American Banks Dumping Dollars for the Yen

NoDrama

Well-Known Member
The Economy will be moving in the right direction just as soon as the banks are required to write down their losses. Which means that the 100 largest banks will cease to exist since they carry so much Real Estate that is worth a fraction of what the current accounting standards are letting them value it at. You know for example BofA holds the notes on 2,000,000 homes and the value of those home according to the bank is $5 trillion lets say. so they write down on their books that they have $5 trillion in assets. Unfotunatley if they were to actually try to liquidate and sell all those homes on the open market they might only be able to recover $250 billion or 1/20th of what they say they are worth.

Everything Hannimal believes in is 100% predicated on future growth. If there is not enough growth (5%+) then everything he hopes and thinks will come true with all of those economic models and graphs will disappear in a poof of smoke. Government can spend as much money as it wants, tens of trillions even, and it won't grow anything because more worthless currency is like acid eating at the base of Capital formation. For every dollar of stimulus is a directly correlating loss of purchsing power for the dollar you have in your wallet.
 

hanimmal

Well-Known Member
The Economy will be moving in the right direction just as soon as the banks are required to write down their losses. Which means that the 100 largest banks will cease to exist since they carry so much Real Estate that is worth a fraction of what the current accounting standards are letting them value it at. You know for example BofA holds the notes on 2,000,000 homes and the value of those home according to the bank is $5 trillion lets say. so they write down on their books that they have $5 trillion in assets. Unfotunatley if they were to actually try to liquidate and sell all those homes on the open market they might only be able to recover $250 billion or 1/20th of what they say they are worth.
$5 trillion divided by 2million houses = $2.5 million per home loan, really doubtful. But I know you were just trying to make a point, but it is way off. They have been writing down their losses, just not all at once.
http://finance.yahoo.com/news/Bank-of-America-Home-Loans-bw-4049386105.html?x=0&.v=1
Through the first half of 2010, Bank of America has provided completed mortgage modifications, providing homeownership retention for about 160,000 homeowners who otherwise would have difficulty making their monthly payments due to economic conditions. This brings the bank’s total of modified home loans to 650,000 in the last 30 months.
Everytime they modify these loans it is a transaction and that must go on the books as a loss. Same as if they sold them. That is a very good reason as to why they have been behind the other banks revenue earnings:

Bank of America reported a $1B loss for the third quarter ended 2009 and a $5.2B loss for the forth quarter ended 2009. The large losses were caused by continued high default rates on loans and Bank of America's repayment of the US Treasury TARP loans. These large writedowns came as other banks began to record strong profits again as the financial sector began to recover from the financial crisis.[4][5]
http://www.wikinvest.com/stock/Bank_of_America_(BAC)/Data/Key_Metrics

These losses are directly linked to the loans taking a loss. They will continue to do this, but the benefit of being a bank is that you have years to do stuff and not just a few months. And if your worried about insolvency, think about the fact that as the 90% of people in this country that are still working pay back their mortgages that is money that goes into their vaults, and if they keep their lending lower they are building up their cash and able to take larger and larger chunks out of their bad debt.

Everything Hannimal believes in is 100% predicated on future growth
Now here you are just making shit up. How is this 100% of what I 'believe' based on future growth exactly?

If there is not enough growth (5%+) then everything he hopes and thinks will come true with all of those economic models and graphs will disappear in a poof of smoke.
You shouldn't try to act like you know the math. Which orifice did you pull 5% growth out of? That is not realistic at all if you are talking yearly growth. Or are you talking long term, because you say that is all I believe in, because 5% over the long term is not much at all, even last year we had about 2% increase.

But I think where you may have gotten the 5% mark:
chart_gdp_012810.top.gif

Nice growth, but not realistic to expect it to last like that, we are not a third world country and a little over 3% is about right.

saupload_gdp.jpg But ofcourse you may not want to see this since they are linking the change in price of goods over this time period to the wages people are being paid, coming up with a actual number that tells you something about how much things would actually cost in 2005 dollars (the unit of measurement they use).

Government can spend as much money as it wants, tens of trillions even, and it won't grow anything because more worthless currency is like acid eating at the base of Capital formation. For every dollar of stimulus is a directly correlating loss of purchsing power for the dollar you have in your wallet
Preach on Brother, Preach on, then maybe we can sacrifice a calf to the Austrian economics gods to release us from this economic turmoil.

Just because something is said doesn't make it true. You should back it up.

If the Government spends 1 trillion on goods and/or services. To the people that purchased those it is real money that will buy real goods, there is nothing distinguishing the value of a government dollar and a private one. When they buy those goods and services it gets money into the peoples hands, who then spend that money and those dollars go to new people to spend, eventually the excess (really not much excess goods in the market, but lots of excess services) will be used up as this money circulates if it is a large enough amount. (short run)

Now for the long run (many months to years depending on the case). In the long run when people are all mostly working and the economy gets back around and the excess funds start to really get inflation going and we see the prices going up and the value of the dollar decreasing, the Fed can come in and remove much of the excess through the open market sales of treasuries bringing the inflation rate to back around 2.5-3%.

One of the big problems (and why I constantly bring up the fact that all the old economist you bring up prior to the great depression) is the fact that they did not examine the short run, the economic models of the time all are basically set up as long run (Assuming unrealistically that its supply that dictates demand only and full employment (maybe due to them believing that if you are not working it is because you don't want to and not that you are unable to which in a industrial society (they were agricultural) is not the case).

You really should take the time and refresh your knowledge in a real economics book, I recommend you get this one, really good look into the historical changes of the different models and their similarities and differences: http://www.amazon.com/Macroeconomics-9th-Richard-T-Froyen/dp/0132438356/ref=sr_1_31?ie=UTF8&s=books&qid=1283620817&sr=8-31 .


ps.
Everything Hannimal believes in is 100% predicated on future growth. If there is not enough growth (5%+) then everything he hopes and thinks will come true with all of those economic models and graphs will disappear in a poof of smoke. Government can spend as much money as it wants, tens of trillions even, and it won't grow anything because more worthless currency is like acid eating at the base of Capital formation. For every dollar of stimulus is a directly correlating loss of purchsing power for the dollar you have in your wallet.
Is this a message to your followers or something? You do know your full of shit with this right?
 

The Ruiner

Well-Known Member
Doesnt the US need a static 2% growth just to break even with current inflation and population increase? And considering the staggering national debt, doesn't that number start climbing?
 

hanimmal

Well-Known Member
The problem is that most people associate the national GDP with our wealth. Basically if you think about america as a middle income person GDP is our income and everything we have purchased in the past like houses, cars, computers, phones, ect is our wealth which far exceeds our GDP at about $200 trillion. http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/

So even if we have a couple years where we spend a % or two of our GDP ( which would be about 14 trillion a year) it will not hurt much long term. Even the national debt of 13 trillion is not too much if we needed to pay it off all at once and not the decades that it is scheduled to be paid back.

The news likes to make things seem much worse than they are in reality because it is what is needed for them to sell advertising, shit and they don't know what the hell they are talking about.
 

The Ruiner

Well-Known Member
Is it a good practice to incorporate the value of goods to a debt expressed in currency value? Isn't that distorting the realities?
 

hanimmal

Well-Known Member
What should we value those goods in? We can link it to anything really, potatoes, rice, gold, ect.

The beauty of using the dollar is that in america we can link it to the amount of money we make as a per capita basis. And if you know how much the average american makes, and the prices of goods you know as a ratio to time worked how much of our time is dedicated to that item. And using the dollar we can also show how much it is with a number that actually has meaning to people.

You know how much you made last year, so if you see a dollar linked to that amount you would have a very good idea of the cost to you at that particular time. Most people have no idea how much gold they could have gotten at any period of time in their lives though so it is not a good indicator when talking about values.
 

NoDrama

Well-Known Member
Only Private industry can properly allocate capital to useful and productive enterprises, government wastes the money or spends it in very unproductive ways that cause bubbles in things that shouldn't and wouldn't have bubbles if they would just keep their noses out of it. There are no more Bubbles to ignite, the Fed has shot its wad, the only tool they have available is a Printing Press. Helicopter Ben to the rescue. Do you know why we call him Helicopter?
 

hanimmal

Well-Known Member
Sweeping generalizations don't mean shit. There have always been economic bubbles especially back in the hay day of little government and gold standard.

Here check it out, recessions every 1-3 years prior to the Federal Reserve: http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

Why do you think that the Austrian economists talked up their business cycle theory so much, which fell to shit after the great depression and the recessions started. Not only did they extend out to 3-10 years but the severity of them and devastation is far less now that we understand not to just cross your fingers, close your eyes and hope for the best when shit is exploding around you.
 

NoDrama

Well-Known Member
Here check it out, recessions every 1-3 years prior to the Federal Reserve: http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
You should actually read what you link. It shows 1 land speculation bubble in that whole period. I would say War was a much greater contributor than gold EVER was, and who makes war? Is it you? Do you start wars with other countries, Or does Government start wars? So we have one of your examples showing a bubble had formed and burst, and all the rest of your examples were caused by government or banks. Prove my point even more.
 

hanimmal

Well-Known Member
US recessions, Free Banking Era to the Great Depression Dates[nb 2] Duration Time since previous recession Business activity [nb 3] Trade & industrial activity[nb 3] Characteristics


Panic of 1837 1836–1838 ~&0000000000000002.0000002 years ~&0000000000000002.0000002 years −32.8% — A sharp downturn in the American economy was caused by bank failures and lack of confidence in the paper currency. Speculation markets were greatly affected when American banks stopped payment in specie (gold and silver coinage).[14][3] Over 600 banks failed in this period. In the south the cotton market completely collapsed.[9]

Depression of 1839–43 late 1839–late 1843 ~4 years ~1 year −34.3% — This was one of the longest and deepest depressions. It was a period of pronounced deflation and massive default on debt. The Cleveland Trust Company Index showed the economy spent 68 months below its trend and only 9 months above it. The Index declined 34.3% during this depression.[15]

1845–46 recession 1845–late 1846 ~1 year ~2 years −5.9% — This recession was mild enough that it may have only been a slowdown in the growth cycle. One theory holds that this would have been a recession, except the United States began to gear up for the Mexican–American War which began April 25, 1846.[13]

1847–48 recession late 1847–late 1848 ~1 year ~1 year −19.7% — The Cleveland Trust Company Index declined 19.7% during 1847 and 1848. It is associated with a financial crisis in Great Britain.[15][8]

1853–54 recession 1853 –Dec 1854 ~1 year ~5 years −18.4% — Interest rates rose in this period, contributing to a decrease in railroad investment. Security prices fell during this period. With the exception of falling business investment there is little evidence of contraction in this period.[3]

Panic of 1857 June 1857–Dec 1858 1 year 6 months 2 years 6 months −23.1% — Failure of the Ohio Life Insurance and Trust Company burst a European speculative bubble in United States' railroads and caused a loss of confidence in American banks. Over 5,000 businesses failed within the first year of the Panic, and unemployment was accompanied by protest meetings in urban areas. This is the earliest recession to which the NBER assigns specific months (rather than years) for the peak and trough.[5][16][8]

1860–61 recession Oct 1860–June 1861 8 months 1 year 10 months −14.5% — There was a recession before the American Civil War, which began April 12, 1861. Zarnowitz says the data generally show a contraction occurred in this period, but it was quite mild.[15] A financial panic was narrowly averted in 1860 by the first use of clearing house certificates between banks.[9]

1865–67 recession April 1865–Dec 1867 2 years8 months 3 years 10 months −23.8% — The American Civil War ended in April 1865 and the country entered a lengthy period of general deflation that lasted until 1896. The United States occasionally experienced periods of recession during the Reconstruction era. Production increased in the years following the Civil War, but the country still had financial difficulties.[15] The post-war period coincided with a period of some international financial instability.

1869–70 recession June 1869–Dec 1870 1 year 6 months 1 year 6 months −9.7% — A few years after the Civil War, a short recession occurred. It was unusual since it came amid a period when railroad investment was greatly accelerating, even producing the First Transcontinental Railroad. The railroads built in this period opened up the interior of the country, giving birth to the Farmers' movement. The recession may be explained partly by ongoing financial difficulties following the war, which discouraged businesses from building up inventories.[15] Several months into the recession there was a major financial panic.

Panic of 1873 and the Long Depression Oct 1873 –Mar 1879 5 years 5 months 2 years
10 months −33.6% (−27.3%) [nb 3] — Economic problems in Europe prompted the failure of Jay Cooke & Company, the largest bank in the United States, which burst the post-Civil War speculative bubble. The Coinage Act of 1873 also contributed by immediately depressing the price of silver, which hurt North American mining interests.[17] The deflation and wage cuts of the era led to labor turmoil, such as the Great Railroad Strike of 1877. In 1879, the United States returned to the gold standard with the Specie Payment Resumption Act. This is the longest period of economic contraction recognized by the NBER. The Long Depression is sometimes held to be the entire period from 1873–96.[18][19]

1882–85 recession Mar 1882 – May 1885 3 years 2 months 3 years −32.8% −24.6% Like the Long Depression that preceded it, the recession of 1882–85 was more of a price depression than a production depression. From 1879 to 1882 there had been a boom in railroad construction which came to an end, resulting in a decline in both railroad construction and in related industries, particularly iron and steel.[20] A major economic event during the recession was the Panic of 1884.

1887–88 recession Mar 1887 – April 1888 1 year 1 month 1 year 10 months −14.6% −8.2% Investments in railroads and buildings weakened during this period. This slowdown was so mild that it is not always considered a recession. Contemporary accounts apparently indicate it was considered a slight recession.[21]

1890–91 recession July 1890 – May 1891 10 months 1 year 5 months −22.1% −11.7% Although shorter than the recession in 1887–88 and still modest, a slowdown in 1890–91 was somewhat more pronounced than the preceding recession. International monetary disturbances are blamed for this recession, such as the Panic of 1890 in the United Kingdom.[21]

Panic of 1893 Jan 1893 – June 1894 1 year 5 months 1 year 8 months −37.3% −29.7% Failure of the United States Reading Railroad and withdrawal of European investment led to a stock market and banking collapse. This Panic was also precipitated in part by a run on the gold supply. The Treasury had to issue bonds to purchase enough gold. Profits, investment and income all fell, leading to political instability, the height of the U.S. populist movement and the Free Silver movement.[22]

Panic of 1896 Dec 1895 – June 1897 1 year 6 months 1 year 6 months −25.2% −20.8% The period of 1893–97 is seen as a generally depressed cycle that had a short spurt of growth in the middle, following the Panic of 1893. Production shrank and deflation reigned.[21]

1899–1900 recession June 1899 – Dec 1900 1 year 6 months 2 years −15.5% −8.8% This was a mild recession in the period of general growth beginning after 1897. Evidence for a recession in this period does not show up in some annual data series.[21]

1902–04 recession Sep 1902 –Aug 1904 1 year 11 months 1 year 9 months −16.2% −17.1% Though not severe, this downturn lasted for nearly two years and saw a distinct decline in the national product. Industrial and commercial production both declined, albeit fairly modestly.[21] The recession came about a year after a 1901 stock crash.

Panic of 1907 May 1907 – June 1908 1 year 1 month 2 years 9 months −29.2% −31.0% A run on Knickerbocker Trust Company deposits on October 22, 1907, set events in motion that would lead to a severe monetary contraction. The fallout from the panic led to Congress creating the Federal Reserve System.[23]

Panic of 1910–1911 Jan 1910 – Jan 1912 2 years 1 year 7 months −14.7% −10.6% This was a mild but lengthy recession. The national product grew by less than 1%, and commercial activity and industrial activity declined. The period was also marked by deflation.[21]

Recession of 1913–1914 Jan 1913–Dec 1914 1 year 11 months 1 year −25.9% −19.8% Productions and real income declined during this period and were not offset until the start of World War I increased demand.[21] Incidentally, the Federal Reserve Act was signed during this recession, creating the Federal Reserve System, the culmination of a sequence of events following the Panic of 1907.[23]

Post-World War I recession Aug 1918 – March 1919 7 months 3 years 8 months −24.5% −14.1% Severe hyperinflation in Europe took place over production in North America. This was a brief but very sharp recession and was caused by the end of wartime production, along with an influx of labor from returning troops. This in turn caused high unemployment.[24]

Depression of 1920–21 Jan 1920 – July 1921 1 year 6 months 10 months −38.1% −32.7% The 1921 recession began a mere 10 months after the post-World War I recession, as the economy continued working through the shift to a peacetime economy. The recession was short but extremely painful. The year 1920 was the single most deflationary year in American History; production, however, did not fall as much as might be expected from the deflation. GNP may have declined between 2.5 and 7 percent, even as wholesale prices declined by 36.8%.[25] The economy had a strong recovery following the recession.[26]

1923–24 recession May 1923 – June 1924 1 year 2 months 2 years −25.4% −22.7% From the depression of 1920–21 until the Great Depression, an era dubbed the Roaring Twenties, the economy was generally expanding. Industrial production declined in 1923–24, but on the whole this was a mild recession.[21]

1926–27 recession Oct 1926 – Nov 1927 1 year 1 month 2 years 3 months −12.2% −10.0% This was an unusual and mild recession, thought to be caused largely because Henry Ford closed production in his factories for six months to switch from production of the Model T to the Model A. Charles P. Kindleberger says the period from 1925 to the start of the Great Depression is best thought of as a boom, and this minor recession just proof that the boom "was not general, uninterrupted or extensive".[27]
Yeah your right, only one speculative bubble, there was not recessions every 1-3 years, and they were not more devastating. All the governments fault which was spending about 2% of GDP, which is about 2% tax on incomes right?

And yeah it has been so horrible for our economy:





When new data comes in that dismantles your theories you really should understand that maybe you are wrong.

Why do you think that Austrian economists say that they dont believe in mathematical models? Because it ruins their followers understanding of inflation if they can do the math and understand what it means.


Austrian economist, and creationists just don't seem to get this.
 

NoDrama

Well-Known Member
The best thing is you use averages, not reality to prove your theories. If poor person makes $10 per year, middle class man makes $50 per year and the rich man makes $1000 per year and then policy changes and the poor man makes $5 per year, the middle class makes $10 and the rich make $1,045 a year guess what? You averages didn't change at all, but now 90% of the population lives in poverty. Don't use averages it fucks up all the numbers and paints a rosy picture that isn't there.

Did you buy any silver yet Han? Bullion only!
 

Mr.KushMan

Well-Known Member
I have. Silver seems to be so under valued currently. I have seen like a 3$ increase since I was watching it.

Peace
 

hanimmal

Well-Known Member
The best thing is you use averages, not reality to prove your theories. If poor person makes $10 per year, middle class man makes $50 per year and the rich man makes $1000 per year and then policy changes and the poor man makes $5 per year, the middle class makes $10 and the rich make $1,045 a year guess what? You averages didn't change at all, but now 90% of the population lives in poverty. Don't use averages it fucks up all the numbers and paints a rosy picture that isn't there.
(10 + 50 + 1000) = 1060.
$10 is 1% of the total.
$50 is 5% of the total.
$1000 is 94% of the total.

(5 + 10 + 1045) = 1060
$5 is 0.5% of the total.
$10 is 1% of the total.
$1045 is 98.5% of the total.

I am not sure what you mean by the best thing I am using is averages. But the math above directly shows the percent changes of the totals being skewed to the larger amount. You don't just decide to use averages for everything it does really matter what you are trying to measure when and where to use averages.

The benefit of using the measurements above for per capita, maybe that is where you are thinking averages, is that you have very specific data to use, GDP which is a national income statistic right, is that you know how many people are in your country, and you know how much you are making as a whole. So it is very easy to divide them both and get a usable figure.

Like today, the per capita income was about 40k last year, does that not seem a reasonable number to measure how you sit in the economy?

And the reason for the CPI is that it is meaningless really to measure things like values across times because it is constantly changing for everything. So you tie CPI to a year that is actually meaningful to you to get a accurate understanding of how much you could expect to purchase at that particular time in a number form you understand.

Because it is meaningless to think about spending 12 cents for bread if you really dont have a clue as to the amount of pain 12 cents would have been at that time to pay out.


Did you buy any silver yet Han? Bullion only!
No, , , I pulled out the money I made off the banks (bought in April after Obama met with them, I love that I was reading my money and banking book before I started school again because it paid off huge) at the beginning of the year and paid off all our debt and have not gotten much back in the market aside from 401k (And i fucking hate I cannot do anything with that besides pick from a list of types of industries).

Glad you got on it early though man!

Im glad your sitting pretty with it though man, you did have a good eye with the silver.
 

NoDrama

Well-Known Member
Like today, the per capita income was about 40k last year, does that not seem a reasonable number to measure how you sit in the economy?
And that is the problem, according to per capita income there isn't one single poor person in America.
 

hanimmal

Well-Known Member
Well it's a good thing it's not a model used in determining poverty then eh.

They determine the poverty line by adding up the costs of all the things a person would need to buy (consume) to live during the year.

To figure out how many people are below it you look at their repotted income.
 

Mr.KushMan

Well-Known Member
But the thing is some people need more money than others based on the standard curve of deviation. So even though the poverty line speaks about how the average family will live on the average income, but there are extenuating circumstances that make this an invalid argument.

Some below the poverty line won't have the resources to live comfortably, some in the wealthy area will have the same problems but not nearly as effected financially.

Peace
 

hanimmal

Well-Known Member
Yeah but that's the difference between qualitative and quantitative that nobody seems to understand. Actual economics is used to find the quantitative question and doesn't answer the qualitative ones.

Qualitative question, should economists continue to measure the arbitrary measurement of poverty line which is measured by the goods picked by the agency requesting the information?

Quantitative is the actual process to get the number.

The poverty line is just a measurement and easy to find, the parameters that are to be measured are far trickier and that is why you have so many different state, federal, and other agencies with different numbers. And it doesn't mean it is not important to know how much our people need to survive, even if people mistaken it for living comfortably. The problem is the politicians that pick what to measure or change the goods don't have a clue with what they are doing usually, and then turn and blame the people that supplied them their numbers as being wrong.
 
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