It's already been explained to you that sharp downdrafts in the US market are distinctly different events than long uptrends. In the former case, international market correlations skew toward '1'. There is no evidence that this occurs in the latter case. In making your case, you attempt to equate two distinctly different circumstances. That doesn't work. Sorry.
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King Bush speaks
- Thread starter mgookin
- Start date
It's already been explained to you that sharp downdrafts in the US market are distinctly different events than long uptrends. In the former case, international market correlations skew toward '1'. There is no evidence that this occurs in the latter case. In making your case, you attempt to equate two distinctly different circumstances. That doesn't work. Sorry.
Does the real estate boom and the continued lowering of rates have anything to do with this problem. I thought it was debt , the Fed invited the public to keep borrowing at low cost and the banks were glad to help.
I guess I am one of those dummies on this thread, I didn't take econ 101. Can someone tell me if its the whole world, why did the US hit the skids first?
Is there any one specific thing in the last 5 years that can be blamed for this crisis?
I guess I am one of those dummies on this thread, I didn't take econ 101. Can someone tell me if its the whole world, why did the US hit the skids first?
Is there any one specific thing in the last 5 years that can be blamed for this crisis?
Quote from BlindLemonBoosh:
It's already been explained to you that sharp downdrafts in the US market are distinctly different events than long uptrends. In the former case, international market correlations skew toward '1'. There is no evidence that this occurs in the latter case. In making your case, you attempt to equate two distinctly different circumstances. That doesn't work. Sorry.
The day you explain to me the similarities or differences or causes of ANY market scenario the past half century is the day I'll buy you a cigar. This downdraft is NOT AT ALL unique or particular to America. Nada. My partner (Mark Oryhon) is perhaps the most active individual Dax trader in America. He's 1-2% of the volume every day. He eats, sleeps and breathes Europe. He's known for months that the Euro banks were in even WORSE shape than the U.S.
The break in Asia is clearly CAUSED by the weakness in the West.
Quote from Pa(b)st Prime:
The day you explain to me the similarities or differences or causes of ANY market scenario the past half century is the day I'll buy you a cigar.
We seem to be trying to accomplish different things here. I'm not trying to micro-analyze, but, rather attempt to provide an accurate broad viewpoint. International market correlations increase during sharp downturns. I postulated that, because of the size of the US economy (more than 3X as big as the second largest economy), a sharp decline in the US economy and equity markets would, as a general rule, induce contagion in the world economy & markets. In any event, here are some links which indicate that the premise of increased international correlations during sharp downdrafts is not a figment of my imagination.
http://corporate.morningstar.com/ib/documents/MediaMentions/ReevaluatingAssetAllocMay08.pdf
http://rfs.oxfordjournals.org/cgi/content/abstract/3/2/281
http://www.informaworld.com/smpp/content~content=a758238070~db=all~order=page
http://ideas.repec.org/p/ebg/heccah/0646.html
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.7.9644
http://www.hec.edu/hec/fr/professeurs_recherche/upload/cahiers/6461999.pdf
http://www.feb.ugent.be/fac/research/Proefschriften/Abstracts/inghelbrecht_abstract_eng.pdf
Whether or not other countries contribute to the problem is beyond the scope of my original argument. However, if we consider that the combined size of the Euro 'economy' is even greater than that of the US, AND that their banks are even more screwed up than ours - well... it safe to say that we all have a bit of a problem on our hands.
Quote from mgookin:
He's at a desk factory in VA.
I did not know we still had a factory in the USA. Must be the last one.
And lord knows that must be where all these exports we hear about come from. We know there's a big surplus of desks in the USA because nobody has a job!
The US is the worlds largest Manufacturer.
According to the Department of Labor (sourcing the United Nations United Nations, National Accounts Main Aggregates Database, http://unstats.un.org/) citing 2005 data the U.S. accounts for 20.6% of the worlds manufacturing nearly 1.5 times that of the 2nd largest (Japan 13.3%) and over twice 3rd largest (Germany 8.2%). The aggregate combination of the EU-15 This link has an explanation of the calculation methods and links to the charts showing the worlds top manufactures: http://www.dol.gov/asp/media/reports/chartbook/2007-06/appendixa_manufacturing.htm
Quote from Covertibility:
How about blaming the lack of consitutional amendments banning flagburning and gay marriage?
People are owning less and less under Generalissimo Bush's Ownership Society.
The great Bush 'ownership society.'
LMFAO (if it wasn't so sad).
Ownership of debt on depreciating assets.
I wasn't trying be unduly argumentative I saw your point-most often it's been true-1998 barely involved Europe (ex Russia) at all. Every market has different shit going on. This time though it's all pretty linked. The house in Brisbane, the loft in SOHO, the estate in Dublin and global share prices all bubbled together.
Back to Greenspan: A few points.
1. The 2000-2003 recession was eerily similar to 1929-1932 and I think he played it fine. I remember he didn't ease one bit until late 2000 maybe even 1/01 allowing prices to correct. When the index markets imploded-even worse than now-he jammed rates lower as he should have. Inflation was VERY benign at the time. As the markets rallied he began raising rates and when he left office the Funds target was 4.5% after 14 consecutive rate hikes. I can remember listening to Bill O'Reilly in 2000 and O'Reilly was going crazy that Greenspan was being to hawkish while tech was coming off 50% that autumn. Damned if you do damned if you don't. Greenspan instead listened to the 2yr Treasury market. As he should. He didn't set policy he just implemented it. Treasury traders had voice. If you remember there was curve inversion a couple of brief times.
2. Treasury traders were accepting of low yield because in toto they've seen this coming for years. That caused the incredibly weird ying-yang effect of low risk free yields virtually forcing yield hungry institutional investors into crap. I've thought about it a lot but I see no rate policy course by the Fed that would've relieved this. One thing is certain though. We would've been better off going into a protracted depression in 2002 than this. Once again though 20/20 hindsight. At the time the Maestro played the tune we wanted to hear.....
Back to Greenspan: A few points.
1. The 2000-2003 recession was eerily similar to 1929-1932 and I think he played it fine. I remember he didn't ease one bit until late 2000 maybe even 1/01 allowing prices to correct. When the index markets imploded-even worse than now-he jammed rates lower as he should have. Inflation was VERY benign at the time. As the markets rallied he began raising rates and when he left office the Funds target was 4.5% after 14 consecutive rate hikes. I can remember listening to Bill O'Reilly in 2000 and O'Reilly was going crazy that Greenspan was being to hawkish while tech was coming off 50% that autumn. Damned if you do damned if you don't. Greenspan instead listened to the 2yr Treasury market. As he should. He didn't set policy he just implemented it. Treasury traders had voice. If you remember there was curve inversion a couple of brief times.
2. Treasury traders were accepting of low yield because in toto they've seen this coming for years. That caused the incredibly weird ying-yang effect of low risk free yields virtually forcing yield hungry institutional investors into crap. I've thought about it a lot but I see no rate policy course by the Fed that would've relieved this. One thing is certain though. We would've been better off going into a protracted depression in 2002 than this. Once again though 20/20 hindsight. At the time the Maestro played the tune we wanted to hear.....
Quote from BlindLemonBoosh:
We seem to be trying to accomplish different things here. I'm not trying to micro-analyze, but, rather attempt to provide an accurate broad viewpoint. International market correlations increase during sharp downturns. I postulated that, because of the size of the US economy (more than 3X as big as the second largest economy), a sharp decline in the US economy and equity markets would, as a general rule, induce contagion in the world economy & markets. In any event, here are some links which indicate that the premise of increased international correlations during sharp downdrafts is not a figment of my imagination.
http://corporate.morningstar.com/ib/documents/MediaMentions/ReevaluatingAssetAllocMay08.pdf
http://rfs.oxfordjournals.org/cgi/content/abstract/3/2/281
http://www.informaworld.com/smpp/content~content=a758238070~db=all~order=page
http://ideas.repec.org/p/ebg/heccah/0646.html
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.7.9644
http://www.hec.edu/hec/fr/professeurs_recherche/upload/cahiers/6461999.pdf
http://www.feb.ugent.be/fac/research/Proefschriften/Abstracts/inghelbrecht_abstract_eng.pdf
Whether or not other countries contribute to the problem is beyond the scope of my original argument. However, if we consider that the combined size of the Euro 'economy' is even greater than that of the US, AND that their banks are even more screwed up than ours - well... it safe to say that we all have a bit of a problem on our hands.
Quote from Pa(b)st Prime:
Greenspan instead listened to the 2yr Treasury market. As he should. He didn't set policy he just implemented it. Treasury traders had voice.
well bernanke is doing the same. in fact you could argue he was an even better trader because he faded the TIPS and the commodity market and turns out he was right. if things get out of hand down the road he can always raise
Quote from Daal:
well bernanke is doing the same. in fact you could argue he was an even better trader because he faded the TIPS and the commodity market and turns out he was right. if things get out of hand down the road he can always raise
I was critical of Bernanke but yes in retrospect he was right-although Gold at almost $900 an oz is saying something. Just the same in the next year or two Treasuries will ALSO implode and I'm sure critics of Bernanke will assign him part of the blame, lol.