[Bugs]

This, from a guy who's in a position to know -- the CEO of Walmart!

[David]

"A pair of recent Gallup Polls shows distinct loss of confidence in the US economy. The first poll shows Americans' Economic Confidence at the 2011 Low. A second poll shows 55% still think the economy is in a recession, or worse."

http://globaleconomicanalysis......-2011.html

[paisley_cross]

It's a sad looking situation - maybe no longer in recession but the economy is moving in fits and starts. Bernanke may not be printing any more money but he is no hurry to put up interest rates. "Underlying inflation" may be "under control" but no wonder the consumer is depressed with gas at $4.50/gal. Pity the poor buggers unemployed with a rate of 8.8% or who bought a home at the top of the bubble.

But of course, what will Canada do when we run out of raw materials to sell to the Asians?

[Bugs]

April 29th, 2011.

I am putting this up as a benchmark.

As I write this, gold is up 1.5% on the day, to ... $1,561.50

Silver is up 1% to ... $48.50

And oil is at $113.

[David]

"There appears to be a huge gap between how Americans see the US economy, and how economists do. "

Who's Right, Americans or Economists?

http://theautomaticearth.blogs.....ns-or.html

[Bugs]

http://www.washingtonpost.com/.....72011.html

This shows the arc of approval/disapproval for the maximum President, Mr. Obama.

Some say he's a shoo-in for re-election, but Bush did better than this in his first term. Personally, I don't know where these trend lines will be in November of 2012, but it's pretty hard to imagine them being higher than they are now.

The only thing the Democrats have going for them -- every time someone criticizes the Obama approach of borrowing money to get out of debt, they call him/her a racist.

[David]

"You don’t end up in the predicament we find ourselves in today due to a couple minor mistakes over a short time frame. It took thousands of horrible choices, colossal doses of delusion, a heaping of stupidity, and a mountain of denial over decades to put us on the brink of economic collapse. An unholy amalgamation of demographics, fiat currency, debt, taxes, power and greed have led us to this point."

http://www.theburningplatform.com/?p=14836]

[Bugs]

You're absolutely right.

For the record, I don't think this is a partisan issue. No doubt, Bush bears some responsibility -- he, after all, organized the first bailout. And, if you want to trace contributing causes, you can certainly find things Clinton did -- such as revoking Glass-Steagall, that were vital to this situation. You can go back to Jimmy Carter, as well, who set up what became the sub-prime mortgage market.

No, was it a lot of Presidents, from both parties. Major congressional figures are also important.

There is also the element of denial amongst the electorate. It would have taken a brave politician, given the alignment of interests, to undertake reforming social security and such things a decade ago.

Even so, Obama is in power, and his whole term has taken place during the breakdown crisis. He seems to be reacting as if its a second level priority, compared to getting Obamacare, etc. He has spent $trillions annually trying to prevent something that now seems inevitable. In so doing, he has added to the debt hugely, and made it impossible for America to recover in a relatively short time. In fact, when you put future generations in the picture, he has doubtlessly made the situation worse ... it will make the disrupture even more extreme, when it comes, and he has saddled future generation with a life long indenture.

[DFP]

[Bugs]

I'll ignore you insulting assumptions approximately one more time. Kindly don't bother me with those things that seem apparent to you, but which I didn't say, if you don't mind.

I don't know how I would have reacted. There would be immense pressure on any decision-maker in that situation. Look at how Bush reacted -- first, he let Lehman's collapse, and they grew faint hearted when he experienced the consequences. Look at how he was savaged by the BusHitler crowd just for his smile. It affects people. I was never in anything like that situation and I doubt if any of us have any idea of how such pressure would affect us.

That said, I think Roubini had the best idea, which was to nationalize the banks when their stock approached zero, and segment the good assets from the bad. Those good assets should have been sold at fair market value, and established bankruptcy law applied. Whatever money raised ought to have been applied to the debt obligations, and the banks quietly put in a grave.

Then I would get the best financial prosecutors to investigate and put the offenders in jail.

What I object to in your version of events is that the toxic assets were created, often contrary to law, by the executives of the bankrupt banks who were creating the toxic assets. Amongst the perps, I am sure, are people charged with regulating the financial industry.

The trillions of dollars of debt were not brought on by toxic financial assets -- the toxic financial instruments are a major portion of the debt. They wouldn't be toxic if they were being serviced.

It took 30 years to create this huge bubble of debt, and the idea that it can be disposed of without anyone being hurt, or that the people of the USA can make it good, is ludicrous.

People are going to get hurt, the question is -- who?

One of the reasons I despise the Obama administration is that they seem to think it's OK to stick the innocent with the cost of the banksters' misadventures, bad judgements, and criminal acts, and let the perps continue with their high-bonus lifestyle.

I look forward to learning why I am wrong.

[David]

The $6.5 trillion lost in the bursting of the housing bubble is not a "paper loss," it is tragically real.

Is anyone surprised that housing continues to slide? According to this report, Home Market Takes a Tumble: Turnaround More Distant After 3% Drop, Steepest Quarterly Decline Since 2008, housing has declined in value for 57 straight months, almost 5 years.

Since the housing bubble topped in most areas in 2006, and it's now 2011, that makes sense: 2006 + 5 = 2011.

American homeowners have lost $6.5 trillion in equity in those 57 months. Here is the data from the Fed Flow of Funds household balance sheet:

Homeowner's equity:
2006: $12.8 trillion
2011: $6.3 trillion

Net decline: $6.5 trillion

There is more of the story (with some links to further information included) at the following link:

"$6.5 Trillion Lost, One House at a Time "

http://www.oftwominds.com/blog.....t5-11.html

[Bugs]

You have to wonder where this money went.

If you are right, the banks, collectively, have looted the whole American public of about half of the equity they held in their houses.

This, in a supposely well-regulated industry, led by the most circumspect and best educated part of American society.

Who benefitted? A few huge banks. Who else? I honestly don't know.

What I do know is that people follow market signals. When housing prices start to rise, year after year, and mortgage money was cheap, they bid the price of housing up ... and the system didn't restore equilibrium, rather, government agencies (notably Fannie Mae, etc.) amped up the process. Politicians were corrupted -- the execrable Barney Frank and Chris Dodd particularly -- and government literally created the sub-prime mortage market. In the end, whole securities market was compromised. Even the ratings agencies were in on the corruption.

It is a huge monument to the failure of state regulation as a solution to anything.

[DFP]

[Bugs]

DFP, I feel like we agree, at least partially, about this. But it also seems you are always fitting things into a framework of kinda totalitarian thought, ie. the solutions to administrative failure is more administrative control.

For example, you say that the banking/mortgage industry wasn't well regulated. Tell me, how many regulatory commissions oversee the actions of banks? How many do the same with the mortgage business? Add to that -- how may bookshelves of regulations would those commissions have created, over the decades? Probably whole rooms full.

If that isn't 'well regulated', what would be? Maybe we should get a regulatory commission to regulate the regulatory commissions?

My point is simply this -- regulation is what hasn't worked. You watch, when the time comes where people want to make sure this never happens again, there will be a raft of downy-faced ivy-league educated kids there, their eyes gleaming, licking their lips, with regulations to recommend to make sure that ... it never happens again.

The hard argument to sustain is -- regulations and regulatory commissions, as well as government institutions, are what made the disaster possible. We need to try something else, because the one thing we know is that ... regulations don't work. They may even be part of the solution, but they are not the solution.

I suspect you're likely to say -- OK, it was regulated up the wazoo, but it wasn't well regulated. But how are failed human beings to know when regulations are effective or not? Do you think these Commissions are going to be accountable? When Glass-Steagall was terminated, Bill Clinton was treating it as a magic bullet, and nobody took issue with him. For all know, he believed it. And he's no fool. What chance, then, do busy people, out in Pittsburgh or St. Louis have when their trusted officials betray them?

In those days, who even knew what Glass-Steagall was, except for a raft of ivy-league educated lawyers, economists, etc, most of whom saw a way to enrich themselves, and no further?

All we really know is that regulation hasn't worked. Don't blame capitalism for this one.

=================================

With respect, your stereotypes get in the way of understanding the problem with elite education. It isn't that it doesn't recruit on merit ... which it largley does, save for 'affirmative action' beneficiaries like Barrack Obama. Few students pay their own tuition at Harvard, and other top Ivy League schools, and tuitions haven't been so incomprehensibly out of reach until recently, when the banksters created a bubble in education.

A decade or so ago, you may recall, there was an uproar because most of the first year class was Asian, many of them Vietnamese, speaking English as a second language. It wasn't because they were Asian -- it was because it seemed to indicate that it wasn't racial discrimination that held black people back.

But lets not waste a lot of keystrokes on that hobby horse. I only bring it up to make the point that the problem isn't due to a lack of diversity.

It's a crisis of post-modern social and political thinking. Academic culture, as a whole, is bankrupt. Who else, after all, but a Princeton educated economics PhD, thinks a nation can borrow its way out of debt?

When the leading economy on earth is looted by its great institutions, and its people -- the most productive workforce that has ever existed -- is robbed of their homes, behind their backs and without their consent, it isn't to be accounted for by a bunch of Bernie Madoff level crooks.

This is a crisis of a civilization, and not just another bump in the road that awaits the Democratic Party to solve.

The Democratic Party is as deep in the shit, as participants on the wrong side of this crisis, as they were when they were defending the rights of segregationists the South, or any other time in their nefarious past.

This is a lot more serious than that.

[DFP]

Bugs, I really think you'd get something out of that link I posted. The matter is not whether or not there was too much or too little regulations in place, but rather it is about which regulations were enforced, which were not, and which sectors should have been regulated to ensure the kind of environment that existed leading into 2008 did not occur. The article goes through 10 regulatory issues that could have massively curbed the reckless speculation, toxic financial instruments and may have made the risks they were taking one of their own making, rather than a problem that the public had to be bludgeoned into accepting.