My view on why our economy is pure shit.

[Uncensored2008]

you truly are a shitty debater. 1. herman cain has sway? Ok. 2. Government is to blame. and 3. you brought up the topic of unemployment.

Christ.

Manifold is best ignored.

He can be amusing at times. He even stumbles across "witty" occasionally. But ultimately, he is a troll. He isn't looking for debate nor dialogue.

 

[editec]

Everything that the current laisse faire cons want today was in place in the 19th century.

There were no taxes, no captial gain taxes, no intrusive environmental laws, no fair labor laws, no unions and an EXTRMELY small government.

Nevertheless. there were financial setbacks including: the Panic 1819, Panic 1837, Panic 1873 and the Panic of 1901.

Now clearly no creeping SOCIALISM caused the panics, folks.

What cause these financial downturns were the changing conditions of their day.

Each panic has its own explanation,

And that is the nature of economies, folks.

As the world changes, so too do the economic conditions change.

Sometimes those changing conditions lead to golden ages, sometimes they lead to financial downturns.

There are no always right answers to their causes , there is not hard and fast solutions to that unique economy.

Each economic situation is different because each economic event is different.

Economics is NOT chemistry, or physics, kids.

There are no formulas that will keep an economy from vasilating as conditions in the world change.

I'm impressed. I agree with most of this, with the exception of:

Economics is NOT chemistry, or physics, kids.

Economics is a hard science. Maybe not diamond hard because it deals with more mushy things than the immutable laws of physics and subject to more variation at times based on the erratic behavior of man. But it is a science none the less.

It is not, nor will it ever be, remotely a hard science.

Why?

Becuase it is a social science studying and describing human affairs which are not really predictable.

When you change conditions in a macroeconomy, the elements making up that marco economy (that would be THE PEOPLE whose comfined activity CREATE that macroeconomy) notice the changes and respond according to their own perceptions about the changes.

No two economies are ever the same in exactly in the same way that no two historical events are ever the same.

There is no way to test how the macroeconomy is going to respond to a given stimuli because the macroeconomy is made from people who do not act remeotely like INANIMATE OBJECTS.

There is no way to ever duplicate a test within a macroeconomy, either.

So given that how much do you think anybody's PREDICTIONS about where the MACROI is headed are really worth?

I do not mean to say that metrics in macro are worthless.

But I do mean to say there are no hard and fast rules for how a macroeconomic event will play out in TODAY's UNIQUE economy.

All I am describing is why social sciences (many of which use metrics and math to help them understand what is going one) can never give us the same KIND of answers as the HARD sicences usually can.

Are we on the same page now?

 

[samjones]

You're kidding, right?

{Neither wealth nor the burden of debt is distributed evenly across households. Hence, the spending effects of changes in these influences also will not be evenly distributed. For example, increased debt burdens appear disproportionately attributable to higher-income households. Calculations by staff at the Federal Reserve suggest that the ratio of household liabilities to annual after-tax income for the top fifth of all households ranked by income rose from about 1.1 at the end of 1998 to 1.3 at the end of 2001. The increase for the lower four-fifths was not quite half as large.

Although high-income households should not experience much strain in meeting their debt-service obligations, others might. Indeed, repayment difficulties have already increased, particularly in the subprime markets for consumer loans and mortgages. }

Alan Greenspan - 2002

In your pedantic tunnel-vision view of the financial crisis of '08 you refuse to see anything but subprime mortgages. It does not matter that the Housing Bubble affected the price of all homes. It doesn't matter that unemployment went to double-digits. It doesn't matter that the DJIA dropped to less than half its high. It doesn't matter that the auto industry needed a bailout. INone of these things matter to you, because in your word it was a *SUBPRIME MORTGAGE PROBLEM* and we all should have seen it coming and put our money in GOLD.

Perhaps you do not recall the issues surrounding investing in that era (say, '03 - '08). Perhaps you had nothing to invest. Out-of-control oil prices and rising food prices were the issues of the day.

Many people consider the Malibu fires to be a crises of matches caused by lighting brush on fire, but a little match won't destroy hundreds of homes and millions of acres, right?

CRA was the match.

Not really. All our homes were overvalued. Mark-to-market accounting ensured that. CRA and sub-prime loans were just the first tinder-box to go up in flames. It's easy to blame the crisis on Mrs. O'Leary's cow, right?

 

[manifold]

you truly are a shitty debater. 1. herman cain has sway? Ok. 2. Government is to blame. and 3. you brought up the topic of unemployment.

Christ.

Manifold is best ignored.

He can be amusing at times. He even stumbles across "witty" occasionally. But ultimately, he is a troll. He isn't looking for debate nor dialogue.

So you can't articulate a convincing argument that the economy is pure shit either.

Got it.

 

[Uncensored2008]

In your pedantic tunnel-vision view of the financial crisis of '08 you refuse to see anything but subprime mortgages.

I guess if I had said that no one could have predicted the housing bubble the way you did, only to be clobbered by a plethora of facts, I'd be desperately trying to move the goal posts as well.

It does not matter that the Housing Bubble affected the price of all homes. It doesn't matter that unemployment went to double-digits. It doesn't matter that the DJIA dropped to less than half its high. It doesn't matter that the auto industry needed a bailout. INone of these things matter to you, because in your word it was a *SUBPRIME MORTGAGE PROBLEM* and we all should have seen it coming and put our money in GOLD.

Once again, your partisanship mixed with your general ignorance of economics drives you to make some absurd posts.

{What if the U.S. housing market goes bust? Of
course the healthy home construction business will get ill. Contractors will be begging for
business and former mortgage brokers will return to driving cabs. Because homeowners’ inhouse ATMs will have run out of cash, it will be easy to get a parking place close to the
shopping mall’s anchor store. But the most serious collateral damage from a housing bust
would be a wounded U.S. banking system. As Chart 1 shows, that home mortgage debt
accounts for a record 32% of total U.S. nonfinancial debt. To put this in perspective, U.S.
Treasury debt held by the public accounts for only 18% of total domestic nonfinancial debt.
U.S. commercial banks have become major investors in mortgage-related debt. As Chart 2
shows, about 60% of U.S. banks’ earning assets are mortgage-related – a post World War
II high. In 1986, the percentage was only 30.} - from 2004

http://www.northerntrust.com/library/econ_research/weekly/us/pc073004.pdf

You see, despite your partisan blather, serious economists were well aware of the housing bubble and the disaster that loomed for the economy.

Perhaps you do not recall the issues surrounding investing in that era (say, '03 - '08). Perhaps you had nothing to invest. Out-of-control oil prices and rising food prices were the issues of the day.

That's nice, but has little to do with your earlier claim that no one could predict the '08 crash.

Not really. All our homes were overvalued. Mark-to-market accounting ensured that. CRA and sub-prime loans were just the first tinder-box to go up in flames. It's easy to blame the crisis on Mrs. O'Leary's cow, right?

Homes were overvalued due to an over saturated market, made possible by loose lending practices. CRA is the match that lite the fire, but there was far more involved in the conflagration than CRA.

 

[TakeAStepBack]

Unfortunately for the central planner economists, the bubble burst was predicted. Just like every other bubble and burst in the last 100 years. It's easy to predict the future in an economy when a bunch of control crazed morons using natural sciences to predict human action are setting the policies.

 

[samjones]

I guess if I had said that no one could have predicted the housing bubble the way you did, only to be clobbered by a plethora of facts, I'd be desperately trying to move the goal posts as well.

I didn't say that. Go back and read post 114. I simply did not say what you are accusing me of having said. No less than Alan Greenspan was issuing warning in '06.

So, I guess I should apologize for "clobbering" you with "facts". In your world made up bullshit rules, I guess.

Homes were overvalued due to an over saturated market, made possible by loose lending practices. CRA is the match that lite the fire, but there was far more involved in the conflagration than CRA.

I can't believe that you're actually accusing me of moving the goalposts.... was this a problem with CRA or was it not? I can't tell whether you're indicting CRA or defending it.

Let me try to catch up with what you're saying. Clearly you're not trying to say that the housing market was oversaturated with homes (supply), because that would make homes *undervalued*. So apparently you're trying to say that it was oversaturated with buyers (demand) and apparently carpenters just couldn't keep up with that demand. Banks were forced to lend too much money to people they knew couldn't repay it because CRA forced them to, apparently...

So the self-governing laws of supply and demand apparently did not work in this case because carpenters just can't build homes fast enough for the banks to loan out money to the people who can't repay it....

*AND*, this all argues for the abolition of all regulation of the banking sector.

THIS seems to be your argument. I struggle with your logic.

 

[Big Fitz]

Everything that the current laisse faire cons want today was in place in the 19th century.

There were no taxes, no captial gain taxes, no intrusive environmental laws, no fair labor laws, no unions and an EXTRMELY small government.

Nevertheless. there were financial setbacks including: the Panic 1819, Panic 1837, Panic 1873 and the Panic of 1901.

Now clearly no creeping SOCIALISM caused the panics, folks.

What cause these financial downturns were the changing conditions of their day.

Each panic has its own explanation,

And that is the nature of economies, folks.

As the world changes, so too do the economic conditions change.

Sometimes those changing conditions lead to golden ages, sometimes they lead to financial downturns.

There are no always right answers to their causes , there is not hard and fast solutions to that unique economy.

Each economic situation is different because each economic event is different.

Economics is NOT chemistry, or physics, kids.

There are no formulas that will keep an economy from vasilating as conditions in the world change.

I'm impressed. I agree with most of this, with the exception of:

Economics is NOT chemistry, or physics, kids.

Economics is a hard science. Maybe not diamond hard because it deals with more mushy things than the immutable laws of physics and subject to more variation at times based on the erratic behavior of man. But it is a science none the less.

It is not, nor will it ever be, remotely a hard science.

Why?

Becuase it is a social science studying and describing human affairs which are not really predictable.

When you change conditions in a macroeconomy, the elements making up that marco economy (that would be THE PEOPLE whose comfined activity CREATE that macroeconomy) notice the changes and respond according to their own perceptions about the changes.

No two economies are ever the same in exactly in the same way that no two historical events are ever the same.

There is no way to test how the macroeconomy is going to respond to a given stimuli because the macroeconomy is made from people who do not act remeotely like INANIMATE OBJECTS.

There is no way to ever duplicate a test within a macroeconomy, either.

So given that how much do you think anybody's PREDICTIONS about where the MACROI is headed are really worth?

I do not mean to say that metrics in macro are worthless.

But I do mean to say there are no hard and fast rules for how a macroeconomic event will play out in TODAY's UNIQUE economy.

All I am describing is why social sciences (many of which use metrics and math to help them understand what is going one) can never give us the same KIND of answers as the HARD sicences usually can.

Are we on the same page now?

You are right, because we study human behavior, this is the fuzzy gray area of economics. That said, there are SOME aspects of it, that are diamond hard as gravity in regards to how items act with one another. In that regard, I guess we will never be on the same page, but that's okay. We don't have to be. I think it's full of a lot more universal laws of scarcity than you do. But it's about as hard as you can get inside the bounds of the 'human sciences'.

 

[Uncensored2008]

I didn't say that. Go back and read post 114. I simply did not say what you are accusing me of having said. No less than Alan Greenspan was issuing warning in '06.

Now you're just pathetic.

I see no way that individual investors, even those who were duly diligent, could have predicted and avoided the problems surrounding the financial crisis of 2008.

So, I guess I should apologize for "clobbering" you with "facts". In your world made up bullshit rules, I guess.

You should man up and take your lumps.

You made a stupid claim and got nailed.

I can't believe that you're actually accusing me of moving the goalposts.... was this a problem with CRA or was it not? I can't tell whether you're indicting CRA or defending it.

I have no need to be painted into your little box. I understand that ThinkProgress provides you scripts to go after particular questions, and you need me to fall into line so that you can read the script.

It ain't my problem.

Let me try to catch up with what you're saying. Clearly you're not trying to say that the housing market was oversaturated with homes (supply)

Sigh, read for content.

The market was over saturated with loans, empowering poorly qualified and unqualified buyers to pursue property they could not afford.

, because that would make homes *undervalued*. So apparently you're trying to say that it was oversaturated with buyers (demand) and apparently carpenters just couldn't keep up with that demand. Banks were forced to lend too much money to people they knew couldn't repay it because CRA forced them to, apparently...

I know you have your script, bummer you have no actual knowledge of the subject.

So the self-governing laws of supply and demand apparently did not work in this case because carpenters just can't build homes fast enough for the banks to loan out money to the people who can't repay it....

Developers were cashing in on the Ponzi scheme, as were lenders. Your script utterly fails you.

*AND*, this all argues for the abolition of all regulation of the banking sector.

THIS seems to be your argument. I struggle with your logic.

A silly little straw man by a silly little partisan.

 

[samjones]

Now you're just pathetic.

I see no way that individual investors, even those who were duly diligent, could have predicted and avoided the problems surrounding the financial crisis of 2008.

So, I guess I should apologize for "clobbering" you with "facts". In your world made up bullshit rules, I guess.

You should man up and take your lumps.

You made a stupid claim and got nailed.

You read every other word and you assume that the writer has written what you most want to disagree with. I 100% stand by the sentence that you boldfaced and I 100% stand by my statement that I did not say that nobody could have predicted a sharp decline in the housing market in '08.

I understand that ThinkProgress provides you scripts to go after particular questions, and you need me to fall into line so that you can read the script.

I have no idea who or what you're talking about. The boogeyman is your's alone.

The market was over saturated with loans, empowering poorly qualified and unqualified buyers to pursue property they could not afford.

The market is homes for home buyers. The market is not "loans". If a buyer is unqualified the bank simply should not lend to him or her. Oh wait, I know.... it was only the CRA buyers who were subprime and defaulting and therefore the banks had no choice... Bullshit.

This hardly explains why the drop in home prices was so across-the-board. Why wasn't it just the bad neighborhoods that were overvalued?

Developers were cashing in on the Ponzi scheme, as were lenders. Your script utterly fails you.

Aha! Now we have caught the culprits. It was the *DEVELOPERS*. And of course the lenders and of course it was a Ponzi scheme, but no need for any regulation.

Maybe if you scream "liberal" your argument will start making more sense.

 

[EdwardBaiamonte]

If a buyer is unqualified the bank simply should not lend to him or her.

Of course the liberals left the bankers little choice. As long as the liberal Fed was printing money, in the worst case home values would go up and a mortgage default would still result in a profit. Any bank that didn't participate would be left far behind the competition. As Chuck Prince of Merryl said, as long as the [/liberal] music is playing you gotta keep dancing.

 

[EdwardBaiamonte]

Everything that the current laisse faire cons want today was in place in the 19th century.

.

OMG!!! Of course that is perfectly stupid and perfectly 100 % liberal. If the cons want 1400 banks issuing 9500 different kinds of currency I'll pay you $10,000. Bet or admit that as a liberal you know less than nothing.

 

[samjones]

If a buyer is unqualified the bank simply should not lend to him or her.

Of course the liberals left the bankers little choice. As long as the liberal Fed was printing money, in the worst case home values would go up and a mortgage default would still result in a profit. Any bank that didn't participate would be left far behind the competition. As Chuck Prince of Merryl said, as long as the [/liberal] music is playing you gotta keep dancing.

How do you reconcile this statement with your Libertarian philosophy, Ed? Wouldn't a Libertarian emphasize personal responsibility and accountability for one's actions? How is blaming the Fed for Merrill's (BofA's) bad loans any different than a carpenter blaming the government because he can't find a job?

I'm not sure whether you're motivated by intellectual ideology or whether you just blankly argue for any policy that favors the rich.

 

[editec]

Are we on the same page now?

You are right, because we study human behavior, this is the fuzzy gray area of economics. That said, there are SOME aspects of it, that are diamond hard as gravity in regards to how items act with one another. In that regard, I guess we will never be on the same page, but that's okay. We don't have to be. I think it's full of a lot more universal laws of scarcity than you do. But it's about as hard as you can get inside the bounds of the 'human sciences'.

Big Fritz

Can you give me an example of those DIAMOND HARD metrics in MACRO?

We may be in completely agreement, here, but are talking past one another.

I believe that in microeconomics one can find rules and formulas that TEND TO BE pretty dependable in the short run.

Oh, they're not as dependable as say a law of basic physics, but they're pretty damned dependable within their limited range of study.

Understand I am not an economist. I am an historian by training.

And when I look at MACRO, what I see is really a specialized kind of historical analysis.

Maybe you're coming at that dicipline from a different POV that gives you better insight than I have.

So if you can show me what you mean, you'll be EDUCATING ME.

That would make me happy, not sad, to learn something new.

I'm here to get it right, not to win a debate, but to better understand my world and how it works.

 

[kwc57]

If a buyer is unqualified the bank simply should not lend to him or her.

Of course the liberals left the bankers little choice. As long as the liberal Fed was printing money, in the worst case home values would go up and a mortgage default would still result in a profit. Any bank that didn't participate would be left far behind the competition. As Chuck Prince of Merryl said, as long as the [/liberal] music is playing you gotta keep dancing.

How do you reconcile this statement with your Libertarian philosophy, Ed? Wouldn't a Libertarian emphasize personal responsibility and accountability for one's actions? How is blaming the Fed for Merrill's (BofA's) bad loans any different than a carpenter blaming the government because he can't find a job?

I'm not sure whether you're motivated by intellectual ideology or whether you just blankly argue for any policy that favors the rich.

Sammy, let me give you the reality of the situation as someone who has worked in banking for the last 30+ years. Banks and bankers ONLY want to loan money to people they are reasonably sure can and will pay them back. It's how they make money and stay in business. Over the years, liberal politicians continually put regulations and fines in place for banks if they didn't make loans to higher risk folks (typically minorities) in an effort to be "fair" and politically correct. You saw what the result was. While some banks out there certainly may have played fast and loose........it all started with the government that you hold in such high regard. That isn't an idelogical view, that is the view from ground zero. You probably shouldn't spout of ideological talking points on subjects you have no real life experience in. It just makes you look stupid.

 

[samjones]

Sammy, let me give you the reality of the situation as someone who has worked in banking for the last 30+ years. Banks and bankers ONLY want to loan money to people they are reasonably sure can and will pay them back. It's how they make money and stay in business. Over the years, liberal politicians continually put regulations and fines in place for banks if they didn't make loans to higher risk folks (typically minorities) in an effort to be "fair" and politically correct. You saw what the result was. While some banks out there certainly may have played fast and loose........it all started with the government that you hold in such high regard. That isn't an idelogical view, that is the view from ground zero. You probably shouldn't spout of ideological talking points on subjects you have no real life experience in. It just makes you look stupid.

Lovely.... yet another "expert" who hasn't taken the time to consider the possibility that the Housing Bubble affected all of us, not just "typically minorities".

Oh yeah, and thanks for making wild assumptions about my political views and how I regard the US Government. It shows the care and consideration that experience bankers put into formulating their opnions. It's what got us into this mess in the first place.

I will help you, since you seem to have missed out on a critical piece of a collateralized loan. Yes, banks should only want to lend money to people who can pay them back.

*AND* they should try to ensure that the collateral for the loan is greater than or equal to the loan itself so they don't get killed if there's a default.

 

[editec]

Everything that the current laisse faire cons want today was in place in the 19th century.

.

OMG!!! Of course that is perfectly stupid and perfectly 100 % liberal. If the cons want 1400 banks issuing 9500 different kinds of currency I'll pay you $10,000. Bet or admit that as a liberal you know less than nothing.

I know less than nothing?

Take a deep breath and review what the current GOP candidates claim that they want, shall we.

What they want now, small government, no taxes, no regultions on corporations on working conditions, no unions etc.

That was what we had in the 19th century.

Certainly we can find things that were different between then and now, but I am addressing (and you are studiously avoiding) the issues that exist NOW.

So seriously, let's try to discuss this as though we were trying to ascertain some truth about the matter at hand instead of trying to win a debate.

You can discuss these issues like an adult, Ed.

And if you want to continue to discuss issue with me, you're going to have to, too.

Thanks in advance, lad.

 

[Uncensored2008]

OMG!!! Of course that is perfectly stupid and perfectly 100 % liberal. If the cons want 1400 banks issuing 9500 different kinds of currency I'll pay you $10,000. Bet or admit that as a liberal you know less than nothing.

The thing our leftist friends don't grasp is that banks already issue their own currency. Each Visa card from an issuing bank is that banks currency. Ditto the checks that people used to write.

 

[kwc57]

Sammy, let me give you the reality of the situation as someone who has worked in banking for the last 30+ years. Banks and bankers ONLY want to loan money to people they are reasonably sure can and will pay them back. It's how they make money and stay in business. Over the years, liberal politicians continually put regulations and fines in place for banks if they didn't make loans to higher risk folks (typically minorities) in an effort to be "fair" and politically correct. You saw what the result was. While some banks out there certainly may have played fast and loose........it all started with the government that you hold in such high regard. That isn't an idelogical view, that is the view from ground zero. You probably shouldn't spout of ideological talking points on subjects you have no real life experience in. It just makes you look stupid.

Lovely.... yet another "expert" who hasn't taken the time to consider the possibility that the Housing Bubble affected all of us, not just "typically minorities".

Oh yeah, and thanks for making wild assumptions about my political views and how I regard the US Government. It shows the care and consideration that experience bankers put into formulating their opnions. It's what got us into this mess in the first place.

I will help you, since you seem to have missed out on a critical piece of a collateralized loan. Yes, banks should only want to lend money to people who can pay them back.

*AND* they should try to ensure that the collateral for the loan is greater than or equal to the loan itself so they don't get killed if there's a default.

You're out of your element here. I'd suggest you move to the General forum and post on things like gardening and what song you're listening to. In the mean time, you can educate yourself. Here, I'll even give you your first reading assignment.

http://research.stlouisfed.org/conferences/gse/White.pdf

You can thank me later.

 

[Uncensored2008]

Big Fritz

Can you give me an example of those DIAMOND HARD metrics in MACRO?

We may be in completely agreement, here, but are talking past one another.

I believe that in microeconomics one can find rules and formulas that TEND TO BE pretty dependable in the short run.

Oh, they're not as dependable as say a law of basic physics, but they're pretty damned dependable within their limited range of study.

Understand I am not an economist. I am an historian by training.

And when I look at MACRO, what I see is really a specialized kind of historical analysis.

Maybe you're coming at that dicipline from a different POV that gives you better insight than I have.

So if you can show me what you mean, you'll be EDUCATING ME.

That would make me happy, not sad, to learn something new.

I'm here to get it right, not to win a debate, but to better understand my world and how it works.

Editec;

In microeconomics you have thinks like NPV, IRR, FV, ad infintium which don't tend to be dependable, they are diamond hard, just as Big Fitz said.

Macroeconomics deals with the sociological elements of the market, it gets more fuzzy as people are unpredictable.