Global Economic June Thread

Talk about the global and national economy to your heart’s content, as much as it takes to get it out of your system so the rest of the site can stick to real estate and housing.

For previous economic open threads, click here.

As of 09/07/2010, global economic comments that do not directly relate to Seattle-area real estate go only in threads designated for this specific subject.


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.

429 comments:

  1. 1
    David Losh says:

    Yesterday on Inman News was an article discussing the Vancouver Real Estate market.

    “Home prices in Greater Vancouver, Canada, continue to rise as the region’s spring homebuying season got off to a strong start.
    Buyers flocked to the market during the first quarter, fueled by heavy sales volume in the Richmond and Vancouver West areas. Although housing sales slowed in April, the benchmark housing price increased, topping $620,000.”

    http://www.inman.com/news/2011/05/31/housing-prices-climb-global-heights-latest-olympics-host

    I’ll post the link, but it may not work, Inman is a weird Real Estate agent booster site that has people paying them to get a sales pitch.

    It appears to me that money is flowing out of China, again, and into Real Property in Canada. It seems to me that maybe the Chinese economy is cooling and business people are looking to position themselves elsewhere.

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  2. 2

    By David Losh @ 1:

    It seems to me that maybe the Chinese economy is cooling and business people are looking to position themselves elsewhere.

    That and probably the fact that rising prices can be self-sustaining.

    If you look at stock prices, a stock that has been going steadily up will be more likely to go up further, especially if it’s at a record high (or a 5 year or longer high). That’s because buyers look at that record, and potential sellers have lived through that record. It causes buyers to want to buy and potential sellers to not want to sell. That translates into higher prices, absent some significant news about either the overall economy or the company itself.

    In that regard, people here often try to pin the start of the bubble to a particular event. I could go way back and pin it to the inflation of the 70s. With that inflation people who were invested in real estate (including just your average homeowner) did very well, especially those that were leveraged. That made others want to jump in, and made those in want to get in further (e.g. not sell their existing house when they bought a new house, or even buying rental houses). It also caused others to want to lend, or be involved somehow in the lending (e.g. buy mortgage backed securities). Those to things caused prices to rise even further, which caused even more people to join in, which caused further price rises, etc.

    The thing is bad economic policy can have adverse effects for decades. That’s why I don’t entirely discount some of the more pessimistic predictions for the economy of the US by some here.

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  3. 3
    The Tim says:

    FYI, I’ve adjusted the comment paging settings so that it will break comment threads into pages of 100 comments each. This should fix the problem of long comment threads (such as last month’s global economic open thread) not loading.

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  4. 4
    The Realist says:

    By Kary L. Krismer @ 2:

    By David Losh @ 1:
    The thing is bad economic policy can have adverse effects for decades. That’s why I don’t entirely discount some of the more pessimistic predictions for the economy of the US by some here.

    If you ever take time out to read United Nations public documented long-term plans for the planet, you’d find that there’s a Fabian socialist movement within the central banking system worldwide that seeks to redistribute wealth from developed nations to the undeveloped nations. The stated purpose for this is greater world political and economic stability, although I would imagine the central banking system, which is privately owned, will have much to gain both financially and politically. Pessimism is pessimism, and then there’s the hard, publicly available press releases and documents coming straight out of the United Nations, the World Bank, the IMF, and the Bank of International Settlements. Note that the mainstream media never discusses such documents or topics, other than simply labelling them “conspiracy theories.” How convenient is that? You didn’t fall for it, did you?

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  5. 5
    MacroInvestor says:

    “Subprime colleges – Student loan debt now equivalent to 7 percent of U.S. GDP. For-profits claim Harvard bragging rights and that barbers can make $150,000 to $250,000 a year to lure students.”

    http://www.doctorhousingbubble.com/subprime-colleges-student-loan-debt-now-equivalent-to-7-percent-of-us-gdp-for-profits-claim-harvard/

    Another drag on the economy and housing. Where will first-time buyers come from when the younger generation is saddled with nuisance debt they can never repay?

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  6. 6
  7. 7
    Scotsman says:

    There is no recovery. The stimulus is a total failure that will soon enough be coming back to bite us in the butt through interest expenses.

    “The Federal government borrowed and spent $6.1 trillion over the past four years to generate a cumulative $700 billion increase in the nation’s GDP. That means we’ve borrowed and spent $8.70 for every $1 of nominal “growth” in GDP. ”

    Thanks, Charles, for updating the math.

    http://www.oftwominds.com/blogjune11/GDP-is-not-growing6-11.html

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  8. 8
    Blurtman says:

    Geithner and Goldman, Thick as Thieves

    What was Timothy Geithner thinking back in 2008 when, as president of the New York Fed, he decided to give Goldman Sachs a $30 billion interest-free loan as part of an $80 billion secret float to favored banks? The sordid details of that program were finally made public this week in response to a court order for a Freedom of Information Act release, thanks to a Bloomberg News lawsuit. Sorry, my bad: It wasn’t an interest-free loan; make that .01 percent that Goldman paid to borrow taxpayer money when ordinary folks who missed a few credit card payments in order to finance their mortgages were being slapped with interest rates of more than 25 percent.

    http://www.truthdig.com/report/item/geithner_and_goldman_thick_as_thieves_20110531/

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  9. 9
    pfft says:

    By Scotsman @ 7:

    There is no recovery. The stimulus is a total failure that will soon enough be coming back to bite us in the butt through interest expenses.

    “The Federal government borrowed and spent $6.1 trillion over the past four years to generate a cumulative $700 billion increase in the nation’s GDP. That means we’ve borrowed and spent $8.70 for every $1 of nominal “growth” in GDP. ”

    Thanks, Charles, for updating the math.

    http://www.oftwominds.com/blogjune11/GDP-is-not-growing6-11.html

    you laugh at me for getting my economic views from a guy who literally wrote the textbook on economics and yet you quote a fiction author. something is wrong here.

    “”The Federal government borrowed and spent $6.1 trillion over the past four years to generate a cumulative $700 billion increase in the nation’s GDP.”

    huh?

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  10. 10
    Scotsman says:

    RE: pfft @ 9

    “huh?”

    I know- math IS hard. Hang in there, baby.

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  11. 11
    pfft says:

    By Scotsman @ 10:

    RE: pfft @ 9

    “huh?”

    I know- math IS hard. Hang in there, baby.

    do you realize that the government spends what it spends regardless. it was the bush great recession and all of his unpaid for spending that caused the huge deficits.

    speaking of math, why don’t you show how much the stimulus and other government measures will be a drag on the economy. I’ve looked at the numbers and they are not a drag.

    would you rather be Ireland, Greece, Portugal or Spain? they are a mess thanks to your beloved austerity.

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  12. 12
    pfft says:

    ha ha. too funny. par for the course though.

    http://www.huffingtonpost.com/2011/04/05/boehner-economists-republican-ties_n_844941.html

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  13. 13
    Matthew says:

    U.S. MAY PAYROLLS RISE 54,000, JOBLESS RATE CLIMBS TO 9.1%

    Stick a fork in the “recovery”. QE3 is probably right around the corner.

    here’s a link:

    http://www.latimes.com/business/la-fiw-jobs-20110604,0,2319986.story

    Employers hired only 54,000 new workers in May, the fewest in eight months, and the unemployment rate rose to 9.1 percent.

    The Labor Department report offered startling evidence that the U.S. economy is slowing, hampered by high gas prices and natural disasters in Japan that have hurt U.S. manufacturers.

    The pace of hiring has slowed sharply from the previous three months, when the economy added an average of 220,000 new jobs. Private companies hired only 83,000 new workers in May — the fewest in nearly a year.

    Local governments cut 28,000 jobs last month, the most since November. They have cut jobs for 22 straight months.

    More people entered the work force last month. That pushed the unemployment rate up from 9.0 percent in April.

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  14. 14
    Blurtman says:

    RE: Matthew @ 13 – Oddly enough, or perhaps not so, Moody’s says that if we don’t borrow more money, the USA’s credit rating will be downgraded, but if we do borrow more money, the USA’s credit rating will be downgraded. As both sides seem to be paying Moody’s the big bucks for their opinion, it will be interesting to see who ante’s up the most to get the final say.

    What a great business! What is puzzling is why Moody’s keeps getting quoted in the media, unless Moody’s is funneling some of that money to the media, but of course, so are the folks paying Moody’s.

    Paging Eric Blair.

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  15. 15
    Ben says:

    RE: pfft @ 12 – yes that is hilarious . I do find it ironic however. you don’t mention krugman, who is the biggest democrat political operative there is .

    they are 2 sides of the same coin anyway. wake me up when lew rockwell has a column in the new york times . I’ll be sleeping a long time .

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  16. 16
    HappyRenter says:

    RE: Matthew @ 13
    How do you know that QE3 will have the same “beneficial” effect as QE2? Also, the recent increase in unemployment is due to people re-entering the work force. This is the same reason why unemployment dropped at the end of 2010 when people left the work force. Now, there is either optimism and more people have re-started looking for a job -or- people running out of cash and decided that they ‘must’ find a job -or- recent college graduates joining the work force and not finding a job.

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  17. 17
    Sweet Pea says:

    By Blurtman @ 8:

    Geithner and Goldman, Thick as ThievesWhat was Timothy Geithner thinking back in 2008 when, as president of the New York Fed, he decided to give Goldman Sachs a $30 billion interest-free loan as part of an $80 billion secret float to favored banks? The sordid details of that program were finally made public this week in response to a court order for a Freedom of Information Act release, thanks to a Bloomberg News lawsuit. Sorry, my bad: It wasn�t an interest-free loan; make that .01 percent that Goldman paid to borrow taxpayer money when ordinary folks who missed a few credit card payments in order to finance their mortgages were being slapped with interest rates of more than 25 percent.http://www.truthdig.com/report/item/geithner_and_goldman_thick_as_thieves_20110531/

    This article might be more useful if there were more facts and references, and less editorializing. Am currently reading “Goldman Sachs – The Culture of Success” and the culture of customer service-driven ethics there has obviously deteriorated over time (based on the research in the book), but calling Goldman a “favored bank”, implying that there was a conscious decision to let Lehman go under and subsequently give $ to Goldman as if those actions occurred in a vacuum, and also implying that from Goldman’s point of view, being forced to re-capitalize and reduce prop trading in order to classify as a bank qualifies as a good thing, sounds like a lot of spin and not much else. What is the info released from the “sordid details”?

    How is Goldman determined to be a favored bank?

    Lehman’s failure was a major “oh s***” moment, and I don’t think the gubmint realized the extent to which it’s failure would affect counterparties and panic the street. And no one seemed to have thought about the implications in the UK, where all the assets were immediately frozen. Or if they did, they clearly didn’t think it was feasible to let that cancer spread. If this happened x Goldman et al, markets would have seized.

    Goldman has made huge money off of leveraged proprietary trading. I seriously doubt they want to be limited to operating as an arthritic, old bank. Banks are lame, according to the cool kids. BofA buying Merrill was like slumming it for Merrill. Even for Merrill.

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  18. 18
    Blurtman says:

    RE: Sweet Pea @ 17 – I think the idea is that if you want more detail, you’ll have to purchase Robert Scheer’s book, The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street. The article includes a link to the book.

    A number of writers believe GS is a favored bank – see comments below.

    I had not read that GS had to reduce proprietary trading to obtain USG backstopping. Theoretically it may if Dodd-Frank goes forward. If you have some links, I would welcome reading them. I had read that they had to decrease their leverage ratios, and that they would be restricted from investing in non-financial companies, but maybe not.

    The question is why the free market was not allowed to deal to GS what they had coming. If they went under, would not other companies have filled the space they vacated?

    Re: the GS favored bank evidence:

    “1. Why is Goldman Sachs allowed to maintain leverage ratios significantly higher than the large legacy bank holding companies like Wells Fargo, Bank of America (BAC), JPMorgan (JPM) and Citigroup (C)?

    2. Why is Goldman allowed to operate like a private equity company, holding large stakes of foreign non-financial corporations? (I should note that Financial Holding Companies do have ten years in which to sell their stakes)

    3. Why is Goldman (and other large banks) allowed to operate like a hedge fund and take outsized risks with capital via large proprietary trading operations. Most of Goldman’s profits are coming from this area. At least Deutsche Bank (DB) has offloaded these bets onto hedge funds in which it invests. Given the fact that the large too-big-to-fail financial institutions have received a large backstop from the taxpayer, the fact that they are loading up in prop trading shows that regulation in the U.S. is non-existent.

    4. Why is Goldman allowed to have an interest in the failure of other financial firms? We now hear that Goldman has an interest in the failure of CIT (CIT), a major lender to small-and medium-sized businesses. These perverse incentives are everywhere in the derivatives world and were an enabler of the financial meltdown and the principal reason AIG was bailed out with taxpayer money

    When Goldman switched to a bank holding company, such big profit seemed unlikely as analysts worried the firm would face stricter regulatory oversight from the Federal Reserve, with limits on risk-taking and higher capital requirements. See story Wall Street changes.

    But almost 10 months later, nothing much appears to have changed, some analysts said in the wake of the firm’s second-quarter results.

    After two quarters as a bank holding company, Goldman is still “not reporting like a bank and not acting like one either,” said David Hendler, Baylor Lancaster, Pri de Silva and Kristine Lanspa, analysts at CreditSights, an independent fixed-income research firm.

    And CreditSights is right. Goldman have no intention of changing anything at all.

    “Our model really never changed,” Goldman Sachs Chief Financial Officer David Viniar said yesterday in an interview. “We’ve said very consistently that our business model remained the same.””

    http://seekingalpha.com/article/164946-why-is-goldman-a-bank-holding-company

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  19. 19

    By Sweet Pea @ 17:

    Lehman’s failure was a major “oh s***” moment, and I don’t think the gubmint realized the extent to which it’s failure would affect counterparties and panic the street. And no one seemed to have thought about the implications in the UK, where all the assets were immediately frozen. Or if they did, they clearly didn’t think it was feasible to let that cancer spread. If this happened x Goldman et al, markets would have seized.

    First, if you want to use language like that, go over to RCG! ;-)

    Second, I think you’re right that they didn’t contemplate all of the impact, and add the implicit thought that perhaps that event affected future actions (e.g. AIG). It probably made them realize how difficult it would be to determine the impact of one company failing, and caused them concerns about a domino effect.

    What’s amazing though is that although those events coined the phrase “too big to fail,” nothing has been done to break up companies that are too big to fail, and in fact some companies have gotten a lot bigger. We broke up Ma Bell because we thought telephone bills were too high, but we don’t break up companies that we think could potentially destroy the entire economy of the United States? Yet another example of how President Obama is little different than GWB.

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  20. 20
    Sweet Pea says:

    RE: Blurtman @ 18 -This article brings up some better points, but I’m not sure where the leverage ratio and substandard reporting support is. Could be true, but he doesn’t provide data.

    If GS and the other broker-dealers went under, the way of Lehman and Bear, there would have been that many more frozen counterparty assets (there are still frozen Lehman assets from the UK, years later – counterparties are just trying to sell their claims in many instances, to get cash flow on them now). Bankruptcy and receivership on that many counterparties, plus AIG, could have the domino effect on the firms on the other side of the trades, which was likely every global financial institution.

    I’m not defending GS, I think they are the ultimate opportunists, the complete product of the American free-market dream. They’ll take Libya’s money, they don’t care. They’ve taken money from scumbags plenty of times, but they don’t moralize about it, they just analyze the opportunity to make more money.

    They have had to reduce prop trading, though, as a result of the threat of the Volcker rule. They have already divested themselves of a lot of their hedge fund products and people. And hedge funds have higher margins and more opportunity to trade on their account. They are not pleased about this. Their gamble is to take the bank company medicine and see if they can lobby their way out of the consequences, as far as I can tell. But this all only happens if the government lets it, by providing favorable legislation, or failing to enforce whatever actually comes out of Dodd-Frank (no one is holding their breath).

    http://www.reuters.com/article/2011/05/04/us-goldman-volcker-idUSTRE7434PZ20110504

    http://www.reuters.com/article/2011/01/10/us-goldman-idUSTRE7090E920110110

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  21. 21
    Sweet Pea says:

    By Kary L. Krismer @ 19:

    By Sweet Pea @ 17:
    Lehman’s failure was a major “oh s***” moment, and I don’t think the gubmint realized the extent to which it’s failure would affect counterparties and panic the street. And no one seemed to have thought about the implications in the UK, where all the assets were immediately frozen. Or if they did, they clearly didn’t think it was feasible to let that cancer spread. If this happened x Goldman et al, markets would have seized.

    First, if you want to use language like that, go over to RCG! ;-)

    Second, I think you’re right that they didn’t contemplate all of the impact, and add the implicit thought that perhaps that event affected future actions (e.g. AIG). It probably made them realize how difficult it would be to determine the impact of one company failing, and caused them concerns about a domino effect.

    What’s amazing though is that although those events coined the phrase “too big to fail,” nothing has been done to break up companies that are too big to fail, and in fact some companies have gotten a lot bigger. We broke up Ma Bell because we thought telephone bills were too high, but we don’t break up companies that we think could potentially destroy the entire economy of the United States? Yet another example of how President Obama is little different than GWB.

    Ha, agree on your 2nd point – I think my post was still in the ether when yours went up!

    I got a good laugh when in the Goldman book I read a quote from a partner in the early ’90’s saying they were “too big to fail”. The book was printed around 1999 – the ultimate scenario just took a while to come true. Their major risk-taking probably started in the mid/late ’80’s, once they became willing to represent the offensive in hostile takeovers, it was just a matter of time before the customer-is-first ethic was totally demolished.

    We had a chance to slow their roll when the CFTC head proposed regulating the derivatives market (assuming they would have actually enforced anything) in the late ’90’s, but Congress and an impotent agency had no chance against a bunch of guys that seemed smarter than everyone else.

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  22. 22

    Would the regulation matter if the entities that were playing in the market weren’t so big they would take other entities down with them?

    Until your post I never considered the alternative meaning of “too big to fail.” That they would be so big they couldn’t fail. I’ve always taken it to mean too big to let fail without serious consequences to the overall economy.

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  23. 23
    Blurtman says:

    RE: Sweet Pea @ 20 – So counterparties who had uninsured and unguaranteed positions with a Lehman or other bankrupt firm clearly mispriced risk. Happens all the time. Hypothetical time – Assuming you are correct and the large broker dealers all went under, which is quite an assumption, then what, short and long term?

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  24. 24
    pfft says:

    religious leaders don’t like ryan’s austerity.

    We did not get into fiscal trouble because of poor people. … The poor didn’t cause this. Let’s not make them pay for it.

    http://thinkprogress.org/politics/2011/06/04/236238/progressive-faith-ayn-rand/

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  25. 25
    pfft says:

    By Matthew @ 13:

    Local governments cut 28,000 jobs last month, the most since November. They have cut jobs for 22 straight months.

    500,000 teachers, firefighters, cops and etc have lost their jobs.

    does that make anybody feel safer?

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  26. 26
    pfft says:

    By Ben @ 15:

    RE: pfft @ 12 – yes that is hilarious . I do find it ironic however. you don’t mention krugman, who is the biggest democrat political operative there is .

    they are 2 sides of the same coin anyway. wake me up when lew rockwell has a column in the new york times . I’ll be sleeping a long time .

    lew rockwell is not paul krugman not even close.

    “you don’t mention krugman, who is the biggest democrat political operative there is”

    what you’ve told me is that you don’t read anything krugman writes. here is hint. read krugman’s column from friday. you guys make it so easy for me. try harder!

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  27. 27
    David Losh says:

    RE: Sweet Pea @ 20

    That is a refreshing alternative to the conspiracy theories.

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  28. 28
    Sweet Pea says:

    RE: Kary L. Krismer @ 22

    Glass-Steagall could possibly have prevented some financial companies from becoming so large, but was repealed, and while the Volcker rule reportedly would get partway back, it is not the same as the original legislation, which sought to separate commercial and investment banking. It’s been years since the crisis started now, though, and we all know very little regulation has been re-enacted or finalized. If the industry gets the government to stall long enough, maybe memories will fade and they can go back to business as usual. It starts to remind me of Battlestar Galactica: this has all happened before and will all happen again :-)

    I went back and looked it up, and the Goldman quote about too big to fail was actually 1994, and the context was a trader was told by a partner that had just met with the Fed, “We’re too big now, they won’t let us fail.” Although, it also sounds like Goldman thought they were diversified and global enough that big trading losses ($50 million plus a pop, at that time) could be absorbed by the firm as a whole. These pieces were part of the discussion around how Goldman’s revenues tanked in 1994 due to huge losses on prop trades with a lack of risk management.

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  29. 29
    Sweet Pea says:

    By Blurtman @ 23:

    RE: Sweet Pea @ 20 – So counterparties who had uninsured and unguaranteed positions with a Lehman or other bankrupt firm clearly mispriced risk. Happens all the time. Hypothetical time – Assuming you are correct and the large broker dealers all went under, which is quite an assumption, then what, short and long term?

    RE: Blurtman @ 23

    I don’t know if the biggest broker dealers would have all gone under, but I think that was at least the fear at the time. No one really knew exactly what these people held since everything had been sliced and diced so many times, deals were held in off-balance sheet entities, etc. I am not close enough to the investment banking business to know what would have happened if they all had gone under. But I think a big part of the mess was that the investment banks and their counterparties didn’t know, either. Some of their risk departments probably weren’t even aware of what all was on the books (or should have been on the books).

    If they had gone under, or looked to be, I imagine there would have been margin/collateral calls left and right as people really panicked. I know with Lehman alone, there were entire investment funds that were essentially or virtually wiped out because of the derivative trading that was central to the strategy, and the fact that multiple markets tanked simultaneously. The potential for panic I think was a huge factor in the Fed’s decisions.

    Long-term, there is usually someone left standing to pick up the pieces, but I’m not sure what that would have looked like. Possibly a more fundamental nationalization of the financial industry here and in the UK, involving multiple governments and/or NGOs, and more money injected by the Warren Buffets (used loosely) of the world.

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  30. 30
    Ben says:

    RE: pfft @ 26 – You mean this one?

    http://www.economicpolicyjournal.com/2011/06/krugmans-disastrous-totally-screwed-up.html

    Krugman’s Disastrous Totally Screwed Up Thinking

    Paul Krugman has really done it this time. Today, he discusses Treasury TIP Securities and displays an ignorance that a first year bond trader would be fired for having.

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  31. 31
    pfft says:

    jobs growth is twice what is was last year at this point.

    Comparing Payroll Job Growth in 2011 to 2010
    http://www.calculatedriskblog.com/2011/06/comparing-payroll-job-growth-in-2011-to.html

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  32. 32
    pfft says:

    By Ben @ 30:

    RE: pfft @ 26 – You mean this one?

    http://www.economicpolicyjournal.com/2011/06/krugmans-disastrous-totally-screwed-up.html

    Krugman’s Disastrous Totally Screwed Up Thinking

    Paul Krugman has really done it this time. Today, he discusses Treasury TIP Securities and displays an ignorance that a first year bond trader would be fired for having.

    I bet you have no idea about TIPS. I don’t so I can’t judge. he’s still infinitely more times smarter than lew rockwell or any other Austrian economist.

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  33. 33
    Ben says:

    RE: pfft @ 31 – a photon of sunshine to be sure.

    http://cr4re.com/charts/charts.html#category=Employment&chart=JobLossesRecessionMaxMay2011.jpg

    We have a ways to go…….

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  34. 34
    Ben says:

    By pfft @ 32:

    By Ben @ 30:
    RE: pfft @ 26 – You mean this one?

    http://www.economicpolicyjournal.com/2011/06/krugmans-disastrous-totally-screwed-up.html

    Krugman’s Disastrous Totally Screwed Up Thinking

    Paul Krugman has really done it this time. Today, he discusses Treasury TIP Securities and displays an ignorance that a first year bond trader would be fired for having.

    I bet you have no idea about TIPS. I don’t so I can’t judge. he’s still infinitely more times smarter than lew rockwell or any other Austrian economist.

    You astound me with your well reasoned, logical, and articulate arguments that support your position. /sarcasm

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  35. 35
    pfft says:

    By Ben @ 34:

    By pfft @ 32:
    By Ben @ 30:
    RE: pfft @ 26 – You mean this one?

    http://www.economicpolicyjournal.com/2011/06/krugmans-disastrous-totally-screwed-up.html

    Krugman’s Disastrous Totally Screwed Up Thinking

    Paul Krugman has really done it this time. Today, he discusses Treasury TIP Securities and displays an ignorance that a first year bond trader would be fired for having.

    I bet you have no idea about TIPS. I don’t so I can’t judge. he’s still infinitely more times smarter than lew rockwell or any other Austrian economist.

    You astound me with your well reasoned, logical, and articulate arguments that support your position. /sarcasm

    you don’t know anything about TIPS either. at least I admit when I don’t know anything about something unlike some here…

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  36. 36
    Ben says:

    RE: pfft @ 35 – you’d be surprised how much I do know. anyway , you can’t defend paul krugman so you attack me . nobody here is impressed by your antics, but we do get to chuckle at them.

    have you put your money where your mouth is? I would love to see these to debate

    http://krugmandebate.com/videos.html#

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  37. 37
    pfft says:

    By Ben @ 36:

    RE: pfft @ 35 – you’d be surprised how much I do know. anyway , you can’t defend paul krugman so you attack me . nobody here is impressed by your antics, but we do get to chuckle at them.

    have you put your money where your mouth is? I would love to see these to debate

    http://krugmandebate.com/videos.html#

    I don’t know anything about TIPS so I can’t comment.

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  38. 38
  39. 39
    Blurtman says:

    RE: Sweet Pea @ 29 – OK, but a lot of the derivative investments were based upon what I would call fraudulent arbitrage. That is, you buy CDS to hedge or speculate from a firm that could not possibly pay out. The CDS were clearly mispriced, and your risk reduction actually a fiction. But you book the profits nonetheless. Very similar to the folks who made money from Madoff, except that they had to give it back when it was shown to be based upon illegitimate returns, even if they were unaware that is was. What about Goldman Sachs and AIG? Why did not firms who made money from AIG products have to give it back? Or, why did the USG not bail out Madoff?

    I know you are not defending the investment banks, but is preposterous to be allowed to keep profits and bonuses based upon fanatasy, and then when reailtiy shows up, be allowed to evade accountability and the realities of the free market.

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  40. 40
    Blurtman says:

    Has Blurtman(TM) been vindicated, again? Recall the sometimes ascerbic past dialogue regarding what is in the Social Security “lock-box”, i.e. Treasuries or IOU’s. On the always interesting Thom Hartman show was a guest who, as Blurtman attempted to do, pointed out that the IOU’s were not at all the same as US Treasuries. That is, if the SS “lock-box” contains $2.5 trillion of marketable securities such as UST’s, then they could be sold in the open market and the cash used to pay the SS beneficiaries. But as the IOU’s are not marketable, they can be paid only through raising taxes, cutting spedning, or issuing UST’s to the market, i.e., borrowing more money. Now it is obvious, I hope, which type of “security” is much more liquid, priced, and currently reliable. UST’s. The IOU’s are entirely dependent on a thorny political process. Further, Thom’s guest claimed that the $2.5 trillion of IOU’s were not even recorded as official USG debt.

    Oddly enough, Thom did not seem to grasp the distinction between marketable and non-marketable securities, and seemd to have an agenda to advance. His guest, in comparison to Thom, remained unflustered and quite factual. This makes me question why I like listening to Hartman on other topics.

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  41. 41
    Ben says:

    RE: pfft @ 37 – FYI….The challenge to debate Krugman has nothing to do with TIPS.

    If you donate, you can shame Krugman into accepting the challenge. After all, Keynesianism is superior to Austrian econonomics, so there is nothing for Krugman to lose, right? Right?

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  42. 42
    pfft says:

    By Blurtman @ 40:

    That is, if the SS “lock-box” contains $2.5 trillion of marketable securities such as UST’s, then they could be sold in the open market and the cash used to pay the SS beneficiaries. But as the IOU’s are not marketable, they can be paid only through raising taxes, cutting spedning, or issuing UST’s to the market, i.e., borrowing more money.

    and that directly contradicts what you’ve said about US interest payments the last month…

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  43. 43
    pfft says:

    By Ben @ 41:

    RE: pfft @ 37 – FYI….The challenge to debate Krugman has nothing to do with TIPS.

    If you donate, you can shame Krugman into accepting the challenge. After all, Keynesianism is superior to Austrian econonomics, so there is nothing for Krugman to lose, right? Right?

    why would he argue with a bunch of crazies?

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  44. 44
    pfft says:

    economists don’t like that austerity in Britain.

    George Osborne dismisses calls for economic ‘Plan B’ for Britain
    http://www.metro.co.uk/news/865380-george-osborne-dismisses-calls-for-economic-plan-b-for-britain#ixzz1OYfTKEY9

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  45. 45
    Blurtman says:

    RE: pfft @ 42 – How so?

    Rate this comment: Thumb up 0

  46. 46
    Ben says:

    RE: pfft @ 43 – There, there. It must hurt to know your hero (Krugman) is a laughingstock and is openly mocked on a regular basis for being so clueless, if not dangerous in his writings.

    When you learn proper business cycle theory, you know all magic wand waving notions of prosperity through deficit spending and money printing eventually lead to ruin in the real world. Don’t worry, one day you will understand as will Krugman.

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  47. 47

    RE: Ben @ 46 – I’m more in Krugman’s camp in that I think the stimulus was too little over too long of a period of time. But pfft is just nuts. Over in the healthcare thread he’s clearly demonstrating an opinion that you can spend your way out of any problem. In pfft’s world increased healthcare costs are irrelevant because you can spend more and the populous will be happy.

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  48. 48
    Ben says:

    RE: Kary L. Krismer @ 47 – Reasonable people can disagree when logical arguments are discussed and examined. Bad policy of the Keynesian variety got us to this point. Austerity is only necessary now because profligacy doesn’t work. Let’s find out where rates go when the Fed stops monetizing the deficit at the end of the month. Europe is a mess as too much debt cannot be fixed with more debt. The good old US of A is headed down the same road.

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  49. 49
    whatsmyname says:

    By Ben @ 30:

    RE: pfft @ 26 – You mean this one?

    http://www.economicpolicyjournal.com/2011/06/krugmans-disastrous-totally-screwed-up.html

    Krugman’s Disastrous Totally Screwed Up Thinking

    Paul Krugman has really done it this time. Today, he discusses Treasury TIP Securities and displays an ignorance that a first year bond trader would be fired for having.

    It’s Wenzel that would be laughed out of the trading room. Had he followed his own Treasury link one more step, he could have seen that the hold to maturity, “real” interest rate yield on the 5yr T is virtually the same as the 5yr TIPS. Treasury doesn’t disclose the key assumptions in their model, but note that others come close to their results. Since getting at the “real” rates is Krugman’s stated intention, there is nothing wrong with the proxy he picked.

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  50. 50
    Ben says:

    RE: whatsmyname @ 49 – Hah. How’s this for laughs – Krugman advocated even more wars to help the economy. Lets root with Krugman for more wars, floods, fires, hurricanes, and earthquakes to fix the economy. If that goofball would only learn the broken window fallacy…….

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  51. 51

    For those of you here that don’t think food prices are related to supply.

    http://www.bbc.co.uk/news/business-13687714

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  52. 52
  53. 53
    David Losh says:

    RE: Kary L. Krismer @ 51

    “The role of commodities traders is increasingly coming under the spotlight with some blaming the speculative element of their activities for pushing prices artificially high.”

    A quote from the link.

    Supply is also artificially low for a wide variety production irregularities. The United States and it’s farm subsidy program is one of the biggest offenders, but all corporate farming has the same business model.

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  54. 54
    Scotsman says:

    Over on the weekend thread pffffft tried to claim we aren’t experiencing structural unemployment. I disagreed. Here’s a picture- worth a thousand words, that says we are:

    http://market-ticker.org/cgi-ticker/akcs-www?get_gallerynr=1795

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  55. 55
    pfft says:

    state and local austerity is destroying the nation very slowly.

    Principal: Detroit’s shutting down Catherine Ferguson Academy
    http://maddowblog.msnbc.msn.com/_news/2011/06/07/6805405-principal-detroits-shutting-down-catherine-ferguson-academy

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  56. 56
    pfft says:

    By Ben @ 46:

    RE: pfft @ 43 – There, there. It must hurt to know your hero (Krugman) is a laughingstock and is openly mocked on a regular basis for being so clueless, if not dangerous in his writings.

    When you learn proper business cycle theory, you know all magic wand waving notions of prosperity through deficit spending and money printing eventually lead to ruin in the real world. Don’t worry, one day you will understand as will Krugman.

    acutally krugman was named in a recent study the most accurate forecaster. many respected economists support krugman’s position.

    “When you learn proper business cycle theory, you know all magic wand waving notions of prosperity through deficit spending and money printing eventually lead to ruin in the real world.”

    really? what does it say about when you’re in a liquidity trap? do you not read the news or have a TV? how is that austerity going for Greece, Portugal, Spain and the UK?

    Spain loves austerity, I can post many videos of people being beaten protesting austerity. you won’t find anyone willing to get beaten protesting the LACK of austerity.

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  57. 57
    Scotsman says:

    This would hurt- negative 2% growth for the first year.

    http://www.nationalreview.com/corner/269076/103-republicans-back-cut-cap-and-balance-andrew-stiles

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  58. 58
    pfft says:

    By Kary L. Krismer @ 47:

    RE: Ben @ 46 – I’m more in Krugman’s camp in that I think the stimulus was too little over too long of a period of time. But pfft is just nuts. Over in the healthcare thread he’s clearly demonstrating an opinion that you can spend your way out of any problem. In pfft’s world increased healthcare costs are irrelevant because you can spend more and the populous will be happy.

    the costs aren’t that much higher. I posted that months ago…

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  59. 59
    pfft says:

    By Ben @ 48:

    RE: Kary L. Krismer @ 47 Bad policy of the Keynesian variety got us to this point.

    really? I thought it was the supply-side unpaid for tax cuts for the rich as well as the unpaid medicare part D and the wars in Iraq and Afghanistan.

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  60. 60
    Scotsman says:

    RE: pfft @ 56

    acutally krugman was named in a recent study the most accurate forecaster. many respected economists support krugman’s position

    link?

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  61. 61
    pfft says:

    By Ben @ 50:

    RE: whatsmyname @ 49 – Hah. How’s this for laughs – Krugman advocated even more wars to help the economy. Lets root with Krugman for more wars, floods, fires, hurricanes, and earthquakes to fix the economy. If that goofball would only learn the broken window fallacy…….

    no he didn’t. stop lying or repeating what others said. there is no broken window fallacy in a liquidity trap. if you are so smart and you think krugman is a joke you should know that.

    do you know what a liquidity trap is?

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  62. 62
    pfft says:

    By Scotsman @ 54:

    Over on the weekend thread pffffft tried to claim we aren’t experiencing structural unemployment. I disagreed. Here’s a picture- worth a thousand words, that says we are:

    http://market-ticker.org/cgi-ticker/akcs-www?get_gallerynr=1795

    he’s a crank. let’s go with real economists not some tea party guy.

    Who’s Unemployed?
    http://krugman.blogs.nytimes.com/2011/02/13/whos-unemployed/

    Structural Unemployment: The Data Just Doesn’t Match Up
    http://www.cepr.net/index.php/blogs/cepr-blog/structural-unemployment-the-data-just-doesnt-match-up?utm_source=CEPR+feedburner&utm_medium=feed&utm_campaign=Feed%3A+cepr+%28CEPR%29

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  63. 63
    Ben says:

    RE: pfft @ 56 – As I previously wrote, austerity is only necessary now because profligacy doesn’t work.

    The liquidity trap you refer to us simply too much debt which cannot be fixed with more debt. This is the inevitable end game for keynesian policy.

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  64. 64
    pfft says:

    By Scotsman @ 60:

    RE: pfft @ 56

    acutally krugman was named in a recent study the most accurate forecaster. many respected economists support krugman�s position

    link?

    already posted it before but I guess you would forget it or never read it.

    http://www.reddit.com/r/politics/comments/h5km1/analysis_of_political_commentators_finds_krugman/

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  65. 65
    pfft says:

    By Ben @ 63:

    RE: pfft @ 56 – As I previously wrote, austerity is only necessary now because profligacy doesnâ��t work.

    The liquidity trap you refer to us simply too much debt which cannot be fixed with more debt. This is the inevitable end game for keynesian policy.

    profligacy DID work. it saved millions of jobs.

    you don’t really understand a liquidity trap because you think that government debt and private debt are the same.

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  66. 66
    pfft says:

    bankers are just insufferable. they crashed the global economy and all they do is whine and have no shame. he also says if we can’t rip off our credit card customers or provide transparency we won’t loan out money.

    Wall Street Loved Jamie Dimon’s Speech Yesterday — The Response Is “Go Jamie!”
    http://www.businessinsider.com/wall-street-responds-to-jamie-dimon-ben-bernanke-speech-yesterday-go-jamie-2011-6#ixzz1Oettv2Vk

    the ironic thing is that ben bernanke has studied the great depression extensively and was the perfect person for our great recession. by the way the pfft from 2007 can’t believe I just said that.

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  67. 67
    Ben says:

    RE: pfft @ 64 – I should hope $trillion and a half deficits over the last three years would have some impact on hiring. What a terrible joke played on the middle class who now are still unemployed and owe more of the national debt. I dont think you understand the reality of what the western world faces in debt service public and private. The keynesian end game is upon us. Leverage must be reduced and bad debts dealt with before prosperity can return.

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  68. 68
    Scotsman says:

    RE: pfft @ 63

    If Krugman is as good as they say- and that is an impressive record- then we’re headed for some very bad times:

    “Will the Fed realize, before it’s too late, that the job of fighting the slump isn’t finished? Will Congress do the same? If they don’t, 2010 will be a year that began in false economic hope and ended in grief.”

    “So the odds are that any good economic news you hear in the near future will be a blip, not an indication that we’re on our way to sustained recovery. But will policy makers misinterpret the news and repeat the mistakes of 1937? Actually, they already are.”

    http://www.nytimes.com/2010/01/04/opinion/04krugman.html?ref=opinion

    I must say, you have an uncanny ability to post and reference links that ultimately destroy both the bullish argument you keep forcing on us and your own credibility. You’ve taken self flagellation to a new level, an art form unto itself. Congratulations!

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  69. 69
    Scotsman says:

    RE: Scotsman @ 67

    This isn’t to be taken as an endorsement of Krugman- there’s a world of difference between accurately predicting the future based on current data and trends, and putting forth viable and effective corrective policies. Krugman’s steadfast adherence to Keynesian policy will ultimately weaken his reputation. In short, yes- we’re economically headed for a cliff. But Krugman’s advice to step on the gas will yield a very different result from hitting the brakes. Forty years from now a new group of economists will write the final obituary for unlimited monetary stimulus, and Bernanke and Krugman will fade from the spotlight.

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  70. 70
    Blurtman says:

    RE: pfft @ 66 – “All the bad actors are gone.” Wrong. Huge wrong. He also forgot to say no one, not even Mozillo, went to jail. Not a word about moral hazard.

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  71. 71
    whatsmyname says:

    By Blurtman @ 40:

    Has Blurtman(TM) been vindicated, again? Recall the sometimes ascerbic past dialogue regarding what is in the Social Security “lock-box”, i.e. Treasuries or IOU’s. On the always interesting Thom Hartman show was a guest who, as Blurtman attempted to do, pointed out that the IOU’s were not at all the same as US Treasuries. That is, if the SS “lock-box” contains $2.5 trillion of marketable securities such as UST’s, then they could be sold in the open market and the cash used to pay the SS beneficiaries. But as the IOU’s are not marketable, they can be paid only through raising taxes, cutting spedning, or issuing UST’s to the market, i.e., borrowing more money. Now it is obvious, I hope, which type of “security” is much more liquid, priced, and currently reliable. UST’s. The IOU’s are entirely dependent on a thorny political process. Further, Thom’s guest claimed that the $2.5 trillion of IOU’s were not even recorded as official USG debt.Oddly enough, Thom did not seem to grasp the distinction between marketable and non-marketable securities, and seemd to have an agenda to advance. His guest, in comparison to Thom, remained unflustered and quite factual. This makes me question why I like listening to Hartman on other topics.

    Sorry I missed your show. Notwithstanding the infallibility of an unnamed guest on a program you enjoy, all forms of treasuries are still IOU’s. You are correct that STB’s can “be paid only through raising taxes, cutting spedning, or issuing UST’s to the market, i.e., borrowing more money.” Ultimately, the same is true of UST’s. As the USG is the issuer of UST’s, your liquidity hypothetical is a distinction without a difference. If USG can’t float a bond in the current market, what is the liquid value of their existing bond?

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  72. 72

    Here’s a short news story for those of you who think that energy prices are rising without any increase in consumption.

    http://www.msnbc.msn.com/id/43327793/ns/world_news-asia_pacific/

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  73. 73
    Scotsman says:

    “Official motto of the White House economic team: Those who can, do. Those who can’t, fantasize in the classroom, fail in Washington and then return to the Ivy Tower to train the next generation of egghead economic saboteurs. Life is good for left-wing academics. Everyone else pays dearly”

    http://michellemalkin.com/2011/06/08/obamas-egghead-economic-saboteurs/

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  74. 74
    whatsmyname says:

    RE: Scotsman @ 73

    I really liked the way she used the imagery of the “Mission Accomplished” banner to illustrate pathetic failure.

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  75. 75

    RE: Scotsman @ 73

    Imagine Scotsman If One of the Current Supreme Court Judges Dies

    And its 5-4 the other direction, with an Obama Dem replacement. It will be another world then.

    http://patdollard.com/2011/06/obamacare-back-in-court-why-it-matters-this-time/

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  76. 76
    whatsmyname says:

    By Scotsman @ 6:

    10-Year Real Wage Gains Worse Than During Depression

    http://www.investors.com/NewsAndAnalysis/Article/573982/201106020800/10-Year-Real-Wage-Growth-Worse-Than-During-Depression.htm

    The site is having technical difficulties, so I couldn’t read the article. I am presuming this includes all 8 years of the Bush presidency?

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  77. 77
    Scotsman says:

    RE: whatsmyname @ 76

    Of course- how else would we set the table to blame it all on Bush? Hell, let me be the first to step up and admit it- if it wasn’t for Bush we’d all be riding around on flying unicorns and snogging Katy Perry. Yes, even you. It’s no wonder you’re angry!

    Reality check- real wage gains have been pretty pathetic for about 40 years now. But credit has been increasingly cheaper and easier to get, so no one noticed. They just put it all on the card, or lay-away, or ultimately the home ATM. Clinton, of, course, had nothing to do with any of this. He was too busy snogging Monica Lewinsky. And Carter had no idea what was going on. Now Barry O, he’s a dangerous combination of clueless and detached, and I don’t even want to think about his violent love life. So there ya go- your loyalty to the party is noted, and the check’s in the mail.

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  78. 78
    whatsmyname says:

    RE: Scotsman @ 77

    I’m not angry. It’s you that’s posting articles to suggest things went bad for our productive citizens in 2001. Is this how you interpret the Bush economy?

    It’s like the Michelle Malkin article; I noticed nobody in her comments section objected to her mocking the “Mission Accomplished” banner. Is this a generally accepted object of ridicule among conservatives these days?

    I’m just a curious fellow trying to understand the new conservative mindset.

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  79. 79
    Blurtman says:

    RE: whatsmyname @ 71 – With regards to what I am discussing, I believe the points you raise are irrelevant. If I hold UST’s in a trust account today, at this point in time, I can sell them on the secondary market. I don’t have to wait 30 years for the USG to redeem them. In the case of STB’s, I hold an illiquid, untradeable “IOU” and must wait for the USG to redeem them, which is quite difficult now, apparently. So we are talking a same day conversion of UST’s to cash versus God knows how long to convert STB’s to cash. And as the UST’s are tradeable on an open market, they are priced and the risk is clear. STB’s are not. The risk of STB’s would seem to be much higher than the “eqivalent” UST’s at this point in time, and so the price must be less.

    If I can find any semblance of logic in your “argument,” it might be that if the USG declared that they would not redeem UST’s than the secondary market for them would collapse, in which case, I suppose, they might be equivalent to STB’s at that stage. But clearly not now.

    Your argument seems to be based upon taking basic but flawed assumptions to reach a conculsion of hypothetical equivalence, while ignoring the real world realities that result in a very real inequivalence. Sounds like economics theory and we know the track record for that.

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  80. 80
    Blurtman says:

    RE: whatsmyname @ 71 – I believe Thom’s guest was Jane Orient, MD, from the Association fo American Physicians and Surgeons (AAPS).
    http://www.thomhartmann.com/radio

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  81. 81

    RE: whatsmyname @ 78

    Hades, What’s A Liberal Anymore?

    I’m an old fashion liberal for Earthday and the environment and most of today’s liberals(?) call me a conservative [or worse….lol].

    The merging of the American two party system, excusing American overpopulation as a good thing, has caused the names liberal and conservative to become a grey area.

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  82. 82

    By whatsmyname @ 78:

    It’s like the Michelle Malkin article; I noticed nobody in her comments section objected to her mocking the “Mission Accomplished” banner. Is this a generally accepted object of ridicule among conservatives these days?

    What I love (actually hate) about politics is how it’s become nothing but talking points for functional illiterates. Take the “Mission Accomplished” banner you mention, which prompted this response. The ship’s mission was accomplished, so to ridicule that you’d need to not have a working understanding of the simple term “mission.” I believe during the speech he said it was also the “end of major combat operations.” Again to ridicule that you’d need to not understand the simple modifier “major” and also be completely ignorant of the history of war (or maybe have believed those in the Bush administration who claimed how warm our welcome would be). That’s two Democratic examples, but both sides seem to equate “liar” with someone who is merely wrong. And no one talks about anything of substance. Talking points make me sick.

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  83. 83

    By softwarengineer @ 81:

    The merging of the American two party system, excusing American overpopulation as a good thing, has caused the names liberal and conservative to become a grey area.

    IMHO it’s better to be an independent than either a D or an R, because the Ds and Rs are both FOS on so many issues you would really have to be stupid to believe all of what either side says. You can lean one way or the other, but to totally fall for the BS or either is foolhardy.

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  84. 84
    whatsmyname says:

    RE: Blurtman @ 79

    Here is a real world reality for you. Your argument lies in total on what you might do in the hypothetical situation where you held STB’s. As you are well aware, you can not. It is the government that must hold them, hold them to maturity, and that is by design.

    The question of what backs the SSI trust is a solvency issue. If it became a liquidity issue, we would go back to the question you can not bring yourself to answer: If USG can’t float a bond in the current market, what is the liquid value of their existing bond?

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  85. 85
    Tim McB says:

    RE: Kary L. Krismer @ 72

    Kary,
    You may have missed this line in the article:

    “The United States had the biggest thirst for oil with 21 percent of global demand, double China’s consumption.”

    With regards to oil we’re still number one and the biggest driver of consumption.

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  86. 86
    whatsmyname says:

    RE: Kary L. Krismer @ 82
    Kary, your answer is right, but incomplete. To ridicule the “Mission Accomplished” footage, you truly would have to be misinterpreting the words mission and major, OR, you might be thinking they were a small part of creating a bigger and perhaps false symbology – a desired perception other than what these words literally mean. I will leave it to others to say which it was, but I think it’s clear which way Michelle rolls on this. Given that nobody but me has called her on this, don’t you wonder how many other conservatives have internalized this view?

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  87. 87

    RE: Tim McB @ 85 – The point of linking the article was to point to the increase in overall consumption, not necessarily who is consuming it. Half the world’s oil could be consumed by Cuba, and it wouldn’t affect the price as long as the total consumption remained the same.

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  88. 88
    Blurtman says:

    RE: Kary L. Krismer @ 82 – Kary, you are really reaching there. Is that why there was a photo of of the draft dodger president in his spiffy flight jump suit? To announce that it was merely the mission ofthe ship that was completed? You’ve got to be kidding me.

    How many times did Rumsfeld, Cheney, Bush and the rest of the crime family dismiss what was happening in Iraq post-invasion as being the result of a few disaffected dead-enders? The Iraq mission was a fiasco, the invasion itself killed 50,000 women children and elderly in a country that did not attack us. One of many reasons W should be up on war crimes charges is his abominable joking about where are the WMD’s as he looked behind the couch in his office. It would be fitting if he was shipped the mangled bodies of dead Iraqi children to use as a backdrop for that joke.

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  89. 89
    pfft says:

    By Ben @ 67:

    RE: pfft @ 64 – I should hope $trillion and a half deficits over the last three years would have some impact on hiring. What a terrible joke played on the middle class who now are still unemployed and owe more of the national debt. I dont think you understand the reality of what the western world faces in debt service public and private. The keynesian end game is upon us. Leverage must be reduced and bad debts dealt with before prosperity can return.

    1. we didn’t run deficits as some sort of plan. we ran deficits because the economy crashed.

    2. w/o rescue measures there would be more people unemployed than there is now and and the deficit would be much higher. federal recovery measures were offset by austerity at the state and local level- like shutting down schools for pregnant woman in Michigan.

    3. you still don’t seem to understand the difference between private debt and government debt. the recovery measures are not that expensive. in 2012 all of the recovery measures will cost less than $100 billion. it’s not a drag on the economy.

    “The keynesian end game is upon us.”

    complete nonsense. interest rates are very low. the only end game is the fantasy that austerity will save us. you guys have it exactly wrong.

    the rescue measure countries are doing ok and the austerity countries are doing terrible. anyone who says otherwise is no credible.

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  90. 90
    pfft says:

    By Scotsman @ 69:

    RE: Scotsman @ 67

    This isn’t to be taken as an endorsement of Krugman- there’s a world of difference between accurately predicting the future based on current data and trends, and putting forth viable and effective corrective policies. Krugman’s steadfast adherence to Keynesian policy will ultimately weaken his reputation. In short, yes- we’re economically headed for a cliff. But Krugman’s advice to step on the gas will yield a very different result from hitting the brakes. Forty years from now a new group of economists will write the final obituary for unlimited monetary stimulus, and Bernanke and Krugman will fade from the spotlight.

    whatever happened to 6 months?

    “Forty years from now a new group of economists will write the final obituary for unlimited monetary stimulus, and Bernanke and Krugman will fade from the spotlight.”

    unlimited stimulus? god you don’t know the first thing about stimulus. they have never said that. not even close. strawman alert.

    krugman is advocated policies that are well OVER 40 years old.

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  91. 91
    pfft says:

    By Scotsman @ 73:

    “Official motto of the White House economic team: Those who can, do. Those who canâ��t, fantasize in the classroom, fail in Washington and then return to the Ivy Tower to train the next generation of egghead economic saboteurs. Life is good for left-wing academics. Everyone else pays dearly”

    http://michellemalkin.com/2011/06/08/obamas-egghead-economic-saboteurs/

    this is the bush recession, not the obama recession. obama inherited the recession. this is the direct result of decades of republican policies.

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  92. 92
    whatsmyname says:

    Did someone mention Austrian Business Cycle Theory?

    http://johnquiggin.com/2009/05/03/austrian-business-cycle-theory/

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  93. 93
    pfft says:

    to illustrate the absurdity of some kind of dumb keynes endgame it should be noted that the cost of the ENTIRE set of recovery measures is $78 billion in 2012 and $70 billion in 2013. is that some number that will crash the economy? not in the least. it’s absurd.

    the bush era tax cuts will(or would?) cost $322 billion in 2012 and $385 billion in 2013. if there is any endgame it’s for taxes and not recovery meaures/stimulus.

    http://www.cbpp.org/images/cms/12-16-09bud-rev6-28-10-t11.jpg

    1. 2/3 of our national debt is from republicans.

    http://maddowblog.msnbc.msn.com/_news/2011/04/11/6449899-mr-obama-please-report-to-the-front-desk

    2. the largest portion of deficits going forward is from the bush tax cuts.

    3rd chart down:

    http://www.offthechartsblog.org/top-5-charts-on-the-bush-tax-cuts/

    3. repealing the bush tax cuts, the tax cuts which scotsman is for even though it would add to our debt levels which he supposedly hates, will stabilize our debt/gdp ratios.

    http://www.offthechartsblog.org/confusion-and-hypocrisy-on-the-debt/

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  94. 94
    Ben says:

    RE: pfft @ 89 – There is none so blind as he who will not see (that more debt can’t solve the problem of too much debt).

    http://www.chrismartenson.com/blog/death-debt/58941

    Death By Debt

    snip…

    One of the conclusions that I try to coax, lead, and/or nudge people towards is acceptance of the fact that the economy can’t be fixed. By this I mean that the old regime of general economic stability and rising standards of living fueled by excessive credit are a thing of the past. At least they are for the debt-encrusted developed nations over the short haul — and, over the long haul, across the entire soon-to-be energy-starved globe.

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  95. 95
    pfft says:

    mission accomplished? sounds like it.

    Admiral Kelly, Captain Card, officers and sailors of the USS Abraham Lincoln, my fellow Americans: Major combat operations in Iraq have ended. In the Battle of Iraq, the United States and our allies have prevailed. And now our coalition is engaged in securing and reconstructing that country.

    http://www.cbsnews.com/stories/2003/05/01/iraq/main551946.shtml#ixzz1OkWcIegh

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  96. 96
    pfft says:

    By Ben @ 94:

    RE: pfft @ 89 – There is none so blind as he who will not see (that more debt can’t solve the problem of too much debt).

    http://www.chrismartenson.com/blog/death-debt/58941

    Death By Debt

    snip…

    One of the conclusions that I try to coax, lead, and/or nudge people towards is acceptance of the fact that the economy can’t be fixed. By this I mean that the old regime of general economic stability and rising standards of living fueled by excessive credit are a thing of the past. At least they are for the debt-encrusted developed nations over the short haul — and, over the long haul, across the entire soon-to-be energy-starved globe.

    you still don’t understand the difference between government debt and public debt.

    again for the 1000th time. GOVERNMENT DEBT WOULD BE HIGHER IF THE GOVERNMENT HADN’T RESCUED THE ECONOMY. UNEMPLOYMENT WOULD BE 16% WITHOUT GOVERNMENT RESCUE.

    less people working=less tax revenue=more debt. very simple.

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  97. 97
    Scotsman says:

    RE: pfft @ 90

    “whatever happened to 6 months?”

    I was right. You said so yourself.

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  98. 98

    By Blurtman @ 88:

    How many times did Rumsfeld, Cheney, Bush and the rest of the crime family dismiss what was happening in Iraq post-invasion as being the result of a few disaffected dead-enders?

    I’ll give you that, and I in fact even referenced part of that–I think it was Rumsfeld that said we would be welcomed as liberators or some such thing.

    I’m just saying that the examples given, “mission accomplished” and the other two, are arguments only illiterate idiots would make.

    So I’m not saying there weren’t arguments to be made. What I’m saying is that they were making moronic arguments.

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  99. 99
    Ben says:

    RE: pfft @ 96 – You are indeed a maker of baseless assertions and purveyor of disinformation.

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/W%20WO%20Recovery.jpg

    QE 2 Was A Disaster: Here Is Why US Fiscal “Stimulus” Was A Complete Failure As Well

    http://www.zerohedge.com/article/qe-2-was-disaster-here-why-us-fiscal-stimulus-was-complete-failure-well

    Two and a half years ago, Christina Romer, then still employed by the Obama administration in the position of Chair of the Council of Economic Advisers penned “The Job Impact of the American Recovery and Reinvestment Plan” – a report predicting the impact of a fiscal “stimulus” that took out $787 billion from the pocket of American Taxpayers (subsequently discovered to cost even more) and put that money…somewhere. We are not sure where, because according to a chart now made legendary for its complete failure to predict the future, it sure did not go into creating jobs. Below we present the original chart that made the January 10, 2009 presentation, and superimpose upon it the reality of the past two and a half years. It is simply stunning. And while we are here, and discussing the abysmal failure of QE2 (the impending arrival of QE3 notwithstanding), it is amusing to hear the whimpering of the likes of one Richard Koo, who is now claiming that all along the money from the Fed’s monetary stimulus should have been invested in the form of a fiscal one. Well, Dick, below is the impact of your fiscal stimulus….AND it also includes the impact of $2 trillion in incremental monetary stimulus. Combined, both fiscal and monetary stimulus has now missed the worst case projection for US unemployment for 30 months running. Here is the simple truth: both monetary and fiscal stimuli are abysmal failures, when the economy is mean reverting to a state where it was hijacked from courtesy of 30 years of “great moderation” – and there is nothing that can be done to stop it. Correction: there is one thing – the Fed can destroy the dollar in its attempt to disprove simple physics. And, ultimately, it will.

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  100. 100
    pfft says:

    By Scotsman @ 97:

    RE: pfft @ 90

    “whatever happened to 6 months?”

    I was right. You said so yourself.

    not really.

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  101. 101
    pfft says:

    By Ben @ 99:

    RE: pfft @ 96 – You are indeed a maker of baseless assertions and purveyor of disinformation.

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/W%20WO%20Recovery.jpg

    QE 2 Was A Disaster: Here Is Why US Fiscal “Stimulus” Was A Complete Failure As Well

    http://www.zerohedge.com/article/qe-2-was-disaster-here-why-us-fiscal-stimulus-was-complete-failure-well

    Two and a half years ago, Christina Romer, then still employed by the Obama administration in the position of Chair of the Council of Economic Advisers penned “The Job Impact of the American Recovery and Reinvestment Plan” – a report predicting the impact of a fiscal “stimulus” that took out $787 billion from the pocket of American Taxpayers (subsequently discovered to cost even more) and put that money…somewhere. We are not sure where, because according to a chart now made legendary for its complete failure to predict the future, it sure did not go into creating jobs. Below we present the original chart that made the January 10, 2009 presentation, and superimpose upon it the reality of the past two and a half years. It is simply stunning. And while we are here, and discussing the abysmal failure of QE2 (the impending arrival of QE3 notwithstanding), it is amusing to hear the whimpering of the likes of one Richard Koo, who is now claiming that all along the money from the Fed’s monetary stimulus should have been invested in the form of a fiscal one. Well, Dick, below is the impact of your fiscal stimulus….AND it also includes the impact of $2 trillion in incremental monetary stimulus. Combined, both fiscal and monetary stimulus has now missed the worst case projection for US unemployment for 30 months running. Here is the simple truth: both monetary and fiscal stimuli are abysmal failures, when the economy is mean reverting to a state where it was hijacked from courtesy of 30 years of “great moderation” – and there is nothing that can be done to stop it. Correction: there is one thing – the Fed can destroy the dollar in its attempt to disprove simple physics. And, ultimately, it will.

    QE2 is not a big deal. nobody has thought it would do anything that great. it was a small program. it’s success or failure isn’t that notable.

    1. the stimulus worked.

    Economists agree: Stimulus created nearly 3 million jobs
    http://www.usatoday.com/money/economy/2010-08-30-stimulus30_CV_N.htm

    2. the dollar is no big deal. as the dollar falls we will add needed manufacturing jobs. this is a good thing.

    exports are near all-time highs.

    http://www.calculatedriskblog.com/2011/05/la-port-traffic-in-april-imports.html

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  102. 102
    pfft says:

    wrong chart for exports. they are at an all-time high.

    http://www.calculatedriskblog.com/2011/05/trade-deficit-increased-to-482-billion.html

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  103. 103
    Blurtman says:

    RE: Kary L. Krismer @ 98 – Bush is a war criminal.

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  104. 104

    By Blurtman @ 103:

    RE: Kary L. Krismer @ 98 – Bush is a war criminal.

    Again, you’re trying to focus on the merits of the overall conflict (or Bush), rather than just the particular arguments against it which I raised.

    Personally I think Rumsfeld was a complete idiot, and that the real turn around in the war wasn’t the surge, it was when Rumsfeld left (sort of like I feel the same way about President Obama’s messaging and the departure of Rahm Emanuel).

    So the point isn’t to debate the war, the point is that arguing that the war was wrong, or that Bush is an idiot based on “mission accomplished” only shows that the person making the argument is functionally illiterate.

    Mission accomplished does not mean war over. If it did, that would mean that we defeated Japan in WWII when Doolittle bombed Tokyo.

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  105. 105
    Blurtman says:

    -“Here is a real world reality for you. Your argument lies in total on what you might do in the hypothetical situation where you held STB’s. As you are well aware, you can not. It is the government that must hold them, hold them to maturity, and that is by design.”

    -No, I meant the scenario to be the real deal, that is, where the SS trust fund holds STB’s versus if they had held UST’s. The surplus SS tax dollars which were to be deposited in the trust fund were spent on war follies and tax cuts, instead of having been invested in marketable assets that could be liquidated to raise cash when needed.

    “The question of what backs the SSI trust is a solvency issue.”

    -It becomes a liquidity issue when forced by negative cash flows.

    “If it became a liquidity issue, we would go back to the question you can not bring yourself to answer:”

    -Drama….

    “If USG canâ��t float a bond in the current market, what is the liquid value of their existing bond?

    -By your question, I take it that you mean no new bond issuance, not merely no new net debt. So if the USG stopped issuing new bonds today, and I held UST’s that were issued at some time in the past, the market would tell me the value of my holdings. Guessing at how the outstanding UST’s would be valued is just that, a guess. One could hypothesize that if the analysts believed that the risk of the outstanding debt were the same as it is today, not much would happen. One could hypothesize that the cessation of UST supply would result in increasing demand for existing UST’s driving up price and down interest rates even further. There are likely other scenarios that might be plausible.

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  106. 106
    whatsmyname says:

    RE: Blurtman @ 105
    First to the value proposition. If the SSI held UST’s instead of STB’s, they would be holding “marketable securities” as you would like. However, both of these instruments are IOU’s from the government. Whichever instrument is being used, the government will look to itself (as issuer) for payment. For the government, both bonds carry the same credit risk,

    In the end, even if it’s not transparent, non-tradeable STB’s can be refunded via issuance of UST’s. This is why I ask what is the liquid value of a T when the government can’t float a new T. Assuming that the government doesn’t structure some enhancement into a new T, investors will be indifferent to whether a T is new or old. Now it’s a matter of auction. If investors want a 50% discount for a new T, what do you suppose they will pay for your old T? If investors don’t want the new T at any price, how willing will they be to pay for your old T? That’s the liquidity risk that I’m talking about.

    Now consider the potential shortfall for current payouts which I think is your focus. This is a problem the constantly needs to be addressed by the program. However, your plan of liquidating assets held for tomorrow’s payments in order to fund disbursements today does not cure the payment problem, but rather defers it in a larger way to tomorrow. If you could operate in this manner, the GOP would have already emptied SSI, and the program would be done without ever having had a vote.

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  107. 107
    Blurtman says:

    RE: whatsmyname @ 106 – “First to the value proposition. If the SSI held UST’s instead of STB’s, they would be holding “marketable securities” as you would like. However, both of these instruments are IOU’s from the government. Whichever instrument is being used, the government will look to itself (as issuer) for payment. For the government, both bonds carry the same credit risk,”

    I am not familiar with the mechanism of the SS trust fund management, but as you know, there is an active market for UST’s and in times of negative cash flows, the secondary market can be a more reliable source for conversion to cash than the USG. I question why you believe the USG alone would be the source of cash for the UST’s that the trust fund could have held. And as it obviously is now more difficult to convert SST’s into UST’s, the risk of SST’s is higher than existing UST’s, and I would hope the USG accountants are crediting the SS trust fund at an appropriate rate of return which must be higher than the rate of return of UST’s. The increased risk is not necessarily a reflection of a change in the USG’s credit worthiness, but on procedural risk, i.e., a broken ATM machine does not mean dollars have less value, just that they are hard to access. The flip of that, easier access to your cash when ATM’s are functioing, is reflected in the dreaded ATM fees. You pay a premium for immediate access.

    Your equation seems to be at fault. You claim that SST’s can only be redeemed by conversion to UST’s. I challenge that assumption, But nonetheless, if true, then conversion of SST’s to cash would occur through conversion of SST’s into UST’s and redemption of the UST’s by the USG. I believe SST’s and UST’s can be converted to cash by other means, and further, that UST’s can be converted to cash (not redeemed) on the open market.

    “Now consider the potential shortfall for current payouts which I think is your focus. This is a problem the constantly needs to be addressed by the program.” No, it is a problem that needs to be addressed in times of negative cash flows. Assume we get to 5% unemployment, and SS tax receipts adjust upwards, the trust fund might not need to liquidate existing assets.

    Given two allegedly equivalent securities, conversion of one to cash occurs in a quite functional and open market but conversion of the second requires Congressional arm-twisting and other uncertain external events, which has the less risk?

    “In the end, even if it’s not transparent, non-tradeable STB’s can be refunded via issuance of UST’s.” As one mechanism, but why the only one? Why couldn’t Geithner make refunding the borrowed SS money a top priority as I have suggested for honoring outstanding debt payments, and cut other programs, Halliburton slush funds, etc. Or golly, even raise taxes.

    “If you could operate in this manner, the GOP would have already emptied SSI, and the program would be done without ever having had a vote.”
    Actually, both the GOP and Democrats have emptied the SS trust fund, and replaced it with IOU’s.

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  108. 108
    whatsmyname says:

    RE: Blurtman @ 107
    I begin to wonder if you are having me on here.

    There is no broken ATM or conversion to UST’s. You (that is the government) redeem your STB’s with the Treasury; same as any holder of a UST would do – and you have the same risk of the government saying “sorry, we don’t have the money”. Do you for one second really consider that the SSI cash management folks have a harder time doing business with the Treasury than, say, some individual bondholder in Seattle? For the government, the instruments are equal. Since the real world reality is that it is the government that holds them, other scenarios are irrelevant as to the soundness of the instruments.

    The government will fund its deficit by floating UST’s, but the cash in the Treasury is fungible. Repayment of STB’s is not tied to getting a matching UST out. I’ve said this before. I can’t imagine where you got the idea that anybody was saying that STB’s have to be converted or run through Congress.

    Negative cash flows from planning (maturities) or budgetary (economic issues) mismatches do present an ongoing challenge at the margins. I can understand your desire to see that they could be automatically and neatly handled by a ready ability to liquidate assets. The system is designed otherwise, and that is at least in part to keep Congress from ratcheting down the trust to nothing. That is why many conservatives join you in this desire. See “temporary” tax cuts.

    If the GOP and Dem’s have emptied the trust fund, and replace with IOU’s, consider that every bond fund has done the same, generally with less stellar credits. I don’t know if you personally hold any UST’s, but if you do, you should know that the government spent all your money on war ‘n stuff. Sorry.

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  109. 109
    Blurtman says:

    ” and you have the same risk of the government saying “sorry, we don’t have the money”. ” No. UST’s are sold on the open market. The buyer’s may choose to hold to maturity, or sell to others. Not redeemd by the USG. No risk that the USG will not be able to pay all its bills, nor deal with the current partisan wrangling that is ongoing. You may have heard, that apparently there is not enough money for eveything. Part of the everything includes the military, Medicaire, Medicaid, and redeeming SSI IOU’s

    “I can’t imagine where you got the idea that anybody was saying that STB’s have to be converted or run through Congress.” I was trying to interpret your remarks, which clearly leads one astray.

    Can Geithner today redeem $500 billion of SSI IOU’s?

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  110. 110
    Blurtman says:

    ” and you have the same risk of the government saying “sorry, we don’t have the money”. ” No. UST’s are sold on the open market. The buyer’s may choose to hold to maturity, or sell to others. Not redeemed by the USG. No risk that the USG will not be able to pay all its bills, nor deal with the current partisan wrangling that is ongoing. You may have heard, that apparently there is not enough money for eveything. Part of the everything includes the military, Medicaire, Medicaid, and redeeming SSI IOU’s

    “I can’t imagine where you got the idea that anybody was saying that STB’s have to be converted or run through Congress.” I was trying to interpret your remarks, which clearly leads one astray.

    Can Geithner today redeem $500 billion of SSI IOU’s?

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  111. 111
    pfft says:

    By Blurtman @ 109:

    ” and you have the same risk of the government saying â��sorry, we donâ��t have the moneyâ��. ” No. UST’s are sold on the open market. The buyer’s may choose to hold to maturity, or sell to others.

    you are desperately trying to split hairs because you are losing the argument.

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  112. 112
    Blurtman says:

    RE: pfft @ 111 – If you think so, that is further endorsement for my position.

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  113. 113
    Blurtman says:

    Chris Whalen agrees with Blurtman, and says the USG can and will continue to make interest payments on the debt, without a debt ceiling extension. (at 1:09). But other programs will not be so lucky. They will get “stiffed,” according to Whalen. Hmmmm….perhaps redemption of the SST’s are therefore at risk?

    http://globaleconomicanalysis.blogspot.com/2011/06/chris-whalen-geithner-cries-wolf-no.html

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  114. 114
    Scotsman says:

    Recovery rocks on. . .

    “Fears that the global economic recovery has stalled pushed the Dow Jones industrial average below 12,000 for the first time since March and drove the stock market lower for the sixth straight week.

    Friday’s drop extended the longest weekly losing streak for stocks since the fall of 2002.

    Weak economic news has dampened hopes for a steady recovery, sending stocks down. Traders worry that weaker hiring, sluggish industrial output, and a moribund housing market are reversing a bull market that has lifted the Dow 20 percent over the past year. If the indexes continue their slide for another week, it would be the first time in 10 years that the market suffered a seven-week stretch of losses. The last such stretch began in May 2001 as the dot-com bubble deflated. ”

    http://www.msnbc.msn.com/id/43352341/ns/business-stocks_and_economy/

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  115. 115
    whatsmyname says:

    RE: Blurtman @ 109

    You can sell UST’s on the open market because the market believes that the treasury can pay. When the market believes that treasury can’t pay, you will not be able to sell them in the open market. How much more will they be worth when you really need them?

    Can Geithner redeem $500B? Even last year, SSI took in $81B more than it paid out.
    http://www.ssa.gov/oact/progdata/fyOps.html

    You are arguing that the STB’s may be at risk due to political pressure at the same time you are fuming that Geithner (the guy who controls payment) is saying he might not pay on UST’s for political reasons. Do you see the irony?

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  116. 116
    David Losh says:

    RE: Scotsman @ 114

    The stock market is a poor indicator of the economy, as you have pointed out to pfft.

    What I find interesting is that when I started commenting here on the Seattle Bubble it was my opinion that the global economy was raising all boats. I believed that we were seeing this great run up in property prices because the world governments were finally having a level of cooperation that was driving a new economy.

    We here in the United States are lucky compared to other places in the world. We have bankruptcy.

    It’s amazing that you don’t see that the recovery we are having is much better than what is happening elsewhere.

    China has got to be in sever trouble. Germany is talking a good game, but they have a semi socialist, manufacturing based economy that can be supplanted at any time. South America is going left.

    In my opinion we have high unemployment because no one wants to admit that our corporate structured welfare economy is dead. We mergered, and acquisitioned ourselves out of an economy, or into a service economy of petty bureaucrats.

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  117. 117
    Blurtman says:

    RE: whatsmyname @ 115 – I appreciate your acknowledgement of my position. We obviously disagree on the relative risks of the securities, and the timing of the recognition of those risks.

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  118. 118
    pfft the wise says:

    By Scotsman @ 114:

    Recovery rocks on. . .

    “Fears that the global economic recovery has stalled pushed the Dow Jones industrial average below 12,000 for the first time since March and drove the stock market lower for the sixth straight week.

    Friday’s drop extended the longest weekly losing streak for stocks since the fall of 2002.

    Weak economic news has dampened hopes for a steady recovery, sending stocks down. Traders worry that weaker hiring, sluggish industrial output, and a moribund housing market are reversing a bull market that has lifted the Dow 20 percent over the past year. If the indexes continue their slide for another week, it would be the first time in 10 years that the market suffered a seven-week stretch of losses. The last such stretch began in May 2001 as the dot-com bubble deflated. ”

    http://www.msnbc.msn.com/id/43352341/ns/business-stocks_and_economy/

    didn’t you say last year the dow would be under 10,000…?

    since you called economic disaster I think we’ve added at least a million jobs…

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  119. 119
    pfft the wise and great says:

    LOOK it’s the GOP’s jobs agenda!

    House WIC Cuts Would End Food Assistance for 200,000 to 350,000 Low-Income Women and Children
    http://www.cbpp.org/cms/index.cfm?fa=view&id=3499

    has anyone notice that the GOP candidates are starting to out stupid each other? palin is fighting with bachmann. bachmann wants drop the corporate tax rate to 9%. pawlenty wants $7 trillion in unpaid for tax cuts. the silly season has begun.

    meanwhile obama’s plan to end the tax cuts for the rich would stabilize the national debt.

    http://www.cbpp.org/images/cms//5-10-11bud-f2.jpg

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  120. 120
    pfft the defender of truth says:

    By Blurtman @ 17:

    RE: whatsmyname @ 115 – I appreciate your acknowledgement of my position. We obviously disagree on the relative risks of the securities, and the timing of the recognition of those risks.

    there is a good reason why SS can’t dump treasuries on the market. it would be a large player dumping treasuries on the market. what would it buy if it dumped treasuries whenever it pleased? put it into a bank?
    of course not. they’d probably buy other maturities.

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  121. 121
    The Tim says:

    RE: pfft the defender of truth @ 120 – Quit changing your name with every post (which requires me to manually approve every single comment) and I’ll quite “burying” your comments.

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  122. 122
    Scotsman says:

    RE: David Losh @ 116

    “It’s amazing that you don’t see that the recovery we are having is much better than what is happening elsewhere.”

    If it’s a world economy we’re all connected. And just because we’re currently doing better than some of the others doesn’t mean we won’t have our turn. I guess when all the boats are sinking there’s a temptation to think your more slowly leaking boat may have an advantage. Perhaps, but you’re still going under.

    You seem conflicted- arguing first that we’re doing well, then ending with this:

    “In my opinion we have high unemployment because no one wants to admit that our corporate structured welfare economy is dead. We mergered, and acquisitioned ourselves out of an economy, or into a service economy of petty bureaucrats.”

    Without real production or value added services there is no economy. Passing around an asset while taking some percentage cut eventually gets you to zero.

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  123. 123
    Scotsman says:

    “It’s hard to say this spring whether it’s more difficult for the class of 2011 to enter the labor force or for the class of 1967 to leave it.

    Students now finishing their schooling—the class of 2011—are confronting a youth unemployment rate above 17 percent. The problem is compounding itself as those collecting high school or college degrees jostle for jobs with recent graduates still lacking steady work. “The biggest problem they face is, they are still competing with the class of 2010, 2009, and 2008,” says Matthew Segal, cofounder of Our Time, an advocacy group for young people.

    At the other end, millions of graying baby boomers—the class of 1967—are working longer than they intended because the financial meltdown vaporized the value of their homes and 401(k) plans. For every member of the millennial generation frustrated that she can’t start a career, there may be a baby boomer frustrated that he can’t end one.

    http://www.nationaljournal.com/columns/political-connections/our-upside-down-workforce-20110609

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  124. 124
  125. 125
    Blurtman says:

    Good Gawd, excerpting from a Larry Summers article. I believe a debt jubilee, or instead of the bank bailouts. consumer bailouts, would have been the way to go.

    How to avoid our own lost decade

    “A sick economy constrained by demand works very differently from a normal one. Measures that usually promote growth and job creation can have little effect, or backfire.”

    “After bubbles burst there is no pent-up desire to invest. Instead there is a glut of capital caused by over-investment during the period of confidence – vacant houses, malls without tenants and factories without customers. At the same time consumers discover they have less wealth than they expected, less collateral to borrow against and are under more pressure than they expected from their creditors.”

    “The central irony of financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it is only resolved by increases in confidence, borrowing and lending, and spending. Unless and until this is done other policies, no matter how apparently appealing or effective in normal times, will be futile at best.”

    http://www.ft.com/intl/cms/s/0/b3c143b6-952d-11e0-a648-00144feab49a.html#axzz1P6b5GXIA

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  126. 126
    Scotsman says:

    RE: Blurtman @ 125

    ““The central irony of financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it is only resolved by increases in confidence, borrowing and lending, and spending.”

    While this is true, it’s also true that this time is different. We’ve traveled, as an economy, well outside the traditional bounds of the normal cycle. One result may well be a massive over-correction on the downside.

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  127. 127
    pfft says:

    By David Losh @ 116:

    RE: Scotsman @ 114

    The stock market is a poor indicator of the economy, as you have pointed out to pfft.

    I bet nobody said that in 2008.

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  128. 128
    pfft says:

    By The Tim @ 21:

    RE: pfft the defender of truth @ 120 – Quit changing your name with every post (which requires me to manually approve every single comment) and I’ll quite “burying” your comments.

    it was pretty funny though.

    Rate this comment: Thumb up 0

  129. 129
    pfft says:

    By Scotsman @ 126:

    RE: Blurtman @ 125

    “â��The central irony of financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it is only resolved by increases in confidence, borrowing and lending, and spending.”

    While this is true, it’s also true that this time is different. We’ve traveled, as an economy, well outside the traditional bounds of the normal cycle. One result may well be a massive over-correction on the downside.

    this time it’s different is an infamous phase…

    this time it is different, we are in a liquidity trap like during the 30s.

    Krugman sums it all up right here.

    http://krugman.blogs.nytimes.com/2011/06/10/macro-readings-self-referential-edition/

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  130. 130
    pfft says:

    no denying climate change now.

    Warming Since 1995 Statistically ‘Significant’
    http://www.treehugger.com/files/2011/06/global_warming-since-1995-statistically-significant.php

    The Economic Impact of Climate Change
    http://economix.blogs.nytimes.com/2009/06/16/the-economic-impact-of-climate-change/

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  131. 131
    Scotsman says:

    RE: pfft @ 130

    “Global greenhouse gas emissions have risen even faster during the past decade than predicted by the United Nations Intergovernmental Panel on Climate Change (IPCC) and other international agencies. According to alarmist groups, this proves global warming is much worse than previously feared. The increase in emissions “should shock even the most jaded negotiators” at international climate talks currently taking place in Bonn, Germany, the UK Guardian reports. But there’s only one problem with this storyline; global temperatures have not increased at all during the past decade.
    The evidence is powerful, straightforward, and gollying. NASA satellite instruments precisely measuring global temperatures show absolutely no warming during the past the past 10 years. This is the case for the Northern Hemisphere mid-latitudes, including the United States. This is the case for the Arctic, where the signs of human-caused global warming are supposed to be first and most powerfully felt. This is the case forglobal sea surface temperatures, which alarmists claim should be sucking up much of the predicted human-induced warming. This is the case for the planet as a whole.
    If atmospheric carbon dioxide emissions are the sole or primary driver of global temperatures, then where is all the global warming? We’re talking 10 years of higher-than-expected increases in greenhouse gases, yet 10 years of absolutely no warming. That’s 10 years of nada, nunca, nein, zero, and zilch.”

    http://blogs.forbes.com/jamestaylor/2011/06/08/ten-years-and-counting-wheres-the-global-warming/

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  132. 132

    Crisis averted. Government spending will plummet via a single simple but effective executive order.

    http://www.techweb.com/news/230600062/obama-to-close-50-of-federal-websites.html

    My only question is: Will this cost more money than it saves?

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  133. 133
    Blurtman says:

    More SS info:

    “But in a real, utilitarian sense, T-Bonds in the SSTF are way, way worse than cash. They are a liability, not an asset. The SSTF can exchange them for dollars, but those dollars must come from the very government that’s on the other side of the exchange. As President Clinton’s Office of Management and Budget once explained:

    “Balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense…. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.””

    Read more: What’s Really in the Social Security Trust Fund? http://dailyreckoning.com/whats-really-in-the-social-security-trust-fund/#ixzz1PCBVM3Ba

    “During a speech on April 5, 2005 in Parkersburg, West Virginia, Bush openly admitted to the fact that all of the Social Security surplus revenue had been spent. He said,

    “There is no trust fund, just IOUs that I saw firsthand that future generations will pay—will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.”

    Bush’s words in this speech bore little resemblance to what he had said about Social Security during the 2000 campaign. But his motives were different in 2005. He was trying to sell his privatization plan, and he thought that by spilling the truth he might further his effort to privatize Social Security.

    http://www.fedsmith.com/article/2328/no-money-social-security-trust-fund.html

    Perhaps the SSTF should have held gold?

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  134. 134
    Blurtman says:

    “there is a good reason why SS can’t dump treasuries on the market. it would be a large player dumping treasuries on the market. what would it buy if it dumped treasuries whenever it pleased? put it into a bank?
    of course not. they’d probably buy other maturities.”

    There is an even better reason. The “Special Treasuries” theoretically held by the SSTF have no market and could not be dumped even if th SSTF wanted to. They are not real securities, just accounting entries.

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  135. 135
    Scotsman says:

    “When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco’s Bill Gross told CNBC Monday.”

    “Greece fell three levels on the S&P rating scale, as the bond agency warned that any debt restructuring would be viewed as a default:”

    “It won’t be long before Moody’s and S&P start issuing similar warnings and ratings reductions for the US”

    http://hotair.com/archives/2011/06/13/great-news-were-in-worse-shape-than-greece/

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  136. 136
    David Losh says:

    RE: pfft @ 127

    Everybody was saying that in 2008.

    Rate this comment: Thumb up 0

  137. 137
    David Losh says:

    RE: Scotsman @ 35RE: Scotsman @ 22

    OK, you don’t seem to get the idea that our system of democracy can change course.

    What I think is that our government gave away too much to allow corporate profits. The banking industry as the biggest offender took full advantage of regulatory loop holes. By blurring the line between bank, and securities broker the financial market place created, out of nothing more than paper promises, a multi trillion dollar market place that seems to me to be free from tax consequence.

    Long story short, let’s tax the derivatives market.

    If we can’t do that let’s stop the farm subsidies.

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  138. 138
    Voight-kampff says:

    RE: Scotsman @ 135
    TO SCOTSMAN and the others who consistently say we are heading into very troubled times ( not that I entirely disagree):
    What will it look like? Chaos in the streets? We will all need one leather outfit, sawed off shotgun and a camaro? 
    I’m not being facetious, I really want to know what you think our country is going to look like. I hear everyday people talking about how bad it’s going to get, pointing to some horrible new statistic about our decline, or some pundits rehashing of said statistic, then going on to say it is unavoidable. It is all starting to sound so academic to me, like some nebulous bad day! I want someone to venture at least a guess as to what it will really be like.
    People pillaging to survive, or just high unemployment and expensive milk?
    Anyone?

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  139. 139
    whatsmyname says:

    RE: Blurtman @ 133
    “But in a real, utilitarian sense, T-Bonds in the SSTF are way, way worse than cash. They are a liability, not an asset.”
    No, they are a liability, and an asset.

    “The SSTF can exchange them for dollars, but those dollars must come from the very government that’s on the other side of the exchange.”
    You are just picking up on this now? Aside from the fact that this is self evident, we’ve discussed it several times. If this is news to you, we can’t talk anymore.

    “they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”
    Yes, Exactly the same as UST’s

    Please don’t be shocked but cash is alternately currency or a bookkeeping notation; and currency is an IOU from the Fed.

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  140. 140
    Scotsman says:

    RE: David Losh @ 137

    David- cutting farm subsidies isn’t gonna do it. Maybe a picture will help, color coded, from the greatest to the least:

    http://upload.wikimedia.org/wikipedia/en/thumb/c/ce/Fy2010_spending_by_category.jpg/800px-Fy2010_spending_by_category.jpg

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  141. 141
    Scotsman says:

    RE: Voight-kampff @ 38

    High unemployment, expensive milk, major cuts in welfare type programs and military efforts, if only because that’s where the potential savings are. We can look to Greece and France for ideas on how the people will react. I see some inner cities getting pretty dangerous but much of society carrying on, but on a much reduced standard of living. Wage cuts, furloughs, shorter work weeks, a lot more stress, less hope. We’ll see- a lot depends on the course we chose in the coming elections.

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  142. 142
    David Losh says:

    RE: Scotsman @ 140

    Taxation is the point.

    Farm subsidies are a give away to corporate culture. Our government needs to stop giving money away to people who hide from taxation. Farming is a big government hand out that dodges taxation, I would guess in the name of National Security.

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  143. 143
    pfft says:

    By Scotsman @ 131:

    RE: pfft @ 130

    “Global greenhouse gas emissions have risen even faster during the past decade than predicted by the United Nations Intergovernmental Panel on Climate Change (IPCC) and other international agencies. According to alarmist groups, this proves global warming is much worse than previously feared. The increase in emissions â��should shock even the most jaded negotiatorsâ�� at international climate talks currently taking place in Bonn, Germany, the UK Guardian reports. But thereâ��s only one problem with this storyline; global temperatures have not increased at all during the past decade.
    The evidence is powerful, straightforward, and “golly”ing. NASA satellite instruments precisely measuring global temperatures show absolutely no warming during the past the past 10 years. This is the case for the Northern Hemisphere mid-latitudes, including the United States. This is the case for the Arctic, where the signs of human-caused global warming are supposed to be first and most powerfully felt. This is the case forglobal sea surface temperatures, which alarmists claim should be sucking up much of the predicted human-induced warming. This is the case for the planet as a whole.
    If atmospheric carbon dioxide emissions are the sole or primary driver of global temperatures, then where is all the global warming? Weâ��re talking 10 years of higher-than-expected increases in greenhouse gases, yet 10 years of absolutely no warming. Thatâ��s 10 years of nada, nunca, nein, zero, and zilch.”

    http://blogs.forbes.com/jamestaylor/2011/06/08/ten-years-and-counting-wheres-the-global-warming/

    it’s know why too. it’s the temporary effect la nina or el nino. I forget which. hottest decade on record though…

    Past Decade Warmest on Record, NASA Data Shows

    The agency also found that 2009 was the second warmest year since 1880, when modern temperature measurement began. The warmest year was 2005. The other hottest recorded years have all occurred since 1998, NASA said.

    http://www.nytimes.com/2010/01/22/science/earth/22warming.html

    this year is starting of smashingly.

    HEAT WAVE SHATTERS 2,852 U.S. RECORDS, KILLS EIGHT
    http://thinkprogress.org/green/2011/06/10/242061/heat-wave-shatters-records-kills-eight/

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  144. 144
    pfft says:

    By Blurtman @ 34:

    “there is a good reason why SS canâ��t dump treasuries on the market. it would be a large player dumping treasuries on the market. what would it buy if it dumped treasuries whenever it pleased? put it into a bank?
    of course not. theyâ��d probably buy other maturities.”

    There is an even better reason. The “Special Treasuries” theoretically held by the SSTF have no market and could not be dumped even if th SSTF wanted to. They are not real securities, just accounting entries.

    if you could put them on the market they wouldn’t be special securities now would they? they’d be like any other treasury with the same claims on the government.

    they are real securities. they are owed money legally by the government.

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  145. 145
    pfft says:

    By Blurtman @ 133:

    More SS info:

    “But in a real, utilitarian sense, T-Bonds in the SSTF are way, way worse than cash. They are a liability, not an asset. The SSTF can exchange them for dollars, but those dollars must come from the very government thatâ��s on the other side of the exchange. As President Clintonâ��s Office of Management and Budget once explained:

    “Balances are available to finance future benefit payments and other Trust Fund expenditures â�� but only in a bookkeeping senseâ�¦. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.””

    Read more: What’s Really in the Social Security Trust Fund? http://dailyreckoning.com/whats-really-in-the-social-security-trust-fund/#ixzz1PCBVM3Ba

    “During a speech on April 5, 2005 in Parkersburg, West Virginia, Bush openly admitted to the fact that all of the Social Security surplus revenue had been spent. He said,

    “There is no trust fund, just IOUs that I saw firsthand that future generations will payâ��will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.”

    Bush’s words in this speech bore little resemblance to what he had said about Social Security during the 2000 campaign. But his motives were different in 2005. He was trying to sell his privatization plan, and he thought that by spilling the truth he might further his effort to privatize Social Security.

    http://www.fedsmith.com/article/2328/no-money-social-security-trust-fund.html

    Perhaps the SSTF should have held gold?

    I read that the House Republicans are going to push again for wall street privatization of SS. they really are stupid.

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  146. 146
    Voight-kampff says:

    RE: Scotsman @ 141

    Thanks for responding. Im not REAL old, but for decades I’ve heard people pounding the doom and gloom drum, and all the while my own and my families “day to day” has not changed, unfortunately this time I fear some of what you say will indeed happen. I’m trying to help my loved ones be as prepared as possible, I’m just not exactly sure how bad it will get, so I appreciate others opinions on the matter.

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  147. 147
    David Losh says:

    RE: Voight-kampff @ 146

    People who buy gold are stupid. Hoarding seeds is also pointless because you have to protect acreage. The survivalist usually break down to a bunch of insurance sales people with high end weaponry, they look more like prey than protectors.

    In my opinion Blurtman has more to say about what Armageddon looks like. The fighting will be in the courts.

    I think more individuals will claim a little corner of the world and hold out while governments consolidate. You have to do what’s right for you. The bigger issues will sort themselves out because there is more than enough will, technology, and tools to be able to have order.

    This is really one of the greatest periods in history. It’s a shift toward community. It’s possible because we have the ability to communicate. Greece is a discussion point, or China lowering production is an indicator of something. We’re an open society that can allow communities to interact rather than be isolated.

    So if this is indeed the collapse of the corporate culture, it will make no difference. The damage, or the infrastructure, is already in place. We can survive.

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  148. 148
    Blurtman says:

    RE: pfft @ 145 – What, you don’t trust Wall Steet.? Don’t worry, they will regulate themselves….What could go wrong?

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  149. 149
    Blurtman says:

    RE: David Losh @ 47 – Armageddon. I look at what is going on as a bunch of ants on a hot plate. It’s all so phony but becoming an increasing self-reinforcing feedback loop, a symptom of a society that has lost its way and has lost its soul.

    “Only when the last tree has died and the last river been poisoned and the last fish been caught will we realize we cannot eat money” ~ Cree Indian Proverb

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  150. 150
    Blurtman says:

    RE: whatsmyname @ 39 – So when Michelle Bachman becomes the next President (OMG!), and the Repubs own the House and Senate, and pass a balanced budget ammendment, and when the Social Security Trust Fund attempts to cash in these special treauries for $500 billion, and Bachman says, “No can do. Here’s $100 million, everybody is taking it on the chin.” – we can talk about what the special treasuries are worth. But we are coming full circe again. If the USG pays existing UST holders, but stiffs the trust fund and the trust fund’s beneficiaries, the bond market would care not at all.

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  151. 151
    David Losh says:

    RE: Blurtman @ 150

    I’ll address this instead because it is more to the point.

    Let’s pretend our government begins stiffing Social Security. Let’s say they are going to pay something else first, or instead of, Social Security payments. Just let that sink in for a minute, because every body has to pay into Social Security.

    They can’t privatize Social Security because they would have to monetize it; the funds would have to be made available. I’ll take mine in cash.

    OK? Are you with me so far?

    The minute our government hints at stopping payment on a system that has been funded, and promised, the law suits never stop.

    Scotsman goes on like this is some welfare scheme set up by the government to give away our tax dollars. Well, it’s my money, I want my money, I want what was promised, and if they squandered the money, they have money elsewhere.

    We can stop paying Congress easier that stopping Social Security.

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  152. 152
    Voight-kampff says:

    RE: David Losh @ 47
    I have bought no gold, and I live downtown so id say im bullish on social order. When I say I’m helping loved ones prepare, I’m not referring to building apocalypse bunkers or anything, I’m just preaching save save save as your job might not be secure as it has been in the past, but I do not believe our country has ever been through what it is about to go through, luckily I’m bullish on the human spirit as well!

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  153. 153
    Blurtman says:

    RE: David Losh @ 151 – You’ll have to show me the contract that defines your benefits.

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  154. 154
    whatsmyname says:

    RE: Blurtman @ 150
    “So when Michelle Bachman becomes the next President (OMG!), and the Repubs own the House and Senate, and pass a balanced budget ammendment, and when the Social Security Trust Fund attempts to cash in these special treauries for $500 billion, and Bachman says, “No can do. Here’s $100 million, everybody is taking it on the chin.” – we can talk about what the special treasuries are worth.

    Or, if you like, we can discuss that after the rapture/apocalypse in October. Seriously, why would SSI be trying to cash $500B in STB’s when we would still be very close to the self-funding line. In fact, this kind of negates your whole premise. The thing to do with maturing STB’s would, for the most part, be to reissue new ones – doesn’t require any cash. BTW, where do you get the $500B number?

    “But we are coming full circe again. If the USG pays existing UST holders, but stiffs the trust fund and the trust fund’s beneficiaries, the bond market would care not at all.”

    Perhaps in the very short term. However, credit people tend to eventually conclude that, “if they’ll to that to them, they’ll do that to us”.

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  155. 155
    pfft says:

    By Blurtman @ 148:

    RE: pfft @ 145 – What, you don’t trust Wall Steet.? Don’t worry, they will regulate themselves….What could go wrong?

    nothing. wall street is very trustworthy.

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  156. 156
    pfft says:

    By Blurtman @ 53:

    RE: David Losh @ 151 – You’ll have to show me the contract that defines your benefits.

    his AARP card. old people vote. note this doesn’t necessarily apply to mr losh right now.

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  157. 157
    David Losh says:

    RE: Blurtman @ 153

    I get it in the mail every year. I pay in and can expect this return. The government sends it out. They tell me what I’ve paid in, and what I can expect.

    The contract has monetary consideration, is fully disclosed to me every year.

    And I hate having to look at links, but here you go: http://www.ssa.gov/regulations/

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  158. 158
    Blurtman says:

    RE: whatsmyname @ 154 – Actually I do not know what the shortfall will be. I am sure the recovery will narrow the gap. Why not hire a trusted money manager to invest the SSTF money? (And not Pelosi’s husband.) .UST’s would be part of the portfolio, but not exclusively.

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  159. 159
    Blurtman says:

    RE: pfft @ 56 – Absolutely, but gradualism is the great killer.

    Rate this comment: Thumb up 0

  160. 160
    Blurtman says:

    RE: David Losh @ 157 – I can guarantee that I will not read those links.

    What we need is a nationwide citizens posse, with Andy Devine as the spokesman. Shotguns and pitchforks. It is our money. Citizens own the USA. We just have to recognize it and act to inplement it. I bet on the self interest of the average American citizen. Paul Revere and all that.

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  161. 161
    Scotsman says:

    RE: Blurtman @ 160RE: David Losh @ 157RE: whatsmyname @ 154

    Social Security is a giant Ponzi scheme- nothing more. there’s no trust fund, no special securities, no cash. Ultimately all it has is the taxing power of the federal government, a government that taxes a shrinking number of employed to support a growing number of retirees. I can tell you how it ends- if you’re much under 60 years of age or so you’ll see less than you were promised. The younger you are, the more your “benefits’ will be cut, and the longer you’ll have to work before you can start to draw them. but social security isn’t the biggest problem. It’s your medical care you should really be worried about. By the time this is over you’ll be lucky to get a federally funded aspirin if you’re over 75. Anything over 80 will just be a burden to society, a non productive drain on resources.

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  162. 162
    pfft says:

    By Scotsman @ 161:

    RE: Blurtman @ 160RE: David Losh @ 157RE: whatsmyname @ 154

    Social Security is a giant Ponzi scheme- nothing more. there’s no trust fund, no special securities, no cash

    yes there is a trust fund. the SS trust fund get US Treasuries. the government HAS to redeem them. they are cashing them in now.

    http://www.ssa.gov/history/ponzi.htm

    Why do some people describe the “special issue” securities held by the trust funds as worthless IOUs? What is SSA’s reaction to this criticism?
    http://www.ssa.gov/oact/progdata/fundFAQ.html#n7

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  163. 163
    pfft says:

    contrary to popular belief while the recovery measures will be a drag on the economy it
    won’t be a disaster like some have predicted.

    What A Drag
    http://krugman.blogs.nytimes.com/2011/06/03/what-a-drag/

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  164. 164
    Voight-kampff says:

    RE: Scotsman @ 61
    A little off topic but Health care can be addressed, medicine does NOT cost as much medicine costs. A single payer system is the only way. Currently with pharmaceuticals we are actually paying for most of Europes medicine( not services but rx), since the pharmaceutical company cannot gouge countries who already have single payer system, they then by design charge us more in the US for the exact same drugs to increase profits. Rx companies charge us the most because we pay the most. Health care cannot be sold as a commodity no more than air could. Unfortunately Deep Deep pockets stand in the way of real change. New medicines and innovations can still be incentivized.

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  165. 165
    pfft says:

    if we didn’t extend the bush tax cuts we would stabilize our debt/gdp ratios for the next 10 years or more at 60%.

    Confusion and Hypocrisy on the Debt
    http://www.offthechartsblog.org/confusion-and-hypocrisy-on-the-debt/

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  166. 166
    Ben says:

    http://www.realclearmarkets.com/articles/2011/06/15/the_economy_is_now_immune_to_keynesian_crack_99075.html

    Pfft, the keynesian end game is here. We are Greece, Japan, Ireland, Argentina, etc. We had all best deal with it head on. Pull your head out (OF THE SAND) and deal with reality.

    Snip…

    Economic data over the past weeks, punctuated by recent dismal employment reports, confirm the diminishing impact of the stimulus efforts orchestrated by the Obama Administration and the Federal Reserve. In what must be a huge disappointment to Keynesian enthusiasts, the record doses of both monetary and fiscal narcotics did not produce the desired results.
    In fact, the size and scope of the “recovery” of the past two years was weaker than would have been expected in a typical business cycle recovery without any stimulus whatsoever. Indeed our current recovery is the weakest on record, despite the biggest jolt of government stimulus ever administered.

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  167. 167

    By Scotsman @ 61:

    Social Security is a giant Ponzi scheme- nothing more. there’s no trust fund, no special securities, no cash. Ultimately all it has is the taxing power of the federal government, a government that taxes a shrinking number of employed to support a growing number of retirees. .

    Those are problems, but they could be solved if politicians had even a minimal level of guts. Slightly higher premiums (taxes) and needs testing is all that is needed, or at least all that was needed. The longer they wait and do nothing the more that needs to be done. It’s like the difference between starting to contribute to a retirement fund at 25 or 55.

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  168. 168
    David Losh says:

    RE: Scotsman @ 161RE: Blurtman @ 160

    I’d be more concerned about a corporate pension plan than Social Security, and MediCare. Even a benefits package with health coverage can be changed. I don’t see you going on about that.

    I just realized that neither of you is ever addressing the fact that corporate profits will continue a decline. Production has been squeezed to the last penney, and even in China workers are demanding higher wages.

    I watch South America becoming more socialist, and turning away from the United States promises of increased wealth. Europe is a mess. Africa is at war.

    Where are these global corporate businesses going to get the next promises to pay? Where are the financial markets going to get the money to pay promised dividends, or prop up the price of the stocks they are selling?

    I’d trust our government more than I would the depleted resources of failed business practices.

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  169. 169
    David Losh says:

    RE: Voight-kampff @ 52

    I only used the gold, seeds, and guns paragraph as the standard that people imagine of an economic collapse.

    Most people invest in Real Estate for cash flow no matter what happens. People always need a place to live. Small residential is the standard, because you can always charge cheaper rent in economic hard times. Commercial properties need businesses to pay the rent so that might be a little difficult. We just saw high rise office buildings with long term tenents walking away.

    Cash flow, rather than savings, is what people need to prepare for economic hardship. Where would the cash flow come from?

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  170. 170

    By Voight-kampff @ 64:

    RE: Scotsman @ 61
    A little off topic but Health care can be addressed, medicine does NOT cost as much medicine costs. A single payer system is the only way. Currently with pharmaceuticals we are actually paying for most of Europes medicine( not services but rx), since the pharmaceutical company cannot gouge countries who already have single payer system, they then by design charge us more in the US for the exact same drugs to increase profits. Rx companies charge us the most because we pay the most. Health care cannot be sold as a commodity no more than air could. Unfortunately Deep Deep pockets stand in the way of real change. New medicines and innovations can still be incentivized.

    This is sort of a mixed up mess. Do you mean medicine doesn’t cost what we pay? Few things do, because if they did, they wouldn’t be produced.

    The reason drugs cost more here than some other countries is: (1) We have higher incomes; and (2) We tend to have insurance. As to the second, that doesn’t mean RX companies charge us the most because we pay the most, they charge us the most because we pay a $5 or $10 copay. Both 1 and 2 move the demand curve in ways that result in higher prices, and with more insurance under Obamacare it’s going to get worse.

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  171. 171
    Blurtman says:

    RE: David Losh @ 168 – It’s already priced in. ;>)

    Rate this comment: Thumb up 0

  172. 172
    Blurtman says:

    So if the USG delivers less than the promised SS benefits, would it have defaulted on its obligations, or at least partially defaulted?

    Rate this comment: Thumb up 0

  173. 173
    whatsmyname says:

    RE: Scotsman @ 161

    “Ultimately all it has is the taxing power of the federal government”
    This would seem to be highly unusual in the context of a defining characteristic for a Ponzi scheme. In fact, I think that this is the textbook descriptor of what stands behind a T-bill, you know, the one that defines the “risk free” rate.

    I can agree that younger people are likely to see smaller benefits and later start dates. This is simply to extrapolate the history of the program. And let me concede the hole we have to fill, as the first generation of beneficiaries put in nothing (and next to nothing). While the number of beneficiaries continues to grow, I do not know whether the number of employed workers will continue to shrink. The baby boom has a lot of visibility, but we’ve also had the echo boom plus a lot of migration to help even that out. Still, the GOP does its best to help ship jobs overseas, so you may be right there too.

    One thing I really like about you is your internal consistency. You reliably predict disaster, and promote policies to ensure your predictions come true.

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  174. 174
    Blurtman says:

    RE: Kary L. Krismer @ 70 – Large buying groups can lower the price paid for medical products. Just ask large medical products distributors. It is a travesty that Medicare will not use its purchasing power to drive costs lower.

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  175. 175
    whatsmyname says:

    By Scotsman @ 135:

    “When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimcoâ��s Bill Gross told CNBC Monday.”

    “Greece fell three levels on the S&P rating scale, as the bond agency warned that any debt restructuring would be viewed as a default:”

    “It wonâ��t be long before Moodyâ��s and S&P start issuing similar warnings and ratings reductions for the US”

    http://hotair.com/archives/2011/06/13/great-news-were-in-worse-shape-than-greece/

    Should be titled “Bill Gross talks his book”.
    http://www.zerohedge.com/article/so-much-pimco-buying-bonds-short-duration-weighted-treasury-exposure-hits-whopping-23-cash-s

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  176. 176

    By Blurtman @ 174:

    RE: Kary L. Krismer @ 70 – Large buying groups can lower the price paid for medical products. Just ask large medical products distributors. It is a travesty that Medicare will not use its purchasing power to drive costs lower.

    I agree that could be done. Insurance companies do it to some extent, but they have limited powers.

    They are also, IMHO too worried about paying for something after coverage has ended. I think a 90 day supply is the longest most will go. Recently I had my doctor issue me a prescription for a 200 day supply, and the pharmacist only filled it for 90, thinking I had drug coverage. I forget the numbers, but I think it was around $100 a year, plus or minus $30, that I save buying in quantity.

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  177. 177
    Voight-kampff says:

    RE: Kary L. Krismer @ 70
    Sorry Karry This is not a simple supply and demand situation, by your rational people who pay the least out of pocket for drugs would demand the most? the consumer doesnt demand anything, the doctor does. It is a well known fact among doctors and pharmacists (my wife is both) that rx companies charge more in the US because they can. In a practical sense
    The larger the insurance group the less they pay, since most european models have everyone essentially in one group they pay very little. Rx companies also develop what is known in the Biz as “me too drugs” which offer little added benefit to what is currently available, like vytorin which combines two already available products which are going off patent.
    So guess who ISN’T going to pay for this expensive unnecessary formulation… Any person or group who is already single payer. It will be marketed here not because of patient demand, but because 1) the new patent will mean no generics for ~14 years, 2) because a drug rep will “convince” doctors to prescribe it, 3)Or a slick commercial will get people to ask there doctors for it by name.

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  178. 178

    By Voight-kampff @ 77:

    RE: Kary L. Krismer @ 70
    Sorry Karry This is not a simple supply and demand situation, by your rational people who pay the least out of pocket for drugs would demand the most? the consumer doesnt demand anything, the doctor does. .

    So you think all that prescription drug advertising on TV is aimed at doctors?

    And yes I do think those that pay the least for drugs in the U.S. (those with insurance coverage) would demand the most? Why wouldn’t they? That’s the way supply/demand works.

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  179. 179
    Voight-kampff says:

    RE: Kary L. Krismer @ 78
    The commercials are small and relatively new component to this mess, and your right they are targted at the consumer, but the rx company knows the consumer doesnt pay for it, and can’t get it without a doctor. Maybe you misunderstood my point as I think we agree fundamentally that insurance is the problem and Obamacare will make it worse. It is precisely because we have so many different insurance providers that rx makers get more money from us. My only point has been: we pay more because our ability to get discounts from rx makers is diluted by the many health plans we have here, as opposed to the enormous leverage many countries have by everyone essentially being covered under one policy. The demand for drugs in Europe is no less than it is here size for size.

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  180. 180
    David Losh says:

    RE: Blurtman @ 171

    But it’s not priced in. You have to pay taxes, that’s the law, there is no law concerning paying debt.

    Our government was founded by criminals. People tend to forget that. The Constitution is one hell of a document; we’ve got the right to guns, and bankruptcy. As much as both sides of the aisle try to take away our rights we still have them.

    We also have the right to access our government. We’ve had the Bushes, Clintons, and Obama. Ronnald Reagan was an actor for God sake. Jimmy Carter was a peanut farmer!

    In the scheme of things, I think our government will win. We have had several lost decades, but I think it’s pretty clear that the government had to step in, right, wrong, or sideways. We need the government more than we need promises of economic vitality.

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  181. 181
    David Losh says:

    RE: Kary L. Krismer @ 78

    Isn’t there a health care thread some place?

    Health Insurance is a huge problem that needs to be done away with. We need single payer, government run, health care.

    I understand that I am advocating bigger government, big brother, they are only going to tax us to death, but something needs to change. We have a mess.

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  182. 182
    pfft says:

    By Ben @ 166:

    http://www.realclearmarkets.com/articles/2011/06/15/the_economy_is_now_immune_to_keynesian_crack_99075.html

    Pfft, the keynesian end game is here. We are Greece, Japan, Ireland, Argentina, etc. We had all best deal with it head on. Pull your head out (OF THE SAND) and deal with reality.

    Snip…

    Economic data over the past weeks, punctuated by recent dismal employment reports, confirm the diminishing impact of the stimulus efforts orchestrated by the Obama Administration and the Federal Reserve. In what must be a huge disappointment to Keynesian enthusiasts, the record doses of both monetary and fiscal narcotics did not produce the desired results.
    In fact, the size and scope of the “recovery” of the past two years was weaker than would have been expected in a typical business cycle recovery without any stimulus whatsoever. Indeed our current recovery is the weakest on record, despite the biggest jolt of government stimulus ever administered.

    same thing happened last year. we are not any of those countries that you listed except Japan. people have spent the last ten years predicting disaster in Japan and it hasn’t happened. The US has it’s own currency.

    how can you even compare us to Greece. Greece has shown austerity is a failure but you people want the same for the US! Of course we’d look more like the UK and that’s the point.

    bond yields in the US went down today…

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  183. 183
    pfft says:

    By Blurtman @ 74:

    RE: Kary L. Krismer @ 70 – Large buying groups can lower the price paid for medical products. Just ask large medical products distributors. It is a travesty that Medicare will not use its purchasing power to drive costs lower.

    amen.

    remember when Republicans passed the unpaid for socialist plot that is Medicare part D? they specifically made it so the government can’t use it’s bargaining power to purchase cheaper drugs.

    republicans are grifters. if they aren’t trying to cut a program or hand it to the private sector with it’s increased costs it’s trying to milk some government program for all it’s worth for it’s corporate buddies.

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  184. 184
    Voight-kampff says:

    RE: David Losh @ 81
    If this is a global economy thread, I think health care is fairly appropriate, and I agree with you 100%… single payer, government run… New medicines and innovations can be incentivized in other ways.

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  185. 185
    pfft says:

    bringing back the housing boom.

    Home Prices Exploding in Silicon Valley Amid More Millionaires
    http://www.bloomberg.com/news/2011-06-15/tech-ipos-boost-demand-for-silicon-valley-million-dollar-homes.html

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  186. 186
    pfft says:

    By Voight-kampff @ 184:

    RE: David Losh @ 81
    If this is a global economy thread, I think health care is fairly appropriate, and I agree with you 100%… single payer, government run… New medicines and innovations can be incentivized in other ways.

    health care is directly linked to our economy. most of the future deficits are the result of spiraling healthcare costs.

    dean baker talked about this.

    The CEPR Health Care Budget Deficit Calculator shows that if the U.S. can get health care costs under control, our budget deficits will not rise uncontrollably in the future. But if we fail to contain health care costs, then it will be almost impossible to prevent exploding future budget deficits.

    http://www.cepr.net/calculators/hc/hc-calculator.html

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  187. 187
    Scotsman says:

    RE: David Losh @ 181

    “I understand that I am advocating bigger government, big brother, they are only going to tax us to death, but something needs to change. We have a mess.”

    So let’s replace the current mess with even more cronyism, incompetence, and unresponsiveness? Is this supposed to pass for a well reasoned argument? What do you want, David- freedom or big brother wiping your butt from cradle to grave?

    Desperation and ignorance make a bad cocktail.

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  188. 188
    Blurtman says:

    RE: pfft @ 183 – Yes indeed. The private sector engages in group purchasing leverage all the time. It is absolute nonsense to restrict Medicare from doing the same. In fact, it is anti-competitive.

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  189. 189
    David Losh says:

    RE: Scotsman @ 187

    In the world of health care the government has the Veterans Administration, Medicare, and Medicaid. They also run Public Health. If I wanted to I could claim that is all a subsidy to our private health insurance system. Our government, our tax dollars, pay for the worst of the health care cases while private insurance charges $5 for an aspirin. It’s kind of the reverse, “our government is screwing us” argument.

    I agree that government has hired way too many people to do nothing. There again I also know that the government can be very stingy and get a lot done in a very little amount of time.

    Let’s use the military as an example. You can have a lean, and mean division go into a village, set up an operation for two thousand soldiers, build a bridge, and function as an economic hub. When the orders come in to do something, everything gets muddled. In my opinion the same happens with FEMA. The money is there, the ability is there, but there are too many mid level management positions looking out for their departments.

    I think it’s easier to fix the government. I trust our ability to fix the government.

    It’s my opinion that there are more solutions to our government than there are trusting the stock market, or bloated, competing corporate structures. Some global corporate structures, in theory, are as big as many governments.

    Are you’re saying we should turn our lives over to these companies to plan our future?

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  190. 190

    By Voight-kampff @ 79:

    My only point has been: we pay more because our ability to get discounts from rx makers is diluted by the many health plans we have here, as opposed to the enormous leverage many countries have by everyone essentially being covered under one policy. The demand for drugs in Europe is no less than it is here size for size.

    I would agree with that, but note that to the extent our incomes are higher, our prices would tend to be higher too. I’m not sure whether prices in Europe go country by country, or all the same across each country.

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  191. 191
    whatsmyname says:

    By pfft @ 183:

    By Blurtman @ 74:
    RE: Kary L. Krismer @ 70 – Large buying groups can lower the price paid for medical products. Just ask large medical products distributors. It is a travesty that Medicare will not use its purchasing power to drive costs lower.

    amen.

    remember when Republicans passed the unpaid for socialist plot that is Medicare part D? they specifically made it so the government can’t use it’s bargaining power to purchase cheaper drugs.

    republicans are grifters. if they aren’t trying to cut a program or hand it to the private sector with it’s increased costs it’s trying to milk some government program for all it’s worth for it’s corporate buddies.

    I was not aware of the provision prohibiting cost effective purchasing. I am sure many other Americans are equally unaware. If it’s what you say, it is outrageous, and the Dem’s should bring this up often and oftener. It should be standard response every time the GOP talks about the exploding costs of entitlements or our very large deficits. And they would need to back it up with a proactive effort to fix the legislation. I won’t hold my breath, though.

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  192. 192

    RE: whatsmyname @ 191 – I think it is brought up. That solution though is only a drop in the bucket.

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  193. 193
    Blurtman says:

    RE: whatsmyname @ 191

    Bill to Let Medicare Negotiate Drug Prices Is Blocked
    http://www.nytimes.com/2007/04/18/washington/18cnd-medicare.html

    “If it’s what you say, it is outrageous, and the Dem’s should bring this up often and oftener.”

    What!? And lose the pharma lobby dollars!!??

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  194. 194
    pfft says:

    By Scotsman @ 187:

    RE: David Losh @ 181- freedom or big brother wiping your butt from cradle to grave?

    this is the classic false choice. the government is we the people. we vote for them. if we have cradle to grave policies it’s because we like them and they work. medicare works. social security works. the voters love these programs because they work and they are needed.

    most of the cradle to grave nations have better standards of living and are more peaceful than the US is. that is a fact.

    I bet you’re a hit at tea party rallies.

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  195. 195
    pfft says:

    By whatsmyname @ 91:

    By pfft @ 183:
    By Blurtman @ 74:
    RE: Kary L. Krismer @ 70 – Large buying groups can lower the price paid for medical products. Just ask large medical products distributors. It is a travesty that Medicare will not use its purchasing power to drive costs lower.

    amen.

    remember when Republicans passed the unpaid for socialist plot that is Medicare part D? they specifically made it so the government can’t use it’s bargaining power to purchase cheaper drugs.

    republicans are grifters. if they aren’t trying to cut a program or hand it to the private sector with it’s increased costs it’s trying to milk some government program for all it’s worth for it’s corporate buddies.

    I was not aware of the provision prohibiting cost effective purchasing. I am sure many other Americans are equally unaware. If it’s what you say, it is outrageous, and the Dem’s should bring this up often and oftener. It should be standard response every time the GOP talks about the exploding costs of entitlements or our very large deficits. And they would need to back it up with a proactive effort to fix the legislation. I won’t hold my breath, though.

    Senate Blocks Bill to Lift Ban on Government Bargaining for Lower Prices
    http://www.webmd.com/medicare/news/20070418/no-negotiation-on-medicare-rx-prices

    “If it’s what you say, it is outrageous, and the Dem’s should bring this up often and oftener.”

    democrats are weak.

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  196. 196
    pfft says:

    By Blurtman @ 93:

    RE: whatsmyname @ 191

    Bill to Let Medicare Negotiate Drug Prices Is Blocked
    http://www.nytimes.com/2007/04/18/washington/18cnd-medicare.html

    “If itâ��s what you say, it is outrageous, and the Demâ��s should bring this up often and oftener.”

    What!? And lose the pharma lobby dollars!!??

    I liked my link better.

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  197. 197
    Blurtman says:

    RE: pfft @ 196 – OK. The truth is out there.

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  198. 198
    k2000k says:

    RE: pfft @ 194

    The riots in Greece and unrest in much elsewhere in Europe belie that statement domestically, and the only reason they maybe so internationally is that they are content to rest under the military umbrella of the United States. Even then it doesn’t stop many European nations from doing acts of belligerence for whatever reason, just look at Libya the major mover and shaker to moving the UN into that conflict was France. And the only reason people like cradle to grave policies and vote for them is because our politicians falsely sold you a system was unsustainable. If politicians were forthright about what the programs were, and their eventual long term ramifications, then they would never have been enacted. The money you put into SS has long been spent and is gone and you will never get it back, just because they have a record of you putting the money in their doesn’t make it any less true.

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  199. 199

    Governor Moonbeam vetoed California’s budget. I don’t have a link handy, but you can probably find one by Googling budget and gimmick. That might get very interesting down there. Lot’s of issues, including whether the legislators will be paid from this point out.

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  200. 200
    David Losh says:

    RE: k2000k @ 198

    The unrest in Libya is a direct result of rolling demand for change in North Africa. You’ll see more of that in Europe, and around the Mediterranean. We already have that change sweeping South America in the form of leftist politicians being voted into office. China, and Russia have already had plenty of change, but China especially is simply paying for peace with it’s workers. China is unsustainable.

    All of it, the whole frigging economic mess, is the result of American business culture. We are being run, our country, ourselves, by a bunch of get quick rich nickle and dime hustlers.

    I understand the nickles and dimes add up to trillions of dollars that are simply being used to pay for lavish life styles of the wealthy. You should understand that this 2% of the world population are standing in the way of political, and economic stability. Volatility creates calculated risks that in turn make profits.

    It’s a game.

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  201. 201

    By David Losh @ 200:

    RE: k2000k @ 198

    The unrest in Libya is a direct result of rolling demand for change in North Africa. You’ll see more of that in Europe, and around the Mediterranean.

    I think it’s a little hard to compare Libya and most of Europe because the issues are quite different. For example, the Libyans want the right to have something, while the Greeks want the right to have something for nothing. ;-)

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  202. 202
    Blurtman says:

    The small businessman rides to the recsue!
    or,
    Blame in on Tom Petty.

    Florida is No. 1 for marijuana grow houses

    Read more: http://www.miamiherald.com/2011/06/15/2267863/florida-is-no-1-for-marijuana.html?source=patrick.net#ixzz1Pl5SY64y

    C’mom, Washington, let’s get going!

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  203. 203

    By Blurtman @ 202:

    C’mom, Washington, let’s get going![sic?]

    Did you mean growing? ;-)

    I wonder if Florida is popular because they could save energy by having a higher temperature and focus the savings on lights to avoid detection from energy use? The article didn’t say that, but they also seemed to think that a house with ten plants was a commercial operation.

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  204. 204
    Blurtman says:

    RE: Kary L. Krismer @ 203 – Hmmmm…Kary, you seem very knowledgeable about this. ;>) The grow lights themselves generate tremendous amounts of heat.

    Could be that Florida is a big agricultural state and so there are lots of farmers in the state already. Or, perhaps the Scarface effect. One would expect to find outdoor guerilla farming operations in the sunshine state.

    I think this is how underwater homeowners in Florida bail themselves out.

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  205. 205
    Macro Investor says:

    By Kary L. Krismer @ 1:

    By David Losh @ 200:

    … the Libyans want the right to have something, while the Greeks want the right to have something for nothing. ;-)

    Funny. Minus the rioting, I’m not sure there’s much difference between Greece and every other debtor gov — all of Europe, the US, CA, IL and most other states. Eventually, they’ll all have their credit cards taken away.

    I’m not sure how everything got so twisted. No able bodied adult should get something for nothing. In a free society, how can you justify forcing people to work for their own families, and have to pay for the lazy leeches (which includes businesses)?

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  206. 206
    Blurtman says:

    What a crappy newspaper the NY Times has become. A Sunday Times front page story describes:

    “In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.”

    LPS Applied Analytics, a “prominent real estate data firm,” is part of Lender Processing Services, an allegedly criminal enterprise being sued by shareholders for securities fraud. LPS, the robosigner king, is under criminal investigation for foreclosure fraud in several states. Even the Federal Reserve is taking enforcement action against this joke of a company.

    And the NY Times Sunday edition runs a self-serving story by this corrupt company on the front page, no less!

    Is Judith Miller writing for this rag again?

    http://www.dailyfinance.com/2010/11/24/lender-processing-services-sued-by-shareholders-for-fraud/
    http://www.deanmostofi.com/?p=791
    http://www.federalreserve.gov/newsevents/press/enforcement/20110413a.htm

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  207. 207
    David Losh says:

    RE: Macro Investor @ 5

    You’re going to love this.

    We are far past a point where we will “employ” our way out of this financial circumstance. Full employment will do nothing to change the economy. There are 7 billion people on the planet. How are you going to employ all of those people, doing what, and for what kind of wages?

    We just had a great shift in wealth. That shift of wealth to a very few will continue. For all the talk we all have about how bad things are, there is money in the system, tons of cash, that is controlled by fewer, and fewer people.

    How do you propose to change that? You don’t want redistribution of the wealth, so they have theirs. How many people should we starve to death to equalize the situation?

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  208. 208

    By Blurtman @ 6:

    What a crappy newspaper the NY Times has become.

    Jon Stewart was on Fox News Sunday (or whatever it’s called) with Chris Wallace this morning. He had nothing good at all to say about the NYTs. It probably got the second most criticism, following of course Fox News.

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  209. 209
    Scotsman says:

    Keynes is indeed dead. Karl has done some more analysis reaching back a bit further than his previous efforts to show that GDP expansion through debt rarely generates a return greater than its cost. And in fact, the trend has been for each new dollar of debt to reduce GDP, the exact opposite of what has been taught for 60 years.

    http://market-ticker.org/cgi-ticker/akcs-www?get_gallerynr=1846

    http://market-ticker.org/cgi-ticker/akcs-www?post=188500

    It makes sense- interest rates have long been seen as the mediator between borrowing costs and potential investment returns. As potential returns rise, lenders can charge more, and effectively capture all of the excess returns generated right up to the break even point. Over time the interest owed compounds exponentially while production returns are less likely to do so. In the end you owe more in interest than you create in productive gains. The result is a loss- financed over 60 years with declining rates. When the debt finally must be paid, all that false GDP “growth” must fade away as debts are paid. Fun times ahead. A collapsing debt based money supply means long term inflation will likely never come to pass.

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  210. 210
    Blurtman says:

    RE: Scotsman @ 209 – Yes, the debt fueled consumption contribution to GDP especially during the hyper RE bubble of the ’00’s creates bogus GDP. And so GDP is a poor metric for the well being of the average American. BTW, if you subtract out the bogus home sales from past GDP, i.e., all of the unsustainable purchases that are now being defaulted on or walked away from, what would GDP really have been in the ’00’s?

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  211. 211
    Scotsman says:

    RE: Blurtman @ 210

    I think the message here runs deeper than GDP is a poor metric. It has to do with the entire concept of leverage and whether, in the longer run, it’s better to finance growth by borrowing or from reinvested profits. Taking on debt to finance expansion during periods of high certainty might be a good idea, but you have to do it with the idea that the debt will be paid off. That’s where we screwed up- we never paid anything off, just rolled it over, including the financing costs. The debt and accrued interest continued to accumulate- at an exponential rate. But the progress or capital improvements, essentially the increases in productive capacity, have to be repurchased with every generation as technology moves forward. There in no geometric or exponential increase on the productive side- it’s linear, and perhaps even decreasing in the face of more advanced competition.

    So now we are locked into a situation where the total debt burden and its servicing costs far outstrip any potential increases in productive capacity we could ever buy- even if we had the money. In fact, as the statistics show- we’re going backward with every dollar of additional borrowed investment.

    The only cure is to vacate or clear the debt. For a variety of reasons I think much of that will happen through default, but we’ll see.

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  212. 212
    whatsmyname says:

    By Scotsman @ 209:

    Keynes is indeed dead. Karl has done some more analysis reaching back a bit further than his previous efforts to show that GDP expansion through debt rarely generates a return greater than its cost. And in fact, the trend has been for each new dollar of debt to reduce GDP, the exact opposite of what has been taught for 60 years.

    http://market-ticker.org/cgi-ticker/akcs-www?get_gallerynr=1846

    http://market-ticker.org/cgi-ticker/akcs-www?post=188500

    Or that’s a great ratio for demonstrating the effects of a negative trade balance because you get to double count by using the net export deficit to reduce GDP in the nominator while while using the corresponding current accounts deficit to increase the debt denominator. Because we’re only looking at the margins (changes), we get even more drama. I do agree with Karl to the extent that this provides insight into a future of allowing multinational corporations to effectively broker the trade of our economy to the 3rd world (for a healthy profit to be sure – so it’s ok)

    Sorry, this chart only goes back to ’92.
    http://www.tradingeconomics.com/united-states/balance-of-trade

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  213. 213
    Scotsman says:

    RE: whatsmyname @ 212

    Ok, points for being clever, but the effect is insignificant for several reasons.

    First is that the U.S. has had a negative trade balance for most of its post WWII existence, so the effect is constant throughout the analysis. Second is that trade (imports and exports added together, then divided by GDP) is a smaller portion of the economy for the U.S. than all but three of four industrialized countries. The sheer size of our domestic economy overwhelms all else.

    But you’re right- the multinationals are working it for all they can, and we have been willing accomplices. Love those WallMart prices!

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  214. 214
    Blurtman says:

    RE: Scotsman @ 213 – So why wouldn’t government spending focused on increasing personal consumption be one way to goose GDP?

    Rate this comment: Thumb up 0

  215. 215
    Blurtman says:

    Turning Japanese, I Really Think So.

    Obama, Congress warned: National debt growing faster

    The Congressional Budget Office reported Wednesday that the nation probably will owe outside creditors more than the size of the entire economy in 10 years.

    The forecast — a public debt equal to 101% of the economy in 2021, and rising to 187% by 2035 unless dramatic changes are made — should be a warning to President Obama, Congress and Vice President Biden’s band of bipartisan negotiators meeting daily to devise just a short-term fix.

    By comparison, last year’s long-term budget outlook from CBO forecast a public debt equal to 87% of the economy by 2020. The difference — 14% — would be about $2 trillion based on today’s economy, even more as it grows.

    “The explosive path of federal debt … underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course,” the report says.

    It goes on: “Large budget deficits and growing debt would reduce national saving, leading to higher interest rates, more borrowing from abroad and less domestic investment, which in turn would lower income growth in the United States.”

    The problem outlined in the report: spending that far outpaces revenue as the years pass. Here’s a simplified version:

    Spending is projected to grow from 24% of the economy today to 26% in 2021 and 34% in 2035.
    Revenue is projected to grow from 15% today to 19% in 2021, where it would remain in 2035.
    Annual deficits would be 7.5% of the economy in 2021, less than today’s 9.3%. But each year’s deficit adds to the national debt. By 2035, the deficit would be 15.5% of the economy, and the accumulated debt would be 187%.

    http://content.usatoday.com/communities/theoval/post/2011/06/obama-congress-warned-national-debt-growing-faster/1

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  216. 216
    whatsmyname says:

    By Scotsman @ 213:

    RE: whatsmyname @ 212

    Ok, points for being clever, but the effect is insignificant for several reasons.

    First is that the U.S. has had a negative trade balance for most of its post WWII existence, so the effect is constant throughout the analysis. Second is that trade (imports and exports added together, then divided by GDP) is a smaller portion of the economy for the U.S. than all but three of four industrialized countries. The sheer size of our domestic economy overwhelms all else.

    But you’re right- the multinationals are working it for all they can, and we have been willing accomplices. Love those WallMart prices!

    You are right that the second counting in the denominator is much less impactful that the first counting in the numerator. Still, I am not half so clever as Karl. Our trade deficit, (about $500B in 2010) is over 3% of total GDP. (it was around 5% a few years ago). Karl only looks at GDP and debt deltas which should seriously amplify the effect of the trade gap, yet he can only get to 1 or 2%. Intuitively, domestic GDP/debt must be growing positively enough to cover some portion of what we’re losing in the trade gap: A portion we can’t know without knowing more about Karl’s numbers.

    If Karl had a serious shot at Keynes, it would be huge. He’d have sources and definitions out in plain sight where they could be tried, adjusted, and tested. Karl is successful in his goal, however, which is not so much to provide light as it is to provide talking points.

    Speaking of Wallmart;
    http://www.theonion.com/video/hostages-trapped-inside-walmart-insisting-they-nev,20362/

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  217. 217
    David Losh says:

    The word is deflation.

    This link best describes what my opinion of the next decade will bring: http://www.businesswire.com/news/home/20110124006336/en/Deflation-2011-Beyond%C2%A0as-Financial-Deleveraging-Persists-Gary

    You may be worried about what the federal government will do next, but it will make very little difference in our lives. For the fed it will all be money in, and money out. There will be far less interest in helping prop up industry the way industry has expected since World War II. That means things like energy, in particular, oil, and coal, even natural gas, will get a lot less funding from the government.

    We have already seen what the banking sector will do with growth. That should be fixed in our minds as we shop, pay, and consolidate. The consumers will literally control the market place through spending. What works will survive, on it’s own.

    The way I look at it is that the government was just given too much money to play with. That’s exactly what our politicians did, they played with our money. What do we have to show for it? Nothing. Our infrastructure is failing.

    I just don’t see any politician in the next few years asking for anything that doesn’t have a direct benefit. If they want to keep the money flowing in they will have to show us a value. You can be as sceptically as you want, but I think that our government is going to want to continue bringing money in rather than giving it away to those who don’t pay.

    In other words, we pay more of the taxes, as many people here have pointed out.

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  218. 218
    Scotsman says:

    RE: whatsmyname @ 216

    “Intuitively, domestic GDP/debt must be growing positively enough to cover some portion of what we’re losing in the trade gap”

    You’re right- it is growing. At least as reported. The problem is that 10% of GDP growth is from deficit spending, the $1.4T the government borrows every year to keep itself solvent. But that 10% isn’t from real organic growth. It should really be subtracted from GDP to get a more accurate number, which would then be negative.

    If you make $100k a year and borrow $40k more would you say your income is $140k a year? Probably not, but that’s essentially what the GDP number claims.

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  219. 219
    Scotsman says:

    This would be funny in a dark way if it wasn’t going to come back and smack all of us:

    “Bernanke Admits He’s Clueless On Economy’s Soft Patch”

    “In his second post-FOMC press conference, Fed Chairman Ben Bernanke touched on every topic, admitting that the recovery was weaker than expected and that beyond temporary factors like supply chain disruptions in Japan and high energy prices, he was at a loss as to what was causing the soft patch”

    When all you have is a Keynesian hammer, everything looks like a nail? I understand what the problem is- it’s well laid out in the posts above. This BB needs to get out and around more. For an academic he’s pretty much solidified in his thinking, to all of our detriment.

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  220. 220
  221. 221
    pfft says:

    By David Losh @ 207:

    RE: Macro Investor @ 5</aThere are 7 billion people on the planet. How are you going to employ all of those people, doing what, and for what kind of wages?

    I love these questions. I am sure that were asked at 1 billion, 2 billion, 3 billion and etc.

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  222. 222
    pfft says:

    By Scotsman @ 9:

    Keynes is indeed dead.

    no. keynes has been vindicated in real-time. just look at europe. just look to the US.

    I believe keynes works best in a liquidity trap so there aren’t many examples. there is the US during the Great Recession and Great Depression. There is Japan. There is Europe right now.

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  223. 223
    pfft says:

    By whatsmyname @ 216:

    By Scotsman @ 213:
    RE: whatsmyname @ 212

    Ok, points for being clever, but the effect is insignificant for several reasons.

    First is that the U.S. has had a negative trade balance for most of its post WWII existence, so the effect is constant throughout the analysis. Second is that trade (imports and exports added together, then divided by GDP) is a smaller portion of the economy for the U.S. than all but three of four industrialized countries. The sheer size of our domestic economy overwhelms all else.

    But you’re right- the multinationals are working it for all they can, and we have been willing accomplices. Love those WallMart prices!

    You are right that the second counting in the denominator is much less impactful that the first counting in the numerator. Still, I am not half so clever as Karl. Our trade deficit, (about $500B in 2010) is over 3% of total GDP. (it was around 5% a few years ago). Karl only looks at GDP and debt deltas which should seriously amplify the effect of the trade gap, yet he can only get to 1 or 2%. Intuitively, domestic GDP/debt must be growing positively enough to cover some portion of what we’re losing in the trade gap: A portion we can’t know without knowing more about Karl’s numbers.

    If Karl had a serious shot at Keynes, it would be huge. He’d have sources and definitions out in plain sight where they could be tried, adjusted, and tested. Karl is successful in his goal, however, which is not so much to provide light as it is to provide talking points.

    Speaking of Wallmart;
    http://www.theonion.com/video/hostages-trapped-inside-walmart-insisting-they-nev,20362/

    here is what you need to know about deninger. he had a gavel from newt gingrich.

    yes that is right. deninger was a newt blingrich fan…

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  224. 224
    pfft says:

    will the myth of Reagan finally be put to rest?

    Reagan and Revenues
    http://krugman.blogs.nytimes.com/2011/06/22/reagan-and-revenues/?smid=tw-NytimesKrugman&seid=auto#

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  225. 225
    pfft says:

    By Scotsman @ 35:

    “When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimcoâ��s Bill Gross told CNBC Monday.”

    “Greece fell three levels on the S&P rating scale, as the bond agency warned that any debt restructuring would be viewed as a default:”

    “It wonâ��t be long before Moodyâ��s and S&P start issuing similar warnings and ratings reductions for the US”

    http://hotair.com/archives/2011/06/13/great-news-were-in-worse-shape-than-greece/

    did you really fall for that unfunded liabilities mumbo jumbo.

    par for the course…

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  226. 226
    David Losh says:

    RE: Scotsman @ 219

    As much as the trade gap is an interesting topic, even though it’s been dead fodder for almost a decade, it’s the Bernanke speech that is more to the point.

    The fed policy did what it was supposed to do, which is stop the slide into a full blown depression. Yes, beyond that he is clueless. Without a depression, or depression policies for him to enact, he has nothing to do.

    The difference is that we do have a global economy that is intertwined. Japan, China, South America, and Europe can all change the way the stock market reacts. OK, not South America so much today, but with the socialist policies being enacted there it is a pretty safe bet that emerging market is going to wise up.

    The Great Depression of the past, the very, very distant past, was one that could argue protectionist policies. I think we pretty much gave up that debate in the 1990s some place.

    Bernanke is stuck with the reality that we will have to set the economy on a steady course of growth rather than get rich, or get rich quicker, tricks.

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  227. 227
    David Losh says:

    RE: pfft @ 21

    No the question has never been asked. Communism, in my life time, was a viable economic policy.

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  228. 228
    pfft says:

    Report: 97 percent of scientists say man-made climate change is real
    http://content.usatoday.com/communities/sciencefair/post/2010/06/scientists-overwhelmingly-believe-in-man-made-climate-change/1

    economic relevance.

    The Economic Impact of Climate Change
    http://economix.blogs.nytimes.com/2009/06/16/the-economic-impact-of-climate-change/

    we know that efficiency works and saves money.

    Breaking News! Energy Efficiency Programs are Working, Saving Consumers Millions
    http://thinkprogress.org/romm/2011/06/15/246252/energy-efficiency-programs-saving-consumers/

    wal-mart is a great example.

    Behind the Greening of Wal-Mart
    http://www.nytimes.com/2011/05/15/business/15shelf.html

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  229. 229
    David Losh says:

    RE: pfft @ 24

    The article never addresses Geece’s socialist policies, or any policies at all. It’s just empty numbers and warnings.

    OK, fine, whatever, Social Security, and Medicare can cover all the citizen’s of the United States for the same amount of money that is already in the budget. The federal budget is just misguided based on this stupid welfare to work mentality we have. OH MY GOD, people in their sixties, and seventies should just keep working because we don’t have enough money to give to banks!!!!, or oil companies, or car companies, or the war in Albania.

    Come on, let’s stop being silly and admit that there is plenty of money. The federal government as more money than they know what to do with. You just don’t want to give money to people who have worked a life time, put up a good fight, and are now deserving of the money that they paid into the system.

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  230. 230
    David Losh says:

    RE: pfft @ 23

    I just thought I would throw in some comments to kind of match your fire storm. Unfortunately I’m out of empty links to conjecture without a basis in facts.

    Rate this comment: Thumb up 0

  231. 231

    MSNBC has a headline that they’re releasing oil from the Strategic Oil Reserve. Why?

    Rate this comment: Thumb up 0

  232. 232
    David Losh says:

    RE: Kary L. Krismer @ 231

    The unjustified high price of oil, and gas, is a major drag on the economic recovery. The federal government doesn’t want interest rates to rise so they are going after the oil reserves.

    What needs to happen is for the government to concentrate on a balanced budget and let the market place work itself out.

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  233. 233

    RE: David Losh @ 232 – The price of oil isn’t all that high, and the purpose of the SPR isn’t to smooth the market.

    Rate this comment: Thumb up 0

  234. 234
    David Losh says:

    RE: Kary L. Krismer @ 231

    OK you peaked my interest so: “The International Energy Agency says 28 countries have agreed to release 60 million barrels of crude to the market to offset disruptions prompted by Libya’s war.”

    Then it goes on to say: “It also warned that the tight oil market “threatens to undermine the fragile global economic recovery.”

    We’re concerned that the summer driving season will be curtailed by the high price of gasoline. That would further dampen the consumer economy.

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  235. 235
    David Losh says:

    RE: Kary L. Krismer @ 33

    The price of oil is way too high. The biggest drag on the economy is oil speculation. We need to get rid of oil, and coal, and move on to unlimited energy sources.

    Rate this comment: Thumb up 0

  236. 236

    By David Losh @ 235:

    RE: Kary L. Krismer @ 33

    The price of oil is way too high. The biggest drag on the economy is oil speculation. We need to get rid of oil, and coal, and move on to unlimited energy sources.

    I would agree with the last sentence, and high prices is what makes that happen. Artificially reducing prices just delays what is necessary.

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  237. 237
    Blurtman says:

    RE: David Losh @ 227 – I’ll ask the question again: As consumption is the major component of GDP, and as the conumer accounts for consumption, why are we not bailing out the consumer to improve the economy?

    Rate this comment: Thumb up 0

  238. 238
    David Losh says:

    “In an updated forecast, the Fed estimated Wednesday that the economy will grow between 2.7 percent and 2.9 percent this year. That’s down from its April estimate of between 3.1 percent and 3.3 percent. The downgraded revision is an acknowledgment that the economy has slowed, in part because consumers have been squeezed by higher gasoline prices.”

    I just thought I would throw that in. The real story is: “The central bank chief and his lieutenants are expressing concern that Congress’s failure to close what Dallas Fed President Richard Fisher called the nation’s “fiscal sinkhole” puts the economy at risk. At the same time, they say that acting too quickly may choke off a recovery hobbled by an unemployment rate above 9 percent.”

    While Bernanke was talking yesterday the stock market stayed steady until after two hours there was nothing more to be said or done by our federal government. No rabbits, no new money, just warnings about the defecit.

    OK, your financial recovery is going to be, Kary, bankruptcy. Banks are going to have to take some losses. Banks are the canary in the coal mine. Banks, and financial markets in general, have sucked the life out of the economy.

    I would have thought the very wealthy would have wanted to perpetuate the momentum of cash flow, but they hoarded instead. Cash reserves, globally are what have killed the economy. The only solution is to stop feeding the beast.

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  239. 239

    According to MSNBC the oil release is to end the speculation spiral. Morons.

    Rate this comment: Thumb up 0

  240. 240
    Scotsman says:

    RE: Kary L. Krismer @ 239

    And our portion equates to one and a half days of consumption. Pure politics.

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  241. 241
    Scotsman says:

    Unemployment initial claims are up again, to 429,000. Recovery summer rolls on..

    http://www.calculatedriskblog.com/2011/06/weekly-initial-unemployment-claims_23.html

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  242. 242
    Scotsman says:

    RE: Blurtman @ 37

    “why are we not bailing out the consumer to improve the economy?”

    Because gains are privatized and losses socialized? ;-) /sarc

    Rate this comment: Thumb up 0

  243. 243
    whatsmyname says:

    By Scotsman @ 218:

    RE: whatsmyname @ 216

    “Intuitively, domestic GDP/debt must be growing positively enough to cover some portion of what weâ��re losing in the trade gap”

    You’re right- it is growing. At least as reported. The problem is that 10% of GDP growth is from deficit spending, the $1.4T the government borrows every year to keep itself solvent. But that 10% isn’t from real organic growth. It should really be subtracted from GDP to get a more accurate number, which would then be negative.

    If you make $100k a year and borrow $40k more would you say your income is $140k a year? Probably not, but that’s essentially what the GDP number claims.

    I have to disagree. GDP is an attempt to measure how much is produced in our national economy, not why it is produced or how the production is financed, or what part of it may be thought of as income, or if it can be called organic.

    Note also, that Karl is not looking merely at government debt, but at all debt as being unable to produce returns larger than the interest cost. Anyone involved in the financial workings of a growing/successful enterprise has seen where this is not true.

    Governmental debt can similarly support productive enterprise when done right. For example, our roads, parks and trails create real value/wealth for our nation in and of themselves, even though this may not be converted back to cash. Further, the dollars that go to the lowest economic strata create additional demand (and therefore production in the private economy) as they will be turned around in full. It is only the dollars that go to people that do their production overseas (and to “savers”) that do not increase production in our economy. In the real world, and similar to private enterprise, some production has questionable real value; but that is a different discussion.

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  244. 244
    MichaelB says:

    By David Losh @ 217:

    The word is deflation.

    This link best describes what my opinion of the next decade will bring: http://www.businesswire.com/news/home/20110124006336/en/Deflation-2011-Beyond%C2%A0as-Financial-Deleveraging-Persists-Gary

    .

    Great Link! Thanks!

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  245. 245
    David Losh says:

    RE: Kary L. Krismer @ 239

    Well, that’s MSNBC. In my opinion, and I’ll look up links in the morning, or probably over the week end, dumping oil reserves are another bail out of the oil industry. In my opinion the oil companies tried, and failed, to spark the illusion of inflation. They collected wind fall profits, and got nothing more than profits for the effort. The economy has stalled, and oil is front, and center as the culprit for simply driving up prices.

    The damage to the image of oil companies is going to be long lasting.

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  246. 246
    pfft says:

    proof austerity does not work.

    Greece Update and European Bond and CDS Spreads
    http://www.calculatedriskblog.com/2011/06/greece-update-and-european-bond-and-cds.html

    how’d this work out? trichet said this years ago.

    Trichet Urges Governments to Curb Spending, Deficits
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auzWAeVkK644

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  247. 247
    David Losh says:

    RE: pfft @ 46

    You should spend some research time on the EEC. It’s fascinating that this was a done deal, of default, long before there was a credit bubble, and no one really cares.

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  248. 248

    RE: David Losh @ 45 – I’m not really sure I understand what you’re trying to say there.

    What I don’t understand is if people think that speculators drive up the final price of oil, why do they think that dumping more oil on the market will change that? If the final price of oil is not about supply and demand, why is it suddenly about supply and demand when the government dumps oil? Those speculators still bought futures contracts at higher prices. Why do people think that doesn’t still drive up the price of oil if they thought it drove it up before?

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  249. 249
    Blurtman says:

    RE: David Losh @ 217 – Yes, but will Dancing with the Stars and Top Chef continue to be televised???

    Rate this comment: Thumb up 0

  250. 250
    David Losh says:

    RE: Kary L. Krismer @ 248

    It’s a parlor trick, a diversion for the benefit of the oil industry. This is about the high price of oil dampening the global economy.

    My point is that the high price of oil is completely artificial. The demand that was there when China was running factories twenty four hours a day, and goods were being shipped to every corner of the earth, is severally curtailed. There is no supply, and demand reason for oil to be over $100 per barrel.

    Production has only slightly been reduced so where is all of that production going? My speculation is that oil poduction has been going into reserves that the United States, and Europe want to get rid of because more is on the way.

    I’ll research it, but I know that the slight decrease in production is far too little compared to the massive decrease in global demand for oil.

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  251. 251
    David Losh says:

    RE: Blurtman @ 49

    No.

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  252. 252
    pfft says:

    By Scotsman @ 240:

    RE: Kary L. Krismer @ 239

    And our portion equates to one and a half days of consumption. Pure politics.

    28 countries participated. it’s not like libya isn’t happening too along with the euro debt crisis.

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  253. 253
    pfft says:

    how come nobody ever defends austerity here? you guys wanted it and it’s failed in every country it’s been tried. just look at all the countries where bond yields are much higher a year or so later.

    http://www.calculatedriskblog.com/2011/06/greece-update-and-european-bond-and-cds.html

    meanwhile the stimulus countries are chugging along.

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  254. 254
    David Losh says:

    RE: pfft @ 253

    You should read up on the EEC. All of Europe has austerity programs to reduce debt burdens. The bond market is responding to governments that may default, will default, are going to default, don’t care if they default, will never pay the money back, or pay any attention to bond ratings, or prices.

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  255. 255
    Blurtman says:

    RE: pfft @ 246 – I don’t think you will settle this argument until you define the terms of success and failure, or work, and not working. And also the time frame to achieve these results, too. So here is my suggestion – peak employment with a stable or rising standard of living.

    US stimulus, currently – Fail.

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  256. 256
    pfft says:

    By Blurtman @ 255:

    RE: pfft @ 246 – I don’t think you will settle this argument until you define the terms of success and failure, or work, and not working. And also the time frame to achieve these results, too. So here is my suggestion – peak employment with a stable or rising standard of living.

    US stimulus, currently – Fail.

    if the stimulus failed it was because there was too little not too much.

    Economists agree: Stimulus created nearly 3 million jobs
    http://www.usatoday.com/money/economy/2010-08-30-stimulus30_CV_N.htm

    imagine if we had spent what we were supposed to according to what people like dean baker and paul krugman said?

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  257. 257
    pfft says:

    it’s pretty clear that meredith whitney’s 15 minutes are over.

    Nevada State Treasurer Takes on Meredith Whitney
    http://www.cnbc.com/id/43525456/

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  258. 258
    David Losh says:

    RE: pfft @ 256RE: pfft @ 257

    Define jobs, in the 3 million range. What I found interesting is that banking is considered a service sector job. That was the job growth that people talked about. Lots of jobs have been created to handle foreclosures, collection of bad debt, bankruptcy, figuring new fee schedules for people still having money, bank tellers, sales people for worthless insurance programs, or stock portfolios. Many new jobs have been created for those low wage, debt slaves.

    Let’s take a Geiko with it’s unprecedented growth, oh yeah, they are losing to Progressive, or is it Nationwide, and we can always switch to All State. Please take a minute to look at the nonsense called our economy.

    As far as Nevada goes, they are in much worse trouble than the numbers show. Losing the housing sector may boost numbers temporarily. More people not paying mortgages increases the illusion of more cash in the system. I’ll go on about Nevada another time, but Merideth is only pointing out the obvious.

    I’m still trying to figure out why the demand for oil is so high, and never seemed to take a down turn.

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  259. 259
    Blurtman says:

    Emblematic.

    “California officials say the state saved hundreds of millions of dollars by turning to China.” – to manufacture the bridge decks for the replacement Oakland Bay bridge.

    What is the unemployment rate in California, again?

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  260. 260
    pfft says:

    By Blurtman @ 259:

    Emblematic.

    “California officials say the state saved hundreds of millions of dollars by turning to China.” – to manufacture the bridge decks for the replacement Oakland Bay bridge.

    What is the unemployment rate in California, again?

    how many more bridges can they fix with the money saved? the more bridges they can work on the more jobs created even if they aren’t jobs for manufacturing the bridge decks. are you advocating government waste?

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  261. 261
    Blurtman says:

    RE: pfft @ 260 – Yep. It really seems to be working.

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  262. 262

    By Blurtman @ 259:

    Emblematic.

    “California officials say the state saved hundreds of millions of dollars by turning to China.” – to manufacture the bridge decks for the replacement Oakland Bay bridge.

    What is the unemployment rate in California, again?

    It actually increases employment in California in the long run, because in 5 years the defective bridge decks will need to be replaced.

    Didn’t the new Tacoma Narrows spans come from Korea?

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  263. 263
    Blurtman says:

    RE: Kary L. Krismer @ 262 – Not to mention replaced autos lost in the collapse.;>)

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  264. 264
    pfft says:

    enjoy austerity just don’t forget to lock your doors!

    Texas Mayor Warns Residents To ‘Bolt Your Doors’ After City Lays Off Entire Police Force
    http://www.businessinsider.com/texas-mayor-warns-residents-to-bolt-your-doors-after-city-lays-off-entire-police-force-2011-6#ixzz1Qbk1KTrO

    don’t worry though, this WILL create jobs. higher unemployment creates jobs. we all know that.

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  265. 265
    pfft says:

    By Blurtman @ 61:

    RE: pfft @ 260 – Yep. It really seems to be working.

    if the state paid double for the steel they’d run a story about how we paid double to enrich union bosses instead of getting the best and cheapest steel…

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  266. 266
    Blurtman says:

    RE: pfft @ 265 – Yes, if every US citizen only bought foreign made goods, think of all the money we’d save. Why, we’d be rich!

    Rate this comment: Thumb up 0

  267. 267
    pfft says:

    By Blurtman @ 266:

    RE: pfft @ 265 – Yes, if every US citizen only bought foreign made goods, think of all the money we’d save. Why, we’d be rich!

    you know that is nonsense and not what I meant so why do you bother to post it? stop trolling.

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  268. 268
    pfft says:

    austerity is working!

    Missouri Gov. Jay Nixon Cuts Help For Abused Children To Pay For Disaster Relief
    http://thinkprogress.org/politics/2011/06/28/255945/missouri-gov-nixon-cuts-help-for-abused-children-to-pay-for-disaster-relief/

    Rick Scott Tried To Disband The Florida Highway Patrol
    http://thinkprogress.org/politics/2011/06/28/256550/rick-scott-highway-patrol/

    why are these workers striking? don’t they know that higher unemployment and lower wages will bring on recovery?

    Greek workers begin two-day general strike – in pictures
    http://www.guardian.co.uk/world/gallery/2011/jun/28/greek-workers-general-strike-in-pictures

    all you austerians, where are the pro-austerity protestors?

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  269. 269
    pfft says:

    look at that austerity creating jobs!

    Austerity engulfs the high street
    Thorntons joins growing list of casualties in a week of retail misery that could cost 10,000 jobs
    http://www.guardian.co.uk/business/2011/jun/28/austerity-high-street

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  270. 270
    Ben says:

    RE: pfft @ 269 – Yep. They just don’t get that they should follow Krugman’s advice to depreciate the currency and borrow and spend their troubles away.

    And when that doesn’t work, depreciate and borrow and spend some more…..

    Free money for everyone…..

    /sarcasm

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  271. 271

    On the topic of nonsense studies, here’s one on speculation:

    http://blog.seattlepi.com/transportation/2011/06/30/study-oil-speculators-costing-drivers-41-extra-per-month/

    I love the simplistic analysis. Morons.

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  272. 272
    pfft says:

    By Ben @ 270:

    RE: pfft @ 269 – Yep. They just don’t get that they should follow Krugman’s advice to depreciate the currency and borrow and spend their troubles away.

    And when that doesn’t work, depreciate and borrow and spend some more…..

    Free money for everyone…..

    /sarcasm

    exactly. you actually have it right you just don’t know it.

    Compare Iceland to Estonia, Greece or Ireland and you’ll see that the Krugman’s of the world were right.

    Depreciation of the currency works. The gold standard the Euro provides has failed. We can now see real-time why we left the gold standard. it’s not flexible enough.

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  273. 273
    pfft says:

    ben- austerity was supposed to inspire “confidence” and hence the economy would recover. why isn’t it in the UK? what not Greece, Spain, Portugal and Ireland?

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  274. 274
    David Losh says:

    RE: pfft @ 273RE: pfft @ 272

    You got the currency part of the equation right, but you are failing with the austerity.

    Default, quick default, quick governemt default by Ireland, Greece, Spain, and Portugal would be a good start to economic recovery. The return to currencies tied to an economy would be better than this blanket dream of, as you say, the “gold standard” of the Euro.

    The introduction of the Euro was, in my opinion, a misstep in global economic development. They, we, should have learned from the disaster of the USSR.

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  275. 275
    David Losh says:

    RE: Kary L. Krismer @ 71

    The in depth analysis also claims that speculators drove up the price of gasoline.

    Your supply and demand argument makes no sense. If it were supply and demand the price of oil would be falling.

    You are using nickle and dime fluctuations in production as proof that there is this a huge deficit in available oil for refinement, or that there is a huge deficiency in refinement for the crude.

    What it has come down to, repeatedly, for decades is speculators yelling fire to create volatility.

    Look at oil company wind fall profits, look at speculator profits.

    Your fascination with energy companies as a way to create wealth is amazing considering how many people suffer in the process.

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  276. 276
    pfft says:

    can’t criticize krugman anymore, not that you could really before.

    Barack Herbert Hoover Obama
    http://krugman.blogs.nytimes.com/2011/07/02/barack-herbert-hoover-obama/

    Rate this comment: Thumb up 0

  277. 277

    By David Losh @ 75:

    The in depth analysis also claims that speculators drove up the price of gasoline.

    Your supply and demand argument makes no sense. If it were supply and demand the price of oil would be falling. .

    David, that study is complete non-sense. For one thing, there was “speculation” going on during the periods their base pricing, so they’re not comparing prices without speculation to prices with. Whatever entity is paying their salaries is getting ripped off.

    Second, to the extend that you want to try to claim that supply and demand is not driving prices, please cite to some statistics to support that claim. I’ve done so in the past to refute your claims, but all you seem to have is a completely unfounded belief that demand is not rising relative to supply.

    Third, of course oil companies are making a lot of money. They own a lot of oil and oil is in relatively short supply. When there’s even less oil they will make even more money! That’s the way supply and demand works.

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  278. 278
    David Losh says:

    RE: Kary L. Krismer @ 277

    Sorry, but we just saw the United States government pull out reserves. How many reserves are there around the world? Lot’s.

    Then you have this from Forbes: http://www.forbes.com/2010/01/21/biggest-oil-fields-business-energy-oil-fields.html

    “Given the size of Iraq’s undeveloped giants there are no technical reasons why within 10 years the country can’t supplant both Iran and Russia to become the world’s No. 2 oil producer after Saudi Arabia.”

    Iraq itself shows the top three spots of the world’s biggest oil reserves. The world has sweet heart deals there, because the “allies” invaded.

    Demand on the other hand plummeted in 2008: http://www.ft.com/intl/cms/s/0/bcda848c-c62a-11dd-a741-000077b07658.html#axzz1R4Cv2X3R

    and today “Texas light sweet crude oil prices continued falling Monday on concerns about slowing global demand and the impact of Saudi Arabia’s oil output hike.” and ” Trading was also influenced by the looming end of the U.S. government’s bond buying program later this month and the effect of China’s inflation problems on the dollar.”
    http://www.thestreet.com/story/11150884/1/oil-prices-weaken-on-demand-outlook.html?cm_ven=RSSFeed

    I know it’s hard to filter through the hype of the markets “selling” you the idea we have market volitility, but the internet has done that. It’s easy to inject a bunch of internet chatter to make things look more volitile than they actually are.

    Let’s take Libya, because I just posted the news from Iraq. Invading Libya means more oil on the street, not less. Oil will get dumped onto the global market to rebuild Libya. Speculators are making profit now because the margins will shrink.

    For having such a fascination with energy you still cling to this idea Enron had no hand in an energy crisis when it’s been proved market manipulation added to the hysteria.

    Oil is a dinosaur. It’s another example of a free market that was bought up into a global monopoly. Banking is today’s example, oil is from our distant past.

    Government needs to intervene.

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  279. 279
    David Losh says:

    RE: Kary L. Krismer @ 77

    While I’m waiting for my comment to mderate let just say that the study is the same as looking at consumer confidence trends, or mortgage interest rates as a way to gauge a market. The study took a method and followed it to a conclusion.

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  280. 280

    RE: David Losh @ 78 – Okay, I guess I guess I needed to be more specific. Current supply and demand. Show some stats where current supply is much greater than current consumption.

    The US and other countries pumping out reserves has probably had a downward effect on price. That’s the type of thing I’m talking about with supply, but that’s not a sustainable supply.

    The story on Iraq is not current supply so it won’t affect the current price. And while they’re developing that supply, other sources of supply are being depleted, just as for example, as how the Alaska pipeline is only processing a fraction of what it was in the early days because the wells are being depleted.

    And really, a cite to 2008? This is 2011. Prices declined because of a world wide recession. Perhaps you frequent a website or two that might have referenced that a time or two. ;-)

    In case you didn’t, there was a world wide financial crisis which arose at the end of 2008 and caused virtually every economy in the world to turn south. That in turn meant that they didn’t consume the same amount of oil, which in turn meant prices dropped. As those economies recover the opposite occurs. Again this is 2011.

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  281. 281
    David Losh says:

    RE: Kary L. Krismer @ 280

    The biggest oil fields link is 2010, that talks about Iraq, and those fields are coming on line.

    The great and beautiful thing about the supply of oil is that you can’t show it.

    You’re thinking that Europe, and the United States dumping reserves was for the benefit of the people? Come on, the world is swimming in oil because production didn’t stop in other countries it just stopped here, as you pointed out in the pipline case. The pipeline is running at low capacity because Palin put a tax on that oil.

    Demand dropped in 2008 while supply kept pumping. This last spike in pricing is all about greed.

    Geez, I could go on with this all day long, but you just follow the market reports.

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  282. 282
    pfft says:

    anyone else find it funny that not raising the debt ceiling is unconstitutional?

    Rate this comment: Thumb up 0

  283. 283

    RE: pfft @ 82 – I could see a possible argument that having a debt ceiling limit is unconstitutional, but I don’t think there’s any argument at all that requires Congress to pass legislation or the President to sign it if it is passed.

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  284. 284
  285. 285
    pfft says:

    By Kary L. Krismer @ 83:

    RE: pfft @ 82 – I could see a possible argument that having a debt ceiling limit is unconstitutional, but I don’t think there’s any argument at all that requires Congress to pass legislation or the President to sign it if it is passed.

    no it IS unconstitutional.

    “The validity of the public debt of the United States, authorized by law…shall not be questioned.”

    http://tpmdc.talkingpointsmemo.com/2011/07/constitutional-crisis-the-political-and-legal-risk-of-ignoring-the-debt-limit.php?ref=fpblg

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  286. 286
    Voight-kampff says:

    RE: pfft @ 285

    After reading the article you link to, it appears it is highly up for debate as to whether it would be construed as unconstitutional and seems to have as many arguments “for” as “against”.

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  287. 287

    By Voight-kampff @ 86:

    RE: pfft @ 285

    After reading the article you link to, it appears it is highly up for debate as to whether it would be construed as unconstitutional and seems to have as many arguments “for” as “against”.

    And beyond that, assuming the argument is valid, it seems to go more to my argument that the debt limit is unconstitutional–something pfft claimed was wrong. :-D

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  288. 288
    Blurtman says:

    RE: pfft @ 285 – A lot of folks believe that the public debt does not include intergovernmental debt, i.e. the spent Social Security trust fund, and empty Medicare trust fund.

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  289. 289
    pfft says:

    By Blurtman @ 288:

    RE: pfft @ 285 – A lot of folks believe that the public debt does not include intergovernmental debt, i.e. the spent Social Security trust fund, and empty Medicare trust fund.

    they’re wrong.

    “the spent Social Security trust fund”

    the money is in US treasuries. where are they supposed to put it where it isn’t spent?

    do you realize that everytime a loan is made there is not actual money left it’s spent on something?

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  290. 290
    pfft says:

    By Voight-kampff @ 86:

    RE: pfft @ 285

    After reading the article you link to, it appears it is highly up for debate as to whether it would be construed as unconstitutional and seems to have as many arguments “for” as “against”.

    not by my reading. the constitution is pretty clear. we can’t default.

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  291. 291
    Blurtman says:

    RE: pfft @ 289 – The SS trust fund money has been spent and replaced with special treasuries. These treasuries bear no CUSIP number and cannot be traded in the open market. Unlike unspecial treasuries. the value of these special treasuries is not set by the market. The entirety of this debt is intergovernmental. None is owed to Chinese, Japanese, pension fund or other investors. The argument has been made that this is not public debt. Consider that the money in the trust fund has been borrowed from the public. I certainly hope the argument is incorrect, but my research on the issue of the SS trust fund has been more accurate than yours.

    A seperate issue – consider that if the special treasuries are redeemed through the issuance of unspecial treasuries, American citizens will be faced with double taxation – first as SS payroll deductions, and then as federal income tax to pay interest on the unspecial treasuries.

    Further, as I had claimed, Geithner has been shown to be FOS yet again. His claim that a default on any USG obligation would send the bond markets into a panic is as has been stated absolute nonsense. I trust you had read the previously supplied link indicating that the Treasury had missed a special treasuries coupon payment to the SS trust fund. Note that the bond market did nto even blink. (http://market-ticker.org/akcs-www?post=189249)

    Further, a default on promised SS benefits concerns the bond market not at all. That is, delivering less and less benefits to SS recipients does not matter to the bond market.

    I am not lobbying for the dissolution of SS and the cessation of benefits. But I think it is important to consider the issue of debt obligations carefully.

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  292. 292

    By pfft @ 290:

    By Voight-kampff @ 86:
    RE: pfft @ 285

    After reading the article you link to, it appears it is highly up for debate as to whether it would be construed as unconstitutional and seems to have as many arguments “for” as “against”.

    not by my reading. the constitution is pretty clear. we can’t default.

    But assuming that’s your reasoning, it doesn’t mean Congress has to act to increase the debt limit. It means imposing the debt limit itself is unconstitutional. Both the existing one and any future ones. What they should do is repeal the debt limit. There’s no reason for it to exist, and it was a stupid idea. I’m not even sure why we have one.

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  293. 293
    Ben says:

    RE: pfft @ 284 – First rule of prediction: Never give a hard date for a major prediction. We learned that yet again on May 21st and we’ll learn it once again October 21st and in December of 2012. :-)

    Depsite the preceding advice about hard dates, I stick to my prediction a month or two ago about the GDP wheels coming off the bus sometime this year. It’s not a hard line in the sand date anyway. You ought to agree with me (for the wrong reason) as good Keynesians will always say any stimulous is NEVER large enough.

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  294. 294
    pfft says:

    By Kary L. Krismer @ 292:

    By pfft @ 290:
    By Voight-kampff @ 86:
    RE: pfft @ 285

    After reading the article you link to, it appears it is highly up for debate as to whether it would be construed as unconstitutional and seems to have as many arguments “for” as “against”.

    not by my reading. the constitution is pretty clear. we can’t default.

    But assuming that’s your reasoning, it doesn’t mean Congress has to act to increase the debt limit. It means imposing the debt limit itself is unconstitutional. Both the existing one and any future ones. What they should do is repeal the debt limit. There’s no reason for it to exist, and it was a stupid idea. I’m not even sure why we have one.

    I agree.

    2/3 of the debt was run up by republicans and during the bush years the debt ceiling was raised by $4 trillion.

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  295. 295
    pfft says:

    By Ben @ 93:

    RE: pfft @ 284You ought to agree with me (for the wrong reason) as good Keynesians will always say any stimulous is NEVER large enough.

    the amount of stimulus is a very easy calculation. what is the difference between what the economy could produce and what it is actually producing. whatever stimulus you have should be enough to bridge that gap.

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  296. 296
    One Eyed Man says:

    RE: Ben @ 293

    So what was your hard prediction? Did you predict negative GDP for a quarter in 2011 per BEA or whatever government entity calculates that number?

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  297. 297
    David Losh says:

    RE: Blurtman @ 288

    Let’s start with Medicare, and carry that over into a socialist agenda. Social Security can be easily funded by our government.

    First we convert medicare to single payer, government run health care, and incorporate all the medicare infrastructure.

    Second we expand all existing government run programs for food, and housing to include the elderly.

    Last we do away with all government sector employee pension plans and incorporate that money into social programs for the elderly.

    It’s all legal, and on it’s way. If you have a government job you work for the people.

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  298. 298
    David Losh says:

    RE: One Eyed Man @ 96

    It’s obvious to me that Spain, Greece, Italy, and Ireland should nationalize the banking system in each country. They should default quickly, and do away with the Euro, to return to their own currencies. If they wanted to make a separate free trade agreement, then they should be allowed to, and probably have closer ties to Northern Africa than to Europe.

    That will put the GDP question into perspective.

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  299. 299
    pfft says:

    Krugman on the triumph of keynes.

    Mr Keynes and the moderns
    http://www.voxeu.org/index.php?q=node/6668

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  300. 300
    David Losh says:

    RE: Kary L. Krismer @ 280

    OK Kary, you ignore my reasoning on oil prices, but why is the price of oil down because the job market is weak?

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  301. 301
    Matthew says:

    Nice jobs report this morning. UE at 9.2%. Time for QE3 already? Where is PFFFT’s recovery? I thought everything was fine in the land of Keynes!

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  302. 302

    By David Losh @ 100:

    RE: Kary L. Krismer @ 280

    OK Kary, you ignore my reasoning on oil prices, but why is the price of oil down because the job market is weak?

    ??? A weak job market would mean lower demand for oil (and probably lower consumption too). That would lead to lower prices.

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  303. 303

    By Matthew @ 1:

    Nice jobs report this morning. UE at 9.2%. Time for QE3 already? Where is PFFFT’s recovery? I thought everything was fine in the land of Keynes!

    I’m not sure why you think this somehow disproves Keynes. State and local governments are laying off people like mad. That’s less spending and Keynes would predict that would translate into lower GNP.

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  304. 304
    Blurtman says:

    RE: Matthew @ 1 – It’s obviously explained by the wealth effect. People have so much wealth, they’ve decided to take the summer off. ;>)

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  305. 305
    David Losh says:

    RE: Kary L. Krismer @ 302

    That is what speculation is all about. However, the job reports have been weak for a long time. Many economic numbers indicate stagnation, yet production continues.

    That is where the reserves come in.

    The bottom line is that the price of oil should be very cheap. It’s not. That is because it is trading at a speculation level rather than in the real world.

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  306. 306

    RE: David Losh @ 5 – David, you need to start stating some facts, rather than your opinion of the world which is based on God knows what.

    What mechanism do you think exists that somehow ensures speculators make a profit, such that if they buy a future at $X they can sell it at $X + $Y? There is no such mechanism and your statements that oil should be cheap are based on nothing.

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  307. 307
    David Losh says:

    RE: Kary L. Krismer @ 306

    It’s very simple. My reasoning, and I have put up links to show it, is that the theory of peak oil was developed before some major changes in the global economy. The projected target date for the point when oil production would get so hard it would drive up the price of oil was 2020. At that time development of alternative energy would become more cost effective.

    Since that time the demand for oil in China has dropped, and according to some people China is heading for an economic crisis. We invaded Iraq and are in the process of bringing more productive oil fields on line. As a matter of fact, while production in Libya has been stalled, Saudi Arabia agreed to cover the short fall, yet it’s pretty clear that was unnecessary, but the offer was made. Last would be that we know oil production in Libya will continue, and probably increase.

    All of this time the development of alternative energy continues. Alternative energy may be expensive, but it is there. We’ll comfortably meet that 2020 dead line with more oil, and more alternatives.

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  308. 308
    David Losh says:

    Actually I wanted to advance another wild theory today.

    In the 1970s a guy, some guy, I forget who, wrote a book about Japan. He was saying that Japan was engaged in a nationalized effort to economically dominate their corner of the world. He referred to it as an economic war.

    We’ve kind of forgotten about Japan except as having a lost decade. They are still an economic power house, but not as dominate as they may have once thought they could be.

    What I started thinking this past week is that Germany seems to be at the center of the Euro economic crisis. What if Germany, or the combination of European countries, had the idea they could economically achieve what two world wars failed to accomplish?

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  309. 309

    RE: David Losh @ 7 – You’re only addressing supply, which is only half the equation, and also have not stated at all how you think buying a future for $X guarantees that you can sell in the future at a profit and drive up prices.

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  310. 310
    David Losh says:

    RE: Kary L. Krismer @ 309

    Ah, the demand has fallen. That should be obvious to every one. Production continues. It’s like the building craze in China. They have to go on or risk putting people out of work.

    What we’re seeing right now, in my opinion, is the clearing of past future’s market speculation. Lot’s of bets that were made during the global economic expansion still have to be paid off.

    In other words, there is no reason for this year’s spike in oil prices. It just looks good on paper, and the profits are extremely real. The consumer is paying a high price to clear the books of petro dollar speculation.

    I’m going to raise the question again in another way. What’s going to happen when the consumers wake up, and stop paying? Isn’t that what all the concern is about?

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  311. 311

    By David Losh @ 310:

    RE: Kary L. Krismer @ 309 – Ah, the demand has fallen. That should be obvious to every one.

    Maybe I need to make this clear, but stating something should be obvious is not citing to a fact. What you need is something like this, but something that says something entirely different.

    http://www.economist.com/blogs/dailychart/2011/06/oil-production-and-consumption?page=1

    Or something that says something entirely different than page 3 of this PDF.

    http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2011.pdf

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  312. 312
    David Losh says:

    RE: Kary L. Krismer @ 311

    You’ve posted these before, and you need to look at them again. These are BP reports that indicate the same slight consumption that out strips production.

    Let me just point out the obvious, again, that according to the graphs shown there is no decrease in consumption in Asia-Pacific, even though it does indicate a flattening of the consumption in North America.

    In my opnion Asia-Pacific will continue to take delivery even though consumption is down.

    In other words, it’s also my opinion that the price of oil, and oil futures should be hitting a brick wall, soon.

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  313. 313

    By David Losh @ 312:

    RE: Kary L. Krismer @ 311 – You’ve posted these before, and you need to look at them again. These are BP reports that indicate the same slight consumption that out strips production.

    You do realize that is exactly a situation that leads to and supports higher prices, right? Higher prices are what keeps consumption in check. But for higher prices we’d have lines at the gas station and stations running out of gas.

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  314. 314
    David Losh says:

    RE: Kary L. Krismer @ 313

    That is a very tired argument.

    There’s a term that I have avoided in these discussion, but it was linked to in another comment on another thread, it’s petrodollars, as opposed to the petroeuro.

    It really makes no difference. Currencies show the strength of a Nation. Our currency is tied closely with the price of oil. We prop up the price of oil to prop up our currnecy values.

    A lower price of oil would bolster an economic recovery, which we need, globally. The United states needs to move on from where we were as a Super Power to becoming an economic dynamic. We refuse to do that in favor of giving away profits to oil company interests.

    Oil should just be allowed to play out. Consumers are already paying the high price of oil. The next question is what gives in the family budget to continue to pay to drive to work? What will we spend less on to pay the higher prices for commodities? How much stress can our economy take before something like the Tea Party happens?

    No, higher prices at the pump are killing our economy, and our fight to maintain the value of the petrodollar is killing the global economy.

    You should really get out ot the house more. In my opinion we have become a society that looks at the statistics that are fed to us by the very companies that depend on high stock prices. Once you look up from the data you can see other things are going on.

    Actually, I think every American should see Nothern Africa from Morocco, to Jordan, and that includes Palastine. It’s a much different perspective.

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  315. 315

    By David Losh @ 314:

    RE: Kary L. Krismer @ 313 – That is a very tired argument.

    That’s what the Davis Administration said in California before they wised up. Unfortunately before they wised up they bankrupted two major utilities and took California from a state with a $20B surplus to a state on the verge of bankruptcy. All because they didn’t understand simple economics.

    “Tired” simply means you don’t understand simple and basic economic concepts, like apparently the indisputable fact that higher prices will result in lower consumption.

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  316. 316

    By David Losh @ 14:

    Our currency is tied closely with the price of oil. We prop up the price of oil to prop up our currnecy values.

    You do realize that there’s an inverse correlation there, right? The stronger the dollar, the lower the price of oil.

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  317. 317
    David Losh says:

    RE: Kary L. Krismer @ 316

    I also understand that ours isn’t the only currency in the world. The Euro, which Saddam made the the mistake of choosing, is having a sever crisis, yet it remains propped up. What makes sense is the Petroruble for China, but they are talking about changing global currency domination. Does that mean we will have the petroyuan? That could be, but Russia may not accept that.

    You have made my point about the dollar being tied to the price of oil, but I’m not sure how that would relate to the profits to the oil companies.

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  318. 318
    David Losh says:

    RE: Kary L. Krismer @ 15

    Please give up the California argument. It has no place here. The Davis administration had no control over the value of the currency, interest rates, oil production, delivery, reserves, or the ability to invade Iraq, or bomb Libya.

    Lower consumption is the last thing we need right now.

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  319. 319

    By David Losh @ 318:

    RE: Kary L. Krismer @ 15

    Please give up the California argument. It has no place here. The Davis administration had no control over the value of the currency, interest rates, oil production, delivery, reserves, or the ability to invade Iraq, or bomb Libya.

    Lower consumption is the last thing we need right now.

    The California argument pertains to their man-made electrical shortages, so none of the things you mentioned have any relevance to that.

    If you want lower oil prices you either need more production capacity or less consumption. There are no other legitimate choices (meaning price controls don’t work).

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  320. 320

    By David Losh @ 17:

    You have made my point about the dollar being tied to the price of oil, but I’m not sure how that would relate to the profits to the oil companies.

    But again, it’s an inverse correlation. The stronger the dollar the lower the price of oil.

    I’m not sure either off the top of my head how the dollar affects oil company profits. If the dollar falls, oil prices go up because of the currency issue and higher consumption elsewhere. If you’re talking about the profit of oil companies in US dollars, that would probably mean higher profits overall, because of the higher price and our economy using so much oil, but I’m not sure.

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  321. 321
    David Losh says:

    RE: Kary L. Krismer @ 15

    You’re basing your entire argument on one phrase, February 2001, California governor Gray Davis stated, “Believe me, if I wanted to raise rates I could have solved this problem in 20 minutes.”

    You’re ignoring the deregulation of wholesale prices, while maintaining a cap on retail prices as a cause for the black outs. Then you are trying to tie that in to the budget deficit caused by the crash of the dot com markets.

    California should have been a warning for banking deregulation, or cross overs that allow speculators to be in control of the free market system.

    You’re making my arguments rather than refuting them.

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  322. 322

    By David Losh @ 321:

    RE: Kary L. Krismer @ 15

    You’re basing your entire argument on one phrase, February 2001, California governor Gray Davis stated, “Believe me, if I wanted to raise rates I could have solved this problem in 20 minutes.”

    No, there were other similar comments. In addition, I’m basing my argument on the fact that was correct. Raising rates was what was needed and raising rates was what in fact solved the problem. They resorted to that after bankrupting two large utilities and using over $20B in state funds to prop up the unsustainable system.

    You’re ignoring the deregulation of wholesale prices, while maintaining a cap on retail prices as a cause for the black outs. Then you are trying to tie that in to the budget deficit caused by the crash of the dot com markets.

    I’m not ignoring the things you mentioned in the first sentence. That’s in fact what I’m saying. Deregulating the wholesale while capping the retail was the problem.

    The dot com crash had nothing to do with it. I’m talking about California spending real dollars on dealing with the electrical crisis. And the utilities did not go bankruptcy because of the dot com crisis.

    California should have been a warning for banking deregulation, or cross overs that allow speculators to be in control of the free market system.

    No, California should have been a warning not to do stupid deregulation. Anyone with 10 college credits of economics would have realized how stupid their system was.

    As to the speculators, you’re really missing the point. To the extent they affected prices at all it was by actually limiting the production (getting production taken off line). That’s what you don’t understand about the oil issue–speculators don’t make the oil pumped out of the ground disappear.

    Also, again you’ve fallen hook line and sinker for the speculation argument put forward by the politicians that caused the crisis. Again, tell me if Enron took over $20B of money from California, and a lot more from various utilities (including those in Washington), just how did they manage to go bankrupt? It’s nonsense. Their profit and their impact was minor in the overall scheme of things.

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  323. 323
    David Losh says:

    RE: Kary L. Krismer @ 20

    This is the global economic thread. Our oil companies have a big stake in selling oil in dollars. That’s what is being attacked.

    We are in, in my opinion, a currency war. Oil is a weapon.

    Your arguments are well founded, just limited in scope. It’s this global economic manipulation that has to change.

    The claims I’m making are that the Euro was a bad mistake. I know they wanted to play into the Super Power theme, but they are simply to disjointed with long histories of war fare.

    My further opinion is that Russia, and China will enter into an energy pact to trade oil for a new currency, or in Rubles. That’s where we are heading, and that would severly impact, and, again my opinion, lower the price of oil.

    We need to have lines at the gas station, we need to increase energy consumption, we need to get the price of transportation lower. I don’t see us running out of oil. I do see the ability for finding alternative energy sources that will present more diverse profit opportunities.

    Or you can take the Scotsman’s view of armed militants in the streets.

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  324. 324
    David Losh says:

    RE: Kary L. Krismer @ 22

    They went bankrupt to retain profits. Come on, this is simply an example of where speculators didn’t need to create new energy sources becuase there was more money to be made by playing the system that was in palce.

    You’re right, it takes two minutes to figure out that wholesale deregulated, retail regulated, hmmm, is there a profit potential in there that doesn’t require capital expenditure? Hmmm, let’s see.

    We are in the same position today with banking.

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  325. 325

    By David Losh @ 24:

    RE: Kary L. Krismer @ 22

    They went bankrupt to retain profits.

    You’re going to have to explain how that one works, because bankruptcy doesn’t work that way.

    The reason Enron went bankrupt had nothing to do with trading energy, and had to do with the fact that the business in other areas was not making as much money as claimed, and was in fact losing money. It’s sort of like Boston Market, but on a much larger scale. Enron was an accounting scandal before they were a speculator scandal, and the reason they became the latter was because they were an easy target because of the former. They were a bunch of crooks.

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  326. 326
    David Losh says:

    RE: Kary L. Krismer @ 325

    The bankruptcy cleared the books, once, and for all. If I recall correctly, because this is ancient history that has nothing to do with anything being discussed here, only one person went to jail.

    And can you please define losses. Where did that money get lost to?

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  327. 327

    RE: David Losh @ 26 – As I recall, they were booking revenue that was speculative at best, and never materialized. Much of their income was phantom income, but the expenses of the business were real.

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  328. 328
    David Losh says:

    RE: Kary L. Krismer @ 327

    Well, yeah, the expenses are very real, like salaries, bonuses, benefits, perks, and, yes, expenses, like dinners out, cars, boats, hotels….

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  329. 329
    David Losh says:

    Look, let’s take Enron as an example. It wasn’t a company as much as it was a profit center. All they needed was a place to catch dollars. They had no product to sell, they were only selling the idea of having a product. They were the ultimate middle person.

    They found a loop hole between regulation, and deregulation then exploited that to show a need for the “service” they were providing.

    Yes, it was all accounting. There was nothing there, but profit, and expenses.

    The same thing is playing out all over the world. There is a lot to unwind, mostly in the financial sectors, not so much in energy any more.

    The speculation in energy today is child’s play compared to the larger issue of currency. Oil is no longer tied to gold, gold is no longer tied to currency.

    We are at the ultimate turning point of who was right, and who was wrong. Who is the super power, and who is the axis of evil?

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  330. 330

    By David Losh @ 29:

    Look, let’s take Enron as an example. It wasn’t a company as much as it was a profit center. All they needed was a place to catch dollars. They had no product to sell, they were only selling the idea of having a product. They were the ultimate middle person.

    You need to do a little bit of reading so that you can understand Enron.

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

    Pay particular attention to the sections on Revenue Recognition, Mark-To-Market Accounting and Special Purpose Entities. Also note that the California energy crisis is hardly mentioned and that Enron went into bankruptcy during the period they were supposedly causing the California energy crisis. That Americans fell for the politicians’ scapegoating of Enron in the California energy crisis is just further evidence of how incredibly gullible they are.

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  331. 331
    pfft says:

    By Matthew @ 301:

    Nice jobs report this morning. UE at 9.2%. Time for QE3 already? Where is PFFFT’s recovery? I thought everything was fine in the land of Keynes!

    same thing happened last year.

    “I thought everything was fine in the land of Keynes!”

    we didn’t really try keynes. keynes-lite.

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  332. 332
    David Losh says:

    RE: Kary L. Krismer @ 330

    What are you talking about? There was no energy “crisis” in California. It was an accounting trick. Speculators were given the right to cut supply. That was a regulation issue. You’ve made that point repeatedly, but it has nothing to do with todays oil speculation.

    Enron was a black hole of mumbo jumbo. A lot of people made a lot of money. Enron was just a physical address to run the money through.

    Geez.

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  333. 333
    pfft says:

    it’s official, obama is a disappointment.

    Obama Urges Dems To Accept Changes To Medicare, Social Security
    http://tpmdc.talkingpointsmemo.com/2011/07/obama-urges-dems-to-accept-changes-to-medicare-social-security.php?ref=fpb

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  334. 334
    Blurtman says:

    RE: pfft @ 333 You catch on real quick.

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  335. 335

    By David Losh @ 32:

    RE: Kary L. Krismer @ 330

    What are you talking about? There was no energy “crisis” in California. It was an accounting trick. Speculators were given the right to cut supply. That was a regulation issue. You’ve made that point repeatedly, but it has nothing to do with todays oil speculation.

    Dave, take an economics class or two. But for the restrictions on raising consumer prices, the situation would not have existed to have taking supply off line have any significant impact on price.

    I’ll agree there was no energy crisis in that it was completely man made by California politicians and regulators who refused to raise consumer prices until the California was on the brink of bankruptcy.

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  336. 336

    RE: pfft @ 33 – Entitlements do need to be changed to make them more sustainable. I just don’t think changing them in this particular process is a good idea at all. We need well thought out changes, not something thought out under the pressure of an artificial deadline.

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  337. 337
    David Losh says:

    RE: Kary L. Krismer @ 335

    Wait a minute, I think my handle on Enron is firm enough without more economics classes.

    You’re fascinated with this idea that energy should be a free market. Well, I think you are right.

    You have blinders on. You are focused on Enron for reasons I can’t comprehend and try to use Enron as an example of energy policy gone wrong.

    Today’s speculators are actual players in the oil futures market. These are real people, with real dollars, who are buying, selling, and trading product that is in transit, or reserves, refinement, or not, as the case may be.

    My point is that demand for oil is down. You keep pointing to consumption charts, that I question. Consumption may be different from demand.

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  338. 338

    By David Losh @ 337:

    RE: Kary L. Krismer @ 335 – You’re fascinated with this idea that energy should be a free market. Well, I think you are right.

    . . .

    My point is that demand for oil is down. You keep pointing to consumption charts, that I question. Consumption may be different from demand.

    I wouldn’t necessarily say energy should be a free market, but it’s a disaster to have the wholesale side be a free market and the consumer side be regulated. That’s what California did because they thought prices would only go down. It’s sort of the flip side of some people thinking housing prices could only go up. Things don’t tend to work that way.

    As to the last point, the reason I’m using consumption rather than demand is because demand is something different because at any one time point demand would indicate there would be a different amount of oil consumed at different prices. For example, your personal demand for gas in August 2011 at $3.00 a gallon might be 100 gallons, and your demand at $4.00 a gallon might be 75 gallons. If you buy 80 gallons in August, that’s your consumption, and it would tend to indicate that gas was priced somewhere between $3 and $4 a gallon. Demand determines overall consumption, but when you’re looking at changes over time the only real numbers you can get are consumption.

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  339. 339

    David, BTW, I was doing a little research on how California spent so much money. Unfortunately most the news reports require that you pay for the full story, but it did help with my recollection.

    The two large utilities ran up so much debt that no one would sell to them. One had something like 9 billion in debt. So California started standing behind the purchases of power for the utilities, spending millions of dollars each day just so that they wouldn’t have to raise consumer electrical rates. At one point the legislature authorized $10B just for these purchases.

    My joke at the time was that in most state you paid for electricity based on your electrical bill, but in California is was part of your income tax.

    In addition, their consumption of electricity was so high that it was taxing the major transmission lines. That’s why there was that one Enron tape of the traders cheering a wildfire. Even with more generation facilities they would have probably had blackouts. Higher electrical rates for consumers was the cure for that problem too.

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  340. 340
    Blurtman says:

    RE: Kary L. Krismer @ 336 – I think the term “entitlement” has a perjorative connotation, implying undeserved monies paid at someone else’s expense. There is no reason that the POTUS of anyone else should threaten to not issue Social Security checks. The USG owes the SS trust fund over 2.5 trillion dollars. Social Security tax dollars have been spent to fund tax cuts, pay for military hardware and other items unrelated to Social Security. I know folks winced when Bush suggested that the fund be privatized which it should not be. But as payment of owed monies by the USG is in doubt, the trust fund should diversify its investment beyond USG “special treauries.”

    Further, Obama has threatened that SS payments will not be made if the debt ceiling were not extended. He did not say that USG bondholders would not be paid, and so Obama has basically created more risk for the “special treasuries” that have been deposited in the SS trust fund. Therefore the interest payments on these treausuries must be greater than for the non-special treasuries.

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  341. 341

    By Blurtman @ 40:

    RE: Kary L. Krismer @ 336 – I think the term “entitlement” has a perjorative connotation, implying undeserved monies paid at someone else’s expense. There is no reason that the POTUS of anyone else should threaten to not issue Social Security checks.

    If you only have X dollars you can pay out, and Y dollars of payments to make, you have to make choices if Y is greater than X. So there is a possible reason not to issue SS checks (note the use of the term possible).

    I agree with you about the use of the term entitlements, but it also reflects how people think. They think it’s something the government must provide, and in it’s current form or better.

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  342. 342
    Blurtman says:

    RE: Kary L. Krismer @ 341 – OK, so let’s include payments to bondholders under the entitlements umbrella.

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  343. 343

    RE: Blurtman @ 342 – That’s one extreme. The other is we could treat them like the former GM bondholders. ;-)

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  344. 344
    Blurtman says:

    RE: Kary L. Krismer @ 343 – The USG = GM? Hmm…. not good.

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  345. 345

    Not a fan of the USG Corvette? ;-)

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  346. 346
    Blurtman says:

    RE: Kary L. Krismer @ 345 – My fave GM mobile was the Pontiac Aztek, a car(?) that seemed to be a chaotic combination of the worst styling details from several unrelated cars. Unfortunately, I notice some of that same styling disaster flair in the Chevy Volt.

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  347. 347
    pfft says:

    totally predictable.

    Defaults fell 60 percent in the first half of 2011 compared with the same period last year, including a $12.5 million Austin, Texas, apartment project that made a late payment in June, according to Distressed Debt Securities Newsletter.

    Muni Default Plunge Belies Whitney as Borrowers Shun Insolvency
    http://www.bloomberg.com/news/2011-07-15/muni-default-plunge-belies-whitney-prediction-as-borrowers-shun-insolvency.html

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  348. 348
    pfft says:

    By Kary L. Krismer @ 36:

    RE: pfft @ 33 – Entitlements do need to be changed to make them more sustainable.

    yeah like get rid of the bush tax cuts.

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  349. 349
    pfft says:

    By Blurtman @ 34:

    RE: pfft @ 333 You catch on real quick.

    when he really puts an effort into things and is a liberal he’s great. when he’s playing the reaching across the aisle obama he’s not nearly as effective.

    when he called out paul ryan he basically ruined ryan’s political career.

    he could be a great liberal president and a great president if he could just clearly articulate a liberal policy and negotiate from a position of strength.

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  350. 350

    By pfft @ 48:

    By Kary L. Krismer @ 36:
    RE: pfft @ 33 – Entitlements do need to be changed to make them more sustainable.

    yeah like get rid of the bush tax cuts.

    I would actually agree with you there, but differently. I think the length of the cuts was too long when passed. When they expired was a lousy time to have them expire, and it’s still a lousy time. It’s sort of like the original expiration date of the first time buyer credit. They needed to expire, but the date picked originally was stupid (it was in the late fall, early winter as I recall).

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  351. 351
    Scotsman says:

    The party’s over. No more free stuff:

    http://www.weeklystandard.com/articles/fling-welfare-state_576909.html?nopager=1

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  352. 352
    Blurtman says:

    Mass psychosis in the US

    How Big Pharma got Americans hooked on anti-psychotic drugs.

    Has America become a nation of psychotics? You would certainly think so, based on the explosion in the use of antipsychotic medications. In 2008, with over $14 billion in sales, antipsychotics became the single top-selling therapeutic class of prescription drugs in the United States, surpassing drugs used to treat high cholesterol and acid reflux.

    Once upon a time, antipsychotics were reserved for a relatively small number of patients with hard-core psychiatric diagnoses – primarily schizophrenia and bipolar disorder – to treat such symptoms as delusions, hallucinations, or formal thought disorder. Today, it seems, everyone is taking antipsychotics. Parents are told that their unruly kids are in fact bipolar, and in need of anti-psychotics, while old people with dementia are dosed, in large numbers, with drugs once reserved largely for schizophrenics. Americans with symptoms ranging from chronic depression to anxiety to insomnia are now being prescribed anti-psychotics at rates that seem to indicate a national mass psychosis.

    It is anything but a coincidence that the explosion in antipsychotic use coincides with the pharmaceutical industry’s development of a new class of medications known as “atypical antipsychotics.” Beginning with Zyprexa, Risperdal, and Seroquel in the 1990s, followed by Abilify in the early 2000s, these drugs were touted as being more effective than older antipsychotics like Haldol and Thorazine. More importantly, they lacked the most noxious side effects of the older drugs – in particular, the tremors and other motor control problems.

    http://english.aljazeera.net/indepth/opinion/2011/07/20117313948379987.html

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  353. 353

    RE: Blurtman @ 352 – That’s a tough one. For sales of some drugs, like say treating “restless leg syndrome” I would guess that most of the demand is created by advertising. But here it wouldn’t surprise me to learn that most people really are nuts! ;-)

    Reply