Rolling US Economy Into The Shitbin Thread

I like how Dandy pretends to have no idea about the basic economic theory behind deficit spending during recessions.

I'm happy to invoke the unimpeachable genius that is Keynes as much as the next liberal is; my problem lies in the details of the trillion dollar devil.

Any opinion on Backwardation and what it means for $?

Tribune bankrupt.

Some hoohah:

The Chicago-based company had roughly $300 million cash on hand, more than enough to make a $70-million payment due today. But executives reportedly were unable to persuade lenders to undertake a broader restructuring of the debt.

Among other obligations, a $512-million principal payment related to Zell's leveraged buyout is due in June.

Money for that payment was to come from asset sales, particularly the sale of the Chicago Cubs baseball franchise. That sale, originally expected to take place earlier this year, has been delayed in part because of the credit crisis and is now expected to take place in 2009.

Some analysts had previously set the value of the Cubs at more than $1 billion.

xxxpost sorry to hear that akm.

For sure -- hoping for the best.

http://bp3.blogger.com/_ucHLXiVwMEQ/R5EyOpriGYI/AAAAAAAAARw/9C_wVLIrXoA/s400/art_bailing_water_from_boat_hg_clr.gif

Don I'm pretty sure the point of deficit spending by the government during a recession is that the details don't matter. What matters is that spending occurs at all. Citizens aren't spending, so the government has to step in. The idea that this spending might well be on things that will have a useful life into the future - like the health of the nation's citizens, long-term technological research, infrastructure - i.e. things private industry is usually too focused on this quarter's profits to sit up and do - is awesome, but not the point. The point is to get money moving. As far as I can make out.

I'm pretty sure the point of deficit spending by the government during a recession is that the details don't matter.

O_O

It is always nice if you get a decent multiplier effect for your gov expenditure - something that giving billions to insolvent banks is not noted for, btw. And it helps to choose recipients who will be motivated to turn around and spend the money they get asap on locally provided goods and services. Boosting imports would be generally unhelpful, which is one reason why those $600 checks were a rather willy-nilly idea.

Lamp, think of it this way - in a non-recessionary time, like say, the late 90s, what do consumers in an affluent society spend their money on? Take-out dinners, third cars, fourth TVs, charms for your mobile phone. Are you suggesting the government spend its fiscal stimulus like this? Since that's what a "healthy" pattern of production and consumption looks like?

I mean, even if the government spent every last dime of its $600 billion fiscal stimulus on Sanrio models, glitter toothpaste, and Head-On, it would still be money moving through the economy. Spending has to take place. As long as the spending is reasonably spread out over different industrial sectors the details honestly don't matter for the purpose it's set up to accomplish. Which is to be the spending of last resort.

hosted by the still-barely-in-business nytimes

http://www.nytimes.com/2008/12/08/business/media/08carr.html?_r=1&ref=business

The other day, I got in a cab and there was a news report on the back seat television about soaring unemployment in New York. An info-screen on an ascending elevator ride in Manhattan suggested that we were all only going one way — down. The news zippers in Times Square were full of reports of crumbling consumer confidence even as people streamed in to the stores beneath them.

Once I made it to my office, it got worse. An RSS feed from Reuters was waiting on my desktop saying, “U.S. employers axed 533,000 jobs from payrolls in November, the most in 34 years.” My e-mail inbox not only included a note from a friend that she had been laid off, but it was flanked by contextual ads from Google labeled “Unemployed?”

lol wtf we are living in gibson's sprawl
where are the lo-teks

btw while I share some of the increasing concern about obama's economic "team" thus far, I am also becoming less and less convinced that they will have much say in any of the policies that the coming administration is going to put forth to get us out of this mess in the next few years, e.g. it's all going to be about how to dole out the new infrapork, and the rates are going to be set to serve that interest, in which case somebody like geithner seems perfectly acceptable. we're totally going to have free wifi for almost the whole country in a few years, I'm really starting to believe that.

i wish i were.

I think the details of the fiscal stimulus, where it is coming from and where is is going to. There is no point giving it to banks that won't lend (although buying commercial paper might be an idea), no point proping up industries with poor business models (why prolong inefficiency, decline and bad practice, besides why make stuff that people won't buy, you are decreasing the multiplier effect), no point giving it to all but the poorest consumers (they will either buy foreign crap or pay down debt, dissapearing the stimulus).

Pretty much the only place you can put it is infrastructure (paying local companies to employ local people to build local things, giving people a sustainable source of income they will spend and beefing up the underpinnings of the economy for the next upswing), or providing capital for new industrial ventures, preferably for export.

The only real models we have for this are the new deal expenditure on infrasteructure (offset by massive declines in non-federal expenditure so difficult to see if it worked) and the second world war mobilisation of industry first for export then for US use.

The problem is how do you direct capital in a non-market distorting way. We don't have a war to focus effort and there is a real danger of ending up with a lot of whute elephants and unsustainable business models.

The point is to get money moving. As far as I can make out.

If you're not concerned about the details of where the money goes, then you don't know anything about how things get done in DC.

Ed is right that classic Keynesian strategy is going to focus on the multiplier effect--funneling money through industry/manufacturing/contruction/goods typically brings the highest multiplier.

I don't trust the asshammers in DC to dole out capital with any sort of economic strategy, other than the kind that will get them re-elected. Along with worthy, smart projects we are going to get purebread pork and horribly mismanaged programs that we can't get rid of. I don't trust the spending to be reasonably spread out over anything, Tracer. I trust it will be retarded pet political projects with dubious multipliers attached to them. Like electric cars, for example.

Im quite glad Sam Zell is ruined and the Tribune is imploding. Those Chicagoans ruined Los Angeles' newspaper wiithout any help from the locals, who indeed should help now - are you listening Mr. Geffen? Buy the damn thing and give it homegrown ownership again

http://laist.com/attachments/la_carolyn/tellzellbanner.jpg

Dandy why do you suddenly sit up like a hawk when it's the government spending money on "pet projects" but don't appear to give two shits when private industry does the same?

I think the difference is that in private industries projects have to stand and fall on their economic merits pretty quickly.

I am, unsurprsingly, not nearly so hawkisih, there is a definite argument for govenrment providing capital so create incubators for new industries, with the understanding that at some point in the future the capital is turned off. (I would also place some of that capital in the ownership of employees and employee trusts rather than expect a direct financial return, but this is my personal view that companies with employee equity holdings are likely to be better for the employees and the local and national economies).

What the politicians have to do is devolve responsibility for disbursing the funds to independant bodies. (Harder in the US than the UK there is less of a culture of apolitical institutions like this).

One more thinh I'd like to see is government do something to rebuild the financial institutions that thatcherism and reganism destroyed, the mutual building societies, the trustee savings banks, institutions that had motives other than shareholder value and were much more locally and regionally focussed.

Dandy why do you suddenly sit up like a hawk when it's the government spending money on "pet projects" but don't appear to give two shits when private industry does the same?

Is this a rhetorical question?

Ed is mostly right.

One thing government could be doing is working out how to persuade new industrial startups to locate in the areas where car plants are closing down and how to assist suppliers to retool to supply these new industries. There is a pool of skilled, experienced labour there and it needs to be tapped. The wartime analogy is another good one, factories and people were turned to new products very quickly. Perhaps the government can seed the new industries by being a large inital customer. (Could work for energy production technologies, or efficiency technologies).

Don I don't think you understand where I'm coming from. I am a pro-big-government all-the-time dude - they can literally do no wrong! Yay go big government!

Inside the world's most annoying economic crisis

The moneda shortage has produced a rising disinclination to provide change at all, even in bill form, at least not without histrionic sighs and eye-rolling. Last night, for instance, in a very crowded bar, I handed the waitress a 100-peso note to pay a 20-peso bill, and I was made to wait 30 minutes for change. The 2-peso note is thrown around with a contemptuous disregard usually reserved for metal money, at least in countries where less money isn't occasionally worth more than more money. But 5s and 10s are harder to come by, because they're actually worth something. In many cases, they're more worth more than 20s, because you can buy things with them, which isn't always true with a 20.

Argentina needs a president who will promise change

http://img369.imageshack.us/img369/6012/bailoutyk2.jpg

Don I don't think you understand where I'm coming from

haha well i certainly dont.

Tracer is also a big fan of that bloated feeling you get sometimes.

well i

Well you?

nly

See, this is just cryptic to me.

Perhaps I should take a break from this thread. When I come back you guys better have sorted this mess out.

http://www.google.com/hostednews/ap/article/ALeqM5gbjFY-o07QeryRxtFR3oC1w_v1PwD94VI1VG0

Also included in the plan is a requirement that the carmakers taking federal aid get rid of their corporate jets — which became a potent symbol when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.

Democrats also inserted a provision in the bill to bail out some of the nation's largest transit systems. The bus and rail systems could be on the hook for billions of dollars in payments because exotic deals they entered into with investors — which have since been declared unlawful — have gone sour with the collapse of American International Group Inc. and other financial institutions.

So predictable.

What, that I'd be happy transit systems are being bailed out?

Has this gone from worrying to amusing yet, or is it still too early?

California running out of money
http://news.yahoo.com/s/csm/20081210/ts_csm/abellyup

Sacramento, Calif. – California lawmakers just got a Henry Paulson-like ultimatum from state officials: If they don't act, the state could be forced to suspend road, bridge, and other public-works projects as early as next week. Come March, California will be out of cash for even day-to-day operations.
A confluence of the national recession and years of legislative budget games is squeezing the Golden State as never before. Although it's not the largest budget gap the state has ever faced, this time it will be harder for California to get help from private lenders. Standard & Poor's now ranks it lower than any other state except Louisiana, which shares the same rating.
The question is: Will lawmakers finally make the tough budget decisions they've put off for so long?
"Because California does have a perennial budget crisis, it's very easy to fall into the 'boy who cried wolf' syndrome," says Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California. "This time the sky is really falling."

It is what it is.

good you found an article about how people don't buy SUVs anymore because gas prices are high

good one avoiding the fact that yr home state/region's race-to-the-bottom subsidized auto industry is a) unsuccessful, b) foreign (and not necessarily committed), and c) contributory to a drain of workers away from declining rust belt cities

http://www.boingboing.net/2008/12/09/SP_from_1825.jpg/SP_from_1825.jpg

^ It's the Burj Dubai!

oh man gabbneb you sure got me!!

Man, at least gas right now is $1.47 down the street from me, and out in the suburbs it's $1.35!! Guess the guys who rig the gas prices didn't want to completely fuck over everyone's Christmas. I say by the time everyone's decorations are down it's back to $3...

http://money.cnn.com/2008/12/11/news/economy/flow_of_funds/index.htm

1st time EVER

lol @ this headline:

Wall Street Flirts With Gains

also lol @ the paradox of capitalism:

Americans holding less debt may sound like a positive, but it also means consumers are spending less, as debt has become more expensive and harder to come by.

Here's another great one:

New unemployment claims surge unexpectedly

http://thepage.time.com/2008/12/11/mcconnell-opposes-auto-bailout-likely-dooming-it/

wow. On one hand I can't say they're wrong in their justification for opposing the bailout. On the other hand, countdown to tent cities and riots on the national mall. Maybe the police can finally try out that new "painful sensation under the skin" raygun weapon now.

Confidence!:

Fortified by half a cup of black coffee, Bush seemed willing to talk sports on end, joking at the conclusion of the 40-minute Oval Office interview that he only needed to end it because Federal Reserve Chairman Ben S. Bernanke was waiting to see him.

http://online.wsj.com/article/SB122901585422798605.html?mod=googlenews_wsj

Whoa whoa whoa. Let me get this straight. The Republicans are in favor of bailing out high finance but won't lift a finger to help factory workers? I'm.. astonished

finance impacts the economy to a greater degree than the auto industry, but yeah, the GOP wants to kill the unions, and it wouldn't hurt if more of those workers moved South to go work in non-union shops for their home state employers