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  4. Irrational Exuberance again...?

Irrational Exuberance again...?

Scheduled Pinned Locked Moved The Back Room
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  • 7 73Zeppelin

    Richard A. Abbott wrote:

    Weren't the dealers somewhat relieved that by the statement by the Fed's Chairman [^] of the no intentions for banks to be nationalized which had an immediate upwards effect at the Stock Exchanges.

    Which is actually one of my arguments in favour of nationalization. If the sole aim of shareholders is to preserve their wealth by having banks hoard liquidity rather than lend, then we do indeed need to consider nationalization under the current economic climate. The DOW is currently at levels not seen since the 1990's. I don't think a small upswing in the market accurately reflects the current fundamentals of the economy.

    Richard A. Abbott wrote:

    Is it not time to consider researching a new system as the current system is probably irrevocably broken. Scrapping it might be the kindest thing to do.

    I'm not convinced that the system is completely broken. I think that financial regulation simply needs to keep up with financial innovation. And, further to that, compensation schemes must be "fair", in the sense that there should be a downside risk for executives if company performance is poor. Under the current system, this is not true (i.e. golden parachutes, free options). This means that there must be appropriate levels of regulation along with appropriate levels of capital requirements. A complete redesign is, in my opinion, unnecessary.

    L Offline
    L Offline
    Lost User
    wrote on last edited by
    #41

    So presumably, Fed Eliminates Compensation Limits for TALF Sponsors [^] alarms you

    7 1 Reply Last reply
    0
    • L Lost User

      So presumably, Fed Eliminates Compensation Limits for TALF Sponsors [^] alarms you

      7 Offline
      7 Offline
      73Zeppelin
      wrote on last edited by
      #42

      Yes, I saw that. Indeed it does trouble me. While competetive compensation packages do attract talent, compensation packages without performance incentives or downside risk send the wrong message. It sends the message of: make money at all costs. That's what got us to where we are today...

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      • 7 73Zeppelin

        Jon, I couldn't agree with you more. What you are addressing is a much deeper topic, whether you realize it or not (and I think you do realize it). The real issue is, indeed, fractional reserve banking. The current system of fiat money is not supported by anything and that is truly the source of not just the current problem, but other, deeper issues like the true causes of inflation. The problem with backing a currency with something like gold is that there isn't enough physical gold to go around. Furthermore, the value of gold is affected by supply, extraction costs, purity, etc.. etc... Even the kings of ancient history (e.g. Croesus) knew that diluting the metal content of coins was a nice way to manipulate the economy. So returning to Bretton Woods isn't an option. Do you receive emails if I send you a link from the "send email" thingy in the message window of CP? I'll send you a link, but it will contain things that hit a little too close to home for me if I post it in public here.

        O Offline
        O Offline
        Oakman
        wrote on last edited by
        #43

        If that isn't working, I can set up a mailbox specifically for you and simply find a months' old messages of yours back on page umpty-ump to send you its address.

        Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

        7 1 Reply Last reply
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        • O Oakman

          If that isn't working, I can set up a mailbox specifically for you and simply find a months' old messages of yours back on page umpty-ump to send you its address.

          Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

          7 Offline
          7 Offline
          73Zeppelin
          wrote on last edited by
          #44

          Sent. Hopefully you'll receive it!

          O 1 Reply Last reply
          0
          • 7 73Zeppelin

            Sent. Hopefully you'll receive it!

            O Offline
            O Offline
            Oakman
            wrote on last edited by
            #45

            Nope, but you should have just received an address for me. Let me know when you have it, OK?

            Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

            7 1 Reply Last reply
            0
            • O Oakman

              Nope, but you should have just received an address for me. Let me know when you have it, OK?

              Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

              7 Offline
              7 Offline
              73Zeppelin
              wrote on last edited by
              #46

              Didn't receive it. You can send me an email directly to: I'll reply to that.

              modified on Wednesday, March 4, 2009 8:13 AM

              O 1 Reply Last reply
              0
              • 7 73Zeppelin

                Didn't receive it. You can send me an email directly to: I'll reply to that.

                modified on Wednesday, March 4, 2009 8:13 AM

                O Offline
                O Offline
                Oakman
                wrote on last edited by
                #47

                Done - strongly suggest you delete the message I am replying to, now.

                Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

                7 1 Reply Last reply
                0
                • O Oakman

                  Done - strongly suggest you delete the message I am replying to, now.

                  Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

                  7 Offline
                  7 Offline
                  73Zeppelin
                  wrote on last edited by
                  #48

                  Oakman wrote:

                  Done - strongly suggest you delete the message I am replying to, now.

                  Yep.

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