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As Robert Kuttner put it so succinctly the other day in, "Fantasies of Green Shoots:"

There is a huge reality gap between the happy talk about green shoots, banks passing stress tests, the rise in unemployment slowing -- and what's happening out in the real economy, especially if you take a close look at banking and housing, ground zero of the economic crisis. Credit remains tight for all but the most blue-chip borrowers. Despite the Fed's policy of keeping short term interest rates at just above zero, average rates on conventional 30-year mortgages, now above 5.5 percent, have jumped nearly a full point since April.

Kuttner's widely considered to be one of the leading progressive-minded urban theorists and economists in the country, not to mention the Editor of American Prospect Magazine. I had the pleasure of working with the guy during one of my first political campaign gigs back in 1979, and he is the real deal when it comes to Progressive Democratic thinking, despite what some (here) may say to the contrary.

But, he's far from the only one going against the grain when it comes to providing a negative outlook for our economy. Let's take a look at what the San Francisco Federal Reserve published, just out this week, with regard to renewed skepticism about there being any significant, near-term recovery in unemployment (h-t to Zero Hedge for bringing this to our attention):

UNEMPLOYMENT, San Francisco Federal Reserve

Even more dramatic, however, has been the break from past patterns in the number of workers who are involuntarily employed part-time. Numerous reports tell of workers being furloughed for a set number of days in a month or asked to work fewer hours each day.These anecdotes are supported by the monthly data. Indeed, the number of workers employed part-time against their wishes is at historical highs.The fraction of the labor force that reports working part-time for economic reasons has increased from 3.0% in December 2007 to 5.8% in April 2009.This increase has been broad-based, occurring in a wide range of occupations. Moreover, the reduction in hours has not been trivial, with more than half of such workers experiencing reductions of five hours per week or more.

What does all this mean for the labor market? We combine data on involuntary part-time workers with the standard unemployment rate to arrive at an alternative measure of labor underutilization. We plot this measure in Figure 3, which shows that the labor market has considerably more slackthan the official unemployment rate indicates.The figure extends this labor underutilization measure using the Blue Chip consensus forecast for the unemployment rate as a benchmark and then adding a share of involuntary part-time workers based on the proportion of workers in that category to the unemployed during the current recession. This projection indicates that the level of labor market slack would be higher by the end of 2009 than experienced at any other time in the post-WorldWar II period, implying a longer and slower recovery path for the unemployment rate. This suggests that, more than in previous recessions, when the economy rebounds, employers will tap into their existing workforces rather than hire new workers. This could substantially slow the recovery of the outflow rate and put upward pressure on future unemployment rates.

In short, the "recovery," as we're now hearing from many, will be a "jobless recovery."  This is the Federal Reserve--light years away from the progressive thinking of someone like Robert Kuttner--telling us this.

But, as even the Federal Reserve tells us elsewhere, a jobless recovery really is not a recovery, because unemployment is a coincidental indicator (not a lagging or a leading indicator) of the current state of the economy. Or, paraphrasing what I said the other day in an earlier diary: the term, "Jobless Recovery," is an oxymoron.


The opinions of Yale University finance professor Robert Shiller, widely considered to be one of our nation's leading experts on real estate valuations, and creator of the home-price indices that bear his name (the Case-Shiller Index), are discussed today over at Bloomberg Media in: "U.S. Home Prices May Fall for Years, Shiller Says."

U.S. Home Prices May Fall for Years, Shiller Says
By David Wilson

June 8 (Bloomberg) -- U.S. housing prices are in the midst of a decline that may last for years, according to Robert J. Shiller, a finance professor at Yale University.


"Prices may continue to fall, or stagnate, in 2010 and 2011," Shiller wrote.


Indications that the housing market has stabilized look like "the mother of all head fakes," Whitney Tilson and Glenn Tongue, co-founders of T2 and co-authors of the book "More Mortgage Meltdown," wrote in a June 2 report.

The folks over at T2, quoted immediately above,  were credited with supplying all of those wonderful graphics delivered by gjohnsit in his recent, highly-recommended diary: "Subprime meltdown over; now comes the bad part."


IMHO, Nobel laureate Joseph Stiglitz, aside from being a true progressive, in the Democratic sense of the term, is the most brilliant economist in this country. Perhaps in the world. Here are some of his latest comments, intertwined within a Bloomberg article that  focuses upon refuting the banking industry's claims that they're "on the mend" in, "Bank Profits From Accounting Rules Masking Looming Loan Losses."

Bank Profits From Accounting Rules Masking Looming Loan Losses
By Yalman Onaran

June 5 (Bloomberg) -- Big banks in the U.S. say they're on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.


The revival may be short-lived. Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama's efforts to pull the economy out of recession.


"There's a chance that it might work," Columbia's Stiglitz says of the government's attempt to boost confidence. "If it does, then they'll look like the brilliant general. But all these efforts also bank on the economy recovering and housing prices not falling too much further. Those are not safe assumptions."

Then there was this wake-up call from Sunday's NY Times: "The Economy Is Still at the Brink."

The Economy Is Still at the Brink
New York Times Op-Ed
Published: June 7, 2009

WHETHER at a fund-raising dinner for wealthy supporters in Beverly Hills, or at an Air Force base in Nevada, or at Charlie Rose's table in New York City, President Obama is conducting an all-out campaign to try to make us feel a whole lot better about the economy as quickly as possible. "It's safe to say we have stepped back from the brink, that there is some calm that didn't exist before," he told donors at the Beverly Hilton Hotel late last month.

Mr. Obama thinks that the way to revive the economy is to restore confidence in it. If the mood is right, the capital will flow. But this belief is dangerously misguided. We are sympathetic to the extraordinary challenge the president faces, but if we've learned anything at all two years into the worst financial crisis of our lifetimes, it is that a capital-markets system this dependent on public confidence is a shockingly inadequate foundation upon which to rest our economy.


Why is so much effort being put into propping up those at the top of the economic pyramid -- the money-center banks, the insurance companies, the hedge funds and so forth -- when during a period of deflation like the one we are in, any recovery will come only by restoring the confidence of the people down at the bottom of the pyramid?


We are in one of those "generational revolutions" that Jefferson said were as important as anything else to the proper functioning of our democracy. We can no longer pretend that our collective behavior as a nation for the past 25 years has been worthy of us as a people. Many of us hoped that Barack Obama's election would redress the dire decline in our collective ethic. We are 139 days into his presidency, and while there is still plenty of hope that Mr. Obama will fulfill his mandate, his record on searching out the causes of the financial crisis has not been reassuring. He must do what is necessary to restore the American people's -- and the world's -- faith in American capitalism and in our nation. Answering our questions may help us get back on track. But time is wasting.


So, here we are in June 2009, and the overriding question about our economy pushes itself to the fore: "What's really changed?" As Lewis and Cohan acknowledge, immediately above, it's too early to tell.

In considering this basic question, I thought I'd leave you tonight with a link to a fascinating piece by one of the bigger "nattering nabobs of negativity," Charles Hughes Smith, who posts over at "Of Two Minds."

While I definitely do not agree with everything he says, in general, he's widely considered to be one of the more prescient purveyors of doom when it comes to our economy.  (In fact, I can honestly say he's quite a bit more negative about most of this than yours truly. So, I guess that says a lot!) His historical references and comparisons between what's occurring today in our economy, but within the context of Galbraith's historical commentary on the Great Depression, are quite amazing, as conveyed in Smith's piece from just a few days ago: "Why the Present Depression Will Be Deeper than the Great Crash of 1929."

Lastly, I leave you with a quote from another great progressive Democrat, George Soros:

"Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited."


Originally posted to on Tue Jun 09, 2009 at 01:35 AM PDT.

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Comment Preferences

  •  Tip Jar (141+ / 0-)
    Recommended by:
    tmo, Aeolus, Sparhawk, Timaeus, Detlef, mattman, emal, eeff, Pellice, MarkInSanFran, Creosote, bara, Euroliberal, cosmic debris, JuliaAnn, ovals49, ctsteve, Dallasdoc, CitizenOfEarth, Sychotic1, nika7k, DelicateMonster, side pocket, Deward Hastings, Josiah Bartlett, bibble, rapala, soros, radarlady, 3goldens, Jagger, el dorado gal, wsexson, irate, PBen, Superpole, truong son traveler, eightlivesleft, Brooke In Seattle, Gary Norton, lennysfo, farmerchuck, aaraujo, GreyHawk, lotlizard, Sandino, FightTheFuture, deepsouthdoug, MindRayge, Pluto, Jim R, BachFan, andydoubtless, ActivistGuy, The Wizard, fromer, Magnifico, NBBooks, bubbanomics, lao hong han, nilocjin, imabluemerkin, Sagebrush Bob, NearlyNormal, bleeding heart, justCal, sceptical observer, Jbearlaw, dochackenbush, andrewj54, DBunn, bigchin, One Pissed Off Liberal, phonegery, xaxado, dotsright, wa ma, Margfh, yoduuuh do or do not, daveygodigaditch, ilex, joyful, Unbozo, HCKAD, jgtidd, ubertar, mcc777c2, SeaTurtle, jnhobbs, Moderation, leonard145b, Terra Mystica, TomP, jgilhousen, MKinTN, glaser, JaxDem, Boisepoet, Youffraita, Fossil, LI Mike, Akonitum, luckylizard, BYw, Athenocles, priceman, In her own Voice, sydneyluv, whabash090, JonBarleycorn, SciMathGuy, two roads, mkor7, John Shade, zaka1, Losty, louisprandtl, ohmyheck, Just Bob, Jez, ArtSchmart, polar bear, snaglepuss, SoCalHobbit, Kristina40, orlbucfan, farbuska, stonekeeper, The Automatic Earth, Floande, JerichoJ8, yellow dog in NJ, Colorado is the Shiznit, slowbutsure, Susipsych, Fire bad tree pretty, Vtdblue, Edgewater, Anthony Page aka SecondComing, Rip Van Mongo, ipso

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Tue Jun 09, 2009 at 01:41:13 AM PDT

    •  I Think the Orignator of the Nabob Phrase (2+ / 0-)
      Recommended by:
      decembersue, MD patriot

      is somewhat of a nabob himself on the state of the economy these days.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Tue Jun 09, 2009 at 04:51:32 AM PDT

      [ Parent ]

    •  I'd be curious (13+ / 0-)
      what you have to say about the beloved, by progressives, Nobelaureate Paul Krugman saying that he believes the economy will have moved out of recession by September. I think that's not possible, but that we will know the direction the economy is moving in at that point, but won't be clear of all the trouble yet not to mention the fits and starts that will occur before we actually start to grow again.
      •  Krugman is now dead to these guys nt (6+ / 0-)

        Warning to all mouthbreathers: Teabagging may cause suffocation. Do not attend Tea Parties unless you know you are able to breath through your nose.

        by lompe on Tue Jun 09, 2009 at 06:31:47 AM PDT

        [ Parent ]

        •  It was all too predictable (8+ / 0-)

          There's a large crew on here that won't be happy until they see our economy in a full fledged depression. I don't know what this is. Maybe they are just so miserable now that they want others to share it. Maybe they loathe capitalism. Maybe they want to use it as a hammer to get what they want in terms of bank nationalization. I just dont' get it. But anyone who deigns to opine that we might actually get out of this mess gets savaged. My guess is Roubinin's next in line for this treatment.

          •  I actually do loathe capitalism.... (12+ / 0-)

            ...and I most certainly do not want to see a "full-fledged depression." The ends do not justify the means, especially when the means would cause such widespread pain and suffering among the people who are least able to endure it.

            I'm not exactly enamored with Geithner et al., and I share the concerns of many others that it would be a shame to pull ourselves out of this recession without taking the opportunity to address the structural problems that got us to this point in the first place. But at the same time I recognize that it's not a strictly black-and-white proposition, and I'm not dogmatic to the point of insisting that it's my way or the highway.

            "Intellectually, the Republican idea deserves the tolerance and respect one gives to the dead." - H.P. Lovecraft, 1936

            by seancdaug on Tue Jun 09, 2009 at 06:53:17 AM PDT

            [ Parent ]

          •  Maybe, just maybe, it's a good faith difference (9+ / 0-)

            of opinion arising from the fact that this precise combination of factors--esoteric debt securities, immensely huge gluts of household, corporate and government debt, historic levels of income inequality, and asset deflation is really a once in a lifetime occurrence that conventional economics has no ready answer for.

            Remember that at the start of this crisis Alan Greenspan himself admitted that individuals had not acted in their own best interests, violating free market underpinnings sacred to the free market economics that has been running the show for a very long time.

            We can't just apply the answers, we have to actually figure them out.

            "It's like we weren't made for this world, But I wouldn't really want to meet someone who was." --Of Montreal

            by andydoubtless on Tue Jun 09, 2009 at 07:26:56 AM PDT

            [ Parent ]

          •  It's not that it's what we want. (10+ / 0-)

            It's that we see what has happened and we see no realistic way out of it.

            And we are tired of all the happy talk all around us, while we are in the worst places we have ever been in our lives, with no way out.

            If someone could put my life back together, find me a good-paying job that I won't lose in a year, a place to live that I can afford, and a way to pay all those back bills that have accumulated -- including restoring my credit score, or completely doing away with the ridiculous things -- maybe THEN I could start seeing some happy future for me and my two kids, who are also by the way, priced out of college and working in jobs that may or may not have a future.

            I would LOVE LOVE LOVE to be happy about my future and the future of my country. From where I stand, there is only misery and sadness for the majority of the country. There are only a few elites who have a hope in hell of being happy in 10 years if things keep going like they are going.

            Now. Prove me wrong. Find me a job, a home, and a life, and I'll come on Daily Kos and write diary after diary about how freaking happy I am.

            "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

            by Brooke In Seattle on Tue Jun 09, 2009 at 07:59:24 AM PDT

            [ Parent ]

          •  The personal and the political (3+ / 0-)
            Recommended by:
            tmo, Pluto, ohmyheck

            There are pessimists (I'm one) and there are optimists. That should be fine-- without some differences, there wouldn't be much for us to talk about, eh?

            Unfortunately, there is also a human tendency to personalize the discussion. Not only is argument X wrong, but the person making it must be stupid, shallow, corrupt, ill-informed, naive, or otherwise unqualified to express an opinion. People don't like to be told that, so they scratch back. Sometimes the catfights become extended in time and across multiple diaries.

            The written language is treacherous, and we humans have our sensitivities. Sometimes a slight is perceived where none was intended. When the perceived slight comes from a "big name" contributor, the emotional reaction is all the greater.

            More civility is better. The impulse to scratch back is powerful, but usually letting it drop is better.

          •  I sense that sentiment too. (3+ / 0-)
            Recommended by:
            Pluto, soms, ohmyheck

            Maybe the negativity is embraced by those who are seeking real change, and the more it looks as though you can kick this dead horse (so to speak) and get it up and running, the more they moan - because the implication is that it will only prolong the agony when real and radical change is what is needed.  And maybe some of us want to see the capitalists who put us here punished instead of throwing them a life-line to live another day. However, I think that capitalism, if regulated, can be a wonderful thing.  Problem is that nobody speaks much of anti-trust stuff anymore, and everything became too big to fail, but failed anyway.  I wish Soros and the like would invest in true green shoots, as in students at MIT who have revolutionary ideas.  Give them the means to compete and change the way we do things in energy and agriculture and transportation. That is the radical kind of change I'm waiting to see.  I do think the economy will recover, not because I'm watching curves with U shapes, shoulders and a head or any other interesting shape, but because our lives depend on it.  Extreme weather will force us to change and we will need innovation streaming out our butts.  It'll be urgent; as in do or die innovation.  We will be busy as hell making stuff that makes sense.

          •  You mean the 8 percent unemployment? (0+ / 0-)

            That if the stimulus plan wasn't passed that we'd see unemployment grow above 8 percent?  That the prediction would fail was all too predictable.

      •  I have no Idea where he gets this from (8+ / 0-)

        First of Paul Krugman is brilliant. Second off, he would be the first to tell you that he is not always right. Further, there are many people that have called this crash years before it happened and were ignored, he being one of them. Economics like most professions , except paid pundits, makes it's practitioners out to be heroes when they are right. But, you are only as good as your last prediction.

        It's very possible that I'm wrong as well as all the other people who say "we ain't seen nothing yet", but the evidence is mounting that the long term picture is bleak at it's most optimistic side and downright horrible on the pessimistic side.

        Note even Krugman knows to hedge:

        U.S. economy will probably emerge from recession by September

        In earlier predictions he though we may see a turn by the end of the year. Yet in the absence of regulatory reform, health care reform and the presence of a weak stimulus package ( by his own admission) I don't see it happening. He may be relying too much on the Democratic Congress to do the right thing. I have no such faith.

        Finally, in a little mentioned but fairly important story, a couple of wingers who represent Indiana Teachers pension funds have had the supreme court put a stay on the impending sale of Chrysler to Fiat with the piss ass excuse that senior bond holders were not getting what they are entitled too. I say piss ass, because these assholes bought a grand total of 43 Million in Chrysler bonds on the secondary market for 43 cents on the dollar ( are pension fund managers even allowed to make speculative junk bond purchases?) . The offer of 29 cents on the dollar would have left them 14 cents shy or 5.5 million. At which time they decided to sue all the way to the supreme court as they "believed" the bankruptcy was against the law by not giving first priority to bond holders, and unconstitutional as Tarp money was used for the bail out against the express desires of congress ( note the hypocrisy when 736 million was taken from Afghanistan funds to lay the ground work for the Iraq war)

        So what does this have to do with the price of eggs in China? If the Chrysler sale is halted, then the bankruptcy judge over GM may have to go into liquidation mode for GM. Those two car companies going out of business would put Ford out of business and then we would have a full scale depression. I should also note that I am from Indiana and I am going to do what I can to find out if these assholes broke their fiduciary duty by buying the junk bonds in the first place and secondly, would the Indiana State Employees want these guys to spend their money , almost certainly more than 5 million on a supreme court case that could put Indiana down like a diseased animal as we are dependent not only on the big three but the foreign manufacturers are also dependent on the parts suppliers. Sales are not so hot for them either.

        This and many other clear and present dangers doesn't justify any optimism at this point. In short we have many issues that gives us a preponderance of evidence that we are not even close to the end. Finally I think Bloomberg misquoted Krufgman who initially said that he may see a turn up in December. With much hedging.

        Finally , as far as the recommended diary above that "has Bonddad's back. I'll just say that Bonddad was in favor and still in favor of credit default swaps. I wrote a diary that's a derivative (heh) of another diary on why we HAD to bail out the banks and why we are from from being out of the woods with proposed solution. I won't link to them. Because I don't want to hijack Bob's diary. But the fact is there is no data that I've seen that suggest this recession is going to end. To the contrary, I believe it's going to get much worse.  

    •  You might ad this article as well (11+ / 0-)

      The Congressionally-appointed panel overseeing the Troubled Asset Relief Program (TARP) recommends running again the stress tests on US banks, as economic conditions have worsened, its chair, Harvard University professor Elizabeth Warren, told CNBC Tuesday.

      ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

      by Kristina40 on Tue Jun 09, 2009 at 06:19:53 AM PDT

      [ Parent ]

    •  recalibrate your American dream (21+ / 0-)

      Obama and his Wall St bought and paid for economic team have put all their chips on the Banking Oligarchs to pump up great chunks of the Big Shitpile that's essentially worthless unless the peak real estate values of the bubble can be miraculously restored.

      America needs to lessen it's dependencies on financial engineering and consumer spending ( 70% of GDP ) as key drivers of the debt laden ‘bubble’ US economy.

      I keep on coming back to this blurb by Simon Johnson in his excellent piece The Quiet Coup

      "From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent".

      The financial engineering racket is simply the best organized white collar crime organization ever !

      In short Obamanomics is where

      1. The government champions funds
      1. Funds champion corporations
      1. Corporations champion markets and industries
      1. The people ( American taxpayers ) get the tab

      This will fail because America and Americans are swimming in debt

      Most Americans had better start making the gradual adjustment that the 'party' since Reagan in the 1980’s where deficits did not matter is over and there will be a leveling of the global playing field.

      And I suggest that most should be recalibrating their American dream ;)

      •  From Your Link, Well, There You Have It: (16+ / 0-)

        The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.  by Simon Johnson


        •  Lack confidence (8+ / 0-)

          America needs to lessen it's dependencies on financial engineering and consumer spending ( 70% of GDP ) as key drivers of the debt laden ‘bubble’ US economy.

          I don't believe the US can prosper producing financial products and importing everything else.  We don't have a solid, balanced economy.

          In the meantime, I won't be comfortable with the current US economy until I feel the underlying problems which caused the crash have been solved.  Yet I haven't read anything which suggests there is now a handle on the derivatives problem with solutions at hand.  This lack of a comprehensive derivative solutions bothers me.

      •  This is why we call them "vampires" (4+ / 0-)
        Recommended by:
        dfarrah, Sychotic1, Pluto, 4km

        ... or maybe "cannibals" would be a better term.

        From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent.

        We have a right to ask, where do those profits come from, and where do they go to? This is one economic sector feasting on the flesh of the others-- you know, the ones that actually produce things of value.

        A bit OT, but I would add that the health care debate is essentially about this same thing: Big Health devouring resources we cannot spare, and delivering nothing we need in return.

    •  Post some Krugman. (2+ / 0-)
      Recommended by:
      New Deal democrat, soms
    •  you are very good with the economics (0+ / 0-)

      but obama is three steps ahead of you with the politics.

      "give 'em enough rope to hang themselves"

      Jesus ain't comin', go ahead and put the Nukes back now.

      by RisingTide on Tue Jun 09, 2009 at 09:14:08 AM PDT

      [ Parent ]

  •  Thanks, maybe... (4+ / 0-)
    Recommended by:
    JuliaAnn, Pluto, bobswern, leonard145b

    Certainly I see very little to argue with in Smith's piece...yes, a few quibbles, but he's summed up the quandary quite well.

    GOP: Turning the U.S. into a banana republic since 1980

    by Youffraita on Tue Jun 09, 2009 at 02:15:20 AM PDT

  •  What is Unsaid... (33+ / 0-)

    ...a capital-markets system this dependent on public confidence is a shockingly inadequate foundation upon which to rest our economy.

    ...and nearly unthinkable, is that an economy based on confidence alone -- is a shockingly inadequate foundation for a global reserve currency.

    It is the loss of Dollar hegemony, which I predict will effectively be accomplished before the end of the year, that is going to kick our asses but good.

    So, what will the United States look like when the Dollar is no longer used by the rest of the world for international trade?


    •  Many say it'll take much more than a year... (15+ / 0-) replace the dollar as the global reserve currency. I believe Roubini speculates up to a decade, in fact, for that to occur. (But, like many others, he says it will occur.)

      I think the number main issues with regard to the dollar being replaced on the world stage will be in terms of what it does to the price of oil, and as far as how it affects Americans, inflation-wise, in general.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Tue Jun 09, 2009 at 02:21:42 AM PDT

      [ Parent ]

      •  It's My Mileau, So I See Structural Upheaval (26+ / 0-)

        We will no longer be able to use Dollars to pay for imports. And, we have no reserve currencies, like other countries do. I trade these exchanges. Counter-parties will want Euros or Gold from us -- and they'll want to know where we got it. We traders will tell the world what the Dollar is worth.

        You know, the Forex was illegal in the US until just a few years ago. Guys like Roubini and Stiglitz honestly are way out of the loop when they guage the timing of this in decades. They have no experience with these international money flows, now performed electronically. It is alive. A beating heart of money circulation, 24 hours a day as the world turns.

        It will happen in days. Perhaps hours will accomplish the emergence of a new currency unit. There will be no meetings or treaties. It will just happen one morning, preceeded by months of casual currency swaps. The reality will follow the idea in minutes.

        And it will occur this year.

        •  Fascinating (6+ / 0-)

          It's almost too much to wrap my head around - how can something this huge just "happen"?  It's not an earthquake. Don't there have to be fevered meetings, interim crisis measures, temporary trading halts? Roundtables?

          Or have these already taken place?

          Could it really just "happen"?

          •  There have already been regional pronouncements (9+ / 0-)

            ...for replacing the dollar...from Russia, China, some of the Gulf and southeast Asian group meetings and alone...

            "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

            by bobswern on Tue Jun 09, 2009 at 03:31:36 AM PDT

            [ Parent ]

            •  China's Currency Pronouncements Are Bluster (5+ / 0-)
              Recommended by:
              MD patriot, Pozzo, Jagger, seancdaug, i8pikachu

              and a negotiating ploy, according to Krugman.  Here, he explains why the U. S. and China share similar/virtually identical problems with the dollar:

              And just the other day, it seems, China’s leaders woke up and realized that they had a problem.

              But they are, apparently, worried about the fact that around 70 percent of those assets are dollar-denominated, so any future fall in the dollar would mean a big capital loss for China. Hence Mr. Zhou’s proposal to move to a new reserve currency along the lines of the S.D.R.’s, or special drawing rights, in which the International Monetary Fund keeps its accounts.

              But there’s both less and more here than meets the eye. S.D.R.’s aren’t real money. They’re accounting units whose value is set by a basket of dollars, euros, Japanese yen and British pounds. And there’s nothing to keep China from diversifying its reserves away from the dollar, indeed from holding a reserve basket matching the composition of the S.D.R.’s — nothing, that is, except for the fact that China now owns so many dollars that it can’t sell them off without driving the dollar down and triggering the very capital loss its leaders fear.  Source: NYTimes  

               What do you all think?  This is exactly what I thought when I heard Mr. Zhou....

              Emphasis, mine!

              •  China has no social spending (0+ / 0-)

                If the Chinese people begin to demand social spending as those costs are increasing (e.g., health care is getting more expensive as new technology is provided), then China is going to be in major trouble. Everything out of China is bluster.

          •  Actually, It Is Happening (19+ / 0-)

            China and South America are not using the dollar to trade. Mexico and Canada may trade with China using the Renminbi. Russia will no longer use the Dollar. The Arab countries announced they will stop using the dollar in January 2010. The Asian block has their own currency arrangement. For a while, many countries will accept Dollars, but that will quickly morph to swaps.

            The big thing is they won't be trading with each other in Dollars. And we are almost there.

          •  Elimination of the gold standard happened (0+ / 0-)

            That was practically overnight.

        •  You do realize (3+ / 0-)
          Recommended by:
          nika7k, ilex, farbuska

          that if it happens the way you say, there would probably be World War III immediately afterwards.

          •  Whom would we fight in this war? (1+ / 0-)
            Recommended by:

            The currency traders?

            We can't restore the dollar as a global reserve currency of any merit by setting about to kill off those who'd use it for same.

            Or are we talking about a commodity war?  Seize the oil in lieu of a stable currency (since war would destabilize all currencies)?  Hmm, I seem to recall the last war like that (Iraq) didn't turn out so well.

            Seems to me, a currency meltdown would happen whether we like it or not (we have little to slow it).

            •  I have a lot of faith (1+ / 0-)
              Recommended by:

              that wealthy and powerful people with a lot of big guns who stand to lose that wealth and power would figure out some way to use those big guns.  Yeah, I suspect they would shoot the currency traders, if that's what it took.

              •  Heh (1+ / 0-)
                Recommended by:

                People like me -- along with the rest of the Plutocrats -- got out of the Dollar years ago. Even the big corporations don't hold Dollars.

                A company like 3M makes all of it's money -- not from profits on what it produces -- but from the Forex. Same is true of Ikea and Starbucks. Hell, the same is true of Chrysler. John Snow, the guy whose signature is on the Dollar bills in your pocket, is chairman of the Board of Chrysler and safely in Euros and Forex. Even Halliburton and the rest of the MIC are out of the Dollar.

                And the money is not in the USA in any event.

                Who's going to shoot whom?

          •  why? (0+ / 0-)

            I am not steeped in this world but if this sort of thing can happen "at a flip of some virtual switch" then dont you think thats factored into our relations already?

            Are you thinking the US will start a 3rd war because of this? With who? How many?

            Just curious (not being snarky at all)

            There must be some functional reason why it hasnt happened in toto already (likely there is money on the table for people, once its gone, then the switch triggers)

            Should be easy to model, anticipate, predict.  Likely already scenario'd out by gov types and they function in ways to mitigate it in ways that will potentially leave them a few scraps to work with.

            I dont think China will make a physical move on our sovereignty - they need us as consumers and then workers too much. (just as we did them for decades)

        •  "Forex was illegal in the US until just" (2+ / 0-)
          Recommended by:
          xaxado, Susipsych

          "Forex was illegal in the US until just a few years ago"

          Are you referring to Nixon's decision to end gold convertibility in August 1971?

          I looked at the volume of forex trading compared to actual trade (merchandise imports and exports) and transfer payments (payments for services and military transfers). In the 1950s and 1960s, it was almost exactly a one to one match. In the mid-1990s, when I looked at it, forex trading was over fifty times larger than trade and transfers.

          How do we make it illegal again? And what will the immediate market reactions be? And how long before markets resign themselves to a new, anti-speculative regime of global regulation?

          Btw, about 2004 I think it was, Thomas Palley elaborated what I think is a very good proposal for targeted bands of exchange rates, in which the burden of defending the bands shifts from a country whose currency is being depreciated by speculators, to a country whose currency is being run up in price.

          A conservative is a scab for the oligarchy.

          by NBBooks on Tue Jun 09, 2009 at 06:17:06 AM PDT

          [ Parent ]

          •  Let's be realistic (0+ / 0-)

            If the currency traders get in the way of TPTB in a big way, they'll figure some way to take them out.  Unless they're totally caught by surprise.

            •  The Currency Traders ARE TPTB (1+ / 0-)
              Recommended by:

              We trade over $3 trillion each day -- more that all the stock markets in the world combined.

              Once the computer and the Internets came along, the Forex was unleashed. You want to stop them, good luck. Even Jesus failed.

              Actually, there is ONE way to stop the money changers:  The creation of a one-world currency would end the Forex.

              Who do you think spreads the rumor that a one-world currency is the first sign of the anti-christ?

              Heh. The primitive huminoids eat that stuff up. Michelle Bachman tried to pass emergency legislation to stop the last G-20. LMAO. The financiers cheered.

    •  Good point, Pluto (28+ / 0-)

      From Reuters yesterday Are canned goods safer than U.S. government bonds?

      U.S. Treasuries, traditionally considered the safest of all investments because the debt is backed by full faith and credit of the U.S. government, is losing favor among derivatives traders to Campbell Soup Co, Microsoft Corp and Intel Corp as concerns over the government's massive deficits and costly bailouts mount.

      Investors are apparently concerned that sovereign debt of the United States, the world's biggest economy, is more vulnerable to a huge sell-off than bonds of these three companies amid the most protracted economic downturn in decades, strategists said.

      Those concerns are reflected in the pricing of credit default swaps, which are used both to insure bonds against default and to place bets on the likelihood of default, of Treasuries and of the three companies.

      The cost to insure debt of the United States with credit default swaps for five years was 43.7 basis points on Monday, versus just 27.4 basis points for Campbell Soup and 29.8 basis points for Intel Corp , according to data from CMA DataVision. Higher prices for credit default swaps, or CDS, reflect a greater perception of a risk of default.

      emphasis mine

      The goal of life is living in agreement with nature. - Zeno

      by yellow dog in NJ on Tue Jun 09, 2009 at 02:44:03 AM PDT

      [ Parent ]

  •  Lost my faith (31+ / 0-)

    Very good diary!  But I've lost my faith in "American capitalism."  I know that's a facile thing to say, but it's true:  I no longer believe that this system can be reformed, configured, or regulated to work for anyone who is not rich.  I don't believe it is capable of producing innovation anymore (where are those hybrids - the technology is almost 15 years old now?  where are the cost-savings in pharmacology?  why can't I just go out and easily buy at a store a solar-powered battery charger to use?  Instead, advertising urges me to buy big-name shoes.)

    Nor do I believe there is anything I can do about the course of capitalism.  I still have a savings account, earning .05%.  I still have a 401(k) to which I have been and am contributing mightily (between me and my employer, over 25% of my income), and which has lost less than most, but looks astonishingly behind where it should be. I still have to invest for the long term, because I do not have the expertise or time to compete with short term managers.  I do all these things, while knowing they are not going to work for me.  Right now and for the future, the system is set up to transfer wealth from the middle class to the rich (the poor are tapped out).

    I don't know what will replace it, but American capitalism is mortally wounded.  The future may hold dire inflation, or depression, or stagflation. Peak oil looms.  It amazes me to know that the experts don't know, this far into the crisis, where it will go (although the hope is the previously failed system will be restored.)

    So all these reform efforts, in my opinion, are trying to put Humpty Dumpty together again.  But I don't claim any particular prescience.  I simply don't know what to do (and gold seems to me as silly an option as any other.)

  •  Another Telling Comment (21+ / 0-)

    ...from the New York Times Op-Ed:

    We can no longer pretend that our collective behavior as a nation for the past 25 years has been worthy of us as a people.

    Many of us hoped that Barack Obama's election would redress the dire decline in our collective ethic. We are 139 days into his presidency, and while there is still plenty of hope that Mr. Obama will fulfill his mandate, his record on searching out the causes of the financial crisis has not been reassuring.

    He must do what is necessary to restore the American people's -- and the world's -- faith in American capitalism and in our nation.

    Here is a President caught in a very tough place. He definitely wants to look forward, because it is on dreams and hope that he can build confidence.

    If he looks back -- to search out the causes of the financial crisis -- it will bring anything but confidence. We would be forced to admit to corruption and high-crimes in the robbing of the nation's treasure. The tax cuts at a time of war are irresponsible and depraved, and cannot be explained to global financiers. The path will inevitably lead to our blatant grab for oil, using the spearhead of the Petrodollar, and the convenient attacks of our enemies, which will expose our international conspirators and shadow armies.

    No, looking back will doom us, as well.

    But let us not pretend that the entire world doesn't know what we have done. They just want to see if we will admit it. Either way, we are buying back all the filthy corrupt paper we sold them, and they are coming out whole as our deficits try to swallow the evil that Hank Paulson and Alan Greenspan did to this nation. It will never be the same from their betrayal.

    For the same reason, if we look back at the torture and the false and fabricated war, the truth will all come tumbling out, as well.

    What choice does Obama have?

    He must use his considerable charisma to convince the rest of the world leaders to play pretend with him. Pretend that the ECB didn't nearly collapse over a weekend in October 2008 and take out the US economy in little more than 36 hours. Plenty of us know how close it was to complete social chaos.

    What can he do?

    •  The perversity that is people (6+ / 0-)

      He must do what is necessary to restore the American people's -- and the world's -- faith in American capitalism

      Well, the white world has resoundingly shown its faith in American capitalism.  If one looks at the recent voting for the European parliament, it looks to be a sweeping rejection of the continent's own social democractic traditions of business regulation and social safety net, and a wholesale embrace of American-style total laissez faire "regulation-free"  capitalism.  That they have done so at the very moment where their own economies are burning down  as a consequence of the Wall Street bonfire serves to illuminate the thoroughly perverse character of the modern public mind, at least in the white countries of the world.

      "When the government becomes a lawbreaker, it invites every man to become a law unto himself." ~ Justice Brandeis

      by ActivistGuy on Tue Jun 09, 2009 at 06:24:47 AM PDT

      [ Parent ]

      •  Uh (2+ / 0-)
        Recommended by:
        Aeolus, Jagger

        You do realize that turnout for the traditionally low-turnout EU elections was at an ... all-time low?

        The EU elections shouldn't be taken as any serious survey of the mood of Europeans vis-a-vis their social safety net. Not to mention whoever is in power during a downturn is going to get whacked (especially when, like the British Labour Party, you've pretty much done nothing but fuck yourself for the last 2 years).

  •  Thanks Bob for my usual need to drink (10+ / 0-)

    before bed.  Good diary as usual.

  •  Great Diary, Bobswern (19+ / 0-)

    To your point on unemployment, the EIA is forecasting declining Real Personal Income into 2010 for most U.S. regions.
    Energy Information Administration

    With higher unemployment and loss of real income, how can mortgages and loans be repaid?
    Bernanke's hand is being forced to raise interest rates which will derail the Recovery Act.
    PPIP and the other Treasury Alphabet Soup has stalled failed due to the FASB suspending M2M.

    The only deleveraging of the U.S. economy has been for common ordinary citizens through the  rescission of credit card lines. There is still a lot of air to be released from the bubble.

    I do not see green shoots. I see the end of the beginning of U.S. economic chaos.

    The goal of life is living in agreement with nature. - Zeno

    by yellow dog in NJ on Tue Jun 09, 2009 at 03:12:38 AM PDT

    •  Regrettably, I Stiglitz.... (9+ / 0-)

      ...the likelihood of failure seems higher than the likelihood of success. There are basic foundational and credibility issues at play...which the government either can't control or doesn't want to control...and therein lies the rub.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Tue Jun 09, 2009 at 03:23:07 AM PDT

      [ Parent ]

    •  How can they be repaid? (2+ / 0-)
      Recommended by:
      tmo, Pluto

      They can't.

      And if something isn't done soon, following the layoff of GM and the closing of related businesses and the exhaustion of the unemployment benefits and savings of all those people, added to those of us already in that position and defaulting left and right on ALL KINDS of bills, not just mortgages, it will be chaos of a kind.

      I do not see green shoots either.

      We need a MASSIVE jobs program. That's all there is to it.

      The government needs to send out people with laptops to record the names and social security numbers of the people in communities who want jobs. They run a quick background check to make sure there aren't any criminals there, and the government gives them a job.

      No contract, no long-term implications of employment, just JOBS.

      If entrepreneurs were smart, once this happens, they would start hiring people too. Because there would be paychecks to be cashed and spent again.

      Sadly, I see nothing like that happening, because people are frozen in fear -- and that includes the government, who is too afraid of what the Republicans are saying about them in the news media to freaking help us.

      "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

      by Brooke In Seattle on Tue Jun 09, 2009 at 08:32:36 AM PDT

      [ Parent ]

  •  Krugman has become a happytalking corporate shill (5+ / 0-)
    Recommended by:
    Yoshimi, rweba, Pluto, imchange, NCrissieB

    Here's what he said in a lecture at the London School of Economics yesterday:

    The U.S. economy probably will emerge from the recession by September, Nobel Prize-winning economist Paul Krugman said.

    "I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer," he said in a lecture today at the London School of Economics. "Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing."

    I wonder what Wall Street investments he's trying to foist on an unsuspecting and gullible public!

    "When the going gets tough, the tough get 'too big to fail'."

    by New Deal democrat on Tue Jun 09, 2009 at 03:54:19 AM PDT

    •  Schlisserman's work sucks; Krugman gets misquoted (14+ / 0-)

      ...a lot, I've noticed. Stories tend to focus on portions of what are usually more detailed responses to questions. For instance, on May 26th, in the NY Times, Krugman said this:

      World economy stabilizing: Krugman
      Mon May 25, 2009 2:31pm EDT

      ABU DHABI (Reuters) - The world economy has avoided "utter catastrophe" and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.

      "I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now," Krugman told a seminar.

      "I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

      The Princeton professor and New York Times columnist has said he fears a decade-long slump like that experienced by Japan in the 1990s.

      He has criticized the U.S. administration's bailout plan to persuade investors to help rid banks of up to $1 trillion in toxic assets as amounting to subsidized purchases of bad assets.

      Speaking in UAE, the world's third-largest oil exporter, Krugman said Japan's solution of export-led growth would not work because the downturn has been global.

      "In some sense we may be past the worst but there is a big difference between stabilizing and actually making up the lost ground," he said.

      "We have averted utter catastrophe, but how do we get real recovery?

      And, many folks in the MSM chose certain parts of this while ignoring others, taking it totally out of context. Schlisserman is constantly misreporting stories over at Bloomberg to the point where I'd say it's the most incredulous financial reporting I've ever read.

      Is Krugman pandering, however? I wouldn't doubt it. But, I've seen him getting so misquoted of late, I always dig deeper when I see stories like this about him. He just couches all of his comments...more like a lawyer than an economist sometimes, IMHO.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Tue Jun 09, 2009 at 04:14:24 AM PDT

      [ Parent ]

    •  If an economist says something... (6+ / 0-)
      Recommended by:
      Yoshimi, lockewasright, jodygirl, soms, lompe, zapus

      positive then they are a corporate shill if they are negative then they are highlighted in the diarist's diaries...

      Obama - Real Leadership for a Real Change

      by dvogel001 on Tue Jun 09, 2009 at 04:51:41 AM PDT

      [ Parent ]

  •  Agree in fact, disagree in characterization. (26+ / 0-)

    The U.S. economy is contracting and will continue to contract for some time.  Or more precisely, U.S. GDP will grow too slowly to keep pace with rising prices on imports, etc., as our GDP continues to be revalued to nearer our 'real' productivity.  There's still a lot of pseudo-wealth in the system, and that pseudo-wealth will continue to disappear as investors grow more skittish about buying cloud castles.  So I agree with you in terms of the likely course of events.

    Where I disagree is characterizing this as negative.  To my mind, letting the pseudo-wealth evaporate, so our GDP reflects 'real' productivity rather than mere speculation on cloud castles, is a good thing.  Will it mean most of us have a lot less than we expected to have a few years ago?  Yes, but those were unrealistic expectations.  We don't make enough 'real stuff' anymore, and the market is already saturated for much of the 'real stuff' we do make.  Business models based on a 7% ROI are dreams that won't come true.  Models based on 2-3% ROI are more realistic.

    And 2-3% ROI won't support capitalism of the sort we've had, where some expect to live in luxury by simply renting out their money.  At 2-3% ROI, they can't get enough return to live that way.  So one of three things will happen: (a) the investor class have to start doing real work to supplement their incomes, as we shift to a business model driven by labor rather than capital; (b) the investor class will leave, go to somewhere they think they can still get their 7% fix, and the U.S. will become an investment-starved 'third world' nation; or, (c) a combination of the above, with the investor class going elsewhere in search of their 7%, and labor finding ways to capitalize its own productivity.

    I see two of those three possible outcomes as being positive, though I won't say the three are equally likely.  But a return to the post-WWII prosperity, by the same means, just isn't in the cards.

    •  Geez Louise (2+ / 0-)
      Recommended by:
      BYw, NCrissieB

      7% ROI?  The criterion for most places at the height of the craze was 15%+, or they didn't like the investment.  

      •  I wasn't describing "the craze" in particular. (13+ / 0-)

        The roughly 7% ROI business model described a broader slice of the economy than the 15%+ ROI sought by the quick-buck investors.  The 7% ROI was considered a "safe" business model not relying on a bubble for its survival.  But in fact it was relying on a very long 'bubble' called "the U.S. economy from roughly 1800-1970," driven first by westward expansion and industrialization, then by overseas expansion and vast U.S. oil resources, then by our post-WWII industrial hegemony because the world's other industrial economies had been devastated.

        Well, we've filled our continent and depleted our oil.  Meanwhile the former industrial economies have rebuilt and new ones are emerging, and they're all competing with us for fewer and smaller undeveloped parts of the globe.  That very long 'bubble' on which the 7% ROI economy depended has burst - about 40 years ago in fact - and we've been trying to keep it inflated with gimmicks ever since.

        Now we need to revise our expectations, and find models that work for 2-3% ROI.

    •  Well on the way to 3rd world nation status (0+ / 0-)

      Your option (b) seems like a pretty good bet. We can be an exporting nation for grain products as long as the water table holds up in the plains. We must have some other raw materials we can export also, which will keep the owners of the corporations doing the exporting flush with revenue. Other than that, we will have a lot of surplus people whose labor isn't needed and who will eventually become too numerous for our prison-industrial complex to absorb. Health-care "reform" may lead to a weakened or privatized Medicare, which will help boost the number of deaths among the surplus folks (i.e., you and me). If the export resource producing areas of the country could be buffered, the best option from the standpoint of the rest of the world (meaning the investor class running it) might be to get a civil war going in the US to kill off the excess working age population. In order to prop up the exports of some natural resources we can scrap our environmental regulations, since the toxic effects of that might cause some not insignificant additional population reduction.

      Just think, with a little effort we could be the future Nigeria!

  •  This reminds me of the lead up to the Iraq war (20+ / 0-)

    Most of the media repeated the bullshit from the Bush admin. The NYTimes was in the forefront of passing on falsehoods, e.g. Judith Miller. The rationale is that the media has to give a new administration the benefit of the doubt. That is, it was Bush's project to invade Iraq and the media would cheer him on.

    I see the same thing for the economy. The Obama admin is going for the quick fix: bail-out, stimulus, psychological-ops. The main stream media dare not question this as you are playing with the economy and peoples lives and the new admin deserves the benefit of the doubt. There are serious structural issues that are not being addressed and won't be because they would shake up embedded interests. It's going to take time and change to fix these problems. The fundamental philosophy of the current admin is that the train derailed, let's just get the crane out and put it back on the tracks. Problem is that the tracks are faulty. They are not only worn out but they are of a questionable design in the first place.

  •  Jobs and demand are still collapsing -- that's (20+ / 0-)

    at the heart of big economic problems ahead.

  •  bobswern - We are not NNN's (12+ / 0-)

    I only think that we refuse to be Pervasive Pollyannas of Prosperity.

    Distrust of authority should be the first civic duty. - Norman Douglas

    by Fossil on Tue Jun 09, 2009 at 04:36:12 AM PDT

  •  What are all the naysayers... (3+ / 0-)
    Recommended by:
    rweba, soms, lompe

    going to do when the Obama economic recovery plan actually works and he is dubbed a hero?

    Obama - Real Leadership for a Real Change

    by dvogel001 on Tue Jun 09, 2009 at 04:52:34 AM PDT

    •  For now (4+ / 0-)
      Recommended by:
      mattman, Sychotic1, fromer, ilex

      He's not acting like FDR, more like Hoover.  He's not getting out in front of this.  So we'll see.  

      •  Yea I mean... (2+ / 0-)
        Recommended by:
        lockewasright, soms

        he raised taxes to balance the budget and refused to pass a government funded stimulus...that was just like Hoover.../snark

        Obama - Real Leadership for a Real Change

        by dvogel001 on Tue Jun 09, 2009 at 06:16:25 AM PDT

        [ Parent ]

        •  Things are different (0+ / 0-)

          even Dubya passed a stimulus bill.  Couple of them, as I recall.

          •  So He's Like Hoover Moreso than FDR... (1+ / 0-)
            Recommended by:

            ... in that he's not confined to a wheelchair?  I'm not seeing it.

            Senator Inhofe? If you're still wondering? He's on my side.

            by TooFolkGR on Tue Jun 09, 2009 at 08:32:01 AM PDT

            [ Parent ]

            •  FDR= big changes fast (1+ / 0-)
              Recommended by:

              Hoover = doing same-old/same-old.

              Big bank bailouts and small stimulus packages are same-old/same-old.  So far.  Like I said, we'll see.

              •  Lets take a closer look... (0+ / 0-)

                FDR first 100 days:

                Emergency Banking Act:  Strengthened banking system to restore confidence, performed "inspections" (see stress tests), re-opened 3/4 of banks, created FDIC insurance up to $5000 to further instill confidence

                Obama:  Restored confidence in financial system (by those outside this diarist and the doomsday followers), increased liquidity, performed inspections of largest financial institutions, most banks are doing fine now and restored to profitability, increased FDIC insurance to $250K from $100K and unlimited for business non-interest bearing operating accounts.


                Economy act of 1933:  Roosevelt submitted legislation to Congress which would cut $500 million ($8.181 billion in 2009 dollars) from the $3.6 billion federal budget by eliminating government agencies, reducing the pay of civilian and military federal workers (including members of Congress), and slashing veterans' benefits by 50 percent.[6][7] Veterans benefits constituted a quarter of the federal budget at the time.

                Obama:  Increased hiring of government employees and no cuts in salaries and benefits

                I agree with you on that one...FDR seems like a Republican there whereas Obama is more like a liberal Democrat...

                Farm and Rural Programs:  

                By the time the Agricultural Adjustment Administration began its operations, the agricultural season for many crops was already under way. The agency oversaw a large-scale destruction of existing cotton crops and livestock in an attempt to reduce surpluses. No other crops or animals were affected in 1933, but six million piglets and 220,000 pregnant cows were slaughtered in the AAA's effort to raise livestock prices. Many cotton farmers plowed under a quarter of their crop in accordance with the AAA's plans.[1] Adlai Stevenson and Telford Taylor and Isaac Nilges worked in the AAA.

                Large farms benefited from the AAA policy of reducing surpluses, having "gross farm income increas[e] by 50% during the first three years of the New Deal".[2] This was achieved because large landowners would evict tenant farmers and sharecroppers in order to keep them from farming their leased acreage; the landowner would then receive the payment for not farming the land.[3] Furthermore, those same land owners, having forced out some of the competition, would then use those displaced farmers as cheap farm labor.[4]


                Obama:  TARP bailout to financial firms and auto industry is on par with this move.

                The wealthy in our country were in many cases large farm FDR bailed them out at the expense of small farmers and real difference here...

                And that was about it for the 1st hundred days for in addition to that Obama...

                Passed a stimulus package, tax cut for the middle class and lower middle class, exteneded unemployment benefits and COBRA health coverage subsidies...

                I don't know...but I would prefer the Obama approach...but I appreciate your comment because it forced me to see what FDR really did in his 1st 100 days for comparison...

                Obama - Real Leadership for a Real Change

                by dvogel001 on Tue Jun 09, 2009 at 10:01:06 AM PDT

                [ Parent ]

          •  No he didn't... (0+ / 0-)

            he passed a tax rebate program...not a government spending bill...

            Obama - Real Leadership for a Real Change

            by dvogel001 on Tue Jun 09, 2009 at 09:34:28 AM PDT

            [ Parent ]

    •  we'll ride our magic ponies (8+ / 0-)

      that Obama's magic recovery will produce.

      Dear Mr. President, There are too many states nowadays. Please eliminate three.
      P.S. I am not a crackpot.
      -Abe Simpson

      by fromer on Tue Jun 09, 2009 at 06:06:31 AM PDT

      [ Parent ]

    •  Grumpily take their money (0+ / 0-)

      all the way to the bank! :-)

      "Man, I am glad the economy is booming again and people are employed and spending again but it sure does suck that my doom and gloom theories were disproven!" heh heh

  •  This mess is to a large extent beyond analysis. (2+ / 0-)
    Recommended by:
    mattman, Sychotic1

    Because it cannot take into account psychology or the actions that will be attempted by government that may make things even worse.

    Never fall in love with your plan.

    by dov12348 on Tue Jun 09, 2009 at 05:07:22 AM PDT

    •  Not just psychology (0+ / 0-)

      The problem is that we are caught in some sort of paralyzing paradox - we can't take any measures that will restore "the American capitalist system."  Everything that is proposed as a remedy is also a problem.  We can't hike rates - they are at zero.  We've done the stimulus funds, but the inflation is raging just below the surface.

      I blame Bush.  I really do - this stupid war and his stupid policies have made it too late for any countermeasures to work.

  •  Some comments on Housing (27+ / 0-)

    Since housing is really what started this mess well housing and the financing of it.

    Real Estate sales has seen a modest uptick in my parts but it's completely at the lower end.  Fixer uppers and bank owned properties mostly, along with some homes which are selling at prices not seen since 02.  What that means is that we'll continue seeing steep drops in average and median selling prices.

    We have not seen the bottom of housing yet.  I suspect we'll see a few more bottoms.  There are a few different things going on that will prevent us from reaching the bottom any time soon.

    For starters, jobs are still being lost.  For every few hundred thousand of people losing their jobs this month, that means a few hundred thousand people who will be struggling to pay their bills in the ensuing months.  Many of them will be struggling to pay their mortgages.  Homes will be put on the already saturated market either by choice or force putting more downward pressure on prices.

    Homes at the higher end are not selling.  Alot of people looking at these homes but from what I hear the only offers rolling in are low ball offers 30% or so below asking price.  Basically bottom feeders looking for a steal.  Some sellers who are desperate are taking the bait, forcing proces down significantly but many are holding out.  At some point one of the two sides will have to give.  The longer this recession lasts the more likely the sellers will be the ones to give.  

    New construction is all but stopped but unfortunately there is still alot of new stock, some of it incomplete stock, out there.  Worse off, alot of the construction loans are reaching the end of their term which means the builders have to get an extension or work something out (not very likely), a new loan (all but impossible), pay the bank (yeah right) or walk away.  Guess which one is the likeliest option, especially if it doesn't look like we're going to recover any time soon?

    Commercial.  This is the big bad wolf nobody is talking about.  The last shoe to drop in real estate and oh boy is it dropping.  Leases are dropping through the floor, as tenants either move out completely or shop around for better terms.  With the vacancy high as it is, landlords are behind the eight ball.  That bodes very badly for properties which rely on their income for value, especially when they go to refinance their crushing debt.  As many operate on short term loans, well that means they'll have to refi pretty soon and many are underwater.  A $200,000 loan on a house is nothing when compared to a $20,000,000 loan on an office building or commercial strip.

    I tend to agree that we're going to see a drop in prices for a few years.  Basically wiping out the Phil Gramm bubble in real estate values which he started inflating in 1999. There is simply too much supply and too much downward pressure on prices right now and I don't see it improving any time soon, especially when you consider the pace of job destruction that is going on right now.  We have to stop that bleeding wound before expecting prices to increase at all.  It'll be a good few years after that before we see any real meaningful price appreciations.  10 Years is looking much more realistic.

    This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

    by DisNoir36 on Tue Jun 09, 2009 at 05:13:44 AM PDT

    •  Phil Gramm Bubble? (1+ / 0-)
      Recommended by:

      C'mon, Phil Gramm wasn't president of the United States.

      At some poing Dems have to deal with Clinton's legacy in an honest way.

      •  Phil Gramm inserted it (11+ / 0-)

        he owns it.  Clinton fucked up by allowing that crap to pass but it originated with Phil Gramm.

        Fault should lie with him.  

        This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

        by DisNoir36 on Tue Jun 09, 2009 at 05:27:43 AM PDT

        [ Parent ]

        •  But if it wasn't that (1+ / 0-)
          Recommended by:

          It would have been something else.  They are hell bent to squash the middle class and there isn't only one way to do that.

          Think of how stupid the average person is, and realize half of them are stupider than that. George Carlin

          by east bay on Tue Jun 09, 2009 at 07:12:33 AM PDT

          [ Parent ]

        •  Does Gramm own NAFTA and Free Trade too? n/t (0+ / 0-)
          •  Did he write those bills? (0+ / 0-)

            If so then he owns them too.  Otherwise don't be ridiculous.

            This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

            by DisNoir36 on Tue Jun 09, 2009 at 07:35:15 AM PDT

            [ Parent ]

            •  How Old Are You? (2+ / 0-)
              Recommended by:
              TracieLynn, imchange

              Clinton went to the mat for NAFTA and free trade legislation. Maybe you were in elementary school then. NAFTA was probably the most sustained effort Clinton gave on any piece of legislation during his presidency, coercing a few Democrats to go along with the Republicans and pass the legislation.

              NPR carried the Congressional debate live the night it passed. Clinton was working the phones and passing out candy the congresspeople to get it over the hump.

              Don't be ignorant of the recent past.

              •  What does age have to do with it? (0+ / 0-)

                unless that explains why you're being such a fucking asshole?

                Get over your Clinton hatred already.  Clinton fucked up in alot of ways.  NAFTA was definately one of them and yes asshole I was old enough to remember it.  However I was talking about housing and last I checked free trade has nothing to do with selling houses.

                Deregulating the financial sector wasn't his doing.  He just made the mistake of signing the damn bill.

                So how about you stop being an irrational Clinton hater and eduacte yourself about the past, specifially as it relates to Phil Gramm and his massive efforts to deregulate everything.

                This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

                by DisNoir36 on Tue Jun 09, 2009 at 08:09:36 AM PDT

                [ Parent ]

                •  The Erosion of Income (1+ / 0-)
                  Recommended by:
                  Brooke In Seattle

                  Most certainly has something to do with selling houses (and more importantly in the current circumstances, the ability to sell houses without resorting to make-believe loan instruments). NAFTA and free trade have eroded the real income of most Americans for for decades now (the trend started before being formalized in treaties that opened the floodgates). In order to consume, Americans have taken on more and more debt (usually using their home as an ATM) to counteract the effect of eroding wages. That has everything to do with where we are now.

                  And hey, I explained that bit of news to you without cussing even once!

                  Like I said, until Democrats are willing to be honest and educated with regards to the legacy of the Clinton administration (and he very much favored deregulation and, like NAFTA, lobbied in its favor) there is very little hope that the economic situation in this country will be dealt with in an honest and effective matter.

                  •  Last I checked (1+ / 0-)
                    Recommended by:

                    Clinton wasn't handing out candy at the passing of the Commodities Futures Modernization Act which was a 262 page provision rammed into an 11,000 page appropriations bill that passed the lame duck session right before Clinton left.

                    It was Gramm who held up the bill in the senate so that he could write in more deregulatory language strictly forbidding the SEC from in any way overseeing the trading of derivatives and swaps.  He also inserted in the Enron loophole which led to them collapsing.

                    He did this under a cloak of secrecy while we were in the midst of an election recount and put the whole thing out after Bush was ruled the winner, in December during recess.

                    Not so coincidentally, the real estate bubble inflated almost immediately after that as banks were free to lend and dice and slice the loans up with minimal worries about the worthiness of the loans they were giving out.

                    Phil Gramm was directly responsible for a large part of the financial collapse that put us where we are.  Senator Byron Dorgan warned us a decade ago and we failed to heed his warning.

                    Blaming Clinton for the housing collapse for something he did 15 years ago which is only related in a six degrees of Kevin Bacon sort of way is as ridiculous as blaming Carter and the CRA.  Clinton also favored deregulating media with the Telco Act of 96 but again only in the most remote ways imaginable could that be blamed for the housing collapse whereas Phil Gramm deregualting the financial market is directly related.

                    And the erosion of income didn't start with Clinton.  It started with Reagan and his aggressive push to destroy the unions and corporate oversight.

                    And hey, I explained all that without ever calling you a name or insinuating you're immature or childish like you did with me.

                    This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

                    by DisNoir36 on Tue Jun 09, 2009 at 09:14:08 AM PDT

                    [ Parent ]

                    •  Reagan Pushed to Destroy Unions (0+ / 0-)

                      And Clinton hammered in the final nails in the coffin with free trade. How's the manufacturing base done over the past decade?

                      And really, you need to educate yourself:

                      Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"

                      Your belief in the innocence of the Clinton administration in the face of that wily old Phil Gramm is touching, but leads to a rather immature understanding of the last few decades.

                      •  You really have a reading comprehension problem (0+ / 0-)

                        and you really are a fucking dick.

                        I never said Clinton was innocent but he wasn't the architect in this.  Grow the fuck up and learn to read what I wrote.  

                        Phil Gramm went to work for UBS right after that so your mentioning Rubin really means nothing.  I know he and Summers pushed for it but who wrote the fucking bill?

                        Get back to me when you can answer that.

                        The manufacturing base has done as well as it did the 8 pervious years and the 8 years before that when Reagan destroyed the steel industry and Auto industry.

                        Your Clinton hatred is touching but frankly my 8 year old is more mature.  

                        This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

                        by DisNoir36 on Tue Jun 09, 2009 at 10:13:09 AM PDT

                        [ Parent ]

                        •  I'm Not The One (0+ / 0-)

                          Sputtering out insults when faced with reality.

                          Like I said, many Democrats are in denial. People, like you in this thread, often react in an emotionally inappropriate way when their ability to keep that denial afloat starts to be degraded.

                          Don't worry, I think you'll have plenty of company in the coming months and years as the damage wrought by Reagan-Bush-Clinton-Bush becomes clearer and clearer and comes to be seen as one continuous philosophy of government that unleashed incredible damage on the nation and the world.

                          •  Both of you need to stop the pettiness.... (0+ / 0-)

                            Both the NAFTA and the repeal of the Glass act by Gramm were shitty deals for the American population.  It doesn't matter anymore which was a worse deal for the general population.  They both have screwed us over in favor of the richest 1%.  We all know that Clinton was a great con-artist and the Bush's outright criminals, along with Reagan.

                            You both are saying we're screwed but from different instruments.  What's the real difference??  Being screwed over by the "politician's" is still being screwed over.

                        •  summers is an asshole. (0+ / 0-)

                          and he is doing more harm than good.


                          Jesus ain't comin', go ahead and put the Nukes back now.

                          by RisingTide on Tue Jun 09, 2009 at 12:03:26 PM PDT

                          [ Parent ]

    •  Great summary (7+ / 0-)

      I'm in the industry and concur pretty much down the line with your observations.

      "When the government becomes a lawbreaker, it invites every man to become a law unto himself." ~ Justice Brandeis

      by ActivistGuy on Tue Jun 09, 2009 at 06:14:41 AM PDT

      [ Parent ]

    •  Two high-rise condo apartment towers are (2+ / 0-)
      Recommended by:
      Sychotic1, ggwoman55

      under construction in downtown Raleigh NC where I work. The financing for both was obvious concluded before the recession. When I see the workers going about their business while driving to the office, I wonder what they're going to be doing in a few months.

      i can't watch [Obama] speak on tv for more than 5 minutes or else what he's saying starts to make sense to me. It's very scary.

      by Kimball Cross on Tue Jun 09, 2009 at 07:06:33 AM PDT

      [ Parent ]

    •  other reasons for lower prices (2+ / 0-)
      Recommended by:
      tmo, ohmyheck

      there is a significant amount of homes that are owned by the banks that haven't been put up for sale. They are hoping by waiting, prices will go up and by not selling now, it helps to keep the value of what they are listing higher.
      Also there is a huge number of people who want to sell but haven't bothered to list their homes because of the market. If they get a hint of the bottom then they'll list like mad, putting further pressure on prices.

      music- the universal language

      by daveygodigaditch on Tue Jun 09, 2009 at 07:20:25 AM PDT

      [ Parent ]

      •  Another bomb waiting to blow up (6+ / 0-)

        Banks are holding onto houses as you said in the hopes of prices going up.  But they're also holding onto them because unfortunately Geitner caved into banks and as I understand it allowed for accounting to change how banks value these assets.  Instead of valuing them at market value they're artificially inflating the value to make their books look better.  

        Problem is at some point they're going to have to sell these assets because the real estate market just is not going to improve any time soon.  When they do sell these assets at what the real market value is, well they're going to have a big write down.  Basically they're trying to kick the proverbial can down the road once again.

        I really wish there was a reset button so we could clean the mess left over from Bush and simply start over.  Instead we're trying to minimize the damage by pushing it aside and hoping it gets better on it's own.

        Also what you're saying about people holding out, you are right.  There are a number of people who are not in desperate situations who are doing that.  Which is why I think we have a few more bottoms.

        This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

        by DisNoir36 on Tue Jun 09, 2009 at 07:29:13 AM PDT

        [ Parent ]

    •  What started it was jobs, or lack thereof. (2+ / 0-)
      Recommended by:
      tmo, ActivistGuy

      If we had ever been adequately compensated for our work for the last 30 years, the American citizen would, for the most part, have been able to afford the "buying a house" part of the American Dream, without the credit that is dogging so many now.

      That lack of proper compensation for our productivity gains, and the concentration on the corporate bottom line that sent good jobs overseas en masse, are what caused the banksters and real estate tycoons to start inflating the real estate bubble (and granting easy credit) in the first place.

      It all comes down to jobs.

      Bring decent, good-paying jobs at which employees actually MAKE something or provide a benefit back to this country, and it will go a long way towards solving any real estate crisis in this country.

      We all need a place to live, and the prices of housing and bad loans helped screw things up, yes. But the root of this crisis is in employment, and I've been watching it grow for at least 30 years.

      "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

      by Brooke In Seattle on Tue Jun 09, 2009 at 08:48:24 AM PDT

      [ Parent ]

      •  A much more complex discussion for another time (1+ / 0-)
        Recommended by:

        We could literally write books on the situation in the US pertaining to jobs, wages and compenastion.  Especially for the middle class.

        That all started to go downhill 28 years ago with Reagan, who BTW we're going to be celebrating for a full year in 2011.

        I can hardly wait.

        This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

        by DisNoir36 on Tue Jun 09, 2009 at 09:29:54 AM PDT

        [ Parent ]

  •  Recovery from what? (19+ / 0-)

    the economy sucked for about one third of the population when it was considered doing well by most economists.

    And there ain't gonna be a recovery unless there's a real stimulus, not that puny thing Obama put forward.

    Obama used to be for single payer before he came out against it.

    by formernadervoter on Tue Jun 09, 2009 at 05:35:22 AM PDT

    •  Lesson from the 20s (15+ / 0-)

      while the history books tell us that the 1929 Crash came at the end of the "Roaring 20s" of growth and prosperity, rural America, which was of course much larger then than today, had been in a depression since about 1922.  Such things are inherent in the radical inequalities of wealth and income that characterize "boom times" in American capitalism.

      "When the government becomes a lawbreaker, it invites every man to become a law unto himself." ~ Justice Brandeis

      by ActivistGuy on Tue Jun 09, 2009 at 06:12:03 AM PDT

      [ Parent ]

      •  Ain't that the truth (13+ / 0-)

        Things have been rough for a long time.  I'm always amazed that for example my Boomer parents can't see it.  For them, they got me and my brother raised and out of the house just in time for the full flower of Bush I's idiocy to reveal itself.  I watched with growing disgust during the 1990's as the impetus of our society flattened and we became distracted with reality tv shows and whiz-bang gadgets.  When the dot-bust occurred in 2000, I figured we were headed for a Depression.

        The "rebound" of the mid 2000's was so flat that all along I believed that the economy had never actually recovered.  And I still believe that.  We are still in the Bush Depression.  That's what people are going to call it in the coming years.  Years when jobs were pissed away by the corporate looter class, and work became a function of keeping your head down and hoping nobody noticed you.  I have no confidence in the current captains of industry to solve jack shit.  They are interested in squatting on their preciouses and little else.  Like a bunch of fucking myopic two year olds.

        "There he goes again! Who's laughing now, betch?" -- Jimmy Carter

        by slippytoad on Tue Jun 09, 2009 at 06:42:05 AM PDT

        [ Parent ]

    •  I know (3+ / 0-)

      What we were experiencing WAS NOT REAL.  It was a scam perpetrated by wall street to make $.  We should have been in this boat long ago.  The illusion kept the masses satisfied enough to not notice all the jobs were disappearing.

      Think of how stupid the average person is, and realize half of them are stupider than that. George Carlin

      by east bay on Tue Jun 09, 2009 at 07:09:21 AM PDT

      [ Parent ]

  •  California heading into depression (22+ / 0-)

    Unless something miraculous occurs,  California is headed into a depression, and we will take the rest of the country down with us. Unemployment over 20%, new construction non-existent, severe dislocations in the economy, hunger and homelessness on a level not seen since the thirties. It's already happening inland.

    The level of state budget cuts ($20 billion) proposed by the Governator, combined with the loss of federal government revenue and the multiplier effect of money through the economy, will translate into the loss of hundreds of thousands of additional jobs in California, forcing  sales tax, property tax, and income tax revenue to drop further. With most families already stretched and over-leveraged, job losses will force another cascade of foreclosures and final acknowledgment that our financial system is completely insolvent.

    The size and scale of our current economic problems are so great that our elected leaders can't begin to grasp the impacts of their actions. At the state level, we're completely hamstrung by our structure and our politics, and on a national level, nobody in Washington quite sees what's coming in California and how bad it's going to hurt the nation.

    No Real Housewives, but plenty of action at Orange County Progressive Come for the politics. Stay for dessert.

    by Aeolus on Tue Jun 09, 2009 at 05:46:59 AM PDT

  •  Here's the rub (21+ / 0-)

    Restoring "confidence" is all fine and good but this weird belief that doing that will get people buying crap again and thereby getting our consumer economy going great guns is simply delusional.

    Hello? The "official" unemployment rate is almost 10 points meaning it's close to twice that for real takes a hell of a lot of purchasing power right out of the mix while the a good portion of the rest are in debt up to their eyes means there is no money.

    This is not to question the wisdom of reviving a doomed non-sustainable economy this is to say; just what are these people, led by Obama, thinking?


    Hello? Note to Obama. The Consumer Economy is dead and it isn't coming back any time soon.

    And last I checked my confidence or lack of it did nothing to make dollars magically appear or disappear in my wallet. Call me crazy but I am sure it's that way for most people, too.

    "Much law, but little justice": Proverb

    by Dave925 on Tue Jun 09, 2009 at 05:51:16 AM PDT

  •  Obama's actions on the economy are clearly... (18+ / 0-)

    ...his biggest weakness.  Whether he sincerely believes in the Geithner/Summers "WALL ST UBER ALLES!" philosophy, or is simply beholden to it because of its sheer institutional power, I don't know.

    But I do know this: the economy is getting worse, not better.  Gas is going back up (hey, i thought Obama was gonna stop speculators from driving our energy policy), jobs are still going away, and the CRE and Alt-A real estate catastrophe is about 6 months away from beginning.

    I understand the president has to have a positive public outlook.  But where the hell is the commission to look into the causes of last September's melt down?  Where is the charge to Congress to rewrite the horrendously whorish laws of the last 25 years, so the banking industry stops resembling a bad night at Caesar's Palace?

    I remain deeply unimpressed with Obama on the economy.  The original stimulous was a political sop and economic joke, and the president has done much better since.

    Fortunately, he has job and health security for the next four years.  Me and my family do not.  Maybe that's why I care about doing this stuff right, and Obama really doesn't appear to.

    Dear Mr. President, There are too many states nowadays. Please eliminate three.
    P.S. I am not a crackpot.
    -Abe Simpson

    by fromer on Tue Jun 09, 2009 at 05:59:30 AM PDT

    •  Edit (6+ / 0-)

      The original stimulous was a political sop and economic joke, and the president has [not] done much better since.

      Dear Mr. President, There are too many states nowadays. Please eliminate three.
      P.S. I am not a crackpot.
      -Abe Simpson

      by fromer on Tue Jun 09, 2009 at 06:09:37 AM PDT

      [ Parent ]

    •  Well the enormity... (4+ / 0-)
      Recommended by:
      Jagger, Brooke In Seattle, imchange, soms

      of the economic problems Obama inherited are beyond anything anyone has ever seen and that included the depression. This is a systemic problem going back 30 years or so. The real issue is American employers don't want to employ or pay American workers, this mindset is ingraned in the entire business community and in many academic instutions teaching our kids the principles of economics.

      And its 100% entirely wrong, that is to say that pretty much everything we've all been going along with for the last 30 years is entirely wrong and utterly mis-guided economic bullshit.

      Add to that all the other crap Obam inherited from Bush and it simply amazes me that he is doing as well as he is on this at this point.

      Listen, this is going to take some time, but there is in fact a plan being put in action to address these issues, however the first and foremost has been to put a floor under the banking system. That's been done at a minimal level and still has a way to go, the other thing being worked on is to figure out a way to prevent a monetary collapse.

      There is a lot more going on here that is easily explained, and Obama has been quite clear in speech after speech that the economy was going to get worse before it gets better, and that's true.

      He has a hell of a lot more work to do, at some point he's going to have to come up with a long term congressional mandated plan for financing and paying off all this debt in order to shore up confidence in the dollar. Brad Delong called for this in a letter he is sending to the president.

      Seek from the Congress for authority to guarantee the debt of states that, in response to the current recession, (a) seek to conduct their own state-level fiscal expansions, and (b) devise plans and strategies for the long-term repayment of the debt the federal government guarantees that the Secretary of the Treasury certifies as prudent and sustainable.

      No president has even been faced with such a mess from his predecessor, methinks Obama deserves some slack...

      What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

      by laughingriver on Tue Jun 09, 2009 at 07:13:58 AM PDT

      [ Parent ]

      •  slack? (4+ / 0-)
        Recommended by:
        TJ, TracieLynn, Jagger, imchange

        I don't blame Obama one inch for creating the mess.

        I hold him entirely accountable for a crap program to fix it.

        I'm sorry, but he is a miserable fail to this point on the economy.  The stimulus was about 2 trillion short, the wall st bailout was about 1 trillion too big, and no steps have been taken, talked about, or even hinted at for addressing the system failures built into our economy.

        It's June.  If he was going to do these things, the time to get people talking about them was 5 months ago.

        color me beyond unimpressed.

        Dear Mr. President, There are too many states nowadays. Please eliminate three.
        P.S. I am not a crackpot.
        -Abe Simpson

        by fromer on Tue Jun 09, 2009 at 07:19:33 AM PDT

        [ Parent ]

        •  Well... (2+ / 0-)
          Recommended by:
          Jagger, soms

          I'm sorry, but he is a miserable fail to this point on the economy.  The stimulus was about 2 trillion short, the wall st bailout was about 1 trillion too big, and no steps have been taken, talked about, or even hinted at for addressing the system failures built into our economy.

          There will be more stimlus coming, there is no way he could have passed a 2 or 3 trillion dollar stimlus, heck only about 11% of the one he did passed has been spend so far.

          You also forget that money does not really grow on trees, the only way for us to pay for this is through tax increases on the folks who have all the money, borrowing from our creditors - who are not that interested in purchasing our debt right now - or having the federal reserve monetize the debt, which is the least favorable option but the only one that we are able to do at this time.

          This is a very precarious situation with no good options, also remember that the treasury department is currently a one man operation as it appears that no one wants to come help work on this mess...

          What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

          by laughingriver on Tue Jun 09, 2009 at 07:41:02 AM PDT

          [ Parent ]

          •  let's knock these down one by one.... (2+ / 0-)
            Recommended by:
            Brooke In Seattle, imchange


            "There will be more stimlus coming"

            Oooh, really?  Were you at the super-secret we-have-planz!!!!! meeting?  I missed that one.


            You also forget that money does not really grow on trees...

            Hmmmm, we came up with a trillion bucks for the banks last fall in less than two weeks.  Rates were dropped to zero.  Yet where are we today?  Bank interest rates to borrowers have sky rocketted, the banks killed cram-down legislation (which would have saved their own stupid greedy asses, but hey, they didn't learn from the Bankruptcy bill bullshit, why would they act any different today?), and they strong armed the government into a complete whitewash, bullshit joke of a "stress test" that let the Rick Santelli's of the world snort another line and whistle "Everything's FINE!"


            also remember that the treasury department is currently a one man operation as it appears that no one wants to come help work on this mess...

            Who are they asking?  Wall St hacks.  Big Law hacks. The same class (word chosen deliberately) of people who think the country is nothing more than a get-rich-quick scheme for their personal amusement.  I haven't seen academia tapped for more than a few spots (Elizabeth Warren comes immediately to mind).  so cry me a river.  If Obama really wanted a fully stocked Treasury, he could have one.  There are more than a few highly qualified, conflict-of-interest free economy wonks out there.  They just don't seem to fetishize Wall St enough to be welcomed aboard Team Obama.

            So in conclusion,, I reassert and stand by my original point:

            I'm sorry, but he is a miserable fail to this point on the economy.  The stimulus was about 2 trillion short, the wall st bailout was about 1 trillion too big, and no steps have been taken, talked about, or even hinted at for addressing the system failures built into our economy.

            Dear Mr. President, There are too many states nowadays. Please eliminate three.
            P.S. I am not a crackpot.
            -Abe Simpson

            by fromer on Tue Jun 09, 2009 at 07:56:58 AM PDT

            [ Parent ]

            •  Well... (1+ / 0-)
              Recommended by:

              Oooh, really?  Were you at the super-secret we-have-planz!!!!! meeting?  I missed that one.

              Obama has mentioned that the original stuimlus would most likely be supplemented, he has been as upfront about it as he can.

              Hmmmm, we came up with a trillion bucks for the banks last fall in less than two weeks.  Rates were dropped to zero.  Yet where are we today?  Bank interest rates to borrowers have sky rocketted, the banks killed cram-down legislation (which would have saved their own stupid greedy asses, but hey, they didn't learn from the Bankruptcy bill bullshit, why would they act any different today?), and they strong armed the government into a complete whitewash, bullshit joke of a "stress test" that let the Rick Santelli's of the world snort another line and whistle "Everything's FINE!"

              And of course that was all as a result of fed monetization of debt, both public and private. I think perhaps you are unaware of all the things that have been going on out of sight at the fed. I agree, nothing is fine, but the first and foremost thing was to put a floor under the banking system.

              I also don't think you realize that all of this started because our trade partners realized that they had all been massively defrauded/conned into believing all this securitized debt was safe and held tripple A ratings. There was in fact high level meeting with our trade partners, Paulson, Rice and Bush and all of them were assured that they would be made whole. Making them whole involved a whole lot of ledger accounting swaps trading out securitized debt for treasury debt. The reality is that in order to do that the treasury debt had to in fact be issued, this it what the real intent of the original bailout funds for the banks was all about.

              You and I would be literally be standing in food lines if the actions that have been taken to date had not occured, most of which have not been reported on nor are really understood...

              What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

              by laughingriver on Tue Jun 09, 2009 at 08:17:15 AM PDT

              [ Parent ]

              •  Oh, yeah most of us got it... (0+ / 0-)

                We gave our trading partners billions to save the banks asses, and supposedly our integrity.  The banks got to keep on playing financial games. OH, and they kept the left over tarp money for salary and bonuses, apparently for having convinced the American tax payer to pay for their greed.

                Name one, just one of the principals that defrauded our trade partners who has had their assets seized, been indicted, or even been severely scolded by anyone from the US Government. If the US Government had to do this to save our economy and our face, don't you think we should at least get to treat them as badly as we treat drug dealers? Don't you think we should get to demand that no more bonuses are paid, no more derivatives are traded and no more banks get to play footsie with speculative hacks.

                Where are the regulations? Where are the indictments? Hell, where are the forensic accountants, even? There has been more examination of Bernie Madoff then apparently has been done to hunt down crooks who almost brought down the entire American economic system through fraud and corruption according to you.

                What the expletive deleted has the Obama White House done except to continue to enable the same greedy corrupt captains of finance to keep ripping off the american people both through their corporate policies and by stealing their taxes to fund their apparent 'fraud'?

                Name one thing. Really, I want you to. I want you to point out one real action that makes me think that everyone I know who has worked hard for ten, twenty, thirty years hasn't done it to pay for the biggest  robbery in the history of the world, and get nothing in return, except maybe the necessity to work hard until they die.

                Oh, and a stimulus with over forty per cent of it guaranteed to provide little or no stimulus doesn't count. Let's hope if they actually do get around to getting a second one out there that it is all stimulus, and that they can get it passed. That isn't a given anymore. They needed to approach the original stimulus as if they had one shot to get it right. Instead they couched it, went for bipartisanship and got milk toast. And we may all go down because of it.

                •  You and I agree on the events surrounding the... (0+ / 0-)

                  fraud for sure. However at that time we were literally put in a position where our trade partners informed us that they would no longer be purchasing securitized debt and that they wanted to be made whole on their assets an they did not care how it was done.

                  So imagine China and Japan and others sitting in a room and literally saying we don't give a fuck how you got us into this mess, we acted in good faith by giving you our goods and services, in which your public readily consumed and of which you did not have any goods and services to trade back to us so we instead took your dollars and then either purchased your treasuries or tripple A rated securitized debt with those dollars.

                  At the same time our trade partners informed us of the above they also literally shut down the supply of goods and services to this country, this is why we have seen such a drastic reduction in our trade deficit and global trade literally grind to a halt. This is primarily because on the flip side there would have been nothing to soak up the dollars and the credit fueled consumption economy had literally dies overnight.

                  Now given this context, there were high level agreements between all our trade partner countries that they would be made whole and what things were in fact still going to be traded until we got this entire mess worked out, think about things like food, energy supplies, raw materials, etc, necessary things tht would pretty much keep the political environment tenable.

                  So this is a long story involving a lot of events but at the time Paulson, Bush, the fed, heck everyone who was supposed to be monitoring all of this literally did not have any idea of the size and scope of the problem, no idea how much money was involved, who held what, what the real liabilities and asstes of the various instutions were, etc. Nothing, they were literally walking into an abyss blind.

                  So where were we at that time? The banks had negative capital, no ability to get recapitalized, no idea what their assets were worth, trade partners demanding that they be made whole on their assets, and global trade literally shut down overnight.

                  And this was just 8 months ago during a presidental election and an administration change.

                  Luckily our trade partners have been patient and slowly things are returning to normal - a new normal I'll grant you that - as far as global trade flows have been going.

                  So as far as fraud charges and whatnot, those will come, right now we need everyone in place to unwind everything, find out who owns what and swap any bad/toxic asstes our trade partners own out with treasuries as they demanded and all the while try to find a way to keep a semblance of the mortgage market going, keep credit flows open and try to find a way to start putting people back to work.

                  Obama has passed a tax cut, gotten the stimlus passed, managed to keep the banking system from collapsing, gotten legislation passed to assist upside down mortgage holders, passed credit card legislation, set up new rules and guarantees for small businesses and the small business loan programs and is working on student loan programs, health care and even unvieled a high speed rail proposal, oh and all the while trying to keep the American auto industry from collapsing.

                  And that's not even counting al lthe stuff the fed has and is doing in order to keep the economy afloat.

                  We are going to have to ride this out, its going to take time but the policies Obama has started to put in place, along with his longer term things will work as long as we all stay focused and patient with the outcome...


                  What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

                  by laughingriver on Tue Jun 09, 2009 at 11:43:09 AM PDT

                  [ Parent ]

    •  He's fighting a Congress full of politicians that (2+ / 0-)
      Recommended by:
      Brooke In Seattle, soms

      see their job security as being dependent on donations from the corporate/really rich 1%. There is no reasonable way to influence them. No one seems to be able to use common sense.  All the cheer leading in the world will not change the realities.

      Justice, if not pursued, does not exist.

      by phonegery on Tue Jun 09, 2009 at 08:39:56 AM PDT

      [ Parent ]

  •  If anything, propaganda about the economy... (15+ / 0-)

    has increased under Obama, in my view. WE're supposed to ignore how most of us, including myself, are living on the edge of financial disaster, and somehow believe in this economy.

    What I believe in isn't coming from the Whitehouse. Here in New Orleans, since the months after Katrina, we've been pushing for a WPA style public works rebuilding of the Gulf Coast. Everyone else, get on board. And begin the public pressure of this administration to live up to its job...representing the people.

  •  The word is "precarity" (10+ / 0-)

    With the transformation of labour practices in advanced capitalist systems under the impact of globalisation and information technologies, there has arisen a proliferation of terms to describe the commonly experienced yet largely undocumented transformations within working life. ...  Within the ambit of social movements and autonomous political groups, these new forms of labour organisation have been given the name precarity ... The term refers to all possible shapes of unsure, not guaranteed, flexible exploitation: from illegalised, seasonal and temporary employment to homework, flex- and temp-work to subcontractors, freelancers or so-called self-employed persons. But its reference also extends beyond the world of work to encompass other aspects of intersubjective life, including housing, debt, and the ability to build affective social relations.

    "When the government becomes a lawbreaker, it invites every man to become a law unto himself." ~ Justice Brandeis

    by ActivistGuy on Tue Jun 09, 2009 at 06:05:14 AM PDT

  •  thank you (14+ / 0-)

    I don't know what to think and I don't know anything about economics. However my intuition tells me that what BobW says in this diary is right on.  More than 3 years ago I sold a big house, and my cottage; and then 1 1/2 years ago I sold everything in my stock/retirement portfolio.  I was talking to a friend recently about how pessimistic I am, as if that were some kind of neurotic disorder.  My friend laughed and said maybe I am just realistic. Honestly I would rather have a 'neurotic disorder' than be 'realistic' about what I see as our future.

    I see our old structures collapsing because they are:  manufacturing, health care, politics and government, financials, environment, freedom and ethics, our reputation, inner well-being, on and on.  The green sprouts that I see emerging from this collapse are very different than what I think others mean when they speak of the new 'green sprouts'.  Spirituality is one the one area where I see growth and hope.

    Meanwhile I'm older, still working but past retirement age, and wondering how the heck to protect myself - ie. where to put my money.  I can work for a long time but who knows if I will have any clients cuz' who's going to have money to pay for anything but the very basics.

  •  Check out the FP (13+ / 0-)

    at nakedcapitalism this morning.  The entire fisrt page is basically "Recovery-My Ass!"

    Take your Recovery and Shove It

    Yes, I love Obama, and No, I don't care to stick my head in the sand.  

    The person who says it cannot be done should not interrupt the person who is doing it.

    by ohmyheck on Tue Jun 09, 2009 at 06:33:47 AM PDT

  •  IBM layoffs and forced time off (13+ / 0-)

    Case in point... And all this while IBM is posting huge profits (not losses)

    IBM announced a summer program called Take Time. People were asked to volunteer to take between 10 and 20 days off for vacation and get 1/3 pay.  If there are not enough volunteers then there will be some who will be asked to participate.

    IBM has also laided off 10,000 US workers in 2009 for the sole purpose of transferring the jobs to low wage countries. Rumors are that the lay offs will continue to about 16,000.

    Employees have been posting comments anonymously on this Union website and the suspicion is that IBM is using the program to target more people for layoffs. When you take time off, you are not billing your time and you become less valuable to the company. Your work rating drops and you get targetted for elimination. IBM has a particularly vicious HR organization.

    Congress STILL stinks like a whore house at low tide.

    by CitizenOfEarth on Tue Jun 09, 2009 at 06:41:35 AM PDT

    •  Damn (7+ / 0-)

      that is vicious.  Ask people to take time off w/reduced pay an then eliminate their job.  

      Ya know, I'm thinking that if companies continue to treat their employees like crap it is bound to bite them in the ass eventually.  How many times do you have to get burned by an employer before you start to phone it in at the office...just do the minimum to keep your job?

      I know my attitude sucks compared to when I started working.  I was going to work hard and get ahead...ha!  I've been screwed so many times by employers now.  Maybe that's one reason that no one wants to hire older workers - older workers have lost their naivete.

  •  Obama will be a ONE TERMER if the economy (2+ / 0-)
    Recommended by:
    Jagger, Kimball Cross

    does not get better. Americans are impatient by nature and he better focus on this or be done in 2012.

    I don't know what he economy team is doing but right now its a mess.

    •  Obama's done about all he can do (2+ / 0-)
      Recommended by:
      lockewasright, soms

      There's really not much more government can do at this point with respect to both fiscal and monetary policy. The recovery will happen, let's not piss all over the "Green shoots" just because it if fashionable to be negative and anti growth on this site.

      •  Really (1+ / 0-)
        Recommended by:

        Serious regulation of the financial sector is in the pipeline (ala FDR in the first 100 days)?

        The zombie bank situation has been dealt with realistically (behind them green shoots one should note that the Geithner toxic asset plan has utterly collapsed before even getting off the ground)?

        The bankruptcy law has been reworked?

      •  He's hardly begun. (1+ / 0-)
        Recommended by:

        Both the WH and Congress have a tremendous amount of control at their beck and call. They have been timid and weak and refused to do what should have been done on Day One.

        Tax the rich.

      •  green shoots (1+ / 0-)
        Recommended by:

        Your daily Green Shoots

        Montgomery County, OH -30

        San Francisco Fed starts the "jobless Recovery" mantra

        Cops may replace crossing guards in Chicago -300

        Opinion: Media falls for phony jobs claims

        Hundreds of L.A. city workers plan march to protest layoffs

        City of Oakland, CA considering bankruptcy

        Indiana Teachers Union -35

        Cape Cod, MA area schools -24

        Lloyds Banking Group (UK) -1,660

        Dorsey & Whitney law firm -55

        American Express announces additional layoffs -4,000

        Orgill Inc. -176

        Monarch Textiles -123

        Lake Superior College -10

        Sika Corp. temp layoffs become permanent -107

        GM Wentzville, MO plant eliminates shift -887

        Capital Group -94

        Ericsson USA -167

        New Britain, CT area schools -70

        City of Somerville, MA -14

        Prosoco -10

        HSN -15

        Belmont County, WV Sheriff's Office -12

        Blackhawk Foundry -50

        Layoffs looming at DMAX trucking plant

        Pasco County, FL Clerk -40

        Palm Springs, CA area schools -123

        King Phillip, MA area schools -20

        Albaugh, Inc. -37

        Smurfit-Stone -12

        Richard Petty Motorsports -9

        Rockford, MI area schools -7

        Byron Township, MI proposed school employee cuts -32

        MCAvoy Group -35

        Eugene, OR Register-Guard Newspaper -21

        Oswald Trippe Insurance -30

        umm... where?
        (todays numbers

        Jesus ain't comin', go ahead and put the Nukes back now.

        by RisingTide on Tue Jun 09, 2009 at 12:17:01 PM PDT

        [ Parent ]

    •  Wonder this too, but then after 8 yrs of Bush (1+ / 0-)
      Recommended by:

      I put a lot at Republicans' feet for this disaster.  I can't imagine within just three years anyone realistically thinks it can all be cleaned up.  And then if the opponent is Palin?  Seriously?  Or Newt?  Puh-lease.  We have to be patient and try to remain calm and positive.  I'd like a job soon too so this isn't easy.  But too early to tell if one termer or not.

      •  I know but the thing is Americans (0+ / 0-)

        are not patient. We wants something, we want it now.

        That's the problem, the meme will begin that Obama failed the economy etc...

        In addition, we need to start making something that people here and abroad will consume. I know its early to tell who is a one termer but Obama is being treated differently than any other president.

        The microscope on him is unprecedented. I wonder maybe if folks had paid attention to the other 43 presidents like him things might have been different. People are expecting miracles from him and the critic on him is ridiculous, something i have never seen.

        Hence Economy must must be numero uno!
        If Health care passes excellent but the economy is still there

        I give him 4 yrs but i don't think majority of the public are that generous

        •  As long as GOP in complete disarray, he has time (0+ / 0-)

          once the GOP get their act together, then we're in trouble.  No body can whip up a PR campaign better than the GOP, lies and all.  Once the lockstep hits, then I may agree with you.  Obama is fine for now.

          And yes, the US needs to actually MAKE something.  Too many things that have no tangible value - derivatives, too much borrowing, too much bigger, bigger, bigger, more, more, more.  This may be painful, but it'll be good for us I hope.

  •  Who's missing from this picture? (5+ / 0-)

    And this is a fascinating development in the ongoing war over what the hell is going on with the economy, but Krugman is now emerging as the dean of the green shootists, predicting in a speech to the London School of Economics very recently there could be recovery by September.

    Honestly at this point I'm not sure which side I fall on, although predictions of a jobless recovery appears to be something both sides have in common.

    To which I have to say, considering the degree to which unemployment and the fear of unemployment is stifling consumer spending, I wonder at what point a recovery is so jobless it ceases to be a recovery?

    "It's like we weren't made for this world, But I wouldn't really want to meet someone who was." --Of Montreal

    by andydoubtless on Tue Jun 09, 2009 at 07:19:31 AM PDT

    •  Read Krugman's Speech (2+ / 0-)
      Recommended by:
      wsexson, Gary Norton

      Not the headline used by the MSM.

      He didn't say what you came away thinking he said.

      •  I did read it. The more general points he makes (3+ / 0-)
        Recommended by:
        Brooke In Seattle, bobswern, soms

        about his lack of certainty as to the policy prescriptions that have been applied and as to the possibility of a jobless recovery are well-taken, but that doesn't mean he said something other than what he did with respect to the timing of the recovery. For what it's worth, I think he may be reading too much in to what he calls a slowing of the rate of decline. It may just be that, a slowing of the rate of decline.

        "It's like we weren't made for this world, But I wouldn't really want to meet someone who was." --Of Montreal

        by andydoubtless on Tue Jun 09, 2009 at 08:40:38 AM PDT

        [ Parent ]

        •  he's making a short term prediction. (0+ / 0-)

          nobody bloody bothered to ask him about 2010... which is where i'm hearing we'll hit the depression (emerging consensus).

          all Krugman's been saying is consistent with him reaching the same conclusion with everyone else -- short term mildly positive, then more negative growth.

          Jesus ain't comin', go ahead and put the Nukes back now.

          by RisingTide on Tue Jun 09, 2009 at 12:09:40 PM PDT

          [ Parent ]

  •  Great diary BUT... (1+ / 0-)
    Recommended by:

    Please spend some more electronic ink on the real fundementals of our economy - food, oil, clothing etc.  America can and will default on its debt but these things won't go away.  

    •  What are you, a pessimist? (2+ / 0-)
      Recommended by:
      sydneyluv, yellow dog in NJ

      Well, so am I.

      I'm not competent to analyze the little bumps and jiggles in the economic graphs, which seems to be what this diary is about (the bumps and jiggles, not my competence or lack thereof). But when I look at the long term trend line, I don't see any possiblity of returning to the type of prosperity we experienced in the last half of the 20th century.

      This is not necessarily a bad thing, just a real thing. How we respond to it, is what will determine how good or bad it is.

      My $0.02 :)

  •  Seems likely there will be permanent damage (6+ / 0-)

    That's what we need to get our heads around.  There is no way that the financial system will bounce back 100%.  The same goes for housing.  There will be a new reality of higher unemployment until this country gets it's head around producing new tangible reality based products.  I still think our best hope lies in green energy products.

    How about some real change?

    by noofsh on Tue Jun 09, 2009 at 07:29:38 AM PDT

  •  I love these economic diaries (6+ / 0-)

    for something that is so closely related to politics it's very surprising to me that there aren't more of them. I worry that some of our better writers don't bother because they attract so many people who just say they are wrong with, Obama being president being the only evidence offered. I think Obama's heart is in the right place but the monied interests only allow him to do so much. Just look how such a simple thing as his AG saying they wouldn't be raiding the pot clinics in CA anymore. The very next day the people doing raids continued so it's easy for me to see how he can be thwarted at every step with the big issues.

    music- the universal language

    by daveygodigaditch on Tue Jun 09, 2009 at 07:30:37 AM PDT

  •  Didn't Agnew actually say negativISM? n/t (0+ / 0-)

    Hey, Wolf. DailyKos is the Best Political Team on the planet.

    by Alden on Tue Jun 09, 2009 at 07:39:44 AM PDT

  •  Circular argument (0+ / 0-)

    "It's safe to say we have stepped back from the brink, that there is some calm that didn't exist before," he told donors at the Beverly Hilton Hotel late last month.

    Mr. Obama thinks that the way to revive the economy is to restore confidence in it. If the mood is right, the capital will flow.

    Where does the writer get the assumption that Pres. Obama is merely trying to cheerlead rather than stating a fact? That's begging the question, namely his premise that the recovery is an illusion and we are doomed, etc.

    Clearly, the Administration has taken many active steps to come back from the brink, and Pres. Obama may simply be reporting on the results.

  •  All I gotta say (2+ / 0-)
    Recommended by:
    bobswern, polar bear
    When I have to talk to a Republician....

    What if:
    Bush had not squandered the surplus Clinton left him and had not given tax breaks to the super rich.?
    Bush had properly responded to the PDB: "Bin Laden to attack..."?
    Bush had not cut the ACOE levee rebuilding budget and work to fix & upgrade the levees had gone as planned?
    Bush had not come into office with a ready plan to invade Iraq, and had been truthful with America.
    Bush caught Bin Laden, and tried him in the Hague?
    Bush had not turned the government into a pig trough for his rich buddies and favorite corporations?

    What if Bush had shown a lick of sense and leadership, and had been a president of the people of America?

    What if?

    Skunks Stink. Republicans Lie. It's their nature.

    by azureblue on Tue Jun 09, 2009 at 08:15:53 AM PDT

  •  I hate to admit it and hope that I'm wrong (4+ / 0-)

    But I'm in the Charles Hughes Smith camp. The squeeze is coming from too many directions to expect "consumer confidence" to be a panacea. Even a rise of a dollar in the price of a gallon would have severe reprecussions - That's how shallow our purported "recovery" is.

    I don't give a damn if I'm skipping like an old LP and repeating endlessly, and: We need a New, New Deal.

    The new Robber Barons disguised as hedge fund managers won't like it, nor will CNBC, nor will the Gopasaurs in congress or that Drug addled gasbag on the radio, old whathisname.

    Screw 'em. This is about the people. A lot of us are suffering. Many if not most played by the rules and were taken to the cleaners. It's our turn.

    You ought to know. Suddenly I have a crush on Alanis Morrisette. Go figure.

    by Anthony Page aka SecondComing on Tue Jun 09, 2009 at 08:41:07 AM PDT

  •  Obama said people are being called back to work (2+ / 0-)
    Recommended by:
    tmo, bobswern

    Has anyone received that call?

    At least he saved 150k jobs and plans on saving 600k this summer if unemployment dips.

    If you don't have a job, don't leave your cell phone because you'll be getting that call back to work!

  •  $68B given back to the Fed today by TARP (0+ / 0-)


    Short of any other major shocks, it appears Obama has begun to stabilize this mess.

    Without reestablishing a working frame in which money can flow, there will be bedlam. As ugly and as broken as the existing system was, it's the only system we've got. Obama is right is to get that back on track, FIRST. It's impossible to make substantial changes without internal mechanisms in place to make the economy work.

    Yes, some of it smoke and mirrors, I don't doubt that for a moment. But I don't see where any other course of action makes sense in the short term - the existing structure of financial institutions must be restored to some level of competent operation. They cannot be replaced overnight.

    It's what happens after restoration, and what Congress does to pass regulation that is of critical importance now.

    •  Not quite (0+ / 0-)

      The article says that if the approved banks return the money it will be $68 billion.  They haven't done it yet.  

      The Treasury even approved Morgan-Stanley to pay back the TARP, even though they need another $10 billion in capital they haven't got.  Of course, the approval was done on the basis of the stress tests, which have been shown to be all BS anyway.

      Let me know when the $68 billion check gets to Treasury.  Then I'll start believing in stabilization.

  •  When do we get a law... (0+ / 0-)

    ...conferring titles and privileges such as first night marriage rights on personages like, say, the Duke of Goldman Sachs and the Earl Halliburton?

    Isn't that more germain than argueing as to whether major changes have or about to occure in our power/economic structure?

    BTW the ‘'Nattering Nabobs of Negativity'' is a bit, hyperbolized, IMO.

    The young man who has not wept is a savage, and the old man who will not laugh is a fool. George Santayana

    by Bobjack23 on Tue Jun 09, 2009 at 09:19:12 AM PDT

  •  Obamas task is near impossible (0+ / 0-)

    He has to maintain a somewhat optimistic tone amid the depressing reality, it's really an incredible highwire act he's trying to pull off.

    The Healthcare fight is the lynchpin to our whole viability as a nation. This is bigger than just saying it's a part of a mythical "recovery". It is literally everything.

    The insurance companies apparently have a lot of the senate already bought and paid for to keep the status quo intact.

    Obama has to DEMAND a viable public option or this country is going to economically crater. It's so fucking obvious but nobody in the senate apparently has the cojones to stand and deliver.

    How many more industries have to implode before these assholes get the message? I mean, who the fuck ever heard of two giant car companies going bankrupt at the same time? It's insane.

    The kind of capitalism we have here cannot survive with health care on it's back, period.

    They need to create a legitimately regulated financial marketplace that creates an even playing field, not one that bends over and does whatever the investment bankers and HMO's want.

    And yes, some form of "gasp", socialized medicine. If they cant deliver it, we might as well just close up shop. This country is broken, and until they admit it and come up with realistic solutions, it will only get worse.

    They have to pull out all the stops to jam this through. If they have to do some fancy footwork in then senate to ram this through with 51 votes, then they better fucking do it, we are running out of time.

    "Pay no attention to that man behind the curtain!"

    by jkay on Tue Jun 09, 2009 at 09:30:59 AM PDT

  •  BobS, thx for commenting on (2+ / 0-)
    Recommended by:
    bobswern, polar bear

    my diary, on related topic of problems cited by the Warren panel and head of FDIC.

    Your diary is great -  as I pointed out to my [few brave] readers earlier this a.m.

    And I sympathize with you - fending off commenter arguments that 'confidence' is a better indicator - via 'majority' opinion - than actual health of the banks, amount of still toxic assets, job losses, etc.

    As that NY Times article pointed out, basing our nation's economic health on 'confidence' is risky business, indeed - especially if the true depth of the bank and mortgage and consumer credit default and jobs problems continue to fester and grow.

    Why, all it might take is someone such as Rush Limbaugh excoriating his 10 percent of the population to 'boycott' that horrible automaker, "Government Motors" and [oh yeah, he just did, SH**T, Dcoronado's theory - whatever his name is - is HOSED].

    We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

    by puffmeister on Tue Jun 09, 2009 at 09:31:12 AM PDT

  •  The K.I.S.S. method (0+ / 0-)

    Keep it simple, stupid.

    We have been aware of the basic problem for thousands of years.

    An imbalance between rich and poor is the oldest and most fatal ailment of all republics.
    Plutarch - circa AD 46 – 120

  •  Totally Great Diary, Thanks (2+ / 0-)
    Recommended by:
    bobswern, polar bear

    just enough technical info/links to indicate we are NOT doing well.

    I'll throw this in from Naked Capitalism, the entire piece is much longer, but worth the read:

    A combination of falling asset prices and falling nominal incomes against the back drop of high private debt loads tends to pose a serious challenge to the ability of market economies to self adjust. In response to a financial crisis, the private sector tries to net save and favors liquid assets in the face of large losses of wealth and income uncertainty. Unless some other sector is willing to net deficit spend, nominal incomes will fall, reducing the ability of the private sector to service existing debt commitments. Spending will drop even as final product prices drop, profits will dry up, and delinquencies and defaults will spread.

    In addition, unless some other sector is willing to accumulate risky assets or increase the stock of money, asset prices will fall, reducing collateral values and net worth. Bankruptcy and attempts to deleverage, with all their ensuing contagion effects, will spread. Along the way, as markets adjust along these paths, history suggests that societies can experience substantial dislocations. Hy Minsky traced out many of these dynamics decades ago based in part on the contributions of J.M. Keynes and Irving Fisher, but his work was mainly ignored or forgotten by professional investors and mainstream economists favoring the self-equilibrating properties of markets.

    The response to recent dislocations in many countries has been to a) increase fiscal deficit spending to both meet the surge in desired private net saving and reduce solvency uncertainty for key financial institutions, while b) reducing policy rates to near zero and expanding central bank balance sheets through purchases of privately held assets (quantitative easing). Market self-adjustment mechanisms that can otherwise lead to market self-destruction are thereby believed to have been short circuited. A "corridor of stability" is being re-established as the guard rails of fiscal and monetary policy have been buttressed.

    This time around, however, it may be more complicated than that. Two questions arise with regard to the policy fix underway: who is going to accumulate the issuance of government debt associated with large (and possibly prolonged) fiscal deficit spending, and are there inconsistencies introduced by pursuing a large quantitative easing approach at the same time?

    again, I'm afraid we are facing a perfect storm of bad economic/social policy, much of it going back decades (i.e. moving manufacturing out of the U.S., the race to dumb-down middle class income, rising health care costs, etc.) which due to congress' stupidity/bad management, have now reached meltdown level and must be dealt with effectively NOW.

    for starters: EFCA and national health care with the public option intact must pass-- or forget a strong economic recovery.

    The bank bailouts are a failure. Robert Reich

    by Superpole on Tue Jun 09, 2009 at 09:46:18 AM PDT

  •  Thanks, bobswern, i'd missed it. going to read (0+ / 0-)

    the nyt piece, it looks good. this is so sick, our country is in free fall, and people are gibbering about the "recovery!"  

    I hope to high heavens that us doomsayers are wrong, but the way we have handed our future over to Wall St., in economics and in health (so far, they're working on turning the energy bill into a meaningless scrap of paper) is depressing. i try to remain up and encourage participation, but lately i feel like crying. Obama, you asked us to participate, but now you blow us off.

    And then there's torture, secrecy, and drone bombing.

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