Instead of allowing capitalism to fix the problem, the feds made it worse. They gave more money to the very institutions and managers who had proved they couldn’t be trusted with it.
We don’t want to rehearse the whole sequence of events that got us to where we are. But it’s important to understand what happened.
All Posts Tagged With: "capital"
How a Deficit in Capitalism Helped Engender the Financial Crisis
The Real Crisis in Capitalism
The Financial Times led off its series on ‘Capitalism in Crisis’ with a wandering piece that attempted to outline the problem. Unfortunately, the FT writers don’t seem to understand what capitalism is, let alone what is wrong with it. They say they are “rethinking capitalism.” But it doesn’t appear that they ever thought about it the first time.
January 12th, 2012 | Bill Bonner | 1 comment | Continued
Tangible and Irreplaceable Assets
Take a deep breath and relax. Today’s issue of the Daily Reckoning is not about the Reserve Bank. Maybe it will raise the cash rate to 4.75% tomorrow and maybe it won’t. But frankly we are tired of pretending to take the RBA seriously as it pretends to know how to perfectly manage the price of money. Instead, then, let’s talk about the upcoming float of Queensland Rail. It’s a great exercise in understanding how to value assets and why the private sector manages better than the public sector.
October 4th, 2010 | Dan Denning | 0 comments | Continued
Chinese Dollar Torture
Recently, the US Treasury Department released data showing an 11% decline in official Chinese holdings of US government bonds during the past year. For US dollar holders, this is a troubling trend. Not so much for those holding gold. To put it simply, the Chinese government isn’t adding to its US bond position…
September 20th, 2010 | Byron King | 6 comments | Continued
Capital Inadequacy
It is important to grasp just how important capital adequacy standards are. They control the money supply… sort of. To be more specific, they control the velocity of money. Please don’t go to sleep. This is actually the biggest fraud ever committed. It goes as follows:…
September 13th, 2010 | Nickolai Hubble | 10 comments | Continued
Still lucky
The next few days should be telling ones for both gold and equities. Gold has come off its new highs. But you haven’t seen a huge amount of selling either. As our friend Phil Anderson pointed out the other night, you often see two to three days of lower closes after a new high. That gives you a good time to enter into a position.But so far, September hasn’t been the historical disaster we’ve come to expect. Mind you, it’s early. Yet outside some whisperings of capital raisings by major European banks…
September 10th, 2010 | Dan Denning | 0 comments | Continued
Dysfunctional Price Signals are Distorting the Housing Market
The price of anything, whether it is a cake of soap or a jumbo jet, is meant to convey a whole bunch of information to an investor, producer or consumer. Prices send signals up and down the supply chain and these signals determine the ultimate supply and demand of any product or service.
August 6th, 2010 | Greg Canavan | 95 comments | Continued
Where Do You Stress?
The European stress tests continue to be discussed in the media. The irony is that the stress tests were intended to de-stress the markets. Instead, the response has been all over the place.There were the suspicious:”European Union stress tests found banks need to raise 3.5 billion euros of capital…
July 31st, 2010 | Nickolai Hubble | 0 comments | Continued
When Animal Spirits Attack
Growing economies…growing people…growing anything…it all requires the proper spirit of enterprise. But life is not a theory. How you feel about something is how you feel about it. It doesn’t alter what the thing is. After all, what people are willing to pay for something is part of what prices communicate, and prices vary based on an aggregation of personal preferences (another miracle of the market).
July 14th, 2010 | Dan Denning | 15 comments | Continued
If Market Keeps this Way, There May Be More Beaten Down Stocks
It’s quickly becoming a market where you’re worried more about the preservation of your capital rather than capital appreciation or even dividends. Late last night we read the latest monthly report from Australian Wealth Gameplan, edited by Kris Sayce. Kris has come up with a way to hedge against the falling Aussie dollar and listed all the collateral damage that would occur if the currency falls more.
February 9th, 2010 | Dan Denning | 11 comments | Continued
Debt Going Down Because Households are Defaulting
“Figures released this week by the Federal Reserve showed that Americans owed $10.8 trillion on home mortgages at the end of the third quarter, down 2.2 percent from a year earlier and the lowest level since mid-2007.
December 15th, 2009 | Bill Bonner | 3 comments | Continued
Can Governments and Central Banks Prevent More Credit Writedowns?
Are we changing our tune, then, about what to expect from markets? Not one bit. But the question now is timing. The collapse of 2008 was so severe because of the sudden reduction in leverage in the financial sector. As assets fell in value, the most highly leveraged firms (or lenders who raised money by selling debt) went out of business.
October 12th, 2009 | Dan Denning | 34 comments | Continued
Underlying Demand During a Housing Shortage
That is clever to suggest that when rates rise people will have to find another way to say that houses are affordable. But we reckon when rates rise, as they eventually must, a lot of new home buyers will find out that access to cheap credit does not make a house affordable. It just makes the amount of debt you owe to the bank a lot larger.
September 30th, 2009 | Dan Denning | 41 comments | Continued
The Banks Should Hold More Capital
The US system of capitalism has become a system where the capitalists have no capital. The big banks have too little in savings…not enough ‘buffers’ to protect them from unexpected crises. They made a fortune during the boom years…
September 7th, 2009 | Bill Bonner | 0 comments | Continued
David Murray Says You Become Dependent on Global Banks When Importing Capital
There we were watching Lateline, waiting for the rain to stop at Edgbaston so the cricket could begin, when David Murray, Chairman of Australia’s Future Fund, began making so much sense we could hardly write it down fast enough. And it wasn’t his comments about buying non-government guaranteed corporate debt that got us so excited.
July 31st, 2009 | Dan Denning | 18 comments | Continued
