I’m trying to understand this, and I guess what I have concluded is that business has basically done everything they can to suck blood from a stone, and that earnings are going to plummet unless something other than productivity increases and layoffs comes in to save the day. Maybe we could get people back to work and goose demand?
BTW- Krugman has just been depressing the last week. Not because he is depressing by nature, but because he is right and we all know it.
Arclite
You know, I like Sully’s blog a lot. There’s such variety, and so many of the posts have interesting contents. And then there’s Sully. The first FUCKING thing he writes coming back:
How do you enjoy a peach when the pit is rotten and infecting everything else? Frustrating.
trollhattan
@John Cole
If I brine my stocks, can I expect them to BBQ moister and with more flavor?
I can’t interpret what the dude’s saying, other than “watch out!” But what am I supposed to do differently, wear a hat?
The Dangerman
@Arclite:
This comes with Zombie Herbert Hoover’s Seal of Approval!
Knowledge of history, doomed to repeat, etc.
JC
It really is such a fascinating, bizarre place the United States is in.
The financiers, wel, they really are tapped out, in terms of what blood they6 can suck. Only Social Security money is out there as a big fat opportunity, and they’ll try to get their hands on that.
But growth, which really makes things better for the economy overall?
That requires investment – which requires spending – which requires taxes – which the rich financiers don’t want.
A couple of links:
Sullivan has a good one – basically, outsourcing has run it’s limits out.
The Limping Middle Class: – Check out especially the graphic.
See, as the superpower, the elites first extracted value from other countries.
Then, their thirst for MORE profits, and corporations the same, led to the hollowing out of the middle class.
But there is no more to hollow out.
The only thing left is to really, break the United States already deeply frayed social contract, by committing to leeching social security, and begin denying Medicare to seniors.
that’s the only place to cut spending, or where there is some cash.
So the thing we MOST NEED to do, investment, requires taxes to pay for the spending.
And that is what is absolutely opposed by the Rethugs – “we have a spending problem”.
which means, the spending on people who are not rich.
singfoom
Basically this. The Real Estate hype-market is over, and they’ve already started upping the fees on normal people’s checking accounts, there’s not a lot they can do at this point without actually creating value.
And as we know, actually creating value requires work and time…so that’s not going to happen.
None of this is going to get any better if we don’t remove the moral hazard problem the financial sector has right now by seriously prosecuting the companies and individuals involved in the massive robosigning/title fraud problems that were part of the housing/CDO bubble.
Bulworth
It’s very simple: the workers are not producing efficiently enough for stockholders to continue to enjoy the fruits of other people’s labor. Austerity!
Bulworth
@Arclite: The beatings will continue until morale improves.
srv
It’s 1937 all over again. Except this time it isn’t going to turn out so well.
Villago Delenda Est
The ca$ino is now closed.
Wall Street asshats are going to have to find legitimate work.
geg6
@Bulworth:
I actually heard pretty much this exact argument on the CBS Early Show the other morning. I almost smashed my teevee screen to bits, but refrained for fear of scaring the doggies.
Gee, I wonder why productivity isn’t rising like it was in the 80s and 90s? I can’t imagine why that would be, can you?
MikeBoyScout
Excuse me, Mr(s). Bus Driver, did you happen to see that sign back there about the bridge being out up ahead?
Excuse me, Mr(s). Bus Driver, I understand you are rather busy and would prefer me not to bother you, but I think we should slow down and not be speeding up… you know, cuz the bridge is out up ahead.
Excuse me, Mr(s). Bus Driver, I don’t wish to disturb you, but me and the other folks here in the bus are very concerned that you seem oblivious to the bridge being out up ahead. Are you ok?
Excuse me, Mr(s). Bus Driver, ahh, we have a Nobel Prize winning bus driver back here who has some really good ideas about what to do when one keeps driving past signs that say “Bridge Out Ahead”. Care to hear his recommendation?
Strandedvandal
@geg6: On CBS Sunday Morning this week, Ben Stein was claiming it was because of cell phones. Seriously.
Samara Morgan
man…the freed market has been sukked dry for the west.
the market is just running toward cheap labor like its fucking SUPPOSED to.
those jobs arent coming back.
Alex S.
Yes, it’s the end of this road. The two ways out are more debt or more inflation. But the politics are against new public debt and people are too scared to consume beyond their means (which is good). Also, the FED could simply print more money and cause inflation. Inflation is a good method to create jobs since money will go to the most productive fields. But noone really likes inflation (even though it helps low income people with debt). Either there is some kind of new stimulus, or the economy will stabilize at the current depressed level and 9% unemployment is the new normal.
A Mom Anon
It’s probably too late for this,but would it help at all to stop allowing giant corporations to stop deducting CEO and other board member salaries from their taxes? And while we’re at it,once again separate investment banking from your garden variety community style bank(checking,savings,loans,mortagages)? Most of this shitty behavior has been incentivized with tax cuts and deductions and relaxed regulations. They’re sitting on money,alot of it,there needs to be something done to force some investment in the people of this country,asking nicely ain’t working.
They’ve had their tax cuts for a decade now,it hasn’t created jobs worth a shit.Deregulation isn’t working either,obviously. I know the MOUs flip out and cry at the slightest hint of raising revenue or regulating their corrupt asses,but so fucking what?
Martin
Corporations are always a bit too fat, so when we get a recession, the way they balance out the loss in revenues is to lay people off, which boosts profits. That works great for a while – productivity goes up because everyone is scared to death of the layoffs, but it’s not sustainable – it’s like sprinting vs jogging.
Well, they’ve laid off everyone and now they’re seeing that they can’t lay off any more. Surprisingly (I know) unemployed people don’t stimulate the economy as they hoped. Instead, corporations should have taken the opportunity to reinvest those lagging profits in now-cheap labor, real estate, equipment, materials and you know, actually innovate. But that’s bold – and we don’t do bold. We hedge, we buy insurance, we hold back and wait to see what happens.
The companies that hired and expanded starting in 2008 are the ones to look at. They’ve got the momentum and they’re succeeding as a result. Problem is, most of them are in China, Taiwan, South Korea, etc. Only a few in the US did that from what I can see.
trollhattan
@Strandedvandal:
Jayzus, they’re still giving that nimrod a platform? It outta be a law that they must play the video of him mocking the guy warning the real estate bubble was about to burst, before letting him on the air.
“I’m a financial expert because I say I’m a financial expert.”
Sheesh.
geg6
@Strandedvandal:
Heh. I missed that one. Mainly because when I hear the teaser that he’s going to be commenting, I turn the channel. I mean, seriously? Ben Stein? Someone actually takes advice or commentary seriously from Mr. “Bueller? Bueller?”?
Zifnab
@trollhattan:
A company makes money by taking existing capital (their stuff) and having people (their employees) use it to render a good or service for a price. The cost of the product, minus the cost of production (employee wages, capital depreciation, rents) gives you your revenue.
For a long while now, companies have been trimming their staff salaries and refusing to invest in new business capital and enjoying stagnant or declining rental prices. So their profits have actually been going up, even though their sales have been somewhat static or in decline.
But now we’re down to the bone. We can’t “not invest in capital” anymore. We can’t downsize any further. Rents aren’t going to go any lower. Now, if a company wants to make more money, it actually has to sell more shit. Since businesses can’t do that (because NO ONE HAS ANY FUCKING MONEY) profits are going to start coming down. And when profits come down, that’s when investors get really scared, pull all their money out of the markets, and sit on giant stacks of cash in their big vaults all Scrouge McDuck style. So that’ll drive down equity prices too (although, I’m sure gold will have another rally).
Basically, it’s the liquidity trap Krugman’s been talking about for years now. The rich are going Galt, and they’re going to tell our politicians not to try and unfuck anything once they leave. So we’ll be well and truly dicked.
General Stuck
We been outsourcing our jobs in the flat earth eyes of dreamers, and maybe they just ain’t here anymore. Especially the manufacturing jobs our current middle class is built on.
I suspect it means we are in for some required contraction of both our productivity overall, and the middle class lifestyle we have been used to.
For decades we have done nothing but increase the bottom line of corps, under the Reagan trickle down bullshit, and that has been firmly woven into our big money politics, (and about to go completely insane under the new world of CU.
This was the case when Barack Obama took office, and it will continue to remain until politicians reinstate a balance of supply and demand that works for everyone. We can toss some more cash on the dwindling fires of greed, for a short burst of economic life, but it will just burn for a while. And not correct the underlying fucked up mentality and corrupted matrix of our econ engine.
When the people are standing in line for a bus ride to standing in line at the soup line, then maybe, big maybe, something might change. Or if the country becomes infected with some kind of alien life form, a virus of unknown origins that makes us smarterer.
The people have to realize what is wrong, and who is willing to fix it for the greater good,and give them the power to make the needed changes within the confines of our separations of power. Too many can’t see past their bigoted nose to accomplish that, others are just plain fucking stooped. But there is always hope, until there isn’t any, and we are way on down the primrose path to ruin.
People forget. When Obama arrived, we were on the doorstep of dystopian bliss that was three decades in the making. We didn’t go inside, but we have one foot in, and the other slipping.
I have a good idea in the meantime. Why don’t we bash Barack Obama to a political pulp, so maybe he will toughen up and use his omnipotence to save us from ourselves. Or, we can try to win the next election. And build the kind of support needed to make that happen. And take it from there.
I’m walking the dog. I have no illusions. Just a blue sky.
beltane
A little Demand-Side economics would be nice. The problem lies with not only with the pathological greed of our Galtian overlords, but with their inherent laziness and lack of a work ethic. It’s so much easier to have mommy and daddy buy you an MBA so you can sit on your soft, idle ass and siphon off the increased productivity of your undercompensated employees than it is to actually work for your money. At least the old robber barons left factories and railroads in their wake, and at least they actually created jobs and an industrial infrastructure. Our new crop of Galtian lard-asses does nothing but steal the wealth that others have created while providing nothing of value in return. If we were to cull the “unproductive” members of society, they would be the first on the list as they are not just unproductive, they are anti-productive.
PeakVT
The paradox of layoffs.
Cap'n Magic
Also, this:
Seems to me Mr. Miller is forgetting who owns those institutions that are demanding they be made whole. And to think he used to be a bank examiner.
Redshift
The thing that we seem to have lost now that all economics reporting is just finance reporting is the fact that “labor costs” means what they pay you and hiring more workers. So when financial types talk about how bad it would be if “labor costs rise,” they mean that in their view, it will be a bad thing if you get a raise or if companies hire more workers.
If more people understood this, it would make it a lot clearer that we all agree there’s something wrong the economy, but their view of what’s wrong with the economy has nothing to do with ours.
Culture of Truth
“In 2004 Vin Weber was Plains States Regional Chairman for the George W. Bush campaign. In 2008 he was a Policy Chairman for the Mitt Romney campaign. Until recently, Weber was Co-Chairman of the Tim Pawlenty campaign for President.”
Mitt is doomed.
Linda Featheringill
There is a limit to how much work you can get out of a person [or a machine, for that matter]. And there is a limit to how much you can get out of a consumer.
Do you think the Masters of the Universe might admit that they need the working class?
Nah. I’m dreaming again.
Arclite
@srv:
Declare war on China? It worked last time. This time we could outsource those Chinese internment camps to Xe. I’m sure they’ll take GOOD care of them.
Also, too: SRV is so awesome. I cried when I heard on the radio he’d died in that crash. I still remember exactly where I was, my “JFK” if you will. So tragic. He’d turned the corner and still had so much to give.
Martin
@Zifnab:
I don’t think it’s a liquidity trap, though. Corporations are sitting on a fuckton of cash, they’re just not willing to invest it. And many of the corporations with cash are using that cash as leverage in their market by paying for someone else’s capital expansion up-front, in exchange for below market prices or exclusivity on components, real estate, etc. So the money is out there and is bypassing the usual money handlers, but someone needs to be doing something actually useful with it. Google for example has been using their cash to help the solar companies build out manufacturing capacity in exchange for getting good prices on solar arrays to offset power costs. It’s a good use of cash for Google and the solar companies are getting risk-free capital because the investment gets repaid with product, so they have guaranteed demand to pay off the new equipment/factory. Everyone but the bankers win there.
CaliCat
@General Stuck: I salute you, wise General.
Strandedvandal
@trollhattan: Yep, I have no idea what makes this buffoon an expert on anything but deadpan, monotonous delivery of lines.
JC
@A Mom Anon:
All these suggestions would help, but as you say:
Problem being, the MOU’s own the place.
So they’ll take their money, look for opportunities in India, China, and simply watch the U.S. continue the glide path to banana republic.
singfoom
@Linda Featheringill: Ah, but there’s no limit to the fees you can charge the average consumer. Because they have to have a bank account to do business in the world.
So fuck em, charge em monthly fees for everything. Our margin is slipping, time to up the daily account balance floor fee. And everything else.
Parasites.
Redshift
@trollhattan: I mistakenly got the idea that Stein actually knew something because he talked about having grown up discussing econ and history around the dinner table, and he was a fairly entertaining guy. It wasn’t until I saw (on a remainder table) a book he’d co-authored about how liberals are trying to destroy America that I realized he was just another hack.
He still does good voice work on Fairly Oddparents, though. Apparently, that droning monotone is his only real skill.
Strandedvandal
@geg6: Yep. Strange days.
JC
@Martin:
Because no one has any money to buy anything. Your example of Google is actually the only example I can think of which bucks the trend. But corporations won’t invest without expectations of selling.
rlrr
@Strandedvandal:
WTF is does anyone think Ben Stein is qualified to comment on anything other than being a bit player in a John Hughes film?
res ipsa loquitur
@Arclite: Seeing this burns me. Right after the Shit Hit the Fan, Sully was on “Real Time”. Naomi Klein was a guest and Sully simply refused to let her speak. He kept shouting her down, until Klein just gave up. Anyway, the thing he kept shrieking — over and over and over again — was, “We will not let you inflate your way out of this debt!” And I remember thinking, “Just who the fuck is ‘we’ and who the fuck is ‘you'”.
He really needs to just go back to England and STFU for once and for all.
Elizabelle
Better that our very real economic and social problems sink in to some “low information voter” skulls this fall than next one.
To the extent possible.
I think Americans are listening, and want to hear what Obama has to say, and that’s why you’re getting the negativity and “he can’t do anything” pre-emptively from the GOP and the empty-suit media.
Chad N Freude
@trollhattan:
It seems to be “Hit the gym, and be sure to wear a cup.”
JR in WV
We are so screwed.
I think the Republican Party’s plan to keep America down on its face in their cess pit to ensure that their teatard presidential candidate has a chance against President Obama may be the straw that broke the American economy. It’s just too long without taking a breath!
The economy across most of the country is static. Well off people are doing OK, still able to go to the beach, take their 4-wheelers out to run, go fishing, whatever. But they aren’t gaining like they want to, so they can’t support the middle-class folks alone.
We are so screwed if the Republicans choke the economy to death, instead of Grover’s dream of choking the government to death.
We’re so screwed~!
Strandedvandal
@res ipsa loquitur:
And he can take Ben Stein with him.
Southern Beale
OT but it seems my blog has disappeared. In fact, I can’t load wordpress.com at all … anyone else having problems?
Elizabelle
@Arclite:
Yeah, I like Sully for the most part. But when he’s got a blind spot — as he does for deficit reduction uber alles — it’s stadium-sized.
Martin
BTW, for those wondering, this is why SF is so massively despised by the right:
No crusade against public nudity – just no danglies at KFC and keep the pooper off the bus seats, please.
The culture warriors certainly have their work cut out for them out here.
Southern Beale
NEVER MIND.
That was weird. My blog wouldn’t load but it seems everything is OK right now.
Strandedvandal
@rlrr: I suppose it is the same reason that Bristol Palin is an expert on abstinence and Republicans are experts on the economy.
Chris
@JR in WV:
One would think they want to destroy America, or something!
Memo to Hollywood: if you want to make an actually GOOD (and faithful) remake of The Manchurian Candidate, make it… well, just like the original, with a fanatic right-winger in league with the ChiComs to destroy American democracy.
Mino
@Martin: Interesting. Is that the future model? Why would anyone who could do differently go to Goldman or BOA for expansion loans. Investment banks have trashed their reputations for a generation, at least.
jwest
Here’s some good news for Obama.
http://www.nbcchicago.com/blogs/ward-room/Quinn-to-Lay-off-Thousands-129290828.html?dr
These former state workers will have plenty of free time to campaign for democrats in 2012.
schrodinger's cat
@Elizabelle: His understanding of economics is spotty and he is innumerate.
catclub
@Culture of Truth: Phil Gramm might be Perry’s kitchen cabinet for economics and deregulation. He is from Texas after all.
Mitt might still have a chance!
Strandedvandal
@Martin: When I was @ Macworld this year, there was a Critical Mass ride. There were all forms of danglies and such flying around the streets on bikes. The police just made sure no one was getting run over and maintained the relative peace of the situation. I like SF, yeah, it’s weird as hell, but I like the town.
Redshift
@Martin:
I’m not an economist, but from my layman’s understanding via Krugman, unless you’re willing to attribute it to big business collectively trying to screw over the Dems, “just not willing to invest” is most likely due to a liquidity trap. Businesses are sitting on cash instead of expanding and hiring because they don’t see a demand that would give them a return on that investment, and there’s no demand because businesses aren’t expanding and hiring to change the current high unemployment.
The fact that some exceptional businesses like Google are making investments that should pay off in the long term doesn’t really change that. If lots of businesses spontaneously decided to do that, it would probably get the economy moving again, but for any individual business, it’s a fairly risky move. Hence the need for government action (in a sane world, of course.)
cleek
Ben Stein, being a former Nixon and Ford speechwriter, is an honorary Villager.
jl
I don’t understand what the link is trying to say. Productivity is difficult to measure, and the factors that move it one way or another are difficult to quantify.
Productivity is especially difficult to measure in the short run, and quarterly variations are surely the short run in this context.
The link might just be pointing out how to use some economic definitions and data eye ball analysis to give some advice about what the data mean for short run stock market variations. It probably is not trying to say anything about long run productivity growth.
The link talks about quick and and dirty way to calculate expected variations in unit labor costs as a function of ‘productivity’, so it is probably talking about apparent labor productivity, which is difference or ratio (depending on how you want to do the math) between the value of output and the value of labor input.
As far as my rusty national income a product accounts mad skilz will take me, now is a very hard time to forecast productivity because business investment in equipment has taken off. So that should be mean more productivity later, but less right now, since when the investment actually takes place, that remove business resources away from production, and take up labor. So the tug between more productivity later, but less measured apparent labor productivity now will mean funny jumps in the measurement and probably lost of weird revisions.
Just by happy happenstance, DeLong just posted a graph on business recent investment.
Against Zombie Macroeconomics One More Time
Sept 5, Brad DeLong
http://delong.typepad.com/sdj/2011/09/against-zombie-macroeconomics-one-more-time.html
Something like this happened in the thirties, which is not a comfortable parallel right now. In retrospect, there was a lot of investment and productivity growth, but the numbers were very confusing at the time.
Dave
Holy shit! You mean we can’t keep shit-canning people to increase profit?? You mean that we actually NEED labor to keep the economic engine going? Who fucking knew???
Bourbon. I need lots of bourbon.
Ben Wolf
@John Cole
“What it means” is that the right has fulfilled its own prophecy of a government which operates at the expense of the private sector instead of to its benefit.
You see, the private sector wants to save in order to dig its way out from under private debt levels never before seen. In order to do that the government must spend: it can’t be any other way without damaging the economy. The problem is that when a single company cuts costs to remain competitive, that’s smart. When they all do it, however, they reduce the ability of consumers to buy their products and effectivel cut their own throats. That’s what the field of macroeconomics is all about: things that make sense at the individual level are often irrational at the macro level.
The correct response to this is for government to spend more. This helps the private sector by transferring financial assets (dollars) to it, keeping people employed and GDP growing while businesses and individuals sock as much money away as possible to pay off debts.
Thanks to the right we’re facing a situation where both sectors are trying to save, which puts them in direct conflict for scarce dollars. Greater demand for fewer dollars means deflation, which is why personal income is still falling three years after the crash. So the Austerity Brigade is demanding government look after itself while quite literally telling the private sector to go fuck itself.
M-Pop
Invisible hand!!!!1
Martin
@JC: Well, and Apple. 40 new stores this year. 10,000 new employees in the last 2 years. New product lines, sales way up – and sales on what are basically luxury items, no less.
If US companies would stop dumping reheated shit on the market, would invest in R&D, would pay employees decently and with benefits, hire talent like engineers, and stop chasing a 90 day business cycle, maybe they’d get somewhere. But you can’t build better cars or green energy or high speed rail in 90 days on minimum wage. You just can’t. Business cannot look at employees as expenses – because the only way any business can grow and be profitable is through the work of their employees. It’s the only asset that they really should be worried about, but because it doesn’t show up on a balance sheet other than as a liability, they can’t think of employees as anything other than liabilities. And then you wind up with companies like HP, the worlds largest PC maker, looking at their worlds largest PC business and realizing ‘Gee, we can’t make any money doing this because we don’t actually do anything with it’. It’s infuriating.
jl
Comment on a couple of comments above. I think Keynesians would say that the government needs to create more reliable demand for final good and services.
The economy does not need to focus specifically on incentives for investment. There was plenty of investment and productivity growth in the Great Depression, but there was not enough demand to make businesses want to expand the scale of production and employment.
Stiglitz, more than most, have emphasized public and private investment, but that is not because more investment spending is better than other kinds of spending to create demand. Stiglitz recommends a focus on investment because the US will need higher long run productivity to help with longer term US debt problems, which are mainly caused by health care costs, but also fossil fuel imports.
ThatLeftTurnInABQ
There’s a giveaway buried in that linked article:
That is a rather large exclusion, nicht wahr? Last time I checked, financials dominate total corporate profits. Financials make money hand over fist and everybody else struggles to be something other than a glorified non-profit with delusions of grandeur and a DotCom domain name. So basically financials are sucking the life-blood out of the rest of the economy. Just like the railroads and their friends were back in the last Gilded Age. Somebody should look into regulating them, I think.
CaliCat
@Martin: The right hates San Francisco for many reasons but yes, mostly because we make our own rules (some pretty ridiculous) and couldn’t give a flying fig what conservatives think of us. We basically ignore the right altogether and that makes them crazier than they already are.
Martin
@Redshift:
Actually, you’re exactly right. I got all jumbled up in my thinking above. I was describing a liquidity crunch – where there’s no money to borrow – which we did have back in 2008 because banks were all overextended.
Zinfab had it right.
barath
@Arclite:
This is what I wrote to him (not that he’ll read it) responding to his inane post this morning about Obama’s approval and the economy:
MikeBoyScout
You know, I was going to hire 100 people, but did not. Not because I don’t have any money to do that (I don’t). I is askeered of regulations and taxes. :-o
So, if we all would just put an unemployed worker under our pillow I’m sure the Confidence Fairies would replace it with a healthy robust economy.
Frankensteinbeck
@singfoom:
That would require them to have broken the law. Deregulation MEANS making things that should be against the law legal. We went through a looooot of deregulation in the last 30 years.
A Mom Anon
I also don’t get this:
If Republicans actually did something that helped the American people they’d be heroes. Hell,even me,DFH that I am,would vote for them if they actually gave a shit about the American people and DID something to help. They wouldn’t even need money from big bucks donors,us little guys would donate and work hard for them. So WTF? Is it just greed and being sociopathic and sadistic?
This is depressing as hell.
cleek
@A Mom Anon:
they can’t do that; Obama might get some of the credit.
we’re all going to have to suffer until the GOP gets a turn at the wheel. and then, when the GOP gets its chance to enact the policies it wants, we’re really gonna suffer!
Martin
@ThatLeftTurnInABQ:
Yeah, still about 30% of all corporate profits. It’s kind of the perfect sector to rack up big numbers, though, because it’s all self-contained. They don’t have to share profits back to retail or manufacturing or transportation, etc. and almost all other sectors have to deal with finance, so they all have to feed the hog too.
jl
@Martin: Huh? What? I don’t see any more naked people walking around in public in SF than in the rest of the SF Bay Area.
But, probably that is not saying much, and provides little useful information for the rest of the country.
OK, searching my memory. Only time I saw naked people wandering about in public was a couple of years ago. Saw a squad of sunburned beer drunks buck nekkid stagger by in the Bay to Breakers race.
Now pissing out in public, that is problem. Why not work on that?
Mino
Well, wars are government spending. And lord knows, govt contractors might be all that’s keping the economy afloat as it is.
We had a big recession after the Vietnam War ended, and it cost peanuts compared to what we’re spending now.
The Other Bob
Here is my positive spin on the economy:
Gas prices are high, which allows the domestic automakers to build smaller cars at a profit.
The dollar is up, so imported goods are expensive and exports are rising.
The dollar is up, so gas is up, which encourages efficiency.
Interest rates are low, but banks are requiring a down payment for houses now, which creates more stable homeowners. (See Canada)
Consumer spending seems to be avoiding all the cheap crap we used to buy (on credit), so hopefully there will be less waste and a shift to more long-lasting goods.
Short term it sucks, but long term it might be more sustainable.
Now the bad:
We are a short sighted nation, who might elect Rick Perry to move us back to a short-term, consumerist economy.
cleek
@jl:
last and only time i was in SF i saw hundreds of naked people in public. it was during the Pride parade.
try that in Raleigh…
The Other Bob
@Martin:
You mean like your beloved Apple, which builds everything in China and has been accused of various worker abuses?
jl
@cleek: Oops. I forgot about that. Then there is the SF mardi gras, which is moved to later in the year when the weather is bearable (bara-able, ha ha).
I guess if you add up all the parades and races, the buck nekkid count could get pretty high.
singfoom
@Frankensteinbeck: Frankensteinbeck, if you really don’t think they broke the law, let me direct you to some cold hard facts:
Nevada suing BOA for breaking the law (old): Link
Goldman referred to DOJ
JP Morgan Settlement with SEC
DOJ suing Deutcshe bank
There are 4 giant banks being sued or reaching settlements with regulators. They DID break the law, and they’re still trying to hide the bodies. Give Schneiderman time and he’ll untangle more of this morass.
Sure, we deregulated a lot, but out and out fraud and not handling title transfer was a crime. And they did it again and again and again. One can only hope for justice to finally prevail against the individuals and companies responsible….
FlipYrWhig
It would be nice if some of the Chamber of Commerce types explained to Republicans that everything is going to burn down around them if _something_ isn’t done to jump-start the economy. As dense and malevolent as many of them are, let’s not forget that when the time came, Republicans and Democrats both, for different sets of reasons, signed off on TARP — because they were told that not acting would be catastrophic. Now, TARP isn’t everyone’s favorite thing, so I don’t mean it’s a case of ideal public policy-making, but rather that it is still possible to freak out Republicans on economic matters if you catch them just right.
Arclite
@res ipsa loquitur: To paraphrase the fundies:
Hate the blogger, love the blog.
singfoom
@Frankensteinbeck: Frankensteinbeck, if you really don’t think they broke the law, let me direct you to some cold hard facts:
Nevada suing BOA for breaking the law (old): Link
Goldman referred to DOJ
JP Morgan Settlement with SEC
DOJ suing Deutcshe bank
Hoping that I don’t trip the moderation filter again. Law was broken, bodies are still hidden, but starting to smell more and more.
singfoom
Gah, moderation hell!
Hopefully these links work.
Nevada suing BOA for breaking the law (old): Link
Goldman referred to DOJ
JP Morgan Settlement with SEC
DOJ suing Deutcshe bank
They did break the law.
Arclite
@barath: You might have included that the high oil (and subsequent gasoline) prices were a prime contributor to the bursting of the housing bubble and financial collapse a few years ago. Yes, subprime mortgages, and people buying on ARMs were a big contribution, but so was the fact that people’s gasoline bill doubled or tripled. Americans used to spending $150 on gasoline per month were suddenly spending $400. There are some studies out there that I’m too lazy to look up.
kdaug
@beltane:
FTFY
Stefan
@Elizabelle:
Sully simply cannot understand anything involving math, economics, finance, statistics, etc. He can fake a superficial fluency, but when you scratch the surface there’s nothing there.
barath
@Arclite:
Yup:
http://www.econbrowser.com/archives/2009/04/consequences_of.html
But I didn’t want to confuse Sully more than I already was, since he probably still thinks that ACORN and poor people caused the 2008 financial crisis because they were too greedy in trying to buy houses.
Occasional Reader
As long as households are stuck underwater on mortgages and paying down their private debt instead of buying stuff it will act as a drag on growth. Government debt is another matter completely. If Sully is talking about the former, he’s got a point. If it’s the latter it’s another argument for the confidence fairy. Sully does tend to suck at blogging Econ. He doesn’t air debates in the same way he does for other subjects. I just don’t think he’s very interested in it.
contessakitty (AKA Karen)
Let’s not dance around it. This is all a set up for the new meme to be that our wages are too high and for the good of the country we should be paid the same as Chinese workers. Or India. Or Philippines and any other outsourcing country. I’d hope that we’d mutiny first but if Rick Perry or Ron Paul can become President I have no faith or hope in the country anymore.
As for them sitting on the money oh no they’re creating islands the size of an oil rig where there are no rules and they can do whatever they want.
Indentured servitude. That’s the real goal. We won’t own anything, they will and we’ll be forced to work for them til we die.
catclub
@FlipYrWhig: “Republicans and Democrats both, for different sets of reasons, signed off on TARP —because they were told that not acting would be catastrophic.”
And the ONLY catastrophe that Cantor and Ryan could envision was the one where the GOP loses big in the 2008 elections.
THAT was their motivation for voting for TARP. It works the opposite way in 2012.
Doing what is best for the country in order to avoid an economic collapse? Not an issue, ever.
Cain
@Martin:
Intel is doing something similar here in Oregon. Parking lots have started to be fitted with solar cells to offset costs in electricity at fabs and business buildings. Quite clever. Hell, Intel is even doing gardens now to a) produce goes to charity b) give employees with a green thumb something fun to do.
Elizabelle
@Stefan:
@schrodinger’s cat:
Yesh. Innumerate indeed.
But it sounds SO GOOD to him, when you wrap it in New Tory/Compassionate Republican/Oakeshottian rhetoric.
Throw in some Edmund Burke, and you’re golden.
TooManyJens
I don’t know what it means, but Weisenthal spells like Matt Yglesias. Yeesh.
KG
@JC: this is what I don’t get… supply and demand are two sides of the same coin… invest money in making new things, and hiring people and people will have more money with which to buy things, among them, your thing. And in having those workers spend money on other things, those companies will hire more people, who will then have more money to spend on your thing. How, exactly, is this difficult to understand? WTF ever happened to “you have to spend money to make money” or “you can’t make an omelet (mmmm, omelets) without breaking some eggs”?
Turgidson
I’m sure others have beaten me to the punch, but that sounds like sockulism to me. How dare you even suggest it. You’re clearly un-Serious.
Origuy
@jl: There’s a group of guys that hang around the plaza at Castro and Market in the nude. It’s been going on for a while; SF Weekly had an article about them back in December.
Turgidson
@Occasional Reader:
You put that much more delicately than I normally do. On economic and fiscal matters, Sullivan is an innumerate clown who will almost always side with the haves over the have-nots and demonstrably not know what he’s talking about. He might just throw in a couple caveats (something like this: “well, maybe we should take our time dismantling Medicare rather than do it all at once”) to make himself look thoughtful on the topic.
It was his stunningly ignorant and retch-inducing early fluffing of Paul Ryan’s “Path to Prosperity (but only if you’re already unfathomably prosperous…otherwise you’re totally fucking fucked)” that landed him in the Mock category of the blogroll, after all.
Dennis SGMM
Now that Wall Street and big bidness have looted the country of everything that isn’t nailed down I confidently predict that they will demand that government furnish them with claw hammers before year’s end. Watch for a tsunami of Very Serious People insisting that if we only cut taxes on cap gains and business while turning the Social Security trust fund over to Wall Street for management we’ll suddenly have a robust job market.
Zifnab
@Martin:
Right. That’s pretty much the definition of a liquidity trap.
Edit: BLARGLE! And you self-corrected. That’s what I get for posting first and reading later.
Dennis SGMM
@KG:
Henry Ford, no friend of labor, realized back in the early Twenties that he would be wise to pay his workers enough to buy the cars they were building. The current Masters of the Universe are so smart that they don’t understand that we need to have some money so that they can take it from us.
Chris
Intelligent greed is a thing of the past. All that’s left now is the obsessive greed for MOAR MONEY NOOOOWWW!!! at all costs, rather like an addict fixated on getting his daily dose of drugs. That’s what happens when you drop Adam Smith and pick up Ayn Rand…
Odie Hugh Manatee
Sooner or later the game of financial musical chairs has to end. Our financial Ponzi scheme can not go on forever because the victims are going to be pumped dry and left with no way to refill the well. The day is going to come when there is nothing left in the bottom 95% of the economy for them to take and their profiting from them will come to an end. The financial cells of our national body have metastasized and are killing the host in their greed to feed themselves.
Former GM chairman, Bob Lutz, was on Rat-again’s show today spouting off about how businesses need assurance that the economy is stable (and taxes/regulation lowered!) and demand rises before they will hire more people. He also explained how our jobs were off-shored because labor is too expensive here, but now that is being rectified because the dollar is worth less and wages have stabilized here.
As usual, Big Business Daddy wants to economically put the cart (tax cuts/lower regulations to spur job growth) before the horse and expect everything to turn out rosy for him. We workers know that the horse belongs in front of the cart (create jobs, put money in the pocket of people to spend and increase demand) but who are we to argue with someone who has lots of money?
We’re just the ones who actually get shit done in this country, it’s not like we are valuable or something like that. We’re not rich!
Elie
@singfoom:
Is that like:
1. Prosecute financial sector leaders
2.???????
3. Prosperity, peace and understanding
Smacks forehead. Of course!
Elie
@Dennis SGMM:
Absolutely true.
I am afraid that they are going to have to collapse us before they stop. To make it worse, its not just those in the US. I think its a world wide problem and that we are in a big transition period between paradigms. We desperately need new approaches and leadership innovation.
FlipYrWhig
@catclub:
They have a lot of state governments in their grips right now, and a majority in the House successfully (from their perspective) preventing Democrats from getting their way. Anything they do economically to damage Obama jeopardizes their own recent gains. They might want to think about their own downside risk.
Odie Hugh Manatee
@KG:
One became “you have to take their money to make your money” and the other became “you don’t make an omelet using golden eggs”.
The golden rule of Capitalism is he who has the gold makes the rules.
Turgidson
@FlipYrWhig:
The 2010 elections proved to me, and perhaps the GOP victors, that there is literally no amount of incompetence and malfeasance that they can’t paper over with a relentless campaign of lies and talking points. They may very well think that no matter what they do, or what consequences stem from their actions, they can successfully blame Obama and the Democrats for all of the nation’s ills and win. And they might be right about that, given our failed media experiment and the laughably short attention span of the electorate.
Brother Shotgun of Sweet Reason
@The Dangerman: So we can’t recover until Americans pay down more debt.
I tend to agree with Sully here. I’m certainly not going to go out buying a newer car until I free up some cash flow by clearing up the credit cards.
Where he gets it wrong: It would be a hell of a lot easier for Americans to get out of debt if America would go in a little deeper. In my case, if the Feds would help state and local gov’ts avoid budget cuts and cancelling capital projects, my company would have more engineering and design work, we might hire some people, who could clear their debt and start spending a little more.