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Move Over Doctor Doom; Mohamed El-Erian Ascends To The "King Of Skeptics" Throne

Tyler Durden's picture




 

Earlier we presented a Bloomberg op-ed by an increasingly pessimistic Mohamed El-Erian. For those too lazy to read it, we recommend the following 4 minute interview by Bloomberg's Tom Keene of the Pimco skeptic. In a response to what policy recommendation El-Erian would suggest, the humble ex-Havard endowment head (who sure got out when the getting was good) who prefaces his response by saying he is not smart enough to propose policy (so who is - Tim Geithner?), says America should expect a bumpy journey as the economy resets "There is no silver bullet." Those mid-term elections are looking uglier by the minute.

 

 

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Wed, 02/03/2010 - 17:28 | 216401 Mongo
Mongo's picture

silver is nice, wouldn't wast'em as bullits.

Wed, 02/03/2010 - 17:28 | 216402 Anonymous
Anonymous's picture

While at Harvard, El-Erian was giving advice to then Harvard pres Larry Summers, which Summers explicity rejected. Summers not taking that advice cost Harvard billions and billions.

Wed, 02/03/2010 - 23:11 | 216711 Anonymous
Anonymous's picture

Mohamed overlapped only a short period of time with Larry.
There was very little advice that Mohamed gave Larry. Mohamed totally screwed up the endpwment including doing many things that cost Harvard a great deal of money (think Jeff Larson). He was an absolute disaster and got out before they threw him out.

Thu, 02/04/2010 - 09:59 | 216942 Anonymous
Anonymous's picture

So, Larry did the best he could given the mess he was handed? His decisions weren't awful... considering? MEE = Bush & Summers = Obama?
We are so screwed.

Wed, 02/03/2010 - 17:30 | 216404 bugs_
bugs_'s picture

Another weatherman warning of the coming storm.

PS: Love the swan pic too bad its not black.

Wed, 02/03/2010 - 17:41 | 216415 NRGTDR
NRGTDR's picture

Agreed. Could it be some attempt at overt symbolism to forewarn the observant?

Wed, 02/03/2010 - 19:00 | 216522 cougar_w
cougar_w's picture

Safe to assume. Semiotics are everywhere these days. The entire end of the world will be sub rosa.

Thu, 02/04/2010 - 01:42 | 216812 Oracle of Kypseli
Oracle of Kypseli's picture

Euphemism perhaps?

Wed, 02/03/2010 - 17:43 | 216418 faustian bargain
faustian bargain's picture

That picture is awesome. He should have a can of black paint in his hand.

Wed, 02/03/2010 - 17:45 | 216423 bugs_
bugs_'s picture

That would rule!

Wed, 02/03/2010 - 17:42 | 216414 SWRichmond
SWRichmond's picture

If the crisis is structural vs cyclical....interesting way to frame the problem.  So many who are alive today and actively participating in these markets have spent their entire adult lives in the Greenspan credit bubble (20+ years), juiced by falling interest rates; they learned behaviour, acquired habits and are burdened with expectations that are no longer appropriate. 

What we have to do is completely change the way we think about money.  Namely, there is no goddamned money.  The regime of falling interest rates is at an end, and that is the reason why this crisis is structural rather than cyclic.  Any cyclic slowdown we had was immediately bubbled away by Greenspan.  Now that interest rates are at zero, we are using QE to render effective rates less than zero.  The things we thought we could afford we never really could afford, but thought we could because of easy money. 

This is the essence of central banking and the welfare/warfare state.  Bubblenomics makes us feel like we can afford war and medicare/medicaid/social security/SSI/extended and emergency unemployment benefits/socialized medicine/corporate welfare/bailouts/what have you.  Now that the regime of steadily falling interest rates is ended, we see that we could never afford any of that crap at all, and we stagger about trying to figure out how to balance a budget that is based on a false assumption.  The fact is, we never had the money in the first place.  There is no goddamned money.  We're broke.  There is no more demand we can pull forward, there is no one to whom we can export our way to happiness, or salvation, or fiscal balance; there is no one who has enough money to lend us to tide us over until the magical productivity fairy shows up.

It's not real.  It never was. 

Wed, 02/03/2010 - 17:42 | 216416 economessed
economessed's picture

Your comments represent one of the finest I have ever read on ZH -- <applause>

Wed, 02/03/2010 - 17:46 | 216427 Joe Davola
Joe Davola's picture

Well there is that (if the answer to my question yesterday is correct) $15 Trillion in 401(k)'s that can be appropriated.  That covers us until the next administration - hopefully.

Wed, 02/03/2010 - 17:48 | 216431 faustian bargain
faustian bargain's picture

I approve of this message.

Wed, 02/03/2010 - 17:50 | 216434 Anonymous
Anonymous's picture

"Hence, let's print paper and keep this facade going as long as possible."

Ben Bernanke

Wed, 02/03/2010 - 17:53 | 216439 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+11

Wed, 02/03/2010 - 18:04 | 216451 B9K9
B9K9's picture

The greatest conspiracy of all is why basic concepts regarding money, credit & economics are not taught in school - at any level. In reality, it should be the sole subject studied during every person's senior year in high school.

The crux of the issue is that our money/credit system requires an expansion in money/credit to cover the costs (principal+interest) of the previous cycle of money/credit expansion.

As it turns out, government is not only a party to this system, it is THE party behind the charade. Without a foil like the Fed, the central government itself would have to take the blame for debasing the People's wealth - a clear violation of the 5th amendment (takings clause).

But if the central government couldn't inflate the money supply (ie have first claims on counterfeit tickets aka FRNs), then its operations would have to be funded purely via taxes & debt. As this would severely crimp the life-styles of all those who feed off the government teat, it soon becomes obvious why the system we have in place today IS in place today.

So, the goal is to force government to live within its means. This, of course, would kill both the warfare & welfare state, which is why there are so many entrenched interests fighting for its survival. Clearly, this opportunity would never exist during a period of economic expansion (ie money/credit inflation), so the government is THE active agent in keeping the hampsters (or debt slaves) running on the spinning wheel.

But, a funny thing happened on the way to the forum, in that in this case with the 2002-2007 housing bubble, it looks like they may have finally over-reached and seriously screwed the pooch.

If so, then this is our golden opportunity. Opportunities like this don't come along any old day; they are multi-generational events. It is important for people to not only recognize the uniqueness of our particular situation, but that this is our window to really make some significant changes as to how things are done.

Wed, 02/03/2010 - 18:59 | 216520 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

agreed.  economics is fatally flawed, but people think it is legit because they believe what they are told, and because they can do calculus, and if they are smart enough to do calculus, they are smart enough to be an economist.  Too bad smart is as common as beauty, and neither mean squat when it comes to REASON and LOGIC.  Also, when the whole system is based on a lie, it does not matter if you can do math tricks.

Wed, 02/03/2010 - 19:07 | 216534 cougar_w
cougar_w's picture

The core of the problem is thinking that economics is a SCIENCE when actually it is a RELIGION.

Wed, 02/03/2010 - 19:25 | 216552 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Buy Buy Buy!!!!

Wed, 02/03/2010 - 21:53 | 216657 KevinB
KevinB's picture

Not at all true; the problems are: the science is still in relative infancy compared to, say, math, physics, and chemistry; that it is a mix of mathematics and social science; and although it has identified some of the principal (pun intended) problems, it hasn't solved them.

If we take Adam Smith as the father of modern economics, than the science is only slightly older than the US itself. After the first 5,000 years of astronomy, we still believed the sun went around the earth. Give it some time.

The second issue is because it studies the actions of people, the variables in any experiment are difficult to control, and thus it's difficult to draw hard and fast conclusions. The development of theories such as "rational expectations" and "game theory" have helped economists understand how human nature can thwart an economic program, and how people, acting rationally, can choose sub-optimal decisions.An example of the latter is the war on drugs. People realize drugs can cause young people to waste their lives, so they ban drugs. But people still want them, and the black market makes the profits huge. Someone fills the void, and we get billions spent on enforcement, deterioration of civil rights, multiple robberies and murders by junkies and drug gangs warring for turf, a huge prison population (the US incarcerates more people per capita than anyone else), and generations of young men raised without fathers who are ripe for enlistment in gangs. The logical solution to the drug problem, banning them, results in serious sub-optimal results.

But by far the biggest issue that economics has identified, but has yet to solve, is the "principal-agent" problem, and we see this cropping up throughout society. Take Congress - we elect representatives to defend our rights and make the best decisions for us, but they end up getting bought off by vested interests, and by using pork to get re-elected, they make decisions that are often sub-optimal. Take much of the finance industry - we work with brokers and IB's thinking they have our financial health in mind, when they're actually snickering and sending each other e-mails about the crap they're unloading. Take health care - Atul Gawande wrote an excellent in piece in last year's New Yorker (available on line - search for the "Cost Conundrum") that details how the financial incentives in "fee for service" push doctors to overprescribe tests and procedures, rather than concentrate on the much less expensive (but less lucrative) preventative medicine. Take the legal system - torts cannot and should not be eliminated, but the huge contingency fees available to lawyers has resulted in patent trolls, malpractice, and ex post facto judgements on medicines and product designs.  Take education - we expect our teachers to educate our young, but they inevitably become more concerned with wages, hours, and pensions than with learning the latest methods or submitting to merit testing. The principal-agent problem is the biggest weakness in human society, and if anyone ever comes up with a solution, he or she may be the greatest thinker ever.

Thu, 02/04/2010 - 00:18 | 216766 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The first rule of philosophy is you do not pretend to know the TRUTH.  The second rule of philosophy is YOU DO NOT PRETEND TO KNOW THE TRUTH.  Philosophy is my favorite study, and this is the main reason.  However awesome we humans are, we can never know the ABSOLUTE TRUTH.  Economics can do a lot right.  I believe economics can do JUSTICE.  However, the way that economics is taught now is ONE BIG LIE.  Professors are running the same BS that B.S. Bernanke is running.  "Run the presses to increase exports." 

This game is over now.  They made too many doelarrs.  The old economic paradigm failed.  There will be a new one soon.  The quicker we put it in place, the less we have to wallow in the mire.

I do apprieciate the insight, Kevin.

Thu, 02/04/2010 - 10:03 | 216947 Anonymous
Anonymous's picture

The problem is too much Keynes and not enough von Mises.

Wed, 02/03/2010 - 19:40 | 216563 Anonymous
Anonymous's picture

It's difficult enough to get any sort of sex education into public schools. Money education? What a great taboo subject that is in large parts of the country.

Wed, 02/03/2010 - 21:51 | 216653 Seer
Seer's picture

I'll respond to this as I did to Bloomberg's Carolyn Baum's article http://www.bloomberg.com/apps/news?pid=20601039&sid=a4ri_.MXxMHs  (e-mailed her, don't expect to hear back):

I agree with your general assessment.  However... I feel that you (and just about every other status quo commentator) fail to spot the elephant in the living room, the REALLY BIG pyramid scheme as it were- growth!

Perpetual growth on a finite planet is impossible, no matter if it's perpetuated by capitalism or Marxism or what-ism.  Picking out the small bits and calling them pyramid schemes when the very system that they are operating within is itself one big massive pyramid scheme is a bit disingenuous.

Sigh, the lies that we tell ourselves...

Everything has been based on fractional banking (even BEFORE the FED).  This system worked because we had plenty of natural resources with which to exploit for growth purposes.  As is typical, no one ever wanted to spoil the party and ask THE key question: what happens when the party cannot continue?

Anyone contemplating subjecting others to chance should, IMO, be required to watch Dr. Albert Bartlett's presentation Arithmetic, Population and Energy (http://www.guba.com/watch/3000053112/Arithmetic-Population-Energy).

Wed, 02/03/2010 - 18:16 | 216464 Anonymous
Anonymous's picture

Clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap clap

Spot on!

Wed, 02/03/2010 - 18:51 | 216513 johnny9iron
johnny9iron's picture

I agree and there is a big downside to all this. Look at the whole board like SW is doing.

Wed, 02/03/2010 - 19:05 | 216527 cougar_w
cougar_w's picture

TRUTH

Wed, 02/03/2010 - 19:18 | 216548 Anonymous
Anonymous's picture

Who doesn't love a snuff film where the director and audience are the unwitting prey?

When the teats dry up, there are gonna be angry bear cubs about.

Wed, 02/03/2010 - 21:17 | 216632 Anonymous
Anonymous's picture

Nicely done... Very nicely.

Nikki.

Wed, 02/03/2010 - 21:53 | 216656 tip e. canoe
tip e. canoe's picture

time to rethink the nature of money itself?

food for thought:

tom greco

http://www.vimeo.com/8044871

http://reinventingmoney.com/

slow money

http://www.youtube.com/watch?v=JzzkayFuLVA&feature=channel

Wed, 02/03/2010 - 22:19 | 216672 T-888
T-888's picture

I aplaud you, sir. Well said. Very well said.

Wed, 02/03/2010 - 22:57 | 216699 phaesed
phaesed's picture

SWR... I've admired you quite a bit recently. But I have something to point out...

1. 0 interest rates were the goal from the start back in 1913, we've probably been at zero a much longer time than any of us think, except CPI has distorted that. Thank Volcker for that, he "broke the back of inflation" by changing the CPI or a.k.a. proving how stupid the business community really is.

2. What is money? It is merely a fluid which enables exchange, wealth is fleeting, but unfortunately there needs to be a medium for exchange. Colonial Scrip had 0% interest rates, it was merely good for paying taxes. All currency should not have an imbedded rate of interest, that is the glaring flaw so few wish to fix.

3. And you are 100% right, none of it was real but the true shame of it all is that all of this fakeness enabled a few to live comfortably and the rest of us to continue in this sham of a struggle. What I find so funny is that so many want to run back to the fakeness and ignore the reality. I'm glad you're not one of them.

 

Keep fighting the good fight.

And now that I'm in NOLa... WOW, the poverty here is stunning, yet people here have far more class and civility than in any person I've seen in a $100/dish Scottsdale restuarant I've been in.

 

Thu, 02/04/2010 - 10:09 | 216951 Anonymous
Anonymous's picture

+1 Often it is poor people who know how to be happy, what to value. As a member of the middle class, I have no reason not to feel blessed.

Thu, 02/04/2010 - 00:37 | 216780 Anonymous
Anonymous's picture

You have just explained why the Fed will NEVER stop QE.

Thu, 02/04/2010 - 00:42 | 216786 Anonymous
Anonymous's picture

You have just explained why the Fed will NEVER stop QE.

Wed, 02/03/2010 - 18:50 | 216417 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Job cuts are a plus for the markets.  Leaves 'em leaner and meaner.  I think there will be a huge pop up when the revised numbers come out friday. 

He has had brilliant perspective all year, especially his focus on the underlying fundamentals for the long term.  This is all great, except he is ignoring the tens of trillions of doe sitting around, making inflation stronger by the minute.  M2 has increased 20% YoY for 2 years running.  He is right about the fundamentals, except that M2 needs to be a huge consideration as for the market's, and doelarr's, movements nowadays.

Wed, 02/03/2010 - 17:49 | 216433 Anonymous
Anonymous's picture

"One would be wise not to push too far the conceit that we are smarter than our predecessors"
Rogoff & Reinhart "The Aftermath of Financial Crises"

Don't know if it's in the book, I read the original paper over a year ago. The shame is people as intelligent as El-Erian make money on their own, they don't need to be corrupt politicians... the shame is people like him SHOULD be politicians. Wish we could have heard him and Ron Paul discuss this situation.

From Mardi Gras... I'm out :)

Wed, 02/03/2010 - 22:47 | 216693 phaesed
phaesed's picture

fyi... that was me

Wed, 02/03/2010 - 17:50 | 216436 Greenhead
Greenhead's picture

I have to agree that SWRichmond's comments are on the "money" when it comes to the short version of the problem/situation.  Great post.

Wed, 02/03/2010 - 17:54 | 216440 gptc
gptc's picture

Is it cold in the Bloomberg studio?

Wed, 02/03/2010 - 17:55 | 216442 10044
10044's picture

They're all tarp and gov intervention lovers. Ignore

Wed, 02/03/2010 - 17:55 | 216443 Anonymous
Wed, 02/03/2010 - 17:56 | 216445 Anonymous
Anonymous's picture

Obama and crew are not listening!

The people have to work with each other!

We have to float like a butterfly and sting like a bee...

Wednesday, February 3, 2010
SwarmUSA.com Open House – Now through Sunday!

http://tinyurl.com/ydsteza

Wed, 02/03/2010 - 18:40 | 216498 Anonymous
Anonymous's picture

So, if the Fed and the banks have trillions of worthless paper assets hidden away from the eyes of the public, do we not have a scene where the so-called "money on the sidelines" remains on the sidelines ?

After all, a pile of AAA rated paper was near worthless when someone was persuaded to pay 100 cents on the dollar for it.

Maybe sideline money will become near permanent side line money until interest rates rise.

Wed, 02/03/2010 - 18:43 | 216501 Rainman
Rainman's picture

El-Erian puts hammer to nail when he describes the current condition as a structural, not cyclical, economic deformity.

That theory is indeed a fact . 

Meanwhile, the Smarter-than-Anybody Beltway Boyz are all in on a cyclical recession requiring the traditional remedies. They all require firing. Press reset, please.....and soon.  

Wed, 02/03/2010 - 19:30 | 216556 cougar_w
cougar_w's picture

So long as they can continue to frame the problem as cyclical, they get to do just as they are now.

Which is making them rich.

They have ZERO incentive to redefine the problem.

Whatever is supposed to happen as a result of this failure WILL happen. There is no avoiding it.

That is the ultimate calling of greed; to take what can be taken until there is no more to take, then move on. They will redefine the problem just as soon as they think they can make more money solving another kind of problem. And not a moment before.

cougar.

Wed, 02/03/2010 - 19:48 | 216570 Rainman
Rainman's picture

You're probably right , Cougar.

Sigh.

Gangstas get a 4 year long Hall Pass while the Prinicpal busily sells hope and no change. I think I get it now.

Wed, 02/03/2010 - 18:46 | 216505 JR
JR's picture

Shifting to a lower gear and adjusting to El-Erian’s “bumpy journey” results in large part from the effects of Globalization. What does Globalization, financed largely by the American producer, mean to the average American? 

It means Goldman Sachs off-shoring his manufacturing base to China et al. and auctioning off America's infrastructure to foreigners; it means Bill Gates replacing Americans with H-1Bs and L-1Bs and L-1As; it means the Federal Reserve devaluing American assets to prop up its global enterprises; that the United States military now serves the international corporations; that Congress is replacing America’s workforce with an open-border workforce and forcing Americans to subsidize all the costs connected to its low-corporate wages; that  the fruits of America’s freedom are being used to subsidize and grow Communist regimes.  It means, according to implications of a mid-2009 Bloomberg report, a  “New Normal of 2% GDP Growth” for America.    

It means that Americans, to service their billionaire plutocracy, have to get “used to unemployment greater than 8 percent”; it means that “potential growth for the U.S. is no longer 3 percent, but is 2 percent or under”; it means “lasting shifts in consumer spending and savings”; it means “a new era of frugality… a secular change in household attitudes”; it means “less return to capital and less-remarkable equity returns”; it means America’s “financial system will be…re-regulated” (by the globalists); it means “growth in the U.S. to be slow…that investors will have to get used to “a 5- to 7-percent return game, not a 15- to 20-percent return game”;  it means the “lasting effect of the recession may be a ‘markedly higher’ natural rate of unemployment.’”  It means savers will be exploited.

It means “consumers are saddled with debt built up during the boom years.” It means that “as a percentage of net worth, household debt -- including mortgages…is at 27%, the highest on record”; and it means that the average house that “grew to 2,521 square feet by 2007” may have to go back to “average size…1,200 square feet”…as less income drives people “to devote less of their incomes to mortgage payments.” It means “the number of U.S. malls [will be] falling by at least a fifth and weak chains succumbing to bankruptcy.” It means all Americans will be “adapting to what will be a new normal.” It means, in short, that the financial insiders smashed  the American Dream in the biggest money swindle known to mankind.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a3i27FMViXmY&refer=home

This is your “balance due” statement, America, from the international bankers.

And if you’ve got the time and want to get to know what Globalization really is, take a look at Goldman Sachs, Wikipedia. Then you will know what happened to this great nation, to her resources, to her freedom, and to you… and why.

http://en.wikipedia.org/wiki/Goldman_Sachs

Wed, 02/03/2010 - 20:42 | 216604 boiow
boiow's picture

wow. i felt that.

Wed, 02/03/2010 - 20:48 | 216607 Kissy Ass
Kissy Ass's picture

Marla loves Goldman. They once contacted her and made her feel guilty for bashing them. They told her that their 10,000 Woman program was changing the world, blah, blah...

Marla folded and secretly joined forces with the squid. You'll never witness Marla disparage GS. She loves them.

Wed, 02/03/2010 - 21:07 | 216625 IBelieveInMagic
IBelieveInMagic's picture


I understand that there is tremendous feeling of frustration with outsourcing. But, I think we are missing an important point here -- outsourcing is a feature, not a flaw of the current US dollar based global trading system. The US economy enjoys huge benefits of USD being the reserve currency in the form of very low cost financing, no exchange default risk (USA can always print away it's external debt unlike other countries that are forced to borrow in a foreign currency). 

Imagine being able to buy real assets such as oil and other essential commodities in return for a piece of paper with green ink that FRB can print endlessly! This has also enabled the US economy to operate as a welfare state for the last couple decades and US Congress has been able to spend virtually without limits on all kinds of entitlements. 

In exchange for tolerating this global structure, major commodity deficit countries like China, India, SE Asia has to have a way of earning surplus USD so that they can in turn buy oil and other commodities which are denominated in USD to meet their internal demands in addition to the raw materials used for exporting to the US/Europe (Additionally, they benefit from transfer and building of skills/capabilities). So, if the US wants to continue to benefit from USD being the reserve currency in global trade, then trade deficits and outsourcing will have to be tolerated. 

Of course, the outsourcing juggernaut can be stopped dead in it's track if the US agrees to an alternative reserve currency and the USD becomes just another currency. Already we are seeing such talks erupting at Davos and other forums. This will of course mean that US economy will be forced to learn to live within it's means just like other countries which may again not be to our liking. So, there are pros and cons in each scenario -- there is unfortunately no silver bullet solution. 

It is said that once a person/society feels entitled to a standard of living, any downward change is going to lead to rioting. But, the reality is, in the current environment we cannot hope to eat the cake and have it to!

Wed, 02/03/2010 - 22:01 | 216661 JR
JR's picture

SWRichmond points out that the system didn't work; it was unaffordable and now we’re up against it. Otherwise, everything would be fine.

The US fiat dollar did not become the global ”reserve currency” until 1944. That is not what built America. But in the hands of the Fed, IMO, it is what is destroying America.

The American Dream was about individualism and the opportunity to achieve success without interference from others.  The American Dream was about freedom; its lifeblood was free enterprise.

Its heartbeat was America’s superior patent system. That’s what gave men the incentive to burn the midnight oil--a chance to own a property right in their own invention. A 1997 study of the inventors honored in the National Inventors Hall of Fame in Akron, Ohio, revealed that 91% of the world’s greatest inventors worked in America and only 9% in other countries.

Global fascism or Red China pseudo capitalism can never give the spring to invention that our Founding Fathers gave to Americans when they included  in the United States Constitution the provision “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

I have faith that men who have known freedom will always, in the end, sacrifice everything to retain that freedom.  Americans are close to that point now where they will tap into that thirst for freedom that brings revolution if the few now wielding raw power do not respond to the call for change – real change, not Obama “change.”

“Government exists off surpluses created by the people whom they rule.  The ruling classes, i.e., those people who refer to themselves as ‘government,’ do not produce wealth, thus their existence depends upon the expropriation of assets from others.” --   Robert J. Ringer in “Restoring the American Dream.”

It is now a question of opportunity—as things get worse, and they are going to get much worse, and when the government clamps down more and more with no redress, that desire for freedom is going to kick in, and men are going to drop everything to get that freedom back.  And they are going to fight: and will kill if they have to kill as they always have, in the cause of freedom.

Thu, 02/04/2010 - 00:17 | 216765 Tethys
Tethys's picture

As others have pointed out, we may get a glimpse of the future from the recent past.  Will we see some of this?

http://www.youtube.com/watch?v=rH6_i8zuffs&feature=PlayList&p=C7977A6A32...

or maybe this?

http://www.youtube.com/watch?v=quY5d_XdoWU&feature=PlayList&p=C7977A6A32...

Some things definitely look familiar:

http://www.youtube.com/watch?v=h3jBHSSXTso&feature=PlayList&p=C7977A6A32...

 

 

Thu, 02/04/2010 - 09:49 | 216933 SWRichmond
SWRichmond's picture

+1

The unleashing of the creative and productive human spirit, to reap the rewards and / or suffer the consequences of one's decisions, is the genius of America.  Humans will work much harder for themselves, their families and their own interests than they will for some nebulus social good defined by others. This has been frustrating utopian planners / socialists / communists for generations, and many schemes have been fostered to thwart this yearning for freedom and action based on enlightened self interest.  Nationalized public schooling, for example, and its incredible lust for central planning and crushing individualism.

Freedom always means freedom from the government, freedom to order one's affairs in the manner one sees fit, as long as one also affords others the same opportunity to do so.  The purpose of government is merely to secure these rights to all equally.  Freedom exists only in the sphere in which government does not interfere.

I have "known freedom", the genuine freedom of our founders, the freedom that is my birthright, by virtue of having extensively read about it.  I intend to reclaim it.  I know I am not alone, and I know as this crisis proceeds I will have lots of company.  The hard questions are finally being asked, aloud rather than in hushed whispers.

Thu, 02/04/2010 - 10:27 | 216965 Anonymous
Anonymous's picture

For those who might not be deep into the literary exercise, I have to highly recommend the HBO series "John Adams" based on the work of David McCullough. There are historical quibbles (as there always are), but overall it is both inspiratoinal and provocative. The 7 episode, 3 DVD set can be had for a mere $20, and it is easily fascinating enough to capture Gen Y/Z's attention. The history they NEED but are sorely deprived of.

http://tinyurl.com/yl28l9b

Wed, 02/03/2010 - 22:27 | 216678 Anonymous
Anonymous's picture

I wouldn't have to demand such high wages if the government didn't steal
half my wages In taxes, and the bank didn't inflate away the rest.
And the notion that I must tolerate corporations outsourcing jobs is
pure bullshit. Why? Because most of these corporatons are getting
subsidies/tax breaks to send these jobs out. Shit, we're paying to kill
ourselves! Take for example AAA auto insurance. The city of Glendale
gave them about $1500 kickback per hightech job they were supposed
to create(on top of the millions in kickbacks for "choosing" Glendale). They took the money turned around and made the jobs imposible to fill, then outsourced the jobs for pennies keeping our tax
money to fill thier wallets.
End the subsidies and theft so we can at least have a fighting chance!
The only blessing is I have killer skills and get to pick up work they fuck up.

Thu, 02/04/2010 - 00:34 | 216779 Anonymous
Anonymous's picture

"outsourcing is a feature, not a flaw of the current US dollar based global trading system" ---- interesting point, but it makes sense. We inflate our wages to the point they are no longer competitive.

Wed, 02/03/2010 - 18:48 | 216508 Gloomy
Gloomy's picture
Posted by Marshall Auerback on 1 February 2010 at 12:32 pm   
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Marshall Auerback here with a post which I originally published at New Deal 2.0.

Last Friday, Mr. Obama and the GOP staged the equivalent of a British Parliamentary Question Period in front of the TV cameras. It showed the quick-thinking, articulate President at his best. Unfortunately, the subsequent Saturday morning national radio address showed him at his worst. Obama reiterated the need for job creation, even as he decried government deficits, which allegedly imperil our long term economic prosperity. It’s like calling for an open house policy, whilst simultaneously putting explosives on the door knobs.

“As we work to create jobs, it is critical that we rein in the budget deficits we’ve been accumulating for far too long – deficits that won’t just burden our children and grandchildren, but could damage our markets, drive up our interest rates, and jeopardize our recovery right now”.

Give Obama credit. He packs a veritable trifecta of innocent, but deadly frauds into one sentence — government debt is bad, markets determine interest rates, and  deficits represent a form of “intergenerational theft.” Then, he adds several new ones to boot.

Unfortunately, he’s got it backwards. The deficits he decries actually help to sustain demand and create jobs, thereby supporting the economy — not destroying it. And he reflects a commonly held belief that growing government debt represents a burden on our children and grandchildren, implicitly suggesting that future generations will have to reduce consumption in order to pay the taxes required to pay off the outstanding debt. Related to this is the fallacy that too much bond issuance will create a “debtors’ revolt”, whereby “the markets” will force the country to pay higher interest rates in order to “fund” its spending.

A Few Overlooked Facts on Deficits

Where to begin? Since the days of George Washington’s administration, national budget deficits and increased public debt have been the rule on all but about six very short occasions. And the US has generally prospered. Why? Far from being a burden, the deficits, and the corresponding government bonds, constitute the foundation of private financial wealth in any nation that creates its own sovereign currency for use by its citizens. Debt owed by the government yields net income to the private sector, unlike all purely private debts, which merely transfer income from one part of the private sector to another. In basic national accounting terms, government deficits equal non-government savings surpluses.

Private holdings of government bonds also constitute an income source — that is, the government interest payments on its outstanding debt constitute another avenue for stimulus. So when the government retires debt, it reduces private incomes — just as when it runs budget surpluses, it constrains private sector demand directly by reducing private income and access to adequate currency. Just ask any pensioner if he/she is happy when the income stream from annuities has declined.

Take away that debt, and you take away income. It is no coincidence that the budget surpluses of the Clinton years (wrongly trumpeted as a great fiscal triumph by President Obama) subsequently led to recessions: government budget surpluses ultimately restrict private sector demand and income growth and force greater reliance on private debt. Does anybody think it is a coincidence that two of the longest and largest periods of budget surpluses in America history — the periods of 1997-2000 and 1927-1930 — were followed by calamitous economic collapses?

There are ample analyses which explain how government surpluses drain aggregate demand (here, here, and here). Suffice to say, a government budget surplus has two negative effects for the private sector: the stock of financial assets (money or bonds) held by the private sector, which represents its wealth, falls; and private disposable income also falls as tax demands exceed income. And, as Stephanie Kelton has noted, the case of Japan illustrates that despite a debt-to-GDP ratio in excess of 100%, the Bank of Japan never lost the ability to set the key overnight interest rate, which has remained below 1% for about a decade. And, the debt didn’t drive long-term rates higher either.

Furthermore, now that we’re off the gold standard, Chinese and other Treasury buyers do not “fund” anything for us, contrary to the completely false and misguided scare stories that deficit hawks and, and now Obama, implicitly endorse. (Click here for an explanation). Legions of economists, investment advisors, Wall Street practitioners and policy makers continue to peddle such gold-standard thinking to their citizens nationwide. To paraphrase Churchill, “It is as though a vast Gold Standard curtain has descended across the entire body of public thinking.”

Obama’s Deficit Confusion

Let’s consider a real world example to demonstrate the President’s conceptual confusion on government deficits. We’re in a recession. Our American citizen who was working in a pie shop has lost his job even though his productivity was just as high during the boom years. As the recession intensified, pie demand fell, as did consumer demand in general. Fearing that their wealth holdings are not going to appreciate as quickly as they did in prior periods, households are saving more money out of their income flows.

The pie guy wants to exercise his freedom to work hard for money. So do 152 million other people. But there are jobs available for only 138 million of them, given current business perceptions of money profit prospects from production now and in the future. The pie guy is stuck with over 15 million other people who would like to exercise their freedom to work hard for money. Over 6 million of those people have been trying to exercise that freedom for over half a year, with no luck. They are dumpster diving for leftover pie scraps.

In desperation, the pie guy has gone back to the pie shop to offer his services for a lower money wage, but unit pie demand is still down, even though the owner has cut pie prices. However, the pie owner, facing lower prices per pie, decides to hire the pie guy back at a lower wage and fires one of his other workers to scratch his way to a little higher profit. Are we all any better off? I suppose pies are cheaper, but then so to are incomes earned by pie makers lower.

In that situation, someone else has to take up the spending slack. Fortunately, we live in an economic system in which a government can freely spend and fill the gap left by the private sector. It has the unique capacity to spend without the constraint of a private firm on productive job creation, thereby increasing output, not just redistributing it. Just giving the pie firm a payroll tax cut on new hires is not going to generate more jobs. Rather, giving it to all employees will lead to more pie sales. Instead of decrying the government deficits, then, the President should be celebrating them as a form of economic salvation.

The problem obviously isn’t about money which a government can always create. The ultimate irony is that in order to somehow ‘save’ public funds for the future, as the President appears to be advocating, what we do is cut back on expenditures today, which does nothing but set our economy back and cause the growth of output and employment to decline. Worse yet, the great irony is that the first thing governments generally cut back on is education — the one thing the mainstream agrees should be done that actually helps our children 50 years down the road. Education cutbacks — as any Californian can tell you — are something that does hurt us, as well as harming our children AND our grandchildren down the road. This is the true “intergenerational theft”, not “runway” government spending.

The False Household Budget Analogy

Like many other people who embrace the nostrums of the Concord Coalition (an advocacy group supporting the deficit hawk themes), the President continues to view government spending through a false household budget analogy:

“There are certain core principles our families and businesses follow when they sit down to do their own budgets. They accept that they can’t get everything they want and focus on what they really need. They make tough decisions and sacrifice for their kids. They don’t spend what they don’t have, and they make do with what they’ve got.”

Yes, it’s true: If households spend more than their income now, they have to borrow. To pay the loan back they have to ensure that they can dedicate adequate income in the future, either by increasing incomes somehow or diverting existing income from consumption. If a household borrows too much, it will face major corrections in its balance of income and expenditure and consequently may have to seriously forgo spending later.

That is the logic that the users of the currency have to consider every day. They have to finance every $ they spend and so planning is required to ensure they don’t blow out their personal balance sheets. If all households attempt to net save by spending less than they are earning, and businesses attempt to net save (reinvesting less than their retained earnings), then private sector incomes and real output will decline absent an increase in government spending.

But it’s not the same for a government. The government is the creator of a currency. It can spend now. It can also spend later. And it can service and pay back the debt without compromising anything. A government, unlike a household or a private business, can choose to exact greater tax revenues by imposing new taxes or raising tax rates.

Notwithstanding the obvious reality that sovereign governments have no solvency risk because they create their own currency, most financial commentators (and the President’s own advisors) still waste their time talking about sovereign default risks. Unfortunately, the President implicitly legitimizes this sort of talk when he speaks about the need for government to embrace budgeting like a household does. This is what we presume he has in mind when he discusses the long term dangers of government deficits. Firms, households, and even state and local governments require income or borrowings in order to spend. But the federal government’s spending is not constrained by revenues or borrowing. It is constrained only by what our population chooses as national goals.

Getting Past the Deficit Myth

We would all rather live in a world where profit prospects are so abundant that business investment spending is high enough to insure full employment given household preferences to save out of income flows. But historical and current experience suggests that is a rare configuration indeed. Ideally, that would be the business sector investing more than it retains in earnings. But in recent decades, this happens only during asset bubbles, and we know how that story ends. Alternatively, the foreign sector could deficit spend — the US could run a trade surplus. But the reality is that US firms have chosen to reinvest in low cost production centers abroad (or would prefer to use free cash flow to engage in short run shareholder value maximization through various financial engineering efforts, including M&A) so the US-based production structure no longer matches foreign demand very well. Ironically that leaves government fiscal deficit spending as the sole remaining mechanism to insure the freedom of its citizens to work hard for money.

The President, unfortunately, has yet to put the pieces of the puzzle together. He also fails to understand the idea that a government like the United States — i.e. one that issues a sovereign currency — can meet any and all outstanding financial obligations, provided the debts are denominated in the national currency. In this regard, the size of the national debt is irrelevant. This myth, and this myth alone, underpins arguments by orthodox economists against government activism in macroeconomic policy. The President does his Administration and the country no service by continuing to jump on this mythical bandwagon.

Myths may constitute good grounds for literature, but they are a horrible foundation for sound economic policy.

Ihttp://www.creditwritedowns.com/2010/02/the-president-remains-trapped-in...

Wed, 02/03/2010 - 19:18 | 216547 Rainman
Rainman's picture

WTF Timmy......get back to work

Wed, 02/03/2010 - 22:17 | 216671 KevinB
KevinB's picture

Thought this was the biggest piece of tripe I've read when I read it a couple of days ago.

Tripe gets worse when it sits out of the freezer.

Thu, 02/04/2010 - 10:38 | 216974 Anonymous
Anonymous's picture

Thank you, thank you, thank you! Maybe now they will see the truth!

~ Gideon Gono

Wed, 02/03/2010 - 19:00 | 216523 Anonymous
Anonymous's picture

Crush the little people..

The Road to Debt Peonage
The Bernanke Disaster

By MICHAEL HUDSON
As for its designated task in promoting price stability, the Fed’s easy-credit bubble has made asset-price inflation the path to wealth, not tangible capital investment. This has brought joy to bank marketing departments as homeowners, consumers, corporate raiders, states and localities run further and further into debt in an attempt to improve their position by debt leveraging. But the economy has all but neglected its industrial base and the employment goes with manufacturing. The Fed’s motto from Bubblemeister Alan Greenspan to Ben Bernanke has been “Asset-price inflation, good; wage and commodity price inflation, bad.”

Obama supports Bernanke and his State of the Union address conspicuously avoided endorsing the Consumer Financial Products Agency that he earlier had claimed would be the centerpiece of financial reform. Wall Street lobbyists have turned him around. Their logic was the same mantra that Connecticut insurance industry’s Sen. Chris Dodd repeated at the confirmation hearings: Bernanke has “saved the economy.”

http://www.counterpunch.org/hudson02022010.html

Wed, 02/03/2010 - 19:07 | 216533 anynonmous
anynonmous's picture

I recall El Erian on CNBS in Sept 2008 when he shared that he had suggested to his wife that she get some currency from the local ATM just in case.  Pimco won big in the various bailouts but I don't recall El Erian ever being anything than a straight shooter.

Wed, 02/03/2010 - 19:17 | 216544 Anonymous
Anonymous's picture

From OpportuniTV.com/many-jobs/:

Popular online markets for customized education (CE) can be expected to catalyze the creation of many jobs.

From a November 6, 2009 article in the Wall Street Journal:

"According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007, two-thirds of the jobs created were in such firms. Put more starkly, without new businesses, job creation in the American economy would have been negative for many years."

From a 2005 report by The Nielsen Company:

"By enabling entrepreneurs to start a business online and immediately reach a market of 157.3 million registered users worldwide, eBay has become the best place to start, grow and operate a small business."

Harvard Business School professor Clayton Christensen is the originator of the canonical Model of Disruptive Innovation, and a co-author of the 2008 book Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns. From Disrupting Class:

"Students need customized pathways and paces to learn.

…The second [phase of the disruption of standardized education] will be the emergence of a user network, whose analogues in other industries would be eBay…"

Stanford economist Paul Romer is the originator of New Growth Theory, which updates growth economics for the information age. From Romer’s entry on Economic Growth in the 2007 edition of The Concise Encyclopedia of Economics:

“The country that takes the lead in the twenty-first century will be the one that implements an innovation that more effectively supports the production of new ideas in the private sector.”

“Perhaps the most important ideas of all are…ideas about how to support the production and transmission of other ideas…North Americans invented the modern research university…As national markets for talent and education merge into unified global markets, opportunities for important policy innovation will surely emerge.”

From The Mystery of Economic Growth, a 2004 book by Harvard economist Elhanan Helpman:

"Interest in growth theory abruptly revived…in the 1980s. The two key papers were by Romer (1986) and Lucas (1988).

…Romer (1990) also initiated the second wave of research on the “new” growth theory.

…A more detailed study of the U.S. economy is provided by Jones (2002). He found that between 1950 and 1993 improvements in educational attainments, which amounted to an increase of four years of schooling on average, explain about 30 percent of growth of output per hour. The remaining 70 percent is attributable to the rise in the stock of ideas that was produced in the United States, France, West Germany, the United Kingdom, and Japan."

In particular, CE markets can be expected to attract many buyers and sellers of corporate training.

From a May 20, 2004 article in The Economist:

"“There has been a huge swing to custom programmes,” says Fiona van Haeringen of IESE, who attended a recent annual conference of business-education providers in America…Looking to this year, most saw growth coming mainly from customised education."

From Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change, a 2004 book co-authored by Christensen:

"Modular, customizable corporate training has an advantage that interdependent M.B.A. programs can’t match — a product specifically designed for each employee’s needs.

…In contrast to the leading schools’ integrated structure, the on-the-job management education industry is a disintegrated one. Hundreds of specialized firms develop materials, others design courses, and others produce and teach them."

Wed, 02/03/2010 - 22:29 | 216680 KevinB
KevinB's picture

Interesting read, thanks. I read a related article in WIRED last week describing "virtual companies". Using new technologies and the Internet, one guy with a product idea can create a model using next-gen CAD/CAM on their laptop, send the design over the internet to a company which uses 3-D printers to make a model in plastic in minutes (or he can buy a 3-D printer for less than $5k), and when he's happy he's got it right, outsource to another plant which could be in China, Australia, or hell, Detroit. No inventory, no investment in specialized factories, no capital (ok, mimimal capital) to start up, and if you're wrong, you're not on the hook for millions. 

What this means is the single greatest asset in the next few decades is going to be creativity. Reading some of William Gibson's later books (i.e. after "Johnny Mnemonic") to get some idea of what that world will look like.

Wed, 02/03/2010 - 20:00 | 216580 Anonymous
Anonymous's picture

El Erian for President!!! (He is a US Citizen, right?)

Wed, 02/03/2010 - 21:12 | 216629 Anonymous
Anonymous's picture

Real people, real life....Obama...remember those days or does green$ erase your memory?

Loan modification rules meet with skepticism
Homeowners say rules won't help much

Some borrowers have received modifications only to have the offer rescinded later.

Jeffery Feig, of Sarasota, sought a modification for five months and was approved last March. His payment was cut in half, but Bank of America called two months later to say it changed its mind. The only explanation was that he hadn't sent necessary financial paperwork, something he disputes.

"They wouldn't have approved me in the first place if they had not received all the paperwork," Feig said. "Since then, I've sent the paperwork again, and my attorney has sent the paperwork. They always say they didn't receive it."

In Tampa, Jeff Kops said his lender, also Bank of America, sent him a loan modification packet offering a lower payment. He agreed, sent the paperwork back and started paying the lower amount. But a few months later, the bank said it could no longer honor the modification because of a problem with the notary on the paperwork.

Kops said the lender looked at the paperwork again and offered him a monthly payment that was $500 higher than the previous offer.

Anthony DiMarco, an executive vice president at the Florida Bankers Association, said lenders want to help borrowers avoid foreclosure but that they are overwhelmed and are "learning as they go along."

Homeowner Rachelle Roach, of Carrollwood, isn't as optimistic. She said she's thankful that the government is taking a closer look at the modification program's failures but doesn't think the new changes will help borrowers like her.

Roach tried to modify her loan with Well Fargo last year and said it was a "paperwork nightmare." She said the bank always ended up misplacing paperwork, requesting more and then denying her requests.

Roach lost her job as a nutritionist and now makes less than half her former salary. Her home is now worth less than half what she paid in 2006. She said she's depleted her savings and sold some of her belongings to pay mortgage payments.

"I was rejected twice, and I think it's because I'm not behind on my mortgage," she said. "I'm being penalized for trying to do the right thing. This is why so many people just walk away."

http://tinyurl.com/ycdzqt6

Thu, 02/04/2010 - 10:50 | 216983 Anonymous
Anonymous's picture

These folks in FL (CA, AZ etc), especially the Alt-A types, need to GTFO and downsize accordingly. They have no moral right to ask or expect principal forgiveness. Those of us who have prime mortgages on modest homes that we can afford agree with Santelli. Why should some speculator live in a nicer house and claim victimhood? You watch the reruns of the flipper shows and see J6P upscale-wannabee's arguing over granite and stainless. FU. Husband and wife beat cops looking at $900k McMansions. FU. MOVE. Shut up and move.

Wed, 02/03/2010 - 21:14 | 216630 Gimp
Gimp's picture

Yep, I think El Erian is a US Citizen but the good old consititution states you have to be born in the United States to run for President, otherwise the Governator and a few other naturalized US celebrities would have already tried.

BTW - SWRichmond you are definitely a learned man, great piece above.

 

Wed, 02/03/2010 - 22:54 | 216700 Anonymous
Anonymous's picture

How can anyone say the future prosperity of the US was not due in large part to the USD as the global reserve currency? The biggest financial markets in the world all came out of the US and all traded in USD, so anyone buying commodities overseas would eventually have to bring that loot back to the US. To me, that is the most important factor in driving our growth from 1944 to present. Anyone trading these products were millionaires, everyone was desperate to get in, imagine the spiraling effect....you can see it now....8000 hedge funds, the biggest banks in the world, continued innovation....etc.

Wed, 02/03/2010 - 23:44 | 216734 rapier
rapier's picture

The US spends more on  military/intelligence than the rest of the world combined and has the lowest taxes of any developed nation.

There is your deficit. One can use monetary issues, trade flows,  simple or complex economic structural issues or even more complex social one or even the goddamn movement of the planets an you will miss those two all important and simple things. 

Wed, 02/03/2010 - 23:56 | 216748 rapier
rapier's picture

El-Erain is just using nice language to deliver the threat.  The threat the giant multinational corporations have been preparing for 40 years to deliver.

It is going to be up to us, PIMCO, C, GS etc.,  what the government spends on now and in fact it will be up to us to run the government.  The modern developed nation state will become the runp the new and dominant model of human organization, the modern business corporation.

The bumbs on this journey will come from two forms. Keeping the growing underclass in line and negotiating a reproachmont with the military.

Thu, 02/04/2010 - 00:23 | 216770 Anonymous
Anonymous's picture

Guys

There is a solution to our predicament.

Save the turkeys this Thanksgiving and have your current political incumbent grilled instead.

BTW, thanks SWRichmond for taking the effort to make it simpler.

Thu, 02/04/2010 - 00:27 | 216775 JR
JR's picture

Speaking of the "bumpy journey," some news of the day from Chris Martenson's Daily Digest February 3:

No Aid or Rebound in Sight, More Homeowners Just Walk Away

The number of Americans who owed more than their homes were worth was virtually nil when the real estate collapse began in mid-2006, but by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance. They are stretched, aggrieved and restless. With figures released last week showing that the real estate market was stalling again, their numbers are now projected to climb to a peak of 5.1 million by June — about 10 percent of all Americans with mortgages.

Housing Crisis Getting Uglier in 2010

Nearly 6 Million Foreclosures in Past 3 years - 3 Million More Expected in 2010 CBS News correspondent Ben Tracy report the American Dream is now a nightmare for many of the 75 million Americans who own a home. The housing report card is ugly. In the past two years, the housing market has lost an estimated $4.9 trillion dollars, as 59 million homes have declined in value. Nearly 1 in 4 homeowners -- 10.7 million households nationwide -- are underwater on their mortgages. They owe more than their home is now worth.


Michigan Continues Turning Paved Roads To Gravel

More Michigan counties are returning stretches of previously paved roads back to gravel to save money. The County Road Association of Michigan said Tuesday that 35 miles were returned to gravel in 2009. Thirty-eight counties have combined to pulverize about 100 miles of pavement and lay down gravel in the past few years. The main reason is because counties lack money to reconstruct or repave deteriorating roads

More People Struggling To Stay Warm, Taxing Agencies (Detroit)

State and local agencies estimate an unprecedented 150,000 metro Detroiters are at risk of having their heat shut off if they don't receive help paying their bills. The number of people seeking state assistance so far this winter jumped 30% over last year at this time, according to the state Department of Human Services. Officials blame the rise on metro Detroit's miserable economy that continues to cost people their jobs. Since last winter, unemployment rose 33% -- to 288,000 people -- for the tri-county area, according to state employment data.

Phoenix OKs 2% Sales Tax On Food Items

Desperate to avert layoffs to police officers, firefighters and other city workers, Phoenix City Council members today approved a 2 percent sales tax on grocery items that will generate tens of millions of dollars in new revenue for city services

The Chickens Come Home To Roost (Video)

Pensions expert Alexander Rublacava told an Emergency BudgetLA meeting on Saturday that without pension reform Los Angeles is headed for bankruptcy. Rublacava was ahead of his time in 2006 when he called for pension reform. His dire predictions were dismissed by the City's then CAO Fujioka, Rob Wilcox, Deputy City Controller and others. LA pensions are of the defined benefit type. That means that the taxpayers have to dig into their pockets to an unlimited extent to literally guarantee the retirement benefits of pensioners.

http://www.chrismartenson.com/blog/daily-digest-february-3/34887

Thu, 02/04/2010 - 00:29 | 216777 Anonymous
Anonymous's picture

Is this threat an indirect means to crash the stock market and re-blow the Treasury bubble ? Is there not a March 31 deadline for $ 1.6 T short term debt ? After all Pimco is a stooge of the Feds and its doing its job to crash the markets in time for the March deadline ??
btw..when are the Toyota foreclosures starting ?
I thought we just got done emtying Detroit !!

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