Financial News

[StrangeSox]

He has a valid point that the Dems are weak and ineffective.

 

They also only got to 60 seats because of Democrat senators who are center-right and wouldn't support liberal policies. They just beat out more-right Republican candidates.

[jasonxctf]

He has a valid point that the Dems are weak and ineffective.

 

They also only got to 60 seats because of Democrat senators who are center-right and wouldn't support liberal policies. They just beat out more-right Republican candidates.

 

which leads to a bigger issue of why filibuster rules need to be adjusted. in today's political environment, the 60 seats that the Democrats had before Teddy died and Scott Brown won the election, will probably be the only time in my lifetime where either party will have 60 votes.

 

The only way either party can get there, is by running Conservative Democrats (See Alaska, Montana, etc) or Liberal Republicans (see Maine, Delaware, etc)

[Cknolls]

Better than expected initial claims this morning. With revisions -13k. But its easy to beat expectations when you make up numbers. Nine states did not file claims #'s. Two, CA and VA, estimated their own and the remaining 7, the Fed's estimated. We all know how well they do with #'s. FWIW.

[Balta1701]

Timothy Noah over at Slate is running a fascinating series on why income inequality has spiked so massively in the last couple decades. It's not over yet, but all of the pieces have been good reads.

[Balta1701]

Saw this yesterday and liked it. Quoting an article from 1998 about the bank of Japan by one...Milton Friedman. It appears quite applicable to the current fiscal situation.

Japan's recent experience of three years of near zero economic growth is an eerie, if less dramatic, replay of the great contraction in the United States. The Fed permitted the quantity of money to decline by one-third from 1929 to 1933, just as the Bank of Japan permitted monetary growth to be low or negative in recent years. The monetary collapse was far greater in the United States than in Japan, which is why the economic collapse was far more severe. The United States revived when monetary growth resumed, as Japan will.

 

The Fed pointed to low interest rates as evidence that it was following an easy money policy and never mentioned the quantity of money. The governor of the Bank of Japan, in a speech on June 27, 1997, referred to the "drastic monetary measures" that the bank took in 1995 as evidence of "the easy stance of monetary policy." He too did not mention the quantity of money. Judged by the discount rate, which was reduced from 1.75 percent to 0.5 percent, the measures were drastic. Judged by monetary growth, they were too little too late, raising monetary growth from 1.5 percent a year in the prior three and a half years to only 3.25 percent in the next two and a half.

 

After the U.S. experience during the Great Depression, and after inflation and rising interest rates in the 1970s and disinflation and falling interest rates in the 1980s, I thought the fallacy of identifying tight money with high interest rates and easy money with low interest rates was dead. Apparently, old fallacies never die.

 

here is the graph of what the U.S. monetary supply has been doing. When we were pulling our way out of the hole, the Fed was doing exactly what Freidman advocated Japan do; basically print money. Since the start of this year, we've headed in the opposite direction.

[southsider2k5]

Saw this yesterday and liked it. Quoting an article from 1998 about the bank of Japan by one...Milton Friedman. It appears quite applicable to the current fiscal situation.

 

 

here is the graph of what the U.S. monetary supply has been doing. When we were pulling our way out of the hole, the Fed was doing exactly what Freidman advocated Japan do; basically print money. Since the start of this year, we've headed in the opposite direction.

 

"Let" the supply of money go down? That is gross misrepresentation of current fiscal policy at best... At worst it is a complete fabrication. The fed can get money into the economy by buying bonds, setting interest rates low, and setting lending requirements low. The reality is that the Fed has been buying tons of bonds, and the interest rates are at zero. The only reason we haven't seen a change in lending requirements is that the banks aren't able to stomach that with the current lending laws.

[NorthSideSox72]

"Let" the supply of money go down? That is gross misrepresentation of current fiscal policy at best... At worst it is a complete fabrication. The fed can get money into the economy by buying bonds, setting interest rates low, and setting lending requirements low. The reality is that the Fed has been buying tons of bonds, and the interest rates are at zero. The only reason we haven't seen a change in lending requirements is that the banks aren't able to stomach that with the current lending laws.

Actually, this has changed somewhat recently. Mortgage rates have dropped again, and are hovering around 4.25%. And I've been talking with mortgage people lately for my own needs, and have gotten the impression that things are lossening up a bit.

 

[Balta1701]

F***ing fainting.

Retiring Sen. George Voinovich (R-Ohio) said he plans to help push a package of small-business incentives through the Senate next week, a move that would give President Obama and congressional Democrats a key victory on the economy in the final weeks before the November midterm elections.

 

In an interview, Voinovich said he could no longer support efforts by Senate Minority Leader Mitch McConnell (R-Ky.) to delay the measure in hopes of winning the right to offer additional GOP amendments. Most of the proposed amendments "didn't have anything to do with the bill" anyway, Voinovich said, and amounted merely to partisan "messaging."

 

"We don't have time for messaging. We don't have time anymore. This country is really hurting," Voinovich said. If a single amendment to reduce paperwork for business owners is considered on the floor, Voinovich said he told Senate Majority Leader Harry Reid (D-Nev.) that he would add his vote to that of 59 Democrats. That would give the majority party the 60 votes needed to overcome possible a GOP filibuster and move the package to final passage when Congress returns to Washington next week.

If he wasn't retiring, he'd probably never do that; he'd wind up with a tea party primary challenge as punishment for helping small business Obama.

[greg775]

How can a great country like ours have 10 percent unemployment?

What the f*** is going on?

[NorthSideSox72]

How can a great country like ours have 10 percent unemployment?

What the f*** is going on?

This great country has had that before, and will have it again. As for what the f*** is going on, there is no simple answer to that. Many things contributed to the recession.

 

[jasonxctf]

How can a great country like ours have 10 percent unemployment?

What the f*** is going on?

 

December 1982, we were at 10.8% unemployment.

 

It was 10.1% in October 2009 and has seemed to level off around 9.5-9.7% for most of 2010.

 

I'm calling for the rate to drop to 9.3-9.4% by years end.

[Balta1701]

I think I'm just going to leave this here and ask if this is the chart that will save the world.

 

[greg775]

This great country has had that before, and will have it again. As for what the f*** is going on, there is no simple answer to that. Many things contributed to the recession.

 

But is it unemployment ever going to go down?

It's a new era in business today, with the worker really being devalued and not cared about (companies freezing or cutting salaries for the last 2 years, adding furloughs and companies totally shrinking overall staff size ... will they ever hire again?? I've heard all companies have shrunk, even the gold mine law firms.

[NorthSideSox72]

I think I'm just going to leave this here and ask if this is the chart that will save the world.

 

Increasing pegged colateral requirements is certainly a good step, but its not going to fix the world.

 

[Balta1701]

Increasing pegged colateral requirements is certainly a good step, but its not going to fix the world.

I didn't say "Fix", I said "Save".

 

Prior to the 2008 crisis, the capital requirements for these banks by international accord was something like 2-2.5% Tier 1 funds, and those were enforced very leniently, such that if you got a ratings agency to package something as AAA, then you could count it as Tier 1. So, all those junk CDO's and Mortgage backed securities counted as useful capitol. That means they could leverage 30-40 to 1 and it was totally fine.

 

If these rules are enforced, no small bank can get to that level, and large banks are held to even tighter standards...and if they want to begin over-leveraging again, then they have to curtail executive pay to do it.

 

If AIG, Lehman, and Bear had to conform to these requirements, and they were enforced...I bet all 3 of them still exist, and we don't have a financial crisis in the first place.

 

It won't fix the world...but it might well be exactly what we need to prevent the next one. We didn't get the kind of real capital requirements in the Finreg package that could have made a difference, but I think that ones that could are sitting right there in that table.

[NorthSideSox72]

I didn't say "Fix", I said "Save".

 

Prior to the 2008 crisis, the capital requirements for these banks by international accord was something like 2-2.5% Tier 1 funds, and those were enforced very leniently, such that if you got a ratings agency to package something as AAA, then you could count it as Tier 1. So, all those junk CDO's and Mortgage backed securities counted as useful capitol. That means they could leverage 30-40 to 1 and it was totally fine.

 

If these rules are enforced, no small bank can get to that level, and large banks are held to even tighter standards...and if they want to begin over-leveraging again, then they have to curtail executive pay to do it.

 

If AIG, Lehman, and Bear had to conform to these requirements, and they were enforced...I bet all 3 of them still exist, and we don't have a financial crisis in the first place.

 

It won't fix the world...but it might well be exactly what we need to prevent the next one. We didn't get the kind of real capital requirements in the Finreg package that could have made a difference, but I think that ones that could are sitting right there in that table.

That would fix part of the problem, no doubt. But many other things need addressing.

 

[Balta1701]

That would fix part of the problem, no doubt. But many other things need addressing.

Well obviously. Finreg (may) have gotten some of them if the Consumer protection Agency winds up having some teeth. The thing I like about capital requirements is...they're idiot-proof, if applied correctly. Even if you wind up taking large bets on something like the idea that housing prices never decline like all these banks did, if you're sitting on an actual large cash reserve, that has grown larger as the bubble has grown, you're not going to require a hundred billion dollar bailout to keep you from taking everyone else down when things pop. If the requirements are imposed in such a way that they're not easily gamed...then legitimately, that gets the world out of the crisis economics game.

[Balta1701]

Republicans officially to roll out ~$4 trillion tax cut proposal.

[jasonxctf]

Republicans officially to roll out ~$4 trillion tax cut proposal.

 

holy sh*t.

 

how is it that we had this perfect balance in 1999-2001 where we were running a surplus, and ever since then both sides have been destroying it.

 

we can't keep cutting taxes for anyone/everyone and we can't keep spending like crazy.

 

Why cant we go back to the tax rates of 1999-2001 and back to those spending levels too?

[Rex Kickass]

holy sh*t.

 

how is it that we had this perfect balance in 1999-2001 where we were running a surplus, and ever since then both sides have been destroying it.

 

we can't keep cutting taxes for anyone/everyone and we can't keep spending like crazy.

 

Why cant we go back to the tax rates of 1999-2001 and back to those spending levels too?

 

Part of that is inflation. Part of that is interest on the debt we pay. Part of that is military engagement in Iraq and Afghanistan, and part of that is TARP and stimulus for the economy. Also, restoring tax rates to what they were in 1999 doesn't mean that we will magically get the same revenues either. Revenues rise and fall based on economic performance. Just like tax cuts don't always reflect a revenue loss, tax hikes don't always reflect as rosy of a revenue gain as people picture.

 

That being said, the sunset of the Bush tax cuts may be a huge step to reversing the deficits, although its not likely. What is more likely is a sunset of taxcuts for the top bracket (those making 250k+) and permanence of middle class tax cuts.

[Balta1701]

THEY FINALLY THREW THE LEFT A BONE! YAY!

[StrangeSox]

Republicans officially to roll out ~$4 trillion tax cut proposal.

 

This is simply a unique way to solve the budget problem. Completely bankrupt the government, and our debts will be forgiven! Sure, our national credit score will suck for a few years, but we'll get back on our feet. Better than debt reconsolidation!

[StrangeSox]

THEY FINALLY THREW THE LEFT A BONE! YAY!

 

How? They're making her an adviser to avoid the confirmation process.

[Rex Kickass]

How? They're making her an adviser to avoid the confirmation process.

 

I think he was talking about the Obama administration in general.

[StrangeSox]

oh right that. I thought he meant the GOP.

Edited September 16, 2010 by StrangeSox