tag:blogger.com,1999:blog-11906042.post840843922049860466..comments2024-03-22T11:55:50.335+13:00Comments on Not PC: Who pumped up the housing bubble? [updated]Peter Cresswellhttp://www.blogger.com/profile/10699845031503699181noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-11906042.post-18993546060946797712009-07-17T08:21:04.256+12:002009-07-17T08:21:04.256+12:00Go to Link<a href="http://www.rollingstone.com/politics/story/28816321/inside_the_great_american_bubble_machine" rel="nofollow">Go to Link</a>Shane Pleasancehttps://www.blogger.com/profile/06144367923437327037noreply@blogger.comtag:blogger.com,1999:blog-11906042.post-2073190211323858892009-07-17T08:16:38.866+12:002009-07-17T08:16:38.866+12:00I used to enjoy reading Rolling Stone magazine, ri...I used to enjoy reading Rolling Stone magazine, right up until they gave the Jonas brothers a top 20 album of the year rating or somesuch. They have, if you have been looking, developed a stronger and stronger political mouthpiece over the years. There is a new piece today laying the blame for repeated bubbles at the feet of Goldman Sachs.<br />http://www.rollingstone.com/politics/story/28816321/inside_the_great_american_bubble_machineShane Pleasancehttps://www.blogger.com/profile/06144367923437327037noreply@blogger.comtag:blogger.com,1999:blog-11906042.post-20141504907003065312009-07-13T19:21:12.154+12:002009-07-13T19:21:12.154+12:00I am guessing that you're a banker, am I corre...<i>I am guessing that you're a banker, am I correct? </i><br /><br />Hi,<br /><br />No I'm not in banking. I am in the food industry as a Quality Assurance Manager. Ex microbiology & chemistry.<br /><br />I view politics/economics from the perspective of what I've learned of pure Capitalism and Objectivism, if that's any help to you. And I'm still learning.<br /><br />Best of luck with getting it off the ground.gregsterhttps://www.blogger.com/profile/04786701115887458801noreply@blogger.comtag:blogger.com,1999:blog-11906042.post-45501769046567464622009-07-13T19:12:11.065+12:002009-07-13T19:12:11.065+12:00..and contemplate the fact that expecting to get a...<i>..and contemplate the fact that expecting to get an education out of the garbage you find in 'Inwhistigate' magazine is like expecting to find flowers growing out of the sewage ponds.</i><br /><br />Sure, I know. The article was by a contributor. Loudon is in the same issue.gregsterhttps://www.blogger.com/profile/04786701115887458801noreply@blogger.comtag:blogger.com,1999:blog-11906042.post-34156991496592870982009-07-13T04:12:22.521+12:002009-07-13T04:12:22.521+12:00Just wondering if Alan Gallagher understands deriv...Just wondering if Alan Gallagher understands derivatives? The valuation of derivative assets & other structured financial products are quite complex (very complex) and often, some financial analysts frequently use or refer to the term (ie, derivative) without understanding them how they work. There are many types of derivatives available today in the financial markets, but mostly their evaluations are done via software which have been specifically designed to do those tasks, because the user is shielded from having to know complex algorithms that the software uses in its calculations. Some evaluation can run for a few minutes (monte-carlo-type asset pricing). <br /><br />All the user has to do is to throw some numbers in and the system spews out the evaluation (ie, an approximation only, since the algorithms are not psychic to foresee the future fluctuations of interest-rates if the specific derivative is interest-rate based). There is no room for guess work in the evaluations of derivatives, since these products are traded in the millions of dollars and if the evaluator is off-target by even a small, error of say 0.0001, this number can be multiplied by the millions (principal) and the result will be the potential loss or gain. I just simplified it here but my point is that evaluation is very difficult and this is the main reason that some financial institutions are hiring quantitative dudes (math, engineering, physics) rather than economic dudes to develop evaluation models for them.<br /><br />I guess that Gallagher refers to widely traded derivatives by financial institutions as caplet/floorlet, swaption, floating-rate-notes/fixed-rate-notes, mortgage-backed-securities, etc...<br /><br />BTW, Gregster, I am not a banker but my interest is solely on writing software for financial derivative evaluations (including equity, fixed-income-security, forex and may be commodities at some stage in the future). I am guessing that you're a banker, am I correct? <br /><br />I am looking to sell this solution to the local banks & other financial institutions, but the few I have made contact so far said they don't do such stuff. I have tried the NZ Reserve Bank (twice) and the first contact they replied that they don't do complex stuff like that but this person wasn't a financial analyst in my opinion she seemed to be someone from the IT department. I have emailed the NZRB's deputy governor with an overview of the solution but no reply yet. I was recommended to try NZRB by an Auckland bank, since the bank said that the solution overview that I sent them , are not the stuff that they do. I know that my market is overseas, but I need to start here (locally), ie, I must crawl (establish locally) before I walk or even run (look to offshore).<br /><br />So, please let me know Greg, if you're banker because I am interested to chat.Falafulu Fisinoreply@blogger.comtag:blogger.com,1999:blog-11906042.post-26762034471342633832009-07-12T17:46:11.524+12:002009-07-12T17:46:11.524+12:00George Reisman is always worth a read, I make sure...George Reisman is always worth a read, I make sure I check his blog at least every fortnight.<br /><br />Regarding the creation of counterfeit capital, I also found the below article by Rothbard brilliant in concisely enumerating the sleigh of hand involved in our fractional reserve central banking systems. For those having difficulty grasping some of the basic concepts, this article is a great - easy to read - introduction.<br /><br />Rothbard's essay on <a href="http://www.lewrockwell.com/rothbard/frb.html" rel="nofollow">fractional reserve banking</a>.Unknownhttps://www.blogger.com/profile/07707604974739887751noreply@blogger.comtag:blogger.com,1999:blog-11906042.post-59904664252087407142009-07-12T15:09:01.945+12:002009-07-12T15:09:01.945+12:00Sorry Greg, I have no idea who Alan Gallagher is -...Sorry Greg, I have no idea who Alan Gallagher is -- or who Peter Hensley is, or what his arguments are -- but that paragraph you quote is just garbage from beginning to end.<br /><br />I can only suggest you look again at the figures above showing the true measure by which the US money supply has been inflated in reality, and place that fact against Mr Gallagher's "simple demonstration [showing] the impossibility of 'creating new money'," and contemplate the fact that expecting to get an education out of the garbage you find in 'Inwhistigate' magazine is like expecting to find flowers growing out of the sewage ponds.Peter Cresswellhttps://www.blogger.com/profile/10699845031503699181noreply@blogger.comtag:blogger.com,1999:blog-11906042.post-4428249822421092542009-07-12T14:54:54.756+12:002009-07-12T14:54:54.756+12:00The July 2009 Investigate magazine has an article ...The July 2009 Investigate magazine has an article “Barbarians At The Gates” by Alan Gallagher. He responds to Peter Hensley’s article which blamed bankers for the crises.<br /><br />I agree with Gallagher but one bit that puzzles: <br /><br /><i>“Hensley’s Assertion Two: <strong>“It was like printing money, which they did. They became modern day alchemists. They created money from nothing.”</strong><br /><br />Also not so. Money can only be created by governments, and more particularly these days, by central banks. This incorrect assertion stands shoulder to shoulder with the old chestnut that banks create credit – also untrue.<br /><br />Let me give a simple explanation. Bank A has $1000 in the kitty. It lends $100 to debtor B. In due course it sells a derivative to investor C for $100 backed with an assignment of the debt owed to it by B. The situation now stands that the bank has its $100 back and the kitty is restored to $1000, B no longer owes $100 to A but owes it to C. No new money or credit.<br /><br />This simple demonstration shows the impossibility of “creating new money.” If it were possible the world economies would have collapsed many decades ago, inflation of proportions of post war Germany, and world financial markets in tatters.”</i><br /><br />Don’t banks create money by their leveraging?<br /><br />http://www.peterhensley.co.nz/gregsterhttps://www.blogger.com/profile/04786701115887458801noreply@blogger.com