Mid-Week Open Thread (2010-08-11)

Here is your open thread for the mid-week on August 11th, 2010. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

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

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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.

135 comments:

  1. 1
    Sniglet says:

    I just posted the recording of my internet economics radio show from last night.

    In this episode Steve tells how his strategy of trading trends allows him to make money in both bull and bear markets. The trick is to have the discipline to stay with a system. Stop listening to the pundits, just follow the trend and adhere to a system.

    http://surkanstance.blogspot.com/2010/08/this-week-on-bear-radio-neither-bull.html

  2. 2
    Trigger says:

    Ok. Now we should not panic. Dow is down 200 points because people are waiting for another stimulus. Bernake should come up and say:
    – We will not be under printed. We will increase supply of $$ to make sure all US businesses have enough $$ to spend as they see fit.
    – We will start by buying a lot of govt papers and this way we will put money in the system

    So we just need a clear direction – that we will take on new debt, increase money supply, issue new tax rebates.

    On top of this the govt should quickly start hiring all unemployed people because this could bring unemployment down to say 4%. It would be nice.

    And then it is time to relax and hike. China will support this move. Investors will welcome the move. We could have good times coming in.

  3. 3
    Sniglet says:

    So we just need a clear direction – that we will take on new debt, increase money supply, issue new tax rebates.

    This is exactly what Japan has been doing for 20 years and just look how it’s worked out for them. The hands of the US government and Federal Reserve are tied. No amount of quantitative easing is going to help. Debt monetization and increased government borrowing will actually just accelerate deflation.

    This is why I maintain that we are going to see epic collapses in asset prices over the next 6 years.

  4. 4

    RE: Sniglet @ 3

    You and Most Pundits Don’t See More American Debt Now as Anything But an Impossible Curse Anyway

    Pfft was sure wages were going up recently, albeit, his rosy forcast would turn into a terrible storm, if he’d do something very logical to his data. Subtract the top 1% rich elite [that control 42% of America’s wealth] and/or the top 10% rich elite in America [that control 95% of America’s wealth] and his “Ponzi Scheme” allegations that wages are going up turns to wages going down.

    http://www.mrswing.com/articles/Top_Percent_Control_Percent_of_Financial_Wealth_in.html

    More news on Pfft’s employment quagmire getting worse:

    “….Company job openings fell for the second straight month in June, a sign that hiring isn’t likely to pick up in the coming months.

    The data comes after a weak employment report Friday that showed businesses aren’t adding enough new workers to bring down the unemployment rate, currently 9.5 percent….”

    http://news.yahoo.com/s/ap/20100811/ap_on_bi_ge/us_job_openings

    But some overly optimistic souls out there would rant that gas doesn’t fuel cars, if it pleased them, broken Toyota gas pedals do….LOL

  5. 5
    Scotsman says:

    RE: Trigger @ 2

    “We will not be under printed!”

    I like it!

    Unfortunately, as goes California, so goes the nation. Huge deficits, no real corrective action, an eminent collapse of epic proportions.

  6. 6
    pfft says:

    By Sniglet @ 3:

    So we just need a clear direction � that we will take on new debt, increase money supply, issue new tax rebates.

    This is exactly what Japan has been doing for 20 years and just look how it’s worked out for them. The hands of the US government and Federal Reserve are tied. No amount of quantitative easing is going to help. Debt monetization and increased government borrowing will actually just accelerate deflation.

    This is why I maintain that we are going to see epic collapses in asset prices over the next 6 years.

    people should stop citing japan. japan was really late in applying stimulus. that argues for quick and bold action so that we would have recovered faster by now. that hasn’t happened though because people who designed the stimulus were listening to deficit hawks.

    deflation is old news. we just had deflation like we’ve never seen in awhile. we aren’t going to have it again. likewise we just had a collapse so we aren’t going to see another one like that for awhile. deflation is the rearview mirror.

  7. 7
    Scotsman says:

    Government workers earn twice what private counterparts do? For what?

    http://www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm

  8. 8
    Scotsman says:

    RE: pfft @ 6

    “deflation is old news. we just had deflation like we’ve never seen in awhile. we aren’t going to have it again. likewise we just had a collapse so we aren’t going to see another one like that for awhile. deflation is the rearview mirror.”

    Can I quote you on this in a year?

  9. 9
    pfft says:

    By Scotsman @ 5:

    RE: Trigger @ 2

    “We will not be under printed!”

    I like it!

    Unfortunately, as goes California, so goes the nation. Huge deficits, no real corrective action, an eminent collapse of epic proportions.

    yeah, how many more months is left until your collapse thesis plays out? 4 months?

  10. 10
    pfft says:

    By Scotsman @ 7:

    Government workers earn twice what private counterparts do? For what?

    http://www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm

    do you read your own articles?

    Public employee unions say the compensation gap reflects the increasingly high level of skill and education required for most federal jobs and the government contracting out lower-paid jobs to the private sector in recent years.

    “The data are not useful for a direct public-private pay comparison,” says Colleen Kelley, president of the National Treasury Employees Union.

    unbelievable.

    studies show government workers are slightly underpaid compared to private workers. I don’t know the specifics, but a lot of this could be because of the war in Iraq, afghanistan and the war on terrorism.

  11. 11
    pfft says:

    By Scotsman @ 8:

    RE: pfft @ 6

    “deflation is old news. we just had deflation like weâ��ve never seen in awhile. we arenâ��t going to have it again. likewise we just had a collapse so we arenâ��t going to see another one like that for awhile. deflation is the rearview mirror.”

    Can I quote you on this in a year?

    no because I’ll remind you first. we could have a month or two of deflation but that’s it. stagflation here we come.

  12. 12
    pfft says:

    By softwarengineer @ 4:

    RE: Sniglet @ 3
    More news on Pfft’s employment quagmire getting worse:

    how does that show things are getting worse? things just aren’t getting better fast enough. we added private sector jobs last month and have been for months so I don’t know what you’re talking about.

  13. 13

    RE: pfft @ 11

    You’re Right Pfft IMO and so is Scotsman

    Its gonna be a convoluted witches brew we’ve never seen before, with twists and turns, no man can predict:

    Currently, oil and food are “sky-rocketing” in price [milk’s, meat’s, etc up 50% the last couple months], because food stuff is energy dependant. [a caveat supporting Scotsman, if the world’s economy goes into a depression worse than America, the dollar may be propped up, reducing domestic energy/food outlays]

    Stocks can go up with higher energy prices, until the consumer is broke, then stocks collapse in value too.

    Other purchasing horrifyingly decreases as more money is used for gas and food, reducing jobs and wages.

    Wages and jobs drive home values, so they collapse insync.

    Stagflation is our likely short-term [possibly longterm too] future and yes, its far worse than a depression….at least food and energy prices decreased in that scenario.

    Wage degradation and unemployment are a global problem too.

  14. 14

    RE: pfft @ 12

    Overall, Non-farm Employment Reduced 131K in July 2010

    And that’s the rosy take Pfft, with your service jobs going up 71K averaged in. What’s totally ignored is we also insourced approx 150K new hungry job mouths to feed from abroad; that makes the real job loss/need almost 300K last month.

    I imagine the new arrivals will have some social supports when they first get here, then its tent city with the previous ghost unemployed Army?

  15. 15
    Trigger says:

    I think personally that if Bernake wants to cash in on this new wave of stock increases – he needs to:
    – Invest heavily into stocks
    – Start telling that money supply will go thru the roof
    – He will do anything to keep the money supply at a comfortable level for everybody.

  16. 16
    Trigger says:

    RE: softwarengineer @ 14 – SoftwareEngineer – This will get resolved on its own. People from abroad come here ONLY if there are jobs waiting for them.

    Look at EU – the rich countries completely opened the labor markets to 3rd world countries. So a person from a 3rd world country like Czech Republic can work legally say in the UK without any work permits etc. And it’s not like all people from 3rd world countries moved…. Once rich economies tanked people from 3rd world countries moved back. I think the best thing the US can do is open the border with Mexico totally, allow Mexicans to work in the US and have them pay taxes. At least this will help with dealing with deficit.

    So the fact that people from 3rd world countries are moving to the US – is a good sign. It means that jobs are still here in the US.

  17. 17
    Sniglet says:

    deflation is old news. we just had deflation like we’ve never seen in awhile. we aren’t going to have it again.

    Deflation has only just begun. We have a long way to go before inflation becomes a problem, and asset prices will easily fall 80% from peak before all is said and done. Just look at what is happening with t-bills: yields are near all-time lows. The historic drop in yields is a flashing light that asset prices are going to fall. If yields on treasuries were rising (for more than a month or so at a stretch) I would say that deflation might indeed have run it’s course, but this is not the case.

    I wouldn’t be surprised to see the yields on 30 year treasuries drop to 2% in the next couple years.

    That said, the yields on any debt not guaranteed by sovereign governments (excepting nations which borrow in foreign currencies) is likely going to skyrocket. Municipal and corporate bonds are likely going to see their interest rates shoot to the moon as investors flee to percieved safety.

  18. 18
    Scotsman says:

    This could be big: Feds rethink policies that encourage home ownership:

    “Just how much should Uncle Sam do to help Americans buy their own homes?
    For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes.

    Now, policymakers are pausing to reconsider. In the next few months, they’ll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.

    The rethink could mean a shake-up for a mortgage market addicted to government subsidies”

    http://www.usatoday.com/money/economy/housing/2010-08-11-housing11_cv_N.htm

  19. 19
    Trigger says:

    RE: Scotsman @ 18 – This would be wrong. Prices could go down. I think if the Feds want to inflate the prices they need to introduce new stimulus, employ everybody who wants a job, create a sense of security, get the tax credits on top of this. You need to throw anything you have at the problem.

  20. 20
    Matthew says:

    We are in the beginning stages of a deflationary spiral unlike anything the world has seen since the Great Depression.

    The Fed has issued credit left and right and the 10 yr yield is below 2.7%. Game over. Debt to GDP ratio approaching the point of no return. Hug the ones you love.

  21. 21
    Trigger says:

    RE: Matthew @ 20 – Remember that there is a last resort which is flat out printing. Get those presses rolling ASAP. The Feds can create an inflation scenario anytime they choose to do so.

  22. 22

    RE: Trigger @ 16

    LOL

    What jobs paying taxes? Your’s and mine?

    You open border zealots are the laughingstock of the rest of the world.

    http://www.numbersusa.com/content/nusablog/beckr/august-9-2010/uscanada-are-last-remaining-developed-nations-giving-birthright-citizen

    And legal/illegal uncontrolled population increases in America is not European, its mostly south of the border. Albeit, you could call that originally from Spain….LOL

  23. 23
    Scotsman says:

    RE: Trigger @ 19

    A home is a right, just like food and medical care. We should have Benny B give each of us a voucher worth $150,000 to spend on a home. Then have the government take all the existing homes (paying the owners fair market value) and put them up for sale with the new system. Existing owners have the first right of refusal. This will not only make sure everyone has a home, it will also put a lot of newly printed cash into the system. Problem(s) solved!

  24. 24
    pfft says:

    By softwarengineer @ 13:

    RE: pfft @ 11
    Its gonna be a convoluted witches brew we’ve never seen before, with twists and turns, no man can predict:

    Currently, oil and food are “sky-rocketing” in price [milk’s, meat’s, etc up 50% the last couple months],

    can you source that? oil have traded in a range for a year. it’s $4 off it’s high right now.

    the milk prices are up slightly.

    http://www.suntimes.com/business/currency/2581860,CST-NWS-BREAKFAST10.article

  25. 25
    Trigger says:

    RE: softwarengineer @ 22 – There is no difference where this population is coming from whether it is from Africa, Asia, America, Europe or Australia. The key is to open the borders to 3rd world countries. Europe did it and no disaster happened. So Western Europe gets all new labor from 3rd world countries and does not even ask for any formalities like work permits. People roll in and just get jobs. Then they become happy. It is that easy. You can do the same with Mexico. After you open up the border – lots of people will move in. Then there will be a new equilibrium. Wages may go down a bit in the US which will make it more competitive. Employers in the US will be happy. Europe did the same and nothing happened. You can open your border to 3rd world countries.

    The US would also do better if it helped countries like Mexico to stop being a 3rd world country. It is easy. Mexico should adopt US laws – maybe have some say in US congress about laws. Have the same structure as the US. And it will thrive. In fact this will probably slower the inflow of new immigrants altogether.

  26. 26
    Trigger says:

    RE: Scotsman @ 23 – I think if we need to cross this bridge – we will do it. I doubt the US govt will allow itself to be under printed. We will not allow this. We will prevail and we will get the presses cranking.

  27. 27
    pfft says:

    By Matthew @ 20:

    We are in the beginning stages of a deflationary spiral unlike anything the world has seen since the Great Depression.

    you were right if you said that in 2008, not now.

  28. 28
    David Losh says:

    Of course you don’t understand the over all economy has to do with corporate profits. You all keep talking like you don’t have a vested interest in what Wal Mart, or BP, or General Electric bring to the stock market.

    Profits are the watch word. The government is non profit.

  29. 29
    biliruben says:

    http://seattletimes.nwsource.com/html/localnews/2012598460_homebuilder12m.html

    Street of Dreams builder guilty of pocketing 600K of sales tax.

    I think the odds of him torching those homes just jumped up higher than 60%. I wonder how careful an investigation occurred?

  30. 30

    RE: biliruben @ 29 – It’s very common for businesses that are in trouble to collect sales tax and not pay it over to the state. The state is the least squeaky wheel when it comes time to pay creditors.

    The thing is though, it’s the first thing they should pay. This liability is non-dischargeable in bankruptcy, no matter how old the liability is, and it even passes through to the individual if a corporate entity is involved.

  31. 31
    Sniglet says:

    RE: Trigger @ 21

    Remember that there is a last resort which is flat out printing.

    This is true, but impossible in practice. Yes, the government could decide to print whatever quantity of currency necessary to stop deflation. Unfortunately, such a crude mechanism of monetary policy can’t be controlled in a modern economy. The minute the US government started printing money (of either the physical or digital variety), there would be hyper-inflation and the US dollar would be almost worthless overnight.

    I am not exagerating. There would be almost no lag time between the start of “printing” and the collapse of the currency. This means that a decision to start the printing presses is synonymous with a decision to instantly destroy the currency. The thing that most “inflationists” fail to understand is that printing money is not some gradual process, where policymakers can just decide to print ONLY the amount necessary to stave off deflation. Instead, just starting up the printing press will instantaneously send a signal to anyone holding US dollars and bonds that they had better dump them NOW, for whatever they can get. The global digital markets would facilitate the liquidation of dollars at an incredible rate.

    This wouldn’t be a process of slow devaluation like Germany saw in the 1920s, where hyperinflation gathered strength for years. No, this would be hyperinflation within 24 hours.

    Anyone who thinks that printing money is a viable option to prevent deflation, just ask themselves this: why hasn’t it already been done? If it’s so easy to “print” money, and fine-tune the press such that only the RIGHT amount of cash is created, then don’t you think that the policy makers would have already done it? Heck, Japan has been complaining about deflation for 20 years and they still haven’t turned on the printing press.

    We see central banks doing all kinds of strange things, like quantitative easing and debt monetization, but these are NOT the same thing as printing cash, and as we can clearly see they don’t stop deflation.

    It is hard for me to see how any policy maker would percieve the instanteous end of the dollar as a currency will be better for their careers than living with the severe pain of deflation. Will voters really thank the politicians that decided to kill the dollar?

    We might very well reach the point where deflation is SO bad that the nation would actually support the abolishment of the currency, but we aren’t anywhere close to that point yet. Just think how much all the voters who still have money in the bank would scream if their savings were worthless tomorrow?

  32. 32
    biliruben says:

    RE: Kary L. Krismer @ 30

    All that being true, Kary, I still think the fact that he was having money troubles makes the “ELF” fire much more suspicious, with suspicion pointing towards the builder who was unable to unload his monstrosity.

  33. 33
    David Losh says:

    RE: Sniglet @ 31

    Cash, and cash positions, would be wiped out. All those reserves, all those profits, all of those available funds, would be dead. The only thing left standing would be worthless assets, because there would be no viable use for them, except to house the poor.

    There are easier, more practical, ways to destroy wealth.

  34. 34

    By biliruben @ 32:

    RE: Kary L. Krismer @ 30

    All that being true, Kary, I still think the fact that he was having money troubles makes the “ELF” fire much more suspicious, with suspicion pointing towards the builder who was unable to unload his monstrosity.

    That “ELF” fire seemed a little suspicious to me from the get go.

  35. 35

    By biliruben @ 32:

    RE: Kary L. Krismer @ 30

    All that being true, Kary, I still think the fact that he was having money troubles makes the “ELF” fire much more suspicious, with suspicion pointing towards the builder who was unable to unload his monstrosity.

    Whaddya mean “monstrosity”? Those things only weighed in at 4500-6500+ sq ft.

  36. 36

    By biliruben @ 32:

    RE: Kary L. Krismer @ 30

    All that being true, Kary, I still think the fact that he was having money troubles makes the “ELF” fire much more suspicious, with suspicion pointing towards the builder who was unable to unload his monstrosity.

    That could be, I don’t know. But it reminds me of a fairly bad joke an attorney told me when I was just starting bankruptcy. The punch line was: “How did you start a volcano?”

  37. 37
    WestSideBilly says:

    http://www.nytimes.com/2010/08/11/greathomesanddestinations/11gh-what.html

    http://www.redfin.com/WA/Seattle/2929-1st-Ave-98121/unit-1001/home/64999

    Great representation for Seattle. A gaudy 949 sq ft condo with mirrored walls and $521/month HOA dues, presumably to pay for the crappy “gym”. Should help persuade people to never move here.

  38. 38
    biliruben says:

    RE: Kary L. Krismer @ 36

    Heh.

  39. 39
    David Losh says:

    RE: WestSideBilly @ 37

    That’s a lot of money for a place in Phoenix.

  40. 40
    pfft says:

    By Sniglet @ 31:

    RE: Trigger @ 21
    We might very well reach the point where deflation is SO bad that the nation would actually support the abolishment of the currency,

    I don’t think you know what deflation is. deflation is when money becomes more valuable not less.

  41. 41
    David Losh says:

    RE: Scotsman @ 18

    You mean profits.

    There is a return on investment if people pay, there just isn’t any profit in that.

    In this case, yes, government should just regulate, over sight, and keep a boot on the throat of banks to make them fulfill the promise of 30 year loans, or longer, whatever it takes, to clear the balance sheets without default.

    You see the government has already done it’s part. Banks want to renegotiate the deal. The banks want bail out, and welfare, and hand outs. The banks, and financial markets, have all the money, they just want more profit.

    If Obama is smart he will leave the problem to the banks, and financial markets, let them default, let them go broke.

    I’m kind of hot about this profit motive concept. It’s making less, and less sense to me as the days go on. Where did American business, that even in bad times, get the idea that huge profits were just a God given right? Why does the rest of the economy have to suffer, so a bunch of back stabbing morons get to have million dollar salaries, and protected bonuses, based on huge profits?

  42. 42
    Sniglet says:

    RE: pfft @ 40

    I don’t think you know what deflation is. deflation is when money becomes more valuable not less.

    It also means that assets become worth much less in terms of currency, and that debt obligations become far greater since earnings (personal, corporate, and government) are lower. Debt is easy to repay if your income keeps rising with inflation. However, when your income keeps shrinking yet your debts remain the same, life isn’t fun anymore.

  43. 43
    Scotsman says:

    RE: WestSideBilly @ 37

    All it needs is the colored lights and a disco ball.

  44. 44
    Scotsman says:

    RE: David Losh @ 41

    “If Obama is smart he will leave the problem to the banks, and financial markets, let them default, let them go broke.”

    Agree- but he won’t, he’s in their pockets and burrowing deeper as we speak.

    “I’m kind of hot about this profit motive concept. It’s making less, and less sense to me as the days go on. Where did American business, that even in bad times, get the idea that huge profits were just a God given right?”

    I think we need to separate out banking from the rest of American business. It seems to me the vast majority of the issues we’re dealing with relate to banking, not the service or manufacturing industries. I’ve never thought profit was bad, but the current positions of the banks and those like Goldman are completely unsupportable. You’re right- they got the advantages they wanted from the government, abused them, and then came crying when things went bad. That’s not the way it should work. The politicians of all parties should be ashamed- and replaced.

  45. 45
    Scotsman says:

    RE: Sniglet @ 42RE: pfft @ 40

    And keep in mind “Trigger” has a nasty sarcastic streak in many of his posts. . .

  46. 46
    Scotsman says:

    Abandon Ship! This sucker’s going down!!

    “According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It’s a point from which it’s almost impossible to return.”

    “Commerce will revise down Q2 economic growth from the already-sluggish 2.4% annual rate to about 1%”

    “Government economists had expected the deficit to widen but the June data surprised everyone. The report was “spectacularly terrible,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.”

    “It’s unprecedented” that such a historically low rate has failed to incite buying or refinancing stampedes”

    “The pace of recovery in output and employment has slowed in recent months,” the Fed said in its statement. It said while it still expects the economy to grow, the improvement will be “more modest in the near term than had been anticipated.”

    http://hotair.com/archives/2010/08/11/quotes-of-the-day-423/

  47. 47
    David Losh says:

    RE: Scotsman @ 44

    Chevy Volt at $41K, in a recession, with a bail out. Price per barrel of oil rising with only a hint of a drop in supply. A dozen crappy products out of Microsoft, delays related to production at Boeing, and all the while worker productivity is maxed.

    New technology every other week in telephones, iPad, iPod, Blackberry, and Droids. You gotta have ’em. Trade deficit means products from China, maybe lower margins, but most definitely higher profits.

    Here’s what I’m talking about in terms of profits for American business. General Electric is my favorite, what do they do? Could you even separate them out from banking? Well, no you can’t, but never mind. My point is we hear General Electric, and we think light bulbs, appliances, or toasters. General Electric sells the brand name, but the products are Korean, or Chinese, or Malaysian, or Mexican, or where ever they are cheapest. Ralph Lauren, the same, Ford, Panasonic, Best Buy, Wal Mart, or another American favorite Craftsman Tools for Sears, where America shops.

    You can take any American business and it’s the same, cut to the bone, and expecting the work force to carry the load, while some idiot bean counter figures out how to maximize profits, and it’s easy to do.

  48. 48

    RE: David Losh @ 47 – I don’t think you know what GE does. They were even going to get out of the appliance business a couple of years ago, because it was so insignificant. Not sure, but I don’t think they ever carried through on that. But they certainly are not mainly light bulbs and toasters.

  49. 49
    David Losh says:

    RE: Kary L. Krismer @ 48

    Not the point, the point is brand recognition.

  50. 50
    pfft says:

    By Scotsman @ 44:

    RE: David Losh @ 41

    “If Obama is smart he will leave the problem to the banks, and financial markets, let them default, let them go broke.”

    Agree- but he won’t, he’s in their pockets and burrowing deeper as we speak..

    thank god obama and bush didn’t let things go out of control.

    The U.S. response to the financial crisis probably prevented a depression, slowed a decline in gross domestic product and saved about 8.5 million jobs, economists Alan Blinder and Mark Zandi said.

    Blinder, Zandi Say U.S. Bailouts Likely Averted a Depression
    http://www.bloomberg.com/news/2010-07-28/blinder-zandi-say-u-s-bailouts-likely-averted-a-depression.html

  51. 51

    RE: David Losh @ 49 – I really don’t think this is bought based on brand recognition:

    http://www.geae.com/engines/index.html

  52. 52
    pfft says:

    By Scotsman @ 46:

    Abandon Ship! This sucker’s going down!!

    “According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. Itâ��s a point from which itâ��s almost impossible to return.”

    wrong wrong wrong.

    Bad Analysis At The Deficit Commission
    http://krugman.blogs.nytimes.com/2010/05/27/bad-analysis-at-the-deficit-commission/

    More On Reinhart-Rogoff
    http://krugman.blogs.nytimes.com/2010/07/22/more-on-reinhart-rogoff/?scp=5&sq=rogoff&st=cse

    it’s beyond dumb to thing there is some magic debt level where things go haywire.

  53. 53
    Scotsman says:

    RE: pfft @ 52

    Is Krugman now the lone wolf for your side ofthe argument? Isn’t there anyone left who agrees with him? Every time I see his name I think of Micky Mouse. . .

  54. 54
    Scotsman says:

    RE: Kary L. Krismer @ 48

    Stange, huh? GE is not much more than a finance company. IBM makes most of its money from real estate. Change is everywhere.

  55. 55
    pfft says:

    By David Losh @ 47:

    RE: Scotsman @ 44
    Here’s what I’m talking about in terms of profits for American business. General Electric is my favorite, what do they do? Could you even separate them out from banking? Well, no you can’t, but never mind.

    actually it’s really easy to separate out the banking business. you just run the numbers. anyway the company/financial division has tens of billions of dollars now in cash.

  56. 56
    pfft says:

    By Scotsman @ 54:

    RE: Kary L. Krismer @ 48

    Stange, huh? GE is not much more than a finance company. IBM makes most of its money from real estate. Change is everywhere.

    if by not much more than a finance company you mean one of the largest industrial companies in the world you are right. the finance division is less than 50%.

  57. 57
    Scotsman says:

    Ray is right: Debts Rise, and Go Unpaid, as Bust Erodes Home Equity.

    “Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and the collateral in the homes backing the loans has often disappeared.

    The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.”

    http://www.nytimes.com/2010/08/12/business/12debt.html?_r=1

  58. 58
    pfft says:

    By Scotsman @ 53:

    RE: pfft @ 52

    Is Krugman now the lone wolf for your side ofthe argument? Isn’t there anyone left who agrees with him? Every time I see his name I think of Micky Mouse. . .

    it’s hilarious that every meme you post I’ve already read about 3 days before on krugman’s blog. you’re slipping because I had to search for this one.

  59. 59
    Scotsman says:

    RE: pfft @ 56

    Wrong again: (and again, and again, and again. . . )

    “Since over half of GE’s revenue is derived from financial services, it is arguably a financial company with a manufacturing arm. It is also one of the largest lenders in countries other than the United States, such as Japan. ”

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

  60. 60
    pfft says:

    By Scotsman @ 59:

    RE: pfft @ 56

    Wrong again: (and again, and again, and again. . . )

    “Since over half of GE’s revenue is derived from financial services, it is arguably a financial company with a manufacturing arm. It is also one of the largest lenders in countries other than the United States, such as Japan. ”

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

    that was before the crisis. I’m pretty sure it was never more than 40% of it’s revenue. ge capital has shrunk since the crisis.

    again and again…

    the latest news on the profit front is GE capital earned about $700 million of the $3.1 billion.

    After a two-year decline, GE recovers its profit growth
    GE Capital swings to a pretax profit, but CEO plays it safe with the dividend
    http://www.marketwatch.com/story/ge-profit-up-16-as-ge-capital-recovers-2010-07-16

    EDIT: there also isn’t a source for that claim which is why I didn’t post it but you did. funny how that works.

  61. 61
    Trigger says:

    RE: Scotsman @ 53
    Scotsman – So you do not agree with a Nobel Prize winner in economics? He is also a professor at Princeton University. Princeton is a pretty damn good school BTW.

  62. 62
    The Tim says:

    RE: Trigger @ 61 – That sounded sarcastic (tone is so hard to read on the internet), but just in case it wasn’t… http://en.wikipedia.org/wiki/Argument_from_authority

  63. 63
    David Losh says:

    RE: pfft @ 55RE: pfft @ 60

    “anyway the company/financial division has tens of billions of dollars now in cash.”

    Profit, and then this, as I thought it might; GM posts $1.33 billion profit, a sign of strength!
    General Motors Co. said Thursday it made $1.33 billion in the second quarter, a sign it’s getting healthier as it prepares to sell stock to the public.

    Now General Motors is going to sell stock based on profit. Never mind the lagging market, or that $41K for a toy car is ridiculous. Investors will buy profits like they are a God given right for American business to have. Never mind the bail out of tax dollars, GM is the American way to go, and it has profit.

    It’s all a pile of sand. Cash reserves, cash positions, profits, won’t get the job done. Circulation of currency is what makes the economy go around.

    In Europe they are waiting for the consumer to start spending again, what a crock. Europeans are burdened with more tangible debt than we are.

    We, Americans, have a life style based on debt, leverage, upward mobility, and a massive middle class. Europe is a different culture, who has been introduced to the American way of doing business, but they have a true class glass ceiling. They are two generations away from monarchies, the ones we fought, but I think we are kind of headed back to.

    Then we have Third World, or Second World countries that are living crisis to crisis. I heard a report on Tuesday that listed disaster relief statistics. They were talking about individuals who contributed as the “contribution” class of people.

    Money needs to circulate. The wealthy, will, in these next five years, become so entrenched, and powerful, that the global economy may never recover.

    I think we have come into a class struggle where some of the promises made to the “middle class” about their boot straps, and upward mobility are turning out to be scams.

  64. 64

    RE: pfft @ 60 – Does “revenue” include repayment of principal? If so that would severely distort the numbers. In any event, I’d look more at income.

  65. 65
    David Losh says:

    RE: Kary L. Krismer @ 51

    GE is a defense contractor. http://dailyradar.com/beltwayblips/story/obama-helps-strengthen-general-electric-putin-ties/ and http://www.globalsecurity.org/military/industry/top100.htm
    and out of the top three most use General Electric components.

    General Electric is comparable to Haliburton which is your tax dollars at work.

    However, in Real Estate, new construction, kitchens are referred to by appliances, on occasion. Viking appliances indicate a higher grade of kitchen, while GE appliances are regarded as cheap. Even the fact GE is in the appliance business could be another topic.

  66. 66

    I was sitting through the Chapter 13 calendar up in Marysville yesterday, and on a number of cases the creditor was waiting for the debtor to complete a loan modification process. I view this as a good sign for a couple of reasons. First, some of the loan modification programs initially proposed weren’t open to people who had filed bankruptcy. That was absurd because it meant they were excluding the people who would be likely best able to successfully deal with a modified loan. Second, the banks have been very opposed to legislation allowing so-called “cramdown” of mortgages in Chapter 13. Apparently they aren’t opposed to modification altogether once the debtor is in Chapter 13.

  67. 67

    RE: David Losh @ 65 – As I mentioned, a couple of years ago they were talking about getting out of appliances altogether.

    Another thing GE does in the real estate business is make the Supra lockboxes that agents use to access the keys to houses.

    And finally, one of my favorite local company names is Major Electric. ;-)

  68. 68
    Matthew says:

    The FED issues credit, it doesn’t print anything. People should really attempt to understand the difference. The U.S. Treasury prints our cash, and last I checked, there are no more physical Benjamins floating around the system then previous to 08 or any other year.

    The attempts so far of the FED to issue credit to stave off deflation hasn’t worked. Have you checked CPI lately? What inflation is everyone concerned about? Wage inflation? Nope. Price inflation? Nope. Expansion of M3? Nope.

    To bet on inflation is to bet on some sort of economic recovery and the banks to start lending money again. That is not going to happen. The banks are saving their cash because they know their balance sheets are full of garbage assets that they are eventually going to have to pay down.

  69. 69
    Scotsman says:

    RE: Matthew @ 68

    Stop it, Matthew- we are now well beyond facts on this blog. We are divided by our loyalty to the every word of leftist wing-nut political tools posing as economists backed by our own fantasy desires, and those who are simply “wrong.” You would fit into the latter category. Any attempt to work with logical, proven concepts (as opposed to frequently disproved, incomplete Keynesian theory) will be met with an onslaught of recent NYT Krugman columns and out of date Huffington Post opinion pieces.

  70. 70
    Dirty_Renter says:

    RE: David Losh @ 47

    …might want to scratch Panasonic from that list.

  71. 71

    RE: Scotsman @ 69
    Actually, it seems to me that there are three rather than two voices predominant here:
    1. The ranting liberals
    2. Those who don’t inject a lot of politics but are labeled wrong for actually using facts, and
    3. Those who answer almost every single blog post on any issue with ” The government is the cause of every problem I’m faced with including acne, and the free market will cure everything, including acne and my liberal girlfriend.”

  72. 72
    One Eyed Man says:

    RE: Matthew @ 68

    I think you might be over simplifying the issues Matthew. Printing doesn’t necessarily mean printing paper money. FOMC open market activities are often referred to as “printing.” And the affect of open market actions by the FED to stop deflation in 2009 is evident if you check the FED’s announcement in Feb of 2009 that it would purchase 1.6T of GSE debt and Treasuries with what happened to the CPI and the dollar index at that time.

    http://www.kathylien.com/site/bernanke/how-does-the-fed-%e2%80%9cprint-money%e2%80%9d

    The issue that Krugman and others raise when they demand more stimulus is worthy of more debt that some would realize. I’m not in favor of more stimulus, but its not an easy call. Those who claim more stimulus is needed are those who believe that the additional debt is less of a danger than the risk of a deflationary spiral or a Japan style liquidity trap. They argue that if you wait too long to use stimulus, the negative sentiment in the economy becomes too great for the stimulus to incease demand on a continuing basis and that the psychological issue is more important to demand and consumption that the other issues because a change in psychology (animal spirits, so to speak) will preceed a change in things like employment.

  73. 73
    Cheap South says:

    I might be missing something here; but none of today’s Redfin updates are showing price history or the location map at the bottom.

  74. 74

    RE: One Eyed Man @ 72 – Most money isn’t even money! :-D

  75. 75
    Matthew says:

    One Eyed,

    Yes, it may be a simplistic explanation but many people think that the Fed is just creating money out of nothing. That is simply not true. They are issuing credit in EXCHANGE for collateral. Sure, the collateral may be worthless MBS (or not nearly worth what they are paying for it). Yes they are expanding their balance sheet, but eventually the Fed has to do something with the 1.5 trillion or so in MBS that it owns. They realize this, and that is why they are stuck between a rock and a hard place. Sure they can expand their balance sheet, maybe even double it, but that would mean taking on additional risk, that at some point, they are going to have to do something about. They are going to have enough of a problem finding a private sector appetite for what they have already swallowed, much less finding one for additional garbage. And what is going to happen to the MBS they already own if rates rise?

    In terms of additional stimulus, that would be coming from Congress and not the Fed. The Fed is out of options at this point, their recent move is just delaying the inevitable.

    Lights out.

  76. 76
    Scotsman says:

    RE: Ira Sacharoff @ 71

    There’s a “cure” for liberal girlfriends? Are we sure one is needed- the cure, that is? Aren’t they supposed to be every acne-burdened boy’s dream date?

  77. 77
    Scotsman says:

    RE: Matthew @ 75

    “, but eventually the Fed has to do something with the 1.5 trillion or so in MBS that it owns. ”

    Oh stop it! You’re squashing the dream, extinguishing the inner light. . .

  78. 78

    By Scotsman @ 76:

    RE: Ira Sacharoff @ 71

    There’s a “cure” for liberal girlfriends? Are we sure one is needed- the cure, that is? Aren’t they supposed to be every acne-burdened boy’s dream date?

    Yes. Every acne-burdened boy would be happy with a liberal girlfriend, or any girlfriend for that matter. But he’d be much happier if she fawned all over him when he quoted Milton Friedman.

  79. 79
    Matthew says:

    Sometimes you have to blow someone else’s candle out to make yours burn a little brighter ;)

  80. 80
    jj says:

    RE: Ira Sacharoff @ 71

    made my morning.
    thanks.

  81. 81
    pfft says:

    By Matthew @ 68:

    To bet on inflation is to bet on some sort of economic recovery and the banks to start lending money again. That is not going to happen. The banks are saving their cash because they know their balance sheets are full of garbage assets that they are eventually going to have to pay down.

    1. when everyone is worried about something it won’t happen. everyone is worried about deflation right now. it’s not going to happen. a few months ago everyone was worried about rising interest rates, rising mortgage rates once the Fed got out of the intervention game and inflation. months later we are all worried about deflation.

    2. the rest of the world can drive up inflation through growth.

  82. 82

    By pfft @ 81:

    2. the rest of the world can drive up inflation through growth.

    Particularly through the use of oil and driving up its price. Not all inflation is true inflation (demand driven).

    So, to recap, not all money is money, and not all inflation is inflation.

  83. 83
    jj says:

    credit suisse analysis (7/16/2010) of GE core businesses give “estimated 2010 revenues” as follows:
    Technology infrastructure – 36.9B
    Energy infrastructure – 38.7B
    NBC Universal – 16.6B
    GE Capital – 48.6B
    Home and Business – 8.8B
    Consolidated revenues – 152.2B

    As far as profit, GE Capital accounts for 3.0B of 17.5B in “estimated 2010 profits.”

    In my experience, Credit Suisse is never off by more than a few billion in its estimates… ;)

  84. 84
    pfft says:

    By Scotsman @ 69:

    RE: Matthew @ 68

    Stop it, Matthew- we are now well beyond facts on this blog. We are divided by our loyalty to the every word of leftist wing-nut political tools posing as economists backed by our own fantasy desires, and those who are simply “wrong.” You would fit into the latter category. Any attempt to work with logical, proven concepts (as opposed to frequently disproved, incomplete Keynesian theory) will be met with an onslaught of recent NYT Krugman columns and out of date Huffington Post opinion pieces.

    keynes wasn’t disproved. I don’t know where you get that from. do you have a source? the only reason we didn’t run a surplus during the bush years was because he gave tax cuts to the wealthy and didn’t pay for them. if you don’t like being proven wrong by a certain economist stop posting erroneous things.

    in asia they are bragging about the stimulus. they had austerity in the late 90s and want no part of it.

    Keynes In Asia
    http://krugman.blogs.nytimes.com/2010/07/24/keynes-in-asia/

    btw krugman predicted when it passed that the stimulus was too small and he was right.

  85. 85
    pfft says:

    By Matthew @ 75:

    One Eyed,

    Yes, it may be a simplistic explanation but many people think that the Fed is just creating money out of nothing. That is simply not true. They are issuing credit in EXCHANGE for collateral. Sure, the collateral may be worthless MBS (or not nearly worth what they are paying for it). Yes they are expanding their balance sheet, but eventually the Fed has to do something with the 1.5 trillion or so in MBS that it owns. They realize this, and that is why they are stuck between a rock and a hard place. Sure they can expand their balance sheet, maybe even double it, but that would mean taking on additional risk, that at some point, they are going to have to do something about. They are going to have enough of a problem finding a private sector appetite for what they have already swallowed, much less finding one for additional garbage. And what is going to happen to the MBS they already own if rates rise?

    In terms of additional stimulus, that would be coming from Congress and not the Fed. The Fed is out of options at this point, their recent move is just delaying the inevitable.

    Lights out.

    couldn’t they just let the MBS run out and with the proceeds go back to holding what it held before the crisis. when the mortgages are paid off they are paid off. you just buy something else with the money.

  86. 86
    pfft says:

    By jj @ 83:

    credit suisse analysis (7/16/2010) of GE core businesses give “estimated 2010 revenues” as follows:
    Technology infrastructure – 36.9B
    Energy infrastructure – 38.7B
    NBC Universal – 16.6B
    GE Capital – 48.6B
    Home and Business – 8.8B
    Consolidated revenues – 152.2B

    As far as profit, GE Capital accounts for 3.0B of 17.5B in “estimated 2010 profits.”

    In my experience, Credit Suisse is never off by more than a few billion in its estimates… ;)

    thanks.

  87. 87
    One Eyed Man says:

    By Scotsman @ 53:

    RE: pfft @ 52

    Is Krugman now the lone wolf for your side ofthe argument? Isn’t there anyone left who agrees with him? Every time I see his name I think of Micky Mouse. . .

    RE: Scotsman @ 69

    When it comes to Krugman and stimulus, how about this quote.

    “Thus, dealing with this deadly combination of deflation, liquidity traps, debt deflation and defaults that I termed as global stag-deflation may be the biggest challenge that U.S. and global policy makers may have to face in 2009. It will not be easy to prevent this toxic vicious circle unless the process of recapitalizing financial institutions via temporary partial nationalization of them is accelerated and performed in a consistent and credible way; unless such actions are combined with massive fiscal stimulus to prop up aggregate demand while private demand is in free fall;”

    Gee, that sounds like a plea for more stimulus doesn’t it. OH, Wait, that isn’t Krugman, that’s Nouriel Roubini, but he’s a democrat too so we can just lump him in with the fools of the world.

    http://tickerforum.org/cgi-ticker/akcs-www?post=72498

    And besides, that quote was back in 2008 when the world was coming to an end. Clearly Roubini wouldn’t be calling for more stimulus now would he? Oh gosh, I guess as recently as a month ago he was. In a July 15, 2010 interview with the Economist, Roubini said he wanted additional stimulus to the states for their budgets and for unemployment benefits.

    “Well, I would like to see first of all the fiscal stimulus to be maintained in the short run. We need to extend those unemployment benefits, help the state and local government.

    . . . . Revenues are collapsing and they are going to be forced to cut even essential spending on education, on teachers, firefight, policemen, and therefore the federal government should be providing a little more of a fiscal stimulus in a number of way to state and local government. ”

    http://findarticles.com/p/news-articles/analyst-wire/mi_8077/is_20100714/economist-nouriel-roubini-talks-stimulus/ai_n54460782/pg_2/?tag=content;col1

    But to be accurate, Roubini also calls for fiscal austerity and debt reducton in the medium term. The stimulus Roubini desires is limited in both amount and duration and balanced against the need to reduce deficits in the medium term.

    I’m not going to tell you that Pfft is always right, but maybe the issues aren’t as one sided as you would paint them Scotsman. Krugman isn’t all alone, and Pfft isn’t the idiot you allege him to be.

  88. 88
    Matthew says:

    Pfft,

    They are using the interest and principle from their MBS holdings to buy long term T’s. Their MBS loan portfolio isn’t going to expire for a LOOOONG time. I doubt the FED wants a 1.5 trillion dollar MBS portfolio on their hands once interest rates start heading up.

  89. 89
    Matthew says:

    One thing that Keynesians leave out of the discussion, you are supposed to SAVE money during the boom times, and use the SAVINGS to stimulate the economy during economic contractions.

    We are using saved money, we are using debt. We pay interest on the debt. Would you take on more debt in order to pay off debt you had already accumulated? Doesn’t make a lot of sense does it? The M1 money multiplier is below 1.0. Any money we are throwing into the economy at this point is not coming back to us in a 1 to 1 ratio. In fact, the more debt we spend at this point, the bigger the hole we dig. We’d be better off purging the bad debt from the system right now and starting anew. However, we don’t want to face the music so we just keep digging and digging. Down the rabbit hole we go.

  90. 90
    Scotsman says:

    RE: One Eyed Man @ 87

    The time for stimulus has passed. It isn’t working. It won’t work if we try more. And since all of it is being paid for with new debt, not savings as Keynes proposed, the long term consequences are negative. You should be smart enough to figure that out. We are passed the point where all of the new stimulus generated growth just goes to paying the interest on the new debt. Now it drags everything down to even lower lows. Krugman et al know this, but the power to give the money is what they seek. So no, Krugman is not right, Pfft is not right, and you are not right in thinking there is anything left to accomplish with stimulus except income redistribution and power grabbing.

  91. 91
    Matthew says:

    Sorry, should read “aren’t using saved money” not are

  92. 92

    RE: Matthew @ 89 – I don’t think that’s necessarily a valid distinction, but they wouldn’t support deficit spending good times and bad, which is what we’ve had most of my life.

  93. 93
    One Eyed Man says:

    RE: Matthew @ 75

    I certainly wouldn’t dissagree that there are limits to the effectiveness of quanitative easing, but quantitative easing can be stimulus. Stimulus isn’t just limited to congressinal spending. And as too when and whether the Fed sells Treasuries and GSE debt there’s an old saying, “timing is everything.” With the exception of the issues named below, there’s nothing keeping the Fed from holding the paper to maturity or buying more until they feel the economy is on better footing. The reasons for not taking those actions relate primarily to the risks concerning long term inflation and damage to the dollar.

    As to blowing out candles,

  94. 94
    Matthew says:

    If you have a giant turd clogging your toilet, would you first remove the turd and flush it, or would you simply pour more water in the bowl?

  95. 95
    One Eyed Man says:

    RE: Scotsman @ 90

    I’m not personally in favor of more stimulus. But to say that Pfft and Krugman are alone in the dark isn’t factually correct. Even Roubini was in favor of limited additional stimulus in the short term.

    As to whether the stimulus worked, there is no way to measure that because you can’t tell what would have happened without it. It certainly didn’t create a V shaped recovery, but it might have kept the economy from a deflationary spiral and extended depression. Clearly its not over and we could still fall into substantial deflation and depression. We’ll see.

  96. 96

    RE: One Eyed Man @ 95 – I’ve come to the conclusion that for stimulus to work it has to be quick and massive, because the public doesn’t have the patience or the understanding to allow for prolonged stimulus. Doing too little or going too slow simply leaves you with the burdens of the spending and not enough benefit.

  97. 97
    One Eyed Man says:

    RE: Matthew @ 94

    I prefer to use the plunger to solve the problem rather than removing the turds by say, bobbing for them like apples. For now I’m trying to stick to my new no turd diet, but its hard because so many of my friends tell me to eat sh__.

  98. 98
  99. 99

    By Matthew @ 94:

    If you have a giant turd clogging your toilet, would you first remove the turd and flush it, or would you simply pour more water in the bowl?

    Neither. You appoint a blue ribbon subcommittee on toilet clogs to study the matter, and to find other toilets that have giant turds clogging them. Send these committee members all over the world to find where toilets are clogged, and make sure they stay in five star hotels.. It’s very draining studying turds, and the committee members need a lot of rest and recovery time.

  100. 100
    One Eyed Man says:

    RE: Kary L. Krismer @ 98

    Just for the record, I was no where near South Seattle on Sunday night.

  101. 101
    Scotsman says:

    $30 billion lost as sellers cut prices on homes currently for sale:

    http://www.reuters.com/article/idUSTRE6783N820100811

  102. 102
    The Tim says:

    By Cheap South @ 73:

    I might be missing something here; but none of today’s Redfin updates are showing price history or the location map at the bottom.

    We were having issues during the first half of the day due to a major site upgrade. Things should be back to normal now. Details here: http://forums.redfin.com/t5/Website-Questions/Site-issues-on-8-12/td-p/121403

  103. 103
    Cheap South says:

    RE: The Tim @ 102

    They just came up about 2 hours ago. Thank you.

  104. 104
    deejayoh says:

    By Ira Sacharoff @ 71:

    RE: Scotsman @ 69
    Actually, it seems to me that there are three rather than two voices predominant here:
    1. The ranting liberals
    2. Those who don’t inject a lot of politics but are labeled wrong for actually using facts, and
    3. Those who answer almost every single blog post on any issue with ” The government is the cause of every problem I’m faced with including acne, and the free market will cure everything, including acne and my liberal girlfriend.”

    Ira, you left out the contingent that posts random sounding lists of non-sequitirs which may or may not contain facts – depending upon how long someone wants to spend parsing the meaning. I usually skip over those.

  105. 105
    Scotsman says:

    RE: pfft @ 85

    “couldn’t they just let the MBS run out and with the proceeds go back to holding what it held before the crisis. when the mortgages are paid off they are paid off. you just buy something else with the money.”

    Um, no. Because the whole problem is that the MBS aren’t being paid off, the underlying mortgages are being defaulted on. Someone has to make up for the loss, and it sure won’t be the Fed. Understanding this is at the core of the whole issue.

    Is Krugman now suggesting we don’t need to worry about MBS losses?

  106. 106
    wreckingbull says:

    RE: deejayoh @ 104 – Greasemonkey works wonders in the realm of cruft elimination. I find it cleans up the reading experience quite nicely.

    https://addons.mozilla.org/en-US/firefox/addon/748/

  107. 107
    BondsOfSteel says:

    RE: Ira Sacharoff @ 78

    ‘liberal girlfriend’? Do liberal girls even date conservatives? The most common ‘dealbreaker’ in The Stranger Personals is ‘republicans’. Try it… do a seach for keyword == ‘republicans’:

    http://thestranger.selectalternatives.com/gyrobase/Personals/Search

    Pages of people who’s dealbreaker is ‘republicans’. I even know a couple girls that won’t even date ‘independents’, out of suspicion that they’re closet republicans.

    BTW, I searched for ‘liberals’, but the only entry was a girl who’s dealbreaker was ‘republicans’. ‘democrats’ found 2 entries, neither relevent.

  108. 108
    Scotsman says:

    More John Stuart. This is funny- “your race card’s maxed out”. . . along with your fat card, your old card, your gay card. Time to take responsibility for our actions:

    http://pajamasmedia.com/instapundit/104496/

  109. 109
    David Losh says:

    OK, I was going to wait until the morning change, to week end open thread, but General Motors has a new CEO today!!! Another yahoo with telecommunications experience!!! He doesn’t know anything about cars, but he is white, and over sixty. Let me bring in some quotes because it is so farcical:

    “General Motors Co. chief Ed Whitacre said Thursday he’s stepping down as CEO on Sept. 1, his mission accomplished as the company reported its second straight quarterly profit.”

    Mission Accomplished!!! Have we heard that before?

    “Whitacre, 68, will be replaced by GM board member Daniel Akerson. Like Whitacre, Akerson has a background of leading telecommunications companies.”

    Perfect fit, they are golfing buddies!!!

    “Dan has been involved every step of the way,” Whitacre said. “He knows this business from a board perspective and also from personal conversations. So I think he’s absolutely the right choice.” “Akerson has served on GM’s board since July 2009. He has worked for The Carlyle Group, a Washington private-equity group, since 2003.”

    Dan Whitacre has been listening since 2009 so I don’t think you can do any better than that.

    Bob Lutz, a former vice chairman of GM who retired earlier this year, said in an e-mail that Akerson is very strong, very opinionated, not always right, and needs to work on listening skills,” Lutz said. “If he can bring himself to trust his now-outstanding senior executive group and lead rather than direct, I think he’ll do an outstanding job.”

    Uh Oh, there is an if in there!!!

    “The Treasury Department appointed Akerson to GM’s board following GM’s emergence from bankruptcy protection.”

    So we do have a vested interest in who takes over, because the United States government does own 61% of the company.

    OK you can talk Fed policy until the day you die, but American corporations are on a fools errand. We’re screwed as long as our government continues to prop up stupidity in the market place. Good God, what if people actually bought stock in this quagmire?

  110. 110
    pfft says:

    By Scotsman @ 90:

    RE: One Eyed Man @ 87

    The time for stimulus has passed. It isn’t working. It won’t work if we try more. And since all of it is being paid for with new debt, not savings as Keynes proposed, the long term consequences are negative. You should be smart enough to figure that out. We are passed the point where all of the new stimulus generated growth just goes to paying the interest on the new debt. Now it drags everything down to even lower lows. Krugman et al know this, but the power to give the money is what they seek. So no, Krugman is not right, Pfft is not right, and you are not right in thinking there is anything left to accomplish with stimulus except income redistribution and power grabbing.

    you need to post a whole lot of sources to back you up.

    let’s just start here.

    “The time for stimulus has passed. It isn’t working.”

    from the CBO.

    The CBO estimated that an increase in the GDP of between 1.4 percent and 3.8 percent by the end of 2009, between 1.1 percent and 3.3 percent by the end of 2010, between 0.4 percent and 1.3 percent by the end of 2011, and a decrease of between zero and 0.2 percent beyond 2014.[62] The impact to employment would be an increase of 0.8 million to 2.3 million by the end of 2009, an increase of 1.2 million to 3.6 million by the end of 2010, an increase of 0.6 million to 1.9 million by the end of 2011, and declining increases in subsequent years as the U.S. labor market reaches nearly full employment, but never negative.

    http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009#Congressional_Budget_Office_reports

    the multiplier for government spending in this instance is 1.5- meaning there is no way it isn’t positive.

  111. 111
    pfft says:

    By Matthew @ 94:

    If you have a giant turd clogging your toilet, would you first remove the turd and flush it, or would you simply pour more water in the bowl?

    what if you calculated you could use just enough w/o overflowing the bowl?

  112. 112
    pfft says:

    By One Eyed Man @ 95:

    RE: Scotsman @ 90

    I’m not personally in favor of more stimulus. But to say that Pfft and Krugman are alone in the dark isn’t factually correct. Even Roubini was in favor of limited additional stimulus in the short term.

    As to whether the stimulus worked, there is no way to measure that because you can’t tell what would have happened without it. It certainly didn’t create a V shaped recovery, but it might have kept the economy from a deflationary spiral and extended depression. Clearly its not over and we could still fall into substantial deflation and depression. We’ll see.

    don’t forget dean baker.

    Barack Obama’s big stimulus
    The proposed $825bn economic stimulus package will do much to get the US back on track. But it needs to be even larger
    http://www.guardian.co.uk/commentisfree/cifamerica/2009/jan/19/barack-obama-economic-stimulus

    remember krugman and baker said this when stimulus was passed. they were right.

  113. 113
    pfft says:

    By Scotsman @ 105:

    RE: pfft @ 85

    “couldnâ��t they just let the MBS run out and with the proceeds go back to holding what it held before the crisis. when the mortgages are paid off they are paid off. you just buy something else with the money.”

    Um, no. Because the whole problem is that the MBS aren’t being paid off,

    link please.

    don’t you people pay attention to the news? this was big news this week.

    Federal Reserve Board’s Statement on Agency Debt Reinvestment
    http://www.bloomberg.com/news/2010-08-10/federal-reserve-board-s-statement-on-agency-debt-reinvestment-full-text.html

  114. 114
    pfft says:

    random thought.

    do people really believe the government could spend $700 billion and not have a positive effect on an economy where people aren’t spending. who do you think is buying the bonds? it’s the people who aren’t spending! if I spent $700 billion don’t you think that would effect the economy? why is it different for the government? the answer is political ideology not facts.

  115. 115
    pfft says:

    only 34% of people surveyed think bush based tarp. 47% think obama did!

    http://pewresearch.org/databank/dailynumber/?NumberID=1057

  116. 116
    Scotsman says:

    RE: pfft @ 110

    This is embarrassing. You post a Wiki link to a Feb. 4 2009 CBO. . . PROJECTION. . of expected results from the stimulus and then try to claim PROJECTIONS as proof of what has actually happened over the subsequent 18 months?? Are you serious??

    Then you go one to essentially claim that by buying a $250K house with a $245K loan one has increased their net worth by more than $250K because of some multiplier effect?

    First, none of the CBO projections for the impact of the stimulus on either GDP or employment have been met here in the real world. The original projections for employment are so far off nobody bothers to refer to them, except as an example of government incompetence. The projections for GDP have also missed their mark and are being constantly revised- down.

    I know you don’t read Karl- it can be hard. but take a moment to try and understand what he is explaining here, then get back to us:

    http://market-ticker.org/archives/2551-How-To-Read-The-REAL-GDP-Chart.html

  117. 117
    Mikal says:

    RE: Scotsman @ 108 – You mean Jon Stewart. Your writing quite poorly. Except, like the rest of the nuts, when you do it there is no problem.

  118. 118
    Scotsman says:

    RE: Mikal @ 117

    Thank you, Mikal, for that timely correction.

  119. 119
    David Losh says:

    TARP, and the Stimulus turned out to be a waste of every bodies time. The only positive comments about it were that giving that money to huge, multi national corporations was better than doing nothing.

    We are deeper in debt, and buying the securities of other people’s losses isn’t doing any more than extending what must surely be a default.

    Spain, no better, Greece, no better, California, no better, and then let’s go down the list of multi nationals who have either been having profits, or bought by bigger multi nationals.

    We didn’t go down the GE path for nothing, they are a financial institution that takes in cash; well where is that? Where are all of these cash reserves, profits, and liquidity?

    Better yet, why is there all this discussion about what the government will or won’t do? Economy is business. If these businesses are so cash rich, where is the money?

    Saying the money is in the hands of a select few doesn’t make an economy. Something is very wrong with this picture, much more so than what happened in Japan. I’ll say it again, Japan is a rock in the ocean, with a dwindling population, that we blew the heck out of. Really, not a good comparison to today’s global economy.

    The answer will have to be something way out of the box.

  120. 120
    What's my name says:

    RE: Scotsman @ 116
    Karl is up to his usual nonsense. The strawman about people calling this a V shaped recovery is just to get the heart pumping. His real argument is buried in the tax vs. borrow paragraphs where he tells us that if you earn (sorry, I mean “output”) $20,000 and then borrow $20,000 which you spend, you have to offset the $20,000 you earned with the $20,000 loan for no real gain. He conveniently forgets to value the assets or services purchased, and says that it is the same for the government – ignoring of course that this is even less true (more untrue?) when the purpose of this government spending is to increase someone else’s “output”. I will agree that this stuff is hard to read – however, that is not the same as difficult.

    To be honest, I am looking forward to reading in the morning your disproof of Keynes and all about the giant government writeoffs of their MBS portfolio. I thought you knew something about tranches and subordination levels. That GE thing between you and pfft: pretty good stuff.

  121. 121
    Scotsman says:

    RE: What’s my name @ 120

    ” you have to offset the $20,000 you earned with the $20,000 loan for no real gain.”

    No, I think his point is you have to offset the $20K of new purchases with the $20k of debt. But it doesn’t matter- you have two $20K positives, the income and the purchased goods, and one $20k negative, the debt. You’ve expanded your balance sheet, but not your net worth when you took the loan and bought the goods.

    “the giant government writeoffs of their MBS portfolio”

    Um, that’s the point- they haven’t written them off, they still carry them at face value when the value isn’t there. (actually at something like 97% of face value) Why do you think the Fed bought them from the banks, because it was an “even-up” trade of one asset for another? No, it was because if the banks had to recognize them at actual value they would create huge losses. So the government took them over and put them in a holding pattern where we can play all sorts of fun accounting games. But eventually the losses will have to be realized, since the cash flow isn’t there to support them. Then you and I get to pay for them when the Fed sells them back to the Treasury in some as yet unimagined scheme.

  122. 122
    Scotsman says:

    RE: Mikal @ 117

    Oh, and by the way, it’s “you’re,” not “your,” when you mean to say “you are.”

  123. 123
    What's my name says:

    RE: Scotsman @ 121
    You mean to say that Karl is arguing that the economy doesn’t increase because the government’s net worth doesn’t increase? Where are we, Soviet Russia?

    I think we both know the MBS issue in the news was about money that is being paid back. What the government did for the banks vis a vis mark to market is an entirely separate issue. Market price in a panic is no more indicative of value than it is in a bubble.

  124. 124

    By pfft @ 114:

    random thought.

    do people really believe the government could spend $700 billion and not have a positive effect on an economy where people aren’t spending.

    Well if you have enough R politicians say enough times that the stimulus is not creating jobs, eventually people believe that. Personally I think it’s probably impossible to spend even $1B without creating a single job, but people believe things they hear if they hear it enough times.

    On a related note, we keep hearing that they spent $700B+ on Tarp, etc., but a lot of that has been paid back, and there is a lot of stuff been done that isn’t Tarp (e.g. Freddie/Fannie). Does anyone have a current accounting of stimulus spending, net of repayment?

  125. 125

    […] so that’s what I’m about to do.First is a condo currently on the market in Belltown, spotted by the astute WestSideBilly, and featured in a New York Times article titled What You Get for … $500,000I’m just […]

  126. 126

    By Scotsman @ 121:

    No, I think his point is you have to offset the $20K of new purchases with the $20k of debt. But it doesn’t matter- you have two $20K positives, the income and the purchased goods, and one $20k negative, the debt. .

    Wouldn’t you have a multiplier effect on the income? If you pay Joe Sixpack to work on a roadway, he then takes his pay and spends it, part of which may be at Home Depot. That money spent at HD then creates more jobs, which in turn create more jobs, with diminishing returns.

  127. 127
    pfft says:

    By Scotsman @ 116:

    RE: pfft @ 110

    This is embarrassing. You post a Wiki link to a Feb. 4 2009 CBO. . . PROJECTION. . of expected results from the stimulus and then try to claim PROJECTIONS as proof of what has actually happened over the subsequent 18 months?? Are you serious??

    Then you go one to essentially claim that by buying a $250K house with a $245K loan one has increased their net worth by more than $250K because of some multiplier effect?

    First, none of the CBO projections for the impact of the stimulus on either GDP or employment have been met here in the real world. The original projections for employment are so far off nobody bothers to refer to them, except as an example of government incompetence. The projections for GDP have also missed their mark and are being constantly revised- down.

    I know you don’t read Karl- it can be hard. but take a moment to try and understand what he is explaining here, then get back to us:

    http://market-ticker.org/archives/2551-How-To-Read-The-REAL-GDP-Chart.html

    you didn’t really say anything. of course stimulus worked, the mulitiplier according to economists is 1.4 I didn’t say anything about homes, why would you bring that up? home prices going up or down don’t really have much effect on GDP growth in this case.

  128. 128
    Mikal says:

    RE: Scotsman @ 122 – I caught that also. It was written after a half rack. Sorry that i was tardy, but I have a job. I don’t feel tardy.

  129. 129
    Mikal says:

    RE: Mikal @ 128 – You are a typical Republican. When the deficit is driven up during good times by a tax cut, no problem. Now you have a problem. Your the kind of guy that wants the best military in the world without paying for it.

  130. 130
    Scotsman says:

    RE: Mikal @ 129

    Yeah, and you’re (note spelling) the kind of typical democrat that gets drunk on beer and sits around complaining about what other people have, then expect someone else to pay for all of your f-ups. I bet the state’s raising half your kids.

    Are we done here? ;-)

  131. 131
    Scotsman says:

    RE: pfft @ 127

    Thanks for the snappy but typically worthless rebuttal. I really liked the data you put forth and the way it was organized. Krugman would be proud of you.

  132. 132
    Mikal says:

    RE: Scotsman @ 130 – Nope, I’m self employed for twenty years. You may know the you’ers and yours better, but at the end of the day I make more, and drink more.The data I put forth is as good as yours. NADA. You are so full of $hit it is exploding out of your ears. Questions?

  133. 133
    Scotsman says:

    RE: Mikal @ 132

    OK, so you’re (note spelling) a man’s man, and a beer drinker too (note spelling). Being a wuss, I can’t touch that. You rule, I drool, whatever. It’s god to be you. Please don’t hurt me if we meet.

  134. 134
    Mikal says:

    RE: Scotsman @ 133 – It’s “god”? It’s ignorant to be a spelling Nazi.

  135. 135
    Scotsman says:

    RE: Mikal @ 134

    Stop, I can’t take it any more. You’ve shamed me into leaving Seattle Bubble. I will never let Sam show his face here again. You will be the hero of this site, worshiped by Pfft, One eye, and all the others who find me a PITA. You will be there god!

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