Economy & Banks

If Quideon thinks the launch of a new coin is going to deflect from another onmishambles of a budget he's got another thing coming.

^ is it an onmishambles?

From what I can see not much has really happened. Pensions and savings benefits to secure the grey vote. Tax breaks at the bottom end to try and pick up from Labour.

Basically the economy is slowly picking up so they've largely left it alone.

It's nothing new - It's how money has pretty much always worked.

I thought that too, especially when on the note it said *"I promise to pay the bearer on demand the sum of ** pound"*

Yeah, but xx pounds of what? Isn't that what people assume, that for each new pound produced by the banks, there is an accompanying stash of gold/silver/whatever stored somewhere that is actually physically worth something?

But the article is saying that banks can and should just produce money willy nilly.

I think.

Not quite - the article is a bit crap, making out that this is all new. Which it isn't.

The paper it refers to is saying that banks extending credit are also increasing the supply of money.

[*]This article explains how the majority of money in the modern economy is created by commercial banks making loans.

[*]Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.

The BofE article also discusses the role of quantitative easing in relaxing the market constraints on banks to make loans.

Money is a big game, a confidence trick and it works (at the moment, but one day it won't and things will get very messy very quickly).

ftfy.

My father paid £22,000 for his house, it's now worth £750,000.

I suspect that £22,000 in 1982 wouldn't buy what £750,000 would buy today, if that makes sense.

What other investment would have realised the return that buying somewhere to live in has done (on paper, he's living in it and will do so for some considerable time yet I hope!)

That's an 11.7% increase, year on year

This has outperformed inflation (which has averaged 3.7%)

The FTSE closed at 593 in 1982, and is currently 6,562 - an increase of 8% year on year

There may be other indices and prices that have outperformed this, but only tommy would be able to pick them with any accuracy.

The S&P 500 has returned an average 11.3% a year since the end of 1982. The DJIA is 12.3%. fwiw. I will see what else I can look up.

hipsters; you are now an investment thesis. Long straggly beards!

1 Attachment

http://rt.com/op-edge/britain-public-spending-budget-005/

Dammit - that is obviously a great return, but I think most would say that the stock marketing over any decent given period outperforms other investments. Also as you and Jeez pointed out there are lots of factors people forget with your primary residence as an investment. 1) cost of buying - interest, fees, etc, 2) maintenance, 3) realisation - you have to live somewhere what will that cost you?

Maybe. I think that you emphasize my point though. We all need to know the basics about money, but once you understand that it has no real value, is not backed up by anything and is vulnerable to inflation then you can prepare.

But practically what does this actually mean?

tin hats and bunkers.

LA DI DA DI DUM
nothing to see here
just depositing 4 trillion into my savings account

http://www.zerohedge.com/news/2014-03-31/4-trillion-fake-euro-bonds-seized-vatican-bank

dodgy fucking vatican bank
if there was one you would think you could trust

Our next generation of financial advisers are going to be aiming for the very thing that caused our problems
http://m1.marketwatch.com/articles/BL-MWTELLB-13253

http://www.telegraph.co.uk/culture/film/film-news/10720915/The-Wolf-of-Wall-Street-has-it-produced-a-nation-of-stockbrokers.html

Pretty interesting article about high frequency trading.
http://www.nytimes.com/2014/04/06/magazine/flash-boys-michael-lewis.html?_r=0

tl;dr: Stock markets are all rigged and you ARE getting screwed by people much smarter than you

From the book:

http://www.amazon.co.uk/Flash-Boys-Michael-Lewis/dp

60% of zero hedge stories in the last few days have been about hft and then the cnbc / cbs ? interview with iex and bats ceo's plus lewis

ZH first article about these was 5 years ago attacking companies making huge profits from this faster knowledge capture, dissemination and access

^^^ I'm not sure that your tl;dr is correct though.

HFT operates well within the spread offered on any quoted prices, and for the institutional investor (let alone the hobbyist), this is dwarfed by transactional costs.

Inter-market front-running can dick people over, but again the margins are nothing compared to market costs of 5 / 10 years ago, given that inter-market arbitrage (of which front-running is an extreme form) already harmonizes prices pretty effectively.

The real way that you or I are fucked over is in big investors (hegdies etc...) illegally moving markets and operating outside of the law. Which they do the whole time.

Still - a transaction tax would damp down any adverse effects of HFT, without detracting from the benefits that arbitrage can bring in normalising prices.

the ceo of iex ( brad ) said he was aiming to slow down feeds from hft to level the playing field on his exchange
although this statement made me wonder how quickly a computer can react ? this quickly really

" They told me it was because I was in New York and the markets were in New Jersey and my market data was slow "

can a 1/1000th of a second advantage really help ?

yes when the computers do all the work

Yes.

Many hedge funds have paid through the nose for properties in buildings next door to exchanges so that they can take advantage of the lower connection latency.

If you can get an order in first, you can get ALL of the orders in first. Price differentials are arbitraged to zero by the first player.

HFT algorithm developers are paid a lot of money to write programmes that run faster than the next investor's programmes.

Better article about the book:

http://www.nakedcapitalism.com/2014/04/michael-lewis-repeat-omission-crimes-committed.html

tl;dr The book is a bit bollocks, not very accurate, and wheels out tropes that the author is well known for

Everyone should read or listen to the tale of the great harjesian goat trading scandal. Linked earlier in thread I reckon.