Comments on: Is the Credit Crisis Really Over? Minsky Would Say No http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html Sun, 22 Nov 2009 14:37:59 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Steve http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7595 Steve Mon, 05 May 2008 23:16:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7595 ``An insatiable demand for liquidity is a pathological condition'' -- Minsky “An insatiable demand for liquidity is a pathological condition” — Minsky

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7590 Anonymous Mon, 05 May 2008 18:55:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7590 The only way to fix this problem is to reign in the Fed, and create a new, more sane system:<br/><br/>www.TakeBackTheFed.com<br/><br/>Mark<br/>www.siv0.com The only way to fix this problem is to reign in the Fed, and create a new, more sane system:

http://www.TakeBackTheFed.com

Mark
http://www.siv0.com

]]> By: Steven http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7581 Steven Mon, 05 May 2008 15:45:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7581 Arguably one of the finest posts here in some time.<br/><br/><br/>I think another issue is that of the points made, they form a "fearful synergy":<br/>* The financial sector is a big part of our economy.<br/>* The sector essentially focuses on short-term gains based on manipulation.<br/>* The focus on short-term gains prevents long-term development.<br/>* Thus a large sector of our economy is not focused on maximizing long-term development.<br/><br/>In short our economy is NOT about being an economy in the functional-productive sense. It's a giant gambling system with no goal of building a productive system with long-term reliable payoffs.<br/><br/>And thus like any gambling system, unsustainable with a mighty financial hangover on the horizon. Arguably one of the finest posts here in some time.

I think another issue is that of the points made, they form a “fearful synergy”:
* The financial sector is a big part of our economy.
* The sector essentially focuses on short-term gains based on manipulation.
* The focus on short-term gains prevents long-term development.
* Thus a large sector of our economy is not focused on maximizing long-term development.

In short our economy is NOT about being an economy in the functional-productive sense. It’s a giant gambling system with no goal of building a productive system with long-term reliable payoffs.

And thus like any gambling system, unsustainable with a mighty financial hangover on the horizon.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7548 Anonymous Sun, 04 May 2008 19:06:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7548 I suspect that this financial crisis will not be over until we see the great failure of insurance (due to excessive leveraging along with multi layering of moral hazard) and long term US treasury bonds below 3%.<br/><br/>This event has been labeled as a US subprime problem but it is actually a global prime problem. I suspect that this financial crisis will not be over until we see the great failure of insurance (due to excessive leveraging along with multi layering of moral hazard) and long term US treasury bonds below 3%.

This event has been labeled as a US subprime problem but it is actually a global prime problem.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7547 Anonymous Sun, 04 May 2008 18:56:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7547 What happens when investors don't step up at the treasury auction?<br/><br/>The primary dealers have to take down the inventory...good thing TAF was bumped $50 billion!<br/><br/>:) What happens when investors don’t step up at the treasury auction?

The primary dealers have to take down the inventory…good thing TAF was bumped $50 billion!

:)

]]> By: Bill http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7545 Bill Sun, 04 May 2008 17:57:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7545 What happens when nobody shows up to bid at a Treasury auction because the rates are too low? This happened (I believe) in 1980. What happens when nobody shows up to bid at a Treasury auction because the rates are too low? This happened (I believe) in 1980.

]]> By: David Pearson http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7544 David Pearson Sun, 04 May 2008 17:47:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7544 The "Arbitrage Capitalism" apologists have one point in their favor: volatility, of a sort, has actually been quite low.<br/><br/>I'm referring to Treasury bond yields. They reflect the presumed price, or premium, extracted by borrowers for having the "inmates run the asylum." At this point, that price is exceedingly low, and the apologists know it.<br/><br/>IMO, the whole Arbitrage Capitalism regime relies on this low Treasury premium. Which means it relies on the dollar recycling of dollar peggers like China. The problem is that dollar recycling is creating massive inflation in dollar peg countries -- a situation that is clearly unsustainable. That is why the Arbitrage Capitalism's days remaining are numbered in tens and not hundreds. The “Arbitrage Capitalism” apologists have one point in their favor: volatility, of a sort, has actually been quite low.

I’m referring to Treasury bond yields. They reflect the presumed price, or premium, extracted by borrowers for having the “inmates run the asylum.” At this point, that price is exceedingly low, and the apologists know it.

IMO, the whole Arbitrage Capitalism regime relies on this low Treasury premium. Which means it relies on the dollar recycling of dollar peggers like China. The problem is that dollar recycling is creating massive inflation in dollar peg countries — a situation that is clearly unsustainable. That is why the Arbitrage Capitalism’s days remaining are numbered in tens and not hundreds.

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7543 Yves Smith Sun, 04 May 2008 17:46:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7543 Anon of 1:29,<br/><br/>OMG, how embarrassing! That sentence was lame anyhow and I rewrote it. Thanks for the catch. Anon of 1:29,

OMG, how embarrassing! That sentence was lame anyhow and I rewrote it. Thanks for the catch.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7542 Anonymous Sun, 04 May 2008 17:29:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7542 The "their" in the first sentence should be "there". Apostates out there, not out their. The “their” in the first sentence should be “there”. Apostates out there, not out their.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html#comment-7541 Anonymous Sun, 04 May 2008 16:38:00 +0000 http://www.nakedcapitalism.com/2008/05/is-the-credit-crisis-really-over-minsky-would-say-no/#comment-7541 I have trouble with the "eye of the storm" analogy. Having grown up in the hurricane zone, I think we have only seen the outer bands of the storm.<br/><br/>Land fall will be a bitch I have trouble with the “eye of the storm” analogy. Having grown up in the hurricane zone, I think we have only seen the outer bands of the storm.

Land fall will be a bitch

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