Rolling US Economy Into The Shitbin Thread

It's so off the charts retarded that it's frightening

Haha I was wondering when someone would post that.

I love the idea that somehow the libertarian rookies who worked at the Cato Institute somehow just didn't 'get it' yet, but post-Atlas Shrugged, they 'got it'. They could have made it easier on them and just made them read a postcard that said 'EVERYTHING YOU ALREADY THINK IS RIGHT'.

http://l.yimg.com/img.tv.yahoo.com/tv/us/img/site/57/98/0000035798_20061116111134.jpg

This is wonderful:

In one chapter of the book, an entrepreneur invents a new miracle metal -- stronger but lighter than steel. The government immediately appropriates the invention in "the public good." The politicians demand that the metal inventor come to Washington and sign over ownership of his invention or lose everything.

The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in "the public interest."

Note the failure to include small detail about, "in return for billions of taxpayer dollars..."

yeah, that sitdown was more on the level of the Five Families carving out their territory and haggling over their percentages w/ Vito Corleone as the presiding officer than some quasi-Stalinist 5 Year Plan.

http://www.nakedcapitalism.com/2009/01/why-so-little-self-recrimination-among.html

Acemoglu calls for external checks ("the right incentive and reward structures"), when the record of the last 20 years is that a neutral to positive view of greed allows for ambitious actors to increasingly bend the rules and amass power. The benefits are concentrated, and the costs often sufficiently diffuse as to provide for insufficient incentives (or even means) for checking such behavior. Like it or not, there is a role for social values, as nineteenth century that may sound. The costs of providing a sufficiently elaborate superstructure of rules and restrictions is far more costly than having a solid baseline of social norms. But our collective standards have fallen so far I am not sure we can reach a better equilibrium there.

this

+ don, "delusional" is what I get sometimes when your hyperbole, seemingly fueled by a special pair of future-glasses which have allowed you to discover the true intent and effects of the incoming administration, continues to be delivered with no caveats whatsoever as to the agency or attitudes of the milk spillers. as you know, we have historically agreed on this thread more than we have disagreed, but I tire rapidly of what I view as trumped-up accusatory remarks aimed at the president-elect and his choice of horsemen. While I don't really have a problem raising questions about the stimulus package, the current ongoing blather contains a lot of partisan ass-covering and you've shown no interest in avoiding that. Plus you linked to Brooks. Friedman is up next I assume?

that post about greed should also go on my other thread where I was trying to air out ideas about what a post-scarcity economy might look like

From that ridiculous, blathery, "well, I don't really know and can't prove, but I suspect" post:

...the stimulus will be smaller then they estimate...

Becker post that DDWeiner linked, I mean

Agree that Romer's rhetorical style is a bit o_0. Super strong rising-pitch emphasis placed on seemingly random words, ripe for SNL parody, if she's ever visible enough to bother with. Otherwise, not sure why you liked that long interview, DDW. It's a getting to know you kinda deal, no big news on any front.

I just thought Romer's speaking style was hilarious. And the crotch shot at 2:52 was even funnier.

FWIW the links I post here aren't meant to be an endorsement of the content as much as something to add to the discussion or, for some people, to apparently shit in their Froot Loops.

Tombot I love you man. Really. I don't care if you accuse me of hyperbole, either. Rahm Emmanuel is a known prick and he's proud of it. I will take shots at that asshole forever and if you don't like it I don't care.

I haven't been critical of Obama's plan or his minions at all on this thread (save for that asshole above), other than asking for some good economists to weigh in on the long term effects of multi-trillion dollar stimulus packages.

As Bush fades out this final week in office, I just hafta say that, as low as his ratings are today, in three years I expect his name will inspire such extreme bitterness that it will make his current unpopularity seem trivial and light-hearted by comparison. That's when we'll all know how fucked this economy really is and we'll be living it every day.

Aimless is OTM and I need to go ahead and start that thread (been saying as much IRL for a few months now)

Don I personally think that the best stimulus package is to raise taxes and pay down the deficit. For the most part, I believe state and local taxation (on property and sales) has a MUCH greater immediate impact on businesses' prosperity or failure, while federal taxes (being, y'know, spread out across the entire populace) can be edged up with little if any negative impact (especially since any person or partnership that sees a bad time coming can generally throw down a fat IRA contribution or equipment investment to ward it off) while generating massive increases in revenue. The government's debts, paid off, enable investors to put their money into "better" entrepreneurial ventures, and this applies to foreign entities as well; if Toyota, for instance, were to own some percentage of the USG debt, and it were paid off, then who's to say they wouldn't reinvest that $$ into US jobs building and recycling batteries for new whatsit-mobiles?

Basically fuck tax cuts, raise taxes all you want, it happens once a year and everyone gets to plan for it (cf Abbott's dad's hilarious-but-true exemptions scheme for 9 months out of the year); war bonds, on the other hand, are fucking horrible.

Tom is the anti-Krugman!

nobody in this country likes planning for anything except getting drunk and laid on the weekend.

But Don, this voice of wisdom:

The best stimulus might be to trim -- or temporarily eliminate -- the payroll tax. That would put money in the hands of the people who need it -- and know best how to spend it. But that would be "too ideological" because it rejects the assumption that government knows best, and it would reward taxpayers, not politicians.

Oh wait, it's Jonah Goldberg, never mind.

pretty sure that trimming the payroll tax is something the Obama team has been throwing around.

I don't know about you guys but I definitely don't know how best to spend my money

:(

not to pick on you ned but there's some solid evidence that a cut in payroll taxes for lower income workers would help stimulate the economy. thats why i was mentioning it is a good idea upthread and presumably why the obama team is considering it. i also think its worth considering on a moral level as well not only did obama campaign on it the tax burden felt by the working poor is disproportionate imo but first and foremost i think the facts bear this out.

i mean eff jonah goldberg and he wants the right thing for the wrong reasons but the payroll tax thing is an example of why ideology is such a shackle. as retarded as that mankiw column is krugman's been on a similar tip lately advocating shit that the data just doesnt support

My point, not that there was much of one, was to counteract Don's crabbiness in the post beforehand -- which the cynical part of me actually happily agrees with, most of the time. There's larger issues over ironies of self-described conservatives like Goldberg whipping back and forth wildly between arguing for self-determination and forms of social control that have been beaten into the ground so I'll note those and move on.

Honestly I'm indifferent to the payroll tax and its suspension as being a good idea, I have no idea WHAT a good idea is. Part of this is my own slacking on the responsibility of being a well-informed citizen, but there's a larger opaqueness in the culture upon the economy that renders a lot of the discussion we've read, heard and argued over to be so much spinach. It's one reason why I've tended towards the dispassionate in recent weeks about it all -- when everyone is shrieking doom, disaster and the end of the economic world, it's amazing how quickly that becomes a comfortable baseline. If this tax idea turns out to be a good solution, great, but I'm not going to wave flags for it at this point, or much of anything else.

Yes Ned but you can't deny that we are rilllllllllllllly good at planning on getting drunk. MAYBE the planning on getting laid part was a stretch.

Depends on the quality of the drink.

FWIW, raising taxes in the middle of a recession (or worse) is not a good idea. i haven't turned into a reagan-worshipping supply-sider/laffer curve devotee here -- i'm 100% all in favor of raising taxes when the economy recovers (which, for all the doom and gloom on these threads, is something we need to keep in mind that WILL happen at some point however that may occur). but doing so at a time when demand is slumping will be yet another thing to further inhibit demand and take money out of the hands of consumers. i don't think that you have to be a card-carrying republican to see things that way.

i'm also open to temporarily trimming or suspending payroll taxes (mainly because those taxes fall most heavily on lower-income individuals) -- although i would also like to see the details of such a plan before signing off on it. and, i believe that Obama has already said that he won't immediately repeal the Bush tax cuts and will instead let them sunset as they are already scheduled to do. again, if the economy wasn't in the state that it's in i would never support either position but given where we are i think that both positions should be considered.

lol ritholtz is REALLY mad at Ken Lewis

http://www.ritholtz.com/blog/2009/01/time-to-fire-ken-lewis-of-bank-of-america/

Volcker speaks:

The report today was issued by the Group of 30, an organization of international economists and policy makers. But the recommendations were immediately seen by observers as a building block to an Obama plan because the lead author is Paul Volcker, the former chairman of the Federal Reserve during the Carter and Reagan administrations who will serve as a special Obama White House adviser. Part of Volcker's role is to help mastermind what could ultimately be the biggest overhaul of the U.S. financial system in decades.

Volcker said he would press the new administration to consider the measures, "but it's up to the administration to decide what they want to do."

The proposal offers 18 major recommendations that would insert government regulators into the board rooms of financial institutions as never before. The plan recommends vastly increased oversight of major banks, going as far as to recommend the end of an era of mega banks whose size makes their failure potentially catastrophic to the global financial system. To limit their size and scope, banks, the document states, should be prohibited from managing hedge funds or private equity funds.

In addition, major mutual funds should be required to operate as commercial banks, subjecting them to stricter government oversight. Those that choose not to comply should be forced to sell only relatively safe financial instruments offering investors low risk, and, most probably, limited room for outsized profits.

The document suggests that venture capital groups and rating agencies should also face a battery of government regulators.

"The issue posed by the present crisis is crystal clear: How can we restore strong, competitive, innovative financial markets to support global economic growth without once again risking a breakdown in market functioning so severe as to put the world economies at risk?" Volcker said in a statement. "We hope that our proposals, which explicitly relate to the weaknesses that have become evident in the financial system over the last year, will be a useful contribution to the debate about needed reforms both by private financial institutions and by public authorities."

Hey, go for it.

yeh, cosign

Senate Votes 52-42 to Release Second Half of Bailout Funds

Every cloud...

http://www.aip.org/fyi/2009/004.html

esp. this:

"Department of Energy: $1.9 billion for basic research into the physical sciences including high-energy physics, nuclear physics, and fusion energy sciences and improvements to DOE laboratories and scientific facilities. $400 million is for the Advanced Research Project Agency – Energy to support high-risk, high-payoff research into energy sources and energy efficiency.

oh hai, welcome back U.S.A.!

Can anybody explain to me why everyone keeps accounting obama's plan with $300B in tax cuts when I thought it was pretty clear from the campaign onwards that he's planning on revoking dubya's tax cuts and even raising the top tax rate so that cutting taxes on "95% of workers" will be covered by the other 5%?

Like, it's not a $300B hole if you fill it in with $300B+.

party time, bailout-style

http://dealbook.blogs.nytimes.com/2009/01/16/rescue-of-banks-hints-at-nationalization/

I think I've found the definitive example of challops:

http://www.latimes.com/news/opinion/commentary/la-oe-stein16-2009jan16,0,5790303.column

Williamsburg, Brooklyn: Paying $3,000 a month to live near Manhattan? Exactly as near as the Sweathogs lived? You can wear librarian glasses, play in a band and go to readings in Iowa City too. Either way, you're not in New York.

hahaha

joel stein needs to be eviscerated

he IS right about w'burg, though ... and $200+ jeans o_O

though i cringe @ the thought of "puritan chic"

ayo tracer hand re: discussion on nationalization:

(W)hen you nationalize the entire banking system, who, exactly, are these “new owners” who are buying the cleaned-up banks supposed to be? And what investor is going to be interested in putting up money to acquire a bank that has to compete with nationalized, and therefore subsidized, banks (since the government presumably won’t be able to privatize all at once).

whole things is worth reading

Unemployment rate in my state (Oregon) officially jumped one full percentage point, from 8% at the end of November to 9% at the end of December. State officials said they expect that figure to be corrected later and they think it may actually be higher.

Yo! Up 1% in one month! Maybe more. We are accelerating into nosebleed territory here. Viscera slamming into spinal columns and all that.

one of the guys who swore in with me today told me he took a pay cut for the govt job because both of his cousins and like three other well-to-do professionals he knows personally have been laid off. this is the DC area! that's not supposed to happen!

Lamp is his argument really that there's a "moral hazard" in the govt running insolvent banks - that the US govt will jump to declare banks insolvent just so it can get its filthy mitts on em? i can't believe this is true - the US govt is uninterested in running banks longterm, as far as i'm aware. any talk of nationalization is short-to-medium-term at most.

i think the reason we keep hearing about this is that americans are a little miffed at putting up billions and nobody even gets added to the board! we put up billions and are still somehow in this position of begging the banks to lend.

i.e.

http://www.ritholtz.com/blog/2009/01/nationalize-now/

some have proposed this idea as well (if only temporarily).

friend of mine her husband works at phillips and hasn't done diddily squat the last week or two as there are no new orders coming in. :-(

friend of mine has been fired (and if she doesn't get a job soon, will lose her house).

:-( shitty times. but for how long? "expert" was quite certain it'd only last a year or two. bell curve ahead? hope so.

I think the "expert" is flat-out guessing about how long this recession will last. It may technically end in "a year or two", but I think it will start as a painfully weak recovery that barely qualifies as the "end" of the recession, and only because the economy isn't actually shrinking. It will probably stay shrunken for a while.

One valid indicator to watch is when housing prices stop falling and maybe even blip up a small amount. Until this happens, we aren't at the bottom, yet. The economy may bump along the bottom for quite a while before it genuinely turns up and grows again. When unemployment falls for three or four months running, things will be looking up again.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.sLr8sp1UBM&refer=home

Prices of houses aren't going down at all here, in fact they still remain the same. Crazy.