Fear looms of future Lehman Brothers-like collapse

http://www.thisismoney.co.uk/money/markets/article-3234192/The-gathering-storm-Fears-new-crisis-seven-years-Lehman-Brothers-fall.html

arrogant smug uhuh aww yes yeah mhmm sexy bamf hugh jackman

One can dream.

Shares in China were on the slide again yesterday, with the stock market in Shanghai down another 2.67 per cent, taking losses since June in what has been dubbed ‘The Great Fall of China’ to 39.71 per cent.

The Great Fail of China.

We won't be laughing when their stocks outperform ours

Last month was the worst for the FTSE 100 index in London for more than three years and the blue chip benchmark is nearly 15 per cent off the all-time high reached in April.

You think that’s bad?

 What to do when the "intellectuals" hit reality like a brick wall? Laugh, I guess

You think that’s it?

Claudio Borio, chief economist at BIS, warns it is ‘unrealistic and dangerous to expect’ that central banks ‘can cure all of the global economy’s ills’ through low interest rates and money printing and BIS is calling for an end to the era of ultra-cheap money.

The time for sanity was 2008.

Of course, he was not alone in being taken by surprise by the last crash. The Queen famously asked in spring 2009: ‘Why did no one see this coming?’

The answer, from the British Academy a few months later, was that there had been ‘a failure of the collective imagination of many bright people’.

Oxymoron in there somewhere.

Seven years on, the storm clouds are gathering once again, as the world struggles to bounce back from the collapse of Lehman and its painful aftermath.

Idiot isn't as much a person as a process of doing things wrong

This was the foreplay. It didn’t work. The IMF is going in dry.

In other financial news:

  • Subprime mortgages are coming back, because we all know what a spectacular success those were last time.

http://www.thisismoney.co.uk/money/mortgageshome/article-3230545/Only-got-5-deposit-time-buyers-helping-hand.html

  • People are stashing cash under the mattresses instead of spending it in the economy, oblivious to the fact that if the banks collapse, it will be because the cash is worthless. But hey, at least they won’t run out of TP.

http://www.thisismoney.co.uk/news/article-3241061/A-nation-money-hoarders-Brits-3bn-hidden-away-mattresses-gathering-dust-sofa.html

  • BoE are hinting negative interest rates because they’ve straight up run out of ideas.

http://www.thisismoney.co.uk/news/article-3240086/Interest-rates-need-cutting-zero-says-Bank-England-s-Haldane.html

  • They still push BTL despite the economic damage because Baby Boomers need even bigger portfolios and property values can never ever go down.

http://www.thisismoney.co.uk/money/mortgageshome/article-1596759/Ten-tips-buy-let.html

  • Baby Boomers outraged there is no such thing as free cruise meal.

http://www.thisismoney.co.uk/news/article-3237624/One-six-hit-fee-5-000-cashing-pension-700-000-55s-pay-access-savings.html

  • Because being in the best position of all time and all current generations isn’t enough.

http://www.thisismoney.co.uk/money/diyinvesting/article-3192386/How-invest-different-generations-profit-needs.html

Despite the rise of new generations, it’s worth remembering that the baby boomers still hold a large chunk of the developed world’s wealth.

Demographic change is a particularly dominant theme across the portfolio and the funds’ managers exploit play this theme via a number of healthcare and pharmaceutical names.

As a wise philosopher once said – ‘demography is destiny’.

Wise to remember when they push for hostile immigration of more people who want to sponge off the State.

The Smart Fraction theory of IQ and the wealth of nations

http://www.lagriffedulion.f2s.com/sft.htm

I was hoping that we could continue our discussion of human biodiversity. I brought some fascinating data from the Summer 2001 Mankind Quarterly. In the article, National IQ and Economic Development: A study of Eighty-One Developing Nations, Richard Lynn and Tatu Vanhanen expose a relationship between national wealth and IQ. I brought a table of their data, but you can see the relationship best in a graph (Figure 1).

It has sexy graphs.

Dat mass.

Notice how GDP is positively correlated to average IQ. The correlation coefficient is 0.733, IQ explaining 54 percent of the GDP variance. Values this large are rare in social science. ….

Prodigy.  That’s because the relationship between per capita GDP and mean IQ is not linear. The fit is the best that can be obtained with a line.

Estraneo.  Is nonlinearity important?

Prodigy.  Correlation indicates the degree of linear association between variables. Because, the relationship is nonlinear, the value 0.73 actually underestimates the strength of the relationship. …

Thus, for a technologically sophisticated society, SFT asserts that a nation’s per capita GDP is determined by the population fraction with IQ greater than or equal to some threshold IQ. Consistent with the data of Lynn and Vanhanen, that threshold IQ is 108, a bit less than the minimum required for what used to be a bachelor’s degree. Figure 3 illustrates the fit of (3) to the data of Lynn and Vanhanen.

Saturation is probable, dwindling marginal utility of sorts.

World IQs have been increasing at the rate of 3 IQ points per decade (the Flynn effect). If that trend continues [DS: and is valid], countries now in the mean-IQ neighborhood of 100, will near smart fraction saturation in about a century.

Directionality is considered.

Estraneo.  There has been something gnawing at me for a while now. Just because national wealth and IQ correlate across different countries, we cannot infer which causes what. Smart Fraction Theory would fit the data just as well if national wealth led to high IQ rather than the other way round.

Prodigy.  You are correct, Estraneo. We need to look elsewhere for evidence that fixes the direction of causation. Independent studies of monozygotic twins reared apart provide some help. At least four major studies have been conducted with remarkably consistent results. They find about 70% of the variance in IQ is associated with genetic variation. Bouchard et al, Science, Oct 12, 1990, present an excellent review of these studies. Closer to the present context, we can look to the clever experiment of Charles Murray (Income Inequality and IQ, AEI Press, 1998). Murray studied biological sibling pairs selected such that the siblings in each pair differed significantly in IQ, but were reared in the same home by the same parents. Controlling thus for environmental factors, Murray found earnings stratified conspicuously by IQ.

There is much more, Estraneo, but two nails are sufficient to fix the direction of a one-way sign. The arrow of cause points mostly from IQ to income, and not the other way round.

Video: We are in stagflation

Your money is worth less, because of debt. Government, corporate and personal.
Prices are going up (RRP) but the intrinsic value (production) is the same or lesser (growth stagnation).