Why hasn't Bush lifted the Executive Order ban on off-shore drilling? Hard to believe that hasn't been done to put pressure on Congress to do the same.
Far more people are worried about losing their jobs than will actually be laid off in this downturn - and if all these people pull back sharply on their spending, then the layoffs might become a self fulfilling prophesy.
That's really the catch-22 isn't it? Really what the US economy needs to become stable in the long-term is less spending and more saving (i.e. a shift from consumption to production) yet the terror of a decline in consumption is so great that we can't allow one to happen lest it turn into a death spiral, so we punish people for saving to stop the kind of adjustment that the economy really needs to remain viable.
There is a way out. It's called "Taking your medicine", or in other words, permitting a recession. Unfortunately, it's an election year, so that isn't going to happen (it seems like every year is an election year these days).
Fiscal stimulus is foolish as a means of propping up demand at an unsustainable level. It would need to be permanent, like Japan's. Our problem is debt overhang, which is solved by servicing debt, which means permitting a fall in demand in the short run (IE a recession).
This isn't the end of the world. Nor is extending unemployment benefits (thereby encouraging the unemployed to avoid a serious job search for another three months) helpful. The economy needs a recession every now and again to kill the bad debt, the overpaid workers, and the unnecessary workers.
Then capital, workers, etc., are freed to work on useful things developed during the recovery. That's why we didn't have much of a recovery in 2002-to date. Not much of a recession, the labor market stayed tight, and the debt didn't unwind.
The problem isn't that people are afraid of spending now; the problem is that people are afraid to start a business now! What sort of fool would bet their livelihood on the government continuing to dole out rebate checks ad nauseam?
Here's one vote for a course of really tough chemotherapy for this patient. It's going to be tough and won't be pretty, but how else are you going to deal with the cancer?
I agree, it does seem to be a pick-your-poison conundrum. But, I would prefer the "shift from consumption to production" model over the current spend-as-if-our-lives-depend-on-it model we are currently reaping the fruits of. Short-term misery for long-term stability. But what do I know -- I'm not an economist.
ac, time heals all wounds. Put in prudent lending standards - and time will take care of most of the problems. This assumes it is better for most people to just limp along for a longer period, than to have a complete meltdown.
Of course there will always be the calls to "liquidate everything" and start over - but that didn't work too well the last time it was tried.
Motorists may want to double check their shock absorbers.
That's because high asphalt prices are causing area transportation officials to put off repaving roads and reduce the number of potholes that crop up annually.
In Bergen County, for example, the growing cost of asphalt means the county has plans to repave just 23 miles, instead of the 32 miles it initially planned.
Asphalt is made of an aggregate, stones or gravel, and a binder, a tarlike substance that's crude oil-based.
As the cost of asphalt, a petroleum-based product, keeps going up, state and local officials around the region are postponing road repairs that are not deemed crucial and all but halting new road construction.
In Westchester and on Long Island, the New York State Department of Transportation is working to make all necessary road repairs because of the high level of traffic in and out of New York City, said Skip Carrier, a department spokesman.
Its a question of how quickly we can get to the projects, not that we wont do the projects, he said. Its a necessary part of maintaining our infrastructure; we have to do the work.
ac, time heals all wounds. Put in prudent lending standards - and time will take care of most of the problems. This assumes it is better for most people to just limp along for a longer period, than to have a complete meltdown.
Of course there will always be the calls to "liquidate everything" and start over - but that didn't work too well the last time it was tried.
Though I often like to pretend otherwise I don't know that anybody will really be able to answer that question until after the fact.
People can point to Japan, for example, and say they didn't liquidate everything, but with the public debt they have the book may not yet be closed on them.
In fact much of the problems we're having globally may have been transferred from Japan and later the US via their monetary policy. Certainly the Bank of Japan seems to be a central actor in what's going on today -- is it possible that everything that's happening now is really a reverberation of Japan's bubble economy still going on?
While I'm not going to seriously argue that we need another great depression, I have to look at the rate of growth that was occurring in the US starting in 1933 and compare it to Japan's "Lost Decade Plus" and have to wonder if there's some merit to this creative destruction idea.
Obviously it's not a tenable position politically. You can't advocate depressions as solutions to problems as viable policy. It's a dangerous sort of thinking.
But it may be in the future that policy makers are going to have to consider more openly whether the level of intentional interference we've had in the markets in recent years really was constructive or not.
Would a mild liquidation in 1996 or 1998 have been productive?
I think in retrospect we might be wishing we had just that.
Government should strengthen the social safety net, and stop there. When you compare the handouts for business, banks, etc; the amounts used to extend unemployment look like chump change.
By the way, with a proper social safety net, liquidation is not a problem IMHO. It's when there's no net that the depression/liquidation scenario looks so scary.
Uh, it's swell that the currently employed can have an academic discussion about the unemployed. I can only wonder how this discussion might change if the blunderbusties got a pink slip.
I'm currently collecting. Geez whiz, I sure wish I got unemployed earlier so I could fully enjoy the cleansing that spells of unemployment do to my attitude.
BTW CR, in my mind the issue here that merits the greatest concern is simply this:
It seems to me that the people who've been arguing that "any attempts to avoid liquidation will simply make things worse in the end" so far have been right about more things then the people claiming otherwise.
My observations may be wrong or simply biased, but IMO that's the thing that should make peoples' hair stand on end if nothing else.
What if these people are right and we've been doing exactly the wrong thing all along?
The mild liquidation we had in 2002 was productive. The liquidation we're beginning to have now is productive, and a return to 1998-2000 prices in the housing market (which were overpriced then but have been overtaken by long run fundamentals now, probably) would be productive. It's always productive to write down, write off, and get over nonperforming assets, be they loans, businesses, contracts, employees, or government programs.
The reason Japan comes up in these discussions is that their "lost decade" (really a decade and a half now) resulted from the use of permanent fiscal stimulus and shoddy accounting to prevent that writing down and writing off. In other words, exactly what Obama, Clinton, and to a lesser extent, McCain have been exhorting as good policy.
It isn't. It is a way to make government more powerful, which is what you'd expect from statists like everyone in the American political class these days. Paulson (Read: Goldman) doesn't want free markets, he wants the government to protect his firm's profits. Bankers saying they want regulation isn't an indication that there's been a sea change in opinion. It's an indication that regulation works for bankers.
At the expense of common stockholders, meaning yours and my retirement money in 401(k) accounts and pension funds.
Almost makes you wish for a Ron Paul; except that he's a nutball who wants to abolish the Federal Reserve and the IRS entirely. Too bad there's no one in politics willing to actually defend free markets rather than use them as a cover for Right-leaning statist tendencies.
By the way, with a proper social safety net, liquidation is not a problem IMHO. It's when there's no net that the depression/liquidation scenario looks so scary.
Is a safety net even possible though if things go too far? What if this safety net is based on promises that can't be realistically realized?
For example, lets say we start aggressively trying to assist those who are losing their jobs and homes by deficit spending and raising taxes, and this simply is counteracted by an upheaval in the bond markets and a flight of businesses to friendlier shores.
I think it's dangerous to assume that having a functional safety net is as simple as wanting one.
I'm more inclined to believe that such a safety net may gasp require saving and running budget surpluses during the good times so we can justify deep deficit spending and maybe tax cuts during the bad times.
We just don't think that far ahead, and I believe that's the real problem.
Have the people on this board lost their minds? We have massive wealth and income ineqwuality in this country with the Deca-millionaires owning a larger chunk of the nation's wealth than they have since before the Great Depression. There will be plenty of time to rebuild the public balance sheet trhough progressive tax hikes and other redistributive measures later. Now is the time to keep the recession from destroying vast numbers lives and that requires a stimulus to keep society from falling apart while the rebalancing takes place.
Just because you need to slow down does not mean that you put your brake to the floor.
A large portion of Japan's attempts at fiscal stimulus during the "Lost Decade" was hosed away on public works projects that had no hope of increasing productivity later. For example, the bullet train line that was built between Tokyo and Nagano for the Winter Olympics was extremely expensive and once the Olympics were over, there was no traffic volume to justify the investment. Nagano is a small, remote town.
Japan should have invested the fiscal stimulus in R & D with a chance of generating future growth.
A good chunk of US fiscal stimulus during the Great Depression generated massive future productivity gains. For example, building of hydro projects in the Pacific NW provided a water source for massive increase in ag production and massive amount of cheap electricity that facilitated aluminum plants, aircraft plants and other industry.
After the communist economies collapsed in 1990s, the countries that had shock therapy fared better than those that wanted to postpone the change. Nevertheless, the governments that imposed shock therapies didn't fare well. So shock therapies are good for the countries and bad for the politicians. Therefore, we already know which path will be chosen.
Is a safety net even possible though if things go too far?
If things go "too far", then heck, we're all screwed. But in order for that to happen, we'd need something on the order of a nuclear holocaust.
I have never believed that there isn't plenty to go around for everyone. Especially if we get creative, and work at it.
However, I am not just advocating endless cash handouts. In extreme circumstances I would like to see more food, shelter, clothing, and medicine made available directly to people.
Allow normal unemployment cash benefits for a while, and then mandate that they work at least part time making stuff we need in exchange for material benefits. If they don't work, they won't eat.
In regards to "short bucky", I only know of a few mutual funds, such as DXDDX. Is there any higher-yielding yet safe alternative?
Well the alternative is to go long other currencies which you can do with ETFs like FXE and FXY, etc.
Again, do so at your own peril and keep in mind that the dollar has already been pounded into oblivion against some of these currencies and some of them (like the Euro) may not really be that much better off than bucky.
Gee, our men and women in uniform have nothing on the macho toughness of overweight middle-aged men typing at a keyboard. Who will squeal like pigs when their employers decide that the fat is them, what with all the time they spend on the intertoobs.
I always think of it as a play on words of "Get Shorty" but could be wrong.
it means, as others have stated, that current fiscal and monetary policies are destined to exacerbate a decline in the dollar. thus, one should short the dollar in order to make money.
There won't be a rebalancing without a debt unwind. Now you and I probably differ on the relevance of income inequality (I don't think it is relevant to public policy, period), but that isn't the point. Fiscal stimulus just puts off the inevitable; instead of unwinding debt due from the relatively poorer, it allows the poor to keep paying it off (IE - it enriches the lender, not the debtor).
Bad debt is bad debt, and shoring it up with government debt is folly.
I agree that the fiscal stimulus in Japan was in many ways wasted. But even their fiscal stimulus was less foolhardy than $600 flat rebate checks or extension of unemployment benefits.
Even stupid infrastructure projects are better than nothing.
In no particular order here is a synopsis of this years conference:
No one has any idea when we will reach a bottom simply because no one knows how many classes of real estate are going down. The most optimistic guess was 2010 but most wouldn't even hazard a guess. Some of the grey hairs think 5 or 6 years.
The problems in the residential side are quickly spilling over to the commercial real estate market.
The spread between bid and asked prices is as large as the Grand Canyon. Banks and particularly the community banks can't afford to take the write-downs the bid price implies.
Aside from say multi-family and really solid income producing properties (producing solid verifiable income now, not projected income) there is no debt available. There is lots of equity looking for 20% and up returns. Since these will have to be largely unleveraged, the asset price required to deliver the return is abysmally low. Further driving down implied valuations is the fact that the equity is Wall Street money with 3 to 5 year time horizons. No one thought that was achievable (with the exception of the Wall Street boys in the audience, of course).
The complicated capital stacks of the past are history. Simplicity is in and you can kiss non-recourse goodbye.
Builder lots are selling for improvement cost or less. Basically, the land is free. There is no debt available and the volume of transactions is approaching zero.
Small and mid-level banks are in trouble. So are the big boys but the govies will take care of them? Several of the deal guys said that banks they contacted three months ago about buying assets are all of a sudden calling back. Three months ago they said everything was fine. The idea du jour is to buy the bank to get the banks real estate. Sounds screwy to me but I'll write some more about this one tomorrow.
Most think this is a credit driven problem, not a supply problem which was the case in 1991. They think the crunch is really going to start hitting when commercial loans mature and need refinancing. Unlike 1991 there is lots of equity on the sidelines which is a good thing. The bad difference from 1991 is that we got into this mess with a good economy not a recession. So if the economy goes south it could get real rough.
Banks have been rewriting their loans and creating new interest reserves to keep the Zombies alive. The regulators have said full stop.
The big buzz word is a "value added" as in look at my Excel spread sheet and how it shows us increasing rents and occupancy and how much money we will make with which to pay you back. Most of the fund providers aren't buying.
Underwriting is getting tougher and tougher. As one participant said, "if you have financing take it and close the deal NOW."
Mezzanine is going to be important as the level of available senior debt in the capital stack shrinks. Most Mezz lenders now only going up to 85%. They are also adjusting any appraisals by five to ten percent.
Lot prices in the hardest hit areas are back to 2000 to 2001 levels.
There is an absolute disconnect on valuations among buyers, sellers, senior debt, mezzanine and equity. Thus no deals are coming together.
Appraisals are good for no more than a month as values are deteriorating so rapidly. Some felt that the appraisers were only picking up sales comps and missing the comps that could be derived from note sales. Basically, no one trusts appraisals.
The Indy Mac performing loan sale that was reported to have been done at about 60% of asking price has fallen apart. Most of the bids at the 60% level were withdrawn after further due diligence. The actual prices the stuff went for is between 20% and 45%. By the way Indy Mac had current appraisals supporting their asking price.
The Wall Street Wizards are proving to be particularly inept at working out real estate problems. Essentially, they donât know anything about operating real estate. On top of that, many of the banks don't have expertise so there seem to be a lot of bad decisions going down (much more about this later).
Things are going downhill so fast that deals that were struck 3 months ago need to be restructured.
Finally, the conference concluded with a representative from the Fed and one from the Office of Thrift Supervision. They dodged, weaved and evaded the hard issues. My take, reading between the lines, is that they are scared to death. Again, I will expand on this in the next couple of days.
I AM VERY INTERESTED IN BUY A LUXURY CONDO IN LV AT THE BOTTOM. ANY COMMENTS ON THE LV MARKET WOULD BE APPRECIATED.
However, I am not just advocating endless cash handouts. In extreme circumstances I would like to see more food, shelter, clothing, and medicine made available directly to people.
My philosophy is that the "safety net" should simply be the set of goods and services that enable people to become and remain productive members of society.
"Single-payer" health care. Efficient mass transit infrastructure. Education loans repay schedules scaled to post-college income.
Draconian taxation of rents (to deter speculators from monopolizing housing stock) would fund a lot of this socialism.
It seems to me we have had one in office for 8 years and I wager that you voted for him at least once...
I would say Ron Paul is looking smarter every day now..Of course he always was, thats why they wouldn' let him debate...
I believe you had to much brandy el presidente..Better to sip it on the beach with a fine young lady in Cabo then throw out adjectives that don't make dollars or sense...
tyvm Seattle Sun. A lot of comfirmation on things I had heard or guessed but hadn't seen strong statements from reliable sources on. Especially interested in points three and nine. By "regulators have said full stop", do you mean they're supporting the futzing, or calling a halt to it? Hopefully, and I assume, the latter, but you never know.
Oh no, here comes single payer health care to invade another perfectly reasonable thread.
My 2 cents. Gov't safety nets are not safety nets. They are moral hazard writ large. Is unemployment possible? Yes. So insure YOURSELF against it. Why should someone else insure you against a real possibility?
This country is all spend, spend, spend until the Wile E. Coyote moment. Then comes "Uncle Sugar! Bail me out!" Kida sick of it really. This country deserves a good, sharp kick in the arse. I suspect the kicker is warming up at the moment.
I agree that the fiscal stimulus in Japan was in many ways wasted. But even their fiscal stimulus was less foolhardy than $600 flat rebate checks or extension of unemployment benefits.
Even stupid infrastructure projects are better than nothing.
I think this shotgun stimulus approach is no different than blanket rate cuts.
It seems that the money simply goes where it's not needed or is spent in a way that simply repeats the mistakes of the past.
Again, perhaps when people misuse money the solution is to take it a way for a while, not give them more.
When somebody robs a bank do we pay them money not to rob banks in the future? Seems like if we pay people to rob banks that's just going to encourage more bank robbing.
Quote from California's EDD website:
"Unemployment Insurance (UI) is a nationwide program created to provide partial wage replacement to unemployed workers while they conduct an active search for new work. Unemployment Insurance (UI) is a federal-state program, based on federal law, but executed through state law. Employers finance the UI program by tax contributions."
However, I believe that the "extended" benefits are not funded from the employer "contributions", but are a transfer from the bottomless (apparently) money-pit.
More interesting to me is that congress waived the "old" requirement that extended benefits be directed to specific workers in specific industries (Detroit area auto workers in 80s, California migrant farm workers after the citrus freeze of Dec '90). The later instance was the first time that extended benefits were granted to a group of workers, where the potential recipients were unidentified in advance (though they were required to be legal residents, as is the case with all UI and DI recipients).
I voted for Al Gore in 2000 and John Kerry in 2004, for what it's worth. I don't necessarily think our current Prez qualifies as a "nutball", although I can't say his policies could have been worse if he was. I've never seen such enthusiasm for spending government money on dumber things. He get a point for vetoing agriculture subsidies, though.
I described Ron Paul as a "nutball" only to the extent that his policy prescriptions seem to outrun his libertarian agenda. There's no real reason a libertarian should dislike the Federal Reserve; although certainly one could disagree with the role the Fed plays in the Bernanke era. Even a relatively hard core libertarian probably thinks the government should have some money (hence the need to collect it, and the IRS). Destroying institutions without necessity is "nutball", not the principles Paul espouses, which I respect.
This is a topic expansion of an article I wrote last night about the IMN Conference on Distressed Real Estate.
One of the recurring themes throughout the conference was that the commoditization of real estate by Wall Street is turning out to be a disaster. While it certainly applies to residential real estate the criticism is primarily directed at the commercial sector. In a nut shell, the argument is that while the various funds, private equity sources and banks were quite good at creating complex financial structures with elaborate financial projections and raising untold amounts of money, they are woefully short of experience in the operational aspects of real estate. Hence, the workout process is taking place in an environment that is completely divorced from the needs and requirements of the asset underlying the paper.
A number of speakers recounted incidents in which they had approached financial institutions that had taken back real estate or were on the verge of doing so with an eye to buying the asset. When substantive issues about say extra remedial work needed to bring a partially completed building to completion and the consequent effect on valuation, the would be buyers were met with either disbelief or incomprehension. Similarly, concerns about vacant space in shopping centers or uncompleted phases tend to be brushed off as leasing opportunities.
The representative of the Office of Thrift Supervision, a true veteran of several of these busts, was of the opinion that the banks were woefully staffed in their REO departments. She expressed the opinion that the logical progression and decisions that need to be made on alternative REO disposition strategies were not being made. Of particular concern to her was the tendency among the banks to put the workout into the hands of the loan officers responsible for the loan at its inception. She stated unequivocally, that this was an unacceptable practice.
I had frankly not thought too much about this aspect of the problem. After the discussions at the conference, I appreciate that it is a real problem. Many years ago, the individual that made or recommended a loan was likely to have spent a good part of his career having made loans to other participants in the industry. He or she had a good working knowledge of the operational aspects of the business they were lending into. When the road got bumpy there was a recognition that certain steps needed to be taken to preserve the value of the asset and not to do so would render the value of the collateral worthless. Essentially, over negotiating the numbers while the asset wastes is a fools errand.
However, if you have no industry well of experience to draw upon, then it may not be possible to recognize the point at which you need to bring the back and forth to an end and salvage what remains. That same lack of experience can seriously impede negotiations as the asset owner with little experience has no means of knowing if the issues the prospective purchaser raises are just negotiating tactics or are of such significance that the disposition strategy and price need to be reconsidered.
There is no doubt that real estate is a complicated business. From entitlement, to construction, to maintenance and leasing a vast array of talents needs to be brought to bear to make it work profitably. To the extent that the financial institutions that find themselves the unwilling owners of property dont realize, appreciate and understand the complexities then the problem is going to take longer than necessary to work out and the losses will probably be greater than necessary.
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I would say Ron Paul is looking smarter every day now..Of course he always was, thats why they wouldn' let him debate...
Ron Paul is a genuine conservative, that's why he's such a threat to the clowns that go masquerading around as conservatives today. They're frauds and Ron Paul (despite his flaws) gives a point of reference for people to point that out. For that reason he's more of a threat to the Republican party than any Democrat today.
Was that Las Vegas conference the one that generated hundreds upon hundreds of spam messages? I'm surprised nobody showed up there with a few hand grenades.
Ron Paul is a student of monetary history. He understands that debt backed fiat causes booms, bubbles, and busts, that is why he dislikes the federal reserve. Not to mention it is unconstitutional.
The government needs to collect money using the powers granted to it by the constitution. This would limit the size of the federal government, and give the people more power to keep it in check.
The faults of our current form of governance exist from failure to follow the constitution(rule of law), not from the rule of law itself.
I can't believe after all that has happened, that people still think the Fed is necessary, or even acceptable. Just shows people's ignorance towards history.
The question really is how have you f'd up your life SO bad that you require it.
Working poor? Working skilless is more to the point. There are endless (many subsidized by the state btw) to increase ones skillset. Do so.
Last Friday I had the pleasure of talking to a lovely young lady that Cisco sent me. Her card read CEO. She wasn't a salesman. She's been in business since 1999. English is her second language.
If the unemployed could find a job in this economy they would work.
I agree with you. The unemployed are generally not unemployed because they want to be.
I am not suggesting that we starve the unemployed, rather that we setup a system like WPA/Davis-Bacon to ensure that people can do something if they hit rock bottom. And this is after a reasonable period of cash benefits.
However, I would not make this just busy work - the work would have to have real value. Something that would actually relate to the benefits they need: food production, for example.
Structured Finance is not the problem; unstructured finance is the problem. Complexity is perfectly acceptable if it is transparent to the specialist; if an MBA can sit down with the appropriate prospectus and income statements and tell you a day later or better yet an hour later who holds what risk and what the status of the underlying collateral is, there is never a problem - no matter how much risk or leverage is involved.
The problem with the last few years is that no one set up the systems to deal with the credit stack; there wasn't a database you could type the name of a security into and get the relevant information.
There should be. A buyer of mortgage backed securities should be able to get at the touch of a button a list of the mortgages to which he is exposed, and the exposure. That is child's play in programming if the data is entered (and it would have been in the origination process).
The problem is not risk. The problem is the inability to price risk. The players chose to treat their own inability to properly estimate risk as an indication that there was none; that, in other words, Countrywide, the buyers, sellers, realtors, and appraisers were all honest enough and competent enough to protect them.
Which is silly. I hope we have credit stacks again; I fervently hope we don't treat this as a cautionary tale about credit rather than a cautionary tale about people.
U.S. Treasury Secretary Henry Paulson will reveal more details about his accelerated plans for the Federal Reserve to assume a larger regulatory role in maintaining financial system stability in a speech in London on Wednesday.
Let's try this again. No one is denying that debt unwinding is inevitable. That does not mean that we cannot keep society from falling apart while the rebalancing happens. Hence measures such as unemployment insurance extensions, revenue sharing to the states to keep vital public services running, infastructure projects to keep people employed while rebalaincing occurs (it's not as if we do not have a large number of projects that would need doing anyway), can save families and communities from being obliterated by poverty and the misery, suicide and domestic violence that often accompany widespread unemployment.
As for income/wealth inequality, I would have thought the relevance here was obvious. The ultra-rich have a much greater proportion of the national welath than they have historically have had. That excess wealth can be tapped to repay this debt (either the debt used to finance the stimulus or the debt that we are trying to unwind).
"The problem is not risk. The problem is the inability to price risk. The players chose to treat their own inability to properly estimate risk as an indication that there was none; that, in other words, Countrywide, the buyers, sellers, realtors, and appraisers were all honest enough and competent enough to protect them."
I'd add the caveat, that due to FFR rates below inflation, and the need for many institutional investors to buy into "AAA" paper, that risk question was pushed into a corner and told to be quiet.
el presidente, i must take issue with this:
"There should be. A buyer of mortgage backed securities should be able to get at the touch of a button a list of the mortgages to which he is exposed, and the exposure. That is child's play in programming if the data is entered (and it would have been in the origination process)."
This has always been the case from the beginning. All attempts to make this happen will be thwarted. Unfortunately, the usefulness of opacity for padding bonuses (on both the buy side and the sell side) prevent it ever becoming transparent. If forced, they will simply lose interest.
You redistribute it to repay debt, provide assistance to help people while reblancing occurs, let the wealthy take hits from a repeal of the Bankruptcy Reform measures, and/or impose reserve requirements on private equity and hedge fund investments in the U.S. and have the Fed Sterilize it by buying Treasuries. All of these masures reduce income inequality and either help with reblancing or reduce the social destruction of rebalancing.
Well I would not call it free money. My job went to India last December. I was making 97k a year. I'm forty five years old and have been employed since I was 15 years old. Every employer that I have worked for has paid employment insurance while I was in their employ. Whether you like it or not, that money came out of my pocket, even though my employers paid the fee. It was part of the cost of my employment.
This is the first time I have drawn un-employment. I look for work deligantly but needless to say the job market is tight.
So those of you who think that this is free money....it is not. I get 404.00 a week. I will now get it for another 13 weeks. I doubt that it will come close to what I have paid into the system over the past 30 years.
The ultra-rich have a much greater proportion of the national welath than they have historically have had. That excess wealth can be tapped to repay this debt (either the debt used to finance the stimulus or the debt that we are trying to unwind).
jalrin | 06.30.08 - 2:38 pm | #
Right idea wrong class. The middle class for the most part has been good boys & girls and has been trying to save in IRA's 401K and ultimate middle class dream of the suburban home. These savings are being accessed as we speak by 140 oil and high commodity prices while declining prices in stocks and housing.
So those of you who think that this is free money....it is not. I get 404.00 a week. I will now get it for another 13 weeks. I doubt that it will come close to what I have paid into the system over the past 30 years.
Plus, in typical asinine fashion, these benefits are taxed as regular income. So take home after that $400 bucks, is well, quite a bit less...
Again, unemployment benefits pale in comparison to the handouts the banksters have been getting!
Is unemployment possible? Yes. So insure YOURSELF against it. Why should someone else insure you against a real possibility?
This is a callous and short-sighted world view.
First of all, one may not be able to save enough money before one becomes unemployed.
Second, if one buys unemployment/disability insurance from a private company, then this private company will do EVERYTHING in its power (legal or otherwise) to deny you the payments IF you actually become unemployed or disabled.
So government safety net is a must for any humane society.
Or do you advocate a society not unlike the ancient Sparta where anyone with any kind of physical imperfection was thrown off the cliff?
I have little sympathy for the poor. I've been there, and can say without fear of contradiction, that it was my fault.
You are not thinking straight here. The world simply does not have enough resources to keep everyone rich. If you suddenly educate everyone then the only thing that would change is you would have PhDs cleaning toilets instead of illiterate people cleaning toilets.
Being poor cannot be thought of as someone's "fault". Someone MUST be at the bottom in a ladder society, like ours.
Melidere said:
"This has always been the case from the beginning. All attempts to make this happen will be thwarted. Unfortunately, the usefulness of opacity for padding bonuses (on both the buy side and the sell side) prevent it ever becoming transparent. If forced, they will simply lose interest."
Obviously, I don't disagree that that is how it happened. But it isn't how it has to happen. A race for the bottom isn't a foregone conclusion. Let me tell a story.
Back in the late 1990's and early '00s, Web advertising got progressively more intrusive, blatant, and everpresent. Brighter, flashier, pop-up-and-underier. But then something happened. A bright spark company (Google) decided that it would market its service and restrict ads based on relevance and unobtrusiveness. Because the service was meaningfully better as a result, it became the standard, and Google became the biggest success story of the decade.
I'm not trying to imply that all the mortgage market needed was a Google (or Google itself); I'm just suggesting that principal-agent problems are capable of resolution if someone is willing to sell the superior product at a lower margin. The real culprits in the risk-pricing part of the debacle were the rating agencies that called trash triple A.
Jalrin said:
"You redistribute it to repay debt, provide assistance to help people while reblancing occurs, let the wealthy take hits from a repeal of the Bankruptcy Reform measures, and/or impose reserve requirements on private equity and hedge fund investments in the U.S. and have the Fed Sterilize it by buying Treasuries. All of these masures reduce income inequality and either help with reblancing or reduce the social destruction of rebalancing."
Leaving aside the "political" issues (like how we define social destruction and rebalancing), the problem here is that income redistribution per se is the problem. Giving out free money in benefits, $600 checks, or make work jobs prevents the people in question from being faced with the hard questions and going out and getting productive employment that will add value for the long term.
Caveat: Every policy has a counterexample. Hank Jestor sounds like exactly the guy who ought to get unemployment benefits extended. That doesnt' mean extending them generally is a good idea.
CR, the last 'intervention-free' liquidation was the Post WWI recession, which I read was particularly ugly (double digit unemployment, I think) but mercifully short.
In the Great Depression, Hoover intervened -- jawboning and action -- all the way down from '29 to '33. FDR continued such, forestalling the recovery.
For this Greater Depression, I heartily recommend fast and thorough liquidation: try it, you'll like it.
M.I. said:
"Being poor cannot be thought of as someone's "fault". Someone MUST be at the bottom in a ladder society, like ours."
Ah, but if someone has to be at the bottom, then why do we worry about them being there so much? and if life is nice down there, why would they bother even trying to better themselves?
If? "Far more people are worried about losing their jobs than will actually be laid off in this downturn - and if all these people pull back sharply on their spending, then the layoffs might become a self fulfilling prophesy."
If my aunt had @@%#%, she would have been my uncle.
"If"? This is a sealed deal. It is human nature to pile on. Nothing will stop it.
This happened in the opposite direction when Bill Clinton was challenged with his immorality; the people piled on and chose the chimp as he claimed he was moral and a "uniter".
We are human, the last time I looked. Nothing less than a full rout and capitulation will stop this massive turn.
Projections of moderation repeatedly are proven incorrect. Is this another?
It is so very sad what we have have come to in this country. All of the people who receive unemployment benefits where involuntarily laid off. They are hard working people who went to work, worked hard and due to a decision of a corporate suit are now unemployed.
My company had 1700 employees before it laid of 55 percent of their workforce. Most of whom had over 5 years with the company. I personally put in 65 hours the week before I was notified.
Continue to speak of us as though we are different than you.....we are not.
PS. The CEO of my company took a million dollar bonus last year.....
Ah, but if someone has to be at the bottom, then why do we worry about them being there so much?
First of all, we worry not about them being there, but about how bad their life is.
We worry because it's important what your bottom looks like. You don't want to reach the point where people at the bottom live in starvation. We are a ladder society, but we can adjust how steep that ladder is.
"Ah, but if someone has to be at the bottom, then why do we worry about them being there so much? and if life is nice down there, why would they bother even trying to better themselves?"
That's ok...when this cycle is finished, most of you will be down there with them. They have been training their whole life to struggle to make it.....just wait until they start knocking down your doors.
Social destruction in this context is not hard to describe: When people are shoved out of work and cannot find replacement employment because of a bad economy, all sorts of really bad things happen. Things like higher suicide rates, increased domestic violence, increased social alienation, people not being able to pay for basic medical care resulting in higher disease levels, malnutrition, etc. Rebalancing is also straightforward: a reduced current account deficit and lower levels of indebtedness. Our gracious host's comment about time healing wounds is on point here. The goal of all of this stimulus is to keep people from drowning until this mess is over.
I also fear that I am detecting a delusion that people can just will into being good jobs for themselves regardless of pesky things like aggregate demand not being high enough to actually justify all of those jobs in the absence of stimulus. Our nation is, well, a nation not a collection of hedonists who can prey on one another at will. As such, we cannot throw our most vulnerable citizens to the wolves and the excessive wealth that our high and mighty use to corrupt our society to their benefit can and should be used to solve this problem (this will also make it harder for our masters of the universe to lobby their way into a repeat of this mess).
PS: in my own field (law), the lawyers doing the most useful work (representing abused children, victims of civil rights violations, domestic relations lawyers, etc.) are doing a lot worse then lawyers whose elaborate corporate structures would not really be missed by society nearly as much as dead children will be. Their clients are richer than abused children but that is not a reflection on the children or their advocates unless one decides to embrace the sinful and uncivic notion that wealth = worth.
Jeers, Misean. Music links, good; thinking that at least half the world (yes, that's how many poor we have) share your fault-filled past, not so much.
Wouldn't have barked about it so much except that such narrow-minded projections about other people's faults/responsibilites -- damn all the contrary reality -- got us into a stunning mess of a war and of an economy.
My notion is not that wealth = worth, just that wealth is a good thing. I happen to be an attorney as well (by God there are a lot of us-) but I wouldn't characterize one attorney's work (or one nonattorney's work) as "most useful" or "more useful". I don't think that representing "victims of civil rights violations" is more meaningful or useful than representing "bond salesmen" or "personal injury plaintiffs". Each seeks redress of their clients' greivances or negotiated contracts in their clients' interests. Their pay reflects not their moral worthiness but their economic usefulness.
And judging from historical evidence, society misses dead children very little.
Now I'm not trying to argue that any of this is right or wrong; quite the opposite. Right and wrong don't come into it. We can argue back and forth about what we qua voters (meaning as a democratic society) want to do for or to members of our society. Elevating government policy or economic outcomes to the level of moral decision making is like calling a child counting his toes a PhD in mathematics. It's a mistake of quality -and- quantity.
[As a side note, you are of course correct that aggregate demand would have to fall below a full employment level during the unwind period. But allowing it to do so is precisely what permits the unwind to occur. If government borrows money and gives it away (or takes it from rich individuals and gives it away) to support aggregate demand, it defeats the purpose. In other words, yes, I'm trying to cause a recession.]
Alo said:
"thinking that at least half the world (yes, that's how many poor we have) share your fault-filled past, not so much."
I strongly suspect that all of us share a fault filled past (some of us have ministers who insist on it, no less). Some of us, myself included, merely got lucky enough that our faults did not harm our economic status (too much!).
More to the point, you run into a problem of definition. If half the world's population is poor, then the median income is the poverty line. Which sounds a bit inclusive. Most readers of this blog probably spent a few years or a decade living on an income below $30,000.00 in current dollars at some point, even if not perpetually (remember graduate school, you M.B.A.'s?) so I doubt the problem is one of imagination.
El presidente, how charitable of you to put your fork down to address the downtrodden with minced words about how "all of us are at fault" and that "there is no poverty if everyone's poor."
Orwell could crib a lot of good stuff from that post. Way to afflict the afflicted.
"They are hard working people who went to work, worked hard and due to a decision of a corporate suit are now unemployed."
I'm with Hank on this one. Highest benefits in NYC are around 400 per week...not the stuff of carefree living. And is there anyone who thinks that corporate America has distinguished itself beyond short-term thinking, inability to assess risk, gimcrack accounting, and a general contempt for employees and shareholders?
I wish you the best Hank...I was laid off in the third round at Morgan Stanley in 2002, and started my own little biz on a shoestring. It's worked out well for me. If you can hire yourself, do so.
Alo said:
"El presidente, how charitable of you to put your fork down to address the downtrodden with minced words about how "all of us are at fault" and that "there is no poverty if everyone's poor."
Orwell could crib a lot of good stuff from that post. Way to afflict the afflicted."
The second quote is a misquote, but no matter. The real problem is that I was making a statistical point, not a normative one. The point is that "poor" is a relative term that doesn't mean anything until you assign it a meaning. You assigned it a meaning that included half the world's population.
Also, that would mean people making $400 a week, in unemployment benefits or otherwise, wouldn't be poor. More than half the world's population lives on less that $400 a week.
Which probably means Americans, rich and poor, should whine less and [work and enjoy the proceeds thereof] more.
Whining appears to be the new national sport. OK, let's say we're in a recession (the data isn't conclusive, but let's say we are for the sake of argument). So? They happen on average every 7 years or so. You're supposed to put something away during good times to tide you over through bad times. That advice goes back to The Bible and probably before. If you didn't, don't blame Bush, Greenspan, Bernacke, look in the mirror.
BTW, I actually support the extension of unemployment, as I said above, but can we please just stop the whining on all sides?
The internet was supposed to open new vistas. Mostly it's just given the cranks a bully pulpit and magnified each and every up and down into world-ending crises.
Interesting that "whine" is now the preferred term to describe a freshly chopped employee who suffered a corporate mugging who chooses to express himself. Hank noted that he finished a 65 hour week, then today...the door. No heads-up, no warning, nada. He never said he didn't have savings. And yes, he's not a Bengladeshi peon.He's also not dead. I'm sure he'll find both bits of info very cheering.
So, Hank still believed there was a social contract in force. There isn't. Now he knows. But before you cheer too loudly remember that you and yours still live here, presumably, and without the middle class and that social stability, the great unwinding may be not just ugly but violent.
So while you're chortling, do remember to sign up for target practice.
Hank is not the one whining. He is justifiably pissed off at getting a raw deal. Everything possible should be done to help Hank, including extended unemployment, job hunting assistance or retraining. Layoffs happen, in good times and bad-they are not even up much now over the average of the last few years-and the individuals affected should have whatever help they need.
The whining is by the people who come on and berate us about how EVERYTHING sucks and Greater Depressions and Bernanke this and blah, blah, blah. Sure as shootin' their pity party isn't helping Hank.
I guess the concern about the increase in the suicide rate that results from recessions is mere "whining" because we all know that people making poverty level wages can easily sock away a large investment portfolio that no layoff, medical crisis, or family problem could knock them down (not to mention that children can choose to belong to families with such portfolios).
The fact that we have recessions regularly is all the more reason to make sure that we keep people from going under, especially when we have to choosen to reward the wealthy at the expense of working people for so long.
Apparently, this includes stealing (taxes), kidnapping (for those that resist the stealing), and killing (for those that resist the kidnapping). All of your arguments about wanting to help people are tainted by the fact that you don't care HOW it gets done. There will be collateral damage (stealing from the innocent) with your broad-brush approach to attaining social justice, because not everybody, not even all the rich, wronged the unfortunate people who are out of work. It's just easier and more convenient to say, "pay for it with taxes."
A truly charitable person gives his own money to those in need. Anybody advocating forced redistribution on a mass scale (rather than in repayment for a crime) is simply trying to push their world-view at the point of a gun.
That, el presidente, is a hard-core libertarian viewpoint.
Well it would seem that there are many people who have forgotten why we have a government. I will restate once again. Unemployment benefits are provided via unemployment insurance. This insurance has been paid by every employer that I have been employed for thirty years. That is a cost that has been born by me through my employer. Money that could have been part of a higher a salary if not required by the government.
I do not seek charity....would not take a penny from my own mother to help support me and mine.
I was born in Wyoming and have had a gun in my hand since the time I was four years old. I was a Nuclear Power Electricians Mate in the Navy and have most recently worked as a SOA architect from my home for the last few years. There is nothing that I can't fix with my own hands.
This program helps reduce the financial fear for these workers.
This is paltry help compared to workers actually saving money to cover life's inevitable setbacks. If the program were not in place, though, some people would not rise to the occasion and save money, so I understand the program's purpose. It just seems a shame that people need to rely on something like unemployment benefits.
Self-fulfilling prophecies seem to all the rage lately.
Why hasn't Bush lifted the Executive Order ban on off-shore drilling? Hard to believe that hasn't been done to put pressure on Congress to do the same.
more free money for all!
glad Conservatives are for small Gov.
I am thrilled to see how much of your GDP is real or just "financial Engeneering"
Far more people are worried about losing their jobs than will actually be laid off in this downturn - and if all these people pull back sharply on their spending, then the layoffs might become a self fulfilling prophesy.
That's really the catch-22 isn't it? Really what the US economy needs to become stable in the long-term is less spending and more saving (i.e. a shift from consumption to production) yet the terror of a decline in consumption is so great that we can't allow one to happen lest it turn into a death spiral, so we punish people for saving to stop the kind of adjustment that the economy really needs to remain viable.
Is there really no way out?
glad Conservatives are for small Gov.
They're for big government spending but small government tax collection.
IMO the worst of all scenarios.
Maybe call it "Wile E. Coyote Economics"?
Cool, more handouts paid for with debt. I am almost sure this won't end well.
CONservatism has been exposed as a sham to transfer wealth from the many to the few. Same old story, just a different name...
There is a way out. It's called "Taking your medicine", or in other words, permitting a recession. Unfortunately, it's an election year, so that isn't going to happen (it seems like every year is an election year these days).
Fiscal stimulus is foolish as a means of propping up demand at an unsustainable level. It would need to be permanent, like Japan's. Our problem is debt overhang, which is solved by servicing debt, which means permitting a fall in demand in the short run (IE a recession).
This isn't the end of the world. Nor is extending unemployment benefits (thereby encouraging the unemployed to avoid a serious job search for another three months) helpful. The economy needs a recession every now and again to kill the bad debt, the overpaid workers, and the unnecessary workers.
Then capital, workers, etc., are freed to work on useful things developed during the recovery. That's why we didn't have much of a recovery in 2002-to date. Not much of a recession, the labor market stayed tight, and the debt didn't unwind.
The problem isn't that people are afraid of spending now; the problem is that people are afraid to start a business now! What sort of fool would bet their livelihood on the government continuing to dole out rebate checks ad nauseam?
Here's one vote for a course of really tough chemotherapy for this patient. It's going to be tough and won't be pretty, but how else are you going to deal with the cancer?
Are ponies included?
AC writes: "Is there really no way out?"
I agree, it does seem to be a pick-your-poison conundrum. But, I would prefer the "shift from consumption to production" model over the current spend-as-if-our-lives-depend-on-it model we are currently reaping the fruits of. Short-term misery for long-term stability. But what do I know -- I'm not an economist.
i'd rather the unemployed get the money then defense contractors.
My UNCLE SUGAR.. Wow, I get another 13 week vacation, my stimulas check with the prospect of more to come?
I feel like a Frenchman!
ac, time heals all wounds. Put in prudent lending standards - and time will take care of most of the problems. This assumes it is better for most people to just limp along for a longer period, than to have a complete meltdown.
Of course there will always be the calls to "liquidate everything" and start over - but that didn't work too well the last time it was tried.
Best Wishes.
How's the ABX Index these days?
Anyone have a link?
Thanks.
Rising Asphalt Prices Slowing N.J. Repaving
Rising Asphalt Prices Slowing N.J. Repaving - cbs3.com
Motorists may want to double check their shock absorbers.
That's because high asphalt prices are causing area transportation officials to put off repaving roads and reduce the number of potholes that crop up annually.
In Bergen County, for example, the growing cost of asphalt means the county has plans to repave just 23 miles, instead of the 32 miles it initially planned.
Asphalt is made of an aggregate, stones or gravel, and a binder, a tarlike substance that's crude oil-based.
This is one of the few stimuli (stimuluses?) enacted recently that actually makes sense, as it targets those who actually need it.
Ross, we are all French now.
Employment vs Budget Spiral??????
Cost of Asphalt Rises, Affecting Repaving
Cost of Asphalt Rises, Affecting Repaving - NY Times
As the cost of asphalt, a petroleum-based product, keeps going up, state and local officials around the region are postponing road repairs that are not deemed crucial and all but halting new road construction.
In Westchester and on Long Island, the New York State Department of Transportation is working to make all necessary road repairs because of the high level of traffic in and out of New York City, said Skip Carrier, a department spokesman.
Its a question of how quickly we can get to the projects, not that we wont do the projects, he said. Its a necessary part of maintaining our infrastructure; we have to do the work.
ac, time heals all wounds. Put in prudent lending standards - and time will take care of most of the problems. This assumes it is better for most people to just limp along for a longer period, than to have a complete meltdown.
Of course there will always be the calls to "liquidate everything" and start over - but that didn't work too well the last time it was tried.
Though I often like to pretend otherwise I don't know that anybody will really be able to answer that question until after the fact.
People can point to Japan, for example, and say they didn't liquidate everything, but with the public debt they have the book may not yet be closed on them.
In fact much of the problems we're having globally may have been transferred from Japan and later the US via their monetary policy. Certainly the Bank of Japan seems to be a central actor in what's going on today -- is it possible that everything that's happening now is really a reverberation of Japan's bubble economy still going on?
While I'm not going to seriously argue that we need another great depression, I have to look at the rate of growth that was occurring in the US starting in 1933 and compare it to Japan's "Lost Decade Plus" and have to wonder if there's some merit to this creative destruction idea.
Obviously it's not a tenable position politically. You can't advocate depressions as solutions to problems as viable policy. It's a dangerous sort of thinking.
But it may be in the future that policy makers are going to have to consider more openly whether the level of intentional interference we've had in the markets in recent years really was constructive or not.
Would a mild liquidation in 1996 or 1998 have been productive?
I think in retrospect we might be wishing we had just that.
Bonjour mon collègue Français!
Government should strengthen the social safety net, and stop there. When you compare the handouts for business, banks, etc; the amounts used to extend unemployment look like chump change.
Short Bucky!
By the way, with a proper social safety net, liquidation is not a problem IMHO. It's when there's no net that the depression/liquidation scenario looks so scary.
Isn't unemployment insurance a state program?
How is the fed able to change the parameters of state uninsurance programs?
Bubba2Friday,
Go to markit.com. You will find ABX, CMBX in traunches and see the spreads.
Good luck
Uh, it's swell that the currently employed can have an academic discussion about the unemployed. I can only wonder how this discussion might change if the blunderbusties got a pink slip.
I'm currently collecting. Geez whiz, I sure wish I got unemployed earlier so I could fully enjoy the cleansing that spells of unemployment do to my attitude.
Drew, you nailed it!
More verification that government spending is becoming the economy.
BTW CR, in my mind the issue here that merits the greatest concern is simply this:
It seems to me that the people who've been arguing that "any attempts to avoid liquidation will simply make things worse in the end" so far have been right about more things then the people claiming otherwise.
My observations may be wrong or simply biased, but IMO that's the thing that should make peoples' hair stand on end if nothing else.
What if these people are right and we've been doing exactly the wrong thing all along?
The mild liquidation we had in 2002 was productive. The liquidation we're beginning to have now is productive, and a return to 1998-2000 prices in the housing market (which were overpriced then but have been overtaken by long run fundamentals now, probably) would be productive. It's always productive to write down, write off, and get over nonperforming assets, be they loans, businesses, contracts, employees, or government programs.
The reason Japan comes up in these discussions is that their "lost decade" (really a decade and a half now) resulted from the use of permanent fiscal stimulus and shoddy accounting to prevent that writing down and writing off. In other words, exactly what Obama, Clinton, and to a lesser extent, McCain have been exhorting as good policy.
It isn't. It is a way to make government more powerful, which is what you'd expect from statists like everyone in the American political class these days. Paulson (Read: Goldman) doesn't want free markets, he wants the government to protect his firm's profits. Bankers saying they want regulation isn't an indication that there's been a sea change in opinion. It's an indication that regulation works for bankers.
At the expense of common stockholders, meaning yours and my retirement money in 401(k) accounts and pension funds.
Almost makes you wish for a Ron Paul; except that he's a nutball who wants to abolish the Federal Reserve and the IRS entirely. Too bad there's no one in politics willing to actually defend free markets rather than use them as a cover for Right-leaning statist tendencies.
By the way, with a proper social safety net, liquidation is not a problem IMHO. It's when there's no net that the depression/liquidation scenario looks so scary.
Is a safety net even possible though if things go too far? What if this safety net is based on promises that can't be realistically realized?
For example, lets say we start aggressively trying to assist those who are losing their jobs and homes by deficit spending and raising taxes, and this simply is counteracted by an upheaval in the bond markets and a flight of businesses to friendlier shores.
I think it's dangerous to assume that having a functional safety net is as simple as wanting one.
I'm more inclined to believe that such a safety net may gasp require saving and running budget surpluses during the good times so we can justify deep deficit spending and maybe tax cuts during the bad times.
We just don't think that far ahead, and I believe that's the real problem.
Thanks Ross!
Ross writes:
Bubba2Friday,
Go to markit.com. You will find ABX, CMBX in traunches and see the spreads.
Good luck
Ross
It's always facinating that people who do not think they are "at risk" are in such a hurry to hurt those who are.
A previous comment stated it correctly that helping people at risk is much cheaper than the bailouts for big money individuals and corps.
Remember tricke down is pissing on somebodys head.
Have the people on this board lost their minds? We have massive wealth and income ineqwuality in this country with the Deca-millionaires owning a larger chunk of the nation's wealth than they have since before the Great Depression. There will be plenty of time to rebuild the public balance sheet trhough progressive tax hikes and other redistributive measures later. Now is the time to keep the recession from destroying vast numbers lives and that requires a stimulus to keep society from falling apart while the rebalancing takes place.
Just because you need to slow down does not mean that you put your brake to the floor.
OT. What does "Short Bucky" mean?
"I would have gotten away with it too if it wasn't for you pesky oil speculators." GroundsKeeper Ben.
OT. What does "Short Bucky" mean?
It means you should short bucky!!!
OT. What does "Short Bucky" mean?
One may want to use instruments that hedge against the US dollars decline.
In regards to "short bucky", I only know of a few mutual funds, such as DXDDX. Is there any higher-yielding yet safe alternative?
A large portion of Japan's attempts at fiscal stimulus during the "Lost Decade" was hosed away on public works projects that had no hope of increasing productivity later. For example, the bullet train line that was built between Tokyo and Nagano for the Winter Olympics was extremely expensive and once the Olympics were over, there was no traffic volume to justify the investment. Nagano is a small, remote town.
Japan should have invested the fiscal stimulus in R & D with a chance of generating future growth.
A good chunk of US fiscal stimulus during the Great Depression generated massive future productivity gains. For example, building of hydro projects in the Pacific NW provided a water source for massive increase in ag production and massive amount of cheap electricity that facilitated aluminum plants, aircraft plants and other industry.
OT. What does "Short Bucky" mean?
One may want to use instruments that hedge against the US dollars decline.
In other words, short the dollar so you make money if the value of the dollar declines.
BTW I'm not advocating that either way. I just think it's funny.
CR,
After the communist economies collapsed in 1990s, the countries that had shock therapy fared better than those that wanted to postpone the change. Nevertheless, the governments that imposed shock therapies didn't fare well. So shock therapies are good for the countries and bad for the politicians. Therefore, we already know which path will be chosen.
Is a safety net even possible though if things go too far?
If things go "too far", then heck, we're all screwed. But in order for that to happen, we'd need something on the order of a nuclear holocaust.
I have never believed that there isn't plenty to go around for everyone. Especially if we get creative, and work at it.
However, I am not just advocating endless cash handouts. In extreme circumstances I would like to see more food, shelter, clothing, and medicine made available directly to people.
Allow normal unemployment cash benefits for a while, and then mandate that they work at least part time making stuff we need in exchange for material benefits. If they don't work, they won't eat.
JEFFREY EPSTEIN PLEADS GUILTY TO PROSTITUTION CHARGES
http://www.nypost.com/seven/06302008/news/nationalnews/jeffrey_epstein_pleads_guilty_to_prostit_117924.htm
In regards to "short bucky", I only know of a few mutual funds, such as DXDDX. Is there any higher-yielding yet safe alternative?
Well the alternative is to go long other currencies which you can do with ETFs like FXE and FXY, etc.
Again, do so at your own peril and keep in mind that the dollar has already been pounded into oblivion against some of these currencies and some of them (like the Euro) may not really be that much better off than bucky.
Gee, our men and women in uniform have nothing on the macho toughness of overweight middle-aged men typing at a keyboard. Who will squeal like pigs when their employers decide that the fat is them, what with all the time they spend on the intertoobs.
BFC,
Thinking that 'safe' and 'higher yielding' go together is what got us into this mess in the first place...
Thinking that 'safe' and 'higher yielding' go together is what got us into this mess in the first place...
Yep, and that's completely flipping reality on it's head.
Usually the higher yield is there to compensate against added risk. Especially with the interest rates paid on currencies.
The carry trade flops all that upside down until the very end.
The risk gets hidden for years then comes back all in one vengeful moment.
OT. What does "Short Bucky" mean?
I always think of it as a play on words of "Get Shorty" but could be wrong.
it means, as others have stated, that current fiscal and monetary policies are destined to exacerbate a decline in the dollar. thus, one should short the dollar in order to make money.
or more simply put: "Short Bucky"
jalrin:
There won't be a rebalancing without a debt unwind. Now you and I probably differ on the relevance of income inequality (I don't think it is relevant to public policy, period), but that isn't the point. Fiscal stimulus just puts off the inevitable; instead of unwinding debt due from the relatively poorer, it allows the poor to keep paying it off (IE - it enriches the lender, not the debtor).
Bad debt is bad debt, and shoring it up with government debt is folly.
FOG:
I agree that the fiscal stimulus in Japan was in many ways wasted. But even their fiscal stimulus was less foolhardy than $600 flat rebate checks or extension of unemployment benefits.
Even stupid infrastructure projects are better than nothing.
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Notes from recent Distressed Real Estate Conference in Las Vegas
METROPOLITAN | Property Management & Real Estate Investments
....
Some very sobering takeaway notes:
In no particular order here is a synopsis of this years conference:
I AM VERY INTERESTED IN BUY A LUXURY CONDO IN LV AT THE BOTTOM. ANY COMMENTS ON THE LV MARKET WOULD BE APPRECIATED.
SEATTLESUN
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However, I am not just advocating endless cash handouts. In extreme circumstances I would like to see more food, shelter, clothing, and medicine made available directly to people.
My philosophy is that the "safety net" should simply be the set of goods and services that enable people to become and remain productive members of society.
"Single-payer" health care. Efficient mass transit infrastructure. Education loans repay schedules scaled to post-college income.
Draconian taxation of rents (to deter speculators from monopolizing housing stock) would fund a lot of this socialism.
wow. thanks Seattle Sun.
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Anonymous writes:
Short Bucky!
Anonymous | 06.30.08 - 1:08 pm | #
and LONG GOLD!
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Lehman taking a dirtnap today. Under $20...
El Presidente-What is your definition of nutball?
It seems to me we have had one in office for 8 years and I wager that you voted for him at least once...
I would say Ron Paul is looking smarter every day now..Of course he always was, thats why they wouldn' let him debate...
I believe you had to much brandy el presidente..Better to sip it on the beach with a fine young lady in Cabo then throw out adjectives that don't make dollars or sense...
it is a good brandy though!
thanks
seattlesun
that link was money!
tyvm Seattle Sun. A lot of comfirmation on things I had heard or guessed but hadn't seen strong statements from reliable sources on. Especially interested in points three and nine. By "regulators have said full stop", do you mean they're supporting the futzing, or calling a halt to it? Hopefully, and I assume, the latter, but you never know.
Oh no, here comes single payer health care to invade another perfectly reasonable thread.
Wachovia just stopped offering Option ARMs. So much for the "superior underwriting" of Golden West.
ac,
You're on fire today.
My 2 cents. Gov't safety nets are not safety nets. They are moral hazard writ large. Is unemployment possible? Yes. So insure YOURSELF against it. Why should someone else insure you against a real possibility?
This country is all spend, spend, spend until the Wile E. Coyote moment. Then comes "Uncle Sugar! Bail me out!" Kida sick of it really. This country deserves a good, sharp kick in the arse. I suspect the kicker is warming up at the moment.
Cheers,
I agree that the fiscal stimulus in Japan was in many ways wasted. But even their fiscal stimulus was less foolhardy than $600 flat rebate checks or extension of unemployment benefits.
Even stupid infrastructure projects are better than nothing.
I think this shotgun stimulus approach is no different than blanket rate cuts.
It seems that the money simply goes where it's not needed or is spent in a way that simply repeats the mistakes of the past.
Again, perhaps when people misuse money the solution is to take it a way for a while, not give them more.
When somebody robs a bank do we pay them money not to rob banks in the future? Seems like if we pay people to rob banks that's just going to encourage more bank robbing.
Short Bucky means short the dollar
To Pablo Escobar:
Quote from California's EDD website:
"Unemployment Insurance (UI) is a nationwide program created to provide partial wage replacement to unemployed workers while they conduct an active search for new work. Unemployment Insurance (UI) is a federal-state program, based on federal law, but executed through state law. Employers finance the UI program by tax contributions."
However, I believe that the "extended" benefits are not funded from the employer "contributions", but are a transfer from the bottomless (apparently) money-pit.
More interesting to me is that congress waived the "old" requirement that extended benefits be directed to specific workers in specific industries (Detroit area auto workers in 80s, California migrant farm workers after the citrus freeze of Dec '90). The later instance was the first time that extended benefits were granted to a group of workers, where the potential recipients were unidentified in advance (though they were required to be legal residents, as is the case with all UI and DI recipients).
ChefVisar
cd:
I voted for Al Gore in 2000 and John Kerry in 2004, for what it's worth. I don't necessarily think our current Prez qualifies as a "nutball", although I can't say his policies could have been worse if he was. I've never seen such enthusiasm for spending government money on dumber things. He get a point for vetoing agriculture subsidies, though.
I described Ron Paul as a "nutball" only to the extent that his policy prescriptions seem to outrun his libertarian agenda. There's no real reason a libertarian should dislike the Federal Reserve; although certainly one could disagree with the role the Fed plays in the Bernanke era. Even a relatively hard core libertarian probably thinks the government should have some money (hence the need to collect it, and the IRS). Destroying institutions without necessity is "nutball", not the principles Paul espouses, which I respect.
ac,
You're on fire today.
Well I've been kind of nasty lately.
I'm trying to behave better. =(
The have to work to eat?
If the unemployed could find a job in this economy they would work.
Enough with the welfare queen analogies.
They are called the working poor
Can you live off of minimum wage? Can anyone live off of minimum wage?
Or maybe you are calling for a new WPA? Remember Davis Bacon?
Your economic insights are like looking through Vaseline smeared lenses
.
.
Part 2
This is a topic expansion of an article I wrote last night about the IMN Conference on Distressed Real Estate.
One of the recurring themes throughout the conference was that the commoditization of real estate by Wall Street is turning out to be a disaster. While it certainly applies to residential real estate the criticism is primarily directed at the commercial sector. In a nut shell, the argument is that while the various funds, private equity sources and banks were quite good at creating complex financial structures with elaborate financial projections and raising untold amounts of money, they are woefully short of experience in the operational aspects of real estate. Hence, the workout process is taking place in an environment that is completely divorced from the needs and requirements of the asset underlying the paper.
A number of speakers recounted incidents in which they had approached financial institutions that had taken back real estate or were on the verge of doing so with an eye to buying the asset. When substantive issues about say extra remedial work needed to bring a partially completed building to completion and the consequent effect on valuation, the would be buyers were met with either disbelief or incomprehension. Similarly, concerns about vacant space in shopping centers or uncompleted phases tend to be brushed off as leasing opportunities.
The representative of the Office of Thrift Supervision, a true veteran of several of these busts, was of the opinion that the banks were woefully staffed in their REO departments. She expressed the opinion that the logical progression and decisions that need to be made on alternative REO disposition strategies were not being made. Of particular concern to her was the tendency among the banks to put the workout into the hands of the loan officers responsible for the loan at its inception. She stated unequivocally, that this was an unacceptable practice.
I had frankly not thought too much about this aspect of the problem. After the discussions at the conference, I appreciate that it is a real problem. Many years ago, the individual that made or recommended a loan was likely to have spent a good part of his career having made loans to other participants in the industry. He or she had a good working knowledge of the operational aspects of the business they were lending into. When the road got bumpy there was a recognition that certain steps needed to be taken to preserve the value of the asset and not to do so would render the value of the collateral worthless. Essentially, over negotiating the numbers while the asset wastes is a fools errand.
However, if you have no industry well of experience to draw upon, then it may not be possible to recognize the point at which you need to bring the back and forth to an end and salvage what remains. That same lack of experience can seriously impede negotiations as the asset owner with little experience has no means of knowing if the issues the prospective purchaser raises are just negotiating tactics or are of such significance that the disposition strategy and price need to be reconsidered.
There is no doubt that real estate is a complicated business. From entitlement, to construction, to maintenance and leasing a vast array of talents needs to be brought to bear to make it work profitably. To the extent that the financial institutions that find themselves the unwilling owners of property dont realize, appreciate and understand the complexities then the problem is going to take longer than necessary to work out and the losses will probably be greater than necessary.
.
.
I would say Ron Paul is looking smarter every day now..Of course he always was, thats why they wouldn' let him debate...
Ron Paul is a genuine conservative, that's why he's such a threat to the clowns that go masquerading around as conservatives today. They're frauds and Ron Paul (despite his flaws) gives a point of reference for people to point that out. For that reason he's more of a threat to the Republican party than any Democrat today.
ac,
"Well I've been kind of nasty lately."
Ain't seen it. Curmudgeonly sure, but what's new? I like curmudgeonly better than happy talk.
I'm gonna go out on the porch now and clean my shot gun. And yell at the whippersnappers running on my lawn.
Cheers,
Was that Las Vegas conference the one that generated hundreds upon hundreds of spam messages? I'm surprised nobody showed up there with a few hand grenades.
el presidente-
Ron Paul is a student of monetary history. He understands that debt backed fiat causes booms, bubbles, and busts, that is why he dislikes the federal reserve. Not to mention it is unconstitutional.
The government needs to collect money using the powers granted to it by the constitution. This would limit the size of the federal government, and give the people more power to keep it in check.
The faults of our current form of governance exist from failure to follow the constitution(rule of law), not from the rule of law itself.
I can't believe after all that has happened, that people still think the Fed is necessary, or even acceptable. Just shows people's ignorance towards history.
SeattleSun, i just found my way to your blog yesterday and that is great reporting from the conference. Thanks so much!
el presidente, i just love your take on things. i'd vote for you
Is Leh going under???
Organic George,
"Can you live off of minimum wage?"
Yes, actually I can. Not well, but can.
The question really is how have you f'd up your life SO bad that you require it.
Working poor? Working skilless is more to the point. There are endless (many subsidized by the state btw) to increase ones skillset. Do so.
Last Friday I had the pleasure of talking to a lovely young lady that Cisco sent me. Her card read CEO. She wasn't a salesman. She's been in business since 1999. English is her second language.
Here, check out her website:
IT Outsourcing Los Angeles, Computer Networking Los Angeles, Network Consulting Los Angeles, Los Angeles Computer and Network Consultant, IT Consulting Company Los Angeles, IT Consulting Firm Los Angeles
I have little sympathy for the poor. I've been there, and can say without fear of contradiction, that it was my fault.
Cheers,
crispy, i have no idea, but the stock action isn't passing the smell test.
Misean, gotta remind you there's a difference between broke and poor. One is a lack of funds and the other is a mindset.
The have to work to eat?
If the unemployed could find a job in this economy they would work.
I agree with you. The unemployed are generally not unemployed because they want to be.
I am not suggesting that we starve the unemployed, rather that we setup a system like WPA/Davis-Bacon to ensure that people can do something if they hit rock bottom. And this is after a reasonable period of cash benefits.
However, I would not make this just busy work - the work would have to have real value. Something that would actually relate to the benefits they need: food production, for example.
LEH, gah! Look at that volume spike.
Something wicked this way comes.
Cheers,
sdtfs,
Broke v. poor, I'll give you that.
Cheers,
Structured Finance is not the problem; unstructured finance is the problem. Complexity is perfectly acceptable if it is transparent to the specialist; if an MBA can sit down with the appropriate prospectus and income statements and tell you a day later or better yet an hour later who holds what risk and what the status of the underlying collateral is, there is never a problem - no matter how much risk or leverage is involved.
The problem with the last few years is that no one set up the systems to deal with the credit stack; there wasn't a database you could type the name of a security into and get the relevant information.
There should be. A buyer of mortgage backed securities should be able to get at the touch of a button a list of the mortgages to which he is exposed, and the exposure. That is child's play in programming if the data is entered (and it would have been in the origination process).
The problem is not risk. The problem is the inability to price risk. The players chose to treat their own inability to properly estimate risk as an indication that there was none; that, in other words, Countrywide, the buyers, sellers, realtors, and appraisers were all honest enough and competent enough to protect them.
Which is silly. I hope we have credit stacks again; I fervently hope we don't treat this as a cautionary tale about credit rather than a cautionary tale about people.
Because it really is the latter.
U.S. Treasury Secretary Henry Paulson will reveal more details about his accelerated plans for the Federal Reserve to assume a larger regulatory role in maintaining financial system stability in a speech in London on Wednesday.
UPDATE 1-US' Paulson to reveal more on Fed stability role
| Reuters
Good thing this lame duck is about out of there. Goldman Suks best interest would be very high on his list.
jalrin | 06.30.08 - 1:31 pm | #
What on earth make you think that you can tax the riches to rebalance?
El Presidente,
Let's try this again. No one is denying that debt unwinding is inevitable. That does not mean that we cannot keep society from falling apart while the rebalancing happens. Hence measures such as unemployment insurance extensions, revenue sharing to the states to keep vital public services running, infastructure projects to keep people employed while rebalaincing occurs (it's not as if we do not have a large number of projects that would need doing anyway), can save families and communities from being obliterated by poverty and the misery, suicide and domestic violence that often accompany widespread unemployment.
As for income/wealth inequality, I would have thought the relevance here was obvious. The ultra-rich have a much greater proportion of the national welath than they have historically have had. That excess wealth can be tapped to repay this debt (either the debt used to finance the stimulus or the debt that we are trying to unwind).
el presidente,
"The problem is not risk. The problem is the inability to price risk. The players chose to treat their own inability to properly estimate risk as an indication that there was none; that, in other words, Countrywide, the buyers, sellers, realtors, and appraisers were all honest enough and competent enough to protect them."
I'd add the caveat, that due to FFR rates below inflation, and the need for many institutional investors to buy into "AAA" paper, that risk question was pushed into a corner and told to be quiet.
Nice post though.
Cheers,
Misean
I've lived in a rented room the size of a broom closet where I had to shake the cockroaches off the cot to go to sleep. So don't tell me about poor.
But unlike you I do not despise those who did not make it out of poverty.
You should try the "there but for the grace" approach to life.
el presidente, i must take issue with this:
"There should be. A buyer of mortgage backed securities should be able to get at the touch of a button a list of the mortgages to which he is exposed, and the exposure. That is child's play in programming if the data is entered (and it would have been in the origination process)."
This has always been the case from the beginning. All attempts to make this happen will be thwarted. Unfortunately, the usefulness of opacity for padding bonuses (on both the buy side and the sell side) prevent it ever becoming transparent. If forced, they will simply lose interest.
Jin,
You redistribute it to repay debt, provide assistance to help people while reblancing occurs, let the wealthy take hits from a repeal of the Bankruptcy Reform measures, and/or impose reserve requirements on private equity and hedge fund investments in the U.S. and have the Fed Sterilize it by buying Treasuries. All of these masures reduce income inequality and either help with reblancing or reduce the social destruction of rebalancing.
Organic George,
"But unlike you I do not despise those who did not make it out of poverty."
Nor do I.
Cheers,
Well I would not call it free money. My job went to India last December. I was making 97k a year. I'm forty five years old and have been employed since I was 15 years old. Every employer that I have worked for has paid employment insurance while I was in their employ. Whether you like it or not, that money came out of my pocket, even though my employers paid the fee. It was part of the cost of my employment.
This is the first time I have drawn un-employment. I look for work deligantly but needless to say the job market is tight.
So those of you who think that this is free money....it is not. I get 404.00 a week. I will now get it for another 13 weeks. I doubt that it will come close to what I have paid into the system over the past 30 years.
The ultra-rich have a much greater proportion of the national welath than they have historically have had. That excess wealth can be tapped to repay this debt (either the debt used to finance the stimulus or the debt that we are trying to unwind).
jalrin | 06.30.08 - 2:38 pm | #
Right idea wrong class. The middle class for the most part has been good boys & girls and has been trying to save in IRA's 401K and ultimate middle class dream of the suburban home. These savings are being accessed as we speak by 140 oil and high commodity prices while declining prices in stocks and housing.
So those of you who think that this is free money....it is not. I get 404.00 a week. I will now get it for another 13 weeks. I doubt that it will come close to what I have paid into the system over the past 30 years.
Plus, in typical asinine fashion, these benefits are taxed as regular income. So take home after that $400 bucks, is well, quite a bit less...
Again, unemployment benefits pale in comparison to the handouts the banksters have been getting!
More money for the n16637s.
Can we get rid of that post @ 3:24?
Is unemployment possible? Yes. So insure YOURSELF against it. Why should someone else insure you against a real possibility?
This is a callous and short-sighted world view.
First of all, one may not be able to save enough money before one becomes unemployed.
Second, if one buys unemployment/disability insurance from a private company, then this private company will do EVERYTHING in its power (legal or otherwise) to deny you the payments IF you actually become unemployed or disabled.
So government safety net is a must for any humane society.
Or do you advocate a society not unlike the ancient Sparta where anyone with any kind of physical imperfection was thrown off the cliff?
I have little sympathy for the poor. I've been there, and can say without fear of contradiction, that it was my fault.
You are not thinking straight here. The world simply does not have enough resources to keep everyone rich. If you suddenly educate everyone then the only thing that would change is you would have PhDs cleaning toilets instead of illiterate people cleaning toilets.
Being poor cannot be thought of as someone's "fault". Someone MUST be at the bottom in a ladder society, like ours.
Yes, need a ban for 3:24pm.
Melidere said:
"This has always been the case from the beginning. All attempts to make this happen will be thwarted. Unfortunately, the usefulness of opacity for padding bonuses (on both the buy side and the sell side) prevent it ever becoming transparent. If forced, they will simply lose interest."
Obviously, I don't disagree that that is how it happened. But it isn't how it has to happen. A race for the bottom isn't a foregone conclusion. Let me tell a story.
Back in the late 1990's and early '00s, Web advertising got progressively more intrusive, blatant, and everpresent. Brighter, flashier, pop-up-and-underier. But then something happened. A bright spark company (Google) decided that it would market its service and restrict ads based on relevance and unobtrusiveness. Because the service was meaningfully better as a result, it became the standard, and Google became the biggest success story of the decade.
I'm not trying to imply that all the mortgage market needed was a Google (or Google itself); I'm just suggesting that principal-agent problems are capable of resolution if someone is willing to sell the superior product at a lower margin. The real culprits in the risk-pricing part of the debacle were the rating agencies that called trash triple A.
Jalrin said:
"You redistribute it to repay debt, provide assistance to help people while reblancing occurs, let the wealthy take hits from a repeal of the Bankruptcy Reform measures, and/or impose reserve requirements on private equity and hedge fund investments in the U.S. and have the Fed Sterilize it by buying Treasuries. All of these masures reduce income inequality and either help with reblancing or reduce the social destruction of rebalancing."
Leaving aside the "political" issues (like how we define social destruction and rebalancing), the problem here is that income redistribution per se is the problem. Giving out free money in benefits, $600 checks, or make work jobs prevents the people in question from being faced with the hard questions and going out and getting productive employment that will add value for the long term.
Caveat: Every policy has a counterexample. Hank Jestor sounds like exactly the guy who ought to get unemployment benefits extended. That doesnt' mean extending them generally is a good idea.
CR, the last 'intervention-free' liquidation was the Post WWI recession, which I read was particularly ugly (double digit unemployment, I think) but mercifully short.
In the Great Depression, Hoover intervened -- jawboning and action -- all the way down from '29 to '33. FDR continued such, forestalling the recovery.
For this Greater Depression, I heartily recommend fast and thorough liquidation: try it, you'll like it.
M.I. said:
"Being poor cannot be thought of as someone's "fault". Someone MUST be at the bottom in a ladder society, like ours."
Ah, but if someone has to be at the bottom, then why do we worry about them being there so much? and if life is nice down there, why would they bother even trying to better themselves?
Stocks starting the swan dive - The Black Swan dive.
Still think we could have a Rule 80B day coming up.
If? "Far more people are worried about losing their jobs than will actually be laid off in this downturn - and if all these people pull back sharply on their spending, then the layoffs might become a self fulfilling prophesy."
If my aunt had @@%#%, she would have been my uncle.
"If"? This is a sealed deal. It is human nature to pile on. Nothing will stop it.
This happened in the opposite direction when Bill Clinton was challenged with his immorality; the people piled on and chose the chimp as he claimed he was moral and a "uniter".
We are human, the last time I looked. Nothing less than a full rout and capitulation will stop this massive turn.
Projections of moderation repeatedly are proven incorrect. Is this another?
It is so very sad what we have have come to in this country. All of the people who receive unemployment benefits where involuntarily laid off. They are hard working people who went to work, worked hard and due to a decision of a corporate suit are now unemployed.
My company had 1700 employees before it laid of 55 percent of their workforce. Most of whom had over 5 years with the company. I personally put in 65 hours the week before I was notified.
Continue to speak of us as though we are different than you.....we are not.
PS. The CEO of my company took a million dollar bonus last year.....
Ah, but if someone has to be at the bottom, then why do we worry about them being there so much?
First of all, we worry not about them being there, but about how bad their life is.
We worry because it's important what your bottom looks like. You don't want to reach the point where people at the bottom live in starvation. We are a ladder society, but we can adjust how steep that ladder is.
"Ah, but if someone has to be at the bottom, then why do we worry about them being there so much? and if life is nice down there, why would they bother even trying to better themselves?"
That's ok...when this cycle is finished, most of you will be down there with them. They have been training their whole life to struggle to make it.....just wait until they start knocking down your doors.
What did she once say, "Let them eat cake!"
Really worked out for her as I remember.
Anonymous - too many #'s. N#'s are five digits long incl. the letters.
el presidente,
Social destruction in this context is not hard to describe: When people are shoved out of work and cannot find replacement employment because of a bad economy, all sorts of really bad things happen. Things like higher suicide rates, increased domestic violence, increased social alienation, people not being able to pay for basic medical care resulting in higher disease levels, malnutrition, etc. Rebalancing is also straightforward: a reduced current account deficit and lower levels of indebtedness. Our gracious host's comment about time healing wounds is on point here. The goal of all of this stimulus is to keep people from drowning until this mess is over.
I also fear that I am detecting a delusion that people can just will into being good jobs for themselves regardless of pesky things like aggregate demand not being high enough to actually justify all of those jobs in the absence of stimulus. Our nation is, well, a nation not a collection of hedonists who can prey on one another at will. As such, we cannot throw our most vulnerable citizens to the wolves and the excessive wealth that our high and mighty use to corrupt our society to their benefit can and should be used to solve this problem (this will also make it harder for our masters of the universe to lobby their way into a repeat of this mess).
PS: in my own field (law), the lawyers doing the most useful work (representing abused children, victims of civil rights violations, domestic relations lawyers, etc.) are doing a lot worse then lawyers whose elaborate corporate structures would not really be missed by society nearly as much as dead children will be. Their clients are richer than abused children but that is not a reflection on the children or their advocates unless one decides to embrace the sinful and uncivic notion that wealth = worth.
Jeers, Misean. Music links, good; thinking that at least half the world (yes, that's how many poor we have) share your fault-filled past, not so much.
Wouldn't have barked about it so much except that such narrow-minded projections about other people's faults/responsibilites -- damn all the contrary reality -- got us into a stunning mess of a war and of an economy.
jalrin:
My notion is not that wealth = worth, just that wealth is a good thing. I happen to be an attorney as well (by God there are a lot of us-) but I wouldn't characterize one attorney's work (or one nonattorney's work) as "most useful" or "more useful". I don't think that representing "victims of civil rights violations" is more meaningful or useful than representing "bond salesmen" or "personal injury plaintiffs". Each seeks redress of their clients' greivances or negotiated contracts in their clients' interests. Their pay reflects not their moral worthiness but their economic usefulness.
And judging from historical evidence, society misses dead children very little.
Now I'm not trying to argue that any of this is right or wrong; quite the opposite. Right and wrong don't come into it. We can argue back and forth about what we qua voters (meaning as a democratic society) want to do for or to members of our society. Elevating government policy or economic outcomes to the level of moral decision making is like calling a child counting his toes a PhD in mathematics. It's a mistake of quality -and- quantity.
[As a side note, you are of course correct that aggregate demand would have to fall below a full employment level during the unwind period. But allowing it to do so is precisely what permits the unwind to occur. If government borrows money and gives it away (or takes it from rich individuals and gives it away) to support aggregate demand, it defeats the purpose. In other words, yes, I'm trying to cause a recession.]
Alo said:
"thinking that at least half the world (yes, that's how many poor we have) share your fault-filled past, not so much."
I strongly suspect that all of us share a fault filled past (some of us have ministers who insist on it, no less). Some of us, myself included, merely got lucky enough that our faults did not harm our economic status (too much!).
More to the point, you run into a problem of definition. If half the world's population is poor, then the median income is the poverty line. Which sounds a bit inclusive. Most readers of this blog probably spent a few years or a decade living on an income below $30,000.00 in current dollars at some point, even if not perpetually (remember graduate school, you M.B.A.'s?) so I doubt the problem is one of imagination.
El presidente, how charitable of you to put your fork down to address the downtrodden with minced words about how "all of us are at fault" and that "there is no poverty if everyone's poor."
Orwell could crib a lot of good stuff from that post. Way to afflict the afflicted.
"They are hard working people who went to work, worked hard and due to a decision of a corporate suit are now unemployed."
I'm with Hank on this one. Highest benefits in NYC are around 400 per week...not the stuff of carefree living. And is there anyone who thinks that corporate America has distinguished itself beyond short-term thinking, inability to assess risk, gimcrack accounting, and a general contempt for employees and shareholders?
I wish you the best Hank...I was laid off in the third round at Morgan Stanley in 2002, and started my own little biz on a shoestring. It's worked out well for me. If you can hire yourself, do so.
I hope this will help out my L.A. friend who is going on 11 months being unable to find a job....
Alo said:
"El presidente, how charitable of you to put your fork down to address the downtrodden with minced words about how "all of us are at fault" and that "there is no poverty if everyone's poor."
Orwell could crib a lot of good stuff from that post. Way to afflict the afflicted."
The second quote is a misquote, but no matter. The real problem is that I was making a statistical point, not a normative one. The point is that "poor" is a relative term that doesn't mean anything until you assign it a meaning. You assigned it a meaning that included half the world's population.
Also, that would mean people making $400 a week, in unemployment benefits or otherwise, wouldn't be poor. More than half the world's population lives on less that $400 a week.
Which probably means Americans, rich and poor, should whine less and [work and enjoy the proceeds thereof] more.
SeattleSun,
Excellent material, thank you very much...
Whining appears to be the new national sport. OK, let's say we're in a recession (the data isn't conclusive, but let's say we are for the sake of argument). So? They happen on average every 7 years or so. You're supposed to put something away during good times to tide you over through bad times. That advice goes back to The Bible and probably before. If you didn't, don't blame Bush, Greenspan, Bernacke, look in the mirror.
BTW, I actually support the extension of unemployment, as I said above, but can we please just stop the whining on all sides?
The internet was supposed to open new vistas. Mostly it's just given the cranks a bully pulpit and magnified each and every up and down into world-ending crises.
Interesting that "whine" is now the preferred term to describe a freshly chopped employee who suffered a corporate mugging who chooses to express himself. Hank noted that he finished a 65 hour week, then today...the door. No heads-up, no warning, nada. He never said he didn't have savings. And yes, he's not a Bengladeshi peon.He's also not dead. I'm sure he'll find both bits of info very cheering.
So, Hank still believed there was a social contract in force. There isn't. Now he knows. But before you cheer too loudly remember that you and yours still live here, presumably, and without the middle class and that social stability, the great unwinding may be not just ugly but violent.
So while you're chortling, do remember to sign up for target practice.
Hank is not the one whining. He is justifiably pissed off at getting a raw deal. Everything possible should be done to help Hank, including extended unemployment, job hunting assistance or retraining. Layoffs happen, in good times and bad-they are not even up much now over the average of the last few years-and the individuals affected should have whatever help they need.
The whining is by the people who come on and berate us about how EVERYTHING sucks and Greater Depressions and Bernanke this and blah, blah, blah. Sure as shootin' their pity party isn't helping Hank.
Ah, but if someone has to be at the bottom, then why do we worry about them being there so much?
Self-interest. So they won't steal your stuff.
I guess the concern about the increase in the suicide rate that results from recessions is mere "whining" because we all know that people making poverty level wages can easily sock away a large investment portfolio that no layoff, medical crisis, or family problem could knock them down (not to mention that children can choose to belong to families with such portfolios).
The fact that we have recessions regularly is all the more reason to make sure that we keep people from going under, especially when we have to choosen to reward the wealthy at the expense of working people for so long.
"Everything possible should be done to help Hank"
Apparently, this includes stealing (taxes), kidnapping (for those that resist the stealing), and killing (for those that resist the kidnapping). All of your arguments about wanting to help people are tainted by the fact that you don't care HOW it gets done. There will be collateral damage (stealing from the innocent) with your broad-brush approach to attaining social justice, because not everybody, not even all the rich, wronged the unfortunate people who are out of work. It's just easier and more convenient to say, "pay for it with taxes."
A truly charitable person gives his own money to those in need. Anybody advocating forced redistribution on a mass scale (rather than in repayment for a crime) is simply trying to push their world-view at the point of a gun.
That, el presidente, is a hard-core libertarian viewpoint.
Well it would seem that there are many people who have forgotten why we have a government. I will restate once again. Unemployment benefits are provided via unemployment insurance. This insurance has been paid by every employer that I have been employed for thirty years. That is a cost that has been born by me through my employer. Money that could have been part of a higher a salary if not required by the government.
I do not seek charity....would not take a penny from my own mother to help support me and mine.
I was born in Wyoming and have had a gun in my hand since the time I was four years old. I was a Nuclear Power Electricians Mate in the Navy and have most recently worked as a SOA architect from my home for the last few years. There is nothing that I can't fix with my own hands.
I will be fine....will you.
This program helps reduce the financial fear for these workers.
This is paltry help compared to workers actually saving money to cover life's inevitable setbacks. If the program were not in place, though, some people would not rise to the occasion and save money, so I understand the program's purpose. It just seems a shame that people need to rely on something like unemployment benefits.