Any Economists Out There?

[unit731]

Could someone place explain to me in real simple terms.

 

In regards to this world wide economic meltdown.

 

Where did all the money go?

[samak]

why don't you ask Mr. Greenspan?

[driftwood]

Where did all the money go?

 

I'm not an economists, but IMHO that extra money never really existed. It only existed on balance sheets, inflated stock prices and home values.

[colorwolf]

...

Where did all the money go?

to nigerian e-mail writers?

[Al]

Where did the money go?

 

"It was the figment of someone elseâ??s imagination.", according to a real economist.

 

Alan Greenspan on the economy of the middle of this decade: "intended investment in the United States has been lagging in recent years, judging from the larger share of internal cash flow that has been returned to shareholders, presumably for lack of new investment opportunities." (Age of Turbulence, p. 387)

 

If Mr. Greenspan is correct, then it follows that much of Bush's $1.35 trillion tax cut went to fund the housing bubble.

 

 

 

 

 

[..]

Could someone place explain to me in real simple terms.

 

In regards to this world wide economic meltdown.

 

Where did all the money go?

I'm not an economist. But you don't need to be. The "smart guys"on Wall St have out-smarted themselves with all this bullshit smoke-n-mirrors.

 

I'll put it simply. You go into a poker game with $100 stake. Over the evening, you build it up to $5,000.

 

But you keep playing.

 

Based upon the chips in front of you, some guy gives you a loan for $10,000.

 

At the end of the night, you walk out of the place with $50 in your pocket.

 

So...are you despondent because you lost $15,000? Or even $5,000?

 

My non-economist mind says you lost $50. The rest of the money was never yours (read that: the cash-basis accounting system that most private folks should use). And the guy who loaned you $10k deserves to be separated from it because he loaned money on a dream (your repayment deal with him is another subject).

 

There's a reason why small "mom-n-pop" (you know what I mean) banks are not in trouble in the US...they did not hire those "smart guys." They actually made sure that people they loaned money to could pay it back. What a novel thought!!!!

 

Cheers,

SD

[Hardy641]

Agree with Driftwood and Suadum that the money never really existed.

 

However, the people who invested and planned their life (e.g. retirement, investments â?¦) on this â??dreamâ?? are totally real. I am sure there ae thousands if not millions of investors who trusted the 401K scheme and believed their retirement is secured just a year ago. Today they probably are starting to realize that all their â??cyber moneyâ?? wasnâ??t real and just virtual. The dream is over welcome to a cruel reality.

 

I just wonder how these people will react. Just suffer quietly or becoming violent?

[cheekyboy]

champagne,yachts,drugs,wild parties,planes,more drugs ,and high class hookers who must be very affected by the downturn.Its like a bigger version of a tuppaware party with only the rich and famous invited ,but they dont get any tuppaware to take home just good promises of extraordinary riches.

[driftwood]

I am sure there ae thousands if not millions of investors who trusted the 401K scheme and believed their retirement is secured just a year ago. Today they probably are starting to realize that all their â??cyber moneyâ?? wasnâ??t real and just virtual. The dream is over welcome to a cruel reality.

 

 

http://cbs5.com/local/elderly.madoff.victim.2.929316.html

 

Ben Lomond Madoff Victim, 90, Returns To Work

 

BEN LOMOND (CBS 5) â?? Imagine working your whole life saving for retirement, then having your life savings disappear. It's reality for a Ben Lomond man, who at age 90 is forced back to work to make ends meet.

 

Retired businessman Ian Thiermann is back on the job working 30 hours a week as a grocery store greeter.

 

Like thousands of people across the country, Thiermann invested with Wall Street financier Bernie Madoff, who is accused of allegedly running a $50 billion Ponzi scheme. Thiemann said he has lost all of his $738,000.

 

With house payments and medical bills piling up, Theirmann said he had no choice but to go back to work for $10 an hour.

 

Theirmann said, "You meet a situation like this, what are you gonna do, fold up? Instead of crying, yelling or being mad about it, face it and move on."

 

When the owner of the Ben Lomond Market heard the news, they offered Thiermann the job. Because in a grocery store, energy, attitude and punctuality can matter more than age.

 

"This is not a, woe is me, kind of man," said Barbara Loffer of Ben Lomond Market. "This is a community coming together and helping each other out in times of need."

 

After his first day on the job, the bosses gave him the next day off, because after all, he's going to be 91 in May. They gave him a chair, because they figured he couldn't handle standing for six hours a day.

 

Thiermann was born in 1919, when Woodrow Wilson was president. He has lived through the Great Depression and all the wars since World War II and he sees no point in being bitter.

 

[AloyMak]

I'll put it simply. You go into a poker game with $100 stake. Over the evening, you build it up to $5,000.

 

Actually, that would actually mean you had 5k of someone's money and at some point some other people were 5k poorer. A better analogy is this:

 

Say you are playing poker and you have a four aces. You look at all the money at the table and your hand. You then use a mathematical calculation based on your years of poker experience to estimate you hage a 99% chance of winning 5k so you start thinking about buying a fur coat for your wife. In fact, you show your hand to a banker friend and on the strength of your hand, he offers to front you a conservative $2k loan to buy that fur coat.

 

Uknown to you and everyone else, you were all actually playing with a pinochle deck (containing only 9s, 10s, and face cards). You are up against 3 other quads and a straight flush. All of you have different bankers that were willing to front you various amounts of money on the expectation they'd win. So using these similar calculations and decades of poker experience, 5 players think they've each locked up conservatively a $5k win.... even though there's only about 10k total in play. And then the lone straight flush comes in and drags the pot leaving the others beyond broke.