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Discipline? Yeah, sure - but if we stop spending we cause a recession and lose our jobs. Catch 22. I don't know the answer except to let all you poor folks who've raided your HELOC, credit cards, and 401(k) to just fall flat on your face and then see if we can reconstruct an economy based on rational spending and savings.
I remember what people used to joke about "political science"--It's just history, without the facts! I get a sense that the modern devotees of our current system seem to be just another brand of true believers who have no critical sense, no truly historical perspective--ie not just the last hundred years. Do people really believe that this system cannot undergo a cataclysmic and total decline? Has the free market really put us beyond the perils of the true believer?
"Boomers are spending like there is no tomorrow." - Paul Volker, Feb 2005.
And why not? It is nice that he was concerned and all for the general economy but in hindsight it was a successful strategy for the individual. Compare this to the alternatives of saving; 2.4-2.7% T-Bills then?
Volker had it easy. He had a dumb and slow populace to manipulate. This had the inevitable result; the populace got smarter and faster. Ask Iceland. A decade of rewarding irresponsible financial decisions is not going to be corrected by rewarding two decades of irresponsible decisions.
Now, get down there in the basement with Benny and start shoveling greenbacks into the furnace. The bankers are getting chilly again.
If the objective is to arrest the decline in house prices, however, the policies are less likely to succeed. Perhaps the most important short-term influence on house prices is the elevated number of unoccupied houses for sale (the inventory overhang). That overhang is likely to remain until house prices fall enough to stimulate additional home sales. Put simply, none of the policies can (or presumably should) guarantee that house prices will stabilize in the near term. Furthermore, attempting to avoid (as opposed to attenuating) the market’s necessary adjustments may not only be unre-alistic, but even if it were to succeed, might ultimately serve only to delay the recovery of financial markets and impair the pace of economic activity.
Max -- what's the mp3 of, the 2005 speech? Can you post a link?
I'm about to run out and would like to listen to this... I checked out the video from Stanford and it doesn't seem like there's a strong visual component I'd be missing out on...
Discipline? Yeah, sure - but if we stop spending we cause a recession and lose our jobs. Catch 22.
The alternative is to argue that we spend our way into bankruptcy.
But looking back at history we can see that the US has surived and thrived in the wake of severe recessions, deflations, and depressions multiple times.
That's not to deny they're horrible situations to be avoided, but now it seems to me that we're arguing that depression is to be avoided at any cost.
I don't know how a person who is looking critically at the history of the US can come to this conclusion given that these sort of events occurring every 50-80 years appear characteristic of the type of economy we have.
Again, that doesn't mean you embrace them or don't try to fight them with everything you've got.
But how can people argue that destroying the dollar, bankrupting the federal government, or abandoning the basic tenents of the most succesful economy in history is a superior alternative?
"What I'm really talking about boils down to the oldest lesson of financial policy in Central Banking: A strong sense of monetary and fiscal discipline."
The problem is monetary and fiscal discipline don't buy Escalades, boob jobs, and 6,000 square foot homes. Perhaps people should be allowed to spent money like drunk republicans, but, when they run out, they should be taken out back and shot.
--
I am a big Volcker fan. Greenspan and Bernanke are a product of a culture of deception, fraud and manipulation that has taken deep roots in America over the past 20 years.
Asking discipline from born-and-bred American dopes and Crooks and their agents? LOL!
Discipline is to be found among Germans and Swiss (mostly Germans). Why are Euro and Swissie the strongest currencies? The cream rises to the top. And sh*t deposits at the bottom.
Counting down to the collapse of the corrupt American system,
"Mr. Volcker in January threw his gravitas behind Mr. Obama, declaring that the Democratic presidential hopeful could "provide the potential for strong and fresh leadership." He added: "After 30 years in government, serving under five presidents of both parties and chairing two nonpartisan commissions on the public service, I have been reluctant to engage in political campaigns. It is time to overcome that reluctance.""
I had to rip this from an 99% complete asx video stream download. It actually took me awhile to download the streaming file, repair it, extract the audio, then convert it to mp3 for easy iPod listening.
EEngineer writes:
He was on Charlie Rose recently too.
EEngineer | 04.11.08 - 5:33 pm | #
Last nite Soros was on Charlie Rose and also had some very interesting things to say, if anyone has any U-Tube links to that it would be worth posting (I watched it but didnt have any equip to record it).
The question at the end of this speech by Pete Peterson of Blackstone asked Volcker (in a very underhanded way) why he endorsed Obama. To paraphrase, Volcker's basic argument was that Gov't approval ratings today are ~30% vs. 60-70% in past decades and the majority of people under 30 support Obama, so he is going with Obama. Just FYI.
Sorry Volker, but boomers are not spending like there is no tomorrow. Just ask a demographer rather than an economist if you want to know what people are actually doing with their money. Compare the spending of the average boomer household today with the spending of households in the same age group 20 years ago using Consumer Expenditure Survey data, and you will see that boomer households are spending just 4 percent more than their counterparts spent in 1984, after adjusting for inflation--despite the soaring cost of housing, health insurance, college tuition, etc. In contrast, households headed by people aged 65 and older are spending 29 percent more than their counterparts did in 1984. Blaming our problems on boomers is looking in the wrong place for the answers.
SACRAMENTO -- Gov. Arnold Schwarzenegger's administration today proposed $7 billion in state spending to bring health care in state prisons up to constitutional standards.
That's another $4.5b to this years' deficit. This in a Constitutionally balanced budget State. Supposedly.
We do need to move back into a position in which our economy is no longer based on how much spending we do and how much debt we are in, but on how much we save and how financially sound individuals in general are.
For those of you who may not know, Volcker was forced out by James Baker, III. He wanted our man at the Fed. What he got instead was not his man but BFNYCs man. In 1991 BFNYC turned against Bush, Sr. and there was a famous quote by James Baker. Poor Bush, Sr., paid the price for offending the most powerful. Clinton supported by the Rubin gang among BFNYC won the election.
$2B a day? That figure was accurate during the boom. During the 1st quarter of 2007 "Total Public Debt Outstanding" was growing at $1.9B/day. In the last quarter, however, it reached $2.3B/day. But then again, what is $400m in 24h? Just a 20% increase
Lemmie check in the trunk of my VW. I think they're under those autographed copies of "Conspiracy of Fools." Very valuable ever since Eichenwald went solo.
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Volcker had it easy. He had a dumb and slow populace to manipulate.
You can't be serious, Rob.
Today's populace is bright and quick by comparison? Intelligence and speed are the hallmarks of the age? What Volcker did wasn't political poison at the time?
"Again, we got a painful dose of discipline followed by - surprise! - years of prosperity"
Those years of prosperity happened to coincide with Junk Bond Mania, quantum leaps in financial innovation (derivatives, securitized debt), collapses elsewhere across the globe that made the US a relatively safer place to harbor wealth and other illusions that led us to believe we were prosperous.
@Jas Jain - Your name implies that you are a Jain, one of the much-respected Indian faith who respects life so much they sweep the ground in front of them as they walk to avoid stepping on insects.
Why don't you try living up to your name and cease the carping on Americans? Show some respect for others and your opinions might be listened to.
Burnside,
Think about it. In the 1970s could you open an Everbank Viking CD or World Energy CD with a few mouse clicks? How would you even explain one to mom and pop America? Explain it and they'd send you packing you subversive you. What was good for General Motors was good for America. How'd that turn out?
Face it. We were dumb and slow. Call it insular and complacent if it makes you feel better. If you think people today are going to sit still for inflation erosion in a stagnant economy you are the new slow candidate. Heck, the housing bubble before and now the commodities bubble are obvious consequences. Ain't no one under 40 likely to bother with Social Security given current trends.
Suecris, after repeated socially correct attempts to curb jas' "enthusiasm" have failed miserably, most of us have given up on civility when responding to his sociopathic rants. Waste of time.
Just saying that (maybe) Obama might be more pragmatic than the other idiots.
Jeebus, I just want a president who works for the benefit of the country, not his golfing buddies.
I just want a president who has some semblance of a sense of ethics. Who cares about your policies if you don't give a damn about right or wrong. Obama is the best of what's left in that sense.
jg,
must you be so tedious as well as repetitive? If you feel compelled to insult the man, ask someone with some wit for help...this is not working for you.
"Inside the Yield Book" was written in 1973 or 74, and when Volker was appointed there was barely enough processing power in mainframes to compute a proper yield.
The pc came on to the trading floor in 1982. prior to that, if you wanted a computation done and asked the IT guys, they would say 'sure, we'll have it in 6 weeks.'
When Volker was appointed you had to actually THINK about what you were doing. The next 28 years have been a wild-eyed exploration of discounted present values, from mortgages to options to credit risk, and a lack of interest in thinking about what it MEANS.
We're enchanted listening to him because he is actually talking about finance. That 'dumb and slow' populace understood why he was doing what he was doing.
They probably understood it a lot better than Jimmy Cayne understood the machinations that were paying his bills.
All the computations underneath this mess are just computations. Finance hasn't changed much.
Lol. It reminds me a bit of some of the writings that came out of PNAC(Project for a new american century), only not quite as direct about military use(IIRC, been a while since i read it). Talks a lot about maintaining control in Eurasia until control can be passed to a global consensus, that kind of shit. Kind of a plan to work towards globalization while trying to maintain the appearance of supporting national sovereignty.
Tyrone-"the brother like no ot writes:
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Tyrone-"the brother like no ot | 04.11.08 - 6:10 pm | #
Got to hear more of this commedy routine. Yeah, live large on the credit card and call it prosperity!
When Volcker speaks, how many people really listen? A lot could have been learned from his speeches, but the guys in charge of the Fed have their own agenda.
It's great that his speeches can leave most of us with moist panties, but his words may be falling on deaf ears in the real world.
Geez, now I've seen everything. Now I gotta get a copy too,... peer pressure you know.
sdtfs | 04.11.08 - 5:59 pm | #
And that, my friends, is why we are in this mess!
BTW, boomers did not invent Starbucks. The gen after us did, the ones who liked to sit on the sidewalks uptown and beg for small change (in solidarity with the homeless, I believe it was).
"You guys should check out "The Grand Chessboard" by Zbigniew Brzinzski if you are thinking about supporting Obama."
I've read it and the US is already there with China, Russia, Iran joining hands to shut down US hegemony. The empire is dying there is no going back. When the dollar loses the world reserve currency status, and it will, the party is over.
What you see in the book having to do with Obama in all this escapes me.
Tyrone-"the brother like no ot writes:
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Tyrone-"the brother like no ot | 04.11.08 - 6:10 pm | #
You nitwit. Reagan raised taxes. This myth needs to die.
Rothbard on Reagan:
"The much-heralded 1981 tax cut was more than offset by two tax increases that year. One was "bracket creep," by which just inflation wafted people into higher tax brackets, so that with the same real income (in terms of purchasing power) people found themselves paying a higher proportion of their income in taxes, even though the official tax rate went down. The other was the usual whopping increase in Social Security taxes which, however, dont count, in the perverse semantics of our time, as "taxes"; they are only "insurance premiums." In the ensuing years the Reagan Administration has constantly raised taxes to punish us for the fake tax cut of 1981 beginning in 1982 with the largest single tax increase in American history, costing taxpayers $100 billion.
Creative semantics is the way in which Ronnie was able to keep his pledge never to raise taxes while raising them all the time. Reagans handlers, as we have seen, annoyed by the stubborn old coots sticking to "no new taxes," finessed the old boy by simply calling the phenomenon by a different name. If the Gipper was addled enough to fall for this trick, so did the American masses and a large chuck of libertarians and self-proclaimed free-market economists as well! "Lets close another loophole, Mr. President." "We-e-ell, OK, then, so long as were not raising taxes." (Definition of loophole: Any and all money the other guy has earned and that hasnt been taxed away yet. Your money, of course, has been fairly earned, and shouldnt be taxed further.)
Income tax rates in the upper brackets have come down. But the odious bipartisan "loophole closing" of the Tax Reform Act of 1986 an act engineered by our Jacobin egalitarian "free market" economists in the name of "fairness" raised instead of lowered the income tax paid by most upper-income people. Again: what one hand of government giveth, the other taketh away, and then some. Thus, President-elect Bush has just abandoned his worthy plan to cut the capital gains tax in half, because it would violate the beloved tax fairness instituted by the bipartisan Reganite 1986 "reform."
The bottom line is that tax revenues have gone up an enormous amount under the eight years of Reagan; the only positive thing we can say for them is that revenues as percentage of the gross national product are up only slightly since 1980. The result: the monstrous deficit, now apparently permanently fixed somewhere around $200 billion, and the accompanying tripling of the total federal debt in the eight blessed years of the Reagan Era. Is that what the highly touted "Reagan Revolution" amounts to, then? A tripling of the national debt?"
Read the rest of this classic dismantling of Reagan here.
Your reaction is fully predictable. Among other things Americans are bred with extreme intolerance, especially, of other econo-political systems. Political Correctness exists for a reason to suppress criticism. Intolerance is at the root of PC and it assumes that people are intolerant and ignorant.
Rob, if you meant communications today have certain advantages, I'll agree easily; you might merely have said that.
But can you reasonably characterize the public of 1970 as dumb, slow and easily manipulated or, by implication, that the wider public of today is bright and quick and impervious to manipulation?
Suecris writes:
@Jas Jain - Your name implies that you are a Jain,
...
Sometimes implications of last names can lead you wayyy astray.. For example, you'd think that Nari Contractor was well,you know, a general contractor and that Farouk Engineer was, well, an engineer.
They were both international(Test) class Indian cricketers. Now if only Jas was a cricketer...
In 1981-3ish, I closed loans up to 17 1/2%. The pens would quiver hesitantly over the note, and finally the people would sign. Far as I know those loans didn't get foreclosed too much more than average. Then they invented neg am.
Boy, those did. The world didn't come to an end. Closings happened, but the houses got smaller and smaller for a while. Now nothing is moving. Does that mean nothing is worth anything?
I've read it and the US is already there with China, Russia, Iran joining hands to shut down US hegemony.
While this is certainly possible, I see much more evidence now that China and Russia are currenctly support the US.
The empire is dying there is no going back. When the dollar loses the world reserve currency status, and it will, the party is over.
I agree.
What you see in the book having to do with Obama in all this escapes me.
I've read that Brezinski is Obama's personal advisor and will be his foreign policy advisor if he is elected. Please correct me if I am wrong.
burnside writes:
Rob, if you meant communications today have certain advantages, I'll agree easily; you might merely have said that.
I meant it in the larger context. Not just communications but the speed of and access to information and the ability to move assets as well. Clipper ships providing investment advantages and all that but also the disemination of those tools.
But can you reasonably characterize the public of 1970 as dumb, slow and easily manipulated or, by implication, that the wider public of today is bright and quick and impervious to manipulation?
I don't agree that you can.
No, just in the narrow context of being able to and/or needing to invest otherwise as a hedge against a government that was no longer a neutral party.
True dat, about nothing moving. The stats are starting to surprise even me.
I find it remarkable, or maybe just illustrative, that the Feds haven't done the one kind of bailout that's a no-brainer: big, dramatic ramp-up of guarantees on really good loans to really good borrowers. Essentially, a purely psychological move on loans that aren't going to go bad anyway and present no credit risk to the government.
But they won't. See, the goal isn't to grease good loans going forward. It's to reimburse bad loans made by greaseballs in the past.
The Grand Chessboard: American Primacy And Its Geostrategic Imperatives (ISBN 0-465-02726-1) is one of the major works of Zbigniew Brzezinski, former United States National Security Advisor under the administration of President Jimmy Carter. The Grand Chessboard presents Brzezinskis geostrategic vision for American preeminence in the twenty-first century. He focuses much of his analysis on the geostrategy of United States in Central Asia, focusing on the exercise of power on the Eurasian landmass in a post-Soviet environment.
I've never read it or heard of it, but that is a summary from wikipedia.
Are any of you writing to your senators or representatives weekly with your opinions? We spend a lot of time on this site but it is starting to feel a little like a meeting of te People's Front of Judea in Monty Python's "Life of Brian". I wrote a letter and gave it to everyone in my family and all my friends with links to our senators and representatives. Are we walking the walk or just talking the talk?
On Volcker supporting Obama, perhaps he is aware of the deficit numbers under Clinton vis a vis Reagan/Bush1 and Bush 2.
Just a thought: he may be contrasting the Democrat willingness to tax and spend versus Republican tendency to tax cut and spend and identifying the former as comparative fiscal prudence.
The critique of Reagan as tax increaser posing as a tax cutter is correct, in so far as it focusing on the bottom slice of wage earners. I was a poor grad student at the time and remember watching my income go down after the famous tax cutting, while commentators gushed on the neat tax breaks I was receiving. The Earned Income Credits in Bush 1/Clinton started to addressed the issue, after I began but by then I was earning a "real" salary and climbing up the quartiles, in time for a new set of tax increases. Not that I don't think we needed the Social Security increases longterm. Good old Greenspan supported them, although he became noticeably more skeptical of entitlements and supported the tax cuts after Bush 2 replaced Clinton. I'm waiting for the supply side to balance the budget--instead they probably staved off or minimized a recession or two and did their bit for the housing bubble.
"A spokesman for the senator's presidential campaign, Tommy Vietor, said the campaign did not know Mr. Brzezinski was leading the delegation. "The first we heard of this trip was from you," he said. He added: "Brzezinski is not a day-to-day adviser for the campaign, he is someone whose guidance Senator Obama seeks on Iraq.""
TCA, thanks for the link to Rothbard's article on Reagan.
Wow, smart libertarians can be vicious!
What he writes appears true, but, jeez...
I will stick to reading Rothbard's economic works, solely.
Sometimes the truth hurts. Doesn't mean we should shy away from it. Otherwise, we end up where we are now.
I'm always amazed at these Volcker threads. When I look at the small print on my investment prospecti I notice the phrase "past results are no guarantee of future returns". I think people are like that too.
To pull someone out of the past and put them in a world that didn't exist when they were doing what they did is no measure of ability. I'm sure he did a great job managing the forces that existed when he was on the job. And perhaps there is a certain common sense to what he says. But I'm not into hero worship or a cult of personality. When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
oops i leaned on my laptop...the rest of the paragraph is...then i will believe that his ideas have relevance and merit in today's rather complicated situations.
"The plan is designed to make financial markets less secretive and improve supervision, which in theory would help prevent a repeat of the current financial debacles.
It calls for strengthening oversight to make sure financial companies have sufficient capital, cash and risk-management practices to handle problems. It also would bolster transparency and the valuation of complex investment products, improve the operation of credit-rating agencies, strengthen authorities' responsiveness to risks and put in place arrangements to deal with stress in the financial system.
One recommendation is to have banks, securities firms and other financial institutions disclose their holdings of risky securities, such as those backed by subprime mortgages given to people with tarnished credit. Those subprime mortgages, which soured with the collapse of the U.S. housing market, were at the heart of the U.S. crisis.
Another involves having credit rating agencies distinguish the ratings they give for regular securities, such as corporate bonds, from those they assign to more complex investments. These agencies have been criticized for contributing to the problems by not accurately assigning risk to mortgage-backed investments.
Yet another recommendation would strengthen supervisors' guidance to banks for dealing with cash crunches and having banks run "stress tests" to see how they cope under different scenarios of financial strain.
The plan also calls for the Basel Committee on Banking Supervision, an international body of regulators, to make sure banks have enough capital to cover any potential losses."
Ron Paul certainly has integrity. I only assume that Obama is corrupt because he is a politician, but I will not vote for him because he is anti-gun and he is unwilling to identify the crimes of our federal government. An apologist or ignoramus won't get my support.
Actually, volker answers the question at the end of the mp3 max gave us (so happy, max! and it's a bit counter-intuitive.
he says he sees one of the most important problems in america is our growing lack of trust in our government. He seems to be making the parallel to say that our EXPECTATION about whether or not we can trust our government is very important.
he seems to be saying that the support of the younger generation for Obama may be an important step in rebuilding that trust.
he freely admits that he doesn't know about obama's economic leanings (or clinton's, for that matter.)
No, Reagan was a tax cutter. In 1981, Congress passed tax cuts that reduced the top Federal income tax rate (70% at the time) down to 50% over three years. Reagan signed the bill, called "Kemp-Roth." In 1986, two Democrats, Senator Bill Bradley and Congressman Dick Gephardt, joined in on the tax-cutting fun, lowering the top Federal income tax rate to 28%, while raising the capital gains rate to 28%.
Today, the lowest Federal income tax rate is only 10%, and I mean the income tax, not the Social Security tax (an extra 6 or 7%).
What really strikes me is how unnervingly similar some conditions are now. And yes, some of us moved our portfolios out of dollar denominated assets through the seventies. I'm not as convinced as you are that the multitudes are protecting themselves today, but perhaps I'm influenced by recollecting that most didn't then either.
I used my first office systems in 1972: payroll, word processing, mail/merge, spreadsheet, G/L and some logging software idiomatic to broadcasting. We went online with a remote computer center (IBM 360/70) for batching and file maintenance. I had a portable computer with modem made to look like a briefcase. My point is, computer aids to business go back farther than is usually credited and, though I wouldn't go back to it all willingly, it wasn't nearly so different as many suppose.
We had offshore accounts. You could telephone. There was telex. If you wanted to daytrade, there was a comfy lobby at the brokerage where you could watch an electronic ticker, place your puts and calls, sip on a scotch in the company of other reprobates like yourself.
Ron Paul certainly has integrity. I only assume that Obama is corrupt because he is a politician, but I will not vote for him because he is anti-gun and he is unwilling to identify the crimes of our federal government. An apologist or ignoramus won't get my support.
Why vote at all? Do you honestly think your vote is going to make a bit of difference? Do you think your state's electoral votes will push one candidate over the top? Add to that, do you think your state will be decided by a single vote? Preposterous! You're probably more likely to win the lottery ten times than you are to decide a presidential election (if you can even trust that the votes are counted properly anymore).
Better to stay home and wash your hands of the whole process. At least then you can say you didn't help put the next despot in power.
he seems to be saying that the support of the younger generation for Obama may be an important step in rebuilding that trust.
Oh come on...no one has ever trusted the government in the history of man. I am so tired of all the happy, shiny talk. I want someone to tell me WHAT they are going to do and do it with conviction, even if it is unpopular..you know, like what you're all saying about Volcker. And tell the truth, not some crap like "i'm going to withdraw troops from Iraq because we all KNOW it isn't polically possible to do that.
Obama is an empty suit from Harvard. Look at the last alumn from there that got into the white house. You know, the Clintons have their issues, but for some reason I really believe that H will hang tough on what she says. That is what I respect.
So others will see my support of a worthwhile candidate.
Do you honestly think your vote is going to make a bit of difference?
Not by voting, but certainly by participating in the political process and sharing information.
Do you think your state's electoral votes will push one candidate over the top? Add to that, do you think your state will be decided by a single vote?
I think we have a very successful system of vote rigging in this country, so no.
You're probably more likely to win the lottery ten times than you are to decide a presidential election (if you can even trust that the votes are counted properly anymore).
Are you done stating the obvious:)
Better to stay home and wash your hands of the whole process. At least then you can say you didn't help put the next despot in power.
Actually I can do that by participating in the political process and not giving a dime to the criminal federal government(I will not be an accomplis to the dumping of radioactive waste).
To pull someone out of the past and put them in a world that didn't exist when they were doing what they did is no measure of ability. I'm sure he did a great job managing the forces that existed when he was on the job. And perhaps there is a certain common sense to what he says. But I'm not into hero worship or a cult of personality. When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
ipodius | 04.11.08 - 7:11 pm | #
Amen. As much as I respect Volcker for what he did THEN... it wouldn't play the same way today.
Then we were net exporters (or close to it)... Today we are massively net importers.
Then we net savers & producers, the worlds largest creditor. Today we are net consumers & the worlds largest debtor.
The effect would be completely different if BB jacked rates to 14, 14, 16%. It would be shock treatment but the patient is weak and would die. 30 years ago the patient was a lot younger and healthier.
I'd love to hear somebody put the question to PV that way. He's smart enough that I think he'd give a pretty good answer.
lawyerliz writes:
Ummm, I'm from Florida, and as you'all may have noticed a very few votes had a influence on who got elected in a certain election not too long ago.
And now Florida (with Michigan) looks to be doin it again. . .
Liz, do you trust that the outcomes in the last two elections were in any way genuine given all the shenanigans regarding butterfly ballots, voter suppression, touch-screen voting, etc.?
I dont know about you guys but PV is one rock star at 80. If he is anywhere in the future of this country - man, I want in. The dollar is a screaming buy if he is allowed even a small say in what happens in the next 5 years.
Actually I can do that by participating in the political process and not giving a dime to the criminal federal government(I will not be an accomplis to the dumping of radioactive waste).
Unless, of course, that the candidate you voted for wins (in which case you have no room to complain about any of his subsequent actions. After all, you helped put him there!).
That's why I find Jas so funny. He admits he voted for Bush in 2000, yet he calls others dopes and criticizes the system he helped empower.
dryfly - "It would be shock treatment but the patient is weak and would die."
I highly doubt it. The same could have been said in 1979. Instead of Cisco & Microsoft, we had Chrysler and Bethlehem Steel. The white house`s answer to high energy prices was "wear a sweater".
Volker would likely say we need to understand and deal with today's problems while we're still in a good position to do it. Waiting will only make the ultimate reckoning worse.
I highly doubt it. The same could have been said in 1979. Instead of Cisco & Microsoft, we had Chrysler and Bethlehem Steel.
Exactly.
One of the major points of Volker's speech was to draw some parallels between the events of the late 70s and today. He talks at some length about how New York was about to default on its debt, and lots of people were worried that would trigger a systemic collapse, and they were demanding government and/or Fed action... And the Fed did the right thing, which was nothing. And the system survived.
I do not know what Volcker would have done about Bear Stearns. (What a great question that would be, if he would answer it.) But whatever it was, I suspect it would have involved significantly more pain for the responsible parties.
Limits of the medium. Marshall Mcluhan didn't know the half of the problem. More my fault than yours.
What really strikes me is how unnervingly similar some conditions are now. And yes, some of us moved our portfolios out of dollar denominated assets through the seventies.
Ye, and that was the lesson.
I'm not as convinced as you are that the multitudes are protecting themselves today, but perhaps I'm influenced by recollecting that most didn't then either.
I'm thinking fool me once shame on me, fool me twice... and you are thinking there's another born every second.
The most likely outcome is six of one, half a dozen of another...
Enough platitudes. There is a small but very real danger of a "run on the nation" much like the March 1933 "run on the banks." We cannot stop people from transferring their wealth elsewhere unless we resort to what we did then. Look at what a recent stumble in the velocity of money is causing. A suspension, no matter how momentary would be fatal.
Focusing on individual tax rates during Reagan's years tells only half the story. Reagan dramatically cut corporate tax rates from 46% to 36% in the mid eighties. From that time, the shifting of the tax burden from corporations to individuals has not ceased.
When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
ipodius | 04.11.08 - 7:11 pm | #
As far as I can tell BB just opened the checkbook. If actual production in the goods and services do not exist and you keep the claims on them from deflating then there are too may claims for existing goods and services. I hope you are right but people have been down this path before. GX Networks
Aw, c'mon hiker: you have a stock portfolio. When corporate income taxes go up, the capital appreciation of your stock goes down and so does your dividend.
De facto, there are no corporate taxes. All corporate taxes are ultimately borne by those -- individuals, pension funds, etc. -- who hold the corporation's stock, via reduced capital appreciation or lower dividends.
Everything that is discussed on this blog confirms my conclusion of few years ago:
Americans people, especially, college educated, are born-and-bred dopes, i.e., thoroughly victimized by propaganda from birth onwards. Let us examine this. Bush has 28% approval rating and worse yet, the Congress, supposedly the most powerful political body, has approval rating in teens. Werent Bush and most in Congress re-elected? If so, what it does say about people that support the American political system?
America is ruled by a Network of Crooks that consists of Bankrupters and Fraudsters of New York City (BFNYC), in particular, and Corporate Crooks of America (CCA), in general.
I have seen nothing hut confirmations of these conclusions over the past few years. America is being ruled by financial Nazis and the last three most powerful leaders, Greenspan, Bush and Bernanke are certifiable evildoers. The sad part is that financial Nazis of America will make the German Nazis look good in comparison. Sorry, if someone is offended by the truth as I see it. A born-and-bred American dope cant see the evil develop at home. He is too busy blaming foreigners for various ills.
Jas
PS: I was no different than a born-and-bred American dope when I voted for GWB. I admit it. I grew up because I wasnt doped doped from birth onwards. My Republican friends who hated McPain only two months ago are going to vote for him. It is part of being a born-and-bred dope.
I highly doubt it. The same could have been said in 1979. Instead of Cisco & Microsoft, we had Chrysler and Bethlehem Steel. The white house`s answer to high energy prices was "wear a sweater".
I was there... I graduated from HS in '75 and college in '81. I was one of the few who actually worked through college (had jobs - UNION jobs). You wouldn't believe the problems I saw localized in 'rust belt'.
It was different - BELIEVE ME - it wasn't the whole country.
Even with Chrysler & IH & others on the rocks... we as a nation were still a net exporter... we had positive CAD most of the time... we were still a mfg based economy (not totally service based)... the gov't debt was smaller (though people worried about it at THAT level - they had no idea what was coming).
I am telling you I know 'retro' looks cool years later but it would not work today, Volcker's '79 gig would bomb and badly in the condition we are in now.
We'd see unemployment go 25-30% as services shut down... they can't inventory... the problem with a services based economy is there is no 'buffer'... it needs cash flow to survive. Dry up the cash and it collapses over-night... mfg needs cash too but can inventory & capital (can literally live off in a crisis - doesn't work when its all cashflow).
An 80s like high interest rate purge would knock the GDP down in half - it would take a generation to get back to where we are today... assuming the social fabric held together.
This why Volcker has said on numerous occasion that today is the most difficult conditions he has ever seen. And it is because of a generation of over consumption & pervasive debt - something he did not have to face.
He's smart enough to realize that even if his worshipers aren't.
--
81% of Americans say that America is moving in the wrong direction, the highest ever.
I am simply providing the explanation America has turned into a country of born-and-bred dopes led by Crooks and their agents. Rogue economists who lie about recession and depression are part of the agents of Crooks and their job is to mislead the public. There is lot of money and good living standard in serving the Crooks just as was the case in Germany during the Nazis. We have too may intellectual whores in America and economists top that list (Greenspan and Bernanke are economists).
Hey Jas,
If Americans didn't take pity on your sorry ass, you'd be speaking Russian in Siberia about now. If you weren't already turned into a lamp shade.
In other news, GE lost $44 billion in market cap today--substantially more that the piddling $29 billion spent to rescue the blackguards and capitalist roaders at Bear Stearns.
The chart of General Electric shows that the stock jumped over its 50-day moving average, the 200-day moving average. . . everything!
If you're under 30 yrs of age chances are 90+% of you will not be as financial well off as your parents or even grandparents.
Why ? In short 25+ yrs of increasingly financial engineered driven bullshit for the US economy ( especially the last 8 yrs under Bush ) with massive market bubbles has created systemic damage.
And the standard of living for 90% of Americans of all ages is going down nd will go down even further.
Get adjusted to reality because if you cannot make $200K/yr you will lose !
"If you're under 30 yrs of age chances are 90+% of you will not be as financial well off as your parents or even grandparents."
I read the same thing about 17 years ago. I think that phrase gets past along every generation. It is one of those non-thinking, alarmist mantras that speaks poorly of the person who says it.
You seem to flutter from telling us how wonderfully well all these manufacturers are doing, going balls to the walls, to telling us how this dire situation can't afford any sort of backbone on the inflation front.
Personally, I'm not ready to condemn Ben & Co., because I think things may actually get dire.
"Time to move to the next generation." I'm not terribly impressed with that generation either.
The boomer generation was the first to move beyond survival. Not to discount the many recent advances and brilliance, but the previous generation is/was collectively more resilient. The other notable factor is that we moved way beyond "Ask not what your country can do for you." There are simply too many lacking consideration for society at large. It's corrosive when the average person continually witnesses folks profiting from spin, manipulation, and positioning.
Sorry for the "Jas Jain" like post...Maybe these folks conclude Obama is the best of the worst. He has the spin, but I don't see the mettle.
Dire conditions developing in the west in the trucking industry. Perhaps in the rest of country as well but only have first hand knowledge of western conditions. Plants in many industries going to reduced work weeks. Dramatic drop in shipping volume during last three weeks. High fuel prices forcing many small operators to park the trucks. This downturn is gaining momentum.
I didn't mean that to sound so accusatory, dryfly. But you do seem to be quick with the anecdote to support your position du jour, and yet never take note of anything contradicting it.
We are definitely in some sort of transition. It may be that dryfly(1) is correct and world demand will save the day. But it may also be that dryfly(2) is correct, and that things really are dire here. In which case, it seems rather grasping to think demand from the rest of the world is going to ameliorate a crash of the great consumer.
SACRAMENTO -- Gov. Arnold Schwarzenegger's administration today proposed $7 billion in state spending to bring health care in state prisons up to constitutional standards.
This is what I've been saying. The housing downturn and recession is putting huge strain on the social services safety net, from police and prisons to health care, counseling, shelters, rehab and mental health.
80-90% of the safety net's cost is paid by state/local govt. It's the first inning and it's already over-stretched.
It's guaranteed that there will be a combination muni fiscal crisis and nationwide taxpayer revolt. What you see in Jeff County will be repeated hundreds of times.
MBIA will one day look back at CDOs and asset-backeds as the easy side of their biz.
SACRAMENTO - Joe Six-pack will have to pay a lot more to get his buzz on if Assemblyman Jim Beall has his way.
The San Jose Democrat on Thursday proposed raising the beer tax by $1.80 per six-pack, or 30 cents per can or bottle. The current tax is 2 cents per can. That's an increase of about 1,500 percent.
Beall said the tax would generate $2 billion a year to fund health care services, crime prevention and programs to prevent underage drinking and addiction.
"The people who use alcohol should pay for part of the cost to society, just like we've accepted that concept with tobacco," Beall said.
But what exactly is your position?
Bob_in_MA | 04.11.08 - 8:54 pm | #
I think it is going to take a long time to fully dig out - all BB can do is the ER work, the rest will have to come later - surgery, recovery, rehab - it will be hard.
Non-auto & non-housing mfg really is doing well - you should see the boom in Waterloo IA (Deere) and Wichita KS (Boeing, Cessna) - staggering. I've seen both those towns it total collapse in the past. Not now.
And not everyone is getting action - there are many still left behind. But they do NOT look anything like recession.
But together they are one medium suburb in Orange County... even if we get 100 or 200 such cases they won't get us out of the hole we've dug and certainly not quickly.
But they shine the way - and it isn't just mfg... services will work too IF they are tradable (exportable) OR compete favorably against import of services (offshoring).
The key is make & do more here... consume less, especially imports... shore up the balance of dollars going out & the dollar will strengthen on its own. But it will be a 'sustainable' prosperity.
The fed can't prop up the dollar by raising rates... in fact they haven't since been able since at least Rubin... the BoJ & PBoC by buying our securitizations (private & agency & treasuries too) did more to prop up the dollar than the Fed.
Now if they raise rates - we'd see unemployment & business failures soar. Countries don't always come back from that.
So ya, non-auto & non-housing mfg are showing the way out but its gonna be a long hard march. The fed can only do a little - make sure sufficient liquidity exists so we don't have a self-enforcing downward deflationary spiral... after that its really up to 'us' to fix it. Literally meaning - all of us to do our personal part.
A good friend used to say 'recessions end an order at a time and a new hire at a time'. We got a decade of order getting ahead of us if this credit crunch is half as bad as it looks to me. But it can be done...
Dire conditions developing in the west in the trucking industry. Perhaps in the rest of country as well but only have first hand knowledge of western conditions. Plants in many industries going to reduced work weeks. Dramatic drop in shipping volume during last three weeks. High fuel prices forcing many small operators to park the trucks. This downturn is gaining momentum.
Viewing with alarm | Homepage | 04.11.08 - 8:59 pm | #
VWA - can you tell us what industries?
I know building supplies are VERY weak as is automotive - both will get worse before better. I'd bet a lot of the slowing in the west is due to fewer building supplies heading to job sites.
BTW - I saw parked rail cars used for hauling autos in Kansas... just like we discussed here a few days ago. Long lines of them just sitting out on a rail spur... empty... no engine anywhere in sight. Its real.
But I'd like to know what you see - what industry is driving the trucking slow down.
Someone correct me if I'm wrong, but doesn't Obama's district include Cook County Illinois ? That's not the cleanest political enviroment to come from. Maybe we need someone without ambition to run for President.
But they shine the way - and it isn't just mfg... services will work too IF they are tradable (exportable) OR compete favorably against import of services (offshoring).
I have been trying to figure out if this will be a big world-wide problem, or will much of the rest of the world be somewhat immune to our problems.
To me, it seems there will be one of two outcomes. If it is just us, the Brits, maybe Spain, that fall, but China, Brazil, India, etc., continue to boom, than exports, and replacements of imports, may help us, but we need to bite the bullet on rates, otherwise we are going to get hit hard by some really bad-ass inflation in 2-3 years.
The second scenario is that the big exporters follow the big consumers down, followed by the commodities and the economies dependent on them. In which case, inflation is going to be the least of our problems. But Waterloo, IA, and Wichita, KS, are going to ultimately take it on the chin.
But Waterloo, IA, and Wichita, KS, are going to ultimately take it on the chin.
But you can't have it both ways.
Maybe not.
Listen - if our currency gets weak enough (Fed might not even be able to stop it - it could get a life of its own) even if world demand goes down... some areas might see a net gain. Might be Waterloo & Wichita.
Japan gained market share here & worldwide through a number of our recessions... they did it by stealing business from others in a down market. Tough to do but not impossible.
The metric I'm gonna be watching is will the FCBs let the dollar really tank... if they do Boeing & Deere might do surprisingly well.
Or will the FCBs step in & levitate the dollar by buying up some of this MBS dreck. If so they would 'fix' (as in a gambling fix) two problems at once - the credit markets and their export problems... of course that wouldn't come 'free'. A Hobson's choice for them.
I don't really know if they will or not but that will be the thing to watch...
Just for the record, I'm leaning toward scenario two. I think the industrial/steel/raw materials spike is being mainly fueled by over-investment in plant and equipment and speculation. Countries that had enough rice to export a month ago, suddenly need to curb exports. Why? Not because the quantity of rice changed, but because the export price went up explosively.
If the commodity boom ebbs, doesn't have to fall precipitously, just ebbs, the demand for Cat earthmovers etc., is going to plummet.
40% of China's GDP is exports and 20% of their exports go here. Britain is Germany's biggest export destination...
But I still see a chance for the other outcome. In that case, be prepared for some real inflation. Probably making the late 70s looking mild.
Or will the FCBs step in & levitate the dollar by buying up some of this MBS dreck.
Do you honestly think Joe German tax payer would go along with the ECB buying up our shit?
That's a pretty big pipe dream.
We are shrinking, that's going to be the theme for the next fifty years or so. We can fight it like the Brits did for the first three-quarters of the 20th century, or we can accept it and find a new niche like they did in the last 30 years.
But expecting the rest of the world to solve our problems is just a pipe dream.
Just for the record, I'm leaning toward scenario two. I think the industrial/steel/raw materials spike is being mainly fueled by over-investment in plant and equipment and speculation.
I see speculation as a big part of it. But capacity (supply) is a function of price & demand... if a lot of that new capacity is low cost enough to produce (cost separate from speculation)... it won't go away just because the price drops. If that capacity is priced 'marginally' now - so that barely profitable at these prices - it will go away if there is a drop. I just don't know.
Also - many of those plants might see owner lose out then fire up again at a MUCH lower capital cost basis for a new owner. It really comes down to their VARIABLE cost - is that above price. Once cost is sunk its hard to close one of these for good until some of the capacity wears out which is why mfg 'recessions' can last so damned long. Equipment lasts forever. Everyone has to go broke & cost go to the new basis THEN have the equipment wear out before supply corrects to a profitable price - see airlines.
As far as UK-Ger trade... that's like Wisconsin & Minnesota now. Once the EU set up it didn't matter much. Sterling is in the EU Zone whether it admits it or not. Same with CN$ & MexPeso here in NAFTA Zone. I view NAFTA/Mexico like my father viewed Alabama from his rust belt perch in the 1960s. No going back - its another state now.
I too was stunned (if delighted) by the Volcker endorsement. In addition to the generational change factor, I suspect they see a few things: 1) that Obama motivates people across demographic groups (notwithstanding Clinton's support among older women and McCain's support among a certain segment of men), 2) I know of many older "liberal" Eastern Republicans - men and women - supporting Obama; and 3) the policy options are very limited, especially given the economic and foreign policy constraints, so Obama's ability to think, to lead, to speak, and to execute his plans (as evidenced by a remarkably successful campaign) are more important than the specifics of his policies, much of which will end up on the cutting room floor of Congress.
But expecting the rest of the world to solve our problems is just a pipe dream.
Bob_in_MA | 04.11.08 - 10:27 pm |
They have been doing it in Asia since the 80s (BoJ then, PboC & BoJ now). ECB is irrelevant - they'll be hollowed out soon too if the euro doesn't correct. Dollar reserves are still growing.
ECB is irrelevant vis-a-vis the dollar. Its all in Asia's hands. China ships more to Euro Zone now than NAFTA Zone. Read that on Setser a couple months ago. It will be a lot more if the difference between euro & RMB stays this wide.
Here not so long ago the people in this country lived through the twin horrors that was the misery of the Great Depression and the slaughter of WWII... both of which threatened our existence all in one 15 year period.
There is nothing remotely so severe about this situation.
Our ancestors lived through epidemics and famines that wiped out entire families and acquaintance after acquaintance.
And this financial mess is now the end of the world.
"We are shrinking, that's going to be the theme for the next fifty years or so. We can fight it like the Brits did for the first three-quarters of the 20th century, or we can accept it and find a new niche like they did in the last 30 years."
Our military hegemony is much more complete than the Brits ever dreamed of. If we want to we can easily take the Saudi oil fields, and many other productive resources. We're not there yet as a society (willing to accept such drastic actions, though Iraq is a test case), but if the shtf we will be. I hope to Glod it doesn't come to that, but ...
"Simple Gifts" was written by Elder Joseph while he was at the Shaker community in Alfred, Maine in 1848. These are the lyrics to his one verse song:
'Tis the gift to be simple, 'tis the gift to be free,
'Tis the gift to come down where we ought to be,
And when we find ourselves in the place just right,
'Twill be in the valley of love and delight.
When true simplicity is gain'd,
To bow and to bend we shan't be asham'd,
To turn, turn will be our delight,
Till by turning, turning we come round right.
For the years that we earned more then our father, for the years we spent 1/2 the worlds total on defense. For the years we used so much oil, polluted so much what have we gotten? McMansions and Hummers. High crime and drug rates . And we have replaced a belief in God with a belief in the Bible
We don't need a conspiracy of Russia Iran and China to bring us down. We are going to Hell all by ourselves.
Excuse me from stealing a term from Marx, but the internal contradictions of our version of Capitalism is causing its implosions.
So maybe it will be good for us if our standard of living drops,if our Gini index drops, if we spend money on educating our children and keeping them healthy. Lets give someone elsde the reserve currency. Lets give up being the policemen of the world. Lets give up being run by big oil. Lets give up being run by the Military-Intelligence-Industrial combine. Lets give being spied upon
Lets bow and bend 'til we find simplicity again
And as Volker says lets step aside and let the kids take over. I don't like Obama, but my two kids are passionate about him. So I will listen to Volker,defer to my kid's judgment and vote for Osama. He has the capacity to grow into the job
So maybe it will be good for us if our standard of living drops,if our Gini index drops, if we spend money on educating our children and keeping them healthy.
God, now I'm going to join mp in a drink.
ac is right. We've become a bunch of freaking pansies. Spending money on education is NOT - SO NOT - going to help bring the education standards up; been there and done that and what have we gotten?
Y'know, I decided tonight to go with the O for President; read the contents of a speech that he gave to an inner-city crowd in which he stated that money is not going to help the kids learn. Turn off the f'ing electronics and be a parent. Stop buying so much crap food and limit what's in the house. Gee, it makes my life unpleasant with all of the whining but they'll get over it.
I went to an elementary school talent show tonight and one trio of ELEMENTARY school kids had to redo their hip/hop dance routine today because what they planned was too vulgar. So where in the hell are the parents?
Here not so long ago the people in this country lived through the twin horrors that was the misery of the Great Depression and the slaughter of WWII... both of which threatened our existence all in one 15 year period.
There is nothing remotely so severe about this situation.
ac - nations don't always survive these events. History is littered with messes that got worse & worse until the system pulled itself apart. There is no law of nature saying we'll survive this one if we let it really get bad.
BTW - my father who lived through the depression & fought in one of those wars thought we today have bigger problems than they did then although none of us suffered like his family & friends did. His belief was based on the fact that they had fewer people then, more natural resources and more 'room for error'. Granted the 40 million or so who died in Europe & Asia might have a different view).
With six billion people today there isn't much room for mistakes and any error in the financial calculus can quickly turn into errors in actual goods getting produced. Miss just one season & a whole lotta people die. I was thinking about that driving by the flooded fields in Missouri today.
I think this mess is solvable but that isn't the same as saying it will get solved. Past performance is no guarantee... yada yada. Keeping the systems functioning is critical. Improving is better but functioning is critical.
There is also a chance it won't even be bad at all - though I doubt it, I can't envision a scenario where the skanky debt doesn't matter. I would rather have them err on the side of caution than bravado when dealing with that skank.
Questions about which industries seem to be taking it on the chin in the west. Dryfly is correct about anything related to housing including furniture and carpet. Paper products, wheat based food products, seems to be less coming in through the ports as well. What is striking is the apparent sharp decline in last three weeks.
Any friend of George Shultz surely must be a fascist pig. The man responsible for wrecking the Bretton Woods system of fixed exchange rates and surrendering control of the U.S. dollar to the City of London is no American in the traditional sense.
As for this hack Volker, let the word go out that any so-called "respectable" man of American finance who says, "Any return to heavily regulated, bank-dominated, nationally insulated markets is pure nostalgia, not possible in this world of sophisticated financial techniques made possible by the wonders of electronic technology," probably is in bed with the eternal enemy of the American Republic. These are the sort who lavish the praises of Adam Smith and despise Alexander Hamilton.
Unless the people of the United States are willing to recognize how today's tyranny is no different than that of 232 years ago, this nation is finished.
If you think Obama's awesome, I feel sorry for you. To tell crowds of Americans they are angry and frustrated is a losing strategy.
So what if they're angry and frustrated. It's a classic trick of a demagogue to convince people how angry and frustrated they are, without having any ability to change their anger or frustration.
You whip up their anger and frustration and try to channel it into personal political power, like Hitler did.
Americans have themselves to blame for electing George Bush twice and spending their way into the poor house, and there's no quick fixed from Obama or anybody else. He gets more arrogant, power-made and bizarre by the day.
ac-
The US didn't see the great depression or WWII coming. In fact, if it weren't for Pearl Harbor, we could be living in a different world today.
What happens when the rest of the world decides they aren't going to take our money at 10, 20, 30 or 40 percent of par?
Been to a grocery store lately? How much of that produce comes from South America? Look at the labels?
The price of beef has increased 200 percent in the last three months. What happens when the feed we import disappears?
What happens when people living paycheck to paycheck have to pay cash for everything, and prices are rising faster than they can get paid, if they get paid at all?
What happens when people can't drive to work because domestic oil is seized to protect military bases around the world from being over run by governments we owe debts that can't be paid?
What happens when people have to wait in line with ration stamps to get clothes for their kids in the dead of winter because textiles no longer are manufactured in the US?
All the while we'll have the media and politicians blaming it on evil foreign government ideology, terrorists, socialists, communists... fill in the blank.
Look back at the triggers for the Great Depression, WWI, WWII, 9/11, no one saw it coming. In hindsight it was obvious.
It's time to wake up and deal with reality. I'm sure many will say I'm paranoid and worry too much. I honestly hope they are right.
I get what you are saying, but the rate of change is the issue - mfg ramp occurs orders of magnitude more slowly than the huge increase in the cost of debt service - open question how much pain occurs while the sectoral reallocation is underway...
Hey guys, its me again. Been a rough week. Actually, its been a terrible decade.
The biggest problem facing our nation isn't low interest rates. Its not declining housing prices or a falling dollar.
The real issue is that we are facing a crisis of confidence. It starts at the very top with George W. Bush and Bill Clinton lying directly to the American public. That set the example, and we all learned one thing.
Lying pays off very well in the short term. Unfortunately, an overwhelming sense of dishonesty has permeated our culture and we are now paying a price. It will get much worse before it gets better, but it will get better.
This society has shown a historical resiliency when things get tough, and I have no doubt we will rebound. All I ask is that we start telling each other, and more importantly ourselves, the unvarnished truth.
When that happens, I will make my triumphant return like a phoenix rising from the ashes. Until then, hang on to your britches because the fat will be trimmed and you won't be able to afford a new pair of pants.
So let me get this straight, you think we Americans need to consume less, and yet you are a proponent of the negative real interest rates being set by the Fed? You think a policy of raising rates now would be suicide for the USA?
The very policy of always intervening to prevent corrections (My God, we might have deflation!) and business failures (We mustnt let Bear fail or itll bring down the system!) is exactly why the problems have gotten this bad. American businesses and individuals are being trained. Reward reckless behavior and you will get more reckless speculation. Punish savings, and you will get the worlds most amazing consumers.
So what if they're angry and frustrated. It's a classic trick of a demagogue to convince people how angry and frustrated they are, without having any ability to change their anger or frustration.
You whip up their anger and frustration and try to channel it into personal political power, like Hitler did.
Hey Rich
I'm ok with you not liking Obama.
im just not seeing the hitler parallel.
in fact just the opposite...seems to be inclined to an inclusive approach. he just made the point that the middle class doesn't have an effective lobby and so DC ignores their needs.
Tyrone-"the brother like no ot writes:
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Tyrone-"the brother like no ot | 04.11.08 - 6:10 pm | #
Hey Tyrone,
tax cuts don't fight inflation..tax cuts are stimulative.
also Reagan pushed thru nearly 3 trillion dollars of deficit spending over his two terms...also a stimulus.
Volcker had big balls... he had to fight the inflation that preceded Reagan and run counter to Reagan's on-going fiscal policy.
Discipline? Yeah, sure - but if we stop spending we cause a recession and lose our jobs. Catch 22.
zinc | 04.11.08 - 11:18 pm | #
Zink aggregate demand includes consumption and investment spending.
you, we, wont loose our jobs if the decrease in "mall" spending is replaced by investment that yields productivity growth,..and that puts people to work.
What's kind of interesting about it is that John Edwards was starting to tap into that sense of "a middle class abandoned" before BSC, before ABK, before all of the latest shenanigans.
I wonder how much it would've changed things had the primary season started now instead of months ago.
I get what you are saying, but the rate of change is the issue - mfg ramp occurs orders of magnitude more slowly than the huge increase in the cost of debt service - open question how much pain occurs while the sectoral reallocation is underway...
energyecon | Homepage | 04.12.08 - 12:17 am | #
I didn't say it would be fast (I expect it will take a decade or more for us to dig out if we start tonight) and I didn't say it would be painless (working harder for less in parity terms isn't fun). It all revolves around a weaker dollar forcing us to produce more & consume less until some of these 'imbalances rebalance'.
But if our trading partners want to keep their currency from appreciating too much too fast so they can continue to remain 'price competitive' in dollars terms then they will have to prop up the dollar - meaning they will have to buy either (1) our products (2) our assets or (3) our debt - the dreck. Oh - the assets look pretty drecky too - they are mostly our equities.
Capital flight means they completely walk away from our market & our 'ramp up' goes virtually unchecked by their competitors.
I can tell you right now that their politicians & central bankers won't allow that - at some point they will be forced to intervene if the dollar gets that weak. the question is how weak will they let it go & which of the three will they buy (products, assets or debt).
So let me get this straight, you think we Americans need to consume less, and yet you are a proponent of the negative real interest rates being set by the Fed? You think a policy of raising rates now would be suicide for the USA?
If they raised rates a lot it would be a disaster. But only for working people. The 'landed gentry' would do great - they have very little debt & enough assets that even in shortages they do okay. Just like 18th century.
You'd see our production fall in half and unemployment go up to 25%-35%. It would stay that way 10-15 years or so like the last depression.
Deflation means every company with any serious amount of debt fails. The worse the deflation the more of them that fail causing more deflation, lay offs and failures.
And since assets are declining in value (as are prices for products) no one steps in to buy the productive capacity - no incentive to rush, the assets will be cheaper tomorrow so why buy today? Your products will be cheaper tomorrow so why produce today?
It really gets ugly fast.
The fed can't let that happen - they won't let that happen and they & gov't can do something about it in a fiat system - print money. The problem is they are likely to over-shoot, might have over-shot already. Won't know until it is way too late.
Punish savings, and you will get the worlds most amazing consumers.
I really don't get as excited about savers - I'm more interested in where you've invested. So what if you throw a pot of money in the bank, or buy metal with it... does it cure cancer? Does it feed people?
We need to consume less and produce more - not hoard chits or pieces of metal. In that respect I have no problem with the fed pushing money out of the vaults and on to the factory floor by not rewarding 'saving'.
Let's try this. Take the average of the last 15yrs housing inflation, per yr and incorporate that to the beginning of the bubble (to be determined by exceeding that average) and calculate the probable price of a home in 08. Have the fed guarantee loan of that amount to bank (investment banks?), if buyer qualifies (criteria that eliminates speculators). You have created a housing floor that is reasonable and the real losers are the speculators - the risk for the potential gain.
When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
ipodius | 04.11.08 - 7:11 pm | #
First of all, Bugabe had 2 years to solve this problem. What's he doing now to make sure that the problem doesn't repeat the second feds stop writting out blank checks? I wish the problem would go away if we stared at the balance sheet long enough.
Dryfly- re: Hobson's Choice Hobson ran a horse-drawn cab company in London and his "choice" was take the next cab in line (regardless of condition) or none. Kind of like Ford's "any color, as long as it's black". I know that in common parlance it's not used that way, but I thought you'd like to know.
You make it sound like the Fed is doing the little guy a favor by preventing this horrible deflationary depression.
I'm not so sure about that.
Look at the growing wealth disparity. The current system specifically benefits the wealthy by artifically pumping up asset values. The bottom rung does not own any of those assets.
Also, your dire forecasts of 15 years of 25% unemployment are outlandish (not impossible, but quite spectacular predictions). I don't know if our labor has the same bargaining power to prevent wage drops like it once did. And if wages can fall, then unemployment will not be as severe.
Of course, our standard of living will fall. But that is inevitable. I'd rather see it happen honestly, with some of the bad actors punished. That might even result in some changed behavior!
Been to a grocery store lately? How much of that produce comes from South America? Look at the labels?
The price of beef has increased 200 percent in the last three months. What happens when the feed we import disappear?
Er... step back a biological nanosecond and 4 out of 5 of your offspring died before the age of 7 and russian roulette had far better odds than child birth.
Grocery stores? Bargain basement imports?
These inconcievable luxuries might gasp disappear?!?!
Oh the humanity!
I take it you've never spent a single second face to face with doom.
Consider that the world you think you live in is not the world you live in.
I'm not really a religious person, but I can't get past the sense that the world today is awash in these seven spectral lights in a way it's never been before.
Maybe thousands of years of accumulated wisdom count for something.
Or maybe it's just our imagination that has brought some biblical abomination creeping out of the shadows and into our everyday lives.
Maybe if we pretend it's not there it will slink back into the darkness.
Thanks sdtf - didn't know that... just knew it was an 'undesirable choice'... so a choice of taking the next crappy cab or walking makes sense... you don't get the choice of the cab you want.
That sure sounds like the economic choices facing us today - take what you get or walk.
You all Volcker funs should really give a thought to an alternative. Remove easy credit and 10% unemployment "here I come". And your 24-hour-on life would be unavailable too. You can not have it both ways.
Watching this video and reading the text should be required for any financial/economic blogger. The opinions and words of all the fake wanna be hyper-active attention deficit back seat driver bloggers/daytraders, economists and politicians are worthless crap and Volcker is THE REAL THING!
You all Volcker fans should really give a thought to an alternative.
I think we should keep in mind that "Volcker fans" are not Volcker. I hope to hell he's a lot smarter. I doubt he'd try the exact "same" solution, but regardless, he'd start with a huge amount of respect from the people who matter.
"Americans have themselves to blame for electing George Bush twice"
No kidding. If it weren't for the vagaries of party politics, maybe the Dems would have put up somebody other than John Kerry, and I could have voted against Bush. I would have even taken Hillary at that point. Well, maybe not Her.
Also, your dire forecasts of 15 years of 25% unemployment are outlandish (not impossible, but quite spectacular predictions). I don't know if our labor has the same bargaining power to prevent wage drops like it once did. And if wages can fall, then unemployment will not be as severe.
I pulled those numbers out my ass - they would be very bad if a real deflation set in unchecked by central bank largess. I have no real idea how bad - at least as bad and long as the 30s depression. Something like 10 years at 25% unemployment... until massive war spending broke the cycle.
So workers wages drop in a period like this... what do they buy? And if they don't buy - where are the profits for the companies that employ them & their neighbors? So the companies lay off & shut down & less gets spent, wages go lower & more fail.
Liquidation - unemployment - liquidation - unemployment... down, down, down. That is the cycle.
With the debt loads today, the liquidation would be furious...
And with continued deflation - you would not see investors step in until they thought the cycle was broken - who wants to buy a depreciating asset? In deflation EVERYTHING depreciates.
Of course, our standard of living will fall. But that is inevitable. I'd rather see it happen honestly, with some of the bad actors punished. That might even result in some changed behavior!
ShortCourage | 04.12.08 - 1:30 am | #
The bad actors always come out better than honest working stiffs - who has the connections? Not the working stiffs. I have no doubt that the rich get richer in EITHER a massive inflation or deflation. But deflation is the uglier of the two initially, immediately. The only good thing is it is also quite easy to cure in a fiat system. Inflation on the other hand is slow to take off but very hard to call back once launched.
The ideal role of the central bank in a fiat system (and we will have no other until the end of time) is to control money supply - enough to avoid the downward spiral... not so much so as to launch inflation.
I am not convinced they have done a good job - that is not to say they shouldn't try and that we should have better laws & regs outside the fed purview to constrain the bad actors. That's where I think the fall down occurred... if they had done that we wouldn't need so much fed interaction.
But that's all lessons learned for when this is over. For right now I want them to keep the systems running so we have a tomorrow - too much is at stake if they let it completely fail.
Its correct but irrelevant to remind us , as ac correctly does, about the enormous advances in medicine, transportation, food availability, relative peace that our generation has had compared to prior ones in the USA.
The US citizenry feels entitled to more -particularly more than everybody else - and in one of those ironic moments on CNBC, Joe Kernan demonstrated this well as the future was discussed with Mohammed El-Erian ( CO-CEO of PIMCO ) as he talked of the rise of the BRIC countries but that there will be more.
Joe Kernan asked : "Hang on, you say there will be more but will we get less of the more"
and Mohammed El-Erian ducked the question but it was repeated and he just had to admit:
"Yup, the USA will get less of the more".
Sorry, tough shit and all that..
Actually I think its way worse than that - and attitudes and viewpoints like "We can just militarily take over the Saudi oil fields" will make it worse before it gets better.
Until the people as a whole really sign on to the idea that the USA is living beyond it means ( and the fact that foreign (alien! ) people are prepared to loan it money to do so does not alter the issue one iota in a fundamental sense ) - until then, the decline continues.
The problem is that they seem to want to control the money supply only when it is contracting....not when it is expanding...
Likewise they don't want to interfere in the free market when things are crazy good (let the market police itself). But when things are going to hell, well then the free market needs the wisdom of the Fed to set prices and change the rules.
C'mon. Let's just have introduce a Soviet-style 5-Year Plan and get it over with.
ShortCourage writes:
The problem is that they seem to want to control the money supply only when it is contracting....not when it is expanding...
We find agreement.
And worse yet - not put any restraints on 'credit creation'... in a fractional reserve system that is playing with fire & we got burned.
And how they handled BSC was disgraceful - I'd rather see them do a Northern Rock & OPENLY nationalize the failed enterprises & liquidate assets but make damned sure the stockholders & execs lose their jobs, bonuses & equity. Instead it was a back door inside job.
There were a lot of ways they could have done this better, earlier & with less heavy handedness (if it was earlier & more open). Didn't happen.
But that isn't the same as saying lets have deflation - not a solution.
Someday a future candidate for fed chairman is going to tell congress all about the mistake Bernanke made and how he won't make 'em... He'll also make his own. Hopefully we will have made the system more robust having learned from this fiasco.
A sign-off comment... The actions I've seen by "the authorities" during my 40+ years have had unintended consequences that are worse than the problem they've tried to fix. I don't expect any better results from the latest batch of government change-the-rules-after-the-fact solutions.
If they continue, the final unintended consequence will be a loss of trust in our financial institutions. Then we might experience capital flight, a collapse of the dollar, hyperinflation, or all of the above.
How is that outcome better than your feared deflation scenario?
Compare this to the alternatives of saving; 2.4-2.7% T-Bills then?
Well no. If you are living beyond your means, i.e. a debtor, saving means paying off your debt. Your return on savings is the interest you no longer have to pay, which in the case of credit cards is a lot, and still substantial for other debts. Not the measly interest a non-debtor would get from a T-bill.
You're talking as though Americans have been going into debt because of a low return on savings, which is absurd. They have been living beyond their means, period.
You know, the Clintons have their issues, but for some reason I really believe that H will hang tough on what she says. That is what I respect.
With posts like these I'm beginning to wonder if what Jas Jain says maybe has some truth to it. What does some "some reason" mean? It implies that you don't even know why you are going to vote for her.
As for "what she says" have you noticed any of her lies lately like the Bosnian smiper story? Or I was for the Iraq war before I was against it but it was the right vote anyway and I was for NAFTA and so is my campaign manager before I was against it. Did you notice her complaining when her husband and the GOP control Houses, signed the repeal of Glass Steagall, that contributed to the present financial disaster? Does that and "their issues" just get ignored in favor of an imaginary "for some reason"? With reasoning like that it's no wonder Bush was re-elected.
How about we talk about smarts okay? First presience. Did you read what Obama wrote about Iraq before the invasion? Pretty much sums up exactly what is happening. Next the ability to speak and inspire. It's no secret that Obama is more articulate and he has won more votes. I suggest you watch the video km4 posted at 10:07 pm in response to the latest smear campaign. There is a reason why he says it is "awesome". Last intelligence. If you haven't read the response to the Wright controversy yet I suggest you do so and take note that he wrote it himself not a speechwriter.
So your "empty suit from Harvard" is smarter, more articulate, more able to inspire people and possesses a knack for seeing the future clearly. Personally in the middle of a crisis I think it's a no brainer.
ac is right. We've become a bunch of freaking pansies. Spending money on education is NOT - SO NOT - going to help bring the education standards up; been there and done that and what have we gotten?
No of course of not that only works with CEOs and Politicians. Paying teachers less than Garbage Men will ensure our children get the best and brightest amongst us to teach them.
You all Volcker funs should really give a thought to an alternative.
I think it is the Volcker anti-fans that need to start thinking of alternatives. Printing up "Plant A Garden" buttons aren't going to feed your families. Most Volcker fans probably already have gardens. Good luck to all the Statists that come crawling out of the city once your system destabilizes. You won't be well received. It's starting to look like the easy way out isn't going to be so easy this time.
Capital flight means they completely walk away from our market & our 'ramp up' goes virtually unchecked by their competitors.
I can tell you right now that their politicians & central bankers won't allow that - at some point they will be forced to intervene if the dollar gets that weak.
From a link above this is what they are actually saying:
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke hosted the Group of Seven discussions, where officials embraced a plan that would seek to increase the openness, or transparency, of financial markets and to sharpen regulators' response to urgent financial problems.
...
The plan is designed to make financial markets less secretive and improve supervision, which in theory would help prevent a repeat of the current financial debacles.
Since they have in effect been ripped off on that market by buying into the CDO mess and losing billions I wouldn't be so sure. They are telling you to clean up your books and put a leash on your crooks. That's what needs to be done and the Bank for International Settlements is predicting it:
The financial instrument that was one of the biggest drivers of the recent explosive growth in mortgage-related debt markets faces near-certain extinction, according to the central bankers bank.
They have elections too and a bailout of another country with their tax dollars would be highly unpopular to say the least. Everybody knows what needs to be done and nobody wants to completely walk away.
Volcker's term as Fed Chairman was between August 6, 1979 and August 11, 1987. He was Fed Chairman before, during and after the peak of the S&L crisis. On January 15, 1993, Volcker testified before the National Commission on Financial Institution Reform, Recovery and Enforcement. He confessed to the Commission that he could have warned more forcefully about problems in the S&L industry but was worried at the time about panicking depositors. So, when he was Fed Chairman he kept his mouth shut, but now he's talkative and glib. Why should we not regard him as just another "doom-and-gloom" talking head? Why sould we believe anything he has to say? He and King Laissez-Faire Greenspan are, in the opinion of many, mere "has-beens." Maybe. But surely they don't deserve the level of attention they get, particularly from the number one economic web site in the world. Delete the posts on Volcker, ignore future comments by him and Greenspan and let's move on CR.
Dryfly, getting writer's cramp yet? Watch out, as it might get in the way of your next circle jerk with ipodius.
Being afraid of Volker's messages about discipline and sustainability is simply about being afraid of everything.
Leadership comes along in a crisis, and a crisis is exactly what we need to come to our senses. You're afraid of pain? What real development has come without it?
Lincoln, FDR and the founders were the real deal. Wall Street is not about leadership, it's about screwing everyone with their pants on for money...reverse prostitution.
Let's give the future to the young, who are inheriting all this "faster and smarter" crap from 1980 forward anyway.
Obama seems to get it. He's converted me from "kill the Republicans," and that's quite a feat these days.
"You know, the Clintons have their issues, but for some reason I really believe that H will hang tough on what she says. That is what I respect."
"With posts like these I'm beginning to wonder if what Jas Jain says maybe has some truth to it. What does some "some reason" mean? It implies that you don't even know why you are going to vote for her."
(Sam's repsonse to Ipodious)
In my view, Clinton II is most likely to hang toughest against those vicious terrors menaces her imagination - like those now infamous Bosnian snipers. I can see it now - Clinton II finally "wakes" to the that three a.m. phone call her campaign babbled about & hears that thousands of Russian ICBMs are on the way. So she crawls out of bed, pulls out the suitcase, and presses the button.
I suppose that's one way to end our current economic problems.
So your "empty suit from Harvard" is smarter, more articulate, more able to inspire people and possesses a knack for seeing the future clearly.
For a thread that began as an accolade to straight, no-nonsense talk, it's funny to see your post Sam. That's precisely my point about Obama...more talk, more smoke, more talk and no specifics or truth. Let's take the war. You know what I want to hear? I want to hear a candidate say "this is the biggest mess since Viet Nam. We can't just pull out, because we'd leave a place behind that would formet terrorists instead of contributing to curtailing them. We're going to lose more men, spend more money, and I don't see this coming to closure for at least another 5 years and even then we'll still be involved. This is the best we can do, and we'll manage it with the goal of trying to create an environment where global terrorism won't get new recruits from. Sorry, but that's where we are."
Straight talk. Go look for that in one of his speechs. I've heard I'm a uniter not a divider before. I don't want false hope, I want straight talk. Here's some more for you: Washington is a machine where you have as much of a chance of getting something done if you're an outsider as you do living at the bottom of the ocean. That's the truth. Where nothing really ever changes because the bureaucrats barely notice the change in political parties. Where the business leaders have more influence than you ever will because they have more money.
I hear no straight talk here, but just the pandering to the kumbaya-wing of the democratic party, which is just as destructive as the wing-nut neo-facist wing of the republicans. All I want is someone real, warts and all. Character defects are interesting. That's probably why I like Hillary, and McCain actually. I would have a beer with either one. And you know what? That's all middle America wants too. Someone they can imagine sitting across a dinner table from. If you miss that point, you're living in a rarefied world, and not in the same America where the votes actually come from. Otherwise we wouldn't have just had 2 Bush terms.
--
So that there is no confusion, breeding dopes, I mean "educated" dopes like economists and such, has been part of the American system, as it has existed in recent decades. Of course, it is to take advantage of them and to serve our economic elite. Everyone is susceptible to propaganda no matter how much formal education one has had.
Now, we are witnessing the consequences of breeding dopes and being ruled by Crooks. That is what I mean. Nothing can save America from the dopes and the Crooks. Too bad that no country can invade America and throw out the rascals and evildoers that control the govt and the economy. It ain't American People.
On Manifest Destiny
"three key themes were usually touched upon by advocates of Manifest Destiny:
the virtue of the American people and their institutions;
the mission to spread these institutions, thereby redeeming and remaking the world in the image of the U.S.; and
the destiny under God to accomplish this work.
The origin of the first theme, later known as American Exceptionalism, was often traced to America's Puritan heritage, particularly John Winthrop's famous "City upon a Hill" sermon of 1630, in which he called for the establishment of a virtuous community that would be a shining example to the Old World. In his influential 1776 pamphlet Common Sense, Thomas Paine echoed this notion, arguing that the American Revolution provided an opportunity to create a new, better society..." Wikipedia
I quote this because it is such a major theme in our national consciousness, and because it pervades many of the comments on this thread and throughout this blog.
It is expressed in our alternate national anthem "America"
It is no accident that we celebrate Thanksgiving rather then say the founding of Jamestown, because it is the arrival of the Pilgrims- an anti-establishment branch of the Puritan movement. We celebrate the founding of the US with the start of American Puritanism.
It is a constant theme extended in the Monroe Doctrine, used to explain the right to annex Texas and the rest of the continent. Its then morphed by Wilson into the defense, later spread of Democracy and possibly morphed back by Bush and Iraq.
Unfettered Capitalism is somehow strongly connected to MD (why??). So those that oppose UC are the spawn of Satan "Godless Socialists" says it all.
MD is backed by the Gold Standard of the Golden Rule. We cannot forget that we pay back with our religiosity
If you buy into MD and its underlying support by God, then we seem to be in the situation often found in the Old Testament. God punishes his Chosen People when they stray from Him. Hmmm.
Ipodius
Either one believes that the system can be returned to the Status Quo with a little tinkering or that we need a new syste. I Think Hillary and John reflect the former. Supporters of Obama I suspect reflect the need for the latter.
I watched the Frank hearings where representatives from FDIC, Fed, GSE and one more all acknowledged the need need for strong Government intervention. Add to that Bernanke and we have a strong movement for government support. But I think that the end model will needs go further. And it will be the "Nordic Solution" of a semi-Socialist (in fact but never in name!) economy; joining the rest of the Western World.
This would suggest Obama, who as an outsider can best achieve this
sk - "Actually I think its way worse than that - and attitudes and viewpoints like "We can just militarily take over the Saudi oil fields" "
Don't get me wrong ... I don't advocate this at all -- I fear it greatly. But if things get as bad economically as some here forecast, I don't think TBTB let the US fade quietly into the night. There is one area where we unquestionably dominate the world - military strength. What's the phrase? "When all you have is a hammer, everything looks like a nail"?
jg, your anti-Obama rhetoric really leaves you looking like a racist.
Oh yes, i was waiting for this to happen. Whoever says anthing deeply critical of Obama is a racist. Perhaps that's why everyone is softballing him...no one wants to this crap happening. if you're not for him, you're a racist. Trust me, there is nothing about race involved in having no substance.
Oooo, ipodius, the guy who doesn't want people posting anonymously.
And who the hell are you? Do you know who Tanta is? And CR?
Keep on shilling for that crook Clinton.
Obama is a freaking saint compared to that criminal family.
And usually, when people are left using the hollow argument, it's clear they have no real argument, and hence it MUST be some other reason that the critic has against Obama.
The definition of hypocrisy is lost on so many here.
You seem to be saying unless Obama agrees with me, he's wrong.
Obama is in effect saying he'll completely pull out of Iraq. You seem to think that will lead to devastation. Experts like Juan Cole don't agree. What is more likely is that a brief period of chaos will ensue with the vacuum being filled with new political structures. The society will then begin to sort itself out. Mesopotamian civilization is ten times older than (European) American society, after all.
I hear no straight talk here, but just the pandering to the kumbaya-wing of the democratic party, which is just as destructive as the wing-nut neo-facist wing of the republicans.
We just heard some straight in a recently released Obama recording and it was quickly painted in the media as a great scandal.
All I want is someone real, warts and all. Character defects are interesting. That's probably why I like Hillary, and McCain actually. I would have a beer with either one. And you know what? That's all middle America wants too. Someone they can imagine sitting across a dinner table from. If you miss that point, you're living in a rarefied world, and not in the same America where the votes actually come from. Otherwise we wouldn't have just had 2 Bush terms.
Non-sense
quack
first????
GE Interest Plus....
as to right of cr's Page...
Was that the 'tell' that all was not right at ge?
Discipline? Yeah, sure - but if we stop spending we cause a recession and lose our jobs. Catch 22. I don't know the answer except to let all you poor folks who've raided your HELOC, credit cards, and 401(k) to just fall flat on your face and then see if we can reconstruct an economy based on rational spending and savings.
I have an extra room in my apt. Cheap rent.
I have an mp3 of it as well, if anyone wants it let me know.
This is a superb speech. Please watch it to see what a resepctable fed chairman is like.
We need people more like him in finance.
Old man doesn't know what he's talking about.
He seems like a man of principles.
Shame on the rest of them, and shame on us for allowing them to get away with so many things.
The problem with knowing what you're talking about is that no one wants to hear what you have to say. Fantasy is so much more fun than reality.
The key question is: Who are the Presidential candidates listening to? (And the secondary question, who are they allowed to listen to...)
I remember what people used to joke about "political science"--It's just history, without the facts! I get a sense that the modern devotees of our current system seem to be just another brand of true believers who have no critical sense, no truly historical perspective--ie not just the last hundred years. Do people really believe that this system cannot undergo a cataclysmic and total decline? Has the free market really put us beyond the perils of the true believer?
I'd love a link to the MP3 of the speech if you could post that. Thanks
Why didn't GE warn? Was it a sudden deterioration?
What's really amazing is that he foretold, to the day, Artie Lange's meltdown as well.
"Boomers are spending like there is no tomorrow." - Paul Volker, Feb 2005.
And why not? It is nice that he was concerned and all for the general economy but in hindsight it was a successful strategy for the individual. Compare this to the alternatives of saving; 2.4-2.7% T-Bills then?
Volker had it easy. He had a dumb and slow populace to manipulate. This had the inevitable result; the populace got smarter and faster. Ask Iceland. A decade of rewarding irresponsible financial decisions is not going to be corrected by rewarding two decades of irresponsible decisions.
Now, get down there in the basement with Benny and start shoveling greenbacks into the furnace. The bankers are getting chilly again.
OK, seriously, I'm gonna listen to this now.
Right on CR!
Policy Options for the
Housing and Financial Markets
From the congressional budget office.
Is this old news?
If the objective is to arrest the decline in house prices, however, the policies are less likely to succeed. Perhaps the most important short-term influence on house prices is the elevated number of unoccupied houses for sale (the inventory overhang). That overhang is likely to remain until house prices fall enough to stimulate additional home sales. Put simply, none of the policies can (or presumably should) guarantee that house prices will stabilize in the near term. Furthermore, attempting to avoid (as opposed to attenuating) the market’s necessary adjustments may not only be unre-alistic, but even if it were to succeed, might ultimately serve only to delay the recovery of financial markets and impair the pace of economic activity.
I think they've been reading this blog.
Wow, bootlegging the lastest Volcker speech. What a bunch of geeks!
BTW, I'd love a link to a downloadable copy of that speech as well, thanks.
Post inauguration, I hope that Osama appoints him Sec. of Treasury or boots Bennie to make a place for him.
Unfortunately, Armageddon will have taken place by then...
Max -- what's the mp3 of, the 2005 speech? Can you post a link?
I'm about to run out and would like to listen to this... I checked out the video from Stanford and it doesn't seem like there's a strong visual component I'd be missing out on...
What I would really like is a transcript of the speech. (Both of them, actually.)
If any of you come across such a thing, please post a link here. Thanks.
He was on Charlie Rose recently too.
It's from the April 08 speech this week. I think CR is going to set up a link, but if you want it sooner, post your email address. It's about 38MB...
ok, i'll confess to being geeky enough to want a link to the mp3.
sighs
that would be really nice.
thanks
meli
Ah, audio only from '05 at:
"Paul Volcker at the SIEPR Economic Summit."
Site map | SIEPR
Discipline? Yeah, sure - but if we stop spending we cause a recession and lose our jobs. Catch 22.
The alternative is to argue that we spend our way into bankruptcy.
But looking back at history we can see that the US has surived and thrived in the wake of severe recessions, deflations, and depressions multiple times.
That's not to deny they're horrible situations to be avoided, but now it seems to me that we're arguing that depression is to be avoided at any cost.
I don't know how a person who is looking critically at the history of the US can come to this conclusion given that these sort of events occurring every 50-80 years appear characteristic of the type of economy we have.
Again, that doesn't mean you embrace them or don't try to fight them with everything you've got.
But how can people argue that destroying the dollar, bankrupting the federal government, or abandoning the basic tenents of the most succesful economy in history is a superior alternative?
This is not how we got where we are.
"What I'm really talking about boils down to the oldest lesson of financial policy in Central Banking: A strong sense of monetary and fiscal discipline."
The problem is monetary and fiscal discipline don't buy Escalades, boob jobs, and 6,000 square foot homes. Perhaps people should be allowed to spent money like drunk republicans, but, when they run out, they should be taken out back and shot.
The problem is monetary and fiscal discipline don't buy Escalades, boob jobs, and 6,000 square foot homes.
Most importantly, it doesn't get you re-elected.
--
I am a big Volcker fan. Greenspan and Bernanke are a product of a culture of deception, fraud and manipulation that has taken deep roots in America over the past 20 years.
Asking discipline from born-and-bred American dopes and Crooks and their agents? LOL!
Discipline is to be found among Germans and Swiss (mostly Germans). Why are Euro and Swissie the strongest currencies? The cream rises to the top. And sh*t deposits at the bottom.
Counting down to the collapse of the corrupt American system,
Jas
Didn't Volcker endorse Obama ?
Must be lesser of the evils, but it sure rings funny to me.
Jas, do you live in America? If so, why, if it's so bad, with all the dopes. Or are you just loving using those dopes for your own benefit?
Just askin'.
OK, forget the email thing. I'm setting up a rapidshare link ATM.
i don't get the obama endorsement, either. very puzzling.
i'd add a quote highlighted in the nyt today:
For financial regulation in general, competition in regulatory laxity cannot be a tolerable approach.
i get all teary at straight talk.
Jas,
When I'm boiling a chicken, the greasy, fatty liquid rises to the top. What does that mean?
Wow, bootlegging the lastest Volcker speech. What a bunch of geeks!
I know isn't great ! ! ! !
Volcker's Stance May Offer View Of Obama's
Sorry. Page not found.
"Mr. Volcker in January threw his gravitas behind Mr. Obama, declaring that the Democratic presidential hopeful could "provide the potential for strong and fresh leadership." He added: "After 30 years in government, serving under five presidents of both parties and chairing two nonpartisan commissions on the public service, I have been reluctant to engage in political campaigns. It is time to overcome that reluctance.""
OK, here's the rapidshare link:
2008-04-08_paul_volcker.mp3
I had to rip this from an 99% complete asx video stream download. It actually took me awhile to download the streaming file, repair it, extract the audio, then convert it to mp3 for easy iPod listening.
Great speech though.
Jas, if ya can manage to squeeze it into your jam-packed social calendar, go f#@% yourself.
thanks, max. that's a convenient little site.
Thanks Max!
Now I can rock out to Volcker during my subway ride!
EEngineer writes:
He was on Charlie Rose recently too.
EEngineer | 04.11.08 - 5:33 pm | #
Last nite Soros was on Charlie Rose and also had some very interesting things to say, if anyone has any U-Tube links to that it would be worth posting (I watched it but didnt have any equip to record it).
barely, you must be on East Coast time, because those Friday afternoon, double scotches are making you a little surly.
Max - thanks!
Now I can rock out to Volcker during my subway ride!
Right on!
Well, it looks like one solution to friday afternoon surprises is to lock everyone up in a room at the treasury!
The question at the end of this speech by Pete Peterson of Blackstone asked Volcker (in a very underhanded way) why he endorsed Obama. To paraphrase, Volcker's basic argument was that Gov't approval ratings today are ~30% vs. 60-70% in past decades and the majority of people under 30 support Obama, so he is going with Obama. Just FYI.
Sorry Volker, but boomers are not spending like there is no tomorrow. Just ask a demographer rather than an economist if you want to know what people are actually doing with their money. Compare the spending of the average boomer household today with the spending of households in the same age group 20 years ago using Consumer Expenditure Survey data, and you will see that boomer households are spending just 4 percent more than their counterparts spent in 1984, after adjusting for inflation--despite the soaring cost of housing, health insurance, college tuition, etc. In contrast, households headed by people aged 65 and older are spending 29 percent more than their counterparts did in 1984. Blaming our problems on boomers is looking in the wrong place for the answers.
Thanks, Max!!!
Blaming our problems on boomers is looking in the wrong place for the answers.
DemoMemo | 04.11.08 - 5:56 pm | #
You're right. Blaming our problems on ourselves is where we should be looking. People get the government they deserve.
Wow, bootlegging the lastest Volcker speech. What a bunch of geeks!
Geez, now I've seen everything. Now I gotta get a copy too,... peer pressure you know.
Someone asked for Soros on Charlie Rose:
A conversation with George Soros
Show Date: 04/10/2008
Charlie Rose - A conversation with George Soros
"Blaming our problems on boomers is looking in the wrong place for the answers."
C'mon, boomers are responsible for:
The Gremlin
Ishtar
Starbucks
Etc...
How can we not blame our problems on those damn boomers? Bastards.
How about blaming criminals?
SACRAMENTO -- Gov. Arnold Schwarzenegger's administration today proposed $7 billion in state spending to bring health care in state prisons up to constitutional standards.
That's another $4.5b to this years' deficit. This in a Constitutionally balanced budget State. Supposedly.
Wow, bootlegging the lastest Volcker speech. What a bunch of geeks!
Just make sure you keep it in a brown cardboard sleeve. And you didn't get it from me!
melidere:
the only commonality that I can come up with is this:
Volcker said, fix the damn problem, screw who gets hurt, and he did it.
I tend to see that same attitude in Obama. Not that I trust him or any other politician. Not that I believe he can or will do it.
Just saying that (maybe) Obama might be more pragmatic than the other idiots.
Jeebus, I just want a president who works for the benefit of the country, not his golfing buddies.
Financial discipline. What would that look like?
We do need to move back into a position in which our economy is no longer based on how much spending we do and how much debt we are in, but on how much we save and how financially sound individuals in general are.
Max- Got any of the 2004 Tour T shirts?
--
For those of you who may not know, Volcker was forced out by James Baker, III. He wanted our man at the Fed. What he got instead was not his man but BFNYCs man. In 1991 BFNYC turned against Bush, Sr. and there was a famous quote by James Baker. Poor Bush, Sr., paid the price for offending the most powerful. Clinton supported by the Rubin gang among BFNYC won the election.
Jas
Volcker said, fix the damn problem, screw who gets hurt, and he did it.
Well (I'd like to think) it isn't "screw who gets hurt" it's "stop even more people from getting hurt in the long-term".
Again, we got a painful dose of discipline followed by - surprise! - years of prosperity.
$2B a day? That figure was accurate during the boom. During the 1st quarter of 2007 "Total Public Debt Outstanding" was growing at $1.9B/day. In the last quarter, however, it reached $2.3B/day. But then again, what is $400m in 24h? Just a 20% increase
Got any of the 2004 Tour T shirts?
Lemmie check in the trunk of my VW. I think they're under those autographed copies of "Conspiracy of Fools." Very valuable ever since Eichenwald went solo.
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Jas Jain
crawl back in your hole you ingrate.
--
"Blaming our problems on boomers is looking in the wrong place for the answers."
Doomers were bred to lead to America's doom. So, you can't blame the Doomers for doing what they were supposed to do.
Those who have not read The Forth Turning might want to to understand the logic. American system will die with the Doomers.
Jas
Volcker had it easy. He had a dumb and slow populace to manipulate.
You can't be serious, Rob.
Today's populace is bright and quick by comparison? Intelligence and speed are the hallmarks of the age? What Volcker did wasn't political poison at the time?
Are you thirty-something?
"Again, we got a painful dose of discipline followed by - surprise! - years of prosperity"
Those years of prosperity happened to coincide with Junk Bond Mania, quantum leaps in financial innovation (derivatives, securitized debt), collapses elsewhere across the globe that made the US a relatively safer place to harbor wealth and other illusions that led us to believe we were prosperous.
Maybe all the illusions are finally wearing thin?
Paul Volcker, bless his heart, raised the Fed Funds rate as high as 19% (in 1981) and the world didn't come to an end.
@Jas Jain - Your name implies that you are a Jain, one of the much-respected Indian faith who respects life so much they sweep the ground in front of them as they walk to avoid stepping on insects.
Why don't you try living up to your name and cease the carping on Americans? Show some respect for others and your opinions might be listened to.
Self-corrections: respect, not respects. And maybe next time I'll try using another word besides "respect" once in a while.
Burnside,
Think about it. In the 1970s could you open an Everbank Viking CD or World Energy CD with a few mouse clicks? How would you even explain one to mom and pop America? Explain it and they'd send you packing you subversive you. What was good for General Motors was good for America. How'd that turn out?
Face it. We were dumb and slow. Call it insular and complacent if it makes you feel better. If you think people today are going to sit still for inflation erosion in a stagnant economy you are the new slow candidate. Heck, the housing bubble before and now the commodities bubble are obvious consequences. Ain't no one under 40 likely to bother with Social Security given current trends.
Suecris, after repeated socially correct attempts to curb jas' "enthusiasm" have failed miserably, most of us have given up on civility when responding to his sociopathic rants. Waste of time.
"The Fourth Turning" is an interesting book.
You guys should check out "The Grand Chessboard" by Zbigniew Brzinzski if you are thinking about supporting Obama.
Just saying that (maybe) Obama might be more pragmatic than the other idiots.
Jeebus, I just want a president who works for the benefit of the country, not his golfing buddies.
I just want a president who has some semblance of a sense of ethics. Who cares about your policies if you don't give a damn about right or wrong. Obama is the best of what's left in that sense.
You guys should check out "The Grand Chessboard" by Zbigniew Brzinzski if you are thinking about supporting Obama.
Or you could, you know, tell us about it!
"I hope that Osama appoints him"
jg,
must you be so tedious as well as repetitive? If you feel compelled to insult the man, ask someone with some wit for help...this is not working for you.
"Inside the Yield Book" was written in 1973 or 74, and when Volker was appointed there was barely enough processing power in mainframes to compute a proper yield.
The pc came on to the trading floor in 1982. prior to that, if you wanted a computation done and asked the IT guys, they would say 'sure, we'll have it in 6 weeks.'
When Volker was appointed you had to actually THINK about what you were doing. The next 28 years have been a wild-eyed exploration of discounted present values, from mortgages to options to credit risk, and a lack of interest in thinking about what it MEANS.
We're enchanted listening to him because he is actually talking about finance. That 'dumb and slow' populace understood why he was doing what he was doing.
They probably understood it a lot better than Jimmy Cayne understood the machinations that were paying his bills.
All the computations underneath this mess are just computations. Finance hasn't changed much.
Or you could, you know, tell us about it!
Lol. It reminds me a bit of some of the writings that came out of PNAC(Project for a new american century), only not quite as direct about military use(IIRC, been a while since i read it). Talks a lot about maintaining control in Eurasia until control can be passed to a global consensus, that kind of shit. Kind of a plan to work towards globalization while trying to maintain the appearance of supporting national sovereignty.
Tyrone-"the brother like no ot writes:
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Tyrone-"the brother like no ot | 04.11.08 - 6:10 pm | #
Got to hear more of this commedy routine. Yeah, live large on the credit card and call it prosperity!
I'll say it again: I want a throwback Volcker jersey.
gimme a "V"!
When Volcker speaks, how many people really listen? A lot could have been learned from his speeches, but the guys in charge of the Fed have their own agenda.
It's great that his speeches can leave most of us with moist panties, but his words may be falling on deaf ears in the real world.
Geez, now I've seen everything. Now I gotta get a copy too,... peer pressure you know.
sdtfs | 04.11.08 - 5:59 pm | #
And that, my friends, is why we are in this mess!
BTW, boomers did not invent Starbucks. The gen after us did, the ones who liked to sit on the sidewalks uptown and beg for small change (in solidarity with the homeless, I believe it was).
"You guys should check out "The Grand Chessboard" by Zbigniew Brzinzski if you are thinking about supporting Obama."
I've read it and the US is already there with China, Russia, Iran joining hands to shut down US hegemony. The empire is dying there is no going back. When the dollar loses the world reserve currency status, and it will, the party is over.
What you see in the book having to do with Obama in all this escapes me.
Tyrone-"the brother like no ot writes:
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Tyrone-"the brother like no ot | 04.11.08 - 6:10 pm | #
You nitwit. Reagan raised taxes. This myth needs to die.
Rothbard on Reagan:
"The much-heralded 1981 tax cut was more than offset by two tax increases that year. One was "bracket creep," by which just inflation wafted people into higher tax brackets, so that with the same real income (in terms of purchasing power) people found themselves paying a higher proportion of their income in taxes, even though the official tax rate went down. The other was the usual whopping increase in Social Security taxes which, however, dont count, in the perverse semantics of our time, as "taxes"; they are only "insurance premiums." In the ensuing years the Reagan Administration has constantly raised taxes to punish us for the fake tax cut of 1981 beginning in 1982 with the largest single tax increase in American history, costing taxpayers $100 billion.
Creative semantics is the way in which Ronnie was able to keep his pledge never to raise taxes while raising them all the time. Reagans handlers, as we have seen, annoyed by the stubborn old coots sticking to "no new taxes," finessed the old boy by simply calling the phenomenon by a different name. If the Gipper was addled enough to fall for this trick, so did the American masses and a large chuck of libertarians and self-proclaimed free-market economists as well! "Lets close another loophole, Mr. President." "We-e-ell, OK, then, so long as were not raising taxes." (Definition of loophole: Any and all money the other guy has earned and that hasnt been taxed away yet. Your money, of course, has been fairly earned, and shouldnt be taxed further.)
Income tax rates in the upper brackets have come down. But the odious bipartisan "loophole closing" of the Tax Reform Act of 1986 an act engineered by our Jacobin egalitarian "free market" economists in the name of "fairness" raised instead of lowered the income tax paid by most upper-income people. Again: what one hand of government giveth, the other taketh away, and then some. Thus, President-elect Bush has just abandoned his worthy plan to cut the capital gains tax in half, because it would violate the beloved tax fairness instituted by the bipartisan Reganite 1986 "reform."
The bottom line is that tax revenues have gone up an enormous amount under the eight years of Reagan; the only positive thing we can say for them is that revenues as percentage of the gross national product are up only slightly since 1980. The result: the monstrous deficit, now apparently permanently fixed somewhere around $200 billion, and the accompanying tripling of the total federal debt in the eight blessed years of the Reagan Era. Is that what the highly touted "Reagan Revolution" amounts to, then? A tripling of the national debt?"
Read the rest of this classic dismantling of Reagan here.
we didn't invent LSD or Pet Rocks either; just consumed them.
--
Barely & Tyrone- The brother with a sti,
Your reaction is fully predictable. Among other things Americans are bred with extreme intolerance, especially, of other econo-political systems. Political Correctness exists for a reason to suppress criticism. Intolerance is at the root of PC and it assumes that people are intolerant and ignorant.
You guys prove my point!
Jas
Rob, if you meant communications today have certain advantages, I'll agree easily; you might merely have said that.
But can you reasonably characterize the public of 1970 as dumb, slow and easily manipulated or, by implication, that the wider public of today is bright and quick and impervious to manipulation?
I don't agree that you can.
Oh, b- and S-, Jas is like Barry Goldwater of '64: in your heart, you know he is right.
Jas has lousy bedside manner, but offers the correct diagnosis.
s-, some write 'spend like drunken republicans,' others take the other tack. Hey, if fellow DemoRat Senators (Ted Kennedy) can say 'Osama,' so can I.
Suecris writes:
@Jas Jain - Your name implies that you are a Jain,
...
Sometimes implications of last names can lead you wayyy astray.. For example, you'd think that Nari Contractor was well,you know, a general contractor and that Farouk Engineer was, well, an engineer.
They were both international(Test) class Indian cricketers. Now if only Jas was a cricketer...
-K
TCA - Well put....couldn't agree more.
In 1981-3ish, I closed loans up to 17 1/2%. The pens would quiver hesitantly over the note, and finally the people would sign. Far as I know those loans didn't get foreclosed too much more than average. Then they invented neg am.
Boy, those did. The world didn't come to an end. Closings happened, but the houses got smaller and smaller for a while. Now nothing is moving. Does that mean nothing is worth anything?
I've read it and the US is already there with China, Russia, Iran joining hands to shut down US hegemony.
While this is certainly possible, I see much more evidence now that China and Russia are currenctly support the US.
The empire is dying there is no going back. When the dollar loses the world reserve currency status, and it will, the party is over.
I agree.
What you see in the book having to do with Obama in all this escapes me.
I've read that Brezinski is Obama's personal advisor and will be his foreign policy advisor if he is elected. Please correct me if I am wrong.
tca:
ethics ? what the hell is that ?
Where's Harry Truman when you need him ? or Colin Powell ? Or Thomas Jefferson ?
oh wait, Colin is too smart to run.
all I can say about this mess is "$)#@)#)@#*"
Powell left his under a UN desk.
"The empire is dying there is no going back. When the dollar loses the world reserve currency status, and it will, the party is over."
And after clearing away the empty beer cans and mopping up the vomit, maybe we can go back to being a decent country.
Fuck colin powel, he is at best a cowardly apologist.
lawyerliz says "Now nothing is moving. Does that mean nothing is worth anything?"
no. it means nothing can move.
i think of this mess sort of like when a car 'seizes'. all the gears are grinding to a halt.
burnside writes:
Rob, if you meant communications today have certain advantages, I'll agree easily; you might merely have said that.
I meant it in the larger context. Not just communications but the speed of and access to information and the ability to move assets as well. Clipper ships providing investment advantages and all that but also the disemination of those tools.
But can you reasonably characterize the public of 1970 as dumb, slow and easily manipulated or, by implication, that the wider public of today is bright and quick and impervious to manipulation?
I don't agree that you can.
No, just in the narrow context of being able to and/or needing to invest otherwise as a hedge against a government that was no longer a neutral party.
True dat, about nothing moving. The stats are starting to surprise even me.
I find it remarkable, or maybe just illustrative, that the Feds haven't done the one kind of bailout that's a no-brainer: big, dramatic ramp-up of guarantees on really good loans to really good borrowers. Essentially, a purely psychological move on loans that aren't going to go bad anyway and present no credit risk to the government.
But they won't. See, the goal isn't to grease good loans going forward. It's to reimburse bad loans made by greaseballs in the past.
Re: Tranchefoot - The Grand Chessboard - Wikipedia, the free encyclopedia
The Grand Chessboard: American Primacy And Its Geostrategic Imperatives (ISBN 0-465-02726-1) is one of the major works of Zbigniew Brzezinski, former United States National Security Advisor under the administration of President Jimmy Carter. The Grand Chessboard presents Brzezinskis geostrategic vision for American preeminence in the twenty-first century. He focuses much of his analysis on the geostrategy of United States in Central Asia, focusing on the exercise of power on the Eurasian landmass in a post-Soviet environment.
I've never read it or heard of it, but that is a summary from wikipedia.
Are any of you writing to your senators or representatives weekly with your opinions? We spend a lot of time on this site but it is starting to feel a little like a meeting of te People's Front of Judea in Monty Python's "Life of Brian". I wrote a letter and gave it to everyone in my family and all my friends with links to our senators and representatives. Are we walking the walk or just talking the talk?
"Now nothing is moving. Does that mean nothing is worth anything?"
No, it means that nobody know what anything is really worth... especially not in the face of a fast-changing credit situation.
Anyone who can, and isn't insanely optimistic, is hunkering down until some kind of stability presents itself. Basic human nature.
"Americans are bred with extreme intolerance"
I can point out a few historical examples that that make Americans look pretty darn good.
TCA, thanks for the link to Rothbard's article on Reagan.
Wow, smart libertarians can be vicious!
What he writes appears true, but, jeez...
I will stick to reading Rothbard's economic works, solely.
Just a thought: he may be contrasting the Democrat willingness to tax and spend versus Republican tendency to tax cut and spend and identifying the former as comparative fiscal prudence.
Obama Adviser Leads Delegation to Damascus
Sorry. Page not found.
"A spokesman for the senator's presidential campaign, Tommy Vietor, said the campaign did not know Mr. Brzezinski was leading the delegation. "The first we heard of this trip was from you," he said. He added: "Brzezinski is not a day-to-day adviser for the campaign, he is someone whose guidance Senator Obama seeks on Iraq.""
Didn't someone speculate that Jas Jain was some kind of Info-Bot that responds at certain intervals to certain key-words?
TCA, thanks for the link to Rothbard's article on Reagan.
Wow, smart libertarians can be vicious!
What he writes appears true, but, jeez...
I will stick to reading Rothbard's economic works, solely.
Sometimes the truth hurts. Doesn't mean we should shy away from it. Otherwise, we end up where we are now.
Taos, that would sure explain a few things.
SweetHomeKilla :
name somebody better and I'll vote for him or her.
integrity counts for a lot in my book. damn little of that around these days.
I'm always amazed at these Volcker threads. When I look at the small print on my investment prospecti I notice the phrase "past results are no guarantee of future returns". I think people are like that too.
To pull someone out of the past and put them in a world that didn't exist when they were doing what they did is no measure of ability. I'm sure he did a great job managing the forces that existed when he was on the job. And perhaps there is a certain common sense to what he says. But I'm not into hero worship or a cult of personality. When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
oops i leaned on my laptop...the rest of the paragraph is...then i will believe that his ideas have relevance and merit in today's rather complicated situations.
Great Scott, they have a PLAN!!!
Powers back plan to halt financial crux
Yahoo! 404 - Page Not Found
"The plan is designed to make financial markets less secretive and improve supervision, which in theory would help prevent a repeat of the current financial debacles.
It calls for strengthening oversight to make sure financial companies have sufficient capital, cash and risk-management practices to handle problems. It also would bolster transparency and the valuation of complex investment products, improve the operation of credit-rating agencies, strengthen authorities' responsiveness to risks and put in place arrangements to deal with stress in the financial system.
One recommendation is to have banks, securities firms and other financial institutions disclose their holdings of risky securities, such as those backed by subprime mortgages given to people with tarnished credit. Those subprime mortgages, which soured with the collapse of the U.S. housing market, were at the heart of the U.S. crisis.
Another involves having credit rating agencies distinguish the ratings they give for regular securities, such as corporate bonds, from those they assign to more complex investments. These agencies have been criticized for contributing to the problems by not accurately assigning risk to mortgage-backed investments.
Yet another recommendation would strengthen supervisors' guidance to banks for dealing with cash crunches and having banks run "stress tests" to see how they cope under different scenarios of financial strain.
The plan also calls for the Basel Committee on Banking Supervision, an international body of regulators, to make sure banks have enough capital to cover any potential losses."
sysin3-
Ron Paul certainly has integrity. I only assume that Obama is corrupt because he is a politician, but I will not vote for him because he is anti-gun and he is unwilling to identify the crimes of our federal government. An apologist or ignoramus won't get my support.
Actually, volker answers the question at the end of the mp3 max gave us (so happy, max!
and it's a bit counter-intuitive.
he says he sees one of the most important problems in america is our growing lack of trust in our government. He seems to be making the parallel to say that our EXPECTATION about whether or not we can trust our government is very important.
he seems to be saying that the support of the younger generation for Obama may be an important step in rebuilding that trust.
he freely admits that he doesn't know about obama's economic leanings (or clinton's, for that matter.)
No, Reagan was a tax cutter. In 1981, Congress passed tax cuts that reduced the top Federal income tax rate (70% at the time) down to 50% over three years. Reagan signed the bill, called "Kemp-Roth." In 1986, two Democrats, Senator Bill Bradley and Congressman Dick Gephardt, joined in on the tax-cutting fun, lowering the top Federal income tax rate to 28%, while raising the capital gains rate to 28%.
Today, the lowest Federal income tax rate is only 10%, and I mean the income tax, not the Social Security tax (an extra 6 or 7%).
Rob,
How'd I end up talking past you on this?
What really strikes me is how unnervingly similar some conditions are now. And yes, some of us moved our portfolios out of dollar denominated assets through the seventies. I'm not as convinced as you are that the multitudes are protecting themselves today, but perhaps I'm influenced by recollecting that most didn't then either.
I used my first office systems in 1972: payroll, word processing, mail/merge, spreadsheet, G/L and some logging software idiomatic to broadcasting. We went online with a remote computer center (IBM 360/70) for batching and file maintenance. I had a portable computer with modem made to look like a briefcase. My point is, computer aids to business go back farther than is usually credited and, though I wouldn't go back to it all willingly, it wasn't nearly so different as many suppose.
We had offshore accounts. You could telephone. There was telex. If you wanted to daytrade, there was a comfy lobby at the brokerage where you could watch an electronic ticker, place your puts and calls, sip on a scotch in the company of other reprobates like yourself.
Not. That. Different.
Ron Paul certainly has integrity. I only assume that Obama is corrupt because he is a politician, but I will not vote for him because he is anti-gun and he is unwilling to identify the crimes of our federal government. An apologist or ignoramus won't get my support.
Why vote at all? Do you honestly think your vote is going to make a bit of difference? Do you think your state's electoral votes will push one candidate over the top? Add to that, do you think your state will be decided by a single vote? Preposterous! You're probably more likely to win the lottery ten times than you are to decide a presidential election (if you can even trust that the votes are counted properly anymore).
Better to stay home and wash your hands of the whole process. At least then you can say you didn't help put the next despot in power.
he seems to be saying that the support of the younger generation for Obama may be an important step in rebuilding that trust.
Oh come on...no one has ever trusted the government in the history of man. I am so tired of all the happy, shiny talk. I want someone to tell me WHAT they are going to do and do it with conviction, even if it is unpopular..you know, like what you're all saying about Volcker. And tell the truth, not some crap like "i'm going to withdraw troops from Iraq because we all KNOW it isn't polically possible to do that.
Obama is an empty suit from Harvard. Look at the last alumn from there that got into the white house. You know, the Clintons have their issues, but for some reason I really believe that H will hang tough on what she says. That is what I respect.
i'm no obama fan, myself. i just thought volker's reasoning was interesting.
proving, once again, that he was wise all these years staying out of politics.
heh
meli
Ummm, I'm from Florida, and as you'all may have noticed a very few votes had a influence on who got elected in a certain election not too long ago.
And now Florida (with Michigan) looks to be doin it again. . .
so they have a plan. now, does this mean that our investment banks have to open their books to all these eyes?
and when they all take a look and realize that everyone is insolvent, what then?
i love this plan.
Why vote at all?
So others will see my support of a worthwhile candidate.
Do you honestly think your vote is going to make a bit of difference?
Not by voting, but certainly by participating in the political process and sharing information.
Do you think your state's electoral votes will push one candidate over the top? Add to that, do you think your state will be decided by a single vote?
I think we have a very successful system of vote rigging in this country, so no.
You're probably more likely to win the lottery ten times than you are to decide a presidential election (if you can even trust that the votes are counted properly anymore).
Are you done stating the obvious:)
Better to stay home and wash your hands of the whole process. At least then you can say you didn't help put the next despot in power.
Actually I can do that by participating in the political process and not giving a dime to the criminal federal government(I will not be an accomplis to the dumping of radioactive waste).
and when they all take a look and realize that everyone is insolvent, what then?
i think melidere, that is when it gets interesting
To pull someone out of the past and put them in a world that didn't exist when they were doing what they did is no measure of ability. I'm sure he did a great job managing the forces that existed when he was on the job. And perhaps there is a certain common sense to what he says. But I'm not into hero worship or a cult of personality. When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
ipodius | 04.11.08 - 7:11 pm | #
Amen. As much as I respect Volcker for what he did THEN... it wouldn't play the same way today.
Then we were net exporters (or close to it)... Today we are massively net importers.
Then we net savers & producers, the worlds largest creditor. Today we are net consumers & the worlds largest debtor.
The effect would be completely different if BB jacked rates to 14, 14, 16%. It would be shock treatment but the patient is weak and would die. 30 years ago the patient was a lot younger and healthier.
I'd love to hear somebody put the question to PV that way. He's smart enough that I think he'd give a pretty good answer.
You know, the Clintons have their issues, but for some reason I really believe that H will hang tough on what she says.
I take it you haven't seen the Clinton Chronicles
Well, there are some bankers shaking in their shoes tonight!
And guess who's invited to dinner?
Citigroup, Deutsche Bank, Barclays, Credit Suisse, Lehman Brothers and Morgan Stanley.
Hope it's a free bar.
night all
meli
lawyerliz writes:
Ummm, I'm from Florida, and as you'all may have noticed a very few votes had a influence on who got elected in a certain election not too long ago.
And now Florida (with Michigan) looks to be doin it again. . .
Liz, do you trust that the outcomes in the last two elections were in any way genuine given all the shenanigans regarding butterfly ballots, voter suppression, touch-screen voting, etc.?
But at least you did your civic duty!
I dont know about you guys but PV is one rock star at 80. If he is anywhere in the future of this country - man, I want in. The dollar is a screaming buy if he is allowed even a small say in what happens in the next 5 years.
Actually I can do that by participating in the political process and not giving a dime to the criminal federal government(I will not be an accomplis to the dumping of radioactive waste).
Unless, of course, that the candidate you voted for wins (in which case you have no room to complain about any of his subsequent actions. After all, you helped put him there!).
That's why I find Jas so funny. He admits he voted for Bush in 2000, yet he calls others dopes and criticizes the system he helped empower.
The dollar is a screaming buy if he is allowed even a small say in what happens in the next 5 years.
Do I need to adjust my sarcasm dial?
dryfly - "It would be shock treatment but the patient is weak and would die."
I highly doubt it. The same could have been said in 1979. Instead of Cisco & Microsoft, we had Chrysler and Bethlehem Steel. The white house`s answer to high energy prices was "wear a sweater".
Volker would likely say we need to understand and deal with today's problems while we're still in a good position to do it. Waiting will only make the ultimate reckoning worse.
My favorite Obama bumper sticker
Seriously, though, I know I should dislike the Obamessiah, but I just can't.
Goolsbee strikes me as quite reasonable and very smart. If Obama listens to him...
And regardless of the rationale, Volcker's endorsement carries a lot of weight in my book. Maybe some new blood really is what the country needs.
Post inauguration, I hope that Osama appoints him Sec. of Treasury or boots Bennie to make a place for him.
I think Osama couldn't choose anybody better than Alan Greenspan for his purposes.
oBama on the other hand....
Volcker is a consultant to the Obama campaign. Not a joke.
i feel so dumb. i don't get the bumpersticker.
Estragon --
I highly doubt it. The same could have been said in 1979. Instead of Cisco & Microsoft, we had Chrysler and Bethlehem Steel.
Exactly.
One of the major points of Volker's speech was to draw some parallels between the events of the late 70s and today. He talks at some length about how New York was about to default on its debt, and lots of people were worried that would trigger a systemic collapse, and they were demanding government and/or Fed action... And the Fed did the right thing, which was nothing. And the system survived.
I do not know what Volcker would have done about Bear Stearns. (What a great question that would be, if he would answer it.) But whatever it was, I suspect it would have involved significantly more pain for the responsible parties.
rnside writes:
Rob,
How'd I end up talking past you on this?
Limits of the medium. Marshall Mcluhan didn't know the half of the problem. More my fault than yours.
What really strikes me is how unnervingly similar some conditions are now. And yes, some of us moved our portfolios out of dollar denominated assets through the seventies.
Ye, and that was the lesson.
I'm not as convinced as you are that the multitudes are protecting themselves today, but perhaps I'm influenced by recollecting that most didn't then either.
I'm thinking fool me once shame on me, fool me twice... and you are thinking there's another born every second.
The most likely outcome is six of one, half a dozen of another...
Enough platitudes. There is a small but very real danger of a "run on the nation" much like the March 1933 "run on the banks." We cannot stop people from transferring their wealth elsewhere unless we resort to what we did then. Look at what a recent stumble in the velocity of money is causing. A suspension, no matter how momentary would be fatal.
Focusing on individual tax rates during Reagan's years tells only half the story. Reagan dramatically cut corporate tax rates from 46% to 36% in the mid eighties. From that time, the shifting of the tax burden from corporations to individuals has not ceased.
Best,
wikipedia rules
When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
ipodius | 04.11.08 - 7:11 pm | #
As far as I can tell BB just opened the checkbook. If actual production in the goods and services do not exist and you keep the claims on them from deflating then there are too may claims for existing goods and services. I hope you are right but people have been down this path before.
GX Networks
Aw, c'mon hiker: you have a stock portfolio. When corporate income taxes go up, the capital appreciation of your stock goes down and so does your dividend.
De facto, there are no corporate taxes. All corporate taxes are ultimately borne by those -- individuals, pension funds, etc. -- who hold the corporation's stock, via reduced capital appreciation or lower dividends.
--
To my detractors
Everything that is discussed on this blog confirms my conclusion of few years ago:
I have seen nothing hut confirmations of these conclusions over the past few years. America is being ruled by financial Nazis and the last three most powerful leaders, Greenspan, Bush and Bernanke are certifiable evildoers. The sad part is that financial Nazis of America will make the German Nazis look good in comparison. Sorry, if someone is offended by the truth as I see it. A born-and-bred American dope cant see the evil develop at home. He is too busy blaming foreigners for various ills.
Jas
PS: I was no different than a born-and-bred American dope when I voted for GWB. I admit it. I grew up because I wasnt doped doped from birth onwards. My Republican friends who hated McPain only two months ago are going to vote for him. It is part of being a born-and-bred dope.
I invoke Godwin's law.
Market Ticker by Denninger is very enjoyable today. Kinda sums up the way I feel about things.
The Market Ticker
I highly doubt it. The same could have been said in 1979. Instead of Cisco & Microsoft, we had Chrysler and Bethlehem Steel. The white house`s answer to high energy prices was "wear a sweater".
I was there... I graduated from HS in '75 and college in '81. I was one of the few who actually worked through college (had jobs - UNION jobs). You wouldn't believe the problems I saw localized in 'rust belt'.
It was different - BELIEVE ME - it wasn't the whole country.
Even with Chrysler & IH & others on the rocks... we as a nation were still a net exporter... we had positive CAD most of the time... we were still a mfg based economy (not totally service based)... the gov't debt was smaller (though people worried about it at THAT level - they had no idea what was coming).
I am telling you I know 'retro' looks cool years later but it would not work today, Volcker's '79 gig would bomb and badly in the condition we are in now.
We'd see unemployment go 25-30% as services shut down... they can't inventory... the problem with a services based economy is there is no 'buffer'... it needs cash flow to survive. Dry up the cash and it collapses over-night... mfg needs cash too but can inventory & capital (can literally live off in a crisis - doesn't work when its all cashflow).
An 80s like high interest rate purge would knock the GDP down in half - it would take a generation to get back to where we are today... assuming the social fabric held together.
This why Volcker has said on numerous occasion that today is the most difficult conditions he has ever seen. And it is because of a generation of over consumption & pervasive debt - something he did not have to face.
He's smart enough to realize that even if his worshipers aren't.
--
81% of Americans say that America is moving in the wrong direction, the highest ever.
I am simply providing the explanation America has turned into a country of born-and-bred dopes led by Crooks and their agents. Rogue economists who lie about recession and depression are part of the agents of Crooks and their job is to mislead the public. There is lot of money and good living standard in serving the Crooks just as was the case in Germany during the Nazis. We have too may intellectual whores in America and economists top that list (Greenspan and Bernanke are economists).
Jas
Hey Jas,
If Americans didn't take pity on your sorry ass, you'd be speaking Russian in Siberia about now. If you weren't already turned into a lamp shade.
i don't get the obama endorsement, either. very puzzling.
Listen to Soros' rationale for his endorsement of Obama, I believe he and Volker are on the same page.
It is the repudiation of a generation.
Volker and Soros just don't think the boomers should be allowed back in power again. Time to move to the next generation.
Really stunning, when you think about it.
In other news, GE lost $44 billion in market cap today--substantially more that the piddling $29 billion spent to rescue the blackguards and capitalist roaders at Bear Stearns.
The chart of General Electric shows that the stock jumped over its 50-day moving average, the 200-day moving average. . . everything!
Ah, the prescient, Stanford Volcker speech surfaces again.
What we need now is Volcker's best guess on how to get out of this mess.
If you're under 30 yrs of age chances are 90+% of you will not be as financial well off as your parents or even grandparents.
Why ? In short 25+ yrs of increasingly financial engineered driven bullshit for the US economy ( especially the last 8 yrs under Bush ) with massive market bubbles has created systemic damage.
And the standard of living for 90% of Americans of all ages is going down nd will go down even further.
Get adjusted to reality because if you cannot make $200K/yr you will lose !
Ummm Taylor - McCain isn't a boomer by ANYONE'S definition yet also didn't get their nod.
You are reading your own prejudice & hate into their answers.
"If you're under 30 yrs of age chances are 90+% of you will not be as financial well off as your parents or even grandparents."
I read the same thing about 17 years ago. I think that phrase gets past along every generation. It is one of those non-thinking, alarmist mantras that speaks poorly of the person who says it.
Elvis has left the building.
BOL because you'll need it !
dryfly,
You seem to flutter from telling us how wonderfully well all these manufacturers are doing, going balls to the walls, to telling us how this dire situation can't afford any sort of backbone on the inflation front.
Personally, I'm not ready to condemn Ben & Co., because I think things may actually get dire.
But what exactly is your position?
--
Kidbuck,
You prove my point. Thanks.
Jas
"Time to move to the next generation." I'm not terribly impressed with that generation either.
The boomer generation was the first to move beyond survival. Not to discount the many recent advances and brilliance, but the previous generation is/was collectively more resilient. The other notable factor is that we moved way beyond "Ask not what your country can do for you." There are simply too many lacking consideration for society at large. It's corrosive when the average person continually witnesses folks profiting from spin, manipulation, and positioning.
Sorry for the "Jas Jain" like post...Maybe these folks conclude Obama is the best of the worst. He has the spin, but I don't see the mettle.
"An 80s like high interest rate purge
would knock the GDP down in half"
An 80's like high interest rate purge would end the Ponzi and the System.
A new and improved world currency would be quickly implented before a Volker-type scenario would be allowed.
In fact, if this gets out of hand, that new currency is already set to go on a moments notice.
Dire conditions developing in the west in the trucking industry. Perhaps in the rest of country as well but only have first hand knowledge of western conditions. Plants in many industries going to reduced work weeks. Dramatic drop in shipping volume during last three weeks. High fuel prices forcing many small operators to park the trucks. This downturn is gaining momentum.
I didn't mean that to sound so accusatory, dryfly. But you do seem to be quick with the anecdote to support your position du jour, and yet never take note of anything contradicting it.
We are definitely in some sort of transition. It may be that dryfly(1) is correct and world demand will save the day. But it may also be that dryfly(2) is correct, and that things really are dire here. In which case, it seems rather grasping to think demand from the rest of the world is going to ameliorate a crash of the great consumer.
Personally, I'm leaning toward the latter.
km4,
I personally think that maps whereas Iraq and such helps the children.
This is what I've been saying. The housing downturn and recession is putting huge strain on the social services safety net, from police and prisons to health care, counseling, shelters, rehab and mental health.
80-90% of the safety net's cost is paid by state/local govt. It's the first inning and it's already over-stretched.
It's guaranteed that there will be a combination muni fiscal crisis and nationwide taxpayer revolt. What you see in Jeff County will be repeated hundreds of times.
MBIA will one day look back at CDOs and asset-backeds as the easy side of their biz.
OT
SACRAMENTO - Joe Six-pack will have to pay a lot more to get his buzz on if Assemblyman Jim Beall has his way.
The San Jose Democrat on Thursday proposed raising the beer tax by $1.80 per six-pack, or 30 cents per can or bottle. The current tax is 2 cents per can. That's an increase of about 1,500 percent.
Beall said the tax would generate $2 billion a year to fund health care services, crime prevention and programs to prevent underage drinking and addiction.
"The people who use alcohol should pay for part of the cost to society, just like we've accepted that concept with tobacco," Beall said.
Higher state tax on beer? - San Jose Mercury News
Uh-Huh
But what exactly is your position?
Bob_in_MA | 04.11.08 - 8:54 pm | #
I think it is going to take a long time to fully dig out - all BB can do is the ER work, the rest will have to come later - surgery, recovery, rehab - it will be hard.
Non-auto & non-housing mfg really is doing well - you should see the boom in Waterloo IA (Deere) and Wichita KS (Boeing, Cessna) - staggering. I've seen both those towns it total collapse in the past. Not now.
And not everyone is getting action - there are many still left behind. But they do NOT look anything like recession.
But together they are one medium suburb in Orange County... even if we get 100 or 200 such cases they won't get us out of the hole we've dug and certainly not quickly.
But they shine the way - and it isn't just mfg... services will work too IF they are tradable (exportable) OR compete favorably against import of services (offshoring).
The key is make & do more here... consume less, especially imports... shore up the balance of dollars going out & the dollar will strengthen on its own. But it will be a 'sustainable' prosperity.
The fed can't prop up the dollar by raising rates... in fact they haven't since been able since at least Rubin... the BoJ & PBoC by buying our securitizations (private & agency & treasuries too) did more to prop up the dollar than the Fed.
Now if they raise rates - we'd see unemployment & business failures soar. Countries don't always come back from that.
So ya, non-auto & non-housing mfg are showing the way out but its gonna be a long hard march. The fed can only do a little - make sure sufficient liquidity exists so we don't have a self-enforcing downward deflationary spiral... after that its really up to 'us' to fix it. Literally meaning - all of us to do our personal part.
A good friend used to say 'recessions end an order at a time and a new hire at a time'. We got a decade of order getting ahead of us if this credit crunch is half as bad as it looks to me. But it can be done...
dryfly,
Well,I was gonna type out a huge response but I will just say...
YEP.
Chris
Dire conditions developing in the west in the trucking industry. Perhaps in the rest of country as well but only have first hand knowledge of western conditions. Plants in many industries going to reduced work weeks. Dramatic drop in shipping volume during last three weeks. High fuel prices forcing many small operators to park the trucks. This downturn is gaining momentum.
Viewing with alarm | Homepage | 04.11.08 - 8:59 pm | #
VWA - can you tell us what industries?
I know building supplies are VERY weak as is automotive - both will get worse before better. I'd bet a lot of the slowing in the west is due to fewer building supplies heading to job sites.
BTW - I saw parked rail cars used for hauling autos in Kansas... just like we discussed here a few days ago. Long lines of them just sitting out on a rail spur... empty... no engine anywhere in sight. Its real.
But I'd like to know what you see - what industry is driving the trucking slow down.
Someone correct me if I'm wrong, but doesn't Obama's district include Cook County Illinois ? That's not the cleanest political enviroment to come from. Maybe we need someone without ambition to run for President.
Obama Responds to McCain and Clinton attacks in Terre Haute
YouTube -
One word - Awesome !
But they shine the way - and it isn't just mfg... services will work too IF they are tradable (exportable) OR compete favorably against import of services (offshoring).
I have been trying to figure out if this will be a big world-wide problem, or will much of the rest of the world be somewhat immune to our problems.
To me, it seems there will be one of two outcomes. If it is just us, the Brits, maybe Spain, that fall, but China, Brazil, India, etc., continue to boom, than exports, and replacements of imports, may help us, but we need to bite the bullet on rates, otherwise we are going to get hit hard by some really bad-ass inflation in 2-3 years.
The second scenario is that the big exporters follow the big consumers down, followed by the commodities and the economies dependent on them. In which case, inflation is going to be the least of our problems. But Waterloo, IA, and Wichita, KS, are going to ultimately take it on the chin.
But you can't have it both ways.
But Waterloo, IA, and Wichita, KS, are going to ultimately take it on the chin.
But you can't have it both ways.
Maybe not.
Listen - if our currency gets weak enough (Fed might not even be able to stop it - it could get a life of its own) even if world demand goes down... some areas might see a net gain. Might be Waterloo & Wichita.
Japan gained market share here & worldwide through a number of our recessions... they did it by stealing business from others in a down market. Tough to do but not impossible.
The metric I'm gonna be watching is will the FCBs let the dollar really tank... if they do Boeing & Deere might do surprisingly well.
Or will the FCBs step in & levitate the dollar by buying up some of this MBS dreck. If so they would 'fix' (as in a gambling fix) two problems at once - the credit markets and their export problems... of course that wouldn't come 'free'. A Hobson's choice for them.
I don't really know if they will or not but that will be the thing to watch...
Just for the record, I'm leaning toward scenario two. I think the industrial/steel/raw materials spike is being mainly fueled by over-investment in plant and equipment and speculation. Countries that had enough rice to export a month ago, suddenly need to curb exports. Why? Not because the quantity of rice changed, but because the export price went up explosively.
If the commodity boom ebbs, doesn't have to fall precipitously, just ebbs, the demand for Cat earthmovers etc., is going to plummet.
40% of China's GDP is exports and 20% of their exports go here. Britain is Germany's biggest export destination...
But I still see a chance for the other outcome. In that case, be prepared for some real inflation. Probably making the late 70s looking mild.
It's now apparent where Conan Obrien got his special "look",Zbigniew Kazimierz Brzezinski.
Godwin violation - new thread please!
Or will the FCBs step in & levitate the dollar by buying up some of this MBS dreck.
Do you honestly think Joe German tax payer would go along with the ECB buying up our shit?
That's a pretty big pipe dream.
We are shrinking, that's going to be the theme for the next fifty years or so. We can fight it like the Brits did for the first three-quarters of the 20th century, or we can accept it and find a new niche like they did in the last 30 years.
But expecting the rest of the world to solve our problems is just a pipe dream.
dry,
Though if they buy the MBS dreck I think we will see repudiation, not levitation...aka capital flight.
Billionaire sues Bear Stearns.
Just for the record, I'm leaning toward scenario two. I think the industrial/steel/raw materials spike is being mainly fueled by over-investment in plant and equipment and speculation.
I see speculation as a big part of it. But capacity (supply) is a function of price & demand... if a lot of that new capacity is low cost enough to produce (cost separate from speculation)... it won't go away just because the price drops. If that capacity is priced 'marginally' now - so that barely profitable at these prices - it will go away if there is a drop. I just don't know.
Also - many of those plants might see owner lose out then fire up again at a MUCH lower capital cost basis for a new owner. It really comes down to their VARIABLE cost - is that above price. Once cost is sunk its hard to close one of these for good until some of the capacity wears out which is why mfg 'recessions' can last so damned long. Equipment lasts forever. Everyone has to go broke & cost go to the new basis THEN have the equipment wear out before supply corrects to a profitable price - see airlines.
As far as UK-Ger trade... that's like Wisconsin & Minnesota now. Once the EU set up it didn't matter much. Sterling is in the EU Zone whether it admits it or not. Same with CN$ & MexPeso here in NAFTA Zone. I view NAFTA/Mexico like my father viewed Alabama from his rust belt perch in the 1960s. No going back - its another state now.
I too was stunned (if delighted) by the Volcker endorsement. In addition to the generational change factor, I suspect they see a few things: 1) that Obama motivates people across demographic groups (notwithstanding Clinton's support among older women and McCain's support among a certain segment of men), 2) I know of many older "liberal" Eastern Republicans - men and women - supporting Obama; and 3) the policy options are very limited, especially given the economic and foreign policy constraints, so Obama's ability to think, to lead, to speak, and to execute his plans (as evidenced by a remarkably successful campaign) are more important than the specifics of his policies, much of which will end up on the cutting room floor of Congress.
Volcker knows nothing about the Wright Model B indicator. Standard bear argument. Nothing here folks, move along.
But expecting the rest of the world to solve our problems is just a pipe dream.
Bob_in_MA | 04.11.08 - 10:27 pm |
They have been doing it in Asia since the 80s (BoJ then, PboC & BoJ now). ECB is irrelevant - they'll be hollowed out soon too if the euro doesn't correct. Dollar reserves are still growing.
ECB is irrelevant vis-a-vis the dollar. Its all in Asia's hands. China ships more to Euro Zone now than NAFTA Zone. Read that on Setser a couple months ago. It will be a lot more if the difference between euro & RMB stays this wide.
Did anyone see if we had our usual Friday Afternoon Bank Failure?
sigh
You people suck sometimes.
Here not so long ago the people in this country lived through the twin horrors that was the misery of the Great Depression and the slaughter of WWII... both of which threatened our existence all in one 15 year period.
There is nothing remotely so severe about this situation.
Our ancestors lived through epidemics and famines that wiped out entire families and acquaintance after acquaintance.
And this financial mess is now the end of the world.
What a bunch of pansies. >:(
Just wait until something really bad happens.
manu06- "Maybe we need someone without ambition to run for President."
I may understand that after another drink.
"We are shrinking, that's going to be the theme for the next fifty years or so. We can fight it like the Brits did for the first three-quarters of the 20th century, or we can accept it and find a new niche like they did in the last 30 years."
Our military hegemony is much more complete than the Brits ever dreamed of. If we want to we can easily take the Saudi oil fields, and many other productive resources. We're not there yet as a society (willing to accept such drastic actions, though Iraq is a test case), but if the shtf we will be. I hope to Glod it doesn't come to that, but ...
"Simple Gifts" was written by Elder Joseph while he was at the Shaker community in Alfred, Maine in 1848. These are the lyrics to his one verse song:
'Tis the gift to be simple, 'tis the gift to be free,
'Tis the gift to come down where we ought to be,
And when we find ourselves in the place just right,
'Twill be in the valley of love and delight.
When true simplicity is gain'd,
To bow and to bend we shan't be asham'd,
To turn, turn will be our delight,
Till by turning, turning we come round right.
For the years that we earned more then our father, for the years we spent 1/2 the worlds total on defense. For the years we used so much oil, polluted so much what have we gotten? McMansions and Hummers. High crime and drug rates . And we have replaced a belief in God with a belief in the Bible
We don't need a conspiracy of Russia Iran and China to bring us down. We are going to Hell all by ourselves.
Excuse me from stealing a term from Marx, but the internal contradictions of our version of Capitalism is causing its implosions.
So maybe it will be good for us if our standard of living drops,if our Gini index drops, if we spend money on educating our children and keeping them healthy. Lets give someone elsde the reserve currency. Lets give up being the policemen of the world. Lets give up being run by big oil. Lets give up being run by the Military-Intelligence-Industrial combine. Lets give being spied upon
Lets bow and bend 'til we find simplicity again
And as Volker says lets step aside and let the kids take over. I don't like Obama, but my two kids are passionate about him. So I will listen to Volker,defer to my kid's judgment and vote for Osama. He has the capacity to grow into the job
Hard to post with all the chit-chat but:
Discipline? Yeah, sure - but if we stop spending we cause a recession and lose our jobs. Catch 22.
The alternative is fascism.
So maybe it will be good for us if our standard of living drops,if our Gini index drops, if we spend money on educating our children and keeping them healthy.
God, now I'm going to join mp in a drink.
ac is right. We've become a bunch of freaking pansies. Spending money on education is NOT - SO NOT - going to help bring the education standards up; been there and done that and what have we gotten?
Y'know, I decided tonight to go with the O for President; read the contents of a speech that he gave to an inner-city crowd in which he stated that money is not going to help the kids learn. Turn off the f'ing electronics and be a parent. Stop buying so much crap food and limit what's in the house. Gee, it makes my life unpleasant with all of the whining but they'll get over it.
I went to an elementary school talent show tonight and one trio of ELEMENTARY school kids had to redo their hip/hop dance routine today because what they planned was too vulgar. So where in the hell are the parents?
Rant off. Now for a beer.
Here not so long ago the people in this country lived through the twin horrors that was the misery of the Great Depression and the slaughter of WWII... both of which threatened our existence all in one 15 year period.
There is nothing remotely so severe about this situation.
ac - nations don't always survive these events. History is littered with messes that got worse & worse until the system pulled itself apart. There is no law of nature saying we'll survive this one if we let it really get bad.
BTW - my father who lived through the depression & fought in one of those wars thought we today have bigger problems than they did then although none of us suffered like his family & friends did. His belief was based on the fact that they had fewer people then, more natural resources and more 'room for error'. Granted the 40 million or so who died in Europe & Asia might have a different view).
With six billion people today there isn't much room for mistakes and any error in the financial calculus can quickly turn into errors in actual goods getting produced. Miss just one season & a whole lotta people die. I was thinking about that driving by the flooded fields in Missouri today.
I think this mess is solvable but that isn't the same as saying it will get solved. Past performance is no guarantee... yada yada. Keeping the systems functioning is critical. Improving is better but functioning is critical.
There is also a chance it won't even be bad at all - though I doubt it, I can't envision a scenario where the skanky debt doesn't matter. I would rather have them err on the side of caution than bravado when dealing with that skank.
hough if they buy the MBS dreck I think we will see repudiation, not levitation...aka capital flight.
energyecon | Homepage | 04.11.08 - 10:28 pm | #
If that happens then the dollar continues to slide & even more mfg comes here. Waterloo (Deere) & Wichita (Boeing) will rock.
So what does Airbus & Kubota do about that? Not lobby their gov'ts? Roll over?
At some point there will be push back... will it be via FCB currency intervention (re-floating the dollar) or Global Smoot-Hawley?
pls-, welcome to the 'Os-' club (your second spelling of O-).
I look forward to hearing O-'s specifics during the upcoming debates.
Methinks there ain't a lot there, except a mellifluous voice (from his cigarette smoking?).
Questions about which industries seem to be taking it on the chin in the west. Dryfly is correct about anything related to housing including furniture and carpet. Paper products, wheat based food products, seems to be less coming in through the ports as well. What is striking is the apparent sharp decline in last three weeks.
Any friend of George Shultz surely must be a fascist pig. The man responsible for wrecking the Bretton Woods system of fixed exchange rates and surrendering control of the U.S. dollar to the City of London is no American in the traditional sense.
As for this hack Volker, let the word go out that any so-called "respectable" man of American finance who says, "Any return to heavily regulated, bank-dominated, nationally insulated markets is pure nostalgia, not possible in this world of sophisticated financial techniques made possible by the wonders of electronic technology," probably is in bed with the eternal enemy of the American Republic. These are the sort who lavish the praises of Adam Smith and despise Alexander Hamilton.
Unless the people of the United States are willing to recognize how today's tyranny is no different than that of 232 years ago, this nation is finished.
Whew, I'm glad I went to an AA meeting.
One word - Awesome !
km4
If you think Obama's awesome, I feel sorry for you. To tell crowds of Americans they are angry and frustrated is a losing strategy.
So what if they're angry and frustrated. It's a classic trick of a demagogue to convince people how angry and frustrated they are, without having any ability to change their anger or frustration.
You whip up their anger and frustration and try to channel it into personal political power, like Hitler did.
Americans have themselves to blame for electing George Bush twice and spending their way into the poor house, and there's no quick fixed from Obama or anybody else. He gets more arrogant, power-made and bizarre by the day.
Obviosly the concept of discipline is lost on most of the commenters this Friday evenimg. Cheers!
ac-
The US didn't see the great depression or WWII coming. In fact, if it weren't for Pearl Harbor, we could be living in a different world today.
What happens when the rest of the world decides they aren't going to take our money at 10, 20, 30 or 40 percent of par?
Been to a grocery store lately? How much of that produce comes from South America? Look at the labels?
The price of beef has increased 200 percent in the last three months. What happens when the feed we import disappears?
What happens when people living paycheck to paycheck have to pay cash for everything, and prices are rising faster than they can get paid, if they get paid at all?
What happens when people can't drive to work because domestic oil is seized to protect military bases around the world from being over run by governments we owe debts that can't be paid?
What happens when people have to wait in line with ration stamps to get clothes for their kids in the dead of winter because textiles no longer are manufactured in the US?
All the while we'll have the media and politicians blaming it on evil foreign government ideology, terrorists, socialists, communists... fill in the blank.
Look back at the triggers for the Great Depression, WWI, WWII, 9/11, no one saw it coming. In hindsight it was obvious.
It's time to wake up and deal with reality. I'm sure many will say I'm paranoid and worry too much. I honestly hope they are right.
dryfly,
I get what you are saying, but the rate of change is the issue - mfg ramp occurs orders of magnitude more slowly than the huge increase in the cost of debt service - open question how much pain occurs while the sectoral reallocation is underway...
Hey guys, its me again. Been a rough week. Actually, its been a terrible decade.
The biggest problem facing our nation isn't low interest rates. Its not declining housing prices or a falling dollar.
The real issue is that we are facing a crisis of confidence. It starts at the very top with George W. Bush and Bill Clinton lying directly to the American public. That set the example, and we all learned one thing.
Lying pays off very well in the short term. Unfortunately, an overwhelming sense of dishonesty has permeated our culture and we are now paying a price. It will get much worse before it gets better, but it will get better.
This society has shown a historical resiliency when things get tough, and I have no doubt we will rebound. All I ask is that we start telling each other, and more importantly ourselves, the unvarnished truth.
When that happens, I will make my triumphant return like a phoenix rising from the ashes. Until then, hang on to your britches because the fat will be trimmed and you won't be able to afford a new pair of pants.
Megadeth - Symphony of Destruction
YouTube
- Broadcast Yourself.
"He gets more arrogant, power-made and bizarre by the day."
Your evidence for this is?
Dryfly,
So let me get this straight, you think we Americans need to consume less, and yet you are a proponent of the negative real interest rates being set by the Fed? You think a policy of raising rates now would be suicide for the USA?
The very policy of always intervening to prevent corrections (My God, we might have deflation!) and business failures (We mustnt let Bear fail or itll bring down the system!) is exactly why the problems have gotten this bad. American businesses and individuals are being trained. Reward reckless behavior and you will get more reckless speculation. Punish savings, and you will get the worlds most amazing consumers.
rich at 1202 wrot
So what if they're angry and frustrated. It's a classic trick of a demagogue to convince people how angry and frustrated they are, without having any ability to change their anger or frustration.
You whip up their anger and frustration and try to channel it into personal political power, like Hitler did.
Hey Rich
I'm ok with you not liking Obama.
im just not seeing the hitler parallel.
in fact just the opposite...seems to be inclined to an inclusive approach. he just made the point that the middle class doesn't have an effective lobby and so DC ignores their needs.
Tyrone said
Tyrone-"the brother like no ot writes:
Volcker is given way too much credit for ending inflation. Reagan tax cuts spurred this nation onto it's path to prosperity and everyone here knows it.
Tyrone-"the brother like no ot | 04.11.08 - 6:10 pm | #
Hey Tyrone,
tax cuts don't fight inflation..tax cuts are stimulative.
also Reagan pushed thru nearly 3 trillion dollars of deficit spending over his two terms...also a stimulus.
Volcker had big balls... he had to fight the inflation that preceded Reagan and run counter to Reagan's on-going fiscal policy.
Zink wrote
Discipline? Yeah, sure - but if we stop spending we cause a recession and lose our jobs. Catch 22.
zinc | 04.11.08 - 11:18 pm | #
Zink aggregate demand includes consumption and investment spending.
you, we, wont loose our jobs if the decrease in "mall" spending is replaced by investment that yields productivity growth,..and that puts people to work.
What's kind of interesting about it is that John Edwards was starting to tap into that sense of "a middle class abandoned" before BSC, before ABK, before all of the latest shenanigans.
I wonder how much it would've changed things had the primary season started now instead of months ago.
I get what you are saying, but the rate of change is the issue - mfg ramp occurs orders of magnitude more slowly than the huge increase in the cost of debt service - open question how much pain occurs while the sectoral reallocation is underway...
energyecon | Homepage | 04.12.08 - 12:17 am | #
I didn't say it would be fast (I expect it will take a decade or more for us to dig out if we start tonight) and I didn't say it would be painless (working harder for less in parity terms isn't fun). It all revolves around a weaker dollar forcing us to produce more & consume less until some of these 'imbalances rebalance'.
But if our trading partners want to keep their currency from appreciating too much too fast so they can continue to remain 'price competitive' in dollars terms then they will have to prop up the dollar - meaning they will have to buy either (1) our products (2) our assets or (3) our debt - the dreck. Oh - the assets look pretty drecky too - they are mostly our equities.
Capital flight means they completely walk away from our market & our 'ramp up' goes virtually unchecked by their competitors.
I can tell you right now that their politicians & central bankers won't allow that - at some point they will be forced to intervene if the dollar gets that weak. the question is how weak will they let it go & which of the three will they buy (products, assets or debt).
This year, I'm voting for Goldman Sachs. The Rubins have all the bases covered.
So let me get this straight, you think we Americans need to consume less, and yet you are a proponent of the negative real interest rates being set by the Fed? You think a policy of raising rates now would be suicide for the USA?
If they raised rates a lot it would be a disaster. But only for working people. The 'landed gentry' would do great - they have very little debt & enough assets that even in shortages they do okay. Just like 18th century.
You'd see our production fall in half and unemployment go up to 25%-35%. It would stay that way 10-15 years or so like the last depression.
Deflation means every company with any serious amount of debt fails. The worse the deflation the more of them that fail causing more deflation, lay offs and failures.
And since assets are declining in value (as are prices for products) no one steps in to buy the productive capacity - no incentive to rush, the assets will be cheaper tomorrow so why buy today? Your products will be cheaper tomorrow so why produce today?
It really gets ugly fast.
The fed can't let that happen - they won't let that happen and they & gov't can do something about it in a fiat system - print money. The problem is they are likely to over-shoot, might have over-shot already. Won't know until it is way too late.
This year, I'm voting for Goldman Sachs.
That's like voting for the Yankees - they always win.
Tranchefoot, reading dryfly's Wichita comments, I couldn't help thinking of Edward's "two Americas" theme...
Punish savings, and you will get the worlds most amazing consumers.
I really don't get as excited about savers - I'm more interested in where you've invested. So what if you throw a pot of money in the bank, or buy metal with it... does it cure cancer? Does it feed people?
We need to consume less and produce more - not hoard chits or pieces of metal. In that respect I have no problem with the fed pushing money out of the vaults and on to the factory floor by not rewarding 'saving'.
Let's try this. Take the average of the last 15yrs housing inflation, per yr and incorporate that to the beginning of the bubble (to be determined by exceeding that average) and calculate the probable price of a home in 08. Have the fed guarantee loan of that amount to bank (investment banks?), if buyer qualifies (criteria that eliminates speculators). You have created a housing floor that is reasonable and the real losers are the speculators - the risk for the potential gain.
Food for thought Bb
Tranchefoot, reading dryfly's Wichita comments, I couldn't help thinking of Edward's "two Americas" theme...
Ya I didn't think of Edwards but his two America's are right there in front of God and everyone.
When he answers a question like "and so Mr V, how would you unwind the complicated financial arrangements of a company like BSC, while keeping the markets from panicing, avoiding horrendous unemployment brought on by the freezing of the credit markets, and keep funds flowing so the entire western economy didn't grind to a screeching halt?"
ipodius | 04.11.08 - 7:11 pm | #
First of all, Bugabe had 2 years to solve this problem. What's he doing now to make sure that the problem doesn't repeat the second feds stop writting out blank checks? I wish the problem would go away if we stared at the balance sheet long enough.
^ that was me.
|
Missed something in the mp comment.
Rubins? He has a twin?
"Just wait until something really bad happens."
Give it a few months. I'm not bothered by the current state of affairs. It's what is coming that's frightening.
Dryfly- re: Hobson's Choice Hobson ran a horse-drawn cab company in London and his "choice" was take the next cab in line (regardless of condition) or none. Kind of like Ford's "any color, as long as it's black". I know that in common parlance it's not used that way, but I thought you'd like to know.
dryfly,
You make it sound like the Fed is doing the little guy a favor by preventing this horrible deflationary depression.
I'm not so sure about that.
Look at the growing wealth disparity. The current system specifically benefits the wealthy by artifically pumping up asset values. The bottom rung does not own any of those assets.
Also, your dire forecasts of 15 years of 25% unemployment are outlandish (not impossible, but quite spectacular predictions). I don't know if our labor has the same bargaining power to prevent wage drops like it once did. And if wages can fall, then unemployment will not be as severe.
Of course, our standard of living will fall. But that is inevitable. I'd rather see it happen honestly, with some of the bad actors punished. That might even result in some changed behavior!
Been to a grocery store lately? How much of that produce comes from South America? Look at the labels?
The price of beef has increased 200 percent in the last three months. What happens when the feed we import disappear?
Er... step back a biological nanosecond and 4 out of 5 of your offspring died before the age of 7 and russian roulette had far better odds than child birth.
Grocery stores? Bargain basement imports?
These inconcievable luxuries might gasp disappear?!?!
Oh the humanity!
I take it you've never spent a single second face to face with doom.
Consider that the world you think you live in is not the world you live in.
I'm not really a religious person, but I can't get past the sense that the world today is awash in these seven spectral lights in a way it's never been before.
Maybe thousands of years of accumulated wisdom count for something.
Or maybe it's just our imagination that has brought some biblical abomination creeping out of the shadows and into our everyday lives.
Maybe if we pretend it's not there it will slink back into the darkness.
Maybe, just maybe, this time it's different.
Thanks sdtf - didn't know that... just knew it was an 'undesirable choice'... so a choice of taking the next crappy cab or walking makes sense... you don't get the choice of the cab you want.
That sure sounds like the economic choices facing us today - take what you get or walk.
You all Volcker funs should really give a thought to an alternative. Remove easy credit and 10% unemployment "here I come". And your 24-hour-on life would be unavailable too. You can not have it both ways.
homedad- "Rubins? He has a twin?"
He has a son: Obama's finance manager.
He has a son: Obama's finance manager.
mp | 04.12.08 - 1:36 am | #
Thank you and good night.
Who the hell is BFNYC?
Watching this video and reading the text should be required for any financial/economic blogger. The opinions and words of all the fake wanna be hyper-active attention deficit back seat driver bloggers/daytraders, economists and politicians are worthless crap and Volcker is THE REAL THING!
You all Volcker fans should really give a thought to an alternative.
I think we should keep in mind that "Volcker fans" are not Volcker. I hope to hell he's a lot smarter. I doubt he'd try the exact "same" solution, but regardless, he'd start with a huge amount of respect from the people who matter.
"Americans have themselves to blame for electing George Bush twice"
No kidding. If it weren't for the vagaries of party politics, maybe the Dems would have put up somebody other than John Kerry, and I could have voted against Bush. I would have even taken Hillary at that point. Well, maybe not Her.
davej
jas jain our most vociferous critic of the usa uses the initials bfnyc to stand for something like "bank fraudsters of new york city"
incessant din
the election was rigged.
just one example
sec state florida kathleen harris purged more than 30,000 voters off the rolls from primarily democratic precincts.
Also, your dire forecasts of 15 years of 25% unemployment are outlandish (not impossible, but quite spectacular predictions). I don't know if our labor has the same bargaining power to prevent wage drops like it once did. And if wages can fall, then unemployment will not be as severe.
I pulled those numbers out my ass - they would be very bad if a real deflation set in unchecked by central bank largess. I have no real idea how bad - at least as bad and long as the 30s depression. Something like 10 years at 25% unemployment... until massive war spending broke the cycle.
So workers wages drop in a period like this... what do they buy? And if they don't buy - where are the profits for the companies that employ them & their neighbors? So the companies lay off & shut down & less gets spent, wages go lower & more fail.
Liquidation - unemployment - liquidation - unemployment... down, down, down. That is the cycle.
With the debt loads today, the liquidation would be furious...
And with continued deflation - you would not see investors step in until they thought the cycle was broken - who wants to buy a depreciating asset? In deflation EVERYTHING depreciates.
Of course, our standard of living will fall. But that is inevitable. I'd rather see it happen honestly, with some of the bad actors punished. That might even result in some changed behavior!
ShortCourage | 04.12.08 - 1:30 am | #
The bad actors always come out better than honest working stiffs - who has the connections? Not the working stiffs. I have no doubt that the rich get richer in EITHER a massive inflation or deflation. But deflation is the uglier of the two initially, immediately. The only good thing is it is also quite easy to cure in a fiat system. Inflation on the other hand is slow to take off but very hard to call back once launched.
The ideal role of the central bank in a fiat system (and we will have no other until the end of time) is to control money supply - enough to avoid the downward spiral... not so much so as to launch inflation.
I am not convinced they have done a good job - that is not to say they shouldn't try and that we should have better laws & regs outside the fed purview to constrain the bad actors. That's where I think the fall down occurred... if they had done that we wouldn't need so much fed interaction.
But that's all lessons learned for when this is over. For right now I want them to keep the systems running so we have a tomorrow - too much is at stake if they let it completely fail.
I think they'd love to have some good old deflation over in Zimbabwe right about now.
Its correct but irrelevant to remind us , as ac correctly does, about the enormous advances in medicine, transportation, food availability, relative peace that our generation has had compared to prior ones in the USA.
The US citizenry feels entitled to more -particularly more than everybody else - and in one of those ironic moments on CNBC, Joe Kernan demonstrated this well as the future was discussed with Mohammed El-Erian ( CO-CEO of PIMCO ) as he talked of the rise of the BRIC countries but that there will be more.
Joe Kernan asked : "Hang on, you say there will be more but will we get less of the more"
and Mohammed El-Erian ducked the question but it was repeated and he just had to admit:
"Yup, the USA will get less of the more".
Sorry, tough shit and all that..
Actually I think its way worse than that - and attitudes and viewpoints like "We can just militarily take over the Saudi oil fields" will make it worse before it gets better.
Until the people as a whole really sign on to the idea that the USA is living beyond it means ( and the fact that foreign (alien! ) people are prepared to loan it money to do so does not alter the issue one iota in a fundamental sense ) - until then, the decline continues.
-K
The problem is that they seem to want to control the money supply only when it is contracting....not when it is expanding...
Likewise they don't want to interfere in the free market when things are crazy good (let the market police itself). But when things are going to hell, well then the free market needs the wisdom of the Fed to set prices and change the rules.
C'mon. Let's just have introduce a Soviet-style 5-Year Plan and get it over with.
ShortCourage writes:
The problem is that they seem to want to control the money supply only when it is contracting....not when it is expanding...
We find agreement.
And worse yet - not put any restraints on 'credit creation'... in a fractional reserve system that is playing with fire & we got burned.
And how they handled BSC was disgraceful - I'd rather see them do a Northern Rock & OPENLY nationalize the failed enterprises & liquidate assets but make damned sure the stockholders & execs lose their jobs, bonuses & equity. Instead it was a back door inside job.
There were a lot of ways they could have done this better, earlier & with less heavy handedness (if it was earlier & more open). Didn't happen.
But that isn't the same as saying lets have deflation - not a solution.
Someday a future candidate for fed chairman is going to tell congress all about the mistake Bernanke made and how he won't make 'em... He'll also make his own. Hopefully we will have made the system more robust having learned from this fiasco.
dryfly,
A sign-off comment... The actions I've seen by "the authorities" during my 40+ years have had unintended consequences that are worse than the problem they've tried to fix. I don't expect any better results from the latest batch of government change-the-rules-after-the-fact solutions.
If they continue, the final unintended consequence will be a loss of trust in our financial institutions. Then we might experience capital flight, a collapse of the dollar, hyperinflation, or all of the above.
How is that outcome better than your feared deflation scenario?
Just saw your comment, and yes, we do have some agreement. Good night!
Compare this to the alternatives of saving; 2.4-2.7% T-Bills then?
Well no. If you are living beyond your means, i.e. a debtor, saving means paying off your debt. Your return on savings is the interest you no longer have to pay, which in the case of credit cards is a lot, and still substantial for other debts. Not the measly interest a non-debtor would get from a T-bill.
You're talking as though Americans have been going into debt because of a low return on savings, which is absurd. They have been living beyond their means, period.
ipodius:
You know, the Clintons have their issues, but for some reason I really believe that H will hang tough on what she says. That is what I respect.
With posts like these I'm beginning to wonder if what Jas Jain says maybe has some truth to it. What does some "some reason" mean? It implies that you don't even know why you are going to vote for her.
As for "what she says" have you noticed any of her lies lately like the Bosnian smiper story? Or I was for the Iraq war before I was against it but it was the right vote anyway and I was for NAFTA and so is my campaign manager before I was against it. Did you notice her complaining when her husband and the GOP control Houses, signed the repeal of Glass Steagall, that contributed to the present financial disaster? Does that and "their issues" just get ignored in favor of an imaginary "for some reason"? With reasoning like that it's no wonder Bush was re-elected.
How about we talk about smarts okay? First presience. Did you read what Obama wrote about Iraq before the invasion? Pretty much sums up exactly what is happening. Next the ability to speak and inspire. It's no secret that Obama is more articulate and he has won more votes. I suggest you watch the video km4 posted at 10:07 pm in response to the latest smear campaign. There is a reason why he says it is "awesome". Last intelligence. If you haven't read the response to the Wright controversy yet I suggest you do so and take note that he wrote it himself not a speechwriter.
So your "empty suit from Harvard" is smarter, more articulate, more able to inspire people and possesses a knack for seeing the future clearly. Personally in the middle of a crisis I think it's a no brainer.
homedad43:
ac is right. We've become a bunch of freaking pansies. Spending money on education is NOT - SO NOT - going to help bring the education standards up; been there and done that and what have we gotten?
No of course of not that only works with CEOs and Politicians. Paying teachers less than Garbage Men will ensure our children get the best and brightest amongst us to teach them.
You all Volcker funs should really give a thought to an alternative.
I think it is the Volcker anti-fans that need to start thinking of alternatives. Printing up "Plant A Garden" buttons aren't going to feed your families. Most Volcker fans probably already have gardens. Good luck to all the Statists that come crawling out of the city once your system destabilizes. You won't be well received. It's starting to look like the easy way out isn't going to be so easy this time.
dryfly:
Capital flight means they completely walk away from our market & our 'ramp up' goes virtually unchecked by their competitors.
I can tell you right now that their politicians & central bankers won't allow that - at some point they will be forced to intervene if the dollar gets that weak.
From a link above this is what they are actually saying:
plan to halt financial crux
Since they have in effect been ripped off on that market by buying into the CDO mess and losing billions I wouldn't be so sure. They are telling you to clean up your books and put a leash on your crooks. That's what needs to be done and the Bank for International Settlements is predicting it:
demise of CDOs
They have elections too and a bailout of another country with their tax dollars would be highly unpopular to say the least. Everybody knows what needs to be done and nobody wants to completely walk away.
Max
Where can I learn how do what you did?
Volcker's term as Fed Chairman was between August 6, 1979 and August 11, 1987. He was Fed Chairman before, during and after the peak of the S&L crisis. On January 15, 1993, Volcker testified before the National Commission on Financial Institution Reform, Recovery and Enforcement. He confessed to the Commission that he could have warned more forcefully about problems in the S&L industry but was worried at the time about panicking depositors. So, when he was Fed Chairman he kept his mouth shut, but now he's talkative and glib. Why should we not regard him as just another "doom-and-gloom" talking head? Why sould we believe anything he has to say? He and King Laissez-Faire Greenspan are, in the opinion of many, mere "has-beens." Maybe. But surely they don't deserve the level of attention they get, particularly from the number one economic web site in the world. Delete the posts on Volcker, ignore future comments by him and Greenspan and let's move on CR.
Dryfly, getting writer's cramp yet? Watch out, as it might get in the way of your next circle jerk with ipodius.
Being afraid of Volker's messages about discipline and sustainability is simply about being afraid of everything.
Leadership comes along in a crisis, and a crisis is exactly what we need to come to our senses. You're afraid of pain? What real development has come without it?
Lincoln, FDR and the founders were the real deal. Wall Street is not about leadership, it's about screwing everyone with their pants on for money...reverse prostitution.
Let's give the future to the young, who are inheriting all this "faster and smarter" crap from 1980 forward anyway.
Obama seems to get it. He's converted me from "kill the Republicans," and that's quite a feat these days.
ac, you rock. Later.
"You know, the Clintons have their issues, but for some reason I really believe that H will hang tough on what she says. That is what I respect."
"With posts like these I'm beginning to wonder if what Jas Jain says maybe has some truth to it. What does some "some reason" mean? It implies that you don't even know why you are going to vote for her."
(Sam's repsonse to Ipodious)
In my view, Clinton II is most likely to hang toughest against those vicious terrors menaces her imagination - like those now infamous Bosnian snipers. I can see it now - Clinton II finally "wakes" to the that three a.m. phone call her campaign babbled about & hears that thousands of Russian ICBMs are on the way. So she crawls out of bed, pulls out the suitcase, and presses the button.
I suppose that's one way to end our current economic problems.
So your "empty suit from Harvard" is smarter, more articulate, more able to inspire people and possesses a knack for seeing the future clearly.
For a thread that began as an accolade to straight, no-nonsense talk, it's funny to see your post Sam. That's precisely my point about Obama...more talk, more smoke, more talk and no specifics or truth. Let's take the war. You know what I want to hear? I want to hear a candidate say "this is the biggest mess since Viet Nam. We can't just pull out, because we'd leave a place behind that would formet terrorists instead of contributing to curtailing them. We're going to lose more men, spend more money, and I don't see this coming to closure for at least another 5 years and even then we'll still be involved. This is the best we can do, and we'll manage it with the goal of trying to create an environment where global terrorism won't get new recruits from. Sorry, but that's where we are."
Straight talk. Go look for that in one of his speechs. I've heard I'm a uniter not a divider before. I don't want false hope, I want straight talk. Here's some more for you: Washington is a machine where you have as much of a chance of getting something done if you're an outsider as you do living at the bottom of the ocean. That's the truth. Where nothing really ever changes because the bureaucrats barely notice the change in political parties. Where the business leaders have more influence than you ever will because they have more money.
I hear no straight talk here, but just the pandering to the kumbaya-wing of the democratic party, which is just as destructive as the wing-nut neo-facist wing of the republicans. All I want is someone real, warts and all. Character defects are interesting. That's probably why I like Hillary, and McCain actually. I would have a beer with either one. And you know what? That's all middle America wants too. Someone they can imagine sitting across a dinner table from. If you miss that point, you're living in a rarefied world, and not in the same America where the votes actually come from. Otherwise we wouldn't have just had 2 Bush terms.
--
So that there is no confusion, breeding dopes, I mean "educated" dopes like economists and such, has been part of the American system, as it has existed in recent decades. Of course, it is to take advantage of them and to serve our economic elite. Everyone is susceptible to propaganda no matter how much formal education one has had.
Now, we are witnessing the consequences of breeding dopes and being ruled by Crooks. That is what I mean. Nothing can save America from the dopes and the Crooks. Too bad that no country can invade America and throw out the rascals and evildoers that control the govt and the economy. It ain't American People.
Jas
On Manifest Destiny
"three key themes were usually touched upon by advocates of Manifest Destiny:
The origin of the first theme, later known as American Exceptionalism, was often traced to America's Puritan heritage, particularly John Winthrop's famous "City upon a Hill" sermon of 1630, in which he called for the establishment of a virtuous community that would be a shining example to the Old World. In his influential 1776 pamphlet Common Sense, Thomas Paine echoed this notion, arguing that the American Revolution provided an opportunity to create a new, better society..." Wikipedia
I quote this because it is such a major theme in our national consciousness, and because it pervades many of the comments on this thread and throughout this blog.
It is expressed in our alternate national anthem "America"
It is no accident that we celebrate Thanksgiving rather then say the founding of Jamestown, because it is the arrival of the Pilgrims- an anti-establishment branch of the Puritan movement. We celebrate the founding of the US with the start of American Puritanism.
It is a constant theme extended in the Monroe Doctrine, used to explain the right to annex Texas and the rest of the continent. Its then morphed by Wilson into the defense, later spread of Democracy and possibly morphed back by Bush and Iraq.
Unfettered Capitalism is somehow strongly connected to MD (why??). So those that oppose UC are the spawn of Satan "Godless Socialists" says it all.
MD is backed by the Gold Standard of the Golden Rule. We cannot forget that we pay back with our religiosity
If you buy into MD and its underlying support by God, then we seem to be in the situation often found in the Old Testament. God punishes his Chosen People when they stray from Him. Hmmm.
Ipodius
Either one believes that the system can be returned to the Status Quo with a little tinkering or that we need a new syste. I Think Hillary and John reflect the former. Supporters of Obama I suspect reflect the need for the latter.
I watched the Frank hearings where representatives from FDIC, Fed, GSE and one more all acknowledged the need need for strong Government intervention. Add to that Bernanke and we have a strong movement for government support. But I think that the end model will needs go further. And it will be the "Nordic Solution" of a semi-Socialist (in fact but never in name!) economy; joining the rest of the Western World.
This would suggest Obama, who as an outsider can best achieve this
sk - "Actually I think its way worse than that - and attitudes and viewpoints like "We can just militarily take over the Saudi oil fields" "
Don't get me wrong ... I don't advocate this at all -- I fear it greatly. But if things get as bad economically as some here forecast, I don't think TBTB let the US fade quietly into the night. There is one area where we unquestionably dominate the world - military strength. What's the phrase? "When all you have is a hammer, everything looks like a nail"?
jg, your anti-Obama rhetoric really leaves you looking like a racist.
Just sayi
mp wrote "The Rubins have all the bases covered."
Prove that Rubins are involved in the Obama camp. Either provide proof or stop repeating the fallacy.
The only thing I find in a search is that Jamie Rubin, a Clinton advisor, loves throwing out cheap shots at the Obama camp. Big surprise.
Prove it, or stop it.
"He has a son: Obama's finance manager.
mp"
Prove this. It was stated last summer, but I see no proof anywhere.
Please, mp, a link. You should know better than to continue spreading misinformation.
jg, your anti-Obama rhetoric really leaves you looking like a racist.
Oh yes, i was waiting for this to happen. Whoever says anthing deeply critical of Obama is a racist. Perhaps that's why everyone is softballing him...no one wants to this crap happening. if you're not for him, you're a racist. Trust me, there is nothing about race involved in having no substance.
Oooo, ipodius, the guy who doesn't want people posting anonymously.
And who the hell are you? Do you know who Tanta is? And CR?
Keep on shilling for that crook Clinton.
Obama is a freaking saint compared to that criminal family.
And usually, when people are left using the hollow argument, it's clear they have no real argument, and hence it MUST be some other reason that the critic has against Obama.
The definition of hypocrisy is lost on so many here.
A-, my mother came from Mexico, and was a migrant farmworker.
Os- led a life of luxury compared to me.
I'm no racist. Os- is empty calories, like Bill Clinton.
ipodius is right.
i like obama but jg said nothing racist that i discern
anonymous...stay anonymous so you don't bring discredit to your persona
Ipodius,
You seem to be saying unless Obama agrees with me, he's wrong.
Obama is in effect saying he'll completely pull out of Iraq. You seem to think that will lead to devastation. Experts like Juan Cole don't agree. What is more likely is that a brief period of chaos will ensue with the vacuum being filled with new political structures. The society will then begin to sort itself out. Mesopotamian civilization is ten times older than (European) American society, after all.
ipodius:
I hear no straight talk here, but just the pandering to the kumbaya-wing of the democratic party, which is just as destructive as the wing-nut neo-facist wing of the republicans.
We just heard some straight in a recently released Obama recording and it was quickly painted in the media as a great scandal.
All I want is someone real, warts and all. Character defects are interesting. That's probably why I like Hillary, and McCain actually. I would have a beer with either one. And you know what? That's all middle America wants too. Someone they can imagine sitting across a dinner table from. If you miss that point, you're living in a rarefied world, and not in the same America where the votes actually come from. Otherwise we wouldn't have just had 2 Bush terms.
I rest my case.