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23-May-10 News -- Some humor that isn't really very funny


** 23-May-10 News -- Some humor that isn't really very funny
** http://www.generationaldynamics.com/cgi ... 23#e100523

Contents:
"Barney Frank in 2005 discusses the real estate bubble"
"A 'hilarious' video by Max Keiser"
"The FlashCrash"
"Additional links"
"Major offensive in Kandahar may be turning point in Afghanistan war"

Just MHO, but it's always down to the bankers as to whom to approve for a loan. The law may tell you that you can't take all the money deposited in a neighborhood and loan it elsewhere, that you must make some loans in that area, but it doesn't ever tell them they must approve some particular person. Laws of that nature were on the books for more than three decades before this housing mess hit, and that's all due to bankers abandoning responsibility for the security of deposits.

In the end, it all comes down to a race. One institution will ease the reins just a bit, and the profits jump and their stock soars. The next one does the same thing, and then the next. It's very much like a virus spreading, shortly even the "stable old well established" banks have eased the requirements for a loan just a bit. Then all the stocks are at the same level, so somebody eases up just a bit more (after all, nothing terrible happened the last time) to jazz the stock before the options come due. Then it goes around again. It's a positive feedback loop with no retarding impulse, it stops when the machine breaks.

John wrote: I just can't understand this. Why is this funny? Why don't ordinary investors, journalists and politicians see what a disaster this is?

I gave an answer about the humor in the other thread but have a difference response below:
http://generationaldynamics.com/forum/v ... 2610#p5631

The market has correctly reacted to the breaking of the "no bailout treaties" and suspension of "ECB only buys investment quality bonds" and printing of more Euros (to buy up bad Greek bonds or as countries borrow the $960 billion for the fund from the ECB) as devaluing the Euro. The Euro is dropping fast. And many people now realize that run this way it is not such a good reserve currency. The rules they setup made it look like a good reserve currency, but now that they are tossing the rules it won't be.

Europe is in the same part of the generational dynamics cycle as the USA but you have not said "debt contraction and deflation for Europe" like you do for USA. The case for inflation in Europe has gotten much stronger very recently and more and more people seem to now be predicting the breakup of the Euro. But how did GD say breakup for Euro and deflation for USA rather than breakup for both, or deflation for both, or inflation for both? If they are in the same part of the cycle shouldn't they both have the same problems? If Europe gets devaluation and inflation, does that imply the USA will too?