Register a SA Forums Account here!
JOINING THE SA FORUMS WILL REMOVE THIS BIG AD, THE ANNOYING UNDERLINED ADS, AND STUPID INTERSTITIAL ADS!!!

You can: log in, read the tech support FAQ, or request your lost password. This dumb message (and those ads) will appear on every screen until you register! Get rid of this crap by registering your own SA Forums Account and joining roughly 150,000 Goons, for the one-time price of $9.95! We charge money because it costs us money per month for bills, and since we don't believe in showing ads to our users, we try to make the money back through forum registrations.
Will the global economy implode in 2016?
We're hosed - I have stocked up on canned goods
My private security guards will shoot the paupers
We'll be good or at least coast along
I have no earthly clue
View Results
 
  • Locked thread
LorneReams
Jun 27, 2003
I'm bizarre

Ramrod Hotshot posted:

Apparently LIBOR is fake, which Matt Taibbi thinks means that $350T of lending transactions is now fraudulent. Can anyone with more knowledge of this comment on it?

http://www.rollingstone.com/politics/news/taibbi-is-libor-crucial-financial-benchmark-a-lie-w497305

I will say that over the last few years I saw a movement back to WSJ from LIBOR on all my credit cards and other offers. I wonder if the volatility was too much, and that this was known to be coming.

Adbot
ADBOT LOVES YOU

Willie Tomg
Feb 2, 2006

wateroverfire posted:

As always, the actual paper is worth a read. A lot of nuance is lost in the retelling.

For instance, post-tax real income for the bottom 50% of earners in the US grew from about $18,000 in 1982 to $25,000 in 2014 measured in constant 2014 dollars. That's an increase of about 39%. (source: Bottom chart of Figure 3 in the appendices of the linked paper) - the same period in which the income share going to the bottom 50% declined (source: Top chart of Figure 3 in the appendices). Standards of living went up substantially for just about everyone even though inequality rose. IMO just talking about inequality makes for a shocking article but not one that's super useful in talking about the world.

Cool, now reconcile this with an actual basket of goods and not inflation as a statistic in a bubble. Y'know, health care, housing, education, fuel, food, etc.

asdf32
May 15, 2010

I lust for childrens' deaths. Ask me about how I don't care if my kids die.
So how do you think inflation is calculated?

wateroverfire
Jul 3, 2010

Willie Tomg posted:

Cool, now reconcile this with an actual basket of goods and not inflation as a statistic in a bubble. Y'know, health care, housing, education, fuel, food, etc.

If you think the results will be worth it, why don't you do the analysis and post? I'd be interested to read it.

Bar Ran Dun
Jan 22, 2006




If you were an investor would you tolerate a 1% return per year over 34 years?

Those at 6% income growth per year are almost going to get three doublings of income over 34 years. Kind of makes that 39% increase over 34 years look like a real pile of poo poo doesn't it?

Proud Christian Mom
Dec 20, 2006
READING COMPREHENSION IS HARD
yeah but the poor people have refrigerators you see

uncop
Oct 23, 2010
The conclusion of the article seems sensationalist.

The just result of an artificial interest rate being replaced with a real market rate would be a ton of loans being forcibly renegotiated to a lower interest rate, and money lost by people through artificially high rates being recompensated to them.

What the article seems to be warning about is how the sheer scale of this virtual economy is so large that it's unlikely that the lost money can actually be recompensated. Who knows what would happen to a lot of financial institutions' books if the loans were just renegotiated like that, a lot of them could turn insolvent overnight. Which would lead to a massive crash.

The sensationalism comes in when one considers that there is the other option: screw justice, do absolutely nothing about the fraud, just quietly get rid of LIBOR. That seems like it would be unlikely to have results noticeable to the regular person. And it is also the option which is by far the most likely. Have you ever seen judges order a large corporation to pay for damages large enough to absolutely cripple them? It would have been just in cases such as many negligently caused environmental disasters, but it is simply not done.

wateroverfire
Jul 3, 2010

BrandorKP posted:

If you were an investor would you tolerate a 1% return per year over 34 years?

It really depends? A 1% inflation-adjusted return isn't unreasonable depending on the risk of the portfolio and the goals of the investor. Though obviously you'd take a 6% inflation-adjusted return for the same risk if you got to choose. :spergin:

BrandorKP posted:

Those at 6% income growth per year are almost going to get three doublings of income over 34 years. Kind of makes that 39% increase over 34 years look like a real pile of poo poo doesn't it?

What is the important point to you, I guess? The very rich won really big compared to the relatively poor over the period we're looking at. But that's a relative comparison. In absolute terms the relatively poor have won as well. A 39% real increase in purchasing power is nothing to sneeze at - that's a real improvement in standards of living. Why is the increase in inequality a more important point than the improvement of living standards for everyone?

call to action
Jun 10, 2016

by FactsAreUseless
The basket of goods used to calculate inflation isn't realistic and insufficiently accounts for the housing, healthcare, and education pressure on households by weighing stupid poo poo like cheaper iPads against it.

wateroverfire
Jul 3, 2010

call to action posted:

The basket of goods used to calculate inflation isn't realistic and insufficiently accounts for the housing, healthcare, and education pressure on households by weighing stupid poo poo like cheaper iPads against it.

That could be. I don't really have the knowledge to make more than an internet argument about it but I'd respond that the inflation calculations available seem to have been good enough for the study authors, and that they are used by academics, policy makers, the BLS and others who presumably know better than either of us how applicable they are. What makes you think you know something they don't?

Awps R. Band
Feb 3, 2016

uncop posted:

What the article seems to be warning about is how the sheer scale of this virtual economy is so large that it's unlikely that the lost money can actually be recompensated. Who knows what would happen to a lot of financial institutions' books if the loans were just renegotiated like that, a lot of them could turn insolvent overnight. Which would lead to a massive crash.

The sensationalism comes in when one considers that there is the other option: screw justice, do absolutely nothing about the fraud, just quietly get rid of LIBOR. That seems like it would be unlikely to have results noticeable to the regular person. And it is also the option which is by far the most likely. Have you ever seen judges order a large corporation to pay for damages large enough to absolutely cripple them? It would have been just in cases such as many negligently caused environmental disasters, but it is simply not done.

I agree with you here. I say that unless the majority of financial institutional power were to reject the fake rate on principle (which I don't think is going to happen), the government would have to step in and force the loan re-negotiations. That's unlikely to happen with our current governments, which favor subtle artificial controls on the markets, especially when it comes to siphoning money out of the larger population. It's easier to imagine it happening if large populations of citizenry pressured their governments (mass abstention from paying their current loans, for example) but I don't see that happening either. I think those with actual influential power would shrug their shoulders and just say, well, you gotta make a profit, you know what I mean?

Dr. Fishopolis
Aug 31, 2004

ROBOT

wateroverfire posted:

What is the important point to you, I guess? The very rich won really big compared to the relatively poor over the period we're looking at. But that's a relative comparison. In absolute terms the relatively poor have won as well. A 39% real increase in purchasing power is nothing to sneeze at - that's a real improvement in standards of living. Why is the increase in inequality a more important point than the improvement of living standards for everyone?

Because if that 39% increase in purchasing power also happens during a period when wages only increase by 11% despite a 73.4% productivity increase over the same period, it's entirely fair to point at the people who are hoarding a third of the economy for themselves and call them loving thieves.

It's also fair to point at the fact that every extreme economic collapse in modern history has been preceded by a period of extreme wealth inequality like we're seeing now. So, sure if you squint at the numbers and talk in purely absolute terms, the poor are doing better than they were 40 years ago, but that's an utterly meaningless and misleading piece of information in the context of what's actually happening.

MiddleOne
Feb 17, 2011

It all stems from the fact that it is difficult to build up speculatory bubbles without having wealth inequality in the first place. All that capital going into speculation has to be borrowed from somewhere.

mila kunis
Jun 10, 2011
Is there going to be some kind of blowup caused by QE leading to people chasing riskier and riskier poo poo for yields?

https://www.bloomberg.com/news/articles/2017-09-11/junk-fever-hits-new-high-as-tajikistan-narrows-bond-sale-spread

https://www.reuters.com/article/us-ukraine-eurobonds/ukraine-raises-3-billion-with-first-bond-since-debt-restructured-idUSKCN1BT19T

Wakko
Jun 9, 2002
Faboo!

Maybe? But if so we'll just solve it with more QE, so no worries.

Bar Ran Dun
Jan 22, 2006




wateroverfire posted:

Why is the increase in inequality a more important point than the improvement of living standards for everyone?

1. Power in our society. This change the relative power between groups. It's driving democracy into oligarchy. It's the authoritarianism hidden within freedom that can/might kill freedom.

2. People perceive relatively. If in relative terms they are falling behind, then that is perceived as no progress. If there is no perception of progress then people's outlooks become radical. Radicals will draw a clear line delineating where things should go no further. That line is often historically drawn between the head and shoulders, or in camps (eg Crowsbeak). One can see in here in these forums already.

Crowsbeak
Oct 9, 2012

by Azathoth
Lipstick Apathy

BrandorKP posted:

1. Power in our society. This change the relative power between groups. It's driving democracy into oligarchy. It's the authoritarianism hidden within freedom that can/might kill freedom.

2. People perceive relatively. If in relative terms they are falling behind, then that is perceived as no progress. If there is no perception of progress then people's outlooks become radical. Radicals will draw a clear line delineating where things should go no further. That line is often historically drawn between the head and shoulders, or in camps (eg Crowsbeak). One can see in here in these forums already.

2. Hey look explain to me why someone who has been given plenty of evidence that being a greedy poo poo is bad and does it anyways doesn't need some physical encouragement to drop it?

Bar Ran Dun
Jan 22, 2006




Crowsbeak posted:

2. Hey look explain to me why someone who has been given plenty of evidence that being a greedy poo poo is bad and does it anyways doesn't need some physical encouragement to drop it?

Did Robespierre keep his head?

Crowsbeak
Oct 9, 2012

by Azathoth
Lipstick Apathy

BrandorKP posted:

Did Robespierre keep his head?

Robespierre didn't have camps. I believe that given the right physical encouragement most people no matter how far they have gone down can be made to see the light and stop being greedy, and prideful creatures. Of course there should probably be some sort of act of contrition if they are to be allowed back.

Bar Ran Dun
Jan 22, 2006




Well that pretty clearly illustrates the point I was making to Wateroverfire.

Crowsbeak where does all this put you relative to the cross?

rscott
Dec 10, 2009

wateroverfire posted:

It really depends? A 1% inflation-adjusted return isn't unreasonable depending on the risk of the portfolio and the goals of the investor. Though obviously you'd take a 6% inflation-adjusted return for the same risk if you got to choose. :spergin:


What is the important point to you, I guess? The very rich won really big compared to the relatively poor over the period we're looking at. But that's a relative comparison. In absolute terms the relatively poor have won as well. A 39% real increase in purchasing power is nothing to sneeze at - that's a real improvement in standards of living. Why is the increase in inequality a more important point than the improvement of living standards for everyone?

If you contrast it to the previous 34 years where incomes in that percentile range doubled it doesn't seem so relatively great

Crowsbeak
Oct 9, 2012

by Azathoth
Lipstick Apathy

BrandorKP posted:

Well that pretty clearly illustrates the point I was making to Wateroverfire.

Crowsbeak where does all this put you relative to the cross?

Well Brandor I am unsure, but increasingly I think that Chesterton may have been too soft in where he was going.

wateroverfire
Jul 3, 2010

BrandorKP posted:

1. Power in our society. This change the relative power between groups. It's driving democracy into oligarchy. It's the authoritarianism hidden within freedom that can/might kill freedom.

That's an interesting idea but I think it's too fuzzy to hold up under scrutiny. I mean, it would depend on which groups you're talking about, surely, at the very least? For instance, we could probably agree that LGBT people have more power (to the extent that makes sense as a grouping) in 2017 than in 1982.

BrandorKP posted:

2. People perceive relatively. If in relative terms they are falling behind, then that is perceived as no progress. If there is no perception of progress then people's outlooks become radical. Radicals will draw a clear line delineating where things should go no further. That line is often historically drawn between the head and shoulders, or in camps (eg Crowsbeak). One can see in here in these forums already.

IDK, maybe. I think these kinds of comparisons and that kind of jealousy are more likely when people compare themselves to people much like themselves - their neighbors, coworkers, etc - then to far away rich people they can't identify with. Especially when in objective material terms, people (at least in the US) are mostly living too well (and better than they did back in the 80's, when inequality was lower) to risk themselves trying to overthrow the status quo even if they're the wokest wokes when posting on social media.

edit: I think instability would be vastly more likely if living standards were generally decreasing even if they were decreasing fastest for the richest for some reason.

wateroverfire fucked around with this message at 19:40 on Sep 21, 2017

mila kunis
Jun 10, 2011
I think you'd have to be massively out of touch or flat out lying to try to argue away the current issues with inequality in the US (increasing debt requirements for housing, transport, education, medical expenses + job insecurity, working multiple jobs, zero benefit variable pay employment in the ""gig economy"", the list goes on and on).

Dawncloack
Nov 26, 2007
ECKS DEE!
Nap Ghost
So I think on the 25th of October the party congress in the PROC comes to an end, and presumably the premier will feel secure in his position, so that he can get to start a controlled demolition of the Chinese financial system. Or simple stop pretending that everything's peach. And I think that's when we should grab a drink, sit back and watch the fireworks.

How off-mark do you people think I am?

namaste friends
Sep 18, 2004

by Smythe
Wassup thread. Looks like jay Powell is the leading contender for Fed chair. Boo I say. Boourns. Kevin warsh or ~blockchain~

Ccs
Feb 25, 2011


Dawncloack posted:

So I think on the 25th of October the party congress in the PROC comes to an end, and presumably the premier will feel secure in his position, so that he can get to start a controlled demolition of the Chinese financial system. Or simple stop pretending that everything's peach. And I think that's when we should grab a drink, sit back and watch the fireworks.

How off-mark do you people think I am?

No, they're going to continue to pretend everything's fine until something terrible happens that doesn't let them pretend everything's fine, just like every other world leader.

Dawncloack
Nov 26, 2007
ECKS DEE!
Nap Ghost
I think you are right. What was I thinking? I must have been coming down with an optimism.

incoherent
Apr 24, 2004

01010100011010000111001
00110100101101100011011
000110010101110010
Are we eating the rich yet?

Adbot
ADBOT LOVES YOU

Goon Danton
May 24, 2012

Don't forget to show my shitposts to the people. They're well worth seeing.

Come join us, friend.

  • Locked thread