Basel Too wrote:

They don't have faith, they've just never been foreclosed on. They are stupid and they are callous, and they don't mind it when people become disheartened. They don't even notice.

Interesting article. The demographics may be the "Its the economy stupid" of the 2010s.
.
Honestly, I agree with some of what she said especially the "loving" and "knowing its limits". I really don't know what our politicians are thinking. I'm not sure they can truly understand what it will mean to be ruler of a non-existent fiefdom. See Detroit. What will that place be if the state and federal government stop sending money?

so Zandi is saying "jobless recovery" is an oxy-Palin, err oxymoron.

ugghhh, Mark Zandi. A male Linda Robertson... (although he is an economist, unlike Ms. Robertson)

It's a good thing there will be no negative consequences of running up Federal debt to 90% of GDP.

If I thought the government were going to actually pull back its interventions, I would actually turn optimistic. However, I see absolutely no reason to expect this. When sustainable, private growth fails to return by 2nd quarter, I expect Congress and The Administration to pull out the mother of all stimulus packages to buy votes for November.

Just to calibrate Mark Zandi's past record of predictions:
From Sept 2006

GHARIB: Mark, let me begin with you. How serious are the declines that we have been seeing in the housing market?

MARK ZANDI, CHIEF ECONOMIST, MOODYS ECONOMY.COM: Theyre serious. Home sales are down 15 percent, single family construction about the same and now we`re seeing price declines. The market peaked about a year ago, and I think it has another year run, the decline.

Rob Dawg (homepage, profile) wrote on Thu, 10/29/2009 - 10:35 pm

It's a good thing there will be no negative consequences of running up Federal debt to 90% of GDP.

I'm not worried at all, since so much of that debt is used to finance forward-looking initiatives and sources of long-term competitive advantage for our nation, and so little of it goes to support subsidy and incentive programs and bloated, useless bureaucracies.

ResistanceIsFeudal wrote:

so little of it goes to support subsidy and incentive programs and bloated, useless bureaucracies.

The will go borg on us, and we will have to fight it from our tunnels and hiding places.

yagij (profile) wrote (in reply to...) on Thu, 10/29/2009 - 10:40 pm

The will go borg on us, and we will have to fight it from our tunnels and hiding places.

Think it's accidental those drones in the Matrix look like mechanized squid? The Wachowski boys were smoking some good stuff!!

I spent some time in Detroit in 2006, and it reminded me of Baku. Beautiful old buildings, great layout and obviously there was once a lot of money there, but overlaid with 50 years of neglect and decay. Actually it seemed worse than Baku which actually had traffic and a population, and a European type café culture from what I saw.

Is there anything that could restore Detroit, or is a bankrupt education system, a declining population and decimation of industry a fatal blow to a city?

ResistanceIsFeudal wrote:

I'm not worried at all, since so much of that debt is used to finance forward-looking initiatives and sources of long-term competitive advantage for our nation, and so little of it goes to support subsidy and incentive programs and bloated, useless bureaucracies.

But aren't you concerned that this massive investment in infrastructure will eventually make it difficult to keep the dollar from strengthening to the point of forcing us to drop interest rates? At the rate we are cleaning up our balance sheet it will soon become impossible to achieve our long term goal of getting out of reserve currency status.

ResistanceIsFeudal wrote:
Think it's accidental those drones in the Matrix look like mechanized squid? The Wachowski boys were smoking some good stuff!!

Funny I was thinking the same thing recently Wake up Neo the matrix has you!

What is his claim to credibility?

Rob Dawg wrote:

At the rate we are cleaning up our balance sheet<
You and RIF are on a roll tonight. How am I supposed to get to sleep? Peak Nachos, please!

....ever notice all the public buildings, bridges, parks, even freeways, damns, and many other publics works projects designed and built during the 30's? Pretty easy to spot with the distinctive "1938" type plaque usually poured into the concrete. What was planned, designed, or built THIS time? Squat.

Oxtail wrote:
How are businesses going to fill the void if there's no demand?
Agree.

*but it will be a better place to live, yes. *

For who?

Oxtail wrote:

How are businesses going to fill the void if there's no demand?

I don't think that government has really figured out that they shouldn't be -like. I think the entire system is wired to think that they should just increase taxes and revenues and the problems go away, but surprisingly, they haven't really figured out the next part in that equation (e.g. ruthless quitters)

Hit me too. No job.

Yes, I have, BSR, and this is a big (perhaps THE) impetus for my utter disgust at the boomers. Their legacy is narcissism, ponzi-based parlor tricks and rot. I honestly can't think of a single major infrastructure project begun since '95.

Thanks CR.
My worry is: He works for Moody's, so the politics of his paycheck may affect his predictions. It might well explain why being optimistic back in 2006 was required.

TJ and The Bear wrote:

I'd much rather have a financial system crash than a full-on political/economic collapse.

Confucius say, "Opportunity and Chaos come from same Chinese character."
.
(Totally snark)

Yancey Ward wrote:

The problem is that nothing can be built on this scale any longer that doesn't take 10 times as long and cost 20 times as much in real dollars.

With our unemployment, why does it matter if it takes 10x as long. Might as well pay 'em 9 USD/hr for 10x as long instead of 12.50/hr for a 1/10 of the time.

Wow.....really?

The "Great Recession" is over?
The largest credit bubble in the history of the world pops and we get a lousy little 2 year downturn that knocks 5-6 points off peak GDP before resuming growth.........really? That's how this plays out?

I don't think so.

This may be a bit off topic but no doubt someone will appreciate it...
Gotta have priorities:
No Paws Left Behind > Home

Rob Dawg (homepage, profile) wrote (in reply to...) on Thu, 10/29/2009 - 11:04 pm

Public campaign financing. The only problem will be finding a major firm intimately familiar with both the inner workings of government and the machinations of influence peddling.

What is that hiding down below in Dow Jones' Locker?! Or is that R'hley...

see also: Humboldt Squid - Wikipedia, the free encyclopedia

"Recent research suggests that the squid are only aggressive while feeding. At other times, they are quite passive. Their behavior while feeding often extends to cannibalism and they have been seen to readily attack injured or vulnerable squid of their own shoal. This behavior may account for a large proportion of their rapid growth."

I'd much rather have a financial system crash than a full-on political/economic collapse. - TJ

I'm not so sure they wouldn't go hand in hand. Do you really thing such an event would be so surgical?

yagij wrote:

I think the only problem would be finding a major firm intimately familiar with both the inner workings of government and the machinations of influence peddling that could operate in such a manner without violating its mission statement and ethical guidelines.

I had just assumed firewalls such as those in place at investment banks would make the operation automatically in compliance with the existing interlocking checks and balances.

Rob Dawg wrote:

I had just assumed firewalls such as those in place at investment banks would make the operation automatically in compliance with the existing interlocking checks and balances.

But you cannot just leave regulation to industry. You need to seek out all stakeholders in the process to ensure that no one is tempted to do anything that is against their own mutual interests. Only through willingly subjugating your business's process to centralized federal structure reinforced by democratically elected leaders can you be sure that everything you do is moral and ethical. Transparency must be a key stone to any broad policy action.

barfly (profile) wrote on Thu, 10/29/2009 - 11:10 pm

I'm not so sure they wouldn't go hand in hand. Do you really thing such an event would be so surgical?

Only if it was an engineered crisis. Ours clearly wasn't. But, think how much worse it could have been without extending trillions in handouts, bailouts and term auction facilities to the firms that assuredly didn't engineer any part of it or even see it coming!

I don't get it obviously. I am not an economist. But I do see what is going on around me. I was posting an ad on Craig's List for a friend who is trying to lease out extra space in his office building. The ads that are on there should terrify anyone even thinking about the future.

Maybe it's just Arizona, maybe it's an east coast thing to be more upbeat about the recovery we are allegedly in or will be having. I don't see it. Not with what I see every day, it just is not in the everyday scene of life here.

Also what are these things we are supposed to buy that are made here? Who will buy them if they still have no job in 2011?

Oxtail wrote:

I don't think anyone would be willing to accept 112 deaths on a construction project.

Like noob's discolored beans, it is amazing what people will and will not accept if it means UE and starvation. Maybe the US Gov't can provide bread and circuses to 25% of the country for the rest of our natural lives, but once you have problems with the enforcement of laws, who will be able to sue over 112 deaths?

CR wrote...

Clearly Zandi is still very worried.

He ought to be - the real issue is, was and will always be about jobs. NOT about bankers bonuses or MBS valuations. This piece really grabbed me - makes me wonder if Zandi actually knows people involved in the 'real economy'...

A more worrisome possibility is that firms are too shell-shocked to resume hiring. Smaller businesses are struggling to obtain credit; their principal lenders, small banks, face intense pressure, while another key source, credit card lenders, has aggressively tightened its underwriting standards

He's right they are shell shocked but the problem isn't more credit - its MORE ORDERS!!! They need more work - preferably profitable work - so they can pay workers to DO SOMETHING.

It isn't just a financial crisis anymore - until they fully wrap their heads around that it is not going to get better.

Sportsfan,

Sure, we will see infrastructure spending, but it will be like fleas compared to projects such as Hoover Dam or 50s-70s projects like the highway system. We simply can't seem to do big infrastructure projects any longer. In other words, we will spend money on a scale much larger in inflation adjusted terms, but get far, far less actual infrastructure.

Oxtail wrote:

I want my damn high speed train to Vegas

Yeah, I think it is a great idea to have high speed service to a city that has had its RE bubble pop the worst followed by crippling declining in revenues and lost jobs. Heaven forbid it actually go somewhere that could help like a transcontinental high speed line to cross the Rocky's or help the entire SW. Please allow gamblers and free buffeters to get to Vegas within 1 hr!

In other words, we will spend money on a scale much larger in inflation adjusted terms, but get far, far less actual infrastructure.

My fair city appears to be taking all of its ARRA money and spending it on replacing every street corner with wheelchair-friendly ramps. I'm pretty certain that there are corners that no one in a wheelchair ever wanted to negotiate that are now being "fixed". I am certain this will have an ROI slightly better than just taking the money and building a bonfire with it -- but the bonfire would have been more fun.

barfly wrote:

Do you really thing such an event would be so surgical?

If handled correctly, yes. Granted that we don't have the leadership to pull it off, but if we did it could be.

People can handle temporary disruptions to their lives without losing faith in the entire system, provided the system hasn't given them prior reason not to. Right now they're conditioning people to mistrust the system, and then when it does go they'll be predisposed to react badly.

I guess it depends on where you think things are going. If you believe this is just a severe recession then I can definitely see how you would think things will eventually work themselves out.

OTOH, if IMHO the TPTB are causing a currency crisis by their attempts to paper over a depression, well, then it's a whole different ballgame. If the USD goes down after already putting 25% of the population out of work (and bankers into brand new Hampton vacation mansions) then it will get ugly.

OT. I was at CostCo pharmacy today and picked up a pamphlet about the wonder supplementpycnogenol which cure almost everything except the clap,although it apparently increases your reisistance to event that.The Author is Richard A.Passwater Ph.D.....does the "P" stand for poured in this case? sick minds want to know...

And just when you think the insanity is over....

Massive project planned for Gateway area | Arizona local news - Chandler, Gilbert, Mesa, Queen Creek, Phoenix, Scottsdale | eastvalleytribune.com | eastvalleytribune.com

This part just SLAYS me!

“In 10 to 20 years’ time, it’s going to be a very intense employment center,” said Councilman Scott Somers, whose District 6 includes the airport area."

MLM wrote:

spending it on replacing every street corner with wheelchair-friendly ramps

LoL! OMFG. You can't write this material.

Oxtail wrote:

The buffet at the Bellagio is so good. Srsly.

Then build your high-speed tinker rail. Once you want to include people who aren't mooching buffets out of LV, then we'll consider it. Remember it is the sausage that makes progress possible in politics.

This is why we'll never get massive infrastructure built. Because we'll never agree on what's useful and what's just a waste of money. Meanwhile, the government keeps throwing mounds of cash to the banks instead.

yagij (profile) wrote (in reply to...) on Thu, 10/29/2009 - 11:35 pm

LoL! OMFG. You can't write this material.

That's going to really hurt the prostitution industry

ResistanceIsFeudal wrote:

That's going to really hurt the prostitution industry

Why? It will open their markets to new customers and allow easier access via the transportation system.

I agree with you TJ, club Washington isn't doing anything but looting and making the inevitable crash worse. If you are ok with the way things are going, you are a fool.

OT, but 20, 30 and 40 year olds moving back home is a reoccurring theme on the site. So if you have not seen it already:
The 40-Something Dependent Child - Room for Debate Blog - NYTimes.com

french mistake, it was just earlier this decade when land across the street from Southern California Logistics Airport sold for 25 cents an acre.

The money isn't in desert scrub. It doing something fantastic at the airport. Doesn't matter if it's California, Arizona, or anywhere else when it comes to "the airport." The only problem other places have is putting together a few hundred acres next to the airport.

yagij (profile) wrote (in reply to...) on Thu, 10/29/2009 - 11:39 pm

Why? It will open their markets to new customers and allow easier access via the transportation system.

Right... lowering the artificial barriers to entry which the industry carefully erected, making it far easier to flood the marketplace... OK, this stuff practically writes itself.

Why is it a good idea to build new infrastructure when so much of what we've already got needs to be repaired, maintained or upgraded?

The US could spend billions doing needed repair & replacement of sewage treatment plants, water treatment (especially if the US finally got away from using only chlorine treatment), water systems (supply systems), doing some private-public partnerships w/the private rail corporations so passenger rail speeds could average around 100 mph--just getting rid of all the grade crossings (replacing them w/underpasses or overpasses) could keep lots of people busy for quite some time. There's no need for new infrastructure projects--the US could spend years fixing up & modernizing what we've already got--much of which greatly needs to be repaired or replaced.

Re: wheelchair accessible curbs--anyone who's uses a grocery cart (2 wheeled or 4 wheeled) to take his/her groceries & other purchases home or has had to walk anywhere w/a rolling suitcase loves those "accessible" curbs. Not sure about rollerbladers or skateboarders, although it seems as though they would.

ResistanceIsFeudal wrote:

lowering the artificial barriers to entry which the industry carefully erected, making it far easier to flood the marketplace...

But here is where innovation and productivity gains help to provide more value to the customers, and through an efficient supply chain, you can lower costs and maximize shareholder value. Also, the workers who are displaced through this process will be freed up to focus on more value-added jobs up the socio-economic food chain. Besides, we believe in diversity in the work place, and there is no reason that someone with physical disabilities cannot actively support this industry or provide the insights and inventions that will drive the growth of tomorrow.

dryfly wrote:

that trying to price for perfection.

Perfection doesn't have anything to do with it. The system would go down for a few days and everyone would worry like hell. The government would spread out the guard and tell everyone to remain calm, and most would. Then it's back to business, only a lot of banks and businesses wouldn't reopen. That's okay, though, because those that survive would go on and prosper and the suddenly unemployed wouldn't even have applied for their first UE check.

It would be like a bad earthquake or storm. Scary, with a number of casualties, but things go on afterward.

sportsfan wrote:

Sioux City if you prefer.

Fine but you have to agree that my project starts first and the work for both sides is given to a great supporter through a no-bid process.

You'd think if the country were looking into the fiscal abyss that we might spend the money fixing the bridges instead of gilding the effing curb ramp lilies.

Curb ramps can be hacked by contractors that pay campaign contributions to local politicians.

Bridges not so much...

we'll never agree on what's useful and what's just a waste of money.

Of course not, but we can either let Pharaoh, Buffett/Gates/GS/JPM or some invisible hand of Maradona decide-- or apply the democratic process. Both will be lousy; neither will be perfect. Not building something useful has unintended consequences, too.

Grow/evolve or die.

Basel Too wrote:

Local contractors that pay campaign contributions to local politicians can do curb ramps.

Bridges not so much...

Translation: we are so screwed.

Basel Too wrote:

for more than you'd ever want to know about Federal guidelines for curb ramps...

I always like applying for an exemption from the required two at each curb corner to one at each curb corner because, well, they weren't ever going to be any pedestrians there anyway.

yagij wrote:

Home of 2 ton pancakes

Not in my house - my wife is a Norski - nothing but paper thin pancakes for us [make up though in number].

Really, isn't it a crying shame that we've spent Trillions on this depression and WHAT DO WE HAVE TO SHOW FOR IT?

Like you guys have said, there are zillions of examples of perfectly good infrastructure dating from the GD. Sheesh.

dryfly wrote:

Not in my house

Poor joke on my part. My apologies.
.
I meant that poor car that had the bridge section broke apart and flatten the car like a pancake.

MLM
I have probably only ever noticed 3 things by Zandi. 1. Stimulus multipliers in congress testimony, 2. Negative Equity estimates, 3. Estimates on foreclosures-to-be. No complaints about any of them. I'm not qualified to speak about anything outside that

Well I agree if it is something fantastic. But something fantastic was built around the Scottsdale airport. The listings for office space are epic now and the place is a nightmare. The problem is we have nothing "fantastic" in our bag of tricks now, unless Mesa goes for truly unique and one of a kind development and types of employment there, such as biomedical or pharmaceutical.

But this is Arizona. We don't have a government that thinks into next year, let alone 10 to 20.

We might build better wheelchairs. I wonder what % of wheelchair users were wounded in a foreign oil war. The latest Iraq war was overwhelmingly popular among those past draft age. Many are even so senile that they've forgotten how popular it was, and how they cheered.

OT: update from my previous (optimistic) report from Charlotte, NC: talked to some more locals. The working buildings under construction near my hotel are CRE: for example, the one next to my hotel that I saw them working on 24/7 is the Bank of America (!) annex 1. However, there are some buildings that are not being worked on: across the street 90 degrees are some planned $1M condos left unfinished at the rebar phase -- told that's been dead for over year. A condo tower a few blocks away has been dead for much much longer -- and it's high enough to be quite the memorial to hubris.

Summary: CRE supported by banks, RRE condos dead dead dead.

1 currency now -yogi wrote:

among those past draft age

My biggest fear and greatest relief is that I'm now moving well-beyond draft age. We may never bring back the draft, but if we did, I'm glad that I'll be border-line "civil defense force" material and not A-1 meat shield material. Fighting the wars of middle-aged white Ivy Leaguers was not something I wanted to do.

TJ and The Bear wrote:

I don't, I really don't.

We agree to disagree.I think you and your family would benefit from a couple 2-3 years without income. I've been there twice. Once as a kid once as an adult. Really close to zero. It changes your perception on what's real.

The elites aren't worrying about our well being - they are worrying about their own. If we don't have full bellies we eat them. I used to joke with conservatives back when I was hungrier that 'I love the rich - they taste good'.

The folks get it - the bankers on WS don't yet they think one more bonus season and we'll be set well enough we can protect ourselves. The guys in DC know better. The ones in Beijing even better - their parents actually 'ate' some rich.

I do NOT think they are managing it well but a total collapse is likely to produce Gulags before it produces wealth. It will result in a 75 year [or longer] experiment like they saw in Russia - or Berlin.

That is what they are trying to avoid and they are doing it very badly.

dryfly wrote:

That is what they are trying to avoid and they are doing it very badly.

dryfly, I just realized you are a closet optimist. At least we can agree on the "very badly" part.

MLM wrote:

Why did that cute waitress call me sir?"

She called me Sir when I was 18. Calling me that at 2x the age is just a way to get a better tip. Besides in the new Greater Recession, beggars can't be choosers. She might dig a 36 yo who can actually put food on the table and help her from hobo'ing it across the great plains. The days of the partying 18-30 something will die quickly if this UE situation doesn't improve.

yagij wrote:

I'm not seeing much in the way of single uncles and aunts moving in with brothers or sisters yet.

My BIL has lived with us twice before and will again once his [and my wife's] parents die. He's got some savings but not enough to make it through old age - he never made enough money to do that - hard to do on $8 - 10/hr factory jobs. There is a whole world of people like him out there.

barfly wrote:

by "currency crisis" , you mean exactly what? I've heard this argument used before, but I'm not sure how it could be worse than doing nothing.

I've never advocated doing nothing, I'm just saying let the banks and companies that are failures actually fail. The government steps in and does triage, making sure good banks and companies aren't adversely affected, and steps up with UE, etc. as necessary for displaced workers.

Instead, the government is spending trillions it doesn't have propping up zombie institutions that are only good for generating ever more trillions in losses, all while the government itself is wildly overspending on everything else under the sun. We're already at the point where most countries risk default and yet we just keep pushing.

"Currency crisis" basically means (a) there is not enough money in the world to purchase the flood of Treasuries coming, thus (b) the Fed steps in and monetizes the debt, leading to (c) foreign repudiation of the dollar and Treasuries altogether.

An alternate view (held by Mauldin) is that the Fed refuses to monetize any more debt and DC is forced to cut spending to match revenues. At that point the budget cutting would make the term "bloodletting" seem tame by comparison, because the debt service alone will kill us.

1 currency now -yogi wrote:

Many are even so senile that they've forgotten how popular it was, and how they cheered.

"How good bad music and bad reasons sound when one marches against an enemy"
--FWN

It's a subject of profound sadness in my life.

But then they made out the guy with the Silver Star to be a coward, so there wasn't even a rebuke.

This country already died.

dryfly wrote:

Are you kidding me? You believe that?

I believe a financial crisis could conceivably be contained without devastating the broader economy, yes. Not having a Nobel prize in economics I could be entirely wrong -- hell, totally nutty -- and I'm willing to admit that, but the idea that a sudden mass movement of zeros and ones rates as the equivalent of a broad-based nuclear strike seems a tad bit of a stretch.

dryfly wrote:

That is what they are trying to avoid and they are doing it very badly.

Well, we definitely agree on that.

The part where we appear to disagree -- and I'm sure this is more a misunderstanding than a true disagreement -- is that they understand the true nature of the problem. If they did then they'd be sending the money to Main Street instead of Wall Street.

Having pondered having written "This country already died," I don't think there is anything else I could say now.

yagij wrote: I'm not seeing much in the way of single uncles and aunts moving in with brothers or sisters yet.

I've had attempts at having married partners foisted off on me... had to push back hard. It's a b*tch having a 2+1 (a San Diego term for a lot with a unit in front, and a converted garage in back).

For the record, multiple attempts, for multiple people. Still waiting on the electrical bill on some land I own in Michigan to see if my brother has moved into an abandoned trailer there...

TJ and The Bear wrote:

I believe a financial crisis could conceivably be contained without devastating the broader economy, yes.

Won't happen. They'll Sampson the economy & have every right to do so under contract law. Meaning they can sit on idle assets & productive capacity even as workers are out of work & production of real things collapse until the bankruptcy judges force them off those assets. In many cases it can take years.

Why would they do it? Because their interest doesn't dovetail the greater good so they fight like hell for theirs even as the productive assets sit idle and wants go unmet.

And 'yes' I am seeing that happen now. It would be much worse with a systemic breakdown. People have no idea how bad it could get. It might require Marshall Law to get the trains running again. There is your republic POOF...

BTW - there are two factories now I'm being prepped to go into and pull tooling before they fail. Ever done something like that? Worse than strike breaking which I've also seen up close and personal.

People have no idea how bad this could have gotten and still could.

The "broader ["real"/"Main Street"/"productive"]economy" has already collapsed and will collapse even more when more bonuses are paid to the unproductive financial sector.

You don't have to ever acknowledge the emperor's lack of clothes, but you won't be better off in your ignorant bliss, even though killing the illusion entails pain and suffering.

Sportsfan, think on rebirth.

John Kerry won a Silver star.

Contract law is fungible. This stuff has all happened before, it's just a matter of framing the issue properly.

The Supreme Court at first killed all the New Deal programs. Then, they didn't.

EEngineer wrote:

Sometimes I wonder if we're living through the game "risk, the bankers edition". Like the mice in the African proverb "when elephants fight the jungle suffers", all that we see is the jungle. In banker world it's all about who's the top dog. All the rest is collateral damage.

Yes - that is their view. If they are lucky someone will come along and save them from themselves. So far no one has even tried. The jungle is going to take a lot more trampling as a result.

dryfly:

You're starting to sound a little like Kunstler. His view is that the oligarchs will come to rue the day they built such easy access to places like Hilton Head and the Hamptons. My view, for what it's worth, is that things will hold together until and unless the food stamps and government checks stop coming.

TJ and The Bear wrote:

At this point we're well beyond any option that could remotely be considered "good". I think we passed that point around 2003.

You really are more optimistic than I am - I think we crossed that Rubicon in the 90s w/ Rubin's 'strong dollar' and Grahm's 'banking deregs'... it's been waiting ever since... but we do have some choices how we delever {and suffer] and they are making the wrong choices... Dems & Repubs alike.

dryfly wrote:

Because we will eat them if pushed too far.

I wish. When I saw that Bank of America is still building their new headquarters building in Charlotte next to their new Ritz-Carlton, just opened three weeks ago, I thought -- they're betting they're gonna win this one. For the rest of us: "You'll get nothing... and LIKE IT!"

dryfly wrote:

You really are more optimistic than I am

Well, I figure 2003 because Bush hadn't doubled the debt and the bubble was still in its infancy. Dot-bomb should've heralded a major restructuring in our economy but didn't. Water under the bridge.

OK, I'm doing better than many, so I can't complain too much. But regarding Zandi's comments about nominal salary - I got my first job as a multimedia programmer in 1997. I was making $75/hr, was working 40-60 hours a week, in NYC, had a wife and a six-month old. I thought I was rich. I'm very happy to have just landed a gig that gives me 80-100 hours a month at - $75/hr. Now I've got two tweens on my hand, live in the Bay Area and $75/hr ain't what it used to be...

roger clemens had a legendary training regimen that consisted of grinding his hands into a bucket of rice.

don't think it was the rice that allowed him to pitch into his forties though...

The banking system is global.
Our credit card system is global.
The nightly rolling credit required to fund our credit card/debit card transactions is global.

How fast do you think bank runs/gas runs/grocery store runs would start if credit card transactions started getting denied in large numbers.

Or your payroll check bounced because the MM fund your company used for daily expenses was frozen.

Or companies couldn't close transactions because bank a refused to honor bank b's transactions.

All of the above were starting to happen at the height of crisis.

Anyone who believes we'd just shut down for a day or two and get back to business the following Monday wasn't following events very closely.

Basel Too wrote:

don't think it was the rice that allowed him to pitch into his forties though...

BALCO == debt/credit

TJ and The Bear wrote:

In effect, we'd be telling them exactly that by monetizing.

In effect, WE ARE telling them exactly that by monetizing.

Fixed.

Anyone who believes we'd just shut down for a day or two and get back to business the following Monday wasn't following events very closely.

Absolutely. It came within hours of total collapse.

Geithner admitted as much to Charlie Rose.

Hell, it could still collapse.

TJ and The Bear wrote:

Well, I figure 2003 because Bush hadn't doubled the debt and the bubble was still in its infancy.

I think Rubin has more finger prints on it than does Bush [and I'm a liberal - LOL]... Bush was just 'there' for it. Without the strong dollar we don't have the dollar cycle, MBS & UST markets & little or no RE bubble. The strong dollar seeded BOJ & PBoC war chests and addicted them to US export growth as much as HPA & MEW addicted us to over consumption. They then manipulated to keep the good time rolling - just like housedebtors. All started w/ strong dollar.

You would have thought it would scare them serious, but here they are looting away.

We're not arguing against each other -- I've a BIL about to run out of unemployment from his bank IT job -- and other family at risk -- just making a comment that what I'm seeing is the perpetrators are still building.

We might disagree about the desirability of re-instituting of the "basic system" -- the one that has so far devastated the industrial Midwest (with the help of Unions, Mgmts, yes -- but whatever the problems the full scale of the devastation cannot be lain on their feet) -- but I will say without some direct addressing of industrial policy and the managed fall of dollar, all else is whistling in the wind.

poic wrote:

and the fact that they continue to sell to us in exchange for our debt tells you all you need to know about the myth of decoupling.

We need them and they need us.

Sort of - we'd both be a lot better off if we backed off a little. We take on less debt & make more stuff ourselves... they make more stuff for themselves & recycle that money among their own. The key is how do you get there w/out Wall Street crashing the temple down around us all?

Anyone who believes we'd just shut down for a day or two and get back to business the following Monday wasn't following events very closely.

We haven't gotten back to business, have you not noticed?

I'm looking at skyscrapers from my window. Many have been through BK without ever having been shut down even for a day. Some business must end. The Pyramid building business- both in Egypt and Ponzi; the typewriter business; the secret currency printing business...

Gee, we were hours away from financial collapse, but now we've saved the world by leveraging up another quadrillion. Sleep well.

Dryfly, yes I fully agree. Hopefully sane heads prevail on both sides of the ocean.

DCRogers wrote:

I feel better now.

edit: collapse == massive fall of the dollar, breaking of the currency pegs, rising interest rates

Yes but do it w/out busting up China - that is POIC's point & it is valid. It does us no good to have more global insecurity.

I don't see how we get there - good thing I'm not in DC.

"poic wrote:
Hopefully sane heads prevail on both sides of the ocean.
Sounds somewhat idealistic. "

I am an idealist in my own way (:

• good thing I'm not in DC.

You failed to add that it's also a good thing for them that you're not in DC.

Them being Timmy and His Friends.

I'm thinking more along the lines of the republic & the constitution as the 'system'. No law of nature says they survive a real chaotic collapse.

Here in California we have 95+% re-election rates for Congressional incumbants -- better than the Communists achieved. New redistricting rules are about to be done for the state, but were blocked for the Federal level by Speaker Pelosi -- both the Dems and the Reps liked their non-competitive districts -- allowed the parties to pick their candidates FTW. Should this system survive?

Should this system survive?

of course not. Gerrymandering is inherently dishonest.

p.s.: Try to dream of and not

later, agitator.

dryfly wrote:

Yes but do it w/out busting up China - that is POIC's point & it is valid.

Yes -- but they need to shift from investment to consumption. Time to start -- NOW. Pain good for all!

Everyone in Congress is convinced the banks are the blood to the economy. If the banks fail it will take our economy under. If the banks fail there will be no more lending. Congress is convinced lending is needed to sustain businesses; even small businesses. In order to achieve success in any part of economy you need to enable banks to loan and businesses to borrow. That is the premise our Government works under.

That is the premise our Government works under.

That's not completely wrong; banks and banking are important to the economy,...but it doesn't have to be these suckers.

mp wrote:

For one thing, they'd better start creating some jobs.

+1M

Appreciation on stock given as bonus still gets big fat tax break welfare as a long-term gain, no?

feralpig
how do you define garden variety corruption in China?
in Vietnam, if you cost the state I think it was 1.5 mil back in
2005 you took a bullet...
as long as someone takes a bullet the family usually gets to keep
most of the money -
can't see that Sino culture to the North diverging that much...

DCRogers,
A number of years ago I read a book by John Bogle regarding Death of Capitalism or something. Seemed like one of his conclusions was that the corporate governance model is broken and he was suggesting compensation along the lines of what the pay czar is doing. Of course I don't know what the big deal is; the only reason the government has any right to dictate compensation is those firms did so bad they needed bailing out. I doubt there will be any traction behind making the pay czar rulings across the board.

YLSP,

People are saying the government is taking 90%+ of the market. Between the GSEs being owned and their MBS being purchased by the Fed and FHA.. the market is effectively in the governments hands.

So the other 40-50% are Freddie/Fannie? And the Freddie/Fannie is being purchased by the Fed (well whatever is left of their $1.5 Trillion).

OT/ Guess Tom Freidman of the Times is to Obama now (esp. after that 5 hours of access recently) what James 'Scotty' Reston was to
JFK. Tom's laying the groundwork for pullout in Afghanistan.
....
Feral Pig
yeah that's in dollars, I think life imprisonment was around 400,000 from stealing from the state...
in late 2004 to mid 2005 they quietly executed 7 top Viet oil executives (this was told to me by a BP
exec), best of my knowledge it was never in the papers. Seems they were conspiring to drive down
the profits of certain sectors of the state owned oil industry with the hope that the gov. would put them on
the block and using that tried and true method of the Russians they'd be behind a private group that buys the assets
for pennies on the dollar.

It's oppressive to read yet another report that the recession is over.

Zandi and DeLong, whatever the state of their respective curriculae vitae may be, are fine minds and presumably well worth reading. To his credit, Mark Zandi raises several - though certainly not all - of the potential forces competing to reinforce the downturn now and in the near future. In fact, the set of circumstances he retails are sufficiently possible - even likely - that I wonder how he dignifies our present situation, calling it a "recovery".

What does it even mean to say a recession is over? The commenters here and elsewhere examine each component of statistical improvement, typically, along two lines of reasoning. One, with some confidence that the historic record contains a narrative we may apply (mindful of differences in context) to ongoing events, gives us much that is of use - that, for example, CRE tends to follow RRE into the bin with an appreciable delay. But this group is also willing to look to residential investment as an indication that a recovery has begun, all the while recognizing that home purchases have been drawn forward into the current quarter - presumably at least to some degree at the expense of future investment - thereby throwing into question the statistical reliability of what should be, but now cannot be, a major indicator of genuine recovery.

How do they hold both views and at the same time, yet preserve credibility?

A second 'school' of commentary looks at those points where the downturn has affected families, individuals and business directly. Their observations surface here at CR mostly when some statistical report relates specifically to job loss, reduced hours, furloughs, savings, retirement, medical costs, or any of a host of matters immediately affecting persons. I hold that even though this perspective isn't properly quantified - and so is ungainly - it is at least as valid as any other. And to date it runs counter to reports of recovery. On the contrary and in useful detail, it reflects ongoing deterioration.

Let me also say I miss Brad Setser's global insights very much. We are not in this alone and, for the most part, I do not see the School of Recovery taking global developments and tropisms into account now. I hope Brad's gifts are at work within the administration, and wonder at the same time if he hasn't been absorbed in order to buy silence. Cynical, I know, but there it is.

burnside - excellent points. My approach is essentially in the counterfactual and philosophic space where "recovery" talk now must be either a ruse or a grievous abuse of the language, given the evidence to the contrary. I was involved in Asia-crisis analytics and clean-up and even five years later the damage and fragilities were all too apparent. Hard to believe the dislocations have ended in this cycle, let alone settled into a new or recognizable design.

Anyhow, here's another take on the shape of things, in big clumsy chunks of economic world:

FT Alphaville » Blog Archive » I LUV u - Sir Martin Sorrell gets creative

(Actually CR gets a ref in the link to April 08, which shows his consistency).

C

PS kinda miss Setser too, as my send-off comment on his last post said, since in his contribution to public policy he would be less public and more policy. Will we ever know where he did the greater good?

I may have said something that stealthily mimicked useful commentary at some point but now can't recall it...! Been a bit lite through the departure process from the swamp too. Some of the half-finished scribbles might get put up soon.

C

...but in the meantime:
YouTube - Fun Lovin' Criminals - Fun Lovin' Criminal

Bloomberg.com:
Personal Finance

Here is more evidence that in fact, the looting continues on a massive scale and perhaps the economic picture is way more fragile than we CAN know as much is hidden from us via the secrecy of the Federal Reserve/Treasury. Wonder how much of AIGs support his time will be funneled back into the

http://www.bloomberg.com/apps/news?pid=20601203&sid=aKBRHcsabS78

By Hugh Son, Susanna Ray and Bryan Keogh

Oct. 30 (Bloomberg) -- American International Group Inc.’s draw on a Federal Reserve credit line surged for a fourth week to the highest since May after the insurer paid down a commercial paper facility and propped up its airplane unit.

AIG owes $44.8 billion on the line, about $3.6 billion more than last week, according to Fed data released yesterday. The increase in the Fed line stemmed from paying down the U.S. commercial paper facility as those borrowings matured, said Mark Herr, an AIG spokesman, in a telephone interview. AIG made $1.1 billion in payments to the Fed line this week, Herr said. .......

‘Puts Off the Problem’

“AIG had to turn to its lender of last resort, the Federal Reserve Bank of New York in order to pay off a $2 billion bank loan that matured,” said Kathleen Shanley, an analyst at bond research firm Gimme Credit LLC, in an Oct. 20 note. The payment “puts off the problem of what to do with the rest of ILFC’s debt for another day.”

The Fed may have to “apply more moral suasion” to get the remaining users of the Commercial Paper Funding Facility to exit the government program before it expires in February, Joseph Abate, a money-market strategist at Barclays in New York, said in an August report.

AIG’s bailout includes access to a $60 billion Fed credit line through 2013. The rescue also includes an investment of as much as $69.8 billion from the Treasury, and up to $52.5 billion to buy mortgage-linked assets owned or backed by the New York- based insurer.

Some CIT developments overnight.
CIT's Swoon Hits Taxpayers - WSJ.com
CIT Bonds Signal Bankruptcy Inevitable as Debt Exchange Expires - Bloomberg.com

Wrong on state frame of reference too.

Gutted, carved and filleted.

http://www.cbpp.org/cms/index.cfm?fa=view&id=711

In political economy terms, but rating very high on the tinfoilometer, it resembles a gigantic roll of the dice to skroo the states and centralize. So much easier to work the invisible tentacles without the mess and noise in the system of 50 jurisdictions...

/uh oh, incoming!

C

ille_vir: The big take away from that article is this statement:

I

n a statement this week, the lender said “through the substantial deleveraging featured in CIT’s restructuring plan, whether completed in or out of court, the company is confident that CIT will emerge as a strong bank-holding companywith improved capital, liquidity and earnings potential.”

Does this mean the same thing as the rest of the BHCs or is this some sort of business double-speak I don't get? Does mean means that after they do all they can to raise capital, it will become another Federal Reserve owned company with a gigantic line of cheap credit?

RobDawg:"But aren't you concerned that this massive investment in infrastructure will eventually make it difficult to keep the dollar from strengthening to the point of forcing us to drop interest rates? At the rate we are cleaning up our balance sheet it will soon become impossible to achieve our long term goal of getting out of reserve currency status."

Not concerned at all. Forward thinking on this is quite exciting. The USD will drop dramatically as the rest of the world hi-tails it out of the USD reserve currency camp.

Those holding the USD are holding a stinking bag, that has an evaporating store of value. It's lightening quickly. This is the same as major inflation, not yet hyperinflation, but on its way. This is not Mish's deflation, but it's a massive loss of the USD store of value.

This is frankly elementary, and has been the case since day one back in 2006 when the storm clouds were obvious.

An impoverishment of the US populace is the appropriate outcome for a country experiencing a liquidity crisis. The US is bankrupt. Rescuing the Primary Dealers was the only option for the USG. But that is not being ignored by the rest of the world.

Personally, I think the boards of directors of the Primary Dealers should be sued by the ombudsman acting on behalf of the world's populace, and bankrupted and imprisoned for about 5 years each, and every one of them should wear their scarlet letter, like Milliken had to, ruined but for his wealth and his ingenuity, and now heavily committed to societally good acts. The Boards can redeem themselves by their later individual actions. People like Lewis and McNeil (sp?) and Paulson are scum of the earth. But in a crowd, watch the public fawn over their fame and money.

Terry wrote:

At best, we will see what both of my sisters have experienced, temporary call-backs and increased hours to do a small inventory build, followed up by cut backs in hours.

I hope the best for your family in these tough economic times. I found this article interesting regarding the health of small business.

Accounts 90 days or more behind in payment, or in severe delinquency, also improved modestly, slipping to 1.40 percent in September from 1.48 percent in August.

But accounts behind 180 days or more, or in default, rose to 0.85 percent in September from 0.81 percent in August. PayNet's Small Business Lending Index, which measures the overall volume of financing, fell 22 percent year-over-year in September, a sign that lenders remain reluctant to extend credit to small and medium-sized businesses.

"It's hard to imagine a robust recovery when you see numbers like this," said Bill Phelan, president and founder of Skokie, Illinois-based PayNet.

http://www.reuters.com/article/ousivMolt/idUSTRE59T15720091030 

More on CIT...the is taking care of that.

• CIT pays $285 mln in fees to Goldman
  • Counting votes on restructuring plan, debt exchange

NEW YORK, Oct 30 (Reuters) - Goldman Sachs Group (GS.N) plans to trim the rescue loan it arranged for CIT Group Inc by $875 million to $2.125 billion, CIT said on Friday.

CIT, which is has been struggling to finance itself amid the credit crunch and recession, said it is effectively removing the part of the loan it hadn't taken, according to a filing with regulators.

The commercial lender paid $285 million as a fee to Goldman for reducing the loan, according to the filing.

CIT is likely to file for bankruptcy in the coming days, analysts have said. [ID:nN29386269]

The lender has offered investors two options: an exchange of bonds for new securities and equity, avoiding a bankruptcy filing; approval of a reorganization plan before the company files for bankruptcy.

Separately, in a statement on Friday, CIT said an independent balloting company is counting more than 150,000 ballots from investors on the exchange and restructuring plan, which expired on Thursday.

The company did not say how long this process might take. (Reporting by Elinor Comlay; Editing by Derek Caney)

[http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN3040457620091030]

Unemployment reached 10.8% at the end of 1982. Unemployment is currently only 9.8% and will probably peak this month at 9.9%. The fact that 'Zandi' (whoever he is/was/or ever will be) doesn't know or doesn't mention this when declaring that the most recent recession was the worst since the 30s says a lot about the value of his opinion.

YLSP wrote:

I did not intend to speak about this, but since he addressed the issue--I have kept a lot of notes about those 2 weeks. I have copious notes, almost 500 pages of them, that describe the events of those 2 weeks in great detail because I was involved in every meeting and every drafting session. So I can tell you down to every dotted i'' and crossedt'' what happened during those 2 weeks. It was a moment of great import, and I thank my friend from Utah for his contribution to all of that.

Translation: I intend to write a book and perhaps cut a movie deal.

YLSP wrote:

Nanoo,
Did you previously post that the Senate might add a "kill TARP" amendment to UE benefits extension?

Bennett introduced an amendment, co-sponsored by Thune, yesterday which purportedly does this, but the actual text of the amendment is not posted yet. The Congressional Record will be going up in a few hours.

EDIT: I give it a 100-1 shot of being adopted.

Thanks Terry...cya later!

"The recession was..."

This guy needs a briefer on the conjugation of the word "is".

@burnside: Wow that RR report from Zero Hedge is stunning. Thanks for linking that. What is CLEAR is materials for construction has continued to contract profoundly and yet....RRE is up ~25% according the GDP report yesterday.

Liars, Liars, pants on FIRE!

YSLP: Why would anything change or perhaps getting rid of TARPI will pave the way for TARPII....and what about TALF and the other so called programs out there providing endless means for the smart amoral scumbags to be the defacto leaders of this nation.

Nanoo,
Baby steps, right? If there is a TARP II its bound to be written a helluva lot better than TARP I.

LOL! Did you read the first TARP written by Paulson before the oink was added? I swear-6th grader could have written it better. Three pages of nothing. The ghost faced congressional leadership was amusing. Paulson accomplished something I've never seen before, a transfer of money/power in record time!!

Florida Car Dealership: Save Your Cash, Use Your Gold as Down Payment

Bob Dance Hyundai | New Hyundai dealership in Sanford, FL 32773

The tax break “brought new families into the housing market and contributed to three consecutive months of rising home prices,” Treasury Secretary Timothy Geithner said in a statement.

Has Geithner sold his own house yet?

Heh.
“It seems to me there should be a better time to have this debate,” Reid said.

It's a damn short amendment (apparently 4 lines). I'm positive the Republicans have the votes to block cloture, and I think they could get lots of public support. Everyone is talking about how the recession is over, economy is recovering, etc. So why give Treasury a continuous slush fund? Are Democrats really going to complain that Republicans are trying to end a program that doesn't have and never had public support? I think this is more interesting than the Tax Credit...

Back to sleep. But in my dream lawsuit the ahole who sues Treasury over TARP funds to bailout the automakers would also subpeona Dodd's 500 pages of notes. There's no damn public record of the TARP bill hearings, markup or anything. In fact his notes probably have better view of "Congressional Intent" than anything.

ylsp
yeah why extend it. that is the reason i posted it. everything is so fine, right? they are not telling us things snark

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