第二, thereby delcaring that spam doesn’t count

Barack Obama: “We Are Out Of Money”Posted by Tyler Durden at 12:58 AMFast forward to 13:34 minutes in the clip below, in which the president, interviewed by C-Span, has the mother of all Freudian slips and discloses just what the real state of the economy is.http://zerohedge.blogspot.com/2009/05/barack-obama-we-are-out-of-money.html

I just finished “More Mortgage Meltdown” by Whitney Tilson and he is totally in line with RGE and the professor’s recommendation. He lays out a very understandable redaction of how we got here and lays out accounting that matches RGE. His conclusion to the first half stresses that Bank of America and Citibank must be put in receivership or the American Taxpayer will be reamed. The exposure to the taxpayer is huge!We cannot practice Socialism for the Rich! The bank bondholders have to take their losses! The moral hazard involved is the most extreme. How does anyonejustify SOCIALISM FOR THE RICH????I am sure somebody else on the blog has read it!!Tell me I am wrong! I would like to be wrong!What I see coming is beyond Gloomy’s posts!!

I found these two remarks especially interesting.One, by Paul Krugman:

One way to think about the global crisis is a vast excess of desired savings over willing investment. We have a global savings glut.

The second quote comes from Nouriel Roubini:

What are going to be the sectors of the economy that give us sustainable, long-term growth? I think that’s an open question.

Indeed it is open, and it may not be answerable Top-Down. Monetary stimulus is just making a lot more money available to invest. However, as Paul Krugman says, there’s no investment flow because the “invest where?” question remains unanswered.Fiscal stimulus (government spending), on the other hand, gives us a top-down answer to the question “where to invest”. If the market doesn’t know where to invest, the Government will decide.What do you think of the Government’s choices about where to make investments when no one else is willing to invest?If the Government (Top-Down) method isn’t working, what’s Plan B?Where else do you find someone with both the resources and the fortitude to make investments in a “down” economy?

There is no plan B! The money has been squandered on overpaying the megabanks to protect their shareholders and bondholders. The banks should have been put in receivership and the HOLC that the professor suggested in his 10 points at the beggining of this crisis would have attacked the debt overhang.

ob 1,the seed has sprouted, grown and we can see thefruits. can we eat this fruit?i have been persuaded by the idea that the monetarysystem of the usa, federal reserve fractional reserve lending at interest (FRFRLI) is fundamentally parasitic and can only fail or ultimately produce a poisonous fruit. terminal debt.some global agents know this and have protectedthemselves politically and economically. china..” Key is its banking system, its government-issued currency, and a system of state-owned banks. Henry CK Liu distinguishes between “national” and “central” banks – the former serves the national and public interest; the latter, private international finance at the expense of the nation and people.”http://dandelionsalad.wordpress.com/2009/05/13/the-rise-and-fall-of-the-international-gold-standard-by-stephen-lendman/.it seems the inflation we have experienced over the last say 25 years was due mostly to finance created, no reserve, private sector, unregulatedcredit and now the government is attempting toreflate the deflation of that as its influencehas permeated the global economy, indeed, itsimplications are staggering and has made possiblefar flung resource exploitation, military spendingand other irrational forms of resource squanderingand suffering which characterize “our” times..the idea of investing in anticipation of a returnin this environment is to discount reality. atthis point the government cannot even produce enoughmoney to account for the inflation we have alreadyexperienced at the prerogative of AIG and friends..pk quote.. excess savings over investment.?reminds me of nr’s statement concerning banksexcess cash from a prior thread.?what excess cash? they are insolvent. whatglobal excess savings? chinas. they have protected themselves from FRFRLI. the rest of us,unprotected as we are, have entered the debt^2universe of FRFRLI where we produce debt to payoff debt and then wonder furiously what to doconcerning excess cash and savings?marvelous!.the growth paradigm is no longer applicable,the model it done.so “investing” needs to be redefined in termsof resource allocation. resources are plentifulbut most are unrecognized as the model does notunderstand value, it does not even honestly recognize its own foundation..look at the facts. the government is at the service of corrupt, dishonest, insolvent banksand military contractors. who will invest in that? what good have they produced? where are their illuminating ideas and innovations to improvelife and reveal the truth of our experience?where is their humanity?

g,i have seen this claim made by others. whileit is fitting that you make this claim at thistime i am compelled to warn you that there willcome a time when ” the first shall be last “.may you fully enjoy your moment in the sun!

This reaction to the former thread from Upchuck says it all:“Yes yes! Money is scarce! Scarce, do you hear me? Money is scarce! So by all means let’s continue totally screwing over the working classes who paid and pay for all while we continue shoving free money to the private insurance profiteers, the crony corporados and their crooked congress, the banksters, the tax cheats, and the military indistrialists and call all this inevitable reality and ourselves realists.”Cowardly eagerness to have us all enslaved makes me sick.”Upchuck goes a long way in dispelling the sickness I have felt over the sicko eagerness in recent posts here that would reduce us all to feudal slavery. Reactions such as yours, Upchuck, can help save this blog from its downward spiral into a socialist rant.The Federal Reserve is the starting point of the present financial crisis that is driving the masses into the corral of a new feudalism. America’s cabal of politicians and bankers has orchestrated this banking crisis into a $12.8 trillion government bailout of the profiteers, the banksters and corporados, the tax cheats and military industrialists; into the nationalization of homes, and into the partial and, perhaps, eventual nationalization of these banking behemoths which will give them even more control over rule of government. The Fed is passing the staggering cost of its fiat money creation on to the public, in the form of inflation.In short, the Fed is an instrument of totalitarianism. No one is going to get out of its banker-created crisis unscathed. And there is going to be the devil to pay, and it is we who are going to pay it.This chain of events began with fiat money–with the Fed–which led to government debt, which caused inflation and corruption and market privilege, which destroyed the economy, which impoverished the people, which provided an excuse for increasing government power, which at this moment is leading into totalitarianism.The Fed was created by Congress. It is time to kill it. If Congress won’t kill it, it’s time we killed Congress.

Gloomy Picture Perhaps Worse Than It Seemsby Rick Ackerman on May 18, 2009Gloomy forecasts have generally held sway at the Committee for Monetary Research and Education’s annual spring dinner, but this is the only time we can recall when there were no optimists on the dais bold enough to challenge a consensus now gloomier, probably, than at any time since the 1930s. Jim Grant’s off-the-cuff talk was about as sunny as the evening’s presentations got, and even he was unwilling to allow much more than a ray of hope that everything would somehow turn out all right. Bob Hoye, on the other hand, was unequivocally bearish: “The chances of anyone fixing this mess,” he told the crowd, “are literally zero.” But the scariest talk of the night came from Bill Beach, director of the Heritage Foundation’s Center for Data Analysis. If you find today’s economic news too depressing to imbibe, he said, “things are even darker than they seem.”A self-described data junkie who loves to delve into the statistical facts behind the headlines, Beach says today’s economic numbers are so appalling that he’s “scared to death” to look at them. What is most extraordinary about these times, he said, is that government at all levels has never been so willing to take on more debt. As a result, said Beach, our children will be paying back interest and principal for many, many years to come. How much do we owe? Beach asked one person in the room to stand up. That one person — one among a hundred in the banquet room of New York City’s Union League Club that night – could be said to represent the $182 billion required to bail out just one insurer, AIG. But if you add in the expenses the federal government will incur maintaining Social Security, Medicare and Medicaid over the next 20 years, you’d have to stack the entire room’s dinner guests up to the ceiling to equal the final tally. Nor will we likely be able to grow our way out of debt, said Beach, since, in order to succeed, today’s five-year-old would need to be three times as productive as we are now while getting his pocket picked clean by the tax collector.Teapot Dome ‘Delay”So when will the system finally unravel? Barron’s editor Jack Willoughby reminded the audience that it took seven years for the Teapot Dome scandal of 1921 to have a measurable impact on the economy. Pressures are building this time as well, many of them attributable to corruption and scandal, and sooner or later something will have to give, said Willoughby. “Risk always hits at the weakest point.”Hoye concluded the evening with a sobering look back on history. He noted that the economic contraction following the Panic of 1873 lasted for more than two decades, until 1895. Although the Federal Reserve came into existence two decades later and was holding the discount window wide open at the time of the 1929 crash, that didn’t prevent the economy from slipping into the Great Depression, noted Hoye, founder of the Vancouver-based Institutional Advisors. Quoting from a 1932 Barron’s editorial, the speaker reminded the audience that all of the Fed’s anti-deflationary remedies had failed, and that bonds had gotten sucked into “the vortex of deflation.” As much could be said of the federal government’s current, recklessly extravagant bailout – a so-far failed effort that Bloomberg news has estimated at $12.8 trillion.http://www.rickackerman.com/2009/05/gloomy-picture-perhaps-worse-than-it-seems/

BM:I’m not yet ready to condemn either fractional reserve banking or charging interest on loans. Here’s why:a. Someone has to create money, and inject it into the economy. The money supply is supposed to grow (and shrink) in response to changes in the underlying assets of a nation, assuming one wishes to keep the dollar’s buying power constant over time (generally a good thing).a.1 Having banks do this is fine; if they “inject” the money foolishly, the loan is not repaid, and the bank takes a direct hit on equity – which is the pocketbook of the bank’s owners. It is appropriate to pay the bank a risk premium and a profit for their expertise in picking out “good loans to make”. This is why we pay them interest. From my perspective, that’s fine.a.2 If the banks continue to find “productive” uses for those loans – e.g. loans to enterprises which create value, and expand the nation’s pool of assets, everything’s OK. So long as the bank is clever enough to allocate those resources correctly, all is well, no matter what degree of leverage the bank is permitted. I repeat, so long as the loans are used to create value, it’s OK to lever that bank up to the moon. When I say “leverage the bank”, I’m referring to the banks’ ability to loan out some multiple of its deposits-on-hand, which is the core concept of fractional-reserve banking.The difficulty comes when banks make dumb investments, which do NOT create value. They have recently shown bad judgment (I’m being polite) in this regard. At the same time, the regulators also made dumb decisions by allowing the banks’ leverage to climb (as far as 30:1, as I understand it).So, the banks made bad decisions, and the regulators allowed the banks to multiply those bad decisions via leverage. That is exactly how we built our credit crisis.The stupidity of the banks and their regulators just provides one more example of the fact that advanced economies are failing to make good allocation decisions.Not only are banks making dumb decisions, but the “Market” at large is, too. Look at the big run-up in bubble-industry equities, followed by (surprise!) a giant crash in those same securities. The market is lamenting, also:”I cannot find a place to make an investment that will create value”.So, not only did the banks screw up, but Mr. “Perfect Information” Market did too, and for exactly the same reason.This is an important point. No one is running around saying “Shoot that greedy, international, black-hearted Stock Market cabal”, although it just lost a pretty good proportion of what the bankers lost for us.Why does Mr. Stock Market get off with only a rap on the knuckles?Part of the answer might be “because the little guy was party to the Stock Market allocation decisions, but was not party to the Banker allocation decisions”. Great, now we have a scapegoat.Are the markets subject to manipulation by big banks? Of course, but how much influence do they really have? Do Bankers tell you what to put into your 401K? No. Did 401K’s get whacked? Yes.So let’s keep our eye on the ball: Allocation decisions.Where does anyone, from Warren Buffet (“I can’t find any companies to invest in”) on down find places to invest?Good question, and still no answer!The reason there’s no obvious answer to the investment allocation question is because we don’t know much about what the economy of tomorrow is going to look like. We only know it’s “gonna be different”.This is why the BrainTrust is spending so much time to understand what the rules of tomorrow’s economy will be. It is impossible to answer the “what to invest in” question until one understands the forces impacting the economy.So when people with the intellectual firepower of NR and PK say amazing things like “I don’t know which sector will provide tomorrow’s jobs”, I take notice.But I’m not going to get too distracted by the manner in which money comes into being. Someone’s got to do it, and right now, that is banks. Maybe we can find someone else that’s better at creating money. Whoever does the money-creation will (still!) have to answer the Big Question:Where do you invest?

Why did the government allow the expansion in leverage from 10 to 1 to 40 to 1? Because the financial industry lobbysts asked for it. They get what the pay for, just like the drug industry, big media, the defense indusrty, etc. They make paltry investments in the form of campaign contributions, then come back around after the elections and reap HUGE profits from their personal government employees when it’s time to write the laws.When are we going to collectively realize that by definition, special interests = the opposite of common interests and put a stop to the ‘legalized bribery’ our political system has become. If enough of us demand it, change can happen, so how about this:IF YOU ARE NOT A REGISTERED VOTER, YOU CAN NOT MAKE A CAMPAIGN CONTRIBUTION!Think about it. No more corporate money, union money, PAC money. None.No more $billion Presidential campaigns and $12 million Congressional races. No more would the airways be filled with slick TV comercials attacking the other side. Suck the money right out of this, and suddenly we get a new class of politician; one more aligned with the original intent of our Founding Fathers – people interested in doing the people’s business, not dancing on the strings of the ‘special interests.’ It is our choice. We have the vote. Sadly though, I fear we are reaping what we deserve as a nation. We did it to ourselves.

In reviewing NR’s input in the above article it would seem that apart from the projection of negative growth in ’09 followed by slow growth in ’10 complimented by +10% unemployment and the necessity of fiscal and monetary stimulus as a remedy, that he is beginning to look at the endgame. That endgame seems to be defined by three difficult options to address the debt arising from the remedy: default; monetize(inflate); increase taxes; and in addition the requirement to implement appropriate regulations.Assuming that the professor is correct that fiscal and monetary stimulus (as applied by the current administration) will be effective and that the appropriate regulatory safeguards will be implemented then what are we left with? According to Roubini we are left with two open questions: “Can we grow in a more sustainable way? And what are going to be the sectors of the economy that give us sustainable, long-term growth?”"Can we grow in a more sustainable way?” is an interesting way to put a question that could have been phrased “‘How will’ we grow in a sustainable way?” Perhaps his second question provides context to the first in that it assumes that there will be sectors that lead to long-term sustainable growth.My question would be: How ‘can’ we grow in a more sustainable way with the shackles of staggering debt in the context of the destructive nature of inflation and/or debilitating taxes that Roubini seems to be projecting? And that question assumes that the stimulus will be effective (and there are questions about that particularly the way it has been designed and implemented) and that the regulatory environment will be cleaned up (and there are even more serious questions about that e.g. Geithner’s latest regulatory gifts to Goldman and friends). And then there is the real danger of protectionism taking root thanks to the stimulus bill’s “Buy America” provision.As for sectors that offer long term sustainable growth, I suppose it would be easy to point to renewable/alternative energy as one, given its ‘political’ priority and apparent popular support or as many would argue, necessity. But as one reviews aspects of “The American Clean Energy and Security Act” there should be cause for concern. In addition to the double taxation created by the combination of cap-and-trade with the recently announced fuel efficiency standards, there will also be higher costs across the economy along with the specter of more protectionism through the probable implementation of “arbitrary” carbon tariffs. And then there is the prospect of a massive new bureaucracy that will be required to manage carbon usage throughout the economy. It may be safe to say that renewable energy will be a growth sector but that a significant component of that growth will be bureaucratic in nature with the (un)intended consequences of protectionism, higher taxation and inflation.In summary, while the efficacy of the remedy (stimulus) is cause for debate, its implementation is cause for concern. Going forward to ask “Can we grow in a more sustainable way?” is probably the operative question as it seems Government bureaucracy itself will be a leading growth sector. It would appear that we are facing a situation in America of limited growth, high unemployment, innovation/growth sectors shrouded in politics/government intervention, bankers continuing to write the rules and the prospect of a trade war and serious inflation on the horizon. And then there’s the dollar.If any here have missed Ron Paul’s speech from a few days ago it is worth taking a few minutes to visit or re-visit.Ron Paul – “Ron Paul – Current Conditions or just a Bad Dream

It’s sad that those who were in a position to make a difference, whether in banking, brokering, the government (including our elected and appointed “leaders”), etc., didn’t have the common sense or decency to stop these practices.

ob, ( apologies , i rant )may i say i always enjoy your comments, thoughts,questions, observations etc.. unique genius i say..the idea of allowing the creative destruction mechanism (contraction) to operate has been deemed a matter of national security and has been disabled.concept of “market” destroyed in the name of national security. ?.where to invest? always the same answer. the future. speculation in time. vision of what could be in the future. what does this mean? returns maybe a few generations in the making…it means man or men or woman or women or humanityhas to have a vision of what IS not, but what WILLbe. this is revolution. to look at the world andsay what i see before me will be demolished, intentionally, and we will build something that someone has seen in a vision and communicated to the rest of humanity..that something to be built could be anything andsatisfy the needs of investment of a fiat currencybut to satisfy the needs of humanity it has to bebrilliant. to be sustainable it has to conformto the capacities of man and his mind and the earthand its ecology. the solar system and its energy..etc..etc.. we need to be brilliant now..money is a contrivance to facilitatesocietal intercourse, a lubricant and nothing more.the tools and resources of man and mind? knowledge,wisdom, observation, analogy and technology. thesevaluable essentials are currently being smotheredby our fundamental contrivance and restrictive delimiter, fiat currency, but necessity is the mother of invention..ponzi pyramids. they work fine until you run outof greater fools. in service of what? return onpaper with more paper backed by a promise of more paper. great economy but it is all on paper.i cannot get around the mathematic certainty thatterminal debt is the final phase of FRFRLI andthe insidious effect its propagation has on thevaluable and essential talents latent in a population that becomes enslaved under its tyrany.how is this infliction accomplished? through thepricing mechanisms in the market place and the demands applied on the agents in that market placeresulting in conformity to the existing paradigm.a seed produces a tree and you know the tree by thefruit (which contains the seed). pine trees haveno capacity to produce apples and should one formin place of a pine cone there would be hell to pay in the universe!the reason no one knows where to invest is becausethere is no place left that has not been “inflated”and cosequently,is not either economically deflating or off limits to the influence of FRFRLI.money is debt. they created it but they neglectedto create that “something” that can satisfy the demands of debt. we see this now, creating debt into the future(public) to satisfy the (private) debt of the past and present. our conundrum; what is the debt carrying capacity of the future generations? this is not some future state of oursystem, it is our current reality and it not only makes no sense, it is insane and is revealing,it speaks directly to our incompetence……………………further thoughts….what is the problem?round holes will not accept square pegs. so whereare the round pegs?they are engineers employed as clerks. philosophersand poets employed as clerks. scientists and artists and visionariesemployed as clerks. and..clerks employed as leaders and teachers and administrators.craftsmen and artisans financially wiped out dueto the forces of subsidized “globalization” andthe “free” flow of capital….why?because no one wants to fight the status quo or upset the powers that be, the money monopolies.the credit limit has been spent. we spend credit,not money, and there is no more. that is the system.and talent and time are misspent trying to solve imaginary financial problems that have no basis inreality or the real economy. it is absolutelymind numbing and should lead any sober person directly down the path of alcoholism..semi related thought….currently the project to rebuild the site of theworld trade center in down town manhattan, the 911site, is stalled due to finance problems. who isto pay for the construction, who is to benefit andi suppose the ongoing debate/negotiation what exactly is to be built? of course the story isinfinitely complex and mostly intolerable but iask… does it make even one fragment of a bit ofsense to build more high rises in a city thatis energetically unsustainable, suffering a glut ofvacant commercial real estate and is already broke?.it is revealing. the location of the heart and “soul” of “free market capitalism” is currently alarge and controversial hallowed hole in the ground and only a shadow government authority would waste taxpayer money on new construction so poorly conceived. it is time for those whose dreams are predicated on the nightmares of others be woken from their slumber, that cold water mentioned above..what will it be? a twisted edifice in honor ofa vestigial organ of the once human male anatomy?with lots of smoke, mirrors and glass, maybe someimported stone?.the power of nightmares…http://www.youtube.com/watch?v=Qk1WkmioQvA

http://dollardaze.org/blog/Inflationism's Seductive Battle CryBy Doug Noland“May 19 – Bloomberg (Rich Miller): “What the U.S. economy may need is a dose of good old-fashioned inflation. So say economists including Gregory Mankiw, former White House adviser, and Kenneth Rogoff, who was chief economist at the IMF. They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now rather than later when prices go up. ‘I’m advocating 6% inflation for at least a couple of years,’ says Rogoff…who’s now a professor at Harvard… ‘It would ameliorate the debt bomb and help us work through the deleveraging process.’ …Given the Fed’s inability to cut rates further, Mankiw says the central bank should pledge to produce ‘significant’ inflation… That would put the real, inflation-adjusted interest rate…deep into negative territory, even though the nominal rate would still be zero. If Americans were convinced of the Fed’s commitment, they’d buy and borrow more now, he says… In advocating that the Fed commit itself to generating some inflation, Mankiw… likens such a step to the U.S. decision to abandon the gold standard in 1933, which freed policy makers to fight the Depression… Inflationary increases in wages — and the higher income taxes they generate — would make it easier to pay off debt at all levels. ‘There’s trillions of dollars of debt, in mortgage debt, consumer debt, government debt,’ says Rogoff… ‘It’s a question of how do you achieve the deleveraging. Do you go through a long period of slow growth, high savings and many legal problems or do you accept higher inflation?’”I think it is important to remember, Obama said many times that income for Americans need to rise.hlowe

Well,yes “11B40″,I second your motion.That is the crux of the matter.There are all sorts of American,s with the knowledge/experience/training to fix both the “Political Problem” and the “Economic one”,but where is the “Public Interest” in the Federal Houses.It died some years ago.Sadly the average American is simply outvoted by Banksters money at election time and afterword.There is no reason why the financial institutions cash contributions should not be limited to $100,000,for example……Why did Fanny May/Freddie Mack donate $8 Million to Obama and $6 Million to McCain ? What is the reason ???????Except to legally scam the system.

http://maxkeiser.com/2009/05/23/on-the-edge-with-max-keiser-22-may-2009/This will be enjoyed by most. (include Marc Faber)hlowe

A Katrina of foreclosures hits New YorkBy Jerry MazzaOnline Journal Associate EditorMay 22, 2009, 00:30..http://onlinejournal.com/artman/publish/article_4731.shtml….“Despite the world-heralded election of a black president, some things don’t change. And not only does foreclosure take the heaviest toll on counties with black and Latino majorities, now the Katrina of foreclosure moved north to the New York region with devastating results, as reported in The New York Times, no punches pulled.The article by Michael Powell and Janet Roberts opens with a jolt: “Turn the corner on 145th Street in Jamaica, Queens, and it is as though a cyclone has wheeled through. One resident, Lakisha Brown, a hospital worker and mother of two, snatched her house back from foreclosure last month, if only temporarily. ‘We needed to sell fast,’ she says. ‘I’m just trying to save what’s left of my credit.’“Across the street in this black middle-class neighborhood, Patrick Nicholas, a surgical technician in blue scrubs, shakes his dreadlocks and shrugs. He rents but is moving out. ‘The owner got foreclosed and told us to leave,’ he said. Six doors away, past two foreclosed and boarded-up homes, a burly man in a blue union jacket declines to give his name but his problem is evident. A foreclosure notice is pasted to the door of his house. His tone is mournful. ‘Tough times, man,’ he says, ‘Tough, tough times.’”Catastrophe is more like it as the foreclosure storm swept through the New York area at an explosive speed in just two years, wrecking billions in housing wealth as per a NY Times study of foreclosures filed since 2005 as well as federal mortgage data. It seems we put one black family in the White House and thousands more into Nowhereville. This affects white families as well, even in hoi polloi estates on the Connecticut Gold Coast and suburban tracts of Long Island. Here 6 percent of all mortgage payments languish at least 90 days late, the point foreclosure mayhem begins.”"

a should read from CRGeithner Blames Borrowers and more, but not Regulators for Bubblehttp://www.calculatedriskblog.com/2009/05/geithner-fails-to-correctly-describe.html

Any notable “downward spiral” on this blog appears to be the product of a libertarian rant, if anything. Screaming with indignation doesn’t make one right. Making bald hyperbolic assertions without supporting facts is just a matter of uninformed opinion as far as any objective observer is concerned. When there is a complex problem to be faced, trying to find a convenient scapegoat (the Fed, “socialism,” bankers, fiat money) won’t serve any useful purpose, either, apart from merely satisfying some visceral craving to cast blame on others for the injustices and inequities one perceives to exist in economics, politics, and indeed, life itself.>”Working classes who paid and pay for all….”In the first place, the burden of this downturn does not fall exclusively on members of the self-styled ‘working class,’ some members of which insist on overvaluing their own contribution to the economy and to society at large.>”…shoving free money to the private insurance profiteers, the crony corporados and their crooked [C]ongress, the banksters, the tax cheats, and the military [industrialists]…”It’s all so unjust. If only it were true. Guess it would be better for the government not to engage in any stimulus spending and let the entire economy go into the toilet. Boy, that and the ensuing 50%+ rate of unemployment would sure help the working class.>”The Federal Reserve is the starting point of the present financial crisis…”No. The present financial crisis had its origins in the relinquishment of government control over the financial sector (e.g., the de facto abandonment of usury regulation), allowing the financial industry to grow from about 5% or GDP to roughly 25-30% of GDP in 30 years, and thereby creating an environment in which individuals and businesses alike were encouraged to over-leverage as standard operating procedure. The Fed merely contributed — mainly during the Greenspan era — to the overall laxity in regulation of banks and shadow banks.>”…nationalization of these banking behemoths which will give them even more control over rule of government.”So, you’re saying that the banks would have even GREATER control over the government if the government were to OWN them? Interesting logic. I assume you think, like Brer Rabbit and the briar patch, the ABA and its members are feigning fear of being nationalized, that all being part of their secret plan to gain totalitarian control the wheels of government?>”The Fed is passing the staggering cost of its fiat money creation on to the public, in the form of inflation.”First, we haven’t really seen any substantial inflation yet. Japan still has an essentially deflationary economy after roughly 15 years of zero and near-zero interest rates, which is where the U.S. is now. Inflation is the last thing we need to be concerned about in a downturn of this magnitude.Second, at least with a central bank like the Fed and a system of fiat currency, control can be exercised over inflation. That’s not the case with representative money (e.g., tied to a gold standard), since inflation becomes an arbitrary function of the amount of the commodity produced to which the currency is tied. Who the hell wants that?>”…increasing government power…is leading into totalitarianism.”Ah. So the root of the problem lies both with the unelected and unaccountable powers taking all that “free money” (“the private insurance profiteers, the crony corporados…, the banksters, the tax cheats, and the military [industrialists],” blah, blah, blah) AND with our elected and accountable representatives (“the crooked [C]ongress”). Seems to me, though, that government power is the only force capable of countering undue influence by private industry, and weakening the power of our duly elected government will only enable further abuse of the little guys by the elite few.>”[T]he Fed is an instrument of totalitarianism.”This would be the same totalitarianism by which we are able to voice our opinions on this blog, and by which we are free to exercise the full panoply of civil and political rights guaranteed under the Constitution? Just how is the Fed regulating, or contributing to the regulation, of every aspect of our public and private lives (i.e., being, or contributing to, totalitarian control)? Would you rather eliminate the Fed and give bankers complete freedom to do whatever they want to do? THAT would be a BIG improvement (when pigs fly).>”The Fed was created by Congress. It is time to kill it. If Congress won’t kill it, it’s time we killed Congress.”Do I understand you to be advocating the abolishment of the Fed, and if Congress won’t abolish the Fed, that we should then abolish Congress? Oh, that would make all our lives better and give us more control over the enumerated evil-doers you identified earlier in your post. How is it, exactly, that we eliminate the threat of totalitarianism by eliminating the institutions of our democratic republic? Oh, I forgot. We have to burn the village in order to save it. Duh! Or perhaps (I hope) you are only suggesting that we hold our elected representatives accountable. Good idea, that. It’s our government, after all, and we need to take responsibility for it or we deserve the very totalitarianism you fear.SWK

By the way, in 2007, the median annual household income rose 1.3% to $50,233.00 according to the Census Bureau.

rules were written that put the CDS holders in first position. And since they are largely the usual suspects of TBTF banks, they will probably come out clean, at the expense of everyone else.

http://www.brookesnews.com/092505obamaspending.htmlReally, Paul Krugman needs to get out more. What a CROCK: Savings Glut.I am saving. I am investing but in gold related investments. The very policies that Govt’s are enacting world wide scare me to death because THEY ARE SPENDING BEYOND THEIR MEANS. That invites a variety of catastrophes on me;- default- monetization- major tax increases- currency debasement- (hyper) inflation- economic collapseSpending myself into poverty is not an option I will willingly take. Is that too illogical for Krugman to comprehend?What do I want to see before I stop my terrible saving habits?1) An END to absurd levels of Govt spending.2) Wind up the insolvent banks.NOW. Ones left standing must be transparent in their balance sheets and plans to recapitalize with clear measurable and publicy accessible milestones.3)Reign in the money supply. Monetizing debt and exchanging crap for Taxpayer IOU’s must stop.4)Impose commonsense capital reserve ratios on all Banks. 10:1 sound right to me – as a MAX- depending on the quality of assets held. Fully audited and publicly accessible.5)Most Important: AUDIT the US Fed and impose strict and enforceable curbs of the Fed’s use of powers so that activities are beholden to clearly agreed Govt guidelines for money supply interest rate policy and the Pvt Debt to GDP ratio.I am going to continue in my savings mode until I can see sustainable economic growth emerging. Because as long as the current policies are in force, I KNOW lower asset prices, higher unemployment, lower economic activity all lie ahead.How do I know this? Because 3 very important things are rapidly diminishing in our consumer and services jobs dependant economy.1) The collateral with which to borrow against is collapsing(asset prices)2) The means by which the Debt is to be paid or credit to be obtained (Jobs and incomes)3) the prospect of a comfortable retirement for Baby Boomers.Now you can spin that and BS those circumstances all you like, but the laws of mathematics simply state that no sustainable recovery can occur when nett incomes and consumer credit are both in rapid decline while Boomers are confronted with almost half their wealth destroyed.NR’s hopes for a sustainable recovery in 2010 are very optimistic in my book. It can only be achieved by creative accounting which rules out +- 1% GDP growth . The world economy is resetting to a (much lower) level of economic activity that is commensurate with the level of incomes ,asset appreciation and the credit levels that they can sustain. Until that equilibrium is reached, the trajectory for economic growth is DOWN.

I think that the reference to “sustainable growth” is on a macro level (not micro- alternative energy level). As such, as I and many others have repeatedly pointed out), it is not possible, not a finite planet.Please people. I dare ANYONE to get this question posed to Noriel. I’ve been challenging him on this for an eternity now. It’s almost like a taunt, this phrase now popping up as though it can be achieved! It’s like pretending that gravity doesn’t exist!Mark

Those people who say that the U.S. government has no “right” to collect taxes on peoples income, are they basing their point of view on the tax-related clauses in the U.S. Constitution?The reason I am asking is because I would be surprised if U.S.A did not have some sort of a law (even multiple such) that says that people have to pay income tax.

All of the formal debate assumes that the crisis is centred on the US. It is recognised that that there is a problem in Europe and some spill-over effects on Asia. The role of financial imbalances gets a mention (eg the fact that the US has borrowed heavily from export-driven Asian economies).However what does not yet seem to have sunk in is that in the post-GFC environment when the US can no longer be ‘the consumer of last resort’ East Asian export-driven economies may have no where to turn because of obscure features of their economic methods – and that this may generate another stage in the crisis (see AreEast Asian Economic Models Sustainable?)

As a saver, I don’t appreciate having the value of my savings eroded by inflation and I’m not about to go on a spending binge to buy cheaper today what I can do without until tomorrow. If anything, inflation will give me incentive to tighten the belt further. I don’t see shell-shocked consumers with massive credit card debt or the unemployed spending either. You can’t get blood from a rock. And how does this help the job market? An increase in wages here spurs job movement to other countries. So what does this do, reignite the real estate bubble? In some ways, deflation takes from the profligate and gives to the prudent.

no doubt we will see improvement from the lows but likely to be a “W” recovery over several years if we’re lucky (otherwise an L for a decade)and ECRI’s analysis must be taken with a grain of salt as the complexity and dynamics of globalization have never been as great as they are now. Nice of you to check in O!

“How does anyone justify SOCIALISM FOR THE RICH???..Tell me I am wrong!..” Answer: YOU ARE WRONG-this is just plain old GRAND LARCENY legalized by our government without the public’s consent and placed on the taxpayer’s back for the next 20 years!

You almost get it, but not quite. There is no reason that Fannie or Freddie should be allowed to contribute ANYTHING, let alone some arbitrary number like $100,000. For our laws to have alowed “entities” to become as citizens is criminal and contrary to the intent of the promise of our constitution to establish a government by, for, and of the individual citizens. One man, one vote – not one corporation or one PAC. Get all of this Special Interest bribery out of the equation – ALL OF IT. There is no way individual citizens can stand a chance against organized onslaughts from Special Interests with seemingly unlimited funds and that are more than willing to buy pandering politicians. They (politicians) have proven over and over again that they cannot resist the temptation. Allowing this perversion of legalized bribery is the equivelent of building on a crooked foundation. The taller the structure, the weaker the whole thing gets, until it finally collapses. Our structure may have already reached a point where it can no longer be supported.

Irwin Schiff is an idiot and a scofflaw. He’s been spouting his quack legal theories about the federal income tax since the early 1970s, and over the years since has been charged with numerous federal crimes relating to his activities and convicted by a jury of his peers repeatedly. The reason he’s currently serving a 151-month in a federal penitentiary is that he was indicted and convicted by a jury in 2005 of multiple counts of filing false tax returns from 1997 through 2002, aiding and abetting others to do so, conspiring to defraud the U.S. government and evade the payment of his income taxes. He’s not in prison, as you suggest, “basically for refusing to stop talking about his income tax theories.” Those of us who work hard and pay our taxes to support our duly elected representative government are righteously offended by arrogant freeriders like Schiff who don’t respect the Constitution or accept the judgments of our court system.Land of the flea, home of the knave, indeed. Fleas are notorious bloodsuckers, and the term ‘knave’ is often used to describe crafty but unprincipled persons. Sounds like a good description of Irwin Schiff.SWK

Thanks again Hayes!The problem is that the bailout trillions have not reduced the debt overhang for the borrowers and interest rate and taxes will have to increase. If we go the route of suspending the “economic stabilizers” that maintain civility in this society,we are toast. We will have to worry about kidnappings for ransom! The ascending jobs will be security for the rich. Crime will propagate. We do not have the economic stabilizers that the Germans have. California is already debating dismantling welfare for families.Do we want to be Lagos, Nigeria??? Krugman talks about this today in his column. The professor was very adamant at the beggining of this crisis about addressing the DEBT OVERHANG. I know that at his level, tilting at windmills is not viable,but the professor I know understands that we are going to reach a CIVIL DYSTOPIAN POINT.Professor:Somebody at your level has to lay out the CivilDystopia scenario. We must force the debt holders to take haircuts and give debt relief to the normal working American. We must tell them that it is in their self interest for civil order to be maintained without having to run a police state. We need a combination of Teddy and FDR to control the present flow of the speculative capital dominance of government. I just saw a chart of the Alt A and Option Arm resets, and I know the default rate on loans where income was stated. I have done the math and the foreclosure rates will be higher than expected. We need a HOMEOWNER’S LOAN CORPORATION debt overhang reduction program immediately to prevent the civil dislocation and the destruction of civil society. Their is “MORE MORTGAGE MELTDOWN TO COME”and all other categories of debt default are exploding. Their are no jobs and the manufacturing base cannot be brought back instantly. RADICAL ECONOMIC ACTION does not mean bailing out the banks. On the contrary, the bank bailouts may have sealed our fate.

Perhaps a better name for “The Crisis and How to Deal with It” by Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, Robin Wells et al. would be “The Death of a Market System.”The point is, Bradley and Soros and Krugman and his wife Robin Wells, a fellow professor of economics at Princeton, are on the Obama team, all advocating central planning. They have a political agenda, uniting as politicians on political policy trying to save Obama.Former U.S. Senator Bradley is not an economist; he is a politician who once ran for president as the liberal alternative to the left of Al Gore; Niall Ferguson, Harvard’s Tisch professor of history and Ziegler professor of business administration and author, is his own global empire. Soros (aka György Schwartz), the leading moneyman behind the left wing edge of the Democrat Party (MoveOn.org, ACORN and Podesta’s CAPS, etc.), is an international bad boy, who engaged in dirty tricks to elect Obama. The way he operates, it’s surprising his passport allows him to travel abroad.For Nouriel Roubini, who has superlative credentials in economics, to tarnish his reputation by association with these people is a subtraction from his credibility.Where is the economic viewpoint in all this central planning hyperbole that gives even a glimmer of hope that they have a market economy in mind? Their views espouse a guarantee of the current banking system that got us into this crisis, taking the word of corrupt bankers, of self-serving opportunists. Americans have got to do something basic—fast–if they hope to avoid an economic Armageddon and restore even a shadow of this once vibrant market economy.Krugman says, “If the private sector won’t do it (spend), the government will… [T]he Federal Reserve is…playing the role the private banking system is no longer playing properly…the federal government is playing the role that businesses are not now willing to play…”Have we got an economy? Then where is it? Krugman seems to say, we’ve taken the savings and the money that you people wouldn’t spend, so we spent it. He thinks this is the perfect system. But it isn’t working. And it never did.For many months now, there’s been massive government intervention, completely bypassing the market system. Where are any results? And, now, the intervention commandos have additional expert advice: more massive intervention.Soros, in his book “The Age of Fallibility,” wrote, “The main obstacle to a stable and just world order is the United States.” He announced in 2003 that it is necessary to “puncture the bubble of American supremacy.” In the Atlantic Monthly of February 1997, he wrote, “The main enemy of the open society, I believe, is no longer the communist but the capitalist threat.”At least we know the road down which Soros intends to take us.

Doctor DoomDon’t Believe The OptimistsForbesNouriel Roubini, 05.21.09, 12:01 AM EDTThink you see green shoots? You’re wrong …http://www.forbes.com/2009/05/20/depression-recession-green-shoots-housing-jobs-opinions-columnists-nouriel-roubini.html

When Dr. Krugman speaks about a savings glut, in the current post, at least, all he is really referring to is the relative disequilibrium between savings supply and investment demand.SWK

My contacts in CA report similar findings and my teenage daughter and friends say the malls in N.E Florida are also busy-BUT, that’s just this weekend. On the other hand, Walmart is constantly busy (year round) with people buying NON-ESSENTIALS and I really believe that many people just can’t control themselves when it comes to purchasing as long as they have cash or credit available: if this is the case and it truly is an addiction, then I believe the wide “U” shaped recession will morph into a more extended “W” recession as we experience a jump up in growth during the next 3-6 months, followed by a drop back down and a prolonged negligible growth period which will eventually recover and finish the last leg of the “W” or remain flat like an “L” for many years. Of course, the unemployment picture is a crucial factor, but who’s to say our govt isn’t going to create non-productive jobs to temporarily “take up the slack” until real innovation and productivity returns.

A superb post, kilgores. Don’t stop now.

Even the dissenters don’t get itquestioneverythingThere is a fascinating article in the New York Review of Books, The Crisis and How to Deal with It. It is a panel interview with Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, Robin Wells conducted by Jeff Madrick. In essence these are the economic luminaries who have been critical of the administration’s policies (both fiscal stimulus and monetary) in one way or another. They can’t really agree among themselves either!They each give their take on the ’causes’ of the current economic meltdown and the financial crisis attending it. Each has a slightly different perspective, but what is absolutely clear is that they all look for ‘internal’ causes. Several point our over leveraging and a few mention various forms of confidence (a psychological factor). They all agree on various ‘trigger’ events as setting off the collapse. Many of them agree that there might be some slow recovery in the economy but differ in amount and timing.But not one of these bright lights considers that the root cause might be something entirely different from all the usual neoclassical suspects. Not one considersBut not one of these bright lights considers that the root cause might be something entirely different from all the usual neoclassical suspects. Not one considers that the actual cause of this debacle is the fact that less real physical (economical) work is being done because there is less net energy available with which to do it. The debt was definitely a factor in the rate and severity of the collapse since debt since at least the 1970s has been built up against a presumed future of production sufficient to pay back both principal and interest. But also since at least the 1970s the net energy available for non-energy extractive economic work (meaning other resource extraction and refining, manufacturing, and all of the service work) has been in steady decline (see: What counts as real wealth). In other words, the world has been decreasingly able to do the work necessary to service and retire that debt. Yet debt financing became the only way anyone could see to keep the engine running. News flash for economists: It isn’t dollar bills that power your car, it is gasoline. When the latter is starting to diminish in availability it takes more of the former to buy the same amount of power. You guys should know that!The one thing they all seem to agree on, even if implicitly, is that a recovered economy means that the GDP is once again growing and that jobs are being created. That, to them, is a healthy thing. Never mind that the GDP grows because people are buying useless (or wasteful) stuff and consuming it so as to buy more. Never mind that the majority of jobs being created are to make and sell useless stuff. Or to flip hamburgers and deep fry french fries to make more Americans obese. Never mind that a significant fraction of the GDP is based on money spent for repairing damage (like rebuilding after Katrina), or replacing Hummers and helicopters lost in Iraq (or more macabre – paying for funerals of fallen soldiers). If it is growing it is good.What an incredible grave we have dug for ourselves. And here is the kicker, like AIG or BofA or GM, the world economy based on borrow-spend-consume is too big to fail! We have to keep going or else. We have to keep borrowing or else. We have to keep creating meaningless jobs or else. No one is capable of seeing any alternative even when they all realize that in the long run it will fail catastrophically!It will fail sooner than later because we are running out of net energy. Left to the private sector (with a few scraps of incentives here and there) the build-out of alternative, renewable energy infrastructure is simply not going to happen fast enough to cover even a small fraction of what we are losing to post-peak oil decline and diminishing energy return on energy invested (EROEI). Right now the governments of the world should be alerting their publics to what the truth is regarding our economic options (there really aren’t any but one at this point) and directing every financial resource into constructing alternative energy infrastructure while restructuring society to live in a far lower energy economy (see: Our energy cocoon). Of course this will be politically difficult. In democratic nations no politician dares tell the truth (even if they knew it) realizing they would be booted out of office for telling people what they don’t want to hear. It’s a tough problem and may end up being democracy’s greatest failure. Especially since our education systems have done such an incredibly bad job of truly educating people [we want students to learn more math but we don't need them to understand how to use the math to grasp this kind of problem!] (see: Is it time for Education 2.0). Poorly educated citizens can’t truly understand the problem let alone the solution. And this is one problem/solution that cannot be captured in a catchy sound bite.Well the economic ‘illuminati’ will continue to debate about causes and effects in their closed-world model. They will not consider that their entire world view is based on a fallacy — that the human economy is a closed system and that all that counts is money (fiat or otherwise). Ah, the failings of human wisdom. More proof that you can be a genius, even a Nobel prize winner, and still not understand the big picture. Good luck Homo sapiens.

“Have I got an office tower for you”Skyscrapers across the U.S. are being sold at fire-sale pricesMay 23, 2009 (AP) NEW YORK – The 40-story skyscraper sits on a prime corner in the country’s wealthiest commercial market, steps from the Museum of Modern Art and a few blocks from Rockefeller Center and Central Park.It recently sold for $100,000.The 1330 Avenue of the Americas building — which sold for close to $500 million three years ago — was auctioned last month for the minimum to a Canadian pension fund unit after owner Harry Macklowe defaulted on a $130 million loan.A month before that, the John Hancock Tower — Boston’s tallest skyscraper — sold at auction for just over $20 million. The 33-story Equitable Building in downtown Atlanta is set to go up for auction next month; its owners owe more than $50 million to the bank and have only half of the building leased.Loan defaults in the worst commercial real estate market in decades have created tens of billions worth of distressed properties across the nation, sometimes forcing cut-rate auctions of landmark skyscrapers. Developers are falling behind on mortgages as tenants leave and can find no financing to cover payments, analysts say.So they are selling skyscrapers at a drastic discount, with the condition that the new buyer take on the enormous amounts of debt connected to the properties.”Just imagine in a residential market, if there weren’t 80 percent loans available for everyone. If everyone had to buy their houses in cash, the values of houses would plummet everywhere,” said Dan Fasulo, a managing director at Real Capital Analytics. “That’s happening on a massive scale on the commercial side.”The Hancock Tower and the Sixth Avenue building are the first of a wave of foreclosures and auctions expected in the next year that will slash sale values of formerly prime real estate, analysts say.”This is a train wreck that’s coming in the large office towers,” said Matthew Haines, chairman of the Propertyshark.com real estate Web site.Real Capital Analytics, which tracks commercial real estate transactions, counted over $86 billion worth of distressed properties in the country as of April, over $6 billion in Manhattan.In New York City, addresses in “serious jeopardy,” Fasulo says, include a 23-story Moinian Group skyscraper across from the New York Public Library that sold for $160 million two years ago, and an office building a few blocks away on Fifth Avenue that Moinian and Goldman Sachs’ Whitehall group bought two years ago.Several construction sites that have shut down are also facing foreclosure threats without new financing, like a hotel-condo project with a Robert De Niro-backed Nobu restaurant under construction in lower Manhattan.Many of the towers that are likely to go up for sale were bought at inflated prices during the boom three to five years ago and could lose over half their value at sale, analysts said.Macklowe bought the Sixth Avenue building in 2006 for $498 million, taking out $130 million in short-term financing known as mezzanine loans that bridged the gap between the equity side and the debt side.The loan was sold to Cadim, Canada’s largest pension fund, and transferred to the subsidiary Otera Capital. Otera took over the loan and the tower’s $240 million mortgage. The building, in the middle of the country’s most lucrative commercial district, is two-thirds leased; its most prominent tenant is the Financial Times newspaper, sporting a pink `FT’ logo on its rooftop.”We had some confidence that the building is a good building, and with patience we would be OK,” said Marie Giguera, an Otera vice president.Macklowe Properties didn’t return calls for comment.The Hancock Tower lost half its market value after its auction in March from former owner Broadway Partners, a partnership of Normandy Real Estate Partners and Five Mile Capital Partners.The 60-story tower was bought in 2006 by Broadway Partners, which invested billions into office towers around the country in the past few years. The company often relied on financing from now-bankrupt Lehman Bros.Normandy and Five Mile — which had stakes in some of Broadway Partners’ debt — took on $640 million in debt, valuing the building at $660 million.The building sold at a far steeper discount than the average drop in commercial prices in the Boston area, said David Geltner, research director at the Massachusetts Institute of Technology Center for Real Estate.The center said last week that commercial property sales in the first quarter fell by 6 percent from the end of last year, and were down 21 percent down from the same period a year ago. And on Wednesday, the National Association of Realtors said its index of commercial brokerage activity fell almost 13 percent from a year ago.Sales volume is “historically low. It has never been this low,” Geltner said.The only major property sales that are likely in the next several months, analysts say, are distressed properties with delinquent loans.”No healthy owner in their right mind would try to sell a property in this environment,” said Fasulo. He said devalued sales of skyscrapers represent “a trickle right now. It will turn into a flood over the next 12 months.”http://www.msnbc.msn.com/id/30850817//

@PeteCAI posted my question earlier but no one seems to respond. As you know poor countries are in a strangle hold of IMF and World Bank beacause they hold their debt in $. Please shed some light on the implications of declining US $ on the debt these poor countries hold. We also know these countries spend significant amount of GDP on just making payments on this debt. so will collapse of $ have a positive impact on them? Thank You

Well,yes 11B40,you hit the nail on the head……ONLY PEOPLE VOTE IN A DEMOCRACY -NOT A CORPORATION…….Corporations vote with their money ,not by ballot.On second thought ,I agree totally NO ELECTION CONTRIBUTIONS by Corporations ,if the PUBLIC are going to speak to power(Our elected representatives).In fact this is the case in several countries now .This is not a new concept. Some countries actually provide to a major degree,on a per capita basis,campaign funds based on the last election vote percentage per party.Not a perfect solution,but beats the “Multinational Corporation Monopoly Vote” ,as at present…The public now have no hope ,they just get outbid directly at election time or indirectly by the lobby power group afterwords…..Nothing new ,but how do you change it ?????

reference peter ca, prior thread…JESUS OF SUBURBIAby James QuinnMay 19, 2009…..http://www.financialsense.com/editorials/quinn/2009/0518.html…“..”..”The lies we’ve been told by government, corporate America, and the media are no worse than the lies we’ve told ourselves. We have tripled the size of our houses, and reduced the sense of community in our nation. Many have perfectly manicured lawns, polished appliances, 12 spotless rooms and dysfunctional, aloof, joyless lives. A McMansion, stainless steel appliances, 6 flat screens, and granite countertops do not guarantee happiness. When all of these items are bought on credit, you have a tragedy. America has degenerated into a materialistic, corrupt, me first, soul-less society. Nobody is right. Nobody is wrong. Everyone deserves to win, even if they made horrible decisions. Unless this changes soon, this country is doomed. By 2020 the United States will essentially be an old aged pension fund with an army.The time for fraud, lies and deceit are over. Anyone within the banking industrial complex, from CEOs to loan officers that committed fraud must go to jail. If individuals lied on their mortgage documents, they should be prosecuted for fraud. If Hank Paulson and Ben Bernanke told Ken Lewis to lie, they should be prosecuted. If you borrowed too much and can’t make the payment on the house you are occupying, move out. You lose. Let prices fall to bargain levels and the winners in society who didn’t take on 150% leverage will buy the houses. A twenty year period of economic stagnation may be the best thing that could happen to this country. Saving would again become a virtue. Materialism would be ridiculed. Homes would be a place to live, rather than an investment. Truly important things like family, friends, community, trust and faith might take precedence once again. Or we could go on flipping houses and keeping up with the Joneses. What would Jesus of Suburbia Do? “

http://www.youtube.com/watch?v=BUC7Nu76VFM

I thought it was called fascism…

yes folks I know many of you are talking about the coming collapse of the US dollars. I personally am of the opinion that if the fundamentals were properly applied to the US economy, the dollar would have collapsed already. The problem is, I do not think it will collapse even in the near future. And the reason for this is not the soundness of the US economy.But I would rather say it this way: let’s wait until this December. If the dollar has not collapsed (which I believe will be the case), what would be the reason for it? Likely nothing else than either some sort of international agreements of ‘let’s keep each other afloat’ or something along that line. That possibly coupled with e.g. that US banks with branches abroad keep buying the dollar.In fact sometimes a representative from a US bank comes with statements about how the country (that the branch is located in) is going to buy US dollars. But in reality no one outside the bank really knows who customer is in behalf of whom the bank is purchasing money…

What are US citizens suppose to do?US citizens can’t even get its government to stop illegal detentions. US citizens have to accept a Kafka-esque health care system, because they’re told the alternative would be a Kafka-esque health care system.

Thanks subgenius. It’s nice to know that there’s someone else out there that gets it. BTW – it’s “cheap energy” that’s running out, not plain old “energy” (there’s been this troll ["guest'] who has been squawking that energy is infinite, which it is, but THE issue is EROEI [Energy Return On Energy Invested], something that Tools never wish to address).Mark

Niall Ferguson:”After all, $1.75 trillion is an awful lot of freshly minted treasuries to land on the bond market at a time of recession, and I still don’t quite know who is going to buy them. It’s certainly not going to be the Chinese. That worked fine in the good times, but what I call “Chimerica,” the marriage between China and America, is coming to an end. Maybe it’s going to end in a messy divorce.No, the problem is that only the Fed can buy these freshly minted treasuries, and there is going to be, I predict, in the weeks and months ahead, a very painful tug-of-war between our monetary policy and our fiscal policy as the markets realize just what a vast quantity of bonds are going to have to be absorbed by the financial system this year. That will tend to drive the price of the bonds down, and drive up interest rates, which will also have an effect on mortgage rates—the precise opposite of what Ben Bernanke is trying to achieve at the Fed.”I predict that fiscal policy will win out as Ben & Co. will eventually come to the realization that it’s futile to attempt to prop up the housing market. The demand vis a vis qualified borrowers just isn’t there.

It’s very simple. The people you see out and about, buying still, are the same people who doubt the data and believe that the news outlets are milking the doom & gloom. They are the same people who won’t believe there’s anything seriously wrong until it literally hits them where it hurts, which generally starts in the wallet and works its way out to food, shelter, etc. And let’s face it–habits are, by their nature, hard to break.

regarding options, you say there aren’t any but one. And that is…?

It is also important to note that commodity countries will benefit vs production countries.

Except perhaps in those cases where the commodity countries are in Africa and the prices for their commodities are set in the western countries.

People are only buying what they need. what people are doing is waiting for huge holiday sales for things they need, and then they go dormant again until next the holiday sales. Also it is inventory dumping going on and what is selling at these low prices is not generating any margin for any of the stores or producers. Also malls have always been a good place to go when one has ntohing to do. Window shopping is a hobby by itslef for most americans, but Most are learning now to not spend unless they need somehting. Again, how many pairs of shoes, clothes, TV’s, comouters,phones, Electronic crap, do people really need?Housing still tanking, CRE on verge og imploding, No help For CA fRom the FED, unemployment rising, and msot importantly NO JOBS being created. this is lull in “BAD” news, but anyone who goes by what the Stock market is doing and what the pundits on TV are saying will be hit hard if they dont save and prepare… Lots of sucker punches and Gotcha’s coming for americans who think things are better…

Good article…Op-Ed ColumnistState of ParalysisPAUL KRUGMANPublished: May 24, 2009California, it has long been claimed, is where the future happens first. But is that still true? If it is, God help America.Fred R. Conrad/The New York TimesPaul KrugmanThe recession has hit the Golden State hard. The housing bubble was bigger there than almost anywhere else, and the bust has been bigger too. California’s unemployment rate, at 11 percent, is the fifth-highest in the nation. And the state’s revenues have suffered accordingly.What’s really alarming about California, however, is the political system’s inability to rise to the occasion.Despite the economic slump, despite irresponsible policies that have doubled the state’s debt burden since Arnold Schwarzenegger became governor, California has immense human and financial resources. It should not be in fiscal crisis; it should not be on the verge of cutting essential public services and denying health coverage to almost a million children. But it is — and you have to wonder if California’s political paralysis foreshadows the future of the nation as a whole.The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.The result was a tax system that is both inequitable and unstable. It’s inequitable because older homeowners often pay far less property tax than their younger neighbors. It’s unstable because limits on property taxation have forced California to rely more heavily than other states on income taxes, which fall steeply during recessions.Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends.For California, where the Republicans began their transformation from the party of Eisenhower to the party of Reagan, is also the place where they began their next transformation, into the party of Rush Limbaugh. As the political tide has turned against California Republicans, the party’s remaining members have become ever more extreme, ever less interested in the actual business of governing.And while the party’s growing extremism condemns it to seemingly permanent minority status — Mr. Schwarzenegger was and is sui generis — the Republican rump retains enough seats in the Legislature to block any responsible action in the face of the fiscal crisis.Will the same thing happen to the nation as a whole?Last week Bill Gross of Pimco, the giant bond fund, warned that the U.S. government may lose its AAA debt rating in a few years, thanks to the trillions it’s spending to rescue the economy and the banks. Is that a real possibility?Well, in a rational world Mr. Gross’s warning would make no sense. America’s projected deficits may sound large, yet it would take only a modest tax increase to cover the expected rise in interest payments — and right now American taxes are well below those in most other wealthy countries. The fiscal consequences of the current crisis, in other words, should be manageable.But that presumes that we’ll be able, as a political matter, to act responsibly. The example of California shows that this is by no means guaranteed. And the political problems that have plagued California for years are now increasingly apparent at a national level.To be blunt: recent events suggest that the Republican Party has been driven mad by lack of power. The few remaining moderates have been defeated, have fled, or are being driven out. What’s left is a party whose national committee has just passed a resolution solemnly declaring that Democrats are “dedicated to restructuring American society along socialist ideals,” and released a video comparing Speaker of the House Nancy Pelosi to Pussy Galore.And that party still has 40 senators.So will America follow California into ungovernability? Well, California has some special weaknesses that aren’t shared by the federal government. In particular, tax increases at the federal level don’t require a two-thirds majority, and can in some cases bypass the filibuster. So acting responsibly should be easier in Washington than in Sacramento.But the California precedent still has me rattled. Who would have thought that America’s largest state, a state whose economy is larger than that of all but a few nations, could so easily become a banana republic?On the other hand, the problems that plague California politics apply at the national level too.

so is this a yellow weed or a Green shoot? The auto industry is the perfect example of reduced demand and the consumer shutting down and saving. how long before this spreads to all segments of the consumer market. Will we bail out Macy’s Sears, Coscto, HP, GE, Best Buy when their numbers start really getting hammered… If the US consumer was 70% of our GDP before this Theft by the PTB which would be about 11 Trillion I suspect it will drop to 6-8 Trillion when all is said and done… so we have a long way to go…GM will need between $40-70 billion in DIP financinghttp://www.nytimes.com/2009/05/26/business/26auto.html?_r=1&partner=rss&emc=rss

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYy7ngeumaCE&refer=home“Consumer confidence(why?)is up”Market goes up!Deception Index is way up!!

They are cherry picking who they poll these days… Do they really think people will buy this BS? LOL- NO JOBS ABOUND!

Most of the improvement has been accounted for by the expectations component, which has risen 42 points over the last two months versus a 7-point gain for the present situation index.

When more suitable rationalizations are lacking, the media will often quote someone who suggests that the market possesses characteristics capable of complex levels of consciousness. Thus, from the Washington Post of October 31, 1974:There was no specific news event to spark this rally. “The market was doing it own thing,” said one observer. “It opened quietly, looked around, then took off”Richard Ney

It’s almost a sickness. I have this co-worker. Every time I talk to him, he’s always is on the verge of buying something, whether it’s the new hot cellphone, a motorcycle, a computer. It’s as though his whole life revolves around his next purchase.

Construction boom turns to bust as Gulf state leads worldwide slump in house pricesHouse prices in the desert sheikhdom dropped by an extraordinary 40% in the first three months of 2009, outpacing falls anywhere else in the world after an investment bubble burst….Dubai “is in a mess,” said Nick Barnes, head of international residential research at Knight Frank….The global turnaround in house prices has been remarkable. A year ago, homes in Dubai were spiralling upwards on an annual growth rate of 48%. The boom spawned developments such as the Palm Jumeirah and Burj Dubai, the world’s tallest tower, but now apartment blocks stand empty or half-finished. Dubai’s ruling family, the Maktoums, have already sought a £13.5bn emergency loan from their oil-rich neighbour Abu Dhabi, and fears are growing that many of the region’s biggest properties companies are close to bankruptcy.http://www.guardian.co.uk/money/2009/may/26/dubai-property-crash

“Lies, damned lies, and statistics,” and Krugman! What a blight to honest journalism. His laureateship doesn’t even bother to come up with a fact to support his twisted and desired conclusions. How could any honest man, let alone an economist, miss the elephant in the statehouse–that California ceased to have a viable Republican Party when the conservative vote was cancelled out by an incoming flood of Democrat voting immigrants?California in recent years has become a majority-minority state–a U.S. state in which a majority of the state’s population differs from the national majority, a U.S. state whose racial composition is less than 50% white, a euphemism for “majority-nonwhite.”

Krugman is just plain wrong here! To put the blame on holding California to limiting their tax revenue as the fault of why California is in trouble … well … is stupid and continues the issue of spend more than you take in and never concern yourself with a bubble.Good grief, holding our representatives to a 2/3′s vote to increase taxes is what is needed if not a higher percentage!Instead of that we have representatives in California that spent money like housing was always going to go UP! What a bunch of morons! If they couldn’t see that coming imagine what else they routinely miss!Krugman is a Noble Prizing winning idiot here and a major cause of why we keep heading in the direction we are headed!

the first question should be who want to hold US$.

This rally has made me sick. The market goes on a binge on a smattering of good news. All the real indicators (House prices, IP, GDP etc.) come in lower than expected, but surveys (PMI, Consumer confidence etc.) come in higher than ‘expected’.I have a feeling that Fed is directly buying stocks through a proxy. No hope for shorts here. Don’t fight the fed is the message that the govt wants to show.

When more suitable rationalizations are lacking, the media will often quote someone who suggests that the market possesses characteristics capable of complex levels of consciousness.

Very true. The “market” is often referred to as if it was some entity or creature.

SWKI was suspecting, but now I am certain that you have an agenda. Talking about “knave”…

The market is running on “hype” fiction, irrational exuberance. The Cramers and the Bloombergers are dishing hype to cheat the investors, taking their money every week, on the ups and downs of hype, for profit. The hype today is Lowe’s, and Apple, but Lowe’s already reported last week and this is not an Apple reporting period. The hype today is using puppet Mortimer Snerd Buffett to try to hide the trouble, big trouble, in the housing market. Housing is teetering on the edge of a second cliff, ready to topple over, on its precipitous slide downward.

There is no Market! With the light volume and Goldman Sachs doing 50% programmed trades, there is no one in there except other programmed trades and risk junkies.So why does everyone keep bringing up the “market”?

Oh, really? If you call expressing my opinion an agenda, then I guess I’m every bit as guilty as you are.Nice ad hominem attack, Guest. Try addressing the argument next time, instead of blindly attacking the motives of someone with whom you may disagree by a dodgy and dastardly suggestion of an unspecified “agenda.” If you have anything other than a vacuous opinion worth espousing, you should be able to defend it by reference to facts.SWK

Great point! First, the brokers and profiteers hype an imaginary green shoots recovery off light volume and programmed trades, and the DOW holds an unnatural level. Then, because the pretend DOW thinks there is a recovery under every rock, consumer optimism shoots up because the DOW is holding. But that’s not all, the DOW shoots up because consumer optimism is up.

Yes ,all around the world Federal Govts found that the Central Banks would not loan them enough money to fight major wars,without the ability to pay the new interest on the newly expanded debt.As a result since about 1850 every Federal Govt has passed some form of Federal Income tax legislation.What every taxpayer needs to know is “You Pay Federal Income tax to pay the interest payments on an expanded Federal Debt “How else can we all play in the Military Game,if we dont accept a Tax Increase in time of War? Very simple Grade 6 Math here.Certainly no mystery involved.

Re the status of any Country.How about this?1st World Country= Debt to GDP Ratio 0% to 50%2nd World Country 50% to 100%3rd World Country +100% (Junk Bond Status)AMERICA Year 2000 35%Year 2008 50%March 2009 60%Estimate Sept 2009 70%” Sept 2010 100%Your guess is as good as mine ….

Will try to post an answer tonight. Commodities pricing, as it affects third world countries, can involve very unfair practises.PeteCA

EARLY RETIREMENTS UP 25%Surprise, surprise….more folks are opting for early retirement, much to the horrification of the Social Security system. The reason for the surge was their unemployment ran out and they need to eat. I imagine another reason is “grab it up while you can”.RE: real estate though, the surge in retirement McMansions with for sale signs should uptick now too…..that’s all we need, a surge in high end units hitting the supply.

Greetings to USProfessor,the crisis and how to deal with it?how about how to deal with this?May 6th 2009http://www.youtube.com/watch?v=uUreWxKGOkYany thoughts?Greetings from sunny GreeceNext year, I think the only “asset” left here will be the sun…

Software Engineer: Yes definitely. Grab it while you can. The only people that will take any real money out of Soc Sec are the ones who cash as much as they can now. This system is going DOWN. I doubt most Boomers will see anywhere near the amount of money they “invested” actually come back as returns. Of course, there is no investment. It’s pay as you go. But a lot of Boomers will find that they paid in a lot more than they eventually get out.People who retire now will extract some $$ out of the system at a reasonable payment rate.PeteCA

No, it’s legal insider information available to insiders at the exchange vis a vis specialists, market makers and the more powerful exchange members who can see the orders coming in and act accordingly.In this case you had an early run up to squeeze out shorts, but, by the time the “outside” longs got on board it was too late as the market went flat for the rest of the day until a last hour shake-out.As an aside, the few times I’ve watched Cramer since the rally started, he’s inadvertently been quite instructive as to how the game works.Early in the rally, he was encouraging investors to jump on board, but, when the Dow hit ~8K, he said it would be “irresponsible” not to take profits.If the game goes according to plan, this rally eventually continues and the investors who took profits will be out of the loop and forced to buy back at higher prices and then encouraged by the likes of Cramer to pyramid up.So, when the market approaches a top the mass of investors end up with a large committment and small profits right at the time when the rug gets pulled out and and those profits quickly turn into losses. At that point, investors are encouraged to “hang on” as prices plummet, only to later be advised to sell when prices are near to their bottom.It’s kinda like Baseball. While there have been minor changes, the game has basically been the same for the last 100+ years.

And what about Ouzo and Souvlaki…

This point was made on CNBC this morning!The activity was mostly program trades!It was lightly touched upon!Guest is right!!!

Marc Faber on Bloomberg today at 11:00pm Eastern. He has been very accurate after the March Low.hlowe

Hey, I like that: “The market was doing its own thing. It opened quietly, looked around, then took off.” That’s good: the only fitting explanation of this irrationality I’ve heard in months.

DIP financing of $40 to $70 billion–and you know it will go higher than that. What is the point of trying to save this company? Given numbers like these and with the overcapacity in the auto manufacturing segment, would it not be better just to wind them down?

Glad you all are in agreement, Morbid, Bob, Guest(s), and Anonymous. Let me inject some non-conformist views, just to liven things up.First, Krugman is hardly “an extreme left liberal.” He may SEEM to be to those to the right of Attila the Hun, but he’s really pretty moderate in his political and economic views.Second, Krugman’s snapshot analysis of the deficiencies and regressions in the tax system created by the arbitrary caps established under Proposition 13 is objectively sound. You can’t dismiss his argument simply by cartoonishly chanting “taxes are bad, increased spending is bad, and that’s what the people voted against anyway.” Proposition 13 eroded the property tax base, which is why California had to make up for the difference in income and sales taxes. It also undermines the autonomy of local governments by depriving them of the resources needed to meet ordinary growth in demands caused by a burgeoning population and commercial development. It hasn’t held down overall taxes, nor has it inhibited the growth of government. It’s fundamentally unfair because two homeowners with homes of equal value right next door to one another can pay wildly disparate rates of ad valorem tax.Third, I especially like the suggestion that California ceased to have a viable Republican Party because of “an incoming flood of Democrat voting (sic) immigrants.” Sounds like the same complaint you hear from Republicans down South about Democratic operatives signing up black voters in poor neighborhoods with offers of free cigarettes and trucking them to the polls so they can slavishly vote for Democratic candidates. Please! If the Republican Party is no longer viable in California, it is because it has become bereft of ideas and beholden to simplistic knee-jerk ideology.Seriously, all this whining about how oppressive taxes are is absurd. Taxes provide us with law enforcement and protection of persons and property; with roads, bridges, and other public infrastructure; they fund the education of our children; they lend support to those among us least able to care for themselves — persons with special needs and the elderly; and they enable us to benefit from public transportation systems, as well as energy, water, and wastewater utilities. The tax system that enables these public services says a lot about who we are as a people, and what we value. Frankly, I wouldn’t care to be a part of the sort of selfish Hobbesian society of anarcho-capitalists that would begrudge assistance to the poor and infirm simply in order to lower tax rates. As Oliver Wendell Holmes, Jr. said, “Taxes are the price of civilization.”O.K. Now you can explode and start calling me a socialist….SWK

“Only 30 percent of foreclosed homes are currently on the market, meaning that some 500,000 sit vacant across the country, part of a vast “phantom inventory” that the market has yet to grapple with.”http://features.csmonitor.com/economyrebuild/2009/05/22/‘shadow-market’-may-undercut-real-estate-rebound/?ref=patrick.netLemmings.

I live in a small college town of 20,000. There are about 3,000 homes and another 3,000 condos for sale for a total of 6,000 out of 10,000 homes for sale. Everyone is just “hanging on” waiting for the bottom.

According to Bloomberg TV (Asia) in the past half hour, the anchor has stated at least a five times that “Nouriel Roubini is calling for a US recovery by the end of the year”.I thought that CNBC was bad but watching Bloomberg – the mantra from the anchors is that the global recovery is in full swing with the expectation that American consumers will be loading up on Flat Panel Televisions at any moment.Marc Faber is currently being interviewed – interesting perspective – he is bullish on Asia in the mid term. Also indicated that markets could move higher as managers sitting on cash will be tempted to jump on the band wagon.

If anyone really wants to know why the SEC did not stop this stuff, go to http://www.deepcapture.com and you will know.

THANK YOU, OuterBeltway! That is one of the points I have been trying to make.

The reason that we are no longer ‘of the people, by the people, for the people’ is that Congress, in its infinite wisdom (sic) chose to limit its quantities regardless of population. That meant the each representative represented more and more people, until, finally, they represented so many that they represented only those who could afford to be heard.Here’s and idea: take all the paid staffers out of the system and increase the quantity of representatives by the same amount (probably increasing the House of Representatives by a factor of 10). That would make each representative much, MUCH more responsive to his/her constituents.

Banks Aiming to Play Both Sides of Coin | WSJIndustry Lobbies FDIC to Let Some Buy Toxic Assets With Taypayer Aid From Own LoanMay 27, 2009 — Some banks are prodding the government to let them use public money to help buy troubled assets from the banks themselves.Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government’s Public Private Investment Program.PPIP was hatched by the Obama administration as a way for banks to sell hard-to-value loans and securities to private investors, who would get financial aid as an enticement to help them unclog bank balance sheets. The program, expected to start this summer, will …http://online.wsj.com/article/SB124338836675757049.html

New Normal of 2% GDP Growth Coincides With BiggsMay 26 (Bloomberg) — Americans may have to get used to unemployment greater than 8 percent for the first time since 1983 and an economy that won’t grow much beyond 2 percent as a consequence of the lost confidence in consumer credit that shattered financial markets.By this time next year, “the market will realize that potential growth for the U.S. is no longer 3 percent, but is 2 percent or under,” Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said in an interview with Bloomberg Radio.“We are transitioning to what we call at Pimco a new normal,” El-Erian said. Pimco, in Newport Beach, California, is the biggest bond fund manager with about $756 billion in assets.The Standard & Poor’s 500 Index must rise 41 percent to reach its last closing price before Sept. 15, when Lehman Brothers Holdings Inc. filed for bankruptcy, freezing credit markets. Since then, 10-year Treasury notes have climbed 4.6 percent. The disparity shows that stock investors aren’t convinced the economy and profits will grow fast enough to sustain a bigger advance.The U.S. financial crisis and recession have produced lasting shifts in consumer spending and savings reminiscent of the 1950s that may crimp profits and productivity, said David Rosenberg, chief economist at Gluskin Sheff & Associates Inc. in Toronto and former chief North American economist at Bank of America Corp.‘New Era’“This is going to be a new era of frugality,” Rosenberg said. “This isn’t some flashy two- or three-quarter deal. This is a secular change in household attitudes.”The last time U.S. gross domestic product grew at an annual rate of under 2 percent over a decade was the 1930s, when it expanded at an average 1.3 percent. In the 30 years before the recession that began in December 2007, the average was 2.9 percent. Over the past 15 years, it was 3 percent.In the first quarter, after contracting at a 6.3 percent annual rate in the previous three months, the economy shrank by 6.1 percent. It was the weakest six-month performance since the last quarter of 1957 and first quarter of 1958.The coming decade may, in some ways, remind people of those years during President Dwight D. Eisenhower’s administration, Rosenberg said.The Cleavers“Life wasn’t so bad for the Cleavers,” he said, referring to the family depicted in “Leave It to Beaver,” the television show that ran from 1957 through 1963. “They weren’t up to their eyeballs in debt and they weren’t a three-car family with a 5,000-square-foot McMansion.”Behavior by newly ascetic U.S. consumers, whose spending drives more than two-thirds of the economy, will translate into “less return to capital and less-remarkable equity returns,” said Milton Ezrati, senior economist at Jersey City, New Jersey- based Lord Abbett & Co., which manages $70 billion. “The whole picture is muted.”Barton Biggs, former chief global strategist for Morgan Stanley, sees the near future as brighter with a “powerful” comeback in equities because of government stimulus packages around the world, he said in an interview with Bloomberg Radio.“The system has had an incredible adrenaline shot, so I think we’re going to have a pretty strong recovery,” said Biggs, who runs New York-based hedge fund Traxis Partners LP.New MarketU.S. stocks are at the start of a new market that may spur an 88 percent advance in the Standard & Poor’s 500 Index in the next two or three years, said Laszlo Birinyi, founder of Westport, Connecticut-based research and money-management firm Birinyi Associates Inc.“We’re confident we are in a bull market,” Birinyi said in an interview with Bloomberg Television.The S&P 500 has rebounded 31 percent since hitting a 12- year low in March. It remains about 43 percent below its October 2007 high, ending at 887 on May 22.Markets in the U.S. were closed yesterday for the Memorial Day holiday.At Pimco, El-Erian expects that “markets will revert to a mean, but it will not look anything like that of recent years,” he wrote in his May Secular Outlook report. “The financial system will be de-levered, de-globalized and re-regulated.”Worldwide, “there are insufficient demand buffers and fast-acting structural reforms to provide for a spontaneous and sustainable recovery in the global economy,” he wrote. “It will be a major shock to those that are trapped by an overly dominant ‘business-as-usual’ mentality.”‘Very Low Growth’Hewlett-Packard Co., the world’s largest personal-computer maker, is expecting growth in the U.S. to be slow, said Todd Bradley, head of the company’s PC unit.“We will plan our cost model for very low growth,” he said.Investors will have to get used to “a 5- to 7-percent return game, not a 15- to 20-percent return game,” said Mark MacQueen, partner and portfolio manager at Sage Advisory Services Ltd. in Austin, Texas, which oversees $7.5 billion.“Things have changed,” MacQueen said. “Wall Street has changed; confidence in the United States has changed.”A lasting effect of the recession may be a “markedly higher” natural rate of unemployment, said Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. The natural rate is one that neither accelerates nor decelerates inflation.“It was 5.5 percent,” Phelps said. “Maybe it will be 6.5 percent — maybe 7 percent.”Jobless RateThe U.S. may report on June 5 that the jobless rate moved to 9.2 percent in May, the highest since 1983, from 8.9 percent in April, according to economists surveyed by Bloomberg. In the recession of 1981-1982, unemployment remained at 8.5 percent or higher for two years, beginning in December 1981. It didn’t move below 7 percent until 1986.Now the rate may not go back under 8 percent until 2013, according to John Ryding, chief economist at RDQ Economics LLC in New York, and Conrad DeQuadros, the firm’s senior economist.“This unemployment outlook is troubling for the ability of the banking system to make money on consumer loans and credit cards,” they wrote in a report on May 15.The economy has shed 5.7 million jobs since January 2008, marking the biggest employment loss of any economic slump since the Great Depression.Highest Debt on RecordConsumers are saddled with debt built up during the boom years. The total amount of U.S. consumer credit rose by an average of 4.9 percent a month at an annual rate from December 2006 to July 2008, according to data compiled by Bloomberg.Yet it has declined in six of eight months since August 2008, according to data compiled by Bloomberg.As a percentage of net worth, household debt — including mortgages — is at 27 percent, the highest on record, according Federal Reserve figures.The personal savings rate, which averaged 0.9 percent from 2004 through 2007, has climbed to 4.2 percent. People are responding in part to a drop in their wealth, with house values down 27 percent since June 2006 after rising 63 percent the previous four years, according to national Case-Shiller data.“That in itself will be a big slowdown in the economy if people are saving instead of consuming,” said Kenneth Volpert, who oversees $180 billion in taxable bonds for Vanguard Group in Malvern, Pennsylvania. The national savings rate could peak at 9 percent, he said.Debt, SavingsHousehold debt was 11 percent of net worth at the end of 1959 and the savings rate was about 8 percent, according to Fed and Commerce Department data. The average size of a home built in 1960 was 1,200 square feet, according to Census figures. That grew to 2,521 square feet by 2007, with 24 percent of new homes larger than 3,000 square feet.Now, smaller may be back as people seek to devote less of their incomes to mortgage payments, said Ara Hovnanian, CEO of Hovnanian Enterprises Inc., New Jersey’s largest homebuilder.“For some number of years certainly after this correction you will see that conservatism translate into both the size of the homes and the finishes customers want,” Hovnanian said. That means “fewer European cabinets and appliances and fewer granite countertops.”$200 HandbagsShoppers will be restrained, which will result in the number of U.S. malls falling by at least a fifth and weak chains succumbing to bankruptcy, said retail analyst Patricia Edwards, founder of Storehouse Partners LLC in Bellevue, Washington.In preparation, Coach Inc. has begun to “engineer” its collections so at least half its handbags fall into the $200 to $300 range, compared with 30 percent previously, meaning an average reduction in price of 10 percent to 15 percent, CEO Lew Frankfort said.Long after the economic contraction has ended, “consumers will spend less on luxury goods than they did before the recession began,” Frankfort said at an April 28 investors’ conference. “We are adapting to what will be a new normal.”Abercrombie & Fitch Co., a teen-apparel retailer that had avoided offering discounts and promotions, said May 15 it will begin reducing what it charges at its Hollister stores. Brinker International Inc., the owner of the Chili’s Grill & Bar chain, said April 21 that it updated its menus to reflect a focus on “lower price points.”That’s not to say that debt-fueled shopping sprees, expensive restaurants and run-ups in house values and stock prices won’t ever make a comeback, said Ethan Harris, co-head of U.S. economics research at Barclays Capital in New York.“Will there be at some time in the next 10 or 20 years another big bubble and collapse? Absolutely,” Harris said. “You can’t entirely change human nature.”http://www.bloomberg.com/apps/news?pid=20601109&sid=a3i27FMViXmY&refer=home

Finally actually got a chance to read the debate above. One thing that is consistently ignored is the way the military sucks dry the economy. It is as if we could let the military take 90% of the budget and all these economists would still be talking about worldwide savings gluts, fiscal and monetary stimulus, 70′s style stagflation, etc. Meanwhile you’ve got this tremendous leach, no, lamprey, that is getting bigger than it’s host. What gives here? Why is this drain on the economy always off limits for discussion?

How dare you inject a big fat shot of reality into this blog?!

GM will be ok…My partners from wall street will take care of it.

One of todays headlines in Belgium’s most popular(Flemish) newspaper:”Top economist(Roubini) who saw recession coming, now predicts its end”http://hln.be/hln/nl/3424/economische-crisis/article/detail/866669/2009/05/27/Topeconoom-die-recessie-zag-komen-voorspelt-nu-ook-einde.dhtmlGongratulations, sir! You made it to the international establishment’s spin toolbox…:)

desperate attempts to end the relentless downhill slide

busy in UT as well – shopping is the american pasttime now I guess, people actually plan vacations around shopping, jaysus how boring. Just try and start up a conversation about anything significant that takes some thought with your “fellow citizens” and you will see the mentality that most people have…Kurt Vonnegut wasnt too far off the mark, just a bunch of drookies that consume stuff.

“…Indifference is a militant thing. It batters down the walls of cities and murders the women and children amid the flames and the purloining of altar vessels. When it goes away it leaves smoking ruins, where lie citizens bayonetted through the throat. It is not a children’s pastime like mere highway robbery.” -Stephen Crane

“What chiefly governs the [U.S.] military budget is the need to spend enormous sums of money in a useless way. The allegedly powerful Pentagon is simply a receptacle for wasteful expenditure, just as a city dump is the receptacle for the refuse of a city.”"The military budget is simply an enormous pork barrel of special privilege, the privileges taking the form of windfall profits, of no-risk profits and, most importantly, of enormous outlays of capital supplied by the Pentagon to arms contractors.”-Walter Karp”If you do not specify and confront real issues, what you say will surely obscure them. If you do not embody controversy, what you say will be an acceptance of the drift to the coming human hell.”-C. Wright Mills, The Causes of World War IIIWell-off people who will not directly suffer the effects of cuts to public education, social security, and medicare (etc.), are busy actually volunteering us all for the coming completely unnecessary austerity measures – while they ignore the trillions in precious wealth being endlessly dumped down that rat hole we call the pentagon.

ha ha, the formulation of this paragraph made me think that UKs biggest concern is that Germany is doing better than UK

In Germany, prices fell by just 1.5% over the year. But Knight Frank admits that it has never been more difficult to access data about house prices, with extraordinary conditions in many markets delaying the publication of statistics. Prices in Latvia fell 36% over the year and in Poland by 13%,…

(which by the way I am sure that Germany is currently far healthier than UK…but you won’t read about that anywhere, God forbid)

From: “The Relationship Between Globalization and Militarism” | Steven StaplesThe Asian financial meltdown of 1997 to 1999 involved a terrible human cost. The economies of Thailand, South Korea, and Indonesia crumbled in the crisis. These countries, previously held up by neoliberal economists as the darlings of globalization, were reduced to riots and financial ruin. The International Monetary Fund (IMF) stepped in to rescue foreign investors and impose austerity programs that opened the way for an invasion by foreign corporations that bought up assets devalued by capital flight and threw millions of people out of work. Political upheaval and conflict ensued, costing thousands of lives.Meanwhile, other countries watched as their neighbors suffered the consequences of greater global integration. In India, citizens faced corporate recolonization…Globalization Fuels the Means to Wage War.The world economic system promotes military economies over civilian economies, pushing national economic policies toward military spending. The World Trade Organization (WTO), one of the main instruments of globalization, is largely based on the premise that the only legitimate role for a government is to provide for a military to protect the interests of the country and a police force to ensure order within. The WTO attacks governments’ social and environmental policies that reduce corporate profits… Yet the WTO gives exemplary protection to government actions that develop, arm, and deploy armed forces…Article X~ of the General Agreement on Tariffs and Trade (GATT) allows governments free reign for actions taken in the interest of national security…Globalization has weakened the powers of the nation-state, while freeing corporations to move profits and operations across national boundaries. Defense/military contractors, once considered part of the national industrial base…are becoming detached from the nation-state…Globalization and the transnationalization of defense / military corporations have replaced the military-industrial complex of the Cold War economy with a military-corporate complex of the new global economy. This is based upon the dominance of corporate interests over those of the state. The weakened state is no longer able to reign in weapons corporations and is trapped increasingly by corporate interests…According to New York Times columnist Thomas Friedman, “the hidden hand of the market will never work without a hidden fist. McDonald’s cannot flourish without McDonnell Douglas, the builder of the F-15…” (Friedman, 1999)…The inevitable outcome of globalization will be more wars-especially in the Third World where globalization has its harshest effects. Meanwhile, the elites of the industrialized world are confident…[t]heir technologically advanced militaries will protect them and their investments, insulating them from the violent effects of globalization.http://www.thirdworldtraveler.com/Globalization/Globalization_Militarism.htmlWritten by Guest on 2009-05-27 7:51:03

first to saynew thread.( this may also be a first )?!!unfortunate as this line of discussion addressesthe fundamental problem we face today. did you evernotice how we worship non sense and considerit to be integral to our survival and the properfunctioning of the universe and mans place in the world.how much time people spend doing nothing in particularof any importance or good and how economically importantall of it is?hmmm?ps.NEW THREAD>>>>>>>……learning is messy and sloppy …and tragic but it must be done.

Happy to oblige, my friend. Glad I could at least be of some entertainment value! SWK

Yeh – you go girrrl !

1064059 beers on the wall.

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