Another Economic Thread

[Altherion]

[quote name='AndyP' post='1636954' date='Jan 3 2009, 23.42']Public works (I hate the word infrastructure, it's a shit word) should be based on need and not make work.[/quote]
The need is there, it's just that the money is not. The benefits from most public works are too widely distributed for any particular entity to profit from them. And I don't see what you have against the word "infrastructure"; it's a fairly exact description of what it represents.

[Iskaral Pust]

[quote name='Ser Scot A Ellison' post='1637042' date='Jan 3 2009, 19.13']IP,

What examples do we have of the US government paying off debt with surpluses? Should savings be encouraged? Don't you think depending on consumer spending to grow the ecomomy without encouraging savings is a reciepe for disaster?[/quote]

Clinton. Yes (but not over-saving - look at China). Yes.

[Iskaral Pust]

There are a couple of good articles in the NYTimes today:

[url="http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html?em"]The problems with the financial sector[/url]
[url="http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html"]Proposals to fix it[/url]

Edit:
And another great (if lengthy) article by Joe Nocera of the NYTimes addressing Taleb's criticisms of financial risk management models, particlularly the ubiquitous VaR.
[url="http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?em"]Risk Management[/url]

[ThinkerX]

Examples of boondoggle (or more accurately 'criminal') spending of the bailout money. Everything from paying bloated bonus's ect to the genius's who wrecked these companies through dubious deals to financing takeovers to lobbying politicians:

[url="http://articles.moneycentral.msn.com/Investing/CompanyFocus/the-10-worst-bailout-boondoggles.aspx"]http://articles.moneycentral.msn.com/Inves...oondoggles.aspx[/url]

I really am inclined to think more and more that something on the order of 20-40% of the bailout money spent thus far has, to all intents and purposes, been literally stolen. The people responsible probably figure they'll skate, save for a few scapegoats...and they are quite possibly right.

[The Progressive]

[quote name='Iskaral Pust' post='1637504' date='Jan 4 2009, 10.18']There are a couple of good articles in the NYTimes today:

[url="http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html?em"]The problems with the financial sector[/url]
[url="http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html"]Proposals to fix it[/url]

Edit:
And another great (if lengthy) article by Joe Nocera of the NYTimes addressing Taleb's criticisms of financial risk management models, particlularly the ubiquitous VaR.
[url="http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?em"]Risk Management[/url][/quote]

I think the best lesson offered is "don't let them get too big to fail". Unfortunately, that's precisely what Paulson and Bernarke are doing with their bailouts. The rest of the proposals are sound as well, especially the part about the revolving door that led most SEC officials to work for big financial firms later on (there ought to be a rule that forbids SEC officials from ever working for big financial firms after ward, the conflict of interest is just too great).

1. “Congress might grant qualifying homeowners the ability to get new government loans based on the current appraised values without requiring their bank’s consent.”
2. “Stop making big regulatory decisions with long-term consequences based on their short-term effect on stock prices.”
3. “End the official status of the rating agencies.”
4. “Regulate credit-default swaps.”
5. “Impose new capital requirements on banks.”
6. “Break up any institution that becomes too big to fail.”
7. “Close the revolving door between the S.E.C. and Wall Street…But keep the door open the other way.”

[quote name='ThinkerX' post='1638687' date='Jan 5 2009, 15.10']Examples of boondoggle (or more accurately 'criminal') spending of the bailout money. Everything from paying bloated bonus's ect to the genius's who wrecked these companies through dubious deals to financing takeovers to lobbying politicians:

[url="http://articles.moneycentral.msn.com/Investing/CompanyFocus/the-10-worst-bailout-boondoggles.aspx"]http://articles.moneycentral.msn.com/Inves...oondoggles.aspx[/url]

I really am inclined to think more and more that something on the order of 20-40% of the bailout money spent thus far has, to all intents and purposes, been literally stolen. The people responsible probably figure they'll skate, save for a few scapegoats...and they are quite possibly right.[/quote]

I strongly suspect that there's something really fishy going on at the SEC with their deliberate suppression/dismissal of reports of suspicious activities by Maddoff going back to 2005. Also, conducts from Paulson and his immediate underlings must be closely scrutinized once Obama came into office with serious probes on corruption and illegal kickbacks.

In China, Paulson would have been hanged already, lol.

[AndyP]

[url="http://blogs.ft.com/maverecon/2009/01/can-the-us-economy-afford-a-keynesian-stimulus/"]FT : Can the US economy afford a Keynesian stimulus?[/url]


The answer seems to be no according to this article.

[Shryke]

[quote name='Triskele' post='1640179' date='Jan 6 2009, 22.14']Econ is hard to understand. It seems to be infinately complicated. I just pray that we do the right thing whichever that is.[/quote]

Economics is what happen when you try and study the way people interact the same way physicists study the way particles interact.

[Moshe Goldberg Rubinshteyn]

[quote name='Shryke' post='1640187' date='Jan 6 2009, 22.39']Economics is what happen when you try and study the way people interact the same way physicists study the way particles interact.[/quote]
Sure, blame the physicists for the economic crisis.

The funniest I've read about that particular notion was the complaint of an economist about all the physicists they had hired to program their computer models. He said, the models became so complicated that he couldn't understand them any more, and so he put the blame for the ensuing mess squarely on the physicists.

Funny shit that.

[AndyP]

[quote name='Cobblestones' post='1640199' date='Jan 6 2009, 23.05']Sure, blame the physicists for the economic crisis.

The funniest I've read about that particular notion was the complaint of an economist about all the physicists they had hired to program their computer models. He said, the models became so complicated that he couldn't understand them any more, and so he put the blame for the ensuing mess squarely on the physicists.

Funny shit that.[/quote]
Well of course it's the economist fault. He should have hired computer scientist to program his models and left the physicists to their string theory, silly economist.


Triskele

...and there are a lot of economist on both the left and right that agree with Krugman, even if they don't agree on the form of the stimulus. I just keep getting frustrated because it is like watching a gardener who keeps trying to spur more growth by dumping more and more fertilizer and hasn't bothered to check to see if more water is needed or if the soil ph level is ok for his plants.

[WarGalley]

This must be the funniest news headline of the year:

[url="http://politicalticker.blogs.cnn.com/2009/01/07/porn-industry-seeks-federal-bailout/#more-34724"]Porn industry seeks federal bailout[/url]

[quote]Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry.

“The take here is that everyone and their mother want to be bailed out from the banks to the big three,” said Owen Moogan, spokesman for Larry Flynt. “The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine.”

Francis said in a statement that “the US government should actively support the adult industry's survival and growth, just as it feels the need to support any other industry cherished by the American people."[/quote]

Everybody and their mother wants to be bailed out is absolutely right.

[quote]But the industry leaders said the issue is a nation in need. "People are too depressed to be sexually active," Flynt said in the statement. "This is very unhealthy as a nation. Americans can do without cars and such but they cannot do without sex."

"With all this economic misery and people losing all that money, sex is the farthest thing from their mind. It's time for congress to rejuvenate the sexual appetite of America. The only way they can do this is by supporting the adult industry and doing it quickly."[/quote]

I expect Congress to completely ignore this but it's still pretty funny.

ETA: I actually hope this isn't a joke.. I would love to see Congressional figures get asked this question in front of a camera.

[mcbigski]

I'm sure it's entirely a joke. According to Fox Business, Francis also said the following, which I thought was the best bit of all:

[quote]Francis said that if invited, he and Flynt would drive across the country in a hybrid vehicle to present their plans to Congress.[/quote]

It's an extremely well done joke in that it's only funny until you think about it.

[WarGalley]

The Daily Show could have done so much with that..

[AndyP]

[url="http://www.iht.com/articles/2009/01/07/business/yuan.php"]China is less interested in buying U. S. dept[/url]

[Lany Freelove Cassandra]

Our office has laid off 40+ people with more to come. *crosses fingers*

(I think the total layoffs just in our office are now over 200)

[CloudFlare]

[quote name='AndyP' post='1640137' date='Jan 6 2009, 21.27'][url="http://blogs.ft.com/maverecon/2009/01/can-the-us-economy-afford-a-keynesian-stimulus/"]FT : Can the US economy afford a Keynesian stimulus?[/url]


The answer seems to be no according to this article.[/quote]

The U.S. can't afford a pack of gum at this point.

The actual question is "Can China afford a Keynesian Stimulus of the U.S.?"

I think the answer is no for them as well.

[Lany Freelove Cassandra]

[quote name='Lany Cassandra' post='1641470' date='Jan 8 2009, 09.37']Our office has laid off 40+ people with more to come. *crosses fingers*

(I think the total layoffs just in our office are now over 200)[/quote]

A further update: CDO depatment is being hit today.

Our second office is rumored to be closing in March...that means more than 100 people more would need to go if they were to be moved into our building.


In possitive news, we have been asked to help out with (and maybe take over) the servicing of the Fanny Mae and Freddie Mac deals...a lot will depend on the new administration. (that is the only rumor of new work we have right now)

[WarGalley]

I haven't seen Torm post in awhile so I've been wondering about him since he was saying he might be let go. My company started offering voluntary severance packages a few weeks ago.

The December layoffs are supposed to be worse than the November number (~533,00 iirc). 2009 is going to be really bad.

[ThinkerX]

[quote]Our office has laid off 40+ people with more to come. *crosses fingers*

(I think the total layoffs just in our office are now over 200)[/quote]

[quote]A further update: CDO depatment is being hit today.

Our second office is rumored to be closing in March...that means more than 100 people more would need to go if they were to be moved into our building.


In possitive news, we have been asked to help out with (and maybe take over) the servicing of the Fanny Mae and Freddie Mac deals...a lot will depend on the new administration. (that is the only rumor of new work we have right now)[/quote]

Glad to see your still hanging in there, if only just barely. Figured out how to sell the office supplies off for personal profit on EBAY yet? Or was that the other person? :)


As to the F and F stuff, they crew at the 'Implode' site has been claiming for most of a year now that ...blatently dishonest... would be a fair description of what was going on there. Time and time again on their forum, these people (most of them current or former mortgage biz types) would run through the numbers and info they had, try to match up with what F & F was claiming, and then cry 'foul'.

[Iskaral Pust]

[quote name='Lany Cassandra' post='1641865' date='Jan 8 2009, 14.56']A further update: CDO depatment is being hit today.

Our second office is rumored to be closing in March...that means more than 100 people more would need to go if they were to be moved into our building.


In possitive news, we have been asked to help out with (and maybe take over) the servicing of the Fanny Mae and Freddie Mac deals...a lot will depend on the new administration. (that is the only rumor of new work we have right now)[/quote]

Best of luck Lany, and sorry for the crappy feeling of seeing people lose their jobs even if you keep yours.

[Iskaral Pust]

There's some speculation (see NYTimes article) that Citi are trying to sell the Smith Barney stock-broking unit to Morgan Stanley. I guess this might help a little with breaking up these behemoths. It also sets up a more aggressive competition between Morgan Stanley and BofA/Merrill Lynch in the stock-broking realm.