This page has been archived and commenting is disabled.

Who Benefits When Bubbles Burst?

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

Who Benefits When Bubbles Burst?

Blowing speculative bubbles cannot possibly lead to organic growth because speculative bubbles fatally undermine the real economy.

An astute reader recently posed an insightful question: we all know who benefits from asset bubbles in stocks, bonds and real estate--owners of assets, banks, the government (all those luscious capital gains and rising property taxes), pension funds, brokers and so on. But who benefits from the inevitable collapse of these asset bubbles?

If asset bubbles end badly for virtually every participant, then why does the system go to extremes to inflate them? This is an excellent question, as it goes right to the heart of our dysfunctional Status Quo.

Broadly speaking, there are three possible answers:

  1. The system has no choice left but to blow serial bubbles.
  2. Bubbles are domestic opportunities for Shock Doctrine-type crises that enable further consolidation of power.
  3. Those in charge of the Status Quo believe the fantasy that the next bubble will usher in the long-awaited return to organic growth, i.e. expansion that isn't dependent on central bank stimulus, enormous fiscal deficit spending, ginned-up statistics, etc.

Let's consider each possible answer more closely.

1. The system has no choice left but to blow serial bubbles. The financial/fiscal Powers That Be have reluctantly accepted that the era of organic expansion driven by rising public/private debt is over for structural reasons, but they have no alternative to maintaining the current power arrangement (i.e. vested interests operate the system to their own benefit) other than serial bubbles.

In other words, it's not that the vested interests benefit so much from the collapse of the bubble-du-jour; blowing speculative bubbles is the only tool left for maintaining the illusion that the current arrangement is permanent and sustainable.

In this scenario, the Status Quo has no Plan B should the next speculative bubble fail to inflate.

2. Bubbles are domestic opportunities for Shock Doctrine-type crises that enable further consolidation of power. Naomi Klein's landmark study of how manufactured crises are used to justify further consolidation of power in the hands of the few, The Shock Doctrine: The Rise of Disaster Capitalism, provides a blueprint for how the easily predictable crises of financial bubbles popping can be used to extend the power of central and private banks and various government agencies.

In this scenario, the state (government) and the vested interests that control the state are largely immune to the losses generated by the deflation of speculative bubbles, thanks to the state's ability to borrow essentially unlimited sums of money to cover the losses incurred by private speculators.

Profits are privatized, losses are socialized. Banks and other financier speculators reap outsized gains during the bubble's inflation, and the state covers their losses when the bubble pops.

The central banks are able to extend their already vast powers with ease during the financial crisis of a bubble popping, and this expansion of financial power is symptomatic of the general dominance of financialization over the economy's productive assets.

The problem with this scenario is there are limits on the system's ability to inflate speculative bubbles. Eventually the economy is so hollowed out by debt and speculative excess that bubbles can no longer be inflated. The end result is power has been fully consolidated in the hands of a few, who are then responsible for fixing the post-bubble economy they created to further their own power and wealth.

Post-bubble economies cannot be fixed if the current power structure remains intact, so the Powers That Be face an impossible task.

3. Those in charge of the Status Quo believe the fantasy that the next bubble will usher in the long-awaited return to organic growth. As absurd as this may seem, I don't think we should discount the naivete, real-world inexperience and credulity of those in power--not just in the state, but in think-tanks, academia and central banks.

Keep in mind that these organizations ruthlessly select out dissenters and those with real-world experience. Those who question the Status Quo arrangement in academia, think-tanks, state agencies, central banks, etc., are weeded out: passed over for advancement, sent to Siberia, marginalized or fired. Those left in charge have little real-world experience outside the cloistered halls of power, and little willingness to risk their own rise to power by questioning the Keynesian Cargo Cult's serial bubble-blowing as the magic that will spark organic growth.

This quasi-religious faith cannot be questioned, for the simple reason there is no Plan B. There is no official policy alternative to the Keynesian Cargo Cult's serial bubble-blowing, because any alternative would necessarily disrupt the existing power structure.

It doesn't really matter which answer we choose; blowing speculative bubbles cannot possibly lead to organic growth because speculative bubbles fatally undermine the real economy.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 01/19/2015 - 10:51 | 5679431 LawsofPhysics
LawsofPhysics's picture

Please, the "markets" are no longer markets, they are casinos, period.

How does "shorting" help markets price and bring innovation to market?  It doesn't, period, especially when nobody is allowed to actually go bankrupt or to prison.

 

If you want to invest in a company or idea, you assume all risk motherfucker.  Useless paper-pushing moneychanging banker wall street fucks need to be all taken out and shot.  Productive folks need to take back the wealth and ownership before anything changes. 

Unfortunately, given the nanny-SNAP baby state at the bottom and arrogant entitlement class at the top, I don't see any other way but the bloody path.

Mon, 01/19/2015 - 10:57 | 5679455 linniepar
linniepar's picture

Simple. The oligarchs are able to fuether consolidate their wealth and power. Think "umbrella" corporation.

Mon, 01/19/2015 - 11:12 | 5679493 weburke
weburke's picture

buying at the bottom as you have said so well before 2minds

Mon, 01/19/2015 - 11:26 | 5679531 Pool Shark
Pool Shark's picture

 

 

Who Benefits When Bubbles Burst?

Simple: The holders of 'money.'

Mon, 01/19/2015 - 12:16 | 5679699 The Merovingian
The Merovingian's picture

Who benefits?    

Simple ... follow the money.  The house never loses.  

Mon, 01/19/2015 - 14:04 | 5680203 Four chan
Four chan's picture

it is mans ego checked my his super ego or in this case reality.

Mon, 01/19/2015 - 12:19 | 5679715 I am more equal...
I am more equal than others's picture

 

 

This article does not answer the question it proposed.  The real question everyone wants to know is how to take advantage of bursting bubbles - not forescasting the black swan event.  We can identify most of the bubbles - real estate, bonds, stocks.  We know why bubbles exist - always looking for the "greater fool" - someone willing to take a lower yield on increasing risk.  Shorting is punished.  Options expire.  What asset groups perform well in bubble bursting environment?

Mon, 01/19/2015 - 13:07 | 5679940 usednabused
usednabused's picture

Yup, shorting is punished. Or disallowed. I still maintain someone should stretch that slimy fucking politician's neck by about 8 inches, that said to effect that he was going to burn the shorts back to their elbows. I won't mention any names but you know who I mean.

Its only through such lawlessness that bubbles can exist. In a true market, bubbles would be recognized as idiocy and get shot down in infancy.

The real question becomes, why are some allowed to be lawless, while others aren't? Then the others are chastised for lifting as much as a voice, let alone a finger in protest. Fucking assholes are what TPTB are.

Mon, 01/19/2015 - 22:20 | 5682200 11b40
11b40's picture

Now that sounds like the $64 Trillion question.

Tue, 01/20/2015 - 00:16 | 5682633 Thomas
Thomas's picture

After years of watching this trimester market, I have concluded that you MUST try to eliminate time sensitivity. If you can be stopped out you will be stopped out. Get it right for each decade and then sit on your hands. The pros can't do this. That is the amateur's advantage.

Mon, 01/19/2015 - 19:17 | 5681525 Escrava Isaura
Escrava Isaura's picture

 

 

I am more equal...

What asset groups perform well in bubble bursting environment?

Cash.

 

Tue, 01/20/2015 - 00:19 | 5682635 Thomas
Thomas's picture

Zactly. You cannot buy at the bottom if you rode the market down. You have to be in cash when nobody else wants it, and then wait and wait and wait some more.

Mon, 01/19/2015 - 20:21 | 5681733 p00k1e
p00k1e's picture

It would depend how large of a bubble.

Cash seems about right.  If you had cash or credit limit in 2009 and wanted to buy a car, "cash for clunkers" was nice.

Window companies had great deals going, yada, yada…  cash. 

Houses were cheap. 

Bonds collapse, pension funds stop paying out, cars and seconds homes flood the market.  The medical industry, depending on the pensioners insurance transfer payments fails to keep their plates in the air.  Cheap lakefronts and cars are coming…. It’s gonna be great. 

As the world around us (dollar holders) collapses, the U.S. stock market should Super Nova, eventually hitting infinity.  

 

??

Mon, 01/19/2015 - 18:39 | 5681385 Captain Chlamydia
Captain Chlamydia's picture

Never read more crap than that! 

Mon, 01/19/2015 - 19:22 | 5681548 Escrava Isaura
Escrava Isaura's picture

 

 

Captain Chlamydia

So, try this writing, instead.

By Matthew Krajcik, at Our Finite World: “If energy use does not increase growth does not increase.”

Does the financial system actually need real growth, or does it really only need the GDP number to get bigger every year?

Does government really need to use more energy, or does it actually just need the tax revenues and GDP numbers to be larger, so it can service its debts?

Perhaps we could consume less in real terms while consuming more in nominal terms. If we use 99% as much oil but the price is 102%, then we have real consumption down 1% but we have 1% nominal growth. We pay 2% more for goods, and consume 1% less of them. We can employ 10 percent more people, by paying all of them money worth only 90% as much.

 

Mon, 01/19/2015 - 19:36 | 5681597 stocktivity
stocktivity's picture

I don't think he was replying to you.

Mon, 01/19/2015 - 20:21 | 5681728 Escrava Isaura
Escrava Isaura's picture

 

 

I understand that Captain Chlamydia was not replying to me.

I was trying to say that things work lot slower than people would like to believe.

 

 

Mon, 01/19/2015 - 17:53 | 5681213 ThirteenthFloor
ThirteenthFloor's picture

Think pump and dump. Generally more is made on downside than the upside if you know when it is coming. But if you can make it happen then you call the shots, a make it on both sides.

Only time this fails, is if some large group holds onto an asset, regardless of the gain or loss they may take, and they can hold off a theft.

Mon, 01/19/2015 - 19:41 | 5681618 hawk nation
hawk nation's picture

The oligarchs get to buy low and sell high and then get to sell high and buy low besides buying up all assets that are forclosed apon for pennies on the dollar

Mon, 01/19/2015 - 11:03 | 5679474 rubiconsolutions
rubiconsolutions's picture

The answer is very easy - bankers always benefit. Under the current rules of engagement if a bubble bursts and the banks are in jeopardy government and central banks bail them out. It's a win-win for them. Unless and until there is a consequence for blowing massive bubbles then the cycle will continue. And by consequence I mean imprisonment or allowing the institutions to fail.

Mon, 01/19/2015 - 13:03 | 5679930 DetectiveStern
DetectiveStern's picture

The smart money sells before the highs and buys the same shit again at the lows classic Rothchild play. One of the scum sold his gilts knowing England had won the Battle of Waterloo (before anyone else knew) causing the price to crash then once it was low enough he bought them all back as the price shot up on news of Englands victory.

Nothing ever changes.

Mon, 01/19/2015 - 14:06 | 5680221 Four chan
Four chan's picture

that was rothschild, he had carrier pigeons deliver early word, they became the richest family in europe. and still are.

Mon, 01/19/2015 - 17:41 | 5681170 Fun Facts
Fun Facts's picture

The Rothschilds are the primary founding family of a 300 year old ponzi scheme.

As such, if the truth were known it would show that this one family controls most of the wealth of the world.

15 of Mayer Amschel Rothschild's offspring married their first cousins.

He kept the families wealth in gold bars stored underneath his chateau.

Go figure.

Mon, 01/19/2015 - 19:17 | 5681530 Morbid
Morbid's picture

no point hating them. they are only doing their job..

Mon, 01/19/2015 - 11:04 | 5679476 mtl4
mtl4's picture

Private profits and social losses are about the best business you can be in besides taxation itself.

Mon, 01/19/2015 - 17:59 | 5681242 disabledvet
disabledvet's picture

Not if you are a Bank. The "ultimate bubble" remains money itself.

 

The whole point of the Federal Reserve was to put an end to these "vast speculations"... Instead the entire country has gone bankrupt.

 

It is interesting that interest rates are plunging...but what if the faith in " credit" (the money itself) is no good?

 

The overnight in Russia is SEVENTEEN PERCENT.

 

And I'm suppose to be long euro's?

I DON'T THINK SO....and neither does more than just "the market."

 

"Political actors" are now coming out of the closet.

 

A NEW DAY HAS DAWNED!  WE ARE AT THE EDIFICE!  I mean PRECIPICE!

 

Mon, 01/19/2015 - 11:14 | 5679498 Motorhead
Motorhead's picture

Fans of West Ham United would not like it.

Mon, 01/19/2015 - 13:05 | 5679936 DetectiveStern
DetectiveStern's picture

Fans of West Ham don't like much.

Mon, 01/19/2015 - 14:05 | 5680208 Motorhead
Motorhead's picture

Especially Millwall.

Mon, 01/19/2015 - 14:57 | 5680445 newdamage
newdamage's picture

Neither of them.

Mon, 01/19/2015 - 11:53 | 5679608 ZH Snob
ZH Snob's picture

we give these guys way too much credit.  they are doing the only thing they know how to do, with no plan B.  therefore, I vote for scenario 1.  

this is the nature of a credit-based system.  maybe, once this credit fiasco finally blows (and that will be the biggest bubble pop of all) the world will have the hard-earned wisdom to understand we've been fooled by a vaporous trick of paper promises.

Mon, 01/19/2015 - 12:22 | 5679720 LawsofPhysics
LawsofPhysics's picture

Yes, I remain optimistic, but at that point there won't be a path forward without retribution

Mon, 01/19/2015 - 13:17 | 5679997 KnuckleDragger-X
KnuckleDragger-X's picture

Yeah, paybacks are a bitch but it'll be a bloody thing all the way around.....

Mon, 01/19/2015 - 16:13 | 5680755 nuubee
nuubee's picture

Absolutely. The men in charge are no smarter than you or I. They have different experiences, that's all. Those differing experiences (and contacts) likely do give them a leg up when dealing with the situations they're presented with, but never mistake resources for wisdom. Never conflate power with conspiracy. Never presume design when incompetence is the easiest answer.

Mon, 01/19/2015 - 19:27 | 5681556 Jstanley011
Jstanley011's picture

Scenario 2 is valid to the end that, as Scenario 1 plays out, PTB-types find themselves in positions "not to let a good crisis go to waste." Consolidating power can be dicey, however, because it points out to the plebs exactly whose heads to place on the end of their pikes when it all, inevitably, goes south.

Mon, 01/19/2015 - 12:31 | 5679768 GuusjA
GuusjA's picture

 

=== Tweet van @CP_SiT op 21 May 2013 ===

@GuusjA neemt aan dat netwerk @euHvR weet wat ze moeten doen!

http://www.forum-voor-de-vrijheid.nl/showthread.php?p=172442#post172442 … #ParadigmaWisseling

 

=== Het enigste wat gebeurde was dat de site uit de lucht ging ===

=== Het lekken over de 3e SpinozaGolf ging dus weer ondergronds ===

 

Ondertussen krijgen de dienaren van het systeem 'Liegen om te Leven' in de gaten dat het de absolute waarheid heel serieus is met de 3e SpinozaGolf. 

 

http://www.nrc.nl/nieuws/2015/01/19/hollande-ecb-komt-donderdag-met-qe/?...

 

De Franse president Hollande lijkt vandaag tijdens een nieuwsjaarspeech te hinten dat de Europese Centrale Bank alle staatsobligaties van de eurozone gaat opkopen voor 50% van de nominale waarde. Wie niet wil leveren zal achterblijven met waardeloze schuldpapieren. De ECB zelf gaf geen commentaar en dus mocht een woordvoerder van Hollande zeggen dat de president “alleen maar sprak over de gevolgen van het mogelijke scenario”.

 

http://politiek.thepostonline.nl/2015/01/19/wij-zijn-theo/

 

De correlatie van de intuïtie met de absolute waarheid gaat via de evoluerende werkelijkheid. Intrinsiek aan de 'Logica van de 1' is dat het bewustzijn wel kan twijfelen aan het bestaan van de wiskundige definitie van de absolute waarheid, maar een geweten met een eenduidige intuïtie niet. 

Mon, 01/19/2015 - 12:43 | 5679839 Encroaching Darkness
Encroaching Darkness's picture

Translator on aisle 5679768 please? We have a Dutch spill .....

Mon, 01/19/2015 - 12:58 | 5679912 ezkappdo
ezkappdo's picture

get the google translate tool on to the chrome toolbar , highlight the section and hit the google translate button and magic, gives you the english version.

Mon, 01/19/2015 - 18:00 | 5681237 The_Dude
The_Dude's picture

I like to keep the NSA as far from my computer as possible, thank you......

Mon, 01/19/2015 - 19:01 | 5681472 MOB666
MOB666's picture

they're already balls deep before you even turn the cunt on.

Mon, 01/19/2015 - 19:42 | 5681619 Calmyourself
Calmyourself's picture

Ever since I started coming here and other less PC freedom type sites my computer seems to have a mind of its own..  Oh well, just want a society of laws not men..  Probably kill me for that one of these days..

Mon, 01/19/2015 - 19:44 | 5681624 unrulian
unrulian's picture

LOL

Mon, 01/19/2015 - 13:15 | 5679990 KnuckleDragger-X
KnuckleDragger-X's picture

the markets we have are the same type as a butcher shop, the meat is only a little different....

Mon, 01/19/2015 - 18:17 | 5681317 booboo
booboo's picture

1,2,and 3 could all be correct depending on your rung on the kleptocracy ladder. Compartmentalizition of players allow them all to function within their own petri dish and allows them to believe that the sun rises and falls on their whim.

Wall Street, D.C. Davos, Brussles, and ultimately this;

" For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.

Ephesians 6:12

 

But go ahead and beat at the wind, you will never score a hit on that bastard. We live in a fallen world and once you come to understand this you stop beating the wind and start living.

Mon, 01/19/2015 - 10:51 | 5679434 thatthingcanfly
thatthingcanfly's picture

2 is a bit far-fetched for me. Central governments (especially the one in D.C.) are so convoluted they can't tie their own shoes. It's impossible for me to believe that the multi-agency coordination to deliberately consolidate power by blowing a bubble in some Jason Bourne-esque conspiracy fantasy is actually what's going on. Opportunists, yes; sophisticated conspirators, no.

I'll go with 3. At least until somebody suggests a plausible 4.

Mon, 01/19/2015 - 10:58 | 5679454 Fun Facts
Fun Facts's picture

4: The politico class are all blackmailable puppets who work for the money. They are not the ones in charge. Their votes are bought and paid for in advance and if they fall out of line their blackmail card is pulled by the ZWO.

Mon, 01/19/2015 - 11:18 | 5679506 shovelhead
shovelhead's picture

Oh please.

If somebody got outed for some disgusting sexual practice, they would have a fan club screaming 'discrimination' by the end of the week.

This ain't the 1950's anymore.

Mon, 01/19/2015 - 12:26 | 5679708 GoinFawr
GoinFawr's picture

So Jian Ghomeshi ought to take heart then?

Mon, 01/19/2015 - 15:56 | 5680668 tumblemore
tumblemore's picture

That's why they use pedophile politicians now.

Mon, 01/19/2015 - 20:51 | 5681845 Tall Tom
Tall Tom's picture

No. They use the pedophile politicians becsuse they are easier to control by the Oligarchs through blackmail.

 

In fact the working echelon, the junior officers in the Pentagram, have been involved with homosexual practices, being ass raped in a coffin with photos taken, in order to be fast tracked to promotions.

 

In this video, "JFK to 911: Everything is a Rich Man's Trick", it exposes that the induction of Jr. Officers into the Pink Triangle is used to subject those inductees to compromise, and advancement, so that they may be controlled as well.

 

http://youtu.be/U1Qt6a-vaNM?t=2h49m25s

 

We are running out of time, folks. They are planning to kill us.

Mon, 01/19/2015 - 18:45 | 5681415 SMG
SMG's picture

You are corrrect except the ZWO part.   The people in power believe they are children of Lucifer and Cain and are superior.  They believe we  (jews included) are children of Adam and are lesser than than them.

This is the reality we face.

 

Mon, 01/19/2015 - 11:48 | 5679607 Dollarmedes
Dollarmedes's picture

2) "...The end result is power has been fully consolidated in the hands of a few, who are then responsible for fixing the post-bubble economy they created to further their own power and wealth."

Who says they accept that responsibility?

3rd world dictators have long sent their children to study at prestigious US universities. The children then go back to become the next dictator in their home country. After the education they receive, the children MUST know that centrally-planned economies retard growth in the country, but this never seems to change anything.

I think it's more likely that the children simply don't care. They are fine with their country being a mess, as long as they get to rule from their palaces.

Mon, 01/19/2015 - 11:51 | 5679617 War_is_Peace
War_is_Peace's picture

"It's impossible for me to believe that the multi-agency coordination to deliberately consolidate power by blowing a bubble in some Jason Bourne-esque conspiracy fantasy is actually what's going on."

 

I held a similar view, until learning about "Ordo Ab Chao", or, order through chaos. The patsies in government that can't tie their shoes are simply order takers. Most have never held jobs in the private sectors, let alone owned a business, so it's impossible for them to understand the damaging impact of the policies they are paid to enforce. The ones drafting and passing the policies, on behalf of the TBTF banks, insurance companies, etc., know exactly what they're doing. 

 

To paraphrase another member of fight club, roll the fucking guillotines, nothing changes otherwise.

Mon, 01/19/2015 - 13:15 | 5679984 usednabused
usednabused's picture

Roll em Baby. You got that part right. Too fucking many parasites on the host. That host needs a general cleansing already. Guillotines or .22's, either way....

Mon, 01/19/2015 - 10:51 | 5679436 NoWayJose
NoWayJose's picture

There is a normal boom and bust cycle in every 'free' market - the main difference is that we have given power to a selected few to over-inflate bubbles that can grow larger than free market forces would allow, and as a result can pop into deeper troughs to be feared.

Mon, 01/19/2015 - 11:11 | 5679491 SuperRay
SuperRay's picture

There hasn't been a 'free' market in decades, if there ever was one. Capitalism is the only economic model that works for everyone, when it is allowed to exists. The last person to try to re-install a free market was teddy Roosevelt, when he kicked the bankers asses. Their response was the federal reserve. We need a gullitene (sp) at the top of the steps of the capital building. Line up bernanke, dimon, and all the other fucks, with that fucking treasonous asshole Greenspan first, and let the heads roll down the steps. Don't clean the blood up. Keep it there as a reminder for future lawmakers...

Mon, 01/19/2015 - 12:23 | 5679728 LawsofPhysics
LawsofPhysics's picture

Not quite.  In a normal "bust" cycle, bad debt is cleared and bad people go fucking bankrupt or to prison.

Please pull your head out of your ass and realize that we haven't had such a real cycle for quite some time now.

Mon, 01/19/2015 - 10:53 | 5679438 vegas
vegas's picture

You are wrong on all counts; who benefits? Easy. Big Government benefits from the carnage; the same people who created the conditions for the bubbles, are the same ones who proclaim they are the ones to "fix" the problem and the solution is ALWAYS more government. As Rahm once quiped. "Never let a crisis go to waste".

 

www.traderzoo.mobi

Mon, 01/19/2015 - 12:01 | 5679649 s2man
s2man's picture

Um, that is answer no. 2.

Mon, 01/19/2015 - 10:52 | 5679440 chunga
chunga's picture

In the housing bubble the banksters bought fake insurance at the peak. Then, the bill was sent to the taxpayers when it popped.

It's just fraud like Bill Belichick deflating all the footballs while nobody is looking.

Mon, 01/19/2015 - 12:05 | 5679662 SuperRay
SuperRay's picture

Well, at least with belichek, the ball was deflated for both teams (I think)

Mon, 01/19/2015 - 10:53 | 5679441 Fun Facts
Fun Facts's picture

The central tenant of the ZWO is "out of chaos comes order". Their order.

By devolving the world into a serfish clusterfuck, they gain more power and dominion over humanity themselves.

Interestingly, this is exactly what is happening to the world.

It is not an accident.

Mon, 01/19/2015 - 18:12 | 5681302 disabledvet
disabledvet's picture

"I'm not robbing the casino I'm here to take the gamblers hostage."

 

That's how a real Oceans 11 plays out if I were going to write  the script.

 

 "Shut down The Strip."

Mon, 01/19/2015 - 18:42 | 5681391 SMG
SMG's picture

Ordos ab chao (From chaos, order) is Lucfierian/Satanic, not Jewish/Zionist.  We are dealing with people who believe themselves children of Lucifer.  Otherwise you are correct.

Mon, 01/19/2015 - 10:55 | 5679449 mayhem_korner
mayhem_korner's picture

 

 

A:  Those who hold real assets. 

Next question.

Mon, 01/19/2015 - 11:24 | 5679525 shovelhead
shovelhead's picture
Like a $250,000 house they bought for 750,000 ?
Mon, 01/19/2015 - 12:05 | 5679645 mayhem_korner
mayhem_korner's picture

 

 

If that house has some land, and it is paid off, then yes.  If it's not paid off, then it's neither an asset nor is it "held."

Far better than $750K in paper securities "owned" that were purchased for $250K.  As many will find out.

Mon, 01/19/2015 - 13:00 | 5679920 SimplePrinciple
SimplePrinciple's picture

Pay off that house, you say?  Not possible.  It is a permanent rental at whatever property tax rate the impoverished hordes living near you deem just.

Mon, 01/19/2015 - 16:01 | 5680699 tumblemore
tumblemore's picture

Like a $250,000 house they bought for 750,000 ?

 

That's what QE is for. The public are buying all that dreck off the banks.

Mon, 01/19/2015 - 10:55 | 5679450 f16hoser
f16hoser's picture

Bursting Bubble Bitchez's

Mon, 01/19/2015 - 10:57 | 5679451 sam i am
sam i am's picture

Novorussia SITREP: Intensive combat operation all over the line of contact in Novorussia

http://vineyardsaker.blogspot.com/2015/01/novorussia-sitrep-intensive-co...

The Ukrainians are now accusing the Novorussians of using "super-weapons."

Latvia bans Russian language, the native language for the quarter of its population.  Remember, the war in Ukraine started with the making the use of the Russian language a criminal offence.

http://rusvesna.su/news/1421677050

Mon, 01/19/2015 - 19:29 | 5681572 HowdyDoody
HowdyDoody's picture

These potato heads are a laugh! The Lithuanians are not much better. Their government has produced a leaflet "How to survive a Russian invasion". What have the Baltic states got that's worth invading for? Potatoes? I'm sure Russian can do that already.

Mon, 01/19/2015 - 12:27 | 5679453 no more banksters
no more banksters's picture

"The Asian crisis began in Thailand. Hundreds of thousands of offices and apartments were built, but nobody wanted them, and brokers went bankrupt under the weight of loans. Investors from the West panicked and rushed to get their money out of the country. The panic began to spread first in South Korea. Housewives formed queues to give their surplus to the government to save country, but this was not enough. [...] Providing billions of dollars in loans, the IMF rescued western investors and pushed the taxpayers of the countries deeper into debt because they had to repay the IMF. The result of the cuts was the destruction of the area. In Indonesia, the government subsidies were removed as instructed by the western bankers. Prices soared and within a few months, in a country of more than 200 million, 15% of the male workforce lost their jobs. Economic output fell by 14%. The economy collapsed and ethnic and religious strife began. The same happened in Thailand and South Korea. Millions of people went back into poverty from which they thought they had escaped forever. By the mid 1998, the Asian economies collapsed. It was the biggest disaster for countries since the big recession of the 30s."

http://x2t.com/1/AsianBubble

Mon, 01/19/2015 - 10:57 | 5679456 WOAR
WOAR's picture

I'm gonna go with scenario #2.

Simply put, the state can still benefit when the Status Quo ceases to function. How? They change the status quo.

Wasn't every currency pegged to gold just a couple of generations ago? Were robot slaves possible 10 years ago? Didn't we enter a "recovery" 7 years ago?...

And on and on it goes, where it stops, nobody knows,

But when it does, and everything pops and everything blows,

Around and around and around the shit will go!

Mon, 01/19/2015 - 10:58 | 5679460 Der Wille Zur Macht
Der Wille Zur Macht's picture

Can somebody tell me why the SP500 is on an upward trajectory this morning? Oil is dumping again and there is bad news out of China. What exuberant expectation is causing this levitation?

Mon, 01/19/2015 - 11:05 | 5679479 JRobby
JRobby's picture

Anti Depressants

Mon, 01/19/2015 - 11:15 | 5679501 weburke
weburke's picture

because so many feed off it. folks say so much has changed, well, how about our view of proper pe? pe 1000 the new normal? 

Mon, 01/19/2015 - 12:17 | 5679705 Fun Facts
Fun Facts's picture

The SP500 is on an upward trajectory because the central banks are the largest customer at the CME.

If they stop buying sp futures with the printed money, the whole house of cards comes down and the banksters lose their political support.

Mon, 01/19/2015 - 12:28 | 5679757 Eyeroller
Eyeroller's picture

Ramping it up while US markets are closed in preparation for profit-taking sell-off on Tuesday, perhaps?

Mon, 01/19/2015 - 19:46 | 5681630 stocktivity
stocktivity's picture

Going up because Draghi's shock and awe coming Thursday.

Mon, 01/19/2015 - 19:32 | 5681582 Son of Captain Nemo
Son of Captain Nemo's picture

All in All it's just another BRIC in the "Wall"!

Mon, 01/19/2015 - 10:58 | 5679462 spinone
spinone's picture

Who benefits from bubbles?  Those with the inside information to know when and in what the bubble will be blown, and when it will pop.

Mon, 01/19/2015 - 13:33 | 5680067 green888
green888's picture

The young should be the ones to benefit

Mon, 01/19/2015 - 10:59 | 5679464 29.5 hours
29.5 hours's picture

 

 

Okay, the last bubble was pretty bad, but THIS next bubble is a sure thing...

 

 

Mon, 01/19/2015 - 11:04 | 5679471 RaceToTheBottom
RaceToTheBottom's picture

Well if the 1% now have more than the remaining 99%, that kinda tells you who have benefited from the recent years of fake markets and bubbles.

Mon, 01/19/2015 - 11:04 | 5679472 JRobby
JRobby's picture

#3, there are a large group who think Real Estate will return as a "growth asset" because they did well for a long period with it. They are younger and they either do not, or refuse to see that the artificially low rates and massive financialization / securitization fueled that bubble.

So they stand around waiting.

 

Mon, 01/19/2015 - 11:57 | 5679636 weburke
weburke's picture

would 100 year mortgages do the trick?

Mon, 01/19/2015 - 11:05 | 5679477 Latitude25
Latitude25's picture

Corollary to #3.  Humans, on average, are no more intelligent than bacteria and will eventually experience exponential growth in a petri dish and then suffer when the population collapses, poisoned by its own by products (shit).

Mon, 01/19/2015 - 11:53 | 5679622 SelfGov
SelfGov's picture

+

Mon, 01/19/2015 - 11:05 | 5679482 geekz_rule
geekz_rule's picture

the same ol plutocrats, thats who.

expand expand expand -> CONTRACT

thats the history of central banking

duh

P < P + I

Mon, 01/19/2015 - 15:55 | 5680663 Kobe Beef
Kobe Beef's picture

Exactly. Who wins when a bubble pops? The Entity whose ability to issue credit is unaffected, that's who.

 

Mon, 01/19/2015 - 11:05 | 5679483 Temerity Trader
Temerity Trader's picture

I vote for number one! The bankers ran out of options long ago. In order to keep the peace, the illusion must be maintained at ALL costs. The alternative is a complete system failure and total collapse. The bankers and oligarchs are not all stupid, but they well understand Bernay’s theories and also how fear and greed work. Bears seem to miss that failure is not an option for the top 1%. To maintain their enormous wealth expansion, they cannot have riots in the streets and civil unrest. The bankers are keeping millions happy as they see their 401K’s soar month after month. Wealth inequality is a minor issue for most compared to having the newest I-Phone, or who won ‘Dancing With The Stars’.  They don’t worry the Fed buying someone another new yacht, so long as the Fed keeps their monthly SUV payments affordable.

The ECB will announce more QE soon and any further weakness here, we will also see more jawboning then more QE. Dow 7000 cannot be allowed. Perpetual central bank intervention is part of the New Normal. If the bubble does burst, the Fed may go to direct market intervention, like the BOJ. For now, so long as the masses have Faith in Fed, the bubble can be kept inflated.  Buyback managed earnings are fine, lousy earnings are fine, soaring P/E’s, all irrelevant if everyone is certain the Fed stands ready to intervene.

Mon, 01/19/2015 - 11:16 | 5679500 RaceToTheBottom
RaceToTheBottom's picture

The key is the duration of debt for the serfs.

Originaly, 4 year car loans, now 40-50 year house loans

Mon, 01/19/2015 - 11:27 | 5679537 Ghordius
Ghordius's picture

you forgot US student debt. there, the duration is forever. and since the student is the collateral, the whole thing is more like free-range slavery then serfdom

Mon, 01/19/2015 - 11:08 | 5679486 IridiumRebel
IridiumRebel's picture

*DANISH CENTRAL BANK CUTS DEPOSIT RATE TO -0.2% FROM -0.05%

NIRP!

Mon, 01/19/2015 - 11:31 | 5679488 Counterpunch
Counterpunch's picture

Those with the power to issue currency, and those with large amounts of capital.... obviously.

Bubble's just another word, for, firesale.


Think Russia under Yeltsin and who beneffitted and how.


That.

Mon, 01/19/2015 - 11:20 | 5679494 firstdivision
firstdivision's picture

I see someone forgot to program some MLK day logic into their algos...I'm looking at you Kevin.

Mon, 01/19/2015 - 11:17 | 5679503 unklemunky
unklemunky's picture

So, we stop playing the game. 401k's are a joke. The stock market is rigged. The only real wealth you can create in this world is a skill that you can earn a living with. Take the money you make and buy real assets like land. There is no quick buck that will not be taken from you as fast as you took it from someone else. Our society has forgotten what real wealth is. That is the ability to feed yourself and your family. Not having a rolls royce and a lear jet. That crap is all temporary. Buy guns, bullets and land and for God's sake learn to work for a living. Screw the stock market. It is now destroyed with the cancer of corruption.....er goldman sachs and booooorock o bla bla.

Mon, 01/19/2015 - 11:53 | 5679625 Dragon HAwk
Dragon HAwk's picture

Somebody told us Wall Street fell.. but we were so Poor that We couldn't tell...

Mon, 01/19/2015 - 11:19 | 5679504 Ghordius
Ghordius's picture

"This quasi-religious faith cannot be questioned, for the simple reason there is no Plan B. There is no official policy alternative to the Keynesian Cargo Cult's serial bubble-blowing, because any alternative would necessarily disrupt the existing power structure. "

this is only somewhat correct. the problem here is that the quasi-religious faith of the Keynesian Cargo Cult serial bubblers is contrasted with a quasi-religious faith that it has to blow up, with Armageddon riders in Nazi uniforms on Velocyraptors and an Apocalypse of Hollywood-like huge balls of fire

go back for a moment to the old-fashioned if sometimes a bit stodgy (and very averse to debt jubilees) Austrian School: simplified to the max, it says "you pump a bubble, you earn a depression", where the pumping is like getting drunk and the depression is the time you spend nursing your hangover

nothing can't be fixed with balanced budgets and a sensible, no-QE monetary policy. but it takes... time. it is something for the... patient

but of course if you don't let anybody fail, i.e. default, it takes even longer. and so there comes this wish for something that goes "BANG!" like the "whole bubble" bursting

the problem is of course valuation. how much is the whole planet and it's economy worth? you can make up a number, but the real answer is: there won't, ever, be enough money to buy the whole of it. That's one of those Paradoxons involving people that can put a price on everything but don't understand the value of anything

it's similar to those who say that the Mighty Dollar is the global reserve currency because of the vast US military

that's hard power. it does, sometimes, help soft power, but the USD is what it is because of the American soft power. it's a kind of goodwill. by the rest of the world

(otherwise Russia would not have any issues with it's Ruble, then it has it "all", the military, the small debt, gold, the somewhat balanced budget, etc. and all the world would pile on Rubles)

Mon, 01/19/2015 - 11:18 | 5679509 farmboy
farmboy's picture

Those with cash = gold  after the crash and are able to pick up the pieces. 

Mon, 01/19/2015 - 11:30 | 5679514 Dre4dwolf
Dre4dwolf's picture

Banks benefit.

Step 1 Create money out of thin air, and get some sucker to borrow it against his property.

Step 2 Pop bubble

Step 3 Sieze Property for money that you lent that never existed

 

Step 4 ?? Profit FREE PROPERTY!

 

When it literally costs you nothing to make loans and encumber property . . . you inevitably should end up with all the property.... if you don't endup owning all the monopoly cards, you are doing something wrong.

 

 

The reason the economy is on its death-bed is because banks used to lend to small businesses (with almost no collateral) and small businesses would take that loan and spend it on capital improvements, plant and equipment to boost productivity.

Now that the plant equipment and productivity are all abroad in china and the USA has been de-industrialized, there is no boost to productivity/ gdp from borrowing anymore and now loans take collateral, so not only are loans not going to boost productivity, they are actually encumbering and taking productive assets out of the economy as well.

Its a catch 22, doomed if you loan, and doomed if you don't loan because unless industry comes back to the USA, you have no productivity to loan into to boost..... unless you count bullshit pencil pushing jobs as "productive"... which lets face it . . . those jobs are pretty much the socialist jobs that govt has legislated into existence for the sake of buying voters they are bubble jobs that will disappear when the govt and banking sectors become unstable.

You probably have 2 million accountants in the USA by now (there-abouts) , all those jobs would almost disappear if the IRS simplified the tax code.

You have 30% of the population working in some govt job doing nothing . . . all those jobs would almost disappear . . .

For every 1 person working and actually building this country up, you have 3 people mooching at a govt desk tearing the country apart.

Honestly the only exception to these views of mine would be the productive sectors of govt.

-Fire Departments

-Sanitation Departments

-Civil Engineers and Architects are neccessary to keep buildings from falling on our heads.

-Municiple water etc... (if they would stop dumping chemicals in the water that would be nice though...)

-Maybe you can count 10% of the police force as neccessary and beneficial . . .

 

The rest of the departments pretty much just get in the way of things getting done and bloat the costs of getting those things done to the point where if they do get done, they get done half-assed to save money.

 

 

Mon, 01/19/2015 - 11:56 | 5679630 shovelhead
shovelhead's picture

The reason the economy is on its death-bed is because banks used to lend to small businesses (with almost no collateral)

Pure fantasy.

The only people that loan with no (real) collateral are CB's loaning to banks with fake valued 'assets'.

Your Mom might loan you $50.00 without a note.

Then' there's Vinny Gibonni who will loan you whatever you need without a signature.

He also knows where you live. You are the collateral.

Mon, 01/19/2015 - 11:20 | 5679519 GRDguy
GRDguy's picture

Who benefits???  The answer was stated in the old 1889 book "The Great Red Dragon: Foreign Money Power In The United States."  Right there in the introduction. THEY want "to own the earth in fee-simple."  THEY are the sociopaths who hide in religions.  THEY don't care about the money, THEY create it.  But THEY do care about TITLE. Just ask who currently has TITLE and you'll find the answer every time. http://GreatRedDragon.com and there are NO ads here.

Mon, 01/19/2015 - 11:38 | 5679577 shovelhead
shovelhead's picture

Lemmee guess...

It's those damn Irish again?

Mon, 01/19/2015 - 14:07 | 5680218 usednabused
usednabused's picture

GRDguy, thanks for the link. That site looks to be very interesting

Mon, 01/19/2015 - 11:32 | 5679552 orez65
orez65's picture

Bubbles are the result of monetary leverage: "Monetization and Fractional Reseve Banking".

Bankers, politicians and the well connected benefit as the bubble expands throgh the rising stock market, bonds ...

The smarter ones convert a good part of their ill gained theft to gold and silver. They then pick up hard assets at bargain prices as the bubble deflates.

So they "win" as the bubble inflates and as it collapses.

"It pays to be the king"

And it is only proper that they end as king Louis XVI of France soon.

Mon, 01/19/2015 - 11:33 | 5679555 chindit13
chindit13's picture

There is another answer, but I suspect it isn't included in the choices because it spreads the blame more widely. It isn't just the authorities (who would be called patronizing if they tried to stop a bubble mid pace); it is everybody who wants "his fair share"  or his piece of the gravy train.

Bubbles happen because market players are human and leaders are human.  People think the bubble will go much farther, go on forever, or that they will get a chair when the music stops.  It happens, and has always happened, in equities, in real estate, in new technologies...even in PMs.  What country has not overbuilt?  What stock market didn't go way too far?  How many times does silver have to do a three-for-one split?  We humans have never learned, and never will.  If there are "winners", it is either because of dumb luck, or in a very cases because a select few can sense when the music is about to stop (we all like to think it is each of us, just as we like to foist all the blame on the elite).  The markets are only slightly different today than ever, despite the oft-touted claim that they are (only now) "casinos".  Markets have always been casinos.  Actual casinos just cut away the false probity and call a spade a spade.  There never was a time when all investment decisions were made only after careful and mature analysis, review of all pertinent fundamentals, and finally a commitment of capital merely looking for a small but fair return.  No matter the time, no matter the system, it always goes too far, because the game is always played by folks driven by very human hopes and dreams.  There's tulips, the South Sea, and a host of "Panics" just about every ten years from the 1820s onward...just to name the most widely known ones.  It isn't fiat, Fed or fractional reserve so much as it is human nature.  The system, whatever it is, is just noise.  Change the system to whatever the new flavor of the day might be, and there will still be bubbles.  Every possible permutation of an economic system has been tried over the last few thousand years, and each and every one, without exception, has produced bubbles, because each one, in the end, was driven by unchanging human nature.

This time is NOT different.  The next time won't be different either.  Nor the one after that.

Mon, 01/19/2015 - 12:07 | 5679588 shovelhead
shovelhead's picture

Access to cheap money makes almost everyone stupid because they believe someone dumber than them will always come along. And it works for a good long while...

Until the bidders disappear.

It's a human thing.

Mon, 01/19/2015 - 11:53 | 5679624 Ghordius
Ghordius's picture

+1, but I have to stop at "Markets have always been casinos..."

no, not in my book. a market without any speculation fluctuates, wildly, particularly if a seasonal product is involved. example: wheat

introduce some speculation, and the effect is benign. up to the point where speculation, weather forecasting, market forecasting and warehousing work so well that you have a somewhat stable price for wheat, the whole year

now add more, pardon, moar speculation, in form of more participants or much moar credit/leverage for speculation and then you have a financial casino with some real economy attached to it

I remember when there was "a time when all investment decisions were made only after careful and mature analysis, review of all pertinent fundamentals, and finally a commitment of capital merely looking for a small but fair return". no, not in all markets, some where already lost to this approach. and now we have nearly everywhere the global financial casino betting on

and speculation of the malign kind frenzies, and causes even moar "agitation", usually first up to the stars and then down to the bottom

Mon, 01/19/2015 - 11:32 | 5679556 DragonWings
DragonWings's picture

actually there is a very simple way out, when bubbles deflate liquidity needs to be sustained as the fed did, it as not an horrific scenario as many paints it, yet the power structure has to be changed right there at that moment. We didn't have the guts to do it however... probably will never have...

Mon, 01/19/2015 - 11:38 | 5679580 Hubbs
Hubbs's picture

Bankers and non productive, non value added money changers who rake in the profits from their activities, and then turn around to buy physical things like yachts, second, third homes, gold, and other tangibles.

 

The trick is to use the money before it becomes worthless.

Mon, 01/19/2015 - 14:25 | 5680295 Accounting101
Accounting101's picture

Or to sell the assets before they become worthless. To find the Greater Fool.

Mon, 01/19/2015 - 11:41 | 5679589 dexter_morgan
dexter_morgan's picture

Banks benefit since they will get bailed out if things go south.

Mon, 01/19/2015 - 11:41 | 5679590 Downtoolong
Downtoolong's picture

I can think of several more examples of those who benefit from blowing and busting bubbles:

- Sellers of inflated assets who were either smart enough or dumb lucky enough not to replace them with other inflated assets until after the bubble bursts.

- Debtors who are allowed to default after their highly speculative debt financed ventures fail. They enjoy a “heads I win bigtime”  proposition while the bubble is blowing and a “tails you lose bigtime” proposition after the bubble bursts.

- Most importantly, there are the financial intermediaries and service companies.They make money on every transaction, whether the bubble is inflating or deflating. In fact, the inflation/deflation cycle increases the number of transactions many multiples over what it would be if the cycle didn’t occur. In other words, blowing and bursting bubbles are the financial intermediaries best friend, because, it increases their ability to extract wealth from the rest of us all the time. No wonder they (Wall Street) and their central bank minions are the ones promoting asset bubble cycles all the time.  

    

Mon, 01/19/2015 - 11:43 | 5679592 honest injun
honest injun's picture

The insiders benefit.  They know which asset classes will increase in price when they are inflating the bubble.  When they know that the bubble can't get any bigger, they short the asset classes that they know will be harmed by the pop.  You and I can do the same but we cannot predict when the pop will occur.

Mon, 01/19/2015 - 11:46 | 5679606 TSTM
Mon, 01/19/2015 - 11:50 | 5679616 grid-b-gone
grid-b-gone's picture

The creation of bubbles is rooted in human nature. Think about it. The Fed did not want the S&P under 700, so now it's over 2,000. Some of the gain has been core healing and recovery, but it's hard to tell how much. We can argue the merits, but the human desire to produce growth will only be corrected by the market.

Everyone of us has blown up a balloon to the point of it bursting. When you think it's about to pop, it can take another dozen breaths to make it happen. Limits will always be tested and broken. That's how man got to the moon... that's how parents who want a better life for their children get their Dreamer children next in line. We as humans will always take that risk. That's how us Irish, Italians, etc. did it 100 years ago. Not much has changed, especially the political and social resistance, but in the end, the risk takers are a net gain for the receiving group.

There is always a time when a prevent defense is the prudent option, but as a species, the acceptance of risk, even its purposeful creation, is in our genes.

Stay vigilant. Remember, even the person blowing into the balloon jumps when it pops.  

Mon, 01/19/2015 - 11:53 | 5679621 Son of Captain Nemo
Son of Captain Nemo's picture

...there is no Plan B...

No there isn't. 

Those who know and understand what has been coming since 2008 know we're totally fucked and there are no more options after 7 years to "fix"!

No more finger pointing at the people in D.C. either because the blame and bucks stops "here"!

Great summary.

Mon, 01/19/2015 - 11:55 | 5679628 GMadScientist
GMadScientist's picture

Qui bono, eh?

I think you're forgetting to include the long period of suspension of disbelief from which all asset holders benefit during inflation as well as the fact that those asset holders are seldom the ones holding the bag when the crash hits.

So in answer to your query: "The one with a yacht and private island after the crash, motherfucker."

Mon, 01/19/2015 - 11:57 | 5679635 Ghordius
Ghordius's picture

which is a simple reminder: if you have a mortgage on your yacht and private island... then it isn't yours. live by leverage, die by leverage

Mon, 01/19/2015 - 12:08 | 5679677 grid-b-gone
grid-b-gone's picture

True, the yacht market crashed even more than most assets after 2008.

 

Mon, 01/19/2015 - 18:19 | 5681326 css1971
css1971's picture

I used to have enough money to buy and more importantly, run a yacht. Then I got married.

Mon, 01/19/2015 - 20:14 | 5681711 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

I never had enough money to get married, or even rent a yacht, let alone buy one, and run it. Then I rolled another reefer!!!

 

:|

Mon, 01/19/2015 - 12:43 | 5679829 GMadScientist
GMadScientist's picture

Succinctly: "Never gamble with your own money"

Mon, 01/19/2015 - 11:55 | 5679629 kchrisc
kchrisc's picture

"Who Benefits When Bubbles Burst?"

Those that made the bubble. Period.

"Bubble," as in financial bubble, is a Newspeak term for theft.

The "print" theft, they leverage that theft, then they catch the fallout of their theft's collapse.

The banksters need to repay us.

 

Theft 1) They steal the people's deposits.

Theft 2: They "print " wealth stealing fiat that later shows up as price inflation.

Theft 3) They steal assets with the "printed" fiat via Wall St. and leverage-loans.

Theft 4) They collect interest on their loaned out fraud-money.

Theft 5) They take possession of the collateral of their loan victims when the bubble bursts.

Mon, 01/19/2015 - 12:27 | 5679741 chistletoe
chistletoe's picture

When I was in junior high school and going through puberty, I weighed between 60 and 80 pounds and stood at 4 feet 4 and a half inches.  I was the shortest kid in the whole school, all three years.  Needless to say, everyone made fun of me, all the guys, all the girls, even the teachers and the principal.

 

So you want to know who benefits when a bubble bursts?  I DO!

 

I am still short...muhahahahahahahaha

Mon, 01/19/2015 - 12:44 | 5679834 GMadScientist
GMadScientist's picture

It's all good. Your nose is at just the right height.

Mon, 01/19/2015 - 12:59 | 5679908 Atomizer
Atomizer's picture

Today is a socialist anti-capitalism day. A nigger was shot protecting the constitution. Union postal workers are off, banks are closed. No Government services. Look at the future problems in the banking derivatives mirror.

Hard to hide the central planning fuck up. 

Mon, 01/19/2015 - 13:07 | 5679949 Atomizer
Atomizer's picture

How much did it cost taxpayers to have holiday without threating shuting down Government services to raise the debt limit. 

Home > Calendar > Holidays > United States > Lincoln's Birthday http://c.tadst.com/gfx/n/spr-soc.png); color: #176db3; width: 20px; height: 20px; display: inline-block; margin-left: 5px; text-decoration: none !important; background-position: 0px 0px; background-repeat: no-repeat no-repeat;" href="http://www.timeanddate.com/bm/17"> http://c.tadst.com/gfx/n/spr-soc.png); color: #176db3; width: 20px; height: 20px; display: inline-block; margin-left: 5px; text-decoration: none !important; background-position: 0px 0px; background-repeat: no-repeat no-repeat;" href="http://www.timeanddate.com/bm/9"> http://c.tadst.com/gfx/n/spr-soc.png); color: #176db3; width: 20px; height: 20px; display: inline-block; margin-left: 5px; text-decoration: none !important; background-position: 0px 0px; background-repeat: no-repeat no-repeat;" href="http://www.timeanddate.com/bm/8"> Lincoln's Birthday is next month. 
Mon, 01/19/2015 - 13:36 | 5680033 Batman11
Batman11's picture
Who Benefits When Bubbles Burst?

Wrong question, the right question

Who benefits from the current system where bubbles inflate slowly and then burst rapidly?

Anyone paid on bonuses for short term performance, eg: sub-prime 2001-> 2008

2001 -> 2008 many years of performance related bonuses

2008 - no bonus

It maked sense to slowly inflate bubles and then watch them pop.

The quick bubble pop reset paves the way for more performance related bonuses in the future.

Bonus maximisation is provided with the current bubblicious system.

 

 

 

Mon, 01/19/2015 - 13:29 | 5680034 malek
malek's picture

You forgot a scenario:

4. On a foundation of #1, the negative effect of bubbles popping are condoned by TPTB, because the "feel-good" driven sheeple accept 6 months of crash hurt after 6 years of feel-good during the bubble inflating phase, plus they are unable or unwilling to do more than short-term planning or learn from history.
A convenient side effect is #2, however buying up companies on the cheap who believed the bubble times will last forever, overinvested, and then went bankrupt in the bust is an even nicer side effect for the rich.

Mon, 01/19/2015 - 13:38 | 5680075 Atomizer
Atomizer's picture

Being lazy. Since Google has a piss poor agroithm. Just figure it out two nights ago. Delete from the beginning. There goes the ad business. Still running Intel i7 without flash update. Stupid cunts still trying to hack into our personal computers. Good luck noobs.

Delete from the beginning wipes out, we know what your thinking bullshit. Mrs Atomizer Gmail account. Yesterday, after logging off Google, she couldn't believe the amount of new links she could view. Without being told by suggestive Google adsense. 

My words, told you so. She laughed, said that i'm still a prick, then hunged me. That's true love. Winks 

Mon, 01/19/2015 - 13:50 | 5680136 mijev
mijev's picture

Michael Jackson's pet chimp was called Bubbles. And every time someone says "blowing bubbles" I get a visual that I can't get out of my head for a while.

Mon, 01/19/2015 - 14:19 | 5680275 robobbob
robobbob's picture

The answer is number 2, at least for the real insiders,

and

"Post-bubble economies cannot be fixed if the current power structure remains intact, so the Powers That Be face an impossible task."

is completely wrong.

The TBTP fully expect the collapse, perhaps even pulling the plug themselves after suitable patsies are in place to take the blame.

This is one of the corner stones of the entire NWO, One World Government scheme.

Various members of the Free Stuff Army, Nationalists and Patriots, Free Market Advocates, and quiet a few 1%ers who find they weren't as insider as they thought, will be thrown to the mob. And when the dust settles, the real PTB will arrive on a white horse with their plan of salvation. technocratic neo feudalism.

Mon, 01/19/2015 - 14:56 | 5680438 Peter Pan
Peter Pan's picture

The only people who benefit from a collapse are those who have no debts and whose cash flow remains relatively unscathed. They are the ones best positioned to buy assets at distressed prices.

Mon, 01/19/2015 - 17:20 | 5681064 Atomizer
Atomizer's picture

Ding,ding,ding. 

Mon, 01/19/2015 - 15:58 | 5680684 brodix
brodix's picture

HaHa. Life is a bubble. What goes up, comes down. The alternative is the flatline. This just happens to have been a very big up and the downside looks disturbing.

Mon, 01/19/2015 - 16:34 | 5680829 tumblemore
tumblemore's picture

1) Money-lenders make money on debt so it is in their immediate short-term interest to maximize debt.

2) Money-lending eats itself over time because credit worthiness is based on disposable income and as debt increases disposable income decreases because of the debt repayments so it is in their medium term interest to not maximize debt.

The imbalance between their short term and medium term interests is what causes boom and bust.

 

#

However as long as the money-lenders are able to bribe politicians to bail them out when the bubble bursts they don't actually lose anything so they don't actually *need* to benefit from the bubble bursting. All they need is to make money on the bubble and to not lose it when the bubble bursts.

From an occam's razor point of view this has the fewest moving parts and doesn't require any big plan or conspiracy. The first part is simply the natural consequence of fractional reserve banking and greed and the second part is a panic stricken bribing/bullying of politicians when it all goes wrong.

 

#

In reality they do benefit from the bubble bursting as well because after they're bailed out they can buy up assets at fire sale prices like they did in Weimar but it's not actually necessary.

As they do benefit from the busts it is certainly possible they do it deliberately but personally I think it's mainly short term greed.

 

 

Mon, 01/19/2015 - 17:33 | 5681139 gdpetti
gdpetti's picture

The real oligarchy benefits, and they aren't o be found listed among the 1%... that bunch are expendable, same as the rest of the herd.

Mon, 01/19/2015 - 17:54 | 5681216 Barnaby
Barnaby's picture

Tech Bubble.

Who lost: VC of the "disinterested" stripe.

Who won: people who wouldn't have been employed, if the VC had vetted them personally.

Example: "Let's build a way for AIBO robots to connect to home stereo systems!" AIBO fails, Sony takes a hit. This entire investment falls like a redwood. Golden parachutes for the vultures.

* I only say this because the complexity of the Bubble requires human collaborators who depend on paychecks. Break the paycheck, break the tax scheme, burst the bubbles forever.

Mon, 01/19/2015 - 18:00 | 5681240 blindman
blindman's picture

stealing (n.) Look up stealing at Dictionary.com
14c., verbal noun from steal (v.). Old English had stælðing "theft."
.
http://www.etymonline.com/index.php?allowed_in_frame=0&search=stealing&s...
.
they would have you never comprehended such a thing.

Mon, 01/19/2015 - 18:05 | 5681268 blindman
blindman's picture

and the rest ...
steal (v.) Look up steal at Dictionary.com
Old English stelan "to commit a theft, to take and carry off clandestinely and without right or leave" (class IV strong verb; past tense stæl, past participle stolen), from Proto-Germanic *stelan (cognates: Old Saxon stelan, Old Norse, Old Frisian stela "to steal, to rob one of," Dutch stelen, Old High German stelan, German stehlen, Gothic stilan "to steal"), from PIE *stel-, possibly a variant of *ster- (3) "to rob, steal."

"The notion of secrecy ... seems to be part of the original meaning of the vb." [OED]. Intransitive meaning "to depart or withdraw stealthily and secretly" is from late Old English. Most IE words for steal have roots in notions of "hide," "carry off," or "collect, heap up." Attested as a verb of stealthy motion from c.1300 (as in to steal away, late 14c.); of kisses from late 14c.; of glances, sighs, etc., from 1580s. The various sports senses begin 1836. To steal (someone) blind first recorded 1974.
steal (n.) Look up steal at Dictionary.com
1825, "act or case of theft," from steal (v.). Meaning "a bargain" is attested by 1942, American English colloquial. Baseball sense of "a stolen base" is from 1867.
stealing (n.) Look up stealing at Dictionary.com
14c., verbal noun from steal (v.). Old English had stælðing "theft."
stealth (n.) Look up stealth at Dictionary.com
mid-13c., "theft, action or practice of stealing," from a probable Old English *stælþ, which is related to stelen (see steal (v.)), from Proto-Germanic *stælitho (cognates: Old Norse stulþr), with Proto-Germanic abstract noun suffix *-itho (see -th (2)).

Compare heal/health, weal/wealth. Sense of "secret action" developed c.1300, but the word also retained its etymological sense into 18c. Got a boost as an adjective from stealth fighter, stealth bomber, radar-evading U.S. military aircraft, activated 1983.
kleptomania (n.) Look up kleptomania at Dictionary.com
1830, formed from mania + Greek kleptes "thief," from kleptein "to steal, act secretly," from PIE *klep- "to steal," an extention of root *kel- (2) "to cover, conceal" (see cell; cognate with Latin clepere "to steal, listen secretly to," Old Prussian au-klipts "hidden," Old Church Slavonic poklopu "cover, wrapping," Gothic hlifan "to steal," hliftus "thief"). Much-derided 19c. as a fancy term for old-fashioned thievery and an opportunity for the privileged to claim a psychological motive for criminal misbehavior.
There is a popular belief that some of the criminal laws under which the poor are rigorously punished are susceptible of remarkable elasticity when the peccadilloes of the rich are brought under judgment, and that there is some truth in the old adage which declares that "one man may steal a horse where another dare not look over the hedge." This unwholesome distrust is not likely to diminish if, in cases of criminal prosecutions where so-called respectable persons commit theft without sufficiently obvious motive for the act, they have their crime extenuated on the plea of kleptomania, as has recently occurred in several notable instances. ["Kleptomania," "The Lancet," Nov. 16, 1861]
rip-off (n.) Look up rip-off at Dictionary.com
"an act of fraud, a swindle," 1969, from verbal phrase rip off "to steal or rob" (c.1967) in U.S. black slang, from rip (v.) + off (adv.). Rip was prison slang for "to steal" since 1904, and was also used in this sense in 12c. Meaning "an exploitative imitation, a plagiarism" is from 1971. Related: Ripped-off.
embezzle (v.) Look up embezzle at Dictionary.com
early 15c., "make away with money or property of another, steal," from Anglo-French enbesiler "to steal, cause to disappear" (c.1300), from Old French em- (see en- (1)) + besillier "torment, destroy, gouge," which is of unknown origin. Sense of "dispose of fraudulently to one's own use," is first recorded 1580s. Related: Embezzled; embezzling.

Mon, 01/19/2015 - 18:09 | 5681284 frankly scarlet
frankly scarlet's picture

Well we 'll soon damn well find out won't we. It looks like all that will be lost will also be owed to the same entities with the few insitutional investors, like CPP or Social Securioty, handing over there cash and leaving their subscribers out in the street.

Mon, 01/19/2015 - 18:15 | 5681314 eddiebe
eddiebe's picture

Curtain #2, Pat, for the win.

Mon, 01/19/2015 - 18:18 | 5681325 robertocarlos
robertocarlos's picture

First by inflation, then deflation, the banker takes everything.

Mon, 01/19/2015 - 18:51 | 5681434 blindman
blindman's picture

foreign supply of energy just might be the first
cut back in a Russian collapse scenario, no?
who would have thought?

Mon, 01/19/2015 - 18:46 | 5681419 gmak
gmak's picture

Dear Author and Editors:

 

You didn't answer the question in the title.  

Do NOT follow this link or you will be banned from the site!