Bits Bucket For November 9, 2009
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Keynes vs Von Mises, look out below!
http://online.wsj.com/article/SB10001424052748704471504574443600711779692.html?mod=googlenews_wsj
Mises work is of great theoretical interest but fails in the real world, in a way like Communism.
What Mises fails to see is that politicians and people alike have the natural tendency to live for today at the cost of tomorrow. Politicans have at most a 4 year time horizon, all they care for it to get reelected. What better way to borrow from the future and spend today? In that regrad most people don’t behave very differently. Immediate gratification is the mantra. Saving is for suckers; buy now pay later.
I believe those are the underlying human instincts (at least in American society) that naturally bias our system towards Keynes. From a purely rational point of view Mises will deliver better outcomes over the long run, but in the long run we’re all dead anyway, right?
Yeah, the IBG crowd (I’ll Be Gone) likes to muck up the works and walk away. Here’s a little excerpt from “Symptoms of Withdrawal” by Chris Lawford, a Kennedy nephew, about a conversation with Teddy at a family gathering.
“Then, writes Mr. Lawford, Teddy “took a long, slow gulp of his vodka and tonic, thought for a moment, and changed tack. ‘I’m glad I’m not going to be around when you guys are my age.’ I asked him why, and he said, ‘Because when you guys are my age, the whole thing is going to fall apart.’ “
Buy now pay later…there will be hell to pay once later arrives. The way things are going “later” (or the long run as Keynes puts it) doesn’t seem to be that far off anymore. Maybe 10-20 years.
“Maybe 10-20 years.”
I think it is imminent, but that’s just me. Any moment now the house of cards goes down. Because the system can be gamed only so far and then the game is over. It will be replaced by a new game, but we just have to see to it that the game is better and more fair.
I’m seeing this in the instability of ecommerce for small and medium sized businesses right now.
As Yogi Berra would put it, “It’s difficult to make preductions, especially about the future”. What leads me to believe that this game still has some life left in it, is the level of government debt. Japan is at 200% debt to GDP, we’re near 80% and rising at about 10+% per year. If we keep on bailing out everything and everybody as we did over that past 12 month we have about 10 years left before we reach completely ridiculous governemnt debt levels. The game ends once we run out of fools and the rest of the world abandons US treasuries. …and yes, I am surprised it lasted this long.
“I am surprised it lasted this long.”
Me, too. But as Ben has said, none of this “debt” will ever be paid back. It’s as much a chimera as the “equity”.
Japan is at 200% debt to GDP, we’re near 80%
A point of clarification - the Japanese government is at 200% vs ours at 85%.
The big difference I think though is overall debt. The current overall U.S. debt is over 350%, if you include state and local governments, business debt, consumer credit, mortgage debt, and (perhaps most importantly) financial system debt.
I’m not sure how that compares with Japan, since I’m not sure the amount of non-government debt they have. From what I’ve heard it’s quite a bit less than ours.
What this means is that while our government debt is a lot lower than Japan’s - we also have a heck of a lot less headroom to work with, before it breaks down.
“Because the system can be gamed only so far and then the game is over.”
The games last until the population pyramid morphs itself upside down. Put another way, there are too many invested and retired passengers watching too few workers pulling on the oars. This is Japan’s problem, and it’ll be ours too if we send those brown folks back where they came from.
Packman,
I believe Japan’s debt was far higher than our’s is in percentage of GDP as well.
I googled and some blogs show it as 520% of GDP.
They are also about to have their own boomer retirement.
Private debt went from 386% of GDP to 326% of GDP. Of course government debt went through the roof. So debt ratio has been flat since 1999. This data is from tough offering blog from 9/22/09.
Not sure what this tells us other than Japan is super mega screwed. We are just mega screwed.
I’d assume the hubbub about the stock market is all fluff. Basically its people fleeing the dollar in one form or the other. However, so many of these companies are bankrupt. I don’t think stocks will give you an adequate hedge. Hence gold takes off.
Now, looking at all the debt levels… with Japan and the US much of the debt will never be repaid. We are just monkeying around with it like Japan did. At some point the bondholders and stockholders will take a bath on these uncollectable debts. At least we can hope.
You can always throw the debt on the government, which will just strangle us with taxes and inflation. Enough years of that and well, the economy disapears underground.
Japan though, oh they sat on the debt for a long time. Everytime they had a potential for growth or evolution, boom some bank fed with cheap money buys a position and then throws its debt dead weight on to the enterprise. Killed em for two decades.
This sentiment is in stark contrast to the green shoots and happy talk which permeates the MSM right now. The stock market is rocketing straight up, and it seems nothing can stop it. The liquidity bubble is massive. Meanwhile, jobs continue to disappear, stores are shuttered, and lives smashed into pieces.
James - thanks for the info. I hadn’t really looked into it.
To this:
Killed em for two decades.
I’ll add “…and running”.
“But as Ben has said, none of this ‘debt’ will ever be paid back.”
One person’s debt is another person’s money. If the debt is never paid back then the person the debt is owed to is the one who is out the money.
An just how many trillions of vanished dollars are owed to how many pensioners and social security receipitants?
Everyone got a stash of cash handy?
I don’t wanna be around, to pick up the pieces, when somebody robs your vault …
Every day we see it get closer. Headlines on Bloomberg show unemployment going to 13%, but things couldn’t be better, according to Buffett and the Dow. How long can it head this way, you’ve got to wonder.
Ah the guy with all the money tells the poor that things will get better. Poor should take him hostage.
“Headlines on Bloomberg show unemployment going to 13%, but things couldn’t be better, according to Buffett and the Dow.”
It’s hard to imagine how things could be better for Buffett- or any of the super wealthy for that matter. They are the benefactors of crooked government policies which preserved and expanded their wealth at the expense of the poor and the common man.
Was the year of this conversation shared in this book? Do you know if it took place last year or 20 years ago?
On the contrary, Mises’ theories are always working in the real world. His “Theory of Money and Credit” explained the Great Depression and the situation today. Also free enterprise is in action all over the world in the underground economy. Anyone who says capitalism never works does not understand what he’s saying. No government cannot stop voluntary exchanges. Some are allowed, some are banned, due to some theocratic or conservative principle in the U.S. and that means they are in the underground economy.
Money is but an idea, a medium of exchange. It has to represent something, like products or services, which might be exchanged in an underground economy.
Poems seem to have the answers today, can’t say why:
Quarterly, is it, money reproaches me:
‘Why do you let me lie here wastefully?
I am all you never had of goods and sex.
You could get them still by writing a few checks.’
“Money is but an idea, a medium of exchange. It has to represent something, like products or services, which might be exchanged in an underground economy.”
Yes, exactly. This is why I just cannot understand those who want a gold-backed currency. All that will do is to restrict expansion of the economy when it is needed and also contraction when it is needed. It sets the money supply in a way that cannot be changed.
Now, the problem with non-gold backed currency is the un-warranted expansion or contraction, especially expansion. We get inflation and deflationary periods like now, here, at this time. The FED and USG are pushing money into the system without consideration on how to remove it nor how much is actually needed.
Note I said how much is actually needed. Do we really need this much money in our “system”? It appears that as long as people have a roof and the kids are doctored, fed, and educated, then the economy will work through this. I really don’t want people wandering the streets in penury.
We need to clear the markets and such before we are going to get anywhere in our economy. I just don’t want people to suffer needlessly. Causing more bubbles will not work.
Roidy
This is why I just cannot understand those who want a gold-backed currency. All that will do is to restrict expansion of the economy when it is needed and also contraction when it is needed.
You’re equating “the economy” with “money”, however, which isn’t right. As stated - money is just a representation of goods and services. It is however *not* the goods and services themselves. The amount of goods and services can still be changed (e.g. economic expansion) without changing the amount of money existing. This would be inflation or deflation.
If the amount of money in existence was exactly static - deflation would be normal, and healthy in fact. However even in the case of gold the amount in existence isn’t static, because new gold is mined every year.
There was in fact a fairly large amount of deflation in the mid 1800’s for a brief period triggered specifically by the California gold rush - a bunch of new gold quickly put into the system with relatively small effort.
This is why gold is most definitely not perfect as money. However since the growth level of its existence is fairly slow (there are no more gold rushes), and roughly equivalent to economic expansion as a whole, it isn’t bad. It’s far better than other alternatives - e.g. fiat money, which are subject to the whims of man; specifically to the whims of bankers - who have a vested interest in expansion that is as rapid as possible.
HAHA! It doesn’t matter if you coin gold as money. As long as there is credit and a frational reserve system, you can blow as big a bubble as you want.
Until they call your bluff (in either case).
Yes but, this would get very unwieldy in short order I think.
With an economic expansion, you’d get massive deflation, with currency units (dollars) needing to be broken into smaller and smaller units, as they become more and more valuable.
Plus, it would kill the bejesus out of lending, which while loathsome when practiced in a predatory fashion, is absolutely necessary for businesses to grow. Lending is like manure - gross but necessary for the crops/businesses to grow.
I disagree.
Sincerely,
The Industrial Revolution
With an economic expansion, you’d get massive deflation, with currency units (dollars) needing to be broken into smaller and smaller units, as they become more and more valuable.
No so, because more gold is still being mined constantly. There is a natural check in that as prices rise, it increases the cost benefit of mining, causing output to rise.
Also keep in mind gold isn’t the only PM that was, or could be, used as money backing. Silver and other things were and could be used.
Plus, it would kill the bejesus out of lending, which while loathsome when practiced in a predatory fashion, is absolutely necessary for businesses to grow. Lending is like manure - gross but necessary for the crops/businesses to grow.
Certainly it would shrink lending a lot - which is a very good thing. Most businesses do not need lending to grow or even to survive. Nevertheless - contrary to popular belief - deflation does not *kill* lending, it makes it more expensive.
Yes, the real world consequences will play out EXACTLY as predicted by Mises. Just the economic system that democratic societies adopt will always be a keynsian system for reaons detailed in my earlier post.
Is it possible that the banks are adopting the Keynesian system, and that democracy has nothing to do with it?
“What Mises fails to see”
You mean Keynes?
Also, IMHO Keynes wasn’t wrong on the economics, he was wrong on human nature.
In particular, he did not understand rational expectations — the tendency of humans to weigh anticipated future policy responses into their current actions. For example, if households and lenders anticipate government bailouts to make them (at least partially) whole in the event of mortgage loan default, they will be far more comfortable accepting or making imprudent loans.
The same principle applies to commercial real estate lending, or to corporate financial governance, where firms anticipating bailouts may take high risk gambles which provide outsized enrichment during boom times but which have a much higher probability of bankrupting the company if the boom ever ends. So long as the pot of bailout gold lies in wait at the point when trouble arises, who cares about reckless financial governance at the present time?
“…wasn’t wrong on the economics, he was wrong on human nature…”
Given that economics is largely concerned with human nature, for instance, the role of incentives in determining human behavior, I am missing the distinction you are drawing.
Given that economics is largely concerned with human nature, for instance, the role of incentives in determining human behavior, I am missing the distinction you are drawing.
Bingo.
Keynesians seems to somehow forget about that “human nature” thingie. IMO the primary correctness of Austrian economics is that it has human nature as its core - economics is merely a corollary.
Which was my original point.
Mises work is of great theoretical interest but fails in the real world, in a way like Communism.
And of course Keynes has been much more successful.
FWIW - We have never actually had a true Austrian school economy, to prove whether or not it can work, just as we have never experienced a true Keynesian economy; nor a true communist economy for that matter.
In the case of Keynes - his theory was that governments should save money in good times and spend in bad times. Well we’ve done the latter - the former not so much.
Keynes did not make this up, it’s in the Bible.
Seventy years after Keynes said, “In the long run, we’re all all dead,” he is long dead, but the rest of us aren’t, and the long run has arrived.
Seventy years after Keynes said, “In the long run, we’re all all dead,”
Did Keynes really say that?
I always thought that was one of the stupidest oft-quoted things ever said. If Keynes said it - it makes me despise him even more.
Apparently some of us (moi) may be guilty of misinterpreting him on that qoute (taken out of context):
“The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.”
A Tract on Monetary Reform (1923) Ch. 3; many have thought this meant Keynes supported short terms gains against long term economic performance, but he was actually criticizing the belief that inflation would acceptably control itself without government intervention.
“Seems like Johnny Ringo is an educated man. Now I really despise him.” - Doc Holiday on “Tombstone”
“The long run….”
I believe the Eagles song “Long Run” seems appropriate:
I used to hurry a lot, I used to worry a lot
I used to stay out till the break of day
Oh, that didn’t get it,
It was high time I quit it
I just couldn’t carry on that way
Oh, I did some damage, I know it’s true
Didn’t know I was so lonely , till I found you
You can go the distance
We’ll find out in the long run
(in the long run)
We can handle some resistance
If our love is a strong one (is a strong one)
People talkin’ about is
they got nothin’ else to do
When it all comes down we will
still come through
In the long run
Ooh, I want to tell you, it’s a long run
You know I don’t understand why you don’t
treat yourself better
do the crazy things that you do
‘Cause all the debutantes in Houston, baby,
couldn’t hold a candle to you
Did you do it for love?
Did you do it for money?
Did you do it for spite?
Did you think you had to, honey?
Who is gonna make it?
We’ll find out in the long run
(in the long run)
I know we can take it
if our love is a strong one
(is a strong one)
Well, we’re scared, but we ain’t shakin’
Kinda bent, but we ain’t breakin’
in the long run
Ooh, I want to tell you, it’s a long run
in the long run
in the long run,
This, I believe, is the money quote:
“But when the government holds rates artificially low in order to feed ever higher capital investment in otherwise unsound, unsustainable businesses, it creates the conditions for a crash. Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse.”
Everyone looks smart for a while….
The article cited doesn’t really refute Keynesianism at all. I think many only get half of Keynes’ theory, that in times of recession there should be a policy of easier money and government stimulus. The other half, just as if not more important, is that in times of economic booms, the ‘punch bowl’ must be removed from the party, ie the Fed should raise rates and tamp things down.
Every major recession/depression referenced in the article was cause by excessive easy money and the lack of financial regulation. That to me seems to support keynesianism .
Mises’ theory includes that in bad economic times, we should let the chips fall where they may, let all businesses fail that can’t survive. The losers will be replaced by better run businesses.
But reality has taught us that in times of crisis, many viable businesses can go broke through no fault of their own. Major industries that took many years to develop (think rearden steel!) can be swept away. Such things are not so easily replaced. The industries often go elsewhere and never return.
History has also taught us that in times of letting the chips fall where they may, governments often fall too. And are often replaced by madmen dictators with easy answers (!) to everything. I guess the ensuing wars can be seen as slate cleaners, but they are nothing I want to experience.
And hasn’t keynesianism coincided with our country’s long period of prosperity and relative domestic and world peace. It worked quite well until we deregulated and turned the financials loose- something Keynes never would have advised.
And he would have advised raising rates during both the dotcom and the housing booms, which probably would have averted both busts. Greenspan was no Keynesian- he was too Randy!
It is regrettable that so many politicians/economists invoke Keynes’ name when they do something stupid that has nothing to do with Keynes’ theories.
They do the same thing with Adam Smith.
But reality has taught us that in times of crisis, many viable businesses can go broke through no fault of their own. Major industries that took many years to develop (think rearden steel!) can be swept away.
Except one thing - Reardon steel existed in a Keynesian, not Austrian, world. That’s why it went down.
In a free market economy an entity that fails generally *is* by fault of its own. But “fault of its own” includes going too deeply into debt and/or being too dependent on luxury-driven or bubble-driven segments of the economy.
The only two ways a business can truly fail through no fault of its own are:
- Government policy that works against it (including Keynesian policy)
- Rapid geopolitical changes (wars and such)
So there’s no such thing as a deflationary death spiral?
No.
I can name several countries whose economies’ have died due to an inflationary spiral. Can you name any significant countries whose economies have died due to a deflationary spiral?
Deflation tends to be self-correcting - inflation not so much.
I’m not saying there’s no such thing as a “deflationary spiral” - theoretically such a thing can exist (reduced spending causing job loss, causing reduced speding, etc.), but if so eventually it is self correcting. The more prices fall the more demand picks up from people who have some savings, until eventually prices flatten, and jobs are created in areas where true demand exists.
Theoretically the same is true for inflation is well - but only in a non-fiat money system. If excess demand causes inflation then eventually people can’t afford stuff and they cut back spending, which reduces inflation. However government money creation and induced spending breaks that check.
The Great Depression seems like a good example of a deflationary death spiral that destroyed many countries’ economies, including ours, and led to a world war.
Yes, the deflationary death spiral is generally refered to at the great depression. Basically a series of cascading defaults.
Inflationary death spiral is the same result. Esentially too much either way and you end up in a barter economy.
I think it is somewhat easier to recover from a deflationary spiral than an inflationary one. In the inflationary spiral you can’t issue new currency at the end.
In the deflationary scenario… not quite as bad.
Both options are a horror.
I don’t think we are either one right now.
Still a very significant change in flow of money, from going out of the US to back in, seems likely. Again, it will probably be a deflationary period in terms of overall money with debt being paid down but might be seen as inflationary because of the realization of money printing in the past as the money flows back.
The Great Depression seems like a good example of a deflationary death spiral that destroyed many countries’ economies, including ours, and led to a world war.
- Our economy did not die during the Great Depression.
- WW2 was much more a function of hyper-inflation (Weimar Republic) than of spiraling deflation.
No our economy didn’t die completely, but neither did the economies of most countries that have had hyper-inflation.
Our economy was revived by FDR following Keynesian principals, but for quite a while the continuation of our governing system was at risk. People didn’t think democracy could cure our problems. Many were calling for communism, others for fascism. FDR held off these impulses by making the capitalistic system more regulated (ie lest prone to booms and busts) and offering safety nets for the ‘losers’ lest they form angry mobs and revolt.
Some may prefer that we had revolted, but this happened elsewhere with unpleasant consequences for the world. Instead of revolting, we regulated our financial industry, implemented social safety nets that helped head off economic crises, and began a period of prosperity that was the envy of the world. It worked spectacularly well until we deregulated the financial industry. Again, something Keynes would never have advised.Nor would he have countenanced Greenspan’s easy-money, ‘we’ll clean up after the bubble pops’ policies.
The hyper-inflation of the weimar republic would never have occured under properly applied keynesianism. And of course, the German economy didn’t die from it, they seem to still be around. (And most historians agree that Hitler’s building up of the german war machine helped pull Germany out of depression. So government stimulus does work! Even for the evil.)
Our economy was revived by FDR following Keynesian principals, but for quite a while the continuation of our governing system was at risk. People didn’t think democracy could cure our problems. Many were calling for communism, others for fascism. FDR held off these impulses by making the capitalistic system more regulated (ie lest prone to booms and busts) and offering safety nets for the ‘losers’ lest they form angry mobs and revolt.
Some may prefer that we had revolted, but this happened elsewhere with unpleasant consequences for the world. Instead of revolting, we regulated our financial industry, implemented social safety nets that helped head off economic crises,
Very, very debatable. Many feel that FDR instead prolonged the depression with the Keynesian policies.
and began a period of prosperity that was the envy of the world.
No - having our 4 closest competitors in the world economy physically destroyed by war, while we remained unscathed, is what gave us our period of prosperity.
It worked spectacularly well until we deregulated the financial industry. Again, something Keynes would never have advised.Nor would he have countenanced Greenspan’s easy-money, ‘we’ll clean up after the bubble pops’ policies.
The hyper-inflation of the weimar republic would never have occured under properly applied keynesianism. And of course, the German economy didn’t die from it, they seem to still be around.
Well - physically Germany’s still around sure. Wrecking the economy doesn’t actually cause the ground to disappear. The economy though was wrecked.
(And most historians agree that Hitler’s building up of the german war machine helped pull Germany out of depression. So government stimulus does work! Even for the evil.)
Sorry, but I don’t believe in the whole “military = GDP” thing. The notion that the economy is improved by reducing unemployment and increasing production by building military is a fallacy. Military is not the economy. As such for instance - I strongly assert that we did not finish the Great Depression until 1946 - after WW2 was done. Only then did we have true private (i.e. non-compulsory) GDP growth.
But reality has taught us that in times of crisis, many viable businesses can go broke through no fault of their own. Major industries that took many years to develop (think rearden steel!) can be swept away. Such things are not so easily replaced. The industries often go elsewhere and never return.
This effect is amplified by the fact that foreign corporations are backstopped by gov.
If we let GM and Ford Collapse there may not be a US corporation that replaces them.
We could thus loose all manufacturing capability. Not a position of strength in a world economy.
Meatson:
Looks like the big international electronics appliance store been here 50+ years just up and left The place sold all the upscale appliances for the kondozes, plus anything that was 240 volts…all sorts of stuff adapters voltage converters Pal secam video machines.
Are either GM or Ford really US Corporations? How really do they differ any more that Toyota, Honda, or BMW in that regard? Your point is well taken, but I’m not sure the auto industry is the best example.
An amusing footnote, I was registering my ‘87 Honda at the MVD the other day, and the clerk was pissing and moaning about owning “American” cars. I remarked that my Honda was assembled in Ohio. Then I asked, do you know where your Ford was made?
I call BS on this. What a wuss response. How can you be so afraid of change?
If they had a general bankruptcy they would be liquidated in to parts that might survive. So, you break up Buick, Pontiac and Chevy. I think at least Chevy would be better off.
What about the truck division? That group was doing just fine.
That and unloading a lot of worthless debt. Somehow, dumping it on the govt and burdening the rest of us with their mistakes is going to work.
I’ve got news for you. When the ship is sinking and the lifeboat is full, you shoot the rest of the guys in the water. Or else everybody dies. You’d sit there and let them drown everyone?
Boy you are full of it.
But reality has taught us that in times of crisis, many viable businesses can go broke through no fault of their own. Major industries that took many years to develop (think rearden steel!) can be swept away. Such things are not so easily replaced. The industries often go elsewhere and never return.
I think that one of our big problems is that companies take less than rational actions due to Keynesian stimulis policies. The biggest of all being the Fed system. What can and does happen is that companies are afraid to have savings because you become a merger target. The Fed system enables large investment banks to leverage against any assets you are holding to move forward with take over attempts. We always look at those mergers and sigh. The public face on many of those transactions was always the new company will do x x x better and leverage off of the x and y. The real reason the mergers went forward was banks could raid the savings the company had and generate a lot of fees. Possibly also getting some action from stock moves.
The reaction to this is companies became very leary of holding assets of any kind so live on credit and the brink of bankruptcy.
I’d also disagree about his thoughts on debt and stimulis. Why was it a bad time to stimulate in 2001? That was a recession too. What effect did it have? If you are Keyenesian than it was good. If you are from the Austrian school then you just see it heaping more and more distortions and debt. What we got was a housing bubble. Now, the debt is at levels that it is unpayable.
Further more we made some additional stimulis under the more recent congress. Again, it was not carefully applied to things that would make the US more competative in the future. It went to banks and to the unemployed. Where does that leave us in a few years? Strangled by even more debt.
In summary. You are insane if you think this is going to work.
I expect that papering over the losses with new money will eventually work but at the current rate will empoverish most of the country. I’d guess that would be a democrat goal since poverty is where they get the backbone of their votes.
Remember that accoding to your patron saint that debt levels don’t matter at all. So, stimulis of any kind is always good.
Boy you are full of it.
You talkin’ tuh me? (*takes shirt off*)
Seriously, are you? The first part is a quote from me. The second part in bold sounds like my position in an argument I had with joeyinca a while ago. But I don’t think it’s a quote, just similar. And I’m not sure how it relates to the first quote.
Anyway, in response to your points, following Keynesian principals we wouldn’t have had a bust in 2001 to bail. He would have ‘removed the punch bowl from the party’ when the dotcom buuble was getting going, thus deflating the nascent bubble. The same point applies to the current crisis, Keynes would have advised raising interest rates when housing escaped its historic price levels. And he would have opposed the deregulation that helped fuel this bust, and the ensuing creation of too-big-to-fail financial companies.
Good posts, alpha. Keep up the good fight!
Alpha,
I’m not bothering to take my shirt off. I’d probably twist you into a pretzel with out breaking a sweat. Course I’d probably end up having a heart attack after that. We can get macho and go schwartz waving later.
Well to complete the chain we could go way back to Reagan who did a bunch of inflationary measures with deficit spending.
Then forward to GB1 who started to pull away the punch bowl. Look where that got him.
Then Clinton via Rubin/Greenspud allowed reserves to go to zero. I was excited about this back then. So soon after the S&L fiasco they unlease a massive inflationary gesture. Then Clinton supported NAFTA… and so the bubble in SUVs was begining and we also had a bunch of credit inflation with LTCM and the russian currency crisis. Perhaps they were interlinked. Then the dotcom and telecom bubble started to appear.
Again that was stimulis. When did Keneysian’s ever think there was bad stimulis? What is the exit criteria for them?
It isn’t clear to me that the Fed/stimulis can react in time to these measures and as I mentioned below, you have to really slam on the breaks hard to stop things because the leverage.
Also I’d note that after 2004 I believe the Fed had pulled away the punch bowl. Banks were lending to each other and selling bonds like crazy to whomever they could trick into it. So, bubbles become self enforcing after a while. You’d have to pull a Voliker to stop it. Full on 15% rates. The Fed raised rates after 2004 for something like a 1.5 years to 5%. I think by that point it was a self feeding problem.
Remember the banks were leveraging to get returns and were yielding something like 35% while making 5% interest rate loans. Good trick, eh? Even Volicker (or however you spell his name) wouldn’t have stopped this train wreck.
Neither tool Austrian or Keynesian seems to have a good clean mathmatical point to break on these issues. All that we really know is that at some magic point inflation is intolerable and at some other magic point deflation is just about as intolerable.
I’d also note that many people believe that the stimulis done by Rosevelt actually lengthened the depression considerably. Not to mention the tarrifs didn’t help
Hence, our founders said no paper money, no central bank to avoid this sort of fiasco. And we blew it. And the country is FUBAR.
Speaking of economic theories and their flaws:
http://finance.yahoo.com/banking-budgeting/article/108116/economists-seek-to-fix-a-defect-in-data-that-overstates-the-nations-vigor?sec=topStories&pos=3&asset=&ccode=
The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.
Rut roh…
It gets a lot worse than that.
They have other fudge factors to adjust for “quality” of goods. So, if you are making a 80486 computer and compare that to a current dual processor machine. Well, making one of the new dual processor machines is like 10x the computing power of that old 486. So, you can multiply the price of the new chip by some adjustment factor.
Stuff like that. Basically I go with the data on the ground. Talk to friends and old HS buddies, and of course my fellow HBBers to get an idea. Then follow analysis and data from all the stuff CR and Ben generate. Also go look at some other websites and general news releases.
I been saying for a while that we have to convince people to stop letting the government guys beat us over the head with the GDP stick. Again, CPI data is also noisey and monkeyed with all the time. Even an inflation adjusted GDP doesn’t work.
I’m fairly confident we can do a decent job with measuring money supply though. That is very possible. The treasury should be busy ripping the nuts off the Fed and taking control of the situation. Most critical thing I can think of for the country is getting the right person, heck maybe Ivy Zellman, into the treasury and having them persue the best interests of the people. And it aint back stopping AIG, BOA, FRE, FAN and C.
Hey rio… Thanks for the football find…
My Vikings play Monday night that weekend,
I’m headed to buzois for new years ..
Let me know if you have any hotel ideas..
Big thanks.. I love brasil… By far one of the
best spots in the world.
The Brazilian women are my favorite women. I had a Brazilian girlfriend and she was so fun to be with! They love American men.
“They love American men.”
Ain’ it da trute. Especially when they think that American man could be their ticket to ride.
American men can be so naive when it comes to women from other cultures. Of course, I know you’re worldly enough to spot the pitfalls, Bill, but not everyone is.
Word to the wise: When involved with a woman from another country and you go to visit her, beware of warm family gatherings.
“beware of warm family gatherings.”
Especially if there’s more than one brother present.
Especially when they think that American man could be their ticket to ride.
Ding ding ding. If you thought the Sex in the City girls in New York were gold-diggers, well…
My mom was engaged to a European man then my naturalized American dad showed up in her town. Mom’s mom went right to work, next thing you know - enagement to European is broken, and my mom was on her way to the States.
“Everyting fine in America…”
Exactly, oxide. There’s been enough complaining about each other between the sexes here in the US. But on the whole, American men and women, whatever their problems might be, ought to experience a little “intercultural” exchange. The ladies should take good warning from attitudes towards women South of the Boder and in the Middle East. Heck, even in Eastern Europe or Russia. And the men need to re-think those pipe dreams of Russian and Filipino brides.
People in the other parts of the world don’t necessarily think and act like people in the US. For the women, in some places, if you even make one little slip like holding hands with a member of the opposite sex, you’re stoned to death at worst, put to the lash at best.
And for the men, the interest is in the wallet. Now, if yer a smart bugger, like I expect Bill is, you can have some huge fun for a while, leading the lady a merry chase with all sorts of pretense or disclaimers about wanting to have an open relationship. And she’ll seem to go along, but sooner or later, she wants you to show her (and sometimes her warm, welcoming family, too) the money. The trick is to know when to “slip out the back, Jack”, just before matters reach a head.
And even then, in these days of “globalism”, it might not be so easy to evade the long arm of the “warm, welcoming family”. It’s pretty easy to get to the US if you feel that sis’s “honor” has been violated.
So always use an alias, if you can.
Not that I have any direct experience in these matters.
Anyway, my point, and I do have one, is that for all the complaining American men and women do about each other, they don’t know when they have it good.
Of all the women from other nations I have…um, known, it seems women from korea were the most ruthless. I see soldiers all the time go there and get them a submissive wife, only in their old age be treated like crap. You see them in the commissary, where most of the baggage handlers are old korean women. They look at you like you are crazy for only giving them $2 to bag your items.
Whoh, palmetto, I wasn’t thinking that far ahead. We like to joke here about how worthless American money is, but I guess we underestimate its value in second- and third-world countries. Too many traps.
Stpn, you make a really good point here, and one I’ve known all along. Some older American men, worn out by bad relationships, divorces, and what they think are selfish American women, seek out foreign women in the hopes of that “submissive wife”. LMAO! They ain’t seen nuthin’ yet! A lot of that “submission” is a ruse, covering a ruthlessness American women in general couldn’t even begin to approach.
You answered a question I was going to ask, which is which country has the most ruthless female population, in general? Korea, eh?
“I guess we underestimate its value in second- and third-world countries. Too many traps.”
It’s the dream of a better life, too, however you can get it. As bad as it is here right now, it is far worse in many other countries, if you’re not one of the top dogs.
I also read a fascinating article, I think it was in Vanity Fair, about young men working at hotels in Egypt romancing female tourists from Canada and Europe, hoping to get out of Egypt. The ladies were perfectly willing to slum it for a while with an exotic Middle Eastern boy-toy, and then departed with many tears and promises of letters, etc. A letter or two would come and then out of sight, out of mind.
European women, in general, are more attuned as to how this international “romance” game is played. Fling, yes, marriage, no.
‘always use an alias’
Oh, they’ll check your wallet.
“Beware the Jabberwock, my son!
The jaws that bite, the claws that catch!
Beware the Jubjub bird, and shun
The frumious Bandersnatch!”
Sleep with Americans !
palm -
In the late 1980s early ’90s there was a cottage industry of sorts in Philadelphia - ME nationals of both sexes looking to exchange cash money for a marriage license. An Israeli woman and her rent-a-spouse got stung and ended up on 60 minutes. We had great fun watching her trying to convince Morley Safer that her association with Dante was a love match when he was half her age and obviously gay.
Hey, X-Philly, good story. How’s yer American honey working out?
Ok, I’m probably gonna get flamed for this, but in general, American men make the best husbands and BFs. Just ask any woman from another country.
always use the hotel safe
I like my redneck man.
Growing up all my friends were crazy over my brother and male cousins, and my dad had his share of wimmins chasin’ his Italian Stallion azz all over town despite his marital status. But since I grew up with these guys and after dating some Italians, I knew I’d never get along with them longterm.
So I switched to the Anglo breed and we’re doing alright though he did have to get accustomed to my feisty ways.
“So I switched to the Anglo breed and we’re doing alright though he did have to get accustomed to my feisty ways.”
Yep, Anglo men will put up with a lot from their women. But in the end, they also know American women are the best, too.
Who else is willing to split the check, after all?
In the 80s in Yemen, my friends included an American who married a Somalian woman who had previously been married to a Yemeni. The first marriage had enabled her to get herself and her mother out of Somalia at a bad time.
I visited them in Maine shortly after they moved there. The wife was incensed that they were living in an isolated lakeside home out of town and her husband expected her to stay home all day. (In his defense, she had previously been very happy when her relationship with him had allowed her to stay home in Yemen instead of being a maid.)
She ranted about how Americans how marry foreigners expect their wives to be submissive, when women who are willing to burn their bridges, leave their family and familiar culture and leap into living in a new language and way of life are active - not passive - by nature.
She started working morning shift at Dunkin Donuts in order to save for driving lessons and eventually a car. Within a few weeks, she knew and was liked by everyone in town - she had found the perfect job to get acquainted.
He should have known she wouldn’t be passive in the US. She hadn’t been in her previous life. Also, he knew that her mother had poured a pot of boiling tea on her father when he took a second wife back in Somalia.
“They ain’t seen nuthin’ yet! A lot of that “submission” is a ruse, covering a ruthlessness American women in general couldn’t even begin to approach.”
But those guys “showed” us American women we weren’t needed, yes? That must be good for something.
I hear ya, Montana, and I think it sucks, frankly. The grass is always greener, or some such thing. I’m not saying there aren’t some good cross-border unions, far from it. But I’m talking in general.
American men and women should be for each other. At the risk of sounding mawkish, in general, they’re not going to get a better deal anywhere else. So a little kindness and understanding on both parts is in order.
She ranted about how Americans how marry foreigners expect their wives to be submissive…
Well duh, that’s the bargain. Don’t give me any trouble, and I’ll get you out of your blasted country. Was she expecting anything else?
oxide,
Well actually they had a good mutually respectful relationship; it wasn’t just a marriage of convenience. But when they moved to Maine, he didn’t really consider her situation, that it might be difficult for her to adjust to a new culture all by herself in an isolated house.
As I said, she solved the problem and got the Dunkin Donuts job in the little town nearby - I don’t remember how she sorted out the transportation, as he commuted to another city - and she not only earned the money for driving lessons and eventually a car, she got the social interaction that she so much needed as a newcomer.
A few years later when he battled a protracted illness, the health insurance she had from her not-so-highly-paid but well-benefited job translating at a major medical clinic was a godsend for him. He died, but had the best of care in his last years, thanks to her.
Yeah I did not mention the downside. Had a run-in with USBP and it was either I get back to the states alone or I stay with her outside the states. That’s the choice the agent gave me, seriously! She lied to the agents, saying we were engaged and living together (both false, and I did not expect any of this stuff to happen. Just a trip down from LA to “Mehico” and she sprang this on me when we were headed back to the US). I left her $400 for a week in Tijuana in a hotel and I came back alone. But I did have fun with her. She eventually snuck back across, but it was not with my help or knowledge at the time. Now she’s living in Brazil, where she belongs.
“She lied to the agents, saying we were engaged and living together (both false, and I did not expect any of this stuff to happen.”
I knew one Brazilian lady who really got the raw end of the deal. She was engaged to a fellow I know (I won’t dignify him by calling him a friend) for about year, they even had a little business together. So she goes back to Brazil to visit her family and lo and behold, the cad she was engaged to gets cold feet and calls off the engagement.
Then she meets another American guy in Brazil and they do get married and come stateside and all is well for a few years, until he meets an American lady and asks for a divorce. She was really devoted to him, too, and got thrown out like garbage, after putting on a few pounds.
So it cuts both ways.
I left her $400 for a week in Tijuana in a hotel
I think there might be a Robert Rodriguez movie in there somewhere…
“She lied to the agents, saying we were engaged and living together (both false, and I did not expect any of this stuff to happen. Just a trip down from LA to “Mehico” and she sprang this on me when we were headed back to the US). I left her $400 for a week in Tijuana in a hotel and I came back alone. But I did have fun”
Result of Bill’s Adventures of Winning Hearts and Minds down Mexico way…
DHS gave him a rap sheet, took away his passport and made him sit in the corner for 30 minutes.
I bet she even said “You look like your 37 years old honey”
“They lie to everybody. They lie to the fish” Bill !
I loved the story.
ha ha ha
“Did you know, Beth, that in some South American countries it’s still legal to kill your wife if she insults you?”
OK, now you’ve gone and done it, Mikey. I just HAD to give a link from the memorable quotes of Falling Down. Awesome.
http://www.imdb.com/title/tt0106856/quotes
Plamy, I was looking for that line I liked about
“We’re going to roll prices back to 1965″..but I didn’t see it !
Falling Down - I watched it twice. And yeah at one point I looked like that engineer played by Michael Douglas. Back then note to self: Never wear a short-sleeved shirt with a tie and have a crew cut.
Try Colombia!
Fecaltime!
Cue the references to Ron Paul in 5..4..3…
Cue this:
Elizabeth Warren: We Rescued The Top Of The System, Left The Bottom To Fend For Itself (VIDEO)
Elizabeth Warren, the chair of the Congressional Oversight Panel charged with monitoring the bank bailout, was on Morning Joe Friday morning to dig in to the newly released unemployment report. The numbers are bleak — unemployment has surpassed 10 percent for the first time since 1983 — and Warren is not surprised.
“Let’s face it,” Warren said, “This is sort of how we went about the rescue — we rescued at the top and we left the bottom to kind of fend for itself — and that’s showing up in the unemployment numbers.”
http://www.huffingtonpost.com/2009/11/06/elizabeth-warren-we-rescu_n_348397.html
Supply side was too big to fail.
I keep saying, with a few more people that agree with me now, that the only thing about the middle class that the high and mighty care about is our insatiable urge to buy more and more of their shit ahd services. Nothing else whatsoever. We’re on our own.
Yep, but that’s nothing new.
Sorry, I forgot to add…
The real strength of the modern middle class came after WW2. You do not argue with 2 million combat vets who have just won the biggest war in the history of mankind.
Combat vets who were now going to college and joining unions and starting their own mom and pop businesses and were NOT going to take any BS from anyone, let alone the banks or politicians. Yeah, they had their flaws (racism for starters) but their strengthening of the middle is undeniable.
In case you haven’t noticed, it all started going to hell almost in lockstep with that generation dieing off.
yes, I agree. That being said, lots of Amercins still seem to believe in the “promise” of the middle class - work hard, get educated, etc., and thou too shalt live in a McMansion w/ your honey and 2.5 childrns. Doesn’t seem to be working out for millions upon millions of us, though.
That greatest generation crap is so overblown and down right BS.
The US was an economic powerhouse 1945-1960 because every other country in the world was in ruin. Had nothing to do with vets kicking ass. It was the perfect situation. No foreign products to compete against and the whole world buying your products to rebuild. If they had tried they couldn’t have screwed it up.
And then these same people voted for 40 years of non-stop Democrat rule that bankrupted the country with schemes like Social Security, Medicare. Where would the money come from? Who cares. Someone else will pay for it, I want my freebies NOW!!
The decline started around 1960 when Japan and Germany were rebuilt and the inferiority of the American worker was exposed.
The decline started around 1960 when Japan and Germany were rebuilt and the inferiority of the American worker was exposed.
More like the inferiority of American management. The workers did what they were told to do. Japanese management listened to Deming…American management laughed at him.
It’s not that the banks are too big to fail, they are too connected to cronies to fail. The ptb are fighting for the big guys.
Ehhdee, keesa me goo’night! (Topo Gigio)
huh?
Ed Sullivan. Topo Gigio was puppet mouse character.
About 30 years before my time. Still have no clue what it’s supposed to mean though.
“About 30 years before my time.”
That answers everything now.
Yep.
LOL.
Gold is going nuts today. Over $ 1100 per oz. The gap between gold and platinum is narrowed to only about $ 270 - $ 280 per oz. Th price of platinum used to be almost double that of gold per ounce. Either platinum is greatly underpriced, or gold is greatly overpriced.
YEAAAAAA!
Third option both under priced with Platinum being even cheaper. However, it is sensitive to auto sales and will rise when auto sales rise.
Yes, that could be true also. The auto sales slump did push Plat. down somewhat.
Gold is reacting to the uncontrolled theftocratic Congress and sees the $10 trillion price tag of the stimulus over the next ten years (predicted by CBO) and a battle ahead over tax hikes, which means several more years of interest rates below 1% and overheated printing press.
Pal who used to work at Goldman had some interesting ideas on the printing press the other night, when I brought up some of the points made here.
First, he said, nobody’s printing money. It’s just numbers on a screen. Your company is insolvent? Hit this button here, make those new numbers pop up on a screen over there, and shazam, you’re whole!
I suggested this game might not work forever. He answered, sure it will. They know we’ll nuke em if they don’t take our virtual money. Us or them.
Don’t know how much that says about actual events, or just opinions on Wall Street.
“First, he said, nobody’s printing money. It’s just numbers on a screen. Your company is insolvent? Hit this button here, make those new numbers pop up on a screen over there, and shazam, you’re whole!”
ED ZACHARY! I’ve known this for a while.
“I suggested this game might not work forever. He answered, sure it will. They know we’ll nuke em if they don’t take our virtual money. Us or them.”
Does he mean “nuke” in the literal or figurative sense?
When people have nothing left to lose, sh*t happens. French Revolution can repeat itself, your buddy needs to know that. In the age of the internet, even the traders who think they are obscure, might not be. Besides, I’m sure they’re on FaceBook. And then there’s GoogleEarth, to find them.
The USA military is the hammer to the worlds
nail. As long as we are, the rest of the world
is going to go along with our financial shenanigans.
He meant it literally. Just one of the rules of the game. Hard to respond to that, ain’t it? Sounds mad, but look at the world.
Did make me think I might want to live farther from the Financial District, though, if they’re playing chicken like that.
On the other hand, if it were true that we are nothing but the neighborhood bully, you think about how such people are usually dealt with. Folks cower and avoid him for a long time, but then somebody finally lands a sucker punch, he goes down for a second, and everybody piles on with a vengeance.
Who’s Ed Zachary?
Oops, mine too?
You have to google the “Ed Zachary joke”. Incredibly stupid and juvenile. I just can’t help myself.
“In the age of the internet, even the traders who think they are obscure, might not be. Besides, I’m sure they’re on FaceBook. And then there’s GoogleEarth, to find them.”
xxxxxxxx
Us nonbrokers can only hope for such smart-bomb retaliation from the masses. It’s also possible that if you live a few blocks away and the Master of the Universe isn’t home, the mob will be burning you out, too!
We, the USA, are like a meth freak with a gun safe full of weapons. Only instead of meth we are addicted to cheap oil and foreign credit. Everyone is afraid to do an intervention because of the guns. Take the guns away and the charade stops.
The best search engine for locating someone, down to and including nice satellite views of their very roofline, is zabasearch. All you need is a name and an approximate dob, plus it helps to know which state they were actually last in. Try it on yourself. It’s scary. And handy at the same time.
BS. Can’t even do a job right against the 3rd world armies of Iraq and Afghanistan. The notion that US military is ready to take on one more war with Chindrusbraz is pure fantasy.
I took his ‘nuke ‘em’ comment to be directed against China, the Middle East etc. Of course we wouldn’t have to nuke these countries if they stopped buying our debt. China’s economic model would implode, and the oil sheiks would lose our protection- and be out of power and/or dead shortly thereafter. It’s good to be the king.
I had 3 or 4 phone lines because of computers (Ran a BBS, wardialing) back in the day. It’s showing all the people who got the phone numbers after me as my addresses. Also, my parents in Florida as well.
I had 3 or 4 phone lines because of computers (Ran a BBS, wardialing) back in the day.
I can tell you from experience that it’s almost impossible to find a past girlfriend over the age of 20… something about getting married and changing names repeatedly.
BS. Can’t even do a job right against the 3rd world armies of Iraq and Afghanistan.
I disagree. The real difficulty is NOT turning those countries into glass.
The auto sales slump did push Plat. down somewhat.
Somewhat???
If you mean platinum falling from $2250/oz to $775/oz somewhat.
The auto sales slump did push Plat. down somewhat.
Somewhat???
If you mean platinum falling from $2250/oz to $775/oz somewhat.
Except for one thing Einstens. By summer 2008 auto sales were already plummeting - going from 16+M per year in late 2007 to 12.5M per year by July 2008. During the same period Platinum went from $1,500 to over $2,000.
Platinum’s peak though was commodities-bubble driven though, and it crashed with oil in late 2008 to $800 by November. Car sales were still falling then as well - but continued falling into February this year even though Platinum was on its way back up by then.
There is some correlation, but it’s been very loose.
All I was stating was that gold’s price in relation to platinum’s is a much more narrow difference than it used to be. Years about, gold would be about 50% of what platinum was. Interesting, no matter who thinks they have the answer.
Einstens
Didn’t Einstens invent the Q-bomb?
You mean when the house passes a $2T spending bill, the dollar is weakened? Never woulda thunk it.
HOPE N CHANGE baby!!
Gold is going nuts today. Over $ 1100 per oz. The gap between gold and platinum is narrowed to only about $ 270 - $ 280 per oz. Th price of platinum used to be almost double that of gold per ounce. Either platinum is greatly underpriced, or gold is greatly overpriced.
FWIW - Platinum was over gold’s double last year - over $2k when gold was just under $1k. However the gap between the two actually narrowed to nothing earlier this year.
Reason is that Platinum is much more of a true commodity than gold. It’s harder to tell a Platinum coin from a gold one, thus easier to fake it.
Gold is not going up, the U.S. dollar is going down. Up $10.00 U.S. down$1.78 Cdn, and every other currency. How is this going to play out re inflation deflation debate.
I see the same deal on Nadler’s Kitco columns. His tone is that this is not a good reason to own or buy gold. I say b.s. Why else would the price of gold fluctuate other than react to the dollar? The dollar dropping is a sign there is too much money chasing too few goods.
and of course the dollar falling and gold going up is related. No news to me.
It’s super-rapid climb still surprises me, although I’ve gotten us into the metals years before this.
I love my platinum coins, but it looks like my gold coins may pay off. The all gold fund I am in is up alot lately. I just may stay in it for the long term..
Well that doesn’t make much sense. Aren’t we supposed to buy low and sell high, not buy medium and hold high? And if you sell, you’ll be selling into inflated dollars, which will only mean something if you turn right around and use the dollars to buy something more substantial than inflated dollars…like. Well, like, I don’t know. If anybody knew, they wouldn’t be buying dollars.
(Those Chinese buying up natural resources in Africa are onto something.)
People best star concerning themselves why sold is doing its thing; start prepping if it doesnt sink back below 1k by the end of the month.
star = start
sold = gold !! I give up. No more drinking before 9 PM.
“Gold is not going up, the U.S. dollar is going down.”
So long as gold is priced in dollars and both are traded in the global financial market, it is a bit hard to have one without the other.
Any thoughts on whether and when the dollar selloff will end? It is currently in a slow crash versus almost all of its major developed country competitors, as evidenced by all of these exchange rates moving in the same direction, with the rival currencies all increasing against the value of the dollar.
From Bloomberg:
CURRENCY VALUE CHANGE % CHANGE TIME
EUR-USD 1.5006 0.0158 1.0642% 11:24
GBP-USD 1.6746 0.0134 0.8075% 11:24
USD-CHF 1.0070 -0.0104 -1.0199% 11:24
USD-SEK 6.8406 -0.1488 -2.1291% 11:24
USD-DKK 4.9589 -0.0532 -1.0625% 11:24
USD-NOK 5.5880 -0.1033 -1.8153% 11:24
USD-CZK 17.0280 -0.3088 -1.7809% 11:24
USD-SKK 20.0770 -0.2155 -1.0619% 11:23
USD-PLN 2.7963 -0.0593 -2.0769% 11:24
USD-HUF 180.9650 -4.2850 -2.3131% 11:24
USD-RUB 28.7370 -0.3346 -1.1508% 11:24
USD-TRY 1.4716 -0.0123 -0.8306% 11:23
USD-ILS 3.7485 -0.0152 -0.4052% 11:18
USD-KES 74.3200 -0.0425 -0.0572% 09:42
USD-ZAR 7.3935 -0.1423 -1.8882% 11:23
USD-MAD 7.6055 -0.0730 -0.9504% 11:24
For us newbs, could you clarify what exchange this is, and over what time period are the changes measured- is this just for today? And how come you left out Yen, C$, Aus$, Kiwi$? And what’s TRY, ILS, KES, ZAR, MAD?
Thanks, LVG
USD-XXX = price (exchange rate) of $US in units of currency XXX
XXX-USD = price of currency XXX in units of $US
Note that all of these prices are moving in the same direction relative to $US.
“And how come you left out Yen, C$, Aus$, Kiwi$? And what’s TRY, ILS, KES, ZAR, MAD?”
1) I work for free, and you get what you pay for (and possibly even more).
2) I provided what was readily available from Bloomberg in their canned format. With a very small amount of extra effort, you can find the exchange rates you mentioned freely available on their site or others on the internet.
Man, you are tough today, Bear ! LOL !!!! I loved it.
USD-XXX = price (exchange rate) of $US in units of currency XXX
XXX-USD = price of currency XXX in units of $US
Note that all of these prices are moving in the same direction relative to $US.
I already knew all that, but you didn’t answer ANY of my questions. At the very least, you should tell us over what time period the changes are measured. And a link would help. I find it hard to believe that “Bloomberg’s canned format” includes the Moroccan Dirham (if that’s what MAD is) but not Japanese Yen.
Buy gold now or get priced out forever!!! (In the wake of last week’s FOMC meeting announcement of endless easy money, I sense an evaporation in faith that the Fed will do what it takes to rein in future inflation…)
I’ve finished most of my buying in 2008. I only bought a total of three ounces in 2009. Occasional buying is fine for me for now.
If we get gridlock in Congress in 2010 I would not buy an ounce more. Gridlock is the beginning of the end of the quick trip to serfdom.
We’re done also. We’re buying dividend stocks and low-prices stocks that we like - with Jim Stack picks plus a few of our own, we’re up 20 % so far this year. Of course, it could sink like the value of a Saturn car, but, well, metals are too high to be buying right now.
The Fed is broadcasting that its primary goal is to get the economy roaring again, and that will not pull back stimulus until the economy is out of danger of retreating into recession.
BUT, there are always economic storm clouds on the horizon.
So, it seems certain that inflation will take root until it becomes intolerable, a la 1982, and some serious measure will have to be taken to reign it in.
Fed herding investors to the slaughter?
http://www.theglobeandmail.com/blogs/markets/is-the-fed-herding-investors-to-the-slaughter/article1353918/
“The real question investors need to ask themselves is this: if we truly are in the middle of a Fed-induced liquidity rally where the fundamentals simply don’t matter, do you buy now or wait it out for the inevitable bust?”
I get the feeling a lot of people believe that it’s OK because they’ll get out before everyone else. Everyone else feels the same way.
“I get the feeling a lot of people believe that it’s OK because they’ll get out before everyone else. Everyone else feels the same way.”
How things end really badly. Don’t worry - I am sure obama will bail them out.
So far money pumps are running full throtte world wide. A lot of East European countries took out loans in Euros. That means they can’t just print up the difference. I’d expect the first valve to blow to be somewhere in Eastern Europe. It will set off a mad rush to the exit.
“I’d expect the first valve to blow to be somewhere in Eastern Europe.”
Good call. Eastern Europe has been teetering on the brink for a while now.
This is probably as good an indicator of a large selloff as any. It seems to me that the Icelandic default was a key indicator of the plunge last year.
I would have thought the Icelandic default would have been seen as the first valve to blow, but they got in there with their chewing gum and rubber bands and patched things up for a bit.
Now that chewing gum is hardening and the rubber bands are drying out.
Then all at once the quarrel sank:
Everyone felt the same,
And every life became
A brilliant breaking of the bank,
A quite unlosable game.
It’s pretty funny that even while many financial pundits are connecting the dots between Greenspan’s easy money policy of the early 2000s and the housing boom-to-bust sequence that followed, the Fed is supplying still easier money in the present episode. I guess they think it is different this time?
The definition of insanity is doing the same thing over and over again and expecting different results.
– Albert Einstein –
http://money.cnn.com/2009/11/06/news/companies/tony_young_acorn.fortune/index.htm?postversion=2009110908
His Northern friends remember Young telling them that he’d grown up on an antebellum Georgia plantation called Rosebud, where he was raised by an African- American nanny named Mae-Mae
ROTFLMFAO!!!!
Mae Mae??????????? LOL…..
Its sad what people will do for money….
Ahhh my home state does me proud again.
Whenever I receive “oddly sexually suggestive” party favors, I can’t help but feel that the host just isn’t one of us.
Whenever I recieve a boxed set of CD as a gift of state, I can’t help but feel….
But…I wanted an iPod!
“Whenever I receive “oddly sexually suggestive” party favors, I can’t help but feel that the host just isn’t one of us.”
Too bad they didn’t take it as a hint that the host wants to screw them.
right, Kim
“Everyone liked Tony. You felt like you’d known him for years,” says a guest, who asked not to be identified. “He was very personable, fun, a great talker.”
DANGER WILL ROBINSON! DANGER!
How can you be so rich yet so dumb?
“The louder he talked of his honor, the faster we counted our spoons.”
— Ralph Waldo Emerson
the faster we counted our spoons
There’s an Arabic expression about encountering the guy who’s full of talk about how much he’s going to do for you - “after you shake hands, count your fingers.”
Ok, Greenspan lowered interest rates to 1% and kept them there for a year. The credit bubble started to get out of hand and he saw this. Interest rates were then raised 17 times (ref: Kramer Rant). I distinctly remember a “conundrum” remark when he raised rates and did other monetary actions to reduce the credit bubble.
Greenspan was tinkering with an economy that he absolutely did not understand.
Now Bernanke, Geithner, Summers, etc. are doing the exact thing that Greenspan did in the dot-com-bust-twin-towers-attack. The only difference is the “conundrum” remark.
I believe my point has been made.
Roidy
The biggest problem was the money supply going anywhere and the unregulated markets being short term casino bets and of course faulty ratings on the quality of that paper . Nobody questioned the new business
models that were adapted that were based on untested waters .The unregulated markets didn’t need discount money from the Feds .
You can have low interest rates but you also have to have excess money available to create a bubble .Greenspan would of had to go beyond
interest rate increases to stop the bubble at the time .
Big Oil’s lean look fuels area jobs fear
If cuts remain permanent, glory days may be over.
HOUSTON CHRONICLE
Houston’s energy economy has clearly felt the sting of an unprecedented drop in crude and natural gas prices, with more than 18,000 jobs lost in past months.
But recent downsizing moves by Royal Dutch Shell, ConocoPhillips and other oil and gas companies appear to go beyond the typical bottom-of-the-cycle belt tightening.
They suggest a permanent shift toward doing more with less — in what could be a troubling trend for Houston.
“The oil and gas industry in the Houston area has probably seen its peak in terms of, if you want to call it, its glory years,” Allen Brooks, managing director at Parks Paton Hoepfl and Brown, a Houston investment bank that invests in the energy sector.
Last month, Shell said by year end it would cut 5,000 employees, or 10 percent of its global workforce, under a sweeping reorganization. ConocoPhillips — after cutting 4 percent of its workforce this year — is putting $10 billion in assets on the block to pay debts. BP, meanwhile, has cut more than 5,000 jobs worldwide under an ongoing turnaround, and major oil field services firms like Schlumberger and Halliburton have eliminated thousands more jobs this year.
About just in time for all of those new Petroleum Engineering students to be graduating college…
Makes you feel sorry for the kids today. What are they suppose to major in when things change so quickly? Today they all want to be in heathcare. The Nursing program an UNC (Northern Colorado) has a waiting list that is years long. For what all those students know Heathcare as a profession could be kaput in a few years as it becomes oversaturated and “customers” have no way to pay (as in no insurance) for their very expensive services.
Exactly. Only the lucky few can stay with a company to retirement and collect a pension. A career? Another generation won’t even understand what the word means.
But economic churn creates employment uncertainty and this helps to keep labor costs down. “You should be glad you HAVE a job, peasant!”
This is precisely what happened in the late 90’s, when schools were oversaturated with computer students. I remember looking at them and thinking: “you all better save your money, because after 5-6 years of this the field will finish expanding, and then you’d better be better than everyone else.” Even dumber were the ones who dropped out. You just knew that they would be supplanted by the ones with college degrees.
i thought we were supposed to be happy when evil B-I-G O-I-L suffered.
When evil B-I-G O-I-L makes billions in profits, you complain. When they lose money and lay people off, you complain. Guess you just can’t please some people, ever.
I’ll be pleased if they get those shale extraction processes working.
It’s funny how things change in just matter of a couple of years…
Evil oil companies and evil Bush/Cheney were all the rage then, now it’s the banksters (deservingly so)….
Don’t you know that banksters do God’s work?
“The oil and gas industry in the Houston area has probably seen its peak in terms of, if you want to call it, its glory years,”
Didn’t this happen before in the early ’80’s?
Yes, and it was brutal. There were tent towns and geologist waiting tables.
You couldn’t get a job washing dishes. It WAS that bad.
This is old news. Well to me anyway.
Most of those layoffs and cutbacks happened back in early spring. By summer, it was real bad. 3rd and 2nd shifts at the oil tool factories were cut, budgets frozen, hiring frozen. The only projects still moving forward were already in the pipeline and could not be stopped without even more painful financial penalties.
Things seem to have stabilized and hiring seems to have started up as well, at least tentatively.
The glory days over? Ho ho ho that’s hilarious! Not for at LEAST the next 100 years. The writer is definitely a moron who understands nothing of the world he lives in.
I’d like to see what percentage of CA and FL mortgages are underwater, if anyone has the stats. 21% underwater on a national level still sounds mighty high to me, and I am guessing it is much higher in the bubble zones.
Special Report The Rescue
Good news: Fewer underwater mortgages
There’s been a decline in the percentage of mortgage borrowers who owe more than their homes are worth.
By Les Christie, CNNMoney dot com
Last Updated: November 9, 2009: 10:47 AM ET
Housing: Best recovery bets
The average home price is forecast to plummet over the next two years. But these 7 cities are predicted to post gains.
The national median home price fell a record 15.6% during the second quarter of 2009. Check how prices fared in your hometown.
(Life after foreclosure
After losing their homes, these 4 families thought they’d never recover. They’ve found it difficult to rent and their credit is wrecked, but life is looking up.)
NEW YORK (CNNMoney.com) — Fewer people are underwater on their mortgages — further evidence that the real estate free-fall may be slowing.
Just 21% of all single-family homeowners owe more on their mortgage balances than their homes are worth, according to a third quarter residential real estate report from Zillow.com. That is down from 23% at the end of the second quarter.
That is good news because it should help reduce the number of homeowners losing their homes to foreclosure. Being underwater is one of the two factors that lead to foreclosure, the other being, of course, not having enough income to make the monthly payments.
“The decline in the percentage of homeowners with negative equity is a positive sign and is directly attributable to the stabilization of home values from the second quarter to the third,” said Zillow chief economist Stan Humphries.
But there’s a second, less-positive factor that contributed to the reduction in underwater borrowers: foreclosures. So many people have already lost their homes that the ranks of those underwater is slowly dwindling.
And that highlights one of the most serious concerns that housing markets currently face. “Foreclosure rates,” said Humphries, “are ramping up again.”
…
Link?
what do yall think about this article?
http://www.nytimes.com/2009/11/09/opinion/09zizek.html
Hard to believe it’s been that long already.
Many people here would be shocked at the tax increases in western Germany.
During the boom ,not only was money coming in from all over the World ,but the 401k funds were massive and needed a place to make money . If it had not been for this fact ,along with deregulation giving Wall Street free rein ,the bubble would of been limited . The PR campaign for real estate investment became intensive from 2003 to 2007 . It reached a point where
loan underwriting became secondary to Wall Streets need to keep the
party going in this Ponzi-scheme that involved a excess money supply of easy money.
Now the government is supplying the excess funds and its being directed in the same old insane ways like propping up real estate or bailing out Banks and Wall Street .
Lately whenever I go to the bank they try to sell me the new bond investment or the new Insurance investment scams that have low yields and long terms . One Bank investment dude tried to discredit FDIC and say that I had to get away from FDIC insured investments .
Also I think when they talk about breaking up the to Big to Fall big Banks
they would take the bad bank assets and stick that part with the taxpayers and let the Banks keep the good parts . It all goes back to the
Good Bank /Bad Bank concept that is another term for finding a bag-holder for the loss or the Bad Bank part .
I guess my point is that currently in one way or another the objective is to get rid of the Banks loss without it affecting a major sector of the financial world . The Powers that Be have decided the Bag-holder will be the taxpayer .
You have problem with Corporate Communist Capitalism©®™, comrade?
US lawyer job cuts worse for 30 years.
Timesonline
Global economic carnage has pushed US firms to make the deepest cuts in lawyer numbers for more than 30 years, according to The National Law Journal.
It said America’s top 250 law firms axed 5,259 lawyers in the last 12 months – a number equivalent to all lawyers at two firms the size of Jones Day losing their jobs.
The four per cent decline in overall lawyer numbers to 126,669 is the first year on year fall since 1993 and only the third decline since 1978, when statistics began.
The savage cuts this year have wiped away nearly one-third of the growth that firms made during the past five years and puts many of them back below 2005 levels.
Of the top 75 law firms, 15 cut more than 100 lawyers and in the top 50, seven cut more than 200 lawyers.
The firm with the largest percentage decrease was Fried, Frank, Harris, Shriver & Jacobson, which cut 26.4 per cent of lawyers to 468 from 636 in 2008.
Partner levels however, remained unscathed. The National Law Journal said number of partners in 2009 was 53,468, compared with 52,980 in 2008, an increase of 0.9 percent.
be fun to see some shysters bagging sandwiches at Subway, like engineer who got laid off from his sandwich artist gig and then went crazy on the firm that fired him two years before.
No they will join politics. Easy entry and can BS into it.
Finally some good news on the economics front!
No, the shysters (partners) are still at it. It’s the associate shysters getting cut or deferred.
Nobody takes it seriously, but here and there prognosticators are saying there is a strong possibility a third political party will be up and running prior to November, 2010.
Gerald Celente, whose predictions are often accurate, observes that the political system is failing the American people and that the banks are robbing us blind. Celente is watching for the formation of an angry Progressive / Libertarian third party before the mid-term elections in 2010. We’ll make a note of the prediction and re-visit it next summer.
The U.S. has only one dominant political party. It is composed of two factions, liberal and conservative, devoted to destroying the Constitution and enlarging federal government. The country desperately needs an affordable alternative .
Shhhh! American Idol is on!
I would say that the people who attached themselves to the GOP in order to vote for Ron Paul in the various caucuses will probably make a big show of leaving *in disgust* to go 3rd party but I think that was always in the cards anyway. You’ve got to be pretty tolerant and pragmatic to put up with the Big Two.
Trouble is, few people want to do do all the scut work of starting and maintaining a viable party. The flamboyant leaders move on to other things and the single-issue freaks take over, at best.
A 3rd party = a guaranteed Democrat win. Ask Perot and Hoffman about it if you don’t believe me.
Ralph Nader says Hi.
You can thank him for GWB’s first tenure.
packman:
I disagree i think Gore was just not cut out for the Top job. Sort of like Ed McMahon. he wouldn’t have been good as the host of the tonight show but Star Search was perfect for him.
Not stating anything with regards to whether or not Gore was cut out for it or not. Just stating that if Nader was not in the race, Gore would have won.
Pac:
well ok…but gores 2nd banana aura lost him enough votes at the end to make Nader a factor.
Predictions:
Yes, there will be a third party, but it won’t be Progressive/Libertarian.
What you’ll see is the Teabaggers splitting off from the Republicans — this started already in NY-23. Then you’ll see the ultra blue-dog Dems (Bayh from Indiana for example) joining with moderate Republicans (for example McCain/Grassley/Snowe/Voinovich). Once shed of the Blue Dogs, the Dems will go ever more liberal.
Further along, the Teabaggers will find out that they don’t have enough votes to sway any election, and sit home and stew. Obama will try to make nice, fail, and ultimately go lib. Elections will be decided by how many moderates will be wooed by either side, and by how fast the old-white-boy Republicans die off.
Nobody takes it seriously, but here and there prognosticators are saying there is a strong possibility a third political party will be up and running prior to November, 2010. Gerald Celente, whose predictions are often accurate, observes that the political system is failing the American people and that the banks are robbing us blind. Celente is watching for the formation of an angry Progressive /Libertarian third party before the mid-term elections in 2010.
The U.S. has only one dominant political party. It is composed of two factions, liberal and conservative, devoted to destroying the Constitution and enlarging federal government.The country desperately needs an affordable alternative .
Yup there will be a 3rd party. I don’t think pubies get it. They are still fuming mad for not being able bomb one more country.
What I see happening is a replay of NY23 in 2012 guaranteeing a second Obama term.
Obama a second term would be great news for gold bugs.
It would be good news for everyone who doesn’t produce and horrible news for everyone who does. If Obama wins in 2012, then this country deserves the fate it will receive. I personally will not pay one dime in taxes 2013 and on.
…unless there is severe gridlock.
I still won’t pay any taxes since I will be long gone from the country.
That’s the best news I’ve read all day.
Predictable.
Can I help you pack your bags?
Yup, a party will form, throw the election to The Won and then quietly implode.
“When I was a young man, they told me if I voted for Goldwater, I’d get sent to Vietnam. I voted for Goldwater anyway, and sure enough, I got sent to Vietnam!”
Democrat and Republican politicians both love using military power. Don’t ever forget that fact.
My dad’s version was this: “I was told that if I voted for Goldwater the country would go to Hell. I did and it did.”
(Bloomberg) — Venezuelan President Hugo Chavez told the military and civil militias today to prepare for war as a deterrent to a U.S.-led attack after American troops gained access to military bases in neighboring Colombia.
Chavez said a recently signed agreement that gives American troops access to seven Colombian bases is a direct threat to his oil-exporting country. Colombia has handed over its sovereignty to the U.S. with the deal, he said.
“Generals of the armed forces, the best way to avoid a war is to prepare for one,” Chavez said in comments on state television during his weekly “Alo Presidente” program. “Colombia handed over their country and is now another state of the union. Don’t make the mistake of attacking: Venezuela is willing to do anything.”
The U.S. agreement with Colombia is part of an effort to “strengthen and increase ties with countries in the region,” Robin Holzhauer, spokeswoman for the U.S. Embassy in Caracas, said by telephone. “We’ve done that with governments who want to have partnerships with us.” Colombia has said the agreement would help combat drug trafficking.
Ties between Venezuela and Colombia have deteriorated this year after President Alvaro Uribe accused Chavez of financing leftist Colombian rebels. Chavez, a self-proclaimed socialist revolutionary, said he would stop importing goods from Colombia due to the U.S. military pact. The two countries are each other’s second-largest trading partners after the U.S.
Probably one of the few benefits of Obama as a president.
All these 2-bit dictators will have to look hard for enemies other than USA.
Fewer U.S. Homeowners Owe More Than Properties Are Worth.
Nov. 9 (Bloomberg) — The number of U.S. homeowners who owe more than their properties are worth fell in the third quarter as values stabilized and some homes were lost to foreclosure, Zillow.com said.
About 21 percent of owners of mortgaged homes were underwater, down from 23 percent in the second quarter, the Seattle-based real estate data provider said today in a report.
“The decline in the percentage of homeowners with negative equity is a positive sign, and is directly attributable to the stabilization of home values from the second quarter to the third,” Zillow Chief Economist Stan Humphries said in a statement. “It is also attributable to many homeowners who were previously underwater on their mortgage losing their homes to foreclosure.”
U.S. foreclosure filings climbed to 937,840 in the third quarter, a 23 percent increase from a year earlier, Irvine, California-based RealtyTrac Inc said Oct. 15. Zillow estimated that the median value of single-family houses, condominiums and cooperative apartments declined 6.9 percent in the same period.
The rate of decline slowed, as home values dropped 0.4 percent from the second quarter to a median of $190,400, Zillow said.
“All we can say is that if the overwhelming consensus is correct that the recession is behind us, then what we have on our hands is the mother of all jobless recoveries and whatever economic growth is being squeezed into the system comes courtesy of the most dramatic intervention by the government in recorded history, including the New Deal 1930s era. President Obama is now running fiscal deficits that would have made FDR blush.”
~ David Rosenberg:
Speaking of jobless recoveries:
http://www.markfiore.com/user/1/animation/408
What I bought with my $8,000 tax credit.
Location: San Carlos, Calf.
Property: 3 bed, 2 bath, 1,600 s.f.
Price: $750,000
Noel Delisle, 30, and her fiance, Mike Spence, 31. She is a hair stylist and he operates a crane.
My fiance and I were running around making wedding plans and looking to buy a home in San Carlos — about halfway between San Francisco and San Jose. We finally found the right place on Roost.com.
We get married in November, but we’re moving into the house this month. I’m excited because it’s the best entertaining house we’ve ever seen. The house is built around a courtyard, and there’s a barbecue. I love to entertain.
We felt like we had to hurry and buy before the end of the year so we wouldn’t miss out on the tax credit. That turned out to be truer than we thought: As we got closer to the end, we realized how much closing costs and other fees would add to the purchase price, which was high enough already.
The $8,000 tax credit is saving us. Wedding, new house, we’re tapped out. We’re definitely big fans of the tax credit!
Still, we feel good about the purchase. Even though it’s a lot to pay, we feel we got a good buy. The house next door is going for $1.2 million.
Prices have tumbled in this area, so the house is a lot cheaper than it would have sold for a year or two ago, and we got a great rate, about 5.5%, on a FHA loan. We’ll use some of the credit money to updating some of the home’s circa-1950’s decor — fake wood beams and chandeliers, textured wallpaper and the like.
Wedding, new house, we’re tapped out
Great start, kids. Good luck!
What’s this obsession with spending money on wedding? Just buy a reasonable ring and save the rest for future.
UH biz is hurting too.. If they are passing Benjaminz around I want my cut. I provide a valuable service ya know……lol
Ha ha. You’re funny. Really.
Price: $750,000
Noel Delisle, 30, and her fiance, Mike Spence, 31. She is a hair stylist and he operates a crane.
Three. Fourths. Of. A. Million. Dollars.
Hair Stylist
Crane Operator.
Hello 2005! I thought you were gone!
“Crane operator,
“He’s a crane operator”*
*Substitute “Cool Operator”
Maybe he’s union?
Who would lend a blue collar couple the dough to buy a $750,000 house? Let me guess: Uncle Sam?
Even if our Uncle gave them a Zero interest loan for 30 years 750K divded by 360 is what? over $2K a month just for starters.
$2K a month for a $750K house? Shit, where do I sign up for that? Costs $4K to rent one.
‘Costs $4K to rent one’
Bzzz…wrong answer. If that was anywhere near the case there wouldn’t be a housing bubble. I recall back in 2006 I knew some waiters in Sedona that were going to pitch in and rent a 4 bedroom, $2 million house that had a pool, for $2000/month. The only reason they couldn’t was they were unable to come up with the $6000 deposit. And this isn’t an isolated example in N AZ.
I’d bet that house is still empty and may be in foreclosure, like so many in ‘expensive’ Sedona.
You may be right about the location in CA but that isn’t happening everywhere. A house offered (but obviously not sold) at $290k just rented out for $2400. (You do have to remember that home will carry a $9k tax bill with it) It reportedly rented out in one day w/multiple phone calls. It is NOT a McMansion by any stretch of the imagination. It is not in a high end neighborhood. The McMansions are asking $4000/mo and more in this area and are not staying on the MLS for long. The SFH rental listings in this town are sporadic at best and we go long months w/few listings at all. Yes, inventory is often single digit.
Note: the local University Hospital was expanding. Last I’d checked the town’s median income had spiked from $70k’s to $90k’s. Probably because every HR dept I ever hear about recommends our district to anyone who can afford the taxes. We’ll see if those high income numbers hold though w/the state budget in disarray.
That crane operator makes well over $100K a year. Thank you longshoremen, teamsters and other unions!! A job that requires no education and about 2 hours worth of training pays 5X more than a teaching position pays.
2 hours? So you already know all about load balancing, the mechanics of fulcrum, levers and pulleys, tensile strength of various cable diameters and materials, momentum, velocity of mass, wind speed affects on various surfaces as well as temperature differences affecting all of the above, all the while moving in 3 dimensions SIMULTANEOUSLY?
I’ll bet you think pilots are just bus drivers well.
OK 2 days.
It’s a crane operator for crying out loud. Relax.
I don’t know a lot about crane operators, but I do believe they have a high death rate among occupations. I have heard the going rate for a larger rig is $150/hour.
I once worked at a place that had elevators. We shook our heads at what these repair guys made per hour. Then one got his hand cut off in our building.
about crane operators
I know that I rely on them to work with a high degree of precision
Holiday hiring is off to a slow start, with retailers filling just 63,500 jobs in October, according to Bureau of Labor Statistics data.
That’s up slightly from a year ago, when retailers added 59,100 jobs.
“Retailers are taking a wait-and-see approach, and could decide to bring in extra workers at the last minute,” Challenger, Gray & Christmas CEO John A. Challenger said in a news release.
He noted that retail employment grew by just 384,300 jobs between October and December of last year, making it the worst hiring season in 19 years.
Monday’s news comes on the heels of last week’s report that the jobless rate jumped to 10.2 percent, the highest in 26 years.
Challenger noted there is one glimmer of hope: Employment at temporary employment agencies grew by 33,700 jobs in October, the third consecutive increase in this category and the largest since October 2007.
“This is significant because temporary employment is typically where we see the first job gains in a recovery,” he said. “As the economy improves, these temporary workers are converted to full-time, permanent workers.”
“As the economy improves, these temporary workers are converted to full-time, permanent workers.”
Well now, that’s the theory at least isn’t it? Based no doubt on observations of the past few decades. Let’s see how such assumptions hold up in these uncharted waters.
Again, here is a writer with no grasp of the real world. Most temporary workers stay temp workers because of company policy. This has been the trend over the last 20 years. Many people have been laid off from their jobs only to have to reapply as temp workers for less pay, no raises and no benefits.
Another little trick is to also have them work just slightly less than 40 hours, thus avoiding full time classification and all the red tape that goes with it.
Right, those temps will more than likely stay temps, now more than ever. Around my company at least they are petrified to fill any position that comes with benefits. Perhaps it’s the uncertainty surrounding the health care bill or maybe it’s just the continuation of a deeper trend. Bottom line: these guys are irresponsible to suggest a significant amount of temps will be brought on permanently.
NYTimes
A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation.
The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.
American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.
“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”
The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do.
That may help to explain why the recovery from the 2001 recession was a jobless one for many months and why the recovery from this recession is likely to generate few jobs for many months.
In addition, more detailed import data would help to explain wage inequality, by linking some low wages more accurately to particular industries exposed to import competition.
“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.
Peter Schiff was right again!
I have had it with this is phony economy and phony GDP.
A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100.
American cars have carburetors?
(Not in any way disputing the facts of the story, just couldn’t resist)
It’s the NY Times. Don’t expect anything resembling the facts from that rag.
I always love morons who present no facts but just bash the source. Refute the story
Another reason to dislike Wall Street.
NEW YORK (MarketWatch) — Some big Wall Street banks are girding against the swine flu, but a flap over how the firms got the vaccine will make them miserable.
The public is outraged about reports that Citi, Goldman Sachs Group Inc. and Morgan Stanley along withh other big New York employers, received hundreds, even thousands, of H1N1 vaccine doses before hospitals and other Healthcare providers, many of which have run out of the precious drug.
A spokeswoman for New York City’s Department of Health said firms like Goldman are important outlets for reaching at-risk adults.
Clearly someone from the health department should visit a hospital or doctor’s office. They might discover that those are also excellent places to reach sick people or those at-risk.
For Goldman Sachs, accused of unfairly benefiting from government bailout funds and its close relationships with administration officials, the problem is especially acute. Though the company said it only had 200 of the 5,400 doses it ordered, it had no plans to give the vaccine back to the government, unlike Morgan Stanley, which received 1,000 doses and is sending them to New York hospitals that need the drug.
Jokes are already circulating on Wall Street about how Goldman will create derivatives out of the few doses it has and begin trading them.
As one reader put it in an email:
As jobless rates keep getting worse
The bankers cut lines to the nurse;
Bad debts they accrue
But when there’s swine flu
They finally turn risk-averse.
After rapping the country and getting nothing but a lecture or two they just want to see how far they can push things before the public riots.
Next will be a law that allows a Goldman employee to sleep with every bride before her wedding.
LET THEM EAT CAKE!
Scotland. My..land.
Perhaps it is time to..re-institute an old custom. Grant them…prima nocte? If we can’t get them out, we’ll..breed them out. That should fetch just the type of lords we want to Scotland, heh?
Could You Be Saving Too Much?
I swear to god, that’s a real title of an article on Yahoo finance.
Where do they find these people?
“About 10 percent of the population is accumulating too much retirement savings in the sense that they could have saved significantly less and still retired with enough resources to continue in the lifestyle they enjoyed during their working life, estimates Harvard University economist David Laibson. (It’s generally assumed you need about 70 percent to 90 percent of your income to maintain the same lifestyle in retirement.)”
Hahaha, stop you’re killin’ me.
” Laibson is not looking at other forms of savings, such as an emergency fund, when he defines these supersavers.
Indeed, he believes the oft-repeated advice to hold six to nine months’ worth of salary in an emergency fund “is an impractical goal for most households.”
So there there, don’t feel bad if you don’t have a pot to pish in…it’s just not practical !
Oliver Twist.
if you accidentally save too much, you can just retire early to fix the problem.
“if you accidentally save too much, you can just retire early to fix the problem.”
Please report to Harvard to pick up your Ph.D. in economics. You’ve automatically been registered for the Nobel Peace Prize.
Geithner Saying Be Like Buffett Can’t Make Banks Lend.
(Bloomberg) — U.S. Treasury Secretary Timothy Geithner is echoing billionaire investor Warren Buffett in telling banks “to take a chance again on the American economy.” So far, his appeal is falling flat.
While financial institutions including Citigroup Inc. and Bank of America Corp. have received more than $200 billion in capital from the government, they are limiting loans at a time of mounting unemployment, rising company bankruptcies and increasing regulatory oversight. Commercial and industrial lending has dropped 17 percent since October 2008, according to Federal Reserve data.
Economic growth will be slower and short-term interest rates will stay lower for longer than economists and investors expect because of banks’ reluctance to lend, says Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York. Bank profits may be restrained and bond prices boosted as institutions put money into safe Treasury securities rather than making riskier, more lucrative loans.
Tight credit is a “serious problem,” Hatzius says. “This could keep growth significantly weaker than the consensus view in 2010 and is likely to keep the Federal Reserve at a near zero-percent funds rate all next year.”
His forecast of 2 percent growth in 2010 is below the 2.4 percent median of 67 economists surveyed by Bloomberg News. If he’s right, traders in the federal-funds futures market who are betting there’s a more-than-even chance the central bank will raise rates by June may need to reverse their wagers. Federal funds are money that U.S. banks have on deposit at Fed banks.
Why lend in a deflationary enviroment? The few survivors of this mess are hunkering down for the 20 year winter.
Can’t force people to borrow and can’t force people to spend…
Reminds me of talking to Mom about moving to the West Coast and being a snowbird. She just said “it’s too hard to jump from being a saver to a spender”.
Same thing will be happening all over the economy.
Well Yes they can just give me a 10 year zero interest rate on my CC and watch me spend that “interest” i’m “saving” each month….on pants shoes dental work (ok its not that much)
—————————————–
Can’t force people to borrow and can’t force people to spend…
Fed: GMAC to receive more bailout money
Fed says GMAC only stress-tested bank without enough capital to withstand future downturn.
Monday November 9, 2009
WASHINGTON (AP) — The Federal Reserve said Monday that GMAC is the only one of 19 stress-tested banks that needs more capital to withstand a future downturn.
GMAC has been unable to raise the $11.5 billion it needed after stress test results were announced in May. The Fed says the finance company is expected to meet its remaining needs by accessing the $700 billion financial bailout.
GMAC is negotiating with Treasury over how much it will receive. Company representatives did not immediately return a call for comment Monday afternoon.
The test results in May found that 10 of the 19 largest banks needed an extra cushion of capital to withstand deeper losses they would see if the recession worsened. They were given six months to raise a total of $74.6 billion of capital. The Fed said Monday that they have raised a total of $77 billion.
GMAC could not raise money in part because investors needed to charge high interest rates to offset the risk that the company could fail.
I’m doing ‘God’s work’. Meet Mr Goldman Sachs.
The Sunday Times gains unprecedented access to the world’s most powerful, and most secretive, investment bank. (AP/Unknown)
Lloyd Blankfein: chairman and CEO
Number 85 Broad Street, a dull, rust-coloured office block in lower Manhattan, doesn’t look like a place to stop and stare, and that’s just the way the people who work there like it. The men and women who arrive in the watery dawn sunshine, dressed in Wall Street black, clutching black briefcases and BlackBerrys, are very, very private. They walk quickly from their black Lincoln town cars to the lobby, past, well, nothing, really. There’s no name plate on the building, no sign on the front desk and the armed policeman stationed outside isn’t saying who works there. There’s a good reason for the secrecy. Number 85 Broad Street, New York, NY 10004, is where the money is. All of it.
It’s the site of the best cash-making machine that global capitalism has ever produced, and, some say, a political force more powerful than governments. The people who work behind the brass-trim glass doors make more money than some countries do. They are the rainmakers’ rainmakers, the biggest swinging dicks in the financial jungle. Their assets total $1 trillion, their annual revenues run into the tens of billions, and their profits are in the billions, which they distribute liberally among themselves.
Average pay this recessionary year for the 30,000 staff is expected to be a record $700,000. Top earners will get tens of millions, several hundred thousand times more than a cleaner at the firm. When they have finished getting “filthy rich by 40″, as the company saying goes, these alpha dogs don’t put their feet up. They parachute into some of the most senior political posts in the US and beyond, prompting accusations that they “rule the world”. Number 85 Broad Street is the home of Goldman Sachs.
More Great Stuff From Those Fun Guys in China!!!
If it isn’t dry wall that corrodes your pipes and makes your eyes burn, or anti-freeze in your toothpaste, or poison in your dog food, now you can get baby strollers that amputate! How’s that for progress???
Strollers recalled for fingertip amputation hazard
1 million Maclaren strollers recalled due to risk of fingertip amputation:
By Natasha T. Metzler, Associated Press Writer
On 1:53 pm EST, Monday November 9, 2009 WASHINGTON (AP) — About a million Maclaren strollers sold by Target and Babies “R” Us were recalled Monday, after 12 reports of children having their fingertips amputated by a hinge mechanism.
The recall includes all nine models of single and double umbrella Maclaren strollers, according to the Consumer Product Safety Commission, which announced the recall after an investigation.
The amputation risk occurs when a child’s finger is placed in the hinge mechanism of a stroller while it is being unfolded. When the opened stroller locks into place, it can cut off the tip of the child’s finger.
The recall includes the following stroller models: Volo, Triumph, Quest Sport, Quest Mod, Techno XT, TechnoXLR, Twin Triumph, Twin Techno and Easy Traveller. They have been sold at Babies “R” Us, Target and other stores around the country since 1999. Prices for the strollers ranged from $100 to $360.
The company is offering free hinge covers to prevent future incidents. The covers should not be removed unless the stroller is being cleaned, according to the CPSC.
“Our message to parents, grandparents and all caregivers is to make sure that you stop using these strollers until you get the repair kit, which zips the covers in place,” said CPSC spokeswoman Patty Davis.
The strollers were manufactured in China and distributed by Maclaren USA Inc of South Norwalk, Conn.
The company could not immediately be reached by phone for comment and its Web site was offline.
Ah so now the wonderful British company is blaming poor design on the manufacturer and distributor? Please place blame where due, this time it is the design and that is neither Chinese nor American in origin.
Yeah how can they design something like this and not know?
Doesn’t anyone have kids in Britain? Wouldn’t you give some of your employees a free stroller in exchange for an honest evaluation, before mass marketing a product?
Dont ya think one or two of them would have caught this defect or maybe their kid would be screaming?
State tax revenue falls 17.8% in October
Atlanta Business Chronicle
The amount of revenue the Peach State pulled in from various taxes plunged 17.8 percent in October, the Georgia Department of Revenue reported Monday.
Georgia took in $1.14 billion last month, compared with $1.39 billion in October 2008.
The $1.14 billion total includes $398 million in sales tax revenue (down 18.2 percent), a deficit of $4.9 million in corporate income tax revenue (down 120.8 percent), $610.6 million in individual income tax revenue (down 15.5 percent), $65.1 million in motor fuel tax revenue (down 14.2 percent) and $6 million in property tax revenue (down 31.1 percent).
Through October, state tax revenue was down 15.1 percent to $4.66 billion.
Quick bring the legislature back to a special session so we can balance the budget by cutting libraries parks and after school activities….
They already did that in CA.
I was at an administrative meeting today and a guy pulled me aside and tried to get me to buy his house and that I should hurry before the credit expires! This was after ‘celebrations’ were announced and that I have another baby. You know, because you can’t let children grow up in a rental.
FOR SHAME!
You should have told him “I would be better off becoming a scAmway distributor under you than to bail you out of your depreciating asset!”
“I was at an administrative meeting today and a guy pulled me aside and tried to get me to buy his house and that I should hurry before the credit expires!”
You could always reply - “I heard about you being on that list and I hate to see you go. Got a new gig lined up? Where ya moving to?”
YEOW!
“You could always reply - “I heard about you being on that list and I hate to see you go. Got a new gig lined up? Where ya moving to?”
LOL. I could really freak him out and throw in a vague reference to an ankle monitor, too.
You could tell him that you’d be glad to rent it—at way below his carrying-costs, of course.
While conservatives and liberals have little else to agree on these days, on the “too big to fail” question, Republicans increasingly find themselves reading from the same page as Ralph Nader, the AFL-CIO and an array of other progressive organizations that have also concluded that the best way to prevent future bailouts is to downsize the huge banks that now dominate everything from credit cards to mortgages and emerging market investments.
“It is hard to look at what was done over the past year and a half and conclude it was anything less than disastrous,” said Robert Weissman, president of Mr. Nader’s Public Citizen group. “The bailout strategy is unacceptable. It unjustifiably plunders the public treasury to support failed, reckless enterprises while reinforcing the cycles that lead to periodic failure and ever-larger bailouts.”
The Nader group is recommending breaking up firms that are too big to fail and reinstating Depression-era rules that prohibit commercial banks from engaging in speculative investment activities, as well as empowering the government to close down such firms in an orderly way if they fail in the future.
“Congress should take a page out of the book of antitrust law,” he said. “The antitrust approach asks not how regulatory agencies can monitor the mammoth financial institutions, but whether those institutions should exist at all.”
Congress and regulators can begin to curb the excessive size of financial firms by enforcing existing limits on the concentration of banks and other depository institutions — which would put a lid on further acquisitions by megabanks such as Bank of America and JP Morgan, he said.
“If it’s too big to fail, it’s too big to exist,” said Rep. Bernard Sanders, Vermont independent, who has introduced legislation directing the Treasury to identify and break up “too big to fail” banks within 90 days.
…
Retardicans seeing the light and doing something right? The thought is refreshing but their blind hatred of anything working class will preclude them from doing the right thing.
Cheap Entertainment
If you haven’t seen it, take a gander at “The U.S. Debt Clock”.
While most numbers appear to be sailing off to infinity, you might notice that:
US Private Debt, Mortgage Debt, Personal Debt, Small Businesss Assets, Corporation Assets,and Currency and Credit Derivatives are moving DOWN. The graphic of a burst bubble falling into
a black hole.
link: http://www.usdebtclock.org/#
“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation’s foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A and Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”
While the news itself is no surprise in the sense that we have expected and written about this situation repeatedly in recent months, the phrase “sharp increases in foreclosure activity” is notable in the context of widespread views that credit difficulties are abating. Below is a reminder of where we stand in relation to the reset curve. This news of a shift in the character of foreclosure activity comes precisely in tandem with the beginning of the predictable second wave. The pleasant lull in the reset schedule is decidedly behind us.
~ John P. Hussman
Fed morphs from “we can’t see bubbles while they are inflating” to “not all bubbles are bad bubbles”:
The Financial Times
Not all bubbles present a risk to the economy
By Frederic Mishkin
Published: November 9 2009 20:08 | Last updated: November 9 2009 20:08
There is increasing concern that we may be experiencing another round of asset-price bubbles that could pose great danger to the economy. Does this danger provide a case for the US Federal Reserve to exit from its zero-interest-rate policy sooner rather than later, as many commentators have suggested? The answer is no.
Are potential asset-price bubbles always dangerous? Asset-price bubbles can be separated into two categories. The first and dangerous category is one I call “a credit boom bubble”, in which exuberant expectations about economic prospects or structural changes in financial markets lead to a credit boom. The resulting increased demand for some assets raises their price and, in turn, encourages further lending against these assets, increasing demand, and hence their prices, even more, creating a positive feedback loop. This feedback loop involves increasing leverage, further easing of credit standards, then even higher leverage, and the cycle continues.
Eventually, the bubble bursts and asset prices collapse, leading to a reversal of the feedback loop. Loans go sour, the deleveraging begins, demand for the assets declines further and prices drop even more. The resulting loan losses and declines in asset prices erode the balance sheets at financial institutions, further diminishing credit and investment across a broad range of assets. The resulting deleveraging depresses business and household spending, which weakens economic activity and increases macroeconomic risk in credit markets. Indeed, this is what the recent crisis has been all about.
The second category of bubble, what I call the “pure irrational exuberance bubble”, is far less dangerous because it does not involve the cycle of leveraging against higher asset values. Without a credit boom, the bursting of the bubble does not cause the financial system to seize up and so does much less damage. For example, the bubble in technology stocks in the late 1990s was not fuelled by a feedback loop between bank lending and rising equity values; indeed, the bursting of the tech-stock bubble was not accompanied by a marked deterioration in bank balance sheets. This is one of the key reasons that the bursting of the bubble was followed by a relatively mild recession. Similarly, the bubble that burst in the stock market in 1987 did not put the financial system under great stress and the economy fared well in its aftermath.
…
“For example, the bubble in technology stocks in the late 1990s was not fuelled by a feedback loop between bank lending and rising equity values; indeed, the bursting of the tech-stock bubble was not accompanied by a marked deterioration in bank balance sheets.”
Got Enron shares?
Does history repeat itself? Are we doomed to repeat the same mistakes over and over again? You betcha.
Hawker to close Salina plant
Wichita Business Journal
Hawker Beechcraft Corp. is closing its plant in Salina, which employs about 240 workers.
The company informed the employees and the International Association of Machinists and Aerospace Workers of the closure Monday.
According to a release issued by Hawker, no time line for the closure has been set.
Melissa McCoy, spokesperson for the Salina Airport Authority, says the company’s lease is good through 2012.
“HBC has asked IAM to actively partner in making a viable business case and exploring opportunities for relocating jobs to Wichita,” the Hawker release stated.
As of Monday afternoon, the company had not filed a mass layoff notice with the Kansas Department of Commerce.
Hawker has laid off about 3,600 workers since Nov. 2008.
A plant that makes hydraulic cylinders in Great Bend Kansas (not far from Salina) has just laid off a couple hundred employees, including some with 25-30 years there.
Sprint to reduce up to 2,500 jobs by end of 2009.
SAN FRANCISCO (MarketWatch) — Sprint Nextel Corp. (NYSE:S) said Monday it will eliminate 2,000 to 2,500 positions in the fourth quarter as part of its effort to reduce labor costs by at least $350 million. The reductions will impact positions companywide, and will also affect contractor and other outside labor. “The impact on geographic locations will vary, and many impacted positions will be eliminated by Dec. 31, 2009,” the company said in a statement.
So that’s why the market rallied today!
About 1,200 undocumented janitors in the Twin Cities were fired from their jobs last month at ABM Janitorial Services as part of a large immigration crackdown, according to a report from Minnesota Public Radio.
The report attributes the news to immigration lawyers in the Twin Cities who are working with some of the janitors that lost their jobs.
San Fransisco-based ABM (NYSE: ABM) cleans many downtown office towers. ABM has 2,600 Minnesota employees in the state, according to research published by the Business Journal, and is the No. 1 janitorial service firm in the Twin Cities, according to a Business Journal ranking by cleanable square feet.
Tony Mitchell, ABM Industries vice president of corporate communications in New York, issued a two-line statement to MPR.
“Federal law prescribes specific procedures by which employers conduct employment verification activities. Our policy is full compliance with the law,” Mitchell said.
Well there you go. This will fix up the unemployment problem right up. I’m sure thousands of unemployed Americans will rush in to take those jobs tomorrow.
Well why not?
My dad was a janitor for a number of years.
I think there probably will be.
This is a test to see if I can post.
A virus destroyed my computer database, so now I am reloading everything after having my computer geeked by Best Buy’s Geek Squad for $129.
Here is a bill which satisfies the KISS principle in a big way (Keep It Simple, Stupid). Can anyone see any problems with enacting this, aside from the difficulty some politicians may face if their campaign contributions from too-big-to-fail financial entities go away?
A BILL
To address the concept of ‘‘Too Big To Fail’’ with respect
to certain financial entities.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the ‘‘Too Big to Fail, Too
5 Big to Exist Act’’.
6 SEC. 2. REPORT TO CONGRESS ON INSTITUTIONS THAT
7 ARE TOO BIG TO FAIL.
8 Notwithstanding any other provision of law, not later
9 than 90 days after the date of enactment of this Act, the
10 Secretary of the Treasury shall submit to Congress a list
2
1 of all commercial banks, investment banks, hedge funds,
2 and insurance companies that the Secretary believes are
3 too big to fail (in this Act referred to as the ‘‘Too Big
4 to Fail List’’).
5 SEC. 3. BREAKING-UP TOO BIG TO FAIL INSTITUTIONS.
6 Notwithstanding any other provision of law, begin-
7 ning 1 year after the date of enactment of this Act, the
8 Secretary of the Treasury shall break up entities included
9 on the Too Big To Fail List, so that their failure would
10 no longer cause a catastrophic effect on the United States
11 or global economy without a taxpayer bailout.
12 SEC. 4. DEFINITION.
13 For purposes of this Act, the term ‘‘Too Big to Fail’’
14 means any entity that has grown so large that its failure
15 would have a catastrophic effect on the stability of either
16 the financial system or the United States economy without
17 substantial Government assistance.
Introduced by Senator Bernie Sanders of Vermont. That’s the entire bill.
“As a result of the greed, irresponsibility and illegal behavior of Wall Street our country has experienced the worst economic decline since the Great Depression,” said Sanders. “Mr. Bernanke was head of the Fed and the nation’s chief economist as this crisis, driven by reckless speculation, developed. Tragically, like the rest of the Bush administration, he was asleep at the wheel during this period and did nothing to move our financial system onto safer grounds.”
“As the middle class of this country continues to shrink, we need a chairman of the Federal Reserve who is more concerned about expanding the productive economy — increasing decent-paying jobs for all Americans — than continuing to fan the flames of Wall Street greed and outrageous compensation packages.”
“As the middle class of this country continues to shrink, we need a chairman of the Federal reserve who is more concerned about expanding the productive economy - increasing decent-paying jobs for all Americans - than continuing to fan the flames of Wall Street greed and outrageous compensation packages.”
Sound good to me, but just how is the Chairman of the Federal Reserve supposed to do this?
Too Big To Fail - Too Big To Exist
What’s Your Reaction?
-Inspiring
-Greedy
-Typical
-Scary
-Outrageous
-Amazing
-Innovative
-Infuriating
More than a year has gone by since Congress passed the $700 billion bailout of Wall Street. The Federal Reserve has committed trillions of additional dollars in virtually zero-interest loans and other assistance to large financial institutions resulting in the largest taxpayer bailout in the history of the world.
President Bush and Ben Bernanke told us we needed to bail out Wall Street because we could not allow big financial institutions and insurance giants to fail because if they failed it would have led to the collapse of the U.S. and global economies.
Today, most of the huge financial institutions still standing have become even bigger — so big that the four largest banks in America (JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup) now issue one out of every two mortgages; two out of three credit cards; and hold $4 out of every $10 in bank deposits in the entire country.
If any of these financial institutions were to get into major trouble again, taxpayers would be on the hook for another massive bailout. We cannot let that happen. We need to do exactly what Teddy Roosevelt did back in the trust-busting days and break up these big banks.
That is why I introduced legislation that would give the secretary of the Treasury 90 days to identify every single financial institution and insurance company in this country that is too big to fail and to break up those institutions within one year.
If it’s too big to fail, it’s too big to exist.
I am not sure why Scott Jagow is so pessimistic about the possibility that a simple but powerful idea could trump Wall Street special interests in the national policy debate on too-big-to-fail?
Momma always told me, “THE BIGGER THEY ARE, THE HARDER THEY FALL.”
Too big to exist
I wasn’t here on Friday to point this out, and it seemed to get lost in the news shuffle anyway, but a bill was introduced in the Senate that would tackle Too Big To Fail. And by tackle, I don’t mean in the wishy-washy Treasury Department way. It would actually break up the banks.
Independent Senator Bernie Sanders of Vermont introduced what he calls the “Too Big to Fail, Too Big to Exist Act.” From the bill:
Notwithstanding any other provision of law, beginning 1 year after the date of enactment of this Act, the Secretary of the Treasury shall break up entities included on the Too Big To Fail List, so that their failure would no longer cause a catastrophic effect on the United States or global economy without a taxpayer bailout.
As opposed to the health care bill, which is 1,990 pages, Sanders’ bill is two pages. The Barney Frank/Treasury plan to address TBTF is 253 pages long. Instead of breaking up the banks, it would allow regulators to shut them down if they seemed a threat to the economy.
Here’s Sanders’ video explanation of why his way is better:
(Click on the video link to understand exactly why too-big-to-fail is too-big-to-exist…)
Too Big to Fail? How About Too Big to Exist?
5:00 PM Monday February 23, 2009
by Duncan Watts
In 1996 a single power line failure in Oregon led to a massive cascade of power outages that spread across all the states west of the Rocky Mountains, leaving tens of millions without electricity. Over the past year we have experienced a different kind of cascade in the financial system that’s produced the equivalent of a global blackout. Having studied the dynamics of cascades in complex systems, I suspect that the most damaging ones are impossible to anticipate with any confidence. The solution may therefore be to make the system less complex to start with, in part by limiting how big companies are allowed to become.
…
How do we reduce the risk of cascades in the financial system? One approach builds on how regulators currently make judgments about systemic risk, in particular when they decide that some institutions are “too big to fail.” There are lots of problems with these judgments, as the Lehman Brothers fiasco revealed, but the most serious is that they are made only after a crisis emerges, at which point only drastic responses are available. A better approach, therefore, would be for regulators to routinely review firms before crises emerge and ask: “is this company too big to fail?” If yes, the firm could be required to downsize or shed business lines until regulators are satisfied that its failure would no longer pose a risk to the whole system. Correspondingly, proposed mergers and acquisitions could be reviewed for their potential to create an entity that would then be too big to fail.
Governments telling firms what they can and can’t do sounds like dangerous meddling in free markets. But anti-trust law already permits regulators to prevent firms from growing in ways that stifle competition, and somehow our free market has survived. The current crisis has demonstrated that markets do not automatically control systemic risk any more than they automatically create competition. Pragmatically speaking, therefore, government intervention is required to prevent markets from destroying themselves, and the relevant question is what kind of intervention is effective. The answer will be complicated, but it should include this simple principle: if a firm is too big to fail, it shouldn’t be allowed to grow so large in the first place.
Duncan Watts is a professor of sociology at Columbia University and is a principal research scientist at Yahoo Research. He is the author of Six Degrees: The Science of the Connected Age (Norton 2003).
The Baseline Scenario
What happened to the global economy and what we can do about it
Big and Small
Yesterday, Treasury Secretary Geithner presented an outline of his approach to regulating the financial system. The four pillars of that approach seem to be:
1. Increased power and regulatory centralization to deal with the problem of systemic risk
2. Increased protections for consumers and investors buying financial products
3. Closing regulatory gaps by shifting that organizes regulation based on financial functions, not types of financial institutions
4. International coordination among regulators
This all sounds good to me, and an improvement over where we are today. But reading Geithner’s discussion of systemic risk – the topic he focused on yesterday – I kept thinking it had been too long since he read Frog and Toad to his children.
…
Given the existence of “systemically important firms,” I agree they need careful regulation. But why does Geithner assume that they have to exist at all?
…
If It’s Too Big to Fail, Is It Too Big to Exist?
Daniel Acker/Bloomberg News
By ERIC DASH
Published: June 20, 2009
Nearly a century ago, the jurist Louis Brandeis railed against what he called the “curse of bigness.” He warned that banks, railroads and steel companies had grown so huge that they were lording it over the nation’s economic and political life.
…
A few Jeremiahs within the administration wanted more. They contended that the biggest banks must be streamlined, and that, in the future, banks should not be allowed to grow to the point where they pose a threat to the financial system. But they are losing a battle to other officials and banking executives who argue that such radical steps would be impracticable and deal yet another blow to the nation’s damaged financial industry. Washington, the argument goes, let banks grow into behemoths in the first place. Now, all of us must live with the consequences.
…
If It’s Too Big to Fail, Is It Too Big to Exist?
By ERIC DASH
Published: June 20, 2009
Nearly a century ago, the jurist Louis Brandeis railed against what he called the “curse of bigness.” He warned that banks, railroads and steel companies had grown so huge that they were lording it over the nation’s economic and political life.
“Size, we are told, is not a crime,” Brandeis wrote. “But size may, at least, become noxious by reason of the means through which it is attained or the uses to which it is put.”
Today, amid the wreckage of the gravest financial crisis since the Great Depression, bigness is one of our biggest problems. Major banks, the Detroit automakers, the financial basket case that is the American International Group — the only reason these giant, sclerotic companies are still standing is that they have been deemed “too big to fail.”
Or, more precisely, too big to be allowed to fail. Policy makers fear companies like these are so enormous and so intertwined in the fabric of the economy that their collapse would be catastrophic. Hence, all those multibillion-dollar, taxpayer-financed bailouts.
In its overhaul of financial regulation last week, the Obama administration proposed several measures to try to contain the biggest of America’s big banks. But it stopped far short of calling for the dismantling of those institutions.
A few Jeremiahs within the administration wanted more. They contended that the biggest banks must be streamlined, and that, in the future, banks should not be allowed to grow to the point where they pose a threat to the financial system. But they are losing a battle to other officials and banking executives who argue that such radical steps would be impracticable and deal yet another blow to the nation’s damaged financial industry. Washington, the argument goes, let banks grow into behemoths in the first place. Now, all of us must live with the consequences.
…
Any company that is too big to fail is too big to exist!
Big Banks Too Big to Exist?
Published: Fri, 26 Jun 2009
Description: FBN’s Liz MacDonald on the world’s biggest banks being too big to maintain financial stability.
Too Big To Fail = Too Big To Exist
October 12, 2009 by Adam
Filed under: News Articles
For conservatives, the financial crisis that began in the summer of 2007 has posed a major problem. We had grown rather accustomed to singing the praises of free financial markets. The crisis threatens to discredit them.
But this crisis was not the result of deregulation and market failure. In reality, it was born of a highly distorted financial market, in which excessive concentration, excessive leverage, spurious theories of risk management and, above all, moral hazard in the form of implicit state guarantees, combined to create huge ticking time-bombs on both sides of the Atlantic. The greatest danger we currently face is that the emergency measures adopted to remedy the crisis have made matters even worse. . . .
It has often been said since the crisis began that an institution that is “too big to fail” (TBTF) is too big to exist. I agree. The question is how we can best get rid of the TBTFs without increasing the power of government in the economy still further. . .
When “too big to fail” is too big to exist
Scott Matthews
Published: Wednesday, October 28, 2009
Here is an interesting consideration: can a company become so big and so profitable, that when it falls on hard times, the ripple effect of bankruptcy would be too disruptive to the economy? So disruptive that the company would need to be “bailed out” by the government to stave off the ensuing multiplier effect of economic hardship?
…
Lombard Street driving fast downhill or the Mad hatter ride… I think I am going to hurl.
What is going on with this market? Over 200+ Over 10000…
I am really getting quite dizzy with all this.
What is going on?
V’ers vs U’ers
Mauldin.
Why” many ask, “is the stock market going up when the bond market is telling us the recovery will be tepid? Isn’t there a disconnect?” And the answer is that there is, and this week good friend and fishing buddy Paul McCulley of PIMCO fame discusses that very topic with his usual insight and wit. He poses the conundrum that those expecting a “V” shaped recovery have pushed risk assets up quite high, and that the real risk to their position is that they in fact get a “V” shaped recovery. And yet, they could go higher and into bubble territory.
For the policy wonks among you, I offer a link to a recent paper by the Cleveland Fed, which suggests that the Fed could hold rates lower for far longer than we would think normal. Which makes What Paul writes even more important to understand. http://www.clevelandfed.org/research/commentary/2009/0809.cfm
INTO bubble territory??
Isn’t the S&P P/E still around 140?
Infectious Greed
Finance and the Money Culture
Fed’’s Hoenig: “Too Big Has Failed”
By Paul Kedrosky · Friday, March 6, 2009
This is important dissension in the reserve system ranks. Here is Kansas City Fed President Thomas Hoenig explaining why current bank policy has failed, and why we’re already nationalizing banks, but doing it wrongly.
We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions. … We have been quick to provide liquidity and public capital, but we have not defined a consistent plan and not addressed the basic shortcomings and, in some cases, the insolvent position of these institutions.
We understandably would prefer not to “nationalize” these businesses, but in reacting as we are, we nevertheless are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis.
Read the whole thing. It is highly recommended.
How long will it take the message about the failure of too big to trickle up to the likes of Bernanke, Geithner and Summers? Or will they pretend to stay in denial forever?
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James Kramer: Too big to fail has failed
By James Kramer / Altura, Minn. | Posted: Tuesday, October 20, 2009 12:15 am
If we have learned anything from the recent devastating financial crisis it’s this: Allowing financial institutions to become too big to fail, regulate or manage is a failed policy.
And if we are to create lasting reform of our financial system, the corporate giants that almost wrecked our economy must be held accountable.
Fortunately, there are a number of reforms we can implement to help protect against the risks these mega-institutions pose to our economy.
Legislation pending in Congress would require the nation’s largest banks to pay higher premiums to the Federal Deposit Insurance Corp. to compensate for the increased risk of insuring them at a time when deposit insurance is a critical safeguard for bank customers. This additional premium would provide the FDIC with greater resources to protect both depositors and taxpayers.
The bill, introduced in June by U.S. Rep. Luis Gutierrez D-Ill., also would require these financial giants to pay their fair share of deposit insurance dues by basing fees on total assets, not deposits.
This would more fairly fund the deposit insurance system and more appropriately account for an institution’s risk to the FDIC.
Community bankers like me are focused on holding deposits and making loans in our communities, not taking dangerous risks on Wall Street.
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