patrick.net

>>and some seem to love to spraypaint roman numbers everywhere, but they dont vote.

CMLXXVI

Like that? WTF?

Randy H - "The fact is that the US is a large-open economy with nominal interest rate power aside from real interest rates as determined by the “market”. This requires an active manager"

Huh? Run that one by us again please. As HARM points out, rates need *only* be determined by the market. Anything else is at best a guess and if wrong, will likely lead to misallocation of resources.

"This natural “”market fair price” you refer to will be set by other countries who do have Central Banks."

And what is the problem exactly?

--“This natural “”market fair price” you refer to will be set by other countries who do have Central Banks.”

And what is the problem exactly?

Sorry, this is getting a bit tiring. You know what, it's a great idea. The whole notion of Central Banks, assurance of payments, counter-party risk oversight, and nominal interest rate management is folly. If we just eliminated Central Banks, fiat money, and hell, all forms of fiscal management while we're at it, then we'd instantly find ourselves living in some kind of Ayn Rand Walden, because everyone knows that no person, corporation or nation would ever attempt to exploit one another or game the system.

If we all drove around without seat belts everyone would be a better driver too.

It is difficult to judge the Fed without knowing what would have happened if a different policy course had been followed. But I think that the Fed always overreacts. Whatever the “right” policy is, they will do too much of it. This in turn requires them to be heavy with the antidote to their preceding mistake.

The huge liquidity move in 2001 through 2004 was excessive. And to the extent that it was excessive and lasted too long it was damaging. I think they should never have gone below 2%, and 2% should have been a six to 12 month affair with rates coming back up starting at the end of 2002. Instead they went lower (to 1%) in 2003 and stayed there until mid 2004. So the pot boiled over.

If only they would have the patience to wait for their medicine to take hold before upping the dose. They know that the lag time is about 18 months for full effect and about nine months for the first real impact of their policy changes. And yet they get impatient and keep upping the dose.

Now (at 5%) the Fed has already raised their target rate above the natural equilibrium level. This is more than enough “medicine” to slow the economy, but it will take a while for the medicine to be digested. Any further increases will intensify the recession that will come soon (2007).

This is a mistake and by early next year they will be cutting rates to reverse the overdose that they have already administered.

"Sorry, this is getting a bit tiring..."

Yes, it does always get tiring at about this point doesn't it.

How about a thread on global warming and how it would affect bay area?

Huh?

Just saw “Inconvinient Truth”.

Please also read State of Fear by Michael Crichton.

Any further increases will intensify the recession that will come soon (2007).

If that is the case, there would be a much inverted yield curve, wouldn't it?

A stronger inversion would be a much more bearish sign. A prolonged flat or slightly inverted curve is also a bad sign. The natural eqilibrium is a positive slope of about 100 to 200 bps from 2 to 10 year treasury. With the 10 year at just over 5% the normal position for the Fed funds target rate would be about 4%. Anything above that is restrictive to the economy. This combined with a slowing housing sector is a recipe for recession. At this point I expect it to be mild. However, the Fed is probably not done with their interference with the natural balance of the economy. Still pushing to correct their prior excessive dosage of liquidity, and proving their anti-inflation credentials.

- water levels rising (putting Alameda and parts of Fremont under water)
- climate changes (very warm, dry, and windy)
- new exotic creatures like mosquitoes coming to bay area

But the theory of Global Warming also requires that:

- the effects are global
- the effects are mostly attributed to human activities

which I do not believe.

I will watch the movie anyway, perhaps this weekend.

Many forms of environmentalism are variants of NIMBYism. I can guarantee that Nature can survive with or without us and that whatever we do will be a non-event to Nature. Much of the world are still in development. It is wrong to deprive them of developmental opportunities simply because we have already polluted enough when we had our turn.

Most environmentalists are idealists with good hearts. Many of my friends fall into this category. I am not saying that we should pollute at will, we should be mindful about our natural resources. However, we must be very careful about any unproved theory that attempts to dictate our growth policies. Hmm... doesn't this sound eerily familiar?

i like gore.

I like him too. I like many people who think differently.

Sorry, this is getting a bit tiring. You know what, it’s a great idea. The whole notion of Central Banks, assurance of payments, counter-party risk oversight, and nominal interest rate management is folly. If we just eliminated Central Banks, fiat money, and hell, all forms of fiscal management while we’re at it, then we’d instantly find ourselves living in some kind of Ayn Rand Walden, because everyone knows that no person, corporation or nation would ever attempt to exploit one another or game the system.

If we all drove around without seat belts everyone would be a better driver too.

Oh, please. So you're giving up just because some of the bloggers disagree with you? Tsk, tsk... This is beyond the straw man --this is just sour grapes.

Not the high caliber of debate I've come to expect from Sir Randall. I'm rather disappointed :-(

The best way to preserve our environment and slowdown the deterioration of the earth is to reduce global population by 95%. War is required to achieve this end.

The 2nd best way is to deprive the 3rd world country of their fair chances of industrialization. This will also lead to war.

Hard medicine. Tough to swallow. But the truth always hurts.

The best way to preserve our environment and slowdown the deterioration of the earth is to reduce global population by 95%. War is required to achieve this end.

Hard medicine. Tough to swallow. But the truth always hurts.

Or we can just wait and see if global warming is real, and if that leads to population reduction or war.

BTW, I never said we need to completely abolish ALL functions that a "Central Bank" typically performs. I just said that most of the USEFUL and NECESSARY functions (such as printing currency/coinage, protecting it from counterfeiters, etc.) is already being performed by the U.S. Treasury Dept.

If we already have an efficiently functioning Treasury Dept., then why do we need the Fed?

I see no reason why they cannot simply absorb what (few) useful functions the Fed now performs exclusively, such as setting reserve requirements and regulating lenders. As far as counter-party risk oversight, and nominal interest rate setting, I'm pretty sure the open market has been able to do this effectively for centuries.

central or reserve banks were actually formed in response to frequent credit squeezes, recession, withdrawal panics (or bank runs), and speculative booms and busts.

http://en.wikipedia.org/wiki/Federal_Reserve_System#History

how well this has succeeded and whether the ideal has been co-opted is a moot point...

see also fractional reserve banking and full reserve banking...

threadmaster,
Please edit that 8-0 to :shock:

Done

how well this has succeeded and whether the ideal has been co-opted is a moot point…

Moot indeed.

extremely moot

SQT,

You haven't weighed in on the thread topic yet. What do you think? Am I "crazy Libertarian" with a capital "L" for wanting to abolish the Fed (and centralized interest rate & money supply manipulation), which I regard as a government-sanctioned cartel of private bankers operating in secret --arguably for political ends?

SQT,

Based on that 2001 appraisal (plus all that other expensive stuff they can sell), I really think your parents may be able to come out of this thing comfortably sitting on seven-figures. As long as they are capable of "downsizing" lifestyle and expectations, they should be able to do just fine on their own. I wish you the best of luck.

@ajh,

is it the Fed. that provides the Lender of Last Resort facility in the US? That’s something that does have to be done

Yes, and I would say this qualifies as a "USEFUL and NECESSARY function" for a Central Bank in any country (see my above post from June 28th, 2006 at 11:49 pm). Again, I don't see why a somewhat expanded Treasury could not handle this function. Hopefully, banking systems (and yes, bank regulations) have evolved to a point where a repeat of your 19th century bank-run scenario would be exceedingly unlikely today.

I never said there was NO regulatory oversight role for government in banking --just that the Fed is not currently fulfilling that role particularly well. And it's performing a number of functions (risk/interest rate pricing) best left to the open market --and doing a poor job of it.

What do you do when the "police" need to be policed as much as the "criminals"?

the thing is, whenever banks and big business have been left to themselves, they also create bank runs, credit squeezes, booms/busts, speculation, recessions, depressions, etc.

one critical view is that the fed only serves to protect other banks interests, so at least the banks won't be hurt by the above-mentioned capitalist phenomena, although everyone else will...

Greenland is losing 52 cubic miles of ice each year, more than anyone anticipated. The amount of freshwater ice dumped into the Atlantic Ocean has almost tripled in a decade. Climate experts have started to worry that the ice cap is disappearing in ways that computer models had not predicted.

RMB Says:
Time magazine? Back in the 70s Time was saying we were heading into the next ice age?

It's called irony, re the quality of reporting in Time. But the Greenland article from the LA Times points out:

"Should all of the [Greenland] ice sheet ever thaw, the meltwater could raise sea level 21 feet and swamp the world's coastal cities, home to a billion people. It would cause higher tides, generate more powerful storm surges and, by altering ocean currents, drastically disrupt the global climate.

By all accounts, the glaciers of Greenland are melting twice as fast as they were five years ago, even as the ice sheets of Antarctica — the world's largest reservoir of fresh water — also are shrinking, researchers at NASA's Jet Propulsion Laboratory and the University of Kansas reported in February.

From cores of ancient Greenland ice extracted by the National Science Foundation, researchers have identified at least 20 sudden climate changes in the last 110,000 years, in which average temperatures fluctuated as much as 15 degrees in a single decade.

The increasingly erratic behavior of the Greenland ice has scientists wondering whether the climate, after thousands of years of relative stability, may again start oscillating."

I think temperatures changing rapidly from year to year will lead to massive die-off of plant species, possibly followed by reductions in the animals that dine off them and live amongst them. Crops may fail on a large scale, as the weather swings around wildly from season to season, jeopardising output from breadbasket farming areas.

It reached 111 here one day last summer, and the manferns outside all but died in that one day. Completely shrivelled leaves.

SQT,

I know this may be of little comfort right now but at least they have each other! Yeah, I know it sounds feeble but ask your husband how many times his "surviving client" (usually mom) had NO IDEA what their true financial picture was like! Poor "mom" is learning of these details at a time when she is ALSO making funeral arrangements. I am SO not kidding.

In more instances than I care to remember the surviving spouse seems shocked to find that medical bills, consomer debt and mortgages devour much of their "savings" forcing some pretty lean choices. At least your folks can work through this together? When things get "raw" (and they will) please to remind them of this?

*Not family advice

Gore is a bad choice as a cheerleader, he does talk the talk, but he definitely is yet to walk the walk.

he invented the internet and discovered global warming... baron munchausen rides again...

>>[Al Gore] invented the internet

Then who invented the algorithm?

The fastest-warming place on the planet is the Antartic - if this ice cap melts, sea levels rise well over 200 feet

in the Jurassic, there were no ice caps, the earth was 16 deg warmer on average, and the seas were 200 ft higher...

why do you think there are sudden die-offs and mass extinctions of species over time?

>>mostly its XIV and XIII. Where do you live that has not been infected by this dog-marking-a-tree crap?

Oregon. But I look forward to this export, as I look forward to all California exports.

Michael Anderson,

Ever been through Woodburn, OR? Yeah, it would be a lot like that, yeah.

"Gore is a bad choice as a cheerleader"

Precisely. I want to see the movie with an open mind about the topic, but it's awfully hard to take a political hack like Gore seriously.

Sure, he's not as bad as Ann Coulter & Michael Moore, but he's still a shill.

"Then who invented the algorithm?"

Al Gore's father.

SQT,

I forgot to mention they have you too! It's funny now that the sentiment in RE is becoming decidedly more negative how we've become "resident experts" not "crackpot bubblistas" we were just six months ago. Not to over step my bounds here but it may now be appropriate to mention to "the folks" that this is no time to "chase the market down". If they price it to sell out of the gate they can move forward. If they try to "milk it" for every last penny and "test the market" I see another listing going into Labor Day and then nickel dime price reductions won't help. But you already know this and I suppose your primary difficulty is "how to break it to them". My two cents? (And not that you're asking) just come out and say it. It would be a far better thing to have to live with "if we held out for X the house down the street got Y" then to have to deal with "we should have gotten this over with, now we're stuck"!

*Not parental advice

>>Ever been through Woodburn, OR? Yeah, it would be a lot like that, yeah.

I'll add Woodburn to my list. :->

“Then who invented the algorithm?”

Al Gore’s father.

heh heh

SQT,

Sell the "sizzle" not the steak!

Gee mom, think of all the fun you're going to have without this HUGE obligation dangling over your head!

Sell the "relief" and forget the "grief"!

We bought my folks place about 15 years ago and I'll never forget their sense of relief as they rolled down the driveway in that rented U-Haul on their way to their "desert oasis"!

>>Ah but the majority of the world’s scientists didn’t weigh in on that - whereas on global warming the scientific community is pretty united (outside of those sponsored by big oil.

Global warming could very well be a problem, but I don't find this scientific "united front" very convincing. Most scientists aren't expert on the problem. And certitude among scientists doesn't mean a lot historically. See Stephen Jay Gould's books. Revolutions in thinking are common.

I remember as a kid reading about global cooling (the worry at the time) and being scared.

Climate change is complicated. We don't know all the systems and buffers. The models that are used for extrapolations seem to be more trusted by the people that use them to political advantage than to the people that came up with them and tweak them.

That said, it makes sense to try to minimize any impact we have on the earth.

HARM,

LOL!

I have a friend that was in marine biology and he told me that something like 90% of the food chain starts with the Humboldt Current? If it is shut down (which seems likely in a worst case scenario) then life as we know it would be reduced...... to well, you don't even want to think about it.