Comments for The Great Unwind

Comment on TARP Now Truly Lives Up To Its Name by Admin

2008-11-22T17:14:31Z

By the way, as of today you can still get a brand new home in Tucson for *no money down*..

Are you sure about that? I kind of doubt that those loans are being approved, sounds like a bait and switch..

Comment on Weekend Schadenfreude by Admin

2008-11-18T07:08:24Z

Yes! I saw this linked from The True Conservative last week and posted it under the Must Read News column, great find.

Comment on Weekend Schadenfreude by vachon

2008-11-17T03:19:10Z

Stunning article in Portfolio about how Steve Eisner came to short the world:

http://tinyurl.com/5s5w2b

vachon

Comment on TARP Now Truly Lives Up To Its Name by vachon

2008-11-14T01:58:40Z

His comment about not bailing out GM and Chrysler because it’s not clear they are “viable” was telling. He kept saying the TARP funds were for “investment”, not bailouts.

The air must be very different where he is.

Comment on TARP Now Truly Lives Up To Its Name by Shane

2008-11-13T02:46:06Z

The U.S. didn’t nationalize the banks; the Banks privatized the Treasury.

It seems to me that this happened long ago, before you or I were ever born, and it also seems to me that things are going as planned.

I’m really not too sure that we the people have it in us to do anything about it, at least in our lifetimes.

By the way, as of today you can still get a brand new home in Tucson for *no money down*… fuck

Comment on Round-trip Ticket to Weimar? by Admin

2008-11-11T06:17:35Z

I think that the danger is that while deflation is a painful economic circumstance for many, it is always a temporary one. Eventually, price equilibria are established and the economy begins a recovery. Despite the severity of our Great Depression, the economy emerged from that period and went on to set the bar for a stable and prosperous capitalist system. Hyperinflation OTOH, as history shows us, always leads to currency crisis and ultimately sovereign default.

To the extent that the current FED attempts to reflate the bubble result in a manageable rate of inflation, like the US saw in the 1970s and 80s, then we can all get along like you say. However, the US carries a much larger debt burden now (federal and individual) and the economy is so much smoke and mirrors, since our real industry is a shadow of its former self. I can’t profess to know how serious any hyperinflationary risk is at this time, but we are certainly closer to it than ever before.

The real problem, I think, is that the solution is clearly deflationary, the unwind of unmanagable debt loads and unrealistic asset price bubbles in housing and elsewhere will inevitably take place. But because of our status as a net debtor nation with a large fiscal deficit, we cannot actually persue a strategy of a managed unwind (e.g. disclosure of the insolvent institutions, bankruptcy and debt forgiveness).

As a nation we are in a bind, and the FED’s only viable strategy is inflationary, which in essence is a tax on US citizens through currency devaluation. Obvious moral hazard aside, I just can’t follow that line of thinking to a conclusion that actually fixes the current predicament. No matter how much money the Treasury and the FED pump into the economy, we the people don’t seem capable of increasing our debt load much farther.

Comment on Round-trip Ticket to Weimar? by vachon

2008-11-10T23:15:55Z

For a long time in the 80s, I had a job that paid enough to cover the rent and utilities but not quite transportation and basic food. Most of my friends also had similarly paying jobs and living situations. So, we all pooled our money 4 nights a week and bought and cooked together and ate at each other’s apartments in the same apartment building. It was a very nice way to live in those days and I’m grateful we had each other.

You could say that we lived in an inflationary environment: stuff was available for purchase, but we couldn’t afford to buy it. That’s a lot different than having no job and no income which would have been, and still is, so much worse.

I’ll take inflation any time, just gotta used to pot luck again.

Comment on Fear, Ideological Dogma and Elections by vachon

2008-11-08T02:17:50Z

“Examine the evidence, republican rule hasn’t been about free markets for a generation, it is about corporatism, and it has now devastated our markets and our nation as a whole.”

I wish I had a nickel for every dubious and dangerous financial product invented over the past 8 years to protect poor, unsuspecting hedge funds from the same market forces that we, the great unwashed, are subject to.

Comment on Hump-day topics and Reading List by vachon

2008-10-17T22:56:09Z

Clean environment policies will prevail in the West but only because it is finally in our economic self-interest. As far as the fake renaissance about nuclear and coal, I’m optimistic that their costs will ultimately doom them. It’s unclear if emerging markets will agree, though.

As someone at ground zero in the current economic disaster (real estate), the government can’t buy up mortgages fast enough. I would gladly pay more taxes if it creates jobs and I suspect there are a lot of scared people out there who feel the same. Obama declaring he’ll raise taxes on the rich isn’t nearly enough to prevent people from voting for him. Hell, he could probably raise taxes across the board and, imho, he’d win just on the jobs/public works issue alone.

Note to McCain: when (economic) fear turns to terror, all platitudes and political allegiances are off the table.

Comment on The fleecing of America. by Admin

2008-10-15T23:59:18Z

Yep. Paulson and co. would love for americans to believe that the banking industry execs are simply repulsed by the idea that they have to accept hundreds of billions of $ of public money, while being allowed to remain at their posts with apparently no government oversite as to what they do with the new found wealth. What they don’t want us to think about is that these bailouts aren’t the exception to crony capitalist systems, but the norm caused by the moral hazard dilemma.