Global Financial "Crisis"?

[Andail]

I only wish I knew how to buy shares so that I could have snapped up loads of HBOS, RBS and other bank shares yesterday, and sold them on in a year's time for mega profits

I think you'd better steer clear from bank shares just a tad longer...

[Shane 'ProgZmax' Stevens]

I don't think your little lesson on economics makes a whole lot of sense, either. Increased inflation typically leads to higher interest rates, not lower ones. (Banks know that if they lend you money now and you pay it back in a year, the same sum will be worth less by that time, so they increase interest rates to maintain their profit margin.)

But my 'lesson' comes directly from Austrian economics, my friend -- and about the interest rates not making sense, you're absolutely right -- but for the wrong reasons!  Under normal circumstances, inflating a currency DOES lead to higher interest rates, discouraging risky ventures.  However, the Federal Reserve (in conjunction with the Central Bank) has been operating under a scheme for 25 years of inflating the currency while artificially dropping interest rates by purchasing guarantee shares from the banks.  Other methods come into play in their agreement, too, but the end result is that they've been artificially (and by artificially I mean that by all intents and purposes the interest rates SHOULD be higher) lowering interest rates while continuing to devalue the currency.  Obviously, either of these things could become a long-term problem, but together they spell disaster to a free market economy as we're seeing play out right now.  I'm not saying they're dastardly men doing this intentionally to ruin America, don't misunderstand; I just believe they've been operating under a system they believed in so strongly that they wouldn't let it go even when it proved untenable.

Since you don't appear to disagree with my point that banks/companies need to liquidate their bad debt and take responsibility for their poor choices we'll skip that part of the discussion and move on to your suggestions for handling the problem, in order:

(1) split the company up into more manageable pieces.   

This first suggestion won't ultimately solve the problem facing the economy, which is the artificial interest levels supported by the Fed to encourage mal-investment.  It's a great idea generally, though, just not a solution to the problem at hand in my view.

2) impose regulation to force the company to be more risk-averse. 

More regulation has proven to be historically bad in American policy, even with the best of intentions.  Regulating these companies to force them to behave a certain way sounds great in theory, but in practice it would turn into this pile of red tape with more loopholes than you or I could imagine and more government involvement when what we need is less.

(3) the government, in recognition of the fact that it will bail out the company if it ever screws up completely, should be given equity so that tax payers also get a share of the profits during good times. 

This also sounds great when said or on paper, but the simple fact of the matter is that the government should not be seizing taxpayer assets to do anything.  If taxpayers do not agree to this plan, their money should not be appropriated for it, because the alternative in my view is fascism. 


Before we continue this, I'd just like to make it clear that I believe the Federal Reserve to be one of the main causes of the current crisis.  If you believe the Federal Reserve to be a useful and necessary part of the system then we will simply have to agree to disagree on this matter and leave it at that .

[Nacho]

Prog, it is quite acepted that Greenspan pissed it off when lowered the interest rate in 2005... Then the banks needed to "invent" something new to win money, since gathering interests was not worthy, then they invented the "subprime", etc... 

[Andail]

The car industry in my region is really going downhill, with some 3000 more or less permanent layoffs. This affects well over a quadruple amount of people in the end, with all contractors and subindustries.
Now is probably one of the worst periods for our industry in modern times.

[SSH]

My company just announced no raises this year. And they're reducing our potential  bonuses by 30%. And they've hamstrung their share discount scheme to make it pointless for UK employees. 

[Nacho]

And NY, Francfort, London, Madrid, etc... stock markets are downhill and with no brakes... I think this is going to be the biggest crash in the history of the modern economy. Good luck to all. 

[deadsuperhero]

Unsurprisingly, the new Zeitgeist documentary goes pretty far into detail about this.

[densming]

Actually, in the US at least, bank deposits up to $100,000 per account are federally insured through FDIC, so even if a bank goes bust, people aren't going to lose their savings.

This is true, but, for people who have all their money in one bank, it could take weeks if not months to get this $100,000 (or $250,000 now, since the law has changed) back.  So, no, people wouldn't lose their money, but I would imagine they would be hard pressed for a length of time until that money was reimbursed to them by the FDIC.

[Nacho]

Zeitgeist? That documentary whose author recognised that he invented everything to prove that people can swallow everything if it's  presented in a documentary format?

[radiowaves]

You and I probably won't see any difference. But I have already met people over the Internet who have lost their jobs because of this. Although people lose jobs all the time, now there are whole companies going down, half the stuff is let go.  And Iceland is a mess also.

One of our banks (Hansapank, now named Swedbank) is going downhill also. People can't take out large amounts of money anymore...


But to call it great economical crisis and downfall, is a bit much, I think. I don't think it will be like in the beginning of 20'th century where there was nothing to eat.

[Pumaman]

Well, it seems that my cockiness has come back to bite me squarely in the ass, as today the company I work for went bust and I got made redundant. So uh yeah, in a dramatic about turn, I've now decided that the credit crunch is real, people! Sing it from the rooftops! It'll be worse than the Great Depression and we'll only have rice and gruel to eat for the next 10 years.

[Domino]

Time to start selling AGS then. 

[TwinMoon]

If you need any good references, just point to this forum (or here)

[Kweepa]

Damn, sorry to hear that Chris!
Apparently the entertainment industry is immune to stock market fluctuations. You should consider a job in games. Or Game.

[MrColossal]

Apparently the entertainment industry is immune to stock market fluctuations.

* MrColossal dramatically wipes his brow

PHEEEEWWWWW

[Andail]

Apparently the entertainment industry is immune to stock market fluctuations.

* MrColossal dramatically wipes his brow

PHEEEEWWWWW

For a while there Eric thought he'd taken all those tap dancing classes in vain.

[bicilotti]

Ouch, sorry to hear that. Good luck with your job hunt!

[Nacho]

Sorry to hear that, Chris... I know you and I am sure you must not only work hard, but also must be one of those guys who keep a good working atmosphere... Things must go really badly in your former enterprise if they must fire you.

But you will find a job soon If not, you can come to my home and I will pay you for sexual services

[SSH]

At last, you'll have the time you need to make Chris Quest! And make AGS3D!

Seriously, though, if you want any CV advice, or just to increase your professional job hunting network, then give me a shout!

[Pumaman]

Time to start selling AGS then

Watch out for the AGS Donate button, coming soon to a website near you! 

If you need any good references, just point to this forum

Don't worry, I've already lined up Stan and arthur.com as my references.

But you will find a job soon  If not, you can come to my home and I will pay you for sexual services

Hmm, there could be a conflict of interest there, what with me already paying AGA for similar services. But I suppose they do say you should pay it forward...

Seriously, though, if you want any CV advice, or just to increase your professional job hunting network, then give me a shout!

Thanks for the offer, but I have a fail-proof plan. I intend to convert my redundancy pay into lottery tickets, and with the moon being on the right alignment it's almost guaranteed to lead to a jackpot win.