Comments on: On the Risk of "Genearalized Meltdown of the Financial System" http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html Sun, 22 Nov 2009 06:06:33 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1743 Anonymous Sun, 18 Nov 2007 13:02:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1743 FDIC gearing up:<br/><br/>http://tinyurl.com/2l3rw4<br/><br/>Office of Thrift Supervision gearing up:<br/><br/>http://tinyurl.com/2r88vd FDIC gearing up:

http://tinyurl.com/2l3rw4

Office of Thrift Supervision gearing up:

http://tinyurl.com/2r88vd

]]> By: Perceptions http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1742 Perceptions Sun, 18 Nov 2007 11:21:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1742 Population Growth & Aging -<br/>This current crisis is not just the usual end of another business cycle.<br/>Demographic levels are now being re-shaped Globally, as nearly two Billion Baby Boomers have commenced a 20 year transition from being big spenders, to big Retirement savers, to thrifty Retirees, before leaving us forever, in increasing numbers. <br/>This will completely change the dynamics of the world economy, as the generations following behind the Baby Boomers, are substantially less in numbers and wealth.<br/>The costs of an aging population divide, between Boomers and the following X & Y generations are also becoming evident, as real estate values start to fall, in the US & elsewhere. <br/>Whilst sub-prime has its own distinct origins, it has highlighted falling Real Estate values and New Housing starts, which have separate Demographic origins, pre-dating the sub-prime debacle. <br/>The sub-prime issue, still has at least 18 months to run and many skeletons are yet to be let out of their darkened closets. <br/>However, the Real Estate and New Housing markets will not subsequently recover. As the Boomers shift, into Retirement and then leave us altogether, a great vacuum is being created and it will not be filled by the following smaller natural generations, nor by less wealthy immigrants. <br/>As if that were not enough, this aging process will also produce vast increases in the medical costs associated with an aging population, it will also vastly increase taxes on those in following generations and you can guess what happens to government Budget deficits.<br/><br/>The scene has been set and I think it is very likely that decisions have been made. <br/>We are 10 minutes into the first quarter, of the highest stakes game, ever played!<br/>I recommend that information not be taken at face value. Do our own research, but without pre-conceived ideas, see where it leads you and come to our own conclusions.<br/>That said, all information needs to be read in context with the providers self interest, a great deal of information is tainted by the "smoke & mirrors" effect.<br/><br/>We are now, at the top of a once in history Population Growth Mega Cycle and some have caught a glimpse of the downside.<br/><br/>In contemplating the future, there are three absolute basics going forward -<br/>1. Population/Growth/Aging.<br/>2. Population/Climate<br/>3. Population/Peak Oil. <br/><br/>Unfortunately, when the herd turns, Scary will not be the right word.<br/>Good luck and watch the debt! Population Growth & Aging -
This current crisis is not just the usual end of another business cycle.
Demographic levels are now being re-shaped Globally, as nearly two Billion Baby Boomers have commenced a 20 year transition from being big spenders, to big Retirement savers, to thrifty Retirees, before leaving us forever, in increasing numbers.
This will completely change the dynamics of the world economy, as the generations following behind the Baby Boomers, are substantially less in numbers and wealth.
The costs of an aging population divide, between Boomers and the following X & Y generations are also becoming evident, as real estate values start to fall, in the US & elsewhere.
Whilst sub-prime has its own distinct origins, it has highlighted falling Real Estate values and New Housing starts, which have separate Demographic origins, pre-dating the sub-prime debacle.
The sub-prime issue, still has at least 18 months to run and many skeletons are yet to be let out of their darkened closets.
However, the Real Estate and New Housing markets will not subsequently recover. As the Boomers shift, into Retirement and then leave us altogether, a great vacuum is being created and it will not be filled by the following smaller natural generations, nor by less wealthy immigrants.
As if that were not enough, this aging process will also produce vast increases in the medical costs associated with an aging population, it will also vastly increase taxes on those in following generations and you can guess what happens to government Budget deficits.

The scene has been set and I think it is very likely that decisions have been made.
We are 10 minutes into the first quarter, of the highest stakes game, ever played!
I recommend that information not be taken at face value. Do our own research, but without pre-conceived ideas, see where it leads you and come to our own conclusions.
That said, all information needs to be read in context with the providers self interest, a great deal of information is tainted by the “smoke & mirrors” effect.

We are now, at the top of a once in history Population Growth Mega Cycle and some have caught a glimpse of the downside.

In contemplating the future, there are three absolute basics going forward -
1. Population/Growth/Aging.
2. Population/Climate
3. Population/Peak Oil.

Unfortunately, when the herd turns, Scary will not be the right word.
Good luck and watch the debt!

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1740 Yves Smith Sun, 18 Nov 2007 07:14:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1740 Michael,<br/><br/>We may unfortunately have the opportunity to see soon enough. However, the news was pretty bad in 1988 and 1989, particularly if you were in Texas, where it seemed as if virtually every other bank was in trouble, yet there were very very few (I earlier said no, but a reader corrected me) bank runs.<br/><br/>I actually think people are more trusting in the government than before, perversely. While they may tell pollsters they hate Washington, their actions say otherwise. Why is there so much complacency about torture, unauthorized wiretaps, police brutality (aka use of Tasers) and invasion of privacy? If we were as concerned as we ought to be, there would be mass protests. Instead, most members of the electorate prefer safety to political liberties, and they look to the government to provide safety.<br/><br/>And you saw all those creepy photo ops during the southern California fires of people in that football stadium (I only saw one clip, and don't recall the name of the facility, but it looked like a total PR plant) showing lots of smiling people saying how well they were taken care of.<br/><br/>People are also more interested in finance and a bit better informed than they were a 20 years ago due to the rise of 401 (k)s, a larger proportion of the population owning stocks, and financial TV. Even in the S&L crisis, most people apparently understood that bank deposits are insured up to a certain level, and I can't believe proportionately fewer know now than then. Michael,

We may unfortunately have the opportunity to see soon enough. However, the news was pretty bad in 1988 and 1989, particularly if you were in Texas, where it seemed as if virtually every other bank was in trouble, yet there were very very few (I earlier said no, but a reader corrected me) bank runs.

I actually think people are more trusting in the government than before, perversely. While they may tell pollsters they hate Washington, their actions say otherwise. Why is there so much complacency about torture, unauthorized wiretaps, police brutality (aka use of Tasers) and invasion of privacy? If we were as concerned as we ought to be, there would be mass protests. Instead, most members of the electorate prefer safety to political liberties, and they look to the government to provide safety.

And you saw all those creepy photo ops during the southern California fires of people in that football stadium (I only saw one clip, and don’t recall the name of the facility, but it looked like a total PR plant) showing lots of smiling people saying how well they were taken care of.

People are also more interested in finance and a bit better informed than they were a 20 years ago due to the rise of 401 (k)s, a larger proportion of the population owning stocks, and financial TV. Even in the S&L crisis, most people apparently understood that bank deposits are insured up to a certain level, and I can’t believe proportionately fewer know now than then.

]]> By: Michael http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1739 Michael Sun, 18 Nov 2007 06:57:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1739 Yves, I think you underestimated the potential for panic and bank runs. In the post-911 and post-Katrina world, the trust in government has deteriorated. We have already had a preview in Countrywide and Northern Rock in terms of bank runs. Just wait when people start losing jobs. Ask yourself this question: would YOU saunter down to your local bank and withdraw some cash if you just lost your job and the local newspaper screams xxx Bank is teetering, all the while the Roubini's doom and gloom are openly trumpeted, not only on CNBC, but also on Oprah? Yves, I think you underestimated the potential for panic and bank runs. In the post-911 and post-Katrina world, the trust in government has deteriorated. We have already had a preview in Countrywide and Northern Rock in terms of bank runs. Just wait when people start losing jobs. Ask yourself this question: would YOU saunter down to your local bank and withdraw some cash if you just lost your job and the local newspaper screams xxx Bank is teetering, all the while the Roubini’s doom and gloom are openly trumpeted, not only on CNBC, but also on Oprah?

]]> By: newsman http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1735 newsman Sun, 18 Nov 2007 04:43:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1735 I keep waiting for someone to calmly explain why this doomsday scenario is all wrong. I keep waiting for someone to calmly explain why this doomsday scenario is all wrong.

]]> By: pjfny http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1725 pjfny Sat, 17 Nov 2007 21:13:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1725 Here is one more disturbing fact:<br/><br/>The CDS (credit default swap market), a multi trillion dollar mkt, which many many financial services companies are relying on to hedge their credit risk.....only works if the credit default seller can perform!!!! That's systemic risk if there ever was one! Here is one more disturbing fact:

The CDS (credit default swap market), a multi trillion dollar mkt, which many many financial services companies are relying on to hedge their credit risk…..only works if the credit default seller can perform!!!! That’s systemic risk if there ever was one!

]]> By: Anonymous http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1724 Anonymous Sat, 17 Nov 2007 20:50:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1724 I suggest those who get the axe become textile entrepreneurs I suggest those who get the axe become textile entrepreneurs

]]> By: Anonymous http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1723 Anonymous Sat, 17 Nov 2007 20:47:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1723 The point is they can continue issuing "money", just not as much as they have been to existing shareholders and employees (and accountants?) without getting it from the Fed, read..(non- shareholders/employees and accountants).<br/><br/>The special-whinging is also quite unbecoming. The point is they can continue issuing “money”, just not as much as they have been to existing shareholders and employees (and accountants?) without getting it from the Fed, read..(non- shareholders/employees and accountants).

The special-whinging is also quite unbecoming.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1722 Anonymous Sat, 17 Nov 2007 20:36:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1722 nitpicking:<br/><br/>1) There were several bank runs in the 1980s, all involving, IIRC, state chartered (& insured) institutions in Maryland, Texas and Ohio.<br/><br/>2) shotgun marriages, not gunshot marriages (though the latter is an interesting idea - probably an accurate description of many, if we take gunshot metaphorically!) nitpicking:

1) There were several bank runs in the 1980s, all involving, IIRC, state chartered (& insured) institutions in Maryland, Texas and Ohio.

2) shotgun marriages, not gunshot marriages (though the latter is an interesting idea – probably an accurate description of many, if we take gunshot metaphorically!)

]]> By: Independent Accountant http://www.nakedcapitalism.com/2007/11/on-risk-of-genearalized-meltdown-of.html#comment-1721 Independent Accountant Sat, 17 Nov 2007 20:05:00 +0000 http://www.nakedcapitalism.com/2007/11/on-the-risk-of-genearalized-meltdown-of-the-financial-system/#comment-1721 Banks like Citibank issue "money". hence are of interest to the Fed, unlike textile companies. I agree, we will not get bank runs by retail depositors, instead we will get a continuing dollar run. Banks like Citibank issue “money”. hence are of interest to the Fed, unlike textile companies. I agree, we will not get bank runs by retail depositors, instead we will get a continuing dollar run.

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