House Republicans gut Dodd-Frank; nobody notices.

Trebuchet said:
At least not here.
http://money.cnn.com/2017/06/08/news/economy/house-dodd-frank-repeal/index.html
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At least it was just in the House that passed the bill... the Senate also has to pass the bill, which (according to the article) will be a little more challenging, since they need to get at least some Democratic support.

Frankly, so many of the republican claims here made no sense. They claim Dodd-Frank was "enshrining too-big-to-fail, but how? To me it did the opposite... it had provisions that would simplify the situation if/when large institutions fail. They also claimed that removing Dodd-Frank "returns to basic principles of safety and soundness".... how does removing regulations make things SAFER?

I guess the major question is: How many orgasms did Trump have when he heard that the changes would: give the president the power to fire the heads of the Consumer Financial Protection Bureau (according to the article). After all, Trump does love to fire people.
 
So, what should I invest in to take advantage of the upcoming recession? I understand some people actually profitted off the 2008 slump, anybody know how?
 
TragicMonkey said:
So, what should I invest in to take advantage of the upcoming recession? I understand some people actually profitted off the 2008 slump, anybody know how?
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Get a job as a bank executive. Make a bunch of bad investments. Wait for the government to bail you out. Receive a huge bonus.
 
TragicMonkey said:
So, what should I invest in to take advantage of the upcoming recession? I understand some people actually profitted off the 2008 slump, anybody know how?
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I benefitted in two ways:

  • shorting REITs (my value analysis was that they were overvalued and overdue for a crash) - I take 'credit' for this
  • My wife had returned from Halifax in May 2008, and I decided to sell the property she was using there rather than rent it out from a base of operations in Vancouver. that got me to thinking about how much easier my life would be without all those revenue properties (I had some condos in North Vancouver); I decided to get out of the Landlord Business, so liquidated them all and had about half a million in cash after capital gains taxes, which I sat on for months while the market imploded, and finally spent on Vanguard index funds in March 2009. - I take absolutely no credit for this, as the decision to abandon real estate as an investment category predated the rapid decline in the market, it was pure luck

So: even though there are ways to benefit, it's not clear how to know about them in advance. Sort of like somebody who won the lottery saying that how they won was to pick the winning numbers. Yeah, thanks for the tip.
 
TragicMonkey said:
So, what should I invest in to take advantage of the upcoming recession? I understand some people actually profitted off the 2008 slump, anybody know how?
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As timhau said, cash out before the crash then look for bargains in the firesales that follow. Crashes tend to overshoot so you should be able to find some.

Then there's short-selling, of course.
 
blutoski said:
So: even though there are ways to benefit, it's not clear how to know about them in advance. Sort of like somebody who won the lottery saying that how they won was to pick the winning numbers. Yeah, thanks for the tip.
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The 2008 crash approached with flags flying high, to the music of trumpets and gongs.

And be aware that they always happen in late September or October.
 
CapelDodger said:
As timhau said, cash out before the crash then look for bargains in the firesales that follow. Crashes tend to overshoot so you should be able to find some.

Then there's short-selling, of course.
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The big challenge is the unpredictability of all this.

Market implosions from deregulation can sometimes be segment specific. I think the public is gunshy about shadow banking and subprime mortgages such that the next meltdown will probably look different... but that may be giving them too much credit. (no pun intended)

Crises like these happen a generation apart for a reason: the last generation learned their lesson, and trying to pass on financial advice to one's children usually ends up falling on deaf ears, so they're going to be vulnerable for the same dangers the parents may have been exposed to.

There's a model that financial illiteracy contributes about a third of cause toward income discrepancies in the USA.

I was surprised by a study the other day that showed low correct answer rate for this question:

You are on a fixed income. Which of the following is a best representation of your financiall needs:
  • I want inflation to be below 3%
  • I want inflation to be above 10%
  • Inflation does not affect me because I am on a fixed income.
  • I don't know.

About one in five Americans answered A (which is the best answer), the majority answered B, and a shared 2rd place was split between C and D.

So, with this in mind, Americans may be strongly in favour of financial services deregulation, through just not understanding that they are losing valuable consumer protection.
 
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TragicMonkey said:
So, what should I invest in to take advantage of the upcoming recession? I understand some people actually profitted off the 2008 slump, anybody know how?
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There are bear market ETFs. These are exchange traded funds that short stock indexes and expose the investor to less risk than shorting individual stocks.
 
blutoski said:
Market implosions from deregulation can sometimes be segment specific. I think the public is gunshy about shadow banking and subprime mortgages such that the next meltdown will probably look different... but that may be giving them too much credit. (no pun intended)
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History doesn't repeat itself, but it rhymes. For instance, after a crash laws are passed to prevent similar events, and not long before the next one they're removed as "unecessarily restrictive".

Crises like these happen a generation apart for a reason: the last generation learned their lesson, and trying to pass on financial advice to one's children usually ends up falling on deaf ears, so they're going to be vulnerable for the same dangers the parents may have been exposed to.
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These events are pretty traumatic for those in the business at the time : they like the new rules. Only when the last of them retire (a generation on, as you say) does the pressure build to remove them.

I think 2008 is different, though. Because of government action - quantitave easing, bailouts, deficits, Keynes temporarily re-animated - there was no great trauma. Which is why they're straight back to their games.

I reckon a hiccup next year, than splat in 2019. With real trauma.
 
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TragicMonkey said:
So, what should I invest in to take advantage of the upcoming recession? I understand some people actually profitted off the 2008 slump, anybody know how?
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Go watch the movie, The Big Short or read the book.
The Big Short describes several of the main players in the creation of the credit default swap market that sought to bet against the collateralized debt obligation (CDO) bubble and thus ended up profiting from the financial crisis of 2007–08. The book also highlights the eccentric nature of the type of person who bets against the market or goes against the grain.
The work follows people who believed the bubble was going to burst, like Meredith Whitney, who predicted the demise of Citigroup and Bear Stearns; Steve Eisman, an outspoken hedge fund manager; Greg Lippmann, a Deutsche Bank trader; Eugene Xu, a quantitative analyst who created the first CDO market by matching buyers and sellers; the founders of Cornwall Capital, who started a hedge fund in their garage with $110,000 and built it into $120 million when the market crashed; and Michael Burry, an ex-neurologist who created Scion Capital.[1]
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CapelDodger said:
I reckon a hiccup next year, than splat in 2019. With real trauma.
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I think you are right. The difference this time though will be that other countries won't be affected as much.

It will be beautiful to watch, as Republicans frantically try to pass the blame onto anyone but themselves. But who will buy it?
 
CapelDodger said:
I reckon a hiccup next year, than splat in 2019. With real trauma.
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I think it may take a little longer... Glass-Stegall (perhaps the most relevant regulation) was repealed in 1999, and the crash didn't happen until 2007-2008; there was almost a decade before the actual collapse.

And not that I think Wall Street has become any less greedy, but they may curb some of their excesses (at least in the short term) until they're sure they can get away with things. (At the very least, people will be less likely to trust the credit rating agencies, which was one of the big causes of the collapse.)
 
Segnosaur said:
I think it may take a little longer... Glass-Stegall (perhaps the most relevant regulation) was repealed in 1999, and the crash didn't happen until 2007-2008; there was almost a decade before the actual collapse.
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You could be right, but I have a feeling we're some way along the road already. Since 2008 I've had the feeling that the other boot hasn't dropped yet - that being personal debt which is never going to be repaid, on credit cards and such. We shall see.

And not that I think Wall Street has become any less greedy, but they may curb some of their excesses (at least in the short term) until they're sure they can get away with things. (At the very least, people will be less likely to trust the credit rating agencies, which was one of the big causes of the collapse.)
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Watch out for the "new paradigm". And of course when you hear a politican say "the fundamentals are sound" head for the hills.
 
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I am for a thriving economy and total global warming, as, 100 years from now, the technological level provided by such growth will absolutely swamp all downsides from GW, as far as measurable length, health, and quality of life will go.

Those who want to reign it in at the cost of the economy are no friend of humanity, or "the little guy", or "the poor people in Bangladesh" (who will be better off in 100 years than preserving some low lands for fishing huts). So to hell with those who want to murder people by omission, by delaying invention.
 
Beerina said:
I am for a thriving economy and total global warming, as, 100 years from now, the technological level provided by such growth will absolutely swamp all downsides from GW, as far as measurable length, health, and quality of life will go.
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You are confusing technology with science fantasy. Start Trek style replicators that produce food and oxygen out of limitless free energy sources will not exist in 100 years, or ever.
 
Beerina said:
I am for a thriving economy and total global warming, as, 100 years from now, the technological level provided by such growth will absolutely swamp all downsides from GW, as far as measurable length, health, and quality of life will go.

Those who want to reign it in at the cost of the economy are no friend of humanity, or "the little guy", or "the poor people in Bangladesh" (who will be better off in 100 years than preserving some low lands for fishing huts). So to hell with those who want to murder people by omission, by delaying invention.
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First of all, you are making a rather big assumption that any economic benefits will be felt by all societies throughout the world, in an amount that would exceed that of a switch to "green technologies" or better regulated markets. (Yes, improved technologies will make life better, but removing regulations might make things really great for those in the developed world but with little or no change for those in poorer areas.)

Secondly, you are assuming that the removal of regulations (in particular financial regulations) will cause more growth than a system that maintains regulations. (Its quite possible that the opposite will occur.... that the removal of regulations may cause a financial windfall in the short term, but the instability will not improve financial prospects in the long term. Remember, Glass-Stegal was repealed in 1999... and while there was a spike in GDP growth around that time, it wasn't necessarily any higher than various points in the 1950s/60s, when the financial markets were better regulated.) Stability is good for growth. Wild swings (such as those occurring in a non-regulated system) are bad for overall growth.

Lastly... most of the people impacted by global warming or financial deregulation now will not be alive in 100 years. Making things worse for currently existing human beings on the HOPE that in the future their descendants will be better off doesn't seem like a very nice thing to do to people.
 
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