Re: Financial topics
Posted: Thu Sep 25, 2008 3:41 pm
The Nuer call something similar the "money of shit."
Perhaps an expletive is warranted at this stage!
Perhaps an expletive is warranted at this stage!
Generational theory, international history and current events
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Matt1989 wrote:The Nuer call something similar the "money of shit."
Perhaps an expletive is warranted at this stage!
Going further with this idea of comparing houses with money, at the height of a bubble in "junk houses" there are lots and lots of "quality houses" that have been converted to junk houses and everyone is happy to keep them on their balance sheets and rent them or own them and live in them. And at the height of the "junk house" bubble, everyone pretty much agrees that because there are so many of these junk houses and people are willing to accept them on the same terms as quality houses that houses really aren't worth very much (kind of like the dollar wasn't really worth very much a few months ago when "junk dollars" were accepted on the same terms as "quality dollars"). But at some point, there is sort of an epiphany and lots and lots of people decide they are not going to live in junk houses anymore and they begin moving to quality houses. And the slumlords lower the rent on the junk houses, but still nobody will live in them. They just sit empty and there are no bids. As they sit empty, they deteriorate even further and now nobody wants to live in the junk houses at all. Meanwhile, the rent on quality houses goes way up and there is a shortage. All of a sudden, everyone wants to get their hands on quality houses, even the slumlords, similar to how the slumlords on Wall Street want to get rid of their junk money and get a hold of quality money. As this process goes on, eventually the junk houses are bulldozed and written off, or they continue to deteriorate until the elements of nature cause them to collapse.Having junk money on your balance sheet is kind of like being a slumlord who owns a lot of beat up junky houses full of deadbeat tenants. If the slumlord goes to a bank to get a loan to buy more slum property, the banker (in normal times) will drive by the houses listed on the balance sheet and decide that said balance sheet does not constitute worthy collateral to make a loan on, and that any future purchases by the slumlord likely will not either. On the other hand the "new " banker (in the abnormal times of the past few years) made a subprime loan, folded it into a derivative product, and sold the derivative product to someone who has never driven by the slumlord's property and has no idea where it is, except that now some of it is in default and payments are not being received. Meanwhile, Ben Bernanke and Hank Paulson, who have also never driven by these slum properties, are trying to convince the American taxpayer that we should provide money so that they can buy these properties, and maybe even make some money on them.
Not sure what you mean here. Anyway, the Nuer won't touch money that's been tainted (collected via shady means -- usually by cleaning latrines, hence the name), and being in possession of such money harms your business reputation. No one wants to touch it.John wrote: "The Nuer are a confederation of tribes located in Southern Sudan and western Ethiopia. Collectively, the Nuer form one of the largest ethnic groups in East Africa.
They are a pastoral people who rely on cattle products for almost every aspect of their daily lives."
http://en.wikipedia.org/wiki/Nuer
Dana Blankenhorn calls it "The big shitpile." Good enough!Matt1989 wrote:The Nuer call something similar the "money of shit."
Perhaps an expletive is warranted at this stage!
This reminds me of Exter's Inverse Pyramid where small quantity, higher quality "money" is on the bottom and large quantity, lower quality "money" is at the top. In financial crises, people seek safer assets or "money" and try to crowd into the lower level creating demand for cash, treasuries, etc.John:
I like that distinction between "money" and "junk money."
This will be a deflationary collapse rather than an inflationary blow-off because creditors in the debt pyramid will move down the pyramid out of the most illiquid debtors at the top of the pyramid -- junk bonds, failing banks, S&Ls & insurance companies, Donald Trump, & Campeau. Creditors will try to get out of those weak debtors & go down the debt pyramid, to the very bottom: currency (dollar bills), even though they pay no interest. Next above currency are Treasury bills, issued by the government & backed by the Federal Reserve, which supports the market through its open market operations. They are by far the largest component of Reserve Bank credit, so are really as safe as currency notes, plus they pay interest. Still, you can’t buy anything with Treasury bills; you have to liquidate the bills to get money of some sort to buy something.
The higher debtors sit in the pyramid, the less liquid they are. At the top are all the least liquid debtors that I’ve already mentioned. This explains why we are headed for deflation. Creditors will move out of debtors high in the debt pyramid as many of those debtors fail through defaults & bankruptcies. That is very deflationary.
http://www.lbo.lk/fullstory.php?newsID=1692291840
John wrote:It means all of the above, if you don't have the very highest credit rating, and even then,Witchiepoo wrote:What does "credit market crashing" mean? No more credit cards? No more student loans? No more mortgages?
Just curious.
you'll be paying sky-high interest rates.
It's very hard to get credit now, but in a while it'll be almost impossible.
John
One of the major goals of the Bailout of the World proposal is toA web site reader wrote: > What is your take on the government's promise of protection on
> the money market funds? Do you think this will make them any
> safer as an investment vehicle?