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The Lost Decade Will Continue

Not only are we not going to get any more stimulus (in fact, the likelihood is a decrease in federal government spending), quantitative easing is a bad idea:

[Joe Stiglitz:] [T]he way Iíd think about using monetary policy first is in a cost-benefit analysis. The likely benefit of monetary easing is very low for all the reasons Iíve said. Now, if it were costless, you might say, sure, the Fed messed up, it feels guilty, it wants to show itís worried about unemployment, so why not let it do what it can do? But this is not costless. The first cost is the potential of currency wars [. . .] The second cost, which people havenít talked about, is that the reason the private market for mortgages has dried up is that everybody knows the moment the government withdraws from the mortgage market, the effect will be that there will be a capital loss on the mortgages -- and the same thing goes for our long-term bonds. [. . .] The third point is that to avoid recognizing the loss, the Fed is likely to do silly things, like rather than buying and selling government bonds, theyíll pay interest on deposits banks make to the Federal Reserve in order to absorb the liquidity.

See also Krugman and DeLong. But what the hell do they know? They were only right about everything on the economy.

Speaking for me only

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  • Display: Sort:
    The GOP (5.00 / 3) (#2)
    by Ga6thDem on Thu Nov 04, 2010 at 12:14:20 PM EST
    couldn't have done a better job than if they were controlling all three branches of government right now.

    If I was a conspiracy theorist, I would think that the GOP sent Obama to destroy the party.

    It was a volunteer mission. (none / 0) (#4)
    by observed on Thu Nov 04, 2010 at 12:34:23 PM EST
    Yes, but the GOP did not (none / 0) (#16)
    by Cream City on Thu Nov 04, 2010 at 01:06:35 PM EST
    even have to put in that effort; the Dems did it to themselves.  I do think that the GOP sure helped him win, then, with their slate and with the timely economic meltdown, McCain's reaction, etc.

    Parent
    As I recall, there was talk during the primaries (none / 0) (#113)
    by oculus on Thu Nov 04, 2010 at 08:41:23 PM EST
    and b/4 that the GOP preferred to face Obama as opposed to Hillary Clinton.

    Parent
    Yep. (none / 0) (#114)
    by Cream City on Thu Nov 04, 2010 at 09:01:48 PM EST
    I wondered if Teddy was being played, too. . . .

    Parent
    Ding Ding Ding (none / 0) (#116)
    by CoralGables on Thu Nov 04, 2010 at 09:06:22 PM EST
    If you had made this comment earlier, this would already be a 200 comment thread.

    Parent
    Frankly (none / 0) (#118)
    by Ga6thDem on Thu Nov 04, 2010 at 09:41:00 PM EST
    who cares what they think but the ones around here preferred him because they figured they had a better chance of rolling him. They knew Hillary was onto their game and put them in their place.

    Of course, none of that really matters now. We are stuck with Obama for a few more years.

    Parent

    The corporate and financial elites have (5.00 / 5) (#13)
    by esmense on Thu Nov 04, 2010 at 01:01:19 PM EST
    achieved, over the last 30 years, the economy they want -- a low wage, high unemployment, low regulation, high government subsidy (for business), low tax(for business and the most wealthy individuals) economy in which working people, educated or not, skilled or not, have no political or self-organized representation, power or leverage. All that's left to do to complete their agenda is to transfer public Social Security funds into their private hands, and remove any remaining social services supports for the working poor.

    It is very important for working Americans to recognize that this state of affairs is intentionally created and is the state of affairs that the people who contribute big bucks to our political system WANT.

    The question everyone else has to ask is; is this the economic state of affairs that you want? And if it isn't, what are you going to do about it?

    I remember being shocked to read an essay in the 80s in which the author proclaimed that "the American worker had to lose their sense of entitledment." I was shocked because, frankly, I believe that that American sense of entitlement -- the expectation of fairness, justice and the expectation that work will pay a living wage and provide, for the hard working, opportunities for upward mobility for one's children if not for yourself -- has, in the past, been the engine of our success.

    A quarter century later I see that the elites have pretty much achieved what they hoped for -- turning a proud, striving and hopeful people into a mass of frightened asskissers.

    Things won't turn around until that turnsaround.

    Sorry, but smart people on the net (5.00 / 0) (#40)
    by Rojas on Thu Nov 04, 2010 at 02:09:37 PM EST
    have informed me that you are way off base. This is a short term issue of the last eight to ten years at best.
    All we have to do is walk back in to those shuttered factories and turn on the lights. TWBWD

    Parent
    No Open Thread tonight.... (5.00 / 0) (#120)
    by Inspector Gadget on Thu Nov 04, 2010 at 10:02:40 PM EST
    Patty Murray has finally been officially declared the winner of the Senate race in WA. Dino Rossi conceded after the vote spread reached 50,000.

    I am happy to say I was a part of making sure the country would not have to suffer under the legislative votes of Dino Rossi.


    Parent

    Good Work! Inspector Gadget (none / 0) (#123)
    by squeaky on Thu Nov 04, 2010 at 10:14:33 PM EST
    not an economist (5.00 / 1) (#19)
    by Capt Howdy on Thu Nov 04, 2010 at 01:12:15 PM EST
    and I dont play one here but I heard this morning that one of the long range effects of what they are doing is the possibility, if the economy starts to recover, of serious inflation problems.

    I saw similar opinions at (5.00 / 1) (#33)
    by Anne on Thu Nov 04, 2010 at 01:43:42 PM EST
    naked capitalism today.  Here's an excerpt:

    Not only did the Fed announce its controversial $600 billion QE2 program today, but Ben Bernanke felt compelled to defend it in a Washington Post op-ed tonight. For the normally oracular Fed to feel it has to sell its program in a non-financial media outlet says Bernanke must recognize that he is staking on thin ice. The problem is he appears to believe the problem is at most one of perception, when it is in fact practical, that QE2 is unlikely to work, and if anything is more likely to produce collateral damage than achieve its intended aims.

    And no one less than the co-CEO of Pimco, a bond fund and hence presumed fan of QE@ (bonds ought to benefit from Fed intervention) expressed his considerable doubts in an op ed at the Financial Times.

    First to Bernanke, and the guts of his argument at the Post. After explaining why low inflation and the risk of deflation are reasons to act, he explains the presumed benefits of QE2:

    This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

    The Fed chair is so disengaged from reality it isn't funny. This is the classic wealth effect argument, that if you goose asset values, people will feel richer and spend more. The problem is it was an abysmal failure the first it was put into effect as a policy idea, in Japan in the later 1980s. The result was rampant asset speculation followed by a twenty year bust.

    And the assertion that QE1 was a success of any sort is a canard. Unemployment is still stuck at just shy of 10%, with job additions still too low to absorb workforce increases. Housing appears to have bottomed in some markets, but that's only as a result of repricing so as to be more in line with long term relationships with income and rentals. The fact that Bernanke is worrying about deflation says it didn't do much to create expectations of price increases (or more accurately, consumers most certainly do expect price increases, but in select but important areas like food and energy prices, which are not well suited to the sort of anticipatory purchases that help increase general price levels). The uncertainty over foreclosures and the reality of shadow housing inventory (delinquent borrowers banks have not evicted yet, plus people who would like to sell but are unduly optimistic re a near term housing recovery) means that any prod to demand from super low rates is offset by concerns about supply pressures on housing prices (as in consumers are correctly concerned that they still face downside risk).

    In addition, even if it worked, the low mortgage rate inducement is a con. The Fed hopes to create inflation. That means higher interest rates. If the Fed succeeds in its goal of achieving modest inflation (2-4%), the increase in funding costs for homebuyers would cycle back into less affordabilty. Anyone who understands that dynamic is again not going to want to gamble on the possibility that the Fed succeeds.

    Emphasis is mine.

    I'm sort of at the point where I think most of the people making the decisions need to adopt the George Costanza Method: whatever you think you should do, do the opposite.

    Parent

    A huge problem with doing this (none / 0) (#25)
    by Militarytracy on Thu Nov 04, 2010 at 01:30:58 PM EST
    It gets very unpredictable from here what the long term affects on the economy could be.  That is why Stiglitz is having a meltdown.

    Parent
    Social Security (5.00 / 2) (#65)
    by dandelion on Thu Nov 04, 2010 at 03:17:37 PM EST
    They've got to keep the Dow goosed if they want to cut SS, it's that simple.  When the market crashed in 2008-9, a lot of immediate response was, whew aren't we glad we didn't privatize SS into market accounts.

    But that's exactly the long-term goal.  

    So they've got to create the psychology/possibility/belief in younger voters that over the decades the market will be a more effective retirement vehicle than SS.  

    Bernanke has flat out admitted that the idea behind QE is to raise asset values.  It's just a floodtide of cash flowing right to the trading floors.  He has also clearly stated that the need to raid SS because "that's where the money is."

    The real question is, will the market turn out to be bigger than Bernanke's control, or not?

    According to Peter Orszag there is (5.00 / 1) (#70)
    by MO Blue on Thu Nov 04, 2010 at 03:37:41 PM EST
    silver lining to the election

    The silver lining is that the election could make Social Security reform more likely -- if the administration chooses to jump at the opportunity.
    ...
    Given the left's strident opposition to any serious discussion of Social Security reform, the issue will provide a key early indicator of the administration's response to the election results.
    NYT

    Peter, you might recall, was Obama's WH budget director until July 2010. Prior to that he was head of the Congressional Budget Office for two years under President George W. Bush.

    Parent

    Gridlock never looked so good (5.00 / 3) (#77)
    by ruffian on Thu Nov 04, 2010 at 04:04:41 PM EST
    Depends on what "compromises" Obama and (5.00 / 1) (#100)
    by MO Blue on Thu Nov 04, 2010 at 06:21:59 PM EST
    the Dems are willing to make. All the rhetoric coming out of various connected Dems plus the make up of the Cat Food Commission makes me think the "fix" is in on Social Security all under the disguise of "fixing" the system.

    Would love to be wrong and see that Dems stand strong on this as they have in the past. But as the saying goes, that was then and this is now and I don't hear the same united defense happening now.

    Gridlock may only occur in the areas that would actually help people and not on things that are long time Wall St. priorities.

    Parent

    Now is the time for all good Democrats (none / 0) (#99)
    by Militarytracy on Thu Nov 04, 2010 at 06:15:18 PM EST
    to fight like hell for solutions that will actually work, and scrap solutions and not play ball at all with devices that do nothing but preserve the status quo, enable this horrible income inequality to further continue, and utterly screw the little people.

    Parent
    Now is the time for all Democratic VOTERS (5.00 / 1) (#119)
    by Inspector Gadget on Thu Nov 04, 2010 at 09:43:47 PM EST
    to get out their paper and pencils and start TELLING their elected officials exactly what they expect from them, and just whom their owe their loyalty to. Stop trying to make them read your minds, your blog comments, and waiting until election day to protest vote because they guessed wrong!!!

    The Dems who managed to keep their jobs need to know right NOW what they did wrong and that they are being watched.

    Know the deadlines in your state for registering as a candidate, and make sure you have your eye on someone (perhaps a state representative) you would encourage to run against the congressional incumbent who isn't behaving and voting for the people. WE elected these people, not Obama, and they are indebted to us.

    Parent

    I think there is more than a little bit (none / 0) (#105)
    by Militarytracy on Thu Nov 04, 2010 at 06:40:01 PM EST
    of truth in your speculation too.  Big traders are saying without this easing a big correction would begin to take place, now they are saying if it is less than a trillion a correction is going to take place.  Our leaders can't make a play to deleverage more of this toxicity on the back of Social Security if the markets correct.  They think if they keep the markets looking plump though that there is a chance we will go easier into that night.

    What they are doing is risky though, it can blow up right in your face.  You can unleash things you can't put back into the bottle.

    Parent

    And this is completely Obama's call (none / 0) (#1)
    by Militarytracy on Thu Nov 04, 2010 at 12:09:57 PM EST
    so the herpes outbreak will continue until the economy improves.  I read about this a few days ago, and it won't even improve the economy in any meaningful way.  It is only another bank bailout. If you aren't a bank though nothing noticeable will change for you other than the devaluation of your currency....but we can find 500 billion for another bank bailout that will not improve the economy while we cut nasty evil entitlements.

    Are you talking about the 600 billion (none / 0) (#3)
    by republicratitarian on Thu Nov 04, 2010 at 12:28:43 PM EST
    the Federal Reserve is spending on buying bonds right now? Does that go straight to the banks?

    Parent
    Pragmatic Capitalism (none / 0) (#6)
    by Militarytracy on Thu Nov 04, 2010 at 12:45:46 PM EST
    splains much better than I do.

    But there is one distinct benefit of such a policy - it alters the composition of bank balance sheets.  At the end of the day it's really just an asset swap and a transfer of risk via bond duration or bond type.  The kicker here, is that if you're a bad bank with a few trillion dollars in bad mortgage paper you're delighted if a AAA rated entity comes in and swaps those assets out with their highly rated paper.  This is exactly what the Fed did in 2009 and make no mistake - it was hugely successful in clearing the credit markets and altering the composition of bank balance sheets.  This was Mr. Bernanke's goal after all.  He was simply trying to clear the credit markets and improve the banking system and he believed that would ultimately fix the problems in the US economy. Unfortunately, he misdiagnosed a household balance sheet recession as a banking crisis.  QE1 provided liquidity in the credit markets and it gave the banks some much needed breathing room.  Unfortunately, the impact on the real economy was far more muted.

    I think Ben Bernanke knows all of this.  He has added $1T in reserves to the banks already and it hasn't resulted in a surge in borrowing or self sustaining economy recovery.  It doesn't take a genius to understand that adding another trillion won't change anything either.  If there is low demand for apples putting more apples on the shelves does not improve the apples salesman's ability to sell more apples.

    But Mr. Bernanke is seeing the same thing that I am seeing.  He sees a weak economy and a housing market that appears to be rolling over again.  Knowing that the banks are extremely fragile here and understanding that there is absolutely no political will for another bailout Mr. Bernanke is creating his own bailout by bypassing Congress.




    Parent
    And actually (none / 0) (#8)
    by Militarytracy on Thu Nov 04, 2010 at 12:49:15 PM EST
    that liquidity and breathing room QE1 created for the banks looks like it went right back into Wall Street.  Loose credit dried up, but the government only saved Wall Street so who had the needed assets to qualify for better securitized loans now that we weren't going to make liar loans anymore?  Wall Street stood head and shoulders above all of us....they even had fuzzy bookkeeping to show solvency that American people and small businesses didn't get to use to show how in black they were.  So all that liquidity was mostly loaned to who?  Looks like Wall Street drank most of it up.

    Parent
    Sounds scammy (none / 0) (#10)
    by waldenpond on Thu Nov 04, 2010 at 12:54:48 PM EST
    Do a bait and switch for the banks so they can inflate their assets, the phoney market programmers will play along and inflate stock prices, rich people will 'feel' richer and spend more money.

    Parent
    Bernanke is trying to save the existing (none / 0) (#14)
    by Militarytracy on Thu Nov 04, 2010 at 01:01:35 PM EST
    structure of the banks because the housing market is going to roll over hard.  We are all simply along for the ride though.  This insanity of saving the banks should have never been started though.  This is the world we get when creating moral hazard is ignored.

    Parent
    Apples and Oranges (none / 0) (#7)
    by BTAL on Thu Nov 04, 2010 at 12:47:34 PM EST
    The Fed QE spending is not part of the US federal budget.  They (the Fed) are just printing more money and purchasing existing Treasury bonds from the banks, not directly from the Treasury.

    Parent
    From Delong link above (5.00 / 1) (#86)
    by MO Blue on Thu Nov 04, 2010 at 04:41:33 PM EST
    The five-year note carries an interest rate of 1.17% per year. The Federal Reserve is thus changing the supply of assets by taking onto its own balance sheet... wait for it... wait for it... duration risk that the market is currently willing to pay $7 billion a year to avoid.

    To take $7 billion a year of duration risk off of the private sector's books in a global economy that still has more than $60 trillion of financial assets is a change in "credit conditions" equivalent to what would be achieved in normal times by a coordinated one basis point reduction in short-term interest rates by the world's central bankers.



    Parent
    Correct, and since the fed already has the (none / 0) (#88)
    by BTAL on Thu Nov 04, 2010 at 04:45:24 PM EST
    rate at effective zero, they don't have that tool at their disposal.  The effect of reducing interest rates spurs activity - that is when you are able to reduce rates.

    Parent
    Seems to me that there were two components (none / 0) (#91)
    by MO Blue on Thu Nov 04, 2010 at 05:03:23 PM EST
    One was to remove duration risk from private sector books and have the Fed assume the risk. So once more the government is assuming their risk.  

    Reducing interest rates has done little to spur activity to date. The interest rate now becoming in effect -1% in no way means that the banks will be willing to invest in the economy by freeing up lending or provide lower rate services. What the lower rates banks have had to pay for money has resulted in them paying nothing in interest on saving accounts while they continue to charge extremely high rates on services such as credit cards and they are now going to charge additional fees on most of their checking, savings accounts and other bank services.  

    Parent

    First, the fed is not the govt so the govt (none / 0) (#93)
    by BTAL on Thu Nov 04, 2010 at 05:23:50 PM EST
    isn't assuming the risk, at least not as far as a balance sheet/on the books action.

    The low interest rates did help as mentioned earlier with home buying coupled with the first time buyer credit.  It has also helped many people with LIBOR ARM mortgages as those rates have lowered mortgage payments at reset time.  The foreclosure issue would have been much worse if interest rates were up and those ARMs reset at higher rates.

    The additional banking fees (checking accts, etc.) are the result of the Fin Reg eliminating other areas of income - like the overdraft charges that have been reduced for the consumer.  Effectively, a rearranging of charges.

    As for the rate the banks could borrow at, why should they borrow to then loan?  This move is intended to force their hands by making them cash flush.  Funds they have to loan to make up for the loss of the long term t-bond revenue.

    The big problem is that it has already started to weaken the USD resulting in money being moved into other currencies (like Germany) driving up the value of those and making their exports more expensive.  Several other countries, especially exporters are seeing this a currency war and PO'd.  The upcoming G20 meeting next week will not be pleasant for Obama.

    Parent

    Fed and the government are intertwined (5.00 / 1) (#95)
    by MO Blue on Thu Nov 04, 2010 at 05:50:01 PM EST
    Loss of income due to unnecessary risks cause a loss of income at the U.S. Treasury level. wikipedia

    According to the Board of Governors, the Federal Reserve is independent within government because "its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government." However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.[11] The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. The Federal Reserve transferred a record amount of $45 billion to the U.S. Treasury in 2009

    Cash flush banks can do a lot of other things instead of lending money. Buying back stock and scoping up other financial entities are just a couple of options that they have available. So once again we are basically drafting policy hoping that the banks will do the right things.

    Parent

    Not Sure That Is The Point (none / 0) (#96)
    by squeaky on Thu Nov 04, 2010 at 06:06:13 PM EST
    The FED is concerned with interest rates... For the banks having a million in t-bonds is not much different from having it in cash as they are liquid.

    Not that I have a clue as to the effect of the measure... something about getting people to hedge against inflation...  

    Parent

    Difference between banks having millions in (none / 0) (#97)
    by MO Blue on Thu Nov 04, 2010 at 06:14:24 PM EST
    t-bonds and having millions in cash is that they earn money on t-bonds. The difference between the money they borrow from the fed at 0% interest and the interest they receive from the t-bonds 1.7% or better goes to interest on investment (i.e. profit).

    As Btal said the intent is to give the banks more cash so that they will be forced to lend the money to small businesses etc, activities that will help the economy.

    Parent

    Yes, intertwined but separate and definitely (none / 0) (#98)
    by BTAL on Thu Nov 04, 2010 at 06:14:25 PM EST
    not a line item appropriation/expenditure of the federal budget (the point I was trying to make to MT).

    Also, have not been attempting to justify or defend what the fed is attempting, just explain what is happening.  

    As stated, they are attempting to influence/force/back the banks into a position to lend/invest more.  Without conditions on the use of the bond sale proceeds (which would be illegal and unenforceable), yes the banks are then left to their own devices as to what they do with the capital.

    Parent

    We are in agreement on what the Fed (none / 0) (#101)
    by MO Blue on Thu Nov 04, 2010 at 06:27:57 PM EST
    is attempting but more importantly IMO the banks are being given more free money:

    Without conditions on the use of the bond sale proceeds (which would be illegal and unenforceable), yes the banks are then left to their own devices as to what they do with the capital.



    Parent
    OK, Got It (1.00 / 1) (#110)
    by squeaky on Thu Nov 04, 2010 at 07:12:07 PM EST
    No numbers on the "free cash" idea?  Thought so.  

    You are just jawboning with our GOP friend, and have no idea what you are talking about, but it feels good to complain.

    Poor baby.

    Parent

    Now that the thread is dead (5.00 / 1) (#134)
    by MO Blue on Sun Nov 07, 2010 at 09:01:10 AM EST
    I will respond to your comment. I left for a 3 day stay at a friends before you made your original request for information. I do not spend all of my evenings waiting for you to unleash your mean spirited attacks to one of my comments. naked capitalism summarized the issue quite well. It is you who is completely ignorant of the subject that was being discussed. h/t to Anne for posting this since I was unable to find an article simple enough for even you to understand.

    Team Obama did none of these things. Instead they announced "stress tests," plainly designed so as to obscure the banks' true condition. They pressured the Federal Accounting Standards Board to permit the banks to ignore the market value of their toxic assets. Management stayed in place. They prosecuted no one. The Fed cut the cost of funds to zero. The President justified all this by repeating, many times, that the goal of policy was "to get credit flowing again."

    The banks threw a party. Reported profits soared, as did bonuses. With free funds, the banks could make money with no risk, by lending back to the Treasury. They could boom the stock market. They could make a mint on proprietary trading. Their losses on mortgages were concealed -- until the fact came out that they'd so neglected basic mortgage paperwork, as to be unable to foreclose in many cases, without the help of forged documents and perjured affidavits.

     

    More to the point I pick and choose who I interact with on a personal basis. This will be my final comment to you on any issue now and in the future. I choose not to deal with people who are mean spirited and hateful just for the fun of it. As far as I am concerned you no longer exist.  

    Parent

    Non Sequitur (none / 0) (#135)
    by squeaky on Sun Nov 07, 2010 at 11:03:17 AM EST
    Your response has nothing to do with my request for numbers and has nothing to do with the recent quantitative easing measures.

    As for the rest of your comment, lol..

    Parent

    LOL? (none / 0) (#112)
    by oculus on Thu Nov 04, 2010 at 08:40:23 PM EST
    Oh, you are on tonight! (none / 0) (#115)
    by Cream City on Thu Nov 04, 2010 at 09:02:27 PM EST
    :-)

    Parent
    This thread has been (none / 0) (#121)
    by shoephone on Thu Nov 04, 2010 at 10:06:17 PM EST
    exceedingly entertaining!

    Parent
    Saving it (none / 0) (#122)
    by Yman on Thu Nov 04, 2010 at 10:09:21 PM EST
    Wouldn't want to overdo it.  :)

    Parent
    Yeah (none / 0) (#128)
    by squeaky on Fri Nov 05, 2010 at 12:34:31 AM EST
    PPUS working at TL....

    hilli high schoolers and one of our GOPers bonding.

    Parent

    You really took the President's speech (none / 0) (#129)
    by oculus on Fri Nov 05, 2010 at 12:44:53 AM EST
    to heart, I gather.  

    Parent
    Correct again. Here's the dirty underbelly (none / 0) (#103)
    by BTAL on Thu Nov 04, 2010 at 06:35:42 PM EST
    I will be dollars to donuts that the fed's move had complete concurrence from and may well have been initiated by the WH and the Treasury.  The administration knows, especially with the election results and polling that there is zero federal govt spending dollars available.  They, the administration, then turned to the fed for any help possible.  This is probably the closest the fed could have gone without dropping bags of cash from helicopters.  

    Parent
    If they chose to use these additional funds (none / 0) (#108)
    by MO Blue on Thu Nov 04, 2010 at 06:58:32 PM EST
    to purchase other financial institutions, they just become more immune to the consequences of their actions. If they were too big to fail before, think of how much bigger they could become.  

    Parent
    hmm (none / 0) (#109)
    by nycstray on Thu Nov 04, 2010 at 06:59:57 PM EST
    perhaps they would be better off dropping bags of cash . . . .

    Parent
    Free Money? (none / 0) (#107)
    by squeaky on Thu Nov 04, 2010 at 06:54:51 PM EST
    Not following you there. The bank sells a $1m ten year note to the FED for more or less what it paid for it...

    I would appreciate if you wold do the math for me, so I can understand how the bank is getting free money?


    Parent

    Study more (none / 0) (#9)
    by Militarytracy on Thu Nov 04, 2010 at 12:49:47 PM EST
    Rhetoric less

    Parent
    Even the excerpts you post (none / 0) (#12)
    by BTAL on Thu Nov 04, 2010 at 12:58:05 PM EST
    show that QE is not on the govt budget/books.  If the fed was purchasing bonds directly from the govt then there is the direct relation between entitlements and QE, albeit tangential.  The govt is out of this transactional loop, at least directly.  

    If the Treasury was issuing new bonds just for the Fed's QE purchasing, then the issue would be monitizing the debt.  This is not happening here.

    Parent

    What is happening then? (none / 0) (#15)
    by Militarytracy on Thu Nov 04, 2010 at 01:03:02 PM EST
    I guess one way it could be looked at (none / 0) (#17)
    by BTAL on Thu Nov 04, 2010 at 01:11:17 PM EST
    is monitizing the debt, but via the side or back door.  As I am reading, the fed is purchasing the Treasury bonds that are already held by the banks and not via the direct Treasury auction.  

    The goal is to get those bonds off the market/bank holdings pushing cash directly into the banks to spur lending.  Making the banks overflow with cash so that they don't have any option but to lend, especially since they can't get any kind of rate via parking the funds at the fed and/or intra-bank lending.

    Direct monitizing of the debt would send very bad signals to the currency markets, truly gutting the USD.

    Parent

    The Fed is buying toxic assets again (none / 0) (#20)
    by Militarytracy on Thu Nov 04, 2010 at 01:13:14 PM EST
    off of the banks, period....end of discussion

    Parent
    Treasury Bond Toxic Assets? (none / 0) (#22)
    by squeaky on Thu Nov 04, 2010 at 01:22:56 PM EST
    I am not an economist, but I never heard of treasury bonds being called toxic assets. Can you explain that to me?

    Parent
    Read (none / 0) (#23)
    by Militarytracy on Thu Nov 04, 2010 at 01:28:14 PM EST
    Do you even know what (none / 0) (#24)
    by Militarytracy on Thu Nov 04, 2010 at 01:29:14 PM EST
    Quantitative Easing is?

    Parent
    Quantitative Easing? (none / 0) (#27)
    by squeaky on Thu Nov 04, 2010 at 01:35:10 PM EST
    Not  my question. I was curious as to why you think T-bills are toxic assets.

    Parent
    QE1 was the purchase of non-treasury bonds (none / 0) (#29)
    by BTAL on Thu Nov 04, 2010 at 01:36:31 PM EST
    effectively an Fed based TARP.  

    QE2 is the purchase of US Treasury bonds from the banks.  Fed to purchase $600B of Treasurys via WSJ

    Parent

    Yup (none / 0) (#31)
    by squeaky on Thu Nov 04, 2010 at 01:38:41 PM EST
    Does MT think that the t-bills are mortgage backed securities... strange.

    Parent
    QE2 has other components to it (none / 0) (#37)
    by Militarytracy on Thu Nov 04, 2010 at 02:04:52 PM EST
    that will be deployed later down the road as well.  But the banks are too insolvent to loan again I guess, after they loaned what they could to fatcats who will only rip it all off again when they eventually default.

    Parent
    Huh? (none / 0) (#26)
    by squeaky on Thu Nov 04, 2010 at 01:34:04 PM EST
    The fed is buying 3 to 10 year T-bills. Not sure what you are referring to as toxic assets. I have never heard T-bills referred to as toxic assets.

    Please explain what you mean.

    Parent

    Read what has been highlighted (none / 0) (#28)
    by Militarytracy on Thu Nov 04, 2010 at 01:35:46 PM EST
    from Stiglitz, Krugman, and Delong.  Read up on what QE is.  Maybe we can talk then.

    Parent
    I Have Read That (none / 0) (#30)
    by squeaky on Thu Nov 04, 2010 at 01:37:28 PM EST
    And more.. I have been following the story.

    You may disagree with the Fed move, but I still do not understand why you think t-bills are toxic assets.

    Parent

    Why does the Fed have to buy (none / 0) (#36)
    by Militarytracy on Thu Nov 04, 2010 at 02:02:59 PM EST
    right now such a huge mass of T-bills from the banks?  AND....that is not the end of what QE2 will do, this is just the kick off.

    Parent
    The fed is sucking up the bulk of the t-bills (none / 0) (#39)
    by BTAL on Thu Nov 04, 2010 at 02:08:58 PM EST
    to force monies to go to alternative sources of investment and ROI.  Effectively taking that card out of the deck so that the banks and other financial services have to play with the remaining cards/investments - corporate bonds (issued for expansion by cos like CAT, Ford, etc.), mortgage origination (hoping to boost housing demand with lower interest rates), etc.  

    Parent
    How is that going to boost (none / 0) (#41)
    by Militarytracy on Thu Nov 04, 2010 at 02:11:43 PM EST
    housing demand with unemployment we have and the loss of household wages we are experiencing?  People can't even qualify for the loans, they are carrying too much debt.

    Parent
    Sorry, I ain't buying (none / 0) (#42)
    by Militarytracy on Thu Nov 04, 2010 at 02:13:50 PM EST
    It is nothing more in my opinion than an attempt to make insolvent toxic banks somehow appear solvent enough.  And QE2 is open ended.

    Parent
    No, QE2 is not open ended (none / 0) (#45)
    by BTAL on Thu Nov 04, 2010 at 02:20:33 PM EST
    It is set at $75B for 8 months totaling $600B.

    Even if it is extended, it still has nothing to do with govt entitlement spending that was initially mentioned.  

    This is the fed cranking up the printing presses and injecting that new cash into the market by buying up existing t-bills.

    Parent

    Not according to Paul Ashworth (none / 0) (#48)
    by Militarytracy on Thu Nov 04, 2010 at 02:29:33 PM EST
    link

    "I don't think this is going to make any difference at all," said Paul Ashworth, senior U.S. economist with Capitol Economics, who feels the plan is too small. "This is a slippery slope. Once you're on it, it's very hard to get off."

    He predicts a repeat of what happened with the first round of quantitative easing two years ago. The Fed initially announced a $600 billion program in November 2008, but then four months later, increased that to $1.8 trillion, when it wasn't enough.

    And he isn't alone sharing this view of what is about to go down

    Parent

    And according to some traders (none / 0) (#51)
    by Militarytracy on Thu Nov 04, 2010 at 02:39:46 PM EST
    which I am not but I do read them from time to time, believe it or not the markets have already adjusted and factored in for a QE2 of 1 trillion dollars......before it is even done I guess.  I have read that anything less than 1 trillion will now trigger a market correction.  Not that I give a rip anymore, I think the longer that is put off the slimier things get. Jusssss sayin though, everything that has been done has been done to avoid market corrections and now if they pump less than 1 trillion in someone is going to shoot the dog.

    Parent
    First, I didn't say it would work, just provided (none / 0) (#44)
    by BTAL on Thu Nov 04, 2010 at 02:17:39 PM EST
    an answer to your question.

    Second, yes there are a lot of people who are unemployed and/or in housing troubles but at the same time there is a ton of private money sitting on the sidelines.  Just look at the bump in home sales that was triggered by this summer's New Buyer Credit.  This doesn't address the people you mention but is an attempt to drive action from that sidelined money.

    Parent

    Considering that 1tr has already been (none / 0) (#46)
    by Militarytracy on Thu Nov 04, 2010 at 02:21:45 PM EST
    pumped in for this purpose and Ta Da, nobody is buying....nobody can buy, it makes no sense that this would do it unless the banks loaned out all their liquidity.  This is a toxic bank bailout scam bypassing Congress and I'll bet before QE2 is over with, there will be some major crap that will have to be bought too.  This is just the kick off.

    Parent
    Huh? (none / 0) (#49)
    by squeaky on Thu Nov 04, 2010 at 02:35:28 PM EST
    OK, I get it, you are just making up that the t-bills are toxic, because it sounds worse.

    Also I have read nothing that supports BTAL's statement that the FED is buying the t-bills from banks. But if you have a link that would be helpful.

    Parent

    We are trying to keep toxic banks afloat (none / 0) (#53)
    by Militarytracy on Thu Nov 04, 2010 at 02:43:10 PM EST
    The last time we went into QE we ended up buying toxicity that was not originally announced.  I don't doubt that "my leaders" had it planned all along, but I was the last person to know.  Why do you want to believe that this time is going to be so different?  What do you smoke that leads you to think that your pony is just around the next corner?

    Parent
    POny? Smoke? (none / 0) (#58)
    by squeaky on Thu Nov 04, 2010 at 02:54:32 PM EST
    Not sure what you are on about smoke and ponies.  The story that is out there is that the FED is buying $600b in 10 months on the open market.

    Please provide links to your version of the story, because I cannot find anything about t-bills being toxic, or that the FED is buying these bonds directly from banks, toxic or not.

    As to the wisdom of the plan, I have no f'ing idea. I am not an amateur economist like you, BTD, et al.. Economics has never been a subject of interest for me, although I do enjoy reading Krugman.

    Parent

    There are links all over the place (none / 0) (#61)
    by Militarytracy on Thu Nov 04, 2010 at 03:01:59 PM EST
    OK Ducky (none / 0) (#64)
    by squeaky on Thu Nov 04, 2010 at 03:13:35 PM EST
    One way to save face..

    Parent
    The purchases are via the fed's open market (none / 0) (#60)
    by BTAL on Thu Nov 04, 2010 at 03:01:15 PM EST
    trading desk and the System Open Market Account (SOMA).

    Operational details of Fed's purchases via Marketwatch

    SOMA (snippet from wiki):

    [T]he trade of securities in the SOMA changes the balance of bank reserves, which also affects short term interest rates. ...

    These trades are made with a group of about 22 (currently 18 as an immediate aftermath of 08/09 credit crisis) banks or bond dealers who are called primary dealers.

    By purchasing the t-bills from the banks via the open market desk, they are actually doing the reverse of what is normally done when the commercial banks purchase t-bills from the fed - a tool the fed uses to pull money back out of the market.

    Parent

    Nothing New or Unusual (none / 0) (#63)
    by squeaky on Thu Nov 04, 2010 at 03:12:52 PM EST
    This is how the fed does business:

    The Federal Reserve Bank of New York trades U.S. government and select other securities with designated primary dealers, which include banks and securities broker-dealers. Weekly transaction, market share data and primary dealer lists are updated periodically. Much of the information is submitted voluntarily.


    Parent
    Except the fed is not buying directly from UST (none / 0) (#75)
    by BTAL on Thu Nov 04, 2010 at 03:55:06 PM EST
    The way that QE works is that the Fed will publish a schedule of how many Treasury bonds it intends to buy and when. It will then go out and buy those bonds from "the Federal Reserve's primary dealers through a series of competitive auctions operated through the Desk's FedTrade system."

    In English, what that means is that the New York Fed has a direct line to the biggest banks in the world (Goldman Sachs, Morgan Stanley, Deutsche Bank, etc -- 18 in all). And it gets all those banks to compete with each other, either directly or on behalf of their clients, for who will sell the Fed the Treasury bonds it wants at the lowest price. The winners of the auction get the Fed's newly-printed cash*, and give up Treasury bonds that they own in return.

    http://blogs.reuters.com/felix-salmon/2010/11/04/how-qe-works/

    Parent

    OK (none / 0) (#78)
    by squeaky on Thu Nov 04, 2010 at 04:15:39 PM EST
    But that is how the system has been set up for a long time, it is called the treasury bond market, t-bonds are bought and sold on the secondary market.

    The implication that you appear to be promoting, is that the FED is buying the unwanted bonds from failing banks. And MT thinks that they are somehow toxic because of it.

    Parent

    Not "unwanted" bonds but they are (none / 0) (#83)
    by BTAL on Thu Nov 04, 2010 at 04:39:00 PM EST
    bidding them at a price that makes it more attractive to sell those long term assets at a premium.  That clears long term investments with cash on their books.  The goal then is that they will invest the new cash into other commercial vehicles like business loans and mortgages.  The banks have to turn that money around since it doesn't make a profit sitting in their vaults.

    Additionally, they are not buying from failing banks - where did you get that from any of my comments?

    Read the entire link from the excerpted article.

    Parent

    I Did Read It (none / 0) (#85)
    by squeaky on Thu Nov 04, 2010 at 04:40:20 PM EST
    Newly Printed Cash (none / 0) (#84)
    by squeaky on Thu Nov 04, 2010 at 04:39:16 PM EST
    The winners of the auction get the Fed's newly-printed cash*, and give up Treasury bonds that they own in return.

    The asterisk *:

    The Fed Does NOT Print Money

    In the US, the central bank doesn't print money, the US Treasury does (US Mint), here is how it works:

    ...... Each Federal Reserve Bank is required by law to pledge collateral at least equal to the amount of currency it has issued into circulation. The bulk of the collateral pledged is in the form of U.S. Government securities and gold certificates owned by the Federal Reserve Banks.



    Parent
    Why is the Fed having to buy (none / 0) (#35)
    by Militarytracy on Thu Nov 04, 2010 at 01:57:23 PM EST
    Treasury bonds from the banks?

    Parent
    because they want the banks to invest (none / 0) (#79)
    by CST on Thu Nov 04, 2010 at 04:18:50 PM EST
    in something other than bonds.

    I think.

    Parent

    Secondary Market (none / 0) (#81)
    by squeaky on Thu Nov 04, 2010 at 04:23:11 PM EST
    Institutions buy and sell treasury bonds on the secondary market. The FED is buying the bonds like any other institution on the secondary market where the notes are traded.

    The bonds are very liquid.

    Parent

    The fed is offering prices that the rest of the (none / 0) (#87)
    by BTAL on Thu Nov 04, 2010 at 04:43:05 PM EST
    market won't - a deal they can't refuse.

    Additionally, they are putting up enough money they are effectively "buying the pot".  

    Parent

    Huh? (none / 0) (#89)
    by squeaky on Thu Nov 04, 2010 at 04:50:59 PM EST
    It is an auction, no? The FED will buy from the lowest seller, not the highest.

    The rates, save for the 30year t-bond have already decreased.

    Parent

    It makes no sense to do this either (none / 0) (#106)
    by Militarytracy on Thu Nov 04, 2010 at 06:48:42 PM EST
    Not the reason they are giving, and the traders are saying if they don't do this there will be a market correction.  Our system is so phucked at this point.

    Parent
    The equity traders are different but related to (none / 0) (#111)
    by BTAL on Thu Nov 04, 2010 at 07:56:04 PM EST
    the bond and banks that will be selling their bonds.

    The market reaction/anticipation is that the banks will take the new cash and invest in corporate issues like - CAT, Ford, etc. that funds new factories, products, expansion into new markets thereby making the companies and their stocks worth more.  The QE2 expectation was already baked into recent stock market share pricing/buys, no QE2 would have triggered a massive sell off driving the DOW way down.  Their $1T QE2 level was them attempting to force the hand of the fed.  The market responded very positive to the $600B level because that confirmed the fed did do what was expected aka: baked in.  The stock market has responded and won't now poo-poo the fed action because it didn't go to the level they "wanted".  In short, it was the market negotiating from the position of what would be there best case scenario but willing to accept a bit less.

    Parent

    When the markets make such moves (none / 0) (#126)
    by Militarytracy on Thu Nov 04, 2010 at 11:35:26 PM EST
    based on technical rather than fundemental factors, we are on our last leg IMO.  We a ripe to do little more than shatter.

    Parent
    Oil's going up (none / 0) (#5)
    by TJBuff on Thu Nov 04, 2010 at 12:44:47 PM EST
    close to $90/bbl.  Bernanke's just playing banker to the speculators at this point.  $100/bbl oil should finish off the economy pretty quickly.

    Yepper, a weak dollar will drive the price of oil (none / 0) (#104)
    by BTAL on Thu Nov 04, 2010 at 06:37:05 PM EST
    higher and higher.   Just in time for holiday travel and more significantly winter heating fuel.

    Parent
    Weak dollar also helps exports (none / 0) (#124)
    by Politalkix on Thu Nov 04, 2010 at 11:23:28 PM EST
    Until 2016 (none / 0) (#11)
    by BobTinKY on Thu Nov 04, 2010 at 12:58:03 PM EST
    At which point the fed up electorate will be ready to try the untried, like liberalism of the New Deal type.  But even then the effects of government action won't begin to be seen until 2018.

    It's not that I am a huge fan of massive government involvement in the economy.  It just happens to be what is called for & required under current circumstances.  Pretending that it isn't as Obama, and to an even greater degree the GOP,do is not going to make either the problem or its solution dissappear.  

    We need a substantial increase in aggregate demand and only government can act to provide it.  Borrow the cheap money that is available and build something, anything and lots of it!

    But in the long run we need to revive (5.00 / 1) (#69)
    by esmense on Thu Nov 04, 2010 at 03:30:16 PM EST
    job creation and wage growth. How do we do that? In the face of globalization, automation and the objections of our ruling financial class?

    In truth, without the crutch of high interest and unsubstainable personal debt, the US no longer enjoys the kind of broad prosperity that creates a mass consumer market -- that creates mass jobs -- and as such it can't support broad, middle class prosperity, no matter how much the government spends.

    Starting in the 1980s we went from what I call the "Macy's and Chevy" mass market economy -- the era when working families routinely bought cars new and everyone shopped in large department stores that catered to all levels of consumer income, from bargain undies in the basement to high end silver and furs on the upper floors (a time when, for the most part, everyone's economic fortunes seemed to be moving forward together) -- to the Nordstrom/Walmart split economy. An economy split 20/80 into an "upscale" (rather than mass) market that includes not just the most wealthy, but, in larger numbers, an army of educated and creative service and technology providers that provide "value added" services and "upscale" products (generally not mass produced) to the wealthy and to each other. The other 80%, meanwhile, has experienced economic stagnation and retreat, and been reduced to purchasing the cheapest foreign goods on credit.  

    The global corporations now sell into and compete in a hugh, global mass market -- so it doesn't much concern them if the American affluence is shrinking rather than expanding -- because increasingly they are selling to many, many more consumers outside the US.

    I use Nordstrom and Walmart as examples of what has happened to our economy because they both started in the 80s and their patterns of growth provide a great demonstration of what has happened to the US consumer market. In the 80s Nordstrom was hailed as a symbol of a future in which the "upscale" market would grow and grow. While Walmart wasn't, initially, much noted except as a competitor to small retailers in rural areas. But in the years since, Nordstrom has barely grown beyond its original 80s expansion -- because its customer base of "upscale" professional, service and technology workers have barely grown -- while Walmart has become the largest retailer in the country.  

    Parent

    Slight correction (none / 0) (#71)
    by Inspector Gadget on Thu Nov 04, 2010 at 03:44:39 PM EST
    Nordstrom started out as a shoe store in 1901, and expanded into clothing in the early 1960's.

    Parent
    Yes, but it wasn't a national retailer until (none / 0) (#80)
    by esmense on Thu Nov 04, 2010 at 04:22:31 PM EST
    the 1980s. In the 80s Nordstrom opened branches in the suburbs of the nation's communications and financial centers -- taking advantage of the growth of professional women and affluent two-income families. That expansion had pretty much ended by the mid-90s.

    Two interesting side notes: In the early 90s when competing 100 year old regional retailer Frederick & Nelson was having difficulties which eventually forced it to close its doors, people (local marketing professionals quoted in a Seattle Times article) advised that it needed, like Nordstrom, to appeal to the "upscale" consumer. But they overlooked the fact that while Nordstrom had expanded into upscale parts of the country, Frederick & Nelson's branches were in declining working class communities like Tacoma and Everett. The "upscale" marketing approach they were encouraged to take was doomed to failure.

    Second sidenote: Nordstrom's flag ship downtown store has long been the least profitable of its stores. In fact, the vast majority of that stores profit comes from the half yearly sale when prices are slashed dramatically. The half yearly sale is bigger than Christmas.

    Parent

    Marshall Fields (none / 0) (#90)
    by Inspector Gadget on Thu Nov 04, 2010 at 04:53:30 PM EST
    (Chicago based) owned Frederick & Nelson since 1929. I have no recollection of there ever being a decent department store of any kind in Everett, though I will admit that Everett is someplace I have never had a desire to explore.

    F&N catered to the wealthy in Downtown, and Edmonds (the old Aurora Village), and they had their spectacular warehouse sale annually near Southcenter. It was an anchor store at Southcenter, as well, when that mall was the cadillac of puget sound shopping. I always considered it more upscale than Nordstrom until the local investment group took over and ran it to bankruptcy. Their holiday decor and the incredible escalator choir and string quartet was perfection.

    I remember well Nordstrom Best, and how difficult it was to drop the Best after they did. It began its expansion, though, in the very early 70's and continues to grow. They have big expansion plans for 2011, as well.

    Parent

    Frederick's was the anchor store in malls (none / 0) (#94)
    by esmense on Thu Nov 04, 2010 at 05:26:50 PM EST
    in Everett and Tacoma, and had branches in places like Walla Walla, and of course Spokane, etc.

    You are right, it was, actually, more upscale than Nordstrom -- it carried designer labels long after Nordstrom discontinued them, and upscale home products that Nordstrom never dabbled in; high end silver, china, home decor items. That is what made the "advice" to market more "upscale" "like Nordstrom" so ironic and misguided -- the problem wasn't that Frederick's product line wasn't upscale enough, the problem was that its consumer base could no longer afford such aspirational shopping (and, of course, genuinely upscale consumers had many more options than going downtown to get their designer duds. They could just as easily pick them up in New York or jet to Paris for the shows).

    The local investment group that drove it into the ground knew nothing about retail -- it was a vanity purchase by real estate speculators.

     

    Parent

    I would like to have heard/seen the (none / 0) (#130)
    by oculus on Fri Nov 05, 2010 at 12:47:52 AM EST
    escalor choir.  Dressed in angel costumes?  Any harps?  Repertoire?  You Tube?

    Parent
    Anyone notice how the stock market (none / 0) (#18)
    by Inspector Gadget on Thu Nov 04, 2010 at 01:11:43 PM EST
    responded to election results? I didn't...it's a question for anyone who paid attention :)

    Up the last couple of days (none / 0) (#21)
    by MO Blue on Thu Nov 04, 2010 at 01:20:53 PM EST
    Dow up 181 as I type this even after bad jobs data today.

    Parent
    Yes, well, I was reluctant to even look (none / 0) (#32)
    by Inspector Gadget on Thu Nov 04, 2010 at 01:39:07 PM EST
    but, curious as to why it wasn't making the news when every other big event starts out with the announcement of how it impacted the market. Wonder why they don't want this exceptional news for the instant recovery of the economy known :)

    Parent
    Well (none / 0) (#34)
    by Ga6thDem on Thu Nov 04, 2010 at 01:48:48 PM EST
    going up 181 isn't really all that great so maybe that's why they didn't mention it. Of course, the media can also be johnny one note.

    Parent
    It closed up almost 220 for the day (5.00 / 1) (#92)
    by MO Blue on Thu Nov 04, 2010 at 05:09:58 PM EST
    Not a bad day for those with the big bucks. Even bigger multi-million dollar bonuses for our lords and masters if they can keep propping it up. From what I can see at a quick glance banks were up, oil and oil servicing were up, and insurance was up.

    Parent
    Unicorn and puppy dog theory of hope for next.... (none / 0) (#38)
    by magster on Thu Nov 04, 2010 at 02:08:12 PM EST
    2 years:

    The Republicans had to be the party of no because if they acted like patriots the last two years by helping Obama govern, they would never win another election.  Now that they are in power while restoring hatred and cynicism in the electorate, they have to produce results. The GOP might actually be more likely to compromise and enact good policy so that they can claim the economic turnaround is their doing with their majority and not Obama's in the next election.  In other words, the next election will be about which party deserves credit.

    Anyone make it to the end of that paragraph before ROFL?

    um, I dont think so (none / 0) (#43)
    by Capt Howdy on Thu Nov 04, 2010 at 02:14:11 PM EST
    the house is going to pass vile crap as fast as Boner can push it through.  he doesnt care what it is as long as it sounds good to the rubes, it will be stopped in the senate or hopefully at least by the WH and so they will have the best of both worlds.  they can pass whatever batsh!t crazy things they want and never have to worry about the actual effects because they know the will never be enacted and they can whine that the mean ole democrats are stopping their march toward the holy land.

    in other more optimistic news this was pointed out on another blog:


    NBC  counts 130 "Tea Party-backed candidates" running for House seats. Only 40 won, with eight races still undecided Wednesday afternoon.

    HuffPo counts 48 conservative Blue Dog Democrats running for re-election. Only 23 won, with three races undecided Wednesday afternoon.

    Daily Kos counts 72 members of the House Progressive Caucus. Only three lost.



    Parent
    oh (none / 0) (#47)
    by Capt Howdy on Thu Nov 04, 2010 at 02:23:10 PM EST
    and when THEY have 4 or 500 bills passed by the house and held by the senate you can be damn sure they will make an issue out of it and they will make it stick.

    Parent
    yeah (none / 0) (#73)
    by Ga6thDem on Thu Nov 04, 2010 at 03:51:24 PM EST
    but if it's their usual bad legislation then nobody is going to care that it actually gets stuck in the senate. Last time when Clinton was president the morons stuck a rider to ban abortion on every bill.

    Parent
    nobody is going to care? (none / 0) (#74)
    by Capt Howdy on Thu Nov 04, 2010 at 03:54:18 PM EST
    oh I think the TPers will care

    Parent
    Yeah (none / 0) (#82)
    by Ga6thDem on Thu Nov 04, 2010 at 04:27:08 PM EST
    that's why I was making the point that it's all a shell game to the GOP and they are going to use Obama as foil for the rank and file and then they are going to say waaaa we can't do anything because of the senate or Obama so give us it all hopeing that everyone forgets what they did the last time "they ahd it all". If they take over everything again, it will be the same story it was during the bush years.

    Parent
    No (none / 0) (#52)
    by zyx on Thu Nov 04, 2010 at 02:42:54 PM EST
    Being the party of no is in Republican DNA now. And working to help the country is out of their DNA--apparently for good.

    If I were younger I'd leave. Canada. Someplace in Europe. I don't see a happy future in America.

    Parent

    I really considered canada (none / 0) (#54)
    by Capt Howdy on Thu Nov 04, 2010 at 02:46:14 PM EST
    early in the century when I was working there and Bush was prez.  
    if you are younger than me and have a job they make it really easy.  even if you are as old as me and have some jobs they make it pretty easy.  it is the largest country in the world and it has less population than California.  which is why they make things like universal health care work.  even for visitors like me.
    and it is a helluva nice place to live.


    Parent
    it is also possible to hold (none / 0) (#55)
    by Capt Howdy on Thu Nov 04, 2010 at 02:47:57 PM EST
    dual citizenship tho the US does not recognize it as long as you are a US citizen.

    Parent
    no (none / 0) (#56)
    by zyx on Thu Nov 04, 2010 at 02:51:31 PM EST
    I'm not young, and my job skill isn't in great demand, and my husband is 20+ years older than I am--a real geezer.

    I think he and I are stuck. And not much to look forward to. On the R side, 2010-election result redistricting and unlimited corporate campaign financing. On the D side, growing minority populations, and a bit more participation by them.

    That is a lopsided equation.

    Parent

    if you are really interested (none / 0) (#57)
    by Capt Howdy on Thu Nov 04, 2010 at 02:54:13 PM EST
    you should still look into it.  it might be more difficult with your age but like I said the generally make it really easy.

    canada wants you.

    Parent

    and let the wingnuts (5.00 / 0) (#59)
    by CST on Thu Nov 04, 2010 at 03:00:15 PM EST
    have this country?

    Not without a fight.

    There is also a benefit to having 50 states to choose from.  Local laws/economy vary greatly.  Just saying...

    Parent

    yeah (none / 0) (#62)
    by Capt Howdy on Thu Nov 04, 2010 at 03:03:08 PM EST
    I get that.  and it is my country.  which is probably the only reason I am still here.  but man, I gotta tell you.  once you find out what its like to live in a country that does things like universal health care (that was a big one for me at the time cause I had none and had not had any real reliable health care for years being a freelancer) it starts looking pretty damn good.  and it closer than than you think.  and the weather isnt even bad on the beautiful left coast.


    Parent
    Correct (none / 0) (#125)
    by Politalkix on Thu Nov 04, 2010 at 11:35:21 PM EST
    We will win the battle. Come and join us in the blue states.

    Parent
    Eh? (none / 0) (#50)
    by s5 on Thu Nov 04, 2010 at 02:39:25 PM EST
    Their point isn't that QE is bad; it's that what the Fed is doing may not be enough. But near as I can tell, the liberal consensus (excluding, of course, liberals who go around screaming BAILOUT! BAAAIIIILOUT! whenever Bernanke orders his breakfast) is that QE2 is better than nothing.

    savers (5.00 / 1) (#66)
    by dandelion on Thu Nov 04, 2010 at 03:18:49 PM EST
    QEII is devastating to savers.

    Parent
    Then we're in luck (5.00 / 2) (#67)
    by ruffian on Thu Nov 04, 2010 at 03:23:52 PM EST
    Not many of those around anymore

    Parent
    only the elderly (none / 0) (#72)
    by dandelion on Thu Nov 04, 2010 at 03:49:17 PM EST
    But no worries.  I'm pretty sure that with the Catfood Commission on deck and the Ryan Medicare-voucher plan on a drafting board, they'll get with the message and start heading for those ice floes.  

    Either that or move into the basement with their unemployed grandchildren who are now living back home with middle-aged mom and/or dad.

    Might be a sitcom in all that.

    Parent

    They are the greatest generation (none / 0) (#76)
    by ruffian on Thu Nov 04, 2010 at 04:03:37 PM EST
    They will do the right thing here.

    They really should revive the Roseanne sitcom for these times. Everyone is unemployed and living off the mean old grandma's cat food.

    Parent

    I'm sorry about this too (none / 0) (#102)
    by Militarytracy on Thu Nov 04, 2010 at 06:33:14 PM EST
    You will lose your real wealth that you had going on with "savings" as well.  And this country stopped rewarding saving behavior too when credit was free....but people who saw what was going on began saving because there was no other place to retain real wealth when the markets were no longer accountable.  I'm a saver too, now it is going to be worth much less and one of the flaws that is ongoing in our economy is that Americans have stopped saving. Now there is no incentive to save.  All wealth growing incentives for regular people are being destroyed.  There is nothing left though to drain of national wealth other than the savers, and social security now.  Everything else is bone dry.  The "savers" were never a big chunk of us at this point, but we will now be stood up against the wall too at gun point.

    Parent
    Stiglitz thinks it's bad (none / 0) (#68)
    by Big Tent Democrat on Thu Nov 04, 2010 at 03:29:38 PM EST
    I agree with him.

    Parent
    being right, about anything, (none / 0) (#117)
    by cpinva on Thu Nov 04, 2010 at 09:29:19 PM EST
    hasn't been politically expedient since 9/11/2001. as the tea partiers will attest, facts don't matter, it's what you feel. the same group that whines about how poorly our nation's public schools perform, turns right around and abuses anyone exhibiting the least bit of intelligence, accusing them of being "elitests".

    dealing rationally with such people is just not possible.

    Too true. I'm trying to cope (none / 0) (#127)
    by Cream City on Thu Nov 04, 2010 at 11:37:37 PM EST
    with a family member who is blathering online to a rapt audience of other conservatives about taxes -- bad, bad, all bad.  Now, I'm urban Amish and walk to work and just about everywhere; I made a conscious decision, after too much of my life behind the wheel, to redesign my life this way.  But, as I told family member, I'm still glad to contribute to the crucial infrastructure of a community -- education, roads, etc. -- so that family member can get in the SUV and drive 50 miles a day on the freeways to get to a job as a teacher in, you bet, public education.  That is, the SUV built by a company rescued by my taxes, the freeways built by my taxes, the job paid by my taxes, for family member to then pull the SUV into a mall and spend my taxes at the businesses there that also benefit from deep tax breaks in my state and pay less than I do. . . .

    Family member, prime examplar of living on the public dollar, still does not get it.  "Dems just want to tax the evil rich, and business should not be taxed at all!"  I'm about ready to take the keys and tell family member to walk to work, too.  It only ought to take about 10 hours a day to do so.

    Parent

    I foresee violence in your future. (none / 0) (#131)
    by oculus on Fri Nov 05, 2010 at 12:50:57 AM EST
    Nah. Blood is thicker than water (none / 0) (#132)
    by Cream City on Fri Nov 05, 2010 at 01:35:25 AM EST
    so they say, but I'm not about to spill any of either to test it.  Family is family.  I'm just going to give up, again, attempting to organize another family reunion!  It has been an almost-impossible task since the election of 2000.

    Parent
    Only a lost decade is the optimistic outcome (none / 0) (#133)
    by pluege2 on Fri Nov 05, 2010 at 05:02:00 AM EST
    it is presumptuous to assume that the plutocrats will do anything at all ever to change the economic condition of the average American. The dismantlement of the middle class, and abandonment and denigration of the disadvantaged and needy has clearly been by design based on the personal character of today's plutocrats. To believe actions will be taken by the ruling elite anytime soon to create a favorable environment for the not-wealthy around is delusional. Making the US worker's standard of liveing equal to that of Asian sweatshops has been the goal.

    A lost decade is a highly optimistic outcome.