And we all welcome Camacho to the real world at least the past 20 years of it maybe more - don't worry it's all on YouTube now.

This is a related question, and maybe somebody can answer it for me. I think there is a good chance of it. Like many, many Americans, I followed the received wisdom and put some of my salary into a 401(K)-like arrangement. Assurances were given that this strategy has proved to be the best for retirement saving. Of course, this investment is now worth less than the simple sum of my contributions to it. My question is whether even this activity of investing in mutual funds is part of the same craziness that Phillips details in the book. Was this way of increasing wealth oversold to us, and is it part and parcel of the CDO, SIV,etc. debacle, even if not recognized as an abuse like those are?

On assumption:

It seems to me that when a person puts money away for retirement in stocks, there should be a momentary raise in the price of the stocks and not necessarily its value. Then, those on the inside would see the stock as over-valued and sell. Those with enough information would seek to put their money in non-over priced stocks - thereby lowering the price back down to market value.

There is more money out there because now there are more investors. The costs of securing an investment in an enterprise goes down because there are more people looking to get rich than there are 'get rich' stocks. It leaves a lot of room to maneuver for those in the know to create gimmicks to suck up all the money people are eager to invest.

Who would want to put money into an over-priced stock that would only get about 5% a year when inflation is actually 5-7%. It's no way to make your money work for you.

I think, right now, with the aging population, declining standards of living, declining stock market value, and the prospect of rapid inflation in 2010, it might be wise to invest in something like old people businesses that don't cost a lot of money. I'm wary of investing in drug companies because of Obama, in the long run at least. If there is a company that is supposed to come out with some kind of medical breakthrough within the next two years that will definitely enhance the quality of life for aging seniors and cost very little (i.e. hospitals don't have to pay millions for equipment) it might really be worth it.

I also think oil is under priced right now. I don't know why, though. I'd invest in oil companies that pay dividends, I think.

Credit card companies should see a huge increase in sales, I would think. Aren't people more likely to use their cards now that it's getting difficult? I want to think that a company like VISA that does not take on debt from consumers - merely provides the card service - would do well. The price for their stock has fallen a lot.

There has to be a way of making money out of all this cr*p.

If inflation is set to rise in 2010 - where to invest? In other currencies? I don't really know - and unfortunately like most people I don't have the money to invest (gamble) anyway. Looks like my mattress is going to get a little bit more cushion.

Dwill wrote:

It's too bad, then, that Canada and most of the world is sucked into the vortex of our financial flushing.

Thanks Dwill, I was wondering if somebody would mention this in the discussion.
The people who wanted to make these bad deals in the US and get rich quickly purposefully sold those products all over the planet so as to spread the risks, and , er... we're not too happy. Of course, if our own bankers had been more careful and less greedy they might have found out.
From what I hear it was very cleverly done, the bad products systematically spread among good ones, so that some European banks still haven't found out how many of those products they bought from the US and in how big a mess they are.

And I'm sorry about what happened to your retirement saving plan!
I'm like Camacho, I don't have enough money to invest so I'm not concerned personally.

grim

I suppose it would depend on who's ideologies you wanted to compare.

This is true to a point but I think the larger question is whether or not ideologically bound thinking serves us well when we are facing rot in our economic system of the nature that Phillips is describing.

Ideology has self-generating capactiy, it creates itself, inculcates us from an early age through the institutions that we created (ideologically of course) and then makes us its emissaries. Witness our efforts for example to 'export' free market capitalism, democracy and Christianity (I know that last one is controversial but I think it is true) .. these are some of the hallmarks of our western ideology and we want everyone and every country to adopt these ways. If we get worldwide buy-in, we win, or so our ideology teaches us.

But when we see adverse consequences of certain ideological beliefs, how do we react? Do we stand back and really examine the ideology itself or do we merely play about with superficial change? Is it even possible to stand outside of one's own ideology?

Ophelia wrote: The people who wanted to make these bad deals in the US and get rich quickly purposefully sold those products all over the planet so as to spread the risks, and , er... we're not too happy. Of course, if our own bankers had been more careful and less greedy they might have found out.
And I'm sorry about what happened to your retirement saving plan!
I'm like Camacho, I don't have enough money to invest so I'm not concerned personally.

Thanks, Ophelia, for your condolences. So I work until I'm 75, so what, right? Something in me even rebels at calling these things "products." I suppose in some ways, finance is looked upon very favorably by economic movers and shakers--the ultimate "green" industry with high wages to boot. In this country we seem to have dropped manufacturing like a bad habit, and I must admit I have never been nostalgic about it until recently. Kevin Phillips says that this speculative frenzy is a hallmark of the English speaking countries. Can you make anything out of that? Does speaking English cause financial hooliganism?

Does anyone see this as a big conspiracy to devalue the American dollar?

Dwill wrote:

Kevin Phillips says that this speculative frenzy is a hallmark of the English speaking countries. Can you make anything out of that? Does speaking English cause financial hooliganism?

I hadn't thought of that!:shock:
I think what matters is how much regulation of capitalism there is in a given country. If capitalists are left to their own devices their greed is bound to get the upper hand.

Camacho wrote:

Does anyone see this as a big conspiracy to devalue the American dollar?

I don't know about a conspiracy, but it seems that everybody who is in economics and government is thinking about a devaluation of the dollar.
There are two scenarios: a small devaluation and a really big one, say 30 or 40 %. Experts are saying it will be very difficult for Obama not to use devaluation, or in other words it will be tempting to use it to boost exports. In that case, the griping little European here says that the US, after exporting their subprimes to us, will be shifting the economic problems to us too by making the Euro uncompetitive. (Don't worry though, I still love you guys at Booktalk).
In theory everybody could retaliate and devalue too but this doesn't seem to be considered in the Euro zone.
It will be interesting to see what Obama does. Also it will be interesting to see how the Chinese will react. They're the ones who've been buying American debt, they don't want a weak dollar that would lower the value of what they've bought, and it would make sense that the US try not to to upset such a valuable customer. I've heard they have already started to diversify their investments in case the dollar is devalued.

This is true to a point but I think the larger question is whether or not ideologically bound thinking serves us well when we are facing rot in our economic system of the nature that Phillips is describing.

I don't see how we can separate anything except perhaps some particular philosophies of science away from the idea-ideology-life relationship. I don't feel that you have described satisfactorily to what point comparing ideologies is useful to. A non-ideology bound thinking is still an ideology. The best I can summarize is that you feel there should be no direction or limits to the system. You seem to me to say that to fundamentally fix the financial sector we would remove all objectives or goals, and not define the limits on its functions. Thereby fully separating the function from the ideology. I understand that these are the two most important ideas that you can ever give to any system.

Phillips decrys the supposed naturalness of the sector asserting that there are few meaningful facets of it which can be explained rationally.

"...one can read through almost every principals of economics text, or even money and banking texts, without learning that private debts are several times larger than public debts and growing in a wholly unsustainable fashion." I couldn't find a much better quote but this seems to show some type of confusion in ideology. Teaching one set of ideas while another is the reality of the situation. Perhaps what you are suggesting? A revision in the very culture of human development to meaningfully affect every aspect of a persons life, their wants, desires, morals, ethics and thoughts. Perhaps not?

What ideology do you see Americans having adopted? I'm having trouble separating Western life from a very personal and yet macro-national process of constant imagining.

P.S. - this is definitely a Chapter 3 topic, also you may be interested in the slave/master relationship brought up there, there are definitely some big ideas to that.

I think part of the lesson we need to learn is how to reign in the financial sector and continue creating jobs in manufacturing, specifically technology. Financial gains aren't real in the classic sense, they are profits made by moving money around. We must have the wisdom to continue growing our base production.