More Unfounded Starry-Eyed Nonsense from Lawrence Yun

Discredited NAR mouthpiece Lawrence Yun paid Seattle a visit on Friday to spout some more of his trademark wish-based forecasting. The Puget Sound Business Journal and the P-I both had brief write-ups of his presentation.

From Aubrey Cohen’s write-up in the P-I:

“We believe that the home prices have already fallen to what could be justifiable,” economist Lawrence Yun said, noting that mortgage payments for a typical household buying a typical house last year were back to 1998 levels, as a percentage of income.

“One may even argue that home prices are underpriced,” he said, because that calculation was based on higher interest rates than current rates.

This statement is so bizarre and nonsensical it’s hardly even worth refuting. As a number of readers pointed out over in the forums, Yun appears to be using national stats for income and home prices, which causes income to be skewed high by the cities (where home ownership levels are lower) and home prices to be skewed low by the rural regions.

Here in the Seattle area, the affordability index—which is calculated using local home prices and local incomes—is still well below its historical level. As I explained in Bottom-Calling: Affordability Index Forecast, home prices will have to fall roughly 40% from their peak to get us back in line with a level that “could be justifiable.” As of January, prices had fallen just over 20% from the peak. So we’re about halfway there.

(Aubrey Cohen, Seattle P-I, 02.27.2009)
(Kirsten Grind, Puget Sound Business Journal, 02.27.2009)

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

173 comments:

  1. 1
    Kary L. Krismer says:

    I think too much attention is paid to Yun. Most people don’t know who he is or what his predictions were and are. So all this attention to what he says is largely unnecessary.

    As to the story, at least the P-I didn’t make that a front page story. It’s always hard to tell what is from reading the stories first on the web.

  2. 2
    Tim says:

    “I think too much attention is paid to Yun.”

    Well, he is the chief economist for the NAR. Seriously, I think the NAR should muzzle him a bit or not force him to constantly utter such nonsense in public. People who do pay attention realize this guy has been full of sh*t for a long time and it reflects on the group of people he represents.

  3. 3

    YUN IS IN THE DENIAL STAGE AS THE EMPIRE COLLAPSES

    The end of the empire of the “totally flawed” Bush/Bernanke/Obama current economic growth formula [it totally ignores overpopulation’s impacts], clearly wasting our tax money to try to revive an overpopulated dead horse economy that’s totally out of resources; due to American/global overpopulation. See the media website or see it at a theater near you:

    http://www.whatawaytogomovie.com/

    Yun should see the movie too. Without depopulation in America/world ASAP, there is no “U” shapes or “L” shaped recession….just a horrifying “l” depression with no end.

  4. 4
    Joe says:

    Found this little gem in the article:

    “There could be a potential for a housing shortage immediately, until builders start ramping up production.”

    Right. Definitely a housing shortage coming, any day now.

  5. 5
    Mike2 says:

    By Kary L. Krismer @ 1:

    I think too much attention is paid to Yun. Most people don’t know who he is or what his predictions were and are. So all this attention to what he says is largely unnecessary.

    I don’t think there is any other RE industry spokesperson that gets more national press attention than Yun.

  6. 6
    jon says:

    A Chief Economist at most companies has credibility because they make forecasts that the company relies on to make investments. At such a company, if the economist’s forecasts are not reliable then they are replaced. The NAR is not like that.

    As newspapers become more desperate to publish pronouncements by their advertisers, their rate of decline will accelerate.

  7. 7
    Kary L. Krismer says:

    By Mike2 @ 5:

    By Kary L. Krismer @ 1:

    I think too much attention is paid to Yun. Most people don’t know who he is or what his predictions were and are. So all this attention to what he says is largely unnecessary.

    I don’t think there is any other RE industry spokesperson that gets more national press attention than Yun.

    But what percentage of people pay attention? The population on this site, and other RE sites is hardly representative of the general population.

  8. 8
    p ruvolo says:

    The fact is we should only be listening to the guys that understand that the otc derivative bubble has blown skyhigh. The fact is the depression has started and all the kings men…….

    Prepare for hyper-inflation in commodities soon. Gold, guns, grub and gas mmight be needed.

  9. 9
    Acerun says:

    Did Yun ever work as the Iraqi Information Minister?

  10. 10

    Not to defend Lawrence Yun, but isn’t it his job to spout propaganda?
    What would happen if he started to tell the truth? He wouldn’t be employed by the NAR for very long.

  11. 11
    Tyler says:

    @7

    Kary, you are right that people don’t listen anymore, BUT he added fuel to the fire during the runup. It just it hard to see someone like him quoted as an expert after being wrong for so long and obviously being a paid to say optimistic things.

  12. 12
    Tim says:

    “But what percentage of people pay attention? The population on this site, and other RE sites is hardly representative of the general population. ”

    And this is why he continues to flat out lie about the state of the market. He and the NAR want the sheeple masses to read in passing that the chief economist of the NAR believes a housing turnaround is imminent and to act accordingly.

  13. 13
    Ray Pepper says:

    I mean serioulsy does anyone here actually belong to the NAR? If so can you please describe to me why you to choose to belong? What the fees are? What support you receive?

    For the life of me I would rather support the local YMCA or Humane Society.

  14. 14
    Interloper says:

    I have to wonder how this guy sleeps at night.

    I think any journalist who quotes him should quote an opposing viewpoint that says “this guy’s a schuck.” Seattle readers are too inclined — too *conditioned* — to believe this kind of stuff.

    Meanwhile Tim’s thoughtful, analytical predictions of the future Seattle home price bottom has gone unreported by the local papers!

  15. 15
    Kary L. Krismer says:

    RE: Ray Pepper @ 13 – Well not quite NAR, but WR has helped prevent additional increases to the transfer excise tax, and the pending amendments to the distressed properties law.

  16. 16
    vermillionsky says:

    RE: Ira sacharoff @ 10

    Yeah, that basically is his job. It’s kind of irritating, though, that his title is Chief Economist and Senior Vice President of Research. They’re trying to hide their propaganda behind a facade of (social) science.

    A more appropriate title for a propagandist is Communications Director and Senior Vice President of Marketing, or something similar.

  17. 17
    Oops says:

    RE: softwarengineer @ 3

    Dude – you have some overpopulation thing going on. Tell us what you are afraid? Are you scared that too many people live in the US? Or on earth? What is the solution – create places where you can ship redundant people somewhere?

    Everytime you post – you either talk about some immigrant taking your job or overpopulation. Have you thought of moving to Montana or Alaska to try to escape the overopolulation Tsunami? It will hit you really hard and I feel for you. In northern Alaska – there are fewer people – you can start a ranch and see very few people on a daily basis.

  18. 18
    tomtom says:

    By Ira sacharoff @ 10:

    Not to defend Lawrence Yun, but isn’t it his job to spout propaganda?
    What would happen if he started to tell the truth? He wouldn’t be employed by the NAR for very long.

    REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations.

    Article 12 of the REALTORS® Code of Ethics.

  19. 19
    Bits_of_Real_Panther says:

    “The fact is the depression has started and all the kings men…….

    Prepare for hyper-inflation in commodities soon.”

    Depression with hyper-inflation? I’d like to see the logic there

  20. 20
    98115_Renter says:

    RE: Bits_of_Real_Panther @ 19

    Best to ignore the apocalypse crowd’s rants.

  21. 21
    tomtom says:

    By Bits_of_Real_Panther @ 19:


    Depression with hyper-inflation? I’d like to see the logic there

    Leveraged stagflation? Stagflation on steriods?

    Let’s be creative here.

  22. 22
    jon says:

    “Depression with hyper-inflation? I’d like to see the logic there”

    Look it up under “Weimar Republic.” Heavy debt, weak exports, printing money.

  23. 23

    RE: tomtom @ 18

    Lawrence Yun is not a Realtor, he just works for them, so the code of ethics doesn’t apply to him.

    Also, I agree: Chief Economist as not an apt title. How ’bout Minister of Propaganda?
    I’m not even sure Yun knows he’s lying. I’ve run into many real estate pros who appear to honestly believe the pablum they’re spreading.

  24. 24
    Mike2 says:

    Interesting. According to Wikipedia, Lawrence Yun is a Mechanical Engineer. You can’t trust those engineering types to interpret housing data, apparently.

  25. 25
    sead97 says:

    I’ll cut Larry some slack. After all, once the NAR gig is up he’ll be flipping burgers for BK, ’cause no one is every going to hire him as an economist again. So he might as well go for broke…

  26. 26
    Kary L. Krismer says:

    Here’s another example of WR in action lobbying. Someone in the state Senate got the idea that “current” copies of HOA financial statements and minutes should be attached to disclosure statements (a/k/a Form 17). The problem is, agents like to have Form 17 available prior to an offer being made so that the buyer can sign off indicating receipt, and so that the listing agent can have some idea of the quality of the buyer’s agent (any buyer’s agent not including such a document in their offer obviously isn’t terribly good, or up to no good). This bill would have made that difficult, because the documents could become out of date monthly with some associations. Also, it would mean some associations would need to provide documents for listing that might be completely unnecessary if an offer was never obtained for the property. Also, some associations have this information on-line, and in any case there are provisions in the state wide forms that make it so a buyer can easily request such documents, so there really was no need for this legislation.

    As a result of complaints, the bill now simply provides that the disclosure statement give the contact information for the association. Far less burdensome for everyone, including the associations.

    For those who want to see the bill, it’s SB 6000.

  27. 27
    David Losh says:

    RE: Oops @ 17

    In 1974 there was a study done on world population. It said that:

    Before 1650 it took 35,000 years for the population to double as compared to an estimated 35 years today.

    At the time the population of the world was about 3.9 billion with a probable growth rate of just over 2%.

    The world population clock today is at

    U.S. 305,928,594

    World 6,764,061,794
    01:52 GMT (EST+5) Mar 03, 2009

    So the world population has about doubled in 35 years.

    There are a variety of studes connected to the original 1974 study that had China passing legislation on families only having one child. Developed countries voluntarily reduced family sizes, but it’s the developing countries that are posing the greatest birth rates.

    The world has limited resources. Disease is on the decline as well as war. In time, very soon, there will be nothing left.

  28. 28
    Eleua says:

    As of January, prices had fallen just over 20% from the peak. So we’re about halfway there.

    Uhhh….beg to differ.

    We are about a quarter (if that) of our way to the bottom. I’m more convinced than ever before that we will see 80% peak-trough for the bulk of PNW real estate. Remeber, as this deflation gets going, affordability will become harder to obtain, as earning ability will be crushed.

    Houses and other commodities may get cheaper in dollar terms, but they will have to fall even further to try to overcome the destruction in earning power.

    The money supply is shrinking rapidly. MAObama is acting like he is purposely trying to crash the bond market, and when he does, the .gov entitlements, contracts, and goodie-goodie spending will get cut off at the knees.

    You have not even heard the first one half of one percent of the caterwauling that will come about due to these foolish .gov policies.

    In the end, Mr. Market always wins and Mr. Math never fails a polygraph.

  29. 29
    Eleua says:

    By David Losh @ 27:

    RE: Oops @ 17

    The world has limited resources. Disease is on the decline as well as war. In time, very soon, there will be nothing left.

    For all of you that are into “PEAK OIL,” you should take those ideas and apply them to “PEAK CREDIT.” Peak oil is a firecracker compared to the MOAB that is PEAK CREDIT.

    It takes 2007 levels of credit to sustain the 7B people in the world. As credit contracts (and is it ever contracting) living standards and basic sustenance of the entire world will crater with it.

    Here is another zany prediction from the “Institute for Economic Reality” (a one-man think tank based on the shores of Agate Pass). Click on my name to go to the website.

    PEAK CREDIT will reduce the world population by at least a billion, and the US population by 60 million. That is without war or pestilence, which are both long, long overdue.

    You heard it first, here on Seattle Bubble.

    I now return you to your Pink Pony parade featuring Skittle spewing Unicorns…already in progress.

  30. 30
    Demersus says:

    Here is an overview of why asset prices may rise despite a recession. Inflation is largely a function of money supply, not necessarily how much money people are earning at any given point.

    http://economics.about.com/cs/money/a/recession_price.htm

    Macro-economics is a complex animal. It’s like a big Rube Goldberg contraption. You can touch something over there, and all of the sudden a ton of crap is falling on your head.

  31. 31
    Eleua says:

    Demersus,

    There is no inflation. The money supply is contracting in an out-of-control fashion.

    Money supply has more to do with the velocity (which is approaching glacial) than the monetary base.

    Anything multiplied by zero is zero.

    True, in order to get inflation, you would need to have both an expanding money supply as well as that money in the hands of consumers so they can drive demand. With shrinking demand, it is almost impossible to get inflation.

  32. 32
    bi renter says:

    RE: Eleua @ 31
    welcome back Clearcut! Now, get em~ chainsaws and all!

  33. 33
    Mikal says:

    RE: Eleua @ 29 – That think tank is the storage chamber for an outhouse.

  34. 34
    Demersus says:

    Eula, I understand what you’re saying. I know the difference between money supply and velocity, somewhat. I wasn’t saying that we’ll have high inflation, I said it was possible under certain conditions even during a recession. This was just in response to a previous poster implying that prices cannot rise during a depression/recession. Oh, but they can and do I say.

    And, even if the money velocity is slow, if a recession last long enough then the effects of slowed production will eventually result in a deficite of supply against a somewhat fixed demand, especially for inferior products. For those whom never have taken a macro econ class, interior good is an ecomomic term. Say, tuna vs. salmon as a consumer decides how to spend his dwindling cash.

    Right now, sure, the money velocity is very slow. But, the money supply is ridiculously high, historically. So, the money is worth bupkis. I don’t think the Treasury is buying back any bonds right now either. I think they’re having a hard time selling them, though. China is getting wise to our little scheme of consuming mass and producing little other than debt. And, the price of certain assets and commodities is rising, as people try to hedge the future. Like someone said, guns, gold and gasoline are what people will want and need if an all out depression occurs.

  35. 35
    Demersus says:

    I have to ask though, Eula, why do you think the money supply is contracting? The friggin’ printing presses at the Treasury must be working overtime with all the spending the .gov is doing. I mean, it’s been what, about 2 or 3 Trillion between the end of Bush’s term and Obama beginning?

  36. 36
    Demersus says:

    Yeah, other experts agree; the money supply is very high right now and that the value of the currency is depreciating in real terms due to this and that price increases are inevitable as a result of this.

    http://www.europac.net/Schiff-CNBC-2-11-09_lg.asp

  37. 37
    Eleua says:

    Demersus,

    Check out the USDX and see how the US dollar is doing compared to the European currencies. Japan is keeping pace, but it will have its day.

    The FED can take issue all the money it wants, but it is almost all offset by debt obligations, which makes the party ultimately deflationary.

    MAObama can only push so much into the debt markets before it cracks. I think we are getting close to that point. When that happens, money around the world will contract severely as the available pool of lendable money will be much smaller than it is today.

    The government isn’t “printing” and it can only borrow so much. We are up to 50% of .gov spending as it is. That won’t last much longer.

    Don’t confuse the money supply with the monetary base. One is a component of the other. Velocity is the most important factor in the money supply.

    Guns, gold, gas…well, one out of three ain’t bad. Two of those three are going to be much cheaper in the future.

  38. 38
    Demersus says:

    “Guns, gold, gas…well, one out of three ain’t bad. Two of those three are going to be much cheaper in the future.”

    Maybe in terms of paper dollars…

    Peter Schiff likes to rate the DOW in gold, not USD. It’s an intersting comparison. Many people think that gold is loosing value only because of it’s price in terms of dollars.

    In 1999/2000 the DOW was worth 42 ounces of gold. Today, it’s worth less than 9 ounces…

  39. 39
    Demersus says:

    The other thing I meant to say is that we have a fiat currency. There is no asset base, so the Treasury CAN print as much as they want whether they can sell debt or not. I’m not saying we’re Zimbabwe, but never-the-less…

  40. 40
    Demersus says:

    Here’s another intersting factiod:
    According to the Federal Reserve Bank of New York, there was $829 Billion in total US currency in worldwide circulation as of December 2007.[10]

    In September 2004, it was estimated that if all the gold held by the U.S. government (261.7 million ounces = 8.14 million kilograms) were again required to back the circulating U.S. currency ($733,170,953,704), gold would need to be valued at $2,800/ounce (90 $/g).

  41. 41
    Eleua says:

    Demersus,

    Schiff is correct on many things. Inflation is not one of them.

  42. 42
    Demersus says:

    How is Schiff wrong on inflation then? Come on Eleua, I expect a lot of meat on your thoughts. It’s the reason you’re my favorite SB blogger.

  43. 43
    Herman says:

    Some actual economists discussed the matter of inflation in the latest podcast at http://www.econtalk.org.

    Their assertion was that the .gov is flooding the market with dollars but they’re going straight into the mattress (deleveraging banks, scared investors) instead of into circulation. When confidence returns that money will be taken out of hiding and will flood back into the economy causing uncontrollable inflation.

    It’s as if a toilet pipe were dammed up, and water is pooling up behind the blockage, so the owners keep pushing more water down to try to clear to blockage. Eventually it will open up in a torrent of chocolate.

    That’s what they said. I’m paraphrasing.

  44. 44
    Herman says:

    Another economist writes about bailouts and inflation here.

    He says that the vast majority of bailing out has been done almost unreported through the Fed. The $700B bailout from the Treasury required congressional approval, ergo, lots of coverage. Meanwhile the Fed has whipped up $2.5T without much press.

    Excerpt:
    From $1.2 trillion of added bank reserves, the late-November lending programs (if not somehow offset) will push added bank reserves to $2 trillion. The Fed has no clear exit strategy from its unprecedented credit expansion. It has too few Treasury securities left to sell in order to pull the credits back in, the traditional method for contracting bank reserves.

    The Fed’s program has attracted little attention mostly because it has not required a congressional appropriation. The Fed is “self-financing”: It can “print up” any funds it needs to make loans or purchase assets by simply expanding the quantity of unbacked claims on itself. This does not mean that Fed credit expansion provides a free lunch. When the Fed increases the stock of dollars, it levies an implicit tax on holders of existing dollar balances by creating an inflationary depreciation of the dollar.

  45. 45
    David Losh says:

    RE: Eleua @ 31

    Let me define demand for you: Limited supply in a growing population.

    We need food, water, and shelter for almost seven billion people.

    Money supply, velocity, or value are getting to be more and more moot.

    The question is going to be distribution of limited resources.

  46. 46
    shawn says:

    RE: softwarengineer @ 3 – SWE if you really love America, why don’t you help depopulate it first? I am sure Mexico would love to have you.

  47. 47
    Eleua says:

    The dollars that are being originated today are going to pay off debt; which is to say that they are being destroyed almost as fast as they are created. What money is left is being pulled out of the capital markets (stuffed into mattresses), which is also slowing the velocity of money.

    The reason that we are creating dollars to pay down yesterday’s debt is because the debt that was originated over the recent past didn’t go to increase production, so money is not being thrown off to pay down the debt. We have to borrow more to pay down non-productive debt. Think of it as using your Visa to pay down your MasterCard for the Hawaiian vacation you charged. Unfortunately, the Visa will have to be paid down in short order. Future productivity in other areas has to be thrown under the bus to pay off that Hawaiian vacation.

    Had you built a widgit factory, the productivity of that widgit factory would be used to pay down the debt. If the ROI was high enough, the productivity would expand GDP, while still paying down debt. This would not be inflationary because the money generated would be offset by production.

    The .gov is borrowing money from the capital markets and then injecting it back into the capital markets. This is the Keynesian folly of trying to economically lift yourself by standing in a bucket and yanking on the bail – it doesn’t work. All it is doing is moving money where the capital markets don’t want to send it.

    AIG has inhaled how many hundreds of billions? To what end? Will AIG suddenly uncork a torrent of dollars that will suddenly end up in the hands of consumers to drive demand? Ride that pink pony…

    All the debt origination is offset by a debt. The Treasury goes to market to borrow money. They issue (sell) TBills, which are a debt instrument. The FED prints the money and sends out the amount to the banks. The amount “printed” are created, but they equal the face value of the TBills that were issued for that action. Eventually, the .gov will have to tax people to raise money to pay the people that loaned the .gov the money (plus interest). Money creation is offset by debt.

    Money goes in – money goes out (plus interest).

    If the .gov does the unthinkable, which is to print unsterilized dollars, then the capital markets will know that they will not be repaid with dollars that represent economic value. It is the working off the debt that gives the currency its value.

    In that scenario, lenders will rapidly discount .gov borrowing, which is a way of saying that they will not be willing to pay anywhere near current market rates for US.gov debt.

    Bond market crash. Instant vaporization of loanable money. Interest rates becoming wildly unpredictable and rising uncontrollably. Complete economic collapse.

    It would also lead to the imminent collapse of the .gov and millions descending upon Washington DC with boiled rope.

  48. 48
    shawn says:

    RE: David Losh @ 27 – that will be a great time to buy

  49. 49
    Eleua says:

    RE: David Losh @ 44
    I don’t care if there is 700 million or 70 billion people. If there isn’t credit/money to pay for the resources, they won’t be produced.

    It isn’t the number of people that creates demand. Demand is created by the available dollars to chase a certain good that is in supply.

  50. 50
    CCG says:

    By Eleua @ 28:

    “The money supply is shrinking rapidly. MAObama is acting like he is purposely trying to crash the bond market, and when he does, the .gov entitlements, contracts, and goodie-goodie spending will get cut off at the knees.”

    Coming soon to a theater near you – Trashury Auction 3P1C F41L! More fun than a KC-777 collision over a 12-lane highway at rush hour!

    Actually, it’ll be a good thing. Getting farther from reality is not the answer.

  51. 51
    Eleua says:

    Congress is going to regret their victory in November when the bond market cuts off their ability to roll their debt. Most of the recent spending is in shorter durations (low interest rates), so they will have to face the dilemma of what half of .gov spending they will cut?

    Don’t think that our enemies are not watching this. If we can’t fund our DoD, we wake up in a whole new world where at least 60million Americans can’t be supported by even a 1960s era lifestyle.

  52. 52
    Eleua says:

    The top 1% of the taxpayers pay just under 40% of the total income tax, and they make 18% of the money.
    The bottom 40% pay -4%
    The middle quintile pays 4% (all income tax paid by the 40-60% income earners goes to pay those in the bottom two quintiles.)
    The 61st to 99th percentiles pay for all the goody-goody programs.

    There isn’t enough room to raise taxes on the upper brackets.

  53. 53
    David Losh says:

    RE: Eleua @ 46

    OK, I tried to avoid it but you just kept commenting.

    Money is being hoarded like a kid who owns the foot ball and won’t let any one play with it unless he hets to make the rules.

    Cash reserves are real dollars, Euros, and Yuan that are out of circulation.

    Government from what I read is shoving money into circulation with the stimulus package while adding to bank and investor reserves.

    All the while there are no profits being made, governments have bad ratings, and investors are pulling out whatever they can salvage to wait for a better day to invest.

    I was of the inflation camp the same as a lot of other people I’ve noticed who are in related fields to Real Estate. It’s not going to happen.

    What I think is that we are headed for a cash economy.

  54. 54
    Noz says:

    What is even more amazing about what YUN says is the fact that he is still heading the NAR. In any other industry, he would have been fired and put into the hall of shame.

    What this shows is how corrupt the NAR as a whole is more than how pathetic YUN is. That’s truly appalling and dangerous. This organization should be destroyed and removed.

  55. 55
    Ray Pepper says:

    As dark as Eleua paints the picture I would not argue with him. He has been dead on so far as I read Dow 6700 on the tape. I took the time to go to his website and watch him tear apart The Mortgage Porter on buying versus renting. I think Eleua is one to listen to here, and I rarely listen to anybody.

    But, like Rick Santelli….I see lots of bearish rhetoric but never an answer of a fix. Eleua can you shed some light on what needs to be done in the short term (6 months) then 12 months, then 3 years. What is the way to get out of this mess. I have many ideas. Do you have some to share? Any long bets in the markets?

  56. 56
    Angie says:

    Eleua, the “MAObama” bit is just stupid. What precisely did Bush do differently in October? What precisely would he have done differently if the worm had begun to turn a year earlier? What precisely would McCain be doing differently if he had won?

    In the end, Mr. Market always wins and Mr. Math never fails a polygraph

    Jesus H. Christ. “Mr. Market” is the one who got us into this mess in the first place. “Mr. Math” aided and abetted. Both of them got too big for their britches and forgot to do a few reality checks along the way.

  57. 57
    Jonness says:

    Eleua:

    You say the money supply is contracting as people and banks put the money under their mattress. It seems to me this does not represent a shrinking money supply at all. Instead, it represents shrinking velocity.

    I don’t profess to know much about this stuff, but it seems if we use MV=PQ in the form of MV=(Phouses + Pstocks + Pother)(QgovernmentSpending + Qother), we have M increasing, V decreasing, Phouses decreasing, Pstocks decreasing, Pother slightly increasing, QgovernmentSpending increasing, and Qother decreasing. I’ve never gotten a good explanation of the exact meaning of the formula, so I might be misusing it. What is your perspective on the formula as compared to today’s economic conditions?

  58. 58
    Eleua says:

    By David Losh @ 53:

    RE: Eleua @ 46

    Cash reserves are real dollars, Euros, and Yuan that are out of circulation.

    Government from what I read is shoving money into circulation with the stimulus package while adding to bank and investor reserves.

    David,

    Cash reserves are real dollars, but the bulk of the “reserve” is the speed at which that money is circulating.

    The .gov is NOT shoving money into circulation. It is taking money OUT of circulation by all these programs. The “stimulus” package was nothing of the kind. Nothing is in there to stimulate anything other than those loyal Leftists that supported Barry, Harry, and Nan.

    The market would sniff out the highest use of the money. If the .gov is doing it by force, it is putting the money where it does not want to go.

    What bank and investor reserves?

  59. 59
    sead97 says:

    By Eleua @ 49:


    I don’t care if there is 700 million or 70 billion people. If there isn’t credit/money to pay for the resources, they won’t be produced.

    It isn’t the number of people that creates demand. Demand is created by the available dollars to chase a certain good that is in supply.

    I hate to wade into this rats nest of a conversation, but there’s some Lawrence Yun style economist going on.

    Demand is not created by the available dollars. Demand is created by people who want something (like food). Price is the mechanism that balances supply and demand. If population increases faster than the productive capacity (or scarce assets) of a society, inflation will result. If there’s little (fiat) money, prices will deflate, or people will use gold, shells, euro, whatever. Your argument is only right if people sit on their hands and produce nothing. But then they’ll starve to death – so then it would only be temporary, self-correcting problem.

    Inflation can happen in any type of economy (remember the term Stagflation). The Zimbabwe reference is spot on – the only increase in the productive capacity of that country is their ability to print banknotes. Hence hyperinflation.

    Do you think Americans are going to buckle down and payoff all their debts, public and private. Or are we just going to inflate them away. Time will tell…

  60. 60
    Eleua says:

    RE: Ray Pepper @ 55
    My idea would be to force the debt out and default it. Make the bank (shareholders) take their zeroes, force the bond holders to take their haircuts, and hold out the banks as an example of what not to do. What good banks are left would receive the capital. Those with savings would be able to be rewarded.

    This is a good thing and is counter to the current bipartisan policy of rewarding bad behavior and punishing good behavior.

    In my ClearcutBainbridge blog, I have an entry on “Beanie Babies, Bankers, Liars, and Leverage” which explains how lack of trust (intentionally misrepresenting banking health) is the root of our problem.

    There is no painful way out of this – none. At best, it will be worse than 1933 or even 1857. We need to get the confidence back into the system, and giving a blank check for .gov and banking industry officials to all agree to lie is not fooling anyone (other than CNBC and Congressional idiots.)

    This is what happens when you blow bubbles. This is the end-game of Globalism. Perhaps if we deal with the consequences, future generations can learn from our example. Kicking the can down the road only makes the situation worse.

    There was a tremendous amount of fraud in the past 10 years. I say that perp walks and passionate prosecution of it would go a LONG way to instill confidence. Yes, we will probably build off a 2500 base on the DJIA, but at least we can put in a bottom. As long as we all agree to lie, the bottom will not be set.

    Bad policy is also part of this. Government efforts to get something for nothing need to be shown for the folly it is. Some people just won’t get credit. Too bad. Some people will live in trailers. Some people will not have what they now have.

    I don’t have easy answers. We passed the event horizon long ago. All I can say is “get it over with.”

  61. 61
    Eleua says:

    RE: Angie @ 56

    Angie,

    I know you are a hard Leftie. I get it. Lefties always think that they are smarter than the market and math does not apply to their version of reality. I’m not going to deconstruct the cosmos of your delusion.

    McCain would likely be doing the same thing. He knows what the bankers tell him.

    I explained what I would have done in my previous response to Ray Pepper.

    The market was twisted by .gov policy of trying to give people more than they could afford. Eventually, the math of the situation presented reality in such a fashion that all of the .gov policy can’t stop it. The harder they try, the dumber they look.

    Fraud and excessive leverage was institutionalized after the bond market cut off HillaryCare in 1994. The UNIBANGER brought in Rubin and all the banksters knew that the fox was guarding the henhouse. They got the safeties taken off the system and fraud was overlooked. This is how The UNIBANGER was able to get the stock market goosed to the levels it attained, which explains the faux balanced budgets of the late 90s. That wasn’t real nor sustainable. It was fraud.

    It happened in 1995/6.

  62. 62
    Eleua says:

    RE: Jonness @ 57
    The monetary base is expanding, but so is the corresponding debt. Velocity is decreasing faster than the base is expanding, which explains why the capital markets are cratering, homes are not selling, and people are losing their jobs at almost record rates.

    Velocity is part of the money supply.

    If 10 of us are in a room with a single $100 dollar bill, and we all keep buying $100 services from one another at a record clip, we functionally have several orders of $100 more than the single C-Note represents. As soon as some of us start fearing that we won’t get that $100 back after we spend it, we will horde it, and the velocity will shrink.

  63. 63
    98115_Renter says:

    RE: Angie @ 56 – Amen sister.

    The wingnuts are out in full force today.

  64. 64
    98115_Renter says:

    RE: Eleua @ 61

    Eleua, your rants and usage of terms like “UNIBANGER” really just make you sound well, um, crazy.

  65. 65
    EconE says:

    By sead97 @ 59:

    By Eleua @ 49:


    I don’t care if there is 700 million or 70 billion people. If there isn’t credit/money to pay for the resources, they won’t be produced.

    It isn’t the number of people that creates demand. Demand is created by the available dollars to chase a certain good that is in supply.

    Demand is not created by the available dollars. Demand is created by people who want something (like food). Price is the mechanism that balances supply and demand. If population increases faster than the productive capacity (or scarce assets) of a society, inflation will result

    1. Lots of people in Mexico without enough to eat. Last time I was there, food was cheaper than it is here. Same food, less availability, more hungry mouths with fewer dollars.

    2. Deflation will psychologically “feel” like inflation if people actually have to save for an item rather than just “charge it”.

    3. Price helps, but people need money. You’d be surprised at how what we might consider “inelastic” demand now can become more “elastic”. Not by choice either.

    4. Housing is probably the “least” scarce asset out there. It’s just concrete wood and glass. Plenty of idle labor also that would love to be building even more of them. As population increases, it doesn’t mean it is a wealthier population either.

    5. We already tried inflating our way out of the .com bubble with the credit bubble. How’d that work out?

  66. 66
    economist says:

    “Guns, gold, gas…well, one out of three ain’t bad. Two of those three are going to be much cheaper in the future.”

    Maybe in terms of paper dollars…

    Well yeah, I mean that’s what everyone I’ve ever met means by “cheaper”. You know, it takes less money to buy something?

    So just what does “cheaper” mean to you?

  67. 67
    Eleua says:

    By sead97 @ 59:

    By Eleua @ 49:

    Demand is not created by the available dollars. Demand is created by people who want something (like food). Price is the mechanism that balances supply and demand. If population increases faster than the productive capacity (or scarce assets) of a society, inflation will result. If there’s little (fiat) money, prices will deflate, or people will use gold, shells, euro, whatever. Your argument is only right if people sit on their hands and produce nothing. But then they’ll starve to death – so then it would only be temporary, self-correcting problem.

    Two different, independent systems exist. Each has the same amount of food, which is not available in scalable units. System A has 40 people that each have $500. System B has 4000 people with $1 each.

    Which one has the higher price?

    I would submit that System B has a higher “demand” as measured in desperation, but lower demand as measured in dollars. The merchants in system B need to be able to produce food for $1/meal, whereas those in System A only need to produce below $500.

    Lots of people in Bangladesh want to drive Subaru Outback AWDs, but they can’t pay for them. Bainbridge Island only has 20,000 people, but you can’t go 20 seconds without seeing one.

    Why? I would think that there is more “demand” for cars in Bangladesh, but we don’t measure “demand” by want. We measure it by how much money you can put behind that want.

  68. 68
    Jonness says:

    “Velocity is part of the money supply”

    In MV=PQ, velocity is a multiplier to the money supply (and interacts with the money supply), but it is not the money supply. The money supply is M2. However, I see what you are saying. MV can be loosely thought of as the money supply because it represents money changing hands. Thus, the money supply can be thought of as decreasing because its real-world increase is much less than the decrease in velocity. However, I prefer to think of it as the government is increasing the money supply at a rate less than the collapse in velocity (which I believe is roughly what you said in your explanation).

  69. 69
    Eleua says:

    By 98115_Renter @ 64:

    RE: Eleua @ 61

    Eleua, your rants and usage of terms like “UNIBANGER” really just make you sound well, um, crazy.

    I may be crazy, but I am also correct.

    Statism doesn’t work. Bush was a Statist, as is The UNIBANGER and MAObama.

  70. 70
    Eleua says:

    RE: Jonness @ 68
    No. The .gov has no more ability to stop the debt bomb than a child with a sand pail has the ability to stop a tsunami.

    In the near future, the debt markets will make this obvious.

  71. 71
    EconE says:

    By 98115_Renter @ 64:

    RE: Eleua @ 61

    Eleua, your rants and usage of terms like “UNIBANGER” really just make you sound well, um, crazy.

    I take it you are new around here. Eleua does have use fun names doesn’t he? My fav is “Uncle Sugar”. You should check the archives. He’s been more spot on than anyone here over the years.

  72. 72
    98115_Renter says:

    RE: Eleua @ 69

    There are 69 comments in this thread, most of them which have nothing at all to do with the original post, and like 1/2 of them are by you. Just pointing out that statist or not, good or bad, you have sort of hijacked the discussion about the NAR “economist”. Oh and your names are silly, like your avatar.

  73. 73
    Eleua says:

    By economist @ 66:

    �Guns, gold, gas�well, one out of three ain�t bad. Two of those three are going to be much cheaper in the future.�

    Maybe in terms of paper dollars�

    Well yeah, I mean that’s what everyone I’ve ever met means by “cheaper”. You know, it takes less money to buy something?

    So just what does “cheaper” mean to you?

    Cheaper in terms of dollars, but more expensive in terms of affordability (guns and gas). Gold will probably be both cheaper and more affordable, as adornments will be a low priority going forward. Debts are not redeemed by gold. You would need to throw gold at currency to do that, which reduces the value of gold and raised the value of currency.

  74. 74
    Eleua says:

    RE: 98115_Renter @ 72
    Keep concentrating on the irrelevant. The main issues will crush you if you are not aware of how they work.

    Deflation, debt, and deceit are the big issues.

  75. 75
    Jonness says:

    I should add that an important component of ObamaKeynomics is the large increase in QgovernmentSpending made possible by the increase in M. Supposedly the increased spending stimulates GDP (i.e. PQ). But if I’m not mistaken, an increase in M typically leads to a short-term increase in Q, but eventually results in increased P (inflation).

    At the moment, I can’t wrap my mind around the point (you mentioned) of increased debt vs. increased M. I have to think about that some more.

  76. 76
    Eleua says:

    RE: Jonness @ 75

    Keep in mind that this expansion via .gov borrowing is money that it is inhaling out of the private capital markets. That money is not free to seek its own level and drive industrial output.

    Keynesian economics doesn’t work, no matter how many politicos try it.

  77. 77
    Mikal says:

    Can we inflate away Eleau?

  78. 78
    Eleua says:

    Nope.

    If we do, the bond market will turn to dust, and nobody will be able to borrow hard currency. We are the reserve. Zimbabwe is not.

    I suspect that the FED will try to quietly buy high priority debt via POMO. If they do too much, they will spook the credit markets and the game will be over.

    That’s leaping out of the frying pan and into the fire.

    The less painful way is by rescinding entitlement programs and the Project for the New American Century.

  79. 79
    Jonness says:

    “No. The .gov has no more ability to stop the debt bomb than a child with a sand pail has the ability to stop a tsunami.”

    I’m not implying the increase in M will bring us out of the recession. I’m just saying that technically the government is increasing M, but not enough to make up for the collapse in V. This makes it appear as though M has decreased (because it’s hidden in mattresses). Yet, in truth, M has grown. What has decreased is V (because M is hidden in mattresses).

    The key idea in ObamaKeynomics is that increasing Qgovernment pumps Qother, and this increases V. I think it’s being done because people (Obama et al) actually believe it will work. The danger I see in it is the money being spent is a fraction of what Keynes stated was necessary. Thus, the plan IMO is doomed to failure before it ever began. Whether or not Keynes level of borrowing and spending would work is not a relevant issue because we won’t ever get to that point.

    Another thing that is particularly striking is that Obama wants to cut the deficit in half after a couple years of heavy spending. Roosevelt tried the same thing in 1937, and it sent the market into another big crash as the economy became more realistic (i.e. the necessary market correction began to take place as decreased M pulled down a fragile PQ (i.e. GDP), which in turn pulled down a fragile V).

  80. 80
    EconE says:

    Johnness…

    Isn’t lot’s of that “M” going to the banks/insurers…and then vaporizing as they continue their derivative write-downs?

    I think there is a much bigger void than most of us can even wrap our minds around.

  81. 81
    Jonness says:

    “Keep in mind that this expansion via .gov borrowing is money that it is inhaling out of the private capital markets. That money is not free to seek its own level and drive industrial output.”

    OK, I see. I think sniglet said something similar as well.

  82. 82
    Mikal says:

    RE: Eleua @ 78 – I’m not talking about the bond markets. I meant your ego.

  83. 83
    Mikal says:

    What if the plan is to borrow as much as we can and then inflate the he11 out of it.? Then who gives a $hit about the bond markets. There is currently, right or wrong, no safe currency other than the dollar.

  84. 84
    Jonness says:

    “Isn’t lot’s of that “M” going to the banks/insurers…and then vaporizing as they continue their derivative write-downs?”

    Wow, good point! I need to think about this some more because the implications are not immediately apparant to me. I’m going to set my mind on this issue for a few days as well as the M for the debt being sucked out of the private capital markets.

  85. 85
    CCG says:

    I try to stay out of these debates, but Eleua is dead on. The stock market is cratering because large investors are puking up stocks to swallow the ever-increasing avalanche of government debt that must be issued to pay for all these “stimulus” packages, bailouts, backstopping of money market funds, etc etc. The exact same thing happened last October. When they stop propping up this latest bubble (Treasury debt) – and they will – all hell is going to break loose.

    Calling him a wingnut or claiming that the free market caused this trainwreck is missing the point. Asking what Bush would have done differently, however, is hitting the nail on the head. Whoever is sitting in the Oval Office, the exact same criminals are running the show, aided by professional apologists like Bernanke and Geithner who justify the looting to the public with quack economics. We haven’t had a free market in nearly 100 years at the least. Allowing banks to lend out hundreds of times more money than they actually have on deposit is not a free market. Letting corporate thieves privatize their profits while socializing the losses onto taxpayers is not a free market. Forcibly suppressing interest rates and screwing savers is not a free market. Cheerleading when prices go up and intervening when they go down is not a free market. Creating money that does not correspond to actual goods and services and giving it to the politically favored so they can drive up prices to everyone else’s detriment is not a free market. I could go on for pages, but I’ll summarize: Neither Bush nor Obama would know a free market if it bit them in the ass, and the people in their administrations who DO know what a free market is would sell their own mothers to make sure we never actually get one.

  86. 86
    EconE says:

    RE: Jonness @ 84

    I have been wondering the same thing. Although I think some banks have some “tricks” they’ve been pulling that will show increased profits (and more big bonuses for the fat cats on top) in the next year. It’s based on my Redfin research in L.A. and it is spotty at best so take my self-contrarian guess with a grain of salt.

    My major concern with the MV or VM (I was more interested in the “arts” side of economics”)…is the $1T per year that was extracted via MEW. That was money brought into the system. How much of the $13T or so was comprised of that $1T (annually for a couple years) when you take velocity into account?

    Also…because people used a few trillion of those MEW dollars, businesses thought that the consumer actually did have money and expanded accordingly. The LBO’s over the last 5 years were enormous.

    What a tangled web we weave.

  87. 87
    EconE says:

    When I refer to “tricks”…it is when I see a listing with a sales history such as…

    Sold 2004 for $500,000

    Bank Buyback 2008 $534,352

    Sold 2009 for $200,000

    Listed as REO for $400K (too short of a time (sometimes only days) after the 200k sale for it to have been a foreclosure flip gone bad.

    So…The bank writes down $334,352 on the house as it “sold”.

    Bank sells house for 300k Q2 2009 and is able to claim 100k profit while still selling a house for 40% off the 2004 price of 500k and 62.5% off peak. (peak would have been 800k).

    I’m only seeing these recently and not very many. The above was a hypothetical example. I need to figure out a way to see which bank(s) are doing this and see if there is one primary culprit or that’s just the way things are working in general now.

  88. 88
    Eleua says:

    EconE and CCG,

    Spot on.

    Good night.

  89. 89
    Kary L. Krismer says:

    By CCG @ 85:

    I try to stay out of these debates, but Eleua is dead on. The stock market is cratering because large investors are puking up stocks to swallow the ever-increasing avalanche of government debt that must be issued to pay for all these “stimulus” packages, bailouts, backstopping of money market funds, etc etc. The exact same thing happened last October. When they stop propping up this latest bubble (Treasury debt) – and they will – all hell is going to break loose..

    Ditto, but in the case of stocks there’s also the concern of dilution. Last week I ask why would anyone want to buy a major bank stock (or automaker stock).

    It would be interesting to see what the stock indexes would look like if you bifurcated them out into companies threatened with government investment and those without. I’m sure they’re both down, but I’d guess there’s a huge difference.

    I continue to believe that converting TARP from an asset buying plan to an investment plan was a mistake for a number of reasons, and would be interested to hear Eleula’s comments on that (or a link to a site where he discussed it previously).

  90. 90
    EconE says:

    RE: Kary L. Krismer @ 89

    I can tell you EXACTLY why I myself want to buy a bank stock. I just need to do a little more research to find out which banks.

    See my comment at #87

    I just last night looked at MANY past sales that are listed on foreclosure.com in addition to Redfin.

    Banks are selling houses for $1000 to themselves and then relisting and reselling them for MUCH higher.

    As soon as they sell them for $1000, that is an immediate writedown on the books. Makes things look worse than they are. Then they can sell the same house for 100k easily (these are homes that went for 500k during the bubble) and post ENORMOUS gains.

    Now I have to start finding out who the culprits are that are selling houses to themselves for $1000 bucks.

    Time to start calling some agents and ask them which bank holds the foreclosure.

    Who said agents can’t be great sources of information…without even knowing it!

    Happy researching!

    Thank God for REDFIN!

    Usual disclaimers. Not investment advice, dyodd blah blah blah…and for all you know, I might just be yanking your chain, crazy, wrong or quite possibly all of the above!

  91. 91
    98115_Renter says:

    By CCG @ 85:

    The stock market is cratering because large investors are puking up stocks to swallow the ever-increasing avalanche of government debt that must be issued to pay for all these “stimulus” packages, .

    RE: CCG @ 85

    The market is cratering because like housing, it has been overvalued for a long time. The fundamentals are bad, earnings are bad, P/E ratios are still high. That is why the market is cratering.

  92. 92
    ElPolloLoco says:

    By Mikal @ 82:

    RE: Eleua @ 78 – I’m not talking about the bond markets. I meant your ego.

    Can you offer some actual counterpoints, instead of insults? Some of us are trying to learn something here.

  93. 93
    Mikal says:

    I’m trying to learn something here as well. He makes several good points and then will add a comment that is just nuts. When he does that it discounts the rest of his writings.

  94. 94
    old ballard says:

    RE: Eleua @ 88

    Without wanting to put you down too much, I have to say you do not serve yourself as well as you could.

    You clearly are very intelligent and know a great deal about Milton Friedman’s monetarist theory of economics and enjoy the old pomposity of the “moral hazard” argument.

    However, you fall on your face, if not your ass, when making grand generalizations.

    It meant surprise you to know as a liberal and a Keynesian, I live for the death of the 401k, LBO and the hedge fund, and I have no problem accrediting Bill Clinton with his share of the blame for the current state of affairs.

    Clinton went down the “Efficient Market Hypothesis” road with rest of the Chicago School of Economics. Both DEMS and REPS drank the Cool-aid. The history of the current bubble dates back to Barry Goldwater’s first attack on Keynesian thought in the 1960s. I also agree that we are headed for the deflationary spiral from hell and have no doubt that the debt implosion you speak of will easily drop the Dow to 1985-86 levels (maybe to as low as 1500.)

    All that said, your avatar has the maturity of a seventh grader. You offer no solutions and no way out. You completely fail to recognize that Keynesian thought is based on the idea of helping everyone not just the white people on Bainbridge Island. For all the grapy things Americans do to each other in normal times, I believe that in the end we’ll come together becoming a better people and stronger nation. A little empathy goes a long way.

    Maybe it’s time for you to come out of your mother’s basement.

  95. 95
    98115_Renter says:

    RE: old ballard @ 94

    +1

  96. 96
    Kary L. Krismer says:

    RE: old ballard @ 94 – In the last six months or so I’ve been defending Eleua on other sites, or at least bringing him up as a negative blogger who actually got the cause of the downfall right. If you throw out flat, a market only has two ways to go–up or down. Just predicting that it would fall is no big deal, and so for example, people who point to San Diego get no credit in my book for their predictions a year ago. In contrast, what Eleua was saying a year or so ago was pretty close to what happened–or at least close enough.

    That said, his writing style leaves a lot to be desired in terms of persuasiveness. I think being a little less colorful would do more.

  97. 97
    Eleua says:

    RE: old ballard @ 94
    Thanks for the torrent of compliments

    Question: What does the maturity level of an avatar have to do with anything? Would it be better if I was a German Shepherd, screaming artwork, roasted pig, iconic banker doll, WW2 propaganda poster, ass-end of a bull, etc?

    I used the album cover to Quiet Riot’s “Metal Health” because it captured the insanity of the housing bubble back in 2005-7. Back then, EVERYONE (even Synthetik and The Tim) thought I had completely lost my mind. Not so much anymore…I hold it over because that is how many people identify me on these blogs – and I liked that album.

    I have stated that I have no solution or way out that is painless. I have posted several solutions to the current mess, with emphasis on not getting here in the first place, on my own blog at

    http://clearcutbainbridge.blogspot.com

    What I refuse to do is attempt to convince someone that there is a magic elixir out there that will save us from our own gross stupidity, greed, laziness. There isn’t. There never has been, and never will be.

    What, exactly, would a mature person propose for this crisis? Would the actions of our Treasury Dept and Federal Reserve be in order? Those policies are geared to keep rich bankers in Beth Page, rather than Bainbridge solvent, at the expense of middle-class people in Islip and Everett. They propose institutional lying and fraud to pretend that there is no crisis of solvency. They treat economics like some goofy, New Age religion, rather than a science that can be studied and predicted.

    How mature is that?

    Spare me the “white guys on Bainbridge” shtick. Perhaps you self-identified Lefties can think outside your prism of race and class for just once. Join the rest of the thinking population and address the issues. People are people, not members of a group.

    I’m for teaching people what is actually occurring and why it is occurring, rather than whining about the occurrence. You Lefties are so in love with the idea that sex-ed will prevent pregnancy and social disease, you would think that “econ-ed” would be a welcome feature of our national discourse. Perhaps if it had been, we wouldn’t be in this situation.

    We are in this situation because we are lazy, stupid, and greedy. We are not here because of poor timing or because we are victims.

  98. 98
    vermillionsky says:

    By 98115_Renter @ 72:

    RE: Eleua @ 69
    Oh and your names are silly, like your avatar.

    By old ballard @ 94:

    RE: Eleua @ 88

    All that said, your avatar has the maturity of a seventh grader.

    What is so offensive about Eleua’s avatar? It looks like the “man in the iron mask” to me.. a metaphor for internet anonymity? Maybe I’m missing something, though (it wouldn’t be the first time).

  99. 99
    Sniglet says:

    If it wasn’t for dear Eleua it would be very lonely indeed for the only other perma-bear on this site (yours truly, of course). :)

    I agree with his comments about the futility of the bailouts and stimulus, as well as the fact that EVERYONE is to blame for this mess (from the executives to the consumers eager to buy more house than they could afford).

    Unfortunately, no one wants to hear talk about how we just have to wait it out and let the economy run it’s course, purging all the mal-investments. When people feel pain they want treatment! The fact that the medicine may be worse than the illness is beside the point.

  100. 100

    ” You Lefties are so in love with the idea that sex-ed will prevent pregnancy and social disease, you would think that “econ-ed” would be a welcome feature of our national discourse. Perhaps if it had been, we wouldn’t be in this situation.

    We are in this situation because we are lazy, stupid, and greedy. We are not here because of poor timing or because we are victims.”

    Hey! I’m a self admitted leftie and completely agree that econ ed should be mandatory, and not taught by either Lawrence Yun or Karl Marx, and that there are many many many stupid, lazy and greedy amongst us, even to the point that we need to be rescued from our own stupidity.

    I’ve never been quite as pessimistic as Eleua or Sniglet, but whatever their style so far they are by far the closest to being accurate out of anybody who posts on Seattle Bubble. And one thing I really like about Seattle Bubble is not only the wide diversity of opinion, but the willingness of people to take unpopular, outlandish positions, and later turn out to be right.
    Still, what do mutual funds announce? Past performance should not be seen as an indicator of future results?
    Eleua has been smart and right so far, but I think things are only going to get half as bad as he predicts.

  101. 101
    CCG says:

    RE: 98115_Renter @ 91

    “The market is cratering because like housing, it has been overvalued for a long time. The fundamentals are bad, earnings are bad, P/E ratios are still high. That is why the market is cratering.”

    I wouldn’t say we’re disagreeing, just looking at different aspects of the same thing. Right now it happens to be the weight of Treasury issuance that is finally forcing recognition of the facts you mention, among others. It’s like having a gigantic, poorly-built sand castle that finally collapses after adding one grain of sand too many. That last grain might be the trigger, but the whole thing was an accident waiting to happen anyway.

  102. 102
    CCG says:

    “What I refuse to do is attempt to convince someone that there is a magic elixir out there that will save us from our own gross stupidity, greed, laziness. There isn’t. There never has been, and never will be.”

    Yep. It’s like drinking 21 shots and then asking how you can avoid the hangover. The mainstream derides this as “crime and punishment economics”. Unfortunately, reality is impervious to epithets.

    “What, exactly, would a mature person propose for this crisis? Would the actions of our Treasury Dept and Federal Reserve be in order? Those policies are geared to keep rich bankers in Beth Page, rather than Bainbridge solvent, at the expense of middle-class people in Islip and Everett.”

    Yep. If you are not a white collar criminal who is gaming the system, then Obama (or, more to the point, Bernanke and Geithner) is no more your friend than Bush was.

  103. 103
    David Losh says:

    RE: EconE @ 90RE: Eleua @ 62

    The velocity of debt is also in the middle between consumer and product. Wal Mart is the perfect example, but it is everywhere. Wal mart issues a credit card with bonus points. The Wal Mart shopper uses the card to buy stuff. Wal Mart stocks it’s shelves with credit and pays employees by borrowing.

    The consumer with the credit card is making payments, or as Wal Mart hopes, minimum payments. The consumer over the course of a year pays four times the price of the goods through inteerest and penalties.

    The smart consumer is religiously making payments on time and only paying twice the price of goods while the bad consumer is running up high balances, late penalties and higher interest.

    In theory though we are only talking about the price of goods. The price of goods is driven down by volume. The manufacturer may make a little bit from his accounts recievable balance but that may only bring up the price of goods, out the door, to fair market value.

    If the consumer buys directly from the manufacturer for cash the price of the goods may be a little more but much cheaper than buying on credit.

    The problem is the people in the middle. It’s thier jobs that every one is trying to perserve. The credit market creates profits and jobs.

    Real Estate began working the same way. lower interest meant higher prices. Yun is using the same argument. Interest is less, so payments are less so Real Estate is more affordable. The value of Real Estate is still far below the price but the payments become more attractive.

    We can’t allow banks, and lending institutions to continue with debt velocity theories.

  104. 104
    old ballard says:

    RE: Eleua @ 97

    Sorry for the delayed response, I have more to do than sit in front of the computer all day.

    You really don’t get it.

    The reason I, and others, attack you is because of your FOX NEWS style attack on the liberalism. Lighten up. You’re not some grand master “teaching people what is” and what’s not. Many people on the Seattle Bubble have called it from the get go, me included. You’re not the only one that gets it. People on both the left and the right get it. That’s why we read blogs like the Seattle Bubble. Look back at some of the comments I’ve made concerning the Dow. Last year people had no end of insults for me when I said the Dow would be trading below 8000 before the end of 2008.
    How about this?

    If you stop your derogatory comments about the left, I wouldn’t say things that I would really enjoy saying about the right.

  105. 105
    David Losh says:

    RE: Eleua @ 58

    I’ve asked the same question for over a year now. Banks keep saying they are losing money. Hedge Funds, Insurance Companies are all talking about losing money. The auto industry I truly believe is losing money, but the others that trade in paper profits don’t lose money, the money needs to end up some place.

    I always ask if it may be lost in the couch or something.

    There was an article in the London Times that did talk about cash reserves being very high. I do believe that there is cash hoarded and that it is accounted for, it’s simply being with held. In my opinion it’s like an extortion plot.

    Sorry to disagree but the government is dumping in money and that is becoming a problem. Those people who were holding all the cards last year are being by passed and being asked to account for money they already took.

    I do agree that money will find it’s highest and best use so the extortion plot may be collapsing along with the financial system as we knew it.

    This time around there is money out there it’s just under utilized.

  106. 106
    old ballard says:

    P.S.

    The ass end of a bull is a joke.

    As in goodbye bull market, or kiss the good times goodbye.

  107. 107
    CCG says:

    “There was an article in the London Times that did talk about cash reserves being very high. I do believe that there is cash hoarded and that it is accounted for, it’s simply being with held. In my opinion it’s like an extortion plot.”

    We’ve been here before, or at least someplace that rhymes with it:

    http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf

    ‘The Fed tried frantically to inflate after the 1929 crash, including massive open market purchases and heavy loans to banks. These attempts succeeded in driving interest rates down, but they foundered on the rock of massive distrust of the banks. Furthermore, bank fears of runs as well as bankruptcies by their borrowers led them to pile up excess reserves in a manner not seen before or since the 1930s.’

    http://www.mises.org/rothbard/historyofmoney.pdf

    ‘[T]he inflationary policies of Hoover and [Federal Reserve Board Governor Eugene] Meyer proved to be counterproductive. American citizens lost confidence in the banks and demanded cash – Federal Reserve notes – for their deposits (currency in circulation rising by $122 million by the end of July), while foreigners lost confidence in the dollar and demanded gold (the gold stock in the United States falling by $380 million in this period). In addition, the banks, for the first time, did not fully lend out their new reserves, and accumulated excess reserves – these excess reserves rising to 10 percent of total reserves by mid-year. A common explanation claims that business, during a depression, lowered its demand for loans, so that pumping new reserves into the banks was only “pushing on a string.” But this popular view overlooks the fact that banks can always use their excess reserves to buy existing securities; they don’t have to wait for new loan requests. Why didn’t they do so? Because the banks were whipsawed between two forces. On the one hand, bank failures had increased dramatically during the depression. Whereas during the 1920s, in a typical year 700 banks failed, with deposits totaling $170 million, since the depression struck, 17,000 banks had been failing per year, with a total of $1.08 billion in deposits. This increase in bank failures could give any bank pause, especially since all the banks knew in their hearts that, as fractional reserve banks, none of them could withstand determined and massive runs upon them by their depositors. Second, just at a time when bank loans were becoming risky, the cheap-money policy of the Fed had driven down interest returns from bank loans, thus weakening banks’ incentive to bear risk. Hence the piling up of excess reserves. The more that Hoover and the Fed tried to inflate, the more worried the market and the public became about the dollar, the more gold flowed out of the banks, and the more deposits were redeemed for cash.’

    Meanwhile, this just in from the Privatize the Profits and Socialize the Losses department:

    http://jessescrossroadscafe.blogspot.com/2009/03/jp-morgan-made-5-billion-in-profit-on.html

    “JP Morgan Made $5 Billion in Profit on $88 Trillion in Unregulated Derivatives Speculation

    There is no justification for a commercial bank, with regulated depositors’ funds insured by the government, should be speculating on a level this great.

    One also has to wonder who actually ‘lost’ in those derivatives bets that JP Morgan made, who the counterparties were. How many losses were taken by AIG, Bear Stearns, and Lehman?

    Who is really being bailed out here? Aren’t we paying for JP Morgan’s “winnings?”

    If they speculate and lose, who pays for that? We do.

    What is a bank doing gambling in unregulated over-the-counter derivatives involving commodities and financial instruments worth $89 Trillion?

    Getting paid by the public whether they win or lose it appears.

    When a single player with deep pockets and government guarantees is placing bets in markets on a scale that dwarfs the Gross Domestic Product of United States that is the very definition of moral hazard.

    Until the Obama Administration takes strong steps to bring back Glass-Steagall, and put hard limits on the banks there will be no reform and no recovery.

    We are 48 days into this Administration. We have see little or no systemic reform. Just a continuation of crony capitalism under Bernanke, Summers and Geithner.”

  108. 108
    Kary L. Krismer says:

    By Eleua @ 97:

    We are in this situation because we are lazy, stupid, and greedy. We are not here because of poor timing or because we are victims.

    There are different levels of stupidity. At the consumer level it is staggering, and to be expected. What I didn’t expect was the stupidity at the highest levels of some of the biggest financial corporations. I read a story on how those in the risk control section (or whatever it was called) of WAMU felt marginalized and ignored, but it goes well beyond that one entity or even a few entities. Just taking one example, unemployment levels were not that bad when things started to really fall apart in September. What kind of assumptions were these companies making when they bet the wrong way on multi-billion dollar bets? They literally bet the continued financial viability of their companies on unemployment never again going above 7%. What kind of a bet is that?

  109. 109
    Eleua says:

    RE: old ballard @ 104

    You got it from the start. Good. Many people did not, even after they were presented with the facts on an almost daily basis.

    I find most of the economic ignorance to be on the political Left, but certainly not all of it. I find that Lefties have the greatest spread between what they actually know versus what they think they know, so they make the best object lessons for others to observe. Calling out the Lefties makes the debate last long enough for 3rd parties to see the folly of that view of economics.

    The hard part of the past few years was that most of the Lefties thought the economy was hollow because of who was in the White House. Now that MAObama is steering the ship of state into the ditch at warp speed, it is tougher for them to see what Barry, Harry, and Nan are doing will only make the problem worse, as most Lefties have ABSOLUTELY NO CLUE how credit origination works or how the government funds itself.

    I’m not letting up on my snarky style nor my pokes at the Statists. The Statist-Lefties are responsible for the root policy that created this mess (getting something for nothing and the democratization of credit). If you don’t like it, then turn the channel.

    I don’t come here to hear myself bloviate or to take victory laps. I come here to spread the knowledge that others passed on to me. They took time to educate me and I am returning the favor, as I can never possibly repay them.

  110. 110
    Angie says:

    They treat economics like some goofy, New Age religion, rather than a science that can be studied and predicted.

    Economics is not, in fact, a science. In fact, *this* kind of thinking is really what’s at the root of the credit blowup.

    British scientist Lord Kelvin (whose name is associated with the temperature scale tied to absolute zero) once famously said that it wasn’t possible to understand something without quantifying it. Fair enough. Quantification is necessary for understanding–but by itself it is NOT sufficient.

    Economics, more than any other field, is about the numbers and the numbers alone. It’s so easy to be seduced by numbers because they are powerful and descriptive–but they do NOT tell the whole story, not by a long shot. (I can’t believe anyone would take seriously a field where the physical environment and the natural world are regarded as “externalities”. Anyone with half a brain knows that Mother Nature bats last, each and every time, and it’s sheer foolishness to pretend otherwise.)

    The tunnel vision around numbers is even worse in economics because those numbers most frequently represent dollars, generally in service of making rich people richer. We all know that saw about a man purposefully not understanding something if his paycheck depends on him not understanding it.

    As a result economics as a field is incomplete, backward-looking, insular, self-serving, and (as we are seeing in full color these days) divorced from reality in some serious ways.

    No one will dispute that up and down the line the financial “professionals” at the heart of this mess–investors, bankers, rating agencies, etc, etc,– had maximum profit as their primary motivation (meet Mr. Market). And you better believe they had numbers (Mr. Math, if you will) to justify and back up their every decision. There is *no way* that transactions that large would go forward without it.

    Every Tom, Dick, and Harry with two brain cells to rub together knew that the hinky shit from the last few years would come to grief. But the finance professionals? The whole generation of econ grads from the Reagan era forward? Alan freaking Greenspan?

    Paulson and Bernanke are stooges like the rest of them, but what the hell can we do? It’s easy to say “Let the banks fail”, but if you think for 3 seconds about what would happen to the economy if every consumer in America suddenly, urgently were driven to proceed by cash only because banks are totally untrustworthy…Good luck with that.

  111. 111
    Eleua says:

    RE: Kary L. Krismer @ 108
    KLK,

    I agree. The irresponsible risks taken by the captains of industry were simply criminal.

    My 11yo daughter understands this. Why can’t someone with all that experience understand it?

    Killinger should be sued off the face of the earth for how he ran WM and how he flat-out lied to his shareholders.

    The local media should have pounded him over and over again until WM came clean with their books.

    Funny thing for all those that think I enjoy this…We are approaching the levels in our financial markets that are starting to make me nervous. It’s not my investments that worry me, but the collapse of society with a gun-grabbing, free-speech squashing Marxist running the government.

    It’s worse than we think.

  112. 112
    Eleua says:

    RE: Angie @ 110

    Your post is one of the best examples of what is wrong with our financial education. Why is it, if economics isn’t a science, that people could predict this outcome and give the reasons why?

    Lucky guess? Sold to you.

    You are correct in one area – people were paid to believe in the New Age religion of economic pink ponies. Yes, that is correct.

    Should the banks fail? They are already insolvent. How long do you wish to hide this sausage? The reason there is no confidence is that money isn’t buying what DC and NY are selling. They know that the solution is institutionalized fraud to paper over the previous institutionalized fraud, that was created to bolster the political fortunes of those selling “something for nothing.”

  113. 113
    b says:

    Eleua –

    Yes, please keep squabbling about the Lefties on the internet. Its just what the upper class wants you proles doing. Anything to keep your mind in the gutter and you thinking your friend is your enemy. Remember all those scorching rants and screeds about the hatred felt between the various founding fathers who had minute policy differences in the grand scheme of things, and how that led to their inability to throw out the King? Neither do I…

  114. 114
    Hugh Dominic says:

    By Eleua @ 111:


    It’s not my investments that worry me, but the collapse of society with a gun-grabbing, free-speech squashing Marxist running the government. .

    Eleua. You may have been right on calling the downturn in the Seattle Real Estate market. Congratulations.

    But do you cant really think Mccain/Gramm/Whitman would be doing better than Obama/Volker/Buffett cleaning up this mess? Really?

    So if you are here to “spread the knowledge that others passed on to me”, do us all a favor and quit the Limbaugh/Hannity impersonation and stick to RE.

  115. 115
    Eleua says:

    b,

    Read your history. The FFs were very concerned about big-gov Statists, Monarchists, and others that seek to subjugate others through the power of government.

    Nice try.

  116. 116
    Eleua says:

    RE: Hugh Dominic @ 114
    McCain is a Statist and only knows what the bankers tell him. Check out his campaign contributors and voting record.

    My description of MAObama you cite is completely, 100% accurate.

  117. 117
    Mikal says:

    We need at least one intelligent post today. Where is Deejayoh?

  118. 118
    wreckingbull says:

    Hey Eleua,

    Speaking of returning favors and WaMu, I can’t thank you enough for your post way back about WaMu and its booking of back-capitalized interest as income. At that point WaMu was still flying high. I did some more research on that and what I learned allowed me to short the living hell out of those crooks.

    One only had to spend 15 minutes with their annual report to see the writing on the wall.

  119. 119
    David Losh says:

    It’s very simple, it makes no sense to me why this discussion goes on and on.

    Credit is a fabrication. It mimics a money supply by allowing goods to be bought sold and traded with the promise of being paid for in the future.

    Real Estate is the same. We promise to pay in the future with future dollars, we hope those are inflated dollars thirty years from now. If those are deflated dollars at least we have an amortized loan that is at a fixed rate.

    The future is here and the dollars are stuck because the people holding the dollars refuse to pay the debt that is owed. They are refusing to let go of the money they have in reserve.

    Along with millions of other people the banks, lenders, and investors are hoping thier cash will be able to buy “investments” for cheap, for cash, and resell for a profit.

    It makes no difference if it’s foreclosures, cheap stocks, classic cars, or businesses, the future is here today, debts need to be paid and the cash in reserves has already been spoken for.

    If banks refuse to pay thier debts why should any one else? Why pay on a mortgage and give banks more money to hoard. Why pay consumer credit accounts? FICO? What’s that going to look like for millions of Americans in a few more years?

    It’s over. Banks need to settle with consumers for whatever they can get and move on. There is plenty to do, plenty of money to be made legitately, they just need to pay thier debts, collect what they can, and move on.

  120. 120
    Eleua says:

    RE: David Losh @ 119RE: wreckingbull @ 118

    No problem. Glad it worked out for you.

    I find it amazing that major shareholders couldn’t see it for what it was.

  121. 121
    Jonness says:

    Just a note to those whom have been personally offended by my or others’ posts at times on this site.

    Ted Kazinki’s message was laced with bitterness, prejudice, and hatred, but that doesn’t mean the core of the content wasn’t meaningful and that it didn’t deserve being discussed and debated. If you get too lost in the content meant to personally harm you, you’ll miss 100% of the meaningful content.

    http://www.wired.com/wired/archive/8.04/joy.html

    Prejudice insults are thought by many to be a very childish way of making one’s point. But don’t give up on a train of thought just because the thinker has experienced some adversity along the way causing him to not personally like you.

  122. 122
    Eleua says:

    Should I change my name to The UNIBLOGGER?

  123. 123
    Kary L. Krismer says:

    RE: Eleua @ 122 – Only if you enjoy meeting FBI agents. ;-)

  124. 124
    Scotsman says:

    Good to see ya around, Eleua.

    What is it with the Left’s fascination with Hannity and Fox News? And why is it that’s the first thing they reference when they’re losing the argument? Lots of diversion, little substance relevant to the discussion at hand.

    We are so screwed. Much like we’ve watched California and Nevada to get an idea where our housing market might be headed, we can now watch Europe to see where the USA is headed. Euro banks are even more leveraged than ours, their housing inflation is just as bad, and their governments are using all the socialist/statist approaches to fixing the problem. We already know how this will play out for them, but maybe we can learn a few lessons along the way and apply them to our situation.

    If our economy were a house, the foundation is cracked and sagging, the framing is rotten, the plumbing leaks, and the termites are getting ready to finish what’s left. And who will fix it? Like our government, the contractors are all either corrupt or incompetent, so the mess will get much worse, and the bills higher, before anything ever gets fixed.

    Time to reset. Burn the house down, clean up the land, and start over. I relish the day when the government’s checks bounce, because then and only then will the people demand change, accountability, honesty, and most important, that the government serve the people and no one else.

  125. 125
    98115_Renter says:

    By Jonness @ 121:

    Just a note to those whom have been personally offended by my or others’ posts at times on this site.

    Ted Kazinki’s message was laced with bitterness, prejudice, and hatred, but that doesn’t mean the core of the content wasn’t meaningful and that it didn’t deserve being discussed and debated. If you get too lost in the content meant to personally harm you, you’ll miss 100% of the meaningful content.

    http://www.wired.com/wired/archive/8.04/joy.html

    Prejudice insults are thought by many to be a very childish way of making one’s point. But don’t give up on a train of thought just because the thinker has experienced some adversity along the way causing him to not personally like you.

    Um, that still doesn’t change the fact that he was the Unibomber.

  126. 126
    98115_Renter says:

    By Eleua @ 109:

    RE: old ballard @ 104

    You got it from the start. Good. Many people did not, even after they were presented with the facts on an almost daily basis.

    I find most of the economic ignorance to be on the political Left, but certainly not all of it. I find that Lefties have the greatest spread between what they actually know versus what they think they know, so they make the best object lessons for others to observe. Calling out the Lefties makes the debate last long enough for 3rd parties to see the folly of that view of economics.

    The hard part of the past few years was that most of the Lefties thought the economy was hollow because of who was in the White House. Now that MAObama is steering the ship of state into the ditch at warp speed, it is tougher for them to see what Barry, Harry, and Nan are doing will only make the problem worse, as most Lefties have ABSOLUTELY NO CLUE how credit origination works or how the government funds itself.

    I’m not letting up on my snarky style nor my pokes at the Statists. The Statist-Lefties are responsible for the root policy that created this mess (getting something for nothing and the democratization of credit). If you don’t like it, then turn the channel.

    I don’t come here to hear myself bloviate or to take victory laps. I come here to spread the knowledge that others passed on to me. They took time to educate me and I am returning the favor, as I can never possibly repay them.

    It’s posts like these that prove that you are an ideological hack, rather than the economist you pretend to be. Perhaps you have no intention of actual persuasion, but if you do you have miserably failed by spouting talk-radio style discourse. It seems to me as if your primary intent is to offend and prove your point without any consideration for opposing views.

    People here say you were right in the past, and perhaps you were. It doesn’t change the fact that you are a small, childish person with no actual intent to educate as you claim.

  127. 127
    Eleua says:

    The dog that yelps is the one that got hit by the rock.

    I’m not an economist. That’s my point. A basic working knowledge of how markets and money work, added with a grasp of relevant history (not filtered by the Lefties) is all you needed to have seen this for what it was.

    People have been blinded by getting something for nothing. History shows that always ends in tears.

  128. 128
    what goes up must come down says:

    Hey Eleua it wasn’t the lefties running things for the previous 8 years how about getting a clue — is that a fact or not — a direct answer would be appreciated.

  129. 129
    b says:

    Eleua –

    I guess my point did not register with you, but thats to be expected when your concern is with “Lefties”. It is times like these that I question your rational judgement, even though I agree (and have here and on TF for a long time) with many of your calls. Blathering about Lefties or Neocons or Righties or Fundies is a nice game for the proles to play, and an easy trap to fall into. Bread and circuses, and you fight against the bread but go full bore into the circus…

  130. 130
    Angie says:

    Eleua @ 110

    Your post is one of the best examples of what is wrong with our financial education. Why is it, if economics isn’t a science, that people could predict this outcome and give the reasons why?

    Aside from Roubini, name the economists who did. Alan “I was wrong” Greenspan, who had enough economic cred to run the Fed, didn’t.

    If economics were a real science, this situation would never have happened. There are enough parallels to what happened in the 30s that the people who run the financial show should have seen what was coming and headed it off at the pass.

    Sadly “Mr. Market” got the best of them and they couldn’t see beyond the next quarter’s profits. Dumb, dumb, dumb.

  131. 131
    Kary L. Krismer says:

    By Angie @ 130:

    If economics were a real science, this situation would never have happened. There are enough parallels to what happened in the 30s that the people who run the financial show should have seen what was coming and headed it off at the pass. .

    As to the first point, does that mean that predicting the weather isn’t a “real science” since they’re often wrong? Both predicting weather and dealing with the economy involve too many variables and too little information.

    As to the second point, what parallels are you seeing? Were there a lot of mortgage backed securities in the 1930s? Did energy prices rise significantly prior to the downturn?

  132. 132
    Sniglet says:

    Aside from Roubini, name the economists who did. Alan “I was wrong” Greenspan, who had enough economic cred to run the Fed, didn’t.

    There were plenty of people who foresaw what was coming, many of them have been getting rich shorting the market. Nassim Taleb comes to mind. As far as having accurate preductions goes, I would give the prize to Bob Prechter. He is the ONLY one that I know of who had almost every particular of the crisis nailed down (particularly his calls for deflation).

    There are SCADS of bubble bloggers (Tim included) who realized the economy was completely bonkers. Heck, even I was sufficiently concerned that I sold my house years ago.

    One important point to keep in mind is that while there are MANY people who foresaw what was coming, none of those individuals are ever likely to be let into the hallowed halls of power, and given authority at places like a central bank.

    The reality is that anyone who is alarmist, or unduly pessimistic will NEVER make it politics. It’s those who are good at getting along, and not ruffling feathers, who will wind up in positions of authority.

  133. 133
    Angie says:

    Kary–weather prediction clearly has come a lot farther than economics in the last 50 years. Go read Cliff Mass’ blog for starters. You’ll love it.

    As to parallels to the runup to the GD–I invite you to read a little more widely, those parallels are being widely discussed. Remember that the regulatory framework that was erected in the wake of the GD was dismantled since the Reagan Era and, surprise surprise, we find that they actually served a useful purpose after all.

    Sniglet, I will take your point about pessimists not being popular. However many of the “halls of power” are in financial institutions, regulatory bodies, and the like, that specifically have to do with money, and an economics background is a prereq.

    Finally, as a followup to my comments regarding whether economics is a science: Like Eleua, I am not an economist. However, unlike Eleua, I am a scientist, and have a very clear understanding of what is and isn’t “real science”. By and large, economics ain’t it.

  134. 134

    “Both predicting weather and dealing with the economy involve too many variables and too little information.”

    And very little accountability for those forecasters who are mostly wrong.
    The difference I see is that weather forecasters aren’t in a position to profit from their predictions.

  135. 135
    Kary L. Krismer says:

    By Ira sacharoff @ 134:


    The difference I see is that weather forecasters aren’t in a position to profit from their predictions.

    And many of them are a lot better looking!

  136. 136
    Hugh Dominic says:

    RE: Eleua @ 127
    Eleua, we all like the content and comments – keep it coming.

    Just try to lay off the “hard Leftie” and “MAOBama” stuff.

    As one of the main contributors to this blog (and somone who guest posts here regularly) I would hope you would do your part to focus on the topics at hand and avoid blatant partisan distractions.

  137. 137
    Eleua says:

    RE: what goes up must come down @ 128
    Your post is EXACTLY what I am talking about – EXACTLY.

    People see the economy through the prism of their own politics and economic bias. Back in the previous Administration, it was easy to get Lefties to see the economy for the hollow shell it was, unless they were buying trendy real estate with money they couldn’t possibly pay back. On the other side, I was kicked off more than one “conservative” call-in radio show for trying to explain the bubble in the face of “record home ownership” under a GOP Administration.

    Now that their Savior is in the White House, suddenly the economic fix is this stupid spending bill. All problems are STILL Bush’s problems, as they will until the economy turns around. If it doesn’t bottom until 2018, with a Republican in their second term, the Lefties will say that the recovery is due to MAObama policies.

    Statist Republicans do the same thing.

    If you are going to play “it’s their fault due to proximity in DC” game, then ask yourself when the markets peaked. What changed in DC at that time?

    Yup. Pelosilini got the Speaker’s Gavel.

    It’s been all downhill since then.

    (Isn’t the blame game fun)

    Look at the Leftie goodie-goodie programs that seek to give money to people for doing nothing. The CRA, FNM, FRE, and all this leverage is a direct result of Leftie programs. Look at Obamessiah’s campaign contributor list (the ones that he publishes).

    That’s my issue. MAObama can’t fix the problem because he is doing the same thing that caused it in the first place, just faster.

    Sometimes I think he is trying to crash the markets to blame it on his predecessor and hide his failings of being a disciple of Keynesian/Statist policies.

    Back in the day, I was blaming Bush for trying to stoke an unsustainable bubble and saying that there is nothing behind the 2003-7 economy.

  138. 138
    98115_Renter says:

    RE: Eleua @ 137

    Now it’s just boring.

  139. 139
  140. 140
    98115_Renter says:

    RE: Eleua @ 139

    Eleua, while this is Tim’s blog, it is still a community. You seem to ignore the fact that there is a diversity of opinion and sensibility within all communities, and communicating within a community requires respect and a maturity that you seem to lack.

    The Tim has requested on multiple occasions that partisan rhetoric be carried on in the blame game forum, yet you seem intent on carrying on your ridicule worthy blather. If you had any sense of history you would not be equating our current leaders to the likes of Mao or Mussolini, but you seem to lack that as well. You have a clear need for attention…why not start your own blog (you probably have one already) where you can spew your bile?

  141. 141
    gameboy says:

    Good to see Eleua back in action and come out swinging.

    I am about a big a liberal as they come and I have a hard time disagreeing with most of what Eleua is saying (I think he is giving way too much of a pass for the conservatives like Greenspan who had a huge hand in this debacle).

    In fact. what Eleua is proposing is the Swedish/RTC model of “nationalizing” the banks that Republicans are up in arms about.

    What is really funny about what is going on is that US LOVES to give out advice to others, but it won’t follow its own advice when faced with the same situation. For decades, IMF and US has adviced failing economies with troubled banks that they need to liquidate the bad banks and manage the orderly selloff of the assets.

    And this is EXACTLY what we need to do today to make sure that we don’t repeat the same mistake that Japan made with their “lost decade” (which US economists readily brought up as an exampe of what NOT to do). Just bleeding things out like what we are doing right now is not really helping anyone and it is just going to drag this recession out over multiple years.

  142. 142

    Eleua et al,
    just curious: Are there any governments now or in the past, foreign or domestic who did things the right way?
    Seems like state intervention usually screws things up, at the same time “free markets’ have big problems too, especially those countries that just a few years ago were hailed as economic miracles, and now are worse off than anybody.
    I don’t have an opinion here, just looking for perspective.

  143. 143
    98115_Renter says:

    By gameboy @ 141:

    Good to see Eleua back in action and come out swinging.
    .

    I appreciate your mature and logical discussion, but I fail to see why you encourage Eleua’s immature, self-serving rants that clearly impede rational discourse.

  144. 144
    Eleua says:

    RE: gameboy @ 141

    It’s one thing to disagree. It’s quite another thing to make stuff up.

    I have hated Greenspan since the mid-90s, and have thought he was the worst CB in our history. I also am against nationalization of banks via the Swedish, or any other model.

  145. 145
    Eleua says:

    RE: Ira sacharoff @ 142

    We have been on a state-driven economy since the Progressive Era of US politics. This is what happens when the state tries to drive the economy.

  146. 146
    Eleua says:

    RE: 98115_Renter @ 143

    What have you contributed to this community, other than whining if someone doesn’t genuflect to your Leftist God?

    Yes, I have disrespectful terms for most prominent US politicians. MAObama is my favorite and it is very accurate. I threw that out in the larger point of what is happening in the bond market, and the usual suspects on SB zeroed in on it, rather than discuss the broader points.

    If you can be so easily derailed, I feel sorry for you Guess what? it is still legal to criticize politicians in the US, and If I overstep my bounds on this forum, I will apologize to The Tim.

    You can see my criticism of both parties in my comments, and while I personally do not care for McCain (McStain if it makes you feel better), I have respect for a guy that wore his country’s uniform and faced hostile fire, whereas I loathe someone that travels comfortably in the company of people who have unapologetically advocated for the systematic extermination of 12% of the US population for doing nothing more than disagreeing with them.

    Why did you and Angie zero in on my offhanded political throwaways and still ignore the bulk of what many on this thread are discussing?

    You don’t see me whining about Mikal’s comments to me. He does that every time I show up, yet I still manage to function. I use a disrespectful term for someone you probably have never met, and you can’t let it go.

    Don’t you have a Prius to plaster with stickers you buy at Pike Place Market, or something?

  147. 147

    “whereas I loathe someone that travels comfortably in the company of people who have unapologetically advocated for the systematic extermination of 12% of the US population for doing nothing more than disagreeing with them.”

    Please explain.

  148. 148
    Eleua says:

    Ira,

    Obama is friends with Bernadine Dohrn and Bill Ayers, both Chicago professors and intellectuals. Obama started his career with them by their introductions.

    Dohrn and Ayers were members of the Weather Underground, a radical US based terrorist organization with roots in RYM and SDS. They spent their time blowing up high profile US landmarks, killing cops, and that sort of thing. They were part of the WU central committee and were essentially the brains behind the operations.

    The WU was infiltrated by the FBI who reported back in 1982 that the WU central committee were plotting for the overthrow of the US government and what the society would be like when the WU remade it. They were asked what they would do with those people that didn’t subscribe to “the new way of thinking” and their response was that these people would have to be eliminated and it might number up to 25 million.

    This is in keeping with similar organizations in other countries that did try reeducation camps and ultimately extermination camps. Marxists don’t change because they live on one side of a border. Their motives and actions descend from the same source.

    Fortunately, it never came to that in the US, but Cambodia, Korea, USSR, China, etc were not so lucky.

    Obama obviously knew of their connections and how they, to this day, are unapologetic about their actions, yet he maintained a friendship with them until he was launched into the national spotlight, where that would be a bit of a problem.

    Imagine what the MSM would have done if Tim McVeigh, rather than being executed, was given a teaching job at some university, or DoD contractor, and was hanging out with the ex-husband of Sarah Paliin’s third cousin in Alaska? We wouldn’t have heard the end of it.

    Imagine what would have been said if Sarah Palin started her political career in the living room of Tim McVeigh.

    Google Larry Grathwohl and see for yourself. The video is chilling. That video was made in 1982, which was when MAObama was 20 years old. It isn’t a hit piece.

  149. 149
    CCG says:

    “Don’t you have a Prius to plaster with stickers you buy at Pike Place Market, or something?”

    Heh, I actually do sometimes drive a sticker-plastered Prius (it’s the girlfriend’s car however). I should add a Ron Paul sticker to really confuse people.

    I stopped getting worked up about political arguments years ago. It’s just two flavors of statism. Trying to argue against THAT usually doesn’t even get you an angry response, just an uncomprehending stare. (“No one can be told what the Matrix is….”) Occasionally it’s fun to bewilder Republicans by telling them that the Bush gang made Lenin look like Theodore Roosevelt.

  150. 150
    CostcoMike says:

    Eleua-

    I respect your thoughts and while I may disagree with some of your thinking you make a good argument in your own way. Just my personal thoughts and feel free to call me a political name and disagree. I love to look at things from more than one angle!

    What does a persons political alignment have to do with the discussion? Yes we can point fingers at the “lefties” or we can say “W. did it” but isn’t it “we the people” that decided to elect the people in their current and previous positions? So we can really only blame “we the people” for the mess. In the end we are our own executioner. (Yes, I realize our election system is a flawed one.)

    As a teacher I believe we should have mandatory economics classes. Classes about our economy and the world economy on the micro and macro level and how they really work. Would be great wouldn’t it? But how can we afford more teachers for those specializations when education is in shambles and does not have enough funding to keep operations running. I guess that is up to “we the people.”

  151. 151
    CCG says:

    Market’s up today (lighter Treasury issuance schedule this week…), I guess the PTB thought it was a good day to let out another little bit of the truth…

    http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=alsJZqIFuN3k

    ‘March 4 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.

    “Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.’

  152. 152
    Mikal says:

    RE: Eleua @ 148 -This is where you become delusional. His connnections with them at best are serving on similar education boards. There were several high profile republicans on those boards as well. Did the republican party get alot of secret support from people that blew up buildings. You should change your name to Mccarthy.

  153. 153
    Eleua says:

    RE: CostcoMike @ 150

    You will get no argument from me on what you posted. At the end of the day, we the people get the .gov we deserve. We are too lazy, stupid, and greedy to tell the statists of both flavors to get bent, so we end up with what we have.

    I never liked Bush after April of 2001, and while I think MAObama is worse, Bush was a disaster. You can read it in my other writings.

    Why do I ping on the Lefties? Because they are unapologetic statists, and that is the problem. We expect the .gov to bail us out of all our boo boos, and that comes from the Left. Getting something for nothing is decidedly Leftist.

    Also, statism is responsible for most of the human misery of the past 100 years, of which, open, avowed Leftist statism accounts for almost all of it.

    For the purposes of discussing economics, I like Lefties because they have a great combination of pride, lack of knowledge, and fundamentally flawed thinking that makes them good object lessons for those watching the debate. With right wingers, we come to agreement too quickly to make the point, as people on the right tend to be better informed, favor free markets, have more open minds, etc.

    Sorting through the idea that the economy is defacto good/bad depending on who is in the WH is just madness. I am a conservative, but thought Bush was a disaster, and had no troubles getting Lefties to agree with me on the outset, but once we delved into the problem, their eyes glaze over and they are on to their next DU talking point.

    The problem today is that suddenly Republicans ‘get it.’ Why? The White House is why.

    I’m an anti-statist, on most issues. I believe that the cultural Left is the religious expression of Statism whose underlying premise is that .gov can perfect man’s condition. That was true of Woody Wilson (the worst POTUS in our history), and every other statist that has followed in his mold.

    I’d really rather discuss the capital markets, our debt, how the .gov funds itself, and how we rebuild than discuss partisan politics. The problem is that politics is part of all those components, and the Lefties are very, very squeamish about tolerating anything that could possibly be construed as dissent. You see that in almost all Leftist dominated institutions, and they can’t even stand when there is any threat to their monopoly over the public discourse.

    Now, if you don’t mind, I have my interpretive dance and abstract poetry class to get to.

  154. 154
    Eleua says:

    Mikal,

    He started his career at a function hosted by those two demons. Keep in mind that we know this as a fact. What don’t we know?

    If I were to run for State Senate, and had my coming out party at the home of the Green River Killer, what would that say about me?

    Would I serve on a board that had Gary Ridgeway as a member?

    After a while, you have to quit dismissing things as coincidence and see it for what it is.

    Cognitive dissonance is tough. You can work through it.

  155. 155
    EconE says:

    I’m neither a “leftie” or a “rightie”…however, I would think (hope?) that if a “leftie” and a “rightie” found themselves alone with each other in a mutually dangerous situation, that their ideological differences would take a back seat to the situation at hand.

    Lefty, righty, centrist…you’re all welcome at my dinner table.

    WRT Economists. What exactly IS an Economist?

    I have a degree in Economics. I’d consider myself an “amateur” economist…or even a “hobbyist” of sorts.

    Similar to Angie, I also feel that Economics is more of an art than a science….and my school (at the time) was the only one that offered a BS in Econ, rather than a BA. I was the guy sitting in the back of the class that challenged the mathematical “science” part with “artful” questions. It didn’t make me very popular with some teachers, as I was able to turn some of their mathematical based theories on their respective heads when looking at it from a non-number perspective. Even using the governments “Minitab” program (and fiddling with the numbers a bit) showed me the math portion of my education was imperfect.

    However, it wasn’t necessarily my background in economics that allowed me to see what was coming. It was based more on simple math. The Econ background just helped me to understand the interconnectedness of everything and how it would spread from industry to industry.

    So what or who is a “real” economist?

    I personally don’t think that anybody that works as an economist on behalf of a corporation is a true economist as there is going to be bias. Even though the job title may be “Economist”, they seem to be more “Marketing Consultants” (no, not the kind that do the print ads or commercials)

    A true economist IMO is someone who doesn’t work for ANYBODY where they are using their knowledge to sell a certain product for that “anybody”. Who did Roubini work for? Nobody. He was a teacher. That gave him the “outside looking in” perspective that allowed him to separate his own interests/hopes/fears from the situation.

    So…finally…what’s an Economist?

    To me it is an artist that can’t draw, play an instrument, sing or dance, but is good at math. I’d be willing to bet that they are probably a bit on the eccentric side, aren’t very popular at cocktail parties…but still are useful provided that you know that they aren’t spinning things on behalf of their own corporate master. You know…like Learah and Yun.

  156. 156
    CostcoMike says:

    Eleua – “Now, if you don’t mind, I have my interpretive dance and abstract poetry class to get to.”

    While I have a hard time believing that you truly are going to these classes it put a hilarious picture of a man with the head of your avatar in a leotard. And I can admit from experience that interpretive dance is not by any means easy.

  157. 157
    gameboy says:

    By Eleua @ 144:

    RE: gameboy @ 141

    It’s one thing to disagree. It’s quite another thing to make stuff up.

    …I also am against nationalization of banks via the Swedish, or any other model.

    But you have proposed this as a possible solution:

    “My idea would be to force the debt out and default it. Make the bank (shareholders) take their zeroes, force the bond holders to take their haircuts, and hold out the banks as an example of what not to do. What good banks are left would receive the capital. Those with savings would be able to be rewarded.”

    Sounds pretty much like what Sweden did…

  158. 158
    Hinten says:

    Ok kids, changing topics slightly:

    What I would like to know is where all the money went. Almost unlimited credit created huge amounts of inventory of every imaginable good from homes to cars. Now we are suffering from high inventory which is driving prices down plus no more credit to buy all that crap. Question though is, was this all just dollars on paper that never actually had any value? I would argue not. For the longest time we had massive amounts of influx of money just looking for a place to land. One of the main causes for the housing bubble was that investors were desparately looking for places to park their money.
    Where did all that money go? I’m happy to agree that a lof of wealth was simply destroyed but the initial massive amounts of moneys that were real still exist but where? And more importantly, where are they going? Don’t be fooled to believe that everyone in the world is poorer now.

    Inquiring minds would like to know where the next buble is building.

  159. 159
    Lake Hills Renter says:

    I could do without all the political mudslinging. This thread pretty much has me only reading the forums the last few days. You have a valuable message, Eleua, but the namecalling and antagonism really detracts from it IMO. I pretty much just started skipping your posts.

    FYI. For anyone that is too young to know, Eleua’s avatar is from here: Quiet Riot – Metal Health

  160. 160
    David Losh says:

    RE: Hinten @ 158

    That is the question: Where did the money go?

    Eula, that’s the question, where’s the money, Dollars, Euros and Yuan?

    I’ll answer because you don’t know. You’re busy with the conspiracy theories. What is surprising to me is the number of people who have gone along with this rant about nothing.

    Cash reserves have been building for years. The aticipation was that as these bubbles burst it was best to have equity shares in real property. Banks are holding real estate and are forced to hold reserves against the mortgages.

    It went way beyond that as people borrowed more and paid more for goods and services. We did have hyper inflation and no one cared. How much is a tomatoe? Cars, boats, TVs, houses, food, oil, everything went up in price beyond any ones comprehension. Corporations put cash aside faster than they could haul it in.

    Governments have tons of cash by having huge tax wind falls. Government had problems spending cash fast enough.

    Now what? The cash is out of circulation so the money stops coming in. The consumer has been bled dry. Governments and global corporations are holding the cards. The money funnelled up to the exremely wealthy.

    The very wealthy are only interested in making more money. Politics are a way of passing legislation to make more money. Left, Right, or moderate, makes no difference.

  161. 161
    Eleua says:

    Hinten,

    The money was destroyed by deflation. Money is created by lending and destroyed by default and repayment. Interest saps the productivity. The situation we now find ourselves is natural at the end of a huge, non productive debt binge. Transferring payments from the productive to the non-productive is at the core of this, but there I go again, being all political.

    LHR,

    My name calling. Interesting.

    “Wingnuts are out in force.”

    “Think tank is in an outhouse storage.”

    I didn’t really get political until #61, which was in response to #56. All I did was have a disrespectful term for His Most Merciful and Divine Benevolence (#28), which is normal for me when I refer to just about any prominent politician.

    Get over it. I don’t come by here very often, but when I do, there are three things I can count on.

    1 Mikal will sling an insult at me for just showing up.
    2. Angie will blame everything on the Republicans, free market (and now math).
    3. 98115 will get into a nod-fest with Angie.

    I get that many of you are Lefties. So what? I live around the very same and find them to be a great example of what went wrong with the housing boom. Remember a few years back when Lefties were congratulating themselves on being part of the “creative class” and how that justifies their views on real estate appreciation? Merely proposing that Seattle was not special was enough to get them all in a huff. I think that is why SB developed the Pink Pony mascot.

    One thing is for sure, they can’t handle dissent, and they won’t stick to an issue beyond the standard DU talking point.

    My point (that I have made over and over again) is that BOTH SIDES tend to view the viability of the economy and the validity of political policy endeavors through the prism of who has power in DC. Guess who holds every lever of power in DC? That’s right. Guess where my criticism is aimed? Good guess.

    When Bush was POTUS, I criticized him just as fiercely. Of course, back then it was justified as Bush was the direct spawn of Satan taken from the DNA of Hitler, Gehngis Kahn, and the starting line for the 1979 Philadelphia Flyers. When I criticize the Messiah, I’m just being mean, racist, homophobic, environmentally insensitive, sexist, abusing children, and threatening the arts.

    Like I said before, I’d rather talk about the capital markets and how that is going to weigh on us as we go forward. The biggest threat to the capital markets is the egregious government borrowing for purposes of political spoils of war, encouraging sloth, social engineering, and the like.

    Guess who is doing it?

    Anyone who thinks I’m just being a blind Republican and not seeing my own party doing the same thing is delusional. I don’t update my blog often, but when I did in September/October, I spent plenty of time talking about the folly of this when Bush/Paulson, (or as I like to call them, Excreta Cerebelli Maximus and Skeletor) were running things.

    Good grief. So I have a disparaging attitude toward politicians. I learned from the best over the past 8 years.

    Get a life.

  162. 162
    Eleua says:

    Hinten,

    The next bubble was in US debt, and it appears to be topping and coming down. The .gov/FED were chasing everyone into US debt to keep the ability for Congress to continue to fund itself.

    That’s why Pelosilini was so adamant about passing the TARP. She was worried that if the bond market cracked, the Congress would have its funding source cut off. The money went to the Primary Dealers so they could continue to wholesale US debt and keep the Welfare State and Project for the New American Century going.

    Picture what the world looks like if the bond market crashes and Congress can’t borrow money for any duration at less than 10%.

    What happens to all the DoD contractors that can’t get funding for their projects? What happens to those employees? What happens if there are no welfare checks, social security or medicare? The Grey Geezers will turn off Judge Judy and start pestering their Congressman. Half the hospitals close within a year after they go BK rendering emergency services to those with no money.
    What happens to commerce and industry when they can’t borrow for less than 15% for prime? What happens when all those 4.5% mortgages can’t be refied for less than 20% Who makes their payments? What happens to every bank in the US?

    The reality is that the bond market is going to crack anyway.

  163. 163
    Hinten says:

    What you are talking about are the dollars that were fake right from the beginning because they only existed on paper because of overleveraged banks and financial institutions. I am talking about the ‘real’ dollars that we watched as they came flooding into this country before the leveraging even started. We had trillions of actual investment dollars coming into the country, and from within the country, looking for good places to invest. Some of those ‘real’ dollars have been destroyed. BUT some of them were pulled out and moved somewhere else.
    Where?
    There are many, many people and institutions that are sitting on cash, have the money in other countries, or have it invested in zero percent government bonds. Those people are just itching to pull the trigger and invest their money again.

    I said this before on this board many moons ago. Just wait until the foreign (and some local) investors start buying up real estate again for pennies for the dollar. Or, back to my original question, what are they going to buy? They will not sit on investments, no matter how secure they are, for 0% losing against inflation for a long time.

    Eleua – I really don’t give a shit about your political leanings. At least not on this board, on this topic. I will say that by denouncing politicians and presidents in this context, you are giving them way too much credit for the little impact that they can actually have on the economy, up or down.

  164. 164
    The Tim says:

    Okay, you guys have finally given me the motivation to bring back the Open Threads. I’m not going to shut down the comments on this thread, but the off-topic conversations have gotten pretty out of hand lately.

    In the future, please restrict your off-topic comments to the open threads. The latest open thread will be linked at the top of the main page.

    Thank you.

  165. 165
    Lake Hills Renter says:

    Eleua,

    Note that *I* didn’t say any of those thing about you. And note that I said *you* have valuable message that is getting diluted by your attitude. You are most certainly not the only one here calling names, but I think *your* message is getting the most diluted because you actually have one worth my time.

    For the record, I am neither a “leftie” or a “rightie”, and I don’t have to be to think the politics gets in the way of your message. But I also see that you’ve made up your mind and will continue to rant instead of discuss. That’s certainly your perogative. But if you’re *really* trying to educate, your methodology is doing you a great disservice by turning off those who might otherwise listen. Like me.

  166. 166
    David Losh says:

    RE: The Tim @ 164

    This thread has everything to do with the topic. You chose an economist to project an opinion, Yun. The economics of what has happened is open to interpritation. As distasteful as these rantings are they are on the topic of the economy.

    I say that the economics of cash have eneded up in Real Estate holdings, the Eleaubomber is trying to make some obscure point about how ploitcs have deflated the cash away. He has missed the inflationary period we just went through, I guess by being over on Bainbridge Island.

    It makes no difference you are two posts away from here so why care now?

  167. 167
    Jonness says:

    “Keep in mind that this expansion via .gov borrowing is money that it is inhaling out of the private capital markets. That money is not free to seek its own level and drive industrial output.”

    The gov. then takes a portion of the money and pumps it back into the economy in the form of stimulus. Thus, this can’t be thought of as completely burying the cash under the mattress. It’s a trade, because at this point, the private capital markets are looking for any kind of mattress in which to safely stash the cash. Thus, the money would not be driving industrial output anyways. The government bond mattress allows a small amount of the money to circulate at the cost of massively increased U.S. debt obligations. The hit to velocity is still sizable, but not as sizable as if the money were hidden in a safe. This begs the question, is mortgaging our future worth slight and temporary support to velocity?

  168. 168
    Jonness says:

    “Should I change my name to The UNIBLOGGER?”

    Nah, you’re not even a fraction as bitter as him. I say, keep on keeping on with the colorful metaphors mixed into your messages. “Sticks and stones can break your bones, but names can never hurt you.”

  169. 169
    Jonness says:

    “Um, that still doesn’t change the fact that he was the Unibomber”

    Perhaps your IQ being less than 170 doesn’t allow you to understand his message. Our opinons on the matter pale in comparison to those 250 years from now.

  170. 170
    Jonness says:

    “I have respect for a guy that wore his country’s uniform and faced hostile fire”

    Yes, but the possibility exists that he would have been much better off if he had saved his neural networks and jumped the boarder. Why? Because he would have never been brainwashed into becoming a mindless nationalist. Although my opinion is probably unpopular, I believe it’s much better to be a free thinker than a brainwashed mindless nationalist. Thus, you have to be very careful when you side with the majority opinion when seeking creature comforts. The brain sends out axons to hook up to dendrites, and if you never have new experiences that repattern the damage, you’re stuck spouting someone else’s opinion forever without really ever having contemplated the alternatives.

    See what I mean about most people injecting a little bitterness into their logic here and there?

  171. 171
    98115_Renter says:

    By Jonness @ 169:

    “Um, that still doesnâ��t change the fact that he was the Unibomber”

    Perhaps your IQ being less than 170 doesn’t allow you to understand his message. Our opinons on the matter pale in comparison to those 250 years from now.

    Very mature. I feel like I am in elementary school.

    You’re wrong about me not understanding. I understand his message. I understand Mohamed Atta’s message too, that doesn’t change the fact that they are/were terrorists.

    Don’t you have a militia meeting to go to or a federal building to bomb?

  172. 172
    Jonness says:

    “You’re wrong about me not understanding. I understand his message. I understand Mohamed Atta’s message too, that doesn’t change the fact that they are/were terrorists.”

    Uhh…how many innocent civilians died in your war in Iraq? We declared that war because they had weapons of mass destruction that could harm U.S. children. How many of those were confiscated after spending a trillion tax dollars?

    I’m pretty certain you haven’t a clue as to the meaning of Kazinski’s message. And I’m absolutely certain I don’t understand it either.

    Does the fact that Hitler murdered 6 million Jews and slaughtered a million Gypsies change the truth in his brilliant observations about you and I? “What good fortune for governments that people do not think.”

  173. 173
    Eleua says:

    Jonness,

    Regarding the stimulus…

    That presumes that it is stimulus, rather than the spoils of political war, which this clearly was.

    If the .gov is taking money from peoples’ mattresses and injecting it into businesses that create jobs, you can make an argument for that action. I would say that if the .gov does that, it is putting money into a risk endeavor that has a below market ROI for such risk. That is fundamentally the problem we are now facing. FNM/FRE are essentially the very same thing, but by a different mechanism.

    If you want to get the money from under the mattress, the interest rates need to be raised (by the market), and that will entice the money out from hiding. As long as we have rising risk, with falling or stagnant interest rates, the velocity will continue to drop.

    Thanks for the intelligent discussion point.

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