# "How to create a depression" discussion.
**URL:** https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144
**Category:** NYSpeed Off Topic
**Created:** [December 3, 2008, 9:28am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144 "2008-12-03T09:28:35Z")
**Posts on this page:** 20
**Page:** 1
### Author:  [@Penfold](https://forums.speedlife.net/u/Penfold)
#### Post date: [December 3, 2008, 9:28am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/1 "2008-12-03T09:28:35Z")
How about some intelligent discussion about this topic?
> We’re starting today with AIG, which was reported now to be in a deal with the US Government to “terminate” some debt obligations.
>
> “NEW YORK (Reuters) - American International Group Inc (AIG.N) and the U.S. government have reached an agreement to clear the insurer of its obligations on about $53.5 billion in toxic mortgage debt, the giant insurer said in a regulatory filing on Tuesday.”
>
> Now let’s talk about how that was accomplished - because it sounds like magic.
>
> What has actually happened is that the government (The Fed and Treasury) have purchased some $46 billion of the “assets” (mostly CDOs and similar things) that AIG wrote CDS against. Since the government now owns “both sides of the bet”, the need to post additional collateral (or pay off in the event of a default) has disappeared.
>
> But here’s the problem - the loss still happened and still got eaten by government (that is, you), which is being “conveniently” ignored! See, while AIG might not need to pay the $53 billion in bets (the underlying), the reason they were under threat of having to pay out in the first place is that the underlyings - in this case all synthetic instruments with no actual asset behind them - were threatening to have an actual value of zero!
>
> The zero is still happening, but now we’re going to hide it in “Maiden III”, yet another opaque LLC in which we the people (who paid the check to buy these so-called “assets” - at par, natch) can’t look.
>
> In other words, this is yet another rooking of the people, this time to the tune of over $50 billion, where we have essentially pissed into the hurricane of debt deflation and we’re not even allowed to see what was bought or at what price.
>
> Now this is, indisputably, bullish for AIG. But it is an outrageous subsidy for this company on the backs of the US Taxpayer, for which we have not been compensated, nor have the acts that led to this situation been punished under the law. The executives at AIG have not been forced to disgorge their bonuses and compensation, they have not been criminally charged, and no punishment has been levied against those who set up this outrageously overlevered mess in the first place.
>
> Paulson continues to jawbone about “increasing lending”; this sort of idiocy from him, Mishkin on CNBC this morning, and similar bleating by Bernanke and others misses the point.
>
> That point, by the way, is clearly illustrated here:
>
> Essentially all of the so-called “growth” since 1996 was in fact debt that was claimed to be growth!
>
> This is exactly identical on a national scale to you borrowing more and more money over a period of more than ten years, spending it all, and claiming to be “enjoying unprecedented prosperity.”
>
> As total debt rises so does total debt service and this presents an ever-growing drag on growth (GDP).
>
> Adding to total debt through bailouts, which must add to total debt as we do not have the money in the United States and must borrow it, simply adds to the negative impact on GDP and thus the drag on the economy!
>
> There is no escaping this reality whether the government (or private parties) like it or not. These are mathematical facts and not subject to political whim; Paulson and Bernanke, both of whom are highly intelligent, understand this.
>
> Unfortunately the American people do not, and it appears that we are instead going to be forced to recognize this reality as we continue to trying to play “borrow and spend” out of the hole, further depressing GDP.
>
> This is how government causes economic Depressions; in the late 1920s and 1930s government did the same thing attempting to deal with a recession and created The Great Depression, and this time, attempting to prevent the excesses of the 1990s Tech Mess from being worked off through recession, it has done precisely the same thing.
>
> Buckle up folks - it is only reasonable to expect that from the same actions will come the same result, and we the people have utterly failed in our most-recent elections to hold Congress to account in that we returned the vast majority of those who voted for the EESA/TARP to office.
>
> Get up, go look in the mirror.
>
> There is no conspiracy - the responsibility for this depression is in fact YOURS.
source: [market-ticker.denninger.net](http://market-ticker.denninger.net)
---
### Author:  [@Nikuk](https://forums.speedlife.net/u/Nikuk)
#### Post date: [December 3, 2008, 9:32am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/2 "2008-12-03T09:32:09Z")
:picard:
Have you heard of the gini coefficient?
---
### Author:  [@Joe](https://forums.speedlife.net/u/Joe)
#### Post date: [December 3, 2008, 9:33am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/3 "2008-12-03T09:33:18Z")
I ACCIDENTALLY THE ECONOMY! THE WHOLE THING! SAVE ME, FELISBERTO!
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### Author:  [@Penfold](https://forums.speedlife.net/u/Penfold)
#### Post date: [December 3, 2008, 9:38am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/4 "2008-12-03T09:38:55Z")
> [@Nikuk](#):
>
> :picard:
>
> Have you heard of the gini coefficient?
nope. Please explain or direct me towards useful knowledge.
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### Author:  [@Blue\_Eyed\_Devil](https://forums.speedlife.net/u/Blue_Eyed_Devil)
#### Post date: [December 3, 2008, 9:46am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/5 "2008-12-03T09:46:48Z")
> [@Nikuk](#):
>
> :picard:
>
> Have you heard of the gini coefficient?
Is it mafia related?
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### Author:  [@Nikuk](https://forums.speedlife.net/u/Nikuk)
#### Post date: [December 3, 2008, 9:47am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/6 "2008-12-03T09:47:24Z")
I presume that you found the article in the OP, so I trust that you can use the internets.
I am in no way going to get into spoon feeding established principles in this thread, nor really any thread that you start. Specifically when I see AWDrifter lurking about as well.
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### Author:  [@Nikuk](https://forums.speedlife.net/u/Nikuk)
#### Post date: [December 3, 2008, 9:47am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/7 "2008-12-03T09:47:46Z")
> [@Blue Eyed Devil](#):
>
> Is it mafia related?
point in case.
:io:
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### Author:  [@Blue\_Eyed\_Devil](https://forums.speedlife.net/u/Blue_Eyed_Devil)
#### Post date: [December 3, 2008, 9:50am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/8 "2008-12-03T09:50:57Z")
Well we are talking about organized crime aren’t we?🙂
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### Author:  [@Eazy716](https://forums.speedlife.net/u/Eazy716)
#### Post date: [December 3, 2008, 9:52am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/9 "2008-12-03T09:52:51Z")
> [@Penfold"](#):
>
> How about some intelligent discussion about this topic?
:mamoru:
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### Author:  [@Blue\_Eyed\_Devil](https://forums.speedlife.net/u/Blue_Eyed_Devil)
#### Post date: [December 3, 2008, 9:57am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/10 "2008-12-03T09:57:33Z")
Well, when Nikuk asks a stupid question he should expect a stupid answer.
He reminds me of a consultant who is clueless but has picked up some buzzwords along the way and just throws them out there. lol
He is probably looking up the definition right now.
Edit: And his response is condesending, but offers nothing of real substance, like a consultant.
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### Author:  [@Geehee](https://forums.speedlife.net/u/Geehee)
#### Post date: [December 3, 2008, 10:00am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/11 "2008-12-03T10:00:42Z")
> [@Joe](#):
>
> I ACCIDENTALLY THE ECONOMY! THE WHOLE THING! SAVE ME, FELISBERTO!
:mamoru::eekdance:
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### Author:  [@Fry](https://forums.speedlife.net/u/Fry)
#### Post date: [December 3, 2008, 10:05am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/12 "2008-12-03T10:05:36Z")
> This is how government causes economic Depressions; in the late 1920s and 1930s government did the same thing attempting to deal with a recession and created The Great Depression
I thought part of the reason that the Great Depression got so deep was because the federal reserve allowed banks to fail, keeping their powder dry in case of a “real crisis”, instead of acting as a lender of last resort as is one of their stated reasons for existing? Instead they let the money supply shrink and deflation kick our asses? :shrug: I thought that’s what that Friedman guy won a Nobel Prize for working on anyway…
:goestoreadabouttheginicoefficient:
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### Author:  [@Nikuk](https://forums.speedlife.net/u/Nikuk)
#### Post date: [December 3, 2008, 10:08am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/13 "2008-12-03T10:08:14Z")
> [@Fry](#):
>
> :goestoreadabouttheginicoefficient:
be forewarned, you’re going to need to bring your critical thinking processes.
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### Author:  [@Blue\_Eyed\_Devil](https://forums.speedlife.net/u/Blue_Eyed_Devil)
#### Post date: [December 3, 2008, 10:26am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/14 "2008-12-03T10:26:43Z")
This may be a bit off topic but the amount of bailouts(and “loans”) so far have equaled aboot $25,000 per person so if they really want to help “us” why not just give us our money back? It seems if EVERY SINGLE person in the USA got $25,000 to spend the economy would be doing much better. No one thinks it is a little strange that they take our money and give it to people who have failed on an unprecedented scale? This is the fix? lmao.
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### Author:  [@Joe](https://forums.speedlife.net/u/Joe)
#### Post date: [December 3, 2008, 10:28am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/15 "2008-12-03T10:28:19Z")
:picard:
um, loans. return. interest. stock.
is the government going to get equity in each person’s life? Is everyone gonna pay it back with interest?
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### Author:  [@cougarspeed](https://forums.speedlife.net/u/cougarspeed)
#### Post date: [December 3, 2008, 10:28am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/16 "2008-12-03T10:28:23Z")
Also you cant simply compare debt to GDP as debt is ever so changing. As we all know debt can be used as an investment tool. Debt that you are paying more to borrow then a return could cause a depression ie: borrow 10% return 5% loss 5%. But if borrowing 5% return 10% gain 5% is the case then you will be in fact helping the economy by assuming debt. Not saying this is a good market and I will say I think it will cause some inflation but I think its a much healthier debt then the past knows it to be.
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### Author:  [@deebo](https://forums.speedlife.net/u/deebo)
#### Post date: [December 3, 2008, 10:30am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/17 "2008-12-03T10:30:13Z")
the story of thanksgiving is fake
as well as the story behind rosa parks
the government is snky
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### Author:  [@Blue\_Eyed\_Devil](https://forums.speedlife.net/u/Blue_Eyed_Devil)
#### Post date: [December 3, 2008, 10:30am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/18 "2008-12-03T10:30:49Z")
> [@Joe](#):
>
> :picard:
> um, loans. return. interest. stock.
> is the government going to get equity in each person’s life? Is everyone gonna pay it back with interest?
What do you mean “pay it back”? It is their money. Wow, you just think socialist 100% of the time don’t you?lol
I have to pay the government back for my money?:lol:
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### Author:  [@Joe](https://forums.speedlife.net/u/Joe)
#### Post date: [December 3, 2008, 10:33am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/19 "2008-12-03T10:33:36Z")
No, but the banks do.
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### Author:  [@Fry](https://forums.speedlife.net/u/Fry)
#### Post date: [December 3, 2008, 10:40am UTC](https://forums.speedlife.net/t/how-to-create-a-depression-discussion/59144/20 "2008-12-03T10:40:58Z")
> [@Nikuk](#):
>
> be forewarned, you’re going to need to bring your critical thinking processes.
Hmm, I’m still coming up short unless you’re saying that the gini coefficient has been at great depression levels for 10 years and this isn’t anything we’re creating now? Or maybe you mean the rich are hoarding and shrinking our money supply, causing deflation? Interesting note: Russia has a more even distribution of wealth now than we do. Our middle class is the same size as Ghana. :bloated:
I still say the article is flawed because the fed is doing the opposite of what they did during the great depression, not the same. :gotme: Maybe I’m missing something.
…
Heh. Oh. The writing’s been on the wall for 10+ years. It’s nothing we’re creating right now.
[http://wallstreetexaminer.com/blogs/winter/2006/12/16/ali-g-economics-and-the-gini-coefficient-puzzle/](http://wallstreetexaminer.com/blogs/winter/2006/12/16/ali-g-economics-and-the-gini-coefficient-puzzle/)
AND
> [@Wikipedia](#):
>
> **US income Gini indices over time**
>
> Gini indices for the [United States](http://en.wikipedia.org/wiki/United_States_of_America) at various times, according to the [US Census Bureau](http://en.wikipedia.org/wiki/United_States_Census_Bureau):
>
> - 1929: 45.0 (estimated)
> - 1947: 37.6 (estimated)
> - 1967: 39.7 (first year reported)
> - 1968: 38.6 (lowest index reported)
> - 1970: 39.4
> - 1980: 40.3
> - 1990: 42.8
> - 2000: 46.2
> - 2005: 46.9
> - 2006: 47.0 (highest index reported)
> - 2007: 46.3 [[3]](http://en.wikipedia.org/wiki/Gini_coefficient#cite_note-2)
>
> Note: Estimates are not 100% accurate.
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