How long will the recession last? Watch

President_Ben
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#41
Report 10 years ago
#41
(Original post by CityMonkey)
Cheap money and petrodollars driving liquidity.
Cheap money being put towards asset bubbles (or a distorted form of carry trade, I suppose) is different from liquidity being a problem.

Liquidity is rarely a problem... the ability for people to dispose of assets without loss of value and great immediacy isn't a typical problem in any market... whereas the loss of it, really is.

It being provided temporarily, with lots of other assets depending on it... and then the liquidity getting pulled - leading to an asset collapse and the related issues... is a problem. But it is the withdraw that is a problem and once liquidity is around - it doesn't have to collapse.
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President_Ben
Badges: 13
#42
Report 10 years ago
#42
(Original post by Drogue)
That's something they can change. If a new government gets elected and wants to change the law on murder, they can. Indeed, the law has changed many times. Lately there's been the law about anonymous witnesses and discussions about double jeapody. In the past there's been discussions (and changes) about the use of the death penalty and the use of DNA evidence.
But that isn't changing the policy (now 'law') that murder is punishable. You can vary the punishment by bits and pieces all you like - but I reckon murder is punishable is a lifer.

But for any automatic response to be credible, given that at times it will be against the public's whim, giving politicians and incentive to 'cheat' and not run a surplus in boom-times, it has to be unchangable by politicians. That is the bit they won't agree with.

No politician will ever agree to a policy they can never change.
Automatic stabilisers don't need a response - they are automatic. Like unemployment benefits or marginal tax bands... anything that reduces injections or increases withdrawals when times are good and vice versa.
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Crazster
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#43
Report Thread starter 10 years ago
#43
Didn't see this thread for a while 0-o. Good thread.

Maybe I was too hasty in saying the stimulus had a small/no effect. I will look into this a bit more. I also know we can not always identify the other factors but since we don't know these other factors i'm going to model these as factors that won't be going away in the short term. Thus, the 1.5% and 1.4% ,over 3 month periods, effect Bloomberg asserts the stimulus package as having (at 100billion in cost) is big it diminished quick. The economy sank right back down under the weight of other factors. The only way I see the economy moving is with a lowering of interest rates - which can't happen for a while.

If you want budgets balanced over the business cycle you need to take it out of short term politicians hands. every time they've been shown unwilling and unable (bar Clinton) to balance the budget, and turn down spending in the good times to use in the bad. If budget balanced over business cycles is to be observed then an independent authority must set the limits of each budget.


Studying economics gives me a base (and models however simplistic they are) to start evaluating the data and making predictions. I'm sure it helps other people make sense of all that goes on, but could we keep this discussion out of the personal insult range. Assuming I am merely parroting a teacher were words wasted that could of been put towards an argument.
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CityMonkey
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#44
Report 10 years ago
#44
(Original post by President_Ben)
Cheap money being put towards asset bubbles (or a distorted form of carry trade, I suppose) is different from liquidity being a problem.

Liquidity is rarely a problem... the ability for people to dispose of assets without loss of value and great immediacy isn't a typical problem in any market... whereas the loss of it, really is.

It being provided temporarily, with lots of other assets depending on it... and then the liquidity getting pulled - leading to an asset collapse and the related issues... is a problem. But it is the withdraw that is a problem and once liquidity is around - it doesn't have to collapse.
I think you're misunderstanding the way in which I am using the term 'liquidity' in this context, but perhaps a term like 'people being flush with cheap cash' is better. And btw, liquidity in and of itself might not be a problem, but excessive liquidity can be an indicator of an underpricing of risk; dot.com?
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President_Ben
Badges: 13
#45
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#45
High liquidity allows more risk to be taken - as in, you aren't meant to face liquidity risk anymore (a market of only sellers).

Of course, that did happen in dot.com (and has happened now).

Liquidity is poorly understood. That is a problem, the presence of liquidity is not. Liquidity does not tend to mean higher or lower prices - although it has some association with volatility (which by skew/smile has association with price and trend). But I think you'd be going down the road of some very tenuous links by drawing it out so far...

But yes, cheap money does tend to be a problem. I believe a large number of Zimbabweans would agree.
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