patrick.net

HARM, Bush also reduced income tax rates for middle class workers. He also reduced the marriage penalty.

Reducing long-term capital gains tax rate helps to stabilize the markets because investors are incentivized into holding assets longer.

History just called and told me Iraq sucks.

HARM, I will wait for that on History Channel in a few decades. ;)

(I definitely agree that Iraq is horrible.)

@Peter P,

I can get behind reduced middle-income taxes, elimination of the "marriage penalty" and a reasonably low long-term capital gains tax rate*. I am open to flat tax proposals as well.

*(Though "how low" we should go vs. payroll tax rates and what constitutes "long-term" are items open for debate.)

By the way, how do you like your new thread graphic ;-) ?

Oh, and let’s not forget that an extreme hands-off, all regulation = bad, laissez-faire style of governance is what helped the bubble grow to immense proportions in the first place.

I argue that it is the expectation of policy intervention that fueled the bubble. If people knew they would be allowed to fail, they would act with much prudence.

Nice graphics. :)

I am not arguing whether Iraq war serves us better or not when it comes in history channel, I was referring to his justification for war.

Again, if you do nothing wrong you have nothing to fear.

I believe our definitions of "regulation" are not the same. I see it as meaning "policing industry in a way that discourages monopolies, coercion, fraud and other forms of systemic abuse, while encouraging fair competition that benefits consumers, taxpayers and small business owners alike."

Industry bailouts are not "regulation" by my definition.
Socializing Wall Street losses (Treasury swaps) is not "regulation" by my definition.
Underwriting risky mortgage securities with taxpayer $$ is not "regulation" by my definition.
Preferential tax credits and tax deductions that mainly target speculators and crooks ("any 2 will do", MID for 2nd, 3rd houses, 1099, etc.) are not "regulation" by my definition.

I would let History judge a war

We can talk about history only if we can get out of it. McCain wants to be there another 100 years. Too bad, we can't be around.

"You keep using that word. I do not think it means what you think it means."
--Inigo Montoya, "Princess Bride"

HARM, by your definition, I agree that some regulations are necessary for the integrity of the free market.

I thought TAF pretty much accepted all crap, what are the .29 crap that they refuse to accpet?
The .29 just means that the auction was oversubscribed (only had $75 billion to offer and they had $96 billion in propositions). TAF actually has the same requirements for collateral as the discount window (but is open to all member banks). The TSLF is the facility that has been liberalizing the instruments which can be swapped for Treasuries.

Notes from the three dot lounge: The high school was surrounded by police cars this morning but everyone was going about their business, so I assume they were "protecting" students from U.S. Immigration and Customs Enforcement (ICE) agents that had picked up a Berkeley family around 9:30 a.m. on Tuesday (not at school)... The local newspaper had a big ad by Berkeley Bowl advertising, guess what, buffalo meat... And on the RE front, our building had a broker tour this morning. Brokers were seen wandering the building clutching bottles of wine (an incentive to get them in the door). Lots of vacancies -- I'd say desperation may be seting in.

HARM, "regulation" also carries the meaning of controlling and averting failures.

@Peter P,

Although I'm sure it means that for some, I personally don't subscribe to that P.O.V. However, I *do* see some instances where "controlling and averting losses" for the completely blameless/economic bystanders is a good idea.

Case in point: FDIC/NCUA bank insurance for depositors. If the bank or S&L president is making shady deals behind the scenes with his crooked cronies, why should depositors have to suffer for it? This was why both were instituted following the bank failures of the Great Depression.

As for the people who willingly and knowingly entered into shady deals with eyes-wide-open and/or committed fraud on their mortgage documents...

F**k 'em.

The housing market might have bottomed:

http://www.newsweek.com/id/135724

In both cases, we’re talking about something that disproportionately benefits the top 5-10% (who own most of the country’s assets), and rewards passive income from securities & inherited wealth over EARNED income from REAL WORK (wages).

Yes, but what about people who have retired after a long time of hard work who plan to live off the income from their savings? Right now you don't even make the rate of inflation on savings. Why should "negative income" be taxed at all? At least when a person gets a paycheck it's worth the dollar value that same week - it by definition is not-inflated.

In re Iraq. I think Bush's heart was in the right place. BUT his real mistake was trying to do Iraq "on the cheap". He tried to borrow some funds and do it all with minimal troops pulled in from the reserves. He thought if he "hid" the effort that nobody would notice and object.

He should have done this: declared a national emergency, brought back the DRAFT, and slapped everyone else with a 10% tax surcharge for the duration. We should have gone in with 2 million men and just squashed the insurgency like a bug.

Maybe not even 2 million men. Perhaps a "surge" in the beginning could have worked. But hindsight is always 20/20.

Right now you don’t even make the rate of inflation on savings. Why should “negative income” be taxed at all? At least when a person gets a paycheck it’s worth the dollar value that same week - it by definition is not-inflated.

Good point. As long as capital gains are taxed in NOMINAL terms and not adjusted for inflation (however it gets measured), it's quite possible to *lose* purchasing power on conservative investments over the long run, and still be taxed on your nonexistent "gains". Yet another thing to thank Congress and the IRS for, G'bless em.

from that hideous piece of advertisement masquarading as journalism that Peter P linked to:

Lereah does think that the House bill co-sponsored by Barney Frank—which was recently passed by the House Financial Services Committee and now awaits a full House vote, is the right idea. Frank's bill would serve to modernize the Federal Housing Administration (FHA) by increasing loan limits in high-cost areas like California and New York, authorizing zero-down and low-down payment loans for more homebuyers, and generally improving access to mortgages for lower-income folks who have faced bigger hurdles to a home loan since the credit crunch began last fall.

Just in case anyone out there had any doubts about whether or not this bill is a good idea....an endorsement from Lereah sure nails it for me!

The bill will be vetoed anyway.

Could be he'll veto it. Could be it'll come back under a different name and he wont veto. Who's to say with him?

The arguments about regulation are getting old. We all have wants that we won't ever see.

*I think we should have adopted the "no regulation" months ago.

*I want the FED to raise the interest rates so high that it kills inflation.

*I want the people who loaned their money out to allow this speculation to get the collateral for the loans they made when the loans go bad.

Kick the people out of the homes they can't afford and make them rent. I have never seen anything in writing stating that it is a right for people to own a home.

The banks have proven that they can't run themselves without supervision. I don't think it is right that our banking system is being held hostage by the irresponsible banks to the threat of a system wide collapse. Because they are now using the gubermint's money to paper over their sins, they have made it my business on how they run themselves. Regulate them and prosecute the people who were involved in fraud. This crap the FED has done will work in saving many banks that should have failed. They are allowing them to buy time to absorb the losses, inflate the money supply, and get a very large spread on the money being lent vs barrowed.

Bush's economy policies tend to be quite sensible. Let's have faith.

(I like his tax rebate program much more than the one that got passed.)

Looks like nutty's wishes are being granted (although indirectly)

http://tinyurl.com/5cn63v

If we have flat tax and/or FairerTax (my version of FairTax, but with a 3% rate instead of a 23% rate), the world will be so much better.

Tax should be replaced with user fees.

would you then scale those user fees to income/net worth or would they have a flat structure? (same for all)

Absolutely flat.

Same service. Same price.

if I'm driving my 200K car in the hov lane which has a $20 toll fee to go to my $2M/yr job in the city, am I receiving the same service as Miguel, going into the city to cook burritos for $12/h? After all, I lose a lot more if I'm late. My time is more valuable than Miguel's. HOw's that the same service?

If your time is valuable, fly a f*cking helicopter.

you're avoiding the issue.

Same resource. Same service.

You can fit your life around the price structure.

Of course he's opposed to a bailout.

All his cronies sold their investment properties in '06 and have their money in hedge funds that are short MBS'.

kewp,

that is the correct explanation of Bush's decision.

Bush doesn't give a f*ck about Americans, rich or poor, he only cares about his "loyal" friends.

Re: Iraq war, I believe it is Cheney's war in disguise. Cheney is fully aware of the peak oil scenario, in fact, he was talking about it several years before he became the VP. It's just very sad his execution of securing future energy source is very lousy.

We live in an unfree system.

In every unfree system, people don't really own their property - the state can decide to take someone's money away and give it to someone else, all in the name of *common good*.

Democrats and republicans both agree that the unfree system is the right system so one is not much better than the other. They both want to take your property away (as much as they can get away with) and they only disagree on where to give it away.

Do I want a president who takes my hard-earned money by force and gives it to a FHB? No. Would I respect someone else who didn't do that but instead spent my money AND people's lives on needless wars? No.

On the surface, what he says sounds praiseworthy. But remember, he also said in 2000 - "I will have a humble foreign policy. We will be peacemakers and not peacekeepers" and all along, he was planning invading Iraq.

Bush is among the top 3 worst presidents this country has ever had.

Peter P,
This thread only represents what he is saying right now. I've heard him talk the bailout talk before. Obviously someone who advises him reminded him that he is a Republican.

Remember who it was who signed the debt forgiveness elimination bill that opened the flood gates even more. Even though I might actually be torn on the issue, his action was definitely a pro bailout one.

In Silicon Valley, a Flight to Safety
By PUI-WING TAM
March 7, 2008; Page A1

As the dot-com bust gave way to revival, many Silicon Valley engineers left large companies to join start-ups, drawn by excitement and the promise of fat payouts. Last month, Ameet Kher headed in the other direction.

From late 2006, the 35-year-old software engineer worked at a small telecommunications-equipment maker called Ditech Networks Inc. of Mountain View, Calif. Last year, the company swung to a net loss and laid off employees. Seeing headlines about an economic slowdown, Mr. Kher got nervous and started hunting for another job. Offers came from two tech start-ups, but he wasn’t interested in start-ups anymore. He wanted to join a big company.

Mr. Kher is part of a new flight to safety among tech-industry workers as the economy struggles. In growing numbers, these workers are gravitating to larger companies that they hope can better weather a downturn. Ian Arcuri, an engineer in Research Triangle Park, N.C., left a local tech start-up to join giant Cisco Systems Inc. in October. “If I have to live through an economic downturn for three years, then I’d like to be at a company with a big war chest,” he says.

There’s no data on these job shifts, and recruiters and companies say the trend is nascent. Start-ups certainly aren’t being abandoned en masse. But early signs of a mind-set shift are unmistakable, evoking memories of previous migrations to stabler jobs. During the dot-com bust that began in the year 2000, dozens of Silicon Valley start-ups withered or disappeared, while many large tech firms survived. Sure, big tech companies eventually began firing as well, but engineers who leaped to safety early were more likely to survive cutbacks.

The weakening economy is bringing into focus the risk that technology start-ups face. After a decade of working for such firms, engineer Thomas Hanley last year started getting stiffed on the occasional paycheck, so strapped was his employer, which he declines to name. Having just started a family, the 33-year-old Mr. Hanley took a job at Silicon Valley software maker Intuit Inc., a $2.7 billion company. Intuit actually provides health benefits, in contrast to the tech start-up he escaped. “I couldn’t do that anymore,” Mr. Hanley says of the hand-to-mouth existence of many start-ups.

Half a year ago, recruiter Mark Hill couldn’t find certain types of engineers to consider abandoning their jobs at start-ups. But today, “I get calls back pretty quickly,” says Mr. Hill, of the recruiting firm Harwood Allen.

Across Silicon Valley, the social status of big-company workers suddenly is elevated. David Roman was hardly the envy of his peers when he joined Hewlett-Packard Co. as a marketing executive in 2005. In a valley of sizzling start-ups, giant H-P was “not the type of company you aspired to join,” he recalls.

Hot Ticket

But late last month, attendees of a Silicon Valley marketing event besieged Mr. Roman about job opportunities at H-P. Arriving at his office the next morning, he found five résumés from event participants in his email inbox. Calling H-P a “cooler” place to work, Mr. Roman says, “We’re the hot ticket in town right now.”

Of course, some tech start-ups are thriving. Slide Inc., a San Francisco-based start-up that makes software programs for social-networking Web sites, recently raised $50 million in funding to use for hiring in case a recession materializes. The Web start-up, which currently employs about 70 people, plans to double its work force by the end of the year and also move into an office space that is twice the size of its current 8,300-square-foot digs. Slide spokeswoman Tammy Nam says, “If there’s a serious recession, then we’re in a much better position to be competitive with a serious war chest.”

Workers shifting to large companies now appear more likely to hang on to those jobs, at least for the moment. While layoff rates at big concerns soared amid the slump earlier this decade, large companies are shedding workers more slowly just now. According to the Bureau of Labor Statistics, layoffs comprising more than 500 workers at a time — typically those made by large companies — accounted for fewer than a quarter of the country’s total layoffs in 2007’s fourth quarter, down from about a third of all layoffs in late 2001.

Moreover, an analysis by Moody’s Economy.com found that big companies had the largest net job gains through early last year, outstripping job growth at small firms.

In the past, layoffs from large companies sent workers in underperforming regions packing to faster-growing ones. According to the California Department of Finance, more than 108,000 people evacuated Silicon Valley between 2000 and 2003, a period when one in five jobs in the nation’s tech capital disappeared. Tech workers dispersed to the East Coast, to up-and-coming tech centers such as Austin, Texas, and to India and China.

This time, however, there is little relocation so far, especially with the housing slump, credit crunch and rising oil prices affecting all corners of the economy.

As Silicon Valley recovered from the tech slump in 2004 and 2005, dozens of Web start-ups flourished, and many engineers sought big paydays by joining tiny companies such as YouTube and Facebook Inc. Venture capitalists poured $9.9 billion into young companies in the area last year, up from $6.8 billion in 2003, according to VentureOne.

Nonetheless, Silicon Valley is now displaying some signs of weakness.

In January, the unemployment rate in Silicon Valley’s metropolitan areas of San Jose, Sunnyvale and Santa Clara rose to 5.3% from 4.8% a year ago. And while the region added a net 28,000 new jobs last year, that was down from 33,000 in 2006, according to Joint Venture Silicon Valley, a nonprofit group representing local businesses and government agencies. Meanwhile, the unemployment rate in North Carolina’s Raleigh-Durham-Cary region — where Research Triangle Park is located — was 3.6% in December, virtually unchanged from 3.7% a year ago, according to the state’s employment commission.

Urge for Safety

An urge for safety is gripping tech workers like Ravi Narayanan. Through late February, the 45-year-old was a vice president of operations at semiconductor start-up WISchip International Ltd., which was acquired in 2005 by a larger Swiss-based semiconductor maker called Micronas Group. Last October, amid weakening business conditions, Micronas restructured its business, leaving unclear the fate of the unit formerly known as WISchip. “It could be a cold winter,” Mr. Narayanan recalls thinking.

In December, he began seeking a new job, specifically targeting fast-growing large companies with several thousand employees. Last month, he joined the Silicon Valley offices of Tyco Electronics Ltd., which employs 94,000 workers and last year produced $13.5 billion in sales across 150 countries.

His move came not a moment too soon. A Micronas spokeswoman says the company is closing the office that employed Mr. Narayanan.

Outside Silicon Valley, tech workers are also searching for safer havens. Mr. Arcuri, the engineer who joined Cisco’s Research Triangle Park offices last year, had worked at five tech start-ups since 1995. Most recently, the 42-year-old was a project manager at mobile-video start-up Integrian Inc. in Morrisville, N.C. When he joined Integrian in 2004, he hoped that it would go public and turn his 40,000 stock options into a huge windfall.

In mid-2007, however, he threw in the towel on start-ups. With the economy struggling, his third child on the way and no IPO for Integrian in sight, Mr. Arcuri began surfing the job boards of big tech firms such as Cisco and International Business Machines Corp.

“I saw the entire economy getting shaky; it was a safe harbor thing” to go to a big firm, he says.

In October, Mr. Arcuri joined Cisco’s customer-advocacy division as a program manager. While earning about the same salary as at Integrian — slightly more than $100,000 a year — he says Cisco offers better benefits, a strong bonus program that gives him up to 15% of his annual salary and more-flexible working hours.

Of course, his security isn’t guaranteed. Cisco last month reported a pullback in customer orders amid slower tech spending. The San Jose, Calif., company’s stock is down more than 11% so far this year. Some on Wall Street posit the $35 billion networking giant may trim costs through layoffs of its 64,000-person work force. A Cisco spokeswoman says no companywide layoffs are currently planned, but notes, “Cisco constantly reviews ways to streamline.”

Mr. Arcuri says he recognizes his move to Cisco hasn’t immunized him. “But am I less susceptible than at a start-up? Probably,” he says.

For Mr. Kher, shifting to a large company is a return to his career roots. The India native moved to the U.S. in the 1990s to obtain a graduate degree, then worked at big companies such as Nortel Networks Corp. and Cisco in Research Triangle Park. In late 2006, he uprooted from North Carolina to Northern California to join Ditech, excited by the growth potential of a small firm.

At the time, Ditech was on an upswing. The company, which went public in the late 1990s, was reporting growing sales and profits from customers such as Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone Group PLC. Ditech, with 160 employees, makes software and gear to improve the voice quality of phone calls on wireless and Internet telephony networks.

Upside Potential

“Ditech was my first small company,” says Mr. Kher, who moved his wife and toddler to a two-bedroom condo in Sunnyvale, Calif., for the chance to make it big through Ditech’s stock-options program. “I wanted to take a chance [because] smaller companies can have a bigger upside potential than a large company.”

Late last year, Ditech’s sales dropped. The company blames the slowdown on the disruption that its telecom customers were undergoing as they transitioned to next-generation wireless networks. Ditech’s revenues have declined to less than $7 million a quarter, down 70% from more than $22 million a quarter a year earlier. In November, it announced layoffs of 20% of its work force.

Mr. Kher grew concerned, especially when several colleagues fled for nearby Cisco and other large Silicon Valley companies. A self-professed “Wall Street junkie,” Mr. Kher trades his own portfolio of tech stocks, and his fears heightened after he watched reports on CNBC about the stock market’s volatility and a possible recession. “The economy will go down eventually,” he recalls thinking.

In December, he posted his résumé on several Internet job sites. His wife, also a software engineer, encouraged him to pursue a variety of options. But “I wanted to go back to a big company,” he says. “Start-ups throw money at you, but after two quarters, they can disappear.” He adds that he and his wife have discussed buying a house this year, despite the area’s high home prices. In January, the median price of a single-family home in Santa Clara County was $750,000, according to the California Association of Realtors.

Loc Tran, a recruiter at technical staffing firm Ryzen Solutions in San Jose, spotted Mr. Kher’s résumé on the Web and called. “Ameet wanted a big company with growth potential,” says Mr. Tran. “A start-up was a hard sell because the probability of a company doing well is one in 100.”

Three Offers

A week before Christmas, Mr. Kher took time off to interview with new employers. He got offers from two networking start-ups, both of which had several rounds of venture-capital funding under their belts and fewer than 100 employees. The third offer he got was from RIM, the $3 billion maker of BlackBerry smartphones that employs 7,500 workers world-wide.

Based in Waterloo, Ontario, and with offices in Redwood City, Calif., RIM wooed Mr. Kher by sketching out a possible leadership role in the future. Mr. Kher says big companies were also offering a 10% compensation increase, including sign-on bonus, with engineers of his experience making $120,000 to $140,000 in salary a year. He declined to detail his RIM pay package.

Elizabeth Roe Pfeifer, RIM’s vice president of organizational development, says she has recently seen that “the economy is causing more pause” among engineers, with more job candidates aiming to move from smaller to larger companies “in search of greater stability, funding and opportunity.”

After getting his RIM offer, Mr. Kher says Ditech matched the package, hoping he would stay. Ditech’s CEO also stopped by his cubicle to ask him to remain. By then, he had decided to opt for the safety of a big firm. “It’s back to what I’m used to,” he says.