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Tylerdurden
01-28-2008, 07:06 AM
Behind the recent bad news lurks a much deeper concern: The world economy is now being driven by a vast, secretive web of investments that might be out of anyone's control.




By Stephen Mihm January 27, 2008 THE PAST YEAR has been a harrowing one for the world's financial markets, shaken by subprime crises, credit crunches, and other ills. Things have only gotten stranger in the past week, with stock prices swinging wildly in every major market - drastically down, then back up.


Last week the Federal Reserve announced the biggest cut in overnight lending rates in more than two decades. Congress, not to be outdone, is slapping together a massive deficit spending package aimed at giving the economy an emergency booster shot.
Despite the anxiety, nobody is stockpiling canned goods just yet. The prevailing assumption in today's economy is that recessions and bear markets come and go, and that things will work out in the end, much as they have since the Great Depression. That's because there's a collective confidence that the market is strong enough to correct itself, and that experts in charge of the financial system will understand how to mount a vigorous defense.
Should we be so confident this time? A handful of financial theorists and thinkers are now saying we shouldn't. The drumbeat of bad news over the past year, they say, is only a symptom of something new and unsettling - a deeper change in the financial system that may leave regulators, and even Congress, powerless when they try to wield their usual tools.
That something is the immense shadow economy of novel and poorly understood financial instruments created by hedge funds and investment banks over the past decade - a web of extraordinarily complex securities and wagers that has made the world's financial system so opaque and entangled that even many experts confess that they no longer understand how it works.
Unlike the building blocks of the conventional economy - factories and firms, widgets and workers, stocks and bonds - these new financial arrangements are difficult to value, much less analyze. The money caught up in this web is now many times larger than the world's gross domestic product, and much of it exists outside the purview of regulators.
Some of these new-generation investments have been in the news, such as the securities implicated in the mortgage crisis that is still shaking the housing market. Others, involving auto loans, credit card debt, and corporate debt, are lurking in the shadows.
The scale and complexity of these new investments means that they don't just defy traditional economic rules, they may change the rules. So much of the world's capital is now tied up in this shadow economy that the traditional tools for fixing an economic downturn - moves that have averted serious disasters in the recent past - may not work as expected.
In tell-all books, financial blogs, and small-circulation newsletters, a handful of insiders have begun to sound the alarm, warning that governments and top bankers may simply no longer understand the financial system well enough to do anything about it.Continued... (http://www.boston.com/bostonglobe/ideas/articles/2008/01/27/the_black_box_economy?page=2)



http://www.boston.com/bostonglobe/ideas/articles/2008/01/27/the_black_box_economy/

The Bigfella
01-28-2008, 07:07 AM
Wow!

Tylerdurden
01-28-2008, 07:08 AM
Wow!

Its not Wensday, keep it in your pantshttp://www.woodenboatvb.com/vbulletin/upload/images/icons/icon12.gif

Joe (SoCal)
01-28-2008, 07:11 AM
But you have an agenda:

Hey everybody look I am beating a dead horse!
Now I am beating a different dead horse!
This is my conspiracy theory, and you all suck!
Here's my new conspiracy theory!
Here's where I call others names and annoy others!
Look I am beating the dead horse again!
Here I am with another conspiracy theory!
Oh I am angry now!
Look Look look ! . . .

This should get me called a name ;)

Tylerdurden
01-28-2008, 07:14 AM
Just keep it going Joe, the rest of the triad should be along shortly.
Blood is thicker than water.

The Bigfella
01-28-2008, 07:15 AM
This should get me called a name ;)

OK - I'll do it.

You Joe, you!

The Bigfella
01-28-2008, 07:16 AM
Strewth Mark - why not just post a photocopy of the lining out of the bottom of the budgy cage?

Joe (SoCal)
01-28-2008, 07:16 AM
Just keep it going Joe, the rest of the triad should be along shortly.
Blood is thicker than water.

There all out to get you Tyler:p

Tylerdurden
01-28-2008, 07:22 AM
Of course neither of you can read? Bigwoosy posted less then 30 seconds later.
No agenda here?

Joe (SoCal)
01-28-2008, 07:33 AM
Of course neither of you can read? Bigwoosy posted less then 30 seconds later.
No agenda here?

http://www.dbebooks.in/uploads/posts/1169419616_1566194024.jpg

The Bigfella
01-28-2008, 07:33 AM
Of course neither of you can read? Bigwoosy posted less then 30 seconds later.
No agenda here?


Ha-de-f'n-ha.

Yeah - I did a speed-reading course too. Maybe Mark is judging us by his own standards?

Tylerdurden
01-28-2008, 07:42 AM
Maybe Mark is judging us by his own standards?

No, Your people will judge you after they come to understand how you sold them out senator.

The Bigfella
01-28-2008, 07:43 AM
No, Your people will judge you after they come to understand how you sold them out senator.

Just how many times can you get something wrong?

Tylerdurden
01-28-2008, 07:47 AM
Just how many times can you get something wrong?

Straiten me out then, You never had any role in government?

Bruce Taylor
01-28-2008, 08:43 AM
Interesting article. Thanks, Mark.

Gary E
01-28-2008, 09:06 AM
Several have seeen this comming for years....

There is nothing anyone can do about it, but you can protect your assets...
Learn how to trade, and dont listen to what they say, watch what they do.

Buddy Tabor
01-28-2008, 09:22 AM
Apparently some people are stocking up on canned goods. And they appear fairly normal except for the feeling that something just isnt quite right. I posted this link a sort time ago in another thread.


http://www.woodenboatvb.com/vbulletin/upload/showthread.php?t=74968

Tylerdurden
01-28-2008, 09:29 AM
Apparently some people are stocking up on canned goods. And they appear fairly normal except for the feeling that something just isnt quite right. I posted this link a sort time ago in another thread.

I added my comments on it. Should being prepared be considered bizarre? It used to be patriotic, not anymore.

Buddy Tabor
01-28-2008, 09:43 AM
Now youre labeled a nut if you have no faith in the "system".

Its part of the brain washing similar to political correctness. No calling a spade a spade anymore. If you persist then you are obviously in need of some type of medication, just look at ADHD and how it has grown to encompass a huge percentage ofchildren and adults.

George Roberts
01-28-2008, 10:04 AM
Most people don't understand quantum physics. Fewer understand string theory. But most do well in the real world.

I suspect that those who make the economy work will get back to it promptly. Lots of work to do. Lots of money to pump.