Krugman is the new Roubini

posting...
Kaufman warns of commodities bubble
| Reuters

Related:

Bernanke in Atlanta - Paul Krugman Blog - NYTimes.com

"But Bernanke should have been more forthright about the Fed’s undoubted failures: Greenspan’s rejection of advice about the risks of subprime lending, and the failure of top officials, BB included, to recognize the housing bubble in real time.
"

It was all a 'low probability event' at one time...GD1, subprime blowup, loans called in crushing huge investment banks, CRE collapse, credit destruction, sustained dollar devaluation, savings and loan crisis, 20% interest rates...didn't Krugman say 'the economic world is a dangerous place.'

CR sez...

My guess is the U.S. will see sluggish growth in 2010, but will avoid a recession.

I agree - but only because we'll see a big fat Stimpak 2.0 just in time to avoid Electageddon 2010. Then the question becomes how far out does the next leg down have to be before they won't call it a 'double dip'. Two years? More?

Ponzi galore and what else is galore? Nobels in Economics! Devils all.

Whether GDP goes up or down has so little meaning.

Even Stiglitz says so. He has a Nobel award also.

CR, I think your post heading is a mistake. Isn't he saying >50% chance of recession?

I can't resist .... The 10 Year treasury yield is like what, zero .... and the stock market has earnings based on accounting fraud and synthetic manipulation never before realized in world economics ...... and ahhh, I'm blacking out again... what was the question?

Krugman doesn't deserve this much publicity.

Comrade Misean is Dope wrote:

But you may make it through the next election. There's just not much left to lever though...

Bingo.

I've been saying all along - watch the treasury auctions. That will be when & where you see it for real.

Geez Dawg,Envy? And anger that PK can be treated seriously while talking out of both sides of his ass at once? You are a better man than that!

Checked but Fed link broken...the Volker Era...
In Oct. of 1979, the Fed under Volcker (now Group of 30 Chairman of the Board of Trustees apparently) shifted its focus from targeting interest rates to control of the money supply.
(See how the U.S. Public Debt accelerated after that.)

Feckless Ness wrote:

Isn't he saying >50% chance of recession?

Remember Greenspan and his 33% chance? And the explanation that a noted economist would never dare predict a higher probability for fear of the ol' self fulfilling prophecy?

dryfly wrote:

I've been saying all along - watch the treasury auctions. That will be when & where you see it for real.

I'm also watching gov't pension fund strain...gives a real indication of investment returns, as they have no incentive to lie when looting the treasury (tax payers) on the hook. And the food markets...

But that WILL show in the auction action...just might be some slight lag...

Feckless Ness wrote:

Am I reading this right? Krugman is saying NOT low probability like 30-40%. He's saying better than even chance; greater than 50%.

The article CR linked to says this:

Nobel Prize-winning economist Paul Krugman said he sees about a one-third chance the U.S. economy will slide into a recession during the second half of the year as fiscal and monetary stimulus fade.

But then it also says this:

“It is not a low probability event, 30 to 40 percent chance,” Krugman said today in an interview in Atlanta, where he was attending an economics conference. “The chance that we will have growth slowing enough that unemployment ticks up again I would say is better than even.” [emphasis added by W.S.]

I guess you'd have to listen to the actual interview to know exactly what he said (and I don't have time to do that tonight), and then even if you heard it clearly you still might not know exactly what he meant. But he's not saying anything that we wouldn't have been familiar with here.

The Princeton University professor joined Harvard’s Martin Feldstein and Columbia’s Joseph Stiglitz, another Nobel laureate, in sounding an alarm for the world’s largest economy during the annual meeting of the American Economic Association. Feldstein yesterday called the fading stimulus “a serious cloud,” and Stiglitz said growth won’t be “robust” soon.

Nothing surprising to anyone who reads CR!

Wisdom Speaker wrote:

I guess you'd have to listen to the actual interview to know exactly what he said (and I don't have time to do that tonight), and then even if you heard it clearly you still might not know exactly what he meant.

In other words, he's a strong a candidate for Federal Reserve Chairmanship.

CalculatedRisk wrote:

dryfly, I think we will see Stimpak 2.0 (is that trademarked?) in the next few months. After that it will be too late for the election.

Yes - they have to move fast if they want to have any chance of saving their bacon next Nov. I read somewhere people make 'economic' decisions regarding elections something like 4-5 months prior to voting. Other factors they might not lock in that early but if economics is their primary concern - they lock in early. The study was [supposedly] backed up by follow through pre-election and then exit polling.

Personally I think they are already too late to save themselves this cycle but what do I know.

I agree, Krugman is saying the odds are better than 50% of all shit hitting the fans

Growth slowing enough to increase the unemployment rate does always equate to a recession. He seems very clear to me.

dryfly wrote:

Personally I think they are already too late to save themselves this cycle but what do I know.

Far too late.

Stock Market + Midterm elections
Chart of the Day - Average Year
& the best stock market year of a presidential cycle is the 3rd year
suggests that 2010 stimulus spending might be lower than we expect
but we are so far off the map, and who knows what they can agree on?

Comrade Misean is Dope wrote:

I'm also watching gov't pension fund strain

As long as the auctions go as planned - the pensions will be 'fine'. When [if] the auctions fail - watch out.

noob goldberg
I think it's because just like any job that doesn't require real thought, they become robots and use the part of the brain good at repetitive tasks while the rest of their brain is freed up to think about other things. Excel-syndrome
or maybe they're too damned old to learn something new, better to just hold on to what they know for a few more years until retirement or death, economists call those people luddites in an ironic sense of professional humour if you ask me

dryfly wrote:

As long as the auctions go as planned - the pensions will be 'fine'. When [if] the auctions fail - watch out.

Which came first, the auction or the need?

Rob Dawg wrote:

watching so many survivors being led to the bow of the S.S. Poseidon

My buddy told me in the Gallico book, that when the main characters reached the surface, they found many others who had taken the easier route.

The Poseidon Adventure - Wikipedia, the free encyclopedia

Inflation crisis of the 70's= more Fed power and control of money supply...
'Inflation problem was addressed through monetary policy.'
'U.S. administration...did not object.'
New Fed chief Volker went to IMF/World Bank meeting in Belgrade on a 'Treasury plane'...(pp. 223,224)
Returned with 'new plan' for monetary policy controlling money supply.
http://research.stlouisfed.org/publications/review/05/03/part2/MarchApril2005Part2.pdf

Irvine Housing Blog - Irvine Real Estate and Resale Homes - Predictions for 2010

Refinancing and mortgage equity withdrawal will not be part of our economy for the next decade
Increasing interest rates mean refinancing is at an end, and mortgage equity withdrawal will also be curtailed. When prices were rising and debt was getting ever cheaper, mortgage equity withdrawal exploded. In a rising interest rate environment, borrowing costs go up and home prices do not appreciate as much (or in our case any at all), so there is little equity to withdrawal, and the cost of borrowing and spending this money is very high.

The housing ATM is broken until we enter another long-term phase of lower interest rates. The rules have changed, and we are now entering an inflationary world. Get used to it.

slurp, slurp ... Could you make that a little more pink-slime-like?

kcoop wrote:

Beef... it's what's for dinner

with a nice amonia sauce and pink slime for dipping.

Comrade Misean is Dope wrote:

Which came first, the auction or the need?

Doesn't matter which was first - the auction now feeds the need. Cut off the feed and the need dies. Pension payouts can go on indefinitely as long as the various gov'ts can borrow to backfill any shortfalls. When that no longer works it is over - and even fedgov won't be able to print their way out forever once the auctions bomb.

Uncle Ar wrote:

although I did tap the neighbours wife

carbonated or still vintage?

YouTube - Rodeo - I.Buckaroo Holiday Hey, where's the beef (icon)?

kcoop wrote:

Beef... it's what's for dinner (at the Whitehouse) Silence is Golden Brown

NICE!

Levitt hung out with the crack dealers in Chicago, oh no i brought up Chicago

I'm telling yah, my menu has no beef,

MLM wrote:

Like I said last night, since you're so worried about the guy who took the 30% raise

Like I've said 3 times, if you think the story was about a 30% raise, and not about the 300% rise in cereal prices (right there in boldface) you are having trouble reading the writing...

MLM wrote:

Those foreign-owned farms will need good infrastructure to get their crops to shipping points,

So the Ethiopians should take a wage below World Bank poverty-line standards so that foreigners can ship away the products of their labor, and MLM sees that it is OK.

Uncle Ar wrote:

look like the hat tip icon

My first thought was a fireman's helmet from a back angle, but that's just me. It's really quite detailed!

Looks like someone wearing a hat got the hair parted with a .44 magnum...

Uncle Ar wrote:

As for the speedos, it sounds like you were in a neighborhood of non-Americans. We leave speedos to the germans and you canucks.

Indeed, the vast majority were Europeans and Canadians in that resort community. I always get a kick out of hearing three-year-olds playing with my little boy and speaking with an English or Irish accent.

EDIT: My only regret was not getting a chance to hook up with Liz down there, but the timing--being during the holidays--and playing dad to the young'uns made it impossible this time. There's always next time.

Dryfly is going to bed without a gratuitous comment about polar bear swims in speedos? My disappointment knows no depths.

1 currency now -yogi wrote:

One currency now.

Where's your website?

"noob goldberg
I think it's because just like any job that doesn't require real thought, they become robots and use the part of the brain good at repetitive tasks while the rest of their brain is freed up to think about other things. Excel-syndrome
or maybe they're too damned old to learn something new, better to just hold on to what they know for a few more years until retirement or death, economists call those people luddites in an ironic sense of professional humour if you ask me."

Krugman is a Keynesian and has always demonstrated high sensitivity to the probability that deflation (i.e. a "double-dip" recession) is a high probability event since he agrees we are in a credit crisis. In this prognosis of symptoms, he is strikingly similar to Mish and many of the posters here with "Austrian" or teabag predilictions.
While most of your solutions may differ, I'm a little surprised by the scurrilous tone at his willingness to take continued deflation as a high probability, which is still relatively rare among public pronouncements in the "Group of 30."

In his defense (on the solution debate, which almost noone here will agree with me, but that's OK), only government demand has prevented (so far) the complete collapse we experienced in the '30s. I had to laugh at Kudlowe and the "Laugher Curve" types who now claim that "market" demand has asserted itself. I call BS on that.

I don't like it, but Krugman's argument for a second stimulus may well be on target; I know most of you won't like it. My concerns are where the stimulus is directed, if it is to happen, since I would prefer it to be directed to infrastructure, including bridges, highways, electrical transmission grid, etc. Without the interventions most of you deride, this might have been my grandfather's credit collapse, and still could be, I'm afraid. And we don't want to go there; if we do, I'd give 10% odds on a new fascism, rather than the socialism the teabag crowd so tendaciously denounce, now that they are clear that Bush's security state corporatism no longer rules. I would have taken them more seriously if they had campaigned for taxes or cuts 4 years ago, but they didn't. They waited for Obama and the "Great Recession" to get concerned, and that was about 5 years too late, in my opinion.

Unsustainable Govt. Public Debt and huge deficit spending leading to expectations of possible default that leads to currency crisis (1st generation model?) doesn't just come from the 'clear blue'...monetary policy is a component which has been used to fight sustained inflation see St. Louis Fed link above
And apparently control of the money supply was important for the Fed to fight 'inflation' in 1979 and as the Public Debt has grown quickly since then so has the instability in credit boom cycles and market boom cycles and now currency speculative attacks and devaluation...so there is a link between Fed policy and financial/currency crisis...but I don't think Krugman as a member of Volcker's Group of 30 can or would address this issue. Just guessing.

I'm probably the one least worried about the US government managing to sell Treasuries at a low yield. The only risk is China jerking the chain during some trade shouting, but even then both parties have their tentacles into each other. Another risk would be a writedown-gap where the US gets too far ahead of other countries causing a loss of faith in the currency itself, but last time I looked around no central bank was looking to appreciate its currency right now. USDs have to sit somewhere, and China doesn't want to Plaza-accord, and it tends to lead the emerging market countries which have 51% of PPP GDP. US Federal deficit could be $2tn this year and it would be ho-hum once everyone stopped hyperventilating. If the money multiplier stays stable, the money will find its way into USTs. Anyone see the senior loan officer survey I brought up earlier? There is no crowding out in the market for USDs. If the money multiplier falls, they can print the difference straight up without impact. The only vulnerability is a weakening currency, so which currencies will counterbalance that? It's a relationship and not a transaction. Where this will lead, is a domestic default on US debt. It won't be a glidepath of inflation, but it's going to take time. I'll consider us all fortunate if we can get there in a route that doesn't involve war. In a financial sense, this is huge. A once in a few decades shift in labor income vs capital income.

In whole though, no matter how big this will be, it will only be a minor part of our lives. I haven't been to war, or lived through an economic collapse or other society shaking events. Not even the littler ones. What's going to matter are the people who surround us and the memories they are a part of. If you can't trust on the financial economy to be stable or look after you, then muscle up on your portfolio in the social economy. The best doomstead in the world is not solely bought by money

Polar bears eating Speedo wearing Ethiopians in frozen swimming pools while noob-ile canuks eat roast beef watching....It's all too much for me.

Nytol.

robj wrote:

In his defense (on the solution debate, which almost noone here will agree with me, but that's OK), only government demand has prevented (so far) the complete collapse we experienced in the '30s.

I think that's overstating the case. My read would be that most of the commentariat was bitterly disappointed in the fact that none of the problems in the financial system have been fixed, first and foremost that bad debts aren't being written down.

As far as fiscal stimulus goes, my guess is there are a lot of folks here who agree with you that if it's doing something relatively useful, it beats paying people to sit at home and watch American Idol.

robj - 'Krugman's argument for a second stimulus may be wellon target.'
For what...more expectations of unsustainable govt. debt default...which is discussed in 1st & 3rd generation currency crisis research...

robj wrote:

Without the interventions most of you deride, this might have been my grandfather's credit collapse, and still could be, I'm afraid.

Oh, just as I'm heading to bed you posted that wonderful seed for a good discussion. I don't know how the commentariat will respond, but I'll back you up on your above assertion. They had to dive in, but my concern is how much moral hazard they introduced into the system by the method they chose to use in their intervention. It's one thing to support credit availability, but it's quite another to rewrite longstanding rules and undermine good businessmen to do it.

Maybe I'll cut and paste your post when I'm back in the CR groove again, because there's a great deal of stuff worth talking about there. But bed for me now, unfortunately.

robj wrote:

Krugman is a Keynesian and has always demonstrated high sensitivity to the probability that deflation (i.e. a "double-dip" recession) ...
I don't like it, but Krugman's argument for a second stimulus may well be on target; I know most of you won't like it.

Like it? It will be fatal. There is too much debt. The blind spot of all Keynesians is in not seeing the limits to intervention.

http://www.ebri.org/pdf/briefspdf/EBRI_IB_12a-2008.pdf

Size of 401(k) Account Balances
At year-end 2007, the average account balance was $65,454 and the median (mid-point) account balance
was $18,942 (Figure 6). There is wide variation in 401(k) plan participants’ account balances at year-end
2007. Nearly three-quarters of the participants in the 2007 EBRI/ICI database have account balances that are
lower than $65,454, the size of the average account balance.

The median 401k plan has less than a year's salary in it. The stock market gains for 401ks are highly disproportionate to the uppermost quartile.

EvilHenryPaulson wrote:

A once in a few decades shift in labor income vs capital income.

I tend to agree, though it may be wishful thinking on my part. With bond yields low, stocks unlikely to be very rewarding from the current overvalued state, and home equity taken down already, it seems capital's turn in the sun is over, and the earning/spending power derivable from accumulated assets will be reduced compared to the earning/spending power of productive human capital. The downside is, folks used to the gravy train (including the government sinecures) will have to learn how to work hard again. The upside is, political control (assuming it follows the economic power) will tilt away from the

I also think the low yields will persist, albeit with fluctuations. They did so in the 1930s-50s, even with the dollar devaluation of 1933 and the wartime inflation pressures. I see too many Boomers needing to save, and not enough people wanting to borrow. Uncle Sam needs to borrow, but the print-and-spenders are losing their political capital. And Uncle Sam has arm-twisting powers, such as the threat of higher taxation, to induce the wealthy to bankroll him for a bit longer. Even without that, the invisible hand will start pulling money into bonds as soon as yields rise above current mortgage levels, and it becomes smarter to save that way. So interest rates can't soar too high too fast. I don't think we're insane enough to risk hyperinflation.

Rob Dawg wrote:

robj wrote:

Krugman is a Keynesian and has always demonstrated high sensitivity to the probability that deflation (i.e. a "double-dip" recession) ...
I don't like it, but Krugman's argument for a second stimulus may well be on target; I know most of you won't like it.

Like it? It will be fatal. There is too much debt. The blind spot of all Keynesians is in not seeing the limits to intervention.

RD,
While we're at the opposite end of the political spectrum (I think), I've always agreed with concerns about debt but the time for that concern was 4-6 years ago, not now. Concerns about debt should be contra-cyclical, not exacerbating the cycle. I learned that from my grandfather in depression Oklahoma.
I fear the question is to load up on debt now to avoid a complete demand collapse or to amplify the cycle (cut spending, add taxes; cut spending, add taxes) that you Californians are now experiencing. If I had lived in California the last twenty years, I suspect I would share your views rather than mine. But I fear a Great Depression more than I do debt. We should have saved our powder for this one; I think we at least can agree on that one.
Rob J.

Thank you. Nice to hear that you have tried to help out in Africa. If Ethiopians grow a surplus that they can trade it's good for the world. If colonialists take the surplus and keep the locals at poverty wages, it's good for some.

Didn't Timmay say there will be no double-dip just before the holidays? But then the administration also said that the stimulus would keep UE under 9%.

robj wrote:

Concerns about debt should be contra-cyclical, not exacerbating the cycle.

On the other hand, lenders shouldn't just offer handouts to borrowers without making sure the borrower uses the money intelligently!

My worry is that the Federal, State, and many local borrowers haven't shown any signs of being able to spend wisely. Thus it appears the additional loan will be squandered rather than put to good use. That would exacerbate the cycle even worse, because next time the contra-cyclical option may not be available.

I fear the question is to load up on debt now to avoid a complete demand collapse or to amplify the cycle

"Star Trek" Operation - Annihilate! (1967) - Synopsis

But as the Enterprise is approaching Deneva, they encounter a small spaceship which is headed on a direct course to the sun. They intercept the pilot's radio message. He sounds insane. Moments before the Enterprise's tractor beam can capture his ship and pull him to safetly, he screams out on the radio "I'm free. I'm free." Then his ship is burned up by the sun.

merchants of fear wrote:

.but merchants will raise prices for devalued currency sooner or later...

? If they print more currency, the price always goes down, all else equal.

Rob Dawg wrote:

I honestly don't know why we bother to pay PK any attention. He's been nothing but wrong, unapologetic and downright nasty to anyone who has been right in the face of his abject failures.

We need to publish life time and seasonal batting averages for these clowns, just like major league ball players. They wiff enough and we send them back to the minor leagues or sand lots and bring up a new crop of seers.

Then, we could have fantasy economists' leagues and trade bubble gum cards.

kidbuck wrote:

We need to publish life time and seasonal batting averages for these clowns, just like major league ball players.

But in baseball, a ball gets called a ball, and a strike, a strike. How do you pin them down when you are getting a 30 -40% weather report?

merchants of fear wrote:

But in deflation and rising unemployment, money is harder to get even if prices fall.

Money yes. Currency no.

EHP,
The 11:34 pm comment is my brief opinion response...

Jackrabbit wrote:

I think the problem is not Krugman's economic theory/prescription

PK's economic theory and prescriptions have been proven a failure time and again. As always, though, the Keynesian's wail upon that continued failure is "we didn't try (i.e. spend) hard enough". Yeah, right.

Ending it for the 'victorious' U.S. that is. I've talked to WWII veterans who said the U.S. economy didn't really recover until the Korean War.

mof wrote:

Did all or any of FDR's stimulus, devaluation, seizure of gold, etc. actually turn the Great Depression around

I'm not an expert on the Great Depression (or Krugman's history of economic prescriptions) but what about the famous 1937 episode? Apparently fiscal stimulus was working but it was cut back for political reasons.

It's not the amount of spending or whether it's signed for by the government or a capitalist that determines its utility.

It's the future utility of the spending that determines whether it was a good idea- and that can only be evaluated in hindsight.

Economics is politics. Or it should be, anyway.

no you're not reading it right. 30-40% of recession (negative growth) 50%+ chance of positive growth, but weak employment growth that leads to rising unemployment

Yes, that's what he said.

Blackhalo wrote:

How do you pin them down when you are getting a 30 -40% weather report?

Yes, I suppose you're right. Is this more like PK saying "no mas." Or is PK just taking his ball and going home? Maybe he's finally tired of making predictions that start... Spend more of other peoples' money and life will get better everyone. The solution to all life's problems is always to let PK give away more of other peoples' money.

'Political reasons' for continuing the Great Depression by cutting 'stimulus' in 1937 just before WWII...this needs to be looked at seriously...

Sometimes monetary policy is 'proscrastination' or kicking the can but the Greenspan 'discretion not rules' Era was more than just that. It was a Bubble Machine that we are dealing with now that's threatening currencies and state and national solvencies.

If I recall correctly, Krugman is not too particular about what a stimulus gets spent on. But I think it matters. Throwing money down a hole trying to cancel debt, seems like it would be far less stimulative, than spending that results in new technology. Funding more X-prizes in things like genetics, robotics or energy alternatives would, I think, be more lasting.

Blackhalo wrote:

Funding more X-prizes in things like genetics, robotics or energy alternatives would, I think, be more lasting.

I'm looking into endowing a prize for the open-source currency.

Tax on luxury consumption is the best way finance growth.

Haven't read much Krugman. Stiglitz is my guy. Going to a lecture in 2 weeks...

US pesodollars, nacho debt.

Throwing money down a hole

Yeah, it is. And it will be. The banks will be recapitalized, one g-damn way or another. Nothing goes anywhere until they are made whole.Because, really, the inflation already happened: now we just have to make it real.
Gotta' agree with EHP in that domestic default awaits us we try to refill that empty shell.

to paraphrase The Great One,
You don't spend your money based on what it's worth now, you spend it based on what it will be worth in future

"I thought I wanted a new era of transparency and accountability, but honestly, I just can't handle it," Ohio resident Nathan Pletcher said. "All I ever hear about now is how my retirement has been pushed back 15 years and how I won't be able to afford my daughter's tuition when she grows up."

"From now on, just tell me the bullshit I want to hear," Pletcher added. "Tell me my savings are okay, everybody has a job, and we're No. 1 again. Please, just lie to my face."

Nation Ready To Be Lied To About Economy Again | The Onion - America's Finest News Source 

It seems to me that we know enough to avoid big economic mistakes, whether it is mistakes that cause a Depression or mistakes that delay or prevent recovery. But....

When times are good, politicians defer to the wealthy and well connected who own or run businesses. Naturally, they all want the party to continue. Result: less regulation and a general laissez-fair attitude. Bubbles get blown (but hey, hoocoodanode. and anyway "I'll be gone, you'll be gone").

When times are bad, politicians defer to the wealthy and well connected who own or run businesses because they are scared shitless and don't have any clue how to right the ship. Their prescription: don't increase deficits (too much) because they fear that they will have to pay for that spending in the end (oh, and send some pork and give-aways my way). So we face a long and deep downturn that but the most pain will falls on J6P.

So the Fed rides in to save the day. And the cycle continues until a bubble comes along that rocks the entire system and even the mighty Fed struggles to forge a recovery.

1 currency now -yogi wrote:

Rob Dawg wrote:
"Give me your tired, your poor,
Your huddled masses
because labor 'costs' are killing profits...

I love this place. Nothing gets by you guys.

I had Groucho timing in mind.

I think neither you nor I is an organizer type. But some out there are taking up the slack:

Public Banking 

traderwalt wrote:

Whadaya think?

What do I think? I think we need to go back to being a country nobody feels the need to terrorize.

Betcha didn't see that one coming.

here's a chart from Richard Koo's last book, http://img12.imageshack.us/img12/3006/kook.jpg
you are right to be concerned about inter-generational/sectoral/regional/etc transfer of wealth/burden (which Koo never addresses btw)
but the basic breakdown is more spending and a bigger deficit, but also more tax revenue and higher employment
given that this bubble was much larger than the one in the great depression (in terms of on the way up at least), and given that at the very least the main pillar of Federal/Federal Reserve policy is a devaluation of the dollar (in order to supply inflation, more employment from exports, etc), I don't see the outrage
before balance sheets are healed over, they'll have had to debase so much they cause a domestic default and the primary loss of trust in the USD
so even if policy is just to lure more foreign suckers into the USD and minimize the domestic fallout, the deficit spending makes sense
but I say, just go all the way. let the bluff be called so the counter-bluff can be called
The US is too big in terms of production and demand even after getting fat on a multi-decade credit volcano
it dominates some economic niches, and has the capacity and capability to move back into competition across the board
it has minerals, water, and food -- that's 2 more key commodities than most energy exporting countries have
too big to isolate, and unlikely that any outsider will be able to take over the US with a putsch whereby the new government is supposed to repay old debts
the sooner losses are allocated and recognized, the sooner we can get on with rebuilding savings and then onto what is hopefully indefinite normalcy

1 currency now -yogi wrote:

It's so much easier to simply type "ceteris paribus" and be done with it.
Assume you live in utopia, with a can opener.

oy oh! I know this one. First you light the match. Kinda like; first you stop the deficit spending. Nobody gets the obvious until someone points it out.

Blackhalo wrote:

. . . Krugman is not too particular about what a stimulus gets spent on. But I think it matters . . .

A certain amount of printing money and deficit spending, even if for short-term, "unproductive" projects can be helpful in a severe downturn but too much of that can cause a drag on the economy and increase the ultimate cost of recovery.

It is essentially the difference between providing a bridge to ease adjustment and delaying necessary adjustment (e.g. "hand ups, not hand outs.")

since I have been defending the existing capacity for monstrous deficit spending, I guess I should point out that almost all the so-called stimulus spending has been garbage. More to the point, dominated by fraud and corruption. I should be more sympathetic to that disgust when I discuss deficits in future, even if I believe the value of these obligations will be worth little in the not too distant future.

Nobody likes high deficits. Its a policy choice. How much pain should people endure to make the necessary adjustment.

The result is usually to "muddle-thru," fighting fires as they occur because that's the safest choice for the status-quo.

Rob Dawg wrote:

Ever since I learned that a local water project completed two years ago that wasn't necessary and only resulted in developer giveaways was listed post completion as a stimulus project I knew we were screwed.

Give them enough rope, and they'll hang themselves.
Better yet, leave the rope closet door unlocked and they'll steal the rope they'll hang themselves with.

EHP

How will they hang themselves? And even when they hang, it seems that we are the one's holding the bag.

Jackrabbit wrote:

How will they hang themselves? And even when they hang, it seems that we are the one's holding the bag.

In past restructurings, there needs to be sacrifices made to sate the public, and those who are known to have had their hands in the cookie jar beforehand are optimal targets both because of emotional convenience for the public, and because every restructuring needs a new regime and the first thing they like to do is clean house and consolidate power.

My 2010 U.S. GDP forecast: 0.7% growth

AP: 2009 bankruptcies total 1.4 million, up 32 pct - Yahoo! News

By MIKE BAKER, Associated Press Writer Mike Baker, Associated Press Writer – Mon Jan 4, 4:12 pm ET

RALEIGH, N.C. – U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally showed Monday.

The AP gathered data from the nation's 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.

While experts believe some of the increase is due to a natural recovery as consumers and attorneys become accustomed to a recent overhaul of bankruptcy laws, the numbers indicate clear correlations to recession-weary regions. Arizona saw the fastest increase, a jump of 77 percent from the year before, followed by Wyoming (60 percent), Nevada (59 percent) and California (58 percent).

......

edit to add after digging for more data: Looked up bk from 07 to 08 stats...when ap references from the 08 figures, it looks like
as 08 was also in double digits broadly by district. warning following is PDF

So to get a clearer picture, it is necessary to reference previous claims with the current claims.

http://www.uscourts.gov/judbus2008/appendices/F00Sep08.pdf

EvilHenryPaulson wrote:

every restructuring needs a new regime and the first thing they like to do is clean house

in banking?

in insurance?

in congress?

Shit man, the third most exclusive club in the whole Windows world is the Senate. And everybody hates congress, but they love their congressman. So you suppose there will be show trials from amongst the FIRE sector. Yeah, bring it on. We could make the Chinese look like a bunch of misguided patsies with the innovations developed in executing humanoids.

Let's see, first we spin the Wheel of Death. A fetching young nymph, dressed appropriately (think magician's assistant) spins the clattering gyro. All eyes are riveted to the marker at the top. Each wedge passes in an ever slowing round of Beheading, Electrocution, Hanging, Firing Squad, and more.

When the wheel stops, a way of execution identified, the prisoner is queried: Would you like to plead guilty and accept your punishment or would you like to double down on a variety of prison stays?

Oh yeah.

EHP: the sooner losses are allocated and recognized, the sooner we can get on with rebuilding savings and then onto what is hopefully indefinite normalcy

Punctuated by bouts of unspeakable idiocy?

Because as we know once a generation forgets, the Glass-Stegall laws are revoked and the banksters have their picnics.

Rob Dawg wrote:

Something tells me we will start tracking Chapter 9 filings this year as well.

PDF here ya go.

http://www.abiworld.org/statcharts/Ch9filings.pdf

Frankly folks, I'm really getting dissappointed in all of you. Krugman is right. Don't you know we are in crisis mode? What do ya all want, a double dipper? We've had the government doing all it can, spending all that money it didn't have, what with all the bailouts, TARP, TALF, cash for clunkers, cash for caulkers, and cash for appliances now starting. The government threw everything but the kitchen sink at this meltdown and all for you. What the hell is a matter with you for glod's sake! Do the patriotic thing in this our time of crisis and need. Just go out there and do it. Go out there and start spending money you don't have, spend like there's no tomorrow, spend just like you did when dubya told you to go shop immediately after 9/11. Go out there and support all our fascist corporatists who are laying you off, sending your jobs overseas, bringing in the H-1B workers, and opening our southern border in a show of hospitality for more illegal workers so that they can show a real profit, not some imaginary, tooth fairy profit on their books for glod's sake!

Maxine Waters:
These servicers, why do you lose so much? I'm getting calls about people losing paperwork 2 or 3 times?

Haha: "Servicers are talking to my constitutients saying certain income isn't valid. I dont' care what it is, child support unemployment... etc..."

Woah, she's saying all the documentation is not necessary!

Good morning from castle keep, west.

Crazy Juvenal is having a sale, all predictions are 30-40% off.

gabyjan wrote:

anyone see this,happened yesterday
Las Vegas Federal Building Shooting Leaves 2 Dead, 1 Injured - Las Vegas Now

I understand the guy had a beef with the Social Security office in that building that cut his social security benefits. They didn't say what kind of benefit but my guess it was probably disability.

1 currency now -yogi wrote:

The old 30-40-% trick.

Yep, when I see one of these, I think -

"Sometimes you win"
"Sometimes you lose"
"Sometimes it rains"

Lesson: If you're going to make predictions, make a lot of them.

There's a poster here trying for a mortgage mod. She's dealing with lost correspondence, incorrect data submitted, unnecessary delays, and other problems apparently all caused by the servicer. All these problems seem to result in modifications that are in favor of the mortgage holder and financial damaging to the home owner. I'm no fan of Maxine Walters, but the answer to her question is that problems in loan modifications result in gaming the program in favor of the mortgage holder and probably the servicer.

Nanoo-Nanoo, oh, you are so right. An increase in property taxes means that it would be more difficult to spend money that we don't have have. What we need to do with those secondary educators that are overpaid is just say no, just send in the Donald to tell them "You're fired!". Or maybe his new associate Rod Blagojevitch can do it. Then we can bring in maybe 4 to 5 million English speaking teachers from India and the Phillipines to take their place at a fraction of the cost. Then we can really save money and maybe even lower our property taxes and go on another personal spending rampage. Nothing like class envy and warfare to solve our spending problems!

"Tens of thousands of homeowners in Southern California are being forced to buy costly flood insurance because new maps issued by a federal agency [FEMA] say they live in a high-risk flood area."

.........yeah right..........it increases housing costs $50-200 a month........and is about as much "bullsh**" as it is "science". We were in a "100-year flood area" also during the last ice age.

Homeowners forced to buy flood insurance after FEMA redraws maps - latimes.com

"My guess is the U.S. will see sluggish growth in 2010, but will avoid a recession."

I don't see how... since - sans stimulus - we are still in the recession and it is now 2010. The "positive signs" in stats lately are dismal fluctuations in the background noise that do not even register on long-term charts, and that is after a good part of our future has been confiscated and thrown onto the bonfire to try to keep it going.

They tried to do that to us twice now. Mom had to pay FEMA to come out and do a survey to prove we were not on a flood plain. Luckily I saved that survey because when I remortgaged after she died my new mortgager tried the same bullshit with me.

FACTBOX-Key 2010 global political risks to markets
04 Jan 2010 14:00:24 GMT
Source: Reuters
By Peter Apps, Political Risk Correspondent

LONDON, Jan 4 (Reuters) - The risk of sovereign debt default, looming elections, social unrest, populism, and thorny relations between the United States and China could all hit global markets in 2010.

Reuters has moved a series of factboxes on the key political risks facing each region of the world. [ID:nLDE5BK0X2]

SOVEREIGN DEFAULT RISK

For global markets, probably the main political risk would be one of the world's more troubled economies defaulting or coming close to default on its sovereign debt -- ultimately a political decision. [ID:nN11259082]

Worries over Dubai, Ukraine and Greece have all spilled over into global markets in the last month, and all three look set to remain under economic and political pressure in the coming year, even as most other countries return to growth.

A renewed crisis in one country could spark a wider sell-off in bond markets that would pressure other investors to question again "implied guarantees" that richer neighbours would step in to help the debtors meet their obligations.

Among those in the spotlight over public debt will be euro zone weak links Portugal, Italy, Ireland, Greece and Spain -- dubbed insultingly the PIIGS -- as well as non-euro Britain. Worries have already helped drive strong demand for U.S. Treasuries [ID:nN1873880]

What to watch:

-- Does Ukraine continue to make bond coupon payments? How long does political instability persist after a Jan. 17 presidential election? [ID:nGEE5AN110] [ID:nGEE5B9114]

-- Any clarity on support for Dubai's conglomerates from oil-rich fellow emirate Abu Dhabi, which investors had assumed would step in. For Dubai stories, click here [ID:nLDE5BK06H]

-- Do Greece and others take enough austerity measures to satisfy markets? In the light of comments by policymakers, how strong is the "implied guarantee" from the EU and Germany? [ID:nLDE5BK06H] [ID:nGEE5B815W] [ID:nBAT005017]

ELECTIONS

A number of important elections loom this year, with U.S. mid-term congressional elections coming alongside likely changes of leadership in Britain and Brazil, as well as a host of votes in emerging Europe that could have wider consequences.

In the United States, all 435 seats in the House of Representatives and one third of the 100 Senate seats will be up for grabs November 2, with the Democrats seen suffering from a strong anti-incumbent mood [ID:nN12418931].

In Britain, Labour Prime Minister Gordon Brown looks likely to lose parliamentary elections, which must be called before June, to David Cameron's Conservative Party. But markets worry about the prospect of a hung parliament with no outright majority. [ID:nLDE5BD1ER]

In emerging Europe, elections are due in Hungary, Latvia, Ukraine, Poland, the Czech Republic and Slovakia.

Australian Prime Minister Kevin Rudd is widely expected to win another term, with the only question being the timing of the election. [ID:nSGE5BE00L] But elections in the Philippines [ID:nSP510426] and Sri Lanka [ID:nSGE5BE023] are harder to call.

What to watch:

-- Pre-election positioning weighing on U.S. policy from climate change to Afghanistan and healthcare. Republican challengers jockeying to take on President Barack Obama in 2012.

-- Any signs Britain is heading towards a hung parliament will unsettle sterling. Clarity from policymakers on likely spending cuts with Britain's credit rating under pressure.

-- Local politics imperilling International Monetary Fund rescue deals in emerging Europe, with Ukraine, Latvia, Hungary and Romania most in focus. [ID:nGEE5B70ZL]

UNREST, POPULISM, RESOURCE NATIONALISM

Social unrest has risen less than many expected as a consequence of the economic crisis, but risks are seen growing in 2010 as Western governments exit from stimulus packages and discontent builds up amongst the unemployed. [ID:nLDE5BH0LM]

Civil unrest in China would be particularly unsettling for markets, but the crisis could fuel instability from Thailand to South Africa to Iran.

Overall, the crisis is seen pushing politicians towards more populist policies, such as attacking bankers' bonuses or stepping in to support struggling industries.

A global recovery in commodity prices could stoke resource nationalism, particularly in Africa and Latin America, raising the threat of expropriation from foreign investors. [ID:nL5588746]

Opinions are divided on whether the crisis has boosted protectionism. A December pressure group report identified dozens of potentially protectionist measures introduced in recent months [ID:nLDE5BD179] but the World Trade Organisation says there has been no major breakdown [ID:nLDE5BH0X0].

What to watch:

-- Signs of unrest in Europe, particularly in Latvia and Greece -- the most exposed Western and emerging EU states respectively. Both could be bellwethers for the wider continent. Reports of xenophobic attacks on minorities.

-- A dramatic commodity price spike, particularly in foodstuffs, could raise pressure on foreign resource projects particularly recent land deals in Africa.

-- Any overt protectionist measures or heightening rhetoric, particularly between the United States and China. Any acknowledgement by the WTO protectionism is rising.

UNITED STATES AND CHINA

The United States and China are already by far the two most important countries in terms of political clout. In 2010, China is set to overtake Japan as the second-largest global economy. The "G2" relationship is key to shaping our destiny not just in the coming year or coming decade, but through the 21st century. Like most relationships, it is not easy.

Pressure on China to allow the yuan <CNY=> to appreciate will become ever more intense in 2010 as economic storm clouds evaporate, and one-year non-deliverable forwards <CNY1YNDFOR=> suggest modest gains by the currency by the end of the year.

Beijing will not want to jeopardise economic growth by letting the currency rise too quickly, and does not welcome being told what to do by Washington or the European Union. In the United States, meanwhile, yuan weakness is regarded as a protectionist policy that threatens the U.S. recovery.

Most analysts say Washington and Beijing are painfully aware of the risks and would step back from the brink before any dispute threatened the global economy. But the two countries have yet to find a way to communicate comfortably as partners.

What to watch:

-- The battle over the yuan. Will Beijing let it appreciate, and if not, how will Washington react? [ID:nSP87477]

-- Protectionism and trade tariffs. If President Barack Obama imposes more tariffs, under pressure from Congress and domestic industry, expect sparks to fly. [ID:nLR352231]

-- Any disputes arising from China's dealings with North Korea, Myanmar, Iran and other "rogue states". [ID:nPEK192670]

UNPREDICTABLE CRISES

Ongoing confrontation over Iran's nuclear programme remains a risk, particularly for energy markets, and the situation is complicated by deepening domestic instability following last year's disputed presidential election. [ID:nHAF152285]

North Korea continues to be dangerously unpredictable, with potential scenarios ranging for a war to the death of leader Kim Jong-il -- an event that might prompt a reunification that could prove financially crippling for South Korea. [ID:nSP523325]

Both Nigeria and Thailand could face market uncertainty over the health of their president and king respectively. Both were hospitalised in 2009.

Analysts expect al Qaeda and its allies to try to spark conflict between nuclear-armed neighbours Pakistan and India. [ID:nGEE5B5050] And Pakistan's weak government, under threat on several fronts, may have its own reasons to focus popular anger on India.

The attempted bombing of an airliner bound for Detroit on Christmas Day shows that attacks on Western targets also remain a threat.

What to watch:

-- Turmoil in Iran. Western decision on sanctions in 2010. Potential split in the ruling establishment.

-- Any news on the health of Thailand's 82-year-old King Bhumibol Adulyadej, Nigeria's President Umaru Yar 'Adua or North Korea's Kim. (additional reporting by Andrew Marshall; Editing by Paul Taylor)

Captain Renault: What in heaven's name brought you to Casablanca?
Rick: My health. I came to Casablanca for the waters.
Captain Renault: The waters? What waters? We're in the desert.
Rick: I was misinformed.

The Emergency Economic Stabilization Act, a monopoly or Oligopaly for the banksters and financial peepholes was signed, sealed, and delivered in Oct, 2008 by Paulson, Bernanke, and our Congress w/o our permission. They can do what they want. Why? Because they now have a monopoly and are in complete control. These elites can look themselves in the mirror and see that they are special, doing God's work, and beyond reproach, so we can call them fascist pigs.

YLSP wrote:

Just reading the forum and it doesn't appear to be all that I would hope, looks like a right-wing party.

You say that like it's a bad thing!?

Pesonal Bankruptcy Filings Increase Sharply in 2009

t r orwell wrote:

Because they now have a monopoly and are in complete control.

Now?

What makes you think it wasn't always that way?

Black Star Ranch wrote:

"dangerous" right-wingers

heehee