5 Years And Counting

Generali

HAMISH_MCTAVISH wrote: »

We had a liquidity crisis, which was allowed to develop into a solvency crisis, entirely thanks to the failure of governments and central banks to act early enough and with overwhelming firepower.

The CDO problem (which was the original problem) was one of solvency: money was lent to people that couldn't repay it which meant the CDO vehicle became insolvent which meant that the banks using it as T1 reserves became insolvent.

I realise it's your opinion that this was a liquidity problem but I don't see any evidence from you or any other credible source beyond assertion.

Furthermore, given the $000,000,000,000s of liquidity that have been pumped into the system, perhaps it's time to say that additional liquidity isn't enough.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Even by your standards, that post was just daft.

Why was it daft?

If you suggest you can fix problems with liquidity, unlimited liquidity at that, what's daft about me suggesting every single world problem relating to money could simply be fixed in the same way?

Is one aspect more important than the other? As that's what leads to social revolt.

You can't just chuck money at one problem, because in your opinion it's more important than other problems....most likely your opinion being based on how you will / won't be affected.

gagahouse

A Decade or so

Generali wrote: »

The CDO problem (which was the original problem) was one of solvency: money was lent to people that couldn't repay it which meant the CDO vehicle became insolvent which meant that the banks using it as T1 reserves became insolvent.

I realise it's your opinion that this was a liquidity problem but I don't see any evidence from you or any other credible source beyond assertion.

Furthermore, given the $000,000,000,000s of liquidity that have been pumped into the system, perhaps it's time to say that additional liquidity isn't enough.

Hey Gen, you might like this by Robert Reich, former Clinton Labor Secretary - his view on insolvency of the working / middle classes that led to the GFC, US centric but worth a read

http://www.irle.berkeley.edu/conference/2010/materials/reich.pdf

John_Pierpoint

9 Years (i.e. as long as the US 1930s Great Depression lasted)

Surely we still have a working class?

This is a global economy and the working class, that makes things, is living in Asia?

To me it feels more like an Edwardian economy, where the members of the "successful" strata seems to think they have a God given right to a high and improving living standard, just because of who they are.

We five on a finite planet, where some people are "workerholicks living in rabbit hutches". We in the West are getting comparatively poorer, there is nothing a pontificating politician can do about this situation.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Why was it daft?

Seriously?

Read it again.

sabretoothtigger

I think there is a consensus here and most places that the bank bailouts were a thoroughly good idea

It was never ok, 1 month was too long. Fred Goodwin and his pension should have been a creditor to the debts he created, all sorts of mistakes were performed to justify politcal ends.
5 years is clearly a failure to the idea of bailouts serving growth yet as a master of procrastination myself I recognise the element of leaving it just a little bit longer and maybe it'll be fine

Im sure if they could make all the emergency measures last ten years they will do this.

The situation will develop from external factors, because we do rely on others in the world to make things for us and to supply us with cheap energy.
At some point we get cut off, Japan on the other hand has been 20 years because they also export.
We only have our link to USA as a reserve currency and our own relationship with the world as a slight reserve currency with actual productive nations.

We can be replaced by something of more use, BOE QE aint it

Robert Reich, former Clinton Labor Secretary

He fits in the same category as Krugman. Clinton is the guy who presided over ramping up sub prime debt, merging investment banks with retail and did not run a surplus but actually increased usa debt but now proudly lectures on his fine economic record.
Every mistake just keeps getting built on with no correction

Graham_Devon

HAMISH_MCTAVISH wrote: »

Seriously?

Read it again.

I'd rather you explained why it's daft...sounds like a mere soundbite otherwise, as you haven't argued any of my points, just deleted them!

Loughton_Monkey

A Decade or so

Graham_Devon wrote: »

I'd rather you explained why it's daft...sounds like a mere soundbite otherwise, as you haven't argued any of my points, just deleted them!

It's for Hamish to give you his full explanation if he can be 4rsed.

But just as an impartial observer to this particular snippet, I would think it's something to do with the fact that he gave an eloquent analysis of his view on the bank bailouts.

Now he may have been right. He may have been wrong. I don't know. We all have our opinions.

But one of the very clear messages he gave - in respect to printing money - was about the timing of doing it. Not the fact of it.

And then you jump in putting words into his mouth pretending that his point was as simple as 'print your way out of depression or any other problem including famine'. This, I expect, would encourage him to think it "daft".

Just a small and tactful suggestion...... whenever you wish to comment on a point, why not write down an opinion. Read what you wrote, and then write down another opinion that is 180° diammetrically opposed to the first. Then toss a coin to decide which, of the two, you will post in reply.

That way, you would probably stand to be 'right' at least half the time. Quite an improvement.

purch

9 Years (i.e. as long as the US 1930s Great Depression lasted)

Of course it's a Solvency problem.

The lack of liquidity in the market was the obvious reaction to the insolvency of most of the participants.

They shoved a load of liquidity back into the market, so that problem was overcome, but the insolvency issue is still there, and will still be there for many years.

If it was a liquidity problem, then it would have all been solved 3 years ago !!!!

Graham_Devon

Loughton_Monkey wrote: »

But one of the very clear messages he gave - in respect to printing money - was about the timing of doing it. Not the fact of it.

Was it?

Ok, so you figure there could be famine problems. You create a pump a load of money into it (after timing it), therefore eradicating the famine.

Problem of famine (and every other possible problem out there) solved. Police numbers are falling. We know thats gonna be a problem....we should just print money and hire police. Problem solved.....gin and tonics all round as you'd say. We don't have enough care homes. Print. Build care homes. Sorted. Another glug of gin. We can't afford the benefits bill. Print. Hand it to those on benefits. Problem solved. Bottle of gin.....etc.

How is what I said daft?

The only daft thing is the idea that you can simply pump unlimited amounts of money into possible problems to avert them with no consequences....other than solving the issue. Which is what Hamish advocated.