Financialization

**Hocus Pocus** · 11-29-12, 10:26 AM

http://market-ticker.org/akcs-www?post=195434

Good article on leverage shared with me by a friend.

While I totally agree with the article , its wishful thinking.

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**AetheLove** · 11-29-12, 01:29 PM

Originally Posted by Hocus Pocus

OWS: Want To Turn The Tide? in [Market-Ticker]

Good article on leverage shared with me by a friend.

While I totally agree with the article , its wishful thinking.

Thanks for the link. While I am largely sympathetic to the author's point of view, and agree with much of what is said, any article that long needs to have fewer fundamental errors of economics.

For example, highlighting leverage (and the associated dangers) is good. There is a decent description of how making credit widely available can have the effect of time-shifting demand. But I don't think there's any reason to demonize the idea of borrowing. Lending isn't the problem - predatory lending is the problem.

The point about how student loans survive bankruptcy is also good, but I thought the "fat cat college administrators" phrase was hilariously stupid. I don't think I've ever seen justified outrage be more ridiculously misplaced.

But so what? I love the OWS crew. They've got the right targets in their sights. As they learn and get better their arguments will improve, and they'll seem less silly.

Cheers,

AetheLove

**-Lazarus-** · 11-29-12, 01:39 PM

What is described here is happening on a much larger scale now, as the federal government finances a large and ever-growing part of it's expenditures every year, including for health care - directly through the privately owned Federal Reserve as the Fed monetizes the debt. And where does all the tax money go? Directly to the member banks of the Fed to pay off interest on printed money that was created out of thin air - free money. Who doesn't want that gig?

And the member banks of the Federal Reserve in turn are converting that constantly devaluing currency they just leveraged out of thin air into other items that will hold their value such as real estate or commodities, or other, stronger currencies. The idea is that they intend to leech from this country until it is ALMOST bled dry. THEN, they turn right around and use all that money they made, and in turn protected, and buy businesses, real estate and all the rest for pennies on the dollar. This is exactly what is happening in Europe, Greece being the best and most obvious example. Then the American economy eventually recovers as other economies become the focus of this scam; and the cycle begins again.

Anyone, ANYONE who sees this as a true issue and voted for President Obama is a complete idiot for this very reason. Look at the President's newest line regarding the so-called "fiscal cliff". Let's raise taxes now and we'll talk about reducing spending later, is what he says. He is in the bankers' hip pocket. I wouldn't say Romney wasn't, but we knew what we were getting into with Obama.

It is what it is. Nothing we can really do about it now, except prepare our own financial protection.

**triggerhappy2005** · 11-29-12, 02:10 PM

Originally Posted by -Lazarus-

What is described here is happening on a much larger scale now, as the federal government finances a large and ever-growing part of it's expenditures every year, including for health care - directly through the privately owned Federal Reserve as the Fed monetizes the debt. And where does all the tax money go? Directly to the member banks of the Fed to pay off interest on printed money that was created out of thin air - free money. Who doesn't want that gig?

And the member banks of the Federal Reserve in turn are converting that constantly devaluing currency they just leveraged out of thin air into other items that will hold their value such as real estate or commodities, or other, stronger currencies. The idea is that they intend to leech from this country until it is ALMOST bled dry. THEN, they turn right around and use all that money they made, and in turn protected, and buy businesses, real estate and all the rest for pennies on the dollar. This is exactly what is happening in Europe, Greece being the best and most obvious example. Then the American economy eventually recovers as other economies become the focus of this scam; and the cycle begins again.

Anyone, ANYONE who sees this as a true issue and voted for President Obama is a complete idiot for this very reason. Look at the President's newest line regarding the so-called "fiscal cliff". Let's raise taxes now and we'll talk about reducing spending later, is what he says. He is in the bankers' hip pocket. I wouldn't say Romney wasn't, but we knew what we were getting into with Obama.

It is what it is. Nothing we can really do about it now, except prepare our own financial protection.

We're you also angry at Bush for raising the debt and for TARP?

A simple yes or no will suffice.

Oh and you still suck at making predictions.

**Hocus Pocus** · 11-29-12, 02:11 PM

Originally Posted by AetheLove

Thanks for the link. While I am largely sympathetic to the author's point of view, and agree with much of what is said, any article that long needs to have fewer fundamental errors of economics.

For example, highlighting leverage (and the associated dangers) is good. There is a decent description of how making credit widely available can have the effect of time-shifting demand. But I don't think there's any reason to demonize the idea of borrowing. Lending isn't the problem - predatory lending is the problem.

The point about how student loans survive bankruptcy is also good, but I thought the "fat cat college administrators" phrase was hilariously stupid. I don't think I've ever seen justified outrage be more ridiculously misplaced.

But so what? I love the OWS crew. They've got the right targets in their sights. As they learn and get better their arguments will improve, and they'll seem less silly.

Cheers,

AetheLove

So if the college deans aren't fat cats than where do you think it started? They're allowed to drive up the cost of education with little regard due to the ease in obtaining credit. I get that cost went up due to the increase in demand, but college has always been notoriously expensive for what I think are intangible costs. I do think school is more so a business these days than ever.

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**Hocus Pocus** · 11-29-12, 02:14 PM

Originally Posted by triggerhappy2005

We're you also angry at Bush for raising the debt and for TARP?

A simple yes or no will suffice.

Oh and you still suck at making predictions.

Everyone was angry at TARP even though it worked.

I really wasn't intending on putting a us fiscal policy spin on here. My main goal was to talk about what I consider the next big bubble and that's student debt.

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**Hocus Pocus** · 11-29-12, 02:17 PM

And I really liked your point about not demonising lending.

You do have to look at the intent of the fed lending directly to students with no underwriting. The avg undergrad could borrow around $50k for any unspecified degree.

So who dropped the ball was it the fed doing unsecured loans or the schools

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**triggerhappy2005** · 11-29-12, 02:48 PM

Originally Posted by Hocus Pocus

Everyone was angry at TARP even though it worked.

I really wasn't intending on putting a us fiscal policy spin on here. My main goal was to talk about what I consider the next big bubble and that's student debt.

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My post was directed at Lazarus not you.

**Hocus Pocus** · 11-29-12, 02:50 PM

Originally Posted by triggerhappy2005

My post was directed at Lazarus not you.

Yeah I know , but your post was much shorter and easier to reply to lol.

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**AetheLove** · 11-29-12, 03:14 PM

Originally Posted by Hocus Pocus

So if the college deans aren't fat cats than where do you think it started? They're allowed to drive up the cost of education with little regard due to the ease in obtaining credit. I get that cost went up due to the increase in demand, but college has always been notoriously expensive for what I think are intangible costs. I do think school is more so a business these days than ever.

As fat cats, college administrators are a bad fit. There are much bigger, and fatter, cats to be found.

Not that we couldn't find plenty who deserve some blame. Of course we can. I just think they're way down the list.

It's like that lawyer who wrote that article whining about taxes and barely making ends meet in a tough economy and it turned out he and his wife were clearing $450,000 a year. I'm not sorry at all he got turned into a punch-line because, yeah, STFU whiney lawyer guy - but he's not the real problem and I don't want to be distracted by small potatoes.

Cheers,

AetheLove