Over 75 years ago Wall Street Crashed; but today the New Crash is already underway...

[eusdaiki]

Quote from brettman9:


And what can the fed do in a world like that? Credit?

Hence the question: can the FED, SEC and all the other organisms that were created after the 29 crash prevent such a crash from happening again?

If the answer is no [as it appears to be]. Then what good are those organisms?


The only thing they've managed to do is build an illusion of economic prosperity. And while the S&P dropped 50% since it's 2005 high... the charts show a bull market and new "record highs" simply because they are expressed in dollars that are worth less every day.

Gold is the only constant in monetary economics. Everything else is relative. Fiat money is an illusion.

 

[oddiduro]

Quote from eusdaiki:

Hence the question: can the FED, SEC and all the other organisms that were created after the 29 crash prevent such a crash from happening again?

If the answer is no [as it appears to be]. Then what good are those organisms?


The only thing they've managed to do is build an illusion of economic prosperity. And while the S&P dropped 50% since it's 2005 high... the charts show a bull market and new "record highs" simply because they are expressed in dollars that are worth less every day.

Gold is the only constant in monetary economics. Everything else is relative. Fiat money is an illusion.

Most everything is an illusion.

Much like "live" television.

The people today know of nothing more than what exists. Most of the proles don't even know that how banking or markets work. If they can cash their checks they can feed, f*ck, and fantasize.

Simulated wealth will keep the masses going for awhile, then the market crashes, assets are sold on the cheap, more government dependence is created, people spend money again, and the cycle starts over.

We have an excellent opportunity to accumulate wealth on the downside of this market, pick up assets, and sell them off at the top of the new bubble.

The sky will fall on some, but that is unavoidable. Just make sure that the sky doesn't fall on you.

Best Regards
Oddi

 

[trefoil]

oddi: precisely.

 

[BCE]

BTW here's a link to the Frontline show called "The Crash" circa 1999 about the Thailand meltdown/LTCM debacle. Including this timeline.
http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/cron.html
Frontline has some great shows. Used to be able to watch the whole show online, but maybe this is too old.
http://www.pbs.org/wgbh/pages/frontline/shows/crash/

It's interesting how the funds needed to work with these situations has changed over the years as this quote shows.
"Sept. 23, 1998
Pushed by the New York Federal Reserve, a consortium of leading US financial institutions provides a <b>$3.5 billion</b> bailout to Long Term Capital Management, one of the largest US hedge funds, amidst fears that a collapse could worsen the panic in the financial markets."

 

[oddiduro]

Quote from BCE:

BTW here's a link to the Frontline show called "The Crash" circa 1999 about the Thailand meltdown/LTCM debacle. Including this timeline.
http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/cron.html
Frontline has some great shows. Used to be able to watch the whole show online, but maybe this is too old.
http://www.pbs.org/wgbh/pages/frontline/shows/crash/

It's interesting how the funds needed to work with these situations has changed over the years as this quote shows.
"Sept. 23, 1998
Pushed by the New York Federal Reserve, a consortium of leading US financial institutions provides a <b>$3.5 billion</b> bailout to Long Term Capital Management, one of the largest US hedge funds, amidst fears that a collapse could worsen the panic in the financial markets."

This demonstrates what I am trying to tell people. LTCM defined the end of one bubble. BSC defines the end of this bubble. Goldman may define the next bubble. Be thankful that you are a speculator, and can take advantage of all this.

Best Regards
Oddi

 

[brettman9]

Quote from eusdaiki:

The only thing they've managed to do is build an illusion of economic prosperity. And while the S&P dropped 50% since it's 2005 high... the charts show a bull market and new "record highs" simply because they are expressed in dollars that are worth less every day.

Gold is the only constant in monetary economics. Everything else is relative. Fiat money is an illusion.

OK, I'll take the other side of that one.

1.
Don't forget that the debt supercycle of the past two decades has been accompanied by changes so powerful that it's becoming difficult to even relate to how you lived your daily life, accomplished little tasks, and set your goals just ten years ago.

It's easy to take for granted the incredible acceleration of progress in virtually every aspect of experience. But note that that curve was founded by the same force that has us bemoaning the destabilizing conditions today: rampant expansion of credit. It is the lifeblood of capitalizing risky ideas. And risky-idea capitalization is precisely how you're reading this right now!

The ability to surround every new innovative idea instantly with financial, human, and physical capital both requires a flexible system of credit and is a prerequisite to rapid technological development.

Do you really feel like your unprecendented convenience and luxury today is an illusion? It's a damn good one. Look at your computer sitting in front of you. Nice, hunh? Now think of a question. Any question provided the answer is some fact about the universe that humans somewhere have the answer to. Now google it. Would have been tough to figure out the diameter of the moon in ten seconds 25 years ago, hunh?

Now, Consider Buying Power: I can buy today for less than a thousand dollars many things that I could not buy a decade ago for all the money in the world. That's an infinite increase in buying power. And it spans many sectors of the economy. Quality change is simply not quantifiable. So quantitative economics just disregards it. And they tell you your buying power has decreased. My ass. I can get a tiny handheld device that would have been more powerful than most of the world's computers in the 70's. And I can afford it with less than one week of work today.


2.
systems evolution generally encounters a stage known as cybernetic coordination. The thermostat-controlled AC in your home is an example. So is your central nervous system relative to your multicellularity. Another example is the emergence of the nucleus in eukaryotic cells. Central banking is quite simply the addition of a cybernetic 'thermostat' on an economic system. It's a bit klunky at this point. But give it a couple centuries and it will take us places that would be entirely unreachable in a pure decentralized non-fiat system.

3.
The disadvantages are clear. Occasional destabilization that is probably possibly fatal to the system at the absolute tail. But that's unlikely enough that i don't mind the risk, and I don't mind if things are fucked up for the next 3-5 years. It's a worthwhile tradeoff, even when it fails.


I don't know if I agree with the above, but it seemed like an interesting position to take...so have at it.

 

[eusdaiki]

Quote from brettman9:

OK, I'll take the other side of that one.

1.
Don't forget that the debt supercycle of the past two decades has been accompanied by changes so powerful that it's becoming difficult to even relate to how you lived your daily life, accomplished little tasks, and set your goals just ten years ago.

It's easy to take for granted the incredible acceleration of progress in virtually every aspect of experience. But note that that curve was founded by the same force that has us bemoaning the destabilizing conditions today: rampant expansion of credit. It is the lifeblood of capitalizing risky ideas. And risky-idea capitalization is precisely how you're reading this right now!

The ability to surround every new innovative idea instantly with financial, human, and physical capital both requires a flexible system of credit and is a prerequisite to rapid technological development.

Do you really feel like your unprecendented convenience and luxury today is an illusion? It's a damn good one. Look at your computer sitting in front of you. Nice, hunh? Now think of a question. Any question provided the answer is some fact about the universe that humans somewhere have the answer to. Now google it. Would have been tough to figure out the diameter of the moon in ten seconds 25 years ago, hunh?

Now, Consider Buying Power: I can buy today for less than a thousand dollars many things that I could not buy a decade ago for all the money in the world. That's an infinite increase in buying power. And it spans many sectors of the economy. Quality change is simply not quantifiable. So quantitative economics just disregards it. And they tell you your buying power has decreased. My ass. I can get a tiny handheld device that would have been more powerful than most of the world's computers in the 70's. And I can afford it with less than one week of work today.


2.
systems evolution generally encounters a stage known as cybernetic coordination. The thermostat-controlled AC in your home is an example. So is your central nervous system relative to your multicellularity. Another example is the emergence of the nucleus in eukaryotic cells. Central banking is quite simply the addition of a cybernetic 'thermostat' on an economic system. It's a bit klunky at this point. But give it a couple centuries and it will take us places that would be entirely unreachable in a pure decentralized non-fiat system.

3.
The disadvantages are clear. Occasional destabilization that is probably possibly fatal to the system at the absolute tail. But that's unlikely enough that i don't mind the risk, and I don't mind if things are fucked up for the next 3-5 years. It's a worthwhile tradeoff, even when it fails.


I don't know if I agree with the above, but it seemed like an interesting position to take...so have at it.

1.
You can observe Moore's law throughout human history, technology has always grown exponentially. We had huge leaps in innovation during the Victorian era and the early 1900's. The function grows exponentially despite fiat money, not thanks to it.
Technology is a wonderfull field because it proves that deflation doesn't kill businesses, it makes them stronger and more efficient.




2.
The problem here is that you're trying to control a system that is far too complex, and it gets more and more complex every minute. It's like trying to control the weather, we can barely predict with some certainty wich way is the market going. But no one, can control the market. No laws, no central banks.
Market dinamics will prevail in the end, and the attempt to control from the gov only makes matters worse.

3.
Yes, the problem is that you can't use your master card to pay for your visa and use your visa to pay your american express... You might be able to do it for some time, but sooner or later the numbers get ugly... The US has been accumulating debt like crazy eversince the 70's when Bretton-Woods ended.

Walking out of Bretton Woods was the second most stupid thing done in the last half century. No 1 goes to Bush... walking out of the ABM treaty.

All hail to the Chimp!

 

[vedantatrader]

Human Action, Mises wrote:

The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

and.....

In the eyes of cranks and demagogues, interest is a product of the sinister machinations of rugged exploiters. The age-old disapprobation of interest has been fully revived by modern interventionism. It clings to the dogma that it is one of the foremost duties of good government to lower the rate of interest as far as possible or to abolish it altogether. All present-day governments are fanatically committed to an easy money policy.[2]


This is what Marc Faber said recently, Jim Rogers and Robert Schiller, Peter Schiff and a many others wo are not so well known.

Marc Faber was questioned on TV that Bernanke was an expert on the Great Depression and there was no one better to deal with this situation. Faber said that what caused the Great Depression was the easy monetary policy between 1924-1930.

http://video.google.com/videoplay?d...=73&start=0&num=10&so=0&type=search&plindex=7

 

[libertad]

Excellent Commentary

...............................................................................

Modern credit is what frees value.... thus leveraging a value to do other things.....

If one wanted truer stability in the individualized credit which frees up and leverages value....then one could think collective concepts....

For example....cars

Cars could be thought of as a perpetual valuation per user....which would be part of a consumption tax....and every individual would have access....

Economic rewards would be rewarded to those who cause broadbased efficiencies....

After all....the car segment is just an ever moving aggregated number....as is everything else....

And this would be a way to stabilize production....thereby reducing collective risks....

 

[SouthAmerica]

.

March 17, 2008

SouthAmerica: It seems to me that the Federal Reserve and the US government are in total PANIC mode right now. And the Panic is spreading around the world.

The article said: “The markets responded negatively to the purchase of Bear Stearns over the weekend by JPMorgan Chase.”

Maybe the markets were expecting that the US government was going to nationalize the Bear Stearns companies at this point – maybe the market has recognized that all they are doing right now with this deal it is contaminating another big American bank – JPMorgan Chase - and probably compounding future possible problems that are on the pipeline for that bank.


**********


Major Stock Markets in Asia Tumble
By MARTIN FACKLER
Published: March 17, 2008
The New York Times

TOKYO — Major Asian stock markets fell sharply Monday as pessimism continued to spread despite the Fed’s dramatic moves over the weekend, sending Tokyo’s benchmark index to a three-year low.

The markets responded negatively to the purchase of Bear Stearns over the weekend by JPMorgan Chase. The acquisition, backed by the Federal Reserve, underscored the severity of the credit crisis in the United States and the weakness of the American economy.

In Tokyo, the region’s largest stock exchange, the benchmark Nikkei 225 index was trading at an almost three-year low. By midday, the index dropped 4.2 percent to 11,726.99, falling below 12,000 for the first time since August 2005.

Elsewhere in Asia, South Korea’s benchmark Kospi index was also down 2.4 percent. Australia’s S&P/ASX 200 index fell 2.4 percent, and in New Zealand, the NZX 50 index dropped 1.9 percent.

The declines in Tokyo came even as the Japanese central bank, the Bank of Japan, moved to shore up financial markets by injecting $4.1 billion into short-term money markets.

Asian stocks have also been hurt by the weakness of the dollar, which erodes the value in local currencies of overseas profits and forces big exporters like Toyota and Sony to raise prices in foreign markets.

Source: http://www.nytimes.com/2008/03/17/world/asia/17market.html?ref=world

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