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Regarding the latest news on financial markets I would like to say a few words about it. I think now the psychological aspect will play an important role. Like everything in samsara, also financial market has its ups and downs and there is absolutely no panic needed. Everything changes, everything waves. I got the news that in Germany people started to transfer their money from private banks into state banks. In Slovenia, as you probably know, the banks has been guaranteed for the money of their clients up to around 20.000 EUR. In last days, this amount was raised up and the amount assured will be unlimited, which means no matter how much money one has in the Slovenian banks, all will be under the garancy. The problem is there is too little money in the flow, started by the financial crisis in USA, where two mortgage institutions gave loans to the clients, without taken saftey measures, and also to such, for which it was clear they don`t intend to pay the loan back. And that was done in mass extent. The institutions has been left now with the real-estates, which they took back from non-solvent clients, but there is practically impossible for those institutions to sell them further, as usually people need to take a loan in order to buy a real-estate. Banks now try to solve the situation, where there is a lack of the money in a flow (money flow has the same importance and role as the blood in the body) by special mechanism, which enable to collect the money among the banks themselves, so they are now running on the inside reserves. It is very important that now people do act as usually, and absolutely do not take the money from the banks because of the fear. Banks need the money to breakthrough the vicious circle. Banks are very important not only from the side of the loans, but also because the connections with economy and business affairs. We all know that big companies all run by the help of the business loans, hired from banks and here a lot of the money is turning, such loans represent usually 50 % or more of the funds of the companies and when business loans stop, it means consequently the capital of the company is lessened, which consequently leads to losing the market value of the company and consequently the fall of the stocks, which we can now detect when read the news on stock exchanges all over the world.

It is similar when facing the negative karma, more panic and fear, the things get worse and more complicated.

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What I find seriously abnormal is that when it is about making huge benefits, it goes into bank's pockets... though they are playing with our money. But when these banks are in difficulties, it should be the State (and tax payers) to refund them? AloOo!

Banks try to make profits by insane speculations, there should be a system to make them responsible of the consequences, without to jeopardise the money we give them to keep!

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What I find seriously abnormal is that when it is about making huge benefits, it goes into bank's pockets... though they are playing with our money. But when these banks are in difficulties, it should be the State (and tax payers) to refund them? AloOo!

Banks try to make profits by insane speculations, there should be a system to make them responsible of the consequences, without to jeopardise the money we give them to keep!

So true, yes :applause: And, I wonder what happened with Basel 2 in USA and why it was not applied in sufficient way... :taptap:


As I have been read in "Manager" there is an other trend in raise and which I would say it is closely connected to the financial crisis, which is consumption. In great extent people do not buy the things anymore because they would need them :o . Of course, that is not true for everyone, but the economists say it is a trend in raise generally. When I switch TV on, at each steps there are commercials telling us how many things we supposed to need in our lives. And, I don`t know if anyone noticed, when a commercial starts, the sound automatically became louder, almost shouting. The similar is going on in internet.

The writer in "Manager" wrote about the friend`s story as being very illustrative. He hired a holiday cottage near see and took his family there. After one hour a child asked when they will go to the shop and friend replied, ok, what do you need from the shop. A child said "how shall I know, if I am not there. I will know what I need, when come to the shop." Which is, are we not able to enjoy what we already have? :dontknow: So, the fact is that if all the people on this planet were live like most of us in so called developed world, the sources would be completely robbed. Already now, I observe in one prominent web site dealing with economy, the debate "shall the water be considered as a general good or as a luxurious good?" as the sources simply cannot renew themselves in the same tempo as we consume them :,(

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I totally agree with what you are both saying about the expected recession. Firstly there is no need for anyone in such a prosperous part of the world to panic and secondly we must generate prosperity in the world again by utilising our faculties for generosity. We must support for example the public buying into financial institutions rather than simply lending more funds and secondly of course by being prepared to increase our personal expenditures on charity, as many people less fortunate than ourselves are going to be in big trouble. Personally I believe in planning, particularly for expected outcomes. We for example have two tenants in our basement flat that will soon be unable to pay the rent - they are working Roma, uneducated and agency workers with no job security (one of them is even a foreigner). We expect them to be among the first to lose their jobs. This means for us an automatic loss of income and for them hardship, and we would be grateful for any ideas now on how to help find them alternative employment. My own profession as translator (Slovene to English) is a very good money earner in good times but I fear translations will be an unnecessary expense for many of my current clients having to make savings. So it appears it is time for us all to access our situation - not at all a bad thing - and make our plans. Our situation is very good - we are homeowners with no loans and even a little savings. We have already cut out our holidays due to wanting to be at home to look after my wife’s elderly mother and our grown-up son appears to be willing and able to earn money. In other words we simply have more than enough. So it is even more obvious our plans must take in others. This is a good time for this, as I see many more opportunities to assist in relieving temporal suffering in our own backyards coming up. If done skilfully and carefully enough this could lead to something worthwhile, and not just in relative terms. In bad times there are many opportunities for everyday folk to learn about a kind heart and compassion. Pulling together is what we English call it.

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Here is a new documentary you might like, it's about the "behind the scenes" of the monetary based economy we live in, about "corporatocracy", modern slavery, global manipulation and corruption of governments and taking over of whole nations by the USA (includes tactics, a three step way they do it...), artificial promotion of scarcity of resources as the fuel for the profit driven system and so on. There is lots more, in fact... This is the second part (addition) of the Zeitgeist movie.


Zeitgeist: Addendum



As a side note: the movie is highly critical of theistic religions (even more in the first movie). From a Vajrayana point of view there are some spiritual quotations at the end of the movie that are incorrect, like no need for a Guru.

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Jesus said, "Give unto Caesar what is Caesar's and unto God what is God's". I suppose today we all have a tendancy to believe we are Caesars or Gods, and I suppose in someways we are right, although in other ways we are wildly of the mark. For me what I get from the saying is the word Give. I think our generousity should permeate all our practices if we are to understand what is a Caesar and what is a God.

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The situation on financial market is getting better, from the latest data, the highest jump among leading stock exchange indexes has been done by German DAX and French CAC, which is for around 11 %, USA Dow Jones and Nasdaq jumped for around 6 - 7 % whereas Slovenian SBI20 for around 5,5 %. :rolleyes:

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From: http://www.pbs.org/moyers/journal/10102008/watch.html


"October 10, 2008

BILL MOYERS:Welcome to the Journal.


You are not alone if you are worried about the financial melt down. So is my guest George Soros, one of the world's best known and successful investors, making billions in times of boom or bust. He's been warning for years of a financial melt down fueled by easy credit and sleepy regulation. Now he's out with this timely book, "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means."


In the interest of full disclosure, you should know that I served three years on the board of George Soros' foundation, the Open Society Institute, dealing with such issues as a free press, the rule of law, and human rights. But I've had no involvement in his political activities and nothing to do, with his business interests unfortunately. It's good to see you.




BILL MOYERS:Let's imagine for a moment that we're not in a New York studio but we are in Neely's Barbecue Stand in Marshall, Texas, my hometown, and we're surrounded by people I know, people who have lost half of their 401(k)s in the last three or four weeks, and what they want to know is does this financial meltdown represent the end of the American dream as they have known it.


GEORGE SOROS:No. No. I think it's got nothing to do with the American dream as such. There has been some kind of an ideological excess; namely, market fundamentalism for the last 25 or so years. And now that world is collapsing...


BILL MOYERS:What do you mean "market fundamentalism"?


GEORGE SOROS:It's that markets will correct themselves, that you should leave it to the markets, and there is no need for government intervention in financial affairs. Letting markets run rampant. And that doesn't work.


Markets have the ability to adjust and they're very flexible. There is this invisible hand. But it is also prone to be mistaken. In other words, markets instead are reflecting reality. They always look at reality with a bias. There is always a prevailing bias. I'll call it, you know, optimism/pessimism.


And sometimes those moods actually can reinforce themselves so that there are these initially self-reinforcing but eventually unsustainable and self-defeating boom/bust sequences or bubbles. And this is what has happened now.


This current economic disaster is self-generated. It was generated by the market itself, by getting too cocky, using leverage too much, too much credit. And it got excessive.


BILL MOYERS:You used the word "disaster."


GEORGE SOROS:The financial system is teetering on the edge of disaster. Hopefully, it will not go over the brink because it very rarely does. It only did in the 1930s. Since then, whenever you had a financial crisis, you were able to resolve it. This is the most serious one since the 1930s, there hasn't been one as serious as this.


Unfortunately, the authorities are behind the curve. They are reacting to these crises as they emerge. One thing leads to another, one market after another gets into difficulty. And they react to it. And they don't quite understand what's hitting them. So they are not anticipating and not gaining control of the situation.


BILL MOYERS:This is what's interesting, why wouldn't the government be able to look at what you looked at and see what's coming?


GEORGE SOROS:Because actually they have been working on false premises. This sounds very strange, but there's been this development of, this belief of market fundamentalism. And particularly the idea that markets always revert to the mean and deviations from the mean occur in a random fashion. And you can calculate it.


And you will get a nice distribution and you can anticipate it. And based on that, you can manage your risk. And that actually was based on a false idea. This namely, the markets self-correcting because the market moods have a way of affecting the fundamentals the markets are supposed to reflect.


And there's always a divergence between our perception and what actually exists. For instance, take the simplest situation, namely housing.


Banks give you credit based on the value of the houses. But they don't seem to somehow understand that the value of the houses can be affected by the amount of credit they are willing to give. Now, we've developed these fabulous new ways of securitizing mortgages, which has made credit much more amply available.


And we've been able to calculate risk. And, therefore, we were willing to give more and more credit. And that has pushed up the value of the houses. Also, of course Greenspan kept interest rates too low, too long. And so you had very low interest rates, easy credit, and house prices have been appreciating at more than ten percent a year for a number of years. And the willingness to lend actually increased. There was an insatiable appetite for these new fangled securities.


BILL MOYERS:Yeah. Nobody understood, really.


GEORGE SOROS:Which they didn't properly understand. And there was always a separation between the people who generated the mortgages and packaged them and sold them to you and the people who owned them. So nobody was paying attention to the quality of the mortgages because they didn't have an interest. They  all day collecting fees. And then there were other people holding the mortgages.




GEORGE SOROS:And that was not factored into those instruments. The idea was that by distributing risk, you actually reduce risk. But by separating the principal from the agent, you actually greatly increase the risk. And that was not reflected. And the rating agencies didn't realize it. So they gave triple-A ratings. And then a few weeks later, those triple-A bonds became practically valueless. And that's what has happened.


BILL MOYERS:But how does the system become deranged like that? So separated from reality like an individual who goes insane because he or she is separated.


GEORGE SOROS:Well sometimes we get carried away. I mean, you know, let's say in the Middle Ages, people were religious. And so they had tremendous discussions about how many angels can dance on the eye of a needle. Now, if you believe that angels can dance then that's a legitimate question. And this is exactly what has happened here. You thought that you could slice and dice and engage in this kind of financial engineering. And it became very, very sophisticated and got carried away.


BILL MOYERS:What happened that we lost control?


GEORGE SOROS:There was a failure of regulations because they couldn't understand these new instruments. But they said, "Oh, well, the banks have very good risk management techniques. So we leave it to them to calculate their own risks."


And, you see, it wasn't only in the housing market. There were all kinds of other financial instruments. So there was not just one bubble. I describe in my book there is the housing bubble. But this housing bubble, when that burst, it was only the detonator that exploded the bigger bubble, the super bubble.


Which is this 25 years of constant credit expansion using greater and greater leverage. The amount of credit in the economy has been growing at, I don't know, I don't know the exact figure, but maybe at least twice as fast as the economy itself. I think it's more like three.


And now, suddenly, you have a contraction of credit. And it's a sudden thing. And it's a period of great wealth destruction. And that's how these poor people in Texas suddenly find that their 401(k) is worthless.


BILL MOYERS:So as we talk, Secretary Paulson and the government seem to be coming around to what you've been advocating and that is taking taxpayer money, public capital, and injecting it directly into the banks  in effect, nationalizing some of these banks. Why do you think that will work when everything else has failed?


GEORGE SOROS:Well unfortunately because they are delaying it, it may not work so well because there's a certain dynamism. And they're always behind the curve. So there are many things that they're doing now if they had done several months ago, it would have turned things around.


BILL MOYERS:That's a very gloomy assessment. You're saying that everything they're doing is coming too late? How does that ultimately play out?


GEORGE SOROS:Unfortunately, that is the case. I'm quite distressed about it. I hope that you know, eventually they'll catch up.


We are determined to put the money in, not to allow the financial system to collapse. And that's the lesson we learned in the 1930s. It's an important lesson. But because we are behind the curve, the amounts get bigger and bigger. If we understood it earlier, we could have brought it to a halt perhaps sooner. But they've got still a number of things to do. And this idea, you see, of just buying noxious instruments of you know, off the balance sheet of the banks was a non-starter.


BILL MOYERS:But that was the idea.


GEORGE SOROS:But it was the wrong idea.


BILL MOYERS:But this is disturbing, George. If everything we're doing keeps accelerating the downward negative feedback and isn't working, are you suggesting, can one insinuate from what you say that we're heading for 1930?


GEORGE SOROS:Hopefully not. But we are heading for undoubtedly very difficult times. This is the end of an era. And this is a fact.


BILL MOYERS:End of an era?


GEORGE SOROS:At the end of an era.


BILL MOYERS:Capitalism as we have known it?


GEORGE SOROS:No. No, no, no. Hopefully, capitalism will survive. But the sort of period where America could actually, for instance, run ever increasing current account deficits. We could consume, at the end, six and a half percent more than we are producing. That has come to an end.


BILL MOYERS:So what do we do now?


GEORGE SOROS:We are probably at the height of the financial crisis. I think it can't get much worse. I think it could get a bit worse yet. But then you have the fallout in the real economy.


BILL MOYERS:We're in a downward spiral.


GEORGE SOROS:We are in a downward spiral.


BILL MOYERS:How long will it go on?


GEORGE SOROS:Look the one thing that my theory says is that you can't predict the future because the future depends on how you react to it. So if we do the right things then things will not  will be less painful. If you do the wrong things, they'll be more painful. Now, so far we've been doing the wrong things. I very much hope that we'll have a different government in a few months and they'll be doing the right things.


BILL MOYERS:Well, don't be shy. What do you think the new government should do?


GEORGE SOROS:Well, first of all you have to prevent housing crisis from overshooting on the downside the way they overshot on the upside. You can't arrest the decline, but you can definitely slow it down by minimizing the number of foreclosures and readjusting the mortgages to reflect the ability of people to pay. So you have to renegotiate mortgages rather than foreclose.


And you provide the government guarantee. But the loss has to be taken by those who hold the mortgages, not by the taxpayer.


BILL MOYERS:You mean the homeowner doesn't take the loss. The lender.


GEORGE SOROS:The homeowner needs to get relief so that he pays less because he can't afford to pay. And the value of the mortgage should not exceed the value of the house. Right now you already have 10 million homes where you have negative equity. And before you are over, it will be more than 20 million.


BILL MOYERS:But, you're talking about taking action three months from now, whether it's a McCain administration or an Obama administration. What happens in these next three months? And I'm serious about that.


GEORGE SOROS:I am very worried about it. And I hope that they will have a new secretary of treasury, somebody else.


BILL MOYERS:Sooner than later?




BILL MOYERS:You don't think...


GEORGE SOROS:It would be very helpful if...


BILL MOYERS:You don't think Paulson's up to it?


GEORGE SOROS:Unfortunately, I have a negative view of his performance.




GEORGE SOROS:Because he represents the very kind of financial engineering that has gotten us into the trouble. And this buying off the noxious things was a...


BILL MOYERS:Buying the bad assets, that was his...




BILL MOYERS:First idea.


GEORGE SOROS:Yeah, and before that, he wanted to create a super SIV, special investment vehicle, to take care of the other special investment vehicles. That didn't fly. And they are now within a week recognizing that they have to change and inject money into the banks to make up for the whole in the equity because those banks lost money. And they can't make it up by taking their assets off their hands. You have to recognize the losses and replenish the equity.


BILL MOYERS:Is that what you would do with the bailout money now? Right now?


GEORGE SOROS:Yes, yes, yeah.


BILL MOYERS:You would put it where?


GEORGE SOROS:Into the capital of the bank so that the capital equity can sustain at least 12 times the amount of lending. So that's an obvious thing. And every economist agrees with this.


You see, what is needed now the bank examiners know how those banks stand. And they can say how much capital they need. And they could then raise that capital from the private market. Or they could turn to this new organization and get the money from there. That would dilute the shareholders. It would hurt the shareholders.


BILL MOYERS:Of the bank?


GEORGE SOROS:Of the banks. Which I think Paulson wanted to avoid. He didn't want to go there. But it has to be done. But then, the shareholders could be offered the right to provide the new capital. If they provide the new capital then there's no dilution. And the rights could be traded. So if they don't have the money, other people could, the private sector could put in the money. And if the private sector is not willing to do it then the government does it.


BILL MOYERS:The assumption of everything you say is that the government is going to be a big player now in the economy and in the financial markets. But what assurance do we have that the government will do a better job?


GEORGE SOROS:We don't. Right now they are doing a bad job. So you want to use the government as little as possible. The government should play a smaller role. In that sense, people who believe in markets, I believe in markets. I just want them to function properly. To the extent you can use the market, you should use the market.


Governments are also human. They're also bound to be wrong. Moreover, they are bureaucratic. So they are slow and they are subject to political influence. So you want to use them as little as possible. But to not to use them, see, assumes that markets are perfect. And that is a false belief.


BILL MOYERS:Has the whole global system become so complex with such gargantuan forces interlocked with each other, driving it forward, that it doesn't know how to obey Adam Smith's natural laws?


GEORGE SOROS:No, I think our ability to govern ourselves doesn't keep pace with our ability to exercise power over nature, control over nature. So we are very complicated civilization. And we could actually destroy our civilization because of our inability to govern ourselves.


BILL MOYERS:Would this all be happening if we still had a strong sense of the social compact? I mean, our social safety net has been greatly reduced. The people have a real sense that the gods of capital have left little space for anyone else. People at the top don't have much empathy for people at the bottom.


GEORGE SOROS:There is a common interest. And this belief that everybody pursuing his self-interests will maximize the common interests or will take care of the common interests is a false idea. It's a suitable idea for those who are rich, who are successful, who are powerful. It suits them to justify you know, enjoying the fruits without paying taxes. The idea of paying taxes is an absolute no-no, right?


BILL MOYERS:Unpatriotic.


GEORGE SOROS:Unpatriotic. So, yes, you must have, in my opinion, you need, for instance, a tax on carbon emissions. But that is unacceptable politically. So we are going to have cap and trade. And the trading will have all kinds of loopholes and misuse of the regulations and all kinds of ways of making money without actually dealing with the problem that it's designed to cure. So that's how the political process distorts things.


BILL MOYERS:So let's think about those people down at Neely's Barbecue going home tonight having heard you. What they've heard you say is the system is really disfunctioning right now. It's out of control. Nobody's in charge. They've heard you express your own worry that in the next three months it could get much, much worse.


And they've heard you say that you don't see much good news immediately on the horizon. So let's leave them something to think about as they go home. Let them go home and say, "Mr. Soros said here are three things we can do, simply." One?


GEORGE SOROS:Well, deal with the mortgage problem. Reduce foreclosures. Recapitalize the banks. And then work on a better world order where we work together to resolve problems that confront humanity like global warming. And I think that dealing with global warming will require a lot of investment.


You see, for the last 25 years the world economy, the motor of the world economy that has been driving it was consumption by the American consumer who has been spending more than he has been saving, all right? Than he's been producing. So that motor is now switched off. It's finished. It's run out of  can't continue. You need a new motor. And we have a big problem. Global warming. It requires big investment. And that could be the motor of the world economy in the years to come.


BILL MOYERS:Putting more money in, building infrastructure, converting to green technology.


GEORGE SOROS:Instead of consuming, building an electricity grid, saving on energy, rewiring the houses, adjusting your lifestyle where energy has got to cost more until it you introduce those new things. So it will be painful. But at least we will survive and not cook.


BILL MOYERS:You're talking about this being the end of an era and needing to create a whole new paradigm for the economic model of the country, of the world, right?




BILL MOYERS:One of the British newspapers this morning had a headline, "Welcome to Socialism." It's not going that way, is it?


GEORGE SOROS:Well, you know, it's very interesting. Actually, these market fundamentalists are making the same mistake as Marx did. You see, socialism would have worked very well if the rulers had the interests of the people really at heart. But they were pursuing their self-interests. Now, in the housing market, the people who originated the houses earned the fee.


And the people who then owned the mortgages their interests were not actually looked after by the agents that were selling them the mortgages. So you have a, what is called an agent principle problem in socialism. And you have the same agent principle problem in this free market fundamentalism.


BILL MOYERS:The agent is concerned only with his own interests.


GEORGE SOROS:That's right.


BILL MOYERS:Not with...


GEORGE SOROS:That's right.


BILL MOYERS:The interest of...


GEORGE SOROS:Of the people who they're supposed to represent.


BILL MOYERS:But in both socialism and capitalism, you get the rhetoric of empathy for people.


GEORGE SOROS:And it's a false ideology. Both Marxism and market fundamentalism are false ideologies.


BILL MOYERS:Is there an ideology that...


GEORGE SOROS:Is not false?




GEORGE SOROS:I think the only one is the one that I'm proposing; namely, the recognition that all our ideas, all our human constructs have a flaw in it. And perfection is not attainable. And we must engage in critical thinking and correct our mistakes.


BILL MOYERS:And that's one...


GEORGE SOROS:That's my ideology. As a child, I experienced Fascism, the Nazi occupation and then Communism, two false ideologies. And I learned that both of those ideologies are false. And now I was shocked when I found that even in a democracy people can be misled to the extent that we've been misled in the last few years.


BILL MOYERS:The book is "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means". George Soros, thank you for being with me.



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