sounds good to me. and we read it here first.
rahmo can rambo the gooper thugs.

no support for the bill. pull all the gooper gimmes.

Exactly – don’t even bother with the smoke – just let them go and whine at the microphones. The Zen of Rahm is to BE the legislation – to GO THROUGH the Repubs to the other side.

Jane, you nailed it. So what’s the real deal? Why does Obama’s stimulus contain so much Republican appeasement, re: tax cuts? I can’t figure it out right now.

If they could’ve told the Republicans to go fuck themselves BEFORE they wrote in the compromises about taxes and contraception it would’ve been slightly preferable.

Not.Enough.Pies.
That’s goddamned right.
Digg right here!

Personally I don’t care for Emanuel but if he gets the job done I’m fine with that.

Nice takeoff on Oppenheimer’s statement, Jane.

Rumors that Obama may offer Sec. of Commerce to Sen. Judd Gregg (R-NH), POTENTIALLY giving Dems the mythological 60-seat Senate majority, assuming Franken eventually gets seated.

Any idea if he will take on AIPAC? Will he help Obama steer a more evenhanded course on Israel/Paalestine?

And, Digg is open, folks.

What is truly ironic is the fact Rahmbo’s DLC/Blue Doggers are more in sync with the Repugs’ tenets than Teh Left’s…! Go figure…! ;-)

So, are Rahm and Barack playing good cop, bad cop? What’s the dynamic?

I think Ian is right, Obama really does believe in tax cuts. He said it during the campaign and he meant it. (BTW, when Dean Baker was here the other day he said he was okay with most of them.)

As for the other stuff, I guess all the whining from the media just got to them.

Well if true why does Obama compromise so much in advance on legislation, like the stimulus? I agree that Rahm and bipartisanship don’t go that well together. But when you look at Rahm’s political agenda, it is a lot closer to the that of the Republicans than ours.

MSM says the plan is getting BIGGERin the Senate! OMG! Where were they with Bushco spending, war and otherwise, and dereg?

You must be kidding. Emanuel loves him some AIPAC.

Look behind you – is that a snark tag lying on the ground?

Heh, See my 10…! Great minds and all…! ;-)

The problem is that tax cuts dilute the effects of the stimulus and it really looks like the stimulus as presently configured is not going to do the job. So what does it matter if everyone agrees but it doesn’t work?

I think you just answered your own question.

;)

I owe you a drink. There is a lot of distractive tap dancing, i.e. kabuki going on.

I’ve never seen evidence that Rahm is competent in any constructive way. Then, (among his more recent aberrations) there is the matter of his misguided support for Nikki Tinker’s primary challenge to Steve Cohen in Tennessee’s ninth congressional district.

I keep hearing part of the tax cut thing will involve payroll taxes. If so, just how much difference would it make in the “average” working person’s paycheck? Maybe 10-20 bucks? Better than a poke in the eye with a sharp stick but basically meaningless.

when Dean Baker was here the other day he said he was okay with most of them.

that is not how i understood dean’s comments. here are the two i’m thinking of, was there something i missed?

dean baker recommended dumping most of the tax cuts:

The Obama stimulus plan is very good start. However, we will need considerably more spending to offset the downturn. By their own calculation, the plan will get us only about one-third of the way back toward full employment by the end of 2010. If we spent $600 billion a year, and dumped most of these tax cuts, the package would be more in the ballpark.

Nonetheless, I very much hope that Congress approves it quickly. We can always add to the stimulus later.

and later:

I’m not sure that if you had the Obama crew draw up their ideal stimulus that it would have much less than $275 billion in tax cuts. Personally, I’m not upset about the $500 per worker tax cut. The business tax breaks are more dubious, especially the 5-year tax look back.

If you are going to do tax breaks, I would love to see them go to reducing hours (you cut hours by 10 percent and we pick up the tab). that would get money in the economy and make for a more family friendly work place. But, it will be tough to get this one on the map in DC.

Rahm: “If only Al Wynn were still in the House, then things would have been different.”

But Jeffrey Goldberg, a deep thinker and strongly impartial, says Rahm’s not in Israel’s pocket.

I’m just guessing like everybody else, but just like Obama is the most liberal president by a long shot that I think we could hope to elect in this country, so this stimulus bill is the most progressive stimulus we could hope to pass. Not because of the Republicans, but because of the Democrats.

Which doesn’t make Obama a liberal, or the stimulus bill progressive. That doesn’t invalidate the fact that, as Bernie Horne said, it’s the “biggest and boldest” piece of progressive legislation to pass in the last 40 years, and there’s a lot to be happy about.

Don’t worry, I’m pretty sure it’ll get worse before it gets through the Senate.

Yeah, well. I get the feeling that Obama doesn’t know much about economics so that it is relatively easy for him to be flimflammed. He is putting all his faith in the stimulus whereas bank nationalization would send a clearer message that his Administration is serious and has a handle on the crisis. By putting it off as long as possible and watering it down as much as they can, when they do get around to it it will have lost much of its impact.

My fervent hope is that Rahm will decide to spend more time with his family in the not too distant future.
I have no basis for this other than hope being in vogue these days.

Not in their pocket, more front and center.

I hope to some day enjoy a tropical drink with ya here in the Isles… You know one of those one’s that’s mixed in a hollowed out pineapple with an umbrella or two…! ;-)

At times I’ve caught myself hoping Blago would drag Rahm down with him. It would probably reflect badly on Obama, though. Guess I should be careful what I wish for.

I think you said it in the article – Rahm isn’t a progressive. Neither is Obama. That stuff’s in there because they want it. Bipartisanship was just an excuse.

Yep, the second one.

If you’re correct, prepare for the depression.

Not bad.

Got my barrel and suspenders.

Which after a couple make ya do stupid shit. *g*

hey, bud.
I’m tagged and bagged.

‘Rahm hates us…and we hate him back.’ Jeebers, I heard stuff like that on the school yard when I was in the third grade.

Here ya go. Post-partisan apparel.

I got a lot of property in the country. What did they call those camps where the homeless accumulated during the depression? We could do a FDL one at my country place.

Nope, not wearin’ any shitkickers.

Hoovervilles.

Nice.

We discussed this yesterday DBaker and I in scarecrow’s post.

http://oxdown.firedoglake.com/diary/3298

It was in that one that Horn’s name came up. Basically,

Total cost of tax cuts: $266 billion

$144 billion to taxpayers
$13 billion for businesses
$13 billion for higher education expenses
$51 billion for aid to states
$20 billion renewable energy
$25 billion increases in earned income tax credit program

The taxpayer cut is the $144 billion and comes in a refundable tax credit $500 for individuals and $1000 for joint filers.

Are you referring to the poor farm aka poorhouse?

It’s true, Blago was shooting for Rahmbo’s heart today. Any danger (or should that be ‘opportunity’?) that’ll hit and stick?

Rahmbo, bipartisan… hmm? Hmm. Nope. Insert unfunny Tom DeLay ‘date rape’ joke here.

Righto. FDL’s Hooverville.
And here’s the first get-together.

CCC camps?

Hobo Jungle.

So am i getting this right that by quoting a dailybeast blog post full of Rethug talking points we should now feel that Rahm Emanuel killed the non existent Republican support for the stimulus bill? Really? Wow. Thats all I can say is Wow.

I wonder what the excuse will be when the Senate Rethugs pull the same shit.

That’s it! Give that man a seegar.

That’s the generic. Hoovervilles were the specific.

Only the tourists…! ;-)

BBL…!

So I get $500 when I file my tax return. Next year. Whoopdy fuckin’ doo. That would just about cover a routine surgical procedure and aftercare on one of tigers. Or a month’s rent.

If you’re correct, prepare for the depression.

Yes, that’s the cost of not getting this right. It’s another thing I don’t think Obama and his economics team grasp is that we really don’t have more than one good shot at this.

I mean how unserious can you get when as I think you noted somewhere the first thing Geithner does is announce some ethics reforms and then to really top it off puts a Goldman guy in charge of it?

The rethugs still think this is a garden-variety economic slow-down. They refuse to believe that their actions over the past 8 years have pushed this country into a deep recession that will slip into a depression. Hence, they’re thinking short term usual playground stuff. Too bad. It’s too late. The challenge will be, in 4 years, who does the country blame?

Think of the upside: all the economists who can make a living studying the failures. /s

don’t think that’s most of them – maybe about half?

No guarantee that it would work even if they do everything right, which they most assuredly will not.

Better hope George Will inadvertently got something right when he suggested the economy has some sort of magical built-in self righting mechanism.

Obama really does believe in tax cuts. He said it during the campaign and he meant it

i agree. obama said it in october, if not earlier. (i probably remember the october speech because that was when i got called a concern troll for pointing out the focus on tax cuts).

Ds are guilty of same way of thinking about it.

As are Wall St. economists. A week ago I went to the annual forecasting lunch of the NY Assn of Business Economists. The two presenters on the U.S. said: fiscal stimulus will offset weakness in other sectors and recovery will begin midyear. When I challenged that outlook, they retreated to old rules of thumb while looking at me like I was nuts.

In my dotage I get confused.
Are we upset because Obama by picking Rahm is being to confrontational with the GOP; or, are we upset because Obama by putting some GOP ideas in the initial package is being too conciliatory with the GOP?

The problem is that he can’t do ‘bank nationalization’ unless he calls it something else, because otherwise the GOP/Media Complex shouts COMMIES COMMIES COMMIES at the top of their lungs.

Actually, thinking about the blindness of everyone who is responsible, as well as the forecasters, all I can say is: who could have thunk it?

Got same reaction when I pointed to tech bubble, which was last disaster I was professionally employed for.

They’ll shout that or something similar regardless of what he does. The closer we get to midterms, the louder it will become.

For me, the fact that Obama is R-lite, so the stimulus won’t work. I could care less about Rahm & bipartisanship, though you always had to doubt Obama’s sanity in talking about postpartisanship while appointing Rahm. But who could have thunk.

That depresses me. I had hopes that outside of Congress and CNBC that some reality was seeping into the people who supposedly had some knowledge. It certainly has in the business world that I operate in…those vaunted “small and medium businesses.” But we’re in the flyover, so we’re more boring and practical than the coasties… /s

That’s it. For $144 billion you don’t get much bang for it. Think back to how little difference Bush’s tax rebate made. I read somewhere it increased economic activity by 38 cents on the dollar, or almost nothing at all.

Got same reaction when I pointed to tech bubble-

All it took to put the kibosh on all that prosperity Clinton gave us was a tiny pinprick. Seemed to be a recurring theme in his presidency.

You got called a troll here?! That’s rich.

I pick “C” — some of this “bipartisan” stuff is just smoke and mirrors. Not upset, just making an observation.

since the topic is rahm and economics…

the other day hugh mentioned a new leonhardt article in the nyt, and he’s my journalist hero (not) i had to take a look.

this bit seemed familiar. i’m trying to remember, maybe a fdl book salon?

TWO WEEKS AFTER THE ELECTION, Rahm Emanuel, Obama’s chief of staff, appeared before an audience of business executives and laid out an idea that Lawrence H. Summers, Obama’s top economic adviser, later described to me as Rahm’s Doctrine. “You never want a serious crisis to go to waste,” Emanuel said. “What I mean by that is that it’s an opportunity to do things you could not do before.”

There is probably some psychological explanation (stronger than denial) that causes those-who-should-know to not know. I think regular folks understand it much better.

Yep. I wish someone was doing the math on the cost differential between a $2-$4 trillion TARP/stimulus package or simply nationalizing the banks for a period of time. That is, the cost differential to we taxpayers, since we’re footing the bill either way.

I’m particularly fond of that quote. It’s so W-Cheney-Rummy-et al.

Actually, the real message here is that John Boehner knows how to roll the netroots, especially the folks at The Daily Beast. From the Beast article that’s ostensibly on Rahm:

The day before the crucial vote in the House, Minority Leader John Boehner told his troops that the Republican Party is no longer a bureaucracy. “He took us by the throat and told us, ‘You’re no longer the majority, stop acting like it,’” a senior Republican told me about the run up to the vote. “‘If you’ve got an idea, get it on MSNBC. This is an entrepreneurial insurgency.’ He was kicking the ball around. He wants everyone involved. If there’s an amendment, he told us to offer it. If you have 48 seconds for YouTube, get it up there. Get busy and resist in every instance.”

There you go. Rahm Emanuel could have given them all tongue baths and they still would have voted against the bill.

That being said, it would have been nice if more of the Blue Dogs who Rahm helped elect had actually voted for the bill too.

That 600 bucks went to my vet. Deposited it in the credit union, drove to the vet and wrote a check. I do have to thank Shrub for helping me with my vet bill, though.

For those of you who are not watching 11th Hour, you’ll be happy to know that, right at the end of the program, they found the stolen stem cells and the pretty young woman whose system was destroyed by chemo will be saved. Cue the violins. (Don’t ask.)

yeah, by knowing, their 2009 bonuses will be erased…and their predictions were wrong…and their great methodology failed. And they got swept up in ideology. Truth hurts.

i been waitin for the Rahm card/hammer to play/fall.
i KNEW this was gonna be the case.
was just a matter of time,
who knew it would take NO TIME ATOLL!
cept of course, Jane!

lol

interestestinglyterrestallyfacinating times, here.

This is why I’m glad he’s no longer running the D-Trip in any way, shape or form. We now have a good shot at replacing him with a true progressive in IL-05, plus it’s looking like he’s not going to last very long as Chief of Staff.

later described to me as Rahm’s Doctrine. “You never want a serious crisis to go to waste,” Emanuel said. “What I mean by that is that it’s an opportunity to do things you could not do before.”

He’s channeling Milton Friedman.

Not hard to do at all back then if you criticized Obama.

Why won’t he last as Chief of Staff? Because he accomplished what Obama wanted him to do?

Good news about his district, though.

shock doctrine, baby!

perfect – thanks for that.

Can the House Repuglicans out-fox, out-think, out-bully, or out-maneuver Rahmbo?

Hahahahahahahahahahahahahahahaha
hahahahahahahahahahahahahahahahahahaha

I saw all that nonsense but selise being called a troll surprises me. She’s got some strong ideas but they’re consistent and she can support her assertions.

You betchum, Red Ryder.

El DIngo!

Is Obama playing the long game? Seems to me it’s brilliant to publicly look all bipartisany while your hatchet man is gutting the opponents behind the scenes. The corporate press are too dimwitted to see what’s going on, all they are able to see is the shiny and pretty. Obama’s nice-nice is shown on the teevee while Rahm does the job he was hired to do with no interference.

I’m not sure Obama’s playing things one bill at a time, I’m beginning to think there’s a long-term strategy here to position the GOP as the rump party they are.

Obama certainly must have known what Rahm was like before he hired him. If he wasn’t expecting exactly what’s happening, then he’s a lot dumber than he appears.

Hugh sez:

$144 billion to taxpayers
$13 billion for businesses
$13 billion for higher education expenses
$51 billion for aid to states
$20 billion renewable energy
$25 billion increases in earned income tax credit program

I think the ones he finds objectionable, the business breaks, are $13 billion.

It’s Thersday, Pups!
BREAKING: Anal Sex-Obsessed Junkie Tops GOP Politico

The difference between an evolutionary and a revolutionary is that the latter takes advantage of opportunities as they present themselves.

Trotsky.

A week ago I went to the annual forecasting lunch of the NY Assn of Business Economists. The two presenters on the U.S. said: fiscal stimulus will offset weakness in other sectors and recovery will begin midyear. When I challenged that outlook, they retreated to old rules of thumb while looking at me like I was nuts.

I think they are on drugs. Of course, many of these people thought the economy had “factored” in the housing bubble bursting by fall 2007. The stimulus should have some impact but I doubt that quickly. More to the point its effects and duration won’t be that long.

The benefits of a hatchet man/woman can never be underestimated, in the corporate world, academia, or politics. Heck, the r’s are lucky. They know what they’re in for.

Gonna try to get into my tree before midnight for once this week.

Be good to yourselves, and all other living things.

Namaste

Well, I think “C” is a good choice as to the political question.

As far as answers to our economic mess, each day I become more confused.
At this point I have yet to hear a plan that makes much sense to me.
We have [or had] a $13 trillion economy, we talk about spending $850 million over 18 to 24 months. That doesn’t seem very bold to me or likely to be very effective regardless of whether it comes as tax cuts or spending. Yet, the idea of making it substantially bigger and spending it faster doesn’t appeal to my flinty Scottish heart.

Depends on what the business breaks are and what size businesses they’re targeted at. Small biotech and green energy startups? Small biz in general? Corporate monoliths? If it goes to ensure hiring and keeping people, or keeping small to mid-sized companies making stuff in this country, I’m less concerned.

There’s this terrible calculation that forecasters make: it doesn’t pay to be too far out of consensus. If you’re wrong, you become unemployed. If you’re right, they hate you. I always took my job much more seriously than that.

it’s cool. just something i’m likely to remember.

spending it faster doesn’t appeal to my flinty Scottish heart.

That’s the thing about depressions a lot of everyday common sense ideas no longer operate. It’s a little like having really nice furniture in your house. The power goes out and you are left with the choice of either freezing to death or burning a fair amount of it up in your fireplace. Your normal reaction would tell you to keep the furniture. Survival tells you to burn it.

Nice analogy.

right – i read that as dean saying he’s not that upset with about half of the tax cuts (although he does advocate dumping all of them). not that he was okay with most of them.

not, i hope, that big a deal though.

Krugman has described the dynamics that demand large quick action very well in The Return of Depression Economics. Recommended.

On second thought, you’re analogy misses on one important point. You have time to decide whether you need to burn your furniture; perhaps the heat will get fixed before you freeze. In the case of the economy, not sure we have the luxury of waiting.

selise,
Jon Stewart did a great mock on confirmation hearings tonight, including some priceless characterizations of some senators. You’ll never watch a senate hearing again without rolling on the floor with those pictures in mind.

I agree, all analogies are imperfect but outside of a visitation by God or advanced aliens, I don’t see any external force coming along to fix the fix we’re in.

thanks. no cable here, but i might download it.

Not trying to be critical. Just making the point that time is of the essence. Nope. No deus ex machina for us.

Please do.

ecahn and hugh and anyone else – what do you see as likelihood of depression (given definition of your choice)? i can see how actions may increase or decrease risk, but i have no intuition let alone analytical way to judge. best guesses welcome.

The only entity large enough to do it at all is the USG. Goopers hate that with a hot hating heat.

The concept of “advise and consent” has morphed into “crack wise and assent.”

will do, i don’t think it will be posted until tomorrow though – must go through itunes as i don’t want to get in trouble with whoever it is that monitors bittorrent seeds.

Well, both you and eCAHNomics, being trained economists, probably know a lot more about this than I do. But, my experience makes me very wary when someone suggests that I abandon my everyday common sense. Over time it has been very good to me.

For me, depression equals recession plus deflation. The stimulus should create sufficient demand to keep us out of deflation and possibly briefly lift us out of recession. However without real reform of the banking system and a new industrial policy we are likely to slide back to where we are now when most of the stimulus effects have expended themselves in 18 months or so.

If I had all my databases, you can believe I’d be doing quantitative work to try to figure it out. In their absence, here’s the way I’m thinking about it. Consumer sentiment, a good leading indicator of the most important sector of the economy, is already at record low for post-WWII period, and there is nothing, except the temporary boost from lower oil prices, to change that. Second, the consumer fundamentals, longer run, are dismal. No rises in real wages, plummeting employment, and debt usage is kaput. So if the substitution of federal government demand for private demand is not big enough to reverse the decline and start employment on a self-perpetuating upswing, declines will continue. The stimulus package seems far short of being able to do that.

Your unwillingness to abandon rules that have worked for you is understandable. But I place the blame on bad economists who have are arguing about ridiculous stuff instead of educating the voter.

everyday common sense is great for everyday. but i think the point here is that this may not be everyday.

if you live in the north you know about driving on ice and how all the rules change how to avoid getting into a skid or if you do, how to get out of one. common sense for driving on dry pavement isn’t the same thing as common sense for driving on ice.

but how to tell the road is icy when we’ve never, in our lifetimes, experienced ice?

eCahn is the trained economist. Such as I am, I’m self taught. The Great Depression is the textbook case. Common sense told us to get our fiscal house in order, wring out the effects of speculation, and this is what sent us into depression. Roosevelt and Keynesian economics of run up big deficits but get people back to work and create demand are what turned things around. And to underline the point it was when Roosevelt in either ‘36 or ‘37 went back and tried to balance the budget the recovery stalled until our entrance into WWII.

Another thought, oldgold. We are not in normal times, which is why your intuition doesn’t work. In economists’ jargon, we are both in a liquidity trap (i.e., monetary policy, the usual regulator of business cycles, is powerless at zero interest rates), and a paradox of thrift, meaning that tax cuts get saved, whereas the economy needs spending right now, not saving.

thanks hugh and ecahn – i don’t doubt the risk, it’s just that i don’t have a way to judge probability – for example when you said get ready for depression, does that mean you think the probability is greater than 50/50?

Treasury is starting to talk about additional TARP funds perhaps 2 Trillion What impact will this have particularly given the justifiable anger over the bonuses etc.

That’s funny. My #119 makes a great complement to your #120. They say much the same thing but in different ways.

but for the depression we didn’t have social security, deposit insurance, etc…. aren’t these things that might mitigate the late 20’s early 30’s experience?

i’m really not disagreeing – just trying to get a better handle myself on how to think about all this.

and the big thing i still haven’t wrapped my head around are the international capital flows.

Too soon to tell. Still must see how pols react to forthcoming unemployment reports.

But to cite Judge Posner, who advanced the use of cost-benefit analysis in Catastrophe, when you face a gigantic negative, even if the probabilty of it is low, it is worth spending gigantic sums of money to avoid the catastrophe.

We had some discussion here the other day about the honest use of cost-benefit analysis, but this is a point in history where the concept applies.

LOL! did you hear whitehouse’s semi-rant today in the senate budget hearing?

Same goes for Dennis Ross, his special envoy to Iran.

paradox of thrift, meaning that tax cuts get saved, whereas the economy needs spending right now, not saving

Thank you. Now can you please go explain that point to Boehner, his ilk, and the MSM interviewers who give them unlimited airtime to say exactly the opposite?

You, selise & I should form a musical trio. *g*

that sounds too much like cheney’s 1% doctrine to me.

that said, i think what our pols are doing is not nuts, it’s criminal.

… i guess i thought you seemed very certain up thread, maybe i misunderstood.

Did not hear that

You learn that concept in Ec I, in an honest economics course. It’s pretty standard fare. Nothing to be done about those whose living depends on their being stupid.

The difference between Cheney’s 1% doctrine and my proposed use of “extraordinary” measures, is that I have evidence and he did not.

Most intellectual concepts are valid under certain circumstances. The trick is figuring out what is appropriate under current circumstances.

you were sounding a bit like a mild version of whitehouse… think i made come contemporaneous comment on what he said…. give me sec and i’ll look.

An assessment of probability is dependent on choices that have yet to be made. Without bank reform or a stimulus the chances of depression are 100%. The stimulus creates demand but does not sustain it. So it only gives you a window for growth in the economy to create new demand to take up the slack. This particular stimulus does not give us much of a window. Obama’s team doesn’t look capable of doing what’s necessary with the banks. So in 18 months or so we will be much deeper in debt but faced with many of the same problems. And then as now, the chances of depression will depend on what choices are made at that point.

Nor about those whose living depends on their maintaining the fiction.

Oh, and from Cheney’s POV, the 1% doctrine was valid. He would have lost his job and the Rs would be in the crapper forever if there had been another attack. What the 1% doctrine was not valid for was the United States. And then there’s the issue of whether Cheney implimented his 1% doctrine productively. Now if he had hardened the targets, gotten loose nukes under control, not tortured, used soft power, etc., etc., then perhaps it would have turned out a bit better.

Speaking of fiction here’s some examples of the kind of maintaining said fictions.

But at that point there will (will there not) be much much less USG capital available to be deployed, due to plummeting tax revenues… especially if too much tax cutting is implemented now.

I don’t rely on ‘intuition.’ Rather, I rely on astrology and tarot cards.

Someday I hope to get a good education and make something of myself. Then, I will be able to discuss the dismal science with folks.

found it:

ot – whitehouse up at senate budget committee hearing on global economy:

bush created $8 trillion in debt compared to where we were heading at the beginning of his administration
ss and medicare is $50 trillion in unfunded entitlement

clear and present economic danger.

we can’t nickel and dime about a trillion or two.

but we’re letting ceos rip off $10’s of billions while having to fight over whether or not to save the auto industry. people are losing trust in the gov. what does this mean for ability to govern?

(I have recently opined elsewhere:) Look, all Team O has to do is put up a couple Ross-Perot-style graphs showing how deeply wrong the economy has gone during every R administration for the last 40 years. The people will quickly understand that the Rs in Congress are just going to have to be ignored for a while, while the grownups pick the toppled economy up and put it back on its feet.

but for the depression we didn’t have social security, deposit insurance, etc…. aren’t these things that might mitigate the late 20’s early 30’s experience?

What you are describing is a social safety net. The problem is that overall and compared to other Western countries we have a really lousy safety net. Many people will either not have access to Social Security because they are too yound or be unable to live on their Social Security. As for FDIC, you need to have money in the bank to for it to be protected by the program.

It has been my experience that in the past housing construction has led the way out of recessions, this spred to furniture appliances etc. That ain’t gonna happen this time. Infrastructure will help but won’t have the same impact on other areas of consumption

not the same thing. probability here is not low. furthermore, there are risks everywhere and addressing one has opportunity costs that may mean not addressing others. imo any decision to spend gigantic sums can not be taken in isolation. opportunity costs must be weighed.

Yep. Do that in my employment table in my diaries. It’s really easy to document. Ds-too-dumb-to-live is my only explanation for why they don’t do it.

And here we sit with no actual domestic manufacturing industry any more.

Neal Stephenson in Snow Crash described a US that was only good at two things anymore, making entertainment and delivering pizza in under 30 minutes.

Without bank reform or a stimulus the chances of depression are 100%

that’s what i was looking for. thanks.

THanks

Someday I hope to get a good education and make something of myself. Then, I will be able to discuss the dismal science with folks.

i don’t let it stop me. worst that can happen is that people think i’m an idiot. i figure “so what?” they’ll probably figure it out sooner or later, and in the mean time i learn a bunch.

It ain’t subtle.

Yep. The only multiplier effect from infrastructure spending is jobs, and the spending those jobs create, etc. In other words, it will probably take more govt spending to have the same influence that a rise in home construction would have had.

There are economic forecasters who argue that home prices are getting low enough to reignite demand for those who still have jobs and can get credit. And there’s some truth in that. But even so, any recovery in housing is likely to be muted because it will take a long time for most people to recover from the recent experience.

Sample of one: I bought my NYC coop 20% off the bottom in the late 1970s. It was a big deal for me, so I talked about it with whoever would listen. Almost everyone told me that I was nuts because NYC coop prices always went down.

What are the opportunity costs you are referring to in this particular circumstance?

i was thinking more basic – like the risk of a run on the banks, or people starving in large numbers.

You forgot to mention the huge contribution to U.S. economic growth stemming from financial engineering in the past couple of decades. That is now caput.

There was already a global electronic run on the banks. That’s why we’re in the state we’re in.

That’s the part about us being deeper in debt. It’s important to remember that we are 18 months into this crisis. The housing market blew up in August 2007. Since then a lot of time and money has been wasted by Paulson and Bernanke. In effect we are blowing through our reserves to deal with this situation. Due to the stupidity of Paulson and Bernanke and now Summers and Geithner, we will continue to do so with little positive effect. This is what is so frustrating about the current mess. First, it should not have happened. The housing bubble should have been stopped back in 2004. Even through 2006, there were still chances to mitigate the worst of the effects of its eventual bursting. Once it did burst a massive intervention and thorough going reforms could have prevented the meltdown or mitigated its effects. Now we need a massive and well directed stimulus plus bank reform plus recapitalization costs plus a new industrial policy. You see how this goes. At each step, greater and greater interventions are needed.

Pop went that bubble. Thinking about doing real, actually productive economies this time instead.

this particular circumstance is not low probability though. hugh just said it’s 100% without effective action and i assume are in agreement? that’s the opposite of the 1% doctrine – more like the 99% doctrine.

banks? i thought it was money market funds and was stopped by, among other things, temporarily insuring deposits. you’re referring to the run on sept 15 or 16? – i’ve forgotten the date.

Well put. To restate your point in the generic: the longer you let the crisis develop, the greater the intervention needed to reverse it.

Is there a medical analogy? Necrotizing fasciitis? If you don’t diagnose it early, the more and stronger antibiotics you need, and the more parts of your body that need to be amputated.

I still think that the way out of this mess is to lower the work week to 32 hrs. Maintain incomes at same levels. For every four jobs that you currently have you would then have five. Sunset the rule so when demand comes back we go back to 40

Using banks as generic for finacial system.

Well, they were only stupid from the perspective of, you know, the effect on American people. They themselves did just fine.

Also the effect is going to be more than just more debt, right? It’ll mean less power from whatever money there is to be used at that point, because the world is likely to have moved off USD as the sole reserve currency by then, to hedge.

Won’t happen so I don’t pay attention to such suggestion. Don’t take that as a dis, just saving my typing fingers for things I think might be likely.

Ah. In the French manner, then. Big demonstrations and labor action there today. Shades of the Revolution, etc.

Right. Probability is much higher. I was just saying that even if the probability were low, you’d still want to do it. The higher the probability, the more compelling the case.

Well we assume that the Obama Administration will take some action and so that changes the calculus. It doesn’t mean that a depression won’t happen. It just changes the calculation. A lot of this is getting quite murky to be honest. The effects of Fed programs to buy large amounts of crap assets for example are difficult to figure in because it is very unclear how much is being bought and what price and how much crap that leaves on the books of banks. It is all opaque. This is again one of the prime reasons I am calling for nationalization because we need transparency to be able to reset the system.

HMMM @ 168
That was suggested today at the economic meetings today by Putin.

from hugh’s list (although wo links):

Money markets are big holder of short term and usually quite safe loans. Problems began, however, on September 16, 2008, when two of the largest Reserve Primary Fund and BNY Mellon Institutional Cash Reserves broke the buck, i.e. when the return on a dollar invested in them fell below one dollar, in response to losses from the Lehman bankruptcy. This began a run on the funds generally. $224 billion was pulled from them in the week ending September 19 with $89.2 billion on September 17 alone. There was also a report that Paulson intervened directly with institutional investors on September 18 to prevent another $500 billion from being withdrawn.

just wanted to make sure were talking about the same event.

dean baker and iirc james galbraith have called for similar.

the world is likely to have moved off USD as the sole reserve currency by then, to hedge.

I am sure that they would like to but the question is hedge to what? One of the main reasons that the dollar is an international reserve currency is that there are no others that can replace it, not the euro, or the yen, or the yuan.

lol. feels like murky is my middle name. that’s ok though – much easier (in my imagination anyway) to take a fixed point, even though hypothetical, and then move from there.

Yet. There are no others that can replace it yet.

Save your analysis until you see several pols in power talking about it. Many economists and other have advocated productive policies (like putting a floor under repos, to name one) that might have worked but were off the policy screen.

this is one of those thread conversations where i really wish we were all in the same room talking instead of typing.

Hate to exit, but I gotta go feed. Thank you all for an excellent thread tonight. I’m very glad you’re here where I can ask you things and learn from you.

And now I owe you a beverage too!

Can’t last a lot longer. But yes, conversation might be better than typing. OTOH, typing creates time to take account of what the other person said, and respond thoughtfully. Conversation is sometimes too rapid. I’m thinking about my attack on the Wall St lawyer at the party a couple of weeks ago. Had we been typing instead, my points might have been clearer (with links) and perhaps more persuasive. (But probably not. His living depended on not understanding.)

WHO predicts worldwide suicide rate increase in 2009
http://www.realtruth.org/news/…..onomy.html

Yep. It’s been real. Eat well.

That seems like an easy prediction. There are some things about the future that you can know, and that stress increases suicide is one of them, unfortunately.

As someone who made her living by forecasting, I’ve thought a lot about what is & isn’t possible wrt knowledge about the future. Some call forecasting a loser’s game, and there is a great deal of truth in that. But not entirely, since some things that will happen are knowable to a surprising extent. Besides, many decisions involve assessing the future. What’s the alternative to thoughtful forecasting? Throwing darts?

Good night to all, and I agree good conversation.

eyestrain trouble for me. would like to be able to close my eyes and just listen. oh well, must take a break for a while now…… later all. lots of food for thought…. thanks.

Oooh. L&O Criminal Intent is doing an episode on torture-sounds.

Oh gosh what are they doing replaying GWB speeches

Conyers has crappy timing. A few days before the stimulus vote Conyers came out with that rove thingy. Over on raw story a poster said repub’s wouldn’t be voting for it unless dems promised not to prosecute bush shooter team. I wonder if this is the case? If this is true the side deals/bribes like this in congress need to be out in the open. We need both sides working together, will they ever learn?

“Destroyer of bipartisanship?” He along with Nancy Pelosi gave Bush everything he wanted. He’s Republican-lite.

If Rahm had been able to do what Obama wanted, we would have seen several GOP defectors on this bill. Instead, not one. Then again, it’s really not Rahm’s fault — Ronald Reagan’s ghost could have risen from the dead and ordered Boehner to back the stimulus plan and he wouldn’t have done so.

Hi there from Utah