What Really Changed ?...2007-2008 ?

L

libertad

When one awoke in 2008....versus 2007....did the actual physical resources actually change to the degree that the paper economics were halved ?

Were the actual resources halved ?

Or just access to these resources via prices ?

Or is it some form of groups of legalities regarding contractual arrangements and therefore paper solvency ?

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Therefore it is economic paper solvency and not physical asset solvency that is the issue....
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This is called legal agreement paper price adjustments on physical assets and services....

The physicals have not changed anywhere close to what paper legal arrangements have changed.....
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Being truly poor is when the physical assets are not present....

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Remember at some price it works....

Tent cities besides rows of empty houses void of people ....forever ?

No........

Justs lots of asset ownership shifting at lower prices.......
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ie...

Average before.....

House: $200,000
Car: $25,000

Average after.....

House: $70,000
Car: $10,000


All businesses adjust to the new offerings.....
 
Buckminster Fuller the self taught genius inventor, architect (the Geodesic dome), and philosopher defined Real Wealth is that which supports x number of human lives , x number of forward days - and said that 'money' is not Wealth. - - Of course its all a rather curious illusion, and in some distant future historians may look back on all this and be perplexed - "What were they all thinking?"
In the meantime - - - we're in this time & place, and the illusion can run you over and put your family out on the streets - - so we play the cards we're dealt. - - -

P.S. - - Admitedly this is a broader and more philosophical response. You may have been thinking only in terms of the current financial account books melt down. I've been in a more philosophical mood lately - - - helps me to put it in perspective & laugh a little during all of this.
 
What this lends itself to.....is the clear distinction between paper and physical wealth....

In a paper way....everything has changed....

In a physical way....what has changed ?

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Another view is.....

There exists a big box....containing many prices and things....

At the beginning, there were $25 Trillion in paper agreements
in the box.....whereby the possibility of total prices paid for things was a cumulative $25 Trillion......

The ink on the paper changed to reflect $10 Trillion.....the possibility of total prices of all things now being $10 Trillion.....

The inked prices on the paper could change again.....in either direction....But the things will stay the same....


Thus why keep changing the ink on the paper ?
 
Quote from 1 in 100:

in many ways it would be so much easier to just ignore the great unwashed

but I won't

OP you've been here long time and you still don't understand how bubbles work

quick lesson............It was NOT value to begin with, fake value, get it ?
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But that would mean that financial companies were posting fake profits the past 8 years, but giving their execs real bonuses...

Isn't that called "fraud"?
 
Quote from 1 in 100:

in many ways it would be so much easier to just ignore the great unwashed

but I won't

OP you've been here long time and you still don't understand how bubbles work

quick lesson............It was NOT value to begin with, fake value, get it ?
More...

great unwashed????

Think you are the one missing the fact that what you posted is what he is stating in his usual rhetorical fashion.
 
Quote from libertad:

What this lends itself to.....is the clear distinction between paper and physical wealth....

In a paper way....everything has changed....

In a physical way....what has changed ?

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/B]
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Libertad;
Long term trend of some market averages changed,clearly in 2008.

And fewer bought into the idea or the physical part;
that a depreciating asset like a car is wealth:cool:
 
Good points.....

The real point is that the US has the physical assets needed to thrive.....and will again....

Some countries do not....and just seem to stumble around forever....

In each ¨bubble¨series.... lessons are learned....maybe.....

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The tough issue at the moment is the decision between socialistic versus capitalistic solutions.....

There are tools available this time around....that were not available last time around....
 
Value, whether physical or paper, is psychological. All of economics is psychology and so physcal assets 'value' are just as prone to the whims of people.
 
This is a good view as well.......

And the physical is given the legal tag called price....which is a paper agreement....

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The expansion of credit happened in an advanced way on a per capita basis in the US over an extended period of time...ie families having an average of less than one car...to an average of more than one car.....an average 1400sq ft house grew to an average 2100 sq ft house.....even as the number of people increased....

What´s happening now is that leverage sources supplied by the core suppliers temporarily blew out their accounts.....

And just because they blew out their accounts does not mean they cannot come back....

In fact....it may even be that next time around.....the peaks could be even more extended.....as more tools stack up in the tool box....

The argument being that capitalism will allow for higher peaks....as well as more lengthy troughs....

Thus one of the next upper enabling tools is a bigger and better world wide stock exchange.....and perhaps structural reforms such as a low level consumption tax....with more constraints on legal largesse....internet woven into education and medicine...etc...new innovations....etc.....

What the US has proven is that they are one of the countries which have pulled it off in the past.....and thus will be the most likely one to pull it off in the future....be it property rights....whatever....

As many other countries that have resources just cannot seem to advance past first base....

One has to look past the mistakes....and start shaping what will create the future peaks....and troughs....
 
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