The Housing Bubble

If you think the poor workers wanted to jump when they were overworked, what will things be like when they are laid off?

Luckily there aren’t any tall buildings in the rural villages that they will go back to…

“What will things be like when they are laid off?”

They riot. Check recent news. Labor unrest in China is quite prevalent these days.

I don’t know about mainland China, but a guy I used to work with spent a few years in Taiwan. He told me that if you laid someone off that they might come back later and throw a Molotov cocktail at the business premises.

And we think Americans feel entitled.

So who’s getting fired in this picture?

And you need a place to bug-out to. Good luck with that on the crowded east coast.

And also a knowledge of secondary routes by which to bug-out over. Remember the hurricane that threated Houston shortly after Katrina but never hit? And the clueless evacuees stuck in 12 hour traffic jams on I-10 and I-45, despite east Texas being very flat and covered with a network of hundreds of alternate routes.

The squad recently re-watched Red Dawn for bug-out preps. Escape from metro Denver could be easily done fanning out east across the plains. Escaping into the mountains (zombies don’t thrive at high altitudes) would be more difficult as there are only a few roads west, and these would become obvious bottlenecks.

The prospect of looting Aspen if TSHTF does sound appealing

Dang, I gotta think about replenishing my bug-outs, especially the food. June 21 is a good day for it. It’s easy to remember 3-month and 6-month if you start on a solstice.

The squad recently re-watched Red Dawn for bug-out preps.

Wolverines!

That traffic jam in Houston was 48 hours and 100 miles long.

Had that hurricane actually hit Houston, there would have been thousands dead.

Thousands.

“despite east Texas being very flat and covered with a network of hundreds of alternate routes.”

jeeesus…no kidding. All the roads go somewhere in that state. No dead ends at mountains.

“Escaping into the mountains…”

A man can dream.

Ozark Mountain Daredevils
Colorado Song

“…(zombies don’t thrive at high altitudes)”

Obviously, you’ve never lived at high altitudes.

While all cars have some foreign content, you can bet your bottom dollar that a car built in Seoul or Hiroshima has less European content than than a VW or a SEAT. The notion that they all have the same percentages is balderdash. For instance, there are cars that have 90% US content:

http://www.thetruthaboutcars.com/2010/06/ten-most-american-cars/

“By that I mean the typical European will buy a European car not because of a law that makes it harder to buy Japanese, but because he wants a European car.”

There is some truth in that statement, but from what my European relatives tell me, imports are more expensive, and that is in part because of duties.

In any case, at least the Europeans understand that buying their own helps their economy more than buying an import.

“For instance, there are cars that have 90% US content:”

Great!

And there are Toyotas built in KY that have 75-80% American content too and GMs built in Mexico that have 30% US content. Renault owns about 45% of Nissan, is a Renault a Japanese car or European car? How about a Renault? How about a Land Rover or Jaguar which is owned by Tata Motors of India which bought the two brands from Ford which owned them both for about 20 years prior to that? Is Jaguar that an Asian car or a UK car? How about Saab which was owned by GM for 25 years before being sold to a Russian company? And if you buy a Dodge (owned by FIAT) made in Mexico, are you really buying an “American” car?

There’s no such thing as a “domestic” or “foreign” car anymore. They’re all global brands with a global presence in manufacturing, sales and design.

“And there are Toyotas built in KY that have 75-80% American content too”

And those, unlike cars imported from Japan or Korea, are not imports.

Anyway, my point was that your assertion that “Take any car on the road today and most likely the part content will be 30%, 30%, 40% sourced from various places” was untrue. Just like some domestics have 90% domestic content, cars assembled in Seoul most likely have comparable percentages of Korean content. There is no “world car”, at least not yet.

Having lived overseas I witnessed first hand the economic nationalism most nations have in manufacturing and in job creation. The higher the local content, the better the trade balance. Lesson #1: You don’t become a net exporter nor create jobs by importing things you can make yourself.

“Lesson #1: You don’t become a net exporter nor create jobs by importing things you can make yourself.”

Russians make cars. So did the East Germans and Yugoslavians. I can probably build a car in my garage as well. Might run for a few days before it blows up.

Making it yourself != making a good product.

That’s why we have this thing called trade. I buy from you what you make well and you buy from me what I make well. What’s that called again? Ah yes. Comparative advantage.

Q: Customer: I’d like a gas cap for my Yugo

A:Clerk: Sounds like a fair exchange to me!

Yeah, the Euros do like their diesels. I don’t see why the Japanese can’t make their own. I also recall reading somewhere that in the UK Hondas are considered old people cars, like Buick is here, but even more so.

I’m either old or Chinese because I think the Buick Regal / Opel Insignia is bada$$. Well, the turbo, 6-speed manual version, that is.

When the new Regal was just a prototype they said AWD would be an option, and that was interesting for me. Then when I went to the car show they said no :-(.

The new Regal, if I’m not mistaken, is a rebadged Opel.

Carl, do you mean AWD with manual transmission? If so, EXACTLY! Maybe I heard them wrong, but when I visited the car show the first year it was out I was told you could get both. At this year’s show, the salesperson looked at me like I was crazy for suggesting such a marriage.

Maybe they meant you CAN get both, just not on the same vehicle. Frankly, that’s why I’ve lost interest, as I’d like both options.

I haven’t checked lately but I did think you can get AWD on the automatic transmission versions…

According to the people at the big traveling GM show AWD was no longer an option, period. But that could have changed again. I don’t check in with them often.

I just got excited for a minute because it looked like maybe there would be an AWD manual 250+hp turbo car stock and I was thinking “whoohoo, this could end up being the return of the Grand National”. With FWD only, not so much.

Amazingly enough I did end up being at that same desk for 10 more years and three more company name changes.

Whenever a buyer says that your company won’t need to change a thing, update your resume. And start job-hunting.

Sure wish I had taken that advice 12 years ago when the small hospital where I worked was gobbled up by a much larger one. The bureacracy and attitude here still make me crazy.

And could you make that interface with Lotus Notes, please?

And could you make that interface with Lotus Notes, please?

I’ve had people ask me things like why I can’t use Word to build their website.

And could you make that interface with Lotus Notes, please?

Outside of IBM, does anyone still use that dog? It was dated 10 years ago.

“It was dated 10 years ago.”

Our CRM is based on FileMaker. Talk about dated.

Outside of IBM, does anyone still use that dog? It was dated 10 years ago.

I don’t think so. It was a little over 10 years ago that they forced us to use it after telling us we wouldn’t have to change anything.

Yes the FAA still uses Lotus Notes, but we are switching to “the cloud” in the next few years . . .

The Corporation where I work uses Lotus Notes still.

What a crappy program.

Oh yeah, they are sooooo much worse off that us ??

You better believe they are….

Spain GDP = 1.4 Trillion

USA GDP = 14.7 Trillion

Sure, our GDP is 10x theirs. However, our debt, deficits and trade imbalances are also 10x theirs. This is why I gave the numbers as % of GDP.

Spain’s GDP per capita, while not as high as ours, is a respectable $30,000.

If they were still on the peseta they could have bailed out their banks with the printing press, like we did.

The Spanish budget minister’s remarks seemed more like a veiled threat to leave the Euro unless the ECB gives them better terms.

Wow. We have six times the population, and ten times the GDP?

The world money markets are telling you who is the biggest midget in the room…USA & Germany…

“The world money markets are telling you who is the biggest midget in the room…USA & Germany…”

To win in the current game, you just have to suck less than the competition.

Yep…

One of Spain’s major problems is banking. They are a bit larger than the state of California (~47 million, vs. CA’s 37 million), but built a huge number of homes during the bubble…

Spain
2006: 760,000 housing starts

California
2006: ~165,000 housing starts

And people think WE had overbuilding…

Lots of bad construction loans in Spain…

“The world money markets are telling you who is the biggest midget in the room…USA & Germany…”

i love this blog.

“Spain
2006: 760,000 housing starts

California
2006: ~165,000 housing starts”

Spain beat us on real estate insanity, hands down.

When I was last a student, almost a decade ago, there was a Spanish post-doc who used to share discussion with me on the relative seriousness of the Spanish versus California real estate bubbles. This was pre-HBB, and long before any MSM or high-level policy economists openly discussed the bubble.

My friend not only fully agreed with my concerns about the California housing bubble, but he insisted the same problems existed in Spain, but at a far greater extreme.

What do you know — he was right!

A long time friend of mine (was an exchange student when a senior in high school with me) was from Spain.

Only more insane than their housing bubble are their employment laws.

Massive required severance for service…people don’t want to officially hire because of it.

21 vacation days for each year of work (I started at 10, and worked up 1 day per year to MAX out at 20).

Others (great unemployment benefits, such that people work under the table frequently).

They are apparently trying to reform this, but it is unclear whether the reforms will be successful.

manchego?

If you personally borrow $60K to buy condos, will the net effect be an increase in USA’s trade imbalance, or a decrease?

First, I’m not going to borrow near that much.

Second, I would have to know if someone else is going to borrow money to buy a condo with carrying costs that are half the current rent. If someone else will borrow the money, then there should be no net macro-economic effect.

Assuming the money would not otherwise be borrowed by someone else, then me not borrowing it would prevent the growth of the money supply, slowing economic activity as the existing trade imbalances drain liquidity from the economy.

Eventually, the slowing economic activity caused by money draining out of the economy and not being replaced, would cause falling trade deficits…. in exchange for recession, which would likely trigger cascade debt default into depression since our ability to pay on existing debt requires we do not have another massive recession.

So… to answer your question, simply stopping the credit expansion, without first eliminating the trade imbalances, would trigger a depression, which would resolve the imbalances.

Now, answer my question. How would you eliminate the trade imbalances? Depression and crashing wasges in the USA to bring us into parity with the 3rd world?

Personally, I’d prefer we end free trade and protect the standard of living of the USA BEFORE stopping the credit expansion.

Yesterday I posted an article from bloomberg about multinational companies lobbying for an effective tax holiday on foreign income. Their usual excuse is that they “can’t compete” on the international stage.

Well, they are right. On a purely economic basis, no country can compete unless their rivers are full of textile dye, their air is full of unscrubbed coal fumes, and their factories are full of expendable slaves. The only way to control it is with tarriffs. Problem is, if you slap up tarriffs, other countries will retaliate with tarriffs of their own. Like, Saudi Arabia.

How do you propose we balance international trade to allow economies to function without the credit expansion?

Well, obviously we have to trade them _something_…

“How much for zee leetle girl…”

So, are you saying that if you (or your proxy) borrow $60K (more or less) to buy condos, that it will increase or decrease the USA’s trade imbalance?

Regarding elevation above the 3rd world; If you have a lifestyle that can only be maintained by borrowing, are you a fraud?

“no country can compete unless their rivers are full of textile dye, their air is full of unscrubbed coal fumes, and their factories are full of expendable slaves”

The 19th century was a great time to be a 1%er. The 21st century will be even better if only we get rid of all those pesky government regulations and give those “job creators” more tax cuts!

“The 21st century will be even better…”

Some people think everything can only be better if the government has more control of it. Some people think that the government restrains the elite.

The last half of the 20th century saw an increase in the power of the elite and an increase of government regulation. It is an interesting theory that when the elite capture the governing process, the regulations promulgated are designed to entrench the power of the elite, rather than restrain them.

The last half of the 20th century saw an increase in the power of the elite

Link? Seems like the southern elite lost their ability to keep a group of citizens in a 2nd class status, and the elite in general lost their ability to keep “[our] rivers are full of textile dye, [our] air… full of unscrubbed coal fumes, and [our] factories … full of expendable slaves” during that time. And certainly there were no figures comparable to the JPMorgans of the first half of the 20th century.

Although I agree the momentum shift in the other direction- towards the 1%’s expanding wealth and power- began in 1980. But they didn’t really seize power until after the repeal of Glass-Steagall.

Do you imagine that because these things were offshored, that the monied elite have been restrained? Amazing.

because these things were offshored, that the monied elite have been restrained?

Restrained from inflicting their will on us at least. Although I am aware their money buys influence in banana republics, that’s obviously harder to restrict, and certainly no less true in the first half of the 20th century than in the second half.

Probably so. I’ve seen the second half a little closer up though!

And now Evans is saying the Fed should potentially buy mortgage backed securities as further easing…

http://www.cnbc.com/id/47698063

Right. We rant about $1T student loan debt. We rant about $1T credit card debt.

The federal government has added $6T to the national debt in the last 4.5 years. And that is not hte fake debt like increasing balances in the trust funds. That is real debt! Debt that the government is not paying itself interest on.

“$6T to the national debt”

Yes, but isn’t that better than having to reduce our spending?

It makes you wonder, with GDP flat, incomes essentially flat, the employment rate down, where did that $6Tr go?

“with GDP flat, incomes essentially flat, the employment rate down, where did that $6Tr go?”

It went to pay for bloated union wages, benefits, and pensions. And for Lucky Duckies to buy steak and lobster with their EBT cards. And to Solyndra. EVERY SINGLE PENNY SINCE JANUARY 2009!

It’s all true, I read it in a link from the Drudge Report.

Some of it went to save this guys a@@:

‘American International Group Inc. (AIG) Chief Executive Officer Robert Benmosche said Europe’s debt crisis shows governments worldwide must accept that people will have to work more years as life expectancies increase. ‘Retirement ages will have to move to 70, 80 years old,’ Benmosche, who turned 68 last week, said during a weekend interview at his seaside villa in Dubrovnik, Croatia. ‘That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.’

‘Greece abandoning the euro could be a disaster for the country and Europe must work to keep that from happening, said Benmosche, whose company was the world’s biggest insurer before it took a U.S. bailout.’

‘People in Greece have to see there is no easy way out of this’ and the government must get them to work longer, he said. ‘If not, and if they go to their own currency, I think they will see huge inflation and it will be devastating for people on fixed incomes.’

http://www.bloomberg.com/news/2012-06-03/aig-chief-sees-retirement-age-as-high-as-80-after-crisis.html

These globalists would throw entire countries under the bus to keep their ‘Euro Project’ alive. And the usual threats; it will be devastating, keep the burden off the youth! Oh please, as if what Greece is experiencing isn’t bad enough. Fat cats like this, who took billions from ‘the youth’ have the nerve to sit in their sea-side villas and lecture us on what others ‘have to see’?

It costs money to keep the GDP flat. If the wealth wasn’t redistributed then the GDP would be negative.

‘If the wealth wasn’t redistributed then the GDP would be negative’

Wealth redistribution is a false part of the two party political landscape IMO. It’s based on the idea that there is a limited amount of money out there, and we’ve got to have the govt spread it around. But the Federal Reserve loaned out enough to buy every house in the US a couple of years ago. Where did that come from? Bernanke insisted they hadn’t printed it. They had that much in reserve?

Really, I don’t think the US PTB even need taxes. They use that to keep us fighting amongst ourselves, and maybe to keep us poorer. Think about it; the ‘Reagan proved deficits don’t matter’ line. The ‘reality based community’. These people keep us squabbling over peanuts while they conjure up trillions and do whatever they like with it.

“It costs money to keep the GDP flat.”

Yes, it does, but why? Hint: Trade imbalances.

It is not a coincidence that the 10% credit expansion almost exactly matches our international trade imbalance and 80% of corporate profits that go to those that already have more money than they spend.

I rich person earns $1 million and puts it in to the bank. How does the money get back into circulation? Answer: the bank loans it back out, increasing both money and debt.

“It’s based on the idea that there is a limited amount of money out there,”

Which, as you point out, is not true… unless we decide to stop borrowing ever more money into existence via the credit expansion. As long as we can go ever further into debt, there can be ever more money.

“But the Federal Reserve loaned out enough to buy every house in the US a couple of years ago.”

Not at any given moment. $77T in loans were made, but in 1, 2, 3, 5 day loans, that were rolled over into new loans. No more than $1T was out at any given time. It they loan you $1T, and you pay it back and then borrow it again, 100 times in a year, is that $1T loan for a year or $100T loans.

“Where did that come from? Bernanke insisted they hadn’t printed it. They had that much in reserve?”

The money was loaned into existence when the mortgage was made. If the Fed takes the loan off the books, in exchange for ledger entries in the banks reserve accounts, in exchange for a purchase agreement, then the banks’ reserve/loan ratio improves since reserves go up and loans go down.

It technically isn’t money, since the ledger entries in the bank’s reserve account are not legally spendable.

the Federal Reserve loaned out enough to buy every house in the US a couple of years ago. Where did that come from? Bernanke insisted they hadn’t printed it. They had that much in reserve?

Maybe those banks DID have it in reserve, in the form of paper assets backed up by… housing!

We were at 120% GDP at the end of WWII. Paid down to 30% at the start of Reagan.

We also mostly owed the money to ourselves. We had an impressive industrial base and international trade surpluses. The majority of the debt had been run up in what was truly a short-term emergency situation.

We also had a steep income tax with a 90%+ top marginal rate, but not of deductions for spending money on things that stimulated the economy rather than putting it in the bank or loaning it out.

Our current debt (which if we ignore trust funds) is only 68% of GDP. Unfortunately, a lot of it is owed to foreigners, we have off shored our industrial base, have massive trade deficits, our debt is the result of 40 years of papering over the cracks in the unsound foundation of our economy, and our top marginal rate is 38% (though the ultra rich pay more like 15%).

I know more than a few wealthy Mexicans who have vacation homes in the USA. Granted, for them it’s just a 2-3 hour flight to visit them.

And being Mexican, they are going from putting capital in a country with less stable property rights (Mexico) to one with more stable property rights (US).

I’d be pretty nervous investing in any country like Mexico.

I’d be pretty nervous investing in any country like Mexico.

Back in the 1990s, I had a web design client who was promoting an RV park in Mexico. It was going to be one of those places where you could, to the extent that you were allowed to as a foreigner, purchase a place to park the Winnie for the winter.

Well, website built. Client happy. Slim paid in full. I like that in a client.

Then, shortly after the site launched, I got a message from the client: Take that site down. NOW!

I took the site down.

I never found out what happened, but I think that the RV park venture suddenly made contact with the realities of doing business in Mexico.

The Scandinavians are probably relying on a single source for their info, and as I’ve heard mentioned, RAL.

They might think the beach is more permanent than a military base.

Yeah, and I can’t brag about renting a room at the Motel 6 either.

“a second home”

Those words make my skin crawl. What’s the point?

The wealthy mother of a childhood friend collects houses the way I collect graphic novels (OK, maybe not that extreme, but you get the point). Most of them she visits at most 2 weeks per year.

I don’t get it either.

My grandfather built a small cabin up in the Lake Tahoe region (off the lake, but a 10-15 minute walk to the lake) in the summer of 1969. It has been in our family ever since. It slept 11 officially (although our record during college years was into the mid-twenties).

We would go up for 1-2 weeks every summer, and a week nearly every winter, and sometimes more with my grandparents during the summer while my parents worked. We fished, hiked, biked, rafted, played cards with family, hung out a the beach, etc.. We got to know the people who lived in the neighborhood, and played with their kids while we were on vacation.

I had several cousins and aunts/uncles who lived in the area (within 4 hour drives) as well. Even family members without much money could go up and enjoy themselves, with only the expense of gas and food (when both were cheaper). All could spend time together without concern for who was picking up the dinner tab, what hotel was being booked, and the cost of airfare.

We continue to use the cabin as a place for family reunions. Plenty of memories, and my parents now live within a 2 hour drive instead of a 4 hour drive, and they stay up there several months per year (not all at once, but throughout the year).

As a second home, and as a family, I think we got a lot of use out of the cabin over 40+ years (in fact, we were up there a couple of weekends ago for memorial day–hopefully starting to give our kids some similar memories).

The cabin is rented sometimes when not in use to help defray the costs.

What have I learned from this lifelong experience (I was an infant for my first trip to the cabin):

1. SECOND HOMES ARE NOT A FINANCIAL INVESTMENT. Second homes are a cost, both in time and expense…you will never “make money” by renting them out, and if you value your time at anything greater than $0, the cost is substantially higher than the numbers flowing out of your checkbook.

2. If the second home is in a place where multiple generations of your family can get together with little cost, and you use it as a place for those generations to spend time together, the returns received in terms of memories are immeasurably large (standard memories include waking up to grandpa starting a fire downstairs, cooking breakfast as a family, grandma’s 70th birthday party, breakfast at the local pancake restaurant, dinner at the local German restaurant–grandparent’s treat each time we got together, hiking 5 miles to go fishing, stomping through creeks, card playing late into the night, lots of laughter, roaring fires, dragging wood out from the snow, staining the cabin, splitting wood, 4th of July many years, etc., etc., etc.).

If you can’t afford the cost (time and $), don’t buy a second home; and

If you can’t utilize the home as an inexpensive way for family gatherings, the utility as a “vacation” home is highly questionable; and

If I was given the opportunity to buy an equivalent cabin today with the knowledge that 4(+?) generations of family and extended family were going to build decades of memories, I would not hesitate. However, in today’s society with scattered and fragmented families, this is rarely the case.

BINGO…. LIKE NO OTHER WORDS.
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Comment by sleepless_near_seattle
2012-06-05 12:42:32
“a second home”

Those words make my skin crawl. What’s the point?

My grandfather built a small cabin up in the Lake Tahoe region

Spot on, Rental Watch; well said.

Yep. Just like all the assumptions made about bammy vs. shrub. That it couldn’t get any worse than shrub. Oh, boy, can it EVER!!!!!!!!!!!!!!!!!

“Corporations are people, too!”

He would be doing the same thing, but the libtard bedwetter media only notices when it’s an R in office!

“Corporations are people, too!”

A decision by the Supreme Court, not the president. A supreme court that was stacked by Bush.

Obama stunting civil rights? Not exactly, but not really helping either.

But let’s not forget Patriot Act 1 & 2. Hard to top those 2.

And let’s not forget that Obama tried like hell to close Guantanamo, end tax breaks for offshoring jobs, clamp down on credit card companies (partially successful) allowed guns to be carried in national parks (he’s gonna take our guns, paw!), reform our highway robbery system of “health” care and many other things.

Is he “my” guy? Oh hell no! He’s just the lesser of 2 evils. And ultimately, that’s all the choice you get in politics.

turkey lurkey said: “Obama tried like hell to close Guantanamo”

I don’t know why LIE-berals keep repeating that lie. Obama is the Commander-in-Chief of the U.S. military. All of it. Every base. Every weapon. Every vehicle. Every soldier. His orders are ORDERS.

So he could close Gitmo tomorrow. He doesn’t have to check with anyone in the chain of command. He doesn’t have to check with the Congress. He can just DO IT. That’s what “Commander-in-Chief” means. He can give a legal order, and it must be followed.

So closing Gitmo was just another Obama lie.

And you’ll know this transition is complete when they take a hammer and chisel to Mt. Rushmore to alter the face of Washington to the features of some johnny-come-lately potentate.

It’s been done before, in Egypt, back in the mists of time.

“you’ll know this transition is complete when they take a hammer and chisel to Mt. Rushmore”

Coming soon during The One’s second term, Rushmore to be re-carved to display Karl Marx, Fidel Castro, Hugo Chavez, and Saul Alinsky!

“Just the other day I was sentenced 20 years in the gulag for disagreeing with Obama.”

LOL, maybe we’re not that far gone yet, but I do agree that the tactics of a Stalin, or a Mao or a Jong Il could very easily come about. But if that happens, it will be your so-called friends and neighbors that will facilitate it, turning in those near and dear to them for “hate speech” or some such thing. And it will be done with a righteousness that far exceeds any religious fervor you’ve ever seen. In fact, when the state BECOMES the religion, watch out.

“I was sentenced 20 years in the gulag for disagreeing with Obama”

Expect the midnight knock on your door from Eric Holder and Janet Napaleotano to arrest you for Thought Crimes© and take you away to the Re-education Camp® soon. You may be jailed without trial but at least you’ll be able to buy health insurance with a pre-existing condition

“Napaleotano”

You spelled it wrong. It’s “Napalmitano”.

“LOL, maybe we’re not that far gone yet, but I do agree that the tactics of a Stalin, or a Mao or a Jong Il could very easily come about. But if that happens, it will be your so-called friends and neighbors that will facilitate it, turning in those near and dear to them for “hate speech” or some such thing. And it will be done with a righteousness that far exceeds any religious fervor you’ve ever seen. In fact, when the state BECOMES the religion, watch out.”

I agree it could happen here just like it could happen anywhere. But to say that every president has advanced our march to totalitarianism is ridiculous. Totalitarianism happens fast, not over 250 years. Took Hitler less than a decade to go from the Beer Hall Peutches to consolidating power. Took the Bolsheviks about 10 years as well. Castro did it in around the same time as well. According to the “Bush is a Nazi Fascist who will shred the constitution” types, we should have achieved full blown dictatorship status already.

What’s the hold up?

“Totalitarianism happens fast, not over 250 years.”

“What’s the hold up?”

Well, in fact, I was going to make the statement that this sort of thing can happen in the twinkling of an eye, but I think it just seems that way. It’s sort of on the order of the critical mass theory.

Kind of like an avalanche. It only takes a moment, but it only happens if potential energy has built up over a significant amount of time in just the right way. And eventually it becomes inevitable and anything will set it off.

Hmm. What do you think they thought of this?

http://www.etymonline.com/cw/lincoln.htm

What do you think they thought of this?

The idea that some of them could go to a
South American colony of fellow freedmen if they wanted? Apparently not much, since the idea apparently went nowhere. But I doubt it made them think that much more poorly of Abe.

All of the following is from the wikipedia article on “The Constitution is not a suicide pact.”

Jefferson offered one of the earliest formulations of the sentiment, although not of the phrase. In 1803, Thomas Jefferson’s ambassadors to France arranged the purchase of the Louisiana territory in conflict with Jefferson’s personal belief that the Constitution did not bestow upon the federal government the right to acquire or possess foreign territory. Due to political considerations, however, Jefferson disregarded his constitutional doubts…

Under the United States Constitution, habeas corpus can be suspended in cases of rebellion or invasion. The Confederacy was rebelling, thus suspension of habeas corpus was both legal and constitutional—but only if done by Congress, since the Constitution reserves this power under Article I, which pertains solely to congressional powers; Lincoln, meanwhile, usurped the power under his own executive order…

Later in the war, after some had criticized the arrest and detention of Congressman Clement Vallandigham of Ohio, Lincoln wrote to Erastus Corning in June 1862 that Vallandigham was arrested “because he was laboring, with some effect, to prevent the raising of troops, to encourage desertions from the army, and to leave the rebellion without an adequate military force to suppress it. . . . Must I shoot a simple-minded deserter, while I must not touch a hair of a wily agitator who induces him to desert?” Lincoln did not comment on the proper channels of due process regarding such “agitation.”

I stand by my earlier statements.

My understanding is that the Declaration of Independence was far closer to a suicide pact than the Constitution was.

+1, oxide!

Wasn’t it old Benny Franklin who once said “Gentlemen, we must all hang together, or we will surely hang separately”. ?

“The Constitution is not a suicide pact.”

I have also read the comment that “Human rights do not prescribe national suicide”.

My understanding is that the Declaration of Independence was far closer to a suicide pact than the Constitution was.

True, dat. The document concluded with this sentence:

“And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.”

What an insane conversation! These deaths violate our laws, international laws, and are destroying the checks and balances over the executive branch. And that doesn’t even begin to address creating more ‘opposition’ than it kills, or the fact that Obama ‘assassinated’ a US citizen, and then amazingly killed his 16 YO son a short time later.

Meanwhile, he turns the DHS loose on the Occupy movement. I’m not an alarmist on the police state, but things are looking serious right now.

“Chain of command” was created to neutralize the “targeted assassination” strategy.

“What an insane conversation!”

Jeebus, I’m tellin’ ya. I couldn’t even bring myself to respond to that first comment. But, if I had to comment, it would be something like this:

“Yeah, what’s the matter with you old coots? Get with the times! Tech is where it’s at!”

“What an insane conversation!”

And while this is probably not the most fitting place to make this observation, but appropos of the “Idiocracy” sub-thread in bits a few days ago, I was doing a bit of channel flipping the other night and watched a little bit of “America’s Funniest Home Videos” (no one ever accused the palmster of being highbrow) and came to the realization that we already have several versions of the show “Ow, My Balls”.

“Ow, My Balls”.

The Kardashian-Humphries televised nuptials being one version.

(And no, I didn’t see that one, palmster doesn’t have cable, hence the really lowbrow stuff like AFV)

I see Wipeout is set to begin a new season!

Meanwhile, he turns the DHS loose on the Occupy movement. I’m not an alarmist on the police state, but things are looking serious right now.

Should we be sending out drones and special operations hunter/killer teams across the globe to kill Al Qaeda and their aiders-and-abettors?

OR, should we attempt to seal our borders, withdraw from the world?

Or, is there a happy medium?

Why is Al Qaeda f–king with us? Is it because we f–ked with them first? Or is that they have some other agenda and f–king with us furthers that agenda? Bin Laden said it’s because we’re in Saudi. Well, we pulled out of Saudi. And they kept f–king with us. There was deposing the elected Iranian leader in the 50s. Invading Iraq. Yeah, we shouldn’t be involved in those kinds of things. But Bin Laden’s beef was our being in Saudi. Well we’re out. But they didn’t back off.

Look, if we withdraw from the world, Russia and China are going to move in and fill the void. Then we will have a weaker hand than they do and all the consequences that go with that.

I think there’s a happy medium. We, a broke country, borrowing as fast as we can from the future, heading towards defaults, shouldn’t be fielding an expensive military in places that don’t directly concern us. However, we’re still hooked on oil. And natural resources. We should use our influence to try and shape the world so it’s better for us AND without screwing the indigenous peoples in those places with oil and resources.

Some people look at 9/11 and see it as a single, anomalous incident, and that it was totally isolated and couldn’t happen again. And there are not people out there who want to get bigger weapons and carry out greater atrocities against the US. I however see 9/11 as a wake-up call.

Also, I think most of us agree that this military apparatus shouldn’t be turned on law-abiding American citizens. I think the drug war is pretty crazy and the source of a lot of outrageous behavior on the part of the authorities. Suppressing legitimate protests is outrageous.

Everything is not a slippery slope to something else. Having hunter/killer teams and drones assassinating Al Qaeda operatives doesn’t mean we’ll have that same apparatus hunting down political enemies. Having a huge military which could crush Japan and Germany didn’t mean we would turn that military against American cities.

‘Having a huge military which could crush Japan and Germany didn’t mean we would turn that military against American cities’

‘The National Defense Authorization Act (NDAA) is a United States federal law specifying the budget and expenditures of the United States Department of Defense. On May 15, 2012, a U.S. District Judge [4th District Court Judge Katherine Forrest] blocked section 1021[2], which its critics claim allows indefinite military detention’

http://en.wikipedia.org/wiki/National_Defense_Authorization_Act

On May 15, 2012, a U.S. District Judge [4th District Court Judge Katherine Forrest] blocked section 1021[2], which its critics claim allows indefinite military detention…

Judge Forrest, I stand in awe of you.

Yes, but if it goes to the Supreme Court, it might get put back in.

On May 15, 2012, a U.S. District Judge [4th District Court Judge Katherine Forrest] blocked section 1021[2], which its critics claim allows indefinite military detention’

The powers that be are always trying to draw more power to themselves. It’s in their nature. Hence the tendency of societies towards greater centralized power and greater centrally planned economies. “Sometimes wrong but never in doubt.” We joke about it, but this is part of top leaders’ DNA.

I’m not surprised Indefinite Military Detention is buried in a huge bill. It’s the nature of the beast:they keep grasping and grasping, and we have to keep fighting with them. Calling out issues like this is important to try and keep the leaders at bay.

But we do need leaders and we do need military power. And the leaders need to constantly be questioned and held to account, lest the gravitational slide into totalitarianism continue unchecked.

“Access to power must be confined to those who are not in love with it.” - Plato

And the leaders need to constantly be questioned and held to account…

In particular, those leaders who we have voted FOR, not just those we didn’t vote for but who got elected.

Ben,

I absolutely agree that this is insanity of the highest order, as my posts over the last seven years (and not a few “civil disorder” arrests) will attest. But if this country demands warfare (and it does) does it not make more sense to move to do so in a (gods forgive me) “lawful” manner instead of one that kills non-combatants?

Were it up to me, I’d go full plowshare and disband the entire “defense” industry, but alas, the majority of this county worships its “heroes” and squanders its assets in favor of its need for vengeance. Until true Christian values pervade our military, I’ll err on the side of precision offensives and reluctantly support the use of robots to do our geopolitical dirty work.

Yes. Belief ran deep.

Probably not.

“He needed more seasoning in the Senate.”

If I’m recalling correctly, even he thought so, and consulted Biden on this matter. Biden’s reply was something along the lines of “Look at me, I’ve had plenty of seasoning in the Senate”.

At which point, Obama promptly announced his candidacy. LOL, I would have done the same thing.

“Look at me, I’ve had plenty of seasoning in the Senate”

See also: John Kerry

See also: John Kerry

Or the late Robert Byrd. Not to mention Ted Kennedy.

John McCain. Dick Lugar. Orrin Hatch.

I would say McCain has been left in the oven waayyyy too long.

And how could I forget my fave overdone turkey, Lindsay “Let’s Make War” Graham!!!!!!!!!!!

I would say McCain has been left in the oven waayyyy too long.

I and a lot of my fellow southern Arizonans agree with you.

I mean, the guy is a complete, out and out nutter. Definitely not playing with a full deck. People who have been through serious trauma like him deserve a quiet, unstressful environment and a fishing pole, not elected office. I’m not saying they don’t have contributions to make, but I’ve heard (read, actually) about some of his behavior, huge tantrum tirades followed by crying jags, in public. I understand it, I really do, but I’d rather that not be coming from a Senator.

I think the press is sympathetic to a great degree and censors a lot of information about this guy, as they probably do with many elected officials.

I mean, the guy is a complete, out and out nutter. Definitely not playing with a full deck. People who have been through serious trauma like him deserve a quiet, unstressful environment and a fishing pole, not elected office.

We in southern Arizona have long thought McCain to be rather baffling. Yes, we have a reputation of being rather, ahem, liberal, but that’s not the only reason why we don’t seem to understand him.

It’s the chronic anger, for one thing. I mean, John, we understand that things were rough for you in ‘Nam. Very rough. But get help for that anger management issue, okay?

And that’s the southern Arizona thing. We can get pretty hot and bothered at each other, and then things just cool off. We don’t stay mad forever.

It is my contention that Bradley Manning is a stooge for the Clinton/Obama State Department’s wikileaks disclosures.

Look at the timeline. Look who profited. This kid is a patriot.

But for your last sentence, I agree.

On an individual level, Biggest. Boner. Ever.

What troubles me about the Manning case, in addition to the MSM blackout, is that the guy was clearly unfit for service. And that includes Stateside service.

What in the Sam Hill was he doing in a combat zone deployment? Why wasn’t he kept Stateside, then released from the military?

I have to agree with you on this one, Slimmie. But I think it speaks to the shortage of those truly fit for service (whatever that means), more than anything else.

Not to mention I think recruiters for the armed forces get some sort of bonus for the warm bodies they can haul in.

“But we could have gone Iceland, nationalized all the banks, only guaranteed the $100,000, and allowed every business that lost their payroll in one of them to go Chapter 11, wiping out their shares and a good share of their bonds.”

A novel little guy approach:
How about if the government had stepped up in this crisis and guaranteed ALL bank deposits fully (the FDIC limit was changed to $250k instantly) instead of throwing trillions down the tube to “save” the system. At least the possible trillions of FDIC would have gone to protect the people who had virtually nothing to do with the mess instead of the in place stooges. Life would have went on and the surviving banks would now have new owners. Keep in mind there was alot of money waiting in the wings to step in if the opportunity presented itself.

‘most of the bank’s capital is the bonds of non-bank GSEs’

You got some proof of that? That Flagstaff bank I mentioned didn’t have a single GSE bond. Even if it’s true, why would they be allowed to concentrate their assets in the GSEs?

When every major bank failed in Texas, and most of the S&Ls, why didn’t uncle sugar come to the rescue? The Feds did come in and liquidate everything. As I remember it, the sky didn’t fall.

But let’s say a bunch of banks did fail. So what? There’s trillions in equity out there to take over and reconstitute them (as happened in Texas). And don’t give me these apocalypse scenarios; they don’t work with me when used to justify stuff like TARP.

Face it; these gamblers just didn’t want to lose, and you think it’s OK.

When every major bank failed in Texas, and most of the S&Ls, why didn’t uncle sugar come to the rescue? The Feds did come in and liquidate everything. As I remember it, the sky didn’t fall.

William K. Black wrote about this period of U.S. history in his excellent book, The Best Way to Rob a Bank is to Own One. Tells you everything you’d ever want to know about control fraud, which is the act of gaining control of a company for the purpose of looting it. Lotta that going around.

With regards from your HBB Librarian…

“In effect, with FDIC in place, the US tax payer was already on the hook for most of the loss.”

Wipe out the shareholders. If that doesn’t cover it, next go the bondholders. Only after that do you touch the depositors. FDIC would have had a bill, but a much smaller one.

$14T total mortgages, the banking system on the hook for more than $5T, probably more than $8T of that.

Less than $600B total capital in the banking system, including shareholder equity and the cash and other assets backing up the bondholders

So you’re guessing that enough mortgages will default so that there is roughly a 50% loss? Not buying it. Even if half of all the value of mortgages went bad, they won’t suffer a 100% loss. Where are you getting these numbers?

Less than $600B total capital? While I accept that there are unreliable balance sheets out there, BAC is listed as have shareholder equity of over $200B. How do you get only $600B for ALL US banks? There are a lot of US banks and while they may be toast, they do have real assets.

Do you just make shit up?

Gotta ask yourself one question: “Why would lenders make loans that they don’t care about having repaid?

Answer that and you solve your debt problems.

Right.

But Ben, don’t assume I believe the “wipeout” scenario is worse that what we have now, just because I believe it would have been a wipeout scenario.

I’m a bit tired of being blackmailed by the 1%, the public employee unions, older generations, the Congressional Republicans, etc. Let us dump more on your back and take things away from you or things will collapse and you’ll be even worse off, they say. At some point, people are going to say “let it burn.”

As I said, a Great Depression is the capitalist equivalent of a communist revolution, as just everyone is kicked back to just about even at a lower level.

“Why would lenders make loans that they don’t care about having repaid?”

1) they were able to securitize them.

2) now that the securitization option is closed, because no one will buy the bonds, they still make the loans that cannot be repaid because they will have collected their bonus in the years before the debt goes bad, then not have to pay back those bonuses.

When you are taking a cut of the interest earned by loaning out other peoples’ money, what do you care if the other people do not get paid back?

I’m sorry, but in that scenario, we’re in depression.

I think we’re already in a depression, the big difference is who bears the brunt of it. It was shifted off the backs of the perpetrators and onto the taxpayer. I think the horrible collateral damage to innocent third parties that was used to justify it will happen regardless…with maybe just a bit of delay.

Gotta ask yourself one question: “Why would lenders make loans that they don’t care about having repaid?

Answer that and you solve your debt problems.

Assume that housing always goes up and it all makes sense.

I think we’re already in a depression, the big difference is who bears the brunt of it. It was shifted off the backs of the perpetrators and onto the taxpayer. I think the horrible collateral damage to innocent third parties that was used to justify it will happen regardless…with maybe just a bit of delay.

I agree with the notion that we’re in a depression. Because of the speed of the economic downturn and the rapid rise in unemployment. Add that to the fact that things just don’t seem to be getting better.

As for the collateral damage, count me as one of the many HBB-ers who isn’t enjoying it at all. We’re the innocent third parties — we lived within our means, worked hard, all that stuff. And now look. We’re screwed through no fault of our own.

Other people. Can’t live with ‘em, can’t live without ‘em.

I do not disagree this is a depression, just a slow motion one.

We created a new term in the 1970s. Stagflation to explain high unemployment and high inflation. I think er need a new one for now.

De(layed)pression?
De(nial)pression?
Stag-bifurcation?
Eye-of-the-storm-pression?
Exhausting-the-borrow-of-last-resort-pretending-we-are-not-fooked-pression?

Credit expansion, and the new money it creates, has been hiding the fact that trade imbalances can not persist forever. One way or another, we’re reaching the end-game of the credit expansion. The only question to be answered is, what form will the debt collapse take when it arrives?

Stagcession. Not as bad as a true Depression. A chronic, long-term recession. Pretty much what you’ expect from monetarism, which holds that as long as the banks and financial system are adequately lubed with money, all is well. We won’t crash under such a system, but we won’t flourish, either, because it ‘papers over’ the fundamental issue- that it’s the middle class that needs the lube.

But that’s commie talk, we’ve been taught. Worse- it’s Keynesian!

Counterexpansion
BOHICAcession
Circular Progression

I’m a HUGE fan of a DEEP examination of the underlying structural issues with our economy, where we find that in the modern economy, money is borrowed into existence and is offset by debt, and for 30 years we’ve been funding massive trade imbalances through unsustainable debt growth, and that the ONLY way to stop relying on that unsustainable debt growth is to attack and reverse the underlying imbalances that created the need for the unsustainable debt growth in the first place.

Examine this, Darrell
http://www.zillow.com/local-info/CA-San-Luis-Obispo/r_6923/

Median sale price: $458,100 (was $605k in 2008)
Median Household Income: $31,926

“Maybe as a result we would have real capitalism in the U.S. in 40 years, like they do in China now.”

Sounds twisted!