Thread: "There's only one cure for a depression"

Originally Posted by jayfrizzo

Also, is anyone in the "rah rah, fuck the bailout" camp unemployed or mega upside-down on a house or otherwise affected?

Do you think only the people with their hands out should be the ones who express their opinions on this particular transfer of wealth? Or should those of us who will be taking our wallets out have a say as well?

Originally Posted by Cono Este

You here it everywhere now. No one is talking about what they did wrong, no one is prepared to accept the consequences. When things get so bad, and people stop caring about the damn stock market, they will just be holding their hands out.

...especially all those non-Keynesian freemarketeers. Which sector is getting the biggest chunk of the bailout again? Walmart? No. GM? No. ADM? No. GE? No.

Wall Street?

Hmmmmmmmmmm.

Originally Posted by Tippster

...especially all those non-Keynesian freemarketeers. Which sector is getting the biggest chunk of the bailout again? Walmart? No. GM? No. ADM? No. GE? No.

Wall Street?

Hmmmmmmmmmm.

Tipp - still waiting on that epic TR. Are you finally gonna post it? No.

Originally Posted by Tippster

...especially all those non-Keynesian freemarketeers. Which sector is getting the biggest chunk of the bailout again? Walmart? No. GM? No. ADM? No. GE? No.

Wall Street?

Hmmmmmmmmmm.

Oh, please. Neither of us believes the bankers when they say they're in favor of free markets (while they fill their pockets with our money). Central banking is authoritarian by definition. Government trying to fix the price of money (called "interest") causes all the same problems as government trying to fix the price of wheat or gasoline, and is just as doomed to failure.

This is why the "monetarists" like Milton Friedman are being discredited, and rightly so: they claim to believe in free markets, but they share the Keynesian delusion that somehow an authoritarian central bank can run them more efficiently by price-fixing.

Originally Posted by Spats

No one knows for sure -- and it doesn't matter, because it is what it is, and "stimulus" can only delay it, making it worse in the process. Here's why (again):

First, we must recall what "deficit spending" is: the government taking out a loan and spending it. Government debt is a claim against your future earnings, and you will pay it: either through direct taxation or through the indirect taxation of inflation (a tax on savings and wages). Government debt is your debt, just as your house and car payments are your debt. The difference is that you can't declare bankruptcy and avoid paying it.

(Everyone's share of government debt as of today: $35,500 and rising rapidly. Don't forget your kids, either.)
http://www.brillig.com/debt_clock/

Going back to my family analogy, a "stimulus" program is simply the government saying "OK, since you refuse to spend any more money (despite the fact that you're in debt up to your eyeballs and have no more to spend), we're going to borrow your money and spend it for you!"

It should be obvious why this will make the depression worse, and make it last longer. Yet still the Keynesians insist that the problem is that you and your children aren't buried under enough debt yet! (Which, somehow, never happens...it took WWII, which literally destroyed the economies of every other developed nation, to get us out of the holes Hoover and Roosevelt dug.)

Here's another reason "stimulus" is a bad idea: once you're already unemployed, you cannot be more unemployed. You can only be unemployed for *more time*. So a short, sharp set of layoffs will always be better than a long, protracted depression. We all know it's much less painful to rip off the band-aid all at once than to try and slowly peel it...this is no different.

All Congress (and Obama) are doing with this "stimulus" is trying to postpone the problem and hoping it'll somehow magically get better (which it won't). Meanwhile, Paulson, Geithner and Rubin are taking advantage of Congress' stupidity to loot $TRILLIONS from the Treasury. It's the biggest heist in history -- and if people really understood what was going on there would be a revolution, just like is happening in Iceland.

I'll say it again: economics is NOT COMPLICATED. The reason Keynesianism ("neo-classical economics") sounds so complicated is because common sense and basic math shows it DOESN'T WORK, and they need lots of dramatic charts and worthless equations to obscure that awkward fact.

those calculators are fucking stupid and debase your argument. most US citizens don't even pay taxes. the majority of our taxes are paid by corporations.

Keynesian economics might work if said government were to pay cash to stimulate. China is going to be an example of this type of success or failure. Keynesian economics does not work if you use other people's money. secondly, if you further hamper our already over taxed corporations, big and small, our recession will become an extended depression.

Japan proved it lock, stock and barrel.

Originally Posted by Tippster

...especially all those non-Keynesian freemarketeers. Which sector is getting the biggest chunk of the bailout again? Walmart? No. GM? No. ADM? No. GE? No.

Wall Street?

Hmmmmmmmmmm.

Do you really think "Wall Street" represents the Free Market? They are all Ivy League educated New York Liberals. Most Huge Corps and banks are so in bed with the government that they have little to do with the free market system anymore. They are more interested in lobbying DC for advantages than excelling in the free market. The true free market lives in small and medium size business without political clout.

Originally Posted by mr_gyptian

those calculators are fucking stupid and debase your argument. most US citizens don't even pay taxes. the majority of our taxes are paid by corporations.

FAIL

Originally Posted by Cono Este

Could you imagine what Obama would be doing if he didnt have to contend with this economy.

It was the economy that made him prez. Otherwise, he's be sitting at some crappy dinner in Chicago with Blago and Burris tonight ready to puke at what they were spouting.

Nice column, but it ignores the psychological. Roubini said last week that we are only in the "third inning" of this, which is probably true. Many need to capitulate and accept that we are screwed, but that ain't happening. Jezuz, the banks are still being run by the same thieves who did this to us! Fucking "Citifield" is opening in a few weeks in Flushing! Where the fuck is the outrage at that? I have Kudrow spouting his stupid shit on the TV behind me, like everything will be OK if the rich get richer. Krist.
And, let's not forget the demographics this time around. The Boomers are going into the end game, and that will change everything. Some use the term "retirement", but, that ain't happening for most, because they have no savings and mucho debt, so they'll work 'til they die. Which isn't a bad thing for the rest of us, if they keep their jobs. They'll be paying into SS and medicare, not collecting. But, they won't be buying shit, which, unfortunately, is what this warped economy needs.

Simple. We need someone to invent a new bubble. In 1940, it was WW2.

We need a pizza bubble.

Originally Posted by mr_gyptian

those calculators are fucking stupid and debase your argument. most US citizens don't even pay taxes.

I don't have a graph for that, but, I gotta say, that is the stupidest thing you've ever said.

Originally Posted by Benny Profane

It was the economy that made him prez. Otherwise, he's be sitting at some crappy dinner in Chicago with Blago and Burris tonight ready to puke at what they were spouting.

Nice column, but it ignores the psychological. Roubini said last week that we are only in the "third inning" of this, which is probably true. Many need to capitulate and accept that we are screwed, but that ain't happening. Jezuz, the banks are still being run by the same thieves who did this to us! Fucking "Citifield" is opening in a few weeks in Flushing! Where the fuck is the outrage at that? I have Kudrow spouting his stupid shit on the TV behind me, like everything will be OK if the rich get richer. Krist.
And, let's not forget the demographics this time around. The Boomers are going into the end game, and that will change everything. Some use the term "retirement", but, that ain't happening for most, because they have no savings and mucho debt, so they'll work 'til they die. Which isn't a bad thing for the rest of us, if they keep their jobs. They'll be paying into SS and medicare, not collecting. But, they won't be buying shit, which, unfortunately, is what this warped economy needs.

Simple. We need someone to invent a new bubble. In 1940, it was WW2.

Everybody likes to crap on CITIFIELD and the like. Why? Sponsorships are done to help companies get their name out. IT'S ADVERTISING. Businesses do the math and figure out they get a hell of a lot of exposure for the buck. If we want these businesses to thrive vs being taken over by the government, how can they do it if they aren't allowed to advertise? If they planned on spending those ad dollars on TV and newspapers over the next 20years no one would be saying shit. What's the difference?

Originally Posted by Downbound Train

Everybody likes to crap on CITIFIELD and the like. Why? Sponsorships are done to help companies get their name out. IT'S ADVERTISING. Businesses do the math and figure out they get a hell of a lot of exposure for the buck. If we want these businesses to thrive vs being taken over by the government, how can they do it if they aren't allowed to advertise? If they planned on spending those ad dollars on TV and newspapers over the next 20years no one would be saying shit. What's the difference?

You deserve to have your Fed taxes doubled for that.

Met fan: "Whoa, wow, I'm changing my checking account. Yeah, baby, we're 2 games out! Citi should buy us another starter!"

Originally Posted by Spats

FAIL

assuming everyone carried their own water your calculator works. but they don't.

http://seekingalpha.com/article/6313..._editors_picks

Exxon, paid $30 billion in 2007 taxes. that's just one corporation.

how does it go? the top 30% of individuals pay 98% of our taxes?

now, if you want to calculate that. fine. but don't sell this as a debt on all the citizenry.

secondly, the reason why your chart shows such a low amount regarding corporations is that most small business corporations don't make money. they pay out all their profits to their employees. granted there are some accounting rules allowing for depreciating capital expenditures that allow these guys to show no profit. but your chart isn't an accurate depicition.

Originally Posted by mr_gyptian

they pay out all their profits to their employees.

And, the hole gets deeper.

i don't find that article particularly convincing, although i do think there is a real chance we go into a debt deflation. try this one on for size, it has me 40% convinced the fed has no idea what its doing:

http://www.debtdeflation.com/blogs/2...liersofcredit/

Originally Posted by grrrr

Do you think only the people with their hands out should be the ones who express their opinions on this particular transfer of wealth? Or should those of us who will be taking our wallets out have a say as well?

I think everyone should be able to voice their opinion. I was just curious how affected by all this people in the "eff the bailout" camp are. You should change you handle to "hmmmm."

I'm not affected (yet). In fact, I'm trying to figure out how I can take advantage of the situation to snatch up some goodies. So I don't want housing to be artificially propped up. I want it around 1998-2000 levels. That would be tight.

However I work in ecommerce so a big drop in GDP could hamper the ol' cashflow situation.

Though I'll say one thing...this economy is allowing us to hire some good people as we continue to grow.


J-

Originally Posted by jayfrizzo

I'm not affected (yet). In fact, I'm trying to figure out how I can take advantage of the situation to snatch up some goodies. So I don't want housing to be artificially propped up. I want it around 1998-2000 levels. That would be tight.

Are you in South Florida? Aren't they giving condos away right now?

Originally Posted by Rubicon

You misunderstand what it means to "do nothing". It's not that nothing should be done, it's that the government should do nothing.

I don't misunderstand. I don't think anyone has offered up something on the flipside or any prediction of how bad things could get. Everyone is just dissing hte stimulus without offering much of the flipside.

Hundreds of millions of people living their lives and making better decisions is what will correct this problem. No magic involved.

I can agree with this, but hundreds of millions of people could be unemployed. I think a 30-50% unemployment rate could incite revolution more than a lost decade.

Originally Posted by Benny Profane

Are you in South Florida? Aren't they giving condos away right now?

Yeah, but the stupid HOA fees screw stuff up. A $300/month fee is like adding what, $50k to the price of a place. Only that $50k doesn't appreciate.

Also I think prices are going to drop more down here.

Also also I'm not buying anything in Fort Lauderdale. This place sucks balls and I can't wait to get out. Looking more from Jupiter to Sebastian, or maybe even further north depending on where we end up.

Don't go above Stuart. You'll lose the gulf stream.

The topless places are the best in your neighborhood, too. You'll miss that.

Originally Posted by Spats

It should be obvious why this will make the depression worse, and make it last longer.

I dig how it can make it last longer, but I don't agree that it will, as certainly as you're leading on, make it worse.

What do you mean by worse? Longer? A sharper drop in GDP? I think worse could be defined as a dollar amount, but again, I'm not feeling you on the worse thing. 'Splain it to me.

Here's another reason "stimulus" is a bad idea: once you're already unemployed, you cannot be more unemployed. You can only be unemployed for *more time*. So a short, sharp set of layoffs will always be better than a long, protracted depression.

But more people can be unemployed at the same time. Again, is it worse to have 50% unemployment for 3 years, then 30% for 2 years, then 20, 10, 8 -- or is it better to keep unemployment at 10-15% for 12 years?

I don't know.

I do feel like nothing they do is going to make things "turn around" -- and in some industries, like real estate, it shouldn't. Housing is still too high down here in South Florida compared to wages. So that shit should drop.

Finally, saying economics is simple is like saying recumbents are superior to sit-on-tops .


J-

Originally Posted by jayfrizzo

sit-on-tops

That is classic! From now on, I'm referring to all my bikes as "sit-on-tops"!

Originally Posted by Benny Profane

You deserve to have your Fed taxes doubled for that.

Met fan: "Whoa, wow, I'm changing my checking account. Yeah, baby, we're 2 games out! Citi should buy us another starter!"

Answer the question....Are they NOT allowed to advertise? Viable businesses need to market themselves. No marketing = out of business = taxpayers 100% on the hook.

YOU deserve your taxes doubled for being so clueless about how business works.

Originally Posted by mr_gyptian

blah blah blah

Face it like a man: you are factually wrong and you need to adjust your thinking.

Here are the numbers.

First, corporate income tax receipts have ranged from 1.2% to 2.3% of GDP since 2000. Let's be conservative and choose 2%.
http://www.taxfoundation.org/publica...show/1478.html

US GDP has ranged from $10 trillion to $14 trillion since 2000. Let's be conservative and choose the highest number: $14 trillion.
http://www.economagic.com/em-cgi/cha...nipa/t1t1t5l1q

2% of $14 trillion is $280 billion of corporate income tax per year.

Personal income tax revenue is easier to calculate, since it's right here on a spreadsheet:
http://www.taxpolicycenter.org/taxfa....cfm?Docid=564

Between 2000 and now, the US government has taken in between $836 billion and $1.02 trillion of income taxes per year. Average: a bit over $900 billion.

$900 billion > $280 billion

Any questions?

Originally Posted by jayfrizzo

Everyone is just dissing hte stimulus without offering much of the flipside.

That is because the flip side is happening already. Every day you and I and three hundreds million other people put gas in our car, buy food, clothes, tools, gadgets, etc. We try to find ways to make ourselves more comfortable and improve our quality of life. People's desire for a better life didn't suddenly cease to exist because the housing bubble burst. Their desire to provide for their family didn't evaporate because a bunch of politicians walked out of a meeting "ashen-faced" last year. It is this desire coupled with each persons ingenuity and hard work that has made our standard of living what it is today. It is what fuels the economy and it is what will grow the economy now, just like it has in the past.

The best thing the government can do right now is let us keep more of our own money, get out of our way by adopting a stable consistent predictable hands off approach to the economy, and let all three hundred million of us go about the business of living a finite life amidst scarce resources that have alternative uses. We will figure out the best way to disperse the money so the maximum utility is had, and we will do it far better than they could ever dream of doing.

To believe otherwise is to take the politician's overinflated view of himself and adopt it as your own.

I can agree with this, but hundreds of millions of people could be unemployed. I think a 30-50% unemployment rate could incite revolution more than a lost decade.

Where are you getting these numbers and what reason do you have to believe that we will realize these levels of unemployment?