Sorry, I don't get it. If we add 3m new people a year to the population starting today then eventually we will only require 1M new jobs a year to support that? Hell, even if all the women become housewives that still doesn't add and going by your 1.1M number doesn't that mean we created 100,000 fewer jobs last year then need to simply keep up with the population growth? That means we have an additional 100,000 people who wish to be employed but can not find employment.
Nowhere near 3M people that come to the U.S. every year are even age-eligible for employment, and if they are they don't immediately enter the workforce. That time delay applies to every year we add people to the population. So yes, as I said before 100,000 jobs created every month doesn't keep up with population growth but, depending on the year, all you'd need is another 50K-100K per month to outpace population growth which is what'll happen when the amount of people looking for work dwindles and we get closer to full employment (which may "only" be 7% in the future).
Sure... from TARP itself. You didn't answer the question though, exactly what happened with the bad debt that caused this mess? Where did it go?
TARP was a shitload of money and the fact that it'll probably cost us no more than $25B is damn incredible. In terms of "bad debt" you'll have to be specific, since that's broad and means nothing to me. Whose bad debt? If you're talking about the banks then I've already answered that; TARP re-capitalized these firms at near 0% interest and they're paying it back in droves due to record corporate profits (for most of them), so the "bad debt" disappeared when they paid it back. Unless you're talking about mortgage securities, which are certainly weak but nowhere near dire right now.
Yeah right. Bribery, front running, bid rigging, market manipulation, blatant insider trading, fuckloads of fraud committed to get us in this mess (with massive profits kept from that fraud), hundreds of thousands of cases of perjury, a fuckload of MBS in which the titles were not properly transfered meaning the banks could be forced to buy them back, backdoor bailout after backdoor bailout (not counted in your TARP numbers), a housing market that has been artificially propped up and will likely start falling again, etc.... Oh, most of that stuff is a crime, would you like to guess how many indictments we have seen?
I'm not for any of those things and I'm hoping more indictments are handed down. There have been indictments and investigations though; we all know about Madoff but he wasn't the only one.
Bullshit. They may fluctuate but the ramp in commodities is not normal nor is it constrained to just food and energy. We are talking 35% - 50% ramps in a lot of them. ALL commodities have been on a tear so try again.
Sorry, but we've seen commodities deflate compared to the rate of inflation too. You're bullshit 35-50% figure applies to nothing more than gas. Big deal, we've known for a while that the OPEC cartel hurts consumers, this is nothing new. Food inflation has been nowhere near 35-50% in the aggregate.
Yup. Exactly the same can be said about the gains all the up to damn near 14K on the DOW in Oct' 07. It happened too, it was real, returns indisputable, etc... Same thing with the .com bubble. Looking back at those times now we can easily see that the market couldn't reasonably account for those valuations because of economic reality. I simply asked about the economic reality right now that supports current valuations. I assume you are going to stick with not answering that question.
You asked no such question, but since you're now asking, I'll answer; the U.S. economy has seen roughly 17 bubbles since 1813, depending on how you define them, where valuations were out of step with what is now 20/20 hindsight. The fact that those bubbles collapsed means what to you, that we shouldn't have bubbles? It doesn't seem you're putting together a specific argument here, you're simply saying that bubbles couldn't be sustained, and I'm telling you right now it doesn't matter, we're statistically better off after every bubble. The last two bubbles, for example, still yielded you a very solid positive return, AFTER the bust.
Mark to myth = legalized accounting fraud because it allows banks to value an asset far above fair market value (ie. what they can sell it for). That is why the FDIC was seeing 40% losses after taking over some failed banks, that should NEVER happen and when it does it means someone cooked the books.
I can make my business show a huge gain in value if I get to pretend my assets are worth more than they really are. If I did that would the value of my business actually be greater though?
I would argue that mark to market is sensible if it's used right, and so I guess that's why you don't like using it during a bubble? In which case, did you feel the same way with the massive overreaction in spring 2009 when the market was clearly well undervalued and mark to market would have been, well, inaccurate to put it mildly?
I am not even going to bother researching the first question and I will admit that the answer is probably none. I am not a gold bug nor do I think we should have a gold backed currency or any of that bullshit. Its just not a good idea to back your currency with something that is mostly produced and therefore the supply is controlled, by other nations. However, I have seen proposals for a "mechanical" monetary system that makes much more sense.
In terms of alternatives to our current system, I've always kind of liked Milton Freedman's idea of having a computer systematically increase the money supply intelligently every year, but in combination with some monetary policy (the less the better during normal booms/busts, and much more intervention during abnormal ones like this recent one). So I don't disagree with your mechanical monetary system idea too much I suppose.
With that said, I wouldn't be banging the Fed drum to hard. Whats a dollars value today compared to 1913? Something like 7%. Doesn't sound very good to me, I am not sure why people think no inflation and no deflation policy is a bad thing.
Actually, the theory behind wage inflation is simply that laborers like seeing their wages go up a little every year, even if they don't necessarily understand that their real purchasing power doesn't change, goes up or goes down. Businesses react much more positively, historically speaking, to inflation of wages and asset prices than the deflation of both. It also increases consumption which has a self-reinforcing effect on demand and growth, obviously. I get the pro-inflation people, just not in the extreme. Nothing more than 2%-3% a year if it can be helped.
As far as interest rates, you are clueless. People do NOT buy houses based on price they buy them based on payment. A family can afford $1K/month for a mortgage payment can "afford" a $200K loan at 4.5%. At 7.5% they can afford a $150,000 loan with that same $1K/month payment, a loss of 25% of their "home purchasing power". That would utterly destroy what is left of the housing market. Next up, the Federal budget.
Huh? I have no idea what you're trying to say here, since ARM's resetting over time isn't a big deal if jobs and wages improve over that same time period. The time period just has to be a long one. If it takes 4-5 years that wouldn't surprise anyone, but it would be limited to the mortgage market. OK, that's one part of the economy. So what?
Guess you didn't do your homework.
Currently the Federal government must roll over damn near ALL of its existing debt approximately every 4 years. You see we moved all of our debt to the short end during historically low interest rates to temporarily make the budget look better and it has worked so far. That is why we currently pay less interest on the national debt then we did in the Bush years despite having a lot more debt.
No such thing as a free lunch though, what that also means is that when the interest rates return to historic norms, or hell any significant rise at all, the interest we owe on existing debt will rise dramatically and extremely quickly. To add a bit of perspective, in 2010 the Feds collected roughly enough to cover JUST mandatory spending (Social Security, Medicare, Medicaid, and interest payments on debt) and thats it. Everything else went on the ye ole credit card including Defense, DOE, Education, Transportation, Ag, Homeland Defense, the light bill for the White House, Congressional budget, everything. A very moderate bump in the interest we must pay on our debt puts us into the "paying one credit card with another credit card" category as we would have to borrow to cover the increase in interest payments. Creditors tend to call that activity risky.
I get all of that. I'm just curious why you think this is an unmanageable scenario when the interest we'll have to pay on this debt can be easily paid for with an increase in tax receipts from a booming economy? Unless you're just bearish for the next decade or something.
Bad debt still in the system, what was fixed? Banks holding assets far above their market rate. National debt on the short end means almost instant increase in costs as bonds return to historical norms, housing market gets body slammed if interest rates go up a few points, the last two are why the Fed is locked into ZIRP, the Federal government replacing a fuckton of GDP with borrowed money, etc...
Interest rates have skyrocketed already in the last 7 months; 30 year fixed rates have gone from 4.17% to 4.8%+ last I checked. Is the housing market ready to collapse as a result? Again, I'm not sure why you're so bearish on the whole situation.
Familiar at all with exponents and what a chart looks like after a long period of time of one side growing X% greater than the other side?
Federal spending compared to GDP:
Outstanding debt:
You are arguing about the stock market which has often been considerably wrong.
Not sure what the stock market has been "wrong" about, that's sort of broad. The stock market, like any other valuation in many other industry, been historically caught in boom and bust hysteria. But they consistently return you good interest on your investments for 200+ years, so who am I to argue those fundamentals are flawed unless some fundamental has actually changed?
I am arguing the underlying economics which eventually catches up with bad bets in the market. There is no argument that the market is up huge but WHY is it up huge? Perhaps you think that the .gov can replace private spending with deficit spending forever? Or perhaps no negative effects will occur when they pull that spending out? Or maybe the actual consumer is just doing a hellofa lot better now than a year ago and will continue to get a hellofa lot better this year (kinda hard when you don't have a job and have lost considerable equity if you had any and 1 in 10 homeowners is actually underwater on their home loan but whatever)? Or maybe the States will pick up the slack because they are all doing so well?
That is the "math" I am talking about, not a single year of the DOW.
It's a combination of all those things. I'd argue that we're already starting to see gov't spending fall (which is true, stimulus has been going down fast since summer which is why we saw that proportional drop in GDP/jobs for a few months, that and the European debt crisis). So the gov't facet is already running dry and the economy is still growing despite it.