Comments on: Breaking the Consumption Addiction

By: nihil

nihil — Wed, 26 Nov 2008 09:10:30 +0000

Give me a break! Legend bought the PC business from IBM and now probably produces more laptops (e.g. “Thinkpads”) than anyone else. China is the biggest market for PC’s in the world. Intel already has a big software lab working on Chinese language software in China, and is building a $2 billion fab to produce microprocessors in China. China can buy anyhing they want. They don’t have to steal anything. Probably do it just to keep their hand in and their fingers nimble.

By: nihil

nihil — Wed, 26 Nov 2008 08:55:34 +0000

First thing Reagan did in 1981 was to rip the solar panels of that Jimmy Carter had installed on yhe roof of the White House.

By: nihil

nihil — Wed, 26 Nov 2008 08:47:32 +0000

Don’t think those reverfse mortgages will be offered in a falling market. Better sell now, and camp out in a camper until you die.

By: nihil

nihil — Wed, 26 Nov 2008 08:43:33 +0000

I hate to telll you, but giving people money to reduce their personal or mortgage debt costs real money, like tax-payer dollars, and the Treasury will never get a penny of it back directly. If there are “multiplier effects” as therfe will be, the Treasury will get money back in taxes, but it won’t know that it was caused by the mortgage relief program. Giving imaginary money to banks in exchange for preferred stock to pep up their depressing balance sheets costs nothing if the banks don’t collpse. Look at the government’s balance sheet — its borrow $350 billion from the banks (who buy T-bills and sit on them)and the Treasury’s Assets have not changed — debit $350B T-bills, credit $350B preferred stock. The banks are in the same situation: credit $350 federal reserves, debit $350 preferred stock owing deferred dividends if the banks ever make a profit. The banks can use the $350 billion to buy T-bills which earn them something,or to make business or consumer loans, or keep it in “cash” which perks up the appearance of the balance sheet, creates confidence, and prevent bank runs. I call the original $350 B “funny money” because the Treasury can borrow as much as it wishesfrom the fed, or China, or anybody and pay trivial interest. The WSJ is profoundly shocked by such monetary indiscipline leading to a rise in the value of the dollar and a real shortage of T-bills. Every week billions in T-bills are auctioned by the Treasury, and the buyer willing to accept the lowest interest rate gets his bills, and so on up the interest rate offers. I suppose the point is that the Treasury can produce as many T-bills as people can be persuaded to buy. No backing, no gold or silver, just the good faith of the American government (and everyone knows just how good that faith is!). Most of the T-bills are just bits on a computer. Can’t we always print more T-bills and sell them?
money is even weirder than. Weirdly enough the Federal Reserve System, that club of bank-owned banks has the exclusive monopoly right to create dollars(except for coins). All one has to do is to borrow a dollar of “money” from a bank. This creates an obligation for the bank to deposit 5 cents in its the reserve account at the Federal Reserve Bank If the bank lends $100 it must have at the “fed” $5 onat the end of the day. There is a huge business in which banks borrow and lend reservesto each of, making sure that they have neither excess reserves (which done pay interest) or insufficient reserves which earns a notice from the fed The new borrower’s cash is then spent, several times through the banking system, and ultimately causes the creation of $20 for each $1 borrowed. (”multiple deposit creation.” Our money is a figment of an elaborate hoax. But upon this shaky found the US sends fleets and armies around the world, eockets and telescopes into space, and buys billions of dollars worth of junk from China. If you really want to raise hell, pay off your debt to a bank, Every dollar you pay destroys $20 of money. Obviously the trick is to keep everyone borrowing and not paying off the debt, like a giant ponzi scheme. You can see that if Paulson can lend $30 biollion of new imaginary money to banks, and can talk them in lend in vn 10 per cent of that, the Treasury will have $350 billion in circulatio plus $350 billion in preferred stocks issued by the banks. The banks will make a vast fortune if they lend all of the money ($7 Trillion dollars),” of which the Treasury tax rate of , say,20% will collect $700 billion. Itd a two-for, or a three-for if we count the preferred stocks (and the banks don’t fail. Now if we could only get businesses or consumers with good credit to borrow and the banks to lend.
Tomorrow’s lecture: “Inflation — why or why not?”

By: bmaz

bmaz — Tue, 25 Nov 2008 06:18:17 +0000

I think you would find this guy’s work fascinating

Edge City: Life On The New Frontier

By: readerOfTeaLeaves

readerOfTeaLeaves — Tue, 25 Nov 2008 04:51:43 +0000

JohnLopresti, I call what you seem to be describing as ‘new urbanism’, and it’s good not only economically, but also seems to be more socially (and emotionally) healthy. It draws from a number of areas, including psych research (engineers tend to use the term ‘human factors‘, in assessing how to best design for scale, sound abatement, and lower crime.

Their used to be a national program called “CPTED” (Crime Prevention Through Environmental Design), but under Bu$hCo the idea of helping local city and county police departments enhance public safety by studying, analyzing, and implementing better housing and neighborhood design regulations lost out to Blackwater contracts and militarization.

However, it turns out that the kind of community you describe tends to have more healthy social interactions, lower crime, and much of this seems to be based on the ‘walkability’ and scale of the construction and design.

As for the building industry — I’m not one bit surprised that the McMansion builders and subdivision sleazebots are bellying up to the Big Government Teat. If they get money, we’ll have more sprawl. Which seems incredibly counterproductive.

As for all those crap retailers, let ‘em fail.
Then use government money to pay people to take care of children and the elderly, and put a lot more money into parks and rec programs. People who whine about low math and reading scores don’t grasp the fact that helping kids play, climb, crawl, run, skip, slide, twirl, swing, prance, and jump helps their growing brains develop a whole range of ‘reading readiness’ and learning skills.

The world doesn’t need more shops selling crap that’s going to end up in garbage bins.

The world needs more playtimes, more swings, more golf, more tennis, more rope-skipping, and more solid kids (and senior, and adult) recreation and art programs.

Government money used to pay people to supervise kids playgrounds and games would be far better spent than bailing out failing businesses in Big Box retail outlets that sit on acres of asphalt.

But enough time on the soapbox for me tonight!
I must go play…

By: Hmmm

Hmmm — Tue, 25 Nov 2008 01:39:43 +0000

But who exactly would you expect to soon be buying that glut of bank-owned properties? I think we are not yet at the bottom. I have considered selling the house and holding the money until we’re closer to the bottom. Because all our money is in the house, and we are going to have to do a reverse mortgage in our dotage if we’re to avoid dining on Little Friskies.

By: BooRadley

BooRadley — Mon, 24 Nov 2008 23:34:15 +0000

Thanks ew.

Thanks to PhilPerspective for opening up digg

By: DeadLast

DeadLast — Mon, 24 Nov 2008 20:45:34 +0000

http://www.sourceoftitle.com/a.....?uniq=4739

Link missing from my comment on 4 million families.

By: DeadLast

DeadLast — Mon, 24 Nov 2008 20:43:48 +0000

…this crisis was caused by our rampant consumerism…

Yes, no, and maybe. The biggest problem was BushCo. After 9/11, they knew they had to drive interest rates down to keep the economy from imploding on their watch. They also realized that flooding the pond with sewer water raised all boats, even though it would later be condemned as a chess pool.

Low interest rates made people think they were wealthier than they otherwise thought. Yes, I thought my $400K house was worth a million because that is what my neighbors were selling their homes for. Year after year. So we actually felt wealthier. Now, maybe BushCo or Rove had read the behavioral science literature and realized that we tend to act like rats in a maze rather than as “free” agents.

Consumption addiction makes it sound like the junkie is the only one to blame. If that is the case, let’s let every junkie fail including the banks, the Big Three, the Big Four, and the Big One. We are all in this boat together and if we continue to blindly cling to the Social Contract, the Commerce Clause, and In God We Trust (to save our sorry asses), we are in trouble.

A new report states that 4 million American families have lost economic security between 2000 and 2006. Add what has happened since 2006 is anyone’s guess. Our soft infrastructure has been crumbling since the 1980s (yes, Clinton did it too).

I think Obama is going to spend as much as he can as smart as he can to avoid disaster. We are also going to have to restructure most of our credit obligations (one step down from bankruptcy). Many economists expect that we are going to have to endure high inflation to keep the balance sheet digits aligned. But something has to give.