FIRE Economy Explosion Fallout -- Part I: Recession ends, depression begins - Eric Janszen

[flintlock]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

We are living in an age of moral midgets. People who would have been shunned twenty+ years ago by society at large are now popular celebrities and political officeholders. And many wealthy people - some that I know - have no wish to even look at the disparity all around them, much less seek to help formulate a solution. Maybe there isn't one, but it should concern them. Our society is apathetic, dependant, coarser, greedier, overfed and overindulged, and I fear altogether unprepared for the hurricane that is likely bearing down on us. There is a spiritual quality to stable societies as well as a material one, and I fear we've lost it.

Preach on brother

Agree. That's what I've been saying for a long time. A lot of America's problem is a moral issue though that isn't popular to talk about these days. Some think you can throw out morals and let reason and knowledge take its place. It never works.

[flintlock]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

I've noticed Mega posts getting longer also. Nice.

Good point rjwjr, we were mostly all Brits back when the sleaziest deals were struck with the Indians.

But I have to agree with Mega that more recent American business dealings bring to mind the term " lying weasels". But we lie to ourselves every bit as much as we do to other countries. Its not like its a nationalistic thing.

[cindykimlisa]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins



We are living in an age of moral midgets. People who would have been shunned twenty+ years ago by society at large are now popular celebrities and political officeholders. And many wealthy people - some that I know - have no wish to even look at the disparity all around them, much less seek to help formulate a solution. Maybe there isn't one, but it should concern them. Our society is apathetic, dependant, coarser, greedier, overfed and overindulged, and I fear altogether unprepared for the hurricane that is likely bearing down on us. There is a spiritual quality to stable societies as well as a material one, and I fear we've lost it.

Preach on brother

[jiimbergin]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Thats a bit of a joke these days though, the way things are currently set up its almost impossible for a board to dictate earnings for many of the CEO's/CFO's. These people get almost anything they want these days, golden parachutes included.

This is exactly what I experienced (BTW I did get a golden parachute since the big boys did and, of course, I did not turn it down)

jim

[mesyn191]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Then what does explain it?

The FIRE economy. More specifically the changes that have been made since at least the Regan era (I'd argue things really started to change for the worst with Nixon) that have more and more favored the rich, while being promoted as being otherwise. The middle/poor are now the rentier class, wealth is extracted from them to support the system and enrich the few, its neo-feudalism as has been noted by others like Hudson.

The money will eventually flow to the more capable earners no matter how many times you hand some back to the less capable earners.

The same way the wealth flowed to Madoff or the guys who ran AIG-FP or the union workers at Chrysler? Anything to make a profit right?

This is strictly your opinion.

Its got some basis in reality though. After all, did this hypothetical CEO/CFO really earn the money or did he/she just take advantage of stupidity/imbalances in the market? Is profit the sole measure of worth/value?

It's up to the Board/owners of that company to decide how much that CEO/CFO is worth.

Thats a bit of a joke these days though, the way things are currently set up its almost impossible for a board to dictate earnings for many of the CEO's/CFO's. These people get almost anything they want these days, golden parachutes included.

So, who are you mad at and who do you think should change this?

I was just giving an example of how much things have changed for the middle/poor class over the decades, you seemed unaware of it if not flat out unsympathetic, I was unsure of which but I guess we know now don't we?

Should the government nationalize homebuilders and, via taxes on the "rich", build all of us a McMansion?

No, I think they should let them all fail, same thing goes for the banks and financial companies.

[touchring]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

I have a feeling that period will be retroactively called "The Medium Depression". :eek:

Is this really the depression, i don't see it yet, not at least in the asia pacific region, there is far too much hot money and liquidity flowing in from the west, and from china.

The 2002-2003 recession is far worst than the current one at least till today. I don't know about next year though.

[sgominator]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

the ten-year period between 1930 and 1940 that came to be known as The Great Depression.

I have a feeling that period will be retroactively called "The Medium Depression". :eek:

[lurker]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

there has always been a wide distribution of abilities within society, but the inequality of the distribution of wealth has varied. thus, varying abilities is not an adequate explanation of wealth distribution.

there are both policies and social norms which feed into the wealth distribution. the recent skew is as large as that in 1929, iirc- what a coincidence! it is a product of the financialization of the american economy, on the one hand, and the global labor arbitrage, on the other.

I agree.

I think there are two main things that causes inequality of income and where the US has strayed far from the optimum over the past 30 years:

1) The rich have become too greedy and too arrogant in believing that only those in the top percentiles of income are "wealth creators".
This fails to recognize that the "wealth creators" would not be able to create said wealth if noone supplied their water, electric, gas, and took their trash and treated their sewage. By starving those in less skilled profession the "wealth creators" risk destroying the infrastructure that allows them to create wealth. We all stand on one another's shoulders when we do what we do.

I see this failing as a social problem: a disintegration of a society that views its future somewhat collectively (we really are all in this together) into a society of dog eat dog. We know that humans are a successful species precisely because of our abilities to communicate and cooperate. The more we go it alone the less successful we will be.

2) Partially resulting from 1) changes in tax policy that reward existing wealth much more greatly than work. The campaign to abolish the estate tax is an example. The USA has become a rentier economy and that guarantees sclerosis of innovation and production of true wealth.

The solution: time IMO. These things cannot be fixed, but they fix themselves over the generations, only to then repeat in future generations as past lessons are forgotten.

[Rajiv]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

One could easily argue that wealth flows towards the rich due to their arrogance, dishonesty, and unethical behavior. Does Bernie Madoff, the geniuses that brought us MBS', CDO's, CDS's ring a bell? The disaster we now face wasn't created by the "other half".

Some here (at itulip forums) would argue that the shepherd has a right to fleece his flock.

[we_are_toast]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Sorry, but I honestly am not sure of the point you are making. I have the gut feeling that we disagree, but you don't even explain why you highlighted some of my passages and opinions, some more than others. If you'd like to articulate your position or objections then I'll try my best to expand on my arguments and opinions.

The arrogance of the implication that rich people posses such traits as "intelligence", "discipline", "drive/ambition", and thus causing wealth to flow their way, suggests that poor people are poor because they are ignorant, undisciplined, and lazy, and deserve their lot in life. To imply such a thing, suggests such a lack of understanding of the "other half" that some would exclude intelligence as a characteristic of the implier.

If you ask people to name the most intelligent people in history, you get scientists, philosophers, writers... but you seldom here businesspeople. This seems to suggest that dedicating ones life to the accumulation of material goods is not looked upon as an intelligent endeavor.

A 2008 Gallup poll ranking honesty/ethics in professions, ranks Business executives (often associated with rich people) near the bottom of the list, below congressman, Lawyers, and labor union leaders, and a couple ticks above car salesman.

One could easily argue that wealth flows towards the rich due to their arrogance, dishonesty, and unethical behavior. Does Bernie Madoff, the geniuses that brought us MBS', CDO's, CDS's ring a bell? The disaster we now face wasn't created by the "other half". But since this is off topic for this thread, I certainly won't make that argument here.

I hope the topic can get back to well reasoned analysis, rather than how the rich are rich due to their superior character.

[jiimbergin]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

"This doesn't come anywhere near to explaining away the disparity in wealth redistribution that has taken place at an ever increasing level since the 1970's though."

Then what does explain it? The money will eventually flow to the more capable earners no matter how many times you hand some back to the less capable earners.

Part of the explaination is greed and power. I was an insurance executive. Usually the number 2 or 3 in several companies. What I saw was the CEO and President using what I called GABA ( Generally accepted Bonus accounting). What bonus they would get each year was the driving force behind most of the decisions they made, not necessarily what was best for the company and employees in the long run.

jim

[jk]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

This doesn't come anywhere near to explaining away the disparity in wealth redistribution that has taken place at an ever increasing level since the 1970's though. If you add more value to your company/economy than say a janitor for instance you should definitely make quite a bit more, but several hundred times more? I don't think so, not even if you're the CEO/CFO of a multi billion dollar company that gets record profits.

People used to be able to own a home with just one job, and it wouldn't be a great job or one with long hours either, nor could they get a great home of course just a "OK" one. But they could still do it with a single blue collar 9 to 5 job. Now days to own a home, even with the massive depreciation that has taken place in many areas, you need a dual income earner family and they both have to work decent paying jobs too. And that is for an "OK" home, a good home in a good area is still impossibly expensive for many or even most people right now, you have to be rich to afford one.

In order for things to become affordable again for many prices will either have to go way down or wages go way up. We may see the worst of both of those options though if current trends are maintained (falling wages + rising prices). In which case the wealth disparity will only continue to grow, the US will end up like any other banana republic, even more so than it is now. Nearly all the wealth (and power) will be in the hands of a very few rich people , then there'll be a small middle class, and then at the bottom a huge pool of desperately poor.

housing is a particularly good example of how the financialization of the american economy has increased income inequality. it also speaks to hudson's point that lower taxes have just allowed more income to be diverted to debt service, raising asset prices instead of building infrastructure.

these smug "ability" arguments are really a joke! tell me why, if disparities are merely the product of different abilities, distribution has varied so much over the course of history, even within the same political systems? i guess those 20-something mortgage brokers and real estate hustlers are really among the most "able"! or they were until quite recently. suddenly, they're not so "able" any more. what happened?

[rjwjr]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

"This doesn't come anywhere near to explaining away the disparity in wealth redistribution that has taken place at an ever increasing level since the 1970's though."

Then what does explain it? The money will eventually flow to the more capable earners no matter how many times you hand some back to the less capable earners.


"If you add more value to your company/economy than say a janitor for instance you should definitely make quite a bit more, but several hundred times more? I don't think so, not even if you're the CEO/CFO of a multi billion dollar company that gets record profits."


This is strictly your opinion. In reality, a CEO/CFO of a multibillion dollar company that gets record profits is creating a tremendous amount of wealth for a large number of stakeholders (employees, shareholders, vendors), which includes a large number of everday folks. It's up to the Board/owners of that company to decide how much that CEO/CFO is worth. It's certainly not up to you and your opinion.


"People used to be able to own a home with just one job, and it wouldn't be a great job or one with long hours either, nor could they get a great home of course just a "OK" one. But they could still do it with a single blue collar 9 to 5 job. Now days to own a home, even with the massive depreciation that has taken place in many areas, you need a dual income earner family and they both have to work decent paying jobs too. And that is for an "OK" home, a good home in a good area is still impossibly expensive for many or even most people right now, you have to be rich to afford one."

So, who are you mad at and who do you think should change this? Did the damned "rich" do this to us again? Should the government nationalize homebuilders and, via taxes on the "rich", build all of us a McMansion? You should read The Two Income Trap by Elizabeth Warren and her daughter. It will dispel some of your misconceptions and misguided angst.

[touchring]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

In order for things to become affordable again for many prices will either have to go way down or wages go way up. We may see the worst of both of those options though if current trends are maintained (falling wages + rising prices). In which case the wealth disparity will only continue to grow, the US will end up like any other banana republic, even more so than it is now. Nearly all the wealth (and power) will be in the hands of a very few rich people , then there'll be a small middle class, and then at the bottom a huge pool of desperately poor.

It may take a lot than just expensive housing before a revolution happen, like what happened in China, before the communist took power, lawness, bandits roaming the countryside and canabalism from starvation. Then, no amount of money from the capitalists, or the US could stop the communist from taking over. Of course, things became worst after mao came in, but that's another matter.

[mesyn191]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

More accurately, it is a "more capable" vs "less capable" issue.

This doesn't come anywhere near to explaining away the disparity in wealth redistribution that has taken place at an ever increasing level since the 1970's though. If you add more value to your company/economy than say a janitor for instance you should definitely make quite a bit more, but several hundred times more? I don't think so, not even if you're the CEO/CFO of a multi billion dollar company that gets record profits.

People used to be able to own a home with just one job, and it wouldn't be a great job or one with long hours either, nor could they get a great home of course just a "OK" one. But they could still do it with a single blue collar 9 to 5 job. Now days to own a home, even with the massive depreciation that has taken place in many areas, you need a dual income earner family and they both have to work decent paying jobs too. And that is for an "OK" home, a good home in a good area is still impossibly expensive for many or even most people right now, you have to be rich to afford one.

In order for things to become affordable again for many prices will either have to go way down or wages go way up. We may see the worst of both of those options though if current trends are maintained (falling wages + rising prices). In which case the wealth disparity will only continue to grow, the US will end up like any other banana republic, even more so than it is now. Nearly all the wealth (and power) will be in the hands of a very few rich people , then there'll be a small middle class, and then at the bottom a huge pool of desperately poor.