Comments on: WILL THE “CULT OF THE EQUITY” INVESTOR DIE?

By: Scott

Scott — Wed, 21 Jul 2010 14:56:33 +0000

I generally agree with your philosophical comments, but I disagree a bit with the statement that bankers produce nothing of real value. I’m not a banker and I generally hold them in low regard. That said, conceptually, their role is to facilitate the flow of capital and resources from those that have them to those that can put them to their highest and best use. In my opinion, that theoretical job description is a critical role thas absolutely needs to be fulfilled for any growth, production, or innovation to take place. We can argue about whether or not there are too many bankers, charge too much, or have put their own short term interests ahead of the longer term objectives (yes, yes, and yes),but their role, in the purest sense, is on the critical path to value creation.

By: Of the People

Of the People — Tue, 20 Jul 2010 23:57:05 +0000

Angry MBA, You have no idea what you are talking about. I’m not going to waste my time by rebutting your blather with facts.

OTP

By: firts

firts — Tue, 20 Jul 2010 22:06:11 +0000

Nina Schizza
Your are corect and if any thing they where much more naïve naive about Government and the Fed. Imagine confiscating gold from the public to day. It would not be so easy would it?

By: Jack Reacher

Jack Reacher — Tue, 20 Jul 2010 21:30:23 +0000

Yes…this article would make things easy, huh? We like easy. Ride it down, endure, then get rich. Wow! If only it were that simple.

By: scharfy

scharfy — Tue, 20 Jul 2010 21:03:28 +0000

“I think the true myth is that there was a magic time when society was harder, better, wiser, etc”

This is so true I want to cry.

Every generation since the early Sumerians told their kids they don’t know how good they have it. The intergenerational improvements in prosperity have become amplified with the increases in real incomes in the US over the last 200 years. Real GDP per capita in the USA increases at about 1.8% annually with very little deviation. So on average someone 60 years your senior (Grandpa), had about 1/3 as much shit as you do. So they are right, we are spoiled. But most likely we will tell people 60 younger than us, how rough we had it. So nothing much changes. Just humans make more shit. And they were just as guilty of being spoiled relative to those 60 years before them, and so on and so on….

http://blogs.cgdev.org/globaldevelopment/2008/09/crisis-not-if-we-take-a-long-v.php

By: words

words — Tue, 20 Jul 2010 21:00:57 +0000

While I’m personally excited to have someone of your remarkable expertise on this site, David, I don’t for a nanosecond believe that public education has contributed to moral decline. I know your heartfelt religious beliefs and your homeschooling beliefs from your excellent blog, but it’s a preposterous distortion of history (like that, Angry MBA?) to argue that there was suddenly an overworked generation of parents and/or suddenly public education, or that public education was suddenly teaching the “wrong” thing. I’m more than happy to discuss/debate this with you offline. BTW, best of luck with your site and work.

By: Gbest

Gbest — Tue, 20 Jul 2010 20:58:02 +0000

Hey David, thanks for the Arc Crawford link

By: Nina Schizza

Nina Schizza — Tue, 20 Jul 2010 20:48:40 +0000

I don’t know if it has been mentioned by now, but surely that greatest generation contributed to the speculative rise of the late 20s. I think the true myth is that there was a magic time when society was harder, better, wiser, etc. Let’s follow the example of that great generation in establishing the Fed and blowing up the gov’t a la Roosevelt.

In a purple prose worthy of the poetic capitalist:
The foul society of this day is no worse than those of old, it only stinks more for being contemporary.

Respect due to our elders, but they’re just like us, only we’re growing up in an age of free and easy criticism of the gov’t. Roosevelt didn’t have to deal with blogger’s opinions.

By: firts

firts — Tue, 20 Jul 2010 19:32:41 +0000

“Greatest generation”
A major difference is that 40 years ago credit was a rational financial instrument and not perceived and abused the way is to day.
In just about 40 years credit became a way of life. We have been bombarded by credit companies, bank advertising easy loans and all kinds of credit cards. It’s cool to have a Gold or Platinum card. Children’s have cards, students are sent cards so they borrow even before they start making money. This is a major change in behavior pattern. Credit as become a way of life almost every where and for every thing in America.
Balancing a budget is hold school.
We don’t even talk about balance budget we talk of deficit to GDP.
Irrational numbers are rationalized by politicians and many economists all day long.
In a way the preceding generation had no choice but to be responsible. It was that or starves.
Credit is not money and its whole purpose is to allow the circulation of goods without money. It’s at every level of consumption whether you buy a car or a computer the sales person will suggest a credit plan or a 12 months interest free deal. Open a investment account and it beacome a marginn account.
In 1980 the total value of global financial assets was equal to the global GDP.
In 1993 global financial assets were worth twice global GDP and
In 2006 it was three and a half times for an astonishing total value of all global financial assets publicly traded shares, bonds, and bank deposits) off $167trillions.

We talk of fixing the economy, perhaps it times to rethink the way we use credit.

By: Nico

Nico — Tue, 20 Jul 2010 19:03:35 +0000

Governments, pushed to the edge, will inflate the problem away through “money illusion” (ref: Animal Spirits, R Shiller). Populations and journalists will see flat to growing nominal prices, GDP growth, everything green, debt reduction, but lose purchasing power. What remains to be seen is how equities will fare under this environment. In the 70s, inflation pushed PE ratios down so my guess is that stocks would tank if that happened. Yet, Buffett said that stocks would do well under inflationary environments – I don’t understand this one besides “cash is sure to depreciate”. Would love to hear others’ opinions on asset allocation under hyper inflation.