The tide goes out on America

And yet we see the largest two day rally on Wall Street in 21 years. Go figure...

Sucker's rally. You don't honestly believe that's going to go anywhere do you, DG?

Maybe I'm just overly sensitive to these kinds of things, but using that picture for a joke (even a "serious joke") seems a bit in bad taste.

Your overall assessment, however, quite sound.

God bless!

Exactly, Pyrrho. Rod needs to name names--who should Obama put in charge of economic affairs?

Rod

Your love of universal catastrophe is so unremittingly persistent and pervasive on this blog that it is almost sexual in nature. At times I feel these constant postings on impending doom to be akin to a dark, romanticized, wet dream. Crunchy conservatives (and I include myself as one) do tend to be dazzled by a highly unrealistic, romanticized, visions of a past that never really was. Could it be that you have an equally distorted vision of a false future? Do you actually *want* society to die?

Haha, best comments thread ever.

Rumsfeld had proteges?

trying again:

Hey, brother, let me know when you come up with something useful. A little something from St. Isaac: "Satan is not the name of any natural being, but is the name we give to that which has turned away."

Kalo taxidi, phile mou!

SC

At times I feel these constant postings on impending doom to be akin to a dark, romanticized, wet dream.

Apocalypicism is associated with a group's selfcongratulatory utopian dreams (in which they usually play the messianic role) collapsing. If they can't win, they want everyone else to lose too.

I resent the headline. America is not God's city on a hill. He, or She, doesn't love America more than anyone else. Why would we privilege America? Yes, I think the Bill of Rights, and the concepts behind the Declaration, the Constitution, and the Gettysburg address are better than other concepts of political policy. Doesn't mean God loves us more than Iraq or Palestine.

If a massive tidal wave of [some sort of] destruction is heading toward America, it can only be a particular manifestation of a set of ideas, which themselves cannot perish. "Crunchy conservatives (and I include myself as one) do tend to be dazzled by a highly unrealistic, romanticized, visions of a past that never really was." Duh. And a present that doesn't exist, and usually a future that will never be either. Get over yourselves.

Everyone should be listening to Dave Ramsey and quit using credit to buy things they can't afford, save for a rainy day, and live on a budget. If whatever "crises" is upon us finally makes everyone see how sensible that is, that's not a bad thing.

I think doomsdayers are forgeting to make good old American engenuity a part of the future-prediction equation. Lots and lots of people will figure out how to make money in the coming new economy. This is still the land of opportunity.

"What kind of magic does this man Rubin have? He was one of the key Democratic architects of the extreme financial deregulation that brought the economy to this pass. At Citi, he was one of the grand strategists of the speculation in securitized loans and off-balance-sheet gimmicks that has brought Citi to the edge of bankruptcy. Yet he continues to fall upwards. Surely Barack Obama must have noticed that Rubin is a false prophet. So why is his entire senior economic group a Team of Rubinistas?"

So we all know that Bush's team simply continued the Clinton-era policies without aim or reflection?

Anyone who thinks that that $ 53 trillion in promised entitlement spending is actually going to happen is taking the short end of a bet. Prof. Lawrence Kotlikoff demonstrated that quite conclusively in his book “The Coming Generational Storm”. I have no doubt in my mind, however, that the Congresses of the 2010s and 2020s will try to see to it that the spending will happen. The Boomers will strongly encourage this. The problem is that this will bankrupt the economy, and very quickly.

Obama is going to make a serious run at nationalized health care. The committee chairs in Congress are going to force it on him. Unlike 1993, there won’t be an awful lot of opposition from the large corporations—they’ll be the ones behind it. (We can see the preliminaries of this now, with the automakers’ complaints about legacy costs.)

As far as the Clinton-retread economic team goes: Obama is going three sides ‘round the barn to surround himself with “experienced professionals in the field” to compensate for his utter lack of knowledge in the area. Also, he wants to present an image of complete respectability in order to defuse any notions of being an “angry black man” or an “angry black radical”. Unfortunately for us commoners, these people are Keynesians and national-socialists through and through. Just consider the recent proposal to “nationalize” everyone’s 401(k)s. The fact that that sort of expropriation even got a hearing should be enough to put the fear of God in any sane investor.

Notice that no one—NO ONE—in the new Administration is saying a thing about the entitlement problem, and no one is likely to. They’ll claim that the current slowdown is more than enough problem to deal with right now. What they know, and what most everyone else in the Throne City knows, is that the demographics of the situation are driving things, and the electoral politics based on those demographics will not permit even a slowdown in the rate of spending-increase, let alone the massive cuts that have to be made to prevent a real catastrophe.

Allow me to explain: our ratio of beneficiaries to workers/producers is not all that bad right now. The retirement of the Boomers and the rise in numbers of the poorer ethnic groups will alter that ratio seriously for the worse over the next 15-25 years. Taxes and borrowing are going to have to rise to European, if not Soviet, levels to cover them. That is NOT a recipe for economic growth.

We’re in for a hell of a rough ride before The Day comes. Live below your means, save your head off, and don’t keep your investments anywhere that American regulators can get their hands on them after 2015 if you want to keep your money.

This current Slowdown doesn’t bother me that much. Our long-term prospects once the entitlement spending really starts to kick in scare the snarf out of me.

Your servant,

Lord Karth

It was the strawberries, Ira, the strawberries!

I'm not sure I understand YOU, Rod.

First, the financial products that you claim are the cause of our meltdown are... securitized mortgages... And that was something invented by... the ... Wait for it... Resolution Trust Corp. Yes, the federal government itself invented securitized bundled mortages, brought them to market and made them popular.

If you're trying to say it was CDS, it is not clear that those are any cause of the credit problems. They were a problem, in that too many carried too much. Still, CDS's could be "settled" reasonably amicably by the parties involved and would not need to kill the institutions involved.

The biggest problem, is that Obama and his advisors do not believe in any workable solution. They believe in spending taxpayer dollars. They don't believe in turning off the impediments to people producing wealth. I'm sorry, but the whole nation NEEDS to get to work. We need to stop throwing our money overseas or even over our borders for oil - so drill here, NOW. We have MASSIVE amounts of natural gas and oil in Utah, Colorado, Montana, and N Dakota.

We need to drop the corporate tax rate to 0. Simply abolish all punitive taxation - death taxes, gift tax, flat out get RID of the income tax and replace it with a retail sales tax. Let the tax code encourage thrift instead of encouraging non-productivity.

The noting of killing our domestic auto sales with insane MPG requirements... Sent packing. I'm sorry, none of this is even ideological. It's just, simple common sense.

So why aren't you actively pushing your readers to start the drumbeat for something intelligent, instead of playing the aloof and disconnected pundit?

Well, I took the picture down because I don't want to cause offense unnecessarily, but I don't think there was anything wrong with it, because I quite seriously believe that the thing that's about to wash over us is going to be quite as destructive.

And Christian, I know you don't like it when I write pessimistically, and you can try to psychoanalyze it out of mind all you like, but it doesn't change the evidence indicating that we're in for a hell of a rough ride. If you disagree, then give evidence to back up your position. Don't get all pissy and make crude sexualized comments about what you suppose my "fantasies" are. This terrible thing we're living through now and will be living through was brought on us by Republicans and Democrats, and all of us, living as though we didn't have to pay attention to limits. If it upsets you to read me going on about it, fine, don't read me. I have to say what I think is true. I would genuinely appreciate it if you could show me where I'm wrong, because I don't want to live through what I think I'm going to have to live through.

Rod "... quite as destructive."
yes... and perhaps much more so than that tsunami...
since...
a severe financial crisis could very well bring about a large reduction in charitable giving and foreign aid...
in this situation, the amount of premature deaths of the world's poor could far exceed the few hundred thousand tsunami deaths...

Hope for the best, prepare for the worst...

Forgive Greenspan (financial)...
Forgive God (tsunami)...

Don't most of us (my apologies to the exceptions; it just sux) still have the same job we did 90 days ago?

My final check from my last job arrives this week. Sometimes being exceptional isn't all it's cracked up to be!

Being worried, or paranoid, or apocalyptic, is one thing, but y'all are just predicting.

I couldn't agree more.

This line from Rod's post above "I don't want to live through what I think I'm going to have to live through." puts a point on exactly what is wrong with how people are thinking. Who cares that we don't want to live through it? This isn't an about our desires, it's about calmly making it through a tough situation.

Look: I would never have chosen to live through a plane crash, but when the engine crapped out at altitude our thin chance of living through it seemed lots better than not living through it. (And I can tell you with great authority that the single most exhilarating experience a person can have is knowing with absolute certainty you're about to be dead, and having events prove you wrong.)

Name the guy who wants to live though this and I'll show you an idiot. This is nothing compared to a real tsunami, hurricane, tornado, flood, or earthquake. Compared with having an IED take your legs off and leave you brain-damaged this is a walk in the park. Do you think those people chose to go through that?

Enough with the apocalyptic whining. Man up and settle down! Either we'll make it, in which case good for us! or we won't, in which case we'll be beyond caring about it.

---

glad I didn't trust the catpcha thing, it timed out and erased everything on the reset.

LK --

To get back to our continuing discussion (Are we screwed now, screwed later, or screwed both now and later?), serious economic bloggers (Jesse's Cafe Americain, etc.) are now debating when the Federal Government will no longer be able to service its debt from existing revenue streams. And the years they are arguing over are 2009, 2010 or 2011. Yup, it's that serious.

So we owe each other drinks. And you finally got your big win! (I'm personally opposed to Orangemen defeating fighting Irish, whether on the battlefields of the old country or on the gridiron over here.)

serious economic bloggers (Jesse's Cafe Americain, etc.) are now debating when the Federal Government will no longer be able to service its debt from existing revenue streams. And the years they are arguing over are 2009, 2010 or 2011

Pyrrho - Would you mind pointing me to some links on this? ISTR seeing something on Cafe Americain a while back, but it seemed a bit short on analysis (or perhaps I missed said analysis - entirely possible). Granted, CBO's current projections don't seem to take TARP, etc., into account; but with total 2008 revenues & interest at $2548E9 & 244E9 (respectively), I have trouble conceiving of a scenario wherein the US has trouble servicing its debt.

Your Name: I think I may have a link that you requested.

Correct me if I’m wrong, but the 2008 Trustee Report, Table VI.F9, shows cash flow going negative in 2011 for Social Security/Medicare under the high-cost assumptions. This must be where the 2009-2011 dates come from.

http://www.ssa.gov/OACT/TR/TR08/VI_OASDHI_dollars.html#116339

These estimates show that Social Security/Medicare begin to compete with other government programs for resources (tax revenue, debt issuance) in 2011.

Pyrrho:

I took a quick look at some of the links from the Jesse’s Café Americain site. That $ 7.5 TRILLION in guarantees and loans made me itch. Exactly what have the Wonderful Gang of Happy Monkeys (Throne City section) been smoking ? As far as when the spigots get turned off, I’m surprised they haven’t been already. Now I’m hearing that the Mad Monkeys are going to directly intervene to prop up the consumer-credit/student loan markets. This strikes me as being flatly insane; their target audience is way overloaded as it is.

I seriously doubt any of these clowns have the faintest idea what they’re doing. Christ help us if Obama wants to pursue this course of action after January. We’d be lucky not to be turned off before Christmas. (Note to Troops: the tax burden is going up, but not in the way you think. Look for the AMT “fix” to quietly get itself lost this summer, and don’t bet against a VAT or that confiscation-of-401(k) plan going off. Obama’s Hair Bear Bunch is a wily lot.)

Drinks: the next time you’re in Upstate NY, I’d be happy to stand you and Mrs. P to several rounds of whatever it is the two of you are imbibing these days. We’ll hit the Dinosaur Bar-B-Que and make an occasion of it. For my part, I’m partial to dark ales: Guinness for preference. Romulan if you can find some.

As to what passes for an SU football team: even a dying lion has one good swipe left in him. That game’s going to be talked about for years.

Your servant,

Lord Karth

You know I stood behind Obama, but I'm with you on this one Rod.

I'm of the belief that the last person I want in charge of fixing the economy is an Economist. Least of all ones who are so close to the mess in the first place.

What we need is some new blood in there who has nothing to do with a major financial institution, a previous administration, or the monetary system.

jeez. Give me Mark Cuban for all I care. - At least the Mavericks play a decent game of ball. Just don't shove some Harvard MBA or Bill Clinon's accountant down my throat.

Considering the leniency I've given to the current Administration, I am willing to extend Obama the same courtesy but this step doesn't exactly fill me with sunshine and rainbows.

Conversely, at this point Obama should realize no matter who he puts in charge - this thing is coming down and it's coming down fast. It's just damage control and if you're going to throw the HarvMBAs into the mix, it might as well be ones you know. After all, they are all essentially the same anyway.

P.S. I never studied for my Econ finals :-)

Your Name @ 0650:

It only makes sense that medical care will need to be rationed, whether by choice or by the market. Our society currently is the least prone to any type of rationing, just look at Canada and you can see the consequences of a single-payer system. People will wait longer for care, that's the definition of rationing.

We don't have a sustainable system anyway-I can't quote the number but I have read that a large percentage of our medical expenses are incurred during the patient's final year of life. I personally don't see that as a good allocation of scarce resources, but that is a tough call to make. I think we will continue to try and care for everyone to the best of our ability but that ability will whither and it will become even more common that it is now to quietly let someone pass on (or maybe even give them a little assistance) without calling it euthanasia. It doesn't have to be formalized to be widespread.

I have thought a bit more about the comments I posted above and have concluded my despair results from an belief that our basic problem as a society is that we are willing to do whatever it takes to prevent anyone from suffering from any bad decision or bad luck. I suppose it's human nature but by doing this we are limiting the upside as well in our society. If things CAN'T be allowed to get worse, well then, no "creative destruction" occurs either. Innovation is prevented. The status quo is our goal. So by definition, we are preventing ourselves from advancing as well.

This leaves us locked into our present situation, with no innovation to move us forward. Why would anyone innovate, when they can just keep doing what they are doing now and be "protected" by the nanny state from any suffering? Which I suppose would be great, except for the fact that things never just stay like they are. We can pretend, but someday we will have exhausted the resources (human, natural, and cultural) that have helped us get to the point we enjoy today. What I am saying is, if we try to stand still, we will regress. Standing still is not an option. We can either move forward, which will involve some members of society suffering and others prospering, but also result in us developing new ideas and new resources, or regress, in which case a far larger percentage will suffer and only a very few will prosper. When I say regress, I mean our standard of living.

Listen: the consequence of making heroic efforts to prevent suffering ($700 billion and counting bailout, anyone?) will be much greater and more widespread suffering in the future. It really is the old "Pay me now or pay me later" effect. And no one is smart enough or powerful enough to overcome it.

When we're going through hell, we should keep on moving-not decide to stop and set up shop. It's hard, but the long term reward is to make it out, as opposed to settling here. But I don't see any sentiment to keep moving-our country seems bound and determined to do everything in her power to establish a base camp right where we are and call this the greatest achievment of civilization and declare history to have ended. And it frustrates the H-E-double hockey sticks out of me.