Financial topics

[aedens]

H you are correct and the events are correlating. Limitations have been apparent for some time.
For the first time since 1980, state aid and property taxes, two primary sources of funding, are dropping simultaneously.
Old the conveyance was from Argentina and they are in grinding collapse as we speak.

http://www.fredoneverything.net/Underst ... mics.shtml
Now, America has two examples of socialized medical care, the VA system and the military system. Since it would be intelligent to examine these to see how well they work, nobody does. The VA hospitals ain't great, being over-affirmative-actioned and under-funded, since the Pentagon has more enthusiasm for making new cripples than caring for old ones.

[Higgenbotham]

You guys understand a language here I can not speak.

But I have a question?

In 1987, as I understand it - these 100s of Trillions of Synthetic Futures Contracts, or Synthetic Option Contracts, or Synthetic Insurance Contracts ( or whatever you want to call them ) placing speculative bet's on the economy just did not exist. Some small part of such existing contracts are actually hedge contracts on the economy, not speculative, as I understand it.

Does the existence of such derivatives with those kind of numbers involved make all past crashes, like 1987, have a lot less value for comparison and predictive purposes regarding what is happening, and will, happen now?

http://www.zerohedge.com/news/trade-stu ... c-collapse
http://www.feasta.org/wp-content/upload ... e-Off1.pdf

I've been looking over the second link here that is referred to in the Zero Hedge article. Obviously it is the author's opinion that the answer to your question is yes, that past crashes were less severe than what is upcoming, though there are more reasons for that than just the use of derivatives. I would say derivatives are symptomatic of other conditions that go hand in hand - that the huge growth in derivatives happened for underlying reasons that already indicated instability. Specifically what I mean there is the currency system became inherently unstable when it started to float and lost its link to gold. Let's say to give an analogy that a guy is bouncing up and down on a trampoline and his amplitude is 10 feet. That fact that he's at ground level is good because if he bounces up 10 feet and misses the trampoline he just hits the ground from 10 feet up. But now let's say he decides to raise his maximum height by a factor of 2 and reduce the amplitude by half, the reasoning being, hey, I'm less likely to fall off and my activity is more stable. That's what derivatives do. What everyone sees is just the second part of that. The problem is that once that step is taken the cycle is self reinforcing and pretty soon you're 100 feet in the air and bouncing in small increments. Within the previous conditions that appears sustainable. Problem is, what if conditions change and the amplitude begins to increase so at some point the guy is 100 feet in the air but now he's back to an amplitude on 10 feet again and can't lower himself to the ground. This is where the world financial system is.

I've given many such analogies through these 600 pages as well as some ideas similar to those found in that second link. From what I've read so far, at this time, I don't think any crisis can propagate with the speed he is projecting but given enough time and the "good fortune" that has occurred thus far at some point it becomes theoretically possible. But, really, rather than repeat more of what I think about this (which is already spread in many places through these pages) I wanted to link to someone else who has and maybe in more depth - I'll read it through and maybe make some comments as to how well I think he covered the topic.

Edit - I read through the second link and I'd say he kept it pretty basic in the discussion of derivatives. He makes the point that derivatives allow for greater use of leverage. Thus, there can be greater relative debt at the peak of the bubble and equity can disappear faster once the bubble starts to deflate. Once it's suspected that equity may have disappeared, then it becomes questionable whether any party that owes money to another through a derivative contract can pay. There's nothing new here that I can see in terms of discussion about derivatives. Though I think the main ideas he presents go hand in hand with the proliferation of derivatives. The complexity in today's economic system could not have gotten anywhere near this level without the use of derivatives and I think he raises some good points and examples about how this complexity makes it vulnerable.

[vincecate]

The number of retired Americans living in Mexico and the Phillipines and Korea who are stridently active on the political boards about how the USA needs less of everything is simply shocking. Why retire in a place like that if you want more freedom? They've got much stricter laws on almost everything.

There are two guys I follow who were both in Argentina. Doug Casey seems to think it is a fantastic place for libertarians to move to. FerFal just "bugged out" of there as he thinks things are bad and getting much worse, so he moved to Ireland. Doug is rich. FerFal is a normal guy. Doug is not keeping his money in Argentina, nor running a business in Argentina, nor investing in Argentina, nor working in Argentina. Most of the troubles governments give people are taxes on wages, taxes on assets, taxes and regulations on business, and taxes on wealth in general. Doug points out that you really don't want to be in the same country as your money or your business. If you seem to be just a rich visitor who is spending money locally most any country will treat you well. FerFal was working and trying to make a living there. Doug is in a nice part of Argentina. FerFal was not in the best of locations. Anyway, it is interesting to see how two guys I respect can have such different views of Argentina.

http://www.caseyresearch.com/cdd/contra ... -argentina
http://ferfal.blogspot.com/2009/06/doug ... ntina.html

I think Doug is right that it is best to have your business, your money, and yourself in different countries. As Anguilla taxes have gone up over the years I can more and more see the wisdom in that. I am working to get better set up.

FerFal's book is what gave me the idea of doing a gold business. He said the gold guys seemed to do well in hyperinflation.

-- Vince

[Trevor]

One thing I've been reading is that economists are becoming increasingly gloomy. 3-4 months ago, I was constantly hearing that the hiring slump was over, that we were now on the road to a sharp recovery. Now quite few are saying anything of the sort.

Like here, for instance: http://www.foxnews.com/us/2012/07/16/ec ... z20liV3BoO

[Marc]

While reading the Zero Hedge financial website, I came across this article which discusses psychopaths working in financial services. A particularly eye-opening portion of it reads:

A senior UK investment banker and I [that is, the article's author] [were] discussing the most successful banking types we know and what makes them tick. I argue that they often conform to the characteristics displayed by social psychopaths. To my surprise, my friend agrees.

He then makes an astonishing confession: “At one major investment bank for which I worked, we used psychometric testing to recruit social psychopaths because their characteristics exactly suited them to senior corporate finance roles.”

Here was one of the biggest investment banks in the world seeking psychopaths as recruits.

Article found at: http://www.zerohedge.com/contributed/20 ... tructive-a

—Best regards, Marc

[Marc]

Let me add something here at this point: I respectfully agree with John and others that Generation-X'ers seem rather reticent regarding prosecuting their own for the rampant financial crimes that have recently taken place. I also agree that a certain measure of pent-up resentment at prior generations seems to be driving some of this, and I also agree with another contributor in that X'ers were raised to "not tattle" (even though they were never taught not to bully), and this no-tattling ethos also seems to prevent X'ers from going after their fellow errant X'ers.

However, in addition to the generational attributes of liberty and honor in X'ers (which can promote the attitude of "do what you want and don't worry what others feel about it if you feel you must do it"), there is also the key X'er trait of survival, and I'm guessing that there are many X'er "smart cats" out there who damn well know what's "lurking out there," and tread carefully as a result — which lessens further the chance that X'ers will go after the financial crime out there. Just my guess here.... —Best regards, Marc

[Trevor]

Let me add something here at this point: I respectfully agree with John and others that Generation-X'ers seem rather reticent regarding prosecuting their own for the rampant financial crimes that have recently taken place. I also agree that a certain measure of pent-up resentment at prior generations seems to be driving some of this, and I also agree with another contributor in that X'ers were raised to "not tattle" (even though they were never taught not to bully), and this no-tattling ethos also seems to prevent X'ers from going after their fellow errant X'ers.

So long as they're all making lots of money, who cares how many people are getting screwed? However, I'm skeptical about the "raised not to tattle" explanation. That's not unique to Generation X. An unspoken rule in your school years, at least when you get older, is not to squeal on anyone, no matter what the person did.

[Marc]

Let me add something here at this point: I respectfully agree with John and others that Generation-X'ers seem rather reticent regarding prosecuting their own for the rampant financial crimes that have recently taken place. I also agree that a certain measure of pent-up resentment at prior generations seems to be driving some of this, and I also agree with another contributor in that X'ers were raised to "not tattle" (even though they were never taught not to bully), and this no-tattling ethos also seems to prevent X'ers from going after their fellow errant X'ers.

So long as they're all making lots of money, who cares how many people are getting screwed? However, I'm skeptical about the "raised not to tattle" explanation. That's not unique to Generation X. An unspoken rule in your school years, at least when you get older, is not to squeal on anyone, no matter what the person did.

Thanks for the perspective here. My own perceptions have been leaning towards Silents (and even Boomers) as more willing to tattle than Generation-X'ers, but that's just my own perception there But the lure of making lots of money can cause a lot of people, regardless of generation, to look the other way, no doubt. Thanks for sharing. —Best regards, Marc

[thomasglee]

Let me add something here at this point: I respectfully agree with John and others that Generation-X'ers seem rather reticent regarding prosecuting their own for the rampant financial crimes that have recently taken place. I also agree that a certain measure of pent-up resentment at prior generations seems to be driving some of this, and I also agree with another contributor in that X'ers were raised to "not tattle" (even though they were never taught not to bully), and this no-tattling ethos also seems to prevent X'ers from going after their fellow errant X'ers.

So long as they're all making lots of money, who cares how many people are getting screwed? However, I'm skeptical about the "raised not to tattle" explanation. That's not unique to Generation X. An unspoken rule in your school years, at least when you get older, is not to squeal on anyone, no matter what the person did.

Thanks for the perspective here. My own perceptions have been leaning towards Silents (and even Boomers) as more willing to tattle than Generation-X'ers, but that's just my own perception there But the lure of making lots of money can cause a lot of people, regardless of generation, to look the other way, no doubt. Thanks for sharing. —Best regards, Marc

Yeah, but we all know people in the workplace that would "tattle" in a heartbeat if they thought it would get them a promotion, browny points, or whatever benefit.

I think when something wrong is done, one should "tattle". There's more honor in upholding the truth than not. What we see in the current generations in power is the desire to tattle when it helps you, but not to tattle when it won't. Purely selfish behaviors that have nothing to do with a moral stance or some code of honor/ethics.

[Reality Check]

This macroeconomic options discussion is well worth watching in it's entirety.

Multiple different points of view from different speakers - at different points in the video.

Kind of rare on CNBC: http://www.cnbc.com/id/48193471