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Why This Depression will be worse than The Great Depression
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Tue Jun 29, 2010 6:18 pm GMT    Post subject: Reply with quote

It is very hard to have systemic change after a society has gone bad. You get too many bad and dumb people in power who keep the talented from sharing their gifts.

Even in this Stimulus, I worked six straight months of 60-70 plus hour weeks to put out a "shovel-ready" project. To meet Obama's Stimulus Deadlines.... Anyway these knuckleheads thought they were getting this Stimulus Money and put the project out to bid. We had 20 bidders. They say that it can cost up to 1% of construction cost to put a bid proposal together, so with 20 bidders in a down and hungry economy, that is the equivalent of 1/5 of the project cost, and only one of the 20 will win. Well, they didn't have the money to award the contract so it effectively drained 1/5 of the project cost to get nothing, on top of our 8 percent or so design fee. Now we have to redesign to what they can actually afford. This is all because you have political hacks wasting and wasting money and talented people's time. These government hacks don't even care if they wasted 1/5 of the project cost, they are oblivious. Government waste goes way beyond what the numbers show, their negative impact of mismanaging projects or policies is unbelieveable. A lot of their disposition resides in their sense of entitlement and job security. People won't target poor judgment because politics and graft trumps competence. This is why so much waste and corruption and incompetence is tolerated, you can't go after someone because they are part of this in-crowd of government workers; everyone is connected.

We have to turn the soil over to keep it fertile. This is Obama's base so don't expect him to pull a Governor Christie and clean house. It is just sad that only one party can go after certain waste while they turn a blind eye to other forms of waste. The Tea Party seemed to target all waste, but they are getting a bad reputation by the media because they present them as if they are dangerous radicals. Chris Matthews had t.v. programs equating them to militants showing radical people with automatic weapons running around in military garb, saying "This is the Tea Party". It was like they had to vilify anyone who was against government corruption and waste. The Tea Party wouldn't have the numbers they do if they were led by militants. The reason why this movement is gaining momentum is that Americans understand the structural flaw of corrupt and wasteful governments and their spending.

In all fairness to Obama and Krugman, the two competing arguments are:

I'll start my diet on Monday, versus I'll worry about my diet after I stop worrying about starving.

The problem is that Obama is letting certain people starve and others get fat.

Liberals seem to have this unsaid philosophy that the rich don't need morals and the poor can't afford them. As bad as this sounds, it explains why they let the banks become too big to fail and bail out the rich "elites"; they feel that we need an elite class that is above any constraint of morality so they allow politicans to lie, bankers to cheat. Think of how many liberals have no problem saying "Oh, politicans just say whatever they have to to get elected...". They don't expect morals to go to an "elite". As long as that politician can use big words and feel good cliches and tap dance and isn't as blatant as Rod Blagovich, they are entitled to be able to cheat on their wives, lie, etc. As far as the poor, well, they can't afford morals. Even though the overwhelming pecentage of criminals come from broken families, it is perfectly fine for young men to leave their children and their childrens mothers. It is ok to make folk heros of these kids who act like gangsters because they are poor. It is ok that people can lie on their mortage applications, or paying bills is optional to poor people in the view of Liberals. Poor people should also have the license to steal, lie, etc. You'll notice that it is typical viewpoint of many liberals. I mean this is why the liberals were lining up to let Ben LeGuer out of jail. The conservatives want to keep the criminals out of the neighborhoods by removing them and putting them in prison. The conservatives want to keep illegal immigrants out, while the liberals could care less that there is illegal human trafficing and that our border patrol is being shot at daily by illegals with automatic weapons. It is like the knee jerk reaction is against law enforcement because evil doesnt' really exist. I mean liberals don't even want to acknowledge bad behavior of terrorists. This liberal Fareed Zakaria on CNN talks about how we shouldn't even use the word "terrorist". Then you have the President and his liberal administration apologizing to everyone and getting mad at Israel for defending itself against neighbors that are shooting rockets in their neighborhoods. It is crazy and absurd how liberals allow the rich to rape and pillage and make every excuse for anyone who they see as disadvantaged to skirt any type of personal responsibility.

This is where Obama is wrong, you need a foundation of morality and responsibility, because if you give someone disadvantaged an excuse instead of the values to overcome their hardships, you're just preserving a permanent lower class. I mean to think that it is the Democrats in Massachusetts that are allowing casinos is crazy. I mean weren't the Democrats against those that preyed on the poor? Why then are they the ones pushing this? Sadly, and I hope I'm wrong, but I think that liberals believe that the elites don't need morals and the poor can't afford them so it is ok for the elites to prey on the poor because that is the order they believe in.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Tue Jun 29, 2010 7:16 pm GMT    Post subject: Reply with quote

I really hope the content of my rant is false. I totally want to be proven wrong and would happily eat my words if I am...
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Boston ITer



Joined: 11 Jan 2010
Posts: 269

PostPosted: Tue Jun 29, 2010 8:39 pm GMT    Post subject: Reply with quote

Quote:
Now U.S. dollar is getting stronger, but it has nothing to do with our economy. It's because there are just too much money in the whole world, and they have to go somewhere safe, just like they flowed to EU last year.

No country or currency stays on top forever. It's not difficult to see signs that the dollar is starting to slide, though I think the bad time will come until at least when we are all retired.


I don't think anyone's debating the staying on top forever, however, do realize this... there is no Gold backed currency.

In fact, even the commodity based economies of South Africa, Canada, Norway, and Australia get pummeled whenever anyone runs to their fiat currencies as a hedge against US dollar devaluation in high numbers. Hence, they also play beggar-thy-neighbor in terms of currency devaluations, to keep their exports going.

Thus, until there's a global type of E-Gold system in place, they'll need to be a USD, British Pound, or Yen for currency allocations since businesses and trades aren't conducted in bullion. And in the case of the British Empire, from '56 (Suez Canal crisis) till '72 (Bahrain's independence), the Pound had lost some 30-40% of its overall forex value but in the meantime, they'd lost nearly all of their Empire (sans Hong Kong). And yet, for that to have occurred, the USD needed to replace it as a reserve currency. Today, the Euro has failed to surface as a reliable alternative to the USD, east Asian countries don't trust one anothers' govts, and no industrialist trusts the Socialist govts of Brazil and Venezuela to handle their money.
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john p



Joined: 10 Mar 2006
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PostPosted: Tue Jun 29, 2010 9:20 pm GMT    Post subject: Reply with quote

Do you think they are playing it like the United States is "Too Big to Fail"?
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Wed Jun 30, 2010 1:36 am GMT    Post subject: Reply with quote

admin wrote:

The flip side is the fallacy that government spending is anywhere and everywhere justifiable by the greater good. Do it poorly enough and the multiplier can be negative. Government spending can also produce negative externalities, such as misallocation of resources, dependence, and political leverage. It may not be "irresponsible" in the exact same sense as a family maxing out its credit cards, but it can be irresponsible.

- admin


Agreed, and if we were in a situation with less unemployment or a smaller
output gap, or some sign of inflation one could have these discussions, but
as it is there's not much danger of any the above.
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Boston ITer



Joined: 11 Jan 2010
Posts: 269

PostPosted: Wed Jun 30, 2010 1:46 am GMT    Post subject: Reply with quote

Quote:
Do you think they are playing it like the United States is "Too Big to Fail"?


I think you've got the picture. In a world where, despite the up and coming BRICs and East Asian Tigers, no one trusts the hands of authoritarian currency controls with the exception of Uncle Sam. The actual amount of USDs floated around the globe is astonishing and the Treasury has no problems with it.

I'd suspected that the whole EEC->to->EU transformation was to provide a secondary platform for an alternate, freely floated global currency, so that Europe, despite being a stagnant economic zone, could will its way into the Forex space. The problem, of course, is that there's no EU nation-state, it's just an amalgam of the Deutche Mark, French/Belgium Francs, & Dutch Guilder. And since this political/economic union is a bit of a sham, there's no way that it'll work out, the way the US did. In Europe, a Free Vermont movement would in fact *work* whereas in the US, it's a theater of Yankee succession fantasies.

So my conclusion is that despite the various bear market calls against the US dollar, all and all, until the Asian economic bloc starts to trust one another and float their currencies freely, with some loose underpinnings to precious metals or commodities, it'll be a US denominated global clearinghouse. Granted, it doesn't mean that Americans, as a whole will stay middle or even lower middle class, but the country won't be Zimbabwe or Argentina for some time to come.
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Kaidran



Joined: 17 Mar 2010
Posts: 289

PostPosted: Wed Jun 30, 2010 1:10 pm GMT    Post subject: Reply with quote

As far as I know SS is and never was a retirement plan, it was to stop old people freezing/starving to death. I'm not sure where the idea came from that you can live comfortably (by modern standards) on SS?


John, I still have no desire to argue when you get the glazed look and the foamy moth but just a few points:

TV news is shit, I would have thought you would have already figured this out. It exists to generate ad revenue and it does so by telling people what they think they already know. MSNBC tells people Tea Partiers are loonies, Fox tells people they are patriots because that is what their audience expects. The Tea Party problem as it seems to me is that it does not have a unified direction or message that it seems to be able to get across. I dont know if this is because "Tea Party" just means different things in different states (very much like democrat and republican does)

The rest of your post is just so black and white as to be ridiculous. Liberals are immoral, liberals are unfaithful, liberals are liars... Conversely Conservative has ever been unethical, cheated on their wife or told a lie? If we take out all the liberals and shoot them would the US become some sort of Utopia? The parties are blurred and only distinguish themselves by who is in power. I know that you have a quest for increased morality, and it is not a bad quest, but assigning it to a political flag is just plain silly. For every liberal that cheats on his wife there is a conservative doing the same thing and I think somewhere deep down you already know this. I believe the divorce rate is actually lower for liberals, though it is probably due to other factors.

Casinos are bad, I completely agree. Gambling is a tax on people who cannot understand math. Having said that, unless you are going to close the CT casinos and/or stop the free buses which ship people to them from MA, you are just sending MA dollars into CT. BTW if there was a move to ban all gambling I would personally support it.
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admin
Site Admin


Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Wed Jun 30, 2010 1:18 pm GMT    Post subject: Reply with quote

mpr wrote:

Agreed, and if we were in a situation with less unemployment or a smaller
output gap, or some sign of inflation one could have these discussions, but
as it is there's not much danger of any the above.


Actually, current unemployment is part of my reluctance with accepting Krugman's sales pitch for more Keynesian stimulus of the type we've been given recently. We have been "stimulating" for awhile now and unemployment is still undesirably high and easily exceeds the projections of where it was supposed to be after earlier rounds of stimulus. If it's not working, I'm not sure we should keep doing it. I'm not opposed to the concept of stimulus, I just wish the money were being spent in a more effective way. Long term, large scale infrastructure creation would be preferable to paying people to play musical houses.

- admin
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Wed Jun 30, 2010 1:41 pm GMT    Post subject: Reply with quote

mpr wrote:

Nope. America has a fiat currency which it controls, so it cannot be in the same trap. The bond market agrees with me BTW, and it agrees with
Krugman too since Greek CDS spreads are now above their previous spike.

One of the unfortunate things about economic discussions is that so many of them are framed in terms of paradigms which are not really that useful - e.g a govt with a fiat currency being "broke", or spending irresponsibly
in the same sense that a family might max out its credit cards.
This is on ample display in this blog, but also in politics and the media.

What Krugman is saying here should be as obvious as the fact that water
flows downhill.


Yes we do have a fiat currency but printing money is no free lunch either. The more you print, the more the bond market will demand, the less people will trade your currency, the less fair the monetary system feels, an important factor in democracies as Greece is currently showing. Krugman's argument for why printing isn't a problem is that the world will always continue lending us infinite amounts of money no matter how much we print because we are the world's reserve currency. We have the world's reserve currency because we have the world's largest economy and because we haven't printed money in the past. Both of those factors are changing so we have only a small window to print if we want to.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Wed Jun 30, 2010 1:47 pm GMT    Post subject: Reply with quote

GenXer wrote:
Not if we can help it. Vote the bums out. Starting in MA. It doesn't matter whom you vote for, as long as they are for cutting spending, taxes and government. We can't spend what we don't have. I'd rather have our standard of living lowered because we are saving rather than because we are overspending.


Taxes and spending money is not the problem. Taxes and spending which do not increase growth are. If we were spending all this money on better education (note "better", not just paying teachers more) then it would be ok. Instead, we are giving throwing more money at a health care system whose cost increases are going to go into overdrive do the extra money and we are throwing money at people who own homes to limit their losses. And that's not to mention subsidising banker bonuses, free retirement money for baby boomers, public pensions, and wars.
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Wed Jun 30, 2010 2:04 pm GMT    Post subject: Reply with quote

admin wrote:

Actually, current unemployment is part of my reluctance with accepting Krugman's sales pitch for more Keynesian stimulus of the type we've been given recently. We have been "stimulating" for awhile now and unemployment is still undesirably high and easily exceeds the projections of where it was supposed to be after earlier rounds of stimulus. If it's not working, I'm not sure we should keep doing it. I'm not opposed to the concept of stimulus, I just wish the money were being spent in a more effective way. Long term, large scale infrastructure creation would be preferable to paying people to play musical houses.

- admin


I agree with you about the money being spent more effectively,
but part of this is due to the political realities of Republicans demanding
tax cuts on the one hand, and people wanting "immediate" results on the
other. Large scale infrastructure spending takes a while to ramp up, but
that was the argument being used in 2007, when people said it would
take too long. Well here we are three years later.

I think the claim that the stimulus "isn't working" is really a canard.
Its defenders (including me) will say that things would have been
much worse otherwise. Its hard to have these hypothetical discussions, but
I think if you are going to flat out claim it "isn't working" there is some onus
on you to prove that.

The argument that unemployment is above projections of where it should
be doesn't convince me at all. Those projections were always over optimistic
as you might expect from political considerations. There was certainly a
dramatic slowing of the number of jobs lost per month after the stimulus
went into effect. You can try to argue this would have happened anyway,
but then you really have to make that argument.

Prima facie at least part of the stimulus went to saving lots of state jobs
(teachers, police) which would otherwise have been lost, and which
could still be lost now.
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mpr



Joined: 06 Jun 2009
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PostPosted: Wed Jun 30, 2010 2:13 pm GMT    Post subject: Reply with quote

balor123 wrote:

Yes we do have a fiat currency but printing money is no free lunch either. The more you print, the more the bond market will demand, the less people will trade your currency, the less fair the monetary system feels, an important factor in democracies as Greece is currently showing. Krugman's argument for why printing isn't a problem is that the world will always continue lending us infinite amounts of money no matter how much we print because we are the world's reserve currency. We have the world's reserve currency because we have the world's largest economy and because we haven't printed money in the past. Both of those factors are changing so we have only a small window to print if we want to.


Well thats a parody of Krugman's argument. No one is claiming you can print
money without limit, but how much you can print depends on circumstances,
and current circumstances say you should be able to print a lot more.

If you want to have a discussion where you invoke the bond market, you
need to look at what the actual bond market (as opposed to some hypothetical one) is doing. !0 year treasury yields are below 3%. 30 year
below 4%. These are almost historic lows. All the guages are telling you
that deflation is more of a danger than inflation right now.
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Wed Jun 30, 2010 2:52 pm GMT    Post subject: Reply with quote

balor123 wrote:
GenXer wrote:
Not if we can help it. Vote the bums out. Starting in MA. It doesn't matter whom you vote for, as long as they are for cutting spending, taxes and government. We can't spend what we don't have. I'd rather have our standard of living lowered because we are saving rather than because we are overspending.


Taxes and spending money is not the problem. Taxes and spending which do not increase growth are. If we were spending all this money on better education (note "better", not just paying teachers more) then it would be ok. Instead, we are giving throwing more money at a health care system whose cost increases are going to go into overdrive do the extra money and we are throwing money at people who own homes to limit their losses. And that's not to mention subsidising banker bonuses, free retirement money for baby boomers, public pensions, and wars.


That's exactly what I'm talking about. Some things are simply should be cut, period. I'm not discussing details on purpose. There is plenty of pork to cut.
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admin
Site Admin


Joined: 14 Jul 2005
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Location: Greater Boston

PostPosted: Wed Jun 30, 2010 4:15 pm GMT    Post subject: Reply with quote

mpr wrote:

I think the claim that the stimulus "isn't working" is really a canard.
Its defenders (including me) will say that things would have been
much worse otherwise. Its hard to have these hypothetical discussions, but
I think if you are going to flat out claim it "isn't working" there is some onus
on you to prove that.


I've got to disagree with that. The onus should always be on those who want to redistribute other people's money to justify that. And I do think it can be justified in a lot of cases, Krugman's argument was just way too lacking in specifics for me.

mpr wrote:

The argument that unemployment is above projections of where it should
be doesn't convince me at all. Those projections were always over optimistic
as you might expect from political considerations.


My point was that the stimulus has failed when measured by its proponents' own metrics. Of course there is no way of knowing if the overall situation would have been even worse without it. This is another reason that makes me not want to support stimulus in the current vein, though, when the proponents are either not being honest about the expected benefits or simply speaking with more certainty than they should.

Just to be clear, I'm not talking about you when I refer to the proponents' past projections. I specifically remember the speech that Obama gave to promote the last round of stimulus which showed a graph of where employment would be with and without the stimulus. Needless to say, things turned out much worse than projected. I do think he was just speaking with more certainty than he should have and that just about any other politician would have done the same, but that's a pretty good reason to step back and question the specifics of any Keynesian plan. We didn't get what we were promised, and if that means the promise was unrealistic, then that impairs their credibility to make future promises.

- admin
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PostPosted: Wed Jun 30, 2010 4:25 pm GMT    Post subject: Reply with quote

mpr wrote:

I think the claim that the stimulus "isn't working" is really a canard.
Its defenders (including me) will say that things would have been
much worse otherwise. Its hard to have these hypothetical discussions, but
I think if you are going to flat out claim it "isn't working" there is some onus
on you to prove that.

The argument that unemployment is above projections of where it should
be doesn't convince me at all. Those projections were always over optimistic
as you might expect from political considerations. There was certainly a
dramatic slowing of the number of jobs lost per month after the stimulus
went into effect. You can try to argue this would have happened anyway,
but then you really have to make that argument.


Probably I am from the East and is a Taoism believer, I think economy crisis is part of nature. It not a bad thing, as a cycle it comes and it goes, just like tide, day and night, or anything in life. However, trying to fix it is just wrong, since it only prolongs the whole process.



Just my 2 cents!
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