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To summarize, Wall Street's saying "They couldn't possibly be that stupid." and Congress is saying "Just try us."?
by biff 13y ago
To summarize, Wall Street's saying "They couldn't possibly be that stupid." and Congress is saying "Just try us."?
- JumpCrisscross 13y ago"There are decades when nothing happens and there are weeks when decades happen" -Vladimir Lenin Crises come quickly because nobody likes to dump until they absolutely have to. That is, when everyone else is dumping. Markets thus exhibit self-organising criticality. Endogeneity doesn't help, either. Wall Street doesn't react because it assumes Congress isn't insane. Congress doesn't believe it's insane because "the Dow is down barely a point from a month ago!"
- apaprocki 13y agoI just hope all the millions and millions of lines of source code out there at banks have no problem with defaulting T-bills. What should we call it.. Y2K => GOVT2DUMB?
- 30thElement 13y agoI hope everyone learned their lesson after all the panic over Italy/Greece/whoever defaulting and when senior MBS bonds took losses way back in 2009 and the code can handle defaults. I think the bigger risk would be from the portfolio rebalancing that would need to be done as what was assumed to be a 0 risk T-note is no longer 0 risk. That's of course ignoring the sudden "oh shit" heard all the way in southern Jersey when the notes don't actually pay out.
- LekkoscPiwa 13y agoThere have been tons and tons of serious investors claiming T-bills are the most risky assets class since at least 2005: Marc Faber, Jim Rogers, Kyle Bass, Peter Schiff, list goes on and on. Hoarding gold since 2005 and tell you one thing - just can't wait.
- douglasisshiny 13y agoU.S. debt will still be among the safest assets (as opposed to the safest, which it still could be). Edit: I don't think that defaulting on or debt wouldn't lead to catastrophic consequences. Nor am I an economist.
- maratd 13y ago> Hoarding gold since 2005 and tell you one thing - just can't wait. I don't want to burst your bubble, but if things go tits up, it will affect the demand of useless shiny metals and as a consequence, their value. If I were you, I would hoard toilet paper. Historically, for some reason, when the shit hits the fan, there is never enough toilet paper around to wipe up the mess.
- dllthomas 13y agoGold has lots of uses. Of course, most of them are dependant on industrial (and hence financial) infrastructure...
- LekkoscPiwa 13y agoGold Price is currently at its mining cost. The asset you can buy at its production cost is a bubble? Where are you talking your investment advise from? CNBC? US Treasuries at the most expensive price point for the past 300 years. That's for you, if you're looking for bubbles.
- ZachPruckowski 13y agoGold's mining cost is directly correlated with its sale price - different precious metal or gem mines have different extraction costs. So the "mining cost" of an ounce of gold varies with which mines are open, which varies with how much the gold sells for.
- LekkoscPiwa 13y agomining cost = labor + energy If: labor + energy to extract gold > gold price we have a bubble? ;-) LOL
- steveplace 13y agoThe term for this is heteroskedasticity, which I've never spelled right. Essentially, volatile events are not evenly spaced-- volatility tends to cluster around events.
- deleted 13y ago[deleted]
- JumpCrisscross 13y agoEndogeneity refers to the causality loop. The markets are judging the probability of the U.S. defaulting. The market's judgement, in turn, affects the probability of the U.S. defaulting. This will tend to produce a system exhibiting self-organised criticality. The probability of the critical point being tripped could be heteroscedastically distributed. But that's not the same thing as saying the market judgement is endogenous to its prediction.