Sunday, October 19, 2008

It's All Bushes Fault

Even that stalwart bastion of liberalism is beginning to question the meme. And for good reason. With a new liberal leader's election all but assured they need to do some serious regrouping lest he be blamed for any lingering effects. Don't get me wrong, there's a lot to be laid at the feet of GW but let's go back a bit more shall we?

Building Flawed American Dreams

Mr. Cisneros, 61, had a foot in a number of those worlds. Despite his qualms, he encouraged the unprepared to buy homes — part of a broad national trend with dire economic consequences.

He reflects often on his role in the debacle, he says, which has changed homeownership from something that secured a place in the middle class to something that is ejecting people from it. “I’ve been waiting for someone to put all the blame at my doorstep,” he says lightly, but with a bit of worry, too.

Long engaging story even if tainted by the contributions by "Poor Gretchen" of CR infamy.
It took a lot more than one administration leaving the tiller untended. It also took an administration to steer the boat towards the abyss.


Casey Serin said...

The entire Global Recession™ is my fault.

I'm still ripping people off as we speak. Law enforcement couldn't care less -- I'm still a free man.

Santa Flipper Clause said...

Ho Ho Ho - It's Santa Flipper Clause

Santa would say that it has been 95 years of poor economic and monetary policy. Plenty of blame to spread around.

Santa F. Clause

Rob Dawg said...

For those too lazy to do the math. Santa is talking about the creation of the Fed.

Rob Dawg said...

Remember my longstanding confusion as to why no one was worried and Wells Fargo?

aClem said...

I read the CR comments regularly. I am fascinated by the deflation/inflation argument. To my layman's mind, inflation seems inevitable, but the 'deflation' camp is well stocked with well educated and informed and educated advocates (as is the inflation camp). Perhaps you might help to enlighten me a little.

It seems to me that if we are to have deflation, it will only be because the government chooses it. We have seen stimulus checks and bailouts/rescue plans. If delfation is the only danger, what is to stop the government from kicking things up a notch and, say, paying down every homeowners mortgage balance by 30%? 40%? How about sending 'stimulus' checks of $50k instead of a lousy $600? If inflation isn't a worry and debt doesn't matter, wtf?

These absurd (?) suggestions aren't absurd if deficits don't matter, as some seem to want to suggest. I don't forsee anything like my 'modest proposals' being enacted, for the reason that government (and trade) deficits DO matter. The US government can not function (as it is currently run) without a infusion of other people's money. We borrow now to pay interest on what we borrowed previously. If the credit crunch continues, where is the money going to come from to finance the deficits?

I understand that US Treasuries are perceived as a 'haven of safety' in troubled times, but it seems to me there must be a limit to just how much of this 'debt' the world can (or will) absorb. It's very sweet of the Chinese (and others) to trade the fruit of their labors for paper, then trade that paper for more paper. But if they can build all that cool electronic stuff, it seems like they would also be smart enough to realize that the supply of the paper they are getting is increasing, and that the old law of supply and demand might just raise its ugly head and make that paper worth less (or worthless) some day.

In short, I don't see how a government that is willing and able to take on as much debt and print as much paper as they please can avoid devaluing the paper. What am I missing here?

aClem said...

Sorry for repeating myself with the 'educated.' I didn't mean to imply over educated.

Rob Dawg said...

Excellent comments aclem. I'm cleaning the garage but will give your post full attention shortly.

Son of Brock Landers said...


The inflation/deflation argument is extremely interesting. The best argument I have heard for deflation is that we (the US) have experienced a massive credti inflation whichhas popped. In events like this, deflation is the outcome. There's also the matter of printing not keeping up with the destruction of false wealth. I do think the US is handcuffed with how much we can print because if we lack funding from our foreign "friends" we're stuck.

I don't think the US will see hyperinflation because the Weimar situation was extremely unique and the politicians that would allow it would be hung from the closest streetlights or voted out.

Lost Cause said...

No, it wasn't Casey.

Calif. man dies in Nev. mine accident

Lyon County sheriff's deputies say Terry Berardy of Mokelumne Hill, Calif., was unconscious and unresponsive after he was extricated Saturday from the shaft around the Ludwig Mine near Smith Valley.

Deputies say Berardy fell at least 80 feet down the shaft as he and friends and family were exploring the area.

He was pronounced dead at the scene. No one else was injured.

Emergency workers from Lyon and Washoe counties assisted with the extrication of the victim from the shaft.

An investigation continues into the death.

Lost Cause said...

Why are you looking to blame the poor and powerless, instead of the rich and the powerful, who control everything? I am not buying it, Rob. You cannot blame it on the poor immigrants this time. These toxic instruments needed a lawyer and a economist to decode. They were designed by people with degrees, and they cleaned out the working class.

Curious said...

At 1:24 PM, aClem said...

Really great comment aClem. You say that you read CR, this is a question you should cross post to CR in an appropriate thread and hope that it stimulates some thoughtful answers. Hopefully CR returns to functionality shortly. I'd love to read some of the regular commenters responses.

K+ on the thoughtful and well thought out post.

H Simpson said...

Things are going to get bad soon.

Everyone likes to throw rocks at W. And Lord knows he has pulled some boneheaded moves. He has gone from hero to zero when he ran for a 2nd term.

But Democrats took over 2 years ago saying they would change things. Only thing that changed is they got more of the spoils. Bottom line is both parties are screwing the working men and women who pay for their gig. Washington is the problem and not the solution.

I don't expect that to change. But the economic climate is changing.

We have all seen prices going up because of inflation. The govt lies through its teeth about inflation rates to keep from having s/s and other federal outlays increase.

But companies cannot print money and raise prices when the dollar goes down. The WSJ has what is called the big mac index whereby they check the price of a big mac in every country. You can tell by the price whether currencies are going up or down compared the dollar. Well lately the big mac is a lot more expensive in the States because the dollar is weaker. So we already have inflation at work.

While inflation is happening, industry will try to hold the line on costs.

Since only so much they can done with raw materials that are skyrocketing, they will squeeze their employees. This will cause deflationary actions for take home pay. Couple this with higher interest rates that take into account actual credit risks, and people do not have as much cash to spend and they will back off buying big ticket items.

Right now we are getting up after the big party with a hang over. And like some drunks, we are drinking some "hair of the dog" to feel better. But deep down we still have a hang over and are not functioning correctly.

Congress is spending a lot of money right now to keep the citizens content until the elections, but sooner or later we have to work through that splitting headache.

California is is trouble. In Mass, the Gov slashed the budget last week and the same hacks who screamed in the 80s at Prop 2.5 cuts are on TV jabbering away how the cuts will destroy live as we all know it. These are caneries in the coal mine.

We soon will have everyone argueing about the last spring roll on platter when government at all levels is forced to cut back.
In NH, we fund most everything at a town/city level. The cuts have already started.

The real question is " as the US economy slows, do other nations perceive we are weak and attack us ala the holding of the US embassey in Iran in 78?"

Sure, Sadam is dead, and Elvis is not doing well, but there are plenty of idiots who want to tangle with the US and long time enemies who are willing to help them convertly.

Would not take much to topple Wall Street as weak as it is right now.
How low would the DJIA go if another 911 attack hit US shores?

Things will slow down and get worse. This feels so much like 1977 and Jimmy Carter it is not even funny. Guess every generation has to stumble and learn the same lessons as their parents.

Storm clouds on the horizons no matter who gets the nod in a couple weeks.

Hope you all are battening down the hatches.


Lou Minatti said...

You cannot blame it on the poor immigrants this time. These toxic instruments needed a lawyer and a economist to decode.

The mortgage-backed securities were, sure. But the loan docs weren't. These people knew the terms. Yes, they were lied to. The loan officers and the sales weasels promised they could refi to a lower rate and the appreciation would take care of the rest.

Northern Renter said...

H Simpson,
Just a tiny correction. The Big Mac index is from the Economist, not the WSJ.

Best wishes,

Jean ValJean said...


Mo' Money! Mo' Money!

Property Flopper said...


> He has gone from hero to zero when he ran
> for a 2nd term.

Many of us thought W was a zero when he ran for his FIRST term. Still do.

> Hope you all are battening down the hatches

Absolutely. The wife and I are set up with spending so that as long as either of us has a job, we've got positive cash flow. Also have enough in the bank to survive two years with both of us out (at current spending levels, longer if we cut back). We'll be fine.

There are enough warning signs - and HAVE been for quite some time - that anyone NOT ready for the coming financial "issues" deserves what they get. Then again, I met someone over the weekend who was thinking about sueing their real estate agent because the house (purchased in 2005) has gone down in value. They were surprised by the real estate bubble and think the agent should have warned them.


Mr. Outspoken said...

According to the WSJ many major mining companies are cutting back exploration and development projects due to a lack of capital, and lower metals prices.

Sounds like just the environment for a well-positioned junior miner to sweep in and take advantage of the future rising prices.

Back the truck up, Casey! You can buy today at a 14% discount to Friday.

Rob Dawg said...

Casey is so screwed. 1.2¢ is half his purchase price and 1/3rd what he needs to repay mommy. Screwed.

Goldspring relies on substantial debt financing to fund operation activities. Debt issuance has not just stopped but reversed. There are several notes coming due that must roll or GSPG dies. You'll see them roll because the lenders know there is no value in the asset so it is better to hope for some payments than to repo on a boat anchor. Doesn't matter GSPG is a zero. THe magic touch still works.

Question. We need to talk de/inflation. How would you like me to make a topic and still retain the awesome comments above? I can just put up a quick post and let you repost or I can quote you all and then have a long post or I can edit to highlights.

Peripheral Visionary said...

aClem, the inflation vs deflation debate has been a fascinating one. At present, however, deflation is clearly the dominant force, as debt destruction will be dramatically reducing the aggregate money supply. Less money chasing the same goods means lower prices.

That can change, however, were the Fed to print money, that is, to make unsterilized infusions of money into the system. The quick and painful result would be hyperinflation (Weimar Republic pt II). While I would not rule out that possibility, as the leadership really is that stupid/crazy, I suspect that it is fear for their reputations that prevents them from going down that road. I wish it were interest in the well-being of the country that was motivating them, but let's be honest, they're probably more worried about what the other economists will think about them, and thank goodness, as respectable economists do not advocate printing money.

Another major issue, as you identified, is the willingness of foreign buyers to continue to finance U.S. debt. I actually see this as less of an issue, because even if foreign buyers were to abandon Treasuries, the increase in rates would push even more Americans into buying them. The net effect would be rates on Treasuries would stay reasonable, but there would be less domestic buying of domestic securities and debt; e.g., more deflation. Inflation is only a possibility if the foreign buyers wake up one morning and decide to buy everything dollar-denominated, not just Treasuries, which would flood the system with money and drive up prices, but frankly, that's not going to happen.

Peripheral Visionary said...

Rob, you're welcome to start another post; I'll just re-post the above in the responses. I repeat myself enough as I repeat meyself enough as it is.

Lou Minatti said...

Casey is so screwed.

I disagree. Unless he is prosecuted, his parents are the ones who are truly screwed. Snowflake will go on to be one of the thousands of other slackers working seasonal jobs in Moab and Park City. Assuming he avoids prosecution, Casey is free and clear.

aClem said...

Thanks to all who commented. I would love to see the deflation/inflation topic discussed further here. CR is great but my questions get lost when there are 500 comments.

I just hope I will be able to find the new thread. Thanks again.