• Man, there are a lot of crazies out there in the world of blogging. Every so often, I'll go through the Feedjit link here on the blog to see what else is being written around the area or browse the Google blog search and just read. Maybe tonight was abnormal, but I found several blogs that just sounded like the rantings of paranoid schizophrenics in the midst of a meltdown - only the posts have been coming for months now! With some of the hatred and prejudice I encountered, it made me a little uncomfortable seeing the dark underbelly of the First Amendment. I'm not of a mind to want to silence these folks by any means, but wow there's some crazy shite out there on the Wild 'n' Wooly Interwebs.
• I hate upset stomachs. I went to bed almost 2 hours ago, and couldn't sleep, which led to my stroll through Blogland. I should know by now not to eat snacks before bed!!
• Anisa was so funny on the phone when I called home during my lunch break. "Daddy, we got the good cheesy poofs! Not the ones that taste awful, like at Jake and Jenny's!" I was glad I was stopped at a red light at the time; I haven't laughed that hard in a long time. We spent the weekend up in Columbia with our friends. Their daughter is about nine months old now and had some of the baby cheese poofs as a starter food. As you can tell, they were not a big hit with Anisa. Jasmine, however, LOVED them. I think she likes the "good" ones even better, though. It was a fun weekend all around, though. I just wish I'd been in a better frame of mind so I could enjoy it a bit more. Everything that came down last week at work was just weighing on my mind.
I mean, could I have picked a worse time to be promoted? Well, I'm sure there are worse circumstances than this, but it still sucks. I wanted to be playing with numbers and coding some stuff up for the web, not jostling job duties and telling people that, like it or not, you're going to be moving to some night shifts. Maybe it's just me, but if there are 4 fewer people working at putting out a product, shouldn't that product be reduced by something close to 4 people's worth of work? Instead, we get to "do more with less!" Sure, we're cutting our output a little bit, but I'd bet that it isn't even close to 40 hours a week worth, let alone 160. Instead, we focus on efficiency and workflow. Layoffs are a big enough hit to employee morale, but working them harder when they were already being asked to do a lot is not going to make things better. I just hope that three months from now, everyone at work can look back and see this as the low point.
• At least there looks to be some hope for an auto industry bailout. On an objective level, I'm not overly thrilled by it. There's a reason why the U.S. companies are in the position they are, while foreign auto makers are still thriving (though not without suffering in this economic climate). They've made bad choices for years - decades even - and didn't have a plan on how to survive if everything went in the crapper. So now, the taxpayers should foot the bill? Ugh, how crappy. I understand there is a bigger picture here that it affects and it's probably in the best interest of the economy as a whole to try and prop them up until things get better, much like bailing out AIG was probably a good thing for the long-term health of the economy. It doesn't mean I have to enjoy it.
On a purely selfish level, I'm absolutely ecstatic about this. The one thing the print media industry can't afford is an even bigger loss in ad revenue from the auto companies. There's already been a big drop, and if any of the Detroit Three had gone under, that would have been a huge loss for us, too. We probably would have been looking at another round of staff cuts in our near future, and that's something I don't want to see again for at least another decade.
I keep hoping that the plan that was put in place factored in the projected troubles of the next year (and that those projections are either accurate or overestimated the troubles we'll face). I just want to be able to hold on to what we have, make it through this rough patch, and come out on the other side better for the experience. I don't want to be part of a company that goes through bankruptcy like the Tribune company has. I'm still shocked that the company that owns the LA Times and the Chicago Tribune is hurting that bad. I hope the commentary that they're the exception rather than the expectation for newspapers holds true.
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Tuesday, December 9, 2008
Friday, December 5, 2008
Number watching in an economic crisis
I've been keeping my eye on several numbers that are big indicators of where we stand as the economy melts down. The biggest one that I pay attention to is the unemployment rate, which officially spiked to 6.7% today. As the NYTimes blogged about today, that number doesn't account for the 637,000 people that have given up and stopped looking for jobs. If that number were included, it would push the unemployment rate close to 7% - a far cry from the peak of 25% reached in the Great Depression, but a disturbing number nonetheless. The percentage is even more disheartening when you think about the population of the country at both times.
Breaking it down to the heart of the issue in the article:
Yeah, that's not good.
Breaking it down to the heart of the issue in the article:
The share of all men ages and 16 and over who are working is now at its lowest level since the government began keeping statistics in the 1940’s.
Yeah, that's not good.
Friday, October 24, 2008
Solution to energy prices? Destroy the economy!
On the surface, it seems so counterintuitive - everything is going in the crapper right now, but oil/gas prices are plummeting? Wasn't it just a few months ago when the high cost of oil was the biggest threat to the world economy? And now, take a look at the price of oil over the last year (courtesy of NYTimes.com):
Oil is trading at roughly $20 a barrel less than it did a year ago after topping $140/barrel in July. Wow, so this is telling me that the value of oil has dropped by half in 3 months??
I look at this and it just strikes me as one more example of why the markets (ALL the markets, it seems) are, to put it bluntly, completely fucked up. The whole process just leads to overreaction, overspeculation, panic. "OMG, we're using oil! It's going to cost more, so bet that it will cost even more than that!"
Fast forward 3 months - "OMFG, everyone's broke, so less oil is being used, now I'm even more screwed because I locked in my price for winter oil in July and now it's half that price. I'm such an idiot!"
It just seems like there needs to be a better way to do all of this, even though I have no clue what that might be. Markets absolutely need to be able to react to changes in the conditions, but can't something be done to avoid or prevent these wild swings? If you look at that graph, there was pretty stable price point for oil around $90-100 or so. And at both the high in July and the low now, I'd bet that the "actual" worth of oil is still somewhere around that point of stability, though possibly slightly lower now that we're looking at decreased demand as the economy crumbles. It's just ludicrous to me that oil is trading so low now, even though that "decreased demand" is still going to be 10-20% higher than the demand in 2007 (instead of the 25-40% increase being projected in July that pushed prices through the roof).
Oil is trading at roughly $20 a barrel less than it did a year ago after topping $140/barrel in July. Wow, so this is telling me that the value of oil has dropped by half in 3 months??
I look at this and it just strikes me as one more example of why the markets (ALL the markets, it seems) are, to put it bluntly, completely fucked up. The whole process just leads to overreaction, overspeculation, panic. "OMG, we're using oil! It's going to cost more, so bet that it will cost even more than that!"
Fast forward 3 months - "OMFG, everyone's broke, so less oil is being used, now I'm even more screwed because I locked in my price for winter oil in July and now it's half that price. I'm such an idiot!"
It just seems like there needs to be a better way to do all of this, even though I have no clue what that might be. Markets absolutely need to be able to react to changes in the conditions, but can't something be done to avoid or prevent these wild swings? If you look at that graph, there was pretty stable price point for oil around $90-100 or so. And at both the high in July and the low now, I'd bet that the "actual" worth of oil is still somewhere around that point of stability, though possibly slightly lower now that we're looking at decreased demand as the economy crumbles. It's just ludicrous to me that oil is trading so low now, even though that "decreased demand" is still going to be 10-20% higher than the demand in 2007 (instead of the 25-40% increase being projected in July that pushed prices through the roof).
Friday, October 10, 2008
And now for something entirely dif... well, not really all that different
Yeah, I've been focusing on the economy a lot lately, but it's been kind of hard not to. Not only is it a financial crisis of truly historical proportions (not to mention a perfect example of what unfettered and unchecked greed can result in), but through the mortgage markets it's having a profound effect on average people the way that 1972 and 1987 really didn't. Plus, it doesn't help that I've been neck deep in looking at mortgages and foreclosures in the area to try and make sense of the local impact as part of my work.
So now, I feel like writing something that has nothing to do with that.
• I'm jealous of Kim and the kids right now. While I was slaving away at work yesterday, they got to go to The Discovery Center here in Springfield. They got to dig for dino bones, see a giant tornado, turn on lights to see animals in the cave, and take turns running the Human Hamster Wheel. The girls were so excited about it when they picked me up from work yesterday, it really made me wish I could have been there. Had I been on my old schedule, I probably would have gone with them. Of course, on my old schedule, we (the adults, at least) probably would have been tired from only managing 5 hours of sleep and might have simply not gone, so I guess it's a trade off. Still, I definitely want to go with them one of these weeks soon.
• I'm getting more and more excited about the Rachael Yamagata concert. I feel like a giddy teenager again when I was thrilled about getting to see Ani for the first time. Not only that, but I get to see Alice Russell as part of the show, too! She'd been on my list of artists to get more of since I'd heard her with Quantic, but once I find out she'd be part of the concert, I went out and picked up "My Favourite Letters" and I've been seriously digging it. It's been on a pretty steady rotation in the car for my 40-50 minutes of driving to and from work each day.
• Ugh, that reminds me. I hate commuting. HATE it. And I know, it's not really commuting since I'm just driving from the south side of town to the middle of the city, but it still sucks. I never realized how lucky and convenient it was to live a total of 5 blocks away from work in Wyoming.
• This whole blog thing has been nice. Not that very many people read it, but it's still nice to have an outlet for things. Instead of losing all the random crap that floats through my head during the day, now I can manage to capture 1 or 2 of those thoughts and pretend to be a writer. Hey, at least my grammar and spelling are pretty good, right? :D
• Pizza. I like it. So there.
• You know, it sure seems like the Dodgers are going to be this year's Rockies. They're going to be the surprise team of the playoffs and then get absolutely spanked by the winner of the Boston/Tampa series, which should be a heck of a battle. I've got say, the whole Manny vs. the Red Sox storyline is an interesting one. Of course, it will get so overplayed and blown out of proportion if they meet in the World Series that I'll absolutely hate the story. I'm just wondering, how many times has a superstar-caliber player been traded mid-season and then met his former team in the championship that same year? I mean, in ANY sport. I honestly can't remember this ever happening, but I'm not the biggest sports geek in the world either so I could easily be wrong.
So now, I feel like writing something that has nothing to do with that.
• I'm jealous of Kim and the kids right now. While I was slaving away at work yesterday, they got to go to The Discovery Center here in Springfield. They got to dig for dino bones, see a giant tornado, turn on lights to see animals in the cave, and take turns running the Human Hamster Wheel. The girls were so excited about it when they picked me up from work yesterday, it really made me wish I could have been there. Had I been on my old schedule, I probably would have gone with them. Of course, on my old schedule, we (the adults, at least) probably would have been tired from only managing 5 hours of sleep and might have simply not gone, so I guess it's a trade off. Still, I definitely want to go with them one of these weeks soon.
• I'm getting more and more excited about the Rachael Yamagata concert. I feel like a giddy teenager again when I was thrilled about getting to see Ani for the first time. Not only that, but I get to see Alice Russell as part of the show, too! She'd been on my list of artists to get more of since I'd heard her with Quantic, but once I find out she'd be part of the concert, I went out and picked up "My Favourite Letters" and I've been seriously digging it. It's been on a pretty steady rotation in the car for my 40-50 minutes of driving to and from work each day.
• Ugh, that reminds me. I hate commuting. HATE it. And I know, it's not really commuting since I'm just driving from the south side of town to the middle of the city, but it still sucks. I never realized how lucky and convenient it was to live a total of 5 blocks away from work in Wyoming.
• This whole blog thing has been nice. Not that very many people read it, but it's still nice to have an outlet for things. Instead of losing all the random crap that floats through my head during the day, now I can manage to capture 1 or 2 of those thoughts and pretend to be a writer. Hey, at least my grammar and spelling are pretty good, right? :D
• Pizza. I like it. So there.
• You know, it sure seems like the Dodgers are going to be this year's Rockies. They're going to be the surprise team of the playoffs and then get absolutely spanked by the winner of the Boston/Tampa series, which should be a heck of a battle. I've got say, the whole Manny vs. the Red Sox storyline is an interesting one. Of course, it will get so overplayed and blown out of proportion if they meet in the World Series that I'll absolutely hate the story. I'm just wondering, how many times has a superstar-caliber player been traded mid-season and then met his former team in the championship that same year? I mean, in ANY sport. I honestly can't remember this ever happening, but I'm not the biggest sports geek in the world either so I could easily be wrong.
How glad I am to be young
Reading this blog post made me happy about my relative youth:
So just to be optimistic, that means it will take at least 20 years for investments made in the last 10 years to return to the equivalent of their dollar value at time of investment. I've got plenty of time for my portfolio to recover, but what about all those folks in their 50s and 60s looking to retire soon? They'd been depending on their 401k and Roth IRAs and now in a year, the value of that has dropped by 40%. What the hell are they supposed to do, other than keep working longer?
This just underscores the need for Social Security reform being done in the right way. Could you imagine the outrage throughout the country if we had gone ahead and privatized Social Security into the markets 4-5 years ago? That would have just added a whole other layer of tragedy and human cost into the whole mess we're seeing now. I truly hope this puts an end to that whole proposal - it's never really made sense, and it makes even less sense now. Let folks do what they want with their personal approaches to retirement with 401(k)s, IRAs, savings accounts, CDs, and coffee cans full of money, but don't put the heart of the government safety net at risk of suffering the whims of the market.
The one thing that does make me a little bit happy about this is that any investments I make now are going to see a huge increase in value as the market recovers. That 40% drop in value means the investment power of my dollar is now buying 40% more. When things get better, that's going to be a huge payoff. Whee - I found a silver lining!!
Some may also wonder how long it will take the market to “recover.” It depends exactly what is meant by “recover,” of course, but one measure might be when the market returns to its pre-crash peak. The historical data is somewhat more distressing in this context.
After the Great Depression, it took 29 years — until 1958 — for the market to reach its pre-Depression, inflation-adjusted peak. After the 1970s recession, it took 24 years — until 1992 — for the market to make a full “recovery” by the same measure. So no matter whether you start from the recent 2007 peak, or from the market’s absolute inflation-adjusted peak during the tech bubble in 2000, we may still have at least a decade to go before full “recovery.”
So just to be optimistic, that means it will take at least 20 years for investments made in the last 10 years to return to the equivalent of their dollar value at time of investment. I've got plenty of time for my portfolio to recover, but what about all those folks in their 50s and 60s looking to retire soon? They'd been depending on their 401k and Roth IRAs and now in a year, the value of that has dropped by 40%. What the hell are they supposed to do, other than keep working longer?
This just underscores the need for Social Security reform being done in the right way. Could you imagine the outrage throughout the country if we had gone ahead and privatized Social Security into the markets 4-5 years ago? That would have just added a whole other layer of tragedy and human cost into the whole mess we're seeing now. I truly hope this puts an end to that whole proposal - it's never really made sense, and it makes even less sense now. Let folks do what they want with their personal approaches to retirement with 401(k)s, IRAs, savings accounts, CDs, and coffee cans full of money, but don't put the heart of the government safety net at risk of suffering the whims of the market.
The one thing that does make me a little bit happy about this is that any investments I make now are going to see a huge increase in value as the market recovers. That 40% drop in value means the investment power of my dollar is now buying 40% more. When things get better, that's going to be a huge payoff. Whee - I found a silver lining!!
Thursday, October 9, 2008
Stock market, trading and bears - OH MY!
Ummm, what the hell happened?? I'd been keeping an eye on the market today, seeing it was down a bit as expected. Then I take a break and all hell breaks loose in the last hour of trading... Insane!
Today's numbers:
Oct. 9, 2008 - 8579.195, down 5618.91 from the high mark on Oct. 11, 2007, for a 39.58% loss since then.
That's also a 1015.74 pt loss since MONDAY, when I last posted numbers, for a 10.59% loss in the last 3 days...
I found an interesting NYTimes blog taking a historical look at the numbers - I guess I'm not the only historically-minded number junky out there. We should take pride! Americans always want to be the best, and now we're closing in on taking the biggest drop in the history of the market. Take THAT, 1932!!
Monday, October 6, 2008
More numbers
Hmmm, can you tell I've been a little preoccupied with the slide of the economy into the gutter?
Just an update to some numbers from last week:
Since Oct. 11, 2007, the Dow has now dropped 4603.17 points to 9,594.93 as of 1:42 p.m. CDT today. That brings the drop in value of the market since it's peak to 32.42% in just 360 days.
Almost as disheartening? In the week since I last posted numbers on this, it's dropped 1,019 points for a 9.6% loss in 7 days.
Gaming
In lighter news, I have hardly been gaming at all lately. Now starting my fourth week on my new work schedule, it's just hard to find time to play. I'm still cruising along on Worldwinner, since that's basically my second job, but "fun" gaming just doesn't happen. I get home from work, and then it's dinner time and time to get the kiddos ready for bed. By the time that nightly fight is over and they've quieted down and fallen asleep, it's usually 9:30, 10. Then I end up finally relaxing a little and spending some time with Kim, which is about the only quiet time we get together. And all of a sudden, it's 11:30 and I'm tired and ready for bed. So where does gaming even fit in with all of that?
I can't say I'm upset or even unhappy about it; that's just the way life is some times. I'm hoping that as time goes on and we all get more used to the realities of the new schedule, things will get a little easier and my free time becomes a little more free. That remains to be seen, though.
Just an update to some numbers from last week:
Since Oct. 11, 2007, the Dow has now dropped 4603.17 points to 9,594.93 as of 1:42 p.m. CDT today. That brings the drop in value of the market since it's peak to 32.42% in just 360 days.
Almost as disheartening? In the week since I last posted numbers on this, it's dropped 1,019 points for a 9.6% loss in 7 days.
Gaming
In lighter news, I have hardly been gaming at all lately. Now starting my fourth week on my new work schedule, it's just hard to find time to play. I'm still cruising along on Worldwinner, since that's basically my second job, but "fun" gaming just doesn't happen. I get home from work, and then it's dinner time and time to get the kiddos ready for bed. By the time that nightly fight is over and they've quieted down and fallen asleep, it's usually 9:30, 10. Then I end up finally relaxing a little and spending some time with Kim, which is about the only quiet time we get together. And all of a sudden, it's 11:30 and I'm tired and ready for bed. So where does gaming even fit in with all of that?
I can't say I'm upset or even unhappy about it; that's just the way life is some times. I'm hoping that as time goes on and we all get more used to the realities of the new schedule, things will get a little easier and my free time becomes a little more free. That remains to be seen, though.
Horror in slow motion
I have to say, this whole economic collapse is one of the weirdest experiences in my life. I've been around and aware enough for many world-changing events, but they all seemed to share a quality of *SMACK* it happened, then watch the aftermath. The Challenger and Columbia, 9/11, Iraq I and II, previous collapses on Wall Street, the Berlin Wall...
Maybe I've just remembered them all as big single events moreso than the reality of the situations actually warrant, but certainly none of them seemed to me to have the kind of prolonged agony the last year has subjected us to. I first started hearing rumblings about the housing market and mortgage industry last summer. I started seeing it have a real impact on the economy around January. And now, the last 3 months I've seen it start wreaking real havoc around the world. I sat there this morning watching the Dow Jones average drop below 10,000 - the first time it's been down to four digits since 2004 - and just wondering when the bleeding is going to stop.
It really makes me wonder how people managed throughout the Cold War. At least with the economic stuff, we can be fairly certain that we'll come out on the other side. We may not know exactly when or how bad it may get, but eventually we'll get things revved up again and back on the right track. With the Cold War, there was just no such certainty, no light at the end of the tunnel, no guarantee that we were going to come out on top or that you wouldn't wake up to the roar of nuclear apocalypse rushing at you in the night. Just with the little tastes I've had in the last decade, I'm glad I didn't have to live with that kind of unresolved fear hanging over my head all the time.
Maybe I've just remembered them all as big single events moreso than the reality of the situations actually warrant, but certainly none of them seemed to me to have the kind of prolonged agony the last year has subjected us to. I first started hearing rumblings about the housing market and mortgage industry last summer. I started seeing it have a real impact on the economy around January. And now, the last 3 months I've seen it start wreaking real havoc around the world. I sat there this morning watching the Dow Jones average drop below 10,000 - the first time it's been down to four digits since 2004 - and just wondering when the bleeding is going to stop.
It really makes me wonder how people managed throughout the Cold War. At least with the economic stuff, we can be fairly certain that we'll come out on the other side. We may not know exactly when or how bad it may get, but eventually we'll get things revved up again and back on the right track. With the Cold War, there was just no such certainty, no light at the end of the tunnel, no guarantee that we were going to come out on top or that you wouldn't wake up to the roar of nuclear apocalypse rushing at you in the night. Just with the little tastes I've had in the last decade, I'm glad I didn't have to live with that kind of unresolved fear hanging over my head all the time.
Friday, October 3, 2008
King John?
When I found this here, I could not believe what I was seeing.
His quote about 35 seconds in:
Ummmmm.... WTF???? Seriously??? He's not joking. He's not kidding. He's saying that with a straight face. This is what you get when you see the real John McCain.
His quote about 35 seconds in:
I’m not saying this is the perfect answer. If I were dictator, which I always aspire to be, I would write it a little bit differently. I would increase the FDIC insured deposits and done some other things.
Ummmmm.... WTF???? Seriously??? He's not joking. He's not kidding. He's saying that with a straight face. This is what you get when you see the real John McCain.
Pushed off the cliff
Serendipity is funny - I was talking to my mom last night a bit about the causes of our current economic troubles, and then opened NYTimes.com this morning to find a rather striking article discussing just that.
Man, if that same standard was applied to me, I could carry nearly $1.5 million in debt.... that sure would be fun for a couple of years, but wow is the hangover is going to suck when the bill collectors show up.
And it makes me all the more confident that we're on the right path now to know that Henry Paulson, the Treasury Secretary leading us down the bailout path, sat there in this SEC meeting and thought this was going to be a great idea and had no qualms about approving it. What, are we now trying to get the U.S. government to a 33-to-1 debt ratio?
Ugh. I'm not looking forward to the next 10 years at all, regardless of who's at the reins.
Very brief summary: A 2004 SEC ruling dramatically increased the amount of debt the Big Boys on Wall Street were allowed to carry. The house of cards that led up this certainly had some foundations built in the Clinton, Bush I and Reagan eras, but this decision basically tried to see if pyramid of pachyderms (to steal a line from Dumbo) could balance on top of that house. How bad was it?
"Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly."
Man, if that same standard was applied to me, I could carry nearly $1.5 million in debt.... that sure would be fun for a couple of years, but wow is the hangover is going to suck when the bill collectors show up.
And it makes me all the more confident that we're on the right path now to know that Henry Paulson, the Treasury Secretary leading us down the bailout path, sat there in this SEC meeting and thought this was going to be a great idea and had no qualms about approving it. What, are we now trying to get the U.S. government to a 33-to-1 debt ratio?
Ugh. I'm not looking forward to the next 10 years at all, regardless of who's at the reins.
Monday, September 29, 2008
Blogging from the brink
http://en.wikipedia.org/wiki/Closing_milestones_of_the_Dow_Jones_Industrial_Average
This shows the historical milestones of the Dow Jones average. The all-time high:
As of 2:42 p.m. today, according to the NYTimes.com feed, the Dow stood at 10,614. So in less than a YEAR, the average has dropped 3,584 points - or 25.24%....
That's just mind-boggling. Seriously, we've lost 25% of the value of our businesses in 50 weeks?? WTF?
A happy note? If this is similar to the Great Depression, it only took 22 years and World War II to pull the economy back to the previous levels the stock market had reached before the crash. Hmmm.... maybe that's NOT such a happy note.
This shows the historical milestones of the Dow Jones average. The all-time high:
| Intra-day Actual: | 14,198.10 | Thursday, October 11, 2007 |
As of 2:42 p.m. today, according to the NYTimes.com feed, the Dow stood at 10,614. So in less than a YEAR, the average has dropped 3,584 points - or 25.24%....
That's just mind-boggling. Seriously, we've lost 25% of the value of our businesses in 50 weeks?? WTF?
A happy note? If this is similar to the Great Depression, it only took 22 years and World War II to pull the economy back to the previous levels the stock market had reached before the crash. Hmmm.... maybe that's NOT such a happy note.
Wednesday, September 24, 2008
Disturbing thought of the... week? month? #!%@$ century??
I tend to enjoy sports a lot. I also enjoy politics and intellectual insight into the many facets of the world. Rarely are these two portions of my brain engaged at the same time, but Gregg Easterbrook's Tuesday Morning Quarterback column on ESPN.com has been doing so successfully for a long while now and is one of my most favoritest (yes, that's a word - in my world, at least :P ) reads of the week during football season. I may not agree with some of the things he says, but he at least makes me think about things a little more.
In his latest column, he put the recent economic turmoil and the government's response to it into terms that struck a chord with me. So I'm sharing it with you now:
In his latest column, he put the recent economic turmoil and the government's response to it into terms that struck a chord with me. So I'm sharing it with you now:
Last week, TMQ asked why no one was paying attention to the fact that the national debt ceiling was quietly raised by $800 billion during the summer. Well, toss that column: The White House just asked the national debt ceiling be raised another $700 billion, for the proposed financial-sector bailout. If that happens, in 2008 alone, $1.5 trillion will have been added to the national debt: every penny borrowed from your children and their children. Stated in today's dollars, in 1979 the entire national debt was $1.5 trillion. George W. Bush and Congress have in a single year added an amount equal to the entire national debt one generation ago. And the year's not over!If you ever needed more reason to feel sickened by our current state of affairs, there it is. I'm going to go cry while looking at my 401k statement again now.It took the United States 209 years, from the founding of the republic till 1998, to compile the first $5 trillion in national debt. In the decade since, $6 trillion in debt has been added. This means the United States has borrowed more money in the past decade than in all our previous history combined. Almost all the borrowing has been under the direction of George W. Bush -- at this point Bush makes Kenneth Lay seem like a paragon of fiscal caution. Democrats deserve ample blame, too. Harry Reid and Nancy Pelosi, Democratic leaders of the Senate and House, have never met a bailout they didn't like: Harry and Nancy just can't wait to spend your children's money. Six trillion dollars borrowed in a single decade and $1.5 trillion borrowed in 2008 alone. Charles Ponzi would be embarrassed.
Tuesday, September 16, 2008
My take on the economy
I was emailed this article today and read it with some interest. There's some good points in there, but a lot that I think is simply wrong. I initially responded directly to the email, but I think it was a reasonably good response, so I figured I'd toss it up on here as well. And so, without further babbling, here it is:
Meh. He far overstates the case.
Did Republicans contribute to the current problems? Absolutely. Their insistence on deregulation and slavish devotion to extreme free market practices led to a lot of this. However, much of the foundation was set during the Clinton administration, albeit with a Republican-controlled Congress. Certainly, of the two parties, the ones to shoulder more of the blame are the Republicans, but the Democrats aren't guilt-free by any means.
The thing is, this isn't a political thing. The government isn't the cause of all this. Yes, they should have been keeping a close eye on things and regulating the housing/mortgage industry a bit more. Bu that's like saying it's the fault of the police when a crazy man goes on a rampage and kills 30 people. Had they watched him and regulated him, he probably wouldn't have killed as many if any people - but are the cops to blame, or the person behind the trigger?
When you're looking at people to blame for this whole thing, the focus needs to be squarely on the bankers and economists directly involved. They got greedy. They saw this opportunity to make a ton of money off of poor people by giving them risky, overpriced mortgages (that the bankers pretty much knew they couldn't afford and knew that their customers were financially naive enough to not realize just how risky it was), the banks made a fat profit and then figured the could eventually foreclose, sell the house and start over again for some more fat profits for little work. On top of that, they saw that the risk itself was fairly minimal because you've got Fannie Mae and Freddie Mac sitting at the bottom of the mountain with government-secured financing to back them up. There's no way THAT's going to fail, right??
If they had been able to stay just a *little* greedy, we'd have been fine. Yes, some poor folks would have ended up getting screwed, but not that many. The real problem was that those small fat profits weren't enough. So every year, the banks lowered their standards a little more... exposed themselves to a little more risk... snared even more people with risky loans... and the whole time were telling themselves, "Yeah, it's risky... but it hasn't failed yet. And not everyone can be doing as much risk-taking as we are, right?" And then it turned into almost a competition of "Which bank can have the largest portfolio of risky loans?"
And had it stayed there, we still might have been okay. But then the economists and the stock brokers got involved.They saw the fat profits on these loans and wanted their piece of the greed pie. So buying and selling of mortgages become a trendy way to make money. Investing in these risky lenders became the thing to do. And the whole time, the economists out there are telling us that this is a good thing, that profits are at record highs and that we should all be happy and comfortable, never taking the time to tell us that all of this is a house of cards built on the back of people that can't afford to keep buying more cards to build with.
Now, where in all that do you see Republicans or Democrats? Other than the fact that the bankers involved have some sort of personal politics, you don't see the government involved at all. Granted, that's part of the problem as I mentioned already - 10 years ago, regulators should have seen this starting and said, "Enough is enough. Stop it, you wascawwy wabbits!", but they didn't. So while I can understand the desire to blame politicians, especially Republicans as we're trying to find ways to ensure we don't suffer another 4 years of the vomit-inducing bullshit we've dealt with so far this century, it's simply incorrect to do so.
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