Rolling US Economy Into The Shitbin Thread

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It's everybody's shitbin

Ed, Friday, 14 November 2008 15:26 (fifteen years ago) link

Correct, I meant to say proportion of available wage left over. Apologies

Kondratieff, Friday, 14 November 2008 15:35 (fifteen years ago) link

Of course none of this takes into account taxation

Kondratieff, Friday, 14 November 2008 15:37 (fifteen years ago) link

BTW anyone here Canadian? How are things bearing up there?

well there are some important caveats but things look better than most other G20 countries. first caveat should probably be that i dont actually live in canada right now lol.

the canadian financial sector is much more tightly regulated than elsewhere and capital requirements for all FIs are much higher. only two of the five major banks were heavily involved with complex credit derivatives and the govt't forced them to take on extra capital in 2007 when those assets were looking troubled.

major cdn investment banks are just arms of the large retail banks and they didn't have the same incentives or structure to encourage the riskier behviour that effected FIs elsewhere. as well the cdn market is almost an oligopoly fees there are much higher than U.S. or europe for most financial products which means that banks and by extension ibanks, fund managers and even insurance companies remained solidly profitable w/o needing to 'innovate'. there's a really good studio 2 podcast where the panel discusses how what were considered the main flaws in the cdn system: lack of competition, high fees, low innovation, lack of risk-taking have become the things that have insulated the cdn financial industry from the worst of the global credit crunch.

as well the cdn gov't has been fairly conservative with fiscal policy aggresively paying down debt and putting through tax cuts over the last few years. inflation is not a problem and hasn't been too much of a worry over the last decade running consistently around the 2% target. fed govt was still has a surplus and the central bank has a room for rate cuts even after the current round so there's more leeway with both fiscal and monetary policy.

z z. st. z z. uv (Lamp), Friday, 14 November 2008 15:44 (fifteen years ago) link

Being a net exporter probably helps too.

Ed, Friday, 14 November 2008 15:49 (fifteen years ago) link

this is a side issue that comes from reading the thread but i'm really disappointed in the way i was taught economics. so few of the economics courses i took really emphasised the way models and theories worked in the real world or gave any extra ability to understand things like the inflation discussion you've been having.

part of this is my fault, i did my writing in the major requirements in the math dept and i took mostly micro courses, but most of what i was required to do was manipulate variables rather than demonstrate a fluent understanding of how this shit actually, for real, works.

haha i suppose it's not a newsflash that someone can get high marks in school w/o learning much of anything but i'm still disappointed

z z. st. z z. uv (Lamp), Friday, 14 November 2008 16:00 (fifteen years ago) link

I am wondering what all the econ classes here on campus are doing this fall -- must be a bit like the poli sci classes with the elections, it's almost a temptation to say "Look, forget all this stuff in the outdated textbooks, here's what's happening NOW."

Ned Raggett, Friday, 14 November 2008 16:11 (fifteen years ago) link

Being a net exporter probably helps too.

it didn't help germany! and being a net exporter is a mixed blessing for canada, i think

z z. st. z z. uv (Lamp), Friday, 14 November 2008 16:16 (fifteen years ago) link

so who else thinks a post-General Motors era sounds kinda cool?

Dr Morbius, Friday, 14 November 2008 16:19 (fifteen years ago) link

o few of the economics courses i took really emphasised the way models and theories worked in the real world or gave any extra ability to understand things like the inflation discussion you've been having.

Ha - well, Kondratieff is on some heterodox economics trip (I think), and I don't know what the hell I'm talking about, so that might also explain it.

Jamie T Smith, Friday, 14 November 2008 16:28 (fifteen years ago) link

michael lewis knows how to tell a story

http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?tid=true

I was coming here to post that. Great article.

o. nate, Friday, 14 November 2008 17:34 (fifteen years ago) link

there's a really good studio 2 podcast where the panel discusses how what were considered the main flaws in the cdn system

link?

abanana, Friday, 14 November 2008 18:30 (fifteen years ago) link

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

Ed, Friday, 14 November 2008 19:00 (fifteen years ago) link

'best' part:

he talks about how because this isn't like the 80s where the countries lending us money were allies, but its our rivals who hold our debts this will have very real geopolitical impact, i.e. China says they forgive the debt but get Taiwan - (audience laughs nervously). Roubini, dead serious: "I'm not joking."

sofa king (deej), Saturday, 15 November 2008 02:19 (fifteen years ago) link

Hey guys I have been right about a lot of things lately in my chosen field of expertise to which I have devoted a lifetime. Now listen, that makes me a credible expert in other fields as well! For instance, I have a passing interest in foreign policy and national relations. China will dick us over for a tiny island they already claim they control.

TOMBOT, Saturday, 15 November 2008 02:30 (fifteen years ago) link

it was an example of how being a debtor nation will have geopolitical impact which seems entirely reasonable to me

sofa king (deej), Saturday, 15 November 2008 03:10 (fifteen years ago) link

i think tom had entered the zone where every post he read was going to be met with derision no matter what

the dan glickman from the hilarious motion picture association of america (max), Saturday, 15 November 2008 13:35 (fifteen years ago) link

http://img.photobucket.com/albums/v134/tracerhand/roubini.jpg

Tracer Hand, Saturday, 15 November 2008 13:51 (fifteen years ago) link

sofa king (deej), Saturday, 15 November 2008 23:10 (fifteen years ago) link

ok that was funny

Tracer Hand, Sunday, 16 November 2008 00:54 (fifteen years ago) link

"soldier hole"

abanana, Sunday, 16 November 2008 03:35 (fifteen years ago) link

roubinis getting a lot of shine from predicting our current situation or whatever - but has anyone studied his previous forecasts - is he just some resolute bear

i agree w/toms skepticism as to his foreign policy chops - its not like china is holding our paper just to be friendly

ice cr?m, Sunday, 16 November 2008 17:56 (fifteen years ago) link

i like that hes beefing with nick denton, nothing screams "2008" like ceo of a blogging company having a facebook fight with the economist that predicted the collapse

the dan glickman from the hilarious motion picture association of america (max), Sunday, 16 November 2008 19:10 (fifteen years ago) link

i agree w/toms skepticism as to his foreign policy chops - its not like china is holding our paper just to be friendly

― ice cr?m, Sunday, November 16, 2008 11:56 AM (1 hour ago) Bookmark Suggest Ban Permalink

that was roubini's point, not toms

_/(o_o)/¯ (deej), Sunday, 16 November 2008 19:42 (fifteen years ago) link

China's holding of US Treasury debt is an interesting situation. It buys China plenty of immunity from US meddling and arm-twisting. However, that debt maintains a detente that cuts both ways. As an old piece of wisdom goes, "if you owe the bank a million dollars you can't pay back, you have a problem; if you owe the bank a billion dollars you can't pay back, the bank has a problem."

Aimless, Sunday, 16 November 2008 20:01 (fifteen years ago) link

has TARP been discussed here?

Dr Morbius, Sunday, 16 November 2008 20:46 (fifteen years ago) link

Naomi Klein in the The Nation:

In a moment of high panic in late September, the US Treasury unilaterally pushed through a radical change in how bank mergers are taxed--a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140 billion in tax revenue, lawmakers found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that "Treasury had no authority to issue the [tax change] notice." http://www.thenation.com/doc/20081201/klein

Of equally dubious legality are the equity deals Treasury has negotiated with many of the country's banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals, "Any use of these funds for any purpose other than lending--for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc.--is a violation of the act." Yet this is exactly how the funds are being used.

Then there is the nearly $2 trillion the Federal Reserve has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg News believes that this secrecy violates the law and has filed a federal suit demanding full disclosure.

Despite all of this potential lawlessness, the Democrats are either openly defending the administration or refusing to intervene. "There is only one president at a time," we hear from Barack Obama. That's true. But every sweetheart deal the lame-duck Bush administration makes threatens to hobble Obama's ability to make good on his promise of change. To cite just one example, that $140 billion in missing tax revenue is almost the same sum as Obama's renewable energy program. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth.

curmudgeon, Sunday, 16 November 2008 21:22 (fifteen years ago) link

"The Street" would cheer a Summers appointment for exactly the same reason the rest of us should fear it: because traders will assume that Summers, champion of financial deregulation under Clinton, will offer a transition from Henry Paulson so smooth we will barely know it happened. Someone like FDIC chair Sheila Bair, on the other hand, would spark fear on the Street--for all the right reasons.

curmudgeon, Sunday, 16 November 2008 21:24 (fifteen years ago) link

I LOLed:

http://www.ritholtz.com/blog/wp-content/uploads/2008/11/24b6gt2.jpg

Ned Raggett, Sunday, 16 November 2008 21:40 (fifteen years ago) link

i agree w/toms skepticism as to his foreign policy chops - its not like china is holding our paper just to be friendly

― ice cr?m, Sunday, November 16, 2008 11:56 AM (1 hour ago) Bookmark Suggest Ban Permalink

that was roubini's point, not toms

― _/(o_o)/¯ (deej), Sunday, November 16, 2008 2:42 PM (3 hours ago) Bookmark Suggest Ban Permalink

i didnt watch the video but i assumed from peoples responses and correct me if im wrong here that roubini was suggesting china could use our debt as leverage in whatever various little tensions there are between our countries - point is this bullshit cause china buys our debt in order to manipulate the exchange rate and export things to us - so china isnt in any sort of position to threaten to cash out or whatever

ice cr?m, Sunday, 16 November 2008 23:06 (fifteen years ago) link

http://blog.mint.com/blog/finance-core/a-visual-guide-to-the-financial-crisis/

^^^ does thia make sense?

hyperspace situation (gbx), Sunday, 16 November 2008 23:15 (fifteen years ago) link

and that particular example of trading debt for taiwan that tom was reacting to is beyond absurd

selfxp

ice cr?m, Sunday, 16 November 2008 23:19 (fifteen years ago) link

doesnt that depend on us continuing to buy things

_/(o_o)/¯ (deej), Monday, 17 November 2008 00:46 (fifteen years ago) link

http://dealbook.blogs.nytimes.com/2008/11/17/our-risk-wall-streets-reward/

Money quote:

"Since compensation has historically consumed half or more of every dollar of revenue generated on Wall Street — what other business even comes close?"

Holy shit.

Dandy Don Weiner, Monday, 17 November 2008 14:39 (fifteen years ago) link

if we cant buy things then obv everyone just packs up goes home and starves to death - the chance of that happening w/o the assistance of some physical cataclysm is 0%

ice cr?m, Monday, 17 November 2008 17:40 (fifteen years ago) link

ok let me rephrase - it requires us to continue to buy things out of proportion to our percentage of the population worldwide

_/(o_o)/¯ (deej), Monday, 17 November 2008 19:04 (fifteen years ago) link

we may be in a tight spot right now but relative to the rest of the world yes were still some rich ass consumer goods loving motherfuckers - i dont see that changing anytime soon

ice cr?m, Monday, 17 November 2008 19:09 (fifteen years ago) link

lol

how did Dilbert turn out to be the one comic that doesn't suck anymore?

adult turban contemporary (Curt1s Stephens), Monday, 17 November 2008 19:13 (fifteen years ago) link

it's a refreshing oasis of consistent lols in the pages of the old tenured dinosaurs and unfunny Calvin & Hobbes ripoff upstarts

adult turban contemporary (Curt1s Stephens), Monday, 17 November 2008 19:16 (fifteen years ago) link

so who else thinks a post-General Motors era sounds kinda cool?

yeah, i don't know. i'm sympathetic to all of the reasons the big 3 should be made to pay for their sins. but i also sort of distrust the punitive instinct when it comes to entire industries, because industrial collapse is ugly and painful. i grew up in the rust belt, when things go bad it is not necessarily just a short-term "shaking out" that goes on. for a lot of people they can get bad and just stay bad. even if all govt. assistance does is make the decline a little more gradual, it might be worth it. shock therapy is philosophically attractive but i'm not sure it's actually a good idea.

tipsy mothra, Tuesday, 18 November 2008 15:36 (fifteen years ago) link

shock therapy at this point would be disastrous for the country - losing a million jobs just from the auto companies then the ripple effect of bankrupt dependent businesses and all the associated long term fallout that losing our heavy manufacturing sector would produce

i am completely sympathetic to the view that the american auto industry has just sucked management wise for a long time - which is why im liking some of the creative restructuring thoughts ive heard floating around - sort of a chapter 11 for a situation where chapter 11 wont work - allow some creative destruction w/o completely wiping out the rust belt economy to do it

ice cr?m, Tuesday, 18 November 2008 15:44 (fifteen years ago) link

ay im sort of unhappy w/ my present job situation--should i submit my cv to the bailout ppl and see if theyll let me be the GM ceo?

the dan glickman from the hilarious motion picture association of america (max), Tuesday, 18 November 2008 15:46 (fifteen years ago) link

worth a shot max! worth a shot!

ice cr?m, Tuesday, 18 November 2008 15:48 (fifteen years ago) link

i hope the Big O realizes just how much power he really has - how deeply and fully he has got the financial system and the auto industry over a barrel. govt won't have this kind of negotiating power for another generation, if then

Tracer Hand, Tuesday, 18 November 2008 15:48 (fifteen years ago) link

too a lot of companies bottom lines could depending on the nature of the program immediately look a lot better upon the passage national health care

ice cr?m, Tuesday, 18 November 2008 15:52 (fifteen years ago) link

lol except health insurance companies amirite

the dan glickman from the hilarious motion picture association of america (max), Tuesday, 18 November 2008 15:53 (fifteen years ago) link

haha yah were gonna fuck them so hard theyre gonna need surgery

ice cr?m, Tuesday, 18 November 2008 15:54 (fifteen years ago) link

this was a good comparison with the british experience of a nationalised auto industry

http://www.nytimes.com/2008/11/18/business/economy/18car.html?ref=business

Healthcare is part of the solution. I think chapter-11 and rescuing what is effective, possibly with government money is better than a wholesale bailout.

Ed, Tuesday, 18 November 2008 15:57 (fifteen years ago) link

chapter 11 cause of the current economic landscape and the nature of the auto business would prob quickly turn into chapter 9

some sort of restructuring is def necessary tho

ice cr?m, Tuesday, 18 November 2008 16:03 (fifteen years ago) link


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