Fed Proposes Tool to Drain Extra Cash

Quote :

"The Federal Reserve on Monday proposed selling interest-bearing term deposits to banks, a move the U.S. central bank would make when it decides to drain some of the liquidity it pumped into the economy during the financial crisis. The new facility is intended to help ensure that the Fed can implement an exit strategy before a banking system awash with Fed money triggers inflation. Fed Chairman Ben Bernanke has described term deposits as "roughly analogous to the certificates of deposit that banks offer to their customers." Under the plan, the Fed would issue the term deposits to banks, potentially at several maturities up to one year. That would encourage banks to park reserves at the Fed rather than lending them out, taking money out of the lending stream. The central bank said the proposal "has no implications for monetary policy decisions in the near term." "The Federal Reserve has addressed the financial market turmoil of the past two years in part by greatly expanding its balance sheet and by supplying an unprecedented volume of reserves to the banking system," it said. "Term deposits could be part of the Federal Reserve's tool kit to drain reserves, if necessary, and thus support the implementation of monetary policy." Michael Feroli, an economist at J.P. Morgan Chase, said "it's another step forward in the exit-strategy infrastructure, but it's been well flagged in advance, so it's not a surprise." When Fed officials decide to tighten credit, they would likely use the term-deposits program ahead of -- or in conjunction with -- adjusting their traditional policy lever, the target for the federal funds interest rate at which banks lend to each other overnight. The Fed is already testing another tool, reverse repurchase agreements, in which the central bank sells securities from its portfolio with an agreement to buy them back later. Under the arrangement, the buyers move cash from banks to the Fed, removing reserves from the system. Fed officials also have discussed selling some of the Fed's long-term securities, a move that would take reserves from the banking system. The Fed also said Monday that its balance sheet rose slightly to $2.2 trillion in the week ending Dec. 23. The Fed's total portfolio of loans and securities has more than doubled since the beginning of the financial crisis. As part of its efforts to fight the downturn, the central bank is buying $1.25 trillion in mortgage-backed securities, a program it says will end in March. The Fed now holds $910.43 billion in mortgage-backed securities, it said Monday."

http://online.wsj.com/article/SB126203742592007957.html

That's great thinking, Ben. Let's allow banks to borrow money at 0% and then get interest on it. I say we start a TWW bank. We'll borrow a trillion dollars at 0% and then sell it back to the Fed for 1.03 trillion dollars.

[Edited on December 29, 2009 at 9:44 AM. Reason : ]

12/29/2009 9:43:36 AM

Thats one of the more infuriating things about saving the TBTFs out of this entire fiasco...why do I have to pay a middle man 5% + fees on a loan when he got the money for free? Just how much overhead does it cost to shuffle paper around? As a society, it makes no sense how much support, credence, and outright reverence that is given to the banks. They are not an end, they are merely a means to an end. Return the investment banks to what they are, get the traditional depository institutions out of everything that isn't traditional loans to small business and consumers, and lets get on with our lives.

The shitty thing is, the fucking of this country via supporting the TBTFs is a bipartisan thing. I've written more than a dozen letters to (especially) Burr, Hagan, and Price, asking them why they are voting the way they are. I mean, I know why Hagan is, she sucks, but Burr has voted for more than a handful of legislation that simply isn't fiscally conservative.

My only hope is that the wizards fuck it up enough that the economy really gets in a shithole and people really start to take notice of what is going on. My fear is they'll succeed in a Japanese-lite experience where growth is abysmal for a minimum of 5 years and it's a decade before we get back to something resembling a free market.

12/29/2009 9:07:05 PM

Interesting article on the impact of the recession on men vice women:

Quote :

"A "man-cession." That's what some economists are starting to call it. Of the 5.7 million jobs Americans lost between December 2007 and May 2009, nearly 80 percent had been held by men. Mark Perry, an economist at the University of Michigan, characterizes the recession as a "downturn" for women but a "catastrophe" for men. Men are bearing the brunt of the current economic crisis because they predominate in manufacturing and construction, the hardest-hit sectors, which have lost more than 3 million jobs since December 2007. Women, by contrast, are a majority in recession-resistant fields such as education and health care, which gained 588,000 jobs during the same period. Rescuing hundreds of thousands of unemployed crane operators, welders, production line managers, and machine setters was never going to be easy. But the concerted opposition of several powerful women's groups has made it all but impossible. Consider what just happened with the $787 billion American Recovery and Reinvestment Act of 2009. Last November, President-elect Obama addressed the devastation in the construction and manufacturing industries by proposing an ambitious New Deal-like program to rebuild the nation's infrastructure. He called for a two-year "shovel ready" stimulus program to modernize roads, bridges, schools, electrical grids, public transportation, and dams and made reinvigorating the hardest-hit sectors of the economy the goal of the legislation that would become the recovery act. Women's groups were appalled. Grids? Dams? Opinion pieces immediately appeared in major newspapers with titles like "Where are the New Jobs for Women?" and "The Macho Stimulus Plan.""

http://www.weeklystandard.com/Content/Public/Articles/000/000/016/659dkrod.asp

1/3/2010 7:40:41 PM

^ And it took The Weekly Standard--a conservative magazine--to bring that to our attention. I've barely heard a peep about it in the MSM--it just doesn't fit the narrative.

BTW, the divorce rate has dropped, too.

1/4/2010 12:07:06 AM

i don't doubt that the divorce rate dropping is due to people not wanting to spend the money required to put one through.

1/4/2010 12:19:03 AM

^ Yes, and other reasons.

Recession Bright Spot? Divorce Rate Drops
Americans Put Financial Issues on Hold, and Focus on Family
Dec. 31, 2009

Quote :

"Like the Levines, experts point to role reversal: men suddenly at home and women back to work, as a major divorce risk factor - it's happening more and more since 75 percent of the job losses in this recession have been shouldered by men."

Quote :

"Call it the silver lining of the recession: Last year in the 44 states reporting data, the American divorce rate dropped to its lowest point in 30 years. There were almost 20,000 fewer divorces in 2008 than 2007. 'What we're seeing is some people are postponing divorce because home values have dropped,' said Brad Wilcox, director of the National Marriage Project. For others, the recession has led to a new sense of togetherness." While it's hard to ignore the tabloid headlines of high-profile divorces, experts say for the rest of us, the statistics show marriage in America is becoming more stable. As Americans tightened their belts and paid down credit card debt, marriage experts say the stress relief made for happier couples. The Levines weathered their crisis with the support of family; lucky for them, Marc's sister Stacy is a marriage therapist."

Quote :

"Now they have fewer dinners out and more family game nights at home. As tough as it's been, Marc said it's allowed them to fall deeper in love with each other, and their children. If they can get through this, they can get through just about anything."

http://www.cbsnews.com/stories/2009/12/31/eveningnews/main6043108.shtml

1/4/2010 12:29:58 AM

Wait, wait wait . . .

1) Is CBS not a major news outlet? Because I see them mentioning the 75% job loss rate in the very first sentence you just posted.

2) Your title seems to contradict LunaK, but the article seems to agree that it is financial -- rather than moral -- reasons that marriages are sticking together.


I do think that the shift of the workforce towards females (could they please stop bitching about the pay gap) will have rather profound effect on the direction of the United States over the next decade.

1/4/2010 9:52:49 AM

"Recession Bright Spot? More unhappy people are staying together in dysfunctional relationships because they cannot afford to legally separate from one another."

yeah, sounds great.....

1/4/2010 9:59:57 AM

Also, interesting short summary from the Motley Fool by Alyce Lomax:

Quote :

"Let's face it -- 2009 was an extremely bizarre year on the investing landscape. More than once, reality itself seemed to become a major competitor to satirical Web site The Onion. Let's ponder some of the high strangeness that marked 2009: * Wells Fargo (NYSE: WFC) sued itself. * Investors enthusiastically traded shares of bankrupt and defunct companies like Lehman Brothers and "old GM," apparently unable to understand the actual meanings of the words "bankrupt" or "defunct." (Look 'em up!) * Fearing mobs of angry taxpayers, several Goldman Sachs (NYSE: GS) executives supposedly loaded up on the likes of Smith & Wesson (Nasdaq: SWHC). Not the stock, mind you -- actual firearms. * Speaking of Goldman, what was that comment about doing "God's work"? Egotistical much, guys? * Executives at firms that would have failed without government intervention whined about pay restrictions. Yes, we're looking at you, AIG (NYSE: AIG). * Piles of public money poured into the seemingly bottomless pits of corporate America. As we speak, GMAC is triple-dipping into Uncle Sam's pocket, to the tune of $3.8 billion. * And how about Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) going all Oliver Twist? Far from impoverished orphans, these two have become something more shameful. * Even I got pretty paranoid for a while. I'm still not convinced my fears were unfounded, and given continued serious issues like our nation's debt and deficit, I still wonder whether another shoe will drop. For now, though, I'm grateful we didn't have to go all Mad Max. Things were plenty weird enough, and I don’t have my post-apocalyptic wardrobe ready yet. * And lastly, droves of Sirius XM (Nasdaq: SIRI) shareholders completely freaked at any whiff of negative opinion on their stock. Oh, wait -- that's not unusual at all. At some point, things get so strange that you start to tune them out. I'm pretty sure my recollections have left out some really primo moments, so I'm turning this over to you. Share your strangest moments of 2009 in the comments box below. And here's hoping for a lot less weirdness in 2010! Happy New Year, Fools."

http://bit.ly/5owoAm

1/4/2010 10:00:07 AM

Quote :

""Recession Bright Spot? More unhappy people are staying together in dysfunctional relationships because they cannot afford to legally separate from one another.""

I don't think they're necessarily people that are staying in unhappy relationships - i think it's people who are forced to work out their issues instead of going the "easy way out" which isn't so easy when money is tight.

1/4/2010 10:38:31 AM

Quote :

"Wait, wait wait . . . 1) Is CBS not a major news outlet? Because I see them mentioning the 75% job loss rate in the very first sentence you just posted. 2) Your title seems to contradict LunaK, but the article seems to agree that it is financial -- rather than moral -- reasons that marriages are sticking together. I do think that the shift of the workforce towards females (could they please stop bitching about the pay gap) will have rather profound effect on the direction of the United States over the next decade."

JCASHFAN

First, concerning your point one, this was my statement:

Quote :

"I've barely heard a peep about it in the MSM--it just doesn't fit the narrative."

I didn't post that I hadn't seen anything about the story at issue--it's a matter of focus. If women were shouldering "75 percent of the job losses," it would be reported as a crisis demanding immediate action. Similar numbers are being seen in college admissions--with men being eclipsed by women--and there is a similar lack of emphasis on this story.

At Colleges, Women Are Leaving Men in the Dust
July 9, 2006

Quote :

"Department of Education statistics show that men, whatever their race or socioeconomic group, are less likely than women to get bachelor's degrees — and among those who do, fewer complete their degrees in four or five years. Men also get worse grades than women."

Quote :

"Still, men now make up only 42 percent of the nation's college students. And with sex discrimination fading and their job opportunities widening, women are coming on much stronger, often leapfrogging the men to the academic finish. 'The boys are about where they were 30 years ago, but the girls are just on a tear, doing much, much better,' said Tom Mortenson, a senior scholar at the Pell Institute for the Study of Opportunity in Higher Education in Washington."

http://www.nytimes.com/2006/07/09/education/09college.html

Second, concerning point two, the news story I posted does not contradict LunaK's. It simply adds to it.

Finally, concerning your last point, yes, women should at long last stop bitching about the "pay gap"--in modern times, it's a myth. The so-called gap is explained away in the book Why Men Earn More: The Startling Truth Behind the Pay Gap--And What Women Can Do about It by Warren Farrell, PhD, a three-time president of the New York chapter of NOW:



And even if the mythical pay gap did exist, it would be largely moot now. Clearly, men are the ones in trouble in higher education and in the work force.

1/4/2010 10:44:20 AM

1/7/2010 2:49:30 AM

FITCH: Check Out The "Payment Shock" ALT-A Mortgage-Holders Are About To Feel

Quote :

"Many U.S. prime and Alt-A mortgage borrowers that are making interest-only (IO) monthly payments will experience a payment shock over the next year due to a recasting of these IO loans to full principal and interest payments, according to Fitch Ratings. Over $47 billion of prime and Alt-A RMBS collateral is due to recast over the next 12 months from an IO payment to a fully amortizing payment. This recast exposes borrowers to an average payment increase of 15% and possibly higher if interest rates increase. Over the next two years, a total of $80 billion of prime and Alt-A loans, and a total of $50 billion Subprime loans are due to recast."

http://www.businessinsider.com/fitch-check-out-the-payment-shock-alt-a-mortgage-holders-are-about-to-feel-2010-1



Well, this is going to be an absolute disaster.

[Edited on January 12, 2010 at 2:29 PM. Reason : ]

1/12/2010 2:29:31 PM

so what's the best way to protect my 401k from this shit ^

1/12/2010 9:12:45 PM

It's priced in, buy buy buy.

1/12/2010 9:19:06 PM

Quote :

"As highlighted by The Economist, only 400,000 more Americans were employed in 2009 vs. 1999 despite the fact that the population had grown by 30 million. Yet it gets worse -- Not only has unemployment skyrocketed, but long-term unemployment has skyrocketed even higher. (Shown in the chart below.) The Economist: Long-term unemployment is what will make this economic downturn inordinately tough for many Americans to bear. Regardless of what headline U.S. GDP data may do, many of the people represented by the spike below will experience a multi-year personal economic downturn regardless. Of course, it's worth asking whether the skills they forget will even be valuable by the time things turn around."

http://www.businessinsider.com/chart-of-the-day-long-term-unemployment-2010-1?utm_source=Triggermail&utm_medium=email&utm_campaign=CS_COTD_012010

1/20/2010 5:11:50 PM

3-Day Slide Sends Markets Down About 5%
January 22, 2010

Quote :

"Wall Street tumbled for a third day on Friday as a three-day slide has pushed the markets down almost 5 percent. For the Dow, Friday was the lowest close since early November. Shares declined again on Friday on concerns about President Obama's proposal for tighter restrictions on the activity of banks as the markets finished the week with a three-day losing streak."

http://www.nytimes.com/2010/01/23/business/23markets.html

PLEASE

STOP

TALKING

1/22/2010 4:20:10 PM

If not for the mass exit of workers from the labor force, unemployment numbers would look even worse.

Quote :

"In October, I showed that while the stimulus funds from the American Recovery and Reinvestment Act were being spent, the unemployment rate kept going up. In fact, the 10.2 percent unemployment rate then was already far above the 8.8 percent the Obama administration said was the maximum rate America would reach without a stimulus. Today, I want to add to the evidence showing President Obama’s promise to create jobs with his administration’s spending is full of hot air. Using data from the administration’s website Recovery.gov and from the Bureau of Labor Statistics, this accompanying chart shows the monthly increase in the number of unemployed workers and the shrinkage of the civilian labor force in tandem with the administration’s stimulus spending. In other words, it shows how not only that many workers have lost their jobs since the administration started spending stimulus funds, but also that many more workers have exited the labor market. The civilian labor force shrinks when individuals who were looking for work or were employed decide that their labor market prospects are not good enough to keep looking for a job or to stay employed. For instance, some people might decide to go to grad school instead of keeping a poorly paid job, while others might decide to not seek a job and instead stay home with their kids. One reason for the shrinkage could be that the current economic state is so bad that workers feel it is not worth their time and energy to keep looking for a job when there is no hope in sight. Two things are sure. First, if it weren’t for workers’ mass exit from the labor force (600,000 workers exited in December alone), the unemployment numbers would look even worse that they already do. Second, government spending cannot create jobs."

http://ow.ly/108Lh

1/25/2010 12:31:56 PM

Speculation on a Canadian business show that the Fed / US Gov't is buying futures during overnight trading to "stimulate" the stock market.


http://watch.bnn.ca/trading-day/january-2010/trading-day-january-8-2010/#clip253604



If true, this will surely end well . . . there is some other pretty damning information in this video.

1/29/2010 10:42:22 AM

Quote :

"As highlighted by The Economist, only 400,000 more Americans were employed in 2009 vs. 1999 despite the fact that the population had grown by 30 million. "

The employment-to-population ratio has been dropping for years, man. But that ain't just because of the bad economy. Baby boomers are starting to retire. And since there are way more of them than there are gen-xers, then that ratio is going to keep falling for years to come.

I am not saying that the economy is peachy right now. But this type of statistic is basically worthless.

1/29/2010 11:03:05 AM

This would normally belong in the AIG thread, but I don't feel like waiting for it to get bumped.Not sure if anyone watched this, but Geithner got grilled hard a couple days ago. Here's the full CSPAN clip:

http://www.cspan.org/Watch/Media/2010/01/27/HP/A/28886/House+Oversight+Hearing+on+AIG+Bailout.aspx

And here's a good section of it on youtube if someone wants to embed: http://www.youtube.com/watch?v=zOZTXqtph3E

At this point, our government is blatantly corrupt. All of these bailouts were not for the benefit of the people, but for the benefit of connected insiders. Geithner was the president of the NY Fed. Paulson was the CEO of Goldman Sachs. Are people not seeing the problem with all of this?

1/29/2010 11:07:56 AM

^^ You make a good point. What makes it even harder to calculate is those on the edge of retirement who can't retire / didn't want to but had to / retired and came back, etc.

1/29/2010 5:25:31 PM

Clyburn: 'We've got to spend our way out of this recession'

Quote :

"The U.S. government must spend its way out of the recession, the Democrats' third-ranking House leader stressed Monday. Rep. James Clyburn (D-S.C.), the House majority whip, said that trying to find greater savings in the budget, which was released by President Barack Obama this morning, wouldn't help alleviate the recession. "We've got to make some decisions here as to what's in the best interests of our country going forward," Clyburn said during an appearance on Fox News. "And I think the best interest is to invest in education, control these deficits, while at the same time trying to get people back to work." "We're not going to save our way out of this recession," the majority whip added. "We've got to spend our way out of this recession, and I think most economists know that." Obama's budget, which was unveiled Monday morning, calls for $3.8 trillion in spending for 2010, but is projected to cause a $1.27 deficit. A number of key Democrats in Congress have responded to the proposal, including House Appropriations Committee Chairman David Obey (D-Wis.), who said lawmakers would seek to abide by spending freezes within the budget, but seek to extend caps to defense and national security spending, too. Some other Democrats have worried that without expanded spending on social programs and other elements of the budget, some people hit hardest by the recession would be disadvantaged by the budget. Clyburn suggested that talk of reducing the deficit was moot as long as the economy remained sluggish in the foreseeable future. "You're not going to bring down the deficits, you're not going to eliminate these problems without growing this economy," he said. "And you're not going to grow the economy by wishing it; you've got to invest in it. And that's what we're doing with this budget.""

http://thehill.com/blogs/blog-briefing-room/news/79039-clyburn-weve-got-to-spend-our-way-out-of-this-recession

I don't know what to add. This country is doomed.

[Edited on February 2, 2010 at 3:07 PM. Reason : ]

2/2/2010 3:05:42 PM

I just wish Reps would have some sort of list or reference for how they are basing their viewpoints...track the money so to speak.

This guy doesn't represent us, but that doesn't mean you can't send him a letter anyway. I sent Ben Nelson one after he prostituted himself telling him he should be tried for treason for selling his vote.

2/2/2010 5:57:53 PM

^^

2/2/2010 6:08:51 PM

That's a great video.

So we've been hearing about the deficit for this year, but I've been reading a lot lately that suggests the deficit is much, much worse.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.G6KFfaDdSc

Quote :

"Look through President Barack Obama’s proposed 2011 budget, and you’ll see a line calling for a $235 million increase in the Justice Department’s funding to fight financial fraud. Lucky for them, the people who wrote the budget can’t be prosecuted for cooking the government’s books. ... The ploy here is simple. They are keeping Fannie Mae and Freddie Mac off the government’s balance sheet and out of the federal budget, along with their $1.6 trillion of corporate debt and $4.7 trillion of mortgage obligations. Never mind that the White House budget director, Peter Orszag, in September 2008 said Fannie and Freddie should be included. That was when he was director of the Congressional Budget Office and the two government-backed mortgage financiers had just been seized by the Treasury Department. The White House is already forecasting a $1.3 trillion budget deficit for 2011, which is about $3 of spending for every $2 of government receipts. By all outward appearances, it seems Obama and his budget wizards decided that including the liabilities at Fannie and Freddie would be too much reality for the world to handle. So they left the companies out, in a trick worthy of Enron’s playbook, except not quite so hidden."

And this is Goldman Sach's Arthur Levitt talking about it on Bloomberg radio:

Quote :

"SPEAKERS: ARTHUR LEVITT, POLICY ADVISOR, GOLDMAN SACHS TOM KEENE, HOST, 'BLOOMBERG SURVEILLANCE' KEN PREWITT, HOST, 'BLOOMBERG SURVEILLANCE' (This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.) 07:37 TOM KEENE, HOST, 'BLOOMBERG SURVEILLANCE': Right now, Arthur Levitt, Policy Advisor, Goldman Sachs, Bloomberg LP Board Member, Former Chairman of the SEC. Jonathan Weil out with a commentary this morning on the Bloobmerg of a $6.3 trillion essentially off balance sheet transaction. Should Fannie and Freddy be on the balance sheet? Should they be visible to the taxpayers? ARTHUR LEVITT, POLICY ADVISOR, GOLDMAN SACHS: Absolutely. It's an incredible article. He's absolutely right. Fannie and Freddie belong on the balance sheet if we're in an era of transparency. The White House is already forecasting $1.3 trillion budget deficit for 2011, which is about $3 of spending for every $2 of government receipts. Fannie and Freddie are wards of the State. Orszag already promised that that's where they should be. And he's not putting it there. Shades of Enron. KEENE: Really? That big a deal? LEVITT: It is that big a deal. KEENE: Shades of Enron? LEVITT: Absolutely. KEN PREWITT, HOST, 'BLOOMBERG SURVEILLANCE': So if Fannie and Freddie were on the government's balance sheet, everything would look even worse than it does now? LEVITT: Oh, considerably worse."

The entire thing is a sham. We should all know at this point that we're in serious trouble, but the government is doing some extreme damage control. Of course, the mainstream media won't call them on it, for whatever reason.

2/5/2010 9:21:23 AM

omg double post

2/6/2010 10:12:51 AM

Quote :

"Asia is frequently lambasted as a source of low cost 'slave' labor by skeptics. The standard notion is that armies of Chinese communist automatons are building faulty plastic toys and copy-cat products, undercutting far more skilled, educated, and innovative Western workers. While this belief may have had some basis over the last few decades, it's hard time for a reality check. Emerging Asia, which doesn't include Japan , now has more skilled researchers than any other economic unit in the world, as shown in the chart below from Citi based on UNESCO data. As you can see, Asia made great strides in increasing its share of skilled researchers from 2002 - 2007. They will make even larger ones going forward since education levels are rapidly improving. Thus, we can easily imagine that Emerging Asia will be immensely competitive very soon -- it will have lower cost labor (since many Asians are still moving up the wealth chain), but at the same time it will have tons of highly skilled, educated (and yes wealthy) people at the same time. Asian industries are likely to be competitive both at the low- and high-end in the not too distant future. Ouch. P.S. And by the way, hiding from the global economy won't be a successful long-term solution here. It would just mean that 10 - 20 years forward Emerging Asian competitiveness would be even stronger while American and European competitiveness would have gone nowhere. Double Ouch."

2/11/2010 5:01:04 PM

I don't think any rational person can say the economy is recovering when stories like this continue to pop up

http://www.latimes.com/news/nation-and-world/la-na-utah-school15-2010feb15,0,906102.story

Quote :

"The proposal by state Sen. Chris Buttars would chip away at Utah's $700-million shortfall. He's since offered a toned-down version: Just make senior year optional."

2/15/2010 11:52:07 AM

My Dear Holly Shit!

2/17/2010 1:04:46 PM

Productivity + inflation + lay-offs = that graph.

The workers probably see 1/6 or less of that money nowadays compared to 1/4 of that money back in the day. Just seems like greater worker exploitation and corporate profit-taking.

2/17/2010 5:37:05 PM

Quote :

"For all the criticism about massive U.S. stimulus spending 'not working', and warnings of an imminent economic downturn once stimulus is removed, here's a simple rebuttal -- most of the administration's stimulus spending hasn't even hit the economy yet. Thus it's absurdly premature to judge its impact or fear its withdrawal. As shown by the pie chart below, only 1/3 of the U.S. recovery stimulus from the The American Recovery and Reinvestment Act of 2009 has been used so far. The amount spent and amounting from tax cuts is only 35%, in blue below, according to stimulus watchdog Propublica. Almost 2/3 of the stimulus is still on the way, as shown below in shades of red."

Wait, didn't we have to have all this money RIGHT AWAY in order to save the economy? Yet we've only spent 1/3. Conveniently, the other 2/3 is to be spent in an election year. That is a shocker.

2/17/2010 5:46:37 PM

Hmm, layoffs == productivity. A factory that fires its workers yet produces just as much is called productivity.
And the graph is inflation adjusted.

If this is exploitation then let us please have even more of it! Bravo!

2/17/2010 5:46:43 PM

Hooray for layoffs! Bravo!

2/17/2010 5:52:21 PM

^ Are you being sarcastic? Would you seriously prefer if 80% of Americans still made their primary subsistence from farming?

2/17/2010 6:21:30 PM

No, I think he is attempting to make a statement on how capitalism works great for those with the capability to absorb a layoff, not so great for those that can't.

Besides that, I find it quite funny that you're all anti government but are more than happy to use their statistics if it supports a point

[Edited on February 17, 2010 at 6:42 PM. Reason : .]

2/17/2010 6:41:13 PM

Quote :

"Hmm, layoffs == productivity. A factory that fires its workers yet produces just as much is called productivity. And the graph is inflation adjusted. If this is exploitation then let us please have even more of it! Bravo!"

What a stupid thing to say, and the stupidity has little to do with ethics. It's stupid because of the way you're looking at it. Businesses don't aim for the point of diminishing returns, they base marginal cost off of price.

In other words: one employee makes 5 things and two employees make 9 things, the cost of each employee is $10 and the things sell for $5, you end up making $15 with the one employee and $25 with two employees, even though the single employee is more productive. Let's hope you never go into business, you won't stay there long. Bravo? more like microecon fail.

2/17/2010 7:03:07 PM

http://www.msnbc.msn.com/id/35437477/ns/business-stocks_and_economy/

"Home building, industry output on the rise
Construction hits 6-month high; production posts 7th increase in a row"

2/17/2010 7:09:47 PM

Meanwhile, permits are down.

2/17/2010 7:24:00 PM

How can there be an increase in construction and building? The market is flooded with homes. Prices haven't even hit bottom. The fact that construction is picking up again says to me that a misallocation of resources is taking place.

2/17/2010 7:58:43 PM

Who's looking out for workers in this situation? I mean, is it better to have lots of corporate profits with higher unemployment? How does that help the country out overall? I mean, I don't think it's good to have one and not the other but I'd say higher employment and lower profit would be better for the country as a whole. It really doesn't make a difference to me whether a corporation makes a profit of a billion or breaks even. Workers who are happy and not worrying about losing their job tend to be more productive anyway.

2/17/2010 8:13:39 PM

You don't even have to make that judgment, I just pointed out how stupid it was, we make more money at full employment, individual worker productivity is completely meaningless.

2/17/2010 8:25:37 PM

Oh shit, I thought you quoted my post and were criticizing me. Oops. I'm just being an argumentative asshole Carry on.

2/17/2010 8:33:40 PM

Quote :

"we make more money at full employment"

A statement that is both true and completely irrelevant. Like you say, the graph says nothing useful about any period of falling production, so obviously that is all you want to talk about. I suspect full employment will return eventually, it did for the other six recessions shown on the graph, so I did not post the graph to talk about the current recession. Hence why the graph goes back to the seventies. Ignoring the short term, the graph demonstrates the increasing use of automation, increasing division of labor, increasing use of outsourced efforts. It says nothing about overall production, it says nothing about how happy workers are, and it says nothing about lots of other things.

Quote :

"Who's looking out for workers in this situation? I mean, is it better to have lots of corporate profits with higher unemployment? How does that help the country out overall?"

The profits figure is an average. If that figure is break even, then some companies are wildly profitable and others are losing their shirt. Companies that are losing their shirt tend to shrink and lay off workers. Companies that are wildly profitable tend to expand and hire workers. If profits are on-average breaking even, then odds are employment is not increasing. As such, it is not probable to have growing employment and on-average break even profitability. As such, profits are good for society because employment and production are good for society. So, to answer your query, in a capitalist system, full employment is better than unemployment, regardless of profitability. Profits are useful to talk about in-so-far as high profits tend to produce fuller employment, as recessions tend to follow periods of widespread losses and recoveries tend to follow periods of widespread profits. But to follow on to the Kris discussion, the graph I posted says nothing about profits.

[Edited on February 18, 2010 at 11:41 AM. Reason : .,.]

2/18/2010 11:38:58 AM

Quote :

"A statement that is both true and completely irrelevant."

It's irrelevant to what you were saying, which I completely destroyed, but it was relevant to the person whom I quoted. I'll assume that it's irrelevant to your backpedaled statement though.

Quote :

"It says nothing about overall production"

Which is what you would need to make the statement "layoffs == productivity".

Quote :

"Ignoring the short term, the graph demonstrates the increasing use of automation, increasing division of labor, increasing use of outsourced efforts."

Really all it shows is that marginal cost is 'U' shaped, which everyone knows.

Quote :

"As such, profits are good for society because employment and production are good for society."

Economic profit, the kind you are talking about, is waste, it shows a market that is not reacting quickly enough.

2/18/2010 5:57:21 PM

The market will tank Friday, feds raised the borrowering rate by .25. They were expected to do this during the second half of the year....sale sale sale!!!!

2/18/2010 5:59:18 PM

sale? where?

oh you mean sell

2/18/2010 6:01:09 PM

Weren't all the inflation chicken little's relying on the assumption that the Fed would never increase the discount rate?

2/18/2010 6:03:42 PM

they raised the discount rate, that will have no effect on interest rates out there.

Let me know when they make real changes to fight future inflation.

[Edited on February 18, 2010 at 6:46 PM. Reason : z]

2/18/2010 6:46:00 PM

Wait, wut?

2/18/2010 6:51:34 PM