• Story alerts
  • Letter to Editor
  • Pin it

Remember the giddy days of the real estate bubble? Crooked lenders drew up mortgages without keeping track of them. Wall Street packaged them and foisted them off on naïve investors. The real estate bubble burst, and now there are massive foreclosures — but not adequate documentation for them. All 50 states are investigating the unscrupulous and slipshod record-keeping, major banks have suspended foreclosures, and lawyers are expected to file suits by the bushel. As a result, more bank woes and another housing dip may be inevitable.

So what is Washington doing? Trying to create another bubble — this one in the stock market. The logic seems to be that giddiness caused the calamity so more giddiness will straighten it out.

The Federal Reserve keeps short-term interest rates near zero, and it’s buying bonds to force long-term rates, which are already near record lows, even lower. The stock market is gleefully lapping up all the liquidity as banks’ trading desks borrow money for nothing and make almost risk-free bets, often on the stock market. We have seen three bubbles burst since the year 2000 — two in the stock market and one in real estate — but our leaders think we prefer financial asset inflation to product and service inflation.

The Fed’s theory is that interest rates are so low that people will buy stocks instead of bonds or savings instruments. If stocks go up, consumers will feel better and will spend. But the richest 1 percent of Americans control 40 percent of financial wealth (such as stocks and bonds); the top 5 percent control 68 percent; and the top 10 percent control 80 percent. The bottom 80 percent have only 9 percent of financial wealth.

Because stock ownership is so concentrated at the top, Del Mar’s Arthur Lipper III, an international investment banker who recently received a patent on his method for using royalties to invest in and finance companies, says propping up the stock market won’t improve the consumer mood. “It is somewhat similar to a liquor salesman providing free product sales to an already-inebriated group of partygoers,” says Lipper. And what about the timing of these liquidity snorts? “Surprise, surprise, right before an election.” (Boozing up the electorate is an old voting trick.)

Peter Q. Davis, retired chief executive officer of a San Diego bank and onetime mayoral candidate, thinks that a stronger stock market will initially lift the spirits of consumers and business executives. “Folks have 401(k)s and are concerned where their values for retirement went. With rising portfolios they are going to feel more confident and are going to spend and invest,” says Davis. But as the Fed creates floods of money, the value of the dollar goes down. “The big question is the rising debt and lowering of the value of the dollar. I worry the government may reach a tipping point similar to an individual who is borrowing far more than his income would justify. When others lose faith in the dollar, we will have trouble refinancing our debt, and then we’re on a slippery slope.”

Lipper worries that the Fed can’t afford to shell out more trillions of dollars to buy bonds. He also believes that “the stock market is being forced to unsustainable levels and a major correction is coming. The Obama administration has done wonders for Wall Street in the short term at the expense of the nation for the longer term. There is nothing like flooding the market with money to get stock prices up.” Long term, inflation is a worry.

More banking and housing misery is probably coming, and one reason is that people are getting smart about foreclosures. Taking advantage of mortgages’ legal limbo, those who owe more on their home than it is worth are not making their mortgage payments. “If you are upside down on your home and delinquent on your mortgage, why would you pay?” says Davis. “Just ride it out rent-free for as long as possible.”

So banks will get hit with lawsuits and the expense of state investigations at the same time people are not paying on their mortgages. Financial institutions won’t be able to rake in fees from foreclosures and will have to come up with the paperwork on foreclosures that had been massively rubber-stamped when the onslaught hit. Some claim that it should be only moderately difficult for banks to straighten out the paperwork, but “it is about as easy as unscrambling eggs,” says Davis.

“Bankers are now held in lower esteem than car dealers or lawyers, and I believe [bankers] will find this a bad situation,” says Davis. “I would sure not be buying bank stocks at present, as I believe there will be some costly shakeouts before this is behind us.” Not surprisingly, some bank stocks have been belted even though the rest of the besotted market continues to do well.

When the logjam of foreclosures in limbo finally breaks, these homes will hit the market and may “cause a real crash,” warns Davis.

Says Lipper, “The lawyers are going to have a long feast, and banks will take significant losses.” As legal and administrative costs pile up, “sooner or later, the banks will have to sell [bank-owned] homes at much lower prices. It is inevitable that residential property values will decline significantly, and that will put increased pressures on states and municipalities that depend on real estate as a tax base.”

Ouch! Several states and municipalities (such as San Diego) are already technically insolvent because of pension commitments they can’t fulfill. Tax receipts, already weak, will drop off more as valuations recede. A housing double-dip, billowing bank crisis, and insolvent political entities could push the overall economy back down again.

Alan Nevin, director of economic research at MarketPointe Realty Advisors, doesn’t take the gloomy view. He agrees that Wall Street shenanigans in selling mortgage-backed derivatives created a problem. “The foreclosures were legal, but they don’t know who has the title,” says Nevin. “It is one enormous headache.” However, “We know that the government — Fannie, Freddie, and FHA [Fannie Mae, Freddie Mac, and the Federal Housing Administration] own half of the foreclosed homes, so there is no question who has the right to foreclose.” Nonetheless, “Attorneys will use this as another business-generating technique.” But the problem should be gone in a few months. “They knew about these three years ago.”

Data from ForeclosureRadar.com show that San Diego County notices of default through September are down 16 percent from a year earlier. Trustee-sale filings, which set the date and time of an auction, are down 27 percent. Nevin expects housing resales in the county to stabilize at 2500 a month, although that’s down from 4000 in the halcyon days.

  • Story alerts
  • Letter to Editor
  • Pin it

More from SDReader

More from the web

Comments

a2zresource Oct. 27, 2010 @ 1:51 p.m.

I assume that the Peter Q. Davis quoted above is the same Peter Q. Davis who was formerly top gun at CCDC and wrote the recent U-T editorial letter in praise of secret negotiations to raise San Diego's tax increment cap by $6 billion for CCDC's benefit.

0

Don Bauder Oct. 27, 2010 @ 3:14 p.m.

Response to post #1: Yes, this is the same Peter Q. Davis. I didn't agree with a word he said in that letter to the editor. However, that didn't stop me from interviewing him on a completely different topic. I respect him and wouldn't have a problem talking to him on the top-secret Sacramento scam (as I have labeled it), either. We welcome differences of opinion. Best, Don Bauder

0

SurfPuppy619 Oct. 27, 2010 @ 5:04 p.m.

Peter Q. Davis made a rare showing and responded to some of my comments on the Voice of San Diego blog a few years back.

While he was no big fan of mine, he did admit that what I said about employee compensation, specifically the pensions, was valid. I think he liked it when I said I don't get why he (Peter Q. Davis) cannot figure this comp scam out because here was a VERY SMART guy that was the CEO of a major local company.

To this day, I find it hard to understand why guys like Peter Q. Davis, who have tons of business experience-much more than any of us here have in pratical terms- don't do more to put a stop to the public pay and pension scams.

Don't get me wrong MANY major CEO's all across the country are asking why these comp packages are being gifted out, but there are still many who refuse to step and ask for an end to it-Peter Q Davis is one who won't step up.

Having said that, he is a smart guy and I respect his business success.

0

SurfPuppy619 Oct. 27, 2010 @ 5:08 p.m.

Remember the giddy days of the real estate bubble? Crooked lenders drew up mortgages without keeping track of them. Wall Street packaged them and foisted them off on naïve investors.

Oh, I am so glad you mentioned this.

I saw this video a few days ago and it hits a home run on the mortgage/pension/debt scam, and it is MUST SEE for everyone, especially public employees.

It is 10 minutes, but watch ALL of it when you have a few minutes;

. http://www.msnbc.msn.com/id/21134540/vp/39855902#39855902 .

0

SurfPuppy619 Oct. 27, 2010 @ 5:16 p.m.

Alan Nevin, director of economic research at MarketPointe Realty Advisors, doesn’t take the gloomy view. He agrees that Wall Street shenanigans in selling mortgage-backed derivatives created a problem. “The foreclosures were legal

100% false, the foreclosures were NOT LEGAL. Wjere does he get off making such obvious falsehoods??????? Does Alan not read newspapers or watch the news??

The banks themselves have admitted they were NOT following the law, the legal requirements, for foreclosuring homes. That is why all major banks stopped the process to review their policies and procedures.

Watch the video I put up above. Also Steve Wynn of las Vegas spoke on this very subject, and he hit the nail on the head also on why we are in this mess;

. http://www.youtube.com/watch?v=LQ4fJH... .

0

Don Bauder Oct. 27, 2010 @ 9:13 p.m.

Response to post #3: I have quoted Peter Q. Davis in numerous columns, mainly about banking. But I think he gave valid opinions on the pension mess, too. He has given me some good information on SDCERS. Best, Don Bauder

0

Don Bauder Oct. 27, 2010 @ 9:16 p.m.

Response to post #4: The telemarketers that talked people into taking on mortgages and homes they could not afford are now working for for-profit universities, telling innocents how they should get a government loan to go to college; when they graduate, they will get a fat job and easily pay off the loan. Of course, the facts belie everything the hucksters say. Best, Don Bauder

0

Don Bauder Oct. 27, 2010 @ 9:19 p.m.

Response to post #5: Bank of America declared that its foreclosures were clean, and resumed the process. Then it found there had been what the bank called "errors," and they are re-examining their procedures. All this happened in a couple of days. Best, Don Bauder

0

Burwell Oct. 27, 2010 @ 9:27 p.m.

Because stock ownership is so concentrated at the top, Del Mar’s Arthur Lipper III, an international investment banker who recently received a patent on his method for using royalties to invest in and finance companies,

Unfortunately for Mr. Lipper the Supreme Court recently ruled that investment models like his are not patentable.

0

a2zresource Oct. 28, 2010 @ 6:08 a.m.

RE "I respect him [Davis] and wouldn't have a problem talking to him on the top-secret Sacramento scam (as I have labeled it), either. We welcome differences of opinion":

And that's the way it should be. We can't have a relatively free market for the expression of ideas and ideals without having open years to receive that expression... and open minds to weigh their value.

When all there is happens to be party-line bickering with no room for compromise, intelligent things do get devalued in that marketplace to the point that the noise prevents the majority of listeners from paying attention and just makes them tune out.

0

a2zresource Oct. 28, 2010 @ 7:20 a.m.

Sorry... "open years" was supposed to be "open ears"!

0

Don Bauder Oct. 28, 2010 @ 7:22 a.m.

Response to post #9: I will ask Arthur Lipper about that. I can't imagine that he doesn't know about the court's decision. Best, Don Bauder

0

Don Bauder Oct. 28, 2010 @ 7:27 a.m.

Response to post #10: The next time I do a column about how CCDC is stealing money from the neighborhoods, and from citywide infrastructure improvements and maintenance, to waste on downtown projects that line the pockets of wealthy developers, and that CCDC should be abolished because it is abusing redevelopment requirements about eliminating blight and providing affordable housing, I will include Davis. Best, Don Bauder

0

Don Bauder Oct. 28, 2010 @ 7:29 a.m.

Response to post #11: I have open ears and lots of years. Best, Don Bauder

0

Don Bauder Oct. 28, 2010 @ 11:42 a.m.

LIPPER'S PATENT GRANTED AFTER SUPREME COURT DECISION. In response to posts #9 and #12, I asked Arthur Lipper whether indeed the court had ruled against patents such as his. The case in question was called "Bilski." Replies Lipper, "On the contrary, the Bilski decision favors patent filing[s] such as ours. Our patent [was] issued on Oct. 12th, after the Supreme Court ruling."

I checked some other sources on the Supreme Court's Bilski ruling. Basically, the court ruled on one patent but didn't make any broad interpretations on the patentability of business methods or software patents. One source calls it "a big win for supporters of business method and software patents."

Best, Don Bauder

0

SurfPuppy619 Oct. 28, 2010 @ 3:25 p.m.

BofA hired a former attorney general of Virginia and a former deputy assistant U.S. attorney general to help defend themselves against the accusations of wrongdoing in processing foreclosures. They are claiming that the problems found so far are "relatively minor"

Follow the money $$$$$$$$$$$$$$

0

Neal Obermeyer Oct. 28, 2010 @ 4:40 p.m.

Via its specificity, that's a bit of a misrepresentation of quantitative easing. QE is a useful tool toward increasing the money supply and velocity when there is nowhere left to go on interest rates. The barrier of zero is essentially artificial; increasing the supply is still the goal when growth in productivity and wages fails to provide it.

I say this with all due respect, as I am a big Don fan, but the theory that QE is all about tricking the public into buying stocks in order to inflate the stock market, with the goal of then subsequently tricking the public to leverage their increased stock value into more consumption, seems like an odd conclusion to draw from what is a pretty straightforward means of increasing money supply.

And I'm not sure what purpose is served by presenting QE in this way, particularly when the mortgage mess is what it is regardless.

0

Burwell Oct. 28, 2010 @ 6:57 p.m.

In most cases the US Patent Office no longer attempts to determine whether patents are valid or not. The fact that Mr. Lipper received a patent after the Bilski case was decided is irrelevant. Most patents are now automatically granted without regard to merit. In Bilski the Supreme Court ruled that an investment strategy that enables commodities buyers and sellers in the energy market to hedge against the risk of price changes could not be patented. The same legal principles in Bilski would apply to Mr. Lipper's investment strategy. His claimed patent is unenforceable in a court of law.

http://www.supremecourt.gov/opinions/09pdf/08-964.pdf

0

Don Bauder Oct. 28, 2010 @ 9:06 p.m.

Response to post #16: And it looks like the federal government is lined up to help the banks. The government has said that the foreclosure probes shouldn't hurt the economy particularly. That indicates to me that the federal government will once again fight to let the banks off the hook. The big banks are still too big to fail. I find this reprehensible.I had hoped for reform. Best, Don Bauder

0

Don Bauder Oct. 28, 2010 @ 9:08 p.m.

Response to post #17: As I stated above, there are already signs that the U.S. government will try to make sure the banks don't get hurt. Best, Don Bauder

0

Don Bauder Oct. 28, 2010 @ 9:15 p.m.

Response to post #18: Oh, of course quantitative easing is a means for increasing the money supply. But what happens when you increase the money supply? Under circumstances such as the present, financial assets such as stocks and bonds go up as a result of the flood of liquidity. The Fed argues that it is trying to stave off deflation. So it wants inflation. But it doesn't want inflation of goods and services, as measured by the CPI, despite what it says. It wants inflation of financial assets. That is, more bubbles. Greenspan has publicly stated that pumping up the stock market is better than federal spending for helping the economy. Bernanke believes the same thing, but doesn't say it. Best, Don Bauder

0

Don Bauder Oct. 28, 2010 @ 9:17 p.m.

Response to post #19: Lipper disagrees. He says the Bilski decision enhances the patentability of systems such as his. Best, Don Bauder

0

Twister Nov. 1, 2010 @ 2:31 p.m.

Has anyone mentioned "maximum feasible deniability" or is that unmentionable?

0

Twister Nov. 1, 2010 @ 2:57 p.m.

ECONOMIC CLIMATE “WARMING,” USA, 2010?

100 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ 90 $$$$$$$$$$$$$$$$$$$$$

80 $ $ $ $ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ 70 $ $ $ ¢ ¢ ¢ ¢ ¢ ¢ ¢ 60 $ ¢ ¢ ¢ ¢

50 $ ¢ ¢ ¢ ¢

40 ¢ ¢ ¢

30 ¢ ¢

20 ¢ vv>? 10 ¢ vvv>? 0 vvvvvvvvv>?

PLEASE CORRECT AS NECESSARY, AND PROJECT TOWARD FUTURE

0

Don Bauder Nov. 1, 2010 @ 9:12 p.m.

Response to post #25: It's usually called "plausible deniability." Best, Don Bauder

0

Don Bauder Nov. 1, 2010 @ 9:14 p.m.

Response to post #26: But as the dollar goes down, stocks and bonds go up. So rejoice, unless it makes you a little queasy. Best, Don Bauder

0

Twister Nov. 2, 2010 @ 9:24 a.m.

Re: 27

U R abskerloutely rite! But the slip as is implies a certain active intent, no? If not yanking the "conspiracy theory" cover off, well, the tangled web of, (gulp!) cons and piracy?

0

Don Bauder Nov. 2, 2010 @ 3:56 p.m.

Response to post #29: I wish I had thought of that -- cons and piracy. Yes, they're ubiquitous. Best, Don Bauder

0

Twister Nov. 2, 2010 @ 4:21 p.m.

Re: 28

Bileous!

But what I wanted to ask is whether or not a kind of "hockey stick" graph (seein' as how it worked for global warming) might slice through all the intellectual woods and drive the point home. Does anybody give a puck?

Seriously, folks, US folk out here in crash-land really don't get it that the scare ads and pundit-pontifications about "raising taxes" is really a silly shilly-shally about not raising taxes on the billionaires pouring all the money into TeeVee ads with actors acting like just folks, ad nauseam. We just don't GET it! We prefer the massage to the message. If it FEELS good, we don't think (until months have passed and it's too late) that we're getting screwed.

Simplifying the message without massaging the truth--now THAT'S the art of journalism!

Take this graph and compare it to the past and the future. Maybe we'll catch on before we get whacked again. And again.

Or must "we" be better liars than "them." Must we "frame" every issue, or will the truth shine through if we find a way to keep our pixel-fingers out of the throats of our fellow folk?

0

Don Bauder Nov. 3, 2010 @ 7:21 a.m.

Response to post #28: While Wall Street pigs feast in all this money the Fed is creating, no one looks at the danger: at some point, the dollar declines so much that the U.S. has difficulties selling its debt. Then interest rates have to go up to make our bonds marketable. And the party ends. Ignominiously. How many bubbles do we have to go through before our leaders learn that they are not healthy? Best, Don Bauder

0

Psycholizard Nov. 5, 2010 @ 12:48 a.m.

The Fed is trying to induce general inflation, not just in investments, but in prices generally by weakening the dollar against other currencies. According to MSNBC over half the purchased bonds are held by foreigners. The hope perhaps is that investors will switch to interest bearing foreign bonds, strengthening foreign currencies, thereby making our products easier to sell.

For nine years now both the Fed and the Government have been printing money furiously at a rate that previously would induce general inflation, but the only inflation was in land and energy prices, and that was followed by a deflationary spiral in real estate, and high energy profits simply puddle into the hands of those who need nothing, and therefore are content to hold treasury notes, and refuse to spend.

The Fed is trying to pump money already printed into action. This is worthy, but might not be enough.

Phil Graham recently observed that it was WWII and not the New Deal that ended the Great Depression. This is true. He did not mention that for the war years this nation became a Socialist dictatorship. We don't want this.

0

Don Bauder Nov. 5, 2010 @ 7:56 a.m.

Response to post #33: Disagree. The Fed is trying to pump up the stock market. You can see it in the way it was done. Wall Street's highest expectation was $500 billion. So the Fed went for $600 billion. Wink, wink. Take off, boys. The market went up that day and zoomed the next day. With the flood of money, the Fed is also trying to pump up commodity prices. This succeeded, too. Right after the action, I bought stocks. Over the last several months, seeing what the Fed is up to, I have raised the percentage of stocks in my portfolio from 19% to above 28%. This will end ignominiously some day, because today's stock levels are not related to the economy, but are related to liquidity. The Fed's balance sheet is a disaster. The dollar plunges as we print more of them. Other countries are making liquidity moves to lower their own currencies. We have something similar to competitive devaluation among nations -- a ticket to perdition. But I am enjoying it while it lasts. Best, Don Bauder

0

Psycholizard Nov. 5, 2010 @ 1:24 p.m.

We rarely disagree nowadays, thanks to a disaster that unites followers of very different economic thought. I will concede that the Fed is probably attempting to inflate investments, they have pursued this policy for over thirty years. I agree that this policy has ended in disaster. We agree that the current stock prices are disconnected from fundamentals, you are right to warn your readers of the danger of a real crash.

Nevertheless I endorse the purchase of these bonds because it gets money moving. Even if the purchase of stocks does little, the sellers may well spend the cash pumped by the Fed.

The action should improve the Fed balance sheet, since the interest no longer will be counted against it, and the money has been printed already, thats how the bondholders purchased the notes.

As for the road to perdition, I believe we are stuck there already. I endorse any idea that might plausibly get us moving, even if it enriches criminals. Except for war.

0

Don Bauder Nov. 5, 2010 @ 6:30 p.m.

Response to post #35: Today, there were encouraging private sector job gains announced by the Labor Department. But the Fed had already announced the $600 billion QEII -- a staggering amount that further crushes the Fed's already-tattered balance sheet. Would the Fed have gone for $600 billion if it had known the employment stats would have been encouraging? In my judgment, yes, and that's because the purpose is to pump up stocks and commodities, and use the story of fighting deflation as a pretext. But QEII won't do much of anything to create jobs. Unfortunately, our leaders, both in government and the central bank, don't care. This economy is being run for the top 30%, and particularly for the top 5%. We're not at a plutonomy yet, but we're getting there. Best, Don Bauder

0

DX Nov. 6, 2010 @ 2:59 a.m.

Nice read. Currently viewing the TV show "Conspiracy Theory" with Navy Seal, professional wrestler and former State Governor Jesse Ventura ripping into and no holds barred shredding of a group of Wall Street insiders. Good show. Forget MSNBC or CNBC.

0

Don Bauder Nov. 6, 2010 @ 8:27 a.m.

Response to post #37: Wall Street led us to the brink, and is still doing so. Bank of America is a disaster, according to a recent Bloomberg story. Despite all this, Wall Street managed to block any meaningful regulation. Congress is for sale -- more sticky-fingered now more than before the Tues. election, in all probability. Best, Don Bauder

0

a2zresource Nov. 6, 2010 @ 8:29 a.m.

RE "While Wall Street pigs feast in all this money the Fed is creating, no one looks at the danger: at some point, the dollar declines so much that the U.S. has difficulties selling its debt. Then interest rates have to go up to make our bonds marketable. And the party ends. Ignominiously. How many bubbles do we have to go through before our leaders learn that they are not healthy?":

I still think it is the lack of analytical mathematical ability in those who are making the most consequential decisions on Wall Street (which includes other markets for both equity and debt) and in Washington. The prime example is the totality of subprimality combined with lack of capitalization that gave us the Crash of 2008, where credit default swaps were being used to insure events but those CDSs were never legally insurance.

Wall Street may not be the tail wagging the dog, but each of the bailed-out insurance and financial firms is like the flea that stopped the dog's forward progress by forcing it to sit in one place and scratch. All together, that's a lot of scratching around without making any progress, accounting for much of the business world predictions of a lackluster 2011.

We will continue to have bubbles as long as the people at the top are still in group-think mode and will chase any concept that promises high returns on little investment up front, no matter what the risk might be to themselves AND the rest of us. The trick will be to find the "bubble" that is actually beneficial for all of us, and where even after bursting, we will be in a much better position than we are in now, kind of like the German Army owning most of northern France even after losing the historically decisive Battle of the Marne.

We may be old enough to remember the Marne.

0

Don Bauder Nov. 6, 2010 @ 10:31 a.m.

Response to post #39: Those credit default swaps were created by MIT math PhDs. The mathematical formulae would go on for 30 pages. Neither the buyers nor the sellers understood the CDSs. Is it any wonder what happened? Best, Don Bauder

0

SurfPuppy619 Nov. 6, 2010 @ 6:59 p.m.

Those credit default swaps were created by MIT math PhDs. The mathematical formulae would go on for 30 pages. Neither the buyers nor the sellers understood the CDSs. Is it any wonder what happened?

Contrived complexity. That is all it is.

The OC Treasurer thought he was good at workign them CDS's, until he lost $1.6 billion in funding.....

0

SurfPuppy619 Nov. 6, 2010 @ 7:02 p.m.

Currently viewing the TV show "Conspiracy Theory" with Navy Seal, professional wrestler and former State Governor Jesse Ventura ripping into and no holds barred shredding of a group of Wall Street insiders.

Have not read that book, but Jesse V is a straight shooter and I admire that guy a lot.

I would love to admire Donald Trump, b/c I think he is pretty smart too-but that guys ego is so damn big that I don't admire him for that one reason. He never shares the glory or success of his team, and it is always HIM that is the one that made everything work. He deserves a lot of credit, but he neeeds to learn humility and share the spotlight.

0

Don Bauder Nov. 6, 2010 @ 10:01 p.m.

Response to post #41: And OC tumbled into BK, where SD belongs. Best, Don Bauder

0

Don Bauder Nov. 6, 2010 @ 10:03 p.m.

Response to post #42: Trump deserves credit for what? Dragging his bondholders into BK? Best, Don Bauder

0

SurfPuppy619 Nov. 7, 2010 @ 7:16 a.m.

Trump deserves credit for what? Dragging his bondholders into BK?

He deserves credit for understanding that if the USA does not maek and manufacture products we are doomed.

He was on TV a few nights ago-and he does know the problem, he said it very concisely when he said America is rebuildign China, not America.

0

Don Bauder Nov. 7, 2010 @ 11:38 a.m.

Response to post #45: Well, he does understand that, anyway. Best, Don Bauder

0

Twister Nov. 18, 2010 @ 4:36 p.m.

Would deflation get money moving again? Actually circulating, not just moving back and forth?

0

Don Bauder Nov. 18, 2010 @ 6:59 p.m.

Response to post #47: Severe deflation is deleterious, as we learned in the 1930s. But mild deflation is not a bad state at all, as Gary Shilling has said for years. Best, Don Bauder

0

Don Bauder Nov. 18, 2010 @ 7:02 p.m.

Response to post #48: A construction worker can work very few hours and be considered employed. There are other ways in which unemployment is understated. Inflation is understated, too. Best, Don Bauder

0

David Dodd Nov. 18, 2010 @ 8:52 p.m.

"But mild deflation is not a bad state at all, as Gary Shilling has said for years."

Japan would disagree.

0

Don Bauder Nov. 18, 2010 @ 10:44 p.m.

In the second half of the 19th century, the U.S. had more deflation than inflation. Although there were some panics and financial problems, by and large it was a prosperous, innovative period. Many years ago, Milton Friedman said that the ideal economic state was prolonged mild deflation. Best, Don Bauder

0

SurfPuppy619 Nov. 19, 2010 @ 8:11 a.m.

Deflation often had the side affect of increasing unemployment and the REAL unemployment rate in California is already 20 percent.

You are right Mindy.

The "real" UE rate is the U-6 rate, and in CA it is 22% (21.8%) from the latest stats. It has not changed in basically the last 18 months. It is close to 50% in Detroit, MI.

The "official" UE rate that the gov uses is the U-3 rate and a cooked number because it does not account for ANYONE how is out of work for more than 6 months (they claim everyone magically STOPS looking for work at this mystical and arbitrary number)and it counts anyone who has worked ANY amount-even 1 hour- as employed.

0

SurfPuppy619 Nov. 19, 2010 @ 9:29 p.m.

That compared to a 53 percent disqualification rate through September. Homeowners say the banks lose their documents and then claim borrowers didn't send back the paperwork. Of course, they sent it back. Who wouldn't send back the paperwork that would save their house from foreclosure?

I have said it many times, they should have tossed all those Bank execs in the slammer. They wiped out our economy and almost caused a global meltdown. And the mortgage fix program is just more of the same.

I would have sent the CEO's to the slammer for 25+ years, ala Jeffrey Skilling, CEO of Enron fame.

Make a flaming sign post out of those losers for all to see, so no one goes that route again.

0

Don Bauder Nov. 21, 2010 @ 9:54 a.m.

Response to post #53: The underemployment figure is a good one to use. It's almost double the headline unemployment rate. Best, Don Bauder

0

Don Bauder Nov. 21, 2010 @ 9:56 a.m.

Response to post #54: Just remember that SurfPup isn't always right, by his own admission. Neither am I. Best, Don Bauder

0

Don Bauder Nov. 21, 2010 @ 9:59 a.m.

Response to post #55: I don't know the latest number, although it is true that the Obama program on foreclosures has generally been a failure. Best, Don Bauder

0

Don Bauder Nov. 21, 2010 @ 10:07 a.m.

Response to post #56: In the 1930s, the banks and investment banks drove the economy over the cliff. Stiff regulations went into effect and some of the malefactors went to prison. It wasn't until 50 years later that the tough regulations were softened. A couple of years ago, Wall Street drove us over the cliff and we couldn't even get halfway sensible legislation to corral their corruption. Best, Don Bauder

0

Twister Nov. 23, 2010 @ 10:13 p.m.

When looking at unemployment or underemployment, what about the QUALITATIVE side of those issues?

What about "bubble jobs?" That is, jobs that don't provide essential services but primarily serve unbridled (luxury) consumption and waste? Is this sort of "trickle-down" in any way polluted? Is it economic kool-aid/hemlock?

0

Sign in to comment