Lucifer, I believe we are in for a long difficult period. We need to see household debt worked down, we need to see a stable financial system, we need to work off the overhang of excess inventory (especially in housing), we need to see the liquidity programs unwound ... the patient didn't die during the fall, but I don't think the patient will be running any climbing any mountains soon.
Shiller focuses on sentiment. I don't pay much attention to it, but I read his pieces.
A GDP decline of 10% would be 1.4 trillion... The Democrats have increased the federal budget by that much so that will offset the decline in the real economy, as long as they can keep the music playing... Maybe we will find out whether the fed balance sheet is really infinite, or that there is a brick wall out there somewhere...
I do not think that the patient can survive for long unless we change the doctors and the therapy. If we do not start implementing rational policies soon (a year at max), it might unwind in an uncontrolled manner.
Rational policies= Policies that are based on reason, rather than bullying people with "expert" talk. If a person cannot explain an idea, provide retestable evidence and withstand cross examination about it from an average interested person- it is a bad idea.
//I believe we are in for a long difficult period.//
There is a GDP chart (1950 - present) on the front page of The Big Picture. It shows a 1950s near-depression and an 80s recession worse than the current one. I don't know why.
You wrote lots of great stuff on the last thread. Lucifer has his own little brand of socialism he's promoting, and it's not the stuff America was founded upon. You come to America, the "land of opportunity", to better yourself and not free-load. Sure, it doesn't work for everyone, but that's not the point.
When I look at as many factors as I can (demographics,resources,political realities,etc) I am not sanguine.Like lucifer I feel very large changes are happening.
All of these long-term #s are absurd without consideration of inflation, most of all, the 70% devaluation of late '33/'34.
But I appreciate someone finally attaching a concrete metric to "depression", arbitrary as it may be. Recognizing you have a problem is the first step to recovery, whether you're a booze, smack or debt junkie.
Whenever I hear these kinds of things I just repeat to myself in between every pronouncement "because it never happen before" and I just laugh at the dismal science as a whole. Who knows what Schiller's excuse will be. Unforessen dollar collapse? Excessive unemployment that no one could have imagined? Earthquake or pandemic? There is sure to be something no one saw coming so he cannot be blamed for missing it either.
The macro-economy and mass psychology are inextricably intertwined, so it's a valid topic.
Regardless, I still believe a depression is what we face and I've seen nothing to convince me otherwise. Even if the fundamental economic & demographic factors didn't already insure it, the government's working overtime to make it an absolute stone-cold lock.
Lucifer, that sounds a lot like the scientific method. Financial engineering is intentionally obscure and difficult to explain because the logic behind the models is flawed. If you were to apply a method as you described, the tax payers would come to the conclusion that it is a politically correct way of saying organized crime.
Really.. Sure the US has more opportunities than other countries, but is this due to to a set of random events or exclusively due to human intervention? People do not like to think about that too hard, because reality often does not live up to their wishes and dreams.
//You come to America, the "land of opportunity", to better yourself and not free-load. //
What happened to defining depression in terms of unemployment? Brad (Mr NBER) Delong has some handy reference points which I can't remember at the moment--wait--one is unemployment > 12%. Could happen IMO. If you look at it that way it doesn't seem as far-fetched as GDP going to -10%. I'll fall over in my grave if that happens.
That is my point! We cannot play this game anymore because we have destroyed confidence in the system.
We have to create a newer and better system.. nobody is going to come back to live in this flaming inferno of a structure.
//Lucifer, that sounds a lot like the scientific method. Financial engineering is intentionally obscure and difficult to explain because the logic behind the models is flawed. If you were to apply a method as you described, the tax payers would come to the conclusion that it is a politically correct way of saying organized crime.//
The last thing this government did right was letting Lehman collapse. Everything since then has been at best expensive and ineffective. And those number very few as it is. These are th people and institutions we expect to keep us out of a depression?
Bernanke consistently says that if they had not saved AIG that the global financial system would have failed. If they had not saved AIG (paid off the CDS liability) then the holders would have had to take a big hit. It might have sunk some of the smaller countries but we could have helped them individually... A lot of the AIG cds payoffs went not only to GS but also to the big Euro banks... So we took the hit instead of them, as if we could afford it... Someone can expand and fill in on this? I'd love to hear more about it...
It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
"Putting humpty-dumpty back together is not easy."
Almost no one under 35 really expects 2006 to come back. That kind of denial-of-reality is almost exclusively found in the cohort that created it.
The idea that we can somehow repair the banks and housing and that all will be well again is really only possible amongst those who have seen nothing but the "prosperity" of 1982-2006 for their peak-earning lives, i.e., those born between 1946 and 1963.
The macro-economy and mass psychology are inextricably intertwined
Absolutely.
I can tell you that my psychology has been permanently altered by the last 2 years.
I believe that millions that have had their 401ks and pensions crushed have had their psychology altered.
I believe that the more than 6 million continuously unemployed Americans have had their psychology altered.
I no longer believe most of what the government, and especially the Fed and Treasury tell me.
I no longer believe that long term stock market investing is the best way to save for retirement.
I no longer trust the banking system or the people who run it.
I do believe that the stock market (if not all financial markets) are based on fraud and deception, and are rigged to the advantage of insiders.
I do believe in commodities and precious metals -- the real thing -- not futures or derivatives.
Re: Effective Demand
I think if we bailed out Lehman we would've let AIG fail... and then everyone would say... "gee, we wouldn't let AIG fail if we could do it again!". You know, at some point the dollar is going to fail and there might be a bunch of people saying... "if we did it again we wouldn't let the dollar fail." I guess my point is your only good until the next thing fails. I have a hard time believing nothing will fail again... does Chrysler and GM count as "fails"? How about CA in a couple of weeks?
I guess eventually our military is going to "fail" too, that will be pretty scary (perhaps they've already failed by blindly going into wars that are deleterious in the long run... even though wars help you train how to fight and seem beneficial to have in the short run... at some point you won't be able to fight everyone). It's almost like our government is being run by those folks who run little leagues and give everyone trophy's and ribbon's and medals... the same people who run our school system and don't hold any students back because it will hurt their self-esteem... maybe not even US government, but maybe the whole world is running like that. I believe at one point very recently we really did fail students and hold them back a grade... whereas to my generation (Y) I've seen/heard jokes about HS students in their 30s (okay maybe 20s) but never really seen that happen.
This all seems a damn borderline way to run our country, yet most people seem to think its great, ie. we don't have widespread rioting. The great positive for us is that we've got 50 years of infrastructure built up and in-place that no one can take away from us (just as long as we don't whore out our toll roads, our telecom infrastructure, our financial industry, our defense industry, etc...) oh wait; what was that? Something about public roads becoming private toll roads (CA, Texas (?) ... cable companies and telecom companies actively lobby government to keep a stranglehold on that infracturcture (North Carolina fiber); we've outsourced defense to Lockheed Raytheon Grumman Boeing?
I could argue all the fundamental reasons why we're still nowhere close to the bottom in stocks, housing, employment, etc. but we've previously covered all that here in spades. I still can't help but wonder, though, why are the media and masses so damned gullible?
If someone gets their bell rung you expect them to bounce back quick; OTOH, if they suffer massive trauma you expect a long and painful recovery. Where does everyone get the idea that you can riddle the economy with bullets and have it jump right up and go "I'm good!".
Sure, the politicians and others invested in the status quo are going to spout such self-serving nonsense, but what is about most everyone else that even entertains such BS in the fact of reams of historical evidence to the contrary???
"'Shock Doctrines' only work if there is a semi-stable underlying system.."
Lucy, your idealism is touching, but not wholly unexpected in a proponent of half-digested Marx and Said.
It isn't supposed to work. It is supposed to create enough chaos to enable looting by those who know how to loot. In that sense, it has worked wonderfully as an instrument of foreign policy and domestic economic policy. Or are you not impressed by the 4 or 5 trillions bucks which have already gone out the door in our attempts at 'nation-building' and restoration of the banking sector?
I am talking about having a functional world.. not restoring the old financial system (which is toast). The real world is far more fragile than you think.
Instead of relying upon numbers to decide whether we are in for another great depression, why not compare the people of the 1930's to our current-day collection of people that have had self-sufficiency surgically removed from them, for the most part?
Yes, we know, a world that never existed. Except, of course, for brief golden periods which you would undoubtedly approve of, like the genuine social equality found in Stalin's Ukraine circa 1930.
There is nothing left to loot. Most of it never existed. It was just a lot of make believe.
Looting was possible only as long as money was something other than paper. You could loot under the gold standard or in fiat currency regimes where you could move your money to a stable west. That is the problem.. there won't be a stable west to move your stuff to.
the notion that we are moving away from a fiat currency to an asset backed currency is playing out in reality. the implications are far reaching for currency valuations and global markets. when i wrote “ALL YOUR STOCKS ARE BELONG TO U.S.” last september i hardly believed the words coming off my fingers:
but now, here we are with an asset backed dollar. most analysts have opined that expansion of the fed’s balance sheet will take down the dollar. i thought this too but i am not so sure anymore. it now looks to me like the fed is creating a new kind of currency.
will people buy it? yeah probably, after it goes on sale. afterwards dollar value will be closely tied to the content of the federal reserve balance sheet.
Worm can open.
the fed is buying large portions of the U.S. economy, like 25%, with mouse clicks. good deal for them.
like it or not (and i don't) their purchases are the new backing of the dollar.
no way around it.
the implications are huge.
say they end up with a $5 trillion balance sheet.
US GDP was around $14 trillion when all the supposedly worthless assets were fully valued.
that there is over 33% of the former US economy.
i expect other nations to follow suit once they catch on.
the assets they are acquiring have real value.
now, i think there still will be a dollar takedown.
but when the dust settles the company that makes the dollars will own maybe 50% of the former U.S. yearly economy.
and thereafter dollar prospects will be tied to the value of those holdings.
is this an improvement over fiat?
probably.
especially when you consider that government debt (which used to be all there was in the fed balance sheet) is going down.
look at it like this:
the fed is diversifying
with mouse clicks.
for now, for the fed, money = mouse clicks.
probably a model that has limited days.
they are getting out of the fiat regime while the getting is good, utilizing the credit implosion black hole to create mouse click fiats with wild abandon.
those mouse clicks are gonna own half of everything.
the fed is not going to remove liquidity, later, eventually, as expected.
they are gonna keep it all.
light bulb ON.
If you doubt me ask yourself if the size of he fed balance sheet is related to the value of the dollar. Conversely, what's resulting value of the dollar be if the fed filled it's balance sheet with goose guano? Less than if it owned half of GDP methinks.
I can tell you that my psychology has been permanently altered by the last 2 years.
I wish CR's chart on savings had gone further back. Current & future generations are already getting into the GD mindset -- much higher savings, low or no debt, grow your own food, fix things you have instead of buying new, don't spend money paying people to do things for you that you can easily do yourself, etc. Our "consumer" economy can't survive several of these things, let alone all of them, so it won't.
No.. I am talking about a world where you depend on the infrastructure, where you can be fairly sure about the quality of what you eat, your property rights.. you know.. much more basic stuff, which many in the west take for granted.
I have never believed that everyone should make the same, just that we should make sure that nobody is too deprived... you can save a lot on other costs that way.
//Yes, we know, a world that never existed. Except, of course, for brief golden periods which you would undoubtedly approve of, like the genuine social equality found in Stalin's Ukraine circa 1930.//
Lucy, the dollar is more powerful than ever... at the moment.
Think of the average person holding XOM or HAL incentive options in the period from 2002-2006. Failure, or success? Or the utterly failed moneycenter upper management guy suddenly sitting on tens of billions from the fed a few months ago. No one notices a few nickels under the cushions. A few nickels wired to the Caymans, a few to Switzerland...
A smashing success, enough for many lifetimes of wealth. You enjoy the doomsday theories, they'll enjoy the sunset on the Idaho ranch and the cocktail at the 5-star hotel in Monaco.
Slightly OT, but this is one way the financial industry in general and AIG, in particular, guarantees that some of its employees keep their jobs no matter what: have their dismissal trigger a 234 billion dollar default.
(From the WSJ)
"American International Group Inc. said it has persuaded a key executive at a French subsidiary to remain at the company, a development that wards off the risk that his departure could help trigger defaults on $234 billion in derivative contracts."
Here's the "dumbed down" version from the WSJ (I couldn't find the original one in the FT)
Since we produce even less in this Country than we did in the 70's....the graph means squat..or could be interpreted to be TWICE as bad as it currently reads. Were SCREWED and the mental damage done by the ass raping will endure for YEARS.
If someone gets their bell rung you expect them to bounce back quick; OTOH, if they suffer massive trauma you expect a long and painful recovery. Where does everyone get the idea that you can riddle the economy with bullets and have it jump right up and go "I'm good!".
The phrase "jump-start the economy" says it all. All 4 wheels have been stolen, the radiator and oil-pan have been drained, there was sugar in the gas that was last run through the engine - but if we just run a borrow a few (triliion) amps to briefly run through the starter motor, all will be good.
HH re Shock Therapy - I have a lot of Milton Friedmans materials and I am pretty much in agreement with him as I understand it... Sometimes I see a Friedman quote which seems out of character and I dont know if those are real or not... AFAIK Friedman never advocated forcing free markets on anyone - all of my reading and videos of him are in the context of a democratic society... I think the fact that socialism has made any advances in the US is a direct reflection of the ignorance of the electorate... We do have an illiteracy problem in the US and also the schools have never done a good job of teaching results based thinking... as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades... This does not bode well for us in the global economy for the next several decades...
"I am talking about a world where you depend on the infrastructure"
Ah, infrastructure. Public goods like clean water, an honest, effective police force, stable currency...
Lucy, my father, a genuinely optimistic man who was born in a Federal housing project and really believes in this country, was smart enough to see the writing on the wall when he took a trip to Guatemala a decade or so ago. He saw that we are becoming them.
He's probably much, much smarter than you going by most metrics, but you've had the past decade to also figure it out. What's the hitch?
At the moment, but the currency of failed states quickly becomes worthless. This has not happened in the last 60 years to a large western country.. let alone the USA. The key word.. has not happened.. but it can and nobody knows how that will play out.
//Lucy, the dollar is more powerful than ever... at the moment.//
I have been doing a lot of that lately. I remember an engineering professor telling me once that the macro-engineering skills needed to build the Hoover dam had been lost recently in this age of micro-engineering and globalization. He said we don't actually have the 'thinking' to build it anymore. Now I am sure he was over-simplifying a complex explanation but it got me thinking a lot about the people who lived through the Depression. We hunt and fish today for recreation and 'heritage'. My father grew up hunting and fishing to help supplement food and money in his family, something he picked up from this father and grandfather who both lived through the Depression. My mother's side grew gardens. These gardens were 3-5 acre crop patches that produced the canned beans and everything else under the sun for personal use, and then sold the rest. All of this was hard work. I remember as a child picking strawberries, pecans, tomatoes, peppers... you name it....not for fun, but because we had a canning schedule to meet and the whole family came home to help out. Who does this anymore? I think a lot of people will do it again soon.
I think the assignation of Friedman as some kind of intellectual godfather of this school of thought is a misattribution. Same goes, to a much lesser degree, to Leo Strauss.
But the arrogance and sheer hatred of American ideals embodied in the neocons wasn't created in a vacuum. And Henry Kissinger could be viably tried as a war criminal on at least three continents.
As for the overwhelming power of the NEA... uh, ok... I doubt that .1% of your average teenager has even seen a Mapplethorpe picture... give me a fucking break.
Any person who displays excessive certainty is either delusional or lying. If you read my posts, I avoid talking about certainties, because there are none. I prefer to consider possibilities and probabilities.
//He's probably much, much smarter than you going by most metrics, but you've had the past decade to also figure it out. What's the hitch?//
The Obama gamble: all the chips are on the Zombie’ Banks
Soros said the banking system is “seriously under water” with banks on “life support.”
note: Soros on Obama: He’s done very well in every area, except in dealing with the recapitalization of the banks and the restructuring of the mortgage market.
Soros said the change to fair-value accounting rules will keep troubled banks in business, stalling a U.S. recovery. “This is part of the muddling-through scenario where we are going to keep zombie banks alive,” Soros said. “It’s going to sap the energies of the economy.”
The “bugaboo of nationalizing banks,” which the Obama administration wants to avoid, means “we are nationalizing only one side of the balance sheet,” Soros said. “We gradually take over the deficits on the balance sheet. But we aren’t actually going to benefit from the banks recovering.”
"lmost no one under 35 really expects 2006 to come back.
Most people that I know under 25 think that 2006 is the norm"
Most people under 40 don't have the background to identify the cycle, to have seen the state change in 1982 when the bull market began and know that a different world is not only possible, but existed in the past.
"Most people under 40 don't have the background to identify the cycle"
True, but those significantly under that age are not burdened with the particular myopic arrogance of the boomers and also have the youthful ability to recognize that things done changed, and to do so in a right quick fashion.
Friedman & Keynes will someday be tossed on the ash heap of history. It's time for new thinking.
"...as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades... "
What has leftwing politics got to do with intelligence & learning? Absolutely nothing! Some would argue that the righties have left their common sense behind and are enthralled with their ideology and dazed by the echo chamber.
And before you denounce me as a hated liberal, I'm a former Republican who voted for Nixon & Reagan.
Graphs and charts tell you a piece of the economic puzzle, but if you really want to see what's happening, there are a good many things that can't be hidden from public view (glut of new cars, glut of leased heavy machinery, etc) and all you need to do is keep your eyes wide open, and you'll be amazed at just how quick things are piling up, as in no business.
How many new car with dealer plates have any of you seen driving around lately?
I don't think there is any correlation between age and the ability to identify irrational behavior.
At work, our team's average age is 45 years. The age of the two people who cashed out of their 401ks is close to 35.
broward @ 6:22 pm "Most people under 40 don't have the background to identify the cycle, to have seen the state change in 1982 when the bull market began and know that a different world is not only possible, but existed in the past"
Bingo!.....Krugman's first Blog post Introducing This Blog - Paul Krugman Blog - NYTimes.com - see chart
fond memories of the Golden Age of Middle class America after WWII to late 1980's then the great divergence in late 1990's
"That’s the country I grew up in. It was a society without extremes of wealth or poverty, a society of broadly shared prosperity, partly because strong unions, a high minimum wage, and a progressive tax system helped limit inequality. It was also a society in which political bipartisanship meant something: in spite of all the turmoil of Vietnam and the civil rights movement, in spite of the sinister machinations of Nixon and his henchmen, it was an era in which Democrats and Republicans agreed on basic values and could cooperate across party lines".
So it is possible but improbable. While I agree it will not technically become a depression it will in fact be one on the floor the population in terms of psychology and standard of living. Just because you don't see it and feel it doesn't mean it isn't happening to others. We know how doctored government statistics are. We know how doctored corporate metrics have become. We haven't hit peak "pick an answer then find the data" culture yet.
I still think the real debate is on the recovery we will have and not whether we will have a depression...I think the recovery will be 2-3 years of little or no growth...
Even though Krugmans chart shows the middle class lasting into the 80's - the changes really started in the mid to late 60's - we had Vietnam, Big Welfare, and the Free Love movement - followed by the Disco/Big Drug movement in the early 70's... We are still paying a big price for all of that...
True.
They have their own particular arrogance and stereotypical beliefs.
It will take a decade or two of experience to winnow those down to match the Boomers.
All Hail the New Sebastian.
Now all we need is a new Jas.
Nostalgia is a key ingredient in the boomer cocktail of delusion. Everyone's favorite Enron consultant, being born in 1953, could certainly qualify as an expert on that one. As for any other field, no comment...
"...myopic arrogance of the boomers..." Some of us are neither myopic nor arrogant and some of us understand & empathize with the thinking of Gen X. In fact, we're free-thinkers who are appalled at the carelessness & greed of the last 20 years. We do indeed remember a time when people didn't scream at each other but discussed solutions to our problems.
I have great concern that the far left & far right will tear up the middle just to get at each other.
I have nobody on ignore, including Jas and Michael.
Some people just can't bear to understand that other sentient beings disagree with them.
I hope that people will endure the stupid things I say, and I will forgive the stupid things they say.
well, SI, I agree on much of the substance there, but there is more than a little irony in hearing disciples of Leo Strauss blame gay culture for a deterioration in the culture. Is there anything more deeply gay than "The Republic"?
"The most people - will be the best off - with the least government"
Yeah, so don't tax any of the rich folk. They have far better fucking things to do with their money than support the system that made it possible for them to acquire . . . that is, steal, . . . their wealth from the labor of others.
TJ and The Bear - I dont think 2-3 years of -1 to +1 GDP growth will be a walk in the park, especially when you add in 11% UE. It will be very painful, especially if you are in the UE ranks...that said, I think the massive government spending will take the place of the lost private sector investment.
"fond memories of the Golden Age of Middle class America after WWII to late 1980's"
Yes, I've weary of the past ten years. I don't think Greenspan did us any favors by prolonging the Depression which really began in 2001, Dot Com Crash. The constant harping on "survival of the fittest" to justify lies and cheating, the delusion of globalism, a complex & fragile system to provide pretty much what we already had at much higher risk so as to make profit on short-term pricing differentials which are already collapsing, the fact that we need ever more weaponry and intervention in other countries....
I remember 1982 being a lot better period with about the same standard of living for me. I lived in San Luis Obispo, it was relatively peaceful, none of this weird paranoia and reactionary anger and constant meaningless churn, churn, churn of jobs and stuff and people and things.
HollywoodHack - "Nostalgia is a key ingredient in the boomer cocktail of delusion"
Really....You are a bitter man with a chip on a shoulder....BOL because you'll need it going forward !
Liz,
Michael hit the "bits bucket" the first time the option showed up next to his name. I suspect I am not alone altough I would understand if I'm in there with him for others.
I'll never argue with the conceit that the golden age of Rock was a high point in music, or that the pop music of later generations is a pale, pale shadow.
Most of those greats (and most of the more intellectually interesting characters of the 60s) were actually born during the war, and not much later, FWIW, making them a little early to be boomers. It is the ones that are demographically in the middle of the herd (like Krugman) that are downright pathetic and have been most corrosive to the nation. Santana is right on the cusp, which helps explain his uniformly horrible output since Reagan was elected.
During boom years, many argue that "this time its different", during downturns the argument then becomes: "this downturn is no different than others we have faced (postwar)."
Well, the bubble WAS different - it was more dangerous because it was a credit bubble - and the downturn is already more severe than others (postwar), and it ain't over yet. And it doesn't help that the financial industry is so large and intertwined with government, that wealth disparity and tax policy is so out of whack, that we have had a HUGE misallocation of resources that has harmed our competitiveness, that we are fighting a war or two, and a multitude of other problems.
"Nostalgia is a key ingredient in the boomer cocktail of delusion"
Thus spoke the arrogance of the Post-Boomer, knowing deep within their heart of hearts that Boomers did create all their woes and their own own natural Superior Intellect would eventually triumph over Neanderthal Boomer Man.
The oil and gas,bust of the 80's, a war in afghanistan against the US and communism did the USSR in.
Change the names and dates and it sounds a lot like us, no?
Regardless, my point is that government is no substitute for the free market. They're doing harm, not good, because politically driven economics leads to gross mis-allocation of resources. As I stated earlier, they're not only not saving us, they're guaranteeing a depression.
@HollywoodHack "Santana is right on the cusp, which helps explain his uniformly horrible output since Reagan was elected".
I do agree with you on this point
we aren't fighting any actual wars - that's a travesty. fighting over a million chinese irregulars in the mountains of korea was a war. the battle of the bulge was a war. Midway was a war.
what we have now is just particularly ugly (and failed) attempts at playing Global Cop. don't insult the sacrifice of the americans who fought in real wars by using that term, please.
"
You can’t blame the president if he is laughing, too. As The Economist recently certified, the G.O.P. is now officially in the throes of “Obama Derangement Syndrome.” The same conservative gang that remained mum when George W. Bush praised Putin’s “soul” and held hands with the Saudi ruler Abdullah are now condemning Obama for shaking hands with Hugo Chávez, “bowing” to Abdullah, relaxing Cuban policy and talking to hostile governments. Polls show overwhelming majorities favoring Obama’s positions. But his critics have locked themselves in the padded cell of an alternative reality. Not long before The Wall Street Journal informed its readers that 81 percent of Americans liked Obama, Karl Rove wrote in its pages that “no president in the past 40 years has done more to polarize America so much, so quickly.”
"
My, my. "The padded cell of an alternative reality."
The inbred natural superior but suppressed-by-Boomer Intellect of Post Boomer Man has triumphed over ape-ish heritage. Post Boomers only need to lie and cheat because Boomers force them to!
Ipso Dipso Facto!
ah, broward, the moisture of the endless PNW winter seems to have left some condensation upstairs...
i would never credit the boomers with creating much of anything - but they certainly warped and perverted the institutions they inherited to a frightening degree.
and we don't want 'triumph' - we're just praying that the damage will play itself out on a relatively quick timetable, minimizing the length of time and resources needed for the cleanup.
The only reason you will end being ignored by me is if you ever start espousing hate towards people because of race, religion, or sexual preference. Michael qualifies for all of the above but for some reason I find him entertaining and once in awhile interesting.
(sigh) So after we discount the synthetic financial economy, what's left? Has anyone done an inventory of exactly what we have here when we get rid of all the banking and real estate junk?
The idea that we can somehow repair the banks and housing and that all will be well again is really only possible amongst those who have seen nothing but the "prosperity" of 1982-2006 for their peak-earning lives, i.e., those born between 1946 and 1963.
YAWN
We have a new posting forum and different names but the same bullshit stupidity. Meanwhile the rock still circles the sun... revolution after revolution.
The larger wars you cite all have one thing in common, both sides wore identifying uniforms.
Our current debacles have us wearing identifying uniforms, but the other side has felt it isn't necessary, so who exactly is the enemy if everybody looks like a civilian?
My, my. "The padded cell of an alternative reality."
Lol. Apparently it is a short trip from alternative rock to alternative reality. It must be profoundly frustrating to have the bar from the previous administration set so low and still find the current one coming up short. We hear it on CR all the time. The deepest insult you can deliver; "Meet the new boss..."
however, without it we would guarantee a depression.
So, let me get this straight... you believe a bunch of phony, government-driven pseudo-economic activity will keep the masses busy enough to prevent the economic indicators from flashing "depression"? That's certainly in the cards, but IMHO they'll run out of ammunition -- i.e., the dollar will fail -- way before the war is over.
Regardless, my point is that government is no substitute for the free market.
TJ - we haven't had a free market since AT LEAST slavery period. ExxonMobil, GE , GS, Microsoft are sufficiently large to be indistinguishable from gov't. The gov't maybe stupid and promoting destructive policy but they are mirror images of the 'private sector'.
Billy - well we still have the world's finest agriculture and food processing - our food supply is the safest anywhere although not 100% of course... We have the best transport system - rails and containers for the heavy cargo, highways, ports... We have the best medical care (for now)... I think the most important thing is we have a lot of creativity and even though we dont know what will come out of it maybe something will still show up... After all, even though I knew about Apranet at the beginning and I was happy to have it - I thought that I would maybe be able to read the draft of someone's master's thesis or doctoral dissertation - I never dreamed of the net as we know it now...
We still do have some heavy manufacturing although it is struggling... We do have a very patriotic volunteer armed services... We have the most advanced military hardware..
"...don't insult the sacrifice of the americans who fought in real wars by using that term, please"
HHack: You are much much closer to insulting those who have served in Iraq and Afghanistan and elsewhere, than I am to insulting those who served in the Korean War.
Indeed we do, if you have the best insurance or best bank account...
And this is the problem with many of the things you mention in terms of infrastructure. I'm not sure that 'best' comes to mind when driving the 5 through LA county. But better than most of the rest of latin america, I suppose.
"That's certainly in the cards, but IMHO they'll run out of ammunition -- i.e., the dollar will fail -- way before the war is over."
But, "this plan will work!" Of course we are looking down the double barrel of inflation and unemployment, and somehow making MBS worth something by printing money works?
I supect we will get to a workable solution eventually, but I strongly doubt Geitnher will be at the helm when that happens.
"We have a new posting forum and different names but the same bullshit..."
Yep, deja vue all over again.
BTW, dryfly...you may have missed my comment about thoroughly enjoying the history thread. I wanted to say that I agreed with you that the North would've eventually crushed the rebs. I have relatives who are Oglala Sioux/Rosebud Reservation who know the stories the history books don't tell. When disease didn't kill 'em off, we starved them into submission.
TJ - we haven't had a free market since AT LEAST slavery period.
Please excuse the poor choice of words because I certainly agree. I just believe in profit motives much more than political ones when it comes to determining beneficial & sustainable economic activity, even accepting the fact that government interference in the economy has always skewed things to some degree.
Seeing as how my taxes directly paid for those overseas adventures, half of my extended family has served and/or serves in the military and the political culture of my country was rotted by the false patriotism and outright stupidity attached to them, I have no problem with that.
No one asked me if it was smart to relive the UK circa 1920-1935. Not incidentally, the end of their empire.
Shadow - you work with any of those things - in any of those industries? Just asking [and not disagreeing w/ some of what you said] - wondering where you got that perception - it isn't the standard boiler plate around here.
HollywoodHack (homepage, profile) wrote (in reply to...) on Sat, 5/2/2009 - 7:10 pm reply Ignore user
And this is the problem with many of the things you mention in terms of infrastructure. I'm not sure that 'best' comes to mind when driving the 5 through LA county. But better than most of the rest of latin america, I suppose.
Ahhh but look at the difference as you cross the border from Democrat L.A. to Republican O.C. [ducks]
HHack: So you should rightly blame the political leadership that sent our troops on these overseas adventures and not insult those who have died or suffered while serving their country.
Sportsfan: I wasn't really talking to you but another. I understand the grief...we recently lost a dad who was with Merrill's (sp?) Marauders in Burma.
oh, I know it very well, Rob. you could eat off of the gleaming jewel that is the 73 - just don't forget to pay the man his toll! Perhaps we should just appoint Bill Gross and Don Bren State Co-Emperors and be done with it.
I increasingly find myself hating the sacramento establishment circa now almost as much as I despised the washington GOP mafia circa 2002. almost.
Please excuse the poor choice of words because I certainly agree. I just believe in profit motives much more than political ones when it comes to determining beneficial & sustainable economic activity, even accepting the fact that government interference in the economy has always skewed things to some degree.
Hear ya.
I've always said if you want small gov't then you better have a balls out anti-trust function... because if you don't the corporations will grow so large as to become gov't. We've had an 'operational arms race' between big business and big gov't ever since the Manhattan Project... only when business gets small can gov't be small again.
Liz--I had a client that said his doctor is going to concierge medical services. Going from 6 docs to 3 in the practice and will now charge a 2,000 per fee for 24/7 on call services. This is non refundable and is just to hold your place in line. Medical services rendered are billable. This client of mine was a pension fund exec.....He was scared shitless about the economy and frankly...talking to him scared the shit out of me.
Just to stay on topic and try to avoid the temptation to needle Post-Boomer Man (and man, it's really hard), Krugman comments on word counts for "Great Depression". I think CR interprets sentiment as cause and economy as effect but I see a more complex situation. Word counts are often reflections of what's happening, symptom instead of cause.
Clearly, these graphs are symptom driven by physical cause, i.e. infection.
I read today that the Veratect company predicted the flu outbreak eighteen days before WHO or CDC, using data-mining very similar to word counts but probably using much better filtering and variety of data sources. I know that some hospitals resell their data now, stripped of personal identification. They also identified the original site of infection within the U.S., which jumped to Mexico City a few days later.
"...our food supply is the safest anywhere although not 100% of course... We have the best transport system - rails and containers for the heavy cargo, highways, ports... We have the best medical care (for now)... "
HollywoodHack (homepage, profile) wrote (in reply to...) on Sat, 5/2/2009 - 7:16 pm
I increasingly find myself hating the sacramento establishment circa now almost as much as I despised the washington GOP mafia circa 2002. almost.
Wait until May 20th when they trot out their "Washington Monument" plays to teach us revenue centers [aka taxpayers] not to vote against their plans. It may not be enough to turn you Republican but it tempt you.
I think that people are thinking in categories which have lost some of their creative oomph, to wit, communism, socialism, capitalism.
When the problem is that robots can take your chance of a job away, all three are irrelevant to the problem. Robots should make everyone's life easier, like a Roombah. Not condemn you to not just poverty, but contempt too. Because if you are poor, you must certainly be lazy. But it seems to be an unintended consequence. No reason why it can't be worked around tho.
"I think the massive government spending will take the place of the lost private sector investment." Ceteris paribus? Because that government intervention will have unintended consequences. It will dull the private sector further by stifling growth potential. Innovation will be replaced by lobbization in technology. It will cause sticky prices for goods and products that would not otherwise have sticky prices. When prices are sticky resources are further misallocated. As the misallocation increases so does the government intervention, attempting to create green shoots in the face of the decreased economic strength and flexibility.
The depression question is extremely relative. Will we face the depression as defined by the pain of 30's or will we face the depression as defined by the life style we got used to since mid 80's?
I ve got another tough question on my mind, will we learn anything out of asset bubble exuberance and our recent experience? My bet is little. However throughout human history hard times were catalyst for new ideas and breakthrough. Maybe, just maybe something positive will come out from our current sufferings.
p.s. when it comes to behavior finance no one understands situation better than Dr Shiller. (I ve seen his online courses, amazing. )
broward, as a post boomer and one sometimes prone to giving less than fauning reviews of my parents' generation, I must admit you are cracking me up at my own idiocy. Good job.
It is no coincidence that sentiment indicators are highest a bull market tops and lowest at bear market bottoms. Investing is a game of confidence and trust. This makes the feelings of the public important in determining where we are in the economic cycle.
I think we pretty much agree that there's a low risk of near term inflation, but how does the Fed unload its Treasuries, when "the time" comes, without crashing the market? Seems like a dicey, brave-new-world position to be in.
All you are seeing is a transfer of the debt load onto the government's balance sheet, and all this is happening just prior to the retirement of the Baby Boomers. A funding crisis for the US government is in the near future (almost certainly no later than 2015, and maybe a lot sooner).
No, we will have a depression. It won't show up in statistics though. Please don't confuse government propaganda and financial oligarchy as a favorable alternative. There are many countries in the world who chose "benevolent" demagogues and their horde of criminals under the guise of national security. It has never and will never work out for the majority of the population. I once read a quote along the lines of "do not measure success by the wealthiest of a country, but instead by the poorest of the country. That will show the true intent of the leaders".
lawyerliz (profile) wrote on Sat, 5/2/2009 - 10:26 pm
I've been thru all those things mentioned earlier, and the closest analogy was the early 80s inflation/S&L bust.
But this feels completely different. In a worser kind of way.
This is MUCH worse than what we went through before. We're in no man's land with an eighty year-old map. The Fed and Treasury have assumed risks that would have been considered mutiny in 2006.
The one I am thinking of had elaborate curtesy, and dueling and stuff, along with colored fingernail polish for men, and genetic engineering of a pleasant sort, nothing forced or anything, and a rebellion by the incompetent, and a stupid mathematician.
I notice my critics post no facts... typical response instead of intelligent debate... If you overwhelm me with facts I will gladly change my position...
I also notice people are still dying to get into this country, not out of it...
I notice that our congress more closely mirrors our population than any of the supposedly enlightened euro countries..
You on the left always claim to be so open minded, yet your voices speak like the fools of fascism...
Educate yourself before you speak lest you be thought of as an ignorant fool and be banned to the ignore list...
"The depression question is extremely relative. Will we face the depression as defined by the pain of 30's or will we face the depression as defined by the life style we got used to since mid 80's?"
Defined by a moving average of the US since WW2 I would say. It would be foolish to expect a return to the 1930s (and maybe equally foolish to write off that possibility?) because of advances in technology. The computer itself has changed the world in a profound way, we can't even comprehend what 1930s life was like. Even those who were alive then won't remember it with any of the severity. That's a good thing. Humans are resilient, we take hardship, survive it, forget about it and thrive on.
I've been thru all those things mentioned earlier, and the closest analogy was the early 80s inflation/S&L bust.
But this feels completely different. In a worser kind of way.
You know - I see it absolutely opposite. I lived through those and definitely from my perspective it isn't ANYWHERE near as bad as S&L or 70's stagflation & rust belt... not even close. But then I was at ground zero for stagflation & rust belt [Great Lakes & Midwest Great Plains]... not at ground zero this time, I'm way out on the 'periphery of the disaster'. Might find it's way my way but it hasn't yet - not like it did then. I hardly notice any change from say 2006 in 'my neighborhood'.
LawyerLiz: "Stupid mathematician" kinda sounds like one of the Foundation series...Harry Seldon was the main character. It was years ago that I read them...can't remember that one.
ShadowInventory (profile) wrote on Sat, 5/2/2009 - 10:42 pm reply
You on the left always claim to be so open minded, yet your voices speak like the fools of fascism...
ShadowInventory,
I'm nowhere near the left, but I have notice when my "inner fascist" comes out--it's speaking German!
The Stock market is forward looking. It prices in trajectory as much as worth.
Exhibit A. Microsoft. Makes more money now than in the early 2000's but yet it is 1/3 the price.
Question what are the growth prospects for US companies?
America's advantage is nobody else, not even the Chinese, really wants to be a superpower. But I sense worse things ahead anyway, because... fundamentally what our government is doing is just basically bailing out bastards who don't deserve to be bailed out. They know its wrong but do it anyway because they dont have to answer to anybody.
Lets not forget, this 'recession' wasnt called a recession til a year in... i suspect that after a terrible xmas season 2k9... ppl will truly truly feel a depression. Its still early folks....GM still runs as a company...
I notice my critics post no facts... typical response instead of intelligent debate... If you overwhelm me with facts I will gladly change my position...
To quote yourself:
"Billy - well we still have the world's finest agriculture and food processing - our food supply is the safest anywhere although not 100% of course... We have the best transport system - rails and containers for the heavy cargo, highways, ports... We have the best medical care (for now)... I think the most important thing is we have a lot of creativity and even though we dont know what will come out of it maybe something will still show up... "
A case of the pot calling the kettle black. Since you have some interesting points I'm a bit confused by this. We have no reason to fear for food safety in this country minus being hit by an asteroid and the world climate changing. We are creative and innovative. But we are definitely not in possession of the world's finest transportation system. No one has that figured out completely. And medical care is neither equitable or affordable across socioeconomic strata.
I also notice people are still dying to get into this country, not out of it...
How about some numbers which describe the inflow and outflow of people from different countries and continents to the US. That might be a bit more elucidating.
I notice that our congress more closely mirrors our population than any of the supposedly enlightened euro countries..
That is somewhat difficult to measure. But any conclusion that politicians of one nationality are superior to those of another nationality could be construed as naive.
You on the left always claim to be so open minded, yet your voices speak like the fools of fascism...
I am neither left or fascist. But isn't that an apples to oranges comparison? Perhaps you mean left or right, communist or fascist. Again, I am neither, and neither are many on this board. Social liberals and fiscal conservatives would be a better match the commentariat.
Educate yourself before you speak lest you be thought of as an ignorant fool and be banned to the ignore list...
To quote yourself:
"We do have an illiteracy problem in the US and also the schools have never done a good job of teaching results based thinking... as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades..."
I agree in that we have a massively underfunded education system thanks to the military industrial complex, but are you sure you meant to write the second sentence?
I know a person who does this. First they took over a retiring relative's practice. Then the got rid of all the old people patients in the homes because she thought they were icky. Then she went and got them back when she realized she really didn't have to invest much time in them and it paid nicely. Then she leveraged herself to the hilt with family and friends to buy other practices. Then all the regular patients left because they realized they had an automoton, not a doctor. Then she wanted to open a botox/restalyn/laser treatment beauty clinic... because, hey everyone was doing it. She wanted to open like 10 of them because no one was really checking to see if the overseeing physician was really overseeing the clinics. Then she wanted to associate only with the wealthiest of patients by doing the concierge thing. But she's so ugly outside and in that I guess people really didn't want her. My dad was a doctor. He actually enjoyed helping people. It made him feel good to do this. At the end of his career he treated his regular patients for free when the insurance company's refused to pay for them or made problems.
After you said the poor need to get to work (because they're all lazy ingrates on the dole), I asked you what you expected them to do. Your fact free answer was that they would get jobs. You then said that our economy started going down the toilet when education was handed over to the NEA and homosexuality, and have yet to explain, despite my repeated polite questioning, what you meant by that.
CR or anyone else, can you tell me that interest rates(longer term) are definitely not going to rise in the upcoming months and years?
The amount of debt the Federal Government is pushing out is almost certainly going to lead to higher interest rates. Where will the capital come from?
The Federal Reserve is already monetizing treasury bonds to try to keep yields down, but price controls have always proven to be ineffective.
If the 10 yr treasuries rates rise to 6 or 7%, housing will go down the toilet, auto sales go down the toilet, corporate debt collapses, banks become even more insolvent, and the economy goes up in flames.
Simultaneously, the proportion of the federal budget devoted to paying interest on debt rises dangerously close to the level of tax receipts. When tax receipts can no longer cover the interest on the debt, the game is up.
For CR's prediction to hold true, interest rates can never rise again.
The only thing the homosexuals I have met all have in common is a preference for the same sex,and I have met plenty living in the SF Bay Area for 50 years.I would also like to note that Homo and Bi sexuality occur in all the mammalian species where people have looked for it.There are freaking gay seagulls for bleeps sake.I really and truly do not have time to waste caring about other peoples screwed up sex lives unless they scare the horses,and the garden hose takes care of that problem nicely.
"So Sportsfan - go somewhere that ideologues will appreciate you and leave this blog for adults who are willing to engage in intelligent debate.."
SI, you equate being pompous and overbearing with serious intent. If you can't hold your own in a disagreement with sportsfan, then change your handle and try again. That's what the other posters in your position have done.
the people who wrote the programs that permitted exotic securitization were gen X ers..quants
the guys who bought into it were often old enuf to be their grandfather
mozillo was born around 1938 not a boomer
clinton and bush were born 1946 the first year of the so called boomer gneration...a term that spans 18 years where as the gen x traditionally denotes a decade,,half of everybody is a boomer
greenspan was born in the twenties
treas sec rubin mid 40s, sec treas paulson 1938 not a boomer
and phill gramm was born in 42 not a boomer either
and btw those who claimed that its the boomers fault because of all the sex and drugs in the 60 and "we are still paying for that,,,"
i have only one thing to say,
the drugs weere cheap maryjane 20 bucks an ounce and the love was free,,
,so you arent still payin for any of it and neither am i, but God how i do miss those daze
kz - re immigration - legal immigration has been over 1 million per year the last few years, who knows how big the illegal immigration is - someone posted a link to a table earlier today...
re congress - minority membership in US congress closely mirrors population distribution - for example 14% of congress is black, just about the same as the % of the total population, whereas in France the minority population is also about 15% but only 5% of the National Assembly is minority... I would have to do research on other countries...
re left, right etc... My experience in discussions or debates with persons on the left/liberal has been and continues to be - the debate begins, they lose on the facts and then degenerate into emotional diatribes and name calling and personal attacks, ignoring the subject matter of the debate and attempting to intimidate and stifle their opposition - exactly the opposite of the free speech which they supposedly prize...
re education - I dont know exactly how much should be spent on education, but at the state level it amounts to almost half the budget... My problem with the NEA and school administrations is that they are promoting their own agenda and ignoring their mandate to educate the students to be productive members of society... That the public schools have become political indoctrination centers for the left and a recruiting station for the homosexuals who have infiltrated the ranks of the teachers. All those kids did not get the idea to become homosexuals on their own - they have been recruited into the lifestyle by their teachers. At the local junior college they now have a whole building dedicated to teaching incoming students reading, writing, and arithmetic. I have actually seen people who claimed to have a masters degree who cant effectively read and write. When the schools fail their students, the students will fail their employer and we all suffer as a result.
Uncle Billy: wish we still had docs like your dad. The older physicians we had in my village were great guys & several donated their time to help people after they retired.
Our present MDs are not even close to that. The new docs treat half the people with a medical complex 3x bigger than the old one. Well, they do hire most of the people around here. If you get sick, they'll have most if not all of your savings. We just went through that meat-grinder of a system.
I think that Shiller is caught up in word magic. Its not a depression because .... but it is a strong recession etc.
Perhaps the problem is that his dismal science has not come up with a broad enough scale to describe bad economic situations. Maybe a hurricane-like scale might be used.
We can call the scale George 1 to George 7 or whatever.
What I do know is that Shiller is looking for quantitative measures. This George has a qualitative, psychological effect on our society that is the worse since the 1930's George.
The effects will be long-lasting and a number of our social institutions will be changed.
It already is a bench-mark event and will only be more so before it is over
No No NO,Gen-x will fix things,they are not saddled with old outmoded ideas or crippled by the human failings of the Boomers they have no unhealthy desire for wealth and power.They are ALTRUISTS and much,much smarter than us old farts.They won't make the same mistakes we did, no way,no how.
"The depression question is extremely relative. Will we face the depression as defined by the pain of 30's or will we face the depression as defined by the life style we got used to since mid 80's?"
kz, I never said any of that.
I'f you're asking why market participants will swap junk for quality.... you have to ask yourself,
What is big money garbage? big money garbage is the last and greatest bubble in existence on Planet Money.
I have my thoughts on the matter. I dont think we get another bubble, but a bubble will be revealed.
"All those kids did not get the idea to become homosexuals on their own - they have been recruited into the lifestyle by their teachers."
thats an outrageous claim, besides
do you really believe people can be talked into being gay or straight??
could you have been recruited into an alternative sexual orientation??? i doubt it
i know what i like, and it runs deep, and was set at a verty very youg age
i dont doubt that culture and peer groups can encourage promiscuity but ,,,sexual orientation,,,for the most part (and there are exceptions to every rule) gays are not made, or recruited they are born and so are hetrosexuals
Tom Stone (profile) wrote on Sat, 5/2/2009 - 5:37 pm
When I look at as many factors as I can (demographics,resources,political realities,etc) I am not sanguine.Like lucifer I feel very large changes are happening.
TS: I agree, but what would you expect after spending a generation burning through financial and economic capital and a two years burning through social and political capital. I hope that the fools pretending to run our political-economy understand the risks that they are running, but honestly, I doubt it.
Corrected....I believe the odds of the current recession becoming a depression are ZERO!
Based on what assumptions? Let's see, we will have 10 million foreclosures before the housing market bottoms; 10-12% of the population are planning or contemplating bankruptcy; credit card & home equity are drying up, representing 70% of our economy. The govt. is backstopping and bailing out everything until they can't any longer when the bond market blows up; baby boomers are going to need massive amounts of health care and SS which won't be there; 600K jobs lost every month; public and private pensions about to blow up. And Wall St. returns to business as usual with taxpayer money.
The NEA annual budget is about $140 million. They don't set education policy. And you really are a bigot. It's not name calling, just an accurate description of fact.
Arbitrage macht Frei wrote at 554
1933: U.S. is the World's largest creditor & oil producer
2009: U.S. is the World's largest debtor & oil importer
Color me scared..
plus what Markar said just above
i agree, all the fundamentals are against us...we are in a world of hurt
i expect real UE at near 20% (not the phony number that drops people from the list when their insurance runs out)
and the L shape stretches out far far away leading to stagflation.. we are effed
NORKA the people running our system CAN NOT see it.Some Colleges have counselors especially trained to deal with kids raised on the bible as literal truth,quite a few of them have breakdowns(some suicide) when confronted with the fact that men and women have the same number of ribs.I have worked with Alcoholics and vividly remember one man who grudgingly admitted he might have a problem to get me off his back.He had lost a business netting $400k a year,lost his wife and kids,lost his home and was on his way to county jail to serve a year after his 3rd DUI in 2 years "If you had my problems,you would drink too","I don't know why everyone is on my case,especially the cops".he meant it.
Some weird quotes from Warren Buffett on Fed's stress tests and Wells Fargo:
May 2 ( Bloomberg ) Berkshire Hathaway Inc. Chairman Warren Buffett dismissed the importance of government stress tests in helping him assess banks, and said Wells Fargo & Co. will prosper no matter what the results show.
“I think I know their future, frankly, better than somebody that comes in to take a look,” Buffett today said of the bank stocks that Omaha, Nebraska-based Berkshire owns. Regulators “may be using more of a checklist-type approach.”
...
Buffett said he instead judges banks by their “dynamism” and their ability to attract deposits, and singled out San Francisco-based Wells Fargo as a “fabulous” company.
“If you look at Coca-Cola today, for example, and just looked at a balance sheet, it wouldn’t tell you anything at all about Coca-Cola,” the billionaire investor said today in a Bloomberg Television interview before Berkshire’s annual meeting. “It’s what the product is.”
Just wow. Buffett surely knows how important bank balance sheets are to the regulators and to the rating agencies (two of which, btw, downgraded Berkshire from AAA recently). The return on equity for banks critically depends on how much equity banks must hold, and that affects their value.
Buffett is not supposed to know about the stress tests results as they have not been made public yet, but it sounds he got a whiff of the Well Fargo 's result and is trying to downplay its importance.
I agree that the 1970's was worse. Gas lines, reduced work weeks, double-digit inflation, high taxes.... We've got a ways to go before we match that, and that was way better then the 1930's. But this is dangerous, and it's more fun to think the world might be ending than that we're just going through a dull old pre-1990's recession, like many others before it, and we're just a bunch of wimps whining about things our parents went through without much complaint.
Shadow
I am a dyed in the wool left winger brought up by ostentatious liberal elite educators and I tend to agree with your opinion regarding liberal thinking being shall we say defensive. I actually don't like the ignore button for that reason. A dialogue is a battle so don't be so thin skinned folks because the "truth" lies somewhere in between, no one entirely right or wrong. For instance, in trying to discredit shadows views earlier today I found, to the contrary, my views discredited. This is not a bad thing. Indeed, in the end it supports my contention that the banksters will be ok if we yank the dole, as much as they may fear it and proclaim the EOTWAWKI. As to the poor working I still think the happiest people I see all day are the crowds of mexicans at the job sites. Work is fun,there are some issues with pay, but this is capitalism, I honed my skills, did a good job, worried about making my customers happy and say pay me what I charge or I'll go elsewhere and I've found that works. Cheaper is cheaper and if it's cheap you want, cheap you get. There is no way to make the world fair. Basically it's a contact sport and if you can't stand the heat...
I don't want to talk only to those who agree, I've never learned anything that way. Look at all the crap CR gets for his sunshine posts. He takes the crap, and makes the post as we appreciate that he should. Don't get me wrong, I would love to witness the collapse of civilzation if for nothing else than the entertainment value, but they may just pull the rabbit out of the hat. That's entertainment. Too much of a good thing is a bad thing...Right?
CR, am I to understand your graph contains the annual yoy changes (except for 2009)?
Wouldn't it be enlightening (for comparison purposes) to plot the current estimate of the annual GDP decline (based upon Q1)?
Although I agree the recession began December 2007, I believe it has only been the last three quarters that have had negative growth, correct? So I'm a little concerned that in just the last three quarters the decline in GDP has surpassed the annual declines of the most recent recessions.
I see how a recovery in the second half of the year would offset the initial decline and put this recession in line with other past recessions (for example, 1958), but if GDP continues to decline, I believe that the rating number in the article regarding a Depression scare is going to go a whole lot lower.
As an officer in the military- don't YOU insult the nearly 5,000 Americans who have been killed and shipped home in caskets in the last 8 years of the global war... Midway was a battle anyway doofus..not a war.
Tremendously ignorant of facts and real history. Comparing the US to the British Empire?!!!
Well I guess they are exactly the same- other than the fact that the English had just lost TWO MILLION MEN in two WORLD WARS before they lost their Empire!!
Lucifer writes, "Really.. Sure the US has more opportunities than other countries, but is this due to to a set of random events or exclusively due to human intervention?"
Gee... which could it be...? Nothing but stone-age tribes in the America's for thousands of years before the evil white man arrived... then instant civilization. Must have been a random event.
We do have an illiteracy problem in the US and also the schools have never done a good job of teaching results based thinking... as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades... This does not bode well for us in the global economy for the next several decades...
It's a deliberate policy, and it's called Cultural Marxism.
The Great Depression is getting closer to something study in the history books, rather than something they personally remember. As such, fewer people have the fear of revisiting something they have personally experienced; and hence, now 18 years after the 1990 scare, perhaps the metric does not carry the same meaning as then, or in the 70's, or 50s.
CR,
I am not worried about a depression. We have fought that enemy before.
I think that this might be a bigger event, in its final impact. Not worser, just more transformative.
We needed a change - a change we could believe in..
Lucifer, I believe we are in for a long difficult period. We need to see household debt worked down, we need to see a stable financial system, we need to work off the overhang of excess inventory (especially in housing), we need to see the liquidity programs unwound ... the patient didn't die during the fall, but I don't think the patient will be running any climbing any mountains soon.
Shiller focuses on sentiment. I don't pay much attention to it, but I read his pieces.
best wishes.
A GDP decline of 10% would be 1.4 trillion... The Democrats have increased the federal budget by that much so that will offset the decline in the real economy, as long as they can keep the music playing... Maybe we will find out whether the fed balance sheet is really infinite, or that there is a brick wall out there somewhere...
CalculatedRisk,
I do not think that the patient can survive for long unless we change the doctors and the therapy. If we do not start implementing rational policies soon (a year at max), it might unwind in an uncontrolled manner.
Rational policies= Policies that are based on reason, rather than bullying people with "expert" talk. If a person cannot explain an idea, provide retestable evidence and withstand cross examination about it from an average interested person- it is a bad idea.
//I believe we are in for a long difficult period.//
There is a GDP chart (1950 - present) on the front page of The Big Picture. It shows a 1950s near-depression and an 80s recession worse than the current one. I don't know why.
ShadowInventory,
You wrote lots of great stuff on the last thread. Lucifer has his own little brand of socialism he's promoting, and it's not the stuff America was founded upon. You come to America, the "land of opportunity", to better yourself and not free-load. Sure, it doesn't work for everyone, but that's not the point.
When I look at as many factors as I can (demographics,resources,political realities,etc) I am not sanguine.Like lucifer I feel very large changes are happening.
All of these long-term #s are absurd without consideration of inflation, most of all, the 70% devaluation of late '33/'34.
But I appreciate someone finally attaching a concrete metric to "depression", arbitrary as it may be. Recognizing you have a problem is the first step to recovery, whether you're a booze, smack or debt junkie.
I was at the Mall today, Macy's was offering 30% off and then sent us a 25% on top of that coupon. Store was empty. Pushing on a string I think.
Whenever I hear these kinds of things I just repeat to myself in between every pronouncement "because it never happen before" and I just laugh at the dismal science as a whole. Who knows what Schiller's excuse will be. Unforessen dollar collapse? Excessive unemployment that no one could have imagined? Earthquake or pandemic? There is sure to be something no one saw coming so he cannot be blamed for missing it either.
Hoocoodanode?
At this point, I'd be happy with a Japan style L-shaped recovery.
The macro-economy and mass psychology are inextricably intertwined, so it's a valid topic.
Regardless, I still believe a depression is what we face and I've seen nothing to convince me otherwise. Even if the fundamental economic & demographic factors didn't already insure it, the government's working overtime to make it an absolute stone-cold lock.
Lucifer, that sounds a lot like the scientific method. Financial engineering is intentionally obscure and difficult to explain because the logic behind the models is flawed. If you were to apply a method as you described, the tax payers would come to the conclusion that it is a politically correct way of saying organized crime.
Thanks TJ ...
Lucifer is on my ignore list so I have no idea what he said...
I like the debate, I hope to learn something...
TJ and The Bear,
Really.. Sure the US has more opportunities than other countries, but is this due to to a set of random events or exclusively due to human intervention? People do not like to think about that too hard, because reality often does not live up to their wishes and dreams.
//You come to America, the "land of opportunity", to better yourself and not free-load. //
Isn't "L-shaped recovery" an oxymoron? What is that, sort of a permanently low plateau?
CR,
What happened to defining depression in terms of unemployment? Brad (Mr NBER) Delong has some handy reference points which I can't remember at the moment--wait--one is unemployment > 12%. Could happen IMO. If you look at it that way it doesn't seem as far-fetched as GDP going to -10%. I'll fall over in my grave if that happens.
@TJ,
In this context, L-shaped "recovery" simply means no further declines, but I see your point.
kz,
That is my point! We cannot play this game anymore because we have destroyed confidence in the system.
We have to create a newer and better system.. nobody is going to come back to live in this flaming inferno of a structure.
//Lucifer, that sounds a lot like the scientific method. Financial engineering is intentionally obscure and difficult to explain because the logic behind the models is flawed. If you were to apply a method as you described, the tax payers would come to the conclusion that it is a politically correct way of saying organized crime.//
The last thing this government did right was letting Lehman collapse. Everything since then has been at best expensive and ineffective. And those number very few as it is. These are th people and institutions we expect to keep us out of a depression?
The last thing this government did right was letting Lehman collapse.
Which is funny because several people have said if they could do it over again they wouldn't let Lehman Brothers fail.
I will let other readers enjoy the unintentional irony in this comment.
Correct me, but does debate not involve discussing about issues that people disagree on?
//Lucifer is on my ignore list so I have no idea what he said...
I like the debate, I hope to learn something//
Bernanke consistently says that if they had not saved AIG that the global financial system would have failed. If they had not saved AIG (paid off the CDS liability) then the holders would have had to take a big hit. It might have sunk some of the smaller countries but we could have helped them individually... A lot of the AIG cds payoffs went not only to GS but also to the big Euro banks... So we took the hit instead of them, as if we could afford it... Someone can expand and fill in on this? I'd love to hear more about it...
jobless stabilization...
"We have to create a newer and better system.."
No, we just have to patiently wait for the baby boomers to die off and hope that the Fed isn't replaced with something worse in the near future.
And, Lucy... if you go carrying pictures of Chairman Mao - well, you know the rest.
In a consumer economy.. sure why not?
//jobless stabilization...//
If we "preserved" Lehman the the only difference would be $100b and 20 banks on the stress test list.
1933: U.S. is the World's largest creditor & oil producer
2009: U.S. is the World's largest debtor & oil importer
Color me scared...
I do not think we have that much time. While decisions have to be rational, we cannot wait for this whole thing to come apart.
Putting humpty-dumpty back together is not easy.
//No, we just have to patiently wait for the baby boomers to die off and hope that the Fed isn't replaced with something worse in the near future.//
No, we just have to patiently wait for the baby boomers to die off and hope that the Fed isn't replaced with something worse in the near future.
Carousel! Renewal awaits! Sponsored by Goldman Sachs and their fine line of retirement products.
"Someone can expand and fill in on this? I'd love to hear more about it... "
The Shock Doctrine - Wikipedia, the free encyclopedia
HollywoodHack,
'Shock Doctrines' only work if there is a semi-stable underlying system.. that is the problem.
//http://en.wikipedia.org/wiki/The_Shock_Doctrine//
Matt Tiabbi has a spot on summarization
It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The Big Takeover
The Big Takeover : Rolling Stone
"Putting humpty-dumpty back together is not easy."
Almost no one under 35 really expects 2006 to come back. That kind of denial-of-reality is almost exclusively found in the cohort that created it.
The idea that we can somehow repair the banks and housing and that all will be well again is really only possible amongst those who have seen nothing but the "prosperity" of 1982-2006 for their peak-earning lives, i.e., those born between 1946 and 1963.
The macro-economy and mass psychology are inextricably intertwined
Absolutely.
I can tell you that my psychology has been permanently altered by the last 2 years.
I believe that millions that have had their 401ks and pensions crushed have had their psychology altered.
I believe that the more than 6 million continuously unemployed Americans have had their psychology altered.
I no longer believe most of what the government, and especially the Fed and Treasury tell me.
I no longer believe that long term stock market investing is the best way to save for retirement.
I no longer trust the banking system or the people who run it.
I do believe that the stock market (if not all financial markets) are based on fraud and deception, and are rigged to the advantage of insiders.
I do believe in commodities and precious metals -- the real thing -- not futures or derivatives.
Re: Effective Demand
I think if we bailed out Lehman we would've let AIG fail... and then everyone would say... "gee, we wouldn't let AIG fail if we could do it again!". You know, at some point the dollar is going to fail and there might be a bunch of people saying... "if we did it again we wouldn't let the dollar fail." I guess my point is your only good until the next thing fails. I have a hard time believing nothing will fail again... does Chrysler and GM count as "fails"? How about CA in a couple of weeks?
I guess eventually our military is going to "fail" too, that will be pretty scary (perhaps they've already failed by blindly going into wars that are deleterious in the long run... even though wars help you train how to fight and seem beneficial to have in the short run... at some point you won't be able to fight everyone). It's almost like our government is being run by those folks who run little leagues and give everyone trophy's and ribbon's and medals... the same people who run our school system and don't hold any students back because it will hurt their self-esteem... maybe not even US government, but maybe the whole world is running like that. I believe at one point very recently we really did fail students and hold them back a grade... whereas to my generation (Y) I've seen/heard jokes about HS students in their 30s (okay maybe 20s) but never really seen that happen.
This all seems a damn borderline way to run our country, yet most people seem to think its great, ie. we don't have widespread rioting. The great positive for us is that we've got 50 years of infrastructure built up and in-place that no one can take away from us (just as long as we don't whore out our toll roads, our telecom infrastructure, our financial industry, our defense industry, etc...) oh wait; what was that? Something about public roads becoming private toll roads (CA, Texas (?) ... cable companies and telecom companies actively lobby government to keep a stranglehold on that infracturcture (North Carolina fiber); we've outsourced defense to Lockheed Raytheon Grumman Boeing?
@dawg,
nice Logan's Run reference.
I could argue all the fundamental reasons why we're still nowhere close to the bottom in stocks, housing, employment, etc. but we've previously covered all that here in spades. I still can't help but wonder, though, why are the media and masses so damned gullible?
If someone gets their bell rung you expect them to bounce back quick; OTOH, if they suffer massive trauma you expect a long and painful recovery. Where does everyone get the idea that you can riddle the economy with bullets and have it jump right up and go "I'm good!".
Sure, the politicians and others invested in the status quo are going to spout such self-serving nonsense, but what is about most everyone else that even entertains such BS in the fact of reams of historical evidence to the contrary???
"'Shock Doctrines' only work if there is a semi-stable underlying system.."
Lucy, your idealism is touching, but not wholly unexpected in a proponent of half-digested Marx and Said.
It isn't supposed to work. It is supposed to create enough chaos to enable looting by those who know how to loot. In that sense, it has worked wonderfully as an instrument of foreign policy and domestic economic policy. Or are you not impressed by the 4 or 5 trillions bucks which have already gone out the door in our attempts at 'nation-building' and restoration of the banking sector?
HollywoodHack,
I am talking about having a functional world.. not restoring the old financial system (which is toast). The real world is far more fragile than you think.
Instead of relying upon numbers to decide whether we are in for another great depression, why not compare the people of the 1930's to our current-day collection of people that have had self-sufficiency surgically removed from them, for the most part?
Almost no one under 35 really expects 2006 to come back.
Most people that I know under 25 think that 2006 is the norm, and not the peak of the credit bubble.
New Haiku Moment:
~
Pushing on a string?
No--bad metaphor; more like
Pissing up a rope
~
"I am talking about having a functional world.."
Yes, we know, a world that never existed. Except, of course, for brief golden periods which you would undoubtedly approve of, like the genuine social equality found in Stalin's Ukraine circa 1930.
HollywoodHack,
There is nothing left to loot. Most of it never existed. It was just a lot of make believe.
Looting was possible only as long as money was something other than paper. You could loot under the gold standard or in fiat currency regimes where you could move your money to a stable west. That is the problem.. there won't be a stable west to move your stuff to.
the notion that we are moving away from a fiat currency to an asset backed currency is playing out in reality. the implications are far reaching for currency valuations and global markets. when i wrote “ALL YOUR STOCKS ARE BELONG TO U.S.” last september i hardly believed the words coming off my fingers:
404 - PAGE NOT FOUND
but now, here we are with an asset backed dollar. most analysts have opined that expansion of the fed’s balance sheet will take down the dollar. i thought this too but i am not so sure anymore. it now looks to me like the fed is creating a new kind of currency.
will people buy it? yeah probably, after it goes on sale. afterwards dollar value will be closely tied to the content of the federal reserve balance sheet.
Worm can open.
the fed is buying large portions of the U.S. economy, like 25%, with mouse clicks. good deal for them.
like it or not (and i don't) their purchases are the new backing of the dollar.
no way around it.
the implications are huge.
say they end up with a $5 trillion balance sheet.
US GDP was around $14 trillion when all the supposedly worthless assets were fully valued.
that there is over 33% of the former US economy.
i expect other nations to follow suit once they catch on.
the assets they are acquiring have real value.
now, i think there still will be a dollar takedown.
but when the dust settles the company that makes the dollars will own maybe 50% of the former U.S. yearly economy.
and thereafter dollar prospects will be tied to the value of those holdings.
is this an improvement over fiat?
probably.
especially when you consider that government debt (which used to be all there was in the fed balance sheet) is going down.
look at it like this:
the fed is diversifying
with mouse clicks.
for now, for the fed, money = mouse clicks.
probably a model that has limited days.
they are getting out of the fiat regime while the getting is good, utilizing the credit implosion black hole to create mouse click fiats with wild abandon.
those mouse clicks are gonna own half of everything.
the fed is not going to remove liquidity, later, eventually, as expected.
they are gonna keep it all.
light bulb ON.
If you doubt me ask yourself if the size of he fed balance sheet is related to the value of the dollar. Conversely, what's resulting value of the dollar be if the fed filled it's balance sheet with goose guano? Less than if it owned half of GDP methinks.
"Most people that I know under 25"
Give them a chance to sample the post-college labor market and see how that works out. Kids tend to figure things out pretty quickly.
I can tell you that my psychology has been permanently altered by the last 2 years.
I wish CR's chart on savings had gone further back. Current & future generations are already getting into the GD mindset -- much higher savings, low or no debt, grow your own food, fix things you have instead of buying new, don't spend money paying people to do things for you that you can easily do yourself, etc. Our "consumer" economy can't survive several of these things, let alone all of them, so it won't.
HollywoodHack,
No.. I am talking about a world where you depend on the infrastructure, where you can be fairly sure about the quality of what you eat, your property rights.. you know.. much more basic stuff, which many in the west take for granted.
I have never believed that everyone should make the same, just that we should make sure that nobody is too deprived... you can save a lot on other costs that way.
//Yes, we know, a world that never existed. Except, of course, for brief golden periods which you would undoubtedly approve of, like the genuine social equality found in Stalin's Ukraine circa 1930.//
. . .if you go carrying pictures of Chairman Mao - well, you know the rest.
Yeah, but someone has to fill it the blank for those who don't:
Revoultion
You tell me it's the institutions
Well, you know
You better free your mind instead.
"There is nothing left to loot. "
Lucy, the dollar is more powerful than ever... at the moment.
Think of the average person holding XOM or HAL incentive options in the period from 2002-2006. Failure, or success? Or the utterly failed moneycenter upper management guy suddenly sitting on tens of billions from the fed a few months ago. No one notices a few nickels under the cushions. A few nickels wired to the Caymans, a few to Switzerland...
A smashing success, enough for many lifetimes of wealth. You enjoy the doomsday theories, they'll enjoy the sunset on the Idaho ranch and the cocktail at the 5-star hotel in Monaco.
Slightly OT, but this is one way the financial industry in general and AIG, in particular, guarantees that some of its employees keep their jobs no matter what: have their dismissal trigger a 234 billion dollar default.
(From the WSJ)
"American International Group Inc. said it has persuaded a key executive at a French subsidiary to remain at the company, a development that wards off the risk that his departure could help trigger defaults on $234 billion in derivative contracts."
Here's the "dumbed down" version from the WSJ (I couldn't find the original one in the FT)
AIG Retains Key Executive - WSJ.com
Since we produce even less in this Country than we did in the 70's....the graph means squat..or could be interpreted to be TWICE as bad as it currently reads. Were SCREWED and the mental damage done by the ass raping will endure for YEARS.
Depression is already happening.
You can call it something different if it makes you feel better.
The interest rate / savings rate cycle changes are a confirmation.
If someone gets their bell rung you expect them to bounce back quick; OTOH, if they suffer massive trauma you expect a long and painful recovery. Where does everyone get the idea that you can riddle the economy with bullets and have it jump right up and go "I'm good!".
The phrase "jump-start the economy" says it all. All 4 wheels have been stolen, the radiator and oil-pan have been drained, there was sugar in the gas that was last run through the engine - but if we just run a borrow a few (triliion) amps to briefly run through the starter motor, all will be good.
Yeah, right.
HH re Shock Therapy - I have a lot of Milton Friedmans materials and I am pretty much in agreement with him as I understand it... Sometimes I see a Friedman quote which seems out of character and I dont know if those are real or not... AFAIK Friedman never advocated forcing free markets on anyone - all of my reading and videos of him are in the context of a democratic society... I think the fact that socialism has made any advances in the US is a direct reflection of the ignorance of the electorate... We do have an illiteracy problem in the US and also the schools have never done a good job of teaching results based thinking... as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades... This does not bode well for us in the global economy for the next several decades...
"I am talking about a world where you depend on the infrastructure"
Ah, infrastructure. Public goods like clean water, an honest, effective police force, stable currency...
Lucy, my father, a genuinely optimistic man who was born in a Federal housing project and really believes in this country, was smart enough to see the writing on the wall when he took a trip to Guatemala a decade or so ago. He saw that we are becoming them.
He's probably much, much smarter than you going by most metrics, but you've had the past decade to also figure it out. What's the hitch?
HollywoodHack,
At the moment, but the currency of failed states quickly becomes worthless. This has not happened in the last 60 years to a large western country.. let alone the USA. The key word.. has not happened.. but it can and nobody knows how that will play out.
//Lucy, the dollar is more powerful than ever... at the moment.//
the proponderance of the bias is palpable.
dont spill yer beverage while ridin yer tinfoil saddled pony.
Homosexuality?
I have been doing a lot of that lately. I remember an engineering professor telling me once that the macro-engineering skills needed to build the Hoover dam had been lost recently in this age of micro-engineering and globalization. He said we don't actually have the 'thinking' to build it anymore. Now I am sure he was over-simplifying a complex explanation but it got me thinking a lot about the people who lived through the Depression. We hunt and fish today for recreation and 'heritage'. My father grew up hunting and fishing to help supplement food and money in his family, something he picked up from this father and grandfather who both lived through the Depression. My mother's side grew gardens. These gardens were 3-5 acre crop patches that produced the canned beans and everything else under the sun for personal use, and then sold the rest. All of this was hard work. I remember as a child picking strawberries, pecans, tomatoes, peppers... you name it....not for fun, but because we had a canning schedule to meet and the whole family came home to help out. Who does this anymore? I think a lot of people will do it again soon.
I am thinking that HollywoodHack is Hoopajoops.
I think the assignation of Friedman as some kind of intellectual godfather of this school of thought is a misattribution. Same goes, to a much lesser degree, to Leo Strauss.
But the arrogance and sheer hatred of American ideals embodied in the neocons wasn't created in a vacuum. And Henry Kissinger could be viably tried as a war criminal on at least three continents.
As for the overwhelming power of the NEA... uh, ok... I doubt that .1% of your average teenager has even seen a Mapplethorpe picture... give me a fucking break.
Why do all these sophisticated economists look at the whole economy through a single indicator?
km4,
thanks for the IMF insider report.
"but it can and nobody knows how that will play out."
and that's why I own some DBA, TBT and gold. but i know that doomsday fantasies don't pay the bills in the here and now.
HollywoodHack
Any person who displays excessive certainty is either delusional or lying. If you read my posts, I avoid talking about certainties, because there are none. I prefer to consider possibilities and probabilities.
//He's probably much, much smarter than you going by most metrics, but you've had the past decade to also figure it out. What's the hitch?//
The Obama gamble: all the chips are on the Zombie’ Banks
Soros said the banking system is “seriously under water” with banks on “life support.”
note: Soros on Obama: He’s done very well in every area, except in dealing with the recapitalization of the banks and the restructuring of the mortgage market.
Soros said the change to fair-value accounting rules will keep troubled banks in business, stalling a U.S. recovery. “This is part of the muddling-through scenario where we are going to keep zombie banks alive,” Soros said. “It’s going to sap the energies of the economy.”
The “bugaboo of nationalizing banks,” which the Obama administration wants to avoid, means “we are nationalizing only one side of the balance sheet,” Soros said. “We gradually take over the deficits on the balance sheet. But we aren’t actually going to benefit from the banks recovering.”
the proponderance of the bias is palpable.
We have a new Sebastian.
otishertz is actually Astro-Turfing the environment for the PPIP etf's that will be rolling out in about 90 days or less.
short that pony out of the gate.
The only non-doom and gloomer on this board is CalculatedRisk himself. How ironic is that?
"lmost no one under 35 really expects 2006 to come back.
Most people that I know under 25 think that 2006 is the norm"
Most people under 40 don't have the background to identify the cycle, to have seen the state change in 1982 when the bull market began and know that a different world is not only possible, but existed in the past.
We have a new Sebastian
And like most sequels, the original was way better.
"I believe the odds of the current recession becoming a depression are very low"
Corrected....I believe the odds of the current recession becoming a depression are ZERO!
.........my late dinner menu : beef steak made from bull beaten up by angry bears ......I guess I dont need A1.......
Does anyone know what happened to DC1000?
"Most people under 40 don't have the background to identify the cycle"
True, but those significantly under that age are not burdened with the particular myopic arrogance of the boomers and also have the youthful ability to recognize that things done changed, and to do so in a right quick fashion.
Friedman & Keynes will someday be tossed on the ash heap of history. It's time for new thinking.
"...as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades... "
What has leftwing politics got to do with intelligence & learning? Absolutely nothing! Some would argue that the righties have left their common sense behind and are enthralled with their ideology and dazed by the echo chamber.
And before you denounce me as a hated liberal, I'm a former Republican who voted for Nixon & Reagan.
Graphs and charts tell you a piece of the economic puzzle, but if you really want to see what's happening, there are a good many things that can't be hidden from public view (glut of new cars, glut of leased heavy machinery, etc) and all you need to do is keep your eyes wide open, and you'll be amazed at just how quick things are piling up, as in no business.
How many new car with dealer plates have any of you seen driving around lately?
"Does anyone know what happened to DC1000?"
I have not seen him since he flamed out and went bust.
The point on the NEA et al was that political indoctrination has taken the place of teaching needed skills in the public schools...
I don't think there is any correlation between age and the ability to identify irrational behavior.
At work, our team's average age is 45 years. The age of the two people who cashed out of their 401ks is close to 35.
broward @ 6:22 pm "Most people under 40 don't have the background to identify the cycle, to have seen the state change in 1982 when the bull market began and know that a different world is not only possible, but existed in the past"
Bingo!.....Krugman's first Blog post
Introducing This Blog - Paul Krugman Blog - NYTimes.com - see chart
fond memories of the Golden Age of Middle class America after WWII to late 1980's then the great divergence in late 1990's
"That’s the country I grew up in. It was a society without extremes of wealth or poverty, a society of broadly shared prosperity, partly because strong unions, a high minimum wage, and a progressive tax system helped limit inequality. It was also a society in which political bipartisanship meant something: in spite of all the turmoil of Vietnam and the civil rights movement, in spite of the sinister machinations of Nixon and his henchmen, it was an era in which Democrats and Republicans agreed on basic values and could cooperate across party lines".
"How many new car with dealer plates have any of you seen driving around lately?"
LOL!! You might want to go outside...we are still going to sell 9 million cars this year in this country...you sound like we are selling zero
AFAIK Friedman never advocated forcing free markets on anyone -
Then obviously your reading comprehension has been altered by your right wing viewpoint.
An even smaller percentage of our budget goes to the arts than to welfare. What exactly was the problem with homosexuality?
So it is possible but improbable. While I agree it will not technically become a depression it will in fact be one on the floor the population in terms of psychology and standard of living. Just because you don't see it and feel it doesn't mean it isn't happening to others. We know how doctored government statistics are. We know how doctored corporate metrics have become. We haven't hit peak "pick an answer then find the data" culture yet.
I still think the real debate is on the recovery we will have and not whether we will have a depression...I think the recovery will be 2-3 years of little or no growth...
Even though Krugmans chart shows the middle class lasting into the 80's - the changes really started in the mid to late 60's - we had Vietnam, Big Welfare, and the Free Love movement - followed by the Disco/Big Drug movement in the early 70's... We are still paying a big price for all of that...
"Does anyone know what happened to DC1000?"
I have not seen him since he flamed out and went bust.
Yeah, it was high drama. I just wondered if maybe things turned out OK or if he was seeing any green shoots.
Sportsfan cite your source of Friedman advocating forcing free markets ...
" if he was seeing any green shoots."
I dont think he will see any green shoots for 7 years....
My question is how do you define recovery if in fact the USA is in decline?
i do believe that dc1000 found a position as a CFO at an education-related outfit.
trading one bubble for the next, but props for getting out of the gutter...
" the particular myopic arrogance of the boomers"
True.
They have their own particular arrogance and stereotypical beliefs.
It will take a decade or two of experience to winnow those down to match the Boomers.
All Hail the New Sebastian.
Now all we need is a new Jas.
Friedman's whole philosphy summed up in a single statement - and a direct quote from his videos on PBS in the 70's - stated slowly and clearly...
"The most people - will be the best off - with the least government"
kz @ 6:33 pm We haven't hit peak "pick an answer then find the data" culture yet.
We're getting closer like with Wolfram Alpha ReadWriteWeb See Wolfram Alpha in Action: Our Screenshots
Sportsfan cite your source of Friedman advocating forcing free markets ...
Shadow, capitalism does not allow for any alternatives.
Capitalism is enshrined in the Constitution according to rightwingnuts.
Friedman was a tool of the TPTB trying to show that "we" were better than they were.
Anyone who reads him is a fool.
bank failure says,
"otishertz is actually Astro-Turfing the environment for the PPIP etf's that will be rolling out in about 90 days or less.
short that pony out of the gate."
i'd probably short them with you pappy, just not out of the gate.
most etfs are scams, particularly the ultras.
Sportsfan - I dont usually engage in blog baiting but in this case I'll make an exception -
Put up or shut up.
I think the recovery will be 2-3 years of little or no growth...
C&C, besides your non-depression call, what makes you think we'll do so incredibly much better than Japan?!?
Nostalgia is a key ingredient in the boomer cocktail of delusion. Everyone's favorite Enron consultant, being born in 1953, could certainly qualify as an expert on that one. As for any other field, no comment...
"...myopic arrogance of the boomers..." Some of us are neither myopic nor arrogant and some of us understand & empathize with the thinking of Gen X. In fact, we're free-thinkers who are appalled at the carelessness & greed of the last 20 years. We do indeed remember a time when people didn't scream at each other but discussed solutions to our problems.
I have great concern that the far left & far right will tear up the middle just to get at each other.
I see you did not cite any source of our disagreement but instead posted some ignorant statements with no logic whatsoever...
So Sportsfan - go somewhere that ideologues will appreciate you and leave this blog for adults who are willing to engage in intelligent debate..
I have nobody on ignore, including Jas and Michael.
Some people just can't bear to understand that other sentient beings disagree with them.
I hope that people will endure the stupid things I say, and I will forgive the stupid things they say.
Deal?
well, SI, I agree on much of the substance there, but there is more than a little irony in hearing disciples of Leo Strauss blame gay culture for a deterioration in the culture. Is there anything more deeply gay than "The Republic"?
"The most people - will be the best off - with the least government"
Yeah, so don't tax any of the rich folk. They have far better fucking things to do with their money than support the system that made it possible for them to acquire . . . that is, steal, . . . their wealth from the labor of others.
However, Jas reallllly tempted me a few days ago.
I have great concern that the far left & far right will tear up the middle just to get at each other.
Too bad we can't just step out of the way and let'em destroy each other. I'd bring the popcorn.
TJ and The Bear - I dont think 2-3 years of -1 to +1 GDP growth will be a walk in the park, especially when you add in 11% UE. It will be very painful, especially if you are in the UE ranks...that said, I think the massive government spending will take the place of the lost private sector investment.
In that spirit of intellectual debate, I'll ask you a third time to explain your problem with homosexuality.
Shadow, what the fuck is your problem?
Are you mad because David Souter had to wait eight years before he could safely resign . . .
Instead of letting Bush appoint another ultraconservative to the Supreme Court?
Like the five ultraconservatives that stole the 2000 election for him . . .
And convinced David Souter how ruthless those free-market conservatives really are?
"fond memories of the Golden Age of Middle class America after WWII to late 1980's"
Yes, I've weary of the past ten years. I don't think Greenspan did us any favors by prolonging the Depression which really began in 2001, Dot Com Crash. The constant harping on "survival of the fittest" to justify lies and cheating, the delusion of globalism, a complex & fragile system to provide pretty much what we already had at much higher risk so as to make profit on short-term pricing differentials which are already collapsing, the fact that we need ever more weaponry and intervention in other countries....
I remember 1982 being a lot better period with about the same standard of living for me. I lived in San Luis Obispo, it was relatively peaceful, none of this weird paranoia and reactionary anger and constant meaningless churn, churn, churn of jobs and stuff and people and things.
deal, liz, what's for dinner?
I think that the argument is that the rich get most of the welfare--and don't even get scorned for it--therefore they will lose the most.
There seems to be some validity to this, but I think it is mostly mierda.
Shadow, I'm not going anywhere.
Get used to it.
Lucifer and HollywoodHack don't own this blog and neither do you.
"However, Jas reallllly tempted me a few days ago. "
Keep an eye on the treasury market and you can tell went Jas is really pissed! LOL!! I think he is finding out who the real dope is
HollywoodHack - "Nostalgia is a key ingredient in the boomer cocktail of delusion"
Really....You are a bitter man with a chip on a shoulder....BOL because you'll need it going forward !
Oh BTW here's some great boomer Nostalgia
Santana - Soul Sacrifice (Woodstock 1969) YouTube
- Santana - Soul Sacrifice (Woodstock 1969)
I think the massive government spending will take the place of the lost private sector investment.
If that was a viable option then why isn't the USSR still around?
Liz,
Michael hit the "bits bucket" the first time the option showed up next to his name. I suspect I am not alone altough I would understand if I'm in there with him for others.
As I said on the previous thread. Chef's Salad with mine own teensy tomatoes and peppers and broccoli, and Kashi pizza. And ice cream and fruit.
Tomorrow my son cooks. He's planning Indian food type chicken.
"If that was a viable option then why isn't the USSR still around?"
The oil and gas,bust of the 80's, a war in afghanistan against the US and communism did the USSR in.
I didn't personally have it bad in the 70s, but I remember being very glad they were over.
Given the pervasive (and justified) fear of nuclear war in the 50s or 60s, vs financial fears, I'll take financial fears anytime.
Hurray for dc1000. Is he the same as something something 9000?
I'll never argue with the conceit that the golden age of Rock was a high point in music, or that the pop music of later generations is a pale, pale shadow.
Most of those greats (and most of the more intellectually interesting characters of the 60s) were actually born during the war, and not much later, FWIW, making them a little early to be boomers. It is the ones that are demographically in the middle of the herd (like Krugman) that are downright pathetic and have been most corrosive to the nation. Santana is right on the cusp, which helps explain his uniformly horrible output since Reagan was elected.
Whom the God's would destroy the first make mad.
During boom years, many argue that "this time its different", during downturns the argument then becomes: "this downturn is no different than others we have faced (postwar)."
Well, the bubble WAS different - it was more dangerous because it was a credit bubble - and the downturn is already more severe than others (postwar), and it ain't over yet. And it doesn't help that the financial industry is so large and intertwined with government, that wealth disparity and tax policy is so out of whack, that we have had a HUGE misallocation of resources that has harmed our competitiveness, that we are fighting a war or two, and a multitude of other problems.
dc1000 filed BK. Now he can raise his kids.
Look, we had some good threads today. Must we get into the chest thumping & poop throwing? Guess we haven't come that far from the trees.
"Nostalgia is a key ingredient in the boomer cocktail of delusion"
Thus spoke the arrogance of the Post-Boomer, knowing deep within their heart of hearts that Boomers did create all their woes and their own own natural Superior Intellect would eventually triumph over Neanderthal Boomer Man.
The oil and gas,bust of the 80's, a war in afghanistan against the US and communism did the USSR in.
Change the names and dates and it sounds a lot like us, no?
Regardless, my point is that government is no substitute for the free market. They're doing harm, not good, because politically driven economics leads to gross mis-allocation of resources. As I stated earlier, they're not only not saving us, they're guaranteeing a depression.
@HollywoodHack "Santana is right on the cusp, which helps explain his uniformly horrible output since Reagan was elected".
I do agree with you on this point
Loved the Santana link...
"that we are fighting a war or two"
we aren't fighting any actual wars - that's a travesty. fighting over a million chinese irregulars in the mountains of korea was a war. the battle of the bulge was a war. Midway was a war.
what we have now is just particularly ugly (and failed) attempts at playing Global Cop. don't insult the sacrifice of the americans who fought in real wars by using that term, please.
Km4:
Excellent thread music.
"
You can’t blame the president if he is laughing, too. As The Economist recently certified, the G.O.P. is now officially in the throes of “Obama Derangement Syndrome.” The same conservative gang that remained mum when George W. Bush praised Putin’s “soul” and held hands with the Saudi ruler Abdullah are now condemning Obama for shaking hands with Hugo Chávez, “bowing” to Abdullah, relaxing Cuban policy and talking to hostile governments. Polls show overwhelming majorities favoring Obama’s positions. But his critics have locked themselves in the padded cell of an alternative reality. Not long before The Wall Street Journal informed its readers that 81 percent of Americans liked Obama, Karl Rove wrote in its pages that “no president in the past 40 years has done more to polarize America so much, so quickly.”
"
My, my. "The padded cell of an alternative reality."
From Tomorrow's Frank Rich column.
"They're doing harm, not good, because politically driven economics leads to gross mis-allocation of resources"
I agree 100% that this kind of spending will be wasted and mis-allocated, however, without it we would guarantee a depression.
" Guess we haven't come that far from the trees."
That's not true.
The inbred natural superior but suppressed-by-Boomer Intellect of Post Boomer Man has triumphed over ape-ish heritage. Post Boomers only need to lie and cheat because Boomers force them to!
Ipso Dipso Facto!
hahahahha.
The oil and gas,bust of the 80's, a war in afghanistan against the US and communism did the USSR in.
Change the names and dates and it sounds a lot like us, no?
Yes, except we have more wars.
War in Afghanistan.
War in Iraq.
War on Poverty.
War on Drugs,
War on Terror.
In the works...
War on Smoking.
War on Obesity.
ah, broward, the moisture of the endless PNW winter seems to have left some condensation upstairs...
i would never credit the boomers with creating much of anything - but they certainly warped and perverted the institutions they inherited to a frightening degree.
and we don't want 'triumph' - we're just praying that the damage will play itself out on a relatively quick timetable, minimizing the length of time and resources needed for the cleanup.
Liz,
The only reason you will end being ignored by me is if you ever start espousing hate towards people because of race, religion, or sexual preference. Michael qualifies for all of the above but for some reason I find him entertaining and once in awhile interesting.
Noooo. HH is not Hoops.
Hoops would never have made that stupid homosexuality comment.
@ ShadowInventory Loved the Santana link...
You're most welcome...They stole the 1969 Woodstock Festival with this fabulous performance and you can thank super promoter Billy Graham for getting them in.
Bill Graham (promoter) - Wikipedia, the free encyclopedia
However Joe Cocker - A Little Help From My Friends - Woodstock 1969 YouTube
- Joe Cocker - A Little Help From My Friends - Woodstock 1969 gave them a run for best performance
(sigh) So after we discount the synthetic financial economy, what's left? Has anyone done an inventory of exactly what we have here when we get rid of all the banking and real estate junk?
The idea that we can somehow repair the banks and housing and that all will be well again is really only possible amongst those who have seen nothing but the "prosperity" of 1982-2006 for their peak-earning lives, i.e., those born between 1946 and 1963.
YAWN
We have a new posting forum and different names but the same bullshit stupidity. Meanwhile the rock still circles the sun... revolution after revolution.
thanks nova. As to Michael me too.
HH
The larger wars you cite all have one thing in common, both sides wore identifying uniforms.
Our current debacles have us wearing identifying uniforms, but the other side has felt it isn't necessary, so who exactly is the enemy if everybody looks like a civilian?
Look, we had some good threads today.
Paradigm Lost, my apologies for upsetting the decorum.
A Korean war vet who lost an eye and earned a Silver Star along with his Purple Heart was memorialized today. He died broke.
We treat our heroes like shit.
I'm just gonna keep drinking. Goodnight.
That wasn't HH; it was shadowinventory who is now ducking an explanation for his apparent bigotry.
My, my. "The padded cell of an alternative reality."
Lol. Apparently it is a short trip from alternative rock to alternative reality. It must be profoundly frustrating to have the bar from the previous administration set so low and still find the current one coming up short. We hear it on CR all the time. The deepest insult you can deliver; "Meet the new boss..."
however, without it we would guarantee a depression.
So, let me get this straight... you believe a bunch of phony, government-driven pseudo-economic activity will keep the masses busy enough to prevent the economic indicators from flashing "depression"? That's certainly in the cards, but IMHO they'll run out of ammunition -- i.e., the dollar will fail -- way before the war is over.
Regardless, my point is that government is no substitute for the free market.
TJ - we haven't had a free market since AT LEAST slavery period. ExxonMobil, GE , GS, Microsoft are sufficiently large to be indistinguishable from gov't. The gov't maybe stupid and promoting destructive policy but they are mirror images of the 'private sector'.
Feelings...nothing more than feelings...
Since we're marking all our assets to feelings/fantasies might as well mark our entire future there as well.
LOL, ask John Yoo! And, while you're at it, see if you can help Alberto G find a job.
Billy - well we still have the world's finest agriculture and food processing - our food supply is the safest anywhere although not 100% of course... We have the best transport system - rails and containers for the heavy cargo, highways, ports... We have the best medical care (for now)... I think the most important thing is we have a lot of creativity and even though we dont know what will come out of it maybe something will still show up... After all, even though I knew about Apranet at the beginning and I was happy to have it - I thought that I would maybe be able to read the draft of someone's master's thesis or doctoral dissertation - I never dreamed of the net as we know it now...
We still do have some heavy manufacturing although it is struggling... We do have a very patriotic volunteer armed services... We have the most advanced military hardware..
Hey we are not so bad!! I could go on and on...
"...don't insult the sacrifice of the americans who fought in real wars by using that term, please"
HHack: You are much much closer to insulting those who have served in Iraq and Afghanistan and elsewhere, than I am to insulting those who served in the Korean War.
"We have the best medical care (for now)"
Indeed we do, if you have the best insurance or best bank account...
And this is the problem with many of the things you mention in terms of infrastructure. I'm not sure that 'best' comes to mind when driving the 5 through LA county. But better than most of the rest of latin america, I suppose.
"That's certainly in the cards, but IMHO they'll run out of ammunition -- i.e., the dollar will fail -- way before the war is over."
But, "this plan will work!" Of course we are looking down the double barrel of inflation and unemployment, and somehow making MBS worth something by printing money works?
I supect we will get to a workable solution eventually, but I strongly doubt Geitnher will be at the helm when that happens.
"We have a new posting forum and different names but the same bullshit..."
Yep, deja vue all over again.
BTW, dryfly...you may have missed my comment about thoroughly enjoying the history thread. I wanted to say that I agreed with you that the North would've eventually crushed the rebs. I have relatives who are Oglala Sioux/Rosebud Reservation who know the stories the history books don't tell. When disease didn't kill 'em off, we starved them into submission.
TJ - we haven't had a free market since AT LEAST slavery period.
Please excuse the poor choice of words because I certainly agree. I just believe in profit motives much more than political ones when it comes to determining beneficial & sustainable economic activity, even accepting the fact that government interference in the economy has always skewed things to some degree.
Seeing as how my taxes directly paid for those overseas adventures, half of my extended family has served and/or serves in the military and the political culture of my country was rotted by the false patriotism and outright stupidity attached to them, I have no problem with that.
No one asked me if it was smart to relive the UK circa 1920-1935. Not incidentally, the end of their empire.
Hey we are not so bad!! I could go on and on...
Shadow - you work with any of those things - in any of those industries? Just asking [and not disagreeing w/ some of what you said] - wondering where you got that perception - it isn't the standard boiler plate around here.
Because GOD hates it....
As someone who presently uses the medical system for pretty much the first time in the last 2-3 years, and has good insurance, count me underwhelmed.
HollywoodHack (homepage, profile) wrote (in reply to...) on Sat, 5/2/2009 - 7:10 pm reply Ignore user
And this is the problem with many of the things you mention in terms of infrastructure. I'm not sure that 'best' comes to mind when driving the 5 through LA county. But better than most of the rest of latin america, I suppose.
Ahhh but look at the difference as you cross the border from Democrat L.A. to Republican O.C. [ducks]
That last post was in response to Gay marriage and Homo behavior....
HHack: So you should rightly blame the political leadership that sent our troops on these overseas adventures and not insult those who have died or suffered while serving their country.
Sportsfan: I wasn't really talking to you but another. I understand the grief...we recently lost a dad who was with Merrill's (sp?) Marauders in Burma.
he same conservative gang that remained mum when George W. Bush praised Putin’s “soul” and held hands with the Saudi ruler Abdullah
GWB KISSED the S.O.B. - and the wingnuts go crazy over a handshake!
Of course, Obama is destroying the economy at least as rapidly as GWB, given Timmay, cap-and-trade, and borrowing us into oblivion.
... by belittling their participation as not being part of a "real war"
oh, I know it very well, Rob. you could eat off of the gleaming jewel that is the 73 - just don't forget to pay the man his toll! Perhaps we should just appoint Bill Gross and Don Bren State Co-Emperors and be done with it.
I increasingly find myself hating the sacramento establishment circa now almost as much as I despised the washington GOP mafia circa 2002. almost.
Please excuse the poor choice of words because I certainly agree. I just believe in profit motives much more than political ones when it comes to determining beneficial & sustainable economic activity, even accepting the fact that government interference in the economy has always skewed things to some degree.
Hear ya.
I've always said if you want small gov't then you better have a balls out anti-trust function... because if you don't the corporations will grow so large as to become gov't. We've had an 'operational arms race' between big business and big gov't ever since the Manhattan Project... only when business gets small can gov't be small again.
Liz--I had a client that said his doctor is going to concierge medical services. Going from 6 docs to 3 in the practice and will now charge a 2,000 per fee for 24/7 on call services. This is non refundable and is just to hold your place in line. Medical services rendered are billable. This client of mine was a pension fund exec.....He was scared shitless about the economy and frankly...talking to him scared the shit out of me.
LOL, Jackrabbit, get it straight...
Just to stay on topic and try to avoid the temptation to needle Post-Boomer Man (and man, it's really hard), Krugman comments on word counts for "Great Depression". I think CR interprets sentiment as cause and economy as effect but I see a more complex situation. Word counts are often reflections of what's happening, symptom instead of cause.
SARS versus Avian fever word count graph -
http://www.realmeme.com/roller/page/realmeme/?entry=sars_versus_avian_flu_meme
Clearly, these graphs are symptom driven by physical cause, i.e. infection.
I read today that the Veratect company predicted the flu outbreak eighteen days before WHO or CDC, using data-mining very similar to word counts but probably using much better filtering and variety of data sources. I know that some hospitals resell their data now, stripped of personal identification. They also identified the original site of infection within the U.S., which jumped to Mexico City a few days later.
"...our food supply is the safest anywhere although not 100% of course... We have the best transport system - rails and containers for the heavy cargo, highways, ports... We have the best medical care (for now)... "
Are you serious? Whatta bunch of BS.
HollywoodHack (homepage, profile) wrote (in reply to...) on Sat, 5/2/2009 - 7:16 pm
I increasingly find myself hating the sacramento establishment circa now almost as much as I despised the washington GOP mafia circa 2002. almost.
Wait until May 20th when they trot out their "Washington Monument" plays to teach us revenue centers [aka taxpayers] not to vote against their plans. It may not be enough to turn you Republican but it tempt you.
This is non refundable and is just to hold your place in line. Medical services rendered are billable.
Doctors on retainer? Hmmmm...
And was, I assume, snarky, Money.
I think that people are thinking in categories which have lost some of their creative oomph, to wit, communism, socialism, capitalism.
When the problem is that robots can take your chance of a job away, all three are irrelevant to the problem. Robots should make everyone's life easier, like a Roombah. Not condemn you to not just poverty, but contempt too. Because if you are poor, you must certainly be lazy. But it seems to be an unintended consequence. No reason why it can't be worked around tho.
Other categories need to be added.
Damn, what was the name of that Heinlein book.
"I think the massive government spending will take the place of the lost private sector investment." Ceteris paribus? Because that government intervention will have unintended consequences. It will dull the private sector further by stifling growth potential. Innovation will be replaced by lobbization in technology. It will cause sticky prices for goods and products that would not otherwise have sticky prices. When prices are sticky resources are further misallocated. As the misallocation increases so does the government intervention, attempting to create green shoots in the face of the decreased economic strength and flexibility.
The depression question is extremely relative. Will we face the depression as defined by the pain of 30's or will we face the depression as defined by the life style we got used to since mid 80's?
I ve got another tough question on my mind, will we learn anything out of asset bubble exuberance and our recent experience? My bet is little. However throughout human history hard times were catalyst for new ideas and breakthrough. Maybe, just maybe something positive will come out from our current sufferings.
p.s. when it comes to behavior finance no one understands situation better than Dr Shiller. (I ve seen his online courses, amazing. )
kz, thats wrong. Market participants will trade junk for quality.
broward, as a post boomer and one sometimes prone to giving less than fauning reviews of my parents' generation, I must admit you are cracking me up at my own idiocy. Good job.
I disagree.
It is no coincidence that sentiment indicators are highest a bull market tops and lowest at bear market bottoms. Investing is a game of confidence and trust. This makes the feelings of the public important in determining where we are in the economic cycle.
I've been thru all those things mentioned earlier, and the closest analogy was the early 80s inflation/S&L bust.
But this feels completely different. In a worser kind of way.
KM4:
Another excellent music choice. Ah, to be 14 again...
Interesting. I was typing feeling at the same time Tim was posting about feelings.
I would hate to be 14 again. Except for the music.
HollywoodHack,
I think we pretty much agree that there's a low risk of near term inflation, but how does the Fed unload its Treasuries, when "the time" comes, without crashing the market? Seems like a dicey, brave-new-world position to be in.
I haven't been following treasuries; I gather they went 'way up so Jas's portfolio went 'way down?
LawyerLiz: Heinlein..."The Door Into Summer"?
All you are seeing is a transfer of the debt load onto the government's balance sheet, and all this is happening just prior to the retirement of the Baby Boomers. A funding crisis for the US government is in the near future (almost certainly no later than 2015, and maybe a lot sooner).
: 0
Edited
No, we will have a depression. It won't show up in statistics though. Please don't confuse government propaganda and financial oligarchy as a favorable alternative. There are many countries in the world who chose "benevolent" demagogues and their horde of criminals under the guise of national security. It has never and will never work out for the majority of the population. I once read a quote along the lines of "do not measure success by the wealthiest of a country, but instead by the poorest of the country. That will show the true intent of the leaders".
Samdog,
The Fed is the Hotel California for Treasuries & Agencies.
YouTube -
lawyerliz (profile) wrote on Sat, 5/2/2009 - 10:26 pm
I've been thru all those things mentioned earlier, and the closest analogy was the early 80s inflation/S&L bust.
But this feels completely different. In a worser kind of way.
This is MUCH worse than what we went through before. We're in no man's land with an eighty year-old map. The Fed and Treasury have assumed risks that would have been considered mutiny in 2006.
Nope Paradigm.
The one I am thinking of had elaborate curtesy, and dueling and stuff, along with colored fingernail polish for men, and genetic engineering of a pleasant sort, nothing forced or anything, and a rebellion by the incompetent, and a stupid mathematician.
I notice my critics post no facts... typical response instead of intelligent debate... If you overwhelm me with facts I will gladly change my position...
I also notice people are still dying to get into this country, not out of it...
I notice that our congress more closely mirrors our population than any of the supposedly enlightened euro countries..
You on the left always claim to be so open minded, yet your voices speak like the fools of fascism...
Educate yourself before you speak lest you be thought of as an ignorant fool and be banned to the ignore list...
"The depression question is extremely relative. Will we face the depression as defined by the pain of 30's or will we face the depression as defined by the life style we got used to since mid 80's?"
Defined by a moving average of the US since WW2 I would say. It would be foolish to expect a return to the 1930s (and maybe equally foolish to write off that possibility?) because of advances in technology. The computer itself has changed the world in a profound way, we can't even comprehend what 1930s life was like. Even those who were alive then won't remember it with any of the severity. That's a good thing. Humans are resilient, we take hardship, survive it, forget about it and thrive on.
bANK fAILURE, could you explain that a bit more?
"TJ and The Bear (profile) wrote on Sat, 5/2/2009 - 10:35 pm reply Ignore user Samdog,
The Fed is the Hotel California for Treasuries & MBS.
Whoa, TJ--thanks for that stroll down memory lane.
I forgot about Don Henly's 'fro. Those boys looked grubby and stoned ... good times--at least the part I remember
I've been thru all those things mentioned earlier, and the closest analogy was the early 80s inflation/S&L bust.
But this feels completely different. In a worser kind of way.
You know - I see it absolutely opposite. I lived through those and definitely from my perspective it isn't ANYWHERE near as bad as S&L or 70's stagflation & rust belt... not even close. But then I was at ground zero for stagflation & rust belt [Great Lakes & Midwest Great Plains]... not at ground zero this time, I'm way out on the 'periphery of the disaster'. Might find it's way my way but it hasn't yet - not like it did then. I hardly notice any change from say 2006 in 'my neighborhood'.
Where a person sits is where they stand?
EDITED
LawyerLiz: "Stupid mathematician" kinda sounds like one of the Foundation series...Harry Seldon was the main character. It was years ago that I read them...can't remember that one.
ShadowInventory (profile) wrote on Sat, 5/2/2009 - 10:42 pm reply
You on the left always claim to be so open minded, yet your voices speak like the fools of fascism...
ShadowInventory,
I'm nowhere near the left, but I have notice when my "inner fascist" comes out--it's speaking German!
LawyerLiz: Check out the last graph on this:
Heinlein in Dimension, Chapter 5, Part 1
What I would really like is to find someone who can teach me how big the Fed balance sheet can be until we hit the wall...
FINAL Thought for the Day
The Stock market is forward looking. It prices in trajectory as much as worth.
Exhibit A. Microsoft. Makes more money now than in the early 2000's but yet it is 1/3 the price.
Question what are the growth prospects for US companies?
America's advantage is nobody else, not even the Chinese, really wants to be a superpower. But I sense worse things ahead anyway, because... fundamentally what our government is doing is just basically bailing out bastards who don't deserve to be bailed out. They know its wrong but do it anyway because they dont have to answer to anybody.
Lets not forget, this 'recession' wasnt called a recession til a year in... i suspect that after a terrible xmas season 2k9... ppl will truly truly feel a depression. Its still early folks....GM still runs as a company...
ShadowInventory,
HolywoodHack left a comment on the previous thread to the effect the Fed could soak up $10 T. He didn't elaborate, though.
ShadowInventory: You sir, are a bully.
why should anyone bother to "overwhelm you with facts"? You would not listen if we did. It's not worth the trouble.
A bully because I asked someone to cite their source?
My purpose is not to stifle opposition, only to promote debate, but if you want to debate with me you better come with facts.
I notice my critics post no facts... typical response instead of intelligent debate... If you overwhelm me with facts I will gladly change my position...
To quote yourself:
"Billy - well we still have the world's finest agriculture and food processing - our food supply is the safest anywhere although not 100% of course... We have the best transport system - rails and containers for the heavy cargo, highways, ports... We have the best medical care (for now)... I think the most important thing is we have a lot of creativity and even though we dont know what will come out of it maybe something will still show up... "
A case of the pot calling the kettle black. Since you have some interesting points I'm a bit confused by this. We have no reason to fear for food safety in this country minus being hit by an asteroid and the world climate changing. We are creative and innovative. But we are definitely not in possession of the world's finest transportation system. No one has that figured out completely. And medical care is neither equitable or affordable across socioeconomic strata.
I also notice people are still dying to get into this country, not out of it...
How about some numbers which describe the inflow and outflow of people from different countries and continents to the US. That might be a bit more elucidating.
I notice that our congress more closely mirrors our population than any of the supposedly enlightened euro countries..
That is somewhat difficult to measure. But any conclusion that politicians of one nationality are superior to those of another nationality could be construed as naive.
You on the left always claim to be so open minded, yet your voices speak like the fools of fascism...
I am neither left or fascist. But isn't that an apples to oranges comparison? Perhaps you mean left or right, communist or fascist. Again, I am neither, and neither are many on this board. Social liberals and fiscal conservatives would be a better match the commentariat.
Educate yourself before you speak lest you be thought of as an ignorant fool and be banned to the ignore list...
To quote yourself:
"We do have an illiteracy problem in the US and also the schools have never done a good job of teaching results based thinking... as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades..."
I agree in that we have a massively underfunded education system thanks to the military industrial complex, but are you sure you meant to write the second sentence?
What graph were you talking about?
I didn't see no stinkin' graph!
"concierge medical services"
I know a person who does this. First they took over a retiring relative's practice. Then the got rid of all the old people patients in the homes because she thought they were icky. Then she went and got them back when she realized she really didn't have to invest much time in them and it paid nicely. Then she leveraged herself to the hilt with family and friends to buy other practices. Then all the regular patients left because they realized they had an automoton, not a doctor. Then she wanted to open a botox/restalyn/laser treatment beauty clinic... because, hey everyone was doing it. She wanted to open like 10 of them because no one was really checking to see if the overseeing physician was really overseeing the clinics. Then she wanted to associate only with the wealthiest of patients by doing the concierge thing. But she's so ugly outside and in that I guess people really didn't want her. My dad was a doctor. He actually enjoyed helping people. It made him feel good to do this. At the end of his career he treated his regular patients for free when the insurance company's refused to pay for them or made problems.
After you said the poor need to get to work (because they're all lazy ingrates on the dole), I asked you what you expected them to do. Your fact free answer was that they would get jobs. You then said that our economy started going down the toilet when education was handed over to the NEA and homosexuality, and have yet to explain, despite my repeated polite questioning, what you meant by that.
Uncle Billy Mental Widget (homepage, profile) wrote on Sat, 5/2/2009 - 11:07 pm
"concierge medical services"
Great post, Uncle BMW--perhaps that person understands Karma a little better? Then again, the really shallow ones never learn ....
It's all about interest rates now.
CR or anyone else, can you tell me that interest rates(longer term) are definitely not going to rise in the upcoming months and years?
The amount of debt the Federal Government is pushing out is almost certainly going to lead to higher interest rates. Where will the capital come from?
The Federal Reserve is already monetizing treasury bonds to try to keep yields down, but price controls have always proven to be ineffective.
If the 10 yr treasuries rates rise to 6 or 7%, housing will go down the toilet, auto sales go down the toilet, corporate debt collapses, banks become even more insolvent, and the economy goes up in flames.
Simultaneously, the proportion of the federal budget devoted to paying interest on debt rises dangerously close to the level of tax receipts. When tax receipts can no longer cover the interest on the debt, the game is up.
For CR's prediction to hold true, interest rates can never rise again.
The only thing the homosexuals I have met all have in common is a preference for the same sex,and I have met plenty living in the SF Bay Area for 50 years.I would also like to note that Homo and Bi sexuality occur in all the mammalian species where people have looked for it.There are freaking gay seagulls for bleeps sake.I really and truly do not have time to waste caring about other peoples screwed up sex lives unless they scare the horses,and the garden hose takes care of that problem nicely.
"So Sportsfan - go somewhere that ideologues will appreciate you and leave this blog for adults who are willing to engage in intelligent debate.."
SI, you equate being pompous and overbearing with serious intent. If you can't hold your own in a disagreement with sportsfan, then change your handle and try again. That's what the other posters in your position have done.
the attacks against the boomers is hysterical
the people who wrote the programs that permitted exotic securitization were gen X ers..quants
the guys who bought into it were often old enuf to be their grandfather
mozillo was born around 1938 not a boomer
clinton and bush were born 1946 the first year of the so called boomer gneration...a term that spans 18 years where as the gen x traditionally denotes a decade,,half of everybody is a boomer
greenspan was born in the twenties
treas sec rubin mid 40s, sec treas paulson 1938 not a boomer
and phill gramm was born in 42 not a boomer either
and btw those who claimed that its the boomers fault because of all the sex and drugs in the 60 and "we are still paying for that,,,"
i have only one thing to say,
the drugs weere cheap maryjane 20 bucks an ounce and the love was free,,
,so you arent still payin for any of it and neither am i, but God how i do miss those daze
kz - re immigration - legal immigration has been over 1 million per year the last few years, who knows how big the illegal immigration is - someone posted a link to a table earlier today...
re congress - minority membership in US congress closely mirrors population distribution - for example 14% of congress is black, just about the same as the % of the total population, whereas in France the minority population is also about 15% but only 5% of the National Assembly is minority... I would have to do research on other countries...
re left, right etc... My experience in discussions or debates with persons on the left/liberal has been and continues to be - the debate begins, they lose on the facts and then degenerate into emotional diatribes and name calling and personal attacks, ignoring the subject matter of the debate and attempting to intimidate and stifle their opposition - exactly the opposite of the free speech which they supposedly prize...
re education - I dont know exactly how much should be spent on education, but at the state level it amounts to almost half the budget... My problem with the NEA and school administrations is that they are promoting their own agenda and ignoring their mandate to educate the students to be productive members of society... That the public schools have become political indoctrination centers for the left and a recruiting station for the homosexuals who have infiltrated the ranks of the teachers. All those kids did not get the idea to become homosexuals on their own - they have been recruited into the lifestyle by their teachers. At the local junior college they now have a whole building dedicated to teaching incoming students reading, writing, and arithmetic. I have actually seen people who claimed to have a masters degree who cant effectively read and write. When the schools fail their students, the students will fail their employer and we all suffer as a result.
Uncle Billy: wish we still had docs like your dad. The older physicians we had in my village were great guys & several donated their time to help people after they retired.
Our present MDs are not even close to that. The new docs treat half the people with a medical complex 3x bigger than the old one. Well, they do hire most of the people around here. If you get sick, they'll have most if not all of your savings. We just went through that meat-grinder of a system.
gays should be allowed to marry
why should heterosexuals be the only ones to suffer
"as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades..."
Said poster has now identified himself as an idiot...when his stumbling no longer amuses, use the ignore feature.
I think that Shiller is caught up in word magic. Its not a depression because .... but it is a strong recession etc.
Perhaps the problem is that his dismal science has not come up with a broad enough scale to describe bad economic situations. Maybe a hurricane-like scale might be used.
We can call the scale George 1 to George 7 or whatever.
What I do know is that Shiller is looking for quantitative measures. This George has a qualitative, psychological effect on our society that is the worse since the 1930's George.
The effects will be long-lasting and a number of our social institutions will be changed.
It already is a bench-mark event and will only be more so before it is over
No No NO,Gen-x will fix things,they are not saddled with old outmoded ideas or crippled by the human failings of the Boomers they have no unhealthy desire for wealth and power.They are ALTRUISTS and much,much smarter than us old farts.They won't make the same mistakes we did, no way,no how.
"The depression question is extremely relative. Will we face the depression as defined by the pain of 30's or will we face the depression as defined by the life style we got used to since mid 80's?"
kz, I never said any of that.
I'f you're asking why market participants will swap junk for quality.... you have to ask yourself,
What is big money garbage? big money garbage is the last and greatest bubble in existence on Planet Money.
I have my thoughts on the matter. I dont think we get another bubble, but a bubble will be revealed.
Shaddow invetory wrote
"All those kids did not get the idea to become homosexuals on their own - they have been recruited into the lifestyle by their teachers."
thats an outrageous claim, besides
do you really believe people can be talked into being gay or straight??
could you have been recruited into an alternative sexual orientation??? i doubt it
i know what i like, and it runs deep, and was set at a verty very youg age
i dont doubt that culture and peer groups can encourage promiscuity but ,,,sexual orientation,,,for the most part (and there are exceptions to every rule) gays are not made, or recruited they are born and so are hetrosexuals
Thank you Fried, my sentiments exactly.
yes bank failure teh bubble will be revealed as 15%+ Unemployment for many years.
Tom Stone (profile) wrote on Sat, 5/2/2009 - 5:37 pm
When I look at as many factors as I can (demographics,resources,political realities,etc) I am not sanguine.Like lucifer I feel very large changes are happening.
TS: I agree, but what would you expect after spending a generation burning through financial and economic capital and a two years burning through social and political capital. I hope that the fools pretending to run our political-economy understand the risks that they are running, but honestly, I doubt it.
NW
I am thinking that HollywoodHack is Hoopajoops.
It would surprise me.
MT,DNFTT.and you must be from the midwest,it was $8 for a 3 finger bag of opiated Thai stick at the ice cream shop in '66.
Corrected....I believe the odds of the current recession becoming a depression are ZERO!
Based on what assumptions? Let's see, we will have 10 million foreclosures before the housing market bottoms; 10-12% of the population are planning or contemplating bankruptcy; credit card & home equity are drying up, representing 70% of our economy. The govt. is backstopping and bailing out everything until they can't any longer when the bond market blows up; baby boomers are going to need massive amounts of health care and SS which won't be there; 600K jobs lost every month; public and private pensions about to blow up. And Wall St. returns to business as usual with taxpayer money.
Sure looks like zero chance of depression to me!
Mock Turtle: You're trying to teach a pig to dance. That only irritates the teacher & annoys the pig.
And, yes, those were the daze...when we were young...the wine was sweet, the nights were long and the music was grand.
as long as we can find WORK at McDonalds (or Walmart)... all is well.
The NEA annual budget is about $140 million. They don't set education policy. And you really are a bigot. It's not name calling, just an accurate description of fact.
Arbitrage macht Frei wrote at 554
1933: U.S. is the World's largest creditor & oil producer
2009: U.S. is the World's largest debtor & oil importer
Color me scared..
plus what Markar said just above
i agree, all the fundamentals are against us...we are in a world of hurt
i expect real UE at near 20% (not the phony number that drops people from the list when their insurance runs out)
and the L shape stretches out far far away leading to stagflation.. we are effed
NORKA the people running our system CAN NOT see it.Some Colleges have counselors especially trained to deal with kids raised on the bible as literal truth,quite a few of them have breakdowns(some suicide) when confronted with the fact that men and women have the same number of ribs.I have worked with Alcoholics and vividly remember one man who grudgingly admitted he might have a problem to get me off his back.He had lost a business netting $400k a year,lost his wife and kids,lost his home and was on his way to county jail to serve a year after his 3rd DUI in 2 years "If you had my problems,you would drink too","I don't know why everyone is on my case,especially the cops".he meant it.
Some weird quotes from Warren Buffett on Fed's stress tests and Wells Fargo:
May 2 ( Bloomberg )
Berkshire Hathaway Inc. Chairman Warren Buffett dismissed the importance of government stress tests in helping him assess banks, and said Wells Fargo & Co. will prosper no matter what the results show.
“I think I know their future, frankly, better than somebody that comes in to take a look,” Buffett today said of the bank stocks that Omaha, Nebraska-based Berkshire owns. Regulators “may be using more of a checklist-type approach.”
...
Buffett said he instead judges banks by their “dynamism” and their ability to attract deposits, and singled out San Francisco-based Wells Fargo as a “fabulous” company.
“If you look at Coca-Cola today, for example, and just looked at a balance sheet, it wouldn’t tell you anything at all about Coca-Cola,” the billionaire investor said today in a Bloomberg Television interview before Berkshire’s annual meeting. “It’s what the product is.”
Just wow. Buffett surely knows how important bank balance sheets are to the regulators and to the rating agencies (two of which, btw, downgraded Berkshire from AAA recently). The return on equity for banks critically depends on how much equity banks must hold, and that affects their value.
Buffett is not supposed to know about the stress tests results as they have not been made public yet, but it sounds he got a whiff of the Well Fargo 's result and is trying to downplay its importance.
I agree that the 1970's was worse. Gas lines, reduced work weeks, double-digit inflation, high taxes.... We've got a ways to go before we match that, and that was way better then the 1930's. But this is dangerous, and it's more fun to think the world might be ending than that we're just going through a dull old pre-1990's recession, like many others before it, and we're just a bunch of wimps whining about things our parents went through without much complaint.
Shadow
I am a dyed in the wool left winger brought up by ostentatious liberal elite educators and I tend to agree with your opinion regarding liberal thinking being shall we say defensive. I actually don't like the ignore button for that reason. A dialogue is a battle so don't be so thin skinned folks because the "truth" lies somewhere in between, no one entirely right or wrong. For instance, in trying to discredit shadows views earlier today I found, to the contrary, my views discredited. This is not a bad thing. Indeed, in the end it supports my contention that the banksters will be ok if we yank the dole, as much as they may fear it and proclaim the EOTWAWKI. As to the poor working I still think the happiest people I see all day are the crowds of mexicans at the job sites. Work is fun,there are some issues with pay, but this is capitalism, I honed my skills, did a good job, worried about making my customers happy and say pay me what I charge or I'll go elsewhere and I've found that works. Cheaper is cheaper and if it's cheap you want, cheap you get. There is no way to make the world fair. Basically it's a contact sport and if you can't stand the heat...
I don't want to talk only to those who agree, I've never learned anything that way. Look at all the crap CR gets for his sunshine posts. He takes the crap, and makes the post as we appreciate that he should. Don't get me wrong, I would love to witness the collapse of civilzation if for nothing else than the entertainment value, but they may just pull the rabbit out of the hat. That's entertainment. Too much of a good thing is a bad thing...Right?
Re: Lucifer & "Ignoring"
Found it amusing.
I personally don't use the 'ignore' button, even if it means that I read comments (or begin to...) that I violently disagree with or find offensive.
But I also never comment on 'em either.
The 1974/1981 recessions are well documented. The current recession is still in progress.
Shouldn't we be comparing pain experienced during the1974 recession with what we will eventually suffer in the current recession?
Yeah REBear,
Put another way:
CR, am I to understand your graph contains the annual yoy changes (except for 2009)?
Wouldn't it be enlightening (for comparison purposes) to plot the current estimate of the annual GDP decline (based upon Q1)?
Although I agree the recession began December 2007, I believe it has only been the last three quarters that have had negative growth, correct? So I'm a little concerned that in just the last three quarters the decline in GDP has surpassed the annual declines of the most recent recessions.
I see how a recovery in the second half of the year would offset the initial decline and put this recession in line with other past recessions (for example, 1958), but if GDP continues to decline, I believe that the rating number in the article regarding a Depression scare is going to go a whole lot lower.
FDIC Insures $4.7 Trillion in Deposits with a $13.6 Billion Deposit Insurance Fund. This is Like Going into a Hurricane with a 99 Cent Store Umbrella.
FDIC Insures $4.7 Trillion in Deposits with a $13.6 Billion Deposit Insurance Fund. This is Like Going into a Hurricane with a 99 Cent Store Umbrella.
Oh yeah, that whole entire 70 year experiment in communism did them in-- seems like some idiots in this country forget that little point..
As an officer in the military- don't YOU insult the nearly 5,000 Americans who have been killed and shipped home in caskets in the last 8 years of the global war... Midway was a battle anyway doofus..not a war.
Tremendously ignorant of facts and real history. Comparing the US to the British Empire?!!!
Well I guess they are exactly the same- other than the fact that the English had just lost TWO MILLION MEN in two WORLD WARS before they lost their Empire!!
Lucifer writes, "Really.. Sure the US has more opportunities than other countries, but is this due to to a set of random events or exclusively due to human intervention?"
Gee... which could it be...? Nothing but stone-age tribes in the America's for thousands of years before the evil white man arrived... then instant civilization. Must have been a random event.
We do have an illiteracy problem in the US and also the schools have never done a good job of teaching results based thinking... as the NEA, left wing politics, and homosexuality have been advancing, the overall academic level of graduates has been declining for decades... This does not bode well for us in the global economy for the next several decades...
It's a deliberate policy, and it's called Cultural Marxism.
No Harry Seldon is Asimov I believe.
The Great Depression is getting closer to something study in the history books, rather than something they personally remember. As such, fewer people have the fear of revisiting something they have personally experienced; and hence, now 18 years after the 1990 scare, perhaps the metric does not carry the same meaning as then, or in the 70's, or 50s.