Another Recession; More Of The Same
Readers suggested a topic on current economics. “Is the double-dip recession outside the realm of possibility at this point? I guess the answer depends heavily upon whom you ask. However, this statement is patently lame: ‘If we were going to have another recession, it would have been in the summer,’ when Congress was debating the debt ceiling amid the growing Greek debt crisis and market effects from Japan’s earthquake, she said. In fact, that might be exactly what happened. ‘They may revise figures and say we had a decline in the summer,’ Ms. Rossell said.”
“The problem, Ms. Rossell, is the labor market is an oil tanker, and oil tankers don’t exactly turn on a dime, as you suggest they do. And which ‘they’ is it she thinks causes recessions to either happen or not happen in the past?”
A reply, “Economists like to ignore the bottom line of the ledger. The economy is flatlined at best according to the Ministry of Truth. Debt continues to mount. The wealth of the nation continues to drop. Is there a limit to debt? Anywhere? The next financial ‘crisis’ will be when some significant entity somewhere refuses to issue or accept more debt. It will be ‘unexpected.’”
“Pelosi was right about saving life as we know it through debt. If the US Gov stops accumulating debt, or even stops accelerating, it’s Game Over.”
“If you recognize that the primary decline never ended, but was only masked by debt, then the question of ‘will there be another decline’ is kind of like asking if a burning house will catch fire again.”
The Gazette. “The Colorado Springs area economy will fall back into a recession with the rest of the nation next year as a result of European debt problems, according to a new forecast. A weak housing market that hasn’t recovered, a downturn in manufacturing and continued acrimony over the federal budget and deficit also will help trigger a double-dip recession, which is back-to-back downturns separated by a brief and tepid recovery, said Tom Zwirlein, director of the Southern Colorado Economic Forum.”
“When you add all of that to the bigger problems going on in Europe, it is not hard to see a recession coming,” Zwirlein said, who said in the forum’s written forecast that another recession is the ‘most probable scenario for both the national and local economies.’”
“Another local recession would seem like more of the same for many residents as the area’s economy has never really recovered from the downturn that began in 2008. Unemployment hit a record 10 percent earlier this year before drifting back to 9.6 percent in August. Payrolls rose slightly early in the year for a few months, but resumed a decline in April that began in 2008. Local housing prices were temporarily stabilized by a special federal tax credit last year, but resumed falling after the credit expired.”
“The area’s unemployment rate likely is closer to 15.5 percent when those who gave up looking for a work are included in the calculation, and the rate would be higher still if it included those working in jobs for which they are overqualified, Crowley said. The forum estimates in its written forecast that about 24,000 residents have given up looking for work.”
From Bloomberg. “Federal Reserve Bank of Dallas President Richard Fisher said that while too many Americans remain unable to find jobs, central bankers have done as much as possible to shore up the labor market without sparking inflation. ‘There are limits to what a central bank can do,’ Fisher said during a speech. ‘We can provide fuel, but we cannot provide incentives for those who create jobs’ to ’step on the gas pedal.’”
“The so-called Operation Twist is not an ‘effective way’ to deal with the economy right now and fiscal authorities, not the central bank, ‘are the problem,’ Fisher said in response to audience questions after his speech. He called lawmakers’ attitude toward U.S. fiscal issues ‘disgraceful,’ and said further monetary accommodation would only encourage Congress to do less.”
The New Zealand Herald. “In Japan they call them freeters, an amalgamation of “freelance” and the German word for workers arbeiter. The Tunisians opt for hittistes, a slang Arabic phrase which roughly translates as people who lean against walls. In Britain they prefer NEETs, the term used to describe the depressingly swelling ranks of our young who are not in education, employment or training.”
“‘The 1980s recession was a generational disaster and there is a major risk of it happening all over again,’ says Richard Exell, a labour market expert at the Trades Union Congress. ‘Whatever interpretation economists might have as far as ordinary people are concerned, we are already in a double dip recession and young people are clearly one of the groups bearing the brunt of it.’”
“One only needs to look south and east of the Mediterranean to see what the end result of endemic youth unemployment can be.”
“The revolutions that have swept the region were largely led by shabaab - self-identified youth movements who were fed up with their lack of prospects in an area of the world where unemployment for their age group rests at 24 per cent, according to the International Labour Organisation. Their anger, was exacerbated by the corrupt and despotic rule of their leaders.”
“Prime Minister David Cameron has insisted Britain’s recent riots had nothing to do with poverty. But numerous statistical analyses of the rioters have shown deprivation and a lack of hope played a key role.”
“…..self identified youth movements fed up with their lack of prospects….”
As a parent of three of these youths, and being familiar with the situations of many of their friends, I can tell you right now that the feeling is rampant among all of them, even in heavily red states. And speculation that they won’t notice because they are too busy playing Xbox, is Major League delusional.
Media propaganda has created high expectations among them. None of them fulfillable on $8/10 an hour jobs, or with $80K in school debt. Hell, most of them can’t cover the cost of transportation without the help of BoMaD.
Maybe it’s just me, but having several million tech saavy 18-30 year olds, with extensive shooting experience, is not a good thing to have within your borders.
The ones that truly know how to shoot and not be shot are in the employ of the Federal Government at this time.
Still, I love how the Corprorate owned MSM is going out of its way to portray the OWS protesters as a group of buffoons, druggies, commies and smelly hippies.
“The ones that truly know how to shoot and not be shot are in the employ of the Federal Government at this time.”
Nobody wins a shootout with the military. Soldiers have a conscience though.
Do a google search on Oathkeepers.
“Soldiers have a conscience though.”
Those soldiers with a conscience will be selected out.
…and replaced with drones.
Drones are being flown by CIA agents. They are paid not to have morals.
Soldiers have a conscience though.
I don’t share your optimism.
He’s talking about the Oathkeepers, who DO have a conscience. And it will be through the efforts of those and others like them that something decent will arise from the mess we’re in right now.
Anyone who lives in a military town, or who has served in the post-9/11 military, can tell you that there is no shortage of thuggish or lowlife soldiers, or officers who put career above all.
I agree Sammy….I have seen s distinct difference in the “attitude” of young police (and firefighters also) post 9/11…Its scary really…
http://www.youtube.com/watch?v=TH3kiaJ1-c8&feature=colike
Cops have long since forgotten any notion of “protect and serve” when it comes to the public.
Yeah, seems like thugs are attracted to jobs with guns, huh?
“…Nobody wins a shootout with the military….”
Tell that to Afghanistan.
“Tell that to Afghanistan.”
Those are guerilla tactics, and while effective, and would not be considered a shootout in my book.
My oldest is currently working in one of those type jobs you mentioned X ($10/Hr). She wanted to go to an expensive college for a fluff degree (photography) and I said not yet. What I meant was hell no. I will take her college money and apply it constructively to her future before I watch it pissed away at some glamour college. I have nothing against photography at all but to pay $200K for a degree is insanity. There are junior colleges for that and that is where she is going now.
A technical/science/law/MD degree at a top school would be viewed differently by me.
SV;
From a DJ and AZ slim will answer…You dont need college…just work for a DJ company who does weddings, photo and video…she will get paid a little probably get fed…and gain tons of experience from real pros.
Make sure she has her own name .com registered plus get the .org.net .info to lock it up all 4 is what $50 a year?
Plus maybe a business name?
Post lo res photos that cant be blown up to 8×10 and ripped off.. or watermark them
Lots of stuff she can do for very little money……a degree may get her into a major newspaer but since the NYT is cutting 20 more on top of the 100 this year….weddings are the key
You need to think fast on your feet…lighting, action anticipating being in the right place at the right time to get that perfect shot….
“technical/science/law/MD degree”
IMHO, those are the only degrees that really directly lead to a “better job”. Yes, going to college for a “soft” degree can open doors, but that’s all it does; you’re spending a lot of money to open doors that many simply do not need.
I went to college for engineering. The company I work for generally only promotes people with “hard science/engineering/CS” degrees to management level positions (although we do have lots of high paid non-grads), so, for me, my degree has absolutely paid for itself over the last few years.
I also went to a state college; my degree cost about 60K (including room/board), not the 200-250K that lots of kids today want to spend on a psychology/photography/literature/etc degree.
My middle kid loves animals. Got on with one of the chain pet stores, and they paid for her “dog grooming” training. She’s on commission now, and is doing okay. Dog owners are still paying to take care of their “fur babies”
The 18 year old doesn’t know what to do. Is not interested in math/engineering/doctoring, so she sees no point in going to college. So she works at the local BWW, serving beer and wings. Not much of a future in that. Needs the Bank of Dad to help pay her living expenses. She’s not dumb, and realizes that her and her friends are pretty well fooked, no matter what direction they go.
We’re heading toward a country with:
-A small ruling/monied class who run the government, and come up with different ways to make money separating fly $hit from pepper
-A “creative” class that designs stuff to be built overseas
-A a media/entertainment class to confuse/distract the serfs,
-A new class of “American-born Prussians” to protect the elite and to extract tribute from the serfs.
-A “servant” class to support all of the above.
Everybody else (80% of the population) will be the “wretched refuse”, whether they know it or not.
You left out the class of American investors in foreign stocks. Although for now it looks like large company U.S. stocks are now doing better relative to foreign stocks and small company stocks.
A colleague at work (software engineer) is seriously looking into moving some of his assets out of the U.S. Citing privacy issues. I was interested as well ten years ago. But I have changed my mind to stay where the legacy of no income tax, the right to life, liberty, and property was originally declared.
Because the next big thing that will happen is big cuts in government spending. The rest of you think there will be a bloody revolution before that. I’m not so pessimistic.
Science major here. I get more than $10/hour, but I get 1/2 of what I should be getting. Too many Chinese taking all those jobs.
My hairdresser had to pay $15k for haircutting school.
Photography is one of those degrees that might not have been “fluff” a few decades ago, because there would have been paid photography jobs out there, but now it is one of those gigs that technology and the internet have really cut into.
If you were going to be in the top of your profession as a photographer, previously you would have been an art photographer (good luck with that) or photographer for print publications, which of course are now dying. If you were at the bottom, you could have opened your own photo shop, but digital technology has killed that. There is still a middle ground of family portraits, senior photos, and wedding photography, but that is crowded field in a shrinking market, already saturated by folks who probably aren’t going to retire anytime soon.
I have a friend who is a photographer who has won some awards, had some high-profile exhibitions and work in publications, and has a good reputation as a photographer. She is currently tending bar.
Senior portraits is a growing market.
When I graduated high school it was 5 seconds sitting on a stool in front of a tarp.
Now a days they have location shoots, multiple outfits, etc.
SV–
One can learn the coursework on one’s own.
It’s not the degree you’re paying for, it’s the contacts you make while you’re getting it. In a field like photography, that “glamor” degree can be invaluable.
If you’re willing to put the money out for an MD (which is no guarantee of her making a decent living, btw,) why not support her in something she loves that will provide her– and maybe yourself– a lifetime’s worth of pleasure and creative expression?
They also serve who chronicle other’s follies….
It’s not the degree you’re paying for, it’s the contacts you make while you’re getting it. In a field like photography, that “glamor” degree can be invaluable.
Isn’t this code for “if you’re not the schmoozing type, it’s a *total* waste of time and money”? And if you’re a good schmoozer, do you *really* need college contacts to make it work?
Is it any different in astrophysics or neurobiology? If you want to work in any given field of endeavor, it’s a good idea to familiarize yourself with the players and their fathers-in-law, the jargon, the go-to money men, your potential colleagues, the history, the culture, etc. Yes, you can do this on the “street” but the concentrations are a lot denser when you’ve corralled them in an institution (and you can take that any way you wish…)
Whether or not this constitutes “shmoozing” (and whether or not it’s a positive ROI,) is up for debate, but the value of a Harvard law degree if you want to clerk for SCOTUS, or a BA from USC/UCLA film school if you want to play in Hollywood, is not.
Allena,
You are correct in stating it’s partially about the networking aspect of going to a good school. I just don’t see the focus on my oldest daughters part yet to open the money spigot. The money has already been set aside but even so I can’t bring myself to spend it until and if she gets serious.
My wife has some connections in the music biz. She was down in LA this past week for work and a few Foo Fighter shows. She has arranged, for the second time, a Press/Photography pass for my oldest so she can get some more practice. That with advice from some professionals my wife knows and we’ll see where it goes. We are trying to arrange a type of internship with one of her contacts.
DJ and everybody else, thanks for the advice. Slim would be a good resource too.
The Colorado Springs area economy will fall back into a recession
Did Springs ever emerge from the previous recession? Luck for them that the Air Force Academy is located there, or they’d really be up the creek without a paddle.
‘Local housing prices were temporarily stabilized by a special federal tax credit last year, but resumed falling after the credit expired’
It wasn’t that long ago that we were told housing leads the way out of every recession. The govt gave the banks lots of money, is propping up the GSEs, hoarding millions of houses, raised loan limits, handed out tax credits, and just look at the unemployment numbers.
Trillions of dollars, several years wasted. We used to consider the Japan bubble response. This is what it looks like. Here’s a message for policy makers; these mistakes can drag us into something that lasts for decades. Think about that; what if we are still in recession in 2021, or 2031?
That’s OK, we can all live on Wall Street. Bring a cot; no prob.
The problem, Ms. Rossell, is the labor market is an oil tanker, and oil tankers don’t exactly turn on a dime, as you suggest they do.
It sure can shed jobs on a dime. The Great American Layoff Machine should be patented, it’s incredibly good at what it does.
‘The Great American Layoff Machine’
You would think that with jobs being at the center of attention, some examination of what’s taken place the past few years would occur. What is the largest economic trend of the past 20 plus years? Globalism.
As the world went down this road, we’ve seen the system respond by creating huge amounts of “liquidity” every time the economies sputtered.
‘Fisher said during a speech…’We can provide fuel, but we cannot provide incentives for those who create jobs’ to ’step on the gas pedal.’
No one can print true lasting wealth, or jobs. All this “fuel” has done is create bubbles. It’s important to recognize just how large the real estate bubble is: It’s difficult to locate a place on the globe where real estate is reasonably priced.
The resulting distortions are gargantuan. But to say lower RE prices will solve all problems is missing the globalism issue. Where are the middle class Mexican, Chinese masses that were supposed to be buying our…
Well, we don’t have anything to sell them do we? Even if these middle classes existed, which they don’t.
It wasn’t that long ago this country didn’t enter into broad trade deals with dictatorial countries like China. Or low wage polluters like Mexico. And we sure didn’t have trade arrangements that never end, like the World Trade Organization.
You would think that with jobs being at the center of attention, some examination of what’s taken place the past few years would occur.
Nah, what you do is you blame everything on “union goons” while you continue with the looting.
Globalization was never about “lifting boats” and “creating a Chinese middle class”.
It was about wag/labor arbitrage, pure and simple. With the infrastructure that made it possible being paid for (unwittingly) by J6P, US American.
Make a product that costs $10 retail and uses $5 of US labor, outsource it to China/wherever and still sell it for $10, but the 50 cent an hour labor doubles your profits.
Like a lot of other decisions made by our doofus management class, this works for a while. At least until your customers can’t afford your product anymore. But being a seperate subspecies of Vampire Squid, the health of the US economy didn’t matter, because they would be swimming on the beach in Fiji by the time it happened.
Any idiot could see what was going to happen. Just ask Ross Perot (not an idiot).
Any economist who said that globalization would be good for the economy is either an moron or a whore, or maybe both.
‘Any economist who said that globalization would be good for the economy is either an moron or a whore, or maybe both.’
You’d be hard pressed to find an economist in the MSM that will say anything against globalization. It’s a bizarre situation; here we are, with higher unemployment than any time in modern history, and it’s almost an unmentionable topic!
‘this works for a while. At least until your customers can’t afford your product anymore’
This is about where we are at. And it raises another matter I mentioned above: if these bubbles are at least a partial result of govts/central banks masking economic problems, how about China’s RE bubble? It isn’t talked about much, but China had a larger stimulus binge than the US a couple years back. If they are such a powerhouse, why do they need these things?
I don’t think globalism has done much good for anybody, even these export/off-shoring countries. It’s a race to the bottom and the bottom isn’t looking too good right now.
Nobody in the PTB will admit they made a mistake. So they deflect attention to the effects, and ignore the root causes.
The root cause of most of our problems is that Middle Class wages and salaries have been stagnant for a generation, while their costs have been increasing. The housing bubble and associated credit bubble are an effect.
Why? Because the idiots/robber barons that run business in this country are able to run the game of “Global Wage Arbitrage” unchecked by either conciense, patriotism, or law. Selling out their brother/neighbor meant more money in their pockets, so they did it. Many others were forced to do so, reluctantly, to stay in business.
Of course, they are all realizing that there is no such thing as “intellectual property” in China, so they are now finding themselves in competition with state-sponsored enterprises.
China doesn’t care if their competitors/trade partners collapse. In their opinion, their rightful place as rulers of the world has been suppressed by all those western democracies, and if a little political turmoil is created in them, this will only serve China’s interests.
Can’t blame them for wanting to do what’s the best for China. I just wish we had a few politicians and business leaders who would do the same thing here.
Unfortunately, our high government officials are whores to the globalists, because they are either taking campaign money from them, or plan on earning a pile of money from them when their government work is done.
Economists seem more like cheer leaders for what ever political regime is currently at the helm.
There is NO doubt IMO that cheap international labor is at the heart of our current economic situation.
You’d be hard pressed to find an economist in the MSM that will say anything against globalization.
Like Ive said before, it’s like a matter of religious faith. Evidence and reason have no place in the discussion. And these are the economists who aren’t paid shills for the 1%’ers. The shills are simply bought and paid for.
My pencil sharpener was destroyed by a leaking battery. Yesterday I tried to replace it (had coupon from Staples that could be used with no minimum purchase amount). Every one was made in China and most were about double the cost of the one that was destroyed. Fortunately, there was one hand cranked one with a vacuum mount that was a bit cheaper. Flimsy compared with the hand cranked ones I remember from my grandfather’s office, but at least it won’t be destroyed by a leaking battery.
I once had an electric razor made in Germany. It worked great for many years, but eventually the thin metal part that touches the skin wore out. The only place I could find parts were at Wal-Mart. I discovered I could get a new razor of the same brand for less than this tiny replacement part. The new razors were made in China.
That original razor will probably last a lifetime. The Chinese made razors felt like a flimsy toy in comparison.
Any attempt to discuss Globalization immediately gets dismissed with a cry of “Smoot-Hawley”.
Well, guess what folks, the Depression is here and free trade hasn’t helped us.
Sadly, this time, we are at the mercy of the Chinese.
Globalism isn’t free trade. It’s managed trade between corporations, usually really big corporations.
I used to live on the TX/MX border. I looked into becoming a NAFTA import/export agent. The tests are complex, with thousands of pages of regulations covered. The system is set up to where Joe/Jose 6 pack can’t afford to get involved. Only deep pockets can play the NAFTA game.
A real free trade agreement would mean you or I could negotiate with someone on the other side, come to some arrangement and make deals. It could be small or large. Sure, there would be rules, but not vast economic hurdles like these. So think what ever you want about free trade, but what we have with NAFTA and the WTO isn’t free trade.
“…It’s managed trade between corporations, usually really big corporations….”
Shares of which can be bought and sold on American exchanges by American investors– the dividends of which accrue to those self-same Americans, their pension funds, their capital markets, and their own private accounts.
Then there are the American employees who make their living buying, selling, distributing, maintaining, managing these goods– in country and abroad.
And herein is the point. (Devil’s Advocate, here.)
While global trade policies may not allow US to maintain the top-of-the-ladder standard of living we’ve enjoyed over the last five decades, they HAVE allowed those on the bottom rungs to advance a few steps towards the middle. And those reciprocal markets invest a good percentage of that money here in the US. (Toyota, for example. Or Siemans. Or COSCO, for that matter.)
In the short term, we Americans suffer from the money drain as our citizens avail themselves of cheap, poorly-made goods (some of us remember when “Made in Japan” was a synonym for flimsy or junky,) and the relative value of our labor falls to a more realistic level on the world market.
But when one considers the price of maintaining that artificial disparity (wars, social welfare for those whose income levels more closely mimic the actual world value of that labor, loss of similar industries because of the expense of price supports and subsidies,) the relative value becomes apparent. As our expectations fall, so will our expenses for maintaining them. (McMortgage slavery, anyone?)
The US will be drawn kicking and screaming into the world economy– and it won’t happen in one generation– but we WILL eventually adapt to this new reality. Our technologies have seen to it that inequalities will be addressed– they also promise to allow us to live better lives for less money.
We’ve all seen what happens when we try to isolate our pay scales and use the rest of the world as our colony–we price ourselves out of a job. (Cue anti-unionists here.)
In the long term, that more equitable wealth distribution will benefit American investors and workers alike as new markets open and the disparities even out in favor of the whole planet– not just a lucky few inhabitants who had the good fortune to be born in a specific nation at a specific time, and whose labors, while good and valuable, are in reality of no more or less intrinsic value than those of any other citizen of the planet.
But in the meantime, it’s a real PITA for those of us stuck here in the trenches trying to figure out which end goes where.
“Globalization isn’t free trade.
…
Only deep pockets can play the NAFTA game.
A real free trade agreement would mean you or I could negotiate with someone on the other side, come to some arrangement and make deals.
…”
Many thanks for clarifying these distinctions. Now I know for sure that I, too, am not a globalist.
‘allowed those on the bottom rungs to advance a few steps towards the middle’
In the mid-90’s I had a job preparing taxes. One of the clients was a woman of modest means who had developed a business where she traveled into Mexico and stayed for half of the year in a small town with a lot of artisan types. She would buy hardware, like door hinges, door knobs, that were locally hand made. Nice stuff. Then she would come back to the states and spend the next six months selling these things. I know because I did her taxes that she made a middle class income doing this.
What she was doing was probably illegal, as she drove the goods back and didn’t have a license or use a NAFTA broker. The brokers fees alone would have made the venture unworkable. But it was voluntary on every ones part; the producers got paid for their work, the consumers got a quality product. That’s closer to what free trade would look like.
There are forests in Mexico that have been 40% clear cut since NAFTA started. Pollution regulation laws are still almost non-existent. I saw an article on Al-Jazerra of all places, where the Mayor of Juarez said his city was a great place for business because the pay was lower than in China.
Why not ask the people in Mexico what they think of the WTO?
‘In September 2003, the World Trade Organization held its ministerial meetings in Cancun, Mexico. Mexican law enforcement officials were expecting a repeat of the riots that marked the 1999 WTO meeting in Seattle and picked Cancun because it was easy to defend. The meetings were held in the tourist district, which is accessible by only two roads - one from the north and one from the south. Police barricaded the roads and only let credentialed participants past the barricades.’
http://kurtzjack.photoshelter.com/gallery/G0000wt0SSCqEj7o
‘At least 100 members of the group Anticop conducted a demonstration in the downtown zone of Cancun in order to protest the Climate Change Conference. The march ended at the Federal Evironmental Protection offices. The federal agency was protected by heavy security. The riots were integrated by members of the Mexican Federal Police.’
‘In a conversation with an activist, whose name Pulsar omitted for security reasons, he explained that their protest was “to denounce the shit that politicians do.”
http://www.argentinaindependent.com/currentaffairs/newsfromlatinamerica/mexico-anti-globalisation-marches-in-cancun-/
‘Cancun itself is one of the world’s most dramatic showcases of the gross inequities of the global economic system. The WTO–the controversial agency that sets the rules of international trade–certainly didn’t intend it to be this way. But when the demonstrators are asked by reporters why they’re rallying and marching, they’ll be able simply to point to the city around them. “Cancun is a prime example of a type of foreign investment and a type of development without any rules to protect the work force, the environment, or to guarantee public services,” says Fernanda Castejon of the Mexico office of the antihunger group Oxfam. “Cancun is everything that should not be done when it comes to economic models. If the goals of an expanded WTO are ever achieved, the world will be full of Cancuns.”
http://www.commondreams.org/views03/0905-10.htm
WTO is to world trade as Wall Street is to free markets.
Both are in the process of being preempted and redirected, if current global populist movements are any indication.
At some point globalism will stabilize. Unfortunately it could be two generations for Americans as long as we keep spending $billions in foreign aid, insist on Wilsonian policies to “make the world safe for democracy,” continue to station hundreds of thousands of U.S. military overseas, and conduct wars that are on foreign soil. And as long as we continue having NAFTA and no tariffs.
Otherwise if all those burdens on the middle class taxpayer disappear, I betcha we will be much more stronger than Chindia in half a generation!
‘At some point globalism will stabilize. Unfortunately it could be two generations…if all those burdens on the middle class taxpayer disappear, I betcha we will be much more stronger than Chindia in half a generation!’
This isn’t how globalism was sold to us. Imagine if I proposed a trade policy and said, ‘this is gonna work out great, but it’s going to take two generations for us to realize the benefits.’
How many would go along with that?
“…’this is gonna work out great, but it’s going to take two generations for us to realize the benefits.’
How many would go along with that?….”
Well, Americans signed a binding document and fought a revolutionary war based on that concept.
Human beings are hard-wired to make sacrifices on behalf of their future progeny. Of course, most of us can rationalize our way out of that propensity when we confront the harsh reality of actually doing so….
Globalism will stabilize much sooner than 40 years.
There is no way the US can continue along the way it is going for the next 40 years.
I think the shiat will hit the proverbial fan in the next 5-10 years.
Don’t worry, Ben - economists are going to adopt a “code of ethics” any day now (har har):
http://online.wsj.com/article/SB10001424052970204294504576613032849864232.html
I somehow doubt that changing one’s mind when the facts change is going to be a core plank of this ethical platform. Keynes wouldn’t make it as an economist today, what with his pesky desire to incorporate actual facts into his views…
Dean Baker thinks that it is almost impossible to go back into recession because that is almost always led by a huge decrease in car and house sales and neither is high enough right now for there to be a huge decrease. He doesn’t think that the decrease in spending by government is enough to lead to an actual contraction of GDP for two quarters in a row.
That being said, who cares? A huge recession followed by almost non-existant growth feels like a recession that has never ended when you are a worker bee.
I have been sick this week. Really bad cold that morphed into something worse. I have a pretty good drug program as part of my health insurance. The inhaler and the other stuff was over $93. For one person with tight breathing and hugely swollen throat and nasal tissues and possibly a secondary infection. The doc gave me samples for what he could, and it still was almost $100. No idea what it would have been without the insurance. Can you imagine being the person for whom that sort of expense means no groceries for the week? I can. My parents’ volunteer with those people all the time. The last time it happened, I ignored it and got better on my own, but it took over 9 months.
Feeling much better now, thanks.
The inhaler and the other stuff was over $93 ??
Its just the beginning…There are going to be some extremely difficult choices to be made on whether or not we, as a nation, are going to care for the elderly and everybody else for that matter…20 years from now, I suspect, we may see that the life expectancy age has fallen…
The inhaler story is interesting–most of the old asthma inhalers were generic and cheap as dirt a few years ago, but they contained chlorofluorocarbons. Every company needed to reformulate the medication in order to remove the CFCs from the inhalers, and voila! Every old cheap inhaler is now a brand name that costs at least 60 bucks.
During my oh-so-recent 21 months of un/under-employment, I had to pay for my blood pressure and cholesterol meds out of pocket.
$400 bucks a month. And one of the blood pressure meds was a generic.
I have a prescription plan now. With the home/pharmacy by mail deal, it’s still $300 every three months.
As noted before, with my family history of Alzheimers, I’m going for the “early stroke/heart attack/set the old coot adrift on an ice floe” retirement plan.
“As noted before, with my family history of Alzheimers, I’m going for the “early stroke/heart attack/set the old coot adrift on an ice floe” retirement plan.”
Shouldn’t you stop taking the cholesterol-lowering drugs then??
Dean Baker thinks that it is almost impossible to go back into recession because that is almost always led by a huge decrease in car and house sales and neither is high enough right now for there to be a huge decrease.
Now watch car sales tumble to less than 9 million. They just can’t bring themselves to admit that 12 million is the new high water level.
A huge recession followed by almost non-existant growth feels like a recession that has never ended when you are a worker bee.
Yup
The doc gave me samples for what he could, and it still was almost $100. No idea what it would have been without the insurance. Can you imagine being the person for whom that sort of expense means no groceries for the week?
Just wait until everyone (who has insurance) is on a high deductible plan. My guess is that your meds cost $300 or more. For someone on an HD plan the whole thing would cost $400+ when you factor in the doctor’s visit, even more if tests are required. So these people will “tough it out”, which means going to work when they are sick and possibly ending up in the ER if they don’t improve.
The only thing propping up car sales in Government Motors’ subprime lending to credit-challenged car buyers. Most of those loans are going to end up being covered by the US taxpayer.
The only thing propping up car sales in Government Motors’ subprime lending to credit-challenged car buyers. Most of those loans are going to end up being covered by the US taxpayer.
obamamotors - phase II
So Ford, Chrysler, Toyota, Nissan, Honda, Hyundai, Kia, etc. sales are being propped up by subprime GM loans?
No. Toyota, Nissan, Honda, Hyundai and Kia are subsidized by their own governments. It’s a fact. Research it if you don’t believe me.
The mere suggestion they’re “competition” is laughable. Level the trade playing field and/or subsidize domestic manufacturers and we will bury them.
Toyota, Nissan, Honda, Hyundai and Kia are subsidized by their own governments.
That’s the point I was trying to make to the claim that “Obamamotors” was “propping up the market”. That’s kind of hard to do when you only have a sliver of it.
Polly probably would have eventually gotten better on her own, although the inhaler, etc will make life a lot more pleasant in the meanwhile. People don’t usually end up in the ER for a cold. If Polly had no insurance and no money, then there would be a doctor in DC with one fewer patient, and perhaps an impending sale on services.
My local GP seems to have a lot fewer patients these days, but he charges as much as ever.
Then there’s all the MDs who are threatening to not see Medicare and Medicaid patients because the gov’t wants a discount. The last thing the medical industry will do is discount their products and services.
Yes, it is the last thing that they will do.
IMHO, going forward, your health is going to be one of your best financial assets.
Costs for drugs related to obesity will continue to rise mainly due to demand.
If you’re looking for an investment opportunity, drug companies producing these drugs might be a way to go.
Oh, I find that washing my hands whenever I enter my home has helped keep me from getting sick since 2007.
Hope you feel better soon Polly. Always enjoy your posts.
Hi RER:
Glad to see you’re still OK.
Can you imagine being the person for whom ($93) means no groceries for the week?
“No, I can’t ever imagine being that lazy” H. Cain
Sorry you’ve been sick, Polly. Glad you’re feeling better!
Thanks, Griz. When you have a 7 year old with a drippy nose stay in your house over a weekend, you end up catching stuff sometimes. The cold I expected. The rest was just an unfortunate bonus.
American Funds’ Flagship Loses Top Rank as Investors Abandon Stock Pickers
By Christopher Condon and Charles Stein - Sep 27, 2011 9:01 PM PT
Growth Fund of America has lost its status as the largest U.S. equity mutual fund, the latest sign investors are turning away from its tradition of picking stocks. Photographer: Andrew Harrer/Bloomberg
Chart: Link to chart
Growth Fund of America has lost its status as the largest U.S. equity mutual fund, a position it held for six years, as investors are turning away from Los Angeles-based parent Capital Group Cos. and its tradition of picking stocks.
The $139 billion Vanguard Total Stock Market Index Fund last month overtook the $137 billion Growth Fund of America, whose $3.3 billion of withdrawals in August were the most of any fund, according to data from researcher Morningstar Inc. (MORN) Investors pulled $73 billion, or 8.6 percent of the money held by American Funds, in the 12 months ended Aug. 31, the heaviest proportion among the 15 biggest fund families.
“We’re in an environment where stock pickers haven’t been adding value and American Funds is a case study,” Geoff Bobroff, a mutual-fund consultant in East Greenwich, Rhode Island, said in a telephone interview.
Money is flowing out of mutual funds whose managers choose domestic stocks for a record fifth straight year as shareholders and advisers question whether it is worth paying them to try to beat the market. The firm, which has resisted offering lower- cost index funds, has been plagued since 2008 by performance it calls disappointing, including poor returns for the large- company stocks that are its specialty, and by an investor preference for bond-fund managers.
American Funds, whose redemptions are rising for the fourth year in a row, is altering its marketing while keeping its investment process intact.
…
American Funds are “sold” while Vanguard funds are “bought”.
If you walk into a broker’s office wanting to buy a mutual fund an American Fund is probably what you will be sold. That’s because commissions for the fund are very high and brokers get a big chunk of these high commissions.
As for Vanguard funds? Vanguard funds are no-load, thus there are no commissions, no incentive for the broker to sell you the fund.
My company switched my 401k large company growth fund out of RGAEX (Growth Fund of America) which I was happy with, to PABGX - T Rowe Price’s Blue Chip Growth. I was bewildered at first, then I became happy with PABGX. $150,000 worth pulled out of American Funds.
Still have a good stake in REREX though.
Live long. You have mastered the prosperity through your diligence and flexibility.
I hope we live long enough to enjoy the diminishing fruits of our labor.
Question for the HBB.
I’m doing my best to educate my (typically Republican Tea Bagger) friends/family members that “low life Subprime borrowers” aren’t the root cause to this mess the country is in.
Any recommendations for links that explain the Big Picture, and how Wall Street lobbied Congress to pass and/or repealed laws that enabled the credit/housing bubbles?
(the housing bubble would never have happened without a credit bubble, IMO)
Any links explaining how Congress gave business incentives to outsource, besides the usual “too much environmental/labor protection/worker safety” excuses?
If your friends voted for Obama, McCain, or any other corporatist-owned Republicrat, they are part of the problem.
1. Drop the attitude
2. Google who ran Freddie and Fannie
3. Google Barney Franks and Chris Dodd and “VIP” mortgages
4. Google Janet “no loan is exempt, no bank is immune” Reno and the CRA
1. Drop the attitude
2. Google who ran Freddie and Fannie
I just ran the math with links on my post at 13:37:30 2banana. The math. The math trumps your or my politics. The math. You will ignore the math because it does not fit in with your rigid agenda but math is math and it is math that has spawned OWS. The math will not go away no matter your ignoring of it.
Re-read my post and tell me how 2% of the US housing market being in arrears could cause such a massive downturn. You can’t, I can’t and it can’t.
“Prime” is apparently the problem. “Prime” wasn’t actually prime. The assumptions were all wrong. The primest of prime was sub sub prime. Calculations don’t capture that sort of error.
why is everyone still answering 6bana*? everyone already realizes that his postings are troll inspired, fox rehashed, really out of wack, etc. can we stop wasting bandwidth with him. ignore him.
1. Drop the Lies
2. Google The Low DownPayment Act
3. Google The Now Down Payment Act
4. Google foreclosure rates in areas subject to CRA compliance
You’re going to be embarrassed. Once again.
Tutti Fruity is a 14-year-old boy. He makes these comments just to see how people will react, and he is charting it. He is doing this for the sake a research paper so he can get an A in his sociology class and go to a good college. I tell myself these things because otherwise I would die of an aneurism every time I read one his posts. The deaths would occur over and over again.
The best advice I can give you is to save your breath. I was raised in a family of Repubs, grew up in a red state, and most all of my friends growing up were Repubs. Facts don’t get in the way of their “feelings.”
Sad but true.
Instead of trying to convince them, I suggest reading “The Authoritarians” by Bob Altemeyer (available free online as an e-book - just google it) to understand their mindset. Then at least you will see how trying to convince them is largely a futile effort.
Somebody here a long time ago recommended that…I checked it out, it was definitely interesting.
I find it easier to just nod in agreement.
And when life jumps up and bites them in the ass, I just say, “huh, who would that would happen”.
You just described life w/Dad.
fixer, it is always a mistake to attempt to educate folks you love on subjects that they have set their minds upon.
in my case almost all of them are simply looking for confirmation of their beliefs, or trying to recruit you to their ideas. what a waste of my bandwidth.
“…almost all of them are simply looking for confirmation of their beliefs…”
That explains why many Retardicans proudly refer to themselves as ‘ditto heads.’
Thank God all the retarded offensive trolls are Republicans. It’s all contained.
“in my case almost all of them are simply looking for confirmation of their beliefs, or trying to recruit you to their ideas.”
I found this “debate flow chart” awhile back on an atheist website. It was supposed to be about discussing religion or the lack thereof with theists, but I find it helpful to keep in mind anytime you are about to get sucked into an argument, with either loved ones or trolls.
I really like the first step:
“Can you envision anything that will change your mind about this topic?”
—-> If No:
“This is not a discussion, I will not talk to you about this topic.”
Saves a lot of time!
http://atheismresource.com/wp-content/uploads/Debate-Flow-Chart1.jpg
1) This crisis is caused by loans going bad, mortgages in particular.
2) Why would lenders make so many loans they weren’t concerned with having paid back? Because they have been separated from repayment risk. They make money on selling the loans, not getting interest from them.
3) When did lenders start being able to separate themselves from repayment risk? The 70s, with the start of securitization.
And finally, watch “The Inside Job” documentary.
One more link: http://www.factcheck.org/2008/10/who-caused-the-economic-crisis/
educate my (typically Republican Tea Bagger) friends/family members that “low life Subprime borrowers” aren’t the root cause to this mess the country is in.
Now these are rough figures but explain the math. More or less, only 14% of mortgages are subprime.
Some 80 percent of outstanding U.S. mortgages are prime, while 14 percent are subprime and 6 percent fall into the near-prime category.
http://dallasfed.org/research/eclett/2007/el0711.html
Of that 14% about 20% are in “default”. 20% of 14% is about 2.8%. This does not include paid off houses which is about 30% of them. When we include those, subprime defaults represent about 2% of the US housing market. Ask you friends how 2% of the US housing market being in arrears could cause such a massive downturn. It can’t.
http://www.chicagofed.org/webpages/publications/profitwise_news_and_views/2010/pnv_september2010.cfm
math numbers to them are subjective figures, they mean nothing. i am amazed myself how the were convinced to plug all avenues of rational arguments. to think that most of them are well educated with college or advance degrees in sciences.
I’m thinking it’s time to set the reset button on the global financial system and start over with a better one.
It appears lots of folks around the globe agree with me.
‘Occupy’ protests spread across the world
15 October 2011 Last updated at 06:12 ET Help
Occupy Wall Street protests have spread to cities around the world, as demonstrators demand reform of the global financial system.
The movement in New York City gained momentum in the past month and protesters have taken to the streets on Saturday, decrying big business and income inequality.
Thousands have protested in Sydney, Tokyo, Hong Kong, Athens, Berlin, Rome and London.
With the recent videos of defenseless women being attacked for no reason on the streets and sidewalks of New York, I’m thinking OWS just got a lot more popular.
I mean attacked by cops, not attacked by protestors.
9/11!
Global economy likely to have worsened, says Lagarde
15 October 2011 Last updated at 12:48 ET Help
The finance ministers of the G20 leading economies have ended their discussions on ways of fixing the eurozone’s debt crisis, and its threat to the wider global economy.
The head of the IMF, Christine Lagarde, who attended the meetings, said the world economic outlook had worsened since the IMF made detailed economic forecasts last month.
15 October 2011 Last updated at 13:57 ET
EU summit ‘will be decisive’ on eurozone crisis
A European Union summit later this month will agree “decisive” measures to tackle the eurozone debt crisis, the French finance minister has said.
The summit would give “clear answers”, said Francois Baroin at the end of talks between ministers from the G20 group of nations in Paris.
He said central banks “would continue to supply banks with liquidity”.
The G20 statement also said ministers were “committed that the IMF must have adequate resources”.
The G20 meeting came amid continuing fears about the EU’s debt-related problems spreading.
The US has expressed particular concern about the threat to its economy.
US President Barack Obama and German Chancellor Angela Merkel spoke by phone on Friday to discuss the crisis.
The head of the International Monetary Fund (IMF) Christine Lagarde said emerging economies - whose growth helped support the world economy during the global crisis - are starting to be affected by weaknesses in the advanced economies.
“The main thing is that the situation has got worse rather than having improved over the last three weeks,” she said.
“We heard a lot from the emerging markets that they are very concerned about the risk of contagion,” Mrs Lagarde said.
‘Contagion’
…
“He called lawmakers’ attitude toward U.S. fiscal issues ‘disgraceful,’ and said further monetary accommodation would only encourage Congress to do less.”
So should we expect the Fed and the Congress to engage in a staring contest, whilst the economy crashes and burns in the background?
They are just fine with Main St. burning to the ground.
They could at LEAST arm wrestle for it, donchathink?
Very interesting article.
1. Builders and realtors going into the solar-power systems business. If that does not say bubble, I don’t know what else does.
2. Half or more of your mortgage payment is property taxes?! Go OWS! Go public unions! Fight the power! Don’t move my cheese.
—————————–
South Jersey home prices have taken big hits
By Alan J. Heavens - INQUIRER REAL ESTATE WRITER - October 16th, 2011
South Jersey home prices have taken one hard punch to the kidneys after another from the bruising economy.
And in all but 17 of the 98 municipalities in these counties, median home prices at the end of this year’s second quarter were less than they were in 2005 - from two or three percentage points in Tabernacle, Collingswood, and East Greenwich, to almost half off where they began in Lindenwold, Magnolia, and Willingboro. (Median is the middle value: Half the homes sold for more; half sold for less.)
“From the beginning of the boom in 1998 to their peak, house prices rose an average of 80 percent in the South Jersey counties and rose by 77 percent in the Pennsylvania counties covered by our data,” said economist Kevin Gillen, vice president of Econsult, who collected and analyzed the sales data for The Inquirer.
But since 2007, Gillen said, house prices have fallen by an average 29 percent in those South Jersey counties, while dropping only 18.7 percent in the Pennsylvania suburbs.
“So the combination of a larger economic downturn combined with greater overleveraging by homeowners has led to greater price declines in New Jersey,” he said.
Subprime and “exotic” mortgage financing during the mid-decade housing boom amplifies pressure on homeowners during an economic downturn like this one by subjecting them to higher mortgage payments and/or greater negative equity, Gillen said.
At the peak of the lending boom in 2005, he said, 16.4 percent of all mortgage loans originated in New Jersey were subprime, compared with 13 percent in Pennsylvania, according to federal data.
But property taxes generally are higher in New Jersey than in Pennsylvania and Delaware, often half or more of the monthly mortgage payment, Herling said, and buyers weigh that when considering what to spend for a house.
“It affects the prices we can get for the homes,” Sandra Levenson, an agent with Prudential Fox & Roach in Cherry Hill, agreed. “Everyone is concerned with what their monthly payment will be.”
Armed with knowledge of the market’s realities, Gary Schaal, 61, who worked for several builders in a nearly 40-year career, has just put up for sale the Voorhees house he bought in 1978.
“People say it is the wrong time, and I realize that I probably won’t get the money out of it that I put into it,” said Schaal, now in consulting and sales of solar-power systems.
Go OWS! Go public unions! Fight the power! Don’t move my cheese.
If you want to believe that OWS is about preserving the mythical 200K pensions you keep yammering about, be my guest. Most people are just fed up with how every job is being offshored while the Banksters get bailouts. That a cop gets a pension is the last thing on their minds.
BTW, we have very low taxes and civil servants are paid modest salaries in the Centennial State, and we have protestors here too.
Those sure are a lot of unrelated ideas you have thrown into that there basket of yours, Tutti Fruity.
Oct. 16, 2011, 9:00 a.m. EDT
U.S. economy: A story of fits and starts
Latest batch of data likely to reflect see-saw pattern
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The U.S. isn’t sinking into recession. Great.
Yet the economy isn’t getter much healthier either. Sure, recent data suggest third-quarter growth was better than expected, but the expansion is occurring at a glacial pace. Millions of jobless Americans are unlikely to find work soon and beaten-down investors can’t expect much relief.
Say hello (again) to the start-and-stop U.S. economy.
“Some months you get a pickup, some months you get a dip,” said Steven Ricchiuto, chief economist of Mizuho Securities. “We have an economy that cannot sustain growth very long.”
Ricchiuto, one of the more bearish forecasters on Wall Street, has largely been spot on in his prediction for a weak 2011. While the economy is slowly mending, he says, corporate cost cuts, lackluster hiring and still-high consumer debt levels are likely to hold the U.S. back for months to come.
The latest batch of data this week is unlikely to alter the prevailing view of the economy.
Reports on housing will show that the industry remains in a historical slump. Manufacturers probably saw some marginal improvement in September after a bout of weakness. And inflation likely crept higher last month, reflecting pipeline pressure from a spike in oil and commodity prices earlier this year.
…
MarketWatch consensus
date report Consensus previous
Oct. 17 Empire state index -5.0 -8.8
Oct. 17 Industrial production 0.1% 0.2%
Oct. 17 Capacity utilization 77.4% 77.4%
Oct. 18 Producer price index 0.4% 0.0%
Oct. 18 Core PPI 0.2% 0.1%
Oct. 18 Home builders’ index 14 14
Oct. 19 Consumer price index 0.3% 0.4%
Oct. 19 Core CPI 0.2% 0.2%
Oct. 19 Housing starts 590,000 571,000
Oct. 20 Jobless claims 400,000 404,000
Oct. 21 Existing home sales 4.90 mln 5.03 mln
Oct. 21 Leading indicators 0.2% 0.3%
Oct. 21 Philly Fed -10.0 -17.5
What Happens if City Schools Go Insolvent
Posted: Sunday, October 16, 2011 11:30 am |
Updated: 11:35 am, Sun Oct 16, 2011.
by Keegan Kyle
Last week, top officials said the San Diego Unified School District is on the brink of financial collapse and may require a state takeover to remain afloat.
So what does that mean?
A takeover would push the state to loan the district millions of dollars to pay for its bills. Declaring insolvency would spur radical changes in the district’s operations.
In exchange for the loan, the law requires local officials to hand over control of the district to the state. Ironically, it would either fire or relegate the top two officials that are sounding the district alarm, Superintendent Bill Kowba and board President Richard Barrera.
Here’s how the beginning steps would unfold:
• The superintendent would be immediately fired and replaced by a state appointed administrator.
• The school board would lose all powers and become an advisory panel.
The state administrator would essentially become the district’s new leader and have the power to unilaterally make decisions, such as which property to sell, what academic programs to cut, which schools to shutter and who to lay off. After labor contracts expire, the administrator could impose district-wide cuts to pay and benefits.
No longer beholden to an electorate, the administrator could make politically unpopular decisions in the community that can be difficult for a board to make under pressure from parents and teachers. The school board, employees and residents could still offer their input on major decisions, but the administrator could ignore them.
After a few years, if the district appears to be on the right track, the state could return some control of the district to local officials. The district could hire a superintendent and the school board could get some its old powers back.
But until the loan is repaid with interest, the state would remain a fixture in the district’s affairs. Though the superintendent and school board could make financial decisions, a state administrator or trustee could veto them.
The length of a state takeover depends on the size of the loan and the district’s repayment schedule. The state issued a $100 million loan to the Oakland Unified School District in 2003, for example, and it’s expected to be repaid in 15 years from now. (Randy Ward, the San Diego County Office of Education’s superintendent, previously served as the state-appointed overseer for Oakland.)
The road to insolvency also isn’t a quick one. If San Diego Unified or County Office of Education officials deem the district insolvent, its financial books would likely undergo months of review before the state writes a check. A state legislator would have to propose a loan and have it be signed off by the Legislature and the governor.
So what’s next?
The dire warnings issued last week by district leaders marked a significant escalation in its battle with the state.
District officials are closely watching the state to figure out whether it will cut an estimated $30 million from the district’s budget this year. The cuts are tied to economic indicators. If the economy improves and the state collects more taxes, it won’t make the cuts. If the indicators fall below state goals, as they have been recently, the cuts will happen.
The district finds itself in this situation as a result of the state’s financial condition and a series of self-inflicted wounds that compounded the state’s woes, our investigation last month found.
…
“The state issued a $100 million loan to the Oakland Unified School District in 2003, for example, and it’s expected to be repaid in 15 years from now.”
I’d like to have Meredith Whitney comment on the odds that the State of California will ever see their money again.
FT dot com
October 16, 2011 8:16 pm
Show the Fed more forbearance
By Edward Luce
A few years ago, it would have been remarkable for any senior US politician to demand the head of the chairman of the US Federal Reserve. During last week’s Republican debate, almost all of the hopefuls cheerfully called for Ben Bernanke’s.
Rick Perry wisely refrained from repeating his threat to treat the “almost treasonous” Mr Bernanke “pretty ugly down in Texas”. Most of the rest, including Mitt Romney, the only viable moderate among them, were happy to put the boot in. “I’d be looking for somebody new,” he said.
Fed watchers remind us that populist anger against America’s central bank rises and falls with the business cycle. At the height of the late 1990s boom Alan Greenspan was hailed as a magician. During the early 1990s, the future “maestro” was pilloried as a monetary scrooge.
That was nothing to the venom Paul Volcker received in the early 1980s when he killed inflation with a drastic round of high interest rates. At one stage the Fed was besieged by a French-style protest of farmers on tractors. The tall man, as President Barack Obama calls him, stuck to his guns and helped lay the basis for the “Great Moderation” in inflation.
Why should it be tougher for Mr Bernanke? There are three reasons to worry he is in greater danger than his predecessors. The first is of scale and intensity. Not only does Mr Bernanke have to contend with hostility across the Republican spectrum. It is also more visceral than before.
As recently as 2008, Ron Paul, the only libertarian in the race, was seen as a crank. He still is. But Mr Paul’s lonely “End the Fed” abolitionism is now a staple in conservative circles and beyond. In a Bloomberg poll last December a majority of Americans wanted to curtail the Fed, or abolish it outright.
Second, Mr Bernanke faces an unfamiliar strain of public anger. In earlier cycles populists always demanded monetary easing. Even Ronald Reagan, a supposed hawk, tried to press Mr Volcker into a less restrictive stance. Hard though it is to believe at a time when the US economy may be drifting back into recession, today’s populists are calling for higher interest rates.
In the last debate – and doubtless on Tuesday night, when the Republicans take again to the dais – candidates accused the Fed of fuelling inflation. In reality, America’s relatively low inflation is falling again after a brief spike earlier this year mostly caused by higher oil and commodity prices.
Nor are there inflationary warning signs. Quite the reverse. In its August meeting, the Fed took the rare step of pledging to keep interest rates at zero until mid-2013 – a sure sign that the Fed, minus its three dissenting votes, is worried America is heading into Japan-style debt deflation. That did not stop the Republican leaders in Congress from taking the highly unusual step of calling on Mr Bernanke to end monetary easing.
But it is the third difference that is most troubling. However much Mr Volcker was reviled, it was clear what he needed to do. Mr Volcker took charge at a time of double digit inflation. Anyone wanting to slay it agreed on the obvious course of action. The remedy was draconian. But at least it was straightforward.
Mr Bernanke faces a much more complex quandary. It may even be insoluble – at least to a central bank. Interest rates are already zero. Two rounds of quantitative easing have failed to reverse the trend towards slower growth. And nobody, including Mr Bernanke, believes Operation Twist, which was announced in September, will make a big difference.
…