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Ch. 1: Introduction: The Panic of August

Posted: Mon Dec 22, 2008 12:39 am
by Chris OConnor
Ch. 1: Introduction: The Panic of August

Please use this thread for discussing Ch. 1: Introduction: The Panic of August.

Posted: Thu Jan 01, 2009 8:41 pm
by LanDroid
I'm embarrassed to admit that after this latest economic meltdown, I don't really remember much about a panic in August of 2007. Probably because real estate in my modest community wasn't part of the bubble, so it wasn't affected as much when it popped? I'm sure others are much more acutely aware of it... :wall:

Some interesting points mentioned:
- The existence of the semi-secret President's Working Group on Financial Markets, may have to look into that...
- How agricultural harvests used to affect credit markets and even military activities...
- Public and private debt quadrupled under Alan Greenspan.

Posted: Sat Jan 03, 2009 7:52 pm
by Grim
Yes, well I don't acutally remember the particular crisis you are really talking about either *cough*. I actually do remember photocopying a Maclean's article around that time that was questioning the likelyhood of a future recession, the implications for Canada seemed minimal, I think the article was titled "Is Recession Ahead," or something like that, definatly non-alarmist. Maybe I can pull it up on archive somewhere.

http://articles.latimes.com/2007/aug/business

http://www.americanprogress.org/issues/ ... pshot.html

I can't find the exact article I was looking for but these two are helpful.

"Many insiders, of course, had sensed for months, even years, what was coming."

This kind of goes into what Phillips says that "if markets are not always rational, the same is true of their willingness to anticipate bad news."

The August 2007 certainty was quickly forgotten yet the question must be asked. If the insiders were so well aware, why were the people not warned? Or is it that America had more to gain from a runaway economy than the experts could have predicted would be the cost of a failure. Phillips goes on to say that "investors heard talk of the possible deleveraging of the global credit bubble - the privately feared "great unwind."

"Unfortunately, vague memories of past financial bubbles almost never suffice to inoculate a people or a nation against repeating an earlier generation's mistakes."

:book:

Posted: Tue Jan 06, 2009 5:48 am
by LanDroid
The panic Kevin Phillips is writing about was in August of 2007, nearly 18 months ago. This book came out in April 2008, nearly 6 months prior to the latest round of investment bank failures, bailouts, etc....

Oh well, bad start I guess - perhaps someone else should reboot this thread. :whistle:

Posted: Tue Jan 06, 2009 2:45 pm
by giselle
I don't know about a reboot for this thread but how about a really lame opening line like,

hey do you remember the Supertramp album from the seventies ... it was called "Crisis? What Crisis?"

sorry, couldn't resist. :bananadance:

Posted: Tue Jan 06, 2009 4:25 pm
by President Camacho
That was awesome.


My copy has just arrived so I'll be cracking it open sometime in the next couple of days after I've finished my other non-fiction, How Not to Begin a Thread.

Posted: Tue Jan 06, 2009 5:45 pm
by giselle
I haven't cracked my copy open yet either - I'm waiting for the stock market to recover.

Posted: Wed Jan 07, 2009 3:47 pm
by realiz
Mine is cracked and I'm half-way through this first chapter and I have to admit I'm a little lost. I don't have enough understanding about hedging, the stock market, subprime mortgages, national debt, world-wide oil pricing, just to name a few, to really understand what is being said here.

What I do understand in life is that any debt a person or country takes on, they must have the means to pay off. This simple concept seems to have no meaning in today's world. This has been on my mind for the past few years as my kids have joined the adult world and come to me with questions about credit cards and student loans after talking with friends. There seems to be such a lack of understanding out there with this generation that debt actually has to be paid off.

Also, if you get a mortgage with a lowered initial interest rate...eventually you have to pay more, and you have to be able to afford to pay more. Tomorrow does come.

I am also finding with this book that the metaphorical language the author uses is getting in my way because I'm really not positive what is literal and what is not. Hopefully through this discusssion with all those more intelligent than me, I'll learn.

Posted: Wed Jan 07, 2009 7:31 pm
by LanDroid
Grim said Yes, well I don't acutally remember the particular crisis you are really talking about either *cough*.
*cough**cough* indeed....Heh, I see how you are, revising history... :cylon:

It does anger me to read that quite a few people were expecting this latest meltdown, but that didn't filter down to the general public. Oh well, I prolly wouldn't have listened anyway, most experts say you shouldn't try to "time the market". Although I am reconsidering whether to ride out the next storm as I have this one. :crutch:

Posted: Thu Jan 08, 2009 2:55 pm
by realiz
LanDroid
It does anger me to read that quite a few people were expecting this latest meltdown, but that didn't filter down to the general public.
The general public is more interested in today and themselves and individually do not really know how to make a difference. If all my neighbours are investing their retirement saving in Mutual Funds and my banker says it is a good solid idea, why would I believe some doom-sayer? If everyone I know is mortaging their houses to the max to buy that new boat, new car, new clothes why should I worry? Housing prices will always rise, right? We can all keep buying these mutual funds, where they invest in the financial sector, which in turn lends us more money, so we can in turn buy more expensive houses and more mutual funds. Can't this last forever?

I used to wish in Canada that we could apply our mortgage payments to reduce our taxable income, but now I can see that this has backfired by encouraging the American taxpayer to carry as large a mortgage as possible.