Is it time to put Keynesianism out of it's misery yet?

[mykevermin]

Which will send those who bought bonds (i.e., the super rich who can invest in such instruments) into an apoplectic fit, correct?

 

[speedracer]

I wish that trader guy that pops in every once in awhile would drop some knowledge on this. To be honest, I'm not sure. The bond market seems to be the focus of the market weirdness right now. There's general pressure there due to so many perceived high risk sovereign bonds, with the added perceived risk of socializing more private debt. But bonds is where safe money hides because it's "safe". If the perception was that stocks, commodities (gold in particular), etc. were going to be better investments, bonds would take a hit as money flowed out and back to those areas. That's a good thing though! It means investors believe the market is turning and more of their portfolio can be dedicated to trying to take advantage of an improving market. It's bad for bond issuers though because it means they have to compete in an improving market, so they pay more in interest to make up the difference. Which is then bad for government project starts, but good for the economy as a whole (and governments would hopefully see higher tax receipts on improving market conditions).

The American situation was seriously strange yesterday. Bond bears (or bond vigilantes as they're sometimes called) have been going on and on about how the market and commodities is the place to be and have complained that us printing dollars hasn't been properly accounted for in our low bond rates (which by all accounts appears to be true). American bonds took a pretty big negative hit yesterday (the cost of borrowing rose). So people aren't investing in bonds. So they have money on hand. So other places should see it. But the market only went up a little bit yesterday and gold actually went down. Bonds and gold/stocks *should* move inversely and the correlation should be quite significant, but they aren't really right now. Both are down today. Copper and oil are strong, but not strong enough to account for all that extra money. Inflation came in at 0.1%, which has some freaking out about deflation. We printed the shit out of dollars and deflation is a worry. WTF?

The opinions are all over the board from the big guys and seems to be 50/50 on whether we're about to break out huge or have a complete economic collapse. The Empire State Manufacturing survey just came out and said production is up, sales is up, and employment is down huge. WTF? Deutche Bank:

Data since last Friday have caused us to revise back up our forecast for the current quarter. It also appears that Q3 real GDP, last reported at 2.5%, will be revised higher, as well. Late last week we learned that the trade deficit in October fell 13% in the month.

...

This caused us to lift our forecast of real consumer spending a couple of tenths to 3.2%. Taking the net exports and retail sales data combined, we are going to lift current quarter real GDP from 2.7% to 3.5%.

Great news... so where the hell is the stock market rise? Great data, money leaving bonds... is it in a mattress or what? Mitsu Financial:

Earlier reports from retailers on a strong turnout of holiday shoppers translated into big retail sales figures for November. The U.S. Department of Commerce reported that retail sales advanced by +0.8 percent in November. Excluding autos they were up an even stronger +1.2 percent. On top of the strong November figures, October sales were revised sharply higher, to +1.7 percent for headline (originally reported as +1.2%) and +0.8 percent for x-auto (originally reported as +0.4%). All in all, October's upward revision combined with November's results imply that real consumer spending in the fourth quarter accelerated at a rate of about +3.5 percent compared to +2.8 percent in the third quarter. Overall economic growth in the fourth quarter is now tracking comfortably above +3.0 percent, assuming that the consumer doesn't suddenly fall on their face in December.

Bond prices going up, I get that. But if everyone's so bullish, why have 6 million Americans been unemployed for 18 months or more consecutively? Copper is considered one of the gold standard of predictors of future conditions. It's blowing up huge. But why is everyone refusing to take the next step into general stock performance increases?

The only thing I can think of is that investors believe that commodities are great because they don't involve companies or governments, governments suck, companies suck, and that without significant structural shift (ie jailing bankers, piercing the veil, or something else that really puts the fear of god in the corporate world), they're all just going to do it all again and they don't want to be there when it happens. At least I'd like to think that.

Oh, and Ireland just accepted an IMF bailout. The vanguard of the capitalist world socializing losses. God bless em.

 

[mykevermin]

http://wikileaks.indymedia.org/cable/2004/11/04DUBLIN1719.html

November 14-15 visit of U.S. Treasury Secretary John W. Snow was an opportunity for discussion on
SIPDIS the “secrets” of Ireland,s success with policy-makers and businessmen who were the architects of Ireland,s Celtic Tiger economy.

2004: RRRRRROOOOOOOAAAAARRRR said the tiger.

2010: meow said the tiger.

O,hUiginn recalled drafting a proposal for economic recovery during that era, using ideas that were “apparent to any first-year economics graduate student” ) cut the fiscal deficit, spur competition, lower corporate taxes, etc.

I've heard this before. It's so familiar, but I can't put my finger on where I've heard that before. Anyone else recall who might have made these arguments in the past? I bet they are regarded as fools today.

McCreevy commented that the test of any government was how well it explained to dislocated workers that the reforms responsible for their plight were good for the country.

Bad news: We're letting you go.
Good news: This will help the economy!

 

[speedracer]

[quote name='mykevermin']http://wikileaks.indymedia.org/cable/2004/11/04DUBLIN1719.html

2004: RRRRRROOOOOOOAAAAARRRR said the tiger.

2010: meow said the tiger.[/quote]
Thanks for posting that. It reminded me that Ireland was the beneficiary of a shit ton of EU pork. When the EU first formed, they were awash in money. It was believed that with the liberalization of the market, an investment anywhere was an investment everywhere. So they undertook all these huge programs to bring the backwoods EU countries up to speed. I was astonished at the scale of projects I saw in Bulgaria, Croatia, Slovenia, Macedonia, and Albania when I was there in 2005. Ireland also got big fat checks for a heck of a long time.

I've heard this before. It's so familiar, but I can't put my finger on where I've heard that before. Anyone else recall who might have made these arguments in the past? I bet they are regarded as fools today.

No kidding.

Bad news: We're letting you go.
Good news: This will help the economy!

The pro-market business degree in me and the uber-lib socialist weasel in me are in serious tension on this point. The business degree says creative destruction in the marketplace is the single greatest feature of it, and having the ability to retool the workforce to meet new needs and phase out old needs is an imperative tenet of that vision of economic dynamism that makes America so special. The lib weasel says that the jobs are not (at least not anymore) destroyed with the intent to create but to merely exploit labor. We can rue the downfall of industrial America and pretend its creative destruction was the goal but without China's near-if-not slave labor supply, there would still be strong manufacturing in America.

I don't think America will be proud of what we did to the Chinese in the period from their joining the WTO to now.

 

[dohdough]

[quote name='speedracer']I don't think America will be proud of what we did to the Chinese in the period from their joining the WTO to now.[/QUOTE]

Given the propensity of the US to exploit labor, I don't really think the country as a whole really gives a shit, muchless other European nations.

 

[Msut77]

[quote name='thrustbucket']I think nowadays when the word "Keynesianism" is tossed around, outside of the economic elite[/quote]

Who would the economic elite be BTW? I have a feeling you used this word differently than most people would.

it's generally referring to the notion that problems can and should be solved by spending your way out of them (or in this decade's case - creating money to get out of them).

Not getting into the self admitted silliness of your characterization what solution do you think there besides letting the country burn?

I fully realize the actual theory is much more complicated than that, but people like to attach basic notions to words. Always have. Just like Fascism, Communism, Socialism etc. they are rarely used in the proper context.

You of course being the greatest enemy of proper usage of those terms.

Such practices always create twists in academic panties.

I know it has been a while since you posted, I still cannot grasp what in the name of anything you happen to think this means.

 

[speedracer]

[quote name='tivo']Most investments, either here or abroad, would help the US bottom line. Do I need to say how investing in a foreign company would normally be repaid + interest or how improving quality of life overseas improves demand for american products or list half a dozen other ways? And the only exception is if the investment $ was lost, burned or never repaid.[/QUOTE]
More on this from Clusterstock because I think it's really important for the "older" members that remember "American" companies to acknowledge that there just isn't such thing anymore. Not only are they not American (except for market branding), they are 100% not interested in American interests. They just plain don't give a shit.

History will record 2010 as the year Washington became “business friendly.”

Not that it was all that unfriendly before. Some would say the bailouts of Wall Street, AIG, GM, and Chrysler were about as friendly as it can get. In addition, Washington gave windfalls to drug companies and health insurers in the new health bill, subsidies to energy companies in the stimulus package, and billions to domestic and military contractors.

But for corporate America it still wasn’t friendly enough. Before the midterm elections, Verizon CEO and Business Roundtable chair Ivan Seidenberg accused the President of creating a hostile environment for investment and job-creation. In the midterms, business leaders overwhelmingly threw their support to Republicans.

So the White House caved in on the Bush tax cuts for the wealthy, and is telling CEOs it will be on their side from now on. As the President recently told a group of CEOs, the choice “is not between Democrats and Republicans. It’s between America and our competitors around the world. We can win the competition.”

There’s only one problem. America’s big businesses are less and less American. They’re going abroad for sales and employees. That’s one reason they’ve showed record-breaking profits in 2010 while creating almost no American jobs.

Consider one of most popular Christmas products of all time – Apple’s iPhone. Researchers from the Asian Development Bank Institute have dissected an iPhone whose wholesale price is around $179.00 to determine where the money actually goes.

Some shows up in Apple’s profits, which are soaring.

About $61 of the $179 price goes to Japanese workers who make key iPhone components, $30 to German workers who supply other pieces, and $23 to South Korean workers who provide still others. Around $6 goes to the Chinese workers who assemble it. Most of the rest goes to workers elsewhere around the globe who make other bits.

Only about $11 of that iPhone goes to American workers, mostly researchers and designers.

Even old-tech American companies made big money abroad in 2010 – and created scads of jobs there. General Motors, for example, is now turning a nice profit and American investors bullish about its future.

That doesn’t mean GM will be creating lots more blue-collar jobs in America, though. 2010 was a banner year for GM’s foreign sales — already two-thirds of its total sales, and rising. In October, GM became first automaker to sell more than 2 million cars a year in China. The company is now making more cars in China than in the United States.And GM has just signed a deal with its Chinese partner to try to crack India’s potentially huge auto market.

Meanwhile, back home in the U.S., GM has slashed its labor costs. New hires are brought in at roughly half the wages and benefits of former GM employees, under a two-tier wage structure accepted by the United Auto Workers. Almost all GM’s U.S. suppliers have also cut their payrolls.

It’s much the same even for America’s biggest retailers. 2010 wasn’t an especially good year for Wal-Mart in the United States. Its third-quarter sales fell, as U.S. shoppers continued to hold back.

But Wal-Mart International is contributing mightily to its bottom line. Its UK business, Asda, will be adding 7,500 new jobs next year. Wal-Mart is also doing well in Japan and Brazil, and hiring like mad in both countries.

So when President Obama tells American CEOs our biggest challenge comes from abroad, you’ve got to wonder. The leaders of American business are already abroad, and doing quite nicely.

Just after the midterm elections, the President’s chief economic advisor, Larry Summers, told a group of top U.S. CEOs that the election was partly a “rejection of elites…that were seen as more citizens of Davos than of their countries.” American CEOs, Summers warned, should “think very hard about their obligations as citizens of this country.”

Yes, they’re citizens. But first and foremost they’re CEOs. And CEOs have to show profits – wherever those profits come from. Under American-style capitalism, profits matter. Jobs don’t.

2010 was the year Washington became even more “business friendly.” The result has been more and better jobs – but not in America.

They're not composed of good Americans that want to do the right thing. They're stateless conglomerates that don't give a hot shit if we go down the tubes. Hell, if they can make money on it, they'd probably root it on. Whether it's a bad thing or not that they care more about profits than America isn't what I'm saying. I'm just saying it's time to stop being deferential or preferential because we think they care about our country too.

That $6 Apple pays to Foxconn is for indentured servitude labor. And no one gives a shit.

 

[mykevermin]

We need more American Apparels, but fewer Dov Charneys.

 

[nasum]

So let's say the iPhone is made in the US. If it costs $6 to get soldered together in China, it'd probably cost $600 to get soldered in the US. Many already complain that the iPhone is too expensive, how about a $594 price hike just to make up for labor?

What do you want? Do you want your income to be able to purchase more goods, or do you want your neighbor to also have a decent income at the expense of yourself being able to purchase as many goods? Would you be willing to pay an extra $150 for an Xbox or a PS3 if it meant that the motherboard was built and assembled in the US, $5k for a plasma TV instead of $2,500?
It's not just toys either, without this so called global economy everything would cost more including locally produced food.

 

[speedracer]

[quote name='nasum']So let's say the iPhone is made in the US. If it costs $6 to get soldered together in China, it'd probably cost $600 to get soldered in the US. Many already complain that the iPhone is too expensive, how about a $594 price hike just to make up for labor?

What do you want? Do you want your income to be able to purchase more goods, or do you want your neighbor to also have a decent income at the expense of yourself being able to purchase as many goods? Would you be willing to pay an extra $150 for an Xbox or a PS3 if it meant that the motherboard was built and assembled in the US, $5k for a plasma TV instead of $2,500?
It's not just toys either, without this so called global economy everything would cost more including locally produced food.[/QUOTE]
Yes, I'm willing to pay more so we don't source indentured servitude and slave labor. I get your point. I really do. But wtf? Is this 200 years ago? Didn't we move past this?

 

[Clak]

[quote name='nasum']So let's say the iPhone is made in the US. If it costs $6 to get soldered together in China, it'd probably cost $600 to get soldered in the US. Many already complain that the iPhone is too expensive, how about a $594 price hike just to make up for labor?

What do you want? Do you want your income to be able to purchase more goods, or do you want your neighbor to also have a decent income at the expense of yourself being able to purchase as many goods? Would you be willing to pay an extra $150 for an Xbox or a PS3 if it meant that the motherboard was built and assembled in the US, $5k for a plasma TV instead of $2,500?
It's not just toys either, without this so called global economy everything would cost more including locally produced food.[/QUOTE]
The only reason that stuff was ever that price to begin with is because the cost was basically kept artificially low, lower than it really should have been. And this has been happening for years, most of the affordable crap we've had these last few decades was because it was made in places with criminally low labor costs. None of this shit should have ever been this cheap, we're used to it now, and people probably wouldn't want to pay more, but those people need a reality check. There is a extra cost most of us never see or think about, it's basic economics. It isn't always a monetary cost, in some cases it's costing people their health, their sanity, even their lives.

We've got all of this advanced technology basically because we've exploited people who don't know any better. I'm as guilty as anyone, I love technology, but I'm starting to see the real cost behind it, and it isn't just what we pay for it.

 

[dohdough]

[quote name='speedracer']Yes, I'm willing to pay more so we don't source indentured servitude and slave labor. I get your point. I really do. But wtf? Is this 200 years ago? Didn't we move past this?[/QUOTE]

[quote name='Clak']The only reason that stuff was ever that price to begin with is because the cost was basically kept artificially low, lower than it really should have been. And this has been happening for years, most of the affordable crap we've had these last few decades was because it was made in places with criminally low labor costs. None of this shit should have ever been this cheap, we're used to it now, and people probably wouldn't want to pay more, but those people need a reality check. There is a extra cost most of us never see or think about, it's basic economics. It isn't always a monetary cost, in some cases it's costing people their health, their sanity, even their lives.

We've got all of this advanced technology basically because we've exploited people who don't know any better. I'm as guilty as anyone, I love technology, but I'm starting to see the real cost behind it, and it isn't just what we pay for it.[/QUOTE]

Pfft. You guys are pussies. Rape and pillage is what every empire has done since the beginning of time. You guys need to grow up. It's our right to take what we want. It's not our fault that others are too primative to fight for their interests. Besides, we're the ones preading wealth! If it wasn't for sweatshops, those poors would be prostituting themselves and starving!

 

[speedracer]

The one that really gets under my skin is the libertarian response to this. Cause the market will sort this all out and intervention is a loss of freedom.

Intervention to prevent slavery and indentured servitude accosts freedom.

 

[dohdough]

[quote name='speedracer']The one that really gets under my skin is the libertarian response to this. Cause the market will sort this all out and intervention is a loss of freedom.

Intervention to prevent slavery and indentured servitude accosts freedom.[/QUOTE]
That doesn't make any sense. They have the choice to work in a sweatshop or starve. It's still a choice and they have the freedom to choose.

 

[Clak]

And if that's really a choice, then the choices of buying insurance or breaking the law is just as valid.

 

[willardhaven]

[quote name='nasum']So let's say the iPhone is made in the US. If it costs $6 to get soldered together in China, it'd probably cost $600 to get soldered in the US. Many already complain that the iPhone is too expensive, how about a $594 price hike just to make up for labor?

What do you want? Do you want your income to be able to purchase more goods, or do you want your neighbor to also have a decent income at the expense of yourself being able to purchase as many goods? Would you be willing to pay an extra $150 for an Xbox or a PS3 if it meant that the motherboard was built and assembled in the US, $5k for a plasma TV instead of $2,500?
It's not just toys either, without this so called global economy everything would cost more including locally produced food.[/QUOTE]

I've had this discussion before. The gross income inequality of the U.S. is masked by exported slave labor. We're ok with getting historically low wages and lifetime earnings because our quality of life is still acceptable.

So... reign in the out of control income disparity, raise prices of goods to account for working conditions (IE Chinese goods are taxed to make up the difference in wage, which encourages Chinese to raise their employees') and we can slowly ween ourselves off of foreign slave dependency. This idea isn't mine, Stephen Jarislowsky described it in an interview and I thought it was pretty good.

Imports are ok, but when we're sending out seeds for slaves to grow and shipping them back, we've gone too far. Corporations are also circumventing environmental regulations by moving their dirty operations to poor ass countries.

We need less cheap goods with hidden costs. If plastic trinkets were priced at their actual cost (adjusted for environmental effects and appropriate labor wages), we wouldn't be drowning in cheap junk.

 

[Clak]

I know this will probably catch the ire of our resident Wal-Marteer, but it's a good read.

http://www.alternet.org/economy/27829?page=1

Yeah it picks on Wal-Mart, it's explained why in the article. It could be blamed on the Chinese government and a lack of regulation and standards, but then isn't that what so many conservatives rally against here, regulations? See China gets labeled communist because of their government, but their economy is more capitalistic than ours at this point. Chinese labor is a capitalist's dream, little to no safety standards or labor laws, workers have next to no power, basically what the U.S. was like during the industrial revolution. If you want to bust unions, pull back regulation, you're basically saying you want our economy to be more like China's.

 

[Trancendental]

[quote name='Clak']I know this will probably catch the ire of our resident Wal-Marteer, but it's a good read.

http://www.alternet.org/economy/27829?page=1

Yeah it picks on Wal-Mart, it's explained why in the article. It could be blamed on the Chinese government and a lack of regulation and standards, but then isn't that what so many conservatives rally against here, regulations? See China gets labeled communist because of their government, but their economy is more capitalistic than ours at this point. Chinese labor is a capitalist's dream, little to no safety standards or labor laws, workers have next to no power, basically what the U.S. was like during the industrial revolution. If you want to bust unions, pull back regulation, you're basically saying you want our economy to be more like China's.[/QUOTE]

Problem is you need a simple story or idiots like him won't get it. And the world situation is not a simple story. In short, I think we're at least partially screwed :/

 

[tivo]

[quote name='speedracer']The one that really gets under my skin is the libertarian response to this. Cause the market will sort this all out and intervention is a loss of freedom.

Intervention to prevent slavery and indentured servitude accosts freedom.[/QUOTE]

"A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa and South America, only to take the profits out with no concern for the social betterment of the countries, and say: "This is not just." - mlk jr.


--democratic socialism--


P.S> accosts???
P.P.S. @ willarhaven: Income inequality of US compared to other countries' per capita income? or, the grossly exaggerated/distorted income inequality among quintiles of american wage earners that individuals on the left (including the above quoted mlk jr.) trump around for social change?

 

[willardhaven]

I'm talking about the fact that minimum wage workers couldn't afford pants if they weren't imported and made by foreign slaves.

 

[tivo]

[quote name='willardhaven']I'm talking about the fact that minimum wage workers couldn't afford pants if they weren't imported and made by foreign slaves.[/QUOTE]

ok, just checking.
also, 2 exaggerations there but its not that important.

 

[speedracer]

[quote name='tivo']"A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa and South America, only to take the profits out with no concern for the social betterment of the countries, and say: "This is not just." - mlk jr.


--democratic socialism--[/quote]
Totally. I'm a democratic socialist. What can I say.

P.S> accosts???

What's wrong with accosts?

 

[willardhaven]

[quote name='tivo']ok, just checking.
also, 2 exaggerations there but its not that important.[/QUOTE]


I'm totally exaggerating, but come on. Poor people shop in stores that generally sell cheap Chinese goods. These goods are cheap because Chinese people are not paid fair wages.

American companies (and multinational ones) are circumventing our minimum wage laws by leveraging foreign workers. Our minimum wage workers can afford to survive (in most cases only with help from the government) because of these exploitative practices.

Cons are trying to shrink the government because they claim they are afraid of it becoming exactly what corporate America is.

 

[tivo]

[quote name='speedracer']Totally. I'm a democratic socialist. What can I say.
[/QUOTE]

[quote name='willardhaven']
Cons are trying to shrink the government because they claim they are afraid of it becoming exactly what corporate America is.[/QUOTE]

How is corporate america a threat? Us, the consumers, give corporate america their success and we can take it away. Their "power" and "control" is just the extension of them benefiting/appeasing us. There is a chance for waste, fraud, and abuse but it can occur just as frequently in the govt. and is eventually uncovered.

 

[IRHari]

[quote name='tivo']Us, the consumers, give corporate america their success and we can take it away.[/QUOTE]

How does one take away success from say, Goldman-Sachs?

 

[cindersphere]

[quote name='IRHari']How does one take away success from say, Goldman-Sachs?[/QUOTE]

By stealing their Gold Man Sacks.

[quote name='tivo']How is corporate america a threat? Us, the consumers, give corporate america their success and we can take it away. Their "power" and "control" is just the extension of them benefiting/appeasing us. There is a chance for waste, fraud, and abuse but it can occur just as frequently in the govt. and is eventually uncovered.[/QUOTE]

Well they produce our basic bag of goods we need to survive, with which they can jerk us around by the chain.

 

[tivo]

[quote name='IRHari']How does one take away success from say, Goldman-Sachs?[/QUOTE]

Fair enough about big banks. But, as it currently stands, the govt. isn't currently able to do anything about them either. Hence, the "too big to fail" mantra and recent TARP payments with tax payer $$. Sooooo, many people point to mandatory convertible securities as the answer. basically, if the bank's equity capital level falls below a certain threshold, their debt (bonds) automatically convert to equity. It allows any bank of any size to fail without bringing down everything else. It seems pretty simple as a policy and best of all, it doesn't need govt. bureaucrats coming in with things get rough.

But besides big banks, any other corporate america threats? Its all about competition and as long as illegal cartels don't exist, the system should work. Note, Oil companies are situated in the grey area with speculators, and govt. intervention about off shore drilling limits, and ethanol requirements driving up food costs, and creating even more pollution than plain petroleum refinery.

 

[IRHari]

[quote name='tivo']Fair enough about big banks. But, as it currently stands, the govt. isn't currently able to do anything about them either. [/QUOTE]

Would you be opposed to the government breaking up the too big to fail banks? I think that was proposed as part of the FiReg bill, and was met with furious anger from the tea party.

 

[mykevermin]

Whatever happened to Ma Bell? Last I heard she got the ill communication...but other than that, I mean.

 

[Clak]

Ma Bell was actually a terminator sent form the future to destroy us all. It combines the regenerative capability of T-1000 and tech support so bad its victims just kill themselves.

 

[tivo]

[quote name='IRHari']Would you be opposed to the government breaking up the too big to fail banks? I think that was proposed as part of the FiReg bill, and was met with furious anger from the tea party.[/QUOTE]

I am not opposed to it and actually agree that its probably the only option we have to limit the potential widespread damage. I think it would also reduce the obligation that the govt. needs to step in because they're "too big to fail." Of course, it alone won't decrease the risk of bank failure, but it should make damage more isolated.

Also, I don't know about the tea party opposition....

Co-founder of the Tea Party, Karl Dellinger, states that, he would consider the pre-emptive closure of banks like Citibank, before they get to the point of failure. He says 'If you're too big to fail, you're too big to bail out, and that means you're dangerous, and should be closed down.'

It's not eloquent but you get the point. he supports the break up

 

[IRHari]

Oh that's good to know.

So what things did you dislike in the financial reform bill? Why did so many Republicans vote against Wyden's bill to end too big to fail?

 

[tivo]

I have to assume that a lot of the animosity is a bit out of habit. They see govt. coming into the market as a threat to their laissez-faire, free market ideology. But one key point is that the current size of "big banks" wasn't a natural free-market growth. It was nurtured by govt. legislations and politician lobbying pork, favors, and side deals. Who knows what size banks would be in a completely free market. But that's just my assumption about the general opposition.

More specifically, the bill creates a new "consumer protection agency" and it enforces monitoring of the economy by the govt. among other things. I really don't know much of the details but my initial reaction to all of it is a bit overkill. But I should look more into it. Unfortunately, I haven;t come across any articles summarizing "X is in the bill b/c of Y, with predictions of the implementation being Z and the economic criticisms are W." But those details are never compiled.

 

[speedracer]

So this chart beautifully describes what I was trying to get across when I explained that low interest rates mean the debt is actually significantly different now than it has been in the past.

This chart is the interest payments on national debt as a percentage of all government outlays.

This is why the statement that the debt as a percentage of GDP is historically high (which is true!) can't stand on its own. The next logical question has to be "well, what is it costing us in real terms?" The answer is it's costing us a laughably low amount relative to historical trends. Like I was saying before, as this trend goes up and the cost increases in the future, you slow down or stop borrowing. But when it's this low, historically low, you go for it.

Knoell, in 1996 your pleas for fiscal sanity would have been 100% correct and Keynesians would have done well to shut up and listen to you. But today, it just doesn't make sense.

 

[Clak]

It makes sense. Since so many people like comparing government spending to their own, think of it this way, now is a great time to borrow money for a car because interest rates are so low. If you wait until the economy picks up, interest rates will be higher and you'll pay more to borrow that money. So if a government has to borrow money to pay for...whatever, when should it do it? When the economy is doing well and the cost of borrowing is higher or when the economy isn't doing as well and the cost is lower?

 

[tivo]

[quote name='speedracer']
Knoell, in 1996 your pleas for fiscal sanity would have been 100% correct and Keynesians would have done well to shut up and listen to you. But today, it just doesn't make sense.[/QUOTE]

I don't get a shout out? :lol:


Also, for a large scale project similar to the hoover dam, the highway system, and the proposed high speed rail, it would also make sense to me that the central govt. create a system of cross-country power grids with transformers and lines connecting the west and east coasts.

 

[speedracer]

[quote name='tivo']I don't get a shout out? :lol:


Also, for a large scale project similar to the hoover dam, the highway system, and the proposed high speed rail, it would also make sense to me that the central govt. create a system of cross-country power grids with transformers and lines connecting the west and east coasts.[/QUOTE]
I talk to you, I don't explain to you.

A rebuilt cross country smart grid is the holy grail. That and the trains would be the only things I put any serious money towards if I was king of the feds.

 

[speedracer]

Clusterstock was so floored by that image I linked above that they went back to see what the interest payments as a % of GDP were doing, since it would be a good indicator of whether or not something was hiding in that chart above.

Noooooooooooope. The shit is for real.

 

[Capitalizt]

http://www.youtube.com/watch?v=d0nERTFo-Sk

 

[tivo]

♫
That rap was totally 'momentous'.
But the gov. isn't our 'loco parentis'
Keynes would have been better off as a 'dentist'
While, Hayek would be the winner of 'American Apprentice.'
♫

 

[Msut77]

http://rortybomb.wordpress.com/2011...g-patriarchy-all-on-political-macroeconomics/

This is like an hour read if you play follow the links, but it illustrates that conservatives/libertarians and their ideological brethren really don't have models or anything to back what they say but fervent belief.

They have no solutions, in large part because of their dogma. They cannot even understand the problems.

 

[Trancendental]

[quote name='Msut77']http://rortybomb.wordpress.com/2011...g-patriarchy-all-on-political-macroeconomics/

This is like an hour read if you play follow the links, but it illustrates that conservatives/libertarians and their ideological brethren really don't have models or anything to back what they say but fervent belief.

They have no solutions, in large part because of their dogma. They cannot even understand the problems.[/QUOTE]

When you're too stupid to understand the problem, the solution is always easy.

 

[mykevermin]

So if you are a type who believes the government can only do bad, who believes that prosperity flows from how appreciated the business community feels, and who believes strongly in the Natural Order, then you are not going to be in favor of activist monetary and fiscal policy to fix the economy. You also won’t have any actual coherent view of what is wrong with the economy.

 

[Msut77]

So I have been reading the Big Short by Michael Lewis, excellent so far.

Recurring theme, the titans of the finance industry (the ones that were ostensibly not outright crooks) had little to no idea exactly what they were knee deep into when practicing their little fiscal alchemy.

Yet, somehow not taxing the twits or regulating these pampered princelings will unshackle the economy and making everything right again.

 

[fullmetalfan720]

Who here enjoys financial fraud? I know I do.

And usury. That's fun too. http://money.cnn.com/2011/01/28/pf/...index.htm?iid=HLMNot perfect credit = 59% APR

 

[mykevermin]

^ It's shitty, but how is it fraud?

Additionally, do you support a cap on interest rates?

 

[Clak]

People are still spending beyond their means in a serious way. I know this is anecdotal, but a local readio sation here was giving away $1000 for some contest all last week. Everyone I heard call in said they were going to use it to pay down debt from Christmas. Yeah, they bought all their gifts with credit.

 

[speedracer]

Lollarity from tivo's link:

Backroom deals have become par for the course for proponents of Obamacare. Senators were greased with special favors, like Nebraska Democratic Sen. Ben Nelson and his Cornhusker Kickback and Louisiana Democrat Sen. Mary L. Landrieu and her Louisiana Purchase. Even the American Medical Association was brought in line under threat of losing its exclusive and lucrative medical coding contracts with the government.

The "Cornhusker Kickback" was removed entirely from the bill. The "Louisiana Purchase" was a forward payment for Medicaid and was meant as a bridge because it's a dirt poor state run by dirt stupid people and poor people were going to have their insurance cut. Which is, you know, THE ING POINT OF THE BILL.

Kind of hard to take the rest seriously. Is the data good? I dunno, but starting with an actual lie and an out of context slam makes it a little difficult to believe the rest is good faith.

 

[fullmetalfan720]

[quote name='mykevermin']^ It's shitty, but how is it fraud?[/quote]
I'm just referring to the current financial system of Goldman, JP Morgan, etc. and their tricks. You know, CDOs, CDSs, hide the bad debts, all that stuff.

Additionally, do you support a cap on interest rates?

Sure. Why should a bank be able to get money from the Fed at a near zero rate and then loan it out at 15+%? It's especially bad when they con some poor person into a credit card and give them 30% or so interest.

 

[willardhaven]

Isn't it illegal to charge such high interest rates in some states?

I can't stand this crap though... the real harm to society is all of the wasted time and brain power spent dealing with finance. It creates nothing of value and is just an abstraction.