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RE: 10.4% Unemployment - 11/20/2009 3:44:00 PM   
willbeurdaddy


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quote:

ORIGINAL: Politesub53

quote:

ORIGINAL: willbeurdaddy

The point is that credit dried up because of uncertainty over the value of toxic assets.

A very simplistic but essentially correct model:

If the troubled banks had been allowed to fail and the toxic assets written off there would be no more uncertainty and normal credit activity would be resumed by the survivors. The money lost by the depositors at the failed banks would "disappear" and be replaced by the money that the government would have to print to cover the insurance on their deposits...ie no real net change in the money supply, no threat of hyperinflation etc.



Firstly credit dried up because banks had no faith in there own systems. You claimed previously that if banks had been left to their own devices, there wouldn`t have been a problem.


im not sure what youre referring to, but any reference to their "not being a problem" would have been in reference to the market being left to its own devices and their not being problems as severe as the bailout will cause

Secondly, just how much money would have been paid by insurers, or are you saying the government would have covered the costs ?  from a 30,000 foot level (where this entire example resides) there is no essential difference to the economy whether its an insurer or an investor/depositor that loses money. The total loss is still the same but the government is only on the hook for what its guaranteed.

The trouble with any mathematical model is they are not exact, it is impossible to cover all the possible variables with any model. Sure you can get a model to predict what should happen, but not what will happen, at least not with a 100% degree of certainty. thats why responsible economic modeling, such as my firm does, is stochastic modeling that assigns probabilities to results, not red light/green light answers.


The basic problems still remained, the banks had run out of funds, the insurance companies likewise. Everything was based on companies using toxic assets to bcover more loans, for more toxic assets. Like it or not, that was the outcome of leaving things to a free market. which still begs the question of what the appropriate response was


(in reply to Politesub53)
Profile   Post #: 141
RE: 10.4% Unemployment - 11/20/2009 3:44:54 PM   
Mercnbeth


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quote:

ORIGINAL: Politesub53
quote:

ORIGINAL: Mercnbeth
The "financial firestorm" was caused not by the private sector but by 'bailing out' the private sector without any plan in place for the resulting economy to recover.

Maybe, since you are in the lending industry, you can explain what would have happened without any kind of bailout, given that the money flow had dried up. Post 129 of mine has a link to the view of one expert.

Polite,
I stand behind the position I had since the first bail out by Bush; I don't know but I know there was value and value in reorganization. Given the time to do due diligence I'd be able to tell you exactly. The "expert" didn't see the assets either to state his position. Having experience in buying and liquidating bankrupt or failing assets, not one was 'worthless', many times the sum of the parts was worth more than the stated book value, and many of the employees stuck around and flourished.

What would have happened without the bailout is what was supposed to happen. Except, instead of the dumping of Billions of tax dollars that have yet to be accounted for, there could have been focused use of funds to avoid the catastrophe you suggest. When it was handled as a "this must be done immediately" both by Bush and subsequently by Bush II signed off by Obama; that was a 'tell'. It told me that something was wrong that wasn't supposed to see the light of day. They convinced the general public that the world would end without these bail outs, and the public bought it and is paying for it.

Why do you not comment on the other half of the equation? What happened to the lending after the bail out? Why is more money available outside the US from the bailed out financial institutions?

It's not a simple solution debate should consider only one part of the actions taken. Not all the assets were "toxic" however some were, but most were so buried in paper ledger book transferences it should not have been a fait accompli to hand out money with no accountability or plan of action after the fact.

(in reply to Politesub53)
Profile   Post #: 142
RE: 10.4% Unemployment - 11/20/2009 3:52:05 PM   
Politesub53


Posts: 14862
Joined: 5/7/2007
Status: offline 		Willbeur.

from a 30,000 foot level (where this entire example resides) there is no essential difference to the economy whether its an insurer or an investor/depositor that loses money. The total loss is still the same but the government is only on the hook for what its guaranteed.

Which has been my point all along. The private sector was unable to cover itself, when left to its own devices. You still havent explained who would buy out the bankrupt companies, and how they would get finance. It seems to me thge whole ideas of letting the market take care of itself, is based on "what ifs". Given it had only been one bank that was having problems, you are probably right, the market would have sorted it. My point has always been the economy had reached tipping point and letting things fester wasnt an option. For example, how much further and faster would the Dow Jones have fallen. How much greater would the half a million job losses in both November and December have been.

(in reply to willbeurdaddy)
Profile   Post #: 143
RE: 10.4% Unemployment - 11/20/2009 3:57:48 PM   
Politesub53


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Joined: 5/7/2007
Status: offline 		Merc, thanks for the reply, my post above covers it. I dont think anyone has a quick fix on this. Governments have been afraid to tell people it will take years for the worlds economy to recover, for fear of spooking new investors.

" Why is more money available outside the US from the bailed out financial institutions? "

I cant answer this, maybe some of the money is helping American banks that operate overseas, I really dont know.

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Profile   Post #: 144
RE: 10.4% Unemployment - 11/20/2009 4:14:30 PM   
willbeurdaddy


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quote:

ORIGINAL: Politesub53

Willbeur.

from a 30,000 foot level (where this entire example resides) there is no essential difference to the economy whether its an insurer or an investor/depositor that loses money. The total loss is still the same but the government is only on the hook for what its guaranteed.

Which has been my point all along. The private sector was unable to cover itself, when left to its own devices. You still havent explained who would buy out the bankrupt companies, and how they would get finance. It seems to me thge whole ideas of letting the market take care of itself, is based on "what ifs". Given it had only been one bank that was having problems, you are probably right, the market would have sorted it. My point has always been the economy had reached tipping point and letting things fester wasnt an option. For example, how much further and faster would the Dow Jones have fallen. How much greater would the half a million job losses in both November and December have been.


There was and is plenty of money around to buy those assets if they were openly and freely bid on. The banks that would have failed have no bargaing power. However, even in a worst case scenario where buyers werent forthcoming individually, a structure like the Resolution Trust/MIF model handled the S&L situation quite well. A number of MIF's made extraordinary money without any significant government intervention other than administration of the assets...essentially executor of the estates of the failed S&Ls. The private equity market has had tons of cash sitting idly waiting for opportunities, and there is no doubt investors would have stepped up to what was essentially a no lose situation for them.

(in reply to Politesub53)
Profile   Post #: 145
RE: 10.4% Unemployment - 11/20/2009 4:19:49 PM   
Politesub53


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Joined: 5/7/2007
Status: offline 		Post a link showing there were institutions willing to buy banks. Barclays were willing to buy Lehmans whole but didn`t as the US treasury wouldnt give any guarantees. You still insist there were those willing to buy the assets yet cant give me a link backing up your point. I know you like such evidence, as you just asked it of me on another thread ( now provided )

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Profile   Post #: 146
RE: 10.4% Unemployment - 11/20/2009 4:28:49 PM   
Mercnbeth


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quote:

Post a link showing there were institutions willing to buy banks.

Polite,
This isn't a poke at your knowledge of how business is transacted in the US, but investment comes from individuals and small investment groups as much a institutions. There would have been many. One of the bigger points I stress is - we'll never know.

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Profile   Post #: 147
RE: 10.4% Unemployment - 11/20/2009 4:48:44 PM   
Politesub53


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quote:

ORIGINAL: Mercnbeth

quote:

Post a link showing there were institutions willing to buy banks.

Polite,
This isn't a poke at your knowledge of how business is transacted in the US, but investment comes from individuals and small investment groups as much a institutions. There would have been many. One of the bigger points I stress is - we'll never know.


Agreed, but my point is that the money for buying companies was needed sooner rather than later. There was no time to get the thousands, if not millions, of smaller investors required on board.

(in reply to Mercnbeth)
Profile   Post #: 148
RE: 10.4% Unemployment - 11/20/2009 5:00:18 PM   
Mercnbeth


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quote:

There was no time
Our point of contention without possible resolution. We'll never know - however we do know, and are experiencing the consequences for the actions and timing of actions taken.

(in reply to Politesub53)
Profile   Post #: 149
RE: 10.4% Unemployment - 11/20/2009 5:14:57 PM   
Politesub53


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Joined: 5/7/2007
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quote:

ORIGINAL: Mercnbeth

quote:

There was no time
Our point of contention without possible resolution. We'll never know - however we do know, and are experiencing the consequences for the actions and timing of actions taken.


Agreed.

(in reply to Mercnbeth)
Profile   Post #: 150
RE: 10.4% Unemployment - 11/20/2009 11:28:09 PM   
Fellow


Posts: 1486
Joined: 9/21/2009
Status: offline 		Interesting animation:


http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

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Profile   Post #: 151
RE: 10.4% Unemployment - 11/21/2009 8:23:23 AM   
SpinnerofTales


Posts: 1586
Joined: 5/30/2006
Status: offline 		~FR~

I think that Obama was right when he said (and forgive me if this is not a perfect quote it's from memory) "When the house is on fire, the first thing you do is put the fire out". We as a country ignored some very clear and obvious indications that our economy was ready to start to burn. Then the fire happened and damage was done trying to keep it from burning to the ground. I can live with that. What bothers me is that it doesn't seem that anyone on either side is spending a lot of time and effort making sure that the fire doesn't start again.

It is time to stop worrying about "who started it" and "who's fault it is" and start trying to figure out ways to keep it from happening again.


(in reply to Fellow)
Profile   Post #: 152
RE: 10.4% Unemployment - 11/23/2009 8:49:01 AM   
Mercnbeth


Posts: 11766
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quote:

When the house is on fire, the first thing you do is put the fire out".


The "fire" is still blazing; According to the government's broadest measure of unemployment, some 17.5 percent are either without a job entirely or underemployed. The so-called U-6 number is at the highest rate since becoming an official labor statistic in 1994.

To date, the Administration seems to be taking the Fahrenheit 451approach to putting it out; increased spending, raising deficits, more regulations on private business.

(in reply to SpinnerofTales)
Profile   Post #: 153
RE: 10.4% Unemployment - 12/4/2009 8:45:12 PM   
tazzygirl


Posts: 37833
Joined: 10/12/2007
Status: offline 		~~Update~~

Nation's jobless rate falls slightly
LATEST DATA SURPRISE ANALYSTS
But Obama may back Democrats' jobs program

By Steven Mufson
Washington Post Staff Writer
Saturday, December 5, 2009

The U.S. unemployment rate edged down to 10 percent in November from 10.2 percent the month before, offering fresh evidence that the economy is stabilizing and that employers may soon stop shedding workers.


http://www.washingtonpost.com/wp-dyn/content/article/2009/12/04/AR2009120400572.html?wprss=rss_business/economy

Now we have to watch the Fed Reserves response.

< Message edited by tazzygirl -- 12/4/2009 8:46:22 PM >

_____________________________

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Profile   Post #: 154
RE: 10.4% Unemployment - 12/4/2009 9:10:22 PM   
Musicmystery


Posts: 30259
Joined: 3/14/2005
Status: offline 		Too soon for a "response," taz.

From stable, we're half a year away from rehiring.

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Profile   Post #: 155
RE: 10.4% Unemployment - 12/4/2009 9:12:43 PM   
MzMia


Posts: 5333
Joined: 7/30/2004
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quote:

ORIGINAL: tazzygirl

~~Update~~

Nation's jobless rate falls slightly
LATEST DATA SURPRISE ANALYSTS
But Obama may back Democrats' jobs program

By Steven Mufson
Washington Post Staff Writer
Saturday, December 5, 2009

The U.S. unemployment rate edged down to 10 percent in November from 10.2 percent the month before, offering fresh evidence that the economy is stabilizing and that employers may soon stop shedding workers.


http://www.washingtonpost.com/wp-dyn/content/article/2009/12/04/AR2009120400572.html?wprss=rss_business/economy

Now we have to watch the Fed Reserves response.


Unemployment for young Black men is 35%, that makes this situation "critical".
We are in a DEPRESSION, and things will get worse before they get better.
 
Good trends, don't pay the rent.-President Barack Obama

< Message edited by MzMia -- 12/4/2009 9:17:43 PM >

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Profile   Post #: 156
RE: 10.4% Unemployment - 12/4/2009 9:19:25 PM   
popeye1250


Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline 		I can't complain, I'm making 10% dividends on a stock I own, (WIN) try getting 10% interest from a bank today.

Well! Seems that (WIN) is "only" paying 9.60% now, it's gone up over the last few days.

< Message edited by popeye1250 -- 12/4/2009 9:35:01 PM >

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Profile   Post #: 157
RE: 10.4% Unemployment - 12/5/2009 4:04:42 AM   
tazzygirl


Posts: 37833
Joined: 10/12/2007
Status: offline 		I agree on the "stable" part. Now the talk is turning to the FR increasing interests rates because the economy is "trending upwards".

_____________________________

Telling me to take Midol wont help your butthurt.
RIP, my demon-child 5-16-11
Duchess of Dissent 1
Dont judge me because I sin differently than you.
If you want it sugar coated, dont ask me what i think! It would violate TOS.

(in reply to Musicmystery)
Profile   Post #: 158
RE: 10.2% Unemployment - 12/5/2009 6:50:21 AM   
Mercnbeth


Posts: 11766
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quote:

The U.S. unemployment rate edged down to 10 percent in November from 10.2 percent the month before, offering fresh evidence that the economy
A magic trick with numbers.

The economy sheds 11,000 jobs - yet the unemployment percentage went down. The solution is obvious! Increase the population by 100,000,000 and we can keep 'shedding jobs' and Obama can still give a speech about how great and "encouraging" the lowering percentage numbers reported.

There were 11,000 FEWER Jobs - That means businesses are closing. $787 Billion in 'Stimulus' and many of the temporary and fictitiously reported (I think they used the global warming scientists) jobs are ending.

Meanwhile, the reality of the numbers YTD:
Another month under President Obama, another 11,000 jobs lost, pushing the total Obama jobs deficit to 7.6 million. One day after the White House jobs summit admitted that the President's policies - including the massive $787 billion stimulus enacted last spring - are not working to create jobs, the Department of Labor's monthly jobs report added the exclamation point.

Barack Obama promised that if elected he would create 3.5 million jobs by the end of 2010 through new economic policies, beginning with the enactment of a massive economic stimulus package. So far in his term in office, employment has dropped by about 3.3 million jobs, while the unemployment rate remains at 10 percent. Accompanying his jobs promise, the President also emphasized accountability and measuring his presidency by results. The President's jobs promise means total employment should be at least 138.6 million by 2010.

Imagine if the FED were charging the appropriate 'market rate' for their money? I tried to go back and see when the Fed rate was this low in my lifestime - that was easy - NEVER. In the past when unemployment approached these levels. the Fed lowered the rate to stimulate purchases and expansion in the private sector. It can't go lower. For businesses, my included, our cost of funds is at the floor of our borrowing agreement - it can't get any lower.

Yet, nobody is expanding, buying, or hiring. Until that trend changes there is no recovery. There is less confidence than there ever was. There is more assumption that taxes on al levels will rise. Pelosi put that out loud and clear last week putting the estate tax out there. $3.5 Million may sound like a lot of money but many small businesses have that net worth. The money was already taxed in most cases. Net worth is generated by net income, but Nancey and Congress want more. Insuring that to continue the business in the family it will have to be sold, closed, putting more people out of work to pay for Nancy's perks. Counterproductive to increasing the net worth of any business.

There is assurity from Congress and the Administration that more regulations will be put in the way of business. There are opportunities for 'quick hitters'. Some people are specializing in applying for stimulus money for road construction. We've had the annoyance of a 1/4 mile bike lane being put into one of the access roads to our house. Totally unnecessary and counterproductive - which defines most of the use of government stimulus funds. There's not much bike traffic, the jobs were temporary, and the contractor benefited more than anyone else.

Business people know and act upon this reality. Sure, an 'entreprenour' working at home employing his/her cat may have thoughts of a 'recovery' but nobody who runs a business employing even a couple of full time people would agree. Most know the reality behind the lies behind the numbers.

Except that is for government statistic keepers. I'm sure there were 150 'new hires'. But as those funds dry up, the project he program is over and you can get some people to say a reduction to 10% points to a positive trend. What trend does another 11,000 jobs shed point to?

People may believe that most businessmen are conservative, capitalist, republicans; not true. They are, and the successful ones have to be, pragmatic. They laugh at this being a positive trend. They read behind the numbers and see the incongruity and the game being played with percentages. At this point in the economy, ALL percentages should be going down. Foreclosures, bankruptcies, business failures, mortgage defaults should all have a lower percentage of occurrence than the month before. Why? There are less of them to make the percentage comparison. If there are 100 business and fifty close thats 50%. You start the next month at only 50 business open and 10 more close. is the resulting 20% compared to 50% and considered "positive"?

Obama knows that - his leadership is being displayed when he can't tell he truth to the people he leads.

(in reply to tazzygirl)
Profile   Post #: 159
RE: 10.2% Unemployment - 12/5/2009 8:57:39 AM   
tazzygirl


Posts: 37833
Joined: 10/12/2007
Status: offline 		Imagine if the FED were charging the appropriate 'market rate' for their money? I tried to go back and see when the Fed rate was this low in my lifestime - that was easy - NEVER. In the past when unemployment approached these levels. the Fed lowered the rate to stimulate purchases and expansion in the private sector. It can't go lower. For businesses, my included, our cost of funds is at the floor of our borrowing agreement - it can't get any lower.

Talk is about raising the interest rate.

_____________________________

Telling me to take Midol wont help your butthurt.
RIP, my demon-child 5-16-11
Duchess of Dissent 1
Dont judge me because I sin differently than you.
If you want it sugar coated, dont ask me what i think! It would violate TOS.

(in reply to Mercnbeth)
Profile   Post #: 160
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