The Economy, stupid

[southsider2k5]

Crude Oil settle below $130 for the first time since June 9th.

 

Down 11%, this was the biggest 3 day percentage drop in crude since 2003.

[Cknolls]

Down 11%, this was the biggest 3 day percentage drop in crude since 2003.

 

Those damn speculators.

[Balta1701]

I think this probably sounds about right to me.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson have suggested over the past year that an end is in sight. But with each prediction, things have grown worse. For many homeowners, the deep housing slump feels like a drop off a skyscraper. Every time another 15 floors have passed, there seems to be more room to fall.

 

"I don't think we get strengthening in the housing market until late 2011 or 2012," said Mark Vitner, senior economist for Wachovia, the nation's fourth largest bank and one that this month hired the number-two man from the Treasury Department as its new chief executive officer to shore up its own growing exposure to mortgage debt.

 

Before bottoming out, prices nationwide should fall 22 percent to 29 percent on average from their peak, according to a report that Wachovia released last Monday.

 

"I think we're somewhere between halfway and two-thirds of the way through the correction," said Vitner, who closely studies the trends in home prices and home sales nationwide.

[Balta1701]

Today's must read piece on the banking system as a Ponzi scheme setup.

[Cknolls]

Watch the closing price for oil next thursday. If Sept crude future can close below 122.27, you will have an outside down month, which is bearish, and technically speaking oil will be broken. Once again, technically you should see some follow through to the down side.

[NorthSideSox72]

So, has anyone else noticed that this big $7500 tax credit for new home buyers isn't a credit at all? Its a loan?

 

Basically, the government says it wants to rescue citizens from a poor housing market and questionable loan practices, by engaging them in a questionable loan practice. f***ing brilliant.

 

[southsider2k5]

So, has anyone else noticed that this big $7500 tax credit for new home buyers isn't a credit at all? Its a loan?

 

Basically, the government says it wants to rescue citizens from a poor housing market and questionable loan practices, by engaging them in a questionable loan practice. f***ing brilliant.

 

I hadn't read that yet. And here I thought the bailout bill couldn't have been any worse. Well sadly Congress proved me wrong AGAIN.

[mr_genius]

I hadn't read that yet. And here I thought the bailout bill couldn't have been any worse. Well sadly Congress proved me wrong AGAIN.

 

how long until we get a bill to bailout people who can't pay the $7500 loan back?

[kapkomet]

So, has anyone else noticed that this big $7500 tax credit for new home buyers isn't a credit at all? Its a loan?

 

Basically, the government says it wants to rescue citizens from a poor housing market and questionable loan practices, by engaging them in a questionable loan practice. f***ing brilliant.

I read that the day the law was passed and about died laughing. These people are idiots.

 

[southsider2k5]

http://www.washingtonpost.com/wp-dyn/conte...8081702079.html

 

Five Ways to Wreck a Recovery

 

By Amity Shlaes

Monday, August 18, 2008; Page A11

 

Perverse monetary policy was the greatest cause of the Great Depression. But five non-monetary missteps were important in making the Depression great, and the same missteps damaged the global economy as well. While many are thinking about the Depression, few seem concerned about replicating these Foolish Five today:

 

· Giving in to protectionism. In Herbert Hoover's time, Sen. Reed Smoot and Rep. W.C. Hawley proposed a tariff that was to raise effective duties by as much as half. More than a thousand economists signed an open letter warning that the duties would "raise the cost of living and injure the great majority of our citizens."

 

But Hoover's Republican Party didn't much care. In its 1928 platform, the GOP had pledged to "reaffirm our belief in the protective tariff." Ambivalent, Hoover signed the bill. An irate Canada and many other nations retaliated. At a time when the United States was begging for foreign markets, it lost them. The selfish signal discouraged an already unstable Europe.

 

Today, international trade claims a sizable share of our economy. Bilateral free-trade agreements with Colombia or Panama are good insurance -- cheap steps that might prevent an expensive loss, that of the Western Hemisphere to Venezuela's Hugo Chávez.

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Yet again, one party -- the Democrats, this time -- is cavalier. House Speaker Nancy Pelosi is blocking passage of these bilateral agreements. And another ambivalent politician -- Sen. Barack Obama -- has sent mixed messages to Canada about just how much he wants to roll back the North American Free Trade Agreement.

 

· Blaming the messenger. Punishing the stock market for the 1929 crash was popular in Washington in the early 1930s. Lawmakers attacked the practice of short selling; Senate Banking Committee counsel Ferdinand Pecora hauled J.P. Morgan and other Wall Streeters in for hearings. By 1934, Congress was creating the Securities and Exchange Commission. The Roosevelt administration also prosecuted business leaders, including former Treasury secretary Andrew Mellon and utilities magnate Samuel Insull. The new regulatory culture cut crime and protected investors. But the arbitrary nature of the assault petrified Wall Streeters.

 

Today, too, a "Blame the Street" mood prevails. SEC Chairman Chris Cox has criticized "naked shorts," an attack with a legitimate anti-fraud component. But targeting short-selling also generates uncertainty. The investigations of Bear Stearns and Freddie Mac are just the beginning; more prosecutions are likely. Like the Sarbanes-Oxley Act, which followed Enron's accounting meltdown, this cleanup will send companies and jobs abroad.

 

· Increasing taxes in a downturn. Hoover more than doubled income tax rates, taking the top marginal rate to 63 percent from 25 percent. FDR hiked the top rate to 90 percent. Perhaps worse, Roosevelt's Treasury crafted taxes to punish business, including an undistributed profits tax and an excess profits tax, that ultimately sucked cash from a capital-starved economy.

 

Today, Democrats are planning tax increases that make Bill Clinton's hike look mild. The proposals start with lifting the cap on Social Security payroll taxes -- an effective increase in the top marginal tax rate of 6.2 percent, or for some 12.4 percent, all by itself. Add in the promised repeal of the Bush tax cuts and you have an additional 4.6 percent increase. Effective top rates approach 50 percent. There are also proposed increases for dividends and capital gains. Taken together, these will make the U.S. economy sluggish and more like that of Europe.

 

· Assuming bigger government will bring back growth. There's a sense today that Washington has retreated too much from daily lives. Wall Streeters mutter that "the system" (the financial markets) doesn't work anymore. In the 1930s, people didn't just mutter that -- they believed it. Public-sector expansion seemed the only way to sustain America's promise. New Deal programs did much to alleviate the pain month to month -- many found dignity in six months of work at the Works Progress Administration, the Public Works Administration or the Civilian Conservation Corps. But economics is a competition for scarce capital. Such state solutions tended to suppress the creation of long-term private-sector jobs, as did the aggressive Wagner Act for organized labor. The National Recovery Administration, the New Deal's centerpiece, favored large businesses at the expense of small fry. The new Tennessee Valley Authority and Roosevelt's repressive Public Utility Holding Company Act combined to crowd out private utilities that hoped to light up the South. As for Wall Street, those New Yorker magazine cartoons were accurate: Wall Streeters retreated into their martinis and country houses rather than rebuild. This yielded the "Depression within the Depression" of 1937.

 

· Ignoring the cost of inconsistency. FDR spoke of "bold persistent experimentation." Obama speaks of "change." Both can do damage. What's more, the list of experiments is always finite. Our bailouts look reassuring, but even Washington cannot rescue the entire economy. And foreign investors wonder where Washington will stop. Already concerned about the inconsistent dollar policy, China is now troubled by the inconsistent rescues.

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The proximate danger today is a repeat of the 1970s, not the 1930s. But if lawmakers don't remember the old missteps, they might find that their new recovery legislation imperils our recovery.

 

Amity Shlaes is the author of "The Forgotten Man: A New History of the Great Depression" and a senior fellow at the Council on Foreign Relations.

[Balta1701]

Yay free markets!

The Big 3 Detroit-based automakers are seeking about $25 billion in federal loans as they struggle to ride out a steep downturn in U.S. auto sales, The Wall Street Journal reported on Friday.

 

Lobbyists for the U.S. automakers—General Motors, Ford Motor and Chrysler—briefed White House officials, as well as U.S. Rep. John Dingell and other Michigan Democrats, on a possible bailout and plan to unveil the proposal after Labor Day, according to the report.

 

The plan is for the government to lend some $25 billion to the automakers in the first year at an interest rate of 4.5 percent, or about one-third what the companies are currently paying to borrow, the report said.

 

Under the proposal, the government would have the option of deferring any payment at all for up to five years, the article said.

 

Representatives at GM, Ford and Chrysler were not immediately available for comment.

 

In a letter to U.S. Senate Majority Leader Harry Reid and House of Representatives Speaker Nancy Pelosi, Michigan congressmen sought up to $25 billion in low-interest credit for U.S. automakers and parts suppliers from the federal government."

 

This incentive program will make it more economically feasible for U.S. auto manufacturers and part suppliers to retool their facilities by providing low-interest credit," said the letter, dated Aug. 1.

 

"The federal government must be a strong partner in the investment in the advanced technologies," the letter said.

And even double-yay!

[Cknolls]

Yay free markets!

And even double-yay!

 

 

Bye Bye getting paid for doing crossword puzzles and watching soap operas, aka. Job Bank. Assinine. The gov't will never see this money again.

[southsider2k5]

Yay free markets!

And even double-yay!

 

And an even bigger yeah for government to the rescue!!!

[southsider2k5]

http://money.cnn.com/2008/08/28/news/econo...=rss_topstories

 

Economy gets big stimulus boost

U.S. gross domestic product grew by 3.3% in the second quarter - much more than previously stated. Economists say the economic stimulus package contributed to the rise.

 

NEW YORK (CNNMoney.com) -- A revised reading on gross domestic product announced Thursday showed much better U.S. economic growth than previously reported for the second quarter.

 

GDP, the broadest measure of the nation's economic activity, stood at an annual rate of 3.3% in the quarter, adjusted for inflation, the Commerce Department said.

 

The revised results far surpassed the initial advanced estimate of 1.9% released late last month, which disappointed economists.

 

Many experts say the more than $90 billion in economic stimulus checks that reached taxpayers during the quarter helped boost GDP up from just 0.9% growth in the previous quarter.

 

Economists surveyed on Briefing.com expected the revised reading to show the economy grew at an annual rate of 2.7% in the second quarter.

 

The economic growth mirage

[southsider2k5]

So with Crude at about $110 a barrel, it is actually closer to the lows of the past 52 weeks versus the high...

[DukeNukeEm]

And an even bigger yeah for government to the rescue!!!

Government to the rescue has saved up a lot of pain.

[santo=dorf]

Free time home buyer soon (I hope.) Looking to buy a used condo that was built less than 5 years ago. Do I qualify for any free money?

[jackie hayes]

Free time home buyer soon (I hope.) Looking to buy a used condo that was built less than 5 years ago. Do I qualify for any free money?

Of course there is.

 

I mean, if Matthew Lesko says there is, who am I to argue?

[NorthSideSox72]

Free time home buyer soon (I hope.) Looking to buy a used condo that was built less than 5 years ago. Do I qualify for any free money?

I've got one of those for sale, as it happens. In the city. PM me if you want the link to the listing.

 

[kapkomet]

Government to the rescue has saved up a lot of pain.

OH OH...

 

You've convinced me that our government is our hero. No more greed, no more capital markets. No more ingenuity, no more creativity. No more garage sales, no more goods, no more anything. I will just wait in line for my handouts. I deserve no better. Boooooo hooooo! I've been brainwashed!

 

 

[santo=dorf]

I've got one of those for sale, as it happens. In the city. PM me if you want the link to the listing.

Well I'm not leaving this area because of my job, and I doubt you could match these prices. 1014 sq feet for $72k

[southsider2k5]

Government to the rescue has saved up a lot of pain.

 

And caused tons more...

[NorthSideSox72]

Well I'm not leaving this area because of my job, and I doubt you could match these prices. 1014 sq feet for $72k

um, yeah, I can't really touch that price. But good luck! Sounds like a very affordable market!

 

[southsider2k5]

Well I'm not leaving this area because of my job, and I doubt you could match these prices. 1014 sq feet for $72k

 

I got my 1400 sq ft house for $81k in 05.

[southsider2k5]

http://online.wsj.com/article/SB1220399194...in_commentaries

 

Why Obama Can't Close the Sale

By AL HUBBARD and NOAM NEUSNER

September 3, 2008; Page A23

 

Even before John McCain shook up the presidential race by tapping Gov. Sarah Palin to be his running mate, polls weren't showing the late-August lead that Barack Obama (and many Republicans) expected. Why so?

 

It's not because of the brilliance of the McCain campaign. Rather we believe that -- despite the media's best efforts to exempt Mr. Obama's policies from critical examination -- American voters aren't sheep. They pay attention to the candidates and positions and make wise decisions about who should lead the country.

 

True, Mr. Obama enjoys several advantages. Republicans are struggling nationwide in head-to-head contests. Democrats lead in voter registration, and have a well-funded presidential candidate.

 

Yet Americans have not committed to Mr. Obama. Why?

 

Clearly, Mr. Obama's weakness on foreign policy is a factor. He has a knee-jerk preference for diplomacy with China, Europe and Russia over the security of the American people and our closest allies. He hasn't explained his shifting positions on Iraq and Iran, among other hot spots. And he felt compelled to make up for his experience gap with Mr. McCain by picking Sen. Joe Biden to be his running mate.

 

But here's the thing: It's not that Mr. Obama hasn't been specific enough in his governing plans. To the contrary, he has been very specific about his tax policy, health-care and energy proposals. It's that voters are paying attention and appear not to like what Candidate Obama is saying.

 

Mr. Obama has proposed a massive tax increase on investors, business owners, and the "wealthy." At a time when the American people rate the economy as the central issue of the campaign, a tax hike doesn't make a lot of political sense. Voters know that a tax hike won't help the economy.

 

Moreover, Mr. Obama's tax plans would directly or indirectly harm U.S. investors by raising the capital gains and dividend taxes. More than half of U.S. households are equity owners, so Mr. Obama's proposal risks alienating half the population.

 

Mr. Obama claims to offer a tax cut to moderate-income families, but a significant portion of Mr. Obama's tax plan is a welfare giveaway costing more than $648 billion over 10 years, according to the Tax Policy Center.

 

How so? He would authorize a hodgepodge of refundable tax credits covering everything from education, mortgage payments, child care and other items for people who do not pay income taxes now.

 

About 38% of U.S. households pay no income tax today. Under a President Obama (whose policies would shave 15.3 million households off the tax rolls) that share would grow to nearly half of all American households.

 

We have been repeatedly told that everyone should pay their fair share. So this sounds grossly unfair and like a return of tax-and-spend liberal economics. No wonder there is a lot of doubt about the wisdom of the junior senator from Illinois.

 

Mr. Obama's health-care proposal is not quite HillaryCare, but it comes close. A national health insurance, heavily subsidized by taxpayers, would be offered to the currently uninsured. Mr. Obama's instincts on health care are always to move more people onto rolls of government-paid and government-mandated insurance, while depriving the marketplace the oxygen it needs for greater innovation, life-saving cures, and efficiency.

 

Americans have heard the refrain for government-provided health care before and know an expensive government giveaway when they see it.

 

Mr. Obama's energy policy is to drill less, consume less, tax more, and spend more. With barely a nod to nuclear energy -- the only meaningfully large, carbon-free source of domestic energy -- he is promising a massive increase in domestic, noncarbon-based energy from sources that produce only a fraction of our energy now.

 

He has also proposed massive tax increases on U.S. oil and gas companies while continuing to cut off vast swaths of U.S. territory to drilling.

 

Again, Americans are wiser than they are given credit. They know that if you restrict supply and tax production, prices go up.

 

The economic wisdom of Americans should not be doubted. They can see through Mr. Obama's proposals. They know that they will have to pick up the bill if Mr. Obama sends checks to people who already don't pay taxes; they know a centralized government-controlled health-care system will be more expensive, less efficient, and less friendly to patients and doctors. They know that the most effective way to bring down energy prices is by keeping all our energy options open, including more drilling in the U.S.

 

And they know that if a candidate has spent his entire career taxing more and spending more, that's what you'll get -- and more of it.

 

Mr. Obama is wondering why he can't shake Mr. McCain. His problem isn't his plans for the campaign. It's his plans for governing the country. Americans just aren't buying into them.

 

Mr. Hubbard was director of the National Economic Council and assistant to the president from 2005-2007. Mr. Neusner was the president's economic policy speechwriter from 2002-2004.