Politics (formerly Election 2012)

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Re: Election 2012

Postby Dantriges » Sun Sep 16, 2012 12:30 am

Do I understand that correctly that it´s basically paying the finance sector the nominal value for their bad loans which are still in the books and were more or less written off?

How can I get the government to pay my debts, too? :mrgreen:

Isn´t the european central bank doing something similar, too at the moment?

IIRC quite a few 3rd world countries crashed their economy pretty hard when they turned to printing money to pay their bills/debts and that seems to be more or less the same just under another name.

Uh well If I were Obama I would probably decline to run a second term and run for the hills.
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Re: Election 2012

Postby Fridmarr » Sun Sep 16, 2012 12:40 am

Fivelives wrote:I had QE explained to me as "printing more money to make people think the dollar is doing fine, when in reality just printing the money actually hurts the value".

Accurate?


It's printing more money but that's not the reason. The fed knows that QE lowers the dollar's value and so they aren't trying to make the dollar look better, they are trying to get cash into the hands of groups who have their cash tied up in assets that they can't unload (mortgage backed securities).

The fed normally tries to increase liquidity by keeping interest rates low, but they've been really low for a really long time (housing bubble anyone?) and so there's not much they can do on that end, so they just "print" more money. In theory it's a little bit different than simply printing money because the distribution is targeted. The fed uses it to buy those assets that companies can't cash out on (at their original value instead of the current value) then the fed is supposed to sell those assets back and wipe out the printed cash to reverse the effects of QE when the economy is healthy and the value of those assets has rebounded.
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Re: Election 2012

Postby Fivelives » Sun Sep 16, 2012 6:30 am

But you can't target an influx of money into an economy. It'll never stay where you put it, unless you're putting it in your mattress or burying it out in the back 40 in a mason jar.
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Re: Election 2012

Postby Fridmarr » Sun Sep 16, 2012 8:31 am

Right, that's not what I mean by targeted. The Fed wants the money to move, in fact that is the whole purpose. They want those financial institutions to have the liquid cash to be able to invest etc. It's targeted because it's aimed at institutions that have certain types of assets. At the moment it's mortgage backed securities, which hopefully can bounce back in value a bit over time.
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Re: Election 2012

Postby Nooska » Sun Sep 16, 2012 9:55 am

Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).
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Re: Election 2012

Postby Shoju » Mon Sep 17, 2012 6:27 am

This is just an amusement really, but I saw a new Super PAC Ad this weekend supporting Romney that made me laugh hysterically.

It talks about "500,000 jobs lost in manufacturing under Obama", and how "Those same jobs increased in China, and for the first time they are beating us." and that "Romney will get tough with the cheaters in China, unlike Obama".

Now, I'm not weighing in on whether or not this did or didn't happen. I'm weighing in, because of the basis of the ad. Romney? Tough on China? The man who built his fortune running a "Chop Shop" (terrible term, but accurate) on companies? Romney, the man who made his fortune with a company that bought manufacturing businesses, gutted them, and shipped their jobs out of the country?

REALLY!?

I.... Don't believe one word of that.

And then, calling China a Cheater? How did they Cheat? What game were we playing? I just... Cheater? Really? I lol'd really hard and long at that one.
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Re: Election 2012

Postby Koatanga » Mon Sep 17, 2012 1:11 pm

Nooska wrote:Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).

But if a country prints up a lot more currency, faith in that currency plummets, and it's not worth as much. It's not like the people of Zimbabwe are all billionaires now.
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Re: Election 2012

Postby Skye1013 » Mon Sep 17, 2012 6:02 pm

It's part of the problem in Greece right now, they can't devalue their currency (because it isn't just their currency) in order to try and get out of their rut. Not to say it would fix the economy, but it likely would have slowed the descent.
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Re: Election 2012

Postby Nooska » Tue Sep 18, 2012 8:00 am

Koatanga wrote:
Nooska wrote:Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).

But if a country prints up a lot more currency, faith in that currency plummets, and it's not worth as much. It's not like the people of Zimbabwe are all billionaires now.

Agreed, but its the result of faith in the currency (or lack of), not the amount of units of currency (I have no idea what Zimbabwe calls their currency).

Also the reason the euro has taken a downward spiral - there is less faith in the currency (due to Greece, and to a lesser degree Spain and Italy) - there is a reason that 2 out of 3 germans (according to a study I saw just today) miss the old Deutsch Mark - depsite not having any currency related problems in germany specifically.
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Re: Election 2012

Postby Cogglamp » Tue Sep 18, 2012 8:18 am

Nooska wrote:
Koatanga wrote:
Nooska wrote:Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).

But if a country prints up a lot more currency, faith in that currency plummets, and it's not worth as much. It's not like the people of Zimbabwe are all billionaires now.

Agreed, but its the result of faith in the currency (or lack of), not the amount of units of currency (I have no idea what Zimbabwe calls their currency).

Also the reason the euro has taken a downward spiral - there is less faith in the currency (due to Greece, and to a lesser degree Spain and Italy) - there is a reason that 2 out of 3 germans (according to a study I saw just today) miss the old Deutsch Mark - depsite not having any currency related problems in germany specifically.


Germany would be a fool to want the old Deutsche Mark back. They've been reaping the benefits of having a comparatively undervalued currency (the Euro) to base their export bonanza on.

Italy, Spain, and Portugal are in a world of hurt. There are signs of Germany's growth beginning to flag and France is stuck in neutral as M. Francois Hollande is beginning to face reality of his country's financial issues.

The EU can't get out of its own way. Say what you will about US banks, but European banks have been bad at marking down assets and in turn getting rid of them. The stress tests that they've put themselves through are laughable and even then, they continue to fail them. US banks have been shedding assets, both good and bad, to shore up their Tier 1 capital reserves to get ready for Basel requirements. European banks are languishing because they are reluctant to take the bitter pill called de-leveraging. The exception has been Ireland as they've done an admirable job at trying to flush bad debt off their balance sheets.

Look at a Japan and their banking crisis from the 90s. They didn't want to take their lumps and many analysts are pointing to that and connecting it to their anemic growth over the past 20 years.

Bad loans got us into this mess. Not the lack of regulation. The only way to get ourselves out of it is to properly write down the debt, take the losses, and move on. There's a metric ton of capital waiting for European banks to actually begin shedding assets because as we've seen in the US, there are lots of opportunities imbedded in the assets. Until this happens, you're going to have reluctant financial institutions not wanting to take on additional risk in the form of new loans/credit due to the reserves they have to hold against assets that are well below their notional value.

US banks are in a comparatively good spot right now. Outside of Canada's financial institutions, US banks are the strongest of the bunch.
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Re: Election 2012

Postby Brekkie » Tue Sep 18, 2012 6:12 pm

Nooska wrote:Agreed, but its the result of faith in the currency (or lack of), not the amount of units of currency (I have no idea what Zimbabwe calls their currency).


Actually, they call it the Dollar. The Zimbabwean Dollar. Glad I could be helpful. ;)
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Re: Election 2012

Postby Nooska » Wed Sep 19, 2012 3:36 am

Okay, thanks - thats what I thought, but wouldn't venture a guess :)
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Re: Election 2012

Postby Shoju » Wed Sep 19, 2012 10:28 am

The latest Romney Soundbite to get leaked from a Fundraiser in May is just... How stupid is this man? I mean...

47% of Americans feel like they are a victim that relies on the government?

Or... the part that really got my skin to crawl.

"...who believe that they are entitled to health care, to food, to housing, to you-name-it"

Riiiiiiight. What I hear in that, is that Romnom doesn't care if you are homeless, or if you are dying from a treatable disease, or if you and your family go hungry.

I could rip apart his remarks for days. But I wont. I will just let that last part sit with you. The man running for president does not give two shits for you and your situation. He doesn't want to help those who need it the most.
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Re: Election 2012

Postby Sagara » Wed Sep 19, 2012 10:33 am

A more honest way of telling it is:

"He thinks you should have fought for the right to get you out of that situation."

Even if you never had the chance.
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Re: Election 2012

Postby Cogglamp » Wed Sep 19, 2012 11:23 am

I find it relatively humorous that Republicans have pushed and pushed for reductions in amounts of income taxes, which they ended up getting, and then they turn around and point the finger and say "Hey, you're not paying!".

Well duh, you pushed that band of income off the table.

It's pretty stupid to think that only one segment of the population gets some kind of benefit from our labrnythian tax code. Everyone up and down the food chain gets some kind of assistance in the form of a credit, tax break, lower tax percentage, etc. I'm not about to get into who benefits more because I think the entire tax code has become an impediment and needs to be reformed badly.

That being said, Romney was pandering to his intended audience. His pandering has now been aired to the general public. It's called politics and it's dirty. It doesn't bother me frankly but I can see where people are upset.
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