What is in store for the future?

None of the “fundamentals” that brought us out of past economic downturns exist anymore.

For instance:

1.) we no longer have a solid (core) manufacturing base to take advantage of a decrease in the value of the dollar

2.) the U.S. is unlikely to recover its position as “the Unique Supreme” banking, trading and investing center it has been in the past

3.) the U.S. is not designed in a structurally efficient enough way to do well in a $3.50 and up dollar/gallon gas environment and we cannot easily change this fact(see #4 below)

4.) critical infrastructure is failing and we do not have the money to make the repairs or transitions that will help to make us competitive going forward

5.) resource,transportation, and energy costs are now prohibitively expensive in a time when we need cheap resources to recover

6.) our education system is failing, and more importantly is failing to provide a significant enough new generation of qualified talent for our workforce/leadership

7.)Our national debt of 10 trillion and growing means a huge portion of future tax revenues will go to interest and paying down the debt

8.) all of the above make it unlikely that credit will ever flow in this country as freely as it has in the past

9.) all of the above make it even less likely that there will ever be a significant enough job recovery to help pull us out of the dire straits we now find ourselves in.

We all have the past thirty years of leadership in our country to thank for not having enough foresight to prepare us for the times we are in. To be sure, some have warned of the changes that were needed for decades, but they went unheeded. Thank especially the Republican Revolution and the wealthy for placing “short-term investor profits” above all other priorities in our country.

In short, don’t expect a significant economic recovery in this country no matter what lip service optimistic economists pay our desperate hopes

The dollar, though strengthening a bit lately, is still weak in historical terms and may weaken more again soon.

Likewise, gas has cheapened a bit lately, but analysts do not expect the drop in price to last for long.

I live in Fairfield, Iowa but purchased investment property in California. Is there any hope for us greedy investors who are facing foreclosure on investment properties? Isn’t it in the interest of the lenders to renegotiate with their borrowers to give us affordable principal and terms commensurate with the diminished property values? Especially since they allowed me an irresponsible interest-only mortgage that was too lenient toward the qualifications of the borrower and did not consider their own protection.

John, I could not have said it better.
I concur 100%.

To quote Oliver Hardy, “This another fine mess you have gotten us into”

Patricia Draznin: is this a joke? Are you serious?

Why on earth did you take out this kind of risky mortgage?

You made a bad business decision and now you’re screwed.

It’s your fault for not doing your homework. If you did not have the proper capital to buy this property in the first place you should have not done this. Your greed followed by a lack of common sense has landed you in this mess.

Here is one taxpayer that says no to bailing out borrowers like yourself.

Amidst scandals and mismanagement, would financial stabilization of the nation stand a better long term chance if ALL incumbent U.S. Congressmen were voted out next week? Close to 90% of them (Senators plus Representatives) are up for re-election and their latest behavior calls for merging and making BIGGER the very institutions they claimed we had to bail out because “they were too big to fail.” Even General Motors wants a piece of this free pie from the taxpayer.

Hey, can we talk about greed? Greed isn’t good, greed caused allot of these severe problems. Let’s talk about people with private gulf courses wanting more of them.

Tim

Does anyone know what the music in the interlude around 10:35 this morning was? It was indie-rock-ish

Why could we not move into a system such as binary economy where there would be changes to central banks to provide interest free loans?

This is great. What we need to do is live within our means for the time being. Mortgageslike that of patricia’s should be allowed to foreclose and the banks take the loss. We keep hearing that consumers are 70% of the economy, but no one bothers to note that their is absolutely no way for the consumer to spend what they spent in the last ten years even if you cut interest rate to zero.

What we might need now is in conjuction with the bail out of banks is government spending on infrastructure and personal savings.

No bail out for detroit or home owners in trouble.

Everytime one of the economist is asked about who’s going to pay for the subprime diaster, they mention that even the rich have lost lots of money. Are we supposed to feel for them? They have no answers when it comes to accountability. That’s what’s wrong in our country. The big wigs are never accountable. They should be jailed and have to pay money back. I know my statements are simple but I know most americans in the “used to be middle class” feel this way. The more powerful you are, the less you have to own up to.

For instance:

1.) We manufacture more now than we ever have. The dollar has recently strengthened.

2.) The U.S. hasn’t been “the Unique Supreme” banking, trading and investing center for decades; but it all depends on where the money is and where the regulations are the most hospitable. We have a $13 trillion economy; nobody else is close. Hopefully Congress won’t blow it and discourage the world from investing here.

3.) I paid $2.50 for gas yesterday and it felt great.

4.) Money can always be found if the investment is worthwhile, especially infrastruture.

5.) Resource,transportation, and energy costs are down from highs and getting cheaper.

6.) Our education system is failing and yet millions of foreigners come here and more would like to just to get an education. Sure it could be better but it’s not for a lack of money, mostly its failings are due to the peversions of entrenched interests.

7.)If you want to pay for all of the above, you’ve got to borrow and right now people are willing to lend the US government money at rates that are at all time lows. Now is the time to borrow.

8.) Credit is a global market, and if you haven’t noticed the world is looking pretty shaky. Again US rates are at all time lows. We can borrow a lot of money and not have to offer much return because the US is so much more attractive than any other credit market.

9.) 94% of people who want a job are employed, very close to historic lows.

Economies ebb and flow, nothing goes up forever. What we are experiencing is a normal part of economic cycles. The economy will recover as it always has, despite the pessimism of doomsayers.

10.)You are a delusionary Republican retard, as can be attested to by the posts you have made on this site over the last couple of months and which anyone can go back and examine if they are interested (which I seriously doubt anyone is).

John, Name calling, so pathetic; but when the facts are against you, it’s all you’ve got.

I’m sorry, you are right to say that. I apologize.

We are in such difficult times that I get uncharacteristically upset at people who delude themselves and end up ensuring the kind of leadership we’ve had since the Republican revolution began to take hold in the Reagan era. I hope “On Point” deletes my last entry.

Let me restate what I meant without resorting to name calling:

10.)You are a delusionary Republican, as can be attested to by the posts you have made on this site over the last couple of months and which anyone can go back and examine if they are interested (which I seriously doubt anyone is).

Once again I’m sorry and I will definitely refrain from using derogatory epithets in future posts.

10/28/2008

OF MEN AND MICE

There is an invasion of mice in the Eastern India and Western Bangladesh. Lack of food is forcing mice in to the homes of people where the attack the residents. Army has been called to get rid of the pests.

It is funny, that mice are acting like people now, reproducing even in the face of a severe shortage of food, eating up the reserves. I wonder if they are liberals or conservatives, since both camps believe that “EVERYONE” has the right to reproduce, whether they can support the brood or not.

Just like a certain segment of our society already does it from instinct, I believe all politician, and the other do gooders should be required to wear their pants off their buttocks, if you have your head stuck up down there lowering the pants off your behind will let you get more air to your brains and thus allow you to think better.

Why are there some people even today thinking that anyone can fix the mess we are in.
How can anyone still believe that we live in a free society, a democracy no less, when we are a short few months, may be a couple of years away from a totalitarian regime. May be God will send us a prophet, right? RIGHT! The joke is on you, God gave you a free will and you abused the crap out of it.

A vast majority, eighty percent, of the humanity is totally useless, ( look up, A New World Order 2003, below), it is net waste of resources, water air and food, and does not contribute to the advancement of human cause.

Our current economic model, based on consumption, is self defeating, we must consume more and more to keep the economy going. But who pays for this consumption, and how? When no one (the rich and the industrialists) wants to spend “their money” (as in paying higher taxes or giving benefits to the workers) but to have some one else spend theirs, for their benefit. The government is then forced to borrow and spend to keep up the facade of prosperity. The situation is same whether it is the United States or Pakistan or Haiti. In the long run, however, the government becomes broke and corrupt, politicians lie and make fake promises while they are bought up by the ones that control the real riches of the land, unlike the government that is left powerless, the government that did not want to collect enough taxes from the rich is now left at the mercy of the same powerful.
it is on my blog

I accept your apology, but note you continue to ignore facts that US interest rates are at historic lows and that the US dollar is surging; both indications of renewed confidence in the US. There is no doubt about the dollar’s predominance.

AND Oh’

the dirty little secret about interest rates is this, if we raise the interest rates to encourage savings, for instance, and to reduce spending where people can save money for down payment on a car or a house for instance, the interest payment on the federal debt of 11 trillion dollars will get so high that all the current taxes collected would not cover the interest payment on debt alone, let alone have any money left to pay the benefits or even run the defense department. That is why the fed must keep the interest rates low regardless of the consequences, hyper inflation, worthless money.

And yet the dollar strengthens, despite suggestions it is worthless. We’ve had low interest rates for some time and inflation has not been problematic. Savings can be encouraged by cutting taxes and raising credits.

What Goes Up……….Blood, Sweat & Tears!
The stock market lost $8-trillion in the last 16-months; $4-trillion of it was lost within the last 30-days. Panic selling caused some of it along with the market adjusting to a new economic reality.

Individuals purchase stocks for one reason; in anticipation that the price will rise with the result that this will increase the net worth of the investor owning the stock of the company. Stocks fundamentally rise or fall as the investors’ expectations of the profitability of the company rises or falls.

It is true that much of the decline in the stock market results from a “selling panic” caused by the many bank failures and the ineffectiveness of the federal government to solve the credit shortage. Eventually the investing public will understand that life will pretty much go on a usual as the weak banks fail and as the credit crisis indeed is resolved.

However, much of the market decline is a result of investors adjusting their expectations of the future income of the companies that they hold in their stock portfolios. With expected returns from investments lowered, it means that “values” of stock portfolios will also fall. A lower expectation of earnings is the harsh reality we are facing; it is not panic driven.

The new reality is that the average household lost trillions of dollars by the value of their homes falling precipitously and now the decline in the stock market. This then results in a significant drop in demand for the goods and services offered by companies that investors have purchased. These companies will earn less and therefore the value of their shares will decline.

The issue for bargain hunters is to determine what portion of the sell-off is due to panic and how much is due to fundamentals.

http://banicki.biz

Mr. Kaufman stated, categorically, the “competance” of Alan Greenspan, former chairman of the Federal Reserve. Although nuanced, Mr. Greenspan did in fact admit to his intellectual incompetance (unfitness) before a committee of the U.S. House of Representatives.

I would give your comments more credence if you didn’t repeat the same spelling error twice.

Point taken! CORRECTION: Competence

The final questions from listeners was about accountability. He didn’t really answer them. If size matters, as in “too big to fail”, what the heck are anti-trust laws for? Shouldn’t we limit there size than? Or is the problem they have to have size to counter-point the large government controlled institution and funds like China, Saudi’s and others? What is the problem with “trust-busting” and these large companies?

The underlying problem to this mess is the lack of accountability on the part of the individuals and institutions that create and sell the various financial products. The best example is insurance. Those in the sales division don’t want to hear from the claims department. The immediate return is all they are interested in. The claims people(or in the present case the taxpayers) follow the elephants in the parade with their shovels.

Only when the sellers believe that there might be personal negative financial and career consequences will they look to the potential pitfalls in the investments they sell.

In the current situation, with the coin rolling in no one in sales wanted to hear from people with bad news.

Maybe there should be the equivalent of “environmental impact statements” (as flawed as they might be), required before new investment schemes are invented.

Henry Kaufman is yet another apologist for an amoral economic and political system that attempts to substitute accountability for responsibility. Note that his conversation is devoid of any notion of what is rightly called the “Golden Rule”. Those who profited from this system did so with clear intent to benefit at the expense of others.

A nation built upon an inherently amoral ideology cannot sustain itself. The impulse to act sole in term of self-interest cannot legislated. We must create a system of political and economic relations built upon a sense of responsibility our nation, community, and fellow men.

Interesting discussion. How about this view: Productivity is up 20 per cent, the wages only 4 per cent. According to economists the real wages are declining (the amount of products people can buy) for some years while the profits are up in the same time (never happend after WW 2, I would call it distribution of wealth - from the workers to the corporations). Unions that can muscle in some bargaining power, are weak. All ideas of politicians aim at lowering taxes or tax payback as economic stimulation. Lasting stimulation can be achieved by shifting or “re-distibution” of some profits into the pockets of working people. Does not work without some social unrest, I am afraid. 25.000 machinists at Boeing were the only people these days who showed how to deal with the economical problems. They had a strike the last couple of weeks - and won: 15 per cent more in wages, more job security. Mister Kaufman is certainly a very knowledgable expert but I wish “On Point” would invite some union economists next time.

What I find interesting about this is how we the tax payers are going to bail out the auto industry.

Just a few years ago they lobbied Washington to overturn California’s new MPG rules for cars that is going to be set for 40 mpg’s. They won. Instead of developing fuel efficient cars and trucks they kept making SUV’s.

Now the big three are in trouble and we are being asked to bail them out. What is wrong with this picture.

I find this criminal, and while I feel for the workers being laid off, this is the fault of bad planing from management.

Majawill claims that 94% of the people who want jobs are employed and seems to use it as part of an argument that our nation’s economy is in decent shape.

However, our nation’s official unemployment statistics are flawed for several reasons. (1) They don’t count people who have become discouraged and “stopped looking for work” as being unemployed. (2) They fail to account for parents who would like to work but who cannot find worthwhile positions and have concluded that it makes more economic sense to be stay-at-home parents and live off of their spouse’s income. (3) They fail to account for people who would like to work but opt to retire since they cannot find worthwhile positions.

The unemployment numbers also fail to account for severe underemployment–people who want to work full-time but who can only find part-time work, the PhD scientist who drives a taxicab or who works as a postdoctoral researcher (low-paid, overworked gypsy scientist) because we’ve imported foreigners to work in the science field and overproduced PhD scientists, or the lawyer or MBA who couldn’t find work in their field as a result of severe lawyer and MBA overproduction.

Furthermore, the unemployment numbers fail to account for QUALITY of employment. After all, someone who works a poverty wage job for 10 hours/week is technically “employed”. Also, it would be technically possible to have only 3% unemployment but at the same time for everyone to be employed at poverty-wage jobs. After all, people do have jobs in third world countries and are “employed”.

As concerned citizens we need to dig deeper and look beyond the doctored-up unemployment numbers so that we can better discern the actual health of our nation’s economy and job markets.