The Curse of Cheap Money
Terrific graphic from Der Spiegel:
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Graphic courtesy of Der Spiegel
Excerpt:
“White recognized the brewing disaster. The analysis department at the BIS has a collection of data from every bank around the globe, considered the most impressive in the world. It enabled the economists working in this nerve center of high finance to look on, practically in real time, as a poisonous concoction began to brew in the international financial system.
White and his team of experts observed the real estate bubble developing in the United States. They criticized the increasingly impenetrable securitization business, vehemently pointed out the perils of risky loans and provided evidence of the lack of credibility of the rating agencies. In their view, the reason for the lack of restraint in the financial markets was that there was simply too much cheap money available on the market. To give all this money somewhere to go, investment bankers invented new financial products that were increasingly sophisticated, imaginative — and hazardous.
As far back as 2003, White implored central bankers to rethink their strategies, noting that instability in the financial markets had triggered inflation, the “villain” in the global economy.
Now White has been proved right — to an almost apocalyptical degree.
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Hat tip Riverdaughter
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Sources:
THE MAN NOBODY WANTED TO HEAR: Global Banking Economist Warned of Coming Crisis
Der Spiegel, 07/08/2009
Beat Balzli and Michaela Schiessl
http://www.spiegel.de/international/business/0,1518,635051,00.html
July 10th, 2009 at 11:36 am
The powers that be (or at least the smartest ones) who were getting rich/richer off of these schemes had to know this would blow up in the end, at which point they could profit off of the blow up, as they are now doing.
The reason we’re not seeing more of an outcry from the masses is that the implications resulting from any critical thought would be/is all too depressing to think about. So the denial will continue until we can no longer deny the real truth anymore – - that the majority of our so-called “financial system” was/is one massive fraudulent scheme to benefit those parasites on Wall Street, while sucking wealth away from, and eventually destroying everyone else.
July 10th, 2009 at 11:48 am
@Manny
“The reason we’re not seeing more of an outcry from the masses is that the implications resulting from any critical thought would be/is all too depressing to think about.”
—
You’re right on there brother…
To play devils advocate here, a lot of “progress” (in terms of technological innovation) was probabaly the indirect result of so much cheap money floating around…
It’s almost like we have two choices…
1. Either go back to SLAVE LABOR for production purposes…
2. Keep engineering these systems of money creation to pay tiers of workers to produce (which ends in the inevitable crash)…
I’m not sure which is worse, or better…
July 10th, 2009 at 11:53 am
I hear you, cvienne. I think the real story behind this is just what an utter failure global “free trade” (if there is even such a thing) has been for the non-elites in the U.S. It’s been great for the elites but not so much for the middle to lower middle classes, namely rank and file workers, who have become slaves to a quasi-feudal system, hence the substition of debt and myriad of fraudulent schemes to replace what was lost in this shift.
July 10th, 2009 at 11:57 am
The masses have no clue what the big picture is. Right now they’re lost in the trees and cannot see the forest (if they ever do). But they will soon be feeling the full effects and that will bring on some serious social unrest.
Maybe over time the truths that come out in the blogosphere will work their way out further and further to the general public and overwhelm the MSM and govt officials misinformation (or propaganda). The sense of betrayal that brings will only heighten that social unrest.
If we can get a charismatic third party type leader to harness that power, maybe there will be change. It’s certainly more likely as time goes on with the medium of the internet as a facilitator. But we need somebody that can’t be dismissed as a nut job (e.g. Ron Paul and Ross Perot).
And if enough people are out of work and in despair, they’ll have nothing to lose and lots of time to vent their frustrations and get their pound of flesh. The question is, can it be contained? We don’t want to burn the place down, just renovate it.
July 10th, 2009 at 12:01 pm
It’s a logical fallacy that an apparent correlation meant causality between the correlating variables.
rc
July 10th, 2009 at 12:06 pm
Like a tree falling in the woods, can there be a financial crisis when nobody sells?
July 10th, 2009 at 12:09 pm
Social unrest, Onlooker? Give me a break. The “masses” will anesthetize themselves with emo or indie, their next tattoo, booze, pot, or FWB sex. America has a long, long way to go before any meaningful change would ever occur. There would have to be some renewed American experience with starvation.
We are a long way from that. I hope.
July 10th, 2009 at 12:11 pm
I’m with Mannwich. A more appropriate meme may be “The Curse of Control Fraud.”
As long as people keep using the “cheap money” meme, which really focuses on borrowers, we’ll never take a hard look a the lenders who created this mess.
July 10th, 2009 at 12:16 pm
Inflation may be a villain for those that LIVE in the global economy, but not for those that CONTROL the global economy.
Remember – that for everyone on wall street – inflation is good. Inflation is like the moving walkway at the airport terminal. If you just stand there – you move right along. If your goal is 8% returns, and inflation is 4% – you only need to work for 4%.
White is clearly from the old guard days when the Fed and central banks worried about the people, and not cronies on wall street.
The new guard employed a simple strategy – fiddle with CPI measures to under report inflation measures, while the inflation is still there making wall street returns look good.
Gordo
July 10th, 2009 at 12:16 pm
“As long as people … we’ll never take a hard look … who created this mess.”
Is it about who caused the mess or is it about what caused the mess? These questions imply different kind of answers and solutions, if there is any.
rc
July 10th, 2009 at 12:21 pm
Onlooker, I like your thinking about a third party, trouble is, ALL politicians seem to lie. It doesn’t seem to matter if they are on the local school board or in the White House. It is my opinion that by accepting the notion that spreading falsehoods is just a normal part of job duties for elected officials we are doomed to be led by unscruplous dirty wh*res. We can have the best system in the world and it makes no difference when the integrity of viable candidates is shady at best.
Oh yes, also very many thanks to everyone who happened to take the time to participate in my U.S. dollar index poll. While not exactly surprising, the results have been posted at http://houseofexile.blogspot.com
July 10th, 2009 at 12:25 pm
@CNBC –”FWB sex”?? What the heck is that? I need to get out more….
July 10th, 2009 at 12:31 pm
In past civilizations & empires you needed BALLS & CHAINS to keep the slaves in order and make them attend to their daily tasks…
In the current version, all you have to do is give them a credit card and go on TV and say things like HOPE & CHANGE…
July 10th, 2009 at 12:32 pm
I think Free Trade in theory, over a long period, would result in the greatest economic good for all. The problem we have now is that we stand to lose the most, as wealth is re-distributed evenly. Will the avg. Chinese continue to work cheaply to make us our iPods, clothing and toys, while we lounge back and get fat?
July 10th, 2009 at 12:36 pm
This chart needs to go back to 1930 or at least 1954, the beginning of the baby boom era. Much of that interest rate increase, at least in “long” rates was due to the BB’ers entering the markets for housing/30yr mortgages. It would be interesting to super-impose population or demographics, somehow, ontoi that chart. Also I would rather see the S&P 500 on there vs. the Dow.
But hey, beggars can’t be choosers.
July 10th, 2009 at 12:36 pm
@Whammer – What age range are you!!!??? LOL
@ shakazulu – you wrote: “The integrity of viable candidates is shady at best”
A political system is only as good as its citizenry, and Americans have only themselves to blame for their problems. I mean, can you believe that my Republican Party still exists in this country?
I am often at odds with Mark E. Hoffer the Libertarian, but the man had it right when he opined that Americans were outsourcing their leadership and responsibility for our nation’s future to Obama. It is true. November 4, 2008 was a big night for a lot of people, but on November 5th, Americans just returned to their old ways.
If the vast majority of Americans truly had the genuine intellectual capacity to think about economics, our nation’s vast and worsening problems, and America’s realistic role in the world’s future, they would be unified, and if they had the will, there would be no more Republican Party and no more CNBC.
July 10th, 2009 at 12:41 pm
Just wait for the expected economic recovery later this year to fail to materialize. Then I believe you’ll start seeing some social unrest. While many people are no doubt glues to their TV’s and computers, many out there are very informed about what’s going on right now. It only takes a small minority to enact significant and real change.
July 10th, 2009 at 12:54 pm
I suggest everyone go out and read John Gray’s “False Dawn” this weekend. A lot of comments you guys make are touched upon in the book.
July 10th, 2009 at 12:58 pm
@Steve Barry:
I doubt that wealth is redistributed evenly. The gap between the rich ones and the poor ones is getting larger, particularly in times of economic crisis. This is the case within many countries as well as between the rich regions and the poor regions in this world. Capitalism tends to increase inequality in the long run, not decrease it. How long can a society be politically and socially stable, or the relations between different regions/countries in the world with these trends? The prospects for a peaceful future of mankind are dire. There will be more wars, more unrest, rise of nationalism and pathological ideologies (like racism or anti-semitism) that blame scapegoats and promise simple solutions. Welcome to dystopia.
rc
July 10th, 2009 at 1:00 pm
@rootless,
You cannot determine the cause of a problem unless you first understand what the problem actually is.
The current “cheap money” meme implies that consumers caused the crisis by overextending themselves. With that assumption as a starting point, fraud on the part of lenders is ruled out as a cause.
One of the best examples of how this meme logically plays out is Barry’s book, which in some ways can be viewed as an apology for Wall Street’s shocking behavior (although he did not intend that), to whit: the absence of regulation coupled with loose monetary policy, the availability of bailouts and the human propensity for greed led to bad decisions by Wall Street. The vast majority of books on the subject reach similar conclusions, with the Federal Reserve and Alan Greenspan always shouldering the majority of the blame.
While the emerging “conventional wisdom,” may be comforting because it fits nicely with strongly held beliefs in this country that “government always bad” and “private enterprise always good,” it is far from being true. Unfortunately, we are likely to be stuck with solutions meant to address perceived “problems” that are really symptoms of a deeper, systemic problem that cannot be discovered because we might not like what we find.
July 10th, 2009 at 1:01 pm
CNBC
Would we not be better off if we had a Republican party that actually stood for what they preached?
Fiscal responsibility, individual responsibility, social morals?
July 10th, 2009 at 1:02 pm
@ Manwich and others
I guess I have slightly more faith in the “masses” than some of the rest of you. Not that I think they’ll be getting angry at the “right” culprits any time soon. I don’t think the “masses” are necessarily ignorant or stupid (they are us, after all). But with the sophistication of PR and marketing, these moneyed entities (IBs, etc) have tremendous power to obfuscate the truth and confuse large groups of people as to what really happened and who’s really at fault. And they are using their clout and spending energy and money to do just that. This use of the money and clout to deflect blame and confuse the issues has become a frustrating part of our American culture.
July 10th, 2009 at 1:05 pm
sb says-
“while we lounge back and get fat?”
dude- we are fat- something like 40% of Americans are fat or obese-
makes me proud
July 10th, 2009 at 1:10 pm
rootless says-
“The prospects for a peaceful future of mankind are dire. There will be more wars, more unrest, rise of nationalism and pathological ideologies”
may as well said that the sun comes up in the east and sets in the west
July 10th, 2009 at 1:12 pm
Moss – A serving of fiscal responsibility, individual responsibility, and social morals would be perfect. However, I am always nervous when I hear “fiscal responsibility”. Fiscal responsibility does not mean a trillion-dollar defense budget. Fiscal responsibility does not mean trillions of dollars in subsidies for nuclear power, or even one penny of subsidy to oil companies that make multi-billion-dollar profits. Fiscal responsibility does not mean trillions of dollars in subsidies to protect Wall Street banks from themselves.
If someone can GUARANTEE me true, across-the-board Libertarianism – with no exemptions for Wall Street, oil, nuclear, and the military-industrial complex, I would be happy with that.
July 10th, 2009 at 1:13 pm
@rootless:
You make a good point…so Free Trade, even if it worked to theory, would be hurting our standard of living now…and in practice, Free Trade’s or capitalism’s imperfections are increasing inequality…a double macro whammy for US consumers.
July 10th, 2009 at 1:39 pm
Free trade and laissez-faire enable the powerful few to fleece the majority. The lobbying and corporate shills in this country have convinced the majority that ideas like these, like “spreading democracy”, are for their own good. See also: Cap and Trade, Global Warming, War on Terror, War on Drugs, War on Poverty, TARP, Iraq War… any government “intervention” is nothing more than a profit opportunity for the well-connected. And more often than not it seems that those well-connected people are the ones creating the conditions or sentiment necessary for an “intervention”. Rinse. Repeat. Until you can’t.
All of it is just artificially pushing the pendulum to one side; the counterswing is looking to be very severe. It’s (almost) baffling how myopic the greed has made those that are in positions of power.
Dogfish’s Recipe for Reform:
(1) City Square
(1) Large Container of Tar
(1) Large Container of Feathers
Add Bankers, Politicians, CEOs, and Lobbyists. Mix to taste. Serves several million.
July 10th, 2009 at 1:41 pm
here’s an i-view w/ Rep. Ron Paul on auditing the FedRes:
http://www.reuters.com/news/video?videoId=107671
run-time: ~5 minutes
~~
to the post,
There were many Individuals, certainly not the Majority, that were very akin to White.
Their Parts were, often, and repeatedly, redacted from the Approved Script. That their POV comes ‘Public’ now, only helps tell a different Story–for different Reasons..
July 10th, 2009 at 1:41 pm
Interesting read, makes me wonder, why write it in 2009? Would have been helpful to inform citizens of the earth before the shit hits the fan.
July 10th, 2009 at 1:48 pm
If they informed us of the problems before the shit hit the fan, then we wouldn’t have the fantastic profit opportunities available (for the well-connected). Or the profit opportunities in the recovery.
I mean, how would Halliburton and all those peeps of made any money if we had known the truth about the Iraq War before we invaded?
Money > Truth
July 10th, 2009 at 1:58 pm
@Dogfish
“Dogfish’s Recipe for Reform:
(1) City Square
(1) Large Container of Tar
(1) Large Container of Feathers
Add Bankers, Politicians, CEOs, and Lobbyists. Mix to taste. Serves several million”
You’ll have to tell that one to The Great CNBC sucks…I think he’s an ORIGINAL RECIPE kinda guy but I bet he’d like that one!
July 10th, 2009 at 1:59 pm
Re free trade/globalization:
The fed engineered inflation of the last decade or so papered over decreases in prices that should have accrued due to the productivity enhancements of the internet and other communications infrastructure, and the increased trade with lower wage countries/economic systems. Their strategy was, and still is, to inflate away the ongoing international wage arbitrage, making it appear the incomes of American workers are not declining, even as they are/were, if only because they have stagnated while everything else has gotten more expensive. Like so much of what the fed does, it was a ruse to juice consumer confidence such that consumers didn’t do what anyone with declining income should, i.e., cut back on spending, because a decline in spending by American consumers would destroy the scheme, which is where we are now.
When one of your biggest trading partners has an average wage rate less than half yours, something has to give. The fed chose to use monetary policy to create an illusion that the US was not becoming less competitive. It worked until the imbalances it created became too great to sustain, coalescing in the rampant fraud of the residential real estate market, ultimately doomed to failure, destroying the illusion.
July 10th, 2009 at 2:01 pm
super_trooper
I don’t know about this guy in particular, but there were people shouting about the crisis in the building phase for many years, trying to sound the alarm. And there were some very credible individuals in that group, not just “nut jobs.”
They were either ignored because they’d just ruin the party everyone was having, or they were shouted down as crazy doom and gloom kooks, easily marginalized by those with an interest in keeping things rolling.
July 10th, 2009 at 2:08 pm
@ Dogfish “I mean, how would Halliburton and all those peeps of made any money if we had known the truth about the Iraq War before we invaded?”
Yes, the proffits were enormous. Somehow I get the feeling that Dick Chaney would have set the table for Halliburton, independent of the wars in Iraq and Afghanistan.
July 10th, 2009 at 2:10 pm
Where is Franklin? I think I’ve overdosed on reality this week.
July 10th, 2009 at 2:15 pm
The most shoking part of that story is how the problems were literally spelled out point by point many times, yet that bunch of arrogant idiots (with Greenspan at the head table) did nothing. Perhaps even more shoking is that the same group of foolish old farts (minus Greenspan) will continue to meet in Basel and take actions or inactions that can destroy the wealth and future of millions of families – because as far as I know not one of them have been fired.
July 10th, 2009 at 2:17 pm
@Onlooker from Troy. I’m stuck here in Sparta. Barely noticed that Helen was gone. I had no idea things were this Fcuked up. I lost interest in economics and finance after realizing how full of BS it was in the early 90s. Only ever read 2 economics/finance books (i) Aufstieg und Fall der großen Mächte (in English The Rise and Fall of the Great Powers: Economic Change and Military Conflict From 1500 to 2000) by Paul Kennedy and (ii) Robert Schiller’s “Irrational Exuberance”.
July 10th, 2009 at 2:34 pm
DeDude…
I don’t know if I can agree with these people being fools… arrogant, yes… but I think it’s just they have different objectives than the stated ones, or the ones the majority of the people perceive them as having.
I mean… why would any of them be fired? They made (and are making) their friends a lot of money. It just that it’s our money their giving away, but then we’re too distracted, disinterested, or misdirected to hold them accountable. Our/we in the society/electorate sense.
If a friend or family member of yours robbed banks and gave you 10%, would you turn them in?
July 10th, 2009 at 2:45 pm
cvienne wrote: “You’ll have to tell that one to The Great CNBC sucks…I think he’s an ORIGINAL RECIPE kinda guy but I bet he’d like that one!”
We sure destroyed last night’s thread, didn’t we? Let that be a warning to Lameholtz that if he pulls a bait-and-switch again (headline: “Media Appearance: Glen Beck”, actual host: Eric Bolling), I am just going to talk about fast food or really weird stuff like transhumanist bean-shaped spaceships.
Back to the topic: To me, an interest rate is an accountability. If you look at the chart, the Dow grew the most during a period (1994 – 2001) when the Fed rate held steady at around 4 – 6%. That shows you don’t need superlow interest rates to have economic growth, and 4 – 6% is a reasonable amount of accountability. In fact, most business school texts if I recall have the “risk-free rate” for NPV calculations somewhere north of that, so even 4 – 6% is relatively low by historical standards. Now, we have negative real interest rates which means essentially zero accountability. So what kind of hair-brained bubble are we going to have with such recklessly low interest rates? My own guess is nothing because I believe this cycle will once and for all illustrate the limits – positive or negative – that monetary policy will have on economic growth. Also, I don’t think we will have inflation in the short term because every other central banker is more or less dancing to the same tune.
July 10th, 2009 at 2:47 pm
@Dogfish, are you suggesting a revolution and finally getting rid of democracy, the least worse of all systems? I’ll support you from behind my computer.
July 10th, 2009 at 2:49 pm
But (cheap money) is different this time…
@Troy (11:57) “If we can get a charismatic third party type leader to harness that power, maybe there will be change. It’s certainly more likely as time goes on with the medium of the internet as a facilitator. But we need somebody that can’t be dismissed as a nut job (e.g. Ron Paul and Ross Perot).”
To be charismatic means having the capacity to charm or influence. Name someone not in the news every other day who doesn’t posess those abilities. No, I would rather a leader have the capacity to make the hard choices by doing what is best for the common good. Paul and Perot nut jobs? Possibly. But Perot had his own money. And Paul has higher standards than most of his colleagues.
@CNBC 12:09 “We are a long way from that. I hope.”
I think its closer than you might think. Afterall, absolute change will not occur without social unrest. I’m not abdicating bloodshed.
July 10th, 2009 at 2:51 pm
Krice2001 wrote:
But with the sophistication of PR and marketing, these moneyed entities (IBs, etc) have tremendous power to obfuscate the truth and confuse large groups of people as to what really happened and who’s really at fault.
—-
Good catch, and you can see that with all the happy talk coming out of the MSM. They are not in the business of giving people a honest and clear economic picture whatsoever. Hell they act like the worst is over and good times are just around the corner. For intents and purposes the MSM is acting like a tool of Wall Street(much like the Obama administration) than anything else. Pravada with a capitalist twist anyone?
So is it any surprise most people aren’t getting any useful facts about the economy or enraged about the bankrupting of our nation by a bunch of Ivy League criminals pretending to be investment bankers and the like?
July 10th, 2009 at 2:51 pm
@bmcnamara82
“Where is Franklin? I think I’ve overdosed on reality this week.”
Franklin’s over in the corner holding the graph of the University of Michigan Consumer sentiment number and figuring which quadrant to turn the paper so that the lines point upwards…
I’ll help you out Franklin…there are 4 sides to two dimensional sheet of paper (but only one side to a one dimensional argument)…
That ought to kick start you on your geometry…
July 10th, 2009 at 3:00 pm
Would anyone here vote for ron paul if he ran again?
July 10th, 2009 at 3:05 pm
Dogfish;
I know; maybe I am just expecting a better world than we the people deserve – as long as the majority of us would rather watch American idol than read blog like this (or similar facts based information and analysis). In a world where the government serve the greater good, and institutions are held to account for fulfilling their stated purpose – they would all have been stringed up.
July 10th, 2009 at 3:07 pm
@Pat G, Ron Paul?? I would never vote for a MD who wants to get rid of UNICEF.
July 10th, 2009 at 3:10 pm
@B in T:
I would. Dude radiates intelligence about the hard choices we have to make.
July 10th, 2009 at 3:11 pm
@DeDude , sounds like you’re describing an ideal version of China. Cultural revolution sucked, but Xiaoping put them on a greater path. Why not run for office yourself. Promote you’re ideal here and maybe you’ll get a few generous donations.
July 10th, 2009 at 3:14 pm
@super_trooper
I can’t advocate getting rid of democracy (quite the opposite)… but we don’t have a democracy so I don’t have to worry about that. Traditionally we’ve been a republic, but currently I think our country is more of a corporate oligarchy masking itself as a crony-laden republic. I will advocate changing that, and if it requires another revolution, then so be it, because the alternatives are worse and not what this country is about.
I don’t think it will get to that point… but at the same time I think it’s near inevitable if we continue down the path we are going, because conditions could get bad enough for that level of social unrest to catalyze.
July 10th, 2009 at 3:15 pm
I would vote for Ron Paul if he were up for King or Lord Protector of the United States. Even if he won the Presidency – which is like 1% chance – the Congress on both sides of the aisle would destroy any reform that Ron Paul would want to pursue, so what’s the point? It’s tough enough for a major party in power to pursue its agenda when it is opposed by another major party; imagine what it would be like for Ron Paul.
July 10th, 2009 at 3:16 pm
@emmanuel117, Ron paul rarely talks about how he wants to go from A to X. I’ld like to shag Halle Berry, but I’m stuck with a minger. Is there a realistic path for me to enter HB? No, but there’s make up and wig for my minger. And pron, gives me an opportunity to imagine what it would be like.
July 10th, 2009 at 3:17 pm
@Bruce (3:00)
I can see Paul as a good VP.
@super (3:07)
Name someone that is perfect? Most often, we’re left with a choice of who we perceive to be the lesser of two evils.
Real change is not going to start from the Electoral College…
July 10th, 2009 at 3:18 pm
no.
July 10th, 2009 at 3:19 pm
@ BnT
I would vote for Ron Paul again.
I don’t agree with him on everything, and I think on some things he is a bit too much of a Libertarian for me, but overall I would support, and vote for, any non-insider reasonably close to me on the issues who would shake the system up. Because it needs a-shakin. Like a “Vote 3rd party, re-elect nobody” kind of shakin.
July 10th, 2009 at 3:21 pm
@B in T 3:00 pm
— not after he got a huge response and tons of puiblic contributions in the primary, and then didn’t know what to do with it, or how to proceed from there. That demonstrated to me that he was simply a noisemaker, unwilling or unable to lead. I’ve had my fill of inept leaders at this point — regardless of how much I might agree with the man’s (or woman’s) public posturing, they MUST be able to lead. And from everything I have seen, Ron Paul prefers being a minority squeaky wheel to getting out in front and leading.
July 10th, 2009 at 3:22 pm
@ Pat G
Exactly… the Electoral College is a part of the problem…
July 10th, 2009 at 3:23 pm
BTW Bruce, didja get the url I left for you back toward the end of yesterday evening’s distasteful thread? (OT)
July 10th, 2009 at 3:24 pm
@ Pat G. Nelson Mandela
July 10th, 2009 at 3:25 pm
@ Bruce: I do appreciate the irony in how a man who preaches the Constitution so much simply can’t get elected under the present Constitution.
July 10th, 2009 at 3:29 pm
@super_trooper
you CAN’T be serious…
July 10th, 2009 at 3:30 pm
with a constitutional ammendment- Arnold could easily be the next POTUS- after watching this Michael Jackson charade I have concluded that FAME trumps everything- regardless that-
you were a known pedophile who liked sleepovers with young boys- doesn’t matter-
that’s why OJ could still get girls even it was apparent he killed his own wife
July 10th, 2009 at 3:40 pm
Hope this isn’t too far off topic, but I wanted to throw it out there. This was the first “crash” of the globalized economy, and I have yet to hear any commentary on this topic but I think it’d be interesting to look more into it.
In a virtualized economy, where many interactions and exchanges are done online and at far off physical distances, how this impacts the “fairness” of how we do business.
There has been extensive studies done on the “ultimatum / dictator game” (google it). Behaviors tend to change in these games depending on the context. The most telling example is if a player believes their identity will be masked they are less generous and fairness is not an issue to the masked identity player. They aren’t worried about their reputation.
I think we could see an extrapolation out into the virtualized world. If we are selling products in a global manner, with no particular individual face attached to products, does that mean that we are less fair and generous in our dealings? For example, will we sell financial products that are rated higher then we believe they should be, even if we know that they are made up of faulty equations because I don’t interact with the buyers face to face? Think of the various ways this could trickle into other areas of business and how society makes decisions.
Adam Smith’s observations worked well during a period where reputations mattered and we had to deal face to face in our business transactions. The butcher faced the local patrons each and every day. When we don’t have face to face interactions we tend to deviate from the social norms which work well in face to face interactions.
July 10th, 2009 at 3:42 pm
@cvienne (3:29)
Great response. Thanks!
July 10th, 2009 at 3:42 pm
“the Electoral College is a part of the problem”
I have to disagree- when a President is elected- each State has an election to see which candidate prevails in that State- without that- you would have the most populous regions of the country deciding the election at all times-
every State deserves a voice in the election- it is the States after all that make up the United States-
States that are not being heard may very well decide that it is not in their interests to be part of the United States
July 10th, 2009 at 3:47 pm
The PPT is working hard today. They will not let the Dow close below 8100 (they hope).
July 10th, 2009 at 3:47 pm
ahab, you do realize that the smaller states have a disproportionate amount of power – relative to their populations – in deciding who becomes President, yes?
And I thought we had already settled in the 1860s that becoming a State is like a roach motel – you can go in, but you can’t go out?
July 10th, 2009 at 3:50 pm
In office? Alan Grayson(D-FL), may have some potential. At least he’s asking the right Q
July 10th, 2009 at 3:55 pm
@Pat G, Aung San Suu Kyi
July 10th, 2009 at 3:55 pm
Bruce in Tn @ 3:00
Yes.
July 10th, 2009 at 3:57 pm
@ahab (3:42) “when a President is elected- each State has an election to see which candidate prevails in that State-”
And who or how do they select “which candidates” are placed on the ballot for each state to vote for to begin with? These candidates are already part of the system and consequently, the problem. A change that would matter has to start from a concentrated grassroots effort. When Americans have had enough it will begin.
July 10th, 2009 at 4:01 pm
cnbc-
that was then- I have no doubt in my mind that states such as Texas could secede- with a referendum of its people agreeing to it- I do not see how it could be blocked- the State is the overriding entity that has banded with other states to make the United States is the way I see it-
just as Lee considered himself a Virginian first- I would imagine that many Texans consider themselves a Texan first-
when skiing in Vermont I see stickers everywhere saying “Vermont out of the USA”- a state such as Vermont could easily align itself with Canada with whom it may more easily identify- Vermont was also it’s own republic for a short time and has a separatist streak and a very independent populace that is often at odds with the direction of the United States
July 10th, 2009 at 4:02 pm
@ ahab
I think I know what you’re getting at, but, unlike electronic voting machines or electoral fraud, no amount of population density will give people more than one vote per capita.
Smaller states get their due representation in the form having 2 senators. The POTUS, by definition, is the President of everybody… If State X has 500 people, State Y has 1000 people, and State Z has 10 people… it shouldn’t matter, because they’re voting for the President of their country, and therefore all that should matter is that there are 1510 people.
The Electoral College seems to be another way of going around the wishes of the majority. Indeed, it was done away with until the voters nominated someone whom the party bosses didn’t approve of…
July 10th, 2009 at 4:03 pm
@ Ra:
I was kinda thinking that someone is gonna be in the doghouse on Monday…
I can hear it now:
Goddamnit rookie, your one objective for Friday was to keep the SPX above 880! You cant do that one simple task??? I could do that shit from my LI beach house you schmuck… you’re fired.
July 10th, 2009 at 4:07 pm
I would also like to point out that the Electoral College is what brings about “swing states”… Well, it coupled with a couple of centuries worth of gerrymandering.
July 10th, 2009 at 4:08 pm
@ Pat G. “When Americans have had enough it will begin.” Doubt it, there’s too much entertainment out there and no one is starvig. When did the Roman’s get enough?
July 10th, 2009 at 4:09 pm
@I-Man
LMAO
July 10th, 2009 at 4:10 pm
I am not going to debate whether a State could / should secede or not secede. The Soviet Union broke apart and they didn’t fight a long protracted civil war to keep it together, so why should we do so again? I wouldn’t take it personally if we became a confederation of states like Europe – except without the good food, thin women, and socialized safety nets.
But ahab, you do realize that the smaller states have a disproportionate amount of power – relative to their populations – in deciding who becomes President, yes? This was Jefferson and Madison’s bargaining chip for the South which has plagued the Republic to this very day.
July 10th, 2009 at 4:12 pm
Dogfish, thank you, but smaller states get MORE THAN their due representation in the form having 2 senators.
July 10th, 2009 at 4:13 pm
@super_trooper
“Doubt it, there’s too much entertainment out there and no one is starvig. When did the Roman’s get enough?”
That’s the whole thing…It’ll come when nobody expects it…LIKE NEXT WEEK, FOR EXAMPLE…
There’s a difference between “waking the people the fuck up” and ultimate “abandonment of an empire”…
The latter may take centuries…the former could happen at any time…
July 10th, 2009 at 4:15 pm
@super (4:08)
The Roman’s didn’t. The collapse of their empire was the result. Perhaps we’ll suffer the same fate. Only time will tell. But not everyone has a 52″ flat screen TV or the availability of food stamps.
July 10th, 2009 at 4:16 pm
That USO chart is one brutal piece of dogmeat the last 7 days…
July 10th, 2009 at 4:18 pm
OK, that’s it. I have had it up to here! Enough of low interest rates, the Fed, Ron Paul, small states vs. large states, the Electoral College, and the Roman Empire!!! Enough, enough, ENOUGH.
What I really want to know is: Are you emo or indie?
July 10th, 2009 at 4:18 pm
@Pat G
“But not everyone has a 52″ flat screen TV or the availability of food stamps”
But wait…
That’s the HOPE & PROMISE of Obama…That EVERY CITIZEN in the USA will have a 52 incher and food stamps…
So let it be written…So let it be done!
July 10th, 2009 at 4:19 pm
@The Great CNBC Sucks
I’m a “variation” of Libertarian Transhumanist…I thought we’d established that…
July 10th, 2009 at 4:20 pm
The problem with Ron Paul is that he’s a party of one. I think a new party needs to arise organically and would have to be a presence in congress before a president who’s not really aligned with DEM or GOP could have any success getting an agenda through.
It’s still all about school boards, city councils, ward politics. Like Tip used to say: all politics is local.
July 10th, 2009 at 4:24 pm
@CNBC — I finally figured out the FWB thing….. And you were right, age was an issue in me not getting it. I’m 51, so FWB was not a concept for us grinders……..
July 10th, 2009 at 4:26 pm
@CNBC (4:18) “What I really want to know is: Are you emo or indie?”
What is emo? I assume indie to mean independant.
July 10th, 2009 at 4:28 pm
Any takes on the action this week? 3 spinning top candlesticks and still holding around 880. Hmmmmm….I think Tuesday is D-Day with GS/JNJ/INTC reporting
July 10th, 2009 at 4:31 pm
cnbc/dogfish-
you have each state voting for POTUS- not the population of the United States as a whole voting for POTUS- that is not the way it is set up
yes- it does give greater power to a smaller state- I do not have a problem with that- because I want the states to be that- states- individual states that can choose or not choose to follow the path of the United States- and have the state decide who it will elect as POTUS-
cnbc- the breakup of the Soviet Union is a good example- the Soviets probably thought their borders were set- but the people that lived within them had their own ideas and and still retained their own identities- and those identities weren’t as Soviets-
could easily happen in China as well
July 10th, 2009 at 4:31 pm
@super-trooper
My ideas are way to different and fact based to get accepted by a majority. However, I do believe that as much as Obama is stuck with the power structures in this country and cannot make the radical changes that most of us are calling for – he does have his heart mostly with the people, and will pull us in the right direction, ever so slowly. At least for now our corporate masters will allow him to do so because they are aware of the risk that the people may revolt if they don’t get to see a little blood (and so a small fish like Madoff can get fried, to save the big Tuna from getting smoked).
July 10th, 2009 at 4:40 pm
@ahab
“the breakup of the Soviet Union is a good example- the Soviets probably thought their borders were set- but the people that lived within them had their own ideas and and still retained their own identities- and those identities weren’t as Soviets-
could easily happen in China as well”
—
Hell AHAB, for that matter, there’s a 50-50 chance that any nuclear family is going to break up due to divorce…
Understand PEOPLE & one can understand their propensities to do this or that…
July 10th, 2009 at 4:46 pm
@CapitalistCanuck
Indecision days. Still waiting on confirmation. A solid close lower (even better if close is below the low of the spinning top) is what’s needed. The market fought off closing below 8100 on the Dow and the weekly close of 877.52 on the S&P from 5/1/09. Next week is opex. Not sure if the market has enough momentum to push higher.
July 10th, 2009 at 4:47 pm
@DeDude
Get off the effing white horse…
CHANGE was a slogan to get elected…(clever as it may have been)…
1. So Obama is either royally STUPID & ARROGANT (thinking he actually could change things)
2. or, he doesn’t CARE (which is my opinion)…and just was a glory seeker who wanted to make history…
Great…HISTORY YOU WILL MAKE PAL, if that’s what you desire…
Three men – a Canadian farmer, Osama bin Laden and a Harley Biker are all walking together one day.
They come across a lantern and a Genie pops out of it.
‘I will give each of you one wish, which is three wishes in total’, says the Genie.
The Canadian says, ‘I am a farmer and my son will also farm. I want the land to be forever fertile in Canada ‘
POOF! With the blink of the Genie’s eye, the land in Canada was forever fertile for farming..
Osama was amazed, so he said, ‘I want a wall around Afghanistan , Palestine , Iraq and Iran so that no infidels, Americans or Canadians can come into our precious land.’
POOF! Again, with the blink of the Genie’s eye, there was a huge wall around those countries.
The Biker says, ‘I am very curious.
Please tell me more about this wall..’
The Genie explains, ‘Well, it’s about 5,000 feet high, 500 feet thick and completely surrounds the country. Nothing can get in or out;
it’s virtually impenetrable.’
The Biker sits down on his Harley, cracks a beer, lites a cigar, smiles and says,
‘Fill it with water.’
July 10th, 2009 at 4:52 pm
Indeed, how do we take our country back from the two parties? They have entirely locked up the political process and locked out anybody from having a decent chance, other than a few outliers. But they are us, I guess. So what do we do?
It seems that we would need a particularly charismatic person of very high means with real integrity to overcome the two party system. Ross Perot had a couple of those characteristics, but he was too much of an odd ball in most people’s eyes to succeed.
Bloomberg is an interesting prospect for this role. There’s a lot I don’t know about him though, I admit. And I’ve never done the due diligence on him. But he seems to maybe fit the bill. I know it’s been bandied about before in the press.
July 10th, 2009 at 4:57 pm
I and I will surely get flamed for this:
INDY… ALL THE WAY
Have a good weekend all!
Peace,
-I-Man
July 10th, 2009 at 4:58 pm
@OT
Hell OT,
If everyone would wake up out of the stupefied trance they’ve been in for the past 2-3 years, they’d realize that we are ALREADY ON THE PATH to electing oddballs…
If you don’t understand me, ask yourself how the mass public of the United States got conned into voting for someone who had no greater experience than a community organizer?
It STILL may take them 2-3 years to figure that one out…
July 10th, 2009 at 4:59 pm
onlooker-
why? just because he said the republicans were going to sabotage his daughter’s wedding- and dropped out of the race- before dropping back in-
that’s not weird is it?
July 10th, 2009 at 5:10 pm
@cvienne
“If you don’t understand me, ask yourself how the mass public of the United States got conned into voting for someone who had no greater experience than a community organizer?”
Puuuhhhllleeeeeeaaaze! Such a shame…. You seemed to be an intelligent person….
July 10th, 2009 at 5:16 pm
emo = http://www.youtube.com/watch?v=w1QqQ5KaNBU
indie = http://www.youtube.com/watch?v=hCSPf5Viwd0
I wish we had a Perot still around….closest might be Pence….but he doesn’t have that “crazy” thing going for him.
Show me ONE VOICE on network/cable media who is not yammering sycophant to the Establishment.
This nation needs a financial Hunter S Thompson….a person brave enough (crazy helps) to peel away the layers of fraud and break it down into common language. Barry does a good job….others too….but we need someone on VH1/MTV…..
Just some randoms thoughts from a three martini Friday afternoon.
PS…The SRS train looks to be leaving the station…dare I say, “All Aboard!”
July 10th, 2009 at 5:18 pm
Understand PEOPLE & one can understand their propensities to do this or that…
I’m okay with understanding about 49% of PEOPLE. The other 51%, the female ones, not so much.
July 10th, 2009 at 5:20 pm
dogfish-
to be truthful- Obama did not have much experience- however that was a blessing- if people are looking for new blood or a new way of thinking- hard to say you are that- if you have been in the Senate for 20 years-
having said that- Obama is disappointing to date- he could have taken some bold stands- but didn’t – and worse- surrounded himself with the same old schmucks-
not a great start
July 10th, 2009 at 5:22 pm
@Christopher
“This nation needs a financial Hunter S Thompson”
Matt Taibbi is pretty damn close.
“Organized greed always beats disorganized democracy” – Matt Taibbi.. and I can’t think of a better way to describe the crisis our country is facing than that.
July 10th, 2009 at 5:23 pm
@Dogfish
I’d be saying the same about a candidate of EITHER party (who made a promise)…I’m speaking more about the intelligence of Americans…
Do u wanna know why I’m angry?
I’ll tell you…
I had the misfortune of WAKING UP this morning…The first thing I do is flip on the TV and I have to listen to this arrogant clown (in his arrogant tone), talking about how “problems will persist”…YADA YADA at the G-8 summitt…
OK fine…maybe he’s being honest…but I & JUST ABOUT EVERY EFFING PERSON I READ ON THIS BLOG a year ago, and before, were saying that things were going to be bad for a LONG TIME…
So what was he doing on the campaign trail last year?
Talking about CHANGE…Talking about HOPE…
Why wasn’t he being honest then? Why wasn’t he saying…”Americans, if you elect ME President, I can’t guarantee you things will be beter for many years, but I’ll do my best”…Of course we all know, THAT’s LUDICROUS…You can’t get elected that way…So he has to blow sunshine…
Fine…
But up until this point…what is there that is to lead me to believe that he’s not just the next in line of another generation of SUNSHINE BLOWERS…
So Great…He got elected…Our National conscience is absolved for voting for a black man…Whoopee…
The BURDEN OF PROOF is now on you people who were actually snowed into thinking he would change anything…Show me some results! and stop kicking the deadline forward and spending MY MONEY in the process…
He has everything on his side…
He has a majority CONGRESS
He has a majority SENATE
He’s has TRILLIONS allocated to the purpose…
SHOW ME YOU’RE RIGHT…I’m drumming my fingers as I wait…
July 10th, 2009 at 5:24 pm
ahab
LOL! Hey, I won’t argue that Perot wasn’t a bit of a kook. I’d forgotten about that whole thing.
But he sure added value to that presidential race, and he’s definitely a smart guy who can get things done. If you had someone with his attributes packaged in a more mainstream way, we’d have a chance at getting the pres we need and want.
The fact is we need someone who won’t just be a patsy for the moneyed interests like banking and who has the integrity to tell us like it is, with the charisma to be able to do it and still be elected. We’ll never get the perfect candidate, God knows. Most don’t want to run the gauntlet. It’s brutal, as we all know.
July 10th, 2009 at 5:33 pm
What job could possibly provide relevant “experience” for POTUS??
Obama was/is the best politician eligible…if Bill Clinton were still eligible O would still be in the Senate.
Really….what job? Governor? C’mon….what state has nukes? What state has a military? What state is the 1000lb gorilla of Earth? Leader of the “Free World” and all that horseshit….
O won because McCain sucked…and still sucks.
The man voted AGAINST every single Veteran’s assistance legislation going back at least 5 years…..yet stopped his campaign to run back to DC to round up votes for the first bailout. The GOP ran a loser….and he lost.
Now everyone is shocked because its becoming readily apparent, even to the most infatuated, that O IS JUST ANOTHER BULLSHIT POLITICIAN.
Cheap money is the CRACK we live on….and now O is the CHIEF CRACK DEALER.
Do you really think he has the GUTS to stop it?? Let’s look at the folks he’s put in charge of distributing the Crack….see any changes??
I think the USA defaults within 1o years…..quite possible half that time….
It doesn’t matter to the Money Men….they got theirs…and if the rules aren’t changed…they will keep getting theirs.
Happy Friday.
July 10th, 2009 at 5:35 pm
onlooker-
Clinton liked Perot that’s for sure- without him he wouldn’t have been elected- and Perot would have had a decent chance too if he hadn’t dropped out of the race for “bizarro” reasons-
but who knows- maybe that’s a good thing- although I did vote for him- for what it’s worth- I am desperate for anyone other than a rep or dem- I liked Nader too- I even liked Kucinich- and not only because of his admission to seeing a UFO at home of Shirley MacLaine- at this point-
I will literally vote for anyone- no matter how weird- if they do not seem to be a party “player”
July 10th, 2009 at 5:36 pm
@Christopher
“O won because McCain sucked…
Now everyone is shocked because its becoming readily apparent, even to the most infatuated, that O IS JUST ANOTHER BULLSHIT POLITICIAN…”
—
That about sums up my point…
July 10th, 2009 at 5:37 pm
@ cvienne, ahab
I agree Obama is inexperienced (both a good and bad thing), and I too have been disappointed with him.
But the “community organizer” talking point will always elicit groans from me. Not only is it overly dismissive of people attempting to enact change at the local level, it does so by intentionally overlooking the fact that Obama was a Senator, and is usually made by people who cheered along McCain/Palin. I would blindly vote for any two random community organizers over almost any ticket that has Palin on it. I think McCain has good intentions (like Obama), but listens to, and is beholden to, the wrong people (also like Obama).
I really wish Chuck Hagel would’ve run.
July 10th, 2009 at 5:38 pm
but it was pretty clear to me back last year as well…
I suppose I wake up a little earlier than some…
July 10th, 2009 at 5:41 pm
@Dogfish
“the “community organizer” talking point will always elicit groans from me”
I’ll concede you that point…I only troll it out when I get truly EXASPERATED…
Truth is…NOBODY is ever really qualified for the job…But once IN the job you have to have COURAGE…
I’m not seeing any signs of that yet…There’s still time…and BELIEVE ME, if I see it, I will publicly acknowledge it…THAT is a promise…
July 10th, 2009 at 5:46 pm
@ cvienne, christopher
“O won because McCain sucked…
Now everyone is shocked because its becoming readily apparent, even to the most infatuated, that O IS JUST ANOTHER BULLSHIT POLITICIAN…”
Perfectly said, both sentences.
Obama was the lesser of two evils. No conning involved.
Imagine if McCain had won… would you rather have Phil Gramm than Geithner?
July 10th, 2009 at 5:49 pm
I wonder if Obama get’s relegated to the couch when he gets home for staring at this chick’s ass at the G8-
http://news.yahoo.com/nphotos/slideshow/photo//090709/ids_photos_wl/r3356552547.jpg/
hat tip I-Man
July 10th, 2009 at 5:53 pm
Eh… if you watch the video that one frame definitely does Obama a disservice. Sarkozy, on the other hand…
That said, she did have a nice onion. I’d hit it.
July 10th, 2009 at 5:57 pm
Courage is a good word. I suspect we’ll be disappointed….but I hope I’m wrong. I think we are to the point that even the best scenario is dark. It’s already getting pretty damn gray.
http://despair.com/despair.html
Man I wish I had thought of this….
July 10th, 2009 at 5:58 pm
@ahab and dogfish –
that’s what i call bubblicious
July 10th, 2009 at 5:59 pm
@Dogfish
“would you rather have Phil Gramm than Geithner?”
ummm…let me think………….NO! lol
@ahab
yeah, but MSNBC was already spinning it as some kind of sinister plot…Apparently they had their forensic analysts go over the tape FRAME BY FRAME and Obama is resolved…
I mean, DON’T YOU SEE PEOPLE, this is what I mean…What kind of society do we live in where we have 1,000’s of paid workers in a press corps analyzing video tape of the President to determine whether or not he was looking at a chick’s ass?
Let me simply this for you…
He was LOOKING AT HER ASS! SO WHAT? I PROBABLY WOULD HAVE BEEN DOING THE SAME FOR GOD’s SAKE!
Now, can we WORRY instead about the trillions?
July 10th, 2009 at 6:01 pm
clinton probably would have had his hand ON her ass- at the bare minimum- pun intended:-)
July 10th, 2009 at 6:03 pm
I’d have been gettin her phone number…
July 10th, 2009 at 6:04 pm
I guarantee you Sarkozy ALREADY has her phone number (and 3 of her best friends to go with it)…
July 10th, 2009 at 6:05 pm
cvienne-
did not know that this was the equivalent of a Zapruder film- silly really- why all the intrigue?
July 10th, 2009 at 6:05 pm
Probably Hilary would have been looking at her ass too…
July 10th, 2009 at 6:06 pm
oui mssr cv, an old pro like nick, you bet he does
July 10th, 2009 at 6:08 pm
No wait…I take it all back…
I would have been puttin’ the moves on Sarkozy’s wife while he was looking at the chicks ass…
NOW WE HAVE OUR STORY STRAIGHT…
July 10th, 2009 at 6:08 pm
cvienne- your crack on Hillary WAS uncalled for- but funny as hell-
LMAO
July 10th, 2009 at 6:09 pm
ahab – the crack is between the cheeks
July 10th, 2009 at 6:10 pm
@ahab
Just trying to keep my reputation in proper WARP mode…
July 10th, 2009 at 6:11 pm
@cv – i would have thought carli would have been part of the threesome, no?
July 10th, 2009 at 6:11 pm
gotta go-
hook up with you folks later
July 10th, 2009 at 6:24 pm
Apparently the girl is exactly that….16 years old.
So perhaps the gratuitous vegetable references should be avoided yes??
July 10th, 2009 at 6:25 pm
@cvienne
I know exactly what you mean… about our society/media, and getting her phone number.
Ever read “Manufacturing Consent”? All those paid workers are there exactly to serve up distractions like this, to keep people away from thinking about stuff that actually matters.
“I lived with the system and took no offense, until Chomsky lent me the necessary sense”
It’s why bullshit like with Obama and the Onion, celebrity worship, and professional sports are as endorsed as they are. GE would much rather NBC be blasting Michael Jackson crap all week than report any actual news that might hurt the profits of General Dynamics or one of it’s other subsidiaries.
It’s why some big journalists (like David Gregory) have stated that their job is not to report the truth, it’s to report both sides of the story.
It’s why I have a theory that we aren’t out of Iraq and Afghanistan yet because most of our government representatives have defense industry related investments. Same with prison infrastructure and the “War on Drugs” (we’ll end the War on Drugs when they can make more money taxing it than they can pretending to stop it).
It’s all about the benjamins.
July 10th, 2009 at 6:30 pm
“Apparently the girl is exactly that….16 years old.
So perhaps the gratuitous vegetable references should be avoided yes??”
If she’s old enough to drive, she’s old enough (and I’m young enough) for me to compliment her on her onion.
July 10th, 2009 at 6:32 pm
Christopher@6:24-
just watched the video
when she turns toward the camera
the girl really does look young
July 10th, 2009 at 7:39 pm
@cvienne;
I have actually seen pleanty of change, although I will admit I wish I had seen a lot more. However, politics in a democracy is not a game where drastic and revolutionary shifts are allowed; way to many balancing and counterbalancing powers that infuence things. That is why neither you nor I would last more than a few weeks in that game – you might be able to push one or two things through, but then you would have locked yourself away in a “box” for good.
July 10th, 2009 at 8:02 pm
call me ahab @ July 10th, 2009 at 5:20 pm
like the 1st paragraph .. you know the wheels of democracy turn ever so slowly so we all can get outta the way or steer .. and for you choirboys “make your trades”
I’ve forgotten what this thread is all about … but I wanna say this to this monopoly board of players .. someone turned on a 2000000000000 cfm whole house fan .. can we start a do over cause the pieces are all messed up …. nevermind I know .. we cant
and getting to the bottom of the existing thread … the ‘08 race and the final candidates .. reading your thoughts .. one wonders if the GOFP figured at this time and place in history things would work out best if a turncoat took the reins if possible … don’t be fooled that idiots are running the world .. that would be foolish (imo)
ps – the 5 sec video clip reveals a glance at steps to assist another woman down … but that is the brain deadness of MSM and …… America is lost and toast
July 10th, 2009 at 8:37 pm
@DeDude
I wouldn’t last a day that’s for sure…(being a politician)
@Greg0658
What was this thread all about?
You’re right…I got in late and just started going with the latest flow…
The thread is about THE CURSE OF CHEAP MONEY…
It simply occurs to the that we have the following choices:
1. One party seems to be willing to send us off to fight wars so as to secure a steady supply of CHEAP MONEY (oil).
2. The other wants to CHEAPEN OUR MONEY, which ends up in us going off to have to fight a war.
Frankly, neither way is very appealing to me. I’d rather have LESS THINGS, than MORE NOTHING
July 10th, 2009 at 8:43 pm
…and whoever it was who said I was partisan (in the other thread), sure hasn’t read the breadth of my posts…
I’d suggest you look closer (or maybe you’re busy dissecting the frames of the G8 video – which I haven’t even seen BTW – nor even plan to watch)…
I’m an equal opportunity assassin
…But I actually don’t mind the criticism…If I recall, you were CORRECT to point out that I go over the top sometimes…and I’m aware that sometimes it’s funny, and sometimes it’s NOT…
July 10th, 2009 at 9:01 pm
@ Greg
Excellent point….I definitely think there were some deals cut for folks to step aside and let Johnny Boy jump in front of the O train.
@ cvienne
Nice summary. I don’t know how it’s going to end….but it’s not going to end well.
My faith in any sort of solution from DC is pretty much gone. At least I know I’m not alone.
Cheers
July 10th, 2009 at 9:09 pm
@cv-
more nothing
that can go to infinity, you know
can’t have too much of nuttin’ honey
July 10th, 2009 at 9:15 pm
http://www.youtube.com/watch?v=m24JXMj7kMk
July 10th, 2009 at 9:19 pm
@Transor Z
Thank Goodness…
I was so fearful when I was clicking on that link that it was going to be the G8gate (which I have promised myself I’m not going to watch)…
I thought you were trying to slip a mickey in my drink there…
July 10th, 2009 at 9:21 pm
One of these days we should wait until Barry has a really heady intellectual discussion going so we know all kinds of academics and economists are reading and then we’ll slip in the old Two Girls, One Cup and add a touch of class to the joint.
July 10th, 2009 at 9:25 pm
I don’t agree with much of what this article says.
First of all, it doesn’t mention oil prices at all. The average annual price of crude oil increased from along term average of generally less than $20 a barrel from the mid- 1980’s to 1999 …. to over $55 in 2005:
http://tonto.eia.doe.gov/dnav/pet/hist/rwtca.htm
This increase was noted at every FOMC meeting from 2003 and triggered the incremental Funds rate increases that began in 2004:
http://economic-undertow.blogspot.com/2009/04/further-evidence-of-influence-of-energy.html
It was the increase in the funds rate that increased money costs to lenders beginning in 2005- amplifying the surge in subprime lending (conventional loans did not allow for sufficient ’spread’) and the peak in house prices neared.
The article puts too much emphasis on Greenspan and less on the overall direction of the US financial economy … as well as the ‘money pump’ that existed between China and the US.
All three- the cheap bank credit, structured finance and outsourcing of US labor as part of a currency regime that favored debt creation – orbit around the increase in oil prices. All three could be considered asset inflatiion hedges against that price rise; more virtual wealth and available credit would allow consumers the purchase of oil- saturated goods and services regardless of the price of that oil.
One reason for the ineffectiveness of current financial and fiscal strategies has been the obsession with credit problems. Ours is an energy crisis with a credit component, not a credit crisis by itself. Loans in no amount can substitute for $20 oil or for any physical resource at all.
This oil price problem, rather than Greenspan and easy money, is the central issue we in the world face. Not facing the correct problem, Mr White, excludes any possible solution.
In dollar for dollar terms, Peak Oil took place in 1998 with crude at less than $12. Prices have increased 500% since that time!’
That’s why the wheels are coming off the world’s economies and will continue until all business has been destroyed. The world runs on oil and commercial consumption has priced its own costs beyond what its customers are able to pay.
Sorry.
July 10th, 2009 at 9:29 pm
@Transor Z
That’s funny…
You know? I’ll confide in something here…In my everyday life, when I try and talk about subjects such as are discussed on TBP…I’m the only one BY FAR who is heady and intellectual (usually calm & fact driven)…
Yet on this forum, I’m content to play the class clown…It’s my alter-ego…
Barry even alluded to something like that earlier in one of these threads (having kicked out some story about the TOP 10% of the graduating class thanking all the rest for their mediocrity)…
Well…from us (ME) in the audience…You’re welcome…
I think you have to “spice it up” a little in a forum like this…After all, if you keep trying to find the MORAL HIGHGROUND everyone dies of altitude sickness…
July 10th, 2009 at 9:32 pm
Steve from VA –
you old inflationista (2nd)
i thought peak oil was in 2005 anyway, oh well
sorry, it is a bursting credit bubble = deflation (1st)
July 10th, 2009 at 9:35 pm
cv@9:29-
you live in West VA
for cryin’ out loud
(in your every day life)
July 10th, 2009 at 9:37 pm
@steve from virginia
“The world runs on oil and commercial consumption has priced its own costs beyond what its customers are able to pay”
—
I expressed it in a different way, but that’s the comment that I was basically making to CNBC Sucks yesterday in a thread…
I also kinda said it here at the beginning of this thread
http://www.ritholtz.com/blog/2009/07/the-curse-of-cheap-money/comment-page-3/#comment-191930
but in the latter instance I was referring more to the labor/wage part of the cost structure…EITHER WAY labor or energy, when you apply those mechanisms to global trade you’ve gotta have the cash to do it…& if you do it on CREDIT and the system burps, you’re in for some trouble…
July 10th, 2009 at 9:38 pm
@wes
I’m fixing a place up in WVA…So I’m about 4 days a week in MD & 3 in WVA…
July 10th, 2009 at 9:50 pm
@Steve: Either that or . . . speculators ran up the price of oil.
Read this and tell me Greenspan wasn’t at fault:
http://www.federalreserve.gov/boarddocs/speeches/2002/20021219/
That’s 2002, dude.
@cvienne:
In my everyday life I have conversations like:
“Did you do poopies?”
“No!” [toddler runs away]
“Yes, you did. I can smell it. Come over here.” [chase down toddler]
or
“I don’t have to pay her anything, do I?”
“Sure, why wouldn’t you?”
“She f—ing cheated on me.”
“Yes, she did. But –”
“I’m not paying her anything.”
“Then she’s going to get you on a contempt.”
“This is f—ing bulls–t!”
or
“Hi, this is Transor Z, attorney for X.”
Opposing Counsel [on speakerphone]: Ok, I didn’t appreciate the last letter you sent.
TZ: Ok, first, take me off speakerphone, please.
OC: What?
TZ: Take me off speaker phone.
OC: What?
TZ: Take me off speaker phone.
Pretty heady stuff.
July 10th, 2009 at 9:56 pm
TZ@9:50 –
real life, love it
poopies, priceless
the other stuff….you seem really laid back – taking the peeps sheet in good stride
July 10th, 2009 at 10:13 pm
@Transzor Z
That’s pretty funny man…:-)
But read CLOSER…I said “when I try and talk about subjects…” (emphasis on the TRY – see when I don’t use CAPS nobody understands me)…Yet when I DO, they chastize me…
and I must confess that when I TRY to talk about these subjects…I’m talking to my corn (and vegetable rows)…Corn has EARS, and vegetables, well, they’re not really that different from PEOPLE in their behavior so I can scarcely tell the difference…
You didn’t think I was referring to PEOPLE PEOPLE did you?
July 10th, 2009 at 10:19 pm
dudes-
this is it- back in my harley days- this song brings it out- I listen to this and I want to hit the road-
too bad my daughter is only 11- but damn this breaks my heart
http://www.youtube.com/watch?v=725iONdAu9Q
July 10th, 2009 at 10:44 pm
ahab
Dude…if your daughter is 11…come year 2014 you’d better keep her away from the G-8 summitt if you’re up to date with what’s been going down in this thread…
July 11th, 2009 at 12:25 am
@steve: heavy. but true.
July 11th, 2009 at 10:03 am
@ steve from va
The recent price history of oil has become detached from supply/demand and has in large part been driven up by speculators… as such, I’m not sure we can glean much information regarding it’s scarcity (or the concept of Peak Oil) from it’s price. Along the same lines, I would ask that you contemplate the possibility that many of the sources promoting the idea of peak oil and scarcity might be doing so with purpose of either artificially driving up the price, or convincing people of the (false) need to open of public lands for more drilling and exploration.
Kinda like all the Global Warming hoopla as an excuse to pass carbon taxes or create a new carbon trading market. More carbon dioxide will just mean more plants. If we really want to do something about the environment, it should be with regards to plastics (Great Pacific Vortex, anyone?), industrial pollution, and air/water quality (such as proper filtration of pharmaceuticals entering our water supply). Unfortunately those problems don’t allow the profit opportunities for business and government that Global Warming does…
Fear is a great way to misdirect people’s energy.
July 11th, 2009 at 11:50 am
If we’re going to talk about politics and the failing thereof on all sides (the media, the lazy, ignorant majority of voters swayed by msm, and the bullshit politicians all about becoming or remaining “lifelong politicians”, switching parties at will, always for their benefit and ALL of this brought to you by CORPORATE AMERIKKKA) i have to at least put in a little shout out to Ralph Nader who i voted for in both of his previous tries (before Obama).
This guy HAS A RECORD of fighting for the consumer, exposing fraud, speaking truth to power, being a bit charismatic (some say he looks like Lincoln) and STILL WORKING on overthrowing the established corporate takeover of our government. The media did such a good job of giving him NO air time, talking negatively (as if their own personal record of work could even come close to what Nader’s done for the consumer – ALL OF US) about him, and not allowing him into ANY of the debates that it’s no wonder he didn’t make a better showing.
i accept any an all opinions/comments as being just that (like my thoughts) and welcome debate/rebuttal, as i’ve been reading this blog for a while and admire (but like you, don’t always agree with) the lot of you here.
July 11th, 2009 at 12:47 pm
@mathman
“The media did such a good job of giving him NO air time, talking negatively (as if their own personal record of work could even come close to what Nader’s done for the consumer – ALL OF US) about him, and not allowing him into ANY of the debates”
—
I think you already know the answer to that one…PLEASE EVERYONE – DON’T JUMP ON THIS AS A POLITICAL STATEMENT – I’M MAKING A M-E-D-I-A STATEMENT…
The media is clearly biased to the left (save for FOX who are just a bunch of clowns)…
So when a 3 candidate system emerges (like 1992, with Perot), they study the polls…They thought Perot could siphon off enough votes from Bush 41 so they were happy to let him join the party…As it turns out, they got their wish, as Clinton was elected with the lowest percent of popular vote in history…
In 2008, they didn’t NEED a Nader in the gumming up the springwerks…Obama had a clear advantage over McCain early on, plus momentum…So an effort was made to keep him out…
Where they screwed up was in 2000 & 2004…I think they thought there was NO WAY “W” could win against either Gore or Kerry…
I’m sure we can expect more of the same forevermore…Although I do believe that the internet is going to achieve a greater and greater dominance in formulating thought…The MSM will then go the way of the newspapers…
July 11th, 2009 at 1:19 pm
I’m sorry, but the “media is biased to the left” meme is just another talking point. Some of the most influential neoconservative journalists work(ed) for the “liberal” NYT and WaPo. If you define certain publications as “left-wing” or “right-wing” it sets the table for people to more easily dismiss those publications while simultaneously using their reporting to set boundaries for “acceptable” (ie, limiting) discussion.
There also seems to be little discussion of the elitist/populist divisions within each side of the left/right divide… which, to me, is more important at this point than the left/right thing, which I think of as a charade. Because you have corporatistas/elitists in each party that are running the show (regardless of which side wins), while populists on either side of the aisle get marginalized. This has helped mask the class warfare that has gone on in this country for decades, which we’re seeing the results of now (Mass wealth depends upon mass consumption, mass consumption depends on people, ya know, being able to actually buy stuff.. see also: wage stagnation, trickle-down economics, globalization, “free trade” agreements, etc)
July 11th, 2009 at 2:17 pm
Dogfish,
Nice points. especially, given the ascendency of the DLC, w/42, w/in the (D)-team..it’s been all ‘Neo-Cons’, all the Time.
cv,
you might be forgetting that Buchanan savaged 41 (“King George”) in the ‘92 Primary..
see: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Buchanan+1992+Republican+Primary+%22King+George%22
for starters..
and the, thereby, ‘over-the-top’/ ‘Ultraconservative’ RNC, in Houston, ‘turned off’ a lot of potential, ’softer’ voterz..
July 11th, 2009 at 2:25 pm
Hi Barry – now that topics are getting so long, an outline view as well as ratings for individual posts – such as here on http://www.slashdot.org: http://tech.slashdot.org/story/09/07/11/1650219/Behind-the-My-Location-Errors-In-Google-Maps – would be nice.
pat
July 11th, 2009 at 5:40 pm
Hello All, my first post. Really enjoyed the comments.
Seems like a key point is to recognize the enabling legislation for our current misery (the Federal Reserve Act). Along that line, note there really is a difference between money and credit. The graphic is labeled “money” where it should be recognized as (primarily) credit.
We do have access to cheap “money” in the form of circulating U.S. coinage which is spent into circulation interest free. There is no other “money”. “Federal Reserve Notes” are not money, but circulating credit instruments that are not redeemable contracts as they fail to guarantee payment and as such are fiat “legal tender instruments” (which are none the less used as part of the Federal Reserve’s “monetary base” for fractional reserve credit creation).
Until Nixon jilted the rest of the world by closing the “Gold Window” for satisfaction of international dollar debts in the 1970’s, there has been no real money circulating in the U.S. per the Constitutional mandate for gold and silver coin (Art. 1 Sec. 10). Congress never had power to name legal tender other than gold and silver. All the money cases appearing to validate or “legalize” “paper m0ney” were settled in favor of “paper money” after the War Between the States as long as it was contractually and easily redeemable in gold or silver (thus satisfying the Constitutional requirement).
If you want freedom and stable economy, enforce the Constitutional money system, where coinage circulates free and clear, no interest due. Stop paying the international banking cabal interest on every move you make. To make a small dent or statement, use more coinage (circulates interest free), fewer Federal Reserve Notes (frns) and less checking account credits (the existence of which evidence interest bearing loans at one level or another).
My Grandparents said, “It’s not what you make, it’s what you keep.” Never borrow money or create credit unless it can be employed to profit from real productive activity. This runaway system has seen a lot of technological advances prior to implosion, but the party is over. “They” probably supercharged it for the last big rake-off prior to the demographic change that dooms it ti deflation. As the Baby Boomers retire the producing class grows smaller, so naturally will not use as much money or credit, thus a smaller “money” system and falling prices
…unless you let enough immigrants in to take up the slack.
Wait, wait, don’t send the illegals home yet. We may need them if we can’t force our government to obey the Constitution.
-Okrahouma