The Best of the Worst

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Davos's picture
Davos
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The Best of the Worst

Best of the Worst

Romer claims that economists still don’t understand why employers made such deep cuts. I’m going to go way out on the limb of sarcasm here: Maybe it was that CPA’s like Jim Quinn who knew where consumers were getting their money from. You know that giant ATM machine called a HELOC. When the housing market bubble popped, businesses heard a giant sucking sound - it was their consumers’ disappearing access to the credit they were using to consume stupid stuff like 4 dollar coffees at Starbucks. She could have asked Jim Quinn or Starbucks why they closed 900 stores and where consumers got 9 billion dollars of money that they spent on 4 dollar coffees from. 

I don’t teach economics at Berkeley but I’d imagine that these four structural problems had everything to do with the answer to her question: 

  1. Consumers can’t live off of 1973 wage levels.
  2. The government is taking 8 months of the consumers’ wages to pay for decades of government over borrowing, over spending and inefficiency.
  3. This and the Fed have slashed the purchasing value of the consumers’ dollar. It takes more worth less dollars to buy goods and services.
  4. The consumer was hanging on a thread called HELOC credit to make up for 1-3 above.
  5. That disappeared the second house prices collapsed.
Thomas Hedin's picture
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Re: The Best of the Worst

The economy needs consumers. Simple.

And consumers need jobs which provide money for them to consume. Even simpler.

I agree with you because this points to the root cause of our economic problems.  Today we have no jobs that provide money for the people, that is unless you're a loan officer at a bank.  It's obvious we cannot handle any more debt in society as it is completly mortgaged to the hilt.

The only thing that jobs provide is goods and services.  Goods and services are not money.  If we had jobs that provided goods or services matched with newly created money spent (not loaned) into circulation people would have access to money that could be used to consume and keep our economy alive and a way to stop the exponential growth of debt.

TD's picture
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Re: The Best of the Worst

Davos,

You do have a gift of seeing the elephant in the room, and describing him well to others. Thank you.

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Re: The Best of the Worst
Thomas Hedin wrote:

The economy needs consumers. Simple.

And consumers need jobs which provide money for them to consume. Even simpler.

I agree with you because this points to the root cause of our economic problems.  Today we have no jobs that provide money for the people, that is unless you're a loan officer at a bank.  It's obvious we cannot handle any more debt in society as it is completly mortgaged to the hilt.

The only thing that jobs provide is goods and services.  Goods and services are not money.  If we had jobs that provided goods or services matched with newly created money spent (not loaned) into circulation people would have access to money that could be used to consume and keep our economy alive and a way to stop the exponential growth of debt.

Thomas, I actually agree!

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Re: The Best of the Worst
TD wrote:

Davos,

You do have a gift of seeing the elephant in the room, and describing him well to others. Thank you.

Hello TD: Thanks, you really have me thinking now. The Elephant in the Room. I like that! Take care,

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Re: The Best of the Worst

This is way too much fun!

I am going to use it to scare the kiddies at Halloween! BwaHAHAHAHAH!

Thanks for the info Davos. It makes it a lot easier to forge ahead with the sound personal and business financial plans. Playing for keeps and doing it defensively seems to be the name of the game.

I will continue to destroy the economy by paying off all personal and business and personal debts, anyone else with me?

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Re: The Best of the Worst
Jager06 wrote:

This is way too much fun!

I am going to use it to scare the kiddies at Halloween! BwaHAHAHAHAH!

Thanks for the info Davos. It makes it a lot easier to forge ahead with the sound personal and business financial plans. Playing for keeps and doing it defensively seems to be the name of the game.

I will continue to destroy the economy by paying off all personal and business and personal debts, anyone else with me?

+1

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Re: The Best of the Worst

 

Hello TD:
Hey, my wife said, "Before you write an article "Why Can't Everyone See The Elephant in the Room"" to ask you if you were kidding or saying that everyone sees the elephant - write about something else.
Thanks in advance, take care

Hello TD:

Hey, my wife said, "Before you write an article "Why Can't Everyone See The Elephant in the Room"" to ask you if you were kidding or saying that everyone sees the elephant - write about something else.

Thanks in advance, take care

 

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Re: The Best of the Worst

Ugh. I repeated myself that badly in the last sentence? I will refrain from posting in the mornings until after my second cup (after my second cup) of coffee.

Oh....I see above I am not the only one this morning. Good company I've got.

 

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Re: The Best of the Worst

Davos,

I greatly look forward to your upcoming aritcle, and am flattered if I might have played a part in it's title... at last, I've made a contribuition!

I do seriously think there is an elephant in the room and that your articles do a great job at pointing him out. I'm not certain if most people in the room are unaware of the elephant, or are in denial that he is there, or don't grasp the significance of it. But that big old fellow is about ready to stampede and a lot of damage is going to be inflicted on this world.

Keep on writing!

TD

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Re: The Best of the Worst

yes, yes, and yes.  a little HELOC story for you.  one morning a few years ago i woke up and for some reason i decided i wanted a HELOC.  i did not really need one but everyone i knew was getting them and it seemed like a good idea to have a substantial credit line available in case an emergency came up.  i called chase and got connected to a guy (hope it was not one of you) and i told him i wanted to open a HELOC for 15,000 dollars.  he laughed and told me they do not do them for less than 25,000 and if i would agree to a higher line of credit (at least 50,000) he could reduce the interest rate.  they had a guy drive by the house and he reported back an estimate that qualified me for 100,000+ dollars - an insane amount.  so i agreed to 25,000 (the minimum) and opened the account.  they sent me checks and a card to use to allocate the resources of the account.  i let that stuff just sit on my desk for a while and every time i walked by the little stack of paper it was calling to me - use me, spend a little, come on, why not ?  it is at a peanuts rate and there are many thousands there.  i ended up charging 2,800 to the account over the next year or so.  then the bubble burst.  not long after i received a letter from chase saying that the equity in my house would no longer support the account they they were closing it effective immediately.  at that point i could only pay on the account - no more charges.  i paid it off and closed it over the next few months.  so much for my HELOC.  however, i know many people who were charging there kid's college educations, crazy vacations, business adventures, expensive musical instruments and equipment, cars, you name it, to their HELOCs.  interestingly enough, very few were using the money for home improvements.

 

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Re: The Best of the Worst

Thomas Hedin wrote:

 

 

The economy needs consumers. Simple.

And consumers need jobs which provide money for them to consume. Even simpler.

I agree with you because this points to the root cause of our economic problems.  Today we have no jobs that provide money for the people, that is unless you're a loan officer at a bank.  It's obvious we cannot handle any more debt in society as it is completly mortgaged to the hilt.

The only thing that jobs provide is goods and services.  Goods and services are not money.  If we had jobs that provided goods or services matched with newly created money spent (not loaned) into circulation people would have access to money that could be used to consume and keep our economy alive and a way to stop the exponential growth of debt.

 

Thomas, I actually agree!

Sinc we agree can we discuss the best and most reasonable way impliment this?

 

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Re: The Best of the Worst
Thomas Hedin wrote:

Sinc we agree can we discuss the best and most reasonable way impliment this?

 

Hello Thomas: I've made my speciality discovering the problems; calling them and the morons who created them what they are. When it comes to the fixes I have a good idea of what needs to be done. I've researched many of the good ideas out there for a new money system. Any of them would be 100x or more better than we have.

But I'm not a new money expert. I think a better discussion would be between someone like you, CM, Nate (from Nathan's Economic Edge) Bill Still and many of the others who have proposed a new money system, one not backed by debt. If there is ever such a debat I'd be very excited about reading everyones' super points. Take care

 

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Re: The Best of the Worst

I think a better discussion would be between someone like you, CM, Nate (from Nathan's Economic Edge) Bill Still and many of the others who have proposed a new money system, one not backed by debt. If there is ever such a debat I'd be very excited about reading everyones' super points. Take care

I think this sounds like a great idea.  Where do you think the best place would be to have this happen?  Do you think you could get any of the parties interested in having a conference call that you could join in on as well?

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Re: The Best of the Worst

Holy Shit! I want to hear that call!

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Re: The Best of the Worst
Thomas Hedin wrote:

I think a better discussion would be between someone like you, CM, Nate (from Nathan's Economic Edge) Bill Still and many of the others who have proposed a new money system, one not backed by debt. If there is ever such a debat I'd be very excited about reading everyones' super points. Take care

I think this sounds like a great idea.  Where do you think the best place would be to have this happen?  Do you think you could get any of the parties interested in having a conference call that you could join in on as well?

Maybe 2Beers Steve would be interested?

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Re: The Best of the Worst

Maybe 2Beers Steve would be interested?

Would you be able to help arrange it?  It would make a great podcast!

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Re: The Best of the Worst

Great idea. My 2 cents - there's a lot at stake, do this for real. Take the best minds and put them together for a few days and let them really hash things out, Constitutional Convention style - fight, scream, laugh, cry, knowing what hangs in the balance, and see if a consensus document can be authored (unless one already exists??).

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Re: The Best of the Worst

I would much rather preffer an honest and rational discussion of the facts.

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Re: The Best of the Worst

Thomas: The only hobby I have time for right now is writing. My last one over on FSN got close to 70,000 reads. I know on the grand scale of things that money is like #1 or #2 - but I'm just not passionate about it enough to PM Steve and try to coordinate this thing. Not that I don't think it is a worthy cause, I just think until the masses get smart about the other 12 or so serious structural economic problems that no one is going to do jack about the #1 or #2 problem.

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Re: The Best of the Worst

"I will continue to destroy the economy by paying off all personal and business and personal debts, anyone else with me?"

I'm with you, Jager06!

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Re: The Best of the Worst

Davos,  you know I spent the day studying problems one and two like crazy in order to spread this on to others.  Late in the day I got an IM from a friend who works on wall street.  I asked him what he thought of the current state of things and my ongoing concern of a deeper crash.  He practically howled with laughter and told me to stay off of the nutjob conspiracy web sites.  The recovery is going slowly but things are not nearly as bad as some people are saying.

So, that elephant??  There are lots of people out there so deep in its "gifts" they can't see the elephant.

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Re: The Best of the Worst
Davos wrote:

 

Hello TD:
Hey, my wife said, "Before you write an article "Why Can't Everyone See The Elephant in the Room"" to ask you if you were kidding or saying that everyone sees the elephant - write about something else.
Thanks in advance, take care

 

Hello TD:

Hey, my wife said, "Before you write an article "Why Can't Everyone See The Elephant in the Room"" to ask you if you were kidding or saying that everyone sees the elephant - write about something else.

Thanks in advance, take care

 

 

 

There is an article over at JSMineset with that title- posted today.

http://jsmineset.com/2010/09/10/the-elephant-in-the-room/

There has been a flurry of proposals this week on how to get the economy growing again.  The President has been giving speeches across the country offering up plans for more infrastructure spending, business tax cuts and credits.  The Republican plan includes keeping all the Bush tax cuts in place and rolling back spending to 2008 levels.  Basically, the Democrats want more stimulus spending and some tax cuts, and the Republicans want more tax cuts and some spending reduction.

 

Davos's picture
Davos
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Re: The Best of the Worst
land2341 wrote:

Davos,  you know I spent the day studying problems one and two like crazy in order to spread this on to others.  Late in the day I got an IM from a friend who works on wall street.  I asked him what he thought of the current state of things and my ongoing concern of a deeper crash.  He practically howled with laughter and told me to stay off of the nutjob conspiracy web sites.  The recovery is going slowly but things are not nearly as bad as some people are saying.

So, that elephant??  There are lots of people out there so deep in its "gifts" they can't see the elephant.

I haven't seen 1 positive economic indicator. At all. I've seen some cooked numbers here and there. I ran into this a few months ago, a client of mine runs a fund for a big investment house. I told him "Explain how it is going to end well to me and I'll give up my 5Gs."

Hope I'm wrong but:

  1. Until they fix the debt and people can work 10 or 11 months for themselves there won't be an economy.
  2. Until they fix the trade/manufacturing and until we stop competing against folks making 2 bucks a day our wages are going to stay stuck at 1973 levels - and that isn't going to pay for stuff with 2010 price tags.

So if your friend can explain how an economy is going to get money with people being enslaved for 8 months and then on their 4 free months going to get money from 1973 wages - I'm ALL ears!!!! This Jim Quinn article explained to me why the economy was doing well a few years ago. The part about Starbucks said it all. Since then Starbucks closed 900 stores.

Davos's picture
Davos
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Re: The Best of the Worst
Ken C wrote:
Davos wrote:

 

Hello TD:
Hey, my wife said, "Before you write an article "Why Can't Everyone See The Elephant in the Room"" to ask you if you were kidding or saying that everyone sees the elephant - write about something else.
Thanks in advance, take care

 

Hello TD:

Hey, my wife said, "Before you write an article "Why Can't Everyone See The Elephant in the Room"" to ask you if you were kidding or saying that everyone sees the elephant - write about something else.

Thanks in advance, take care

 

 

 

There is an article over at JSMineset with that title- posted today.

http://jsmineset.com/2010/09/10/the-elephant-in-the-room/

There has been a flurry of proposals this week on how to get the economy growing again.  The President has been giving speeches across the country offering up plans for more infrastructure spending, business tax cuts and credits.  The Republican plan includes keeping all the Bush tax cuts in place and rolling back spending to 2008 levels.  Basically, the Democrats want more stimulus spending and some tax cuts, and the Republicans want more tax cuts and some spending reduction.

 

Jim Rickards said it well. Put a buck in the washing machine known as the government and Romer is wrong, you don't get 1.50 you get .07 cents. Jim Sinclair is, as usual, right on the gold (read: money that is worth something).

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