We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Our Recent Essays Behind the Front Page
Wednesday, September 12. 2018
Do you look like your dog? Canine-human lookalikes in pictures
‘Worst-case scenario’ hurricane simulation alarmingly similar to Florence forecast
Don't Be Fooled, There Was Nothing 'Financial' About the 2008 Crisis
California Regulates Barber And Tattoo Shops Out Of Business
The Paris Climate Accord, Unravelling
Mike Rowe's Epic Response To Nike's Kaepernick Campaign Hits Home On 9/11
LUXURY SOCIALISM AND THE END OF THE WORKING LEFT - Who needs necessities, when the government can give you luxuries?
Joe Scarborough Owes the President - and the Country - an Apology
It’s Not Just CNN’s Poll. All Polling Shows Trump’s Approval Rating Dropping.
Real 'Collusion' — Deep State's Failed Effort To Elect Hillary Clinton Unravels
The Afghanistan War at 17
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Wow, never-Trump Hot Air reports on Trump-negative polling data. Do people still rely on polls after the last presidential election?
Yes, only when the polls back their bias. Otherwise, all say that polls are BS.
Just curious....when the dems finally unseat potus trump and install clinton....does her term of power get an immediate four years of does she just run out potus trumps term? And do the citizens of this country just calmly accept that debacle?
A lesser man would have long since caved to the incessant screeching and accusation-hurling by the left and simpatico hangers-on. The Donald is not a lesser man.
Polls are notoriously slanted to report what is desired, not what is true. Polls are BS, as stated above. Ask Hillary.
In my circle, those of us that voted for Trump are still 100% behind him. Trump remains our last best hope to drive the left back onto their heels so we may educate a generation to fight the left with the same tactics they've successfully used against us or do whatever it takes to win.
Civil people, none of whom reside on the left, must take off our rose-colored glasses and see this fight is to the death. Right now only the left is perfectly at ease with the dichotomy of public demands for "tolerance", "civility" and "compromise" while winking and nodding at mounting physical violence against Americans on the right.
Our crumbling facade of civility reveals a nasty war zone that we on the right are only now beginning to acknowledge actually exists. By the time we join the battle, words alone may not express the degree of lethality required.
Hot Air used to be one of my go to sites. I rarely go there anymore. I really like Ed Morrisey. Remember Captains Quarters? I’ve often wondered how pj media hasn’t brought Ed over to their place.
Nice article on the federaly caused financial crisis of ‘08. I seem to remember that after the bailout, those cronies in Lehman Brothers, et all, still got big bonuses. What a scam. We really need our education system to teach children critical thinking skills, instead of how to be sexually charged and politically correct. As long as the progressive socialists are in charge of the indoctrination camps that we call schools, we are doomed to keep repeating the horrors of socialism.
I thought the analysis of 2008 was good, but it was a financial crisis. Just not the kind the writer was thinking of.
After all, he dismisses the increases in hard asset prices in the 00s as not meaningful with regard to the crisis, because it happened in the 70s and there was no crisis. In fact, he also points out interest rates were rising in the 70s and falling in the 00s.
In reality, he missed a key item of interest. As he points out, hard asset prices RISE when currencies are devalued, and they were devalued in the 70s (dropping off the gold standard) and 00s. The direction of interest rates is secondary to the impact of the creation of money or money substitutes. The creation of money and its substitutes is a source of financial crisis creation! Dubious methods of monetary fulfillment (either with hard cash that is printed readily, or substitutes of some kind) creates a Gresham's Law problem...and people simply fail to see it while they suffer from Money Illusion.
Similarly, his link to the direction of interest rates says mortgages weren't the issue because mortgage creation happened in the 70s when rates were high and rising, but also happened in the 00s when they were low and falling. Again - it's the creation of money and money substitutes which generates activity like this, which is a financial crisis.
His final point was that the problem is the result of bailing out Bear Stearns and NOT bailing out Lehman, which everyone expected (because Bear was bailed out). 100% in agreement...but that is a failure to treat a SYMPTOM after treating it once and determining it didn't help.
I've always thought of 2008 as more of a regulatory crisis. Not a de-regulatory crisis, mind you, but a direct result of pushing banks into mortgages that anyone paying attention at the time understood were fantastically uncollectible. Zero down, adjustable rates, no payments to speak of for two years: the very successful short-sellers had relatively little difficulty in predicting a collapse when a large enough group of such mortgages hit the wall and payments started coming due. But banks were encouraged and even bullied into writing more and more mortgages for people who had "unfairly" failed to qualify for mortgages in the past, and regulators colluded with the captive rating agencies to pretend that bundles of mortgages deserved triple-A ratings. Honestly, it's hard to see how most of this could have happened if we had concentrated on the fantasies perpetrated by the rating agencies, with the enthusiastic cooperation of both the regulators and their regulated "clients." It was fairly common knowledge that the rating agencies were just making that stuff up.
Trump bashing has gone beyond old to ridiculous. The Dems are clawing at every crumb and their desperate behavior takes up 1000 times more effort than any action to negotiate a better country for the citizens. They have become arrogant, ego-driven children, terrified of being exposed for all their criminal, mafia-style activities since Hoover, Dulles and The Banksters formed their parallel governments to bury our republic.
When their wall of fraud comes tumbling down, it may not be pleasant for the U.S., but at least we have a chance to clear the thugs out of government. I hope justice allows back tracking to punish all those responsible for 9/11 as well as the '08 meltdown as way too many of those critters are still operating at full steam, doing more evil as we speak.
Same here. They've gone to the dark side. Once a site removes comments, critical review by readers, I'm done.
Texan99: But banks were encouraged and even bullied into writing more and more mortgages for people who had "unfairly" failed to qualify for mortgages in the past, and regulators colluded with the captive rating agencies to pretend that bundles of mortgages deserved triple-A ratings.
On your first point, the bubble, like all bubbles, was demand driven. Mortgage originators made the loans because there was high demand for mortgage-backed securities on the shadow market.
Your second point about rating agencies is valid, though. Securitizers, offering $millions, poached employees from the ratings agencies, and reverse-engineered the ratings system, while cultivating relationships with the ratings companies. This allowed them to bundle bad mortgages with good mortgages, and still have the bundle garner a high rating. When the bottom fell out, mixed securities, even those with a large portion of good mortgages, became toxic.
A third problem was lack of transparency in the shadow market. No one knew who was left with the hot potato toxic mortgages, so no one could be trusted. If you can't trust Bank of America or Chase to repay, what chance does Joe Blow have of getting a loan? In September 2008, the entire banking system suddenly froze up.
Wow, someone finally went the full distance and fingered the core problem. Where no limits to creating money exist money creation will not be limited. Like water, pressure finds outlet. Bad banking was that outlet.
Hopefully now we can ditch the usual R v D partisan blame games about the great recession too. No, it was not FM and FM or Dodd or Frank, et al, at least not as a first order issue.
(I'd say go educate our mindless resident robot on this, Bulldog, but you can only program a 'bot.)
Bulldog: but that is a failure to treat a SYMPTOM after treating it once and determining it didn't help.
Quite so. However, the inconsistency could certainly make the situation more dangerous when teetering on a cliff.
Bulldog: Again - it's the creation of money and money substitutes which generates activity like this, which is a financial crisis.
You are largely correct. Market bubbles generally don't happen without a source of credit so that people can leverage their existing assets to strike it big.
Another factor was the very success of modern economics at ameliorating the market cycle. People assumed that if things turned south, the government would be able to quickly counteract the effects of overindulgence by the banks and others. This created an atmosphere lacking in accountability. Success bred complacency. Indeed, countercyclical policy only works if you actually implement the policy. That means paying down debt during times of plenty.
Genesis 41: Then Pharaoh said to Joseph: ‘Behold, in my dream I stood on the bank of the river. Suddenly seven cows came up out of the river, fine looking and fat; and they fed in the meadow. Then behold, seven other cows came up after them, poor and very ugly and gaunt, such ugliness as I have never seen in all the land of Egypt. And the gaunt and ugly cows ate up the first seven, the fat cows.’
The Bush Administration engaged in procyclical policy during an economic expansion, which created "irrational exuberance" about pricing. Consider if the Gore Administration had not cut taxes, but used the money to pay down debt ("lock box"). That would have pulled some excess liquidity from the system, tempering the run up, while also setting aside money to address any economic crisis, should one still occur.
President Hillary Clinton approved all of those polls.
Mike Rowe. A damn fine guy! Joe Scarborough is a rotter.
The Deep State plot unraveling? Good. Better than good.
It's hard to know where to even start with this mess of assertions, wishes, and rhetoric.
To put the issue into any kind of meaningful context you'd have to actually refer to what your infinitely patient host is telling you. I call troll.
Zbot: You are largely correct. Market bubbles generally don't happen without a source of credit so that people can leverage their existing assets to strike it big.
"Credit", as you euphemistically refer to it, is in the broad, original context money, which, to correct your faulty allusion, means the currency lent into existence by the central bank where it is then leveraged with each subsequent issuance incurring interest.
Therefore money exists whenever and wherever demand for it it exists. Add irresponsible banks and their policies and you have the mortgage crisis. Add derivative betting and you have hundreds of trillions in cross-linking.
Your question becomes how will you liquidate these debts, which leads you back to Bulldog's point, the one you instead slather your boilerplate all over. "Market bubbles generally don't happen without a source of credit" doesn't even scratch the surface, and indeed it diminishes that point.
Zbot: Another factor was the very success of modern economics at ameliorating the market cycle.
Unmitigated rubbish. The fore-mentioned "modern economic" phenomenon has everything to do with bubbles, as you call them, precisely because of the creation of "credit" as you also call it. Policy has yet to restore the equilibrium of sound markets if for no other reason then lag, and lag is the least of its problems.
Zbot: People assumed that if things turned south, the government would be able to quickly counteract the effects of overindulgence by the banks and others. This created an atmosphere lacking in accountability.
This is just you slinging nouns and verbs and I suspect leading up to some boilerplate partisan conclusion nowhere in evidence.
Zbot: Success bred complacency. Indeed, countercyclical policy only works if you actually implement the policy. That means paying down debt during times of plenty.
You can't "pay down" such debt because such debt is unbacked and crosslinked, which, if you knew how any of this worked or even remembered the bailouts and subsequent balance sheets, also completely nullifies your upcoming political conclusion, among other things.
Zbot: The Bush Administration engaged in procyclical policy during an economic expansion, which created "irrational exuberance" about pricing.
Preposterous. Greenspan's wordplay had nothing to do with a Bush policy and everything to do with the natural action of money and the reckless creation of it via financial instruments, just as Bulldog posits.
Zbot: Consider if the Gore Administration had not cut taxes, but used the money to pay down debt ("lock box").
Gore's non-existent lockbox related to solving Social Security's debt crisis, which has nothing to do with this conjectured President Gore or if in your odd formulation he'd have lifted a finger, much less any assurance that he'd do what no president has since Nixon first unhinged things.
Zbot: That would have pulled some excess liquidity from the system, tempering the run up, while also setting aside money to address any economic crisis, should one still occur.
Subjective nonsense and weasel words. Without a fundamental solution to the core issue no band aid fixes apply to anything.
You have no idea what you're talking about, which makes this partisan appeal of yours a consummate trolling.
Zzzz: Consider if the Gore Administration had not cut taxes, but used the money to pay down debt ("lock box")...
Oh please, not another hypothetical fantasy...
Meh: It's hard to know where to even start with your mess of assertions, wishes, and rhetoric.
It's hard to know where to even start with your mess of assertions, wishes, and rhetoric.
Meh: You can't "pay down" such debt because such debt is unbacked and crosslinked
Of course the federal government can pay down its debt.
Meh: Subjective nonsense and weasel words.
Subjective nonsense and weasel words. When the economy is already near capacity, cutting taxes causes prices to increase without a corresponding increase in productivity, often resulting in illusory gains.
I see. So the treasury reserves hundreds of trillions in liquidity with which to cover bank derivatives and unfunded obligations with something other than renamed debt. Would that be before or after paying the national debt, financebot?
You're so utterly out of your depth you can only resort to the simplest slogans and neener-neener retorts.
Crapulent: Would that be before or after paying the national debt
When discussing procyclical and countercyclical policy, we are referring to government fiscal policy (e.g. federal deficits). Our use of the terms is orthodox and hardly controversial.
Zzzzatemypuppies: Oh please, not another hypothetical fantasy...
It's a particular example of standard economic policy.
With procyclical policy, when the economy shrinks, the government raises taxes or cuts spending to keep the government budget in balance. This reduces demand, causing the economy to shrink further, leading to a downward spiral. When the economy expands, the government cuts taxes or raises spending to keep the government budget in balance. This increases demand, causing the economy to grow faster, leading to an upward spiral. The result is that the market cycle is exaggerated, resulting in booms and busts.
With countercyclical policy, when the economy shrinks, the government cuts taxes or raises spending, running deficits. This provides demand dampening the downturn, reducing long-term damage to the economy. When the economy expands, the government raises taxes or cuts spending, running surpluses. This reduces demand dampening the expansion, reducing the probability of overheating the economy. The result is that the market cycle is attenuated, with gentler and shorter-lived recessions.
Objection, financetrollbot. Unresponsive.
Having two days ago refused the notion of a variable money supply impacting markets vis a vis Obama, Trump, et al, now you insist that a variable money supply is all that holds markets intact vis a vis your Bush falsehood and Gore fantasy.
You're so out of this you can't see straight, financetrollbot.
Crapulent: Having two days ago refused the notion of a variable money supply impacting markets vis a vis Obama, Trump, et al, now you insist that a variable money supply is all that holds markets intact ...
Have no idea what you are going on about. The money supply is certainly an important regulator of the economy. To use an analogy, the engine of markets provides the power, and countercyclical policy acts as a governor.
Crapulent: vis a vis your Bush falsehood and Gore fantasy.
Are you saying Bush didn't cut taxes and that the economy didn't have a real estate bubble? Or are you saying having a couple of extra $trillion on hand wouldn't have been helpful if and when the financial crisis occurred?
...and before you get all pedantic about your Googled financebot du jour phenomenon, I'll unpack my shorthand.
You're proposing that monetary policy itself either magically doesn't exist or has no effect on Bulldog's observation, which is the correct premise. However, you continue, Executive "government" policy establishes market equilibrium - via your cyclical ruminations on Bush and Gore - and does so in an era where there haven't been specific budgets in 20 years and where I recall the Obama era was made famous by Reid refusing to pass one.
Reid was Legislative. Trump is Executive. Neither are the Fed. Your fundamental "government" financial regulatory action is either sloppy rhetoric, a euphemism for a partial effect anyway, or non-existent.
It's a hypothetical fantasy where anything is possible.
Stop being obtuse, kiddiez .
Hot Air was so anti-Trump I left them in 2015 or so. Never went back. I do not believe any polls at all. Not after 2016. The way they manipulate the numbers is ridiculous. Don't forget, you don't see the questions asked. And they are professionals at wording questions to get the answer they want.
So go with your gut instinct. Use your eyes and ears. Trump rallies just as popular as ever, if not more so now that he has serious results since he took office.
I also look at polls that contradict each other...how do you have increased black and hispanic approval numbers for Trump, but then decreased overall approval number? Defies logic.
On your first point, the bubble, like all bubbles, was demand driven. Mortgage originators made the loans because there was high demand for mortgage-backed securities on the shadow market.
Wrong. Those of us who were there know you're lying again.
The kiddiez deal in generalities.
Now I suppose they'll ask you for specifics.
Really? The government is the arbitrator of demand? Would this be in all facets of the economy?
The comment you initially used to try to derail this thread was Bulldog's. Bulldog wrote about the instability of financial instruments. I also replied to Bulldog in the affirmative.
You tried to turn both remarks into another of your captured topics.
In today's botwork about things not pertinent to the original point or to how things work, you speculated on the fictional imperial majesty of a Democrat president and the failure of a president who was not a Democrat. Your remarks were nonsensical, all the more so by comparison to the original premise, the one you saw fit to poke at without cause or substance.
This mirrors your efforts two days ago in which you lost another effort to create a partisan distinction and division where none existed. This is because you are ignorant of the larger picture, the one Bulldog raised and you unsuccessfully sullied. This ignorance in no ways prevents the trolling of much botwork.
You are mistaken again, financebot. And off-topic, diversionary, pedantic, and to some notable degree, tiresome.
That is all.
Lends a whole new meaning to Chief Executive. No wonder Dimon periodically emerges from the Wall St woodwork to posture at Washington...
For the Dems it's not about making things better for the people, it's about clawing their power back from the people who took it from them.
The Repubs were satisfied with being their nominal opposition until they got the power to actually BE an opposition party - at which point they didn't know what to do. The charade had failed, and the DC elite were exposed.
Trump turned over a rock, and we're seeing the slimy things under it.
Edit: Bulldog's is the correct premise, financebot. Yours is not the correct premise.
That would be profoundly unlikely, that yours could somehow be the correct premise.
Crapulent: You're proposing that monetary policy itself either magically doesn't exist or has no effect on Bulldog's observation
That is not our position, so you seem to fighting a straw man. Indeed, we largely agreed with Bulldog's comment. On his first point, we did point out that when on the precipice, small events can have inordinately large effects. Agreeing with his second point about the flood of liquidity, we noted the importance of easy credit to the development of historical bubbles. We then added an additional point about the taming of the market cycle, and how that led people to believe that the worst aspects of a financial crisis could be averted.
B. Hammer: The government is the arbitrator of demand?
The government is a source of demand, one of the largest. Hence, what the government does has a macroeconomic effect.
Specifics are important. For instance, at Countrywide, subprime mortgages earned more than twice in commissions as other mortgages. If this were supply side and harder to sell, then they would pay less, not more. Instead, it was strong demand for mortgage-backed securities that fueled the market.
Here's another way to see it. Note the rapid run up, then decline. It's clearly a demand bubble as investors move in to reap profits, then head for the exit just as quickly.
Note also that GSEs were late to the party. They were the greater fools.
Right. To pretty much this entire commentariat your obsessive arguing, reframing, and diversions are actually a case of mistaken identity.
That tends to explain a lot, victimhoodbot.
And when you refuel your knockoff Vespa an economic butterfly flaps its wings and it rains on the sweatshops in the East.
Anyway, back to securities...
Leaving out defense spending, in what area are of the economy is the government acquiring the majority of goods, and or services? Does the government buy the majority of airline seats? The majority of cars and trucks? The majority of grains, farm goods, beef, poultry, pork? All the hotel rooms? All the alcohol, water, soda pop? All the spare parts out of the auto stores? They don’t even buy the most firearms! I know they have a great demand on my pay check. Please enlighten me.
Defies logic. Yep. But not reality.
The NFIB Small Business Optimism Index soared to 108.8 in August, a new record in the survey’s 45-year history, topping the July 1983 highwater mark of 108. The record-breaking figure is driven by small business owners executing on the plans they’ve put in place due to dramatic changes in the nation’s economic policy.
B. Hammer: Leaving out defense spending, in what area are of the economy is the government acquiring the majority of goods, and or services?
Who said "majority"? Total government spending is about ⅓ of GDP.
Federal spending is typically around 20% of GDP, but reached a recent high of 24% during the Great Recession (due, in part, to the decrease in the denominator).