30 is an impressive number of pages.

the economy? not so impressive.

new evidence suggests the problem is not entirely due to stupid bankers. the problem seems to be related to the fact that as a group americans are a bunch of spoiled brats who have the attitude that they deserve the high life come hell or high water. hence, we've been living off credit, spending more than our means to produce.

our individual, household debt is collectively 100% of our GDP. the last time this happened was 1929






[Edited on February 27, 2009 at 10:38 PM. Reason : ]

2/27/2009 10:36:51 PM

Quote :

"new evidence suggests the problem is not entirely due to stupid bankers. the problem seems to be related to the fact that as a group americans are a bunch of spoiled brats who have the attitude that they deserve the high life come hell or high water. hence, we've been living off credit, spending more than our means to produce. "

yep.
watch (both parts) - http://www.pbs.org/moyers/journal/08152008/watch.html
then read - http://www.amazon.com/Limits-Power-American-Exceptionalism-Project/dp/0805088156

2/27/2009 11:06:08 PM

crickets

2/28/2009 10:29:04 PM

Quote :

"btw, you care to revise the numbers you posted earlier, or do you think Cato will revise them, with the revised Q4 GDP data? And then you want to restate your argument?"

The math is not that hard. You didn't need to wait for me to come around, all the numbers you need are right in my post. The old number for Q4 was -3.8%, it is now -6.2% annualized (-1.55% for the quarter). Well, holding the other numbers constant that will turn America's 2008 figure from -0.2% to ((-6.2 - (-3.8)) / 4 + (-0.2)) or -0.8% for the year, still better than everyone elses yearly figure. And this is assuming no one else has revised down their Q4 figure, which is quite unlikely.

U.S. -0.8% (revised)
France -1.0 (unrevised)
Germany -1.6
Britain -1.8
Italy -2.6
Japan -4.6

Quote :

"well, for one - the ballooning household debt:income ratio which was largely fueled by the false assumption that the equity in our homes would rise forever, therefore leading people to take on more and more debt because "hey, we'll just pay it off with our equity". And now millions of people are left with zero equity and a shitload of debt that they have no way to pay."

Millions eh? Well, there is no doubt these individuals were overloaded, but they owed all that money to other Americans and your assertion was that America's debts were beyond our limits? So, again, anything beyond the fallacy of composition?

2/28/2009 10:43:59 PM

uhh, yeah, [tens of] millions

Quote :

"GEORGE SOROS:The homeowner needs to get relief so that he pays less because he can't afford to pay. And the value of the mortgage should not exceed the value of the house. Right now you already have 10 million homes where you have negative equity. And before you are over, it will be more than 20 million. "

http://www.pbs.org/moyers/journal/10102008/transcript1.html

I didn't say America's debt was beyond our limit (although it may be), i said American's debt was beyond their limits. This is clear. Jesus, pull your head out of your ass - the average credit card debt among people who carry balances is in the 10's of thousands. Do you think those people are ever going to pay them back? Sure, maybe some of them will, but just like with the mortgage situation, it only takes a small number of bad apples to spoil the whole bunch, and with credit card debtors, I think the number of bad apples is greater than "small".

I'm really, seriously curious as to what kind of amazing cognitive dissonance you have going on in your head that refuses to allow you to admit that most American's are stretched beyond their limits financially, first with stagnating wages, second with increasing consumer debt, and now third, the real kick to the balls, declining equity and net worth.

2/28/2009 11:11:43 PM

hmmm.... i don't have very high credit card debt

2/28/2009 11:15:32 PM

Quote :

" I'm really, seriously curious as to what kind of amazing cognitive dissonance you have going on in your head that refuses to allow you to admit that most American's are stretched beyond their limits financially"

Because the evidence does not support such an assertion. Yes, we owe a lot, but we also have very high disposable incomes. As such, if we wanted to, the vast majority of us could pay off our debts, we just choose not to. And choosing not to do a thing does not make it beyond our means.

2/28/2009 11:21:12 PM

Nope. I plugged the numbers into my calculator and arrived at your the same .8 revised figured you have via averaging the quarters. I then went looking for the data for the other countries to verify what you posted from the CATO link. The data I found for Germany didn't add up when averaging the 4 quarters. However, when you just sum the four quarters, it equals the -1.6% listed in your link

German data

http://economic-research.bnpparibas.com/applis/www/RechEco.nsf/EcoFlashByDateEN/34267280D431713FC125755C003716B6/$File/EcoFlash066_english.pdf?OpenElement

Feel free to average these numbers and see that Germany did better than the US last year from a GDP perspective.

The data at this link doesn't match exactly for Germany (it's close) and I'm a bit miffed about what they have there for the US.

http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2009/PGE_CAT_PREREL_YEAR_2009_MONTH_02/2-13022009-EN-AP.PDF

Italy as well.


[Edited on February 28, 2009 at 11:24 PM. Reason : .]

2/28/2009 11:22:11 PM

^ even given all that, I'm not sure it follows, logically, that just because the US GDP dropped by a smaller percent than a certain other country, that "proves" that it is not partially or largely US's fault or it is not the US exporting our problems to the rest of the world

2/28/2009 11:34:15 PM

Quote :

"Yes, we owe a lot, but we also have very high disposable incomes. As such, if we wanted to, the vast majority of us could pay off our debts, we just choose not to. "

the people who fall into this category (i doubt it's a "vast majority") are not the ones we need to worry about. Just as the people who did not have subprime mortgages or insane ARMs are now being screwed too.

2/28/2009 11:36:35 PM

Then you should have said that. I didn't bother checking Europe's figures, it seems Cato made a mistake with Germany, as best I can see it's GDP didn't collapse until december and not enough to erase the previous year of gains.

Quote :

"India reported on Friday its fourth-quarter GDP growth was lower than expected, while Japan said last week its GDP had contracted more than 12%. Growth in both Europe and the U.K. fell at an identical 5.9% annual rate."

I suspect Japan's figure is going to be close to right.

Quote :

"the people who fall into this category (i doubt it's a "vast majority") are not the ones we need to worry about. Just as the people who did not have subprime mortgages or insane ARMs are now being screwed too."

If by "screwed" you mean having an incentive to walk away and then doing so, then yes.

[Edited on February 28, 2009 at 11:38 PM. Reason : .,.]

2/28/2009 11:36:53 PM

watched an interesting documentary today I.O.U.S.A. http://www.imdb.com/title/tt0963807/ - although all documentaries like this have a bias i thought the story they were trying to tell was portrayed pretty well - i recommend it

3/1/2009 10:46:34 PM

I saw some of it awhile ago. Pure rubish.

3/1/2009 11:00:59 PM

pleeease, oh enlightened one, show us the errors of their ways


30 minute version here http://www.iousathemovie.com/

3/1/2009 11:19:30 PM

The federal debt is not that large. Other countries have higher debt ratios and are not having too much trouble.

And the most important point: unfunded promises are not contractual obligations. The Government tomorrow could legally eliminate all SS, Medicare, and Medicade payments. All it takes is a 51% vote in both houses plus a presidential signature, or a 67% vote in both houses.

That said, while it is less certain, as the supreme court could consider T-Bills an enforceable contract, it is unlikely, so a 51% vote could repudiate the entire U.S. debt.

It would enforce a balanced budget upon the federal government, since no investor would ever again loan them money. But the point is that this is not a country wrecking problem.

3/2/2009 11:46:18 AM

^

Quote :

" Never Gonna Happen "

3/2/2009 8:44:38 PM

Quote :

"One of his most interesting observations is how consumer debt has been pretty constant over time but credit card debt has increased while other forms of less pleasant and more expensive debt (layaway and payday loans) have decreased."

http://www.econtalk.org/archives/2009/03/zywicki_on_debt.html

[Edited on March 3, 2009 at 12:28 AM. Reason : econtalk]

3/3/2009 12:08:25 AM

Simply amazing

http://www.northcountytimes.com/articles/2009/03/01/business/z7ac44fbb08f3294c8825756a00619d5e.txt

Quote :

"Countywide, homes are back to 2002 pricing. This property on the western edge of Vista just east of College Boulevard was a bit more ambitious in rolling back the clock, going to 1980s pricing. At $100,000, it's not the cheapest home out there, but it's got bang for the buck with 1,600 square feet, or $61 per square foot. The three-bedroom, two-bath house was built in 1982. Know a better deal? Contact staff writer Zach Fox at zfox@nctimes.com. Sold August 1989: $165,000 Sold August 2005: $520,000 Sold December 2008: $100,000 Deal: 81 percent"

3/3/2009 12:52:08 PM

I'm so glad we're in the market for a house this summer. gg Impressive U.S. Economy!1

3/3/2009 12:53:33 PM

Yeah, as usual, those that already have the money will profit immensely from this. They'll go in and buy up many of these homes, rent them for a few years at or more the mortgage payment and then sell them for quite a bit of profit.

I mean on that house, you could take out a 120k loan (20k to fix it modestly for rent) and rent the thing out for 800/month and cover the payment and taxes on it. And you shouldn't have too much trouble renting a 1600 sqft house at that rate in a decent neighborhood.


In 5 years, that house should go back to 1989 levels at least for a very handsome profit.

3/3/2009 1:03:02 PM

LoneSnark has lost a lot of credibility in this thread.

3/3/2009 3:24:22 PM

well, he's got a tough job, defending a hooksaw thread.

3/3/2009 3:30:40 PM

^^ I'm sorry I took statistics in a Cato publication for granted. Geez, like no one else has ever referenced statistics that turned out to be mistaken. Especially when there is a chance the statistics were valid, I just don't think it is worth the effort to prove it. The author suggested "in the past 12 months", it is possible he meant from February to February.

^ ?

3/3/2009 3:42:03 PM

your overall contention in this thread has been, and apparently continues to be, "this is not a big deal folks. calm the hell down, recessions happen from time-to-time. just relax and it will work itself out. No need to get gov't involved, no need for new regulation. In fact, this is the perfect opportunity to strip out more regulation to allow the markets to operate more efficiently."

am I off base here?

3/3/2009 3:49:12 PM

Not at all. You have me just right, just not alarmist enough. The economy is never so bad that assertive effort from the Government couldn't make it worse. I just didn't understand the connection to Hooksaw (I guess I get it now).

[Edited on March 3, 2009 at 4:56 PM. Reason : .,.]

3/3/2009 4:56:16 PM

and the irony train rolls on

3/3/2009 5:40:45 PM

So the economy has turned to shit. What was the root cause? What should we do to prevent this from happening again?

I think the root cause is a result of everyone (people in general, banks and the Govt.) spending money that they do not have (Credit). This is very potent when combined with spending bubbles (01 Tech bubble, 08 housing bubble). If this is indeed the problem then the obvious solution is to limit credit or provide incentives for saving. Its a little out of my league to even suggest a neat easy fix for that will promote financial responsibility of people, banks and Gov.

3/3/2009 11:13:47 PM

thanks for your invaluable contribution

3/3/2009 11:43:43 PM

^^ "Who are you? Perry Mason?"

3/4/2009 12:41:39 AM

^, ^^ Ok smartasses.

Since our problem is overspending, why do we think overspending^10 is going to fix our problem?

I can somewhat understand the logic of propping some banks to prevent total economic collapse, but frivolous govt spending doesn't make any sense.

3/4/2009 9:58:21 PM

Of course it does. It is the same logic that drove a republican government to spend like drunken sailors during their watch. They are trying to buy the loyalty of their constituency.

3/4/2009 10:46:17 PM

Yes, Republicans have not shown any fiscal responsibility either. That doesn't make what Obama is doing ok. Your post made me think of this quote.

Quote :

""A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the Public Treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the Public Treasury with the result that a democracy always collapses over loose fiscal policy always followed by dictatorship." - Author Unknown"

[Edited on March 4, 2009 at 11:15 PM. Reason : -]

3/4/2009 11:14:46 PM

Ah, but while that quote would probably be true in a democracy, that is not the system we enjoy. The groups that are living off the treasury are not the masses of voters but tiny minorities known as special interests. As such, the special interests which control the system have a strong incentive to maximize their take, which means not killing the golden goose, which means keeping taxes and regulation at reasonable levels.

3/5/2009 12:14:52 AM

hmm, i hope nobody invested in a DOW index fund in 1966 and expected to make any actual money by now

3/7/2009 8:31:13 AM

I was raked through the coals in Stock Market 2008 thread from the buy and holders.

3/7/2009 8:42:15 AM

woe be to anyone that sold their stocks in 1983.

That said, you also need all the usual caveats when it comes to the DOW index and actual investors. Namely, an investor in the index return actually exceeds the DOW figure as the DOW is drug down by its composition bias (stocks are added when they are high, taken off when they are low). Such an analaysis also ignores the return through dividends.

[Edited on March 7, 2009 at 9:52 AM. Reason : .,.]

3/7/2009 9:49:03 AM

Quote :

"hmm, i hope nobody invested in a DOW index fund in 1966 1928 and expected to make any actual money by now"

3/7/2009 2:28:18 PM

Quote :

"Namely, an investor in the index return actually exceeds the DOW figure as the DOW is drug down by its composition bias (stocks are added when they are high, taken off when they are low)."

What jibberish is this?

3/7/2009 4:05:27 PM

In the long run, the stocks that make up the index go up more than the index does.

3/7/2009 10:37:08 PM

I don't doubt you, however, do you have a comparison readily available? I tried to find one myself, then I started to do the experiment myself but grabbing historical stock data isn't a quick process.

It's sort a dead point anyway when talking about the Dow because it is a terribly structured and antiquated index as it is.

3/8/2009 11:45:27 AM

I do not. But the effect should be dwarfed by the annual return of dividends which the index ignores.

3/8/2009 12:15:33 PM

holy.... shit....
i did not know this (the part in bold)

Quote :

"The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006. The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts."

http://www.boston.com/news/nation/washington/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums

un-fucking-believable.
How long before Congressmen and bankers start getting thrown in jail for such gross negligence? Oh right - never, because there will never be a full accounting for what has happened

3/11/2009 6:04:13 PM

Settle down man. Who in their right mind stuffs away a little bit of funds during the good times to be safe during the bad times. Don't you know the good times, like rising home prices, continue forever and ever?

3/11/2009 6:10:53 PM

Quote :

"Hurley agreed with Bair's analysis of the FDIC's dilemma. "Typically you would build up a reserve during the halcyon days to protect yourselves during a recession," he said, calling the decision to stop collecting most premiums "a political one" that was pushed by banks and not based on strict accounting principles. But James Chessen, chief economist of the American Bankers Association, said that it made sense at the time to stop collecting most premiums because "the fund became so large that interest income on the fund was covering the premiums for almost a decade." There were relatively few bank failures and no projection of the current economic collapse, he said. "Obviously hindsight is 20-20," Chessen said. House Financial Services Committee chairman Barney Frank agreed that officials believed at the time that the good times would last and that bank failures would not be a problem. "We had this period where we had no failures," the Massachusetts Democrat said in an interview yesterday. "The banks were saying, 'Don't charge us anything.' ""

[Edited on March 11, 2009 at 6:24 PM. Reason : .]

3/11/2009 6:21:24 PM

^^^, ^ Jesus Hussein Christ.


In other news, the economy remains sound:

Quote :

"WASHINGTON -- One of President Obama's economic advisers said Sunday that the economy is fundamentally sound, a striking reversal from the Democrat's campaign rhetoric as his administration now guides the nation's financial health amid dire conditions. Obama's Democratic allies pleaded for patience for an administration hitting the two-month mark this week, while Republicans said the White House's plans ignore small business and the immediate need to fix what ails the economy. During the fall campaign, Obama mercilessly mocked his Republican opponent, Sen. John McCain, for declaring, "The fundamentals of our economy are strong." Obama's team painted the veteran senator as out of touch and failing to grasp the challenges facing the country. On Sunday, economic adviser Christina Romer was asked during an appearance on NBC's "Meet the Press" if the fundamentals of the economy were sound. "Of course they are sound," she replied. "The fundamentals are sound in the sense that the American workers are sound, we have a good capital stock, we have good technology," she said. "We know that -- that temporarily we're in a mess, right? We've seen huge job loss, we've seen very large falls in GDP. So certainly in the short run we're in a -- in a bad situation." Just a week ago, White House Office of Management and Budget director Peter Orszag declared that "fundamentally, the economy is weak." "

http://tinyurl.com/cqbzw7

Obviously, this is a semantics game, and the party in power needs to paint things in the best light they can, I nevertheless found it of a most humorous nature.

3/15/2009 1:56:21 PM

I'll agree with you that they attacked McCain for saying the fundamentals were sound. Ultimately, it seems to come down to which fundamentals people are talking about, and I guess you can fault the media outlets for not asking that question.

Romer says right in her statement though

Quote :

"So certainly in the short run we're in a -- in a bad situation." "

Fault the McCain campaign for not being more vocal about the fundamentals and articulating why they were sound and applaud the Obama campaign for pinning him on it. Politics as usual.

3/15/2009 2:00:36 PM

I figure this thread could use some humor:

3/25/2009 10:59:35 PM

son of a bitch, what the hell did NC do to take such a beating in the last year....

Quote :

"All seven of those states experienced rapid rises in unemployment during the past year. North Carolina’s increase was the sharpest in the nation, up 5.5 percentage points from its February 2008 jobless rate of 5.2 percent. "

http://www.bizjournals.com/baltimore/stories/2009/03/23/daily49.html

3/27/2009 2:42:39 PM

fuck, n/m

[Edited on April 3, 2009 at 1:39 PM. Reason : .]

4/3/2009 1:39:04 PM

let's try some more charts (they didn't work last time)

4/8/2009 11:25:01 PM