The Keynesian Nightmare Continues...

#101
#101
BigPapaVol said:
no it isn't, in the least. He fully understands that the markets are about psychology, which has never even remotely been bent by the laws of physics.
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Absolutely incorrect.

I'm sitting right here with "Free to Choose" on my desk. Do you really want to go there with me? You should know from experience where you will end up.

Friedman believed the laws of economics were exactly the same as the laws of engineering or physics (this is his most profound fallacy). Hence, I tend to believe he was, in truth, just a college professor / technocrat.
 
#102
#102
Really? Is that why the guy was open to a Central Bank, even though he didn't like the idea. Paul Krugman has sold too many people on the idea that Friedman was some sort of absolutist and believed there was no merit to external intervention. GTFO with that silliness.

Again, the folks on this site most often trumpeting their victories tend to be the most wrong the most often, even to the point of embarrassment.
 
#104
#104
BigPapaVol said:
Really? Is that why the guy was open to a Central Bank, even though he didn't like the idea. Paul Krugman has sold too many people on the idea that Friedman was some sort of absolutist and believed there was no merit to external intervention. GTFO with that silliness.

Again, the folks on this site most often trumpeting their victories tend to be the most wrong the most often, even to the point of embarrassment.
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Gotcha, BPV.

What were Friedman's comments on the Monetary Reform Act?

He said he would "like to abolish the Fed." What would he replace it with? "A mathematical model...."

Now, that alone proves you wrong straight away. He wanted the Fed (and Central Banks in general) abolished. Since they were here with us he wanted them essentially replaced with computers.

Now, I don't know how much you know about the current Crisis of Capitalism. However, the "securitization" process involves a lot of fuzzy math generated, actually, by boys from JPL which were supposed to be fool-proof.

A trillion in Keynesian bail-out later (not actually Keynesian, but you get the point - governments have had to pour in a trillion in liquidity to keep the system's heart beating, however irregularly), and these notions remind me more of 1984 than "Freedom Man."
 
#105
#105
utgibbs said:
However, the "securitization" process involves a lot of fuzzy math generated, actually, by boys from JPL which were supposed to be fool-proof."
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i assume you mean the rating process. the actual mathmatics of these bonds is pretty straightforward.
 
#106
#106
utgibbs said:
Gotcha, BPV.

What were Friedman's comments on the Monetary Reform Act?

He said he would "like to abolish the Fed." What would he replace it with? "A mathematical model...."

Now, that alone proves you wrong straight away. He wanted the Fed (and Central Banks in general) abolished. Since they were here with us he wanted them essentially replaced with computers.

Now, I don't know how much you know about the current Crisis of Capitalism. However, the "securitization" process involves a lot of fuzzy math generated, actually, by boys from JPL which were supposed to be fool-proof.

A trillion in Keynesian bail-out later (not actually Keynesian, but you get the point - governments have had to pour in a trillion in liquidity to keep the system's heart beating, however irregularly), and these notions remind me more of 1984 than "Freedom Man."
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Did you actually read what I said? He conceded that fallible nd political man was probably OK, even though he knew they'd always err to the politically palatable for the near term.

Your securitization silliness regarding the math sad to me you read a couple books and don't know jack about the actual finance. The capital crisis is steeped in awful underwriting and faux insurance, not some stupidity about fuzzy math. Zillions in faux book capital which should never existed was wiped away as poor underwriting came home to roost. Securitization simply made it easy yo' assume expected value returns would happen, even after poor underwriting. Almost made the essentially criminal default swap insurance palatable. It was stupid, over and over and over.
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#107
#107
BigPapaVol said:
Did you actually read what I said? He conceded that fallible nd political man was probably OK, even though he knew they'd always err to the politically palatable for the near term.

Your securitization silliness regarding the math sad to me you read a couple books and don't know jack about the actual finance. The capital crisis is steeped in awful underwriting and faux insurance, not some stupidity about fuzzy math. Zillions in faux book capital which should never existed was wiped away as poor underwriting came home to roost. Securitization simply made it easy yo' assume expected value returns would happen, even after poor underwriting. Almost made the essentially criminal default swap insurance palatable. It was stupid, over and over and over.
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+1

:hi:
 
#108
#108
That nails it BP, and the faux insurance was allowed during the Clinton administration after our forefathers in their wisdom had erected a solid wall between banking and insurance, like letting a weasel in the henhouse.

Of note Bush and a republican majoritiy didn't correct that dire mistake, nor has obama/democratic financial reform corrected it either, they have only made it worse.

This whole argument is purely academic and immaterial to our real problem which maybe someday we can achieve enough sanity, intelligence and objectivity to discuss on this board.

Hint, in reading the following on another board one poster interjected the Obama is the third incarnation of Woodrow Wilson and he was right on the money.

They brag that only one man in a million can understand it but I say only one man in a million can't understand it if it's explained in simple enough terms.

Until then let me offer the following:

Reaganite Republican: The Guy Obama SHOULD HAVE Been Emulating All This Time . . .

(Terrific read on Harry S Truman.)

Alas, somehow it seemed more stylish and romantic to repeat the expensive Keynesian failures of the Roosevelt Administration instead... this coupled to a weird defeatist foreign policy of Team Obama's own creation.
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truman+bacall.jpg


My choices in life were either to be a piano player in a whore house or a politician... and to tell the truth, there's hardly any difference!
 
#110
#110
droski said:
i assume you mean the rating process. the actual mathmatics of these bonds is pretty straightforward.
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It's not bonds. It's debt instruments packaged under the rubric of "securitization." It has failed spectacularly, and it was branded as "fool-proof."
 
#111
#111
utgibbs said:
It's not bonds. It's debt instruments packaged under the rubric of "securitization." It has failed spectacularly, and it was branded as "fool-proof."
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what do you think debt instruments are exactly? the rating system failed spectacularly and who branded it as fool proof? securitization is probably the best financial invention in our lifetime. blaming it because the underlying assets failed in record numbers is a bit silly. it's kind of like blaming your contractor because your house fell down when you built it out of paper rather than steel.
 
#113
#113
gsvol said:
That nails it BP, and the faux insurance was allowed during the Clinton administration after our forefathers in their wisdom had erected a solid wall between banking and insurance, like letting a weasel in the henhouse.
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The repeal of Glass-Steagal (sp?) under Clinton was indeed a body blow to a real economy.

Although I am certainly not a "Gold Bug" I find the destruction of Bretton Woods at the hands of Nixon ("now we are all Keynesians"), leaving the Gold Starndard in order to fund Vietnam, is ripe with symbolic value. I think tying a currency to gold is rather insipid, however, realizing that money is just an instrument of presumed value is crucially important. Take that away, it is no surprise that, suddenly, the towers of the mega-resorts began to rise in Las Vegas. The symbolism and the infantilism is absolutely delicious. But someone is going to have to sweep up the rubble (probably those two in my avatar).

Jefferson's comment that banking institutions are more dangerous than standing armies has never been more true since the 1973 Crisis of Capital. "Structural Adjustment" and debt peonage has been soup du generation.
 
#114
#114
utgibbs said:
The repeal of Glass-Steagal (sp?) under Clinton was indeed a body blow to a real economy.

Although I am certainly not a "Gold Bug" I find the destruction of Bretton Woods at the hands of Nixon ("now we are all Keynesians"), leaving the Gold Starndard in order to fund Vietnam, is ripe with symbolic value. I think tying a currency to gold is rather insipid, however, realizing that money is just an instrument of presumed value is crucially important. Take that away, it is no surprise that, suddenly, the towers of the mega-resorts began to rise in Las Vegas. The symbolism and the infantilism is absolutely delicious. But someone is going to have to sweep up the rubble (probably those two in my avatar).

Jefferson's comment that banking institutions are more dangerous than standing armies has never been more true since the 1973 Crisis of Capital. "Structural Adjustment" and debt peonage has been soup du generation.
Click to expand...

glass-steagal didn't prevent 2000+ banks going under during the savings and loan crisis. this has nothing to do with bush or regulation. when the housing market collapses so does the economy. this has been true everywhere in the world throughout history. see japan in the 90s.

the banking industry is THE KEY to the economy and is the sole reason why we are have the greatest economy on earth. easy access to capital is the #1 key to economic expansion.
 
#115
#115
utgibbs said:
The repeal of Glass-Steagal (sp?) under Clinton was indeed a body blow to a real economy.

Although I am certainly not a "Gold Bug" I find the destruction of Bretton Woods at the hands of Nixon ("now we are all Keynesians"), leaving the Gold Starndard in order to fund Vietnam, is ripe with symbolic value. I think tying a currency to gold is rather insipid, however, realizing that money is just an instrument of presumed value is crucially important. Take that away, it is no surprise that, suddenly, the towers of the mega-resorts began to rise in Las Vegas. The symbolism and the infantilism is absolutely delicious. But someone is going to have to sweep up the rubble (probably those two in my avatar).

Jefferson's comment that banking institutions are more dangerous than standing armies has never been more true since the 1973 Crisis of Capital. "Structural Adjustment" and debt peonage has been soup du generation.
Click to expand...

Am I the only one who finds it wildy amusing that part of Gibbs' thought is italicized. Wiki maybe?
 
#116
#116
droski said:
what do you think debt instruments are exactly? the rating system failed spectacularly and who branded it as fool proof? securitization is probably the best financial invention in our lifetime. blaming it because the underlying assets failed in record numbers is a bit silly. it's kind of like blaming your contractor because your house fell down when you built it out of paper rather than steel.
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Uh, that is just plain failure, which is just plain what happened.

The JPL boys came in to package these things with equations to balance "high" risk and "no" risk so, presumably they were always winners. To put it very crudely. Because it was based on a lot of risk management math, it was declared "foolproof".

Obviously, real life came up and bit us on the azz, and we are still on rough seas with no idea how it will really correct itself.

Over $500 trillion in derivative assets are still in circulation, backed against ~ $50 trillion in the real world wide economy. You almost have to be a rocket scientist to miss this simple and radically polarized leveraging.
 
#117
#117
droski said:
glass-steagal didn't prevent 2000+ banks going under during the savings and loan crisis. this has nothing to do with bush or regulation. when the housing market collapses so does the economy. this has been true everywhere in the world throughout history. see japan in the 90s.

the banking industry is THE KEY to the economy and is the sole reason why we are have the greatest economy on earth. easy access to capital is the #1 key to economic expansion.
Click to expand...

No, that was Reagan's deregulation in action. So bad did it become that the FDIC chief at the time threatened them with nationalization. That, I might remind everyone, required another $200BN Keynes-esque input to save the ship from sinking.

The housing "bubble" is exactly the Crisis of Capital Accumulation I have already mentioned. In order to get 3% compounded return, capital has to go somewhere. One of the easiest methods to relieve this crisis is to build stuff. China busy building stuff for the last 15 years has propped up a very sick economy.

I could go on about the disaster of US housing since Vietnam Era. Suburbanization is great for Capital, an absolute nightmare / horror-show for livable, human communities, but to point: since "derivatives" are so profitable, they had to be grown. How else to do that but extend credit to people who can't afford houses?????? Since the fuzzy math once these are all packaged together "perfects" them, it is no danger, right???? :eek:lol:

The key point to remember is the Crisis of Capital Accumulation. Capitalism is truly innovative and revolutionary; it remakes itself every 20 years or so when one of its intrinsic contradictions come a callin'
 
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#119
#119
utgibbs said:
No, that was Reagan's deregulation in action. So bad did it become that the FDIC chief at the time threatened them with nationalization. That, I might remind everyone, required another $200BN Keynes-esque input to save the ship from sinking.
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Who do you hate more, Reagan or Mike Hamilton?
 
#120
#120
OrangeEmpire said:
I love watching someone speak about something they have no knowledge about.

Beautiful day!
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I get the impression that gibbs is an academic economist like Krugman and has no meaningful experience in the real world outside of the university or government.
 
#121
#121
utgibbs said:
Uh, that is just plain failure, which is just plain what happened.

The JPL boys came in to package these things with equations to balance "high" risk and "no" risk so, presumably they were always winners. To put it very crudely. Because it was based on a lot of risk management math, it was declared "foolproof".

Obviously, real life came up and bit us on the azz, and we are still on rough seas with no idea how it will really correct itself.

Over $500 trillion in derivative assets are still in circulation, backed against ~ $50 trillion in the real world wide economy. You almost have to be a rocket scientist to miss this simple and radically polarized leveraging.
Click to expand...

once again who delcared it foolproof? link? this isn't fuzzy math or complicated risk management mumbo jumbo. it's actually pretty simple. if historically in a portfolio say 5% of all mortgages of this variety default than clearly if the you own the last say 25% of hte portfolio the chances of default are extremely low. if you want to ***** about something ***** about underwriting standards, the rating agencies, and the collapse of the housing industry. it has nothing to do with the way these instruments were constructed. ZERO.
 
#123
#123
utgibbs said:
No, that was Reagan's deregulation in action. So bad did it become that the FDIC chief at the time threatened them with nationalization. That, I might remind everyone, required another $200BN Keynes-esque input to save the ship from sinking.
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so reagan caused that housing collapse too? did he also cause the 11% inflation during hte carter era that resulted in the savings and loans losing billions on their fixed mortgage portfolios (loaning at 6% and borrowing at 11%)? wow the republicans are really bad at this housing stuff huh? or maybe the housing market, like every other market, is cyclical. no couldn't be.
 
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