Comments on: George Magnus on the Economic Outlook http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html Sun, 22 Nov 2009 07:56:24 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: luther http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21560 luther Tue, 14 Oct 2008 21:33:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21560 hubert: "ONce they understand they will tolerate it to make up for losses."<br/><br/>well, when the 'make up for losses' is on the backs of increased interest charges on those ARM mortgages tied to LIBOR, they have to the end of October to tolerate.<br/><br/>remember, election day is right after the November mortgage payment for quite a number of voters. hubert: “ONce they understand they will tolerate it to make up for losses.”

well, when the ‘make up for losses’ is on the backs of increased interest charges on those ARM mortgages tied to LIBOR, they have to the end of October to tolerate.

remember, election day is right after the November mortgage payment for quite a number of voters.

]]> By: luther http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21559 luther Tue, 14 Oct 2008 21:27:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21559 "Somehow I think this family will remember."<br/><br/>and the thousands others like them now and in the near future. “Somehow I think this family will remember.”

and the thousands others like them now and in the near future.

]]> By: luther http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21557 luther Tue, 14 Oct 2008 21:11:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21557 "And that is the massive loss of confidence and trust by retiring Boomers in the tenets of faith based investing and the ownership society. The Boomers are increasingly and painfully aware of the ponzi like units underlying the global financial system that is suppose to finance their retirements. And they are teaching their children accordingly."<br/><br/>tourist, great paragraph worth repeating...with one caveat...<br/><br/>in many instances, it's the children teaching the parents.<br/><br/>either way, the generations-long esoteric is rapidly becoming exoteric indeed. “And that is the massive loss of confidence and trust by retiring Boomers in the tenets of faith based investing and the ownership society. The Boomers are increasingly and painfully aware of the ponzi like units underlying the global financial system that is suppose to finance their retirements. And they are teaching their children accordingly.”

tourist, great paragraph worth repeating…with one caveat…

in many instances, it’s the children teaching the parents.

either way, the generations-long esoteric is rapidly becoming exoteric indeed.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21553 Anonymous Tue, 14 Oct 2008 20:37:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21553 Anon of 3.20<br/><br/>I suppose off-topic here, but am very curious as what your strategy has been to generate an envious 500%?<br/><br/>Would be very keen to hear if you would be kind enough to explain, even in general terms??? Anon of 3.20

I suppose off-topic here, but am very curious as what your strategy has been to generate an envious 500%?

Would be very keen to hear if you would be kind enough to explain, even in general terms???

]]> By: Carlosjii http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21528 Carlosjii Tue, 14 Oct 2008 15:41:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21528 from Louise Yamada <br/>…..We made comparisons to as far back as 2004 to this structural bear market that began in 2000. It has been very parallel to the 1932 to 1942 period and right now we are in something very similar to the 1937-38 period decline, which was 49% for the Dow.<br/> <br/>The credit bubble is so large that the deleveraging process, this unwinding of the bubble can take quite sometime. Whether or not we have seen the lows is questionable. But once we have the degree of the damage it’s just that it’s going to take long time to repair. 1938 to 1942 saw about three-four years of up and down movement and we may have something very similar to look forward to.<br/><br/>…..I think the 7,200 level would bring you right back to the 2002 lows and it is looking more like that maybe a possibility since it broke below the 9,000 level which was where the Dow broke in 2003. Till now all the gains that people have made from 2003 to 2007 have been reversed.<br/>………………………………………………..<br/>AND my personal take is Sir Alan suffered a health problem is 1996 causing some kind of brain damage or some thing – akin to Clinton’s heart problem and it’s attendant manifestations. Simplistically Sir A has been functionally senile for a long time. He is – after J Edgar – the best reason I can think of for AGE and term limits<br/>see http://www.drmcdougall.com/misc/2008other/080412clinton.htm on diminished blood flow to the brain from Louise Yamada
…..We made comparisons to as far back as 2004 to this structural bear market that began in 2000. It has been very parallel to the 1932 to 1942 period and right now we are in something very similar to the 1937-38 period decline, which was 49% for the Dow.

The credit bubble is so large that the deleveraging process, this unwinding of the bubble can take quite sometime. Whether or not we have seen the lows is questionable. But once we have the degree of the damage it’s just that it’s going to take long time to repair. 1938 to 1942 saw about three-four years of up and down movement and we may have something very similar to look forward to.

…..I think the 7,200 level would bring you right back to the 2002 lows and it is looking more like that maybe a possibility since it broke below the 9,000 level which was where the Dow broke in 2003. Till now all the gains that people have made from 2003 to 2007 have been reversed.
………………………………………………..
AND my personal take is Sir Alan suffered a health problem is 1996 causing some kind of brain damage or some thing – akin to Clinton’s heart problem and it’s attendant manifestations. Simplistically Sir A has been functionally senile for a long time. He is – after J Edgar – the best reason I can think of for AGE and term limits
see http://www.drmcdougall.com/misc/2008other/080412clinton.htm on diminished blood flow to the brain

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21511 Anonymous Tue, 14 Oct 2008 14:06:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21511 GDP/economy spiked by years of excess credit growth certainly needs a new playbook but the emphasis on bailing the financial sector from its own excess makes it dificult to imagine a healthy productive economy driving income growth for the citizens anytime soon. Can't imagine any decline in deleveraging until this problem is addressed. GDP/economy spiked by years of excess credit growth certainly needs a new playbook but the emphasis on bailing the financial sector from its own excess makes it dificult to imagine a healthy productive economy driving income growth for the citizens anytime soon. Can’t imagine any decline in deleveraging until this problem is addressed.

]]> By: ruetheday http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21489 ruetheday Tue, 14 Oct 2008 12:06:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21489 thomas - Regarding how far we need to delever - Minsky broadly defined three different financial positions: hedge, speculative, and ponzi. We'll need to get back to the hedge position where current period income covers current period financing costs, without requiring rollover of interest or asset sales. We still have some way to go. thomas – Regarding how far we need to delever – Minsky broadly defined three different financial positions: hedge, speculative, and ponzi. We’ll need to get back to the hedge position where current period income covers current period financing costs, without requiring rollover of interest or asset sales. We still have some way to go.

]]> By: Hubert http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21475 Hubert Tue, 14 Oct 2008 11:02:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21475 Reg: money market<br/>For months now a I have a nagging suspicion that the high Libor rates are not unwelcome to the banks themselves. Sure, it shows distress but that we knew anyway. And the real rates, if any lending would have gone on in 3-or-more-month-LIBOR, would have been higher, much higher, anyway.<br/>So looking forward I do not see them the spreads they are making up, bringing in. Or only under sophisticated political pressure.<br/>I think politicians first not realize how much banks profit from a bigger spread while borrowing at central banks or state secured senior subordinated. <br/>ONce they understand they will tolerate it to make up for losses. Only when business lobbying and some Pecora hearings really step up in 2009, we might finally bring LIBOR really down back to 20-50 points spread. <br/><br/>Some thoughts ? Reg: money market
For months now a I have a nagging suspicion that the high Libor rates are not unwelcome to the banks themselves. Sure, it shows distress but that we knew anyway. And the real rates, if any lending would have gone on in 3-or-more-month-LIBOR, would have been higher, much higher, anyway.
So looking forward I do not see them the spreads they are making up, bringing in. Or only under sophisticated political pressure.
I think politicians first not realize how much banks profit from a bigger spread while borrowing at central banks or state secured senior subordinated.
ONce they understand they will tolerate it to make up for losses. Only when business lobbying and some Pecora hearings really step up in 2009, we might finally bring LIBOR really down back to 20-50 points spread.

Some thoughts ?

]]> By: tourist http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21467 tourist Tue, 14 Oct 2008 10:33:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21467 cic said: I beg to differ. This is 2008, the attention span of the population is close to zero. In a year from now[sic] nobody will remember.<br/><br/><br/>“Rafael and Carroll Aguirre from Paola Place had sold their house in San Jose’s east foothills to move to Manteca to be closer to family. They put more than 25 percent down on a $547,000 house. They depleted their 401(k)s to spend $120,000 improving their backyard. Aguirre lost his job and, with no income for 11 months, the bill collectors started calling and he no longer could pay the mortgage. Selling the Town Car and the diamond ring barely made a dent. In July, they received a notice from the bank that they had 72 hours to leave. Their $270,000 investment was gone, and they were filing for bankruptcy.”<br/><br/>Somehow I think this family will remember. cic said: I beg to differ. This is 2008, the attention span of the population is close to zero. In a year from now[sic] nobody will remember.

“Rafael and Carroll Aguirre from Paola Place had sold their house in San Jose’s east foothills to move to Manteca to be closer to family. They put more than 25 percent down on a $547,000 house. They depleted their 401(k)s to spend $120,000 improving their backyard. Aguirre lost his job and, with no income for 11 months, the bill collectors started calling and he no longer could pay the mortgage. Selling the Town Car and the diamond ring barely made a dent. In July, they received a notice from the bank that they had 72 hours to leave. Their $270,000 investment was gone, and they were filing for bankruptcy.”

Somehow I think this family will remember.

]]> By: Sean Maher http://www.nakedcapitalism.com/2008/10/george-magnus-on-economic-outlook.html#comment-21464 Sean Maher Tue, 14 Oct 2008 09:47:00 +0000 http://www.nakedcapitalism.com/2008/10/george-magnus-on-the-economic-outlook/#comment-21464 As someone who called the crash in commodities and then equities on my blog, and advised going long at the end of last week, I think it's important to understand the tenets of behavioural finance, as much as the insightful theories of Hyman Minsky. Markets swing to emotional extremes, and a wise investor will sell euphoria and buy despair...buying a market like Japan at sub book value is highly likely to generate decent medium term returns, regardless of further inevitable volatility. As someone who called the crash in commodities and then equities on my blog, and advised going long at the end of last week, I think it’s important to understand the tenets of behavioural finance, as much as the insightful theories of Hyman Minsky. Markets swing to emotional extremes, and a wise investor will sell euphoria and buy despair…buying a market like Japan at sub book value is highly likely to generate decent medium term returns, regardless of further inevitable volatility.

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