ERICOPOLY

Having spent 15 years in the Seattle area, I'm enjoying the weather here. We've had a few days in the 75 degree range in January. Mostly sunny and in the 60s. Have you ever lived in a dreary climate before? I hear London and Seattle are similar climates. Even if somebody gave me a waterfront mansion in Seattle for free, I still wouldn't want to live there again -- well, I'd use it as a summer home only (nice in August/September).

In Montecito it's impressive just to be able to buy a 2,000 sqft "Mansion". I need to scrape together nearly $2.5m just to buy the house I'm renting, which is 2,300 sqft. Keep in mind that this is post-collapse pricing :-[

Last year the Euro was going to collapse and there was to be a daisy chain domino effect on global banking. So now if the "Euro is here to stay" it might mean that BAC and AIG will be spared this year. http://www.bloomberg.com/news/2013-01-24/soros-says-euro-is-here-to-stay-with-two-tense-years-ahead-2-.html

I'm guessing he needs a heavy cash allocation to heat his 8,000 sqft Hoggs Hollow mansion.

It would make it easier to earn 10% ROE if the E goes down.

I really don't have any qualifications. I would pay attention to what Sanjeev said about private investment records.

ERIC, I doubt you would ever like to add further on any of these funds, the rate at which you are currently compound it doesn't makesense! Might be BB wish you open a fund and he invest in yours! I wish that as well!

Today I bought the bare minimums of each fund. Now my foot is in the door and I can add to them after the funds close.

The vivid recreation of his death in theaters is a bit like a public hanging isn't it? I can see why they were popular.

Eric, I don’t understand your point here. Savings = Investments, provided, of course, that you actually invest them! If people deposit money in the banks and the banks don’t lend, that money is not put to work… Isn’t that a problem? Another story is “how much” money people deposit in the banks, and therefore how much they save. I would like to see people saving 10% of their income, and banks putting those savings prudently to work. Sorry, surely I missed your point… giofranchi Your desire to boost savings would be working against Fisher's desire to stimulate aggregate demand from credit growth. Begin with income, add to it new credit, and take away savings. That gives you aggregate demand. Eric, I am not so sure I understood what you mean. Let me explain what I mean: whenever a client pays my firm for a service it has provided him/her, I immediately take 20% of the money coming in and I invest it in other productive businesses, which I believe have good future prospects. I don’t use that 20% to give parties, or to buy a fancier office space. Now, I don’t see any difference with an individual or a family. Ok, 20% maybe is too much, so let’s say I would like to see each family save 10% of its income. Then, because not everybody is able to spend much time evaluating the best way to put to work their savings, there are banks. Which collect savings and should in theory be smart enough to use them properly. And, of course, to use them properly means to facilitate credit to those businesses which really deserve it. There is a whole world of difference between lending to good businesses on their way to be highly profitable, and letting homeowners borrow because they want a new, bigger “palace” they cannot afford, or letting the government borrow and squander people’s money on its largesse or on silly projects. I think Mr. Fisher is deploring the fact that big banks, to misleadingly strengthen their balance sheets, have ceased to lend to trustworthy businesses, the only ones truly capable of creating employment and wealth. giofranchi I misunderstood you then. By increasing savings to 10%, what you really mean is you want everyone to take 10% of their incomes and invest it in expansion of their businesses. I had in mind the kind of "savings" where people make fewer trips to the malls, instead using their incomes to pay down their mortgage or car loans. Therefore final demand falls, and businesses no longer feel confident to invest in further expansion of their operations. Therefore, they don't want loans from banks. Thus you would be at odds with what Mr. Fisher wants.

Is it sick to admit that the best part was watching Bin Laden shot? I saw it last night.

I was watching Roubini interviewed today. Last night I saw Zero Dark Thirty. There was the point where all of the senior CIA people were putting 60% odds on Bin Laden's presence at the compound. The female analyst put it at 100%, then said "okay, I know you people hate certainty so 95%". The CIA director walked out of the meeting saying "they're all cowed".

Do I need to start a separate thread for optimistic macro musings? http://www.bloomberg.com/news/2013-01-25/bridgewater-s-dalio-sees-game-changer-as-money-shifts.html

Eric, I don’t understand your point here. Savings = Investments, provided, of course, that you actually invest them! If people deposit money in the banks and the banks don’t lend, that money is not put to work… Isn’t that a problem? Another story is “how much” money people deposit in the banks, and therefore how much they save. I would like to see people saving 10% of their income, and banks putting those savings prudently to work. Sorry, surely I missed your point… giofranchi Your desire to boost savings would be working against Fisher's desire to stimulate aggregate demand from credit growth. Begin with income, add to it new credit, and take away savings. That gives you aggregate demand.

I'm with you there, but Fisher isn't. So what's up with him? Is he campaigning for political office?

giofranchi, I think earlier you posted that you are worried the savings rate had gone down again. I notice in Fisher's document he is concerned that the big banks aren't lending enough. Are you guys worried about different things? The road to prosperity might be paved with more debt after all, if you follow Fisher's line of reasoning.

They can't so much as take a piss today without getting approval. Here we are waiting for "permission" to pay a dividend. Well, if you had to assign a probability to the fact that Mr. Fisher's proposal will truly be implemented, which would it be? ??? giofranchi Low probability. Why? I don't think "the people" even want it. For example, I bank with Wells Fargo. It's not because they have a gun to my head, it's because I've moved from Los Altos Hills, to Eugene, to Los Angeles, then on to Seattle, and now Montecito. Never have I had to open a new bank account. It's very convenient. Why would I want Mr. Fisher to create a law that says Wells Fargo can only be a small community bank? What a pain in the rear in today's world where you don't grow up, work, and die in your same small community. Eric, commercial banks can do business wherever they want, opening how many branches they want. What Mr. Fisher proposes is they cannot be commercial and investment banks at the same time. And only the assets of commercial banks should be guaranteed by the government. What’s wrong with that? giofranchi I didn't realize that he was an advocate of letting firms continue to control a trillion in deposits. Rather, I thought he was gunning for all banks over $250b in assets. They may be misquoting him, but here is what one author claims: He identified 12 "megabanks" with assets of over $250 billion as too big to fail. http://www.cnbc.com/id/100385916/Fed039s_Fisher_Break_up_banks_that_are_039too_big_to_fail039 It sounds like he wants to "down-size" the commercial banking operations, but maybe it's just a poorly worded sentence and I'm misunderstanding him: "Only the resulting down-sized commercial banking operations, and not shadow banking affiliates or the parent company, would benefit from the safety net of federal deposit insurance and access to the Federal Reserve's discount window," he said. I have posted his most recent speech on this thread. If you then look at the slide that follows the quoted paragraphs, I think it becomes very clear what he is advocating. Maybe, I misunderstood him, but I don’t think he is saying that “parent holding companies” should not exist, and he is not putting any limit either on the dimensions of a pure commercial bank. Am I missing something? giofranchi Unless there is another, here is the one you posted to this thread: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/'macro'-musings/?action=dlattach;attach=1306 On page two, under "Defining TBTF", he writes: The reduction of market discipline has been further eroded by implicit extensions of the federal safety net beyond commercial banks to their nonbank affiliates. Notice how he says "further eroded"? He thinks size alone is too big of a deal and must be curbed -- the ones with non-bank affiliate protection are not the only ones he is gunning for, they are merely icing on the cake. Then he goes on to say how big banks are a problem but not small ones when they "get into trouble" -- he is not talking here about non-bank affiliates enjoying protection, he is clearly saying that size alone of the commercial bank is enough to pose unacceptable risk: The 12 institutions that presently account for 69 percent of total industry assets are candidates to be considered TBTF because of the threat they could pose to the financial system and the economy should one or more of them get into trouble. By contrast, should any of the other 99.8 percent of banking institutions get into trouble, the matter most likely would be settled with private-sector ownership changes and minimal governmental intervention.

They can't so much as take a piss today without getting approval. Here we are waiting for "permission" to pay a dividend. Well, if you had to assign a probability to the fact that Mr. Fisher's proposal will truly be implemented, which would it be? ??? giofranchi Low probability. Why? I don't think "the people" even want it. For example, I bank with Wells Fargo. It's not because they have a gun to my head, it's because I've moved from Los Altos Hills, to Eugene, to Los Angeles, then on to Seattle, and now Montecito. Never have I had to open a new bank account. It's very convenient. Why would I want Mr. Fisher to create a law that says Wells Fargo can only be a small community bank? What a pain in the rear in today's world where you don't grow up, work, and die in your same small community. Eric, commercial banks can do business wherever they want, opening how many branches they want. What Mr. Fisher proposes is they cannot be commercial and investment banks at the same time. And only the assets of commercial banks should be guaranteed by the government. What’s wrong with that? giofranchi I didn't realize that he was an advocate of letting firms continue to control a trillion in deposits. Rather, I thought he was gunning for all banks over $250b in assets. They may be misquoting him, but here is what one author claims: He identified 12 "megabanks" with assets of over $250 billion as too big to fail. http://www.cnbc.com/id/100385916/Fed039s_Fisher_Break_up_banks_that_are_039too_big_to_fail039 It sounds like he wants to "down-size" the commercial banking operations, but maybe it's just a poorly worded sentence and I'm misunderstanding him: "Only the resulting down-sized commercial banking operations, and not shadow banking affiliates or the parent company, would benefit from the safety net of federal deposit insurance and access to the Federal Reserve's discount window," he said.

They can't so much as take a piss today without getting approval. Here we are waiting for "permission" to pay a dividend. Well, if you had to assign a probability to the fact that Mr. Fisher's proposal will truly be implemented, which would it be? ??? giofranchi Low probability. Why? I don't think "the people" even want it. For example, I bank with Wells Fargo. It's not because they have a gun to my head, it's because I've moved from Los Altos Hills, to Eugene, to Los Angeles, then on to Seattle, and now Montecito. Never have I had to open a new bank account. It's very convenient. Why would I want Mr. Fisher to create a law that says Wells Fargo can only be a small community bank? What a pain in the rear in today's world where you don't grow up, work, and die in your same small community.

They can't so much as take a piss today without getting approval. Here we are waiting for "permission" to pay a dividend.

Japan had a much larger bubble and it's population is shrinking. Why is that a good example but 1929 is not? And besides, hasn't the US been quicker to face it's bad private sector debts, compared to Japan? I thought that was a result of having all these securitized loans in shadow banking that quickly went bad and were written off. Whereas Japan was (I'm told) slow to clear the bad debts.

There's nothing like history to see how deceptively simple approaches have worked out in the past.

He could have done that without misrepresenting the motivations of others. For example, when QE is done it's not to create wealth as Mr. Paul claims. This is just a straw man so that Ron Paul can knock it down and have an easy victory (he never looks clever when he speaks directly with Mr. Bernanke, IMO).

I thought they were merely trying to offset the deflation that is otherwise going on, but Mr. Paul suggests they are trying to create wealth. Do I simply misunderstand our stimulus spending or does Mr. Paul misunderstand/misrepresent their intentions? But in just a few short sentences Professor Hans-Hermann Hoppe eviscerates the Krugmans of the world by pointing out the obvious: If governments or central banks really can create wealth simply by creating money, why does poverty exist anywhere on earth? Why haven’t successive rounds of quantitative easing by the US Fed solved our economic recession? And if Fed money creation really works, and doesn’t create inflation, why haven’t Americans gotten richer as the money supply has grown?

You accidentally discharge your gun and shoot a hole in the front window of a bus. Not that catastrophic. On a plane?