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ORIGINAL: kittinSol

Sure. It's a done deal: go ahead with whatever your plans were. I'll write you an IOU.

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ORIGINAL: BKSir

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ORIGINAL: kittinSol

Sure. It's a done deal: go ahead with whatever your plans were. I'll write you an IOU.

I knew it!  You're actually a spy working for the U.S. government! 

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Congress 3  USA 0

And so the Presidents proposal, the thoughtful words of Paulson, take second place to a Congress  insuring that it continues to strengthen it's power. The result of  "polls" is how our once great nation is being manged by our cowardly representatives. All this political bull about "protecting the taxpayer"..sounds good, but anyone who has reached the age of reason knows that "protecting Congress, protecting the power of their party and their re-election (democrats and republicans share in this disaster) is really at the heart of the watered down program that might have had a chance to save our fragile financial system.  This was never the "bailout", a word that fits nicely on the boob tube, it was to "save our financial system".  This program was never made understandable to the public.

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Actually, this is one of the smart things Nixon did. Bretton Woods set arbitrary values, and moving to a floating (albeit a managed float) is a much more realistic plan. Yes, the dollar went nuts for a bit, but settled into real value. I wish China would do something similar.

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ORIGINAL: TheUtopian

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Congress 3  USA 0

And so the Presidents proposal, the thoughtful words of Paulson, take second place to a Congress  insuring that it continues to strengthen it's power. The result of  "polls" is how our once great nation is being manged by our cowardly representatives. All this political bull about "protecting the taxpayer"..sounds good, but anyone who has reached the age of reason knows that "protecting Congress, protecting the power of their party and their re-election (democrats and republicans share in this disaster) is really at the heart of the watered down program that might have had a chance to save our fragile financial system.  This was never the "bailout", a word that fits nicely on the boob tube, it was to "save our financial system".  This program was never made understandable to the public.

No offense bra......but I've been participating in these forums for going on close to four years now.....and you are easily the most submissive poster with regard to governmental authority I've ever read. And I find it very disheartening.

Ever since Nixon took the country off Bretton Woods, there's been a slow but steady march to the graveyard. As managers--and that's what they are---these people have been fucking pathetic.....And now, finally, the people make some noise and speak up, voicing their extreme opposition in regards to unitary privileges and their future tax payer dollars being delivered up to a finance oligarchy who's responsible for this mess, and guys like you want to completely hand over the last bale of straw.

I say let Milton Friedman and Friedrich von Hayek continue to sleep, and let economic Darwinism, ala the free-market, run its natual free-flowing course.






- R

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Because of that arbitrarily fixed value, arbitragers were able to exploit the difference between official value and true value of the Pound in the 1960s, threatening to bring the Bank of England to its knees. Speculators started a similar strategy against U.S. currency in the 1970s, and had Nixon insisted on maintaining the gold standard, the dollar would have fallen under a similar crisis.

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Please explain how that is going to help the hard working, taxpaying citizen when his credit card line is frozen, when he can't get a loan, or buy a house, or lease a car or, maybe even, lose his job because the financial markets are frozen and credit on all levels is unavailable.  Libor at 7% plus is at a record level...but some institutions are not lending to others because of counterparty concerns

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ORIGINAL: TheUtopian

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Because of that arbitrarily fixed value, arbitragers were able to exploit the difference between official value and true value of the Pound in the 1960s, threatening to bring the Bank of England to its knees. Speculators started a similar strategy against U.S. currency in the 1970s, and had Nixon insisted on maintaining the gold standard, the dollar would have fallen under a similar crisis.

Heh....the only thing arbitrary with regard to fixed-values ala Bretton Woods, was the non-adherence to the genesis of the system--- non-speculation and the expanse of capital.

Like I mentioned in my first post back to you, without an agreement of parity, you're left with competitive-devaluation one-upsmanship. And the very evidence of that is in our current relationship with China.

And I think you would agree there's not a chance we could go back to gold - But parity with regard to the Yuan, Yen, Rubble, Euro, Dollar, etc, backed by 15-30 percent silver,  would surely shore-up/stabilize the inconsistencies as far as global trade.

- R

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It's my feeling that a healthy populace should be weaned off the use credit for the purpose of consumption. What ever happened to owning/driving a five-hundred-dollar car until you can afford to purchase a five-thousand-dollar one completely outright? I consider credit for the purpose of individual consumption to be a completely false reality.

Credit for the purpose of accumulating/purchasing capital assets that generate income over and above the servicing of debt is highly important and needs to be readily preserved. But I see no evidence of such credit freezing up - only brazen fear mongering designed to seize upon emotion so an oligarchy can take care of its friends.

And besides, with an over-quadrillion dollar derivatives black hole, the infusion of 700 billion is not a fix at all, but instead just a very small band-aid meant to cover a gaping wound.

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ORIGINAL: TheUtopian

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Because of that arbitrarily fixed value, arbitragers were able to exploit the difference between official value and true value of the Pound in the 1960s, threatening to bring the Bank of England to its knees. Speculators started a similar strategy against U.S. currency in the 1970s, and had Nixon insisted on maintaining the gold standard, the dollar would have fallen under a similar crisis.

Heh....the only thing arbitrary with regard to fixed-values ala Bretton Woods, was the non-adherence to the genesis of the system--- non-speculation and the expanse of capital.

Like I mentioned in my first post back to you, without an agreement of parity, you're left with competitive-devaluation one-upsmanship. And the very evidence of that is in our current relationship with China.

And I think you would agree there's not a chance we could go back to gold - But parity with regard to the Yuan, Yen, Rubble, Euro, Dollar, etc, backed by 15-30 percent silver,  would surely shore-up/stabilize the inconsistencies as far as global trade.

- R

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It's my feeling that a healthy populace should be weaned off the use credit for the purpose of consumption. What ever happened to owning/driving a five-hundred-dollar car until you can afford to purchase a five-thousand-dollar one completely outright? I consider credit for the purpose of individual consumption to be a completely false reality.

Credit for the purpose of accumulating/purchasing capital assets that generate income over and above the servicing of debt is highly important and needs to be readily preserved. But I see no evidence of such credit freezing up - only brazen fear mongering designed to seize upon emotion so an oligarchy can take care of its friends.

And besides, with an over-quadrillion dollar derivatives black hole, the infusion of 700 billion is not a fix at all, but instead just a very small band-aid meant to cover a gaping wound.

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ORIGINAL: Musicmystery

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ORIGINAL: TheUtopian

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Because of that arbitrarily fixed value, arbitragers were able to exploit the difference between official value and true value of the Pound in the 1960s, threatening to bring the Bank of England to its knees. Speculators started a similar strategy against U.S. currency in the 1970s, and had Nixon insisted on maintaining the gold standard, the dollar would have fallen under a similar crisis.

Heh....the only thing arbitrary with regard to fixed-values ala Bretton Woods, was the non-adherence to the genesis of the system--- non-speculation and the expanse of capital.

Like I mentioned in my first post back to you, without an agreement of parity, you're left with competitive-devaluation one-upsmanship. And the very evidence of that is in our current relationship with China.

And I think you would agree there's not a chance we could go back to gold - But parity with regard to the Yuan, Yen, Rubble, Euro, Dollar, etc, backed by 15-30 percent silver,  would surely shore-up/stabilize the inconsistencies as far as global trade.

- R

No, not at all.

Under Bretton Woods--or any fixed system--a nation agrees to maintain a fixed value for its currency. As the economy is constantly changing, so does the true value of its currency, so that fixed value is maintained by the government's central bank buying and selling its own currency on then open market.

Currency arbitragers then take advantage of this split. They buy cheaper dollars on the open market, then sell then to the Fed, which would be forced under its obligations to pay the arbitrary fixed price. This further devalues the currency, so arbitragers invest their profits in more dollars at the true lower value, selling them to the Fed at the fixed higher price, etc. etc., pumping more and more money out of the government under the value of the dollar becomes so out of whack that the Fed would be forced to devalue the currency----and then the cycle starts again, until the currency is almost worthless, and inflation is rampant.

Floating currency mirrors the true market value. Any currency, after all, is only truly backed by the security and revenue-raising ability of a government, and its currency valued by the money supply (controlled by the central bank) and the balance of trade. Fixed systems simply do not work.

And---the economy is global. It has been for a long time---we just keep trying to act as if it weren't true.

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It's my feeling that a healthy populace should be weaned off the use credit for the purpose of consumption. What ever happened to owning/driving a five-hundred-dollar car until you can afford to purchase a five-thousand-dollar one completely outright? I consider credit for the purpose of individual consumption to be a completely false reality.

Credit for the purpose of accumulating/purchasing capital assets that generate income over and above the servicing of debt is highly important and needs to be readily preserved. But I see no evidence of such credit freezing up - only brazen fear mongering designed to seize upon emotion so an oligarchy can take care of its friends.

And besides, with an over-quadrillion dollar derivatives black hole, the infusion of 700 billion is not a fix at all, but instead just a very small band-aid meant to cover a gaping wound.

Well, first you'd have to get Americans to save. In fact, our savings rate is negative. Second, you'd have to get business to stop selling on credit. Good luck with that! And of course, that would shrink the economy, making savings difficult.

The evidence of credit markets freezing is already there---banks are reluctant to lend to each other, so they are unable to continue their day to day business as usual, and must hold their assets (hurting profits, incidentally) instead of participating in the money market. Should this continue, banks may be reluctant to lend to business and consumers too, and banks unable to meet cash flow demands will cease to exist, obviously never loaning again. The fear mongering is great, yes, but the problem does essentially exist.

Yes, the bill sucks, is a band-aid, and manipulates the situation for the benefit of the wealthy elite. That's why I'm glad it failed in the House. But realistically, something will need to be done---preferably more at the consumer end. We'll see what "they" propose next.

We also need much tighter regulation of the financial system. The sub-prime mortgage debacle should have been illegal.

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We also need much tighter regulation of the financial system. The sub-prime mortgage debacle should have been illegal.

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'm scratching my head here trying to figure out what the hell Bretton Woods has with the issue of the day

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Where is the "debacle"?  The default rates are high, but not alarmingly so.  Regarding the shuffling of mortgage-backed paper that is at the heart of this credit crisis, if one bad mortgage were bundled with four good mortgages, one would have a securities bundle that arguably would be worth roughly 80% of the mortgages combined face value.  Securities markets have weathered larger price drops than 20%.

While a good deal of subprime lending was foolishly and recklessly done (by both lender and borrower), the real debacle is not the subprime lending itself, but the mountain of derivative paper spawned from it.  Exotic derivatives have caused financial turmoil before, and will likely do so in the future.....because not only do many not understand what a derivative actually is, but because even with technical understanding, derivatives lack the transparency necessary for sound buy-hold-sell decisions.

Some tightening of subprime lending is in order, because even a default rate of 16% is too high to let stand.  However, the greater focus needs to be on either eliminating derivative securities (my hope), or regulating them so as to maximize their transparency.

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ORIGINAL: Musicmystery

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Where is the "debacle"?  The default rates are high, but not alarmingly so.  Regarding the shuffling of mortgage-backed paper that is at the heart of this credit crisis, if one bad mortgage were bundled with four good mortgages, one would have a securities bundle that arguably would be worth roughly 80% of the mortgages combined face value.  Securities markets have weathered larger price drops than 20%.

While a good deal of subprime lending was foolishly and recklessly done (by both lender and borrower), the real debacle is not the subprime lending itself, but the mountain of derivative paper spawned from it.  Exotic derivatives have caused financial turmoil before, and will likely do so in the future.....because not only do many not understand what a derivative actually is, but because even with technical understanding, derivatives lack the transparency necessary for sound buy-hold-sell decisions.

Some tightening of subprime lending is in order, because even a default rate of 16% is too high to let stand.  However, the greater focus needs to be on either eliminating derivative securities (my hope), or regulating them so as to maximize their transparency.

You've just answered your own question.

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ORIGINAL: Musicmystery

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'm scratching my head here trying to figure out what the hell Bretton Woods has with the issue of the day

Someone else brought it up. Just responding to that misunderstanding.