Global Economic December Thread

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

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

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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.

365 comments:

  1. 1
    David Losh says:

    I had a long talk with a stock analyst yesterday. I asked if she thought the stock market would just keep going up, and she said yes it will.

    She had read some of my blog posts about debt, loss of collateral, defaults on payments, and the destabilization of the mortgage backed securities. Then we talked briefly about deflation, and the Fed holding off deflation with the promise of $600Billion.

    With all of that, my question to her was again, “how can you be so sure the stock market will go up?”

    She used Boeing as an example. They sell airplanes. They sell airplanes at a profit. My point was that for Boeing airplanes are the cash flow and investment is the profit. She kind of waved that off to make the point that Boeing makes airplanes and sells them at a profit.

    It makes no difference about plants opening or closing, if China builds airplanes, or if Boeing loses an order, they still have defense contracts, they still make a profit. When they don’t make profits the stock drops.

    So, I have been listening to the financial news differently. A report yesterday talking about extending unemployment benefits said we had over built the housing market. Those workers will have to find other jobs, other skills, the construction industry won’t be coming back, and when it does, it will be different.

    Another report said there was no bubble in emerging markets. China is still growing economically. Let’s say that is true. Let’s say that China can build it’s own economy within it’s own borders.

    Is it possible that the global economic collapse is contained to mortgages? What if the global economy just moves on from here, takes massive losses, and rebuilds?

    So what if the price of housing drops? In the long run that would be a good thing. What if there is massive debt default? In the short run that would be a very good thing.

  2. 2
    One Eyed Man says:

    RE: David Losh @ 1

    1. We’ll likely get some certainty on taxes, perhaps within the next 3 weeks.

    2. There’s a very good chance that Obama will put our money where his mouth is and back meaningful deficit reduction. Even Rick Santelli said optimistically this morning that Obama has the opportunity to be the leader of the decade if he backs meaningful deficit reduction.

    3. ADP came in at something like 88K new private sector jobs which is 10 months in a row of gains and the most in a couple of years. Loses of construction jobs were down to 2K and manufacturing jobs continue moving up. BLS is expected to come in on Fri with 150K + new private sector jobs.

    4. Banking and foreclosure issues will likely be contained.

    5. European debt issues will likely be contained.

    6. China’s economy is still expanding despite any bubble issues. We need their rare earth elements more than we need their financing of our debt. Bernanke’s Fed will buy our debt if they think its necessary to prevent economic contraction and promote employment.

    7. Consumer sentiment and business sentiment metrics are generally moving up.

    8. The S & P is meeting its profits expectations of around $85 for 2010 and the estimates for 2011 are still over $90. With a PE around 13, and fundamentals showing some continuing promise, there is a reasonable potential for the market to move up until those things change.

  3. 3

    RE: One Eyed Man @ 2

    I owe you lunch or a beer. I still expect the stock market to decline, but I’m not willing to put my money where my mouth is, and I’ve continued to buy stocks, even over the last month. I’m in it for the long haul, not a month, and I don’t buy all stocks, just boring stocks with growing dividends. The old Ira bought risky fun stocks. I bought a stock about fifteen years ago that was delisted the day after I bought it and the CEO carted off to jail for fraud. It came highly recommended by respected analysts.

  4. 4
    One Eyed Man says:

    RE: Ira Sacharoff @ 3

    I was going to call you and leave a phone message saying “This is the ghost of bubble bets past,” so you’re lucky you posted before the ghouls came to visit.

    You don’t owe me a lunch or a beer, but I do request the honor of an audience with one of the most respected brokers to post on Seattle Bubble. Unfortunately neither Kary or Adelle could make it so I’ll be giving you a call later this morning.:-)

    I also have a holiday philosophy question for you just because I believe in Christmas (even thou I’m an agnostic).

    Was Ebenezer Scrooge a Scotsman and a bankster?

    Or was he a thinly veiled stand in for SWE’s favorite economist Thomas Malthus?

    Or is he just a pawn in a cheap left wing morality fable championing the use of extortion as a means for wealth redistribution?

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

    http://thetyee.ca/Views/2003/12/22/In_Defense_of_Scrooge/

  5. 5
    Scotsman says:

    RE: One Eyed Man @ 2

    “4. Banking and foreclosure issues will likely be contained.

    5. European debt issues will likely be contained.”

    “Contained?!” I love that word- it has so many new and old connotations. Did you see this mornings news about the U.S. bailing out the EU? How about the Fed’s $3.3T in “emergency ” loans. . . and illegal stock purchases? You know the finally cut off the ever extending unemployment benefits? That will help contain spending. . ;-)

  6. 6
    David Losh says:

    RE: Scotsman @ 5

    I deliberately used the word contained.

    Let’s take mortgages. First let’s separate out pre 2004 mortgages, or older. Then let’s contain the number of loans made, or refinances between 2004 to 2008, let’s make that 2009 so it’s an even five years.

    The mortgage crisis would be contained to a five year period. If that’s true then what is all the fuss about?

    The same with equity in housing. From 2003 to 2008 is five years. We lost that equity in a blink. Now where would the scrambling be?

  7. 7
    pfft says:

    it looks like they are buying the recovery. there is absolutely ZERO evidence of a double dip. the double dip was supposed to happen by now.

    vehicle sales are up almost 14% YOY.

    ADP says 93,000 jobs. usually scotsman would have posted those numbers by now a long with a witty zombie bear remark.

  8. 8
    pfft says:

    By Scotsman @ 5:

    RE: One Eyed Man @ 2

    “4. Banking and foreclosure issues will likely be contained.

    5. European debt issues will likely be contained.”

    “Contained?!” I love that word- it has so many new and old connotations. Did you see this mornings news about the U.S. bailing out the EU? How about the Fed’s $3.3T in “emergency ” loans. . . and illegal stock purchases? You know the finally cut off the ever extending unemployment benefits? That will help contain spending. . ;-)

    so would letting the bush trillion dollar unfunded tax cuts for the rich. I forgot you are for that spending that will add $3 trillion or so to the national debt that you keep talking about. somehow you believe at the same time that unfunded tax cuts that will add trillions to the deficit should be extended but interest payments will soon overwhelm the us budget. I would love to have heard that conversation with yourself!

  9. 9
  10. 10
    One Eyed Man says:

    RE: Scotsman @ 5

    You know what “contained” means, the European economies are just a shicht storm in a bottle.That’s the kind of amorphous terminology they don’t teach you in law school but all good lawyers learn on the job. It sounds good but lacks any real specificity.

    Where did you hear the 3T number. I know the Fed’s got a currency swap line of some sort, but I didn’t see anything saying it was that large and everything I did see seemed to say the Europeans had to buy that stuff back at some point. Of course, if the Euro becomes fishwrap that might be an empty promise even if the repayment obligation is stated in US dollars.

    As to the illegal purchase issue, I hadn’t heard that they had purchased improper assets. I’m no Fed scholar, and I’ve never read the enabling statutes regarding Fed powers but I wasn’t aware the Fed had the authority to purchase foreign currency and foreign debt either.

  11. 11
    Scotsman says:

    RE: pfft @ 7

    Yup, ADP says 90+K jobs, and that’s better than we’ve seen in the past. But it’s still not enough to even keep up with new entrants to the labor force, so in reality it’s another month that we’ve fallen further behind. And the bulk of the jobs that were added are low paying service jobs with small companies. Maybe they’ll hold, maybe they won’t. But there’s no way a less-than-even move in low paying jobs is going to bust us out of the crunch that’s coming.

  12. 12
    David Losh says:

    RE: One Eyed Man @ 10

    The $3T number came out today, it was the lag time, promise to tell, who got what money when during the crisis.

    It’s pretty impressive. It goes far beyond anything that the Fed has ever done.

    It made me feel a little bit more like the United states was in control and contained the situation very nicely.

  13. 13
    Scotsman says:

    RE: pfft @ 9

    Krugman is such a pussy. Lots of talk about rights, government intrusion, a system that works, etc. Lots of straight from the heart emoting. But not a single figure in the whole article. Maybe it’s because he knows the current math doesn’t work, and never will. He’s a coward, and a sickly patronizing and duplicitous one at that.

  14. 14
    Scotsman says:

    “So, to make a long story short, somewhere in the past few years we have gone from having a government of the people, by the people and for the people – to having a government of the bankers, by the bankers, and for the bankers.”

    http://market-ticker.org/cgi-ticker/akcs-www?post=173707

  15. 15
    Scotsman says:

    ?

  16. 16

    “I do request the honor of an audience with one of the most respected brokers to post on Seattle Bubble.”

    ” Most respected real estate broker” on Seattle Bubble is kind of like saying “favorite Islamic terrorist at the Christmas party” or “favorite BBQ pork rib dish at a vegan potluck..”

  17. 17
    David Losh says:

    RE: Scotsman @ 14

    It’s a conspiracy.

    Come on, look at the list again. Your link is exactly why I read the article about the $3T in a Canadian news paper.

    This isn’t just the United States saying that we are going to protect our own, it’s the global system that has sever problems. The one thing, the only thing, the inflated guy got right was wait until they get to Spain.

    Had the Fed not spread the wealth that they did we would have, the United States economy would have, been sucked dry.

    I’ll go back to the emerging markets another time, but I’ll say it again, we all got duped by the Euro. You can’t, or shouldn’t, create a currency out of thin air.

  18. 18
  19. 19
    Blurtman says:

    The Madness of a Lost Society

    http://www.youtube.com/watch?v=fOshw4kIGR4

  20. 20

    RE: Scotsman @ 13 – I’m surprised Krugman takes such a position about SS. He’s treating it like it’s a retirement account instead of a government benefit. He knows better.

  21. 21
    One Eyed Man says:

    RE: Scotsman @ 14

    If “past few” means “past 200” I’d agree.

  22. 22
    Blurtman says:

    Summarizing the argument, I believe:

    The recently released recipient list of TALF bailout money illustrates the lengths the the USG will go to keep credit flowing. The rationale is that expanding credit is absolutely necessary for worldwide economic growth.

    On the other hand, debt levels can become so large that servicing the debt inhibits economic growth. Ireland would be one example of this, now forced by the lenders to undergo austerity.

    Arguing for continual stimulus to drive economic growth, the funding of which derives from issuing new debt, seems to be an illegitimate and dangerous argument when debt levels are so high that their servicing actually impedes economic growth or worse.

  23. 23

    By One Eyed Man @ 21:

    RE: Scotsman @ 14

    If “past few” means “past 200” I’d agree.

    It goes back further than that. The newest bankruptcy act, which was basically bank sponsored legislation, goes back so far it was vetoed by President Clinton. In Washington state, a non-conforming provision regarding deficiencies on auto loans was wiped out well before then (I don’t remember the year). Again, something only banks wanted.

  24. 24
    David Losh says:

    RE: Blurtman @ 22

    That is a fair assessment. It’s very much to the point.

    Debt is just debt. Some one recommended a book to me that said that debt equaled money, but it doesn’t. Banks and governments around the world can have relationships of any kind. Government can allow banks, or stop doing business with them.

    No one has to deal with the financial sector.

    The standard of living can improve greatly with the expansion of credit. Factories can be built, farms can bridge living expenses between harvests, or equalize good years with bad.

    The fact is all of the expansion can be done for cash, it just takes time. We may be at a point where we don’t need to expand, we may need to deal with what we already have in place.

    I’m having a hard time saying that we need to maintain the financial sector. It makes no sense to me that we are paying Bank of America to stay in business. Wells Fargo is an absolute stretch for me to understand why we reward a company that is run so badly.

    The Investors, the ones who have the bundles of Notes are another mystery to me. They own the Notes. The investors own a portfolio. It makes no sense for a government, or stock market, or financial investment to keep dumping in money when the investors seem to have thrown up their hands to say they just didn’t know.

    This may be a simplistic view, but I think the investors in these toxic assets, if they are toxic, should deal with their own paper. I’m sorry that it might take time. I’m sorry they may have to allocate resources to sort it all out. I’m sorry that there might be some actual work involved.

    It’s the same for government debt. The United States has a list of expenses that we don’t need. We don’t need two, possibly three wars. We don’t need to be in business. The government needs to regulate the heck out of business, but we don’t need to be in business.

    The United States can expand into research for a variety of business ventures. The government can float any number of grants or low cost loan programs in cooperation with the financial markets, but there should be a defined return.

    In other words we don’t have to have everything right now. Argentina is a good example. They had to have a bail out, Ireland has to have a bail out, Greece needed a bail out.

    Well, no they don’t. The chips can fall where they may.

  25. 25
    Trigger says:

    RE: Scotsman @ 5 – Scotsman – everything can be contained thru printing. People like you or Sniglet underestimate the power of printing. People want to print and relax. Nobody wants to hear about some screwed up austerity plans. The govt needs to print new cash so people can spend it and then relax themselves.

    The govt will not allow deflation to happen. It will simply replace the lost monetary base. Nobody cares here. Period.

    The debt can be handled as it is handled thru more printing.

    It works. Dow is up.

  26. 26
    Scotsman says:

    RE: Trigger @ 25

    They’re printing up a storm- $192B last month alone, almost $1.9T for the year. Print, print, print! Problem is they’re giving much of it to the rest of the world, not just us. I’m sure prosperity is just around the corner, right next to the $6 gallon gas and the $5 loaf of bread. Too bad your wages are frozen, eh? Gotta save those banks though! And hey, if a few worker bees get caught in the machine, no problem, they breed like flies.

    Fat, dumb, and happy is the only way to go through life.

  27. 27
    Scotsman says:

    Hey Pfft:

    Here’s a quick run-down on what we get for our money, including this little gem:

    “2) Health reform’s cost savings apparently were bogus. Remember how Democrats boasted that health reform would cut the budget deficit by $170 billion over the next decade and far more after that? The deficit commission must not have gotten that memo. It says health spending projections under the new law “count on large phantom savings” and the reform law’s new long-term care program that the report calls “unsustainable.” As a result, Congress will still need to enact “a number of other reforms to reduce federal health spending and slow the growth of health care costs more broadly.”

    I thought reform was going to save us from deficit spending?

    http://www.aolnews.com/opinion/article/opinion-6-hidden-gems-in-the-debt-commission-report/19741541

  28. 28

    RE: Scotsman @ 26
    Worker bees? We don’t need no stinkin’ worker bees. The domestic worker bee is pretty much extinct anyhow. But we import them. As long as we get our electronic geegah, who cares if it’s made by some five year old chained to an assembly line in China?

  29. 29
    Blurtman says:

    RE: Scotsman @ 26 – So the crime of the century works like this. Steal trillions of dollars and replace them with a nominal amount of dollars that are worth much less. You have reached into the future to steal real wealth that the bagholders are on the hook to replace with less valuable dollars. Where is Superman when you need him?

  30. 30
    Trigger says:

    RE: Scotsman @ 26 – Scotsman – it makes sense to bail out the rest of the world and also can be resolved by printing. Basically you can bail out other folks so they can buy stuff from you.

    Look at EU. They send money to poorer countries so they get ramped up. Initially this costs the tax payer a little but then the new countries start buying stuff and create jobs also in your country.

    It is basically going thru good times and not being dumb. Don’t be judgmental even if you graduated from MIT because there are a lot of folks here that graduated from top places including MIT as well:)

    What you are suggesting with $5 bread is that we would have inflation. It does not make sense. As long as they do not go overboard with money supply – it will be good times. Remember we had shrinking monetary base and a risk of deflation. They can still print and have little inflation. Come on Scotsman – you know this.

  31. 31
    Trigger says:

    RE: Scotsman @ 26 – Scotsman – The banking system is the most important thing in today’s economy. Without banks there are no loans. With no loans – companies cannot develop projects. Plants are not built. Consumers cannot consume so much.

    So yes. Saving banksters is the right thing to do. Because they are your only hope. And yes – it will make them rich. And you will have less money than them etc. But this should not be a biggie – you should focus only on your position and not compare it to others.

    Some people say that it is not fair to bail out banksters. But life is not fair. Is it fair that 1 person gets a heart attack while another does not. Is it fair that one is born ugly while another is born pretty. Fairness is not sthg we are looking for and it is not our goal.

    So saying that we will tap into savings of people who saved and then redistribute it to people who are reckless with consumption is an ok thing to do. Because life was not meant to be fair.

    The only thing that matters when you a politician is to be re elected again. You don’t care about people who are your voters. You will sell them anything as long as they can buy it and reelect you again.

  32. 32

    RE: Trigger @ 31 – The Fed did a lot on 9/11 to keep the system going, and very soon thereafter Congress acted to keep the insurance industry going.

  33. 33
    Scotsman says:

    RE: Trigger @ 30

    “What you are suggesting with $5 bread is that we would have inflation”

    No, not inflation- commodity speculation and a devalued dollar. That’s why you get stuck with the low wages verses higher prices.

    Where’s Jimmah Carter when we need him? Time to put on the sweater and enjoy the malaise- getting by with less.

  34. 34
    Scotsman says:

    RE: Blurtman @ 29

    Banksters and Pigmen.

  35. 35
    Blurtman says:

    RE: Trigger @ 31 – It is not a matter of fairness, so much, as enactment of a practical solution. The bailouts of the banking system, without the replacement of corrupt and incompetent execs, is an impractical solution.

  36. 36
    pfft says:

    By Scotsman @ 11:

    RE: pfft @ 7

    Yup, ADP says 90+K jobs, and that’s better than we’ve seen in the past. But it’s still not enough to even keep up with new entrants to the labor force, so in reality it’s another month that we’ve fallen further behind. And the bulk of the jobs that were added are low paying service jobs with small companies. Maybe they’ll hold, maybe they won’t. But there’s no way a less-than-even move in low paying jobs is going to bust us out of the crunch that’s coming.

    45 days. I gave your prediction until jan 15th. are you excited?

    no double-dip much less your doomsday scenario in the car sales numbers. up almost 14% YOY. car sales have recovered from CFC which the doom set said wouldn’t happen.

  37. 37
    pfft says:

    By Scotsman @ 13:

    RE: pfft @ 9

    Krugman is such a “kitty”. Lots of talk about rights, government intrusion, a system that works, etc. Lots of straight from the heart emoting. But not a single figure in the whole article. Maybe it’s because he knows the current math doesn’t work, and never will. He’s a coward, and a sickly patronizing and duplicitous one at that.

    the current math is working. the deficits are not a problem. they are easily funded at low interest rates. that’s the math that he has talked about for awhile.

  38. 38
    pfft says:

    By Kary L. Krismer @ 20:

    RE: Scotsman @ 13 – I’m surprised Krugman takes such a position about SS. He’s treating it like it’s a retirement account instead of a government benefit. He knows better.

    SS has a dedicated tax that people pay for for most of their life. it is a retirement account.

  39. 39
    pfft says:

    By Blurtman @ 22:

    Summarizing the argument, I believe:

    The recently released recipient list of TALF bailout money illustrates the lengths the the USG will go to keep credit flowing. The rationale is that expanding credit is absolutely necessary for worldwide economic growth.

    On the other hand, debt levels can become so large that servicing the debt inhibits economic growth. Ireland would be one example of this, now forced by the lenders to undergo austerity.

    Arguing for continual stimulus to drive economic growth, the funding of which derives from issuing new debt, seems to be an illegitimate and dangerous argument when debt levels are so high that their servicing actually impedes economic growth or worse.

    1. ireland already took austerity years ago. they were the model for greece.

    2. ”
    Arguing for continual stimulus to drive economic growth, the funding of which derives from issuing new debt, seems to be an illegitimate and dangerous argument when debt levels are so high that their servicing actually impedes economic growth or worse.”

    no it isn’t. it’s working here and all over the world. name a stimulus nation having a Ireland-like crisis? you can’t. we know that preventing economic collapse means that you don’t take on even more debt as economic collapse adversely effects tax revenue.

  40. 40
    pfft says:

    By Scotsman @ 27:

    Hey Pfft:

    Here’s a quick run-down on what we get for our money, including this little gem:

    “2) Health reform’s cost savings apparently were bogus. Remember how Democrats boasted that health reform would cut the budget deficit by $170 billion over the next decade and far more after that? The deficit commission must not have gotten that memo. It says health spending projections under the new law “count on large phantom savings” and the reform law’s new long-term care program that the report calls “unsustainable.” As a result, Congress will still need to enact “a number of other reforms to reduce federal health spending and slow the growth of health care costs more broadly.”

    I thought reform was going to save us from deficit spending?

    http://www.aolnews.com/opinion/article/opinion-6-hidden-gems-in-the-debt-commission-report/19741541

    it’s worth every penny to try and save the lives of the 40,000 people a year who die from lack of healthcare.

    if it adds $172 billion it’s worth it. that’s only $17 billion a year.

  41. 41
    pfft says:

    By Trigger @ 31:

    RE: Scotsman @ 26
    So saying that we will tap into savings of people who saved and then redistribute it to people who are reckless with consumption is an ok thing to do. Because life was not meant to be fair..

    if it saves the savers jobs and retirement accounts I’m sure they’ll be all for it. we got almost all our TARP money back. TARP was a big success.

    the bailout worked in sweden in the early 90s. nearly 20 years later there hasn’t been a bigger crisis like so many bears have said about our bailouts.

  42. 42
    pfft says:

    By Scotsman @ 33:

    RE: Trigger @ 30

    “What you are suggesting with $5 bread is that we would have inflation”

    No, not inflation- commodity speculation and a devalued dollar. That’s why you get stuck with the low wages verses higher prices.

    Where’s Jimmah Carter when we need him? Time to put on the sweater and enjoy the malaise- getting by with less.

    carter had a pretty good economy. just as good as Reagan’s and better than W’s.

    http://www.prospect.org/csnc/blogs/ezraklein_archive?month=01&year=2008&base_name=your_world_in_charts_how_good

  43. 43
    Haybaler says:

    RE: pfft @ 42
    I think you are referring to an alterative universe…

    One of my recollections of Carters economy was learning a new word…. “Stagflation”.

    I remember weekly stories in the paper about how an item had increased in price 5 or 10 percent since the quarter before….tax rates were much higher than in Reagans or W’s economy and growth was nonexistent. And interest rates were in the high double digits. …yep, those were the Good days!

  44. 44
    Blurtman says:

    RE: pfft @ 39 – I think you are mistaking correlation for cause. Your observation seems to be that since there are no countries engaging in stimulus that are undergoing an Ireland-like crisis, then engaging in stimulus prevents an Ireland-like crisis. Sophistry. Countries that can engage in stimulus are not at unsustainable debt levels.

    Why do you think Ireland is undergoing austerity? Alternatively, why did they not embark on a stimulus program?

  45. 45

    By pfft @ 38:

    By Kary L. Krismer @ 20:

    RE: Scotsman @ 13 – I’m surprised Krugman takes such a position about SS. He’s treating it like it’s a retirement account instead of a government benefit. He knows better.

    SS has a dedicated tax that people pay for for most of their life. it is a retirement account.

    No it’s not. It’s a government benefit program with a specific tax source. You have no dedicated account or built up savings in SS. And your expected benefits, while correlated to the amount you pay in, is not directly proportional. Someone who pays in relatively little will get far greater returns than someone who pays in a lot more.

  46. 46
    Ben says:

    RE: Kary L. Krismer @ 45 – It’s interesting that pfft is smart enough to know better and yet he posts misinformation on a regular basis. I don’t believe he is ignorant, so the question is what is his motivation?

    I noticed he loves to bogusly “prove” that austerity – otherwise known as living within your means – does not work. Yet, he has no solutions to offer.

    What’s with this guy? Is he a troll, a shill (paid or volunteer)?

  47. 47

    Interesting that this month the payroll company employment data was more optimistic than the government data.

  48. 48

    By Ben @ 46:

    RE: Kary L. Krismer @ 45 – It’s interesting that pfft is smart enough to know better and yet he posts misinformation on a regular basis. I don’t believe he is ignorant, so the question is what is his motivation?

    I noticed he loves to bogusly “prove” that austerity – otherwise known as living within your means – does not work. Yet, he has no solutions to offer.

    What’s with this guy? Is he a troll, a shill (paid or volunteer)?

    I don’t think pfft is a troll or a shill. I think he sincerely believes in what he says. Certainly he’s a glutton for punishment by returning here for continuing abuse, and certainly he appears to me to be unrealistically optimistic, but if you look at people’s opinions here over the years, there’s been a lot of wrongness on both sides of issues.

  49. 49
    Ben says:

    RE: Ira Sacharoff @ 48 – Pfft sincerely believes SS is a retirement account? For real? Kary, God bless him, set him straight. Honestly, pfft posts so much drivel that goes unchallenged just because we all have better things to do with our time.

    I know he is smarter than that and does not truly believe the obvious nonsense that he often posts. The question is why does he do it?

  50. 50
    Trigger says:

    RE: Blurtman @ 35 – When I was in FL in 2005 – I talked to a friend working from Smith Barney and asked about the fact that janitors are buying 1 mln $ villas and are trying to relax. I said that Palm Beach post is cracking jokes about this and Greenspan is saying everything is just fine.

    My friend said that people on Wall Street are also trying to relax because they can ship those derivatives overseas and then it will not be a biggie.

    So if you are thinking that banksters are incompetent – you are mistaken. Everybody on Wall Street knew about the bubble but everybody tried to profit from this new wave and tried to secure nice life in Hawaii. So there is no morality in this business. You try to make money and you are trying to relax.

    Same is with politicians. You try to get reelected. You are not trying to do what is best for the economy or whatever – you try to get reelected.

    When you are a bankster – you don’t care about anything but PROFIT for YOURSELF. Replacing people in the banking industry is not going to help. All of the people in this industry simply are trained to think a certain way. Nobody cares about moral standards, fairness, what is good for average Joe etc. Nobody gives a damn.

  51. 51
    Trigger says:

    My personal opinion is that even Greenspan knew about the bubble and possible ramifications. But he chose not to intervene because banksters would get upset. And you really do not want to upset people who have the money. Maybe he was hoping that all of this will be swept under the carpet and say China takes the hit for this or sthg like that.

    How could Greenspan not know about the bubble if the press was making jokes about the whole issue.

    My friends working for top Wall Street firms knew about this and they were also relaxing. They were trying to ride the wave.

    Even my friends from Microsoft were all busy flipping houses to make extra cash out of this mess.

    The only people who lose in such situations are the people who try to save, work hard at a job, be frugal etc. Those people should be hit hard because a transfer of wealth needs to take place. People who spend in a reckless manner now need fresh cash to spend even more and to relax some more. So the frugal people now need to really work hard for them.

    This is not a biggie again.

  52. 52
    Scotsman says:

    RE: Ben @ 49

    “I know he is smarter than that and does not truly believe the obvious nonsense that he often posts.”

    You must be younger, or a better Christian than I. Long ago I fell in love with a woman, became obsessed is more like it, who was not only beautiful but socially charming. For the longest time I refused to accept that despite her pluses she was one of the people who balanced out the I.Q. distribution by taking a position on the low side of the curve. And that’s being polite. It wasn’t until months after having my heart broken that I was finally able to see the truth- and get some relief in the realization that I’d been saved from myself.

    I think Pfft believes in what he posts. But I doubt he could explain why in his own words, in a room by himself, without a pile of Krugman columns near by. I’d like to be wrong- it would make things more interesting, and everyone would benefit. But past experiences have helped me to see things as they are, not as I want them to be.

  53. 53
    Scotsman says:

    RE: Trigger @ 51RE: Trigger @ 50

    Ouch- but all true. I need to relax.

  54. 54
    Blurtman says:

    RE: Trigger @ 51 – Yes. I am only asking that the law be upheld. Even under George W, people who committed fraud were jailed. Banksters are smart and understand risk. Without substantial downside risk, i.e., going to jail, why not keep committing fraud?

  55. 55
    Ben says:

    RE: Scotsman @ 52 – Well, if he does actually believe the incredible nonsense he posts, I am truly sorry for him. It would be easier to understand if there was some other explanation – I had thought for the longest time he was just some kind of troll jester, trying to get us annoyed.

    I just wish there was an ignore feature either way.

  56. 56
    pfft says:

    looks like cap and trade isn’t dead after all.

    Cap-and-Trade Market for North America Weighed by States After Obama Fails
    http://www.bloomberg.com/news/2010-11-30/cap-and-trade-market-for-north-america-weighed-by-states-after-obama-fails.html

  57. 57
    pfft says:

    By Ben @ 49:

    RE: Ira Sacharoff @ 48 – Pfft sincerely believes SS is a retirement account? For real? Kary, God bless him, set him straight. Honestly, pfft posts so much drivel that goes unchallenged just because we all have better things to do with our time.

    I know he is smarter than that and does not truly believe the obvious nonsense that he often posts. The question is why does he do it?

    if SS isn’t a retirement account that what is it?

  58. 58
    pfft says:

    By Haybaler @ 43:

    RE: pfft @ 42tax rates were much higher than in Reagans or W’s economy and growth was nonexistent.

    you didn’t read the link. reagan didn’t have more growth than carter. they were basically tied.

  59. 59
    pfft says:

    By Blurtman @ 44:

    RE: pfft @ 39 – I think you are mistaking correlation for cause. Your observation seems to be that since there are no countries engaging in stimulus that are undergoing an Ireland-like crisis, then engaging in stimulus prevents an Ireland-like crisis. Sophistry. Countries that can engage in stimulus are not at unsustainable debt levels.

    Why do you think Ireland is undergoing austerity? Alternatively, why did they not embark on a stimulus program?

    Ireland did austerity because it wanted to be seen as prudent and responsible. it’s economy has not been good but it finally gained respect and they didn’t want to lose the seat at the big table by becoming the mess of Europe. Ireland was running surpluses before the crisis. it was the darling of Cato and other right-wing groups. austerity depresses the economy at a time when it’s already depressed. that combined with Ireland not having it’s own monetary policy or currency means the economy will be depressed for awhile. iceland hasn’t been in the news at all lately.

  60. 60
    pfft says:

    By Ben @ 46:

    RE: Kary L. Krismer @ 45 – It’s interesting that pfft is smart enough to know better and yet he posts misinformation on a regular basis. I don’t believe he is ignorant, so the question is what is his motivation?

    I noticed he loves to bogusly “prove” that austerity – otherwise known as living within your means – does not work. Yet, he has no solutions to offer.

    What’s with this guy? Is he a troll, a shill (paid or volunteer)?

    I have repeatedly said stimulus now and deal with the bill later when it can be paid. people who have jobs pay tax and increase government revenue to deal with the debt occurred by the government during the recession.

    I like how nobody who disagrees with you guys could possibly have nothing other than some alterior motive.

    here is my challenge?

    where has austerity worked? Ireland was the model for Greece just a few months ago. how did that work out?

    where did stimulus fail? not in the US. not in Asia.

  61. 61
    pfft says:

    By Blurtman @ 54:

    RE: Trigger @ 51Banksters are smart and understand risk.

    you are so naive! what makes you think they aren’t human like the rest of us? what makes you think that like thehouse flipper they weren’t blinded by greed? I believe that a lot of them just didn’t believe that home prices would fall. how else could they have lost so much money? the general public didn’t think house prices would fall. of course some saw the crisis coming. the failures were so widespread that you just chalk it up to greed and stupidity.

  62. 62
    pfft says:

    By Scotsman @ 52:

    RE: Ben @ 49But I doubt he could explain why in his own words, in a room by himself, without a pile of Krugman columns near by.

    I’ll take Krugman over your erroneous Investors Business Daily link and your fiction writer links. that sound good? I don’t need Krugman’s columns now I’ve basically got the relevant one’s memorized! I’ll put my prediction record up against yours anytime, especially when your prediction of economic doom doesn’t pan out in the next 45 days.

  63. 63
    Scotsman says:

    RE: pfft @ 60

    “where did stimulus fail? not in the US.”

    Really? $Trillions of dollars thrown into a hole, $trillions more to go over the next several years and all we have to show for it is rising unemployment and a dollar that’s dropped 40% in the last decade. The air is leaking out of this balloon faster than we can blow it in and you’re calling it a success? And don’t just repeat your line about how bad it would have been if we hadn’t spent the stimulus- we did spend it, and we’re already in the same spot or worse.

  64. 64
    Scotsman says:

    RE: pfft @ 62

    “I’ll take Krugman over your erroneous Investors Business Daily link and your fiction writer links. that sound good? ”

    Why don’t you try thinking for yourself? I don’t care who writes it, it’s the ideas that count. Either they stand up to scrutiny or they don’t, but in the end the author’s qualifications have very little to do with it. Krugman is a perfect example, a Noble Prize winner, and yet his ideas are routinely ridiculed by those who know better and can show that they won’t work. Even Krugman himself has pretty much retreated to ideology and emotions, leaving out the facts and mathematics. How convenient, both for him and his dim ideologue followers.

  65. 65
    David Losh says:

    RE: pfft @ 61

    I’m just going to take this one because the rest of it is a train wreck.

    I started writing seven years ago about all the money that kept getting lost. I used to ask where the money got lost. Is it lost in the cushions of the couch? Is it in the car under the floor mats? What does it mean that the money got lost?

    In 2007, or 2008 my questions started to be answered by some nonsense about how the stock market crashed, or that the housing market crashed, or AIG, bail out, and global economic crisis. The money was lost in a global economic crisis.

    Explain to me what a global economic crisis is. It’s a new term for me. Some how money got lost. Where did the money go? How lost can it be because it has to be some place.

    Lost? Define lost to me, because I can tell you exactly where the money is. It’s in the bank. The money is in cash reserves. Cash is the new asset class.

    You’re telling me banks are human? What a load of carp oil. It’s all numbers man, it’s just numbers. Yes individuals lost money in the stock market. Yes individuals lost equity in the houses and property they own. Yes individual lost retirement funding.

    Banks lost nothing, they gained. Just because you can’t see that, just because you can’t figure out global economy, doesn’t mean the money isn’t there.

  66. 66
    David Losh says:

    RE: pfft @ 60

    So far no one has followed an austerity program other than Germany. Argentina, Ireland, Greece, the United States had stimulus forced on them. Now it all needs to be paid back. I don’t see that happening. In my opinion Spain will default, and start the domino effect.

  67. 67
    Just sayin' it like it is says:

    If the US economy is so ready to bounce and be happy again, why are the IMF and World Bank strongly suggesting the US dollar be replaced as the global reserve currency, due to the amount of unpayable debt that has been placed upon it? It is no small thing to have the major countries of the world no longer trust the “backing” of your currency… that is, the US taxpayer’s ability to pay substantially higher taxes.

    Forgot about that, didn’t you? The two most powerful institutions on the planet state something of this magnitude more than once, and it is summarily forgotten? In fact, the intense amount of global legislation coming out of the UN (the IMF and World Bank being the UN’s economic arms) for the last several years very strongly suggests that the economic collapse of the US is a highly anticipated event.

    Absolutely, the fabricated US government numbers suggest otherwise. The corporate, paid-for news media says all is well and that the recovery will just take time. The news media said the same thing right before the depression of 1929.

    What we are seeing is the US stock market going up because speculation on US dollar inflation is being priced in. All prices rise during inflation — including stock prices. The DOW may go to 20,000 in such a situation, but this is no indication of a healthy economy. Quite the opposite.

    What happens after the inflationary bubble is that it is then popped. The event that will trigger this could be any number of things at this point. If you are not properly hedged in precious metals when this event occurs, you will lose most of your standard of living.

    The US will not default on its debt obligations. We are the leading monetary contributor to the IMF. If the IMF wants austerity in the US, the military industrial complex and the prison industrial complex is going to make sure it happens.

    What does if feel like to be owned by someone you have never met, much less know their name? For the army of paid-for bloggers who spread disinformation here and elsewhere on seemingly
    “balanced and representative of the community” forums such as this one, realize that you, too, are also owned and that you do not know your owner’s name. I hope that provides some level of discomfort to you.

  68. 68
    Just sayin' it like it is says:

    RE: Just sayin’ it like it is @ 67 – Correction: “bloggers” should state “blog forum comment posters,” instead. No offense to the person running this blog.

  69. 69
    Just sayin' it like it is says:

    By David Losh @ 66:

    RE: pfft @ 60

    So far no one has followed an austerity program other than Germany. Argentina, Ireland, Greece, the United States had stimulus forced on them. Now it all needs to be paid back. I don’t see that happening. In my opinion Spain will default, and start the domino effect.

    You mean losing your pension and retirement savings, and giving it to the IMF is not considered by most people to be part of an austerity program? That’s news to me. Maybe I just don’t know much about how giving people really are.

  70. 70

    By pfft @ 57:

    By Ben @ 49:

    RE: Ira Sacharoff @ 48 – Pfft sincerely believes SS is a retirement account? For real? Kary, God bless him, set him straight. Honestly, pfft posts so much drivel that goes unchallenged just because we all have better things to do with our time.

    I know he is smarter than that and does not truly believe the obvious nonsense that he often posts. The question is why does he do it?

    if SS isn’t a retirement account that what is it?

    This is reminding me of the health care thread where I have to say the same thing over and over and over.

    SS is a government benefit plan with a special funding tax. Part of SS isn’t even for retirement–there are death benefits for survivors, etc.

  71. 71
    Blurtman says:

    “The prime directive coming out of Treasury is ‘protect the banks’ and don’t force them to recognize their losses.”

    http://crooksandliars.com/susie-madrak/hearing-witness-treasury-directive-pr

  72. 72

    RE: Kary L. Krismer @ 70
    For some oldsters, social security is their sole source of income. Some jobs never had pension plans, others retired so long ago that their pensions are very meager as they’re not indexed to inflation.
    Some of these folks never made enough money during their working years to save anything.
    While it was never intended as a retirement account, a lot of people are dependent on the income it provides. These people shouldn’t have their benefits cut.
    Yet I realize that there’s more Social Security money going out than going in, or there will be shortly, and something needs to be done. If I were in charge, how social security is taxed would change. ight now, no additional taxes are taken out of your social security check if you make more than 106,000 per year? I remember when multi millionaire Nelson Rockefeller, of the oil and banking family, turned 65, he proudly waved around his first social security check. What an ***hole!
    If they want to shore up social security without hurting the most needy reciprients, shouldn’t they lift that 106,000 income max on taxing it?
    And maybe, if you have income of a million or more and assets of 10 million or more, maybe they should just cut you a check for what you’ve contributed, and not give you a monthly benefit?

  73. 73

    RE: Ira Sacharoff @ 72 – I agree SS is the only source of income for many people. I wonder how much of that is cause by them thinking that SS is a retirement account?

    As to your last point, I was thinking something similar, but I don’t think you need to write the wealthy a check. SS would still be protecting them in case something bad happened, like say they invest with a guy named Bernie.

    I would also point out that a lot of income is totally exempt from SS taxes. Rental income, investment income, etc. So those with high incomes might not necessarily be entitled to large SS payments.

  74. 74
    David Losh says:

    RE: Just sayin’ it like it is @ 69

    The other countries have had forced bail outs. Only the Germans have had an austerity program in place for a bid at world domination.

    Pension Funds? You mean the free money accounts? What does that have to do with austerity?

  75. 75
    Trigger says:

    RE: Blurtman @ 54 – But there is no fraud involved. The banksters did the right thing.

    They saw that there is an opportunity to flip some derivatives. They did that.

    They are in the business of giving loans and selling loans. So they did just that. They are law abiding citizens. Cream of crop. They want to make optimal profit.

    It is secondary that they knew that the situation was fishy.

    It is like you going to your neighbor and offering him a rusty nail for $100. You know that it is worth less than 1 cent. But if your neighbor buys this nail – should you go to jail? Ofcourse not. You did the right thing. You wanted to get some cash so you can buy nice things. You are not responsible for your neighbors actions. This is the main thing. So banksters did the right thing. They needed a bailout after that and it is nice they got one. And now they can go off and think of new and more enticing derivatives so they can become richer. This is ok. This is the right thing and nobody should panic.

    Even Greenspan is not really to blame. Even if he knew about the possible mess brewing – so what? The house ownership was increasing. More Americans were buying houses. People were traveling to Hawaii because their assets were appreciating. It was good times. I am sure he did not know how many derivatives are still in the US vs China. So he let the market play itself out. Everybody would have done the same thing in his shoes. Obviously this is a speculation to a certain extent about what he knew and what he did not know but come on even SeattleBubble got started for a reason:) So even laymen were sniffing sthg was brewing in the air.

  76. 76

    By Trigger @ 75:

    It is like you going to your neighbor and offering him a rusty nail for $100. You know that it is worth less than 1 cent. But if your neighbor buys this nail – should you go to jail? Ofcourse not.

    I’d propose a system that whenever someone sells something to someone else, and it goes down in value, that the seller go to jail. Sell Apple stock on the open market to someone you don’t even know and five years later it goes down: Jail time! :-D

  77. 77
    Blurtman says:

    RE: Kary L. Krismer @ 76 – Or like selling a house and not disclosing the water damage, cracked foundaion, and rotten roof. If I were a realtor, I might not communicate this business philsophy on an open forum.

  78. 78
    Blurtman says:

    RE: Trigger @ 75 – Your logic is contradicted by how the justice system actually operates. Example, if someone asks you to kill them, and you shoot them, you will go to jail. But your premise, that those who purchased the securities knew they would go bust in a few months is also very flawed. King County purchased triple A rated SIV’s that went bust shortly thereafter. Are you saying they knew this would happen? They were likely lazy and believed Moody’s but that does not let the seller off the hook.

    Pertinent information about these securities was not disclosed. That is fraud.

  79. 79

    RE: Blurtman @ 77 – I think you missed the point entirely. I was suggesting jail time even if the defect was disclosed or even if there was no defect–just a market decline. That seems to be all some people require to call something fraudulent or criminal.

  80. 80
    Blurtman says:

    Sure. Gotcha. “WInk, wink, nod. nod.”

    This type of thinking that it is some kind or game to stick the other party in a transaction with crap permeates sectors of American society. I recall a conversation that I had with a very prominent RE lawyer in San Francisco regarding pharmaceutical patent law. Even though many biologic drugs are off patent, there are no generic competitors (yet) because these drugs are made in other life forms like yeast, and just because you are making a similar drug from the same DNA sequence, it doesn’t mean what pops out of the yeast will be the same. Therefore, the market exclusivity of biologics is greatly enhanced.

    Upon explaining the science behind this, the smiling RE lawyer was saying, “Sure, I get it.” beleiving that this was a scam. The more I tried to explain that there was a real scientific rationale, the more he insisted he understood the con.

    I have found this same attitude of stuck you with it sucker expressed by Wall Street securities brokers.

    If enough participants in a society are immoral, the society will crumble.

  81. 81

    RE: Kary L. Krismer @ 73
    When I suggested that the very rich get cut a check for whatever Social Security they’ve contributed and not collect a monthly amount, I was just trying to be practical, come up with something that could possibly be accepted.
    Left to my own devices, people like Nelson Rockefeller would be slow roasted and served as the free meal at the mission in Pioneer Square.
    I can just picture it: The street person takes a bite and exclaims ” I can’t eat this. Tastes too rich.”

  82. 82
    David Losh says:

    RE: Just sayin’ it like it is @ 67

    I always love the debate about:

    “If you are not properly hedged in precious metals”

    Let’s see, the currencies are going to deflate until they are worthless, but precious metals will increase in value because they are the value behind currencies. Now I know that this is 2010, so how did precious metals become the backing of currencies?

    Actually if you follow this logic to it’s natural conclusion you will find that the only precious metals worth owning are brass. Then there is the debate about whether the 7.62 NATO casing is a global plot to corner the ammunition market as opposed to sticking with the United States .223 round. Hmmm?

  83. 83
    Blurtman says:

    Senate Roll Call on vote to extend the Bush tax cuts for everyone but the super wealthy:

    http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=2&vote=00259

    All Republicans either voted against the tax cut or did not vote. No Republican voted for the tax cut. A few Democrats voted against the tax cut – Durbin, Feingold, Harkin, Rockefeller, and sometimes Democrat, Liberman

  84. 84
    Scotsman says:

    RE: Ira Sacharoff @ 81

    Republican- tastes like chicken!

  85. 85
    Macro Investor says:

    How many of you know your history? In 1913, the US gov was insolvent and the bankers decided not to lend them any more money. Instead they offered a deal. They would forgive the debt if the US agreed to let THEIR PRIVATE CORPORATION, the Federal Reserve, replace money with federal reserve notes. In 1933, the US gov was insolvent again. They made a “new deal”. The federal reserve notes would be replaced with new ones not backed by gold.

    A version of this has happened in most countries. That is the reason why bankers are not prosecuted for law breaking, and not taking losses on their bad sovereign loans. The central banks report to the private banks, and the central banks control the economies. This is not a conspiracy theory. It is fact.

    If you want to understand why deflation is impossible for the central banks to accept, watch the money is debt videos.

    http://www.youtube.com/watch?v=vVkFb26u9g8

  86. 86
    David Losh says:

    RE: Macro Investor @ 85

    What’s the debt of Libya?

  87. 87

    By David Losh @ 82:

    Actually if you follow this logic to it’s natural conclusion you will find that the only precious metals worth owning are brass. Then there is the debate about whether the 7.62 NATO casing is a global plot to corner the ammunition market as opposed to sticking with the United States .223 round. Hmmm?

    So I guess if you want to create your own little personal arsenal, you’d better also subscribe to a number of financial/economic magazines, so when the police come you can just say you’re investing in metals. ;-)

  88. 88
    Trigger says:

    RE: Blurtman @ 78 – Blurtman – My premise is
    – Bankers knew that there is a good chance that at some point derivatives will go bust. Even laymen knew about this. I have friends who work for Wall Street who also knew about this. I am almost sure they did not know the exact timing when this will go bust otherwise they would not be left with so many toxic assets. My bet is they thought that the good waves would last longer!
    – My speculation is that even Greenspan knew about this
    – Average Joe was lazy and did not think much about this. He saw some prices going up – so he used to take new loans to go to Hawaii and relax.
    – My speculation is that bankers and everybody did not know how fast the correction would proceed and what type of bailouts would happen eventually.

    Is there an issue with this?

    If you are a seller of a rusty nail for $100. You know that it is worth less than $100. But if you get a buyer for $100 – why not profit from this?

    Maybe what you are proposing is that a seller writes a small disclaimer that things can always go down in value? This is redundant I think. People know that real estate prices, security prices are not FDA insured. They can go down in value. We are not talking about not disclosing mold. We are talking about the fact that the seller wants to sell a rusty nail (probably because he thinks he is getting a good price of $100) and a buyer who is more than happy to pay $100 for a rusty nail. This is all legitimate.

    So bankers saw an opportunity. Buyers were aware that what they are purchasing is not FDA insured. As such nothing happened. It means basically riding the good times.

    You cannot blame the bankers for wanting to get more profit for themselves. They are good people who want a lot of cash. They analyze how to make profit. When they sell – they think they will make a profit and when they buy they think they can sell for more money. This is how the industry works. And people on Wall Street should demand more respect and admiration from the society.

    People on Wall Street work very hard so that they can make a lot of money for themselves. They have to think how to increase profit. How to squeeze more money out of each transaction. They are all good people.

  89. 89
    Trigger says:

    RE: Trigger @ 88 – In the end the smart people actually bought houses when this crazy real estate mania was happening. People have made tons of money from flipping.

    So even the question – should you buy a rusty nail for $100 is not easy to answer.

    My guess the optimal answer is the following:
    If people around me are excited by rusty nails then I should buy the rusty nail. Wait a bit. Then sell it for $150.The key is not to wait too long because rusty nails are not FDIC insured and can lose value. If people are not excited about the rusty nails but say deep in my heart I really like the kind of rust that built up on the nail ad I can display proudly in my office – then this is also a good reason to buy the nail for $100.
    BUT – if I am looking for FDIC insured product then buying a rusty nail is not the best move. In order to find which produccts are FDIC insured – it is best to go their web site and find out!

    Same is with houses. Or derivatives. If you like them – you feel like investing – then go ahead.

    Given this argument all the people including Scotsman should give more respect to banksters, Wall Street, Fed etc. They all want the same thing – some more cash to make life better for themselves.

  90. 90
    Trigger says:

    RE: Blurtman @ 80 – Blurtman – what you are proposing is actually what communist Russia tried to do. Speculators – so people who buy for profit at the cost of others would go to jail. It was tested many years ago. It failed……

    What never failed are the banksters. They make money on a cosnistent basis and GDP is growing. Good times.

  91. 91
    David Losh says:

    RE: Kary L. Krismer @ 87

    Back in the 1990s, after the assault weapons ban, the price of weapons far exceeded the growth in gold. Then there was a debate about a ban on ammunition.

    The right wing radicals with gold coins in the bunker, like Glenn Beck is selling to today, began hoarding weapons, and ammunition. Weapons became the new currency.

    So when guys, and it usually is guys, start talking about precious metals they are way behind the curve. The other ones are talking about seeds, or hoarding seeds. The time line from planting seeds to harvest is long. You also have to know what you are doing, and protect the crops, from weeds, vermin, pests, and any one who might want your harvest.

    When you follow the natural conclusion of the doomsday fringe it all comes back to which weapons will be the most useful.

    As an aside, many police, or law enforcement people are already aware of the trend. Police, and law enforcement have rights to own, and sell certain weapons. In a way they are a big part of this under ground movement. So you don’t need to keep magazines around, they already know what you are doing.

  92. 92
    Show us how to do it says:

    By Macro Investor @ 85:

    How many of you know your history? In 1913, the US gov was insolvent and the bankers decided not to lend them any more money. Instead they offered a deal. They would forgive the debt if the US agreed to let THEIR PRIVATE CORPORATION, the Federal Reserve, replace money with federal reserve notes. In 1933, the US gov was insolvent again. They made a “new deal”. The federal reserve notes would be replaced with new ones not backed by gold.

    A version of this has happened in most countries. That is the reason why bankers are not prosecuted for law breaking, and not taking losses on their bad sovereign loans. The central banks report to the private banks, and the central banks control the economies. This is not a conspiracy theory. It is fact.

    If you want to understand why deflation is impossible for the central banks to accept, watch the money is debt videos.

    http://www.youtube.com/watch?v=vVkFb26u9g8

    Oh dude, you’ve told the truth. You know what happens when you tell the truth, right? The sheep come out and attack. Watch them go for it… trying to deprogram 30 years of television programming in one forum post? Not going to happen.

  93. 93
    Show us how to do it says:

    By David Losh @ 82:

    RE: Just sayin’ it like it is @ 67

    I always love the debate about:

    “If you are not properly hedged in precious metals”

    Let’s see, the currencies are going to deflate until they are worthless, but precious metals will increase in value because they are the value behind currencies. Now I know that this is 2010, so how did precious metals become the backing of currencies?

    Actually if you follow this logic to it’s natural conclusion you will find that the only precious metals worth owning are brass. Then there is the debate about whether the 7.62 NATO casing is a global plot to corner the ammunition market as opposed to sticking with the United States .223 round. Hmmm?

    Equally, so… I love making very nice gains in the last 10 years from precious metals while individuals such as yourself smug yourself to death, and take home nothing. Walk the talk.

  94. 94
    David Losh says:

    RE: Show us how to do it @ 93

    There are greater gains in the small arms market than in precious metals. Weapons are still location, price, and condition while precious metals are traded by the once.

    There again, the biggest gains in both markets were after Obama was elected. If you aren’t liquid right now you’ll be taking a loss.

  95. 95
    Scotsman says:

    RE: Trigger @ 89

    I agree much of what transpired was legal and only a response to the market. But at some point a line gets crossed- perhaps when you start telling people that rusty nails only go up in value, or that the FDIC/Fed/.Gov will guarantee the value of their nail purchases, or perhaps start a rumor that soon the government will only accept rusty nails in new construction (recycled content?) and there is sure to be a shortage. Most of what went on was legal, but enough more than usual was not, hence the situation we are in. It’s one thing for you to take the loss on your rusty nail purchase, but now you want to transfer some of the cost/losses to me, or to my 91 year old mother? It’s certainly not as straight forward as you make it seem.

  96. 96
    Scotsman says:

    25 facts about unemployment:

    #11 The U.S. economy would need to create 235,120 new jobs a month to get the unemployment rate down to pre-recession levels by 2016. Does anyone think that there is even a prayer that is going to happen?

    #14 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941

    #24 According to Richard McCormack, the United States has lost over 42,000 factories (and counting) since 2001.

    http://theeconomiccollapseblog.com/archives/jobless-recovery-25-unemployment-statistics-that-are-almost-too-depressing-to-read

  97. 97
    Trigger says:

    RE: Scotsman @ 95 – Scotsman – I think there should not be a problem if you say that rusty nails only go up in value. You are referring to what is happening now. Even when Palm Beach Post was cracking jokes about janitors buying 1 mill villas – they said that real estate only seems to be going up and up. I think real estate agents hoping to profit from the bull market were also telling people to buy and buy.

    But noone said that there is a guarantee it will go up and up. Noone said that those prices are FDIC insured. They were MERELY expressing their OPINION. If you say that rusty nails can only go up from $100 then you are expressing your opinion and as such this is entirely legal.

    Spreading false rumors that are not just expressing your opinion maybe an issue. But even that is hard to prove. What if you say that According to our research rusty nails will be used in new construction because people need to recycle more – You are expressing your opinion. It is different from saying the govt has mandated that only rusty nails be used for new construction.

    Now – asking your mother who is 91 years old to partially cover the mess that has happened may seem from a moral standpoint as a really bad thing. BUT noone in the govt is the least interested in moral issues. Noone cares. They care that they get reelected. So they just print. They may tax your mother or whatever. The key is that it is legal even if morally wrong. But remember that morality is not sthg that the govt will be concerned about.

  98. 98

    By Scotsman @ 95:

    RE: Trigger @ 89 – I agree much of what transpired was legal and only a response to the market. But at some point a line gets crossed- perhaps when you start telling people that rusty nails only go up in value,. . ..

    Another similar issue is people thinking “secured by real estate” means safe. Some of these big institutions fell for something that only a novice investor should fall for.

  99. 99
    David Losh says:

    RE: Scotsman @ 96

    On another blog I asked if there is equity in the equity markets, kind of the same thing that I was asking here. Then over this week end Jim O’neill of Goldman Sachs said he expected 20% growth in the equities market. He talked currencies, and government debt crisis, while extolling the cash reserve that are out there.

    My point earlier is that cash has become the new asset, and that looks like the next bubble.

  100. 100
    Scotsman says:

    The feds say the net job creation effect of the stimulus was . . . zero. Whoda thunk?

    http://www.frbsf.org/publications/economics/papers/2010/wp10-17bk.pdf

    “The results suggest that though the program did result in 2 million jobs “created or saved” by March 2010, net job creation was statistically indistinguishable from zero by August of this year. Taken at face value, this would suggest that the stimulus program (with an overall cost of $814 billion) worked only to generate temporary jobs at a cost of over $400,000 per worker. ”

    I can hardly wait to see Pfft and Krugman argue with the fed’s own report.

  101. 101
    Ben says:

    RE: Scotsman @ 100 – The jobs are netted out but the debt remains – to be paid by present and future debt slaves.

    Ain’t Keynesianism grand? Thanks, Scotsman.

    BTW, if pfft actually believes what he writes, it will not fit in his paradigm and the information will be ignored thusly. I’ve read stories about Native Americans not “seeing” sailing ships anchored off the coast way back when simply because ships were not part of their paradigm.

    In simpler terms – we see what we want to see.

  102. 102
    NumberMonkey says:

    RE: Scotsman @ 100

    You’ve quoted a blog post and tried to attribute it to a Fed Working paper.

    If you want to talk about what the Fed said, you might want to quote the Fed.

  103. 103
  104. 104
    Scotsman says:

    RE: NumberMonkey @ 102

    Read much? Did you even click the link? It for a working paper written by an employee of the Federal Reserve Bank Of San Francisco. That’s not a blog post. Maybe you should check the facts before spouting drivel.

  105. 105
    doug says:

    While the simulus wasn’t any great shakes (most of it should have been spent on infrastructure projects, not tax cuts and expensive green and military projects) I don’t think it invalidates demand-side economics.

    In fact if anything we today have a stark case of why supply-side economics not working: Companies are more cash-rich than they’ve ever been. The rich are richer than they’ve ever been, with record CEO payments this year. No one is spending, and the economy’s in dreadful shape. The complete farce that is supply-side economics is the singel biggest reason I could never be Republican.

  106. 106

    RE: doug @ 105 – I don’t think supply side or demand side works when you have a President of the United States that is vocally and rabidly anti-business. Executives that run businesses don’t want to take any risk because they don’t want to be the next target if their projects fail miserably.

  107. 107
    NumberMonkey says:

    RE: Scotsman @ 104

    Fact checking? Your quote is not part of the paper. You’re quote is part of the blog which I linked to. How stupid are you?

  108. 108
    Scotsman says:

    RE: NumberMonkey @ 107

    Ah, now I see what you’re saying. So what? Do the facts change? You can read the quote and get the message, or you can read the 70+ pages of the paper. . . and get the same message.

    How about disputing the content instead of the presentation?

    And how stupid am I? Very. But I’m still smarter than 99.something of the rest. At least I’m able to see the big picture and focus on the message instead of playing some version of spelling nazi.

  109. 109
    NumberMonkey says:

    RE: Scotsman @ 108 – Fair enough. From the actual fed paper:

    “This paper estimates that ARRA spending (excluding tax cuts) created or saved approximately 2.0 million jobs at its peak impact – which occurred from January through March of 2010 – but that the impact fell in the months thereafter, reaching 0.8 million jobs as of June 2010 (and, as shown in Table 17, becoming nearly zero as of August). It should be reiterated that the impact I estimate in this paper relates only to ARRA spending, not ARRA tax reductions. ARRA spending is a little over half of total ARRA costs through mid-2010 (twothirds of estimated costs through 2019). This implies that if the jobs multiplier of tax cuts is the same as that for spending, then this paper’s estimate of 0.8 million jobs through June 2010 from ARRA spending would imply around 1.6 million jobs due to total ARRA costs, which is near the low end of the CBO’s estimates and well below the CEA’s estimates.29 This paper’s estimate of 2.0 million jobs through March 2010 from ARRA spending would imply 4.0 million jobs from total ARRA costs, which is well above either the CEA’s or the CBO’s range of estimates. Thus, the key difference between the ARRA employment effects implied by this paper and those
    estimated by the CBO and CEA has to do with timing. This paper estimates a bigger impact in the first year of the ARRA, but then a steep drop-off in its employment effects in the legislation’s second year, while the CBO and CEA estimate a continual, near-linear increase in the ARRA’s employment impact over time. ”

    While I won’t get as detailed as I like due to time constraints at work, I will show that the blog post was horribly misleading with two very basic errors they made in analysis.

    1.
    The blog post takes to total-to-date estimate of ARRA spending and applies it to the first two months of implementation to get the 400k per job estimate. Did we cease ARRA spending after tow months?
    2.
    It applies total ARRA cost, which includes tax cuts, and applies it to an estimate of effect which explicitly excludes tax cuts.

    If this debate is still going when I get home I will dig in and explain other problems, like the limitations of the auto-regressive moving average model the author seems to be using.

  110. 110
    NumberMonkey says:

    RE: NumberMonkey @ 109 – Hah, let me correct myself: first twelve months of ARRA spending, not two :)

  111. 111
    doug says:

    RE: Kary L. Krismer @ 106

    You think the rules of economics are out the window because the President said a few mean things about businesses? I think that’s pretty far-fatched as opposed to the simpler explanation: the middle class is broke and not spending money.

    Especially since Obama isn’t going to get anything aggressive passed at this point. I haven’t seen the upswing in hiring, because there’s no demand.

    “Taken at face value, this would suggest that the stimulus program (with an overall cost of $814 billion) worked only to generate temporary jobs at a cost of over $400,000 per worker. ”

    22% of the stimulus was tax cuts. Disregarding this, and saying jobs cost $400,000 either shows extreme bias or ignorance. I know $300,000 isn’t all that much better, but still.

    As to graphs, I’ll see you and raise you a http://www.flickr.com/photos/speakerpelosi/4332827382/
    ALL OBAMA’S FAULT!

  112. 112

    RE: doug @ 111 – Well it would explain the tons of cash business is sitting on. President Obama has made the attacks very personal in some instances. If you were the CEO of a company that is doing okay, and sitting on cash, why would you risk spending any of it if that might result in your losing your position and your privacy?

    What’s really crazy is that if I’m right, not only did it result in wasting billions of dollars, but it also didn’t get President Obama what he was going after by making the attacks (popular support and votes).

    BTW, it’s not the rules of economics that are out the window, but the chance of success of government programs.

  113. 113
    doug says:

    So: Scotsman et al, I’d like to know what the trickle-down supply-side fans propose to do to help the economy. Tax cuts don’t count. Taxes are the lowest in a century, companies are richer than ever. We’ve HAD tax cuts since Reagan and they are not helping.

    So what do you propose?

    Also re: all the inflation/weak dollar panic, the dollar’s gotten stronger against the Euro, Yuan and Yen since Obama gained office. Also, inflation has been very low, and the dollar actually experienced deflation in 2009.

  114. 114

    By doug @ 113:

    We’ve HAD tax cuts since Reagan and they are not helping. .

    That’s very close to the standard Democrat talking point, although you go back a bit further. It’s a false argument.

    Tax cuts did not cause the crisis in 2008-2009. So the unemployment levels we are suffering through are not the result of tax cuts. If tax rates had been higher we probably would not have had the same growth we did prior (e.g. during Clinton), and the downturn might have been much worse. Move jobs might have been shipped overseas.

    That said, the length of the Bush tax cuts was absurd as being stimulus. Four years would have been more than long enough if the goal was purely to be stimulus to get us out of the 2000-2001 stalling.

  115. 115
    doug says:

    “What’s really crazy is that if I’m right….”

    Forgive me, but in this case I don’t believe that you are. Let’s make a bet. Obama can do little to nothing now that he’s lost a branch of the legislature, and another’s in perpetual lockdown. I haven’t seen a jump in hiring. I don’t think we will see one for a long time. I would think that this invalidates your theory.

    I can’t believe we’re having a debate over whether unemployment, demand, and the health of the middle-class drive the economy after this disaster. Of course, I couldn’t believe we were having a serious debate over whether there needed to be regulations on investment banks after the bubble. Conservative economists are resilient in their stubborness and resilience. We are clearly seeing the results of supply-side deregulated economy, which has been in the works for 30 years. You can’t GO any more conservative than the taxation and (lack of) regulation of the 00’s, and this is precisely where it got us.

  116. 116
    doug says:

    RE: Kary L. Krismer @ 114

    You are correct. Tax cuts are not the cause of the financial crisis. They ARE largely the cause of the huge deficict. That, and the wars, and the downturn in tax dollars from the bubble bursting.

    I never made the argument that tax cuts caused the economy, that’s a straw man. I AM making the argument that they have not done one lick of good.

    Just because it’s a talking point doesn’t make it untrue.

  117. 117
    Scotsman says:

    RE: doug @ 113

    “Tax cuts don’t count. Taxes are the lowest in a century, companies are richer than ever.”

    Wrong. Corporate tax rates are among the highest in the world. Every worker is effectively taxed at about 16% (both halves of FICA, medi-, etc.) starting with the first dollar earned. Companies are holding both record cash- and record debt. The net wealth effect is little changed.

    Cutting or eliminating FICA, etc. for a year or two would put money in the hands of consumers now. In fact, Obama has just proposed reductions in FICA:

    http://online.wsj.com/article/SB10001424052748704156304576003441518282986.html?mod=WSJ_hp_LEFTWhatsNewsCollection

    This isn’t rocket science. If you want recovery, you need to put money in the hands of consumers as quickly as possible. Tax cuts or rebates are the fastest way to do that. Cutting corp[orate rates, etc. or otherwise encouraging companies to spend cash on hiring or investment takes time and requires consistency in expectations, something we haven’t seen much of. Government spending takes even longer and doesn’t generate as much of an effect for several reasons.

    I don’t think anyone would argue that enhanced “trickle down” really describes what has been tried over the last couple of years so it’s not very helpful to continue that argument. We need to look elsewhere.

  118. 118
    Ben says:

    RE: doug @ 115 – Doug, a point of clarification is in order. These arguments seem to get emotional as they a hit our collective hot buttons.

    When you say the following:

    “We are clearly seeing the results of supply-side deregulated economy, which has been in the works for 30 years. You can’t GO any more conservative than the taxation and (lack of) regulation of the 00’s, and this is precisely where it got us.”

    It is important to note that many people confuse the word “deregulation” with actual free markets. “deregulation” actually means crony capitalist policy, implemented by the oligarchs that now rule America. When bankers, big pharma, etc. write legistlation for congress – think about the TSA scanners – they are a product of crony Michael Chertoff.

    What I’m saying is that all markets are regulated – I would argue that an actual free market is the best regulator. We can take our chances with legislation. Regulatory capture creeps in eventually and leads to cronyism and voila, here we are today.

    “Deregulation” it is definitely NOT what we have today.

  119. 119
    NumberMonkey says:

    RE: doug @ 111 – Careful, even the non-tax related parts of the cost of ARRA include the effects for years to come. You need the cost-to-date to make that calculation.

    And that calculation is going to be tricky. A job for a month is not the same as a job for a year. I think the best figures would be the hours of employment bought with ARRA, the cost per hour and the wage per hour the people in those jobs received.

  120. 120
    EconE says:

    RE: doug @ 113

    Let’s hypothetically say that we just took every penny from every rich person.

    Forget taxes. Just take it all. Every. Last. Penny.

    How much would it be?

    How long would it take for the government to spend it all?

    Think outside the box.

  121. 121
    Scotsman says:

    RE: NumberMonkey @ 109

    “If this debate is still going when I get home I will dig in and explain other problems, like the limitations of the auto-regressive moving average model the author seems to be using.”

    Well, that will certainly thrill the readers! ;-)

    Is my quoted summary a bit short of the full package? I’ll admit it is, but not in ways that matter to anyone except geek econometrics addicts and nit-picking editors. Here’s a summary for the average guy that covers all the bases, is easy to understand, and is pretty much irrefutable:

    “We spent nearly a $trillion and two years later we have even more unemployment. It may have kept things from being worse, but it certainly failed to drop unemployment to the 8% target. In fact, it appears to have failed miserably. But we still have the debt.”

    What else is there to say?

  122. 122
    NumberMonkey says:

    RE: Scotsman @ 121 – We pledged to spend around 600 billion over 10 years and give tax breaks to people which will result in 200 billion in reduced federal revenue.

    I certainly agree with you that it is falling short of it’s intended effect, mostly for the reason you gave above: the money isn’t getting to the right people (those who would spend it rather than hoard it).

  123. 123
    David Losh says:

    I love the unemployment debate because if you want to work I’m happy to find you something to do.

    I really like house painting, but we have a cleaning company. How about rot repair, or the ever popular ditch digging, when a machine just won’t do the job.

    How about all of those manufacturing jobs that are “lost.” We just lost them. They went some place else.

    As I understand it we have over built commercial spaces which includes factories. How about that vast brain trust of over educated MBAs, Phds, and Doctorates come up with a product.

    From what I hear there is plenty of labor available, and equipment going to auction.

    You see the problem is that cash is king and can beget cash. making money is easy. You borrow at 1% and lend at 6%, or 8%, or 16%, or 34% or if you cash checks it’s 300%.

    Why work? Why produce anything other than debt. Debt is money, and there is plenty of debt to buy, sell, and trade.

    The financial markets are the engine of the train. That’s what needs to change.

  124. 124

    By doug @ 116:

    RE: Kary L. Krismer @ 114

    You are correct. Tax cuts are not the cause of the financial crisis. They ARE largely the cause of the huge deficict. That, and the wars, and the downturn in tax dollars from the bubble bursting.

    I never made the argument that tax cuts caused the economy, that’s a straw man. I AM making the argument that they have not done one lick of good.

    Just because it’s a talking point doesn’t make it untrue.

    But that’s a false argument. That’s exactly the same as arguing the stimulus has not created any jobs because unemployment has increased. What those that make that argument don’t know is how much worse unemployment would have been without the stimulus. Similarly, what we don’t know is how much less employment there would have been without the tax cuts.

  125. 125

    By doug @ 115:

    “Whatâ��s really crazy is that if Iâ��m right….”

    Forgive me, but in this case I don’t believe that you are. Let’s make a bet. Obama can do little to nothing now that he’s lost a branch of the legislature, and another’s in perpetual lockdown. I haven’t seen a jump in hiring. I don’t think we will see one for a long time. I would think that this invalidates your theory.

    What I’m trying to say is what President Obama did while the Ds had control was less effective because of his anti-business rhetoric. President Obama needed businesses to create jobs. Creating a hostile political environment for business was not productive in that regard.

    That President Obama has less power is probably good. That will make business a bit less concerned about him and is rhetoric. I doubt that’s enough, however. What he needs to do is change his tune.

  126. 126

    By Scotsman @ 117:

    RE: doug @ 113

    “Tax cuts donâ��t count. Taxes are the lowest in a century, companies are richer than ever.”

    Wrong. Corporate tax rates are among the highest in the world..

    Corporate taxation is double-taxation as long as you also tax dividends. If the corporate tax rate was cut to zero corporations would be less likely to move jobs out of the country.

  127. 127
    NumberMonkey says:

    RE: David Losh @ 123 – Any product they come up with will be fabricated and assembled in china, at least until the wages normalize across our nations, which wont happen for generations.

  128. 128
    NumberMonkey says:

    RE: Kary L. Krismer @ 126
    I don’t see how that follows.

    Corporate taxation makes higher wages “cost” less because you get a tax break for expenses. The difference between $1 an hour and $4 an hour with a 33% tax rate is only $2, because the corporation gets to deduct the extra expense from it’s taxable profit (this of course assumes that they do turn a net profit).

    I would expect reduced corporate taxation to encourage outsourcing jobs.

  129. 129

    By NumberMonkey @ 128:

    RE: Kary L. Krismer @ 126
    I don’t see how that follows.

    Corporate taxation makes higher wages “cost” less because you get a tax break for expenses. The difference between $1 an hour and $4 an hour with a 33% tax rate is only $2, because the corporation gets to deduct the extra expense from it’s taxable profit (this of course assumes that they do turn a net profit).

    I would expect reduced corporate taxation to encourage outsourcing jobs.

    So you think a business would flush a dollar down the toilet to get 33 cents back, if the act of flushing was deductible?

    Or maybe you’re just focusing on the different country aspect? I was assuming that the other country would have a corporate income tax, and that we would be more attractive if we didn’t (all other things being equal, which they are not). As it is, I think they get a credit (not just a deduction) for foreign income taxes paid, and if so, we’re really subsidizing foreign income taxes.

  130. 130
    doug says:

    By EconE @ 120:

    RE: doug @ 113

    Let’s hypothetically say that we just took every penny from every rich person.

    Forget taxes. Just take it all. Every. Last. Penny.

    How much would it be?

    How long would it take for the government to spend it all?

    Think outside the box.

    Seriously?

    ‘Let’s just not have a government, and we can have no taxes and no roads, or police force, or military, or any kind of social safety net. How long would it take for someone to invade us take all our precious money?’

    Slippery slope arguments are lame, man. We’re talking about a 3% increase on money earned above $250k, and I actually liked the one that raised it above $1M, if you must know.

  131. 131
    numbermonkey says:

    I was thinking about corporate taxes being erased overnight. Taking the example from before:
    Wages are $4 domestic and $1 foreign per hour.

    With corporate 30% tax: company faces a trade off of 70 cents for foreign labor and $2.80 for domestic, when we account for the tax saving from deducting expenses. A difference of $2.10

    Without corporate taxes the labor would have no tax effect and would be $1 and $4, a difference of $3.

    If the domestic worker is worth $2.50 more an hour than the foreign worker (say they are equally productive but the shipping cost of whatever they are making is 2.50 for an hours worth of product), which system does she get employed under?

  132. 132
    doug says:

    By Scotsman @ 117:

    RE: doug @ 113

    “Tax cuts donâ��t count. Taxes are the lowest in a century, companies are richer than ever.”

    Wrong. Corporate tax rates are among the highest in the world. Every worker is effectively taxed at about 16% (both halves of FICA, medi-, etc.) starting with the first dollar earned. Companies are holding both record cash- and record debt. The net wealth effect is little changed.

    Cutting or eliminating FICA, etc. for a year or two would put money in the hands of consumers now. In fact, Obama has just proposed reductions in FICA:

    http://online.wsj.com/article/SB10001424052748704156304576003441518282986.html?mod=WSJ_hp_LEFTWhatsNewsCollection

    This isn’t rocket science. If you want recovery, you need to put money in the hands of consumers as quickly as possible. Tax cuts or rebates are the fastest way to do that. Cutting corp[orate rates, etc. or otherwise encouraging companies to spend cash on hiring or investment takes time and requires consistency in expectations, something we haven’t seen much of. Government spending takes even longer and doesn’t generate as much of an effect for several reasons.

    I don’t think anyone would argue that enhanced “trickle down” really describes what has been tried over the last couple of years so it’s not very helpful to continue that argument. We need to look elsewhere.

    I don’t disagree with you much here. Corporate taxes aren’t high for the INDUSTRIALIZED world. And from CBO studies, tax money (and unemployment) in the hands of poor an middle-class people is the best way to stimualate the economy. If those studies showed that tax cuts above $250k were a good stimulus, I’d be all for them. They don’t they (and history) show that tax cuts to the rich do very little to stimulate the economy.

  133. 133
    Scotsman says:

    RE: EconE @ 120

    “Let’s hypothetically say that we just took every penny from every rich person.
    Forget taxes. Just take it all. Every. Last. Penny.
    How much would it be?
    How long would it take for the government to spend it all?”

    Excellent question, and one that quickly puts to rest the notion that if we just tax the rich more everything will be OK.

    Figures are a bit hard to come by, but in a few minutes I found:

    1998- average household wealth of the top 1% is $12,500,000. Let’s assume that has doubled to $25M. Number of households (2008) is113.5M, so 1% is 1.4M households with $25M of total net worth for the top 1% of $35T. Sweet- that’s enough to run the government for the next 8 years or so! We should have done this long ago! There’s only one problem- we just burned through 35-40% of the country’s wealth. This is oversimplified- there’s confusion between wealth and income, and some wealth will be reinvested. But it should help some to see that even in the U.S. wealth isn’t some bottomless cup from which we can draw at will forever.

  134. 134
    doug says:

    By Kary L. Krismer @ 124:

    By doug @ 116:

    RE: Kary L. Krismer @ 114

    You are correct. Tax cuts are not the cause of the financial crisis. They ARE largely the cause of the huge deficict. That, and the wars, and the downturn in tax dollars from the bubble bursting.

    I never made the argument that tax cuts caused the economy, that’s a straw man. I AM making the argument that they have not done one lick of good.

    Just because it’s a talking point doesn’t make it untrue.

    But that’s a false argument. That’s exactly the same as arguing the stimulus has not created any jobs because unemployment has increased. What those that make that argument don’t know is how much worse unemployment would have been without the stimulus. Similarly, what we don’t know is how much less employment there would have been without the tax cuts.

    Ok, you got me. tax cuts for the rich DO have a stimulating effect on the economy, something to the tune of 17 cents on the dollar. It would be more accurate to say they do a very poor job stimulating the economy.

    I have NOTHING against tax cuts for the rich dogmatically. However, when we’re talking about holding social security and unemployment hostage, you are severely bleeding the middle class and poor. There are much better way to cut government, and we do need to have that debate. But we’ve got a pretty stark case here of politicians saying no more unemployment (when there are no jobs to be had), but yes to trillions in tax cuts for the VERY richest Americans. This is why middle class wages have not grown in 30 years.

    As an aside, hopefully I haven’t come off as tremendously rude here. I enjoy good debate, and like this board and the people on it, I’ve certainly gotten some good advice here :-)

  135. 135
    doug says:

    By Scotsman @ 133:

    RE: EconE @ 120

    “Letâ��s hypothetically say that we just took every penny from every rich person.
    Forget taxes. Just take it all. Every. Last. Penny.
    How much would it be?
    How long would it take for the government to spend it all?”

    Excellent question, and one that quickly puts to rest the notion that if we just tax the rich more everything will be OK.

    Figures are a bit hard to come by, but in a few minutes I found:

    1998- average household wealth of the top 1% is $12,500,000. Let’s assume that has doubled to $25M. Number of households (2008) is113.5M, so 1% is 1.4M households with $25M of total net worth for the top 1% of $35T. Sweet- that’s enough to run the government for the next 8 years or so! We should have done this long ago! There’s only one problem- we just burned through 35-40% of the country’s wealth. This is oversimplified- there’s confusion between wealth and income, and some wealth will be reinvested. But it should help some to see that even in the U.S. wealth isn’t some bottomless cup from which we can draw at will forever.

    You know, in the 50’s, the highest tax bracket was something like 90%. That era is looked upon as one of the most prosperous era in American history. No one’s suggesting a tax rate of 90%. Again Slippery slope arguments are kind of lame.

    Lastly, it wasn’t the DEMS that figured out how to spend our governmental surplus.

  136. 136
    Scotsman says:

    RE: doug @ 135

    ” in the 50’s, the highest tax bracket was something like 90%.”

    90%? True, as far as the tax code went. But the EFFECTIVE rates, those actually paid after deductions, legal shelters, etc. were actually some of the lowest we’ve had. Reality is consistent- it’s the manipulations of the image that keep changing.

  137. 137
    EconE says:

    RE: doug @ 135

    I’m not asking what the tax rates were in the 50’s. Times were different then. I don’t care who spent what or who taxed what. I don’t care about Republicans or Democrats as I’m pretty non political myself and think that they all $uck. All the liberals seem to rag on Scotsman but it seems that he brings MATH to the table where most others strictly appeal to emotion.

    I just asked a basic math question.

    I still don’t think that the answer is going to be found in taxes. I think that we have a much larger issue with our monetary system in general.

    Maybe we should just tax homeowners more and use the money to subsidize renters.

  138. 138
    pfft says:

    By Scotsman @ 63:

    RE: pfft @ 60

    “where did stimulus fail? not in the US.”

    Really? $Trillions of dollars thrown into a hole, $trillions more to go over the next several years and all we have to show for it is rising unemployment and a dollar that’s dropped 40% in the last decade. The air is leaking out of this balloon faster than we can blow it in and you’re calling it a success? And don’t just repeat your line about how bad it would have been if we hadn’t spent the stimulus- we did spend it, and we’re already in the same spot or worse.

    CBO says we’ve saved millions of jobs and Mccain’s own economic advisor was for it. the stimulus was $700 billion and 1/3 of it was tax cuts. it wasn’t the trillions you said.

  139. 139
    pfft says:

    By Ben @ 101:

    RE: Scotsman @ 100 – The jobs are netted out but the debt remains – to be paid by present and future debt slaves.

    Ain’t Keynesianism grand? Thanks, Scotsman.

    BTW, if pfft actually believes what he writes, it will not fit in his paradigm and the information will be ignored thusly. I’ve read stories about Native Americans not “seeing” sailing ships anchored off the coast way back when simply because ships were not part of their paradigm.

    In simpler terms – we see what we want to see.

    just how much do you think we’re paying on $700 billion? keynes worked. we saved millions of jobs and trillions in debt.

  140. 140
    pfft says:

    By Scotsman @ 108:

    RE: NumberMonkey @ 107

    Ah, now I see what you’re saying. So what? Do the facts change? You can read the quote and get the message, or you can read the 70+ pages of the paper. . . and get the same message.

    How about disputing the content instead of the presentation?

    And how stupid am I? Very. But I’m still smarter than 99.something of the rest. At least I’m able to see the big picture and focus on the message instead of playing some version of spelling nazi.

    who would have thought, scotsman posts a bogus link again.

  141. 141
    pfft says:

    By Scotsman @ 136:

    RE: doug @ 135

    ” in the 50â��s, the highest tax bracket was something like 90%.”

    90%? True, as far as the tax code went. But the EFFECTIVE rates, those actually paid after deductions, legal shelters, etc. were actually some of the lowest we’ve had. Reality is consistent- it’s the manipulations of the image that keep changing.

    it’s funny how you talk about effective tax rates to disprove doug’s good point but totally ignored it when it came to the tax on corporations.

    there is a simple reason why businesses aren’t investing. it’s simply overcapacity and no enough demand. corporations have record amounts of cash. if there was money out there to be made they’d be making it.

  142. 142
    EconE says:

    RE: pfft @ 141

    How much debt do corporations have?

  143. 143
    doug says:

    Here’s the thing. I’m not saying we should tax the rich to punish them. But the middle class is tapped out, kaput, done for the foreseeable future. Corporations have money, and are not spending.

    Should we be looking at cuts in the government? There’s not a doubt in my mind. Unfortunately EVERYTHING is sacrosanct : Medicare, military, social security, huge tax cuts. Out of those, I’d prefer the tax cuts went away. Good luck getting the boomers to give up SS or Medicare after they’ve been paying into it all their life, not going to happen. I’m sure it would be good for my generation (30yo).

    This is probably all moot. The tax cuts will be extended, so will unemployment. Social security and the defense budget won’t be touched. The deficit will keep going up. Republican, Democrat, it ultimately won’t much matter, this is what will happen. We are Americans, and we want everything for nothing. The next big crisis will be when our utility infrastructure finally starts giving up the ghost, and everyone will be howling, after they’ve starved the beast without cutting spending for 30 years.

    My wife and I are very blessed to be doing well now… but a lot of our generation is screwed. That’s ultimately why I’m passionate about this.

    So, once again: from where is the spending going to come now that the middle class is truly tapped out, and has actually learned their lesson, and is saving its money?

    The answer ultimately may be that it won’t come from anywhere. Everyone working will be working poor, essentially, except the top whatever percent. I aim to be in that top percent, because if you can’t beat ’em…

  144. 144
    David Losh says:

    While looking for a chart earlier, that was in one of the David Stockman videos Scotsman posted, I came across the GDP charts by country. Wow!

    http://www.indexmundi.com/g/r.aspx?c=xx&v=65

    We have a lot going on here in the United States. Comparing to other charts like Cost of Living Index http://www.numbeo.com/cost-of-living/rankings_by_country.jsp we are doing well.

    Last but not least let’s look at public debt http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt

    When you take it all and look at it side by side, the United States actually has a pretty robust economic picture.

    Fixing the federal deficit to me is simple.

    Medicaid, and Medicare are huge costs. The cost of dying, in this country is astronomical. We have the technology to keep people alive artificially. So our technology is a double sided sword. Ultimately it does come down to cost.

    Second is Social Security, which is an entitlement. It has to be paid. It’s a dedicated tax, a cost to the individual, it has to be paid out, it’s an obligation. Even to play around with it, or say we are like a socialist country that is giving a workers benefit is wrong. It has to be paid.

    So Health Care, and Social Security are in that way hard dollar costs. They have to be paid.

    Military has no leg to stand on. Even our police force is tenuous. There is no provision for a standing army, and it’s pretty clear in the Constitution that our founders never anticipated our troops on foreign soil.

    If you want free markets then the Department of Commerce, and Agriculture are up for grabs. In the midst of all of that we can probably cut millions of jobs in the federal government.

    That leaves us the problem of taxes which need to be simplified. A flat tax, across the board seems like the best solution. This FICA, or Unemployment need to go. There has to be a way to provide a safety net that allows those that can, to do things, and those who can’t to be cared for.

    All the talk we’ve done about insurance should show that there is a way to privatize a lot of the social services we currently pay tax dollars for.

    Schools, to me, are the best example. I think there is plenty of money in the school system that is misappropriated. We can educate, people can pay a fair price for education, it’s a matter of paying for teachers, equipment, class size, and curriculum. The money is there, some one can figure that out.

    The day politicians start talking about a complete picture rather than causes is the day we can move forward.

  145. 145
    doug says:

    RE: David Losh @ 144

    When discussing a flat tax, I’ve never seen any analysis of how much money a plan like the Forbes plan would actually take in… anyone know? My gut says “not enough to make it work,” and the flat rate would actually be closer to 23% than 17% to get anywhere close to a working income.

    The Forbes plan was pretty radical: no Social Security, no capital gains taxes (which means CEO’s pay very, very little. Yay for Forbes friends!) I have read a couple of his proposals, and he doesn’t mention cuts to the military… how would he come up with a working budget? I don’t think you can make up that balance in discretionary spending…

  146. 146
    doug says:

    http://www.nytimes.com/2010/12/07/us/politics/07cong.html?_r=1

    Wow, as proposed, this is the ultimate budget-busting bill. HUGE tax cuts, not offset by any cuts to the government. I guess we’ll see how well it does at stimulating the economy… maybe it will get businesses hiring, maybe not.

  147. 147

    By doug @ 134:

    Ok, you got me. tax cuts for the rich DO have a stimulating effect on the economy, something to the tune of 17 cents on the dollar. It would be more accurate to say they do a very poor job stimulating the economy.

    I have NOTHING against tax cuts for the rich dogmatically. However, when we’re talking about holding social security and unemployment hostage, you are severely bleeding the middle class and poor. There are much better way to cut government, and we do need to have that debate. But we’ve got a pretty stark case here of politicians saying no more unemployment (when there are no jobs to be had), but yes to trillions in tax cuts for the VERY richest Americans. This is why middle class wages have not grown in 30 years.

    As an aside, hopefully I haven’t come off as tremendously rude here. I enjoy good debate, and like this board and the people on it, I’ve certainly gotten some good advice here :-)

    Just to be clear, I’m not taking the Republican position on the tax cut issue. I’m just attacking the idea that tax cuts do not stimulate the economy. Clearly they do, but that’s not the end of the analysis.

    If the goal is to stimulate employment, what I would prefer to see would be a special rate for Schedule C income, but only for those that report employee withholding. This would be something like the capital gains rate. So you could let the Bush tax cuts expire for those making over a certain amount, but give those small businesses that employ people and report on an individual return (e.g. sole proprietorship, Sub-S corps, etc.) a lower rate.

    I also don’t buy the Republican argument that small businesses create jobs. It’s not so much that I dispute that being true, but I just don’t think they create the good jobs. That’s why I’d be in favor of eliminating the corporate income tax to get US corporations to do more of their activities in the US.

  148. 148
    David Losh says:

    RE: Kary L. Krismer @ 147

    That’s what Ireland did. Tax cuts won’t do it. More income is what stimulates an economy. To get more income the business has to be in a partnership with the government and the only way to do that is a balance between benefit, and taxation. That’s what we don’t have.

    Small business is at a disadvantage in terms of benefits from government. They don’t have the where with all to make significant in roads to development. A larger corporation can get benefits for research and development as a side branch in a diversified business model.

    At the same time corporations can benefit from research done by government by immediately implementing opportunities presented. Corporations can partner in NASA programs as an example.

    For the United States to compete it needs to have a complete package that is of benefit to all business.

  149. 149
    David Losh says:

    RE: doug @ 145

    I’ll research the flat tax this afternoon, but it’s not a Forbes plan that I’m thinking of.

  150. 150
    doug says:

    RE: David Losh @ 148

    Thanks, David!

    I do truly believe that we can have an economy one day where, once again, everyone can prosper. But everyone’s going to have to make sacrifices. Sacred cows like subsidies and the military budget are going to need real scrutiny.

    The plan the Republicans and Obama just agreed to is just the worst. More free money for everyone, with no offsets.

  151. 151
    Scotsman says:

    This news is making the rounds today, and has stunned many. The U.S. has to get it’s act together on education if we ever want to see the high wage jobs we used to have come back:

    ““We have to see this as a wake-up call,” Secretary of Education Arne Duncan said in an interview on Monday.

    “I know skeptics will want to argue with the results, but we consider them to be accurate and reliable, and we have to see them as a challenge to get better,” he added. “The United States came in 23rd or 24th in most subjects. We can quibble, or we can face the brutal truth that we’re being out-educated.”

    In math, the Shanghai students performed in a class by themselves, outperforming second-place Singapore, which has been seen as an educational superstar in recent years. The average math scores of American students put them below 30 other countries.

    PISA scores are on a scale, with 500 as the average. Two-thirds of students in participating countries score between 400 and 600. On the math test last year, students in Shanghai scored 600, in Singapore 562, in Germany 513, and in the United States 487. ”

    http://www.nytimes.com/2010/12/07/education/07education.html?_r=2&hp

  152. 152
    doug says:

    This doesn’t surprise me at all. When I was engineering school ten years age, (during the tech boom!) the classes and enrollment were tiny compared to liberal arts classes. And we wonder why we can’t keep up in the technical fields…

  153. 153

    By Scotsman @ 151:

    This news is making the rounds today, and has stunned many. The U.S. has to get it’s act together on education if we ever want to see the high wage jobs we used to have come back:

    “â��We have to see this as a wake-up call,â�� Secretary of Education Arne Duncan said in an interview on Monday.

    �I know skeptics will want to argue with the results, but we consider them to be accurate and reliable, and we have to see them as a challenge to get better,� he added. �The United States came in 23rd or 24th in most subjects. We can quibble, or we can face the brutal truth that we�re being out-educated.�

    In math, the Shanghai students performed in a class by themselves, outperforming second-place Singapore, which has been seen as an educational superstar in recent years. The average math scores of American students put them below 30 other countries.

    PISA scores are on a scale, with 500 as the average. Two-thirds of students in participating countries score between 400 and 600. On the math test last year, students in Shanghai scored 600, in Singapore 562, in Germany 513, and in the United States 487. ”

    http://www.nytimes.com/2010/12/07/education/07education.html?_r=2&hp

    It’s fascinating, and open to interpretation.
    Has our educational system changed? Has it become ‘”watered own”? Whose fault is it? The teacher’ union? The parents? Or is it that as a society we’ve just become dumber, like in the movie Idiocracy?
    Finland also did very well for themselves, ahead of all countries in all continents except for Asia.

  154. 154
    doug says:

    I think it’s at least part cultural. Intellectual curiosity is not looked upon favorably by many today, compared to steadfast belief. Both parents must work in order to afford to live in many middle-class households, and therefore have less time to teach their children. Another case of the detrimental effect of the squeeze on the middle class.

    If I hear another feel-good report about how ‘tech-savvy’ today’s youth are, I’ll scream. Being able to use a smart phone or post your speed-run of Mega Man 2 doesn’t mean you’re ready to be an engineer or programmer.

    I think we need more teachers and less money spent on computers. In Seattle, we have a tendency to outfit schools with the coolest new tech. I can make you a good desktop with $40 and a copy of Windows XP that will do everything you need as a school computer.

    Class sizes are so huge that promising students often don’t get the attention they need. Even good teachers are challenged teaching a group of 50 teenagers. Teaching cetificates are bunk, I think. If someone wants to teach, and has a bachelor’s degree, let them interview for the job. If they stink, fire them. If there are a greater number of motivated teachers on the market, some of the old, bad guard might shape up and actually try to teach a class. Smaller class sizes could also reinvigorate burned-out teachers.

  155. 155
    pfft says:

    obama only sorta caved on the tax cuts. progress! he seemed to be more mad at those that voted for him than those that have filibustered him over the last two years during his press conference.

  156. 156
    pfft says:

    By EconE @ 142:

    RE: pfft @ 141

    How much debt do corporations have?

    I don’t know but they have tons of cash. interest rates are so low corporations are borrowing even when they don’t have too!

  157. 157
    David Losh says:

    RE: Scotsman @ 151

    Read all the articles pertaining to Chinese education before you start in on how the United States isn’t keeping up. This trend China has right now to Westernize reminds me a little of Mao.

  158. 158
    blurtman says:

    RE: Trigger @ 90 – Trigger, I am not proposng anything of the sort regardiing speculators, which your definition inadequately addresses. I am asking that the law be upheld. Why? Because it is the law, which should be reason enough, but also, that folks have been negatively affected far beyond the buyers of these fraudulently rated and sold securities.

    You argument seems to be that both the buyers and sellers knew that this market was bullshit, but they decided to go with it. If the buyers were provided with proper information regarding the securities and purchased them anyway, there is no fraud.

    But there is fraud when the known risk of securities is not disclosed. Note the civil fraud
    settlement of Goldman Sachs, where they did not disclose to purchasers that the mortgages in the securities they bought were placed there by the client who wanted to short the securities. And where is the prosecution of Magnetar whose similar crimes dwarfed those of Goldman Sachs?

    The chief underwriter at Citibank recently tesitifed that he informed senior management including Robert Rubin that 60% of the roughly $50 billion of prime mortgages that Citigrup bought and sold annually were “defective.”

    There was no such disclosure made by Citibank. That is major fraud!

    Open your eyes, please, to the fall-out of this fraud. Credit markets seized up, the stock market plumeted over 40%, and many folks will be unemployed for several years. Major life destruction has occured. This crime greatly expands beyond merely the two parties involved in each transaction.

    For this reason alone, these crimes must be prosecuted.

    Other reasons for prosecuting this fraud:

    It is the law.

    It is becoming clearer to the average person that this is a two-tiered society – one set of laws for the rich and powerful, another set for the peasants.

    The growing revelation that we live in an unjust society does not bode well for the USA.

  159. 159
    WestSideBilly says:

    By pfft @ 156:

    By EconE @ 142:

    RE: pfft @ 141

    How much debt do corporations have?

    I don’t know but they have tons of cash. interest rates are so low corporations are borrowing even when they don’t have too!

    Found this:

    http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245214635566

    S&P 500 companies holding about $1T in cash, $2.6T in debt.

    http://financialedge.investopedia.com/financial-edge/0910/Rising-Cash—And-Rising-Debt-Too.aspx

    Corporate debt stands at about $7.2T. Can’t find hard numbers on total corporate cash, but it appears to be about 30% of that number ($2.2T?), up from about 25% a few years ago.

  160. 160
    Scotsman says:

    RE: David Losh @ 157

    I don’t know what you think is going on in Chinese education, but even if we set them aside there are still 20+ countries ahead of us on the list. The bottom line is it’s going to be hard for us to build a high value added manufacturing economy with decent wages if we don’t have an educated population to design and work in it. If you want to be the world’s technology leader at some point you have to do more than just claim it and talk about it- you have to be able to do the work and make things happen.

  161. 161
    EconE says:

    RE: WestSideBilly @ 159

    Nice find.

    It reminds me of the “How many millionaires are there?” stories that you see in the MSM every now and then. They (MSM) always calculate their (The supposed millionaires) net worth by specifically excluding their primary residence.

    If somebody has $1,000,000 in cash and a $2,000,000 mortgage are they *really* a millionaire or are they teetering on the brink of insolvency?

    It’s like the Housewives of wherever shows that I read about on the Realestalker. They all seem to go broke trying to keep up with each other. In the end, when the truth comes out, it appears that they’re all…well…most of them…are faking it.

    http://realestalker.blogspot.com/2010/12/alexis-bellino-another-real-housewife.html

  162. 162
    Hugh Dominic says:

    RE: Scotsman @ 160 – The US advantage was the powerful manufacturing base and the high productivity levels of our general population.

    Now the US advantage is that it’s the biggest homogenous market in the world. If you’re going to build a successful business, you do it where the customers are. Our businesses have the advantage of cultural and geographic proximity to the worlds most wealthy and populous customers. We remain rich because we are rich. On top of that, we control the currency that we transact in, that this giant customer base uses, which you cannot say for the EU.

    Through all this turmoil this is still true. Even as our education system fails us, and our government fails, bankers skim profit, jobs decline, and all the other bad news.

    I believe however that this will not be true forever. And when it flips, the true nature of US non-competitiveness will be revealed in a massive and sudden correction.

  163. 163
    Blake says:

    RE: doug @ 152
    Re: “This doesn’t surprise me at all. When I was engineering school ten years age, (during the tech boom!) the classes and enrollment were tiny compared to liberal arts classes. And we wonder why we can’t keep up in the technical fields…”

    heck… when I was in engineering school 30 years ago it was the same! I recall one of my engineering profs talking about how the Japanese and Koreans had 10x the engineers per capita, while the US was graduating 10x as many lawyers and “financial engineers.” Whiz Bang! Those financial engineers were REAL geniuses eh? Efficient at allocating capital and managing risk!

  164. 164
    David Losh says:

    RE: Scotsman @ 160

    The rush to educate in China doesn’t change the dynamics of class struggle. It’s the same in India. Education needs an outlet. We are seeing that here in the United States.

    Education, higher education in particular, was designed to keep people out of the work force. 500 million people can get degrees in astro physics, mathematics, nuclear science, doctorates in medicine, and we still won’t have a Utopia. Somebody has to cut the lawn.

    Our money is better spent on population control, and distribution of resources, in particular food, and shelter.

  165. 165
    pfft says:

    By Scotsman @ 151:

    This news is making the rounds today, and has stunned many. The U.S. has to get it’s act together on education if we ever want to see the high wage jobs we used to have come back:

    “â��We have to see this as a wake-up call,â�� Secretary of Education Arne Duncan said in an interview on Monday.

    �I know skeptics will want to argue with the results, but we consider them to be accurate and reliable, and we have to see them as a challenge to get better,� he added. �The United States came in 23rd or 24th in most subjects. We can quibble, or we can face the brutal truth that we�re being out-educated.�

    In math, the Shanghai students performed in a class by themselves, outperforming second-place Singapore, which has been seen as an educational superstar in recent years. The average math scores of American students put them below 30 other countries.

    PISA scores are on a scale, with 500 as the average. Two-thirds of students in participating countries score between 400 and 600. On the math test last year, students in Shanghai scored 600, in Singapore 562, in Germany 513, and in the United States 487. ”

    http://www.nytimes.com/2010/12/07/education/07education.html?_r=2&hp

    in one breath you say that we need students who are more educated and in the next you are advocating austerity policies at the state and local level that lays off teachers. I think you need to think these things through more.

  166. 166
    pfft says:

    By WestSideBilly @ 159:

    By pfft @ 156:

    By EconE @ 142:

    RE: pfft @ 141

    How much debt do corporations have?

    I don’t know but they have tons of cash. interest rates are so low corporations are borrowing even when they don’t have too!

    Found this:

    http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245214635566

    S&P 500 companies holding about $1T in cash, $2.6T in debt.

    http://financialedge.investopedia.com/financial-edge/0910/Rising-Cash—And-Rising-Debt-Too.aspx

    Corporate debt stands at about $7.2T. Can’t find hard numbers on total corporate cash, but it appears to be about 30% of that number ($2.2T?), up from about 25% a few years ago.

    earnings are at very high levels for corporations. from the depths of the recession earnings are up 900%.

  167. 167
    pfft says:

    By Scotsman @ 160:

    RE: David Losh @ 157

    I don’t know what you think is going on in Chinese education, but even if we set them aside there are still 20+ countries ahead of us on the list. The bottom line is it’s going to be hard for us to build a high value added manufacturing economy with decent wages if we don’t have an educated population to design and work in it.

    your austerity measures will make the situation worse.

    anyways you are wrong. the US lead in value added manufacturing. google says it took less than a second for them to find this out.

    Manufacturing Surprise: The U.S. Still Leads In Making Things
    http://moneywatch.bnet.com/economic-news/blog/macro-view/manufacturing-surprise-the-us-still-leads-in-making-things/2134/

    it appears as though we are losing some ground but that should dampen as the dollar falls. there is certainly a huge gulf between perceptions and reality.

  168. 168
    pfft says:

    By Blake @ 163:

    RE: doug @ 152
    Re: “This doesnâ��t surprise me at all. When I was engineering school ten years age, (during the tech boom!) the classes and enrollment were tiny compared to liberal arts classes. And we wonder why we canâ��t keep up in the technical fieldsâ�¦”

    heck… when I was in engineering school 30 years ago it was the same! I recall one of my engineering profs talking about how the Japanese and Koreans had 10x the engineers per capita, while the US was graduating 10x as many lawyers and “financial engineers.” Whiz Bang! Those financial engineers were REAL geniuses eh? Efficient at allocating capital and managing risk!

    from what I’ve heard engineering is really tough and when you get out the job has longs hours and isn’t fun. sounds like we know what the problem is.

  169. 169
    EconE says:

    RE: pfft @ 166

    Nigeria’s export earnings are also up 900%

    http://www.tradeinvestnigeria.com/news/689300.htm

    Yay! We’re as good as Nigeria!

  170. 170
    Blake says:

    Just catching up reading through this Blog from the last week… (3 year strategic plan and annual report finally went out last Friday!! whew…)

    It is an interesting forum and collection of voices. Always fascinating to see what people people believe and try to discern how they think (??) I find that there is actually a lot of common agreement…
    I even agree with some of Scotsman’s posts! ;-)
    #96 – 25 facts about unemployment
    and
    #103 http://reason.com/assets/mc/ngillespie/2010_12/revenuegdp.JPG
    >> Note in that graph that govt revenues/tax receipts are at 40 year lows! Gee… can’t figure out why we might have deficits? Better CUT TAXES MORE!!!
    (But… re: scotsman #100 – I think we can all agree that if you post a link and a quote, the quote shoudl be from the link!)

    The news today was fairly grim for long term prospects. $900 billion in tax cuts and short term spending will stimulate the economy some – – 2011 will not be so bad now. But this does nothing to help out nation in the long run – – as I think everyone in the forum would agree. No fundamental change… just the pols greasing things and sliding them down a ways!

    Ironically, former Reagan Budget Director David Stockman has been the most honest about all this.

    Four Deformations of the Apocalypse
    By DAVID STOCKMAN July 31, 2010
    -snip-
    IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing…
    http://www.nytimes.com/2010/08/01/opinion/01stockman.html?_r=1

    Barry Ritholtz did a good bullet summary of Stockman’s points…
    http://www.ritholtz.com/blog/2010/08/gop-destroyed-the-u-s-economy/
    (snip): I can sum it up thusly: Whereas the Democrats have no economic
    policy, the Republicans have a very bad one.

    The details are what makes Stockman’s take so astonishing. Here are
    his most important observations, of which I find little to disagree
    with:
    • Supply Side tax cuts for the wealthy are based on “money printing
    and deficit finance — vulgar Keynesiansism robed in the ideological
    vestments of the prosperous classes.”
    • Republicans abandoned the belief that prosperity depended upon the
    regular balancing of accounts — government, trade, central banks
    private households and businesses.
    • Once fiscal conservatism was abandoned, it led to the serial
    financial bubbles and Wall Street depredations that have crippled our
    economy.
    • The Nixon administration defaulted on American obligations under the
    1944 Bretton Woods agreement.
    • According to Friedman, “The free market set currency exchange rates,
    he said, and trade deficits will self-correct.” What actually occurred
    was “impossible.” Stockman calls it “Friedman’s $8 trillion error.”
    • The expansion of our financial sector has been vast and
    unproductive. Stockman blames (tho but not by name): 1) Greenspan, for
    flooding financial markets with freely printed money; and 2) Phil
    Gramm, for removing traditional restrictions on leverage and
    speculation.
    • The shadow banking system grew from a mere $500 billion in 1970 to
    $30 trillion by September 2008 (see Gramm, above).
    • Trillion-dollar financial conglomerates are not free enterprises —
    they are wards of the state, living on virtually free money from the
    Fed’s discount window to cover their bad bets.
    • From 2002 to 2006, the top 1% of Americans received two-thirds of
    the gain in national income.

  171. 171
    Scotsman says:

    Iceland chooses austerity, takes it’s medicine, lets private banks fail, and is now on the road to recovery!

    “Iceland emerged from recession in the third quarter, official data showed Tuesday, returning to growth for the first time since its financial system collapsed at the height of the crisis in 2008.

    Iceland’s real gross domestic product grew by 1.2 percent in the July-September period from the previous quarter, the first quarterly increase since the same period in 2008. Iceland entered a slump after its overleveraged financial sector collapsed in the wake of Lehman Brothers’ bankruptcy.

    Like Ireland and Greece, Iceland has taken a large dose of austerity measures to rebuild its economy. Unlike Ireland and Greece, however, Iceland allowed private banks to fail, and its currency, the krona, has declined by about 46 percent against the dollar since the start of 2008.

    “Excluding the financial system, the real economy is doing well,” Arsaell Valfells, a professor of business and finance at the University of Iceland, said in telephone interview. Retail spending was still shrinking, he said, but the export sector, consisting mainly of fish, aluminum and tourism, was improving.

    “We’ve basically gone back to 2003 in terms of the level of standard of living,” he said. The worst has been felt by younger people who borrowed at the height of the bubble and are now having to reduce their debt, he said. “But they’ll come through this,” he added.

    Iceland’s experience, he said, offered a lesson for the euro zone as it grappled with its own crisis: “This is the proper process. If you go through a bubble economy and you need to correct it, the answer is not to convert private debt into public debt. Rather it is to restructure the debt to the level of the assets.”

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

  172. 172
    Blake says:

    This paper came out almost 2 years ago is is amazingly accurate… so far! Got a few years yet to go… 2016?
    The Aftermath of Financial Crises
    NBER Working Paper No. 14656
    Issued January 2009
    by Carmen M. Reinhart, Kenneth S. Rogoff
    http://www.nber.org/papers/w14656
    This paper examines the depth and duration of the slump that invariably follows severe financial crises, which tend to be protracted affairs. We find that asset market collapses are deep and prolonged. On a peak-to-trough basis, real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over a downturn of about three and a half years. Not surprisingly, banking crises are associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on average over four years. Output falls an average of over 9 percent, although the duration of the downturn is considerably shorter than for unemployment. The real value of government debt tends to explode, rising an average of 86 percent in the major post-World War II episodes. The main cause of debt explosions is usually not the widely cited costs of bailing out and recapitalizing the banking system. The collapse in tax revenues in the wake of deep and prolonged economic contractions is a critical factor in explaining the large budget deficits and increases in debt that follow the crisis. Our estimates of the rise in government debt are likely to be conservative, as these do not include increases in government guarantees, which also expand briskly during these episodes.

  173. 173

    RE: WestSideBilly @ 159
    When looking at stocks to invest in, some investors look at debt as a percentage of shareholder equity, and shareholder equity has to be considered, in addition to the amount of cash.
    If a company doesn’t have a lot of cash, but does have a lot of shareholder equity, and a fairly low amount of debt,it should be easy for them to raise for cash by issuing more shares.
    At the same time, there are companies that have a lot of cash, no or little debt, but are just sitting on the cash and aren’t really growing it or growing profits. a company like that would have a harder time issuing new shares to raise more cash, because investors aren’t seeing that the existing cash is being spent wisely.

  174. 174
    Scotsman says:

    RE: Blake @ 170

    “#103 http://reason.com/assets/mc/ngillespie/2010_12/revenuegdp.JPG
    >> Note in that graph that govt revenues/tax receipts are at 40 year lows! Gee… can’t figure out why we might have deficits? Better CUT TAXES MORE!!!

    Falling tax revenues are an interesting problem , especially in light of this:

    http://www.hoover.org/publications/hoover-digest/article/5728

    “Hauser’s Law” suggests that it’s difficult, if not impossible, to increase tax revenue in the U.S. (or perhaps any industrialized economy) above 20% of GDP. You can read the link above and/or Google for more info, but the idea is pretty simple- punitive tax rates don’t lead to increased revenue. The natural conclusion then is that federal expenditures should be limited to 20% of GDP with the discussion then focused on how to prioritize spending. Given you only get this much of the total pie, how do you want to divide it up? Instead we spend too much time trying to expand the government pie and never make the hard selective decisions.

    Knowing this, let’s go back to the chart in post #103. Why have revenues fallen so sharply when they are still well below the 20% mark? I’d suggest it’s because the tax code is too focused on capturing marginal dollars and special classes of revenue, categories that have taken disproportional hits during this recession. If stability is what we want we need to limit spending to 20% and reconstruct the tax code so that it is less profit oriented and either more consumption or wealth oriented. One thing is ever more certain- the current system is about to take us over a cliff, so opportunities to redesign both the government and economy may soon be available.

  175. 175
    pfft says:

    By Scotsman @ 171:

    Iceland chooses austerity, takes it’s medicine, lets private banks fail, and is now on the road to recovery!

    very funny. iceland has their own currency and it fell and stimulated the economy which led to it’s recovery. greece and ireland cannot do that they must have massive deflation.

    no austerity nation is doing well right now.

  176. 176
    Blake says:

    RE: pfft @ 175

    Iceland also allowed their banks to fail… like Sweden in the 90s. Japan (90s) and the US (now) decided to prop them up!

  177. 177
    Scotsman says:

    RE: Blake @ 170

    Stockman is a breath of fresh air with a real knack for communicating complex ideas in easily understood terms. I completely agree that Gramm and Greenspan are to blame, along with the idea that a FIRE economy could somehow be self-sustaining. The notion of creating an entire economy by shuffling papers across your desk while taking a fractional percentage cut of the action seems insane in retrospect. And indeed if anyone had really put any introspective effort into the idea up front we could have been saved much pain and suffering. We need to reward real production and wealth creation, not just its redistribution or manipulation. You can’t legislate morality, but you can legislate limits. Gramm removed the limits and the structural foundation is now crumbling.

  178. 178
    Blake says:

    RE: Scotsman @ 174
    “Why have revenues fallen so sharply when they are still well below the 20% mark?”

    I’d say – looking at your graph from the last 10 years – because of the 2000 stock bubble collapse and recession combined with the Bush tax cuts! And then the 2008 economic collapse… and now the Obama tax cuts!!! Not rocket science.

  179. 179
    Blake says:

    RE: Ben @ 118
    Ben: “What I’m saying is that all markets are regulated… Deregulation” it is definitely NOT what we have today.”

    heh heh heh… really…. REALLY!??
    … ummm
    REALLY!!!???

    The Depository Institutions Act of 1982 (Reagan)
    -> S&L crisis

    Financial Services Modernization Act of 1999
    -> Enron, Citigroup, etc etc
    enabled the merging of commercial and investment banking and creation of too-big-to-fail conglomerates

    Commodity Futures Modernization Act of 2000 (CFMA)
    -> AIG etc etc
    http://www.ritholtz.com/blog/2010/03/misunderstanding-the-last-financial-crisis/
    -snip- the universe of structured derivatives were completely exempt from ALL regulation. Whether it was Collateralized Debt Obligations (CDOs) or Credit Default Swaps (CDSs), the CFMA put them into the world of shadow banking. No supervision was allowed, no reserve requirements for potential future payouts were mandated, no exchange listing requirements were put into effect, all capital minimums were legally ignored, there was no required disclosures of counter-parties.

    Ben: It’s not that the corporations captured the regulators, they removed ALL the regulations.

    It’s odd to argue with rightwingers who seem to still believe that the government caused the crisis and that businesses – if left to their own means – would be just fine. At a certain point – like after witnessing the worst financial and economic crisis in two generations unfold after the foolish deregulation of the financial markets – that I feel like there is no arguing with some people. But I like to ask them about the booms and busts of the 19th century – the depression of 1873-79, the gilded age – when there was virtually no government! WHAT caused those?? Fact is: If left to themselves, markets tend to act irrationally and destroy themselves!

    In Oct 2008, I was driving home listening to the BBC. They were interviewing Henry Kaufman, former Managing Director of Salomon Brothers (which was later absorbed by the Travelers Group which then merged into the Citigroup monster…) The BBC asked him point blank if we would have another great depression. Henry said no because the government is such a large part of the economy now (12% in 1930 vs. ~33% in 2008) and that would soften the blow as the private sector retrenched and deleveraged and the government would step in to fill the gap. He was right – – to an extent… Unfortunately, the political tide is turning against government action towards austerity and the 2010s may be more like the 1930s or 1870s (Gilded Age) than we wish!

    Re: Education and America’s long term prospects…
    You all should read this recent short piece by Prof. Barry Eichengreen
    Is America Catching the “British Disease?”
    http://www.project-syndicate.org/commentary/eichengreen24/English
    He examines various explanations for Britain’s decline (education, financial system, workforce…) and concludes:
    “In short, Britain’s was a political, not an economic, failure. And that history, unfortunately, is all too pertinent to America’s fate.”
    I read that last week and thought of it today watching the WashDC circle jerk.

    See also Skildesky’s The Irrepressible 1930’s
    http://www.project-syndicate.org/commentary/skidelsky35/English

  180. 180
    Scotsman says:

    RE: Blake @ 178

    Aw, you missed the point, and went for the easy partisan shot. It’s not the tax rates, it’s how the taxes are structured- what we tax, i.e. profit. That’s also why the income distribution continues to skew so badly:

    http://media.hoover.org/images/tax_rates_graph_ranson.jpg?size=large

  181. 181
    Blake says:

    RE: Scotsman @ 177
    Stockman always speaks his mind… as Reagan found out! I’ve enjoyed reading Kevin Phillips’ books the last 10-15 years where he explores the financialization of the US economy. (ie. American Theocracy, American Dynasty, Bad Money etc.) He looks at the collapse of the Spanish, Dutch and British empires… We have a variant of the Dutch Disease. After their success in the 17th century, the Dutch loaned money to the Brits and others and sat back clipping coupons and living large while they neglected their science and industry. At least they were solvent! The odd 21st century American variant is that we are shuffling and printing paper and borrowing it!? At the least while we are still the reserve currency and can exploit seigniorage privilege, we should be using the money for productive investments… The US has no leadership… the political system is hopelessly corrupt. Japan’s is as well and that is why they never could make their banks swallow the losses.

    BTW: Phillips’ 1994 book Arrogant Capital: Washington, Wall Street and the Frustration of American Politics is one of my favorite books of all time…. Seems like a long time ago, but he was dead on!

  182. 182
    Blake says:

    RE: Scotsman @ 180
    Hmmm… sorry… couldn’t resist!
    But, I don’t know what you mean by punitive tax rates?
    >> “punitive tax rates don’t lead to increased revenue.”
    You mean higher taxes??

    And I’m not sure what the last two sentences here mean…
    “Knowing this, let’s go back to the chart in post #103. Why have revenues fallen so sharply when they are still well below the 20% mark? I’d suggest it’s because the tax code is too focused on capturing marginal dollars and special classes of revenue, categories that have taken disproportional hits during this recession. If stability is what we want we need to limit spending to 20% and reconstruct the tax code so that it is less profit oriented and either more consumption or wealth oriented.”
    ???

    But I must whole-heartedly disagree with your statement that we limit government spending to 20% of GDP. That would be a recipe for disaster! Massive layoffs, 25% cut in Federal government outlays… not a good idea right now (Bernacke made that point in his 60 minutes interview Sunday night… not a good time to cut. He made a strong pitch for fiscal stimulus… there’s not much the Fed can do.)

  183. 183
    Blake says:

    RE: Scotsman @ 174
    OK… I did think that graph in the link you posted was off…
    Falling tax revenues are an interesting problem , especially in light of this:
    http://www.hoover.org/publications/hoover-digest/article/5728
    “Hauser’s Law” suggests that it’s difficult, if not impossible, to increase tax revenue in the U.S.

    As I suspected, the lower line for “Federal Tax revenues” is not for just income tax, but also includes social insurance taxes! So the Hoover Institution publishes that graph (which the Wall St Journal also used) depicting changes in the top marginal individual income tax rate with “federal tax revenues” below – – which are NOT revenues from individual income taxes, but include corporate and social security taxes (which have gone up substantially!)
    So… heh… heh… I kinda see how this might confuse people! Of course the Hoover Institution and WallStJ are good at that! (I’m a statistician and I get so offended by people like that… they deceive people with numbers and stats. “professionals?” liars…)

    No… as they slashed corporate and individual income taxes, tax revenues HAVE declined!

    Zubin Jelveh at Seeking Alpha debunked this misleading chart and the Hauser’s Law=Laffer Curve here (David Stockman calls it the “Laugher curve”):
    http://seekingalpha.com/article/78256-lying-with-charts-wsj-edition
    (scroll down to chart #4 at bottom to see how revenues have declined when you remove the social insurance revenues… That is also why it is such BS that Greenspan and Co jacked up our SS taxes in the early eighties to build up the SS reserves and now act like there are no reserves! It was just general revenue!! The SS trust fund actually has trillions of $ US bonds… they just don’t want the trust fund to ever cash them in!)

  184. 184
    doug says:

    RE: David Losh @ 157

    Exceeding our scores in mathematics is lot more do-able than trying to compete with our iron production by welting down cooking implements. I’d say it’s not that difficult, period.

    RE: pfft @ 168

    Yes, engineering school is very difficult, and business school is very easy (beingin an MBA program, I think I can make this statement). We reward lawyers and bean-counters more than anyone else in this society, so it’s hard to be surprised when we have a society of lawyers, bean-counters and skimmers that produce nothing useful.

  185. 185
    David Losh says:

    RE: Blake @ 179

    Kaufman was also asked what happened with Citigroup and he replied that no one knew what the other was doing. The company got too big to be managed.

    The difference today from 1930 is we are in a globally connected market place. Let’s tax derivatives. They’re there, they exist by good will, let’s tax them.

    If corporations are entities, as the Supreme Court claims, then let’s tax them.

  186. 186
    One Eyed Man says:

    RE: doug @ 184

    The defacto career goal of every engineer is to become an engineering manager and potentially an executive. That’s the promotional track up the pyramid shaped organizational chart with the big dollars at the top.

    One of my uncles was physicist of the year for Honeywell in the late 1970’s. In the mid 1980’s he retired in his nice little house in the suburbs of Minneapolis after the Dept of Energy budget was cut and the grant funding for his solar energy research dried up. One of his buddies who had left research years earlier to become a patent lawyer did much better economically. And another friend who left for the management track eventually became CEO of 3M.

    To paraphrase a friend of mine, if you want to stay an engineer, you’ll start out as a buck fart and work your way up to a stooge. If you want to make money, get closer to the flow and more of it will rain down on you.

    Our economy often rewards those who control the flow of money disproportionately more than those who create value. That leakage in the flow is an externalized cost that’s not easily measured when assessing the efficiency and fairness of a market economy or a business organization. The winners and losers in a capitalist economy aren’t necessarily determined in strict proportion to the true value they contribute. And as a corollary to that proposition, there is perhaps a Faustian element to the “American Dream.”

    Unfortunately I don’t have a good solution to the described dilemma. I went to school at the height of the Viet Nam War. My aptitudes are in math and science, but I eventually went to law school because I thought the skill set gained there would provide me more ability to control the path of social choices and build a better world. I didn’t want to end up with Oppenheimer syndrome as a result of spending the rest of my life making parts for smart bombs that some other moron decided how to use. Ironically, to make a living as a lawyer I ended up representing real estate developers and real estate lenders because I needed the money and there were people with better credentials who got the jobs working for The Nature Conservancy and Trust for Public Lands. Every now and then I wonder if Mephistopheles will be showing up soon to collect my soul.

  187. 187
    doug says:

    RE: One Eyed Man @ 186

    Unfortunately, you’re right on. Which is why I’m getting my MBA…

  188. 188
    WestSideBilly says:

    By Blake @ 163:from what I’ve heard engineering is really tough and when you get out the job has longs hours and isn’t fun. sounds like we know what the problem is.

    Long winded rant alert!

    First, engineering school is hard, but it is by no means impossible for anyone who can grasp math. It’s all math and problem solving (the degree, not the real world). The elite engineering schools are much harder, despite offering little increased value (in terms of salary) over mediocre engineering schools. The engineering curriculum in the large state schools is pretty basic stuff; I’ve met plenty of engineers who couldn’t design a cardboard box but got through school with high marks.

    Second, the career path is pretty dull for probably 90% of engineering disciplines. I’ve had 3 engineering jobs and 2 were exceedingly monotonous – coworkers have/had been doing the same thing for decades. Maybe some new software here and there, but the same job. In that sense it’s not elevated much above manufacturing. The other job of the 3 I had was pretty awesome, but was for a crappy company and in a crappy city.

    Third, the pay simply isn’t commensurate with the supposed demands of the field, nor has it increased when demand was supposedly high. Doctors, lawyers, MBA wielding paper pushers, accountants, programmers, etc all make more and offer higher ceilings. I made more driving a semi than some engineers make, and there is a fairly low ceiling. 6 figure engineering salaries only exist if you work 70 hour weeks, or work in the petroleum industry (which means you work in the middle of nowhere or on a rig). The stories about Boeing engineers making 6 figure salaries largely ignore that part. So, while not exactly peanuts, engineering as a career path is fairly dead end salary wise after about a decade (with inflationary raises thereafter). So, if you want to make money, you get your MBA and go into program management (e.g. paper pushing). This is really a huge problem, because the most ambitious and talented engineers frequently are steered out of engineering and into paper pushing in order to move up the salary ladder. GM and Ford discovered this and started creating high salary career paths for the best engineers they had, albeit after the paper pushers had destroyed their business. Most of Boeing’s woes are tied to listening to paper pushers instead of engineers, which is somewhat tied to the cachet of the two roles. A lot of Microsoft’s best and brightest go into the PM field instead of creating newer/better software/products. Same issue, many of their woes go hand in hand with that.

    The fourth issue is that in many of the Asian cultures, engineering (along with math and science) is viewed very favorably. It is admirable to become an engineer, it is admirable to be exceptional at math and science. Engineering hasn’t been admired in this country since the Apollo program, and being good at math usually gets you labeled a dork and resulted in significantly reduced opportunities to intermingle with the opposite sex. Software programmers, despite being far dorkier as a group, have broken this image somewhat because the economic ceiling is so high.

    Fifth, and this is tangential to engineering but directly tied to the broader sciences, is that so much of this country is willfully ignorant. A scientist can spend much of their life researching something, have their work validated by dozens of other scientists, only to have their worker skewered by a no talent ass clown with no scientific background. And yes, I’m somewhat referring to climate change, evolution, and other hot topics. But the traits of good engineers, scientists, and mathematicians (curiosity, analytical thinking, and problem solving) are all scorned by broader society in the US.

    Long winded post shortened: we are somewhat screwed so long as math, science, and engineering in this country are looked down upon and compensated poorly compared to bean counters and paper pushers.

  189. 189
    David S says:

    http://en.wikipedia.org/wiki/China_Railways_CRH380A

    http://news.yahoo.com/s/ap/20101203/ap_on_hi_te/as_china_high_speed_rail

    This thing rocks!

    China is kicking bottom right now in science and tech. If it was not for the oppression, lack of human rights and language barriers I might try to go compete.

    I wonder if the engineers on this project are happy, or have commensurate salary or pay? I know they have no rights, but what a cool project to be involved with.

  190. 190
    blurtman says:

    Fook the unemployed, let’s help the folks whose fraud ruined the economy. Why can’t everyone get these wonderful terms?

    “The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics. “It’s a transfer from savers to banks.” The trading results, which helped the banks report higher quarterly profit than analysts estimated even as unemployment stagnated at a 27-year high, came with a big assist from the Federal Reserve. The U.S. central bank helped lenders by holding short-term borrowing costs near zero, giving them a chance to profit by carrying even 10-year government notes that yielded an average of 3.70 percent last quarter.

    The gap between short-term interest rates, such as what banks may pay to borrow in interbank markets or on savings accounts, and longer-term rates, known as the yield curve, has been at record levels. The difference between yields on 2- and 10-year Treasuries yesterday touched 2.71 percentage points, near the all-time high of 2.94 percentage points set Feb. 18.”

    http://www.washingtonsblog.com/2010/12/no-big-banks-have-not-really-paid-back.html

  191. 191
    blurtman says:

    Obama is a piece of dung coward and fraud. Soon after he assumed office, he made a publicity stunt appearance on the Jay Leno show where he claimed that while what happened on Wall Street was bad, that no crimes had been committed. How the heck would he know that without having launched an investigation? What a bought-and-paid for pimp!

    Look at how quickly that empty suit US AG Holder acted against the Wikileaks founder. Where the heck has this piece of garbage been with Goldman Sachs?

    Here is a nice run down of Wall Street fraud from Janet Takavoli. Where are the police????

    http://market-ticker.org/akcs-www?post=174392

  192. 192

    RE: WestSideBilly @ 188

    Great Take

    I’d add too that it’s VERY costly for a company, like Boeing and Microsoft, to have non-tech supervision over engineers [they both do BTW] and it’s no way to have supervision plan and schedule their work [they don’t know what an engineer does and legally/logically, they’re not qualified either].

    Also, IMO, the non-Tech degreed professionals are jealous of engineers getting higher offers from companies and competing against them [if they’re the engineers’ supervisor] for scarce Recession Employment….hence, public schools [unions] don’t want to pay math and science degree teachers more than arts graduates and outsourcing all of America’s automotive engineering backbone is considered wonderful by a lot of non-technicals [when it’s actually a pitch fork in our back].

  193. 193

    “Every now and then I wonder if Mephistopheles will be showing up soon to collect my soul.”

    It might have already happened. Probably true of politicians, too. They think they actually have souls, but it’s really just a distant memory.

  194. 194
    Scotsman says:

    RE: WestSideBilly @ 188

    Thanks for your post- it’s very timely in that I’ve been having career discussions with my daughter who wants to be an engineer. She’s very bright, ME @ Stanford, finding it very challenging as the competition and expectations are very high. I’m not convinced it’s going to provide that much of a leg up and have been trying to steer her more toward business or marketing. Product development is the current compromise. What I know, that she hasn’t figured out yet, is that 10 years of doing pipe layout, etc. will make her suicidal. I wish I knew more, but have no experience in the field.

  195. 195
    Scotsman says:

    More support for taking the financial hit up front with a bit of austerity- Iceland is headed for a surplus!

    “Iceland has finally emerged from deep recession after allowing its currency to plunge and washing its hands of private bank debt, prompting an intense the debate over whether Ireland might suffer less damage if adopted the same strategy.

    The Nordic economy grew at 1.2pc in the third quarter and looks poised to rebound next year. It ends a gruelling slump caused largely by the “New Viking” antics of Landsbanki, Glitnir and Kaupthing, the trio of lenders that brought down Iceland’s financial system in September 2008.

    The economies of the two “over-banked” countries have both contracted by around 11pc of GDP, but Iceland has achieved it with inflation that devalues debt, while Ireland has done it under an EMU deflation regime that raises the burden of debt.

    This has led to vastly different debt dynamics as they enter Year III of the drama. Iceland’s budget deficit will be 6.3pc this year, and soon in surplus: Ireland’s will be 12pc (32pc with bank bail-outs) and not much better next year. ”

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8187476/Iceland-offers-risky-temptation-for-Ireland-as-recession-ends.html

  196. 196
    WestSideBilly says:

    By Scotsman @ 194:

    RE: WestSideBilly @ 188

    Thanks for your post- it’s very timely in that I’ve been having career discussions with my daughter who wants to be an engineer. She’s very bright, ME @ Stanford, finding it very challenging as the competition and expectations are very high. I’m not convinced it’s going to provide that much of a leg up and have been trying to steer her more toward business or marketing. Product development is the current compromise. What I know, that she hasn’t figured out yet, is that 10 years of doing pipe layout, etc. will make her suicidal. I wish I knew more, but have no experience in the field.

    I think what she will find is that the elevated requirements of Stanford probably won’t give her a leg up in terms of economic opportunity vs engineers from other schools. She will probably be vastly more prepared to succeed, but like many things that does not always translate to more pay, especially not at first. The bigger companies (GM/F/C, Caterpillar, Boeing, et al) generally have very regimented pay scales for new graduate hires, mainly because their GPA and whatnot offers no indication of their ability to be an engineer. Smaller companies don’t always like to hire new grads, unless they work cheap (refer to my comments about pay relative to driving a semi).

    I agree that if she ends up in a monotonous field she will not enjoy it, partly because it will be so much easier than her education was. There are a couple variables that could lead to a fruitful engineering career. First is flexibility in where you live. Personally I found that living somewhere I want to live (e.g. Seattle) was better for me than doing a cool job. If your daughter is flexible, she will find some very cool opportunities. I mentioned the petroleum industry, because it really offers the best pay and some exotic locales. I have friends/college acquaintances who ended up in Alaska, Colorado, Russia, Indonesia, and various other places. They are paid much better than I am (and probably ever will be), and have many opportunities to travel. The second variable is what else she has to offer. Being multilingual (Spanish, Japanese, Mandarin would be good, Hindi or Arabic might offer more unique opportunity) is a good asset. Having a diverse skillset (whether a second degree or not) is valuable. Most engineers finish school with a very homogeneous skill set and it’s very difficult to make yourself stand out. If she can market skills/knowledge such as robotics, automation, or high level programming, that will separate her.

    One thing I will say is that ten years ago the ME + MBA combo was very valuable, but it’s probably losing sail now (MBA is basically a commodity at this point). Being a money pimp (business degree + MBA) is still a good way to make boat loads of money but the competition is immense, and it seems like a very unrewarding career choice for a problem solving mind. A good engineering + marketing background could head her into a career in technical sales – won’t fully utilize the engineering brain but the money can be really good.

    About the only guarantee I can make is that if she does only the bare minimum to get her BSME, she/you will have wasted $200k (or whatever Stanford is charging these days) and she will probably end up in a dull career.

  197. 197
    pfft says:

    By Blake @ 176:

    RE: pfft @ 175

    Iceland also allowed their banks to fail… like Sweden in the 90s. Japan (90s) and the US (now) decided to prop them up!

    sweden propped up their banks.

    Sweden’s ‘Mr. Fix-It’ Bank Bailout May Be Model for U.S., U.K.
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atrQkJTX1P50

    notice that sweden’s bailout did not lead to an even bigger bailout down the road. today sweden is one of the world’s healthiest economies despite the naysayers. if they had “taken the hit” like austerians wanted they wouldn’t be as well off.

  198. 198
    pfft says:

    By Blake @ 179:

    RE: Ben @ 118
    Ben: “What Iâ��m saying is that all markets are regulated… Deregulationâ�� it is definitely NOT what we have today.”

    heh heh heh… really…. REALLY!??
    … ummm
    REALLY!!!???

    I know! the unregulated part of AIG is what needed to be bailed out. deregulation is why banks held so many toxic mortgages.

    we were told the market would police itself because no business would ever do anything wrong. kind of like saying nobody would commit crimes because they would go to jail.

  199. 199
    pfft says:

    By Scotsman @ 195:

    More support for taking the financial hit up front with a bit of austerity- Iceland is headed for a surplus!

    “Iceland has finally emerged from deep recession after allowing its currency to plunge and washing its hands of private bank debt, prompting an intense the debate over whether Ireland might suffer less damage if adopted the same strategy.

    The Nordic economy grew at 1.2pc in the third quarter and looks poised to rebound next year. It ends a gruelling slump caused largely by the “New Viking” antics of Landsbanki, Glitnir and Kaupthing, the trio of lenders that brought down Iceland’s financial system in September 2008.

    The economies of the two “over-banked” countries have both contracted by around 11pc of GDP, but Iceland has achieved it with inflation that devalues debt, while Ireland has done it under an EMU deflation regime that raises the burden of debt.

    This has led to vastly different debt dynamics as they enter Year III of the drama. Iceland’s budget deficit will be 6.3pc this year, and soon in surplus: Ireland’s will be 12pc (32pc with bank bail-outs) and not much better next year. ”

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8187476/Iceland-offers-risky-temptation-for-Ireland-as-recession-ends.html

    why do you continue to distort what is happening in Iceland? it’s the currency stupid.

    you ignore other take the hit now countries- estonia and latvia are still messes that has near 20% unemployment. austerity doesn’t work.

    “(32pc with bank bail-outs)”

    that is not a credible number. are you really saying Ireland is borrowing at 32% of gdp this year? no way.

  200. 200
    pfft says:

    scotsman you don’t know it but what you’re really arguing about is currency devaluation. you’re saying it’s a success. when I say the US economy will recover as the dollar lowers and it boosts exports and jobs you say that it won’t happen.

    which is it?

  201. 201
    Gerald says:

    RE: Scotsman @ 194 -Scotsman, engineering can be a lucrative career if you manage your own career well. People who take the easy, comfortable path by letting others define their careers will end up in the boring mind dulling positions. If your daughter is an achiever and deliberately seeks out the companies who are pushing the envelope then she can both enjoy an exciting job while being compensated well. She needs to find the small companies that demand each engineer become skilled at multiple disciplines rather than the large companies that push people into the repetitive task positions.

  202. 202
    David Losh says:

    No one bit on taxing the Deriviatives Market, or Corporations, but it will have to be done.

    Let’s take the capital flight argumnet, where will capital go next? The entire global economy is a mess, there is no safe haven. Every government is a slave to the financial markets, are trying to appease the financial markets, and are afraid of an economic collapse.

    Well, the simplest thing to do is open the credit markets, deriviatives, and see what’s exactly inside.

    Given the amount of ink the Heritage Foundation has devoted to a solution I will guess there is very little supporting the $600Trillion claim of value. I think “investors” like Warren Buffet are selling off worthless peices of paper for huge profits on a very small investment of cash.

    My point is that we can’t regulate a phantom industry like this, but we can tax it. All governments can tax this wind fall of an industry.

    What taxation gets us is an accounting. Once you start asking for a wind fall profit tax I’ll bet the value of the deriviatives market collapses into the pile of paper it actually is.

    We can tax anything right? We can have a tax on interest income.

    I think we need that kind of accounting. I think every stock holder should have a right to know if the company they are putting money into is actually producing something or just lending money for profit.

    The deriviatives market is $600Trillion, and we’re going on, and on about soveriegn debt of maybe $50 Trillion globally, less than 10%. Let’s tax it.

  203. 203

    By pfft @ 198:

    By Blake @ 179:

    RE: Ben @ 118
    Ben: “What I�m saying is that all markets are regulated… Deregulation� it is definitely NOT what we have today.”

    heh heh heh… really…. REALLY!??
    … ummm
    REALLY!!!???

    I know! the unregulated part of AIG is what needed to be bailed out. deregulation is why banks held so many toxic mortgages.

    we were told the market would police itself because no business would ever do anything wrong. kind of like saying nobody would commit crimes because they would go to jail.

    I would argue the problem was more with companies not having any form of adequate risk control, or having it and not listening to it. Too many MBAs and not enough people who knew what they were doing.

    I’m not sure regulation would help, except perhaps regulation that prevents adventure into entire areas. Even L.A. County got into similar problems by not having sufficient controls.

  204. 204
    justtalkingre says:

    RE: blurtman @ 191 – Here Here Blurtman! It is time to call for an investigation and prosecutions! Fraud can be proved and WikiLeak is providing fodder that proves it. Speak out and let Britain hear us, Protect WikiLeak founder Julian Assange as he is an instrument of the HIDDEN truth. Governments and Business if ethical have nothing to fear!

  205. 205
    justtalkingre says:

    Great conversation, it’s nice to hear folks talking specifics and ethics.
    In tossing around your ideas I see threads of information but am unclear on your goals. What do you want to achieve? I call it “Cleveland.” I know where Cleveland is and I can choose any way to get there I so choose. I can walk, fly, ride my bike, go there via Istanbul, but I know I’m going to Cleveland. Knowing I’m going to Cleveland gives me the impetus to measure my questions of business, government, & community and maintain my path to “Cleveland.”

    Here’s my Cleveland: America 2050
    Let’s identify the structures we work with, Business, Government, & Community. Business is the machine that makes the money. Government plans for industry, manages ethical business practices and provides basic human services. Business and Government are solely responsible for the best interests of the community. (Community is our family, friends, cities, states, countries, & the world.)

    Invest in Environment/Energy, Education, & Healthcare. Business is the machine that makes the money. It’s wealth is distributed to the community via jobs and benefits. Government taxation provides for the community where business jobs and benefits cannot reach. The Community must hold Business and Government to the highest standard to build a well educated, healthy, and sustainable community.

    My question is, “Do the tax credits for the rich move us toward that Cleveland or maintain the status quo of Business serving itself over the community?” I think the latter and therefore voice ” The tax cuts for the rich should be allowed to expire while the tax cuts and unemployment for the middle class should be extended.

  206. 206
    Ben says:

    RE: Kary L. Krismer @ 203 – There is a common misconception regarding the meaning of “free market” and “deregulation”. There is no fee market in the US and literally everything is regulated.

    Every problem we are experiencing is a direct or indirect result of true free market forces being subverted by government and crony capitalists. The Fed, Fannie Mae, Freddie Mac, Wamu, Countrywide, mortgage lending, blind eyes by SEC and regulators…You name it and government and big business had a hand in it.

    There is no free market and nothing is deregulated. It all about money and power. Who makes the rules – the market or crony capitalists?

    If you answered “crony capitalists”, you get a gold star and snaps.

  207. 207
    Blake says:

    RE: pfft @ 197
    Re; Sweden 1992 bank insolvency/bankruptcies
    http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=1
    Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing. Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
    … Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.
    (Note: “write down losses” – – our banks are still carrying trillions at BS valuations.)

    -and, quoting Barry Ritholtz – – > “prepackaged bankruptcies”
    http://www.ritholtz.com/blog/2010/08/bailout-counter-factual/
    In my counter factual, the bailouts did not occur. Instead of the Japanese model, the US government went the Swedish route of banking crises: They stepped in with temporary nationalizations, prepackaged bankruptcies, and financial reorganizations; banks write down all of their bad debt, they sell off the paper. In the end, the goal is to spin out clean, well financed, toxic-asset-free banks into the public markets.
    …and…
    AIG ? There never was an implicit government guarantee that all counter-parties dealing with AIG-Financial Products — a giant leveraged structured finance hedge fund hiding under the skirt of the regulated insurer — would be made whole. But the Bush/Paulson/Bernanke bailout created one. Instead, AIG-FP should have been carved out for dissolution/wind down, while the insurer could have continued to exist on its own. AIG would have had the liability for the government’s costs, but the counter parties? They would have gotten zero. If you go to Vegas and shoot craps in the alley way behind the casino, don’t expect the gaming commission to collect your winnings. But that is what we did with AIG.

    Fannie & Freddie: Two more crappy banks that should have been wound down. These were publicly traded companies that were guaranteed lower interest rates — not an infinite backing from taxpayers. They should have been wound down like all any insolvent bank. Today, they serve as the mechanism for backdoor bailouts of the rest of the wounded banking sector.

    The same approach should have occurred with the rest of the crowd of irresponsible banks, investment houses, monoline insurers, etc. One by one, we should have put each insolvent bank into receivership, cleaned up the balance sheer, sold off the bad debts for 15-50 cents on the dollar, fired the management, wiped out the shareholders, and spun out the proceeds, with the bondholders taking the haircut, and the taxpayers on the hook for precisely zero dollars. Citi, Bank of America, Wamu, Wachovia, Countrywide, Lehman, Merrill, Morgan, etc. all of them should have been handled this way.

    My comment: In the US, like Japan, the big banks are too powerful -and the government too weak- to force them to write off their losses. Same for the real estate interests… they just keep asking for money/subsidies and dragging the process out. FIRE interests run the Congress and the US…

  208. 208
    Blake says:

    RE: Ben @ 206
    Ben, You are a fundamentalist… it is based on “belief.” Markets must be regulated. They destroy themselves. What do you think happened in the 19th century…? There was virtually no government then. The free-for-all leads to syndicates, monopolies/oligopolies… Tony Soprano-style capitalism. Madoff etc… people lie, people cheat, people steal.
    -Blake
    (I like to use sports metaphors and wonder what an NFL football game woudl be like if it was unregulated??)

  209. 209
    Blake says:

    Re: Engineering careers
    In my career I moved into management, but often regret it. Managing people (especially PhDs and techies) is a thankless task!

    A few observations… My senior year as an undergrad we had a few “project” classes where we had to work as teams. It was incredible for me to see how some of these very top notch students could not function in a team. This was and is a huge problem because most of what you need to do you have to work and coordinate efforts across teams. I continue to see this again and again… 16-23 years of education … building little if any team and interpersonal communication skills! It’s hard to teach a 30-something how to communicate and “play” with others!! (oiii… I could go on and on!)

    Also: My grad program was perhaps 3/4s asian students (China, Japan, sKorea, Taiwan). I did feel stupid next to them… (One Chinese gal was perhaps one of the smartest I’ve met… but there was also a young anglo gal from rural Maine who was absolutely brilliant.) But – again – so many of them lacked the team-building and communication skills needed to thrive to build and manage complex systems.

    I can see how an engineering career might be seen as tough – but I actually think that if you work independently it can be most enjoyable. For a few years i was contracting and programmign largely on my own and those were perhaps my happiest and most productive years. Now I make much more, but I am constantly putting out fires, solving/trying to prevent problems, and dealing with personnel issues. Perhaps not the best use of my skills, but soemone has to do it! ;-)

    (Having worked on some very large collaborative projects (software dev and med research) I can say “run away… run away!” Read Fred Brooks’ book The Mythical Man-month.)

  210. 210

    RE: Ben @ 206 – Interesting distinction, but I’m not sure it holds up. How would you apply that to AIG where one or two people in one department were making highly leveraged bets which went the wrong way on them?

  211. 211
    Ben says:

    RE: Blake @ 208 – Blake, I think you miss the point.

    You said: “The free-for-all leads to syndicates, monopolies/oligopolies… Tony Soprano-style capitalism. Madoff etc… people lie, people cheat, people steal.”

    Our current situation: Crony capitalism leads to syndicates, monopolies/oligopolies… Tony Soprano-style capitalism. Madoff etc… people lie, people cheat, people steal.

    We have laws that are not enforced. Regulators looking the other way. Rampant fraud in a country that has an agency and regulatory body for everything. Yet, where are we today?

  212. 212
    Ben says:

    RE: Kary L. Krismer @ 210 – Kary, who designed the system that AIG, Merrill, Lehman, Citi, Wamu, Counrtywide, etc. operated in?

    They did. Regulatory capture and cronyism. Why wasn’t Madoff caught decades ago? You guessed it…..

    BTW, Taleb’s book, The Black Swan is a fascinating read.

  213. 213
    Ben says:

    RE: Ben @ 212 – Ritholtz: Its You vs. Corporations

    http://www.ritholtz.com/blog/2010/09/you-vs-corporations/

    Every generation or so, a major secular shift takes place that shakes up the existing paradigm. It happens in industry, finance, literature, sports, manufacturing, technology, entertainment, travel, communication, etc.

    I would like to discuss the paradigm shift that is occurring in politics.

    For a long time, American politics has been defined by a Left/Right dynamic. It was Liberals versus Conservatives on a variety of issues. Pro-Life versus Pro-Choice, Tax Cuts vs. More Spending, Pro-War vs Peaceniks, Environmental Protections vs. Economic Growth, Pro-Union vs. Union-Free, Gay Marriage vs. Family Values, School Choice vs. Public Schools, Regulation vs. Free Markets.

    The new dynamic, however, has moved past the old Left Right paradigm. We now live in an era defined by increasing Corporate influence and authority over the individual. These two “interest groups” – I can barely suppress snorting derisively over that phrase – have been on a headlong collision course for decades, which came to a head with the financial collapse and bailouts. Where there is massive concentrations of wealth and influence, there will be abuse of power. The Individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights.

    This may not be a brilliant insight, but it is surely an overlooked one. It is now an Individual vs. Corporate debate – and the Humans are losing.

    Consider:

    • Many of the regulations that govern energy and banking sector were written by Corporations;

    • The biggest influence on legislative votes is often Corporate Lobbying;

    • Corporate ability to extend copyright far beyond what original protections amounts to a taking of public works for private corporate usage;

    • PAC and campaign finance by Corporations has supplanted individual donations to elections;

    • The individuals’ right to seek redress in court has been under attack for decades, limiting their options.

    • DRM and content protection undercuts the individual’s ability to use purchased content as they see fit;

    • Patent protections are continually weakened. Deep pocketed corporations can usurp inventions almost at will;

    • The Supreme Court has ruled that Corporations have Free Speech rights equivalent to people; (So much for original intent!)

    None of these are Democrat/Republican conflicts, but rather, are corporate vs. individual issues.

    For those of you who are stuck in the old Left/Right debate, you are missing the bigger picture. Consider this about the Bailouts: It was a right-winger who bailed out all of the big banks, Fannie Mae, and AIG in the first place; then his left winger successor continued to pour more money into the fire pit.

    What difference did the Left/Right dynamic make? Almost none whatsoever.

    How about government spending? The past two presidents are regarded as representative of the Left Right paradigm – yet they each spent excessively, sponsored unfunded tax cuts, plowed money into military adventures and ran enormous deficits. Does Left Right really make a difference when it comes to deficits and fiscal responsibility? (Apparently not).

    What does it mean when we can no longer distinguish between the actions of the left and the right? If that dynamic no longer accurately distinguishes what occurs, why are so many of our policy debates framed in Left/Right terms?

    In many ways, American society is increasingly less married to this dynamic: Party Affiliation continues to fall, approval of Congress is at record lows, and voter participation hovers at very low rates.

    There is some pushback already taking place against the concentration of corporate power: Mainstream corporate media has been increasingly replaced with user created content – YouTube and Blogs are increasingly important to news consumers (especially younger users). Independent voters are an increasingly larger share of the US electorate. And I suspect that much of the pushback against the Elizabeth Warren’s concept of a Financial Consumer Protection Agency plays directly into this Corporate vs. Individual fight.

    But the battle lines between the two groups have barely been drawn. I expect this fight will define American politics over the next decade.

    Keynes vs Hayek? Friedman vs Krugman? Those are the wrong intellectual debates. Its you vs. Tony Hayward, BP CEO, You vs. Lloyd Blankfein, Goldman Sachs CEO. And you are losing . . .

  214. 214
    blurtman says:

    RE: Ben @ 212 -Who continues to use the American citizen as a dumping grounds for their fraudulent securities? Who staffs the government with their employees to ensure that dollars continue to be diverted to their interests?

    “Quite an experience to live in fear, isn’t it? That’s what it is to be a slave.”

  215. 215
    blurtman says:

    How policy is set in the USA:

    Average American remarks: “Unnhh… Mongo like Dancing With Stars…slobber…slobber…..”

    NEW YORK (AP) — Citigroup Inc. said Thursday that it named Peter Orszag, a former budget director under President Obama, to serve as its vice chairman of global banking.

    The company said Orszag, 41, will work with its investment banking clients.

    To keep in line with ethics rules, Citi says Orszag’s role at the banking giant will not involve contact with officials from the federal government.

    At the height of the downturn, Citi received a $45 billion bailout from the U.S. government; it was one of the government’s largest bank rescues. This week the Treasury Department said it struck a deal to sell its remaining Citi common stock. The government is making a $12 billion profit on the rescue.

    Orszag’s appointment is the second former high-ranking government official that Citi has hired in recent days. Last week, Citi named former Secretary of Commerce Carlos Gutierrez, as vice chairman of its institutional clients group. Gutierrez served as Commerce Secretary from 2005 to 2009 under President George W. Bush

    http://finance.yahoo.com/news/Citi-taps-exbudget-director-apf-3233864248.html?x=0&sec=topStories&pos=4&asset=&ccode=

  216. 216
    justtalkingre says:

    This is a must see movie, running in the U District now. Takes a closer look at what brought about the financial meltdown.

    http://www.imdb.com/title/tt1645089/

    as they say, “The movie that took $20,000,000,000 to make.”

  217. 217
    pfft says:

    these University kids don’t get it. less kids going to University will be good. austerity is good. sure it may depress the economy and add more debt to the bill but we’ll get through it. sure we may need another round of austerity because of the first round but eventually all will be good. unnecessary austerity is good. we need less cops, teachers and government services. sure less University students will go to University but we don’t need more higher education in this global economy. while we’re at it we should join the Euro because that will make austerity even more necessary and result in a better economy. we need wage deflation.

    Prince Charles’s Car Attacked in London During Student Protests Over Fees
    http://www.bloomberg.com/news/2010-12-09/cameron-coalition-set-to-face-first-test-as-lawmakers-vote-on-student-fees.html

  218. 218
    pfft says:

    By Blake @ 207:

    RE: pfft @ 197
    Re; Sweden 1992 bank insolvency/bankruptcies
    http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=1
    Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing. Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
    … Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.
    (Note: “write down losses” – – our banks are still carrying trillions at BS valuations.)

    -and, quoting Barry Ritholtz – – > “prepackaged bankruptcies”
    http://www.ritholtz.com/blog/2010/08/bailout-counter-factual/
    In my counter factual, the bailouts did not occur. Instead of the Japanese model, the US government went the Swedish route of banking crises: They stepped in with temporary nationalizations, prepackaged bankruptcies, and financial reorganizations; banks write down all of their bad debt, they sell off the paper. In the end, the goal is to spin out clean, well financed, toxic-asset-free banks into the public markets.
    …and…
    AIG ? There never was an implicit government guarantee that all counter-parties dealing with AIG-Financial Products � a giant leveraged structured finance hedge fund hiding under the skirt of the regulated insurer � would be made whole. But the Bush/Paulson/Bernanke bailout created one. Instead, AIG-FP should have been carved out for dissolution/wind down, while the insurer could have continued to exist on its own. AIG would have had the liability for the government�s costs, but the counter parties? They would have gotten zero. If you go to Vegas and shoot craps in the alley way behind the casino, don�t expect the gaming commission to collect your winnings. But that is what we did with AIG.

    Fannie & Freddie: Two more crappy banks that should have been wound down. These were publicly traded companies that were guaranteed lower interest rates � not an infinite backing from taxpayers. They should have been wound down like all any insolvent bank. Today, they serve as the mechanism for backdoor bailouts of the rest of the wounded banking sector.

    The same approach should have occurred with the rest of the crowd of irresponsible banks, investment houses, monoline insurers, etc. One by one, we should have put each insolvent bank into receivership, cleaned up the balance sheer, sold off the bad debts for 15-50 cents on the dollar, fired the management, wiped out the shareholders, and spun out the proceeds, with the bondholders taking the haircut, and the taxpayers on the hook for precisely zero dollars. Citi, Bank of America, Wamu, Wachovia, Countrywide, Lehman, Merrill, Morgan, etc. all of them should have been handled this way.

    My comment: In the US, like Japan, the big banks are too powerful -and the government too weak- to force them to write off their losses. Same for the real estate interests… they just keep asking for money/subsidies and dragging the process out. FIRE interests run the Congress and the US…

    there are some difference but sweden was a sort of model for the US. we could have done worse but the banks did feel some pain. probably not enough but today the government just sold more of it’s citi stake.

    banks have lost and written down hundreds of billions of dollars. they were forced to raise capital. they were forced to give most of the company to the government.

    the unrealized losses thing is a non-issue. banking stocks have recovered so investors are largely dismissing those concerned.

  219. 219
    pfft says:

    By Blake @ 208:

    RE: Ben @ 206
    Ben, You are a fundamentalist… it is based on “belief.” Markets must be regulated. They destroy themselves. What do you think happened in the 19th century…? There was virtually no government then. The free-for-all leads to syndicates, monopolies/oligopolies… Tony Soprano-style capitalism. Madoff etc… people lie, people cheat, people steal.
    -Blake
    (I like to use sports metaphors and wonder what an NFL football game woudl be like if it was unregulated??)

    people need to realize that regulations grew out of hard won experience. does anyone remember the 19th century?

    Triangle Shirtwaist Factory fire
    http://en.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire

  220. 220
    pfft says:

    By Ben @ 211:

    RE: Blake @ 208 – Blake, I think you miss the point.

    You said: “The free-for-all leads to syndicates, monopolies/oligopoliesâ�¦ Tony Soprano-style capitalism. Madoff etcâ�¦ people lie, people cheat, people steal.”

    Our current situation: Crony capitalism leads to syndicates, monopolies/oligopolies� Tony Soprano-style capitalism. Madoff etc� people lie, people cheat, people steal.

    We have laws that are not enforced. Regulators looking the other way. Rampant fraud in a country that has an agency and regulatory body for everything. Yet, where are we today?

    it would be a lot worse if we didn’t have those regulators. don’t blame me I didn’t vote for the presidents and the party who attack regulators.

    ain’t my fault.

  221. 221
    WestSideBilly says:

    RE: Blake @ 209 – I interviewed with GM after college. It was about an hour long, 1 on 1. I was asked no technical questions, nothing pertaining to cars, interests in cars, etc. It was all about team playing. I asked the interviewer why they did it that way, and his answer has stuck with me:

    “We can train just about anybody to be a good engineer, but we can’t train someone to be a good person. Either they are or they aren’t.”

    Goes well with what you say about students who lack social skills necessary to work in teams. And almost every interview I’ve had since then has emphasized the same things – team work, problem solving, dealing with problematic coworkers, etc. At least in the bigger companies. The smaller companies don’t care, they need to know if you have a head on your shoulder.

  222. 222

    RE: WestSideBilly @ 221 – Or it could have been that no one at GM cared about cars or engineering. Assuming your interview was after about 1970, that’s likely the case. ;-)

  223. 223
    Blake says:

    RE: Kary L. Krismer @ 222
    Yes, in the 1970s the US corporations were really still in the dark ages. I received my Industrial and Systems Engineering degree in 1984 from a top 5 school and we were never taught anything about W. Edwards Deming!!! Incredible… Of course at the time Deming had nothing but contempt for US management practices, so it would be hard for the US institutions to teach him. I think that US corps and engineering/management schools started to teach Deming and TQM by the late 80s, but much of it still hasn’t sunk in (i.e. US corps still tend to view employess as liabilities and invest much less in training and retention… just replaceable cogs).

    btw: Wanna fun read about GM in the 70s? Read Ben Hamper’s hilarious, ugly, truthful book Rivethead. You’ll laugh your ass off…
    http://www.amazon.com/Rivethead-Tales-Assembly-Ben-Hamper/dp/0446394009

  224. 224
    Blake says:

    BTW: Barry Ritholtz just posted some interesting “chart porn” derived from the Fed’s Flow of Funds Report issued yesterday:
    http://www.ritholtz.com/blog/2010/12/some-flow-of-funds-chart-porn/
    -snip- “Household net worth rose to $54.9T, up $1.2T for the quarter but still down $10.8T from the $65.7T peak hit in the second quarter of 2007. Corporate Equities rose by over $900B, and Mutual Funds by almost $400B, while Real Estate declined by about $650B.”

    Chart #2 – Liabilities as Share of Disposable Income – depicts the state of deleveraging. Only I would tell him to treat the ’00-’09 data as an outlier and fit his trend line to the ’85-’99 data and then see where the leveraging may be leading down to… Perhaps ~105%??

    Chart #3 Owners’ equity as a percent of household real estate speaks for itself… Mind blowing really. Devastating…

  225. 225
    pfft says:

    ECRI says no double-dip.

    “In October we were able to rule out this double-dip nightmare scenario,” he says. “We are able to see very clearly, with a good deal of conviction, a revival in growth,”

    Forget The Double Dip, ECRI Sees A Major “Revival In Growth”
    http://www.businessinsider.com/forget-the-double-dip-ecri-says-america-is-experiencing-a-revival-in-growth-2010-12#ixzz17mMkOfTq

  226. 226
    pfft says:

    By Blake @ 224:

    Chart #3 Ownersâ�� equity as a percent of household real estate speaks for itself… Mind blowing really. Devastating…

    but although taking a breather it’s been up for a bit.

  227. 227
    Blurtman says:

    Interesting graphic illustrating the growth of the FIRE industries and shrinkage of US manufacturing over the last 50 years.

    http://www.theatlantic.com/business/archive/2010/12/this-is-what-americas-manufacturing-story-looks-like/67765/

  228. 228
    Ben says:

    RE: pfft @ 225 – I don’t know whether that is funny or sad. The reality is things are very bad and about to get worse. Witness Bernanke’s need for QE2 and Obama’s going for broke push for tax cuts.

    Those in power are scared ****less of what is coming. They certainly know more than we do.

  229. 229
    Ben says:

    I applaud Sanders as an American hero. As in my earlier post, it’s not about left/right, liberal/conservative, D/R, etc. It’s about the future af America.

    Stop the looting and start the prosecuting!

    Bernie Sanders, American Hero
    http://market-ticker.org/cgi-ticker/akcs-www?post=174718

    “Seriously.

    Here’s all eight and a half hours of his filibuster – a real one – archived by CSPAN.

    Part 1
    Part 2
    Part 3

    Unfortunately, CSPAN does not permit embedding. Boo hiss.

    Mr. Sanders is a die-hard socialist. But he believes in what he puts forward, which makes him very different than the other clowns in Washington DC.

    While I cannot endorse much of what Mr. Sanders wants as solutions, you can’t find much in the way to argue with when it comes to the cause of the problems. In fact, a large part of his missive sounds like it was a filibuster that I’d deliver on the floor of the Senate were I elected to the position.

    You have to give a man credit for walking the talk. Filibusters in recent years have become all threat and no talk. All you’ve had to do is threaten to engage in one and it’s as if you did. This was different – Mr. Sanders actually rose and spoke for eight and a half hours straight.

    In those eight and a half hours Mr. Sanders hit on literally everything. He called a spade a spade. He said we can’t afford to keep spending money we don’t have, and he called out those in the banking and financial industry who have created this crisis. He wasn’t afraid to use the blunt language that has to be used – he laid it all out.

    Banks with 63% of GDP in alleged “assets”, he quoted Simon Johnson, and he gave you a prescription to end this crap – “BREAK THEM UP.”

    Then he added to it: the people who did this on Wall Street “need to go to jail.”

    “Outsourcing”? You mean employing slave labor and environmental arbitrage, destroying our job base and making a mockery of our laws that allegedly “protect” workers and environment, right? All under the corporate umbrella of “profit”?

    Profit….. for whom?

    If our laws on environmental damage and labor rates are just, then they are – everywhere. If they’re not, they’re not – everywhere. What’s wrong is allowing this sort of arbitrage to take place; you get your cheap trinkets, our manufacturing job base is destroyed, and all we do is shift WHERE the slavery happens and the environment is destroyed – not whether it occurs!

    Conservatives? Jim DeMint, for instance?

    Where the hell are those traitorous cowards who claim to be “Conservatives”?

    Bernie Sanders, an admitted and in fact proud far-left Socialist, has to rise in The Senate and lecture the party that claims to be for “The Rule Of Law” on how the banks swindled the entire nation out of trillions of dollars of wealth AND STILL ARE DOING IT TODAY?

    Mr. Sanders, my hat’s off to you.

    I disagree with your prescriptions for a fix, but I’ll be damned if you didn’t just take the so-called “Free Market” folks out back, beat them within an inch of their lives and then assault ’em in the back door for good measure.

    A free market – or capitalist society – isn’t one where you use the government to enact laws that promote and protect your looting of the people.

    Those who claim to be “for free markets” and “for the rule of law” are supposed to use the law to put a stop to that crap by prosecuting and locking up the crooks, clawing back the illicit profits and returning them to the people they were stolen from instead of passing more laws and regulations that enable further looting of the people.

    If my choice is between being sold socialism that is straight-up what it is, and alleged “capitalism” that in point of fact is, has been, and continues to be fascist Nazi-style mayhem and theft using the power of government to shield those who do wrong from facing the just punishment for their crimes……

    Hell hath indeed frozen over.”

  230. 230
    Blurtman says:

    From: http://www.doctorhousingbubble.com/laundering-real-estate-how-dirty-loans-have-made-data-on-distressed-inventory-look-better-jumbo-loans/?source=patrick.net

    Years ago, I tossed out the notion of nationalizing the US banking system. Why? The system was so rife with corruption and fraud that it would take only a true internal assessment to get us out of the mess. Many objected about the cost and believed what the banking industry fed them (or politicized the entire event). Well guess what? We are now entering the fourth year of the crisis, $9 trillion in housing wealth gone, and banks now back to their speculative ways again so what has really changed? We now back Fannie Mae and Freddie Mac completely and banks are the gatekeepers in terms of what mortgages they shuffle off to these agencies. What we have now is the worst part of nationalization (the cost) without the major benefit (complete control to reform). The battle isn’t between Democrats or Republicans. The battle right now is between the people and Wall Street investment banks. The media doesn’t frame it this way but most Americans now finally get it. Not all, but definitely a larger number.

    So what is next for us? Expect home values to drop even lower. Keep in mind that if mortgage rates go up (a very likely scenario given global market debt concerns) home prices will become much more unaffordable. The only thing keeping home prices affordable right now is an artificially low mortgage rate manufactured by the Federal Reserve. This is not a normal market by any stretch of the imagination and the longer home problems drag out, the more people of a new generation will think twice about buying a home. This was another important reason to confront the issue head on and deal with it squarely by breaking up banks into commercial and investing units and clearing out the inventory in a steady and predictable way. Now, it is a patch work of insanity and the price tag is up in the trillions of dollars even though we keep hearing about the few billions of dollars being paid back to TARP as some sort of win.

  231. 231
    David Losh says:

    RE: Blake @ 207

    What if we had done nothing was a speech Obama gave.

    What I think is that these banks, and institutions, like insurance companies, hold debt instruments from every where in the world. In my opinion, and it’s only my opinion, most of the debt in these portfolios, these bundles, or boxes of debt instruments, are propping up each other in order to collect enough to be worth at least face value. That may be a reach, so let’s say they hope that in time things will improve enough that when they reveal the losses it won’t sound as bad as it could have been.

    Just speaking for my self, if things would have gotten much worse we wouldn’t have been able to survive financially. As it is today we have had 30% growth in our business. I expect to double our business this year and re open a couple of other businesses we had to let go of. Many of the people I know also have a sense of doing well this year. Things are moving, and improving.

    My thought is that with time these mega corporate structures will open their books, and we will find an improved situation where they can also grow.

    The whole interview with the CEO of General Motors yesterday was very positive. It seems to me that we can turn things around, rather than be climbing out of a hole.

  232. 232
    pfft says:

    By Ben @ 228:

    RE: pfft @ 225 – I don’t know whether that is funny or sad. The reality is things are very bad and about to get worse. Witness Bernanke’s need for QE2 and Obama’s going for broke push for tax cuts.

    Those in power are scared ****less of what is coming. They certainly know more than we do.

    they are only scared of what everyone knows, unemployment is not dropping fast enough.

  233. 233
    pfft says:

    I am wondering what data are you guys seeing that the rest of the world isn’t? we’ve recovered from the summer slump. even pimco is raising their 2011 GDP.

    PIMCO sees the economy growing 3 percent to 3.5 percent in the fourth quarter of 2011 from the same period of this year. That compares with its previous estimate for 2 percent to 2.5 percent growth.

    PIMCO ups US economic growth forecast on tax deal
    http://www.reuters.com/article/idUSN0927461320101210

  234. 234
    Blurtman says:

    RE: David Losh @ 231 – May the lords be kind to we poor peasants. Is that your view of America?

  235. 235
    Blurtman says:

    A great review of the financial crisis and fraud by Janet Takavoli on C-SPAN
    http://www.c-spanvideo.org/program/FannieMaean

    The callers, both Democrats and Republicans, get it, interestingly enough.

    Some interesting points:
    TBTF is a green light to engage in ponzi schemes and fraud.
    Fannie Mae and Freddie Mac became the dumping grounds for investment banks’ toxic securities.
    Investment banks are currently speculating with taxpayer money.
    Savers are being robbed of earnings on their money to fund profits and speculation at investment banks.
    The ever rising home prices excuse is a lie. No credible analyst wouls utilize this assumpiton in securities valuations.
    Securitization of mortgages was a massive ponzi scheme with oversized compensation packages for those keeping the scheme going.
    Bashes the lie that as some banks lost money, there could not have been fraud (i.e., the best way to rob a bank is to own it.).
    Reviewed the AIG bailout of Goldman Sachs by their former CEO Hank Paulson.
    Banks who are committing mortgage foreclose fraud are being lionized, while underwater mortgage holders are being villified.
    The FED bailed out out hedge funds that were screwing investors in mortgage backed securities.

  236. 236
    Ben says:

    RE: pfft @ 232 – Pfft, do you understand that the “growth” is on borrowed money? Organic growth is not there and that’s what has the Fed and Pres scared ****less. The end game will be a worse outcome the longer the can is kicked down the road.

    As usual on the economy, Denninger’s arrow hits the bullseye again. Lots of graphs worth careful study.

    Fed Z1 Report: Yikes!
    http://market-ticker.org/cgi-ticker/akcs-www?post=174777

  237. 237
    WestSideBilly says:

    By Kary L. Krismer @ 222:

    RE: WestSideBilly @ 221 – Or it could have been that no one at GM cared about cars or engineering. Assuming your interview was after about 1970, that’s likely the case. ;-)

    At the top of the food chain, there was some truth to this. GMAC was a very profitable division, and the majority of the engineering resources were being pushed into trucks and SUVs. The upper executives seemed mostly interested in the share price and their bonuses, and not in making the company better, basically the same thing that has infected most of the large corporations in this country.

    But at the lower levels, a lot of the engineering staff cared greatly about engineering and good products. They were just hamstrung by management decisions.

  238. 238
    David Losh says:

    RE: Blurtman @ 234

    No.

    I never saw the depth of the of the securitized financial markets. That was the point of my original comment on this thread.

    In theory I could buy a bundle, a box, of mortgage Notes and use that to sell Mortgage Backed Securities. Until you open the box, and look at each Note, sort them out, and figure the actual value of the property, you are selling faith.

    In theory I could trade my box of mortgage Notes for commercial paper which could be credit card debt. I could also buy insurance to guarantee that if the value of my commercial paper or Mortgage Backed Securities went down the insurance would pay the difference.

    In theory I could sell the security of that insurance as a real dollar value asset.

    It all depends on how long people continue to pay on the fractionalized debt.

    If you lend $10K how many payments at 15% interest until you get the $10K back? What if some one refinances other debt to pay the $10K?

    So, you are right, it is a Ponzi Scheme in the true sense. If it just stops over night it crashes. The way it is today we are in an adjustment.

  239. 239
    pfft says:

    By Ben @ 236:

    RE: pfft @ 232 – Pfft, do you understand that the “growth” is on borrowed money? Organic growth is not there and that’s what has the Fed and Pres scared ****less.

    private debt is shrinking. in the short-term increased government debt is a good thing because it stimulates growth and keeps unemployment up. the market has no problem with increased government debt as interest rates are very low. even after the tax cuts added hundreds of billions to the national debt interest rates haven’t really reacted much.

  240. 240
    Ben says:

    RE: pfft @ 239 – Yes, as long as Bernanke has the capacity to get away with buying (monetizing) enough debt at low rates all is peachy. That’s the sum total of your position, you know. We’ve heard you many times.

    Alright then. Everything is peachy – for the moment. Tell us, what happens when rates inevitably go up and 100% of all tax collections go to interest? Or worse, what if 100% of all tax collections do not cover the interest?

    I’ve been asking you for a solution and you never respond. Got game?

  241. 241
    pfft says:

    By Ben @ 240:

    RE: pfft @ 239 – Yes, as long as Bernanke has the capacity to get away with buying (monetizing) enough debt at low rates all is peachy. That’s the sum total of your position, you know. We’ve heard you many times.

    Alright then. Everything is peachy – for the moment. Tell us, what happens when rates inevitably go up and 100% of all tax collections go to interest? Or worse, what if 100% of all tax collections do not cover the interest?

    I’ve been asking you for a solution and you never respond. Got game?

    yes I have many times. we can cuts services and raise taxes. the fed can simply refund the interest payments it receives back to the government.

    what if rates go down? that what will you say?

  242. 242
    doug says:

    RE: Ben @ 240

    You DO know that a very good chunk of this deficit is the economic downturn, the Bush (soon to be Obama) tax cuts, and the wars, I’m sure.

    Hopefully these are temporary circumstances, and we’ll be in much better shape in a couple years. We shall see.

  243. 243
    Ben says:

    RE: doug @ 242 – That’s partially right, Doug. The problem is the downturn was created by the same policies that are now touted as fixes. The reality is that nothing has been fixed, only bandaided with stimulus and money printing.

    Have you studied any of the charts that Denninger puts together? You can wish these are temporary circumstances, but they are not. If you look around the world at the financial distress in the EU and UK, you will understand that this is a very big deal indeed.

  244. 244
    Ben says:

    RE: pfft @ 241 – “yes I have many times. we can cuts services and raise taxes”.

    Welcome to Austeria. It is the nexus of the universe as all roads lead here sooner or later.

  245. 245
    Marcus Garvey says:

    So what about all the UN legislation that’s coming down the pike, and entering the US at the local level? Isn’t this a strong indication that the economic malaise was planned and intentional, for the restructuring of the global social, political, and economic climate? Groups such as the Club of Budapest, the Club of Spain, or the Club of Rome do not comprise the brightest minds giving regular guidance to the UN, for no apparent reason at all. This is not random.

    Isn’t this really the banking oligarchy elites doing their best to save the masses from themselves (or so they claim), while at the same time ensuring their own positions of power for several generations to come?

    How do people feel about allowing such elites to run the machinery, despite that they are unelected and perhaps morally flawed in their methodologies? That is, lying and warring to save the world.

  246. 246
    doug says:

    RE: Ben @ 243

    Of which policies, specifically, are you speaking?

    I don’t think I disagree with your post. The Wall St. reform package that was put together was a step in the right direction. Thus, it’ll probably be gutted.

    He might be a brilliant guy, but his writing’s full of logical fallacies, slippery slopes and unbacked assertions, such that I can’t tell if he’s on to anything.

  247. 247
    pfft says:

    By Ben @ 243:

    RE: doug @ 242 – That’s partially right, Doug. The problem is the downturn was created by the same policies that are now touted as fixes. The reality is that nothing has been fixed, only bandaided with stimulus and money printing.

    Have you studied any of the charts that Denninger puts together? You can wish these are temporary circumstances, but they are not. If you look around the world at the financial distress in the EU and UK, you will understand that this is a very big deal indeed.

    there is no financial distress in the UK. the problem with europe is specific to the euro currency problem that was predicted years ago. countries like iceland and poland are doing better than ireland, latvia and estonia.

  248. 248
    pfft says:

    By Ben @ 244:

    RE: pfft @ 241 – “yes I have many times. we can cuts services and raise taxes”.

    Welcome to Austeria. It is the nexus of the universe as all roads lead here sooner or later.

    they don’t have to. austerity now and austerity when the economy can take it are two very very different things.

  249. 249

    By Ben @ 243:

    RE: doug @ 242 – That’s partially right, Doug. The problem is the downturn was created by the same policies that are now touted as fixes..

    If you’re talking about the tax compromise, you’re sounding too much like the soon to be impotent House Democrats.

    Our tax policy didn’t get us in this situation, although we might have been better off if the Bush tax cuts had only been for four years (possibly lower national debt). The tax policy didn’t create the mortgage situation or cause AIG and other large financial entities to go under.

    Just because something happened during a certain timeframe, that doesn’t mean it was the cause of the problem, or that things wouldn’t have been worse without it.

  250. 250
    pfft says:

    proof of recovery that doesn’t rely too much on government data.

    Ceridian-UCLA: Diesel Fuel index increases slightly in November
    http://www.calculatedriskblog.com/2010/12/ceridian-ucla-diesel-fuel-index.html

    you can see the panic of 2008, the recovery and the spring/summer swoon of 2010. if you click the chart you’ll see on the bottom the same for rail traffic and truck traffic.

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