Open thread July 23, 2010 Dan Crawford | July 23, 2010 7:15 pm Comments (37) | Digg Facebook Twitter |
Anyone wanting to comment on the election process is welcome, but presenting the comment as snark first and thought second is not welcome….comment originally here is deleted.
Of Course it Was! Only the snark you deem worthy gets to stay…as usual!
The discussion in the US about unemployment is so academic. There are the things you can say (all the things that are being said) and the things you can’t say, like the proximate cause of the employment problems are a direct result of our trade policy, both international and domestic.
How much of an economic rocket scientist (ERS) does it take to ignore, what seems obvious to me, that we have allowed the agricultural export lobby and the merchants to ship too many jobs overseas. I’m all for agricultural exports, except that every unit of production is subsidized by the American taxpayer. So we lose money when we produce them for the domestic market and we double lose when we negotiate away manufacturing and basic industrial production for the right to export subsidized agricultural (not to mention finace) products. Hardly fwee twade stuff.
What a deal. We trade slave level wage agrarian and sales jobs, with a multiplier of < 1, for high paying manufacturing and basic industrial jobs, with a multiplier of 3.2. Such a deal.
Oh my God, Taft Hartley tarrifs. Remember what happened during the depression. Uh, yeah, except during the depression we were the exporters not the importers. Hopefully, all the ECS will get their government jobs and stop throwing the Middle Class to the wolves.
Petulance is unbecoming.
you know better than that. your snark is a regular feature of these columns.
what limits their effectiveness is your tendency to go off half facted.
sure am glad you can’t say that.
even i had trouble saying “the proximate cause of the employment problems are a direct result of our trade policy.” i mean, that could be true, but it’s hard to say.
TREASURY SECRETARY GEITHNER, to David Gregory, for tomorrow’s “Meet the Press”: “[G]iven that we’ve been living beyond our means as a country — Americans had been borrowing too much,
Now, I think this is an idiot thing to say. Don’t get me wrong. Timmy is a very bright guy, can probably do present values in his head. But human brains are limited and he probably didn’t even take the class in common sense.
Sen. John Kerry skips town on sails tax
Isabel – Kerry’s luxe, 76-foot New Zealand-built Friendship sloop with an Edwardian-style, glossy varnished teak interior, two VIP main cabins and a pilothouse fitted with a wet bar and cold wine storage – was designed by Rhode Island boat designer Ted Fontaine.
But instead of berthing the vessel in Nantucket, where the senator summers with the missus, Teresa Heinz, Isabel’s hailing port is listed as “Newport” on her stern.
Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven – like the Cayman Islands, Bermuda and Nassau – for tax-skirting luxury yacht owners?
And as long as states go whoring after “business” by offering competitive tax rates, the rich will play you… i mean them… against each other and snigger in their champagne.
a fairy tale for them as has ears.
imagine a farmer who has more acres than he and his mule can plow. each year he makes enough to feed the family but not a lot over. he thinks to himself if only he could get a thousand bucks ahead he could buy a tractor and plow the whole farm and double his income.
poof. a man appears from the city and offers to lend him the money for the tractor. indeed, he offers to lend him twice as much. so the happy farmer borrows the money and buys the plow. and they sell the mule and get a car, and go out to eat a lot. and new shoes for all the kids, and..
next year the nice man from the city comes back and wants his loan repaid. but, but, says the farmer, i haven’t got the money. you just need to wait another year until the new crop comes in. so the nice man, says, okay, but i’ll have to charge you interest on what you owe me. (that’s interest on interest for those unclear on the concept.)
and sure enough next year comes back sooner than expected and the nice man comes back. only this time he says, well, if you can’t pay, i’ve got to foreclose.
now there are two possible endings to this story. in the first ending, the sheriff comes and makes sure the farmer leaves peaceable like and the nice man builds a golf course which makes more money than the farmer ever could.
in the second possible ending, the farmer says, well, sorry, i ain’t got it, and that’s a fact. and the sheriff is my cousin. so you’ll just have to wait for your money til i got it.
now there is no moral to this tale. but which ending do you think fits if the farmer is named Uncle Sam?
Well, Tim, all these people who were living above their means, ummmm, who were they? I knew some people who lived on credit cards while unemployed or sick. Or just plain poor, didn’t have any money at all and ended up on the street. And, worked full time and ended up on the street because of min wage jobs. Lotta students getting out of school owing small fortunes, no jobs, big debts, lotsa interest going to lenders.
Umm, Timmy boy, who they were paying all that interest To? The Easter Bunny? Or maybe some big banks with everyone up and down taking a bite of the vigorish. So, everybody was living above his means, right? Except your friends and you. Plenty of money going around at the World Bank, last I heard.
But, you know, not a lot of people throwing money around. So, this little notion sounds like a fairy tale to me. Better than saying, “Well, we screwed people out of decent wages and salaries and made a whole bunch of my friends rich whilst doing it, so it worked out great for us. Tellwiddyou.” Actually, I’d rather have them just say, Tellwiddyou. I’m rich so just go **** yourself. ” Jeezus luweezuz, man, off to the PO’d with me. NO
Coberly, that ain’t a fair question! Uncle Sam talkin’, of course, you gotta wait. My grandfather talking, there goes the farm. That’s what really happened in a recession during a Republican administration in the 1920’s. So, my Smith grandaddy and his family share-cropped and that’s more or less all she wrote. I like the ending where the nice man is happy to wait for Uncle Sam to pay. Nancy Ortiz
Gee Nancy, the people you know are just like the people I know — stripped of savings and real estate, spent their extra savings helping friends and family, with plenty of grown children (and parents) cluttering up the basements and sofas …
And as waves of people with pensions (one of the last untapped wealth possessions of the older generations) die off and lose that cash stream, there will be a wave of their dependents hitting the wall on a regular basis because there won’t be parents with handy basements.
If a train wreck is slow enough it looks harmless, even graceful. Certainly not fast enough to startle most people into fighting back. But when you speed up the film on the last 30 years, it shows highway robbery on the hugest scale in history, and it makes me furious on a daily basis.
Like that would surprise any regular AB readers…
well, here’s another fairy tale for them as has corn
suppose farmer A brings in a bumper crop, while farmer C over in the next county has the corn worm.
now farmer A could sell his corn to farmer C, but farmer C has no money. so farmer A says, tell you what, take the corn and pay me later. (this is called a loan.)
now next year farmer A has corn again, but farmer C has given up farming and gone to the city to look for a job.
question is, what exactly did farmer A lose?
for the purposes of the fairy tale, try to color inside the lines.
questions for the more advanced students.
in the first fairy tale, what exactly did the nice man from the city give up in the way of needs, comforts, or pleasures, when he lent the farmer the money?
what exactly would he give up if the farmer can’t pay?
what does “risk premium” mean?
(assuming you don’t own the sheriff, who takes the risk when money is lent?)
getting back to Timmy’s problem… who exactly lent who what at what risk, and who will do without?
i hate these sleepy saturday morning classes. reminds me of the days before air conditioning. we’d have to open the windows but the buzzzzzzing you heard was not the blue tail fly. it was the sound of sophomores torn untimely from their beds.
well, here is more hints for you all.
who is Timmy talking about when he says “we” “Americans have been borrowing too much.” Is he talking about your credit card? Is he talking about your home loan? If so, how does he propose “we” pay it back? other than the usual way? does this have anything to do with the national debt or looting Social Security?
or is he talking about people buying stuff from the Chinese, and the chinese taking our notes for it? or putting the money into our banks? Maybe they should have been putting the money into their banks. But even the Chinese can’t invest more money than the economy can absorb… a fact lost on those who want to “invest” Social Security in a stock market that is already bulimic.
or is he talking about the Congress spending but not taxing. and borrowing the money from… Americans who are not taxed? or Chinese who are not taxed? And if so, what is Timmy’s answer?
For extra credit, explain in detail how cutting Social Security is going to help with this problem. For extra extra credit, explain in detail exactly what the problem is.
I don’s see how impoverishing current wage earners in the future by reducing their SS benefits helps anything. For example, if the old folks have less income, don’t their kids have to help take up the slack? And, if the kids have lower wages than they would have if there were any kind of reasonable domestic economic development, how does this help solve the problelm of “intergenerational inequity”? Before, you paid the tax for your retirement insurance. Kids might not have to kick in any help. But, in the future, you’ll have less and may have to depend on the kids for help. If your kids can’t help, you starve.
I think these people are just plain nuts. As Noni says, the future looks pretty bleak if we have austerity for its own sake. It’s just plain brilliant to do away with good jobs, pensions and SS too. Not for the first time I must ask: What is this country for if it is not for its citizens to live and prosper in? Coberly, Noni, Sandi and I want to know. Nancy Ortiz
i think you meant smoot – hawley. i don’t think importer v exporter was exactly the issue with that. had something to do with starting a competition for tarrifs that killed trade (business). could be. but i think you are right that we don’t live in those times today.
The comment about living beyond means is a macro economic one, not a micro economic one. The Savings rate in the US has declined since the 1960s and was nearly zero in the mid 2000s before the bust. Macro means looking at the economy as a whole. The rich are spending their money as fast as possible, 4 or 5 palatial homes and the like. Just recently corporations are doing most of the savings, expecting further storms. He is talking about people being suckered into buying more house than they can afford because they were sold a bill of goods by the mortgage broker, the creation of fake demand thru omnipresent advertising and the like. This concept has been around for at least 6 years, so the problem was present during the last fake boom.We as a society borrowed prospertiy from the future and now have to repay.Madison Avenue has created a lot of demands that did not used to be, now it seems every teen agers needs a car, granite countertops and McMansions are mandatory, a 60k car for people. Its not the low end who should be saving its the upper half of the middle who spend to much. They are the ones with the needs for luxury. In addition given that large parts of society are depressed, many engage in retail therapy, (see the various shows on hoarding).
So the comment should apply to the defense contractors and the like ,but being the elite and being that they are “important folks” they will make out ok.
Of course the low end will suffer the most that is the way the world has always been and always will be (let them eat cake).Things will never change at most one elite will get replaced with another.
The elite see the 1890s as a golden ear and harken back to then, of course forgetting that we had a lot of domestic riots and the like at the time.
i am inclined to agree with you. but on a macroeconomic scale who should be saving and for what?
there seems to be plenty of money available for investments. more than enough, not counting the recent phenomenon of banks refusing to lend because they don’t know their business.
fact is we seem to be in a post – capitalist world, whether the hard right knows it or not. corporations and rich people have more than enough money to finance any investment they think might turn a profit. they don’t need to entice the poor to save their pennies by offering them 3% against a gold standard.
all that overspending by the poor you see just keeps the wheels turning. which is probably not a good thing. because i forgot to ask
Q what will happen to the farmer now that he has a tractor and doesn’t have to leave any part of his farm fallow (because he owns more land than him and the mule can plow up) ?
then i guess the other question would be just how is the low end suffering if they are out buying Mercedes and granite countertops with money they didn’t earn?
or put it another way… is it possible for a society to borrow from the future?
I was not speaking of the low end put the high earner higher spender, the typical suburban keep up with the Jones person (150K+).
One of the issues that I believe occurs is that macro and micro are different. In a micro economic sense all borrowing is from the future because one has to eventually pay it off. (Buying a house with a mortgage is essentially tieing up some future income in exchange for the money today for example). On the Macro sense its not as clear, since globally at least for every borrower there must be a lender (possibly a printing press however).
Then the concern is the perception of how an economy spends its resources, just like many economists regard health care spending as to high, yet we see the same ramp up in spending on Vet Services, which are completly voluntary. It may well be that economists being part of the elite think they know how to spend societies resources better than society.
One of the issues driving this is the totally stupid idea of local school districts, they should be at least on a metro area if not state wide basis, with people being able to enroll in any school in the area. Principals are rated on the basis of their waiting list, and have the ability to hire and fire teachers as need be. (Essentially principals become business owners of the school)
probably we agree about the important question. i am trying to get you to see that money is an illusion. all the “real” consumption has to happen “today.” we, or the near rich, may consume too much, but the money we borrow to do it comes from people who didn’t need the money or they wouldn’t be lending it. if they were hoping to get it back later… well, life is full of risks. all that means is that someone else will be consuming in the future, not that the future has been borrowed from and lost.
i think that in general the people who really need to get the money they lend back, are not the people who are being borrowed from.
but before i make this too long, i already know that no one will know what the hell i am talking about.
about that camp song.
when Timmy was six, his mom and dad needed some time together so they sent Timmy to summer camp. Not wanting him to waste his time, and to give him a cometitive advantage, they sent him to accounting camp. That’s where Timmy learned to make numbers add up whether they wanted to or not. And where he began to feel that he was missing something. He still doesn’t know what it is, but he is sure it will cost a lot when he finds it. And he is really mad at old people.
Coberly essentially what you say is the macro point of view on borrowing, i.e. on a global basis the world does not owe anyone or anyone owe the world any money. At all times if you did a global balance sheet the net borrowing or saving would have to be zero. So the difference is from the point of view of an individual borrowing is encumbering future earnings. Now if you don’t think there is a future, e.g. a 100 km asteroid is inbound then…
Part of the issue involves the idea of buying something that makes something versus something that is just consumed. In one sense the low interest rates world wide (for long term loans which are not totally in central bank control) suggest that there is more money looking for something to do than the demand for money (It was true during the boom else why a synthetic CDO)?
So what this sums up to on an individual basis we do borrow from our future earnings (spend them) when we use credit. The question becomes when one goes to a country level instead of the global level which model applies the micro or the macro. Its clear from the past that countries can overspend and put themselves in the poor house (see Spain in the 1600s etc etc etc). GWBush set us on that road with his war of choice in Iraq.
Lyle–Ah hah! Someone who remembers Spain’s ruinous wars! Which, of course, were waged with Protestants in Europe usually in the form of some sort of dispute regarding dynastic successions (Catholic vs. Protestant heirs) in the Low Countries and elsewhere in Europe. The Spanish empire’s vast wealth derived from the gold and silver mined in Mexico and Peru disappeared in a hundred years or so after the Conquista. Their treasure ships sailed from Monterrey and Veracruz, Mexico straight to their Italian creditors without even stopping in Spain (IIRC).
These were religious wars, of course. We should be warned. Nancy Ortiz
you are more or less exactly right. i have no doubt that if you borrow more than you can easily repay you are setting yourself up for tight straights in the future. for a nation it’s not so simple. Spain did not borrow itself into poverty. it stole the silver and gold and figure a gold standard would protect it from inflation. after it spent the money it failed to realize that it had never bothered to build a national economy that worked (sic). we are doing the same thing here, but it ain’t the borrowin, and it sure as hell ain’t that “we the people” have lived beyond our means.
Geithner is either a liar or a fool.
the only way the present can borrow from the future is to drill for too much oil and poison the planet.
js kit aite the comment in which the camp song was referred to. something about Geithner not needing to believe what he was saying, just singing an old camp song.
i’d try to fix the spelling, but js kit might just aite it again.
Individuals borrowing, say a mortgage for a home, is a wise strategy as long as the mortgage payments can be met.
Over time, one hopes to have an asset that is fully paid for, and which has appreciated over time. That is a system designed to succeed.
When government borrows from itself, the eopposite occurs over the long run.
For example, the surplus in the trust funds was there, supposedly, to pay off the beneficiaries when they retired. The assets were supposed to accrue, so that over time, the monies were there to pay the beneficiaries.
But the actual design of Social Security and Medicare is “pay-as-you-go.”
That means the surpluses are spent for other, current government expenses, and current revenues are supposed to pay the beneficiaries, some of who have thought they were accruing monies in a trust fund to pay them at retirement.
What they found was a system whicy relies on one year’s of revenues to pay 30 years of accrual of benefits.
There is no way that can be successful.
Public debt must make up the deficit each year.
We have “achieved” this dubious result for the Social Security trust fund this year.
Pay-as-you-go will get even more onerous as the number of beneficiaries increase.
Isnt that how it “should” be Jimi? Its HIS board he can keep or delete what he wants.
Start your own and you can let everyone post whatever they want whenever they want……. good luck!
what is it about putting money in a bank that you don’t understand? or DO understand?
the money you put in on Monday is lent to someone who takes it and spends it. what you hope for is that by friday he pays it back with enough interest so the bank can pay you interest.
that’s all the Trust Fund is, does.
The Pay as You Go takes care of “interest” by the mechanism that the benefits you get forty years after you paid the taxes are paid out of the higher wages of the time in which you get the benefits. Rather clever. Too clever for some people to understand.
The Trust Fund has no important effect on Social Security. It’s just a bridge fund. The interest it collects is approximately equal to the effective interest that pay as you go is “paying” over the same time. about 5%. roughly the sum of inflation plus the growth in the economy.
The snark reference is an excuse. You didn’t want that topic discussed here, and you know that comment was nothing but the truth, and it makes you and your ilk look silly, so instead of rolling with it, and let a real debate happend, you delete it.
To classify that comment as some sort of election process comment is laughable.
When those of us who have a different perspective other than the “follow the leader” were bludgeoned to death by the utopian rhetoric before the election, rhetoric that was not only supported here at AB, but encouraged. And now a comment that rubs that crap back in your face….all of a sudden you want to deal with it….Typical!
I don’t believe you have the credibility to be deciding what is fact and what isn’t. This is just another case of the Pot calling the Kettle Black.
Yep………………representing a clear and biased double standard is excatly the way things should be. That is exactly why you hang out here isn’t?
Then STOP hanging out here!
No ones making you and your certainly not changing anyones mind.
Answer the question! The reason you hang out here, because you know you won’t be challenged isn’t it?
Tell me what exactlly are you learning here when everybody agrees with each other?