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[John S. Lipton]

My fellow Americans,

I am writing this to reach out to my fellow countrymen of all political colors. I am asking you; where has all our common sense gone? Our President and Congress are going to destory this country! Why are we sitting back and and letting it happen? When W. was in office there seems to have been posts everyday on this board about a critisism of his administration. Why has this stopped just because Obama is in office? Why are all the intelligent people who like to opine and expouse on these tpoics grown silent in all this recent bailout and spending mess? Fiscal irresponsiblity is bad no matter who is doing it. We had W. Running up a 500 billion dollar deficit, passed a nearly 700 billion dollar bailout, the Obama doubles down on the deficit, adds about 800 billion dollar bailout, a 400 billion dollar spending bill with 9000 earmarks and is going to give nearly another billion to Hamas. Where is all this money coming from??? Why are we letting them spend this money? They are going to ruin this nation, devalue the dollar and makes slaves of us all to the state.

I have a question for all my fellow Americans -

1. If you are a Republican or conservative, why are you not standing up and fighting this administration harder?

2. If you are a Democrat or a Liberal, if you were out spoken about the "big spending" and deficit spending W, then why do you think it is ok to let Obama who has been in office for less than 60 days spend more money than we have and will put us in debt for generations to come? Why is it bad for W, but not bad for Obama to do?

I am wondering how many people have common sense out there instead of being blind political followers of anyone. Am I the only one around here upset about this all?

[BFW]

Have you not been following the topics on the financial bailout and the withdrawal plans?  Seems to me that plenty is being said.  Obama doesn't get a free pass.

I'm wondering what ANY of this has to do with common sense?  Unless "common sense" means "believes what I believe" or "holds political positions I agree with."

[John S. Lipton]

Have you not been following the topics on the financial bailout and the withdrawal plans?  Seems to me that plenty is being said.  Obama doesn't get a free pass.

I'm wondering what ANY of this has to do with common sense? Unless "common sense" means "believes what I believe" or "holds political positions I agree with."

Common Sense = Fiscal Responsibility

Throwning money all around and at everything is not a common sense solution to anything no matter if you are a liberal or conservative.

I also did not say anything about "beliefs" or politics. I thought not spending more than you have and not wasting money is common sense. I thought I was clear and was attempting to find common ground among people of different political stripes. I thought it was common sense that if irresponsible fiscal policy got us into this mess, then doing more is not going to help. Seems like logical and common sense to me. Guess I am a weirdo.

[BFW]

Thanks for the clarification.  I couldn't care less whether a particular solution was common sense.  I do care whether it's fiscally responsible.

I would agree that "throwing money around" is fiscally irresponsible.  I don't think I agree that providing funds for things constitutes throwing money around, and I don't think I agree that all the current measures being taken to attempt to deal with the financial crisis constitute throwing money around.  I do have my concerns.

There was an interesting interview on the radio (Fresh Air, on NPR) yesterday with the former head economist of the IMF; he had much to say regarding dealing with the crisis, including some agreement and some disagreement with current policies.  If I can find the link, I'll post it later (unless someone beats me to it).

[B0B]

Good evening,
BFW, I heard that interview as well. Interesting stuff.


John, during Bush's time one of the longest wars in american history was continuously funded through extra "emergency" bills even though there was no clear end in sight and we'd been there for years. The economic downfall was a good ways in coming and fairly easily seen, yet Paulson and the like said all was good until... the sky is falling. Give me 700 billion or else. And so on and so on. The biggest difference I see is that Bush and the republicans took massive amounts of unneeded money and threw it to their friends. Obama actually needs it, and is trying to put it to good use.


Obama is placed in one of the hardest situations an american president has ever had to face coming into office. Our foreign policy is wrecked. We are at two wars that we do not have the power to win. And they aren't even the number one concern. Our economy has been eaten from the inside out for the past two or three decades and it's just starting to fall apart. He didn't get us there, he just has to deal with it. The least we can do is give him the benefit of the doubt.

Sure you can be upset. Sure you can be angry as hell. I've been that way since we decided to invade Iraq. But as much as I hate us being there, it'll be worse if we just cut and run. Similar with the economy. I hate the flagrant spending, but doing nothing can be far far worse. And quite frankly, I haven't heard a single idea from anyone against the massive spending that is useful and anything but... "oh them democrates are going to grow the government and be irresponsible with money" and so on. The most idiotic thing is that many of these calls are from the republicans in congress. The same group that help the government get to become the largest government in our history with the largest debt and still our infrastructure crumbles.

So any other ideas that don't drop us into one hell of a depression?

Take care,
B0B

[kbiggs]

The interview with Simon Johnson:  http://www.npr.org/templates/story/story.php?storyId=101360253

"Fiscal responsibility" does not equate to common sense.  If we were all "blessed" with "common sense," we wouldn't be in the current financial and economic mess.  And there wouldn't be any need to distinguish between "liberals," "conservatives," "Democrats," "Republicans," or whatever else you want to parse out.  If we were to rely on "common sense" to help muddle our way out of the current financial crisis, we'd be waiting a long time indeed.  In fact, there's every reason to believe that what you call "common sense" is exactly the kind of thinking that got us into this mess. 

Asking "Why do you think it is ok to let Obama who has been in office for less than 60 days spend more money than we have and will put us in debt for generations to come? Why is it bad for W, but not bad for Obama to do?"  is to fundamentally misunderstand the present situation, as well as basic economic theory--and, I might add, "common sense."  It's not about just spending "money."  It's about what the money will be spent on, or how you use the money.  The last 8 years, we spent billions on 2 wars, NCLB (a bureaucratic, fiscal and educational bankruptcy), the lure of cheap money and a house for everyone (whether they could afford it or not) . . . and what have we to show for it?  Boy oh boy, that's "fiscal responsibility" for you. 

Where do you think the money should come from?   How will you get "the people responsible" (whoever they are, be it W., Paulson, Greenspan, the presidents of banks, the NYSE, or the head of the SEC. . .)?  When banks fail, who do you think pays?  Who paid during the Great Depression?  The S&L scandal of the late 80's?  When the banks fail, the government is the only other institution available. 

"Am I the only one around here upset about this all?"  Please.  As if you're the only one who isn't upset about the present state of affairs.  Quite frankly, if you were upset about how we got here instead of griping about the proposed solution, I could understand your righteous indignation.  As it is, you sound like the typical right-wing fiscal conservative that got us into this mess. 

[gpkimzey]

If there even is such a thing as "common" sense, then we all posess it, by definition.  That is, it is common to all.

[evan51]

Imbalances have been building up for 28 years, culminating in the disastrous and calamitous presidency Of George Bush II. Money to be spent within the country has a different impact than money spent to "defense" contractors to kill strangers half-way around the world. The devil is in the details, but the "fix" (like the problem) is hardly a matter of common sense. I can tell from the posts that many are confused by the facts and spout Limbaugh-esque emotional rhetoric instead of anything (common)sensical or factual. Not a promising start to this thread.

[Baron von Bone]

If there even is such a thing as "common" sense, then we all posess it, by definition.  That is, it is common to all.

Exactly. That's just it. "Common sense" is what each of those who are enamored with the fallacy decide it is, which means it's rarely common or sensible.
 
Byron

[jaws241]

Personally, I thought common sense meant not getting two mortgages on your home and purchasing 5 plasma-screen TVs and going to jamaica.

[BGuttman]

Personally, I thought common sense meant not getting two mortgages on your home and purchasing 5 plasma-screen TVs and going to Jamaica.

Bravo, Jaws.  Second mortgages have their place:

1.  Expensive repairs to the house.
2.  College expenses for the kids.
3.  Captializing a new business.
4.  Catastrophic medical expenses.

We had too many people using their houses as ATM's to support a rather extravagant life style.

[evan51]

I hear many right wing/hate talk radio types talking about "consumer greed" as a cause of our current financial crisis. Yes; many people availed themselves of the loosened credit to buy houses and consumer goods. And that, coupled with a sagging job market spelled catastrophe for many. It created personal hardship. But this is not the "cause" of the problems that could no longer be contained and split apart in October of 2008. The bailouts go so far beyond the extent of any mortgage and consumer credit bubble this should be obvious to anyone. Conducting two wars whilst giving out tax cuts and rebates certainly didn't help our prognosis. The manipulations of the "financial industry" are the real culprit and the ones who can conceal their tracks the easiest.

Behind all the drama, many forces are at work in the world economy:
1. Globalization. Countries throughout the world are looking to move their economies forward, especially the new "mega-economies" in India and China, where there are huge, intelligent, motivated workers who will work for less than 1/10th of an American or Western European wage. By law, American corporations must seek the highest profit (not that they need to be told, BTW), and jobs are moving off our shores. At the same time, our economy hasn't adjusted to the new realities. We make airplanes and avionics, weapons, we grow food, we do R&D in many areas, we do construction (if there are buyers, etc.), but the lion's share of our daily economy is now service industry related. Much  of our technology is extremely advanced, secret even, and not the kind we can share or sell. Our place in the new world economy is uncertain. Perhaps we shall face a "leveling" that our leaders do not want to discuss with us as I believe the nature and extent of our resources and capabilities is known to many decision makers and the change in our lifestyle and expectations will be painful to us.

2. Population. We've probably gone past a turning point where we can deal with overpopulation on our terms. The planet will now have its say as resources, water, air, arable land, energy is running out and populations increase. The cost of these resources will increase, both in currency and doubtless human life and suffering as things move forward.

3. Environment. Global climate change, toxins in air and water, extinction of species, destruction of the rain forest, heating of the oceans are threatening us. Time is being compressed as Earth can no longer recycle and clean at a rate to compensate for humans.

4. Social controls. Personal freedom and personal choice is now seen as a threat in virtually every industrialized country. Regulations, laws, statutes, and strict enforcement through cameras, satellites, GPS tracking, even sub dermal RFID chips await us in the very near future.

So....lacking a consensus on identifying problems, and lacking the political will and integrity to deal with these situations in an honest and positive manner, we've had 28 years of placing duct tape on the playground basketball. At some point there is no basketball---only tape. I think we have reached it. I'm concerned that politicians can't save us at this point. They can only seek to save themselves. I heard today that UBS, the Swiss bank doing business in the US, can't reveal Swiss accounts of US citizens because it would violate Swiss banking law. One congressman states we lose $100 billion in taxes just to these accounts (and yet the Republicans still demand more tax cuts for the rich ).

The very things that made us a successful species (ability to mold environments, agriculture, intelligence, reproductive rates, lifespans, etc.) are now the same things that threaten to destroy us. Conscious evolution is the only solution that offers a long term solution---we need to become better creatures. In the meantime, we need to demand truth over action, knowledge over belief and rhetoric, and to control fear, greed and lust while we put the house in order. Behind all the talk do we still have a notion of what it means to be Americans? Is it a matter of consuming? Is that all "life, liberty, and the pursuit of happiness" mean to us?

[mwpfoot]

We had too many people using their houses as ATM's to support a rather extravagant life style.

I take the exact same circumstances and say that the true problem was that there were too many corporations acting maliciously and recklessly, simple as that. They were targeting and marketing and selling and lending and repackaging everything to anyone and everyone knowing full well that the system was unsustainable. As long as they got theirs in the short term it was rewarded with obscene bonuses and options. These vampires had to GROW their interchangeable corporations by hook or by crook, because sustainability doesn't fuel the speculation on the market that make the fat cats happy. Sustainability is failure; grow grow grow.

The working and non-working individuals wanting more than they could afford are certainly a problem in our society, but the corporations that enabled people to hopelessly sink themselves WITHIN a supposedly regulated system are CRIMINALS that knowingly took advantage. The population was also trying to get ahead, yes, but ultimately should be considered victims when compared to what those above them got away with and from whom they took it.

 

[evan51]

Another angle on these bailouts is that Goldman Sachs, Morgan Stanley, and others had the private pension funds among their top clients----the teachers' funds, UAW, and scores of other funds. If these companies were allowed to go under these workers would have been left destitute in their retirement years (which can be 20-30 years nowadays!). The interconnectedness of the financial system is what can bring it down so fast, both internationally and nationally.

[evan51]

I am wondering how many people have common sense out there instead of being blind political followers of anyone. Am I the only one around here upset about this all?

Yes; you are absolutely amazing.

[ABinkard]

Conscious evolution

Careful on the word choice. 

[slidemansailor]

In 1913, the legislative and executive branches of the USA government gave control of the US dollar to private banking interests in the name of The Federal Reserve.

Though completely illegal under The Constitution, this giveaway survived nearly 100 years without any successful challenges. In that period of time, the value of the dollar they were supposedly chartered to protect has degraded by 99%.

WHO got THAT money?  Yeah, the 99% went into somebody's pocket.  You should be outraged at 95 years-worth of politicians and bankers who robbed us.  But you are most likely blaming one of the two most recent Presidents.   SUCKER.

Common sense would have all of the thieves hanging by their Gucci ties from the nearest lamppost. But instead, we choose to stupidly nod our heads when they talk.

Now they are ACCELERATING the demise of the dollar. This should really fire us up. But they have pretty people saying pretty words on our pretty TVs.  Who could get pissed when it all sounds so pretty.

When you are playing your King on the street corner for a bowl of soup, please try to remember who stole it all from you.

[Thomas Matta]

Common Sense = "Sound judgment not based on specialized knowledge; native good judgment."

Hmmmmmm.......

[BGuttman]

Common Sense = "Sound judgment not based on specialized knowledge; native good judgment."

Hmmmmmm.......

I agree.  Seems to be a lot of bloviating here, though.

Lots of criticism without suggestions.  Don't like what is going on?  Tell me what you think should happen and what you expect the result to be.

[Baron von Bone]

I agree.  Seems to be a lot of bloviating here, though.

The problem is that far too much usage renders the term pretty meaningless. If someone uses the term and you don't know that person relatively well, you have no idea if what they're talking about is either common or makes any sense. In fact based upon the fact that most people who use the term use it just like faith, to artificially bolster a position they can't defend with reason or evidence, the odds are that neither are the case.
 
Byron

[John S. Lipton]

John, during Bush's time one of the longest wars in american history was continuously funded through extra "emergency" bills even though there was no clear end in sight and we'd been there for years. The economic downfall was a good ways in coming and fairly easily seen, yet Paulson and the like said all was good until... the sky is falling. Give me 700 billion or else. And so on and so on. The biggest difference I see is that Bush and the republicans took massive amounts of unneeded money and threw it to their friends. Obama actually needs it, and is trying to put it to good use.

Mr. Bob,
This is EXACTLY what I am trying to get at. I am trying to rally people of all political stripes behind common principles. That is, deficit spending is bad no matter if it is a Republican or a Democrat. All you can do is blame W. for wasting money, then tout Obama as a great man with great challenges and say you support him. Obama is doing the exact same thing W. did!! I am asking you to look past the man and look at his actions. Liberals will always blame Bush for everything, then when a Democrat does the exact same thing W. did, they say thigs like "Obama actually needs it".

Liberals are always judged by this actions instead of thier results. Sure, the Democrats want to take your freedom of choice in medicine, schools, what you eat, where you can live, how much you can earn etc. But, it was for a good cuase right? Who cares they will bankrupt America. They have good intentions! Welfare has destroyed the black family. It has not help anyone get out of the ghetto since LBJ. However, becuase it is well intentioned and gor Democrats votes it is hailed as a success!

I hear many right wing/hate talk radio types talking about "consumer greed" as a cause of our current financial crisis.

Mr. Evan,
I have been spending some time reading all your posts from the past. Your a very arrticule and intelligent man. More so than I am. The one thing that bothers me about you is use of "buzz" words. You use words that are not intended to further your argument but rather have an incitful tone or meaning behind them. You try to invalidate your opponents argument more through controling the language than controling the debate. Here you have used the phrase "right wing/hate talk radio types". First off your association of right wing and "hate" is misleading. I would like to ask you who is hatefull? Of the people you may mention, does your opinion of them derive from actually listening to thier programs for more than a few hours, or does it come from what others in your circle of like minded friends think. I find it funny that many people who dislike Sean Hannity have never actually listened to his program. It would be the same as me saying I do not like Stephen King, but never read his books.

I believe you have been misled by others about the talk radio types you mention. I have never heard Hannity, Rush, Levin, Humphries, Savage or Boortz talk about "hating" people. On the contrary I hear them talking about lifting government restrictions to allow people to be free and attain the level of wealth and happiness thier own determination, passions and choices allow for. They want everyone to succeed. Everyone to be happy and wealthy! I know transcripts are hard to come by with out subcriptions, but could you please cite me an isntrance where these people incite hate. Please post it in context and please tell me who you think they are inciting hate against and why.

I'm concerned that politicians can't save us at this point. They can only seek to save themselves. I heard today that UBS, the Swiss bank doing business in the US, can't reveal Swiss accounts of US citizens because it would violate Swiss banking law. One congressman states we lose $100 billion in taxes just to these accounts (and yet the Republicans still demand more tax cuts for the rich ).

The very things that made us a successful species (ability to mold environments, agriculture, intelligence, reproductive rates, lifespans, etc.) are now the same things that threaten to destroy us. Conscious evolution is the only solution that offers a long term solution---we need to become better creatures. In the meantime, we need to demand truth over action, knowledge over belief and rhetoric, and to control fear, greed and lust while we put the house in order. Behind all the talk do we still have a notion of what it means to be Americans? Is it a matter of consuming? Is that all "life, liberty, and the pursuit of happiness" mean to us?

Mr. Evan, you speak with great wisdom here. You speak like a great conservative. The points you lay out seems to be a distrust in government, and the promotion of freedom and individual rights. In everything I have read about you, I have never seen you post your political affiliation or actually call yourself by any political philosophy. If I may go out on a limb here, you probably considers yourself a liberal. If I am wrong, please correct me. Your writing and stated philosophy seems to be diamestriclly opposed to your stated beliefs. Please do not take offence to this, but I think you are a "closet conservative". You are a conservative and do not even know it. You have been mislead to believe that the Democrats stand for all these policies that you expouse when at the heart of it they do not.

For example...

4. Social controls. Personal freedom and personal choice is now seen as a threat in virtually every industrialized country. Regulations, laws, statutes, and strict enforcement through cameras, satellites, GPS tracking, even sub dermal RFID chips await us in the very near future.

Why do you appear to give less concern for the Democrats than the Republicans? It is the Democrats who want to ad laws, restriction, buerocracies and statutes. They want to "protect" you from yourself. They want to tell you if you can smoke, if you can eat trans fats, what doctor you can see, how much you should make, where you have to bank etc. I am not asking you to be a Republican becuase that would be idiotic. The Republicans are as dishonest as the Democrats. You just seem to vest so much more confidence and trust in the Obama Administration when from thier actions and statements alone are contradictory to your stated concerns about the nation.

1. Globalization. Countries throughout the world are looking to move their economies forward, especially the new "mega-economies" in India and China, where there are huge, intelligent, motivated workers who will work for less than 1/10th of an American or Western European wage. By law, American corporations must seek the highest profit (not that they need to be told, BTW), and jobs are moving off our shores. At the same time, our economy hasn't adjusted to the new realities. We make airplanes and avionics, weapons, we grow food, we do R&D in many areas, we do construction (if there are buyers, etc.), but the lion's share of our daily economy is now service industry related. Much  of our technology is extremely advanced, secret even, and not the kind we can share or sell. Our place in the new world economy is uncertain. Perhaps we shall face a "leveling" that our leaders do not want to discuss with us as I believe the nature and extent of our resources and capabilities is known to many decision makers and the change in our lifestyle and expectations will be painful to us.

Well stated and I could not agree more! Obama and the Democrats have been the ones screaming at the tops of thier lungs about working with other nations. Obama recently has been talking with the PM of Great Britian about a "Global New Deal". It is Obama who is worried about sitting down with no preconditions with dictators and terrorists. It is the Democrats who are against enforcing our southern borders. They want to give amnesty to illegals. They want to dilute the legal and assimilated law abiding citizens with anyone who wants to come in unchecked! Obama is the globalist! If you are concerned as much as you say you are, then I hope you will stop using the liberal buzz words like "right wing/hate" and "NeoCon" and hold both sides to account.


*Note* -  I am sorry about my spelling and grammar. I wrote this on my PDA phone and I can not use the spell check or go back and fix things. I will edit this tonight when I get home. Please forgive my errors.

[evan51]

If I may go out on a limb here, you probably considers yourself a liberal. If I am wrong, please correct me. Your writing and stated philosophy seems to be diamestriclly opposed to your stated beliefs. Please do not take offence to this, but I think you are a "closet conservative". You are a conservitive and do not even know it.

I am a social liberal and a fiscal conservative, Jason.

However, the current crisis defies labels and the true nature and extent of what has been done to us by "conservatives" is still unknown. I don't mind "spending money" at this juncture, as long as it gets in the hands of those who need it and there is accountability. It is crisis management only, however, and we shouldn't kid ourselves that a real economy will result. I don't think you've really understood what I'm saying above. This goes so far beyond the superficial liberal/conservative labels that taint our political discourse, that we should abandon those discussions. For the last eight years, our economy has been built on "financial products" (basically moving paper assets from one place to another), buying foreign made products on credit (personal and national through balance of trade deficits), and borrowed money fueling the wars and corporate giveaways of the Bush administration. Clinton got by on ".com" businesses and the fact that people were holding down two or three part-time jobs to get by. That's over. So we have people concentrated in the cities and 'burbs with no work, dwindling manufacturing, a global depression starting, increasing energy costs,fierce competition for global resources, and painful solutions ahead for us.

Truly----it is time to throw out your conservative/liberal playbook and end appeals to a mythical "common sense" solutions and "capitalism" (a "buzz" word for a return to feudalism). We are facing a major catastrophe of first impression----Reagan-voodoonomics, and FDR Keynsian economics won't work long or short term, IMHO. The rich have covered their asses and handed us the bill the last six months.  I remain skeptical the "stimulus package" will work, but not for any reason the Republicans suggested (i.e. whining "We want tax cuts!!!"), but because it doesn't address the real problems with our economy. Simply put, the economy is built on sand, operated with smoke and mirrors while investment banks,the Fed, Big oil, Big Pharma, and insurance companies bleed us dry. These guys don't care if "conservatives" or "liberals" are in charge---they will get theirs no matter.

[BFW]

I am a social liberal and a fiscal conservative, Jason.

John.

[johngsteel]

Potential root cause? Political idolitry.  A political party that is reviered, and followed with 100% support and approval.  Those that do not agree become evil, demonized, etc.

That applies to both Democrats and Repubicans.  Neither are accountable for their actions.  The media, in general, is biased.  It's reporting and presentation of information just adds to the dysfunctional government that we now have.

Some here will blame only one party, or specifically one current or former president.

A solution?  How about finding a way to have an unbiased reporting agency actually hold all elected politicians accountable, publishing all of their pork, reporting honestly, presenting proven facts.  The only problem is that there is no such beast.  Besides that, the masses need to be more aware of ALL the stupidity, not just point fingers at the other party and blame them.

It takes two to tango.  It took both Democrats and Republicans to create this mess.  They blame each other, and they both blame wall street.

[kbiggs]

In 1913, the legislative and executive branches of the USA government gave control of the US dollar to private banking interests in the name of The Federal Reserve.

Though completely illegal under The Constitution, this giveaway survived nearly 100 years without any successful challenges. In that period of time, the value of the dollar they were supposedly chartered to protect has degraded by 99%.

Slidemansailor, I don't understand why establishing the Federal Reserve was "completely illegal" under the Constitution. 

Liberals are always judged by this actions instead of their results. Sure, the Democrats want to take your freedom of choice in medicine, schools, what you eat, where you can live, how much you can earn etc. But, it was for a good cause right? Who cares they will bankrupt America. They have good intentions! Welfare has destroyed the black family. It has not help anyone get out of the ghetto since LBJ. However, because it is well intentioned and go[t] Democrats votes it is hailed as a success!

John,

If I may characterize much of your argument here (and in previous posts), you make many statements that just seem plain wrong.  (This is a point of logic and argument, and not "common sense").  Take, for example, just two of your statements in the above paragraph:  that "Welfare has destroyed the black family. It has not help anyone get out of the ghetto since LBJ." First, they are "truth" statements without anything to support them.  This is hyperbole, rhetoric, and promote neither understanding nor unity, your stated intentions. 

Second, you have no standard against which to measure your statements.  I could just as easily say, "Not all black families have been destroyed by welfare," and "I personally know people who made it out of the ghetto, and went on to college to boot!"   These two statements clearly are true: some families have been helped by welfare, and some blacks, as well as whites, Asians, Native Americans, etc., have escaped the cycle of poverty and despair that pervade poor America (urban and rural, not just "ghettos"). 

Clearly, your arguments do not persuade me, and because they are full of factual and logical errors, I sincerely doubt their ability to sway others to your position, whatever it may be. 

This is EXACTLY what I am trying to get at. I am trying to rally people of all political stripes behind common principles. That is, deficit spending is bad no matter if it is a Republican or a Democrat. Obama is doing the exact same thing W. did!! I am asking you to look past the man and look at his actions. Liberals will always blame Bush for everything, then when a Democrat does the exact same thing W. did, they say thugs like "Obama actually needs it".

What "common principles" are you talking about?  If you are concerned about deficit spending, great.  Many people are.  But why are you upset now, when we are having to spend more to get ourselves out of the current financial mess?  Why didn't you complain when Bush et al. were wasting the taxpayer's money?  Despite what you may believe, Americans have very few "common principles."  Yes, we are dedicated to life, liberty, the pursuit of happiness, we want to be secure in our persons, houses and affairs, etc.  We all claim to uphold the Constitution, the Bill of Rights, and the remainder of the amendments, and we all claim to believe in Democracy (whatever that means), mom, and apple pie.  Fine.  We agree on the basic framework of government, and we hold a few things in common.  But one of the things that makes America American is that we are free to do almost anything we want, and we have very few rules (esp. when compared to other modern democracies) preventing us from doing what we shouldn't. 

The present state of the economy is not a Republican vs. Democrat issue, and the labels "liberal" and "conservative" do not help.  Republicans do not have the upper hand on "fiscal responsibility" any more than the Democrats.  Besides, if you view the terms "liberal" and "conservative" from an historical perspective, how we use them today is nearly the opposite of what their original meanings were:  "liberal" and "conservative" have become almost meaningless epithets today.  But that's another topic. . . 

When we are discussing the global financial crisis, we are talking about the role of governments in the banking industry and in our financial and economic lives.  Sometimes the government has to tell us what to do because we won't do it of our own accord.  We are, after all, human beings, and human beings have a strong tendency to be selfish individuals.  When the US govt. stepped in to save some of the Wall Street banks late last year, it was viewed as essential.  It probably was, and it will probably be so by the end of the month with other industries (more banks, the mortgage industry, General Motors, etc.). 

One essential role of government is to provide stability and predictability in the lives of its constituents.  No other institution does that.  By going into debt now--by increasing the national debt, and not just the year's deficit spending--we are ensuring the future of the government and the US.  The Obama administration is, in part, saying that the US will be around for another 20-50 years so that we can pay off this debt.  By spending money on projects and programs that will, more likely than not, produce more jobs, Americans will then have more wage-earners willing to spend money to help pick the economy back up (or maybe just not continue to fall), and tax-payers to help pay off the debt.  Classic Keynesian economics.  And no, what the Obama administration is proposing, and hopefully achieves, is not "the exact same thing" that W. did. 

John, what I find distasteful about your arguments is that you clearly have an axe to grind, yet you attempt to couch it in terms that you hope are acceptable to others by appealing to our "common sense."  The message I receive from your posts is "Democrats are bad.  Obama is a Democrat.  Obama is therefore bad."  Logically, that makes sense, and I can understand it if that's your belief.  But politics isn't as simple as a classical logistic syllogism.  Even when things make sense it doesn't mean it's the right thing to do politically.  As I often told my students when I was teaching political science and government, "The biggest problem in politics is our inability to take the problems of politics seriously." 

[johngsteel]

The problem we have, according to John L, is the complete fiscal iresbonsibility of our government, regardless of politician, political party, who did what, etc.

All elected officials have cause our country to sit on the brink of collaps.  All of us can point fingers to Bush, to Carter, to Clinton, to Regan, to LBJ, to......

All of them, past and present caused this.  Fiscal irresponsibility.

"They" have an agenda.  "They" are both wrong.

I hold the Republicans in disrespect.  I hold the Democrats in greater disrespect.  Once you understand that, you may understand some of my posts...  Thers is no political favoritism in my mind or my heart.

[SilverSonic]

I hold the Republicans in disrespect. 

+

I hold the Democrats in greater disrespect.

=

There is no political favoritism in my mind or my heart.

????
 

[Sergethetuba]

Slidemansailor, I don't understand why establishing the Federal Reserve was "completely illegal" under the Constitution. 

It's not 'illegal' I think it just took it's fair share of stretching(elastic clause) by the current president in office (Wilson?), and Hamilton who wanted the fed to be as powerful as they could be.

[BGuttman]

The Federal Reserve was created in the wake of two other financial problems that occurred during the previous 20 years: the Panic of 1893, which I understand was actually worse than the Great Depression, and another Panic that occurred in the early 1900s.  In both cases there were massive bank failures and it resulted in a major currency crisis.  The Fed was created to have reserves of cash to prime the economy in the event of another crisis.

Remember, the "free enterprise" of Adam Smith's day is GONE.  It can never be recreated because there are many large enterprises (many are holdovers from the days of the Robber Barons) who will stifle any attempt at true free enterprise.

I want to ask all our friends who are so adamant that we are headed in the wrong direction: what do you propose?  If you say to let all these businesses fail, what will you do with the 25-50% unemployment that will ensue?  Do you think that enough small enterprises will arise to employ all these people?  Think hard about that.  I hear a lot of carping about the problems with deficit spending, but I don't hear any well-reasoned alternatives.  For 20 years we tried "trickle down" and discovered that the trickle evaporates before it gets very far.  That doesn't work.  Milton Friedman's model was wrong.  We may discover that Galbraith's model is wrong too, but to my mind Government spending on infrastructure is miles ahead of Government spending to keep a bunch of kids in Iraq.  What's right?  Wish I knew.

What will all you smug folks think when the next job to be cut is yours?  And don't think it can't happen.  Even if you own your own business if all your customers disappear you are out of business too.

[kbiggs]

Here, here Bruce!!!   

[Piano man]

It's a bit naive to say that Obama's running deficits just like W, and no one's complaining about it.

Running deficits is believed by most (not all) economists to be a reasonable response to an economic downturn. Lower taxes, raise spending. The speed with which the money's spent, and the effectiveness in creating jobs and demand, are more important than the other merits of the proposals. Obama's not doing a great job in this respect.

During an overheated economy, responsible economic policy is to raise taxes and cut spending. During the dot-com bubble, the government ran surpluses. Between the Iraq war and massive tax cuts, Bush borrowed money at a time we should have been paying it back. The latter would not only have helped our creditworthiness but would have slowed down the housing bubble and made the fallout less severe. The neo-cons (unlike the traditional conservatives) who said deficits don't matter could not have been more wrong. The problem is that when everyone in America thinks he's ready to get rich, most politicians don't have the courage to rain on the big party.

Obama has inherited a tough, tough situation--an economy that needs massive public investment and light taxation, paired with a bankrupt government after the previous administration used up our lines of credit. Globalization has made it worse, because our economic travails have weakened the countries who were lending to us.

So, to answer your question, Obama isn't doing the same thing as W, and no, he's not getting a free pass, and no, my opinions aren't driven by blind partisanship. I'm about as centrist as they come.

[Graham Martin]

My fellow Americans,

I am writing this to reach out to my fellow countrymen of all political colors. I am asking you; where has all our common sense gone? Our President and Congress are going to destroy this country! Why are we sitting back and and letting it happen? When W. was in office there seems to have been posts everyday on this board about a criticism of his administration. Why has this stopped just because Obama is in office? Why are all the intelligent people who like to opine and expouse on these topics grown silent in all this recent bailout and spending mess? Fiscal irresponsibility is bad no matter who is doing it. We had W. Running up a 500 billion dollar deficit, passed a nearly 700 billion dollar bailout, the Obama doubles down on the deficit, adds about 800 billion dollar bailout, a 400 billion dollar spending bill with 9000 earmarks and is going to give nearly another billion to Hamas. Where is all this money coming from??? Why are we letting them spend this money? They are going to ruin this nation, devalue the dollar and makes slaves of us all to the state.

I have a question for all my fellow Americans -

1. If you are a Republican or conservative, why are you not standing up and fighting this administration harder?

2. If you are a Democrat or a Liberal, if you were out spoken about the "big spending" and deficit spending W, then why do you think it is ok to let Obama who has been in office for less than 60 days spend more money than we have and will put us in debt for generations to come? Why is it bad for W, but not bad for Obama to do?

I am wondering how many people have common sense out there instead of being blind political followers of anyone. Am I the only one around here upset about this all?

I think perhaps you should have addressed your remarks to a wider audience than just Americans. This worldwide economic problem may have been sparked in the US but the solutions do not exist just with your 'fellow Americans'.

Most of the criticism I read in the last days of the Bush administration was that he should have got the rescue package through quicker. Now we have a situation where the UK, Australia and many other advanced economy countries also see the right course of action to be stimulating their economies. They hope that there will be a snowball effect and it will stimulate the world economy. These stimulus actions are in their infancy and you are therefore unlikely to see any criticism of Obama's bailout (a continuation of Bush's as I see it) and what you call a "spending mess". How specifically are they a mess, I would ask?

I would ask, what is the alternative? I guess you would say 'don't spend' but that would lead to the collapse of individual countries' economies and then worldwide collapse. Unemployment is already growing very quickly and I believe this is due to the incentive packages being held up in various parliaments (or whatever they are called in your part of the world) and just not being spent quickly enough.

Yes, I will be critical if I think the stimulus packages are being spent in obviously the wrong areas but so far this does not seem to be happening.

The area in which I am uncertain is how much we should concentrate on world trade, rather than keeping jobs in our own countries. In Australia we seen to think the FTAs are part of the answer, but I am not so sure.

I don't think the individual party politics of various governments are of any importance at this stage. Let us, the general public, see the full spending plans and give us some 'say so' in the decisions almost on a day-to-day basis. It can be done, you know, via polls and representation to our own area's politicians. Maybe not in the US, I am not sure, but we have been more or less managing this in Australia for some years now.

I do not think that even in the US there are a lot of "blind political followers of anyone". Most of us are waiting to see if the politicians and their economic advisers have got it right. There are no precedents for this. We think that stimulus is the right way out, but we are not totally sure. I certainly have not heard any other practical solutions.

[Andrew Meronek]

I do not think that even in the US there are a lot of "blind political followers of anyone". Most of us are waiting to see if the politicians and their economic advisers have got it right. There are no precedents for this. We think that stimulus is the right way out, but we are not totally sure. I certainly have not heard any other practical solutions.

Yeah, there are blind political followers in the U.S. I don't know the numbers, but a significant number of people have never voted anything except a "party-line" vote, where you vote for every eligible candidate of your party listed on the ballot. The majority of political strategy is simply getting these people out to the polling stations, rather than appealing to swing voters.

[BFW]

Yeah, there are blind political followers in the U.S. I don't know the numbers, but a significant number of people have never voted anything except a "party-line" vote, where you vote for every eligible candidate of your party listed on the ballot.

I agree there are blind political followers in the US.  I disagree that someone who consistently votes a party line is therefore a blind political follower.  In a two-party system, when the candidates of one party are consistently closer to your point of view than are the candidates from the other party, a party-line vote is common.  No reason to go even farther from your point of view just to prove you aren't stuck on the one party.

The majority of political strategy is simply getting these people out to the polling stations, rather than appealing to swing voters.

This is discussed in "The Big Sort."  There just aren't very many people who are truly undecided about such things.

[evan51]

Running deficits is believed by most (not all) economists to be a reasonable response to an economic downturn. Lower taxes, raise spending. The speed with which the money's spent, and the effectiveness in creating jobs and demand, are more important than the other merits of the proposals. Obama's not doing a great job in this respect.

During an overheated economy, responsible economic policy is to raise taxes and cut spending. During the dot-com bubble, the government ran surpluses. Between the Iraq war and massive tax cuts, Bush borrowed money at a time we should have been paying it back. The latter would not only have helped our creditworthiness but would have slowed down the housing bubble and made the fallout less severe. The neo-cons (unlike the traditional conservatives) who said deficits don't matter could not have been more wrong. The problem is that when everyone in America thinks he's ready to get rich, most politicians don't have the courage to rain on the big party.

Obama has inherited a tough, tough situation--an economy that needs massive public investment and light taxation, paired with a bankrupt government after the previous administration used up our lines of credit. Globalization has made it worse, because our economic travails have weakened the countries who were lending to us.

I agree with everything you wrote, in principle and factually.

But the danger I see in our current course is as follows:
When FDR did this (massive government spending) as part of the New Deal, our circumstances were quite different. Our manufacturing base was still in place---our industries were still the best in the world. Also, we were still an agrarian society in many ways and the post-WWII migration to the suburbs hadn't happened. When FDR increased spending, demand also increased and then jobs, production and increased tax revenues. I don't see that government spending will have the same effect this time. Our manufacturing is gone--steel, auto, electronics, apparel, except for "specialty" items, agriculture and aerospace industries. Of course, China, Korea and Japan desperately need us to buy more consumer electronics and plastic items to survive----capitalists sold the world on the need for globalism. But if and when we buy these items, we are still not creating "real" jobs here in the U.S. (buyers and greeters for WalMart excluded). But the attraction of cheaper and cheaper consumer goods has proved too enticing to the American consumer and perhaps our downfall. This is why I don't see how personal or government spending (borrowing) will solve our crisis. As you suggest, the time to address these imbalances was eight years ago. Our situation is now dire. While the need is for an immediate injection of capital, the long term needs are for restructuring and re-engineering our society. It seems our strengths lie in food production, aerospace, hi-tech R&D, alternate energy technologies, invention (why not new types of vehicles?), and in areas of human development (instead of individual indulgences). I am not an expert in this, but it is a serious question and not one to make in an emotional fear/anger-charged environment.

[And to return to an old theme--had we decided, say, in 1945 that our population should stay at around 135 million there would be no energy crisis, no job crisis, no wild economic crises, etc,. The political realities of managing overpopulation will be much uglier than facing truth 60 years ago.]

Bush's "deficit spending" was little more than organized looting by quasi-criminal political and corporate interests.

I'm not sure where to put this piece on Lieberman-----. I don't want to start a new topic and I don't think he deserves one in any event. But talk about waffling!!!

[johngsteel]

How many people do you know that will actually discuss the issues with a political party that they support?  How many would quickly redirect the conversation to speak against the party opposite of their allignment?

There are a few that can (and do) discuss the shortfalling of their political party of choice with someone of the 'opposition'.

There are many more that can not.  Instead, theyI know that will turn the conversation to attacking the other party.

It does not matte where they or you stand.  Just think about it...

[evan51]

John:
I think the grass roots party discussions are very different from national level politics. The relationship among Congressmen, their party, their districts and special interests is tenuous at best. The "foot soldiers" at the local level can ask questions and demand change, but at election time they are supposed to turn out the vote and shut up.

Maybe that's the way it should be in the sense that the president, a senator, the House are representatives for the whole country, not a party, state or special interest group. Does it work that way in practice? Sometimes, maybe.

[johngsteel]

Evan, I do understand.

I just am more aware of the dysfunctionality of them all than ever before.  The coruption, the biasenss, the pork, the cover-ups...

Maybe the visability is just that much more.  And it appears to me so is the willingness to ignore the faults of the preferred.

But never before have I seen such wholsale destruction of the US *(from Carter administration until today)

(and yes, older administrations had their issues as well, but nicely covered up, I assume)

I prefer the grass roots level of discussions about character, etc.  I do not like discussions with the focus of political idolitry.  That simply turns intellectual honesty off.  (something all of us are guilty of at some time or another...)

[Graham Martin]

We can't change the past; just take note of the faulty decisions, corruption, whatever, and then start doing something about improving things and getting out of the present mess. I will never believe individuals cannot have some effect by making their viewpoint known to their local party organisers and their politicians. And I refuse to even consider that America cannot extract itself from the present economic crisis - although you might have to change the whole political system quite radically. If you are the great country that most of you think you are, show us! And stop whinging about the past!

I am not totally a fan of Warren Buffett, even though the company for which I work is part of the Berkshire Hathaway group, but he outlined some good ideas in recent days which you might like to consider.

"Mr Buffet said the meltdown, which has seen US unemployment hit a 25-year high, was an "important war which could be won".

Japanese planes attacked the US Naval base at Pearl Harbour, Hawaii, on December 7,1941 in a surprise strike which drew the country into World War II.

The US put aside "partisan stuff" then and should do so again, Mr Buffett said. "We knew if we stuck together and followed leadership we would prevail," he added.

Mr Buffett said the degree of the global economic turmoil had come as a surprise, even to him, representing his own "worst-case scenario".

The financial sector, he forecast, would not return to health for five years.

He said: "It has fallen off a cliff. Not only has the economy slowed down a lot but people have really changed their habits like I haven't seen."

To ensure a pick-up, Mr Buffett said, the Government must deliver a less "muddled" message than it had done to reassure the country's "scared and confused" consumers.

The so-called "toxic assets" of the banks, he said, were "probably ... the best prospects for returns if the current value is based on mark-to-market".

European regulators recently backed calls to reform the mark-to-market accounting rules that many banks blame for forcing them to declare larger write-downs than necessary, saying they should instead be allowed to value certain assets on the basis that they will be held to maturity, rather than being forced to estimate their present value.

In a reference to "fat-cat" executives, he said that companies should not be condemned for using private-jets. His company, he said, had made deals that it otherwise would not have secured because he had access to a jet.

Mr Buffett is a strong supporter of Barack Obama, whom he called the "right President".

However, he said, the dire financial situation could be eased if the Government better communicated its policies for dealing with the meltdown."

I am not so sure about those toxic assets, or about allowing executives to keep their private-jets, but I like the suggestion of cooperation across political parties. And this is a war that simply has to be won!

As part of the stimulation package here in Queensland, our presently campaigning Premier Anna Bligh announced over the weekend that she was going to build a $60 million upgraded Carrara Stadium down at the Gold Coast. Except she got her timing and all the facts wrong. Gees Anna, you can't mess around with AFL, the most Aussie of sports. Anna is not going too well in her re-election campaign and will need to do a lot better. But then Springborg gets absolutely everything wrong and I can't see how anybody could vote for the LNP. I think I will have to vote for the Greens if Anna does not get her act together pretty quickly. My real problem is that  don't think that if you combined all the parties here in Queensland you would be able to find sufficient political brains to run an effective government. A true bunch of no-hopers, the lot of 'em. Well, not all, but most.

[B0B]

Good morning,

Mr. Bob,
This is EXACTLY what I am trying to get at. I am trying to rally people of all political stripes behind common principles.

And yet in this topic and a few others I have seen you in, you have taken a very biased republican stance and a blind eye towards part of reality. More often then not, that is a divisive tactic rather then a unifying one.

That is, deficit spending is bad no matter if it is a Republican or a Democrat. All you can do is blame W. for wasting money, then tout Obama as a great man with great challenges and say you support him. Obama is doing the exact same thing W. did!!

Obama is not doing what W did to waste money. Sorry, W was tossing away money long before the TARP. And from all appearances, Obama is doing his damndest to try to help and rectify the situation. He is in an incredibly difficult situation just starting off. Do you think obstructionist measures are going to help him? Do you really think they're going to help us as a whole?

Honestly and frankly, do you have any other ideas other then just not spending the money?

Take care,
B0B

[puma]

I hold the Republicans in disrespect.  I hold the Democrats in greater disrespect.  Once you understand that, you may understand some of my posts....

As you can see, the posters still don't understand it. They completely ignore your topic in order to promote their own liberal agendas. It's the usual idle banter. Common sense is not dead yet ... but the cancer is spreading.

[Piano man]

As you can see, the posters still don't understand it. They completely ignore your topic in order to promote their own liberal agendas. It's the usual idle banter. Common sense is not dead yet ... but the cancer is spreading.

I don't see many posts here that come close to matching that characterization. Just because everyone didn't instantly agree with everything that was said doesn't mean we 'still don't understand it', or are 'ignoring the topic' or 'promoting a liberal agenda' or committing 'idle banter'.

I happen to believe that the Democrats are screwing up the bailout and stimulus by not spending the stimulus money fast enough, not selecting expenditures that will maximize economic impact and not putting enough strings on the TARP money. Both parties are missing an opportunity to 'jawbone' the economy by reminding people who have money that they can help the economy by taking advantage of the bargains in stocks, new homes, remodeling, travel, etc. All the doom and gloom can be self-fulfilling.

Perhaps that view is just 'idle, liberal banter' compared to your highly substantive post, quoted above in its entirety.

Most people here aren't blindly following Obama or Limbaugh, but have relatively centrist, or at least mixed, political ideologies. That doesn't mean they're obligated to agree with everything you say.

The original poster is entitled to his opinion, but IMHO he's taking a very complicated subject and trying to reduce it to a simple lack of common sense. Other than Thomas Paine, I rarely read anything that's presented under the banner of 'common sense' that sheds much light on the subject at hand.

[evan51]

The original poster is entitled to his opinion, but IMHO he's taking a very complicated subject and trying to reduce it to a simple lack of common sense. Other than Thomas Paine, I rarely read anything that's presented under the banner of 'common sense' that sheds much light on the subject at hand.

Exactly.

I should point out that none of our Republican friends posted any appeals to "common sense" when Bush began a costly and protracted war(s) (based on lies and skewed reasoning) by granting a $600 rebate and a hefty tax cut. It's most peculiar that they should raise this banner now that the country is cleaning up from their fiscal debacle.

No appeal to "common sense" when Bush's response to being called on his Niger fuel rod lies was to out a CIA agent and expose her operatives to danger, possibly death.

No appeal to "commonsense" when Republicans insist that an economic recovery plan needs further tax cuts to the richest 2% of Americans.

Republicans simply can't do math and call the resultant disability "common sense."

[BGuttman]

OK.  Puma, John Lipton, Johngsteel, and Slidemansailor (you all seem to have a similar bent).  I am still waiting to hear how you intend to deal with the economic crisis.  And if you plan to be true laissez-faire, how you plan to deal with the consequences of another 1930 style Depression, which I think ALL economists agree will result from doing nothing.

Are you all so secure in your employment that you are convinced you are Depression-proof?

[B0B]

Good evening,
As a random note: part of me really wonders if we might be better off in the long run if we didn't try to bail out these people and keep them in power. If we all need to learn to live on less after years and years of living off of more and more.

Rarely did I ever hear from any of these "Economists" that what goes up is going to come down during our booms. Rarely did I hear maybe we better slow the growth- we're TOO prosperous. Shoot, most of them even said this recession was a surprise. I'm sorry but regular schooling teaches enough to expect this recession.

I really wonder if the money spent would not be better spent on infrastructure and blue collar jobs, and let the banks fall to pieces. Don't think by any means what we're spending on them is a couple hundred billion. Add in the Fed and the FDIC and we're talking currently about 2 trillion in less then the past year alone.

Our country really does need to drastically restructure it's economy. How will that ever happen if we prop up the same people and instutions that got us here to begin with?

Take care,
B0B

[evan51]

I really wonder if the money spent would not be better spent on infrastructure and blue collar jobs, and let the banks fall to pieces. Don't think by any means what we're spending on them is a couple hundred billion. Add in the Fed and the FDIC and we're talking currently about 2 trillion in less then the past year alone.

Yes. The entire "sub prime crisis" amounted "only" to $100 billion, assuming the federal government paid the banks losses and "took over" the assets. That's not what happened-----they paid the losses and gave the assets to the banks. And what of the other $1.9 trillion? <<Poof!!>> It's gone. Where?

Isn't it strange that Congress can grant bailout money literally overnight, but will debate national healthcare for years(now some strange plan where the government pays insurance companies to insure us, thinking we need "insurance" instead of healthcare)?

It seems the government is becoming increasingly clever at handing our money over to the rich, even when it means borrowing that money so that future generations of credit slaves can be bound. Bob, I wonder what the aggregate sum is of all the investment money members of Congress had at risk in this meltdown?

[slidemansailor]

OK.  Puma, John Lipton, Johngsteel, and Slidemansailor (you all seem to have a similar bent).  I am still waiting to hear how you intend to deal with the economic crisis.  And if you plan to be true laissez-faire, how you plan to deal with the consequences of another 1930 style Depression, which I think ALL economists agree will result from doing nothing.

Are you all so secure in your employment that you are convinced you are Depression-proof?

While the wizards of wall street and the vast army of Keynesian economists continue to express shock and awe at the failings of their models, but ceaselessly conjure up new models to replace them, the Austrian Economists have correctly predicted every single step along the way.  The pattern is a sure thing.

Though there will be some really significant differences this time (*more on that in a moment*), the future is clearly written in "FDR's Folly" and Murray Rothbard's "America's Great Depression". Government meddling is assured. It also will guarantee a LONG depression rather than a brief adjustment.

I know none of this will fit with what the ruling elite and their Keynesian enablers are convincingly promoting on their media monopolies. If you want to be continually surprised by "unforeseeable events", stick with your experts. If you want to have a clue as to what's coming, why and what you should do about it, seek other experts.

* Differences between now and 1929 are:
No net savings; Americans are individually in debt
No significant manufacturing of essential goods
Widespread belief in what the TV tells us
Much groundwork for replacing dollar with world currency
Dollar detached from precious metal
 ... (d'ya remember silver certificates?)
 ... has already lost 90% of its value from then
Dollar used as world currency since 1942 Bretton Woods Accord,
now in HUGE quantities in every central bank of every "developed" nation ... all waiting to come home to rapidly devalue the remaining dollars.

There are more, but those are going to loom large.

The only way out is to repudiate the national debt. Neither you, I nor any of the rest are going to be able to repay the $50,000 per person we owe on promises our politicians made. Forget 'em.  Let those who loaned money to them extract their pound of flesh from the carpetbaggers.  We move on without them.

[Baron von Bone]

I don't see many posts here that come close to matching that characterization.

Reality is pretty much never the actual issue with fundies.
 
Byron

[B0B]

Good evening,

Somehow every other post I see from you seems to call someone a "fundie". Reminds me of a kid with a favorite word, where they just want to repeat it over and over again. Might I suggest a thesaurus? One entry is as follows:

Main Entry:     
diehard

Part of Speech:    
noun

Definition:    
overenthusiastic person

Synonyms:    
Bourbon, Tory, bitter ender, dyed-in-the-wool*, extremist, fanatic, fogy, fundamentalist, intransigent, mossback*, old liner, praetorian, pullback, reactionary, right, right-winger, rightist, standpat, standpatter, stick-in-the-mud*, true blue, ultraconservative, zealot

Take care,
B0B

[Exzaclee]

so does anyone know how the hell Gold (silver, etc...) became "intrinsically" valuable?

and would anyone care to follow that question to its logical conclusion?  Namely the entire concept of an economic system that isn't built around equal trade of goods and services is doomed to eventually collapse -

scary

discuss!

[Baron von Bone]

Somehow every other post I see from you seems to call someone a "fundie".

I suggest you turn off your "buttons" as best you can now and then, so they won't be pushed, and so you can consider the substance behind what pushes them when they're on. It would probably be quite revealing. It's the first step very few people ever take toward a much better grasp of a much larger and more interesting world (it's also pretty much inherent to studying anthropology).
 
I suggest everyone do this, by the way, as often and as constantly as possible. Ideally, just try to keep them turned off. It's not easy, but the rewards are tremendous and that helps it get easier over time.
 
Byron

[BGuttman]

so does anyone know how the hell Gold (silver, etc...) became "intrinsically" valuable?

and would anyone care to follow that question to its logical conclusion?  Namely the entire concept of an economic system that isn't built around equal trade of goods and services is doomed to eventually collapse -

...

Gold is one of the few metals found in nature as-is.  It is also quite rare.  I think the fascination with Gold probably predates recorded history.

Silver is a little more common, but not much.  Again, it is found in nature as-is (although it also occurs in compounds).

Gold and silver were used for coins (money).  Money was invented to create a standard by which goods and services could be rated.  That way you would know that (for example) 3 sheep were equivalent to one cow, and if you wanted to get a cow you didn't need to shlep three sheep with you, just the money equivalent.

There are always some people for whom money is much more important than the goods or services it can purchase.  These people then try to get as much of the metal basis for the money as they can.

This whole idea of trade is a VERY complex subject.  Way beyond even the scope of a whole Forum.  Suffice it to say if the Chinese ship tons of Jin Bao trombones here and refuse to buy any Shires trombones there, we will have a surplus of Chinese trombones here.

[Baron von Bone]

Gold is one of the few metals found in nature as-is.  It is also quite rare.

Rare and pretty ... and somewhat useful in practical ways. But mostly I think just being rare and pretty drives its value. Diamonds are similar, but much more useful, I think (gotta check those suspicions with geologists or other types with pertinent expertise who know a hell of a lot more about it than I do though).
 
Byron

[puma]

OK.  Puma, John Lipton, Johngsteel, and Slidemansailor (you all seem to have a similar bent).  I am still waiting to hear how you intend to deal with the economic crisis.  And if you plan to be true laissez-faire, how you plan to deal with the consequences of another 1930 style Depression, which I think ALL economists agree will result from doing nothing...Are you all so secure in your employment that you are convinced you are Depression-proof?

You begin with the premise that one person has the answer. No one does. Even the wizbangs on this forum have no answer. They only have opinions. Same for me, so read the rest of this as you should read all posts here, prefaced with the phrase, "in my opinion".

Forgive me if I missed your actual question. There are several parts to the answer. Part one: let the people who know how to handle money handle the money. That means no one owns their job unless they are self-employed. When you hear someone ask, "How will you save my job at Company X?" Tell them "It's not your job." The job was created by the person(s) who formed the going concern named Company X and decided to hire you. You provide a specific service for the company and the company pays you.

Part two: The president is virtually powerless to create jobs. POTUS can recommend incentives, but the incentives only work insofar as they are implemented. Witness the attempt to grant hardship money to banks recently. Where did the money go? Certainly not to the populus. Did the U.S. automakers hire more people? No. In keeping with the topic, common sense would tell anyone that most people hoard money, they don't give it away.

Part three: Regarding the depression, you said, "I think ALL economists agree will result from doing nothing". Thank you for prefacing the statement with "I think". I disagree with your comment and would change the word "ALL" to "SOME". Anyone who screams about a repetition of the 1930's depression has no clue what that entailed. Unemployment would have to reach 30% to mirror that disaster. Remember ... this is all IMO ... Let the prices go up as high as necessary. Our country still fosters the freedom that inspires greatness, despite the loudmouths. Brilliant minds are inspired by necessity, not government waste. Henry Ford and Albert Einstein were not asked to contribute to society. They saw the need and did something about it.

Part four: Am I secure in my employment? You bet, but the reasons I am secure have nothing to do with this topic. As stated above, it is not "my employment". I have been downsized twice and found alternate means of employment. The "ax" could fall any day in my life. Rest assured the same ax can fall for anyone else. Common sense tells me not to worry about the things I can not control. As the saying goes, "don't sweat the petty things and don't pet the sweaty things."

[kbiggs]

Though there will be some really significant differences this time (*more on that in a moment*), the future is clearly written in "FDR's Folly" and Murray Rothbard's "America's Great Depression". Government meddling is assured. It also will guarantee a LONG depression rather than a brief adjustment.

On gold and Rothbard's "full reserve" banking system: Gold is a finite resource.  Its value fluctuates, but over time we will value it more and more.  ("Value" means what we are willing to pay for it.  Gold as such, like silver and other precious metals, has no intrinsic value.)  When there is no more gold to be mined (or it's just too expensive to extract), gold will either be the most valuable substance, or it will be worthless--or rather priceless--because no one will be able to afford it.  What will happen then to currency based on a gold standard?  It, too, will be worthless.  A banking system based on gold/silver/platinum or other commodity is not inherently stable as Rothbard and others of the so-called Austrian School state. Advocates of returning to the gold standard have never addressed inflation and devaluation sufficiently. 

Combine that with a full reserve system like Rothbard's, and you have little incentive to save, and banks have little incentive to loan because the return is so small.  Yes, economies of scale work in a bank's favor:  2% of $5,000 is only $100, but 2% of $500,000 is $10,000, so the more investors you have consolidated in one institution, the easier it is to loan money and earn interest.   But, if you have to have $500,000 in reserve in order to loan out $500,000, your ability to loan is severely decreased. 

A very conservative economic and fiscal argument that has few adherents nowadays, even (or more accurately, especially) in the midst of an economic crisis. 

The only way out is to repudiate the national debt. Neither you, I nor any of the rest are going to be able to repay the $50,000 per person we owe on promises our politicians made. Forget 'em.  Let those who loaned money to them extract their pound of flesh from the carpetbaggers.  We move on without them.

The time value of money will help to redue the per capita national debt: the face value may increase, but its "worth" in comparative dollars will decrease.  (Think of the price of a gallon of milk in 1959 and now in 2009, then compare them using 1959 dollars.  Now do the same with the average income in 1959 and in 2009.)

If by "repudiate" you mean write it off, ignore it, or devalue it, that would only make currrent matters worse.  Although Shylock was legally entitled to his "pound of flesh," to extract it from "the politicians" is to miss the target.  There are many people and institutions "responsible" for the current state of affairs: yes politicians (lax regulations, for instance) and company presidents, but also investors such as people with 401(k)'s and 503(c)'s and other deferred compensation plans, margin investors, day traders, etc.  Like a democracy/republic, we're all in this together.  The taxpayers will have to pay 'cuz there's no one else.   

A national debt is not a "bad" thing.  Debt for individuals, business, institutions, and governments, if properly managed, is a tool for growth.  Further, govt's are not businesses, and having a nat'l debt and deficit spending are not "evils" that must be avoided.  If anything, a nat'l debt promotes security and stability: it implies that the debtor--the gov't--will be around to repay it, which promotes financial security and encourages investment.   Said another way:  applying the same rules to govt's and businesses is a mistake.  Yes, fiscal and monetary responsibility are present in both, but in different ways and means.  (That's not to say that the idea of a nat'l debt hasn't been abused in the past 30 years or so.) 

 

[Exzaclee]

Forgive me if I missed your actual question. There are several parts to the answer. Part one: let the people who know how to handle money handle the money. That means no one owns their job unless they are self-employed. When you hear someone ask, "How will you save my job at Company X?" Tell them "It's not your job." The job was created by the person(s) who formed the going concern named Company X and decided to hire you. You provide a specific service for the company and the company pays you.

Part two: The president is virtually powerless to create jobs. POTUS can recommend incentives, but the incentives only work insofar as they are implemented. Witness the attempt to grant hardship money to banks recently. Where did the money go? Certainly not to the populus. Did the U.S. automakers hire more people? No. In keeping with the topic, common sense would tell anyone that most people hoard money, they don't give it away.

Part three: Regarding the depression, you said, "I think ALL economists agree will result from doing nothing". Thank you for prefacing the statement with "I think". I disagree with your comment and would change the word "ALL" to "SOME". Anyone who screams about a repetition of the 1930's depression has no clue what that entailed. Unemployment would have to reach 30% to mirror that disaster. Remember ... this is all IMO ... Let the prices go up as high as necessary. Our country still fosters the freedom that inspires greatness, despite the loudmouths. Brilliant minds are inspired by necessity, not government waste. Henry Ford and Albert Einstein were not asked to contribute to society. They saw the need and did something about it.

Part four: Am I secure in my employment? You bet, but the reasons I am secure have nothing to do with this topic. As stated above, it is not "my employment". I have been downsized twice and found alternate means of employment. The "ax" could fall any day in my life. Rest assured the same ax can fall for anyone else. Common sense tells me not to worry about the things I can not control. As the saying goes, "don't sweat the petty things and don't pet the sweaty things."

1) Letting the money handlers handle it is kind of what caused this problem.  Talking about "Job Ownership" is a semantical Red Herring that does little address the actual problem, namely unemployment.  If you want to argue about Job ownership let's start another thread - we can get all philosophical and break out the economic theory in the process further obscuring the original point.  
2) Unemployment, Or namely how the govermet figures the numbers.  You are aware, assume, that the givernment doesn't actually survey the population for aht eactual number of people not working.  See: http://www.bls.gov/cps/cps_htgm.htm  for the actual definition.  People who have been out of the workforce for a certain amount of time are not considered unemployed, they are considered out of the workforce - which does not reflect on the unemployment numbers.  The numbers of underemployed are not factored in either- for instance - since i retired from cruise ships 2 months ago i've been averaging about $100 worth of income per week - definitely not enough for most in the US to live on - but I am still considered employed.  A relative who has been out of work for over a year is considered out of the work force.  Neither of us are effecting the unemployment numbers.  The same way the gov skews inflation numbers (like not including rising energy costs) to make things seem rosy is the same way they skew the unemployment numbers.  We're a lot closer to that 30% number than you think.

3)  Being secure in your employment and being secure in your belief that God Will Provide are two different things.  Ignoratio Elenchi yet again rears it's fishy head...

Gold is one of the few metals found in nature as-is.  It is also quite rare.  I think the fascination with Gold probably predates recorded history.

Silver is a little more common, but not much.  Again, it is found in nature as-is (although it also occurs in compounds).

Gold and silver were used for coins (money).  Money was invented to create a standard by which goods and services could be rated.  That way you would know that (for example) 3 sheep were equivalent to one cow, and if you wanted to get a cow you didn't need to shlep three sheep with you, just the money equivalent.

There are always some people for whom money is much more important than the goods or services it can purchase.  These people then try to get as much of the metal basis for the money as they can.

This whole idea of trade is a VERY complex subject.  Way beyond even the scope of a whole Forum.  Suffice it to say if the Chinese ship tons of Jin Bao trombones here and refuse to buy any Shires trombones there, we will have a surplus of Chinese trombones here.

I understand the history of how it came about - i guess my ???? is a more fundamental one - namely - Gold And silver are not edible, nor are they water, you can;t build a shelter with it, it doesn't get you high or make coffee for you in the mornings - it's just a shiny piece of metal with no fundamental value other than what the first narcissistic alphas ascribed to it.  it's rarity makes no diff - Platinum is usually worth about what, 4 times as much as gold (i know it fluctuates as well) but according to it's rarity it should be worth 1000 times over that (you could fit the amount of platinum discovered in the world into a large room)

Rare and pretty ... and somewhat useful in practical ways. But mostly I think just being rare and pretty drives its value. Diamonds are similar, but much more useful, I think (gotta check those suspicions with geologists or other types with pertinent expertise who know a hell of a lot more about it than I do though).
 
Byron

Yeah, but the uses have come about fairly recently - rare and pretty was pretty much it for the majority of human history.

And diamonds are not rare at all -  google the diamond myth or debunking the diamond myth - i wrote a paper about how DeBeers artificially inflates the price of diamonds by hoarding supplies - in like 97 or 96 i think - and my teacher told me i was a nut job.  Modern estimates place the number of diamonds so high that each person in the world could have a cup of jewel quality diamonds - rare my spleen!



Kbiggs brings up some good points that i think need to be understood on a fundamental level before we proceed to much further....  nice stuff K - you aren't an economist are you?

Z

[johngsteel]

OK.  Puma, John Lipton, Johngsteel, and Slidemansailor (you all seem to have a similar bent).  I am still waiting to hear how you intend to deal with the economic crisis.  And if you plan to be true laissez-faire, how you plan to deal with the consequences of another 1930 style Depression, which I think ALL economists agree will result from doing nothing.

Are you all so secure in your employment that you are convinced you are Depression-proof?

I guess that nobody does get what I am saying.  My critical analysis is consistant.  I do fight political biasness in myself.

I do hold the GOP in disrespect.  I do hold the Dems in greater disrespect.

Throwing money is NOT the way to get consumer confidence.
There are so many things that both sides of the isles have failed policies.  Outsourcing jobs, manufacturing, greed, excessive taxes, death tax, and what is next? farting tax? Exhale tax? I am going to go for a walk in my neighberhood tax?

Good regulations are good.  Bad regulations are bad.  Ignoring the regulators is worse.  That is what the dems did (if it was that important, then why did not the GOP stand up and shout really loud?)

That is the meaning of this thread.  Both sides of the isle are wrong. 

To fix it? get our jobs back, our manufacturing back, our foodstuff growers back.  A country that dreams, creates, produces, and consumes, is a country with a healthy econemy.  Specifically if it rewards EVERBODY that works hard, not punish with excessive taxes for their success.

With that said, I am not addressing greed, which is a major negitive character trait, that only causes problems.

[Andrew Meronek]

The time value of money will help to redue the per capita national debt: the face value may increase, but its "worth" in comparative dollars will decrease.  (Think of the price of a gallon of milk in 1959 and now in 2009, then compare them using 1959 dollars.  Now do the same with the average income in 1959 and in 2009.)

Correct me if I'm wrong, but this only applies during inflation, yes? Thus, a government in debt has this specific incentive to keep inflation going?

A national debt is not a "bad" thing.  Debt for individuals, business, institutions, and governments, if properly managed, is a tool for growth.  Further, govt's are not businesses, and having a nat'l debt and deficit spending are not "evils" that must be avoided.  If anything, a nat'l debt promotes security and stability: it implies that the debtor--the gov't--will be around to repay it, which promotes financial security and encourages investment.   Said another way:  applying the same rules to govt's and businesses is a mistake.  Yes, fiscal and monetary responsibility are present in both, but in different ways and means.  (That's not to say that the idea of a nat'l debt hasn't been abused in the past 30 years or so.) 

A national debt is not a bad thing in the short term. We know that it means that the government is investing in the economy and creating jobs, increasing the money flow, etc. But what jobs are created and where does the money flow just by paying interest on the debt?

Also, I fail to see how the debt really promotes stability, given current events. It seems to me that it hasn't affected stability noticeably either positively or negatively. Except perhaps historically; I'll provide two extreme examples of negatively affected stability:

Augustus Caesar ran up huge debts during his ascension to being Emperor. He paid those debts by killing and seizing the property of political enemies and people he otherwise just didn't like. By modern standards, this would be the equivalent of the U.S. government seizing and liquidating a large number of companies and estates.

The Soviet Union famously ran up a huge debt before it collapsed.

[BGuttman]

I guess that nobody does get what I am saying.  My critical analysis is consistant.  I do fight political biasness in myself.

... 

To fix it? get our jobs back, our manufacturing back, our foodstuff growers back.  A country that dreams, creates, produces, and consumes, is a country with a healthy econemy.  Specifically if it rewards EVERBODY that works hard, not punish with excessive taxes for their success.
...

As someone who has been in and out of work for the last 7 years due to offshoring, I laud your sentiments.

How do you plan to get our jobs and manufacturing back?

Right now a Chinese can do assembly labor for under $10 per day (let's not talk about the phony exchange rate for the moment) where an American is going to want at least $10 per hour.  The Chinese factory can emit any number of hazardous substances where the American plant must find a way to sequester these materials and dispose of them safely.  The Chinese factory owner does not have to pay taxes to educate the children in his city, or pay for any kind of health care for his employees.  Nor is there any Unemployment Insurance.  His expenses are much lower than an American plant.

This goes to the "level playing field" argument.  If the Chinese had to pay for all the things that Americans did, the relative low cost of their products (with the very high cost of shipping them halfway around the world) would not be as great.  This would allow American factories, with high levels of automation and high efficiencies to compete (one would hope).

But the fact of the matter is, we will buy on price.  Get the cheapest oats you can find, even if they have already been through the horse once.

But I rant.

[johngsteel]

ah, how to get our jobs, manufacturing back?

Tax outsourced effort.  Make it not worth the investment.

A reasonable tax change would have layers of tax "penalties"
- owned here, designed, manufactured, distributed here.
- not owned here, designed ........
- Owned here, not designed....
- Not owned here, not.....

And, if you want to add a pollution tax, have it based upon our environmental standards.  Remember, the enviornmentalist attack the US first, the rest of the world 2nd.  So, in support of that, have a % layered polution tax.  the bigger the polutants (China, India, etc), the bigger the tax.  that would discourage businessses from doing business until they implemented actions to change their polution problem.

Just a thought....  So who does not want our jobs back? Who wants to let other countries that we outsource to get a free ride on polution?

[BGuttman]

It becomes interesting.  Remember the brouhaha that Kathy Lee Gifford had a few years back when it was discovered that the place making her clothing was using something akin to slave labor?  Nobody wanted to buy her clothes until she guaranteed that they were paying fair (?) labor rates (well, fair for there)?

I'd bet if any American had to live near a typical Chinese factory they would want it shut down.  But because it's NIMBY, we seem to be willing to let it go.  After all, who suffers?  Just some of them.

I like your suggestion about the pollution tax.  One other thing we should do: anything bought for the US Military has to be made here.  Cars, uniforms, airplanes, you name it.  Down to the screws and rivets.  Just think: if we are outsourcing supplies for the Military and a war breaks out, what do we do for supply?

[Andrew Meronek]

Tax outsourced effort.  Make it not worth the investment.

This already happens to some extent.

But to make it severe risks some very serious political fallout. What I would be worried about is this long term effect: countries not trading goods and thus ideas are much more likely to go to war than countries who are trading goods and ideas. Look at the countries that we currently do not trade with at all: North Korea, Cuba, Iran. Think about how friendly relations are. Think about how much friendlier relations are with China nowadays compared to twenty years ago, before those trade avenues really opened up.

[kbiggs]

nice stuff K - you aren't an economist are you?

Z

No, but I play one on this forum.     Seriously, though, I taught Politics and Government for a while, and I had to learn about economics and the like to pass my master's degree. 

Throwing money is NOT the way to get consumer confidence.
There are so many things that both sides of the isles have failed policies.  Outsourcing jobs, manufacturing, greed, excessive taxes, death tax, and what is next? farting tax? Exhale tax? I am going to go for a walk in my neighberhood tax?

Good regulations are good.  Bad regulations are bad.  Ignoring the regulators is worse.  That is what the dems did (if it was that important, then why did not the GOP stand up and shout really loud?)

That is the meaning of this thread.  Both sides of the isle are wrong. 

To fix it? get our jobs back, our manufacturing back, our foodstuff growers back.  A country that dreams, creates, produces, and consumes, is a country with a healthy econemy.  Specifically if it rewards EVERBODY that works hard, not punish with excessive taxes for their success.

How do you decide what's good and what's bad?  What's good for one man is bad for the next.  The present economy is bad for bankers, real estate agents, and the like, but great for foreclosure agents and attorneys representing the banks and the foreclosed. 

My point: there ain't no "good" or "bad" to it.  What we desire--what we mistake as "good"--are things like ever-increasing wealth, continued growth, financial security, a reasonable return on investment, the ability to retire without undue worry, etc.  What we don't want are things like a stagnant economy or, even worse, accelerating inflation; dis-incentives to save or invest due to low interest rates; lack of financial security, and the like.  On these things, most modern citizens of the 1st world agree.  Then again, there are values where reasonable people differ, like whether the gov't is better equipped to oversee and regulate certain areas of business, the economy, and monetary and fiscal policy, or whether those entities/institutions are better governed by themselves.  Also, how we do these things are where people reasonably differ: how and why we set up institutions and regulations to encourage one set of behaviours and discourage another set of behaviours. 

Similarly, there ain't no quick fixes.  Getting US jobs back from overseas competitors, supporting farmers, bringing blue-collar jobs back to America are all very laudable goals.  How to do it, though?  China, as one example, is a very difficult obstacle to overcome.  They've got a tremendously large workforce (cheap labor), a huge supply of raw materials, incipient capitalism and consumerism, a failry uniform gov't and society, and many other factors in their favor.  You've got to find a way to entice China to adopt better labor practices, better pollution controls, less protectionist trade policies, etc.; you've got to provide incentives for the few remaining farms and farmers (even agribusinesses) to stay in the US; and you've got to entice other people and businesses (especially "blue collar" jobs) to come here and stay here. 

Now, just try to get China to agree to reduce pollution (again, one small example).  They are already making some efforts, but some of those same efforts have costs, too, like the Three Gorges Dam.  It prevented China from making 5 or 6 coal-burning plants, but the cost was relocated lives (millions), lost farmland and natural beauty, lost architectural and historical treasures, soil erosion, other chemicals and toxins produced to create the dam. . . you get the idea.  However, a portion of the steel and concrete used to create the dam were from US manufacturers.  So, who is hurting or helping whom. . . ?

***

Back to the original topic: Like it or not, the US taxpayers will have to pay a large amount of money to dig ourselves out of this mess.  That's what happens in a participatory republic.  Sure, we'll pay taxes to cover losses that are the result of a few greedy individuals, lax politicians and regulations, margin-profit investors, as well as all the legitimate investors with 401k's and 503c's who got burned.  In a way, by buying more than we could afford (home loans that couldn't be repaid, maxed-out credit cards, second mortgages acting as ATM's), as well as electing politicians with a laissez faire attitude towards the economy, and tolerating undue influence on policy and regulations by individuals and corporations (read "lobbyists"), we all contributed to the problem.

Taxes to repay these massive losses really aren't "punishment."  It's a way of spreading out the hurt so that we all suffer a little, just like taxes used to redistribute wealth help us all a little.  (Taxes are also used for other purposes, like building and maintaining roads, police protection, mail service, safe water and sewers, paying politicians, etc., but that's a different topic.)

[puma]

Here is a model for common sense

[Exzaclee]

seriously, did you just link us to a snopes article?

 here we go - someone using their "title" trying to appear authoritative on a subject they understand little about.  while i do sympathize with a lot of the sentiments contained therein, it is still an oversimplification of an extrememely complex matter - he's the president of knox machinery - if i need a lathe he could probably point me in the right direction but his opinions are no more valid than yours or mine just because he happens to be the president of a machinery company.

who says a forklift driver shouldn't make 85K a year?  if he actually works the hours he's supposed to, he's more than earned it.  i know a lot of forklift drivers working half of what they're scheduled.  do we need to change the unions?  yup.  do we need to get rid of them?  do you know why we make more money here than  in china?  yup... unions - just the threat of workers unionizing will help you get fair wages. 

a family earning 50K shouldn't have to buy a $485K house to get out of a bad neighborhood either. - where's his solution to that?

yeah, no house in florida (house i said, not mansion) is worth $750K - tell that to the jerks in NYC selling their brooklyn lofts for 1.5M and starting bidding wars that make those prices possible. 

and what are these high housing prices cause by?

open markets.

you can't have your cake and eat it too...

z

[slidemansailor]

For the time being, we are still in the process of ‘price discovery.’ Last year, investors suddenly realized that debtors couldn’t pay their bills…that assets weren’t worth what people paid for them…that collateral was declining in price, making many erstwhile valuable credits worthless…and that revenue streams were not sufficient to maintain whole sectors of industry and commerce. They panicked. That is why these episodes were called “panics” in the 19th century. Nobody knows which assets are good…and which are bad…. or who’s solvent and who’s not…or which businesses can survive and which can’t. Everyone tries to hold onto to what he’s got…trusting no one and nothing…until the market has time to discover proper prices for things in the new post-bubble era.

In the 19th century…up to the Panic of 1921…this all happened fairly quickly. And then the economy got up off the ground, dusted itself off, and went on its way.

But since the Hoover Administration, the meddlers have intervened. Now, they try to stop the process of price discovery…by keeping zombie businesses alive…by loaning money to brain-damaged industries…and nursing the cadavers and corpses with trillions in taxpayers’ money.

Mr. Sherman continues…

“…the US government’s balance sheet looks increasingly like that of a Third World country. America’s debt-to-GDP ratio is more than 100%, including the nationalized debt of the two mortgage giants Fannie Mae and Freddie Mac. Budget deficits of $1 trillion are projected for years to come. Worse yet, America’s pension and medical obligations to the baby-boom generation and those that follow are estimated to be considerably more than $50 trillion.

“As the US government prints more money to address the crises, investors will realize that are being repaid in a much diminished currency. For the moment, foreign investors have remained relatively firm. But, at some point, foreign and domestic investors will consider the US government’s terrible fiscal position, and they will start dumping debt.”

*** That may happen next week. It may happen years from now. Remember, there are always back-eddies and countercurrents – even in the biggest flood. We’ve had a rebound, but it has been very slight. In the ’30s stocks rallied six times – more than 20% each time – before finally beginning a new bull market. And several times, investors thought the crisis was over…only to see it hit again, harder.

Our advice: stay in investments that you will not want to sell in the next ten years. What kind of investments are those? They’re investments with income and/or capital that is reliable. Forests. Down-market retailers. Apartment houses with good tenants. Farms, ranches providing foodstuffs at good prices. Basic service industries with decent revenues. Nothing fancy. The world is moving away from fancy. You want to be the low-cost provider of whatever goods or services people need.

And of course, stay in gold.

excerpted from The Daily Reckoning. Read the whole article here.

[kbiggs]

Let's pretend that we follow the advice of Bonner and Knox and just let businesses die.  GM, Ford, Pontiac all go, perhaps survived by a company or two that are combined less than half the size of "the big three"  . . . followed by most of the parts manufacturers. . . and then some of the few remaining domestic steel and aluminum producers. . . and industrial plastics manufacturers. . . and brass and copper processing businesses. . . computer chip makers won't supply to the auto makers any more because there are no more cars to build and no more car manufacturers to sell to. . . so the chip-makers (again, the few remaining domestic ones) start to lay off and then go under. . . which causes robotics, ultra-clean HVAC manufacturers and service agencies to diminish or go under. . . which causes a decrease in paper production so no one buys a new copier for office work. . . which causes Canon and Ricoh and Kyocera and other Xerox-copier companies to go under. . . and (horrors!!) human resource managers get laid off  . . . you get my drift. 

The "panics" of the late 19th-early 20th C. are fundamentally different from the Great Depression and, most people would argue, the present situation.  In addition to the several differences slidemansailor mentioned above, the panics occurred during a period of laissez faire government.   The gov't--or rather, the elected officials--believed that the gov't did not have a a large or influential role in the economy, and in monetary or fiscal policy.  Today, we have a mixed bag: some politicians do, and some don't.  Most economists do, some don't.  The operative word is "believed," which is fundamentally different from accepting economic theory when the evidence is staring you in the face. 

Indeed, the reality is that since the Great Depression and the New Deal, we've basically operated under a Keynesian economic system, assumptions and all.  (The basic assumption is that gov't has a proper place in economic, fiscal and monetary policy, and can work to stabilize markets and economies to promote the general welfare.  Since that time, most political arguments about economics are about how much or to what degree we want to endorse Keynes's assumptions, not whether.)  I think that most people, if pressed, would admit that America's growth since WWI and especially since WWII has been, in large part, due to the govt's ability to "meddle" in the economy, as advocated by Keynes and practiced by everyday American politics.  I do not want to return to the old days of financial panics: there's no security and little way to plan, except if you happen to be very rich, very lucky, or very poor (who, after all, have little to lose).   

Is economic theory "common sense"?  Of course it isn't.  Otherwise, any fool could earn a Nobel prize, just like all the other prize-winners in economics like Amartya Sen, Friiedrich Hayek, Milton Friedman, Paul Krugman. . . the list goes on. . . . Are Bonner and Knox fools?  No, but their "common sense" arguments don't account for the complexities of economics and the human condition.

No doubt someone will now counter, "Well, if it's Keynesian economic practice and gov't meddling that got us into this mess, then we need to get rid of them."  The old "throw-the-baby-out-with-the-bathwater" argument: chuck the whole lot and start fresh.  Won't work. 

If anything, we need to re-work the basic laws governing banking practices, lending, and investing.  That, after all, is how we got into this mess.  We allowed regulations to grow lax, we de-funded gov't agencies dedicated to monitoring business practices, and we turned a blind eye to people who made a quick buck on the backs of the common workers.  And it hasn't been in just the last year or two.  Remember Enron?  That was only one milestone in a very long road. 

The next argument will, no doubt, be along the lines of: "Well, who do you trust?  Government or business?"  Neither.  I trust the law and justice, even though they are imperfect and applied unequally.  I don't trust people or businesses to abide by the law of their own free will, and I don't trust them to do "the right thing."  Businesses have little incentive to do so because it often cuts into their income and profit.  And I don't trust politicians who deplore the laws that hold businesses and individuals accountable for doing "the right thing."  Unfortunately, no one has yet found a way to control and subject cupidity, selfishness and greed to the necessities of the common good. 

Enough of my rant for today. . . thanks for listenin' . . .

[puma]

seriously, did you just link us to a snopes article?

Seriously yes. What is your point?

[Exzaclee]

and the rest?

[ABinkard]

Seriously yes. What is your point?

His point was the rest of his post. There's some common sense for you.

[slidemansailor]

As much as anyone here, I wish the Keynesian mythology was valid. I wish doubling the money in circulation would solve the economic problem. I wish handing it to political friends would get us back to a vibrant economy. I wish fiat currencies did not crash 100 out of 100 times.

The Keynesians who gave US boom-and bust cycles and 95% inflation since they got their central bank and private ownership of the dollar, claimed their purpose was to prevent boom and bust AND prevent inflation. Your choice: believe what they say, or believe what they do.

Now they say taking money from farmers, shoemakers and shopkeepers to lavish on automaker and banking executives is good for the economy. Right. We won't be needing new cars nearly as much as we will be needing food.

While people do the obviously intelligent things with their personal finances, central banks prop up industries whose need has passed AT THE EXPENSE OF industries who are the highest priority.

Fortunately for the devout Keynesians, your religion preaches giving complete power to the rulers. They, in turn, love it and eagerly embrace that message ... in fact, they make darn sure that it is preached in every school that gets government money - including student loans. The FCC licenses ownership of our airwaves to 8 Keynesians, so we get to hear the same message on our radios and TVs.  Consistency is such a comfort.

Thus we all get to experience Nirvana again. As amusing as it was to read about societies dominated by central planning and government meddling, it will be so much more fun to live through it.

You can buy the script from mises.org so as to memorize your lines if you wish.

[BGuttman]

What kinds of "farmers" are you planning to help, Slidemansailor?  Archer-Daniels-Midland?  Tyson Foods?  Purdue?

The Family Farm is as dead as the small car maker.  It's as much Agri-Business as Big Pharma and Big Oil.

The only small farms left are the guys you can buy from at the local Farmer's Market, and they don't make a living at it either.

[kbiggs]

I post a serious reply with reasoned arguments and I get sarcasm back. . . I shoulda known . . . but I won't let you off that easily! 

"As much as anyone here, I wish the Keynesian mythology was valid."
Don't sound like it. 

"I wish doubling the money in circulation would solve the economic problem."
I don't think any Keynesian would propose that.  It definitely would lead to inflation.  Besides, this is not a monetary problem.  It's an economic one. 

"I wish handing it to political friends would get us back to a vibrant economy."
If wishes were horses, beggars would ride.  And you know what they say about friends in low places, yes?

"I wish fiat currencies did not crash 100 out of 100 times."
Economies of all kinds--local, regional, national, specific goods based--have ups and downs.  So, flat currencies (meaning of "flat", please?) will have ups and downs.  Not all economies crash, though. 

"Your choice: believe what they say, or believe what they do."
This, I suspect, is the real crux of the matter.  It really depends upon who you listen to, and what you've heard, now doesn't it?  It also depends upon who you're watching and what they do. Finally, all too often, people simply want to believe in the familiar, comfortable and simple.  Life just ain't like that.   

"Now they say taking money from farmers, shoemakers and shopkeepers to lavish on automaker and banking executives is good for the economy. Right. We won't be needing new cars nearly as much as we will be needing food."
Really, now: who is saying this?  Just who are you listening to?  Which farmers?  How many domestic shoemakers are there? 

"While people do the obviously intelligent things with their personal finances, central banks prop up industries whose need has passed AT THE EXPENSE OF industries who are the highest priority."
Which industries are the highest priority, in your view or in the view of the people you listen to?  Why?  And, why are they any more important than car manufacturing companies and banks? 

"Fortunately for the devout Keynesians, your religion preaches giving complete power to the rulers."
Hogwash. And again--just who are you listening to?   

"Thus we all get to experience Nirvana again. As amusing as it was to read about societies dominated by central planning and government meddling, it will be so much more fun to live through it."
If this is a thinly-veiled reference to "Communism," or Soviet-style socialism, dat dawg don't wag.  "Socialism" ain't a bad word all by itself.  After all, even America, that bastion of freedom to whatever-I-damn-well-please, has "socialistic" programs (horrors!!) even in the midst of the government itself ("Call for Joe!! Joe McCarthy, please!!").  See some of my comments above when responding to John S. Lipton's original post. 

"You can buy the script from mises.org so as to memorize your lines if you wish."
My turn for sarcasm:  Why, when you just read me the lines? 

***

C'mon, guys, why shout past each other?  Why not just have a nice, reasoned argument, rather than retreating to our comfortable, well-worn and worn-out politically entrenched positions?  It is possible, after all.  Why, I hear that it even happens occasionally in Washington DC!

[evan51]

Is economic theory "common sense"?  Of course it isn't.  Otherwise, any fool could earn a Nobel prize, just like all the other prize-winners in economics like Amartya Sen, Friiedrich Hayek, Milton Friedman, Paul Krugman. . . the list goes on. . . . Are Bonner and Knox fools?  No, but their "common sense" arguments don't account for the complexities of economics and the human condition.

Yes. Quantum physics, nanotechnology, art, language, literature, entire worthwhile and enriching areas of human thought and action are beyond common sense. Appeals to "common sense" are often nothing more than the attempt to apply an intellectual reductionist model to facts, either to understand a phenomena or, more often, to control its impact in society.  Whether and when the appeal is made in politics, economics, religion or personal and societal relationships, it lacks sufficient flexibility of thought to be of developmental value.

Even a Keynesian outlook would consider the nature of the underlying economy. In FDR's time we still had savings, lived in rural areas, grew our own food, had intact industries, and were self-sufficient in energy, resources, and people. That is not the case now and I think it's prudent to consider what the effect of mass infusion of currency will have on this economy. When I think "real economy,"  I mean that wealth ultimately derives from manufacturing, agriculture and mining. There are certainly many and varied spin-offs, but an economy lacking all of those basics is basically parasitic (or a pirate state). So I wonder what the impact of the various and stimulus packages can be? I heard on NPR that only 7% of the stimulus package actually goes to infrastructure and that the lion's share of those jobs will go to current skilled union labor. Which begs the question, where will the other jobs be created? We've rewarded the financial market makers by absorbing all of their losses. Now what is their incentive to create new jobs and wealth?

Even the Keynesians must be scratching their collective heads at this point, yes?

[Andrew Meronek]

http://news.yahoo.com/s/ap/as_china_us_economy

Apparently, China is starting to raise concerns over the ability of the U.S. to repay treasury bonds, given that they have about $1 trillion of them.

So what happens when countries decide it's not worth it to keep buying these bonds that will likely not be repaid?

[evan51]

So what happens when countries decide it's not worth it to keep buying these bonds that will likely not be repaid?

That is unlikely to happen. China is in the unenviable position of having to bolster the U.S. dollar or risk losing a major asset. But, to answer your question-----our currency would crash overnight.

[Piano man]

http://news.yahoo.com/s/ap/as_china_us_economy

Apparently, China is starting to raise concerns over the ability of the U.S. to repay treasury bonds, given that they have about $1 trillion of them.

So what happens when countries decide it's not worth it to keep buying these bonds that will likely not be repaid?

Just to clarify, I got the impression that the Chinese were worried that we'd devalue our currency and thus their holdings, not that we'd default.

Of course that doesn't change the import of your question. I don't know what we'll do if we can keep the economy afloat only through borrowing, and there's no one left to lend.

[Piano man]

Slidemansailor, I don't know about shopkeepers and shoemakers, but farmers are among the people getting the money, not the ones having it taken. Putting aside your romantic notion of the rough-handed man of the earth being robbed by the cunning suits, farm subsidies are some of the most misspent portions of our national budget.

[Andrew Meronek]

Just to clarify, I got the impression that the Chinese were worried that we'd devalue our currency and thus their holdings, not that we'd default.

Of course that doesn't change the import of your question. I don't know what we'll do if we can keep the economy afloat only through borrowing, and there's no one left to lend.

Yes, that's true. I took the liberty of running down a small chain of events:

The U.S. devalues it's currency as a way of controlling the debt.

China supports this for a while, having no choice, even though they actually lose money doing it.

China, after deciding that it's not worth it to keep supporting a U.S. economy that is based on inflation in order to control it's debt, stops buying treasury bonds. Perhaps China starts to run out of money as well at this point.

Other countries follow China's example.

Is that a slippery slope?

[Piano man]

Yes, that's true. I took the liberty of running down a small chain of events:

The U.S. devalues it's currency as a way of controlling the debt.

China supports this for a while, having no choice, even though they actually lose money doing it.

China, after deciding that it's not worth it to keep supporting a U.S. economy that is based on inflation in order to control it's debt, stops buying treasury bonds. Perhaps China starts to run out of money as well at this point.

Other countries follow China's example.

Is that a slippery slope?

Slippery, and very plausible.

The problem is that we could have a 'run' on T-bills. In other words, one country starts quietly selling them off, everyone catches wind of it, and it turns into a race to get rid of them, especially among Asian and Mideast countries.

The impediment to this is that we comprise a great market for these countries. Between that and their vast holdings in our debt, they're almost as afraid of our collapse as we are.

I guess the true US patriots are buying Chinese.

[ntap]

China has too much at stake to not keep backing US currency: If they stop, the market for their goods dry up.

America's consumers are the backbone of the Chinese economy, and China is the backbone of our currency. Widespread financial ruin here = widespread financial ruin there.  Basically, we buy all the stuff that the Chinese make.  If we stop buying it, they stop making it and they're screwed.

You scratch mine, I'll scratch yours.

All this free market ideology is quite frightening and it seems to be pretty widespread: There are people who would rather see the majority of the social order fail instead of straying from free market principles.

Read: The auto industry in America is the largest consumer of steel, glass, rubber, and employs around 2.3 million people.  All of those innocents would be dragged along in the economic mess, this would create a huge mess.  Slidemansailor, talk about hurting the little guy - a collapse of the auto industry would totally bankrupt small towns dependent on factories. 

This isn't the time to let ideological views about how the world should be blind what the world really is.

[Andrew Meronek]

China has too much at stake to not keep backing US currency: If they stop, the market for their goods dry up.

America's consumers are the backbone of the Chinese economy, and China is the backbone of our currency. Widespread financial ruin here = widespread financial ruin there.  Basically, we buy all the stuff that the Chinese make.  If we stop buying it, they stop making it and they're screwed.

That's not really my point. What happens when China literally can't do it any more?

You scratch mine, I'll scratch yours.

All this free market ideology is quite frightening and it seems to be pretty widespread: There are people who would rather see the majority of the social order fail instead of straying from free market principles.

Read: The auto industry in America is the largest consumer of steel, glass, rubber, and employs around 2.3 million people.  All of those innocents would be dragged along in the economic mess, this would create a huge mess.  Slidemansailor, talk about hurting the little guy - a collapse of the auto industry would totally bankrupt small towns dependent on factories. 

This isn't the time to let ideological views about how the world should be blind what the world really is.

IMHO, if a big company like GM were to fail, they should fail by gradually downsizing over a long period of time. Not in one big crash. The reason why they're in danger of doing so now is because of all the rules in place set by unions and political expediency, preventing them from being able to cut their losses without threatening bankruptcy.

The U.S. automotive industry hasn't grown in many decades. My reasoning for not being overly enthused about government protection of the automotive companes is long term: we need some new, innovative automotive companies to revitalize the industry. How can that happen if the Big 3 are "too big to fail?" I agree that it's in peoples' best interests right now to hold off a total collapse of GM, but I worry that this reinforces a long-term set of political behaviors which are not helpful.

[djdekok]

China has too much at stake to not keep backing US currency: If they stop, the market for their goods dry up.

America's consumers are the backbone of the Chinese economy, and China is the backbone of our currency. Widespread financial ruin here = widespread financial ruin there.  Basically, we buy all the stuff that the Chinese make.  If we stop buying it, they stop making it and they're screwed.

You scratch mine, I'll scratch yours.

All this free market ideology is quite frightening and it seems to be pretty widespread: There are people who would rather see the majority of the social order fail instead of straying from free market principles.

Read: The auto industry in America is the largest consumer of steel, glass, rubber, and employs around 2.3 million people.  All of those innocents would be dragged along in the economic mess, this would create a huge mess.  Slidemansailor, talk about hurting the little guy - a collapse of the auto industry would totally bankrupt small towns dependent on factories. 

This isn't the time to let ideological views about how the world should be blind what the world really is.

I love that last line of yours--very wise of you.  I was having a discussion with a fellow Catholic parishioner about the changes in our parish since the new priest arrived.  Our city has been undergoing a (for lack of a better term) "diversity transformation"--that is, an influx of African American and Latin-American residents from not only Philadelphia but from Central and South America, and a shrinkage of the Italian and Irish that used to dominate here.  The neighborhood has changed and the last few priests did little to deal with it in spite of the fact that the school was losing enrollment and contributions were down.  This priest had the wherewithal to do something about it and is getting excoriated in the local paper, on line, and (sometimes) in person.  He and I don't always agree on things, but this time he's 100% right. He sees how it is, and is dealing with the reality rather than the expectation.

[Russ White]

I for one, am getting really tired of hearing "Legacy costs" or "union rules" blamed for the problems of the US auto industry. Those costs are contractual obligations that the automakers entered into freely in good faith negotiations. If they then did not figure these costs into their long term planning and future negotiations, then shame on them. I would like to see the annual cost of "legacy" items put up next to the compensation packages of the top 100 managers at GM. How far down the food chain would you have to get before those numbers equaled out? It's not the workers fault.

[BGuttman]

I think one of the major problems in the Auto industry is that they have a product introduction cycle that cannot be put in "sync" with the buying desires of the American public.

The typical tooling cycle for an American car is on the order of 5 years.  That means if they made a decision to introduce a new car size tomorrow, it won't show up until the 2015 model year!

Gas prices here went from $2.00 a gallon to $4.00 a gallon over the course of 6 months.  The American car companies couldn't bring enough smaller cars to market quickly enough.  Then just as suddenly the gas prices went back to $2.00 a gallon and people are going back to the Land Yachts.  The American car company model cannot deal with this kind of change.

This happened once before.  In 1973 the Arabs decided to try withholding gas from the US and Europe.  You couldn't find gas; or if you could, you had to wait in line for 3 hours to get it.  There were some "odd little Foreign cars" from folks like Toyota, Datsun (now Nissan), and Volkswagen that got great gas mileage, so people would abandon the V-8 monsters in favor of these little guys.  Chrysler jumped on the bandwagon bringing in a Mitsubishi car (I owned one of these - the Colt) and a British car (the Cricket).  People laughed at me for my "toy car" but I got where I needed to go.  Then gas became readily available and everybody (except me, it seems) ran out to get some new V-8 power.

What we need to do is to get the American car companies to find a way to produce products that can quickly adjust to changing popular tastes.  That's what the "Bailout" money should be spent on.

[Andrew Meronek]

I for one, am getting really tired of hearing "Legacy costs" or "union rules" blamed for the problems of the US auto industry. Those costs are contractual obligations that the automakers entered into freely in good faith negotiations. If they then did not figure these costs into their long term planning and future negotiations, then shame on them. I would like to see the annual cost of "legacy" items put up next to the compensation packages of the top 100 managers at GM. How far down the food chain would you have to get before those numbers equaled out? It's not the workers fault.

True, it's definitely not the worker's fault. Don't confuse workers' efforts with union efforts, though. They are in sync most of the time, but not all.

http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm

"The carmaker is saddled with a $1,600-per-vehicle handicap in so-called legacy costs, mostly retiree health and pension benefits."

"Normally a company in such straits contracts until it reaches equilibrium. But for GM, shrinkage is not much of an option. Because of its union agreements, the auto maker can't close plants or lay off workers without paying a stiff penalty, no matter how far its sales or profits fall. It must run plants at 80% capacity, minimum, whether they make money or not. Even if it halts its assembly lines, GM must pay laid-off workers and foot their extraordinarily generous health-care and pension costs. Unless GM scores major givebacks from the union, those costs are fixed, at least until the next round of contract talks in two years."

There's definitely plenty of blame to go directly to GM, too. But it's a mistake to not look at all sides of the problem.

[Exzaclee]

well, if GM can't make it's obligations to it's workers, it should have to pay a penalty.  pensions should be inviolable.  some guy forgoes a college degree for a career with GM and all the sudden he's 52 and looking down the barrel of a layoff?

As much blame as can be put at the feet of the unions, this kind of thing should not happen,  that's why the unions exist - to keep the american worker from getting screwed.

one of the many negatives of a "free market" system - it usually the worker that gets screwed.

you screw enough of them and you're setting the stage for some serious instability.

[evan51]

It seems to me that much of the discussion of the auto industry centers around how to maintain the rampant consumerism we've experienced since the Reagan days and long before that. Yes, millions of jobs and dollars are tied up in producing these units to propel individuals from place to place at an incredible financial and environmental cost. While we had started to examine the impact of these customs in the 60's and 70's, the 80's saw a return of unrestrained consumerism and a denial of the concerns of the environmentalists. There is no significant move to design better cities, more efficient and cost effective mass transit, and manage resources with "sustainability." I have the sense that the longer we pretend this is not important the more painful the inevitable is going to be.

[kbiggs]

Correct me if I'm wrong, but this only applies during inflation, yes? Thus, a government in debt has this specific incentive to keep inflation going?

Andrew, my bad.  I meant to say "real dollars," not "time value of money."  Sorry 'bout the confusion.  Still, "real dollars" implies constant, incremental inflation, but the theory is to keep it in check.  Obviously, there have been times where inflation has not been in check by adjusting monetary and fiscal policy.   

Also, I fail to see how the debt really promotes stability, given current events. It seems to me that it hasn't affected stability noticeably either positively or negatively. Except perhaps historically; I'll provide two extreme examples of negatively affected stability:

Augustus Caesar ran up huge debts during his ascension to being Emperor. He paid those debts by killing and seizing the property of political enemies and people he otherwise just didn't like. By modern standards, this would be the equivalent of the U.S. government seizing and liquidating a large number of companies and estates.

The Soviet Union famously ran up a huge debt before it collapsed.

Yes, those are two good historical examples of huge debts that  eventually led to tremendous social change and revolution.  However, I would argue that because those societies were not capitalistic, they don't really apply. 

[Russ White]

True, it's definitely not the worker's fault. Don't confuse workers' efforts with union efforts, though. They are in sync most of the time, but not all.

http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm

"The carmaker is saddled with a $1,600-per-vehicle handicap in so-called legacy costs, mostly retiree health and pension benefits."

"Normally a company in such straits contracts until it reaches equilibrium. But for GM, shrinkage is not much of an option. Because of its union agreements, the auto maker can't close plants or lay off workers without paying a stiff penalty, no matter how far its sales or profits fall. It must run plants at 80% capacity, minimum, whether they make money or not. Even if it halts its assembly lines, GM must pay laid-off workers and foot their extraordinarily generous health-care and pension costs. Unless GM scores major givebacks from the union, those costs are fixed, at least until the next round of contract talks in two years."

There's definitely plenty of blame to go directly to GM, too. But it's a mistake to not look at all sides of the problem.

And the management folks that, during good faith negotiations, freely entered into the contracts mentioned above  are the ones that are now in DC with their hands out asking us to pay for them. I saw the City I worked for give our Firefighter's union some unbelieveable contracts that just didn't make sense when I was working. The City is paying for them big time now, and I would hope that future negotiations are more balanced. The reality is that negotiations are virtually always carried out as an adversarial exercise, when they really should be between equals trying to jointly provide the best service, product, etc. to the customer while as fairly as possible dividing up the resultant profits. Not going to happen in the me,me, me free market economy.

[kbiggs]

Labor unions historically had a vital role to play in the development of the modern workforce.  For one, they served primarily to protect workers when gov't rules and regulations weren't adequate to address criminal and rampant abuse of people.  They still have a vital role to play, I think, because the mind-set of most businesses hasn't changed much.  Just think of the many reports we've had of sweatshop conditions in Asian, South America and African countries (the "3rd world") where worker protection is hardly on the political agenda.   Left to their own devices, most businesses attempt to make as much money as they can regardless of the consequences or harm to individuals, the environment, or the economy.  Unions will almost certainly have to make significant concessions. 

The costs and consequences are made worse by "globalization," the notion that we are all much more connected than we used to think: e.g., many now think of the earth as a "closed system," and we are now aware that we have inter-related and inter-dependent economies and monetary policies.  Why else would bank failures in the US decimate the banking systems in Ireland and Iceland which, until 6 mos. ago, were 1st world countries labeled as "models" of efficiency and health?   So, perhaps unions can broaden their focus to incorporate some of the concerns we're only recently becoming aware of, like the environment and the economy. 

On other hand, businesses like auto mfgrs. need to learn a lot more about sustainability.  No doubt, some of their "models" of profitability and future predictions of costs and income must be re-worked.  Maybe that will lead them to make some domestic cars that are as attractive, fuel-efficient, and inexpensive as some of their Asian counter-parts. . . but that would really be a revolution, wouldn't it? 

[ntap]

That's not really my point. What happens when China literally can't do it any more?

The U.S. automotive industry hasn't grown in many decades. My reasoning for not being overly enthused about government protection of the automotive companes is long term: we need some new, innovative automotive companies to revitalize the industry. How can that happen if the Big 3 are "too big to fail?" I agree that it's in peoples' best interests right now to hold off a total collapse of GM, but I worry that this reinforces a long-term set of political behaviors which are not helpful.

It may, but what GM needs is for it's customers to have a healthy and reliable flow of credit; our economy depends on that.  I think product innovation would be important if we weren't in the kind of recession we are in - Don't get me wrong, GM didn't gauge the market very well by not making fuel efficient cars  - but I believe the real reason they aren't selling is because the banks aren't lending. 

So I say keep the big three going until banks start lending again, then the market will pressure them, most likely to build fuel efficient cars. 

While we had started to examine the impact of these customs in the 60's and 70's, the 80's saw a return of unrestrained consumerism and a denial of the concerns of the environmentalists. There is no significant move to design better cities, more efficient and cost effective mass transit, and manage resources with "sustainability." I have the sense that the longer we pretend this is not important the more painful the inevitable is going to be.

I read this magazine called Scientific American, and almost every month for the past year, they've had features on how to do exactly what you're talking about.  Green energy grids, massive solar panal installations in the desert, all the like.  http://www.sciam.com/earth-and-environment  Check it out here.
I think the only way we are going to achieve the environmental goals we have is to have government step it, which is exactly what money (hopefully) from the stimulus will go towards.

[Andrew Meronek]

well, if GM can't make it's obligations to it's workers, it should have to pay a penalty.  pensions should be inviolable.  some guy forgoes a college degree for a career with GM and all the sudden he's 52 and looking down the barrel of a layoff?

As much blame as can be put at the feet of the unions, this kind of thing should not happen,  that's why the unions exist - to keep the american worker from getting screwed.

one of the many negatives of a "free market" system - it usually the worker that gets screwed.

Tell me of a system that works better.

[Andrew Meronek]

And the management folks that, during good faith negotiations, freely entered into the contracts mentioned above  are the ones that are now in DC with their hands out asking us to pay for them. I saw the City I worked for give our Firefighter's union some unbelieveable contracts that just didn't make sense when I was working. The City is paying for them big time now, and I would hope that future negotiations are more balanced. The reality is that negotiations are virtually always carried out as an adversarial exercise, when they really should be between equals trying to jointly provide the best service, product, etc. to the customer while as fairly as possible dividing up the resultant profits. Not going to happen in the me,me, me free market economy.

You say "freely entered" then you say "adversarial exercise." I don't see how it's possible to reconcile these two views.

[BGuttman]

Remember that a lot of the deals that are currently dragging down the Big 3 Auto Makers were agreed to in a different time with different market conditions.

Non-Big 3 auto makers in this country have very different agreements.  They are not getting guaranteed medical coverage on retirement and are generally getting much lower pay scales for similar work.

It's time for the Unions and Big 3 makers to sit down in a cooperative manner.  The Unions have to realize that economic realities are very different today than they were 20 years ago.  The companies have to agree to share financial operating data with the Unions.  If they choose not to do this, they run the risk of being accused of having something to hide.  Also, Management has to agree that in the case of difficult times, EVERYBODY tightens the belt.  Workers get a pay cut, and Managers get a pay cut.  Same percentage.  Failure to do this will result in Bankruptcy and nobody gets anything.

[Exzaclee]

Tell me of a system that works better.

A free market system that takes the rights of the workers and consumers into account would be a better system.


During the Bush years we used to complain about how the greatest experiment in the history of man, that of democracy, had been subverted by the rich and powerful and the result had been the death of american political power abroad and the death of trust here at home.  

And some guy lacking the ability to argue his point would patriotically cry out: "Tell me of a system that works better."

This system should work better.  The question you should be asking "How can we make our system better?" - then we have a discussion.

Z

[Andrew Meronek]

This system should work better.  The question you should be asking "How can we make our system better?" - then we have a discussion.

I was under the impression that this was exactly what we were talking about.

You said:

one of the many negatives of a "free market" system - it usually the worker that gets screwed.

I was trying to ask if you knew of a non-free market system where workers didn't get laid off.

Anyway, I don't think that such a system exists that is still competitive on a world scale. Layoffs suck, but they're part of how a company responds to changing market conditions. When people speak of having a "social safety net," or what is one of the main aspects of socialism, I don't think they're necessarily talking about preventing people from getting laid off. I think that they're talking about making sure that people don't get thrown out on the street as a result of layoffs. Hence, unemployment benefits, social security, and the like.

Having unions negotiate great benefits and job protection within a company is great and all, but if as a result that company has that much more trouble responding to market conditions, then it's a bad deal. No workers are really helped if the company goes belly-up. Of course, as we are talking about this stuff, I'm sure that the UAW and GM are figuring out how to survive this crisis of theirs - it just makes it tough to have to wait this long, with the threat of bankruptcy and government intervention. The consequences are more severe now than if they had BOTH planned ahead better.

[Exzaclee]

Okay, here's a trend i'm noticing -

the suburb i'm living in has had 2 or 3 houses go vacant in the last week.  houses cost an average of $110-120 thousand.  Good neighborhood, good schools.  People leaving for cheaper environs - the latest a family of 4.

anyone else seeing this pattern in their neighborhoods?

Z

[RedHotMama]

Several of the flats in my block have recently been repossessed. Does this count?

[MoominDave]

Oh man, I wish houses cost that little where I live! A family of four in a $120,000 house... The two-bedroom terraced house I bought with my now ex in a rather downtrodden and far-flung corner of Oxford cost £185,000 - or about $350,000, by the exchange rate at the time we bought it.

This is a symptom of the same effect that should stop what Zac is noting happening in SE England - much greater population density; there's nowhere else to go!

[Piano man]

Okay, here's a trend i'm noticing -

the suburb i'm living in has had 2 or 3 houses go vacant in the last week.  houses cost an average of $110-120 thousand.  Good neighborhood, good schools.  People leaving for cheaper environs - the latest a family of 4.

anyone else seeing this pattern in their neighborhoods?

Z

That's very cheap compared to here, even with prices falling. The last appraisal on my house was over 500K, and it's a forty year old three bedroom. It's no doubt less by now.

[BGuttman]

There was a piece on National Public Radio this morning about people having to relocate to tents!

If the family gets caught in the layoff frenzy, they can't pay ANY rent and get dispossessed.  Where do you go?  Homeless shelters are pretty full, and won't let you stay during the day anyway.

[johngsteel]

On the San Francisco peninsula, you will still pay about 1,000,000 for a basic house in a neighborhood that you can safely walk around in day any early evening.  I am not talking fancy, granit counter tops, hardwood floors and marble floors, just a basic house about 2,000 sq feet.

Anything below, you get a fixer-upper, or something in a neighborhood that is dangerous at night.

Really.  I have lived on the peninsula since 1956, when we moved here (I was 2 years old then)

My mothers house was sold for 950K.  It was about 1,600 sq ft, and a fixer-upper. Kitchen and bathrooms needed to be demo'd, carpet replaced, closets rebuilt, roof replaced, yard redone.  Good neighborhood.  Not wealthy, mix of blue and white coller people.

[Andrew Meronek]

Wow. It's a shame that the California state government has money problems. How much does it take in through property taxes??