because there are many stocks that have become artificially depressed because of general market pressure that has little or nothing to do with the credit crises.

Take BAC for example. They've have basically pwned the entire financial market. They've bought Merril Lynch and Countrywide, making them one of the largest players in mortgages and IB, but they are still well off their highs. They even managed to do this at a huge discount because the turmoil.

This is just one example, there are many other solid companies whose stock has taken a huge hit who aren't going to be hurt by this crisis in the long term, and will emerge out of this stronger, as the market has done every time.

The USA is in Deep trouble still for the following reasons

1. 12-13 billion a month war
2. Manufacturing falling below 12% of GDP
3. Wall streets ability to peddle worthless securities through hedge funds
4. Doubling the national debt over the last ten years which japan and China now hold 47% of
5. Republicans bailing(buying) out Fannie Mae,Freddie Mac,AIG,Bear Stearns in a supposed Free Market

To quote Eric Margolis " Americans will have to learn the hard truth that you cant borrow your way to prosperity"

Eugene Fama ftw. This analysis is a huge lol for anyone who knows anything about the markets, even those who don't believe in EMH.

But how do we know "people" are correct?

IF your response is, well, we'd need to look at the indicators, then this:

...is not an appropriate response, it's just circular.

Here's my point.

Recession, according to those of you who seem to know, is defined in a very specific way by how many quarters of non-growth or retraction, correct? So the problem in determining whether we are in a recession is that a certain amount of time must elapse before there is enough data to make that determination.

But there are countless other economic indicators or measurements, aren't there? For example, we can see if inflation has increased or if interest rates have increased. And those "indicators" may have significant information over a shorter span of time than those necessary for concluding that a recession has begun.

Thus, people can look at some indicators and determine whether the economy is doing poorly, even if they lack the data to determine whether we are in a recession.

And on a totally separate note, I'm not sure I agree that statistics or indicators are the only way to assess whether the economy is doing poorly.

Well there are lagging indicators and leading indicators. This is a linky to widely following group of leading economic indicators:

Leading Economic Indicators List

The Fed anticipates changes in the economy so they have to anticipate recessions before they're officially declared. I found it interesting that the Fed didn't lower the Fed Fund's rate last week at their regularly scheduled meeting even though the credit crunch got more intense.

They have to save some bullets so we don't end up like Japan in the 90's.

how much longer are we going to let non-Austrians use the title economist?

Yeah well I agree which means to me that things could be worse.

I interpret it the opposite, that the Fed is keeping its tinder dry for what it thinks will be a long hard campaign.

Until Austrians are actually right about something.

There were a lot of Austrians who would have told you that jumping into the real estate sector for work and buying that condo of yours wasn't a particularly stable endeavor. Does that count?

classy imo ^

And it was such a lovely, interesting, and respectful discussion you guys had going before that.

None of us made a joke about someone else's personal problems before that.

Tell yourself w/e you need to get by.

It's kind of like:

If someone breaks his leg, I feel bad for him and empathize.

If I find out he broke his leg playing on icey rooftops, I think that was kind of stupid. But still everyone makes mistakes, and I still empathize.

If he goes around claiming to have a good understanding of safety, and even goes so far as to tell people with a different theory about safety that they've never been right about anything (when incidentally a lot of those people warned specifically about slippery rooftops, and he's sitting here with a broken leg), it comes off as a little bombastic if not totally demented.


I only have this information because he mentioned it in the other thread as fodder for why he thought a bailout should happen. If this is particularly traumatic stuff, I wish he wouldn't have willfully entered it into the debate here. Once he does it seems like fair game.

That said, sure it's a little murky. I meant no harm, but I'm aware of how it comes off and you can judge my post however your little heart desires. But calling me out for it given the content in this thread is, I think, rather silly, mr. ikestoys.

This is hillarious. The Austrians have been correct about this entire fiasco and it's predecessors, every step of the way, for decades. Who was talking about the housing bubble in 2002? The Austrians. Who was talking about the dot com bubble in 1997? The Austrians. Who was talking about the S&L crisis in 1984? The Austrians. Who predicted stagflation and wage & price controls? The Austrians. Who predicted the collapse of Bretton Woods? The Austrians. Who predicted the Fed's Wonderful Depression? The Austrians.

I've made hundreds of posts talking about exactly what has happened and is happening right now; artificially lowered interest rates, via that creation of money to expand the pool of loanable funds, whose sole intention is to allow people to get loans that could not get them in the free market, creating a massive unsustainable boom and a diversion of investment into an unsustainable bubble that must eventually burst and reveal gigantic losses. This is the Austrian theory of the business cycle, has been since 1912, and is now plainly, painfully, obviously true to anyone who is not clinically insane.

WTFU. How many times does someone have to be proven right before you people can admit that your precious government schemes are a nightmare? How big does the crash have to be before you admit that printing money cannot create wealth, it can only reallocate it?

You're a joke. A sad, pathetic joke. Your kind will get us a Greater Depression of such proportion that cannot even comprehend it. They're all over the cable news channels, yammering about how "necessary" these bailouts are. They're explicitly saying the price tag will be $1.5T, which means that it'll likely be at least $5T. But wait! You haven't seen anything yet. This is the tip of the iceberg. There are half a quadrillion dollars of abstruse, extremely highly leveraged derivative instruments that are pyramided on top of asset classes whose fundamental market values are going into the toilet; there are $60T in credit default swaps alone (why do you think AIG got bailed out, Bucko?). That's 50 times more than the total money supply, Chief. The losses will be _staggering_. Government cannot bail them all out; they could tax us at 100% and not bail them out, even if they didn't shut down all economic activity because there is no incentive to work. The Chinese, Japanese, Russians, and the Middle East could not buy enough debt to bail them out, even if they didn't stop buying our debt at all, which they will. And that doesn't even include the $130T in government and private debt that will not be able to be serviced, on the government side because governments won't be able to float any new debt to service the old, or raise enough taxes from an economy in the toilet, and onthe consumer side because for basically the same reasons. That leaves only one way to bail them all out: monetization of, at the very least, tens of trillions if not hundreds of trillions of dollars. Inflation will be staggering. The collapse of the economy will be near total, and the final transfer of the last dregs of the plunder and loot from the American taxpayer/consumer to the power elite will be complete.

And it'll all be thanks to people like YOU. Frankly, you sicken me.

Yeah Boro nailed it. How can you seriously make a statement like that with a straight face Iron? Your delusion is mind boggling.

But Borodog, tell us what you really think.

Can someone do me a favor and ask the Austrians whether the Jets will get into the playoffs this year? Could save me some time and trouble.

Ending up like Japan in the 90s would be a dream situation for us at this point. They were a wealthy, creditor nation with a lot of savings at the time. We, however, are not only flat broke but massively indebted.

ROTY

Im no Austrain lover. I was once officially hated by Borodog. However, as events have played out the fact that Austrian theory both predicts and explains them is impossible to deny imo.

I think the meat of the ROTY is contained in TOAFK's quote, so I'll focus on that.

The Fed's interest rates had very little to do with the housing bubble. Yes, Austrian theory predicts and explains various bubbles. It predicts them in the sense that many mainstream economists foresaw them as well and explains them in a way that doesn't make any sense. Low interest rates did not create the pool of funds that Borodog speaks of. That came from the deregulation of the financial industry in the 90's that led to the creation of mortgage backed securities. This allowed banks to lend money from many different sources when before they could only lend what they themselves could get from deposits.

The banks then lent this money out to people with poor credit histories. But does it really matter how low the interest rates if you are lending to ban risks? Would you lend to a bad risk at 0%?