Sunday, November 08, 2009

Three dollars for a Sunday

$1 The dollar is in very serious trouble. Even his own mom is trying to get rid of him.

$2 The money guys are starting to admit that deregulation was a very, very bad thing. Told you so--I've been crowing about Glass-Steagall for over a year.

$3 Think the US national debt is troublesome? Dig the derivatives market. It's good for about $190,000 per person ON THE PLANET.

And some spare change for a guy who maintains the best economic news aggregate around.

28 comments:

Bri said...

I don't always agree with him, but I usually learn something from Karl Denninger at http://market-ticker.org/

He likes to use bold fonts once in a while :)

(and why isn't this shit covered by CNN and Fox and MSNBC? I mean, REALLY covered?)

Erin O'Brien said...

I think the reason we don't see good econ coverage is because it's so hard for people to fathom. It's probably a ratings killer.

Or people just don't want to know.

Kirk Jusko said...

We don't see good econ coverage because our media our owned by giant corporations that want as little regulation as possible.

kelly@TearingUpHouses said...

i couldn't agree with your comment more erin.

kelly

Ashton King said...

I work in the media. The reason economics isn't really reported on is because our audience is generally very visual, and numbers aren't really visual...unless you count those times when graphs/charts are used. But to be honest, when people watch the news they want it told to them with pretty little videos in the background. Numbers are hard to explain orally.

Anonymous said...

actually, the guy who covers this stuff, occasionally, in a very entertaining way, is a guy most of you probably hate. That's G Beck. Really!

Tony said...

Thanks for the good wishes. Your blog helps.

VideoDude said...

Anon,

If Beck spent more time on these issues, instead of his racest, socialist, fear mongering, hate speech, we might just listen to him!

Ashton King said...

Amen, VideoDude. Well-said, indeed.

rjs said...

erin, i gotta at least come back to thank you for the spare change, but i'm aware enough to know that there'd be more interest in my blog if i covered britney and miley...

ive included snippets of some of karl denninger's posts on my blog, if only for the great headlines he writes...even his name is censored on the sites of the wall street journal network (when posted it comes out as @#$%&!), which is a recommendation in itself - where there is a debateable issue he presents, i try to cover both sides...

some derivatives do perform useful functions, ie corn futures allow a farmer to get his price before the crop is harvested, but some have no socially redeeming value... a credit default swap, for instance, basically is an unregulated insurance policy on debt (ie, bonds) that pays off if the creditor defaults...the holders of any CDS are ususally themselves bondholders in any distressed company...there’s no limit to the amount of exposure one can take in CDS contracts referencing a particular credit, much more than the actual debt involved, so it can be profitable to load up on CDS and then buy just enough of the actual bonds so that you can force a bankruptcy (think chrysler)...the bettor loses on the bonds he owns, but gains far more on the CDS that pay off as a result...

as far as being visual, even karl denninger can do it: this is debt to gdp ratio since 1929; you can see weve been living beyond our means for a quarter century...

how about Long-Term Unemployment - (60 year graph) percentage of population unemployed 27 weeks or more...

and did someone say glenn beck?

Ashton King said...

You can make them visual...but that doesn't mean the general public will understand it. And when it comes down to it, the general public doesn't want to know it anyway.

(S)wine said...

what ashton said up above. what really makes me laugh uncontrollably is that the poor simpletons who teabag/demonstrate against reguation, are the exact same suckers who've been had by the Wall Street fat cats. i'll never get that about Americans. same w/healthcare: the people making the most static against gov't SPONSORED coverage, are the ones with either shitty insurance, or no insurance at all. "Americans: cutting our noses to spite our faces for over 280 years"

it's awesome, my mum has a PhD in economics and has been telling me about this crap hitting the fan for over 15 years now. i think she is one of the few people who actually understood what Greenspan was babbling about...and half the time, she says, he was ethereal and bullshitting anyway. the basic reason no one understood Greenspan is because he talked gibberish.

and yea; if even the FED who makes up money and its value, doesn't want to hold on to the dollar, we are so fucked.

Erin O'Brien said...

good lord.

How terrifying are rjs's links?

hoosierboy said...

yes, and prolifigate government spending, and printing money is only making it worse.

rjs said...

did you say printing money?
50 year Chart: M2 vs Monetary Base

Anonymous said...

Hey rjs,

Could you regale is with a story about Alexander Hamilton and deficit spending saving the young US's arse so we can shut the profligate spending crowd up?

"Nothing like the sound of a printing press in the morning." (With apologies to Oliver Stone.)

RJ

Kirk Jusko said...

RJ, if that's Apoclypse Now you're paraphrasing, than the apologies should go to John Milius and Francis Ford Coppola.

Anonymous said...

oops. this is my brain on drugs, any questions?

*(With apologies to John Mlius and F.F. Coppola) and thanks to Kirk.

RJ

rjs said...

i aint a historian so i cant say much about alex...i aint even an economist, so i can only give an interpretation from what ive read...

while ive always been something of a deficit hawk, i recognize there are valid points on both side of the deficit spending debate...ill try to simplify the dilemma...under normal circumstances during a economic downturn the correct fiscal policy would be to deficit spend to stimulate, but we've been running deficits since johnson's "great society", so the debt has accumulated & is now about $12 trillion, or about $110,000 per household, and we're projected to run trillion dollar deficits for the foreseeable future...currently much of the debt is being bought by the Fed (called quantitative easing or printing money), and during this downturn the Feds balance sheet has almost tripled; if there should be a recovery, they will have to reverse that, or else the result would be considerably inflationary...at that time there will be a surplus of treasury instruments (bonds, notes, & bills) on the market, and to get the funding, interest rates on those will have to rise to compensate for the increaingly worth-less dollar...at some point, then, the interest on the debt, already the largest item in the budget except for entitlements, will overwhelm tax collections...it is the the prospect of this that has China and OPEC upset, as theyre holding much of our debt...
for twenty years this country has been surviving because we have fooled the rest of the world into trading us real goods for our fiat paper, but they wont be fooled again...

Kirk Jusko said...

rjs, I aint no economist, either, but most of the world also has fiat money. They prefer our fiat money to their own fiat money because we have (or at least foreignors THINK we have) the most stable government in the world. That's what really backs up our money: we promise we'll be here tomorrow.

As for inflation, we don't have it at the moment. When we do inevitably get it, well, been there, done that. And inflation is a good thing for debtors, of whom there are an awful lot of in this country.

Anonymous said...

11/9/09 MSN

Stocks were soaring today, with the Dow Jones Industrial Average ($INDU) hitting a new 2009 high.

The rally was prompted by a record gold price, gains in financials and the Group of 20 nations' agreement to keep economic stimulus programs in place.


Fiats happen.


RJ

rjs said...

kurt, you've apparently missed what been going on internationally over the past month...it started with this...
then scroll down a couple dozen on each of the following october posts here and youll get to links to dozens of followup stories...

rjs said...

RJ: gold today is the same metal as gold yesterday; its the green paper going down in value that you are quoting...

Kirk Jusko said...

rjs, if China stops selling us their stuff because they no longer want our worthless money, well, maybe we can start selling them our stuff instead.

Assuming there are still factories in this country to make that stuff.

Better check the Endangered Species List.

rjs said...

US Manufacturing: Guns R Us

Erin O'Brien said...

Our only chance is to cut military spending.

The gov spends money in three places: Social Security, Medicare/Medicaid, and the military. All the rest of the pork everyone bellyaches about doesn't add up to shit against those three.

We've got to get out of the Middle East. We've got to stop playing world cop. It's our only chance.

And don't worry, the Saudis will still be plenty happy to sell us oil.

Oddly enough, I penned this comment and saw rjs's last comment/link right before I was about to publish. Think I'll leave it as is.

Anonymous said...

Erin,

Not to be a total stickler, but Glass-Steagall's repeal via Gramm-Leach really did not do anything.

The only company who would have taken advantage of the deregulation it provided was Citigroup, who 2 years earlier was granted a special exemption.

The widespread problem across the board was accountability. It was assumed that housing values would continue increasing (or at least would not fall sharply) and that the accumulation of these safe securities led to a risk-free balance sheet.

On the spending points:
Entitlements have shot up massively in the past 3-4 fiscal years. Frankly, the last few years of Bush 2's 2nd term echo Reagan's 2nd term - high military based deficit with little or no increase in non-defense discretionary spending.

If Medicare part D was not passed, our fiscal situation would be much better.

Another point of contention is the effect of defense spending based deficits - many argue that the arms race won the Cold War. Reagan was not a proponent of containment, but his foreign policy ultimately amounted to aggressive containment in military, social, and economic arenas. It can be argued that our past foreign policy (read: backing the only State in the Middle East who has no control over any important resource) plays a large role.

i'm just rambling now... i'll stop

rjs said...

here's what i meant: $4.8 trillion - Interest on U.S. debt - CNN - More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest. More than half. In fact, $4.8 trillion. If that's hard to grasp, here's another way to look at why that's a problem. In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group."