The Residential Real Estate Crash Index Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: ChanceIs	11/7/2008 9:40:52 AM
	Read Replies (2) of 306849

Hangin' with Jim Grant I went down to the AEI yesterday afternoon to hear Jim Grant (Grant's Interest Rate Observer) speak and promote his new book. "Mr. Market Miscalculates." Yes, I now have the autographed copy on my shelf collecting dust. He is a fascinating speaker. The book is a compilation of essays written over the years - but culled out to focus on the current economic crisis. He had a lot of uncomplimentary things to say about the use of debt. I could go on and on. The most salient thing to me was his recounting of the "double liability" concept for bank equity stockholders. This concept was purged from the system in 1935 as part of the New Deal restructuring. I can't make too much sense of it. Certainly in the first instance, a bank stockholder could loose all of his investment. In the second instance, the shareholder was responsible for a pro rated portion of the bank's paid in capital. I can only speculate how that worked. After all, in the event of a failure the stockholders get what is left - which is usually nothing. In a sense it could be like paying yourself back. Probably if the concentration of shareholders changed, then some newer holders would have to pay in. The bottom line is that some holders lost all and then some. The government would come after them. Therefore people would look a little harder at the numbers before they invested. He also took issue with the FED. He wonders how that small group who really don't know much more than you or I can conjure the appropriate interest rate for the economy at any particular point of time. He gave instances of several economic epochs in US history where we had deflation and prosperity. Acknowledged that the Depression was bad - GDP shrank some 45%, but suggested that the FED's fears of deflation were way overblown. I think that Grant thinks that in general the whole country has become somewhat morally flaccid and has lost its perspective on risk and its downside. An interesting and well spent afternoon.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next