Monday, December 01, 2008

Um, Yeah. It Is a Recession.

It was obvious to anybody paying attention that we were entering a recession back at the beginning of the year. Anybody except the conservatives, of course, who maintained that it was all a big media conspiracy to make Bush look bad.

Here's Ezzie, who likes to claim I don't understand economics, in January of this year:
A great piece in today's Wall Street Journal discussing why the chances of a recession are extremely low, and showing just how well the economy is actually doing.

Excerpt from the piece, which is called -- I'm not kidding -- "The Economy Is Fine (Really)" :

It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble...

Models based on recent monetary and tax policy suggest real GDP will grow at a 3% to 3.5% rate in 2008, while the probability of recession this year is 10%. This was true before recent rate cuts and stimulus packages. Now that the Fed has cut interest rates by 175 basis points, the odds of a huge surge in growth later in 2008 have grown. The biggest threat to the economy is still inflation, not recession.

Yet many believe that a recession has already begun because credit markets have seized up. This pessimistic view argues that losses from the subprime arena are the tip of the iceberg. An economic downturn, combined with a weakened financial system, will result in a perfect storm for the multi-trillion dollar derivatives market. It is feared that cascading problems with inter-connected counterparty risk, swaps and excessive leverage will cause the entire "house of cards," otherwise known as the U.S. financial system, to collapse. At a minimum, they fear credit will contract, causing a major economic slowdown.

For many, this catastrophic outlook brings back memories of the Great Depression, when bank failures begot more bank failures, money was scarce, credit was impossible to obtain, and economic problems spread like wildfire.

This outlook is both perplexing and worrisome. Perplexing, because it is hard to see how a campfire of a problem can spread to burn down the entire forest. What Federal Reserve Chairman Ben Bernanke recently estimated as a $100 billion loss on subprime loans would represent only 0.1% of the $100 trillion in combined assets of all U.S. households and U.S. non-farm, non-financial corporations. Even if losses ballooned to $300 billion, it would represent less than 0.3% of total U.S. assets.

Beneath every dollar of counterparty risk, and every swap, derivative, or leveraged loan, is a real economic asset. The only way credit troubles could spread to take down the entire system is if the economy completely fell apart. And that only happens when government policy goes wildly off track.

And please don't miss the conclusion:
Dow 15,000 looks much more likely than Dow 10,000. Keep the faith and stay invested. It's a wonderful buying opportunity.

Here's the same author explicitly blaming the media for the "false pessimism about the economy."

At the time, I responded to Ezzie like this:
So Ezzie, if in a year or two it becomes obvious that we are in a recession, do you promise to give up the WSJ? :-)

He didn't answer then. I wonder if he'll answer now:
The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .

The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.

The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year.

Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.

The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures reached a peak between November 2007 and June 2008, the NBER said.

I'm just positive that the WSJ and its readers will critically examine the reasons for their grievous errors and will radically adjust their understanding of economics. Maybe they'll let even pick some economists based on merit instead of ideology.

Yeah, right.


EDIT
: Here's Paul Krugman, also from January of this year, in that liberal rag The New York Times, two weeks before the WSJ spin-job:
Suddenly, the economic consensus seems to be that the implosion of the housing market will indeed push the U.S. economy into a recession, and that it’s quite possible that we’re already in one.

40 comments:

Ezzie said...

LOL. So all you've shown is that hasty predictions are meaningless, seeing as how the NEBR does this.

It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.

Duh. Moreover, it BACKS what the guy said, which is that things were quite good then: All those measures reached a peak between November 2007 and June 2008

Which is a nice way of saying it hit the top in that time, THEN fell. I wonder (!) how much vigorous pushing of the media that we were "already" in a recession actually caused it to happen.

Jewish Atheist said...

Moreover, it BACKS what the guy said, which is that things were quite good then

The guy didn't say that things were good; he said that all this noise about a recession coming is "rampant pessimism" "with so little evidence of serious trouble."

Everybody on the left and in the mainstream were saying we were entering a recession. The WSJ picked a right-wing ideologue to state the opposite. It's what they do. And you fell for it.

I wonder (!) how much vigorous pushing of the media that we were "already" in a recession actually caused it to happen.

LOL.

Jewish Atheist said...

See the edit, showing that Krugman and the economic consensus were right when the ideologues at the WSJ were completely wrong.

Ezzie said...

Are you kidding me? Seriously. Explain how we were entering a recession if things were peaking between Nov and June, unless things were pushing it back down? Do you not get that consumer confidence is the most important factor in today's economy? Really? Why do you think there's such rampant pushing by banks to disallow short sales (which I disagree with) - it's because they know that irrational shorting of stocks or even purposeful shorting of stocks can drive a stock down and in many cases, a company out of business. Do you get economics at ALL? Come on!

I can almost guarantee you that despite no policy implementations, things will start looking up in the Obama administration. Why? Because of consumer confidence. People will talk about how the worst has passed, and things are getting better, and blah blah blah.

Go look at the numbers and understand what they actually mean.

The only hole in this guy's piece was that the banks didn't follow - even close to follow - the rule that SHOULD be true: Beneath every dollar of counterparty risk, and every swap, derivative, or leveraged loan, is a real economic asset. The only way credit troubles could spread to take down the entire system is if the economy completely fell apart. And that only happens when government policy goes wildly off track.

In fact, it IS true in reality, the problem is that these banks leveraged against those assets irrationally. It is all based on the same asset. And it's why McCain's plan - while not a good one - made sense. If the government would have bought up every bad mortgage and paid the debts, then the derivatives all would be sound by definition. It was a race to the bottom that would stop anything worse from happening.

Man, I just want to come there and slap you. :)

Ezzie said...

LOL. Wow, doomsayers. Betcha I can find one of those in every year.

Notice how in the WSJ, they use numbers, while Krugman doesn't? Guess why.

Guess which most people - who don't understand the stuff anyway (cough) - end up believing because of how it's written. And since you like Krugman, note that he wasn't a fan of Obama's policies that you now claim to love.

Ezzie said...

Just to simplify this for you, here's a circle.

ABC expects less people to buy widgets --> ABC makes less widgets --> ABC stock price drops --> People view ABC as a company that is struggling --> Stock price drops --> People are less inclined to buy ABC products --> ABC expects less people to buy widgets

Where does it start? Does it depend? Where can external influences most impact ABC?

Go study finance. PLEASE.

Ezzie said...

(I didn't even put in about ABC laying people off and why that might be. And I keep forgetting to click the button. :) )

Jewish Atheist said...

Ezzie:

Are you kidding me? Seriously. Explain how we were entering a recession if things were peaking between Nov and June, unless things were pushing it back down?

I'm not sure what you're even arguing here. That it wasn't a recession? But the official definers of recessions say it was. Or that it was, but he couldn't have known it, in which case why did virtually every other economist know it?

Do you not get that consumer confidence is the most important factor in today's economy?

What is this, magic? The problem was all the bullshit built on top of bad loans that were rated as good investments. Consumer confidence matters, but it wasn't the driving force here. Or do you think that as long as we pretend things are going great, they'll be great forever?

The only hole in this guy's piece was that the banks didn't follow - even close to follow - the rule that SHOULD be true: Beneath every dollar of counterparty risk, and every swap, derivative, or leveraged loan, is a real economic asset. The only way credit troubles could spread to take down the entire system is if the economy completely fell apart. And that only happens when government policy goes wildly off track.

That "hole" is the size of the (hypothesized) supermassive black hole at the center of our galaxy. Um, duh. Obviously if the paper values reflected real values there wouldn't be a crash. The problem was that they didn't.

Notice how in the WSJ, they use numbers, while Krugman doesn't? Guess why.

Because Krugman wasn't trying to obfuscate with data? He just mentioned the idea that we were entering a recession as a given BECAUSE EVERYBODY KNEW IT BUT THE IDIOTS AT THE WSJ AND THEIR BUSHIE FRIENDS. I don't have to remind you that Krugman just won the Nobel in economics. He understands the numbers.

Just to simplify this for you, here's a circle.

I'm sorry, your simple circle doesn't include a massive widget bubble nor the invented BS financial instruments that were invented by greedy Wall Street assholes who were allowed to do whatever they want because there were no regulations.

Go study finance. PLEASE.

I can't study everything. I probably know more finance than 95% of Americans already. Beyond that, I'll just trust the experts. The actual experts, not the ideologues at the WSJ and Fox.

You may think you know more than I do, but I'm smart enough to know that there are people smarter than me, and how to find them. Your version -- the Republican version -- of economics does not work and never has worked. It's a pretty theory, but Jesus, it's been almost 30 years since Reagan took office. Give up already.

Ezzie said...

Or that it was, but he couldn't have known it, in which case why did virtually every other economist know it?

LOL. Or, nobody could have known it slash it really depended on how people reacted whether it would be or not.

Or do you think that as long as we pretend things are going great, they'll be great forever?

Actually, far more true than you realize! But that's a separate issue.

The problem was all the bullshit built on top of bad loans that were rated as good investments.

Agreed. Of course it wasn't bull until the loans turned out to be bad, which is exactly the point. And even the bull was covered by the CDSs... except the banks didn't have enough collateral.

Obviously if the paper values reflected real values there wouldn't be a crash. The problem was that they didn't.

DUH. LOL - which is the major problem people have all the time with companies!! Except that's how banks (and companies) work: Leveraging assets. And now, it is the left that will pursue policies to allow banks to continue to *over* leverage assets with no fear of repercussion.

That "hole" is the size of the (hypothesized) supermassive black hole at the center of our galaxy.

No - that hole assumed that they weren't that far over leveraged... and it's possible they'd have been fine if fear hadn't been spreading forcing margin calls that they couldn't make. AIG was screwed by an inability to post unreasonable collateral because suddenly nobody would lend to them. That's not how things normally work.

Because Krugman wasn't trying to obfuscate with data? He just mentioned the idea that we were entering a recession as a given BECAUSE EVERYBODY KNEW IT BUT THE IDIOTS AT THE WSJ AND THEIR BUSHIE FRIENDS. I don't have to remind you that Krugman just won the Nobel in economics. He understands the numbers.

LOL so? And the "everybody knew it but..." line makes you sound pathetic. Krugman has criticized every breath Bush took for 8 years, and now that something bad actually happened, it's "Wow, what a genius!"? How about if you predict just about anything long enough it'll eventually come true?

I'm sorry, your simple circle doesn't include a massive widget bubble nor the invented BS financial instruments that were invented by greedy Wall Street assholes who were allowed to do whatever they want because there were no regulations.

LOL. Yes, BS financial instruments. All because of no regulations. Uh huh.

I can't study everything.

Agreed. But don't assume that therefore your limited understanding is somehow "right" and others are somehow "wrong". Just keep your mouth shut if you don't understand or aren't willing to hear anything but what you wish to.

I probably know more finance than 95% of Americans already.

How sad is that!

Beyond that, I'll just trust the experts. The actual experts, not the ideologues at the WSJ and Fox.

LOL. And yet oddly, the WSJ is still who any serious news or investment person turns to regarding either. Hmmm...! And FOX is not nearly as bad as: CNN, MSNBC, ABC, CBS, NBC...

You may think you know more than I do, but I'm smart enough to know that there are people smarter than me, and how to find them.

And I don't? The difference is you love buying into anything politically motivated and think that that's all there is. Meanwhile, I almost always argue on numbers and logic. Which one do you think is more appropriate?

Your version -- the Republican version -- of economics does not work and never has worked. It's a pretty theory, but Jesus, it's been almost 30 years since Reagan took office. Give up already.

LOL. And compare where we are now to then. It works far better than any alternative and works quite well when people aren't so damned afraid of letting people who screw up go broke. But no - instead, we bail them out. And if you think that they don't count on it you're lying to yourself.

Holy Hyrax said...

>greedy Wall Street assholes who were allowed to do whatever they want because there were no regulations.

a) which wall street assholes in particular?
b) have you heard of OFHEO?

>Beyond that, I'll just trust the experts. The actual experts, not the ideologues at the WSJ and Fox.

Ezzie Ezzie Ezzie. Don't you understand that only CONSERVATIVES are ideologues?

Holy Hyrax said...
This comment has been removed by the author.
Holy Hyrax said...

>Your version -- the Republican version -- of economics does not work and never has worked

and the democratic version is what?

Ezzie said...

HH - Screw the rich and successful, and let government handle it. When that doesn't do the job, just say we need to screw the rich and let government handle it. When that doesn't do the job...

Jewish Atheist said...

LOL. Or, nobody could have known it slash it really depended on how people reacted whether it would be or not.

The majority of economists -- and Americans! -- did know we were probably entering a recession and said so, while your guy blithely insisted it was irrational pessimism.

Agreed. Of course it wasn't bull until the loans turned out to be bad, which is exactly the point.

BUT ANY IDIOT COULD SEE THEY WERE BAD. Who did not see a housing bubble? Anyone?

And even the bull was covered by the CDSs... except the banks didn't have enough collateral.

They weren't covered, they were "covered." Anybody could buy a CDS and "anybody" did. But the CDSs were grotesquely mispriced because the rating agencies were completely corrupt (or completely inept.)

No - that hole assumed that they weren't that far over leveraged... and it's possible they'd have been fine if fear hadn't been spreading forcing margin calls that they couldn't make.

We're talking about different holes. This hole everybody was wrong about because people didn't know about the crazy CDSs and the overrated bullshit built on top of the misrated loans. Your guy was ALSO wrong about the recession, which started months before the financial meltdown.

And the "everybody knew it but..." line makes you sound pathetic.

I sound pathetic because I'm pointing out that something that was common knowledge was completely unknown to the partisans on the right?

Krugman has criticized every breath Bush took for 8 years, and now that something bad actually happened

LOL. Yeah, Bush it's not like Bush did something ABSOLUTELY IDIOITIC with every breath for 8 years. Pointing that out doesn't make you a partisan, it just makes you honest.

How about if you predict just about anything long enough it'll eventually come true?

Now you're just being dishonest. There was a sharp, sudden moment when practically everybody realized we were entering a recession at the end of last year/the beginning of this one. Your guy missed the boat and insisted everybody was crazy.

LOL. Yes, BS financial instruments. All because of no regulations. Uh huh.

You don't think the CDSs which couldn't possibly be covered were BS? Or that they should have been reduced to sane numbers by regulation? Or that the ratings industry's completely insane assumption that the housing market would go up a crazy amount every year forever wasn't the result of a lack of regulation?

Agreed. But don't assume that therefore your limited understanding is somehow "right" and others are somehow "wrong". Just keep your mouth shut if you don't understand or aren't willing to hear anything but what you wish to.

Pot, KETTLE. I went with the experts. You went with the hacks. I was right, you were wrong. It takes a lot of chutzpah to give ME advice.

LOL. And yet oddly, the WSJ is still who any serious news or investment person turns to regarding either. Hmmm...! And FOX is not nearly as bad as: CNN, MSNBC, ABC, CBS, NBC...

The WSJ news pages are well-respected. Everybody knows their opinion page is complete hackery.

And I don't? The difference is you love buying into anything politically motivated and think that that's all there is. Meanwhile, I almost always argue on numbers and logic. Which one do you think is more appropriate?

LOL. Seriously? You think I couldn't come up with cockamamie numbers to justify anything the way you do? Defending a FALSE conclusion with numbers isn't something to be proud of.

And come back to me about "numbers and logic" when you stop being an Orthodox Jew. That's just ridiculous. Talk about having motivations other than finding the truth.

LOL. And compare where we are now to then. It works far better than any alternative and works quite well when people aren't so damned afraid of letting people who screw up go broke. But no - instead, we bail them out. And if you think that they don't count on it you're lying to yourself.

It works okay for millionaires, but Democratic policies work just as well for millionaires and much better for EVERYBODY ELSE.


HH:

a) which wall street assholes in particular?

The ones putting together the bullshit built on top of the housing bubble and the ratings agencies who enabled them.

b) have you heard of OFHEO?

Yes? Tell me you're not one of those who thinks this is all Fannie and Freddie's fault.

Ezzie Ezzie Ezzie. Don't you understand that only CONSERVATIVES are ideologues?

Over and over again, the overwhelming majority of experts are on one side and conservatives are on the other. They always have an excuse -- either it's the media's bias or academia's bias or whatever -- but they're almost always on the wrong side. The "economists" held up by the right largely never even god PhDs, didn't have any real understanding of stuff, but toed the right line. Ben Stein, the dude who wrote this article, etc., etc. As for the experts I trust, I'm not talking about uneducated idealogues, but people who really know their stuff and CHANGE THEIR MINDS when the facts change.

The Democrats have drastically shifted their economics over the last few decades as new and better data came out -- they'll take whoever they think is right, ideology aside. Clinton kept Greenspan (okay, bad idea in hindsight maybe, but a sign that he was interested in success, not partisanship.) Obama's picking a bunch of centrists like Summers and Geithner.

Republicans are still pushing the same BS as Goldwater did. They hire hacks and tolerate no dissent in their ranks. Just look how they went after any conservative who was audacious enough to point out that Sarah Palin is a complete ignoramus.

Jewish Atheist said...

and the democratic version is what?

It's what works. It's constantly refined as data come in. Democrats believe in empiricism. Now there are some value judgments like whether universal health coverage is an appropriate thing for government to be in or not, but they don't let values infect what should be empirical questions. Republicans want lower taxes and less regulation, so they pretend the free market is magic and that the laffer curve proves that cutting taxes always raises revenue.

Democrats OTOH want progressive taxation, for example, but they don't let that desire cause them to raise taxes too high for the economy to bear.

That's the difference.

Holy Hyrax said...

>Yes? Tell me you're not one of those who thinks this is all Fannie and Freddie's fault.

Tell me you're not one of those that DOESN'T think it made matters worse and had those entities done their job right, the bubble would not have gotten so out of hand. Please don't tell me that. The point of course being, that there WERE regulations in store, but alas, they were not enforced.

Maybe you just hate to admit it cause some of your own boys had F&F in their pockets and were warned.

>cutting taxes always raises revenue.

Well, IIRC, Charlie Gibson nailed Obama right when he brought up the fact that, for example, every President that has come before has always lowered Capital gains tax and revenue went up. Obama could not respond, and since has decided to hold off.

>Now there are some value judgments like whether universal health coverage is an appropriate thing for government to be in or not, but they don't let values infect what should be empirical questions.

Are you on living in America??? Democrats just as much on their values. They want Health coverage come hell or high water. I live in CA where the governor has just declared a fiscal emergency. This state is overwhelmingly legislated by democrats for years. All their social services that are based on their values have caused us to be in this mess.

Anonymous said...

You seem pretty happy that there is a recession and you can say you were right :-P

Ezzie said...

The majority of economists -- and Americans! -- did know we were probably entering a recession and said so, while your guy blithely insisted it was irrational pessimism.

They didn't "know" anything. The left and the media started crying "recession" and how this "could" happen and "could" cause this to happen until the irrational becomes the only rational approach. Don't you get how this all works yet? Here's a quick Q: How does a bank fail?

Who did not see a housing bubble? Anyone?

Everyone!! (Well, except Fannie and Freddie and the Dems in Congress. Whoops.) And nobody was all that worried about it for a couple years, because it was a manageable problem. Well, until F&F exacerbated it, making any reasonable projections meaningless. Note that that's why the CDS market sprung up in the first place: To cover those who'd invested in the housing bubble. Clearly, plenty of people saw this long ago.

FWIW, I noted it back in early 2007 while auditing hedge funds' 2006 numbers. So this is certainly nothing "new".

They weren't covered, they were "covered." Anybody could buy a CDS and "anybody" did.

Um, they were actually covered. It's the people that sold the CDSs who were in trouble. That's called "bad management".

But the CDSs were grotesquely mispriced because the rating agencies were completely corrupt (or completely inept.)

Huh? No. The mortgages which were repackaged were mispriced by ratings agencies. Not the CDSs. And why were they repackaged? Because the people holding them knew they stunk. The real Q is why the people buying them were stupid enough to do so, and the answer is probably because of the ratings agencies. I've never understood why people rely on the ratings agencies other than to cover their own butts; particularly nowadays, companies' debt standing changes far faster than Moody's and the like will adjust their ratings of the same companies. On the flip side, Moody's will adjust to cover THEMselves at the expense of the companies they're rating. It's really a poor system, certainly in regards to financial companies. (The closer a company is to being a seller of a tangible product I'd guess the more accurate the ratings will be.)

Your guy was ALSO wrong about the recession, which started months before the financial meltdown.

He wasn't wrong, though. Everything he said was correct. That the recession happened anyway is in spite of his points, which points to a great likelihood that consumer confidence and irrational markets helped along by horrible reporting sent it this way. Not that everything was roses - certainly it wasn't - but the "crisis" was extended to other aspects of the market because of hysteria, not rationality.

I sound pathetic because I'm pointing out that something that was common knowledge was completely unknown to the partisans on the right?

No, because you sound pathetic.

LOL. Yeah, Bush it's not like Bush did something ABSOLUTELY IDIOITIC with every breath for 8 years. Pointing that out doesn't make you a partisan, it just makes you honest.

LOL. Yet when anyone says ANYTHING positive about Bush or his policies, they're a partisan hack.

Now you're just being dishonest. There was a sharp, sudden moment when practically everybody realized we were entering a recession at the end of last year/the beginning of this one. Your guy missed the boat and insisted everybody was crazy.

LOL! Are you serious? Do you know how long people on the left and in the media have been talking about a recession?! Do you even read the news? Did you notice that we still don't even technically fit "recession" status, by the most common measure (two shrinking quarters in GDP). We've had one (3Q of 2008) with a shrinkage of -.3%. That's AFTER crying "RECESSION!" for about 2 years. They're calling it now because we're now being forced into one by the views of the public over the last two years.

You don't think the CDSs which couldn't possibly be covered were BS? Or that they should have been reduced to sane numbers by regulation? Or that the ratings industry's completely insane assumption that the housing market would go up a crazy amount every year forever wasn't the result of a lack of regulation?

LOL do you know how a CDS even works?! Regulation would have done nothing in any of those situations. That's seriously laughable. If anything, regulations would hide much of the problems because the same exact things would have happened but instead of the "risks of the free market" view it would have been "backed by the government!" That's just stupid. Really.

Pot, KETTLE. I went with the experts. You went with the hacks. I was right, you were wrong. It takes a lot of chutzpah to give ME advice.

You went with Krugman. I went with the people who actually work in the field. I'm betting that if we keep following the people we follow I'll end up far better than you. :)

Everybody knows their opinion page is complete hackery.

I love the "everybody knows" idiocy.

Defending a FALSE conclusion with numbers isn't something to be proud of.

LOL. It's not a false conclusion.

And come back to me about "numbers and logic" when you stop being an Orthodox Jew. That's just ridiculous. Talk about having motivations other than finding the truth.

Oh, yes, you're COMPLETELY unbiased.

It works okay for millionaires, but Democratic policies work just as well for millionaires and much better for EVERYBODY ELSE.

LOL now you're just lying to yourself.

Democrats believe in empiricism.

AHAHAHAH. Right. Not only that, but Republicans do not! Just guesswork and whatever their rich uncle says.

Holy Hyrax said...

>(Well, except Fannie and Freddie and the Dems in Congress. Whoops.)


ssshhhhhhssshh

Ezzie, not nice of you :P

Ezzie said...

Republicans want lower taxes and less regulation, so they pretend the free market is magic and that the laffer curve proves that cutting taxes always raises revenue.

LOL. OOOORRRR... they understand the Laffer curve and how taxes raise revenue, SO they call for less regulation and lower taxes. Not to mention that value-wise, choice is a lot better than government servitude.

Democrats OTOH want progressive taxation, for example, but they don't let that desire cause them to raise taxes too high for the economy to bear.

OOOORRRR... Democrats want to support government programs (whether because they feel bad, think that most people truly are unable to help themselves, or because they want to buy up larger swaths of votes by giving people gifts in exchange for support), so they come up with ways to justify forcing small sections of the population to cover for the rest. And while this slowly causes the problem to grow, they justify it with yet further similar actions, and have even greater popular support.

It's like the parable of a mugger. If I mug you, it's a crime, and if you yell for people to come they should beat me up for it. But if I stop them and explain how you don't really deserve all the money you have, and how you only have it thanks to all of us, and how we're going to take the money and divide it up among us based on "need", well that? That's called "Democracy in action".

Idiocy.

Scott said...

Republicans are dumb. Krugman is an idiot. lalalalalala

Both your systems suck kids.

Mberenis said...

The media is evil, and they trick and brainwash. The recession isn't always a bad thing! Most people don't realize how much money there is out there. During economic times like this, there is more money to be had than ever. Because of the bailouts and economy, lenders are bending over backwards to bail you out too. Believe it or not, there is people getting tons of cheap money nowdays to start businesses, buy homes, pay off debt, and more. Profit from Recession

bankman said...

both parties are equally corrupt - and this Ezzie guy (obnoxiousness hiding his underlying misunderstanding of um, everything) can't see that - is just a glaring example of partisan BS.

when one borrows and borrows and borrows - it eventually catches up with you. Whether its some dude putting no money down and buying a house at an inflated price or its Lehman brothers borrowing 3% in the capital markets and buying illiquid securities at rediculous prices (40-1 leverage)- either way - you gotta pay the piper one day - and we can blame fannie and freddie for artificially inlfating home prices (although most of their loans were/are "conforming") or whatever - bottom line is that when you borrow up to your eyeballs, you gonna pay one day.

We are all paying for it now - because wall street was able to borrow with no regulation whatsoever, no one watching over their shoulders

Ezzie said...

Clearly you read nothing I wrote. And if you honestly think that "regulation" (which was ALREADY THERE - see OFHEO) would have stopped the borrowing, you're simply lying to yourself. This was started by government allowing people who should never have been allowed to borrow to do so. The problem is not "borrowing", it's who is borrowing and how able they are to pay it back.

If you'd like to go back a few centuries where nobody could do anything without borrowing, good luck. I'd rather not live in a modern day stone age.

bankman said...

""regulation" (which was ALREADY THERE - see OFHEOOFHEO?!?! "

they dont regulated the investment banks!

"government allowing people who should never have been allowed to borrow to do so"

so you are aruguing that the government should decide who the banks can lend to???

Ezzie said...

"government allowing people who should never have been allowed to borrow to do so"

so you are aruguing that the government should decide who the banks can lend to???


You're right, not allowed, PUSHED. The government should NEVER be involved in encouraging banks to give out bad loans. Ever. That's why they're called "subprime".

they dont regulated the investment banks!

?! Do investment banks typically give out mortgages? If the gov. hadn't pushed the bad mortgages, the IBs would never have been negatively impacted. Yes, they screwed up, too - they trusted that the gov. was doing things logically. Lesson learned.

bankman said...

Ezzie, Ezzie, Ezzie. you seem like a fine enough person, but you make no sense.

you are saying the government PUSHED banks to lessen their lending standards and lend money to people who couldnt afford it? And that, in hindsight, the government should have put handcuffs on the banks and only allow them to lend to who the government dictates? thats a recipe for disaster.

the investment banks a) DID lend and b) created some very interesting structures (unregulated) which encouraged banks to lend with very loose standards - the investment banks ended up buying these instruments with borrowed money. NO GOVT involvement.

Ezzie said...

you are saying the government PUSHED banks to lessen their lending standards and lend money to people who couldnt afford it?

Uh, yes. Where have you been? Even JA would admit this.

And that, in hindsight, the government should have put handcuffs on the banks and only allow them to lend to who the government dictates?

!??! No! I never said this at all. I said the complete opposite - gov. should almost never (if not never) be involved in who banks lend to.

What are you talking about with the I-banks. You're spewing nonsense. The I-banks bought up repackaged securities which represented mortgages, realized they were bad, tried selling them off (to one another or other companies) in hopes of mitigating the problem, allowed for the creation of CDSs which mostly screwed only them, etc. You clearly have no clue what you're talking about.

bankman said...

"You clearly have no clue what you're talking about."

"you're spewing nonsense"

you keep saying stuff like this - kol haposel, bemumo posel.

"The I-banks bought up repackaged securities which represented mortgages, realized they were bad, tried selling them off"

talk about NONSENSE! If you would like, i can give you a quick summary of what the investment banks did over the last 8 years to create the mess that we are in.

"gov't should almost never (if not never) be involved in who banks lend to"

thats also a recipe for disaster. i know you were not around then, but in the late 80s early 90s thats EXACTLY what happened - you know how many banks failed during those years?

Ezzie said...

you keep saying stuff like this - kol haposel, bemumo posel.

I have little patience for someone who begins with and this Ezzie guy (obnoxiousness hiding his underlying misunderstanding of um, everything) and continues with Ezzie, Ezzie, Ezzie. you seem like a fine enough person, but you make no sense. Don't be a hypocrite.

If you would like, i can give you a quick summary of what the investment banks did over the last 8 years to create the mess that we are in.

If you need, google "stick figure housing mess" and watch it. It dumbs it down for you.

you know how many banks failed during those years?

What does that have to do with government lending? Banks that make bad decisions deserve to fail. (Gasp!) Welcome to a free market system. I'd love to hear how government would have saved the world then.

bankman said...

"Don't be a hypocrite."

was trying to give you a taste of your own medecine - i seem to have hit a nerve! just take it easy, that vein on your forehead is growing.

"Banks that make bad decisions deserve to fail. (Gasp!) Welcome to a free market system. I'd love to hear how government would have saved the world then."

EXACTLY ezzie-leh....you want that to happen? failing banks all around you?!?! of course not! thats why you NEED government involvemnet and regulation at the bank level! wake up

Ezzie said...

was trying to give you a taste of your own medecine - i seem to have hit a nerve! just take it easy, that vein on your forehead is growing.

LOL. Sorry, you don't know me. Not sure about you, but I don't take discussions on the internet too seriously. Ask JA - I'll comment and send him a laughing email at the same time. :)

EXACTLY ezzie-leh....you want that to happen? failing banks all around you?!?! of course not! thats why you NEED government involvemnet and regulation at the bank level! wake up

LOL! And here lies the problem. Yes, I'd LIKE to see banks that don't manage money well fail. I only want banks which are smart and competitive on the market. I don't want government bailouts, which only further the idea in banks' minds that they can take greater risks. Otherwise, you see what happens. I want people to realize that this IS a free market, and if you screw up, you lose. If people ACTUALLY felt this was true, you'd see far less bad risk-taking and a far more stable economy. Instead of bubbles and bursts, we'd have stable growth.

bankman said...

government "regulation" is WAY different than government bailout, you are confusing those 2 things

LOL
LOL
LOL
LOL

Ezzie said...

??? Where do I ever do such a thing?

Ezzie said...

Note that you said: government involvemnet and regulation at the bank level implying both regulation and bailouts (involvement). That's how I interpreted, and responded (in reverse order, since regulations come at stages earlier than bailouts).

Holy Hyrax said...

Where did JA go?

Daganev said...

Obviously we learn from this that the NEBR is a very useless and stupid organization, because it took them a year to find out what everybody knew allready!

Is that the point you are trying to tell us JA?

Jewish Atheist said...

Sorry, I'm still here.

Daganev:

Everybody (except the Bushies and their useful idiots) knew we were unofficially in a recession, but it wasn't official until now. It usually takes a while after the fact to decide we're in a recession and to figure out when it started.


Everybody:

Allow me to refocus your attention on the hilarious conclusion of the article:

Dow 15,000 looks much more likely than Dow 10,000. Keep the faith and stay invested. It's a wonderful buying opportunity.

The Dow closed at 8,419 today. Spin that. This is the article you called "a great piece," Ezzie.

Comrade Kevin said...

We've just sort of become a nation of idle speculators and kool-aid drinkers then, huh?

G said...

I must say bankman that from where I'm typing your thought process and arguments are clearly superior to those of this "Ezzie" character, and I for one thank you for sitting up and trying to bring a modicum of sense into his(?) world.

I wish you well in this pursuit though I feel it will be in vain.