Welcome Guest [Log In] [Register]


Reply
  • Pages:
  • 1
  • 3
  • 8
Who Predicted The GFC Global Financial Crisis: Nouriel Roubini, Steve Keen, Peter Schiff, Marc Faber; Harry Dent, Robert Shiller, Paul Krugman, George Soros, Jeremy Grantham, Dean Baker, Gary Shilling, Nassim Taleb
Topic Started: 14 Mar 2012, 07:46 AM (13,280 Views)
muzza
Default APF Avatar


Great post perthmouse. Very interesting.
Profile "REPLY WITH QUOTE" Go to top
 
peter fraser
Member Avatar


perthmouse
26 Apr 2012, 05:07 PM
Nonsense, everyone can do the math, it just takes some a bit longer. Its a very very good topic. May I suggest some into to cal and advance calc books to begin with. Then the harder stuff. Its a very very excellent topic.

A fair amount of human behavior sadly can be modeled, if it couldn't we wouldn't have adverts directed at children between 3 and 6pm using pester power. Or psychological profiling for hiring employees (which is one of our requirements and emotional intelligence is a key contributor).

I think maybe one of the characteristics we share is ignorance. Keen may be able to show the system, predict the system and warn people of the system, but ultimately its up to people to listen and ignorance is one of our characteristics. If it wasn't people would be screaming 'nothing matters we rot in the ground and get enveloped by a star!'. Or sort of how we will ignore that noise the car engine is making until it comes to a grinding halt. But like a broken car engine it can usually be fixed.

That's where I believe the 'unpredictable' nature may be included. That when the system does break down it becomes a lot easier to make a decision we are predictable in that we patch it up rather than change it and in that way we are not unpredictable. Case in point, the first home owner boost came when the system broke. The decision wasn't to hold a 'one direction' concert or become aggressive and start punching or even look into why first home owners could no longer afford to enter the market. Everyone knew housing would have imploded if people hadn't been given 21k for free, who wouldn't want that.

I wouldn't believe many of keens predictions beyond a few months due to this. He did call bank of qld making a large loss a couple of months prior to it happening so that was a good call. Given all that, the majority of why his predictions have been off from what I've been seeing is that when ever he calls it, the government appears to spot it and say hmmm tax cut here. boost it here. tweak this there. They are only trying to do whats best for the people.

What Keen is trying to say that he doesn't really explain to well is that -

All economic value(input) is fixed.
All productive capacity(output) per person is fixed.
Speculation (note speculation not investment) generates no capacity yet exponentially increase value through a feedback look(see automatic control)
X, Y, Z sectors are predominately speculatively based.
Eventually underlying markets win due to the inability of fixed input to sustain a speculative based fixed output. You can 'inject' input to sustain the speculative fixed output (stimulus) but the underlying speculation isn't taken away and the system merely recycles the input and speculation back into itself actually making it worse.

Another way to see it is that its basically a speculative pyramid scheme. Imagine buying a house that took 3 months to build. Asking the next person to pay double for 3 months work. They ask the next person to pay double for 3 months work. and the next and the next. Eventually you require a support base of infinite size and infinite money to support 3 months work. Which is possible, but only if we reproduce infinitely. However population growth is not exponential. Its 1.7%. Nothing can provide infinite population growth, immigration, baby bonus, clones?... Not going to happen.

Maybe china will save us? maybe India will save us. Maybe Africa after that? The only thing for sure is that the nature of the system itself is to tend towards instability.

Yes I agree with muzza's comments - very interesting.

Don't worry about my math, I'm just being lazy.

But I have a couple of issues.

Firstly the Bank of Qld problem was known, Keen probably didn't pick that up in his modelling, it has been long suspected and was brought to a head with a change of CEO who didn't want to take the criticism for the predecessor.

It's your idea that we can predict human behaviour that intrigues me though. As I understand it, you are confident on short terms, but less so after say 6 months - is that a fair assessment?

Also how unreliable does it become in the case of extremes, could models predict riots in Libya, Greece, can they tell us what people will do in a very oppressive regime - when do they accept and when do they rebel etc.

Isn't an extreme event started by a spark of resistance somewhere - wouldn't it depend upon the supply of arms, support from abroad, strength of the military etc?

If we look at market models, can you predict where a distressed asset will fall to before it becomes attractive to the market again, or how far a share value will overshoot during a time of exhuberance?

All of the accurate predictions that I have seen so far, may have been made by intelligent men and women, but the underlying prediction has had a fair amount of guesswork based upon experience in it - perhaps the brain is analysing those aspects subconsciously - although I've seen some horribly incorrect calls made as well, from respected intelligent people.

You seem sure, but is is really possible to model extreme events with accuracy?

Any expressed market opinion is my own and is not to be taken as financial advice
Profile "REPLY WITH QUOTE" Go to top
 
Strindberg
Member Avatar


perthmouse
26 Apr 2012, 05:07 PM
However population growth is not exponential. Its 1.7%.
Whilst it is 1.7% it is exponential.

Exponential growth (including exponential decay when the growth rate is negative) occurs when the growth rate of the value of a mathematical function is proportional to the function's current value. A growth rate of 1.7% means that growth of a function is 0.017 times the function's current value.
Quote:
 
Nothing can provide infinite population growth, immigration, baby bonus, clones?... Not going to happen.

This statement adds nothing to any intelligent discussion. Why have you written it?
Nobody has ever claimed that house prices will rise or fall when the earth no longer exists.



Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
Profile "REPLY WITH QUOTE" Go to top
 
Enrico Palazzo
Member Avatar


The RBA certainly had no idea - but then again that appears to be their job
Profile "REPLY WITH QUOTE" Go to top
 
perthmouse
Default APF Avatar

peter fraser
26 Apr 2012, 05:37 PM

It's your idea that we can predict human behaviour that intrigues me though. As I understand it, you are confident on short terms, but less so after say 6 months - is that a fair assessment?

Also how unreliable does it become in the case of extremes, could models predict riots in Libya, Greece, can they tell us what people will do in a very oppressive regime - when do they accept and when do they rebel etc.

Isn't an extreme event started by a spark of resistance somewhere - wouldn't it depend upon the supply of arms, support from abroad, strength of the military etc?

If we look at market models, can you predict where a distressed asset will fall to before it becomes attractive to the market again, or how far a share value will overshoot during a time of exhuberance?

All of the accurate predictions that I have seen so far, may have been made by intelligent men and women, but the underlying prediction has had a fair amount of guesswork based upon experience in it - perhaps the brain is analysing those aspects subconsciously - although I've seen some horribly incorrect calls made as well, from respected intelligent people.

You seem sure, but is is really possible to model extreme events with accuracy?
Yer, it has to do with how you linearise an equation. Its pretty dam accurate. Super accurate. That's why its taught in engineering because you can do it. Check out taylor series expansion.

I guess we are predictable up to a point. How hard would you have to push a man before he pushed back? From what history has taught us doesn't the US usually meddle in other countries if they pose a risk to it?

I don't think you could predict where an asset will fall to. Only that there is an imbalance and that typically corrective measures become more extreme as imbalance becomes more extreme.

Well, I can tell you that the calcs that go into a bucket wheel reclaimer are much much much more complex than an economy. We are not interested in extremes events as that's what the design is supposed to avoid. But yes, I don't see why, provided you do it correctly that you could map a timeline of expected extreme events.
Profile "REPLY WITH QUOTE" Go to top
 
perthmouse
Default APF Avatar

Strindberg
26 Apr 2012, 05:40 PM
Whilst it is 1.7% it is exponential.

Exponential growth (including exponential decay when the growth rate is negative) occurs when the growth rate of the value of a mathematical function is proportional to the function's current value. A growth rate of 1.7% means that growth of a function is 0.017 times the function's current value.


This statement adds nothing to any intelligent discussion. Why have you written it?
Nobody has ever claimed that house prices will rise or fall when the earth no longer exists.

Correct, thanks for noticing it should have been asymptotic in order to support a pyramid.

on - Nothing can provide infinite population growth, immigration, baby bonus, clones?... Not going to happen.

I guess that's my opinion on how you would support an infinite output on a closed loop system with a limited input. And that maybe the use of a closed system that Keen uses may be incorrect and to avoid feedback altogether an open system approach could be used. But then you would run into not using investment properly but perhaps that's for the economists to figure out.
Profile "REPLY WITH QUOTE" Go to top
 
perthmouse
Default APF Avatar

Enrico Palazzo
26 Apr 2012, 05:46 PM
The RBA certainly had no idea - but then again that appears to be their job
ahh they are doing ok I think. They haven't even had 100 years at it give em a chance
Profile "REPLY WITH QUOTE" Go to top
 
genX
Default APF Avatar


I think this is the best Peter Schiff video I have seen to date. Peter was invited to a Mortgage Brokers Conference in Nov 2006.

It's long, but if you have 45 minutes to an hour to spare, it's very accurate on how the mortgage crisis eventually unfolded and entertaining too.

Peter Shiff 2006 Mortgage Brokers Conference

After watching this video, Peter goes to the top of my list for GFC prophets.
Profile "REPLY WITH QUOTE" Go to top
 
Kate
Default APF Avatar

Apologies for raising what appears to be dead post, but I thought Keen's comments regarding spec investing were comments that shouldn't be just let go.

And before Shadow mounts his anti-Keen high horse again - it's not because it's Keen who said it. I've had those thoughts about spec investing myself and I'm sure many others have too.

I did think the way he communicates it (that spec investing has a 'positive feedback loop' Ponzi-like impact) is a good way of framing the concept for others. Basically in a nutshell - spec investing exaggerates market instability - it pushes the natural market highs so much higher, and the subsequent market lows are (or seem in comparison) therefore so much lower.

Economic instability has flow on effects to general societal and political stability (or lack thereof) - which was why Keen was referencing the 1930s.

Isn't it therefore in our country's best interest to not have policies which promote economic instability - ie not promote speculative investing? I'm not saying it should be outlawed - I'm just saying our laws shouldn't promote it as a beneficial option.

Possibly since this is, after all, a property forum, some of you might have already guessed where I'm heading. Negative gearing.

Should we be demanding that runners for seats in the next federal election declare their positions on policies which can ultimately in the long-term heighten economic instability? Demand they take some action on current negative gearing policy?

The thing is - if you asked a politician "Are you for or against policies which promote economic instability?" They'd answer "AGAINST!@#!" and try to hug the nearest baby in case there was a camera aimed at them. But if you asked the for or against question specifically in relation to negative gearing I think you'd be hard-pressed to find a politician who was against it. There seems to be this disconnect with how negative gearing is seen to be and what it actually is. Why?
Profile "REPLY WITH QUOTE" Go to top
 
miw
Member Avatar


Kate
3 Jun 2012, 04:22 AM
The thing is - if you asked a politician "Are you for or against policies which promote economic instability?" They'd answer "AGAINST!@#!" and try to hug the nearest baby in case there was a camera aimed at them. But if you asked the for or against question specifically in relation to negative gearing I think you'd be hard-pressed to find a politician who was against it. There seems to be this disconnect with how negative gearing is seen to be and what it actually is. Why?
I think it is because most people don't understand what negative gearing is or how it works.

If you could get people to understand that if someone is negative geared by $10k, that means they actually have to find $10k in cold hard cash to put into the gaping maw of a mortgage, and at the end of the year they only get back (Marginal tax rate)*$10k - i.e. they are out the difference until years later when they realise the asset *if* the investment appreciates - *and* they pay CGT on that gain, then they would realise it is less tax-advantaged than taking that same cash and using it to top-up their super, which of course they would scream blue murder if they were not allowed to do. I know negative-geared PIs who don't even understand this point!

I guess the reason why spec. property investors could be seen to add to instability is that you have to be pretty stupid to speculate in an asset with as much friction as property. Stupid people add liquidity when it is not needed (when the market is rising) and remove liquidity when it is needed (when the market is falling.) So, unlike stock market speculators they do not perform any "market-maker" function -i.e. keeping the market moving when the peepz hate property.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1
  • 3
  • 8



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy