The Keynesian Nightmare Continues...

[utgibbs]

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.

Maybe history is cyclical. What's the point?

It wasn't a housing collapse that required the bailout. Those institutions, under deregulation, completely out-leveraged themselves with their Casino Capitalist ways. It was a forerunner of today's big bang.

Strangely, there was no banking crisis during inflation days. The problem was the 1971 - 1973 Crisis of Capitalism (which basically launched the "Financialization" Industry). And specifically, all the new money printed to finance Vietnam after ditching Bretton Woods.

 

[droski]

Maybe history is cyclical. What's the point?

It wasn't a housing collapse that required the bailout. Those institutions, under deregulation, completely out-leveraged themselves with their Casino Capitalist ways. It was a forerunner of today's big bang.

Strangely, there was no banking crisis during inflation days. .

what the hell are you talking about? you are really arguing that inflation didn't cause the need for deregulation of the savings and loans? what do you think would have happened if they forced them to still invest in AAA securities? do you think it's possible to make money when you are loaning at 6% and borrowing at 11%? all the deregulation did is punt the problem down the road. without deregulation carter's inflation would have bankrupted every bank in this country in the early 80s.

 

[sjt18]

It wasn't a housing collapse that required the bailout. Those institutions, under deregulation, completely out-leveraged themselves with their Casino Capitalist ways. It was a forerunner of today's big bang.

The problem isn't the deregulation so much as the protections that were left in place to prevent them from losing... LIBERAL, KEYNESIAN protections.

Strangely, there was no banking crisis during inflation days. The problem was the 1971 - 1973 Crisis of Capitalism (which basically launched the "Financialization" Industry). And specifically, all the new money printed to finance Vietnam after ditching Bretton Woods.

I know that makes you feel all warm and fuzzy but Nixon was distincitly a Keynesian and he followed another strong Keynesian Admin.

 

[utgibbs]

what the hell are you talking about? you are really arguing that inflation didn't cause the need for deregulation of the savings and loans? what do you think would have happened if they forced them to still invest in AAA securities? do you think it's possible to make money when you are loaning at 6% and borrowing at 11%? all the deregulation did is punt the problem down the road. without deregulation carter's inflation would have bankrupted every bank in this country in the early 80s.

They were loaning at > 21%?!? It was called the Volcker Shock! That's what pushed inflation down. This is why people defaulted on their mortgages! (with most of the pain actually felt outside the US)

The inflation was caused because of money printed to finance Vietnam. That is a no brainer.

PS - Paul Volcker weighed in 2003 saying we were heading for the biggest economic iceberg in world history......

 

[droski]

you can't loan at 21% when you are a savings and loan and 100% of your mortgage portfolio is at a fixed 30 year rate and most of it was issues years earlier. carter and his policies (particurally the middle east ones) caused the inflation. know your history. google shaw of iran and oil rationing. wage and price controls hurt it as well. the "money printed" had nothing to do with it.

 

[MG1968]

you keep saying that about the Vietnam war, yet you've provided no evidence to support your claim.

 

[sjt18]

The Vietnam War under LBJ and Nixon was a quasi-Keynesian operation. Both thought that the economic activity generated by the war would boost or was boosting the economy. Only in the mind of a Keynes disciple could you believe that creating things for the express purpose of destroying them is good for the wealth of a nation.

 

[gsvol]

The Vietnam War under LBJ and Nixon was a quasi-Keynesian operation. Both thought that the economic activity generated by the war would boost or was boosting the economy. Only in the mind of a Keynes disciple could you believe that creating things for the express purpose of destroying them is good for the wealth of a nation.

From an economist (or financier) point of view war is necessary for a healthy economy (from their standpoint) according to 'the report from Iron Mountain,' circa 1966.

It works like this, while money is spent on material, labor and other overhead for munitions, those munitions go poof and exit the economic cycle helping to prevent inflation while guarding against deflation also.

If all the capital were spent on manufacturing widgets rather than some on munitions then widgets wouldn't be worth the cost of production because of the law of supply and demand, there would simply be too many widgets.

Meanwhile there is always an ample supply of money to be spent on widgets.

You don't particularly have to have government debt to do that but then war is always a good reason to borrow money.

Fireworks is probably one of the reasons the Chinese had such a stable economy for so many centuries, (except for the occasional famine), prior to Mao and the Marx brothers, because fireworks and munitions are pretty similar if you stop to think about it.

We're off to a good start though, we still have the Fourth of July!!

 

[sjt18]

Yeah except you don't kill a bunch of consumers en masse... that would have to be anti-inflationary also, right?

While most think Obama is a dove... but most failed Keynesian economic recovery efforts have resulted in war, expansion of war, or continuation of a war past its necessity. The scary part of that is that the only people I've seen Obama willing to call "enemies" are conservative Americans and the most extreme terrorists (but he doesn't call them terrorists, right? Don't want to offend them.) He paints these groups with a broad brush as "extremists". Since he seems to be utterly unwilling to take decisive action against foreign enemies... who will he attack....?

 

[gsvol]

Yeah except you don't kill a bunch of consumers en masse... that would have to be anti-inflationary also, right?

While most think Obama is a dove... but most failed Keynesian economic recovery efforts have resulted in war, expansion of war, or continuation of a war past its necessity. The scary part of that is that the only people I've seen Obama willing to call "enemies" are conservative Americans and the most extreme terrorists (but he doesn't call them terrorists, right? Don't want to offend them.) He paints these groups with a broad brush as "extremists". Since he seems to be utterly unwilling to take decisive action against foreign enemies... who will he attack....?

Well how many widgets do you expect a poor rice farmer in Vietnam to buy, not many if any.

Who will he attack??

The American people!

That is what he is all about from the word go, it dovetails nicely with killing the infidel and eliminating the bourgiousie, the only two credos he has stated he supports.

 

[gsvol]

This thread is a dull boring ignorant nightmare.

 

[utgibbs]

you can't loan at 21% when you are a savings and loan and 100% of your mortgage portfolio is at a fixed 30 year rate and most of it was issues years earlier. carter and his policies (particurally the middle east ones) caused the inflation. know your history. google shaw of iran and oil rationing. wage and price controls hurt it as well. the "money printed" had nothing to do with it.

This post is absolutely wildly ideological.

Vietnam, the destruction of the Bretton Woods system, the Crisis of Capital Accumulation with surplus production meeting surplus labor, caused the inflation crisis of the 70s.

If you think you can teach me anything about Mossadegh and the Shah, Kermit Roosevelt et al. I am all ears.

Wage and price controls were Nixon, and they coincided with leaving the Gold Standard.

All of this is rich blaming Carter. :crazy: Roll back the Enlightenment!

 

[utgibbs]

you keep saying that about the Vietnam war, yet you've provided no evidence to support your claim.

I didn't think reviewing common knowledge was necessary.

This board will be a "Project" clearly.

 

[utgibbs]

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.
Posted via VolNation Mobile

Positive economics is in principle independent of any particular ethical position or normative judgments. As Keynes says, it deals with "what is," not with "what ought to be." Its task is to provide a system of generalizations that can be used to make correct predictions about the consequences of any change in circumstances. Its performance is to be judged by the precision, scope, and conformity with experience of the predictions it yields. In short, positive economics is, or can be, an "objective" science, in precisely the same sense as any of the physical sciences.

from "The Methodology of Positive Economics" In Essays In Positive Economics Chicago Uni Press, 1966 p4 [my bold]

As for the repackaging of "debt" as "commodities" I'm afraid, again, we couldn't agree more. However, this process was legitimized by a lot of fuzzy math developed by boys from the JPL whose equations declared these "products" fail-safe. However, capitalism itself necessitates the emergence of these kinds of "products." We are in the End Times of Capitalism. Will be interesting to see how it all collapses.

 

[BigPapaVol]

Positive economics is in principle independent of any particular ethical position or normative judgments. As Keynes says, it deals with "what is," not with "what ought to be." Its task is to provide a system of generalizations that can be used to make correct predictions about the consequences of any change in circumstances. Its performance is to be judged by the precision, scope, and conformity with experience of the predictions it yields. In short, positive economics is, or can be, an "objective" science, in precisely the same sense as any of the physical sciences.

from "The Methodology of Positive Economics" In Essays In Positive Economics Chicago Uni Press, 1966 p4 [my bold]

As for the repackaging of "debt" as "commodities" I'm afraid, again, we couldn't agree more. However, this process was legitimized by a lot of fuzzy math developed by boys from the JPL whose equations declared these "products" fail-safe. However, capitalism itself necessitates the emergence of these kinds of "products." We are in the End Times of Capitalism. Will be interesting to see how it all collapses.

Your fuzzy math silliness is absurd. CDOs aren't complicated. People buy in tranches relative their position in the payment pecking order. Those buying low investment grade and sub investment grade know what they're buying. Nobody's math convinced insurance companies to buy huge swaths of poorly insured equity class bundled mortgages. They simply couldn't fathom a massive devaluation of a scale seen now. It was a failure of underwriting and vision. Not complicated math or capitalism failure.

As to your excerpt, he was making the valid point that econ is a science I which predictive variables can behave as they do in hard sciences. It wasn't an absolute statement in even the slightest way. It was his point that the markets can be predictable and it's not a fuzzy business.
Posted via VolNation Mobile

 

[droski]

This post is absolutely wildly ideological.

Vietnam, the destruction of the Bretton Woods system, the Crisis of Capital Accumulation with surplus production meeting surplus labor, caused the inflation crisis of the 70s.

If you think you can teach me anything about Mossadegh and the Shah, Kermit Roosevelt et al. I am all ears.

Wage and price controls were Nixon, and they coincided with leaving the Gold Standard.

All of this is rich blaming Carter. :crazy: Roll back the Enlightenment!

if leaving the gold standard was the problem how come we had record low inflation (dropping every year till the early 90s) for the 30 years following the carter administration? and you are blaming nixon for the inflation that happened 6 years after he was in office? THAT's rich. Particurally if you want to ignore how badly carter screwed up the middle east which directly resulted in the oil price rising by 5 times and his dumbass oil rationing sure helped that right? but i guess the cost of energy going up doesn't effect inflation right? are you truly this clueless? or are you too young to remember the 80s?

 

[sjt18]

utgibbs. Bottom line: Gov't spending and over-regulation which are the hammers of Keynesian economics in practice are what got us into the mess we are in. It was not free market ideals. It wasn't even captialism except to the extent our capitalism is "blended".

You may not realize that those arguments you've swallowed hook, line, and sinker are self defeating... but they are.

Gov't being a player in the game precludes gov't from being an objective referee. The "failures" of capitalism can almost invariably be traced to the politicization of regulations and regulators.

 

[droski]

However, this process was legitimized by a lot of fuzzy math developed by boys from the JPL whose equations declared these "products" fail-safe.

no matter how many times you say it, it still doesn't stop it from a) being wrong and b) being completely idiotic. do you not understand CDS at all? have you taken any sort of higher level corporate finance class? you have 2 finance professionals telling you that CDS aren't even remotely complicated or involve fuzzy math while patiently describing how they work, yet you continue to post this idiocy. and btw securitized bonds were created by solomon brothers. not sure where you are getting this JPL garbage.

 

[sjt18]

Question: utgibbs, were you even born when Carter was in office?

 

[sjt18]

no matter how many times you say it, it still doesn't stop it from a) being wrong and b) being completely idiotic. do you not understand CDS at all? have you taken any sort of higher level corporate finance class? you have 2 finance professionals telling you that CDS aren't even remotely complicated or involve fuzzy math while patiently describing how they work, yet you continue to post this idiocy.

Real world vs left wing academics? Say it isn't so...

 

[utgibbs]

if leaving the gold standard was the problem how come we had record low inflation (dropping every year till the early 90s) for the 30 years following the carter administration? and you are blaming nixon for the inflation that happened 6 years after he was in office? THAT's rich. Particurally if you want to ignore how badly carter screwed up the middle east which directly resulted in the oil price rising by 5 times and his dumbass oil rationing sure helped that right? but i guess the cost of energy going up doesn't effect inflation right? are you truly this clueless? or are you too young to remember the 80s?

Carter did more to try to fix the Middle East than any President.

Can you remind me who was in office in Oct 1973? It seems you have forgotten. But, it was the man from Yorba Linda (your state too). Certainly energy prices affect inflation, but you forget your history.

 

[droski]

Carter did more to try to fix the Middle East than any President.

Can you remind me who was in office in Oct 1973? It seems you have forgotten. But, it was the man from Yorba Linda (your state too). Certainly energy prices affect inflation, but you forget your history.

you mean he did more to screw up the middle east than any other president. he's the primary reason for the fall of the shaw of iran and the subdigation of 50% of hte iranian population.

when carter started in office the oil price was $14.40. When he left it was $37.42. By the end of reagan's tenure it was back down to $14. You forgot your history CLEARLY.

 

[utgibbs]

no matter how many times you say it, it still doesn't stop it from a) being wrong and b) being completely idiotic. do you not understand CDS at all? have you taken any sort of higher level corporate finance class? you have 2 finance professionals telling you that CDS aren't even remotely complicated or involve fuzzy math while patiently describing how they work, yet you continue to post this idiocy. and btw securitized bonds were created by solomon brothers. not sure where you are getting this JPL garbage.

Sigh.

Securitization. This is an adequate primer. We can go into more detail AFTER you learn something about it:

Interestingly, some of the Wall Street rocket scientists behind securitisation were actually real rocket scientists, from the very lab in Pasadena which had managed the Mars Climate Orbiter project.

BBC NEWS | Business | The rocket scientists of finance

 

[utgibbs]

you mean he did more to screw up the middle east than any other president. he's the primary reason for the fall of the shaw of iran and the subdigation of 50% of hte iranian population.

when carter started in office the oil price was $14.40. When he left it was $37.42. By the end of reagan's tenure it was back down to $14. You forgot your history CLEARLY.

WHAT!?! oh my god! I'm not reading this, am I?

I have A LOT of work to do on this forum. I haven't read anything except in this thread lest I go into vapor lock at the mountainous task of teaching folks something real.

Okay, two questions:

1. What happened to the Shah in 1951?

2. When did oil production in the United States peak?

Learn history. What is past is prologue.

 

[BigPapaVol]

Sigh.

Securitization. This is an adequate primer. We can go into more detail AFTER you learn something about it:

Interestingly, some of the Wall Street rocket scientists behind securitisation were actually real rocket scientists, from the very lab in Pasadena which had managed the Mars Climate Orbiter project.

BBC NEWS | Business | The rocket scientists of finance

That was quite possibly the stupidest article I've ever read on the subject. It implied that the commercial banks were the ones driving the securitization business, which is pure ignorance. It also said that those rocket scientists were employed by the hedge funds, which on the buy side of the transaction. Maybe you misunderstand that those are the idiots who dropped the ball here. Employing rocket scientists rather than financial analysts is a problem. Those who don't understand the due diligence side of investing or try to insure it away are doomed to failure. They failed.