Gloom, Doom, or Boom? Finance and Economics

Now, what news on the Rialto?
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Azrael
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Azrael »

Typhoon wrote:The US is fortunate to have captive rating agencies.
What's stopping the Europeans from creating captive rating agencies of their own? Actually . . . [Googling] . . . Fitch Ratings, one of the big three credit rating agencies, is owned by Fitch Group, which is a majority-owned subsidiary of Financière Marc de Lacharrière, a French credit rating and risk management corporation.
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Typhoon »

Azrael wrote:
Typhoon wrote:The US is fortunate to have captive rating agencies.
What's stopping the Europeans from creating captive rating agencies of their own?
Don't know.
Azrael wrote: Actually . . . [Googling] . . . Fitch Ratings, one of the big three credit rating agencies, is owned by Fitch Group, which is a majority-owned subsidiary of Financière Marc de Lacharrière, a French credit rating and risk management corporation.
Interesting.
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Re: Gloom, Doom, or Boom? Finance and Economics

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AP | Casinos embraced to fight economic slump, with New York leading the way
Once worried about their societal costs, states have embraced casinos to stimulate tourism and boost revenue.
NEW YORK — A Malaysian company’s plan to build a $4 billion convention center and big-time casino on the outskirts of New York City could be the biggest shot fired yet in a tourism arms race that has seen a growing number of Eastern states embrace gambling as a way to lure visitors and drum up revenue.

New York Gov. Andrew Cuomo announced last week that he would work with the Genting Group, one of the world’s largest and most successful gambling companies, to transform the storied, but sleepy, Aqueduct horse track into a megaplex that would eventually include the nation’s largest convention center, 3,000 hotel rooms, and a major expansion of a casino that began operating at the site in October.

The proposal came less than two months after once-puritanical Massachusetts passed a law allowing up to three resort casinos, plus a slot machine parlor, at locations around the state.

Ohio is poised to see its first commercial casinos open this year, after voters approved up to four gambling halls in 2009. Maryland’s first casino opened last year, with more on the way. Pennsylvania’s first casinos opened in 2006, and already the state is threatening to surpass Atlantic City as the nation’s second-largest gambling market.

And in Florida, lawmakers are hotly debating a whopper of a bill that would allow up to three multibillion-dollar casinos, plus additional slot machines at dog and horse tracks. Genting appears confident the law will pass. It has already spent around $450 million to acquire waterfront property in Miami, where it wants to build a $3.8 billion complex that would include a casino, dozens of restaurants and a shopping mall.

States have embraced casinos, after years of trepidation about their societal costs, for two simple reasons: a promise of a rich new revenue source, plus the possibility of stimulating tourism.
Always looked at casinos as a form of voluntary additional taxation and wealth transfer.
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Marcus »

Typhoon wrote:Always looked at casinos as a form of voluntary additional taxation and wealth transfer.
Casinos/gambling are a manifestation of the social rejection of predestining the future by means of hard work and saving and the acceptance of luck in their place. Men do not learn from experience, if they did there'd be no such thing as casinos. Men learn by faith or the lack of it.

Casinos are a symptom of our social disorder. We are, quite probably, a dying society.

In my opinion, that is . . .
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The future of gold?

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Azrael wrote:How would a collapse of the gold bubble -- the return of the price of gold to a more reasonable level -- launch hyperinflation? How would the gold price going down cause most other prices to go way up? Wouldn't the price of gold going down make the price of jewelry go down, the price of electronics that use gold go down, the price of gold coins go down, etc.?
Azrael, so where then is gold going in the near term . . the next five to ten years? Gold is a pretty big deal up here in Alaska as you might imagine. We visited Dawson City in the Yukon this past summer and were told that the neighboring hills have more prospectors and miners crawling around in them now than were there during the Klondike gold rush.

Where's gold going? Anyone?
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Re: The future of gold?

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Marcus wrote:
Azrael wrote:How would a collapse of the gold bubble -- the return of the price of gold to a more reasonable level -- launch hyperinflation? How would the gold price going down cause most other prices to go way up? Wouldn't the price of gold going down make the price of jewelry go down, the price of electronics that use gold go down, the price of gold coins go down, etc.?
Azrael, so where then is gold going in the near term . . the next five to ten years?
I don't know. I wish I did. I could make a lot of money if I could accurately predict the future price of gold or any other commodity.
Gold is a pretty big deal up here in Alaska as you might imagine. We visited Dawson City in the Yukon this past summer and were told that the neighboring hills have more prospectors and miners crawling around in them now than were there during the Klondike gold rush.
I would imagine so, considering how high the price is now. There's a fair amount of small scale gold mining going on in California as well.
Where's gold going? Anyone?
I don't know, but it would probably be a good idea to have a bit of one's equity holdings in mining companies as a hedge against inflation and to take advantage of any possible increase in demand. Perhaps buy Rio Tinto (RIO). They mine for all sorts of things. They end up with a lot of gold when they go after copper.
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Azrael
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Azrael »

Marcus wrote:
Typhoon wrote:Always looked at casinos as a form of voluntary additional taxation and wealth transfer.
Casinos/gambling are a manifestation of the social rejection of predestining the future by means of hard work and saving and the acceptance of luck in their place.
But there is a middle position: perhaps one can't know whether or not there is any sort of predestining and perhaps hard work, saving and luck all play a role.
Men do not learn from experience, if they did there'd be no such thing as casinos.
Gambling isn't "rational", but the compulsion to do it isn't mysterious, either. Gambling is essentially operant conditioning with a variable ratio schedule of positive reinforcement. The same thing works with mice, pigeons, rats, etc.
Men learn by faith or the lack of it.
People's faith certainly effects how they interpret what occurs to them.
Casinos are a symptom of our social disorder. We are, quite probably, a dying society.
Perhaps. It could certainly be interpreted as a sign of governments taking the easy way out when faced with tough budgetary choices.
In my opinion, that is . . .
Thanks.
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Re: The future of gold?

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Azrael wrote:. . it would probably be a good idea to have a bit of one's equity holdings in mining companies as a hedge against inflation and to take advantage of any possible increase in demand. . .
In 1965 I bought a brand-new, 1965, full-size, Chevy pickup with their largest 6-cylinder engine for, if memory serves, about $2,000. Today, as of this minute, 2000 silver dollars is worth $39,400, way more than enough to buy the comparable truck today.

Speaking of small-scale mining in California, back in 1959 we used to pan the American River between Colfax and Placerville . . shinny down the slopes to the river and snipe the crevasses in the bed-rock. Gold was, I think, $32/ounce at that time.

Inflation with a vengeance . . :shock:
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Re: The future of gold?

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Marcus wrote:
Azrael wrote:How would a collapse of the gold bubble -- the return of the price of gold to a more reasonable level -- launch hyperinflation? How would the gold price going down cause most other prices to go way up? Wouldn't the price of gold going down make the price of jewelry go down, the price of electronics that use gold go down, the price of gold coins go down, etc.?
Azrael, so where then is gold going in the near term . . the next five to ten years? Gold is a pretty big deal up here in Alaska as you might imagine. We visited Dawson City in the Yukon this past summer and were told that the neighboring hills have more prospectors and miners crawling around in them now than were there during the Klondike gold rush.

Where's gold going? Anyone?
No expert, however:

Image

Gold looks like it's had quite a run, but appears to have recently stalled.

Donning my Captain Obvious cap, I think that the time to buy it was when the original internet bubble burst ~ 2000.

Now is the time to mine it. :wink:
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Marcus
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Re: The future of gold?

Post by Marcus »

Typhoon wrote:. . I think that the time to buy it was when the original internet bubble burst ~ 2000.

;) . . . :D
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The "Wiggle Room" chart

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http://www.economist.com/blogs/graphicd ... fsrc=gn_ep

http://www.zerohedge.com/news/presentin ... eveloped-w

This might get interesting...a battle between a diner's dilemma and volunteer's dilemma game theory on a grand scale.
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Nonc Hilaire »

With a run up that fast a correction was predictable. If gold closes above 1705 tomorrow that would break the downtrend.

The sad thing is you don't actually have more value when gold goes up. It really just that fiat is worth less.
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Re: Gloom, Doom, or Boom? Finance and Economics

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Nonc Hilaire wrote:With a run up that fast a correction was predictable. If gold closes above 1705 tomorrow that would break the downtrend.

The sad thing is you don't actually have more value when gold goes up. It really just that fiat is worth less.
That signals the potential of inflation?
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Marcus »

Parodite wrote:
Nonc Hilaire wrote:With a run up that fast a correction was predictable. If gold closes above 1705 tomorrow that would break the downtrend.

The sad thing is you don't actually have more value when gold goes up. It really just that fiat is worth less.
That signals the potential of inflation?
That'd be my guess . . as Nonc said, our dollars will be worth less. Read "take more of them to buy whatever." As I understand it, the very definition of inflation is "an increase in the money supply." If gold goes up, it's simply a recognition of how many dollars are floating around out there.
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Nonc Hilaire »

Parodite wrote:
Nonc Hilaire wrote:With a run up that fast a correction was predictable. If gold closes above 1705 tomorrow that would break the downtrend.

The sad thing is you don't actually have more value when gold goes up. It really just that fiat is worth less.
That signals the potential of inflation?
An overall inflation seems inevitable, but right now we are experiencing inflation in some areas and deflation in others. I'm not an expert - I'm just like everyone else and trying to cover my ass in all this confusion so do your own research.

A good source for learning about gold and Austrian economics is http://www.professorfekete.com/. .
Professor Fekete
not only knows his stuff, he is quite readable for the layman. Most of the usual internet sources are selling something, fear mongering or just plain gobbledygook.
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Re: Gloom, Doom, or Boom? Finance and Economics

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http://www.atimes.com/atimes/Global_Eco ... 8Dj02.html

this article is close to my own illformed, barely expressible sense of things.
Socialism is a bit like that old joke about everyone wanting to go to heaven but no one wanting to die quite yet.
Whatever be the argument of the Keynesians and Krugman acolytes, the simple fact is that the collapse of Lehman Brothers in 2008 did more to reduce systemic risk than all the subsequent action of governments keen to preserve economic status quo.

Creative destruction, a term coined ironically enough by a Frenchman (Schumpeter), is like the small forest fires that keep things tidy. Stop these fires - as others have pointed out - and you merely lay the ground work for an impossible-to-control conflagration that wipes out forests and cities next to the forests.
None of the above though should be construed as my belief is laissez-faire capitalism. Far from it, I believe that capitalism is the best system mankind has tried, but it remains far from perfect. The simple tale of Mexican billionaires goes to show the unintended effects of socialism.

All too often calls to discipline capitalism are made by people who previously failed to police the systems under their supposed regulatory controls. Failing to keep pace with technological changes and failing to grasp the unintended effects of liberalization (on the one end) and market intervention (on the other), central banks made a complete meal out of the risks in the global financial system in the years before the financial crisis.

Asking people with such poor skills to now introduce new regulations and assume greater power over economies is akin to one handing over a delicate garland of pearls to a hungry monkey. Even so, there is need for greater regulation and policing of the global economy as well as its various component parts ranging from trade to finance. The real trouble is the absence of credible institutions with which to execute such regulation and policing.

Until credible politicians come along, we will be forever at the mercy of assorted Pied Pipers, who shall play the sweet-sounding but meaningless tunes of stability and equality from the land of Humbug.
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Re: Gloom, Doom, or Boom? Finance and Economics

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Ritholz | Living in a QE World
All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE
Image

Image

Image
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Re: Gloom, Doom, or Boom? Finance and Economics

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The Great Swindle
Image

Read it carefully.

http://www.marxist.com/usa-crisis-of-ca ... umbers.htm
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Re: Gloom, Doom, or Boom? Finance and Economics

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its a crisis of nanny state socialism.

its cute how it all went pearshaped in these graphs during the 80's.. that was my sense of it aswell... before the 80's we were free and didnt have to queue up for permission to live our lives, nor justify it against worst case paranoid scenarios.
But as the Marxists have always explained, credit is a very precarious foundation on which to build an economy. By 2007 and 2008, it was clear that the fictitious “prosperity” was hanging by a thread.
i suspect you will find that old school liberal capitalists think likewise.

its only post-history moderns who think leveraging yourself to within an inch of your income with no buffer against bad times is the best way to do it... they come in left wing socialist krugman flavours and right wing share market tycoon flavours.. in fact those two groups feed off each other and enable each other and then blame each other....

greece and germany spring to mind :P
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Enki »

noddy wrote:its a crisis of nanny state socialism.

its cute how it all went pearshaped in these graphs during the 80's.. that was my sense of it aswell... before the 80's we were free and didnt have to queue up for permission to live our lives, nor justify it against worst case paranoid scenarios.
But as the Marxists have always explained, credit is a very precarious foundation on which to build an economy. By 2007 and 2008, it was clear that the fictitious “prosperity” was hanging by a thread.
i suspect you will find that old school liberal capitalists think likewise.

its only post-history moderns who think leveraging yourself to within an inch of your income with no buffer against bad times is the best way to do it... they come in left wing socialist krugman flavours and right wing share market tycoon flavours.. in fact those two groups feed off each other and enable each other and then blame each other....

greece and germany spring to mind :P
Yes, I've noticed this problem. People defending anything that resembles a business these days. If you point out that some forms of business practice are shady, you get accused of being 'anti-business'. The reality is we've got some predatory monopolies and credit market manipulators out there. This IS NOT a free-market at work. The market is being grifted from every angle.
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Re: Gloom, Doom, or Boom? Finance and Economics

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Some part of the divergence in the first plot is due to the rise of

1/ automation; and

2/ offshoring

However, having said that it's not clear that a FIRE [finance, insurance, and real estate] based economy creates new wealth rather than concentrating it.
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Simple Minded »

regarding Endovelico's post "The Great Swindle."

I read the article several times, each time it still seemed nonsensical to me. Wow, I thought my extremely limited mental capacity forced me to adopt an overly simplied view of the world. The author has me beat by a mile. He must have a brain like a possum.

To ignore about 17.625 bazillion variables and boil most of the 20th century down to free markets vs. leftist government central planning........ I need to see the kiddy version of this movie. I can't quite get there from here.

couple thoughts regarding the graphs:
- During the previous bubble in financial assests, the rich gained disproportionately because they held more of the appreciating assets.
- If the bull market occurred in cow manure, dairy farmers would have become the evil rich of the 1920s.
- During the reversion to the mean, the Great Depression, the rich lost wealth disproprotionately.
- Several years of the most destructive war ever known in industrialized coutries, creates several decades of work for laborers rebuilding....... everything!!
- Several years of killing millions of young people in war eliminate economic competitors for those lower paying jobs. Menial wages will rise. Supply and demand.
- Any surprise that the decades following WWII was a lucrative period to be a laborer?
- Destroying capital assests to obtain the wealth of rebuilding is the classic example of the discredited "broken window" theory of economics. If it actually worked, people would be burning down their houses (and maybe even killing their children?) to become rich.
- Repeating the 1930s and 1940s will no doubt lead to several decades of necessary regrowth and a large demand for labors. So would moving mountains and paving roads by hand instead of using heavy equipment.
- From what I recall hearing from my elders, very few who were alive in Europe in the 1930s and 1940s would recommend going back.... even if it resulted in several decades of the boom period that followed.
- Based on the graphs, is a repeat of The Great Depression inevitable?

Gotta love the true believers, history is meaningless to them. A leap of faith that would make the most zealous evangelist proud.
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Re: Gloom, Doom, or Boom? Finance and Economics

Post by Simple Minded »

If you look at the graph from 1947 to about 1995?, one could come to the conclusion that if the previous generation wages a huge war, and the war ends when you are less than 10 years old, or born within 10 years of the war ending..... that was brilliant economic central planning..... for your generation.
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Re: Gloom, Doom, or Boom? Finance and Economics

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Ultrafast Trades Trigger Black Swan Events Every Day
The US financial markets have suffered over 18,000 extreme price changes caused by ultrafast trading, according to a new study of market data between 2006 and 2011
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Re: Gloom, Doom, or Boom? Finance and Economics

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Meanwhile in Canada . . .

Bloomberg | Toronto Condo Bubble Risk Topping New York
Toronto has more skyscrapers and high-rises under construction than any North American city -- almost three times as many as New York -- stoking debate on whether the condominium market in Canada’s largest city is headed for a U.S.-style correction as prices rise and household borrowing hits a record.
Toronto has 148 high-rises and skyscrapers being built, compared with 59 tall buildings for No. 2-ranked New York City, and 22 in Chicago, according to Emporis, a Hamburg-based building data company.
Wow.
The country’s financial authorities have become increasingly vocal about the housing market. The heads of Bank of Montreal and Royal Bank of Canada (RY); the country’s banking regulator, and Bank of Canada Governor Mark Carney have all expressed concerns about the condo markets in recent months as cranes and construction crews swamp Toronto.
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