161–170 of 226 posts
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Unfortunately we are stuck living in the present where the bonds are worthless and not the future.
If you happen to be holding any "worthless" Treasury bonds, I would be happy to take them off your hands for $0.10 on the dollar.
"Prof. Richard Wolff: The Economics of the US-China Cold War & Ukraine War"
No, I remember 2007-2008 pretty clearly. That felt much more precarious. Right now it seems pretty clear that if your bank fails you're going to get your money. That's not to say that this isn't the start of some kind of a financial crisis. But it could be very different from 2008. In this case I think the risk is more towards high inflation - for example, if enough banks were to fail (hypothetically - I doubt this w…
We have a gigantic housing bubble and banks are holding the bag.
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> How many crises do we have to go through before we admit the fed and banks either have no idea what they are doing or they know exactly what they're doing and it's malevolent? False dichotomy. The Fed can have good intentions, and a good-but-not-perfect idea what they're doing, and things can be working out, not perfectly, but better than they would in the absence of the Fed. Is there any evidence for that? Yeah, l…
Exactly. Economics likes to pretend it is a hard science because it has mathematics and formulas and hard numbers, but it's not. It is much closer with a social science, where work has either big assumptions or is much closer to a study about the market's behavior. But because economics has masqueraded as a science, we expect it to be more exact than it really is, and I think that dissonance can be quite impactful to…
One look at Norway tells me this is malarky.
If Norway can have such a stable economy and society, why can't the rest of the world?
What have they figured out that has eluded everyone else?
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All good points. Let's remove the power to control money from these people.
Great idea! As someone who spent time volunteering for Bernie Sanders campaign, I'll wait here while you go do that: Good luck!
How do you feel about his three houses?
The truth is people with the money don't want to change things and those with the power stop caring as much once they too get more.
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Everyone refinanced to very low interest rates. If home prices drop and people default then that’s lots of exposure to potential negative equity in all those home loans. I think the bubble is due to extremely high home prices. In my metro area, prices are up 70% since 2020. So a drop of 40% to correct to 2020 levels isn’t unheard of. Personally, I think the price is structural adjustments as people shift to remote wo…
Your metro area is not my metro area, nor is it any other metro area besides your metro area.
And I think is a pretty decent reference to average US home prices going up by 45% [0] since 2020.
[0] https://www.ceicdata.com/en/indicator/united-states/house-pr...
It feels a bit more like 2006 since the real economy is still mostly flying along fine and most of the business page pronouncements from 'respected leaders' are that a soft landing is still in our future. There's a lot more unrest among average people though, back then you couldn't really find anyone in your normal life that thought it would crash.
It isn't the same though, the pandemic and the inflationary period that we hit were not anything like what happened in the build up to the housing bubble.
At the same time I think some people think we're back to the 1970s and inflation and stagflation are here to stay. That is unlikely to happen because this Fed speaks very highly of Volker and has signaled their willingness to crash the economy into a wall in order to tame inflation. This isn't the 1960s Fed that grew up during the 40s and 50s and wanted to prevent a Great Depression at all costs so was running the economy hot. There will be a recession and unemployment will rise, and the Fed has done everything other than come out and state explicitly that is what is going to happen.
Because of the increase in interest rates things are going to break. We just saw one example of that, but there's also going to be a corrosive effect on bad companies/investments as the zombie ones that required rolling over loans at low interest rates see their borrowing costs increase and that pushes them into being liquidated. The blowup that I'm expecting is in commercial real estate and CMBS. The top will likely come off the housing market, and that can't possibly go down that easy without a lot of economic pain.
At the same time I don't think anything has fundamentally changed. When unemployment starts to spike up significantly again and the system starts to lock up, then they'll drop rates back down to zero again. It'll also probably work, since with enough destruction of zombie businesses and a glut of unemployment there won't be an immediate rebound in employment or inflation.
Might not happen this year though. The Fed rate tightening cycle has still not quite ended yet, and its usually 6-12 months after the tightening cycle ends that it gets bad. We can still see a counter-trend rally into e.g. a double top in the markets. A lot of people believe that interest rates rising are what causes economy pain, not holding interest rates at a higher rate (they thing it is an "edge trigger" rather than a "level trigger") and those people are likely to try to throw a party after the Fed stops raising rates. Or this cycle might be different and the aggressive Fed actions might start to blow up more stuff quicker this time, I can't really tell you (if I could I could make a ton of money, but I have no firm idea of the near-term trajectory of the economy).
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Exactly. Economics likes to pretend it is a hard science because it has mathematics and formulas and hard numbers, but it's not. It is much closer with a social science, where work has either big assumptions or is much closer to a study about the market's behavior. But because economics has masqueraded as a science, we expect it to be more exact than it really is, and I think that dissonance can be quite impactful to…
Please. One look at Norway tells me this is malarky. If Norway can have such a stable economy and society, why can't the rest of the world? What have they figured out that has eluded everyone else?
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magical thinking about very un-tethered and highly manipulated currency is not a help. imagining it will change for an entire economy ... is quite irrational. no magic will make a constantly shifting ice floe into boring bedrock.
The current system is more irrational, unless you're benefiting from the corrupt system. Bitcoin is democratic and you vote with a node.
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Please. One look at Norway tells me this is malarky. If Norway can have such a stable economy and society, why can't the rest of the world? What have they figured out that has eluded everyone else?
Sitting atop the world’s largest sovereign wealth fund, accumulated over decades of judicious management of national oil wealth, perhaps insulates Norway from realities that apply elsewhere.