Official Let's Make Some Money Off Stocks Thread
10-02-2008, 06:26 PM
#1291
Registered User
Join Date: Nov 2002
Location: slo
Posts: 473
Likes: 0
Received 0 Likes
on
0 Posts
I think this is the right view.
Austrian School explanations
Another explanation comes from the Austrian School of economics. Theorists of the "Austrian School" who wrote about the Depression include Austrian economist Friedrich Hayek and American economist Murray Rothbard, who wrote America's Great Depression (1963). In their view, the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In their view, the Federal Reserve, which was created in 1913, shoulders much of the blame.
In opinion, Hayek, writing for the Austrian Institute of Economic Research Report in February 1929[15] predicted the economic downturn, stating that "the boom will collapse within the next few months."
Ludwig von Mises also expected this financial catastrophe, and is quoted as stating "A great crash is coming, and I don't want my name in any way connected with it,"[16] when he turned down an important job at the Kreditanstalt Bank in early 1929.
One reason for the monetary inflation was to help Great Britain, which, in the 1920s, was struggling with its plans to return to the gold standard at pre-war (World War I) parity. Returning to the gold standard at this rate meant that the British economy was facing deflationary pressure.[17] According to Rothbard, the lack of price flexibility in Britain meant that unemployment shot up, and the American government was asked to help. The United States was receiving a net inflow of gold, and inflated further in order to help Britain return to the gold standard. Montagu Norman, head of the Bank of England, had an especially good relationship with Benjamin Strong, the de facto head of the Federal Reserve. Norman pressured the heads of the central banks of France and Germany to inflate as well, but unlike Strong, they refused.[17] Rothbard says American inflation was meant to allow Britain to inflate as well, because under the gold standard, Britain could not inflate on its own.
In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a depression was inevitable.
The artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. According to Rothbard, government intervention delayed the market's adjustment and made the road to complete recovery more difficult.[18]
Furthermore, Rothbard criticizes Milton Friedman's assertion that the central bank failed to inflate the supply of money. Rothbard asserts that the Federal Reserve bought $1.1 billion of government securities from February to July 1932, raising its total holding to $1.8 billion. Total bank reserves rose by only $212 million, but Rothbard argues that this was because the American populace lost faith in the banking system and began hoarding more cash, a factor quite beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, and this, Rothbard argues, was the cause of the Federal Reserve's inability to inflate
Austrian School explanations
Another explanation comes from the Austrian School of economics. Theorists of the "Austrian School" who wrote about the Depression include Austrian economist Friedrich Hayek and American economist Murray Rothbard, who wrote America's Great Depression (1963). In their view, the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In their view, the Federal Reserve, which was created in 1913, shoulders much of the blame.
In opinion, Hayek, writing for the Austrian Institute of Economic Research Report in February 1929[15] predicted the economic downturn, stating that "the boom will collapse within the next few months."
Ludwig von Mises also expected this financial catastrophe, and is quoted as stating "A great crash is coming, and I don't want my name in any way connected with it,"[16] when he turned down an important job at the Kreditanstalt Bank in early 1929.
One reason for the monetary inflation was to help Great Britain, which, in the 1920s, was struggling with its plans to return to the gold standard at pre-war (World War I) parity. Returning to the gold standard at this rate meant that the British economy was facing deflationary pressure.[17] According to Rothbard, the lack of price flexibility in Britain meant that unemployment shot up, and the American government was asked to help. The United States was receiving a net inflow of gold, and inflated further in order to help Britain return to the gold standard. Montagu Norman, head of the Bank of England, had an especially good relationship with Benjamin Strong, the de facto head of the Federal Reserve. Norman pressured the heads of the central banks of France and Germany to inflate as well, but unlike Strong, they refused.[17] Rothbard says American inflation was meant to allow Britain to inflate as well, because under the gold standard, Britain could not inflate on its own.
In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a depression was inevitable.
The artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. According to Rothbard, government intervention delayed the market's adjustment and made the road to complete recovery more difficult.[18]
Furthermore, Rothbard criticizes Milton Friedman's assertion that the central bank failed to inflate the supply of money. Rothbard asserts that the Federal Reserve bought $1.1 billion of government securities from February to July 1932, raising its total holding to $1.8 billion. Total bank reserves rose by only $212 million, but Rothbard argues that this was because the American populace lost faith in the banking system and began hoarding more cash, a factor quite beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, and this, Rothbard argues, was the cause of the Federal Reserve's inability to inflate
10-03-2008, 07:49 AM
#1292
Registered User
Mugens, if you're looking for an interesting $5 gamble check out ARNA.
They've got the only seriously good diet drug still viable in a pipeline. Be aware it is also 90+% of their activity. Their sales are a joke (tiny fraction of costs) but they should have the capital to get this drug to market. You have to be willing to hold it for the big payout (2010 if all goes according to schedule for FDA approval) but I'll bet Merck buys it sooner, giving us a lower payoff but still attractive. Considering they have almost no sales to value them, their price is volatile as heck. You can, I did, make money on shorter-term trades (price tends to dive around each quarterly report).
They've got the only seriously good diet drug still viable in a pipeline. Be aware it is also 90+% of their activity. Their sales are a joke (tiny fraction of costs) but they should have the capital to get this drug to market. You have to be willing to hold it for the big payout (2010 if all goes according to schedule for FDA approval) but I'll bet Merck buys it sooner, giving us a lower payoff but still attractive. Considering they have almost no sales to value them, their price is volatile as heck. You can, I did, make money on shorter-term trades (price tends to dive around each quarterly report).
10-03-2008, 08:59 AM
#1293
Registered User
Join Date: Feb 2003
Location: anywere
Posts: 498
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by Penforhire,Oct 3 2008, 07:49 AM
Mugens, if you're looking for an interesting $5 gamble check out ARNA.
They've got the only seriously good diet drug still viable in a pipeline. Be aware it is also 90+% of their activity. Their sales are a joke (tiny fraction of costs) but they should have the capital to get this drug to market. You have to be willing to hold it for the big payout (2010 if all goes according to schedule for FDA approval) but I'll bet Merck buys it sooner, giving us a lower payoff but still attractive. Considering they have almost no sales to value them, their price is volatile as heck. You can, I did, make money on shorter-term trades (price tends to dive around each quarterly report).
They've got the only seriously good diet drug still viable in a pipeline. Be aware it is also 90+% of their activity. Their sales are a joke (tiny fraction of costs) but they should have the capital to get this drug to market. You have to be willing to hold it for the big payout (2010 if all goes according to schedule for FDA approval) but I'll bet Merck buys it sooner, giving us a lower payoff but still attractive. Considering they have almost no sales to value them, their price is volatile as heck. You can, I did, make money on shorter-term trades (price tends to dive around each quarterly report).
By Peter Loftus
Of DOW JONES NEWSWIRES
Merck & Co. (MRK) took a gamble with an experimental anti-obesity drug, and it didn't pay off.
The drug giant Thursday said it halted development of an experimental anti-obesity drug called taranabant because of side effects seen in clinical trials. Merck has previously said that while the drug was effective at certain dose levels in helping people lose weight, it was also associated with increased risk of psychiatric side effects.
The company Thursday said that both effectiveness and adverse events are dependent on dose levels, with higher doses producing greater effectiveness but more adverse events. Essentially, Merck wasn't able to find a dose level that adequately minimizes the safety risk while helping people lose weight to a significant degree. Five patient studies of the drug are being halted, said spokeswoman Amy Rose..............
10-03-2008, 09:57 AM
#1294
Registered User
Not the same drug. That's MRK's failed drug.
Merck's drug was not as effective in its trials as Arena's. Just another reason why Merck will be interested later (they had a relationship with Arena in the past). ARNA's drug is undergoing a massive last-phase evaluation for safety (6,000+ people IIRC). They need to do that because it uses one of the same biological pathways as Phen-fen and we all know how THAT turned out. Knock on wood, so far no increased heart valve complications.
Definitely do your due diligence on this stock but don't confuse it with MRK.
Merck's drug was not as effective in its trials as Arena's. Just another reason why Merck will be interested later (they had a relationship with Arena in the past). ARNA's drug is undergoing a massive last-phase evaluation for safety (6,000+ people IIRC). They need to do that because it uses one of the same biological pathways as Phen-fen and we all know how THAT turned out. Knock on wood, so far no increased heart valve complications.
Definitely do your due diligence on this stock but don't confuse it with MRK.
10-03-2008, 10:04 AM
#1295
Administrator
Thread Starter
Bernanke has spent his entire adult life studying the Great Depression in infinite detail. I would not question his understanding of it. However, simply not repeating what was done before doesn't guarantee a different outcome but I'm not nearly qualified to question the decision and I suspect nobody else here is either.
He MAY be wrong in the end but everyone else is ABSOLUTELY wrong from the get go.
He MAY be wrong in the end but everyone else is ABSOLUTELY wrong from the get go.
10-03-2008, 11:19 AM
#1299
Registered User
Join Date: Jul 2008
Posts: 73
Likes: 0
Received 0 Likes
on
0 Posts
so i'm trying to "diversify" a bit and am looking to get into the engery sector now.... Just wanted someone else opinion. I have been looking at ETP,HTE, and EVEP. any comments... i also looked at the cos.un mentioned above but i dont think i can get it thru my IB.
