patrick.net

The market doesn't need nor want liquidity. I think it has made that very clear. Trying to force liquidity on the market is like "pushing on a string".
No amount of printing nor helicopter drops of money will resolve the problem. All they can do is delay the inevitable.

O.T.

Comments?

Doesn't pass the sniff test.

A couple comments:

We had a balanced budget during the Clinton years. We can have one again just by ending the Iraq boondoggle and reversing Bush's tax cuts for the wealthy.

I agree in general with what needs to be done, I just don't see where a stock market collapse figures into this.

I live in San Diego and I don't personally know any FB'ers, other than a friend who short-sold a year ago. I've lived like a pauper the last two years paying down CC debt. *I could care less* if everyone else in America enjoyed a lesser standard of living for the next 10-100 years. Cry me a river.

The dollar is strong, commodities and housing are getting cheaper by the day and unemployment is manageable. If you do meaningful work the fruits of your labor will buy you more over time, not less.

Doesn't strike me as something worth freaking out over, personally.

that thing above is the worlds smallest virtual violin to play for all the boomers who lost money in the stock market.

LOL!!!

I wonder what this downturn in the market will do to University endowments? Here is some data on how most endowment funds are invested:

http://www.nacubo.org/x2376.xml

It will be interesting to see how this affects research and academia in general. There will be less endowment income to pay for the programs and less to reinvest.

I don't see how research and academia are improving humanity anyway.

We had Tulipomania in Holland centuries ago.

We just had a housing bubble. Only now the effects are global and systemic. We remain who we are. Knowledge and technology just allow us to destroy ourselves faster.

Kewp:
We had a balanced budget during the Clinton years.

Nope:Treasury Numbers:

FYear Year Ending National Debt Deficit
FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion $281.26 billion
FY1995 09/29/1995 $4.973982 trillion $281.23 billion
FY1996 09/30/1996 $5.224810 trillion $250.83 billion
FY1997 09/30/1997 $5.413146 trillion $188.34 billion
FY1998 09/30/1998 $5.526193 trillion $113.05 billion
FY1999 09/30/1999 $5.656270 trillion $130.08 billion
FY2000 09/29/2000 $5.674178 trillion $17.91 billion
FY2001 09/28/2001 $5.807463 trillion $133.29 billion

Almost made it in 2000, but there was no mythical "Clinton Surplus." Most of the myth comes from Enron-like off-booking of Social Sec. deficits, with SS receipts going to make the "Discretionary Spending" look balanced or surplused. I.e. Clinton admin added $1.4T to the national debt not fighting any major wars to speak of, low inflation, "Peace Dividend", getting the reductions out of Welfare Reform, and having a huge peacetime expansion of the economy, they still ran up a $1.4T deficit, a 31% increase.

Ya'll ready for Obama? Hold onto your wallet.

I still don't understand why Silly Valley people want Obama to be the president.

Think tax.

Alas, brace for president Obama and his demo-con-gress.

Peter P wrote : Knowledge and technology just allow us to destroy ourselves faster.

I completely agree with that , especially for developed countries.
What is our goal as a nation ? our level of happiness has stagnated many decaded ago. GDP growth is no longer increasing average happiness because GDP growth is not related to happiness after certain standard of living is met in a nation. so what are we trying to achieve here except consuming more and more to satisfy the never ending need for hierachichal superiority in the society. Everybody is busy producing just to consume more.
In the end, i hope our history is not written as a species which used its brain power just to consume the resources on earth faster than other animals, eventually hastening its demise as a species.
Its high time , we get our priorities right and re-think our debt based ever expanding economy.

Its high time, we get our priorities right and re-think our debt based ever expanding economy.

Sadly, we will never do that. Humans tend to push the system right towards its breaking point. The future for humanity is very grim.

That said, we as individuals ought to be optimistic. Want beer? :)

Happiness is expectations matching reality.

So long as we have unsatisfied wants, we will remain unhappy. No amount of technology can change that. In fact, expectations of technology improving our lives will only lead to yet more disappointments.

Emotionally, we are doomed.

Interesting stat, since I thought I was alone in not being able to vote this time around. It turns out 25% of AOL users who answered a survey said they have already voted. I voted by mail about a week and a half ago.

Interesting, people can't wait. I think they can't wait to crucify their representatives for voting on the bailout plan.

Oops, I meant to say "not being able to wait to vote."

Yen is pushing its March 14 high. WHat do you guys think?

MST

Might want to run those numbers again as a % of GDP and % of GDP growth, which is really what matters with deficits.

In fact, run that back to Eisenhower and you might be surprised to find out there is no correlation between party affiliation and deficit handling capability. Both parties have done greater and lesser damage along the way.

Partisanship has a terrible tendency to fool people into thinking that there is always another side. Sometimes it just is what it is, regardless of demagoguery.

Pete:

Yen is the only major currency that wasn't internally engaged in CDO/MBS/CDS BS (since they already did that to themselves 15 years ago) so its strength relative to other currencies is (and was) predictable. As far as other factors, Japan is also not a commodities producer, so they're not in that camp either (look at Canada). Gonna be a bitch on their exports, though.

Relative currency strengths are only marking out who is in least-worst shape.

Thanks, MST.

De-leveraging may also be playing a part.

I guess the Japanese "lucked" out because they were still having hangover from the last bubble.

Do you think the export part will be a major issue this time around? They have been setting up factories in other countries (e.g. US, China) now.

Randy:

I thought I was "anti-partisanizing", simply against the "Clinton Surplus/Balanced Budget" bit. 'Taint true as a direct proposition, no matter what size the Deficit Vs. GDP, no matter which side of the partisan divide i fall on. I'm no fan of the Reagan Deficits, either. And OMG the GWBush Deficits.

My big issue is with deficit spending BS. (And here we go again! A little Keynsian stimulus for Christmas! yay! I can pay my heating bill. Maybe.) My second big issue is the off-budget accounting, which allows statements like Kewp's to be made. I'll just "off-budget" a portion of my income and see what the IRS thinks.

And GAO's public debt as a function of GDP chart puts GWB PD at about the same level as WJC PD in 1998/99: http://tinyurl.com/4km4k3
So that makes GWB's deficits OK? I don't think so.

O.T.

Doesn’t pass the sniff test.

Only if that sniffer is on the nose of a Yellow Dog Democrat.

The point of that piece was to not re-elect anyone, regardless of party, who sold out the public by voting for the bailout. To want to forgive the bailout crowd en mass, just because more Democrats than Republicans would be voted out, is simply partisan. If the bailout supporters were voted out, thier replacements would see a good reason to pay more attention to constituents than to lobbyists. It may even put a crack in the two party system.

I'm going to do the unpopular thing and speak up in favor of partisanship:

It appears that many folks, although not necessarily anyone in particular on THIS blog, have decided that "the problem with Washington" is a "lack of bipartisanship".

I could not disagree more.

The whole point of having more than one party is that the parties are there to represent different views. If they always agree we might as well cancel democracy and elect the President as the Kaiser of the United Reich.

Those who know me know where I'm going with this: The problem is not partisanship or lack of bipartisanship. The problem is the serious case of "bipolar government disorder" (yes, this is a pun on a well known psychological condition) which stems from political power always hovering around an unstable 50% mark.

The solution is to abandon our dysfunctional election system and create a proper election system with true proportional representation and support for >2 parties.

As a side note: When Republicans call for "bipartisanship", what they really mean is, "god damn it, do what the president says, he is the commander in chief and The Decider (TM)".

Thank god for partisanship. Without it we would be a dictatorship long ago.

You have a point.

If we had strict partisanship, no Republican would have voted for the bailout (nor would W had proposed it) and no Democrat would have voted to give W the power to take us to war.

Hear! Hear! for partisanship.

Bipartisanship leads to things actually getting done in Washington. God Forfend! My point above is that *facts* are non-partisan.

As a side note: When Republicans call for “bipartisanship”, what they really mean is, “god damn it, do what the president says, he is the commander in chief and The Decider (TM)”.

And vice versa. Please note that the first vote on the bailout ws "Republican Obstructionism (TM)" [and lets have an "Oo-rah!" for Republican Obstructionism then] even though 30% of the no votes were Democrats, and a Democrat Victory against those nasty Repubs, even though 30% of the votes came from that side. It's only bipartisan if you agree with Nancy Pelosi, and then only if they lose, otherwise it's a great moral victory for Dems.

Double standards are the only thing consistent about Washington.

oops: Add words

...and [the second vote] a Democrat Victory against ...

There are many multi-party fans in US. The other side is always greener and so is the multi party system.
I have actually been in other countries and seen the effects of both the systems.
Both the systems suck big time. Its just that the multi party system sucks more. Ideology pushing at the expense of common goal is more powerful in multi party systems.Multi-party systems are more perfect but notoriosly slow.developed and old nations would be better candidates, not young or growing countries.

Republics (since that's what they really are) are godawful messy, but not as messy as true democracies; those can get really guillotine awful.

Republics where the rights of the minority is enshrined in the fundamental way of doing business are very rare (like one example, maybe? Two?). In this case a relatively small group can block (mostly) things from getting done, which is what most of the Constitution is about.

In most multi-party systems, the mini-parties form coalitions to actually accomplish their goals (necessarily majority sized). How is this different from the US? You have a Center-right party that has subdivisions that are for a strong military, reduced (Hah!) spending, free-enterprise, traditional values, etc. We have a Center-left party that has elements of progessive values, union support, and redistributionist economics, etc. Think of all the talk about the various "Wings" and "Lobbies" of the parties. All are represented.

Paliamentary mini-parties' primary goals are to get their slice of the pie made bigger than someone else's. How is that different from lobbying? You've just made the lobbies into political parties. Bad idea.

snmr:

>> I have actually been in other countries and seen the effects of both the systems.

So have I.

>>Both the systems suck big time. Its just that the multi party system sucks more

I disagree.

>>Ideology pushing at the expense of common goal is more powerful in multi party systems.

Your words are abstract, I see no evidence that this is true. On the contrary, if you have multiple parties, it is much simpler to get a majority of votes for any given law, because each party can afford to have its own ideology and a nuanced view about each law proposal. Multiple parties much more often ensure that there is a solid plurality behind any given law, or against it, for that matter. This is much more democratic, because the majority rules on a case by case basis.

>>Multi-party systems are more perfect but notoriosly slow.developed

Apart from the self-contradiction, someone will have to explain what this sentence means.

MST:

>>In most multi-party systems, the mini-parties form coalitions to actually accomplish their goals (necessarily majority sized). How is this different from the US?

It is different because the coalition forms on a law-by-law voting basis. Coalitions are not only about capturing or controlling the executive branch, they are about passing laws on a case-by-case basis. As I said above, this fact ensures that much more often a solid majority of the people are behind each law passed.

Justme:

1) Please give concrete examples (name a country) of these coruscating coalescences of mini-parties creating voting majorities on vote-by-vote bases.
2) Since most of these multi-party states are parlimentarian, ruling coalitions must be created or governments fall. Please give your counter-examples of Prime Ministers who have a constantly changing coalition under them, and if the PM opposes the (supposedly popularly mandated) law, how does he avoid a vote of no confidence?

Your idealization of the motives of these parties is unrealistic. There will always be quid pro quo: you vote for my boondoggle, I'll vote for yours, which knock your ideologically pure mini-parties right back into politics as usual.

"Ideologically pure" is frightening in and of itself. Ideological pure parties account for several hundred millions of their fellow citizens dead in the last 100 years. And those purists were all small minority parties -- until they killed off the opposition or terrorized them into submission.

Give me big, corrupt, raucous, obnoxious do-nothing bloviators. Save us from the Pure of Heart!

There is no perfect political system. Humanity is destined to sway from one system to another as history unfolds, with or without bloodshed.

MST:

1) if I do, will you then concede, or are you just making busywork for me? If you are willing to concede once I come up with the examples, I will go and do the work. I won't sit down with you without preconditions ;-).

2) I did not make a claim about Prime Ministers ruling continuously through multiple consecutive different coalitions. You served up that red herring all by yourself.

What must be understood is that it is perfectly possible for executive coalition member parties to vote against each other on specific laws. This does not cause the executive branch to fail. It does only if the Prime Minister explicitly states that (s)he will resign unless the law passes, and acts accordingly. Or if there is a vote of non-confidence against him. This is a great way of getting rid of dangerous people in the executive branch.

Multi-party systems are more perfect ( representation of democracy) but notoriosly slow. The more closer you go towards dictatorship, the faster the decision making ( for good or bad). ofcourse, i am not advocating dictatorship...just making my point. The more you go the other way, the slower but more democratic. There is a fine balance though and we can't just theorize our way out of it. The balance can be found mostly by observation rather than black and white theories. If you look at the efficiency of democratic system versus the risk they pose to democracy itself , i personally feel that two party system is much more efficient ( relatively)

I also take exception to the word mini-parties. Parties can be big or can be small. It is not uncommon for parties to have anywhere from 5 to 35 % of the popular vote in many western democracies.

My conclusion is based on observation and data. you guys seem to be more knowledgeable about the inner workings though.
If you have some evidence which proves otherwise, i will be more than happy to hear that.
These things are not new and history is enough proof on which system is more efficient and which is not.

snmr,

You are entitled to your opinion, but I have seen no evidence that multi-party democracies are slow.

Counterexample: Did not just France, Germany, Ireland, even England, and several others put together their financial rescue plans at record speed, and much faster than Washington.

Washington often described as "a gridlock". So which is it, a bipartisan gridlock or a lean mean decision machine?

I propose strong regulation of governments.

In this regard, I guess we at least have a good constitutional framework.

Argentina is going to nationalize pension funds. Is this what you want? Democracy can be as dangerous as exotic derivatives if the tyranny of the majority is not well regulated.

snmr,

our posts crossed again. I see no data. You have probably observed plenty, but as you say yourself, it is indeed very useful to have a wider knowledge about how many other western democracies function internally.

At some point, Rome was an incredibly powerful democratic republic. And I will bet that any number of romans would agree that they had the best and most efficient democratic republic possible How could it not be -- they were the rulers of the world!! They simply had to be the best, right?

But history shows what happened soon thereafter,

But history shows what happened soon thereafter,

Exactly. Any system eventually fail. This has absolutely nothing to do with the merits of the system. It has everything to do with time and events.

Peter P,

We actually agree on something today:

Strong constitutions and GOOD constitutions are of the essence. The US has a flawed constitution and election system. Many countries have better systems, We should learn.

>>Argentina is going to nationalize pension funds. Is this what you want?

Oops. Maybe I spoke too soon. There you go again baiting with some irrelevant prattle. What is your point here, exactly? That multi-party systems are more likely to nationalize than 2-party systems? Whatever the reason, it was just a red herring.

PS: Our 2-party system just "nationalized" the big banks, at least according to some people.
They also did not privatize social security, so no need to re-nationalize that, for what it's worth (sarcasm off).

Peter P says:

>>I propose strong regulation of governments.

Then he says:

>>Any system eventually fail. This has absolutely nothing to do with the merits of the system.

Uh, logic contradiction alert, anyone?

Strong constitutions and GOOD constitutions are of the essence. The US has a flawed constitution and election system. Many countries have better systems, We should learn.

Which country has a better constitution than the US? I agree we need to more adherence to the constitution.

The "progressive" era is a dark age though.

Does the inherent structure cause the elected members in multi party systems to be more pandering to thier constituents than focusing on something big for the country ?
India and other former british colonies have this problem so i am just curious ?
may be justme can enlighten me here.
What motivation does a mini-party have in driving and creating something useful for the nation beyond just getting re-elected ?
India has failed so many times in pushing for major "national" reforms when small parties with no national brand (so nothing to lose) have time and again put obstacles.
The more parties in key decision making, the less recognition they will eventually have and hence less motivation for the stuff thats beyond pandering to thier local masses
No wonder, europe is leaning towards socialism.
May be two or more Ceo's for a company might be good idea too ;-)