WE Blog

Willful amnesia? This country thrives on stupidity and willfull ignorance in general. We just need more wars, and more television shows that’ll fix everything.

It is nothing even remotely like 1929 now. In 1929, the banking system was not insured and regulated as it is now. The “banks” that are in trouble are NOT real banks but investment houses. Your neughbourhood bank is doing just fine. The economy is not doing that bad either. I do not expect a recession anytime soon but I do see a bad bout of inflation coming probably followed by a recession in a few years. You can thank the Federal Reserve for that. Just my view.

From a financial standpoint, this quasi-recession is nothing like the banking and stock market fiasco of ‘29 but it’s interesting to see how few people actually know the difference.

Komrade knows everything about everything. Must be a great feeling to be a genius. I’m officially done with this blog.

the dust bowl is coming, ahhhhhhh

How many financial crises were there before the Fed? Hmmmmmmm

What a complete lack of perspective. The reason Iraq gets compared to Vietnam and the current economic climate gets compared to the Great Depression is so that this worthless generation of Americans will actually feel like they faced and overcame a challenge. A complete joke.

There are far more differences than similarities to 1929. While we are in for a bout of rough times, and there is serious fiscal and monetary work to do to put in place long-term foundation for the coming tsunami of baby-boomer retirement, we are not headed for a 1929-style crash.

More sky-is-falling blather. Generally, this kind of oh-my-god panic is designed to drive book sales or similar personal enrichment. How many times over the last 20-30 years have we been told we are on the verge of total collapse? Why do we continue to listen?

GM because we are a nation of reactors as long as the non facts support our political leanings. When will we ever learn and not be led by the nose. Think people.

Krugman is someone who “gets it.”

Things happen for reasons.

The reason we had the housing melt-down now and not ten years ago was a change in how regulations were interpreted and enforced.

It’s only panic time if they are coming after your pop guns huh GMC?

My notice from the gubmit that we would be receiving a check this spring came in the mail over the weekend. I wonder how much this notice cost YOU and ME? The notice to tell you and me that the gubmit will be sending YOU and ME some of our own money. What a bunch of incompetents! And we sent them there and probably will send them back. That makes us more than complicit!

Linda - $24-34 million. Read it somewhere, can’t remember where now.

Sol, is that the cost for the notices? I think I may be sick.

My mistake, I undershot.

The IRS wants you to know that your rebate check is almost in the mail. To do this, they will spend $42 million of your hard earned tax dollars.

http://www.tothecenter.com/news.php?readmore=4424

It is really sad to see so few with no economic sense. Greed and wanting ‘it now’ got us here. Have you seen that stupid commercial. Look, I have enough room to put a big screen plasma on my credit card.

We can blame repubs and dems alike because they both contributed but the root cause is us. The consumers that can’t tell ourselves no. We have raised generations of kids who are the same way. This is what has to change.

Read it and weep.

Sol–

You are taking an extremely complex system — economics — and boiling it down to an extremely simple principle — unfettered capitalism.

Contrary to common belief, Adam Smith did not believe in unfettered capitalism:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”

In other words, he was well-aware of the danger of monopoly.

He also, contrary to common belief believed in progressive income taxes:

“Smith is credited by economists as one of the first to advocate a progressive tax.[9] Smith wrote, ‘It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more in proportion.’ In another quote he supported taxation in proportion to the revenue (income) of the individual–

“‘The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.’”

He was also opposed to “joint stock companies” or what we now call “corporations.”

*****

We tried that laisse-fair crap before the New Deal, and we got massive market manipulations and a world-wide Depression.

Less regulation leads to speculative bubbles that leads to exactly what we’re seeing now.

Krugman nails it in these two paragraphs:

In the old system, savers had federally insured deposits in tightly regulated savings banks, and banks used that money to make home loans. Over time, however, this was partly replaced by a system in which savers put their money in funds that bought asset-backed commercial paper from special investment vehicles that bought collateralized debt obligations created from securitized mortgages — with nary a regulator in sight.

As the years went by, the shadow banking system took over more and more of the banking business, because the unregulated players in this system seemed to offer better deals than conventional banks. Meanwhile, those who worried about the fact that this brave new world of finance lacked a safety net were dismissed as hopelessly old-fashioned.

“The bottom line is that Washington has a serious spending addiction. While both parties debate how to raise the revenue, both parties seem happy to spend over $3 trillion of your money in various ways. While some in Washington criticize the war in Iraq, very few are criticizing the interventionist mindset that got us into the war in the first place. Many so-called “Iraq War critics,” criticize this administration rather than truly opposing the decades old policies that led to war. They claim they will eventually get the troops out of Iraq, but the danger is that they simply plan to move them around to other countries, not bring them home. The American people want peace. Minding our own business is the best way to achieve it. Not only is it also a whole lot cheaper, but free trade and friendship with other countries benefits all involved.

This spending spree is exactly the wrong policy for an economy on the brink of recession. History has shown that all empires eventually crumble under a worthless currency and with an exhausted military. Since too many of our nation’s leaders haven’t taken the time to learn from history, we are seeing mistakes repeated through recently enacted policies such as the new House budget.”

http://www.house.gov/paul/tst/tst2008/tst031608.htm

KSGRM,

There isn’t a fiscal conservative on any ticket. We will get more of the same tax/borrow and spend. The fed is dragging the recession deeper and getting the average joe to pay for it. Where is our hope for salvation? A presidential candidate that will STOP the spending and cut back or eliminate the cost of war and entitlements?

Capn:
“CapnAmerica
Posted March 24, 2008 at 9:06 am | Permalink
Krugman is someone who “gets it.”

Things happen for reasons.

The reason we had the housing melt-down now and not ten years ago was a change in how regulations were interpreted and enforced.
—-
BULL
State the “change” in interpretation.

State the “change” in enforcement.

You can’t. There wasn’t any “change” to speak of.

What has happened, simply put, is that home loan finance moved from a local bank and savings and loan function to being financed by Wall Street.

Try not to be so partisan.

Real Estate agents are licensed by STATES!

Real Estate Appraisers are licensed by STATES!

Some of the States with the worst real estate melt downs are controlled by DEMOCRATS! This is not a partisan issue.

This is a case of innovation, in the financial markets, getting ahead of itself, and getting ahead of government understanding and oversight.

Amen Econ and today we are seeing the Real estate market adjusting itself as over inflated home prices settle down into reality. See the CA market for reality setting in.

McCain Kennedy
McCain Feingold

“John McCain sponsored an amendment to S. 1805 on March 2, 2004 that would outlaw the private sale of firearms at gun shows. According to GOA, the provision would effectively eliminate gun shows, because every member of an organization sponsoring a gun show could be imprisoned if the organization fails to notify each and every “person who attends the special firearms event of the requirements [under the Brady Law].”

“The GOA report of the 106th Congress reveals that out of 15 votes relating to the right to keep and bear arms, Senator John McCain voted favorably only 4 times. Put that into a percentage and McCain’s pro-Second Amendment voting record is a pathetic 27%.”

“Former California State Senator H.L. “Bill” Richardson wrote this about John McCain, “He’s [McCain's] proven his dislike for conservatives and would gut us at every opportunity.

“Why do I say that? Because of three decades of experience as a Republican California Senator and a fifty year activist in the conservative movement. I have first hand, in-their-face experience with elitist RINO’s (Republican in Name Only) office holders. They are biblically ignorant, power hungry, status seeking egotists who have no difficulty aiding their liberal Democrat colleagues whenever their arms are politely twisted. The one thing they have in common with liberal Democrats is their dislike for all conservatives, especially those who are Bible-believing. McCain, as president, would stifle the voices of elected Republican leaders and try to legislate the conservative movement out of existence.”

“Repuke gov’t stood by and let them.”

And who forced the good people to sign on to a variable rate? Who forced them to take on more debt than they could afford?

Who forced the banks to buy risky mortgages?

But yeah capn, blame it on the government. The same government you want to run everyone’s lives.

By the way, where was the regulation under Clinton with the tech bubble. Huh.

It fits a pattern, Econ, a pattern of Repukes ridiculing and marginalizing regulation in gov’t.

The FDIC stands for Federal Deposit Insurance Corporation, created by the Glass-Steagall Act of 1933.

This is not a state-run enterprise.

The same people who let polluters write energy policy in secret meetings with Dick Cheney, the people claim that Ron Brembey “doesn’t have the authority” to rule on the Holcomb expansion, the people who forced out moderate Christine Todd Whitman from the EPA, the same people who refuse to answer Congressional subpeonas show in many and sundry ways their contempt for regulation and the rule of law.

When you put those people in charge, you get exactly what has happened.

Sol–

Unlike the Repukes, I don’t stand by the Democratic party leaders when they act like idiots.

Clinton’s “triangulation” policies have led to a lot of harm for the US. While I used to support NAFTA, I disagree with it now. Clinton pushed that through Congress despite initial resistance.

Clinton was not a great president or even a very good president. To a great extent, he was a sell-out. But he cut funds to our bloated military, paid down the national debt and ran budget surpluses.

That’s a helluva lot better than

Worst.
President.
Ever.

“The very last thing we need is a prez that promises ‘pie in the sky’ to us without telling us that we will be paying dearly for those handouts.”

That’s why Ksgrm supports George WMD Bush.

He never met a gov’t pay-off to a huge multi-national corporation that he didn’t like.

Yes, let’s listen to that famous Wichita Entrepreneur CapnAmerica. Known through out Kansas as (well let’s not go there.)

Let’s just say that Credit Unions and Banks lock their doors and extra guards are put on duty when he’s around.

It boils down to consumerism without personal responsibility. No, you can’t blame it all on Bush, but there’s an arguement to be made that spending half a trillion dollars that we don’t have on a war we didn’t need hasn’t helped matters.

Personal greed and irresponsibility don’t know political party. Lack of “proper” regulation does. There need to be safeguards, but let’s not go overboard.

People who live in glass houses shouldn’t throw stones, Reg.

What was the county appraisal on that vast estate that you live in, Regular?

If you want to talk about who’s more financially successful, bring it on . . .

Not sure if anybody really has a complete handle on the Great Depression and all of its causes. But if it has to be put succinctly: the boom of the 20’s due to speculators bidding up the stock market on margin were squeezed when there was simply not enough liquidity to cover all the credit that was “created”. It was a house of cards. Now there are reserve requirements at banks to prevent the panic from the run on the bank that happened back in the late 20’s.

Simply the same thing happened to the housing market. People buying homes on margin because of either fear or greed. Fear that they would be priced out of a house of their dreams foever, and/or greed that they can put down a few thousand $$ to gain control over hundreds of thousands of real estate $$ that promised to only go up.

When the prices did not go up any more, why stay in a mortgage that keeps you underwater when you either can’t afford it to begin with or you are not going to make the thousands you originally lusted after? Perhaps, taking a bankruptcy is better then to stay in a negative equity house for the next few decades.

This behavior was initiated by Fed Head Greenspan’s loose fiscal policy where he kept rates too low for too long. While he was chairman, everybody loved his mug. But all he was doing was squeezing the last drop out of a seemingly resilient economy while putting the next generation at higher risk for a meltdown. It was all a false boom. Just like during the stock market speculator fueled boom of the 20’s.

Since the government fomented this “crisis”, it will rush forward and try to avoid it, thus causing more turmoil and uncertainty. The only resort of the Fed right now is to debase the dollar to prevent the big banks from failing. Any more drastic action than what they have done so far, like freezing foreclosures or forcing banks to renegogiate mortgages, would be a long term disaster for the credit markets. The lesson from all of this? Don’t trust your government to maintain the value of your fiat based savings. If you have savings, Sell your dollars for gold or commodities that will be in high demand.

When financial institutions, banks, et al, shove papers entitled “American dream” across the table to people the institutions know are borderline risks, it is done so in the name of greed. When those same institutions aren’t regulated, what we got now is what we’re going to get.

I can hardly blame some young couple, looking for that dream, signing for loans for the house. This whole thing has little to do with the borrowers, and a lot to do with the lenders.

If common sense had prevailed, there would be a lot more couples renting, which is what it should have been, had the lenders not been so greedy.

One last thought - those corps like Walmart you want to bring down are a large part of most retirement plans. You might be surprised if Hill gets her way in taxing them to death. It might affect someone you know. Maybe even you.

So… then… simply stated, you agree.

Corporate welfare = good

Human welfare = bad.

Nice to know…

Capn said,
“You illegally kidnap and torture people like me.” to kagrm.

—————

I want to know when she did this, because I’ll turn her in myself if she did.

And what did you mean by “people like me?”

Are you a radical islamicist terrorist?

“This reminds me of that Obama video that takes a shot at McCain. In the video, one young person says, “I want to own a house”, then you hear McCain saying something like “No you can’t” While video replays Obama saying “Yes, You Can!”.”
————-

Good point. the liberal ideal is to supply everyone with the same material goods, even if they cannot afford to pay for them. Never mind that the subprime mortgages will break the country - just keep doling them out in hopes of getting more votes.

“Komrade has opinions as good and as useless as the rest of us. Sometimes, a poster brings more than opinions, I’ve never seen Komrade do so.”
——————-

Ive never seen you do so either in the short time I’ve been here, but thanks for the personal attack. It shows your character.

Ive never seen you do so either in the short time I’ve been here, but thanks for the personal attack. It shows your character.

She wasn’t attacking you. Quite the opposite.

*There
Haven’t had my coffeee yet :)

Michigan is one of the worst states in the country,

One of… ONE OF God please tell me there are none worse !!!!

“In todays atmosphere we can’t afford to not have a top notch and funded military. I wish we were out of Iraq. We will be. Sat I learned my nephew will be going to Iraq. Part of the big red one. He has two year old twins and a brand new baby. He voluntarily entered the army and knew this could happen.”
========================

Sorry to hear about your nephew… Thats not good news at all!! I can only pray that he gets to come back home from that hell hole, to see his children again. But a vote for McCain might mean otherwise… But, thank God we have an election system that could allow McCain to continue the slaughter!

SolDevVB
Posted March 24, 2008 at 8:08 am | Permalink
How many financial crises were there before the Fed? Hmmmmmmm
===================================
How about the Panic of 1877 for starters??

So then chas you support the fed devaluing the dollar and bailing out banks?

Yep, this damn democrat controlled congress is spending money faster than they can print new bills up!

1. Passed record deficit spending in their Omnibus last minute appropriations bill.

2. Passed second highest record of earmarks ever.

3. Passed trillions of dollars for their bloody Iraq War.

4. Refuse to reign in pork and earmark spending, despite efforts by the frontrunners for president.

5. Lowest approval rating of any congress to date.

And they keep on spending on…..