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What Would We Do Without Experts?
At this point is the United States even capable of permitting bubbles to deflate without a massive run-up to a desperate crash? Probably not. Bloomberg cites Krugman, revving up the Stimulus 2.0 motors already.
Nobel Prize-winning economist Paul Krugman said he sees about a one-third chance the U.S. economy will slide into a recession during the second half of the year as fiscal and monetary stimulus fade.
It is not entirely clear how, in the event we start pumping more meth into the national bloodstream, we ever manage to get the body off of the habit. When exactly can we stop stimulating housing prices and not see an "increase of one percent in mortgage rates" that will "inhibit recovery"? When will the country finally be disabused of the fantasy that a 5.5% mortgage and 8.5% equity returns are some kind of god-given right? Who is finally going to have the courage to tell America that the average family of four is either going to get pimp-slapped out of some more net worth in the next few months, or that they can wait another half-year to a year and go six rounds with Evander Holyfield c. 1990 instead? Anyone? Bueller?
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The funny thing is that O has repeatedly said that we needed to get away from a "boom and bust" economy. Well, here we are again, in the midst of the biggest stock bubble in history.
Our fates are sealed; we will go straight up until the engines completely fail.
Wait. You mean the economic troubles are not over?
What happened to all the freakin' stimulus money? Didn't that solve everything?
http://pajamasmedia.com/instapundit/91049/
So we'll all have to be content with a permanent bust economy.
Hold on to your capital, ladies and gents. I wonder how Hu Jintao feels about this?
http://krugman.blogs.nytimes.com/2010/01/02/not-my-actual-lecture-text/
Note: click on 'More or less' to download .pdf
Krugman: 'So there is a clear case for temporary capital controls - a sort of curfew on capital flight - in the heat of a third-generation currency crisis'
That was Hume Cronyn in Rollover... 1981 (sigh).
Hu and the chinese are totally clueless on economics and American politics. Last year they paid, some said $300k for Krugman to deliver 2 lectures in Shanghai or was it Beijing? Turned out Krugman gave his typical China bashings, red CCP faces all round, some really tenses exchanges with the audiences. Thank goodness those same folks are the ones buying our treasuries and funny money, too bad for the poor chinese farmers and workers their leaders are even more stupid than ours.
Then they should stop saying that we don't understand China until they understand the US.
Whenever China gets humiliated in any respect, I chalk it up to being a Good Thing.
For once, their lack of wisdom and intelligence shows through.
Economics and American (US) Politics are topics for which you cannot just simply memorize tables of information, you actually have to have some creativity. Running a bad company town in China for a profit does not count towards either American Politics or Economics. It just shows that you carry favor with the Party, various multinationals, and whatever social group is in control.
+1
+1
You can read about the Wild West, and still get gunned down in the street for not being able to read the 'sitchyation'.
Ron Paul is saying this (not quite in the same words) but the populus can't hear it above the din of Mad Money and Reality TV.
The Ministry of Doublespeak is working overtime. If this doesn't stop soon, the "jobless recovery" will be accompanied by a "voteless democracy".
I prefer the term "recovery-less recovery."
Kinda like 'leader-less leadership'
I prefer jobless-stimulus.
THE VIAGRA FALLS ECONOMY
Wow, this is worth > 200 words. Nice. Everyone can hear the dull roar, but we're too busy trying to get laid again before the stimulus wears off.
Thanks and call your doctor if you have a money market withdrawal that lasts longer than four hours
If a man can't keep a hardon for 8 hours you know he's a gay sissy boy.
Ain't that right ladies.
;)
-MobBarley
Just an aside. Paid off my mortgage today. I had the money sitting in cash earning zero percent and got spooked about the possibility of a bank holiday and currency devaluation that would leave me with a mortgage and a lot less purchasing power, so I paid it off. I just turned 50 and plan to live in this house forever. I may lose it to property taxes in the event of a hyperinflation. If it ever comes to that, I will burn the house and lay waste to the land before I ever give these thieves anything of value.
So, to refute your assumption, not all of us are busy trying to get laid again. Some of us are fighting back the only way we know how. I never dreamed it would come to this, but it has and I know damn well who's fault it is.
People, just b/c you have the urge to payoff your mortgage doesn't mean you should.
For most people, a large fixed rate mortgage is their best hedge against inflation.
I'm looking forward to buying 6 bedrooms this summer with 3% down, as long as the 10-year bond can hang in there for a few more months. :-)
Right, unless the dollars stop coming in to pay the monthly nut. With unemployment going up like it is, there are no sure bets anymore. Yeah, you may be paying with "cheaper" dollars over time, but paying interest is the same as paying rent. If you have the cash, the best thing is to pay off the place, and only worry about the taxes, which are payable with or without a mortgage. There is a real possibility that inflation will wreak havoc, without a corresponding rise in wages. If so, paying a mortgage bill will become nearly impossible.
Also, the big lie about a mortgage being a tax break is incredibly dangerous. If you are making big bucks, yes, it is. But for most people, the tax break is very expensive when you consider that you have to pay out a lot of money for interest, which gains you almost nothing. It's like going into a department store and buying a Rolex at a 20 or 25 percent discount. It costs less, but you still have to shell out a ton of after-tax cash to get the discount.
And, finally, who says that the tax breaks will continue, especially if the gummint boyz decide that they need to raise taxes? They could shut off the tax breaks tomorrow if they wanted to, and they just might do that if there's a failed bond auction or two.
Personally, I would rather have no mortgage and have peace of mind, rather than play against the casino in their inflation/deflation game to save a few dollars down the road. The casino wins every time, and foreclosures are ugly things.
Watching theses so called experts on TV, is enough to make you just want to puke. I no longer can even watch TV because theses clowns are on there. If for once they actually just told everyone straight, what was happening that would be good.
Stick with Marc Faber, sites like http://www.dailyjobcuts.com , Gerald Celente, Jim Rogers. They all have a clue what is going on.
Not just television. Get a load of this crap....
http://www.slate.com/id/2240282
I prefer jobloss recovery.
Yup. Behind Stimulus Door #2 in the 2010 Meltdown Show is the wretched condition of State and local budgets........and the ghost of a million + layoffs without more support to financially emaciated ,yet bloated, Blue States.
Arnie's already looking for $ 8 billion......first in what will be a long line. Too bad Arnie's problem is really 3 times bigger than that....at least. But let's not be greedy.
Job loss recovery.
Excellent phrase!
"Voteless Democracy" I couldn't have thought of anything better, thanks.
While they were out of power, the Democrats heard the phrase, "One man, one vote, one time." It sung to them. Now they think 53% is a mandate to roll out their America. Fortunately, they do not have enough firepower to make it stick.
The use of experts is a standard procedure for avoiding responsibility.
It's true! It's been proven by experts in clinical research studies.
LOL!
The creditmoney system requires exponential growth to satisfy the prevailing coupon which was set more-or-less a little below the economicalness ROI of the business climate.
IOW, we need to grow this year around last year's interest rate regime. The problem is that the newest, latest, greatest economic activity is of negative profitability. It's uneconomical. Be it empty cities in China or ethanol, everything we're trying now is a waste of money and energy.
Building new roads, "infrastructure," all planning for a future that won't come. The returns aren't there in the fundamental economy, so we have leverage and synthetic instruments trying to make nominal money. Hell, the stock market is computers trading with other computers to raise nominal prices on literally bankrupt companies.
We need to be looking at how to downscale and retrench instead of trying to find a way to get the crate more speed.
I wish there were good numbers on what maximum current theoretical oil production could be, if OPEC really cut or just legitimized a production decline pretending it was a cut of oil they were never really producing.
As fragile as shit is right now, if oil supply has declined such that inventory drawdowns become systemic, we are in real, real trouble here. We just piled on a mountainload of debt to get through no more than a year or two and all of those projects and plans are going to go to complete shit because the liquid energy just won't be there to power them.
Not a bad argument, but it sounds like you've been reading too much JH Kunstler.
Nope. My own thesis. JHK may say some of the same things, but I don't borrow from him
It's just a different means of explicating the declining marginal utility of debt. As societies enter mature phases of economic development, it becomes increasingly difficult to generate above-average returns on investment. Thus, the tendency to engage in more speculative, leveraged activities in search of returns.
The reason we must have ever increasing productivity, however, is to service the additional debt tranches necessary to propel the fractional reserve banking system. Trav, Kunstler and many other TOD adherents subscribe to the 200 year-old iron clad rule that energy supply & utility correlates perfectly with economic output & growth.
While I agree with the premise of economicalness & debt-service productivity, I'm still reserving judgment as to the energy component. I still think there may be the off-chance that we might come up something completely out of right-field, whether it be genetically engineered crops and/or health-care solutions, or even a means/mechanism of reducing our physical footprints while continuing to realize a full-range of conscious experiences.
The problem with my position is two-fold: not only are the" solutions" highly unlikely in the short (if not long) term, they are also highly dependent on capital resources that are currently being consumed by social spending for favored constituents.
Altogether not a very favorable outlook, which is why prudence dictates that one should look towards a much more modest future.
"It's just a different means of explicating the declining marginal utility of debt. As societies enter mature phases of economic development, it becomes increasingly difficult to generate above-average returns on investment. Thus, the tendency to engage in more speculative, leveraged activities in search of returns."
Right out of Marx. Dude foresaw how this would end and the fallacy of 'growth' forever (even cancerous growth ends when the host dies).
Stop....Bubble Time!
"Nobel Prize-winning economist Paul Krugman......"
Nice to see Krugman had his name legally changed. But he's going to find it difficult fitting that long name into those small "Name - Last, First" spaces on government forms. He might want to shorten it to "Krugman, Paul" when signing his government checks.
BTW, this is a perfect example of spin and propaganda by the mass media. Of course you must listen to what this fine man is telling you. After all, he's an expert of the highest degree. Suspend your disbelief and drink the Kool-Aid.
I long for the old days, when his highness was just Paul Krugman, government hack for the government mouth piece New York Times. I suppose I should practice my most respectful bow, just in case I run into him at the local soup kitchen.
I was a PK-flavored drinker until O took the Peace-piece himself. I was forever cured of NYTimes fever. Except for the foodie pieces.
PK has diarrhea of the mouth.
Projectile.
That's because Asshat was already taken...
This market is going to Pluto. The HFT machine will see to that. No traders nessesary. Just The machine and taxpayer money and wala... Stock market rally.
If I see the name Krugman....
I make sure that I skip over it....
Krugman = Nut job....
My succinct crystal ball gazing when asked is as such:
Either we're going full blown depression, or your dollar is going to be cut in half the next 5 years...there will be no in between and no answer C, its either going to be one or both.
Who has the guts to tell the American people? Nobody in a position of power. I am guilty of this as well. I tell folks the above in my capacity as a friend or someone trying to share. In my capacity as an investment professional that is not the view that I tout to my clients (though we have strategies to deal with either one).
It is easy to say "we're fucked" but much harder to say "you're fucked and it might seem like I can do something about it but not really."
I chose B, the dollar will be cut down (half would be a good outcome), in the next year. I chose that option shortly after the Fed's March 18, 2009 decision to buy the entire MBS market.
'Who has the guts to tell the American people? Nobody in a position of power. I am guilty of this as well. I tell folks the above in my capacity as a friend or someone trying to share. In my capacity as an investment professional that is not the view that I tout to my clients (though we have strategies to deal with either one).'
You just said a mouthful.
Mind you, in your capacity as an investment professional, there are inevitable consequences coming to you if you did not toe the party line to some degree to your clients. And they won't listen to you anyway, if you don't sound like anything resembling what they're used to.
Yesterday a friend of mine asked about buying a LOT of gold. I closed the door, took off my glasses, and told her what I REALLY think, tinfoil hat black helicopters and all.
I am SO GLAD I don't have to be an investment professional in this disintegrating economic environment. Can't imagine the stress of that particular service these days.
anyone see the action on phk and dpo today???
yep....Denninger has an interesting piece on it and it is worth the read.
http://market-ticker.denninger.net/archives/1813-Carnage-Continues-PHK-Who-Smells-Smoke.html
Exactly. It runs even deeper than that. Will will the country be disabused of the notion that we cannot slip from "Republic" to "Empire" (if we have not already) because we have some inalienable right granted by God himself to exist in perpetuity -- even though we are a greedy slothful bunch?
It's not even a problem of "getting the body off the habit". It's worse. It's a prolonged and increasing descent into a society where bureaucrats make all the decisions as to what should be produced and bought at what prices, eventually making the decisions based on what producers offer the most enticing "favors" (remember the public oil field sales scandal from last year, the remodeling work done for all the congressmen?). They're telling us that, for The System (You LIKE the System, don't you? If not, you are sick. Tell it. It will help you.), for Jobs, we must surrender more economic freedom to go with all the political freedom already stolen. In order to have a yoke to strap to we must strap ourselves to it harder. It is the same societal drift human societies have always descended into: Nobels breeding a proletariat and providing them just enough to stay alive with enough strength to push on the yoke.
those are damn good points.
Like Sancho said,
Kruggie in last 2 paragraphs page 7:
Or to put it a different way, what happens in a third-generation currency crisis is a vicious circle of deleveraging. Hence the severe cost to the real economy.
One question you might ask is whether this diagnosis is all ex-post rationalization. Did the theory of third-generation currency crises actually succeed in predicting any crises? The answer is yes: Argentina, which, alas, played out exactly as expected.
So he supports the hyperinflation argument!
then goes on to support capital controls, just like Jim Rogers/Peter Schiff etal called it as noted by Sancho:
So there is a clear case for temporary capital controls – a sort of curfew on capital flight – in the heat of a third-generation currency crisis.
To be fair, PK says the United States is suffering from a third generation deleveraging crisis which has similarities to a third generation currency crisis. I think it was a careful choice of words on his part to link capital controls to currency crises and not third generation crises in general. Regardless, when and if things get ugly, you know those controls are coming.
This "growthless recovery" is working just fine. UEC checks are going into Apple, either its common or its products, and the TBTF banks are cooperating by halting foreclosures so as to maintain the illusion we all desperately seek regarding the solvency of our banking system. The unintended bonus is that allowing folks to stay in homes they are no longer paying for puts more cash in the consumer's pocket, so that he/she can juice retail sales by paying more for gas at the pump and filling the coffers of the Sheikh-lets, who can then fund al Qaeda operations, which in turn hands more power and control over to the Guardians of Our Liberty. Rube Goldberg couldn't have designed a better system.
"....about a one-third chance the U.S. economy will slide into a recession."
I love when they try to put numbers on their wild-ass guess.
I suppose I agree with Krugman on the negative effects of withdrawing stimulus. I just don't share his conclusion that this is a reason to continue it and postpone the inevitable.
By the way, I've seen some of the "extend and pretend" issues we discuss come up a few times on a local blog I frequent.
The blog doesn't generally focus on these issues, and neither the blogger and commenters are financial experts, but they seem well aware of these govt shenanigans. I think awareness of these timebombs is becoming more widespread to laypeople.
Jan. 4 (Bloomberg) -- Credit Suisse Group AG was sued by property owners at ski resorts in Montana and Idaho who claim the bank made loans based on inflated appraisals so it could take over the resorts when the debts couldn’t be repaid.
....
The lawsuit alleges racketeering, breach of fiduciary duty, fraud and negligence. The lawsuit seeks $24 billion in damages, triple the $8 billion in alleged losses for property owners and names three Credit Suisse units and Cushman & Wakefield Inc. as defendants. Cushman & Wakefield provided appraisals, according to the complaint.
Oh my. Now that's the sort of thing I was expecting to see some time ago - property buyers who put 2 and 2 together and say "heh wait a minute, that should be 4 but someone claimed it was 6!"
This pressure comes in many forms and includes the following:
* the withholding of business if we refuse to inflate values,
* the withholding of business if we refuse to guarantee a predetermined value,
* the withholding of business if we refuse to ignore deficiencies in the property,
* refusing to pay for an appraisal that does not give them what they want,
* black listing honest appraisers in order to use "rubber stamp" appraisers, etc.
http://tinyurl.com/ylpwujq
The old saying that opinions are like buttholes, everyone has one (well, except for Bill Clinton who has two, as he also still has Hillary)...However...
Expert: A Huge Ego With An Opinion
1/3rd and not 99.9999999999% (there is of course a .0000000001% chance of some miracle energy/battery invention that they could bubble up like tech and housing). Utter and absolute MORON.
Magical inventions cannot do enough in time to offset the number of people who are out of work.
"When exactly can we stop stimulating housing prices and not see an "increase of one percent in mortgage rates" that will "inhibit recovery"?
Answer: Only when we no longer have the ability to do so.
"When will the country finally be disabused of the fantasy that a 5.5% mortgage and 8.5% equity returns are some kind of god-given right?
Answer: Only when reality forces us to confront a new model.
Who is finally going to have the courage to tell America that the average family of four is either going to get pimp-slapped out of some more net worth in the next few months, or that they can wait another half-year to a year and go six rounds with Evander Holyfield c. 1990 instead? Anyone? Bueller?
Answer: No one.
Just curious. Why the general lament? Why now? Surely you know your history well enough to know what happens when empires reach this point and behave in this manner. They don't miraculously get religion and reform themselves. They don't. That's just simple fact. No, they go over the falls and out of the wreckage on the rocks below, the survivors rebuild. It is a story as old as civilization itself and a lesson that we have not yet learned. Fortunately, karma being what it is, we're about to get another opportunity.
Well said.
The USA as is currently composed will not have the foresight and will power to fix our problems. Not only do we not have the foresight and will power, the current paradigm is to lie about the problem and "hope" that it will just go away. We have proven beyond all doubt since this crisis erupted (i go back to Bear Stearns at least as a starting point) that we will do nothing that reasonably attempts to fix the financial problems.
Anon 182300 said it wonderfully: "Surely you know your history well enough to know what happens when empires reach this point and behave in this manner. They don't miraculously get religion and reform themselves. They don't. That's just simple fact. No, they go over the falls and out of the wreckage on the rocks below, the survivors rebuild. It is a story as old as civilization itself and a lesson that we have not yet learned."
I hope zerohedge examines the bank secondaries because they all went pretty well, raised a butt load of capital and the underlying securities are trading above their offering prices. In a world that has been spanked, you might think people have become a bit wiser with their money. Who bought this trash?
"Who bought this trash?"
Umm, you? With your tax dollars.
Bankruptcy Filings Rise 32%, Top 1.4 Million -WSJ
There is also no sign that things are slowing down. Mr. Harmon said bankruptcies have been coming in waves, first with those 18 months ago who had adjustable-rate mortgages, then with those who lost their jobs due to the housing downturn. Now he is finding wealthy individuals and business owners who have finally succumbed to lower incomes and shrinking home values.
http://online.wsj.com/article/SB126263231055415303.html
Saw this today. Happy fuckin' New Year for sure.
I am turgid with anticipation.
I am Chumbawamba.
Headache? Have a drink.
And while we're at it, put roadblocks on the highways leading to the dry states. We're all in this together!
checking out ms mandy on the closing bell as i type....
comcast needs to find a way to get her here full time....
Bernanke et. al. are fucking insane.
Can I make myself clearer? Fucking insane.
of course, once the bombs fly into Iran, or Pakistan, or Yemen or wherever, I can already hear it: "the economy was almost completely recovered and things were great" until this event occurred.
I guarantee we will see it. I can see that fuckhead Geithner saying it or that piece of shit Summers saying it.
I guarantee you will see it.
+1E9 After the underwear bomber it will be the anal jihad. The fraud never stops.
Please refrain from using the deprecated term "underwear bomber". The proper term is "crotch bomber"
Thank you for your attention to this urgent (almost explosively so) matter.
And for the record, his bomb wasn't "crappy" - it was "piss poor".
LMAO! Reminds me of this girl I used to date.........
+10
My guess is Yemen first, embassies are closing down. Secure the Saudi East-West pipeline and access to the Red Sea and then the Israeli jets can fly over Saudi Arabia to hit Iran.
http://www.eia.doe.gov/cabs/Saudi_Arabia/images/Oil%20and%20Gas%20Infras...(large)%20(2).gif
Is there an echo in here?
+1000000000.
DEAD FUCKING ON.
Dead on, unfortunately
Obviously, the point is to highlight the absurdity of an economist commenting on a non-economy. Useless, something to be ignored.
His statement has more holes, just at first glance, than swiss cheese.
According to recovery.gov, see link;
http://www.recovery.gov/Pages/home.aspx
ARRA2009 will be at full stride around July 2010. A recession requires verifiable (after adjustments) two consecutive quarters of GDP decline. We know GDP is skewed by stimulus, and GDP quarterly results take many weeks before release, and the GDP number is suspect on its own.
By stimulating GDP you change it. The measurement essentially is what you yourself make it to be. It has no basis for measuring what may be perceived as reality, or useful in terms of meaningful data.
This should be known as the Economists Stimulus GDP Heisenberg uncertainty principle.
http://en.wikipedia.org/wiki/Uncertainty_principle
----------
So far the track record for the FED/Treasury + GSE to pull housing stimulus, in its many forms, has no historical foundation. The fact is, almost all of the programs are still on-going, and even TARP was extended. So we really have no proof that any specific type of stimulus may officially end in CY2010. The one program of significance that was halted, or I should say expired, was the $300B Long Term Treasury buy.
Krugman's opinion has no basis in fact. Perhaps he should follow ZH.
Mark Beck
I would have to agree that what is needed is a major mind shift by the general public from "I'm entitled to..." to "What work can I do....". We have millions on EUC, Millions more on Medicad and Millions on Government pensions. The Service on the debt is 1/6th of what we take in in taxes (probably more this year as tax income will plunge) and we are close to adding more to the deficit than what we take in in taxes.
What ever happened to pulling yourself up by your own bootstraps instead of pulling everyone down with you?
"Ask not what your country can do for you, ask what you can do for your country." Hope for the best, prepare for the worst. This does not look to end well.
CNBC - Fast Money had the courage to allow Peter Shiff some airtime just now. Good and funny at the same time. Funny watching Seymore telling him he's full of shit.
http://www.cnbc.com/id/15840232?video=1376887454&play=1
Good video, man that first talking-head really pisses me off: "Prices arent up, hence no inflation!!!111!!!1"
Retard
"Who is finally going to have the courage to tell America that the average family of four is either going to get pimp-slapped out of some more net worth in the next few months, or..."
No-one is going to tell them.
(Who hasn't already screamed it from the rooftops and been suitably branded in reprisal.)
But that's OK, because they'll find out for themselves in time, family by family.
Doesn't fiscal and monetary mean the same thing here?
Not to nitpick..I understand the power of repetition since I used to pray the rosary on a regular basis.
The power of three
The power of three
The power of three
you see..
Ohm mani money holmes.
-MonBarleyPlume
Does Krugman (or most economists for that matter) ever actually make a testable prediction? If the world ends, he predicted it (1/3 probability), if we party like it's 1999, he predicted it (2/3 probability). Thanks for wasting space.
Economic Recovery And The Coming Financial Crisis
great presentation from the AEA in Atlanta by Simon Johnson
(pdf slide presentation)
http://baselinescenario.files.wordpress.com/2009/09/recovery-and-crisis-...
WSJ summary
http://blogs.wsj.com/economics/2010/01/04/simon-johnson-politics-vs-fina...
I presume y'all have seen this, relating how the banksters have been taking the government for a ride under the PPIP?
http://www.businessweek.com/news/2010-01-04/no-good-deed-goes-unpunished...
It gets a little more pointed later on in the article:
The chutzpah of these shysters is astounding.
fairy tales are the currency of shysters
don't listen and go get a drink
Cut Krugman some slack, when he says the recession may return he means "recession recession", that is, a recession which negatively affects the uber-wealthy. He couldn't care a corn covered turd ball less about the little people.
Allow me to quote anonymous from another thread:
Bernanke and Geithner's top priority is to keep bankers rich. What actions they will take will be primarily driven by this goal. The effect of inflation and unemployment on the masses matter little--the effect of these on banks matter massively...
But we like our new priests..
Our secular religions require new priests, wizards and sacrifices. Everyone knows that the rain gods can be placated with ever increasing amounts of human sacrifice.
Happy are the few who owe no debt.
With that in mind, I see the United States running into a brick wall and it is going to hurt when the interest on the debt comes due.
Interest rates MUST come up. If they dont, we will get buried by our own spending.
Debt and Stimulus spending is equal to a 8 mile wide asteroid coming down at 130,000 mph while everyone below on earth scurries for what little pathetic stuff that will not sustain them through the initial fallout.
I for one intend to go straight to ground zero with a schnapps in hand happy.
If you are in a city, get out. If you are in a town, start making friends with all your neighbors. If you are in the Country start being self reliant.
As they say, who is Uncle Sam gonna call when his bills come due with interest and there isnt a dollar left in the place to pay with hunger and cold setting in.
Hmm?
Who you gonna call?