Missed it by that much…
http://www.dailykos.com/...4340/6189/142/695504
“Ya know, we’re not any geniuses in economics or finances… We’re representatives of people. We ought to take our time, but let the people know this is a very difficult struggle.
Somebody threw us into the middle of the Atlantic Ocean without a life raft and we’re trying to determine what’s the closest shore and whether there’s any chance in the world to swim that far. We. Don’t. Know.”
I sure get the feeling that we are in the eye of the storm at the moment. Its quiet, things aren’t good but they aren’t as bad as they looked over the fall (months). We may still come out of the period of relative economic calmness to a far worse shit-storm.
Through all of this I’m not confident that the US government is capable of doing much directly to change the course we are on, but if not Uncle Same then who?
but if not Uncle Same then who?
No one, Unlce Sam has ben manipulating, prodding and screwing with the market and it has been this in part that has gotten us here. They’ve been building a house of cards and once it starts to tumble you can’t stop it. It’s will fall to a point that it naturally can sustain.
The only thing Uncle Sam can do at this point is make it worse IMHO, and they are doing exactly that.
~Matt
Can someone explain to me exactly what “Economic collapse” means?
Seriously this “Doom and gloom” world coming to an end seem rather dramatic. Sure things are going to change, maybe dramatically, but don’t they NEED to? If not now then when?
I think this is a pretty big sign that’s screaming “The lifestyle you’re living is not sustainable” yet we are struggling to hold on to it.
I don’t think people are going to just lay down and die. People will still need things and people will still provide those things, we’ll just do it in a different way. Hell who knows maybe it will end up BETTER in the long run.
~Matt
I sure get the feeling that we are in the eye of the storm at the moment. Its quiet, things aren’t good but they aren’t as bad as they looked over the fall (months). We may still come out of the period of relative economic calmness to a far worse shit-storm.
Through all of this I’m not confident that the US government is capable of doing much directly to change the course we are on, but if not Uncle Same then who?
As a student of history I find all of this fascinating and scary. Like you wrote, the worst could still be coming, we don’t really know. 2 years from now we might get tired of waiting for significant improvements, we do have a tendency to be impatient, and then Congress will do something in a panic (again) that really screws the pooch. Then we will write about how and why things went so wrong. We will have time lines and quotes, we will point fingers at the various political parties and media as we watch our political/economic systems crash and burn.
Can someone explain to me exactly what “Economic collapse” means?
Seriously this “Doom and gloom” world coming to an end seem rather dramatic. Sure things are going to change, maybe dramatically, but don’t they NEED to? If not now then when?
I think this is a pretty big sign that’s screaming “The lifestyle you’re living is not sustainable” yet we are struggling to hold on to it.
I don’t think people are going to just lay down and die. People will still need things and people will still provide those things, we’ll just do it in a different way. Hell who knows maybe it will end up BETTER in the long run.
~Matt
Matt, economic collapse to me means your cash is no longer of value. We go to a barter system for transactions. Farmers can’t plant, food supplies dwindle, people starve or freeze to death, rioting and crime is rampant, hospitals close and govt. programs no longer work. See Escape from New York for further details. In the new order I am changing my name to Snake.
This is a great question. Nobody knows I would think. I am a bit of a conspiracy theorist and think gov’t (all gov’t, both parties) are a bit incented to scare the hell out of people and also to have the markets NOT recover and possibly even continue to fail because it forces people to look to them to “control” the situation and therefore adds to their power.
I think gov’t really wants to manage individual wealth to an extent because it keeps the balance of power in their favor…they do NOT want massive wealth creation.
based on what’s getting passed down the line in the bureaucracy, i highly doubt that political masters are interested in seeing this continue.
they’re far more worried about getting taken down with it.
No one, Unlce Sam has … been …in part that has gotten us here
Like many people I’ve been trying to read more on economics recently, which as it turns out is usually a history book on people trying to predict the future out of an incomplete understanding of the past.
From what little I understand I’ve been left with the impression that the governments lack of positive intervention generally extended the depression of the thirties, so I don’t think simply letting markets collapse is the right approach.
As far as what got us here, of all the bits and pieces that added up to this “perfect storm” (nice way of saying its nobody’s fault) the one thing that stands out is the appeareant fraud on the part of banks and other financial institutions on these collateralized debt obligations (I may have the term incorrect).
Basically these institutions sold insurance on the bundled mortgage vehicles, but had no funds to back this up - i.e. fraudulently sold protection they had no ability to supply. The reason this strikes me as fraud is its very similar to the ID theft insurance my previous bank was selling. My wife and I found out the hard way that the bank had no mechanisms in place to actually do anything about ID theft when the bank gave a car loan to a woman in a different state who used my wife’s social but a different name. The bank literally had no idea what to do or who’s job it might be to do something.
Basically both the collateralized debt obligations and the ID theft insurance consisted of a marketing program, an ability to collect money, and no ability to deliver on the product sold.
Which reminds me, the thing that seems to be missing in most books/theories/models of economics is the prediction of scams which always seem to bring the house of cards down.
Matt, economic collapse to me means your cash is no longer of value.
(Quick glance at my retirement account) Ooops too late 
Seriously I understand this but think that is a scenario that is next to impossible. Pretty much everyone over the age of 6 in this country understand the concept of “Money”. Sure we may no longer have the “US dollar” but we all understand we have to have some “Standard” in order to function. Best Buy isn’t going to take my Wetsuit in exchange for a DVD player.
Call me skeptical but even in the worst case scenario people aren’t going to abandon basic operating principles.
Farmers can’t plant, food supplies dwindle, people starve or freeze to death, rioting and crime is rampant, hospitals close and govt.
And I don’t buy this either. Maybe more people might starve but that’s because the non productive ones will no longer be supported by everyone else. Everyone that has a job will still be needed and thus doctors, farmers, etc would go to work everyday…what else would they do? I suspect many would be changing jobs but other than that I don’t buy it.
** In the new order I am changing my name to Snake. **
Ok Snake what do you do for a living?
~Matt
Sure, and ultimately you are probably right, but I like the conspiracy theories.
But based on what they are passing, they are buying more power and control. People are now looking to the gov’t before making many investment decisions…THAT is scary. These power hungry politicians scare me a lot.
From what little I understand I’ve been left with the impression that the governments lack of positive intervention generally extended the depression of the thirties, so I don’t think simply letting markets collapse is the right approach.
There are many schools of thought on this and some believe the opposite. A more recent example is Japan who had very similar issue in the 80’s and tried to “Spend” their way out of it as we are trying to do now. In 1984 Japans NIKKEI index was around 10K It’s currently around 8K almost 25 years later. Around 1990 it reached almost 40K.
As far as what got us here, of all the bits and pieces that added up to this “perfect storm” (nice way of saying its nobody’s fault) the one thing that stands out is the appeareant fraud on the part of banks and other financial institutions on these collateralized debt obligations (I may have the term incorrect).
I’m far from blaming the government plenty of screw ups all around. However the government did have a hand and they are engaging in similar policy to try and “Fix it” which simply isn’t going to work.
~Matt
first off, there’s a lot more to it than that. your thesis is fundamentally too narrow and thus incorrect.
second of all, on the topic(s) that you did write on, right but wrong.
it was not fraud.
that’s the way markets innovate.
the culprit in this particular instance, i’d say, was not that the financial markets sold these kinds of instruments but that they were almost entirely unregulated. there was a complete lack of truly international regulation.
if i wouldn’t lose my job doing it, i’d post up an imf paper released yesterday that is up for board discussion on february 25th entitled Initial Lessons of the Crisis that focuses on three dimensions - regulatory, macroeconomic, and global architecture for stability.
this paper in particular addresses some of what you talk about in terms of financial markets and the lack of regulatory oversight.
if you have access to imf’s extranet (that is to say, you work for a central bank or governmental finance ministry of some sort), you should be able to get access to it.
in the absence of that, i suggest that you read
THE EVOLUTION OF THE FINANCIAL CRISIS OF 2007–8
by Ray Barrell* and E. Philip Davis**
this is a publically available paper that you should be able to find by googling the title and/or authors.
it’s also potentially more useful as it is much broader and deals with certain things that the imf paper does not, e.g. it has a lot more contextual background information that the imf paper does not need to include.
Sure, and ultimately you are probably right, but I like the conspiracy theories.
But based on what they are passing, they are buying more power and control. People are now looking to the gov’t before making many investment decisions…THAT is scary. These power hungry politicians scare me a lot.
it’s interesting, though, that they’re trying NOT to make investment decisions.
that’s why they want a public/private fund of $1 trillion to buy up toxic assets. they want private firms - which are more able to accurately price these instruments - to step up so that the government & the taxpayer don’t get ripped off.
what’s more, if you compare what the US government is doing today against what it did with the savings and loan crisis and the “bad bank” it created to help resolve the crisis (Resolution Trust) in the late 1980s/early 1990s, you’ll note that the government is taking a more “hands off” role in relative terms.
The “end of our economic system and our political system as we know it”? I don’t think so. Some of our politicians love to portray our economy as a damsel in dire distress if it gives them the opportunity to play the role of knights in shining armor.
Yes, as Matt pointed out, the government has really fucked up our economy. But that doesn’t mean that letting the government fuck it up some more will solve anything.
If Rep. Kanjorski is really that worried about coming out of the ocean alive, perhaps he should take Total Immersion.
Well said. Lots and lots of blame to go around.
My latest thought was the messages we got from the terrorists just after 9/11 that they were intent on crippling capitalism and all things “american way”. You think indirectly they are the biggest people to blame for this? The defense of what they were doing is a huge factor in bankrupting this country isn’t it?
Has Bin Laden won?
I’m far from blaming the government plenty of screw ups all around. However the government did have a hand and they are engaging in similar policy to try and “Fix it” which simply isn’t going to work.
~Matt
so what you’re saying is that norway, sweden, south korea, etc. etc. failed to resolve their banking crises?
please, read this, then take off your ideological hat because so far you haven’t really proposed any factual arguments for why an attempt to socialize (note that this is not a political term related to socialism) bank losses.
though, i haven’t had time to really look at the details of the US plan because most of my work revolves around emerging market economies, so i can’t really say it’s going to work
please, read this, then take off your ideological hat because so far you haven’t really proposed any factual arguments for why an attempt to socialize (note that this is not a political term related to socialism) bank losses.
Are there some words missing from this as I can’t seem to pull your point from it?
~Matt
please, read this, then take off your ideological hat because so far you haven’t really proposed any factual arguments for why an attempt to socialize (note that this is not a political term related to socialism) bank losses.
Are there some words missing from this as I can’t seem to pull your point from it?
~Matt
if you can’t, then perhaps you’re a right wing anarchist rather than somewhere on the political spectrum between centrism and libertariansm.
anywho, speaking of GOOD governmental regulation, let’s talk about how the spanish and canadian banking systems have so far withstood the international financial crisis quite well by being required to build up large capital adequacy ratios during good times 
which banks have been able to go to markets and raise equity while the rest of the world’s hasn’t?
hmmm…
anyway, lunch time is over, ciao!
“…economic collapse to me means your cash is no longer of value. We go to a barter system for transactions.”
What you’re describing would be the end-result of a hyperinflation. That’s not where we were headed in the September crisis to which Kanjorski was referring. (Rather the opposite, since there was a high demand for cash rather than a push to dump it.) OTOH, measures such as the stimulus bill now under discussion would definitely move us in that direction.