Monday, September 15, 2008

Were you watching the financial channels?

Last night?

If not, you should have been. CNBC was showing the Asian and European financial programs, instead of Deal No Deal.

I've always thought they have some real financial babes on the U.S. programs, but uh la la, the European babes are something else. Different style, for sure. English ladies with pixie haircuts, pouty lips, hoop ear rings, and off the shoulder dresses. German chicks with deep voices, and angular but pleasing chins and cheeks.


Oh, and there was some financial crisis.


Anonymous said...

WTF??? CNBC?!? European and Asian newsbabes?

Dang -- it sounds like I'm seriously missing some important business news by not watching CNBC. Time to re-evaluate my viewing priorities!

blackdog said...

"German chicks with deep voices, and angular but pleasing chins and cheeks."

You sure those were chicks?

blackdog said...

Sarah Palin may not have known what the Bush Doctrine was, but we're getting a pretty good idea of what the Palin Doctrine is. Or will be -- because it's still currently under construction. And what is it going to look like? Let's just say, it's going to seem familiar.

According to London's Daily Telegraph, the architects of the Palin Doctrine are a group of people who have been singularly wrong about virtually everything in the last decade -- the neocons, who have been briefing Palin for weeks.

As predicted, the fact that she didn't know anything wasn't a bug, it was a feature. She's perfect for the neocons: likeable on the outside, a blank slate on the inside. To borrow from an old cliché, if Sarah Palin didn't exist, the neocons would have had to invent her.

In fact, this is how one former White House aide describes her: "She's bright and she's a blank page. She's going places and it's worth going there with her."

Of course, the place her neocon mentors hope she's going is the White House. Given their dismal track record, they're smart enough to figure that the American public wouldn't be too keen on letting them in the front door again, so they are trying to sneak in hidden behind Palin's skirt. The Trojan Moose approaches. -- Arianna Huffington

We're about to get rid of one neo-con sockpuppet and the Republicans are trying to foist another one on us. Don't fall for it again, people!

RDC said...

Why not post something that actually has some facts in it.

Instead of just a fluff article from Huffington.

As far as the first comment about the "Bush Doctrine" there is no Bush Doctrine or atleast nothing that is consistently identified as being the Bush Doctrine. On one panel show they identifed 5 or 6 different subject that various people have identifed as the "Bush Doctrine"

From MSNBC, not exactly a Republican network, they indicate that there are "Many versions of 'Bush Doctrine'"

Or as stated in the Seattle newpaper

"WASHINGTON — Alaska Gov. Sarah Palin seemed puzzled Thursday when ABC News anchor Charles Gibson asked her whether she agrees with the "Bush doctrine."

"In what respect, Charlie?" she replied.

The Republican vice-presidential nominee was on to something. After a brief exchange, Gibson said he was referring to the idea — enshrined in a September 2002 White House strategy document — that the United States may act militarily to counter a perceived threat emerging in another country. But that is just one version of a purported Bush doctrine advanced during the past eight years.

Peter Feaver, who worked on the Bush national-security strategy as a staff member on the National Security Council, said he has counted up to seven distinct Bush doctrines. They include the president's second-term "freedom agenda"; the notion that states that harbor terrorists should be treated no differently from terrorists themselves; the willingness to use a "coalition of the willing" if the United Nations does not address threats; and the one Gibson was talking about: the doctrine of pre-emptive war."

So you talk in another stream about attacks and what do you post something that only exists as an attack piece.

blackdog said...

Dow closed down more than 500 points. We are totally screwed.

Conservative Financial Follies:

RDC said...

Not really. The amount of drop is not unexpected.

It may actually be the kind of fairly massive short term drop that puts in a bottom, similar to 87.

The market is still a bit higher then I would have expected it to bottom around 10500, but atleast we have dropped below the 11,000 range.

The real question is if AIG is able to execute its plan to raise 40 billion in Capital. If it does then we might have a real bottom here. If it does not then expect a further drop.

What happens to WaMu does not matter much its failure is already priced in.

In most other area people buy when things are cheap. Only in the stock market do most people buy when its expensive and sell when it is cheap.

blackdog said...

"Why not post something that actually has some facts in it."

The salient fact is that she is being groomed by the neo-cons. I don't think there's any real dispute about that, what with Joe Lieberman and Bill Kristol briefing her on foreign policy.

RDC said...

Actually there is.

If you read the original UK article you will find that it is very heavily on projection and very little on fact.

What you posted didn't even contain that much.

The only real fact in the article is that part of the team that has briefed her are part of McCain's campaign. Gee now that is a major surprise. It then tries to assemble a conspiracy that would compare with the twin towers was an inside job folks.

RDC said...

By the way the article did not claim that Kristol (Weekly Standard) or Lieberman was briefing her (now since when has Lieberman been called a NeoCon).

RDC said...

Does not look good for AIG this morning.

The good news is that a number of Central Banks did liquidity injections this morning.

What is needed now is for the EUCB (not the FED) to drop interest rates there.

blackdog said...

The stock market's holding pretty steady this morning amid speculation the Fed may reverse itself and decide to bump interest rates down a notch. There will be temporary upward blips in response to this or that little bit of (relatively) good news, but overall I think we're in for a long and deep recession if not an outright collapse a la 1929. Contrary to what Senator McCain asserts, the fundamentals of the economy are NOT sound.

RDC said...

On the other hand I listened to Biden on CNBC this morning and if they do even half of what he proposed there, we are almost certainly going to see a very long and drawn out collapse.

For example:

1. Rewrite bankruptcy laws to allow Bankruptcy judges to rewrite Mortgage loan terms. If you really want to see housing tank even worse then this is one you really want to see. Basically this converts a banks risk from the value of the property to a buyers ability to pay at some time in the future. It changes the risk equation significantly. This would probably add a couple of points to new mortgage rates and make qualification even more stringent then under the current system. If this law passes expect more people to stay in houses they cannot afford, but at the same time expect new loans to cost more with much tighter qualification requires. Of course I would expect their solution for that problem would be for the government to start writing loans directly.

2. When challenged about creating jobs, his response was to start a massive infrastructure investment program. Now I tend to be in favor of investment in infrastructure. Except this is on top of their current annual stimulation plan (currently presented as their tax reduction plan). Their tax proposal is to basically do the recent stimulus plan each year. Write checks to the 40% that do not pay any taxes, and give a credit to the ones that do up to the cutoff. They are describing this as a tax cut, when it is really is increased spending, especially the wealth redistribution to the 40% that do not currently pay income taxes. Now if you do a massive infrastructure spend on top of the stimulus, then the spending really gets out of control. What should have happened is COngress should have taken the 140 billion we just spent on the last stimulus package (mailing out of checks) and spent that money on a infrastructure program.

Also look back at the great depression and the FDR new deal (which is basically the Obama-Biden proposal) that had the impact of short term gains but really extended the great depression up to the start of WWII.

A combination of Pelosi heading the House, Reid heading the Senate and Obama as President is a very very scary thing. I would not have as much of an issue with Obama being President if it were not for the other two, because Obama has not shown that he will stop anything they send forward. Their track record definately does not agree with those of his proposals which make sense.

RDC said...


Since you seem to like soundbits and commercials, what is your opinion of the Obama commercial talking about McCain being so outdated that he does not use a computer?

RDC said...


Since you introduced view on the economy. Let me ask you this question who was more out of touch on economic issues McCain who co-sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005.
And made these comments to the Senate when he introduced the Legislation.

Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

Quick Info
S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005
Last Action: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.
Status: DeadI join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

Or might it be the Democrats, including Obama who prevented the Legislation from moving forward. You know the same Obama that is belaming the lack of regulation after the fact for their demise.

Or maybe it is because he was number two behind Dodd in the contributions received from the lobbiests of those two organizations.

The legislation basically would have required those organizations to meet the same accounting standards as other public companies.

blackdog said...

Also look back at the great depression and the FDR new deal (which is basically the Obama-Biden proposal) that had the impact of short term gains but really extended the great depression up to the start of WWII.

I was with you until you spouted the hoary old right-wing line that the New Deal prolonged the depression.

Although it's true the country did not pull out of the depression completely until WWII (or actually the arms build-up that preceded WWII) the jobless rate (as high as 25% when FDR took office in 1933) was much lower by 1939. Don't forget the depression had been raging for three years (while Hoover waited for the market to work its "magic") before FDR took office, and then it was the better part of a year before his programs could be enacted and put into effect. You can't turn the economy around on a dime, especially after such an economic catastrophe. But in the five years from 1934 to 1939 FDR made considerable progress in turning it around.

Of course it's always possible to throw out speculation that the depression would have ended sooner if it hadn't been for the New Deal, and the beautiful thing about that (if you're a right winger) is that it's impossible to disprove it. OTOH there is no evidence that the right wing / Hoover strategy -- basically, do nothing -- would have ended it sooner either.

And in any case, even if FDR's policies didn't end the depression they greatly mitigated the suffering it caused. Hoover and the Republicans kept saying that the economy would right itself "in the long run." to which FDR had an excellent rejoinder: "People don't eat 'in the long run.'"

blackdog said...

Since you introduced view on the economy. Let me ask you this question who was more out of touch on economic issues McCain who co-sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005.

But in March 2007 -- long after it had become apparent that real estate was overvalued and the bubble was about to pop or had already popped -- McCain said this: “Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.”

In other words, he wanted to keep inflating the bubble.

In the same month, Obama "warned of the coming housing crisis, and a year later in a speech in Manhattan he outlined six principles for overhauling financial regulation."

This comes from today's NY Times. And I hope you're not going to take the tack of claiming the "liberal media" just made it up.

blackdog said...

Couldn't resist this ...

Carly Fiorina, a key surrogate for John McCain on economic issues, said on Tuesday that Sarah Palin does not have the experience needed to run a major company like the one that Fiorina formerly headed.

"Do you think [Sarah Palin] has the experience to run a major company, like Hewlett Packard?" asked the host.

"No, I don't," responded Fiorina. "But you know what? That's not what she's running for."

Is that a friggin JOKE or what? Does she really think being president of the United States is an easier or less complicated job than running a corporation?

RDC said...

Actually there are several academic papers on the subject of the new deal and its impact. The end result is while the actions did have a short term positive impact it was at the expense of lengthening out the depression. Basically it made the Government a competitor with industry for the limited capital which was available. If the government imploys someone it usually does not generate increases in productivity. It employes someone and creates a job, whereas money used in industry tends to grow and create multiple jobs. If the Government is in competition for the available capital then it is has a restrictive impact on business growth.

Not a libreal- concervative thing just straight economics. It is also one of the reason why Social Security is such an issue when it stops generating a surplus (currently loaned to the Government in exchange for T-Bills), because at that time the Governments demand for cash goes up tremendously and it becomes more of a competitor for the investment capital.

RDC said...

you never did answer the question about the PC use commercial?

RDC said...

How about this from UCLA, being the conservative bastion that it is.

FDR's Policies Prolonged Depression by 7 Years, UCLA Economists Calculate

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data....

"This is exciting and valuable research," said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. "The prevention and cure of depressions is a central mission of macroeconomics, and if we can't understand what happened in the 1930s, how can we be sure it won't happen again?"

RDC said...

Keep in mind that McCains comments were in 2005 and 2006 before the housing market started to peak. They were aimed at making Freddie and Fannie follow the same rules and commercial companies, including having to report the same information, and follow the same rules. The Democrats blocked that law.

In 2007 you had the start of the credit squeeze under way. At that time it was readily apparent that the financial institutions needed and for that matter still need to raise additional capital. The regulatory hurdles McCain was discussing at that time are little things like, if someone owns more than 25% of a bank then the owning company must be treated like a bank. As a result a lot of capital that would otherwise be available to the Financial institutions is otherwise not available due to that little regulatory restriction such as additional investments by the national funds.

So no he was not inflating the bubble he was for allowing them to raise capital. If they cannot raise capital to offest losses in the portfolio then the only two choices are a bailout by the Fed or BK.

Keep in mind that the roughly 160 billion dollars of capital infusion by Citibank and others during 2007 and 2008 is what has kept them solvent as they have been writing off bad loans.

If that is your example of how McCain is out of touch you are severely out of touch yourself.

RDC said...

One other note:

Not surpriing your view on economics is what it is if you view the New York Times as a unbiased information source or for that matter a high quality one considering their recent problems with inaccuracies in reporting.

Duncan McGeary said...

Thank you for keep it civil, guys.

RDC said...

You do realize that you did not include the entire quote, which is:

, Fiorina said in an interview on MSNBC Tuesday running a Fortune 500 corporation is not the same as running the country.

“Well, I don't think John McCain could run a major corporation, I don't think Barack Obama could run a major corporation, I don't think Joe Biden could run a major corporation," Fiorina, a top McCain advisor, said.

"But, on the other hand, a major corporation is not the same as being the president or the vice president of the United States," she continued. "It is a fallacy to suggest that the country is like a company. So, of course, to run a business, you have to have a lifetime of experience in business, but that's not what Sarah Palin, John McCain, Joe Biden, or Barack Obama are doing."

So if you are going to include things atleast include the complete information. I don't think that I would hire any of them to be a CEO of a fortune 500 company. The only one with any real business experience is Palin, and in her case is not enough to be CEO. The other three has even less.

Of course I also would not hire any of them to be a physician, software engineer, fireman, police office, etc. All of which require specialized knowledge.

If you were running the board a major corporation would you hire any of them to be CEO today?

RDC said...

in a previous post when I said by Citibank and others it should have read infusion to Citibank and others

blackdog said...

"Actually there are several academic papers on the subject of the new deal and its impact."

Am I supposed to be impressed by this? Lay all the economists in the world end to end and they will never reach a conclusion.

"Basically it made the Government a competitor with industry for the limited capital which was available."

But, you see, the problem was the private sector WAS NOT EMPLOYING PEOPLE. There was a need to get people employed and spending money again. To prime the pump, to use the phrase of the period.

"Not a libreal- concervative thing"

Yes it is. I have never seen any but conservative economists make your argument.

And now, because I don't think Dunc wants this turned into a forum for ideological wrangling, I'm going to abandon this thread. Declare victory if you want to.

blackdog said...

"Not surpriing your view on economics is what it is if you view the New York Times as a unbiased information source..."

Classic right-wing response -- if you don't like the facts, impugn the source.

What's your unbiased source? AEI? Cato? Faux Noise?

Are you claiming McCain was quoted inaccurately?

blackdog said...

"Keep in mind that McCains comments were in 2005 and 2006 before the housing market started to peak."

No, the comment quoted was made in March 2007.

But I'm not going to hang around here all night bandying words with somebody who obviously has WAY too much time on his hands. Good night.

RDC said...

I was referring to 2 sets of comments.

The first referring to the law he sponsored was in 2005.

The second that you posted was in 2007 after the market had topped and the financial companies started to realize that they would need massive amounts of Capital. Some came from the National Funds, but if anyone takes a position owning over 25% of a bank, the owning business must then also be regulated as a bank. Thus he was talking about changing those restrictions which would allow those groups to infuse a massive amount of Capital. At that time you had billions of dollars being raised by the financial institutions (a total of 160 billion to date). What he proposed then would have enabled even more cash. Now it is too late. Those funds that were willing to take a position then will not do so today. THat leaves the option of a bailout or BK.

RDC said...

If you read the article the one posted was a press release from UCLA with a note talking about the importance of their work by a Nobel Laureate. Did you actually try reading the article?
It specifically talked about how the actions taken resulted in both lack of competition between companies and in Salaries ending up with both about 25% higher than they should have delaying the recovery. While this article did not talk about the competition for capital there are some others out there which have.

I tend not to reference sources that have demonstrated bias in one direction or another. Where possible I like to either use academic or government references, though I will use standard sources for quotations.

As far as the New York Times their history speaks for itself. Also I did not impune them as a source for anything you posted, because you have not really been referencing much from them and you certainly have not referenced them as part of the economic discussion. Consequently there was nothing to impune. THe only reference was a comment that if you were using the Time for your economic education then it explains your interpretation.

Do you always fall back on labels.

blackdog said...

Where possible I like to either use academic or government references

And you think those are unbiased? LOL!

BTW McCain was against the AIG bailout yesterday, but this morning he said it was a "necessary evil." Poor old coot can't remember what he said from one day to the next. Sometimes from one hour to the next.

RDC said...

Now could you provide a reference to such a quotation. Both Obama and McCain had said that they were not in favor of a bailout for Lehman.

I have not found a specifc reference to AIG at the moment and I have a Board meeting that I need to go into so do not have time to search at the moment.

So lets make the assumption that he did make such a statement. Most people are pragmatic enough to have a position and then move on with the world as it changes around them.

His first statement would have been prior to the event and consequently would have stated his position about how the situation should be handled.

His second would have been about an event that had already occured. The bailout has occured and based upon the logic presented was "a necessary evil" that does not mean a change from the comments preceeding the event that "he was not in favor of it"

What exactly would you expect his response after to be that the Fed are a bunch of idiots and that we are all doomed. I don't think so.

Those do not seem to be in contradiction. Now if the Government did not bail them out, he if he had then said that they should have, then that would have been a contradiction.

Will have to track down the comments, including Obama's during this time. Keep in mind also that the Feds initial reaction was no, but then they changed their minds when they realized how the default would multiply rapidly due to the value of credit swaps with a number of financial institutions.

RDC said...

Atleast those source tned to go through peer review and have more thought behind them then Blogs and Op eds. They also have to stand up to far more scrutiny and challenge than a standard news article.

blackdog said...

"What exactly would you expect his response after to be that the Fed are a bunch of idiots and that we are all doomed. I don't think so."

How about something along the lines of: "I still think the bailout was a mistake, because market forces must be allowed to sort the mess out." Or if he thought the bailout was a mistake the day before, he should explain what's changed to make him think otherwise now (other than the fact that the FEd has already done it).

But it seems to me McCain doesn't know WHAT the hell he thinks anymore. He's just tacking and veering with the political winds, saying whatever he or his handlers think might sound good to the voters at any given moment.

blackdog said...

Sweet sufferin Jeebus, the Dow dropped another 440 points today. We're in meltdown mode.

But not to worry: Old Man McCain (who admits he "doesn't know much about the economy") tells us the fundamentals of the economy are sound. Whatever that may mean. Unless he has rescinded that remark.

blackdog said...

Johnny One-Note:

"I still believe our fundamental underpinnings of our economy are strong." -Sen. John McCain (1/23/08)

"I still believe the fundamentals of our economy are strong." -Sen. John McCain (8/20/08)

"Our economy, I believe, still, the fundamentals of our economy are strong…" -Sen. John McCain (9/15/08)

Will he say it again after the Dow tanked again today? I'll lay 5 to 3 that he will.

RDC said...

Do you have a url reference to those quotations?

The reason for the drop is because of what is happening with the credit. The overnight Libor rate is through the ceiling and the credit spreads are extreme to say the least.

That amount for even short term operating loans for non-finance Corporation has basically doubled with the corresponding impact on their balance sheets.

This happened with the FED taking over AIG with fairly draconian measures (80 percent ownership plus an interest rate of greater than 11% on the loaned money) The bottom line is that the "bailout" is just a very expensive bridge loan that will enable the assets to be sold off without having to do a fire sale.

RDC said...

I found the quotes

``On the bailout itself, I didn't want to do that,'' the Republican presidential nominee said on ABC's ``Good Morning America'' program today. ``But there were literally millions of people whose retirement, whose investments, whose insurance were at risk here, and they were going to have their lives destroyed because of the greed and excess and corruption.''

Twenty-four hours earlier, McCain said that he didn't want taxpayers to be ``on the hook'' for AIG. ``We cannot have the taxpayers bail out AIG or anybody else,'' McCain said yesterday on NBC's ``Today'' show

Fits in line with what I said earlier. Not the comment "On the bailout itself, I didn't want to do that"

So basically he said I did not want it, but here is why they did it.

Not the change in position it is being made out to be.

On the other hand if you look at Obama's statement.

``The Federal Reserve must ensure that the plan protects the families that count on insurance,'' Obama said at a campaign event in Elko, Nevada. ``It must not bail out the shareholders or management of AIG that are making big profits when times are good. They shouldn't be bailed out when times are bad.''

It definately shows he is out of touch. All of AIGs standard insurance companies are subsidiaries that are independently regulated by the states in which they are located. As a result they are not and were not threatened. Even if the core company of AIG holding the insurance products and the annuities would still have remained and the state regulators are comfortable with the assets. The question for the FED action was the the insurance related to credit swaps which is basically where AIG guarentees that is a company defaults on their credit line AIG will pay. THe reason why that is important is if AIG goes down then a bunch of credit swaps that are insured by AIG that the companies can now consider to be good credit will immediately go to bad asset category immediately.

So it was not done to "protect families who depend upon insurance", because they were never at risk.

RDC said...

Actually found a bit more:

But on Tuesday, the day following Lehman Brothers' collapse after the government declined to bail out the 158-year-old bank, McCain was opposed to the notion that the government should act to save AIG, teetering on the brink of collapse itself.

McCain was adamant in an interview with "The Today Show." "No, I do not believe that the American taxpayer should be on the hook for AIG, and I'm glad that the Secretary [Henry] Paulson has apparently taken the same line."

NBC's Matt Lauer pressed McCain: "So, if we get to the point, in the middle of the week when AIG might have to file for bankruptcy, they're on their own?"

McCain replied, "Well, they're on their own. We cannot have the taxpayers bail out AIG or anybody else. This is something that we're going to have to work through."

Language in an e-mail statement today from McCain on the financial markets and AIG seemed to follow suit.

McCain said any actions "should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts," and in the next sentence insisted, "We must not bailout the management and speculators who created this mess."

Which is in line with his there should not be a bailout. Why because such actions should be to ...

Which was not needed.

Now this article state that the change was because he was adamant prior and only lukewarm in his opposition after. Yep, real change of position.

Is that the best you can point to.

Duncan McGeary said...

Hey, this is fun.

Let's you and him fight!

An actual civil discussion.

RDC said...


Do you want to play as well? The more the merrier.

blackdog said...

"Is that the best you can point to."

Well, since you asked, no. McCain has been all over the map on the economy in the past year.

"I think the fundamentals are strong, but I think we may be in a rough patch for the next six months or so as we sort this out." -- Nov. 27,2007

"I don't believe we're headed into a recession. I believe the fundamentals of the economy are strong, and I believe they will remain strong." -- Jan. 10, 2008

"There's no doubt that we are in enormous difficulties. I think if you look at the overall record and millions of jobs that have been created, etc., etc., you could make an argument that there's been great progress economically over that period of time [since 2000]." -- April 17.

"We're worse off now than we were four years ago." -- McCain campaign ad, Sept. 2008

"Our economy is broken." -- Sept. 11

"Our economy, I think still the fundamentals of our economy are strong." -- Sept. 15

"Our economy is in crisis." -- McCain campiagn ad, Sept. 16

The point? John McClueless has no idea what the hell he is talking about.

blackdog said...

rdc, you're strong on the microeconomic stuff but you're not looking at the macro. Liberal economists have been saying for years that we were headed for a crash because of the widening wealth and income gap and declining real wages for working class and middle class. The illusion of prosperity was maintained for a while with cheap credit (including HELOCs abd sub-prime mortgages) but it could not be sustained. The rot in the economy goes much deeper than the "greed of Wall Street" that the politicians (of both parties) are blaming our current troubles on.

Conservative economists and pundits dismissed the liberals as gloom-and-doomers, but it looks like the liberals are having the last (bitter) laugh.

RDC said...

Huh. You can find people that were both liberal and conservative on both sides of the issues with the economy during the last bubble. That same as back during the .com bubble.

Of course as everyone is making money most do not rock the boat.

You now you really should drop your focus on labels and discuss the issues. You have this bad habit in your discussion of having this bizarre view that liberals are always right and conservatives are always wrong. That damages your credibility.

If you look back at the housing bubble you can find enough blame to go around. The real focus should be to fix the issue instead of pointing fingers.

The housing bubble really started in the late 90's when the tax laws changed. The change from having to roll the profits from a house sale into a more expensive sale with a one time tax exclusion during your lifetime, to the ability to exclude up to 250k every two years for a principal residence. This made for a fundamental change in the housing market.

You also had substantial pressure applied on banks to improve minority home ownership. This had the impact of eroding bank decisions strictly on credit terms.

Then you had the collapse of the .Com bubble in 2000. Cash flowed very heavily into the real estate market which had started to show unusual gains after the tax law change.

About this time CDO's returned (they started in the 80's with Drexall Burnham but fell out of favor). A major factor in the growth of CDOs was the 2001 introduction by David X. Li of Gaussian copula models, which allowed for the rapid pricing of CDOs.

Then you also had Sept 11 and the dropping of interest rates.

So you had a housing market that was hotter than normal, cash looking for a hot investment, politicians cheerleading homeownership and actually telling banks to make it easier for poor credit, first time buyers to buy, the return of CDO's, and low cost borrowing with Central Banks willing to keep the cash flowing.

The perfect storm so to speak. The end results the buying and selling of housing went thorugh the roof, home prices went insane, money was being made from the velocity of transactions and with CDO's noone was looking at risk because the traditional risk gateway was getting rid of the paper as fast as they could produce it.

It that situation you can find blame just about everywhere. What is comical is watching the same politicians that was cheering the subprime loans and how low income and other poor credit risks were getting homes, changed and started pointing fingers the second the market started to collapse.

The only thing surprising to me was that the collapse started in 2006, I was expecting it in late 2004 and early 2005.

You can always tell when a bubble is in action and when it is about to burst. That is when you go to a medical meeting and the Physicians are all saying how good an investment is. That is the best sign that a collapse is near.

Now my educational background is physics, though I have represented the FDA in international negotations with the EU and Japan(during the Clinton years) and I have also been a VP for a Pharmaceutical Company (contracts, forecasting, government affairs were part of my responsibilities).
It was always entertaining to hear what people were saying in public vs actions that they were actually taking or what they were saying privately.

RDC said...

Lets talk about some of those issue:

Now I did a little analysis on pre-tax income by quintile from 2006 back to 2007

Now since 1970 the increase in income in 2006 dollars (adjusted for CPI)

Lowest Q 26%
Q2 18%
Q3 22%
Q4 37%
Highest Q 71%

So adjusted for inflation all of the quintiles are ahead in real incomes from where they were in 1970.

Now since now all quintiles incomes dropped between 2000 and 2004. Since 2004 the incomes in all quintiles have increased through the end of the data in 2006. However, all of the quintiles are below the 2000 peak (negative between (-1 and -5%) except for the top category which is 1% over the 2000 peak. Now this is with number adjusted for inflation.

In number of dollars received all have 2006 incomes higher than 2000.

Now you can also take a look at tax rates and income after income tax.

I doubt think that you really want to hear the real issues with the US economy. The major reason is that third world infrastructure such that workers in the US, especially unskilled ones now have to compete with workers in the rest of the world and guess what to compete and maintain the salary differential between workers in the US and the rest of the world the workers in the US have to be that much more productive.

The reality is that unless the US finds ways to continue to increase productivity or develop other advantages you will continue to see erosion in the standard of living. More jobs are going to be ones that cannot be easily relocated. It does not matter who is in the White House that is the reality that the US faces.

Couple that with the tendacy for people in the US to try an live above their means and the problem gets even worse.

By the way mean incomes in 2006 were

Q1 11,352
Q2 28,777
Q3 48,223
Q4 76,329
Q5 168,170

with the mean for the top 1% was 297,405

RDC said...

Now here is an article from the Wall Street Journal that talks about some of the impacts on the statistics of EITC. It is an opinion piece so believe it or not. But it does provide some interesting sources and numbers that are worth consideration.

A few facts about Federal Income taxes.

The top 40% pay 99.1% of all Federal income taxes. The bottom 60% pay .9%. The bottom 40% basically pays zero (actually negative because of earned income credit).

The top 1 percent makes 19% on all income, however, they pay 40% of all federal income tax.

RDC said...

I meant to type 2006 back to 1970 in the post two earlier.