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The One Percent Pt. 2

For discussions of events and conditions not necessarily related to Peak Oil.

Re: The One Percent Pt. 2

Unread postby Tanada » Sat 06 Jan 2018, 14:43:49

onlooker wrote:I submit to you again, that what matters per say is not the actual wealth but the commensurate power that wealth bestows. If you look at all countries and if you look at the trajectory of our human world, one can plainly see how all actions and policies are tilted to benefit the already wealthy. That makes sense given the close tie in our human world of money and power.

So, instead of Governments being there to try and prepare for the consequences of our huge population in overshoot we have governments subverted and corrupted by the power of money and beholden thus to the money brokers. That is why making headway to prepare for PO and Climate change and slowing down the momentum of Modern Industrial Civilization and even population growth has not been addressed sufficiently. We live for today and the hell with tomorrow because our money masters like it that way and yes we normal citizens in rich countries also. We are also relatively rich in comparison to the mass of impoverished on the planet. This by the way was evident in other former civilizations and their downfall.


Onlooker you have been around here about four years now but I think you misunderstand how the real world works in a fundamental human behavior way. Take a gander at the post in this link and see if you can understand what is being aimed at here. The 1 percent are a perfectly normal human system that has happened many times before and will happen many times again.

Fascism
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Re: The One Percent Pt. 2

Unread postby Outcast_Searcher » Sat 06 Jan 2018, 15:03:18

Tanada wrote:[Take a gander at the post in this link and see if you can understand what is being aimed at here. The 1 percent are a perfectly normal human system that has happened many times before and will happen many times again.

Fascism


I see plenty of evidence for stages 4 - 8. Opinions will of course differ on which stage is dominant at time X. Greed, for one example, appears to be almost everywhere -- both in the haves, and in the wants what others have earned but don't want to do the requisite work.

Regardless, this is NOT the part of the spectrum indicative of a healthy, vibrant, young, can-do pioneering spirit country -- not by a long shot.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The One Percent Pt. 2

Unread postby pstarr » Sat 06 Jan 2018, 15:25:12

you are an optimist outcaste. We went through Six, Apathy over the last decades. We are now deep into . . .
Stage seven, Dependency, this is the point where leaders arise who promise the party will go on forever, as long as you put them in charge. The people in the culture willingly give up the right to think for themselves in return for a complete abdication of personal responsibility.

We are dependent on lies now. All of us. We willingly elected a stupid sleazy man President of the United States who we wouldn't buy a used car from. And allow a left-wing media to lull us to sleep at night. All the while . . . ignoring the truths around us, suckling on a techno dreams.
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Re: The One Percent Pt. 2

Unread postby onlooker » Sat 06 Jan 2018, 15:31:36

Yes and my post does not say or imply that this is a unique stage in our history or evolution. Rather it is indicating the oft repeated consequences throughout history. The difference now is that the impacts of the hierarchically run societies is much greater because of our numbers and technologies. And yes all humans respond to the cues of pleasure (greed) and power. Sad to think that reaching this stage may have always been our destiny
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Re: The One Percent Pt. 2

Unread postby ralfy » Sat 06 Jan 2018, 22:02:37

vtsnowedin wrote: You seem to ignore that those numbers in hard drives are backed up by real estate including forest and farm land, factories, stores, office buildings, hotel towers and resorts, golf courses, railroads and the rolling stock etc.
We the ninety nine percent get to use all of these things at prices we are willing and able to pay and should not begrudge the stock holders their dividends.


If the liquidity pyramid presented in this site is right, then total miscellaneous assets which you mention are worth $125 trillion worldwide.

In contrast to that, the notional value of total derivatives is $1,600 trillion.

If biocapacity is used instead of money to measure wealth, then each person worldwide is allocated less than 3 global hectares, and that's given the current population, which is expected to rise to 9 to 11 billion. On top of that, both depletion and environmental damage (especially given the effects of global warming) will decrease biocapacity further.
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Re: The One Percent Pt. 2

Unread postby vtsnowedin » Sat 06 Jan 2018, 22:20:03

ralfy wrote:
vtsnowedin wrote: You seem to ignore that those numbers in hard drives are backed up by real estate including forest and farm land, factories, stores, office buildings, hotel towers and resorts, golf courses, railroads and the rolling stock etc.
We the ninety nine percent get to use all of these things at prices we are willing and able to pay and should not begrudge the stock holders their dividends.


If the liquidity pyramid presented in this site is right, then total miscellaneous assets which you mention are worth $125 trillion worldwide.

In contrast to that, the notional value of total derivatives is $1,600 trillion.

If biocapacity is used instead of money to measure wealth, then each person worldwide is allocated less than 3 global hectares, and that's given the current population, which is expected to rise to 9 to 11 billion. On top of that, both depletion and environmental damage (especially given the effects of global warming) will decrease biocapacity further.

Do you know how to make a small fortune in the derivatives market?
First start with a large fortune.....
:)
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Re: The One Percent Pt. 2

Unread postby ralfy » Mon 08 Jan 2018, 01:15:40

vtsnowedin wrote:Do you know how to make a small fortune in the derivatives market?
First start with a large fortune.....
:)


Apparently, the data contradicts your argument: the amount in terms of derivatives exceeds miscellaneous assets by many times.

And since you cannot address that or basic scientific points such as biocapacity, I have to add you to my ignore list. The way I see it, no amount of time you spend in this forum will allow you to learn common sense.
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Re: The One Percent Pt. 2

Unread postby vtsnowedin » Mon 08 Jan 2018, 09:30:06

ralfy wrote: I have to add you to my ignore list. .

That's fine with me.
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Re: The One Percent Pt. 2

Unread postby Newfie » Mon 08 Jan 2018, 09:52:08

Ralph,
Actually I think you are spot on in evaluating wealth.
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Re: The One Percent Pt. 2

Unread postby onlooker » Mon 08 Jan 2018, 10:00:23

I think if you take into account biocapacity including depleting resources as well as the huge worldwide debtload, one can easily see that the nominal monetary wealth far exceeds the natural capacity to generate tangible wealth. So, this overblown wealth on hard drives etc. is subject to disappear quite quickly. The One Percent is thus very vulnerable
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Re: The One Percent Pt. 2

Unread postby Newfie » Mon 08 Jan 2018, 10:19:47

Exactly. That’s why I think a big financial crash is our most immediate threat.

Not to diminish PO or CC. They are real just down the road and will be effected by the more emergent crisis.

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Re: The One Percent Pt. 2

Unread postby Cog » Mon 08 Jan 2018, 10:38:03

What is crystal clear, is that ralfy doesn't understand derivatives. Please add me to your ignore list as well.
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Re: The One Percent Pt. 2

Unread postby Cog » Mon 08 Jan 2018, 10:40:23

Newfie wrote:Exactly. That’s why I think a big financial crash is our most immediate threat.

Not to diminish PO or CC. They are real just down the road and will be effected by the more emergent crisis.



Why? Companies are flush with cash, low unemployment, and oil prices are low. What is going to drive this financial crash? And be specific on what you mean by crash. A 2000 point drop in the DOW, a 50% drop in the DOW, or Mad Max. I swear to God people think we have never had a recession. We have one, on average about every ten years. Life goes on.
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Re: The One Percent Pt. 2

Unread postby Outcast_Searcher » Mon 08 Jan 2018, 12:47:29

ralfy wrote:If the liquidity pyramid presented in this site is right, then total miscellaneous assets which you mention are worth $125 trillion worldwide.

In contrast to that, the notional value of total derivatives is $1,600 trillion.

I believe the damage that the notional value of derivatives could cause, comparing that total number to the number of underlying assets is VASTLY overstated and wildly misunderstood by most people.

Let's take a common, fairly safe, well managed, capitalized, regulated, and (relatively speaking) easy to understand derivative market that is huge.

Stock options on major exchanges.

The average risk of such options is TINY compared to the notional value for multiple reasons.

First, puts and calls move in the opposite direction when the underlying stock moves. So a large move will have a relatively tiny impact on the value of all the options, if the puts and calls come reasonably close to balancing (which they won't always, of course).

Second, options that are way out of the money, and thus only have a tiny chance of being exercised have their notional value calculated the same way that options way in the money (and thus having a nearly 100% chance of being exercised on or before expiration) are calculated.

Third, the financial clearing houses and margin rules for stock options are extremely conservative. They isolate the risk of the investor to the market -- not to the financial position of the party on the other side of the trade. They ensure there is plenty of capital to back the options, even if the market moves way against a trader. And if margin calls aren't promptly met, they ensure positions are liquidated to prevent further losses, which reduces risk.

...

So, comparing the notional value of , say, stock options on a mature, well regulated options market, to poorly regulated CDO's which have dicey capital requirements makes little sense. But just adding up the total amount of notional value of all derivatives and lumping them together as though they're all as dangerous as nuclear bombs in the hands of terrorists is doing exactly that.

I'm not disagreeing, BTW, with Buffett's descriptions of derivatives (which are poorly regulated and financially backed) as "financial weapons of mass destruction" at all.

I'm disagreeing with the general lumping of ALL derivatives into that bucket, and especially using the total notional value to try and make the pile of bombs look MANY times bigger than it truly is re true financial net risk.

So if the purpose of some website citing such numbers is FUD, along the lines of a zerohedge article, I call (mostly) nonsense. If it's to compare scale compared to, say, prior decades, that might be a valid point, but again, the underlying NATURE and size of the various types of derivatives would be critical in determining (roughly) the magnitude and probability of serious real world risk over a given time frame.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The One Percent Pt. 2

Unread postby Newfie » Mon 08 Jan 2018, 13:33:13

Cog wrote:
Newfie wrote:Exactly. That’s why I think a big financial crash is our most immediate threat.

Not to diminish PO or CC. They are real just down the road and will be effected by the more emergent crisis.



Why? Companies are flush with cash, low unemployment, and oil prices are low. What is going to drive this financial crash? And be specific on what you mean by crash. A 2000 point drop in the DOW, a 50% drop in the DOW, or Mad Max. I swear to God people think we have never had a recession. We have one, on average about every ten years. Life goes on.


50% or more drop in the next 10-20 years. It’s always good to clarify time frames. Could be the source of our apparent disagreement.

What will Drive it is what crashes all Ponzi schemes. When you can’t find enough converts to prop up the fake earnings.

I don’t expect to convience you, nor you me.

What I see is the reliance on increased global financialization requires peace and stable markets. At some point some group will disrupt this stability sufficiently to cause investors to withdraw, try to turn these fake assets into real assets. It could be a retirement fund crisis, don’t know.

At any rate once the ball starts to unwind it will likely fall a long way before confidence is restored, if at all.

I think you see the beginnings of this ready in the increased nationalism in so many sectors. There is a general retreat from globalization, a resurgence of local interest, across the board.

Could be wrong, hope I am for my personal self. Hope I’m not for the good of the world. It’s complicated, conflicting desires.
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Re: The One Percent Pt. 2

Unread postby onlooker » Mon 08 Jan 2018, 13:53:07

The timelines is what is difficult to predict. But NOT the general trajectory. Societies both rich and poor are stressed by different factors. All these factors of a common origin, the arriving consequences to our unsustainable ways of living and our total numbers. Modernity and 7 plus billion people is being stressed by natural limits, by social dysfunctions like inequality and by a voracious economic system that is encountering natural enforced limits to its voraciosness. You cannot look to precedents because no precedent exists to our species overshooting the entire carrying capacity of the Earth. The fake money creation is our feeble attempt to postone these consequences and the 1% fear especially all this because the wave of change that all this augurs acutely threatens their priviledged positions.
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Re: The One Percent Pt. 2

Unread postby ralfy » Mon 08 Jan 2018, 21:59:16

Outcast_Searcher wrote:I believe the damage that the notional value of derivatives could cause, comparing that total number to the number of underlying assets is VASTLY overstated and wildly misunderstood by most people.

Let's take a common, fairly safe, well managed, capitalized, regulated, and (relatively speaking) easy to understand derivative market that is huge.

Stock options on major exchanges.

The average risk of such options is TINY compared to the notional value for multiple reasons.

First, puts and calls move in the opposite direction when the underlying stock moves. So a large move will have a relatively tiny impact on the value of all the options, if the puts and calls come reasonably close to balancing (which they won't always, of course).

Second, options that are way out of the money, and thus only have a tiny chance of being exercised have their notional value calculated the same way that options way in the money (and thus having a nearly 100% chance of being exercised on or before expiration) are calculated.

Third, the financial clearing houses and margin rules for stock options are extremely conservative. They isolate the risk of the investor to the market -- not to the financial position of the party on the other side of the trade. They ensure there is plenty of capital to back the options, even if the market moves way against a trader. And if margin calls aren't promptly met, they ensure positions are liquidated to prevent further losses, which reduces risk.

...

So, comparing the notional value of , say, stock options on a mature, well regulated options market, to poorly regulated CDO's which have dicey capital requirements makes little sense. But just adding up the total amount of notional value of all derivatives and lumping them together as though they're all as dangerous as nuclear bombs in the hands of terrorists is doing exactly that.

I'm not disagreeing, BTW, with Buffett's descriptions of derivatives (which are poorly regulated and financially backed) as "financial weapons of mass destruction" at all.

I'm disagreeing with the general lumping of ALL derivatives into that bucket, and especially using the total notional value to try and make the pile of bombs look MANY times bigger than it truly is re true financial net risk.

So if the purpose of some website citing such numbers is FUD, along the lines of a zerohedge article, I call (mostly) nonsense. If it's to compare scale compared to, say, prior decades, that might be a valid point, but again, the underlying NATURE and size of the various types of derivatives would be critical in determining (roughly) the magnitude and probability of serious real world risk over a given time frame.


That's already given in the pyramid chart, where the derivatives number is broken down into "shadow," reported, and unfunded gov't liabilities. But each of them is still larger than the total value of misc. assets.

Of course, one can argue that these physical assets need to be re-assessed so that their values will increase, but even that becomes questionable. For example, will land for which food can barely grow or where there are barely any minerals be considered highly valuable because it's a good location for a golf course? What about valuing reserves? Is it logical for one to claim that he is wealthy because there are lots of minerals or oil underground even though it would be too expensive for him to extract them?

In any event, I think anyone will have a lot of difficulty explaining how present credit levels can be backed up by physical assets.

Given that, isn't it more logical to look at biocapacity? After all, basic needs and wants boil down to availability of energy and material resources available. And this is a more logical figure than using money to measure availability of resources, etc.
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