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twofish
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March 3rd, 2009, 1:43 am

QuoteOriginally posted by: Traden4AlphaDon't get caught in the same logical fallacy that created the bubble. Just because something is going down(up) at rate X doesn't imply it will continue going down(up) at rate X. Even the current rate of change WRT the historical distribution of rates of change -- i.e. worst fall in X since 19YY -- doesn't mean much.Also if you think that the basic problem is malinvestment, then the fact that things are falling apart quickly is a good thing, since the faster things fall apart, the less time it will take before things hit bottom and start improving. The other bit of good news is that the banks aren't failing as they did in the 1930's. What killed the economy in the 1930's wasn't so much unemployment, but rather unemployment combined with losing your life savings. As it stands now, people are still putting money into the banks, and even the banks that are having problems aren't ending up with lines of people on the outside demanding cash.QuoteLike Dominic and Twofish, I'm older and remember earlier recessions and times when "they" (the nattering nabobs of negativism) thought the U.S. was finished. But it wasn't finished then, it wasn't finished in 1929, and it isn't finished now.And one problem with the "younger generation" is that they are a bit spoiled. There have been few recessions since 1982, and the situation thus far isn't anywhere as dire as it was in the 1982 recession or the 1973-1975 recession. The entire 1970's was one economic crisis after another with stagflation in the mix. Could things get worse than 1982 or 1974? Absolutely, but the point is that they haven't so far.QuoteThings may be bad with a capital B, assets (stocks & houses) will probably fall another 20-30%, and some banks (both commercial and central) will suffer some mortal blows, but the economy will survive.And if things don't totally fall apart (i.e think Mad Max) then things are looking good. One thing that makes me situation quite different from penguina is that I happen to think that what I'm doing is a socially useful thing that generates real wealth and generally makes the world a better place to live. The consequence of this is that it's likely to generate profits in the post-bust world.
 
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twofish
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March 3rd, 2009, 1:46 am

QuoteOriginally posted by: penguinaBy the time WW II came along the economy had already spent 10 years deleveraging. We haven't even had the deleveraging yet in order to start reinflating.Why wait then? One of the nice things about being totally doomed is that you lose nothing by trying different things.
 
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legacy
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March 3rd, 2009, 7:26 am

QuoteOriginally posted by: twofishlegacy: Thanks for sharing your opinions. Another question is that if I have to settle with a lower profile function in finance, how difficult it will be to move to the prime roles when market picks up again ?Does it matter? If you have to settle for something, then you have to settle for something.Also, no one has any clue what the prime roles are in finance will be, so whether you are in good or bad shape if the market picks up will depend on if you can figure out what the prime roles are and position yourself before anyone else does.In my case, it matters as I have the option to wait for a couple of months, and that means I don't necessarily exercise it now. My expectation on the prime roles in the futures is martingale. So in that context, I'd like to have people opinion on the job mobility when the market picks up.L.
 
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QuantVader
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March 3rd, 2009, 7:30 am

QuoteOriginally posted by: penguinaTHIS IS NOT A BLOODY RECESSION IT IS A DEPRESSION The old joke goes that a recession is when your neighbor loses his job. A depression is when you lose your job.
 
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twofish
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March 3rd, 2009, 8:09 am

QuoteOriginally posted by: legacyIn my case, it matters as I have the option to wait for a couple of months, and that means I don't necessarily exercise it now. My expectation on the prime roles in the futures is martingale. So in that context, I'd like to have people opinion on the job mobility when the market picks up.In that case, my personal opinion is that you have far more prospects if you are on the inside than if you are on the outside regardless of what you do on the inside. Even if you get a job shining boots in a financial firm, then at least you'll see things on the inside, and have a better idea of what strategies to take. So if the choice is between "get a job" and "do nothing" then its better to "get a job". However if the choice is between "get a job" and "go to school" then it becomes trickier.Also don't think "when the market picks up" think "if the market picks up." You want to future proof things by considering all possible options sense you or I have no idea what is going to happen next. Right now the banks are thinking about what they should do if unemployment hits 15%, and you should also.
 
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DominicConnor
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March 3rd, 2009, 9:19 am

Pengiuna THIS IS NOT A BLOODY RECESSION IT IS A DEPRESSIONFirstly, unlike a recession, I am not aware that there is any formal definition, so you are quite free to define what we are in now as a "depression", or shit storm, or whatever. I like QuantVader's definition Penguina is angry and depressed, and we've all been there, and like many others he seems to be embracing the mindset of socialism.There will no doubt be riots in various places, but if he'd done any history (or read grown up newspapers), he'd know that lots of rich countries have gone through that level of civil disorder many times without any real structual damage. The US has various structural issues, such as the poor educational outcomes of people born there, and a political system that seems optimised specifically to cause corruption. But...The US has a very flexible labour market, and retains a culture that (usually) manages risk taking well. There are several important industrial activities that are so dominanted by the USA that people express surprise when told they happen anywhere else.Inevitably, global growth means that even once the USA goes back to its long term historical average growth rate, its % of the world economy will continue the decline it has experienced for decades.
 
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twofish
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March 3rd, 2009, 12:46 pm

QuoteOriginally posted by: DominicConnorPenguina is angry and depressed, and we've all been there, and like many others he seems to be embracing the mindset of socialism.Frankly, I don't really care about -isms provided that one is realistic and realize that socialist political and financial leaders will be as amoral and corruptible as capitalist ones. I'm open to any economic solution, but anything that assumes that people are saints rather than that people are people is likely just not going to work. There are saints in the world, they get eaten alive long before they reach any position of power.The fact that people are people is what makes society so complex. Everything would be easier if the Church or the Party could come in and make things right, but the Church and the Party consist of people who act like people. Personally, I find this part of the challenge of doing any sort of social engineering.QuoteThere will no doubt be riots in various places, but if he'd done any history (or read grown up newspapers), he'd know that lots of rich countries have gone through that level of civil disorder many times without any real structural damage. Civil disorder tends to happen in two types. If people are just angry, they can do a lot of damage, but after burning down a few buildings and leaving themselves off worse than before, the anger subsides. If people are angry and they have leaders and political programs, then they get elected, and become part of the system, with of course the caveat that the new leaders are going to be subject to the same temptations and corruptions as the old leaders.Personally, I'm quite angry (and was quite angry looking at the bonus check), but for the most part I've been directing my anger at coding, which is useful. One amusing thing about work that makes things a bit difficult is that everyone seems to feel a huge amount of pressure to be *nice and friendly* to everyone else. The logic is that if you start screaming at someone or lose control, then when the next round of layoffs come, you are going to be the one voted off the island, so people are under enormous pressure to be "nice, friendly, and helpful" which becomes really annoying since no one is in a "nice, friendly, and helpful" mood. One thing that helps a huge amount is that I personally believe that what I'm doing is good and useful. .That gives me some motivation to keep doing it, both for altrustic reasons, and for pure self-interest, since my logic is that once things settle down, if things settle down, then I would be generating a whole bunch of wealth and value, and after the "usual exploitation fees" are taken out, I'll get some table scraps at the end.QuoteInevitably, global growth means that even once the USA goes back to its long term historical average growth rate, its % of the world economy will continue the decline it has experienced for decades.But that's good. One reason I like finance is that the fundamental truth of finance is that if you make other people rich, you'll get some of it eventually. Conversely, if you just take the money and run, eventually it will come back to get you.
 
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penguina
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March 3rd, 2009, 9:12 pm

QuoteOriginally posted by: DominicConnorPengiuna THIS IS NOT A BLOODY RECESSION IT IS A DEPRESSIONFirstly, unlike a recession, I am not aware that there is any formal definition, so you are quite free to define what we are in now as a "depression", or shit storm, or whatever. I like QuantVader's definition Penguina is angry and depressed, and we've all been there, and like many others he seems to be embracing the mindset of socialism.There will no doubt be riots in various places, but if he'd done any history (or read grown up newspapers), he'd know that lots of rich countries have gone through that level of civil disorder many times without any real structual damage. The US has various structural issues, such as the poor educational outcomes of people born there, and a political system that seems optimised specifically to cause corruption. But...The US has a very flexible labour market, and retains a culture that (usually) manages risk taking well. There are several important industrial activities that are so dominanted by the USA that people express surprise when told they happen anywhere else.Inevitably, global growth means that even once the USA goes back to its long term historical average growth rate, its % of the world economy will continue the decline it has experienced for decades.Early on in this crisis you were claiming the Chinese could save the world with all the US treasuries they hold. How's that theory working out for you? I guess you think you can carry on talking shit with ever being called on it, and you do talk a lot of shit.I have given you all the information necessary to understand the problem.You are clearly galactically dim as you still refuse to understand the issues and seriousness of the problem despite it being blindingly obvious to anyone with two brain cells.You are a pimp to a failed industry but, like all good socialists, you think you deserve to rescued by the government.Keep talking your book you stupid old fool.I'm done with you.
Last edited by penguina on March 2nd, 2009, 11:00 pm, edited 1 time in total.
 
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propertyrights
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March 4th, 2009, 8:44 am

penguina,Let's talk about timeframes.I think that the "days of fictional profits and easy money" are coming back. Phrased this way, the statement is difficult to disprove - if the "days of fictional profits and easy money" still have not returned 100 years later, the statement still has not been proven false - after all, the "days of fictional profits and easy money" might come back 200 years later.My guess is that you don't think that the "days of fictional profits and easy money" are never coming back - or maybe you do. I'd rather ask than assume, so I'm asking you now: "what do you think is the earliest that the "days of fictional profits and easy money" might return?" Five years? Ten years? Twenty years? One hundred years? Never?A collapse of civilization is possible, sure. But I would say that this is only a possibility rather than a certainty. If you think it is a certainty, fine. How soon do you think it would happen? And are you stockpiling guns, canned food, gasoline, etc.?QuoteOriginally posted by: penguinaYou really think the days of fictional profits and the easy money are coming back?think again.
 
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quantyst
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March 4th, 2009, 9:51 am

QuoteOriginally posted by: penguinaQuoteOriginally posted by: DominicConnorPengiuna THIS IS NOT A BLOODY RECESSION IT IS A DEPRESSIONFirstly, unlike a recession, I am not aware that there is any formal definition, so you are quite free to define what we are in now as a "depression", or shit storm, or whatever. I like QuantVader's definition Penguina is angry and depressed, and we've all been there, and like many others he seems to be embracing the mindset of socialism.There will no doubt be riots in various places, but if he'd done any history (or read grown up newspapers), he'd know that lots of rich countries have gone through that level of civil disorder many times without any real structual damage. The US has various structural issues, such as the poor educational outcomes of people born there, and a political system that seems optimised specifically to cause corruption. But...The US has a very flexible labour market, and retains a culture that (usually) manages risk taking well. There are several important industrial activities that are so dominanted by the USA that people express surprise when told they happen anywhere else.Inevitably, global growth means that even once the USA goes back to its long term historical average growth rate, its % of the world economy will continue the decline it has experienced for decades.Early on in this crisis you were claiming the Chinese could save the world with all the US treasuries they hold. How's that theory working out for you? I guess you think you can carry on talking shit with ever being called on it, and you do talk a lot of shit.I have given you all the information necessary to understand the problem.You are clearly galactically dim as you still refuse to understand the issues and seriousness of the problem despite it being blindingly obvious to anyone with two brain cells.You are a pimp to a failed industry but, like all good socialists, you think you deserve to rescued by the government.Keep talking your book you stupid old fool.I'm done with you.There is no doubt -- to point out the painfully obvious -- that a discussion is going on in this thread. And obviously it is extremely difficult to keep it sensible when some resort to ad hominem attacks, especially when it is so unnecessary. Although DominicConnor's language is sharp and perhaps biting, it is hardly an attack on penguina, but definitely a harsh criticism of penguina's ideas. As such, penguina's offensive reaction to DominicConnor's post is uncalled for and inappropriate. If you, penguina, find many of us "clearly galactically dim" with respect to "the issues and seriousness of the problem", then just maybe, maybe, you have not done a good job of convincing us. You may still be correct in your assessment of the situation, but not sufficiently good at convincing many of us. So, instead of radiating so much heat, why not shed light on the issues?
 
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twofish
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March 4th, 2009, 10:41 am

QuoteOriginally posted by: propertyrightsA collapse of civilization is possible, sure. But I would say that this is only a possibility rather than a certainty. If you think it is a certainty, fine. How soon do you think it would happen? And are you stockpiling guns, canned food, gasoline, etc.?If I thought it was a certainty that civilization would collapse, then the logical thing to do is to max out all of my credit cards and then go totally insane spending myself into massive debt buying stupid expensive things and doing stupid expensive activities. Why not? Once civilization collapses, it's not as if I have to worry about credit card debt, and I might as well go out in a blaze of glory. If I know things are going to fall apart, then I'll spend the last days of Pompeii having as much fun as I possible can. Why not?As it is there is only a possibility that civilization will collapse, I have some gold stashed away, I have passports ready, and I know exactly the people that I'll call if things go insane and what I'll say to them. The good news is that I know people that have survived the collapse of civilization, and a lot of my life has been to do things that will put me in a good situation if things totally fall apart (which is why I ended up studying physics and finance in the first place). But I'm not going to go totally crazy, because if civilization *doesn't* collapse, then I'm totally hosed.What my current strategy is, is to position myself so that I'm in good shape if things improve. If things improve, then I'll be able to sell myself as "one of the people that helped save the world economy" and at that point I will ask for, and likely receive massive amounts of money, power, and gratitude. If things don't, well while I'm in the street corner selling apples, I'll at least know that I did what I could and had a lot of fun doing it.Part of the reason I have this really weird optimism is that I think it is extremely unlikely that I'll have to live through anything quite as bad what people I know have lived through. The worst thing that I can imagine happening to me is that I lose my job and all my life savings, and at that point as long as I manage to keep a few books around, I'll still be doing mostly what I'm doing now. I just don't see myself having to worry about being shot at by brutal Canadian occupation troops, and while the mobs might be interested in burning and rampaging, I think that they will be well behaved to confine themselves to throwing rotten eggs at me and kicking me unconscious rather they being interested in stringing me up on the lampposts, turning me into a human torch, or insuring that I die a slow lingering painful death. People might be mad at Wall Street, but they are "throw rotten fruit" mad rather than "shoot and torture the bankers" mad, and I'm not that far removed from periods in history when people were "shoot and torture the bankers" mad.(It is interesting how many people end up in finance because of a survival instinct. Even in the worst of times, having money is useful because you can pay bribes and make sure that someone in the family gets out, even if you don't. Also, people may get into a "shoot the bankers" mode, they will eventually realize it's a very bad idea. If you can either pretend to be stupid, or be somewhere else while the lynch mobs are around, then eventually they'll realize that it was a mistake to shoot the bankers, and if someone in the family can survive, you'll do well in the end.)So I really don't what there is to be too depressed and angry about. I could lose my job and all my money. Big deal. I'll survive, and if things merely get as bad as they did in the United States in the 1930's, I think I'm likely to do much better than survive. Apple salesman? Construction worker? Union organizer? Professional rabble rouser? Buddhist monk? Soy sauce manufacturer? Heck, if we go into a Mad Max world, then someone has to do the books and make deals for fuel for the roving bands of warlord gangs. Whatever.... I've already changed careers a few times, and assuming that I'm not physically in danger, I'm likely to have fun doing whatever needs to get done.
 
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twofish
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March 4th, 2009, 11:23 am

QuoteOriginally posted by: quantystIf you, penguina, find many of us "clearly galactically dim" with respect to "the issues and seriousness of the problem", then just maybe, maybe, you have not done a good job of convincing us. You may still be correct in your assessment of the situation, but not sufficiently good at convincing many of us.You've convinced me that there is a strong likelihood that things will fall apart. You haven't convinced me that there is an absolute certainty that things are going to fall apart, and I don't think your actions make any sense at all if we were to conclude that things really were going to totally fall apart.I mean if things are going to be as bad as you think they are, then I don't see the point of going to work or saving any money. If the banks are hosed, then your savings are going to be worthless. Also, if things are going to hell, then the figuring out exactly *when* and *how* they are going to hell will be useful. If you think that there is going to be massive hyperinflation, then it makes no sense to go to work. Max out all your credit cards, apply for every loan you possibly can, and then when the dollar goes worthless you can pay your debts with a postage stamp. If you think that unemployment is going to reach 25% then now is the time to quit Wall Street and get a job in the civil service or as an elementary school teacher. If you think that there are going to be massive riots, then now is a good time to quit Wall Street and enroll in the police, where you are likely to have very good job security as well as being on the right end of a gun. If you think things are totally going to fall apart, then now is a good time to join the military, so that you will have the right skills and connections when martial law is declared and/or the United States breaks up and is controlled by rival warlords. If you end up in the middle of total social breakdown, then being quartermaster or in charge of logistics within an army gives you a huge amount of power and influence, since you have food and you have guns. And by the way, this is exactly why I have an unusually large number of relatives with military experience.If you think that there is going to be a mass uprising against Wall Street, then start reading Marx, make friends with leftist intellectuals and union organizers, so that when the revolution comes, you are going to be in the Politburo. By contrast, if you think that the evil corrupt, amoral, exploitive political and economic elite are going to win and ruthlessly crush the champions of freedom and justice, now is the time to introduce yourself to the evil oppressors of the people. Personally, my money is on the current evil, corrupt, exploitive political and economic elite class of oppressors winning. Something that you find in most cases of massive social upheaval is that the people that were in positions of power before the upheaval, usually find themselves in positions of power after the upheaval.
Last edited by twofish on March 3rd, 2009, 11:00 pm, edited 1 time in total.
 
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QuantVader
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March 4th, 2009, 12:36 pm

Maybe you've seen it already but here is a link to an interesting article from Robert Barro published yesterday.
 
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Traden4Alpha
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March 4th, 2009, 3:40 pm

QuoteOriginally posted by: QuantVaderMaybe you've seen it already but here is a link to an interesting article from Robert Barro published yesterday.Good article! Their study probably underestimates the risk of D/depression due to correlation effects. Many of their examples include local stock market crashes and country-specific downturns that occurred in the context of a non-recessionary world economy. I'd wager that the correlation effects mean that a world-wide stock market crash is a much stronger indictor of a severe downturn than is a local stock market crash.Personally, I agree with Twofish and Dominic that things are NOT that bad, even if they are "terrible." I can see that on shorter timescales and measured against the wealth that we've all become accustomed to, that this is an umpteen sigma, heavy-tail, Black Swan disaster. But on the timescales of the human lifespan and geographic scales of the current world, this event is barely a 1/2 sigma event so far and not likely to be worse than a 1-sigma event. And I agree with Anthis that the days of "days of fictional profits and easy money" will return although it may take a couple of decades.If I'm angry at anyone, it's at the people that are angry about this event as if they were entitled to a life of leisure through the miracle of perpetual low-interest-rate lending. If people think that their "future had been stolen", it's because they irrationally expected a future that was patently impossible and clearly unsustainable. Thus, I'm angry at the hind-sight blinded people that can't see the inevitability (perhaps even the benefits) of bubbles and crashes. Most of what people have lost are gains they never should have enjoyed in the first place.
Last edited by Traden4Alpha on March 3rd, 2009, 11:00 pm, edited 1 time in total.
 
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jambodev
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March 4th, 2009, 4:23 pm

Just out of curiosity, is there any policy regarding using abusive language on this forum, or someone like penguina can say whatever they want and get away with it?
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