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Shorter Fox News "All Stars": CLENIS!
While the Village Elders may be salivating over the prospect of another round of spotted dick, the real replay from the 90's may very well be a coming recession depression:
Somewhere in all this mess the U.S. stock market will collapse. At the moment the stock market is already in a correction, worrying about an economic recession. What it really should be worrying about is something much worse – a complete collapse of the credit markets globally, leading to a depression that will last 3 – 5 years. Once that is understood, the Dow will be trading well below 8,000.
So hold on to your job, whatever that may be. Pay down your debt and watch your expenses. Monitor the credit and market risks in your investment portfolio, and if you have any real concerns, U.S. Treasuries earning 2% will be a lot better than stocks or bonds that might collapse in value. As of now, the four horsemen of the apocalypse are mowing down the big players, but the little guy will be in their sights eventually.
Rangel and Schumer are on the shows this morning talking about the need for economic demand side stimulus, though by hastening to emphasize that "no lines are being drawn in the sand," Schumer makes my next point before I get to make it: the Democratic Congress will once again give Mr. 25% whatever he wants.
I've talked to some progressive wonks lately who have some good ideas they are shoppping around the Hill to help with what's coming, but while Democrats know how to govern, they truly suck at media and politics. There's no way their fantasy league ideas will see the light of any day, because this Congress has apparently learned the wrong lesson from last year: instead of picking and sticking to fights they should fight like hell, they think their mistake last year was due to over promising and under delivering. They won't make that mistake this year: they plan to under promise AND under deliver. The progressive policy wonks have no idea what to do about it, and no idea how to build movement around a core message. They truly don't know what they don't know.
And so, as Wall Street begins to fathom what it has wrought, the rest of us keep an eye on our brittle, neglected, unready economic levees. The presidential hopefuls can snipe at each other all they want, but the next president may well face circumstances unlike any in our collective memory, alien to our current discourse. Because of the price tag, ironically, it may be Wall Street that forces us out of Iraq. Welcome to the peace movement, y'all!
Not many people working today remember 1982, let alone the stagflation of the late 1970's. . . or the depression of the 1930's. They have no frame of reference for where we may be headed. The press may think we're headed back to 1992, but the real worry is we may be headed for 1932, 21st Century style.
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Grandpa!
Hi, Pach!
Yikes!
Hey: Anybody know who’s running the book salon today?
Krugman, in his blog, says Not So Fast….
Glenn Beck said it all. We wouldn’t be in this pickle if it weren’t for FDR!
This nation is doomed.
-G
Cheery this morning, aren’t you? ;)
Geez. This is some scary stuff. What about the $800 tax rebate idea? How will this help? Will people spend it to charge the economy, or will they pay down debt?
Edwards sounds good on FTN. Says he isnt quitting.
o/t: I’m not big on newspaper endorsements and don’t think too many people are but it gives the candidate some nice quotes to use and the media mentions them. Rudy’s staking it all on Florida, as you know. He can’t be happy about this:
http://www.orlandosentinel.com.....5905.story
One of the under appreciated elements of what’s going on is the condition of the states. They have to balance their budgets, and their incomes already taking a huge hit on falling property taxes.
Big cuts coming closer to home, services, etc. Our infrastructure is already neglected for 30 years, and the states are going to need federal help before too long.
Are we gonna need another WPA?
Great post. Things are going to get really bad. I already know how to do the poor thing well:) and as long as I stay employed I’ll be fine, but folks like my sister who is/was comfortably middle class are starting to worry about pensions/investments/401 etc. I know she is getting really worried about being able to maintain/sustain her and her childrens’ standard of living (she works hard and is careful about spending etc). It’s going to be bad for so many people :(
Second that. It could get rough out there.
IANA economist, so can someone explain to me how giving a bunch of money to everyone and telling them to spend it on stuff which will most likely be imported help the US economy? Aren’t you essentially sending a bunch of money to China? At tax-payer’s expense?
Hush. You weren’t supposed to notice that… shhhh….
hey guys, on a cruise celebrating any number of things including my birthday so this is my quick comment before I get back to some hedonism;
worrying about an economic recession?
this insinuates we aren’t already in one and it insinuates we haven’t been in one for the entire length of this presiden’t bizarre “strategy” of giving middl class assets to people so wealthy they will never ever spend it
this has been a recession and it’s nothing but deliberately induced to create a class war, redistribute wealth from everyone and too those already wealthy and create a robber baron economy
back to fun and games for me. see all later
Of course, the bond play won’t work if inflation spirals up. That seem to be the more likely scenario. Just review the movement of commodity prices over the past year.
I do agree that the economy will be THE ISSUE this fall.
People are more likely to spend it on essentials, like food and housing. Once the spiral of homelessness or insolvency begins, it generates its own momentum. Food costs, reliant as they are on energy (transportation) costs, have spiked up significantly.
Again, there’s no collective frame of reference for what we’re potentially facing.
Well, Good Morning to YOU too, Pach.
I’ve had nightmares almost nightly every since junior was crowned. Thanks for enhancing my latest ones, sigh.
Thanks for the only spot of good news, snowbird42. We can hope. I can’t believe so many people want the job of
cleaningtrying tobeing expected toclean up after this gang of rethugs.It just STINKS! So much waste! So much hurt in the world….
McCain knows his way around Washington, D.C. But his maverick’s record of taking on GOP leaders and special interests shows he can be the agent of change for which many voters are clamoring.
He truly is a mold-breaker.
is that Dizzy Cruiselines? I wouldn’t touch the shrimp…
We saw this coming two years ago. We paid off our loans large and small, except the mortgate. Have paid cash for everything possible, not even using the debit card unless necessary. Been putting whatever extra cash in CD’s, and sitting tight. Boy, It’s been tough, but I think it will be the best thing for the long run.
3 6 5 - that ain’t no jive!
Actually, if people follow the advice from the Agonist, which makes a lot of sense, they will use tax refunds to pay down their debt, thus transferring tax money to the lenders that made all the dumb loans in the first place. Talk about your moral hazard. What else can we do to bail out the big money runners on Wall Street?
Certain municipal bonds might still be a safe investment, but watch for areas that are going to have a real estate bust or high foreclosures.
That is very good!
We’ve been doing that, scrabbling along, for over 40yrs. u got any better ideas? You got a year-round garden from heirloom seeds, saving snippets from yer own crops to keep it goin? You off the grid? Otherwise….
When we told people about our plans to tighten the belt and pay down debt because of the impending recession, all we got were funny looks, like we were just paranoid.
Drive the Blue Ridge Parkway (and other locations in the country)…still lots of evidence of projects from that era; they’ve been as “permanent” as anything we will see in our lifetimes.
I cringe to think what the thugs would do with/to that kind of arrangement today.
Good one Pach. I disagree on one small point. I believe Congress will give Fucktard more than 25% of what he wants.
Ohhhh! I GOT it! And no coffee even poured yet. That’s progress of a sort. Thanks for the note of “cheer”. Shall we take turns watchin’ the kid & shooter? Or did you hire that out?
Ain’t he tho’? Another dead-on call by the Sentinel.
For whatever it’s worth (and it certainly ain’t worth no delegates) the paper endorsed Hillary, too.
HAPPY BIRTHDAY Perris. tho mebbe this isn’t the thread…
You’ve already been proven a lot more smart than the idjits who gave you the “funny looks”.
Because of the R E P U B L I C A N sub-prime mortgage mess. Don’t miss a chance to wrap this tight around the Republicans free market B/S.
So I guess this is the wrong time to ask, if elected, will the Democrats put the war on the budget, or will they leave it off the budget as it has been up until now? What will happen to pay as you go? How do you add to a deficit that is already over the line?
Even in urban areas, some of the old Courthouses, etc.
What would the thugs do? They’d be all for it. Have the government build stuff and then they can privatize/sell it.
Ah that’s the beauty of it we borrow it from them.
Yes.
Don’t forget the mid-70s, when Nixon trimmed the defense budget. A lot of people got hit then - somewhere I have a copy of the resume my father wrote up, because he was unsure about his job disappearing on him (at the time he was an engineer with nearly forty years experience). I’ve heard my parents - and read a report my grandmother wrote up, when she was a county agent - on the depression years. It will be worse this time, because so many of us have no place to grow vegetables or keep chickens or rabbits or pigeons.
Friday morning CNN.com was running a poll on what people would do with this proposed $800 handout. More than half were going to apply it to bills.
The politicians may be clueless, but the rest of us know something big and bad is coming.
hAPPY B’DAY. have fun
This is from Krugman’s article. I don’t quite understand why he unquestioningly assumes that the Fed’s only purpose in lowering interest rates is to “help” an ecnomy it “thinks” is “weak”.
During his whole trickle junior’s been passing every bill down to the next generation, and the one after that. And we sometimes wonder why they’re discouraged and angry, even while they put it all on dad’s credit for the moment.
I agree with egregious. This is already getting ugly, but it’s not just “out there”. How thick do the walls have to be to protect the fat-&-happy few?!
We are going to need an FDR style New Deal to deal with what coming at us. Unfortunately, Edwards was the only one I had any confidence at all would deliver such programs.
Apparently, the vast majority of the Democratic base only listen to corporate media and never get on the internet. Clinton nor Obama will deliver the type of programs that will keep starving people off the streets. That will take too much money away from their corporate sponsors.
I’m not going to help bail out the big guys. I’m spending my rebate on weed and liquor.
-G
A luxury we can no longer afford
We spend several times what the whole rest of the world spends on what we still laughably refer to as “defense”. If defense was what we were planning for, we would have a standing military establishment capable of fighting off the dread prospect of a Mexico-Canada alliance to partition us — say 5% tops of what we spend now on our military. Yet we don’t seriously plan to use this incredibly expensive military on the offense, to conquer fresh countries, and certinly not now that Iraq shows us how well that goes.
There will be only two alternatives for dealing with this luxury that we will shortly realize that we can no longer afford.
The reasonable, hoped-for, response would be to repeat what we had always done after a war, up until the end of WWII, and essentially disband our standing forces. The aftermath of WWII has been historically atypical, and about 5% of current spending, and that percentage, or less, of current force structure, would indeed get us to the historical baseline of where you’ld expect our military to be when there isn’t an actual war to justify having more military on hand.
But another, darker, alternative presents itself. We could start making this luxury pay for itself. We would essentially start charging all those freeloader nations who supposedly benefit from the financial sacrifices we make to support the GWOT. If they don’t pay up, our Navy takes them out of global trade. See also Empire, Athenian. This solution would be especially likely to almost suggest itself if part of the oncoming crisis involves our creditor nations trying to get tough with their 800lb gorilla debtor. Yes, the US is not Argentina. It’s much, much worse. It’s got the shrill, paranoid internal politics of an Argentina, but which has not, before, been stressed by the economic difficulties of Argentina in the 90s, but it also has this huge, outsized military. If you thought the paranoid response to 9/11 was bad, wait until it’s more than a one-time pin-prick our political system is asked to respond to rationally and responsibly.
Already here.
OT_
Here’s Scott Horton of Harpers on Blackwater.
Depression?
The rest of the world’s economy is doing OK so sever recession is more likely
I think that since the US moved to a service based economy in the 90’s the rest of the world has picked up our manufacturing based. So widgets will still me made but not for the US market.
The real problem is inflation. The Bernanke fed keeps printing money, he believes that all economic problems can be solved with liquidity. But with each interest rate cut the dollar falls and imports, read oil, becomes more expensive.
Bush will not only leave us with a war but the economy in shambles. I guess the federal government will fit into that bathtub after all
The easiest way, but not necessarily the most prudent, for a nation to escape a debt crisis is to adopt a monetary policy that promotes inflation.
If you ‘own’ a home worth $250,000, with a $350,000 mortgage, an $800.00 tax rebate really isn’t the answer.
If this economy contiues to unravel as a consequence of unmanageable debt, don’t be surpised if the money spigots are turned on.
When shooter was standin’ behind junior at the presser earlier in the week, he looked different. Check it out. No swagger. No sparkle in the eye. No set chin. More like major saggyface. Definitely forgot to put on his leadership-honcho mask. Ruh roh. When the tyrant is frightened & discouraged over what the future holds…. parag*ay you say?
LOL! Thanks for the grin amid the grim. I’ll pass on the weed, but double up on the liquor.
Right On. A man who has his priorities in order!
Buy local!
-G
And I’ll be Willin’
Note: Link fixed by Mod
Moonshine’s not to my taste, so I’ll import some Woodford Reserve from Kentucky.
I wonder how the old ticker is doing?
precisely, mayfly. see my #42
Truly some excellent sippin’ Bourbon.
Isn’t that what post WW 1 Germany did?
I’m watching the history channel and it’s about the gang crimes of the 30’s.
The narrator said: In times of trouble a lot of money and big mansion made people a target.
Another commenter talked about ‘armies of poor people who resented the weaslthy’.
-G
How does the govt giving people money to buy stuff made in China help the economy?
My first home mortgage had an interest rate of 16.5%….those were the days.
As I said yesterday, the gates on their exclusive communities won’t save them when they’re left open by the guard.
I’m curious… why are people paying off debt… as opposed to carrying it? While having debts is a bummer because you need income to support them… why pay them all off aside from wasting money on paying interest?
Does this approach imply that borrowing for interest is “wrongheaded”?
Isn’t borrowing and credit part of this economy? What would happen of no one used credit?
Just asking…
yup. that crossed my mind. &/but, he knows they’ve really fouled up bigtime, as it were. home scheecuriosity was a myth, in every sense, for everyone including hissownself. there’s no joy in this for anyone…
remember how hyman roth ended up in the gawdfather?
with no defibrillator for anyone’s economy… who will dust the chandelier?
We will be told that a plate of steaming pig slop is a good meal and a tar-paper shack is a castle.
That’s what will happen.
Exhibit A: Iraq.
This is John McCain’s idea of success.
-G
My guess is that most people will either pay bills or buy groceries. Well, maybe that pair of shoes or shirt for your child to wear to school… I know the folks I work with are starting to get the creepy feeling that something really, really bad is about to happen to their finances. They don’t know what it is or why it’s coming, but they know that what used to cover the bills doesn’t any more.
As far as how any of that is supposed to “help the economy,” the whole idea is nonsense. It’s sound and fury signifying nothing except sound bites containing the phrase “help the economy” to lull people back to sleep. /rant.
dang. we’re on parallel tracks! if we could just find that switch, we could form a train and GO somewheres! heh.
Since I haven’t seen anyone mentioned the effects of Global Warming on the coming economy yet, I thought I would. Al Gore seems committed to becoming a venture capitalist for whoever wants to make big changes to make us more green or more energy independent, or both. Isn’t it possible that the opening up of this whole new industry could help to ease the blows the economy is taking?
First, kill your TV.
Then watch “Kill The Messenger”, a film about Sibel Edmonds and how she became an enemy of the State.
This Video is currently under embargo and unavailable to U.S.A. audiences.
However, you can get past the censorious government nannies by joining the bleeding edge of techwonery here. [Link removed by Mod]
I’m seeding this now. As Jim Morrison would say “come on baby light my byte fire…”
[Mod Note; While it is easy to find and illegally download copyrighted material from the internet, FDL does not condone or promote doing so. Thank you.]
yes — the rest of us could smell it coming. Since 2006, I’ve said 2008 would be the bust of this economy. The US is drowning in debt with a dollar not worth a nickel…
Thanks for the thread Pach — Grandpa’s economy is right!
Here is the another crazy-assed development under W.: We have abandoned our cheap food policy.
Every country, with any sense, since Marie Antoinette has adopted a cheap food policy.
Kicking the can down the road. It’s the only thing this feeble minded Bush and his handlers and stooges know how to do.
As for Deadeye Dick, he sees the curtain closing on his career and his life and knows that he’s going down in history as one of the great villains for our times.
Bush is too stupid to see beyond Karl Rove’s storybook narratives about him being a great man in world history.
That’s why he keeps talking about it, he believes it.
Cheney aint that dumb.
-G
Are we going to watch this election under a microscope while the county falls down around our ears even as we hear the latest on whether Obama is black enough or if Hillarys voice is grating?
Ding!
Intead of using all of the energy to paint the picture it is being expended on high school antics.
-G
Causes of the Great Depression:
TOHUODU
Tax Policies of Andrew Mellon
Overproduction of Goods
High Tariffs
Unwise Speculation in the Stock Market
Overexpansion of Credit
Drought in the Mississippi Valley
Unhealthy International Monetary Situation
You can debate how many of these conditions exist today.
It will give a short term stimulus by increasing consumer spending. But you are right it doesn’t address the fundamentals. Democrats and Republicans want to be seen as doing something going into the November elections. As for the Bush Administration, its goal is to kick the recession into the next Administration and leave the blame for it, and the responsibility for cleaning it up, there.
In other words, Bush is trying to do with the economy what he has already done with Iraq. He creates the mess and then he leaves it for others to deal with after he is gone.
TUODU
Global warming was a horserace environmental scientists were/ARE terribly worried about
way back in/EVER SINCE the 60’s.I thot it’d always been assumed it’s gonna take a substantial amount of extra green ($) to GO green. That’s one of the reasons the humungous, wanton, greedy waste of the past several yrs is so egregious.
Is it too late to start? Supposedly we do NOT have the luxury of standing around wondering. We have to try. With a busted economy, we do it with… what? China seems to hold a nice steaming pile of our debt. They also seem to have ZERO interest in investing in green tech.
ANGRY? Moi? That doesn’t come close.
I’ll drink to that!
Re: Tax rebates
This is a cynical, one time political manoeuver meant to placate the 80% while providing a small stimulus to the Stock Market.
As observed, there is no realistic expectation of long-term benefit.
“” Vestas Blades picked Colorado for its first North American wind blade manufacturing plant. This means hundreds of new jobs for Colorado. Thanks to companies like Vestas, Ascent Solar and Abengoa, thanks to world-class research institutions, the next generation of new-energy technology is being developed right here in Colorado.”
Governor Ritter’s State of the State address, 1/10/08.
Lots more under the heading “New Energy Economy.”
Along with Sander’s interesting question, I have one of my own. I can remember who said it - it was either Hillary or Edwards - that that horrible bankruptcy bill that everyone voted yes on never went into effect. Is that true? Because if the rules are the same as they were, at least here in Texas you can dump all your credit card debt in bankruptcy and still keep your homestead, which makes it a lot easier to ride out a recession/depression.
actually it depends on your channel.
mebbe just the results of the latest push-poll…
isn’t that why we’re all here? *tiny, determined smile*
I predict that some portion of the Emergency Oil Reserve will be drained in Aug-Nov as well.
Whip Inflation Now.
The Republican’s other “WIN”ning strategy.
That was supposed to be can’t - I can’t remember who said it.
Yeah, and that strategy worked really well for Gerry ford didn’t it?
Before you get too sotted, folks, go read
“Guns, Germs and Steel”
by Jared Diamond
Here’s an interesting take on the economy via C&L.
And “Collapse”.
My thinking, too. A concerted, all-out national push to develop methods and technology to address global warming seems like a natural…with a president who asks us to make sacrifices as well (”Ask not what you can do for your country…” etc.) A push akin to mobilization for WWII.
Sucked worse for the rest of us.
Here’s more cool shit.
Our economy is driven by energy (fuels) and credit… Labor is playing (unfortunately)a smaller part.
We are told that the fed plays the economy by releasing money into it… ie low interest rates means more money in the economy. But what they really do is encourage more borrowing… albeit at a lower and more affordable rate.
The fed prints money as bonds… sells them to financial institutions who break them up and market them to consumers as credit and large borrows as loans for capital improvements (hahahaha yea right). So you can see the fed is a big credit monster and if people did not borrow… if they had no debt.. the economy would completely tank.
right?
groan. i was trying to be a little more positive. you’re right.
why waste time on the “why’s”?
Jim Cramer was on the teevee yesterday (I believe with Tweety) predicting a meltdown of the stock market in the next two or three weeks, a drop of 2000 points. He believes the bond insurers are all bankrupt and when they start failing it will cause a melt down like we have never seen. Even though I personally take everything Jim Cramer says with a healthy dose of salt this I believe is straight talk out of him. He acknowledge he is the consumate bull but this is the real shit.
I read somewhere last year that 23% of our economy is based on financial services. If those fail there isn’t much of a backup. Who will have the money to buy from our “service based” economy?
Suggest you ask eCAHNomics about that guy.
eCAHN? u there anywhere?
Ni hoonan,
I’d like to take exception to your list of “Causes of the Great Depression:”
I’ve studied the situation with tariffs, and I’ve come to the conclusion that the “conventional wisdom” about tariffs is nothing but a post facto talking point created by the globalization, neo-liberal, “free trade” crowd.
The fact of the matter is that the greatest prosperity this nation has ever had has been during periods when we maintained strong protectionist tariffs in order to strengthen industry and manufacturing within our own borders. Every successful developing nation has done the same. Look at Japan after WW II and ask how they got to be the most advanced techological nation on the planet, surpassing the U.S. in electronics manufacturing by the mid-1980s. It was by a clearly rational policy of protectionism and a willingness on the part of the national leadership to have the Japanese suffer a bit early on as they perfected the JVC, Onkyo, Sony, Hitachi, Matsushita and other brands. Once these industrial giants matured, they utterly killed off the U.S. television manufacturing industry, where we maintained an idiotic predatory capitalist’s mercantilist vision of making money on mere trading, rather than on more nobly, profitably and sustainably creating our own products. It truly insane that the greatest manufacturing today in the U.S. is the manufacturing of our national debt and current account deficits.
These chickens are coming home to roost, chillen; and far too many people are still swallowing the neo-liberal kool-aid acid testicles.
Well, that’s my story, and I’m stickin’ to it! And I got me some MBA credits to my name to give me just enough insight to be willing to go out on this limner and cut myself off from Miltie Friedman’s trunk full ‘o lies and lunacy.
Actually, I think the message of Collapse, if we as a society choose to accept it, could lead us in a good direction.
Jim Cramer also told his audience to buy some investments in stocks in the financial industy because they were underrated.
A better way to make “this” economy healthy is job creation and rising wages. Put money in people’s pockets by work and new products and services they can use.. where their purchase does not move to offshore business. We need to localize the economy on a all levels and move away from the out source model which favored high profits, lower production cost, high energy use for transport and destroys local jobs. Globalization is good for profits, bad for the planet and ultimately bad for the citizens (though they think lower prices) are a benefit. The trouble is their wages are driven down to the level where they can barely even afford the lower priced imports if they still have a job.
Too much of our economy is moving toward work which produces nothing. We need service type jobs, but we are drowning in them. Too many fees and too few products are what this economy is about. Fees and commissions are just added on top of the whatever value a product has and they are out stripping the labor added value to produce these products. Too many middle men taking their piece of the action.
We need to completely rebuild this economy. Patches are not gonna save the patient this time.
I guess the good news is that I grew up in an extended family that never quite believed that the depression was over. So I know what to do. My grandmother and her sisters washed and reused EVERYTHING from the plastic bags the newspaper came in to milk cartons. They also saved every penny they could. Being good Germans they did not spend their savings, they left it to us profligate nieces and granddaughters!
. They have to balance their budgets, and their incomes already taking a huge hit on falling property taxes.
From Pach.
Worse. as Ian says in the piece they’re gonna lose access to municipal bond markets, because their insurers branched out to insuring CDOs. If you’ve been reading atrios on the shitpile, you’ll know those two insurers are now rated at 70% likely to go under. The commercial lending market will collapse, because banks will have to reserve more capital to self-insure their outstanding issues. The muni market will have nobody to back their securities, so will be force to pay more interest, if they can get into the markets at all, with falling revenue projections.
We’ve got to take a one time hit in real income as the increase in fuel prices makes its way through the economy, have to absorb consumers reducing spending from their loss of credit, and we have to deal with the collapse of the US lending market.
I guess the good news is that foreign companies are buying up US assets, trying to turn their dollars into something a little more stable.
Given that the current disaster has a lot of fingerprints from folks with MBAs, that might not be such a great thing to be bragging about these days.
“Pay down your debt and watch your expenses”
Stupid conventional wisdom.
NO. Take ALL the monay out of your house you can.
When you house falls below it current appraised value (and it will), walk away from it with the cash.
House prices in my area, Souther California, will only stop falling when the affordability index hits about 35%. That means 35% of wage earners can buy the average price house. Curent affordability index is about 17-19%. We’ve another 20%-30% to go on house prics.
CASH IS KING. Not Equity (which is going down quickly).
YES. Cut expenses. Don’t watch them, cut them. Cable, Phone, Electricity, Eating Out, cut, cut, cut.
And yes I remember both the ’70s, through now. I also remember my Father’s stories of the 30’s.
And if you believe that more defict spending by our government will do any good, ask yourself: why would anyone lend us the money? And, how will we pay the interest?