BBC BLOGS - Mark Mardell's America
IN ASSOCIATION WITH
« Previous | Main | Next »

From Wall Street to Main Street to Skid Row

Mark Mardell | 21:15 UK time, Thursday, 15 October 2009

The politicians said that Wall Street had to be saved to rescue Main Street. But even as Wall Street makes profits, the loans don't seem to be flowing into Main Street.

The United States economy is about to pose an interesting political problem. As the Dow Jones industrial average hits 10,000 for the first time for over a year, unemployment hovers on the edge of the 10% mark.

As Goldman Sachs makes quarterly profits of more than $3bn, and ponders paying bonuses, for the first time in 34 years social security payments to Americans will not increase automatically next year. It is because inflation is so low, but it may not feel like justice to those not getting their expected annual increase while watching bankers get big bonuses.

One writer calls the planned payouts to bank executives "unseemly corporate welfare". Is he right?

Comments

or register to comment.

  • 1. At 9:32pm on 15 Oct 2009, PARRISIA_GREECE wrote:

    THAT'S MUCH BETTER. SHORT AND TO THE POINT POSTS

    Complain about this comment

  • 2. At 9:43pm on 15 Oct 2009, GH1618 wrote:

    Since when is "parrisia_greece" the arbiter of the length or content of Mr. Mardell's posts?


    At the risk of being accused of pedantry by our pedants-in residence, here's an interesting little bit of American trivia:

    Although almost everyone outside of Seattle, Washington uses the term "skid row," the historically correct term is "skid road." Skid Road was literally a road, now Yesler Way in Seattle, which was paved with "skids" (peeled and greased logs) in order to skid timber downhill to the bay. Probably it became "skid row" long ago when some eastern reporter failed to listen carefully and get it right. Once an error gets in print it takes on a life of its own.

    Complain about this comment

  • 3. At 10:09pm on 15 Oct 2009, MagicKirin wrote:

    Some of us were consistant with our feelings on the bailouts.

    I did not want Wall Street, The auto Makers and now the Media to be bailed out.

    Small business people aren't getting one and we provide the majority of jobs.

    Complain about this comment

  • 4. At 10:17pm on 15 Oct 2009, Gavrielle_LaPoste wrote:

    2. At 9:43pm on 15 Oct 2009, GH1618 wrote:

    Since when is "parrisia_greece" the arbiter of the length or content of Mr. Mardell's posts?

    More than three paragraphs is just too "text intensive" for some folks. The fine art of conversational writing is being twittered away at 140 characters per post.

    Complain about this comment

  • 5. At 10:22pm on 15 Oct 2009, Andy Post wrote:

    Mark:

    I can't help but wonder Americans a year ago were suddenly made aware of the fact that they were leveraged up to their eyeballs and decided to de-leverage immediately if not sooner. I know my wife and I did. That can't of helped the recovery. Wall Streets excesses in this one way may have been a blessing in disguise... if, of course, you managed to keep your job.

    Complain about this comment

  • 6. At 10:33pm on 15 Oct 2009, Gavrielle_LaPoste wrote:

    Of course it's corporate welfare. The financial industry counted on being bailed out by the taxpayers when they started playing fast and loose with the system. They're smart and conniving, not stupid and incompetent. They knew exactly what they were doing and how the government would be forced to react in a financial crisis. Especially since they stacked the deck at the Fed and Treasury with Goldman Sachs alumni.

    Complain about this comment

  • 7. At 10:36pm on 15 Oct 2009, Menedemus wrote:

    Karl Marx (in essence) identified that the pillars of Capitalism were The State, The Bankers and the Proletariat - without all three pillars in place and working towards the common good the Capitalist State would collapse and fail.

    Intrinsically, the Anglo-Saxon model of Capitalism has seen Politicians and Bankers become greeedy and the Proletariat used and abused at the expense of profiteering.

    Dare I suggest that with the degree of inequality and imbalance in the US Capitalist (and also the United Kingdom Capitalist) economic models, we have the potential nexus for a rebellion. This is becoming evident in the UK where we have the apsirations of white blue-collar (and possibly even middle class) voters turning towards ultra extremist right-wing political parties and away form the mainstream.

    How it will transpire in the Americas I don't know but the United Kingdom is fast becoming a Banana Republic driven by self-aggrandisement and political shenanigans. Could the USA go the same way I ask myself?

    Given the way the UK is developing it would seem entirely possible.

    Complain about this comment

  • 8. At 11:29pm on 15 Oct 2009, faeyth wrote:

    First of all old people get more than a poor family of 4.Second of all Unemployment is a lot higher than 10% they aren't including people out of High school or College looking for work or people who have stop looking.Third Baby Boomers shouldn't have outsourced their jobs until they retired now they are retraining for jobs that should go to younger workers who don't have a job and aren't considered unemployed because younger workers they pay for Social security of older workers.Plus they shouldn't have gambled retirement away and bought big houses when their kids moved out, they didn't need them.Now younger generations are screwed because Gen X is smaller and Millenials are not working.Right now Social Security is paying out more than it is receiving.If Younger people don't get Employment soon there may even be cuts in the future.It's wrong all the bad domestic policies that have happened under the Baby Boomer Generation.Now they are borrowing from grand kids to pay for their S.S. which they are taking because many can't find a job.Because all the money they put away into Government is long gone with debts added.Boomers were robbed by politicians and Corporations who constantly diverted issues away from economy and policy while robbing my parents generation(Boomers) and now mine and my children.Employment needs to increase soon.Unfortunately the US media does something to do with that as well since it too is owned by Corporations and didn't really try to show Boomers they were getting the shaft.Since the money was coming my parents didn't realize it was all borrowed and that they were going to be left holding the bag.Dems haven't closed any loop holes for Corporate Greed.

    Complain about this comment

  • 9. At 11:30pm on 15 Oct 2009, ranter22 wrote:

    The entire process of government is more or less about distributing hope.
    Since religion is also not about instant gratification it also serves as hope.
    So long as people have hope they will be manageable. Our leaders, beginning with our last president of the US; The son of the wealthy and recently empowered George w. Bush, understood that in no way shape or form, does capitol sharing of funds trickle down.
    Ordinary people also know this to be true. I know it, you know it, and so do many constituents. It is only in the hope that elected officials should once in a while drop the proverbial bread crumb.
    We will, for the most part of us never experience true wealth. But our hope for the higher ups to fully line their pockets, with enough money and then allow for loose change to fall upon us, never wanes. People, if by some chance you are blessed with just one opportunity in life to grasp a moderate amount of riches, do not squander this fluke. All the governments, in all parts of this world have the same common denominator, money. Governments cannot function well if all are wealthy. There was a time I the US, when, no American,(Anglo) would even consider a cotton picking job. For many, many years the written constitution coupled with the only interpreters of the same would all but guarantee a job of good stature. A job of leadership, prestige, and certain inalienable rights. Success, continuity and consistent relegation.(for some) All taken for granted by many. The times have changed now, Ask any Mexican, Haitian, south American or non descript, according to the viewers. You may need a translator for some to respond to the question. And I am not putting them down. The fact is, that the vast majority of these individuals, perhaps had a language barrier to overcome, and I am sure they did the best they could. One thing that these people did not lack, was the resolve to do a days work and to do it with honor. Today, they are persecuted, arrested and killed.
    The competition is for the measly jobs that nobody but these folks wanted to do, because they had no other option. Our society has now declared that "we will take whatever job there is" even cotton picking if we must.
    The voice of a kind and just country is now crying out, 'throw those bums out, they are taking over our precious jobs'. No more charity, we have had enough. Meanwhile, we hope our leaders will exact mercy on us. Health care for some, hellcare for others. The Government has great health care, just not for you and me. If you want a good plan, join the democratic or Republican Platinum group. Who is there to watch them spend our tax dollars?
    Yet, when a business district sees a few errant vagrants roaming their streets, they call in the skid row police. Let go buddy, on to the shelter with you! Hey, guess what, the shelters didn't get funding this year, where do we take this bum?
    No problem, Charge him/her with a felony and problem solved. Three squares and a cot for only 40,000 dollars a year. That sounds like the Ritz, where can I get first class treatment like that? A little melodramatic you think. Listen to this, with my rent and my yearly bills paid, and all else, living low budget I can do it for slightly over 25,000 a year, If I don't get sick. Yes we pay for first class service to almost anyone else, yet we live lower class. We support and pay for the salaries of those who seek to drain the living sheet out of us. They live in comfort and prestige. They make sure we have hope. A game of Golf for some, a hotel across the world, a page boy for the deviate, and accessories for a secret girlfriend of some other. Sure we are at the cusp at times, bordering between a shelter and skid row, but which one of the highly regarded elected officials will answer your call?
    We live in America, we Are Americans, does that mean what it might have meant at one time?
    People die everyday, from illness, from hunger, from utter neglect or lack of human affect. What does our president tell us, what does he do, "Well if you don't need that operation, maybe you can just take some pain killers".We live in skid row. They live in the palace, with the guards and the civil servants we pay for them. They are, the civil servants with an egotistical and belligerent attitude towards the skid row dwellers. Phew!

    Complain about this comment

  • 10. At 11:41pm on 15 Oct 2009, squeptikal wrote:

    Dont these CEOs have some shame on their face to get millions of bonus when they know that we (public) saved their banks last year and if it were not for that, they would be begging somewhere out on the street? I am raged at the fact that there would be no increase for the people who merely live their lives on social security while the executives of these companies get ridiculous bonuses.

    I am equally appalled at the government regulators, where are they amidst all this? I wonder if they get their share of kickbacks out of these millions of bonuses and hence are not taking any steps to put a curb on this. This is the worst form of white collar corruption and a blow in the face of the american public who out of their hard earned taxes so called rescued these banks.

    And we call this democracy? It's insane.

    Complain about this comment

  • 11. At 11:53pm on 15 Oct 2009, Simon21 wrote:

    One writer calls the planned payouts to bank executives "unseemly corporate welfare". Is he right?"

    Whatever it is a non issue. Those in these positions are always going to pay themselves fortunes, always have, always will.

    The only way round is to fundamentally change the system and no one is seriously suggesting that. The US recently tied itself in knots over the simple issue of medical provision, changing corporate culture is not going to happen.

    Until someone does suggest this all comment is simple whining

    Complain about this comment

  • 12. At 11:56pm on 15 Oct 2009, Simon21 wrote:

    6. At 10:33pm on 15 Oct 2009, Gavrielle_LaPoste wrote:
    Of course it's corporate welfare. The financial industry counted on being bailed out by the taxpayers when they started playing fast and loose with the system. They're smart and conniving, not stupid and incompetent. They knew exactly what they were doing and how the government would be forced to react in a financial crisis. Especially since they stacked the deck at the Fed and Treasury with Goldman Sachs alumni."


    Welcome to capitalism. The Government and Big industry have always bailed each other out.

    Complain about this comment

  • 13. At 00:36am on 16 Oct 2009, parityisbetterthancharity wrote:

    If anyone on here has the *time* perhaps you would be so kind as to give Parrisia_Greece a link to a news service that provides news pieces small enough that a sparrow could peck them up. Sparrows so love to twitter;)

    (You might want to use all caps too so she (or he) notices your post:)

    Complain about this comment

  • 14. At 00:49am on 16 Oct 2009, bethpa wrote:

    If the dollar goes down 15% relative to world currencies but a stock priced in dollars goes up 10%...have you really made any money? only if you buy something made in America...

    As the dollar goes down perhaps exports will do better but also the cost of things from China will go up. And will a lower dollar translate into more jobs..now that the US has such a weak manufacturing base...

    I never feel like I am finding out in an honest way how the economy is doing...except on Bloomburg.


    There seems to be some push back now to some of the Insurance corporations by politicans.

    Maybe some banks should go under... but these guys are corrupt imo.

    Its class warfare and the corporate leaders are winning.

    Complain about this comment

  • 15. At 00:52am on 16 Oct 2009, socialistlibertarian wrote:

    13, trueconservative -

    An excellent idea. I'm afraid I can't oblige, however. None of the news services I read regularly fit the bill!

    Complain about this comment

  • 16. At 00:57am on 16 Oct 2009, bethpa wrote:

    Not only is it corporate welfare I think an argument could be made for treason by some of these corporations. If it ever could be proved that the war in Iraq was waged so that corporations could get cheap oil then that would be using the military not to secure American interests but to protect the interests of corporations...

    And these people are so rotten they are stopping Americans from getting health insurance.

    Well I lump them all together..and when I see their corporate ads on tv I feel angry. I wonder how many other Americans are like me now...

    Complain about this comment

  • 17. At 01:12am on 16 Oct 2009, saintDominick wrote:

    Rewarding successul executives for a job well done is the American way and an essential element of capitalism. My only objection on this issue involves giving golden parachutes and huge bonuses to executives that are under performing and often bringing their companies to the verge of bankruptcy.

    It is not unusual for the stock market to bounce back from an economic downturn before the general economy does. I think it is unrealistic to expect the TARP and stimulus package to single handedly solve our economic problems. Those were shots in the arm or placebos designed to avert a catastrophe and provide the stimulus necessary to get the economy going again, but in the end what will make a difference will be the Fed's monetary policies, consumer spending, more emphasis on personal savings, greater focus on improving our infrastructure, R&D and education. I would not be surprised if a serious devaluation of the dollar takes place to mitigate the effects of our debt liabilities, make exports more affordable to foreign clients, encourage foreign investment, and help reduce our trade deficit.

    The cash for clunkers was highly successful, the $8K real estate credit for first time buyers, the $1,500 credit to people that replace old appliances with energy efficient ones and other stimulus programs helped keep unemployment in the 10% range, but they are not enough to sustain long term economic recovery.

    Complain about this comment

  • 18. At 01:26am on 16 Oct 2009, DigitalJanitor wrote:

    Labels are not nearly as important as what this sort of thing might lead to: open class warfare. The health care debate is merely a corner of that larger, vastly more dangerous, unacknowledged elephant in the middle of the room. IMO this and our dependence on foreign petroleum* could be the twin blows that bring America to it's knees.

    As I read in another article recently, many of us work year in and year out hoping we'll save enough to die before our money runs out. Is this really the American Dream?

    * Ignore global warming, pollution, and peak oil if you like- the political implications alone should be sufficient motivation to get cracking on feasible alternate energy ASAP.

    Complain about this comment

  • 19. At 01:27am on 16 Oct 2009, David wrote:

    I work for the US government and its..culture (Treasury department) is worse than anyplace I've ever been. Not to say its horrible...

    Just very stressful...so maybe corporations are not all bad...if the IRS where I work is sooo picky, picky, picky, (lol) about accuracy (in work)

    Perspective is everything,

    and one might stop to think that with globalization ...huge corporations are here to stay, therefore it's good to buy a world (dedicated) magazine like the Economist, rather than a national TIME magazine--for more realistic analysis.

    That may be the reason I come to the BBC wesite...relevance.

    Complain about this comment

  • 20. At 01:49am on 16 Oct 2009, nate1129 wrote:

    How can retirees possibly expect to get the same bonus as a working banker? Granted, the CEO who leveraged his bank many times over may not deserve such extravagant pay, but certainly an 80-year-old on a pension should not expect a multimillion dollar bonus coming in the near future, as a reward for the past 15 years of lounging about in a wheelchair with the family or the nursing home.
    Making a $3 billion profit is probably worth rewarding a few people, especially after the past year. Financial incentive and risk (i.e. carrots and sticks) remain the best way to motivate people, businesses, governments, and organizations of all stripes.

    Complain about this comment

  • 21. At 01:58am on 16 Oct 2009, ranter22 wrote:

    800 billion stimulus for bailout - x billions from soc-sec+medicare
    proposed 829 billion over 10 years for health care. hmm. Can somebody rip off the goggles from that elephant, I think he is confusing the Republicans.

    Complain about this comment

  • 22. At 02:15am on 16 Oct 2009, fluffytale wrote:

    Not only is it corporate welfare I think an argument could be made for treason by some of these corporations.


    Well said bethpa

    Complain about this comment

  • 23. At 02:29am on 16 Oct 2009, MagicKirin wrote:

    ref #18
    DigitalJanitor wrote:
    Labels are not nearly as important as what this sort of thing might lead to: open class warfare. The health care debate is merely a corner of that larger, vastly more dangerous, unacknowledged elephant in the middle of the room. IMO this and our dependence on foreign petroleum* could be the twin blows that bring America to it's knees.

    ___________________________________________

    Part of the problem with the dependence on foriegn oil should be layed at the environmental lobby who has paid the Dems to freeze off shore drilling, drilling in alaska and construction of Nuclear power plants

    Complain about this comment

  • 24. At 02:33am on 16 Oct 2009, Gavrielle_LaPoste wrote:

    12. At 11:56pm on 15 Oct 2009, Simon21 wrote:

    Welcome to capitalism. The Government and Big industry have always bailed each other out.

    I have no problem with capitalism when it is well regulated and driven by long term goals instead of short term profits.

    Complain about this comment

  • 25. At 02:42am on 16 Oct 2009, Gavrielle_LaPoste wrote:

    20. At 01:49am on 16 Oct 2009, nate1129 wrote:

    ...an 80-year-old on a pension should not expect a multimillion dollar bonus coming in the near future, as a reward for the past 15 years of lounging about in a wheelchair with the family or the nursing home.

    Lounging? Just how old are you that you imagine your elders, or anyone for that matter, are lounging in a wheelchair? You make it sound like they have a choice. Or maybe you think they do. Get busy living, or get busy dying, eh? Is that your philosophy?

    And just for the record, no one without megabucks wants to be in a nursing home. My mother, who is 80 and trapped in a wheelchair, would rather die.

    Complain about this comment

  • 26. At 03:48am on 16 Oct 2009, digital2horses wrote:

    Not one major news organization in the USA reported the Goldman Sachs record multi billion dollar profit OR the ridiculous bonuses to employees. I am a registered nurse, single parent having never received one penny of child support from a dead beat Dad. I am currently getting my Master's Degree in Nursing Education and the job prospects are bleak, and I am unemployed. For-profit and nonprofit hospitals are hiring LPN's now as they are cheaper than RN's. Why doesn't someone bail me out? How come American News did not report this? Thank goodness for BBC news. My country can only report credit card basic fees going up 250%, with record credit card company profits, Right.

    Complain about this comment

  • 27. At 05:11am on 16 Oct 2009, BienvenueEnLouisiana wrote:

    I had actually heard about this news that social security payments would not go up this year on the morning news radio broadcast, though I confess my attention was on the President's visit to New Orleans instead. I would've signed up for a ticket to the townhall meeting at UNO, but I couldn't get out of work. As for the bonuses, I don't know if there is anything that can or even should be done about it; after all, we want these companies to make a profit so that wealth can be created in this economy again. Seeing profitable companies give out bonuses is hardly as scandalous as seeing near-bankrupt, bailout receiving companies give bonuses.

    Complain about this comment

  • 28. At 06:39am on 16 Oct 2009, powermeerkat wrote:

    SS[Social Security] is broke. Medicaid is hovering on the brink of bankruptcy.

    Nope, not because they're run by bankers.

    But because they're state schemes administered by the government.

    "The scariest phrase in English language is: 'I'm from the government and I've come to help you'"

    (Ronald Reagan)

    Complain about this comment

  • 29. At 07:58am on 16 Oct 2009, dceilar wrote:

    Bethpa

    I wholeheartedly agree. The corporate world is winning partly due to the role of so-called intellectuals.

    Every powerful state relies on specialists whose task is to show that what the strong do is noble and just and, if the weak suffer, it is their fault. In the West, these specialists are called "intellectuals" and, with marginal exceptions, they fulfil their task with skill and self-righteousness, however outlandish the claims, in this practice that traces back to the origins of recorded history.

    For decades the West has been defending corporate interests in the middle east. There was never a threat from the Kremlin to control that region (despite claims otherwise), and now Islamic terrorism is the new deceit for us to control the area of the world. Intellectuals are part of that deceit.

    Complain about this comment

  • 30. At 08:08am on 16 Oct 2009, KScurmudgeon wrote:

    When the voters get angry enough, things will change.

    If the voters have hope they will probably remain patient, because they know they don't know enough and they fear change.

    Giving the voters just enough hope and comfort is what our masters do so they can continue to fleece us year after year.

    Most working taxpayers are content with having the car, house, food, TV and gadgets that they see advertised. They really don't care if it is all bought on credit or what the interest rates are, as long as they still have a job and no one forecloses on them.

    Ten percent unemployment is only really meaningful to that ten percent.

    Apparently loosing one's retirement savings, principle and bubble-fed interest, hasn't hurt enough people to bring significant pressure for reform. Or maybe the politicians just aren't willing to listen, yet. Or they believe that a simple shell game based on distraction will diffuse the anger.

    We seem to understand that our security depends on keeping our bosses happy, or if we are already on welfare or other government 'entitlements', on keeping the pot of public anger simmering but not boiling over.

    Smart money will go wherever the potential for return is greatest. We all know this. Smart money does not consider how the return is 'earned'. Principal is what is invested in order to get interest, or what is borrowed , so that we pay it. Principle is a misspelling.

    Not enough has been lost. Not enough has been lost to make change necessary.

    The greatest potential is still in shilling the system, in making sausage of filler, fat, and multisyllabic opacities and selling it to all those fools who work and pay their taxes and their bills and don't know any better. Oh, and the 'protein' in chicken feed is processed chicken byproducts. We all know this, but buy the cheapest chicken we can find at the market anyway.

    We are cattle in some one else's feed lot, eating salt and hormones so we gain weight faster and can be sold by the pound. Oh, and the 'protein' in chicken feed is processed chicken byproducts. We all know this, but buy the cheapest chicken we can find at the market anyway.

    Value and quality are matters of price, not content.

    We are idiots, and deserve to be treated this way.

    The wolves are in charge of the pasture, the foxes masters of the hen house.

    Only a few are smart enough to work hard and get out of the rat race, or into it depending on your POV. The rest are as above.

    Epigrams of democracy.

    KScurmudgeon

    Complain about this comment

  • 31. At 09:04am on 16 Oct 2009, wanderingangus wrote:



    In an otherwise thoughtful post, Curmudgeon writes "Ten percent unemployment is only really meaningful to that ten percent".

    Surely as long as the employment figures continue to rise there will be at least another ten or twenty percent who are terrified that they are going to be next? And the terror that those people feel must be very meaningful to them indeed.

    It's all a matter of confidence. Confidence seems to have returned in a big way to the Stock Market and in an even bigger way to Goldman Sachs.

    But I very much doubt whether there are too many ordinary working families who are feeling very secure as we go into the winter months of 2009/10.

    Complain about this comment

  • 32. At 10:17am on 16 Oct 2009, dceilar wrote:

    #Meerkat

    Social Security and Medicaid are not hovering on bankruptcy. They are govt run institutions - they cannot go bankrupt.

    "The scariest phrase in English language is: 'I'm from the government and I've come to help you'"

    (Ronald Reagan)


    Didn't Raygun hold govt office? Didn't he help corporate America while he was POTUS? One rule for the rich and another for the poor eh?. The State is nothing but a committee for organising the affairs of the bourgeoisie.

    Complain about this comment

  • 33. At 11:27am on 16 Oct 2009, saintDominick wrote:

    The amount of raises to Social Security recipients has nothing to do with the system being solvent or insolvent, and it definitely has nothing to do with what President Obama does or says. Raises are determined based on the Consumer Price Index during the July-September quarter.

    In 2007, when the CPI was low, American retirees received a 2.3 percent raise, which brought the average benefit from $1,055 $1,079. In 2008, when the CPI went unexpectedly high, the raise was 5.5 percent. This year, with the CPI in an almost deflationary trend benefits remain stable.

    The solvency of SS is a different matter. The current economic downturn, and the subsequent reduction in government revenues, including SS - had a negative impact on the system. However, Social Security has been running a huge surplus for decades and according to the CBO it will continue to do so within the next year or two as soon as the economy recovers...which remains to be seen.

    Complain about this comment

  • 34. At 11:43am on 16 Oct 2009, saintDominick wrote:

    Ref 20, Nate

    "...but certainly an 80-year-old on a pension should not expect a multimillion dollar bonus coming in the near future, as a reward for the past 15 years of lounging about in a wheelchair with the family or the nursing home."

    Someday you will join the ranks of those who spend their days "lounging" about in wheelchairs with the family or in a nursing home. People don't age or become physically impaired because they want to.

    Your views on this issue reflect the mindset of those who continue to oppose Social Security, programs for the poor, and healthcare reform. It is the centerpiece of a philosophy that promulgates individual Vs collective responsibility, and the most fundamental difference between Democratic and Republican ideology.

    Should we plan for babies to be born in incubators and raised by robots? How about euthanasia? Alas, maybe Sarah had a point after all, I just wish she had elaborated a bit more on who is actually planning to deploy the final solution...



    Complain about this comment

  • 35. At 12:39pm on 16 Oct 2009, ironfranco wrote:

    *… but it may not feel like justice to those not getting their expected annual increase while watching bankers get big bonuses.*
    Mark, can you suggest an alternative way to motivate the bankers in their effort to earn money while all of us still suffer the consequences of the recession? Can you propose another way to push forth an economy which is based on the private property and on the earning of profit? I agree that an initial step is to be done in order to start the liveliness’ process which may take years. Why shall we obstruct those who can make it?

    Complain about this comment

  • 36. At 1:14pm on 16 Oct 2009, barry white wrote:

    They (the Americans) seem to have missed the point that we did with our manufacturing industry. Sure it is in the short term cheaper the send it all abroad where the wages are lower and the health and safety non existent, but these decisions taken by chaps in the board room turn out to be wrong most times. And they are guided by a pension and bonuses.
    How many board rooms have actually given the world a legacy other than debt and no jobs?

    Complain about this comment

  • 37. At 1:47pm on 16 Oct 2009, MagicKirin wrote:

    ref #30
    KScurmudgeon wrote:
    When the voters get angry enough, things will change.

    If the voters have hope they will probably remain patient, because they know they don't know enough and they fear change.

    Giving the voters just enough hope and comfort is what our masters do so they can continue to fleece us year after year.

    (I think the majority of voters are Lemmings, I see outrages from both parties and yet the same people keep getting relected. anyone want to take a bet on Charlie Rangel getting relected?)

    Most working taxpayers are content with having the car, house, food, TV and gadgets that they see advertised. They really don't care if it is all bought on credit or what the interest rates are, as long as they still have a job and no one forecloses on them.

    (Not all of us, being able to pay my bills amd mortage even with a cushion is scaring me)
    Ten percent unemployment is only really meaningful to that ten percent.

    (Shortsighted, no one economicly exists in a vacum)

    Apparently loosing one's retirement savings, principle and bubble-fed interest, hasn't hurt enough people to bring significant pressure for reform. Or maybe the politicians just aren't willing to listen, yet. Or they believe that a simple shell game based on distraction will diffuse the anger.

    We seem to understand that our security depends on keeping our bosses happy, or if we are already on welfare or other government 'entitlements', on keeping the pot of public anger simmering but not boiling over.

    Smart money will go wherever the potential for return is greatest. We all know this. Smart money does not consider how the return is 'earned'. Principal is what is invested in order to get interest, or what is borrowed , so that we pay it. Principle is a misspelling.

    Not enough has been lost. Not enough has been lost to make change necessary.

    Complain about this comment

  • 38. At 2:13pm on 16 Oct 2009, MarcusAureliusII wrote:

    The Obama administration has pumped up the economy by adding nearly one trillion dollars to the federal deficit over last year's budget. While that may have boosted Wall Street for the moment, many people feel it has not worked to stimulate the economy. Here's why I think it hasn't. The rationale for the stimulus was that since banks and other lending institutions had been badly damaged by the highly leveraged sub prime mortgage scheme, providing bail out money to these institutions would restore normal credit to the rest of the economy which depends on the financial sector. But these institutions didn't lend for what would have been previously thought to be sound business and personal loans to nearly the degree that was needed and hoped for. Instead, they sat on the money and paid their top execs bonuses to boot. This has infuriated many people including the President himself. What the government should have done was to allow the banks to go broke if they couldn't lend, allow the sub-prime mortgages to go into default and be sold off at their fair market value, and gone into the banking business itself until new private banks that could re-privatize the financial industry could be chartered. This would have punished the segment of the market especially shareholders that made bad investment choices and at the same time kept the economy running. And where would the money have come from to pay out these loans? From the same place it will come from inevitably anyway, the government would have to print it. And when it does, it will devalue the US dollar and cause interest rates to rise. This means that for the first time since the Clinton administration, the federal government will have to live within its means the way everyone else does. It also means the same for state governments including deadbeat California. In the end, in order to keep the economy rolling the government will have no choice because it cannot tax the private sector or individuals to pay off its own debts, the money isn't there and it would kill what is left of the economy if they tried.

    The fact remains that the US economy is still the big engine that drives all the other economic engines around the world either directly or indirectly. And it is a fact that the US economy is two thirds driven by consumer spending. When that spending doesn't materialize because people won't buy the discretionary items they did when they felt their jobs were more secure, their assets greater, the finances stronger, the market will probably sink again. I do not see major capital expenditures by private industry and all those shovel ready projects the government was supposed to be funding don't seem to have started yet in great numbers either. But 40% of the stimulus package has already been spent. The cash for trash auto buying incentive is thought to have merely accelerated the purchase of new cars that would have been bought in the near term anyway. How much money will the government have to print? As much as it takes to get the total assets in absolute numbers back to where the markets thought they were before the crisis. The longer it waits, the more people who go broke, the more people whose mortgages go into default, whose businesses go bankrupt, the more it will be but right now it is in the many trillions of dollars already. And what of the creditors who hold US backed loans and bonds at fixed rates of interest? Well they can accept a return of 20 or 30 cents on the dollar in real value compared to what they loaned out or nothing when the borrowers default. We'll see what kind of Christmas shopping season we have when about 30% of annual retail sales are made but as the time approaches, don't be surprised if there is a bleak outlook. January will be a golden opportunity for some great bargains...if you have any money to spend. Attention K-Mart shoppers, we're having a blue light special in aisle 6. For a mere $200 you can buy K-Mart-Sears, that's right the entire chain of stores for sale for only $200. And if you act now, we'll throw in Martha Stewart as a free incentive bonus.

    Complain about this comment

  • 39. At 3:50pm on 16 Oct 2009, carolinalady wrote:

    #2 GH1618: you are correct in your explanation of the origin of the term Skid Row. The question is: how did the loggers' Skid Road, greased and peeled logs used to slide timber to the dock, somehow morph into a euphemism for a derelict community?

    Obviously, the tin-eared masters of the Universe who run the financial institutions still believe they have as complete license to reward themselves for non-performance (or for the government's performance and helping hand) as they did for the poor performance and greed that got us into this mess last year in the first place. Since the Insurance Cartel stepped up to the plate (sorry for the baseball analogy, but it's playoff season here in the US), and seems to have hit a 3-run dinger in the first inning, I'm afraid the opposition is too much encouraged. Time for the rally caps, good guys.

    Complain about this comment

  • 40. At 4:12pm on 16 Oct 2009, faeyth wrote:

    Stock market is scam,Hedge funds and Banks purchase stocks in a healthy companies bribe the CEO's and board members with bonuses to lay off workers,outsource jobs,lower quality standards and take out loans from banks who also get money back before common stock holders.They purchase Preferred (pay out stock) and Common(voting stock)give huge dividends to preferred stock have common stock pay back loans which more poor people own and don't know they have a voting right because it's usually managed by adviser who is in on it.Then take the company for all it's worth.Multiply the stock stuff it into 401Ks and leave poor people holding the bag(how many lost money from 401k) while the rich walk away with the money and the best part is you are probably a client of the bank who used your money for the investments and loans to fire you and outsource your job so they could get Bonuses(while they scam you on fees,mortgages,and credit cards).The CEO's and board members then leave the company and get new jobs at new company to continue the scam.The high stocks market just means rich people are buying cheap stock after they ruined everybody else.The stocks are naturally going to go up.And employment has nothing to do with the profitability of companies anymore.Why do you think Rich people are always about Free trade and having China introduce to World market so they can produce things in other countries with lower standards of Environmental policies and wages.Companies are actually saving money in China because they are polluting the crap out of it and don't have to pay to clean,however more and more Chinese are starting to be aware and angry about their low wages and dirty pollution.Naturally they are getting everything that comes with industrial revolution that includes workers strikes and environmental complaints.Then the corporation will dirty a new country that's why they are in China because Mexico, Central and South Americans were increasing their standards.That's why we have so much immigration from Mexico and Central America because they to had their jobs outsourced to China.It's sick.That's why companies such as Ford where the family still hold large amounts of Common stock(voting stock) don't have the same problems as companies owned by Hedge funds(Chrysler)or Public companies like GM.They have a family legacy to keep up as well, so have a long term interest in company.That's why I belong to a Credit Union and save money instead.The problem is now they have all the money and have only left jobs for those they can't outsource.That's why Rich people love illegal immigrants so they can exploit them for low wages in this country while exploiting others in foreign companies and Unions are only concerned with skilled labor and don't help those who truly need them which is unskilled labor.I feel for illegal immigrants but I think we all have same problem many, many people in Asia willing to work for practically nothing.Until workers in these regions expect better pay and until consumers purchase more products made in North,South and Central America we won't solve unemployment or illegal immigration.Plus with low property values and the fact that the Federal Government didn't take the property they gave Banks money for Rich people are buying large amounts of property both commercial and residential and charging people who have lost that house at lot of money to rent it because their credit is bad from bankruptcy,foreclosure,and unemployment.And the best part is a lot of Americans don't care until it happens to them or someone they know.Look how the stimulus money is being spent it's not going to people who need it most because politicians want to be given to every district not just the ones most in need which than expands the problem while aiding the Corporations robbing all of us.Dems have not changed and regulations back that Bush dissolved,Speculation loop hole,loans scams,credit card debt,Bank take overs,Dividing and adding stock together,They're disgusting all of them.Nader is right Dems are weak GOP who only throw bones to the poor while robbing the middle class and making them poor but it's okay they'll send you a check sort of.And the US media owned by corporations talks us into blaming Workers and Socialist ideas for Free market poverty of middle class and giving the rich more money and less taxes because they will give it back,Yea Right.The Depression Generation was right to save money,pay off debts by homes and have credit debts,and not trust the Rich Banks or Corporations.Trading 401K for Pensions has been a big mistake.Lucky for my Dad he has a pension,unlucky for my Mother she has a 401K.

    Complain about this comment

  • 41. At 4:56pm on 16 Oct 2009, GH1618 wrote:

    carolinalady (#39), The original skid road in Seattle became the place where the derelicts hung out, so the name of the place became the name for such places generally, although in corrupted form.

    Complain about this comment

  • 42. At 5:38pm on 16 Oct 2009, Philly-Mom wrote:

    Ah yes... When the rich get richer and the poor get poorer, the American Dream begins to die.

    This is why so many of us are desperate for change. Unfortunately, the po folks of the far right blame the greedy liberal left, and the po folks on the far left blame the greedy conservative right.

    Why can't we all just get along?
    -- Greed and Misconception. That's why.


    Personally, I am more worried about the middle class and the threat of a super-rich elite than I am about war in the middle east and the threat of new-clee-are war.

    Sorry, but there it is. Look:
    I've been on welfare and I've overdrawn my bank account to feed my kids. I pay bank fees to feed my children and bankers get BONUSES???
    --- now, that jus' ain't right. It ain't right.


    Meanwhile, back at my desk job:
    I work in Finance and Operations at a University. Our endowment has not quite made it back up to pre-crash levels... but it's dang close. Why? Because our Board has some smart investors.

    Will our investors get bonuses from our University? nope.
    But, they'll do well when the market turns around... you better believe it.

    As for me and my house? My checking account hasn't dipped red for almost two week! Yay!

    SO -- Anyone who had cash to drop into the market will do well in the coming years. If you didn't or you're unemployed, inflation will make you feel more poor in the coming years.

    It jus' ain't right.


    [The above rant has been brought to you by a Concerned Mother for America. All hugs and donations must be made to your local charities because I don't have a website with a paypall account. Have a Nice Day.]

    Complain about this comment

  • 43. At 6:28pm on 16 Oct 2009, faeyth wrote:

    What's really sick is,if unemployment and foreclosures continue we will be back where we started before Stimulus because the Rich are transferring the money to stockholders and CEO's and board members and not loaning to businesses or clients to create jobs or purchase products.At least if the Banks fell the Robbers would be in same lines as the middle class and poor.There a sense of justice in that even if it affects us all at least unemployment and poverty would have been evenhanded.Not just dumped on the backs of middle class and poor,which is everyday expanding.when we all have even less money because less people have purchasing power we will be back at square one and there won't be anyone to borrow money from for the Government to bail them out.These are very ignorant people.All I can say is write our leaders or vote them out and replace with crazy 3rd parties they can't do worse than GOP or DNC.Who knows they might even be effective.

    Complain about this comment

  • 44. At 7:41pm on 16 Oct 2009, U13817236 wrote:

    "One writer calls the planned payouts to bank executives 'unseemly corporate welfare'"...which, of course is typical establishment media understatement. By simply referring to it as "unseemly", it minimizes its unjustness. And that's always the way with apologists for corporate predation, to appear to be criticizing, but in a very limited fashion, as a tactic to contain more far-reaching doubts about the system as a whole. By calling it "corporate welfare", it can serve as an implicit way to disparage all types of welfare, even for the truly needy, whose numbers continue to grow. It's much more than 'corporate welfare', a term 'free market' conservatives have used for years, it's socialism for the rich, a term no conservative, including Obama, would dare whisper.

    Complain about this comment

  • 45. At 9:06pm on 16 Oct 2009, Simon21 wrote:

    41. At 4:56pm on 16 Oct 2009, GH1618 wrote:
    carolinalady (#39), The original skid road in Seattle became the place where the derelicts hung out, so the name of the place became the name for such places generally, although in corrupted form.
    "

    I disagree with this. The name surely comes from the UK where Row has meant path since before Hogarth's time.

    Although Seattle is claimed as the origin of the name this is unlikely simply because it is a backwater and had no special claim as a centre of deprivation.

    New York, Boston all had poor districts which dwarfed Seattle's - so why adopt a name from such an isolated area?

    Also Canada must have had a number of skid paths in its logging towns, so what particuarly identifies Seattle?

    Complain about this comment

  • 46. At 9:12pm on 16 Oct 2009, Simon21 wrote:

    38. At 2:13pm on 16 Oct 2009, MarcusAureliusII wrote:
    The Obama administration has pumped up the economy by adding nearly one trillion dollars to the federal deficit over last year's budget. While that may have boosted Wall Street for the moment, many people feel it has not worked to stimulate the economy. Here's why I think it hasn't. The rationale for the stimulus was that since banks and other lending institutions had been badly damaged by the highly leveraged sub prime mortgage scheme, providing bail out money to these institutions would restore normal credit to the rest of the economy which depends on the financial sector. But these institutions didn't lend for what would have been previously thought to be sound business and personal loans to nearly the degree that was needed and hoped for. Instead, they sat on the money and paid their top execs bonuses to boot. This has infuriated many people including the President himself. What the government should have done was to allow the banks to go broke if they couldn't lend, allow the sub-prime mortgages to go into default and be sold off at their fair market value, and gone into the banking business itself until new private banks that could re-privatize the financial industry could be chartered."


    And when the rioting was over with the masses of homeless, unemployed and crashed business empolyees, they could pick up the bodies and start again?

    And a country where people get more hysterical over health insurance than they do over their young men being killed and injured in useless losing wars is not likely to tolerate government banks.

    Complain about this comment

  • 47. At 9:14pm on 16 Oct 2009, Simon21 wrote:

    28. At 06:39am on 16 Oct 2009, powermeerkat wrote:
    S

    "The scariest phrase in English language is: 'I'm from the government and I've come to help you'"

    (Ronald Reagan, "Who am I again Nancy? President of what?")

    Particularly if said by a US soldier to one of his allies.

    Complain about this comment

  • 48. At 9:17pm on 16 Oct 2009, Simon21 wrote:

    35. At 12:39pm on 16 Oct 2009, ironfranco wrote:
    *… but it may not feel like justice to those not getting their expected annual increase while watching bankers get big bonuses.*
    Mark, can you suggest an alternative way to motivate the bankers in their effort to earn money while all of us still suffer the consequences of the recession? Can you propose another way to push forth an economy which is based on the private property and on the earning of profit? I agree that an initial step is to be done in order to start the liveliness’ process which may take years. Why shall we obstruct those who can make it?"


    Perhaps you can tell us why pay motivation only works with Bankers? SOme unique Physiology?

    SOme of us might have thought there were other people involved in the economy.

    Complain about this comment

  • 49. At 9:28pm on 16 Oct 2009, Simon21 wrote:

    37. At 1:47pm on 16 Oct 2009, MagicKirin wrote:
    ref #30
    KScurmudgeon wrote:
    When the voters get angry enough, things will change.

    If the voters have hope they will probably remain patient, because they know they don't know enough and they fear change."


    Giving the voters just enough hope and comfort is what our masters do so they can continue to fleece us year after year."

    True and there are less voters each time. People cannot be bothered.

    "(I think the majority of voters are Lemmings, I see outrages from both parties and yet the same people keep getting relected. anyone want to take a bet on Charlie Rangel getting relected?)"


    Or the farcial senator (I belong to every party) Lieberman.

    The US electoral system permits open and sustained fraud in the form of gerrymandering. No serious democracy would ever allow this any more than the ridiculous and childish filibustering.

    No wonder so many cannot be bothered to vote.



    "Apparently loosing one's retirement savings, principle and bubble-fed interest, hasn't hurt enough people to bring significant pressure for reform. Or maybe the politicians just aren't willing to listen, yet. Or they believe that a simple shell game based on distraction will diffuse the anger.

    We seem to understand that our security depends on keeping our bosses happy, or if we are already on welfare or other government 'entitlements', on keeping the pot of public anger simmering but not boiling over.

    Smart money will go wherever the potential for return is greatest. We all know this. Smart money does not consider how the return is 'earned'. Principal is what is invested in order to get interest, or what is borrowed , so that we pay it. Principle is a misspelling.

    Not enough has been lost. Not enough has been lost to make change necessary."


    True, but it has to be understood that the system (across the world) is not designed to give people a real say, but rather simply give the illusion.

    Arcane customs, simplistic participation (scratching a piece of paper with a symbol once every few years) are intended to inhibit interest, not stimulate it.

    Anymore than any country's judicial system is really designed to give justice - in fact in this case they are generally designed to prevent justice and simply reinforce the authority of the elite. The cost of legal representation alone is proof of that.

    Anyone who has worked in judical system soon learns that it is not there for the GP. Political systems ditto.

    Complain about this comment

  • 50. At 11:14pm on 16 Oct 2009, greg00m wrote:

    Wall Street successfully held the US economy hostage, now the snake oil types in real estate and the media want theirs too. Should've just let it all fail.

    Complain about this comment

  • 51. At 11:54pm on 16 Oct 2009, saintDominick wrote:

    Ref 50, Greg

    "Wall Street successfully held the US economy hostage, now the snake oil types in real estate and the media want theirs too. Should've just let it all fail."

    I don't have any respect for the Wall Street moguls, oil barons, and all the other tycoons whose behavior contributed to the economic mess we are in, but allowing our economy to collapse is not an option.

    If the stock market, banks, and our largest corporations had failed we would be in the midst of the second Great Depression.

    Complain about this comment

  • 52. At 00:53am on 17 Oct 2009, fluffytale wrote:

    45 simon.. I don't often agree with GH but skid row road is named after the seattle connection.
    Who would live on a street with trees hurtling down it.

    The last place to live "skid road"


    Complain about this comment

  • 53. At 00:55am on 17 Oct 2009, fluffytale wrote:

    lol scariest phrase is "It's OK I'm an american, I've come to help"

    Complain about this comment

  • 54. At 01:11am on 17 Oct 2009, McJakome wrote:

    Kali must do the dance of destruction before rebirth is possible. Or as Jefferson would have it, we need a revolution every so often.

    Complain about this comment

  • 55. At 01:24am on 17 Oct 2009, Simon21 wrote:

    52. At 00:53am on 17 Oct 2009, fluffytale wrote:
    45 simon.. I don't often agree with GH but skid row road is named after the seattle connection.
    Who would live on a street with trees hurtling down it.

    The last place to live "skid road"

    Yes but that would apply to any number of instances. No one would live in any kind of road full stop.

    There is evidence for the Seattle connection undoubtedly, but the problems remain - why Seattle since other Skid Roads will have existed and why did a Seattle term for deprivation become so widespread, was Seattle known for the size of its slums? Hardly seems likely.

    I still think the English Row, meaning road, is significant here.

    Interestingly road in the US in the nineteenth century usually meant railroad.

    Tracing popular phrases can be very difficult.

    Complain about this comment

  • 56. At 02:38am on 17 Oct 2009, AndreaNY wrote:

    Banks should have to pay a hefty fine for dumping their risk onto taxpayers. The bailout was necessary, but they should have to pay for it -- and not just "pay it back".

    Can anyone imagine a bank assuming the risk that taxpayers were exposed to and not charging an exorbitant rate? What rate did the US government, on behalf of taxpayers, charge? Obama got taken for a ride.

    Complain about this comment

  • 57. At 02:49am on 17 Oct 2009, LucyJ wrote:

    Mark, the real problem began when American corporations started moving jobs overseas, mainly because they did not want to pay American workers, as we charge at least minimum wage. More, if it is a quality item. So, the greedy corporations moved many of our jobs overseas and left us to hang. They wanted cheap labor. America does not do legal cheap labor. Some American corps. who move overseas are good and treat workers right, but most do not follow the standards of sanitation, human rights, ect. that we use in the USA today. That is wrong.

    Fast forward to modern times. What American products are even made in USA anymore? There are some, but not many. SO when I see a product that says made in America, produce grown in America, ect. I always try to buy it, to support our economy. But it doesn't seem like there are so many of these products anymore.

    There should be a high tax on products by American corporations in other countries selling products to America. If a corporation cannot afford minimun wage and our factory standards, they should have high, high taxes put on them, to discourage them from taking the jobs overseas. There needs to be some kind of penalty for these greedy corporations. We need to stop supporting cheap labor and embrace quality care, which comes with costs, but will save American jobs.

    If President Obama wants to bail out Main Street, he needs to focus on the average Joe's and Jane's who need their jobs which have been shipped overseas back. President Obama needs to give an incentive to corporations to bring our jobs back home. That is the right thing to do.

    Complain about this comment

  • 58. At 04:46am on 17 Oct 2009, Orville Eastland wrote:

    Why should ANYONE get paid bonuses when the company is losing money? (Or, alternatively, only making money because the Government is giving them money...)
    In addition, many approve of cutting the salaries of lower-wage workers to reduce costs and increase profits- why not do the same for those higher up?

    As for tax increases to reduce the deficit causing the economy to collapse, I say, why? If we paid our bills (and began paying back the deficit, the federal government would be paying investors back with money to create jobs.

    As for what we can cut, we don't have a USSR to fight, so we can get our troops out of Europe. Maybe only have eight aircraft carriers instead of 14. Maybe cut our nuclear arsenal and get rid of those old ICBMs. (None of those will help against Al Quaida... and those carriers make nice big targets for Iranian cruise missiles and subs...)

    Finally, we need to publicize the fact that the corporations have taken more money from the government than ACORN ever has, have been COMVICTED of more crimes than ACORN, and, according to the bill passed to defund ACORN, are no longer eligible for ANY government money. (If the government obeyed its own laws...)

    Complain about this comment

  • 59. At 06:04am on 17 Oct 2009, KScurmudgeon wrote:

    31. At 09:04am on 16 Oct 2009, wanderingangus wrote:
    In an otherwise thoughtful post, Curmudgeon writes "Ten percent unemployment is only really meaningful to that ten percent".
    Surely as long as the employment figures continue to rise there will be at least another ten or twenty percent who are terrified that they are going to be next? And the terror that those people feel must be very meaningful to them indeed.

    37. At 1:47pm on 16 Oct 2009, MagicKirin wrote:
    ref #30

    Ten percent unemployment is only really meaningful to that ten percent.
    (Shortsighted, no one economicly exists in a vacum)

    ------------------------------

    This rant represents what I see and feel are the emotional and political reactions of most of us to the issues in Mark's blog. Of course all these issues are complex and have many layers of meaning and many implications - but I don't see any massive action being taken to force our legislators to directly improve employment. The big guys get bailed out, but the real engine of our economy, employment and consumer spending, is left to the market forces to work itself out. Capitalism must be severely myopic.

    We are purposefully talking about fixing what's wrong with health care, but no one is talking about addressing the conditions that will very likely make this yet another jobless recovery.

    Maybe the issue is just too complex. Maybe the nine in ten who are working are keeping their mouths shut and wishfully ignoring how close they may be to the unemployment line and the still softening economy around them.

    Mark, if you will look among the shadows in my post, I think you will come face to face with the American who lives on Main Street, USA, outside the beltway. A little scared, angry but uncertain just where to direct his or her anger, and full of denial. Not nearly as pretty as we were a couple of years ago, but somehow still frozen in our steps.

    We have lived very well for a very long time, and it has dulled our senses. We are still fat - each hoping they will continue to milk us rather than cull us out for slaughter.

    KScurmudgeon

    Complain about this comment

  • 60. At 07:18am on 17 Oct 2009, squirrelist wrote:

    57. At 02:49am on 17 Oct 2009, Illinoisan wrote:

    You plan, as I have often pointed out before, is economic pie in the sky. Every measure you propose will increase prices, and the fundamental reason manufacturers have gone abroad is to allow Americans to buy cheap. US economic policy has been dedicated simply to that.

    You could scrap 90 per cent of US missiles, the USAAF, the US Navy, and it would not put one cent into the economy: it would save nothing. You would simply spend less in maybe 20 or 30 years' time.

    In fact, it would probably bankrupt most of US heavy industry and the aerospace industry, since supplying the US armed forces is basically what it relies on to make profits.

    Complain about this comment

  • 61. At 07:34am on 17 Oct 2009, KScurmudgeon wrote:

    47. At 9:14pm on 16 Oct 2009, Simon21 wrote:
    28. At 06:39am on 16 Oct 2009, powermeerkat wrote:
    "The scariest phrase in English language is: 'I'm from the government and I've come to help you'"
    (Ronald Reagan, "Who am I again Nancy? President of what?")

    -------------------------

    After 20 years in the business I still get those messages from the EPA, OSHA, DOT. At first it was scary, in the late '80s and early '90s, because manufacturing and even the hazardous waste industry were new at managing their wastes, and the government was constantly changing the rules - proposing, promulgating, implementing, modifying, and authorizing the states to administer them all across the board - air, water, in and on and over the ground. I still have the Tshirt from the next to the last 'final implementation' of the 'Third Third'.

    Much of industry still held the opinion that nature was there to hold their wastes, and that emission control devices were the devil's invention to reduce industrial efficiency, like catalytic converters on cars. Many fought tooth and nail to find a way out of complying.

    But now the changes come in an orderly fashion: the industry has developed communication systems to get the word out well in advance, not only on what the rule will say, but how it should be interpreted. Leaders of affected industries have a place at the table when regulations are proposed and hammered out, and rulings are carefully and respectfully explained. Engineering is available, knowledgeable, and effective. And the Obama administration has taken to writing regulations in clear, simplified English with a positive tone. Talk about transparency!

    The man or woman in a blue suit with a briefcase and laptop isn't as frightening as they once were - in the day.

    KScurmudgeon
    your mileage may vary, of course

    Complain about this comment

  • 62. At 09:21am on 17 Oct 2009, wanderingangus wrote:

    Squirrel writes about the financial importance of keeping up the supply of weapons to the US armed forces. And it's not only the US forces that keep the wheels of this leviathan rolling merrily along. It's the whole world.

    Arms and IT software : Those are what America supplies to the global marketplace. Sad, really.

    Complain about this comment

  • 63. At 2:42pm on 17 Oct 2009, ikamaskeip wrote:

    It is difficult to accept anything as 'justified' where the top Bankers and Investment Executives are concerned after their willful venality led directly to the Economic crash.

    Yesterday I was watching tv coverage of the Formula 1 Grand Prix Practise in Rio and spotted 2 World renowned Banks among the key advertisers on the Racing Cars and around the Race Track: Well, presumably those commitments stem back some time and we cannot really complain at this late stage.

    No, I was just wondering what the Unemployed, those who've lost Homes and the Hungry around the World would think of the F1 HOSPITALITY SUITES - - tv showed BOTH Banks had sleek and fat Business Executives with their cutesy WAGS and hangers-on guzzling champagne, eating pate de foie gras etc. and smugly laughing literally all the way to the 2 Banks' ENTERTAINMENT and EXPENSES Claim Forms - - such gross high-living in Rio by people representing Banks bailed-out by US-UK etc. TAX-PAYERS!?

    This Corporate largesse funded by ordinary people's suffering is I take it not what Obama and Brown meant by "..curbing excesses.."?

    Complain about this comment

  • 64. At 4:00pm on 17 Oct 2009, fluffytale wrote:

    Simon.
    you ask why seattle.

    It was not always the grand city it is now.
    It was the hub of logging , salmon canneries, and Gold rush supplies heading to the Yukon.

    the classic line is the only ones that made money in the gold rush were the suppliers of mining equipment.

    As to Road / row.

    probably depended on who you talk to.
    There are Creeks and Cricks.


    Complain about this comment

  • 65. At 4:08pm on 17 Oct 2009, MagicKirin wrote:

    ref #58
    Finally, we need to publicize the fact that the corporations have taken more money from the government than ACORN ever has, have been COMVICTED of more crimes than ACORN, and, according to the bill passed to defund ACORN, are no longer eligible for ANY government money. (If the government obeyed its own laws...)
    _______________________________________________________-

    The overwhelming number of corporation act ethicly and almost all provide a useful good or service.

    ACORN engaged im major voter fraud which probaly allowed Franken to get the MN Senate seat. They are a bunch of shake down artists who have been caught urging people to break the law.

    If the Democrats tryly want to demonstrate transparency Eric Holder should be spending time investigating them, than former membvers of the previous administration.


    Hey Eric time for you to show courage!

    Complain about this comment

  • 66. At 5:18pm on 17 Oct 2009, saintDominick wrote:

    Ref 65, Magic

    "ACORN engaged im major voter fraud which probaly allowed Franken to get the MN Senate seat."

    ACORN was found guilty of improprieties involving voter REGISTRATION fraud. There has never been any evidence provided to substantiate that any of the imaginary or dead people they registered actually voted!

    I do agree, however, that most companies are not fraudulent and do provide valuable services to our society...among them jobs!

    Complain about this comment

  • 67. At 6:30pm on 17 Oct 2009, writerray wrote:

    Yesterday afternoon I was watching a financial programme from Wall Street on CNBC.
    I couldn't believe my ears when I heard one of the programme's presenter's say something like 'We're entitled to the oil from Iraq considering how many men we've lost over there? And then within a few minutes the arrest of some billionare for insider trading.
    Who honestly thinks the status quo is ever going to change? Pigs might fly.....

    Complain about this comment

  • 68. At 7:14pm on 17 Oct 2009, Simon21 wrote:

    65. At 4:08pm on 17 Oct 2009, MagicKirin wrote:
    ref #58
    Finally, we need to publicize the fact that the corporations have taken more money from the government than ACORN ever has, have been COMVICTED of more crimes than ACORN, and, according to the bill passed to defund ACORN, are no longer eligible for ANY government money. (If the government obeyed its own laws...)
    _______________________________________________________-

    The overwhelming number of corporation act ethicly and almost all provide a useful good or service."


    But those that don't do a lot of damage eh like countries. Most people are good (regardless of colour) but a disgruntled well-armed US schoolboy can still do awful damage and cost lives.

    "ACORN engaged im major voter fraud which probaly allowed Franken to get the MN Senate seat. They are a bunch of shake down artists who have been caught urging people to break the law."

    This from a supporter of Israel and its "government". When does Eddie go before the courts again? And who was that Pres who beleived getting "fresh" with his staff.

    Franken won = without the stacked Supreme COurt. If you do not like democtracy go and live in Noth Korea.

    "If the Democrats tryly want to demonstrate transparency Eric Holder should be spending time investigating them, than former membvers of the previous administration."

    Just a pity the fomer admin was so corrupt, morally as well as financially.




    Complain about this comment

  • 69. At 7:53pm on 17 Oct 2009, GH1618 wrote:

    "Arms and IT software : Those are what America supplies to the global marketplace. Sad, really." (from wanderingangus at #62)

    This is just politically motivated nonsense. Many nations besides the US export military hardware. The US exports about $11 thousand million annually in military equipment of all types, and five to six times that amount in agricultural products.

    Complain about this comment

  • 70. At 7:59pm on 17 Oct 2009, GH1618 wrote:

    To add to my remarks in my preceding post, France exports nearly as much in ,ilitary equipment as the US, about $9 thousand million (US), with a GDP only about one-fifth that of the US.

    Ask any British veteran of the Falklands war about the importance of French arms exports.

    Complain about this comment

  • 71. At 8:16pm on 17 Oct 2009, GH1618 wrote:


    "... why Seattle since other Skid Roads will have existed and why did a Seattle term for deprivation become so widespread, was Seattle known for the size of its slums?"

    I suppose there is a "skid road" anywhere in the Northwest that there is logging, because loggers still use a type of tractor called a "skidder." But the name "Skid Road" applies to the one in Seattle. I've never heard of another one.

    Size of a slum has nothing much to do with it. It became notable enough as a hangout for bums that someone, somewhere, wrote about it and the name caught on as a metaphor for the condition.

    There is a book on the subject, if anyone is really that interested in the history of Seattle: Skid Road

    Complain about this comment

  • 72. At 9:16pm on 17 Oct 2009, dceilar wrote:

    #65 Magic

    The overwhelming number of corporation act ethicly and almost all provide a useful good or service.

    ACORN engaged im major voter fraud which probaly allowed Franken to get the MN Senate seat. They are a bunch of shake down artists who have been caught urging people to break the law.


    Majik are you being ironic? You obviously don't watch the Daily Show.

    Al Franken proposed an amendment that would deny defense contracts to firms that ask employees to sign away their right to sue. In 2005, Jamie Leigh Jones was gang-raped by her Halliburton/KBR co-workers while working in Iraq and locked in a shipping container for over a day to prevent her from reporting her attack. It was outside US jurisdiction and she couldn't sue her employer. 30 Republicans voted against Franken's amendment to refuse contracts to these firms arguing that it's not the government's place to decide who the government does business with. The Republicans do decide though when it comes to ACORN!

    What's the problem with you right whiners? You allow Halibarton/KBR condone rape of its employees doing government work, yet froth at the mouth at ACORN!!

    Complain about this comment

  • 73. At 9:58pm on 17 Oct 2009, MagicKirin wrote:

    ref #72
    What's the problem with you right whiners? You allow Halibarton/KBR condone rape of its employees doing government work, yet froth at the mouth at ACORN!!


    First you are ingoring that the majority of U.S corporations are ethical and provide a service.

    Second this case is pending yet you are accusing Halliburton/KBR of a cover up. are you a member of the Duke 88.

    Presumed innocent remeber.

    Second I represent a so called community group encouraging child prostitution and the fact they were so corrupt in getting votes in 2008 they would have shown equal corruption if they had been allowed in doing the census

    Complain about this comment

  • 74. At 10:03pm on 17 Oct 2009, MagicKirin wrote:

    ref #68

    those that don't do a lot of damage eh like countries. Most people are good (regardless of colour) but a disgruntled well-armed US schoolboy can still do awful damage and cost lives.

    "ACORN engaged im major voter fraud which probaly allowed Franken to get the MN Senate seat. They are a bunch of shake down artists who have been caught urging people to break the law."

    This from a supporter of Israel and its "government". When does Eddie go before the courts again? And who was that Pres who beleived getting "fresh" with his staff.

    (Once again Simple Simon brings Israel into the discussion)

    Franken won = without the stacked Supreme COurt. If you do not like democtracy go and live in Noth Korea.

    (Franken lost the election on a selective recount administrated by democraticly appointed judges and voting boards only Franken votes were accepted. The Dems tried this in 2000 in FL and suceed edin Washington State where Dino Rossi won the initial vote but the recount mysteriously went to the Dems)
    "If the Democrats tryly want to demonstrate transparency Eric Holder should be spending time investigating them, than former membvers of the previous administration."

    Just a pity the fomer admin was so corrupt, morally as well as financially.
    (Bush had his problems but this current white house and congress has had so many tax cheats that it is a wonder any of us pay ours)

    Simon the BBC version of CNN Sanchez

    Complain about this comment

  • 75. At 11:11pm on 17 Oct 2009, dceilar wrote:

    #73 Majik

    Second I represent a so called community group encouraging child prostitution and the fact they were so corrupt in getting votes in 2008 they would have shown equal corruption if they had been allowed in doing the census

    Like most people who know they are in wrong you resort to gibberish!

    If you were a Senator would you had voted for Franken's amendment?

    Complain about this comment

  • 76. At 11:20pm on 17 Oct 2009, Interestedforeigner wrote:

    58. At 04:46am on 17 Oct 2009, Orvillethird wrote:

    Why should ANYONE get paid bonuses when the company is losing money? (Or, alternatively, only making money because the Government is giving them money...)
    In addition, many approve of cutting the salaries of lower-wage workers to reduce costs and increase profits- why not do the same for those higher up?

    _________

    Dear Orville:

    On bonuses:

    The short answer is that there is a market for skills that exists whether your company is making money or not.

    Even a company that is losing money will pay a bonus to a top performer - to keep him or her from moving to another firm or setting up shop for him or herself.

    For example, suppose your company has 20 salesmen or saleswomen. The top selling fellow generates 70 % of you company's revenue, and has responsibility for managing a close, long term personal relationship of trust with your major customer, to whom you sell 30 % of your product. If you lose that employee to a competitor your business dies.

    As for the remaining 19 sales staff, well, some of them may look a lot more like a cost than a benefit. Of course you are going to cut their pay until it fall back in line with the revenues they generate, and some of them you are going to fire. Are you going to keep overpaying them until the company goes bankrupt? Then everybody loses their job, not just the under-performers.

    When the top performing guy brings in a big contract that yields $25M in revenue, you better believe you are going to pay him a minimum of $ 250,000 - 300,000 (or sometimes way, way more, up to 30 % of the value of the deal) for that transaction alone.

    Because if you don't, your competitor very certainly will. Rainmakers are very hard to come by. And if you are losing money, you will either do this or go bankrupt. In a downturn, the guys who can still generate business are even more valuable than in a boom.

    In a downturn, a struggling company faces the very real risk that competitors will poach its top people, and it will not have the resources to be able to prevent that poaching. When the best performers leave, the company is in even worse shape ... and thus begins the death spiral.

    Complain about this comment

  • 77. At 11:47pm on 17 Oct 2009, MagicKirin wrote:

    dceilar wrote:
    #73 Majik

    Second I represent a so called community group encouraging child prostitution and the fact they were so corrupt in getting votes in 2008 they would have shown equal corruption if they had been allowed in doing the census

    Like most people who know they are in wrong you resort to gibberish!

    If you were a Senator would you had voted for Franken's amendment?

    ___________________________________-

    The editors changed resent to represent, I resent ACORN encouraging law breaking and child Prostitution.

    In regard to the Franken Admendment I would have to read it and see what it said. For example if a worker did a frivolous suit what would be the penalty for them? Right now we have a major problem with legislators not reading bills they are voting for.

    Complain about this comment

  • 78. At 11:58pm on 17 Oct 2009, neil_a2 wrote:

    The 10,000 should be no surprise.

    Since January 20, 2009, the messiah's spending spree and money creation spree knocked 12% off the value of the dollar. We are still close to 8,800 in December, 2008 dollars.

    Look for more rapid shedding of American jobs as the midnight administration is pushing through health care, voting on legislation that is not even in writing.

    The gains are just taxable numbers and do not reflect an increase in value.

    Complain about this comment

  • 79. At 00:21am on 18 Oct 2009, ranter22 wrote:

    I believe that some people cant be blamed for not speaking English.
    Most people that do speak English cannot understand All the terminology used by the legislators anyway.
    So even if we were able to clarify all the mumbo jumbo written into law, for the masses we wouldn't really know how it would impact the economic sectors or the national debt. I think that If the government is getting advice from people dedicated consultants, then even our president who is a lawyer doesn't even know what it means.
    They could write a nice brochure depicting Skid Row as the utopia in the United States and bring in
    tourists, just based on the ambiguous propaganda, err I mean publicity. I know they mean well, its just those bums that screw up the scenery.
    (the extravagant views)How can businesses flourish with all those poor people hanging around.
    Why the end of life agreement even sounds nice, in writing.
    Bless silver tongues.
    Skid Row, Skid Road, Climate change, Pro choice, end of life, Soilent green, Group think, Intelligent design its all double talk.

    Complain about this comment

  • 80. At 02:19am on 18 Oct 2009, Interestedforeigner wrote:

    58. At 04:46am on 17 Oct 2009, Orvillethird wrote:

    "As for tax increases to reduce the deficit causing the economy to collapse, I say, why? If we paid our bills (and began paying back the deficit, the federal government would be paying investors back with money to create jobs."

    ______

    Dear Orville:

    This is a bit trickier to explain, but the short answer, roughly, is that over the long term you (meaning the public as represented by the government) have to pay back what you owe, otherwise the people who lent you money will refuse to lend you any more. To pay back the money you owe, it is inescapable that you must either cut spending or raise taxes.

    For a long time a surprising number of Americans seem to have believed that hog-wild spending can continue forever, without the money ever having to be paid back. This is a ruinous notion.

    Right now cutting public spending presents a greater disaster than increasing taxes. This is a complicated issue and explaining why would take a very long series of postings. I would just ask you to accept as a premise that right now the American economy would have greater difficulty dealing with a further contraction in demand, and the risk of deflation and heightened unemployment that go with a contraction in demand, than it would have dealing with either modest inflation or modest tax increases

    Fear of unemployment leads to deferment of spending. Reduction in spending leads to a reduction in demand for goods and services in the broader economy, which ultimately translates into job losses, further shortage of income, further reduction in spending, and so on.

    At one level, it is no bad thing that Americans are saving more, and spending less. America's savings rate was ridiculously low (even negative at one point) and China's savings rate is too high. Americans were consuming far more than was healthy. A much too large component of that consumption was based on borrowing - the borrowed funds being provided by foreigners, of whom the Chinese were, and are, quite prominent.

    Consumption based on borrowing tends to have a number of undesirable effects. The economy becomes rather frothy. There is great inflation of asset prices - in the most recent bubble, most prominently the price of housing. Then comes the day of reckoning. All of a sudden asset prices stop rising. People actually have to pay those mortgages, and find that they can't carry them. People lose their jobs. As we have seen, it isn't pretty.

    One way out of this mess is inflation.
    The problem is, America has borrowed an enormous amount from foreigners. Since private demand is so soft, the government has correctly pumped up demand in the public sector, by borrowing, and spending. If they were to stop doing so, unemployment would climb far more rapidly than it already has.

    The problem is For America's spending to continue, people have to keep lending to America. But why would they lend to America if the dollar is only going to be worth half as much tomorrow as it was worth yesterday?

    Money performs two fundamental functions: First, it provides a relatively fungible medium of exchange that facilitates the trading of dissimilar services (i.e., so we do not have to barter goats for oranges, apples for hairdressing, and so on); second, it provides a store of value permitting a mismatch in time of consumption: The bananas I wish to barter today may otherwise have gone bad before the goat I wish to buy next a month from Tuesday becomes available.

    A currency, i.e., a particular brand of money, represents a promise to pay in the future. But the currency is only as good as the implicit trustworthiness of that promise.

    This is one of the dangers of being the reserve currency for the world. There is a huge temptation to reduce you debts to others by simply devaluing the currency - sort of like saying, "its my game, and I can change the rules as I go along if I want."

    If you are owed money in the reserve currency, you may not like the idea that the dollars you lent are about to fall to half their previous value.

    So, for future lending they may demand a different currency - the Swiss Franc, for example, or maybe the Chines Yuan.

    If that happens people will dump dollars. There will be quite severe inflation. The imports that the American economy requires will become much more expensive. In relative terms, all Americans will see their purchasing power fall, and, in terms of the good and services they can afford, they will quite soon perceive that they have become poorer. The perception that America will try to take the "easy" way out by debasing the currency has already taken hold in places: The price of gold, a classic hedge against inflation, is at an all time high.

    Alternatively, to convince foreigners to keep lending, America will have to pay more to borrow to reflect the relative untrustworthiness of the previous promises. Interest rates will have to rise, and possibly quite substantially.

    But if people are having trouble servicing their mortgages now, when interest rates are almost zero, what is going to happen when interest rates rise? If investment is weak at low interest rates, what will it be if interest rates rise? Again, we are staring widespread home foreclosures and unemployment in the face.

    So, right now, forcing consumers to spend by taxing them and then spending the money on stimulus programs in the public sector is probably good policy. Maintaining demand for goods and services in the public sector by borrowing is ok in the very short term. It is not ok in the long term. At some point we have to stop spending more than we have. Therefore taxes are going to need to rise.

    More to follow.

    Complain about this comment

  • 81. At 02:36am on 18 Oct 2009, Interestedforeigner wrote:

    Continued reply to Orville:

    Americans are not used to thinking of themselves as poor (which, in America, seems to mean not being able to buy every last video game your heart desires, right NOW!), and they are in denial when it comes to recognizing that foreigners who work harder than we do at school, and who work longer hours, and work harder than we do on the job, ought to earn more than we do. The sense of entitlement in our society, in the baby boom generation and its offspring, is very strong. But if Chinese and Korean kids work harder than we do, why shouldn't they earn more than we do? Why should a worker in China earn 1/5 (or less) of what a worker in America earns? How is that fair?

    We need to cut spending, but without cutting demand for goods and services in the domestic economy generally. How can this possibly be done? Isn't it a contradiction in terms?

    Well, it seems to me that America is waging some very expensive wars on the other side of the earth. Those wars are an extravagance. They are self-indulgence on a grand scale. They pump an awful lot of money overseas, to people who don't like us very much, either.

    And, as several other posters have noted, the story is that reforming health care must be spending and revenue neutral. Since when did anybody require that the war in Afghanistan be spending and revenue neutral?

    As for cutting carrier battle groups and other measures, that would be penny wise and pound foolish. It takes a lot of time and effort to establish that infrastructure, and once you run it down, you will be hard pressed to re-build it at anything like a reasonable cost. Those are incredibly valuable assets you need to keep. The current account spending in Iraq and Afghanistan - an expense that leaves no long term assets whatsoever - is what needs to stop.

    Complain about this comment

  • 82. At 04:36am on 18 Oct 2009, Interestedforeigner wrote:

    "43. At 6:28pm on 16 Oct 2009, faeyth wrote:

    "What's really sick is,if unemployment and foreclosures continue we will be back where we started before Stimulus because the Rich are transferring the money to stockholders and CEO's and board members and not loaning to businesses or clients to create jobs or purchase products.At least if the Banks fell the Robbers would be in same lines as the middle class and poor.There a sense of justice in that even if it affects us all at least unemployment and poverty would have been evenhanded.Not just dumped on the backs of middle class and poor,which is everyday expanding.when we all have even less money because less people have purchasing power we will be back at square one and there won't be anyone to borrow money from for the Government to bail them out."

    "These are very ignorant people."

    ________

    "... because the Rich are transferring the money to stockholders and CEO's and board members and not loaning to businesses or clients to create jobs or purchase products..."

    "... and not loaning to businesses or clients to create jobs or purchase products."

    Faeyth:

    No posting here is going to provide what might really help, which is to say, first, at least an introductory course in economics, and then, second, an introductory course in business governance.

    Who are these anonymous "rich" ?
    Why are they transferring money to stockholders?
    What is this money they are transferring to stockholders?
    Why would they be transferring money to "CEOs and board members"
    Why is it the responsibility of these "rich" to loan to businesses or clients to create jobs...? Isn't that what lending institutions are for ?

    The stockholders of a company are its owners. They have three rights
    (a) to vote on resolutions affecting the company; (b) to share in distribution of profits of the company (i.e., dividends, if any); and (c) to share in the proceeds of the company, if any, when it is wound up.

    If there are no profits, there is no annual distribution to share.

    The board of directors is a group elected by the stockholders to oversee the running of the company.

    The board of directors appoints the officers of the company, typically including a CEO (managing director in UK-speak) and a CFO (secretary-treasurer) and so on, who are the day to day managers of company business.

    The Officers and Directors of a company have a fiduciary duty always and at all times to act in the best interests of the corporation on behalf of the owners. If they fail to do this they are accountable to the owners.

    It is misconduct on the part of Directors or Officers to appropriate to themselves opportunities or money that belong to the company. It would also be misconduct on the part of the company to provide payments to Officers or Directors without the authorization of the Board.

    A Board of Directors is not permitted to authorize payments to either the stockholders (i.e., dividends) or to officers and directors, or anyone else (e.g., bonuses) if the company is otherwise unable to pay its debts as they become due, or if such payment would render the company unable to pay its creditors as debts to those creditors become due.

    The foregoing propositions are basic principles. They are the building blocks of corporate law in every English-speaking democracy on earth, and have been for many, many years.

    There is nothing in your posting that suggests you have any familiarity with what a corporation is or how it is run; who stockholders are and what rights they have; the role, function and duties of a CEO or other Officers of a corporation; the rights of creditors; what the function of a corporation is in society, or the rules by which corporations are governed.

    You also seem to be unfamiliar with the role of lending institutions in our society; their link to the ability of businesses large and small to stay in business; and their link to the ability of individuals to buy property.

    Nor do you seem to understand the difference between deflation, in which purchasing power increases, if you are lucky enough to keep your job; and inflation, in which there is too much liquidity in the market (i,e, too much lending) and more dollars buy fewer goods (inflation).

    Nor do you seem to be aware that there has been a bloodbath in the financial services industry. If you don't think there are droves of unemployed financial guys, who haven't even got the prospect of another job in sight, you're dreaming.

    But nonetheless you feel free to say, presumably without blushing:

    "These are very ignorant people."


    I don't mean to be nasty, but you just don't know what you're talking about. At all.

    Complain about this comment

  • 83. At 08:23am on 18 Oct 2009, KScurmudgeon wrote:

    Interestedforeigner -

    Very interesting and enlightening posts. Thank you for taking the time.
    Would you venture to recommend some solutions?

    For example, how do we increase our confidence in the job market? How can we working stiffs feel confident that we can continue to pay our bills, and go out and spend more?

    How much credit should be in the mix? How do we ensure that credit cards, mortgages, etc. are used responsibly, do not produce a dangerous bubble that will inevitably collapse at some point, and that the lending system does not itself make the credit market unstable?

    It appears to me that stability and confidence and the willingness of others to continue lending to us, come from transparency and clear, balanced regulation - just like the rules in a baseball game make everyone willing to continue playing. But transparency, and regulation that protects both the borrower and the lender, seem to be resisted very strongly by the financial system. What gives?

    KScurmudgeon

    Complain about this comment

  • 84. At 11:10am on 18 Oct 2009, saintDominick wrote:

    InterestedForeigner

    Thank you for the outstanding analyses of business practices and the economic problems we are enduring.

    Complain about this comment

  • 85. At 1:24pm on 18 Oct 2009, MagicKirin wrote:

    ref #81
    Interestedforeigner wrote:
    Continued reply to Orville:

    Americans are not used to thinking of themselves as poor (which, in America, seems to mean not being able to buy every last video game your heart desires, right NOW!), and they are in denial when it comes to recognizing that foreigners who work harder than we do at school, and who work longer hours, and work harder than we do on the job, ought to earn more than we do. The sense of entitlement in our society, in the baby boom generation and its offspring, is very strong. But if Chinese and Korean kids work harder than we do, why shouldn't they earn more than we do? Why should a worker in China earn 1/5 (or less) of what a worker in America earns? How is that fair?

    We need to cut spending, but without cutting demand for goods and services in the domestic economy generally. How can this possibly be done? Isn't it a contradiction in terms?
    _____________________________________________________

    Iam forced to agree with some of your points, especially the entitlement and leaving beyond one's means.

    Many home owners are in trouble because they bought properties they could not afford and expecting the value to increase forever. Likewise they accumulate too much interest on credit cards. The local state and fed goverment are equally irresponsible with their spneding and entitlements. I have yet to see a public employee especially in the upper end or elected official take a pay cut or have their benefits cut

    Complain about this comment

  • 86. At 1:29pm on 18 Oct 2009, McJakome wrote:

    81. At 02:36am on 18 Oct 2009, Interestedforeigner wrote:
    Continued reply to Orville:
    “Why should a worker in China earn 1/5 (or less) of what a worker in America earns? How is that fair?”

    The Chinese worker is a slave. Enslaved by the totalitarian Chinese government and rented, not sold, to foreign companies who fire their nationals and move their operations to China.

    The real question is, why should working class people in democracies put up with this? This is clearly related to Lenin's comment that capitalists would sell communists the rope with which to hang them.

    Complain about this comment

  • 87. At 1:43pm on 18 Oct 2009, ForbiddenCityEunuch wrote:

    "the loans don't seem to be flowing into Main Street"

    The govt bailout money -- which was necessary to prevent a complete meltdown of the financial system -- is going back into the Fed. That's where banks put their cash and reserves they aren't lending. Banks are allowed to leverage capital 10-to-1, they get 2% at a cost of 0.5%, they can make a 15% return on equity with no risk.

    So banks are taking the money the Fed is printing, and essentially putting it back at the Fed. They aren't lending it, the environment is too risky, deteriorating balance sheets, commercial real estate woes, etc.

    TV and the popular press are making an issue of bonuses because it's easier to understand, it's less technical, less boring, excites class hatred/envy, and so on. The public is even less interested in how salaries are structured in the finance industry, but the base salaries are very flat to keep performance and innovation up. But, no matter, for political reasons you have to go after bonuses. Raise taxes on the Evil Rich. Much more exciting that going after the Rating Agencies. "So how did this piece of crap get a AAA rating in the first place?" -- zzzz, makes for boring TV

    Complain about this comment

  • 88. At 2:59pm on 18 Oct 2009, dceilar wrote:

    These rating agencies do wield a lot of power and are on the whole unaccountable. They rated these toxic debts AAA and as we speak are rating entire nations on their 'trustworthiness'. Sounds a bit rich to me!

    Financial capitalism needs these agencies. So blaming them for the crisis is too taboo a subject, therefore we won't be seeing any debate about them in our so called media. There also doesn't seem much real debate about why our governments are in so much debt in the first place. The Blue Party blames the Red Party and vice versa but no-one blaming the real culprit - capitalism.

    I used to think that Marx was wrong about the State, that 'we the people' had a greater say in the running of our lives and that the economy wasn't the only thing that had control over us. I'm beginning to see how right Marx was: the economic base does determine the super-structure. Those who think otherwise are deluded.

    Complain about this comment

  • 89. At 3:55pm on 18 Oct 2009, David Cunard wrote:

    #2. GH1618: "Since when is "parrisia_greece" the arbiter of the length or content of Mr. Mardell's posts?"

    Having been without internet access for over a week (a result of moving house) I trust that this tardy response will be excused. Parrisia is of course correct and the upper-case post is right on target. This is neither the place for a long essay nor yet longer posts, most especially those without paragraph breaks: GH1618 should take note.

    "At the risk of being accused of pedantry by our pedants-in residence . . . "

    There should be a hyphen between 'in' and 'residence' . . . :)

    "Although almost everyone outside of Seattle, Washington uses the term "skid row," the historically correct term is "skid road."

    From a quick Google search, it appears that more than one town has a claim to the origination of the term. As with those establishments which claim to be the "home of the original" hamburger/Philly cheese-steak/hot dog/ice-cream cone (cornet) &c., Vancouver and others may well be the site of a skid road. Like inventions, terms can be coined simultaneously thousands of miles apart.

    Now that I have returned to this blog, I confess to be being disappointed with Mark's choice of subject matter. He appears to be trapped in the Washington "bubble" and has not ventured out to somewhere more representative of American life: where are "some thoughts on being a Brit living in the USA" which are promised a the head of this column? It is no small wonder that so many of the contributors to Justin Webb's blog have have departed or post very rarely. On a scale of one-to-ten, one being deadly dull and ten being brilliant, I would rate it no more than three. A pity, for Mark has the chance to inform readers beyond North America what life in the United States is really like. With regret, so far he has failed.

    Complain about this comment

  • 90. At 4:11pm on 18 Oct 2009, saintDominick wrote:

    Ref 87, FCE

    "The govt bailout money -- which was necessary to prevent a complete meltdown of the financial system -- is going back into the Fed."

    If you are referring to President Bush's TARP, that money went mostly to banks and other financial institutions to prevent, as you pointed out, a meltdown of the financial system. The TARP and the monetary policies of the Federal Reserve were responsible for preventing an economic catastrophe.

    While President Obama's stimulus package may have mitigated the effects of our fiscal problems as it pertains to unemployment, it has not been enough to produced the desired stimulus, in part because the administration has been too cautious in using the appropriated funds to create jobs, and also because it is not enough to overcome the effects of our government, corporate, and personal liabilities. We simply owe too much money to enjoy the level of prosperity we had a few decades ago.

    The stimulus package, which is nothing more than a shot in the arm to get things going and not enough to guarantee sustainable growth, was close to $800B, with over $200B targeted for tax cuts. Only $111B has been used.

    More aggressive government spending is necessary to get things moving. Unemployment is at unacceptable levels and many consumers remain fearful of losing their jobs and reluctant to invest or spend. While savings is a welcome change from the "exhuberant spending" of yesteryear, consumer-oriented economies such as ours depend on consumer confidence and spending to survive.

    President Obama has to re-focus his attention from foreign policy, where he has been very successful, to domestic policy which is the top priority of most Americans and the most important consideration when we go to the polls. Regardless of how unfair it may be to blame him for the mess we are in, voters don't elect victims of circumstances, we vote for people capable of solving problems, including those that are of our own making.

    Complain about this comment

  • 91. At 5:33pm on 18 Oct 2009, ForbiddenCityEunuch wrote:

    re Rating Agencies - at some point there could well be hearings, I wouldnt be surprised. Some whistleblower from the lower ranks emerges, explaining how they tried to warn their direct managers who didnt want to hear it... the question is why didnt they want to hear it? Will we ever know?

    I would think most investors had no idea what a CDO was comprised of, nor did they care. They just saw the price, the AAA rating, thats all you needed to know, the credibility of the top rating agencies is (or was) that much beyond question.

    This business of going after the werewolves @ AIG or anyone else offering the notorious "credit default swaps" - is that really worse than any other kind of insurance? Should they be punished for having foresight?

    To me, the actual villains were the people issuing AAA ratings, not the people who figured out you could short AAA tranches or invest in a CDS that pays a return (like any other insurance) when disaster hits, at least they deserve credit for seeing through the ratings BS.

    Complain about this comment

  • 92. At 8:00pm on 18 Oct 2009, saintDominick wrote:

    Ref 88, dceilar

    "The Blue Party blames the Red Party and vice versa but no-one blaming the real culprit - capitalism."

    You are absolutely right and, clearly, this is a circumstance that does not contribute to our well being or that is conducive to problem solving. Unfortunately for the Democrats they now enjoy a solid majority in Congress and have control of the White House which means that, deservedly or not, they will be blamed for not solving the domestic problems we are having. Blaming their predecessors for our economic problems, while factual, will not be a good enough reason for people to vote Democratic in 2010 or 2012.

    I support President Obama, but I believe he has failed to create an environment that encourages investment and promotes spending, two essential elements to economic recovery and job creation.

    I don't think the solution lies in a replay of Reagan's decision to cut taxes to put more money in the hands of business to stimulate the economy, as that is bound to increase our huge budget deficits by further aggravating our balance of payments, but I think a responsible monetary policy, an honest effort to reduce the debt, government investment in infrastructure and education, and taking steps to restore consumer confidence are essential to long term recovery.

    Companies are not going to start hiring until there is demand for their products or services, and the real estate market is not going to stabilize until we reduce the huge inventories created by over building and speculation. The best approach to solve these problems is to restore consumer confidence, encourage investment, make credit available - with the necessary regulation in place to avoid a reccurrence of what led to the current crisis - to promote spending.

    Complain about this comment

  • 93. At 9:59pm on 18 Oct 2009, MagicKirin wrote:

    ref #92

    Most of your points I agree with.

    Hopefully voter discontent will get rid of the major culprits of the collapse:Chris Dodd

    But the day of surplus employees are not coming back. Too many middle managers in the case of the car companies too many employees being paid for not working. Small and mid size companies create new jobs.

    Complain about this comment

  • 94. At 11:31pm on 18 Oct 2009, frayedcat wrote:

    Yes he is right.

    "Madness is badness of spirit, when one seeks profit from all sources" - Aristotle. I think these people called "wall street" have been insane for quite a while now.

    Complain about this comment

  • 95. At 01:48am on 19 Oct 2009, neil_a2 wrote:

    Ugh #92 Except for the part, "I support Obama", I am pretty much in agreement with your post.

    With regards to 0bama:

    I detest the administration that encourages legislators to vote without reading legislation. (Now they vote on unwritten legislation because the public might read it, too.)

    I detest the administration that lies before Congress regarding legislation that at least one vocal congressman actually read. (Yes, Joe Wilson was correct.)

    I detest the administration that adopted the czar system because none of his cronies could pass scrutiny for the very most basic of ethics.

    I detest the administration that took Air Force One, his motorcade, 44 marines, and two helicopters so he could go on a date with his wife.

    I detest the administration whose stated objective is to tax employers solely to fund those it did not employ, and then provide exclusions for his union supporters.

    Is it really difficult to understand why no one wants more employees? When the big "O" gets more of his entitlements pushed through, who would want to hire an American and carry the burden?

    0bama never ran a business. He never made payroll. He never actually employed anyone. He never had to produce a profit. He is absolutely clueless on what it takes to encourage (not create) employment and make the business work once you have employees.

    I do not live my life hating one party or the other. The last election was a lose-lose election. I feel we lost to a popular, empty shirt.

    Obama's premise, "If they hire, we will tax." Business response, "Why hire, they will tax!"

    Our cost of our labor is already uncompetitive in the global market. Obama's ambition to burden employment further will only aggravate the shedding of American jobs.

    Complain about this comment

  • 96. At 02:32am on 19 Oct 2009, saintDominick wrote:

    Ref 95, Neil

    I suspect what you detest is giving credit to someone with a different approach to problem solving than yours. Instead of looking for faults, or wishing a President to fail like some modern-day Benedict Arnold's do, why don't you suggest alternatives? Don't forget that what is at stake is not a political party or a politician, but the future of our country.

    Incidentally, the USA has one of the lowest tax rates in the industrialized world and President Obama has not done anything to change that for the overwhelming majority of Americans. Increasing the tax burden of those making over %250K a year to bring it to the level that existed in the Reagan era would help reduce our budget deficits, would provide desperately needed revenue to repair our infrastructure, modernize or create new industries, and improve an education system that is totally inadequate to meet the challenges of the 21st century.

    I realize that paying for the things we need or want is an outrageous proposition for those who would rather depend on a good credit card - or China - to achieve their goals, but considering the fact that we are drowning in debt, don't you think the time has come to give fiscal sanity a chance?

    It would be easy to engage in a tit for tat about which President spent the most on vacations and frivolous or unnecessary undertakings, but since that happens to be one of the reasons our politicians can not get anywhere I will leave the finger pointing to you hoping that someday you will reflect on what you are saying and consider previous precedent before blaming a President you don't like for reasons known only to you.

    Complain about this comment

  • 97. At 02:35am on 19 Oct 2009, ranter22 wrote:

    I might want to congratulate Fox News Station, But they may prove me out to be a liar.
    I can begin to understand just how they are feeling right about now.
    They may just be seconds away from kissing and making up with the Obama administration, so if I hive them props, then I would appear to look foolish. The same effect they are experiencing the people of the US are feeling.(judging by all the opposition)
    If we are to believe certain people who are promoting yet another war with Venezuela, Mexico, Pakistan, Iran, Korea and internal citizenry, then we may as well turn over to the government every single dollar we make. Every bullet, bomb, aircraft, barrel of oil and that, not to mention the cost of life which is immeasurable, comes out of our tax money. When we are ready to support the war fund drive and the internal economic budget, we are saying go ahead it is all right, we can afford it. The next skid row candidate may be you or me. It is getting to the point where we are going to have to decide which one of us lives or dies. Lets see, when we kill the illegals and we completely eradicate all the free loaders(non workers or social security leeches)and we stop giving to legitimate charities(because we think they ought to just get a job). Then we will begin to look at the sick in the hospitals and anyone who cant afford to pay their own way. Smokers, Jay walkers, Ugly people, Fat people, too tall, too short, Gay, un-American, and soon we may fall somewhere on that list. Fortunately we have the high profile 1% of the rich who will continue our heritage, and go on to populate the earth again. Meanwhile communist Russia will still have the system they have always had and though, it has been unfair for so long it is not making the sort of 'progress' that we are. At least they will survive. Fox news may be forced to go rogue. Severin, Mcphee, and Graham could join Dodd. And Limbaugh May even become the next president with Beck as vice president. Who knows stranger things have happened.
    Wall street may become a pseudonym, Democrats and Republicans might emerge with a new political party, Elephonkeys.
    "Peace, prosperity and progress" D.D.E. 1952

    Complain about this comment

  • 98. At 02:46am on 19 Oct 2009, ForbiddenCityEunuch wrote:

    Are we all govt employees yet?

    Complain about this comment

  • 99. At 03:04am on 19 Oct 2009, moderate_observer wrote:

    neil what we are seeing are employers on strike. A notion that seems very foreign to most who believe people that produce will always produce enough to be taxed. American society is tax averse and with the histeria surrounding Obama's plans what else would be expected?

    Complain about this comment

  • 100. At 03:13am on 19 Oct 2009, moderate_observer wrote:

    by the way, im sure that Obama is not the first president to use tax payer funded transportation to travel to vacations or outings. All of a sudden this sort of things matter? Wherever an American president goes, whether its to the toilet or to a banquet it cost tax payers a lot of money, I have never heard anyone nit pick over expense records of an administration in such detail until these past 9 months. I suppose this is to be expected when a president most hated by the right since....... the last democrat President. Politics in DC is all talk, glamour and glitter, no productive results (unless you can afford a lobbyist of course).

    Complain about this comment

  • 101. At 03:28am on 19 Oct 2009, EUprisoner209456731 wrote:

    Austrian Radio website reports from 800 girls at the Robeson High School, Chicago, 115 are either pregnant or already mothers.

    Complain about this comment

  • 102. At 04:13am on 19 Oct 2009, Philly-Mom wrote:

    I had a very long frustrated post filled with data and stores about poverty here in Philadelphia... but I deleted it.

    Long posts won't help the 17% of Philly folks who are cutting back on groceries to make ends meet. That's about 180,000 people eating cheap pasta and SPAM instead of fruits and veggies.


    Chatting up macro economics in order to justify bonuses for ANYONE while unemployment is increasing, city taxes are increasing, more families are loosing benefits and income, the cost of living is increasing...
    -- it just seems inappropriate.


    At least the Phillies are doing well. Go Phillies!

    Complain about this comment

  • 103. At 04:26am on 19 Oct 2009, ranter22 wrote:

    (In January, MTV News asked experts and a panel of young people, "Why Don't We Always Use Condoms?")
    mass statistics

    The Time report described the predominantly white, blue-collar town of 30,000 as having been hit hard by the downturn in the fishing industry, with school Superintendent Christopher Farmer saying that the economic hardship has devastated some local families. "Families are broken," he told the magazine. "Many of our young people are growing up directionless."

    Two Gloucester teen moms who unexpectedly got pregnant while sophomores at the high school last year told the Herald that the girls who made the pregnancy pact have no idea what's ahead of them. "If I could go back in time, I would want to wait and have the same baby later. You can't do stuff that normal teens do," said Meaghan Orlando, now 17 and the mother of 3-month-old Jayden. "They don't know what they're getting themselves into."

    Orlando's childhood friend and fellow new mom Alivia Fidler said the pact was "ridiculous." Fidler — who, like Orlando, plans to return to school next year as a junior — warned the teens that their friendship won't likely survive the multiple births. "They're not going to be friends very long. You have to take care of your baby," said Fidler, who has broken up with the baby's father and lost her job at McDonald's, according to the paper. "It's frustrating. I don't have a lot of support."

    At a time when the national teen pregnancy rate rose 3 percent in 2006 — the first increase in 15 years — Time suggested that the school may have done too good a job embracing its young mothers. Sex-ed classes at the school end freshman year, and teen parents are encouraged to take their children to the free on-site day-care center. "We're proud to help the mothers stay in school," said Sue Todd, CEO of the company that runs the in-school day care. The report described a scene where strollers sit seamlessly alongside cheerleaders and junior ROTC members in the hallways of Gloucester Hig

    Complain about this comment

  • 104. At 05:14am on 19 Oct 2009, KScurmudgeon wrote:

    85. At 1:24pm on 18 Oct 2009, MagicKirin wrote:

    I have yet to see a public employee especially in the upper end or elected official take a pay cut or have their benefits cut"

    ------------------------

    My brother is an employee of the City of Los Angeles, a manager although not 'upper end'. The city is encouraging early retirement, although it is in the face of news that it has failed to match the mandatory employee pension contributions for many years.

    Maybe in this you can see how government controls spending ---

    KScurmudgeon

    Complain about this comment

  • 105. At 06:24am on 19 Oct 2009, allmymarbles wrote:

    Wall Street, big business, and Congress all have one thing incommon. They are corrupt. It doesn't matter what we think because we have no representation.

    Complain about this comment

  • 106. At 06:59am on 19 Oct 2009, KScurmudgeon wrote:

    This blog is about the proper relationship between government, business, and the private citizen.

    Everyone who works for or owns a business is a taxpaying private citizen as well, and as a citizen of a democracy has the right to expect that the government exists to promote his or her 'general welfare'.

    It seems clear that the founders designed a government to protect and promote the interests of property holders and businessmen - they had little concern for the interests of laboring masses who did not hold real property - and who in most states paid little or no taxes and who consequently were not allowed to vote. The quarrel of the revolution was between Northern business and merchants and southern planters/exporters, and British mercantilist interests. So we took control of things ourselves and built a system of governance to give business the best possible opportunity to prosper and profit.

    The interests of the 'People' didn't come to the front until Andrew Jackson came to power about 50 years later. The theory was still that everyone had the opportunity to prosper (except slaves and natives, of course), and the nation would do best if no impediments were be placed in the way of an individual's prosperity.

    Today we have a situation, I think, in which business's actions to make a profit have damaged the entire nation's prosperity, and wrought economic catastrophe around the world. Individual greed lies at the base of this, both those who bought things on credit they couldn't pay for, and corporations that created financial instruments designed to cheat the consumer/borrower or investor by being so complex that they were meant to cheat their customers.

    Similar conditions existed from the beginning, got worse during and after the Civil War, and were only mitigated in the populist period of a hundred years ago - and through FDR's administration.

    On this scale, we can only understand what is happening by examining systemic activities.

    What is the 'greater good', and how should it be ensured?

    KScurmudgeon, ruminating

    Complain about this comment

  • 107. At 07:04am on 19 Oct 2009, KScurmudgeon wrote:

    Hi, Marbles -

    That is what my wife says - 'taxation without representation', which is to say that they make laws and spend money without regard for the taxpayers' interests. If I were closer to the top in my my employer's organization, I might feel that what was good for them was good for me, as my son does. But I am not really thrilled at the Dow going back over 10000 - it hasn't helped the working folks feel any more secure, or feel they can go out and spend, now has it?

    KScurmudgeon

    Complain about this comment

  • 108. At 08:33am on 19 Oct 2009, allmymarbles wrote:

    107, KS.

    As far as the Dow is concerned, what I think we are seeing is another bubble. And another crash. There is no rationale for the index being so high. For the first time I heard someone say today that the only way to clean up Congress was to have a revolution. A startling comment, but an indication of our helplessness and frustration.

    Complain about this comment

  • 109. At 09:57am on 19 Oct 2009, MagicKirin wrote:

    ref #104

    My brother is an employee of the City of Los Angeles, a manager although not 'upper end'. The city is encouraging early retirement, although it is in the face of news that it has failed to match the mandatory employee pension contributions for many years.

    Maybe in this you can see how government controls spending ---

    __________________________________

    I can't speak to your brother's specific situation. But most people in the private sector don't get a tax payer funded pension with a cost of living increase.

    Complain about this comment

  • 110. At 12:34pm on 19 Oct 2009, saintDominick wrote:

    Ref 104, KSC

    "My brother is an employee of the City of Los Angeles, a manager although not 'upper end'. The city is encouraging early retirement, although it is in the face of news that it has failed to match the mandatory employee pension contributions for many years."

    The "Early out" scheme is common practice in private industry and government to reduce manpower without having to lay off personnel, reduce cost by replacing high paid senior employees with entry-level employees, replace departing employees with new ones that are often more familiar with emerging technologies than the folks encouraged to move to Jurassic Park.

    The objective is, more often than not, to reduce cost, increase profit, and strengthen the corporation or government agency.

    Complain about this comment

  • 111. At 1:19pm on 19 Oct 2009, dceilar wrote:

    #106 KSC

    It seems clear that the founders designed a government to protect and promote the interests of property holders and businessmen - they had little concern for the interests of laboring masses who did not hold real property - and who in most states paid little or no taxes and who consequently were not allowed to vote.

    You'll get my vote! I remember reading that Adam Smith once wrote that the State should be run in the interests of capitalists - even if it hurts the majority of the people the State governs over (even more so for peoples of the colonies).

    Thucydides anyone?
    . . . the strong do what they can and the weak suffer what they must

    It's about time all of us stood up. Only together in a group are we strong! We should create a bolshevik wing of the Red Squirrel Party! ;-)

    Complain about this comment

  • 112. At 2:26pm on 19 Oct 2009, squirrelist wrote:

    111. At 1:19pm on 19 Oct 2009, dceilar wrote:


    Only together in a group are we strong! We should create a bolshevik wing of the Red Squirrel Party!

    Squirrelpost:

    "No need to. The Red Squirrel (European) Party is Bolshevik. We're having problems with the Mensheviks, largely supported by the American Grey Squirrels, as you'd expect, and who we strongly suspect of still hankering after a diluted form of capitalism and maintaining the middle classes contrary to the interests of the proletariat (viz. the US banks, failure to provide universal healthcare and aggressive intentions against Pakistan, for example) but a vaccine is being developed to protect the most vulnerable against infection."

    Communique ends

    Complain about this comment

  • 113. At 01:02am on 20 Oct 2009, ranter22 wrote:

    Must be hunting season,
    Red, Grey, achromatic and deceptocons.
    Yes, the skies are cloudy and There is a storm on the horizon.
    Wall street, Wall of china, Wailing Wall, all the main st attractions.

    I myself said,
    "How gladly would I treat you like sons
    and give you a desirable land,
    the most beautiful inheritance of any nation."
    I thought you would call me 'Father'
    and not turn away from following me...
    Return, faithless people;
    (Jer.3:19,22niv)

    Complain about this comment

  • 114. At 03:12am on 20 Oct 2009, Interestedforeigner wrote:

    83. At 08:23am on 18 Oct 2009, KScurmudgeon wrote:

    Interestedforeigner -

    Very interesting and enlightening posts. Thank you for taking the time.
    Would you venture to recommend some solutions?

    For example, how do we increase our confidence in the job market? How can we working stiffs feel confident that we can continue to pay our bills, and go out and spend more?

    How much credit should be in the mix? How do we ensure that credit cards, mortgages, etc. are used responsibly, do not produce a dangerous bubble that will inevitably collapse at some point, and that the lending system does not itself make the credit market unstable?

    It appears to me that stability and confidence and the willingness of others to continue lending to us, come from transparency and clear, balanced regulation - just like the rules in a baseball game make everyone willing to continue playing. But transparency, and regulation that protects both the borrower and the lender, seem to be resisted very strongly by the financial system. What gives?

    KScurmudgeon

    __________

    Solutions?
    Well. I'll check in the back, but I think we're all out of inventory.

    Confidence is another term for faith in a better future. That's what makes people invest in starting a new business or expanding an old one, or hiring more staff. Right now everybody is afraid.

    "We have nothing to fear but fear itself."
    In so many ways, so true.

    ______

    Here are some random thoughts:

    The financial sector seems to have just way too much political influence, so we get policies that favour the banking sector unwisely. Paradoxically, these policies seem to make the banking sector weaker in terms of ability to weather a storm, rather than stronger.

    For example, did you know that a standard condition in all credit card retailer agreements is that the retailer is forbidden to charge a lower price to those who pay cash? Effectively, people who pay cash pay the retailer a higher price for the same goods than people who buy on credit. The credit card companies typically charge 2 - 3 % on every transaction, sometimes as much as 6%.

    What this means is that all consumers subsidize those who pay by credit. There is a clear anti-trust problem here, raised more than a decade ago by The Economist, but nobody does anything about it. Why hasn't there been a big anti-trust suit against the major credit card issuers?

    Next time you go to the store, think about whether you want the bank to have that 2% or 3 % (or 6%), or whether you would like the retailer to have that money.

    It also means that those people who really can't afford this or that, and who couldn't buy anything cash outright buy it on credit anyway, and so get strung out.
    _______

    Or consider this: you pay sales tax (value added tax, if you will) on everything you buy. But you don't pay sales tax on the interest you pay to the bank when you take out a loan. Why not? Why is interest on loans exempt from goods and services tax? You might say that rent is also exempt, but it isn't, really: municipal tax is based on land, and hotels pay tax on hotel rents.
    ________

    Or consider this: If you save up money to buy something, the interest you earn on your savings is taxed as income. But if you go into debt and buy on credit, the amount you "earn", by imputation, in reduced interest payments as you pay down capital on that debt is not subject to income tax, and no goods and services tax is payable on the interest. This is why, generally, the best "investment" you can make is to pay down outstanding debt, since any savings are tax free. Thus the tax system favours those who stay perennially in debt, and pay the highest percentage of their income in interest charges. This is a policy tailor-made to maximize the payment of (tax-free) interest, and to punish people who save for a rainy day.

    Well, it's hardly surprising then, that when a rainy day comes, so many people are over-extended financially.

    ________

    There are many, many examples like this. Our tax system is heavily skewed to favour borrowing over saving, and as such strongly favours lending institutions. By favoring borrowing over saving, we also tend to promote the creation of asset price bubbles, most notably in housing.

    I am not against the existence of lending institutions. They are necessary to make a non-barter market based economy function. But I am strongly against coddling banks, against subsidizing them in any way, and against exempting them from anti-trust rules that apply to everybody else in society. Don't hold your breath, though.

    Do you want to stop subsidizing the banks? For a start, try paying cash.

    Every time you make a transaction, ask if you can be the item at a lower price if you pay cash. There isn't, for example, a Chinese food restaurant in North America that will turn you down. Lots of small businesses work that way.
    _______

    I tend not to use credit at all if it can be avoided. No bank ever did me any favours, so why do them any? When I want something, I save up for it the way my parents and grandparents did, and then buy it cash. Until then, I do without. It doesn't hurt, and it teaches patience. And after a while you realize that you don't really need all those things you thought you wanted, anyway.

    I have never bought a car except in cash. Consequently we have saved thousands and thousands of dollars in interest payments. Buying a house in cash is more difficult, true enough.

    When you don't use credit, you don't lie awake at night wondering how you are going to pay for things if you lose your job. Instead, you save your money carefully to make sure that you don't need to borrow, and you can ride out a rainy day.

    To be fair, a good argument can be made that under-use of credit is also a mistake that stunts long term economic growth and employment. However, we have cut the balance so far in favour of borrowing over saving that we are, typically, miles and miles from that risk while being almost constantly in risk of creating asset price bubbles.
    ________

    How much credit should be in the mix?
    Well, it's a bit late now.

    I don't know, but consumer credit for retail purchases should, in general, be a lot less easily available than it is now, without question. However, at the present moment the problem is just the opposite: too little consumer spending, not too much.

    What irony.
    ________

    Actually, after writing this long post, the real answer has just struck me. You want to know where to start on a solution?

    The institutions of America's democracy aren't functioning very well. They have become rather sclerotic. They need to work better, or it will be next to impossible to achieve any meaningful policy progress. So -

    Campaign finance reform.
    Re-districting reform to prevent gerrymandering and to encourage the creation of more highly competitive electoral districts.
    Electoral reform to permit more direct voting as in Switzerland.

    And none of that is going to work if the schools don't work way, way better, and if there isn't a non-commercial, publicly funded news broadcaster with a mandate to represent a broad spectrum of views impartially.

    In the last ten or fifteen years, every time I have visited the US I have been amazed how difficult it is to find serious news coverage. 500 channels of TV. None of them except PBS provides a hard core nightly news program, and nobody watches PBS. Unbelievable.

    But we know everything anyone could possibly ever want to know (and a lot more) about the funeral of a rather creepy middle aged performer, or about a balloon that wasn't carrying a small boy.

    No wonder debate of public affairs issues is so ill-informed.

    America needs to keep its private broadcasters, but at the same time also to look at to, and to emulate, the BBC, CBC-Radio Canada, ABC Australian Broadcasting; Deutsche Welle, and Radio Netherlands: serious news broadcasters with serious budgets, not beholden to advertisers, with an arms-length public mandate. Right now there is no serious, heavyweight US news broadcaster to keep the private broadcasters honest.

    It is the non-functioning school system that has led to the dumbing-down of America, and the rise of the anti-educational establishment so -

    Is there not something really, really out of whack, when teachers' unions own professional sports teams? Provide education reform to give vouchers to all parents. Allow teachers unions only in private, non-publicly funded schools. Let parents vote on which teachers should get raises, and for how much. That ought to put the right priorities back into the school system in a hurry.

    Complain about this comment

  • 115. At 7:03pm on 20 Oct 2009, Simon21 wrote:

    74. At 10:03pm on 17 Oct 2009, MagicKirin wrote:
    ref #68

    those that don't do a lot of damage eh like countries. Most people are good (regardless of colour) but a disgruntled well-armed US schoolboy can still do awful damage and cost lives.

    "ACORN engaged im major voter fraud which probaly allowed Franken to get the MN Senate seat. They are a bunch of shake down artists who have been caught urging people to break the law."

    This from a supporter of Israel and its "government". When does Eddie go before the courts again? And who was that Pres who beleived getting "fresh" with his staff.

    (Once again Simple Simon brings Israel into the discussion)
    -------------------------------------------------------------------------------


    Once again Magic cannot stand criticism of his beloved.

    And doesn't answer the question

    ------------------------------------------------------------------------------
    Franken won = without the stacked Supreme COurt. If you do not like democtracy go and live in Noth Korea.

    (Franken lost the election on a selective recount administrated by democraticly appointed judges and voting boards only Franken votes were accepted. The Dems tried this in 2000 in FL and suceed edin Washington State where Dino Rossi won the initial vote but the recount mysteriously went to the Dems)
    --------------------------------------------------------------------------------

    Gibberish and contradictory (Deomcrart judges turned down a democrat?) doesn't even make sense. Go and live in North Korea, they don't have elections there.

    -------------------------------------------------------------------------------
    "If the Democrats tryly want to demonstrate transparency Eric Holder should be spending time investigating them, than former membvers of the previous administration."

    Just a pity the fomer admin was so corrupt, morally as well as financially.
    (Bush had his problems but this current white house and congress has had so many tax cheats that it is a wonder any of us pay ours)

    Simon the BBC version of CNN Sanchez
    ------------------------------------------------------------------------------

    Magic our very own Bill Reiley, but less educated.

    Complain about this comment

  • 116. At 11:53pm on 24 Oct 2009, dennisjunior1 wrote:

    Mark:

    One writer calls the planned payouts to bank executives "unseemly corporate welfare". Is he right?

    Yes, the writer is very much right; Since, it is corporate welfare and, a generous hand-out...

    ~Dennis Junior~

    Complain about this comment

  • 117. At 03:59am on 28 Oct 2009, over100usa wrote:


    The only way to save the main street is for senators and congressmen to take pay cuts and to stopped being paid for life!


    Complain about this comment

  • 118. At 10:13pm on 28 Oct 2009, Interestedforeigner wrote:

    117. At 03:59am on 28 Oct 2009, over100usa wrote:

    "The only way to save the main street is for senators and congressmen to take pay cuts and to stopped being paid for life!"

    _______

    ... because, of course, if you pay people really badly to do an important and difficult job, and make sure that they have no job security, you will naturally attract the best talent.

    ... because if you pay them badly enough, the kind of people who will take the job will in no way be more vulnerable to a desire to keep the money that came in the brown envelope from (pick one or more):

    (a) a tobacco company;
    (b) an oil company;
    (c) health care insurer;
    (d) political lobby group in favour of making sure every American man, woman and child has sixteen loaded automatic rifles, a grenade launcher and a bazooka in the front hall closet;
    (e) well funded religious groups;
    (f) the well funded political action group of a foreign nation;
    (g) the nuclear industry;
    (i) a public sector union;
    (j) a union whose former leader has been missing for quite a while;
    (k) ....

    Oh, yeah. Pay our elected representatives really badly. That will improve things, for sure.

    ______

    Please keep in mind that the average second or third year associate at any top law firm earns about as much as your congressman. A junior partner will earn roughly double what a senator earns. A senior partner will earn double (or more) what the President earns.

    These are enormously skilled, exceptionally bright and capable people. In fact, they might just be the kinds of people who you might want in positions of power and responsibility.

    But just make certain that they have to take a 50 or 75% pay cut for the privilege of serving in public office, for the risk of having their reputations and the lives of their loved ones dragged through the mud by the press, and for the privilege of giving up secure careers and all the hard earned accumulated power and seniority of their existing positions. That should really make public service totally attractive to the best and brightest.

    Sure. Right away. Where do you sign up?

    So, do you want the most skilled people, or the least skilled people to be making public policy decisions that affect the future of the nation?

    Complain about this comment

View these comments in RSS

BBC iD

Sign in

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.