Brace for $5 gas, Shell exec warns U.S.

[krazy]

I was pumpin' 3.39 over at some other city cause I had no gas to get home.. and when I get home gas is only 3.25 

 

[martin and co]

Originally Posted by devildog1776

Whoever said that this is fear mongering is as dumb as rocks . 6 dollar gasoline is in our future . Sooner than later too

You're right, former oil industry executives who's pension is based on oil company stock have nothing to gain from promoting increased speculation of petroleum-based commodities. 
Also, thank you for the intricate explanation of the reasoning behind 6 dollar gas, I really enjoyed it. 

 

[martin and co]

Originally Posted by devildog1776

Whoever said that this is fear mongering is as dumb as rocks . 6 dollar gasoline is in our future . Sooner than later too

You're right, former oil industry executives who's pension is based on oil company stock have nothing to gain from promoting increased speculation of petroleum-based commodities. 
Also, thank you for the intricate explanation of the reasoning behind 6 dollar gas, I really enjoyed it. 

 

[damn its me]

OP please change thread title to Method Man and his economy debates*

 

[damn its me]

OP please change thread title to Method Man and his economy debates*

 

[Methodical Management]

Very little was reiterated, as the general consensus in the thread is that domestic production will somehow decrease the price of oil, whereas I stated increasing domestic production would make no difference. 

The whole point of MANY posts in this topic was to disabuse people of the notion that this is somehow related to domestic production (drill, baby, drill!) or increased demand.  You're basically co-signing the same folks you just insulted. 

I need not provide any credentials, as I do not present myself as any kind of authority. I clearly stated I am only presenting my take on the subject(s) at hand for anyone who would care to read it.

Oh, I see... so YOU don't have to provide credentials - but you're bashing me because:  "Quoting a rolling stones article nor getting a degree in economics provides you with credentials."
How was my attempt to post a link that other people found worthwhile any more "pseudo-intellectual" than your take on the subject?  I didn't assume any authority and, in fact, deferred to other sources I found worthwhile.  Say, Pot, have you met my friend Kettle?  You two have so much in common. 

You know full well I did not mean the Homestead act was a "soviet" thing; you're smarter than that. What you discussed is the government taking part in something that is by every definition communism, and if it where to do that, what would the implication be on.....everything? Would supply of housing and construction be controlled by the government like in the former Soviet Union? You clearly see housing as some sort of right, so if the government were to "nationalize" it, I guess you think they should also nationalize the production and distribution of food? What then, private industry?�

Right, because it's all or nothing and the first Homestead Act led us down the path to unadulterated socialism.  You could've applied the same ridiculous, "slippery slope" logic to your own support for socialized medicine. 
I get the sense that you just felt like being a jerk for some reason and, when push comes to shove, that's all it boils down to: hostility for the sake of hostility.  

Really, what is people's problem today?

Edit: what are all these question mark�symbols?
For whatever reason, whenever you embed a video the system converts a nbsp to that symbol.  They lock down flash to prevent abuse.  It's like in the old days when you couldn't type the word applet.  
As for bikes, the infrastructure issue is glaring and obvious, but it's not as though steps can't be taken to improve public transportation.  As you can see, Tokyo's doing a good job of improving the ability of commuters to pair bikes with the rail system, for example, which is especially useful for urban dwellers, but even if you're short on money you can still implement a system like the BRT in Curitiba and get a ton of bang for your buck.  

The Segway was designed to solve the problems you're referring to, as they're far more compact, but they're also impossibly over-engineered, which meant that, instead of "changing the world," all it did was change the way lazy millionaires get to their mailboxes.  Obviously our interstate highway system was predicated on access to a cheap and inexhaustible supply of oil.  The writing's been on the wall for decades now regarding inefficiency of our gasoline fueled suburban sprawl, but to this point we've managed to muster little more than a collective shrug in response.  

Kind of a shame that we have no money left to modernize our transportation infrastructure... 

 

[Methodical Management]

Very little was reiterated, as the general consensus in the thread is that domestic production will somehow decrease the price of oil, whereas I stated increasing domestic production would make no difference. 

The whole point of MANY posts in this topic was to disabuse people of the notion that this is somehow related to domestic production (drill, baby, drill!) or increased demand.  You're basically co-signing the same folks you just insulted. 

I need not provide any credentials, as I do not present myself as any kind of authority. I clearly stated I am only presenting my take on the subject(s) at hand for anyone who would care to read it.

Oh, I see... so YOU don't have to provide credentials - but you're bashing me because:  "Quoting a rolling stones article nor getting a degree in economics provides you with credentials."
How was my attempt to post a link that other people found worthwhile any more "pseudo-intellectual" than your take on the subject?  I didn't assume any authority and, in fact, deferred to other sources I found worthwhile.  Say, Pot, have you met my friend Kettle?  You two have so much in common. 

You know full well I did not mean the Homestead act was a "soviet" thing; you're smarter than that. What you discussed is the government taking part in something that is by every definition communism, and if it where to do that, what would the implication be on.....everything? Would supply of housing and construction be controlled by the government like in the former Soviet Union? You clearly see housing as some sort of right, so if the government were to "nationalize" it, I guess you think they should also nationalize the production and distribution of food? What then, private industry?�

Right, because it's all or nothing and the first Homestead Act led us down the path to unadulterated socialism.  You could've applied the same ridiculous, "slippery slope" logic to your own support for socialized medicine. 
I get the sense that you just felt like being a jerk for some reason and, when push comes to shove, that's all it boils down to: hostility for the sake of hostility.  

Really, what is people's problem today?

Edit: what are all these question mark�symbols?
For whatever reason, whenever you embed a video the system converts a nbsp to that symbol.  They lock down flash to prevent abuse.  It's like in the old days when you couldn't type the word applet.  
As for bikes, the infrastructure issue is glaring and obvious, but it's not as though steps can't be taken to improve public transportation.  As you can see, Tokyo's doing a good job of improving the ability of commuters to pair bikes with the rail system, for example, which is especially useful for urban dwellers, but even if you're short on money you can still implement a system like the BRT in Curitiba and get a ton of bang for your buck.  

The Segway was designed to solve the problems you're referring to, as they're far more compact, but they're also impossibly over-engineered, which meant that, instead of "changing the world," all it did was change the way lazy millionaires get to their mailboxes.  Obviously our interstate highway system was predicated on access to a cheap and inexhaustible supply of oil.  The writing's been on the wall for decades now regarding inefficiency of our gasoline fueled suburban sprawl, but to this point we've managed to muster little more than a collective shrug in response.  

Kind of a shame that we have no money left to modernize our transportation infrastructure... 

 

[wawaweewa]

It's a simple concept at its core.

Low interest rates encourage borrowing. Near zero rates encourage rampant speculation. If you can borrow at near 0 then you do unless you're an idiot. Especially when you know there's someone else to backstop your losses if any occur. All that money that you borrowed has to be put to work. You don't just sit on it like a schmuck.

The next question becomes not what you can speculate in but what you can't  speculate in. Whatever's not in that category you throw your !%%+@@$ capital at because, after all, you did borrow it at near zero and you'll only need to be correct a small percentage of the time to reap significant profits. This is discounting the fact that you know there's a backstop in case your positions blow up on you.

Extremely low rates encourage widespread (irresponsible) borrowing, you're forced to throw capital at nearly everything that you can (which you believe has the ability mania ---> price ramps)  because you know others will as well. Then you have the fact that at the very least this is technically inflationary which breeds others to crowd into the trade to hedge against inflation.

A similar thing happened in 2006. The housing market was showing signs of blowing up (as a result of fed rate hikes over the previous quarters), so the speculators who realized that had to find another market to speculate in. Commodities it was.

This can and will go on as long as the rates are kept low. They got done with equities (about 6 months back; run out of steam there), now they're unto commodities. Low interest rates breed speculation. That's what they're designed to do.

 

[wawaweewa]

It's a simple concept at its core.

Low interest rates encourage borrowing. Near zero rates encourage rampant speculation. If you can borrow at near 0 then you do unless you're an idiot. Especially when you know there's someone else to backstop your losses if any occur. All that money that you borrowed has to be put to work. You don't just sit on it like a schmuck.

The next question becomes not what you can speculate in but what you can't  speculate in. Whatever's not in that category you throw your !%%+@@$ capital at because, after all, you did borrow it at near zero and you'll only need to be correct a small percentage of the time to reap significant profits. This is discounting the fact that you know there's a backstop in case your positions blow up on you.

Extremely low rates encourage widespread (irresponsible) borrowing, you're forced to throw capital at nearly everything that you can (which you believe has the ability mania ---> price ramps)  because you know others will as well. Then you have the fact that at the very least this is technically inflationary which breeds others to crowd into the trade to hedge against inflation.

A similar thing happened in 2006. The housing market was showing signs of blowing up (as a result of fed rate hikes over the previous quarters), so the speculators who realized that had to find another market to speculate in. Commodities it was.

This can and will go on as long as the rates are kept low. They got done with equities (about 6 months back; run out of steam there), now they're unto commodities. Low interest rates breed speculation. That's what they're designed to do.

 

[martin and co]

Originally Posted by Method Man

Very little was reiterated, as the general consensus in the thread is that domestic production will somehow decrease the price of oil, whereas I stated increasing domestic production would make no difference. 

The whole point of MANY posts in this topic was to disabuse people of the notion that this is somehow related to domestic production (drill, baby, drill!) or increased demand.  You're basically co-signing the same folks you just insulted. 

- The final conclusion that was arrived to was the same as many people's, yes. The logic behind that conclusion is more important than the conclusion itself in this case. One could be ignorant of all the factors that go into reaching an answer, yet still reach that answer. 

I need not provide any credentials, as I do not present myself as any kind of authority. I clearly stated I am only presenting my take on the subject(s) at hand for anyone who would care to read it.

Oh, I see... so YOU don't have to provide credentials - but you're bashing me because:  "Quoting a rolling stones article nor getting a degree in economics provides you with credentials."
How was my attempt to post a link that other people found worthwhile any more "pseudo-intellectual" than your take on the subject?  I didn't assume any authority and, in fact, deferred to other sources I found worthwhile.  Say, Pot, have you met my friend Kettle?  You two have so much in common. 

-The second I typed out "pseudo-intellectual discussion" I thought to myself in jest, "how long will it take someone to say the same about my post?". For the record, I did not explicitly mean you when I said "pseudo-intellectual". It was my collective take on a few random posts here and there of people clearly having no factual basis for their assertions. 




Whether you like it or not (and I know that you consciously know this), you are perceived by many to be an authority on this board; You are the Admin and you are also infamous for the "wall of text"/"essays" (I am not bashing them at all, just stating what many call them) that you post. Referring people to a link does not absolve you from authority, either. A school teacher is no less of an authority because he or she directs pupils to read books written by others; as someone who decides what they read, they have enormous authority in how the students consciousness is formed. Your article link was not the only thing you posted, and in none of your posts did you say, "I think"; "In my opinion", etc. It comes off more factual than anything else. 

You know full well I did not mean the Homestead act was a "soviet" thing; you're smarter than that. What you discussed is the government taking part in something that is by every definition communism, and if it where to do that, what would the implication be on.....everything? Would supply of housing and construction be controlled by the government like in the former Soviet Union? You clearly see housing as some sort of right, so if the government were to "nationalize" it, I guess you think they should also nationalize the production and distribution of food? What then, private industry?�

Right, because it's all or nothing and the first Homestead Act led us down the path to unadulterated socialism.  You could've applied the same ridiculous, "slippery slope" logic to your own support for socialized medicine. 
-The first homestead act lead us to prosperity and the Native Americans into the poor house; socialism for the chosen. I hate the "slippery slope" logic used by the likes of Glenn Beck and others as much as you, but your point was that the government could afford to absorb the costs of all outstanding mortgages. It was not a "public housing" suggestion, but the suggestion that it's somehow a good idea for there to be a system where there is only one buyer and one seller. How is the government supposed to know what a fair value for as house is? It simply cannot, and that's where free market comes in. Socialized medicine is not even remotely as ridiculous as socialized housing; as one of the leading capitalist nations of the world, Japan outlawed private corporations from engaging in health care services. Socialized health care is successful in plenty of other countries as I know you already know (Germany, etc). The only place socialized property existed was in communist countries, and that sure did turn out great!

I get the sense that you just felt like being a jerk for some reason and, when push comes to shove, that's all it boils down to: hostility for the sake of hostility.  

-Truth be told I felt nothing of the sort, and I apologize if I came off as hostile towards you. 

Really, what is people's problem today?

Edit: what are all these question mark�symbols?
For whatever reason, whenever you embed a video the system converts a nbsp to that symbol.  They lock down flash to prevent abuse.  It's like in the old days when you couldn't type the word applet.  
-I considered this, but thought if that was the case there would be an aesthetically "cleaner" way to do that. 

As for bikes, the infrastructure issue is glaring and obvious, but it's not as though steps can't be taken to improve public transportation.  As you can see, Tokyo's doing a good job of improving the ability of commuters to pair bikes with the rail system, for example, which is especially useful for urban dwellers, but even if you're short on money you can still implement a system like the BRT in Curitiba and get a ton of bang for your buck.  

The Segway was designed to solve the problems you're referring to, as they're far more compact, but they're also impossibly over-engineered, which meant that, instead of "changing the world," all it did was change the way lazy millionaires get to their mailboxes.  Obviously our interstate highway system was predicated on access to a cheap and inexhaustible supply of oil.  The writing's been on the wall for decades now regarding inefficiency of our gasoline fueled suburban sprawl, but to this point we've managed to muster little more than a collective shrug in response.  

Kind of a shame that we have no money left to modernize our transportation infrastructure... 

-Oil/Auto industry lobbying killed off a lot of subway/El train expansion plans many cities had, but the basis of the suburban sprawl/highway problems you're referring to were the effect of "socialized housing". The government guaranteed no money down, super low interest rate mortgages for returning GIs after the war was over. A similar program was later extended to regular citizens. Just as the "Super-easy-no-money-down-no-income-to-prove-any-man-woman-or-dog-living-or-dead-with-a-SS#-real-or-made-up-qualifies" mortgages fueled the recent housing boom/bubble, those mortgages fueled the boom back in the post-war era. My grandfather once told me when he came back and tried rent an apartment in New York, he was told there were over 800 other rental applications for that same apartment. So to meet the artificially-fueled real demand, developers starting buying up farms and building massive communities of "little boxes made of ticky-tacky", as the song goes. It's hard to imagine now that the vast majority of Long Island was nothing but farmland. As the move outward prompted the renewal of highway infrastructure to be expedited, more people continued to make the move to the suburbs with the promise that getting around will not be a problem. Also, as much as I love the public transportation system in Japan, I tend to stay away from using it as an example Stateside, as the result of the government's undertaking of constructing and maintaining it was so costly that it had to be sold in chunks to private corporations for pennies on the dollar.  




Edit: magneto-plasma engines burning gasoline ultra effectively do already exist, which would solve a lot of problems, but the issue is there is no private nor government funding to commercialize the technology. Car companies want to continue to reap profits from R&D dollars spent decades ago, and the US government is so corrupt that it only promotes developments in areas it's lobbied to promote (i.e., financing the development of a airplane that could nuke all who oppose us from space). US presidents have about as much foresight and insight into the future of technology and our country as 4 year olds do (and that is insulting 4 year olds) to make any progress independent of lobbies. Leaders like Park Chung-hee only come around once every couple generations; and in the US it seems, never.

wawaweewa wrote:

---

It's a simple concept at its core. 

Low interest rates encourage borrowing. Near zero rates encourage rampant speculation. If you can borrow at near 0 then you do unless you're an idiot. Especially when you know there's someone else to backstop your losses if any occur. All that money that you borrowed has to be put to work. You don't just sit on it like a schmuck. 

The next question becomes not what you can speculate in but what you can't  speculate in. Whatever's not in that category you throw your !%%+@@$ capital at because, after all, you did borrow it at near zero and you'll only need to be correct a small percentage of the time to reap significant profits. This is discounting the fact that you know there's a backstop in case your positions blow up on you. 

Extremely low rates encourage widespread (irresponsible) borrowing, you're forced to throw capital at nearly everything that you can (which you believe has the ability mania ---> price ramps)  because you know others will as well. Then you have the fact that at the very least this is technically inflationary which breeds others to crowd into the trade to hedge against inflation. 

A similar thing happened in 2006. The housing market was showing signs of blowing up (as a result of fed rate hikes over the previous quarters), so the speculators who realized that had to find another market to speculate in. Commodities it was. 

This can and will go on as long as the rates are kept low. They got done with equities (about 6 months back; run out of steam there), now they're unto commodities. Low interest rates breed speculation. That's what they're designed to do. 

-What exactly do low interest rates have to do with speculation in any of the asset classes you've mentioned? Hedge funds/PE funds/IBs don't borrow from the Fed. They raise money from private investors and the sale of securities, so their cost of capital is much higher than whatever LIBOR or the fed rate is. 

 

[martin and co]

Originally Posted by Method Man

Very little was reiterated, as the general consensus in the thread is that domestic production will somehow decrease the price of oil, whereas I stated increasing domestic production would make no difference. 

The whole point of MANY posts in this topic was to disabuse people of the notion that this is somehow related to domestic production (drill, baby, drill!) or increased demand.  You're basically co-signing the same folks you just insulted. 

- The final conclusion that was arrived to was the same as many people's, yes. The logic behind that conclusion is more important than the conclusion itself in this case. One could be ignorant of all the factors that go into reaching an answer, yet still reach that answer. 

I need not provide any credentials, as I do not present myself as any kind of authority. I clearly stated I am only presenting my take on the subject(s) at hand for anyone who would care to read it.

Oh, I see... so YOU don't have to provide credentials - but you're bashing me because:  "Quoting a rolling stones article nor getting a degree in economics provides you with credentials."
How was my attempt to post a link that other people found worthwhile any more "pseudo-intellectual" than your take on the subject?  I didn't assume any authority and, in fact, deferred to other sources I found worthwhile.  Say, Pot, have you met my friend Kettle?  You two have so much in common. 

-The second I typed out "pseudo-intellectual discussion" I thought to myself in jest, "how long will it take someone to say the same about my post?". For the record, I did not explicitly mean you when I said "pseudo-intellectual". It was my collective take on a few random posts here and there of people clearly having no factual basis for their assertions. 




Whether you like it or not (and I know that you consciously know this), you are perceived by many to be an authority on this board; You are the Admin and you are also infamous for the "wall of text"/"essays" (I am not bashing them at all, just stating what many call them) that you post. Referring people to a link does not absolve you from authority, either. A school teacher is no less of an authority because he or she directs pupils to read books written by others; as someone who decides what they read, they have enormous authority in how the students consciousness is formed. Your article link was not the only thing you posted, and in none of your posts did you say, "I think"; "In my opinion", etc. It comes off more factual than anything else. 

You know full well I did not mean the Homestead act was a "soviet" thing; you're smarter than that. What you discussed is the government taking part in something that is by every definition communism, and if it where to do that, what would the implication be on.....everything? Would supply of housing and construction be controlled by the government like in the former Soviet Union? You clearly see housing as some sort of right, so if the government were to "nationalize" it, I guess you think they should also nationalize the production and distribution of food? What then, private industry?�

Right, because it's all or nothing and the first Homestead Act led us down the path to unadulterated socialism.  You could've applied the same ridiculous, "slippery slope" logic to your own support for socialized medicine. 
-The first homestead act lead us to prosperity and the Native Americans into the poor house; socialism for the chosen. I hate the "slippery slope" logic used by the likes of Glenn Beck and others as much as you, but your point was that the government could afford to absorb the costs of all outstanding mortgages. It was not a "public housing" suggestion, but the suggestion that it's somehow a good idea for there to be a system where there is only one buyer and one seller. How is the government supposed to know what a fair value for as house is? It simply cannot, and that's where free market comes in. Socialized medicine is not even remotely as ridiculous as socialized housing; as one of the leading capitalist nations of the world, Japan outlawed private corporations from engaging in health care services. Socialized health care is successful in plenty of other countries as I know you already know (Germany, etc). The only place socialized property existed was in communist countries, and that sure did turn out great!

I get the sense that you just felt like being a jerk for some reason and, when push comes to shove, that's all it boils down to: hostility for the sake of hostility.  

-Truth be told I felt nothing of the sort, and I apologize if I came off as hostile towards you. 

Really, what is people's problem today?

Edit: what are all these question mark�symbols?
For whatever reason, whenever you embed a video the system converts a nbsp to that symbol.  They lock down flash to prevent abuse.  It's like in the old days when you couldn't type the word applet.  
-I considered this, but thought if that was the case there would be an aesthetically "cleaner" way to do that. 

As for bikes, the infrastructure issue is glaring and obvious, but it's not as though steps can't be taken to improve public transportation.  As you can see, Tokyo's doing a good job of improving the ability of commuters to pair bikes with the rail system, for example, which is especially useful for urban dwellers, but even if you're short on money you can still implement a system like the BRT in Curitiba and get a ton of bang for your buck.  

The Segway was designed to solve the problems you're referring to, as they're far more compact, but they're also impossibly over-engineered, which meant that, instead of "changing the world," all it did was change the way lazy millionaires get to their mailboxes.  Obviously our interstate highway system was predicated on access to a cheap and inexhaustible supply of oil.  The writing's been on the wall for decades now regarding inefficiency of our gasoline fueled suburban sprawl, but to this point we've managed to muster little more than a collective shrug in response.  

Kind of a shame that we have no money left to modernize our transportation infrastructure... 

-Oil/Auto industry lobbying killed off a lot of subway/El train expansion plans many cities had, but the basis of the suburban sprawl/highway problems you're referring to were the effect of "socialized housing". The government guaranteed no money down, super low interest rate mortgages for returning GIs after the war was over. A similar program was later extended to regular citizens. Just as the "Super-easy-no-money-down-no-income-to-prove-any-man-woman-or-dog-living-or-dead-with-a-SS#-real-or-made-up-qualifies" mortgages fueled the recent housing boom/bubble, those mortgages fueled the boom back in the post-war era. My grandfather once told me when he came back and tried rent an apartment in New York, he was told there were over 800 other rental applications for that same apartment. So to meet the artificially-fueled real demand, developers starting buying up farms and building massive communities of "little boxes made of ticky-tacky", as the song goes. It's hard to imagine now that the vast majority of Long Island was nothing but farmland. As the move outward prompted the renewal of highway infrastructure to be expedited, more people continued to make the move to the suburbs with the promise that getting around will not be a problem. Also, as much as I love the public transportation system in Japan, I tend to stay away from using it as an example Stateside, as the result of the government's undertaking of constructing and maintaining it was so costly that it had to be sold in chunks to private corporations for pennies on the dollar.  




Edit: magneto-plasma engines burning gasoline ultra effectively do already exist, which would solve a lot of problems, but the issue is there is no private nor government funding to commercialize the technology. Car companies want to continue to reap profits from R&D dollars spent decades ago, and the US government is so corrupt that it only promotes developments in areas it's lobbied to promote (i.e., financing the development of a airplane that could nuke all who oppose us from space). US presidents have about as much foresight and insight into the future of technology and our country as 4 year olds do (and that is insulting 4 year olds) to make any progress independent of lobbies. Leaders like Park Chung-hee only come around once every couple generations; and in the US it seems, never.

wawaweewa wrote:

---

It's a simple concept at its core. 

Low interest rates encourage borrowing. Near zero rates encourage rampant speculation. If you can borrow at near 0 then you do unless you're an idiot. Especially when you know there's someone else to backstop your losses if any occur. All that money that you borrowed has to be put to work. You don't just sit on it like a schmuck. 

The next question becomes not what you can speculate in but what you can't  speculate in. Whatever's not in that category you throw your !%%+@@$ capital at because, after all, you did borrow it at near zero and you'll only need to be correct a small percentage of the time to reap significant profits. This is discounting the fact that you know there's a backstop in case your positions blow up on you. 

Extremely low rates encourage widespread (irresponsible) borrowing, you're forced to throw capital at nearly everything that you can (which you believe has the ability mania ---> price ramps)  because you know others will as well. Then you have the fact that at the very least this is technically inflationary which breeds others to crowd into the trade to hedge against inflation. 

A similar thing happened in 2006. The housing market was showing signs of blowing up (as a result of fed rate hikes over the previous quarters), so the speculators who realized that had to find another market to speculate in. Commodities it was. 

This can and will go on as long as the rates are kept low. They got done with equities (about 6 months back; run out of steam there), now they're unto commodities. Low interest rates breed speculation. That's what they're designed to do. 

-What exactly do low interest rates have to do with speculation in any of the asset classes you've mentioned? Hedge funds/PE funds/IBs don't borrow from the Fed. They raise money from private investors and the sale of securities, so their cost of capital is much higher than whatever LIBOR or the fed rate is. 

 

[wawaweewa]

Originally Posted by MARTIN AND CO

. 
-What exactly do low interest rates have to do with speculation in any of the asset classes you've mentioned? Hedge funds/PE funds/IBs don't borrow from the Fed. They raise money from private investors and the sale of securities, so their cost of capital is much higher than whatever LIBOR or the fed rate is. 
?

First off, PE funds are PE funds. They're not in the business of speculating (directly) in equity markets/commodity markets. There are conglomerates out there but they're a different story.

- IB's don't borrow from the Fed? Tell that to GS and MS who are now both BHC's (Top 50 Bank Holding Companies) and have borrowed from the fed discount window over the past few
years.  ML was acquired by BOA, so they now too have access to FED money. Those are the 3 largest IB's and they all use FED window money.

In addition, remember all those FED facilities? PDCF, TAF, TSLF, AMLF and TALF . Browse it for a bit and see how much various entities borrowed. Again, capital is fungible so they could use it for whatever the hell they wanted to use it for and the Treasury and Fed has "admitted" (they know exactly what it was being used for though) to not knowing how it was being used.


- Actual commercial banks (JPM, HSBC, Citi, etc.) have sizable prop (FX, comm, equity, etc.) trading desks and they ,as BHC, they do borrow from the FED. Internal capital is fungible so what are you going to tell them? "Don't use ~0% money for prop trading!"? It isn't against the law after the repeal of Glass-Steagal.  If not for prop trading these banks would be insolvent ( a bunch of em technically are based on other investments) or substantially smaller.

Commercial banking is similar to selling groceries. It's steady business but you're not going to "wow!" anyone.

Compared to HF or small Algo shops or whatever, these are the behemoths...and they do borrow from the FED at near 0%.

 

[wawaweewa]

Originally Posted by MARTIN AND CO

. 
-What exactly do low interest rates have to do with speculation in any of the asset classes you've mentioned? Hedge funds/PE funds/IBs don't borrow from the Fed. They raise money from private investors and the sale of securities, so their cost of capital is much higher than whatever LIBOR or the fed rate is. 
?

First off, PE funds are PE funds. They're not in the business of speculating (directly) in equity markets/commodity markets. There are conglomerates out there but they're a different story.

- IB's don't borrow from the Fed? Tell that to GS and MS who are now both BHC's (Top 50 Bank Holding Companies) and have borrowed from the fed discount window over the past few
years.  ML was acquired by BOA, so they now too have access to FED money. Those are the 3 largest IB's and they all use FED window money.

In addition, remember all those FED facilities? PDCF, TAF, TSLF, AMLF and TALF . Browse it for a bit and see how much various entities borrowed. Again, capital is fungible so they could use it for whatever the hell they wanted to use it for and the Treasury and Fed has "admitted" (they know exactly what it was being used for though) to not knowing how it was being used.


- Actual commercial banks (JPM, HSBC, Citi, etc.) have sizable prop (FX, comm, equity, etc.) trading desks and they ,as BHC, they do borrow from the FED. Internal capital is fungible so what are you going to tell them? "Don't use ~0% money for prop trading!"? It isn't against the law after the repeal of Glass-Steagal.  If not for prop trading these banks would be insolvent ( a bunch of em technically are based on other investments) or substantially smaller.

Commercial banking is similar to selling groceries. It's steady business but you're not going to "wow!" anyone.

Compared to HF or small Algo shops or whatever, these are the behemoths...and they do borrow from the FED at near 0%.

 

[martin and co]

Originally Posted by wawaweewa

Originally Posted by MARTIN AND CO

. 
-What exactly do low interest rates have to do with speculation in any of the asset classes you've mentioned? Hedge funds/PE funds/IBs don't borrow from the Fed. They raise money from private investors and the sale of securities, so their cost of capital is much higher than whatever LIBOR or the fed rate is. 
?

First off, PE funds are PE funds. They're not in the business of speculating (directly) in equity markets/commodity markets. There are conglomerates out there but they're a different story.

- IB's don't borrow from the Fed? Tell that to GS and MS who are now both BHC's and have borrowed from the fed discount window over the past few
years.  ML was acquired by BOA, so they now too have access to FED money. Those are the 3 largest IB's and they all use FED window money.

In addition, remember all those FED facilities? PDCF, TAF, TSLF, AMLF and TALF . Browse it for a bit and see how much various entities borrowed. Again, capital is fungible so they could use it for whatever the hell they wanted to use it for and the Treasury and Fed has "admitted" (they know exactly what it was being used for though) to not knowing how it was being used.


- Actual commercial banks (JPM, HSBC, Citi, etc.) have sizable prop (FX, comm, equity, etc.) trading desks and they ,as BHC, they do borrow from the FED. Internal capital is fungible so what are you going to tell them? "Don't use ~0% money for prop trading!"?

Compared to HF or small Algo shops or whatever, these are the behemoths...and they do borrow from the FED at near 0%.

It's true PE funds do not specialize in prop trading, but they're not all LBOs, either.
You were talking about general economic theory, and the situation as of recent is unique. When libor+prime was 20% decades ago, it only marked the beginning of the LBO/bubble age. 20% as a cost of capital was low considering the enormous returns that were made back then because of the smaller number of players (pre-information age) involved. Deposits also provided safe and easy yields.  

The biggest difference right now is that there is almost no inter-bank lending. The only institution to borrow money from is the central bank of whatever country you're in. So, the jump in discount window lending reflects more-so the lack of borrowing between banks themselves. Funds of all sizes definitely still regard private investors as their bread and butter, otherwise all they'd do is borrow from the fed. When D.E. Shaw was able to arrange a line of credit with Bank of America in the billions, it liquidated its funds because it was cheaper to use money borrowed from the bank than the pay customary returns, Lots of companies are BHCs now; insurance companies and even american express are in on it, but all they're doing is just offering banking products like CD and mortgages. Their business model has not changed much. You cannot borrow 9 dollars for ever dollar that you have like people say after watching zeitgeist; you have to have 10% of the amount of deposits you accept as a bank. Capital ratios have fallen to as low as 3-6% in many banks after deregulation, with 6% being considered healthy now.

In closing, low interest rates do not cause any more speculation than high interest rates. Volatile markets (theres no money to be made if the market stays nice, calm, and flat) with many players beget speculation. The whole reason there is so much speculation in the first place is because after the era of consolidation when large corporations bought up smaller ones (i.e., "Bob Jones cable" is bought by comcast for $100 Million) many entrepreneurs had very large sums of cash with nowhere to invest it. That, along with bulging pension and endowments looking to park their money somewhere. These organizations gave money to people like George Soros and Jim Rogers, who's colossal returns coincided with skyrocketing commodity prices. Are those type of people needed to correct markets? Yes, but often times they're correcting markets they had a hand in making "incorrect".  

edit: it's late, I'm making typos like china is making lead toys; I'm off to bed for the night

edit again: didn't catch your edits: "If not for prop trading these banks would be insolvent ( a bunch of em technically are based on other investments) orsubstantially smaller." - Goldman is an almost trillion dollar hedge fund that I'm sure uses a lot of cheap fed money (those profits aren't coming from underwriting fees, now), but that still does not go against what I've said. Unless you have #s showing GS' discount window borrowing volume, we have no idea of knowing how much they're borrowing to speculate with. 

 

[martin and co]

Originally Posted by wawaweewa

Originally Posted by MARTIN AND CO

. 
-What exactly do low interest rates have to do with speculation in any of the asset classes you've mentioned? Hedge funds/PE funds/IBs don't borrow from the Fed. They raise money from private investors and the sale of securities, so their cost of capital is much higher than whatever LIBOR or the fed rate is. 
?

First off, PE funds are PE funds. They're not in the business of speculating (directly) in equity markets/commodity markets. There are conglomerates out there but they're a different story.

- IB's don't borrow from the Fed? Tell that to GS and MS who are now both BHC's and have borrowed from the fed discount window over the past few
years.  ML was acquired by BOA, so they now too have access to FED money. Those are the 3 largest IB's and they all use FED window money.

In addition, remember all those FED facilities? PDCF, TAF, TSLF, AMLF and TALF . Browse it for a bit and see how much various entities borrowed. Again, capital is fungible so they could use it for whatever the hell they wanted to use it for and the Treasury and Fed has "admitted" (they know exactly what it was being used for though) to not knowing how it was being used.


- Actual commercial banks (JPM, HSBC, Citi, etc.) have sizable prop (FX, comm, equity, etc.) trading desks and they ,as BHC, they do borrow from the FED. Internal capital is fungible so what are you going to tell them? "Don't use ~0% money for prop trading!"?

Compared to HF or small Algo shops or whatever, these are the behemoths...and they do borrow from the FED at near 0%.

It's true PE funds do not specialize in prop trading, but they're not all LBOs, either.
You were talking about general economic theory, and the situation as of recent is unique. When libor+prime was 20% decades ago, it only marked the beginning of the LBO/bubble age. 20% as a cost of capital was low considering the enormous returns that were made back then because of the smaller number of players (pre-information age) involved. Deposits also provided safe and easy yields.  

The biggest difference right now is that there is almost no inter-bank lending. The only institution to borrow money from is the central bank of whatever country you're in. So, the jump in discount window lending reflects more-so the lack of borrowing between banks themselves. Funds of all sizes definitely still regard private investors as their bread and butter, otherwise all they'd do is borrow from the fed. When D.E. Shaw was able to arrange a line of credit with Bank of America in the billions, it liquidated its funds because it was cheaper to use money borrowed from the bank than the pay customary returns, Lots of companies are BHCs now; insurance companies and even american express are in on it, but all they're doing is just offering banking products like CD and mortgages. Their business model has not changed much. You cannot borrow 9 dollars for ever dollar that you have like people say after watching zeitgeist; you have to have 10% of the amount of deposits you accept as a bank. Capital ratios have fallen to as low as 3-6% in many banks after deregulation, with 6% being considered healthy now.

In closing, low interest rates do not cause any more speculation than high interest rates. Volatile markets (theres no money to be made if the market stays nice, calm, and flat) with many players beget speculation. The whole reason there is so much speculation in the first place is because after the era of consolidation when large corporations bought up smaller ones (i.e., "Bob Jones cable" is bought by comcast for $100 Million) many entrepreneurs had very large sums of cash with nowhere to invest it. That, along with bulging pension and endowments looking to park their money somewhere. These organizations gave money to people like George Soros and Jim Rogers, who's colossal returns coincided with skyrocketing commodity prices. Are those type of people needed to correct markets? Yes, but often times they're correcting markets they had a hand in making "incorrect".  

edit: it's late, I'm making typos like china is making lead toys; I'm off to bed for the night

edit again: didn't catch your edits: "If not for prop trading these banks would be insolvent ( a bunch of em technically are based on other investments) orsubstantially smaller." - Goldman is an almost trillion dollar hedge fund that I'm sure uses a lot of cheap fed money (those profits aren't coming from underwriting fees, now), but that still does not go against what I've said. Unless you have #s showing GS' discount window borrowing volume, we have no idea of knowing how much they're borrowing to speculate with. 

 

[Senoj]

Originally Posted by UnbornSeed

I dont even think ninja hood drives yet he stay having stances

yeah doesnt dude drive a Huffy?

 

[Senoj]

Originally Posted by UnbornSeed

I dont even think ninja hood drives yet he stay having stances

yeah doesnt dude drive a Huffy?

 

[Methodical Management]

-The second I typed out "pseudo-intellectual discussion" I thought to myself in jest, "how long will it take someone to say the same about my post?". For the record, I did not explicitly mean you when I said "pseudo-intellectual". It was my collective take on a few random posts here and there of people clearly having no factual basis for their assertions. 

If you weren't referring to me, you shouldn't have specifically referenced the Rolling Stone article in the same sentence used to impugn others as "pseudo-intellectual."  

Whether you like it or not (and I know that you consciously know this), you are perceived by many to be an authority on this board; You are the Admin and you are also infamous for the "wall of text"/"essays" (I am not bashing them at all, just stating what many call them) that you post. Referring people to a link does not absolve you from authority, either. A school teacher is no less of an authority because he or she directs pupils to read books written by others; as someone who decides what they read, they have enormous authority in how the students consciousness is formed. Your article link was not the only thing you posted, and in none of your posts did you say, "I think"; "In my opinion", etc. It comes off more factual than anything else. 

What I posted was supported by the material provided.  Nothing was out of pocket and I gave credit where credit was due.  If you're hung up on the "authority" aspect, that's your problem.  

I posted a freaking link to a related article and you're giving me a hard time about it?  Step back for a second and think about how obnoxious that is.  

I sacrifice enough for this community as it is.  On top of everything else, I shouldn't have to be harassed and insulted just for contributing to regular discussion topics like any other member. 

The final conclusion that was arrived to was the same as many people's, yes. The logic behind that conclusion is more important than the conclusion itself in this case. One could be ignorant of all the factors that go into reaching an answer, yet still reach that answer.
I'm not going to assume that somebody's illiterate just because they don't sound out each syllable while running their index finger across the page.  You showed your work?  That's nice, but I don't see the need to insult everyone else for simply cutting to the chase.  

The first homestead act lead us to prosperity and the Native Americans into the poor house; socialism for the chosen. I hate the "slippery slope" logic used by the likes of Glenn Beck and others as much as you, but your point was that the government could afford to absorb the costs of all outstanding mortgages. It was not a "public housing" suggestion, but the suggestion that it's somehow a good idea for there to be a system where there is only one buyer and one seller. How is the government supposed to know what a fair value for as house is? It simply cannot, and that's where free market comes in. Socialized medicine is not even remotely as ridiculous as socialized housing; as one of the leading capitalist nations of the world, Japan outlawed private corporations from engaging in health care services. Socialized health care is successful in plenty of other countries as I know you already know (Germany, etc). The only place socialized property existed was in communist countries, and that sure did turn out great! 

First of all, let's take a step back and acknowledge that you decided to blast me for no other reason than because you had this violent, knee-jerk reaction to a concept I alluded to based solely on the association with the name 'Homestead Act.'  So, to sum up, you think an idea you know about in name only is the "stupidest thing you've ever heard."  That's fair. 

Second, and on the subject of fairness, I think it bears mention when we talk about housing, when we talk about the Federal Highway Act, the FHA/HOLC, and the original Homestead Act, we are talking about MASSIVE public subsidies benefiting a very select group and some of the greatest contributors to racial inequality this side of Jim Crow.  

As Dr. King wrote, 

"there is another myth that still gets around; it is a kind of overreliance on the bootstrap philosophy.  There are those who still feel that if the Negro is to rise out of poverty, if the Negro is to rise out of slum conditions, if he is to rise out of discrimination and segregation, he must do it all by himself.  And so they say the Negro must life himself by his own bootstraps.




... The people who say this never stop to realize that the nation made the black man's color a stigma; but beyond this they never stop to realize the debt that they owe a people who were kept in slavery for 244 years. 




In 1863 the Negro was told that he was free as a result of the Emancipation Proclamation being signed by Abraham Lincoln.  But he was not given any land to make that freedom meaningful.  It was something like keeping a person in prison for a number of years and suddenly discovering that that person is not guilty of the crime for which he was convicted.  And you just go up to him and say, "Now you are free," but you don't give him any bus fare to get to town.  You don't give him any money to get some clothes to put on his back or to get on his feet again in life.  




Every court of jurisprudence would rise up against this, and yet this is the very thing that our nation did to the black man.  It simply said, "you're free," and it left him there penniless, illiterate, not knowing what to do.  And the irony of it all is that at the same time the nation failed to do anything for the black man - through an act of Congress it was giving away millions of acres of land in the West and the Midwest - which meant that it was willing to undergird its white peasants from Europe with an economic floor.  




But not only did it give the land, it built land-grant colleges to teach them how to farm.  Not only that, it provided county agents to further their expertise in farming; not only that, as the years unfolded it provided low interest rates so that they could mechanize their farms.  And to this day thousands of these very persons are receiving millions of dollars in federal subsidies every year not to farm.  And these are so often the very people who tell Negroes that they must lift themselves by their own bootstraps.  It's all  right to tell a man to lift himself by his own bootstraps, but it is a cruel jest to say to a bootless man that he ought to lift himself up by his own bootstraps."  

It's ironic to me that so many in the finance and policy communities adore things like, say, Hernando De Soto's The Mystery of Capital for extolling the benefits of formal property ownership (which, in practice, has more often than not served as a great way to make people in developing nations become renters on their own land), but when the opportunity arises to help working families remain in homes that might otherwise be left vacant, to help stop the bleeding and stabilize whole communities devastated by foreclosure, then suddenly we start trotting out the old Marxist boogeyman, ignoring this country's long and storied history of using public subsidies to heap advantage on White men (and the wealthier the better.) 

It seems to me that if you're going to loan/gift preposterously large sums of money to the very banks that caused this disaster (which, among other things, resulted in the greatest loss of Black wealth in the history of this country), you at the very least ought to do so with some very sturdy strings attached.  Predatory and racially discriminatory lending practices proved a massive contributor to this mess.  We could've at least tried to come out of this with the goal of expanding FAIR credit and home ownership opportunities to help our fellow citizens build wealth and avoid the massive Ponzi scheme of perpetual borrowing.   

We have several generations of folks now who, due to government largesse, have access to home equity they can borrow against and pass on to their progeny.  The White folks who came back from the war and poured into pressboard tract houses in New Jersey built stores of wealth denied to those who were sidelined by redlining, restrictive convenants, etc.  That's basic.  Wealth-stripping sub-prime loans turned that dream into a twisted nightmare for countless Americans, disproportionately impacting those who, demographically speaking, have been traditionally excluded from the prime market through a perverse admixture of policy and prejudice.  

It's very easy for people who have no personal stake in this to take a very detached, theoretical view of the situation.  For the privileged, even $5 a gallon gasoline is little more than a nagging inconvenience which, at worst, means one or two less fancy dinners out per month or, heaven forbid, holding off on that ipad purchase.  From that vantage, one could easily lose sight of just how dire the situation truly is for so many working families.  Suffice it to say, and to no one's surprise, most politicians failed to place their constituents' needs at the fore.  

Since you're obviously unfamiliar with it, the intention behind the new Homestead Act was to try and keep people in their houses.  As you're aware, under normal circumstances (that is to say, before your mortgage was sold off dozens of times before the ink even dried) banks would negotiate with borrowers to avoid foreclosures.  Thanks to securitization and the genius financial alchemy of converting toxic waste into AAA  rated investments, that's now practically impossible because the loans can't be modified.   So, the actual proposals - if you even care - revolved around replacing the foreclosed mortgage with a shared equity agreement.  The upshot was that families could remain in their homes, maintain the property, build equity, and help avoid flooding the market with foreclosures.  As the proposals entailed working WITH banks, it could hardly be described as socialism so much as encouraging responsibility. 

We had the means to get that done.  We had the means to extend access to home ownership to those who weren't part of that original 'privileged class.'  We didn't do it.  

Again, that's another story for another topic.  I elaborated only because I'm sick of this retro McCarthyist garbage that gets pinned on anything aside from the unimpeachable purity of private profiteering. 

Oil/Auto industry lobbying killed off a lot of subway/El train expansion plans many cities had, but the basis of the suburban sprawl/highway problems you're referring to were the cause of "socialized housing". The government guaranteed no money down, super low interest rate mortgages for returning GIs after the war was over. A similar program was later extended to regular citizens. Just as the "Super-easy-no-money-down-no-income-to-prove-any-man-woman-or-dog-living-or-dead-with-a-SS#-real-or-made-up-qualifies" mortgages fueled the recent housing boom/bubble, those mortgages fueled the boom back in the post-war era. My grandfather once told me when he came back and tried rent an apartment in New York, he was told there were over 800 other rental applications for that same apartment. So to meet the artificially-fueled real demand, developers starting buying up farms and building massive communities of "little boxes made of ticky-tacky", as the song goes. It's hard to imagine now that the vast majority of Long Island was nothing but farmland. As the move outward prompted the renewal of highway infrastructure to be expedited, more people continued to make the move to the suburbs with the promise that getting around will not be a problem.

It's obvious that suburban sprawl was predicated in the availability of a cheap and inexhaustible oil supply, but beyond the sustainability aspect we also have to deal with the social justice aspect of it.  

Urban development is certainly "greener," but gentrification doesn't exactly strike me as particularly just.  It's a cruel shell game in which assets are merely shuffled around and kept out of reach for the disadvantaged, who are physically marginalized.  

Also, as much as I love the public transportation system in Japan, I tend to stay away from using it as an example Stateside, as the result of the government's undertaking of constructing and maintaining it was so costly that it had to be sold in chunks to private corporations for pennies on the dollar.  

It's worth mentioning that Tokyo Metro is one of only two subway companies in the world currently operating at a profit. (And Tokyo Metro, you'll note, is is jointly owned by the Japanese government and the Tokyo metropolitan government.)  The other company operating the Japanese subway system is Toei - and they are still running at a loss.  However, the difference can, at least in part, be attributed to maturity.  Tokyo Metro considers its coverage so complete that it has no further plans for expansion.  It's a long term investment, so it's hardly fair to look at it in the short run and, while it may not be a public good in the strictest sense, it's only sensible to consider the economic benefits that subway access offers to businesses and property owners as well.  

 

[Methodical Management]

-The second I typed out "pseudo-intellectual discussion" I thought to myself in jest, "how long will it take someone to say the same about my post?". For the record, I did not explicitly mean you when I said "pseudo-intellectual". It was my collective take on a few random posts here and there of people clearly having no factual basis for their assertions. 

If you weren't referring to me, you shouldn't have specifically referenced the Rolling Stone article in the same sentence used to impugn others as "pseudo-intellectual."  

Whether you like it or not (and I know that you consciously know this), you are perceived by many to be an authority on this board; You are the Admin and you are also infamous for the "wall of text"/"essays" (I am not bashing them at all, just stating what many call them) that you post. Referring people to a link does not absolve you from authority, either. A school teacher is no less of an authority because he or she directs pupils to read books written by others; as someone who decides what they read, they have enormous authority in how the students consciousness is formed. Your article link was not the only thing you posted, and in none of your posts did you say, "I think"; "In my opinion", etc. It comes off more factual than anything else. 

What I posted was supported by the material provided.  Nothing was out of pocket and I gave credit where credit was due.  If you're hung up on the "authority" aspect, that's your problem.  

I posted a freaking link to a related article and you're giving me a hard time about it?  Step back for a second and think about how obnoxious that is.  

I sacrifice enough for this community as it is.  On top of everything else, I shouldn't have to be harassed and insulted just for contributing to regular discussion topics like any other member. 

The final conclusion that was arrived to was the same as many people's, yes. The logic behind that conclusion is more important than the conclusion itself in this case. One could be ignorant of all the factors that go into reaching an answer, yet still reach that answer.
I'm not going to assume that somebody's illiterate just because they don't sound out each syllable while running their index finger across the page.  You showed your work?  That's nice, but I don't see the need to insult everyone else for simply cutting to the chase.  

The first homestead act lead us to prosperity and the Native Americans into the poor house; socialism for the chosen. I hate the "slippery slope" logic used by the likes of Glenn Beck and others as much as you, but your point was that the government could afford to absorb the costs of all outstanding mortgages. It was not a "public housing" suggestion, but the suggestion that it's somehow a good idea for there to be a system where there is only one buyer and one seller. How is the government supposed to know what a fair value for as house is? It simply cannot, and that's where free market comes in. Socialized medicine is not even remotely as ridiculous as socialized housing; as one of the leading capitalist nations of the world, Japan outlawed private corporations from engaging in health care services. Socialized health care is successful in plenty of other countries as I know you already know (Germany, etc). The only place socialized property existed was in communist countries, and that sure did turn out great! 

First of all, let's take a step back and acknowledge that you decided to blast me for no other reason than because you had this violent, knee-jerk reaction to a concept I alluded to based solely on the association with the name 'Homestead Act.'  So, to sum up, you think an idea you know about in name only is the "stupidest thing you've ever heard."  That's fair. 

Second, and on the subject of fairness, I think it bears mention when we talk about housing, when we talk about the Federal Highway Act, the FHA/HOLC, and the original Homestead Act, we are talking about MASSIVE public subsidies benefiting a very select group and some of the greatest contributors to racial inequality this side of Jim Crow.  

As Dr. King wrote, 

"there is another myth that still gets around; it is a kind of overreliance on the bootstrap philosophy.  There are those who still feel that if the Negro is to rise out of poverty, if the Negro is to rise out of slum conditions, if he is to rise out of discrimination and segregation, he must do it all by himself.  And so they say the Negro must life himself by his own bootstraps.




... The people who say this never stop to realize that the nation made the black man's color a stigma; but beyond this they never stop to realize the debt that they owe a people who were kept in slavery for 244 years. 




In 1863 the Negro was told that he was free as a result of the Emancipation Proclamation being signed by Abraham Lincoln.  But he was not given any land to make that freedom meaningful.  It was something like keeping a person in prison for a number of years and suddenly discovering that that person is not guilty of the crime for which he was convicted.  And you just go up to him and say, "Now you are free," but you don't give him any bus fare to get to town.  You don't give him any money to get some clothes to put on his back or to get on his feet again in life.  




Every court of jurisprudence would rise up against this, and yet this is the very thing that our nation did to the black man.  It simply said, "you're free," and it left him there penniless, illiterate, not knowing what to do.  And the irony of it all is that at the same time the nation failed to do anything for the black man - through an act of Congress it was giving away millions of acres of land in the West and the Midwest - which meant that it was willing to undergird its white peasants from Europe with an economic floor.  




But not only did it give the land, it built land-grant colleges to teach them how to farm.  Not only that, it provided county agents to further their expertise in farming; not only that, as the years unfolded it provided low interest rates so that they could mechanize their farms.  And to this day thousands of these very persons are receiving millions of dollars in federal subsidies every year not to farm.  And these are so often the very people who tell Negroes that they must lift themselves by their own bootstraps.  It's all  right to tell a man to lift himself by his own bootstraps, but it is a cruel jest to say to a bootless man that he ought to lift himself up by his own bootstraps."  

It's ironic to me that so many in the finance and policy communities adore things like, say, Hernando De Soto's The Mystery of Capital for extolling the benefits of formal property ownership (which, in practice, has more often than not served as a great way to make people in developing nations become renters on their own land), but when the opportunity arises to help working families remain in homes that might otherwise be left vacant, to help stop the bleeding and stabilize whole communities devastated by foreclosure, then suddenly we start trotting out the old Marxist boogeyman, ignoring this country's long and storied history of using public subsidies to heap advantage on White men (and the wealthier the better.) 

It seems to me that if you're going to loan/gift preposterously large sums of money to the very banks that caused this disaster (which, among other things, resulted in the greatest loss of Black wealth in the history of this country), you at the very least ought to do so with some very sturdy strings attached.  Predatory and racially discriminatory lending practices proved a massive contributor to this mess.  We could've at least tried to come out of this with the goal of expanding FAIR credit and home ownership opportunities to help our fellow citizens build wealth and avoid the massive Ponzi scheme of perpetual borrowing.   

We have several generations of folks now who, due to government largesse, have access to home equity they can borrow against and pass on to their progeny.  The White folks who came back from the war and poured into pressboard tract houses in New Jersey built stores of wealth denied to those who were sidelined by redlining, restrictive convenants, etc.  That's basic.  Wealth-stripping sub-prime loans turned that dream into a twisted nightmare for countless Americans, disproportionately impacting those who, demographically speaking, have been traditionally excluded from the prime market through a perverse admixture of policy and prejudice.  

It's very easy for people who have no personal stake in this to take a very detached, theoretical view of the situation.  For the privileged, even $5 a gallon gasoline is little more than a nagging inconvenience which, at worst, means one or two less fancy dinners out per month or, heaven forbid, holding off on that ipad purchase.  From that vantage, one could easily lose sight of just how dire the situation truly is for so many working families.  Suffice it to say, and to no one's surprise, most politicians failed to place their constituents' needs at the fore.  

Since you're obviously unfamiliar with it, the intention behind the new Homestead Act was to try and keep people in their houses.  As you're aware, under normal circumstances (that is to say, before your mortgage was sold off dozens of times before the ink even dried) banks would negotiate with borrowers to avoid foreclosures.  Thanks to securitization and the genius financial alchemy of converting toxic waste into AAA  rated investments, that's now practically impossible because the loans can't be modified.   So, the actual proposals - if you even care - revolved around replacing the foreclosed mortgage with a shared equity agreement.  The upshot was that families could remain in their homes, maintain the property, build equity, and help avoid flooding the market with foreclosures.  As the proposals entailed working WITH banks, it could hardly be described as socialism so much as encouraging responsibility. 

We had the means to get that done.  We had the means to extend access to home ownership to those who weren't part of that original 'privileged class.'  We didn't do it.  

Again, that's another story for another topic.  I elaborated only because I'm sick of this retro McCarthyist garbage that gets pinned on anything aside from the unimpeachable purity of private profiteering. 

Oil/Auto industry lobbying killed off a lot of subway/El train expansion plans many cities had, but the basis of the suburban sprawl/highway problems you're referring to were the cause of "socialized housing". The government guaranteed no money down, super low interest rate mortgages for returning GIs after the war was over. A similar program was later extended to regular citizens. Just as the "Super-easy-no-money-down-no-income-to-prove-any-man-woman-or-dog-living-or-dead-with-a-SS#-real-or-made-up-qualifies" mortgages fueled the recent housing boom/bubble, those mortgages fueled the boom back in the post-war era. My grandfather once told me when he came back and tried rent an apartment in New York, he was told there were over 800 other rental applications for that same apartment. So to meet the artificially-fueled real demand, developers starting buying up farms and building massive communities of "little boxes made of ticky-tacky", as the song goes. It's hard to imagine now that the vast majority of Long Island was nothing but farmland. As the move outward prompted the renewal of highway infrastructure to be expedited, more people continued to make the move to the suburbs with the promise that getting around will not be a problem.

It's obvious that suburban sprawl was predicated in the availability of a cheap and inexhaustible oil supply, but beyond the sustainability aspect we also have to deal with the social justice aspect of it.  

Urban development is certainly "greener," but gentrification doesn't exactly strike me as particularly just.  It's a cruel shell game in which assets are merely shuffled around and kept out of reach for the disadvantaged, who are physically marginalized.  

Also, as much as I love the public transportation system in Japan, I tend to stay away from using it as an example Stateside, as the result of the government's undertaking of constructing and maintaining it was so costly that it had to be sold in chunks to private corporations for pennies on the dollar.  

It's worth mentioning that Tokyo Metro is one of only two subway companies in the world currently operating at a profit. (And Tokyo Metro, you'll note, is is jointly owned by the Japanese government and the Tokyo metropolitan government.)  The other company operating the Japanese subway system is Toei - and they are still running at a loss.  However, the difference can, at least in part, be attributed to maturity.  Tokyo Metro considers its coverage so complete that it has no further plans for expansion.  It's a long term investment, so it's hardly fair to look at it in the short run and, while it may not be a public good in the strictest sense, it's only sensible to consider the economic benefits that subway access offers to businesses and property owners as well.  

 

[wawaweewa]

Originally Posted by MARTIN AND CO


It's true PE funds do not specialize in prop trading, but they're not all LBOs, either.
You were talking about general economic theory, and the situation as of recent is unique. When libor+prime was 20% decades ago, it only marked the beginning of the LBO/bubble age. 20% as a cost of capital was low considering the enormous returns that were made back then because of the smaller number of players (pre-information age) involved. Deposits also provided safe and easy yields.  

The biggest difference right now is that there is almost no inter-bank lending. The only institution to borrow money from is the central bank of whatever country you're in. So, the jump in discount window lending reflects more-so the lack of borrowing between banks themselves. Funds of all sizes definitely still regard private investors as their bread and butter, otherwise all they'd do is borrow from the fed. When D.E. Shaw was able to arrange a line of credit with Bank of America in the billions, it liquidated its funds because it was cheaper to use money borrowed from the bank than the pay customary returns, Lots of companies are BHCs now; insurance companies and even american express are in on it, but all they're doing is just offering banking products like CD and mortgages. Their business model has not changed much. You cannot borrow 9 dollars for ever dollar that you have like people say after watching zeitgeist; you have to have 10% of the amount of deposits you accept as a bank. Capital ratios have fallen to as low as 3-6% in many banks after deregulation, with 6% being considered healthy now.

In closing, low interest rates do not cause any more speculation than high interest rates. Volatile markets (theres no money to be made if the market stays nice, calm, and flat) with many players beget speculation. The whole reason there is so much speculation in the first place is because after the era of consolidation when large corporations bought up smaller ones (i.e., "Bob Jones cable" is bought by comcast for $100 Million) many entrepreneurs had very large sums of cash with nowhere to invest it. That, along with bulging pension and endowments looking to park their money somewhere. These organizations gave money to people like George Soros and Jim Rogers, who's colossal returns coincided with skyrocketing commodity prices. Are those type of people needed to correct markets? Yes, but often times they're correcting markets they had a hand in making "incorrect".  

edit: it's late, I'm making typos like china is making lead toys; I'm off to bed for the night

edit again: didn't catch your edits: "If not for prop trading these banks would be insolvent ( a bunch of em technically are based on other investments) orsubstantially smaller." - Goldman is an almost trillion dollar hedge fund that I'm sure uses a lot of cheap fed money (those profits aren't coming from underwriting fees, now), but that still does not go against what I've said. Unless you have #s showing GS' discount window borrowing volume, we have no idea of knowing how much they're borrowing to speculate with. 

Dude, honestly. You don't know what you're talking about and it's evident when you say things like " ...low interest rates do not cause any more speculation than high interest rates." Low interest rates are designed to cause speculation (technically investment but there's a fine line between the two).

You claimed IB's don't borrow from the Fed window then I showed you that all of them do, in addition to the top Banks who have prop desks.
Again, if you can borrow at near 0 you do unless you're an idiot.

We don't know who borrows how much because the Fed won't release the data but that's beside the point. \

Why are you bringing PE 's, insurance companies, and credit corp's into the mix? They're irrelevant in this discussion. Not all BHC's have prop desks that speculate. "It just so happens" that the largest 3 IB's and top 5 Comm banks do.

 

[wawaweewa]

Originally Posted by MARTIN AND CO


It's true PE funds do not specialize in prop trading, but they're not all LBOs, either.
You were talking about general economic theory, and the situation as of recent is unique. When libor+prime was 20% decades ago, it only marked the beginning of the LBO/bubble age. 20% as a cost of capital was low considering the enormous returns that were made back then because of the smaller number of players (pre-information age) involved. Deposits also provided safe and easy yields.  

The biggest difference right now is that there is almost no inter-bank lending. The only institution to borrow money from is the central bank of whatever country you're in. So, the jump in discount window lending reflects more-so the lack of borrowing between banks themselves. Funds of all sizes definitely still regard private investors as their bread and butter, otherwise all they'd do is borrow from the fed. When D.E. Shaw was able to arrange a line of credit with Bank of America in the billions, it liquidated its funds because it was cheaper to use money borrowed from the bank than the pay customary returns, Lots of companies are BHCs now; insurance companies and even american express are in on it, but all they're doing is just offering banking products like CD and mortgages. Their business model has not changed much. You cannot borrow 9 dollars for ever dollar that you have like people say after watching zeitgeist; you have to have 10% of the amount of deposits you accept as a bank. Capital ratios have fallen to as low as 3-6% in many banks after deregulation, with 6% being considered healthy now.

In closing, low interest rates do not cause any more speculation than high interest rates. Volatile markets (theres no money to be made if the market stays nice, calm, and flat) with many players beget speculation. The whole reason there is so much speculation in the first place is because after the era of consolidation when large corporations bought up smaller ones (i.e., "Bob Jones cable" is bought by comcast for $100 Million) many entrepreneurs had very large sums of cash with nowhere to invest it. That, along with bulging pension and endowments looking to park their money somewhere. These organizations gave money to people like George Soros and Jim Rogers, who's colossal returns coincided with skyrocketing commodity prices. Are those type of people needed to correct markets? Yes, but often times they're correcting markets they had a hand in making "incorrect".  

edit: it's late, I'm making typos like china is making lead toys; I'm off to bed for the night

edit again: didn't catch your edits: "If not for prop trading these banks would be insolvent ( a bunch of em technically are based on other investments) orsubstantially smaller." - Goldman is an almost trillion dollar hedge fund that I'm sure uses a lot of cheap fed money (those profits aren't coming from underwriting fees, now), but that still does not go against what I've said. Unless you have #s showing GS' discount window borrowing volume, we have no idea of knowing how much they're borrowing to speculate with. 

Dude, honestly. You don't know what you're talking about and it's evident when you say things like " ...low interest rates do not cause any more speculation than high interest rates." Low interest rates are designed to cause speculation (technically investment but there's a fine line between the two).

You claimed IB's don't borrow from the Fed window then I showed you that all of them do, in addition to the top Banks who have prop desks.
Again, if you can borrow at near 0 you do unless you're an idiot.

We don't know who borrows how much because the Fed won't release the data but that's beside the point. \

Why are you bringing PE 's, insurance companies, and credit corp's into the mix? They're irrelevant in this discussion. Not all BHC's have prop desks that speculate. "It just so happens" that the largest 3 IB's and top 5 Comm banks do.

 

[rexanglorum]

Originally Posted by MARTIN AND CO

A lot of pseudo-intellectual discourse in here by people who clearly have no idea what they're talking about. Quoting a rolling stones article nor getting a degree in economics provides you with credentials. Economists have contributed absolutely nothing to the American colossus, other than their ability to prolong problems. 

  

Listen boy, I have battled Method Man for more than half a decade, he has much more than an article or two at his disposal. You can drop the "pseudo" label.

As far as I am concerned, economists have contributed to American power and prestige. This country was on the verge of collapse in the late 1970's, the "triple double" era, double digits interest rates, inflation and unemployment were cured by a triumvirate of Reagan, Volcker and Friedman. Those three men, two of whose were full time economists and the other a dedicated student of the discipline, brought us a quarter century of sustained growth (something you may not remember). Their successors failed us but those 25 years are, in themselves, valuable and if that time had not been squandered, we would still be enjoying mass prosperity.

 

[rexanglorum]

Originally Posted by MARTIN AND CO

A lot of pseudo-intellectual discourse in here by people who clearly have no idea what they're talking about. Quoting a rolling stones article nor getting a degree in economics provides you with credentials. Economists have contributed absolutely nothing to the American colossus, other than their ability to prolong problems. 

  

Listen boy, I have battled Method Man for more than half a decade, he has much more than an article or two at his disposal. You can drop the "pseudo" label.

As far as I am concerned, economists have contributed to American power and prestige. This country was on the verge of collapse in the late 1970's, the "triple double" era, double digits interest rates, inflation and unemployment were cured by a triumvirate of Reagan, Volcker and Friedman. Those three men, two of whose were full time economists and the other a dedicated student of the discipline, brought us a quarter century of sustained growth (something you may not remember). Their successors failed us but those 25 years are, in themselves, valuable and if that time had not been squandered, we would still be enjoying mass prosperity.

 

[npa07]

Originally Posted by Crumbs

its ##*+$*! ridiculous ... ive seen from 3.35 to 3.62.. the last few days...and thats for 87 @@* is this ...if it hits 4 im walking.

real talk im gonna bust out the beach cruiser word to debow from friday with the squeaks and everything

 

[npa07]

Originally Posted by Crumbs

its ##*+$*! ridiculous ... ive seen from 3.35 to 3.62.. the last few days...and thats for 87 @@* is this ...if it hits 4 im walking.

real talk im gonna bust out the beach cruiser word to debow from friday with the squeaks and everything