economists are idiots

If they're going to make you pay them to hold it, you might as well buy gold bullion instead.

Cheers

Phil Hobbs

-- Dr Philip C D Hobbs Principal Consultant ElectroOptical Innovations LLC Optics, Electro-optics, Photonics, Analog Electronics

hobbs at electrooptical dot net

What do you have against mattresses?

The price of gold changes a lot... but Osmium looks fairly stable :^)

George H.

Den torsdag den 5. juni 2014 20.30.19 UTC+2 skrev John Larkin:

we are talking banks here not private deposits, the idea is to get the banks to lend money to those who need it to actually make stuff instead of just putting it in the central bank watching everything grind to a halt

-Lasse

It usually does not work. But since many economists and central bankers are IMHO not particularly smart they will not understand this.

How long would one keep cranking a motor that just sputters instead of starting up with a nice roar? Until the battery is completely dead? It would be much smarter to investigate why it doesn't start, then we'd get somewhere.

So, Europe is going to borrow its way to prosperity?

The problem is that nearly all economists are macroeconomists. They want to turn really big knobs at international levels, and have math models that supposedly predict the effects. They are mostly power-crazed morons.

The productivity of a country is the simple sum of the productivities of all the people in it. So the only economics that really matters is microeconomics, which hardly anybody cares about.

Den torsdag den 5. juni 2014 21.52.13 UTC+2 skrev John Larkin:

It worked for the US didn't it ;)

joke aside, a lot of small companies depend on credit to run their business or loans to invest

-Lasse

I have to agree. It isn't called the "dismal science" for nothing.

No other Nobel Laureates have been involved in lending their names to spectacular speculative business crashes that were tantamout to fraud on an industrial scale.

Then you have to pay for storage and it is illiquid if you try to sell it in big slabs. Ask UK's Gordon Brown for a how not to do it guide!

The smart hyper rich money is mostly converted into making property in London, Tokyo and Hong Kong ever more stratospherically expensive. Particularly London at the moment since it has an essentially trivial cost of foreign ownership and >10% increase in value per annum.

sure, but in that analogy the is the ECB telling those who have gas that they don't want to store it for them, they should go put is in someones gas tank where it can do something useful instead

-Lasse

The macro-economic conditions matter as well. I saw a classic example during a mountain bike ride last Sunday. A tube blew on my friend's bike so we emerged from the bush at the Wetsel-Oviatt plant south of Folsom. Aside from a custodian who seems to live there it has become a ghost factory, very sad to see.

A little research showed why this happened. Their workers comp rates had skyrocketed and snuffed the daylights out of it. Scores of people have lost their jobs and now you have a plant with lots of office buildings that is completely idle. Someone uses a tiny section of it as a parking lot for freight trailers but that doesn't generate back the lost jobs.

That's by far no the only place like this. When you ride a mountian bike through "less than habitable" turf you find a lot of such ghost places. I bet many could have made it if CA hadn't turn leftist decades ago.

This is kind of a 'nuclear option' I've heard discussed before and is actually pretty worrisome. Plus they're doing the QE stuff.

A bellweather for me is that certain airfares four months out have fallen to the lowest level since early 2008 (and oil has not changed hardly at all in price). Some clever folks are anticipating a reasonable probability of serious trouble ahead.

Other than stirring up a major conflict of some kind, what else can they do? They keep slapping the paddles on, but the patient is hardly responding to the jolts.

--sp

It is a brainless assumption on the part of the ECB. Because then those who have gas will put it in foreign tanks or trade it in for commodities.

Nobody in their right mind will make a loan where they don't have a good feeling that they'll get all of their money back at the end. Just like I'd never buy municipal bonds from any Californian city after what some have done to investors.

The only real fix is to improve the business climate. In many European countries, for example, that means to make it more possible to finance via venture capital (it's one reason why I no longer live there). Then cut back bureaucracy and fire most of the EU-bureaucrats.

Most small company loans are secure in one way or another, so small company owners are unlikely to take any risks involving their home etc.

That's not the case for large companies where CEOs are rarely personally liable for when a loan goes bad.

It might be currently working for the US, but massive debt is like a noose around the neck.

Interestingly the ECB cut is based on falling prices. Normally in such circumstances you print money to offset with inflationary forces. It's also a convenient way of paying off government debt!

Try to go to European banks when you have a (very sound) business plan and the right mix of people on board. I've tried.

Start simple: Ditch WEEE and all such meshugginah legislation. Then open up the market to venture capital. Allow stock option plans in countries that still haven't gotten the message. And so on. That will help foster the prosperity of small business. It is small business that does the real innovation and can lead countries out of economic stagnation.

Forget interest rates. It makes no difference whether a business loan costs 7% interest or 7.5%. Especially if you can't get the loan anyhow.

My prediction: Reducing interest to -0.1% will achieve ... absolutely nothing.

and what happened?

-Lasse

Nothing. Same when I presented ideas of mine to companies :-(

Then when I had another idea I sent it straight to the US. A few months later it took off like a rocket. The CEO liked it, so did the board, and funds were allocated. Once the ball was rolling I was surprised how fast it rolled. They made it conditional on me moving and running the start-up, which I did.

so the ECB discouraging banks from stockpiling money there and instead encouraging them to lend money to companies like yours is bad how?

-Lasse