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Economic Stimulus: Real Solutions

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Once you understand how we got into the perilous economic situation we now enjoy you can start to look for ways to get out of it. But to find real solutions you have to approach the situation rationally, and not in a desperate panic. Thus far the reaction of Congress as well as both the Bush administration in passing the TARP bill, and the Obama administration in passing the stimulus package, has been one of irrational panic; throwing money at the problem without thinking about the consequences of their deficit spending or more effective and more responsible alternatives.

What we are faced with is a natural cyclic recession which has been intensified and prolonged by government mismanagement, gross financial irresponsibility, misguided economic policy and poorly conceived attempts at inadequate stimulus. Not to let anyone off the hook, consumers for years we've been spending money we don't have on crap we don't need. We've seen problems with real estate, credit markets and banking before, and we've seen the results of government intervention. When the role of government is limited and primarily that of a caretaker and manager, it can be a great help. When its response is heavy handed and excessive, it can do far more harm than good.

The reality is that the poorly conceived TARP bailout and the equally foolish stimulus plan are working to suppress the economy and prevent recovery by doing all of the wrong things and producing results too slowly. The TARP bailout gave money away to prop up businesses failing because their methods of doing business were unsupportable, when it should have shut those businesses down, quarantined their bad debt, and sold off their assets to more responsible competitors, even if they needed government loans to make those purchases. By giving more money to companies whose basic business models are flawed and have put them on the brink of failure, they are just encouraging those companies to lose more money, but in this case taxpayer money instead of money from their hapless investors.

About half of the TARP money has been spent, but the current behavior of the stock market and the increasingly unstable status of many lending institutions makes it clear that it is not having any positive effect. The perfect example of this is the situation with AIG, which received $80 billion with no strings attached, immediately spent that money to very little positive effect and then came back asking for another $60 billion to keep it solvent. Under what possible scenario would it make sense to give more money to a company which has already proven it couldn't make use of its previous handout responsibly?

In a bizarre example of doublethink, the advocates of stimulus spending are declaring that we were put in these dire straits because of the uncontrolled spending of the Bush administration, on the basis of which they disqualify all conservatives from having an opinion on the subject. Yet they think that the solution to a problem they admit was contributed to by excessive spending, is to spend enormously more money — spending  more in 2 months than FDR spent in his first 4 years . That just makes no sense at all. The idea that you can spend your way out of recession makes no sense when you're getting the money you spend by further enlarging the deficit which is helping to cause the recession in the first place.

The current stimulus plan cannot work because it isn't designed to stimulate the economy directly enough; it wastes money on huge numbers of non-stimulative programs and passes too much money through the hands of bureaucracies which will reduce its impact while covering their own expenses. It spends $800 billion to produce the impact of maybe a quarter of that amount of spending. And it remains a basic truth that government cannot create jobs with the efficiency and permanence of the private sector; this stimulus plan not only does little to help the private sector, but it also comes with tax increases which will have a crushing effect on small businesses and entrepreneurs who really do create jobs.

We might very well do more good for the economy by doing nothing at all than by engaging in massive deficit spending, but there are things which the government and the private sector could be doing now which would be far more effective than massive, poorly-directed spending.

The most important thing is to restore the government oversight and regulation which was neglected for years in the financial sector. I'm as opposed to intrusive government as anyone, but there really is a legitimate role for government in regulating business practices in the public interest. This basically comes down to protecting the people from fraud and theft, and some of the more "creative" banking practices of the last decade can only be described as fraudulent theft. Recapitalizing mortgages at 50 times their face value is nothing but fraud. It's selling an asset based on a false value which the purchaser can never recoup as security for his investment. The same is true for the practice of encouraging the mortgaging of properties held by people who were completely unqualified for the loans they received. By encouraging these lending practices, the government became a partner in defrauding the borrowers as well as the American people, who are ultimately left holding the bag for these loans.

The government's role should not be that of a co-conspirator in massive financial fraud. It should never have been directly involved in the industry. Policies like the Community Reinvestment Act and institutions like Fannie Mae and Freddie Mac politicized the financial market and the mortgage industry; creating an inherent conflict of interest which encouraged members of Congress and of several administrations to ignore their regulatory and oversight responsibilities for political reasons.

Before anything else, our first step towards solving all of these problems is to end these kinds of incestuous relationships. Government should never be involved in setting business practices. Political objectives and good business management are rarely compatible, and it erodes the impartiality which is needed to be an effective regulator of business. In the current crisis Government may have to play a very large regulatory role, which makes it doubly important that politics be kept out of the process.

The current approach to dealing with insolvent key businesses is clearly not working. It needs to be rethought. Just providing more money to failing corporations who keep coming back for more handouts is irrational. It makes much more sense to let those banks and large businesses fail and go through bankruptcy and reorganization with government oversight. Then their assets can be revalued or sold off or taken over, to be used by surviving, more responsible banks and businesses. This would still cost the taxpayers money. Government would have to pay out to cover bank deposits and provide loans to assist in corporate takeovers of failed companies, but that would produce far less liability than the current approach, plus the total cost would be much easier to control.

When dealing with mortgages, the situation is somewhat more delicate because of the homeowners who may suffer in the process. Clearly they need to be protected to some degree, but they don't need to continue to pay mortgages which they cannot afford on properties they never should have bought in the first place. No amount of government assistance is going to change the fact that their incomes are not sufficient to pay for the properties they bought, no matter how radically you renegotiate the mortgage terms.

When the last real estate bubble burst, back in the 1980s, many banks found themselves holding property they had foreclosed on and could not sell. Some of them went into the rental market as a result and that worked out pretty well for them. Bringing in a rental income on a foreclosed but unsellable property is considerably better than letting it sit unoccupied. The scale is larger today, but this might be the solution to the mortgage problem. Tell overextended home buyers that they have defaulted and no longer own their homes. Then offer to let them stay in the homes as renters at a rate somewhat lower than they were paying for their mortgages; a fair rate set based on the local rental market. This returns the property to the books of the bank as a positive asset, lets the hard working people keep a roof over their head while paying a market-appropriate rent, and maintains the value of the property for future resale in a stronger economy. Then, for those who manage to pay rent responsibly for a couple of years, the banks could offer to apply a portion of the paid rent similar to the amount which would have been applied to principal under a regular mortgage to a future purchase of the house, and those who qualify could be transitioned back into home ownership.

This solution would likely still involve some taxpayer money, because the government would have to provide some sort of rental insurance or guarantee to back up property values and provide an incentive for banks to take on the responsibility of being landlords, but the cost would certainly be less than ongoing bailouts. This plan might also produce some unintended positive consequences because it would create a lot of work for people as rental agents, and property managers, as well as maintenance contractors working for these banks and taking care of these defaulted properties. Given the number of properties involved we could easily be looking at the creation of 500,000 new jobs and quite possibly more.

As for job creation in general, the way to do that remains what it has always been: to grow business and attract new businesses to America. Real tax cuts have been categorically dismissed by the current administration under the theory that the Bush administration tried them and "look where it got us," but the truth is that Bush mainly cut the income tax and didn't cut it that much or in a way which would be highly stimulative. Under Bush, our corporate taxes became the highest in the world because, while we maintained the high taxes established by previous administrations, other countries around the world lowered their corporate tax rates. The result was that companies found it easy and attractive to move operations and even headquarters overseas, keeping America as a consumer market, but abandoning the US as a base of operations. Something is just very wrong when France has lower corporate taxes than the United States.

That needs to change. The two factors counting against us as an attractive haven for businesses are our high corporate taxes and our high wages. The way to stimulate the economy and create jobs is for wages and corporate taxes both to go down.

Industrial wages which have been artificially inflated by long-term union contracts need to be reset to a market level. Industrial plants operating in non-union states are doing fine while those in unionized areas are failing at an alarming rate. Government should not ever be in the business of wage and price controls — Nixon showed us what a bad idea that was. Yet the stranglehold of unions needs to be broken. Contracts need to be voided and wages in the Midwestern states need to be allowed to naturally adjust to something similar to what is being paid in states like Tennessee and Alabama. This is something which only government can do, and it would create jobs while costing very little. It worked for Teddy Roosevelt with his "Square Deal" and it could work for us. With the depressed state of the Michigan economy these days, $35 an hour will go pretty far. You can probably even buy back the $150,000 house you abandoned which is now worth something like $18,000.

To bring those jobs back, companies need an incentive beyond just more reasonable prices for labor. That means cutting the corporate tax rate so that the US becomes a tax haven where people want to put their business headquarters rather than the country from which they are all fleeing to low tax countries like Ireland. Ideally, the corporate tax should be eliminated entirely. It has really never made any sense. It largely just gets passed on to consumers as an increase in prices, which makes American-made products less competitive in the marketplace. If you want radical solutions, it could be eliminated as part of the implementation of a system like the Fair Tax where tax is charged at the point of consumption and nowhere else in the economy. Switching to that sort of tax system instead of our current multi-tiered system would have an enormous stimulating effect. Read up on the Fair Tax. It's a pretty viable way to pay for government while putting a lot more cash in the hands of consumers and creating a much friendlier environment for business.

These proposals would all cost less and do more good for the country. Replacing government spending with government regulation, guidance and oversight uses government in ways better suited to its strengths, uses resources more effectively and reduces the overall cost of rebuilding the economy. Implementing any of these ideas is probably unlikely. It would require those in power to put aside political interests and paying off their supporters and special interests and actually try to do what's best for the country. That just seems unrealistic.

Failing the implementation of these proposals, almost anything would be better than poorly planned and misdirected spending. if you want to go the route of government handouts, then do it in a serious way. First off, a great deal of what is in the "stimulus" package isn't stimulating. It doesn't create jobs or help people directly. It's a bunch of pet projects and spending on programs with very little stimulative value. That's just a waste of money and time. As for what real aid there is, it's used inefficiently. Putting the money through the hands of state governments and bureaucrats and hirelings and contractors before it gets to people in the form of welfare and jobs is grossly inefficient. It reduces the amount of aid that gets to actual people and it delays the rate at which that aid gets distributed.

If you accept the dubious idea that spending taxpayer money can create real stimulus in the economy, then the more money you spend and the more directly you get it into the economy the better. If that's the case then we would be better off taking the $800 billion and just mailing a check for $5000 to every person who filed a tax return last year. The cost would be lower overall, and the money would go directly into the economy — at a level where much of it will actually be spent. It would have a much more substantial and much more immediate stimulating effect. We'd still pay a big price in inflation down the road, but a large direct stimulus would work in ways which the planned slow and diluted one will not.

To actually get out of recession you need to cause the GDP to grow. That requires the creation of new wealth, not just redistributing taxpayer money. Creating new wealth is very difficult, especially when you try to do it in an already weak economy. The alternative is to make what we have more valuable, rather than less. This means doing the opposite of deficit spending. A combination of the two would be ideal.

Bankrupt and restructure failing businesses. Abandon the idea of cheap home ownership and accept renting as a lifestyle. Get government out of the economy and back to neutral regulation. Eliminate all corporate taxes. Artificially reduce wages while assisting workers to relocate and retrain. Cut back on the money supply. Intentionally cause deflation. Accept the idea of increased unemployment and decreased wages, at least in the short term. We'd be going back to 1990 and starting over again and trying to get it right this time. There would have to be some spending, but we'd likely pay a lot of the price in short-term hardship. This is where we have put ourselves, and real solutions like the ones I suggest here will do more good than all the pie-in-the-sky socialism and deficit spending which are going to drive us deeper into debt and just prolong the recession.

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About Dave Nalle

  • Lumpy

    i’m just going to live in a cave, smoke weed and kidnap a MILF for a sex slave and eat twinkies and bbq chips ’til it all blows over.

  • Doug Hunter

    Sound good lumpy. I have a weakness for peanut butter and syrup on white bread though.

    Dave, there are some interesting ideas in there. I don’t think deflation is a good idea as leveraged as we are now. It’s no fun to pay off a house when it’s worth half as much as when you bought it, but even moreso when the money you’re paying is twice as valuable.

  • bliffle

    Dave says:

    “What we are faced with is a natural cyclic recession …”

    What the heck does this mean? Why is there a cycle? Why do you say it’s natural?

    Are you trying, like a religionist, to explain one mystery in terms of another?

    Do you just accept this cyclic thing withot question, as an article of faith? Is it beyond mans understanding?

  • http://www.indyboomer46.blogspot.com Baritone

    Hey Dave,

    Are any of those wild fires around Austin endangering your homestead? Hope you and yours are safe.

    B

  • http://www.republicofdave.com Dave Nalle

    Bliffle, economies do go in cycles. That’s one of the things we really do understand about them. When you don’t mess with them too much they expand and contract on an identifiable cycle. IIRC the normal cycle is about 6 years from high to high. I don’t think it’s beyond man’s understanding, though I’d be hard put to identify an exact mechanism which causes it.

    Market analysts talk about cycles in terms of seasons. Right now we’d be in a pretty damned hard winter. See if you can dig up a copy of H. L. Moore’s Economic Cycles. It’s a bit dated, but a good, straightforward explanation of the idea.

    Dave

  • http://www.theprosperitymandate.org/blog/letter-to-president-obama peterfedrick

    The description about the present and previous economic crises is good and do you think all these real solutions can work to put up the financial crises back.

  • STM

    Doug: “I have a weakness for peanut butter and syrup on white bread though”

    When will you philistines on the other side of the big pond learn to eat Vegemite?

    Perfect for Lumpy’s plan, as it’s full of vitamins to keep you going.

  • bliffle

    “Bliffle, economies do go in cycles. That’s one of the things we really do understand about them.”

    That’s about the same as a religionist saying that god just exists.

    Your incurious attitude is astounding.

  • Georgio

    Dave …I read your really long article with an open mind and even though I did not agree with much of what you said I give you alot of credit for having the guts to expose your ideas and tackle the stimulus plan with ideas instead of the GOP plan of just say NO..
    I am not going to try and go through each item you have laid out but there are two items that I want to talk about ..like just giving each tax payer $5000 and call it a day …How does this help the millions of others who would get nothing and probaly need it the most..and how does it help to build a battery factory in Mich.or how does it help to build a grid system etc etc..in short it does nothing except to give an individual more money to buy more shit.
    The second thing is this ‘GET RID OF THE CORPORATE TAX…I have heard this so many times from the GOP side so I am curious ..The Rs had the power for at least six of the last eight years ..so WHY didn’t they do it ? just asking.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Good points, Georgio, especially about rebuilding that battery factory in Michigan, or the grid system, and so on. We’re going to need much more innovative solutions if we’re to recover.

  • http://takeitorleaveit.typepad.com/ roger nowosielski
  • Sceptic

    Bliffle…economies do go in cycles and then Americans do go downwardly mobile

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    But these are just human costs. They don’t matter in the larger scheme of things of the free-market economy going through its cyclical gyrations.

  • Sceptic

    Bliffle…economies do go in cycles and then Americans Mutiny at the Market

    That’s how the Nalle hypothesis works….

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    That’s a good one.

  • Sceptic

    Lol Roger…good one…

  • http://www.republicofdave.com Dave Nalle

    I am not going to try and go through each item you have laid out but there are two items that I want to talk about ..like just giving each tax payer $5000 and call it a day …How does this help the millions of others who would get nothing and probaly need it the most..and how does it help to build a battery factory in Mich.or how does it help to build a grid system etc etc..in short it does nothing except to give an individual more money to buy more shit.

    More people buying more shit does more to stimulate the economy directly than anything else we can do. If the purpose of the stimulus package IS stimulus then that’s the best way to do it. However, clearly the purpose of the package is not really stimulus. And I agree that infrastructure improvements are important. But that stuff really ought to be in the budget, not in a stimulus bill – as is the case with a lot of the other stuff in this bill.

    As for how money given to consumers helps a battery factory, $5000 is more than enough to cover the difference in cost between a regular car and a hybrid, and hybrids use a hell of a lot of advanced batteries made in battery factories. And so on.

    The second thing is this ‘GET RID OF THE CORPORATE TAX…I have heard this so many times from the GOP side so I am curious ..The Rs had the power for at least six of the last eight years ..so WHY didn’t they do it ? just asking.

    Those who advocate cutting corporate taxes did NOT in fact have power under Bush. Bush wasn’t on board for the idea and they didn’t have enough voices in the House or Senate to do it. This ongoing misconception that the Bush administration followed anything like a conservative or free market economic policy needs to be nipped in the bud. It just ain’t so.

    Dave

  • Sceptic

    well….atleast the feeling is mutual:)

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    So how can you expect Obama to do things that Bush and his clique failed to do, whatever their reason? That’s insane to expect this administration to institute policies which, as you argue, should have been put into effect during the past eight years when the Republicans were in power. Where were all those brave voices then?

  • Sceptic

    Excellent point Roger…

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Well, knowing Dave, he’s always got an answer.

  • http://www.indyboomer46.blogspot.com Baritone

    First, I haven’t been able to read Dave’s article as yet. I may retire in a few years, so I should be able to carve out some time then. :-)

    Just a note though which perhaps magnifies Roger’s
    link a bit.

    A couple of days ago I heard a local news story about how the poor economy has hurt the wedding business. People are still getting married, but they are not spending as much as in better times.

    My first response was: Who gives a rat’s ass? Big weddings are IMO silly and a waste of money. But in a more reflective moment it occured to me that pretty much everyone is getting hit. Regardless of what one may think of big weddings, it does stand to reason that a downturn there hurts purveyors of wedding apparel, florists, other retailers, reception halls, limo rentals, etc., etc. It is a spiraling domino effect, that like some of those incredible displays of hundreds of thousands of falling dominos, the adverse effects of this economy can lead to any number of areas which we might not even consider.

    It would appear that the dominos are still falling, and it may be a while before any end comes to light. While Dave and others are disturbed and skeptical (to say the least) about the possible success of Obama’s approach, it is clear, regardless of the outcome, that the paradigm is changing. If it doesn’t, we will find ourselves back in this hot broth before we know it.

    The way in which we do business, and the manner and extent to which government involves itself in the private sector – mainly in the area of oversite – must change. It is clear that left to its own designs, the private sector will not properly regulate itself. It’s just not in our nature not to take advantage of situations which will benefit ourselves, even if it may mean doing harm elsewhere. This is simply an extension of the corrupting influence of power.

    Obviously, the power government wields is also often corrupted – the government is peopled by, well, people after all. But, either one – the government or the private sector – left to police itself is a recipe for disaster. They represent, if you will, the yin and yang of commerce and its regulation. Neither will properly serve its constituents without the other to leaven their respective power and influence.

    B

  • http://takeitorleaveit.typepad.com/ roger nowosielski
  • http://takeitorleaveit.typepad.com/ roger nowosielski
  • Sceptic

    That’s insane to expect this administration to institute policies which, as you argue, should have been put into effect during the past eight years when the Republicans were in power. Where were all those brave voices then?

    Roger…while we are still on that point of brave voices…thesedays Nalle speaks about“how we got into the perilous economic situation we are in”

    …here’s the BRAVE VOICE OF DAVE NALLE NOT TOO LONG AGO in complete denial that there was even a recession.
    “There has always been a certain amount of ‘structured finance’ even if it took somewhat different forms in the past. I remember the 1980s when people were leveraged way beyond anything you see today. And again, the overextended segment of the financial market is still limited in size. Your average investor is probably less overextended today than at other times in history.”

    There’s almost always some sort of crisis looming. I just don’t see this one – which was so obvious and predictable – as being worse than most others.

    As for the current real estate cycle, there are many parts of the country like Austin where I live which are still going up. Compared to the down cycle in the late 80s this slump is trivial.

    Anand, whatever happens in housing is inherently contained because although housing is important, it is only one element of the economy. There’s only so much damage that a drop in housing prices and a few foreclosures can actually do.

    And keep in mind that if housing values increased 200% in the last 5 years and drop 20% this year, people overall are still going to be ahead.

    Yep, we might have a recession. Recessions happen. IMO it’s still a little too soon for one. I’d expect another short-term recovery before we have a real recession.

    Again, you’re operating on the ridiculous assumption that a decline in housing prices harms everyone, when the truth is that as some suffer a tiny bit from seeing their houses that went up 200% in the last 5 years go down 10% leaving them with only 180% profit, others will benefit from more affordable housing, leaving them with more disposable income, benefitting the economy in general. …and we can all see for ourselves how well the economy has benefitted.

    Turns out that 70% of the US GDP is domestic consumption.That being the case, imagine how well buffered our economy is against the kinds of things Anand keeps bringing up…..

    The truth is that foreclosures are declining nationwide…

    Oh and wait…the WSJ says that the Subprime Crisis is Over. What on earth will we do if the sky stops falling?

    A bunch of real estate trading hands with one group of people losing money and another picking up bargains and making money is hardly a disaster in the long run.

    I put the current situation in historical context. In that context it’s very clear that while there are certainly problems today, the situation is nowhere near as desperate as it was in the crisis periods of the 70s and 80s.

    Perhaps we need to redefine the term ‘recession’. Even Mike should be able to admit that our current situation doesn’t fit the traditional criteria for a recession since we haven’t had two consecutive quarters of negative growth.

    The Ford-Carter recession was the worst as a percentage of GDP. Compared to both of those the current recession is much less intense. It looks like it’s about half-way through and is going to be about 2/3 as bad as the Clinton recession and half as bad as the Ford-Carter recession, based on the rate of decline and depth of decline over time.

    Best guess is that it will start to turn around in the next 6 months and we’ll be out of recession sometime in 2009. A very nice break for the next president who will get credit for economic developments he has no actual role in, just as Bush got blamed for the Clinton recession.

    and the classic foot in the mouther…
    As for the ‘housing bubble’, it’s not bursting. Every expert seems to agree that the adjustments are short-term, and the impact of artifically low interest rates wore off quite a while ago. You can bleat about economic doom and gloom all you want, but the evidence just isn’t there to support it

  • Cindy

    the private sector will not properly regulate itself

    Regulate itself? What an odd idea, B. I thought it all worked on “the magic of greed”.

  • Cindy

    You do know if you bold everything it sort of defeats the purpose. :-)

  • http://www.joannehuspek.wordpress.com Joanne Huspek

    Dave makes more sense than our current crop of Congressmen, and that scares me. Not so much about Dave, but about those Congressmen.

  • Sceptic

    You’ve to be bold as brass towards the likes of Dave Nalle

  • Cindy

    lol @ Sceptic

  • Sceptic

    How did we go from “Everything hunk-dory” to “Perilous economic situation” ?

  • Sceptic

    This guy is going to offer us “Real solutions”…what a joke..

  • Cindy

    But, either one – the government or the private sector – left to police itself is a recipe for disaster.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Some people are slow learners. I’d say it’s the conservative bent of mind.

  • Sceptic

    You should take it easy Dave Nalle…why don’t you retire…banish yourself to a lonely island…develop what you are good at…designing fonts…

    How about calling your latest design “Economica Shit-Creeka”…very stylish font …with lots of downward spirals….

  • Georgio

    Dave ..your answer to my $5000 is so short sighted that I can’t believe a man who posts here quite alot cannot see the trees becase of the forest..Building a battery factory has nothing to do with the cost of a Hybrid or a regular car ..it has to do with competing with South Korea who is also building one ..it has to do with putting ppl to work ..it has to do with putting scientists with creative thinking to work to try and come up with a battery that will exceed anything we now have ..something the Republicans know nothing about and your answer to the Corporation tax is lame and full of bullshit.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    That’s cruel. Dave’s a true believer. The problem is, it’s all in the past. Once he converts, he’ll be a great champion for the truth:
    Saul, the Pharisee, on the road to Damascus.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I couldn’t get in on that, Georgio, because I didn’t know enough about it. So I am glad you’re putting it in the context of a larger picture.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    But damn it – we used to have such a climate not so long ago, when American business and corporations were rooted to the local community. It was a symbiotic relationship, one of give and take. Everyone was a winner. How did we allow the situation to get so out of hand? We created a fucking Frankenstein monster.

  • Cindy

    Wow, look at all these new people here. Must be my fellow snow-bound east-coasters.

  • bliffle

    I’m not snowbound, I’m rainbound. Raining all day. I suppose it would be snow if it were cold enough.

    What’s this!? My thermometer reads 20. There should be snow. Oh, wait, that’s Celsius, not Fahrenheit.

    Never mind.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Dow to slide to 5000.

    If this ever happens given the devalued dollar, say good-bye to capitalism as you know it.

  • Cindy

    lol @ bliffle

  • http://drdreadful.blogspot.com Dr Dreadful

    It’s supposed to be raining all day here, too, but the best this part of central California can manage so far is a slight dampness to the air.

    We need rain too, and in absurd quantities. Goodness knows what drastic measures will be necessary in the summer if we don’t get it.

  • http://www.republicofdave.com Dave Nalle

    So how can you expect Obama to do things that Bush and his clique failed to do, whatever their reason?

    He did campaign on change, and from what I’m seeing he’s repeating the same mistakes on a larger scale and adding new blunders to them. We could at least expect him to try something different.

    Dave

  • http://www.republicofdave.com Dave Nalle

    This guy is going to offer us “Real solutions”…what a joke..

    Skeptic. I don’t see you attempting to offer anything positive at all. You just sit there in – India, isn’t it – and engage in Schadenfreude. These problems aren’t confined to the US and will impact everyone eventually. Maybe you should be looking for solutions instead of bitching.

    Dave

  • http://www.republicofdave.com Dave Nalle

    Dave ..your answer to my $5000 is so short sighted that I can’t believe a man who posts here quite alot cannot see the trees becase of the forest..Building a battery factory has nothing to do with the cost of a Hybrid or a regular car ..it has to do with competing with South Korea who is also building one ..it has to do with putting ppl to work ..it has to do with putting scientists with creative thinking to work to try and come up with a battery that will exceed anything we now have

    Well Roger, your battery factory question is too specific and essentially meaningless. I just tried to point out how that could be one benefit of the $5000. Clearly if we just gave out a giant handout the money would not be targeted to any specific project, but it would go to retailers and to banks and ultimately be available to build and operate whatever businesses were competitive in the marketplace at the time.

    IMO it would not and should not be a battery company. Our goal is not to compete with Korea and other 2nd World nations which have focused on heavy industry. I agree with Bliffle here. We need to evolve into the next generation of economies and focus on information industries, management and research. A battery factory is a step backwards and would be a bad investment.

    ..something the Republicans know nothing about and your answer to the Corporation tax is lame and full of bullshit.

    Sorry, you’re wrong. Make your best argument for why it’s good for the US to have the highest corporate tax in the world and lose business to other nations as a result. I’d love to hear it.

    Dave

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    “He did campaign on change, and from what I’m seeing he’s repeating the same mistakes on a larger scale and adding new blunders to them. We could at least expect him to try something different.”

    Yes, but not in terms of reverting to past policies, tried or untried. And he is trying something different – the influx of government into the whole thing. You or I may not agree, but it is different.

  • Cindy

    #47

    Dave,

    Well Roger…

    Georgio, I think you mean? Unless I am missing something.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I think Dave got confused in the heat of the battle, Cindy. Shit happens.

  • Cindy

    I think Dave got confused in the heat of the battle

  • Georgio

    I’m not new here Cindy…I just don’t comment that much but now and then Dave sets me off..I am interested in any good idea that will help this economy for my daughter’s sake who is also a Cindy because she own’s two stores here in Savannah Ga that depend on tourists and so far it has not hit us…I would be out fishing but it is down to 40 degrees .Poor me LOL.

  • Baronius

    Roger, a government trying to run an economy isn’t different. It’s been tried and failed repeatedly. There’s only a few possible ways of structuring an economy, and Obama’s ideas aren’t new, nor have they ever been successful. Also, there’s an element of blind faith to it, similar to Baritone’s earlier comments.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I love Savannah, Georgio, at least from what I’ve seen of it in the movies: “Midnight in the Garden of Good and Evil.” Johnny Mercer and the greenery, and all those beautiful houses. Is it true?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Well, Baronius. I sincerely believe this time is going to be so different none will recognize it. I’m sorry if you don’t see the writing on the wall. Have you seen the Wall Street action lately. Don’t worry! More of the same is coming. Soon, it’ll come to the point everyone, even Dave, will be on their knees for a savior. Mark my words. Or just wait.

  • Cindy

    Georgio,

    So, I guess my snow-bound theory is invalid, since you are in Georgia.

    But, there are new posters all over the place, even in the Culture section there are more different names than I have seen in a single day. I wonder why.

    40 degrees, poor you indeed.

  • Baronius

    Come on, Roger! Your sincere belief? That’s all you’ve got? Relatively unregulated capitalism rocks for 150 years, builds you a computer and power lines to keep it running, and you’re using it to tell me that you sincerely believe that a directed economy will do better?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    No, Baronius. I’ll be the first to espouse the virtues and the first to see it go. No civilization of the kind I’d care for could be without it. But I do realize we’ve reached the crossroads. And truly, I really don’t know what the future will be like. But I do know it will not be in any way like the past. I’m sorry, but I sincerely believe the Golden Age is over.

  • http://www.republicofdave.com Dave Nalle

    I’m atheistical, Roger. All your idols are equally false to me.

    The only real way to get out of this is through the efforts of citizens and consumers and business owners. In the long term they have the solution. The question is whether government can dig a hole so deep we can’t dig ourselves out.

    Dave

  • Georgio

    Roger..It is so beautiful that I can’t express it..I came down here from my home in Chicago three years ago to visit my daughter and I never went back..

  • Baronius

    So you support a control economy and you think it’ll make things worse? Or you think that things are getting worse anyway, so we might as well supervise the end of the Golden Age from a government office somewhere?

    And what if you’re wrong? What if things are just lousy for a couple of years, then an unprecedented boom happens – or would have happened, except that the new command economy didn’t allow it?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I think we’re past that point, Baronius. And if I’m wrong, I’ll eat my words.

  • Baronius

    I know the feeling, but it is only a feeling. I see the news and think that this is as bad as I’ve ever seen it. But I remember the 1970’s, and things were terrible then. My grandfather who slowly died of a lung condition caused by unsafe working conditions, he had it tougher than I can imagine. And his life was easier than his grandfather’s.

    It’s the speed with which things fell apart that makes this current recession so unnerving. Then again, if things fell apart more slowly, that would have meant a drawn-out crisis, and that would have seemed unnerving.

    I’m reminded of a story that Dave Chappelle told about a trip he took to Africa. He was talking to someone about how he walked away from his HBO show because it wasn’t the creative outlet he was looking for. The other guy said to him, “yesterday I ate a dog”.

  • Georgio

    Roger..Google the..landings in Savannah Ga..if you want to see true Beauty.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Well, believe me Baronius, I don’t like to see it but the world is falling apart. I realize it’s “subjective” and no, I haven’t experienced the Great Depression. But we were still young then. It’s different now because we seem to have reached our peak. At the present rate, with the dollar at its historical low and the Dow plunging, there’ll be nothing left. Any restructure will come about by unconventional means. And I do hope that the private sector will come into its own – for there’ll be no prosperity otherwise. But it will have to be rejuvenated, set on firmer ground, more connected to the local community, the consumer, the employees, the whole shebang, like in the good old days. I think it will be like starting from scratch. The idea of global corporation got busted and I think it’s a good thing. But these are just speculations.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Well, Georgio, I was stationed in Fort Gordon, GA. Even Augusta, GA, was a neat old colonial town. Savannah was 500 miles from where I was – by the ocean, is that true? I heard. But I never made it there. Now I’m sorry.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Dave, #59,

    I don’t have idols. But the road you suggest was already tried before and it failed. So to tell the truth, I don’t know what the future will be like, but I can bet it won’t be anything like the past.

  • Baronius

    Again, Roger, in what sense did the free market fail? If you want to rely on a medieval CAT scan or Soviet-era HIV drugs then feel free.

  • Cindy

    The Free* Market failed in the sense of the collapse of the entire global economy.

    *shipping is free to try, if you decide to keep it, do nothing, you will be billed in 2 million easy installments of 1 billion dollars each.

  • Baronius

    Cindy, that’s silly. We’re likely in a hiccup that’ll hurt a billion or so people for a couple of years, but those people are more prosperous, healthier, better educated, and more self-actualized than any people have been in human history. What do you think your life would have been like 500 or 50 years ago?

  • http://www.indyboomer46.blogspot.com Baritone

    Georgio,

    I concur about Savannah. I spent only a day and night there a couple of years ago, but my wife, son and I fell in love with it. I suppose it’s gotten a bit commercial, but that’s okay.

    We also took a brief trip out to Tybee Island which was fun. In Savannah we had a great lunch at the little restaurant run by the arts school there.

    How is the weather there in the summer? Does it get really hot and humid as I would imagine? We were there in mid-December and the weather was great.

    We wanted to eat at Elizabeth on 37th, but it’s a bit too pricey for our meager pocket books. I do have Elizabeth Terry’s cookbook – “Savannah Seasons.” It’s great if you like to cook seafood and soups among other things.

    Georgio, you are truly fortunate to be living in Savannah.

    Sorry Dave for taking things off message here.

    Now, back to our regular programming.

    B

  • http://www.republicofdave.com Dave Nalle

    Ditto on #68. If what we’ve had in the last few decades was a free market I must have missed some econ classes.

    Dave

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    What Baronius refers to a hiccup he’ll soon realize it to be a catastrophe – for all the accomplishments of humankind. Keep on dreaming. Soon you’ll realize how shallow and thin-veiled it all is.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    No, we didn’t have it and it won’t happen again. Under new regime, perhaps. Just wait till the Dow fall flat on its ass, as it’s about to do, and then we shall see what tune you’ll be singing then. Then all your civilization and erudition will come to naught. It may get real primitive and nasty and brutish out there, so you had better get your gun. You may need it.

  • Baronius

    Roger, don’t mistake me for an optimist. I think that Obama’s economic agenda will stifle capitalism and set us back ten years or so. But do you know what a catastrophe really looks like? I hate to keep making the same point, so this is the last time (today): 19th century kings never had it as easy as the bottom quintile of US earners.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I buy that. But that’s precisely the point, Baronius. The people have tasted prosperity and they are not about to let go. Every American, black, white, immigrant – they’re going to ask questions. The crime on the city streets, in the ghettos, organized crime – you name it – all it’s a symbol and an indication of the extent to which the American people had bought into the notion of success. And now this! You’re still talking about recovery. But what if it doesn’t happen in a year or two? Do you really believe it will continue business as usual? Things will get real nasty out there, and there’s no way of telling what might happen.
    And you’re talking about ten years! Give me a break. Don’t you see there’s an explosive situation here. And what of Russia and China and Iran? Are they going to just stand still? Don’t you think the internal unrest is going to spread to international relations? There’s already a great deal of unrest and rift within the European community – the Germany denying aid to the Eastern bloc, Hungary, Poland, etc. And it’s only the beginning.

    Again, I really hope for some miraculous turnaround soon, very soon, and I don’t give a damn how it comes about. Just let it happen. So I don’t feel I have the luxury to criticize Obama or any Tom, Dick and Harry – because no one really knows what will work and what will not under present conditions. All bets are off. Just let it happen!

  • Clavos

    Cindy @#40:

    Some of ‘em aren’t really new; they’re just sailing under false flags.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    the pretenders

  • Clavos

    Georgio,

    Kept my boat for twenty years in Kilkenny Creek, at Richmond Hill. The Georgia coast is a beautiful secret; a cruising ground relatively few people know about.

    St. Catherine’s and Ossabaw islands, reachable only by boat, are not only beautiful, but redolent with history. St. Catherine’s was once owned by Button Gwinnett, Georgia’s signer of the Declaration of Independence; his home is still there. St. Catherine’s was also the site of the first book printed (a dictionary of the language of the Indians the Spanish missionaries found there) in what is now the USA.

    Ossabaw has herds of wild donkeys which are direct descendants of donkeys left by the Spanish explorers, long before Oglethorpe brought his rag-tag band of prisoners to the area he named Georgia.

    Richmond Hill, on the mainland, is the site of the nation’s first automatic telephone exchange, because Henry Ford, who had his plantation there, demanded it.

  • http://www.republicofdave.com Dave Nalle

    because no one really knows what will work and what will not under present conditions. All bets are off. Just let it happen!

    Rather like telling a rape victim to just “lie back and enjoy it.”

    Dave

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    No. They’re trying to fix it. Whether they’ll succeed or not, I don’t know.

    “Let it happen” refers to my hope that it’s fixable.

  • Georgio

    “Let it happen” refers to my hope that it’s fixable…..WHEW…I’m glad you explained this Roger..I was worried about what you meant but I think Dave really made a FUNNY with his ‘Rather like telling a rape victim to just “lie back and enjoy it.”..now that was funny Dave..would like to see more of that side of you..
    But after all this talk…we have come to no conclusions so …as Roger says..”LET IT HAPPEN”

  • M a rk

    Dave, I read your proposals with sadness. They amount to a prescription for the transfer of wealth precariously held by workers to owners (those who survive the dog fight) and increased suffering for the marginalized; your argument against home ownership can be expanded to apply to worker ownership generally…as the market is demonstrating daily.

    Even Smith (Theory of Moral Sentiment) theorized that the invisible hand could functions for the betterment of society only because of what he posited to be an innate sympathy one man for the other.

  • http://www.republicofdave.com Dave Nalle

    I’m sorry, but “let it happen” is about the stupidest damned response to this I can imagine.

    When we know deficit spending is a terrible idea and we have no evidence that any of these stimulus ideas will work and we frankly know that many of them will do actual harm rather than good, sitting back with our thumbs up our asses and a beatific smile on our faces saying “let it happen” is just totally fucking idiotic.

    Dave

  • http://www.republicofdave.com Dave Nalle

    Mark, if the whole economy goes down in flames, everyone suffers. If the economy can be saved everyone benefits. It’s not too late for our focus to be on saving the economy for the benefit of everyone, rather than cutting our losses and trying to alleviate individual suffering on the assumption that there is nothing we can do to address the problems themselves.

    Dave

  • Baronius

    Mark, you mention home ownership. This also comes up a lot when people talk about the American Dream. But the whole problem is that no one owns their homes. They own $13k of a $267k house. That’s not home ownership, and it’s certainly not the dream I leared about in my youth.

    Some people screw up badly. Some people are overtaken by events they didn’t anticipate. Some people are duped. However they got into their current situation, they aren’t really home owners, and they’re not losing their houses. They’re losing $13k. It feels like something more, but it really isn’t. A just housing bailout would return that money to those who were foreclosed upon based on unfair conditions. It wouldn’t guarantee a new mortgage or future ownership of a particular house.

  • http://www.republicofdave.com Dave Nalle

    Baronius, about 35% of the population own their homes outright. Of course they are still burdened by property taxes and if they don’t pay them then the state can use a tax lien to take their homes away.

    Dave

  • The Obnoxious American

    Dave,

    Good article and good solutions. Only problem was when you tried to convince Bliffle that the economy does run in a cycle. What an absurd notion, Dave, where did you get this stuff, from a college course or something? I hope you realize guys like Bliffle are not much for book learnin’.

    Seriously, that exchange made my day. Thanks for that, and thank you too Bliffle.

  • Dan

    Here’s a drastic, but effective, solution to the housing crisis:

    *Let current defaulters off by marking down their lowns to current housing prices. They’d have 0 equity but they wouldn’t be upside down.

    *Let people who lost 401k stock equity buy into the housing market at current mark downs plus any provable losses in retirement accounts.

    The latter wouldn’t be for everyone, many who already have a home and don’t want the hassle of moving or selling, but as a take it or leave it option, it would scoop up a lot of the housing glut with built in equity.

    The market would still be depressed, but the ownership would be with people. The government would stay out of it other than to give the banks what they would have gotten without the downturn. I think it might be cheaper, and more homes value would be protected from people taking care of their investments.

  • http://blogcritics.org/writer/dan_miller Dan(Miller)

    Interesting idea, Dan, but I don’t think the folks it would help are those whom our current masters care a great deal about helping — or appearing to help.

    Dan(Miller)

  • Dan

    Dan Miller, you’re right of course. A financial crisis always gives government the opportunity to choose winners and losers. There is a new trend among stock analysists; they look among companies and sectors who spend money lobbying. It seems there is a positive correlation verified with lobby efforts and financial success.

  • Glenn Contrarian

    Dave –

    I hate to sound repetitive, but:

    25% top marginal tax rate in the 1920’s led to the ‘Roaring Twenties’…and then the Great Depression.

    90% top marginal tax rate in the 1950’s led to paying off the monstrous debt left over from WWII…and helped us build the best economy in the world (we were the biggest creditor nation until Reaganomics, remember)

    Then Reagan came along, slashed the top marginal tax rate and Reaganomics (and Clintonomics) gave us the boom of the 90’s…and the economic meltdown of today.

    Once is an event. Twice is a coincidence. Three times is a pattern. History shows the fallacy of the ‘tax-cuts-cure-all-ills’ dogma of the conservatives.

    Do what’s patriotic, Dave – LEARN from history, rather than deny it.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Wow, Glenn. That’s a new form of appeal.

  • Clavos

    Glenn notes:

    25% top marginal tax rate in the 1920’s led to the ‘Roaring Twenties’…and then the Great Depression.

    90% top marginal tax rate in the 1950’s led to paying off the monstrous debt left over from WWII…and helped us build the best economy in the world…

    Then Reagan came along, slashed the top marginal tax rate and Reaganomics (and Clintonomics) gave us the boom of the 90’s…and the economic meltdown of today.

    Once again, correlation does not imply causation.

    To infer that it does is a logical fallacy.

    History shows the fallacy of the ‘tax-cuts-cure-all-ills’ dogma of the conservatives.

    History shows no such thing; it merely relates events which, in this case, coincide.

  • http://www.republicofdave.com Dave Nalle

    Glenn, what Clavos said. You can’t compare the 20s the 50s the 80s and today as if the only thing different in those periods was the tax rate. That’s just silly.

    If you care to study history, you’d know that the tax rate had absolutely nothing to do with the depression. The depression wasn’t caused by government not having enough money. It was caused by environmental disaster, business mismanagement and a world-wide contraction of the commercial markets in the post-war period. To suggest that cutting taxes made the economy worse is just nonsensical. It might not make things better, but it certainly wouldn’t make them worse.

    Hell, we didn’t even HAVE an income tax in the “gilded age” and we had huge economic growth.

    Dave

  • Cannonshop

    But Dave, the low taxes CAUSED the droughts (that caused the dustbowl), along with soil erosion, cavities, and cancer, and the postwar contraction was, of course, caused by not having enough money taken by the government and redistributed to political action groups like the League of Nations, and hostility to the beneficience of the Soviet Union’s new and innovative policies-especially their gentle treatment of the Kulaks-if only we had the kind of enlightened people in charge then that we have now!

    Just imagine, all the motivated, happy workers in motivated happy lines, following the One Leader…

    oh, wait, that’s right, it wasn’t “War profiteers” or “the Bourgeouis”, it wasn’t low taxes that made bad decisions in industry, it was people who thought the ride would never end.

    When FDR took over from Hoover, he took over a Federal Government that was running budget SURPLUSES-the government had PLENTY of money-it’s jsut that the cult of Credit had wrecked the rest of the economy-kind of like today. I realized something today that disturbs me intensely-I’m apparently part of that “One percent” who’re supporting the rest- I’m writing a cheque to Uncle Sugar, no refunds coming, and it wouldn’t be that way if I only did what everyone else did, and jumped ass-deep into the Cult of Easy Credit until I had debt running out my ears.

    Doing that, I’d have all SORTS of deductions.

    And that’s under the tax-laws written BEFORE the current crisis, before the bailouts.

    Mind you, I made just over sixty grand last year, and my witholding was at max-rate…plus fifty dollars per paycheque.

    This current crisis is all about people sinking into the trap of Easy Credit Terms, then building “derivative securities” off of that debt.

    It’s about DEBT, Glenn, it’s about everyone from the paperboy to the CEO maxing out their borrowing and treating what they owe as if it were an asset, and it’s about laws that are built to encourage, even compel them to do so, while dis-encouraging real wealth generation through industries that actually MAKE something.

    This market, this economy, is a direct outgrowth of telling people that not only CAN they live beyond their means, but that they MUST do so, or pay the penalty.

    And this bailout’s a reaffirmation of that.

  • http://www.republicofdave.com Dave Nalle

    At $60K you should still be under even the new lower threshold for a rate increase, at least. Be happy for that, Cannon. If the economy hadn’t hit my business moderately hard I’d likely be looking at a rate increase next year, because I’m so stinking rich, what with my retirement savings now enough to buy a candy bar and all.

    Dave

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Shoot, on 60K these days you can live the life of Riley.

  • Clavos

    As of a few minutes ago (and the market is up so far this morning), I have lost 41% of my life’s savings (I was and am 100% invested in stocks).

    My income is commission only, and yacht sales have slowed nearly to a standstill.

    But, I’m not worried. The Stimulator is watching over me.

  • http://blogcritics.org/writer/dan_miller Dan(Miller)

    Clav,

    Here are two sure fire investments: cement and hot air balloons. Cement is very solid, and hot air balloons are certain to go up.

    You’re welcome.

    Dan(Miller)

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    You might as well hold on, Clavos, for the long haul. “The Stimulator,” if I gather correctly your meaning,” has just issued a statement about markets being a good investment. Very uncharacteristic for a president to do so, putting themselves out on the limb. “Damage control,” I guess.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Entertainment and all sin-related activities – drugs, sex – are also foolproof during depression. People need a diversion.

  • Cindy

    This has absolutely nothing to do with anything. But it’s really, really cool!

    Much better than guns and stock markets.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    It’s a diversion alright.

  • Clavos

    It’s a diversion alright.

    Not entirely, Roger; there’s a lesson in it:

    Perspective is important.

    Thanks, Cindy, that is cool! I saw a similar one a few months ago.

  • Baronius

    Dan (notMiller) – Interesting comment about lobbying. It’s been years since I read Douglass North, but IIRC one of his big theories of economic history was that economies grow when there is more profit to be gained by producing than by influencing the distribution of products. Think Somali farmers and Somali warlords. Your observation is pretty scary in that context.

  • Cindy

    Clav,

    OMG…look at Julien Beaver’s work.

    (pretty cool, that perspective idea :-)

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Sorry! Fail to see the significance. I must be dense. Only today, because I’m working on the finish.

  • Clavos

    Cindy,

    That’s him! Those are the ones I’d seen before!

    I especially like the lobster with the plate…:>)

  • Cindy

    I’m thinking the little doll in the plate is not part of the drawing. It looks like something a child put there.

  • Clavos

    No, No! That’s a human — the artist drew it — it’s part of the joke, the whimsy.

  • Cindy

    Oh! lol

  • http://handyfilm.blogspot.com handyguy

    Your formulation — it’s really simple, just do this — is pretty offensive. You’re sitting on the sidelines calling potshots. But do you actually think that Ben Bernanke, to take one example, is just a dumbass? That his opinions are completely worthless and meaningless, just because they don’t match your ideological purity? He is an enormously gifted, brilliant, accomplished man. And who are you?

    Opinions about TARP and the stimulus are all over the map. I recommend reading some economics columnists whose analysis, frankly, I trust more than your armchair sniping. Try Martin Wolf of the Financial Times. David Leonhardt of the NY Times. Almost anyone in The Economist. Maybe you’ll learn something. [They don’t all support Obama; but they don’t pretend that cutting corporate taxes and letting companies fail are the ‘simple’ solution to the problem.]

    Wolf, like Martin Feldstein, worries that the stimulus bill is politically compromised and misguided; but they both also complain that it’s too small. The deficit spending of 1983-1993 didn’t cause hyperinflation; why are you so convinced it will now? Why would Feldstein and Wolf and others be calling for even larger spending?

    It’s not that I think your ideas are all crap. It’s that you write off the ideas of others so blithely. Nothing is as ‘simple’ as you maintain it is in this article.

    Your pronouncements that Obama’s policies are “the same as” Bush’s are just ridiculous, not just grossly oversimplified and caricatured, but untrue. Your use of AIG as proof that bailouts don’t work is also pretty simplistic.

    Bernanke said yesterday that AIG made him angrier than any other part of the meltdown — a perfectly sound insurance giant had basically been turned into a huge hedge fund.

    Yet he maintains that the bailout was necessary and should continue, because the company’s failure would take so many others down with it. I can’t think of a good reason he would lie about this, and I don’t think it’s likely that your analysis is more knowledgeable than his.

  • Clavos

    The deficit spending of 1983-1993 didn’t cause hyperinflation; why are you so convinced it will now?

    Scale.

  • Glenn Contrarian

    Dave and Clavos –

    Ah, I see – It was all MERE COINCIDENCE, huh? It was mere coincidence that the depression followed two terms of 25% top marginal tax rate. It was mere coincidence that we paid off the monstrous debt from WWII and America’s economy was on top of the world even into the seventies after a decade of 90+% top marginal tax rate (followed by a decade of 50+% tax rate). AND IT WAS ‘mere coincidence’ that after Reagan slashed the tax rate we had a bad recession…and then “Read-my-lips” Bush raised taxes up to 39% IIRC and what happens? A Boom! Then Dubya cuts the rates again and what happens?

    SURE, maybe the top marginal tax rate has NOTHING to do with the economy…but history shows a higher top marginal tax rate does NOT hurt the ability of the economy to function, and a higher tax rate certainly WOULD help us pay down the deficit, just like it did after WWII.

    Again, Dave and Clavos – LEARN from history!

  • STM

    Bloody hell. With respect, Dave, I can’t believe all the bulsh.t I’m reading on BC about this financial crisis.

    We are NOT faced with a natural cyclic recession, Dave. It’s a little bit beyond that. The global financial markets ride out little blips and bumps all the time.

    This one is the mother of all crises.

    All governments around the world have been forced to come up with stimulus packages and bailouts very similar to that of the US. Basically, what’s happened is beyond their control but doing nothing is a recipe for disaster.

    Please, mate, before putting pen to paper, try to get your head around just how serious it really is and what REALLY caused it. The answer to it all is so simple. Your previous story doesn’t really explain how we got here either, although for what it’s worth, it does contain what I’d consider is some fair comment.

    This is a global financial meltdown that has the potential to rival the Great Depression – or worse – and has been wholly and solely caused by Wall Street’s idiocy and greed, for God’s sake, with a lot of help from their colleagues in the City of London.

    But the perfect financial storm has just the one epicentre – New York.

    I couldn’t believe the other day on these threads that you couldn’t understand why AIG couldn’t go under and why it couldn’t be allowed to happen.

    AIG held many billions in risk on CDSs and no money in the bank to cover them, having virtually taken a punt on the fact they’d never have to pay up, and thus exposed much of the European and world banking system to catastrophic failure.

    This is the story right through, and lack of regulation is a major issue.

    While it might in normal circumstances be better to let companies like AIG go under because of their own foolishness, there are factors in this crisis that go way beyond the US, but which are sadly all interlinked.

    A collapse in Europe, for instance, would be a disaster for the US, and vice-versa. We are no longer talking about the US economy here – which is in huge trouble anyway as a result of this crisis – but the global economy.

    In fact, it all makes for a very good case for nationalisation of banks around the world, or at least some very strict regulation of the banking and financial sector to ensure this never happens again.

    Transparency, or lack of it in this case, is everything here.

    I even heard a US economist admitting on radio the other night that many of the people trading CDOs and CDSs (lunatic forms credit derivative dreamed up by the pea-and-thimble tricksters on Wall St) – had no idea about how they really worked.

    Madness … and also madness to apportion blame on anyone or anything else.

    Key term here: trillions in toxic debt, emanting mainly from the United States, and now global toxic debt at that.

  • bliffle

    Sceptic in #25 is quite right. Dave knows nothing about economics, he just invents econ theories to support his political biases.

    Anyone who heeds Daves notions of econ will be led astray. He’s just an entertainer. BCs own version of Rush Limbaugh.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Why do it, then, and be exposed to ridicule? That doesn’t make sense. A person should know their own strengths and weaknesses and act accordingly.

  • http://www.republicofdave.com Dave Nalle

    Sceptic in #25 is quite right. Dave knows nothing about economics, he just invents econ theories to support his political biases.

    Bliffle, I’ve studied economics in an academic setting and know enough to go out and read and learn about other theories and ideas. You’ve certainly shown zero understanding of economic theory or practice on these threads, so you’re not in much of a position to critique me.

    I may not always be right, but I do at least have some idea what I’m talking about, and when even I need to I do the research to back up my ideas.

    Roger, I don’t have a problem to being exposed to the ridicule of people like Skeptic and Bliffle who have such strong and transparent political baises that anyone can see that their criticisms lack substance.

    Dave

  • http://www.republicofdave.com Dave Nalle

    We are NOT faced with a natural cyclic recession, Dave. It’s a little bit beyond that. The global financial markets ride out little blips and bumps all the time.

    Stan, I didn’t say that we were faced with a natural cyclic recession, I said that it was part of what triggered the collapse of the overextended credit market, which based on your comments here, you seem to agree with.

    All governments around the world have been forced to come up with stimulus packages and bailouts very similar to that of the US. Basically, what’s happened is beyond their control but doing nothing is a recipe for disaster.

    Past evidence suggests that even doing nothing would be better than misdirected stimulus based on deficit spending. As I point out there, I’m not against stimulus, just against stimulus and regulation efforts which cannot possibly work and will likely make things worse.

    But the perfect financial storm has just the one epicentre – New York.

    The point which I thought I made pretty clear in the other article is that the derivatives situation could have been solved by regulation had the other problems not pushed it to the critical stage.

    I couldn’t believe the other day on these threads that you couldn’t understand why AIG couldn’t go under and why it couldn’t be allowed to happen.

    AIG held many billions in risk on CDSs and no money in the bank to cover them, having virtually taken a punt on the fact they’d never have to pay up, and thus exposed much of the European and world banking system to catastrophic failure.

    And you’re going to hear me say it again, Stan. AIG was big, but it wasn’t THAT big. We have now poured more billions into it than it would have cost had we let it just fold. It would have been hard luck for banks and investors if we had shut AIG down, but the total cost would have been less and it would have been paid by a more appropriate group of people than the US taxpayer.

    This is the story right through, and lack of regulation is a major issue.

    As I believe I made very clear in both of these articles.

    While it might in normal circumstances be better to let companies like AIG go under because of their own foolishness, there are factors in this crisis that go way beyond the US, but which are sadly all interlinked.

    But again, do you see your small local banks in Australia which did not invest in derivatives going under here? Banks and businesses which did not engage in this kind of speculation can weather the current storm, and it is unfair to those who were responsible to give excessive government assistance to those who were irresponsible, especially when it comes at a cost greater than the cost of letting them fail.

    A crisis like this HAS to be allowed to bottom out. If you try to keep the failing institutions afloat artificially you just delay real recovery.

    I know this is just a theory, but it’s based on what’s happened in past similar crises and it certainly has more validity than the opposing theory that massive deficit spending will make things better rather than worse.

    Dave

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Dave,

    A pretty good op-ed piece in WSJ:

    Has Obama Burried Reagan?

    Care to comment?

  • http://www.republicofdave.com Dave Nalle

    I think he has a good basic point. Reagan is only incidental to it. I’m tired of him being held up as an icon. It’s the issue of the war on capitalism which really matters.

    Dave

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Dave,

    I liked it too, except for

    “Democrats don’t want the private economy anymore.”

    I don’t think that’s the most correct assessment. I think he’s oversimplifying here.

  • http://www.republicofdave.com Dave Nalle

    I wish that were true, but there are so many indicators that they’ve declared an all out war on capitalism that I’m not convinced.

    Dave

  • Cannonshop

    #123 it may be oversimplifying, but on the leadership level, it looks pretty accurate to me. Private Economies are the bane of Collectivism,and the Democratic Party’s leadership is built out of the sixties radicals who wanted communism to win.

    (earlier comment) Handy, as far as Ben Bernanke is concerned-no, he’s not a dumbass, he’s protecting himself and his cronies at the expense of the Taxpayer. In this case, it’s not Incompetence, it’s Malice. So long as people are miserable and the criminals get away with it, democrats will hold the White House and all of Congress.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I hope, Dave, that common sense of prevail. Private enterprise was the engine which built this country and brought hope to the rest of the world. I doubt that even the most severe critics of the recent abuses fail to see this point.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I disagree, Cannon, with this characterization of the sixties radicals as a whole – though can’t discount the exceptions. My take is that it was mainly an idealistic movement centered on justice, but which had bought into the bourgeois values. See, for example, my series of articles on BC, The Hidden Dimensions of American Politics,” where I analyze the nature and makeup of the Left.

  • STM

    You are wrong about AIG, Dave. I’m reading your stuff and it just seems like a puff piece for an ideological point of view that would probably make this crisis worse than it is.

    Thank God it won’t have an influence on anything.

    You don’t really seem to understand how any of this works. The value of the debt is multiplied in this case because of the exposure.

    So a $500bn debt has the potential to cause many trillions in debt and meltdown worldwide in a kind of domino effect.

    AIG’s problem was that its collapse would have brought down the European banks, which would have been a disaster for the US as well.

    You seem to be writing in a vacuum, focusing on the US, when it’s no longer about that at all. I recommend The Financial Times website for the best breakdown on how this all works.

    I respect your point of view on a lot of things even if I don’t always agree with it, but I don’t think you should’ve put pen to paper on this one.

    Readers will get a better idea from reading handy’s comments than from your stories on this.

    TARP, by the way, is one of the better ideas, because it directly addresses the cause of the problem and until that actually is addressed, the situation will only get worse, not better.

    Until the issue of toxic debt is dealt with, the banks won’t lend to each other and that is a key factor in any recovery.

    As for tax cuts, look up the Laffer Curve to see why they don’t work.

    Trickle-down economic theory has absolutely no role to play in this desperate – yes, desperate – crisis.

    And once again, the people who should be carrying the can for all this taxpayer money being used to address this crisis are not governments, but the idiots who caused it in the first place.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    But we allowed them to. Never again!

  • bliffle

    About econ ‘cycles': suppose you actually took a freshman econ course (a circumstance that OA has no more experience with than Dave) and the Prof assigned you the task of writing a paper on econ cycles, in particular:

    -what is the mechanism that causes cycles?
    -what determines the amplitude of a cycle?
    -what determines the period of a cycle?
    -what parameters can be used to modify cycles?
    -who benefits and who suffers from cycles?

    Do you think that you could respond by pooh-poohing the prof and saying that cycles ‘just are’?

    Do you think cycles are so trivial that they are unworthy of serious attention?

  • Cindy

    “The Obnoxious American”

    You should change your name to The Ridiculous Human.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    You’re going to incur his wrath.

  • Cindy

    You promise?

  • http://www.republicofdave.com Dave Nalle

    You are wrong about AIG, Dave. I’m reading your stuff and it just seems like a puff piece for an ideological point of view that would probably make this crisis worse than it is.

    My piece doesn’t actually address AIG at all. It’s more about general principles. And yes, it has a particular slant, because it’s glaringly obvious that we cannot put all of this cost on deficit spending and the backs of the US taxpayers.

    You don’t really seem to understand how any of this works. The value of the debt is multiplied in this case because of the exposure.

    I think I understand it much better than you realize.

    So a $500bn debt has the potential to cause many trillions in debt and meltdown worldwide in a kind of domino effect.

    Except that we are not talking about a $500 billion debt in the case of AIG. The face value of their mortgage holdings was $32.1 billion at the start of this. Even assuming a 40-1 leveraging of that debt, that’s only $1.2 trillion. The total asset value of the company was about $650 billion. Apply that plus the $180 billion we’ve spent so far and they have $830 billion to cover their derivative obligations. That leaves them $370 billion short. Liquidate the company and then share that loss among all of those holding the derivatives and it’s a bit hit, but it is NOT one which would break the world economy. Plus the derivatives could probably still be resold at an adjusted value to recoup some losses.

    It would help a lot if AIG was not allowed to keep who owns the derivatives secret. But the general belief is that they are shared by hundreds of banks and other institutions, many in Europe. Passing on a loss of what would probably end up being about $300 billion to these investors shouldn’t be devastating unless they have invested disproportionately in them. Most should only be invested to about 5% in derivatives and that is a loss they can take.

    AIG’s problem was that its collapse would have brought down the European banks, which would have been a disaster for the US as well.

    Except that as I point out, with the value of its assets and the bailout money from the US taxpayers the amount of the loss in a collapse ought to be within survivable limits for those banks.

    I respect your point of view on a lot of things even if I don’t always agree with it, but I don’t think you should’ve put pen to paper on this one.

    This article isn’t primarily about AIG, but even from the international perspective, it’s still a bad idea to have the US shoulder the entire cost of the AIG bailout and do it with taxpayer money. Hell, the country even offshored its HQ to Ireland to avoid US taxes some years ago.

    As you say, it’s an international problem, so the risk ought to be shared internationally, not all carried by the US.

    As for tax cuts, look up the Laffer Curve to see why they don’t work.

    The Laffer curve applies to income tax cuts not to cuts in the corporate income tax which has an entirely different and more indirect effect in making America more attractive for corporations looking for a friendly tax environment.

    Trickle-down economic theory has absolutely no role to play in this desperate – yes, desperate – crisis.

    And I haven’t said one word about trickle-down theory in these two articles. Though I do think raising taxes on consumers under so much economic pressure is just sadistic and insane.

    And once again, the people who should be carrying the can for all this taxpayer money being used to address this crisis are not governments, but the idiots who caused it in the first place.

    Which is exactly what I have been saying and which you seemed to disagree with earlier in your comment.

    Dave

  • http://www.republicofdave.com Dave Nalle

    Do you think that you could respond by pooh-poohing the prof and saying that cycles ‘just are’?

    Bliffle, I didn’t dismiss your comment and say that cycles “just are,” I referred you to one of the seminal works on the subject, one which was still being used when I took Econ 301 in college 30 years ago.

    Hell, you ought to like the idea of economic cycles. They inspired the development of the Soviet Union’s famous “five year plan” system of managing the centrally controlled economy.

    Should we get into a technical discussion of k-waves and consumption and production cycles? Shall we go into the relationship between large economic cycles, the credit cycle and the business cycle? Or do you just prefer to dismiss the entire idea of economic cycles out of hand?

    Or maybe you’re a secret Friedman fan and believe in a more complex theory of multiple vectors in the economy which just create the appearance of cycles.

    I can recommend some further reading if you like.

    Dave

  • STM

    Dave: “As you say, it’s an international problem, so the risk ought to be shared internationally, not all carried by the US.”

    This is the reason I think you have no genuine understanding of how any of this works.

    You don’t seem to uinderstand that taxpayers of many other countries are also sharing this burden. Without you seeming to have that knowledge, what’s the point of reading any more of what you write on this issue?

    Other governments have been pumping squillions into their own economies and proppoing up their own banks, all because of a crisis that emanated from the United States – so yes, everyone else IS sharing the burden.

    The taxpayers in this country are sharing the burden, with bailouts, bank deposit guarantees, and stimulus packages that have put us into debt – as are the taxpayers of Britain and many countries in Europe.

    Don’t forget, lack of regulation to rein in Wall Street is a huge part of the cause of this crisis so essentially, America has spread this illness to everyone else.

    This is a crisis made-in-America, that threatens a financial forestorm around the globe. None of your writing really seems to address the real nature of the crisis.

    BTW, the derivates are now worth at the most a tenth of their listed value, if that by now.

    That’s what the National Australia Bank, one of the banks here exposed to them, valued them at and that’s how they wrote them down.

    That sparked a lot of comment in the US, because until then the banks were reluctant to divulge what they thought they were worth …

    The US is only bailing out the institutions in the US affected by the crisis. The rest of the world is bailing out and propping up their own institutions affected by the crisis.

    Britain has been particularly hard-hit and has spent a lot more per capita on rescuing its institutions and propping up its economy than the US.

    But surely you don’t expect taxpayers of other countries to bail out an American failure?

    Dave, can I suggest this: go to the Financial Times website to get the best ever picture of this crisis – then come back and write a story with some bloody sense in it.

    You’ve chosen ideology over reality in this case, and it makes you look like a complete tit.

  • STM

    Dave, it wasn’t so much AIG’s mortgage holdings that were an issue, it was the amount of money it had to cough up and couldn’t because of the risk it had assumed on traded Credit Default Swaps.

  • Cindy

    Dave,

    I have never taken an econ course; I have no idea what all this vector stuff is about. So, you’ll forgive me for this stupid question.

    But, I have investigated some of Uncle Milton’s ideas. And this sounds sort of like his usual stuff.

    …a more complex theory of multiple vectors in the economy which just create the appearance of cycles.

    Does that mean these bubbles are actually all appearance? Like imaginary?

  • STM

    And the Laffer Curve is crucial to the theory behind supply-side or trickle-down economics, which also makes a case for lower corporate tax rates.

    Effectively, part of the ideology you are spinning here is about lowering tax rates for the wealthy – ultimately that comes to apply to individuals, small-to-medium businesses, large businesses or corporations, whether you state that unequivocally or not. Under normal circumstances, and this is where I don’t disagree with some of your oft-touted views in the past, none of those things would be that bad.

    But then this isn’t normal, which is why I reckon you should pull your head in on this and leave it to the experts.

    Lowering of corporate tax rates is effectively trickle-down economics in its rawest form.

    In the wash-up, though, it’s probably a good job you’re not in charge of anything that could affect this process (except on a personal level your own business) – and on that score, I genuinely wish you good fortune and hope all’s well there as we are all unwitting potential victims of this nightmare.

  • http://www.republicofdave.com Dave Nalle

    You don’t seem to uinderstand that taxpayers of many other countries are also sharing this burden. Without you seeming to have that knowledge, what’s the point of reading any more of what you write on this issue?

    Stan, I understand that perfectly well, but the fact is that AIG is effectively not a US company — in fact the concept of these large companies being based in any single nation is erroneous. But I don’t see anyone but the US bailing AIG out — even if other countries are bailing out their banks which may have problems related to AIG. The US is bailing out not just AIG but a number of other international banks and various US industrials as well. Perhaps your reading of the Financial Times is not sufficient to give you the full scope of the bailout from the US perspective.

    Other governments have been pumping squillions into their own economies and proppoing up their own banks, all because of a crisis that emanated from the United States – so yes, everyone else IS sharing the burden.

    This idea that the problem emanated from the United States is characteristic of your myopic view of this issue. The problems with mortgages and derivatives was not limited to the US, any more than these are “american” banks. Barclays was more overextended than anyone, with their derivatives more heavily leveraged than AIG or anyone else.

    Wall Street is really not a US institution anymore and hasn’t been for decades. Like the companies whose stock is traded there, it’s international. The same for the whole financial industry. It’s all international.

    The taxpayers in this country are sharing the burden, with bailouts, bank deposit guarantees, and stimulus packages that have put us into debt – as are the taxpayers of Britain and many countries in Europe.

    I know, and in each of those countries we see them throwing borrowed money at the problem with no positive results at all. When does sanity kick in?

    Don’t forget, lack of regulation to rein in Wall Street is a huge part of the cause of this crisis so essentially, America has spread this illness to everyone else.

    This is exactly what I say in my article. It’s the lack of regulation which is the problem, and regulation and management of losses is the solution, not dangerous and out of control spending.

    This is a crisis made-in-America, that threatens a financial forestorm around the globe. None of your writing really seems to address the real nature of the crisis.

    Again, blaming America when the financial markets are international is just wrong.

    BTW, the derivates are now worth at the most a tenth of their listed value, if that by now.

    I’ve been operating on the assumption that any solution should value them at no more thanm 1/30th of listed value.

    The US is only bailing out the institutions in the US affected by the crisis. The rest of the world is bailing out and propping up their own institutions affected by the crisis.

    Except that AIG and Bank of America and CitiGroup are international, not just American. AIG more than any of the others is characterized by being truly international, so in a way it’s a special case.

    Britain has been particularly hard-hit and has spent a lot more per capita on rescuing its institutions and propping up its economy than the US.

    Yep. I’ve read quite a bit about the problem in Britain, starting at the very beginning when their real estate market started to go bad even earlier than ours did.

    But surely you don’t expect taxpayers of other countries to bail out an American failure?

    What I’d really like is for America to take the lead and get other countries to follow in not trying to solve this problem primarily through enormous cash infusions whose long-term price may be enormously more than the costs of the current crisis.

    Dave, can I suggest this: go to the Financial Times website to get the best ever picture of this crisis – then come back and write a story with some bloody sense in it.

    I’ve been there before and have used it for reference in other articles. I’ll go there again, just for you, Stan. But I’m pretty sure I’ll see what I’ve seen in other financial papers — that other nations are making the same dangerous mistakes the US is.

    You’ve chosen ideology over reality in this case, and it makes you look like a complete tit.

    Sorry, Stan, my ideology is just simple common sense in this case. You can’t solve a crisis by replacing it with a far worse and longer lasting crisis.

    Dave

  • STM

    Sub-prime was the trigger for the crisis. That was purely American, and driven by the market emanting from Wall St for CDOs.

  • http://www.republicofdave.com Dave Nalle

    Lowering of corporate tax rates is effectively trickle-down economics in its rawest form.

    If you want you can look at it that way, but by that definition ANY lowering of taxes is effectively trickle-down economics. Hell, the $5000 handout I suggested in the article can be considered trickle-down economics, because it plays the same role of putting cash into the system through consumers to spur economic growth.

    But corporate tax rates are in fact different, because they have the added value of providing an incentive for corporations to do business in the US rather than offshoring their interests. That creates jobs and is good for the economy in many more ways than just cutting taxes for a stimulus effect would.

    And I realize you think I’m a “tit” for believing it, but I can’t see how anyone sane can subscribe to the idea that you can spend your way out of a depression or recession with money you don’t have. I may be a “tit,” but if you believe that idiocy you’re just nuts.

    Dave

  • STM

    Dave: “Except that AIG and Bank of America and CitiGroup are international, not just American. AIG more than any of the others is characterized by being truly international, so in a way it’s a special case”.

    So is Barclay’s, but I don’t see any US taxpayer dollars heading over the pond to bail out Barclay’s.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Dave,

    I believe I figured out the deeper problem you’re facing. It was staring me in the face all this time, almost at the tip of my tongue but not quite.

    You are having problem with (handling) uncertainty. Uncertainty of course is a problem for everyone, but for some more than others.

    I’d give it a thought if I were you.

    Roger

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Dave,

    Stock Markets: When Will the Bull Return?

    This is more in line with my thinking. Times of uncertainty and not much of a historical precedent to depend on.

    Roger

  • http://www.republicofdave.com Dave Nalle

    Roger, no one likes uncertainty and the problem isn’t just facing me, it’s facing all of us.

    In such conditions we turn to the things we know and can trust. One of those is the certainty that fiscal responsibility is better than fiscal panic and profligacy.

    Dave

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Or just go with the flow.

  • http://takeitorleaveit.typepad.com/ roger nowosielski
  • http://takeitorleaveit.typepad.com/ roger nowosielski
  • http://takeitorleaveit.typepad.com/ roger nowosielski

    The link to “Spin-Free Economics” (see above) is also a good one.

  • http://takeitorleaveit.typepad.com/ roger nowosielski
  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Pretty good critique by Steve Forbes:

    Repeating Bush’s Worst Mistakes.

  • Cindy

    Thanks for that Forbes one Roger. It was good. I have heard of the mark-to-market acctg problem before. Some trader gave me bad advice about the uptick rule, or I misunderstood. It’s apparently not back yet. But, I’m sure it will be.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    It ought to – to prevent speculation. That’s the least thing we need now. But my argument here is with Dave. I think he has a problem with handling uncertainty. He’s not the only one, of course. And these people will grope for anything to give them false hope rather than face the condition of not knowing. It’s a psychological trait, really, ability to deal with the unknown – some are better at it then others.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Another one on “shorts”.

  • Sceptic

    I think he has a problem with handling uncertainty. He’s not the only one, of course. And these people will grope for anything to give them false hope rather than face the condition of not knowing. It’s a psychological trait, really, ability to deal with the unknown

    Roger, it’s more than that .Dave Nalle’s one point agenda is furthuring the conservative view point.The fog of ideology coupled with an exaggerated sense of his own importance in the scheme of things has obscured his judgement and in the process you’ll see him vehemently defending some rather absurd propositions.When the situation suits him you’ll see him stubbornly espousing certain absurd scenarios and then you’ll also see him comically trying to extricate himself from the mess by adopting an opinion diametrically opposite to the one he’d held all along because now his credibility is at stake.

    Its that simple really.

  • Sceptic

    It may be possible to debate the merits and demerits of Nalle the font designer or Nalle the prolific writer but Nalle as the Politics Editor is insufferable.

  • http://www.EurocriticsMagazine.com Christopher Rose

    Sceptic, I’m no big fan of much, though not all, of Dave Nalle’s “perspective” myself, but your remarks are verging on being deleted.

    Dave’s performance as Politics Editor is beyond reproach. He logs in, he publishes articles or deals with any issues – and that’s it. Your suggestion that as Politics Editor he is unsufferable can really only be interpreted as “some anonymous jerk with an attitude” and may lead to you being banned…

    Christopher Rose
    Blogcritics Comments Editor

  • Sceptic

    Here’s a sample of bone-head comments featured on a cnbc slide show.The breath taking confidence with which Nalle says things mirrors some of those made by public figures.

    Erin Callan

    “Categorically no.”

    Lehman Brothers CFO Erin Callan responding on March 18, 2008, to the question as to whether the firm would be the next to go out of business.

    Callan was ousted from her job in June. In September, Lehman Brothers filed for Chapter 11 bankruptcy protection.

    Ben Bernanke

    “I expect there will be some failures” of smaller banks. “Among the largest banks, the capital ratios remain good and I don’t anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system.”

    —Federal Reserve Chairman Ben Bernanke in February 2008.

    Dick Bove

    “Lehman is a takeover target…I upgrade to buy”.

    —Dick Bove, banking analyst at Ladenburg Thalmann on Aug. 21, 2008.

    Within three weeks, Lehman Brothers filed for bankruptcy. The stock went from $14 a share to $0.

    Chris Dodd

    “Fannie and Freddie are very solid institutions. They have more-than-adequate capital. They have access to capital markets.”

    —Chris Dodd, chairman of the Senate Banking Committee, July 14, 2008.

    In September, the U.S. government seized control of both Fannie Mae and Freddie Mac, concerned about their mounting losses.

    Bernie Madoff

    “In today’s regulatory environment, it’s virtually impossible to violate rules…it’s impossible for a violation to go undetected, and certainly not for a considerable period of time.”

    Shelia Bair FDIC Chairman (March CNN Money Interview)

    “This very challenging credit environment will likely continue through most of 2008, but will clear out towards the end of the year.”

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    That is an impressive list. But don’t worry. There’s more to come.

  • Clavos

    The sky is falling, the sky is falling…

  • http://www.republicofdave.com Dave Nalle

    .The breath taking confidence with which Nalle says things

    Septic, you really are surreal. Why don’t you read some of my recent articles? I’d think you’ve be happy that I’ve come around to a more negative perspective, but perhaps there’s no way to satisfy you, or perhaps you’re just grinding your own axes as you haven’t even bothered to figure out whether I’m a “conservative” or not.

    Dave

  • http://blogcritics.org/writer/dan_miller Dan(Miller)

    The sky is not falling. All is well, now that we have all the change we can hope for. This is the dawn of a new and glorious day. Yes it is! Yes it IS! All is well.

    I would go on, but it’s past time for me to take my meds. I got so excited that I missed the last dose.

    Dan(Miller)

  • Sceptic

    Its called LYING Roger and while we are on the subject this is how the Government lies about important things like unemployment statistics.

    In February, the number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) rose by 787,000, reaching 8.6 million. The number of such workers rose by 3.7 million over the past 12 months. This category includes persons who would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs.

    Persons Not in the Labor Force

    About 2.1 million persons (not seasonally adjusted) were marginally attached to the labor force in February, 466,000 more than a year earlier. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

    Among the marginally attached, there were 731,000 discouraged workers in February, up by 335,000 from a year earlier.

    Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

    The other 1.4 million persons marginally attached to the labor force in January had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

    The official unemployment rate is 8.1%. However, if you start counting :
    1.All the people that want a job but gave up
    2.All the people with part-time jobs that want a full-time job
    3.All the people who dropped off the unemployment rolls because their unemployment benefits ran out

    then….

    one gets a closer picture of what the unemployment rate REALLY LOOKS LIKE.

    That number is 14.8%

    It reflects how unemployment feels AND HURTS the average Joe on the street.

    These job losses ARE approaching depression levels.

  • Sceptic

    I don’t want a more negative perspective.I’d like to hear a more truer perspective,a more consistent perspective….not flim-flam or flip-flop.

    Lets have some consistency here…actually I’m being unfair….come to think of it you have been consistent…consistently wrong.

  • Clavos

    These job losses ARE approaching depression levels.

    It’s OK, the Stimulator is in charge. We’re all gonna get paid, even if we don’t work, and the rich people are gonna pay us; the government will make sure of that.

    Ford’s in his flivver, and all’s well with the world.*

    *Apologies to A. Huxley.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Sceptic

    I’m aware of course the extent to which unemployment figures are bogus; and the fact that it represents customary reporting doesn’t wash with me at all. I would say the figure is closer to 20%; and what it really is, that’s anyone’s guess. Besides, comparisons with anything in the past don’t fly with me either. We’re in a brand-new situation. And we’re far from having seen or reached the end.

  • http://www.republicofdave.com Dave Nalle

    Guys, it’s not the gross number that matters. We all know that there are more people out of work who could be working than the official unemployment number. What matters is the CHANGE in unemployment, both official and real during the recent crisis.

    As for “lying,” that’s a pretty gross misrepresentation. It’s no more lying than if I were to say that almost half the population is “out of work.” Which is a true statement, even if in no way representative of real unemployment.

    Other countries use basically the same methods we do to determine their estimate of unemployment. When France says they have 12% unemployment we all know they really have 26% of the potentially employable population not working.

    The truth is that when the official unemployment figure gets down to around 4.5% everyone who is employable and wants a job can find one. It may not be exactly the job they want, but there’s work out there going begging. When our official figure gets to 8% or more then we’re looking at a situation where there are people who are highly motivated to work who can’t even find stopgap jobs for which they are overqualified. And when the Mexicans start going back to Mexico — then we have a real unemployment problem.

    Dave

  • Clavos

    And when the Mexicans start going back to Mexico — then we have a real unemployment problem.

    They’ve been going back for nearly a year, now.

    According to this article, published in August, 2008:

    The illegal immigrant population in the U.S. has dropped 11 percent since August of last year, according to the Center for Immigration Studies.

    The rate of exodus has accelerated considerably since then.

  • http://www.republicofdave.com Dave Nalle

    Yep, I was aware of that decline in the illegal workforce. You can actually see it here in Austin at the places they usually hang out.

    Dave

    Dave

  • http://handyfilm.blogspot.com handyguy

    Well, I won’t claim to be typical, but I have applied for 500-600 jobs in the last 6 months. These have led to a dozen phone interviews, a half dozen in-person interviews, but no employment.

    On the other hand, I got my first really good job in the second half of 1981, at the beginning of another really deep recession.

    What’s that proverbial Chinese saying? Was it a curse or a blessing?
    “May you live in interesting times.”

    I think maybe these times qualify.

  • Sceptic

    Very interesting times handyguy.

    So interesting that a Ohio school gets 700 applicants for ONE janitorial job

    And Nalle about It may not be exactly the job they want, but there’s work out there going begging.

    ….so much work out there that more than 800 show up for ONE Tacoma water meter reader’s job

  • Clavos

    My sister, who’s been unemployed for about three months now, has turned down two job offers in the last month, because they didn’t meet her criteria.

    I’m betting (and so’s she, obviously) she’ll find one that does before much longer.

  • Sceptic

    Re #162you haven’t even bothered to figure out whether I’m a “conservative” or not.

    but you are rather quick to label people as hate filled socialistic goons without bothering to find out whether they really aren’t you Nalle?

  • http://www.republicofdave.com Dave Nalle

    And Nalle about It may not be exactly the job they want, but there’s work out there going begging.

    ….so much work out there that more than 800 show up for ONE Tacoma water meter reader’s job

    Nice work taking that quote out of context. You know perfectly well — because it was absolutely unambiguous — that I was referring to conditions when official unemployment was at 4.5% or lower. I never said that was the situation now. Things have changed pretty substantially pretty quickly, even here in Texas.

    But I do have to wonder about people like Handy who are applying for 500 or 600 jobs. Surely there can’t be that many jobs for which they are really qualified. I wonder if innundating those who are hiring with applications from everyone who needs a job but might not be right for that job isn’t kind of counterproductive.

    but you are rather quick to label people as hate filled socialistic goons without bothering to find out whether they really aren’t

    Prove me wrong. You’ve had plenty of opportunities to show you have something positive to contribute and haven’t done so yet.

    Dave

  • pablo

    174

    Excellent post on Nalle Sceptic, you are spot on.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    “What matters is the CHANGE in unemployment, both official and real during the recent crisis.”

    Dave. We’ve been over this before. I realize that change/percentages is an important variable here, but you can’t altogether discount the gross numbers because they mean something, too – in particular, all the people who are not part of the production and consumption cycle, people who are (therefore) on some kind of government assistance, etcetera. Let’s just say that the reporting of unemployment has been skewed from the get-go in the interest of the exponents of capitalist-run economies (because reporting the aggregate numbers wouldn’t sit very well with the critics).

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Dave,

    A pretty well-balance article about Nationalizing of Banks.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Sorry: this is the right link.

  • http://takeitorleaveit.typepad.com/ roger nowosielski
  • Clavos

    but you are rather quick to label people as hate filled socialistic goons without bothering to find out whether they really aren’t you Nalle?

    Nalle probably knows they’re not him…

  • Cindy

    lol!

  • Clavos

    Buenos dias, Cindy.

  • Cindy

    Buenos nachos Clav! lol

    (see I told you I know Spanish, well…some)

  • Clavos

    Lol.

    Just FYI, in light of your plans to move to Ft. Lauderdale:

    Florida has the dubious distinction (currently, not always) of having one of the highest (maybe THE highest) rates of unemployment in the country.

  • Cindy

    Clav,

    Fortunately, I don’t think I will be forced to work for someone else. I would still like to be a teacher eventually. But because of his health, I prefer to stay with my husband as much as possible, rather than to work full-time.

    I have managed to keep the business going and so the move isn’t as urgent as it was. I am likely going to sell the house and move to a travel travel on my sister’s property for awhile to reduce expenses. Eventually, I’ll get down there.

    There is a program where they offer the education training for free if you commit to 3 years in a high-needs school. That is the sort of school I would want.

    Also, if they want to fire me for any reason (can’t think of why I might get fired :-), it’ll be them breaking the contract.

  • Clavos

    I didn’t realize your husband’s health was not good, but here’s yet another dubious distinction for your consideration:

    According to a report in the New England Journal of Medicine, South Florida health care costs are the highest in the nation.

  • Cindy

    He has an Aetna Medicare plan that pays just about everything (for an additional $100/month). They have a heart specialist at Cleveland Clinic in Westin (Weston?)–which is the premier heart hospital. My insurance covers his medication in the gap.

    Do you know Cleveland Clinic Clav? They treat people well. They have one patient per room.

    He’s doing well right now. I make sure of that. But, he has severe heart failure. Too much damage for any bipass. I don’t want to be away from him for most of his/my day. I’d like to spend as much time as we have, if possible.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    You should try the new developments in stem research – the number, I believe, is STEM – 123. If that’s wrong, there would be references in George Noory’s Coast-to-Coast-AM show. One of the frequent guests there is a top researcher in the field and they publish a monthly newsletter.

    They have experimental programs (one in Stanford, I believe), not to mention full procedures in Taiwan, India and other places. Reportedly great successes in rebuilding heart muscle and other cardiac related disorders. And if his condition is as bad as you’re saying, he’d be certain to qualify.

  • Cindy

    Thanks Roger. I have looked in to the stem research. I could use more info.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    The area code may be 415 or 510 – because that was in California. I’ll see if I can get the info.

  • Clavos

    Yes, I am familiar with the Cleveland Clinic, Cindy, and I have heard that they are among the top facilities for cardiac problems, along with Emory University Hospital in Atlanta and Methodist DeBakey Heart & Vascular Center in Houston, which is one of the leaders in use of stem cells for cardiac treatments. It is named for Michael DeBakey, who was a pioneer cardiologist and one of the first successful transplant specialists.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Here is the link to the newsletter. I believe that’s the right one.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    And that’s his website.

  • Cindy

    Thank you both for the info. I’ll use it.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Right. DeBakey is a big name too. They appeared together.

  • bliffle

    Dave is wrong about a lot of things, but he was right about this:

    “Once you understand how we got into the perilous economic situation we now enjoy you can start to look for ways to get out of it. ”

    You’re fortunate that I’m here to explain how we got into this mess.

    What you have to remember is that every thing in the so-called grownup world is just like High School. All of business, politics, manufacturing, newspapers…everything is just like High School. In spite of the sober looking suits and all the high-flown talk, all those people are just overgrown teenagers.

    Remember when you were in High School and someones parents went out of town for the weekend, or maybe a weekend when someone got the keys for the Lake house? The teenager would invite a couple of his teenage friends over for a little innocent mischief, a few beers, a couple girlfriends, etc.

    But then word would get out and some rowdier kids would show up with whiskey, marijuana, whatever. Pretty soon kids would be puking, hormone fueled teenagers would be necking and petting, and then they’d be having s*x!

    More booze, more smoke, some older guys show up.

    Then a bunch of kids pile into a car and go for a joyride! There’s a crash, maybe some kids die, maybe they crash into a family.

    Afterward, everyone’s remorseful, sad, there’s a memorial service. The survivors feel chastised, swear never to do it again. People blame the parents for letting their kids run wild, etc.

    Well, that’s what we did when we created Unregulated Free Markets and let the overgrown teenagers known as ‘businessmen’ and ‘bankers’ and ‘politicians’ operate them.

    Any sensible person would say “they’re going to run wild and ruin everything, puke on the furniture and then go out and crash a car and kill someone”.

    But some crackpot social organizer said “No, they’ll be alright. They said they’re responsible and ready to take on the responsibilities of adulthood. Besides, if they do what they want, they will eventually do the right thing to gain the greatest pleasure and admiration of their cohorts. Everything will turn out fine, as if guided by an Invisible Hand.”

    So we see the result: the political/banking/business world is just like High School.

    QED.

    How lucky you are to have me around to explain this to you!

    “Boy, you’re plenty smart, Bliffle”, you’re probably saying to yourself. “How did you get so smart?”

    Well, about 130 years ago I went to the University! Yes, and I studied hard and found a class in economics, Econ 601, which is TWICE as good as econ 301! So I’m TWICE as smart as any slacker who only took found econ 301!

    So let that be a lesson to you boys and girls: pick a nice big course number out of the Course Schedule! You don’t need to actually TAKE the course. Who’s going to check?

  • http://www.republicofdave.com Dave Nalle

    Bliffle,, was that a scene out of some generic teen movie you just recounted for us? Are you confusing things you see on TV with actual life experiences again?

    And what kind of a fool takes Econ 601 when Econ 301 fills the requirement for his major?

    Dave

  • http://handyfilm.blogspot.com handyguy

    It is true that if Alan Greenspan [and many others] had not so strongly resisted regulating derivatives [which Warren Buffet calls ‘weapons of mass destruction’], the scale of this crisis would be much smaller, or even non-existent.

    But too many of us spent the better part of two decades thinking that derivatives traders and hedge-fund managers were to be admired, because they ‘created wealth’ in such mind-boggling amounts for themselves and others.

  • Clavos

    How lucky you are to have me around to explain this to you!

    Oooohhh! That’s downright orgasmic!!!

  • Zedd

    Dave’s pulling a Dan.

    Write a book why don’t you.

    Clav,

    Huuuurrrrrrrrrrrrrrl, eww eww.

  • Zedd

    Cindy you have a husband? I thought you were gay?

  • http://www.republicofdave.com Dave Nalle

    But too many of us spent the better part of two decades thinking that derivatives traders and hedge-fund managers were to be admired, because they ‘created wealth’ in such mind-boggling amounts for themselves and others.

    I wonder who was thinking that, because it’s remarkably stupid. You create wealth by building a business and producing something of value. You don’t create wealth by subdividing and redefining the value of assets.

    Dave

  • http://www.republicofdave.com Dave Nalle

    Write a book why don’t you.

    I will, Zedd. I wouldn’t want to disappoint you.

    Dave

  • Cindy

    #202 — Zedd

    Cindy you have a husband? I thought you were gay?

    Oh, that is funny. Nope Zedd, when I wished to be gay it just didn’t work. Every morning, I woke up hoping I would have turned gay. Alas, I had to settle for straight.

  • Cindy

    Couples therapy needed in the Economic Stimulus aisle. Let’s see we could use some between Clav and Zedd; Dave and bliffle; Dave and Zedd; Dave and…

    well Dave and everyone, but Clav.

  • Clavos

    I tried being gay once.

    But I’m too morose.

  • Cindy

    lol!

  • Cindy

    Just reminded me of a good graffito.

  • http://drdreadful.blogspot.com Dr Dreadful

    The problem with being gay is that boys are just too smelly. I can see where Cindy is coming from on this one.

    ;-)

  • Cindy

    Dr.D is a student of Dr. Love, I see.

    zing and I set that study straight. Either that or everyone is lying.

    (boys smell just fine…girls just don’t want to admit it)

  • http://biggesttent.blogspot.com/ Silas Kain

    Well, being a student of Mae West I have but one comment, “a hard man is a good thing to find.”

  • Cindy

    Oh I C, you think boys are smelly, Dr.D. Well apparently, so do girls. Though it seems they’re lying. Or maybe they were actually lying when they admitted they were lying.

  • http://drdreadful.blogspot.com Dr Dreadful

    Well, Cindy, if they were lying about lying when they were lying, then maybe you’re lying when you say you know that they know they’re lying about lying oh no I’ve gone cross-eyed.

  • http://handyfilm.blogspot.com handyguy

    Dave, re admiring derivatives traders and hedge fund managers:

    I was saying that the collective ‘we’ admired them [when the market was up] before we decided to despise them [when the market crashed]. Very few people called them villains while they were still making money.

    If you were immune to all the hype, bully for you. But while it may have been a distorted, vacuous version of capitalism, it was capitalism all the same. And it made a lot of people rich before it made a lot more people poor.

  • http://www.republicofdave.com Dave Nalle

    Like most people I didn’t think about the whole derivatives issue much at all, except to have a bad feeling about mortgage banks in general and dump my stock in the one I had stock in.

    In retrospect, while I guess I admire the cleverness of the derivatives traders and I don’t see them as villains, I certainly don’t admire them the same way I would someone who created a real business from a good idea and hard work.

    The villains are not the derivatives traders, they’re the regulators, all the way up to the House Banking Committee who didn’t see the obvious problems in what was going on or who for various reasons chose not to act.

    Dave

  • STM

    Handy: “And it made a lot of people rich before it made a lot more people poor.”

    It made a lot of people rich in what turned out to be a ponzi game that has now brought down the entire glopbal financial system, and when it made a lot of people poor, it made a lot of others poor as well. All of it was at our expense.

    There’s nothing great or anything to admire about the kind of greed these guys engaged in, nor the insane schemes they cooked up – the CDS derivatives in particular. Someone gets a payout banking on another party being unable to pay a debt, and we’ll trade those? Great idea … it’s the corporate equivalent of two bush farmers in the pub betting on a couple of flies crawling up a wall.

    CDOs, on the other hand, aren’t a bad idea … unless they’re dodgy debt packaged up with less-risky debt and then sprinkled with some magic AAA-rated sparkly dust – when clearly, that mortgage debt made them a huge risk and everyone involved in packaging up those tranches knew it.

    Besides which, it was the get-rich-quick demand for CDOs that caused such bizarre lending practices in the sub-prime market, and it is sub-prime that continues to be pinpointed as the spark for the firestorm.

    It was all about lining their own pockets.

    Something to admire?

    I admire people who make and sell things and get rich that way, the way America used to, not lunatics taking over the asylum on Wall Street who dream up the equivalent of pyramid games that have the potential to ruin global economies and who think America’s wealth should depend on their ability to talk fast and shuffle bits of paper around.

    If we ever learn anything from this crisis beyond the need for tighter regulation, it should be that no one should admire that kind of thinking.

  • Zedd

    You also tried being funny once but….

    Then you tried being smart, but alas.

  • Zedd

    Boys are smelly and kinda dense but so darn cute. Actually don’t mind the smelly thing so much either.

  • Clavos

    You also tried being funny once but….

    Then you tried being smart, but alas.

    As if you would know the difference…

  • Sceptic

    Good observations you’ve made there STM.For an excellent analysis of how we moved away from making and selling things to making bubbles I heartily recommend this article Wall Street — Cold, Flat, and Broke-C R Sridhar

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Looks like a good piece. But I’d say it goes back at least twenty years – to Reagan and the onset of global type of corporation.

    Outsourcing is just a consequence. Since everyone caught on to the availability of cheap labor, there was less incentive for the American firms to be innovative and competitive. Why bother when you can rake big profits by drastically reducing production costs?

  • Sceptic

    Roger you are right.It does go back atleast as far back as Reagan .

    I’d like to quote …”The main thrust of the articles was to show that the general economic tendency of mature capitalism is toward stagnation. The main challenge of capitalist economy is surplus capital, which has diminishing opportunities for profitable investment. Deploying investment in the mature productive economy yields fewer returns as the markets are saturated. A number of strategies such as military spending, government spending, consumer spending, exploitation of third-world economies as sources of cheap labor, raw materials, and markets are used to counter stagnation in capitalist economies but do not resolve the problem of stagnation. As the authors point out, “The tendency to stagnation is inherent in the system, deeply rooted and in continuous operation. The counter-tendencies, on the other hand, are varied, intermittent, and (most important), self-limiting.”4

    The problem of surplus capital finding suitable avenues for profitable return is sometimes solved by key inventions and technologies, which provide economic stimuli. The invention of automobile in the “early twentieth century led eventually to huge developments that transformed the U.S. economy, even aside from the mass ownership of automobiles: the building of an extensive system of roads, bridges, and tunnels; the need for a network of gas stations, restaurants, automotive parts and repair shops; the efficient and inexpensive movement of goods from any location to any other location.” But the new information technologies such as computers, software, and the Internet do not appear to provide the same epoch making long-term economic stimuli as automobiles did.5

    In the productive economy, money is used to purchase raw materials, machines, and labor to produce commodities, which are sold, with the capitalist receiving back money (M-C-M). While in speculation, money makes more money directly, represented as M-M. A significant change in the way banks and financial institutions operate today as opposed to the past lies in the fact that the massive borrowed money goes into speculative finance and very little is invested in the productive economy. There is practically no stimulatory effect on the economy: there are few jobs created as there are relatively fewer people employed in the speculative economy. The profits generated by speculation are rarely invested in factories or the service sector but finds its way for financing more risky financial schemes creating speculative bubbles.

    The Magdoff -Sweezy hypothesis mentioned in that article goes back to the 70’s .

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Sceptic,

    I think you can reduce it even further to one simple principle. Allow (some) people to behave immorally – alas, encourage immoral behavior rather than punish it – and for the most part they will. They’ll all take the path of least resistance. Which is precisely what had happened and what the effect was of deregulation and getting lax on controls.

    Which is kind of mind boggling, when you think of it, because “the conservative mind” is reputed to distrust human nature. But no! Here is an arch-conservative, Reagan – still an idol to the many here – throwing all caution to the wind. Why?

    I suppose it must have to do with some kind of blind faith in the inner goodness and workings of capitalism, unchecked and unregulated. They really have a philosophical dilemma on their hands, trying to escape this contradiction.

    No wonder they’re so depleted of ideas that the only recourse which seems left is raving and ranting.

  • Julia Maple

    A definition of insanity is to keep doing the same thing and to believe you’re going to achieve different results… in other words, the government keeps giving the big companies stimulus packages and the companies use the same old mechanisms, hoping and praying everything will be well… Well… it doesn’t work…