ZED ! Very telling as usual Ian!!

Digg It pups When ya get here!!!

Knock Knock anyone home???

Dugg!

Bullseye Ian.

Tell that to people hocking their wheel chairs.

We are seeing the beginning of the next Great Depression. Believe it.

Speaking of psychology any idea who Obama would pick and look to for economic advice earlier in the morning there was some worry that Obama would listen to Chicago School Economic advisers.

I don’t think Krugman or Delong are overly optimistic.. i think what they’re doing now is trying to stop, or at least slow down,panic. Just today Krugman posted on his Blog his trepidations as to where we’re headed. But, yeah I agree otherwise.

Ian, fwiw, Dylan Ratigan, host of CNBC’s “FastMoney” went after both Cox and Paulson on today’s show. He had a 2004 quote from Paulson asking to increase the amount of leverage to ?? 40 to 1. I think there’s tremendous traction for the really terrific analysis you have provided here.

Thank you.

I’m listening to these posts for some economic sanity.

Thanks.

Five trillion is getting off light. I’m predicting a minimum of ten.

I learned my lesson in 1987 on how the markets are manipulated by those greater than I, and have since gotten out when the parabola appeared. But it still pisses me off that the big guys suck the little guys dry. I guess my only consolation will be in a couple years some of the schmucks will be in jail and bush, if he is still in the country, will be facing war crime charges. peace and love.

Fast Money is going against Paulson? Larry Kudlow and Maria Bartiromo must be feeling so alone…and broke if they have been listening to their own advice.

As long as that all stays in never never land and is sucked into the black hole of deleveraging derivatives losses it will have little direct effect on the economy. But what if half a trillion, say, landed on the real economy?

Do you mean the banks keep the money and do nothing with it except treat it as an asset to eliminate their insolvency? How does the money land in the real economy? The banks lend it out? The government has been printing money for decades and inflation has remained more or less manageable. I do not understand why. Foreigners accumulating dollars? I thought we’d have serious inflation years ago. We haven’t. I missed something. Perhaps what worked these past decades will continue to work. It won’t help the unemployed or the mortgage challenged, but we won’t have runaway inflation.

I agree that to date none of the fundamental problems that underlie the meltdown have been addressed. Paulson and Bernanke are conning the politicians. The politicians want to be conned. The media dutifully reports the con as if it were real. In other words, business as usual on all fronts.

I have said before in the context of global warming that there are some problems that a speech or a BS program will have no effect on. The problem just is and will continue to progress according to its own rules. The current economic meltdown is like this. Just as with global warming, there are solutions or at least ways to mitigate the effects so there are ways of dealing with the meltdown. The problem is in both cases that what needs to be done is not being done. Instead as I said last night our political and economic leadership has decided to use any amount of public money not to address the underlying problems and avoid doing what is necessary.

Most of the money was parked in places where it didn’t get to the real economy. Overseas, in stocks, in housing prices – 500 trillion in notional derivatives, where as long as you didn’t spend the money on real things it didn’t matter. Meanwhile you offhsored/outsourced to keep wages from going up and to decrease prices. Various policies were pursued to keep resource prices down from the 70s to 98 was a huge bear cyclical in resources. All of this meant that you had very low inflation outside of assets, and it was ok for inflation to occur in assets as long as it didn’t get to the real economy. (That’s the very very short description of the economic history of the last thirty years, really.)

Notional money doesn’t matter much, except when it either lands on or has to be paid back by the real economy.

Problem is, eventually notional money always has to be paid back by the real economy.

But eventually can be a long time.

, I’m going to give you a question.

2 or 3 trillion dollars have been printed in this two year period, which was created out of midair. The money is being sent primarily to banks and other financial institutions, which are probably insolvent. How much, if any, of that money will get to the real economy

Probably nothing until the economy starts to get better. In order for that to happen prices must go down MUCH more to attract the vultures that is the GOP/banker plan.
Or the government can increase taxes on the rich and borrow more money to put people to work the FDR hopefully the Obama plan.

I’m sorry, man.I consider myself fairly well educated, but when the debt clock can’t handle any more numbers, the numbers are all just too big for me. We need more money? Print more money. Give it to people facing foreclosure.

it costs just slightly less to not fix the problem than to fix the problem, is their calculation, I think.

Also they are protecting sunk power and money. Really fixing problems means opening up the franchise to new people, to real changes in the elite. They would rather do anything than allow that.

They really are an inbred incestuous bunch, and I mean those words literally.

”but we won’t have runaway inflation”…better think again.

Printing money is where you are. But it will have to be paid back at some point. The questions then are two:

who gets the printed money?

who pays it back?

So far the answers are:

not you.

you.

I agree 100% with this:

“… what they’re doing is keeping housing prices higher than they should be to bail out the financial sector, and thus keeping mortgage payments too high. Since there’s no reasonable prospect for increased wages, that means you’re talking about overall demand reduction – less spending on everything else.”

Hope Ian is too pessimistic about the rest, but I don’t have time to keep up with the nonsense they are pulling, so I can only have my silly over-optimistic faith that somehow we will muddle through.

I read that Stiglitz has joined the Obama economic team. Stiglitz has repeatedly pointed out that the big job on the real housing economy should not be to prop up real housing prices, but to provide an alterntiave, workable, price adjustment mechanism that will find a reasonable supply/demand floor without massive overshooting on the downward side (but rigid unstable adjustment with massive overshooting is just what trying to preserve the current system will produce IMHO, if we do not go Japan 1990s and try to prop up prices for indeterminate future). I think that would require a new HOLC, and I think that is what Stiglitz is recommending.

As an economist, IMHO, paying attention to real markets and real assets has a faintly Marxist whiff to it among the mainstream folks. But the old capital accumulation instability and adjustmetn problems of unregulated markets haven’t gone away, they have just been ignored. The mainstream fashionable economics profession is prolly in for some reality therapy. I guess Japan was not real enough for them.

And that in my opinion is what is happening. I was cheered for a day or so when Paulson seemed to adopt the UK (and I think will be majority EU) approach. But that quickly revealed itself to be another hollowed out scam designed more to ’support the industry’ and try to keep the curent unworkable mortgage securitization system going. As an economist I will be very interested to see whether it can be made to work while housiing prices fall. But as a normal person who would like a nice economic environment and eventual comfy retirement, I don’t want any more half baked experiments.

There have always been two outcomes possible here:

a) runaway inflation
b) deflation.

Which we get is a policy choice. Psychology (perhaps mob psych), not economics.

Let’s Get Fiscal
By PAUL KRUGMAN
Published: October 16, 2008
Paul says the bouncing casino, the banks don’t solve the underlying economy which will be in recession maybe a decade. With no disposable income consumers are not going to be able to consume. Your Miriam Fractal Spiral is gaining momentum.

UMich consumer sentiment for first half of Oct reported today at 57.5. The lowest ever (data starts in 1954) for that important indicator around 52 when Carter told consumers to put away their credit cards in 1980. In serious recessions, consumer sentiment has bottomed above 60, except for 74-75, when it bottomed around current levels. Prediction: consumer sentiment hasn’t bottomed in this cycle.

OT but I just heard that Congresswoman Michele Bachman wants to reopen the House Un-American Activities Committee to purge “liberals”. The Republiclans are like zombies. They just keep coming. The only time they stop is when they are planted in the ground, but then again Lee Atwater is still working his special magic.

I’ll take your bet for any amount you want to wager.

I have found it very strange thinking that concluded that massive government intervention and government design of complicated bizarro and inappropriate market mechanisms (reverse auction mumbo jumbo) was A-OK as long as it was meant to prop up their pet unreglated mortgage securitization project, and to keep financial whizzbangs overpaid and overemployed.

But setting up a much simpler and more transparent system, with several historical examples of success, to ease downward price adjustment in useful real assets for real people (for perfectly good houses) was dreaded socialism.

It is very weird thinking to me.

BTW did anyone see Washington Week tonight? It is usually pretty awful but tonight it was positively hallucinatory. First, you had people who knew absolutely zilch about the meltdown repeating the standard Beltway BS on it. But then they went off on a Democratic stimulus package, making fun of the fact that it had started out at $100 billion and had increased to $300 billion, which given the money that Paulson and Bernanke have been slinging around in recent weeks is chump change. Yet not one of them put in the context of the money that had been laid out so far.

Then they spent considerable time going off on ACORN whom Michael Dufy of Time described as a shady organization. He then did one of those classic both sides do it kind of things. In this, he totally missed the point that Republican voter suppression has resulted in tens even hundreds of thousands of voters being disenfranchized whereas the number of instances of voter fraud is vanishingly small. But this didn’t stop him or any of the others from going on at length about Mickey Mouse showing up to vote. And of course none of them mentioned that ACORN is often required to submit all voter registration forms to the state by law.

I mean the Republicans are going down in flames. They could use their stock portfolios for cheap wallpaper. Yet even now, these “journalists” can do nothing but carry water for the powers that be. All I can say is that if you think John McCain is out of touch you really need to see these guys. They make him look deep.

I noticed courtly ol’ ignorant Bob go all Hoover on us during the third debate, and also got US k-12 educational achievemnt stats wrong.

We should try to get Letterman, Daily Show, or the View to do national affairs journalism. Might get better results that way.

Five trillion is getting off light. I’m predicting a minimum of ten.

That is three to four years worth of US federal budget…can’t make it up in that time.
We are not the mighty power we were when Bushco to office!
The almighty dollars is on a slide.
As global warming increases (the poles increased 9 degrees the last two years and will bring increased disaters including famines). Where will all the money come to pay for this?

I defer entirely to the econmic views here, but in as much as this may be an issue of psychology… The psychological issues that I am most interested in is the question of the progressive left’s love affair with the current about to be new leadership on these issues. We love him at the moment. The mob always loves the guy on the white horse.

But project out a year when the romance is over and a Democratic government has not restructured the tax policy to return to sanity. (I see that as heavy taxes on the rich, the banks, the securities industry etc.) We won’t have universal health care, we won’t be able to afford it. We won’t close our bases overseas and bring the troops home. We won’t have embarked on a rebuild Americas roads, hospitals, schools and bridges program.

Will the mob still be in love or will we turn on the new masters who by then will look like they are owned by the corporate world, after all we will be still bailing them out. And when we turn what will be the political and social consequences for things like, right to free speech, right to assemble, right to be free from unreasonable search and seizure?

And to think I used to watch that show for its liberal views, my hometown gave more votes to David Duke than Jesse Jackson Washington Week seemed Liberal in comparison to my old home town.

his 10% mortgage credit “hi, we’re going to pay you to buy houses” will help people a great deal and will provide strong support for folks to buy houses. Added to various other programs meant to stop foreclosures from happening and reset mortgages to the very highest amount that folks can just barely afford, it will stop the housing market from crashing out fully.

except, in addition to the fact that as you point out wages are not increasing, unemployment is. if the really economy tanks too hard, and unemployement increases (by how much i have no clue), i can’t see people affording their mortgages. what happens then?

Idiot child, McCain supporter and University of Chocago economist John Cochrane on the econmomy :

“We have an unprecedented seizing up for credit markets and, as yet, no depression,” he argues. “No recession.” Cochrane points to the relatively steady gross domestic product figures and astronomical rates of unemployment during the Great Depression. The United States is nowhere near having 1 in 4 adults out of work, he says. Instead, the gloom and doom he’s hearing sound more like a typical recession.

Look at the failure last week of Washington Mutual, Cochrane says. That was the largest federal bank failure in history. JPMorgan Chase bought the bank, and business continued.

“I still don’t see what is coming over the horizon that is so absolutely awful,” he says. He acknowledges suffering among ordinary consumers and Wall Street financiers alike, but he says some of it is unavoidable.

On second thought, even if we could increase median real wage to better reflect productivity, trying to prop housing prices up would still be a waste of resources, since it would distort household spending inefficiently.

Better to set up a HOLC and find the bottom for real housing prices asap. And better to set up a national financial industry bankruptcy program and let the insolvent fail in way least disruptive to economy.

Them houses are built and most (but no all) should be occupied at a market clearing price. This will be tough since households as well as financial industry will have to take a big write-off on recently perceived paper wealth. But not to do that will be re-running Japan 1990s. And US is in much worse fiscal shape, so will go worse for us than Japan. It went bad enough for Japan.

The real cost of the real estate bubble and pop was misallocation of real productive resources into too much housing too quick. But now it is built. Best to use as much of that built resource as possible at the market clearing price and fix financial system that allowed the misallocation. IMHO.

True, Cochrane is a very right wing Chicago economist, and has too much faith in the current unregulated mortgage security system to muddle through. But he is a very good analyst and his critique of the Paulson Plan Mark II (that is, a fake UK plan) is very good. I will try to find links to his analysis.

The politicians want to be conned.

yes. and that is starting not to surprise me. (i’m a little slow *g*).

but here’s the thing we have to decide:

do we want to be conned?

The toast of John Swinton, the former Chief of Staff for the New York Times, at the New York Press Club in 1953, seems most appropriate:

“The business of the journalist is to destroy the truth; to lie outright; to pervert; to vilify; to fawn at the feet of mammon, and to sell his country and his race for his daily bread”

The onrushing Depression is no accident.

Wake up America.

http://www.sweetliberty.org/is…..eedman.htm

Again I would agree as long as they can use other people’s money to keep their wealth, power, and privilege they will. Paulson has talked again and again about the need to save the financial system but what he is really trying to preserve is the financial system run by and for the elites.

I have never understood, perhaps until now, the psychology of those who would kill the goose who lays the golden eggs. But Paulson et al would rather risk destroying the world’s economy than actually give up control of it. Of course, they couch their actions in the opposite terms, that they are really trying to save it. But seriously, they have not addressed a single core problem: distressed homeowners and the declining housing market, derivatives, bank insolvency, or lack of regulation. Not one.

I believe that with respect to Global Climate change we may already be screwed. As if the Methane deposits under the Permafrost weren’t bad enough, there are large deposits of under the Arctic Sea ice. As it recedes, the Methane is released. Lots of temperature raising Methane with it’s Two Carbon Molecules, which would seem to indicate it is twice as bad for the environment as plain old Carbon Dioxide. Perhaps there isn’t any reason to get overly concerned.

New research suggests there may be a methane “time bomb” on the ocean floor threatening to catastrophically warm the climate and Canadian scientists wonder what effects this may have on people’s efforts to combat global warming.

Ian,
Thanks for another masterful analysis. One thing bothers me about your general analysis over these past few weeks however, and it is typified by the following quote:

. . .what they’re doing is keeping housing prices higher than they should be to bail out the financial sector, and thus keeping mortgage payments too high.

I think you’re making assumptions about the housing market that are dubious. The market for housing is not perfectly elastic: The upper bound may be elastic, but the lower bound is less so. A certain amount of this is a population density dependent issue: More and more people are bidding on less and less land. And if Al Gore is right, we’re going to have a lot less prime real estate (i.e., coastal plains with their cities) than before. That means there will be resistance to lowering real estate prices too much.

One outcome may be that more and more people will become homeless, with potentially catastrophic results. One place to look for what might happen is to research the relationship between wealth distribution and real estate in overpopulated places like Bangla Desh.

Another possible consequence is that the “excess” population will increasingly inhabit the most marginal environments– especially places that are prone to floods and other natural catastrophes (NOLA’s 9th Ward?). Remember Katrina? Welcome to the 21st century. California wildfires? You ain’t seen nothin’ yet.

This implies tremendous pressure on housing for the masses. There are already signs of this all over the place. Here in Hawaii, where the temperature is relatively mild all year round, there is a “homeless” population of large proportions. The mayor of Honolulu has a policy of conducting sweeps of public parks amounting to a kind of curfew to keep the homeless away from the tourists as much as possible. But I digress.

The point I started out to make is that real estate prices can only go so low. Yes, some homes were over-priced. Yes, people were encouraged to buy homes that they couldn’t afford by unscrupulous lenders. Yes, regulation and oversight were overly lax, starting at least with Clinton in an effort to make housing “affordable” and unleashed pell mell by the Bushies, who saw huge money making opportunities.

You haven’t commented yet, have you, on restoring the essentials of the Glass-Steagall Act? Many financial conglomerates would have to divest themselves of one type of business or another, but there were reasons for that Act, which Phil Gramm and others were eager to discredit.

I’d better stop here, because I’m starting to go in too many directions. Perhaps you get a few of my main points.

Bob in HI

I watched a portion of it until the “journalist” from the NYT’s said her family knows “Joe the Plumber” because he did some work for her family. That’s when I turned it off. Did see Doyle McManus from the LATimes give the usual beltway bullshit. These people aren’t legitimate representatives of the 4th Estate but merely celebrities posing as “journalists.” Comedians are the real journalists that are willing to ask the tough questions. Look at Letterman asking McLame about his connections to G. Gordon Liddy. By the way, has anyone heard anything about the new “Joe the Plumber” sitcom schedule for Fox?

I read that Stiglitz has joined the Obama economic team

as far as i’m aware, he got invited to one meeting. would love a link if it is more than that (and i’ll believe it when i see some sign of it in obama’s policy proposals).

Ian,

I have been enjoying and learning a lot from your recent series of posts about the economy. I would take the position that the “crisis” we face is not in psychology but in capitalism itself, regulated or not, to whatever extent it is. Capitalism is driven by credit and fiat money. Credit is “created” and used to drive the economy and where “wealth” is extracted. It also created inflation and bubbles.

Capitalism when left to those who believe in a credit based economy will ALWAYS overheat and at some point run away and create the crisis as we have today.

The only thing true believers can do to “save” capitalism is mess around with it severely which is hardly a “free market” affair, but a rather “state controlled” top down economy where the free market plays little roll until it is primed to run along until the next massive bubble and crisis where wealth which was created evaporates and its illusory value is driven home.

The latest “fixes” are nothing more than trickle down BS with the belief that that it is the finance sector health which is what makes Main Street work. So they are trying to “shore” up the banks and the financial sector believing that recovery will trickle down to Main Street. It probably won’t, because Wall Street is not about creating jobs, but about EXTRACTING wealth from “transactions”.

We need some radical economists steering the world away from capitalism which is in the process of destroying the planet as it generates enormous wealth for a very few.

Nero fiddles while Rome burns comes to mind.

I’m no economic genius by any means. And I know that Paulson is no dumbie. He is sweating the family jewels over this one. His choices, I think, are stagflation, prolonged recession, depression or inflation. When push comes to shove, I would imagine inflation is his first choice. Do you not remember what happened after the “oil embargo”? The manipulation of oil prices by ICE is no different.

“I read that Stiglitz has joined the Obama economic team. “

Stiglitz participated in the House Democratic Leadership team that was on CSPAN a few days ago talking about the hearings that are being/will shortly be conducted, and talking about the shape of the direction that they are going.

Bob in HI

Little edit

Large deposits of Methane Hydrates in the form of clathrates, seafloor deposits of frozen methane and water under the Arctic Sea ice..

I don’t understand why housing prices should not go so low as to reduce the currently unoccupied inventory down to normal levels.

How low can they go, and why only so low?

Talk about living on “marginal lands” check out “Escape from New York” if you want a glimpse of the Republican vision of life in the U.S.. Guess which side of the wall the fat cats and aristocrats live on.

Uh-oh. I’m not so optimistic anymore! Thanks for the info, I guess.

OK, sligthly more optimistic now.

Europeans are demanding a new world economic order. They recognize that the U.S. version of capitalism is dead.

sorry. I was more optimistic about this comment.

“Our race is the Master Race. We are divine gods on this planet. We are as different from the inferior races as they are from insects. In fact, compared to our race, other races are beasts and animals, cattle at best. Other races are considered as human excrement. Our destiny is to rule over the inferior races. Our earthly kingdom will be ruled by our leader with a rod of iron. The masses will lick our feet and serve us as our slaves.”

— Menachem Begin – Israeli Prime Minister

Who gets the bill, well, that’s never been a question.

there is a question and a correct answer but I doubt Obama has the balls

Thomas Jefferson in a 1803 letter to David Williams;

“The greatest evils of populous society have ever appeared to me to spring from the vicious distribution of its members among the occupations… But when, by a blind concourse, particular occupations are ruinously overcharged and others left in want of hands, the national authorities can do much toward restoring the equilibrium.”

and he goes on to note that this is the job of congress

FDR got it, Obama needs to get it

there has been far too much wealth concentrated in far too few hands

these assets MUST be reclaimed and put back whence they came, THEY MUST be put back into our infrastructure, our middle class, our education system, our alternative fuel and cooling the planet

they must

this process, and the bill that must be called, if it is to be successful Ian MUST be payed by those who’ve enjoyed the growth of their wealth

Yes, I think Glass-Steagall should be restored and I think the congloms should be broken up. I agree with Sanders that any business which is too large to fail is too large to exist, except that if I determine the scale is necessary then it has to regulated the way old style utilities were regulated “you will make 5% a year, give or take .1% or so”.

On housing – I think the correct response is to go to very high density land and let marginal land mostly fall out of use, or rather, to throw that stuff onto its real cost – no more subsidizaiton of it by any level of government. YOu want to live out in the boondocks, you pay the full infrastructure and insurance costs. If you do that, I think the US has plenty of land, but youi have to get off the suburbanization treadmill. Most suburbs that continue to exist should be made into mixed use, allowing light commerical/office uses, and should also be made into energy producers if possible, to make them economically viable, rather than pure cost centers that have no profit making ability other than property prices increasing.

The US’s population isn’t htat high given its size, it’s a question of population density.

Now folks will say “Americans don’t want to live like that?” I’ll reply “what’s so wonderful about travelling two hours a day” and also “people do what the incentives are for them to do”.

The current property track is how people save for retirement. Once it becomes clear that’s gone away, it’ll end.

Will the mob still be in love or will we turn on the new masters who by then will look like they are owned by the corporate world, after all we will be still bailing them out.

if we decide that we like being conned, then by that time there will be another guy (or gal) on the white horse for us to love.

just like we transfered our hopes from pelosi to obama. there will be another one to distract us.

or we will decide we don’t like being conned any more. here’s hoping.

He’s on the list, yeah, but there’s on the list and “really listened to” and I don’t think he’s the latter, though I’d love to be wrong.

that’s all and well when the human population had the space on the planet to go into “virgin territory”. but alas, it’s not your gramma’s planet any longer.

I think it would be real interesting to study this “unoccupied inventory” more, including whether it is growing more numerous or less, and how it is distributed geographically. A part of the study would also be the rules and regulations and market forces controlling repopulation of the “unoccupied inventory.” There may not be as much more unoccupied inventory as you think, but the distribution of it has probably changed, as well as its average value, which is itself a shakey concept, as Ian points out.

Bob in HI

they have not addressed a single core problem: distressed homeowners and the declining housing market, derivatives, bank insolvency, or lack of regulation. Not one.

neither have the dem party leadership. i doubt they even have a clue how to start.

Good article linked to in Naked Capitalism -Hanky Panky scam has increased mortgage rates. Though why the article (or was it Yves Smith?) said this was an unintended consquence is unclear to me. It certainly was a scenario discussed during the first weeks of Hany Panky Mark I.

Friday, October 17, 2008
Bailout Plan Drives Up Mortgage Rates
Naked Capitalism
http://www.nakedcapitalism.com…..rates.html

when I say “fdr got it”, I mean to say he was a student of founding father thomas paine and thomas jefferson;

paine, one of the greatest economic scholars EVAH, he invented the progressive tax and he really really got it, here’s a snippet;

“On small and middling estates it is lighter (as it is intended to be) than the commutation tax. It is not till after seven or eight thousand [Pounds] a year that it begins to be heavy. The object is not so much the produce of the tax as the justice of the measure. The aristocracy has screened itself [from taxes] too much, and this serves to restore a part of the lost equilibrium.

there is no doubt that we have screwwed the planet. whether anyone likes it or not, we are in the midst of the sixth great known extinction. the only question is: how severe we make that extinction.

It was a downright horror show of spin. Gloria Borger as host giving them their cues and the lapdogs playing their roles. The only thing missing was, “I’m John McSFB and I approved this message.”

America has taken the entire wrong approach to “housing” especially with respect to the environment. Much of it is embedded in the “american dream” of owning property. This is a dumb idea.

We need to look at housing as high density low energy demand small foot print structures, like apartment complexes and leave the land free.

What we have done is spread the cancer of home ownership from the center cities first to “bedroom communities” then to “suburbs” now exburbs to the point where we have almost blighted the entire coast from Boston to DC for example.

I believe you cannot find a single place in the lower 48 which is further than something like 10 miles from a paved road. Our american dream is a wet dream for bankers, builders and marketers and a night mare for mother earth.

that’s all and well when the human population had the space on the planet to go into “virgin territory”. but alas, and guess what, it’s not your gramma’s planet any longer.

Sustainable practices in energy production/consumption…Krugman’s geographic eco model where transport can be reduced in concentration centers (increase allowable density in existing zoning) and mixed use as you say will reduce deamnad on outside area resources like water and energy. Sierra Club has good explanations. Living with in our means is sustainable. It has little to do with the demand growth of USA economy. Lowering lifestyle expaectaions in exchange for stability and a reliable lifestyle is a trade off that has to be made as opposed to the the JackPot American dream and keeping up with the Jones as they jones on credit.

how about:

By Erik Kirschbaum

BERLIN (Reuters) – Two decades after the Berlin Wall fell, communism’s founding father Karl Marx is back in vogue in eastern Germany — thanks to the global financial crisis.

His 1867 critical analysis of capitalism, “Das Kapital,” has risen from the publishing graveyard to become an improbable best-seller for academic publisher Karl-Dietz-Verlag.

“Everyone thought there would never ever again be any demand for ‘Das Kapital’,” managing director Joern Schuetrumpf told Reuters after selling 1,500 copies so far this year, triple the number sold in all of 2007 and a 100-fold increase since 1990.

“Even bankers and managers are now reading ‘Das Kapital’ to try to understand what they’ve been doing to us. Marx is definitely ‘in’ right now,” Schuetrumpf said.

The revival of Marx’s treatise reflects a broader rejection of capitalism by many in eastern Germany, a communist country until 1989 and now racked by high unemployment and poverty.

A month of intense financial turmoil has toppled banks in the United States and forced a series of government bailouts in Germany and elsewhere, reinforcing anti-capitalist sentiment.

Chancellor Angela Merkel — herself an easterner — unveiled a 500 billion euro financial rescue package this week, a move decried as a reward for irresponsible bankers.

A recent survey found 52 percent of eastern Germans believe the free market economy is “unsuitable” and 43 percent said they wanted socialism rather than capitalism, findings confirmed in interviews with dozens of ordinary easterners. Continued…

You won’t find capitalists doing anything but looking for ways to prop up capitalism.

But it is unsustainable and needs to be scraped as a viable economic paradigm.

…
“We read about the ‘horrors of capitalism’ in school. They really got that right. Karl Marx was spot on,” said Thomas Pivitt, a 46-year-old IT worker from east Berlin.

“I had a pretty good life before the Wall fell,” he added. “No one worried about money because money didn’t really matter. You had a job even if you didn’t want one. The communist idea wasn’t all that bad.”

CAPITALISM EVEN WORSE

Unemployment in the former communist east is 14 percent, double western levels, and wages are significantly lower. Millions of jobs were lost after reunification. Many eastern factories were bought by western competitors and shut down.

“I thought communism was s —- but capitalism is even worse,” said Hermann Haibel, a 76-year old retired blacksmith, who was strolling near Alexanderplatz in the heart of old East Berlin.

“The free market is brutal. The capitalist wants to squeeze out more, more, more,” he said.

Free market hopes were high in the east when Chancellor Helmut Kohl promised “flourishing landscapes.”

But while some areas on the outskirts of Berlin, in Leipzig and along the Baltic shore are thriving, much of the rest suffers from depopulation and high unemployment.

The opposition Left party, which traces its roots to Erich Honecker’s SED party, has capitalized on the frustration and become the east’s most popular party with support of 30 percent. Continued…

Inflation follows strong economic growth (barring supply disruption). Therefore you can’t get inflation before the economy recovers. Q.E.D.

Oil embargo was a supply disruption coupled with the removal of Nixon’s price controls, the worst economic policy in the post WWII period, until W. Current situation is NOT like that. Supply disruption was last year’s news. If you hadn’t noticed, commodities prices are falling like stones.

Whether economy will recover or not is another matter.

…”I don’t think capitalism is the right system for us,” said Monika Weber, a 46-year-old city clerk.

“The distribution of wealth is unfair. We’re seeing that now. The little people like me are going to have to pay for this financial mess with higher taxes because of greedy bankers.”

Like many other east Germans, Ralf Wulff said he was delighted about the fall of the Berlin Wall and to see capitalism replace communism. But the euphoria was ephemeral.

“It took just a few weeks to realize what the free market economy was all about,” said Wulff. “It’s rampant materialism and exploitation. Human beings get lost. We didn’t have the material comforts but communism still had a lot going for it.”

But not everyone condemned capitalism. Astrid Gerber was a master tailor in East Berlin before her company was shut down.

“It was my dream job,” said Gerber, 42. She was unemployed for seven years, then opened up a newsstand but gave it up after her family disintegrated due to her 90-hour work week.

“Capitalism has its advantages but so does communism,” she said. “I can’t say one is better than the other.”

The thing to remember is that America has an aristocracy, and that aristocracy is very aware of who they are, and watch out for each other’s interests in a very tribal manner. So any steps taken by “Wall Street” or “the current administration” are taken BY our aristocracy FOR our aristocracy. Not you, not me, not America. These plans will be BY the wealthy and powerful, FOR the wealthy and powerful.

This aristocracy is as susceptible as any other crowd to self-delusional echo-chamber ideologies, con men, and fuzzy thinking. The difference is, they run things.

They are ONLY looking out for themselves. The don’t even see you and I as real people – we’re rabble. If you view our national policies as efforts by the rich to stay rich and get richer, without regard for anyone else, then they start to make sense. Otherwise not.

They only care if we’re heading into a depression if it threatens their wealth – if they knew a depression was looming which would result in starvation and unemployment for the masses, but wouldn’t threaten them or their lifestyle, they would shrug it off with no concern. And if it offered them more wealth, they’d embrace it.

McCain had the audacity to accuse Obama of ‘class war’ in the third debate, but like so much of the Right, that was projection. As one brilliant blogging economist put it, there was a class war, and the rich have already won.

My point is this: the question isn’t so much whether Paulson’s plan or Bernanke’s plan will WORK, the question is, “What is the plan ACTUALLY designed to do?” Our best hope is that these plans might accidentally happen to help out the working class.

Right now all the plans I’ve seen seem to be about propping up the facade of the status quo because those in power do not have the courage to accept that their laissez-faire ideologies are, literally, bankrupt. Right now the Aristocracy pretends that they’ve figured out an easy, simple formula for ever-growing wealth – let every rich person do whatever they want, and the government should shut up and sit down. Accepting that this ideology does not work means that their future becomes uncertain rather than assured, and they don’t have the courage to face that.

Right now they are desperately bending their ideological rules in order to push the problem off a few months into the future. They hope desperately that “something” might “happen” and that they will be able to continue with their simple confidence in Reaganomics. Meanwhile the rest of us suffer and hope “somebody in power” will fix things on OUR behalf, but those people aren’t even clear-headed enough to ACTUALLY fix things on their OWN behalf.

There are two ways this can play out. One is that the Aristocracy have the courage to take the long view and realize that they only way they’ll remain the Aristocracy is to reinvigorate the economy with investment in productivity. The other way is that they’ll continue in a spiral of denial until the system collapses fully.

The best thing for the working class to do is to try to figure out a way to survive. Maybe that means moving to a different country where the economic cycle is at a different place. Maybe it means paying off our debts and strategizing how to stay in our homes and keep our jobs. But don’t look to the government or Wall Street to fix things on our behalf.

We will only benefit from any solution incidentally.

We need to look at housing as high density low energy demand

However, 99% of Americans disagree with you.

sustainability is like some oxymoron. there is nothing sustainable when that which we wish to sustain is being consumed at an unstainable rate.

“The distribution of wealth is unfair. We’re seeing that now. The little people like me are going to have to pay for this financial mess with higher taxes because of greedy bankers.”

capitolism is fine, it’s the theives that are allowed to buy our law that is not fine

these theives will exist in all systems sanders, not just capitolism

the problem is the buying of our law, that’s the problem

lol, 1500 is still not exactly bestseller category. That said, folks who dismiss Marx out of hand are fools, he had a lot of very interesting things to say even if you don’t agree with all of it (and I don’t.)

I, for one, am not even fond of the soon-to-be Dem leadership. I see this as an opportunity to lay the groundwork within Congress to effect real change in the not-so-distant future. I see very little changing in policy over the next Congressional cycle or two. The Rethugs learned long ago how to exploit opportunity when it arose. I want the Dems to learn it and become better at it.

Ian, thank you for another enlightening post, and thanks to the rest of the pups for discussing it and adding to my store of knowledge.

Two decades after the Berlin Wall fell, communism’s founding father Karl Marx is back in vogue in eastern Germany — thanks to the global financial crisis.

All I can say is, the East Germans certainly deserve a return to communism. After the equivalent of 3 or 4 Marschall Plans, courtesy of West Germany, if East Germany is not happy, they deserve all the poverty they would experience under renewed communism. Apparently couldn’t happen to a nicer bunch. West Germany should say good riddance to bad rubbage.

One billion people at starvation today! That is the beginning.

They are brainwashed and except for farming this is not a good model for MOST Americans. Americans are selfish and like to own THEIR OWN PROPERTY and defend it with a gun.

What an odd concept.

You won’t find capitalists doing anything but looking for ways to prop up capitalism.

far too general, I am myself a capitalist, I do plenty else besides “proping up capitalism”, in fact, I do NOT prop it up, I defend it when it’s attacked at those times it is the victim

every capitolist I know is a good person who works for the better of man and I have no clue what you are on about.

there is evil among men not systems, that evil will rear it’s head no matter what the system and we have to be on guard

They are brainwashed

If so, what are your plans for changing it?

off to bed, see all later

Communism as practiced in the soviet block was certainly flawed, but we have proven in spades that capitalism as practiced in the West is equally flawed. We just have more junk to buy and debts for buying it.

“Your Miriam Fractal Spiral is gaining momentum.”

Of all the math that does not describe this system it’s fractals. Fractals are predictable and calculable, and are defined by non integer dimensions. They are like the froth on the sea, they are the “noise” or small variations in the system. Fractals do not define the Tsunamis.

It’s a chaotic system. The limits, up and down ae NOT, repeat Not predictable. What’s predictable is the changes will be sudden. Likw Tsunamis.

here’s a newsflash. whether you like it or not. this planet can only “sustain” about 2-3 billion of “us”; if those of “us” want to maintain the average lifestyle of the average american. but guess what??? there are 6 or 7 billion of us. so you take it from there. just be glad you lived when you did. cus our kids are fucked.

I don’t think you understand capitalism. At it’s core is the exploitation of labor.

Righto. Equally flawed. That’s why the standard of living in West Germany was equal to the standard of living in East Germany. Suddenly it is all clear. /s

Becuase house prices are a funtion of three items:

Unemployement and Wages
Interest rates

If unmploymentt rises wages go down. If interest rate go up house prices go down, as house prices are a function of 31% of income.

In a depression or ecession house prices fall. Those with no equity (caused by a loss in house value) are forced into the rental market. House prices fall further.

Who said equally flawed. I don’t see how you can measure flaws. There are some state controlled economies… or ones where capital is reigned in and there are “socialist” practices which have high standards of living such as Norway. It’s not North Korea vs Dubai.

Ian
Great post..they just keep on comng and getting better,My concern is

“In 2007 world derivatives outsanding were 282 trillion dollars, of which 250 was currency and interest rate swaps, 26 of credit default, and 6 of equity derivatives…”

$282 trillion is almost equal the total global money supply! What is the impact?

My links in defence of Chicago economist and free market Friedmanite Cochrane on Paulson plans:

Look in this link for Cochrane’s evaluation of Hanky Panky Mark II (along with many other economists’ evaluations)

Neel Kashkari Is the Zombie Master…
October 14, 2008
http://delong.typepad.com/sdj/…..ari-i.html

(Though I wonder how many of these evaluations will be different now that the hollowness of Hank’s equity recapitalization plan has become clear)

Here is Cochrane’s analysis of Hanky Panky Mark I (buy up all the naughty securities plan)

October 2, 2008, 4:33 pm
John Cochrane on Why the Bailout Plan Would Be a Disaster
By Steven D. Levitt
http://freakonomics.blogs.nyti…..-disaster/

***
Cochrane is an excellent analyst, even if his ideological leanings often lead him to high risk free market solutions. He has written some brilliant articles diagnosing problems of current health care market in the US. That said, his prescription seems to be to do away with most state insurance regulations, go with uniform federal regs, and watch the market produce the contracts we would want to see -which I disagree with completely.

Anyway, I tend to forget about ideological leanding of economists when they are willing to do serious analysis, and delay my doom on them until I see what their thinking is, and what evidence they present. Economics is science, dammit! It is it is it is, really really really…

Now I will go hold my breath until you agree! :-)

Capitalism is good when the outcome is win/win.
Capitalism is bad when the outcome is any combination of win/loose.

The derivatives will get unwound. They will be called illegal (voidable) contracts.

If you look at a country like Cuba, you will see it is very poor, and embargoed by the US, but in many ways the people have things that our middle and lower classes don’t have – health care, housing, education and jobs.

gonna take a whole lot of suffering and about a million years before this planet get back on track.

How can capitalism be successful when we have homelessness in this “rich” country, when we have hunger in this country? America is not only the silk stocking district and the Hudson Valley.

I agree, that is why need following for solution to housing mess:
1) mechanism to renegotiate, or refinance, distressed mortgages
2) government mechanism to clear market, my beloved idea of new HOLC.
3) fiscal stimulus to support median income (and longer term, reforms to allow median income to follow producitivity increases in long run)

But if that is what you and Bob in HI are saying, that just letting housing prices bottom out while keeping everything the same will not work, then I agree.

The tragic think about “investments” of most people is that this is their “retirement” income or where the life’s work is placed – in corporate shares, stocks which are supposed to represent an asset of accumulating value. How dumb is that?

50 million below the poverty level and growing rapidly…could be 60 million in a couple years of recession.

How do rents relate to the deflation of housing and real estate? Can we expect rents to come down as well as housing prices? Why shouldn’t all sorts of things drop in price as well?

If real estate was artificially valued then it should come back down to reality… And what would that be? How do you value a home? Bricks and mortar? What about location? Demand? How do you avoid the same inflation spiral when intangibles are at play?

the person i really pity, is the next president. he is so fucked what ever he does.

With Paulson essentially driving the economy we are not a fascist country – state capitalism.

Not if he takes some radical steps and nationalizes what should belong to the people and limit interest charged, sets a livable minimum wage and a maximum limit on earnings and taxed inheritances severely so that accumulated wealth is returned to the people not passed to heirs.

Love the read Ian, only one nagging issue . . . . people lost their homes AFTER they lost their jobs. No jobs, and NO ONE gets saved. No one’s home gets saved without an income.

So, this version of bailout that you’ve offered is indeed doomed deeper and faster than you intimate IMHO. And IANAE!!!!!! It’s just common sense.

This toilet started flushing long ago here in CA when jobs in building started to tank. Them new homeowners from Redding to Bakersfield were in great part people with jobs based in the building business and all it’s offshoots, be it supplies, trucking, or admin and support.

And jobs are NOT coming back, and they will CONTINUE to disappear. And you can’t pay on a mortgage with unemployment or a $10 an hour job . . . or on service tips.

Nope, the key indicator, which NO ONE is addressing in details, is jobs. Good paying jobs, at $40K or more for people with experience and education. Even building trades make $40K.

What to do?

National Work Projects, NOW! Throw a Trillion at that, create jobs for labor and white collar, and you’ll save mortgages and houses and lives.

Without the IMMEDIATE creation of jobs, it’s gonna crash hard, less than two years into Obama’s admin. Hell, it may crash much sooner than that if MORE jobs are gonna be LOST, before they get replenished.

It’s a tsunami waiting to happen, and well, it IS happening. Let’s not forget that jobless rates and stats don’t include those who have been out of work for the past year or more. Or those who have had minimal work for 2-3 years. My guess is, there’s a lot of those out there.

I wanna know what the 1% mentality of econ is gonna do when THAT flood engulfs them and there’s milllions upon millions of unemployed and homeless . . . beyond what we have now.

Again, Ian, great read, you make it easy to grok and I sure do appreciate how you lay it out so us layfolks can understand it, see it, and feel it. Great work, as always. Thanks for sharing.

The other side of the coin is over 90% are employed and living there life style. I see the “Real Economy” shrinking but those retained will do well…if not a little less affluent…just not spending so much.
My county has 2.3% unemeployment in as state with 7.8% unemployment. The national is 7 something.
So what will the projected GNP be? and can FRD programs be instituted to reemploy the disenfranchised?
How about tackling that Synoia?

We really need thinking outside the box and get the greedy bastards who sunk us as far away from the decision process as possible. They may be clever but they screwed us royally. You’re fired.

capitalism is tantamount to facsism without social responsibility. that goes without saying. take it from there dude.

Phreakin bingo . . . as a political model, that’s spot on Sander.
And the have’s have been exploiting labor from the get go . . .

We humans have made great strides from the onset of the industrial age in the west, no doubt.
Working hours, fair wages, working conditions, child labor, safety and more have all improved over the decades . . .

But the middle class that erupted post WW2 has been gutted in USA. Gutted.
And conditions are dismal across the board with NO regulatory oversight improvements to support, empower and improve labor (all work, not just manual labor).

Privatization/deregulation has served only the ruling masters while the workers saw their lives diminished.

Healthcare to wages, you name it. Down.

Profits, up.

Without regulation, and the creation of more jobs, fast . . . house collapses on us all.

Less than a week after the Washington Post reported that the Department of Defense will pay private contractors $300 million over the next three years to “produce news stories, entertainment programs and public service advertisements for the Iraqi media in an effort to ‘engage and inspire’ the local population to support U.S. objectives and the Iraqi government,” Virginia Sen. Jim Webb wrote a strongly worded letter to Defense Secretary Robert Gates. “I have serious reservations about the need for this expenditure in today’s political and economic environment,” he wrote. “Consequently, I am asking that you put these contracts on hold until the Armed Services Committee and the next administration can review the entire issue of U.S. propaganda efforts inside Iraq.”

rents are on the rise as foreclosed households increase demand. We went fron 6% vacancy rate (a flexible stock that worked for the renters) to closer to zero vacancy.
As population grows it squeezes the supply rents prices rise. Will they soften? Doesn’t seem so as speculators are buying the bank foreclosures.

The problem now is that rents have been stable, whiile housing prices are far above their rental value by historical standards. In fact, in areas with high foreclosure rates, rents have increased due to people getting kicked out of houses and having to find rentals. Housing prices will fall to be closer too, but still slightly above, their rental value. Rents will stay the same, given economic conditions do not go into depression territory.

So, I am not talking about general deflation, but change in price of an asset (housing) in terms of the real services it provides back to historically normal levels.

The price of housing is still much higher relative to its rental value, to real household income, to real productivity, than has historically been the case for almost 100 years. There has always been a premium on ownership compared to renting and this has been stable historically. The real estate blog Calculated Risk has presented lots of evidence that the price of housing is still too high and must fall another 10% to 25% in order to be in line with historical norms.

Further falls in the price of housing will be painful -certainly many families’ wealth is not what they perceived it to be a couple of years ago, and that causes havoc with retirement plans, and kids educational plans, etc. But that is one of the costs of an asset bubble and burst like we have seen with housing. In my opinion, that misperception of personal wealth, and associated infeasible planning and consumption and saving decisions, are part of the real cost of the bubble, more than the federal bailout dollars we read about in the paper.

How about this for a radical idea:

When you vote each November your ballet has a series of categories such as education, infrastructure, defense, etc and as a voter you apportion how our taxes are spent. Congress only decides what the programs are and can’t spend more than it takes in!

when the economic structure changed from rewarding the worker for increasing productivity to rewarding the investor, the system become out of wack.

“So there are a number of things that can go wrong with the current plan, and its best case outcome is economic stagnation, where all the money that would have been used to improve the economy is instead being used to keep rich people rich, where the owners are chained to their houses by golden handcuffs, where on aggregate Americans have no money to increase either consumption or saving—an economy that doesn’t fly apart at the seams, perhaps, but one that feels just awful all the same. What is being used up to save the present is, once again, the future.”

I would argue that this is actually where we have been for some time with the exception of people being chained to thier houses.

We have had little or no savings and people have been borrowing in order to grow the economy. They have not conciously done this they have done this because they could and rates have been relatively low if you don’t invoke the universal default clause in your card (even if you did you could probably transfer it to a new one.) Debt was seen as a no brainer.

We have been losing our economic base for decades. Fifteen years ago in college I was reading about how the only growth in the economy was in the service sector. We have been running around servicing each other for decades and we no longer make anything of consequence except food, guns (military spending), drugs and healthcare. Before the bust I would say houses, but they don’t really count. McMansions in the middle of nowhere are really a dead weight loss to society. They serve no productive capacity except to make people feel rich.

Many of the things we do make are either a dead weight loss to society or they just plain don’t make sense. America as a society has made very poor choices about what to spend our scarce resources on. These poor choices are really going to come back to haunt us in the new economy. We are really going to miss all the time and money we spent on houses in forclosure, the war in Iraq, various military boondoggles, various aid programs to countries that support our enemies, no bid contracts for Katrina cleanup…the list goes on and on.

A little bit of actual scarcity might actually do us some good. Our society needs to learn that choices have consequences and the sooner the better.

With properties upside down, why bother to pay the mortage and throw your money away? Why not do the calculation and get out and buy in when the market has bottomed?

The deal with home ownership is that it is usually a very long term commitment because the asset costs so much and people usually don’t have the savings to pay cash. So it is decades of payments… and they hope for moderate appreciation to exceed inflation. This whole credit volatility thingy is a nightmare for long term borrowing and home ownership.

What I am saying is that housing values are a density-dependent phenomenon. The more people there are, the more competition there is for land. This competition has consequences, which is what ownership and valuation are all about, ultimately. That competition will manifest itself somehow, and the main ways have been ownership, occupation (residence), and the values placed on those two things. In our system, “values” mainly means price, but it can also be conditioned by things such as building codes, insurance rates, and so on.

So there’s just no way that the price of land in, say, Manhattan, can drop too far, unless sea level rises and a tsunami washes all structures into the ocean. Or unless it becomes toxic to human habitation for some reason. Someone will always pay a price to either own or occupy that land, and it won’t be cheap. The homeless will “occupy” it temporarily, until the city, or the owners, decide to remove them. So the elasticity of low-end pricing on housing depends on population density: the higher the density is, the less elastic its value becomes.

The converse is also clearly true: The lower the population density, the more elastic is the lower bound on the valuation of housing: In a deserted place, the value easily drops to zero. That’s what a ghost town is.

Bob in HI

Interesting – so Markie bets we do, and you bet we don’t? If Markie’s right and you’re wrong, won’t his payout to you be practically worthless, while the other way round you have to pay him (say) funf billionen dollars?

man the dykes matey.

This is because America worships wealth not quality of life.

See Century of the Self:

http://www.bbc.co.uk/bbcfour/d…..de_1.shtml

You can understand how we have been manipulated by the masters.

anwaya. two hundred years from now, they’ll be saying, “where was their sense.

“The politicians believed they were creating a new and better form of democracy, one that truly responded to the inner feelings of individual. But what they didn’t realise was that the aim of those who had originally created these techniques had not been to liberate the people but to develop a new way of controlling them. “

Well, Markie, as long as you still have the price of a loaf of bread and somewhere to buy it, I guess you’ll be alright until tomorrow.

I think the collapse of the Dollar will sudden. The Dollar is rising against all other currencies (except the Yen) just as the Fed is adding three trillion to the supply. Even Gold is falling compared to the Dollar. I was suspicious when the Fed quit publishing M-2 (money supply). It all makes such perfect sense now.

i make my own bread, but 10% of US petroleum consumption is consumed by the military. go figure.

Thing is, I think they’re going to do as much as they can to stop it from collapsing back to rent-equivalent. Once can argue they won’t succeed, but a 10% mortgage credit, say, is pretty powerful.

If the dollar has a real collapse it’s all over. There are at least a couple hundred trillion dollars in currency swaps. It’d be a nightmare. That’s the one thing they must avoid at all costs.

so go back to the beginning of this thread. see the parabola of the derivatives??? your ass is grass. good night.

OT but I just heard that Congresswoman Michele Bachman wants to reopen the House Un-American Activities Committee to purge “liberals”. The Republiclans are like zombies. They just keep coming.

They must be stopped at the voting booths. Voting for a Republican is just a slightly slower way to kill yourself.

Democrats (at least this year) are the answer. Republicans ARE the impediment to solving our problems.

I have never understood, perhaps until now, the psychology of those who would kill the goose who lays the golden eggs. But Paulson et al would rather risk destroying the world’s economy than actually give up control of it. Of course, they couch their actions in the opposite terms, that they are really trying to save it. But seriously, they have not addressed a single core problem: distressed homeowners and the declining housing market, derivatives, bank insolvency, or lack of regulation. Not one.

Maybe they’ve sussed it out like a CDS and ‘failure’ can somehow be more profitable than ‘the rescue’.

Maybe they plan to trash America and move to London or Peking and run the world from there. Nobody knows their gripe or their opportunity or agenda.

However, whatever the elites are promising their minion you can also depend on them to stab them in the back at the appropriate time. After all, this is the Bush era and that’s just how things are done.

Meanwhile, the rest of us are in a sinking boat and we don’t seem to have an army to fight this enemy. Just a few weeks ago I tried to imagine what they would or could do to win the presidential race and it never occurred to me they would trash America for fun and profit. Now I fear they have several more months to do even more damage. What, I still don’t know.

Finally, it becomes more clear with every passing day that there is a very real enemy (ideas really) which are driving these crises and we can hardly gird ourselves to survive them since we aren’t privy to them or the plans.

America today is as vulnerable as a slave or a non-union coal miner to their master and employer. Will America stand and fight back? How?

EPUland, but maybe someone will read …

As of last month, my back-of-the-envelope calculation was: in excess of $4 trillion thrown into the financial system. Starting with $500 billion from the Fed in August, an equal amount from ECB, and a lesser figure from BoE. Then there was the discount window ~loans~, the TAFs, the TSLFs. The rest of the manipulations like the suspect Bear Stearns deal for JPMC — and the dollar ~rally~ brought to the world by the Fed and three other central banks, at a cost of $280 trillion.

All that before the ~rescue~ … and then this a.m. I read, from the Agora Financial 5-minute Forecast:

“The Fed is still doing its part to devalue the greenback: Banks borrowed a record $437 billion from the Fed last week… per day!

In the week ending Oct. 15, borrowings from the Fed averaged $437.53 billion each day, an all-time high. That’s an average $99 billion a day from the discount window; $133 billion a day for the Primary Broker Credit Facility; $82 billion for “other credit extensions, namely AIG; and $122 billion (PER FREAKING DAY) for the new commercial paper swap fund.

As of Oct. 15, the Treasury has sold over $499 billion in Treasury bills to fund the Fed’s supplementary financing account, which it uses to make these loans. They sold $50 billion in T-bills last week alone. Incredible.”

I just threw away my envelope.

They should be fired the whole crew of financial advisers on tv.

we have had serious inflation. rather than being widely distributed through the economy, it was limited to real estate and equity sectors.

Wow, you have summed up the knowns about the unknown perfectly (serious here).

One thing to also ask is what happens to the people that actually have money – what happens to the value of their assets and what do they do? Ex. Does China decide to be the first to dump the dollar in order not to be the last – if not why would they arrive at that decision (what sort of global arrangement will have to be reached).

Okay, let make the whole thing free. NO MORE MONEY. If you want a house, it’s free. Same thing for a car, and so on. I mean, we are already spending Trillions of dollars on DOLLARS – not something tangible, just MONEY. This to me makes no sense.

Now being free, does not mean there is no cost, so to speak. You have to work, if you are able and of a certain age (say, in good health and after high-school or college, noting that not all professions require college. Also, if you refuse to work, you only get the basics to live on, nothing more. And what constitutes refusal, vs unable will be fair as defined by the public at large, not government). Also, whatever you get for free, you have to support. But that is a whole other segment.

We will have stopped these wild financial cycles that cause untold damage, just because of money. Instead we now value people, not for what they have (because they can have anything), but rather what they give back to society. THE PERSON BECOMES THE FOCUS OF WHAT IS MOST IMPORTANT, AND WHAT THEY CONTRIBUTE TO SOCIETY, IS THE CURRENCY OF THE LAND.