Foist

Crap!low interestrates and they way how we measure inflation is the problem

To avoid this L-shaped near-depression a strong, aggressive, coherent and credible combination of monetary easing (traditional and unorthodox), fiscal stimulus, proper clean-up of the financial system and reduction of the debt burden of insolvent private agents (households and non-financial companies) is necessary in the US and other economies.

I would say odds strongly favor the |______ shape

Chinese Ship Sinks After Russian Shots; Crew Missing (Update1)http://www.bloomberg.com/apps/news?pid=20601087&sid=afNBFDZTlsso&refer=home

The alleged dichotomy between “free markets” and “regulated markets” is false, as is the alleged disagreement between proponents of free markets and those who favor increased government regulation. Proponents of free markets should reject this counterproductive paradigm by insisting on extensive and aggressive regulation of the U.S. economy, while redefining the debate to encompass only the question of which regulations are appropriate and conducive to the functioning of a free market. Specifically, proponents of free markets should recognize that a “free market,” properly defined, should be a highly regulated market where all forms of theft, fraud, misrepresentation, deception, and dishonesty are banished, punished, and prevented to ensure that all transactions are voluntary and to mutual advantage. To achieve this critical goal, government regulations, no matter how extensive, must be designed, evolved, and relentlessly enforced to ensure the market is and remains truly free.To understand why I make this claim, the first order of business is to properly define what a “free market” really is. To err on the side of caution, I will begin with the definition of a free market as proposed by the ardent free-marketeer Ayn Rand. According to her definition, a free market is a market in which all economic power is achieved by “the voluntary choice and agreement of all those who participate in the process of production and trade.” Such voluntary trade must be “by mutual consent to mutual advantage.” Accordingly, a free market has no tolerance for “theft,” “fraud,” “false pretenses,” or “breach of contract.” Such conduct must be prohibited because it “consists of obtaining material values without their owner’s [true] consent.” In such a market “[a] man can grow rich only if he is able to offer better values – better products or services, at a lower price – than others are able to provide.” Individuals “must be free to discover” such values themselves — i.e., to live by their own judgment. In such a market, “if a man’s judgment is right, the rewards are his; if it is wrong, he is his only victim.”This definition makes clear that, even to the most ardent free-marketeer, a “free market” does not mean a market in which you are “free to do anything you want.” To the contrary, a free market has several important restraints and limitations that are crucial to securing its nature. These limitations are as follows:• People must be free to buy the goods and services they want, and not to buy the goods and services they don’t want• People must be free to sell the goods and services they want, and not to sell the goods and services they don’t want• All exchanges must be voluntary• All exchanges must be to mutual advantage, as determined by the participants according to their own individual judgments• All forms of theft, fraud, deception, misrepresentation, false pretenses, and breach of contract must be prohibited• All rewards must accrue only to the participants, and to no one else without his or her consent• All costs must accrue only to the participants, and to no one else without his or her consentIn light of these important limitations, the term “free market” is an unfortunate and confusing moniker because the term “free” is commonly understood to mean “without limitation or restraint.” As a result, many people mistakenly believe that a “free market” means a market in which “you can do anything you want” and is completely devoid of government regulation. Limitations and restraints enforced by the government, however, are inherent in the nature of political and economic freedom. As Oliver Wendell Holmes famously quipped, “My right to swing my arm ends where my neighbor’s nose begins.” Accordingly, a “free market” does not mean a market in which a person is allowed to sell vegetable oil under the false pretense that it is “snake oil” that will magically cure the buyer of cancer. Such a person should be arrested for fraud and prohibited from selling his wares. A free market also does not mean a market in which you can buy a toaster from Target for $75 and take it home and discover it’s broken, and, when you attempt to return it, are told that they’re keeping your money anyway. You should and do have the legal right to demand your money back because you did not get the product you paid for (a working toaster), and therefore were deprived of your money without your voluntary consent (you were willing to voluntarily give up your $75 only for a working toaster).The confusion generated by this vocabulary glitch is quite dangerous. At the time of this writing, many financial and media pundits are proclaiming that “the free market has failed,” when, in fact, the U.S. economy is anything but free once that term is properly defined and understood. With respect to the current financial crisis, a “free market” does not mean a market in which a former pizza delivery boy becomes, overnight, a “loan officer” who can extend millions of dollars of mortgage credit to homebuyers who are encouraged to lie about their incomes so that their mortgages can be sold to eager buyers on Wall Street (see CNBC documentary “Houses of Cards”). A “free market” does not mean a market in which Wall Street executives can purchase and package these defective mortgages, obtain false ratings from dishonest ratings agencies, and sell the loans and securities to unsuspecting buyers in the U.S. and overseas. It does not mean a market in which rating agencies can place an unmerited AAA rating on a security under the pretense that the rating agency understands the security and is doing its level best to give it an accurate rating, when in fact the agency doesn’t understand the security and is giving it an unwarranted rosy rating to attract more business from Wall Street. It does not mean extending credit, extending insurance, and increasing leverage to untenable levels where inadequate capital exists to make good on such guarantees and obligations. It does not mean a market in which the government arbitrarily sets the price of money (the interest rate), thereby invalidating the independent value judgment of the market participants. It does not mean a market in which corporate executives take on unreasonable risk and conspire with their boards so that they can pay themselves extremely high levels of compensation while the bubble is rising, and then retire to Greenwich to play golf after the bubble bursts, leaving the company they were hired to run as a bankrupt husk of its former self, all under the pretense that they are carrying out their fiduciary and contractual duties to the run the company for the benefit of its shareholders. It does not mean corporate executives buying expensive homes, cars, and boats while the benefits of financial risk are incurred, and then retaining these assets by hiding behind the corporate form, bankruptcy laws, and social welfare programs (e.g. TARP) when the costs of the risks eventually come due (referred to succinctly as the privatization of reward and the socialization of risk). It does not a mean a market in which the reckless actions of a few thousand unethical persons impose severe economic costs on billions of people all over the world — from Iowa to Iceland — when such innocent victims were not parties to the transactions and never voluntarily agreed to incur such costs.What the financial and media pundits mean to say, if they were speaking more accurately, is that “the market in which people were free to do anything they want, including engage in fraud, misrepresentation, deception, and breach of contract has failed” — a claim to which both free-marketeers and pro-regulators could readily agree. I would therefore suggest that proponents of free markets agree upon a better term than “free market,” or else they run the risk of appearing as defenders of the current economic system that led to this regrettable mess. I am open to any suggestions, but for now will use the term “marvelous market” to distinguish a true free market from a free-to-do-anything-you-want market. I prefer this term because it denotes the goodness of a free market without creating the misapprehension that “anything goes.”

No no what the fool basically said is that L.F. capitalism is working properly when it causes huge bubbles and crashes in the system which force people out of jobs and home. Can all the Ron Paul idiots and conservative nut cases please just go home and leave thinking to the capable! Please you’ve already ruined a great nation just go away!

“…two key elements are key to avoid a near-depression and still seriously missing: …and a more aggressive and across-the-board reduction unsustainable debt burden of millions of insolvent households (i.e. principal reduction of the face value of the mortgages, not just mortgage payments relief). Prof. Roubini 2/19/09Re-post from previous thread:As discussed here on several occasions, there is only one solution to ending the housing crisis – the elimination of “negative equity”. Everything else is window dressing.Plans relying on lenders’ voluntary principal reduction are fool hardy at best, and a complete waste of valuable resources at worst. It’s simply not in the lender’s economic best interest to voluntarily reduce outstanding principal.The plan unveiled today stresses affordability by manipulating the mortgage interest rate to achieve a desired payment (it’s too complicated to explain here, read it and set-up a spreadsheet model). It doesn’t make any provision for achieving parity between a home’s current market value and its mortgage principal balance. Without that, it’s DOA.But more affordable mortgages aren’t the issue; it’s which party incurs the loss in today’s “short sale” environment. Lenders won’t and sellers can’t so the R/E market remains seized.Make no mistake; the solution to the housing crisis will entail the elimination of “negative equity” by mandating the reduction of principal. There is no other viable solution. As others have noted, there will be no recovery without addressing the debt overhang (principal reduction not principal set asides).I can hear the screaming…moral hazard, legal precedent, rewarding bad actors…STOP! There is no other way out. The only relevant issue remaining is when. Hopefully sooner rather than later, as @ 10,000 homes go into foreclosure each day.Hide reply Reply to this comment By TA on 2009-02-18 16:51:07But this is only a temporary fix. The real issue is falling wages and, job losses.MarkHide reply Reply to this comment By Mark on 2009-02-18 23:47:01Mark,It’s a three legged stool; banking/finance, employment/income, and real estate. Advocates for each make compelling arguements for fixing their “leg” first.My point here is simple: there will be no economic recovery without first resolving the housing crisis, and resolving the housing crisis requires the elimination, not partition or set aside, of “negative equity”.Many advocate letting the market take care of itself, and I’m in complete agreement, to a point. Letting real estate prices find their equilibrium point (bottom) on their own is fine, but then what? The steeper prices fall, the wider the “negative equity” gap becomes.If lenders won’t voluntarily close the gap (i.e. incurring the short sale loss), and sellers can’t close the gap (i.e. marginal savings & retirement funds) the next viable agent is the federal gov’t.Everyone is looking for a bottom signal. IMHO, THE bottom signal to watch is how “negative equity” is resolved. Although it’s likely economic data will indicate otherwise, the “all clear” signal to watch for is the federal gov’t's plan for eliminating “negative equity”.Reply to this comment By TA on 2009-02-19 07:06:33Before the legal beagles, finance wizards and general naysayers pounce, it’s understood the federal gov’t's mandated reduction of mortgage principal is unprecedented (as best I can tell). However, it’s not only the ultimate “outside-of-the-box” solution, it’s the only viable solution.

some great charts from David Fry David Fry’s Charts

We are doomed here’s why: From 2000 thru 2006 the economy was on fire, consumers net worth and spending power were off the chart thanks to home equity gains and massive leveraging yet despite all of that intense stimulus and available credit median wages actually went down from 2000 to 2006.Geithner and his team actually believe more lending will save the economy when there is actual proof that even in times of the excessive and easy lending peoples wages actually went down. Isn’t this proof enough that their economic recovery program is a inevitable disaster?

Marx said this was how capitalism would ultimately collapse, the capitalist in pursuit of higher and higher profit would eventually squeeze the consumer/worker to the point of capitulation.

STIMULUS BILL TO HELP 9 MILLION DISTRESSED HOMEOWNERS?Gee, my fuzzy math is overwhelmed. If a distressed homeowner is in foreclosure or about to be, and about 1/600th the homes are in foreclosure, that means there’s about 5 Billion homes in a nation with 300M people?What the Hades does 9 million distressed homeowners mean?Or does it mean 1/10th of America’s homes are close to foreclosure? MSM and government has a way of giving us facts and statistics that are completely meaningless; to brainwash us?Will $85 billion be enough to give 9M distressed homeowners [whatever the Hades it means] like $6000 each? Yes, and that’s about it too…..little good that will do when your home’s worth $100s of thousands less than your loan principle.Everytime I hear government talk bailing out waves of reset loans; I think of a pyrammid scheme; the folks at the beginning have a chance at affordability [getting the bail out money] with government socialistic welfare, yet the follow-on groups are screwed when our credit dries up and/or loan rates sky-rocket from a falling dollar and all government services must be butcher axed like California.

No Greater Love Can One Have Than To BUY-BUY-BUY For…I have a sister-in-law [step (1)] who will “shop ‘till she drops” – that’s what needs to be mass produced in this world. Run up the credit cards and let the ObamaNation Bamelot wetdream socialize the debt [step(2)]. Repeat steps (1) & (2) endlessly the world over. That ought to get us down the road a ways further. That wet dream Obi keeps having may be the way out of this mess after all. (Bowing in the direction of the ONE.)

The Wizards of Washington

Opps – that link no longer exists. The following works.The Wizards of Washington

There is NO MANDATE. None. Zip. Zero. Nada.The Fannie/Freddie part merely allows a refi up to 105% of current value instead of restricting it to 80-85% of current value.Owe $250,000? House only worth $200,000? Can’t refi as max refi loan is capped at $210,000 unless you have $40000 in cash to pay it down before refinancing.The second part merely bribes the lenders to work out mortgages so that the payment meets certain parameters. (That $1000 -1500 bribe to lenders.)

Read Jeffrey Sach’s the “End of Poverty”. It is in our enlightened self interest to help the billions of downtrodden of the world who live on a $1 a day. Their future will dictate our future. Please read the sages in all religions. We have bought into the false survival of the fittest concept that adaptation means culling the heard. Darwin would tell you that synergistic cooperation is the key to adaptation and therefore the fittestare the most innovative in cooperation.Remember that we all went to the Universityto integrate all disciplines into a coherent plan for betterment of society. We learned economics, evolutionary biology, cognitiveneurology, comparative religions;however, wegave it all up to be narrow minded careeristswho see the world with hypermyopia. Just lookat nature and its web of cooperative synergistic relationships. Where do you thinkthe sages got their ideas? They didn’t havemind numming media and looked at the intricacies of nature to find the guiding principles for man. Why am I ranting about thisin an economics blog? We are all like the Indian blind men describing the elephant, andI see a tail and you see a trunk. We all should concentrate on the most important and lowest common denominator. The billions that are closeto starvation are part of the economic net thatnow will make us all food for the debt producingspider of parasitic finance. We are moving towards being at one with those billions on theeconomic net, because a middle class is a threat to the parasitic financial interests.

well said

“But the design of the new system should be robust enough to counter three types of problems with rules: A tendency toward ‘regulatory arbitrage’ should be borne in mind, as bankers can find creative ways to bypass rules faster than regulators can improve them. Then there is ‘jurisdictional arbitrage’ as financial activity may move to more lax jurisdictions. And finally, ‘regulatory capture’ as regulators and supervisors are often captured – via revolving doors and other mechanisms – by the financial industry. So the new rules will have to be incentive compatible, i.e. robust enough to overcome to these regulatory failures.”and so these 3 sets of rules aide on getting us out of the |_______________________________________ shaped R?

that’s HILARIOUS. You should right a book.

Current Obama/Geithner strategy:1. Bailout banks 2. Buy some time 3. pray for a miracle 4. nationalize 5. Bailout more elitists 6. Buy some more time 7. pray for more miracles 8. nationalize more 9. repeat steps 1 thru 8

More and more ordinary people worldwide are losing in all currencies – including the U.S. dollar. Does it make sense for anyone lucky enough to have any portfolio left to invest in gold? (If so, through what vehicle and to what percent of portfolio?) Thank you for any response.

“Government-less Markets”Fraud will always exist, but when government rewards it it condones it!Perhaps a better term might be “Open Markets”Mark

I was just bouncing the HASP around with some buddies and we came to the conclusion that the BankruptcyLaw will be changed, but not to a cram down of principal, but a forced modification by bankruptcycourt order. The Congress will hem and haw their wayto this solution. The banks will want the regularHASP modification with the government subsidy of payment between 38% to 31% of debt to gross income,and not the forced bankruptcy modification with nosubsidy. This will be the stick! Not much of a stick,since the principal reduction will not be part of anybankruptcy modification of the first mortgage. Thebankruptcy 13 will change the second trust deed tounsecured dischargeable. The first mortgage will besacrosanct. Any feedback?

Reducing mortgage principal IMO is not going to work in light of all parties involved vis a vis the inherent declining value of properties commensurate with a decline in wage growth – much less the fact that someone up the chain has to ultimately take the loss voluntarily otherwise everyone eventually gets locked up and challenged through the courts.Instead of that scenario a more effective mechanism would be to extend payment terms out beyond the typical 30 fixed cycle. Something perhaps out to 50 and more years if necessary. In light of that mechanism nothing prevents someone from paying off the mortgage earlier – in effect making additional principal payments each month assuming personal financial conditions change over time. Call it the optimism will win out over time factor. What this does is first reduce the monthly outlay and second it frees up cash to stimulate the economy at the consumer level. There also could be some form of significant tax incentive provided for those who pay off the principal earlier which in effect also becomes an indirect savings incentive as it were. Yes, that too would be a subsidy to the banks but look at the horrific alternatives offered now in comparison. Those horrific alternatives mainly having to do with the moral hazard of rewarding poor financial judgement through heavy-handed socialistic handouts in a capitalist-based economy.To effect this with the lenders there obviously there still would have to be guarantee backstops from the feds in some form or fashion and obviously blanket agreements with all the security holders. I think at this juncture the vast majority of these security holders are coming to the conclusion that something is much better than nothing even if it means they get paid back over a much longer duration.AM

Flying Pig Theory of Economics = PinkFloydism? They have the song, the poster and everything…

If you’re still investing in hopes of producing income, you’re a lunatic.If you’re investing because you have money to throw around, there are people who could use it – like the guy next door who is losing his house.If you’re hell bent on investing, gold is as good a bet as any.

I thought the room might tip, and the traders fall out onto the street. Could you imagine how that would have played out on live t.v.?

When will the outrage spill onto the streets?

Since Heidegger was an unrepentant Nazi, I’m not sure why anyone would quote him especially on topics relating to politics or economics.

Not enough, Professor.Recapitalizing the banks even with regulatory reforms you suggest does not address the problem of misallocation of capital.Real reform is correctly pricing risk and depriving the S&P AAA oligarchs of their subsidy in the “liquid capital markets”.Who’s going to do that? It starts with putting the bums out on their bum

VRWC,The problem with “debt for equity swaps” in this environment is the strong likelihood of minimal appreciation going forward. With lenders returning to more conservative lending practices, it’s reasonable to project meager future appreciation for most real estate products. In such an environment, the issue then becomes how a homeowner’s account would be settled if the gain from a future sale didn’t satisfy the forgiven debt.IMO, it’s also unlikely the homeowner will share in the partition of loss. It’s more likely to be shared between the lender/investor and the federal gov’t. In all likelihood, the federal gov’t will incur the full loss by offering offsets (tax credits) to the other loss parties.I think it’s important to keep in mind that “negative equity” is a consequence of rapidly falling prices which isn’t confined to any one mortgage type (i.e. Sub-prime, Alt-A etc.). As such, it touches almost everyone selling and purchasing in today’s market.“Anything else is extreme moral hazard.” Agreed. It’s highly controversial and bitter medicine for most, but it’s also the only viable solution.

He’s offering reasonable solutions without ruining his reputation by sounding radical or fanatic. How is that not credible? Your post may lack credibility or sense.

Both of you score points. Now stop fighting.

The Government’s budget is essentially a moral document and statement.

As Peter JB wrote on August 30, 2008, “The money pools which are revolving around the Banks and the bodies politic, bureaucratic and the massive private corporates, have suddenly seen extreme highs of huge no risk profitability for those with access to leveraged credit across the Globe, er, such as themselves. And these giants, with untold and unlimited access also to the global power influence are now feeding in a frenzy never before in written history ever considered.“As you look for logic in the emerging patterns; consider this posit. Those of the “leadership elite” now only serve as the “faithful servants” to these agents of change…”And now that the revenging bear is ripping through their faltering bull market and exposing its entrails of corruption and greed, their profits are self-imploding. But not to be outdone by economic justice, these giants have erected themselves a self-feeding TARP trough inside the U.S. Treasury with their man, Tim, at the spigot, while their man, Ben, at the Fed is keeping the printing presses rolling, replenishing their losses by the trillions.And Roubini thinks that free market capitalism given us by our Founders — that created the American cornucopia that raised the living standards of the world — is the problem. There’s only one problem with his argument: the United States hasn’t had anything closely resembling a free market for nearly 100 years.The greed and excess that Roubini believes was the cause of the financial disaster actually is a symptom rather than the cause of a market dominated by government intervention.To understand the economic predicament the United States faces today, Roubini needs to travel back to 1913, when Congress created the Federal Reserve and delegated control over the United States’ money supply to it.When Thomas Jefferson stated, “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered,” he was describing what is now happening.Jefferson, unlike Roubini, understood the danger inherent in letting private interests create inflation and deflation.

Ha Ha! Charade you are!

It is not a crisis of free markets. It is a crisis of crony capitalism. Laws have been broken, bent, ignored, repealed or invented, not for the benefit of citizens lawmakers are there to serve but for their money masters – the banks and multinationals. Same with defence. Same with trade agreements.

the issue then becomes how a homeowner’s account would be settled if the gain from a future sale didn’t satisfy the forgiven debtThis is the classic short sale. If the government takes the loss through tax offsets, you basically reward the homeowner and the lender, with the government taking the downside.If government taking the loss is the only way, then so be it. Perhaps they could create the equivalent of a lien on the property, such that with some future appreciation the government can be made whole. Such a lien could be a factor in the purchase price of the home (ie, a discounted purchase price would be set in exchange for the consideration that the lien is owed to the government).

To call Ron Paul an idiot simply proves you are a fool, he has a better understanding of the working of our financial system than anyone else on either side. You are the one should should f-off.

Ben, Tim, Barack and Larry have been pitching curve balls for four weeks and two days, and if the Professor isn’t careful, he’s not going to be ahead of the curve; the curve ball is going to come back and hit him.

It is a shame that Bernard Lietaer’s “The Future of Money” was never made available in this country. It is one of the few things I have ever read that puts the current financial escapade into perspective.If you can find a copy, BUY IT

Yep. Which is exactly why many, many Americans are getting really fed up with this situation. And why families like mine will not quit paying down debt until we get the banks and the credit card companies OUT of our lives completely.PeteCA

re-post from yesterday’s thread – I nested this in a comment up near the top and it may have been missed, and I am very interested in other readers opinions…How about writing down student debt – currently it is, as far as I can see, a massive protection racket supported by the government. Many students graduating last year and (presumably) this year were sold into it on the basis of the “booming economy” and will suffer the rest of their lives from the constant hounding of collection agencies.On a related note – I find the clause related to the non-dischargability of student loans in bankruptcy court to provide potential leverage. As you may know, it was recently made virtually impossible to discharge student loan debt in bankruptcy unless a debtor can prove that repayment of the loan will create an undue hardship on the debtor/borrower and his family for the majority of the repayment period. It was virtually impossible to prove this in the past. I would be interested in hearing from any lawyers if they think this clause will give leverage in the likely coming depression

I’m with ya Pete. Not spending a dime we dont have to until we’re in the black. Bartering for all I can, buy used or local if necessaryIm not going to hand them the club to beat me with.

Don’t look now, but with the market selling off again today – it sure looks like the Dow is going to break under a key level of support in the range 7480-7485. If that happens, it’s a bad omen.Quoting Peter Navarro from a recent article by him …Link: http://www.financialsense.com/editorials/navarro/2009/0216.html“That the Dow has broken through a critical support level now that both the fiscal stimulus package and the bank bailout are in place is an extremely ominous sign. With that support level broken, the downside risk is substantial. “Other financial commentators have their own viewpoints e.g. people tracking Dow theory are also looking at imminent sell signals at this time.But the Bottom Line is THIS: The market has considered the Obama stimulus – a whopping trillion dollars of printed money to be thrown into the US economy – and the reaction is negative.I have never, never seen anything like this in the US economy before. Neither the huge stimulus moves – with reckless consideration to the economic stability of the United States. Nor the immensely negative investor sentiment. This is seriously ominous.PeteCA

ditto that – well written and thought out piece, exactly the kind of post that makes the comments section here so enjoyable.

Then again…Status: This quotation is at least partly spurious; see comments below.Comments: This quotation is often cited as being in an 1802 letter to Secretary of the Treasury Albert Gallatin, and/or “later published in The Debate Over the Recharter of the Bank Bill (1809).”The first part of the quotation (“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered”) has not been found anywhere in Thomas Jefferson’s writings, to Albert Gallatin or otherwise. It is identified in Respectfully Quoted as spurious, and the editor further points out that the words “inflation” and “deflation” did not come into use until 1864 and 1920, respectively.[3]The second part of the quotation (“I believe that banking institutions are more dangerous to our liberties than standing armies…”) may well be a paraphrase of a statement Jefferson made in a letter to John Taylor in 1816. He wrote, “And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”[4]The third part of this quotation (“The issuing power should be taken from the banks and restored to the people, to whom it properly belongs”) has not been found in any of Jefferson’s writings. In fact, he said something rather different in 1813: “The States should be applied to, to transfer the right of issuing circulating paper to Congress exclusively, in perpetuum, if possible…”[5]Lastly, we have not found a record of any publication called The Debate Over the Recharter of the Bank Bill. There was certainly debate over the recharter of the National Bank leading up to its expiration in 1811, but a search of Congressional documents of that period yields none of the verbiage discussed above.Maybe I should read more….

Not even Dr. Roubini can predict accurately all catastrophic events that may effect the world economy. Often the data is hidden, negative trends can have complicated synergistic effects, etc. Then, of course, there are acts of war, widespread natural disasters, boycotts and embargos, etc. The outstanding example of widespread effect of a fairly minor incident is the effect that 9/11 has had on the US economyWhat interests me in this regard is the fragility or non-fragility of the world economy to catastrophic events. With the exception of a possible Israeli-Iran war in the middle east, I have seen no discussion of this theme, or of how to measure or assess the fragility of the world economy (or of national economies, for that matter).I bring this up because it seems to me that the world economy is presently held together with chewing gum and band aids, and is becoming year by year more and more susceptible to extreme derangement by unforeseen catastrophic events.

I’ve NEVER had a credit card! And, fortunately, I owe no bank a single cent (nor anyone else). Yet here I am, facing increasing taxes due to bailing out bad behavior! Moral hazard!Mark

A (fallacious) ad hominem argument has the basic form:Source A makes claim XThere is something objectionable about Source ATherefore claim X is falseAd hominem is one of the best known of the logical and systematic fallacies usually enumerated in introductory logic and critical thinking textbooks.

Dear Anonymous,We’ve had 30 yrs of Republican (feel-good) economics. How much more do you need?Have a nice day

I believe he’s a good guy he seems to wear his heart on his sleeve and I agree whole heartedly that the biggest problem is the private banking cartel the FED. However runaway capitalism will still find away to amass power and enslave the worker if not closely regulated-haven’t we learned that! Also the gold standard is a terrible idea it’s even worse than a fiat currency. There are better ways to fight inflation a gold standard would have a ton of inherent problems. Ron Paul has a big fan base but not all of his points are on.

Crisis? What Crisis? By CHRISTOPHER KETCHAMMore good news in crisis from down the block here in Brooklyn: The realty office that I could almost spit on from my stoop has shut its doors, boarded up the classy windows, sent its half-breed parasites home, no more to feed on the entrails of rent control. Praise be to the realtors out of a job – may they find real work suited to their minds, dealing heroin to children or pulling the wings off flies for re-sale. Good times, I tell you, and the rents falling fast, the bubble-brain-time popping. On the same stretch of street in Brooklyn, the boutiques with their sale signs like epitaph, spray-painted in the colors of the rainbow, desperate-looking, like the owners were fainting as they painted. Jeans for $319 now at 50 percent – a bargain, I’m to understand. Threadbare t-shirts “artistically printed,” just $40, cut to $20, I might pay 50 cents, if they’d get rid of the infantile print. Alas, the inventories piling up across the blackened plain, burial-mounded and no one buying, and in the wind a hysterical lament, the marketeers, the opinionators screaming their heads off that “something must be done,” as if we hadn’t enough of enough to last this generation and the next, as if it is not a wonderful and beautiful thing to stop buying stuff we don’t need….So where’s the crisis? Answer: there is none. There is only a slowing down, a getting off the drug of crapola consumption. If we are the coke addict, the alcoholic, the meth fiend emerging from a long lunatic twilight binge, so hepped for so long that mania has become normalcy, then what is normal and healthy and balanced now feels like crisis. So now the DTs, the withdrawal, and, perhaps at last, some measure of clarity.BINGO!Mark

Patriot, this is just a wonderful explanation. I thank you for sharing, and for writing in such a clear, articulate manner.

Yes, let us now look to Stalin’s and Mao’s economic models for the solutions to our ‘capitalistic” financial crisis.For as Albert Einstein said: “It is characteristic of the military mentality that non-human factors (atom bombs, strategic bases, weapons of all sorts, the possession of raw materials, etc.) are held essential, while the human being, his desires and thoughts—in short, the psychological factors—are considered as unimportant and secondary. Herein lies a certain resemblance to Marxism, at least in so far as its theoretical side alone is kept in view. The individual is degraded to a mere instrument; he becomes ‘human material.’ The normal ends of human aspiration vanish with such a viewpoint. Instead, the military mentality raises ‘naked power’ as a goal in itself—one of the strangest illusion to which men can succumb.” From “The American Scholar,” 1947By all means, let us look to these exemplary economic models of Marxism where “you can’t make an omelet without breaking eggs (Stalin)” – 130,000,000 million broken eggs between Stalin and Mao alone, for their economic omelet.

Is there anyone who does have all of their points on? Is there at least anyone who has more points on about this matter than him? Serious questions, if you know of anyone, shout it out.

Thank you, North Central Alabama, for your timely snapshot of what’s really going on on Main Street. This is priceless information.

Great rant!!

You’re wise, Mark, to have never had a credit card. And you are right about the Moral Hazard.I bought into the easy credit for 20 years. Finally woke up about 8 years ago and since then have moved heaven and earth to stay debt-free, and that includes never buying a home. Not sure if that route is for everybody, but I got burned badly and will never go back to that easy credit. Ever.

More, from Thomas Jefferson to Gallatin, 1803:This institution [Bank of the United States] is one of the most deadly hostility existing, against the principles and form of our Constitution. The nation is, at this time…, strong and united… But suppose a series of untoward events should occur, sufficient to bring into doubt the competency of a republican government to meet a crisis of great danger, or to unhinge the confidence of the people in the pubic functionaries: an institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation…What an obstruction could not this bank of the United States, with all its branch banks, be in time of war? It might dictate to us the peace we should accept, or withdraw its aids. Ought, we then to give further growth to an institution so powerful, so hostile?… Now, while we are strong, it is the greatest duty we owe to the safety of our Constitution, to bring this POWERFUL ENEMY to a perfect subordination under its authorities…” (from “Thomas Jefferson on Democracy,” Edited by Saul K. Padover

and Ben, Tim, Barack and Larry might be getting some pitching too, pitchfork pitching!

Such a refreshing conversation here. People who avoided the problem, people who learned how to overcome the problem, people who are in the process of overcoming the problem. This is what can save us… thanks for the view from the ground level.

He has a very clear idea of what to replace it with, and has been right about the state of our fait fractional reserve banking system for decades. We are living in a ponzi scheme, the Fed is our Madoff, and the Rothchilds, Rockerfellers Mogans, Warburgs and the corporations they shield themselves behind are making out like bandits just as they have in every engineered business cycle fix they’ve played for two hundred years.Fool me once, as they say. I hope the American people are ready to wake up and heed the call. To hear someone as well respected as Simon Johnson come out and speak openly about the American Oligarchs on PBS could mark the beginning of the end for this corrupt nonsense. Banking, not fractional reserve banking, is what we need now. http://www.pbs.org/moyers/journal/02132009/watch.html

As somebody who understands mania, this makes sense to me. As you come down from the high, the normal seems awfully dreary – but really, it’s during the highs that most of us die…

Alan’s Psychedelic Breakfast resulted in A Momentary Lapse of Reason and everybody thought Green Is the Colour of Money. It was The Happiest Days of Our Lives and the DJI said Point Me at the SkyGet Your Filthy Hands Off My Desert said the Middle East while The Dogs of War viewed them with Paranoid Eyes and decided to Stay because they need all that oil for A New Machine.We were going Round and Around while TPTB continued to Meddle. The bankers and politicians were Fearless. “The Show Must Go On” they cried, and ignored the Storm Signal. Now its Childhood’s End and we are Up the Khyber and there is a Terminal Frost in the markets.Nouriel Roubini was One of the Few who saw it all coming.Now, there are no Signs of Life, the mcmansions are becoming Empty Spaces – there is Nobody Home.Oh, By the Way Madoff and Stanford made A Nice Pair and displayed no Sorrow while heading for The Trial. Watch out, they might Run Like HellThe Final Cut is being made and its Absolutely Curtains for the banks. When will it Stop?There is little chance of Remergence the FED is Burning Bridges trying to keep the system from failingOne Slip and you will have to pawn your Household Objects.Nowadays many say The Gold It’s in the… bag. “Wot’s… Uh the Deal?” We are running out of oil, What Shall We Do Now?One of These Days we will rediscover The Pros and Cons of Hitch Hiking. Soon we will be back to burning trees – Careful with That Axe, EugeneOne Slip and its Goodbye Cruel World

VRWC,“Allowing Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options: The Obama administration will seek careful changes to personal bankruptcy provisions so that bankruptcy judges can modify mortgages written in the past few years when families run out of other options.How Judicial Modification Works: When an individual enters personal bankruptcy proceedings, his mortgage loans in excess of the current value of his property will now be treated as unsecured. This will allow a bankruptcy judge to develop an affordable plan for the homeowner to continue making payments. To receive judicial modifications in bankruptcy, homeowners must first ask their servicers/lenders for a modification and certify that they have complied with reasonable requests from the servicer to provide essential information. This provision will apply only to existing mortgages under Fannie Mae and Freddie Mac conforming loan limits, so that millionaire homes don’t clog the bankruptcy courts.”http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/FactSheet.pdf (bottom of pg. 6)Did the last sentence grab your attention? Nothing like a little “class warfare”.

“This is seriously ominous.”@ PeteCAWhat is it that you trying to say?Ho hum

It’s not credible because he is hedging, being cagey. Have you seen his interviews and his editorials? He just keeps repeating the same warmed over analysis, like a parrot. But he does not have the courage of this convictions to follow his trail of reasoning to the ultimate conclusion. I’m not even sure he has predicted double digit inflation. Only a 30% chance of an L-shape? HA! So NR how does this end? Bond market dislocation? Hyperinflation? Tax revolt? Curtailment of entitlement programs? He’s one of the few people on earth who can have an credible opinion on this but he deigns not to go there. In one interview he said something to the effect of, oh, it won’t be a free ride. That’s it from the Great One? GOOD GRIEF! California is about to fall into the Pacific, buddy.

Dow closing at 7467 today (or close). A definite break below the defined support level at 7480-7485.We’re looking at a serious continuation of the bear market now.The impact on investor psychology and consumer expectations is going to be profound.PeteCA

Mark:I don’t see this “thing” / phenomenon or anything else slowing down; to me “it” remains in acceleration which is most interesting as, in the physical sense “it” is a cyclic attractor, the final detonation will come from the centre and not the extremes AND at highly leveraged fundamentals.What does this infer? It infers that the term “slow” is not something that you will automatically bear in mind in the near future as “slow” will be missing from all equations…Ho hum

Go to the chart at this link (below). Ask yourself one question. What happens if that blue line (current US market) continues downwards at about the same pace? This is a threshold in market behavior this week.Link: http://www.dshort.com/charts/bears/four-bears-large.gifPeteCA

Gloomy,Yeah, which is why I would not have a nickel invested in anything, even GOLD, in this environment. How will you ever collect even if you guessed right?The real Black Swan event that is coming will blow everyone’s mind, wallet, safety, etc. You will see.

Except the communists’ logic was backed by butchery, starvation, deprivation, gulags, all the while its henchmen were yelling slogans of equality and power to the proletariat while they stepped on his face with their hobnailed boots; until the blood ran in the streets.”A lie on the throne is a lie, still, and truth in a dungeon is truth, still; and a lie on the throne is on the way to defeat, and truth in a dungeon is on the way to victory.” [Anonymous]

So do I. I think that our worldwide economic collapse will merge into the peak oil/resource depletion/global warming effects so that the paradigm shift is complete to a completely new way of life. One that is not so cushy….

excellent post

Certainly if we go back to the stone age all will be lost. But at that point the crops which you have grown will be stolen by a mob of your starving neighbors at gunpoint, as will your candles and bottled water. How do you plan to protect your self from the angry mobs?

AVERAGE JANE;You sure have it right!!!Alabama,s comment re :CONGRESS following the same mind set is exactly what the Canadian Govt.did between 1974-1994,16 of 20 Budgets being out of balance(Deficit).The end result was a National Debt going from $100B to $566B (Debt to gdp from 20% to 72.5%)When the Triple A credit rating was taken away at that point,the Govt announced that from now on they would VOLUNTEER to adopt balanced budgets and as well place a 2% contingency in the budget in order to VOLUNTEER to make a Principal Payment at year end with the monies left over.Great guffaws of laughter greated this statement from coast to coast.The very thought that our Federal Politicians would actually practice PERSONAL DISCIPLINE was too much for anyone to comprehend.Amazingly they have actually done this for 13 years in a row.Which means the debt to g.d.p.ratio is now back down to 22%.Canada,s National Debt actually fell by$100B during this time.Believe it or not it is actually possible to get off the DEBT/CREDIT CYCLE and survive very nicely(No Bridges to nowhere-PORK can be added to the barrel)FINANCIAL STABILITY is what you get when the Debt to G.D.P.Ratio is kept below 30% by all government agencies.

Ouch! Another down day in the markets! I hate to have been right (once again) Check my recent posts. I cannot keep up with so many new threads:-)

Honey, we’ve had nearly 100 years of (feel-bad) confiscatory Fed Economics. How much more do you need before you release yourself from the prison of partisn politics?You have a nice day, too. :+)

Power already knows the truth. We’ve got to speak truth to the regular folks.Mark

Synchronized Boom, Synchronized BustBad U.S. monetary policy had global consequences.By MARC FABER | Wall Street JournalThe world has gone from the greatest synchronized global economic boom in history to the first synchronized global bust since the Great Depression. How we got here is not a cautionary tale of free markets gone wild. Rather, it’s the story of what can happen when governments ignore market signals and central bankers believe in endless booms.Following the March 2000 Nasdaq bust, the Federal Reserve began to slash the fed-funds rate from 6.5% in January 2001 to 1.75% by year-end and then to 1% in 2003. (This despite the fact that officially the U.S. economy had begun to recover in November 2001). Almost three years into the economic expansion, the Fed began to increase the fed-funds rate in baby steps beginning June 2004 from 1% to 5.25% in August 2006.But because interest rates during this time continuously lagged behind nominal GDP growth as well as cost of living increases, the Fed never truly implemented tight monetary policies. Indeed, total credit increased in the U.S. from an annual growth rate of 7% in the June 2004 quarter to over 16% in early 2007. It grew five-times faster than nominal GDP between 2001 and 2007.The complete mispricing of money, combined with a cornucopia of financial innovations, led to the housing boom and allowed buyers to purchase homes with no down payments and homeowners to refinance their existing mortgages. A consumption boom followed, which was not accompanied by equal industrial production and capital spending increases. Consequently the U.S. trade and current-account deficit expanded — the latter from 2% of GDP in 1998 to 7% in 2006, thus feeding the world with approximately $800 billion in excess liquidity that year.When American consumption began to boom on the back of the housing bubble, the explosion of imports into the U.S. were largely provided by China and other Asian countries. Rising exports from China led to that country’s strong domestic industrial production, income and consumption gains, as well as very high capital spending as capacities needed to be expanded in order to meet the export demand. An economic boom in China drove the demand for oil and other commodities up. Rapidly accumulating wealth allowed the resource producers in the Middle East, Latin America and elsewhere to go on a shopping binge for luxury goods and capital goods from Europe and Japan.As a consequence of this expansionary cycle, the world experienced between 2001 and 2007 the greatest synchronized economic boom in the history of capitalism. Past booms — of the 19th century under colonial economies, or after World War II when 40% of the world’s population remained under communism, socialism, or was otherwise isolated — were not nearly as global as this one.Another unique feature of this synchronized boom was that nearly all asset prices skyrocketed around the world — real estate, equities, commodities, art, even bonds. Meanwhile, the Fed continued to claim that it was impossible to identify any asset bubbles.The cracks first appeared in the U.S. in 2006, when home prices became unaffordable and began to decline. The overleveraged housing sector brought about the first failures in the subprime market.Sadly, the entire U.S. financial system, for which the Fed is largely responsible, turned out to be terribly overleveraged and badly in need of capital infusions. Investors grew apprehensive and risk averse, while financial institutions tightened lending standards. In other words, while the Fed cut the fed-funds rate to zero after September 2007, it had no impact — except temporarily on oil, which soared between September 2007 and July 2008 from $75 per barrel to $150 (another Fed induced bubble) — because the private sector tightened monetary conditions.In 2008, a collapse in all asset prices led to lower U.S. consumption, which caused plunging exports, lower industrial production, and less capital spending in China. This led to a collapse in commodity prices and in the demand for luxury goods and capital goods from Europe and Japan. The virtuous up-cycle turned into a vicious down-cycle with an intensity not witnessed since before World War II.Sadly, government policy responses — not only in the U.S. — are plainly wrong. It is not that the free market failed. The mistake was constant interventions in the free market by the Fed and the U.S. Treasury that addressed symptoms and postponed problems instead of solving them.The bad policy started with the bailout of Mexico following the Tequila crisis in 1994. This prolonged the Asian bubble of the 1990s, because investors became convinced there was no risk in growing current-account deficits and continued to finance Asia’s emerging economies until the bubble burst with the start of the Asian crisis in 1997-98.Then came the ill-advised bailout of Long-Term Capital Management in 1998, which encouraged the financial sector to leverage up even more. This was followed by the ultra-expansionary monetary polices following the Nasdaq bubble in 2000, which led to rapid and unsustainable credit growth.So what now? Unfortunately, Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner were, as Fed officials, among the chief architects of easy money and are therefore largely responsible for the credit bubble that got us here. Worse, their commitment to meddling in markets has only intensified with the adoption of near-zero interest rates and massive bank bailouts.The best policy response would be to do nothing and let the free market correct the excesses brought about by unforgivable policy errors. Further interventions through ill-conceived bailouts and bulging fiscal deficits are bound to prolong the agony and lead to another slump — possibly an inflationary depression with dire social consequences.Mr. Faber is managing director of Marc Faber Ltd. and editor of “The Gloom, Boom & Doom Report.”http://online.wsj.com/article/SB123491436689503909.html

And this is really different than the US situation how?While it may not come out guns blazing upon its own citizens, it does do so on others around the globe.I’d say that in total it’ll all come out to very little difference. Power is power…Mark

@ The Patriot,Very well said. Thank you!A true “free market” rewards good decisions, and punishes bad ones.The market we have today resembles more of a “free only when convenient” market, controlled by morally confused individuals. To blame our current economic situation on the freedom of the market makes no sense, because with all of the intervention, manipulation, collusion, etc… that goes on today, calling this market “free” would be a stretch. I think it is safe to say that if we had a truly free market, we would not be in the position we are in. If so, it would be a lot less severe.One of the problems is that we live in a society where we always want and expect “good” outcomes regardless of the “bad” choices we make. Freedom in the market is the solution, not the problem. But when corruption prevails (like it does now), the system falls apart, and we are forced to start over again at a disadvantage. I suppose this is where we are today.Instead of blaming freedom, we should be blaming the real culprits, namely: corruption, greed, dishonesty, and a lack of integrity, character, morals, principles, values, and ethics. Instead of asking government to bail us out, we should be asking our government to protect our rights and freedoms, and make all efforts to remove corruption from the system.IMO, true freedom is the only road that leads to progress and prosperity…All other roads eventually lead to misery and bondage.

I’m in Phoenix as well… Good to see other locals on the forum. I have been on this board for 3 years now. Seems like it has went by in a flash.

The laisez-faire not work with pulverized shares because the corruption. A corporation become a micro government with politics instead technics… A large and pulverized company become a socialist institution in a capitalist model.

FWIW, I also visit a hobby/mom forum. I posted an entry in the Off Topic area about the Geithner plan as first revealed. There were 83 posts last I checked it, then it was pulled. Most were very angry.

The politics plays to be rich, technics plays to construct things… You need nerds and geeks engineers in the control of corporations, not people that lost time talking too much…

its a back slash () or lowercase L shaped recession

Excess is Excess. Period. No discussion!Because I earn more than $3/day (2/3rds of the world live on this amount or less) I am in the excess category, as I expect you (and everyone else posting here) is.This “wealth,” if you were paying attention, is bogus. It’s wealth that detracts from the real essentials: Food, Shelter and Water.If I were trashing the heck out of the planet and my actions were helping kill thousands elsewhere around the globe, then do you really think that putting up a homeless person (or two) would really mean something? It’s the big picture. And that’s what the writer was getting at.Mark

IMHO, a reversal tomorrow ain’t very likely. The stage is set to screw Feb call buyers.

who is Turbo?

Roubini wrote – “At some point a sovereign [bank] may crack, in which case the ability of governments to credibly commit to act as a backstop for the financial system – including deposit guarantees – could come unglued.”Is Roubini stating that if a European bank(s) were to go under that our money in US banks may not be able to be protected by the FDIC?

For those interested I have a new post up at The Light of Day:http://medic-thelightofday.blogspot.com/2009/02/just-who-has-influence-anyway.htmlCome on over – coffee’s on……..PS – To all of you who have commented here about your decisions to reduce your debt, my family and I have been doing that for the better part of 18 months. We have also acted to reduce our consumption of oil by installing solar panels and a pellet stove (hat tip to Yankee) and we don’t hardly drive anywhere these days.We are all moving towards that lowered standard of living some have been predicting. There are still too many, however, who have not taken steps to prepare. I have too many friends who laughed (some very hard) when I tried to warn them about what was coming. I fear they will find out all too soon just what an once of prevention is worth.

That would be Turbo Timmy – our new head of Treasury.

There is no question that the role of Govt is to see these Institutions through Chapter 11.They have no responsibility except to ensure the basic safety net for individuals is available(Unemployment Insurance/Other personal assistance over the next two/three years).Anything else is simply a giveaway of tax dollars to people who of their own “Free Will”killed of the credit system world wide and at the same time increased massive personal wealth.This is the biggest “giveaway”in the history of the world on the pretext that the Bankers dont know how to remedy same.They certainly do.At the moment they are not, for the simply reason that they and their representatives are presiding over the greatest consolidation of wealth the world has ever seen by way of Govt bailouts/Bank/Insurance Company consolidations with Taxpayer Money….

The Fed played God and God had His little joke–Ben’s Planned Economy.

He was against the wall street bail out.

See my reply much further down this blog page.PeteCA

Earlier someone wrote …”More and more ordinary people worldwide are losing in all currencies – including the U.S. dollar. Does it make sense for anyone lucky enough to have any portfolio left to invest in gold? (If so, through what vehicle and to what percent of portfolio?) Thank you for any response. “You are not alone in wondering if gold has further upside potential. For a possible answer, see this very recent article by Chris Puplava.”Gold: Is the Future Still Bright or Fading?”http://www.financialsense.com/Market/daily/wednesday.htmThe choice of an investment vehilce in precious metals is now harder – because physical gold (and silver) is harder to come by. Do some research. And be aware that gold is trading in a channel … it has relative price peaks and bottoms in that channel. There are good and bad times to buy.PeteCA

There will always be people who won’t adhere to ethical and moral values to the detriment of those who are honest. You have to have laws and those laws have to have teeth. There is no other way.

It was an error, he meant “Sovereign” minus the bank, which tome still sounds ominous

Pete -I am and I am glad to hear your family has done the same.Oh, and I know I hardly ever comment on your posts, but yours are among the ones that always draw my attention. I am listening – keep the info coming. It’s appreciated.

Made-off and Lita Rascal Are Poster Children…When are they going to confiscate the wealth of the top 2%? Call it a crawback. That would be the beginning of some justice.

Good one tutterfrut.

Nearly 5 million in America getting unemployment benefits in US.That means that the amount of unemployed could be 15 million, as many do not get unemployment benefits (contrary to Eurozone, the unemployment benefits in US are paid by ex-employer and many contest paying such, or hire workers on terms that allow for layoff without benefits).Nearly 5 million are getting unemployment benefitshttp://www.google.com/hostednews/ap/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD96EM52G0

Probably at the same time they confiscate yours.

Prepare!Guadeloupe has seen a month of protests

Interesting. China seems relatively unconcerned. Weird.Another defective/substandard shipment from China?

This is startling. A harbinger of things to come in the US?

Oh–and did you hear that Citibank and JP Morgan are charging fees for people who have debit cards to get their unemployment benefits? Fifty cents per transaction. I don’t have the link handy but it was on msn money or something like that.Our Captains of Industry recapitalizing themselves. It’s just beyond despicable.

Medic, no need for cable, you can get tv on the internet now.

we have always lived this way- we pay off our bills every month. We paid off our home equity loan in eight months- paying double the minimum payment every month. Except for the current month we are debt free. We drive older vehicles and make our own repairs, we never hire anything to be done that we can do ourselves. We shop at thrift stores often and stay away from the malls. We are not wealthy by any means- but we are comfortable and able to afford our needs and then some. Welcome to my world- the world of responsible personal finance.

new Roubini video up on CR

A wonderful thing to think about — all the unsung generosity of many, many Americans, and a tribute to their goodness…

Thank God!

http://www.cnbc.com/id/29283701

Has the long emergency begun?

Awesome. This should be published.

100 years of (feel-bad) confiscatory Fed EconomicsROTFLMAO

Yes, the partisan argument is a fool’s game. The ignorance and corruption rises to astounding levels in both parties. We have had bad policy since 1913 and maybe most surprising is it took this long to bring it down.

Chicago Tea Party | A response to the Stimulus Bill | Care to Join In?We’re thinking of having a Chicago Tea Party in July,” Rick Santelli told CNBC Squawk Box” co-anchor Joe Kernan. Listen in on “Rant of the year.” | Here’s part of the transcript…Becky Quick, in studio: …. Rick have you been listening (to the previous conversation)?Rick Santelli, on trading floor: Listening to it? I’ve been just glued to it because Mr. Ross has nailed it. You know, the government is promoting bad behavior, because we certainly don’t want to put stimulus forth, and give people a whopping eight or ten dollars in their check, and think that they ought to save it.And in terms of modifications, I’ll tell you what, I have an idea. You know the new administration’s big on computers and technology. How about this, (Mr.) President and new administration — Why don’t you put up a web site to have people vote on the Internet as a referendum to see if we really want to subsidize the losers’ mortgages, or would we like to, at least, buy cars and buy houses in foreclosure and give them to people who might have a chance to actually prosper down the road, and reward people that could carry the water, instead of drink(ing) the water.Trader sitting near by: What a novel idea! What? Who thought of that!(traders in the pit start clapping and cheering)Joe Kernen, in studio: Rick, they’re like putty in your hands. Did you hear –Santelli: No they’re not, Joe. They’re not like putty in our hands! This is America! (turns around to address pit traders) How many of you people want to pay for your neighbors’ mortgage that has an extra bathroom and can’t pay their bills? Raise their hand. (traders boo; Santelli turns around to face CNBC camera) President Obama, are you listening?Trader (sitting nearby, goes over to Santelli’s mike): How about we all stop paying our mortgage? It’s a moral hazard.Kernen: It’s like mob rule here, I’m getting scared. I’m glad –Santelli: Don’t get scared, Joe. They’re already scaring you. Y’know, Cuba used to have mansions and a relatively decent economy. They moved from the individual to the collective. Now they’re driving ‘54 Chevys, maybe the last great car to come out of Detroit.Kernen: They’re driving ‘em on water too, which is a little strange to watch, at times.Santelli: There you go.Kernen: Hey Rick, how about the notion that Wilbur pointed out, you can go down to 2% on the mortgage …Santelli: You can go down to minus two percent, they can’t afford the house!Kernen: ….. and still have 40% not be able to do it, so why are we trying to keep them in the house?Santelli: I know Mr. Summers is a great economist, but boy I’d love the answer to that one.(some cross-talk)Quick: Wow. You get people fired up.Santelli: We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m going to start organizing.http://sistertoldjah.com/archives/2009/02/19/chicago-tea-party-re-the-stimulus-bill/

A better concept of what we “supposedly” had was a market economy – where humans interact and determine the value by purchasing or abstaining from purchasing within basic rules set by the enumerated powers of the government.This has been drastically changed since 1913 and the creation of the Fed, among other things specific to that year (not to say other central banks in our history didn’t do the same).Instead of the rule of law and the supreme Law of the Constitution being the guide for a set of rules that don’t change on a whim, without any public debate, we have a central bank that alters the rate of interest at nearly the exact instant where the market economy is attempting to make corrections to the value structure due to past capital allocations.So I would hope that people won’t say the people’s collective judgement has failed. This judgement is attempting to correct the massive imbalances that have occurred as we speak. It is saying we don’t need, at the current prices, that many houses, that many cars, that many strip malls, that many banks, etc. It is actually trying to work.But of course, the central planners are attempting to claim that they know better than the wisdom of billions. It is impossible for them to know. We all know it, but don’t care as long as the perceptions and expectations can be kept up. As long as this can be kept up, the amount of power involved is extraordinary.What has failed, once again, is that a small group of central planners (congress through fiscal planning and the Fed through monetary planning)are no match for billions of people at infinite instances in time determining their scale of values.Maybe in the future, we’ll have enough wisdom gained through experience to know that any person or group claiming to have this power is searching for something, and it isn’t your best interest.

CA approved tax increases to close $42 billion budget deficithttp://www.bloomberg.com/apps/news?pid=20601015&sid=a_eSllHEhcSM&refer=munibondsDemocrats will turn hard-working money earners into personal ATM.

http://www.govtrack.us/congress/bill.xpd?bill=h111-1068H.R 1068 -> 0.25 percent tax on securities transactions to pay for STIMULUS and TARP? This is nut!!! Obama and those crazy Democrats just went to the deep end.

you can kiss 401K and any trading good bye. This will guarantee savage selloff of S&P500 to 200. Where those stupid Democrats came from? And which idiots voted for them?

The majority of the public is still in the buy and hold for the long term mind set (trained / brain washed by Wall Street and their advisor). This has cracked and you will see a wide spread public panic selling in the stock market before a major market bottom is reached. My guess today on a range/level is 506-609 on the S&P 500 and 4,486-5,394 on the Dow 30 (61-68% off market top). This assumes a severe recession but not a full blown depression. With 2009 S&P reported earnings (not operating) estimated to be as low as $32 the market would still be a bit pricey at even my estimated levels with reported earnings multiples in the 15X-19x range (compared to other major market bottoms 1950 6X, 1980 7X, most major market bottoms will reach at least a 10x multiple).

i hope that apply only to the broker. or this apply to all purchaser/seller of securities? you mean, i have to pay amount x 0.25% too??but wait broker charge me fix $8 on a transaction of any amount. if transaction amount x 0.25% > $8, then will broker refuse to execute the trade?

Love it, Medic. Carlin is sorely missed these days, yes? Can you imagine the fun he’d be having with this mess we’re in now?BTW, keep on posting at your new blog, medic-thelightofday.blogspot.com. If I could only figure out how to post comments there. . .I’m so in the dark ages. . .

http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-taxH.R. 1068, great way to punish everyone. or just another for Democrats to raise tax on everyone?

According to my spouse, for the types & sizes of the trades he does, it would be equal to around $100 per trade–give or take depending on the contract size, etc. Given enough trades, it becomes a significant amount.

You crack me up, K.Death by inches, sweetie.

Forgiving mortgage principal is giving someone something they don’t deserve at the expense of those who will then rightfully resent being penalized for not being imprudent. I don’t see hide nor hair where that makes sense whatsoever towards bringing this economy back. In fact it does the opposite.I also don’t think paying rent is necessarily better than paying a mortgage when the mortgage payment can be brought down substantially in comparison by extending payment terms. In effect, if it came down to paying rent and a mortgage one must always assess the differences in quality of life one is getting too – much less the infrastructure role and benefits property taxes play in the health of communities.Providing more tax incentives for sticking with a mortgage during these times is therefore something the feds could do to help get this situation stabilized rather than rewarding the undeserving. There are far better ways I think than the principal write down notion.But hey, different perspectives.AM

These people will hide their money, pull your money out of the bank and barter with cash and with your skills its working better than you think. Pay with cash not a check or plastic but cash. Barter is a great system it has worked for years, now that more of us have a reason to use for it, it will only get better its easier than people believe. No taxes on barter.

Last I checked, just a few more points lower on the S&P 500 and we’re back to 1997!!

Be thankful I still have a job.

@ above…stated..”It is the failures of ideas such as the “efficient market hypothesis” that deluded itself about the absence of market failures such as asset bubbles; the “rational expectations” paradigm that clashes with the insights of behavioral economics and finance; the “self-regulation of markets and institutions” that clashes with the classical agency problems in corporate governance that are themselves exacerbated in financial companies by the greater degree of asymmetric information -how can a chief executive or a board monitor the risk-taking of thousands of separate profit-and-loss accounts? Then there are the distortions of compensation paid to bankers and traders.This crisis also shows the failure of ideas such as the one that securitization reduces systemic risk rather than actually increase it; that risk can properly priced when the opacity and lack of transparency of financial firms and new instruments leads to unpriceable uncertainty rather than priceable risk.”..generally, failure of globalism and corresponding backlash against it with the acceptance that it is necessary. so treat it as a necessary evil, not the cornerstoneof a , or many, sustainable local economies. and price it accordingly..?as production becomes global and expands into “emerging markets” (sweat shops) , international standards re. labor compensation, safety, environmental standards, energy efficiency etc.. must be instituted and met. ( level field and good for local economies ).as new generations of production emerge price advantages are natural and create anegative stress, backlash, on older existing (former) locations of production , economies. in the u.s. we have seen this very clearly. the obvious solution is deflation, tending to level the field.however, this option is being rejected. while it would make production possible, thereby facilitating export and debt reduction, the resulting strong dollar would makedebt payment extremely difficult due to the existing national fiscal debt, 15-? trillion.without deflation internationally competitive production and export will remain impossible. by choosing reflation, printing etc., the dollar may inflate but we will have no capacity to export, honestly.so, theoretically, it seems we could first deflate, produce and export and then inflate and pay back, but that is just a cheating pipe dream.so it seems the solution should be some level of long term deflation here, with corresponding useful exportable production and increased standards globally with regards to labor and environmental concerns, all within the theme of energy conservation or marvelous market energy production technologies. the urban energyrevolution. we could export that, if we only knew what it is. ?.”new instruments leads to unpriceable uncertainty rather than priceable risk.”i would say also new markets lead to systemic imbalances, uncertainty and systemicrisk. without a full accounting of all costs associated with production, transportationlocal repercussions, energy consumption etc. the process of expanding markets will and has created a chaotic and imbalancedeconomy where even efficient production itself becomes a total waste of resources.if we can’t recognize costly and useless production when it is right in front of us, and stop it, then we are truly lost.ps.. none of the stimulus plan makes any sense without triage. right. we know that. just had to repeat it. triage. triage. triage……somebody said it. never feed the zombie / stimulate the zombie.but they continue to do that.. it may be the death of us.?but of course the most important element is water. h 2 O.rant complete.

Since house prices got out of line of rental values, while not modify foreclosure law to allow current occupents the option to maintain occupancy and pay rent at current market rate in lieu of eviction? Assuming they can afform the rent, which should be substantially less than their mortgage payment. Fear of eviction and homelessness would be greatly reduced.

All this goes much beyond financial intermediation, which has been just a paliative in the last 25-30 years.

Maybe we should run a comparison between benefits and laws in Euro-zone vs. USA to educate people and provide some sort of a list of things that should be present in USA.I do not necessarily mean that “everything is sooo nice in Eurozone”. Just that there are some laws there that Americans do not seem to talk much about, and when they are discussed, there’s an outcry from corporations about how it will be sooo expensive or lead to maaany job losses. If Eurozone can have these laws or benefits, why can’t US of A?

A “sovereign bank” sounds to me like a Freudian slip. They are running the show these days, aren’t they?My bank recently asked if I would be interested in a new mortgage … after suspending my disbelief (I had bought into the Obama-Media-Complex hype that nobody was lending these days), I then had to re-think my long-standing policy of not taking on un-necessary debt.If the near-to-mid-term environment is deflationary, as posited by the Professor, then I am a sucker to not take on debt that I can repay in debased Dollars (it was a US property in question). And since I am functionally denominated in Euros these days, if I believe that the EU is on the brink of a $25T banking crisis, I would be a sucker to not be pumping even more money into USD since the Dollar will probably fare relatively better than the EUR , meaning my US-based assets will appreciate relative to my EUR assets (gee, what has my investment philosophy become these days … picking the least-worst investment?).But best of all is this … my vacation home would become my primary US residence. I could take out this loan, and then simply not pay it, and also not have to resort to jingle mail. After all, my President and his henchmen would be there to help keep me in my home. After all, in the US I have almost no income, therefore I must be one of the new winners in life’s lottery.So, time to apply for that mortgage.

My European colleagues and friends are shocked that US people were getting mortgages with nothing down, and remain amused that people in the US feel it is a hardship to come up with 20% down … over here they typically put 30% down, and sometimes more.I heard a great call on NPR a couple weeks ago, where the 52-year-old woman was upset with how unfair her bank was for refusing to write her a 30-year mortgage to refinance her house because she had missed a few payments. Thinks about the several components embodied in that call and tell me how an entitlement mentality has not taken hold in the US that is even more pernicious than that evidenced in all of the European social-welfare states. People in the Eurozone expect a few crumbs from their government, while too many people in the US seem to expect the world handed to them by every corner of society.

NYSE Circuit BreakersIn response to the market breaks in October 1987 and October 1989 the New York Stock Exchange instituted circuit breakers to reduce volatility and promote investor confidence. By implementing a pause in trading, investors are given time to assimilate incoming information and the ability to make informed choices during periods of high market volatility.Rule 80BEffective April 15, 1998 the SEC approved amendments to Rule 80B (Trading Halts Due to Extraordinary Market Volatility) which revised the halt provisions and the circuit-breaker levels. The trigger levels for a market-wide trading halt were set at 10%, 20% and 30% of the DJIA, calculated at the beginning of each calendar quarter, using the average closing value of the DJIA for the prior month, thereby establishing specific point values for the quarter. Each trigger value is rounded to the nearest 50 points.The halt for a 10% decline would be one hour if it occurred before 2 p.m., and for 30 minutes if it occurred between 2 and 2:30, but would not halt trading at all after 2:30. The halt for a 20% decline would be two hours if it occurred before 1 p.m., and between 1 p.m. and 2 p.m. for one hour, and close the market for the rest of the day after 2 p.m. If the market declined by 30%, at any time, trading would be halted for the remainder of the day.Under the previous Rule 80B trigger points (in effect since October 19, 1988) for a market-wide trading halt, a decline of 350 points in the DJIA would halt trading for 30 minutes and a drop of 550 points one hour. These trigger points were hit only once on October 27, 1997, when the DJIA was down 350 at 2:35 p.m. and 550 at 3:30, shutting the market for the remainder of the day.www.nyse.com/press/circuit_breakers.html

Someone that sick needs more than Gary Null can offer though certainly his methods would be a huge help. 95% of all diseases are completely curable without modern medicine but it will take a drastic life style change. A life style change that will seem painful at first but will liberate anyone to their maximum health potential. Anyway there is a book called “Rainbow Green Live Food Cuisine” by Gabriel Couzens- who in my opinion is the greatest living genius on the planet. Buy his book, send your wife to his healing center in Arizona called “The Tree of Life” (tree of life.nu) and it might take a year or two to completely reverse it but rest assured not only is it curable but her life will be enhanced 1 million times over. He’s a doctor and they have on staff doctors that can help your wife devise a plan for total recovery-though they’ll never tell you that for fear of law suits etc.Also though not as good I feel check out Jordan Rubin’s book “The Makers Diet” this guy was wheelchair bound from Chrons disease and cured it.

Again with the people who have enough pronouncing that means everyone now has enough.What makes you just throw out this opinion/judgement over and over as if it were true?Ever seen how others are forced to live without?????

Your views are extreme, not just in this post, but in your other ones as well. I have the feeling you are someone who experiences great joy from seeing the worst in any situation.

why not just make lending and borrowing illegal? while we are at it, lets make trading, investing, and 401k illegal. lets confiscate all of them.

the most important things that get said on this blog are usually ignored in direct proportion to their importance: that’s why you’ve received no replies.all the knowlege that humankind has gained over all the ages of progress belongs to everybody in equal shares and the society that keeps higher education priced beyond the ability of 90% of people to gain education is insane.education is by rights and intelligent thinking to be made free to everyone who wants it. society should want educated people – society should realize the crucial importance and benefit of having everyone educated to their greatest ability, and if society wants educated brains then society needs to pay for that because society reaps the benefit (and suffers the consequences of having a little-educated society).making parents and students pay for education is myopia on steroids again.it’s a racket with big negative consequences and it makes no sense – you have nailed it, subgenius.ask the europeans and they’ll tell you: “my parents weren’t rich, but i got to enjoy a better quality of life than they did because i was given a free education and didn’t have to begin my adult working life bound to decades of debt someone got to reap profits off.”

“The most important bill in our whole code is that for the diffusion of knowledge among the people. No other sure foundation can be devised, for the preservation of freedom and happiness.Preach, my dear sir, a crusade against ignorance; establish and improve the law for educating the common people. Let our countrymen know, that the people alone can protect us against these evils (of monarchy), and that the tax which will be paid for this purpose, is not more than a thousandth part of what will be paid to kings, priests, and nobles, who will rise up among us if we keep the people in ignorance.”- Thomas Jefferson to George Wythe, August, 1786

Gold going vertical – $997/ozDJIA futues down 120.

could you have done this if your job had been taken away years ago?

7286 was the closing low Oct 9, 2002 with an intraday low of 7181 on Oct 10, 2002. But other than that you have to go back all the way to 1997 to find lower levels.Separately 741 on the S&P (Nov 21 intraday low) will be key. As suggested yesterday – potential Fed/Treasury intervention – though the market seems to be less and less impressed by such actions.

Santelli is like a dog barking at someone walking in front of the house (homeowners)while robbers (banksters)are cleaning out the house from the back door. He should be barking at AIG, Fannie, Freddie, and others in the cartel.

A thousand plus dollars for an ounce of shinny malleable metal that makes nice jewelry and works well for electronics? You’ve got to be kidding. If you don’t see another bubble, you’re crazy. If it’s as bad as they say, everyones going to need to sell that gold and another bubble will burst. Panic will set in. Anyhow, I wouldn’t take investing advice from anyone on a public BB or from a investment advisor. I read Roubini because he’s an economist and has a better picture than people who are invested in the system. The best advice I think is to hold cash in FDIC insured accounts and eliminate debt and live within your means. Since unemployment is skyrocketing, you need a backup plan. And if you’re the one employed, you’ll be morally obligated to help family.

No need to explain the market drop today. Anybody following my comments earlier in this blog session knows what’s going on.There will be a lot of new theories now as people offer their best guess about a bottom for the Dow. And more financial commentators will start using the word “depression” instead of “recession”.But the key thing to remember is this … a lot of those US investors are baby boomers. Many boomers have already seen their retirement funds gutted. A lot of mutual funds (in stocks) have already lost at least 50% of their value. In fact, the major mutual funds rarely offered their investors Inverse ETF’s for protection, and most people were too skittish to ever get involved in precious metals.Now Baby Boomers have to contemplate another possible loss in their portfolio’s. It could be just another 10% drop. But what if it’s another 20%, 30% … or even 40%???? We’re looking at the potential annihilation of all the hopes and dreams of the Boomers here. You think that these people are going to just jump back into the market right now – in the off chance that maybe they will catch a bounce. Yeah right. Boomers won’t do it. And pension fund managers will be flayed alive if they make a mistake now. People don’t gamble “market timing” with what’s left of the meager scraps of their life savings.This is a tough game now.PeteCA

This is one of the greatest responses to the requests for bailout money I have seen thus far.As a supplier for the Big 3 this man received a letter from the President of GM North America requesting support for the bail out program. His response is classic, and has to make you proud of a local guy who tells it like it is.”Dear Employees & Suppliers,”"Congress and the current Administration will soon determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation’s history. Your elected officials must hear from all of us now on why this support iscritical to our continuing the progress we began prior to the global financial crisis……… As an employee or supplier, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard. Thank you for your urgentaction and ongoing support.”"Troy Clarke, President General Motors North America”GO ON DOWN FOR THE REPLYResponse from:Gregory Knox, Pres. Knox Machinery Company Franklin, OhioGentlemen:In response to your request to contact legislators and ask for a bailout for the Big Three automakers please consider the following, and please pass my thoughts on to Troy Clark, President of General Motors North America.Politicians and Management of the Big 3 are both infected with the same entitlement mentality that has spread like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping this nation, awaiting our new “messiah”, Pres-elect Obama, to wave his magic wand andmake all our problems go away, while at the same time allowing our once great nation to keep “living the dream”… Believe me folks, The dream is over!This dream where we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded “laborers” without paying the pricefor these atrocities… this dream where you still think the masses will line up to buy our products for ever and ever.Don’t even think about telling me I’m wrong. Don’t accuse me of not knowing of what I speak. I have called on Ford, GM, Chrysler, TRW, Delphi, Kelsey Hayes, American Axle and countless other automotive OEM’s throughout the Midwest during the past 30 years and what I’ve seen over those years in these union shops can only be described as disgusting.Troy Clarke, President of General Motors North America, states: “There is widespread sentiment throughout this country, and our government, and especially via the news media, that the current crisis is completely the result of bad management which it certainly is not.”You’re right Mr. Clarke, it’s not JUST management… how about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass… so they can come in on the weekend and make double and triple time… for a job they easily could have done within their normal 40 hour work week. How about the line workers who threaten newbies with all kinds of scare tactics… for putting out too many parts on a shift… and for being too productive. (Wecertainly must not expose those lazy bums who have been getting overpaid for decades for their horrific underproduction, must we?!?Do you folks really not know about this stuff?!? How about this great sentiment abridged from Mr. Clarke’s sad plea: “over the last few years… we have closed the quality and efficiency gaps with our competitors..” What the hell has Detroit been doing for the last 40 years?!?Did we really JUST wake up to the gaps in quality and efficiency between us and them? The K car vs. the Accord? The Pinto vs. the Civic?!? Do I need to go on? What a joke! We are living through the inevitable outcome of the actions of the United States auto industry for decades. It’s time to pay for your sins, Detroit.I attended an economic summit last week where brilliant economist, Alan Beaulieu, from the Institute of Trend Research, surprised the crowd when he said he would not have given the banks a penny of “bailout money”. “Yes, he said, this would cause short term problems,” but despite what people like politicians and corporate magnates would have us believe, the sun would in fact rise the next day… and the following very important thing would happen…where there had been greedy and sloppy banks, new efficient ones would pop up… that is how a free market system works… it does work… if we would only let it work…”But for some nondescript reason we are now deciding that the rest of the world is right and that capitalism doesn’t work – that we need the government to step in and “save us”… Save us my ass, Hell – we’re nationalizing… and unfortunately too many of our once fine nation’s citizens don’t even have a clue that this is what is really happening… But, they sure can tell you the stats on their favorite sports teams… yeah – THAT’S reallyimportant, isn’t it…Does it ever occur to ANYONE that the “competition” has been producing vehicles, EXTREMELY PROFITABLY, for decades in this country?… How can thatbe??? Let’s see… Fuel efficient… Listening to customers… Investing in the proper tooling and automation for the long haul…Not being too complacent or arrogant to listen to Dr. W. Edwards Deming four decades ago when he taught that by adopting appropriate principles of management, organizations could increase quality and simultaneously reduce costs. Ever increased productivity through quality and intelligent planning; treating vendors like strategic partners, rather than like “the enemy”…Efficient front and back offices… Non union environment… Again, I could go on and on, but I really wouldn’t be telling anyone anything they really don’t already know down deep in their hearts.I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into – my children do this on a weekly, if not daily basis, as I did when I was their age. I do for them what my parents did for me (one of their greatest gifts, by the way) – I make them stand on their own two feet and accept the consequences of their actions and work through it. Radical concept, huh… Am I there for them in the wings? Of course – but only until such time as they need to be fully on their own as adults.I don’t want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and government. Detroit and the United States need to pay for their sins. Bad news peop le – it’s coming whether we like it or not. The newly elected Messiah really doesn’t have a magic wand big enough to “make it all goaway.” I laughed as I heard Obama “reeling it back in” almost immediately after the final vote count was tallied…”we really might not do it in a year…or in four…” Where the Hell was that kind of talk when he was RUNNING for office.Stop trying to put off the inevitable folks … That house in Florida really isn’t worth $750,000… People who jump across a border really don’t deserve free health care benefits… That job driving that forklift for the Big 3 really isn’t worth $85,000 a year… We really shouldn’t allow Wal-Mart to stock their shelves with products acquired from a country that unfairlymanipulates their currency and has the most atrocious human rightsinfractions on the face of the globe…That couple whose combined income is less than $50,000 really shouldn’t be living in that $485,000 home… Let the market correct itself folks – it will. Yes it will be painful, but it’s gonna’ be p ainful either way, and the bright side of my proposal is that on the other side of it all, is a nationthat appreciates what it has…and doesn’t live beyond its means…and gets back to basics…and redevelops the patriotic work ethic that made it the greatest nation in the history of the world…and probably turns back to God.Sorry – don’t cut my head off, I’m just the messenger sharing with you the”bad news”. I hope you take it to heart.Gregory J. Knox, President Knox Machinery, Inc.”The problem with socialism is that you eventually run out of other people’s money.”Margaret Thatcher

I hear you. Wasn’t saying that I think it’s a good thing. Just seems minor from here.Income from labor is taxed at a higher rate than income from investment. In most states you are taxed when you earn the money AND taxed when you spend it. Taxed for owning property. Taxed on gasoline, supposedly to pay for roads, AND then taxed again for a license to drive and a license for the vehicle.Our country was supposedly born as a tax revolt – taxation without representation, double taxation. Seems to me that we are back in the same spot, practically speaking.A fair, progressive, simple tax system for the U.S….what are the odds?

@Farnorth5As long as the Banks/Insurance companies have the ability to provide unlimited reelection funds to the politicians its reasonable to assume they will answer to the people providing the most money.<.i>Yes, but only if they continue to be fed at the trough. If you look into Paul’s positions you’ll find that this is balanced by NOT doling out pork and favors to corporate entities. This is what separates Paul from the other “pretenders.”Mark

Yes. Although I haven’t been there, Haiti is one of the best examples of real poverty. Compare people here with the likes of Madoff and Stanford (“‘wealth’ creators”) and it’s nearly impossible to deny that excess exists.Mark

At the core of every financial crisis throughout recent history you will find the mis-use of leverage. Leveraged demand corrupts the concept of supply and demand. Leveraged capital corrupts the valuation of goods and services. Separating different financial services was done to reduce the corrupting effects of leverage. Leverage can be profitable and gives the player an edge, but it distorts the money supply. Sometimes can’t have what you want. When you lose control of leverage, you lose control of the money supply.

Great, can I send my worthless brother-in-law, who has never made a mature, responsible decision in his 58 years on over? I gotta tell you, I am REALLY, REALLY sick of supporting this looser, and would be overjoyed to find some nice group of suckers…oops, I mean good, God fearing folks, to take over for me. By the way, he’s always worked “under the table” and has no social security account, and a 2 pack a day cigarette habit. I’m sure you’ll find redemption in trying to help him, and I know he’ll be happy to tell you whatever you want to hear.

Annual budget for IRS is $8.8 billion. If there was a simple VAT, there’d be no need for IRS, tax accountants, tax codes, tax forms, tax breaks, tax loopholes. Just think about the time and money we waste! And then, pass a law mandating that we can only spend what we take in and not a penny more. We can SAVE excess funds, but we can’t be allowed to SPEND excess funds.

I love Santelli, and have been his fan for a long time. He is a practical, honest, knowledgable advocate of the system as it should be. He does not hesitate to skewer the excesses and wrongheaded moves of both businessmen and politicians on an equal basis. He has a point of view, which he quickly and ably defends against his peers and fellow commentators as well as their guests. His ability to clearly see through the fog is refreshing, and he is the one to most likely throw political correctness out the window and engage in a rousing verbal fist fight.Perhaps you should invest some time learning about the subject instead of “pimping” your own personal perspective. Ther are plenty of charlatans out there, but Santelli is not one of them.

What dividend growth?

Median wages in the middle/working class have been flat since the mid 70s. During the same period the top 1% have more than doubled their share of the wealth. The same disproportionality obtained during the run up to the Great Depression. Hardly a coincidence.The financial elite in their greed have failed to heed the necessary participation and health of the largest cohort of the population.

Nouriel, are you serious? Maybe you were partying the night before you wrote this? Or maybe you are just stirring the pot to get 300+ comments?We have never had a Laissez Faire economy in this country.Ron Paul is correct.We have had currency debasement, and central banks run amok. Fractional reserve lending is bullshit.What do you prefer socialism? Can you please work for me then. I will be the oligarch, thanks! Oops Bernanke, Paulson, Greenspan and the other banking bigwigs are already the oligarchs…damn.While your economic predictions and analyses are excellent, your interpretations and policy recommendations suck.RespectfullyMG

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