This past year has shown just how different the the two major parties are.

[Franzl]

Since when is the goal of the government the "general welfare"?

Huh ? So, if the general welfare is not the State's goal, what would it serve to ? I already hear the Libertarians "NOTHING !"

I misphrased that....obviously the "goal" of every government, more or less, at least in theory, is the general welfare.

What I meant is that in practice, the government often does things in contrast to what I would consider promoting the general welfare.

[Antonio the Sixth]

Since when is the goal of the government the "general welfare"?

Huh ? So, if the general welfare is not the State's goal, what would it serve to ? I already hear the Libertarians "NOTHING !"

I misphrased that....obviously the "goal" of every government, more or less, at least in theory, is the general welfare.

What I meant is that in practice, the government often does things in contrast to what I would consider promoting the general welfare.

Of course. The government is neither good nor bad per se, it all depends to the people who compose it.

[Vepres]

For the most part, since the New Deal, whichever party is in power supports larger Government.

That statement is entirely meaningless.

Why? If both support increasing government, just one supports increasing its size slower, they are essentially the same. There are no meaningful differences outside of that one, broad ideological subject. Medicare expansion happened under Republicans, WTF?

[Хahar 🤔]

For the most part, since the New Deal, whichever party is in power supports larger Government.

That statement is entirely meaningless.

Why? If both support increasing government, just one supports increasing its size slower, they are essentially the same. There are no meaningful differences outside of that one, broad ideological subject. Medicare expansion happened under Republicans, WTF?

"Size of government" is not a measurement.

[Mint]

First off, sorry for taking awhile to respond. With finals you know I've been busy.

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If Romney is one of the most liberal members of the party, how come 'conservative' (neocon admittedly) media like National Review, FOX News, and much of the talk radio establishment (Limbaugh, Hannity, Ingraham, Savage) support him? And what does it imply if 'hard line' conservatives like Cornyn are already dismissing a repeal of a bill literally just signed as too radical? I just have serious problems believing Republicans were ever sincerely opposed in any way, shape or form on this issue.

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This has been mentioned extensively as I said by media sources like Huffington Post. The current bill itself exempts 98% of banks from annual oversight among many things. You can look it up for yourself: http://www.huffingtonpost.com/2009/10/23/obama-administration-prai_n_332358.html

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This implies I think either party has a real discernible difference in ideology. Again, when it comes down to it I honestly do not think there is a tremendous difference in both parties, as their leadership have embraced a similar 'neo-liberal' (corporatist) on economic policy and aggressive interventionism on foreign policy. The further up you go the less difference there has been in terms of actual substantive policy... Remember Clinton and Bush both pushed for similar policies on issues like 'free' trade, Iraq, the war on drugs, surveillance, privatization of social security, etc.

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If we didn't have bail outs that would have been capitalism in action. As it stands I stand by my original sentiment that the government's actions have by and large, simply made the crisis worse in the long run by allowing dysfunctional monopolies and zombie banks to seize up even more of the economy at tax payer expense. Liquidation or trust busting would have been far better.

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How has Obama been a serious departure in terms of international policy? Other than Global Warming I don't see a huge departure. Again, we're still expanding the War on Terror into Pakistan and Yemen. We're still continuing the same policy on Iraq as we were in 2008 under Gates. We still have secret prisons. We're still building more bases worldwide in areas like Latin America and the Mideast. Whatever my feelings towards internationalism are I would certainly prefer it if Obama was a genuine liberal on foreign policy but to me it mostly looks like we just have better PR.

[Free Trade is managed by the invisible hand.]

First off, sorry for taking awhile to respond. With finals you know I've been busy.

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If Romney is one of the most liberal members of the party, how come 'conservative' (neocon admittedly) media like National Review, FOX News, and much of the talk radio establishment (Limbaugh, Hannity, Ingraham, Savage) support him? And what does it imply if 'hard line' conservatives like Cornyn are already dismissing a repeal of a bill literally just signed as too radical? I just have serious problems believing Republicans were ever sincerely opposed in any way, shape or form on this issue.

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This has been mentioned extensively as I said by media sources like Huffington Post. The current bill itself exempts 98% of banks from annual oversight among many things. You can look it up for yourself: http://www.huffingtonpost.com/2009/10/23/obama-administration-prai_n_332358.html

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This implies I think either party has a real discernible difference in ideology. Again, when it comes down to it I honestly do not think there is a tremendous difference in both parties, as their leadership have embraced a similar 'neo-liberal' (corporatist) on economic policy and aggressive interventionism on foreign policy. The further up you go the less difference there has been in terms of actual substantive policy... Remember Clinton and Bush both pushed for similar policies on issues like 'free' trade, Iraq, the war on drugs, surveillance, privatization of social security, etc.

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If we didn't have bail outs that would have been capitalism in action. As it stands I stand by my original sentiment that the government's actions have by and large, simply made the crisis worse in the long run by allowing dysfunctional monopolies and zombie banks to seize up even more of the economy at tax payer expense. Liquidation or trust busting would have been far better.

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How has Obama been a serious departure in terms of international policy? Other than Global Warming I don't see a huge departure. Again, we're still expanding the War on Terror into Pakistan and Yemen. We're still continuing the same policy on Iraq as we were in 2008 under Gates. We still have secret prisons. We're still building more bases worldwide in areas like Latin America and the Mideast. Whatever my feelings towards internationalism are I would certainly prefer it if Obama was a genuine liberal on foreign policy but to me it mostly looks like we just have better PR.

//If Romney is one of the most liberal members of the party, how come 'conservative' (neocon admittedly) media like National Review, FOX News, and much of the talk radio establishment (Limbaugh, Hannity, Ingraham, Savage) support //
Probably because he has changed a few of his stances, and secondly he doesn't shy away from bashing democrats and supporting conservative talking points. Fox news also supports Glenn Beck, Mike Hackable, and Sarah Palin. In any even Mitt Romney was govenor in a state that is considerd to be generally liberal, and furthermore his health care plan was done on a state level. In my opinion only a fool would consider neo-conservatism to be inherently wrong, and secondly i would be very carefull with how you attach that bias to fox news. The station has a long history of supporting non-neo-conservative views. Fox news is just generally conservative, and clearly anti-liberal.

//I just have serious problems believing Republicans were ever sincerely opposed in any way, shape or form on this issue.//
All of them not only voted against the bill, but they never really came out against all of the absurd conservative conspiracy accusations that sometimes came from their own policy. Thus they not only legislatively opposed health care reform, but they also continued to foster an intellectually dishonest atmosphere. In my opinion the Republican party did everything they could all the way up to the very end. The public can interpret their efforts in various ways, but I am going to assume that most of the public who are informed about this issue probably feel that the conservative party in this country really fought hard. The Republican Party had no problem when it came to lying, and using cheap dirty tactics to try and defeat this bill. In any event your use of sincerly is highly subjective, thus you should ask yourself these questions: if they were so lazy in combatting socialism than why did most of the Republican party fail to dismiss claims about death panels, abortions, and other such non-sense? Why did they rely on the intellectual dishonest arguments of paul ryan to make the case againts health care? why did they continue to lable any attempt by the obama administraion to reform health care as socialized healthcare? Finally if you think republicans have giving up than why do you think they continue to promote an alternative health care plan?

//If we didn't have bail outs that would have been capitalism in action. As it stands I stand by my original sentiment that the government's actions have by and large, simply made the crisis worse in the long run by allowing dysfunctional monopolies and zombie banks to seize up even more of the economy at tax payer expense. Liquidation or trust busting would have been far better.//

Define capitalism please, and secondly you made several unbacked assertions that have almost nothing to do with I said. I would also like to point out that through out the history of capitalism the government has often come into rescue the private sector from almost anything and everything. This would include unions (britian 1830's), deflationary spirals(great depression), stock market crashes(1987), natural disasters(katrina/san francisco earth qauke), sovereign debt crisis, war and even our current financial crisis. Thus why should our government do nothing and break precedent with what normally happens when capitalism begans to stare into the abyss? our government, and other governments have bailed out their economy before, and thus why should we ever take the unprecedented step of letting the market handle it? Finally I would also like to point out that liquidity injection was not only the fastest, but also the simplest way to ensure that the public could remain safe from any potential economic fallout that would have came from the collapse of these lending institutions.


//simply made the crisis worse in the long run by allowing dysfunctional monopolies and zombie banks to seize up even more of the economy at tax payer expense. Liquidation or trust busting would have been far better.//

non-sequitur. This has almost nothing to do with my previous statements. Perhaps trust busting would have been better, but what if the only realistic solution was a bailout? I could probably cite tons of articles that would suggest trust busting would have not worked in that scenario.....Its kind of like common sense once someone factors in policy lag. In any event the effects of either policy is highly debatable,but more importantly it suggests that we should think more about what is practical, and less about what an ideology would do.

In any even concerning international policy you are only cherry picking examples that would make obama look similar to bush while ignoring examples of obama doing things differently than bush. I could play this game all day by pointing to the fact that Obama is more supportive of the UN, has not invaded another country, and so forth. One of the biggest criticisms coming from the left is that George Bush not only ignored international institutions, but he also would send people like Josh Bolton to the UN.

In response to your huffinton post article: You cry that the consumer protection act or whatever is only going to cover 2% of banks but you failed to mention the size of these banks. This is important for me to know because little banks aren't responsible for the complicated fraudulent financial instruments of mass destruction. Secondly little banks die in a relatively orderly manner, being easily dismantled by the FDIC.

In short The big banks make up the vast majority of the American banking system
there are a TON of little banks across the country, but I think the top three banks hold more than 60% of the deposits. Thus this bill directly address the issue of two big two fail, while avoiding pointless regulation of smaller banks.On a final note this article is suggesting that we should regulate every bank no matter what size, but why should we even bother with smaller banks if the main contributors were finanicial institutions deemed to big to fail?

The fact that you are cherry picking a huffington post article shows me that you are either cherry picking to confirm your own bias, or you are willing to except a rouge opinon from somone who may not even be an authority on economics. Its like you are just trying to be radical to see how others would respond to rarely talked opinions. Instead of asking yourself why this bill might fail, your should instead ask yourself why was the bill was crafted in such a manner?

// With finals you know I've been busy.//
did you get that five page paper done?

[Free Trade is managed by the invisible hand.]

http://blogs.ft.com/maverecon
The name of the article is "Those whom the gods would destroy, they first make mad".
This is a pretty good blog for anyone who is curious as to what would have happened if their were no bailouts.

I would also like point out that the new bill dealing with financial reform either excludes the bailout measure, or creates a fund that would ensure that NO TAXPAYER MONEY WOULD BE USED TO FINANCE TO ANY POTENTIAL FUTURE BAILOUT.

[Mint]

Probably because he has changed a few of his stances, and secondly he doesn't shy away from bashing democrats and supporting conservative talking points. Fox news also supports Glenn Beck, Mike Hackable, and Sarah Palin.

Yes but he was their first candidate, as in these people explicitly endorsed him. And at the time he was still promoting Romneycare, an idea he still hasn't completely backed away from. He's hardly the first to propose a kind of government-insurance partnership under the guise of the free market either. You just have to read CATO's healthcare voucher scheme proposals or what people like Paul Ryan are saying about insurance exchanges to understand that in general, both parties have in practice moved away from a free market approach to healthcare.

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Right.. which is what I just said. It was opportunism. Now that it's passed they're openly switching tactics.

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"Capitalism is an economic system where the means of production are privately owned; wage labor is predominant over self employment; supply, demand and price are at least predominantly set by markets forces rather than by government regulation; and profit is distributed to owners who invested in the business."
- Wikipedia, common working definition

None of that describes artificially and arbitrarily propping up entities like Goldman-Sachs, AIG (which was already owned by the government in large party anyway), etc. while others like Bear Stearns are allowed to fail.

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I did not say they should do nothing necessarily John. I simply said we should stop propping up the zombie banks. Please note my statement that I favored liquidation and/or breaking up the banks.. The latter is clearly interventionism. A large part of my problem with the bail out was that I felt it would only give groups like Citibank, Wells Fargo, Bank of America, etc. an incentive to continue their insane acquisitions and shell games at the expense of tax payers and the dollar - moral hazard. A year later those institutions were not only still around with almost no consequences, but far larger:

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/27/AR2009082704193.html

I do not want to imagine what they are like now, especially given the new rules concerning inventory and write offs.

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It is true that global equity effectively collapsed early last year - it was the injection of unprecedented liquidity by the central bankers that brought us the market rally we saw. Likewise as I said, the bond market was effectively dead a year ago - the fed bought up 80% of t-bonds. The problem I see is again, none of the fundamental problems in the economy have been addressed, and I do not think we can continue injecting money into the system indefinitely for a variety of reasons.. Case in point, look at China's own asset bubble and recent decline in T-Bond purchases - we've needed them to buy a continually increasing portion of our debt since the '80s and now they are pulling back very noticeably.

Back when the crisis was more apparent some people like Schumer were talking about firing everyone involved, kicking out shareholders, etc. and effectively nationalizing these institutions then re-selling them. Some like Brad Sherman proposed putting them under FDIC control, even. While I doubt the sincerity and viability of such a plan it would be infinitely preferable to what we did, and more honest. Bottom line, I do not think we have averted catastrophe we've simply compounded on our problems.

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Then cite some.

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What do you think John? It's already public knowledge that the 'first draft' of the bill does not include derivatives at all, a major source of revenue for the banks and undeniably a time bomb. This is exactly what the big banks have been lobbying for, as it exempts up to half their trades from federal regulation. And obviously we know the ties that people like Geithner, Patterson, Rubin, etc. have to Goldman Sachs. Obama might talk about transparency but it should have been clear from the beginning to the public from his choice in cabinet members and donors what would actually happen. That may be a talking point coming from me by now, but it is no less true than it was a year ago.

[Beet]

Why are you guys debating each other on a message board if you're roommates?

[Mint]

Why are you guys debating each other on a message board if you're roommates?

He insists on doing this everywhere pretty much.

[Free Trade is managed by the invisible hand.]

Probably because he has changed a few of his stances, and secondly he doesn't shy away from bashing democrats and supporting conservative talking points. Fox news also supports Glenn Beck, Mike Hackable, and Sarah Palin.

Yes but he was their first candidate, as in these people explicitly endorsed him. And at the time he was still promoting Romneycare, an idea he still hasn't completely backed away from. He's hardly the first to propose a kind of government-insurance partnership under the guise of the free market either. You just have to read CATO's healthcare voucher scheme proposals or what people like Paul Ryan are saying about insurance exchanges to understand that in general, both parties have in practice moved away from a free market approach to healthcare.

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Right.. which is what I just said. It was opportunism. Now that it's passed they're openly switching tactics.

You must be logged in to read this quote.

"Capitalism is an economic system where the means of production are privately owned; wage labor is predominant over self employment; supply, demand and price are at least predominantly set by markets forces rather than by government regulation; and profit is distributed to owners who invested in the business."
- Wikipedia, common working definition

None of that describes artificially and arbitrarily propping up entities like Goldman-Sachs, AIG (which was already owned by the government in large party anyway), etc. while others like Bear Stearns are allowed to fail.

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I did not say they should do nothing necessarily John. I simply said we should stop propping up the zombie banks. Please note my statement that I favored liquidation and/or breaking up the banks.. The latter is clearly interventionism. A large part of my problem with the bail out was that I felt it would only give groups like Citibank, Wells Fargo, Bank of America, etc. an incentive to continue their insane acquisitions and shell games at the expense of tax payers and the dollar - moral hazard. A year later those institutions were not only still around with almost no consequences, but far larger:

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/27/AR2009082704193.html

I do not want to imagine what they are like now, especially given the new rules concerning inventory and write offs.

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It is true that global equity effectively collapsed early last year - it was the injection of unprecedented liquidity by the central bankers that brought us the market rally we saw. Likewise as I said, the bond market was effectively dead a year ago - the fed bought up 80% of t-bonds. The problem I see is again, none of the fundamental problems in the economy have been addressed, and I do not think we can continue injecting money into the system indefinitely for a variety of reasons.. Case in point, look at China's own asset bubble and recent decline in T-Bond purchases - we've needed them to buy a continually increasing portion of our debt since the '80s and now they are pulling back very noticeably.

Back when the crisis was more apparent some people like Schumer were talking about firing everyone involved, kicking out shareholders, etc. and effectively nationalizing these institutions then re-selling them. Some like Brad Sherman proposed putting them under FDIC control, even. While I doubt the sincerity and viability of such a plan it would be infinitely preferable to what we did, and more honest. Bottom line, I do not think we have averted catastrophe we've simply compounded on our problems.

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Then cite some.

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What do you think John? It's already public knowledge that the 'first draft' of the bill does not include derivatives at all, a major source of revenue for the banks and undeniably a time bomb. This is exactly what the big banks have been lobbying for, as it exempts up to half their trades from federal regulation. And obviously we know the ties that people like Geithner, Patterson, Rubin, etc. have to Goldman Sachs. Obama might talk about transparency but it should have been clear from the beginning to the public from his choice in cabinet members and donors what would actually happen. That may be a talking point coming from me by now, but it is no less true than it was a year ago.

//Yes but he was their first candidate, as in these people explicitly endorsed him. And at the time he was still promoting Romneycare, an idea he still hasn't completely backed away from. He's hardly the first to propose a kind of government-insurance partnership under the guise of the free market either. You just have to read CATO's healthcare voucher scheme proposals or what people like Paul Ryan are saying about insurance exchanges to understand that in general, both parties have in practice moved away from a free market approach to healthcare.//
So what if conservatives were the first to suggest the idea its not like it was ever a dominant part of their ideology. Letting the market handle it is a naive and simple approach that no party should ever embrace.

//Right.. which is what I just said. It was opportunism. Now that it's passed they're openly switching tactics.//
That does not sound like a very objective statement, and honestly it doesn't seem to be a very interesting opinion either.

//"Capitalism is an economic system where the means of production are privately owned; wage labor is predominant over self employment; supply, demand and price are at least predominantly set by markets forces rather than by government regulation; and profit is distributed to owners who invested in the business."
- Wikipedia, common working definition//
sound like a good dictionary definition but there is a specific book in our library the proposes a more scholarly definition of capitalism based upon the historical development of such an economic system. In any event the means of production are still privately/undemocratically owned. I would also like to point out that through out the history of capitalism business has a good history of agreeing to particular terms with a government when entering a contract. In the case of the bailout it is just common sense to attach strings to a particular loan in order to ensure that the loan is paid back.

// Please note my statement that I favored liquidation and/or breaking up the banks.//
Liquidation sounds like doing nothing, and secondly it would be a better idea to break up the banks after they get bailed out.

//. Case in point, look at China's own asset bubble and recent decline in T-Bond purchases - we've needed them to buy a continually increasing portion of our debt since the '80s and now they are pulling back very noticeably.//
we sold a record number of T-bills this year, and china continues to buy up our T-bills. Furthermore economists are still debating wether or not an asset bubble is existing in china or not. Some economists think it is there,while others do not.

//What do you think John? It's already public knowledge that the 'first draft' of the bill does not include derivatives at all, a major source of revenue for the banks and undeniably a time bomb. //
I think Derivatives are hard to regulated except for cases that deal with fraud or insider training. The more liquid an asset is the harder it is too regulate.

on a final note although i have read up on some economics and plan to go into the field at some point,but i am no expert thus it would probably be much wiser to raise your issue in the economic forums.

[Free Trade is managed by the invisible hand.]

Why are you guys debating each other on a message board if you're roommates?

He insists on doing this everywhere pretty much.

your the one who responded to the thread. My beef isn't with you but in instead it is with cookie cutter arguments, bumper sticker slogans, and so forth.

[Free Trade is managed by the invisible hand.]

//Bottom line, I do not think we have averted catastrophe we've simply compounded on our problems. //

So when is the next financial crisis going to occur and what will happen? Keep in mind that a Recession could occur and it would not constitute a financial crisis. Let me remind you that you have predicted a dollar crash,hyperinflation, double dip recession, and probably a few other things but it is almost impossible to hold you accountable unless you provide something that can be measure.....for example a date or something. The only thing I can really hold you accountable to is a double dip recession which is something i haven't entirely ruled out, but seems less likely as GDP reports continue to post positive numbers.

I would also like to point out that you continue to talk about a currency crash, but how will it come about? Currency speculation? the Historical threshold of 20% inflation per annium? As I said before one of the cornerstone of economics is realizing that the devaluation of a currency usually effects imports/exports and thus currency crisis usually means something more than a continued gradual devaluation of the dollar.( I would also to point out that our dollar has not only gained against the euro,but some economists have suggested that it has remained relatively stable for the past 3 years).

You continue to suggest that China could auction off our treasury bills at any time,but some economists actually think that it would be a good thing. What do you think of this position?

[Derek]

I'm too anti-democrat to post on here. The past 30 years has shown the difference between the parties though.

[Mint]

//Bottom line, I do not think we have averted catastrophe we've simply compounded on our problems. //

So when is the next financial crisis going to occur and what will happen? Keep in mind that a Recession could occur and it would not constitute a financial crisis. Let me remind you that you have predicted a dollar crash,hyperinflation, double dip recession, and probably a few other things but it is almost impossible to hold you accountable unless you provide something that can be measure.....for example a date or something. The only thing I can really hold you accountable to is a double dip recession which is something i haven't entirely ruled out, but seems less likely as GDP reports continue to post positive numbers

An exact date is hard because the government and banks keep attempting to pump up the economy with more stimulus. However, I would be extremely surprised if the economy did not collapse by 2011. I'm going to repeat this one last time then drop the issue, honestly this is more for everyone that's asked me about this than you:

1. We have not allowed assets to be liquidated or companies to be reorganized/broken up. The banks and firms responsible are now larger and represent yet another obligation for the federal government in the event that they fail.

http://politifact.com/truth-o-meter/statements/2010/apr/27/sherrod-brown/six-largest-banks-getting-bigger-brown-said/

As it stands now we can't even really pay for the hundreds of banks that have failed, you only have to look at the FDIC bail out that recently occurred to see that.

http://online.wsj.com/article/SB123630125365247061.html

In fact the FDIC has warned that the number of failures could easily surpass the 140 banks that were seized in 2009. Commercial Real Estate overexposure has been deemed the most serious threat to banks this year.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSAZEmeZ5Ek4&pos=6

2. Despite enormous amounts of liquidity, commercial bank lending is down by more than 7%. Small businesses don't have access to credit and the programs already in place are inadequate.

3. ARMS and Alt-A mortgages are resetting and according to experts like Whitney Tilson have about a 70% default rate. This represents another, greater housing crash in addition to commercial real estate. This was big news 2 years ago. We should be approaching the beginnings of that right now... And if you read between the lines the government is slowly acknowledging it.

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

4. Long term unemployment is worse now than the early 80s - most figures I've seen put it at 17.1% in april 2010. Even with the economy here riding the stimulus still and the birth death model 'assuming' a certain amount of jobs, job growth hasn't been enough to seriously dent that number let alone the U3 rate in quite some time. In order to break even we need millions of jobs. Until we significantly change our industrial policy and go 'clean' I don't see that substantially changing.

5. At least 39 states are experiencing serious budget shortfalls. California, Texas, Alabama, etc. are all insolvent now. They will require bail outs at this rate.

6. Household debt as of right now is 96% of GDP. As Michael Pento pointed out, the last time we had unemployment figures like this was back in 1983 and that number was 46%. It makes no sense to encourage people to 'spend their way out' of this. People might be spending more now but a lot of that is because they're no longer paying for their houses or are maxing out their credit cards completely. It can't last.

7. The bond market did effectively collapse. 80% of purchases last year were done by the fed in 2009. This is not a conspiracy theory, it is fact - CNBC admitted it.

http://www.cnbc.com/id/15840232?video=1380339595&play=1

 A similar situation happened in California before they admitted that they were effectively insolvent (they bought and issued their own bonds to themselves which were then eventually downgraded). That is exactly what I and many other people suggested would happen to Bonds as a result of US fiscal policy, particularly after Bush's policies. China may have agreed to prop up the Euro but it's obviously moving away from buying more of our debt, and has essentially announced it.

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There's too many blind spots in the inflation figure. You have to remember core inflation doesn't factor in food or gas. Both are going up. Actually the former already has ridiculous inflation, just look at the Bureau of Labor statistics for the Producer Price Index (PPI) in the last year. Fresh and dry vegetables alone were up 56% compared to last year, across the board it was far worse than expectations. Now certainly gas prices can impact these figures but the fact remains that while we might have seen deflation in some areas of the economy food prices have consistently been at their worst in decades and that has only been exacerbated. As for what will cause it, try all of the above. Not only do we not have the political will to cut entitlements or the military yet, but there is already a considerable amount of hedge funds shorting against the dollar. People are going to be fleeing it in droves in the near future, how soon I don't know - we are seeing deflation in significant sectors of the economy plus the explosion of Europe - but I'm fairly confident they will eventually.

http://www.youtube.com/watch?v=_7qvszjzdg0 < better commentary on this than I can provide, honestly.

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They are beginning to. Their problem is if they abruptly try to sell, the value of what they hold plummets. They're attempting to do this as gradually as possible, but already they are our second largest holder of debt:

http://www.reuters.com/article/idUSSGE61G0A620100217?type=usDollarRpt

Also the scenario I've outlined before again and again has been forecasted in large part by even mainstream pro-bail out, pro-stimulus 'neo-Liberal' establishment publications like the Economist. This is not the first time I've posted this but it bears repeating:

http://www.economist.com/opinion/displayStory.cfm?story_id=15213157

If everything I've posted turns out to be completely wrong in 2 years then great, but I really don't see it.

[War on Want]

Why are you guys debating each other on a message board if you're roommates?

He insists on doing this everywhere pretty much.

Is he this annoying in real life?

[Mint]

Why are you guys debating each other on a message board if you're roommates?

He insists on doing this everywhere pretty much.

Is he this annoying in real life?

He once tried making a golf club into a fishing rod. Does that answer your question?

[Free Trade is managed by the invisible hand.]

//Bottom line, I do not think we have averted catastrophe we've simply compounded on our problems. //

So when is the next financial crisis going to occur and what will happen? Keep in mind that a Recession could occur and it would not constitute a financial crisis. Let me remind you that you have predicted a dollar crash,hyperinflation, double dip recession, and probably a few other things but it is almost impossible to hold you accountable unless you provide something that can be measure.....for example a date or something. The only thing I can really hold you accountable to is a double dip recession which is something i haven't entirely ruled out, but seems less likely as GDP reports continue to post positive numbers

An exact date is hard because the government and banks keep attempting to pump up the economy with more stimulus. However, I would be extremely surprised if the economy did not collapse by 2011. I'm going to repeat this one last time then drop the issue, honestly this is more for everyone that's asked me about this than you:

1. We have not allowed assets to be liquidated or companies to be reorganized/broken up. The banks and firms responsible are now larger and represent yet another obligation for the federal government in the event that they fail.

http://politifact.com/truth-o-meter/statements/2010/apr/27/sherrod-brown/six-largest-banks-getting-bigger-brown-said/

As it stands now we can't even really pay for the hundreds of banks that have failed, you only have to look at the FDIC bail out that recently occurred to see that.

http://online.wsj.com/article/SB123630125365247061.html

In fact the FDIC has warned that the number of failures could easily surpass the 140 banks that were seized in 2009. Commercial Real Estate overexposure has been deemed the most serious threat to banks this year.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSAZEmeZ5Ek4&pos=6

2. Despite enormous amounts of liquidity, commercial bank lending is down by more than 7%. Small businesses don't have access to credit and the programs already in place are inadequate.

3. ARMS and Alt-A mortgages are resetting and according to experts like Whitney Tilson have about a 70% default rate. This represents another, greater housing crash in addition to commercial real estate. This was big news 2 years ago. We should be approaching the beginnings of that right now... And if you read between the lines the government is slowly acknowledging it.

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

4. Long term unemployment is worse now than the early 80s - most figures I've seen put it at 17.1% in april 2010. Even with the economy here riding the stimulus still and the birth death model 'assuming' a certain amount of jobs, job growth hasn't been enough to seriously dent that number let alone the U3 rate in quite some time. In order to break even we need millions of jobs. Until we significantly change our industrial policy and go 'clean' I don't see that substantially changing.

5. At least 39 states are experiencing serious budget shortfalls. California, Texas, Alabama, etc. are all insolvent now. They will require bail outs at this rate.

6. Household debt as of right now is 96% of GDP. As Michael Pento pointed out, the last time we had unemployment figures like this was back in 1983 and that number was 46%. It makes no sense to encourage people to 'spend their way out' of this. People might be spending more now but a lot of that is because they're no longer paying for their houses or are maxing out their credit cards completely. It can't last.

7. The bond market did effectively collapse. 80% of purchases last year were done by the fed in 2009. This is not a conspiracy theory, it is fact - CNBC admitted it.

http://www.cnbc.com/id/15840232?video=1380339595&play=1

 A similar situation happened in California before they admitted that they were effectively insolvent (they bought and issued their own bonds to themselves which were then eventually downgraded). That is exactly what I and many other people suggested would happen to Bonds as a result of US fiscal policy, particularly after Bush's policies. China may have agreed to prop up the Euro but it's obviously moving away from buying more of our debt, and has essentially announced it.

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There's too many blind spots in the inflation figure. You have to remember CPI doesn't factor in food or gas. Both are going up. Actually the former already has ridiculous inflation, just look at the Bureau of Labor statistics for the Producer Price Index (PPI) in the last year. Fresh and dry vegetables alone were up 56% compared to last year, across the board it was far worse than expectations. Now certainly gas prices can impact these figures but the fact remains that while we might have seen deflation in some areas of the economy food prices have consistently been at their worst in decades and that has only been exacerbated. As for what will cause it, try all of the above. Not only do we not have the political will to cut entitlements or the military yet, but there is already a considerable amount of hedge funds shorting against the dollar. People are going to be fleeing it in droves in the near future, how soon I don't know - we are seeing deflation in significant sectors of the economy plus the explosion of Europe - but I'm fairly confident they will eventually.

http://www.youtube.com/watch?v=_7qvszjzdg0 < better commentary on this than I can provide, honestly.

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They are beginning to. Their problem is if they abruptly try to sell, the value of what they hold plummets. They're attempting to do this as gradually as possible, but already they are our second largest holder of debt:

http://www.reuters.com/article/idUSSGE61G0A620100217?type=usDollarRpt

Also the scenario I've outlined before again and again has been forecasted in large part by even mainstream pro-bail out, pro-stimulus 'neo-Liberal' establishment publications like the Economist. This is not the first time I've posted this but it bears repeating:

http://www.economist.com/opinion/displayStory.cfm?story_id=15213157

If everything I've posted turns out to be completely wrong in 2 years then great, but I really don't see it.

1. If these firms were liquidated in the fall of 2008, a ton of normal and profitable companies wouldn't have been able to issue commercial paper to cover their payroll. These companies shouldn't have to pay for someone else mistake, and thus these banks shouldn't be allowed to fail. I wouldn't have a problem with breaking them up though.

6. Right now the savings rate is too high, and secondly debt isn't that bad when we have seen consistent gains in personal income.

7. I am not sure if that would constitute a bond market collapse,but ok.

Secondly in regards to inflation the CPI includes Gas&energy, but it is core inflation that excludes these two things. I would also like to point out that Food prices have just started to recover, and that I am not so sure that energy prices have been consistently rising. In any event right now economists are worried about deflation, and disinflation. Expected Inflation on the other hand is good because it allows companies, and individuals to pay off their debt.

[Mint]

1. If these firms were liquidated in the fall of 2008, a ton of normal and profitable companies wouldn't have been able to issue commercial paper to cover their payroll. These companies shouldn't have to pay for someone else mistake, and thus these banks shouldn't be allowed to fail. I wouldn't have a problem with breaking them up though.

There were dozens of alternatives to the bail out. Even liberal democrats like Brad Sherman pointed out that we had mechanisms to put the banks under emergency control on the books since the '30s. Of course other more ethical companies would fail immediately but that's what we're setting them up for now anyway, there's a reason they're called 'toxic assets.' It doesn't matter if the government decides to buy them up and hold them indefinitely.

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Just 25 years ago it was at 9% and we weren't in the worst economic conditions since the 1930s. During most of the Cold War era that's roughly where it stood, 8-10% with perhaps some occasional spikes upward in recessions (e.g. 14% or so in 1975). That's a healthy rate and comparable to a lot of foreign countries.

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Noticed that. Corrected. Food prices haven't 'recovered' though.  They're abnormally high. Even 2 years ago when the downturn became obvious they were at their highest since 1991 and rising. And that was in the US, elsewhere there were (and increasingly, are) food riots taking place over basic crops like corn.

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Obviously standard of living has deteriorated significantly since the 1970s.. In part because of the enormous and persistent inflation that occurred in that decade, which in some ways never really got better if anything worse (e.g. college, housing, etc.). Now if we had a prolonged deflationary period like the late 19th century, particularly the 1870s, I think that would be true but we haven't. The last 100 years have been almost non stop inflation, with the exception of the early '30s and even then we devalued the dollar and most other currencies in response to that.  Historically there really hasn't been a situation like this.

[Free Trade is managed by the invisible hand.]

1. If these firms were liquidated in the fall of 2008, a ton of normal and profitable companies wouldn't have been able to issue commercial paper to cover their payroll. These companies shouldn't have to pay for someone else mistake, and thus these banks shouldn't be allowed to fail. I wouldn't have a problem with breaking them up though.

There were dozens of alternatives to the bail out. Even liberal democrats like Brad Sherman pointed out that we had mechanisms to put the banks under emergency control on the books since the '30s. Of course other more ethical companies would fail immediately but that's what we're setting them up for now anyway, there's a reason they're called 'toxic assets.' It doesn't matter if the government decides to buy them up and hold them indefinitely.

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Just 25 years ago it was at 9% and we weren't in the worst economic conditions since the 1930s. During most of the Cold War era that's roughly where it stood, 8-10% with perhaps some occasional spikes upward in recessions (e.g. 14% or so in 1975). That's a healthy rate and comparable to a lot of foreign countries.

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Noticed that. Corrected. Food prices haven't 'recovered' though.  They're abnormally high. Even 2 years ago when the downturn became obvious they were at their highest since 1991 and rising. And that was in the US, elsewhere there were (and increasingly, are) food riots taking place over basic crops like corn.

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Obviously standard of living has deteriorated significantly since the 1970s.. In part because of the enormous and persistent inflation that occurred in that decade, which in some ways never really got better if anything worse (e.g. college, housing, etc.). Now if we had a prolonged deflationary period like the late 19th century, particularly the 1870s, I think that would be true but we haven't. The last 100 years have been almost non stop inflation, with the exception of the early '30s and even then we devalued the dollar and most other currencies in response to that.  Historically there really hasn't been a situation like this.

//Just 25 years ago it was at 9% and we weren't in the worst economic conditions since the 1930s. During most of the Cold War era that's roughly where it stood, 8-10% with perhaps some occasional spikes upward in recessions (e.g. 14% or so in 1975). That's a healthy rate and comparable to a lot of foreign countries. //
savings normally increases during a recession and this is what drives down demand. There is nothing inherently good or bad about a savings rate,but if it increases from its optimal rate then demand simply goes down. The National savings rate is sometimes considered a conservative estimate,but what is more important is what it is doing now.

//Obviously standard of living has deteriorated significantly since the 1970s.. In part because of the enormous and persistent inflation that occurred in that decade, which in some ways never really got better if anything worse//
Inflation has been considered to be consistently low over the past two decades, and core inflation suggests that it will continue its downward trend. Finally I would like to point out that the inflation shocks of the 1970's were unexpected.

//Food prices haven't 'recovered' though.//
Food prices have recovered though because they have started to increase, and I believe this recovery started a few months ago. Finally I would like to point out that their is nothing wrong with inflation unless it is unexpected. If inflation is stable and consistent it gets built into the system, and is often offset by shifts in consumer preference. For example lets pretend that inflation is growing at a stable 2.5-3% rate, if i am a lender and I want to earn three percent interest I can build my rate around the inflation rate by making my rate 5.5%. When inflation is expected, it just gets built into the system.

// The last 100 years have been almost non stop inflation, with the exception of the early '30s and even then we devalued the dollar and most other currencies in response to that. //
yah the 1970's remind me of all those inflationary episodes that happened during the civil war, and various periods prior to than. I would also like to point out that when inflation did occur prior to the 20th century it was much higher, and the episodes lasted like half a decade. For example inflation during the civil war,inflation after the revolutionary war,  The great inflation that came about from the agriculture revolution, and so forth. Fortunately the 20th century mainly saw inflation gradually increase at an expected rate, and it was only during the 70's did we have any unexpected episodes. thus the previous century actually did a lot better of handling inflation compared to prior centuries. Sure the rate of inflation may have been higher during other periods, but the rate was mainly stable and we didn't have as many shocks.

In short runaway inflation is less likely to occur during this era, when compared to any prior era that came after the 14th century.

//devalued the dollar//
Right now the dollar has been consistenly stable since 2008, and I think it was strong during the 80s. In any event Sometimes policy makers will purposely enter trade deals in order to ensure that the dollar devalues in order increase our countries trade value. I would also like to point out that trade in general has become a larger percentage of GDP over the last century, and this decade.

[Free Trade is managed by the invisible hand.]

1. If these firms were liquidated in the fall of 2008, a ton of normal and profitable companies wouldn't have been able to issue commercial paper to cover their payroll. These companies shouldn't have to pay for someone else mistake, and thus these banks shouldn't be allowed to fail. I wouldn't have a problem with breaking them up though.

There were dozens of alternatives to the bail out. Even liberal democrats like Brad Sherman pointed out that we had mechanisms to put the banks under emergency control on the books since the '30s. Of course other more ethical companies would fail immediately but that's what we're setting them up for now anyway, there's a reason they're called 'toxic assets.' It doesn't matter if the government decides to buy them up and hold them indefinitely.

You must be logged in to read this quote.

Just 25 years ago it was at 9% and we weren't in the worst economic conditions since the 1930s. During most of the Cold War era that's roughly where it stood, 8-10% with perhaps some occasional spikes upward in recessions (e.g. 14% or so in 1975). That's a healthy rate and comparable to a lot of foreign countries.

You must be logged in to read this quote.

Noticed that. Corrected. Food prices haven't 'recovered' though.  They're abnormally high. Even 2 years ago when the downturn became obvious they were at their highest since 1991 and rising. And that was in the US, elsewhere there were (and increasingly, are) food riots taking place over basic crops like corn.

You must be logged in to read this quote.

Obviously standard of living has deteriorated significantly since the 1970s.. In part because of the enormous and persistent inflation that occurred in that decade, which in some ways never really got better if anything worse (e.g. college, housing, etc.). Now if we had a prolonged deflationary period like the late 19th century, particularly the 1870s, I think that would be true but we haven't. The last 100 years have been almost non stop inflation, with the exception of the early '30s and even then we devalued the dollar and most other currencies in response to that.  Historically there really hasn't been a situation like this.

on a side note you seem to make the same continued errors.

1. Conflating core inflation with the CPI
2. Continued to assume that a steady rate of inflation is a bad thing.
3. Continued to assume that a devalued dollar is always a bad thing.
4. In the past you would sometimes conflate the monetary base with the money supply, and sometimes suggest that changes in the monetary base would always lead to increases in the money supply.
5. I would also like to point out that some of the sources that you have used are probably the worst. For example my brother often watches CNBC money because he knows that they are lying. I suggest that you instead rely on calculated risk, CNN money, and the paul krugman blog. I think calculated risk is the best one, and I only check the CNN money in order to check out the stock market.

[Mint]

1. No I was just tired and typed CPI instead of core, considering your typos you have nothing to criticize me on here.
2 & 3. I do believe it is a bad thing. Since 1913 we've seen the dollar decline by more than 90%. Some fluctuations in monetary value are natural but the prolonged trend is obviously because of how the banking system is set up now.
4. I did no such thing, you just didn't understand atemporal money supply.
5. I deliberately picked CNBC because they've been the biggest proponents of the 'recovery' that the media keeps pushing, yet even they've admitted that the bond market essentially was in a depression last year to the point where the central bank had to buy our own T-bonds for us. All of last year there was a constant debate about what would happen to the bond market, with the bears on that issue being called the equivalent of homeless people with picket signs. If outlets like CNBC and Bloomberg are essentially admitting they were right, that should tell you something.

Anyway, I'm done. Don't post spam my wall, let's see how this plays out over the next 2 years.

[Free Trade is managed by the invisible hand.]

1. No I was just tired and typed CPI instead of core, considering your typos you have nothing to criticize me on here.
2 & 3. I do believe it is a bad thing. Since 1913 we've seen the dollar decline by more than 90%. Some fluctuations in monetary value are natural but the prolonged trend is obviously because of how the banking system is set up now.
4. I did no such thing, you just didn't understand atemporal money supply.
5. I deliberately picked CNBC because they've been the biggest proponents of the 'recovery' that the media keeps pushing, yet even they've admitted that the bond market essentially was in a depression last year to the point where the central bank had to buy our own T-bonds for us. All of last year there was a constant debate about what would happen to the bond market, with the bears on that issue being called the equivalent of homeless people with picket signs. If outlets like CNBC and Bloomberg are essentially admitting they were right, that should tell you something.

Anyway, I'm done. Don't post spam my wall, let's see how this plays out over the next 2 years.

//1. No I was just tired and typed CPI instead of core, considering your typos you have nothing to criticize me on here.//
Well I make typos all the time,but I can't believe anyone could ever make a typo when it comes to an economic indicator. In any event the CPI is the one used by the government, but the one that strips out food and energy prices is core inflation which is used by economists. Economists use this measure because food and energy prices are hard to predict.

// Since 1913 we've seen the dollar decline by more than 90%.//
yah so?

//I deliberately picked CNBC because they've been the biggest proponents of the 'recovery'//
They were biggest proponents? Of course they are going to argue for an economic recovery. There show is fun to watch because they suggest to invest in a particular stock(normally the one who the expert is associated with), while on the bottom of the screen everything is in red. Secondly almost every economist says that their is an ongoing recovery, but some economists are just more pessimistic or optimistic about the labor market and such.

//4. I did no such thing, you just didn't understand atemporal money supply.//
you have done it in the past, and secondly i gave you that word.

//2 & 3. I do believe it is a bad thing.//
you should read a basic marcro-economic textbook, or read up on expected inflation vs unexpected inflation.