There are reasons why I keep subscribing to one print publication, the NY Times, and the best of them is Bob Herbert, an op-ed columnist who lately is on fire with well written rage. He is becoming our new Thomas Paine.

Enjoy...

OP-ED COLUMNIST; They Still Don’t Get It - NY Times

Give me liberty, or give me debt.

Math is hard.

OK, I can't resist posting this:

randominium: Bernanke Breath

Juvenal Delinquent wrote:
Give me liberty, or give me debt.
A pity that our culture has taught at least three generations that they are one and the same.

CalculatedRisk wrote:

I've seen several people argue that not confirming Bernanke would be bad for the stock market.

I think it was none other than Warren Buffet that said something like "If Bernanke is not going to be reconfirmed, let me know a day in advance so that I can sell some stocks".

Bob Herbert is a little too preachy for my taste.

Again, bernanke will be reconfirmed by a 51-49 squeaker, with 9 safe republicans voting for cloture but against bernanke. Bank on it.

Ask blind bat bubble Ben why we now have 584 troubled banks? A record of accomplishments?

Reposting:

These were from yesterday, this thread is more appropriate:

first

second

third

The Massacre has upended politics. The Senators are not stupid or so beholded to special interests that they will ignore the fact that if things get worse (50-50 at best) then their vote for Bernanke will be used against them. PLUS, Fed secrecy means that a vote for Bernanke is a risk simply because of what may be dug up in the future.

With that said, a lot of this is a dance between the Dems and Repubs, making it really hard to know how it turns out in the end, Probably most have a view one way, but many want to see how each side is lining up before making a final decision.

Then there's the question of POTUS. His support for candidates doesn't seem to be helping much (Virginia, New Jersey, Mass.). Bernanke is his nominee, but how strongly (in public) will he throw his support behind him?

Perhaps a poll on the final confirmation vote is in order.

I already voted 51 aye (asteresk that the 51 ayes may include Biden).

You can't extend and pretend if you change whores in mid-dream.

Benny stays put, imo.

Deflationary Jane wrote:

I missed that piece yesterday since I read the NYT a day behind.

The Bob Herbert piece was published in today's NY Times. I know because I was reading it while eating my lunch.

Unless...maybe I was eating yesterday's lunch.

otishertz wrote:
Bernanke swore to congress he will not monetize. So, don't worry.
oh this hurts!

resistance
1st how you feeling?
now what happens if someone accidently does the "right" thing,as in sir winstons truth about americans?

RIF, what happened? Got the flu? Or something worse? Get well soon!

Seriously, they are fighting over crumbs at this point. It's the Game Show.

YouTube - Ministry - Game Show

there is nothing the D's love more than power

now that they have it, they intend to keep it

consider what Obama must do to turn the electorate in his favor

whatever is done, so they will hope

I think, since it's been bus under throwing season lately, they'll likely add one more to the scene.

Slowly they will turn, their daggers always concealed beneath their senator robes, some eagerly awaiting the close grip and upward twisting thrust of the blade, some warm blood drizzles their hand, and the corpse is whooshed away by trained professionals while the R's say something appropriate.

If Bernanke goes down, guess where the warpath leads next?

I would not want to be the people in Larchmont renting Timmy's house.

OT:

My job and the crazy working hours mean I don't watch my TV. Have the mainstream parody shows (Daily Show, SNL) started going after Obama yet? Is the honeymoon truly over?

Get better, man. I didn't know. Haven't been able to read much since exactly the 4th, when I started working.

He needs to, uh, ... stop saying dumb things.

Yeah, really. That's my job.

Back to my movie.

gabyjan wrote:
now what happens if someone accidently does the "right" thing,as in sir winstons truth about americans
IMHO, and it has been my long standing position, the harm done to us by our would-be overlords can only be remedied at the individual and local level. Culture is not a top-down model and never has been - socialization and artificial culture can never replace the power of individual action and its effect on others and one's surroundings. We have just been taught to devalue it and the significant events of our own lives in favor of living vicariously through celebrities, athletes and movie stars and emulating these commercially-supplied idols in order to feed the corporate coffers.

What about Chris Whalen for Chair of the Fed? I've always been impressed with his take on the (lack of health) at big banks while highlighting well-run smaller institutions.

1 Come clean Ben, the truth will set you free for four more years.

How to disrupt Wall Street cdixon.org – chris dixon's blog

"I've seen several people argue that not confirming Bernanke would be bad for the stock market."

I think that this potential threat is similar to the one the bankers employed to get Congress to pass the bailout quickly and on terms most favorable to them.

.

"Radical reform" is a good way to put it.

Volker said it best when he said the ATM is the most important financial innovation of the 21st century. You can't argue with a robot teller using a baseball bat. The ATM is a limiting valve. The fed began paying interest on reserves it gave the financial geniuses to match the money supply in demand deposits so that the he cash is on hand for inevitable runs. We all know the banking system is terminally insolvent.

The fun is just getting started.

CalculatedRisk wrote:

And I was still happy when he was appointed. Back then I was concerned the next Fed Chairman would be Harriet Miers!

Ouch. Faint praise.
In fact, praise so faint that it's transparent.

EHP:

I'll have to take your word for it. I m but a humble engineer working at a simple nuclear power plant. This finance crap is too complicated for me, and looks more like alchemy than science. Or maybe it's very simple, and the BBs of the world try to make it look complex to obfuscate and deceive?

rich wrote:

I think Obama pulls the nomination in the best interests of the country and economy.

Two standard routines: (1) Spending-time-with-family (2) Does-not-want-important-responsibility-entangled-in-personalities.

Issue for Obama is whether things have gotten bad enough to at least pretend to a significant policy shift. Replacing Bernanke by somebody else associated with the bailouts won't do Obama any good. Bernanke is a Bush holdover, and if the Republicans can't get enough votes to keep him, that's their problem.

CalculatedRisk wrote:

But I think he needs to do a few things to gain more credibility:

There was one item I would have added to the list: He needs to demonstrate that he is capable of delivering painful medicine.

Volker demonstrated that he could deliver painful medicine to the population at large. (No easy feat.)
Thus far, Bernanke has failed to deliver painful medicine to a much smaller group: Bankers.

mock turtle wrote:

however justifiable our impulse to punish bernanke might be, is it worth the risk of that an alternative candidate

Electing Bernanke without significant protest will vindicate his policies.

If there must be a Fed, Chris Whelan is a great choice.

If it has to be a successful businessperson, George Foreman would do a better job than anyone from Wall Street..

Badger boy wrote:

American standard of living is sinking due to outsourcing, which has bipartisan support

OK, and what is the root cause of that?

Time to play 'Let's Make A Deal': Bernanke agrees to HR 1207 and drops all his objections to freedom of information act requests, then he gets re-appointed. If there are no smoking guns or blatant lies told to Congress discovered, he might even get to retain his job for the full term. If not, oh well.

rif
im thinking local level im also thinking what if its just a pre-training level,then on to state where you get groomed for the real thing and all of the goodies.

The root cause of outsourcing and offshoring is globalization policies that facilitate a 'race to the bottom' for manufacturing wages and job losses for workers in the U.S.

Nuke
It's hard to see because there is so little room for yields to move, but foreign CBs went from ditching USTs to stabilize their currencies/economy/necessary imports as hot money flowed out -- which provided an opening that US investors immediately filled, leaving a vacuum higher up the risk ladder -- to putting money back into USTs and forcing the private investors elsewhere. The Fed's purchases were probably the tipping point, but I wouldn't be surprised if there was a pre-game huddle where everyone agreed to turn the tide and save Wall St while they had the wind at their backs. If you look at the Fed data though, this rally has been because of margin credit. It hasn't been from a raising foundation due to inflows, which means the market can't support the IPOs and issuance. FRB: Stock Market, Selected Statistics, November 2009
ICI

...it is no wonder people are angry

When I said that free floating anger isn't necessarily effective, I didn't mean that people might not lose elective office. What's much more important is whether or not the anger leads to practical and effective policies, from the point of view of the common welfare.

Does 'the common welfare' still exist, even as an ideal? Or is it sauve qui peut?

Want to send a strong signal to the world. Mike Tyson for Fed Chairman!

Hell. if we can have actors for presidents and wrestlers for senators and terminators for governors why not boxers for bankers?

What's with Krugman and this 'borg' thing?

's not good enough for him?

Nuke wrote:

This finance crap is too complicated for me, and looks more like alchemy than science. Or maybe it's very simple, and the BBs of the world try to make it look complex to obfuscate and deceive?

Both. The concept of gravity is clear and straight forward, but the more different masses you try to account for can make it complex very quickly. Our leaders have gotten enamored with the statistical analysis that approximates the path we want, and have forgotten the fundamental aspects.

Edit: Economy is based on making things people want and exchanging them for things you want. The financial stuff derives it's power from that. Although you can affect the economy with financial maneuverings, if you neglect the first step, the rest falls apart.

merchants of fear wrote:

The root cause of outsourcing and offshoring is globalization policies that facilitate a 'race to the bottom' for manufacturing wages and job losses for workers in the U.S.

This is where the economists are correct. For the most part -- that is unless market share gain is due to non-market intervention designed to change the market place -- trade does create a bigger pie to share.

The problem has been the gains have gone to capital real income instead of sharing with labour real income. If all the cost savings of all the products and services delivered from overseas were passed on as price savings to the consumer, it wouldn't be the same complaints.

There is more to it than that, like JIT supply chains that are way too fragile compared to reasonable shocks -- because as you maximize the supply chain efficiency, it's just like leveraging up on debt because the gains are mostly one-time and the marginal gains do not cover the expected costs of shocks to the system.

economics is religion, not science.

I've heard it that way.

The free market may work well when the members of society agree on and adhere to a common morality and legally upheld and respected ethics. Mammon as a jealous god is the god of anarchy.

Ben is simply too big to fail. He'll be back. Too bad because I was holding out for Donald Trump and a new reality tv show about the Fed.

Krugman, I want to pet him and give him taffy.

James Candy Company manufacturers of salt water taffy and other boardwalk candy-James' 1 lb Box Chocolate Sealed Taffy

Wow, I agree with Krugman for once- nominating Krugman for Fed Chairman is an insane idea.

This is Merica. Dammitt. Have Foreman and Tyson fight to get the job.

Brooksley Born if she isn't so fed up and tired of the nonsense she can't stomach it anymore.

Wonder what BB's or Volcker's take is on the illiquidity risk, total credit risk, insolvency risk, deterioration of asset quality, creditor runs, probability of defaults, spillover effects, systemic impacts, global crisis risks, financial/currency crises risks, etc. of fractional reserve lending and associated credit bubbles & easy credit cycles that lead to deflationary periods?

The problem as I see it is that the fed chairman has to believe in the system, but I believe the system is broken. Remember all those comments a couple of years ago about how Wall Street would change irrevocably if investment banks disappeared?

On a global or national scale, the only way for the "system" to work is to increase consumption. But there is iron determination to hold the line - well, really, to reduce - wages and benefits for the majority of people. In the past, the encouragement of debt has solved this dilemma. That solution has disappeared.

I'm betting that the powers that be throw one last effort into dumping costs onto the environment, in fact, that is what is happening with the tar sands exploitation, but the costs of such a policy now appear almost instantly.

Does it matter who is fed chairman these days? A couple of years of keeping interest rates near 0% - doesn't sound like a terribly tough job to me.

Mom is killing bike thieves with aplomb, thanks. Hope yours is keeping her purse safe from the foes of global electronic mediums of exchange.

I'm betting that the powers that be throw one last effort into dumping costs onto the environment, in fact, that is what is happening with the tar sands exploitation, but the costs of such a policy now appear almost instantly.

How so?

Badger,

You can only write so much in one op-ed column. Bob Herbert is against outsourcing of jobs. He wants to insource.

He wants to stop the flow of Chinese crap and put Americans back to work creating things Americans need and buy. I think that will happen. It will be inflationary, but there will be more jobs.

You are starting to see the news drift that everything about China is bad news for the vast majority of Americans. If America "just said no" to Chinese crap, the Communists would sink. Hillary took a step in that direction this week, and Obama will soon start bashing the Chinese, too.

The main U.S. fear in the Google flap isn't about human rights. It's about Chinese ventures in tapping into our national Internet grid and security systems, for the purposes of espionage and potential disruption when the new Cold War comes. It may start sooner than you think. The Chinese have more disruptive power than you think, and we are more vulnerable to cyber attack than you think.

China has become cyber enemy #1.

rich wrote:

and we are more vulnerable to cyber attack than you think.

What makes you say that?

pavel.chichikov wrote:

That only happens if you lose a war.

Are you talking about an economic war? If so, we have a loser.

energyecon wrote:

We systematically overvalued certain jobs

oh bullshit - you're reversing cart and horse - that argument is absurd on the face of it.

I guess you weren't around for the dot.bomb bubble, where complete incompetents were taking down six figure salaries writing HTML that a teenager could have done better.

If you think that outsourcing began with the dot com bubble, you either haven't been paying attention or you are young and not studying your history...

sm_landlord wrote:

So it doesn't get reported as executive outsourcing

As of now that's only a trickle. We will see when that rate picks up.

Bubblisimo Gerkinov wrote:

What's with Krugman and this 'borg' thing? 's not good enough for him?

The borg is groupthink among "serious" economists, which is separate from ish conspiracies.

energyecon wrote:

If you think that outsourcing began with the dot com bubble, you either haven't been paying attention or you are young and not studying your history...

OK, another example. How about the auto workers at the Van Nuys plant that were sabotaging Cameros as far back as 1975? If that wasn't just asking for it, I don't know what is.

checkmate,
There's plenty of research on bubble busts, financial crises, currency collapses, deflationary cycles, what the Fed did wrong in the Great Depression, etc. so the hoocoodanode excuse for the current crop of insider enablers doesn't hold much water.

REBear wrote:

As of now that's only a trickle. We will see when that rate picks up.

Well thats the threat...if we don't pay a kings ransom our 'most talented and brightest' they will move overseas to other banks. Problem is, executives and their minions already outsourced their wealth and corporate profits overseas to avoid taxation. It is one reason we are in this fine mess as the obligations of participating in a free society, benefiting from a free society are not ones they consider part of their responsibilities.

Now state and federal governments have and are turning to their old fashioned methods of generating revenues as hemorrhaging of money goes on unabated. Silent taxes on the poor and middle class, increases in everything we consume but the turnip is running dry. With those who avoided their share over time, it isn't possible for those impoverished by wage stagnation, loss of benefits, etc and wealth destruction to pick up the slack anymore.

For all the talk of best and brightest, innovation and understanding; little but the same worn old rhetoric appears while more pain is inflicted on Main Street that cannot bear much more.

otishertz wrote:

Refreshing honesty from Mike Tyson.
YouTube - Mike Tyson Flips out at Tyson-Lewis Press Conference Jan 22,

"I'll F*&^ you til you love me" is a line I borrowed from Iron Mike and often use in meetings when there is a disagreement on budget expenditures. It is a surprisingly effective negotiating tactic

Lowering reserves requirements in an already 'fractional reserve' lending system must be reviewed probably. As well as the deregs affecting derivatives and investment banking. But 'research' by who or whom? No money to fund this type of economic research.

Fair Economist wrote:

... which is separate from ish conspiracies.

I don't see the as a conspiracy. It's an out in the open stranglehold on the status quo.

Bubblisimo Gerkinov wrote:
It's an out in the open stranglehold on the status quo
is the oldest open conspiracy in the book. It's as old as Babylon, as old as the first usurer who figured out you could get money for nothing and chicks for a fee.

energyecon wrote:

your homework Wink

Yes, I have seen those charts. Durable goods outsourcing started first, because that's where the biggest imbalances were. Next non-durable goods, and finally information services as that sector went all bubbly.

My conclusion is that bubbles are bad. One particularly bad effect is that they create a supply/demand imbalance for workers, which results in wage imbalances (and less competent workers being hired) , which creates the push for wage arbitrage.

Banks once again trying to evade regulation: http://economic-pain.blogspot.com

Only a year after the government stepped in to aid Goldman Sachs and Morgan Stanley by granting them access to the federal safety net, policy makers are developing an exit path that would allow them and others to escape limits on banks being proposed by the Obama administration. cont: http://economic-pain.blogspot.com

Major OT:

This is a letter to a colleague who asked about open administrator positions in my school district...It is my prediction for the public ed job market 2010-2020. I post to CR for a sense of what its like at ground zero in the state collapse that is California

___________,

The only positions I've seen posted are for high school principals at ____, _______ and _______. But I haven't checked EdJoin for a while. Our district is closing schools faster than administrators are retiring, so there will be admin workforce reduction in _______ this year unless there are retirees that haven't stepped forward.

Its going to be a difficult next three years in _______ County as declining enrollment/school closures will be reducing positions across the board. If you are willing to commute, or you're not attached to living in _________, they've been hiring in the exurbs (_______, ______, _________). I don't know if the foreclosure crisis has caused a drop in enrollment in those areas, it would be interesting to check that out. In addition, the Guvernator has proposed significant cuts at the district office level, suggesting cuts to administrative budgets of up to 30% depending upon how their calculations are done I don't know if those cuts will survive the budget wrangling over the next couple of months, but if so, there are going to be a lot of management positions eliminated. In our district’s case, there had already been severe cuts in our district office before this proposal, so I’m not sure how it will affect us going forward (we’re on skeleton crew already).

On the whole, we're heading into a different model of public education. Sincerely, the model is changing and we're going to have to be very nimble to remain standing on this shifting landscape. The next 10 years will be dramatic. Its not just pedagogical change, though that too is shifting. In many ways it is fundamentally about economic restructuring. Most states are facing insolvency due to fantasy levels of debt, these issues will not go away without increased economic production, debt jubilee, or sustained inflation (the last of which is the most likely). In either case, a reduced standard of living for the middle class is likely. This means reduced earnings and benefits for all state employees (state employees are pretty much all that is left of the middle class anyway).

While this can sound like dismal news for a prospective administrator (and in regards to standard of living, it is) there will be many new opportunities that will present themselves. Older administrators may decide they don't want to make the transition to whatever awaits us on the other side of this paradigm shift. Their departure will create job opportunities. In addition, changes in public education delivery will lead to new school models and experiments, these will provide opportunities for fresh leaders with ideas and methods not cemented from past practice. I think your prospects are strong in the medium term (3-4 years), but short term...2010-2011 and 2011-12, it may be a crap shoot on what opens up. The worst of the California budget crisis awaits...we still haven't reached the event horizon (think black holes). When they start issuing IOU’s to every state employee, or when inflation hits 5%+ and COLA is 0%, we will be there.

Good luck in your search...be persistent. In 3 years, spots will start opening up in earnest as the first wave of baby boomers start hitting the beaches of Florida and the senior living centers in Phoenix (assuming they still have a pension). In some ways, for those of us behind the baby boom, there is a sick game of watching to see if the pensions blow up before the retirement wave occurs. If the pensions blow up first, those retirements will be pushed off, and it will be 3-5 years before sheer physical fatigue forces our elders into retirement (or disability). If the retirements happen first, then you’ll see positions open up, but the new retirees are going to find themselves deep in regret once the pension collapse finally hits. For us…don’t count on any pension. Think of it as a nice idea…like winning the lotto…but don’t count on it. Unfunded pension liabilities are a big part of the black hole mentioned above.

In regards to my district, there will be about 4-5 admin retirements in my district over the next 4 years. Of course, there will also be 3 school closures, but...spots will be opening up. Check in with ______________, she's in __________ and could give you some insights into that district's topography for openings.

Remember always that in an era like this, even highly qualified, excellent people can find securing a position very difficult. If you don't get your first or even your fifteenth interview, remember that you are fighting against historic economic pressure to reduce the workforce, it does not mean you are not worthy. Sadly, dumb luck will be a determiner of much in the coming years. Network with as many people as you can to increase your chances of landing a spot. And even then…be compassionate with yourself.

As a final note, I'm not as pessimistic as I sound...I'm just committed to pragmatic honesty. While things will definitely be rough in the coming decade, if you are able to navigate it, you won't be bored.

Again; persistence and agility…and compassion.

Janet Yelen of the Federal Reserve Bank of San Francisco (in her October 2007 speech at the Omni hotel in Los Angeles, printed in the Winter 2007 edition of the Town Hall Journal - not affiliated with townhall.com)

Here in California, the rise and fall of house prices has been a lot like the nation's, only more so. In 2004 and 2005, many homeowners gleeflully watched the meter tick up and up on their house values. I know I did.

The biggest problem is that most defenders of Bernanke cite his performance 'after the crisis'... which is exactly where I think he is most wrong. His choice in the face of a credit collapse/debt deflation has been to try to PREVENT destruction of debt by actually institutionalizing it, making it very, very difficult to destroy... if not impossible. He thought he might then inflate it away ( see all his arguments about "always" being able to create inflation) but was DEAD WRONG because he has the power to print money but not the power to control where it goes once he has sent it out to the banks. The structural problems created since the crisis began are more serious than those that led to the original crisis, but Bernanke cannot see that.

Me, but they could never stand that first rate hike to 2%.

Someday this war's gonna end...

If enough students took spring semester off and **went on strike ** they could get anything they wanted from schools.

Schools are hurting, as should be expected, since a large part of the sum of human knowledge is now available instantaneously at little or no cost worldwide. Learning is free. Adult day care is something you have to buy.

energyecon wrote:

sm_landlord wrote:

We systematically overvalued certain jobs

Are you suggesting Dick Fuld didn't add a couple hundred million dollars of value? Are you a Commie?

Now you are speaking my language Yogi. Bike is life. Are you building a velodrome in NYC?

hmm crammer says Obama may cause 1000 point dow decline http://econbriefs.blogspot.com/

Jackrabbit wrote:

6) Other

Now accepting nominations . . .

George Foreman

Jackrabbit wrote:

6) Other

Now accepting nominations . . .

Cramer.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7038961/Warren-Buffett-attacks-Krafts-bad-Cadbury-deal.html

he feels "poor" because of it.

Vetch wrote:

Information is NOT learning. But your point is taken.

True that. Let me refine my point. If one learns how to learn they do not need school since information, data, and knowledge is available instantaneously worldwide at no cost translated across all languages.

Feckless Ness wrote:

They will continue to act in their interests, not ours.

You are right, that is the really sad part.

Oh please! Janet Yellen is a moron. I've heard her speak several times in the past two years and she is a total Obama-borg.

She vapidly repeats all of Obama's hopey-changey propaganda and literally parrots all the "affordable housing" BS of Michael Barr whose ideas about housing policy CAUSED this crisis. Frankly, I haven't heard an original thought from her in years.

Her publication record in academia was thin and unimpressive. Many of the papers she has published were co-authored with her brilliant husband, George Ackerlof, who obviously dragged her along. She negotiated her way through the obstacle course of academia to positions she didn't deserve. Then she pulled her extensive political strings to get a top job in government, making policy based on her core political interests: women, minorities, inequality.

Yellen does NOT hold the interests of the general economy at heart. Like Krugman, Blinder, Stiglitz, De Long, and others, government is a means to a phantom end - the futile search for a "third way" to blend the best parts of capitalism with the best lies of socialism - that redistributing wealth and distorting incentives in the market will create more income equality AND promote economic growth and development. Not only are their economic desires a complete fantasy, demonstrated time and again as failures, their policy prescriptions are in direct violation with the US Constitution.

It is PRECISELY that "third way" that caused this crisis. Government provided the incentives to divert tax dollars toward low and moderate income people to buy houses. They created "affordable" mortgage products to bring homes that were out of the reach of their incomes into their grasping hands. Then, when the assumed "growth" in their incomes didn't materialize, WE had to bail them out.

The financial sector took all the bones thrown to them by government and spread this contagion throughout our economy. They bought up all the subprime mortgages and, at government insistence, securitized them so they could by even more subprime loans. Government then allowed the WILLING GSEs to purchase all the crappy, undocumented, unsustainable mortgages they could get their hands on. The middle class joined the poor in using these "affordable" products to overreach their income. It was like driving faster than the reach of your headlights and with similar results. The externalities of home purchase decisions, supercharged with 'affordable" products, created the asset bubble and infected otherwise safe mortgage pools with systemic risk.

Housing prices were pumped up and so we had the perfect storm of greater exposure to risk and a higher value of risk assumed.

Yellen is PART AND PARCEL of that movement. She didn't see this coming and she didn't do anything to stop it. Remember, she was in charge of a bank regulatory agency DURING this crisis. She may have paid LIP SERVICE to the risks many of us saw, but the San Francisco Fed didn't do anything about it any more than any other regulator. She REFUSED to take the punch bowl away from the party in the very geographic region where MOST of the nation's failed mortgages occurred. She is DIRECTLY to blame for the Fed (as one of several regulators) for the housing crises in CALIFORNIA, ARIZONA, and NEVADA and the crisis which spread to Washington, Oregon, and Utah. That was HER bailey wick CR.

She walks in lockstep with Obama, Barr, Frank, Pelosi, et al who are STILL talking about "affordable housing" even though houses have never been more affordable. Their solution is hair of the dog! Their solution is more personal debt, more risk, and more government guarantees of that risk and debt. FHA mortgages are the largest share of home purchases; meanwhile, HUD is broke from FHA defaults and reverse mortgages being paid back with undervalued homes. The Fed is still buying MBS to maintain low interest rates. The homebuyer tax credit inefficiently distorts the buy-vs-rent decision. They are deliberately creating another bubble in housing to counter the effects of the previous burst bubble.

I come here for the superb economic analysis. You were spot on about the impending burst of the bubble. You call the housing tax credit and MBS purchases for what they are. But when I see recommendations for someone like YELLEN to become the new guardian of monetary policy, I cringe!

My God, is there a sane person left in this world?

Bernanke or no Bernanke-- what's the difference? The Federal Reserve system is the problem, and it can't be fixed from within.

It's tempting to put Volker in-- but the situation has deteriorated so much since he last held the job, it's completely beyond what he could do to save it.

The most interesting thing about the upcoming confirmation is, we'll get to see who exactly is running the show at this moment in time. Presumably, Bernanke is still the banksters' boy, so if he is reconfirmed, that would mean they are still squarely in the driver's seat.

A useful exercise would be to imagine the different power blocs involved, and who each one might be motivated to back.

sm_landlord wrote:
And the fact that the education system has not been able to get a majority of their students past that hurdle is a huge problem.
......
An educated public needs to be capable of continuing to learn after they have left the educational system. Thus the importance of the first item.

Agreed.

bootsrap wrote:

Paul Krugman was a former Enron adviser. I think we should give him all credibility that implies.

I don't see how this is a negative. I sure they had plenty of advisors. Did he structure the off-balance sheet entities? Did he participate the accounting fraud? Did he talk up the stock?

Otherwise this comment is just character assassination.

It's NOT sad. It's WHINING on our part. WE LET THEM get away with it.

I've said many times:

1. Move your money.
2. Strategic default.
3. No votes for incumbents.

Sure, there are some good people in office, like Ron Paul. But how effective are they? Boot them out. Sometimes firing people is the best thing you can do for them.

If we don't change the game, nobody else is going to do it for us.

A rudderless Fed in the middle of a Hurricane at sea...

Is the Oracle's crystal ball broken? He should have already deduced the decision of Congress and traded stocks accordingly. Does his sophisticated analysis of fundamentals not include political risks?

Like a lonely nightstand cowboy
Riding out on a horse in a star-spangled rodeo
lonely nightstand cowboy
Gettin' cards and letters from bloggers I don't even know
...

Yeh, the bike snobs made a tour of Portland. Rip City is the new bike capitol of the world.

BikePortland.org » Blog Archive » An estimated 5,000 take part in Portland’s Naked Bike Ride

otishertz wrote:

Modern life requires a guide, or teacher, in order to navigate the sea of conflicting facts because reason has been deliberately bred out of the population by 40 years of media saturation bombing.

Well said...the hard part is ensuring you have teachers, and a system to support them, in teaching reason, logic, and civil discourse. Not to mention the need to inspire curiosity and imagination in our youth beyond the bounds of their xbox or cell phone.

Jackrabbit wrote:

I think the nomination period will end at 3:30, unless any one objects. Then I'll put up the poll.

I want to see Mike Tyson up there.

Jackrabbit,
Just look at Krugman's financial crises research...

:bag o' cement: icon?

PK should know what govt. over-spending can cause...

EHP, your in.

Self nominations are fine by me (what do i care, this is not really a serious exercise - as pointed out previously, no one is listening to us??!!)

Juvenal Delinquent wrote:

We can't limp along like Japan for 20 years, like the heedless whoremen seem to think we can.

I knew who posted that comment before I read the name. Usually I just let your comments be, but just wanted to give you a compliment, because you ought to know you have a gift for good lines.

Everyone can stop wringing their hands.

It's all posturing for the November elections.

Bernanke will be confirmed.

Agreed. JD has one of the quickest wits I have ever seen and the man can turn a phrase. I wish you would put up some longer writing JD. Your quips reveal your ability.

dp roberts
no

@OtisHertz

Adam Smith deals with this extensively in Wealth of Nations. You should have a look. It might give you more ideas.

Give them just enough knowledge to pay taxes, no more, otherwise they start asking uncomfortable questions.

mp wrote:

Bernanke will be confirmed.

I'm not sure, if you changed it to:

"Bernanke's policies will be confirmed"

I think that's right.
It may be that changing the salesman is part of the posturing.
The strategic plan is still the same.

Nominations so far (in no particular order)

1. Yellen
2. Whelan
3. CR
4. Krugman
5. Stigliz
6. EHP
7. DeLong
8. Blinder
9. Other (write in)

What about Blair, Warren, Brooksely Born? Any others? Last chance!

If Janet Yellen were prepared to rock the boat, she would have translated her concerns about a bubble into actions that we can all see. Instead, she too went along.

We don't need a head of the Fed who goes along.

Of course, that's all we will get. Those with a vested interest in cheap money and inflated asset prices are still fully in charge.

merchants of fear wrote:

Fed system is the problem. '...and it can't be fixed from within'. That's it in a nutshell.

I agree with this statement, but since the Fed is not going away soon, it does matter who is leading it.

Jackrabbit wrote:

What about Blair, Warren, Brooksely Born? Any others

Linda Blair. She can do her exorcist routine at FRB meetings.

Yes please Jackrabbit, add Brooksley Born.

bearly wrote:

Linda Blair. She can do her exorcist routine at FRB meetings.

I'm tempted. . . . feel free to write that one in!

Mr. Slippery,
If the Fed goes away...it'll be part of the next phase of money regulation and control...and a new central banking entity will emerge...in some form or another...maybe the Fed wants to go belly up holding all that trash...it's like deforestation by timber companies...cut, sell, and run...to the next forest that needs clearing...

Man, I think I'll have to pass on reading any bible. You know Adam Smith originally meant the the Invisible Hand to be the Invisible Hand of the Divine. Meaning, let God sort it out. I think there is likely to be more pertinent and timely economic truth in this book:

Amazon.com: Days of War, Nights of Love: Crimethink For Beginners (9780970910103): Crimethink Workers Collective, Nadia C., Frederick Markatos Dixon, NietzsChe Guevara, Jane E. Humble, Paul F. Maul, Stella Nera, Tristan Tzarathustra, Jeanette Winterson: B

I have most of the main books on economic theory and have a thorough but generalist understanding of economics from my world view. Lately I have come to the understanding, or maturity level, that the whole of information is unknowable. At some point I realized you gotta run with my opinions and other tools at my disposal and stop getting bogged down by the incessant flow of information blaring from the constant feed.

There is too much information. Information in general is a detrimental distraction from what matters which is community.

'it doesn't matter who is leading it.'
Yeah...well try bringing back 'no rules', bubble maker Greenspan then...

merchants of fear wrote:

If the Fed goes away...it'll be part of the next phase of money regulation and control...and a new central banking entity will emerge...in some form or another.

I think we are clearly moving toward some new kind of international trade system, but what, and when are unknown. The imbalances built up with the dollar reserve system are enormous.

otishertz wrote:

I have most of the main books on economic theory and have a thorough but generalist understanding of economics from my world view.

He is the Jevons.
They are the Menger.
I am the Walras?

Sure, people are worried he'll bring back the gold standard, but Mr. T might be the right man for the job.

'There is too much information.'
Yeah and the disinfo, propaganda, gatekeeping, and pro-insider spin is really everywhere and omni-present. Information is one thing and misleading info that brainwashes and presents a false reality is another...with data manipulation, framing issues, and defining problems...and solutions...

And also to breed yes-men.

I agree!

And if countries don't like the 'manufactured' international trading systems...more conflicts, protectionism, debt defaults, possible wars...this sound like a familiar scenario...

merchants of fear wrote:

more conflicts, protectionism, debt defaults, possible wars...this sound like a familiar scenario...

same as it ever was.

An eye for an aye is about the most we can hope for from our best yes-men.

purple wrote:

Most job loses in manufacturing have been due to technology

No. Most job losses (recent, past 15yrs) have been purely due to executives chasing the MBA valhalla of bonuses as they cut production costs ( avoiding taxation, legal, health care, environmental, union...) by shipping everuthing imaginable to 3rd world hovels. A race to the bottom led by next-quarter-bonus corporate greed. The result is systematic wealth destruction in the USA. And it's not showing any signs of slowing down. Wealth is excess savings. Most of us have none left.

Governments aren't going broke because we are swimming in wealth.

Elizabeth Warren and Simon Johnson were the very first nominees, IIRC, courtesy of Deflationary Jane.

purple
Emerging market exports are dominated by capital intensive goods. Which doesn't make sense on its own, in the vein of Hecksher-Ohlin trade. The simple answer is that is a clear sign of a non-market unsustainable intervention. Which becomes even more important when you consider that FDI into fixed capital is not immobile. Factories can and are packed up and shipped out these days. It's important to remember that we must take the market as it is, not as we wish to idealize its outcomes.

Economic demand for manufacturing is limited no more than demand for entertainment, demand for healthcare, demand for housing (to be clear, not necessarily the # of houses, but people will always be willing to spend on an upgrade if they get more utility from it than spending that elsewhere).

It's a relative thing.

Relatively-speaking, manufacturing's share of the economy in some countries like the US is below equilibrium levels (in my opinion) now that the unsustainable intervention of a credit bubble has burst. There are no longer as many, or as highly paid, jobs for selling handmade soap, realtors, hotel employees, etc.

FairEconomist, how's Hope doing, in your judgement ? I mean at governing, since that was the job he was hired to do. The campaigning ended in 2008 yet I can't seem to be able to identify anything (in terms of a positive outcome) he's done since. He's still campaigning and bragging about his fine campaigning skills but by now I would have expected less hope and more results.

hbb wrote:

I would do a much better job than Bernanke.

And your current day-job is...?

I've been slowly but surely building a to-read-later library of books, purchased on amazon, one at a time, classics I never got around to reading, and whatever strikes my fancy.

Think of the consequences of this plethora of information being shut down, and we've all become junkies, so coming down could harsh your mellow without old school information lying around, waiting for you.

Okay, seriously Thomas M. Hoenig, current President of the Kansas City Fed for US Fed Chair. He's the man for the job!

Why? See: http://www.kc.frb.org/speechbio/hoenigpdf/omaha.03.06.09.pdf

Sorry, I asked about Warren before I made the poll. But no one said to put her in.

I see the post from Deflationary Jane. I missed that -- I think it might have come before. I proposed the Poll Please write them in.

Juvenal Delinquent wrote:

I've been slowly but surely building a to-read-later library of books, purchased on amazon, one at a time, classics I never got around to reading, and whatever strikes my fancy.

Be careful, or you'll end up like me; with so many books that I had to rent extra space to store them after the first reading.

And once our generation is gone, I'm beginning to wonder if printed books will have any value to anyone. Maybe a few collectors and interior decorators...

soccerballtux
I apologize, I only check that e-mail about 2-3 times a year, so I haven't seen it yet.
More clearly what I recommend would be targeting of the amount of credit relative to income. Advances in information technology are crucial to making this work -- overnight borrowing rates was a fine way to disseminate signals through the economy when we had to work with phone calls.
So I wouldn't have a hard cap. It would be a range, such that credit:income would/could go up and down over time so that we don't leverage up for X decades only to find that disaster looms if the amount of debt shrinks. Managing the supply of credit in an economy domestically is eminently more stable than trying to do the same with foreign exchange. What's more, foreign countries would be pressed to take on similar transparent/robust mechanisms as credit bubbles would be focussed in countries that had no such ability and/or had a currency peg beyond the range of what would be natural.
The downside is that it interferes with politics. Makes clear the threat of crowding out on the borrowing side. Which I'm ok with because it is the most apolitical way of acknowledging the links between economics and politics.

P.S.
I must confess to ignorance. Could you tell me more about managing the supply of total debt in the 1970s? I presume for the United States

josephcast: I added Hoenig to the Poll.

After my wife and I read a book, we always give em away to friends, or when traveling overseas (prime time to read books) we leave them for others to enjoy...

Yeah, it makes you wonder if we'll end up looking like people that thought 8-track tapes were the cat's meow?

I've added Hoenig, Warren, Simon Johnson, and Volker to the Poll.

It most definitely would be a fire hazard in the UK.

okay, I'm new here after being a lurker. i just joined to write-in my candidate for fed chair- hoenig. voted in the poll the first time and selected other/write-in but forgot to add my name in the comments. now i went back and the old poll is gone and now hoenig is an option. so i voted again (for hoenig, obvs). hope i didn't mess anything up. hoenig is the man! lots of other good options though too. i hope we get someone good (not ben).

josephcast: Welcome! Good call on Hoenig. If I hadn't voted already, I'd seriously consider him.

josephcast wrote:

so i voted again

OMG.

Now we'll have to redo the entire poll.

"He said he was extremely impressed by Bernanke's "intellectual stamina,""

If only Glod were available!

"What is the problem we wish to solve when we try to construct a rational economic order? On certain familiar assumptions the answer is simple enough. If we possess all the relevant information, if we can start out from a given system of preferences, and if we command complete knowledge of available means, the problem which remains is purely one of logic. That is, the answer to the question of what is the best use of the available means is implicit in our assumptions. The conditions which the solution of this optimum problem must satisfy have been fully worked out and can be stated best in mathematical form: put at their briefest, they are that the marginal rates of substitution between any two commodities or factors must be the same in all their different uses.
H.2

This, however, is emphatically not the economic problem which society faces. And the economic calculus which we have developed to solve this logical problem, though an important step toward the solution of the economic problem of society, does not yet provide an answer to it. The reason for this is that the "data" from which the economic calculus starts are never for the whole society "given" to a single mind which could work out the implications and can never be so given."

I should add that in addition to borrowing abroad, there will of course be a black market domestically. That's fine, the public above board markets should have the lowest interest rates. Black market borrowing would be easier to take care of if it impacted the economy, but it shouldn't if the interest rates were significantly higher. The danger with this system is that some kind of bubble squeezes out other borrowers that can only afford to pay what's actually possible. Which is desirable because it expedites the bubble popping, and provides cheap credit (stockpiled in amounts relative to the bubble's upslope) on the recovery side.
Think of it as there is only so much of one's income that can sustainably spent on debt servicing, and that every bit of debt beyond that represents debt that cannot be repaid. Whether it's a good investment stealing wallet-share, but contributing to bad debt elsewhere, or just a bad loan in itself. If it's a bad loan, it doesn't matter what the interest rate is. Extending+pretending is parasitic to the economy. If Bernanke wants to make the case that the drop in earnings/growth is just a temporary negative shock, then it is incumbent upon him to lay out how everything can be repaid without suggesting that the housing bubble's $800bn annual MEW at peak was sustainable

Shylockracy wrote:

Don't get me wrong, EHP, I respect your rigorous thinking

but stay the hell out of Montreal.

It's largely magnetic.

Magnetism fluctuates.

Ink bleaches. Paper burns.

But more to the point: Paper copying time is order of seconds. Electronic copying time is nanoseconds. (or picoseconds if you are cutting edge.)

It might pay to think about why wikileaks has waited until this decade to become a social force.

Shylockracy wrote:

The final proof EvilHenryPaulson is a human -and not a turing machine- is that his French averages way below contemporary machine translations.

That's exactly the behavior I expect from a turing machine, in order to not give itself away.

I was looking into the pine trees along the ridge in front of me this morning, and they had a filagree jewelry look about them, pregnant with snow, maybe a few feet...

I vote for Oprah! She is experienced at giving lotsa shit away. That's the only quaity needed these days for a leader in any public service position.

josephcast: don't sweat it. They're only playing. Appreciate your honesty.

EHP, yes, it was from a while ago. Petty as it may seem, I felt relieved to see your mistakes in French, not because French is my mother tongue, but because Prolog seem not to be yours.

josephcast wrote:

If I voted more than once, I apologize.

Nobody cares (unless Volcker doesn't win).

Apparantly, Simon Johnson is voting for Krugman.