Jump to content
House Price Crash Forum

Bubble That Broke The World


Recommended Posts

From: http://elainemeinelsupkis.typepad.com/money_matters/

A wonderful dawn for the wizards of finance! Throwing away all caution, the biggest financial houses in the world have convinced the biggest central banks to arbitrarily reduce to cost of borrowing money so the savings crisis in the West can get much worse. I found an online book that talks about the Great Depression the same way as I do: the collapse in the USA was triggered by the collapse of the German and British empires who couldn't pay off the increasing volume of debt they took on due to their wasteful, dangerous war called WWI. Only this book, which I have never read before, was written in the early 1930s! Wow. There is no excuse for misunderstanding how excessive credit can cause a sudden decompression of credit!

Link to post
Share on other sites
From: http://elainemeinelsupkis.typepad.com/money_matters/

A wonderful dawn for the wizards of finance! Throwing away all caution, the biggest financial houses in the world have convinced the biggest central banks to arbitrarily reduce to cost of borrowing money so the savings crisis in the West can get much worse. I found an online book that talks about the Great Depression the same way as I do: the collapse in the USA was triggered by the collapse of the German and British empires who couldn't pay off the increasing volume of debt they took on due to their wasteful, dangerous war called WWI. Only this book, which I have never read before, was written in the early 1930s! Wow. There is no excuse for misunderstanding how excessive credit can cause a sudden decompression of credit!

Manias, Panics and Crashes by Charles Kindelberger is probably the best book that I have read on crashes, and he subscribes to the theory that it is all about credit getting too loose. You are correct though in that the cause of crashes has been known for a long time.

Link to post
Share on other sites

I've just been watching the 'Money As Debt' video and although I have watched it before it now seems more relevant to what is happening at the moment.

It mentions the drying up of credit which cause the 1929 depression - perhaps we are only a couple of years away from this again? The video also mentioned that tinkering around the edges of the debt based system is not sufficient for it to keep existing in it's current form.

The party will come to an end sooner or later and I wouldn't trust gold as my only savings (so what can we do?) as the governments and banks will have plans for debasing its usefulness.

Link to post
Share on other sites
I've just been watching the 'Money As Debt' video and although I have watched it before it now seems more relevant to what is happening at the moment.

It mentions the drying up of credit which cause the 1929 depression - perhaps we are only a couple of years away from this again? The video also mentioned that tinkering around the edges of the debt based system is not sufficient for it to keep existing in it's current form.

The party will come to an end sooner or later and I wouldn't trust gold as my only savings (so what can we do?) as the governments and banks will have plans for debasing its usefulness.

interestingly, the US banks were protected for years during the great depression.

It wasnt until the money really ran out that they let the market destroy a lot of banks and within weeks the depression ended.

Link to post
Share on other sites
I wouldn't trust gold as my only savings (so what can we do?)

Get real stuff, anything thats real that you can keep at home and will use yourself diesel. toilet rolls, tinned food, reams of paper, batteries, booze etc. Nothing can devalue the usefulness these assets have to you.

Some gold and silver of course.

Unless you are 100% certain the current money system will fail totally (I am not)some in it - pension funds, NS&I etc.

Please advise how gold's usefulness can be debased.

Gold is excellent as money and has a few other minor uses. (jewellrey is to some extent a store of value=savings=money(it is seen this way particularly in India))

With the most powerful nations that have ever existed trying to devalue gold it has to be somewhat risky, 100% gold is therefore very risky

.

interestingly, the US banks were protected for years during the great depression.

It wasnt until the money really ran out that they let the market destroy a lot of banks and within weeks the depression ended.

The austrian approach, let the free market be really free no bailouts=bankrupsy=asset auctioned=person that can make best use of it aquires it=economic recovery

Link to post
Share on other sites
From: http://elainemeinelsupkis.typepad.com/money_matters/

A wonderful dawn for the wizards of finance! Throwing away all caution, the biggest financial houses in the world have convinced the biggest central banks to arbitrarily reduce to cost of borrowing money so the savings crisis in the West can get much worse. I found an online book that talks about the Great Depression the same way as I do: the collapse in the USA was triggered by the collapse of the German and British empires who couldn't pay off the increasing volume of debt they took on due to their wasteful, dangerous war called WWI. Only this book, which I have never read before, was written in the early 1930s! Wow. There is no excuse for misunderstanding how excessive credit can cause a sudden decompression of credit!

Just finished reading it.

Great stuff and amazingly familiar.

"10 years of credit expansion"

"you can't send the sherriff to foreclose if the debt is overseas"

"the bankers don't know where the losses are. And what can be done about it? Nothing"

"what does the buyer of a foreign bond get? They got a promise...It is a promise that is designed to be kept by the children of men now living. That bond rely upon the people of the Japan taxing themselves a generation from now to pay back the principal of that bond to the children of the person who invests in that bond today...it is a startling idea."

Thanks for this!

Link to post
Share on other sites
Manias, Panics and Crashes by Charles Kindelberger is probably the best book that I have read on crashes, and he subscribes to the theory that it is all about credit getting too loose. You are correct though in that the cause of crashes has been known for a long time.

...I thought Gordo was an educated man ....obviously his education took him in the wrong direction ....there is education and education ...then there is common sense ....when will he realise the inflation bubble is not the way to go forward.... ?... :ph34r::ph34r::ph34r:

Edited by South Lorne
Link to post
Share on other sites
Guest grumpy-old-man
...I thought Gordo was an educated man ....obviously his education took him in the wrong direction ....there is education and education ...then there is common sense ....when will he realise the inflation bubble is not the way to go forward.... ?... :ph34r::ph34r::ph34r:

just think, they have the biggest bubble ever & they know it's just about to pop....imo....they really just don't know what to do now.....it's just a game of who is going to get the blame now........who do you think will get the blame......?

the BoE, the government or both ?? :ph34r::ph34r:

oops, missed the obvious one......can they blame it ALL on the US.

Edited by grumpy-old-man
Link to post
Share on other sites
Guest DissipatedYouthIsValuable
Please advise how gold's usefulness can be debased.

By making it into Sovereigns and putting it in those awful rings and necklaces.

Edited by DissipatedYouthIsValuable
Link to post
Share on other sites
just think, they have the biggest bubble ever & they know it's just about to pop....imo....they really just don't know what to do now.....it's just a game of who is going to get the blame now........who do you think will get the blame......?

the BoE, the government or both ?? :ph34r::ph34r:

oops, missed the obvious one......can they blame it ALL on the US.

....when you have / had 'authorised' lenders offering 'sub prime BTL mortgages' among other interesting offerings in the UK, apparently, without any regulatory control, the pointing figure goes one way only .....the Government...after all who is defined as responsible in the 'tripartite' management between the Treasury, BofE and FSA .....ah well ..they didn't get round to agreeing that after almost ten years .... :ph34r::ph34r::ph34r:

Link to post
Share on other sites

I read a paper on the great depression. Having read here many times how it was some kind of "typical" examples it was fascinating to read just how unique the conditions were and how poor the decisions made at the time were too. The conclusion I drew was that it is very unlikely we will ever see this again. For example we now well know that the government could have ended it much sooner if it had made decisions that now seem normal to us but were unheard of at the time.

Comparing to 1930s economics is about as useful as comparing to 1930s technology. Things really have changed. Go get yaself a good book if you arent familiar enough with events to get this :).

Link to post
Share on other sites
I read a paper on the great depression. Having read here many times how it was some kind of "typical" examples it was fascinating to read just how unique the conditions were and how poor the decisions made at the time were too. The conclusion I drew was that it is very unlikely we will ever see this again. For example we now well know that the government could have ended it much sooner if it had made decisions that now seem normal to us but were unheard of at the time.

Comparing to 1930s economics is about as useful as comparing to 1930s technology. Things really have changed. Go get yaself a good book if you arent familiar enough with events to get this :).

..the economics of greed never change....it was so in '29 ...and the same ingredient is there for the '08 recession...sadly a big boogie depression .... :ph34r:

Edited by South Lorne
Link to post
Share on other sites
I read a paper on the great depression. Having read here many times how it was some kind of "typical" examples it was fascinating to read just how unique the conditions were and how poor the decisions made at the time were too. The conclusion I drew was that it is very unlikely we will ever see this again. For example we now well know that the government could have ended it much sooner if it had made decisions that now seem normal to us but were unheard of at the time.

Comparing to 1930s economics is about as useful as comparing to 1930s technology. Things really have changed. Go get yaself a good book if you arent familiar enough with events to get this :).

The really interesting thing about the great depression is it shows that every time the government interferes, they wreck the ability of people to plan ahead and therefore make things worse. Capitalism is all about saving today so you can do more tomorrow and that's damn hard to do when idiots keep changing the rules every five minutes.

And they are doing the exact same thing this time.

The only real solution to a market proble is to let the market sort it out. But that means bank failures and the death of our overbearing, expensive state so it will be fought all the way... making the whole thing much, much worse.

Link to post
Share on other sites
I read a paper on the great depression. Having read here many times how it was some kind of "typical" examples it was fascinating to read just how unique the conditions were and how poor the decisions made at the time were too. The conclusion I drew was that it is very unlikely we will ever see this again. For example we now well know that the government could have ended it much sooner if it had made decisions that now seem normal to us but were unheard of at the time.

Comparing to 1930s economics is about as useful as comparing to 1930s technology. Things really have changed. Go get yaself a good book if you arent familiar enough with events to get this :).

Tell that to the Japanese!

Link to post
Share on other sites
Tell that to the Japanese!

Damn right. When a public stop spending, the government will have to get very creative. I don't know everything the Japanese tried, but the certainly had the 0% rates to help the banks out. They also tried massive government spending, but I think we don't have the scope to do that.

I guess they could try

Abolish stamp duty

Abolish HIPS

No VAT on conveyancing

Tax relief on mortgage interest

Abolish ISAs

Increase tax on savings

Legal cap on credit card rates

Link to post
Share on other sites
Damn right. When a public stop spending, the government will have to get very creative. I don't know everything the Japanese tried, but the certainly had the 0% rates to help the banks out. They also tried massive government spending, but I think we don't have the scope to do that.

I guess they could try

Abolish stamp duty

Abolish HIPS

No VAT on conveyancing

Tax relief on mortgage interest

Abolish ISAs

Increase tax on savings

Legal cap on credit card rates

Interested in the 0% Japanese rates, there were a number of well informed sounding posts saying that those rates were for external consumption only. I can't find the thread. However, be that as it may, were the Japanese 0% rates actually covering up for insolvent banks?

I wonder, because I have little confidence that the BoE (or treasury or FSA) would tell us if banks went to the wall, they'd try to cover-up, and Mervyn has said that is what he'd do.

Is there evidence that the Japanese recession was prolonged at all by Banking failures that the Government tried to prop up?

I am increasingly coming to the view that the only sensible approach is to do away with all central bank intervention in banking failures, and allow the markets (and consumers) to make decisions for themselves. This is an Augean Stables situation, and we need to just wash away all the [email protected] from the banking sector. Covering up just makes the smell worse in the long term!

Link to post
Share on other sites
...I thought Gordo was an educated man ....obviously his education took him in the wrong direction ....there is education and education ...then there is common sense ...

There is something deeply wrong with that man. He's spent too much time obsessively studying what made people 'great' or 'courageous'; then somehow spends his entire political career bending over for the opinion polls & the bankers.

Link to post
Share on other sites
Interested in the 0% Japanese rates, there were a number of well informed sounding posts saying that those rates were for external consumption only. I can't find the thread. However, be that as it may, were the Japanese 0% rates actually covering up for insolvent banks?

I wonder, because I have little confidence that the BoE (or treasury or FSA) would tell us if banks went to the wall, they'd try to cover-up, and Mervyn has said that is what he'd do.

Is there evidence that the Japanese recession was prolonged at all by Banking failures that the Government tried to prop up?

I am increasingly coming to the view that the only sensible approach is to do away with all central bank intervention in banking failures, and allow the markets (and consumers) to make decisions for themselves. This is an Augean Stables situation, and we need to just wash away all the [email protected] from the banking sector. Covering up just makes the smell worse in the long term!

The Japanese situation is now a totaly controlled con trick on the Japanese people according to many accounts Ive read, they of course dont have access to the 0% rates, this is used to keep the Yen down against the $ £ and E etc so the big industrialists can sell to them (all aided and abeted by western banks etc re the carry trade). Japanese CPI is very much manipulated and used to keep wages and pensions etc down. Its many years since Japanese companies realy looked after their workers and most dont get those perks anymore even though they are still expected to work free overtime and never take their holidays etc. As a trick economy, it cant work if repeated all over the world, the Japs already hate China for pulling similar tricks (without US approval though). We couldnt get away with it, however Im sure the big VI's and BOE will try something to keep their bonus flow cash positive. A race to the bottom is what I would call it.

Link to post
Share on other sites
Is there evidence that the Japanese recession was prolonged at all by Banking failures that the Government tried to prop up?

I am increasingly coming to the view that the only sensible approach is to do away with all central bank intervention in banking failures, and allow the markets (and consumers) to make decisions for themselves. This is an Augean Stables situation, and we need to just wash away all the [email protected] from the banking sector. Covering up just makes the smell worse in the long term!

BoJ bail-out example.

Bad loans kept on Japanese bank balance sheets.

Still, it didn't stop them selling me a Toyota :lol:

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.