Fed issues excuses for why they missed what everyone else saw coming

[kevsta]

http://libertystreeteconomics.newyor...recession.html

Quote:

The economics profession has been appropriately criticized for its failure to forecast the large fall in U.S. house prices and the subsequent propagation first into an unprecedented financial crisis and then into the Great Recession.

In this post, I examine the performance of the forecasts produced by the economic research staff of the Federal Reserve Bank of New York (New York Fed) over the period 2007-10 and consider some of the reasons why we, like most private sector forecasters, failed to predict the Great Recession.

the bolded makes me chuckle, all the ones I take notice of saw it coming from years out, the rest proved their worth (or not)

so my question really is why should we listen to anything else they say moving forwards? if they couldn't even see it coming, why would they now have any idea what "it" is, or the best way to deal with "it" moving forwards?

this kind of incompetence would not survive in the private sector (bankruptcy, when it used to be allowed anyway) and in the military if you got it this wrong you would likely be dead.

thoughts please?

[Roger Ramjets]

Originally Posted by kevsta

and in the military if you got it this wrong you would likely be dead.

So how did the Allies manage to win WW2, when they failed to predict Hitler's invasion of France and Japan's attack on Pearl Harbor? The reason, of course, is that (some of us) learn from history and improve our skills.

Sure, a few in the private sector 'accurately predicted' this recession, and one presumes that they got rich off it (if not, why not? Were they not sure?). But how do we know it wasn't just dumb luck? How many predicted a slightly different scenario that didn't pan out? Without knowing the methodologies used we can't know whether they were unusually competent, or just plain lucky.

One thing is for sure though, if bankruptcy was 'allowed' for everybody who didn't have a super-accurate crystal ball, there would be very little economy left for those few who did. Everybody would lose.

Quote:

this kind of incompetence would not survive in the private sector

The incompetence was (and still is) mostly in the private sector. There's not much the Fed could have done even if their predictions were spot on - nobody would have believed them anyway...

[kevsta]

Originally Posted by Roger Ramjets

So how did the Allies manage to win WW2, when they failed to predict Hitler's invasion of France

in the case of the UK, pure geographic luck. if there hadn't been the mere 20 miles of sea between France and Britain, Hitler would have rolled right over them and history would be different now.

Originally Posted by Roger Ramjets

and Japan's attack on Pearl Harbor?

hardly a decisive blow against a country as powerful as the USA was it? the men killed at Pearl Harbor tend to back my argument though, they played no further part in things, did they?

Originally Posted by Roger Ramjets

The reason, of course, is that (some of us) learn from history and improve our skills.

ah, if only. Rogoff & Reinhart's work tends to dispute this.

Originally Posted by Roger Ramjets

Sure, a few in the private sector 'accurately predicted' this recession, and one presumes that they got rich off it (if not, why not? Were they not sure?). But how do we know it wasn't just dumb luck? How many predicted a slightly different scenario that didn't pan out? Without knowing the methodologies used we can't know whether they were unusually competent, or just plain lucky.

yes, lots of them are richer from it, but I will accept that there was luck in some cases, and some corruption too, eg, Paulson selected his deals to bet against, and since then has made wrong call after wrong call to the point of virtually destroying himself and his firm.

Originally Posted by Roger Ramjets

One thing is for sure though, if bankruptcy was 'allowed' for everybody who didn't have a super-accurate crystal ball, there would be very little economy left for those few who did. Everybody would lose.

what would everybody have lost? the ability to continually subsidize incompetently managed zombie banks and institutions that should have gone under? the ability to perpetually fund more bailouts into the future?

what they have lost is the chance to be actually recovering and growing now, instead of again facing round II imminently (IMO, admittedly)

Originally Posted by Roger Ramjets

The incompetence was (and still is) mostly in the private sector. There's not much the Fed could have done even if their predictions were spot on - nobody would have believed them anyway...

ok, accepted. thanks for a decent answer.

[stilicho]

Originally Posted by kevsta

Quote:

Originally Posted by Roger Ramjets
The incompetence was (and still is) mostly in the private sector. There's not much the Fed could have done even if their predictions were spot on - nobody would have believed them anyway...

ok, accepted. thanks for a decent answer.

You perform a lot of the same rhetorical gymnastics as Tippit does. He is presumably fabulously wealthy since he claimed that he bought all his silver when it was in the single digits. Naturally he claimed this on this very board many years after silver was no longer priced there but we shouldn't pay any attention to that.

The point is that it's unbelievably easy to select a couple "wise men" out of the entire financial consulting industry and claim they were always right when the economists working at the Federal Reserve were wrong.

Why not walk out on a limb and predict something like the US unemployment rate, the USD-EUR exchange rate, the US trade surplus/deficit, and the price of a 5kg bag of flour just one year into the future? Use any of the ball-gazers you wish to support your position. We can all meet back at the thread you start, next year at this time and with those predictions, to see just how easy it is to be right. It should be a lead-pipe cinch because "everyone" can see the future.

It would certainly save you the business of starting a new Federal Reserve thread every couple days.

------------

PS: If 20 miles of sea is such a barrier to conquest then it's obvious that the Pacific Ocean is 19 miles or less across.

[psionl0]

Originally Posted by stilicho

Why not walk out on a limb and predict something like the US unemployment rate, the USD-EUR exchange rate, the US trade surplus/deficit, and the price of a 5kg bag of flour just one year into the future?

If kevsta proved to be remarkably accurate with these predictions would you start viewing him with awe or would you say he jagged it?

[kevsta]

Originally Posted by stilicho

You perform a lot of the same rhetorical gymnastics as Tippit does. He is presumably fabulously wealthy since he claimed that he bought all his silver when it was in the single digits. Naturally he claimed this on this very board many years after silver was no longer priced there but we shouldn't pay any attention to that.

I cant comment for Tippit, but he sounds like a relatively wise chap to me

Originally Posted by stilicho

The point is that it's unbelievably easy to select a couple "wise men" out of the entire financial consulting industry and claim they were always right when the economists working at the Federal Reserve were wrong.

Why not walk out on a limb and predict something like the US unemployment rate, the USD-EUR exchange rate, the US trade surplus/deficit, and the price of a 5kg bag of flour just one year into the future? Use any of the ball-gazers you wish to support your position. We can all meet back at the thread you start, next year at this time and with those predictions, to see just how easy it is to be right. It should be a lead-pipe cinch because "everyone" can see the future.

I am sure you are well aware that specific exact predictions are very difficult, evading even the best traders in the world, all the time.

Even the mighty Goldman Sachs have given up attempting that this week in fact, after too many people making too much money from doing the exact opposite of what they recommend publicly, and the humiliation that brings.

however accurately predicting numbers is very different to saying "this is bad, and it can't possibly end well" or that "gold and silver are going to go up, over the next few years" - would you not agree? those kind of predictions, im fine with.

Originally Posted by stilicho

It would certainly save you the business of starting a new Federal Reserve thread every couple days.

c'mon now, it is a brand new piece from them? it doesnt deserve to be hidden away on the tail end of some trolling bickering post somewhere does it? many people are suspicious that it appeared at the close of Black Friday / Thanksgiving etc as if to get minimum exposure anyway, Im just trying to give it a little light.

------------

Originally Posted by stilicho

PS: If 20 miles of sea is such a barrier to conquest then it's obvious that the Pacific Ocean is 19 miles or less across.

are you saying that you think if there had been a land connection to the UK, having crushed and humiliated the British Expeditionary Force in France that the British civilians could have repelled the Blitzkreig and Panzer divisions?

really?

Im British, and we pride ourselves on our fighting spirit, and the overall victory, if you know any British you'll know this is true, but only a complete delusional mentalist would be under any illusion that if the Germans could have just driven there in 1939, we wouldnt be speaking German by now.

here's some pictorial evidence from the period

[Roger Ramjets]

Originally Posted by kevsta

what would everybody have lost? the ability to continually subsidize incompetently managed zombie banks and institutions that should have gone under?

Down here we did let some 'zombie' institutions go under. But we kept the wall up between banks and finance companies, so damage was minimal. In the US virtually everybody had their fingers in the pie, and probably most if not all the major banks would have gone under - have you any idea what chaos that would have caused?

I imagine gold bugs wandering the streets trying to trade their 'precious' for something to eat - and not getting any takers...

Quote:

what they have lost is the chance to be actually recovering and growing now

What they gained was not having another 1930's style depression, where people starved to death while farmers destroyed produce because it wasn't worth bringing to the market. If you had a sucking chest wound, would you pay a doctor to stitch it up and then stay in bed until it healed, or let it bleed out and hope for a fast recovery?

[kevsta]

Originally Posted by Roger Ramjets

Down here we did let some 'zombie' institutions go under. But we kept the wall up between banks and finance companies, so damage was minimal. In the US virtually everybody had their fingers in the pie, and probably most if not all the major banks would have gone under - have you any idea what chaos that would have caused?

I imagine gold bugs wandering the streets trying to trade their 'precious' for something to eat - and not getting any takers...

good imagery.

Originally Posted by Roger Ramjets

What they gained was not having another 1930's style depression, where people starved to death while farmers destroyed produce because it wasn't worth bringing to the market. If you had a sucking chest wound, would you pay a doctor to stitch it up and then stay in bed until it healed, or let it bleed out and hope for a fast recovery?

do you believe the mutually assured destruction stories that Hank was peddling then? martial law, troops in the streets?

and if it turns out they have avoided that, then you are correct, but if it turns out how I think it still will, not only have they not avoided it, they have ensured it will be worse still.

[Roger Ramjets]

Originally Posted by kevsta

Im British,

Then you should know that the British armed forces were already preparing for the inevitable long before the Panzers rolled into France. What they were not expecting was how little resistance the Germans met there.

Quote:

you think if there had been a land connection to the UK, having crushed and humiliated the British Expeditionary Force in France that the British civilians could have repelled the Blitzkreig and Panzer divisions?

If there was a land connection between France and England, I'm sure the UK's military strategy would have been quite different.

Quote:

do you believe the mutually assured destruction stories that Hank was peddling then? martial law, troops in the streets?

As I understand it that was not a threat, but simply a 'worst-case' scenario to be considered if the economy completely collapsed. Perhaps he should have shut up and advocated no action? Then we would know what would have happened!

Things got pretty bad in the Great Depression, but the US population was only 127 million. Today they have over 300 million mouths to feed, and a much higher dependency on imports. I would not be surprised if the army had to be called in to maintain civil order and infrastructure.

Quote:

if it turns out how I think it still will, not only have they not avoided it, they have ensured it will be worse still.

Care to be more precise? How much worse? When will this happen?

[stilicho]

Originally Posted by psionl0

If kevsta proved to be remarkably accurate with these predictions would you start viewing him with awe or would you say he jagged it?

Bingo. If forecasting was simply a matter of being right on random points of interest then we'd all be super-rich kabillionaires. Unfortunately, planning and analysis is more than just dumping data or making the best guess.

Cherry-picking select experts is not evidence of anything, especially when you pick them after the events they're said to have predicted actually occur.

Let's see him try that one simple task I presented, though. It should be a lead-pipe cinch since he has special knowledge. Why not put his money where his mouth is?

[stilicho]

Originally Posted by kevsta

....

I am sure you are well aware that specific exact predictions are very difficult, evading even the best traders in the world, all the time.

Even the mighty Goldman Sachs have given up attempting that this week in fact, after too many people making too much money from doing the exact opposite of what they recommend publicly, and the humiliation that brings.

however accurately predicting numbers is very different to saying "this is bad, and it can't possibly end well" or that "gold and silver are going to go up, over the next few years" - would you not agree? those kind of predictions, im fine with.

....

Yeah, things suck and it's all going down the drain. What an ineffectual cop-out. I just looked at the P&L from the company I work for and see a nearly double digit year over year growth in revenue and EBITDA. So I guess we either hire delusional people who don't accept this kind of inept fatalism or things don't really suck but you have to pick your fights and work harder than your competitors to succeed.

As I've explained before, one of the company's markets is in gold and silver and there's never been a better time to sell. This is exactly the opposite of what you've recommended and I'd really like to hear about your P&L so we can compare. In fact, the metals trading business has stagnated and its growth cycle has definitely matured.

I think we would gladly accept anyone from the Fed or Goldman Sachs on board but we probably can't afford them. We get newly-minted accountants and other professionals who have all the tools to run their own businesses if they wanted to. I wouldn't hire any of the dolts you recommend. They over-report their wins and under-report their losses. They don't supply any baseline. They don't even tell you whether their accidental victories are based on a calendar year or a fiscal year. In essence, they're frauds and deserve all the scorn you can summon to dispense.

[stilicho]

Originally Posted by kevsta

....

are you saying that you think if there had been a land connection to the UK, having crushed and humiliated the British Expeditionary Force in France that the British civilians could have repelled the Blitzkreig and Panzer divisions?

really?

Im British, and we pride ourselves on our fighting spirit, and the overall victory, if you know any British you'll know this is true, but only a complete delusional mentalist would be under any illusion that if the Germans could have just driven there in 1939, we wouldnt be speaking German by now.

here's some pictorial evidence from the period

We don't know because there actually isn't a land bridge connecting the sceptred isle to the continent. Who knows? But we do know that the Pacific Ocean was not an insurmountable barrier to the victorious Americans in their war against Imperial Japan. Rumour has it that the ocean is wider than the English Channel.

Military action is always a roll of the dice and the outcome is never easily forecasted. In that respect it's exactly like economic activity.

Your abiding sense of certainty about military or economic consequences and faith in specific preconditions or remedies is startling and naive. The real world contains a morass of uncertainties and conflicting missions and anyone who tells you that such-and-such a result is a sure thing is either pulling your leg or jerking your chains.

[kevsta]

Originally Posted by Roger Ramjets

Care to be more precise? How much worse? When will this happen?

How much worse? good question. Ok, I think that 2008-2009 will be eclipsed by round 2 of the crisis, by some fair margin, more major US banks will fail (and or get bailed). further derivatives based blowups.

I would also speculate that in the next decade the US will lose reserve currency status, and suffer the lowered standards of living that will bring. A bond market crisis ala Europe currently, very good chance.

If by the end of next year this is not underway and evident for all to see, then I will be very surprised, and you can claim "victory"

I dont want to argue anymore about what may or may not have happened in WW2, as that is pretty irrelevant to a thread about the poor forecasting record of the Fed, but will just leave that with this final comment.

Most of what I know about WW2 comes from my father who was a war child, and from his father who fought in both WW1 & WW2. He was in the D day landings, and made it as far as the Battle of the Bulge where he was badly injured by shrapnel and sent back to England at that point, and he was never in any doubt that if the Germans had been able to get to England in the early stages it would have been all over before we had a chance to blink.

was he right? who knows, but he was there, all the way through, and so I would tend to trust his judgement over that of you guys, no offence.

what the US did in the Pacific is completely irrelevant to this conversation isnt it? feel free to answer because obviously you know more about it all than me, but Im dropping this here, ok?

Originally Posted by stilicho

Yeah, things suck and it's all going down the drain. What an ineffectual cop-out. I just looked at the P&L from the company I work for and see a nearly double digit year over year growth in revenue and EBITDA.

you dont work at Sprott do you? I gather they are doing pretty well.

Originally Posted by stilicho

As I've explained before, one of the company's markets is in gold and silver and there's never been a better time to sell. This is exactly the opposite of what you've recommended and I'd really like to hear about your P&L so we can compare. In fact, the metals trading business has stagnated and its growth cycle has definitely matured.

I dont remember you explaining anything about this? it's possible I missed a post somewhere? link me if its relevant?

my P & L? I run an SEO company and it's going well, luckily it's the kind of business that benefits from tougher times, the harder things get, the more people need their sites to work effectively for them.

wrt to metals ownership, 70/30 Gold silver since Aug 2009. I'm not trading metals for a living? I have been playing the GSR and gambling on drops to buy back in a bit lower, but I think youve got the wrong end of the stick with all this.

Originally Posted by stilicho

I wouldn't hire any of the dolts you recommend.

which dolts exactly? I don't remember recommending anybody? and I'm pretty sure you couldn't afford them either.

Originally Posted by stilicho

Let's see him try that one simple task I presented, though. It should be a lead-pipe cinch since he has special knowledge. Why not put his money where his mouth is?

one simple task? get real. I already told you if Goldman cant do it, do you think you sound clever insisting that an interested layman does? and I did already put my money where my mouth is, by getting out of property in the UK in 2006 and into metals in 2009.

although what this has to do with the Fed's terrible forecasting record is beyond me. I am not the (hundreds of) MIT trained PHD economists who blew bubble after bubble with cheap money yet couldn't see any trouble coming?

could we get back to the subject do you think?

[kevsta]

It is of course possible the can gets another mighty kick for a few years more courtesy of a 100 trillion SDR binge as discussed at Davos.

or it could go completely the opposite direction.

my only bet really is that in either case, Gold is a better option than paper based investments.

what are the FED telling us will happen? .. basically as long as Im 180 degrees to that I'll be able to sleep soundly

[balrog666]

Originally Posted by kevsta

http://libertystreeteconomics.newyor...recession.html



the bolded makes me chuckle, all the ones I take notice of saw it coming from years out, the rest proved their worth (or not)

so my question really is why should we listen to anything else they say moving forwards? if they couldn't even see it coming, why would they now have any idea what "it" is, or the best way to deal with "it" moving forwards?

this kind of incompetence would not survive in the private sector (bankruptcy, when it used to be allowed anyway) and in the military if you got it this wrong you would likely be dead.

thoughts please?

The fact that Fannie and Freddie are still operating under a business-as-usual manner tells you everything you need to know about their masters.

[stilicho]

Originally Posted by kevsta

....

one simple task? get real. I already told you if Goldman cant do it, do you think you sound clever insisting that an interested layman does? and I did already put my money where my mouth is, by getting out of property in the UK in 2006 and into metals in 2009.

although what this has to do with the Fed's terrible forecasting record is beyond me. I am not the (hundreds of) MIT trained PHD economists who blew bubble after bubble with cheap money yet couldn't see any trouble coming?

could we get back to the subject do you think?

Uh, the subject was yet another of Tippit's kevsta's endless screeds against the Federal Reserve and economists in general and a resolute refusal to provide your own alternate predictions. We have nothing but time on this board, kevsta, and I've yet to see a single contributor to the economics forums accurately predict anything. I've waited for years (see my join date) and still it's crickets.

Show me anyone, right this minute, who will accurately forecast better than Goldman Sachs or the economists at the Federal Reserve. Pick your favourite and we can watch wide-eyed as his or hers forecasts unfold before us. I supplied four really simple criteria but perhaps you have some others in mind. Let's hurry, though, because we can start this proposal of yours around New Years and follow your experts as they overshadow everyone in the business.

[respect]

Originally Posted by kevsta

http://libertystreeteconomics.newyor...recession.html



the bolded makes me chuckle, all the ones I take notice of saw it coming from years out, the rest proved their worth (or not)

No, they did not. The likes of Ron Paul were hardly accurate about anything. Their decades of predictions of economic catastrophe were bound to bear tangent resemblance to something real (a broken watch is right twice a day) but where the hell is the hyperinflation that they predicted?

Where the hell are the claims of sluggish M2 growth and a massive drop in money velocity in the You Tube videos of them uneducated clowns keep claiming show they predicted the current recession? Why did Peter Schiff's investors take a beating if his predictions were so good? Are we really supposed to believe his predictions (he never made) were so great that he often bet the opposite and lost a lot of people a fortune?

All I ever see from people like you is links to You Tube videos where so and so predicts, "housing bubble>Fannie and Freddie in trouble>hyperinflation."

Bang up job **** heads, lots of people predicted the housing bubble, where are these prophets predictions of banks over leveraged in mortgage backed securities without a proper level of hedging? Where are the predictions of sluggish M2 growth? Where is the hyperinflation they predict? Where is the drop in money velocity, short term deflation and sluggish inflation in their predictions?

You know, the things that actually happened? Where are they in the predictions of these great prophets? They only appear accurate to you because you have no idea what you are talking about.

The likes of you and Peter Schiff should actually be very happy with the current economy. Households, businesses and even banks are saving, money velocity is down, inflation is down. THIS IS WHAT YOU GOLD BUGS HAVE ALWAYS WANTED. Your ilk has been telling us for decades that debt is bad and savings are good. You got your wish for the time being. Banks won't lend, people and businesses are settling their debts and saving. Fiat hardly stops this from ever happening, Japan has been in it for decades, but gold practically demands it. This is the economy you dream of.

Originally Posted by kevsta

so my question really is why should we listen to anything else they say moving forwards? if they couldn't even see it coming, why would they now have any idea what "it" is, or the best way to deal with "it" moving forwards?

this kind of incompetence would not survive in the private sector (bankruptcy, when it used to be allowed anyway) and in the military if you got it this wrong you would likely be dead.

thoughts please?

Because that isn't the way science works. We don't discount a scientist because his hypothesis was wrong, unless fraud and deception were involved or deliberate ignorance, most hypothesis are wrong. We make educated guesses and test the ideas out to determine what is the most predictive and has the most value. What requires the least assumptions to still be predictive. What explains the largest sets of data and so on. The Fed was hardly flawless here, that does not discount all of the good research they have done, it does not mean they will not do good research in the future.

[Robrob]

Originally Posted by kevsta

the bolded makes me chuckle, all the ones I take notice of saw it coming from years out, the rest proved their worth (or not)

What percentage of firms would that be exactly? Simple guessing "yes" or "no" would yield a 50/50 success ratio. Are you claiming you did better?

Quote:

so my question really is why should we listen else they say moving forwards? if they couldn't even see it coming, why would they now have any idea what "it" is, or the best way to deal with "it" moving forwards?

Why should we listen to the 50% or more of financial institutions that also failed to "see it coming?" Because the Fed is no more psychic than the rest, that's shocking?

Quote:

this kind of incompetence would not survive in the private sector (bankruptcy, when it used to be allowed anyway) and in the military if you got it this wrong you would likely be dead.

You do realize a lot of private sector firms also "got it wrong" and did go bankrupt (or close to)? And that financial firms have always (and always will) gone bankrupt?

Is any of this this new to you?

[kevsta]

Originally Posted by stilicho

Uh, the subject was yet another of Tippit's kevsta's endless screeds against the Federal Reserve and economists in general and a resolute refusal to provide your own alternate predictions.

are you implying that I am Tippit? I can assure you I am most certainly not.

Originally Posted by stilicho

We have nothing but time on this board, kevsta, and I've yet to see a single contributor to the economics forums accurately predict anything. I've waited for years (see my join date) and still it's crickets.

see my join date, I wasnt born yesterday either.

Originally Posted by stilicho

Show me anyone, right this minute, who will accurately forecast better than Goldman Sachs or the economists at the Federal Reserve.

I don't think you've been paying attention, there has been a lot of money made by just consistently doing the opposite of what certain individuals and firms tell punters to do. Goldman in particular have almost a 100% failure rate with their sellside analysis, all you have to do is take the opposite bet. see this most recent example, and the inevitable conclusion here a few days later.

so a mere financial (conspiracy goldbug non-credible yada yada yada) blog wiped the floor with Goldman, as it has done time and time and time again. perhaps you can shoot the messenger some more because you don't like the message being right too much of the time.

the FED however, should have just a very slight advantage over everyone else, what with actually making the policies!!! would you not agree?

Originally Posted by stilicho

Pick your favourite and we can watch wide-eyed as his or hers forecasts unfold before us. I supplied four really simple criteria but perhaps you have some others in mind. Let's hurry, though, because we can start this proposal of yours around New Years and follow your experts as they overshadow everyone in the business.

for a "scientist" you are being very simplistic. "my favourite" hmm, difficult to choose, there are a few. within this group there are alternate views and opinions on micro issues, but within the context of broadly similar macroviews

• Jim Rickards
• Eric Sprott
• Hugh Hendry
• Kyle Bass
• Reggie Middleton
• Steve Keen
• Gordon T Long
• Robin Griffiths
• Ben Davies
• Michael Pento
• Peter Schiff
• Jim Rogers
• Marc Faber

and so if I have until New Years I will accept your challenge, let me collate opinion across the guys who do have a clue, cross reference it with my Contra indicators

• Goldman sellside (Stolper, Jim O Neill etc)
• Whitney Tilson (see the anti Tilson ETF )
• Dennis Gartman
• Jim Cramer
• Bernanke
• Krugman
• Roubini

and see what we can come up with on specifics (because small specific parts of a large complex system are what is truly important in the grand scheme of the macro view, aren't they)

the problem we have with this though, is it is hugely dependent on what the FED actually do, ie Rickards thinks the Euro will survive and get stronger, and if the FED (IMF whatever) bail Europe out, he will likely be correct.

do you see how they (FED) might have a little inside knowledge with regards to these things and hence *should* be in a position to predict slightly better than outside observers?

So I think the predictions will be along the lines of:

"if they do this, then this.. but if they do this, then this.." is that acceptable?

Originally Posted by resprect

No, they did not. The likes of Ron Paul were hardly accurate about anything.

Originally Posted by resprect

Their decades of predictions of economic catastrophe were bound to bear tangent resemblance to something real (a broken watch is right twice a day) but where the hell is the hyperinflation that they predicted?

be careful what you wish for, this is so far from over yet. if this comes, it will come because of the loss of the reserve status and bond market meltdown, it's not the US' turn yet, they will be last, before that we have the UK and Japan

here's the timetable were following if you're really interested, written Jan 2010 (right as Dubai defaulted) and going pretty much to plan ever since, validated almost daily by events.

Originally Posted by resprect

Why did Peter Schiff's investors take a beating if his predictions were so good? Are we really supposed to believe his predictions (he never made) were so great that he often bet the opposite and lost a lot of people a fortune?

sorry but this is utter bull and has been debunked over and over again, but still it gets trotted out by people who do not know what they are talking about.

one of us (not you) spent 6 months listening back through Schiff's "Wall Street Unspun" archives in 2008, every single one right back to 2004, comparing with recent history and events and so has a clue what he is talking about, the other is just parroting what every other detractor says.

You accuse me of getting my information from Youtube and yet this is what you are doing with regards to Schiff. nice

Nobody who stayed with him (and the fund) lost a single penny, and every single one is up massively today. There were a few stupid (and later vocal) individuals who bailed at the exact worst moment in the middle of the crisis, when everybody and everything were down, and if you jump out of the lifeboat right in the middle of the storm, sorry but that's Darwinism at work, the stupid often die.

Originally Posted by resprect

All I ever see from people like you is links to You Tube videos where so and so predicts, "housing bubble>Fannie and Freddie in trouble>hyperinflation."

"people like me" ? you have never met one before amigo.

Originally Posted by resprect

Bang up job **** heads, lots of people predicted the housing bubble

The FED who blew it didn't?

Originally Posted by resprect

where are these prophets predictions of banks over leveraged in mortgage backed securities without a proper level of hedging?

proper levels of hedging? you do understand what happened at AIG do you? people were "hedged" and the insurance company blew up, lol, hedge that.

Originally Posted by resprect

Where are the predictions of sluggish M2 growth? Where is the drop in money velocity, short term deflation and sluggish inflation in their predictions?

minor parts of complex systems taking time to work to the finale.

Originally Posted by resprect

Where is the hyperinflation they predict?

If you had ever actually listened to Schiff instead of just bandwagoning with all your chums parrot fashion, you would know that he is always saying that is a possibility, and that he hopes that it can be avoided by doing the right things, however he (like me) has zero faith that they will do the right things, and so that is ultimately probably where it is heading.

Originally Posted by resprect

You know, the things that actually happened? Where are they in the predictions of these great prophets? They only appear accurate to you because you have no idea what you are talking about.

ironically in fact, they only appear inaccurate to you, because you have no idea what you are talking about.

Originally Posted by resprect

The likes of you and Peter Schiff should actually be very happy with the current economy. Households, businesses and even banks are saving, money velocity is down, inflation is down. THIS IS WHAT YOU GOLD BUGS HAVE ALWAYS WANTED.

LOL! time for your medication amigo.

Originally Posted by resprect

Your ilk has been telling us for decades that debt is bad and savings are good. You got your wish for the time being. Banks won't lend, people and businesses are settling their debts and saving.

Banks wont lend because they are all insolvent and desperately trying not to disappear into their own debt vortex, people are not settling their debts, this is just false.

If "consumers are paying down their debts" why are Credit cards delinquencies on the rise?

Not only are consumers not paying down their debt, they aren’t even making the payments on the debt they owe. Consumer debt is increasing. The millions of people who have fallen off the unemployment are now using their credit cards to survive.

Originally Posted by resprect

Fiat hardly stops this from ever happening, Japan has been in it for decades, but gold practically demands it. This is the economy you dream of.

somebody is dreaming for sure.

Originally Posted by resprect

Because that isn't the way science works. We don't discount a scientist because his hypothesis was wrong, unless fraud and deception were involved or deliberate ignorance, most hypothesis are wrong. We make educated guesses and test the ideas out to determine what is the most predictive and has the most value. What requires the least assumptions to still be predictive. What explains the largest sets of data and so on. The Fed was hardly flawless here, that does not discount all of the good research they have done, it does not mean they will not do good research in the future.

"deliberate ignorance" .. how about just plain ignorance from years of planning around the pseudo-scientific theories that comprise modern economics?

we are not just asking for forecasts from an impartial scientific observer here, are we?

THE FED MADE THE ECONOMY FROM ONE BUBBLE TO THE NEXT, YEAR IN, YEAR OUT, AND YET COULD NOT "FORECAST" A SINGLE ONE OF THEM.

do you really not see the difference?

[kevsta]

Originally Posted by Robrob

What percentage of firms would that be exactly? Simple guessing "yes" or "no" would yield a 50/50 success ratio. Are you claiming you did better?

can you be a bit more specific? yes or no to what? I was desperate to sell my property in the UK and get out before it all collapsed from 2004 onwards, I managed to get out in early 2006. did I do better? you tell me?

Originally Posted by Robrob

Why should we listen to the 50% or more of financial institutions that also failed to "see it coming?" Because the Fed is no more psychic than the rest, that's shocking?

no, of course not, however I feel that failure consistently, should lead to changes in staffing, not back-patting and more of the same? ..controversial I know.

Originally Posted by Robrob

You do realize a lot of private sector firms also "got it wrong" and did go bankrupt (or close to)? And that financial firms have always (and always will) gone bankrupt?

yes of course? except for those with the implicit Govt guarantee of course..

Originally Posted by Robrob

Is any of this this new to you?

well to be honest I usually have more idea what I am actually being asked from a post?

[WildCat]

If everyone saw it coming why did the stock market crash rather than falling slowly in the months and years leading up to the financial meltdown?

[daenku32]

Originally Posted by WildCat

If everyone saw it coming why did the stock market crash rather than falling slowly in the months and years leading up to the financial meltdown?

I was about to ask that too. Maybe it's the "hey, it's going to crash soon, but I bet I have time for just one more trade."

But that question is rhetorical. Personally, I think its that not only did they not see it, they did not even WANT to see it. There was too much money to be made.

[daenku32]

Since this is a Central Bank thread, here is a point made today in regards to Sweden's and Finland's (non)ability to print money.
http://www.businessinsider.com/swede...inland-2011-11

Sweden has its own currency, so it can do it. Finland has the Euro, so it cannot. And because ECB is not printing money it's hurting countries like Finland.

Both countries still have a rock solid economy with cradle-to-grave welfare systems, but it's clear which one the 'Gold-like' inflexible Euro currency is hurting.

[kevsta]

Originally Posted by WildCat

If everyone saw it coming why did the stock market crash rather than falling slowly in the months and years leading up to the financial meltdown?

are you one of the (majority, admittedly) of Americans who think that the stock market is a valid indicator of the general health of the economy?

if so, what kind of indicator do you think it is? forward? rear-view?

also do you think it is purely "market driven" or do you think that central planners might interfere with it to affect public perception?

Originally Posted by daenku32

I was about to ask that too. Maybe it's the "hey, it's going to crash soon, but I bet I have time for just one more trade."

But that question is rhetorical. Personally, I think its that not only did they not see it, they did not even WANT to see it. There was too much money to be made.

who actually is "they" in this question? the Fed? institutions? traders?

I dont think its actually possible to respond with a "they didn't because.." type answer.

[daenku32]

Originally Posted by kevsta

who actually is "they" in this question? the Fed? institutions? traders?

A very large portion of the "everyone" in your post, which I assume would be those involved in the mortgage & derivatives business in the private sector.

[WildCat]

Originally Posted by kevsta

are you one of the (majority, admittedly) of Americans who think that the stock market is a valid indicator of the general health of the economy?

if so, what kind of indicator do you think it is? forward? rear-view?

also do you think it is purely "market driven" or do you think that central planners might interfere with it to affect public perception?

Would you like to try responding to my post again, this time actually adressing the question raised?

[kevsta]

Originally Posted by WildCat

Would you like to try responding to my post again, this time actually adressing the question raised?

if you could manage to phrase a valid and legible question I might be tempted.

firstly define: "everyone" ? is it the same same "everyone" I used in the thread title? if so, get over that, it was written merely as a "headline" to attract attention and provoke reaction.

I was more interested in how or why you think the stock market has anything to do with anything than attempting to answer an unintelligible question that has no base in reality.

it reads like "if you are right, then how come [insert random unrelated fact]? "

which is frankly in keeping with pretty much everything you write here. I may have removed you from ignore again but it doesn't mean I'm going to waste very much time answering your inane questions when you have not, once, in 4 weeks sensibly answered anything I have asked you.

please do try again though, I will continually reassess your efforts.

[kevsta]

Originally Posted by daenku32

Since this is a Central Bank thread, here is a point made today in regards to Sweden's and Finland's (non)ability to print money.
http://www.businessinsider.com/swede...inland-2011-11

Sweden has its own currency, so it can do it. Finland has the Euro, so it cannot. And because ECB is not printing money it's hurting countries like Finland.

Both countries still have a rock solid economy with cradle-to-grave welfare systems, but it's clear which one the 'Gold-like' inflexible Euro currency is hurting.

so you are implying that a country's economy can only be viable if it can debase it's money? if a country has a rock solid sound economy, it should be able to weather slightly higher borrowing costs, AND a strong currency?

otherwise how did Germany become one of the strongest economies in the world, with possibly the strongest and most stable currency in the world? I don't think they did it by constantly printing and debasing their way to efficiency and wealth did they?

being stuck in a fundamentally unsound economic union with a "one size fits all" currency is not the same as saying an economy can only be viable if we can print money.

Finland are now just suffering by association with the whole Euro zone which looks less like surviving as-is by the hour.

[stilicho]

Originally Posted by kevsta

....

I don't think you've been paying attention, there has been a lot of money made by just consistently doing the opposite of what certain individuals and firms tell punters to do. Goldman in particular have almost a 100% failure rate with their sellside analysis, all you have to do is take the opposite bet. see this most recent example, and the inevitable conclusion here a few days later.

so a mere financial (conspiracy goldbug non-credible yada yada yada) blog wiped the floor with Goldman, as it has done time and time and time again. perhaps you can shoot the messenger some more because you don't like the message being right too much of the time.

the FED however, should have just a very slight advantage over everyone else, what with actually making the policies!!! would you not agree?

Nobody, including your favourite non-economists selling their hedge funds, has "almost a 100% failure rate" or they wouldn't even be in business right now.

The Federal Reserve, as a national central bank, doesn't control anything more than monetary policy. They don't control foreign national central banks, American political decisions, or foreign political decisions. That's not their business and nobody is suggesting it should be.

I looked at your own recommendation of Hugh Hendry since you'd been touting him as an expert. He has no particular experience or credentials in economic theory. I told you where he was wrong about the USD:EUR exchange rate in 2007 and he's been predicting inaccurately for years that the Chinese growth rate was about to slow down. It finally is slowing down and he's finally able to advertise his gains. He completely missed the growth in the Chinese economy in calendar years 2008 through 2010 and dismissed his failures rather breezily.

Quote:

....for a "scientist" you are being very simplistic. "my favourite" hmm, difficult to choose, there are a few. within this group there are alternate views and opinions on micro issues, but within the context of broadly similar macroviews....

I am not particularly wedded to the idea that economics as a discipline is interchangeable with science such as paleohydrology or phycology.

Quote:

Hugh Hendry

Let's just pick this guy and dispense with the others. You've promoted Hendry endlessly on several threads to the point where I consider you to be interchangeable. I have also spent at least a few hours reading his works and transcripts of his interviews.

We shouldn't worry about the criteria since he is all over the map with his likes and dislikes. Sometimes it's currency exchange and other times it's Asian GDP growth. Who knows what he's going to be talking about in 2012?

Originally Posted by kevsta

....and see what we can come up with on specifics (because small specific parts of a large complex system are what is truly important in the grand scheme of the macro view, aren't they)

....

Why don't you simply summarise your own experts and pick three or four easily trackable criteria? That and Hugh Hendry ought to cover it in a very simple format.

[kevsta]

Originally Posted by stilicho

Nobody, including your favourite non-economists selling their hedge funds, has "almost a 100% failure rate" or they wouldn't even be in business right now.

aha, you are not nearly cynical enough mi amigo bear in mind that this is the sellside we are talking about, ie the "customer screwing department"

as per the links I supplied, when the sellside recommend a trade to customers, it is the GS prop desk that are then selling to the customer/s

..and yes actually some quarters the GS prop desk had 100% (zero loss quarters) see http://goo.gl/5arK

...do you see how this works yet?

Originally Posted by stilicho

The Federal Reserve, as a national central bank, doesn't control anything more than monetary policy. They don't control foreign national central banks, American political decisions, or foreign political decisions. That's not their business and nobody is suggesting it should be.

would you disagree that the Fed (under Greenspan) set interest rates from 1987 to 2006?

..that the tech bubble bursting led to a lowering of interest rates, and that basically facilitated (not exclusively, there were other factors) the housing bubble to get going?

that they (FED) encouraged deregulation and promoted financial engineering (derivatives) and prevented Brooksley Borne from reigning them in when she tried?

http://en.wikipedia.org/wiki/Brooksl...vatives_Market

so would you seriously not say they should have had more idea of what to expect than outsiders?

Originally Posted by stilicho

I looked at your own recommendation of Hugh Hendry since you'd been touting him as an expert. He has no particular experience or credentials in economic theory. I told you where he was wrong about the USD:EUR exchange rate in 2007 and he's been predicting inaccurately for years that the Chinese growth rate was about to slow down. It finally is slowing down and he's finally able to advertise his gains. He completely missed the growth in the Chinese economy in calendar years 2008 through 2010 and dismissed his failures rather breezily.

its difficult enough to say exactly what is going to happen, precisely when too, is pretty much impossible. Schiff was also right for 6 years before it happened, I dont regard early as wrong.

Originally Posted by stilicho

I am not particularly wedded to the idea that economics as a discipline is interchangeable with science such as paleohydrology or phycology.

glad to hear it

Originally Posted by stilicho

Let's just pick this guy and dispense with the others. You've promoted Hendry endlessly on several threads to the point where I consider you to be interchangeable. I have also spent at least a few hours reading his works and transcripts of his interviews.

hardly endlessly? but he is an industry leader and highly respected by his peers so I'm ok with that

Originally Posted by stilicho

We shouldn't worry about the criteria since he is all over the map with his likes and dislikes. Sometimes it's currency exchange and other times it's Asian GDP growth. Who knows what he's going to be talking about in 2012?

he has very large long term bearish bets on China, expressed by CDS on Japanese companies that trade with China.

I believe he also has major bets on the Euro interest rate and stands to make an absolute fortune on leverage if it goes below a certain level, I'll find the details.

Originally Posted by stilicho

Why don't you simply summarise your own experts and pick three or four easily trackable criteria? That and Hugh Hendry ought to cover it in a very simple format.

ok, I will do, I'll have them ready for my own NY 2012 predictions. can we also compare with what the Fed are saying so I can wipe the floor with them too, on the record?

I remember shouting at the Bernank on TV about there being "no goddamn green shoots" in 09/10, shame I didn't come on here and rant about it too.

[respect]

Originally Posted by kevsta

I have never seen Ron Paul predict what actually happened. Certainly a real estate bubble would be painful on its own but that does not come anywhere near explaining the depth of this recession. And the hyperinflation he has been screetching about for thirty years is still nowhere to be seen.

Originally Posted by kevsta

be careful what you wish for, this is so far from over yet. if this comes, it will come because of the loss of the reserve status and bond market meltdown, it's not the US' turn yet, they will be last, before that we have the UK and Japan

here's the timetable were following if you're really interested, written Jan 2010 (right as Dubai defaulted) and going pretty much to plan ever since, validated almost daily by events.

Right, it is far from over, but not for the reasons Paul predicted. Europe will continue to get the worst of it, not because of hyperinflation, but because countries that would benefit from inflating can't. Monetary expansion (and contraction) can be valuable tools that they have largely deprived themselves of.

Originally Posted by kevsta

sorry but this is utter bull and has been debunked over and over again, but still it gets trotted out by people who do not know what they are talking about.

one of us (not you) spent 6 months listening back through Schiff's "Wall Street Unspun" archives in 2008, every single one right back to 2004, comparing with recent history and events and so has a clue what he is talking about, the other is just parroting what every other detractor says.

You accuse me of getting my information from Youtube and yet this is what you are doing with regards to Schiff. nice

Nobody who stayed with him (and the fund) lost a single penny, and every single one is up massively today. There were a few stupid (and later vocal) individuals who bailed at the exact worst moment in the middle of the crisis, when everybody and everything were down, and if you jump out of the lifeboat right in the middle of the storm, sorry but that's Darwinism at work, the stupid often die.

I like this analysis, link.

Interestingly enough, your claim is that people were wrong to abandon Schiff when he was getting clobbered, yet you don't seem to realize that that demonstrates that he made mistakes. Any time an economist that doesn't confirm your biases makes a mistake you take that as proof that they are not credible, yet you find Schiff to be some sort of prophet while acknowledging that he has made errors.

Originally Posted by kevsta

"people like me" ? you have never met one before amigo.

Gold bugs/Ron Paul fans/Fed conspiracy theorists like you are a dime a dozen.

Originally Posted by kevsta

The FED who blew it didn't?

They didn't get everything right, more importantly, that banks would overextend themselves in mortgage backed securities, but Greenspan did testify to congress that the practices of Fannie and Freddie were going to cause big problems.

Originally Posted by kevsta

proper levels of hedging? you do understand what happened at AIG do you? people were "hedged" and the insurance company blew up, lol, hedge that.

Right, AIG over leveraged itself as the insurer, while most did not have enough insurance.

Originally Posted by kevsta

minor parts of complex systems taking time to work to the finale.

LOL, M2 growth and money velocity are arguably the most important indicators of an economy's health that there is.

Originally Posted by kevsta

If you had ever actually listened to Schiff instead of just bandwagoning with all your chums parrot fashion, you would know that he is always saying that is a possibility, and that he hopes that it can be avoided by doing the right things, however he (like me) has zero faith that they will do the right things, and so that is ultimately probably where it is heading.

No, it isn't. We have a problem with low money velocity, not high money velocity.

Originally Posted by kevsta

ironically in fact, they only appear inaccurate to you, because you have no idea what you are talking about.

So says the gold bug with no education in what he is complaining about. M2 growth is a minor issue? LOL. Hyperinflation is around the corner? LOL.

Originally Posted by kevsta

LOL! time for your medication amigo.

Schiff has been saying for years that we need more saving, he has his wish. Banks and businesses are sitting on cash, households are saving more, money velocity and M2 growth are down. This happening is supposed to be one of the big selling points of the gold standard, of course it doesn't look so good when it happens.

Originally Posted by kevsta

Banks wont lend because they are all insolvent and desperately trying not to disappear into their own debt vortex, people are not settling their debts, this is just false.

If "consumers are paying down their debts" why are Credit cards delinquencies on the rise?

Not only are consumers not paying down their debt, they aren’t even making the payments on the debt they owe. Consumer debt is increasing. The millions of people who have fallen off the unemployment are now using their credit cards to survive.

Banks are sitting on large quantities of cash, far beyond reserve requirements. Jobless people are of course defaulting, others are saving.

Originally Posted by kevsta

somebody is dreaming for sure.

Do you even know what deflation is?

Originally Posted by kevsta

"deliberate ignorance" .. how about just plain ignorance from years of planning around the pseudo-scientific theories that comprise modern economics?

we are not just asking for forecasts from an impartial scientific observer here, are we?

THE FED MADE THE ECONOMY FROM ONE BUBBLE TO THE NEXT, YEAR IN, YEAR OUT, AND YET COULD NOT "FORECAST" A SINGLE ONE OF THEM.

do you really not see the difference?

A strange criticism coming from a guy who cites Austrian advocates constantly.

[kevsta]

Originally Posted by respect

blah blah blah various pseudo scientific economic nonsense.

er, yea, ok whatever.

[respect]

Originally Posted by kevsta

er, yea, ok whatever.

It will be okay little fella, but you should probably make sure you are sitting down and not hyped up on sugar if you ever look into why economists reject the Austrian Business Cycle Theory (hint-it has to do with empirical evidence).

[stilicho]

Originally Posted by kevsta

aha, you are not nearly cynical enough mi amigo bear in mind that this is the sellside we are talking about, ie the "customer screwing department"

as per the links I supplied, when the sellside recommend a trade to customers, it is the GS prop desk that are then selling to the customer/s

..and yes actually some quarters the GS prop desk had 100% (zero loss quarters) see http://goo.gl/5arK

...do you see how this works yet?

I have no idea what you're trying to prove by citing some random internet blogger. Can you explain it? Are you suggesting that Goldman Sachs is fraudulently reporting its results? Have you taken your evidence to the SEC?

Originally Posted by kevsta

would you disagree that the Fed (under Greenspan) set interest rates from 1987 to 2006?

..that the tech bubble bursting led to a lowering of interest rates, and that basically facilitated (not exclusively, there were other factors) the housing bubble to get going?

that they (FED) encouraged deregulation and promoted financial engineering (derivatives) and prevented Brooksley Borne from reigning them in when she tried?

http://en.wikipedia.org/wiki/Brooksl...vatives_Market

so would you seriously not say they should have had more idea of what to expect than outsiders?

This isn't even a straw man. Not even a hay man or an alfalfa man.

If you think that the Federal Reserve of the US was responsible for the tech bubble then you need to prove it using reliable sources. The tech "bubble" was fuelled by ignorance and greed on the part of investors. Was Greenspan supposed to order investors to stop investing like idiots?

The US Federal Reserve has absolutely no effect on US political decision-making and they are not the ones responsible for "deregulation", whatever that's supposed to mean.

I keep forgetting. Are you a free market enthusiast who believes in less regulation? Or are you a statist who believes the financial institutions require much stronger central authority from government bureaucrats? Do you think a central bank should tighten credit when elected officials deregulate sectors of the economy?

[stilicho]

Originally Posted by respect

....

Banks are sitting on large quantities of cash, far beyond reserve requirements. Jobless people are of course defaulting, others are saving.

....

Corporations are likewise tying up large cash reserves. I had some stats but can't find the link any more. You're also seeing many more share repurchasing "plans" since the investment climate sucks and banks are looking three or four times before lending to entirely solvent commercial clients.

[kevsta]

Originally Posted by stilicho

I have no idea what you're trying to prove by citing some random internet blogger. Can you explain it?

are you reading any of the links? ok, once more..

• this link shows this "random blogger" ( ) pointing out that there is good money to be made doing the opposite side of what the GS sellside analysts recommend, as always, (as does the GS prop desk)
  
• this link shows the random blogger being correct (as usual) a few days later
  
• this link shows you evidence of the 100% you claim as an impossible statistic

Originally Posted by stilicho

Are you suggesting that Goldman Sachs is fraudulently reporting its results?

No, I am not, I am claiming that what GS say to the public, and what they do, are 2 very different things. see sh1**y deal

Originally Posted by stilicho

Have you taken your evidence to the SEC?

BWAHAHAhahahaha!! Ahahahahahahahahahahahahaha !!!!! ah sorry, that's a good one!! this SEC? the one that were so on top of the Madoff thing for 5 years?

No, lol, no I havent, and anyway why would I? it's too easy to just fade their public "advice" (ie do the same as their prop desk does) and make money, GS sellside are one of the most reliable contra indicators out there, on a par with Cramer. Traders are very grateful for them.

Originally Posted by stilicho

This isn't even a straw man. Not even a hay man or an alfalfa man.

If you think that the Federal Reserve of the US was responsible for the tech bubble then you need to prove it using reliable sources. The tech "bubble" was fuelled by ignorance and greed on the part of investors. Was Greenspan supposed to order investors to stop investing like idiots?

comprehension 101 amigo. where did I mention him blowing the tech bubble? what I did discuss was every action taken since that.

Originally Posted by stilicho

The US Federal Reserve has absolutely no effect on US political decision-making and they are not the ones responsible for "deregulation", whatever that's supposed to mean.

so Greenspan's theories and testimony would have played no part in "freeing up" regulations in his 18 years as chairman?

Quote:

source http://www.msnbc.msn.com/id/27335454.../#.TtSL5WMk67s

Greenspan’s interrogation by the House Oversight Committee was a far cry from his 18½ years as Fed chairman, when he presided over the longest economic boom in the country’s history.

He was viewed as a free-market icon on Wall Street and held in respect bordering on awe by most members of Congress.

Not now. At an often contentious four-hour hearing, Greenspan, former Treasury Secretary John Snow and Securities and Exchange Commission Chairman Christopher Cox were repeatedly accused by Democrats on the committee of pursuing an anti-regulation agenda that set the stage for the biggest financial crisis in 70 years.

“The list of regulatory mistakes and misjudgments is long,” panel chairman Henry Waxman declared.

Greenspan, 82, acknowledged under questioning that he had made a “mistake” in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions. Greenspan called that “a flaw in the model ... that defines how the world works.”

He acknowledged that he had also been wrong in rejecting fears that the five-year housing boom was turning into an unsustainable speculative bubble that could harm the economy when it burst.

Greenspan maintained during that period that home prices were unlikely to post a significant decline nationally because housing was a local market.

Originally Posted by stilicho

I keep forgetting. Are you a free market enthusiast who believes in less regulation?

on the whole, yes.

Originally Posted by stilicho

Or are you a statist who believes the financial institutions require much stronger central authority from government bureaucrats?

not really, but it would be nice if somebody would at least enforce some of the regulations that are already there. after the S & L crisis many people went to jail for their part in the corruption, this time... ? hmmmm....

[kevsta]

Originally Posted by respect

It will be okay little fella, but you should probably make sure you are sitting down and not hyped up on sugar if you ever look into why economists reject the Austrian Business Cycle Theory (hint-it has to do with empirical evidence).

I keep telling you I have no interest in learning your pseudo-science, it is all woo. You keep talking about empirical evidence as though economics is science, it isn't, it's a load of mumbo jumbo theories dressed up as science.

everything they taught you is wrong. I realize this is a hard thing to accept, but given that the people in charge are using your beliefs too, and have driven the world to the edge of disaster, it's time to sack the witch doctors.

[kevsta]

http://www.ft.com/intl/cms/s/0/dc342...#axzz1gPM1jQjy

if you cant see this, click here and go in via Google instead

Quote:

Hugh Hendry, the outspoken UK hedge fund manager known for his bearish, often contrarian views on the global economy, has seen his ‘China short’ fund rack up gains of more than 52 per cent so far this year, investors have told the Financial Times.

The gains compare to a loss for the average hedge fund of 4.37 per cent over the past 11 months, data from Hedge Fund Research released last week show.

Mr Hendry’s credit fund is constructed from a portfolio of short positions against highly cyclical Japanese corporate credits that have high exposure to Chinese demand.
His larger flagship Eclectica Fund, which also has a portion of its portfolio in credit default swaps contracts against Japanese credits, has performed well too. Investors report it has made gains of 12.2 per cent so far this year.
Mr Hendry began raising concerns about a Chinese slowdown in 2009 – even uploading a homemade video on to the video sharing site YouTube based on a visit to deserted Chinese real estate developments.

remember Hendry also has long term bets that the EU interest rate goes under 1% next year that will pay out 40x stake, and as it's now down to his threshold and looking very likely to go below next time, lots of people thought the last cut might have been 0.5% instead of 0.25%.

other headlines on FT for context

Quote:

More

ON THIS STORY
Hedgies’ average return is ‘zero’
Funds of hedge funds adapt to change
Hedge funds’ year in the pain trade
Hedge funds braced for worst year since 2008

ON THIS TOPIC
Paulson funds lose more money in November

IN ASIA-PACIFIC EQUITIES
Shipping groups help lift Tokyo markets
Asian stocks slide on eurozone jitters
Mitsui OSK Lines propels Nikkei to a four-week peak
Property fears over Shanghai as rally ends

hmm, wonder if he might know what he's talking about after all?

[daenku32]

Originally Posted by kevsta

so you are implying that a country's economy can only be viable if it can debase it's money? if a country has a rock solid sound economy, it should be able to weather slightly higher borrowing costs, AND a strong currency?

otherwise how did Germany become one of the strongest economies in the world, with possibly the strongest and most stable currency in the world? I don't think they did it by constantly printing and debasing their way to efficiency and wealth did they?

being stuck in a fundamentally unsound economic union with a "one size fits all" currency is not the same as saying an economy can only be viable if we can print money.

Finland are now just suffering by association with the whole Euro zone which looks less like surviving as-is by the hour.

Germany was strong even before the Euro. They are a country that has benefitted from the Euro, while others have hurted because of it. Countries like Spain, that had a massive trade deficit leading up the recession.

China is another good example. They have fixed their currency (to the dollar), and it has hurted them as well as others.

[daenku32]

Krugman: Call it what it is: a depression

Quote:

Let's talk, in particular, about what's happening in Europe...First of all, the crisis of the euro is killing the European dream.
...
Specifically, demands for ever-harsher austerity, with no offsetting effort to foster growth, have done double damage. They have failed as economic policy, worsening unemployment without restoring confidence; a Europe-wide recession now looks likely even if the immediate threat of financial crisis is contained. And they have created immense anger, with many Europeans furious at what is perceived, fairly or unfairly (or actually a bit of both), as a heavy-handed exercise of German power.

So it's not like kevstra's Hedge Fund managers are being all that contrarian. Maybe they just subscribe to Krugman's blog. (Added Well, except the inflation stuff I suppose.

Krugman: Receding Inflation In Britain
Inflation falls back as petrol and food prices drop