This is why Paul Krugman drives me insane. Last week, I thought his column was pedestrian and not very helpful. Today, however, I think it is one of his finer efforts, with as concise an explanation of what is happening and what he thinks needs to be done that could be done in an op-ed column for mass consumption (complete with pop culture reference!). His description of the mess we are in makes a great deal of sense, is hard to disagree with, and is depressing as all hell. I don’t know about his solutions, because I don’t know if there is a solution.
Edited for clarity (for a change).
This Paul Krugman primer will help it all make sense:
Krugman the Economic Analyst = Win
Krugman the Political Analyst = Fail
Isn’t that any good columnist though? I mean, no one can possibly be "on" for every column right? It’s part of why I think newspapers should ditch the Op-Ed model altogether.
Krugman was strong this morning…no wealth was created for the average household in the last 8 years.
On another note, I wanted to ask y’all what you use for wingnut repellant. A friend of mine set me off yesterday and I wanted to respond but wasn’t sure how. I created a diary on Oxdown that talks about the details, so any ideas are appreciated.
Not trolling for hits, just help.
Meanwhile, the NIE lists the economic situation as the single greatest threat to our national security right now. I’m waiting to hear the "impoverishment of our children" stimulus screamers call for an immediate withdrawal from Iraq to save the $$$.
Better lay in some snacks, this might take a while.
Jebus. Krugman is depressing, all the more so because I think he’s right.
Meanwhile, pathetic blogwhore of the day, my prediction for the next meme that will eventually drive us all crazy. Move over "slap in the face."
I kind of like the gist of the intro to the article. It’s not so much that we "lost" money, but rather that we never had that money to begin with. We should concentrate harder on trying to make the little money that we have left work for us instead of trying to "regain" what we used to have.
I think a long, hard, recession is just what this country needs right now. Teaching us a lesson the hard way. B/c Americans sure as heck won’t learn with gentle reminders.
Krugman from Madoff to:
That’s worth a thesis: Why/How did people become convinced of something that the slightest bit of common sense would have told them was not true?
By (capitalist) hegemony. The same thing is happening right now.
Why are there still creationists? We’re all suckers for magical thinking in one way or another–some of us just do it in more damaging ways. It’s one thing to think that your team will lose if you don’t wear your jersey in a particular way, and another to believe that home prices will continue to gain double digit percentages in value every year (without concurrent gains in inflation).
I put drain cleaner in your undead and put it in your bed so you can have zombie lye while your zombie lies.
The Grand Panjandrum
The Krugman piece is OK. But I think this article from yesterday’s WaPo by Matthew Richardson and Nouriel Roubini outlines a strong and convincing argument for bank receivership with the feds acting as receivers. It does not guarantee that insolvents banks will not be allowed to fail. But with the right kind of legislative action and regulation for smaller regional banks to once again decentralize the system and not have the industry be at the mercy of banks "to big to fail" to create havoc in the markets.
NOTE: I use the word receivership instead of nationalization because the banks would NOT be nationalized under this plan. They are entirely different animals and the word nationalization is poltical poison, although any federal receivership could be considered de facto nationalization.
@wilfred: I’ve been thinking about that for quite a while now, since Lehman melted down. I’m thinking the shorter is:
You’re not poorer since the meltdown. You were never really rich.
@MikeJ: LOL. I’ll deserve the blame if this one catches on. I’ve used it at least five times in the last week at my Detroit News blog. And I saw it used since then on couple of bigger blogs.
It was a rhetorical question, meant to imply that the same pie-in-the-sky apparatus of convincing people that everything will be ok if we only do x, y an z and throw the future of the country down the cash drainhole of the banking system is at work in what passes for American politics.
It’s a great moment for alternative thinking and collectivism on the part of American citizens. And in some places it’s actually happening – it would be nice to hear more about that.
Capitalism is dead. Start thinking differently.
That’s the real estate bubble as well. You didn’t lose value on your house–assuming you owned before the bubble really started inflating–your house was never worth that to begin with.
In a way, I was lucky that I moved to Florida at the beginning of the bubble–I was priced out of the market before I could even look, so I wasn’t really affected by it directly. My in-laws are in better shape than most because even though they had an unexpected expense that forced them to do a refi, they’d been in their house for 20 years, so the refi didn’t put them in ridiculous debt. Lots of people weren’t as lucky.
Much as I hate the thought of how much pain this going to cause the working class like me, who will be hit the hardest, I also think the silver lining is it just break the chain of mindless consumerism in this country.
On the negative side though, consumerism is what drove the enonomy and I don’t see the next big thing that will create a new bubble on the horizon. I’d love to think it might be alternative energy like windmills and solar panels, but I don’t see that growing fast enough to save us in the short term.
@wilfred: Capitalism isn’t dead, Wilfred. Might as well say that religion is dead. Some parts of it have been discredited, but even that isn’t enough to kill it.
That will be resisted until the point of war, if not beyond. Consumerism has already been conflated with patriotism, it won’t be long before it is again.
Years ago I read a science fiction story written in the ’50’s that imagined a future where material poverty was the indication of wealth and only the poor were obligated to consume and consume and consume. In fact, it was this obligation that signalled their poverty. I don’t remember the author but it would be nice to see that story taught in schools.
The solutions are so obvious yet no politicians have the balls to propose them.
Wipe out equity in the banks (and probably bond holders too), and recapitilize. Start using the $50 billion that is reserved to keep people in "their homes" (they’re not their homes, they never were their homes) to buy up empty vacant homes and burn them to the ground. Use the stimulus money to buy build public works that actually benefit everyone (and yes, that includes nuclear power plants). Suspend the payroll tax for a year.
None of these things will happen. My guess is that 60-70% of the stimulus package is a joke and Geitner’s performance thus far is underwhelming.
One last comment on this and then I really have to get some work done. I don’t think consumerism is necessarily a bad thing. I mean it is part of a healthy economy. Perhaps I should said, indiscriminate consumerism. It’s not so much that everybody bought stuff, it’s that they blew tons of money on cheap crap from China or wherever.
If consumers insisted on quality instead of quantity and bought goods meant to last from American manufacturers instead of plastic junk that they throw out because it’s cheaper to replace than repair, consumerism would be a good thing.
I know we don’t have that dynamic going here right now, in terms of enough quality goods being produced at affordable prices, but I’d like to think it could happen.
OMG, You speak Prada?
OK, but only if you tell me how you’re getting free internet access.
I hate the terms conspicuous consumption or consumerism. They are just so vague and ill defined. One person’s conspicuous consumption is another person’s informed consumer choice.
Case in point. I dropped my damned bodum two weeks ago. I have been getting by with instant coffee and tea for the last few weeks. This is the 5th one I have broken, so I am thinking about just breaking down and buying a coffee pot. Now, since I like to buy things that last (my first car lasted 23 years), I am probably going to drop a couple hundred dollars on a Bunn-o-matic. Is that conspicuous consumption? I could just as easily go spend 19 bucks on a POS coffee pot somewhere.
Some people might look down their noses and say “Who needs a 200 dollar coffee pot- CONSPICUOUS CONSUMPTION.” I look at it as a decision to purchase something I will use for the next 20-30 years.
See what I mean?
@gopher2b: Heh. That is better framing.
@wilfred: The Midas Plague. Frederick Pohl.
Brick Oven Bill
Krugman is a big government guy, and is delusional. Big government guys say:
“We spent a lot of money in WWII, and this ended the Great Depression.”
What these big government guys do not tell you is that we had a gold-backed currency back then, and a manufacturing base. Spending today is the act of simply de-basing the currency. Inflation will make people mad, when it kicks in.
My solution is protectionism, as the value of labor on the world market is $3/day, and we do not want this reality to become globalized here. I think the Middle Class is a good thing. America is food independent and energy independent, as soon as we choose to be.
@John Cole: Well, that’s what I was driving at comment #20. I think spending more on a quality item that will last is good consumerism.
I’d note in passing that if you broke a glass coffee carafe, I believe they make stainless steel replacements. Not sure if they still do though since I’ve used a Melitta drip cone for so many years.
The Grand Panjandrum
@John Cole: Ah, grasshopper, you must learn the lesson of thrift again. Now go ahead and buy whatever you want because it is your choice. I do not consider a $200 Bunn consumerism just a waste of good, hard earned money. Go buy the $20 Mr Coffee and hold on to that $180 in a CD. Then as long as your Mr Coffee lasts at least 2-3 years you are in the black ink! (I suspect it will last somewhat longer, but you do have to take care of it by washing it out every six months whether it needs it, or not.)
@John Cole: Okay, I’ve never dropped a couple of hundred bucks on a coffee maker, but I have spent upwards of fifty on more than one occasion, and each time I’ve done it, the damn thing has broken and left me with the twenty dollar one I bought six years ago. Just saying.
@wilfred: "That’s worth a thesis: Why/How did people become convinced of something that the slightest bit of common sense would have told them was not true?"
Because most people don’t spend their days on blogs like this. They’re busy working and raising their kids and assume that the financial experts are right because that’s their job and they wouldn’t be on tv telling people things if they were lying.
As an ex-math teacher I know that there are a lot of people who are extremely intimidated by anything to do with numbers – even though many could do the work just fine once they got over their fears – and would be more than happy to trust others so they didn’t have to figure out the numbers for themselves.
Who the hell needs a $200 coffee pot?
The guy who went to JCPenny’s this ‘kend and scored 3 pairs of pants for…..get this….$34 TOTAL. Really not sure how that place is gunna make it.
Get yourself an Aeropress. It makes great coffee, though with a little bit of work.
Remember how Rush Limbaugh used to make fun of Ernest Hollings for complaining about "to much consumption going on?"
They just did a study about this that confirmed something I felt all along. The happiest people were those who spent money on experiential goods like trips, films, etc. The less happy were the ones who bought things. Also, there is only so much stuff a person needs; the rest is a trap. Finally, we can’t go on consuming in a linear manner on a non-linear planet, but I hope that we take this moment to make the argument that regulated capitalism, not consumerism is a way forward. Lets face it, America is better with a strong middle class, period. I do not want our country to turn into Brazil (sorry NRO – I know fortified gated communities is your masturbatory fantasy)
Bodum makes acrylic versions of the French Press, too. If you like that style of coffee, you probably won’t like a plain old coffeemaker.
We were watching 60 Minutes last night, my husband and I, the segment about mortgages, and we looked at each other and said, "Boy, I’m glad we didn’t go that route." Because we had a fixed mortgage with WaMu, and there was that point a few years ago where there was a lot of pressure to refinance because rates were so low, and to take money out of equity.
And we did refinance – into a fixed 30-year low-rate mortgage with our local, stable, very dull credit union. For all that we are wildly liberal on social matters, we’re pretty conservative with our money. And at the time people would laugh at you for making such a conservative decision, because you were leaving all that potential cash on the table.
Fortunately our nabe was never that bubbilicious, so we have some equity still and our nice low monthly payment. I don’t feel righteous about it though, more of a "that could easily have been us" sigh of relief.
@ksmiami: "The happiest people were those who spent money on experiential goods like trips, films, etc. "
All of that money I spent going on Grateful Dead and Phish tour suddenly seems so well spent…
Perhaps Apple makes coffee makers. Since everything they make is apparently so teh awsum, you’d better investigate, and expect to pay $695.
And buy 1-brew disposibles for $0.99 at their iStore.
I don’t find Krugman’s piece depressing, although it is a bit sobering. But I see his bottom line about "years to work off the debt" thing and think, well, duh. I knew that I would have to work to pay off every dollar of debt I incurred, this is not exactly a big surprise.
I won’t get too specific about my finances in the interest of anonymity, but I have never taken on debt that I could not pay off. So yes, I know that it will take time to pay it off. The only thing that is a fly in my ointment is that if I lose my job, then my scheme has to go to Plan B which is a lot harder and poorer than it would be under Plan A. But I knew that when I took on the debt, too. So again, nothing shocking.
What’s shocking to me is that we let the obese felines, er, fat cats, set up a banking system that overpowerd the government and run amok. And now that we know that, we sit around and whinge like schoolgirls that Geithner’s careful thinking out loud about what to do next isn’t sufficiently dispositive and understandable by anybody at the coffee shop the first time we hear it. Actually, a careful and thoughtful approach is exactly what I think we need, and if it made sense to the morans at first, then I’d be damned worried.
Frederik Pohl, "The Midas Plague"
Frontline is doing a piece Tues night, the 17th, on the financial markets meltdown, IYAI
Seems time to declare The War on Gravity.
John, I think what makes Krugman valuable is also what drives you bonkers: his loyalty is to his scholarship, rather than any leader or ideology.
Tell ya what, we can start by taking away your income and your property. Oh, that wasn’t what you had in mind? But it’s only a relatively well-off person who will say such things. Such thinking is foolish. Demonstrably; it makes matters worse. (See Keynes, passim.)
Wilfred, the story was by Fredrick Pohl, who is still alive, still writing, and has a blog.
A metallic currency did nothing to prevent or control recessions in 1930 or at any previous time. (Look up Krugman on recessions prior to 1930.)
@Dork: Funny as hell.
@jnfr: I’m exceedingly conservative with my money too. I bought my house with an 80/20 fixed (ok the no down payment thing was a little risky), and when the bubble gave me some paper equity, I refinanced into a normal fixed with a faux 20% downpayment. I never pulled anything out because I didn’t trust it.
I spent last year paying down my cc instead of blowing my bonus on fun things. I hate debt too much to be a real American.
To be honest, I think the only thing that separates this column from the one John hates is tone. They both pretty much say the same thing.
Sounds like you’re sitting on a bit of a nest egg to be able to say something like that so glibly. A whole lot of people have been living at the end of their rope for years now and don’t need to be ‘taught a lesson’ about how fucked up things are when they’re less-than-gently reminded of it every waking moment.
I’m lucky enough to be hanging on thru this downturn so far. My job pays just enough to get by and it’s stable for now (a govt job that creates construction projects. just what the stimulus is geared for). I live in a middle-to-poor neighborhood and with what I see around here I wouldn’t wish a ‘long, hard’ period of more shit on anyone. The top 15% might need an attitude adjustment, but everyone else needs some help right now.
The Grand Panjandrum
With all the instant punditry using the stock market tanking the day of Geithner’s testimony as evidence that the plan was not fleshed out enough you have to wonder just when they will finally understand some simple truth: Wall Street wants the banks bailed out because it is in their best financial interest. I would also add that the banks themselves have not offered any real solutions to the problems they created. None. Oops, sorry, that’s not completely true. I forgot they do have one preferred solution: Taxpayers money.
Nothing like "socialism for the rich, capitalism for the working class and poor", no?
True, dat. I’ve never regretted a penny spent on things like trips or concerts. They’ve enriched my life and I can reminisce about them and look at my photos for the rest of my life, so those expenditures will continue to bring me happiness for many, many years.
I have, however, regretted some of the money I’ve spent on clothes, or knick-knacks. So it’s a shame that as money becomes tighter, the first thing that people tend to cut back on are the experiential goods, and not the material goods.
Yeah, right, like he wasn’t one of the first columnists to repeatedly point out that Bush was a fraud and a danger to the republic.
@Dork: Get one of the all-steel vaccum French presses like I did. They’re usually insulated too. Nissan’s is usually about $30 and I’ve not been able to break it yet.
The pants are probably made by people who are getting $2.50 a day. The store is probably selling off seasonal merchandise that already made the profit when it was fresh and now just needs to be gotten rid of to clear stockroom space for new merchandise.
I cant wait to see the (somewhat justifiable) outrage when O proposes taxpayer-funded mortgage relief assistance. Honestly, my conservative side kicks in, and I’m somewhat angry about it to. On one side, you have whole families without a shelter, which sucks. On the other hand, you had them buying not just an enormous house, but a huge SUV, jetski, vacations in Disney, and 800+channel cable/plasma/wireless all with the faux equity that didn’t exist.
IOW, torn between pure sympathy and a desire for comeuppance. Does this make me an asshole?
PS: I knew it was the end of society when I saw the first dog bakery as millions are starving…
Your not being an asshole if you look at the example you used, but I think it may be a very extreme example. Not everyone who’s in trouble went that route.
@ksmiami: I don’t know about that — to me, it seems like a perfect solution to the problem of starvation.
But maybe baked dog isn’t to everybody’s taste…
Because he was pointing out Bush’s lies about the economy. This was economic analysis, not analysis about what voters want or whether he was going to be successful at passing a law. Political analysis and policy analysis are different, even though I know the news media wants to make as think otherwise.
Gopher: The solutions are so obvious yet no politicians have the balls to propose them … buy up empty vacant homes and burn them to the ground.
Actually, Goph, that isn’t so obvious of a solution, considering the tent cities and growing population of homeless.
Well, maybe if you DON’T consider the homeless it becomes more "obvious" but that would require a Conservative outlook and nothing in nature is less a solution than THAT. But the Cons would like it.
And if it doesn’t work, the Cons could go with Both Sides Did It ™ Obviously.
No, that ship has already sailed, my friend. :)
However, WTF, man, have you turned into Ronald Reagan? What’s next from you, stories of Welfare Queens driving Cadillacs?
The scenario you describe is not the average foreclusure story at all. The average foreclosure story is modest family in modest house in modest neighborhood. Why are you focussing on the story that is several standard deviations away from the mean?
For the past 30 years, the American economy has been about "screw the savers".
I could never vote for a Republican, given that the party is run by psychopaths these days, but I would easily vote for a Blue Dog if that is what it took to get rid of these incentives for debt slavery that are are pervasive throughout our society.
Yes and no. That story may not be common, but working class poor (maids, nurses) with multiple investment properties is more common than you would think. You can thank Carlton Sheets infomercials for this. I don’t know exactly how widespread this was, but I and others have met several people who fell into this category.
@Alan: Second that Aeropress recommendation. I wish I had brought mine with me when I moved to Texas last month. It was wondermous.
I believe it was renamed to "The Space Merchants"
and is now required reading for certain college classes.
None of which are economics, naturally.
As far as I can tell, these two groups are not made up of the same people in most cases. People who were earning enough to get financing for those things aren’t suddenly living on the street–they’re renting a smaller place and don’t have as many gadgets now. And they’re bitching about it, a lot. But they’re not homeless.
Shawn in ShowMe
I’m in the same boat. Krugman may be on our side but when it comes to personal knowledge of the daily struggles of working class Americans, he’s just as insulated as Friedman is.
@Walker: I think you are describing exceptions that prove the rule.
My part of town is probably half Hispanic and 2/3 working class. Foreclosures are pretty common. But very few of my neighbors have rental property. Many more of my neighbors are living in rentals than are collecting rent on properties.
Nothing wrong with exceptions that prove rules, as long as we have a good idea what the rules are. The big-house-two SUV-60" HDTV-new pool-speedboat in driveway story is not the norm around here. "Those people" are Republicans and are living in the exurbs.
Left Coast Tom
I don’t see how a coffee maker, even a $200 one, qualifies as conspicuous consumption – particularly from someone who doesn’t do frequent entertaining. Mostly because it’s not conspicuous. I see conspicuous consumption as consumption intended to show off. For example, a $1.2 million office remodel.
And even this is separate from the issue of spending borrowed money on consumption – the "bad debt" versus "good debt" thing. There is too much bad debt in the economy, debt that didn’t generate wealth or provide long-term security.
Barry Goldwater, 1964. Forty-four years of sociopathy …. maybe it’s time to call a spade a spade. The conservative movement has always been a fraud. Unless you think that extremism is compatible with a democracy that rests on a middle class.
@Punchy: I shop at Penney’s a good bit, and even got a Penny’s gift certificate for Xmas (because I asked for it).
I think there is a difference between spending a lot of money on a product you will have forever, and spending a lot of money on crap that you will replace in a short time (clothes). Like, for example, my home stereo. Adcom Amp, Adcom Pre-amp, purchased for about a grand in 1991. That was a boatload of money at the time, and I have no idea how much it would cost in today’s dollars. Was that conspicuous consumption or consumerism? They still work today, almost twenty years later, and I simply don’t think I will ever need to replace them barring flood or fire.
Here is another vote for finding Krugman’s article Not Depressing. I find it quite a relief to hear, at last, an analysis of our economy that makes sense and explicitly rejects the gimmicks and nonsense I have heard my entire adult life (since Reagan, that is).
The fact it may take a decade or two to recover is not a big deal. We as a country may be more poor than we thought, but there is still plenty of wealth and innovation to take care of us all as we retool. We have a government and dominant political movement that appears inclined to do the right things once they stumble on them. The professional liars and cranks who got us in this situation are increasingly discredited and marginalised. I am more optimistic about all this than I have been in 25 years.
I can now level with my kids and let them know what sort of challenges they have to prepare for. They can look around themselves and directly see how things really are. They can get the sort of education they need to survive in a future that is fairly predictable. This is a tremendous relief to me.
That is purchasing with total cost of ownership in mind. Your costs have amortized to what now, about $56/year?
Anybody who is good at managing money thinks this way. If more people did this, Wal-Mart would go out of business.
The conservative ‘movement’ was always a fraud but this is a pretty good time for working people to conisder some conservative values, especially when they are being encouraged to support a recovery plan that will just reinforce their beggar status in regard to banks.
I’m talking about working class people here, btw, not middle class people clinging to the trappings of the rich. I bought 2 houses and sold one and never dealt with a bank – in each case either I or the owners carried the paper.
Conservativism, if genuine, would recognize that banks are as much a controlling institution as excessive government is and that limited government should also entail limits on banks. The best way for working class people to get out from credit slavery is to look to each other, not to government officials who, whatever their nominal intention, are always beholden to banking interests.
Good for you, too, being reasonable and thinking ahead.
I don’t know, I don’t have an issue with spending money, per se, but Krugman is completely correct that the whole country has been on a debt binge (some parts more than others, obviously), and one way or another we have to work that off.
It’s kind of weird for me to look around my very ordinary suburban neighborhood and realize that we are supposed to be the engine that drives the world economy. I know we’re well-to-do compared to most of the people on the globe, but most of us don’t really have all that much in the way of financial resources.
@John Cole: From an ethical viewpoint, I would stress the ‘conspicuous’ aspect. If you are buying an expensive piece of equipment because it is of high quality, and you get a lot of pleasure out of that high quality, I can’t find anything objectionable about that.
If you are buying fancy crap to impress other people (which happens to be how a lot of stuff is explicitly marketed), then you are making a foolish purchase that deprives you of money and time that should be dedicated to something worthwhile. An obnoxious side effect of conspicuous consumption is that it make waste and narcissism normative… I can’t see an aspect of that in your purchase, either.
Now if you are buying sound equipment in order to impress the babes, then that is conspicuous, but is basic human nature in action. That sort of thing is necessary to propagate the species.
gopher2, a rising star in the Republican party. Taking idiocy to completely new levels even Eric Cantor doesn’t dream of.
Shawn in ShowMe
And how many people have you met that didn’t fall in this category? There are also black Republicans, female race car drivers, and romantic comedies that don’t suck. The only reason these facts are noteworthy is because they are several deviations away from the norm.
He is only wrong in his choice of destruction. Buying homes and bulldozing them has long been accepted policy in bubbles past. Vacant homes allow squatters and are a nightmare for both the neighbors and law enforcement. If no one wants the property, it is better for everyone just to clear it.
Ivan Ivanovich Renko
@John Cole: I think you have to use a different metric for technology related items.
For example– I have a set of Yamaha computer speakers (with sub) that I bought for all of 30 bucks about five years ago, and they sound WAY BETTER than anything I could have afforded for hundreds twenty years before that.
My first computer was an Apple II that cost me about 2400 bucks back in 1983– yeah, guess how useful it would be today.
BUT– I have a pair of black leather dress shoes that I bought from (omg) JCPenny some thirty years ago– and they’re still beautiful and still working for me (not that I wear dresss *anything* much these days).
Yes, but Wilfred, their problem is that the "movement" has been funded by the rich people who own the banks!
You have people with limited means being manipulated by people with wealth to vote against their own financial interests …. talk about dysfunctional. The conservative "movement" was one of the greatest frauds ever perpetrated on the American public.
Mar in #6 —
Be careful what you wish for…
People do not stay calm and cool while all their means for food and shelter disappear…there are huge consequences for social instability and a great deal of suffering. While it may happen due to unavoidable events, I would not wish it on us, even though in some ways we may "deserve" it…
you lack even a fundamental understanding of economics.
@Shawn in ShowMe:
It depends. As a whole of the US population, yes, they are several deviations from the norm. But I have personally witnessed several building projects (subdivisions, condos, etc.) where this type of buyer is not atypical for that particular project. However, in this case, I am really more pissed with the developer, as they actively sought this type of buyer and have now destroyed the environment and property values of their surroundings.
I have shared this thought for a while now. The stock market never should have gotten as high as it did. It is a very poor indicator of economic health and in my opinion nothing more than a Ponzi scheme. One would have thought that after the internet bubble burst in 2000 that we might have had a sliver of instrospection; instead, it was full speed ahead into the real estate bubble. As always, the only ones who get rich are the ones who get in first.
@John PM: Blasphemer!
Destroying houses and plowing them under sounds like orthodox FDRism to me. We have lost some pretty nice farmland to McMansions in the last decade.
Shawn in ShowMe
"The Midas Plague" was a short story by Pohl done in the 50s. The Space Merchants was a novel he wrote with his friend and frequent collaborator C.M. Kornbluth that satirizes the role advertising plays in our lives.
Don’t get me wrong, I’m all for a big(ger) safety net. But that safety net should not include keeping people in houses they had no right buying in the first place.
There is only two ways to stop a deflationary spiral. Create artificial demand or cut supply and creating artificial demand (which is what pre-foreclosure subsidies are) rewards the wrong people.
If you prefer that the government turn the houses into subsidized public housing…okay (not the McManision, those need to go). But the owners should not get to keep the houses anymore than shareholders should keep the banks.
Personally, I think the Krugster is kinda cute, in a geeky sorta way. He needs to have his ears fixed however.
Exactly. There’s something to be said for buying well-made things that will last a long time. It’s harder to save up your money for well-made items, instead of just buying the cheap junk, but I’m convinced that over the long run, it saves you money. It’s also a hell of a lot better for the environment, ’cause we’re not throwing stuff away every two years.
Case in point: when my mom and dad got married, back in 1967, her uncle bought her a Phillips toaster that, at the time, cost around $60. That’s a fair amount to pay for a toaster even now, so in ’67, it was a pretty expensive toaster indeed. My mom still has that toaster. It still makes perfect toast. And it gets used, on average, three times a week. I used to buy cheap-ass toasters, but would have to replace them once a year. I would like to see people starting to own fewer items, but better-made ones, instead of owning a bunch of cheap Chinese shit. It’s much better for our environment, and it might help revive the repair industry. Right now, nobody bothers repairing anything, because they only spent $10 on it and it’s crap. But if we start saving our money and buying quality stuff, we’d be more likely to take good care of it and not throw it out when it needs repair.
Fires are more fun to watch. I just thought I would give the something back to the people and let fire fighters practice their trade.
It takes one to know one, does it?
I’ve been through 2 expensive coffemakers (a Mr. Coffee and a Krups) in 3 years and am currently on a Cuisinart that got high ratings for quality of both the coffee and the unit itself.
Interestingly enough, I wouldn’t have bothered buying the Cuisinart on the third time around because my old Mr.Coffee Accel still works, but I dropped the carafe and didn’t want to wait for a replacement to arrive.
The still working Mr.Coffee says ‘Made in USA’ on the bottom.
Both the Mr. Coffee that crapped out literally a month after the warranty expired and the Krups said ‘Made in China’.
That would be lame if I actually called you a name. But, I didn’t so its just stupid.
As long as there are people living on the street or living in their cars, of course there is someone who wants that property. Where do you think those squatters come from?
Instead of bulldozering houses, why not rent them out at low rates as some kind of homeless shelter and help people get back on their feet again?
And? What the fuck does that prove? I thought the same thing from the beginning and was one of the lonely 10% that disapproved of Bush during and immediately post 9/11.
That does not make me a reputable political analyst.
@John Cole: Jesus, John, have some coffee before you make your coffee. Five? I have had the same Bodum 12-cup for 15 years, and the little 1.5 American (3 cup European) pots I have for every day use are going on two years now.
Failing that (the not dropping them anymore) by a shatterproof replacement beaker from Bodum.
I am as big a believer in paying more to buy a product onlu once, but if you pay $200 for a coffee maker that doesn’t come with a (cute) barista, your getting jobbed.
I am not certain what my lapsed Catholicism has to do with my last comment, but thanks! :)
The irony of the last eight years is that those who are conversative (i.e., reactionary) when it comes to social issues were the same people who were liberal (i.e., reckless) when it came to economics. They tell us that we do not have enough sense to be able to get an abortion or purchase birth control, but we can afford a million dollar home on a $50,000/year salary.
Every day now one phrase from the Bible runs through my head: "It is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of Heaven." Why is it that those who profess so loudly to be Christians seem to forget this basis principle of Christ?
@TenguPhule: The Space Merchants is a completely different book.
Jesus H. Christ.
Leave it to you to turn a discussion on the state of the economy into a referendum on theism. You’re getting as bad as Paul L. in his quest to twist any issue into yet another tirade against Mike Nifong.
It would help if you understood what the expression meant, but as grammar and punctuation don’t seem to be your strong areas, I assume reading comprehension is not one of your strong points either.
Be aware that the Bunns keep the water hot 24/7 (this is why they start brewing so quickly).
So if you get one, you might want to use the ‘vacation switch’ on the side to actually power the unit down until you’re ready to make the coffee.
The water here is hard as hell and I didn’t particularly relish the idea of running vinegar through a Bunn once a week in order to remove the mineral buildup.
Shawn in ShowMe
The teachings attributed to Jesus Christ and the business being conducted in his name are two different things. For a more recent secular example, see Henry Ford.
@Shawn in ShowMe: #100
I know…the question was rhetorical. As a lapsed Catholic I am unfortunately all too familiar with the divergence between words and deeds when it comes to Christianity.
@John PM: My idea of a discussion on religion is to simply fall back on my all purpose prayer:
Jesus H. Fucking Christ!
Forced labor camps for Wall Street and DC.
Or we just tar and feather the bastards.
You are talking about turning them into an alternative to the Projects. Yes, that can be done as well. But of course, this has its own problems (witness the effects that this has had on Memphis).
Squatters who are capable of upkeeping a house are not a problem. The problem is with the mentally ill homeless, who would simply let the house decay and become unsafe, or with drug dealers who turn them into a place of business.
The problem here is not some lack of housing demand. We have built far more homes over the past decade than we have people to live in them (the statistics on second+ houses bears this out). Some of these houses will probably have to be destroyed. Finding the right balance will of course be quite tricky.
Thanks, you’re right. I’ve read both and got them confused. ^_^’
Here’s the problem, there’s almost no way to be insulated enough from the effects of this recession. Consider my family.
We have zero debt outside our house. Our house is a fixed rate ~5% mortgage (luck/timing) that’s roughly 20% of our gross income. Our house was purchsed right after 9/11, so way before the current bubble. We save 20%/year into our 401ks/IRAs. We’ve got 6 months+ of fixed savings. We put away enough each year into a 529 to fund a full ride to a state school (we hope) for our kids.
But our 401k and 529s are entirely under water (think back to 1995 and look at your investments, maybe you’re break-even, but even with dollar cost averaging, it hasn’t been a good time). Our 6 months savings would barely cover the length of unemployment we’d be facing if one (or both, heaven forbid) of us got laid off.
In fact, if I get laid off, it’s likely I’ll use up all that savings and I’m doubtful about my ability in the short run to return to the same income level. Lots of friends who are in similar positions to me have been getting laid off since this summer, and only a few have returned to work (this means 6+ months of unemployment). And these are the years I need to be cruising on "auto-pilot" (hard to save for retirement when you eat through your savings every 10 years due to a length lay-off). I’ve been laid off for a long period of time before, it sucks, but back then I didn’t have kids or a big mortgage. Still ate through a lot of savings that could have been used for lots of better purposes.
And I count us as the lucky ones (in a position where fiscal responsibility requires no real sacrifice). Even unexpected expenses (car problem, emergency room visit for the kid) set us back only a tiny bit. How the median family even survives is entirely beyond me, without factoring in "stupid" decisions.
Our economy is broken for 90% of the people, and it’s only debt, lies from Republicans and our collective willful ignorance that has made it not seem this way. If we don’t come out of this recession with seriously increased taxes on the wealthy, some kind of nationalized healthcare, strengthened social security, better regulations that prevent market excesses, etc. us "middle aged" people are facing the prospect of no meaningful retirement and no way to afford college for our kids.
Okay, genius, let’s try out your plan of turning 4200 sq. ft. single family homes located in the middle of the suburbs into homeless shelters and see what that does to the deflationary problem everyone is trying to reverse. I’m sure when everyone on the block put their house on the market that won’t drive down prices at all. Grow up.
(and BTW, you can you start a sentence with but, because or any other conjunction unless you stopped learning to write in the 7th grade, but I digress)
While I hate dealing with POS consumer items that break regularly, I haven’t found that high-end items are any better. I wish there were more consumer goods that acted like a "Toyota". Not cheap, but dependable.
A lot of expensive consumer goods are like buying a BMW – which is awesome compared to a cheap clunker (feature-wise), but requires high end repairs and is finicky.
So I’ve tried to do a better job of finding that middle ground. Don’t want to buy things that need replacing every 6 months because they break, but paying quadruple the "average" price in hopes you get something that lasts 20 years seems silly too.
Viva la Revolution.
Stick to pre-80s stuff.
Less parts, lasts damn near forever.
@ThymeZone: Speaking of "morans", check out what I found in my neck of the woods.
In general, I hear you, but there are a lot of good advances since then.
For example, modern electric ovens (not ranges, ovens) heat much more uniformly, especially those with convection features. Old microwaves do actually leak radiation, heat poorly, etc.
And cars are way more reliable and full-featured than models of the past. Consumer Reports regularly talks about how "defects/thousand" is way down over the last 30 years.
At any rate, I still think a lot of current consumer goods are either cheap and crappy throw-aways, or overly-featured luxury items that aren’t built to last either.
Yeah, I feel very fine about blowing almost 30k on burning man over the years now. At least I got mimosas on an alien tripod while watching naked people with flamethrowers.
Audio equipment, like cars, is simply a flame that exists to burn appalling amounts of money. Have you looked at an issue of The Absolute Sound or Stereophile recently?
I mean, who actually buys a $150K turntable (and spends another $30K on a cartridge and phonostage of similar quality)? And why? Does it really perform 300x better than what I just bought for $600?
And why did God, in his infinite wisdom, seemingly choose to put that gene only on the Y chromosome?
Actually I do have a slight cushion, b/c I’ve been saving 25% of my income every year since I started working. …and I started working minimum wage, saving on rent by sharing a place with roommates, and ate sandwiches, spaghetti, and the occasional fruit and vegetables to stay healthy and gain muscle mass while spending a minimum amount of money.
I share your resentment for the top 15%, but the bottom 85% aren’t blameless either. The only reason somebody should be at the "end of their rope" is b/c of astounding medical fees. (and for those people I really feel for them, b/c basic medical care for everyday ills should NOT be as expensive as it is) Other debts of obligation that you’ve put yourself through aren’t "needs" to survive, but are rather "wants" to have a better life. And those should be cut back, no matter what your income or where you live.
Women’s shoes and handbags.
I rest my case.
Your argument against Krugman seems to be that he should stick to what’s politically feasible, even if what’s politically feasible won’t get the job done. But to say this is to say that we’re doomed.
Also, what’s politically feasible isn’t written in stone; it can be shifted. One way to shift it is for respectable people to persistently advocate policies that are currently not considered politically feasible.
I see you and I pray to similar Gods; my favorite is God F-ckin’ Dammit!
I think that is the idea. In the future, most of our population will have one of two career choices: soldier in exotic far-flung locale, or inmate in our ever increasing prison industry. And retirement for middle-aged people such as yourself will be conversion into some type of Soylent Green substance.
Food, rent, utilities and transport.
Food and energy inflation have soared over the last decade. Things that were possible 20 years ago are no longer achievable today.
But how exactly do we determine that THEY had no right to buy the house in the first place. I doubt most of the homebuyers who are in trouble looked at their house and said "boy in three years they’ll have to foreclose on me, but I’m taking it anyway". I’m sure most homebuyers looked at a house and thought how much they loved it and the Realtor said, "hey we can get your payments to where you can afford them" and the people believed it.
A few years ago my ex and I wanted to upgrade our house. The Realtor who was working with us figured out pretty quickly that what my ex wanted in a house was usually over $300,000. What she never quite grasped was that I was not comfortable with spending that much for a house. So she showed us all these expensive houses and told us how easily we would qualify for financing (we did have fantastic credit scores) When we found houses in the price range that I was comfortable with, she would sabotage the deal, because she wanted to make a better commission. I finally convinced my ex that I just couldn’t go as high as he wanted and he told me he didn’t want to move to settle for less and we ended up not moving and she got no commission. The point is that if it weren’t for the fact that I got queasy after a certain price range, we would have been talked into buying a house that would be very hard to sell right now. Not everyone has those kind of instincts and the world keeps telling us that we SHOULD have it all. I do feel sorry for people who actually believed the lenders and the mortgage brokers and the Realtors who said "See you can afford it, you’ll only pay "x" dollars a month and when you sell you will make a profit.".
Takes a warehouse full of Jimmy Choo and Prada to add up to one of these.
And that sucker is 1/2 of a Lamborghini.
I wasn’t talking about starting a sentence with but, but about for example using "its" where you should use "it’s".
So you think people should sleep on the street and in their cars and risk freezing to death rather than have some overpriced real estate for the rich lose a bit of its value?
As I said, a rising star in the Republican party.
I think the Boomers who are planning on retiring within ten years are the canary in the coalmine regarding the 401k. Defined benefit pensions have been nearly eliminated and the median income worker just isn’t able to save enough to retire decently with a 401k. I’d like to hope this will stop those stupid fucks who are obsessed with privatizing Social Security, but those people are hopeless.
Student loans are the other big shitpile I haven’t seen many people discuss. Lots of people in their 20’s & 30’s have student loan debt that they will never be able to pay back (especially in this job market) and can’t discharge. I’m interested how this will effect home ownership, retirement planning and even couple’s plans to have kids. I’m not optimistic.
You of all people should be furious about this. The prices of those houses your ex wanted were artificially inflated outside your price range by people with too much credit bidding them up.
I’m sorry but if someone decides to buy a house with less than 5% down, on a variable rate mortgage based on the premise that if they can no longer afford they can simply sell it for a profit is (a) at best, incredibly naive, or (b) at worst, really stupid.
I am so sick of people blaming all of their problems on someone else. "The banker made me buy the house." "The real estate agent told me it would be a great investment." Boo-fucking-hoo. Grow the fuck up. If anything, you should be happy you got to live in a nice house for five years. (And by "you"…I’m obviously not referring to you Linda)
It’s your decision. You made it-live with it.
(This is obviously different from the limited fraud cases out there. If you have a real fraud case, then sue. And not reading the contract because you are too lazy or stupid is not a defense, morally or legally)
I’m doing fine for myself even though I am only in a temporary career where the business I am in is suffering because of the economy. It’s probably because I work so much and because my part of the country hasn’t been hit as hard as other parts. My expenses aren’t small but hardly huge, and I am hardly in my prime earning years, as I am very young. That’s why I am more optimistic than most.
Not everyone in my family is the same way. I can’t even imagine what it’s like for people who are worse off and have responsibilties I don’t have, especially for those who are close to retirement.
There is no practical way you can upgrade beyond a good set of mackies and a technic 1200 set.
Oh, you found a typo. Congrats.
I did not say people should sleep on the street and freeze to death. I said people who made poor (and greedy) decisions should not be rewarded. Building new and better homeless shelters, relocating people to cities where there is job growth, re-educating them with new skills, etc. are all better uses of resources than subsidizing inflated housing prices.
And whether you like it or not, if you start turning vast swaths of the suburbs into public housing and/or homeless shelters, you will have massive deflation in those areas. This would only exacerbate the problem. I don’t know where you draw the line of demarcation between the "rich" and “not rich” but I don’t think it falls on “homeowner” vs. “non-homeowner.”
@bootlegger: Good work, at least now we know where their headquarters is!
So you say that you need to burn down houses because when you put people in those houses you are subsidizing inflated housing prices, And then in the next paragraph you state that putting people in those houses will cause massive deflation? Try again.
And you want to burn down houses and build new homeless shelters rather than converting existing houses in to homeless shelters? Why the destruction of capital? Can’t you just say that you don’t want to have "those" people living near to your people?
Don’t you think that unless you flatten whole subdivisions, a neighborhood that has a number of empty plots where clearly houses used to be look about as bad as a neighborhood with some empty houses?
In the case of owner occupied residences:
*Lenders should be mandated to directly attempt to negotiate with homebuyers before foreclosure. Too many stories of people wanting to renegotiate but they don’t know who even owns the paper at this point.
*During negotiations, homeowners should be able to pay rent on the homes (for up to say, a year) so they can stay in them. This should help aleviate the phenomenon of suburban ghosttowns.
Vis a vis consumer goods, I am beginning to think that maybe someone could work out some sort of equation that incorporates cost, longevity, reliability, and dumb luck. Because while I buy into the notion of investing in quality goods with a long expected lifespan, I had a Volvo that was a total piece of junk, I could have had a new Lexus for what I spent on it in repairs and depreciation, while my parents had a Renault Alliance (under $6k brand new) that they drove with very few problems for 15 years. It’s similar with a lot of things I have — there is a vague "you get what you pay for" quality to many things in my house, but there are also cheap shoes that hold up well and are comfortable, a midrange price laptop that after three years I am ready to chuck into a lake, and rickety and annoyingly fragile antique furniture. It would be neat to have a program that would evaluate all these things, then calculate your luck factor and tell you that there’s a 75% chance you won’t regret getting the Bunn.
An acquaintance of mine was telling me about his homebuying experience from a few years ago. He and his wife had told the realtor that they enjoyed traveling and keeping a cushion of savings in the bank, and that their upper limit for houses was going to be rather less than what they would qualify for. He described the realtor getting frustrated with them several times trying to explain that a home was an investment, and you should just put as much into it as you possibly could because you would get it back, there was just no reason to spend less on a house than you could. So the realtor didn’t last. But I expect there were other buyers that realtor may have convinced to spend more than they wanted to, who probably regret it now.
The Moar You Know
@Calouste: Depends on where he’s posting from – if you’re living in Southern California, this may not be quite the stupid idea that it seems.
Friend of mine works for a homebuilder. They, like all other homebuilders, invested rather heavily in the "Inland Empire", the godforsaken shithole stretch of California that stretches from Temecula through Riverside, all the way out to the California/Arizona border. There are several hundred thousand houses out there. No jobs. No centers of industry. A two-hour drive, at a minimum, to get to any poissible place of employment.
Those homes are never going to be occupied. They are worse than useless – you can’t place homeless folks in them as they are miles away from any kind of support structure, or even supermarkets, for that matter. There is no mass transit that can effectively serve such developments, as they are nothing but massive sprawl. There is no industrial or commerical infrastructure that can support any employment.
My friend is grateful that his employer was one of the smaller homebuilders, as they aren’t that invested in the area. We took a drive out there a few weeks ago. It’s beyond creepy. Thousands of acres of houses that will never be lived in.
The homes will rot to the ground, although a better disposition of them would be, as gopher2b notes, to burn them to the ground. Like Katrina trailers, they are literally uninhabitable.
You are morphing two different scenarios into a single one to make your point so I’ll break it down for you. You have deflation. You can stop deflation two different ways (a) increase demand, or (b) decrease supply. Most everyone thinks stopping real estate deflation (at this point) is a good thing. The current solution is to artificially keep supply down by subsidizing existing mortgages. That is a solution that may very well work but it rewards all the wrong people. Another way to cut supply is to actually destroy it. This solution, at least, doesn’t contribute any moral hazards.
Now you could "convert" these houses into homeless shelters as you suggest. If you converted these houses into homeless shelters or dense public housing, a great deal of the existing neigbhorhood would leave (putting their house up for sale thus increasing supply thus driving down value). Say what you want about those people, but living near public housing or homeless shelters wasn’t what they signed up for when the moved in and its right to leave.
I don’t live in the suburbs. I live right smack in the middle of a major city. My place is about two blocks from a Salvation Army homeless shelter so I’m not sure what you mean by "my" people but you can pretty much go fuck yourself with you juvenvile assumptions. And its not "capital" if its driving down the value of everything around it. It’s, like, totally the opposite.
I think the neigbhorhood would appreciate the opportunity to expand their yards and/or build parks.
I didn’t make this point but its dead on. You might as well put people on reservations because that is all you would accomplish (in place like Southern CA).
I really like reading the discussion today — lots of good thinking..
I would caution this however: the "Fix" is harsher the shorter the timeframe it takes to do. Major cutbacks in spending and crashing employment "work" to correct our excesses. However, the kind of suffering brought on by this kind of rapid, Draconian fix also brings along with it a great deal of social misery and unrest. Those of you who think that you would not be drawn into chaos because you have always saved more than you spent and always done the "right thing", eschewing consumerism and the like, will not be spared. There won’t be gold stars on your foreheads to keep angry hungry mobs from doing their own kind of impulsive adjustments.
Again, while some of us have the luxury of thinking of some of these sorts of punishments or purges as a real option, those with some desire to minimize suffering and chaos to the extent possible will be considering a more measured, patient even, approach. That approach will require waiting to see what is evolving and trying to pace the rate of fall rather than just letting go of the rope as some seem to advocate.
We are all soft and though we are less than blame free, few of us have had to live through real political and social chaos in our lifetimes. Remember, revolutions don’t always result in improvements — at least in the short term.
So have some humility and also think about having some luck — unless you like a lot of pain and don’t care at all about the real costs of your future reality…
@TheHatOnMyCat: I’m going to snag a picture of the street sign for our host.
You should come out this way if you want to tear down unused housing. It would sure do this area a lot of good.
Re: audio equipment.
A large part of the problem is that spending insane amounts of money is the only way to get quality audio these days. Thirty years ago I bought a stereo system for $200 that included a Kenwood receiver that I was basically getting for free because it was a discontinued model. It had .1% Total Harmonic Distortion. That was entry-level (or below) then. Soon you would see amps with .003% THD to take advantage of the new CD format.
Now, look at some of these "home theater" systems that cost huge sums of money. Five channels with a subwoofer, admittedly, but 9% THD is pretty standard.
Problem is, once you’ve gotten used to quality sound, you can’t listen to this noise any more. Nowadays they’re touting the death of the CD in favor of downloaded crap at 128,000 bits per second that I’d rather stick an icepick in my ear than listen to.
If my 20-year-old Carver AVR 100 ever goes belly up, I’m SOL because I can’t afford what even the bottom end of quality audio equipment goes for these days. I paid $800 for it (down from $1200 because it had been replaced by a model with a black faceplate) so that’s $40 a year. You’d probably have to pay $10,000 for anything remotely comparable nowadays, and there is nothing comparable because it incorporates at least three technologies that died with the second of three corporations that Bob Carver had stolen out from under him by insensate bean counters, which they proceeded to drive into the ground.
So, yes, I kind of sympathize with people who spend that kind of money if they have it and that’s what it takes to get anything decent any more.
The estimated value of their house going down 20% in year instead of going up 10% every year wasn’t what they signed up for either. But you know, live sucks sometimes. And I’d still rather see people live in public housing in my neighborhood than on the streets.
The land is still owned by someone (if even the bank), who might want to see some money for it. Or just let it lay bare until the economy recovers and they can sell it for good money.
I’m on record here arguing for the more humanist approach proffered by Elie and others above. When you start arguing over who "should" stay in their home and who "deserves" help and who doesn’t you slip into one of two extremist (IMO) camps.
The first is the "moral hazard" argument that seems to buttress the reasoning behind the cold calculus of capitalism. Anyone who is stupid deserves to suffer, the argument goes, and if we try to ameliorate it we ensure it happens again. I don’t buy it. I don’t believe people need to be bankrupted and have their entire lives turned upside down to see that the exotic loan was a bad idea. We all make mistakes, but more importantly is the fact that it isn’t just the decision-maker that suffers, but every person, mostly children, for whom that person is responsible. Should the idiot’s children have their lives turned upside down so we can make an example out of the financially illiterate? In my opinion, no.
The second is the authoritarian "they don’t deserve it" argument that implies that because someone has more, they naturally deserve less. I am in complete agreement that the wage gap in the US is absurd, but I frankly don’t trust anyone, including my government, to decide who deserves what, particularly when it comes to what home someone is in or what wages they should earn. I’ll go along with a minimum living wage and even a maximum wage, say 10-20 times the lowest paid employee, but when I hear someone say "they don’t deserve that expensive house" I cringe. Obviously at one point in time they did "deserve" the house, at least in terms of someone being willing to lend them the money.
My humanist instinct is to try and minimize the disruption to family’s lives as we all try to get through this together. If this means throwing some of my tax money into new mortgage ideas to keep people in their current homes, and it bottoms out the falling housing market so people aren’t totally freaked about the value of the one thing they have the most invested in, then I’m all for it.
@The Moar You Know:
If a house is literally uninhabitable, how can it affect the housing market?
Krugman’s right, it was con job, and he’s wrong, large scale global war will shortly be on the horizon; albeit, we may well play a role more akin to Germany in WWII, with the Chinese playing our former part. Just keep in mind that history does not repeat itself, so much as it rhymes with itself.
@Calouste: One way I could see is that people would be willing to live in the middle of nowhere if they had tons of land and few neighbors. Being surrounded by 40 acres of desert landscape is a lot different than having a creepy, empty subdivision.
I agree that most ‘home theater in a box’ systems are substandard junk, but a good HT receiver can still be bought inexpensively.
My Yamaha RX-V740 ($350 clearance at a locally owned shop) is rated at 0.06 THD 90 watts RMS 20Hz-20kHz at 8 ohms for each of the six powered (sub output is unpowered) channels.
I’ve also seen good reviews of the Panasonic digital receivers.
Couple it with decent speakers* and you’ve got a decent HT setup that wont bleed your ears or your bank account out.
Granted, it won’t match the Carver M0.5t/Klipsch Cornwall II setup that I owned 10 years ago when I lived in Mom’s basement, but it’s not nearly as big either.
*(Bic V-62’s and a Paradigm sub for my current setup)
Sounds good. As long as I’m not a burden to my kids and don’t have to work into my 90s in the salt mines on the moons of Regulus XI, I’ll be fine.
I think the Boomers who are planning on retiring within ten years are the canary in the coalmine regarding the 401k
Ding, ding, ding! Anyone else read "the great risk shift" by Jacob Hacker? Great book, and makes the point that pretty much all the "risk" has been shifted onto your average joe, while companies and the government, are more insulated than ever from the long-term consequences of, you know, employing people. And frankly, the solutions to a whole mess of issues are simple.
Repeal the bankruptcy bill. If businesses make stupid bets on poor credit risks, both sides should suffer. Pass the so-called credit card/consumers bill of rights (esp. capping the top rate). Regulate all the excess fees, etc. Kill all the pay day lenders (or at least massively curtail them). We the people are already paying for this whole mess (private profits, social losses), so we’re shareholders in the credit industry and deserve a say.
Nationalize health insurance (a la single payer) – it makes nothing but sense. Put everyone in the same pool, do some sensible regulatory/health improvement things, bingo – we spend 1/2 what we do now and 99% of people get better outcomes. Plus we eliminate 50% of consumer bankruptcies, and gain spillover of having all the "extra" money going into consumer spending, savings, whatever.
Beef up social security to provide a better floor under people. Get rid of the wage cap, means test at the top end (?) and increase benefits (do not increase the retirement age). While we’re at it, reinvent unemployment as "job loss insurance" and make it something that actually helps people (whether it’s staying afloat or retooling, it can’t be a pittance of your actual needs).
Make a single "mega IRA" that’s on top of SS. Combines the 401k and IRA features/totals, get rid of "Roth" and just have the tax-reduction option, and make it totally portable (any brokerage place can sign you up, but they all have to have transparent, low-fee options). Require companies to continue/expand matches (through tax incentives, legislation, whatever), get rid of vesting periods, but make it trivial for companies to require employees to save (like the recent law that lets companies auto sign you up). This would at least come closer to replacing the role of pensions, but avoid the issue of companies sloughing off pensions during bankruptcy, since it’s not tied to an employer.
None of this is rocket science, but conservative and Libertarin jibber jabber about tax cuts, the Laffer curve, moral hazard and other hooey that has no pertinence to the real world is filling all the space for real solutions.
I do not believe the government should do everyone’s "work" for them, but the Libertarian ideal that we should all become financial, medical or otherwise experts is just idiotic. There has to be a sensible middle ground, and where we are ain’t it. The rest of the free world has this shit mostly figured out (and their problems pale in comparison to ours) and is worried about bigger issues.
Indeed. The possession of a double X chromosome guarantees the presence of a dominant allele known as The Imelda Gene.
I finshed grad school in the mid-90s. I discovered I wasn’t going to make all that much more than I did as an undergrad. And I not only had grad loans due, I still owed on my undergrad.
I lived like a broke grad student for years after graduate school. Cardboard box furniture. No tv. No stereo. No computer. No lamps. No sofa.
My monthly student loan payment was larger than my rent plus food.
As a result, many things had to come later in my life, such as marriage, babies, home ownership, saving for retirement — were all put on hold until my late 30’s. Health insurance was a luxury I couldn’t afford if my employer didn’t provide it.
The most infuriating thing I remember was smug fuckers telling me all I simply needed to do was to reduce all unnecessary expenses. It was infuriating because when there is nothing extra it is only a gooper or glibtard’s fantasy one can find money for necessities by simply eliminating those vacations to Aruba or buy a new car only every 3rd year instead of trading it in every other year, or go with dial-up instead of the T-1.
That was 10 years ago, and I don’t regret my decision to get a grad degree, or go best (read expensive) under-gradate school I could get into. It’s a very long term investment, but it is obvious to me it will not pay off as well as many think. Certainly not as well as I thought it would.
No one told them about this part, where after all that effort, time and money, everything they hoped to do will fade another 10 years further into the future — if they can see it happening at all.
That is the rude awakening awaiting the young people finishing college or grad school right now. And it’s going to be even worse for them. There is going to be a lot of angst, a lot of frustration, a lot of depression, a lot of anger, and a lot of re-calibrating of expectations.
See? There’s always a silver lining.
Wow, you really, really hate rich people
I don’t know if anyone will read this latest comment of mine, but I read through most of the comments on this thread earlier today, and when I got home from work, I decided to finish. A lot of people are talking about problems with student loans, especially towards the end.
I’m not sure what the solution is for people who are already having massive issues with paying them back. I find it incredible that someone could rack up tens of thousands if not well over $100,000 of loans only to go into a relatively low paying job without having someone, somewhere, tell him that this was a recipe for disaster. It’s understandable that some people have financially ignorant parents who aren’t going to be much help, but what about financial aid officers or loan officers at some institution lending money or helping students in need? I don’t know if it’s economically sound, let alone fair, to have some sort of system for discharging truly heinous debts, but outside of having people drastically alter their lives in a way to make paying back the debts manageable, what other solution is there?
Of course, it’d be nice to prevent this in the first place, so I like Suze Orman’s idea of requiring people dealing with student loans to give those who are taking them out some idea of the repayment plans so they can see if it really makes sense. Steps such as that will establish greater financial literacy and hopefully prevent people from making choices that don’t work out in the long-run.
Its obvious that the caldron has been bubbling quietly about a lot of issues — esp for younger folks from 30-40 years of age. That will be exacerbated and can lead to a lot of division and rancor during this downturn. Many people have gotten screwed but denied it for a long time. There is going to be no easy way to fix that short term but those younger workers supporting the boomers through social security are probably not going to be in a generous mood. Can’t blame them.
I find it interesting that most people are talking about our financial system. I believe however that our social system — the one, you know, associated with driving our political and policy decisions is going to be where the real friction ocurrs, where the reality of "not enough" and "where’s mine" will take this country to the wall.
You think that the antipathy against the Republicans is our central focus right now — and that is right. But if we crank up the pain on our population a couple of notches, your Moma is going to look like the enemy.
Can’t prove it, but I think Obama knows this and is extremely concerned and careful about the "fixes" he puts in place. He knows that we are sitting on top of a giant roman candle and that it won’t take much to have it all melt down.
I ask us all to go easy and go slow — be careful in how we think about our solutions. Think about the world that we want to live in. Aint hard at all to push it over into hell — not hard at all.
It’s late and I’m tired, but I’ll take a preliminary stab-implement a more humane repayment program:
For example, you pay 10% of your income above the federal poverty line for 10 years and your loan is considered forgiven. The poverty line for 1 person is $10,400. For someone making 30k/yr. they would pay 10% on the difference between their salary & the poverty line-$19,600. That would work out to $1,960/yr or $163/month. That seems perfectly fair and doable. Or maybe make the percentage income dependent-on sliding scale or something.There are obviously details I’m glossing over, but this is a fucking blog post, so…
I’m in complete agreement regarding costs going forward, though. Like healthcare, overall costs need to be driven down so a more egalitarian approach is feasible.
Respectfully disagree. If you shop carefully, you can find "entry level" electronics, from manufacturers like Cambridge Audio, Vincent, Simaudio, and others, that is much better than what you could have gotten for the same amount of (inflation adjusted) dollars 25-30 years ago. Similarly with speakers: there are some pretty good values out there from companies like B&W, Epos, Paradigm, Triangle, and others.
Last year, I replaced a Denon A/V receiver, Sony SACD player, and Polk speakers that I had since college with an Arcam Solo and a pair of Triangle Cometes. A major upgrade in sound quality for about $2400.
And the coolest thing? I never have to handle a record or a CD. Everything is ripped to CD-quality-or-better Apple Lossless or AIFF files, stored on a big hard disk array, and fed wirelessly to any laptop in the house or the main stereo. At some point I will get an external DAC for the main stereo, to improve the feed out of the Squeezebox, but I don’t consider that urgent.
I’ve been playing and singing since I was six years old, so I know what things are supposed to sound like. My current gear gets close enough to make me happy.
Krugman’s article isn’t depressing. If you want depressing, read about the folks predicting we’re following Japan’s path to ten years of ongoing recession. Like, for example, this article.
We’re already in the new bubble! It’s called the military-industrial bubble, and it’s growing like gangbusters. Our economy is collapsing, tent cities full of homeless fill vacant lots, tens of millions of people are losing their jobs…yet we’re increasing our military spending. Take a look at America’s Defense Meltdown if you want a preview of this next and biggest bubble of all. Along the way, take a look at GAO reports like this one showing massive cost overruns for Rube Goldberg weapons systems that don’t even work and in many cases must be cancelled before they’re even finished because they can never work.
When the military-industrial bubble pops, that’s going to be the big one. That will collapse America. At that point, everything will come apart. It’ll be interesting to watch. Also, it’ll be interesting to see just how high America’s defense spending can go — because, as we all know, bubbles always get much bigger and last far longer than anyone thinks possible.
Right now we’re spending well in excess of 1.3 trillion dollars per year on defense, broadly defined. Typical measures of defense spending leave out the Iran and Iraq wars as "special expenditures" (they’re ongoing, why are they special?), and leave out veterans’ pensions, the VA, the NRO, the NSA, Pentagon "black projects" (35 billion right there), DHS, and so on. Put that all together you’re nearly at 1.4 trillion dollars.
Since America’s GDP never was anything close to 13 trillion courtesy of all the Madoff-style scams and housing Ponzi schemes, our real GDP is probably somewhere closer to 10 trillion now. Spending 1.3 trillion per year out of a 10 trillion dollars is 13% of GDP. That’s a Soviet level of military expenditure — and note, folks, that it’s going up. The DHS budget skyrocketed this year. It’ll get higher next year. The Afghanistan war spending is set to go through the roof. The cost overruns on the F35 joint strike fighter have barely begun. You’re going to watch defense spending make a hocket stick move upward over the next few years.
Meanwhile, 1.3 trillion dollars per year in a 3 trillion dollar annual budget is 45% of America’s annual budget. That’s increasing fast. How high can it go before the military-industrial bubble collapses? 50% of the budget? 60%? 70%? 80%?
It’ll be fascinating to watch.
Cue the kooks and cranks and flakes crawling out the woodwork to claim (1) the U.S. military budget isn’t anywhere near 1.4 trillion per year; and (2) it’s worth every penny, in: 3…2…1…