UnThreaded | Threaded | Whole Thread (46) | Ignore Thread Prev Thread | Next Thread
Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 455666  
Subject: “This time it is Different” Date: 4/19/2013 12:00 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 23
Regardless of what you think of Reinhart and Rogoff, “This time it is Different”, published 2009, contains a huge database of 800 years of country defaults, banking crises, and currency debasements. Much of the material is new, having been compiled and consolidated by the authors from statistics collected all over the world. The point is, of course, that this time it is never different. This may not be a particularly profound conclusion, but the statistical evidence presented by the authors is nonetheless quite surprising both in terms of the number of the events chronicled, and the shape of the patterns that develop from these data. Rather than being black swans (uncommon and unpredictable events) financial crises are the inevitable result of economic cycles in a free market economy. While timing of a banking crisis may be hard to predict they are nevertheless unavoidable.

While I am certainly not opposed to regulation, many attempts to regulate are doomed from the start. The notion that we can eliminate market cycles is born of the same sort of hubris that says “this time is different”. Much of the fertilizer that feeds the hubris that inflates the bubbles comes from the belief that legislation passed after the last crash will make it different this time.

My personal take on the data presented is very different from the one drawn by the Authors, who seem quite concerned for the future of our economic system. For instance, one statistical table presented shows that for the 66 countries covered for the period from 1800 to 2008 there were 268 banking crises. From the Authors this generates a good deal of hand ringing where I find these statistics reassuring.
None of these 268 crises caused the sky to fall or brought an end to capitalism. Instead throughout this period the world economy survived and living standards increased, and Capitalism has become semi-ubiquitous.

Granted the rate of GDP increase varied substantially from economic system to economic system. An important point the authors ignore or perhaps missed entirely is that the rate growth of personal income and per capita GDP was substantially greater in the countries with the most banking crises. Clearly the number of crises in a particular country is indicative the length of time the country operated with free markets.
If we break the numbers down by region, African countries averaged 1.7 crises per country, Asia 3.7 per country, Europe 5.8 per country (7.4 per country if you ignore Russia, Romania, Poland, Hungry and Turkey), Latin America 2.9 per country, and North American wins with an average of 10.5 per country.

The top ten countries in the world in the number of banking crises during this 208 year period were:

France 15
United States 13
United Kingdom 12
Brazil 11
Italy 11
Belgium 10
China 10
Denmark 10
Canada 8
Germany 8
Spain 8

Clearly, there is a strong relationship between free markets and the number of banking crises. But, if we admit this relationship, then are we not faced with the conclusion that the price of reducing these crises would result much slower growth in GDP per capita and lower living standards? It seems that one of the central ironies of life is that economic pain promotes growth. The authors do not mention this relationship. Hey, they are from Harvard, what would you expect. They are always looking for someone to blame and for way to solve a problems they can’t solve.

The United States has survived 13 banking crises since 1800 – not only survived but prospered, while Russia, Kenya, Angola, Hungry have had two, Romania, Angola, Algeria, and Zimbabwe, one. It is time to look at the business cycle as a natural function of a market economy. While we may not like the pain of the consolidation, we should see it as creative destruction looking for a ways to make the economy work better. We should accept the fact that there is really nothing we can to eliminate the pain. Just as long periods of prosperity inevitably lead bankers and investors to take on stupid risk, it is what we learn from the pain of the consolidation that propels the next period of prosperity. The data doses do a very proper job of supporting the writing of an author with a very different philosophy Nassim Nickolas

Taleb who writes in his book “Antifragile” that it is the type of volatility introduced by the economic cycle that not only allows capitalism to survive but helps to make it AntiFragile.

http://www.loschmanagement.com/content/antifragile-portfolio...


Will it be different this time? Will this great contraction be the end of our prosperity? Have we reached the end of our period of dramatic growth? Is the American empire as dead as the as the British Empire or we have turned into Japan? Or perhaps this time follow the same pattern as our previous 208 years and this great contraction be followed by a couple of decades of double digit growth in corporate earnings and PE ratio expansion?
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: qazulight Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420906 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 12:09 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Awesome.

Thoughtful, articulate, data backed.

Awesome!

Thank you

Qazulight

Print the post Back To Top
Author: qazulight Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420908 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 12:42 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
Will it be different this time? Will this great contraction be the end of our prosperity? Have we reached the end of our period of dramatic growth? Is the American empire as dead as the as the British Empire or we have turned into Japan? Or perhaps this time follow the same pattern as our previous 208 years and this great contraction be followed by a couple of decades of double digit growth in corporate earnings and PE ratio expansion?

Does it matter?

Will we be "toast" like England where the citizens are free to travel to Australia, to a booming economy, but most do not.

Is it so terrible to be Japanese? I see no reports that the Japanese are committing HariKari out of grinding dispair and hopelessness.

Would it really be so terrible to be one of many rich nations rather than the richest nation? Would it be so bad if Europe protected its own western border? Do we really want to be called on to keep the nation on Russia southern border stable? Why can't China deal with its own unruly vassal state?

I mean even if we are not the biggest baddest on the planet we can still make money. I mean ABB makes money, Barkley's makes money, Portugal Telecom makes money, even a Frecch company, Total makes money, Honda makes money. Do we really care where wealth is created? In today's global economy the wealth is often created in many places at once and disbursed to many places at once.

My brother told me that ten years ago when he retired from Intel, that engineering teams worked around the clock, but nobody worked nights. The information was moved from time zone to time zone around the world.

Can you buy an American car? No. You can buy a car from an American company and it may actually been assembled in the U.S., but even if it was, the dollar you paid for it will be sent to several different counties. The same with Japanese and European cars.

While I still believe ( hope?) that stock market will drop way down, I believe that more of the difficult times are behind the world than in front of it.

Cheers
Qazulight

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: jgc123 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420916 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 9:21 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 19
"But, if we admit this relationship, then are we not faced with the conclusion that the price of reducing these crises would result much slower growth in GDP per capita and lower living standards"

I don't think that necessarily follows when you look at the long haul.

For example, had we kept Glass-Steagall in place and a few sensible regulations that were also gutted in the 90's prior to that, we would have had less of a booming economy from 2000-7, but we would not have had a total meltdown like we had in 2008-9.

Plus, as misplaced as some of the banking bailouts were concerned, most economists and some really bright businessmen like Buffett and Gates think that a total meltdown would have resulted in a depression that surpassed 1929-37.

I realize that we are dealing in counterfactuals that can never be fully answered without multiple time machines, but Dow was at 6500 and still in freefall and banks were going under and about to take millions of people down with them when we stopped some of them from crashing.

Quite frankly I don't think the above conclusion follows at all and I have little confidence in the stats provided by Reinhart and Rogoff unless and until somebody verifies that they weren't fudged like the working paper was fudged.

Humpty dumpty sat on a wall. Humpty dumpty had a great fall. All the king's horses and all the king's men couldn't put Humpty together again.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: jgc123 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420918 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 9:39 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 6
I am not a big fan of collateral attacks and I do not lightly dismiss respected scholars who know a heckuva lot more than I do. But it looks to me like Reinhart and Rogoff have real credibility issues with a factual basis:

http://nymag.com/daily/intelligencer/2013/04/grad-student-wh...

Print the post Back To Top
Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420927 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 10:54 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
France beat us as something finally.

Dave

Print the post Back To Top
Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420929 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 11:19 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 96
This is the most seriously addlebrained post on the subject yet.

Rather than being black swans (uncommon and unpredictable events) financial crises are the inevitable result of economic cycles in a free market economy. While timing of a banking crisis may be hard to predict they are nevertheless unavoidable.

And yet, of the 13 bank crisis you list for the US, fully 10 of them happened in the 19th century, 2 in the early 20th, and since the Great Depression, and the onset of bank regulations such as Glass Steagall, there have been a grand total of two. There was the Savings & Loan debacle in the late 80's, a bank crisis handled so adroitly by regulators that the national economy barely hiccuped, and then - with the dissolution of Glass Steagall and other bank regulations, the crisis of 2008.

So rather than some simplistic conclusion like "Oh, regulations don't prevent anything", a more informed analysis would lead you to conclude that 12 of 13 bank crisis happened when regulations were scant, and in a world where data leads to conclusions, the conclusion is obvious.

Unless, of course, you are one who goes around throwing nonsense like "Hey, they are from Harvard, what would you expect. They are always looking for someone to blame and for way to solve a problems they can’t solve."

None of these 268 crises caused the sky to fall or brought an end to capitalism.

Uh, the one in 1929 gave rise to significant growth of the Communist Party in the United States and elsewhere (leading to the question, 20 years later "Are you now or have you ever been a member of...") There were many who believed that if the crisis had not been solved, that capitalism would have ended. Told that if he succeeded FDR would be remembered as a great president, he replied "And if I fail I may be the last." It was not an uncommon thought.

Incidentally, the French Revolution was preceded by a financial crisis. The riots in Spain are a result of the bank crisis. There are plenty of other examples, which a cursory knowledge of history would explain.

Clearly, there is a strong relationship between free markets and the number of banking crises. But, if we admit this relationship, then are we not faced with the conclusion that the price of reducing these crises would result much slower growth in GDP per capita and lower living standards?

Yes. And no. The highly regulated market seemed to have some pretty extraordinary growth in the US from 1950 to 2000, didn't it? No, we are not "faced" with that conclusion at all. Indeed, one might reasonable conclude the opposite, as one notices that recessions become ever shallower, business cycles stronger, and the financial system more robust - unfortunately leading to the erroneous conclusion (egged on by political dogma) that such regulations were "hampering" it, rather than the opposite.

The United States has survived 13 banking crises since 1800 – not only survived but prospered, while Russia, Kenya, Angola, Hungry have had two, Romania, Angola, Algeria, and Zimbabwe, one.

Wow. Pick countries that don't have an economy to speak of, much less a bank sector to have a crisis in, and pull this ridiculous factoid out of some nether region.

The only thing more embarrassing than the logic in this post is the fact that some fool at the Fool decided to highlight it with Post of the Day status.

As with so much in today's world, there's no accounting for...well, anything anymore.
 


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: jgc123 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420930 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 11:31 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Thanks.

Sometimes if feels like the the debate turns not on substance, but on willingness of some to repeat memes so relentlessly that substance is drowned out by volume.

Print the post Back To Top
Author: bjchip Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420931 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 11:46 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
For the past 200 years we have had, progressively, cheaper and more abundant sources of energy and access to energy. Money represents work done, and a lot more work kept getting done.

Growth is always good.

Except that it isn't ALWAYS good.

Ask the bacteria in the culture medium of a closed petri dish.

So we are hitting limits, with respect to poisoning our environment. A vastly different proposition to running out of resources, not amenable to a "free market" solution.

So yes, there is a difference, and it has nothing whatsoever to do with the business cycle which remains as it has always been.

Print the post Back To Top
Author: notehound Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420932 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 12:03 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 19
Taleb who writes in his book “Antifragile” that it is the type of volatility introduced by the economic cycle that not only allows capitalism to survive but helps to make it AntiFragile.

Resilience is encouraged by the economic cycle because the natural cycle of default after speculation (risk taking) prevents excesses from continuing long enough to take down the entire system. Resilience develops when periodic defaults and losses are suffered and recovered from in the normal course of events, rescued by savers who lend and are rewarded with interest. Fragility develops when default and recovery are prevented from occurring.

I think of the natural economic cycle as follows:

Savings -> lending -> growth -> prosperity -> speculation -> default -> savings -> lending -> growth-> prosperity -> speculation -> default -> savings, etc.

By postponing and preventing default, suspending normal accounting rules, rewarding failure, and punishing savings (thereby discouraging lending), the Fed and the "Japanese" solution of interrupting the economic cycle have destroyed the natural engine of capitalism.

The economic cycle includes failure and then subsequent revival by savers who are rewarded by lending and earning interest. The Fed's financial repression and prevention of insolvency and default, have effectively shut down the engine of capitalism.

How can the price discovery mechanism ever determine the value of anything when default is prevented and the risk pricing of money (interest) is removed from market forces?

By allowing the TBTF banks to obtain cash from savers without paying the normal price (interest), they are allowed to engage in speculation without suffering risk of default. All markets are therefore subject to manipulation by the wielders of massive amounts of cost-free cash.

Taleb is right. Capitalism depends upon the economic cycle for its resilience. Everything the Fed and Japan have done to suspending the rules of risk and default does nothing but make the entire system more brittle, fragile and leveraged toward catastrophic failure.

IMHO, of course.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420933 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 12:13 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
The top ten countries in the world in the number of banking crises during this 208 year period were:

France 15
United States 13
United Kingdom 12
...
Canada 8
...



How very odd, look as I might I can't find anything about a Canadian banking crisis though I did find several links suggesting we have had zero major banking crisis. There were some regional bank problems some years back in the oil patch but if that qualifies as a crisis (in fact the industry regulators called them "shocks") most Canucks weren't even aware of it at the time.

Perhaps they have a different definition of "crisis"? Perhaps we missed the cut because we haven't existed as a country for 208 years though I think others might qualify for that group?

I couldn't find the link to the whole list but I'm thinking that the claim that "and North American wins with an average of 10.5 per country" might be in doubt as well?


Any <so much nonsense> mouse

http://blogs.wsj.com/economics/2013/04/09/why-canada-can-avo...

April 9, 2013, 5:12 PM ET.

Why Canada Can Avoid Banking Crises and U.S. Can’t

By Victoria McGrane

Since 1790, the United States has suffered 16 banking crises. Canada has experienced zero — not even during the Great Depression.


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: notehound Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420935 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 12:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 7
There was the Savings & Loan debacle in the late 80's, a bank crisis handled so adroitly by regulators that the national economy barely hiccuped, and then - with the dissolution of Glass Steagall and other bank regulations, the crisis of 2008.

I largely agree with you, Goofy. Crises were manageable so long as the proper regulations, such as Glass-Steagall, prevented the banks from amassing sufficient cost-free cash to engage in speculation on a massive, system-threatening scale - and then protected the banks from the natural results of speculation: default and loss.

I always point out, however, that the repeal of Glass-Steagall was not the only form of "deregulation" that destroyed the ability of the economic cycle to suffer default and recover from periodic crises without destroying capitalism.

The final piece of deregulation that permitted speculation on a massive, system-threatening scale sufficient to destroy rationally-regulated capitalism was the passage of the Commodity Futures Modernization Act of 2000.

http://en.wikipedia.org/wiki/Commodity_Futures_Modernization...

Print the post Back To Top
Author: goofnoff Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420939 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 12:49 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
As with so much in today's world, there's no accounting for...well, anything anymore.

I blame it on the over production of tinfoil hats.

Print the post Back To Top
Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420941 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 1:03 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Would it really be so terrible to be one of many rich nations rather than the richest nation? Would it be so bad if Europe protected its own western border? <i/>

Of course not.

In fact the rise of other rich nation should be of benefit to all employed people here because it amounts to a huge expansion of our customer base.

The end of British Empire may have been bad for the old British ruling class, the vast majority of people in England are far better off today that their ancestors in 1900.


Print the post Back To Top
Author: qazulight Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420944 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 1:56 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
Yes. And no. The highly regulated market seemed to have some pretty extraordinary growth in the US from 1950 to 2000, didn't it? No, we are not "faced" with that conclusion at all. Indeed, one might reasonable conclude the opposite, as one notices that recessions become ever shallower, business cycles stronger, and the financial system more robust - unfortunately leading to the erroneous conclusion (egged on by political dogma) that such regulations were "hampering" it, rather than the opposite

Goofy,

I normally applaud what you have to say, however on this, I think not.

I have been thinking over the cycles, bear and bull market, financial problems and so on. Recently I cam across an article about Nixon and how he had the FED juice the economy before his election and that the inflation of the 1970's might be laid at his feet rather than at the feet of OPEC.

After looking over the cycles, again and again, I have come to believe that if you went back in time and assassinated Hoover, someone else would have made similar choices, if you went back and time and saved Kennedy, a Nixon like person would still have been in the White House in 1970 and the manipulation by the FED would still have happened, or something like it.

These cycles are not based on regulations, the regulations are based on cycles.

It is what it is.

Cheers
Qazulight

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: PolymerMom Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420945 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 2:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
I hope the grad student in the Econometrics class gets an "A+" for finding these errors.

Print the post Back To Top
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420946 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 2:13 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
These cycles are not based on regulations, the regulations are based on cycles.
It is what it is.


Qaz... tread carefully... you are discovering truths that few are able to handle!

Print the post Back To Top
Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420947 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 2:16 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Qaz,

you have one chicken you have plenty of eggs.

You have one egg you have a chicken.

They go hand in hand and neither one comes first.

But if you had to the first one is the mother chicken....or rather the mother chicken's egg?

regulate this!!!

sitting on hands is the problem. We can not sit back and trust capitalists. I know I am one.

Dave

Print the post Back To Top
Author: unholydave Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420950 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 2:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
OP:

Are you insane, disingenuous, a troll? You want to live high on the hog while the speculation is out of control, and yet you want the Fed to save your butt when it all comes crashing down. Are you one of the TBTF bankers, or just an empty suit?

Print the post Back To Top
Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420952 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 2:59 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Speaking of banking problems, it is getting awfully lonely in triple A.


Any <In order to be an immaculate member of a flock of sheep, one must above all be a sheep oneself> mouse

http://www.bbc.co.uk/news/business-22219382

19 April 2013 Last updated at 14:32 ET

Fitch downgrades UK credit rating to AA+

The Fitch credit ratings agency has downgraded the UK to AA+ owing to a weakened economic outlook.

The move, after Moody's downgrade in February, came as Chancellor George Osborne defended the government's austerity plan.

Fitch said its downgrade primarily reflected a weaker economic and fiscal outlook.


Print the post Back To Top
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420954 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 3:13 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
So we are hitting limits, with respect to poisoning our environment. A vastly different proposition to running out of resources, not amenable to a "free market" solution.

"Hitting" in the sense of "moving rapidly away from" - at least in the countries with economies that most strongly resemble a free market.

Print the post Back To Top
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420955 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 3:16 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
The top ten countries in the world in the number of banking crises during this 208 year period were:

France 15
United States 13
United Kingdom 12
...
Canada 8
...



How very odd, look as I might I can't find anything about a Canadian banking crisis though I did find several links suggesting we have had zero major banking crisis.


Pure speculation: during most of the last 208 years, Canada was part of the United Kingdom.

Perhaps there were UK banking crises during that portion of the period, that impacted Canada and are being counted against Canada in these figures.

Print the post Back To Top
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420957 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 3:31 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
Are you one of the TBTF bankers, or just an empty suit?

Wouldn't being the former imply being the latter?

Print the post Back To Top
Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420959 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 3:47 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
warrl: Pure speculation: during most of the last 208 years, Canada was part of the United Kingdom.


Since Canada ceased to be part of the United Kingdom in 1867 you may want to check your math?

In truth the US had just finished the "Civil" war and were looking for someone else to pick a fight with, the Brits wanted no part of that and were pretty quick to complete the process.


Any <It’s ok if you disagree with me. I can’t force you to be right> mouse

Print the post Back To Top
Author: bjchip Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420960 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 3:48 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Warrl - sending the polluting industries offshore and polluting some other part of the planet faster and then hoping that the rubbish doesn't affect OUR part.... that doesn't actually work. I know you'd like to believe it does, but we can't

...not as in "we don't prefer it", but as in "we can't actually succeed no matter what we do"...

we can't continue that growth. There ARE some bacteria in that dish that will do better than some of the others.... for a while.

Print the post Back To Top
Author: franchot Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420961 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 4:20 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
Speaking of banking problems, it is getting awfully lonely in triple A.

Tim, it is admirable the way Canadian banks have managed to insulate themselves from the toxicity which pervades much of the financial sector. However, the fact that Canada is an extractive economy should be cited when noting its comparative fiscal health. When oil increased from $27/bbl in 2003 to $147/bbl in 2008, this made previously uneconomic oil/gas reservoirs viable. The fracking bonanza is a symptom of this and Canada is a beneficiary of the oilfield expansion which has ensued during the current era of higher oil prices.

Print the post Back To Top
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420962 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 4:24 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
warrl: Pure speculation: during most of the last 208 years, Canada was part of the United Kingdom.


Since Canada ceased to be part of the United Kingdom in 1867 you may want to check your math?


Okay, downgrade it to "a big chunk" - same speculation applies.

Print the post Back To Top
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420963 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 4:34 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Warrl - sending the polluting industries offshore and polluting some other part of the planet faster and then hoping that the rubbish doesn't affect OUR part.... that doesn't actually work. I know you'd like to believe it does, but we can't

I'd prefer to believe that it isn't actually happening.

I can't find any specific analysis on trends in global pollution broken down by whose standard of living the pollution is supporting, though. The thing is, if that analysis actually did clearly point to the US being an increasing global polluter, I'm sure it would be readily available.

China is currently the world's biggest polluter in many categories and one of the fastest-growing polluters. Sure they export a lot to the US - but their standard of living is also rising rapidly, and they export a lot to quite a few other countries as well. So you can't just blame all their increasing pollution on the US.

By the way, the US is among the few countries that did not ratify the Kyoto accord on CO2 emissions... and is also one of the few industrialized countries that came anywhere close to *meeting* emission-reduction goals set in that accord.

Print the post Back To Top
Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420964 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 4:48 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 8
This is the most seriously addlebrained post on the subject yet<i/>

Goofy


Thanks I can always tell when one of my posts has been successful when it generates a counter rant from goofyhoofy.

As I have explained frequently in the past, and at other locations, I am not opposed to regulation. I would just like it to be limited and effective.

I think that the FDIC has been very effective at limiting the bank runs that used to appear every ten years or so. And I certainly agree that FED’s intervention in 2008 and since has been helpful.

I also believe that one of the reasons that a small investor can beat the market is the result of the disclosure requirements established by Securities Laws that were passed in the 1930s (10Ks and 10Qs).

What I do object to is the naive belief that we can alter the nature of human behavior in a way that will eliminate economic cycles.

I try to remain apolitical in that I think that both of our parties house equal and generous portions of idiots. I try not to read political rants as they are generally a waste of time, never convince anyone of anything and tend to degenerate into personal attacks and name calling a practice that does serious damage to the quality of the content available here.

rc


Print the post Back To Top
Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420965 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 4:50 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
warrl: Okay, downgrade it to "a big chunk" - same speculation applies.


You have the most amazing way of recreating reality to suit your story then living in it.

All of our "Big Five" banks pre-date confederation (thought there has been some mergers along the way).

Now if you want to show me the list of our eight banking crisis episodes mentioned that you are "speculation" on I could perhaps try to look them up? Otherwise the number remains at zero.


Any <How many are in an umpteen?> mouse

Print the post Back To Top
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420966 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 5:29 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
warrl: Okay, downgrade it to "a big chunk" - same speculation applies.


You have the most amazing way of recreating reality to suit your story then living in it.


No, re-creating reality is asking me to justify and defend a position I have not taken.

Now if you want to show me the list of our eight banking crisis episodes mentioned that you are "speculation" on I could perhaps try to look them up? Otherwise the number remains at zero.

Try reading what I said. I am not trying to show that Canada has had 8 banking crises. I am speculating about the nature of banking crises that this guy might have INCORRECTLY identified as Canadian.

If you want the list of 8 Canadian banking crises, ask someone who says that Canada has had 8 banking crises.

Print the post Back To Top
Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420967 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 5:38 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Taleb is right. Capitalism depends upon the economic cycle for its resilience. Everything the Fed and Japan have done to suspending the rules of risk and default does nothing but make the entire system more brittle, fragile and leveraged toward catastrophic failure.<i/>

A minor Qubble. I would agree if the various Gov. agencies had been passive participants in the bubble, instead they were feeding the Bubble with both hands.

1. Interest rates too low (the Fed could have popped the housing bubble anytime by raising interest rates enough to stop people from buying. Since they did not act to prevent the problem they own it.

2. Congress mandated the expansion subprime borrowing.

3. George Bush lowers taxes at the top of the bubble.

4. Bill Clinton eliminates Capital Gains tax on housing.

When the Government works this hard to screw up the economy it is their obligation to fix it, particularly in this case as in the 1930s are the only ones that can fix it
rc


Print the post Back To Top
Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420968 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 5:41 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
By the way, the US is among the few countries that did not ratify the Kyoto accord on CO2 emissions... and is also one of the few industrialized countries that came anywhere close to *meeting* emission-reduction goals set in that accord.



True, though it is a side effect of (temporarily?) cheap Nat gas, a sluggish economy and mostly local government regulation making the burning of coal for electricity production more difficult rather than a serious effort to meet the goals.

Congrats anyway. }};-D


Any <I AM CURRENTLY UNSUPERVISED I know. It freaks me out too. BUT THE POSSIBILITIES ARE ENDLESS!> mouse


http://online.wsj.com/article/SB1000142412788732476340457843...

April 18, 2013, 10:48 p.m. ET.

Rise in U.S. Gas Production Fuels Unexpected Plunge in Emissions

By RUSSELL GOLD

U.S. carbon-dioxide emissions have fallen dramatically in recent years, in large part because the country is making more electricity with natural gas instead of coal.

Energy-related emissions of carbon dioxide, the greenhouse gas that is widely believed to contribute to global warming, have fallen 12% between 2005 and 2012 and are at their lowest level since 1994, according to a recent estimate by the Energy Information Administration, the statistical arm of the U.S. Energy Department.

While other factors, including a sluggish U.S. economy and increasing energy efficiency, have contributed to the decline in carbon emissions from factories, automobiles and power plants, many experts believe the switch from coal to natural gas for electricity generation has been the biggest factor.


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420982 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 7:22 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
When the Government works this hard to screw up the economy it is their obligation to fix it,

When a the cause of the problem is known, don't ask the cause for more, but bigger & faster!

Print the post Back To Top
Author: bjchip Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 420985 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 8:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
You work out what we use and buy that is "made in china" rather than "made in the USA", or "made in Germany" or "made in NZ" or "made in Australia", and then notice that the CO2 rise has not been affected in the slightest by our shifting heavy manufacturing to them.

I do NOT blame all increasing pollution on the US... why would you say so?

However:

1. Growth in consumption is a requirement of a fractional reserve system. It is being driven artificially, as is the debt required to keep it growing... and the USA is home to the Fed and a staunch supporter of the distortion of fractional reserve banking.

2. The US consumption doesn't grow as fast as others because it is already wealthiest and it is hard to actually concentrate and accumulate more in a country that already has so much. We got in and gorged ourselves on that "cheap" energy at exactly the right time (before we knew there was a problem). Our contribution to the problem however, is historic and our responsibilities are deeper than the present balance of emissions.

Print the post Back To Top
Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421002 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 11:03 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 19
Resilience is encouraged by the economic cycle because the natural cycle of default after speculation (risk taking) prevents excesses from continuing long enough to take down the entire system. Resilience develops when periodic defaults and losses are suffered and recovered from in the normal course of events, rescued by savers who lend and are rewarded with interest. Fragility develops when default and recovery are prevented from occurring.
I think of the natural economic cycle as follows:
Savings -> lending -> growth -> prosperity -> speculation -> default -> savings -> lending -> growth-> prosperity -> speculation -> default -> savings, etc.


This is the same sort of reasoning people gave for not taming the rivers of the TVA. Because if you don't let the floods periodically ravage the landscape, you will destroy the natural cycle and, oh, I don't know, something bad will happen.

I wish I had a perfect, on point, economic example to give you, but alas, we have only the one and it's in use, so I will just have to say "balderdash." There is no reason to think the economy of the 19th century, when we had a full blown panic and national economic collapse every 15-20 years was "healthful" or "productive". We know it caused great anguish and human suffering, and eventually, ruthlessly, caused the conglomeration of a few vast trusts and monopolies which controlled, well, everything.

By regulating the flows of the rivers in the TVA, as by regulating traffic going through a city or electricity through your house, we regulate the economy for the best benefit of all. Does that mean one car that drives 90 mph might not be "as fast"? Yes. But overall it means that more cars are more successful for more people, and that is a beneficial result, in my view.

How can the price discovery mechanism ever determine the value of anything when default is prevented and the risk pricing of money (interest) is removed from market forces?

It's not. However excesses are tamped down, and when a roaring fire threatens to engulf the country, extraordinary measures (occasionally even extra-legal!) are taken until the crisis passes. Please do not tell me that interest rates never change, since I have been alive from periods of 3% to 20% and back to 1%. Those have been, directly or indirectly, pushed by "market forces", although not always (and very thankfully) not to the extremes that the market might like at that exact moment in time.

By allowing the TBTF banks to obtain cash from savers without paying the normal price (interest), they are allowed to engage in speculation without suffering risk of default.

Yes. That's why intelligent regulation is required, first to get rid of "TB", just as Teddy Roosevelt did, and then ameliorating the worst problems of "TF", as FDR tried, and WW2 eventually did.

Taleb is right.

Actually not. He's too simple by half.

The final piece of deregulation that permitted speculation on a massive, system-threatening scale sufficient to destroy rationally-regulated capitalism was the passage of the Commodity Futures Modernization Act of 2000.

There were actually many smaller steps along with Glass Steagall, but this is a message board, and cluttering every jot and tittle with every sin of omission and commission would make it unreadable, not that it already isn't. But I agree with your point.
 


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: AdvocatusDiaboli Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421003 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 11:12 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 13

Quite frankly I don't think the above conclusion follows at all and I have little confidence in the stats provided by Reinhart and Rogoff unless and until somebody verifies that they weren't fudged like the working paper was fudged.


What Reinhart and Rogoff show in the book is that bank meltdowns have massive negative effects on the economy - they cause enormous losses of wealth, weak growth for years after and they result in huge increases in government debt, oftentimes leading to sovereign default.

In other words, any reasonable person reading R-R's book would conclude that such crises must be avoided at virtually all costs.

Especially considering the prosperous period the world enjoyed after New Deal-style regulation put a leash on the infernal machine of finance, it is completely beyond my comprehension how anyone could come to a different conclusion.

Print the post Back To Top
Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421004 of 455666
Subject: Re: “This time it is Different” Date: 4/19/2013 11:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 8
I have been thinking over the cycles, bear and bull market, financial problems and so on. Recently I cam across an article about Nixon and how he had the FED juice the economy before his election and that the inflation of the 1970's might be laid at his feet rather than at the feet of OPEC.

It's pretty well known that Nixon got Arthur Burns to keep the economy hot for his re-election. RN always blamed his loss to JFK a decade earlier on a mini-recession he was sure was caused by the Fed pulling back near the end of Ike's second term. (Well, he blamed lots of things, including the Chicago Mob, but I digress.)

However it's clear that while inflation was trending upwards slightly as Johnson left and Nixon took over, and up again as Nixon and Burns kept things "humming", the serious damage was done when oil prices tripled overnight. Yes, tripled, a cost input that affect every manufacturing plant in the land as well as transport systems required to get material to market - an simultaneously withdrew billions upon billions of dollars from consumer pockets and shipped all those discretionary dollars overseas.

The inflation, coupled with the disappearance of consumer demand is what caused the 70's, and while Nixon played a part, "oil" was the - by far - largest cause.

These cycles are not based on regulations, the regulations are based on cycles.

I don't disagree with that. Sometimes things are done badly. Look at the feckless attempts by Ford to tame inflation. Wearing W.I.N. buttons? Really? And Carter got to appoint two Fed heads - the first did no better (and was bumped upstairs and out by Carter after only a year), but Volker came in and told him: "If you want to kill this, here is what I have to do. And if you don't kill it, you may not have an economy anyway." Carter went ahead and appointed him, Volker raised rates through the roof, inflation was tamed, but the recession killed any chances Carter might have had of re-election. (Not that Reagan might not have won anyway, Carter's dour Calvinist demeanor being out-of-touch with what America wanted.)

Yes, regulation follows cycles. And sometimes it causes them, too. Remember the decade where "the business of America is business", and the dismantling of regulations that "hampered" business? When was that again? The 1920's? Hmmmm.
 


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421016 of 455666
Subject: Re: “This time it is Different” Date: 4/20/2013 6:22 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1


Taleb is right. Capitalism depends upon the economic cycle for its resilience. Everything the Fed and Japan have done to suspending the rules of risk and default does nothing but make the entire system more brittle, fragile and leveraged toward catastrophic failure.


This shynola is constantly stated and truly believed by the many on this board. Please show us one example of how bad a major economy in modern times has failed by such interventions?

Link please....

Dave

Print the post Back To Top
Author: notehound Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421027 of 455666
Subject: Re: “This time it is Different” Date: 4/20/2013 9:17 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
Please show us one example of how bad a major economy in modern times has failed by such interventions?

Dang, you got me Dave.

On the other hand, please show us one example of how well a major economy in modern times has succeeded by such interventions?

I'm not talking about a Japan-style, 20-year deflationary, zombie-like malaise-success.

I'm also not talking about a US-style, "new normal" with slowly-increasing poverty, dependency, and youth-age unemployment.

I'm also not talking about a Europe-style, massive youth unemployment, slow deflation, depression.

When has a major economy really experienced a barn-busting recovery and broad-based growth as a result of prohibiting assets from being written down, defaults from being written off and feeding cost-free cash to speculators on Wall Street?

It's a moot point, of course, since the choices have been made and cannot be reversed or corrected now.

Print the post Back To Top
Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421029 of 455666
Subject: Re: “This time it is Different” Date: 4/20/2013 9:40 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
England after Queen Victoria came to power

America after WW II

Dave

Print the post Back To Top
Author: notehound Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421032 of 455666
Subject: Re: “This time it is Different” Date: 4/20/2013 10:27 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
England after Queen Victoria came to power

America after WW II


Dave,

You're obviously a greater economic historian than I (most anyone would be).

However, I'm not sure that one can truly say that either Victorian England or Mid-20th Century American practices (while the "gold standard" was still nominally in effect) actually allowed the Central Bank to engage in unlimited Quantitative Easing for decades at a time.

I also am not sure that the accounting rules applying to default and solvency were permanently suspended for the banks of the times.

In other words, I think that comparing modern post-Bretton Woods monetary policy to that of Victorian England or Post-WWII is really comparing Apples, Oranges and Plums.

Or maybe not.

I really am not invested in being "correct" at this point, since my feelings and biases have no bearing whatsoever on how things unfold from here.

I'm hoping for the best, but preparing for the worst.

In the meantime, like some others on the board, I'm sitting on cash waiting for a prime opportunity to buy more stocks (and bonds, too) when a serious buying opportunity arises.

Right now, I just think they're all overpriced - stocks, bonds (possibly even gold). When the price comes down to what I think is reasonable, I'll jump on the opportunity.

The Fed's massive interference distorts prices and forces what should be unnecessary risk-taking by otherwise cautious individuals - and that's what's really at the bottom of some of my gripes.

I honestly don't think that the Victorians or the Americans of the past did exactly what the Fed is doing now. Otherwise, so many of the "experts" wouldn't describe the Fed's behavior as "unprecedented."

;-)

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421048 of 455666
Subject: Re: “This time it is Different” Date: 4/20/2013 2:11 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 6
This shynola is constantly stated and truly believed by the many on this board. Please show us one example of how bad a major economy in modern times has failed by such interventions?


The USSR.

Print the post Back To Top
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421058 of 455666
Subject: Re: “This time it is Different” Date: 4/20/2013 3:50 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
This shynola is constantly stated and truly believed by the many on this board. Please show us one example of how bad a major economy in modern times has failed by such interventions?


The USSR.


Plus, notice the bias built into the question.

"Major economy".

Economies subject to this sort of regulatory abuse generally don't BECOME major (China possibly being an exception, but it's a combination of a really huge population and what is in principle a resource-extraction economy - the main resource being cheap labor, and it's depleting that resource).

So we have to find a country that WAS a major economy, and then inflicted the regulation upon itself.

Quite frankly, the USSR was never truly a major economy. It was another resource-extraction economy, and not very good at extracting resources. It was important because it chose to spend a huge share of its wealth on its military, specifically including but not limited to nuclear weapons, and use that military to rattle sabers and back rebellions and terrorists around the world. The country *looked* more important than it was, because truth was whatever its leadership found advantageous.

For example, in 1960 Robert Heinlein visited Moscow. On the basis of the size of the city and the size of the buildings, traffic, and the general feel of the city, he estimated the population to be about 3/4 of a million. His wife agreed, but on a different basis: she had talked with a good number of Muscovites, and by sharing information about her family had learned a lot about theirs - how many siblings, children, and grandchildren they had, for example - and worked the demographic numbers in her head. After returning to the US, Mr. Heinlein asked an old military buddy (an admiral at the time) to estimate the population of Moscow based on logistics, and his conclusion was that they would find it extremely difficult to feed more than 3/4 of a million people with their existing transportation facilities.

Three different people doing the analysis, three different methodologies, all concluding that the city's population was 3/4 of a million or a bit less.

The claimed population of the city was a bit over 5 million.

Heinlein reported, in rather less detail, similar evidence of exaggerated population pretty much everywhere he went in the Soviet Union. http://www.rulit.net/books/expanded-universe-read-66340-97.h...

(And even the US military and CIA publicly claimed to believe the Soviet government's figures. If there is any mystery in this situation, it's in explaining THAT.)

Russian cities are different because they have so much room? As of 2010 Moscow's population was 11.5 million in 390 square miles, for a density of a bit under 29,500 people per square mile. (Note: in 2012 the city absorbed an even larger area directly to the south with only about a quarter million people in it.) New York City has a population density of 26,400 people per square mile. Moscow as of 2010 is officially MORE densely populated than New York City. Here are links to the satellite views on Google Maps; see if you believe it. I don't.

New York: https://maps.google.com/maps?q=new+york+city&hl=en&l...
Moscow: https://maps.google.com/maps?q=moscow+russia&hl=en&l...

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421188 of 455666
Subject: Re: “This time it is Different” Date: 4/22/2013 1:00 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
The USSR.

Well we proved our point. The most ridiculous answer on the board got the most recs.

Dave

Print the post Back To Top
Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421231 of 455666
Subject: Re: “This time it is Different” Date: 4/23/2013 12:27 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Every time it's different.

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (46) | Ignore Thread Prev Thread | Next Thread
Advertisement