Great Depression’ ahead?

Discussion of current events
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Milo
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Re: Great Depression’ ahead?

Post by Milo » Sat Oct 13, 2018 2:21 am

neverfail wrote:
Fri Oct 12, 2018 10:24 pm
Doc wrote:
Fri Oct 12, 2018 7:58 pm
neverfail wrote:
Thu Oct 11, 2018 12:38 am
Thanks Milo.

Over the past decade I have been aware that governments in both the US and Europe have only treated the symptoms, not the root causes, of the 2007-08 GFC crash. I have long believed that their lack of action in structural reform have damned our world to a plunge into very hard times reminiscent of the Great Depression of the 1930's era. :(

They have wasted an entire decade through inaction on reform.

The current Trump tax cut (not tax reform) powered 4% plus non-sustainable US growth rate has convinced Trump devotees (poor deluded sods) that the current POTUS is the new messiah; the font of all wisdom in matter economic. They are soon to learn that they are watching the last brilliant sunset afterglow before darkness sets in.

A very long and very dark night to come.
Andrea Mitchell's husband is no longer chairman of the federal reserve. From 2000 until 2012 the world poverty rate fell by 15%
Alan Greenspan must have foreseen that conditions were ripe for the coming GFC that erupted the year after his final one on the Federal Reserve Board (2006). That way he was able to dodge the blame. Poor Bob Bernache! He gained the position in time to have to answer a lot of awkward questions soon after.

(Moral to story: if you want to go into retirement with the myth of your infallible wisdom intact; do what Alan Greenspan did and know the right time to quit - even if it sets your successor in office up to be the fall guy after you are gone. ;) )

Doc: the IMF warning suggests that even the cleverest Federal Reserve Board chairman will not be able to save the World from the catastrophe it is now poised on.
I don't buy that narrative about Greenspan, he was almost two years gone when that crisis occurred. In any event, it's not the OMC's job to prevent market downturns forever.

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cassowary
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Re: Great Depression’ ahead?

Post by cassowary » Sat Oct 13, 2018 3:55 am

The biggest threat to the world economy is government debt. The US, EU, and Japan are highly in debt. How did this happen?

neverfail
Posts: 2726
Joined: Sun Dec 18, 2016 3:47 am

Re: Great Depression’ ahead?

Post by neverfail » Sat Oct 13, 2018 4:28 am

Milo wrote:
Sat Oct 13, 2018 2:21 am
neverfail wrote:
Fri Oct 12, 2018 10:24 pm


Alan Greenspan must have foreseen that conditions were ripe for the coming GFC that erupted the year after his final one on the Federal Reserve Board (2006). That way he was able to dodge the blame. Poor Bob Bernache! He gained the position in time to have to answer a lot of awkward questions soon after.

(Moral to story: if you want to go into retirement with the myth of your infallible wisdom intact; do what Alan Greenspan did and know the right time to quit - even if it sets your successor in office up to be the fall guy after you are gone. ;) )

Doc: the IMF warning suggests that even the cleverest Federal Reserve Board chairman will not be able to save the World from the catastrophe it is now poised on.
I don't buy that narrative about Greenspan, he was almost two years gone when that crisis occurred.
You don't need to wait until the first drops fall to realise that it is going to rain. You just look up at the shy and take note of the thick bank of dark clouds drifting your way,

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Sertorio
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Re: Great Depression’ ahead?

Post by Sertorio » Sat Oct 13, 2018 7:59 am

cassowary wrote:
Sat Oct 13, 2018 3:55 am
The biggest threat to the world economy is government debt. The US, EU, and Japan are highly in debt. How did this happen?
Government debt is only problematic if it is placed abroad.

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cassowary
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Re: Great Depression’ ahead?

Post by cassowary » Sat Oct 13, 2018 8:53 am

Sertorio wrote:
Sat Oct 13, 2018 7:59 am
cassowary wrote:
Sat Oct 13, 2018 3:55 am
The biggest threat to the world economy is government debt. The US, EU, and Japan are highly in debt. How did this happen?
Government debt is only problematic if it is placed abroad.
True to some extent. They can always print more money. But you will get inflation.

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Sertorio
Posts: 1925
Joined: Fri Dec 16, 2016 3:12 am

Re: Great Depression’ ahead?

Post by Sertorio » Sat Oct 13, 2018 8:59 am

cassowary wrote:
Sat Oct 13, 2018 8:53 am
Sertorio wrote:
Sat Oct 13, 2018 7:59 am
cassowary wrote:
Sat Oct 13, 2018 3:55 am
The biggest threat to the world economy is government debt. The US, EU, and Japan are highly in debt. How did this happen?
Government debt is only problematic if it is placed abroad.
True to some extent. They can always print more money. But you will get inflation.
No need to print money. If the interest rate is good, there will always be takers...

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Milo
Posts: 1489
Joined: Thu Dec 15, 2016 10:14 pm

Re: Great Depression’ ahead?

Post by Milo » Sat Oct 13, 2018 9:14 am

cassowary wrote:
Sat Oct 13, 2018 8:53 am
Sertorio wrote:
Sat Oct 13, 2018 7:59 am
cassowary wrote:
Sat Oct 13, 2018 3:55 am
The biggest threat to the world economy is government debt. The US, EU, and Japan are highly in debt. How did this happen?
Government debt is only problematic if it is placed abroad.
True to some extent. They can always print more money. But you will get inflation.
Or you can make the payments and everything is fine.

neverfail
Posts: 2726
Joined: Sun Dec 18, 2016 3:47 am

Re: Great Depression’ ahead?

Post by neverfail » Sat Oct 13, 2018 2:16 pm

Yet all the diplomatic speak in the world can’t sugarcoat the roughly $250 trillion crisis unfolding in slow motion. That’s the level to which the world’s debt burden ballooned since the Lehman crash. That’s 18 times China’s annual gross domestic product.

And with official rates from Washington to Tokyo still at ultra-low levels historically, there’s little ammunition to battle the next reckoning.
http://www.atimes.com/article/great-dep ... e-warning/

Print money in the midst of a shrinking economy and it is a gilt-edged guarantee of high inflation.

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Doc
Posts: 2201
Joined: Thu Dec 15, 2016 7:09 pm
Location: Cradle To Grave

Re: Great Depression’ ahead?

Post by Doc » Sat Oct 13, 2018 10:10 pm

Milo wrote:
Sat Oct 13, 2018 2:21 am
neverfail wrote:
Fri Oct 12, 2018 10:24 pm
Doc wrote:
Fri Oct 12, 2018 7:58 pm
neverfail wrote:
Thu Oct 11, 2018 12:38 am
Thanks Milo.

Over the past decade I have been aware that governments in both the US and Europe have only treated the symptoms, not the root causes, of the 2007-08 GFC crash. I have long believed that their lack of action in structural reform have damned our world to a plunge into very hard times reminiscent of the Great Depression of the 1930's era. :(

They have wasted an entire decade through inaction on reform.

The current Trump tax cut (not tax reform) powered 4% plus non-sustainable US growth rate has convinced Trump devotees (poor deluded sods) that the current POTUS is the new messiah; the font of all wisdom in matter economic. They are soon to learn that they are watching the last brilliant sunset afterglow before darkness sets in.

A very long and very dark night to come.
Andrea Mitchell's husband is no longer chairman of the federal reserve. From 2000 until 2012 the world poverty rate fell by 15%
Alan Greenspan must have foreseen that conditions were ripe for the coming GFC that erupted the year after his final one on the Federal Reserve Board (2006). That way he was able to dodge the blame. Poor Bob Bernache! He gained the position in time to have to answer a lot of awkward questions soon after.

(Moral to story: if you want to go into retirement with the myth of your infallible wisdom intact; do what Alan Greenspan did and know the right time to quit - even if it sets your successor in office up to be the fall guy after you are gone. ;) )

Doc: the IMF warning suggests that even the cleverest Federal Reserve Board chairman will not be able to save the World from the catastrophe it is now poised on.
I don't buy that narrative about Greenspan, he was almost two years gone when that crisis occurred. In any event, it's not the OMC's job to prevent market downturns forever.
GReenspan sold out then got out. He had a good idea of what was coming. He knew that his loose credit polices would eventually crash the markets Why else was he so defensive WRT Michael Burry?

https://en.wikipedia.org/wiki/Michael_B ... ent_career
In 2005, Burry started to focus on the subprime market. Through his analysis of mortgage lending practices in 2003 and 2004, he correctly forecast that the real estate bubble would collapse as early as 2007. Burry's research on the values of residential real estate convinced him that subprime mortgages, especially those with "teaser" rates, and the bonds based on these mortgages, would begin losing value when the original rates were replaced by much higher rates, often in as little as two years after initiation. This conclusion led Burry to short the market by persuading Goldman Sachs and other investment firms to sell him credit default swaps against subprime deals he saw as vulnerable. This analysis proved correct, and Burry profited accordingly.[10][11][12] Burry has since said, "I don't go out looking for good shorts. I'm spending my time looking for good longs. I shorted mortgages because I had to. Every bit of logic I had led me to this trade and I had to do it."[9]

https://www.nytimes.com/2010/04/04/opinion/04burry.html
I Saw the Crisis Coming. Why Didn’t the Fed?

By MICHAEL J. BURRYAPRIL 3, 2010
Continue reading the main story
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Cupertino, Calif.

ALAN GREENSPAN, the former chairman of the Federal Reserve, proclaimed last month that no one could have predicted the housing bubble. “Everybody missed it,” he said, “academia, the Federal Reserve, all regulators.”

But that is not how I remember it. Back in 2005 and 2006, I argued as forcefully as I could, in letters to clients of my investment firm, Scion Capital, that the mortgage market would melt down in the second half of 2007, causing substantial damage to the economy. My prediction was based on my research into the residential mortgage market and mortgage-backed securities. After studying the regulatory filings related to those securities, I waited for the lenders to offer the most risky mortgages conceivable to the least qualified buyers. I knew that would mark the beginning of the end of the housing bubble; it would mean that prices had risen — with the expansion of easy mortgage lending — as high as they could go.

I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers — those with the weakest credit. The lenders generally then sold these risky loans to Wall Street to be packaged into mortgage-backed securities, thus passing along most of the risk. Increasingly, lenders concerned themselves more with the quantity of mortgages they sold than with their quality.

Meanwhile, home buyers, convinced by recent history that real estate prices would always rise, readily signed onto whatever mortgage would get them the biggest house. The incentive for fraud was great: the F.B.I. reported that its mortgage fraud caseload increased fivefold from 2001 to 2004.
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

neverfail
Posts: 2726
Joined: Sun Dec 18, 2016 3:47 am

Re: Great Depression’ ahead?

Post by neverfail » Sat Oct 13, 2018 11:16 pm

Thanks Doc.

I was only making an educated guess that Greenspan ( I do not believe his denial, do you?) may have opted for retirement when he did in order to preserve his image as a superb, long incumbent, FED chairman for posterity. Your above links go a long way towards confirming my suspicion that it may have been so.

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