1. Right wingers adore unregulated markets. Markets organize a lot of behavior productively but they also create a lot of chaos. Many on the right and left are saying that this credit crisis is a failure of regulation, and it is, whatever this week’s clever Republican talking points may say. (And here they come now, I’m sure).
2. Our economy is phony. We, as consumers, borrow on market-imagined values of houses. Now those imagined values are collapsing. AND WE DO NOT SAVE–WE JUST CONSUME MORE. The shortfall comes from Chinese investment in US debt instruments. We are on the road to being a second rate country unless we all begin to save a little, already. But we are only doing what our Republican leaders do–spend and borrow.
3. The FED is low on options. They had to cut interest rates literally to zero to overcome the tech collapse. Now, they can’t lower interest rates much because this will hurt foreign investment in US dollars which are already very weak, making them even less attractive…
4. Instead of tax and spend liberals we have suffered with not too bright spend and borrow conservies racking up record deficits giving tax breaks to the ultra-rich and fighting the wrong war in the wrong country. Foreigners have bought our debt to cover the shortfall. Trickle-down has not been driving this economy–just phony market appreciation of private homes. Now it is time for the opposite of trickle-down–UP-CHUCK. That’s where the little people pay the wealthy Republicans hard dollars for their debt or get thrown in the street or both under the new Republican personal bankruptcy laws. UPCHUCK, indeed.
This is a truly scary situation and will remain so though September and October until the leverage unwinds from bank-like institutions that are not regulated like banks–e.g. KKR Capital. Where are the regulators?–put to sleep again by the free-marketeers. Was it not Neil Bush’s Silverado S&L fiasco and failure that cost the taxpayers $1 billion a few years ago? It is hard to learn lessons when the rich and powerful, having bought themselves a presidency through the media, glue the textbook pages together so we can’t see them.
But why object to any of this?–we insurance people are all fat dumb and happy. Like the trading company in Trading Places, we win either way! I can’t wait for those higher D&O and other commissions to come rolling in! I can’t wait to find out that this or that insurer is heavy into mortgage obligations that were rated oh so highly and now simply cannot be sold! (Sure hope it isn’t one that pays big contingencies or that is writing my crummiest business that no one else will). They are going to need cash NOW. This should produce some interestig selling opportunities in the coming months.
Keep those markets free and let “me first and only” reap the benefits of the ensuing chaos.
This is just the first installment falling due from the policies of the past 7 years dominated by right wing crazies. Wait until you see the real cost of the war in Iraq and the many other shoes still to drop. America, no longer the world leader, is a serious possibility. Unwinding this Bush mess is going to make the sacrifices Carter was reviled for in the 1970s look like a picnic. As Laurel used to say to Hardy “This is a fine mess you have gotten us into.” Way to go, right wing crazies! Eight more years!
Yes, this one is the “fault” of many parties: the homeowners/borrowers who borrowed much more than they should have; the lenders who made these loans to people who they knew, or should have known, would eventually not be able to make payments, etc. But remember, this couldn’t have even started without the fiat money system that we have. Such a system gives the Fed the ability to pump up the currency based on political (i.e., criminal) considerations; the resultant money is then too cheap and sends out incorrect signals to the marketplace. Then, as is inevitable, a correction (also known as a recession or depression) must occur to balance the credit boom. But you’ll never read about this in the mainstream media. Two of the few media outlets that predicted the now-occurring housing slump are http://www.mises.org (as in Ludwig von Mises) and http://www.lewrockwell.com Von Mises by the way predicted the “Great” Depression in the 19 “teens” based on these same principles.
Incidentally, what we have right now is in no way an “unregulated” or “free” market. Oh, it might be if you remove the farm subsidies, medicare, welfare, taxes (income, tariffs, etc.), subsidizations to Archer Daniels Midland, Haliburton, etc., and let everyone-gasp!-keep their own money and let them spend it-double gasp!-in the way that they choose. Of course, that would required putting the professional parasites (every government employee) out of a job. But that would first require people to renounce the religion of statism and actually see things as they really are.
so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
“so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
You’ve got to be kidding.”
I don’t know that there’s any “we,” unless you think that everyone who happens to live on the same land mass is part of some unit obligated to each other. The decision to abandon it is each individual’s decision; in fact right now, there are payment methods right now that involve electronic transfers of gold and they’re being used all over the world in volumes of billions of dollars.
My main point however was that a fiat money system can not help but experience booms, busts, recessions, depressions and declines in the currency value-the dollar of today has lost 95% of its purchasing power compared to the dollar of 1913. In Zimbabwe, the inflation % is in the thousands. A fiat money system would work-if human beings were perfect. But as we don’t have any of those on this planet (and no, whenvever someone gets the label “government employee” behind their name, they don’t become morally flawless), a fiat money system will never work.
the “we” is everyone that interacts. For example I’d like to stop for a coffee on the way home tonight. Should I wire some gold bullion to my local Dunkin Donuts, or should I prepare a competitive rate study on auto insurance in the state of his choosing. Otherwise I kind of need him to accept some sort of fiat money or I don’t get my coffee.
At this point, you probably don’t have much choice but to use Federal Reserve currency/coins (which I hope everyone knows is a private business? that’s not even close to being a controversial statement). However, it is (“is” should be italicized) possible to have currency that’s backed by something of value; “our” current money is backed by nothing but political hot air (is there anything else that comes out of a politician’s mouth?). There is something called the Liberty dollar that’s backed by warehoused silver-I have a feeling that if/when the inflation rate on Federal Reserve notes reaches Weimar Republic-like levels, you’ll find more Dunkin Donut shopowners willing to accept gold coins or Liberty dollars, or pre-1964 silver coins (which were 100% silver) or whatever else has real value.
Until 1913, the dollar was 100% backed by precious metals; and guess what? Prices stayed stable and even declined in some areas. From 1913 till 1971, it was partially backed by metals. Then Nixon “closed the gold window” and there has been a wee bit of inflation since then (which is why interest rates reached as high as 18% in the early ’80’s).
It’s personal choice: people can put their faith in pieces of paper (yeah, yeah, I know-the currency doesn’t actually have any paper in it but only cotton fibers) with really cool numbers and pictures on it, which is backed by political promises (i.e., nothing or worse than nothing) or in things of real value. All those who put their faith in politicians, please line up over here for a close-out sale on some great pieces of Florida swamp land.
Incidentally, as far as “wire some gold bullion” which I assume is supposed to be a smart comment, the electronic gold purveyors do (again, “do” in italics) have debit cards that work just like other debit cards. With an electronic gold debit card, you’re wiring ownership in real gold for your Dunkin Donuts stuff. With a debit card that draws on Federal Reserve notes, you’re wiring the government’s “full faith and credit,” which we all know is priceless (that’s a sarcastic remark)
i have printed your response out and will make copies of it to pass out to anyone willing to listen to what has happened to our country due to our responsible leaders. i am a card carrying conservative republican and i have had this uneasy feeling about our leaders until i read your post at 1;57PM on 8/23/07. you said it better than i could have and it is completely understandible. thank you for taking the time to write. i am thinking about sending your article to my congressmen(republicans) so i hope you do not mind. thanks again!!! beautifully written and thought out.
i have just reread your article for the 4th time and it just hit me. i can remember having a very uneasy feeling when the republican congress passed the revised bankruptsy laws and thought how unfair it was. your article just showed me. now that bills are coming due for the spend and borrow policies of the past 7 years the less affluent cannot get out of the debt they were talked into by slick talking big business. the middle class is in danger of collapsing because they have no options.
your comments on this, if you would.
You people just don’t understand my situation. I know I don’t make much money, but we really needed that 55″ HDTV with surround sound so I put the $5,000 on my credit card. Then we needed that hot tub and that was $2,000 on my credit card. Then all the stress was just too much so we had to go on that cruise that was $7,000 on the credit card. And we also like to go out to eat and everything and before you know it our balance was $45,000. We had a hard time making the credit card payments so two years ago we refinanced our mortgage. We were able to get 100% financing and an adjustable interest rate. We had to sign a bunch of federal government disclosure documents about our loan. I don’t think they were very important so I did not really read them. It was great. We were paying $250 less that our previous mortgage and credit card payments. Since we had extra money (the $250 per month), we bought a new Chevy Tahoe. We got a good deal and were able to finance it for 72 months. Six months ago my wife got sick and since we did not have insurance we had to put that $4,000 on our credit card. My wife liked being off so much that she quit her job.
Then three months ago they told me my interest rate on the morgtage went up and my payments were being raised by $500 per month. I am sure that evil Bush is doing this just because I did not vote for him. This is not fair. We don’t have the extra money and should not be required to pay this additional amount.
Some of you are very mean and want to blame this on us, saying it was our responsiblilty due to the decisions we made. I just don’t understand that. We are entitled to a new car and to have nice things and live like we want to.
Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too? Thanks for your help.
“Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too?”
Dear sad,
I’m sure that the government would be happy to help. I suggest you contact the same department that subsidizes Archer Daniels Midland (oops! I mean invests our tax dollars wisely) to the tune of billions of dollars per year. They will most likely pay off all your bills. We all know of course that Congress is not influenced by large bribes (there I go again! I mean “campaign contributions.”) and refuses to be bought by special interests (gosh darn it! I just can’t stop! That should be “anointed souls who know what’s best for 275 million people”). The fact that you wouldn’t have millions to give to Congress wouldn’t mean anything to them of course; they’re just as willing to pay you; how many votes, power and tenure they get doesn’t enter into the equation at all. Isn’t government great?
I sympathize with your plight also. All I want to be able to do is come home from work and watch 4 hours of TV every night and never take the effort to educate myself about the real world (after all, how can anyone even live without watching Survivor, 24, American Idol, Friends, Seinfeld, Lost, Joannie Loves Chachi, House, et. al.?). I have just as much right to demand that the government do something! After all, we all know that voluntary interactions between people is not the way to go! We need to give government the power to direct our actions by violence! Why can’t everyone understand this?
We have updated our privacy policy to be more clear and meet the new requirements of the GDPR. By continuing to use our site, you accept our revised Privacy Policy.
So many items to hit on. Here are a few:
1. Right wingers adore unregulated markets. Markets organize a lot of behavior productively but they also create a lot of chaos. Many on the right and left are saying that this credit crisis is a failure of regulation, and it is, whatever this week’s clever Republican talking points may say. (And here they come now, I’m sure).
2. Our economy is phony. We, as consumers, borrow on market-imagined values of houses. Now those imagined values are collapsing. AND WE DO NOT SAVE–WE JUST CONSUME MORE. The shortfall comes from Chinese investment in US debt instruments. We are on the road to being a second rate country unless we all begin to save a little, already. But we are only doing what our Republican leaders do–spend and borrow.
3. The FED is low on options. They had to cut interest rates literally to zero to overcome the tech collapse. Now, they can’t lower interest rates much because this will hurt foreign investment in US dollars which are already very weak, making them even less attractive…
4. Instead of tax and spend liberals we have suffered with not too bright spend and borrow conservies racking up record deficits giving tax breaks to the ultra-rich and fighting the wrong war in the wrong country. Foreigners have bought our debt to cover the shortfall. Trickle-down has not been driving this economy–just phony market appreciation of private homes. Now it is time for the opposite of trickle-down–UP-CHUCK. That’s where the little people pay the wealthy Republicans hard dollars for their debt or get thrown in the street or both under the new Republican personal bankruptcy laws. UPCHUCK, indeed.
This is a truly scary situation and will remain so though September and October until the leverage unwinds from bank-like institutions that are not regulated like banks–e.g. KKR Capital. Where are the regulators?–put to sleep again by the free-marketeers. Was it not Neil Bush’s Silverado S&L fiasco and failure that cost the taxpayers $1 billion a few years ago? It is hard to learn lessons when the rich and powerful, having bought themselves a presidency through the media, glue the textbook pages together so we can’t see them.
But why object to any of this?–we insurance people are all fat dumb and happy. Like the trading company in Trading Places, we win either way! I can’t wait for those higher D&O and other commissions to come rolling in! I can’t wait to find out that this or that insurer is heavy into mortgage obligations that were rated oh so highly and now simply cannot be sold! (Sure hope it isn’t one that pays big contingencies or that is writing my crummiest business that no one else will). They are going to need cash NOW. This should produce some interestig selling opportunities in the coming months.
Keep those markets free and let “me first and only” reap the benefits of the ensuing chaos.
This is just the first installment falling due from the policies of the past 7 years dominated by right wing crazies. Wait until you see the real cost of the war in Iraq and the many other shoes still to drop. America, no longer the world leader, is a serious possibility. Unwinding this Bush mess is going to make the sacrifices Carter was reviled for in the 1970s look like a picnic. As Laurel used to say to Hardy “This is a fine mess you have gotten us into.” Way to go, right wing crazies! Eight more years!
Yes, this one is the “fault” of many parties: the homeowners/borrowers who borrowed much more than they should have; the lenders who made these loans to people who they knew, or should have known, would eventually not be able to make payments, etc. But remember, this couldn’t have even started without the fiat money system that we have. Such a system gives the Fed the ability to pump up the currency based on political (i.e., criminal) considerations; the resultant money is then too cheap and sends out incorrect signals to the marketplace. Then, as is inevitable, a correction (also known as a recession or depression) must occur to balance the credit boom. But you’ll never read about this in the mainstream media. Two of the few media outlets that predicted the now-occurring housing slump are http://www.mises.org (as in Ludwig von Mises) and http://www.lewrockwell.com Von Mises by the way predicted the “Great” Depression in the 19 “teens” based on these same principles.
Incidentally, what we have right now is in no way an “unregulated” or “free” market. Oh, it might be if you remove the farm subsidies, medicare, welfare, taxes (income, tariffs, etc.), subsidizations to Archer Daniels Midland, Haliburton, etc., and let everyone-gasp!-keep their own money and let them spend it-double gasp!-in the way that they choose. Of course, that would required putting the professional parasites (every government employee) out of a job. But that would first require people to renounce the religion of statism and actually see things as they really are.
so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
You’ve got to be kidding.
“so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
You’ve got to be kidding.”
I don’t know that there’s any “we,” unless you think that everyone who happens to live on the same land mass is part of some unit obligated to each other. The decision to abandon it is each individual’s decision; in fact right now, there are payment methods right now that involve electronic transfers of gold and they’re being used all over the world in volumes of billions of dollars.
My main point however was that a fiat money system can not help but experience booms, busts, recessions, depressions and declines in the currency value-the dollar of today has lost 95% of its purchasing power compared to the dollar of 1913. In Zimbabwe, the inflation % is in the thousands. A fiat money system would work-if human beings were perfect. But as we don’t have any of those on this planet (and no, whenvever someone gets the label “government employee” behind their name, they don’t become morally flawless), a fiat money system will never work.
the “we” is everyone that interacts. For example I’d like to stop for a coffee on the way home tonight. Should I wire some gold bullion to my local Dunkin Donuts, or should I prepare a competitive rate study on auto insurance in the state of his choosing. Otherwise I kind of need him to accept some sort of fiat money or I don’t get my coffee.
At this point, you probably don’t have much choice but to use Federal Reserve currency/coins (which I hope everyone knows is a private business? that’s not even close to being a controversial statement). However, it is (“is” should be italicized) possible to have currency that’s backed by something of value; “our” current money is backed by nothing but political hot air (is there anything else that comes out of a politician’s mouth?). There is something called the Liberty dollar that’s backed by warehoused silver-I have a feeling that if/when the inflation rate on Federal Reserve notes reaches Weimar Republic-like levels, you’ll find more Dunkin Donut shopowners willing to accept gold coins or Liberty dollars, or pre-1964 silver coins (which were 100% silver) or whatever else has real value.
Until 1913, the dollar was 100% backed by precious metals; and guess what? Prices stayed stable and even declined in some areas. From 1913 till 1971, it was partially backed by metals. Then Nixon “closed the gold window” and there has been a wee bit of inflation since then (which is why interest rates reached as high as 18% in the early ’80’s).
It’s personal choice: people can put their faith in pieces of paper (yeah, yeah, I know-the currency doesn’t actually have any paper in it but only cotton fibers) with really cool numbers and pictures on it, which is backed by political promises (i.e., nothing or worse than nothing) or in things of real value. All those who put their faith in politicians, please line up over here for a close-out sale on some great pieces of Florida swamp land.
Incidentally, as far as “wire some gold bullion” which I assume is supposed to be a smart comment, the electronic gold purveyors do (again, “do” in italics) have debit cards that work just like other debit cards. With an electronic gold debit card, you’re wiring ownership in real gold for your Dunkin Donuts stuff. With a debit card that draws on Federal Reserve notes, you’re wiring the government’s “full faith and credit,” which we all know is priceless (that’s a sarcastic remark)
i have printed your response out and will make copies of it to pass out to anyone willing to listen to what has happened to our country due to our responsible leaders. i am a card carrying conservative republican and i have had this uneasy feeling about our leaders until i read your post at 1;57PM on 8/23/07. you said it better than i could have and it is completely understandible. thank you for taking the time to write. i am thinking about sending your article to my congressmen(republicans) so i hope you do not mind. thanks again!!! beautifully written and thought out.
i have just reread your article for the 4th time and it just hit me. i can remember having a very uneasy feeling when the republican congress passed the revised bankruptsy laws and thought how unfair it was. your article just showed me. now that bills are coming due for the spend and borrow policies of the past 7 years the less affluent cannot get out of the debt they were talked into by slick talking big business. the middle class is in danger of collapsing because they have no options.
your comments on this, if you would.
You people just don’t understand my situation. I know I don’t make much money, but we really needed that 55″ HDTV with surround sound so I put the $5,000 on my credit card. Then we needed that hot tub and that was $2,000 on my credit card. Then all the stress was just too much so we had to go on that cruise that was $7,000 on the credit card. And we also like to go out to eat and everything and before you know it our balance was $45,000. We had a hard time making the credit card payments so two years ago we refinanced our mortgage. We were able to get 100% financing and an adjustable interest rate. We had to sign a bunch of federal government disclosure documents about our loan. I don’t think they were very important so I did not really read them. It was great. We were paying $250 less that our previous mortgage and credit card payments. Since we had extra money (the $250 per month), we bought a new Chevy Tahoe. We got a good deal and were able to finance it for 72 months. Six months ago my wife got sick and since we did not have insurance we had to put that $4,000 on our credit card. My wife liked being off so much that she quit her job.
Then three months ago they told me my interest rate on the morgtage went up and my payments were being raised by $500 per month. I am sure that evil Bush is doing this just because I did not vote for him. This is not fair. We don’t have the extra money and should not be required to pay this additional amount.
Some of you are very mean and want to blame this on us, saying it was our responsiblilty due to the decisions we made. I just don’t understand that. We are entitled to a new car and to have nice things and live like we want to.
Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too? Thanks for your help.
“Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too?”
Dear sad,
I’m sure that the government would be happy to help. I suggest you contact the same department that subsidizes Archer Daniels Midland (oops! I mean invests our tax dollars wisely) to the tune of billions of dollars per year. They will most likely pay off all your bills. We all know of course that Congress is not influenced by large bribes (there I go again! I mean “campaign contributions.”) and refuses to be bought by special interests (gosh darn it! I just can’t stop! That should be “anointed souls who know what’s best for 275 million people”). The fact that you wouldn’t have millions to give to Congress wouldn’t mean anything to them of course; they’re just as willing to pay you; how many votes, power and tenure they get doesn’t enter into the equation at all. Isn’t government great?
I sympathize with your plight also. All I want to be able to do is come home from work and watch 4 hours of TV every night and never take the effort to educate myself about the real world (after all, how can anyone even live without watching Survivor, 24, American Idol, Friends, Seinfeld, Lost, Joannie Loves Chachi, House, et. al.?). I have just as much right to demand that the government do something! After all, we all know that voluntary interactions between people is not the way to go! We need to give government the power to direct our actions by violence! Why can’t everyone understand this?