# Is the global financial crisis affecting you in any way?



## Shantar (Nov 25, 2008)

I read the news every day and I´m starting to get worried about how this global financial crisis is going to end. I´m just curious if this crisis affects the working composers in any way as of yet? Luckily (I guess?) for me I´m just a hobby-composer so I have my stable income selling wine and (other alcohol beverages controlled by the norwegian government an "alcohol monopoly store"). When times are getting tough people are just drinking more so I´m pretty much safe but I´m staring to worry about the rest of my countrymen and neighbors abroad.


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## Nick Batzdorf (Nov 25, 2008)

Yah-uh it's affecting me! We were the first to feel it.


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## Patrick de Caumette (Nov 25, 2008)

Nick Batzdorf @ Tue Nov 25 said:


> Yah-uh it's affecting me! We were the first to feel it.



Exactly.

I started feeling the financial crisis two years ago.
Advertisement budgets started shrinking and the fees I would normally get were reduced by half.

Coincidentally, I'm doing well right now, much better than two years ago.
But who knows what tomorrow holds?

Multi-tasking is key for surviving


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## rgames (Nov 26, 2008)

Fear not! It is a real threat. Trust your leaders!

That's what we do here in the US. For example, when Bush said that WMD were out there, we trusted him. We couldn't really be sure, and we didn't really see them ourselves, so we had to rely on what we were told.

So, just like the WMD, you're certain to see the financial crisis sooner or later. I mean, it's gotta happen, right? It's all over the news...

Certainly people don't incite irrational fear for personal gain, do they? 

Like, say, winning a presidential election?  

rgames


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## Evan Gamble (Nov 26, 2008)

rgames @ Wed Nov 26 said:


> Fear not! It is a real threat. Trust your leaders!
> 
> That's what we do here in the US. For example, when Bush said that WMD were out there, we trusted him. We couldn't really be sure, and we didn't really see them ourselves, so we had to rely on what we were told.
> 
> ...



Your insinuating that what?... The Democrats or Liberals made up this Financial Downturn to win an election?


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## synergy543 (Nov 26, 2008)

Naw, its not real is it? Ya know Richard, those silly VI composers, makin up this goofy stuff (giggle) when the economy in Alaska is roarin! Obama Osama. Aw shucks, those silly composers just need to dig deeper in their pockets and they'll find plenty of change right? Just like Cindy McCain did, and in Alasaka, like ya know, they just dug and found oil gosh darn,... Oh, and btw, its all 'bout health care and....

Richard, can you see Area 51 from your back yard?

Take Care Number 1 dude!

(the men in the white coats and the straight jacket are comin...) Its gonna be OK, don't worry.


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## Patrick de Caumette (Nov 26, 2008)

rgames @ Wed Nov 26 said:


> Fear not! It is a real threat. Trust your leaders!
> 
> That's what we do here in the US. For example, when Bush said that WMD were out there, we trusted him. We couldn't really be sure, and we didn't really see them ourselves, so we had to rely on what we were told.
> 
> ...



Dude, I hope that by that you refer to 9/11 (and how that's what saved G.W. and his clan)

'cause if you're refering to the current recession, it's for real and you should stay away from the pills :mrgreen: (o)


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## Nick Batzdorf (Nov 26, 2008)




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## rgames (Nov 26, 2008)

Of course my comments are (mostly) tongue-in-cheek.

While it's clear that the US (and world) economy is facing some problems, there are many elements of the issue that are impossible to extricate from the effects of psychology. So I say read everything with a healthy dose of skepticism if you can't tie it to reality. Trust but verify, ya know...

Soon we'll have a presidency and congress controlled by the same party and a lot of emotion on one particular issue. Sound familiar?

All I'm saying is let's make certain we get it right this time. It's even more important that we scrutinize the actions of the governemnt this time round because Obama has a popular appeal that Bush never had.

Here's an example:

I just sold one house in Virginia and bought another in Arizona. Of hundreds of homes in those two markets, I saw one foreclosure. I also had no trouble getting a mortgage. In 2001, I had exactly the same experience when I sold a home in Georgia and bought one in Virginia. So I'm right in the middle of this crisis but I can't seem to find it...

So, given the popular assumption that the housing woes are to blame for our current economic problems (which I agree with, by the way), how big is that effect? Well, what percentage of mortgages are in foreclosure? It turns out that this number is extremely small - about 1.0% - but what gets reported constantly is the change. Well, when small numbers change, the percentage changes look big. So, for example, a change from 0.6% to 0.9% gets reported as a "50% increase", which, of course, makes for a much better story, especially if you're running for president .

So, 99.0% of mortgages are not in foreclosure, and about 95% are being paid in full, on time. Is that good enough? That's where we get in to the psychology. The answer is that nobody really knows. Sure, the credit markets locked up temporarily while the banks were adjusting to cash flow shortages because of the shift, but have they reached a new equilibrium? Hard to say. Wat is clear is that the credit lock trickled down through the rest of the economy - e.g. business couldn't get short-term credit to make payroll. That, in turn, makes people think twice about the viability of those businesses, and publicly traded firms take a hit on their stock prices. When a bunch of people start thinking twice, well, you get a downturn in predictive indicators like the stock market.

Which brings me to another point: the stock market is great fun, but it's not the best indicator of the present state of an economy. It's more like a very complicated bet on what people think is going to happen in the future. Actual economic indicators, like GDP, are much more closely tied to the present and recent past. But they're not as fun to watch because they're more stable and less prone to wild swings, and that's boring. So if you're the type of person who likes to sensationalize things, you'll focus on the stock market, especially if you're running for president 

So, if GDP is a better indicator, how are we doing here in the US? Well, the most recent numbers (out yesterday) indicate a drop of about 0.5%. Q2 numbers showed an increase of 2.8%, and Q1 numbers showed an increase of 0.9%. That's right, increasing GDP over two of the last three quarters. And ONLY indications of increases while the presidential campaign was going on. But if you want to convince everyone that they're facing tough times, you'll ignore the indicators that tell a different story, especially if you're running for president 

While it's certainly possible that we might dig into a deep recession, especially if we allow the psychological element to dig us deeper than we otherwise would have, it's not clear that it's a foregone conclusion. Of course, maybe we've just been duped and our hero is about to emerge and say everything is OK again, thanks to his leadership. What a great story that would be, especially if you just became president 

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## bryla (Nov 26, 2008)

rJames @ Thu Nov 27 said:


> But the good news is that this mess has forced gas prices down...so I guess I'm back on for that new Hummer.
> 
> (yeah, kidding)


Not to diss americans, but during the last two years Hummer sale dropped, but have started to increase with gas pricing dropping, and that's what I think is wrong. Americans are very short termed


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## Nick Batzdorf (Nov 26, 2008)

I think people are the same everywhere, bryla. The reason people drive small cars in Europe is that gas is taxed highly to force that. It's not because they're more forward-looking or godly. And that's the unfortunate side to having the gas prices drop back down (plus it seems to be the leading contributor to deflation, which is a really bad thing).

On the other hand, it's so refreshing to hear a president (president-elect) with a vision for the future. What a difference from the past eight years.

Again, the silver lining in this whole mess may be that it's now possible politically to start making the huge changes we need to make in order to avoid ecological collapse. Obama sure makes the right noises, talking about a new energy economy.

Richard wrote:

"there are many elements of the issue that are impossible to extricate from the effects of psychology"

Always. That's what the whole field of econometrics is all about.

We just have to remember that life goes on even if the economy sucks! Even in the Depression, 75% of the country was still working.

But you know, I'm constantly struck by how far removed we are from the barter system that money replaced.


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## bryla (Nov 27, 2008)

Nick Batzdorf @ Thu Nov 27 said:


> I think people are the same everywhere, bryla. The reason people drive small cars in Europe is that gas is taxed highly to force that. It's not because they're more forward-looking or godly. And that's the unfortunate side to having the gas prices drop back down (plus it seems to be the leading contributor to deflation, which is a really bad thing).


Well, the American musicians I play with that live in Denmark (or elsewhere in Europe) share my view on this :s

It's possibly not people but politicians (and yes there is a GREAT difference between the two  ) As I think politicians tend to choose short-termed solutions. If it's not done in their term they won't get the credit for it.


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## Scott Cairns (Nov 27, 2008)

Shantar @ Wed Nov 26 said:


> Is the global financial crisis affecting you in any way?



One client owes me 3k and is not replying to my emails. I guess I could put that down to the economy (perhaps)

Oh, and the latest Cubase upgrade was $299 Aussie dollars for ages, I ordered it yesterday and its now $349. Our dollar has gone from roughly 90c to 60c against the American dollar. The financial crisis again I guess.


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## John DeBorde (Nov 27, 2008)

yeah, I just had a corporate video gig put on hold while they "rethink" it, which makes me pretty worried that it's about to go away completely, so I think that qualifies as being affected by the crisis.

I've also seen my retirement account go down about 30% which is pretty nerve wracking, but hopefully it will come back up by the time I need it. My mother-in-law on the other hand, is living off hers right now, so she's feeling the pinch in a big way.

So I think that makes this pretty real, no matter how much of it is fear driven. I have to say that seeing all the economic eggheads that seem pretty genuinely concerned about the situation make it all the more disconcerting, and I find the insinuation that all the concern is manufactured by the democrats to be in pretty poor taste and insulting. If in fact 1% of the mortgages in the country are in foreclosure, that is a staggering number of actual people being put out of their homes, and I hope that you don't find truly hard times encroaching on your life any time soon Richard. My dad grew up during the depression and has always told me stories about how much he loved "mayonaise sandwiches" and working all day on the farm to grow food to eat, so I hope none of us ever have difficulty finding something substantive to put in our sandwiches.

But yes, I agree with you completely that a healthy dose of skepticism is a good idea when eyeing the government's activities. >8o 

peace,
john


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## Thonex (Nov 27, 2008)

It affected me... I had a REIT (real estate investment trust) go south on me... not fun :evil: 

Turns out the Company engaged in fraud and cooked the books. US courts are involved and people will be going to prison... I may see 10-15 cents on the dollar *if* I'm lucky.

But my work (knock on wood) has been steady... if not picking up a little.

Cheers.

T


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## JustinW (Nov 27, 2008)

IF this dude is right; it will be affecting more American, soon, in a worse way:

http://www.infowars.com/?p=5938


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## rgames (Nov 27, 2008)

John DeBorde @ Thu Nov 27 said:


> If in fact 1% of the mortgages in the country are in foreclosure, that is a staggering number of actual people being put out of their homes



Sure - but I'll put on my hardass conservative hat and say a lot of them deserve it. I can't tell you how many discussions I had with people between, say, 1998 and 2005 about the ridiculously risky mortgages that were being advertised. 110% financing, interest-only, crazy ARM structures. None of it made sense. Sure, it greatly expanded the number of homeowners, but what a risk... I bought my first house in 1999 and used 50% of the max loan the bank offered me - their push to mortgage people beyond their financial limits was ridiculous.

Having said that, I do favor helping out the folks who made rational decisions and are now hurting because of those who didn't. However, I'm 100% opposed to helping out some guy who had no business getting a mortgage in the first place, or the other guy who mortgaged himself beyond his means.



> The common man, no matter how smart, may not understand the details involved in some super complex financial instrument.



If the person explaining the details is worth his salt, he should be able to explain it to the common man. One of the first things that every graduate student has to do is teach. Part of the reason is that professors are basically lazy  but it's also because your knowledge (or lack) of some subject matter is made most evident when you have to explain it to neophytes.

So if somebody tells you there is an explanation but it's too complicated for you to understand, odds are he doesn't understand it himself.

rgames


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## Thonex (Nov 27, 2008)

rgames @ Thu Nov 27 said:


> Having said that, I do favor helping out the folks who made rational decisions and are now hurting because of those who didn't. However, I'm 100% opposed to helping out some guy who had no business getting a mortgage in the first place, or the other guy who mortgaged himself beyond his means.



Agreed


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## Nick Batzdorf (Nov 27, 2008)

The problem is that what's right is a lot less important than saving the country from becoming unraveled. Do the banks deserve bailouts? Auto companies? Of course not! They made bad decisions. Same with the people who signed on for bad loans.

But do we want what JustinW posted above to become the reality? The only way to stave that off is for the government to rescue homeowners so that the houses don't all get taken over by squatters and rats, etc.


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## Nick Batzdorf (Nov 27, 2008)

"Well, the American musicians I play with that live in Denmark (or elsewhere in Europe) share my view on this :s"

They probably said that during the Bush administration, when it was pretty easy to say that all Americans were shortsighted jerks. How else could they vote twice for a retarded ass who was obviously going to leave the country in ruin? (Never mind that the whole country didn't vote for him.)

However, resources/money/power has always ruled. It's human nature (and in a simpler way, animal nature). When presented with a choice between getting rich now and sustaining a more manageable lifestyle, guess which one people will choose?


"It's possibly not people but politicians (and yes there is a GREAT difference between the two ) As I think politicians tend to choose short-termed solutions. If it's not done in their term they won't get the credit for it."

Politicians, business leaders, people - everyone is complicit. We see that in the bad loans, the SUVs, "drill baby drill" when gas gets expensive...it's human nature.

On the other hand, that's also why I'm optimistic: we don't have the illusion of unlimited riches distracting us from reality right now, and we have an opportunity to make big changes. Again, Obama is certainly making all the right noises when he talks about a new energy economy and investing in a future that can be sustained.


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## synergy543 (Nov 27, 2008)

rgames @ Wed Nov 26 said:


> I just sold one house in Virginia and bought another in Arizona. Of hundreds of homes in those two markets, I saw one foreclosure. I also had no trouble getting a mortgage. In 2001, I had exactly the same experience when I sold a home in Georgia and bought one in Virginia. So I'm right in the middle of this crisis but I can't seem to find it...



Richard, below is a quote from the first article I started to read in today's news:

"Hotels in Tucson, Ariz., and Hilton Head, S.C., also are about to default on their mortgages."

Isn't this right in your backyard? It does seem the crisis is affecting us all.


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## JonFairhurst (Nov 27, 2008)

Tomorrow, Black Friday, we will get a good indication of how deep the crisis is. If sales are reasonably strong, people will gain confidence and things will bounce back. If people stay home and hold onto their wallets, many retailers will go out of business in January. Circuit City is already in Chapter 11. 2008 holiday sales will determine if they will bounce back - or possibly liquidate - in 2009.

If nobody's buying, then nobody's selling and nobody's manufacturing.

So, how stingy will your holidays be?


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## Nick Batzdorf (Nov 28, 2008)

Go me it's pretty obvious that people aren't going to spend enough today to save the economy. Why would they?


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## bryla (Nov 28, 2008)

What is Black Friday?


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## Nick Batzdorf (Nov 28, 2008)

The day after Thankgiving in the U.S. is the first day of the Christmas Buying Season in which people spend lots of money on obligatory crap and make the retail industry's year. 

But it seems pretty obvious to me that people are going to cut way back this year - although the shopping mall around here has been busy the last couple of times I went there.


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## rJames (Nov 28, 2008)

bryla @ Fri Nov 28 said:


> What is Black Friday?



My wife just told me that it is when retail companies finally go into the black for the year. (or when they hope to.)


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## Nick Batzdorf (Nov 28, 2008)

By the way:

"So, 99.0% of mortgages are not in foreclosure, and about 95% are being paid in full, on time. Is that good enough? That's where we get in to the psychology."

and

"So, if GDP is a better indicator, how are we doing here in the US? Well, the most recent numbers (out yesterday) indicate a drop of about 0.5%. Q2 numbers showed an increase of 2.8%, and Q1 numbers showed an increase of 0.9%. That's right, increasing GDP over two of the last three quarters. And ONLY indications of increases while the presidential campaign was going on. But if you want to convince everyone that they're facing tough times, you'll ignore the indicators that tell a different story, especially if you're running for president"

That's not where we get to the psychology, because for years people have been leveraging their houses. According to a book I read last year the actual wages for all but the top have been going down. People take loans to add on to their houses, etc.

Of course psychology is an important part of it - that's why you always see consumer confidence indexes listed when people talk about the economy - but the spending power has gone way down. All the rest of your theory about this being manipulated for the elections is fun but not real.


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## Nick Batzdorf (Nov 28, 2008)

Put another way by James Galbraith (son of Kenneth and also a big economist): "THIS IS THE BIG ONE."

And the biggest problem right now, as he puts it, is that the well is poisoned: the banks don't trust other banks that they're solvent and don't want to lend to each other, they don't trust that people are going to be able to repay loans, and people don't trust the banks.

He says that if the government plays its cards right - and in the U.S. they have some cards to play because of the New Deal - then we may see this begin to turn around in three years.

I hope his estimate isn't right.


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## JB78 (Nov 28, 2008)

For fucks sake:

http://edition.cnn.com/2008/US/11/28/bl ... index.html

This is insane, I hope they charge every last one of the idiots for manslaughter.


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## Nick Batzdorf (Nov 29, 2008)

Well, I was wrong. Black Friday was up 3+% over last year.


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## Thonex (Nov 29, 2008)

Nick Batzdorf @ Sat Nov 29 said:


> Well, I was wrong. Black Friday was up 3+% over last year.



yeah... but with 50% price cuts... so... how sustainable is this for the retail companies?


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## Nick Batzdorf (Nov 30, 2008)

Dunno, but according to my brother-in-law who used to be a department store manager, stores like Bloomindale's still make money.

I think a lot of consumer electronics stores are going to disappear, but that isn't abnormal even when there isn't a recession. All the stereo stores from the 70s are gone, places like Adray's are gone, Good Guys, and so on.

No question, though, retail is hurting.


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## rgames (Nov 30, 2008)

Nick Batzdorf @ Fri Nov 28 said:


> the well is poisoned



Right. So, how did it get poisoned? We had OK economic indicators over the last year or so; what happened? How did people get convinced that times are so terrible? What proof was offered? Proof besides the "trust me, I'm an expert" explanation, that is.

Investment Banks: so a few investment banks fail - so what? There are tons of others that are still around, and doing just fine, thank you. There was ridiculous speculative investing, and those who bet big wound up losing. They deserved it.

Mortgages: 99% are not in foreclosure - I already discussed that...

Stock market: Sure, stock prices are down. But that's the nature of equity investments: they're tied to psychology as much as actual economic performance, so if investors are convinced that they're in trouble, regardless of the facts, guess what? Stock prices drop. *If you can't take the risk, don't invest in stocks!* One of the tragedies of the recent past is the notion that everyone is entitled to guaranteed returns on equity investments. That's not the way it works. If you want security, buy AAA or government bonds - at least then you have a claim on the assets if a business fails. Stocks, though, are paid after all debts and other liabilities if a business goes under, if there's any cash left... *Investing in stocks is akin to betting: are gamblers entitled to a return?* If not, why is there this prevailing sentiment that everyone is entitled to guaranteed returns on their 401(k)'s?

Unemployment: we're at about 6.5% in the US right now. Historically, we vary between about 4.5% and 8.5%. So we're right in the middle.

So, where's the crisis? And who poisoned the well?

It's certainly true that GDP has decreased recently and unemployment has increased. Those are definitely bad trends. But who has shown how the magnitude of these trends justifies the hysteria that is filtering through the media? That's the part I'm missing.

rgames


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## JohnG (Nov 30, 2008)

Dear Richard,

Are you seriously trying to argue that "nothing much is wrong" and that it's all psychology? It's a bloodbath. The Wall Street Journal reported last week that 2008 had been the single worst year for stocks -- down 48% -- in 100 years, including even the years comprising the Great Depression (stocks have been up the last five trading sessions, but still, it's brutal).

The surviving investment banks are not doing "just fine." Banking profits are 10 cents on the dollar compared to what they were, not counting the bankrupt companies. Morgan Stanley's stock is off over 70% and its senior bonds are quoted at 75 cents on the dollar (reflecting tremendous distress), both Morgan Stanley and Goldman Sachs had to convert to bank holding companies to get easier access to funding. Goldman's stock has sunk by over 60% and the company was forced to issue a 10% preferred stock to Warren Buffet to stave off a liquidity disaster. That is not "just fine."

Other banks are down too. JP Morgan - 24%, Citigroup -70%, Bank of America -60%, Morgan Stanley -71%, Goldman -62%. Only Wells Fargo's stock is basically flat for the year.

And it's not just US/Europe/Japan. Emerging market stocks are down 80% (in US dollar terms, which also reflects currency declines).

Real estate is a smoldering wreck. In 20 major US markets, home prices dropped over 17%, the largest drop since the National Association of Realtors began keeping data in 1968. In many markets, over half the sales are of foreclosed homes, and in the third quarter, the National Association of Realtors said 35%-40% of home sales overall were foreclosed or distressed sales.

Building permits are down, housing starts are down over 50% from the averages of 2002-2005, commercial real estate analysts are projecting prices down 30% to 40% over the next year -- all this in an industry that often has equity of 10%-25%, so that means a huge percentage of the equity is going to be gone. So far, predictions of a market bottom in real estate have been couched in "crystal ball" terms -- "some time in 2009-2012" seems pretty consistent.

Unemployment is on its way up and respectable economists think it will hit 9-10% before its done.

Since September, Lehman went bankrupt in the biggest ($600 billion) US bankruptcy in history by far, WaMu and Wachovia effectively failed, Merrill Lynch ran for cover in a CYA merger. More banks have failed this year than in 15 years or so, yields on bonds are over 10% for companies whose debt was trading at 6-8% a year ago. 

Maybe it's not the 1930s, and so far policy makers appear determined to socialize banking (ironic that it's a Republican administration) and flood the economy with cash, so hopefully we will avert disaster. 

But however you look at it, it's a bloodbath.


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## Nick Batzdorf (Nov 30, 2008)

Furthermore, Richard, your whole attitude is horribly detached! 2 million jobs have been lost!

" So, how did it get poisoned?"

http://www.pbs.org/moyers/journal/10242 ... ript2.html

That's a transcript of the interview I quoted that from. It's very informative.


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## rgames (Dec 1, 2008)

re: bloodbath

Again, stocks are not a good metric to judge the state of an economy. Sure bank stocks are down; people are convinced the banks are in trouble. It doesn't necessarily have any bearing on reality, only people's perceptions of reality, which are, in turn, affected by what they're told by people who wield influence.

It's a self fulfilling prophecy: if you convice people that they have problem based on a speculative metric like the stock market, you're creating a feedback loop that genertates the problem it's describing. It might be justified, but it might not; that's the part where I'm stuck right now. I just can't see the justification for the hysteria; it might be there, but where?

Here's a question: when economists look back through history to learn lessons about economies, do they look at the stock markets? No - they look at indicators like GDP and unemployment. When we compare the US economy in 1800 to the current one, do we use the stock market as a metric? No - we use GDP.

*So forget about stocks*- what legitimate economic indicators did we have that warranted the hysteria? That's what I'm asking.

And yes, housing prices are down. I sold a house in Virginia back in September. I could have gotten 20% - 30% more for it a year ago. So what?  *Housing prices are still up about 50% from seven years ago when I bought the place.* That's a damn good return, especially since I used a lot of the bank's money, so my return on my cash was quite a bit more.

Here's a statement that no politician had the balls to say: *housing prices needed to come down*. The drop in housing prices is a good thing for a lot of people, especially first-time homebuyers. Let's not forget that.

The problem that I see is that ever since the early nineties or so, people have been on this investment kick. More people are buying stocks, more people are speculating on real estate, and riskier investment tools are being devised to feed this hunger for "investment opportunities." Well, maybe this is the wake-up call that America needs to get its head straightened out. People seem to think that they deserve both high returns and low risks. That's absolutely contrary to basic financial principles. If you want low risk, you're stuck with low returns!

If you invest in stocks, you run a risk that you'll lose your investment, so choose a level of investment consistent with your tolerance for that risk.

If you buy a house, the price might be down if/when you have to sell. So choose a target price and put enough down so that you won't be stuck with a bill you can't pay if the price drops and you have to sell and pay off the mortgage.

This is basic personal finance. Nobody is entitled to a return on anything, nor should he expect it. And that's the problem - there's this prevailing sentiment that everyone "deserves" some return on stocks and real estate. That's not the way it works, people!

rgames


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## Nick Batzdorf (Dec 1, 2008)

You're really stubborn, Richard!

Don't you understand that whether or not people are entitled to a return on anything, there's far less money circulating around the economy and that's causing people all over the world to lose their jobs?!

Gawd I hate conservative philosophy. It's so stupid.


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## Nick Batzdorf (Dec 1, 2008)

"Here's a question: when economists look back through history to learn lessons about economies, do they look at the stock markets? No - they look at indicators like GDP and unemployment."

Japan went through a depression that lasted ten years. The whole time their productivity didn't drop at all.


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## JohnG (Dec 1, 2008)

"forget about stocks"

Whoever is telling you that is clueless or willfully blind.

Between stock and housing price declines, trillions of dollars have just left the pockets of consumers, world-wide. It is simply nonsense to state that a massive stock and property decline doesn't affect behavior, employment, pricing of assets, companies' willingness to invest in new equipment and new products, and consumer spending, which still constitutes 2/3 of the economy.

It does.

Stocks are one of the leading indicators accepted by economists, bankers, and other financial professionals as a hugely important metric of economic activity, expectations, and estimates of likely future prospects. When the stock market crashes like this, companies fire (or fail to hire) workers, they cut back on R&D, they don't buy new equipment or start new businesses, and that caution ripples through the economy. Plus, contrary to your post, the history of stock performance is studied in great detail as a measure of financial health, progress, and history, not just GDP.

Even the Bush administration, which has stated time and again that regulation is bad, has practically nationalized lending to stave off total disaster. So that puts you in the minority in thinking it's largely media hype and misplaced entitlement.

But you are for -- what? Insisting that everything is ok and it's just the New York Times' fault? That announced job cuts in the tens of thousands is just the media's effect? Telling people close to retirement who have just lost 25-50% of their savings and are unable to sell their houses that it's ok because it's "market forces?" It isn't a theoretical exercise in Ayn Rand-ism for them, and it's not good for the country to have millions of formerly-prosperous people struggling through old age without enough money. I wonder how much charitable donations will fall this year and next. 

We are all more connected than the devil-take-the-hindmost pioneer spirit in your posts. Lots of financially weakened people sooner or later will use lots of services paid for with tax money from you and me.

This crisis does not merely reflect the action of normal market forces. It is a crash in the value of practically every valuable asset simultaneously, and markets are under record strain. Volatility (measured by the VIX index) is normally considered very high when it's at 35. It's been at 75 and 80 in the last couple of months. That is not normal market functioning, that's chaos. Banks have sharply curtailed lending and, for a while, practically stopped. The spread between 3 month LIBOR and Treasury Bills is still high, reflecting fear in the banking sector that there is no bottom visible. And when the banking sector is fearful and suddenly cautious with lending, that affects everyone -- large businesses, hospitals, schools, startups, entrepreneurs, graduating students, retirees, and families.

And this is a world-wide crash, not just the US or Europe -- it's affecting just about every person on the planet -- and that also means that there is no clear place from where demand will emanate to take up the slack and get things moving again. Central banks are very concerned about world-wide deflation of the type that hit Japan.

Crashes hurt lots and lots of people and ruin lives, so please don't be so glib about dismissing what every single financial professional will tell you is a hideous crash that is hurting vulnerable people all over the world.


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## rgames (Dec 2, 2008)

"trillions of dollars have just left the pockets of consumers"

The dollars leave your pocket when you buy the stock. That's part of the problem: people perceive stocks as cash. They're not.

"every single financial professional will tell you is a hideous crash"

Remember Paulson's comment about "Nation of Whiners; Mental Recession". Well, he's a financial professional. McCain also had his "economy is strong" comment, and it was justified at the time, as well. The trouble is there was (and is) intense media bias that REALLY wanted tough economic times for some reason (maybe because Obama polled better on economic isses...??? Nah...!!!), so both of these comments were taken as rallying calls for the doom-and-gloomers. We're about to get it...

I'm not denying that things are getting tough, I'm just trying to understand how we got here. As I said (and Paulson, a financial professional , said), we had decent economic indicators all the while we're being told to expect armageddon (hence the "Mental Recession" comment). Well, people are finally convinced and we're starting to fulfill the prophecy.

The stock market is a speculative metric. It's not tied to the here-and-now, it's tied to the future and, therefore, perception. When you buy a stock, what do you get? You can't drive it to work; you can't eat it; you can't live in it; you can't smoke it (well, I guess you could). So what, exactly, is the basis of its value?

The basis of its value is the likelihood that it will return dividends in the FUTURE. So if you convince people that the future is bleak, then stock values will go down. That's precisely what we've seen over the last few months, in a big way.

The question I can't get an answer to is _why_. Why did people all of a sudden decide that the value of stocks should go down? Or more appropriately, why did we get a barrage of media focus on doom and gloom, which then drove stocks down?

The stock market decline is not a cause; it's an effect. So what's the cause, other than media-induced mass hysteria?

It's a simple question.

rgames


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## Nick Batzdorf (Dec 2, 2008)

"The trouble is there was (and is) intense media bias that REALLY wanted tough economic times for some reason (maybe because Obama polled better on economic isses...??? Nah...!!!), so both of these comments were taken as rallying calls for the doom-and-gloomers. We're about to get it..."


That is beyond absurd!


"So what's the cause, other than media-induced mass hysteria?"

The mass hysteria is totally rational. And I hope that isn't a rhetorical question, because I'm going to answer it and I don't enjoy having my chain pulled by people who aren't beautiful women.

The answer is as simple as your question: people were making money hand over foot by selling loans. They didn't care whether people could pay them back, because they sold the loans to someone else as part of a package and were long gone. And indeed they couldn't pay them back, hence the banks were over-leveraged.

Eventually the seemingly endless credit started coming due and the whole pyramid collapsed. With people unable to pay for their houses, real estate values plunged due to the oversupply and people were unable to get loans based on the value of their real estate. That's not media hype!

Meanwhile the banks ran out of money and had to be bailed out (because people aren't able to repay the loans they have out and they're stuck with a bunch of foreclosed houses that are worth less than the amount they paid for the liens). They aren't making loans now, and that means people can't buy stuff, businesses aren't able to get loans to fill orders, etc., and of course that has ripples all over the world economy. Chinese factories are shutting down and all of a sudden people are out of work. And so on.

Oh and by the way the stock market collapsed because businesses are going to make less money since nobody has any. People like us who have their money in the stock market all of a sudden have way less, and that makes us less likely to go out and by stuff. The engines have stopped.

Now if you still insist on saying it's all psychological and hyped up by the media so Obama could win, I'm going to scream, because that's just retarded.


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## JonFairhurst (Dec 2, 2008)

rgames @ Tue Dec 02 said:


> Remember Paulson's comment about "Nation of Whiners; Mental Recession". Well, he's a financial professional. McCain also had his "economy is strong" comment, and it was justified at the time, as well.



That was McCain adviser and bank lobbyist Phil Gramm whining about Americans. And the numbers just confirmed that we have been in a recession since December.



> So what's the cause, other than media-induced mass hysteria?


 Personally, I believe that the underlying cause has been a lack of transparency. We had a housing bubble, which is more accurately called a banking bubble. Investors went giddy buying loan packages that they didn't understand. They hedged their bets with derivatives backed by companies who's exposure was similarly muddled.

Basically, the financial institutions were able to make income by stacking these hedges. If you played it right, you had no cash involved whatsoever, but would make money off of billions of dollars worth of insurance. 

Consider three companies. Company A has an investment. They insure the investment by paying a percentage of the interest to Company B. Company B hedges their bet with backing by Company C. All it took was one firm to go insolvent to start unraveling the quilt.

The solution wasn't necessarily to tell companies that they couldn't make these hedges. The solution was to make companies disclose the details of their risk. The bozos would have failed quickly, and responsible institutions would have avoided buying crap loans and bogus insurance packages from risky companies.

Face it. Insurance from a teetering company is no insurance at all.

Now, the recession that started in December 2007? That might have just been a normal cycle. But with big financial institutions leveraged to the nines, it was like pulling the apple from the bottom of the stack.

But the recession was never fake. The bankruptcies were real. The job losses were real. The media just reported it. They didn't create it. It was the web of opaque financial tricks that allowed this particular recession to explode.


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## synergy543 (Dec 5, 2008)

rgames @ Wed Nov 26 said:


> Well, what percentage of mortgages are in foreclosure? It turns out that this number is extremely small - about 1.0%


Richard, you're off the mark by more than just a little bit. Here are today's headlines:

*Delinquencies, foreclosures rise to 10 percent of US home loans in third quarter*

WASHINGTON (AP) -- A record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy.

http://biz.yahoo.com/ap/081205/home_foreclosures.html


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## Stephen Baysted (Dec 5, 2008)

I can see where Richard is coming from... the media, in its own interest, peddles doom and gloom and public confidence is undermined as a result. If the public doesn't feel confident, then it doesn't spend. If it doesn't spend, then retail is buggered. And once retail is buggered, then manufacturing suffers and so on. It's a self-fulfilling prophecy to a large extent. And of course, economists (who love to imagine that they are scientists and deploy the scientific meò¨Õ   4#¨Õ   4$¨Õ   4%¨Õ   4&¨Õ   4'¨Õ   4(¨Õ   4)¨Õ   4*¨Õ   4+¨Õ   4,¨Õ   4-¨Õ   4.¨Õ   4/¨Õ   40¨Õ   41¨Õ   42¨Õ   43¨Õ   44¨Õ   45¨Õ   46¨Õ   47¨Õ   48¨Õ   49¨Õ   4:¨Ö   4;¨Ö   4<¨Ö   4=¨Ö   4>¨Ö   4?¨Ö   [email protected]¨Ö   4A¨Ö   4B¨Ö   4C¨Ö   4D¨Ö   4E¨Ö   4F¨Ö   4G¨Ö   4H¨Ö   4I¨Ö   4J¨Ö   4K¨Ö   4L¨Ö   4M¨Ö   4N¨Ö   4O¨Ö   4P¨Ö   4Q¨Ö   4R¨Ö   4S¨Ö   4T¨Ö   4U¨Ö   4V¨Ö   4W¨Ö   4X¨Ö   V9¨Ö   V:¨Ö   V;¨Ö   V<¨Ö   V=¨Ö   V>¨Ö   V?¨Ö   [email protected]¨Ö   VA¨Ö   VB¨Ö   VC¨Ö   VD¨Ö   VE¨Ö   VF¨Ö   VG¨Ö   VH¨Ö   VI¨Ö   VJ¨Ö   VK¨Ö   VL¨Ö   VM¨Ö   VN¨Ö   VO¨Ö   VP¨Ö   VQ¨Ö   VR¨Ö   VS¨Ö   VT¨Ö   VU¨Ö   VV¨Ö   VW¨Ö   VX¨Ö   VY¨Ö   VZ¨Ö   V[¨Ö   V\¨Ö   V]¨Ö   V^¨×   4Y¨×   4Z¨×   4[¨


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## JohnG (Dec 5, 2008)

It is illogical to say the the media created a recession that began a year ago, long before the media said there was going to be a recession.

For once, the economists tend to agree, that the latest economic numbers are "Indescribably Terrible."

http://blogs.wsj.com/economics/2008/12/ ... -terrible/


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## JonFairhurst (Dec 5, 2008)

Another contributing factor is that gas prices were through the roof for months on end. The oil companies made huge profits as spending power was sucked out of the economy.

The bad mortgages and derivatives were the dynamite. The high gas prices were the flame. 

The good news is that gas prices are back in line. For those who still have jobs, that frees up some spending money each month. Trucking companies, airlines and energy-intensive manufacturing also get some breathing room.


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## Stephen Baysted (Dec 5, 2008)

JonFairhurst @ Fri Dec 05 said:


> Another contributing factor is that gas prices were through the roof for months on end. The oil companies made huge profits as spending power was sucked out of the economy.
> 
> The bad mortgages and derivatives were the dynamite. The high gas prices were the flame.
> 
> The good news is that gas prices are back in line. For those who still have jobs, that frees up some spending money each month. Trucking companies, airlines and energy-intensive manufacturing also get some breathing room.



Yup for us in the UK spiralling petrol prices and the threat of massive eco taxes on new cars (showroom tax) coupled with the actual punitive eco tax hikes on existing cars fatally wounded the car market whilst the 'credit crunch' was still only being talked about in the media. 

John G, the media didn't create it all by themselves, but they've been certainly fanning the flames for the past year. Oh and for the record, there isn't 'officially' a recession yet in the UK.


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## Nick Batzdorf (Dec 5, 2008)

Rousseau, the economy is shit and would be no matter what euphemisms you use and whether or not the media ever reported on it.

And while I hadn't heard about those eco taxes and am not in favor of knee-jerk attempted solutions to anything even if they're well-intentioned, I'd like to remind you that human civilization as we know it is in danger of ecological collapse and there's good reason to dissuade people from driving. I have very serious doubts that those taxes fatally wounded the UK car market.


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## Nick Batzdorf (Dec 5, 2008)

"The good news is that gas prices are back in line."

That's also the bad news, because people are likely to go back to their old habits. We really do need a new energy economy, and the cheaper gas is the harder it is to get conservative politicians to look beyond the present.


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## JohnG (Dec 5, 2008)

Rousseau @ 5th December 2008 said:


> Oh and for the record, there isn't 'officially' a recession yet in the UK.



well, as Sarah Palin might say, kind of, sort of probably officially:

"On Wednesday, the Bank of England said the UK has probably entered a recession in the middle of 2008 and is likely to continue to contract well into 2009" -- BBC


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## Nick Batzdorf (Dec 5, 2008)

From Wikipedia:

"In economics, a depression is a sustained, long downturn in one or more economies. It is more severe than a recession, which is seen as a normal downturn in the business cycle.
Considered a rare but extreme form of recession, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression."


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## JohnG (Dec 5, 2008)

For all those who think economic woes are caused by "the media," here are some non-media-created facts:

WSJ 12/5/08 "The Mortgage Bankers Association said its latest survey, released Friday, showed that 10% of mortgages on one- to four-family homes were at least a month overdue or in the foreclosure process in the third quarter. That is up from 9.2% three months earlier and 7.3% a year ago. *The current level is the highest since the trade group began such surveys*"

The media is not causing people to stop paying their mortgages.

WSJ 12/5/08 stocks rose despite "*the biggest drop in payrolls in almost 34 years*"

Chief executives / managing directors fire workers when their sales decline. They don't do so because they are frightened of what's in the paper; they are not like that.

An overshoot on appetite for risk and financial leverage / gearing precipitated this calamity, not a media-manufactured panic. Moreover, the overshoot was almost exclusively the province of very large firms that offered, on the one hand, and bought, on the other hand, assets that turned out to be worth less than expected. These are institutions, not panicky individuals who have no resources or experience on which to draw. They overdid it and now we all are paying.

Certainly, the news is so bad today that it now contributes to people feeling uncertain, but the really astonishing fact is how optimistic the press was even after Bear Stearns fell and Lehman began to totter soon after. It is almost amusing that many stock indexes around the world reached their all-time highs as recently as the middle of 2007 and now are languishing near ten year lows. 

I think the more interesting story is not, "the role of the media in creating problems" but the opposite -- how did the press continue to print so much good news until the markets -- jobs, housing, banking, stocks, bonds, real estate, oil -- had already plunged?


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## rgames (Dec 5, 2008)

[quote:1765a1617b="synergy543 @ Fri Dec 05, 2008 11:21 am"]Richard, you're off the mark by more than just a little bit. Here are today's headlines:

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## synergy543 (Dec 5, 2008)

rgames @ Fri Dec 05 said:


> The part I don't get is the magnitude - have we allowed banks to become so tightly leveraged that a few percent of bad accounts creates massive upheaval?
> 
> Think of it this way: if your income is a few percent lower than expected next year, how will it affect you? Would your financial world come crashing down?


Richard, I understand your question I think...I'm a liberal trying really hard to make peace with a conservative (gotta work together to make things better right?) and explain logically instead of screaming with frustration...so bear with me.

If someone put a 10% deposit on a million dollar home and the price dropped as much as 45% to $550,000 and then they foreclosed, the bank still has a $550,000 house and a $100,000 mortgage - not bad. Certainly a far cry from zero. $650,000 cash in the pocket isn't anything to snuff at. So how could this be a "crisis"?

But you must understand the effects and dangers of leverage. As some of the banks and hedge funds are leveraged 30-to-1. Some are/were 70-to-1. Think of it like this:

Just compare a 3-to-1 leverage such as a stock like ERX. If the market goes up 10%, you gain 30%. Sweet. However, if the market drops 10% you lose 30%. But wait, there's more... If the market drops 20% you lose 60%, 30% you lose 90%! When you go beyond 33%, you lose EVERYTHING. Very very dangerous. Delicious looking poisoned candy.

So when the the mortgage loans were re-packaged, in multiple pieces (making them hard to value) and then highly leveraged, you have a wonderful situation in a rising market (Ferraris, second homes, etc). But the minute things begin to fall, you can see from the above examples how fast things can come to a frightening collapse - particularly when you can't place valuations on the re-packaged pieces (derivatives). And then you can't trust the guys you're trading with. Confidence is lost. The well is poisoned.

Obviously over-simplified but if you do the math in the examples above you can quickly see how insane it was to allow tremendously high leverage without adequate capitalization. And in addition to having a financial crisis, we're fighting the the wrong war, there was a bubble in oil prices, we're losing our competitive edge in a sea of industrial and legal bureaucracy, we're allowing short selling opportunists to hammer good companies into the ground, and we've had a goverment in whom the people have completely lost trust and confidence. So really its been the perfect storm. But like all storms it will eventually end. But good people will also be part of the collateral damage and many of us feel the pain.

I hope that made sense, cause....it ain't all just about health care. :wink:


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## JohnG (Dec 6, 2008)

rgames @ 5th December 2008 said:


> My guess is...



"My guess is" pretty much describes your posts in this area, Richard, devoid of accurate data or figures. 

One of the marks of old school conservatives is unemotional, data-driven, knowledgeable analysis. Your posts in this area demonstrate none of that -- no research, no figures -- just a mish-mash of hunches, personal anecdotes, and extenuations for the basic thrust of "let the whiners rot, I am ok."

The only number you keep citing, inaccurately, is the actual number of foreclosures. That number as of the end of the third quarter was actually 2.97%, not 1% as you keep repeating. Even that figure (which, by the way, is up by over a third since a year ago), does not give as much insight as the number of mortgages in "distress," since a large number of institutions have temporarily halted foreclosures, as Jay Brinkmann, the Mortgage Bankers' Association chief economist says:

"An initial look at the number of foreclosure starts would seem to indicate at least a leveling off of foreclosures. These numbers, however, are being influenced by several factors including various moratoria on foreclosure filings and by mortgage companies holding loans in the 90+ day bucket during the modification and workout process. Evidence of this can be seen in the *large increase in loans 90 days or more past due but not yet in foreclosure. This rate jumped by 45 basis points, the highest increase in this category ever recorded in the MBA survey and far above the average 4 basis point jump we would expect to see.* While 20 states showed declines in the rate of foreclosure starts between the second and third quarters, every state showed an increase in the 90 days or more delinquent category with the exception of Alaska and all of the increases were greater than what we would expect due to normal seasonal factors.”

And yes, since you asked, banks are, in fact, leveraged that much.

You seem to say that the whole crisis is cooked up by the media. How could that be? Do you think that business people (most of whom describe themselves as "conservative") are so dumb that they panic when they read the paper?

If you want to find out what has already happened, read the news. If you want to see what is going to happen, watch stocks. Historically, they have generally declined before a recession is fully expressed by data (which lags the events) and they also generally have risen ahead of a recovery.


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## rgames (Dec 6, 2008)

JohnG @ Sat Dec 06 said:


> One of the marks of old school conservatives is unemotional, data-driven, knowledgeable analysis. Your posts in this area demonstrate none of that -- no research, no figures -- just a mish-mash of hunches, personal anecdotes, and extenuations for the basic thrust of "let the whiners rot, I am ok."



Maybe you missed some of my previous posts?

I got the 1% number from the Mortgage Bankers Association website. But whether it's 1% or 3% of mortgages in foreclosure doesn't matter. That's a really small percentage of mortgages; that was my main point.

I discussed the GDP numbers, which were decent while the media (and Obama) were constantly discussing the "recession" and potential depression.

I discussed the unemployment numbers, which are in line with historical averages. (They've actually been on the low side for a while, so the rise should be expected.)

So, how, exactly do you come up with the statement that I'm ignoring the numbers? In fact, my main question during this discussion has been "how do these numbers justify the hysteria?"

I'll summarize the essence of my confusion again (repeating numbers from previous posts, John ):

- The economic woes seem to be tied to mortgage banking problems, but only a few percent or mortgages are in trouble. How is that enough?

- The GDP numbers showed an OK economy (Q1 +0.9%, Q2 +2.8%, Q3 -0.5%) while the media (and Obama) were preaching doom and gloom. Why do those numbers not matter?

- Unemployment numbers have been REALLY low for the past few years. They've recently risen back to historical averages (6.5% or so). Why is that such a problem for the greater US economy?

rgames


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## midphase (Dec 7, 2008)

So Richard...if I'm understanding you correctly, you're implying that the current Recession and potential Depression are the result of a media and left wing liberal conspiracy who, by hyping negative news, have in effect brainwashed the population into tightening up their spending which is, for all intents and purposes, now causing a "real" recession?

Did I get that right?


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## Stephen Baysted (Dec 7, 2008)

JohnG @ Sat Dec 06 said:


> Rousseau @ 5th December 2008 said:
> 
> 
> > Oh and for the record, there isn't 'officially' a recession yet in the UK.
> ...



'Probably' and 'likely.' This is not ex post facto - just a prediction, an estimate or guess. This is not news, but crystal ball gazing. Now of course I'm not arguing that the media is 100% responsible, but in markets which are driven as much by confidence as they are by other factors, the media's role is of crucial significance. 

The media always 'reports' in an alarmist fashion. It has to sell its service so it's in its best interest to exaggerate, dramatize and sensationalize. Just look at the unsubstantiated and epistemologically unsound rubbish that is printed and broadcast about MMGW for instance (well I suppose the IPCC and Al Gore must take some of the blame for it as well).


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## Synesthesia (Dec 7, 2008)

rgames @ Sun Dec 07 said:


> But whether it's 1% or 3% of mortgages in foreclosure doesn't matter. That's a really small percentage of mortgages; that was my main point.
> rgames



Urm.. This is a joke right? You're playing the idiot to wind people up yes?

If you are, its not very funny.

If you are not, thats pretty sad.


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## rgames (Dec 7, 2008)

midphase @ Sun Dec 07 said:


> So Richard...if I'm understanding you correctly, you're implying that the current Recession and potential Depression are the result of a media and left wing liberal conspiracy who, by hyping negative news, have in effect brainwashed the population into tightening up their spending which is, for all intents and purposes, now causing a "real" recession?
> 
> Did I get that right?



Well, that's one explanation... 

Look, I said way back at the start of the thread that I'm not saying that's the case, though it certainly could be.

But let's assume that's not the case. Given the numbers I showed above, how did we manage to convince people that the larger economy is in such dire straits?

I believe it's a legitimate question that I haven't seen addressed anywhere. It's not a rhetorical question - I really want to know!

I'll again draw the parallel to the WMD debacle: remember all the expert testimony about the threat? And remember how convinced folks became? Well, it had a lot to do with the fact that people ignored evidence (or lack of) that just didn't add up.

The difference here is that Bush/Cheney coulnd't make WMD appear. The media (and I'll throw Obama in there again) definitely can make a recession appear. I'm just asking if they have, and if so, shame on us for not taking it to them when things didn't add up!

rgames


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## Nick Batzdorf (Dec 7, 2008)

Richard, how many times are you planning to keep making the same patently absurd, factually incorrect statements about the economy?

Honestly, I don't think there's anything anyone can draw from reality that will satisfy you.


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## JohnG (Dec 7, 2008)

Richard, only after I pointed out your mistake did you correct your one fact -- that you were off by a factor of three on foreclosures.

And you conveniently ignored the rest of the Mortgage Bankers Association info that I provided to you, that 10% of mortgages are in serious distress -- in foreclosure or over 90 days past due -- and that the only reason the specific foreclosure rate is not higher is that lenders are afraid to foreclose lest things get even worse.

And the official figures say that the US recession began a year ago, not last quarter. We await the official word from other countries.

If "independent thinking" means ignoring data, then you are certainly qualified.

Even Bush agrees:

"'Our economy is in a recession,' Bush said flatly, speaking to reporters on the South Lawn only hours after the release of a government report showing the biggest month of job losses in 34 years. 'This is in large part because of severe problems in our housing, credit and financial markets, which have resulted in significant job losses.'

"The White House has refused to embrace the term until Monday, when an economic panel said the recession began last December and is ongoing."


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## rgames (Dec 7, 2008)

1% vs. 3% doesn't matter; it's not much. You say that's a threefold difference, or 300%. That sounds like a lot!

I say 99% of mortgages are not in foreclosure, and further capitulate that you might be right that it's 97% not in foreclosure. That's a difference of 2%.

So - exactly the same information can be spun as "300% increase" or "2% decrease." Both are correct. Take your pick. :wink: 

Have we learned something about statistics?

BUT: I keep coming back to the same issue: I still haven't seen an explanation of how that number, whatever it is, is sufficient to warrant the doomsday predictions. Same thing with the GDP numbers, and same thing with the unemployment numbers.

SO, I'll try this one more time, then I think I'll have to give up: (o) 

Pick a number for mortgage foreclosures, or GDP, or unemployment. ANY number you think is right. Now take me through an explanation of how that number warrants the hysteria.

Here's my explanation of why I think it's not justified:

*Mortgages: * Let's take your number of 10% and assume ALL of those are foreclosures, not foreclosures and delinquencies. So a worst case scenario. Ok, that means the banks have accounts receivable that are not going to be realized, that's a hit on their balance sheets. Bad thing. I agree. But, how bad? Well, it's 10% of the NUMBER of mortgages; what's the dollar value associated with those mortgages? Given that most of the mortgage problems are due to folks who probably shouldn't have gotten mortgages in the first place, it's probably the low end of the mortgage market. So the actual dollar value associated with those losses is a lot less than 10% of accounts receivable - maybe only 1%? There's where I can't find info, but let's say it's 5%. OK. So there are a bunch of banks who have accounts receivable that are only going to be realized to 95% of their value on the books. Now, those accounts receivable are only one portion of the bank's assets, so the actual impact on the balance sheet is less than 5%.

So that's where I'm stuck on the mortgage issue: a worst-worst-case scenario gets me to less than 5% negative impact on the balance sheets of those banks. That doesn't seem like enough to cause financial upheval in the banking industry. Sure, it created a short-term cash flow problem, but that's been accounted for and things have re-adjusted. So no problem there.

*GDP:* GDP is the benchmark of the economy and it's been chugging along like it has for most of the last 50 or so years. Recent numbers (including the recent drop) are pretty much in line with where we were at the end of the Clinton presidency. So, by the most accepted benchmark, our economy seems to be running along like normal.

*Unemployment:* Again, statistics. I see reports of "50% increase in unemployment" that could as accurately be reported as "return to historical averages." Unemployment has been VERY low over the past several years (should've kept those Republicans in the White House and Congress, huh?). So the return to historical averages seems like no major cause for concern.

Again, pick any number you like for these three, or offer alternative metrics and use those to explain the rationale for the media hype. I've explained why I think the hype was not justified.

I've gone through this exact exercise with many people and haven't gotten that explanation. I'm not trying to be argumentative here, I really am interested in getting to some explanation on this. I'm really concerned that I might have totally missed the bus on this one...

rgames


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## Stephen Baysted (Dec 8, 2008)

I think Richard has a point and I think many of you are being harsh; he's asking some very serious questions about the reality of the current situation. 

Of course it's extremely sad when people are affected by these issues, and absolutely devastating when families lose their homes etc. but do the actual figures support the current hysteria? 

All of the information bandied about on this thread emanates from one source, and one source only: the media. Make of that what you will.

What I would say is that the day any of us takes information from the media and government as gospel without examining it critically and intelligently, that's the day we might as well give up. The current debacle about climate change teaches us that. 

Cheers


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## careyford (Dec 8, 2008)

Oh, I'm affected — my wife is completely stressed! 

Here's an interesting link and a good (and official not media-based) site to explore: 
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000 (http://data.bls.gov/PDQ/servlet/SurveyO ... NS14000000)

I agree the media doesn't generally know what they're talking about. (I do recommend Fareed Zakaria's show, Sundays on CNN. http://www.cnn.com/CNN/Programs/fareed.zakaria.gps/) To me the alarming aspect of the statistic 533,000 payroll jobs lost is because that number is typically the net loss for one year not one month. 10 million are now unemployed out of a workforce of 154 million. Not bad historically, but at an average monthly increase of .3 %, which is the average increase rate from each of the last 3 months, should it continue would mean an annual increase of 3.6% putting the US at 11% or over 16 million unemployed (60% increase). While not comparable to the 25+% seen in the depression, we are also a country with much less manufacturing and exports and a lot more service based jobs now. We're also seeing significant job loss from service based industry as well as manufacturing. It could potentially create a vicious cycle accelerating the growth of the unemployment rate (people stop/reduce spending -> companies cut jobs because of reduced revenue -> more people stop/reduce spending, etc.) Which by the way also reduces the tax revenues for individual states and the fed.

I'm optimistic that this is not the scenario, but I feel a responsibility to watch what's going on with our government and our corporations to the extent I can. UNfortunately, anything available to us falls in the category of either 'media' or 'government' unless you're going down to your local college and talking to an economic professor yourself. Additionally, the private sector can not fix this without government, and IMHO, part of what was wrong with the Republican approach was that they don't believe government works or that it is necessary to the operation of our markets. This crash is the end of that experiment started in 1981. 

Frankly, instead of discussing who's to blame or whether a crisis is exists (since crisis means "an unstable or crucial time or state of affairs in which a decisive change is impending; especially : one with the distinct possibility of a highly undesirable outcome" it is never based on anything but how people perceive the situation), I'd love to focus more attention paid to the good possibilities coming out of the perception of the crisis: Job creation, political and business leaders working together, our nation paying attention to our own problems rather than distracting ourselves with other people and their problems, empowering parts of our country that have long felt powerless, and hope. 

Boy, I need to get back to work... :oops: 
Richard


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## Nick Batzdorf (Dec 8, 2008)

"do the actual figures support the current hysteria"

YES!


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## Nick Batzdorf (Dec 8, 2008)

"The current debacle about climate change teaches us that."

It's not a debate.


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## JPB (Dec 8, 2008)

rgames @ Wed Nov 26 said:


> Of course my comments are (mostly) tongue-in-cheek.
> 
> 
> So, given the popular assumption that the housing woes are to blame for our current economic problems (which I agree with, by the way), how big is that effect? Well, what percentage of mortgages are in foreclosure? It turns out that this number is extremely small - about 1.0% - but what gets reported constantly is the change. Well, when small numbers change, the percentage changes look big. So, for example, a change from 0.6% to 0.9% gets reported as a "50% increase", which, of course, makes for a much better story, especially if you're running for president .



I was a Commodity broker for several years. Have spent a lot of time studying markets/market history - though, for some reason, I eventually lost all interest and don't even really follow them anymore.

But it is the same thing with the way that they report daily fluctuations in the averages. They don't report the percentage change (which is the only way one should ever measure any financial instruments' fluctuation). You'll hear lines like, "The third biggest one day point decline in history!" When the Dow was at 2000, a 100 point decline represented a 5% drop - a very substantial one day change. But at 10,000 that same point change would only be 1% - a very normal one day change. As the averages have moved higher through the years, the past daily point changes become completely irrelevant when compared to recent history. There is no basis for comparison.

They do this sort of stuff all the time when they KNOW that they are deliberately exaggerating and framing the story in a way that will make it more dramatic than it really is.

For me, while add response in the last few weeks has slowed down from what it had been, if I didn't watch the news I would have no idea that there is a "crisis." There have been several severe recessions in the last century and a half. They do effect people, but life goes on. They are as normal and inevitable as the tides.

There is a great book - and a classic among traders - called "Extraordinary Popular Delusions and the Madness of Crowds". It's a study of historical examples of the irrationality of crowd psychology - as it applies to financial perceptions. 

I remember in the run up to the Iraqi invasion, CNN (not Fox as I would have expected) was running a story all day that the new 'biggest threat' to US national security was no longer Osama Bin Laden, but was now Sadam Hussein. At the end of the day they did a pole: "Who is the biggest threat to US national security: Osama Bin Laden, Saddam Hussein, ...". Sure enough, and quite predictably, somewhere around 70% of those who responded gave their informed opinion that it was Saddam Hussein. It was a very painful thing to watch as I knew then where that was going.

The 24 hour news networks are constantly goading people into both forming and valuing their own opinions. They constantly conduct opinion polls and request people to send in e-mail/voice mail comments about various issues. And these ALWAYS are simply parroted responses based on the news stories that they run! It blows my mind to watch. It matters not whether they are liberal or conservative, or the really enlightened "independents" I am always flabbergasted to see how people simply adopt one of a few lines of thought - points of view that appeal to their notions of themselves, regurgitate those back in a poll, and then pat themselves on the back for being "informed." It has reached the level of an epidemic in this country.

CNN also has a slogan that they like to run - "Every American is an independent thinker." I truly feel, and I am a life long American citizen, that the US will go down in history as the single most duped culture in the history of the world - bar none.

EDIT: And yet - there are things going on now that are somewhat unique to the times we live in. I think there is cause for genuine concern, I just think that (and I can only speak for America) we tend to be too accepting of information that is presented to us - to the exclusion of things that are never reported on and that SHOULD be our focus. There is no doubt that fear is the basis of what the 24 hour networks are selling - while excluding most of the things that are a genuine cause for fear.

Then again, I think I spend too much time watching documentaries along these lines. I think Lynard Skynard said it best: "They can't dig what they can't use, if they'd stick to themsleves they'd be much less abused. (Now that's wisdom :D )


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## rgames (Dec 8, 2008)

Nick Batzdorf @ Mon Dec 08 said:


> "do the actual figures support the current hysteria"
> 
> YES!



HOW?

Come on Nick, you seem to have it all figured all out. Please enlighten those of us less capable!

rgames


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## Stephen Baysted (Dec 9, 2008)

Nick Batzdorf @ Tue Dec 09 said:


> "The current debacle about climate change teaches us that."
> 
> It's not a debate.



Nick, I said débacle. Perhaps I should have used the term scandal or tax con instead. 

So you're saying that the debate has finished and that, as renowned climatologist Al - I couldn't get elected to the White House so I'll reinvent myself as a purveyor of half truths, exaggerations, and a panoply of epistemologically unsound assertions - Gore puts it, 'the science is settled'? 

Or is that not what you're suggesting?


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## Illuminati (Dec 9, 2008)

Oopps double post.. Cool


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## Nick Batzdorf (Dec 9, 2008)

"Or is that not what you're suggesting?"

No it's not. 

I misread the word - sorry - but what I'm stating outright, not suggesting, is that anyone who believes that global warming isn't man-made and that it isn't a looming crisis is sitting on his or her brains.

Richard, you are incapable of being enlightened. Your questions have been answered several times and you're clearly not interested in facts.


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## midphase (Dec 9, 2008)

I understand what Richard is trying to say...and although it's quite a cynical point of view, I can see where he's coming from.

I think that while people are indeed influenced heavily by the media, Richard is giving them way too much credit. I think there is something more going on here than just an imaginary depression caused by media-driven hysteria. It's not that the 3% of homeowners who are defaulting on their loans are necessarily breaking the banks all by themselves (although when your margin is tight, a 3% loss in your earnings can be quite significant), but the behind-the-scenes machine that is present is falling apart independently from those few homeowners. It's like a poorly constructed car which falls apart upon hitting a small pebble. Richard is questioning how can something as big as a car completely fall apart upon hitting such a small thing. The answer is that the car will fall apart if it's essentially being held together by duct tape and elmer's glue!

To understand in layman's terms what has been going on in the past decade or so, I turn people towards the podcast of This American Life titled Another Frightening Show About The Economy.

Richard, please take an hour out of your busy schedule and listen to it:

http://www.thisamericanlife.org/Radio_E ... sched=1263

Let's talk afterwards....I think it'll be a more informed and positive conversation then.


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## Nick Batzdorf (Dec 9, 2008)

We've already posted all of that (other than your link), Kays, but Richard refuses to listen!


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## Nick Batzdorf (Dec 9, 2008)

By the way, JPB, I agree with you. The stock market would routinely rise and fall, creating and losing fortunes, every time Alan Greenspan farted.

On a smaller scale Apple's stock recently went way down and back up again because someone posted a bogus story that Steve Jobs was gravely ill. Of course a lot of things are fueled by the media.

What isn't true is that the present problems were ever all in our heads.


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## JPB (Dec 9, 2008)

Nick Batzdorf @ Tue Dec 09 said:


> By the way, JPB, I agree with you. The stock market would routinely rise and fall, creating and losing fortunes, every time Alan Greenspan farted.
> 
> On a smaller scale, Apple's stock recently went way down and back up again because someone posted a bogus story that Steve Jobs was gravely ill. Of course a lot of things are fueled by the media.
> 
> What isn't true is that the present problems were ever all in our heads.



I didn't mean to imply that they were. Just the opposite. It's just that the way issues are framed by the media and the way information is presented is an extremely effective orchestration of disinformation. There is enough "truth" to scare the crap out of people but NEVER enough to allow them to begin to see how this world really operates.

That was my point. 

It's funny, but I couldn't sleep last night. I stayed up and watched the Aaron Russo documentary on the fallacy of the entire American tax system, as well as the criminal activities of the Federal Reserve (I have seen it before - as well as the work of others who have researched this same issue and many others). It was during a public television membership drive, so every few minutes they would stop the film to ask for donations. And in these breaks they would read e-mails from viewers. It turns out that this film was causing a lot of uproar and they were getting a lot of angry responses. How dare this pinko insult the U S of A!!!!

One guy, obviously infuriated by what he was hearing, said that, 'He believed in offering alternative points of view, but didn't want to hear this "whack job" (referring to Russo) and his insane ideas." It is not enough for that guy to be a sheep - but he has to make it a point to actively attempt to herd all the other sheep into conformity. THAT is what bothers me the most about American culture. Purposely blind but actively belligerent.

That's America in a nut shell. This guy was, at that very moment, hearing what was probably the most sane and cognizant ideas that he has ever heard, and chose to call the man who took the time to research and DO HIS HOMEWORK and share that information with him "crazy."

And that is my point. So many people fall into this shell game of "liberal" versus "conservative", or "patriotic American" versus "whack job." When any careful examination of the most fundamental policies of our government since Kennedy, will reveal that it matters not who is in the Oval Office. They DO NOT set policy. All the liberals scream about Bush and the Patriot Act. But do they know that Clinton was already authorizing illegal wire taps on American citizens long before 9/11? He didn't even wait for the Patriot Act! And that he sicked the IRS on several of his political opponents after he was elected to the White house?

Just watch. I was certain of this before the election and am as certain now. Obama (and I voted for him - though with a total sense of futility I might add) will not make any difference at all. NONE of the most important economic policies or any of the current "trade" agreements, to the failed system of over leveraged credit (or any other aspect of what is going on in this country) will change. The president is nothing more than a figure head. Have you noticed that already the left is perplexed at how some of the key cabinet people (especially in terms of the war) didn't even change? "Change you can believe in!!!" It is SO CYNICAL. They even make it a point to make slogans out of the very thing that is the basis of the grand lie. The only change will be in Americas standing in the world. Obama has been given his orders and he will follow them like all good lackeys do. 

America is a ship of fools.


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## Stephen Baysted (Dec 9, 2008)

Nick Batzdorf @ Tue Dec 09 said:


> "Or is that not what you're suggesting?"
> 
> No it's not.
> 
> ...


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## Nick Batzdorf (Dec 9, 2008)

Thanks Rousseau. And you deserve a nice cushion. 

JPB, I believe you'll find that Obama makes a HUGE difference all over the world.

And are you talking about Aaron Russo's film about how the IRS doesn't have authority to collect taxes?

If so, I have to say that I found it very silly. Even if he's right that there's no law giving the IRS authority to collect taxes, it's a technical issue. If it ever came down to it, Congress would hold a vote and enact the law. But I'm sure there is one somewhere.


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## JPB (Dec 9, 2008)

Nick Batzdorf @ Tue Dec 09 said:


> Thanks Rousseau. And you deserve a nice cushion.
> 
> JPB, I believe you'll find that Obama makes a HUGE difference all over the world.
> 
> ...



I am quite certain that what you "believe"about Obama will prove to be false. Just as your/my belief in Santa Claus eventually did. He won't matter at all. Not one bit. None of the most important policy stances will change. Just sit back and watch as all the liberal pundits express their perplexity in the coming months. The impetus and direction that this country has been on for the last many decades will continue unimpeded. Of that, you can be certain.

(I sincerely hope I am wrong.)

Did you see on the news today - the breaking scandal regarding the Illinois Governor - Blagojevich? (gosh - what a coincidence) As of yet, there is no connection, in terms of his activities, with Obama. But just wait. Information will continue to come out that will gradually begin to erode people's confidence in Obama. And this won't be the last scandal - you can be certain of that. Just as with Bush and Clinton before him. The purpose is to make certain that he will loose the political power to rally any real consensus to enact any otherwise damaging legislation. Anything that he might actually want to do (and I don't doubt his sincerity for a minute) will be unachievable because of the way public opinion can be so easily swayed. Just watch and see how he will be eventually rendered ineffective politically.

A "technical issue?". Good God, man! Look around for a while! DO YOUR HOMEWORK and begin to replace your "feelings" and "beliefs" with facts. That is but one film and one person among a HUGE and growing body of people - those in a position to have a perspective that makes their point of view more valid than yours or mine. Russo was initially acting upon information that he had garnered from others much more informed than he.

These are people who don't just sit back and passively form opinions about things they are uninformed about. And they are actively involved in investigating and desperately trying to point out that there are many, many things being enacted, particularly in the form of Executive Orders, that directly contradict and circumvent the Constitution of the United States of America. The IRS issue was a tiny part of the point of that film. Were you paying attention? The fact that you find that "silly" proves my point. It should, at the very least concern you, if not terrify you! That is, if you value the principles that this country was founded upon.

As for me - I am starting to think I want to... ~o)


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## tobyond (Dec 9, 2008)

midphase @ Tue Dec 09 said:


> To understand in layman's terms what has been going on in the past decade or so, I turn people towards the podcast of This American Life titled Another Frightening Show About The Economy.
> 
> Richard, please take an hour out of your busy schedule and listen to it:
> 
> ...



+1 for this, it's the best explanation I've ever heard about the situation, and a riveting 60 mins of reporting to boot.


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## Nick Batzdorf (Dec 9, 2008)

JPB, I don't know that we're talking about the same film, but I saw the one I'm talking about years ago and have forgotten almost everything about it except that it was stupid and that he needed to get some exercise. He was going on and on about how there was no law that the government could collect taxes, and I don't find that point of view very interesting.

But either way, is it possible that someone could disagree with you without being clueless about what's going on in the world? I mean, is there any chance that I could have "done my homework" and still have good reasons for thinking Obama is going to be great?


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## rgames (Dec 10, 2008)

Nick Batzdorf @ Wed Dec 10 said:


> is there any chance that I could have "done my homework" and still have good reasons for thinking Obama is going to be great?



Nope. None whatsoever. :wink: 

A better question is whether Obama will be "sold" and "perceived" as great. When the Dem's have control, the overwhelmingly liberal media kicks in to make it seem like everything is so great. That's one of the best reasons to have a conservative president: at least then the liberal media do their jobs!

Remember all the talk about the Clinton "surplus"? I can't tell you how many times people bring that up then tell me I'm wrong when I say he increased the national debt by 55%. "We had a surplus!" Aaaarrrgh! Same thing as the Iraqi Liberation Act - Clinton made it official policy that Hussein would be removed from power, not Bush. Somehow the media neglects to discuss facts like these... And the Dem's look great to the uninformed person without actually being great. (Shhhhh..... it's a secret.)

But, back on point: you still haven't told me which of my facts are incorrect...??? Furthermore, you still haven't explained how the numbers (again choosing whatever numbers you want) justify the hysteria.

I get the part about banks not having money to lend - I went over that. Simply stating that there's a shortgage of cash is like saying there's an object hurtling towards the earth from deep space. How big is the object? Will it simply burn up in the atmosphere? Or will it make it to the Earth's surface? If so, how big a crater will it make? And how far outside the crater will the effects be felt?

You haven't explained how the size of the object warrants the fears about the size of the crater and, more importantly, the magnitude of the effects outside the crater.

rgames


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## JonFairhurst (Dec 10, 2008)

rgames @ Wed Dec 10 said:


> ...I say he increased the national debt by 55%. "We had a surplus!" Aaaarrrgh!



Both are true. Under Clinton the annual deficit increased slightly for the first year or two, and then decreased every year afterward. This accumulated debt. In his last year, there was no deficit; there was a small surplus.

So, both facts are true, yet only one makes you say, "Aaaarrrgh!." This is telling.

Did Reagan, Bush or Bush EVER have a surplus? No. Did the annual deficit grow during their administrations. Yes. As did the debt.

No one can expect a president to pay off the national debt in their term(s) any more than we should expect a homeowner to pay off a new mortgage in a year. The fiscal goals of both the homeowner and the government are to not spend over budget, pay the interest and some principal on debt, and avoid taking new debt without gaining assets and without blowing future budgets.

When it comes to budget management, Reagan and Bush II were the two worst presidents in our history. It took Clinton eight years to get the budget back under control after the Reagan/Bush I legacy, but he accomplished it. Rather than keep it on track, Bush II took a sledgehammer to fiò«c   ºÐ«c   ºÑ«c   ºÒ«c   ºÓ«c   ºÔ«c   ºÕ«c   ºÖ«c   º×«c   ºØ«c   ºÙ«c   ºÚ«c   ºÛ«c   ºÜ«c   ºÝ«c   º


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## Nick Batzdorf (Dec 10, 2008)

"When the Dem's have control, the overwhelmingly liberal media kicks in to make it seem like everything is so great. That's one of the best reasons to have a conservative president: at least then the liberal media do their jobs!"

I thought the liberal media created the economic mess we're in? And they sure did their jobs when it came to selling the Iraq war, for example.


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## JonFairhurst (Dec 10, 2008)

The "liberal" media reported on Whitewater for how many days on end? They were giddy about impeachment. 

None other than Keith Olbermann hosted a nightly show called "White House in Crisis" during the Lewinsky scandal. It was all impeachment, all the time - and it was the Ken Starr show for years before that.

It's not that the media is liberal. It's that conservatives simply can't stop from portraying themselves as victims.


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## Nick Batzdorf (Dec 10, 2008)

And that Richard can't stop trolling.


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## rgames (Dec 10, 2008)

Of course they reported on Lewinsky - IT WAS ABOUT SEX! And during that whole period it was clear that people weren't concerned about the presidency, they just wanted the juicy details: Whitewater, Lewinsky, whatever.

Are you saying liberal media bias doesn't exist? Because that goes against nearly all analysis I've ever seen. Here's one of the most coherent analyses I've found: http://www.sscnet.ucla.edu/polisci/facu ... iaBias.pdf

My apologies in advanace - I realize it's a scholarly journal paper, not a YouTube video or liberal blog :wink: . I'll give you the one-sentence summary from the first paragraph: "Our results show a strong liberal bias."

Of course, what the authors have done here is outline a theory, explain it via a logical thought process, then publish it for commentary. Much like my comments above, which nobody seems to want to comment on other than to simply state that they're wrong...

So I don't know how much stock you guys would put into this type of logical thinking, other than to simply state it's wrong, of course... :o 

rgames


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## JonFairhurst (Dec 11, 2008)

Conservatives claim a liberal bias. They're playing the refs. End of story.

The reality is that the media has a corporate, profit-driven bias. Yes, the media is PC. Why? The same reason that McDonalds is. They want ALL the viewers (or hamburger eaters.) 

And, yes, it's also about spectacle, shock and eyeballs.

After the 'rah rah" run up to the war, the hiring of "military analysts" who had a stake in the game - and the media's refusal to come clean about these connections, it's absurd to call the media liberal.

Now, can you call Olberman's and Maddow's shows liberal? Definitely. But you can't call Fox News centrist. Liars maybe, but not centrist.


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## Nick Batzdorf (Dec 11, 2008)

"They're playing the refs"

Great line. 

Still, I do aspire to be scholarly like Richard. Maybe one day if I keep at it...


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## rgames (Dec 11, 2008)

Doubt it, Nick 

The authors are playing the refs here, and I don't know if they're liberal or conservative. All I see is the outline of their argument, and it's a good piece of logic.

I didn't say Fox news is centrist - I wouldn't know, I've never seen a Fox news broadcast.

According to the analysis in the paper, though, Fox is one of only two outlets they found that does not have a liberal bent.

rgames


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## rgames (Dec 11, 2008)

Actually, I was looking back through that paper and something struck me: 

On pg 1203, they list a bunch of legislators and their ADA scores. I recognize all the names at the extreme liberal and extreme conservative end but if you look in the middle, there are a lot of "who?" in there. Interesting...

rgames


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## JPB (Dec 11, 2008)

Nick Batzdorf @ Wed Dec 10 said:


> JPB, I don't know that we're talking about the same film, but I saw the one I'm talking about years ago and have forgotten almost everything about it except that it was stupid and that he needed to get some exercise. He was going on and on about how there was no law that the government could collect taxes, and I don't find that point of view very interesting.
> 
> But either way, is it possible that someone could disagree with you without being clueless about what's going on in the world? I mean, is there any chance that I could have "done my homework" and still have good reasons for thinking Obama is going to be great?



"...have forgotten almost everything about it except that it was stupid and that he needed to get some exercise."

So you don't remember the actually content - you just remember your gut reaction and cling to that to the exclusion of the facts presented. I would ask you - what specifically in the film was "silly?" And then you make a glib comment about the guys' weight? ...as if that has anything to do with the issue at hand. So I get it - you don't remember what he was saying but he was fat and that is soooo gosh!!! Got it.

"...is there any chance that I could have "done my homework" and still have good reasons for thinking Obama is going to be great?"

Without realizing it, you answered your own question.

I don't care to argue. This isn't a YouTube/Gen X-Y-Z/sound bite issue. One of my original points was that America is a culture where forming and defending opinions, to the exclusion of any real understanding, has become a national pastime. We are a pseudo-informed, passionately opinionated people. A very dangerous combination.

Keep watching. It may take some time but Obama will be rendered, one way or another, ineffective. And even if that is only him having an apparent 'change of heart' in the same way he suddenly decided that his own campaign promise re troop withdrawal is no longer doable. Did you notice that BTW? That took only days. Now, as the result of his 'rethinking' that issue (wow - what a flexible and intellectual man he is!) even more young men and women will die because he has already decided that his original promise is not realistic. That's not an intellectual debate for those poor souls. That is flesh and blood - life and death. They are dying for nothing. "CHANGE YOU CAN BELIEVE IN!!!!" It is an observable fact that once on the inside, all governmental representatives either conform to the dictates of the ruling class or they get summarily dismissed/disabled. There is no third alternative. This is the modus operandi of the US political system. And the egomaniacal individuals who are drawn to public office are the perfect group catalyst and unified synchronicity for the impending fate of this country.

I would love to see something unexpected happen. Some kind of surprise event - one that wakes up more of us to the strangle hold that this country is in. Something that would rally enough people to force genuine reform of our current governmental shell game. We ARE NOT a country governed by it's people any longer. The tail has long been wagging the dog. And there are plenty of people to come to their defense - to actively chide those who don't fall into line. As one researcher put it - 'The sheep and the sheep herders.' 

Political correctness is a perfect example. In a "democracy" what is politically correct is, by definition, whatever the majority decides. When we reach a point where opinions/policies/norms are dictated by a minority (in direct opposition to the majority) then we are no longer a democracy. That is what has happened in America. And Richard and others are correct when they say that the media has been a integral part of this. And yet I am certain that the real purpose is simply to divide and conquer. The perceived struggle between “left” and “right” is just a means to keep people suspicious of their neighbor – when any justifiable suspicion would be toward those behind the scenes who are setting policies and slowly bringing this once great democracy to it’s knees. 

I have a sneaking suspicion that if one could go back in time and listen to the discourse of the average guy, in the latter days of the Roman Empire, there would be some haunting similarities to the political discourse in this country (and in this thread).


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## Nick Batzdorf (Dec 11, 2008)

"One of my original points was that America is a culture where forming and defending opinions, to the exclusion of any real understanding, has become a national pastime. We are a pseudo-informed, passionately opinionated people."

Speak for yourself!

Now, I happen to agree - and have posted before - that a lot of what we have is a mockery of democracy. And I agree that the corporate controlled media have been wholly complicit in that.

But that doesn't mean every pathetically stupid thing anyone says about our government - or a single thing Richard ever says - is true. Nor does that mean most of what you're saying isn't totally OTT, and patronizing me doesn't change that.

Sure it's possible that Obama gets pulled in every direction and won't be able to do what he wants to do. But he's sure making all the right noises as far as I'm concerned, and I think he's going to succeed in getting most of what he wants to happen. The old line is that politics is the art of the possible, not the ideal, and unfortunately there are still enough Republicans around to block all the good legislation he wants to enact. So we'll have to see. But I'm optimistic.

Now, you have to remember that it's easy to say you want to end the Iraq war right away while you're campaigning. I've been saying (and posting here!) all along that no candidate - Obama or Hillary - would be able to leave Iraq right away. I just didn't believe it. But at least it looks like it's going to happen slowly...although you have to wonder whether the mercenaries are also going to be taken out at the same time. There are at least as many of them in Iraq as there are Armed Forces.

You also have to remember that Obama isn't President yet, and who knows what's going to happen with Iraq when he is.

As to Russo, the reason I don't remember that movie is that there wasn't anything in it that stuck with me other than what I said. That's how people are: some things don't grab us and we don't bother remembering them. What I do remember is that whether or not I agreed with some or even most what he was saying - maybe I did, I don't remember! - I thought the movie was shite at the time and therefore am not interested in revisiting it now either.

You're more than welcome to insult me for that. I couldn't care less.


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## Nick Batzdorf (Dec 11, 2008)

"I have a sneaking suspicion that if one could go back in time and listen to the discourse of the average guy, in the latter days of the Roman Empire, there would be some haunting similarities to the political discourse in this country (and in this thread)."

Except for yours, of course.

The real similarity to the Roman Empire is our own empire, not this thread. I don't know if you've read any of Chalmers Johnson's books (which are light years ahead of Aaron Russo in substance), but he predicted that this would all collapse a long time ago. He's only a little bit OTT.


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## JPB (Dec 12, 2008)

Nick Batzdorf @ Thu Dec 11 said:


> "I have a sneaking suspicion that if one could go back in time and listen to the discourse of the average guy, in the latter days of the Roman Empire, there would be some haunting similarities to the political discourse in this country (and in this thread)."
> 
> Except for yours, of course.
> 
> The real similarity to the Roman Empire is our own empire, not this thread. I don't know if you've read any of Chalmers Johnson's books (which are light years ahead of Aaron Russo in substance), but he predicted that this would all collapse a long time ago. He's only a little bit OTT.



I appologize for my patronizing tone. I was actually speaking in response to so much of what I hear, and yet I directed it at you specifically. Not fair.

I can see from our posts that we do want the same thing - that America will, in spite of our current woes, come through this in tact.

I just watched a good portion of the Ken Burns doc on the Civil War last night (a great film I'm sure most will agree) and if you read the narrative in publications as it existed at the time, and took a good look at what was going on and how deeply split this country was, it would have seemed that we would have never made it. And yet - here we are.

Honestly, I didn't mean to represent myself as an "Aaron Russo fan." I have read so much other stuff that I would cite as observations of our country's (and world's) current situation. It came up because he was on public TV the other night. I think the whole point of his position, and many others as well, is that there are some very potentially destructive forces that are effecting this country. Some from within and some without. And on that basis I think he is, in a general sense, still correct. And I think he and so many others are just heeding and actively embracing the concern of Lincoln that, "government of the people, by the people, for the people, shall not perish from the earth."


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## Nick Batzdorf (Dec 12, 2008)

And I apologize for being a hothead. 

Yes, we definitely want the same things.

However...I think there's a good reason the country is so divided: George Bush and company. It's hard not to get enraged when you see half the country so enthusiastic about the most incredibly stupid, ill-advised, violent solutions to the complicated problems of the world. I'm never in any mood to compromise with people who think the first answer is to go kill people!

But "history" has a great ability to forget/forgive. The English and the French got over it, the red and blue states did, etc. That's why I think there's even hope for the Middle East.


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## JPB (Dec 12, 2008)

Nick Batzdorf @ Fri Dec 12 said:


> And I apologize for being a hothead.
> 
> Yes, we definitely want the same things.
> 
> However...I think there's a good reason the country is so divided: George Bush and company. It's hard not to get enraged when you see half the country so enthusiastic about the most incredibly stupid, ill-advised, violent solutions to the complicated problems of the world. I'm never in any mood to compromise with people who think the first answer is to go kill people!



+1... +1... +1... +1. I don't want to presume to present myself as "insightful", or anything remotely resembling that, but honestly, I KNEW going into this war that it was B.S.!!! And I knew that a lot of innocent people would suffer, and the guilty had nothing to do with it (the suffering that is). 

BTW - I don't think you were such a "hot head." Not as much as I at least. These are emotional issues. They should evoke such reactions.

And you are right. I think this last administration got away with murder (or at the least manslaughter). Literally. For the first time in my life, in the last few years, I found myself thinking about, fantasizing about, the French Revolution! And I am not joking. 

Only the times we live in, and the solidly entrenched way that our government now postures itself, could spare the neo-cons from their deserved fate. Not even an angry French mob could counter the force of what is in motion in our country at this point.

I really hope that Obama (again, I did vote for him) can truely make a difference. I'm still gullible enough to believe. 

And yet, growing weary. :oops:


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## synergy543 (Dec 14, 2008)

700 $Billion bailout? That's nothing! How about the 2 $Trillion.... >8o 

http://www.truthout.org/121408A

Well, Richard did make one important point, and I agree, we need to be vigilant.

Does anyone smell fish?


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## Nick Batzdorf (Dec 14, 2008)

Are you sure those aren't just routine bank loans? It seems totally incredible to me that the Fed would sneak out $2 trillion without anyone knowing about it.

I mean, the Fed's job is to loan money to banks.


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## synergy543 (Dec 14, 2008)

Well, the point is, we don't know until we know. If it were routine, why not be upfront? Don't you think we should know where 2 trillion went? Out the back door with Cheney? Naw, you trust him right? So I do agree with Richard that we need to keep a vigilant eye on things and have more checks and balances in our system. 

If that doesn't rile your feathers, then how about the Madoff heist? 50 Billion? The largest in scam history slipped by the SEC for this long? Nobody was looking while 50 Billion walked away?

Although I agree 50 billion doesn't sound like a lot any more. :? 

Well, I just got three 1.5 Terabyte drives. o=<


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