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To Whom it May Concern
Gifthub is an immortal work of art in theMenippean Tradition,written in a Padded Cell (he calls it a Dumpster for obvious reasons) in a state of shock by Phil Cubeta, Morals Tutor to America's Wealthiest Families, under an alias, or alter ego, The Happy Tutor, Dungeon Master to the Stars in Wealth Bondage...... More....
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Used to be in interest-bearing accounts or relatively safe bonds, medium and long term.
But if we are in perpetual low-to-near zero interest environment, what then ?
I'd love to see some informed speculation about the relationship(s) between interest and (perceived and / or real) risk ... and yes, I wonder what the role / purpose of "interest" is, now in an environment that has become distorted by newfangled forms of packaging risk as product.
And what that means for the visibility and non-visibility of mirages.
Posted by: wirearchy | October 01, 2009 at 03:43 PM
Add inflation to the mix....
Posted by: Phil Cubeta | October 01, 2009 at 04:04 PM
re: interest or re: visibility of mirages ?
;-)
Posted by: wirearchy | October 01, 2009 at 05:37 PM
Well, if you invest in low yields bonds and inflation returns, down go the bonds. Or, put another way, the purchasing power of your interest payments goes down and down. Buy an apple tree, on the other hand, and "annual growth" is a measured in bushels.
Posted by: Phil Cubeta | October 01, 2009 at 06:26 PM
Sort of points out the thin air that financial assets are built from.
Reading the article reminds me of my reaction every time I hear some media person saying that the economy is not bouncing back because consumer demand is still down. Well, du'h, you scammed everyone out of their money already, nobody has anything but the super rich. They already borrowed past their limit and can't get any more. They just don't get it, after the money moves to the big buckets it stops. All leveraged investments are wiped out and now those remaining standing, the financial ologarchs, hold all the tokens.
Well, game over, put all the money back in the Monopoly box and start a new game. All the bailout could ever have accomplished is moving the end game a little further out. Actually, that's a best case scenario, in reality the bail-out is pure "moral hazard" in financial terms. AIG's counterparties were made whole when they should have taken a big hit for their risky positions.
Posted by: twitter.com/ddenizen | October 05, 2009 at 02:40 PM
http://blogs.wsj.com/wealth/2007/01/08/plutonomics/
Posted by: twitter.com/ddenizen | October 05, 2009 at 03:41 PM
"after the money moves to the big buckets it stops," well put. Cash for clunkers will fix that, right?
Posted by: Phil Cubeta | October 05, 2009 at 06:25 PM
I just can't get over the image of a greedy few, with holdings in millions, sometimes billions, the plutocrats, saying to the indebted masses, "You just have to spend more." Wrong!
Considering Geoff's comment that monetary systems are decision making systems, and how it is functioning now, we have to look at the plutocrats and how they are making decisions. They could choose to give more generously in a downturn with the understanding that it is what is necessary to reverse the trends. Instead there is evidence that they are hoarding in fear as if they were exposed to the vicissitudes of the market like a dumpster dweller.
Message to fix the economy: If you have, give more, give to those who will use it better than you.
Posted by: twitter.com/ddenizen | October 06, 2009 at 08:09 AM