All this
On a day when US exposure so far looks like being $23.7 trillion dollars, not the .7 trillion they've fessed up to previously. Oh and our debt, at $799 billion, is a record. Your timing, like your spelling, is impeccable. But before you criticise one of the most eloquent writers I know for not writing well,

How do you spell précis again? Have you ever seen it written down before, or was that just your best phonetic guess?

Apropros of that, how much credence should I give you and anything you subsequently write?

Yeah I agree I'm stretching a point for dramatic affect, but meh, it's not that tenuous. Capitalism requires fresh blood and new debtors to survive, that much is true.

So..let's see, writer's credentials: Stoneleigh is both a biologist and a lawyer, Ilargi is a finance industry insider. Doesn't guarantee anything but it's a start eh.

Predictions:

They accurately predicted the oil price collapse last September when el Gordo was going cap in hand to the Saudis *in August* begging for them to pump more, implying he didn't expect a decrease in oil prices any time soon, neither did his economic advisors. They also went against the consensus of "the oil drum."

Not bad so far.

In March this year, they predicted a sucker rally, this is what we're currently seeing. When stocks go up on the day that we report the worst debt in history, you know somebody's divorced from reality.

Depressions of this magnitude take years to play out, this one is just getting started. I don't need to convince you, infact, if you carry on as per, that would be great, stops a log jam at the exit.

Oh, and why stop at 'boring', why not add 'and smells of wee'?

P.S. Only 193 people seem to share your misconception that millenarial is a word.

'badly written' eh?

Give me strength.
(Countryslicker, Tue 21 Jul 2009, 16:25, 1 reply)

Oops that's embarassing
Brain death there. Can't believe how stupid "prasee" looks now especially as I know perfectly well how to spell précis. Also, millenarian, not millenarial.

Your rebuttal - as equally confused as the article - appears to be an ad hominem attack based on my mis-spelling of two words. There is more in there, something about oil price "collapse" which as far as I can see hasn't happened; just a correction from an unsustainable peak. I also don't see what the sucker rally proves in relation your biologist's theory; it's actually a contra-indication if you think about it, since plenty of people are getting quite rich off it.

Once again. There. Is. No. Pyramid. The 'ragged bottom' of your imaginary pyramid is emphatically *not* made up of borrowers, it is made up of producers of goods and services.

Finally, as I have never met either of the writers, I couldn't possibly tell you whether they "smell of wee" or not. That is why I stopped at "boring".
( Scrumper, Wed 22 Jul 2009, 13:32, closed)

let's take a step back eh
Tbh I find this medium rather clumsy as a way of conducting myself, I'm not usually this fragmented.
[I also wrote the original in haste and would have framed that better too, not my best]

OK, re oil prices. Many peak oilers were convinced that the $145+bbl was because we'd hit peak oil, and this was because of below ground factors.

Ilargi and Stoneleigh predicted that oil would drop in price when everyone else on the oil drum thought it could only go higher.

They put a temporary bottom under the fall oct 07 - march 09 - and predict a sucker rally from March till this Autumn. Yeah people get rich in sucker rallies, the first ones in and the first out.

I don't understand why you don't see that CDoing a subprime, and then CDO2ing that and then leveraging that 'asset' at anywhere between 25 and 80:1 is not the ragged bottom of the debt pyramid. It's effectively counterfeiting money. The 'asset' is not pegged to good quality reliable payers, we've run out of those.

Perhaps we're talking about different pyramids?

Do you disagree with this? www.chrismartenson.com/crashcourse/chapter-8-fed-money-creation

"All of which leads us to the fourth Key Concept, which is that perpetual expansion is a requirement of modern banking.
In fact we can make a rule: Each year, new credit (loans) must be made that at least equal the amount of all the outstanding interest payments that year. Without a continuous expansion of the money supply, past debts would not be able to be serviced, and defaults would ripple through, and possibly destroy, the entire system.
Defaults are the Achilles heel of a debt-based money system, which we saw in our local banking example in the previous chapter. Because of this, all the institutional and political forces in our society are geared towards avoiding this outcome."

.. and we've also got the small matter of $1.5 quadrillion in derivatives to contend with - where's that cash going to come from? Oh. Yeah, I know about the 'ostensibly a zero sum game' bit. But it isn't really, is it?

Oh. P.S. Are you Mr G. Gecko? ;)
(Countryslicker, Wed 22 Jul 2009, 15:55, closed)

Yes it's not an ideal medium for debate. Better for dick jokes and flaming.
Can't argue that much of the financial engineering that went on was massively misguided and very dangerous. Your CDO squared example is particularly egregious. But the issue wasn't the concept itself, but the huge mis-rating that went on. There's no harm in leveraging an asset up to a multiple consistent with its quality; the problems began when those estimations of quality were hugely overstated, leading to more risk than was expected.

We/they have cocked up in truly epic fashion. I suppose the difference in our opinions is that you think it's terminal, and I don't.

I'd comment more but I'm far too busy asset-stripping a family-run airline ;)

All the best!
( Scrumper, Thu 23 Jul 2009, 12:31, closed)

yep
We shall see eh.

Hope for the best, but prepare for the worst, at the very least, get out of debt. Oh, and keep some *real* cash under the bed.

cheers.
(Countryslicker, Thu 23 Jul 2009, 15:35, closed)