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What happened to all of the doom and gloom economic threads?

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As the Fed makes bad stuff seem like it’s worth a lot, the banks blindly follow. They buy the same stuff that the Fed does (sometimes from the Fed) and book their own “profits” as prices rise.

Last week, Bank of America CFO Bruce Thompson said, “We’re all making significantly more amounts of money with less risk.”

Hmmm. We’ve heard that before.

Yes, yes, the government has put in place rules, like the Dodd-Frank’s “Volcker Rule,” that are supposed to prevent a repeat of ’08. But rules can’t counteract the temptation of free money.

Notice that Goldman Sachs is doing the opposite of everyone else, it’s paring back its business. Because Goldman figured out the last crisis before most people did, that says something.

Zero interest rates can’t last forever. The financial industry figures they’ll last until next year — and one Fed official opined that they may stay until 2015.
Eventually, though, the Fed will have to hike rates. That could create a mess on Wall Street. In 1994, a less dramatic rate hike precipitated billions in losses on mortgage-related securities.

The modern economy has never, ever had rates so low, for so long — and nobody has any idea what will happen when they’re not so low anymore. Wall Street has short memories; the guys who remember ’94 are gone.

A shock will have its usual devastating effect on New York’s economy — and possibly worse, because the Fed will be out of bailout tricks.

Meanwhile, low rates prevent New York City and state from doing what we should be doing: cutting spending and lessening our dependence on Wall Street.

Between now and 2015, city spending on such things as pensions and debt payments will soar 21 percent, from $26.4 billion to $32 billion. If tax revenues from Wall Street collapse, we’ll be looking at savage cuts in core services.

Treasury says not to worry: “The financial industry is less vulnerable to shocks than before the crisis.”

The shock may be that Treasury is wrong — that the wave of paper profits is setting us up for another disaster.
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Read more: http://www.nypost.com/p/news/opinio...xt_peril_urCe00NRgilgnUYdw2jIeP#ixzz1sxDY9SKA
 
Political Realists see the world as it is: ... In this world laws are written for the lofty aim of "the common good" and then acted out in life on the basis of common greed...; a world where we are always moral and our enemies always immoral; a world where "reconciliation" means that when one side gets the power and the other side gets reconciled to it, then we have reconciliation.... In the world as it is, the solution of each problem inevitably creates a new one.
Saul David Alinsky
Rules for Radicals

How can you measure the value of knowing that company books are sounder than they were before? Of no more overnight bankruptcies with the employees and retirees left holding the bag? No more disruption to entire sectors of the economy?
Michael Oxley 2002
Co-Author of Sarbanes-Oxley Law
(Jon Corzine, co-sponsor)

It will take the next economic crisis, as certainly it will come, to determine whether or not the provisions of this bill will actually provide this generation or the next generation of regulators with the tools necessary to minimize the effects of that crisis.
Chris Dodd
Co-Author Dodd-Frank Financial Reform Act
Friend of Angelo
 
Durable goods orders, like housing are

[voice=The Round Mound of Pound]

Turrible!

[/voice]

merc, did it ever occur to you that with the French election and the return of Socialism (and the end of European austerity) and the crackup of the Euro that money is fleeing to relatively safer harbor in a place where it looks like SOcialism is about to be swept out of office?

;) ;)
 
UK double-dip

Britain's economy slid into its second recession since the financial crisis after official data unexpectedly showed a fall in output in the first three months of 2012, piling pressure on Prime Minister David Cameron's embattled coalition government.
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http://www.cnbc.com/id/47169446

European Lost Decade

Europe (minus Germany) looks more like post-bubble Japan each month.

The long-feared credit crunch has mutated instead into a collapse in DEMAND for loans. Households and firms are comatose, or scared stiff, in a string of countries.
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http://blogs.telegraph.co.uk/financ...ces-japan-syndrome-as-credit-demand-implodes/

The French Left wants more "stimulus spending..."
 
Today's lesson - in a response to Krugman

An Austrian perspective, not a natural-unemployment-rate framework, provides a better understanding of the past and more correct policy implications for the future. Hayek's comments on how to respond to the stagflation of the mid 1970s, created by attempts to maintain high employment through monetary ease, should be a warning to current policy makers. Hayek commented,

I find myself in an unpleasant situation. I had preached for forty years that the time to prevent the coming of a depression is during the boom. During the boom nobody listened to me. Now people again turn to me and ask how we can avoid the consequences of a policy about which I had constantly warned. I must witness the heads of governments of all Western industrial countries promising their people that they will stop the inflation and preserve full employment. But I know that they cannot do this. I even fear that attempts to postpone the inevitable crisis by a new inflationary path may temporarily succeed and make the eventual breakdown even worse. (Hayek, 1979, p. 3)
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In an Austrian framework, as in a natural-rate-of-unemployment model, monetary expansion and a low (relative to the natural rate) interest rate may increase employment; the policy may appear to succeed. But, as Hayek and Mises emphasized long before the development of modern macroeconomics, the employment created by stimulus, whether monetary or fiscal, and whether implemented when an economy is near full employment or initiated at a point where significant unemployed resources are available (Hayek 1939 and Ravier 2011) is unstable. Such employment, if it is to be maintained, will require ever-increasing distortions to the spending stream. A policy that uses inflation to generate employment hence contains the seeds of a return to stagflation, and if continually attempted every time unemployment begins to increase, ultimately, to the choice whether to end the inflation or move forward on a wrong path to a eventual crack-up boom.

Recommendations to speed recovery with inflationary policy are a consequence of too many pundits and economists too quickly attempting to compare the crisis to the Great Depression. While there should be concern that such an event never happen again, attention should also be focused on policies that will prevent a return of the stagflation the 1970s and 1980s. The "Great Moderation," a nearly 20-year period of economic growth and low inflation, made it appear that policy makers had learned the lessons from policy errors made between 1960 and 1980. A shift in monetary policy emphasis from high employment to price stability — which even Hayek argued might be the best policy to be expected from a central-bank-headed fiat-money regime — appeared until 2000 to be successful. Two Austrian-style boom-bust periods ended the appearance of macroeconomic tranquility.
Click to expand...
http://mises.org/daily/6016/Not-Enough-Inflation
 
4est_4est_Gump said:
Durable goods orders, like housing are

[voice=The Round Mound of Pound]

Turrible!

[/voice]

merc, did it ever occur to you that with the French election and the return of Socialism (and the end of European austerity) and the crackup of the Euro that money is fleeing to relatively safer harbor in a place where it looks like SOcialism is about to be swept out of office?

;) ;)
Click to expand...

AJ is reduced to spluttering 'bout socialism! and the Euro! is teh best evidence yet that Obama is going to be re-elected by a large margin.
 
If I quote from a blog, you say that.

If I quote from a book, you go for the author...

What rarely ever happens is an actual examination of position.



Which is why our economy is

TURRIBLE!!!​
 
I think that some people's predictions on the election are probably about as sound as their constant declarations that the economy has turned the corner and in just a few months will begin to grow better than ever before now that smart people are finally in charge...
 
richard_daily said:
Reagan started this rampant deficit spending... and he was a union member.


TURRIBLE!
Click to expand...

It's very telling that ya'll continue to take Reagan out of context rather than to expound eloquently on the miracle of the Obama economy...

Reagan gave to the Congress that which they requested in return for a promise to cut spending.

He should have known that the Democrats were lying to him.

Good thing his policies could overcome their duplicity...
 
4est_4est_Gump said:
It's very telling that ya'll continue to take Reagan out of context rather than to expound eloquently on the miracle of the Obama economy...

Reagan gave to the Congress that which they requested in return for a promise to cut spending.

He should have known that the Democrats were lying to him.

Good thing his policies could overcome their duplicity...
Click to expand...

I'll just blame it on the Republican Congress, stalling any progress.

That's how you do, isn't it?
 
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