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Gatsby
Joined: 09 Feb 2007
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 Posted: Mon Oct 13, 2008 11:19 pm Post subject: |
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This politico-economic mess has brought out some great writing by the commentators. Here are two great lines by Eugene Robinison:
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Sitting back and letting the dire situation correct itself is not an option, because the market's phoenix-like solution begins with self-immolation.
Politically, though, there is at least some justice in the fact that a Republican president has to deal with this Republican-made crisis. That little piece of irony isn't worth $700 billion, but so far it's all we're getting. |
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/13/AR2008101302172.html?hpid=opinionsbox1
The whole column is excellent, but I will restrain myself. |
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BS.Dos.
Joined: 29 Mar 2007
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| Posted: Mon Oct 13, 2008 11:33 pm Post subject: |
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I agree. There's been some good copy these past few weeks.
Just out of interest, how do the big US broadsheets (NY Times, Washington Post etc) align themselves politically? |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Tue Oct 14, 2008 12:15 am Post subject: |
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| BS.Dos. wrote: |
I agree. There's been some good copy these past few weeks.
Just out of interest, how do the big US broadsheets (NY Times, Washington Post etc) align themselves politically? |
NY Times and Post definitely are left-leaning. WSJ is the one right-leaning paper. LA Times used to be as well, but don't think it is as much these days. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 14, 2008 8:26 am Post subject: |
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| Kuros wrote: |
Ha ha. Christopher Hitchens!
Edit: Actually, this is pretty good. There seems to be some confusion about what anti-American means, though. Being critical of one's government is distinctly American. |
Well, that's why I said "sensitivity".
Your boy Hitchens endorsed Obama Kuros. It was actually a good piece. But for a really good endorsement, you should see the The New Yorker's:
http://www.newyorker.com/talk/comment/2008/10/13/081013taco_talk_editors
Or by podcast:
http://downloads.newyorker.com/mp3/comment/081013_comment_editorschoice.mp3
For Gopher, from the New Yorker:
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We cannot expect one man to heal every wound, to solve every major crisis of policy. So much of the Presidency, as they say, is a matter of waking up in the morning and trying to drink from a fire hydrant. In the quiet of the Oval Office, the noise of immediate demands can be deafening. And yet Obama has precisely the temperament to shut out the noise when necessary and concentrate on the essential. The election of Obama�a man of mixed ethnicity, at once comfortable in the world and utterly representative of twenty-first-century America�would, at a stroke, reverse our country�s image abroad and refresh its spirit at home. His ascendance to the Presidency would be a symbolic culmination of the civil- and voting-rights acts of the nineteen-sixties and the century-long struggles for equality that preceded them. It could not help but say something encouraging, even exhilarating, about the country, about its dedication to tolerance and inclusiveness, about its fidelity, after all, to the values it proclaims in its textbooks. At a moment of economic calamity, international perplexity, political failure, and battered morale, America needs both uplift and realism, both change and steadiness. It needs a leader temperamentally, intellectually, and emotionally attuned to the complexities of our troubled globe. That leader�s name is Barack Obama. |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Wed Oct 15, 2008 5:04 am Post subject: |
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In addition to the capital infusions, which will be made this week, the government said it would temporarily guarantee $1.5 trillion in new senior debt issued by banks, as well as insure $500 billion in deposits in noninterest-bearing accounts, mainly used by businesses.
All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks. The latest show of government firepower is an abrupt about-face for Mr. Paulson, who just days earlier was discouraging the idea of capital injections for banks. |
http://www.nytimes.com/2008/10/15/business/economy/15bailout.html?hp=&adxnnlx=1224072649-X6q9uLvfkKzRM6QAg%20FoAw&pagewanted=all
This is a little vague. Do we add the 2.25 trillion dollars of the "latest bailout package" to the $700 billion "rescue package?" That would be about three trillion dollars, give or take a few billion dollars.
That's larger than the entire U.S. federal budget, which is $2.7 trillion.
Now, given that $1.5 trillion consists of "guarantees," so we are not spending this money at the moment. But we still have stimulus packages being considered in Congress to help the economy.
Do you realize what would happen if all this stuff doesn't work? What if the economy still tanks? What if we do have to pay out a bunch of guarantees, and our investment in bank stock and bad mortgage bonds goes bad?
The markets' are bound to fall because they were pumped up by the easy credit and the bubble years. The U.S. is headed into a recession, as is the rest of the world, apparently. Without fiscal stimulus, a recession can keep spiraling downward. And we are using our ammunition on solving the credit crisis, instead of on stimulus.
It seems to me we're playing some mighty high stakes poker here. If we lose this hand, we might be out of the game for good. At some point, people would stop buying our treasury bonds.
But if we can make it through this and start to clean up this mess, maybe we won't go broke. And in 10 or 15 years the economy could recover. |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Fri Oct 17, 2008 6:21 am Post subject: |
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October 17, 2008
Op-Ed Contributor
Buy American. I Am.
By WARREN E. BUFFETT
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I�ve been buying American stocks. This is my personal account I�m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation�s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now. |
http://www.nytimes.com/2008/10/17/opinion/17buffett.html
I'm not sure I agree. But when Warren Buffet talks, the world listens. |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Thu Oct 30, 2008 3:18 am Post subject: |
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George Bush & Co. somehow manages to turn everything, EVERYTHING they touch into a giveaway to their rich buddies. EVERYTHING!
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Banks to Continue Paying Dividends
Bailout Money Is for Lending, Critics Say
By Binyamin Appelbaum
Washington Post Staff Writer
Thursday, October 30, 2008; A01
U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.
The government said it was giving banks more money so they could make more loans. Dollars paid to shareholders don't serve that purpose, but Treasury officials say that suspending quarterly dividend payments would have deterred banks from participating in the voluntary program.
Critics, including economists and members of Congress, question why banks should get government money if they already have enough money to pay dividends -- or conversely, why banks that need government money are still spending so much on dividends.
"The whole purpose of the program is to increase lending and inject capital into Main Street. If the money is used for dividends, it defeats the purpose of the program," said Sen. Charles E. Schumer (D-N.Y.), who has called for the government to require a suspension of dividend payments.
The Treasury plans to invest up to $250 billion in a wide swath of U.S. banks in return for ownership stakes, which the government will relinquish when it is repaid.... |
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/29/AR2008102904533.html?hpid=topnews
So, let me see if I've got this straight. Of the $163 billion provided to banks to get them to loosen up the credit market, more than $80 billion will actually go to paying dividends to people who own stock in the banks.
And the U.S. is borrowing money and paying interest on that money so that the banks can loan half that money out, and pay the other half out to stockholders. And the U.S. is now a stockholder, so it will get some of the money it borrowed to buy the bank stock back in dividends.
Does this make sense to anyone except George Bush, the banks, and the shareholders?
No wonder Henry Paulson was in such a hurry to get the bailout packaged passed. Before Congress could have time to think and find the loopholes.
I don't know whether to scream, cry or hit my head against the wall.
When will it end? |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Wed Nov 19, 2008 7:41 am Post subject: |
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Hard to believe, but deflation is actually a bad thing.
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October consumer prices and home starts plummet
By Glenn Somerville
WASHINGTON (Reuters) - Consumer prices dropped at the fastest rate on record in October and new home construction was at a record low, according to government reports on Wednesday that underlined how rapidly the economy was weakening.
The Labor Department said its widely watched Consumer Price Index plummeted 1 percent, exceeding forecasts by Wall Street analysts for a 0.8 percent decline and the biggest drop since the department began monthly data in 1947. Core prices, which exclude food and energy items, declined 0.1 percent in contrast to the 0.1 percent advance that had been forecast.
Analysts said earlier concern about inflation risks may soon be replaced by worry about deflation, which also has a corrosive effect on the economy's performance.
Separately, the Commerce Department said new-home starts fell 4.5 percent last month to a seasonally adjusted annual rate of 791,000 units and building permits -- which signal future building intentions -- dropped 12 percent to 708,000.
Many economists think the U.S. economy already is in recession even though one has not yet been formally declared. A severe global credit crunch that has sapped demand for commodities and hurt consumers has already driven parts of Europe and Japan into recession.
"It appears we are in a period of disinflation right now, where the actual level of inflation is trending lower," said Michael Sheldon, chief market strategist for RDM Financial, Westport, Connecticut. "The question is will the economy rebound enough with the benefit of a big stimulus plan in 2009 to prevent deflation and get consumers spending again."... |
http://www.reuters.com/article/businessNews/idUSTRE4AH85920081119
I guess if people don't buy stuff, but stuff has already been made, the price tends to come down. Don't know the economic term for this, but I think it's called "a sale." |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Wed Nov 19, 2008 7:59 am Post subject: |
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After a long period of inflation (a "bad thing"), deflation is both necessary and a "good thing."
Many people have been confused by the bogus, erronious, and just plain moronic writings of Keynes and his brain-dead successors.
Economists understand that we need to undo the inflation to get the economy back to a sound footing.
In a pure free market, on a gold standard, there would be zero inflation, in terms of printing unbacked paper money. Newly produced gold could be monetized, but such production is so small that this would be a tiny increase in the supply of real money and not "inflation" as we think of it.
In addition, there would be a gradual decline in the general price level as measured by a market basket of goods' due to the increasing productivity and increasing total production of goods and services by the society.
Thus, the value of money would be stable. The price level would gradually fall, there would be no bubbles and therefore no recessions or depressions. In a free market, of course, there are no taxes on income or property as well, so investment would be encouraged and rational, poduction would be maximized, consumers would be king, and labor would be paid at its untaxed, unrestricted, market level so that income would be distributed at a much more even and equitable level.
The economic "crisis" has only just begun. The "bailouts" which now exceed $3 trillion by the US alone, are attempting to reinflate the bubble. Meanwhile, markets and prices are attempting to fall. At best, these government actions will prolong and worsen the recession. At worst, they will succeed in reinflating the bubble enough to give us a hyperinflationary depression, a worldwide replay of post WW1 Germany. These are the same kinds of steps taken by Hoover. His massive intervention failed to work as well. Hopefully we have learned enough NOT to curtail free trade this time, which will help. Unfortunately, Obama will likely try to follow FDR's evil fascist example which will ensure a long, painful, depression. His "economic advisors" are woefully lacking in knowledge in the essential field of economics. |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Wed Nov 19, 2008 2:46 pm Post subject: |
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November 20, 2008
Dow Drops Below 8,000 in Another Sell-off
By JACK HEALY
Shares on Wall Street closed at their lowest levels in five years on Wednesday as hope dimmed in Washington for an emergency bailout of the auto industry.
The late-day sell-off came in frenzy amid growing fears of deflation.
The Dow Jones settled below 8,000 for the first time since 2003, dropping 427.47 points or 5 percent to 7,990. The broader Standard & Poor�s 500-stock index was 6.1 percent lower. The technology-heavy Nasdaq composite index was down 6.5 percent.
�It�s painful,� said Howard Silverblatt, senior index analyst at Standard & Poor�s. �A lot of people have pulled a lot of cash out. They�re sitting on the side. It�s all I hear all day: �Where can I hide?� �
All corners of the market were down, but the financial, transportation and consumer sectors took the heaviest blows. Financial stocks were down an average of 9 percent over the day, and the banking giant Citigroup dropped 22 percent.
Auto shares fell as the leaders of the three American automakers reprised their appearance on Capitol Hill to discuss an emergency bailout and the threat of bankruptcy. General Motors was down 10 percent, to $2.78 a share, and the Ford Motor Company was down 24 percent, to $1.27.
By late Wednesday, it seemed clear the automakers would leave Washington without the $25 billion in federal aid the companies contend is critical to their long-term survival.
Crude oil prices settled at a 22-month low at $53.62 a barrel, and energy stocks followed them lower. Exxon Mobil, Chevron, Conoco Phillips and other major oil companies were all down.
Wednesday�s losses followed news that consumer prices dropped 1 percent in October, a record one-month decline, according to the Labor Department. Energy prices, which tumbled 8.6 percent over the month, led the declines.
Even removing turbulent energy and food costs, consumer prices fell 0.1 percent from September to October, though they are still 2.2 percent higher for the year. Economists said the drop in so-called �core prices� offered a warning that the United States could fall into a cycle of deflation as the economy weakens.... |
We are in the classic death spiral. One thing leads to another. And trying to stimulate the economy is like pushing on a string.
We might never return to the level we were at because it was artificially stimulated - a prolonged bubble. In the 1950s and 60s there was solid growth, with some bumps, because the population was growing. But now the population is aging. And let's fact it, there's only so much stuff a person can buy. Perhaps the impetus for growth needs to come from the developing countries. |
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blade
Joined: 30 Jun 2007
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| Posted: Wed Nov 19, 2008 4:15 pm Post subject: |
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| bucheon bum wrote: |
| BS.Dos. wrote: |
I agree. There's been some good copy these past few weeks.
Just out of interest, how do the big US broadsheets (NY Times, Washington Post etc) align themselves politically? |
NY Times and Post definitely are centre left-leaning. WSJ is the one right-leaning paper. LA Times used to be as well, but don't think it is as much these days. |
Fixed it for you.
Also how come you left out the New York Post, The Washington Times and the Washington Post? Aren't these papers also considered centre-right? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Jan 15, 2009 5:23 pm Post subject: Re: Econ 201 -- Understanding America's economic mess |
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| Gatsby wrote: |
| What happens to the American economy if Bank of America goes bankrupt? What happens if the U.S. has to prop up this and other commercial banks? |
We're about to find out. |
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