13 Mar 09 Stewart vs. Cramer
Jon Stewart definitely gets the last laugh lolz.
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Part Two:
Part Three:
11 Mar 09 CNBC On The BBQ
Jon Stewart flames CNBC and Jim Cramer
17 Nov 08 Autos Drive Retail Sales Drop
According to the US Census Bureau Advance Monthly Sales Report that came out Friday, retail sales in October 2008 fell to approximately 4% below last year’s levels. Two sectors of the economy were responsible for most of the decline: the auto industry was down by 23% and home furniture and furnishings sales dropped 14%. If the automotive sector is factored out of the overall numbers, the economy grew by about 1% year-over-year.
The primary cause of the sales drop is not the fault of the big three auto makers. The underlying issue is that banks will not provide credit to new car buyers. The banks in turn point to the expanding group of people who are not good credit risks due to problems with their mortgages. The ongoing bank credit crisis means that even good credit risks are not being given loans.
It is very clear to everyone, except perhaps the Republican members of Congress, that the car business is screwed until sometime after the mortgage and credit crisis is over. Until that time the government has no choice but to provide the auto sector with enough cash to stay afloat. If the Republicans refuse to act, the USA will no longer have an auto industry.
According to Calculated Risk the following graph shows the year-over-year change in nominal and real retail sales since 1993. The dramatic fall-off over the past few months is almost entirely driven by the collapse of the automotive industry, due to lack of financing.
29 Oct 08 Paul Krugman On The Economy
If you want to understand the basic facts of the economic crisis facing us today, take 30 minutes to watch this video. Charlie Rose interviewed Paul Krugman on October 23rd, shortly after he won the Nobel Prize in Economics. Krugman discusses the causes and outlines several possible solutions.
If institutions need to be rescued like banks, they should be regulated like banks.
27 Oct 08 What Would Reagan Do?
Just as I felt myself drifting off on the waves of a beautiful dream last night, with a smokin’ hot blonde in a black bikini, Ronald Reagan showed up. “Studs, let’s have a beer and talk some economic treason, whaddya say?” Being that it was Reagan, I forgot all about the blonde for a minute and said “Sure Ron, whatever you want,” and followed him over to Molly Malone’s pub.
“We’re going to need a lot more than $700 billion dollars to get out of this mess we’re in, and there’s only one way to do it,” says Himself. “Yes, you can hear the words already, can’t you? It’s time for Voodoo Economics, and not a moment to waste. All those Economical PhD schoolmarms are going to mess their pants, but there’s no other choice.” Then the blonde showed up at the door, still wearing that little black bikini, and I took my leave. “Until next time!” I told Ron. But I digress.
Voodoo Economics is one of those concepts you can’t wrap your arms around, but you know it works. Rather than listen to some professor profess his allegiance to a theoretical guru of greed, you step up to the craps table, you put your money supply on the line, and you start shooting naturals. Just to prove I paid attention to one of those professorial types in the economics class I took back in the day, I’m going to use one of those schoolmarm phrases: acceleration of the growth of the money supply. Still awake? I hope so, this is important stuff.
When the money supply is growing at a nice, safe, positive rate everyone is happy. When the money supply grows too fast, with acceleration well over the speed limit, you get inflation, which is the problem Ron Himself faced back in the day. When the money supply is shrinking, you’re dealing with a negative acceleration rate. That’s going to be Barack Obama’s problem to deal with, and all too soon. Too soon for him of course, not for us, because if these tax-cutting, budget-balancing sycophants stay in power much longer there isn’t going to be any money supply at all. But I digress.
Back to the craps table. When you have too much acceleration in the growth of your money supply, you pump up the vig until people stop borrowing to shoot craps. When you have a negative acceleration in the money supply, you pay people to shoot craps. That’s right, we’re talking Uncle Sam’s Negative Am Deposits aka you keep the vig. You simply look Mr. Banker in the eye and say “I don’t care about your balance sheet, your treasurer’s dirty drawers, or your mother’s nest egg, it’s time to lend some money.” And then for every dollar they lend you give them a dollar of Uncle Sam’s Negative Am Deposits. Sounds too simple doesn’t it? That’s why they call it Voodoo Economics boys and girls. All I can tell you, and this is from the mouth of Ron Himself, is that it works.
24 Oct 08 Roots of the Economic Crisis
It’s a rather simple equation when you examine the history of how the economy got to where it is today. Banking and investment regulations were gradually erased over a period of 28 years, beginning in Reagan’s first term as President and culminating with the repeal of the Glass-Steagall act in 1999. Conservative “free market” advocates insisted that the market should be the ultimate arbiter of what is, and what isn’t a good investment. Today the market has spoken, and the message is clear. Here’s a quick history lesson, in little more than a minute.
Thanks to Matt Yglesias for finding this video.
15 Oct 08 A Panic Like 1873, Not 1929
A lot of comparisons have been made in the press between the current bank liquidity crisis and the Great Depression of the 1930’s. However when you look at the fundamentals there are some stark differences. The contraction of the money supply in 1930-31 was an after-effect of the stock market crash of 1929 and hyper-inflation in Europe. In today’s economy the huge losses in the stock market are the result of a dramatic contraction of the money supply. That’s also what happened in the Panic of 1873, and the result was a four year depression of the economy that dwarfed the depression of the 1930’s.
More after the jump …
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14 Oct 08 Thank You Mr. Treasury Secretary
Woke up this morning to see that the thing most on my mind for the past few days is being announced today, a pile of cash is being dumped into the banking system. Too bad the man we get to thank for that is the same man who lit the fuse on this mess by kicking Lehman Brothers to the curb last month. $250 billion is just the first small bite of a very big apple.
Bloomberg link:
http://www.bloomberg.com/apps/news?pid=20601068&sid=aJ2tc72IixiQ
The Treasury chief was forced to change tack from an initial plan to buy distressed assets from banks after the financial panic caused banks to hoard cash and send money market rates to record levels. In its biggest effort yet to halt the 14-month credit rout, officials will also offer guarantees on new bank debts and start purchasing commercial paper in two weeks.
The Treasury’s stock buying program will begin with nine banks, which it didn’t name. People briefed on the matter said $125 billion will be disbursed in days: Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co. and a combined Bank of America Corp./Merrill Lynch & Co. each will get $25 billion, while Morgan Stanley and Goldman Sachs Group Inc. will get $10 billion each. Bank of New York Mellon Corp. said it will receive about $3 billion and State Street Corp. said it’s getting $2 billion.
13 Oct 08 The Economic Rescue Package
Congress gave $700 billion dollars to the Treasury Secretary ten days ago, with instructions to use it to restore liquidity to our banking system. To date nothing has been done. Secretary Paulson seems to be unable to break away from the discredited free market ideological straight-jacket of the Bush administration. The situation worsens with each day that passes. There is only one workable option on the table: the government must buy stock in our banking institutions in quantities sufficient to restore their balance sheets. Only then will the banks be able to resume lending.
More after the jump …
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13 Oct 08 The Roots of Bank Insolvency
Most people are wondering how the economy got into the mess we’re experiencing today. For those who truly want to understand the situation, Nobel-winning economist Paul Krugman gave a great overview last December. According to him, all hell broke loose in the economy in August of 2007. Since that time the Bush administration has been, in Krugman’s words, “re-arranging the deck chairs on the Titanic.” In the video below, Krugman spoke and took questions on the state of the economy at Google’s headquarters for just over an hour on December 14, 2007. It is the most insightful and direct explanation you’ll ever hear, luckily Krugman is knowledgeable, intelligent and intelligible, a rare combination.
01 Oct 08 McCain Hits Dead End
Everybody knows his campaign is over except for McCain and a few of his advisor. When it comes to the economy, the only thing he can take credit for is killing the deal to rescue the banking system. And make no mistake about it, unless we take immediate action to pump hundreds of billions of dollars into the banking / mortgage system there are a lot of big and little banks that will go straight into the toilet.
ABC News link:
http://abcnews.go.com/Politics/wireStory?id=5916813
Last Wednesday, McCain suspended his presidential campaign to insert himself into a $700 billion effort to rescue America’s crumbling financial structure. In so doing, he tied himself far more tightly to the bill than did his Democratic opponent, Barack Obama.
Then, as the bailout plan appeared ready for passage Monday in the House, McCain bragged that he was an action-oriented Teddy Roosevelt Republican who did not sit on the sidelines at a moment of crisis.
But McCain didn’t get the job done. And rather than take responsibility, after the bill failed he tried to point the finger at Obama.
Within hours, however, the measure died in the House mainly at the hands of McCain’s own Republicans.
McCain was on his campaign plane preparing to leave Ohio when the House vote became final. McCain’s chief economic adviser, however, issued a statement that blamed Obama.
“This bill failed because Barack Obama and the Democrats put politics ahead of country,” McCain senior policy adviser Doug Holtz-Eakin said.
30 Sep 08 McCain Fundamentally Wrong
No wonder nobody in his own party is listening to McCain about the bailout. You could fill a book with what he doesn’t know about the economy.
26 Sep 08 Wall Street to McCain: Drop Dead
John McCain played dice with the economic future of our country yesterday, and contributed nothing other than confusion. Excessive deregulation of the financial industry got us into this mess, and one of the key features of the surprise plan McCain supports is more deregulation. James Pethokoukis at US News published a Wall Street reaction to the McCain bailout negotiations shennanigans.
US News link:
http://www.usnews.com/blogs/capital-commerce/2008/9/26/wall-street-to-gop-drop-dead.html
I am a huge Reagan fan and admirer.I have voted GOP every election since 1976. Until now. Today. September 25, 2008. As soon as I finish this email I am going to try and get my $1000 McCain/Palin credit card donation back as I will not be voting GOP this year after watching this circus and the theatres passing as leadership displayed by the GOP. I am embarrassed to have been an erstwhile supporter of this gaggle of self-serving jerks. I hope the GOP lose their asses come November. They shall deserve it.
