"Financial crisis was a 100-year storm" - Hank Poulson
22 replies, posted
[Quote=CNBC]
he 2008 financial crisis was a 100-year storm, and no one involved in it had ever seen anything like it, former Treasury Secretary Hank Paulson told CNBC on Friday—nearly five years since the bankruptcy of Lehman Brothers."This was a massive credit bubble that burst and I just think this was a major dislocation," he said in a "[URL="http://www.cnbc.com/id/15838368"]Squawk Box[/URL]" interview. "We're fortunate to be where we are right now."
Paulson, a former chairman and CEO of [URL="http://data.cnbc.com/quotes/GS"]Goldman Sachs[/URL], headed-up Treasury during the crisis and helped engineer the then-$700 billion Troubled Asset Relief Program (TARP)—the bailout credited with preventing the collapse of the financial system.[/quote]
[quote=CNBC][URL]http://www.cnbc.com/id/101032241[/URL][/quote]
This is the best way to sum up what I feel about Hank Poulson's argument:
[IMG]http://i.imgur.com/zQ3ZkB0.jpg[/IMG]
[media]http://www.youtube.com/watch?v=NJYef4lK0rw[/media]
The whole crisis was intentionally engineered to further rob the worlds economies & to create a little something called quantative easing. In other words, a recipe for disaster.
[QUOTE=Tengil;42182094][media]http://www.youtube.com/watch?v=NJYef4lK0rw[/media]
The whole crisis was intentionally engineered to further rob the worlds economies & to create a little something called quantative easing. In other words, a recipe for disaster.[/QUOTE]
The stock market has been fluctuating very a lot since the FED creation and especially after the dollar went of the parity with gold following the 'nixon shock'.
[IMG]http://i.imgur.com/hrB03I2.png[/IMG]
whats so great about the gold standard?
[sp]fuck all unless you have an 17th century economy[/sp]
[QUOTE=Sobotnik;42182422]whats so great about the gold standard?
[sp]fuck all unless you have an 17th century economy[/sp][/QUOTE]
That you can't do this:
[IMG]http://i.imgur.com/4FXNw9r.jpg[/IMG]
[QUOTE=Beafman;42182512]That you can't do this:
[IMG]http://i.imgur.com/4FXNw9r.jpg[/IMG][/QUOTE]
Can you explain the process by which removal of the gold standard caused this?
[QUOTE=Sobotnik;42182562]Can you explain the process by which removal of the gold standard caused this?[/QUOTE]
It's obviously due to global warming and internet piracy.
[QUOTE=Beafman;42182512]That you can't do this:
[IMG]http://i.imgur.com/4FXNw9r.jpg[/IMG][/QUOTE]
You do know that the massive amount of debt there is from recognizing defense debts from wars as part of the national debt.
[QUOTE=Sobotnik;42182562]Can you explain the process by which removal of the gold standard caused this?[/QUOTE]
Have you ever tried to print gold?
[QUOTE=Tengil;42182627]Have you ever tried to print gold?[/QUOTE]
So you are telling me that runaway inflation caused the debt?
Please.
Tell me more.
[QUOTE=Sobotnik;42182562]Can you explain the process by which removal of the gold standard caused this?[/QUOTE]
Sure.
The US amassed a huge amount of gold during WW2, as it was the only means by which the british and russians could pay for US equipment. All in all the US collected 2/3 of all gold in the world during the war. In 1944 the allied nations meet at Bretton Woods in the US and instituted the 'Bretton-woods' system, where the dollar was pegged to gold at 35 dollars an ounce, effectively meaning that the dollar was 'as good as gold'. That meant a large part of the world then used the dollar in 'good faith' that they could return their dollars for gold if they ever needed it and the US then controlled the reserve currency of the world.
Move forward to the the 60's. During the later parts of the 60's, the US were deploying a large amount of troops in Vietnam and Johnson had created the 'Great Society' movement, which created social security, Medicare/medicade. A large sum of money was spent and the Fed printed more in the knowledge that the rest of the world would still need them. However that meant the dollar, compared to the volume of it was overvalued.
The european countries saw this and returned their dollars for gold in the US. This created a huge problem, since this created high inflation as the money returned to the same pool. Nixon closed the 'gold window' and shut the rest of the world from collecting their gold from the US.
Of course, that meant the US dollar turned from being actual money into a fiat currency. The Fed then set the target of yearly inflation rate to around 2%.
Since the dollar was no longer 'as good as gold' the economy tanked. The fed continued to print money, however as with compound interest, 2% a year doesn't sound like a great deal, but give it 30 years and it makes for a very, VERY big deal. Coupled with a political situation in which either side have their respective groups of interest (democrats have social security voters, Republicans have defense companies and those jobs) with no intention of letting their voters down, you there is only one easy solution: Print more money.
Now you might ask why, since the fed just prints more and more money, that it doesn't come back as much higher rates of inflation? Nixon was smarter than most people give him credit for. The nixon administration was all to keen on what going of the gold standard would mean with all the overseas dollars that would still come back, even if they couldn't get their gold, they could still buy american products. Together with OPEC he made the deal of military hardware and protection in return for the exclusive right of oil from the middle-east being sold in U.S. dollars only, making it impossible for other countries currencies to purchase oil. This created an 'artificial demand' for dollars, as the rest of the world would then continue to need dollars if they wanted to continue to get oil. It's really just pegging the dollar to oil instead of gold, but it works much the same way. The US can, from now on, continue to print as much money as they want, since the world will just take the newly printed money to purchase the oil. It's also the reason why the oil price is going up to record highes again.
[editline]13th September 2013[/editline]
[QUOTE=Paul McCartney;42182614]You do know that the massive amount of debt there is from recognizing defense debts from wars as part of the national debt.[/QUOTE]
I'd say you'd need to take that into account too?
[quote]All in all the US collected 2/3 of all gold in the world during the war.[/quote]
Source?
[quote]Since the dollar was no longer 'as good as gold' the economy tanked. The fed continued to print money, however as with compound interest, 2% a year doesn't sound like a great deal, but give it 30 years and it makes for a very, VERY big deal.[/quote]
[img]http://upload.wikimedia.org/wikipedia/en/a/a0/US-Inflation-by-year.png[/img]
Why is there all this inflation before the the 1970s? What about muh gold?
[quote]Coupled with a political situation in which either side have their respective groups of interest (democrats have social security voters, Republicans have defense companies and those jobs) with no intention of letting their voters down, you there is only one easy solution: Print more money.[/quote]
Well to pay for things, obviously printing money is one source. Borrowing and trying to reduce interest rates are others, then there is also good old taxation.
[quote]Now you might ask why, since the fed just prints more and more money, that it doesn't come back as much higher rates of inflation? Nixon was smarter than most people give him credit for. The nixon administration was all to keen on what going of the gold standard would mean with all the overseas dollars that would still come back, even if they couldn't get their gold, they could still buy american products. Together with OPEC he made the deal of military hardware and protection in return for the exclusive right of oil from the middle-east being sold in U.S. dollars only, making it impossible for other countries currencies to purchase oil. This created an 'artificial demand' for dollars, as the rest of the world would then continue to need dollars if they wanted to continue to get oil. It's really just pegging the dollar to oil instead of gold, but it works much the same way. The US can, from now on, continue to print as much money as they want, since the world will just take the newly printed money to purchase the oil. It's also the reason why the oil price is going up to record highes again.[/QUOTE]
Except a lot of industry and oil production goes on outside of America as well.
Also in reference to that graph:
[img]http://brucekrasting.com/wp-content/uploads/blogger/_5JJarCb6DPo/TGBOJqD_23I/AAAAAAAABUE/e_1wLTt6Zww/s1600/us_gdp.png[/img]
It seems strange how GDP and debt are growing, almost in line with each other in fact.
Statistics & diagrams say very little about what is actually going on. That the economy is still healthy and is getting stronger is an illusion.
The whole global economy is fueled by a continued creation of money, debt & the buying of treasury bonds. Treasury bonds that are sold with the promise of riskfree yield. It is a ponzi scheme on a global scale. Once the flow of money stops, there will be an economic collapse on a magnitude never seen before.
It is like a drug users addiction. Once he stops getting his fixes everything will fall apart. But even if he keeps getting his fixes, he will eventually come to a point where he dies.
The gold standard is archaic.
The US debt is because of politicians with a hard-on for war.
Thank the US war economy.
[QUOTE=Tengil;42183256]Statistics & diagrams say very little about what is actually going on.[/QUOTE]
Why do you trust the graph covering debt and not mine covering GDP?
[QUOTE=Sobotnik;42183348]Why do you trust the graph covering debt and not mine covering GDP?[/QUOTE]
Going to need a graph of trust levels here.
[QUOTE=Sobotnik;42182991]Source?
[img]http://upload.wikimedia.org/wikipedia/en/a/a0/US-Inflation-by-year.png[/img]
Why is there all this inflation before the the 1970s? What about muh gold?
Well to pay for things, obviously printing money is one source. Borrowing and trying to reduce interest rates are others, then there is also good old taxation.
Except a lot of industry and oil production goes on outside of America as well.
Also in reference to that graph:
[img]http://brucekrasting.com/wp-content/uploads/blogger/_5JJarCb6DPo/TGBOJqD_23I/AAAAAAAABUE/e_1wLTt6Zww/s1600/us_gdp.png[/img]
It seems strange how GDP and debt are growing, almost in line with each other in fact.[/QUOTE]
[quote=World Gold Council 1999 rapport]What counted was the soaring US
stock. Before the price rise to $35 the US held 6,070 m.t., by 1938 they had 11,340 m.t.,
and by 1942 20,205 m.t., with the ultimate peak just over 22,000 m.t. in the late 1940s and
early 1950s (being 75% of all monetary gold by then and half of all gold ever mined).[/quote]
[quote=World Gold Council 1999 rapport]What counted was the soaring US
stock. Before the price rise to $35 the US held 6,070 m.t., by 1938 they had 11,340 m.t.,
and by 1942 20,205 m.t., with the ultimate peak just over 22,000 m.t. in the late 1940s and
early 1950s (being 75% of all monetary gold by then and half of all gold ever mined).[/quote]
To the image you posted on inflation before 1970, notice several things. First: The massive rises before 1970 is due to printing of dollars to pay for entry into WW1 and WW2. Actually, all the 'hikes' are due to wars outside the country.
You're right. You can make taxes higher. However the US tried to borrow by selling american bonds abroad, making it possible for very low rates. Those rates are now rising as people aren't buying, so what do the US do now? Raise taxes or cut spending? Because no one is buying.
[quote]Except a lot of industry and oil production goes on outside of America as well.[/quote]
You'll need to explain that one?
To your last graph: That isn't great to be honest. If the US actually had a trade balance surplus, sure that would be great, however the way the US GDP is calculated is getting more and more screwed as the government has been changing how you calculate it.
[quote][url]http://www.businessweek.com/articles/2013-07-18/the-rise-of-the-intangible-economy-u-dot-s-dot-gdp-counts-r-and-d-artistic-creation[/url][/quote]
[editline]13th September 2013[/editline]
[QUOTE=Van-man;42183312]The gold standard is archaic.
The US debt is because of politicians with a hard-on for war.
Thank the US war economy.[/QUOTE]
[quote=Financial Post]Add on the current federal net debt of $676-billion and Canadians are currently leaving a legacy of $1.2 trillion dollars in debt to the younger generations, an increase of more than $350-billion since 2007-08.[/quote]
Apparently not the only ones
a gold standard is a terrible idea and anyone that thinks it is a good idea is stupid
[QUOTE=Bobie;42183614]a gold standard is a terrible idea and anyone that thinks it is a good idea is stupid[/QUOTE]
[IMG]http://i.imgur.com/EbIbkTd.jpg[/IMG]
[highlight](User was banned for this post ("Image Macro" - rilez))[/highlight]
Yes, let's believe the Goldman Sachs alum who, as Treasury Secretary under Bush, swore the economy was absolutely a-okay right up until the moment it collapsed, then did everything possible to make sure the bankers were taken care of with taxpayer money while millions of people lost their jobs and their homes, never to recover. That asshole did nothing to prevent the collapse, and nobody should be listening to him now.
but the gold standard means one physically has to possess enough gold to cover all the wealth, and eventually we cannot expand the amount of currency we have if nobody will sell us enough gold to cover that expansion.
what is this? the 1896 election of McKinley?
[editline]13th September 2013[/editline]
going back to the topic though
that is a stupid very short sighted viewpoint that it was just a fluke, was the crash of the 70s a fluke? was the recession following ww2 a fluke? was the great depression a fluke too? its more like a 20-30 year storm if anything
[QUOTE=Sableye;42185459]but the gold standard means one physically has to possess enough gold to cover all the wealth, and eventually we cannot expand the amount of currency we have if nobody will sell us enough gold to cover that expansion.
what is this? the 1896 election of McKinley?[/QUOTE]
Not to mention it'll jack up the price of any product that uses gold.
Oh hello there sharply increasing electronics prices.
It [B]IS [/B]just stupid.
And it isn't the solution to banks & the regulators of those acting stupid.
If you're going to start comparing GDP to debt (and more importantly, graphs to graphs, which you [I]really[/I] need to be careful about, due to differences in scale, timeframe, etc), you should be looking at debt as a percentage of GDP. [URL="http://visual.ly/united-states-debt-percentage-gdp-1940-2012"]Look at this link.[/URL]
To put it simply, US debt to GDP is nearing the levels it was at during the depths of WW2. There is a staggering difference between now and then however: during WW2, the people's money was used to build factories, infrastructure, and otherwise just build up a proper framework for a world-class economy. Essentially they used the money to create jobs and invest in industries that generate wealth - to make an America that would last. This time, they gave the money to the financial sector. Did this generate wealth, jobs, or financial security for the USA? Not even close. The banks still took people's homes, jobs were still lost, and everyone now has effectively 30% less money than they did 10 years ago.
Financial crisis was not an accident: it was a method to shuffle wealth away from people (equity in homes, pension funds, etc) and to the financial sector. I think one of the most telling parts of that story was how we here in Canada were hearing, as early as 2007, that the US market was on the edge of collapse. My US friends were hearing from their media that the market was perfectly safe and they should throw everything they have at it. They didn't believe me when I told them their country was about to kick the bucket. Americans [URL="http://static2.businessinsider.com/image/4fd9ee1e6bb3f7af5700000a/media-infographic.jpg"]should take a peek at this[/URL] while on the subject of US media (who controls it, and by proxy, you).
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