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2008-09-23 Home Front Economy

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Posted by lotp 2008-09-23 07:33|| || Front Page|| [10330 views ] Top

#1 There are so many assumptions in this estimate that I got lost in them after the 4th or 5th one. If I trusted my assumptions that much, I'd be playing the stock market now rather than reading Rantburg. One thing I'm sure of: housing prices will have to fall to levels matching historical ones, with respect to incomes of creditworthy would-be house buyers -- and there is a very long way to go before that happens, and a lot of pain on the way to that point. No politician can say that without getting lynched -- this is the third rail of this election year. The US will have to get into a line of work different from that of selling real estate to ourselves at ever increasing prices.

Posted by Anguper Hupomosing9418 2008-09-23 09:27|| 2008-09-23 09:27|| Front Page Top

#2 This garbage just proves one thing. Having shit for brains gets one nowhere. I don't know how this mess gets resolved, but it is becoming quite clear that a majority of ordinary citizens oppose this bailout. I hope they all rail at their Senators and Representatives. Yesterday I sent some "very hot" emails to mine. Today, when I have time, I'm calling them and I'm even more upset today than I was yesterday.

Posted by Woozle Elmeter 2700 2008-09-23 11:19|| 2008-09-23 11:19|| Front Page Top

#3 This is such a garbage article, I simply do not know where to begin. His whole premise is that people who borrow too much money to bet the wrong way should be bailed out, or there will be dire consequences.

The reality is that overleveraged corporations that make wrong-way bets ought to be allowed to fail, as they have been in the past. There will always be other pools of capital available to pick up the pieces. I trust owner investors like Warren Buffett and T. Boone Pickens to run these places, post-liquidation, a lot more than I trust the hedge fund manager-wannabes who currently run them. Note that big chunks of bankrupt Lehman will continue to operate, having already been bought up by other companies. And all this without any cost to the taxpayer. Doing Japan-style bailouts will not only not stop stock market declines, it will ensure Japanese-style multi-decade economic stagnation.

Posted by Zhang Fei 2008-09-23 11:43|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2008-09-23 11:43|| Front Page Top

#4 Once again, let me bring in the concept of "real" versus "imaginary" multi-leveraged money. The "core economy" of the US is based in real money industries, and must be protected at all costs. The imaginary money economy is one of speculation and unregulated excess.

Unfortunately, like drug lords, the imaginary economy speculators try very hard to launder their speculation through core industries.

And even though it is not a core industry, the best example of this was when AOL merged with Time-Warner. An "imaginary" company merging with a "real" company.

Knowing better, as soon as the merger was done, the AOL executives dumped every share they had in the combined enterprise, massively looting Time-Warner.

The way to defend against this, as I have recently suggested, is very high-denomination "protected" currency controlled by the US government. Core companies would be issued bills that would be fully backed, from $100k to $10M, but could only be redeemed or transferred with permission from *that company to another authorized company*, not individuals.

Right now, many companies are hoarding cash, and only loaning it at high premium rates. But a company with protected bills could get guaranteed loans up to say 95% of their paper, again with government permission. This would give them the loans they needed to continue to function.

It would in turn provide "safe credit" that could be used for business operations but NOT for leverage or speculation.

Importantly, only a required base amount of protected money would have to be kept by a core industry, so it could still have open play with imaginary money, which while it can be abused is still a very important part of a stable economy.

In turn, this would not immediately kill unprotected industries, yet permit the rather brutal correction they most likely still have to face. The bottom line being to create insulation between them and the core industries.

Posted by Anonymoose 2008-09-23 12:04|| 2008-09-23 12:04|| Front Page Top

#5 What a mess! If anything, I think all it does is delay the Great Depression 2.0.

Posted by Glinetle McGurque6029 2008-09-23 12:07|| 2008-09-23 12:07|| Front Page Top

#6 We still have war debt, deficits, social security, outsourced workers and manufacturing, oil prices, borrowing from China etc.

How can we fix anything when all the jobs are being sent overseas and everything we buy is made in China??

Posted by Glinetle McGurque6029 2008-09-23 12:10|| 2008-09-23 12:10|| Front Page Top

#7 You'll be seeing lots of justifications in the coming weeks and months. Just remember that the people making the statements have a vested interest.

Posted by mojo">mojo 2008-09-23 12:54|| 2008-09-23 12:54|| Front Page Top

#8 The guy makes a fundamental mistake: he's computing the lost opportunity costs using numbers based on the pseueo-growth created by the problem he is purportedly solving.

I think his numbers for shrinkage of the economy are correct, so the bail-out is a plus, just not as big a bargain as he thinks.

I think Anonymoose is right and that we should let private enterprise bail us out of this one.

Posted by Ptah">Ptah 2008-09-23 15:05|| http://www.crusaderwarcollege.org]">[http://www.crusaderwarcollege.org] 2008-09-23 15:05|| Front Page Top

#9 Gee, and I thought the "smartest guys in the room" were at Enron.
You mean they are now in Washington and Wall St.? When were they paroled?

Posted by Jack is Back!">Jack is Back! 2008-09-23 15:07|| 2008-09-23 15:07|| Front Page Top

#10 "There is a very long way to go before that happens, and a lot of pain on the way to that point. No politician can say that without getting lynched -- this is the third rail of this election year."

Right on AH. And this is just the most recent example of the cowardice of our political class in dealing the truth to the electorate.

The most egregious example is that we've only begun the correction of the public's expectation of lifestyle for a given amount of work as a result of globalizing the workforce - a correction that has been overdue since the 1970's. No politician would address that issue for fear of being run out of office, although most knew dealing with it was inevitable and tried to mitigate it (the wrong way) by turning a blind eye to illegal immigration, instead of being honest with the American public and working through the changes.

In a similar way, it has been evident for a shorter but not insignificant time that the public's expectation of housing was way out of line with what could be realistically sustained. Ditto for the "value" of people's house. And the politicians have been just as cowardly on this issue as they were dealing with the implications of global labor markets, until the bomb was exploding in everyone's face.

Perhaps there is no politician with the stones to tell the American people the truth about issues such as these. Yes, if there were, he'd probably get booted from office, but he'd plant the seed into the public's consciousness, and when they eventually got it, everyone would look back and he'd be heralded as a hero (that legacy thing politicians are supposed to care about so much?). Maybe there aren't any politicians for whom that will offset the money and graft they can get merely by staying in office.

Posted by no mo uro 2008-09-23 15:41|| 2008-09-23 15:41|| Front Page Top

#11 > Bailout prevents Great Depression 2.0

what a load of shite.

Posted by Bright Pebbles 2008-09-23 16:40|| 2008-09-23 16:40|| Front Page Top

#12 Bailout prevents Great Depression 2.0

Lets just give it 90 days and see.

Posted by Besoeker 2008-09-23 16:43|| 2008-09-23 16:43|| Front Page Top

#13 Maybe Ron Paul was right and we should return to a medieval barter economy. Keep some sheep in the yard in case you need to go buy a case of beer. Could work.

Posted by rjschwarz 2008-09-23 16:44|| 2008-09-23 16:44|| Front Page Top

#14 No bailout necessary. The houses with bad mortgages are still standing, therefore, they wait and sell them for less, which will make the dollar stronger. For the democrats part, they need to get this out of the news before all Americans find who is to blame. Democrats all.

Once again, Bush is on the wrong side. Idiot !

Posted by lollypop 2008-09-23 17:01|| 2008-09-23 17:01|| Front Page Top

#15 Just send Bright Pebbles 699 billion dollars and he will fix it all for a billion less!

The sum of the parts of these companies is worth more than the whole. These companies are bankrupt.

Posted by Bright Pebbles 2008-09-23 18:42|| 2008-09-23 18:42|| Front Page Top

#16 Bright Pebbles is a very good accountant. He even figured out where money was moving in the UK's bloated government system for one of their "Taxpayer Unions".

Keep that in context with his statements.
I have been chatting with him about this very storm brewing for years.

Posted by 3dc 2008-09-23 18:57|| 2008-09-23 18:57|| Front Page Top

#17 FoxNews says McCain is leaning to vote NO and if he does - rest of party will follow him and not Bush.

Posted by 3dc 2008-09-23 19:12|| 2008-09-23 19:12|| Front Page Top

#18 3DC, I'm MBKs mate.

Posted by Bright Pebbles 2008-09-23 19:56|| 2008-09-23 19:56|| Front Page Top

#19 As a citizen I would be much more comfortable with any bailout IF ....
If a requirement is that TAX HAVENS like the Caymen's and Isle of Man open up their books to the US people, government and the FBI...
Like WHO had stashed WHAT MONEY there.

Posted by 3dc 2008-09-23 20:10|| 2008-09-23 20:10|| Front Page Top

#20 Keep some sheep in the yard in case you need to go buy a case of beer. I keep a Ford pickup in driveway for that!

Posted by Gerthudion Glaith5839 2008-09-23 22:57|| 2008-09-23 22:57|| Front Page Top

23:48 CrazyFool
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