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Post by j3aN62 on Jun 18, 2007 8:20:46 GMT -5
Why is debt continuing to spiral despite low unemployment and continuous economic growth? I made myself this comment a long time ago. Salaries for engineering work in IT for example have not raised for 20 years. But on the other hand the price for buying or renting a place has doubled or tripled. Some people just get all the money.
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Post by jewbird on Jun 20, 2007 14:12:52 GMT -5
Jean, maybe you need to go into real estate.
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Post by 0 on Jun 20, 2007 21:16:11 GMT -5
^ You don't see rent as providing a service which should be compensated?
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Post by j3aN62 on Jun 21, 2007 10:02:58 GMT -5
Jean, maybe you need to go into real estate. I got interested in ecological construction. Cool, manual jobs. Clay, lime, etc. ^ I'm tending to think usury and rent should be outlawed. It occured to me that it goes together. High real estate prices, it's perfect for more loan activity of the banks.
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Post by jewbird on Jun 21, 2007 17:11:37 GMT -5
As long as there's the land to develop...
Actually, banks make loans when prices are reasonable. High real estate prices mean financial institutions make loans people can't afford. And what I find hilarious is that institutions like Bear Sterns and Merill Lynch who should theoretically know better are left holding the bag.
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Post by j3aN62 on Jun 22, 2007 6:34:21 GMT -5
My understanding of fractional reserve banking is that since most loans consist of conjured money made from thin-air, You have understood as far as I have myself. One can only wonder the level of profit involved. It's like 50% annual yield or benefit for the banks. Most profitable business in town. And then they charge you for your bank account, the credit card, any payment default, etc. Jean, maybe you need to go into real estate. I'm afraid this is very much an ethnic business, just like job in banks. This is far from being a niche for EAs. I have seen very little real estate business Asian or EA owned in France. Even in real estate agencies, this is too profitable for letting in the Asians.
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Post by miaim on Jun 29, 2007 11:16:28 GMT -5
My understanding of fractional reserve banking is that since most loans consist of conjured money made from thin-air, banks never lose any real money even if a person defaults. In the case of foreclosure, a bank will still profit from the conversion of conjured debt money (the loan) to debt-free money (proceeds from foreclosure). Under fractional reserve banking, it's win-win for the banks, which is why our markets are awash with money. Someone correct me if I'm wrong, as I would really like to know. you're not entirely wrong, but: 1. the bank's money exists on paper - it's called a balance sheet....so, there is a certain tipping point when banks won't be able to hide that they have lent more money than they get back by foreclosing....which is what drove the japanese banks to the edge of collective collapse in the early 1990s.... 2. one of the principal reasons the markets are awash with money (or more precisely cheap money) is because of low interest rates - hence the borrowing frenzy.... so, a collapse in the property and stock markets may well leave the banks in very deep s***....as what you're calling "debt free money" from foreclosures is worth less than the money the bank loaned....or put even more simply, the collateral (asset) is worth less than the loan (liability)....we'll see: bank balance sheets are so opaque there is no way of knowing until s*** hits the fan (asset prices collapse but the value of liabilities remain constant)..... no need to worry tho - the government will no doubt bail the banks out with our tax money....they always do..... peace
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Post by EA Observer on Jun 29, 2007 11:24:14 GMT -5
You know, I never figured it out - and I'm sure it's as complicated as quantum physics - but, just how do they go about putting monetary values on things? I know that a bar of gold is monetarily worth hellavu lot more than a a sack of rice, but you can't eat gold when you're are starving. They say it's all about demand and supply, but still, I think that's a too simplistic explanation.
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Post by 0 on Jun 29, 2007 11:34:12 GMT -5
My understanding of fractional reserve banking is... you're not entirely wrong, but: LOL - if that wasn't a left-handed compliment I don't know what is.
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Post by rob on Jun 29, 2007 12:53:20 GMT -5
Any financial experts willing to make a comment? (rob?) Thanks for asking. I actually work in this field and have developed a number of proprietary models that explain the relationship between interest rates, bank reserve ratios and household debt. The chart below summarizes that relationship quite clearly (R-squared of 0.92) and has a strong predictive capability. Just let me know if you have any questions and happy to answer them
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Post by jewbird on Jun 29, 2007 19:55:07 GMT -5
Any financial experts willing to make a comment? (rob?) Thanks for asking. I actually work in this field and have developed a number of proprietary models that explain the relationship between interest rates, bank reserve ratios and household debt. The chart below summarizes that relationship quite clearly (R-squared of 0.92) and has a strong predictive capability. Just let me know if you have any questions and happy to answer them I can't help but notice that the mean $$$ remains more or less constant for the period from 1980-1992, while debt increases sharply from 1998-1992, followed by vertical drop in $$$ from 93-94, as well as in the year 2000. Meanwhile, although debt drops even more sharply from 1997-2000, overall, $$$ are down sharply while debt is slightly increased. I suppose my question is: what are the underlying fundamentals driving the data?
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Post by rob on Jun 30, 2007 5:30:40 GMT -5
I suppose my question is: what are the underlying fundamentals driving the data? As with all things in this world, two variables only: Chuck Norris no. Floyd, what are you talking about? Haven't you been told enough times that Islam is the religion of peace? I even had a post removed by Zoff when I disagreed with that 'fact'. LoLzZz!![/size]
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Post by jewbird on Jun 30, 2007 13:28:16 GMT -5
I suppose my question is: what are the underlying fundamentals driving the data? As with all things in this world, two variables only: Chuck Norris And roast chicken.
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Post by rob on Jun 30, 2007 13:42:42 GMT -5
^ No, that's an apple strudel (oops sorry, "apfelstrudel" : ... It didn't factor into the study at all.... at least not until a peer review by the University of Heidelberg..... bloody Germans.
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Post by rob on Jun 30, 2007 13:49:58 GMT -5
Ajeno - 45Hz!
edit: you should ask that question to mr. EMF himself (you're so unbelievable!!) .... Jean62!
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