The TARP Inspector General’s report is out. The following is a verbatim extract from the executive summary. The penultimate paragraph of the summary states that the financial danger is not past. If anything it has gotten worse. Reflecting on what lasting change TARP has brought to the economy, the report said:
Stated another way, even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.
The good news is that things will go just swimmingly … until we reach the next hairpin bend. The rest of the excerpt follows.
Many of TARP’s stated goals, however, have simply not been met. Despite the fact that the explicit goal of the Capital Purchase Program (“CPP”) was to increase financing to U.S. businesses and consumers, lending continues to decrease, month after month, and the TARP program designed specifically to address small-business lending — announced in March 2009 — has still not been implemented by Treasury. Notwithstanding the fact that preserving homeownership and promoting jobs were explicit purposes of the Emergency Economic Stabilization Act of 2008 (“EESA”), the statute that created TARP, nearly 16 months later, home foreclosures remain at record levels, the TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation. Whether these goals can effectively be met through existing TARP programs is very much an open question at this time. And to the extent that the Government had leverage through its status as a significant preferred shareholder to influence the largest TARP recipients to carry out such policy goals, it was lost with their exit from TARP. As important as assessing the effectiveness of TARP programs is, in the final analysis, TARP can truly only be a success if TARP is both managed well and positive effects are enduring. The substantial costs of TARP — in money, moral hazard effects on the market, and Government credibility — will have been for naught if we do nothing to correct the fundamental problems in our financial system and end up in a similar or even greater crisis in two, or five, or ten years’ time. It is hard to see how any of the fundamental problems in the system have been addressed to date.
To the extent that huge, interconnected, “too big to fail” institutions contributed to the crisis, those institutions are now even larger, in part because of the substantial subsidies provided by TARP and other bailout programs.
To the extent that institutions were previously incentivized to take reckless risks through a “heads, I win; tails, the Government will bail me out” mentality, the market is more convinced than ever that the Government will step in as necessary to save systemically significant institutions. This perception was reinforced when TARP was extended until October 3, 2010, thus permitting Treasury to maintain a war chest of potential rescue funding at the same time that banks that have shown questionable ability to return to profitability (and in some cases are posting multi-billion-dollar losses) are exiting TARP programs.
To the extent that large institutions’ risky behavior resulted from the desire to justify ever-greater bonuses — and indeed, the race appears to be on for TARP recipients to exit the program in order to avoid its pay restrictions — the current bonus season demonstrates that although there have been some improvements in the form that bonus compensation takes for some executives, there has been little fundamental change in the excessive compensation culture on Wall Street.
To the extent that the crisis was fueled by a “bubble” in the housing market, the Federal Government’s concerted efforts to support home prices — as discussed more fully in Section 3 of this report — risk re-inflating that bubble in light of the Government’s effective takeover of the housing market through purchases and guarantees, either direct or implicit, of nearly all of the residential mortgage market.
Stated another way, even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.
Basically it suggests we have incentivized rather than discouraged economically destructive behavior. TARP has handed out Thompson submachine guns and getaway cars to people caught exhibiting an inordinate interest in other peoples’ money. No good may come of it. There will be Hope and Change, as in “let’s hope you’re still left with some change”.
Tip Jar or Subscribe for $5
This administration has already fired one Inspector General, ignoring the law that prevents such actions. I wonder how long before this guy gets a pink slip too? Amazing what this administration has been able to get away with under a compliant and complicit press. F
Why is it considered political if it is only stating a logical reality?
Or is logic another concept that has had its meaning taken away?
TARP
“It’s a trap”
debts that can never be repaid, will not be repaid.
I’m guessing war will be one of the results of the default.
To the extent that the crisis was fueled by a “bubble” in the housing market, the Federal Government’s concerted efforts to support home prices — as discussed more fully in Section 3 of this report — risk re-inflating that bubble in light of the Government’s effective takeover of the housing market through purchases and guarantees, either direct or implicit, of nearly all of the residential mortgage market.
http://www.americanthinker.com/2010/02/budget_fun_with_fannie_and_fre.html
http://www.nytimes.com/2010/02/02/business/economy/02fannie.html?ref=politics
http://corner.nationalreview.com/post/?q=MTI4MGZhM2QxOWY5MmJjOGQ4YTg1ZjE4YWRkY2JiMDI=
They called the tune…we pay the piper.
Well as Dick Morris said after discussing the Obama admins economic moves and their effects and the perceptions generated on the Hannity show, Republicans take the House and the Senate in the November mid terms.
President Barack Obama branded Republicans on Tuesday as electoral opportunists more concerned about their own interests than the people’s, taking a political risk by escalating criticism of the very lawmakers he’s urging to work with him.
http://news.yahoo.com/s/ap/20100203/ap_on_bi_ge/us_obama
How’s that bipartisan thing going, by the way?
The Wall Street Journal says:
….the U.S. so far has committed nearly $2.98 trillion toward stabilizing financial companies and rescuing domestic auto makers . . .
. . . “This is a huge, unprecedented financial commitment…$2.9 trillion is just short of what the entire federal government spent in fiscal year 2008,” Senate Finance Chairman Max Baucus (D., Mont.) said. “It’s like having a second United States government budget dedicated solely to saving the financial system, and that is truly surreal.”
It’s been a while since I’ve use my favorite response to matters large and small (other than ‘I told you so’)…
“Well… Duh!”
Were I sitting around a table drinking tea with a bunch of my friends, and one had just told this, as you have, Wretchard, I would calmly look at him/her and say very calmly, “ARE YOU ****ING ME???????”
Note: Please replace the asterisks with your favorite phrase denoting extreme consternation.
Teresita @ 8: And at least another trillion still to come.
What are the numbers? $12t national debt. $14t residential real estate, almost all in CDOs for which the market is still nonfunctional because maybe $7t is in the red. Real estate prices and economic infrastructure still reflecting the Internet and real estate bubbles and Greenspan’s keeping interest rates below inflation. I think a real accounting is that we’re something over $20t in debt (because the fed has to back up the bad CDOs), and at a realistic interest rate of 5%, that’s $1t interest in the budget, just to begin.
Now, some of that may be recoverable. The $7t in bad CDOs (and I am pulling some of these numbers out of my, er, hat) are not worth zero, they are probably worth at least $3.5t, and if things recovered, could be worth the full $7t or even more.
But I haven’t even tried yet to account for the social security or medicare deficits already on the horizon. Neither, to the best of my knowledge, has Obama. Or anyone else.
They were perhaps manageable on their own before the current meltdown, but now – I dunno. Certainly it will be harder.
–
Meanwhile, this is an excellent report.
Neil Barofsky can replace Geithner for my money. I assume he’s paid his taxes! And check the rest of the org chart in the linked document, p 221. Maybe there are some good people left, yet.
“We are still driving on the same winding mountain road, but this time in a faster car.”
Willie Nelson, On The Road Again
http://www.youtube.com/watch?v=1TD_pSeNelU
On the road again
Just can’t wait to get on the road again
The life I love is making money with my friends
And I can’t wait to get on the road again
On the road again
Getting bonuses and babes again
Buying Maseratis with my pocket change
And I can’t wait to get on the road again
On the road again
Like a band of burglars we go down the highway
We’re the best of friends
Insisting that the world keep turning our way
And our way
Is on the road again
right on cue, the ”debt” is all the latest two days of head parades on the financial cables can talk about. The Dems have been told to do it (the phraseology tells) and the pubs are so happy to talk about any part of the mess that yes if you want to talk about the debt pray let’s.
We’re being misdirected again –the debt is the flood but the busted dam upstream is the damned spending.
http://abcnews.go.com/Blotter/RunawayToyotas/apple-founder-toyota-problem-software/story?id=9728007
Steve Wosniak on ABC News claiming he can often but not always cause a runaway acceleration in his 2010 Prius by tapping the cruise control, presumably meaning it is neither the pedal nor the floormats, but most likely a software glitch.
But that’s not the story. The story is he (says he) could reach neither officials at Toyota nor in the government, couldn’t even get the numbers, which is why he called the news.
It’s that insensitivity to input by big organizations, that I suggest is the story, relating to the budget and TARP as much as Toyota.
As usual Walt wins the thread prize for Poetry, All Categories, All Weight Classes. How you do it –on point, in form, with strict rhyme and rockin’ fine meter, within MOments of the topic being raised– is one of life’s great mysteries. I am in awe and in your debt.
Keep Walt-zing, O Muse.
Why shouldn’t foreclosures continue on pace or at a greater pace? Sure, the banks may feel free to lend out as before, but if those they have lent to can not get a job and pay the mortgage foreclosure rates are not going to go down. In fact, they are likely to go up if the banks feel obligated to lend for the sake of lending. In fact, there is wide pressure on the banks to lend, how many stories have you heard about X small business not getting a loan?
Only when people start going back to work will foreclosure rates go down. In the meantime, the notion of trying to push more people into debt and into trouble seems like the plan.
IIRC Rush L. attributed the following to Saul Alinksy (paraphrase): I’ll get the banks to finance the revolution on Friday, on Saturday we’ll have the revolution, on Sunday the banks will profit, and on Monday we’ll shoot the bankers.
Nothing on the quote turns up on Google search (from a less than determined search) but it seems about right.
I have always thought, if credit is so hard to come by why oh why keep rates down? Supply and demand, right? I’ve not looked lately but when banks were lending out money (for non-mortgage loans) for 6% or so, most peer-to-peer lending sites were at around 9%.
Oh well. It seems to me in the last month or so IT hiring in my region is really catching fire. I pumped out seven applications today and received an unsolicited call inquiring about my availability.
hairpin turn?
On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn’t be further panic out there.
If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it.
We are no better off today than we were 3 months ago because we have a decrease in the equity positions of banks because other assets are going sour by the moment.
National
Review Article
I wonder are those hairpin turns at the hand of SOMEONE like Soros, who in fact has done it before
Meet
George Soros, the man who BROKE the Bank of England
Buddy,
Not to discount the spending issue, but I don’t think the main problem is runaway government spending, I think the problem is runaway government, period.
On one level we have a corrupt financial system that through favorable corrupt government leverage practices, allowed a handful of TBTF banks and favored hedge funds to nearly bankrupt the nation, with the help of
GSE ‘s like F & F.
But on a deeper level, it was the sheer amount of credit extended to the general public, much of it without prudent capital and income support, that first brought the nation to its knees, almost immediately followed by an enormous extension of credit to the very same banks pushed that credit to the public in the first place. ( Mish and Denninger’s crusade)
But still a deeper question is why so many of the public needed to go so deep into debt in the first place? Yes, the privileged classes were profligate spenders, but there are millions of stories of families where two reasonably talented and educated household wage earners, despite their best efforts, fell further and further behind, and eventually into deep debt. How did that happen? The answer is that family cost of living expenses in all the major expense areas: housing, education, healthcare, insurance, food and energy have risen much faster than income for decades. Why? Because the government is a major regulatory player in all the major business sectors that effect family cost of living. The hidden regulatory costs in all those industries is just suffocatingly huge, and it has driven costs through the roof!
Yes, the cost of government needs to cut way back immediately and it is a major, major issue, no doubt about it. But even if you could cut back the cost of government 30-40% tomorrow, the cost of living would still be way too high for millions in the former middle class.
Josh @ 11:
You asked what are the numbers regarding Social Security and Medicare.
According to the 2009 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, estimated outstanding unfunded Social Security liability stands at $15.1 trillion.
According to the 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, estimated oustanding unfunded liabilities for Medicare parts A, B, and D are $88.9 trillion ( remember, “You won’t believe how much health care will cost when it’s free”).
The website of the Dallas branch of the US Federal Reserve has more info, particularly a speech a few years ago on these liabilities by Dallas fed president, Richard Fisher (it isn’t pretty).
end up in a similar or even greater crisis in two, or five, or ten years’ time
My guess is that we have only six to nine months before the roof caves in. The Democrats will try to hold off the flood by throwing money at foot soldiers, as with 80,000 Census jobs, the low skill energy rehabbing of government offices, and the diversion of Tarp returns to favored “small business” programs. This time I think that strategy will fail for three reasons;
1. the light of publicity is on the exposed slush funds,
2. everyone knows the money is a one shot so no investment will follow,
3. while some Democrats facing an election in 2010 have an incentive to continue the farce, at the cost of greater damage down the road, no one else does.
Who that gave Obama rope in 2008 has a reason to do so in 2010? Not the big bankers like Goldman Sachs, not the Chinese or the Russians or the Arabs or Big Pharma. Who will risk taking a bullet for this team now if, to paraphrase John Kerry, it means being the last one standing up for him in a failed culture war? Perhaps GE will feel tied to their schemes of Cap and Trade projects and maybe the Hollywood and MSM set will cling to their dreams but it is as likely that they will drop Obama for the ultimate sin, being unfashionable.
Obama remains very smooth, his performance today in New Hampshire demonstrated that. His problem is that The Voice is a wasting asset, once people see it being rejected in the face of steady principled attachment to reality then it becomes almost impossible to repeat the magic spell that his performance had created. Obama is now the magician behind the torn curtain. His audience applauds but they are saying to each other “See, look at where he hides the coin on the back of his hand?” According to Rasmussen he has achieved a 10% bounce from the SOTU. Unfortunately for him that still leaves him at -7% and more important almost all of the gain is from Democrats. Independents now agree with Republicans that they have seen this act and don’t like it, and most telling is that they don’t trust him.
This is the end point in a movie where the old Homicide Dick shows the body to the shocked girlfriend/widow and then throws the tarp back over it.
Not quite the end, LotM –she still has to say Goodbye –
I remember holding on to you
All them long and lonely nights I put you through
Somewhere in there I’m sure I made you cry
But I can’t remember if we said goodbye
But I recall all of them nights down in Mexico
One place I may never go in my life again
Was I just off somewhere just too high
But I can’t remember if we said goodbye
I only miss you here every now and then
Like the soft breeze blowing up from the Caribbean
Most Novembers I break down and cry
But I can’t remember if we said goodbye
LMFAO!! For the guys that never managed anything at all except to get elected. Priceless!
No kidding. The worst is yet to come.
buddy @ 13:
Always, always, always watch The Magic Ones Other Hand!!
The Scammer-In-Chief is playing his double-double down. He is running to Leeden’s “Faster, Please!” but not the way Leeden intended. He has to have the utter and complete collapse of the Republic’s systems by mid-summer, at the latest. There is a Black Swan being staged out in the dark that we cannot see yet.
The former administration’s ignominy: a deadly recession, the TARP to make it worse, and the trust a group of Texans put into New York financiers and academics.
I wish back in September of 2008, GW would have simply said he screwed up and that he would seek Congress’s help to let the market clear as quickly as possible instead of propping up already-failed institutions.
I’m more of a compassionate conservative than a free-market anarchist, but even that (TARP) was taking it too far. I thought we had learned this lesson with RTC and the S&L crisis. Hell, a lot of that lesson played out in front of GW’s very eyes in Texas.
I don’t want to see us go the way of Japan. I’d rather take our nasty super-recession now, get it over with, and get about the business of rebuilding.
I’m ambivalent about what a mid-term Republican success could mean. Would they repeal TARP? Doubtful. Should they? Yes. Should they propose the mother-of-all bankruptcy court & foreclosure dumping market mechanisms as the alternative? Yes, but they won’t. It’s almost depressing to think about how another potential Republican majority may be squandered.
The problem is that there is no way out of this without pain, severe pain. No politician wants to be the one who ‘pulls the plug’ so to speak. I don’t want a Republican majority in the congress. Just enough to stop the worst of Obama’s initiatives. Because if the R’s are there, conservatives or not, and the economy implodes, guess who will get the blame. Not that they don’t deserve a great deal of it, after all they had 8 years to do something and didn’t. But then, as I said, politicians don’t want to be seen as causing pain, even if it is the best thing for the country. The US is like a drunk going through withdrawal, begging for more booze. No politician wants to be the one to cut us off. This is one of Darren’s feedback loops. Politicians get positive feedback spending your money to buy votes from various constituencies: trial lawyers, lefties, unions and their ilk.
And Unsk, I don’t really agree with your assessment that the middle class had to go into debt because of increased costs of living. The problem is that the middle class, made up of the Boomer and Gen X’ers, had to fuel a consumption driven lifestyle. Average home sizes have increased dramatically, more kids went off to college, including many who shouldn’t go to 4 year schools, more huge cars were sold. None of that was necessary. People can choose to live in a smaller home and not a McMansion, in a lower status neighborhood. They can choose to buy a used car instead of a new one every 2 years. They can choose to send their kid to community college instead of a private university. But they didn’t. They wanted it all, even if they couldn’t pay for it.
I know many people who have lived within their means and done without. They are not interested in bailing out those who lived high off the hog for the past several years, whether that person is a bankster or a ‘middle class’ debt slave.
If people make bad financial decisions, then they should feel the pain. that is the feedback loop that we need. But we’ve got it all screwed up, where those who were greedy, or stupid and lost their shirt gambling are rewarded, and those who were humble and went without are punished.
pel, agree, nothing but nothing can grow anew in the shadow of ‘too big to fail’. it so utterly distorts risk that nothing but the stingiest dribbles of new capital formation are gonna emerge in robust & usable form. the entrepreneurial and professional/managerial cadres understand perfectly that TBTF is the state takeover mechanism looming overhead like a drooling buzzard.
I wish back in September of 2008, GW would have simply said he screwed up…
Me too. At the time President Bush put forth the TARP bailout and nationalized the banks, I remember saying aloud to a room full of people that he had finally lost me. Turns out, and what none of us knew at the time, he himself wanted nothing to do with the plan but was persuaded by Paulson and others that if he didn’t sign on the entire economy would collapse.
Certainly many of the big banks would have gone under, but maybe that’s exactly what needed to happen.
Too bad Bush didn’t stick to his guns. But if he had, no matter what, he’d still get no credit and get most of the blame.
Plus –an American president, rushmore great or fencepost stoopid, has to be unquestionably on the side of the nation and the people. this one thing MUST be unquestionable. But somehow the idiots party has managed to elect the one thing that’s a no-no, a breach of that sine-qua-non –and thus the people are dumbstruck, frozen.
And we still don’t know ‘what happened’. stumble into clues and dark pathways almost daily. Wanna hear the latest? okay, here goes, short form.
Search [ paulsen russia fannie ], perhaps in the ‘news’ category –or web, either one.
See all that?
okay, Paulsen opens his book tour the other day, his first tv interview, it’s one hour long with Larry Kudlow, on CNBC. Transcript link below. A lot of repetitive drivel –and not ONE word about the huge foreign-policy story he had just the day before broken with his book release. Why? I can only surmise that someone –must’ve been CNBC –told Kudlow not to bring it up. Why? well, NBC is GE, and GE is very tight with Obama. what does this mean? I don’t know –and *that’s* the problem.
http://kudlow.nationalreview.com/post/?q=MjBmMWIyOTU0ZWYwYmU2YTYyZDkxYTg4ZDM0NjE4ZGQ=
TARP was never intended to be other than a big slush fund. And that is exactly what it is being used as, nothing else.
http://wp.me/piCpQ-59
To Big To Fail means To Big To Be
TBTF=TBTB
Billboard ready. Why can’t I get paid to think of these?
buddy larsen,
Did Bush’s acquiesce to TARP at the urging of Paulson and the Dems out of a misplaced sense of healing? Was he told that by giving the new team what they wanted he would reduce the rancor and stop any partisan attacks on his domestic record? Did they flat out lie to him and did he know how many of his people were already working for the other side?
LotM, i watched the Paulsen interview –LK raised that question (understandably not so couched), and paulsen, yes, over-protested and over-gestured that GWB was ‘very involved’. The rumor of course, is that he wasn’t –that he just turned the financial crisis over to paulsen & co. he had russia and georgia, and two wars, and Iraq & Agan gov’ts, to shape up for his exit, after all. but do read the transcript, when you have a chance –it’s there, sans the visuals.
Holy Crap!
In spite of W’s plainly stated admonition, I didn’t realize that almost everything in his initial post was word for word from the report, until I downloaded it from the .gov website and started reading it myself…
It reads more like an editorial piece form the WSJ or FT than a report generated by an apparatchick. Who ever wrote the executive summary wasn’t pulling punches and wasn’t afraid to call a spade a spade. To the best of my limited knowledge, everything in the executive summary is certainly true and is going to cause Rahm and company to have a stroke, a heart-attack, or both.
Who wrote that executive summary?
We need to know so that when their body turns up in a river, or they don’t turn up at all, at least Fox news can cover the story. We all know that nearly every other MSM outlet in the world will do their damndest to ignore this report entirely, and ignore the death or disappearanse of the straight shooter who penned it.
We really are in an ever steepening spiral into a financial abyss.
It seems the situation is probably worse than even a cynical pessimist like me understood it to be.
It sounds like it’s past time to find a remote piece of land far away from urban areas with fertile soil and adequate water supply, and to lay in a large supply of heirloom seeds and 19th century farm equipment.
It sounds like the wheels REALLY are coming off this time.
It’s just a question of next week, later this year, or five years down the road?
Pray for western civilization.
Lex Talionus, cum Alchemy. All just Habu doing some writing under different names.
I read the report yesterday and under Alchemy labeled it a Turd..the turd being the TARP charade.
I am pleased W is getting the word out although I don’t think it will change much. The November elections are setting up to change a good many things which will unfortunately have only a palliative effect.
The septic aspect that pervades all of this is primarily two fold. The Federal Reserve System and Wall Street. The SRO’s and other mechanisms are so dysfunctional that they now do greater harm than good. A good first step. The “Chinese Wall”
Great Wall of China easily became a metaphor for separation, lack of contact, and defensive fortification against intrusion. The metaphor was first used in the financial world during the reforms of the 1930s, following the stock market crash of 1929. The government insisted on separating the functions of investment banking (which are supposed to provide objective analysis of investment opportunities) from brokerage functions (which make money from offering stocks for sale). Even though the same company often provided both services, there was to be a “Chinese Wall” between the functions
Enron’s collapse in 2001 should have been tocsin heard around the world. Instead we continued to allow investment bankers and brokerage firms to work hand in glove.
The big problem here is that the firms’ stock analysts were generating false reports on companies to induce investors to buy their stock. This would benefit the investment firm, which was underwriting the stock offering. In one case an analyst at Credit Suisse First Boston kept a “strong buy” recommendation on a small telecommunications company named Winstar, even as the stock fell from $17 a share to 31 cents a share from January to April, 2001. The hapless Winstar never showed a profit and filed for bankruptcy. Regulators contended that the analysts had “failed to disclose the risks inherent in the company” Had the “Wall” been in place this would have mitigated the problem.
By April, 2003, ten of the nation’s biggest investment firms agreed to pay regulators $1.4 billion in fines. They were being prosecuted because they had “lured millions of investors to buy billions of dollars worth of shares in companies they knew were troubled and which ultimately either collapsed or sharply declined,” according to The New York Times,( April 29, 2003). That size fine might seem large but it doesn’t even cover the cost of paper used by Wall Street firms.
Now we are in a very deep dark hole. IF, IF we can get out of it we will be lucky. Few things are on our side; demographics, a society of separate cultures who cling to the old ways, our diminishing lack of the ability to rise from one socioeconomic class to the next higher one, an increasingly separated family unit ….the list is long and quite depressing. It is said that the difference between an optimist and a skeptic is experience ……call me a pessimistic skeptic. Reforming the FED and separating investment bankers from brokerage would move me to become simply a skeptic.
A lot of the really bad stuff could be ameliorated if the capital flows in and out of the USA were reversed: albeit slowly.
That could be done by turning the US from a net energy importer to a net energy exporter.
and too perhaps by putting up non tariff barriers to chinese goods.
the elements for becoming a net energy exporter are already in place. the US has so much natural gas in the lower 48 that the also immense gas fields in alaska are not needed. therefor alaska is now already considering rerouting the alaska gas to Valdez on the coast for export rather than sending the gas down through canada. The US government might pass a law that would somehow encourage the energy companies to invest their money in the USA.
It might not be so wise to put up non tarriff barriers to the Chinese but they do have to have their behavior changed. I think the argument that soros had something to do with the electronic run on the banks in sept 08 because of his relationship to the run on the british pound in 91. that would fit the kind of chastened look he showed at davos when asked about how weak the US currency is. he said that the US currency is weak — but every other currency is even weaker. (the few strong currencies like the norwegians and the brazilians–remember energy–have such a small float that they are already bid up)then he went on to attack the chinese for not allowing their currency to float. this is something that sarkozy of france did as well.
Solution? Ignore reality!
If banks had to value assets at their current worth, the entire banking system would become insolvent overnight. So they choose to purposefully ignore the reality on the ground. And for those that think things have improved let me present to you exhibit A, California notice of defaults for the last few years:
Chart
Last year, as in the year that saw the stock market rally with the momentum of a bull stampede, California witnessed the largest number of notice of default filings ever. Worst year ever. California had 450,000+ notice of defaults filed in a year that supposedly saw recovery. Now this data does reflect the new world order where banks choose to ignore bad data and pretend Alt-A and option ARMs turning into platinum bars. How bad is this?
1,232 people per day in 2009 received a notification of default because they missed at least 3 mortgage payments in California. Chart 2.
—
Japan proved the value of kicking the can,
Their Debt is now 200% of GDP!
Better than the US taking unilateral moves would be a requirement by international bodies that the chinese allow their currency to float in order for them to participate in international trading conventions.
Once again this would have to be done slowly in order to prevent severe disruptions.
Charles, agree with you completely about Nat Gas – and of course the US govm’t doesn’t even need to pass a law encouraging investment; they just have to stop working so hard to DIScourage investment at every turn. For example, the pipeline that would transfer nat gas from Alaska to the lower 48 has been blocked for 30 years now. Shipping by sea is only feasible if construction of massive new LNG plants are allowed, and so far they haven’t been. (construction will still take years even after permitting is completed) So the huge gas reserves of Alaska just sit there, untapped, because no way to transfer them anywhere is allowed, by express government diktat.
Kind of puts a new light on the so-called “energy shortage”.
This is a hurried response…yea,I know ya’ll been waiting for it, I have to get the kids to day care and school.
F
I thought it was two (2) IGs that have been fired. Can’t research it now.
islanddave
What logic, it is all political, as Spock would say “That is not logical!”
sirius_sir
It is not only a trap, it was illegal!
Breaking News: Evidence of criminal wrongdoing in Treasury’s handling of AIG?
aaron
War? There will be more than one…
cfbleachers
Good links, I have read them and I recommend everybody read them.
programmer
You need to get your thinking up, this is minor news as to what is down the pike.
Josh
You started listing and stopped. Yea, I know it’s just too damn depressing.
Walt
Willie will get you, Waylon not so much since he is dead. (but not with me, I listen to Waylon every day in my ol’ truck.)
buddy there is so much misdirection that even the ones that are doing it get misdirected, confused and waylaided.
josh Mark my words, there will be suicides and much anguish in Japan over this Toyota debacle. Plus of course, many lawsuits.
Marcus In the real world, your credit rating and debt to income determines if you can get a loan. OH and those low rates…? NOBODY qualifies for them except millionaires and politicians. I’m glad there are opportunities for you, but you need two jobs anyway, because you will lose one in the next few months.
what is “occupation”/pork rinds for allah: thanks for the heads up and the links but we have already been told several times about this. It’s just too bad that nobody can or will investigate it. It’s off limits, verboten and everybody involved has already been paid off or threatened and will remain silent for decades.
cowboy your right it is not pretty, but no worries, I’ll be long dead before the crisis and my kids and grand kids and their kids will be outlaws hunted by the USSR. But never worry, they will remain free and never give up.
Lifeofthemind You give all the players way too much credit for logic and forethought. They will “double down” just like Obama and all of their Chicago thugs and Community Organizers and Union thugs will go right along with the money.
OK, sorry, out of time…see you later.
Papa Ray
31. Armageddon Rex:
“…cause Rahm and company to have a stroke, a heart-attack, or both”
We can hope.
It is all according to the plan. Tax us all into poverty. Regulates us into servitude.
Charles @ 33: A lot of the really bad stuff could be ameliorated if the capital flows in and out of the USA were reversed: albeit slowly.
That could be done by turning the US from a net energy importer to a net energy exporter. and too perhaps by putting up non tariff barriers to chinese goods.
Jobs.
We’ve exported ALL the jobs but fast food, and we’ve imported legal and illegal aliens to do those.
The trade deficit was last positive in 1975.
The steel industry had left before that.
We’ve been averaging like 3% of GNP per year since 1996.
http://en.wikipedia.org/wiki/File:U.S._Trade_Deficit_Dollars_and_%25_GDP.png
We passed the crisis point circa 1990. That’s when the financial industry began to explode in size. That’s when Greenspan lowered rates below inflation.
Internet and real estate bubbles, and an unbelievable world hunger for US treasuries, kept us afloat.
But now we have no jobs, and our bubbles have burst.
Globalization is real. We cannot return to the status quo ante.
We need to bring back job.
Millions of jobs.
We need to reindustrialize.
I see major protectionism as the only option.
Yes, that will have macro and micro downsides.
But it’s better than no sides.
Slavery is Freedom!
Classic economics in action, ie: coin debasement.
http://www.coinflation.com/coinage_material.html
From the Kudlow interview:
Mr. PAULSON: Well, let me start with TARP being hated; and, in some ways, I think it’s good because we, as a country, don’t like bailouts.
KUDLOW: Ah.
Mr. PAULSON: And the president said it in the State of the Union.
KUDLOW: Right.
Mr. PAULSON: He said Republicans, Democrats, all of us. And you know, I hate it. I hated the things I had to do. It was just much better than the alternative, which was Armageddon, as you said. And the—I remember looking at a poll once and—which put it all in perspective for me. I said—it said 93 percent of the people in the US were against the bailouts. I was trying to figure out who the other 7 percent were. And it said—but 60 percent were against torture.
—–
Crocodile tears. That poor, tortured former-Goldman-Sachs CEO financier Treasury secretary.
GW probably should have stuck to his instincts and kept Paul O’Neill on board.
#36 wws
Yes indeed. We have lots of natural gas, and it can be converted into gasoline with a cost of about $25 per barrel.
http://www.technologyreview.com/energy/21261/page1/
This would provide jobs here that couldn’t be exported and it would make us energy independent at least. We might even become an energy exporter, who knows?
You must have cheap and reliable energy in order to have a modern industrial economy. Anyone who says otherwise is a fool.
But there are powerful interests who don’t want prosperity for the US, both foreign and domestic. Currently our worst enemies are home grown. People who are prosperous don’t need nanny’s to tell them what to do. They tend to resent it. And what is a nanny to do if their services become obsolete?
40. Josh:
The trade deficit was last positive in 1975.
……
Now you’re starting to track.
What was the big event in the 1970′s the turned the US trade deficit negative.
(Coincidentally, in what decade did the salafists in saudi arabia and the khohomenist in Iran gain ascendency?)
josh/40; ”major protectionism” –thus we enter a position analog to the two fraught years of the Molotov/von Ribbentrop Pact. During that time, weaker entities of the peripheries fell. That’s Toyota (corps as countries), falling because –underlying, GM/USSA wants it dead; proximate, a delayed action software bomb ?
Charles @ 47: Yeah I was going to mention that – but on second thought I decided that it did not really signify. What mattered was that we were both shipping jobs in steel and autos and consumer electronics, and yet increasing our overall expenditures. If the major economic factors had been stronger, the oil imports would not have mattered greatly. Call me revisionist, but the oil was more of a symptom, not a cause.
Buddy @ 48: I didn’t expect the Molotov/von Ribbentrop Pact! Is that anything like Hawley-Smoot? I don’t get your analogy, who’s on first, and what corresponds to the pact failure?
The Kudlow interview was interesting, and this Liesman interview is also interesting: http://www.cnbc.com/id/35126472
An excerpt:
——-
LIESMAN: Do you think the outrage over compensation on Wall Street is warranted?
Mr. PAULSON: Here’s what I think. OK, here’s what I think. And it’s very–the American public, and me included, none of us like to see private business of any kind, and particularly banking–no one likes bankers–but likes to see the benefit from public assistance, number one. In our system, risk takers are supposed to–supposed to have their–have the impact of their losses. They’re supposed to take their own losses. So of course the public is angry, but what I keep saying to people is let’s not let that divert us from what we need to do. Let’s channel that anger and then frustration to getting the kinds of reforms we need so that we never again see a situation when the taxpayer needs to bail out big banks. And so that’s why I keep coming back over and over again and saying we need really strong resolution authority so that when any institution, regardless of type, financial institution, is facing failure, that whoever is sitting in the seat where I was sitting has the ability to liquidate them and liquidate them in a way in which it doesn’t hurt the markets and the economy. And that’s really where the–where the problem came from.
——-
After reading the interviews, I do think the man was generally concerned and afraid of the consequences of major institutional failure.
However, it boggles the mind to think that the only conceivable alternative to “Doing nothing + Armageddon” is writing the Treasury Dept a big blank check so that they can shoulder a huge chunk of the tab for liquidating a failed institution.
Paulson’s first draft of the TARP legislation he proposed was, if I recall correctly, not longer than two pages, essentially a blank check for $800 bil and had the curious requirement to detach all strings and scrutiny from the Treasury Dept.
It was so offensive and provoked such an outrage, that GW should have fired the man on the spot. He was clearly unfit to serve if he took no action to deal with the disaster (which he now claims to have seen coming) and then, when hit with it, his first instinct is to scare Congress with “write me a big friggin blank check or it’s Armageddon.”
The Secretary of Treasury of the biggest economy in all human history needs to better qualified than that. It’s for this that GW committed a perhaps-inpardonable sin.
After reading the interviews, I do think the man was generally concerned and afraid of the consequences of major institutional failure.
pel, the threat was not a single major institution failing, it was ALL of them failing on the same day which would destroy the smaller ones as well, until you would be left with the cash in your wallet and non-functioning credit cards and checks, all paper assets gone forever, pretty nearly a guns and ammo situation.
the scale of the threat, and the total incapacity of the normal processes to deal with it, justified (perhaps) Paulson’s unstructured demand. note that of the $700b he got, only half was ever deployed, and some large percentage of that has already been recovered, with profit.
Josh/49; interests aligning: USA trade unions & kremlin anti-pax America. Analog to the pact break, external system collapse (following Obama as an all-but fait-accompli USA internal system collapse) somewhere.
Josh, watch the Prius case –unfolding as we speak. Think of it as ‘direct action’.
These are thought exercises –wet finger to the wind –trying to look into the corners –
pel, the threat was not a single major institution failing, it was ALL of them failing on the same day which would destroy the smaller ones as well
Yes, I meant to say -major structural failure-, not simply institutional.
But it is inexcusable for an American treasury secretary to:
1. Claim to have seen the disaster coming and done nothing to mitigate it, and
2. Only conceivable plan is to put the American checkbook behind a personalized “liquidate-them-one-at-a-time” strategy.
We deserved better than that. President Bush should have at least had the political savvy to reject such a ridiculous claim.
There is a whole spectrum of possible action between “do nothing” and “blank check.” I can still hear the words of that Pimco shill bleating, “The sovereign needs to intervene [with money] NOW!” and taste the disgust in my mouth about the AIG counterparty mess, which could be seen coming a mile away.
It should tell you something that Wall Street was by and large, almost to a man, supportive of what Paulson and Bush did to “avert the disaster”, and which is now being abused by the current administration.
I ate some squirrel and rabbit last weekend. I had forgotten how epicurean this fare can be….You pundits are starting to make me think that there may be necessitous partaking of critter meat directly.
In this morning’s Q&A with House Dems Obama repeated his mantra that more government regulation and oversight will fix our dilemma. He asserted that “the pendulum has swung too far the other way” regarding bank lending, and promised that his proposals will rectify the situation.
No mention or sign that he grasps the fact that government oversight and regulation caused too much lending in the first place.
No mention or sign that he grasps the fact that government oversight and regulation is now causing banks to do too little lending today.
No mention or sign that he grasps the fact that government oversight and regulation IS THE PROBLEM.
Reagan said it best:
“In this current crisis, government is not the solution to our problem. Government IS the problem.”
Obama is either too moronic, or too evil, or too BOTH to embrace this truism. Whether it’s too evil, or too stupid, or both, it’s ALL bad.
OT–but I an curious as to how the Toque works in regard to sending/receiving messages.
Is there anyone out there who would mind if I sent them a message (probably like “testing, this is a test” ) and who would reply back?
re Paulsen & ‘armageddon averted’ –the multiple burning fuses but they were being tamped out one by one –then all of a sudden one got away and set off the bomb –only when world markets had been led to expect fedgov to resuscitate ALL the blown financial houses and leave no one (but taxpayers) holding the bag (expecting this because they had been led and cajoled to do so, remember) –woke up to a Lehman Bros banckrupty.
Then, it was katy bar the door as credit flow froze all over the globe, as it dawned that fedgov may be more than just one of the ambushed, that maybe something is really fishy. Loss of confidence that there was any reason to advantage a LIBOR opening up an otherworldly spread.
and Geithner, some of the players have said, was, incredibly, out-of-touch in the critical weekend, could not be reached in the day before the blow. And, fedgov gets to blame somebody named “Alistair Darling”, from way across the sea.
pel @ 53: 1. Claim to have seen the disaster coming and done nothing to mitigate it.
I don’t know anybody who publicly predicted the total market failure that occurred.
Yeah sure, there are always doomsayers and even a stopped clock is right twice a day. Fiat currency evil, we all know. But nothing in particular seemed imminent.
Everybody and their dog saw that real estate prices were going too high and would stop rising and maybe fall back with an unprecedented number of foreclosures especially due to the CRA stuff. WSJ ran columns for years about the risk in Fannie and Freddie. But all of that would have amounted to less than a tenth of what actually occurred even with intervention. The big guys shouldn’t have been hurt, and certainly not surprised.
Nobody who “saw this coming” could ever have sold the CDOs they were packaging and trading. If they did, they would be guilty of civil and criminal fraud. Was it Paulson or Greenspan (or both?) who blame it on the Chinese, saying they SHOULD have seen it coming and demanded higher interest. That is both correct, and ridiculous. That is just where we are, that things CAN be both correct, and ridiculous.
On China, Obama says US must address currency rates
Oh look, Obama learned a new phrase today, isn’t he just precious?
Our problem is that not enough is getting put into the productivity pot. We have way, way too many people doing essentially useless work, but getting paid (sometimes shockingly high salaries) for it. The cost of health care isn’t going up because doctors are making more money, it’s because more and more people are attaching themselves to the process of delivering healthcare and demanding a living from it –without providing sufficient value. The armies of incompetent billing clerks and insurance industry functionaries who shuffle paper and digital bits around for weeks or months after your three hour hospital visit are not doing anything to improve the quality or quantity of care delivered. The folks working at insurance companies selling ever more expensive malpractice insurance draw a paycheck but aren’t contributing to the quality of your care. The lawyers filing the malpractice suits might contribute to better quality of care, if the system actually punished incompetent doctors, but the way it’s evolved, the entire malpractice system seems to be more of a pooled risk arraignment, where every doctor, good bad or in between, pays into the system at rates that do not reflect the actual quality of care offered by the individual doctors.
Manufacturing has been largely outsourced because of the regulatory unpredictability and the high cost of the remoras who attach to that. The hordes of people who staff the workers comp con games, the inspectors and compliance consultants, the lawyers and liability insurance workers again, and the bureaucrats and functionaries at the various licensing agencies. Millions of people have been shunted from manufacturing jobs into retail jobs because retailing is less regulated with less liability exposure. But those jobs are not all that productive either. Helping me find the toaster aisle isn’t as valuable as building the toaster in the first place. It’s not that retail is unimportant or doesn’t provide value, just that it doesn’t provide enough value to the overall economy to justify the number of jobs in it.
Or if not retail, people have gone into finance. Again, too many people attaching themselves (and the need to support their families) to an otherwise useful activity dilutes the average productivity to the point that it’s a burden on the rest of the economy. And like the legal profession (another area with too many people trying to make a living), an excess of ambitious people looking for money actually creates negative value. All the various cockamamie financial schemes that led to the meltdown were created by people who needed to generate money transfers in order to draw a percentage commission. As the President of one healthy regional bank said at the time “I guess borrowing money at 5% and lending it at 10% wasn’t a good enough business for those guys.” No, it wasn’t , when you had so many mouths to feed. It drove Wall Street to get way, way too creative.
In this diatribe, I’ve barely mentioned the hordes of government employees, doing who-knows-what and drawing an ever-increasing paycheck. It’s bad enough that we have a bloated government, but the real problems are in private enterprise, though they are caused by government.
There are two fundamental causes of the problem, both stemming from regulation and the courts. We make it too difficult and risky to build things, driving people who would otherwise be productive members of society into unproductive, even destructive, jobs. And, we make it far too easy for those unproductive jobs to attached themselves to the remaining few productive activities. Taxes are too high, but just cutting them won’t solve the problem. Government is too big, but just shrinking it won’t solve the problem. Both of those things need to happen, but they need to happen as a part of an overall deregulation of society. A de-lawyering and de-licensing and de-interfering of society. Too many people – in and out of government – make their living through government enforced rents. Not enough people make their living through truly voluntary exchange. The result is a dramatic collapse of productivity. People will focus their energies on doing whatever it takes to keep the paychecks coming. Someone in a voluntary-exchange job will focus on providing value. Someone in a rent-seeking job will focus on lobbying to keep the rent in place.
We have a ton of work to do fixing this mess.
18. Unsk:
Buddy,
Not to discount the spending issue, but I don’t think the main problem is runaway government spending, I think the problem is runaway government, period.
Agreed, Unsk, and here’s one reason why I agree: Large chunks of the federal government are underfunded and understaffed and unable to fulfill whatever their specific mandates are. This means that the government is trying to do even more than the amounts it has allotted itself will pay for. This is insanity. Keep in mind that I’m not even talking about the phenomenon known as “unfunded mandates” or the companion “unfunded liabilities.”
55. Morton Doodslag:
In this morning’s Q&A with House Dems Obama repeated his mantra that more government regulation and oversight will fix our dilemma. He asserted that “the pendulum has swung too far the other way” regarding bank lending, and promised that his proposals will rectify the situation.
No mention or sign that he grasps the fact that government oversight and regulation caused too much lending in the first place. . . .
The federal authorities committed Maddoff-like fraud by classifying mortgage-backed securities as “sound financial instruments.”
josh/58, pel/53; –FYI
http://www.washingtonpost.com/wp-dyn/content/article/2006/08/18/AR2006081801032.html
(note date)
http://emac.blogs.foxbusiness.com/2010/02/02/housing-red-flags-ignored/?test=latestnews
***
have read elsewhere, Bush admin made 17 separate initiatives to reform F&F (You Tube has a BFrank ridiculing Cheney on one of ‘em), the last one ‘died in the Senate in 2005′. some say, GWB should’ve gone over congress to the American people with this –but had he done so, the mkts would’ve collapsed then –albeit with lesser (to some extent, depending) damage. But the albatross would’ve then been on crazy Hoover Bush –so i guess he just punted. Hindsight: he shouldn’t've.
***
one of the killers was the ‘hide’ –the OTC CDS –SEC had slipped a quiet little approval (this is a story in itself, a certain review meet went unatended by the pencil –Bill Donalson –now on PERAB) of allowable leverage from the half-century old 12 in a leap all the way to 40. It’s critical to remember that altho the predicates to the disaster extended at least back to 1998 when citi merged Traveler’s and became Too Big To Fail (been bailed four times since) –the great damage was compressed into the 18 months of ninja and liar loans just before the bust.
I mentioned a book yesterday that is by it’s reviews a tremendous work.
This Time is Different; Eight Centuries of Financial Folly
Some of you may at least want to peek at some of the reviews by FT, Baron’s etc that appear on Amazon. Sounds like a good read.
http://tinyurl.com/ygf9as2
Charles @ 47 asked:
“What was the big event in the 1970’s the turned the US trade deficit negative.”
Peak US Oil Production. Refer to:
http://upload.wikimedia.org/wikipedia/commons/c/c5/US_Oil_Production_and_Imports_1920_to_2005.png
US Peak Oil motivated the decision to phase out our manufacturing capability and shift over to a FIRE economy and globalism.
Financial malfeasance, an impeachable crime? How can the plain folk charge these socialist bastards with high crimes and misdemeanors. They’ll never impeach themselves.
DR/62; http://pajamasmedia.com/instapundit/93057/
SIGINTEL@67 asked:
“How can the plain folk charge these socialist bastards with high crimes and misdemeanors.”
We can’t. Instead we have to vote the bastards out this year and in 2012. However that requires working around and through the MSM. No easy task since the MSM is a major part of the problem.
SIGINTEL,
They’ll never impeach themselves
The answer remains the old fashioned way of hard work. If you want to control the national government in America, including the Impeachment process in the House and the trial and treaty processes in the Senate then the place to begin is locally. Gain control over your local government and then gain control over your state government. That is what controls redistricting and the patronage jobs. That is the source of the Democrats power. Once you control that then you will control the Center. I am applying to work for a Conservative Democrat’s local campaign for two reasons;
1. I really need the $300/wk,
2. that is the political reality in NYC.
To be blogged under the title “Think Local.”
Don Rodrigo@63:
“The federal authorities committed Maddoff-like fraud by classifying mortgage-backed securities as “sound financial instruments.””
Well, yeah…if you’re talking about liar mortgages or worthless 2nd mortgages or zero-down-with-balloon-payments or other “creative” mortgages that might be true.
The shame is that a tranch of mortgages like mine would probably be worth good money. 30 year fixed-rate 20%+ down. Securitizing mortgages isn’t such a bad thing, it’s lying about the quality of those mortgages to potential investors that’s evil.
Of course, I’ve now reverted to the point where anything that isn’t physical precious metal bullion coins in my pocket or flat-rate 100% instant liquid investments isn’t worth consideration anymore. The entire financial system is suspect in my eyes. They’ve gotten too clever by way more than half for way too long, and I simply don’t trust anything they say. I wonder if that attitude has gotten a lot more widespread, and if maybe that isn’t one of the reasons we’re unable to get business going very well?
buddy @ 64: FTA: But the mortgage insurers, which cover the losses when loans go bad, see big problems. Their trade group, in a plea to regulators delivered in a comment letter last month, alluded to its fear of widespread foreclosures if some of these new borrowers default on their loans. An increase in such problem properties could weaken the real estate market and drive down home values even for those who bought conservatively and diligently paid their mortgages.
What, the mortgage insurers pleading, “Stop me before I insure again!”? Fooey. All it would take is one guy with more conscience than greed to stop the whole thing. Very Biblical.
But look at the expressed fears, “weaken the market”, and drive down values, not collapse the US and world economies.
Josh/72; “weaken the market”, and drive down values, not collapse the US and world economies –but that wallop was packed in downstream –at AIG, the Financial Products division, HQ’d in London, run by the guy who replaced Hank Paulsen (after NY AG Spitzer removed same, in 2005, on now proven bogus charges), and –incredibly –watchdogged by one guy at the Office of Thrift Supervision. best all-around –and, uh, entertaining (?!) –place to readallaboutit:
http://www.rollingstone.com/politics/story/26793903/the_big_takeover
“ARE YOU ****ING ME???????”
Not only is Wretchard not ****ing you, but the government is actively ****ing you.
In 2008, I was a “let it burn” fan. TARP was an exceptionally bad idea that did not fix the problem, it just delayed the problem. Now that Fannie & Freddie have essentially unlimited access to Treasury capital, the Lender of Last Resort is trying to get into a financial game that cannot be won. Maybe they won’t be doing it with 30x leverage, but when the idea of propping up the mortgage market, the cancer of the late 2000s, has spread from the banks and the investment houses to the government itself, the tumor has spread and the patient is now terminal.
Nobody will ever vote themselves pain, in the form of the tax rates necessary to pay for this mess and fix the underlying chasm of unfunded mandates and bad debts taken on by the federal government in the name of stability. There is no stability, just pots of things that traders spent way too much of OPM to buy and in the process destroyed OPM. Economic growth would help, and maybe a more market-oriented Congress can get itself out of the way long enough to allow economic growth.
But bringing back manufacturing? What Congress is going to gut OSHA, EEOC, the Americans with Disabilities Act, the NLRB and the host of other federal agencies that encumber business today? And what President would sign bill after bill that sets fire to 80 years of good intentions? Not in our current system. The fact that all of these regulatory bodies are job-killers does not matter to the people for whom intentions count more than results, and there are too many of those these days. Tariffs? How many thousand percent do you think would be needed to compete with countries that are only a little upset with half a million barrels of diesel in their waterways, or a factory full of benzene in a major water source? The enviros will go nuts, and all the laws on the books that allow them to snarl progress in regulatory lawsuits will have to be summarily repealed before we can get back to manufacturing.
Not only that, but the rest of the world is a lot hungrier than Americans have been in my lifetime. Why? Because they can either put together toys with lead paint for $20 a week or spend the rest of their lives watching the rear end of a water buffalo, or bent over at the waist doing wet-paddy rice farming. Americans don’t understand that there are options to perpetual economic growth, so they expect it without grasping how it comes about. A good depression might change some minds and educate some souls, but that won’t happen by design. I think it might happen by accident, if some switch in the grand and glorious regulatory apparatus doesn’t get thrown at the right time, or may be fated to happen period given all the bad debt in the system.
I really do try to be an optimist, but in the current circumstances I am going to shift my focus from being optimistic about our current government to being optimistic about the one that comes afterward. We got fat, we got lazy, and we screwed ourselves out of the prosperity that our system could provide, if only we…followed the system.
72. Josh
It doesn’t take one person of conscience to stop the system. It takes one person without conscience to perpetuate the system. One mortgage insurer that stops writing policies is stopping their business. Other mortgage insurers will simply take that business, and do so at policy costs that reflect the reality of competition in the mortgage insurance industry, rather than the reality of risk. It’s the same mechanism that got the CDS market up to more than the economic output of the world in 2008. People are crappy at assessing risk, but they are good at figuring out what 2% of a CDO works out to in quarterly payments. Therefore, the money to be made is more important than the risk. They are exceptionally crappy at assessing risk when their business is TBTF and there is no moral hazard involved.
The warning shots that were Bear Sterns and Lehman Bros. have been ignored because the financial industry has the implicit promise of body armor made up of overlapping layers of Treasury money should things go bad. There is no moral hazard in stupid deals if you can be paid dollar-for-dollar in a CDS contract by a government-funded zombie like AIG.
Buddy — Thanks for the Emmylou. Music for the soul.
Papa Ray — I play Waylon every day. Never gets old.
I believe we who listen to Willie and Waylon, George Jones and Emmylou, Jerry Jeff and Johnny Cash, will take back our country from the people who think Barack Obama and Lady GaGa are not the same person.
61/JMH
Extremely well said, JMH, and absolutely correct. I once worked for the U.S. Government at a pretty high GS rating. I was there for a decade. The amount of incompetence and featherbedding I saw was incredible. I learned from that experience two things: 1)government does very little well, and 2)it does NOTHING efficiently. Anyone who ever suggests that government take charge of an issue or provide a solution to a problem is undoubtedly someone who has never worked in the government.
Government action always has two major flaws that make anything it accomplishes tainted at best. First, government almost never has a single aim. It tries to accomplish too many goals at once and consequently does none of them well. Example: trying to get a ship fixed at a “small business” shipyard which simply does not have the experience or infrastructure necessary to properly perform the work. Result: money almost completely wasted and poorly performed work had to be done again elsewhere at a greater cost.
Second, the people who spend government money very seldom consider where it comes from. There is all but no consideration that they have any responsibility to be proper stewards of the people’s tax dollars. As a general rule, U.S. Government personnel have the opinion that “We’re the Government. We have money we haven’t even printed yet!” Prudent and judicious fiscal management is an all but alien concept to most government managers. Their rule is, “spend the money until the budget is completely gone so we won’t get a cut next year.” Most government workers look at taxes as a “kickback” necessary to keep their jobs.
Simple answer: government IS the problem, and the entitlement mentality is a cancer that will kill our country unless we cut the beast back down to size. Make no mistake, it’s us or them and if WE don’t yet know that, I guarantee you that THEY do. The cynicism and selfishness of the average government worker are incredible to behold. Most of them hate their jobs but are afraid to leave and face the real world, so they’ll do whatever is necessary to make sure things continue on as they are.
One last thing: the U.S. Government is increasingly staffed by incompetent minorities who dislike whites and feel entitled to special treatment. When I worked for the U.S.G., firing an incompetent minority was all but impossible and so difficult most managers simply wouldn’t bother trying. They would try to get the person transferred if they could, and ignore their poor performance if they couldn’t. Fighting the inevitable charge of racism was harder than simply reallocating the necessary work to the competent people. Of course, this didn’t make the competent workers very happy and oftentimes drove them to leave, thus worsening an already underperforming workforce. I could get started on how much damage affirmative action has caused in the U.S.G. but that’s far too long a topic to address here. The bottom line is that the machine is too broken to fix. All that can be done is to make it smaller, and our country’s future depends on us doing that.
I probably haven’t read the comments carefully enough, but I don’t think I’ve seen anything about the part played by the “quants” in the market collapse. Right now I’m about a third of the way into Scott Patterson’s book, and I can’t recommend it too highly.
http://preview.tinyurl.com/ygb8sbu
Jamie Irons
A TEA Party Congress might. But the key thing here isn’t simply railing against regulation. Regulation, in small and sanely delivered doses, is fine, beneficial even. We don’t want our rivers on fire after all. But a sane regulatory system is not what we have today.
We need a massive reformation to the way we go about regulating things. Simply shrinking it, doing away with a rancid alphabet soup of agencies festering in yesterday’s stock pot isn’t going to sovle the problem. Chaging people’s attitudes matters and it’s the work of a generation I think. Or maybe not – maybe the broken expectations are a temporary glitch of a spoiled generation.
The broken expectations aren’t that we can have clean water without economic consequence – there’s actually nothing wrong with that expectation. It’s a very American sort of idea – no need to settle for the lesser of two evils, just get to work and figure out how to have the best of both worlds.
The broken expectation is that someone else will do the work, someone else will solve the problem. That usually translates to “government” and that’s where things go wrong. Having toys free of lead paint means buying toys from manufacturures you have some reason to trust. But when people stop accepting the burden of deciding who to trust and instead rely on the FTC, or the EPA, or the BBB, etc., then manufacturers no longer have an incentive to be trustworthy. Nobody cares. Instead, they have an incentive to please the bureaucrats, which is easiest done by bribing the bureaucrats, who can then make sure the bribes are repaid (by others) with enough interest for even bigger bribes next time around…
It may be a Boomer thing. Older environmentalists I come across seem to think the solution to environmental problems is for “other people” to make sacrifices, but the eco-boomers are usually uninteresting in making their own sacrifices. Younger environmentalists, while sometimes shockingly ignorant about many things, seems to have a stronger desire to participate in the solution themselves, and not just by sacrificing. In fact, the common theme seems to be innovating. Younger econuts seem more interesting in windpower, biodiesel, etc. All those have technological limitations (at least for the time being), and may not represent real solutions to the problem, but they are at least attempts to solve the problem instead of shove it under someone elses rug. Perhaps more importantly, they’re more or less honest attempts as solving what the econut thinks is a legitimate problem insted of just an excuse to boss other people around or graft money from them.
If anybody wants to start reading about the economy and the politics involved, I would recommend Karl Denninger over at http://market-ticker.denninger.net
Lender of Last Resort is trying to get into a financial game that cannot be won
Well that lender can “win”. All it takes is for the government to devalue the dollar.
Your money could be worth 10 cents on the “dollar” overnight. It has happened all over the world, no reason it can’t and won’t happen here.
Hmmmm, from the comments it appears that my outburst was interpreted as directed at Wretchard. Nope, just a colloqualism from my youth that expresses my dumb struck consternation at the absolute mess we are in with no apparent solution in sight.
(A long sad sigh ensues.) The tea is good tonight.
Programmer,
FWIW I read your comment as disbelief of the information, not the speaker. It is rather startling information. And the thing I keep coming back to is that the ‘A’ team is the one that blew everything up. How is the ‘B’ team from the government supposed to put things back together. You can make the argument that a financial regulator has an inherent risk-averse nature that led them to graduate from Wharton or Harvard or wherever, pass up a starting job at Goldman Sachs and take the guaranteed salary and bennies that government services has to offer, and that may be true. You can make the argument that there are highly-capable civic-minded people who could have made a fortune on Wall Street and instead chose to be regulators, and that may be true as well.
But the counter-argument is the medical system, and comparison of the VA system with the private or academic systems. There are some dedicated VA docs that are outstanding. But there are also a lot of clock-punchers who know more about bureaucracy than the field in which they were educated. I wouldn’t want the VA to take over healthcare, so why would I want federal financial regulators to take over Wall Street? Maybe that’s an analogy that only works for me, but it’s one I believe to be accurate.
Jamie Irons,
I need to read that book, it will be the third in my trifecta of ‘House of Cards’, ‘When Genius Failed’ and that one. This dovetails with my argument above, that the folks trying to regulate financial services haven’t a clue of understanding some parts of what the quants were doing. The guys that AIG have to pay $100 million in bonuses to — those are some of the very quants that the book is about. Considering that they are largely the equivalent of nuclear reactor operators adjusting control rods to keep a trillion dollars in CDS contracts hedged and paid for until they expire, a hundred mil in bonuses is fine. The only thing that will make the situation worse is if they walk, let the contracts blow up, and then (successfully) sue for breach of contract.
re the agencies, joe citizen has weak recourse against agency decree, AKA ‘administrative law’. If you are harmed, you can go to the press, or you can “seek legislative relief”. It’s just not good tv to put folks on camera who have been impoverished by living in the vast areas depopulating due to industry not there because of the regulatory agencies. Tho the truth of it is undeniable, it just has no hook line. it’s depressing. the agencies are depressing, and how.
re mac/76; the government as a gigantic jobs program is gonna come a cropper in the depression it will be blamed for causing. if it doesn’t start dramatically fixing itself, people are gonna elect some new house members who are gonna start making speeches advocating civil disobedience re taxation. “taxation without representation is tyranny” was powerful. Today, dunno what it’d be –”taxation with pisspoor representation is tyranny” ? “Taxation with FAKE representation….” ?
Darren@82 Thanks. As an aside, your analogy of the VA and health care is spot on.
buddy@83 I shall never see or hear the phrase about taxation and representation the same way again.
Quants, analysts,investment bankers, brokerage firms, etc. are all playing with OPM, Other Peoples Money. They don’t really care about “The Great Flyover” that is America. They’ll pull their bonus’ out of the FED to the tune of billions of dollars.
They are just playing a game. They control the entire board, the players and the stash. We’re just the bozos on the bus and until the FED and Wall Street reform, and that won’t be in anyones lifetime reading this them we’ll just have to accept it since we have no revolutionary fervor.
darren re82, ”let the contracts blow up” –that happens to be one of the (ignored?)lines of investigation into the whole mess –the 2007 contracts at AIG were *abnormal* -they broke with the standard before and after –dunno the specifics but even Geithner today at the hearing was goaded into saying something along the lines of had he seen them beforehand he’d not have been so generous with yada yada yada. IF some investigator would look into WHY that year and that set was drawn in that way –there might be some knowledge there about what Kudlow tried three times to get out of Paulsen the other day –to no avail –re ‘what was THE thing that happened that made the thing actually blow up?’
***
walt –glad you enjoyed –yes, she can do things for ya with that voice, she sure sure can. sings with her eyes closed and you think about that whole other world of of of hmmm. no word for it. dang!
Speaking of interesting reads, Michael Lewis (Liar’s Poker, the Vanity Fair article describing the post-Greenberg Cassano Connection inside AIG) has a new book out, as of late last year, titled “The Big Short.” Lewis does the people angle really really well. I can’t help but think that, out of all the written material spawned by 2008, the Lewis book will be the movie deal.
And so it goes, as Linda Ellerbe used to say.
Darren @ 82: … the guys that AIG have to pay $100 million in bonuses to — those are some of the very quants that the book is about.
Only a few are likely quants, most traders and managers, deal makers, rain makers.
Darren @ 74: But bringing back manufacturing? What Congress is going to gut OSHA, EEOC, the Americans with Disabilities Act, the NLRB and the host of other federal agencies that encumber business today? And what President would sign bill after bill that sets fire to 80 years of good intentions?
Do or die, friend.
But for all those, which are indeed significant, the real macroeconomic problems are still worse, trying to pay first world wages when the same work can be done at third world wages. Could fix all of your listed problems, and the economics would still be prohibitive. But “we all know” that Hawley-Smoot only made things worse, “comparative advantage” and all that. Well, welcome to the new world.
Focus on the affirmative – draw a picture of what it would be like, this new American manufacturing economy. That’s how you do it.
but that wallop was packed in downstream –at AIG, the Financial Products division, HQ’d in London, run by the guy who replaced Hank Greenberg [not Paulsen] (after NY AG Spitzer removed same, in 2005, on now proven bogus charges)
When’s the Greenberg book coming out?
10 billion, hah. 100x that, more like. Lucky if it’s not 1000x.
http://www.marketwatch.com/story/banks-10-billion-problem-loan-repurchases-2010-02-03
Loan repurchases are a $10 billion problem for big banks
Bank of America, J.P. Morgan and Wells Fargo vie with insurers, Fannie, Freddie
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) — Just when they thought the worst of the mortgage crisis was behind them, billions of dollars in bad loans from the debacle may be rising from the dead and creeping back on the balance sheets of the largest U.S. banks.
Big lenders including Bank of America (NYSE:BAC) , J.P. Morgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) may be forced to repurchase troubled home loans from insurers and mortgage-finance giants like Freddie Mac (NYSE:FRE) that had agreed to take on risks associated with those assets during the real estate boom.
…
“The wave of loan repurchase demands on securitization sponsors is the next area of fun in the zombie dance party, namely the part where different zombies start to eat each other,” Whalen wrote in a note to clients Tuesday.
…
josh/88; ”that’s how you do it” –sure does make one realize what a fantastic achievement a good economy with full employment actually is. Followed by the thougfht of how flagrantly stoopid it is to rip it to pieces with politics, for politics.
***
GL/87; also Vonnegut –i think in ”Slaughterhouse Five” –ended every important passage with “So it goes.” bittersweet, fatalistic, not without hope –
Ha – always one degree of separation removed from The Original.
Hopeless but not Critical.
JMH @ 61: “We make it too difficult and risky to build things, driving people who would otherwise be productive members of society into unproductive, even destructive, jobs. And, we make it far too easy for those unproductive jobs to attached themselves to the remaining few productive activities.”
Spot on, JMH! In business terms, we have let the overhead grow too large. Not sustainable. Regulation costs us more than we can imagine – far more than it benefits us. A roll back to a sensible level of regulation is the path – the only path – to sanity & survival.
Now, if only we could get all those activists who whine about the sustainability of suburbs, modern farming, etc to think about the (non) sustainability of an excessively large government which specializes in excessive regulation & running Ponzi schemes, we might be on the way to getting something done about it.
sure does make one realize what a fantastic achievement a good economy with full employment actually is. Followed by the thougfht of how flagrantly stoopid it is to rip it to pieces with politics, for politics.
The primal error of the left, from Rousseau to Marx to Obamarama, is not appreciating how hard it is to get things working in the first place.
The primal error of the right being an unwillingness to change things whether they are working or not.
49. Josh:
66. Eggplant:
What happened in the 70′s.
1.)era of limits predicted in the 1960′s begins.
(it wasn’t the limit of natural resources but rather the limits of the tools to extract natural resources. The oil and gas available to us today was not available in the 1970′s because the tools were not available to extract them.)
to continue:
2.)Peak US Oil Production
3.)US loses control over oil
4.)Foreign Oil exporters Jacked up the price of oil and expropriated oil companies.
5.)McNamera recycled US dollars to third world countries that then defaulted on their
loans and took down a number major US banks with them. the loss of liquidity
in the late 70′s early 80′s was much like today.
6.)US Peak Oil motivated the decision to phase out
our manufacturing capability and shift over to a FIRE economy and globalism.
7.)The sunni salafists in Saudi Arabia and the shia Khohomeniasts in Iran seized control of their countries. They could claim that (allah gets credit for their victories–because the force of arms didn’t do it.) Rather than, say, the demoralization of the west.
8.)The US stepped out of Viet Nam & the soviets stepped into Afghanistan.
Charles @ 95: I dunno, let me try some responses.
1.)era of limits predicted in the 1960’s begins.
Outside of US local peak oil production, did the production of *anything* go down in the 1970s?
2.)Peak US Oil Production
See above.
3.)US loses control over oil
Only as consumption increased, and it’s not like our oil companies didn’t exert great influence even through the embargo.
4.)Foreign Oil exporters Jacked up the price of oil and expropriated oil companies.
Sure, but also North Sea oil came online, other offshore drilling as well. And the increase in the US still left it way cheaper than in Europe.
5.)McNamera recycled US dollars to third world countries that then defaulted on their loans and took down a number major US banks with them. the loss of liquidity in the late 70’s early 80’s was much like today.
South America, Mexico? I forget. But the total was just a few tens of billions, wasn’t it? Even with inflation, two orders of magnitude smaller than today’s problems.
6.)US Peak Oil motivated the decision to phase out our manufacturing capability and shift over to a FIRE economy and globalism.
Not really, it’s not like manufacturing moved to Saudi Arabia. Steel went to Japan, where oil cost far more than the US.
7.)The sunni salafists in Saudi Arabia and the shia Khohomeniasts in Iran seized control of their countries. They could claim that (allah gets credit for their victories–because the force of arms didn’t do it.) Rather than, say, the demoralization of the west.
Wasn’t it always thus in Saudi?
8.)The US stepped out of Viet Nam & the soviets stepped into Afghanistan.
True, but I don’t see the immediate economic relevance, except to stress the Soviets. Who were already under pressure as they fell behind in (Japanese!) consumer goods.
Might also mention the Israelis defeating Soviet client Egypt yet again, and signing a peace agreement which has held, however feebly.
O/T but:
Link here:
Acquiring Shotguns
Solicitation Number: TIRWR-10-Q-00023
Agency: Department of the Treasury
Office: Internal Revenue Service (IRS)
Location: Field Operations Branch Western (OS:A:P:B:W)
Now WTF does the IRS need with assault type shotguns? To protect the Magic Unicorns shooting out of The Zero’s a$$?
That’s another of the unfortunate occurences in our government lately. Every agency needs it’s own police force. And then every agency with a police force wants a SWAT team within that force. Pretty soon, you’ve got a proliferation of law enforcement agencies claiming overlapping juristictions and itching to get tactical on somebody.
We could go back to one police agency for a given physical location. Maybe? If the IRS, or the Interior Dept, or the Federal Department of Knotted Knickers wants to arrest somebody, they can go to court, get a warrant, and politely ask the local sherrif to serve it.
Charles@95:
I more or less agree except for point 7):
“7.)The sunni salafists in Saudi Arabia and the shia Khohomeniasts in Iran seized control of their countries. They could claim that (allah gets credit for their victories–because the force of arms didn’t do it.) Rather than, say, the demoralization of the west.”
I don’t think it was demoralization. I think someone “did the math” concerning the cost of conquest and occupation versus simply allowing the Saudis and Iranians to nationalize American and European petroleum assets such that the oil could continue to flow uninterrupted. War and military occupation are expensive. Also it’s very easy to sabotage oil wells and pipelines. If we really wanted to do “Blood for Oil” then we would have been obligated to put a significant fraction of the native population to the sword. Contrary to what moonbats are programmed to bark, Americans are not Nazis. Slaughtering Arabs and Persians for their petroleum was never an option.
Eggplant,
The too clever by half calculation in 1975 was that we could shovel money at the Arabs and let them nationalize the oil companies because we owned the banks. There was a brief spike of inflation and then the wealth all flowed back to the West. The only real losers were the people in 3rd World. The Green Revolution of the 1950s and ’60s depended on cheap petrochemical based fertilizers and insecticide. The rise in oil prices doomed millions in Africa, Latin America and Asia. State failure, famines, plagues and constant warfare became much more pronounced after the Arabs siezed the oil companies and raides prices.
The acceptance of this in the West was based on the arrogance and bigotry of Liberal elitists. They assumed that all the Arabs would do with the money was blow it on shiny toys, prostitutes and boozy weekends in London. The money was used instead to buy capital assets, including media and technology companies, academics, politicians and bureaucrats.
More bad news.
ABC: White House Prepares for Possibility of 2 Supreme Court Vacancies.
H/T Drudge
LotM, re your new venture:
http://pajamasmedia.com/instapundit/93117/
More bad news.
ABC: White House Prepares for Possibility of 2 Supreme Court Vacancies.
If someone can erect a freakin’ billboard (Kansas, isn’t it?) with the one word “Marxist” on it, and everyone knows who that describes, then it’s time for the GOP to raise the issue of Obama’s radical judges and their effects on America for generations to come.
Somebody at that GOP retreat should have stood up and said, “Mr. President, you just said we and our supporters have accused you of being some kind of Bolshevik. Maybe it’s time we cleared the air on this issue, and asked what was the true nature of your relationship with Mr. Bill Ayers. It’s clear now that he was not ‘just some guy’ in your neighborhood. In fact, you began your political career in his living room, after working closely with him for many years. In the interest of transparency, tell us and the American public what you learned from Mr. Ayers.”
@ 95. Charles: “What happened in the 70’s.”
1971 – end of US gold standard. No more converting dollars for gold.
IRS shotguns?
***
http://www.powerlineblog.com/archives/2010/02/025515.php
(snip)
It’s easy to understand the Obama administration’s purpose with regard to churches and private charities, which it regards as competitors of the government. It wants to damage or destroy them by making contributions more expensive. But what about the mortgage interest deduction? The administration purports to be concerned about the decline in home prices that triggered the economic crisis of 2008-2009. But severely reducing the mortgage interest deduction will inevitably depress home prices. And not just the prices of expensive homes, either; as those prices fall, the values of less-expensive houses will decline as well. Is this really what the administration wants? It is hard to escape the conclusion that the Obama administration simply doesn’t care about America’s economy.
***
http://maggiesfarm.anotherdotcom.com/archives/13547-The-red-and-the-black.html
(a federal property tax? would get the DemSoc to the promised land –the direct national ‘taking’ wealth –Constitution goes into the museum, Golden Calf comes out)
OTOH, if if if a good Constitutionalist conservative overturn of the twelve million word IRS code in favor of ANY of the major ‘flat’ or ‘fair’ tax proposals (Steve Forbes, Huckabee) required losing the mortgage interest deduction, hey, do it –who’d care in the boom that followed?
Here is video of President Obama today speaking at the National Prayer Breakfast, where he lectured attendees on the need for “civility,” and told them “surely you can disagree with my policies without questioning my faith – or for that matter my citizenship.” Obama makes the remark at around the 1:30 mark of the video.
……….
EVERY burglar you will ever encounter would love to lecture you on ‘civility’.
Salt Lick,
Well said. The same thing applies to his efforts to shut down any voice that dares to question him on any issue. Obama’s remarks at the Prayer Breakfast were not an affirmation of his citizenship. They certainly were not a proper response to questions that have been raised. They were a flat effort to rule any questions directed at his fitness or eligibility as a breech of “civility” with the presumption that he is the arbiter of such a quality and that it would trump other qualities such as honesty and legality.
The correct reply to any such statement by any politician would be on the order of, “With all due respect that is not true. Any citizen has the right and indeed the duty to question you or any politician regarding a question that touches at the heart of our Constitutional government. Good men have died in the millions to defend that Constitution. We practice civility because we are civilized and we do so to the extent that it serves a free people to meet together and peacefully debate issues of governance. Mere form and rituals of courtesy that mask the pretensions of power we left with the Courts of European Kings. So answer the questions; did you ever claim to be a foreign national on a financial aide form to gain a benefit subsidized by the United States taxpayer and did you ever travel on a foreign passport after your 18th birthday? If you did then you may indeed be a citizen but I and many others would hold that you would then not be a Natural Born citizen and that you would be ineligible for the office that you now occupy.”
Obama had a two year free run because he could paralyze any voice that dared to question him by having his lackeys scream racism. Reality has broken that shield for him and the repeated occasions of incompetence and abuse and bigotry by Obama and by his supporters have made it acceptable to question him on any issue of fact. He rose on the backs of Alinsky and Cloward and Pliven in a culture paralyzed by the relativist philosophy of Derrida and Foucault. It is fitting that he be deconstructed using their tactics.
To be blogged under the title “Obama’s Civility.”
buddy larsen,
Yeah what you said, I just use more electrons, bits, words etc.
Looking down.
LoTM @ 107:
A great line from Harvey Mansfield in this week’s Weekly Standard: “What every progressive wants is to put the particular issue he espouses beyond political dispute.” That to me seems to get to the heart of Obama’s hold over the bien-pensant Left: what’s the point in, you know, **rhetoric** when everything has already been decided? Of course, it remains to be seen what Plan-B is now that the Great American Cram-Down hasn’t gone as advertised.
Or to put it another way, “Just who you callin’ a ‘menshevik,’ son?”
Well, ya’ll have done all of the whys, the wherefores, the mights and the maybes the coulds and the couldn’ts and covered the shoulds and the shouldn’ts.
So now it is time to have an Interlude and Rally around Our Flag and Values.
First…
Has it come to this?
Too Late to Apologize: A Declaration
This is on my Blogger Profile:
WE THE PEOPLE
This represents and presents our Groups History AND Request.
STAND WITH US!!
And when Texas went to Washington!
We damn sure where there!!
And this is for All of us!
BORN AGAIN AMERICAN!
The future is bleak, in fact terrifying. But remember and stand by this:
Americans are different, we will not give in, or let our liberties and freedoms be taken all at once or little by little.
With the help of God Almighty and with the strength of our Ancestors, the Republic of the United States of America will not only prevail but return to what our Founder’s fought and died for.
I will not be here to finish the fight.
But my Children’s Children will finish it for me.
This much they have sworn to do.
Papa Ray
Well, it’s Ginsberg and Stevens, so the news is not all that bad. Obama could hardly do worse than Ginsberg (though I’m sure he’ll try). Stevens he could probably do a little worse, but as a practical matter, not really. How long has it been since Stevens wasn’t a reliable vote for liberal orthodoxy?
LOTM @ 100: More bad news.
ABC: White House Prepares for Possibility of 2 Supreme Court Vacancies.
Maybe it’s good news – cut back the number of judges, cut the SCOTUS budget 28%! It is an era of cutbacks.
“surely you can disagree with my policies without questioning my faith – or for that matter my citizenship.”
This is on par with Bill Clinton’s angry reply “There is no evidence!” to a question/remark about the Marc Rich pardon implying that there had been a quid pro quo. No one had directly questioned President Clinton on the “rearrangements” of the pardon and his response immediately made me think, “What do you mean there is no evidence?? How do you know? Should we be looking for the evidence?” It was a tell if there ever one and in my mind firmly cemented my belief that the Clintons, in addition to the money siphoned into the Library fund, have a nice fat Swiss bank account opened for them by their good friend Marc Rich. And today we have Obama challenging folks not to question his citzenship. Aside from Chester Arthur has any President had to defend his citzenship? Let alone refuse to offer up any proof that would dismiss any thought of him not being a Natural-born citizen. To my mind if he truly had the proof he would be holding it up with a smug look on his face and say, “See!” That he doesn’t speaks volumes.
if it was a boxing match, he’d want the fighter who got fouled to be disqualified.
“Listen, referee, isn’t it true that there would not have been any foul at all had the other fighter not been in the ring?”
>>’well, yes…but….’
“There you have it –the truth!”
“surely you can disagree with my policies without questioning my faith – or for that matter my citizenship.”
Speaking of which, did we ever determine if he is legally a natural-born citizen since his father was a British subject, thereby making him (the President) a British subject at birth?
Tarnsman, I’m with you there. I’ve never spent much time following the intricacies of the birth certificate arguments because I find such discussions dull. But I’ve seen enough to feel the answer is both not-that-simple, and that it hasn’t been answered satisfactorily. I agree with you that if there were a definitive response to the question, the O would long ago have flashed it for all to see.
The question then is why hasn’t he? If it exists? Despite the dismissive “birther” term tossed by the Left (as soon as they start trying to marginalize an argument with ridicule, you know you’re on to something), it’s not a trivial question. Quite the contrary. It’s a game changing, earth shattering question, if one assumes the answer might, just might, be that he was never eligible to be President. It’s a Constitutional crisis waiting to happen, and for all intents and purposes every action Obama has taken suggests he can’t satisfy the requirement. Why on earth is he hiding the proof, if proof there be? That’s a question I never hear answered by those who dismiss the issue as crazy birther nonsense.
“surely you can disagree with my policies without questioning my faith – or for that matter my citizenship.”
And don’t call me Shirely.
But yes, I can question your policies without questioning your faith or your citizenship. I can question your intelligence, your grasp of facts, just what or who it is in which you have this faith, and your likely actions when you are confronted with your own gross errors.
And I can wonder just what are your policies anyhow, the stuff you do, or the words that are coming out of your mouth, when the two don’t match up at all.
And I can wonder if we’ll ever get around to your policies, when your idea of discussion is to question the faith and personal integrity of everyone who disagrees with you.
Sadly enough, your citizenship is a moot point, and whether or not you have it, the precedents and aesthetics of the American government seem pretty much foreign to your words and deeds, and I suppose it could be worse, Nancy Pelosi could be president.
Belmonters, OT (not really) but you’ve got to read this article (which will incense you in part) and check out the music video (which will inspire you). It’s enough to give one hope.
http://tinyurl.com/y8hhybz
We need this baby to go viral.
HT: Instapundit
Hollowing out the US economy. It’s not just in the manufacturing sector. I’m guilty for 30 years of raising funds for 5 start-ups to speed the effort. I’ve never had a venture investor reject any of my proposals becuase we projected too few employees to get the job done.
Nor, did any ever complain that these innovations when fielded would destroy jobs across entire industries. So, now we find US having spent 40 years getting really efficient at what turns out to be the wrong things, in light of our perilous situation.
It’s been a digital massacre. My last e-commerce endeavor probably put 200,000+ purchasing “professionals” out of work forever, and shaved the margins of every vendor to the F10,000.
Secretaries, stenos, typists, A/R-A/P & payroll clerks, bookkeepers, etc, etc, etc, by the millions, all perished in the digital onslaught. All businesses bought-in.
And, it’s not like burgerflippin isn’t subject to automation next. Add an ever-heavier regulatory burden. Systems maintenance vs. employee maintenance creates a clear business choice. It’s a no-brainer. Bits are always cheaper than atoms.
All the while, these same VCs (exalted stewards of US future – now >90% extinct BTW and 10s of $Bs along with them) funded near nothing toward educating and retraining a population that was obviously going to be dependent for their survival on “adaptibility.” National interest was never in the their investment criteria, rules-of-thumb, or decision matrix. In fact the suggestion of such even as a side benefit, would assure the proposition would not get funded. The Web and going Global and all.
15M unemployed (more to come), plus hopefully fewer than 15M illegals, plus 2M gov’t employees too many, plus maybe 15M unwilling to work. Soon this will be a serious problem, since there are literally NO replacement occupations that we haven’t digitized. Demassifying inexorably drives unemployment upward.
The value of a deliverable = information/mass.
Stan Davis (ca. 1986). Workers increase mass.
VC predictions on how we get out of this “productivity trap” into which they were the major bluderers? Crickets.
I cannot imagine how to write/pitch a business plan,
to raise any significant capital, based on hiring lots of people upfront. Maybe contract, and only temporarily. IOWs, I’m plum out of innovative ideas about how to solve this jobless quandry; even if I had unlimited amounts of non-existant US funds and an overwhelming mandate. Manufacturing windmills and solar panels will always be cheaper somewhere offshore or cross-border.
Leo Linbeck III is to be highly commended for his courageous efforts in K-12. It’s a great start and a terrific model for future schooling. However, we need the time to embed “adaptibility” at the top of the K-12 schema and curricula. Every subject needs to be taught with national survival as the underlying theme and explicit goal. Exceptional and proud of it.
Changes at that level cannot be realized in the public school system; yet a vast majority of US parents would line up today, to buy what L3 proposes for their children. Worldwide the audience is in the hundreds of millions – every year. Soon L3 and others will be able to prove irrefutably that their product delivers far-better results, at least at equivalent cost. A viable alternative is universily sought. Few entrepreneurs can legitimately make this claim.
Twelve hours by VDH on ancient history is superior to any text book on the market. Updated weekly. If Dr. Hanson charged every school only $5 a year, he’d profit handsomely, think it worthwhile to compete to provide it, and students would learn history and enjoy the experience, while schools/students/ taxpayers would save the enormous expenses($billions) involved in textbooks.
Of course, this advanced delivery of the “best education has to offer” on every subject, means all those textbook-manufacturing jobs go away, along with 75% of the current teaching positions. The best teachers and students migrating to alternative schools leaves behind a hellofa mess. Dismal. Rotting infrastrucutre and facilities, staffed by NEA-lifers, maintained by SEIU goons, teaching students essentially now left in bondage how to feel good about it. And who’s to blame, whenever they don’t.
Geoffgo, L3, everybody, this video, to be released soon, is right in that ‘liberals, see what you’ve done!” channel we MUST stuff:
http://maggiesfarm.anotherdotcom.com/archives/13549-The-Lottery.html
It’s about charter schools. Direct to You Tube here.
Manufacturing windmills and solar panels will always be cheaper somewhere offshore or cross-border.
The correct answer to that is: so what? “Cheapest” does not have to be the most important goal. And yes, it’s windmills and solar panels and cell phones and iPods and t-shirts and computer monitors and tires and dog treats and tea cups and….
Lifeofthemind said:
“They assumed that all the Arabs would do with the money was blow it on shiny toys, prostitutes and boozy weekends in London. The money was used instead to buy capital assets, including media and technology companies, academics, politicians and bureaucrats.”
Where we really outfoxed ourselves was failing to anticipate Middle Eastern politicians using religious demagoguery to maintain their grip on power. I think there was this implicit assumption that the Arabs and Persians would jettison their medieval superstitions after they achieved some measure of prosperity. Instead we’ll soon have the situation of crazed religious fanatics being armed with modern ballistic missiles and thermonuclear weapons.
peterike,
My bad. I didn’t intend to suggest that US shouldn’t do any and all manufacturing possible and soonest; just pointing out the contra-productive but prevailing criteria for investment.
just pointing out the contra-productive but prevailing criteria for investment.
Sad but true! Isn’t that just like the Bible verse?
Verily, by the transgressions of your transnational investors, so shall ye be hanged.
First Book of St. Chesterton I believe.
Aye, today they be limberin’ the rope, they be.
three legs, Vix, SP500-1080, DOW-10K –looks like we held on the one inch line today –DOW trying to hold the mark, on the mark.
oops –9999.
“Instead we’ll soon have the situation of crazed religious fanatics being armed with modern ballistic missiles and thermonuclear weapons.”
Yes, we will. However, they won’t have many of them. Once used – then the Millennium War will finally be over. Personally, I think that even the Empty Suit would respond appropriately when a US city goes up in smoke. If the USA and the West are really lucky, it won’t be the Empty Suit’s decision – because DC will be the smoke cloud.
geoffgo @ 117: Secretaries, stenos, typists, A/R-A/P & payroll clerks, bookkeepers, etc, etc, etc, by the millions, all perished in the digital onslaught. All businesses bought-in.
And thus vanished the white-collar middle class, and I’ve played my role in that, too. The Internet and cheap telecom generally has disintermediated a whole bunch of sales channels and impacted brick and mortar retail. And, we’ve done run out of other stuff for those people to do.
We keep hearing that half the jobs problem is globalization, and the other half is automation. Through the 1970s and 80s and 90s there was a constant question, “Are all these computers helping, or not?” It took until the Internet to finally make it clear the answer was, “Yes!” And now, we’re reaping the downside.
I don’t necessarily see this as evil. It *is* a dramatic increase in efficiency. The sun still rises in the east, the grain still grows, even if Fred isn’t sitting by the phone all day writing down orders from the field. So, why should Fred’s income be any different? Not because the resources are not there – that’s the good news! It’s because, in the absence of his work, we have no rational way to *allocate* them to Fred in any fair manner.
OK, maybe we spent half of Fred’s salary on the new and more efficient automation system. That would impact Fred’s salary, just as it would if Rajiv is taking orders in Bangalore over that cheap telecom line.
Because of logic like this, I am very afraid that a challenge to even the most conservative thinkers, in the next century, is going to be to figure out just what we *do* with 100,000,000 or so people we just don’t need, in order to produce all the goods and services for the entire population of 300,000,000. If the problem is on the table, even a conservative government needs to deal with it. I’m just saying, the government of the future, is going to look rather different than the government of the past – unless a bunch of uneducated yahoos get in there and refuse to learn from the past and would rather repeat it, bloody revolutions and all.
Buddy Larsen … seems if I remember correctly there was a similar rally back in the early 1930′s and then, and then….
(sound)
http://tinyurl.com/3akcvr
BTW derivatives are still unregulated and still a “black box” to 99.99% of humanity yet they are in the hundreds of trillions of dollars.
habu, that’s exactly what triggered the sell-off today –big movement on derivatives –looks like a currency day but the currency followed the leap in price of cds on sovereign debt of the ‘pigs’ –portugal, italy, greece, spain. One side of the trade ‘knows’ Germany will quash the crisis, other side ‘knows’ germany is export driven and cannot but accept the serendipity of a devalued Euro. For a variety of reasons (bankster power & liquidity a big one) Germany –has it thrust upon her –to drive the solution.
Now germany is either more loyal to the EU, or to its own industry. The world waits with bated breath to see what germany –the heart of europe as the nazis used to say –will do. Hey, uh, didn’t this happen once before, no, uh, twice? no, 1870, thrice? No, treaty of Westphalia, frice ? Fourse? quads?
portugal, italy, greece, spain, … ha!
California leads the world in weak bond ratings, and California always sets the model for the US to follow nationally.
In the light gold gathers the gloom about it.
Prechter on London gold raids
The Tea Party is looking better and better when this is the direction the GOP is headed:
http://online.wsj.com/article/SB20001424052748703575004575043612216461790.html#printMode
“Last week, House Minority Leader John Boehner of Ohio made a pitch to Democratic contributor James Dimon, the chairman and chief executive of J.P. Morgan, over drinks at a Capitol Hill restaurant, according to people familiar with the matter.
Mr. Boehner told Mr. Dimon congressional Republicans had stood up to Mr. Obama’s efforts to curb pay and impose new regulations. The Republican leader also said he was disappointed many on Wall Street continue to donate their money to Democrats, according to the people familiar with the matter.
A spokeswoman for J.P. Morgan declined to comment.
“I sense a lot of dissatisfaction and a lot of buyer’s remorse on Wall Street,” said Rep. Eric Cantor (R., Va.), the second-ranking House Republican and a top Wall Street fund-raiser for his party.
A complete picture of Wall Street’s 2009 campaign donations won’t be available for a few weeks. Through the third quarter, campaign-finance reports show that some major Wall Street players began sending an increasing share of their donations to Republicans.”
“I sense a lot of dissatisfaction and a lot of buyer’s remorse on Wall Street,” said Rep. Eric Cantor (R., Va.), as he gazed down from his office window onto Wall Street, and the brigade of idling Soviet T-90s and the busy squads of shock troops serving eviction notices on the former tenants.
geoffgo, Josh, Etc.:
Yes we have a BIG problem with productivity and what to do with all the assembly line workers, secretaries, clerks, Information & Tech workers, programers, engineers, scientists, etc. who have had their jobs outsourced or replaced by automation.
There are really only two possible solutions to keeping them productively employed. Those solutions are two sides of the same coin. That coin is making U.S. produced goods economically competative again. The two sides, regrettably, are protectionism and demand.
In order to re-employ our workforce, we must impose tariffs, or outright ban categories of imports in order to make U.S. produced goods economically competative.
We must also limit the number of workers by severely and effectively limiting immigration. Without immigration and the children of immigrants, the U.S. population would be in a steady decline like many Western European nations.
Fewer jobs available, but fewer workers to fill those jobs.
That leaves supporting the retired and aged infirm as a problem, but one we won’t be able to deal with anyway in the near future with our current system. Let’s put that aside for the moment.
Yes, I know this will result in a world wide depression, and more expensive, lower quality goods for consumers in the U.S. but compared to what’s facing the entire U.S., what’s the alternative?
We import far more than we export. A few industries such as aircraft, agriculture and defense will be hurt by world wide re-erection of trade barriers but they certainly won’t be killed. Nearly every other industry in the U.S. will rebound, with the greatest gains to be achieved among blue collar workers.
Even domestic aircraft manufacturing might rebound without competition from Bombadier and Airbus. It sure would settle the Air Force Tanker deal in a hurry! Domestic agriculture may pick up as well when we stop importing all those tons of rice from Thailand, wheat from China, and fruit from Central and South America.
Yes, the rest of the world, and especially the third world, will be screwed. So what?
With 300 milliion consumers, adequate reasources of every type, and the skills to produce everything needed or indeed wanted, we can go it alone succesfully where many other nations can’t.
If people feel sorry for the Africans, Guatamalans, etc. let them give charity out of their own pockets, or move there to retire, where a modest income can provide a comfortable living, and they can boost the local economy through conspicuous consumption, and relieve their silly guilt through volunteer work.
The alternative to this economic Fortress America is continued U.S. decline in average worker income. Increasing disparity in wealth between the rich and everyone else, a rapidly shrinking middle class, and eventual revolution, or collapse followed by revolution, or slow rolling collapse followed by world war, followed by revolution in some form or other.
One of the big problems during the “great” depression was that the U.S. was a large exporter of all manner of raw material, manufactured goods, and of agricultural products. Erecting trade barriers at that time was counter-productive to the U.S. economy. It won’t be like that this time, and yes I know we import a lot of petroleum products. We need to end that for many reasons.
If Rex was temporary tyrant of the U.S., in the ancient Greek manner, there would be a ten year period of weaning the U.S. off all energy imports. A crash program to meet 120% of U.S. electricity demands via nuclear power. A crash program of Alaskan, off shore, and continental drilling to bring in additional sources of domestic oil and natural gas. A reasoned role back of the many outrageously cumbersome restriction on industy, and implementation of a universal flat income tax of 15-20%, so that more than 50% of the electorate will have skin in the game.
We also need to dismantle the U.N. as it currently exists, outlaw public employee unions, greatly simplify the majority of the U.S. legal code, stop judicial activism, restore the activities of the U.S. government to it’s constitutionaly mandated functions, and make congress a part time, occational occupation again instead of a full time career choice for some of the worlds most self important inflated egos. Those are other topics for another time.
Does anyone else see a non-magical way to restore the U.S. economy and ensure future U.S. prosperity without either becoming a modern Roman Empire, or implementing a Fortress America economy in some way, shape or form?
AR/132; good thoughtful post –yes there are some tough nuts in there –differential pay scales of course exist in differential cost-of-living environments –maybe that’s the way to eventually drag the imbalance into rough parity.
Either that or as you say, fortress America –an underlying Democratic party (union) position anyway –note the trade rumblings already afoot. UAW would like nothing better than if American consumers had no choice –if they want to drive –but to buy a UAW microcompact for $150K.
Buddy @133:
In a globalized economy, and without import tariffs, and without banning certain imports which will be much cheaper to manufacture at slave labor wages in China or elsewhere in the 3rd world, relying on different pay scales for different costs of living in different countries is a certain loser for the U.S. worker.
It used to mainly impact blue-collar workers, but no longer. At one time they were going to re-train all those ex-factory workers to be computer aided design draftsmen, or computer operated lathe programmers, or x-ray technicians, or computer technicians, etc. They mostly turned out to be either unemployable or employed in the service industry earning effectively half the amount they were making before.
Well, now the lathe operators, and CAD draftsmen, and technicians of almost every sort and software engineers, and electronics engineers, and computer engineers, and nurses, and school teachers, and doctors, and at the rate things are going, even the G-ddamned lawyers will be cheaper to train and employ in Asia or Africa than in the U.S. The cost of living will be lower and people there will be willing to work for less money to perform a given trade, profession or service than an American for a long time to come.
Relying on wage differential without a tariff means the product made in the third world will be substantially cheaper than the similar product made in the U.S. and in a market economy, even a poor example of one like we have now, that means double shifts in the third world factories and unemployment for the U.S. factory workers. The same applies to engineers, scientists, accountants, repair technicians, etc.
In order to make industrial manufacturing work in the U.S. we must either lower the costs here, increase the cost of stuff made elsewhere, or manufacture stuff that can’t be made as well elsewhere, and thus has a technological or quality advantage. We still have that edge in a few areas: software, aircraft, high-tech weapons, communication gear, silicon wafer fabrication equipment, medical equipment, etc., but that edge is dulling all the time.
Again, is there a solution to restore prosperity to the U.S. and keep her prosperous short of becoming an expansionist hegemonic empire, or Fortress America?
I don’t believe we would ever want U.S. workers to compete with Chinese laborers on an even playing field. What’s the point?
Josh @ 94–exactly right.
In addition to all the other doom and gloom, anyone care that Social Security has a $12T unfunded liability, and Medicare about $60T?
Those bills are about to start coming due, at a time when the Fed budget is already $1.6T in annual deficit with no end to $T deficits in sight—
And we just wasted a year arguing about how people should get medical insurance.
AR/134; it’s as gnarly as anything gets –the choice in your last para is nothing new tho –it usually can’t be made by anything except war –at least a trade war if not a shooting war. “Beggar thy neighbor” is only a partial decription, it should read “beggar the neighbor before thy citizens” –but even that’s partial, it should be “beggar thy neighbor before thy citizens and send thy citizens to war”.
Meanwhile, guess how much of our SP500′s profits come from ‘ROW’ –the ‘rest of the world’? Half. fifty percent. point five. So, you could say that Fortress America will begin by unemploying half the workforce of the nation’s five hundred largest companies (and that’s not to count the foreign sales of the rest of American sales & service).
I’m sure the solution is buried deep in the locked desk drawers of the far left academy, and i’m sure it involves lowering American labor costs by updating the traditional solution –slave labor, communist-style means gulag the boojwahzee. after all, that’s the system that built the ancient empires, and it was not without benefit for the slaves –their labor made them too valuable to kill off.
Last comment for me on an excellent thread.
We must all remember that what is here on BC is just words unless someone has the guts to get out in the real world and make a difference. A difference that matches their words.
Start at home. Where it should be started because that is where your family and your self depend on your livelihood and your daily happiness and prosperity.
Attend those PTA meetings, those city council meetings, those county commissioner meetings and any other meetings where policy or preferences is decided or discussed. If you don’t you will be contributing nothing good and helping those who oppose you.
Remember this is just not for you but your family and their future families.
Then after helping city, county or providence wide continue working your way up to supporting what you want for your State in this Republic that we love.
Today through the magic of the Internet you can follow and assist those that have the same or simular ideas and aspirations. You can give not only moral support but financial support to them. We can’t kick the bastards out of our governments and elect conservative individuals unless [we] they can get the favorable attention of the masses that vote.
Remember that most do not read blogs, nor keep up with the news and political, the only know what they see on TV or hear on the Radio or at the water cooler.
And that costs money.
Hope and work for the improvement in all levels of govenment and for the preservation of our Republic.
But plan for the worse.
Papa Ray