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EJ
01-09-09, 10:49 AM
http://www.itulip.com/images/brokepeople.jpgThe Myth of the Slow Crash Revisited

In The Myth of the Slow Crash (http://www.itulip.com/forums/showthread.php?p=15103#post15103) August 2007 we stated: “Just because it's big, doesn't mean an economy can't go down fast. In a debt deflation, the extreme rate of change even fools central bankers.”

Economic data coming out this week reveal an economy in free-fall.

The Stats

Every single working day in the month of December 2008:


190 U.S. companies filed for Chapter 7 or Chapter 11 bankruptcy protection
4,950 Individuals filed for bankruptcy protection
3,100 Homes went into foreclosure
26,190 Jobs were lost and 25,035 workers filed for unemployment insurance

For the year 2008, the $6.9 trillion in lost stock market value among 110 million households represents a per household loss of $62,727. The $6 trillion in lost residential real estate property value nationally in 2008 adds $54,545 per household for a total of $117,272 in lost household asset value in 2008, exceeding by 27% the national household median net worth in 2007 of $86,000. (Losses were concentrated in the middle quintiles aka "the middle class.")

The Old Timer Experts
Q: How is this current economic crisis different than what you've experienced before?

A: This is as big as the big Depression. This is a type of recession/depression that happens usually after the kind of greed sprees which are associated with bubbles.

- Stephen Jarislowsky, 83, founder of investment firm Jarislowsky Fraser Ltd. that manages about $52-billion in assets for pension funds, institutions and private customers, Financial Post, Dec. 29, 2008 (http://www.financialpost.com/news/story.html?id=1123647)

“The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself.” - Former Goldman Sachs chairman John Whitehead, Reuters, Nov. 12, 2008 (http://www.reuters.com/article/Finance08/idUSTRE4AB7HT20081112)
The People


http://www.itulip.com/images/depressionpoll.gif


Since March, the percentage of Americans largely ruling out the possibility of an economic depression in the next two years has shrunk from 40% to 25%, while the percentage saying it is "very likely" has grown from 23% to 35%. Although Americans who predict the worst for the economy remain in the minority, another 39% think a depression is "somewhat likely" to occur. - Gallop, Dec. 2008 (http://www.gallup.com/poll/113509/Idea-Economic-Depression-Becoming-Less-FarFetched.aspx)
Old timers like Jarislowsky and Whitehead foresee economic depression, 74% of Americans believe an economic depression in the next two years is either very or somewhat likely, and the statistics bear it out. Such is the fate of an economy as dependent on credit as the U.S. when the credit suddenly disappears and leaves old debts behind as unemployment rises and incomes decline. Debt deflations are no joke. Beware Relief Rallies (http://www.itulip.com/forums/showthread.php?p=62889#post62889). The US economy glides like a box of rocks. Don't stand under it (http://itulip.com/forums/The%20US%20economy%20glides%20like%20a%20box%20of% 20rocks.%20Don%27t%20stand%20under%20it).

The Culprits

On a more encouraging note, the mainstream press are finally starting to go after a few FIRE Economy (http://www.fireeconomy.com/) bandits.
<nyt_headline version="1.0" type=" "> Nationwide Inquiry on Bids for Municipal Bonds </nyt_headline> (http://www.nytimes.com/2009/01/09/business/09insure.html?hp)
<nyt_byline version="1.0" type=" ">Jan. 9, 2009 (MARY WILLIAMS WALSH - New York Times)</nyt_byline>
<nyt_byline version="1.0" type=" "></nyt_byline>
<nyt_byline version="1.0" type=" "> </nyt_byline> The federal investigation that prompted Gov. Bill Richardson of New Mexico to withdraw his nomination as commerce secretary offers a rare glimpse into a long-simmering investigation of possible bid-rigging, tax evasion and other wrongdoing throughout the municipal bond business.

Three federal agencies and a loose consortium of state attorneys general have for several years been gathering evidence of what appears to be collusion among the banks and other companies that have helped state and local governments take approximately $400 billion worth of municipal notes and bonds to market each year.

E-mail messages, taped phone conversations and other court documents suggest that companies did not engage in open competition for this lucrative business, but secretly divided it among themselves, imposing layers of excess cost on local governments, violating the federal rules for tax-exempt bonds and making questionable payments and campaign contributions to local officials who could steer them business. In some cases, they created exotic financial structures that blew up.

People with knowledge of the evidence say investigators are not just looking at a few bad apples, but also at the way an entire market has operated for years.

“It’s rare to sell a Senate seat, but it’s not rare to sell a bond deal,” said Charles Anderson, who retired as manager of tax-exempt bond field operations for the Internal Revenue Service in 2007. “Pay-to-play in the municipal bond market is epidemic.”
Ever drive down your street and notice the lousy roads and sidewalks but the fine new school buildings, and fire and police stations? Ever wonder why? Road construction comes straight out of tax revenue, but those buildings just might be paid for using bonds floated in insider deals where tax revenue can be leveraged, leaving yet another FIRE Economy liability that will climb onto the backs of tax payers in 2009 and 2010 as local property and income tax revenues plunge and waves of municipal bond defaults mark the next stage of decline of the 1980 to 2006 FIRE Economy.

Most Americans have no idea yet just how broke we all are after if all the debt built up during the FIRE Economy era is finally accounted for, but if we look we can see the evidence everywhere. The challenge for the coming decade is coping with the debt while at the same time transitioning to a more productive and stable economic structure.

(Hat tip to iTuliper don (http://www.itulip.com/forums/member.php?u=1055) for finding the muni story.)

iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™

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BK
01-09-09, 11:14 AM
Another great article.

Any feeling as to when the Public Sector Employees will start to feel the pain.

Everyone I know in the "dreaded" Private Sector is anxious and worried about their financial future. Contrast that with Public Sector Employees I know who may worry a little about the economy, but will describe their own situation as set for life.

So, do you think the Feds will do what ever they have to to keep as many Public Sector Employees 'set for life'. Is there any chance that Municipal bankruptcies lead to elimination of Defined Benefit Pension Plans and are replaced with 401K savings plan?

I just don't see where the Money will come from to pay for the Defined Pension Plans for Government Employees?

don
01-09-09, 01:34 PM
[quote=EJ;70064][wrapright]Ever drive down your street and notice the lousy roads and sidewalks but the fine new school buildings, and fire and police stations? Ever wonder why? Road construction comes straight out of tax revenue, but those buildings are paid for using bonds floated in insider deals where tax revenue can be leveraged, leaving yet another FIRE Economy liability that will climb onto the backs of tax payers in 2009 and 2010 as local property and income tax revenues plunge and waves of municipal bond defaults mark the next stage of decline of the 1980 to 2006 FIRE Economy.

Love that touch, EJ. The shining symbol of over-compensated firemen and school teachers is a hidden fat hog of FIRE. :)

strittmatter
01-09-09, 02:05 PM
How bout we look at the scam that preceeded the scam.

http://www.dentonrc.com/sharedcontent/dws/drc/localnews/stories/DRC_Special_districts_1112.200367a9f.html

Note that:
In order to satisfy the taxing entity creation requirements set forth by the state, developers had to create a mock district with live mock voters. So they dragged trailer houses onto their various raw undeveloped properties and stocked them for the most part with college kids - rent free, in exchange for their mock votes.

The bonds that were later sold by these new districts have been severely downgraded by Fitch.

ax
01-09-09, 02:36 PM
[quote=EJ;70064][wrapright]Ever drive down your street and notice the lousy roads and sidewalks but the fine new school buildings, and fire and police stations? Ever wonder why? Road construction comes straight out of tax revenue, but those buildings are paid for using bonds floated in insider deals where tax revenue can be leveraged, leaving yet another FIRE Economy liability that will climb onto the backs of tax payers in 2009 and 2010 as local property and income tax revenues plunge and waves of municipal bond defaults mark the next stage of decline of the 1980 to 2006 FIRE Economy.

Love that touch, EJ. The shining symbol of over-compensated firemen and school teachers is a hidden fat hog of FIRE. :)

Better hope that your house doesn't catch fire, don.

FRED
01-09-09, 03:13 PM
[quote=EJ;70064][wrapright]Ever drive down your street and notice the lousy roads and sidewalks but the fine new school buildings, and fire and police stations? Ever wonder why? Road construction comes straight out of tax revenue, but those buildings are paid for using bonds floated in insider deals where tax revenue can be leveraged, leaving yet another FIRE Economy liability that will climb onto the backs of tax payers in 2009 and 2010 as local property and income tax revenues plunge and waves of municipal bond defaults mark the next stage of decline of the 1980 to 2006 FIRE Economy.

Love that touch, EJ. The shining symbol of over-compensated firemen and school teachers is a hidden fat hog of FIRE. :)

The teachers in the schoolhouse, the firemen in the firehouse, and the policemen in the police station are good uses of tax money.

The issue is the incremental debt payment on bonds floated to build a gigantic high school campus where a modest schoolhouse is needed, a five story fire station where a two story building will do, and a beautifully architected, waterfront courthouse where a more modest structure on less rarefied land is more appropriate.

necron99
01-09-09, 03:16 PM
To Don...

The shining symbol of over-compensated firemen and school teachers is a hidden fat hog of FIRE. :)
I'm not a teacher or fireman, but with respect I must point out that a shiny new building is not the same thing as an "overpaid" fireman or teacher. The article describes the bond market as "pay-to-play," do you really think the rank and file employees see any of that money? Ya wanna talk about overpaid superintendents and University presidents, that's another thing entirely, but I don't think rank-and-file teachers and firemen have it any easier than, say, Engineers or carpenters.

Ya wanna talk about an overpaid "hidden fat hog of FIRE," come visit Mexico sometime, where Doctors are paid at about the same low level as schoolteachers... because (i) the State pays their tuition debts, so the doctors don't have that particular excuse for demanding money; and (2) both professions are considered equally life-critical. Meanwhile my doctor in the States gets paid six figures for glancing at my medical chart five minutes before my appointment and then telling me that exercise and diet will cure all my problems; then phoning-in a similar performance for the other 600 patients he's scheduled to see that day, while his interns and nurses do all the actual work.

LargoWinch
01-09-09, 03:17 PM
For the year 2008, the $6.9 trillion in lost stock market value among 110 million households represents a per household loss of $62,727. The $6 trillion in lost residential real estate property value nationally in 2008 adds $54,545 per household for a total of $117,272 in lost household asset value in 2008, exceeding by 27% the national household median net worth in 2007 of $86,000. (Losses were concentrated in the middle quintiles aka "the middle class.")


This is a real eye opener regarding the scale of the economic devastation we are witnessing.

I assume here that the article refers to the nominal loss, which is even more discouraging when I try to think of it in real terms. Shivers are running down my spine when I do.

I am puzzled by one thing however: is it fair to assume that the upper class is also being heavily affected by the crisis? I am saying this, because I suspect they are owners of a significant portion of equities and real estate property.


PS to Ed. and crew: It appears that the following link as per quoted in the article: "The US economy glides like a box of rocks. Don't stand under it (http://itulip.com/forums/The%20US%20economy%20glides%20like%20a%20box%20of% 20rocks.%20Don%27t%20stand%20under%20it)" is broken.

necron99
01-09-09, 03:21 PM
comment removed

ax
01-09-09, 03:29 PM
[quote=don;70083]

The teachers in the schoolhouse, the firemen in the firehouse, and the policemen in the police station are good uses of tax money.

The issue is the incremental debt payment on bonds floated to build a gigantic high school campus where a modest schoolhouse is needed, a five story fire station where a two story building will do, and a beautifully architected, waterfront courthouse where a more modest structure on less rarefied land is more appropriate.

California is finding this out firsthand....

"Just $5 million of work is needed to complete a new California Court of Appeals building in Santa Ana. The state may not have the money, and come July judges may be writing opinions in their living rooms."

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a5GbgGwA7BKM

don
01-09-09, 03:55 PM
[quote=don;70083]

Better hope that your house doesn't catch fire, don.

You managed to completely misunderstand my comment.
Congratulations :)

don
01-09-09, 04:07 PM
To Don...

I'm not a teacher or fireman, but with respect I must point out that a shiny new building is not the same thing as an "overpaid" fireman or teacher. The article describes the bond market as "pay-to-play," do you really think the rank and file employees see any of that money? Ya wanna talk about overpaid superintendents and University presidents, that's another thing entirely, but I don't think rank-and-file teachers and firemen have it any easier than, say, Engineers or carpenters.

Ya wanna talk about an overpaid "hidden fat hog of FIRE," come visit Mexico sometime, where Doctors are paid at about the same low level as schoolteachers... because (i) the State pays their tuition debts, so the doctors don't have that particular excuse for demanding money; and (2) both professions are considered equally life-critical. Meanwhile my doctor in the States gets paid six figures for glancing at my medical chart five minutes before my appointment and then telling me that exercise and diet will cure all my problems; then phoning-in a similar performance for the other 600 patients he's scheduled to see that day, while his interns and nurses do all the actual work.

Talk about being misread, not once but serially.

Emails can be tough at times to discern the tone and color. I understand that.

My comment was not meant in any way to denigrate the firemen or school teachers. It was meant as a comment on FIRE's never tired of wanting to cut salaries, pensions, benefits, etc of people just like firemen and school teachers- you guys think I'm not aware that working people's pensions haven't been raped and pillaged by the scams and frauds of FIRE- and low and behold, these same FIRE men are in up to their shoulders in rigging the public trough. Hope that clears up my one liner. Perhaps it ignited, however inadvertantly, an emotional response to the thread of what I can only characterize as a visceral hatred of working people that some of our Libertarian members keep ready and lit for all occasions. Rampant militarism, a totalitarian state, a corrupt-to-the bone government, a casino economy, and their evergreen primary fear- UAW workers have negotiated a partial shield against the depradations of the FIRE economy's fangs that are sunk into healthcare. Maybe that was it ;)

lakedaemonian
01-09-09, 04:32 PM
Another great article.

Any feeling as to when the Public Sector Employees will start to feel the pain.

Everyone I know in the "dreaded" Private Sector is anxious and worried about their financial future. Contrast that with Public Sector Employees I know who may worry a little about the economy, but will describe their own situation as set for life.

So, do you think the Feds will do what ever they have to to keep as many Public Sector Employees 'set for life'. Is there any chance that Municipal bankruptcies lead to elimination of Defined Benefit Pension Plans and are replaced with 401K savings plan?

I just don't see where the Money will come from to pay for the Defined Pension Plans for Government Employees?

I think a big part of the next leg of the downward spiral will include local/state retirees that get thrown under the unsustainable bus.

necron99
01-09-09, 04:36 PM
Talk about being misread, not once but serially. Emails can be tough at times to discern the tone and color. I understand that. My comment was not meant in any way to denigrate the firemen or school teachers. It was meant as a comment on FIRE's never tired of wanting to cut salaries, pensions, benefits, etc of people just like firemen and school teachers-

Apologies.
Nice recovery.

Basically you're right that some of us hear too much of this meme that the lowest-paid, least powerful public servants (just like unionized auto workers) are somehow to blame for trillions upon trillions of dollars of economic troubles which only upper management could create. I reacted with a hair-trigger.

Just for the record, I found it hard to tell from your post that you were using the word "symbol" in a sarcastic, facetious way, i.e. a "scapegoat" which doesn't represent reality. It sounded like you were using "symbol" as "exemplar". Scare quotes around 'symbol', or maybe a wink-smiley instead of a full smiley, might have done the trick.

There are too many iTulipers for me to keep track of which avatar has which political leanings, so I mistook you for one of the Rothbard-type Libertarians we occasionally see on these pages... I offer my apologies.

BK
01-09-09, 04:43 PM
I agree good Teachers, Firemen, and Police are key to order in society. But, when these Defined Benefit Pensions were designed the System Could Count on most Retirees dropping Dead by 75 years( or even younger) or so. How does the System Fund Pensions when most Retirees live way past 75 year.

The FIRE System allowed for greater and great improvements in wages/benefits for Public Employees. Anyone heading a Public Pension Fund will need magical abilities to generate the Cash flow to meet these entitlements. The Tax Revenues generated by Real Estate, Finance, and Insurance created a false sense of financial security that made for dramatic improvements in Pay for all Public Employees during the last 20-25 years.

No were are stuck with a Wage and Benefits system that can't be funded.

FRED
01-09-09, 05:31 PM
Apologies.
Nice recovery.

Basically you're right that some of us hear too much of this meme that the lowest-paid, least powerful public servants (just like unionized auto workers) are somehow to blame for trillions upon trillions of dollars of economic troubles which only upper management could create. I reacted with a hair-trigger.

Just for the record, I found it hard to tell from your post that you were using the word "symbol" in a sarcastic, facetious way, i.e. a "scapegoat" which doesn't represent reality. It sounded like you were using "symbol" as "exemplar". Scare quotes around 'symbol', or maybe a wink-smiley instead of a full smiley, might have done the trick.

There are too many iTulipers for me to keep track of which avatar has which political leanings, so I mistook you for one of the Rothbard-type Libertarians we occasionally see on these pages... I offer my apologies.

In the blogosphere these matters are usually argued as "four legs good, two legs bad" so it's easy to assume that anyone who is for small government automatically thinks poorly of public servants.

In that vein we are thinking of starting a section in the new iTulip called, Who said this? For example:
Though he may be little versed in the things of this world, it can hardly have escaped the Montesquieu of Cologne that "new inventions" and commercial crises are features just as permanent as Prussian ministerial decrees and legal basis. New inventions, especially in Germany, are only introduced when competition with other nations makes it vital to introduce them; and should the newly arising branches of industry be expected to ruin themselves in order to render assistance to the declining ones. The new industries that come into being as a result of inventions come into being precisely because they can produce more cheaply than the declining industries. What the deuce would be the advantage if they had to feed the declining industries? But it is well known that the state, the government, only seems to give. It has to be given first in order to give. But who should do the giving, Montesquieu LVI? The declining industry, so that it decline even faster? Or the rising industry, so that it wither on the stem? Or those industries that have not been affected by the new inventions, so that they go bankrupt because of the invention of a new tax? Think it over carefully, Montesquieu LVI!

And what about the commercial crises, my dear man? When a European commercial crisis occurs the Prussian state is above all anxious to extract the last drops, by means of distraint, etc., from the usual sources of revenue. Poor Prussian state! In order to neutralize the effect of commercial crises, the Prussian state would have to possess, in addition to national labor, a third source of income in Cloud- Cuckoo-Land.
Who said this?

a. Murray N. Rothbard
b. Ludwig von Mises
c. John Stuart Mill
d. Jean-Baptiste Say
e. Karl Marx
(Hat tip to Shakespear (http://itulip.com/forums/member.php?find=lastposter&t=7320) for the idea.)

jimmygu3
01-09-09, 05:53 PM
Apologies.
Nice recovery.

Basically you're right that some of us hear too much of this meme that the lowest-paid, least powerful public servants (just like unionized auto workers) are somehow to blame for trillions upon trillions of dollars of economic troubles which only upper management could create. I reacted with a hair-trigger.

Just for the record, I found it hard to tell from your post that you were using the word "symbol" in a sarcastic, facetious way, i.e. a "scapegoat" which doesn't represent reality. It sounded like you were using "symbol" as "exemplar". Scare quotes around 'symbol', or maybe a wink-smiley instead of a full smiley, might have done the trick.


I misunderstood don's original comment, too. It's funny but true that quotes or a different smiley choice would have avoided all this misinterpretation. I initially hated smilies, but I have realized that they are a necessary thing, since the reader often has no idea what your tone and emotion are, especially with very dry sarcasm.

Jimmy

tree
01-09-09, 06:12 PM
This thread....the Tulip at its best....:)

necron99
01-09-09, 08:15 PM
In that vein we are thinking of starting a section in the new iTulip called, Who said this? For example:
[truncated]...third source of income in Cloud- Cuckoo-Land.
Who said this?
a. Murray N. Rothbard
b. Ludwig von Mises
c. John Stuart Mill
d. Jean-Baptiste Say
e. Karl Marx
(Hat tip to Shakespear (http://itulip.com/forums/member.php?find=lastposter&t=7320) for the idea.)

I love the idea! Great! It ought to be a sticky thread somewhere, so that it has its own exclusive page and is easy to find. Please announce it somewhere so that I don't have to go combing through the entire Forum.

As for the actual question... I'll go for broke and guess Karl Marx! It's just a guess, though, I suppose it wouldn't be sporting to try and Google the quote. The others don't strike me as quite, quite the right time-period.

Here's one I've always liked:


"One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this guy is going to offer to bet you that he can make the jack of spades jump out of this brand-new deck of cards and squirt cider in your ear. But, son, do not accept this bet, because as sure as you stand there, you're going to wind up with an ear full of cider."Who Said This?
a) Eliot Spitzer
b) Warren Buffett
c) Sky Masterson
d) Joey Soprano
e) John F. Kennedy

...too easy??

Chief Tomahawk
01-09-09, 08:17 PM
Just thought I'd pass along a remarkable sight today. The CVS Pharmacy on my way to work, has long had the same type of sign a gas station has except it's for a gallon of milk. Forever and a day it's said "$2.99". Now it says "$2.79". Could prices of everyday items be heading lower?

ax
01-09-09, 08:50 PM
[quote=ax;70092]

You managed to completely misunderstand my comment.
Congratulations :)

I believe the word is sarcasm. But now I see your explanation and subsequent apologies so I guess I wasn't alone. Congratulations.

amitsaluja
01-09-09, 09:08 PM
Here in Dallas, Milk at Kroger is also down from 2.50 to 2.25. But Gas which had gone below 1.50 is now up again to 1.72.

audrey_girl
01-09-09, 09:22 PM
I love the idea! Great! It ought to be a sticky thread somewhere, so that it has its own exclusive page and is easy to find. Please announce it somewhere so that I don't have to go combing through the entire Forum.

As for the actual question... I'll go for broke and guess Karl Marx! It's just a guess, though, I suppose it wouldn't be sporting to try and Google the quote. The others don't strike me as quite, quite the right time-period.

Here's one I've always liked:

Who Said This?
a) Eliot Spitzer
b) Warren Buffett
c) Sky Masterson
d) Joey Soprano
e) John F. Kennedy

...too easy??

(f) Nicely Nicely Johnson
:D

metalman
01-09-09, 09:55 PM
karl. the prussia references kinda give it away, no?

on the second one, is joey kennedy an option?

tree
01-10-09, 08:20 AM
Just thought I'd pass along a remarkable sight today. The CVS Pharmacy on my way to work, has long had the same type of sign a gas station has except it's for a gallon of milk. Forever and a day it's said "$2.99". Now it says "$2.79". Could prices of everyday items be heading lower?

Milk is a loss leader--gets folks in the door at stores like CVS. Other stuff going up very soon, I think.

vinoveri
01-10-09, 05:19 PM
There are too many iTulipers for me to keep track of which avatar has which political leanings, so I mistook you for one of the Rothbard-type Libertarians we occasionally see on these pages... I offer my apologies.

Well Mr. T., nothing like a stereotypical categorization to get the bullits flying - hey maybe he's one of those wackos who believe liberty is a fine ideal, perhaps one of the finest - so we know where he's comin from ... attack and crush! we can't have the people out thinking they are free and don't need the nanny state - what would we ever do if the people started thinking this way, all those millions of bureaucratic jobs lost, oh no.:p

Policeman, Fireman, and School Teachers (and Dr.s and nurses too) are always needed and valued because they are local and we all need them. What we don't need are U.S. secretaries of education, labor, health, and the like foisting tand forcing heir half-baked theories on the rest of us.

Aristotle defined virtue as the golden mean between two extremes, both vices with one vice more deadly than the other. To stretch an analogy to economic systems, with all the perceived problems of "extreme" libertarianism, communism which is the other extreme is much much worse. Western culture has been a hallmark example of man's attempt to throw off the yolk of tyranny, in both daily economic life, political, philosophical and religious thought. But government's always grow in power, and never do they cede it, and they always ended in some form of demise, violent overthrow or not. So a good, but albeit still imperfect, attempt at the golden mean gov, say the democratic republic of the U.S. of 1790 has evolved (or devolved depending on your perspective) into something which I would venture to suppose is only dimly recognizable to founders like Washington and Jefferson. The 10th amendment is effectively dead letter and the government is out of control, (notwithstanding the building of the panama canal, landing a man on the moon, and all the other great achievments that have been accomplished).

While you and others may disagree with Rothbard type libertarianism (and I for one and not a 'disciple' either), at least his views are self consistent and are based on an underlying set of core principles and systematic thought - which to me is an admirable quality and much more refreshing than the typical "I want whatever works best for me" attitude that is more commonly seen and heard.

don
01-10-09, 05:54 PM
Another crash site. Nearly a 100 airports have closed in smaller cities and towns in the last 2 years. Residents have to drive 100+ miles to get to the nearest operating airport. This loss means ending a municipal income stream, ditto airport-dependent businesses, tourism in general, and local businesses that require business travel will relocate.

Were all those convenient airports before de-regulation an affluence mirage. Is airline concentration the rational, only viable future. Will air travel be primarily for business, with families saving for years for a trip? Will there be an impact on how far families live from one another?

Will there be air service to Jackalopes :rolleyes:

http://www.nytimes.com/2009/01/10/business/economy/10airports.html?ref=business

dcarrigg
01-10-09, 10:58 PM
Another great article.

Any feeling as to when the Public Sector Employees will start to feel the pain.

Everyone I know in the "dreaded" Private Sector is anxious and worried about their financial future. Contrast that with Public Sector Employees I know who may worry a little about the economy, but will describe their own situation as set for life.

So, do you think the Feds will do what ever they have to to keep as many Public Sector Employees 'set for life'. Is there any chance that Municipal bankruptcies lead to elimination of Defined Benefit Pension Plans and are replaced with 401K savings plan?

I just don't see where the Money will come from to pay for the Defined Pension Plans for Government Employees?

It will not come from anywhere. These defined benefit plans are being phased out, and they are changing deals after the fact. State law is somewhat more easily altered during 'fiscal emergencies.' Normal special interests loose power when a budget must be balanced by the end of the year.

http://www.wpri.com/dpp/news/local_wpri_ri_pension_reform_plan_budget_proposal_ 20090108

Jay
01-10-09, 11:53 PM
Another great article.

Any feeling as to when the Public Sector Employees will start to feel the pain.

Everyone I know in the "dreaded" Private Sector is anxious and worried about their financial future. Contrast that with Public Sector Employees I know who may worry a little about the economy, but will describe their own situation as set for life.

So, do you think the Feds will do what ever they have to to keep as many Public Sector Employees 'set for life'. Is there any chance that Municipal bankruptcies lead to elimination of Defined Benefit Pension Plans and are replaced with 401K savings plan?

I just don't see where the Money will come from to pay for the Defined Pension Plans for Government Employees?
I work in a blue collar community Emergency Department in the Northeast, beside that fact that the hospital is insolvent, the town is about to slash police and fire department jobs and benefits to make the books balance. Many hardworking people who have had good jobs for over a decade will be out of work.

Scot
01-11-09, 01:28 AM
Another crash site.

Were all those convenient airports before de-regulation an affluence mirage.


Those living at smaller regional airports were being supported by the affluent in other cities.

After deregulation, they lost their subsidy. This had the effect of a tax reduction on fares, increasing affordability and allowing greater numbers of people, overall, to fly.

So yeah, they were a mirage.

oddlots
01-11-09, 02:14 AM
Karl Marx is my guess. And Sky Masterson to Necron. (Too easy: google search.)

LargoWinch
01-11-09, 03:26 PM
I work in a blue collar community Emergency Department in the Northeast, beside that fact that the hospital is insolvent, the town is about to slash police and fire department jobs and benefits to make the books balance. Many hardworking people who have had good jobs for over a decade will be out of work.

Jay, wait until PPPs arrive in the US.

I suspect public infrastructure will rock and lots will be employed in that sector.

Again, in the US I understand that most hospitals are private, thus results may vary...

ThePythonicCow
01-11-09, 05:57 PM
Jay, wait until PPPs arrive in the US.
Pray tell, what is a "PPP" ? A Precision Plumbing Product ?

LargoWinch
01-11-09, 06:49 PM
Pray tell, what is a "PPP" ? A Precision Plumbing Product ?

My apologies PythonicCow; PPP stands for Public, Private, Partnership.

Huge in UK, Australia and starting in Canada.

I believe - and EJ refers to this in his latest article - that this will be one way to "inflate" out of this debt.

dcarrigg
01-11-09, 07:22 PM
My apologies PythonicCow; PPP stands for Public, Private, Partnership.

Huge in UK, Australia and starting in Canada.

I believe - and EJ refers to this in his latest article - that this will be one way to "inflate" out of this debt.

They are already present in the US. They are also growing with the advent of economic development assistance $ from the federal government. See the National Council for Public Private Partnerships website. (http://www.ncppp.org/)

Slimprofits
01-11-09, 10:28 PM
They are already present in the US. They are also growing with the advent of economic development assistance $ from the federal government. See the National Council for Public Private Partnerships website. (http://www.ncppp.org/)

PPPs to the rescue of the 42 states facing budget shortfalls in 2009 and 2010. (http://itulip.com/forums/showthread.php?t=7168)

FRED
01-11-09, 10:40 PM
They are already present in the US. They are also growing with the advent of economic development assistance $ from the federal government. See the National Council for Public Private Partnerships website. (http://www.ncppp.org/)

Who could have known?

"Supporting this alternative-energy bubble will be a boom in infrastructure—transportation and communications systems, water, and power. In its 2005 report card, the American Society of Civil Engineers called for $1.6 trillion to be spent over five years to bring the United States back up to code, giving America a grade of “D.” Decades of neglect have put us trillions of dollars away from an “A.” After last August’s bridge collapse in Minnesota, it took only a week for libertarian Robert Poole, director of transportation studies for the Reason Foundation, to renew the call for “highway public-private partnerships funded by tolls,” and for Hillary Clinton to put forth a multibillion-dollar “Rebuild America” plan."

- The next bubble (http://www.harpers.org/archive/2008/02/0081908), Feb. 2008

ThePythonicCow
01-11-09, 11:10 PM
PPP stands for Public, Private, Partnership.

Thanks for the explanation. Yes - PPP and similar such entanglements between the public and private spheres would seem to be a major trend in the United States.

The Wiki page for public-private partnership http://en.wikipedia.org/wiki/Public-private_partnership lists the Federal Reserve as an example of a PPP in the United States.

The new equity and debt positions being taken by the Fed or Treasury in formerly private, currently distressed firms would seem to be a related phenomenon.

The likely upcoming nationalization of health care in the United States seems related as well.

As I noted in another post yesterday, I predicted that national socialization of a wide swath of formerly private sectors of the economy would form the new basis for the U.S. currency. We used to have gold, then Treasury bills, as the redemption basis for the dollar. Treasuries are in their final blow-off now. The Banksters are working overtime to change this basis to holdings in America's businesses. Foreign holders of big piles of Treasuries will end up owning chunks of America, for a sweet price if they play their cards well. The dollar bill will become one share in the worlds largest ETF. The federal government will own controlling interest in, or have dominating regulatory control over, all major sectors of the American economy.

(Just beware that like media personalities, I make new predictions frequently, and turn a deaf ear to complaints that prior predictions failed. ;) )

necron99
01-11-09, 11:24 PM
Policeman, Fireman, and School Teachers (and Dr.s and nurses too) are always needed and valued because they are local and we all need them. What we don't need are U.S. secretaries of education, labor, health, and the like foisting and forcing their half-baked theories on the rest of us.

...communism which is the other extreme is much much worse....

So a good, but albeit still imperfect, attempt at the golden mean gov, say the democratic republic of the U.S. of 1790 has evolved (or devolved depending on your perspective) ... the government is out of control... While you and others may disagree with Rothbard type libertarianism (and I for one and not a 'disciple' either), at least his views are self consistent and are based on an underlying set of core principles and systematic thought - which to me is an admirable quality and much more refreshing than the typical "I want whatever works best for me" attitude that is more commonly seen and heard.

So the minute I stick up for rank-and-file firemen and schoolteachers, I get called a Communist? Perchance did you actually read my comment? I did say that the rank-and-file are unfairly blamed for "problems that only upper management", e.g. Secretaries of Labor, Education, or perhaps Central Bankers and CEOs for example, "could create." :confused:

I kinda thought the "I want whatever works best for me" attitude was the basic foundation of Individualism, Capitalism, and Libertarianism. Correct me if I'm wrong there. So, ummmm, if what I happen to want is an organized system of firemen and schoolteachers instead of a patchwork pay-for-play one, I guess that makes me a Communist. Fine, I'll accept the label.

But, having been called "un-American" so many times to my face in the past, it always amuses me how my political opponents can heap praise on America and then turn on it like vipers in the next breath. Are you implying that Murray Rothbard's work was "self consistent and are based on an underlying set of core principles and systematic thought" -- but the tens of thousands of word penned by the Founding Fathers about constitutional representative Democracy are not? Are you implying that the centuries of philosophy they incorporated by citation, stretching from the French back to the Greeks and Romans, don't count as "systematic thought"? The Founding Fathers didn't just talk about liberty and independence, ya know, they wrote quite a bit about how to maintain those things, via a massive, oppressive monopoly-of-force agency called a 'government'. Libertarians read their work just as selectively as "fundamentalists" quote the Bible. The Founding Fathers might well be surprised at what the U.S. looks like today -- but if it is indeed "out of control", and I happen to believe that the system of checks and balances they set up might be used to repair it and update it rather than trashing it, that makes me an Enemy of Liberty?

Feh, I used to waste enormous amounts of time on discussions like this, but I ain't got the time this week. I know very well where this is going. When you say you stick to "core principles and systematic thought," I will then accuse you of preferring a Utopian economic model to real-life practicality. When I insist that my mind is open to new theories and evidence, that I'm pragmatic, you will accuse me of being unprincipled ("whatever works best for me"). When I cite some humanistic principles as goals of my pragmatism, we will then switch places: you'll accuse me of being Utopian, while insisting that a "pragmatic" view of human nature leads you back to Libertarianism. Start over at square 1. Well, with respect Sir, feel free to continue spinning your wheels, but I gotta log off the site and go earn my rent for the week...

Uno
01-12-09, 02:37 AM
This public vs. private employee issue is very interesting. In a way it came about because of socialist policies put in place during the last great depression. So now what? More socialist policies, is that even possible?

Public employees have gamed the system for a long, long time. The well is now dry and the private sector paying the bills are unemployed and unhappy.

Once those in the public sector start to live better then those in the private, then perhaps that is the road towards communism people are talking about or some wierd latin American style socialism.

One can only hope Americans wake up long enough to replace all local governments with libertarians.

and my guess is that if Obama throws money directly at the public sector, then that will be the end of his presidency, 1 term president.

Charles Mackay
01-12-09, 02:03 PM
Just for some contrary opinion, Louis-Vincent Gave was quoting Galbraith's three phases to a bear market

First: asset prices fall
Second: bank credit contracts
Third: all the crooks are found out Satayam, Madoff etc. etc.

By his reckoning (not mine) we are in the third phase similar to 2002 when Enron was exposed. He's an optimist by nature and has explained how much better off the US is for having platform companies that mfg in China than the Chinese are with the actual plants (Apple's ipod city for instance)... i.e., Apple makes much more money from the process than the Chinese.

Jim Nickerson
01-12-09, 03:03 PM
Just for some contrary opinion, Louis-Vincent Gave was quoting Galbraith's three phases to a bear market

First: asset prices fall
Second: bank credit contracts
Third: all the crooks are found out Satayam, Madoff etc. etc.

By his reckoning (not mine) we are in the third phase similar to 2002 when Enron was exposed. He's an optimist by nature and has explained how much better off the US is for having platform companies that mfg in China than the Chinese are with the actual plants (Apple's ipod city for instance)... i.e., Apple makes much more money from the process than the Chinese.

I don't know how long it takes to find out all the crooks. We are getting toward 9 years from the 2000 tops and today even I received another (must be the 25th to 30th) class-action participation filing form for stocks I owned in 2000-2002. I don't know if the lawyers really have valid suits, or whether they have just succeeded in black mailing some of these companies into coughing up dough to prevent going to court.

So if what is happening with the current crash has a lot or even some to do with illegalities or assumed illegalities, if history is a guide, it will be near a decade before all the legal crap is resolved.

I quit filing these forms as the usual return to me was spit, compared to my losses, and the only ones I suspect making serious money are the lawyers.

jk
01-12-09, 03:46 PM
Just for some contrary opinion, Louis-Vincent Gave was quoting Galbraith's three phases to a bear market

First: asset prices fall
Second: bank credit contracts
Third: all the crooks are found out Satayam, Madoff etc. etc.

By his reckoning (not mine) we are in the third phase similar to 2002 when Enron was exposed. He's an optimist by nature and has explained how much better off the US is for having platform companies that mfg in China than the Chinese are with the actual plants (Apple's ipod city for instance)... i.e., Apple makes much more money from the process than the Chinese.
he left out lather, rinse, REPEAT.
a new leg down will expose the next group of crooks.

Charles Mackay
01-12-09, 03:55 PM
he left out lather, rinse, REPEAT.
a new leg down will expose the next group of crooks.

Good Point JK... 2000-2002 was the first rep of lather and rinse and now we are in the second. My hope is that the naked short sellers and their collusion with banks will be the third...

Slimprofits
01-22-09, 03:03 PM
Ever drive down your street and notice the lousy roads and sidewalks but the fine new school buildings, and fire and police stations? Ever wonder why? Road construction comes straight out of tax revenue, but those buildings just might be paid for using bonds floated in insider deals where tax revenue can be leveraged, leaving yet another FIRE Economy liability that will climb onto the backs of tax payers in 2009 and 2010 as local property and income tax revenues plunge and waves of municipal bond defaults mark the next stage of decline of the 1980 to 2006 FIRE Economy.

EJ, Even worse than a school or a fire station though are the stadiums. As if we all didn't need another reason to hate the Yankees (http://news.google.com/news?rlz=1C1CHMQ_enUS308US308&sourceid=chrome&q=yankees%20muni%20bonds&um=1&ie=UTF-8&sa=N&tab=wn).