Is everyone wrong about market response to Madoff?

[brocklanders]

Quote from trader_arb:


My thoughts exactly.
Seems there are more space travelers on ET than actual traders living in reality. I'm pretty certain this same demographic of people believe Obama will turn the US into Utopia?

Being skeptical is positive and healthy but being closed off and close minded to possibilities and new realities is not imho.

 

[richrf]

Quote from golfbarron:

Is anyone else enjoying reading about this as much as I am? All those "wealthy" good folk who thought they were "it" with all their money. This will be a truly enjoyable christmas.

And many were (probably no longer) for government deregulation. Stiff regulation we put in place after the last great bank runs of the 1930s. Unfortunately, we have (well really had) a President who never read a history book and didn't know about bank/investment house frauds. Now I guess, we need to teach everyone who is for deregulation, some history again.

As for what will happen, some people will take what they have and and put it in CDs, others in Treasuries, and others in well known funds, ETFs, that are transparent and well regulated. Hundreds of millions of dollars, all over the worlds, were lost because the Republican administration let the scam artists run free and unregulated. For me it is unbelievable that there are still those (e.g. on CNBC), who are still lobbying for deregulation. Haven't they caused enough harm?

The hedgies wanted secrecy, those who invested in them knew what they were getting into (these are wealthy families and funds), and they got secrecy. Sometimes secrecy works to your advantage and sometimes not. This was a not.

 

[trader_arb]

Quote from richrf:

And many were (probably no longer) for government deregulation. Stiff regulation we put in place after the last great bank runs of the 1930s. Unfortunately, we have (well really had) a President who never read a history book and didn't know about bank/investment house frauds. Now I guess, we need to teach everyone who is for deregulation, some history again.

As for what will happen, some people will take what they have and and put it in CDs, others in Treasuries, and others in well known funds, ETFs, that are transparent and well regulated. Hundreds of millions of dollars, all over the worlds, were lost because the Republican administration let the scam artists run free and unregulated. For me it is unbelievable that there are still those (e.g. on CNBC), who are still lobbying for deregulation. Haven't they caused enough harm?

The hedgies wanted secrecy, those who invested in them knew what they were getting into (these are wealthy families and funds), and they got secrecy. Sometimes secrecy works to your advantage and sometimes not. This was a not.

If you allow people to be free, there will always be a certain percentage who will not abide by rules/laws. You are part of the crowd that may have good intentions but wants to over-regulate, which will be overcompensating and will cause a new set of problems.

I have an idea. Lets have the IRS audit EVERY taxpayer EVERY year, that way there will be no tax gap, tax fraud, etc. Sound good?

 

[richrf]

Quote from trader_arb:

If you allow people to be free, there will always be a certain percentage who will not abide by rules/laws. You are part of the crowd that may have good intentions but wants to over-regulate, which will be overcompensating and will cause a new set of problems.

I have an idea. Lets have the IRS audit EVERY taxpayer EVERY year, that way there will be no tax gap, tax fraud, etc. Sound good?

Impractical. Full disclosure, with proper regulations worked since the 1930s. No great Depression or Great Recession. It is very simple, except that the scammers got their dimwit into office so they could direct the dismantling of the regulatory framework that worked for 80 years. This is the result. I would hope that those for deregulation just admit that they had no idea what they were doing, and simply revisited the 1920s with comparable results - i.e. wealth redistribution to the top 1%, enormous leverage and debt, incredible number of bankruptcies, a run on the banks (until the Feds backstopped every financial institution), and an incredibly dysfunctional economy.

Luckily, unlike the Hoover administration, that allowed major institutions to fail, which manifested into 25% unemployment, Obama will do the opposite.

 

[Debaser82]

Quote from richrf:

Impractical. Full disclosure, with proper regulations worked since the 1930s. No great Depression or Great Recession. It is very simple, except that the scammers got their dimwit into office so they could direct the dismantling of the regulatory framework that worked for 80 years. This is the result. I would hope that those for deregulation just admit that they had no idea what they were doing, and simply revisited the 1920s with comparable results - i.e. wealth redistribution to the top 1%, enormous leverage and debt, incredible number of bankruptcies, a run on the banks (until the Feds backstopped every financial institution), and an incredibly dysfunctional economy.

Luckily, unlike the Hoover administration, that allowed major institutions to fail, which manifested into 25% unemployment, Obama will do the opposite.

So you don't subscribe to the "let the forest burn and out of the ashes shall grow far more healthy threes" theory?

 

[richrf]

Quote from Debaser82:

So you don't subscribe to the "let the forest burn and out of the ashes shall grow far more healthy threes" theory?

I think that we did that in the 1930s. ep, the trees grow back, after World War II(I), but I rather learn from past mistakes, and try to avoid all of that calamity.

 

[Debaser82]

Quote from richrf:

I think that we did that in the 1930s. ep, the trees grow back, after World War II(I), but I rather learn from past mistakes, and try to avoid all of that calamity.

Yeah but what if the holes this time are so deep (as some would argue they are) only hyperinflation could be the answer to bail out everyone in need of a bailout?

Surely that can't be the lesser of 2 evils or is it?

 

[richrf]

Quote from Debaser82:

Yeah but what if the holes this time are so deep (as some would argue they are) only hyperinflation could be the answer to bail out everyone in need of a bailout?

Surely that can't be the lesser of 2 evils or is it?

Hyperinflation is a possibility, but unlikely as long as the velocity of money is stagnant. It is a tricky business. What is for sure, is that fixed income and savers are ultimately going to pay for this mess, as well as all those who lost money in their equity investments. The winners, as always, are the scammers themselves, one of whom is Paulsen himself, who somehow found a way to give all of his buddies $350 billion with no strings attached (no $25/hour pay for the kids on Wall Street).

 

[Debaser82]

Quote from richrf:

Hyperinflation is a possibility, but unlikely as long as the velocity of money is stagnant. It is a tricky business. What is for sure, is that fixed income and savers are ultimately going to pay for this mess, as well as all those who lost money in their equity investments. The winners, as always, are the scammers themselves, one of whom is Paulsen himself, who somehow found a way to give all of his buddies $350 billion with no strings attached (no $25/hour pay for the kids on Wall Street).

Excactly, where will the moral incentive be to not put the world economy at risk the next time for some personal profit?

I'm more a believer in the "my grandfather kept his cash in a sock under his bed, my father kept his money in the bank, I bought shares of a bank and my son will keep his money in a sock under his bed" theory.

These cycles seem to be inevitible the only thing I'm not that sure of is whether it's human nature on it's own responsible here or unknown and higher forces playing there cards such a way the cycles must happen eventually.

Bit of both perhaps.

 

[scriabinop23]

Quote from richrf:

Hyperinflation is a possibility, but unlikely as long as the velocity of money is stagnant. It is a tricky business. What is for sure, is that fixed income and savers are ultimately going to pay for this mess, as well as all those who lost money in their equity investments. The winners, as always, are the scammers themselves, one of whom is Paulsen himself, who somehow found a way to give all of his buddies $350 billion with no strings attached (no $25/hour pay for the kids on Wall Street).

velocity of money is economic activity in real terms.

You can have hyperinflation with even less velocity of money than today. You just need to print a lot!