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Financial disaster in Europe
Posted: 20 September 2011 07:39 PM   [ Ignore ]   [ # 31 ]
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No, what I meant was that the unproductive would decode themselves as unproductive if after, say, one year they are still unable to find a job.

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Posted: 21 September 2011 05:43 PM   [ Ignore ]   [ # 32 ]
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You mean I have to turn myself in to the fertilizer grinding machine because I haven’t been able to find a job since 1993?  That’s when I retired and I haven’t been looking for one, but that certainly shouldn’t be an excuse, right?  LOL

Occam

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Posted: 21 September 2011 05:52 PM   [ Ignore ]   [ # 33 ]
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Actually, I have no idea where I was going with this.  confused

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Posted: 26 September 2011 12:12 AM   [ Ignore ]   [ # 34 ]
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Occam. - 21 September 2011 05:43 PM

You mean I have to turn myself in to the fertilizer grinding machine because I haven’t been able to find a job since 1993?  That’s when I retired and I haven’t been looking for one, but that certainly shouldn’t be an excuse, right?  LOL

Occam

LOL
Don’t do it Occam!
I know what you’re referring to and let me tell you…
what an awkward experience that movie was.


Junior in High School, cutie date at the drive-in
I kept trying to watch the movie while she kept trying to make out, how sweet it was

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Posted: 26 September 2011 12:15 AM   [ Ignore ]   [ # 35 ]
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Oh,
but yea,
Europe is going to hell,
because they tried to pretend that the American Dream would work for them too . . . . . . .

as it has for us. . .

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Posted: 26 September 2011 06:40 PM   [ Ignore ]   [ # 36 ]
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Eurozone quagmire.

From Paul Krugman’s 25th September article at the NYT

Euro Zone Death Trip

They’ll probably find a way to provide more credit to countries in trouble, which may or may not stave off imminent disaster. But they don’t seem at all ready to acknowledge a crucial fact — namely, that without more expansionary fiscal and monetary policies in Europe’s stronger economies, all of their rescue attempts will fail.

Now, from this 26th September article at the BBC

Bank shares rally on hopes of eurozone debt deal

50% write-down of Greece’s debt:

They are expected to involve a 50% write-down of Greece’s massive government debt, the BBC’s business editor Robert Peston says.

More financial firepower to the EFSF:

The package is expected to involve a quadrupling - from the current projected level of 440bn euros - in the firepower of the eurozone’s main bailout fund, the EFSF.

Will this strategy work at all or will Krugman be proven correct?

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Posted: 26 September 2011 10:14 PM   [ Ignore ]   [ # 37 ]
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kkwan - 26 September 2011 06:40 PM

namely, that without more expansionary fiscal and monetary policies in Europe’s stronger economies, all of their rescue attempts will fail.

Isn’t this the crux of the problem,

we need expansion,

but we live on a finite planet, where expansion has been driving the economy for thousands of years,

But, something seems genuinely different this time around.

Could it be we are bumping up against the limits of growth?

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Posted: 27 September 2011 10:32 AM   [ Ignore ]   [ # 38 ]
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citizenschallenge.pm - 26 September 2011 10:14 PM

Isn’t this the crux of the problem,

we need expansion,

but we live on a finite planet, where expansion has been driving the economy for thousands of years,

But, something seems genuinely different this time around.

Could it be we are bumping up against the limits of growth?


Yes, I think we are. According to this site,

http://www.footprintnetwork.org/en/index.php/GFN/page/earth_overshoot_day/

today we reached the overshoot day. Every year, we consume everything plus an extra 35%. So if we insist asking for expansion and growth, well, things will get really difficult.

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Posted: 27 September 2011 09:55 PM   [ Ignore ]   [ # 39 ]
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citizenschallenge.pm - 26 September 2011 10:14 PM

Isn’t this the crux of the problem,

we need expansion,

but we live on a finite planet, where expansion has been driving the economy for thousands of years,

But, something seems genuinely different this time around.

Could it be we are bumping up against the limits of growth?

That may generally be so wrt the limits of growth globally, but in the context of Europe now:

Some stimulus and growth is necessary for recovery instead of just austerity. That is the crucial point which Krugman makes in his 25th September article:

But exports can’t boom if creditor countries are also implementing austerity policies, quite possibly pushing Europe as a whole back into recession.

This is the Paradox of thrift. From the wiki HERE

The paradox states that if everyone tries to save more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. The paradox is, narrowly speaking, that total savings may fall even when individual savings attempt to rise, and, broadly speaking, that increases in savings may be harmful to an economy.

The problem is, according to Krugman, in his article HERE

Does Economics Still Progress?

I’ve written a lot about the Dark Age of macroeconomics, of the way economists are recapitulating 80-year-old fallacies in the belief that they’re profound insights, because they’re ignorant of the hard-won insights of the past.

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Posted: 27 September 2011 11:11 PM   [ Ignore ]   [ # 40 ]
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All I know from my past life in the stock market is when the world and his wife is worried about the problem, presidents, breakfast TV hosts and people on message boards like this are talking about it, it’s time to “fill your boots”.

Stephen

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Posted: 29 September 2011 12:24 AM   [ Ignore ]   [ # 41 ]
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I don’t know how wide spread the expression fill your boots is.

Here is the origin of it: http://www.theanswerbank.co.uk/Phrases-and-Sayings/Question408054.html

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Posted: 29 September 2011 09:57 PM   [ Ignore ]   [ # 42 ]
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StephenLawrence - 29 September 2011 12:24 AM

I don’t know how wide spread the expression fill your boots is.

Here is the origin of it: http://www.theanswerbank.co.uk/Phrases-and-Sayings/Question408054.html

That’s great, thanks for the definition,
i’m pleased to know it clicked before I read the link   wink

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Posted: 29 September 2011 10:28 PM   [ Ignore ]   [ # 43 ]
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From Wiki,

The Modern Theory
The modern theory suggests that income distribution, plays an important role in the determination of aggregate economic activity and economic growth.
The credit market imperfection approach, developed by Galor and Zeira (1993), demonstrates that inequality in the presence of credit market imperfections has a long lasting detrimental effect on human capital formation and economic development.[32]
The political economy approach, developed by Alesian and Rodrik 1994) and Persson and Tabellini (1994), suggests that inequality is harmful for economic development because inequality generates a pressure to adopt redistributive policies that have an adverse effect on investment and economic growth.[33]
Evidence
Perotti (1996) examines of the channels through which inequality may affect economic growth. He shows that in accordance with the credit market imperfection approach, inequality is associated with lower level of human capital formation and higher level of fertility, while lower level of human capital is associated with lower growth and lower levels of economic growth. In contrast , his examination of the political economy channel refutes the political economy mechanism. He demonstrates that inequality is associated with lower levels of taxation, while lower levels of taxation, contrary to the theories, are associated with lower level of economic growth

http://en.wikipedia.org/wiki/Economic_growth#The_Effect_of_Inequality_on_Economic_Growth

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Posted: 01 October 2011 03:27 AM   [ Ignore ]   [ # 44 ]
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StephenLawrence - 27 September 2011 11:11 PM

All I know from my past life in the stock market is when the world and his wife is worried about the problem, presidents, breakfast TV hosts and people on message boards like this are talking about it, it’s time to “fill your boots”.

Stephen

Volatility in the global stock and commodities markets with indexes gyrating up and down in the last one month or so, the rush to consolidate to US Treasuries or to gold, reflect the expectation of many investors of an impending global economic/financial crisis leading to a double dip recession verses others who are more optimistic.

“Good news is bad and bad news is good” is how one trader described it. It is surreal.  gulp

Fiscally, the US government is dysfunctional with the Republicans and Democrats bashing each others’ proposals. Unemployment remains very high at 9.1%, with fragile growth and companies neither investing nor hiring because there is no visibility and/or low demand.  The housing market is still in the doldrums. The banks are still holding vast sub prime loans in their balance sheets. The Fed. is impotent, with no effective monetary bullets left besides QE3 to create more money. OTOH, QE is not a magic bullet, it has implications wrt credibility, inflation and is equivalent to devaluation. 

The US (0.25%), UK(0.5%) and Japan(0.1%) are all caught in a liquidity trap.

In Europe, (without fiscal union) the Eurozone have unsolvable systemic problems wrt the Euro, and Greece with their huge sovereign debts (growth is -5%), on the brink of default, Spain and Italy are at risk as well, France and Germany (only nominal growth in the last quarter) with their banks vulnerable to a possible 50% haircut on their holdings of Greek bonds. There are also their Spanish and Italian bonds as well. The issues of the Euro and sovereign debts is an unfathomable conundrum which will take many years to resolve. There is no quick solution.

China is caught in the dollar trap (70% of their reserves are invested in the US) with relatively high 6% domestic inflation as well. The Chinese, with their factories running on wafer thin profits geared to full production for export are damned worried. Any substantial drop in demand will spell instant bankruptcy for many of them.

In general, all of Asia is caught in the middle. If the US and Europe slip into recession, Asia will be badly affected as well because Asia mainly export their products to them.

It is an interdependent world and it is not a pretty picture now, more gloom than bloom.

If, “fill your boots” means to “take full advantage”, then consider consolidating to cash by selling some of your investments in stocks/mutual funds etc. (if you have any). In a recession/depression, cash is king.

However, please don’t blame me if it turns out not to be so bad after all. cheese

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Posted: 01 October 2011 02:13 PM   [ Ignore ]   [ # 45 ]
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kkwan - 01 October 2011 03:27 AM

If, “fill your boots” means to “take full advantage”, then consider consolidating to cash by selling some of your investments in stocks/mutual funds etc. (if you have any). In a recession/depression, cash is king.

The idea is take full advantage by buying!

The stockmarket is low when people are fearful about the future.

It’s a bit like betting on horses kkwan, it don’t matter which is most likely to win, it matters if the odds are good value or not, if you bet when the odds are good value, overall you’ll win.

Same with the stockmarket, the fear, when high enough, makes the price good value.

We can tell it’s high enough when the world and his wife is talking about the impending doom.

So that’s the reason to fill your boots.

edit:

kkwan - 01 October 2011 03:27 AM

However, please don’t blame me if it turns out not to be so bad after all. cheese

I’ll add, it’s not a question of whether it turns out so bad, it probably will, it’s a question of whether how bad it’s gonna turn out is “priced in”. If it is the market will go up regardless, that’s the way it works. The bookie buys on expected bad news and sells on expected good news, the punters do the opposite, the bookie generally makes money out of the punters.

Stephen

[ Edited: 02 October 2011 12:41 AM by StephenLawrence ]
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