Rolling US Economy Into The Shitbin Thread

'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."

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.

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

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

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

ok that was funny

"soldier hole"

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

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

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

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."

has TARP been discussed here?

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.

"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.

I LOLed:

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

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

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

^^^ does thia make sense?

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

selfxp

doesnt that depend on us continuing to buy things

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.

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%

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

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

lol

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

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

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.

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

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?

worth a shot max! worth a shot!

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

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

lol except health insurance companies amirite

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

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.

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

That's why I'm saying they should get some money but really they should be in a position to restructure radically before they do. Nothing off the table.

yah its actually a great opportunity of the american auto industry to be reborn as a viable business sector

I'm loving hearing that it's all the unions' fault.

America really sucks sometimes, doesn't it?

http://1.bp.blogspot.com/_djgssszshgM/SR652xnt46I/AAAAAAAAAqs/7qEUg8GmJis/s1600-h/big3a.jpg

not sure why that didn't work.

to wit:

http://1.bp.blogspot.com/_djgssszshgM/SR652xnt46I/AAAAAAAAAqs/7qEUg8GmJis/s1600-h/big3a.jpg

How scandalous that our expert fabricators are well paid.

the scandal is the way that management cries about compensation when they don't have the balls to confront the unions. As if they didn't sign the contracts, too.

your graph has convinced me

xxpost What is that an argument for or against?

the graph, I meant

As if they didn't sign the contracts, too.

Yep. It's almost as if they expected their product ranges to garner large profits that would be shared generously with the employees who make them!

If people are going to blame labor unions for the auto industry's problems, they should also take up torches and pitchforks and go after homeowners who defaulted on their mortgages. The responsibility seems about the same.

oh this thread is about to go places I can tell

The point of the graph is that the American car makers are paying 40% more in compensation than the Japanese car makers--and this compensation is in America, not overseas. That is largely due to legacy costs.

see also
http://mjperry.blogspot.com/2008/11/cancer-on-big-three-29hr-pay-gap.html

The bigger issue is the way that the Big Three have ridden their corporate culture (both from a management and labor perspective) into a wall. The system needs an enema. I'd need some examples of radical systemic change in another industry before I'd believe that any one of the Big Three could do it, let alone trust them with billions.