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This Bubble's Got Legs

bloomberg.com

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Re: This Bubble's Got Legs

#31

Post by lintiness »

Wildgoose wrote: post #14

The financial problems originated with excess debt, but debts that are so large that they cannot be paid back - will not be paid back. Inflating assets via QE doesn't really address the real underlying problem. The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help. For example, when the Banks were technically insolvent then the opportunity should have been taken…

banks issued equity and preferred equity to the tune of many many tens of billions during the crisis. revisionist class warfare stuff i strange (as a first hand participant): the bailout of wall street banks was critical for the economic well-being of EVERYBODY not just "the rich", and it's the main reason obama and democrats (who wanted it as opposed to the republicans who didn't) swept the elections.

Re: This Bubble's Got Legs

#32

Post by icantdrive55 »

benmarten wrote: post #4
rtpg wrote: post #2

So my vague understanding is that QE and stuff is technically printing money, but the resulting money isn't really being used for anything. Is a bubble a bubble if the extra bubbly-ness is from stuff that doesn't get used? EDIT: actually, answered my own question. QE raises asset prices (even if the sellers aren't really doing anything with the money), and at one point people will be like "wait, none of this is worth…

Yes, i feel the same when I look at houses in San Francisco. The shittiest houses are valued at almost 1mio. I'm just saying, nope, I'm not buying that. ;)

But the wealthy, who are the one's who have really benefitted from this free money will buy these chit boxes, and rent them out at outragious ROI.

And so will the wealthy foreigner--with a lousy phone call.

I've given up on more building. I think we need to open up areas where people can camp without breaking the law. Or, at least allow people to legally sleep in their vehicles. The fines/fees for breaking over stringent municipal laws are just not fair.

(I don't believe lightening up municipal laws will cause the average person to sleep on the sidewalk to save money. Yes, we will always have homelessness. I have known two people who were between rentals, and were ticketed for sleeping in their cars. It's just not--what's the word--the America I thought I was proud of.)

Re: This Bubble's Got Legs

#33

Post by lintiness »

Inthenameofmine wrote: post #28
codingmyway wrote: post #26

Earlier quoted context omitted.

the problem with the 'wealth' effect, or equality effect, is that the person selling the asset is likely retired or close and won't spend it and the increase in asset prices take an equal amount from the people who need to buy for their retirements but can't because central banks own them all. So those people of working age who might have spent more are poorer and will spend less too. The question is why central bank…

Based on many papers, articles, and interviews by many central bankers I have come to the conclusion that most of them aren't very smart to say the least. They think of a country as a household, rather than a complex system. Economic orthodoxy is also very irrational atm.

yeah, a lot of dumb central bankers running around!

Re: This Bubble's Got Legs

#34

Post by lintiness »

lifeisstillgood wrote: post #6

So, the article says dotcoms caused first bubble in 2000, houses in 2008, but this one is driven by central banks printing money. And there is no way they will stop printing so this is an infinite bubble There is sooo much wrong with that. As @rtpg says, that s stops not when Fed stops printing money but when market realises that the high asset prices "globally" become obviously unsustainable. The issue is that when…

another way to think about high asset prices is fear of owning currency. it's not irrational given the willingness of central banks to debase money.

Re: This Bubble's Got Legs

#35

Post by carsongross »

hga wrote: post #30
Wildgoose wrote: post #14

The financial problems originated with excess debt, but debts that are so large that they cannot be paid back - will not be paid back. Inflating assets via QE doesn't really address the real underlying problem. The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help. For example, when the Banks were technically insolvent then the opportunity should have been taken…

The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help. Note the US Federal government owns so much land in the Western part of the country and Alaska that that alone might allow it to get its fiscal house in order, and could certainly help. I mean, isn't it everyone's dream to have title to a plot of Alaskan tundra ^_^? Obviously it would be very hard to make thi…

Government debt, while large, is not the core issue.

Private debt is the issue. Steve Keen has been hammering this for years:

https://www.youtube.com/watch?v=CLplU4WdX9A

https://www.youtube.com/watch?v=ocQWs8EteqI

http://www.debtdeflation.com/blogs/

Re: This Bubble's Got Legs

#36

Post by euroclydon »

hga wrote: post #30
Wildgoose wrote: post #14

The financial problems originated with excess debt, but debts that are so large that they cannot be paid back - will not be paid back. Inflating assets via QE doesn't really address the real underlying problem. The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help. For example, when the Banks were technically insolvent then the opportunity should have been taken…

The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help. Note the US Federal government owns so much land in the Western part of the country and Alaska that that alone might allow it to get its fiscal house in order, and could certainly help. I mean, isn't it everyone's dream to have title to a plot of Alaskan tundra ^_^? Obviously it would be very hard to make thi…

If the government sold all it's land to pay back it's debt, we'd be no better off than we were back in the Robber Barron days. It's not secured debt, so it would be stupid for any entity to give up hard assets. This would almost be equivocal with ceasing to be a sovereign.

Re: This Bubble's Got Legs

#40

Post by hga »

euroclydon wrote: post #36
hga wrote: post #30

Earlier quoted context omitted.

The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help. Note the US Federal government owns so much land in the Western part of the country and Alaska that that alone might allow it to get its fiscal house in order, and could certainly help. I mean, isn't it everyone's dream to have title to a plot of Alaskan tundra ^_^? Obviously it would be very hard to make thi…

If the government sold all it's land to pay back it's debt, we'd be no better off than we were back in the Robber Barron days. It's not secured debt, so it would be stupid for any entity to give up hard assets. This would almost be equivocal with ceasing to be a sovereign.

If the government doesn't pay back/at least keep current on that debt, it's likely to fall, as in, the whole system of government, as happened the last time it screwed up so badly ("Not worth a Continental." although there were of course other factors). Secured by hard assets or not, a very great deal depends on people continuing to have a degree of faith in it as a whole, and it's hard to see how repudiating the debt would be survivable.

And it would still be just as sovereign as it is now, or are you claiming it's not sovereign over the Eastern part of the country???

Or course, there are many other gambits it could and likely will try, like the already mooted one of seizing people's tax system entangled retirement accounts.

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