"Kurt Ullman" wrote in message
...
In article ,
"Robert Green" wrote:


You're too smart to *really* believe what you just wrote. "Reckless
spending?" The economy, as handed over by Bush, was in free fall and
near
collapse. Stimulus spending, while it might seem reckless to you,
cushioned
the blows delivered by Wall Street's ruthless repackaging of America's
real
estate wealth into mortgage securities and selling it abroad. Without
that
"reckless spending" to help free up frozen credit we would probably be
in a
deeper abyss than the first Great Depression.

You are too smart to **really** believe what you just wrote. Heck
there was a CBO report within the last couple of months that showed a
hefty part of the stimulus money (especially on "shovel-ready" projects)
hasn't been spent yet.

My two dogs have created more shovel-ready projects than Obama. If I come
down too hard on the Republicans, I want to apologize and make it clear
everybody worked very hard on both side of the aisle to screw things up
starting with Nixon for waking the Sleeping Dragon to Clinton for Feeding
the Sleeping Dragon to Bush for borrowing from the Wide Awake Dragon and
right through to Obama for praying to the Angry Dragon.

A point that non-libs seem to forget it that Obama had *nothing to do*
with the collapse. He simply got stuck with the thankless job of fixing
the incredible mess that under-regulated financial markets and reckless
spending wreaked on America. Blaming him for trying to right a
sinking ship is more than a little disingenuous. It's partisan BS
taken into the stratosphere.

I'd agree with last part. The mess was very much 20 years in the
making and much of the deregulation was enabled by LEGISLATION passed by
Congress, some as far back as the Clinton Administration. Heck the
repeal of Glass-Stegal, for instance, was approved by a voice vote in
the Senate. Same with most of the other laws that were changed.

The Clinton folks presided over a good part of the sell off of large
segments of our economy to China. As long as the "daily numbers" looked
good, people didn't seem to mind the massive change in the American economy.
For a while, all was good. Cheap Chinese goods gave people the sense of
much higher disposable income. Factory owners invested the money they got
moving their factories to China and the economy boomed. There's more than
enough blood on Clinton's hands. Plenty of people were saying back then
that intercourse with China might give us financial clap. It would be great
if we still had a leading industry that could provide the economic engine to
haul us out of our financial doldrums. But where will those jobs come from
if everyone's getting squeezed? The less spending, the more people will be
jobless. Having less money to spend equals lower overall demand and still
more cutting back.

The ONLY
person I can find without blood on his hands in this mess is Barney
Frank who consistently voted against these measures every chance he got.
(It boils me something fierce to have respect him--grin)

I just saw him on a new version of "Ethics in America" - an educational TV
series that he participated in during the early eighties. When asked if a
man cheating on his wife was a suitable PTA president candidate, he
suggested that the man run for city council where they wouldn't see his
cheating as a fault. He was on the wrong side of things for a little while
IIRC, but once he saw the runaway train going down the tracks, he became
very active in trying to slow it down when no one else seemed to care.

This was inevitable given the psychology of humans. We had a very
long run of good times with even the recessions being short and shallow
by historical standards. We had good times to the point that we forgot
about bad times, and figured it would go on forever.

I understand that, but can it be that we forget so quickly? This crash
seemed to have been a particularly bad one. What really drove this last
bust to be so big and ugly? Could it be as simple as the entire world had
been brainwashed into thinking real estate prices could only rise
(meteorically)? It seems that rising real estate prices drove a lot of the
train that went off the bridge. But there were other reasons. I think in
the future we'll discover There may have to be some sort of limitations
placed on contracts that specify "the worse things look, the more you owe."

The attempt to "change the deal" unilaterally in midstream has unfortunately
become the new norm and I don't think it's a good one. I seethe whenever my
credit card issuer decides to change the three-year deal I signed whenever
it suits them. Contracts with "sliding fees according to risk increases"
*seem* to be great deals for the lenders (which is why they exist) but it
didn't really work out for them, either, since the collapse those escalation
clauses helped caused hurt everyone. Badly. Such clauses have a built in
"domino doom" factor written all over them.

While I never quite believed in the domino effect in SE Asia, I surely do
believe in dominoes and Wall St. There were lots of cross-riggings in
effect in 2008 that seemed to exacerbate the collapse. I believe that all
this may have happened because analysts became obsessed with "offloading"
risk to helpless third parties (-: like pension funds and apparently,
sovereign wealth funds, too.

Risk often can *appear* to be eliminated until external factors reveal that
wherever the financial markets collapse, people are going to get hurt and
that offloading risk comes back to bite the unloaders on the ass as well as
everyone else. The bad part is that it seems that in the process, they've
dragged down risk averse as well as the risk-takers as the entire economy
around them tanked.

For instance, the personal savings rate has been negative (my
definition is not necessarily that of the economists. I say if the
savings rate goes down from one year to the next, that is a negative
savings rate) since the late 80s. Even see a downward trend in how much
it increases during recessions, a time when traditionally savings rates
skyrocket.

The PSR has been very bad for a long time. Worse, still, people found it
easier and easier to eat away the equity in their homes to buy a Lexus and a
plasma TV. I don't know if you've seen the rising rate of foreign
"investment" (aka ownership) in the US. But IIRC, it's growing like a
malignant tumor. Economists argue about the net effect selling our
mortgages (and promises to pay) to China and the EU. Some say it matters
little, some say it can trigger political instabilities. That's why a bunch
of bailout money went to Deutsche Bank. America is now a wholly-owned
subsidiary of China and the EU, Inc. )-: (Hyperbole alert)

The average American was spending much more than making. And, this
was not only in housing, but across the board.

And businesses were falling all over themselves to get them further
indebted. It was a slow but deliberate process of reaching down lower and
lower, lending to the less and less creditworthy. In real estate the
assumption was that when those subprime borrowers busted out, the mortgage
holder could simply foreclose and re-sell the house into the "eternally hot"
housing market. That idea was only valid until the bubble burst. Putting
monthly rent payments into building equity appeals to almost everyone.
Until they found out that THEY had to fish the tampons out of the toilet
drain for them, pay the real estate taxes and caulk their own windows.

The same was being seen
in Corporate America which had their equivalent in overleveraging.

"Overleveraging" was the key villain in the 1929 crash. It took a long time
for banks to throw off the regulations that they claim were choking them but
were really protecting the economy. R's & D's both signed on with glee,
claiming we *had* to do this to be competitive with the EU. Oh, I wish that
we had "stayed the course" and were now watching the disaster confined to
the EU.

Largely because the psychology of the situation that thinks a tree grows
to the sky. It is fascinating that this pattern is much more similar to
when you are expecting inflation (and thus buy things on credit to pay
it back in cheaper dollars).

I have my doubts that many (if any) people borrowing more than they can ever
hope to repay are banking on inflation to help cushion their fall.
Businesses might think and act that way but people will borrow whatever
banks, car dealers and other lenders will lend them. They ALWAYS believe
that getting that brand new car will enable them to get a better job and
thus afford all the things they bought on credit. Sure. One of the issues
of the last big crash was writing "mirror fogging" loans to people who
clearly didn't have the wherewithal to repay them. I wince when I see
"Cashpoint" car-title loan ads that promise loan dollars AND you get to keep
your car! For a little while, anyway. )-:

I still haven't figured that one out.

Balancing inflation and economic growth is pretty much black magic and what
works in one decade won't work in another. I've paid a lot of attention to
explanations of "stagflation" and the dangers of an economy getting out of
whack when both lack of growth and inflation are present. However, my own
experience in modeling a very specific situation (nuke war) tells me that
most economic models are junk. Why? To paraphrase someone, "The economy
does whatever it damn well pleases." There are just too many wildly
varying inputs into the econometric universe to get them all right. We end
up with economic projections that tend to mainly support the various and
conflicting claims of politicians.

There have been so many times when the best and the brightest have tried to
steer a shaky economy only to make things much, much worse. Some say
Germany's ill-fated attempt to return to the gold standard helped propel
Hitler to power. Price fixing didn't work out well for Nixon although the
nation demanded it. There are some very few areas, mostly monopolies, where
governments should intervene. That's based on the time-honored list of
abusive practices that monopolies can't seem to help but engage in. (-:
But by and large, the attempts to "steer" the economy have produced very
spotty results. The most popular steerage mechanism, fiddling with interest
rates, ran out of gas when interest rates dropped into the sewer.

Whether they were mimicking Washington or Washington was taking its
cue from the Public, is an interesting discussion I don't want to get
into (g).

It's human nature. Unrestrained.

Thus, when the bubble of bubbles broke, NOBODY, consumers, governments
or corporate had any money to pull us out. However, as I noted, this is
hardly solely Bush's problem any more than it is Obama's. This is a
financial cluster f*** with many fathers over literally generations.

I still think that the government *could* have done much more to bail us
out, but then I can't stand seeing someone getting a government check
sitting home on a couch when there are parks to be cleaned. I wouldn't mind
the Feds paying for clean-up and repair work like the WPA and CCC. It's
better to teach them to work and HAVE them work than just cut a check.
Cutting a check is much easier, though.

At least you sort of acknowledge that Bush spent too much on needless
wars,
the "junk touching" TSA agency and about a trillion in new and improved
security measures. We've spent at least 100 times and perhaps 1000
times
the total of the actual monetary damage done on 9/11. Would you pay $1
million in insurance premiums to protect against a $40,000 loss? No, of
course not, but that's exactly what the US did because it was so
"terrified"
by terrorists. Bush's spending will probably go down in history as the
most
wasteful expenditures ever made by the Feds. Yet you're eager to blame
Obama for trying to clean up the mess of Bush spending trillions he/we
couldn't afford.

That is what the government, at all levels did, because they wanted
to avoid getting grilled by constituents, press, and talking heads that
should have known better and so they could say they did all they could
to avoid the next one.

A lot of our troubles come from the media's very bad habit of creating
controversy to sell their product. They have been more than happy to
exacerbate the growing partisan divide.

This is quintessential politician and bureaucrat
ass-covering behavior. You SURE you spent a lot of time in DC????
(grin).

Yeah, (grin) indeed. I just wonder where all the pandering to press and
preening for the public will lead us. Nowhere good, I fear.

We've heard your endless criticism of Obama, Chet. Now I'd be
interested in
hearing what *you* would have done, President Hayes, had you been Obama
in
2008, entering office with the stock market dropping like a paralyzed
falcon, a $700 billion bill for Bush's bailout payments to Wall Street
on
your desk, credit markets frozen like Antarctica in winter and major
investment banks and manufacturers staring down the barrel of
bankruptcy.
It's easy to find fault - a lot easier than finding solutions.


The bill was one that Obama, for better or worse, had a hand in.
One of the classier (maybe the only one) thing that Bush did was consult
with Obama coming in.
The stimulus bill was the same as 9 months of tax revenues. I would
have returned the money to the American public and trusted them spend it
much more efficiently than I could have. I would have been right.

I dunno. Study after study shows when you give money to taxpayers of the
middle class in this kind of economy, they sock it away for a rainy day. On
the other hand, the poor people can be counted on to spend it as soon as
they get it, thus stimulating demand more. As much as people like to
compare the US economy to the a typical household budget, there's no
comparison. Giving money to poor people seems so morally bankrupt, but it's
the one area where you can input money and expect consumer spending. Look
at when the Feds gave money to Bank of America to lend. Instead, they
bought Merrill Lynch and Countrywide "Collapse the Housing Market" Financial
instead. Those poisonous acquisitions might end up killing BoA in the long
run.

--
Bobby G.