I watched glen beck this evening for my dose of daily magic.

Joepistole, you're whole post amounts to a pissing contest to see who can throw out the most technical terms to convince people by an appeal to authority. I'm a musician and could talk you into the ground about scales and modes and arpeggios and notes and transpositions and how they all relate to the harmonic composition and overtones of a piece of music... but I could also explain any of those things in terms and metaphors that even a child could understand because I have a macro view of how everything relates to the whole.

I'm more of a generalist and so I learn enough to get an idea of the entire picture of what I'm studying - and once that is obtained I fill in the details if I want. It is a mistake to take this for incompetence. It is a sign of incomplete understanding to not be able to translate technical terms which describe specific systems in the more general language of the layman.

Would you just answer the questions I asked you instead of putting yourself on a pedestal by "not having the time to give an economics lesson"? It sounded like you did try to give me an economics lesson and if I had to rate you on RateMyProfessor I'd give you a sad face.

 

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I was in a masochistic mood that evening I guess

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Go back and read my post and then show me where I used technical terms. I tried to make things as simple as possible for a layman and I did answer your questions. And if I appeared a little ruff I apologize. My patience is running a little thin these days with the ditto head crowd, those that hear things on right wing radio (limbaugh, beck, levin, et al) and think they are now phd's with secret knowledge about economics or the consitution when in fact 99 percent of what they "know" is fiction. It would be like me who has never played an organ listening to Toccata and Fugue in D minor, BWV 565 and then trying to give an organ concert. It doesn't work. But it does not stop them from trying.

When it comes to music, I have no doubt your technical knowledge far exeeds anyting I could possibly muster up. As for metaphors, I just do not think in terms of metaphors because for me they are not necesary. But to others learning something new, I think you have a very good point. I will try to use metaphors more in explaining concepts and issues. So thank you for that suggestion.

Maybe the simplest comparison for the lack of confidence is if you had a friend who just betrayed you, would you trust him/her again? That is what has happened in the markets today. That is why there is a severe lack of confidence.

The financial markets were betrayed, because debt instruments were bundled and misrepresented as investable securities and sold around the globe. Insurance policies were sold on these debt instruments. The debt instruments turned out not to be as good as they were represented...meaning they were over valued. The insurance policies that were supposed to pay, defaulted because no reserves were set aside to cover the losses.

So investors, including banks stopped investing...money stopped moving. So the governments around the globe needed to come in and stabilize the markets. Governments around the globe stepped into the markets with stimulus packages in order to keep people employed. That kept government revenues flowing and minimized the expense of bank closures (government guarentees bank deposits to a certian level) and unemployment benefits that would be paid by government.

 

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Thanks for the thoughtful reply joepistole. I know some people on this forum who would immediately disregard everything I say for not going through the long hours of learning the technical language of a given discipline. I believe technical language is a huge help for group research because everybody is working with the same terms and definitions and also as a way of sorting information but the truth of the discipline is not exclusive to the language.

I like your comparison to the friend who just got betrayed. Can we run with it a little more? Metaphorically, how can the debt instruments that were bundled and misrepresented as investable securities be represented in the two friends scenario? And how can we represent the insurance policies?

Now the government I think can accurately be represented as the father of the two friends in this metaphor. What is the "father" doing as a result of the situation between the two friends?

You know, metaphors are like numbers in the way that they take complex systems and simplify them to their most basic and integral parts. If you can simplify this system within the confines of what I've presented it would be much appreciated - for me and for many other people as well I'm sure!

 

Watch this: http://crisisofcredit.com/

The explanation of carving up cash flows starts at about 4:45, but the whole things is a pretty good explanation of the credit crisis's cycle.

 

Thanks for the link pandaemoni. I watched it but didn't quite get it all. I still don't see why we had to bail out wall street over this. They screwed up and deserved what they got. I know this has been been said before but what kind of precedent have we set by rewarding failure?

 

I love Glenn Beck!

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http://www.youtube.com/watch?v=m0x-DOiDzp8&feature=related
http://www.youtube.com/watch?v=TUzNNOeO3is&feature=related

 

As the video mentions "Wall Street" does impact our 401Ks and they do ultimately drive the loan markets. Without Wall Street, the credit card companies they own shut down, and the mortgage markets and car loan markets become much tighter. Even as it stands it's not always easy to get a loan if you run a business right now, which retards economic growth of those businesses that would like to expand (which generally requires hiring more workers).

If thae banks failed, so does the stock market, and then so do the pension funds, and so do the insurance companies to a large extent, and a huge (and possibly fatal) strain is placed on the FDIC and other federal agencies that guaranty things in the economy. Imagine that your bank is dragged down. No problem, the FDIC guarantees the deposits. But wait, the federal government is broke, so where does the FDIC get the money? Typically, it borrows it. But wait, nobody is lending money right now because of the chaos--and all the major banks are failing or at risk, so maybe they can't borrow. If they can't borrow, the government has to print money, which leads to inflation.

It's debatable whether the bailout actually did anything, as American banks are still in the midst of the liquidity trap (though some would say a less severe one), but the above was the reason for the bailout.

 

Am I the only one here who wouldn't mind that outcome? It seems to me that the only people who advocate the bailout are the people who were most heavily invested in it... how is that not biased? It's a bunch of people trying to save their own stupid investments instead of realizing that they made shitty choices - and they dragged EVERYBODY into helping to save them from drowning. What a bunch of selfish pricks.

 

You wouldn't mind a complete economic collapse?

 

When you build a house out of cards a collapse is expected and encouraged.

 

Not by the person selling cards....

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The people who orchestrated this disaster did not suffer at all. A collapse would not severely hurt them. The people who would be hurt from a collapse are the American middle class.

 

Should we pity the sheep that walked into the wolves den? Gotta break some eggs to make an omelet, you know what I mean?

 

If you feel like experiencing a replay of the great depression, whatever. But leave me out of it. I heard enough about severe poverty from my father; I don't feel the need to experience it first hand.

 

It's gonna happen either way - we're just delaying the inevitable. I prefer to just get things over with. It'll be pretty cool if everything comes to fruition on December 21, 2012 though.

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Actually, it's people like you who are dragging me into your solution against my will. It would have been fair if they only took bailout and stimulus money from the people who believed it would help. I would have liked to have just done nothing, which wouldn't have affected you at all - you could have still donated your money for the cause.

 

The reckless gambled, and it didnt pay off. But rather than suffer losses, they got 1UP and walked away unscathed. The prudent, those who chose to live within thier means, and not jump into bad decisions, could end up paying for all this.

I have savings, and my biggest fear at the moment is that the Government encourages high inflation in an attempt to deal with debt, and reduce the value of my savings. Its like punishment for not behaving recklessly...

 

No, it isn't inevitable. Cycles in the economy may not be avoidable, but action by governments can dampen the highs, and cushion the lows.

I have to assume that your underlying thinking is that some brilliant new social order will emerge from the crash that you feel is unavoidable. The likely consequences of such a crash will be terrible, and it's quite likely that what follows would be no different, or even worse than what we have at present (see the historical example of the Weimar republic). Things really aren't that bad for most Americans. And they could certainly be far worse.

My death is inevitable. At this time, I see no reason to hurry that up either. Watching my diet and exercising may just be delaying the inevitable, but I still consider it prudent to do both, based on the advice of the leading experts in health. The outcomes of TARP and the stimulus may not be ideal, but there is a general consensus among economists that both were better than the alternative. I see no reason to doubt them.

 

Glenn Beck totally has gayface! And he wants to make out with Rick Perry!

 

Oh, Lordy! Tell me about the Landini cadence?