£3 trillion wiped from shares... or was there..

Discussion in 'The Front Room' started by ilaya, Aug 5, 2011.

  1. ilaya

    ilaya Can't get enough of FH

    so as thread says.. thats what news reporting after today.
    so where has that money gone? the way the news is reporting it.. its like world has lost £3 trillion. but its not the case.

    suppose you bought a painting for 100 quid.. then later had it valued and its worth 80 quid. have you lost 20 quid? no.. you have the painting... you SPENT 100 quid on it.. that money is still in the system somewhere.

    the 20 quid "missing" is only because of others perception of the painting and what its worth.

    and its the same with stocks and shares.. its only perception. people still own the shares.. but difference is.. they not as good to look at as the painting.

    this is how we in this mess in first place. people are buying items.. thinking they have real monetary worth and treat them like currency when in fact they are not.

    the 3 trillion didnt go anywhere... it never existed in the first place
  2. Gwadien

    Gwadien Uneducated Northern Cretin

    Ano, it's amazing to think that we're fucked over a couple of pixels, at the best.
  3. Shagrat

    Shagrat I am a FH squatter

    im always getting fucked by pixels, or is it the other way round?
  4. Tom

    Tom FH is my second home

    I can assure you that if the value of my pension fund halved, I would be incredibly pissed off.
  5. Helme

    Helme Part of the furniture

    To further add to the fun, the US is getting its creditrating downgraded by S&P. Granted, it's not like it'll change anything meaningful because really, who still listens to these jokers apart from the Banks paying them?

    Also, it seems Bank of America is on its deathbed, and will probably go under fairly soon due to a fuckload of shitty loans, and dumb purchases.

    Funtimes, funtimeeees.
  6. Turamber

    Turamber FH is my second home

    What Tom said.
  7. ilaya

    ilaya Can't get enough of FH

    but isnt this the crux of the matter tho. you pay real money into it expect real money out. but its not SPENDING money.. its investing, and its all a matter of other people perceptions as to just how much that investment is worth. ( i know you dont do that, but the people running the pension fund do that)

    Its never on the news that oh shares went up £3 trillion... its only when it goes down.. and there's a knock on effect as people panic.

    there's only a finite amount of cash in the system.. so where the hell is it?
  8. Gwadien

    Gwadien Uneducated Northern Cretin

    Yep, I second that, Tom did say that

  9. Helme

    Helme Part of the furniture

    Most of it is no joke stuffed away in taxhavens by corporations or private persons. This is why we're still not coming out of the recession, money isn't circulating. It gets to the top and then it stays there. We need some serious wealth redistribution to get it all going again(note that I'm not advocating shooting the fuckers and looting, that's plan B) by raising taxes - especially in the US where they've now settled on a 27% tax-rate for the top earners, and are calling it a sacrifice.
  10. Job

    Job The Carl Pilkington of Freddyshouse

    Well isn't everything worth what someone will give you for it, nothing has intrinsic 'worth', not money, gold ,diamonds .
  11. ilaya

    ilaya Can't get enough of FH

    people aint SPENDING.. they investing.. different things. spending is for consumables... but those that have the cash aint SPENDING money, they investing and taking more cash out of the finite system, leaving less and less for people to SPEND...

    oh and USA just lost AAA rating btw.. oh this is gonna be fun.
  12. Zenith.UK

    Zenith.UK Part of the furniture

    Quite. Gold in itself has certain properties that make it useful. It's a great electrical conductor, a fantastic thermal reflector, incredibly ductile and malleable and resists corrosion. However, if the stock markets decided to ditch it as a standard and switch to another material, gold would drop to a realistic price that reflects it's industrial utility and nothing more.

    If the knock-on effect of all this economic stirring is my house price going down, then I'll just have to plough money into making it exactly the way I want it for the next few years.
  13. Helme

    Helme Part of the furniture

    It's not going to change anything at all, it's just an unregulated private enterprise deciding that the government isn't implementing enough austerity to please the banks that pay it. I mean, this is the same agency that put an AAA on every single shitty mortgage package back in 07 - they clearly have no fucking clue what they're doing and that some people are listening to them is just absurd.

    Something that is depressing however is that Republicans are beginning to fight the 50% defense cuts that were in the debt deal, and looking at the Democrats and Obama's current history of being a piece of shit corporatist they'll most likely get away with it and Medicare/SS will be gutted further, while the bloated military will be fine.
  14. Chilly

    Chilly Balls of steel

    Who cares what the us spend their money on?
  15. MYstIC G

    MYstIC G Official Licensed Lump of Coal™ Distributor Staff member Moderator FH Subscriber

    You don't need wealth re-distribution, you need people to stop thinking it is ok to live on debt. Things will then distribute themselves. Anything that insinuates that a specific group are totally responsible is bogus.

    I think the US having their credit rating notched down is the best thing to happen in ages, time for the system to correct itself and their "we increased the debt ceiling to avoid a default" was bullshit. That's like paying off a credit card with cash you take out on another credit card.
  16. Helme

    Helme Part of the furniture

    If you remove Social Security and Medicare in favour of military contractors you'll eventually have a riot on your hands, and whatever the outcome of that is - it'll affect the entire world.

    Also, you know, it's kind of terrible that people are going to die because they can't get healthcare so the government can continue buying bombs to throw at brown people.

    edit: No, you most definitely need a wealth redistribution because money simply put isn't circulating any more, wages have remained stagnant while productivity have gone up, and nobody is hiring. Taxing the top earners would be the logical way to achieve this, but in the US that's extremely unrealistic at this point.

    As for the actual debt ceiling - it's totally bullshit from the start, no other country even has one. Debt for a government isn't actually that big of a problem, in fact it's preferable because if the government is actually saving money every year - that money comes straight out of your pockets and you'll have the same problem with wealth getting concentrated and not circulating.
  17. Chilly

    Chilly Balls of steel

    A small surplus or defecit is fine, as long as its all evened out.
  18. MYstIC G

    MYstIC G Official Licensed Lump of Coal™ Distributor Staff member Moderator FH Subscriber

    Helme you've harpooned your own argument mate.

    I'd rather have a government with funds in it's coffers that could build a new hospital when it's needed from said funds than have a government which has fuck all in its coffers and has to borrow to build a new hospital because that costs more (interest) and THAT money comes straight out of my pockets.
  19. Jupitus

    Jupitus Old and short, no wonder I'm grumpy! Staff member Moderator FH Subscriber

    It's getting pretty serious out there now. We have the possibility of a break up of the Euro, the 3rd largest economy of which seems increasingly likely to default, with Spain running close behind, and the US credit rating taking an unprecedented turn for the worse.

    BTW, S&P may not be regulated, but I know for a fact the levels of scrutiny every decision they make gets. S&P and Moodys are in competition and both need to be able to back up their statements to the markets wordwide.

    Much as many don't like it, the austerity package the libcons put in place is now looking to be serving the purpose and insulating the UK economy from some of these problems, but frankly any country right now even close to trouble will only see it get worse.

    If the US unemployment figures yesterday hadn't offered a glimmer of hope god only knows where the markets may have taken this yesterday. As it is, we had a rough old ride.

    From where I sit I can tell you this - the volumes of market data and trade activity yesterday were an all time high. We were processing a stream of 250mbps for the markets we cover. That's not transferring a file as fast as you can and downloading it in under 5 seconds, it's a stream of market data updates in real time, and equates to something of the order of 8 million trade or price updates per second.

    No wonder I had a busy day :(
  20. Helme

    Helme Part of the furniture

    The US employment figures are bullshit sadly, because they don't include the layoffs that happened during the same period so the net gain ended up around 45k not the 117k claimed. That's not telling the whole truth though, around 200 thousand people disappeared from the statistics because they've given up on ever finding a job. There were a lot of last minute edits to make the numbers look better to avoid further chaos on the stock market.

    As for 'building a hospital' and such with savings, you borrow on future growth. Taking a loan at the attractive interest rates governments can get makes total sense when you take growth into consideration. A government hoarding money is going to keep that money from private corporations, and the taxpayers. The real problem is responsible borrowing, and especially in the US case extreme irresponsibility when it comes to actually spending money on things that produces growth, coupled with a failure to control growing costs in certain sectors(like healthcare).
  21. Chilly

    Chilly Balls of steel

    I have no problem with a government borrowing 100bn to build a load of roads or railways or whatever, but when they borrow to spend on opex (wages for civil servants, nhs, etc) then it's obviously bad news. Borrowing to fund specific one off projects is a good idea because it's cheaper than not spending that money elsewhere in the economy and paying out of general taxation.
  22. Rubric

    Rubric Part of the furniture

    It's all shit beyond me, who are the governments borrowing from?
  23. Chilly

    Chilly Balls of steel

    You and me, basically. We put our money in the bank, the bank buys gilts (government bonds). The government get £100k a bond (or whatever) and pay back £110 over 10 years. Your bank then gives you a slice of this in interest and keeps the rest as profit. Perfectly reasonable system. Where it can go wrong is when banks start using our money to do all sorts of fucking demented things like give some scrote a 200k mortgage on a burger flipping job.
  24. Raven

    Raven Brrrrr!

    Or buying bonds in countries that are quite clearly fucked (Greece)
  25. Helme

    Helme Part of the furniture

    By first offering to help those countries cheat on their numbers to get into the EU.
  26. MYstIC G

    MYstIC G Official Licensed Lump of Coal™ Distributor Staff member Moderator FH Subscriber

    Perpetual growth is an illusion. Borrowing is not and never will be the solution especially when the lenders have all the intelligence and scruples of retarded donkeys (as in Chillys example).
  27. Helme

    Helme Part of the furniture

    Yeah, I know there is no such thing as constant growth. It's the biggest flaw in capitalism, but working within the current framework it makes total sense to borrow so much so that it'd be stupid not to. Now, to reduce the risk you would need regulation on the lenders but... yeah. That doesn't exist.
  28. ford prefect

    ford prefect Can't get enough of FH

    Actually it does change things. The downgraded rating means the US will now pay out more in interest on debt and those who own that debt (largely China I believe) will not receive as much in return. Added to the economic issues already in play in the US, we are probably looking at slight debt interest increase across the board and in the US specifically, potentially tens of thousands of public and near public sector jobs being lost.
  29. Turamber

    Turamber FH is my second home

    Which is how the problem was created originally. That and because of a relaxation of rules surrounding solvency and the audit thereof. Now banks are required to have much greater solvency, and transparency of that solvency, which reduces further the amount of money there is to go around.
  30. Zenith.UK

    Zenith.UK Part of the furniture

    ^ THIS!

    Al Bartlett has presented a series of lectures for years about arithmetic, population and growth. The highlight for me is when he talks about "11:59" in the third video on this page.
    Video parts 1 through 4 of Arithmetic, Population and Energy - a talk by Al Bartlett on the impossibility of exponential growth on a finite planet

    Population, food, oil, water, money... all follow this idea of "growth" which is put forward as a good thing. It is impossible for things to continue growing indefinitely and there will come a time when it stops growing.

    Maybe we're seeing the beginnings of the impending slowdown in the world's economies.

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