usctrojanGT3

Didn't mean to do that, but I'll be kind enough to take your GT3 allocation off your hands.

Leica 993

And the cherry on top? Read your bank deposit agreements. It's not even your money when it goes into the bank, you're simply a creditor to the bank when you make a deposit. If things go south, you'll need to get in line for your own money, behind those higher on the food chain.

I heard that the biggest landowner in the USA is the Federal Reserve, due to mortgaged backed securities held by them. Maybe that's the end goal, fee simple ownership of everything by global banking interests. Have a good evening

Leica 993

Yea, let's forget this end of the world stuff, tell us about your GT3 spec

Guest89

Do you know how banking actually works?

Notwithstanding the FDIC fund into which all FDIC regulated banks pay premia, depositors are well protected by the very thing you denigrate - the degree of leverage inherently necessary in profitable, efficient, fractional reserve banking.

Banks (and bank holding companies, to an extent) are highly supervised by their primary regulator, whether the institution is nationally or state chartered; assuming the absolute worst case scenario (and nothing anywhere near this transpired during the most recent financial crisis) in which a bank failed to open one day and instead said "Surprise, we took some losses and don't have any equity left! Sorry common equity holders!" ... the bank would no longer operate, could not take subsequent, further losses, and depositors would (eventually) be fine.

If you bank at a public institution, call into their earnings call next quarter and ask the CEO what will happen to your funds if the bank fails.

Archimedes

I know I sound like a broken record, but I totally disagree that it would take anything like that to cause a dramatic reduction in asset values in the U.S. We've had 'big resets' in the past with nothing remotely resembling that, and just because the risk factors/root causes are different this time, doesn't mean the end result won't be similar.

And I never said it would be rapid, or a large reset. The correction could just as easily manifest itself as an underperformance over the longer term. The only way asset values will continue to rise (IMO) is through more manipulation by central governments, and there just isn't much more room for them to move the levers without big consequences. God help us if we really did have a major debt/financial crisis somewhere in the a first world power at the moment. The central banks shot all their arrows manipulating us out of the last one and don't have much of any left.

Debt is the new equity and, thanks to the Central Banks, it's massively underpricing risk in this environment.

grendel88

But this is only part of the problem. The Central Bank policy was supposed to bring inflation, but because of technology and globalization and a dozen other crazy macro concepts, real inflation in consumables has been hard to achieve in the US and Europe so we get asset inflation, which is far less consumable/destructible. But monetary policy has always been a broad stroke policy weapon. The cost of things in this country is so out of whack now. A flat screen TV for $300. A new top of the line cell phone for $800. A t shirt for $5. Basically, cheap money was supposed to drive our consumer economy, instead cheap money drove the investor economy. The underlying problem is still as simple as the cycle of production and consumption.

Archimedes

On that bolded part, we again disagree. IMO, that was not the real intent on the part of policymakers at all. It was to prop up asset prices, plain and simple.

And the only reason it doesn't appear there is inflation is because of the way it's measured and the fact that there are huge regional differences. My big four expenditures, housing, food, energy and health care have all increased dramatically in the past few years as this bubble has progressed. Of course, core inflation doesn't capture that, nor does it account for regional housing shocks.

Scorponok

I love this thread.

That is all, carry on!!

grendel88

I think it was a 70/30 thing, with a the main hope of inflation. I think the bailouts were more for asset protection. Either way, trusting bankers to save the world sounds like a plot line for a British farce.

Whatever the reason, it has not helped a portion of the population in the way that they want. It did not bring back $30 an hour jobs for under-skilled and under-educated labor. It did bring back meaningful industry in the communities that used to have them.

The four components that have increased for you have complicated connections to human labor in regards to production so none of this inflation seems to help the majority of people in the economy. Even healthcare, which is a service based product, hasn't been able to spread the gains across to the producers/servicers. There are so many ancillary costs associated with it that gets spread across so many industries that we can't make it work.

Look at IT law, it is crazy hot mess as we try to put a value figure on intellectual production. How do we value an idea? How do determine the exact origin of the production of that idea and reward it? Until we can effective come up with a solution to distribute wealth in a way that somehow encourages competition and compels sharing for the greater good, we will always have this crap.

In the end, you and I live in one the most affluent and opportunity filled areas of our country. We can have fun on forum boards talking about getting $150k toys and complain if we have to pay an additional premium to buy these toys. Even with the asset bubble, we hopefully have diversified investments, good health, good education, and good skills to further enrich ourselves or weather any economic storm.

I just want a new 6 speed GT3...

two2012spyders

Actually, even when you own it you are borrowing it--- You can't take it with you.

I like leasing because my downside depreciation cost is fixed (absorbed but the manufacturer through a fixed residual) and I only pay sales tax on the part I use (e.g., tax on the 37.5% with a three year 12,000 lease on a GTS).

Of course financial discipline is always recommended.

two2012spyders

This! Of course, everyone hates to buy or sell to early and first lose money or leave too much on the table. Timing is everything and most difficult. I presume scaling in or out may be the best approach.

Archimedes

Read a few more articles yesterday about all the warning signs out there about how ridiculous valuations are at the moment and how similar the metrics are to the last crash, then watched the Big Short again last night just for good measure. Just need the bubble to keep floating for about 60 more days.

GrantG

I'm not disagreeing that there is a bubble, but trying to time it is really difficult. Hard to predict whether there is room for much more growth before popping or whether it's very imminent.

Archimedes

Totally agree and I'm not saying it's imminent or even that I really hope it happens, though I would welcome a slow return to a reasonably priced market. I also realize that the policy makers still have some power to manipulate the market for a while longer. Kinda like how the big banks manipulated the CDO market until they unloaded all their long positions during the last crash.

Manifold

So what's happening with mortgage interest rates? Why the spike up starting in November? Are the rates going to correct downwards before going back up again?