Rolling US Economy Into The Shitbin Thread

ok I love Iceland, but Iceland's main prongs of their economy has been a) lots of desert glacier offroading, and b) "omg this is where BJORK and SIGUR ROS are from! it's like soooo rad". Iceland has been proudly neutral to anything political all this time, with the occasional "lol we be whalin' and getting mad ass drunk" aside. Good luck to whoever wants to help out Iceland.

― obamaloverholeinyohead (Mackro Mackro), Wednesday, 8 October 2008 16:28 (50 minutes ago) Permalink

they're heavily invested in canada's north atlantic fishery, so it could prove a disaster for, say, newfoundland. i think it's mainly landsbanki.

just in the non-glib spirit that iceland is not unconnected to the rest of the world...

Lehman Bros Chairman Dick Fuld gets punched in the face

sorry if this has been posted already

hahaha wow, no apology needed, that should be posted in every thread

“From two very senior sources – one incredibly senior source – that he went to the gym after … Lehman was announced as going under. He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold. And frankly after having watched this, I’d have done the same too.”

McCain's newly unveiled mortgage plan seems interesting. I guess the specifics are only beginning to trickle out, but it seems to be a rather surprising plan for a putative conservative to offer:

McCain's Plan Calls for Government to Buy Mortgages
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBLgWTu.IKn0&refer=home

He seems to be endorsing something Obama hinted at in a news conference in September, and that Hillary Clinton has also apparently been pushing for. Combined with McCain's suggestion of Warren Buffett (an Obama supporter, and known to be no fan of the Bush tax policies) for Treasury Secretary, I guess it could be read as McCain moving left on economic issues.

Brad DeLong isn't a fan of McCain's new plan

Hmm, that's interesting. I hadn't read that McCain is now suggesting that taxpayers should take the full hit for the bad loans - I thought his plan would at least include a haircut so that lenders would still have to take some of the losses. Seems like not such a good plan after all.

McCain doesn't want to be president.

And he's doing a great job at that goal right now. I seriously think he doesn't want to be president anymore.

"Ward determined Fuld deserved the beating based on his testimony before the committee."

^^^ <3<3<3

Posted without comment: http://news.bbc.co.uk/2/hi/business/7660409.stm

US debt clock runs out of digits

The US government's debts have ballooned so badly the National Debt Clock in New York has run out of digits to record the spiralling figure.

The digital counter marks the national debt level, but when that passed the $10 trillion point last month, the sign could not display the full amount.

The board was erected to highlight the $2.7 trillion level of debt in 1989.

The clock's owners say two more zeros will be added, allowing the clock to record a quadrillion dollars of debt.

Douglas Durst, son of the late Seymour Durst - the clock's inventor - hopes to replace the Manhattan clock with its lengthier replacement early next year.

For the time being, the Times Square counter's electronic dollar sign has been replaced with the extra digit required.

For its part, the digital dollar symbol has been supplanted by a cheaper version - perhaps a sign of the times for the American economy.

Some economists believe the $700bn bail-out plan for ailing US financial institutions could send the national debt level to $11 trillion.

The clock's owners say two more zeros will be added, allowing the clock to record a quadrillion dollars of debt.

The last growing market in the US.

So this morning tells me that the UK plan is the gold standard for sorting out the clapped out financial system, will the rest of the world follow?

the gold standard for sorting out BANKS - possibly - except the UK's equity stake in these banks doesn't give them any actual say in how they're run

It gives them a say in as much as do what we say or you don't get the money, and there is always the threat that the preference shares can be converted into normal equity at a punitive rate.

However the more concerning thing is that we now have global negative real interest rates and I am trying to bone up on the implications of this.

i cannot help there. perhaps kondriateff has some ideas.

what's crazy to me is that we're running full-steam into government ownership of both 1) investment finance 2) retail finance and 3) homes (i.e. mortgages) but not because there's any great plan or ideas about what to do with these things

Where will this end? They have been comparing this to the 30s but on the other hand they claim it's not recession (yet) cause we're still growing (har har). So how long will this last? How bad will it be? :-(

Keynes, Bevan and Beveridge have the last laugh.

xpost

http://www.nytimes.com/2008/10/09/business/economy/09econ.html?_r=1&th&emc=th&oref=slogin
http://www.economist.com/finance/displayStory.cfm?source=hptextfeature&story_id=12341545

To borro:

this is not the beginning of the end, merely the end of the beginning.

Hopefully it will mark a return to a mid 20th century European style of social contract with some kind of idea of how to pay for it.

The National Debt clock (which now greets you on the BBC homepage) irritates me for some reason.

I think it's the font of 'family share'. All that money and they put something so cheap looking. So unlike property developers to do that.

http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2008/10/08/bell512.jpg

what's crazy to me is that we're running full-steam into government ownership of both 1) investment finance 2) retail finance and 3) homes (i.e. mortgages) but not because there's any great plan or ideas about what to do with these things

I guess the plan is that the government will divest itself of all these assets once it's safe to do so.

All these rescue plans seem to be predicated on the assumption that the state can and has to be the final guarantor of the system, but isn't all this something of a shell game? Banks won't lend to banks, so the government provides a pool of money that they can lend from. To set up this fund, governments issue bonds that banks buy. So banks really are lending to banks, aren't they? With the figleaf that the government will cover any bad debt. But with what money? With the money the banks lend them, via bonds. It's a confidence game. But if Iceland goes bankrupt, won't bonds suddenly seem a whole lot less safe? Is there a chance that banks will not only not lend to banks, but not lend to governments either?

Then governments can print money and inflate our way out of the crisis, hooray!

It worked for the Weimar Republic! Oh wait...

Worked for Germany

http://www.bitsofnews.com/images/graphics/economy/weimar2.jpg

and Zimbabwe

http://starphoenixbase.com/wp-content/uploads/2008/04/zimbabwe-zim-currency-slide.jpghttp://newsimg.bbc.co.uk/media/images/40094000/jpg/_40094536_zim102203.jpg

xpost

note the time limit on the zimbawean bank note.

Talking to a friend in the civil service last night revealed that all spending targets for health, education, child poverty, everything are in tatters now. No one has a fucking clue what effect this is going to have on overall spending.

I think we do have a clue, there is going to be less of it, or higher taxes, or both.

Sign of the times, AP can't afford to send a snapper out for a photo of the new improved debt clock.

Lol Simon Heffer.

Will Hutton and Larry Elliot predictably on the other side of the debate.

http://www.guardian.co.uk/business/blog/2008/oct/08/economics.creditcrunch
http://www.guardian.co.uk/business/blog/2008/oct/08/economics.creditcrunch

oh jeesus that heffer article

Anyone over the age of 40 will recall the abiding result of the days when we had a socialist economy in this country: poverty. We had better prepare for some more of that.

heffer = hysterical nincompoop

This notion that governments bailing out banks = socialism is one of the more ridiculous memes generated by the crisis.

i just love the idea there's been no poverty since thatcher took power

I guess the plan is that the government will divest itself of all these assets once it's safe to do so.

It would be a shame if the (US or UK) govt doesn't use its presumably temporary equity stake in the banks and in the homes of millions of citizens to institute a few diktats -- environmental stuff, city planning stuff -- some of which will hopefully bring in the ducats over the long term regardless of what happens to the billions in shitty mortgages

CalculatedRisk blog linked to a remarkably prescient Paul Volcker speech given at Stanford in early 2005. I couldn't find the transcript of the speech online, but I did find this op-ed from the Washington Post which he adapted from the speech. I guess his warnings sort of fell on deaf ears at the time:

An Economy On Thin Ice
http://www.washingtonpost.com/wp-dyn/articles/A38725-2005Apr8.html

This notion that governments bailing out banks = socialism is one of the more ridiculous memes generated by the crisis.

― Zelda Zonk, Thursday, October 9, 2008 6:57 AM (2 hours ago) Bookmark Suggest Ban Permalink

Whether it's ridiculous or not, I'd be upset if it wasn't out there. For years the right has criticized government-controlled/funded education and medical using just that term and to not bring it up at this time would be hugely hypocritical. Glad they are sticking to their guns.

Many aren't

This notion that governments bailing out banks = socialism is one of the more ridiculous memes generated by the crisis

"In America, the only respectable form of socialism is socialism for the rich." --John Kenneth Galbraith

i just love the idea there's been no poverty since thatcher took power

I just love the idea that there wasn't any poverty until socialism.

So if we keep this up maybe we won't have to go to war with the Russians again. They will be comrades!

Wait I thought the Russians were the cowboy capitalists now?

nyt savages greenspan niiice http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html

Ms. Born was concerned that unfettered, opaque trading could “threaten our regulated markets or, indeed, our economy without any federal agency knowing about it,” she said in Congressional testimony. She called for greater disclosure of trades and reserves to cushion against losses.

Ms. Born’s views incited fierce opposition from Mr. Greenspan and Robert E. Rubin, the Treasury secretary then. Treasury lawyers concluded that merely discussing new rules threatened the derivatives market. Mr. Greenspan warned that too many rules would damage Wall Street, prompting traders to take their business overseas.

*mouth agape*

“We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams,” American financial historian Ron Chernow told The New York Times.

dow below 9000 now