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Wednesday Humor (And Hubris): Who Said It?
Guess who said it, back in 2003:
A Fiscal Train Wreck
With war looming, it's time to be prepared. So last week I switched to a fixed-rate mortgage. It means higher monthly payments, but I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits.
From a fiscal point of view the impending war is a lose-lose proposition. If it goes badly, the resulting mess will be a disaster for the budget. If it goes well, administration officials have made it clear that they will use any bump in the polls to ram through more big tax cuts, which will also be a disaster for the budget. Either way, the tide of red ink will keep on rising.
Last week the Congressional Budget Office marked down its estimates yet again. Just two years ago, you may remember, the C.B.O. was projecting a 10-year surplus of $5.6 trillion. Now it projects a 10-year deficit of $1.8 trillion.
And that's way too optimistic. The Congressional Budget Office operates under ground rules that force it to wear rose-colored lenses. If you take into account -- as the C.B.O. cannot -- the effects of likely changes in the alternative minimum tax, include realistic estimates of future spending and allow for the cost of war and reconstruction, it's clear that the 10-year deficit will be at least $3 trillion.
So what? Two years ago the administration promised to run large surpluses. A year ago it said the deficit was only temporary. Now it says deficits don't matter. But we're looking at a fiscal crisis that will drive interest rates sky-high.
A leading economist recently summed up one reason why: ''When the government reduces saving by running a budget deficit, the interest rate rises.'' Yes, that's from a textbook by the chief administration economist, Gregory Mankiw.
But what's really scary -- what makes a fixed-rate mortgage seem like such a good idea -- is the looming threat to the federal government's solvency.
That may sound alarmist: right now the deficit, while huge in absolute terms, is only 2 -- make that 3, O.K., maybe 4 -- percent of G.D.P. But that misses the point. ''Think of the federal government as a gigantic insurance company (with a sideline business in national defense and homeland security), which does its accounting on a cash basis, only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting . . . is an accident waiting to happen.'' So says the Treasury under secretary Peter Fisher; his point is that because of the future liabilities of Social Security and Medicare, the true budget picture is much worse than the conventional deficit numbers suggest.
Of course, Mr. Fisher isn't allowed to draw the obvious implication: that his boss's push for big permanent tax cuts is completely crazy. But the conclusion is inescapable. Without the Bush tax cuts, it would have been difficult to cope with the fiscal implications of an aging population. With those tax cuts, the task is simply impossible. The accident -- the fiscal train wreck -- is already under way.
How will the train wreck play itself out? Maybe a future administration will use butterfly ballots to disenfranchise retirees, making it possible to slash Social Security and Medicare. Or maybe a repentant Rush Limbaugh will lead the drive to raise taxes on the rich. But my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.
And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future.
I think that the main thing keeping long-term interest rates low right now is cognitive dissonance. Even though the business community is starting to get scared -- the ultra-establishment Committee for Economic Development now warns that ''a fiscal crisis threatens our future standard of living'' -- investors still can't believe that the leaders of the United States are acting like the rulers of a banana republic. But I've done the math, and reached my own conclusions -- and I've locked in my rate.
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funny
First, lenders will demand higher interest on their loans, to compensate for the increased risk (or uncertainty regarding the future of the economy/nation-state). Then savers will demand to be paid interest again (a quaint idea, right?) for the risk of depositing their money with the bank. Then banks will HAVE to lend, in order to earn enough interest (through real lending, not parking 'reserves' with the Fed) to pay interest to depositors.
Then... Inflation. Loss of reserve currency status. Bankruptcy epidemic (also a quaint notion). Loss of faith in the currency (aka hyperinflation). Fall of government.
Any input as to whether I've got the order about right is appreciated
And btw, the very word dollar originates from thaler, which meant a coin of 0.9 oz silver.
http://upload.wikimedia.org/wikipedia/commons/c/c0/Hungary-thaler-leopol...
I'd like to know how many times he's refinanced since then...
I'd like to know his street address...
How are these people not embarassed by themselves and others within their realm?...
~~~
I'm just thankful that I share ZERO...ZILCH...NADA, in common, with the likes of Krugman...
Because they conrtol the press. And thus, memory.
Welcome to the Matrix
Yeah... I somethines think of what it would be like if the worlds population were reduced down to 50 people & I'm one of them [which would make me 2% of the population at large]...
~~~
& in the process... I got control of the only bank, the only broadcast network & news service, & I'm the President, & the only judge... [& made everyones life miserable in the process]...
I'll bet all the people who JUNK me every day on ZH... In so far as they consider themselves well rounded 'fair minded' types would take it upon themselves to be my water carrier in that moment and berate all my freshly minted detractors in that brave new world...
Francis, could you possibly make more of your postings less about whether people junk you or not and how they all don't get it, and just share your opinion and let people - whether they junk you or not - reflect - or not - on what you say?
In my younger, more naive days, I'd express amazement at the INCREDIBLE hypocrisy, MASSIVE revisionism of his own words and calls, EPIC total disingenuousness and generally speaking, boundless dishonesty of Paul Krugman.
Now?
My response is a mere:
This is what I've come to expect of Krugman. He literally could say NOTHING that would shock me.
He's a quite sad and tragic metaphor for the failure of academia, and more specifically, the absolute, dismal failure of conventional economic theory in producing anything of true worth in the modern world.
@sunaJ
~~~
No... I'll make my comments the way I want them to be [& in doing so, I'll refrain from requesting that you advise me how to make my comments]...
For the record... Speaking about 'junks' serves a purpose... What it does is 'identify' the difference between people who REPLY to a comment versus people who hide behind a junk button... For example, YOU chose to REPLY [probably 'junked' as well, but that's beside the point, at least you had the courage to say something]... Pointing out the number of 'junks' [especially to comments that nobody replies to, identifies those people to themselves]... Not that they give a FF in the end, but if I'm going to say something, & somebody uses a JUNK button, it becomes a DE FACTO communication 'loop'... But it's a pusillanimous one... Therefore, if I'm not given the courtesy of knowing WHY a comment I may make is offensive to someone, the only thing I'm left with is calling out the junk...
Note: This especially goes in the case of the above comment... Why?... Because most of francis_sawyer junkers are what I'd call 'serial junkers'... They're not exclusive to me [others on ZH carry them around as well]... There 'types' are ones who perfer to attack the PERSON rather than the ARGUMENT... I'll admit that it still probably goesn't gain anything by calling them out, but IMO it doesn't lose anything either...
It's just another way of saying... "I'm still here whenever you finally get the guts to air out your own version of the issue & lay it out there for the public to see"...
Now... Wasn't that easy?... See what perspective one can gain when they endeavor to REPLY [rather than hide behind a junk button]?... Perhaps they STILL don't like the perspective, but it's more colorful than a blog full of "Fuck you Bernanke's" in 5 syllables or less... Then again, some people are just 'haters' & don't have time to tell you why because it's RISK FREE keepin one's yap shut...
Clearly, my error. Carry on...
Thank you I will... & Congrats for your courage to articulate your thoughts...
~~~
For the record... I'm not trying to "win" any arrow contests around here... I publish comments when I'm motivated to speak out about something... Sometimes, either my style or tone upsets people [& sometimes it's the argument itself]...
I'll give you a perfect example on this... Months ago, I went on and on & back & forth with CrockettAlmanac about an issue... I did my best to articulate my POV, he did his best to articulate his... Frankly ~ I can't say that anybody WON the argument [because it was an unwinnable argument either way]... Which proves my point... I'm not trying to WIN anything here, I'm just trying to express ideas... It just so happens that my 'ideas' go against what the mainstream has been conditioned to think... Many of my ideas are therefore taboo... Strangely ~ some people stick to making 'slam dunk' comments around here [which, I suppose, satisfies some deeply rooted 'need' in their life to be rewarded with approval... ANY approval]... Not saying that was the case with Crockett... But that dynamic is palpable around here...
Anyway, what happened?... Crockett got so flustered that he practically stopped posting... [he even admitted to this himself]... He's definitely still around lurking though because I see his comments pop up from time to time...
What's the moral of the story?... NOTHING ~ it's just a story... But it does illustrate some subtle dynamics that go on around here if anybody is paying attention...
- Some may take the POV that Crockett 'wimped out'... That he couldn't stand the heat of FIGHT CLUB when a real fight was brought to the doorstep [instead of all the yuk yuk backslapping that sometimes goes on around here in the NEW & IMPROVED, 'CHEERS WITH A BLOOMBERG TERMINAL' version of ZH]
- Some may tell me that I'm FOS [by that previous bullet point]... But if I AM FOS, feel free to TELL ME WHY... It doesn't take long around here to figure out who attacks arguments & who attacks the 'messenger' of an argument... Like Doc Holliday said to Ike Clanton [in the movie 'Tombstone']... "Maybe poker isn't your game Ike... I know, let's have a spelling contest!"...
In any case... In warfare it's known as the 'SCORCHED EARTH POLICY'... Losing the war?... Well ~ just go ahead & burn everything in sight while making your retreat...
Upvote
I read a while back that the biblical roman coin called a 'talen or talent' was Linguistically the source of the english word 'talent' representing a personal skill that is an asset. As in Obama is a talented liar.
he really was. however it is the kind of thing that has a short shelf life. and he's been smelling funny for a while.
Boris have single monetary theory. Interest rate is never rise again on US Dollar or Euro or Japan Yen. Reason is simple. Duration for Mismatch. Lend Long, Borrow Short. Even Federal Reserve is now buy Treasury of 30 year duration. How can bank to pay high rate for money is loan already at low rate!? Key fact is Bernanke is head of Federal Reserve, Federal Reserve is central brain of banking cabal (and Protocol of Elder of Zion - but that is other story) and will not destroy bank. In 2009, QEI is take interest rate to edge. In 2010, QE2 is take interest rate over edge. Sorry, is not can turn back, at the point of no return ("How long, how long, to the point of no return").
But what is Boris know!?
I agree with Boris, government will not pay much more than is pay now. Boris, however, if new house want in future, to pay much higher of interest rate. If Boris need new razor for shave or womans leg, credit card much higher interest than now. Bank not to pay Boris so much for saving probably also.
Jesus...
I read that as Boris use life savings to pay to shave woman's leg.
Now it all makes sense.
"How can bank to pay high rate for money is loan already at low rate!? "
The method used in 2009 was to tell the Treasury Dept they had to give you the money or you'd go bankrupt.
In 2009, interest rate is fall to low level if bank not borrow, is pure crazy. But borrow, not enough, bank is need margin between borrow and lend. Multiply margin by velocity and now understand why bank is rich and powerful. But if lend long at low rate and in future must borrow short at high rate, margin is evaporate. Compound with slow velocity, profit is vanish and bank capital is depreciate. Therefore, if rate rise after QE, QE, QE, then bank is crush. Why would cabal desire crush of member bank!? Why is woman razor so expensive and not include calculation of Consumer Price Index!?
I think there's a fatal flaw in this reasoning. I don't expect savers or lenders to demand anything unless they have an alternative.
And we all know the only alternative is heavy and shiny.
But they won't percieve it as an alternative until the paper market collapses.
This looks like the cornerstone. Remove it, and all the building comes down crumbling, no matter what happens elsewhere. Keep it, and the farce will be sustained.
@ Herd
I can't say for sure, but lenders and savers demanding higher rates of interest would be DEflationary, right?
And also, just because banks want to lend doesn't necessarily mean anyone is looking to borrow.
jm2c
I think you answer your own question to the extent that deflation in house and car prices (and next after that college and air fare) happens, people will be willing to borrow to buy those things.
So a car that costs $20,000 with 4.5% financing now will for a time cost $16,000 (or you will get more perks for $20k, but you get the drift). $16,000 but with what, 7, or 8%+ interest?
I just dropped a Krugman in the toilet bowl. The bearded potato is too big to flush. I'll have to re-hypothecate it with a courtesy flush or two.
from "Plunge Protection Team" to "lets drop an M-80 down that thing and hit flush and see what happens." huh. go figure. http://macromarketmusings.blogspot.com/2010/08/bubble-in-bond-market.html
ah, the good ol days where i used to have quite the back and forth. 3 LONG years ago actually.
And that's how you know that somebody is not to be trusted. Whichever way the political wind blows, so some people follow.
A LOT different than the Ron Paul 80s flashback article yesterday, huh? Man's stead as a rock. Thank God.
It is refreshing to see a man of conviction like Dr. Paul. You don't see too many in the political world that's for sure.
Or three or four if you have one of those newfangled low flow toilets.
uh huh...
The law of unintended consequences.
So I point this out to some of my uber-lib buds and note that now I'm actually using more water than I had before.
Not to mention that the old commodes had been designed to take a standard to big load and with one flush, get the stuff flowing down the drains. I mean so much crap gets moved by so much water... simple engineering.
But now, many municipalities are having to use caustic chemicals to go back into the systems to dislodge backups that accumulates because of not enough water flow.
Thereby dumping toxic stuff along with the other stuff into the environment.
Good on ya, boys! Save the fucking environment.
Just like the NYT's article a day ago noting that something's amiss! Global warming has stopped, plateaued for the past 15 years! What the fuck!
Whata loada crap!
Roger that. Moved into an apartment in NOVA years ago and had to flush three times per dump. First flush was mid dump which sometimes was messy, second time post dump, and third time was to get rid of the toilet paper. My other option was to have an overflowing toilet.
I worked at the regional sewage treatment plant so i knew i would always have a job.
Back in 98 I was just a kid but I remember trying to discuss with someone older the possibility that Global Warming wasn't run amok. I didn't know fuck all about anything, but at least I was skeptical. And hey, what do you know, sitting here 15 years later it was well-placed skepticism.
Ahem. This is exactly why anyone thinking of relocating from a "rich" "first world" country to latin america should definitely NOT DO IT.
Your mental luggage includes a lot of bad habits, guys. Impatience for one. Rudeness for another. Disrespect. Thinking there are 2 queues for anything, one for your important self and the other for the foreigners who occupy the space you just invaded.
Perhaps the silliest though is the thoughtless slinging of paper down the drains.
Use a WPB like everyone else!
Most Simons, and the rest of you (think, Haciendas in Paraguay, Wine Estates in Argentina), will not make it. You will end up in a colony with electric gates and 24h security guards.
Guess what will happen to the guards and gates in a bad moment?
Good luck with that.
That's from like 10 years ago! He's change a lot since then, hope I didn't give the answer away...
And about 9 years ago, Dave Walker said this mutha was gonna blow.......when national debt was half that of today. " DEBT CRISIS MUCH WORSE THAN ADMITTED ".
http://www.dailykos.com/story/2004/11/19/74961/-Debt-crisis-much-worse-than-admitted-Comptroller-General-You-owe-Uncle-Sam-330-000
Its not the debt, its the unfunded liabilities.
paper rocks scissors:
dollars beats words all day long
sell........out
Krugman in 2003!
cognitive dissonance: the mental act of attempting--but always failing--to understand how the politcal sensibilities of America have been completely reversed without the respective left and right shills noticing they have switched sides.
There are no sides when it comes to government. There is only the collective.
the scale of govt and its dependents is so massive now that any threat to its source of revenue makes it a us vs them scanario (and, yes, i think we are balls deep in that situation and sinking fast)
So, if he can't figure it out what chance do I have?
Do Not utilize him as a strawman of intellect, FFS Best employed for crazy ass ideas, unintelligibly faulty analytics and a source/object of humor and ridicule.
Don't panic...
Get a grip...
You will be OK
I hope interest rates go through the roof. Means prices will crater...
PLUS I get to use that as a bigger tax right off... WIN, WIN!!!!
Be careful what you wish for. Prices crater at first. Esp. for items purchased with financing. See my comment above.
True, thats why I think you have to time it accordingly...
2012 Q4 GDP 0.4%
2013 Q1 GDP on the inventory bounce, 2.4%
Projected 2013 Q2 GDP with bounce complete, 1.5%
THAT'S ALL WITH MASSIVE STIMULUS.
Why on Earth would they think they can withdraw it. With GDP at 1.5% BEFORE the DoD Sequester layoffs starting in July, why would they think they can withdraw it?
I smell a Mario Draghi moment. Say you are going to do things, over and over again, and never do them.
Too funny. I guessed right then convinced myself it couldn't be.
Maybe if he'd known he'd drive down rates in the future, he wouldn't have locked-in at ~6%...probably chaps his ass every month when he sends that check.
Could that be the reason he had to declare personal bankrupcy a few months ago?
http://dailycurrant.com/2013/03/06/paul-krugman-declares-personal-bankru...
Satire.
Financial advice from someone who is bankrupt is like free market advice from Obama.
When is Krugman going to run for office?
Shortly before his assassination.
I don't know...He could always be Biden's VP when Obama is impeached for lying to the public.....wait...
I was going to say Jim Cramer, then I changed my answer to Cosmo Kramer.
"Missed it by that much"
Maxwell Smart, Agent 86.
I loved the answer.
"locking in a rate" is a solid plan if you've
a) stashed all the cash in some safe place to spend on assets that deflate faster than your interest rate or
b) bought an undervalued asset that will certainly go up faster than your locked in rate when interest rates rise.
that's cool. but what are you going to buy? (a) or what asset will be appreciating when interest rates are rising? (b)
Forgive him, for he konws not what he does, says or thinks. He's just like you, he's just trying to make a living.
Krugman will go insane likely. So pray for the poor fellow.
Go insane?
That's his mealticket. Being insane is a New York state of mind.
Everybody's capable of critical thinking as long as the conclusion is compatible with their worldview.
They should teach this a textbook case study in Confirmation Bias.
Now he says we have not printed nearly enough! What a political hack! Piece of shit!
He had a mortgage? What a loser!
But we're looking at a fiscal crisis that will drive interest rates sky-high.
10 year Treasury rates were running a bit over 4% in 2003. Ten years later, after years of deficits that dwarf the Bush deficit of 2003, they are a 'sky-high' 2.25%.
Krugman is a political hack who issued dire deficit warnings when Bush was president, and then started urging larger deficits as soon as Obama took office. The 'Economist' magazine did the same thing.
I think rates will never be high. The Fed will simply end up buying all debt with printed money. Rates are a function of price.
We can have zero rates until the dollar ceases to be used as currency.
I'm not real old, but I learned one thing long ago- I never use the word "never".
The analogy to an insurer who runs on an accrual basis is noteworthy.
It is interesting to note there are 2 accounting perspectives on future liabilities, that were discussed at length toward the end of the Medicare trustees' report: the trust perspective and the governmentwide pespective.
The trust perspective includes all "assets" in the trust fund.
In addition, any interest redeemed from the trust fund is considered an asset.
Any general revenue transfers is considered an asset.
For example, over the next 75 years, Parts B and D were about $21l trillion dollars in the hole, for 75% of the premiums are paid with general revenues, an immediate expense, and raising the deficit.
From the trust fund perspective, Parts B and D are fully paid up!
These 2 perspectives is what is dividing us from our more liberal buddies.
They take the trust fund perspective, believing unpaid for Treasuries are like cash in the bank!
Don Levit
But I learned Treasuries are risk-free assets in school, either my schooling is wrong (unpossible) or you are a liar! /sarc
I clicked anyway...
I thought of the possibily that it would be too easy to be Krugman.
I was wrong...lol.
Lol. Do we need any more evidence Krugman is off his rocker ?
But now that we're $17 Trillion in debt we aren't a Banana republic and the FED is saving the country?
What a disingenuous boob.
Krugman - the bearded potato - PhD.
He's simply a paid shill for the Authoritarians.
Sounds more like a democratic, blue-waving, autobot than a mouthpiece for the powers that be...
(in 2003 we had a Thing-One and not a Thing-Two.)
I think there is something mentally wrong with Krugman. I'm serious. Watch him and he has crazy eyes and makes crazy expressions like a psychotic homeless person foaming at the mouth. He may have been infected with rabies.
An analysis of his inconsistent articles like this and his attacks on Reinhart/Rogoff and every fiscal conservative or Republican only enhance the case.
If we had a Republican President his shit would be all about how we are going to implode, yadda yadda... a Dem Pres, especially a Black Muslim? "Spend more , motherfuckers!". Asshole fuck , may he rot in Hell for eternity.
He didn't tell you that his mortgage was for $500k more than he should have received because he's a Princeton professor.
Still, fun to see how much the left sold out on war. Forget about deficits.
Psychopolitik manual by Lavrentiy Beria, one sick motherfucker
- To produce a maximum of chaos in the culture of the enemy is our first most important step. Our fruits are grown in chaos, distrust, economic depression and scientific turmoil. At least a weary populace can seek peace only in our offered Communist State, at last only Communism can resolve the problems of the masses.
- In a Capitalistic state you are aided on all sides by the corruption of the philosophy of man and the times. You will discover that everything will aid you in your campaign to seize, control and use all "mental healing" to spread our doctrine and rid us of our enemies within their own borders.
- By psychopolitics create chaos. Leave a nation leaderless. Kill our enemies.
- Show me the man, and I will find you the crime.
Lavrentiy Beria....
Pure psychopath - wouldn't have recognized empathy if it bit him on the arse.
Seems to be a required skill for present day 'lawmakers' (correct spelling - lawsubverters)
People talk about unfunded liabilities all the time. When I hear this it makes me crazy. There is no such thing. Silly people that's what bullets are for (I give a nod to the TRIX rabbit), but who in there right mind thinks SS or Medicaid or Medicare will be there in 20-30 years. I'm just hoping when my " Soylent Green "moment comes I can chose a "Hot Shot" over the Rod, well and maybe a hooker or 2.
Unfunded liabilities = stolen money.
People have paid into a fund most of their lives and DESERVE a return on what they've paid in.
Problem is that the 'representatives' used what they paid in for their own nefarious purposes instead of wisely investing.
Boomers are only asking for what they have paid for.
They are not going to get it, because it's already GONE.
The word theft comes to mind.
The only person you have any hope of relying on is yourself - some are still hopeless, unfortunately, and the rest of us can only hope for the best.
Excellant- how did you find this?!?!
I remembered reading some rerun about "switching my mortgage" from him before.
Otherwise I would have guessed wrong: no hyperbole, was he weakened by some flu or so at the time he wrote that?
But all sarcasm aside, how did the call for rising interest rates turn out?
And that from a Nobel memorial prize winner...
When I saw the dildonic reference to Rush and taxing the rich, I new it was some sort of mucus covered little worm. So, in fact I guessed correctly. ;)