Financial topics

[aedens]

The new tyrants are here and it is just as when the secular cash strippers laid waste to Russia. No different just the rate of decline we all note now.
Premafin, whose only asset is Fondiaria, has around 370 million euros of debt which would be restructured and loaded into its subsidiary.

[aedens]

Adeans - of the Russian loan from the IMF, was any of it repaid?

What of the parabolic nature of IMF loans... 1 billion to 10 billion in the 1990's, now the world doesn't mind throwing around 300-400 billion.

No since fiat is based on which premise? Russian faith in democracy, free enterprise, and "reform" suffered hammer blows in the years from 1993 to 1996. This period withstood the shattering confrontation between Yeltsin and the legislature in October 1993; the electoral success of nationalist extremists like Zhirinovsky in the December 1993 elections to the Duma; the bloody and disastrous first Chechen war beginning in December 1994; the "loans-for-shares" privatization fiasco in 1995-96, which ordinary Russians perceived as a witches' sabbath of corruption and theft orchestrated by Washington; the 1995 Duma elections, which returned an entrenched Communist-led bloc bent on thwarting reform; and the 1996 flood of IMF money into the hands of Russia's unpopular semibankirshchina--the so-called "Rule of the Seven Bankers" whom oligarch Boris Berezovsky had said owned half of Russia.

I

[Trevor]

I wouldn't be in the least surprised if Spain requires a bailout sometime this year. They're going to be much harder to bail out than greece ever was, but nevertheless, we're going to try. Problem is, Greece is likely going to require one as well. So will Portugal, most likely, and possibly even Italy. A small country can be bailed out, but it's going to be next to impossible to bail all of them out, even with our assistance.

We're also seeing the old fault lines open up again because of all this, especially the one between France and Germany. A few years ago, few others would have even imagined this and yet the European project is breaking apart.

[aedens]

Humans need not apply. 3 sigma drop relative to the day's volume-weighted average price volatility.
Noted was the calibration 2 sigma by some sharpys. Its coming....
viewtopic.php?f=14&t=2&p=13231&hilit=s+sigma#p13231
old fault lines open up again Some convey a wall. No, a pit of epic design.
French election and nobody even knows what can be done here given the herds
fear status. Both blue and red know there hosed here. I found the year 2020
statement from the FED interesting. I have found myself backing up to event zone
for actual context ongoing. They will continue to thin the herd and the herd will just
do nothing at all. Totally surreal to watch all over again.

[Higgenbotham]

Curious, have you read "The Innovator's Dilemma"? It's interesting to see that even companies go through their own versions of Generational Dynamics. I guess that's natural, but within some industries, the generational changes seem to occur more rapidly than they do in society.

Thomas, I haven't read it. Maybe the closest I came was reading The Spirit of Enterprise by Gilder. I seem to remember his description of "the fetid bins of creation". I think that's apt. Innovation is a beautiful thing, but it is also dirty, hard and desperate work. Gilder captures that spirit.

Furthermore, the bailouts of the ones you mention, did have somewhat of a trickle down effect and therefore indirectly bailed out others (their suppliers). Not saying that was a good thing.

I agree with this. It's a "bailout economy" more or less.

[aedens]

Curious, have you read "The Innovator's Dilemma"? It's interesting to see that even companies go through their own versions of Generational Dynamics. I guess that's natural, but within some industries, the generational changes seem to occur more rapidly than they do in society.

Thomas, I haven't read it. Maybe the closest I came was reading The Spirit of Enterprise by Gilder. I seem to remember his description of "the fetid bins of creation". I think that's apt. Innovation is a beautiful thing, but it is also dirty, hard and desperate work. Gilder captures that spirit.

Furthermore, the bailouts of the ones you mention, did have somewhat of a trickle down effect and therefore indirectly bailed out others (their suppliers). Not saying that was a good thing.

I agree with this. It's a "bailout economy" more or less.

http://itemsweb.esade.edu/research/esad ... ine_EN.pdf
Going forward is just that. Good back drop to whats coming...

[Higgenbotham]

I see very little of Gilder's book on the Internet. I'll quote the passage I referred to and the last paragraph in the book.

The entrepreneurial start-up is the most creative domain in American enterprise largely because it affords the best learning experience. A man who builds a company from scratch acquires a depth of understanding of what makes it work that an imported chief executive, however effective his management information systems, however many cases he has explored in depth at the Harvard Business School, cannot easily command. The entrepreneur gains a dynamic and integrated view of his company and a realistic view of enterprise.
Because he started in rebellion against established firms, he bears a natural skepticism toward settled enterprise. Because he had to make scores of decisions before all the information was in, he recognizes that enterprise always consists of action in uncertainty. The entrepreneur prevails not by understanding an existing situation in all its complex particulars, but by creating a new situation which others must try to comprehend. The enterprise is an aggressive action, not a reaction. When it is successfully launched, all the rest of society - government, labor, other businesses - will have to react. In a sense, entrepreneurship is the creation of surprises. It entails breaking the looking glass of established ideas - even the gleaming mirrors of executive suites - and stepping into the often greasy and fetid bins of creation.
In the entrepreneur's contrarian domains, he needs most of all a willingness to accept failure, learn from it, and act boldly in the shadows of doubt. He inhabits a realm where the last becomes first, where supply creates demand, where belief precedes knowledge. It is a world where expertise may be a form of ignorance and the best possibilities spring from a consensus of impossibility. It is a world where service of others - solving their problems and taking on new ones for yourself - is the prime source of leadership and growth. It is a world where bankruptcies can serve as an index of growth, large setbacks as a portent of large gains, and stability as a precursor of failure - where other people's garbage is your wealth and sand is often a richer resource than gold. It is a world where unit losses can indeed be made up by volume, where low profit margins lead to the largest profits, and where giving is the rule of highest returns. A world rarely penetrated by any economist, it is yet the very center of all economic life.

The spirit of enterprise wells up from the wisdom of the ages and the history of the West and infuses the most modern of technological adventures. It joins the old and new frontiers. It asserts a firm hierarchy of values and demands a hard discipline. It requires a life of labor and listening, aspiration and courage. But it is the source of all we are and can become, the saving grace of democratic politics and free men, the hope of the poor and the obligation of the fortunate, the redemption of an oppressed and desperate world.

It's been about 30 years since I read this book but it's all very relevant to our current condition and problem (more so than it was 30 years ago) and these words go right to the heart of my previous post at the bottom of page 553.

[aedens]

Menger conveyed what should one make of a nation whose elite, after two hundred
years of economics, admire such nonsense and perceive it as an epiphany, when in fact it isn’t even new? What can one
expect of such a people? Well we have covered this already so we move forward even if it is walking out the door in silence.
What we must convey is the Austrian School has never succumbed to the fatal illusion that values can
be measured, and has never misunderstood that statistical data has nothing to do with economic theory, but belongs to the history of economics alone as Mises conveyed. Truth would prevail of its own accord when man possessed the faculties necessary to perceive it. Using impertinent means to cause people to pay lip service to a teaching was of no use if they lacked the ability to grasp its substance and significance. Menger made no efforts to extend favors since free will asserts a compass as does works.

[OLD1953]

As with all things, there is a time to sow and a time to reap. Humans being lazy and greedy, we try to extend the reaping, which Austian economics abhors as destructive. I'm not disagreeing with their conclusions, but some of the recommendations from the Austrian school aren't well aligned with what's worked in the past. This isn't necessarily a flaw in the theory so much as in the people applying it and their own prejudices.

Small and unique business grows during a crisis because of necessity. I remember reading of an electrical engineer who was fixing small appliances in his home for a dollar or two during the depression, as he simply could not find work that paid enough for his debts. He managed to work himself out of debt eventually. He would not have done this save for necessity. A friend of mine's father bought literally barrels of parts for guns and pistols from surplus sales and closings during the depression, and when his son wanted a little extra money he'd go pick through parts and make a couple of guns to sell. Millions of people had gardens during the depression, tearing out flower beds to grow their tomatoes and corn. Conditions create the necessity which force people to create the solution.

Higgs, what I was hoping people would take away from that historical table was that there is a reason why we've got problems collecting taxes and inspecting beef and controlling the greed of the hedge funds and maintaining peace in the world. We generally have the laws, but we'd increased the population of the US by over 100,000,000 in the period from the sixties to now, but we are trying to do the controls with a smaller group. We tried to fight two wars with a smaller military than we had during Vietnam. It is neither shocking nor surprising that attempting to manage complex matters with understaffed offices doesn't work well - it's not logical to expect it to work well. It does lead to the attitudes John describes, in which everyone in the offices recommends just ignoring everything, because they can't do anything else and they've been drowned in meaningless paperwork which is supposed to "prove" what a good job they are doing, so they fill out paperwork instead of actually being able to do the damned work. And it leads to government grants to independant agencies that are supposed to do the work, but often don't. And somehow we convince ourselves that we can vote for "smaller government and less taxes" but get 1/3 more meat inspections and more roads and more of everything we want just because we said we want it cheaper. Wishing for the moon doesn't work, and nothing is free. And you will ALWAYS pay the price, if you don't pay for the meat inspections, then you pay in hospital bills and sick people and monster recalls that will cost the companies more than just paying for the inspections and complying (that's that self destructive part of Austrian economics at work).

Aedens, I fully agree that millions of people truly desire to see everything go to wrack and ruin. I know them, and I don't understand them at all. I spent ages demonstrating to one of those folks some time back pretty much exactly what would happen when conventional oil production peaked, it did and it has and it's pretty much followed expectations (with a few surprises OFC, I'm not the witch of Endor or anything) as to increased prices, decreased usage, and ramped up production. He's happier and more logical now about such issues, but there isn't enough time in the world to discuss such things with all these people. Making logical plans for shifting production and supplies is one thing, knowing the prices will shift is good, sitting in a corner and crying because the axe might fall on a child doesn't make any sense. Go pull it out of the wall, dammit. http://www.authorama.com/grimms-fairy-tales-33.html

Living for no purpose but to bewail potential catastrophe is not life at all. It's merely dread, masquerading as life.

[Trevor]

One of the big problems we've also got in government is not only a great deal of fraud, like this GSA scandal they've got in the news, but there's just as much incompetence and overlap. You've got government agencies doing 5-6 jobs at once. Then you've got different agencies doing the exact same job and they end up stepping on each other's toes, wasting even more money.

I've talked to numerous people who work in government and they've all mentioned this problem. If we can get one agency doing one specific job and leaving other jobs to other agencies, we can solve at least part of the problem. Of course, i don't expect this to happen until after WWIII where we rebuild everything.

Another is the rule where you have to spend the entire budget or it'll end up getting cut. Can you imagine a stronger motivation to waste money?