Prices not going down??

[Mike OReilly]

Originally Posted by daletournier

...I like to think that theres a great opportunity here to reexamine our values, and the world will be better after this works it's way through, at least us westerners may be more humble.

Thanks for this Dale. Earlier I'd been musing on the negative lessons our societies might learn through this latest crisis; the growing authoritarianism, the demonstration of how tenuous all our apparent freedoms really are. But I like your take here. I definitely agree there are more positive lessons we might collectively learn.

You understand finance and the world of money in a way I never will, but it has long seemed to me that we've been building a house of cards with a faux economy that mostly serves the very few. Blaming the current crash on Covid-19 is like blaming the final straw for the camel's broken back.

[Island Time O25]

I have somewhat more pessimistic view of the future. We individually may have learned or will have learned the lessons when it is all shaken down. But it will take much more than that to translate this individual and veery spotty knowledge into concrete society wide accepted economic changes.

Even the New Deal, which was earthshaking for its time (at least in US, Germany had its own new deal since Bismarck's social reforms of 1870s), as it turns out just put the lipstick on a pig so to speak.

And what's most disconcerning - no one yet, with all the other systems tried or proposed, has found a workable long term solution. May be there is none afterall.

[daletournier]

Originally Posted by Mike OReilly

Thanks for this Dale. Earlier I'd been musing on the negative lessons our societies might learn through this latest crisis; the growing authoritarianism, the demonstration of how tenuous all our apparent freedoms really are. But I like your take here. I definitely agree there are more positive lessons we might collectively learn.

You understand finance and the world of money in a way I never will, but it has long seemed to me that we've been building a house of cards with a faux economy that mostly serves the very few. Blaming the current crash on Covid-19 is like blaming the final straw for the camel's broken back.

The virus is just a pin on steroids, and of course a very convenient scape goat , I've already watched the Australian PM direct blame towards it.

We keep solving debt problems with more debt. My big concern is the bond market, arguably the biggest bubble in history....we do not want this to pop, reset on the way? I dont even know what that really means, my brain just isnt big enough to comprehend the enormity of a financial reset.

The US just announced its 2 trillion dollar package, it reminds me of the Jaws movie "we're going to need a bigger boat", and this things just getting started.

[Mike OReilly]

What's the definition of insanity? Doing the same thing, over and over, and expecting different results. Seems to me the system keeps crashing, and we keep propping it up by borrowing (stealing?) from the future. But even an unsophisticated viewer such as I can see it's a Ponzi scheme that is enriching the few, but screwing all the rest.

Hopefully this crisis will break the log jam that is producing this cyclical 'insane' response. What we need is a new way of ensuring that everyone gets what they need, disconnected from a job. I'm pleased to see the cross-political agreement on what essentially is a guaranteed income. Hopefully we'll remember this lesson as we move beyond Covid-19.

I also think there might be a lesson here for those of us in the rich, protected parts of the world. This might be the first time some of us actually feel -- vulnerable. Yet it is a life reality for most of the global population. Hopefully this will produce a lasting sense of empathy when we move forward beyond this health crisis.

[flyingnut40]

Well Put Sir!!!

[Byrdman]

Originally Posted by Orion Jim

This pause in the industrialized nations economies is the result of the pandemic. Once this threat is stabilized and those afflicted are responding to treatments the economy will return to a generally prosperous level.

Originally Posted by Chotu

This is exactly why.

Everything is paused. When we’re through this, it’ll come back. Economy had decent fundamentals before the virus.

I beg to differ with you two and I hope I am wrong. Here is why and sorry if this has been mentioned before:

Long before the CV reared it's ugly head, the government was having to prop up the repo market with Billions of $$'s to keep things moving. Kind of like grease in a machine. This lack of liquidity was caused by many different things, but one thing I think really hurt it was the fact that large corporations were using what cash they had to purchase their own shares to prop up their stock value and when they didnt have anymore cash like retained earnings, they issued corporate debt (Bonds) and bought more of their own stock. This works up to a point until many corporations are extremely overvalued, broke, and leveraged to the hilt. Then stock price cannot go higher.

Using this money to buy their own stock and issue more debt to buy more stock is kind of like a big ponzie scheme. Everything works great for the few at the top until new money stops coming in, then it starts falling apart. There were indicators in the market that everyone ignored because everyone was too busy making so much money.

So here we sit, the markets are all out of cash, corporations have no money, and everyone is over their head in debt that cannot be sold except maybe to the fed through the primary dealers who buy treasuries, MBS, and now corp bonds to keep enough money in the system. Now the government has stepped in to throw 2 trillion dollars, that they dont have BTW, at the problem.

Bottom line is trickle down economics didnt work again this time, and trillions of dollars have vanished in the market so far because of the stock market crash and this doesnt even cover what will soon happen in the derivatives market.

CV didnt cause this, it just made things happen much sooner and more severe, IMO. We are still a world away from a sound financial market as long as everyone thinks you can borrow your way out of financial problems.

Just my take, take it or leave it...

[rabbi]

Originally Posted by Byrdman

I beg to differ with you two and I hope I am wrong. Here is why and sorry if this has been mentioned before:

Long before the CV reared it's ugly head, the government was having to prop up the repo market with Billions of $$'s to keep things moving. Kind of like grease in a machine. This lack of liquidity was caused by many different things, but one thing I think really hurt it was the fact that large corporations were using what cash they had to purchase their own shares to prop up their stock value and when they didnt have anymore cash like retained earnings, they issued corporate debt (Bonds) and bought more of their own stock. This works up to a point until many corporations are extremely overvalued, broke, and leveraged to the hilt. Then stock price cannot go higher.

Using this money to buy their own stock and issue more debt to buy more stock is kind of like a big ponzie scheme. Everything works great for the few at the top until new money stops coming in, then it starts falling apart. There were indicators in the market that everyone ignored because everyone was too busy making so much money.

So here we sit, the markets are all out of cash, corporations have no money, and everyone is over their head in debt that cannot be sold except maybe to the fed through the primary dealers who buy treasuries, MBS, and now corp bonds to keep enough money in the system. Now the government has stepped in to throw 2 trillion dollars, that they dont have BTW, at the problem.

Bottom line is trickle down economics didnt work again this time, and trillions of dollars have vanished in the market so far because of the stock market crash and this doesnt even cover what will soon happen in the derivatives market.

CV didnt cause this, it just made things happen much sooner and more severe, IMO. We are still a world away from a sound financial market as long as everyone thinks you can borrow your way out of financial problems.

Just my take, take it or leave it...

good old inflation will fix all these problems for you

[Byrdman]

Originally Posted by rabbi

good old inflation will fix all these problems for you

I agree. Actually a little inflation is what we should have had over the past 10 years. The fact we didn't was a sign everything wasnt as great as everyone thought.

If it ends in hyperinflation we are all F-ed...

[rabbi]

Originally Posted by Byrdman

I agree. Actually a little inflation is what we should have had over the past 10 years. The fact we didn't was a sign everything wasnt as great as everyone thought.

If it ends in hyperinflation we are all F-ed...

Not necessarily all will be f-ed longterm.

After a full financial reset countries with a strong industrial production could return.
Countries that rely mostly on super smart ideas around funny money and tax fraud will probably never recover.

[cdy]

To get back a bit to the original question - the boat market - I can only comment on it in Florida - there is always going to be a strong market for used bluewater sailboats in good shape - ready to go - that aren't too old - however that probably represents 5-10% of the sailboats I see - most in marinas don't get used much - need work , many are older designs - these are the ones that are going to be very hard to move unless they are at almost giveaway prices - people with money will want boats ready to go - if the prices get low enough - boats become cheap housing - usually anchored out - people with limited budgets dont have the cash flow to pay for a slip and the costs of upgrading the boat - owners in the past you have just sat on the boat and maybe used it once or twice a month - will no longer want to keep paying monthly slip rental - expect a lot to be donated. Many are going to come out of this virus situation with a lot less money - lost wages, lost investments - they will make it back but it will take 5-10 years - paying $400-$500 month for a slip + insurance and upkeep just makes no sense - sailboats that are not priced well and in good shape - will sit on the market for years until the heirs unload it after the owner kicks the bucket.

[slug]

Originally Posted by Byrdman

I beg to differ with you two and I hope I am wrong. Here is why and sorry if this has been mentioned before:

Long before the CV reared it's ugly head, the government was having to prop up the repo market with Billions of $$'s to keep things moving. Kind of like grease in a machine. This lack of liquidity was caused by many different things, but one thing I think really hurt it was the fact that large corporations were using what cash they had to purchase their own shares to prop up their stock value and when they didnt have anymore cash like retained earnings, they issued corporate debt (Bonds) and bought more of their own stock. This works up to a point until many corporations are extremely overvalued, broke, and leveraged to the hilt. Then stock price cannot go higher.

Using this money to buy their own stock and issue more debt to buy more stock is kind of like a big ponzie scheme. Everything works great for the few at the top until new money stops coming in, then it starts falling apart. There were indicators in the market that everyone ignored because everyone was too busy making so much money.

So here we sit, the markets are all out of cash, corporations have no money, and everyone is over their head in debt that cannot be sold except maybe to the fed through the primary dealers who buy treasuries, MBS, and now corp bonds to keep enough money in the system. Now the government has stepped in to throw 2 trillion dollars, that they dont have BTW, at the problem.

Bottom line is trickle down economics didnt work again this time, and trillions of dollars have vanished in the market so far because of the stock market crash and this doesnt even cover what will soon happen in the derivatives market.

CV didnt cause this, it just made things happen much sooner and more severe, IMO. We are still a world away from a sound financial market as long as everyone thinks you can borrow your way out of financial problems.

Just my take, take it or leave it...

Stock buybacks are used when a company can’t find a productive home for money

Using money to invest in production implies that you see greater demand

The demand is not there... demographics

As a result you return the money to shareholders so that they may use this money

[Byrdman]

Originally Posted by rabbi

Not necessarily all will be f-ed longterm.

After a full financial reset countries with a strong industrial production could return.
Countries that rely mostly on super smart ideas around funny money and tax fraud will probably never recover.

Do you know of such a country? I'm agreeing with you, but think that most if not all of the world's financial markets are intertwined and rely mostly on funny money solutions to their finances.

As a global economy, we are all in this together. What happens here will affect the world, and so will EU's money problems.

There will be lots of pain before any gain, IMO

[daletournier]

Originally Posted by Byrdman

Do you know of such a country? I'm agreeing with you, but think that most if not all of the world's financial markets are intertwined and rely mostly on funny money solutions to their finances.

As a global economy, we are all in this together. What happens here will affect the world, and so will EU's money problems.

There will be lots of pain before any gain, IMO

Your opinion and mine are very similar. I will just add that artificially low interest rates over a long period of time have caused a misallocation of funds, such as stock buybacks.

I think it was Warren Buffett that said " you dont know who's swimming naked until the tide goes out", well the tide is going out and we are about to find out which companies are insolvent.

Historical times, 50 years from now people are going to be reading the books and saying " what were they thinking?"

[rabbi]

Originally Posted by Byrdman

Do you know of such a country? I'm agreeing with you, but think that most if not all of the world's financial markets are intertwined and rely mostly on funny money solutions to their finances.

As a global economy, we are all in this together. What happens here will affect the world, and so will EU's money problems.

There will be lots of pain before any gain, IMO

As long as we keep repairing the existing financial system yes.
Only if this crisis leads to a full reset (that is erase all 0s and 1s and burn all the little printed papers) things would be different.

But I guess smarter people than me will fix the existing system. Likely by printing more money and creating more debt, thus digging a deeper hole.

[daletournier]

Originally Posted by rabbi

As long as we keep repairing the existing financial system yes.
Only if this crisis leads to a full reset (that is erase all 0s and 1s and burn all the little printed papers) things would be different.

But I guess smarter people than me will fix the existing system. Likely by printing more money and creating more debt, thus digging a deeper hole.

How can they fix it again? genuine question.

They really have few tools left, we are already at zero interest rates, I mean really all they can do is print ,print and print, how does this not destroy the currency? Its just started and they have already allocated more funny money in a couple of weeks than they did through the whole 2008 crisis, I assume they'll start buying up the market next BUT is it even a market then? I also assume they'll start nationalizing corporations etc.