Open Thread for Friday March 6th

Here is your open thread for the weekend beginning Friday March 6th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

53 comments:

  1. 1
    Ooops says:

    When will the Fed start printing money like crazy? Bank of England already started the presses going. Is Helicopter Ben already gearing up for money drops here in Seattle? How would heavy printing of money affect the real estate prices? Since we have deflation money printing should be ok? Since the whole world will soon start the presses going – then it should not affect the USD valuation?

    Does Bernake have good HP printers? How fast can he print the money? And when?

  2. 2
    Ooops says:

    Here is a nice article on the Fed’s policy and govt. It is pretty neat stuff. We are trying to financially engineer prices of real estate. It will be a blast!

    http://www.atimes.com/atimes/Global_Economy/KC06Dj02.html

  3. 3
  4. 4
    Eleua says:

    If money is printed, it needs to do two things to cause inflation.

    It has to be done in such a way that lenders don’t discount the added currency by selling off the bond market and raising interest rates.

    It has to find its way to the consumer so he can drive demand and cause inflation.

    IF not, all we have done is added stress to the already fragile bond market.

  5. 5
    wtf says:

    I’ve been reading Seattle Bubble for a couple of years now and must say that I’m leaning towards the Eleua/Sniglet/Scotsman camp about this whole thing. I’m wondering if any of you three, or any other SB-folk are familiar with the following video and what your take on it is:

    The Money Masters – How International Bankers Gained Control of America (1996) http://video.google.com/videoplay?docid=7757684583209015812&q=f?ederal%20reserve&ei=euSASLOeH5OerAPQyuS2Cw

    Watched it last night and I don’t think I’m a survivalist-conspiracy theorist, nut-job; but somehow this makes sense to me.

    I’m afraid that it’s going to get much worse. This party is just getting started.

  6. 6
    Scotsman says:

    RE: wtf @ 5

    I’ve watched it, and there are many good points made. But it does fall a bit heavily into the conspiracy camp, which I don’t think is true. The problems we’re seeing now are in many ways a natural conclusion to several factors working in unison, but not necessarily the result of intentional conspiring or collusion.

    A fiat money system, along with a fractional reserve banking system, naturally leads to a rapidly expanding monetary base as the required interest drives an expansion of the currency. In the end though, as with any system based on exponential growth, the growth gets out of control. Some have argued that ALL fiat/fractional reserve systems come to a natural end once the exponential factor takes over, and a reset of some type is inevitable. It’s the iron hand of mathematics at work.

    The second complication is our political system, a system that rewards government largess, or “pork to the people.” There really isn’t any natural limit on what the people can vote to give themselves- retirement, health care, etc., all for free until the balance tips and the system collapses. This has been written about for hundreds of years, from De Tocqueville on down through the ages. Again, it’s not a plan, or a conspiracy per se, it’s just a fact of how political systems such as ours evolve and then die. All of the current budget/banking/economic problems can be tied back to a political system that lacks the incentives to choose long term stability and solutions over short term personal gains. Term limits would help immensely here.

    I think we will see a major collapse, as bad or worse than the 1930s. When we rebuild, the question is will we make the needed tweaks to the banking and political systems to prevent a recurrence while restarting an era emphasizing capitalism and freedom and the growth that they bring, or will we muddle along to a slow collectivist death? The U.S. didn’t grow to dominance (4% of the earth’s population, 30+% of the wealth) because of an abundance of resources or geography- it was because of a political system that emphasized a reliance on personal effort and achievement with rewards to match. Empires come and go based on the choices they make, just as our personal lives flourish or fade based on the quality of our decisions.

  7. 7
    Sniglet says:

    I concur with Scotsman. I don’t believe there has been any “conspiracy” to take over the economy, or such like. If anything, we have gotten in such a terrible mess because policymakers have done their level-best to avoid having the nation feel any economic pain over the last 50 years (e.g. lowering interest rates, bailing out depositors/investors, etc).

    It’s ironic that all the efforts to prevent pain have only served to make the eventual hurt all the more severe.

  8. 8
    wtf says:

    Conspiracy or not, it seems to be playing out like this:

    Sucker people into thinking they can make a jump in class by buying a house and living large off of it – make it so attractive that people feel like they’re missing out or an idiot for not doing it – once you have everybody in – pull the rug out from under them….fat cats with money can now scoop up the remains at pennies on the dollar. The formerly lower/middle class that tried to live beyond their means are pushed back down to the dregs.

    So, I guess the next question is…if you believe this is leading to depression (which I’m afraid of), then what, do you as an individual do? Eliminate as much debt as possible, save money, buy silver coins, etc…?

  9. 9
    Scotsman says:

    Here’s a great column that touches on some of the above:

    http://pajamasmedia.com/michaelledeen/2009/02/14/were-all-fascists-now-ii-american-tyranny/

    “There is no single dramatic event in Tocqueville’s scenario, no storming of the Bastille, no assault on the Winter Palace, no March on Rome, no Kristallnacht. We are to be immobilized, Gulliver-like, by myriad rules and regulations, annoying little restrictions that become more and more binding until they eventually paralyze us.

    Subjection in minor affairs breaks out every day and is felt by the whole community indiscriminately. It does not drive men to resistance, but it crosses them at every turn, till they are led to surrender the exercise of their own will. Thus their spirit is gradually broken and their character enervated…

    The tyranny he foresees for us does not have much in common with the vicious dictatorships of the last century, or with contemporary North Korea, Iran, or Saudi Arabia. He apologizes for lacking the proper words with which to define it. He hesitates to call it either tyranny or despotism, because it does not rule by terror or oppression. There are no secret police, no concentration camps, and no torture. “The nature of despotic power in democratic ages is not to be fierce or cruel, but minute and meddling.” The vision and even the language anticipate Orwell’s 1984, or Huxley’s Brave New World. Tocqueville describes the new tyranny as “an immense and tutelary power,” and its task is to watch over us all, and regulate every aspect of our lives.

    It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd.

    We will not be bludgeoned into submission; we will be seduced. He foresees the collapse of American democracy as the end result of two parallel developments that ultimately render us meekly subservient to an enlarged bureaucratic power: the corruption of our character, and the emergence of a vast welfare state that manages all the details of our lives. His words are precisely the ones that best describe out current crisis:

    That power is absolute, minute, regular, provident and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?

    The metaphor of a parent maintaining perpetual control over his child is the language of contemporary American politics. All manner of new governmental powers are justified in the name of “the children,” from enhanced regulation of communications to special punishments for “hate speech;” from the empowerment of social service institutions to crack down on parents who try to discipline their children, to the mammoth expansion of sexual quotas from university athletic programs to private businesses. Tocqueville particularly abhors such new governmental powers because they are Federal, emanating from Washington, not from local governments. He reminds us that when the central government asserts its authority over states and communities, a tyrannical shadow lurks just behind. So long as local governments are strong, he says, even tyrannical laws can be mitigated by moderate enforcement at the local level, but once the central government takes control of the entire structure, our liberties are at grave risk.”

  10. 10
    gameboy says:

    What is really disappointing about Obama so far is that he is still just continuing the same policies set by Paulson/Bush. They still refuse to just rip the band-aid and take the losses and move on. They would rather drift from one band-aid solution after another.

    US needs to follow it own advice that it has given to countless other economies when they were in the similar situation; take over the zombie banks, sell off good parts right away, and sell the bad parts orderly as possible over time. This is what they did when we had S&L crisis and it worked fine and it is what we need to do now.

    But as long as we have the holdovers from the people who created this mess (Bernanke, Geithner, etc.) this will never happen as they want to desparately save their reputation.

    We need a clean start and that can only happen once we get a fresh set of eyes.

    Paul Krugman wrote a great columns about this today: (http://www.nytimes.com/2009/03/06/opinion/06krugman.html)

  11. 11
    Jbeans says:

    By wtf @ 8:

    So, I guess the next question is…if you believe this is leading to depression (which I’m afraid of), then what, do you as an individual do? Eliminate as much debt as possible, save money, buy silver coins, etc…?

    I have the same questions. We’re in a good position — no debt, we have savings, reasonably secure job — I worry though that all our savings could be worth nothing if we have a total collapse. I have a hard time trusting the idea that the FDIC is going to cover everyone’s deposits if banks start going down the tubes left and right.

  12. 12
    Kary L. Krismer says:

    RE: Jbeans @ 11 – I wouldn’t worry about the FDIC not acting–I’d be more worried about the money they paid you being worthless at that point in time.

  13. 13
    wtf says:

    I’m with Kary on that one….I’m pretty secure that my dollar amount is safe….I’m just afraid that it won’t have any purchasing power.

    However, if Sniglet is right about deflation – then my money has tons of purchasing power, if I’m following his line of thinking.

    But, let’s say they push it the other way: Is it possible that the “remedy” is to inflate our way out of the problem…the mortgages are in today’s dollars – but let’s say inflation increases (and wages would have to follow) bringing the effective outstanding balance of a mortgage of $500,000 or so, to be only the equivalent of $250,000 or less. Does that make sense?

  14. 14
    Kary L. Krismer says:

    Yes that makes sense, and that’s why the government might want inflation. Inflation will hurt a lot of people, at least temporarily, but those mortgages won’t be underwater for long.

    Of course there would be other effects. For example, interest rates would rise and thus those mortgages wouldn’t be worth as much due to that. But at least determining their worth would be largely a mathematical calculation, increasing the certainty of valuations.

    But from an individual’s point of view, owning highly leveraged real estate during times of inflation is usually good.

  15. 15
    Scotsman says:

    Guys, enough of the inflation fear. There isn’t going to be any inflation, there isn’t going to be any “printing.” The bond markets can’t and won’t support it.

    The U.S. has about $11 trillion in debt. Of that, only about half is “public” or sold into open markets. The rest is held by governmental agencies, such as social security, as inter-governmental I.O.U.s. etc. So the world at large has only really absorbed about $6.0 trillion in U.S. bonds or treasuries. Now, the government is looking at funding something in the neighborhood of an additional $3.0 trillion in deficit spending over the next year or two. And that assumes that tax revenues stay at their current level, which most can agree is unlikely to say the least. So what we’re really looking at here is trying to push an additional 50+% of additional treasuries out into the “real (as opposed to accounting gimmicks) world. That’s huge. It will require that interest rates go up in order to pull capital out of private hands and the equities markets. This will crash the markets not only by pulling capital, but by ramping all borrowing costs for all entities- cities, corporate, mortgages, credit, etc. There goes any thought of a recovery. The government can’t create money fast enough to cover the wealth destroyed. Net result is deflation.

    Watch the 10 year Treasury rate, currently just under 3%. When this starts to move up, the end is near.

  16. 16
    softwarengineer says:

    I AGREE SCOTSMAN [WE SHOULD START OUR OWN WEBSITE: CALL IT “ECONOMIC RECOVERY WITH A BRAIN”]

    Why in the name of all that is common sense would anyone buy US debt for like 1%?

    At some point anyone or any country with extra cash is just going to tell us to all go to Hades and put it in their Jack Benny vault and wait it out….the final coffin nail in this TOTALLY flawed uncontrolled growth/debt dead economy, we fruitlessly try to revive the same old wrong way.

    Look at the $85B pyramid scheme housing bailout waste….9 million lottery recipients get about $9000 each. Sounds like a few months of mortgage payments at best, but more likely a complete waste of our tax dollars when these upside down mortgages are like $50-200K underwater.

    I think we should use 100% of the stimulus money developing industrial base jobs again….Hades, if we could train domestic technicals, with a year or two of college, to be the predominant sector of the Boeing development workforce, that sucessfully developed the 757/767 in 1978; what do we need cheap insourcing of technicals into America for? Ask Bill Gates, he’s a college dropout.

    We should do this now, and stop wasting all the stimulus money on flash pan road projects that die after a few months and simultaneously brainlessly add more overpopulation, that further deteriorates our schools and our economy.

    And if countries in Asia and Europe get mad at us for manufacturing our own stuff again, tell them its the only way we can get back to buying anything from them again [and making the monthly payments on the debt we owe them]….its definitely in their best longterm intererst too.

  17. 17
    Eleua says:

    RE: Scotsman @ 9

    Thanks for the great post.

    I have a book to recommend that fully explores the subject of debasing the moral fabric and the micromanagement of the Nanny State, but I know from experience that about half a dozen SBers will crane their necks 270deg and spit pea soup at the prospect of their beloved ideology getting challenged.

  18. 18
    Hugh Dominic says:

    RE: Jbeans @ 11

    Jbeans, I am in the same boat: no debt, got my 20-25% down payment in CDs (about to reset to lower rates, but hey, what can you do). Job in good shape (so far).

    I am looking at houses, but have no intention to buy until things settle down.

    I used to think that I would wait for signs of the market finally hitting a floor – Case Shiller flat for 6 months for example.

    But now, I am much more keyed into the larger market, particularly employment. Real Estate may have started this mess, but dropping home prices are small beer compared to the highest unemployment figures in 25 years (14% by some measures). And Real Estate isnt going to recover any time soon if the economy continues to hemorrhage jobs like this.

    So, to answer the question, if, as Eulea/Sniglet/Scotsman think, deflation is coming on strong, hold onto your $$s and don’t take on any debt no matter what. If you can keep your job and we don’t have a total societal collapse, you will come out smelling like a rose and buy a house for pennies on the dollar in 5-10 years.

    If on the other hand, inflation does become an issue (and some like Peter Schiff think it will), then sitting on that cash pile is a terrible idea – borrowing and then paying back in inflated currency is what you want to do – taking on a fixed rate mortgage for example.

    For what its worth, the deflationary scenario seems more likely to me – and it certainly seems like we are experiencing that now. Also, I suspect that the inflationary scenario will have some warning signs – we aren’t going to wake up with Argentinean/Weimar hyper inflation overnight.

    So for now, I am socking away all I can, getting a bit of interest and waiting….should be fun.

  19. 19
    Sniglet says:

    With all the talk about deflation, I just have to put in the inevitable reference to my Deflation 101 podcast, that makes an in-depth argument for why significant deflation might be in our future.

    http://surkanstance.blogspot.com/2009/01/deflation-101-podcast.html

  20. 20
    Everett_Tom says:

    I have a book to recommend that fully explores the subject of debasing the moral fabric and the micromanagement of the Nanny State, but I know from experience that about half a dozen SBers will crane their necks 270deg and spit pea soup at the prospect of their beloved ideology getting challenged.

    Like that’s ever stopped you before.. Why not post it? some of us (or… at least one of us..) are interested…

    When I first found this site I firmly believed that buying a house (in early 2007 in Seattle) was a good move, so some of us can change our minds.. when presented with data..

  21. 21
    Scotsman says:

    Eleua-

    Sounds like win/win to me- I get to learn about a good book AND watch liberals spin their necks 270 degrees and spit pea soup!! No wait, that’s not how it works, hmmm…

    Anyway, the book?

  22. 22
    Jillayne says:

    Hi Eleua,

    I am open to learning. Pls share the book title.

    in other news, the PI has a scathing article today on loan originators/felons in WA State and follows up on the A+ Mortgage story which I happy to see is finally getting some MSM attention. The guy who ran that company is STILL in business making loans.

    http://seattlepi.nwsource.com/local/402545_mortgagefelons06.html

  23. 23
    Herman says:

    RE: Scotsman @ 6 – I’m going to have this post framed.

  24. 24
    ARDELL says:

    E,

    We want the book! (bang) We want the book (bang) . You just wanted us to beg you for it, didn’t you? ;)

  25. 25
    Ooops says:

    RE: Scotsman @ 15

    Scotsman – But what if the US govt decides to fund $3 trillion deficit by printing the $3 trillion? You assume it will issue treasuries to pull money out of the market. If it prints the $3 trillion – then you will have the inflation you are talking about.

    I know – all people holding US currency will be screwed. But Bernake does give a damn about this.

  26. 26
    Ooops says:

    Also what do you guys think of TIPS as a way to protect yourself from inflation if it starts rocking the boat? I think when we start seeing inflation – this might be also the way to go. For now hoarding cash is the way to go.

  27. 27
    David Losh says:

    RE: Scotsman @ 9

    And you tell me I ramble.

    It’s very simple, you need to go through the looking glass. There is a world much larger thatn the United States. I also thought manufacturing at one point would help “fix” things until I saw that things aren’t broken.

    The credit markets are winding down, as they should. People need to become more self reliant. Pooling money is one way to do that. Every family living alone. spending more, and keeping less was the American Dream. Two cars in every garage, thousands of housing units stacked on top of each other, and every housing unit having three TVs was the life to aspire to.

    I can’t keep straight who is the immigration person, but get used to the idea that America, as you knew it, is gone forever. I also don’t remember if the one going on about immigration is the one who talks about the world population being above six billion.

    The world is shrinking and all the financial calulations in the world isn’t going to make any difference. The money doesn’t make any difference. The cost of the housing units does. You don’t want to pay the price for housing? There are a few million people who will come here and buy the housing unit, a few million.

    The Obama plan is the only thing keeping this country going right now. The Republicans keep trying to destroy this country at every turn, but we need to resist that. The only reason Republicans have any say in anything is because Ronald Reagan pointed out the Federal Budget as a farce, initiated the Grace Commissiojn, and wanted the line by line Veto. That’s the sum total of the Republican platform.

    The second part of Republicans keeping power, or any say since has been the Democrats attack on gun rights in this country. Most true conservatives are horrified at the government controls the Republicans have championed. The small little rules that give corporations more power than our government is a thing to fear. Most conservatives would like to see power returned to our government officials.

    Our government is the least oppressive in the world. Corporations have proven to be suspect. Privitizing has given us such abuses of power that we are looking more like Mother Russia, without the communsim, than the United States.

    Deflation, maybe, but will wages deflate? I don’t think they can. Will the price of goods deflate? If so then the supply and demand theories go out the window. The world has a ton of demand for goods.

    Inflation? Why, for what purpose? For some financially engineered formula? Sorry, you need to get out and see the world. Take a trip to India, or the Phillipines, South America, or drive through Mexico. You get the idea that the world has problems larger than you.

    The only thing we can do, that our government can do, is to help the credit market wind down, slowly. After that blood bath we need to figure out what we can do to build more personal wealth. There will be no trickle down promise this time. You need to do more, work more, contribute more to your own personal economy.

    After you are stable then you, we, can help other people in other countries. If we refuse to help they will be at our door.

  28. 28
    gameboy says:

    Just read a great proposal from a favorite analyst of mine, John Mauldin.

    His proposal for solving the bank problem is here: http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/03/06/the-law-of-unintended-consequences.aspx

    i would highly recommend reading this.

    The gist is this; the current system of rating RMBS (mortgage backed securities) using a coporate bond rating method is not viable. Even if you only lose $1, the bond goes from AAA rating to junk bond. Which make sense for a bond from a single source (a corporation), but does not make sense when the bond is comprised of thousands of homes. Just because one home defaults does not mean that every home will.

    But because of the corporate bond rating method, the banks are in a very difficult situation of having to unload these low rated RMBS at $0.50 on the dollar when they may on lose $0.10 on the dollar. Making hedge funds rich in the process.

    I think this idea has a lot of merit. It will definitely help stabilize the banks with fewer resources from the taxpayers while bringing more transparency to the rating methods.

    What do you think?

  29. 29
    Scotsman says:

    RE: Ooops @ 25
    It is currently illegal to just print up money without first backing it with debt/treasuries, per the constitution. To just openly print would first require an act of congress, which no one around the world would be able to miss. And knowing that we were just printing, who would want to take those increasingly worthless dollars for payment? It can’t be done. Folks need to understand how the process works, and not just throw terms like “print” around in discussions.

    In the U.S., every dollar has to be backed by debt. Once we just start printing paper dollars without any backing, the currency becomes what it is- just worthless paper, and again the system crashes.

  30. 30
    Scotsman says:

    RE: David Losh @ 27

    David, the Obama plan is only insuring that this country will remain depressed for decades. Put down the Kool-Aid and do some more reading. Start here:

    http://www.tickerforum.org/cgi-ticker/akcs-www

  31. 31

    A number of “experts” believe that what we’ve got now is a bubble in treasuries. Interest rates on t bills and t notes is extremely low, and the thought is that at some point the demand for treasuries will lessen. The demand is very high now because treasuries are seen as safe, and the Chinese and others are continuing to buy them despite very low rates.
    So what if they print money and can’t sell the treasuries? Or do they wait until the treasuries are sold until they print the money?

    By Scotsman @ 29:

    RE: Ooops @ 25
    It is currently illegal to just print up money without first backing it with debt/treasuries, per the constitution. To just openly print would first require an act of congress, which no one around the world would be able to miss. And knowing that we were just printing, who would want to take those increasingly worthless dollars for payment? It can’t be done. Folks need to understand how the process works, and not just throw terms like “print” around in discussions.

    In the U.S., every dollar has to be backed by debt. Once we just start printing paper dollars without any backing, the currency becomes what it is- just worthless paper, and again the system crashes.

  32. 32
    TJ_98370 says:

    .
    I consulted with Eleua and with great reluctance, he finally revealed the title of the book to which he was referring:
    .

    Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market

    .

  33. 33
    Herman says:

    RE: Ooops @ 26 – TIPS are a good idea, but keep in mind that the .gov gets to define the way that inflation is measured. They have a tendency to exclude certain things from their definition of inflation, and thus they can underpay on TIPS (and COLA adjustments for pensioners).

    Keep your eyes on commodities – gold, soybeans, etc. A worldwide inflation binge would drive up the currency value of real resources. Right now they are in check because the slow economy has slowed demand for natural resources, but I’m thinking that the economy will reach a stable state at some point and inflation will kick in.

  34. 34
    David Losh says:

    RE: Scotsman @ 30

    Put the Kool Aid and step away. Just back away.

    Stock Market Ticker Tape that’s the problem. Those profits have been based on consumer credit. Consumer spending is what has kept the economy going. Wages are flat so I don’t see them going down. Lay offs were the only alternative.

    You’ll notice an up tick in personal credit last month after a couple of months of decline. People have to use credit because they have fewer jobs, and less money.

    The problem was that our government allowed credit card companies to charge 30% inteerst with fees and penalties. Companies like GM and General Electric began counting this interest, penealties, and fees as profit. Second morgages or home refinances were used to convert this consumer debt into mortgages, and the process started all over again.

    The stock moarket is now responding to the fact consumers are defaulting on mortgages. Foreclosure stops people from getting more consumer credit. The credit market is shrinking and is going to collapse. Get used to that idea.

    No more easy stock market profits for your 401Ks or IRAs. Pension Funds dependent on stocks will be hurt and the safe havens will be crowded.

    I could go on but you should be able to see the writing on the wall. Our country will have to start producing something in order to survive.

    The Obama plan provides for infra structure inside of our country. Health care is a brilliant way to generate more jobs. We need to get away from corporations dictating public ploicy. Our current government is providing an alternative.

  35. 35
    Scotsman says:

    David- call Scotty, and ask him to beam you up. The reality you seek is not here.

  36. 36
    David Losh says:

    RE: Scotsman @ 35

    Patriotism is protecting our way of life. Freedom is by far the one thing the United States holds over the rest of the world.

    In the past ten years more and more power was given to private enterprise. We are seeing the results today. Who do you trust? Who do you think will help us pay our debts, or who wo suduce us into creating more debt?

    We are individuals. That group thought reasoning you have there about government controls pales in comparison with what passes for profits lately.

    I wish I had time, but i don’t. Our government has given us diverse characters at the helm Ronnie, Bill, George, and now Obama. I happen to believe this is the greatest form of government in the world. It can work if the people support it.

    Too many time people want to subvert our way of life for an agenda that is based on profit. The phrase is We the People, it’s called the United States.

    Yes, I’m well aware of the struggles. What I know is that we elect the people we believe in. Thier job is to keep this country strong. My job is remain free.

    Am I getting the point there or am I missing something?

  37. 37

    David makes sense here.
    Tyranny can come in different forms. We could live under a Stalinist regime, or under Fascism, or we could live under the tyranny of the large corporation, which has had a stranglehold on our economy. In recent years, laws regulating large corporations have diminished, which is neither good nor bad but we’ve done things to encourage free markets, and that has meant minimizing labor and environmental protection for the sake of profit.
    For years, some have been asserting that the government is the problem, not the solution, that we should simply let the corporations do whatever they want and prosperity will flow.
    Now, corporate profits are down or non existent, and and these CEO types who had been wailing about the shackles of government?
    They’re waiting in line for their government handout of billions, because they”re “too big” too fail.
    At the same time, the mom who bought a house a couple of years ago as a result of manipulation by unscrupulous real estate agents and loan originators , but is now out of a job and is standing in line waiting for her government cheese…she’s the one who’s getting the blame.

  38. 38
    lafsalot says:

    It’s a mistake to say one political persuasion is more prone to regulate citizens to death than the other.

    I grew up in the south, where all of my very conservative relatives vote people into power who work to legislate away their ability to buy dildos, hire midwives or take birth control. As a kid I deplored the oppressive atmosphere of the conservative religious people around me, and was relieved over the years as that lightened and eventually I moved to the west coast where I can live and play with much less intrusion into my activities. Now if only we could decriminalize pot and shrooms.

    It’s largely conservatives who hold their morals as the absolute authority that every one should abide by and try to write them into stone, er, law. Liberals have plenty of faults, but I wouldn’t want to live in a place where conservatives got free reign to dictate to me how to live my life and what activities I should or shouldn’t partake in.

  39. 39
    Scotsman says:

    RE: Ira Sacharoff @ 37

    “the tyranny of the large corporation, which has had a stranglehold on our economy. In recent years, laws regulating large corporations have diminished… and that has meant minimizing labor and environmental protection for the sake of profit.”

    Really? You’re kidding, right? Shall we look at the size and growth of the EPA and OSHA budgets, and the sheer volume of law that they write? What do you think the cost of compliance is? Why do you think so many jobs have left this country?

    You do realize that the U.S. government is on the verge of essentially making it illegal to exhale by declaring CO2 a toxin?

    We are SO f@ck#d. This country deserves to be flushed down the toilet for, if nothing else, failing to educate its own people in basic logic. God help us.

  40. 40
    Scotsman says:

    Oh good, now it’s out: Obama is completely overwhelmed and in over his head! I love the comments.

    http://hotair.com/archives/2009/03/07/great-news-obama-fumbled-brown-visit-because-hes-in-over-his-head/

  41. 41
    Ooops says:

    Hey Scotsman – For all laymen here on Seattle Bubble can you please do everybody a big favor and share the knowledge of how govt prints money.

    You say it has to be backed with govt debt.

    But if the govt issues treasuries – then it takes money off the market. Sb gets treasuries and pays money to the govt. So this part is deflationary because sb has treasuries instead of money that the person or institution can spend.

    Now the govt has more money which it can spend on sthg. So that part is ok I guess and is inflationary.

    Am I missing sthg?

  42. 42
    Ooops says:

    Hey Scotsman –

    So articles like this one: http://www.ciovaccocapital.com/sys-tmpl/moneyprinting/
    are midleading or what?

    Many Americans find it hard to believe the Fed can create money out of thin air. They can and based on Tuesday’s Fed statement, they will continue to do it. When they create new dollars, the basic laws of supply and demand tell us they are devaluating the dollars we currently hold. More dollars (demand) chasing a relatively stable amount of goods (supply) will eventually lead to higher prices. As prices go up, the buying power of your dollars goes down. As of late 2008, we remain in a deflationary cycle for asset prices, so price inflation in the general economy will take time to surface (maybe years if things get really bad). For those of you who are skeptical of whether or not the Fed prints money, below are excerpts from recent articles from well known news organizations. It is no longer taboo to talk about money printing.

  43. 43
    David Losh says:

    RE: Scotsman @ 39

    Interesting juxtaposition of your avitar and reference to the Brown visit to the White House. Are you a patriot or not? Do you believe in the principles of freedom or not?

    The british have been the most oppressive regime in modern history. Why would any President of this great country look at a visit by the british as anything other than a pleasant chat. Go to London and see the class struggles that go on in that country. You have truly the haves and have nots? You have workers and Land Owners, Lords and fiefs.

    Now about the EPA and OSHA. They do very little in stemming the emmissions that we have had during my life time. The auto and oil industries have had years of low emmissions standards and an over all lack of any concern for workers.

    The oil industry I won’t address because it’s so ridiculous. OSHA however has decades of abuses on the American worker to answer for. Employers have routinely put American workers in harms way with the blessing of our government.

    Pointing at these agencies that are doing to little, way too late is just another indication of why our government needs to be held more accountable.

    About the money supply, I suggest you read up on how the credit markets have been operating. We have almost gotten to the point where credit has replaced, or could in theory, replaced money. Our government needs to step in and reclaim this country from unscrupulous business practices.

    Like I say, I wish I had more time, but I have to go to work.

  44. 44
    Bellevue Resident says:

    Did anyone see the Washington Post article about increasing default rate on FHA loans?

    Calculated Risk had an article on this today.

    http://www.calculatedriskblog.com/2009/03/rising-epd-on-fha-loans.html

    So FHA is turning out to be the new sub-prime. When will this madness end?

  45. 45
    Scotsman says:

    RE: Ooops @ 40

    Don’t confuse federal spending with central bank operations.

    The federal government can’t just print money and spend it. It has to either collect it through taxation or borrow it, those are the constitutional limits placed on it.

    The central bank, or fed, which is not a government institution but is owned by its member banks and to an extent regulated by federal constraints, is a separate issue. It gets money from the treasury (giving the government some control) and lends it into circulation through its member banks. But it carries an offsetting obligation on its books, as do the member banks that borrow the created money. It’s not simple to grasp, but there is no “something for nothing” here. All dollars are ultimately backed by the underlying “debt” or productive capacity of the U.S.

    The federal government can not take dollars directly from the treasury, freshly printed, and use them to pay its debts. It can work with the fed to lower the cost of borrowing, or minimize unemployment, or expand the money supply, what ever it choses as its primary goal. But it can’t force any of those things to happen. The market and its productive capacity are the ultimate arbiters of indices such as unemployment, etc.

    I know it sounds like the fed controls interest rates, etc. It doesn’t, the market does, and the fed follows. In the game of curling “sweepers” attempt to speed or slow the stone as it heads toward the goal, but by far the controlling factor is the energy in the stone, not the sweepers. The same is true for the economy and the fed, the fed being the sweepers.

    Bottom line, the bond market and interest rates tie it all together, placing significant restraints on the actions of both the government and the fed. Remembering that debt is essentially the same as money, i.e. your credit card buys that big screen as well as your green cash does, it is the expansion of debt, not cash, that is the main player here. And when debt contracts, the “money supply: contracts, and the debt can shrink much, much faster than the printing presses can produce green dollars.

    There is only about $800 billion cash in circulation, and most of that is held outside the U.S. In contrast, there is, according to some estimates close to $800 trillion, or almost a thousand times as much value or “money” in derivatives and other assets tied to the U.S. Printing won’t close the gap when that collapses.

    The whole concept of money isn’t at all intuitive- hope this helps some.

  46. 46
    Scotsman says:

    By David Losh @ 42:

    RE: Scotsman @ 39

    Interesting juxtaposition of your avatar and reference to the Brown visit to the White House. Are you a patriot or not? Do you believe in the principles of freedom or not?

    Of course, and I would argue I value personal freedom and responsibility More than your past posts suggest you do.

    The British have been the most oppressive regime in modern history. Why would any President of this great country look at a visit by the British as anything other than a pleasant chat. Go to London and see the class struggles that go on in that country. You have truly the haves and have nots? You have workers and Land Owners, Lords and fiefs.

    The British are our number one allies, the second largest economy, and a significant military power. Only a fool would dis them the way Obama has.

    Now about the EPA and OSHA. They do very little in stemming the emissions that we have had during my life time. The auto and oil industries have had years of low emissions standards and an over all lack of any concern for workers.

    This is pure sh*t. The air, water, etc. are all cleaner now than at anytime during the last 100 years. Put down the crack pipe.

    The oil industry I won’t address because it’s so ridiculous. OSHA however has decades of abuses on the American worker to answer for. Employers have routinely put American workers in harms way with the blessing of our government.

    American workers enjoy a higher safety standard than any other country in the world, along with significant production and wage advantages.

    Pointing at these agencies that are doing to little, way too late is just another indication of why our government needs to be held more accountable.

    Name one specific instance. David- please hold your breath- YOU are now the polluting, toxic, CO2 generating problem. Thank your government for the additional freedom….. to breathe.

    About the money supply, I suggest you read up on how the credit markets have been operating. We have almost gotten to the point where credit has replaced, or could in theory, replaced money. Our government needs to step in and reclaim this country from unscrupulous business practices.

    I don’t know where to start, and my time is too valuable.

    Like I say, I wish I had more time, but I have to go to work.

    Later then, comrade. P.S.- I corrected your spelling for you. You’re welcome.

  47. 47
    David Losh says:

    RE: Scotsman @ 44

    It’s a simple question comrade, are you a patriot?

    Making statements like our air and water quality are better than in the last 100 years must show that the EPA is doing a good job, which is it, are they or are they not?

    You snuck in on the oops comment a direct response to how international corporation have high jacked our money supply with: “your credit card buys that big screen as well as your green cash does.” So there is no need to take your valuable time to respond to that.

    Global Corporations have engaged in UnAmerican activity with the blessing of the Bush Administrations. Ronnie may have started it, but I chose to believe he had good intentions. The Bushes only cared about building a dynasty to rival the Kennedys.

    Oil is the perfect example. Dependency on foreign oil is the catch phrase, but the greed of American oil interests has us building gas combustion engines decades after they were obsolete. Solar and wind power has been around since the 1870s and still today it’s like a new industry.

    The list goes on and on of how Corporations have stolen our money, driven up the price of goods, depleted resources for frivolous economic ventures, and are now asking for more welfare from our government.

    It’s UnAmerican comrade. I refer to our current corporate system as Corporate Communism. Just like Mother Russia we would have the Politicos running off the the dachas on week ends while the workers starve in freezing apartments.

  48. 48
    Scotsman says:

    My avatar is a couple of marshmallow Peeps dressed up as a Scottish band. I thought it was funny, not a comment on my patriotism or lack there-of.

    David, I’m sorry, but I’m unable to follow what ever logic or structure you are using in your discussion. I’d love to have a pizza with you, or talk about construction, or houses, but I’m not smart enough to connect with you on other matters. I give up. My apologies, my friend, and good luck.

  49. 49
    David Losh says:

    RE: Scotsman @ 46

    We’ve obviously been here before. It depends on who the enemy is. Out sourcing is a result of greed. There is plenty of money here for every one to live well.

    100 years ago most people in this country were self employed. They were farmers, and working families. The Industrial Revolution along with the Computer Age have made corporations larger than governments. Corporations have expanded beyond borders and greed has subverted any good intentions that may have existed at the beginning.

    So it’s a choice of fighting our government or the corporations.

    Your avatar is of a Virginia Regular in the Revolutionary War. May be artillery judging by the glove.

  50. 50
    Scotsman says:

    RE: David Losh @ 49

    Um, no.

    My new avatar features one of my ancestors, a royal Scottish archer of some fame, shooting his bow.

    Take care, friend.

  51. 51
    Herman says:

    It’s not you, Scotsman, it’s Losh. Sometimes there’s a nugget of sense in his rambling posts, but it’s rarely worth the effort to look for it.

  52. 52
  53. 53
    Kary L. Krismer says:

    By David Losh @ 47:

    RE: Scotsman @ 44 – Oil is the perfect example. Dependency on foreign oil is the catch phrase, but the greed of American oil interests has us building gas combustion engines decades after they were obsolete. Solar and wind power has been around since the 1870s and still today it’s like a new industry.

    Solar only work an average of 12 hours a day at best. Wind is also unreliable. To change that you’d need some different/better battery systems. Also, I don’t believe solar is cost competitive yet–not sure where we are with wind.

    Stated differently, gasoline combustion engines and other uses of oil for power are not obsolete. When it is, it will be much more expensive than solar/wind.

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