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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (22049)	9/7/2007 3:19:44 AM
From: elmatador	Read Replies (2) \| Respond to of 219848

"We may get price increases without asset price increases" You guys are simply saying: The cost of living goes up without a concomitant increase on asset prices. That's a distorted way to look to the economy because it points to someone living off capital. So your capital has to keep increasing in price to keep up with cost of living inflation. Keep in mind the prices, where there are more competition and absence of government intervention, increase a decrease based on market forces. While your stock of capital is subject to a different set of market forces. Thus the delta. What the triggers 'price increases without asset price increases'? That's what we need to discover. I understand clear as the day outside what is a price increase: Example 1) and 2) happening right now in Brazil: 1) Income raises=>people go from cheaper fresh milk to costlier UHT milk =>the industrial capacity of producing that type for a moment, doesn't keep up with the demand, and prices increases. 2) Obviously concomitantly fresh milk demand goes down=The industries react by increasing production of UHT milk and price goes back. “price increases without asset price increases” points simply to an economy imbalance. Then we need to find that imbalance. Because the market comes to solve and return to balance. A price increase could be: Steel price going up because the demand in China is higher, wheat, coffee going up etc. Now if your stock of capital you live off is your investments in the energy segment. That segment not necessarily moves in tandem with the components that triggers cost of living increases. Or say the capital you live off are office space rented. That stock of capital is subject to a totally different set of circumstances than those that affects the components of your cost of living. For instance in a down turn, like the one that just starting, the returns will be lower. If you live off homes rented and suddenly that market tanks, the capital you are living off produces less return.

To: TobagoJack who wrote (22049)	9/7/2007 3:50:48 AM
From: elmatador	Respond to of 219848

Has the US outlawed bad luck? The US government has always had the money to implement a system that insures people are not getting hurt by lack of measures to prevent that accident to happen. That's why the have so many lawyers to go after someone with a lawsuit if he fails to prevent the preventable. How people can be taught that there is danger, failure and pain? It has a name even: moral hazard. That is: you engage in something that can end up in tragedy knowing that if tragedy happens you'll be rescued. When there is abundance there are distortions and unbalances. Klaser calls the burden of abundance. In the US the case is abundance of money. Last time there was a rescue operation: S&L crisis cost taxpayers an estimated $150 billion to resolve. [edit] S&L and bank crisis of the 1980s Federal deposit insurance received its first large-scale test in the late 1980s and early 1990s during the savings and loan crisis (which also affected commercial banks). The brunt of the crisis fell upon a parallel institution to the FDIC, the Federal Savings and Loan Insurance Corporation (FSLIC), created to insure savings and loan institutions (S&Ls, also called thrifts). Due to a confluence of events, much of the S&L industry was insolvent and many large banks were in trouble as well. The FSLIC became insolvent and, along with its insurance function, was merged into the FDIC. Thrifts are now overseen by the Office of Thrift Supervision, an agency that works closely with the FDIC and the Comptroller of the Currency. (Credit unions are insured by the National Credit Union Administration.) The primary legislative responses to the crisis were the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). This crisis cost taxpayers an estimated $150 billion to resolve. [edit] FDIC funds