

No more depression posts, solve it instead - schtog

Do we have to litter the frontpage with articles about how the american economy is going to hell?<p>You get the impression the world is going under.<p>Sure this is a startup-forum so it effects funding etc but still.<p>We are the guys and girls that solve this, not the people that whine about it, right?
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tibix
Sorry to disagree with you. All the articles concerning this crisis I have
read linked from here were really interesting, unlike those other sites (you
know, digg/slashdot/reddit/etc) where half the posts are crap.

~~~
steveplace
2 Newsfeeds to get

calculatedrisk.blogspot.com

bigpicture.typepad.com

Should keep you filled.

~~~
alecco
Some more links if you really dare to look into the abyss:

<http://www.rgemonitor.com/roubini-monitor>

In particular (but have a drink and take a deep breath)
[http://www.rgemonitor.com/blog/roubini/253933/revisiting_my_...](http://www.rgemonitor.com/blog/roubini/253933/revisiting_my_february_paper_the_risk_of_a_systemic_financial_meltdown_the_12_steps_to_financial_disasterand_some_new_policy_recommendations_to_avoid_the_meltdown)

And for the best commentary and aggregation: <http://ftalphaville.ft.com>

~~~
steveplace
Take Roubini with a grain of salt. He's been calling for the credit freeze
among other things for at least two years, and now that more people are giving
him attention, his views are getting amplified.

~~~
alecco
Indeed. Take everybody with a grain of salt.

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stevedekorte
There is no solution to resources which were already misallocated. The best we
can do is to 1) not missallocate more resources (via a ballout) and 2) end the
system that credited the debt bubble. Here's how to do that:

End Fractional Reserve Banking

Allow banks only to lend their deposits. This also eliminates the need for
central banks - let people use 100% deposit banks when they want deposit
security. This will prevent large debt bubbles (speculative investment
bubbles) and the resulting massive misallocation of resources. End
Inflationary Monetary Policies

Never print more money. Period. Use smaller denominations as slow deflation
occurs due to an increasing population. This will keep prices in line with
value and allow people to save without making high risk investments.

~~~
alecco
> Allow banks only to lend their deposits.

That doesn't work in a bank run. Central banks or some similar mechanism is
needed to fix the asymmetry of time for deposits (e.g. savings) and loans
(e.g. mortgages.)

Due to our behavior set on risk aversion most of us wouldn't take bonds
matching the times of a mortgage. No matter how good the deal is. That's what
the bankers exploit.

~~~
stevedekorte
As I said, if you want to secure your deposit, use a 100% deposit bank that
gives no interest and charges a small storage fee.

What we commonly call banks aren't - they're investment houses - and very
highly leveraged ones at that. And what we commonly call deposits aren't -
they're investments and no investment is a sure thing. Any system that
pretends that there is a sure thing will fail sooner or later and the bigger
the system the more catastrophic the failure.

~~~
0x44

      (T)hey're investments and no investment is a sure thing.
    

That's why your "investment" in the bank is insured.

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stevedekorte
The so-called insurance is a promise by the central bank to print money to
cover your deposit. That is, to steal value from everyone else holding cash in
order to pay for the losses of those that choose to invest theirs unwisely.

It's not like an insurance company that keeps enough real cash reserves to
cover potential costs. For example, the FDIC only has enough in reserve to
cover ~1% of the deposits in US banks.

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tptacek
Do we have to litter the frontpage with articles about what kind of articles
we should have on the front page?

You get the impression the site is going under.

Sure this is a forum so we're interested in what's on the front page etc but
still.

We are the guys and girls that _vote on which articles are good_ , not the
people that whine about it, right?

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mkn
It affects funding, revenue, and side-employment (relevant if you're self-
funding), IPO share price, and a host of other startup-related things. In
addition, this is a news event of immense scale. The global economy is
probably melting down.

 _We are the guys and girls that solve this..._

That depends, I guess, on if we're the kind of people who keep others in
houses, lend to banks, evaluate debtor's credit rating, produce the things
people need in order to live, or have the intellect and authority to make the
right policy decisions in this frankly harrowing time.

If a meltdown really happens, starting up will be a whole different ball game.
Changing currency valuations will strongly influence things like who gets to
be an industrial economy vs. who gets to be a service economy, who gets to
have functioning infrastructure and who doesn't, and who can afford food and
energy.

Though we are all a little disaster-fatigued, the global financial freeze-up
that could wreak havoc on our abilities to make a living surely warrants
attention on the front page.

~~~
swombat
It might change who gets to be an industrial economy versus who gets to be a
services economy, but start-ups can sprout up just as well in one as in the
other - although they're obviously going to be different start-ups focusing on
different sets of opportunities.

~~~
jhancock
There is no telling which businesses will come out from the ashes. To be sure,
entrepreneurs will find their way, whether its selling vegetables or selling
communications tools. Speculation is futile ;)

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m0nty
"Sure this is a startup-forum so it effects funding etc but still."

It affects just about everything. I remember during the last big downturn,
there was a piece on the BBC about a couple who had lost everything they had,
in part because she had been a Herbalife [v. big in the 80s] sales person, and
(as she put it) "when people are feeling the pinch the first thing they can do
without is a herbal dietary supplement." Her business died almost overnight.

Now, maybe your startup idea is about something which gives real value and
reduces costs of some vital business process. But if it's not, this will bite
you very hard indeed. And even if it is, you might still find your potential
customers are very cost-averse.

Personally, I see this downturn as a big opportunity, but it will be
accompanied by plenty of pain first.

~~~
schtog
Herbalife is a pyramid-scam so I guess she got what she deserved.

~~~
alecco
Why would a victim of a scam deserve it? Specially in this case it seems the
victim wanted to make a real living out of it.

~~~
lacker
Well, the sad part of pyramid scams is that the victims are also the
perpetrators. An Herbalife salesperson is probably making the world a worse
place. So, it is sad, but it is probably better for the world if they lose
their job.

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Prrometheus
We haven't had a single quarter of negative growth, unemployment is at 6%, and
people are calling it a "depression". +1 point for the sensationalist media.

~~~
jhancock
+50 points for people starting to pay attention to something whose dangers was
clearly written about for 5 to 8 years. No, it didn't make the front page of
mass consumer papers, but there has been solid information that the economic
structure of at least the last 20 years could become unstable and was being
abused.

Economic systems do end. Currencies do die or lose their leadership position.
Has America's time come? Maybe. I think its close enough to it that its wise
to think about basic things like where and how to live safe and comfortable.
If we are in for 10 years of depression, it is wise to not live in large urban
areas that will see crime rate soar.

~~~
kirse
I think it's sheer ignorance to believe that this current economic situation
is just going to "blow over" like the last recession we had.

We're not just going to spend and leverage our way out of this one (as we have
with previous recessions) because the trust and confidence in credit is
extremely shaky. The last 30 years, since about 1980, have been fueled by a
ridiculous amount of credit and the bills are coming due.

It's now an issue of people and their confidence. The whole system of credit
works because of trust, and with each bank failure and company fallout
confidence is going to drop. This isn't just consumer confidence too, but also
confidence on the part of foreign countries to believe that we'll make good on
our insane level of debt.

We haven't had a negative quarter or high unemployment yet because 2008 just
marked the significant beginning of this erosion of confidence and the
revaluing of the massive bullshitting of on-paper "value" created by abnormal
demand (fueled by credit). This "confidence crunch" is far from over.

~~~
lacker
I wouldn't call it "sheer ignorance" - I don't think anyone can predict what
is going to happen. If you think we are going to fall further, then buy some
gold and make yourself some money.

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alecco
> We are the guys and girls that solve this, not the people that whine about
> it, right?

I don't know about you but I don't have a trillion dollars. And I bet most
readers here have debt due to funding their startups and not having a safe
job.

This is a case of renegotiating the best you can and trying not to pass
forward whatever pain you get. If you do so, you'll be as good as dead in
startup-land when this recession is over.

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poppysan
My Solution to the financial crisis -

I read an article on diamond synthesis posted here recently. Now as the
president, I would order a silent meeting with the head of the companies
leading the diamond sysnthesis industry - Gemisis and apollo. Their work is
synthesizing the gemstone into identical physical makeup as natural diamonds.
The benefits for superconductors and microprocessors are tremendous as well as
the impact of the diamond as a commodity trade. Some think it could well
replace steel.

That being said, I would murder the ceo's replace them with body doubles,
close their companies and destroy any evidence of their technologies.

Then make the find of the century....the largest diamond mine in the world
located right under alaska. build a mine, staff it, then back the dollar with
diamonds.

The dollar would be worth substance again and the significance would be huge
around the world...

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gills
We are definitely the people who will dig out of the hole. Well, at least the
people who will design better shovels :)

Even so, it's good to know what you might be facing.

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qaexl
[http://www.sciam.com/podcast/episode.cfm?id=learning-to-
stay...](http://www.sciam.com/podcast/episode.cfm?id=learning-to-stay-
calm-08-10-13)

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quasimojo
no, we are not the ones to "solve" it, because there is no button to push,
method to be invented, or novel approach to making everyone solvent with web
technology.

what we are, we're the people who will live with reduced wealth for decades to
come. debt must be unwound and asset prices reverted to the mean. there is no
shortcut. regimes that have taken shortcuts have ended violently. for example,
monarchist france and weimar germany.

we are, ONCE AGAIN (like 2002), attempting to put off (inevitable) deflation
with hyperinflation. or do you think pumping like $3 trillion globally into
markets will have no impact on currencies? the dollar will not make it to 2025

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sabat
Thank you. God bless you for posting this. We either give in or we FIGHT. I
say: let's fight.

------
fnazeeri
+1

