5 Years And Counting

Loughton_Monkey

A Decade or so

Graham_Devon wrote: »

......

How is what I said daft?

....

Nurse......?

Hamish.....?

Anyone....?

posh*spice

The current crisis is caused by high oil prices not financial institutions. The Financal Institutons were just the victims of the high oil price....

N1AK

Generali wrote: »

I think there is a consensus here and most places that the bank bailouts were a thoroughly good idea but how long a depression would change your mind?

The length of the recession shouldn't change your mind if the reason is not related to the bailouts. Personally I think the bailouts were a mistake, or handled badly, as they ultimately passed on massive liability from large investors to state governments.

You could see clearly in Spain and Greece how each time European money was provided to provide liquidity it was immediately used to cover the void left by private investors jumping ship.

kabayiri

A Decade or so

N1AK wrote: »

...
You could see clearly in Spain and Greece how each time European money was provided to provide liquidity it was immediately used to cover the void left by private investors jumping ship.

This was exactly the point being made by some Spanish commentators on the radio 5 yesterday (a professor and 2 others). There was a mood building that external creditors should take some of the hit too, referring to the banks including UK banks.

The current situation with Europe is buying time, and undoubtedly allowing some people to unwind positions.

Buying time was a theme during the GFC. If the banks had crashed in 2007/8, a lot of people would have been leaping out of some pretty tall buildings in Wall St et al.

I think a precursor to government action is people openly talking about this action in the media, introducing terms into common parlance. People started talking about the need for QE before it came into use, perhaps it softens people up. Spanish commentators are now talking about possible exits from the Euro for Spain and surprisingly Germany.

If the Eurozone situation struggles along, it seems inevitable we will catch some of the wash.

Generali

Graham_Devon wrote: »

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.

In the absence of an answer from Hamish, I'll post.

I think you're making a straw man here: clearly a shortage of food isn't going to be solved by printing money, in fact it will make the problem worse as if you literally print money you're moving resources away from food production.

I don't think HAMISH_MACTAVISH has ever said that QE is the cure for all ills just that it is a cure for what he perceives, incorrectly IMO, to be the current problem: liquidity.

John_Pierpoint

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

posh*spice wrote: »

The current crisis is caused by high oil prices not financial institutions. The Financal Institutons were just the victims of the high oil price....

Perhaps it is the other way round, as the massive deficits run up by "developed western economies" find their way into chasing up the oil price?

That is definitely what has happened with the gold price.

Is it just possible that we are reaching the "limits to growth" in commodities? [You could grow wheat on the top of Snowdon if the price was high enough].

sabretoothtigger

Too much liquidity creates quicksand You can destroy an engine with too much oil