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#21 milbank

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Posted 29 November 2007 - 10:58 PM

I basically blame everything on Jimmy Carter...even today



the only way i could blame carter today is if GWB were his illegitimate son....and we all know carter only lusted in his heart :lol: .

ed rader



For Barbara? EWwwwwww! :sick:

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#22 NAV

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Posted 29 November 2007 - 11:02 PM

I was waiting for the "gotcha" part to comment. Everytime I'd start a post though, I'd stop and think "geeesh, this is too long and involved" so I'll say this.

You are correct NAV. The Fed doesn't "start" anything. I do blame them for, as you called it, facilititating. I blame Greenspan for his lack of foresight in promoting ARMs the way he did without jawboning Congress to reign in the lax standards that anyone who saw Johnnie Woo on "his" yacht with his arms around those two bikini babes hustling how "YOU could live like ME by buying properties with no money down!" etc, knew this was all going out of control and would end badly. Greenspan used his Bully Pulpit to promote one end the one the Greedies wanted without promoting the other end, responsible ARM lending practices until it was way past the point of no return.

The Fed isn't responsible, of course, for all of it. They supplied the means and Greenspan allowed and jawboned some of the way.

Elected government with it's deregulations to "grow capitalism more freely," spearheaded by presidents both in Republican and Democratic (Clinton) administrations, pushed for deregulating irresponsibly in many ways, the banking industry, lowering standards for banks and lenders and easing oversight and enforecement of the regulations still in existence. I blame the investment banks for levering 20 to 1 etc. and I blame the rating agencies who were in bed with said banks and didn't do the job of really knowing EXACTLY what they were applying rating to. I've gone into the whole anatomy of the crisis we are now in more thoroughly before.

To approach this as a "is the Fed totally responsible or not" situation is a simplistic, trick, "gotcha" setup.

If I thought the Fed was totally responsible for the mess we are in, I'd be cheering the rate cuts too but, I know that those cuts are akin to trying to staunch a sliced artery with a band-aid.

Jeesh! This is still too long. :lol:


It all starts from the bottom. I was on a wine tour in the Mendoncino county in 2004. I was chatting with this guy, who worked in the tasting room, who was bragging how he purchased a property for 350k and flipped it for 450k on a zero-down loan. When he said he made 30K in annual wages, i almost dropped the wine glass. Now the greed starts at this layer. When he sees thy neighbour getting rich, the peer pressure builds and the herding behaviour starts. Can we blame this guy for taking such huge leverage? Sure. But what about the next layer who facilitates these loans? - The greedy bankers, cuz all they care is about their commisions and bonuses. Can we blame these bankers ? Sure. But who facilitates the liquidity ? The Fed, of course !.

Who demands the Fed ? - The crowd thru the financials instituitions who in turn thru the congress. In the end, i think the Fed is just a scape goat. The ultimate blame IMO rests on we as a society, our debt culture and the greedy bankers in this grand circus called fiat system - We are the clowns !.

Edited by NAV, 29 November 2007 - 11:04 PM.

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#23 SemiBizz

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Posted 29 November 2007 - 11:17 PM

NAV, we are long past Gutenberg. There's nothing Omnipotent about printers... I guess you didn't get that.
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#24 NAV

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Posted 29 November 2007 - 11:21 PM

NAV, we are long past Gutenberg. There's nothing Omnipotent about printers...

I guess you didn't get that.


Ok, now i get it. :D

"It's not the knowing that is difficult, but the doing"

 

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#25 SemiBizz

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Posted 29 November 2007 - 11:24 PM

I think Teaparty said it best, our enemy is bias in this business... the minute your model is closed hard over you are in trouble. The best strategy and mindset of all is to always, always keep an open mind. I've studied charts enough to know that there are always events, be they rational or not, that cause extreme gyrations, over and above normal tolerances. Basically you and I are students of direction, if we get that right, that's the important part, we can quibble over pivots... :lol:
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Volume is the only vote that matters... the ultimate sentiment poll.

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#26 ernie ennui

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Posted 29 November 2007 - 11:30 PM

[i][font=Verdana][size=2]Yeah, but if your house value goes up 15/20% annually, isn't that inflation?

:bear: :bear:

I basically blame everything on Jimmy Carter...even today




During Jimmy's time those who had savings were very happy with 12-15% money market return without dealing with volatility of stock market!!



ya but inflation was 20%!!!!


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#27 milbank

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Posted 29 November 2007 - 11:46 PM

It all starts from the bottom. I was on a wine tour in the Mendoncino county in 2004. I was chatting with this guy, who worked in the tasting room, who was bragging how he purchased a property for 350k and flipped it for 450k on a zero-down loan. When he said he made 30K in annual wages, i almost dropped the wine glass. Now the greed starts at this layer. When he sees thy neighbour getting rich, the peer pressure builds and the herding behaviour starts. Can we blame this guy for taking such huge leverage? Sure. But what about the next layer who facilitates these loans? - The greedy bankers, cuz all they care is about their commisions and bonuses. Can we blame these bankers ? Sure. But who facilitates the liquidity ? The Fed, of course !.

Who demands the Fed ? - The crowd thru the financials instituitions who in turn thru the congress. In the end, i think the Fed is just a scape goat. The ultimate blame IMO rests on we as a society, our debt culture and the greedy bankers in this grand circus called fiat system - We are the clowns !.


I've got to disagree with you NAV and this is something I've posted previously, I think it starts at the top. The top being our elected officials who make the laws and those regulatory agencies entrusted to oversee what regulations are in place in terms of the lenders and the borrowers. With the ABCP/SIV/CDO situation, I'd add the rating agencies and the SEC (regarding allowing the absurd leveraging by the investment banks) in the mix but, that's another part of this whole thing which I feel is the real killer part in terms of the damage coming.

The winetaster in Mendoncino could not have done what he did without the layer above him making it possible with the zero-down loan. The lender could not have made it possible without regulations watered down to the point where it was possible to have no hurdle to entry, no imput of collateral to keep the mortgagee responsibly invested in his end of the agreement. Regulations had gotten to the point where you literally could get something for nothing. I blame congress and the state's governments for allowing that but, now adays you can't even afford to run on the state level without being totally in the pocket of business by the time anyone gets elected.

And, as I said, I blame the Fed and especially it's last Chairman for facilitating all this with easy money and lots of it without any strings or control of which the Fed does have some purview.

Edited by milbank, 29 November 2007 - 11:52 PM.

"The power of accurate observation is commonly called cynicism by those who have not got it."
--George Bernard Shaw


"None are so hopelessly enslaved as those who falsely believe they are free."
--Johann Wolfgang von Goethe


#28 milbank

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Posted 30 November 2007 - 12:00 AM

You know NAV, rereading your last post, I think we DO agree on a lot really except the order of responsibility. As I said, I don't think Greenspan was a passive participator. I don't think he thinks so either. I'm not old enough or was not interested enough to know exactly how Volker and Burns ran their shop but, Greenspan was very proactive both in actions and words even though it was hard at times to know exactly what he was saying when he said it. :D He reminds me of the "Ol' Professer," Casey Stengel. You weren't sure exactly what he said but, you clearly knew what he meant.

Edited by milbank, 30 November 2007 - 12:05 AM.

"The power of accurate observation is commonly called cynicism by those who have not got it."
--George Bernard Shaw


"None are so hopelessly enslaved as those who falsely believe they are free."
--Johann Wolfgang von Goethe


#29 IYB

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Posted 30 November 2007 - 12:18 AM

So Fed cuts will be ineffective this time around in halting the stock market decline.

>>Eventually, interest rate cuts will stop the economic slide which is still ahead and even more eventually they will lead to the next upswing- but we are looking out years. How long, for example, was the lead time between 2001 Fed cuts and the eventual re-expansion of the economy? About 3 years. The Fed doesn't determine the economic cycle, though. They react to it. They definately have some very measurable impact on the economy in how quickly or slowly they react.

In other words the Fed did not create the RE bubble, the stock market rally, the commodity rally. Right ?

>>Right, argumentatively. They had a definate influence in that they were very slow to react to the economic cycle in 2003-2005, when they kept rates at 1% for some 2 1/2 years. But they didn't create the cycle to begin with. The economic cycle is global, and way bigger than the Fed.

Blaming the Fed and calling the Fed impotent is utterly oxymoronic.

>>Definately!

Either they control or they don't. So what is it ?

>> They don't

Though my view is based on 40 years of observation in real time--I know that it is the minority view of how things work. But you asked.....Best, D

Edited by IYB, 30 November 2007 - 12:24 AM.

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

#30 NAV

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Posted 30 November 2007 - 12:34 AM

So Fed cuts will be ineffective this time around in halting the stock market decline.

>>Eventually, interest rate cuts will stop the economic slide which is still ahead and even more eventually they will lead to the next upswing- but we are looking out years. How long, for example, was the lead time between 2001 Fed cuts and the eventual re-expansion of the economy? About 3 years. The Fed doesn't determine the economic cycle, though. They react to it. They definately have some very measurable impact on the economy in how quickly or slowly they react.

In other words the Fed did not create the RE bubble, the stock market rally, the commodity rally. Right ?

>>Right, argumentatively. They had a definate influence in that they were very slow to react to the economic cycle in 2003-2005, when they kept rates at 1% for some 2 1/2 years. But they didn't create the cycle to begin with. The economic cycle is global, and way bigger than the Fed.

Blaming the Fed and calling the Fed impotent is utterly oxymoronic.

>>Definately!

Either they control or they don't. So what is it ?

>> They don't

Though my view is based on 40 years of observation in real time--I know that it is the minority view of how things work. But you asked.....Best, D



Now that's what i call a unambigous response. Thanks IYB.


You know NAV, rereading your last post, I think we DO agree on a lot really except the order of responsibility. As I said, I don't think Greenspan was a passive participator. I don't think he thinks so either. I'm not old enough or was not interested enough to know exactly how Volker and Burns ran their shop but, Greenspan was very proactive both in actions and words even though it was hard at times to know exactly what he was saying when he said it. :D

He reminds me of the "Ol' Professer," Casey Stengel. You weren't sure exactly what he said but, you clearly knew what he meant.


Milbank,

What about individual responsibility ? It's like saying - "It's not my fault that i smoke, but it's all Phillip Morris' ".

As for Greenspan, i never understood him either. I have always considered him a hypocrite, a politician more than a beaurocrat.

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