Wednesday, June 30, 2010

Last Call

If a flying car doesn't do it for you at $194,000...

The Transition Roadable Aircraft carries two and will cost nearly 
$200,000. can always opt for the Lightcycle at a mere 35 grand.

light Be the Ultimate Nerd By Buying and Driving This Real Tron 

Ain't technology great?

Another Milepost On The Road To Oblivion

The third Twilight Saga film, "Eclipse", made $30 million.  Today.  On just the midnight showings.

It hurts just thinking about it.

In Which Zandar Answers Your Burning Questions

Steven Spruiell over at The Corner asks (while accusing Jon Chait of a reductio ad absurdum argument on tax cuts, no less:)
The importance of cutting tax rates, in terms of economic stimulus, it not just that it gives people more money to spend. The stimulus comes from the incentive effects of letting people keep more of the money they earn. If people think they are going to need to work harder and save more because the government is going to cut their Social Security, and the government is simultaneously letting them keep a higher percentage of each marginal dollar, eliminating taxes on their investments and reducing taxes that create a drag on their business activities, how could that not be a net plus for economic growth?
Really?  So, if I make X a year and pay Y in taxes, and my taxes are reduced by Z, under Steven's theory here I'm going to put that money away because the government is cutting spending programs.  It doesn't matter how hard I work if I'm a salaried employee or my boss has eliminated overtime to cut costs.  My incentive to put this money away becomes more of a necessity, and I sock it away.  Sure doesn't help with inflation or interest rates.  if anything, like most Americans I'm not saving that extra money, I'm reducing my debt.  That helps a little as far as keeping marginal dollars, but not much.

How does that stimulate the economy?  How does that increase employment or demand or revenues?  I'm not buying anything extra.  Maybe the money market or hedge fund manager in charge of my chunk of the pool of money is having a fatter paycheck, but I'm sure as hell not unless the tax cuts are substantial.  If the tax cuts are more than the spending cuts, then surprise!  The deficit increases.  The important part is the economy isn't growing to offset the deficit increase, either.  Steven like most supply-siders, keeps making this fundamental assumption that tax cuts equal growth, when it doesn't unless you cut taxes to the point of increasing the deficit like Reagan did, and then Bush Jr. did.  In the end, all that does is help the people that pay taxes.  If you pay little to no taxes, it does absolutely nothing for you.

I mean look at where we are right now.  If Spruiell is right, our economy should be gangbusters after the Dubya tax cuts, right?

Not Going To Happen

Jon Cohn talks climate legislation:
I don't think this means the situation is hopeless. I heard plenty of dire predictions about health care reform, right up until the day it passed. As Brad and others have written, some of the possible compromises would represent worthwhile, if far from adequate, progress. But even those compromises won't pass without a bigger push.
That bigger push is not coming.  Democrats can't even get jobs bills passed right now.  The Republicans have their target in health care reform so there's no reason anything else will pass now.  Their base will not let them.  Anything that does pass is a victory for Obama, and that cannot be allowed to happen as far as the Republicans are concerned.  jobs legislation will not pass.  Financial Regulation will not pass.  Climate legislation will not pass.  Nothing will pass.  I have my doubts that Elena Kagan will pass.  Republicans will blame the Dems and hope for gains in November.

That's the plan.

Zandar's Thought Of The Day

S&P 500 just closed well under the technical level of 1040 at 1030 and some change.  From here on out, things are going to get bad.  Really, really bad.  When Friday's job numbers come in at Oh Crap, you're going to see some rich, nougat-filled carnage on the markets.  Going to get worse with the 2Q earnings numbers too.


Home, Home I'm Deranged Part 4

Time for another round of problem solving, Happy Face Financial Media style.  Today's issue:  the housing depression.  the problem:  people can't afford the cost of homes, specifically with housing prices dropping, people are getting underwater on their mortgages and now owe more than their house is worth.  This means they can't sell the house, and have to either come up with the higher mortgage rate or lose the house.  Since people aren't buying homes, the housing market continues to fall...a classic real estate depression spiral.

The Happy Face Financial Media solution?  Make it even tougher to buy houses, especially for first-time home buyers.
Could it be time to say good-bye to the popular 30-year mortgage?

"The 30-year mortgage is outdated, the standard fixed-rate mortgage is outdated, and it has to be improved," housing expert Robert J. Shiller told CNBC.

Shiller is Yale University professor and author, who is best known for co-creating the S&P/Case-Shiller Housing Indices, which track home prices in the United States.

"People want a more modern vehicle, and that's something we need to think about next," Schiller said.
Wait, what?   Get rid of the 30-year mortgage rate?  Who the hell is that going to help?  The banks, sure.  Home buyers?  How is that going to stabilize demand when the problem is people can't afford houses now?
"If America wants the government out of housing, it has to get used to a number of things," said Raghuram G. Rajan former IMF economist, author of Fault Lines: How Hidden Fractures Still Threaten the World Economy and professor at the University of Chicago's Booth School of Business.

"For example, shorter mortgage durations, higher interest rates [and] potentially lower housing prices, because the cost of financing has gone up. Is it ready for that? I don't know."
Shorter mortgages on lower priced housing means the payments are still the problem.  Maybe after the market is stabilized you can consider doing this, but until that happens it's suicide.  This is looking at the color of your replacement wallpaper while your house is still burning down.  Barry Ritholz?  He gets it.
Even after a plunge of more than 30% from the 2007 peak to the 2009 trough, house prices still did not fall to their long-term "fair value" level relative to incomes and rents of the past century.  Over the next year or so, Ritholtz expects prices will resume their fall and drop at least another 10% before bottoming.

What are the factors that will continue to drive prices down?  Mainly, an ongoing imbalance of supply and demand.

Basically, we still have way too many houses for the current level of demand. It's true that houses are more "affordable" than they have been for decades, but many of the folks who might be interested in buying houses have lost their jobs or are working off huge debt loads accumulated in the past.  And that means that they're not queuing up to buy still-over-priced houses again.
I personally think if Obama follows through on austerity, it's going to be a lot more than 10%.

World Cupdate

No games until this weekend but in the meanwhile...Germany's secret weapon against Argentina is the power of PSYCHO OCTOPUS.
Paul, a two-year-old octopus born in England now living in a German aquarium, has a 100-percent winning streak at the World Cup -- and even accurately predicted Serbia would beat Germany in their Group D match-up earlier in the tournament.

The eight-legged octopus, a denizen of Sea Life in the western town of Oberhausen, has turned into a celebrity oracle for getting all four picks right so far -- including last Sunday's elimination round match when Germany beat England.

On Tuesday, Paul once again was given the choice of picking food from two different plastic containers lowered into his tank -- one with an Argentine flag on it and one with a German flag.

The container Paul opens first is seen as his pick. Paul moved cautiously and spent about 45 minutes mulling his decision before eating the food in the box with the German flag -- suggesting a hard-fought win in extra time or even penalties.

Last week Paul ignored the England container and quickly went for the container with the Germany flag -- which was taken as a hint that Germany would win a decisive victory

"It took Paul a really long time to make up his mind today for the Argentina-Germany match," said Sea Life spokeswoman Tanja Munzig. "Even after he opened the Germany container it took him a while to go in and eat the clam."

Munzig said, by contrast, it took Paul only seconds to decide before the England match to go for the Germany container.

"That it took him so long to make up his mind suggests it'll be a very tense match against Argentina that won't be decided until the very end -- maybe not even until penalties," she said.
You cannot hope to defeat the power of can only hope to contain him.  Personally, I think Germany and Argentina going to extra time or PKs is actually a pretty safe bet.

The Real Deal Appeal Of Repeal, Part 6

Orange Julius and his sidekick Eric Cantor have now gone all in on total repeal of health care reform.
The top two House Republicans signed onto two petitions to force votes to repeal Democrats' healthcare reform law in its entirety.

House Minority Leader John Boehner (R-Ohio) and House Minority Whip Eric Cantor (R-Va.) said they had signed onto discharge petitions set to be offered by members of their conference, one of which would seek to repeal health reform in its entirety.

Boehner and Cantor said they'd back discharge petitions by Reps. Steve King (R-Iowa) and Wally Herger (R-Calif.), a method to force a vote in the House. A majority of the House — 218 members — must sign onto a discharge petition, though, to force a vote, meaning that a vote on repeal in the House would be a steep climb.

"The American people asked Congress and President Obama not to pass the massive healthcare overhaul, and they were ignored," Boehner and Cantor said in a statement. "Three months later, they remain opposed to it, worried about the consequences it is having for job creation, the national debt, and the cost and quality of their healthcare.

"The House should immediately vote on and pass legislation that would implement the will of the American people with respect to the president’s healthcare law," the pair added. 
Which is funny, because the American people have started embracing the health care reform legislation recently, which more or less renders the GOP argument moot.   The will of the American people is that they now like the law, since apparently we're now passing or repealing laws based entirely on poll numbers, according to Republicans.  They favor it 48%-41%.  He's lying when he says the American people remain opposed to it.

I guess it hasn't occurred to OJ and Kid Can't here.  Makes it easy for the Dems to continue to counterattack on this.  That's the GOP solution to health care:  repeal!

Jobapalooza Preiview

The initial ADP numbers ahead of Friday's Labor Dept. report aren't looking good at all.
Private employers added a paltry 13,000 jobs in June, compared to a revised gain of 57,000 in May, a report by a payrolls processor showed on Wednesday.

The May figure was originally reported as a gain of 55,000.

The median of estimates from 30 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 60,000 private-sector jobs in June.

The ADP figures come ahead of the government's much more comprehensive labor market report on Friday.

That report is expected to show a fall in nonfarm payrolls of 110,000 in June overall, as many temporary workers hired to complete the government's decennial census were laid off.
13K new jobs?  That's a disaster.  I really hate to say this, but I'm also convinced that we want a much worse job number to kick some Senators in the ass to get them to go with a real jobs bill.

Unfortunately,even if it was a steep loss, the Republicans still wouldn't care:  they gain nothing by helping the economy now and profit the most in November by filibustering everything and blaming the Dems.

Playing The Paranoia Angle, Part 5

Sharron Angle just needs to stop talking to the press, period.  Every time she opens her mouth, she just makes things worse.  Nevada reporter Jon Ralston asked Angle about her statement on the Second Amendment and "taking Harry Reid out."
"A lot of people think that's pretty outrageous rhetoric," Ralston said, referring to the language about "take Harry Reid out," and asked Angle whether she thought President Obama was a tyrant comparable to King George III.

"Well, I was speaking broadly, as you saw, about the Constitution, and that was the context of that rhetoric," Angle responded. "I admit that was a little strong to say 'take him out,' but you know what I meant. I meant take him out of office, and taking him out of office is a little different. I changed my rhetoric, to 'defeat Harry Reid.'"

Ralston continued to ask Angle whether she had gone too far.

"You know what, Jon," Angle responded, "I think it's interesting that we're nitpicking on all the little topics that Harry is putting out there."

"Harry Reid didn't put this out there," an excited Ralston said. "You put it out there."

Angle then appeared to switch topics, responding that she thought Reid should instead come and debate her on the main issues. "Why did we put all that money into a stimulus," Angle said, among other economic issues.
Yes, why should anyone talk about the things Sharron Angle doesn't want to talk about?  It's not like politicians should be asked about their past political statements when running for the US Senate.  Gosh, why isn't Ralston asking softball questions?


The Grand Experiment

NY Times economics reporter David Leonhardt takes a look at Austerity Hysteria.  He hedges his bets like most economists, but he does admit that austerity doesn't automatically mean an end to the recession and that there is serious risk involved.
The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation is different enough to assure a different outcome.

In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts.

On Tuesday and Wednesday, pessimism seemed the better bet. Stocks fell around the world, with more steep drops in Asia Wednesday morning over worries about economic growth.

Longer term, though, it’s still impossible to know which prediction will turn out to be right. You can find good evidence to support either one.

The private sector in many rich countries has continued to grow at a fairly good clip in recent months. In the United States, wages, total hours worked, industrial production and corporate profits have all risen significantly. And unlike in the 1930s, developing countries are now big enough that their growth can lift other countries’ economies.

On the other hand, the most recent economic numbers have offered some reason for worry, and the coming fiscal tightening in this country won’t be much smaller than the 1930s version. From 1936 to 1938, when the Roosevelt administration believed that the Great Depression was largely over, tax increases and spending declines combined to equal 5 percent of gross domestic product.

Back then, however, European governments were raising their spending in the run-up to World War II. This time, almost the entire world will be withdrawing its stimulus at once. From 2009 to 2011, the tightening in the United States will equal 4.6 percent of G.D.P., according to the International Monetary Fund. In Britain, even before taking into account the recently announced budget cuts, it was set to equal 2.5 percent. Worldwide, it will equal a little more than 2 percent of total output.

Today, no wealthy country is an obvious candidate to be the world’s growth engine, and the simultaneous moves have the potential to unnerve consumers, businesses and investors, says Adam Posen, an American expert on financial crises now working for the Bank of England. “The world may be making a mistake, and it may turn out to make things worse rather than better,” Mr. Posen said. 
Certainly not as against this as the Kroog and others, but at least it's an obvious admission that this too may fail...because the evidence is there that when we tried this the last time, it threw us right back into a Depression.   If Ireland is any indication, this much austerity globally with our consumer-based economy is going to turn into a long-term disaster.

The Big Casino

McClatchy catches Goldman Sachs admitting that they actively bet against insurance giant AIG in order to make tons of money at the expense of you and me. They played the Big Casino, they bet against the country and watched the economy go into the crapper and made a mint.  And you and I paid for it!
Reversing its oft-repeated position that it was acting only on behalf of its clients in its exotic dealings with the American International Group, Goldman Sachs now says that it also used its own money to make secret wagers against the U.S. housing market.

A senior Goldman executive disclosed the "bilateral" wagers on subprime mortgages in an interview with McClatchy, marking the first time that the Wall Street titan has conceded that its dealings with troubled insurer AIG went far beyond acting as an "intermediary" responding to its clients' demands.

The official, who Goldman made available to McClatchy on the condition he remain anonymous, declined to reveal how much money Goldman reaped from its trades with AIG.

However, the wagers were part of a package of deals that had a face value of $3 billion, and in a recent settlement, AIG agreed to pay Goldman between $1.5 billion and $2 billion. AIG's losses on those deals, for which Goldman is thought to have paid less than $10 million, were ultimately borne by taxpayers as part of the government's bailout of the insurer.
Nice.  Meanwhile, Sen. Scott Brown and the Senate Republicans won't let us tax the big banks to get some of that money back because it's just not fair to companies like Goldman Sachs.  Gotta love how that works, huh.

We're being played for fools and idiots. Just how stupid do the Republicans think we are?


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