A Bunch of Whiners?

Amity Shlaes says Phil Gramm is right, people really are whiners. This annoys me. Comments below:

Phil Gramm Is Right, by Amity Shlaes, Commentary, Washington Post: ..Phil Gramm ... is McCain's most senior economic adviser.. Now, however, Gramm faces political exile because he made the mistake of telling the truth.

What prompted the abrupt demotion? The short answer is what might be called Campaign Econ. Campaign Econ says the American economy is a certain way because Americans think it is. Campaign Econ competes with real economics and often wins -- with damage that extends way beyond, say, the political career of either Phil Gramm or John McCain.

So people are irrational in their beliefs? Must be how we got Bush as president. Anyway:

Consider what happened this week. While speaking with the Washington Times, Gramm said that the country was not in a true recession but a "mental recession." He also said, "We have sort of become a nation of whiners" and "You just hear this constant whining..."

Gramm was right about the recession and stood by his recession comments on Thursday. A recession is two consecutive quarters in which the economy shrinks, and last quarter it grew. But no matter. Voters feel they are in a recession, and so they are, at least according to Campaign Econ. ad_icon

She doesn't know what she is talking about, or she is being intentionally misleading. That's not how a recession is defined. But you don't have to believe me, here's the NBER - the people who formally date recessions:

Q: The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER's recession dating procedure?

A: Most of the recessions identified by our procedures do consist of two or more quarters of declining real GDP, but not all of them. ... Our procedure differs from the two-quarter rule in a number of ways. First, we consider the depth as well as the duration of the decline in economic activity. Recall that our definition includes the phrase, "a significant decline in economic activity." Second, we use a broader array of indicators than just real GDP. One reason for this is that the GDP data are subject to considerable revision. Third, we use monthly indicators to arrive at a monthly chronology.

Q: Could you give an example illustrating this point?

A: On July 31, 2002, the Bureau of Economic Analysis released revised figures for gross domestic product that showed three quarters of negative growth in 2001-quarters 1, 2 and 3-where previously the data had shown only quarter 3 as negative. This revision shows why the committee does not rely on a simple rule of thumb such as two consecutive quarters of negative growth, nor relies on GDP data alone, in making its determinations, but rather looks at a broader array of statistics. In November 2001, the ... two-quarter-decline rule of thumb would not have allowed the declaration of the recession... It was not until eight months later that revisions in the GDP data showed declining real GDP for the first, second, and third quarters of 2001.

Back to the article which, I hope you can see, is based upon a false premise due to her apparent lack of understanding of how recessions are dated. (I would have thought she'd know this claim isn't right, it's been written about so much most people who write about these issues know the NBER procedure by now, so there's a chance this is an intentional deception. If it's not intentional, if she doesn't know how recessions are dated, then she has no business writing about it.) Her claim is that because there hasn't been two consecutive declines in GNP, the economy can't be having problems. Therefore, people are nothing but whiners.

She says you can't tell people the truth, that they really are nothing but whiners, because it hurts their feelings:

Gramm's second sin was political. Calling voters whiners is to shame them. ... Campaign Econ is unabashedly populist, and to seek to elicit shame is regarded as unpardonably elitist. ...

Calling someone who has just been laid off a whiner doesn't shame them, it makes them mad. And it should.

Now she's going to tell us about the problems that don't exist:

Campaign Econ is certainly understandable. Gas prices are ruining vacation plans and killing businesses. Many Americans have lost or are about to lose their homes... inflation plagues the country. The weak dollar is altering our everyday calculations. For many, this is not a happy summer.

But don't talk about that unhappiness - you'll be called a whiner!:

Still, to liken the current moment to the Great Depression, or even the early 1980s, as Campaign Economists have, is to whine, just as Gramm said. ... The country approached double-digit unemployment in the early 1980s. This week, even as McCain was trying to talk his campaign past Gramm's comments, joblessness stood at a historically modest 5.5 percent.

If you look at the NBER definition, you will see that they look at employment and personal income as part of the dating procedure. How have those been doing? How's the employment to population ratio looking these days? Cherry picking a single statistic - unemployment - to make a case is unconvincing, especially when other labor market indicators tell a very different story.

Next, the standard blame the government for any problems that might occur. The press and politicians convince people of problems that aren't really there (they just decide one day, out of the blue, to start saying the economy is in trouble), then the evil government responds:

And Campaign Econ has costs. The first is that talk of a downturn -- or "mental recession," as Gramm put -- can itself generate a downturn. Keynesian economists say this is so because consumer spending slows when people are afraid. But there's also a non-Keynesian dynamic. Grumbling leads to costly government rescues that scare markets and slow growth.

Yes, it's wrong for government to step in and try to help all the whiners that lose their jobs in a downturn. They and their families should suffer through whatever problems they might encounter since conservatives think that helping them might slow economic growth (even though there's no evidence that slower economic grwoth is a problem we should worry about).

Oh, I forgot, there is no downturn, only the possibility of one due to evil government's support of Fannie and Freddie:

[A]s evidenced by the plummeting prices of Fannie Mae and Freddie Mac shares, serious trouble may be closer than we think. The plunging stock of the government-sponsored mortgage companies reminds us that those entities urgently require restructuring. Wall Street figures and the Senate Finance Committee ... are already talking about how to structure a bailout. But this task is about stopping recession, not luxuriating in it.

I guess it's okay to whine about the possibility of a recession if you can somehow cast it as a problem with government.

The next part is no surprise. She can't write a column without taking a swipe at Social Security and Medicare.

Social Security and Medicare also need rewriting -- and Gramm put forth one of the better proposals on Social Security in the 1990s.

How does Gramm's proposal in the 1990s relate to people whining about the non-existent problems she just identified?

So here's here solution:

In short, to fix it all, we need a frank conversation about the economy. McCain, in fact, inaugurated one back in 2006 when he gave a speech that was downright Gramm-like at the Economic Club of New York.

To "fix it all"? But I thought people were whining about nothing? Oh, I see, to fix it all we need to fix entitlements:

In that speech, McCain said that on entitlements, hard choices were necessary. He concluded: "Any politician who tells you otherwise, Democrat or Republican, is lying."

This was McCain at his best. Many voters knew it, too.

Yeah, the voters knew that was McCain at his best - and they realized if that was his best there wasn't much substance there - and they either moved on to support other candidates, or held their nose and supported McCain (some even write columns).

More on the solution:

The way to strengthen the economy right now is to elect leaders who dare to talk about problems in precise and even technical terms -- and then act on them. McCain has that capacity, but only if he can transcend Campaign Econ.

Precise, technical terms like knowing the definition of a recession? First-rate analysis of the economics of a gas tax holiday? Honest presentations about deficit reduction plans? Things like that would be nice, but as we saw from the whiner comment - a very technical and precise term - I'm afraid we won't get that from McCain's team.

You see, it's okay to whine about Social Security based upon deceptive presentations of its financial state or to whine about social programs generally, it's okay to whine about anything the government does to try to help people having troubles due to the state of the economy, it's also okay to whine about the liberal press misleading people, and it's okay to whine incessantly if anyone so much as thinks about making taxes more progressive.

But if you have lost your health insurance, had your wages stagnate, your retirement program at work eliminated or scaled back, if you are worried about job security or have been forced to look for a new job as the economy retools for the global age, if you are worried about how gas prices, food costs, and other price increases might impact your budget and have seen the value of your house plunge as those around you get into trouble, if you so much as dare to speak up about any of these or other problems, then you are nothing but a whiner.

Buck up, common folks, the rich people in the Republican party are doing just fine, thank you very much, and they really don't want to hear whining from the masses.

Update: Via Brad DeLong:

McCain Throws Phil Gramm Off the Train/Under the Bus/Over the Side:

Think Progress: Holtz-Eakin: Phil Gramm Is No Longer ‘Giving Advice To Senator McCain’» Since Thursday, Sen. John McCain’s (R-AZ) presidential campaign has been in damage control mode, attempting to distance itself from top economic adviser Phil Gramm’s belief that America is “a nation of whiners” that is only going through a “mental recession.” “Sen. Graham and I, as I said, we have a total disagreement on whether Americans are whiners or not,” McCain told reporters yesterday.

Appearing on PBS’s Nightly Business Report last night, McCain’s senior policy adviser, Douglas Holtz-Eakin, claimed that because of the comments, Gramm would no longer be giving McCain advice:

GERSH: Is Senator Gramm still giving advice to Senator McCain?

HOLTZ-EAKIN: No.

GERSH: No.

HOLTZ-EAKIN: At — I haven’t spoken to Senator Gramm since the comments took place, and I’m not expecting to...

Comments

[Barkley Rosser]

Yes, this column by Shlaes is one of the most moronic I have seen in some time. Employment has been declining all year, and so this means more people are getting laid off than are getting hired. We know that getting laid off is one of the most depressing events there is, beaten only by things like having a spouse die or getting thrown in jail. So, even though GDP is rising, the decline in employment is without question something that will lower peoples' happiness levels, and calling them whiners is simply outrageous.

Apparently Shlaes made these remarks at a conference at the Mercatus Center that was sponsored partly by the "Texas Policy Forum," which just happens to be headed by Wendy Gramm. Scam City I would say, although I guess we cannot say anything bad about W.G. here.

[Marie]

Let them eat cake... (it is after all, almost July 14)

[anne]

Knowing who Amity Shlaes is, and how much influence she has is important. She is a writer who has entry at any time to the Wall Street Journal or Chicago Tribune, or Council of Foreign Relations publications. Where the attempt by Joseph Stiglitz and Linda Bilmes to set down proper costs of the war in Iraq was quite ignored by economists and the New York Times book review, Shlaes was able to widely publish a diminishing review.

Beyond this, Shlaes has long been busily re-writing the history of the New Deal successfully enough that her startlingly deceptive accounts dominate casual Google browsing.

[Bruce Wilder]

A fine rant, Professor.

Here's the Post's identification:
Amity Shlaes is a senior fellow in economic history at the Council on Foreign Relations and the author of "The Forgotten Man." She recently spoke at a meeting hosted by the Mercatus Center and the Texas Public Policy Foundation, which is chaired by Wendy Gramm, wife of Phil Gramm.

They might have mentioned her early career as member of the Wall St. Journal's editorial board.

"The Forgotten Man" is a dreadful hit piece on the New Deal. On Amazon, the first customer review is by Newt Gingrich, who, of course, gives the book five stars.

Amity Shlaes is an unapologetic class warrior, serving in the plutocrat's royalist army. McCain and, even more, Gramm are her kind of guys.

[David]

While I don't agree with Amity Shlaes or Phil Gramm, I do think the reaction to rising gas prices isn't entirely rational. And if we see perception issues there, might it also apply in other areas? Surely that would have consequences for the economy then.

Examples are easy to find: people selling semi-new SUVs at a fraction of the purchasing price, just to spend yet again more on a new, efficient car. All to save $1,000/year on gas. Maybe they expect gas prices to increase significantly, or to drive their new cars for 20 years, but I think it's far more likely that the one-time purchase price is just less of a downer than continuously paying more at the gas station. (the higher payments of course end up costing more than the money saved, I'm not making the example because the saving isn't significant - I'm making it because there is no saving)

People drive for miles to get to a gas station where gas is a few cents cheaper, often waiting in long lines. They waste so much gas on this, it'd have been cheaper to buy it at a nearby station that charges more.

The New York Times had a lengthy article the other day about people trying to stretch their tanks as far as possible, so they'd have to tank less frequently. There's no reason to do this, especially not because driving on a low tank can damage some parts. Some guy faked running out of gas to receive a courtesy gallon. They caught him when he requested that gallon for the third time, with his third car. So there's someone who pays insurance for three cars, yet went through great lengths to cheat some service out of $12.

I think we can't ignore the effect that news coverage has on the perception of the market. Some financial institution might be in great shape, but if people start to think it has liquidity issues and they act on it, the institution really will be in trouble. It's like the ad campaigns that point out how many people don't smoke and change the perception of the social norm thereby leading to fewer people smoking.

Is it unreasonable to think that this could be happening to the entire economy? Maybe not to the point where it causes a recession by itself, but at least enough to make it worse?

[RK]

Poor Phil, UBS Vice Chairman, he was born with a negative $40 billion silver foot in his mouth.

[2slugbaits]

Since John McCain (at least publicly) disavowed Gramm's comments, does this mean that Shlaes also disagrees with McCain? Or are the GOP hacks trying to have it both ways...disagree with Gramm's comment that voters are whiners while still trying to maintain that things really aren't that bad afterall? Geez....and they accused Clinton of being a triangulator!

[2slugbaits]

Sounds to me like Phil Gramm doesn't know Dickie Flatts.

[tom]

Hey Mark, quit whining! You are just proving Phil Gramm's point.

[Bruce Wilder]

David, I don't know that the behavior is "irrational" or not, but it is common for people to want the very short-run marginal cost of their choices to be as near to zero as possible. It is the whole point of a lot of consumer durable investments and flatly monthly rates for services (e.g. internet access).

If trading in the SUV is "rational", it implies a lot of consumer surplus is at stake in being able to make marginal trips.

[dd]

The wealthy are doing plenty of whining and Phil, a UBS VP, no doubt is getting an earful:

Wealthy Americans Under Scrutiny in UBS Case
"Under pressure from the authorities, UBS is considering whether to divulge the names of up to 20,000 of its well-heeled American clients, according to people close to the inquiry, a step that would have once been unthinkable to Swiss bankers, whose traditions of secrecy date to the Middle Ages.
Federal investigators believe some of the clients may have used offshore accounts at UBS to hide as much as $20 billion in assets from the Internal Revenue Service. Doing so may have enabled these people to dodge at least $300 million in federal taxes on income from those assets, according to a government official connected with the investigation."
http://www.nytimes.com/2008/06/06/business/worldbusiness/06tax.html?scp=1&sq=gramm+and+wealthy+americans&st=nyt

Then there's the whining by Blackstone's Peterson as he stood in front of a taxpayer subsidized portrait of himself whining about taxes while touting his tax avoidance foundation dedicated to whining about taxes.
http://www.bloomberg.com/apps/news?pid=20601088&sid=aSi411UWhgkg&refer=home

[OhNoNotAgain]

"Maybe they expect gas prices to increase significantly"

Yah think ? :-)

I would say that preparing for the future by purchasing a fuel efficient car *now* when you have the economic resources to do so instead of waiting until some point in the future when it is possible that you might *not* have these same resources, is perfectly rational. It's kind of like how the EU has been moving towards renewables and conservation for some time now. In the short-term it looks silly, but in the long-term it's proving to be brilliant.

Your post summarizes quite nicely what is wrong with the thinking in this country. If you can't think beyond next month, then you're pretty much screwed as a society if there's any major shocks to your way of life.

[Icarus]

You guys are great at dismissing any idea which doesn't fly with the boring redistributionist ethic.

Americans buy SUV's, and complain about gas. Americans are getting obese every day, and complain about food prices. Americans don't read, or force their kids to study, and complain about foreign competition. Americans tolerate and serve their Empire, and complain about the French or the Chinese ruining their game. Americans give nuclear technology to India, yet complain about Iran pursuing such fields.

The model is clear...Americans are about as deserving of our sympathy as the crappy cars GM/Ford cranked out to get into this mess.

Perhaps what Gramm was kind of referring to is the collective need to stop whining, stop getting fat, start learning something, and actually compete. People around the globe with much less of a head start seem to be able to compete well in the US.

Progressives in the US never want to hear this. They think citizens can do no wrong. Everything is someone else's fault. And...this is why we're moving further to the right (including obama). Personal responsibility is not a choice...it is an ethic we must embrace.

[Dr. Steven J. Balassi]

I would not say we are “whiners”; we just want things to get better. It seems like American’s are never satisfied. This drive is what leads us to be innovative leaders. We tend to not understand how bad it can be in other countries. Can you imagine what it would be like if we had an unemployment rate of 40%? Sometimes we can be a bit spoiled.

[ken melvin]

If population growth adds 1.5 million/yr to the work force and employment is decreasing, the net's bad. Phil can call it as he will, but sounds like another 2million per yr unemployed to me.

[Bupa]

Icarus nice rant except for the first and last paragraph.

Some progressives who spend some part of the year in the US like me agree with you that Americans should be more environmentally aware, stop driving SUVs, insulate their houses, produce less garbage, be more frugal, eat less and healthier food, educate their children to world class standards in every major subject matter, and fit in better with the world that they live in.

A more redistributive system, like Europe, is not inconsistent with any of those things.

[robertdfeinman]

Some background from Media Transparency

Another "pundit" who owns her career to the funding of Charles Koch, Richard Scaife and the rest of the libertarian propaganda underground.

Every time a person like this with no credentials or expertise gets published in a place like WaPo, champaign glasses click at the plutocrat's estates.

I'll say it again, until the power of the super wealthy is curbed by a series of progressive tax and campaign funding changes we will continue to see self-serving propaganda passed off as serious thought.

As Christopher Buckley said: "You can fool some of the people some of the time - and those are the ones you need to focus on."

[anne]

The Council of Foreign Relations has long been wildly influential and Amity Shlaes writing for Council publications is important to be aware of. No matter the coming President, Council members will be highly influential, directly and indirectly, which is why I find reason to think there will be relatively little change in foreign policy direction.

[mik]

the rich people in the Republican party are doing just fine, thank you very much,

As opposed to probably more numerous rich people in Dems party, who are suffering badly, having to cut down on they Gulfstream trips.

[anne]

Also, there are any number of reasons a person may be relatively heavy but simply eating too much may have nothing to do with being heavy for many people. Many people confront a situation where the most affordable of foods are most fattening and poorest nutritionally. Many poorer people are heavy because of diets that are "necessary" for them. That we subsidize corn and not spinach has a lot to do with what many people eat.

[mik]

Dr. Steven J. Balassi says...

Can you imagine what it would be like if we had an unemployment rate of 40%?

Wow, that proves it.
Can you imagine eating tree bark for breakfast, Dr.?
Don't you feel better already?
Must not we all?

[donna]

Let the Republicans keep whining about how those who complain about our economic state are just whining. I'm sure it will continue to make them very popular.

Fucking idiots.

[anne]

"As opposed to probably more numerous rich people in Dems party, who are suffering badly, having to cut down on their Gulfstream trips."

Please explain what this means. A reference would be ever so helpful, along with an explanation.

[Bupa]

anne stay away from that high fructose corn syrup. the stuff is in everthing from ketchup to soft drinks. it should be outlawed.

[hari]

Find this discussion unbelievable in a hegemonic super power of a country that wants to destroy all we've struggled to build since end of WWII - in terms of multilateral conventions and treaties to safeguard humanity from ravages of war and starvation and so on - and now whining about stupid newspaper articles - what for?

Do the Chinese or Indians care about your bloody domestic nonsense? Do the Russians and French....?

I am really sorry...you've reached a pathetic stage of mental condition which is really difficult to appreciate.

PS. The Council of Foregin Relations is the historical bastion of American power and its influence in the world.
Now headed by none other than Richard Haas - former planning director of Foggy Bottom.

[anne]

Please explain how moving to the right is moving to personal responsibility. What does a Presidential candidate's moving to the right have to do with personal responsibility? With whose personal responsibility? Just who is it that needs to be made to be more personally responsible and how do we make any such person more responsible?

Please do explain, as we all move merrily to the right with our candidates. I must be wrong, but I thought we had moved wildly to the right these last 8 years, but no....

[mik]

Icarus says...

Americans are about as deserving of our sympathy as the crappy cars GM/Ford cranked out to get into this mess.

Did you repay to US taxpayer all the educational expenses that were wasted on you?

[JV]

Gosh, I did not think that people still used the reference "The Masses" anymore. Brings back memories of the 70's and that little red book. Of course it is 2008 now and the wall came down 18 years ago and Mao died 32 years ago.

Phil Gramm is right. Too many people whine rather than get off their behinds and do something about it. It sure is easy to blame the evil Republicans for holding their boot heel to the neck of the masses -- how silly, how dated, how ridiculous.

Americans run America at all levels and from all parties -- there are as many Democrats who own businesses as Republicans from mom & pop stores to Ted Turner and Soros at the top.

Hope that some new president will save you from the choices you made in the past and the crap you buy from China and the oil you import because you don't want drilling here or the SUV you drive, or the air conditioning you run when it is above 75 and on and on are the choices we all made is not a plan. Now those choices are not free anymore. Time to pay for being grasshoppers.

Silliness about Republicans causing all this hardship and treading on poor old us masses is defeatist drivel that will not benefit this nation in any way whatsoever -- no mater who is president.

Sheesh.

[chris]

Amity Shales is an unreconstructed reactionary all round. A disgusting woman who has no business having any podium from which to speak. Both Graham and she deserve to be condemned to live on a US minimum wage for the rest of their lives.

[mik]

hari says...

Do the Chinese or Indians care about your bloody domestic nonsense? Do the Russians and French....?

I don't know if they care or not, why should I be concerned with that?.

So what do you do popping up on this board pretty much dedicated to the USA economics and politics?

I bet there are not many Americans inserting themselves on boards discussing your country, whatever it is, econ and politics.

Got too much time on your hands?

[Bupa]

go to bed hari you big grump. it's almost midnight. i'm just to the south of you in brussels. and stay away from that high fructose corn syrup when you visit america,

http://en.wikipedia.org/wiki/High-fructose_corn_syrup

[mik]

JV says...

Phil Gramm is right. Too many people whine rather than get off their behinds and do something about it.

But luckily we've got you, and other geniuses like you, who will save us, poor dumbbell suckers.

[mik]

robertdfeinman says...

Another "pundit" who owns her career to the funding of Charles Koch, Richard Scaife and the rest of the libertarian propaganda underground.

Why conspiracy explanation is needed when truth is apparent:

chris says..

Amity Shales is an unreconstructed reactionary all round. A disgusting woman who has no business having any podium from which to speak.

[MG]

I never understood why McCain wanted Gramm associated with his campaign since he's pretty much the poster child for financial deregulation. Given the current mess Wall St. is in, McCain was probably looking for an excuse to dump him. Schlaes is just providing him with a little cover fire for "the base."

[save_the_rustbelt]

Amity Shlaes is a legend in her own mind.

She should spend a week in Flint Michigan.

[pgl]

Wow - it was a year ago where I noted her nutty book on the Great Depression. Just had to link to your post and my old one over at Angrybear. Shlaes is a certified wingnut.

[Bruce Wilder]

"I never understood why McCain wanted Gramm associated with his campaign . . . "

If you accept that McCain is in it to lose, it is not hard to understand.

If you understand that the Right is living in a fantasy world of its own making, where hacks like Amity Schlaes and Jonah Goldberg write important books, a con artist like Phil Gramm is an important economist, the Surge is Working™, Bush has strengthened the economy and built America a better place in the world, and Obama is a secret Muslim, then the whole thing is positively easy to understand. Phil Gramm as an advisor is not a blunder; it is just ever so slightly overreaching in our Media environment, where we are all made to share the manufactured reality, where Gramm or Schlaes are not hacks-gone-bonkers.

[donna]

I don't think McCain is in it to lose. I hope to God he will lose, though. We sure can't afford 4 more years of this nonsense.

[ken melvin]

Gramm ran for president once, you can look it up. So did Orin Hatch.

[Bruce Wilder]

Many of my friends think political analysis is fantasizing about how massive numbers of people suddenly respond positively and enthusiastically to a slogan or frame, which just happens to correspond exactly with their own views. This is harmless self-deception, when confined to the cocktail hour at home among friends. U.S. Senators are notoriously unable to so contain such self-deception, but most U.S. Senators do not also have the charisma of a dead fish.

[Bruce Wilder]

donna: "I don't think McCain is in it to lose. I hope to God he will lose, though. We sure can't afford 4 more years of this nonsense."

I'm pretty certain that McCain will lose. There has not been a worse major Party nominee or campaign in my political lifetime. McGovern was a better candidate, and McGovern was a terrible candidate (though he might have made an OK President).

But, the nonsense won't stop until we find a way to institute some major Media reform.

[Vicente Fox]

But, the nonsense won't stop until we find a way to institute some major Media reform.

Bingo! Give that man a cigar!

[Lord]

The problem I see is the discussion is not even about the appropriate things. We are talking about people here. It is not gdp but gdp per capita that matters to people and that has been negative for a while. It is not jobs created or lost but jobs created or lost over population growth. It is not inflation but real wages that matter and have fallen. It is not about how wealthy we are but how much of it is disappearing in the market and real estate. When one doesn't focus on the pertinent measures no wonder one ends up cluelessness.

[Movie Guy]

God, Mark. Why didn't you just tell her to fuck off? It would have saved time.

These people deserve no air time or the slightest recognition...even on the blogs.

Screw them.

Meanwhile, someone on the econ blogs needs to tear Gramm apart on his role in keeping derivatives' operations in the dark.

[Francois]

With such an underwhelming background, why does Amity Schlaes get any space in the WaPo?

This episode tells us as much about the Washington Post than about Schlaes herself.

Undoing Mainstream Media concentration is long overdue. But that suppose politicians with kahunas, an oxymoron of the first magnitude.

[montag]

I think Gramm missed the point: the people at large don't think we are in a recession; we do not talk and think that way. Discussions about the existence of a recession are in the realm of the econmists.

What we feel is that we are in a run-away train, having gone through a train yard of catastrophes, and now on a clear line to disaster.
Whether one wishes to call it a "recession" is academic.

Besides this distinction, I seem to have a hazy recall of econ 101 where the members of an economy made choices based upon what they "believed" and what they "valued".
If Gramm holds that the perceptions of the individuals who make up an economy are somehow deleterious to that economy, it seems he might be in favor of a more authoritarian economic system.

[ken melvin]

Let me guess what the connection to the WaPo is.

[Cynthia]

Bruce (Wilder) writes,

"If you accept that McCain is in it to lose,..."

I'm with Bruce on this one, as I am on most things. He's just much better at saying such things than I am...

I've got a sneaking suspicion that Repubs would rather not win this upcoming presidential election, otherwise they wouldn't be running such a lamebrain-candidate as McCain. Plus if they were really out to beat Obama, they'd already be out in full force swiftboating the hell out of Obama!

Rupubs, after all, would rather have Dems left holding the bag when all the sh_t generated by the Bushies hits the fan, whether this sh_t pertains to geopolitics or the economy.** Then they'll be free to turn around and accuse Dems of causing all this sh_t, thus freeing themselves of any wrongdoing.

**mixed metaphor alert!

[H Sloboda]

I guess if you are wealthy enough to have more than one home, losing one doesn't cause a major problem or result in heartache.

"Campaign Econ is certainly understandable. Gas prices are ruining vacation plans and killing businesses. Many Americans have lost or are about to lose their homes... inflation plagues the country. The weak dollar is altering our everyday calculations. For many, this is not a happy summer. "

But what if that is your only home? Reality is that losing one's home also trashes one's credit file making it pretty much impossible to even rent a place, so being homeless would perhaps cause a person to "whine" and could make that person unhappy for more than just the summer. It takes years to rebuild your credit.

If you look at folks in the lowest income brackets, an increase in gas prices from 2.50 to 4.20 per gallon is more than a 50% increase in their expenses and could be seriously crimping their budgets. I know of people who gave up their jobs because they weren't making enough to cover the commuting costs and had to find a lower paying job on the bus route. In my community where there is no bus route, the alternatives are not good. This scenario is a little more than an alteration in "everyday calculations". Republicans have no concern for the little folks that make up the bulk of this country's population.

I work in healthcare and am seeing older folks who don't yet qualify for Medicare and poor working folks with no insurance being sent home to die of treatable diseases, because they can't afford care. This has never happened in the past. We need to do something now before this gets worse!!

[cm]

H Sloboda: Please consider Maslow's "hierarchy of needs" (physiological, safety, social, esteem, self-actualization) or the "4S" (?) model (survival, stability, success, significance). Once anybody is beyond the point of worrying about daily survival and in some "comfort zone", it becomes a matter of "self image", which in most cases contains however defined elements of "prestige" - be it material belongings, stature at work, stature in social circles, etc. And there is little more damaging that can happen (from an individual perspective) than being pushed down the ladder of social success, even more so if not everybody from your "reference group" suffers the same.

Of course, the individual perspective is often starkly different from the big-picture perspective, and there are absolute standards - going from "success" to "stability" should probably be preferable to going from "stability" to "survival".

I don't mean to be apologetic. And in accordance with this, there are "whiners" at every level. The whining is probably the louder the more you are up the ladder.

[John]

http://www.imdb.com/title/tt0103850/

I'm reminded of one of the songs of rightwing folksinger Bob Roberts: "Some people will have / Some simply will not / But they'll complain and complain and complain and complain and complain..."

[Icarus]

Personal Responsibility requires that we take ownerhship, as much as possible, for our own lives. Children cost an average of $150,000 over a lifetime...don't have them till you can afford them, and if you can't, use that money for retirement.
It requires that we eat only what we need, and not to the level of obesity. We don't blame the supply chain of fructose or any other agro business. The bottom line is that you can shut your mouth after the 3000 calories you need in a given day. There's no excuse for eating double that.

Personal responsibility means you take the job you can get, and live accordingly. It means you plan your move up the wage ladder...systematically, perhaps slowly.

Personal responsibility means you don't abandon your children, physically abuse anyone, or sign documents you don't read, including phone contracts and mortgages.

We can blame govt, blame big business, blame the educational system, blame hospitals...blame the tooth fairy. The bottom line is that the best strategy to lead a successful life is to move beyond any of those institutions, and forge a rational plan despite them.

[Icarus]

MIK,

Your assumption is that I was educated in the US...and hence have to pay back something.

That said...my absurd tax rate which I contribute to the social coffers more than pay for any pathetic K-12 education I could have received. At $10,000/year, for 13 years, I'd have to throw in around $100k to equalize costs. I do that every 15-20 months, however hard I try to avoid such payments.

This is another area where we should have the choice to privatize services.

[Icarus]

Lord,

Is this not a function of the very greed which fueled this situatoin?

Every mortgage signed, and now in jeapordy, was an exercise in profligacy and irresponsibility. Yes the banks must suffer...but, an individual signed those papers, and if they didn't have an awareness of the commitment, it's their fault for signing.

Every SUV getting 12 mgg...what is that? Every 300 pound person waddling through life? Every quasi literate child who's raised with no discipline? Every deadbeat dad?

There is something horribly "american" about these social maladies, and many in the rest of the world cheer profusely as we see middle class life in the US wither away. This middle class has been horrible for the globe...wasting energy, living a commodity-obsessed existance, growing fat, and ignorant.

It's not "let them eat cake"...it's more..."shoot the damn thing and put it out of its misery".

[H Sloboda]

CM

I guess I've always lived at "Survival" levels. I have a roof over my head, basic transport, food and some modest coverage of my medical care. I have a small savings and am trying to enlarge that for my retirement, 15 years from now. I have few "extras". Most of the people in my small town fall into my category as well. They do not drive big SUV's. If they drive a truck its because they need it for a contracting type job.

Not all Americans are living at a level where they can absorb higher gas costs or a medical disaster. The assumption that we can is arrogant in the extreme. There is currently 9% unemployment in my state (Michigan) and folks who live at my level are hurting. Republican economics do not help us. You don't say what comes below "Survival"? "Shut up and die" level?

I work in cancer care and am truthfully seeing people falling through the cracks. In the past, there were organizations and individuals who would pick up the costs of care for the working poor, or folks who took early retirement and foolishly figured they would "chance" not having health coverage for a few years until Medicare kicked in. The support systems we used to see seem to have evaporated recently. I have seen numerous cases where a retired man diagnosed with a treatable cancer will elect to go home on hospice rather than rock the financial boat and risk letting his wife end up in poverty. I have seen working folks with no coverage die of surgically curable disease. This is shameful to us as a nation. To have the medical expertise to prevent early death and a painful demise and reserve it only for the wealthy. Cancer can be a rough end, I'd love to see a national health plan in place. Surely even you agree that this is "Survival" level economics?

[Icarus]

H Sloboda,

There will always be sad stories in a world of scarcity. Medical treatments, if expensive, may not trickle down to all the globe's population, whether Michigan, or a shanty town in Mumbai. Niether person are more deserving than the other...it's not about what you 'deserve'...it's about what you can afford, and what your society socially insures.

Many people in Michigan need to move. Auto is dying...learn some other skillset. And do that, before you have a family. This is the healing lesson we need to spread. Unemployment may be high in Michigan (as it should be)...but, other cities like Nashville, Atlanta, Calgary...all have better prospects.

Everyone's personal story has a sequence of choices, and some could/should have been better. For every struggling retiree you see, ask if they had a child they couldn't afford, or did they engage in behavior (like cigarettes) they can't medically afford? A child costs $150k...there's many people's retirement money.

[Bupa]

Icarus the men in white coats are coming to lock you in a rubber room. You've turned a post about whining into a thread about manic ranting.

In the world you would like only the rich would be allowed to have children.

The gullible who have been swindled by crooks will be thrown in debtor prison till the crooks run out of gullible folks to swindle.

Like your name-sake you are flying too close to the sun. The wax is beginning to melt. Soon you will plummet into the sea.

[Icarus]

Bupa,

No, I think there are greater heights, but...shouldn't I?

No, it should not be a world where only the rich have children...but, it should be a world where people who have children are financially and emotionally prepared. Don't you agree?
Or, is a handout strategy more your terrestrial game?

The gullible also loved the asset price increases, and the low payments. They weren't exactly swindled...they came to the crooks, hand open, pen ready, and greed inspired.

Sometimes, that behavior leads to a crash. Many of us didn't sign those rapacious papers, and now want to see home prices fall to their market levels...and those that inflated those prices out of our collective way.

Keep in mind that all those people signing those ludicrous mortgages kept rational people out. They actually hurt others...there's more to empathy than commisserating with the irresponsible.

[cm]

"Auto is dying...learn some other skillset. And do that, before you have a family."

Well I think this statement speaks for itself. Pure bullshit.

[Icarus]

Really CM?

How secure would you feel, if you were a young blue collar auto worker, perhaps pregnant...hoping the US auto industry rebounds, and actually makes a car which secures your future?

Learn blackjack buddy...

[Bupa]

Well Icarus, I guess it is time for you to slap a Phil Gramm for President bumper-sticker on the back of your Audi.

You won't be the only one.

Fred Barnes and some folks at Fox news are with you:

http://thinkprogress.org/2008/07/11/barnes-gramm-whining/

Last night on Fox News’s Special Report, the “All-Star panel” discussed top McCain adviser Phill Gramm’s recent controversial remarks that regarding the economy, the U.S. has become a “nation of whiners” and the U.S. is merely in a “mental recession.”

“All-Star” and Weekly Standard executive editor Fred Barnes wholeheartedly endorsed Gramm’s assessment, saying he was giving “straight talk” and that “America has become a nation of whiners.” But Barnes took Gramm one step further, acknowledging the economy is “weak,” but that Americans are “whining all the way through it”:

BARNES: He wasn’t wrong to say that. You know what this was? This was straight talk that McCain always says he’s giving it, and this is exactly what Phil Gramm did. He gave straight talk…They claim about how bad the economy is–and it’s weak, no question about that. …They’re whining all the way through it.

[cm]

H Sloboda: As I said, I did not mean to be apologetic. I can understand that you are not in the mood for lofty philosophical waxing. I agree that many have physical survival and the survival of a semblance of hope on their mind.

Myself, I would think I'm at the "stability" level (for the time being), but my hopes are not running too high either.

[Bupa]

from the same clip:

"Sadly, Barnes wasn’t the first Fox News personality to defend Gramm’s comments yesterday. And this isn’t the first time Barnes has shown a complete lack of understanding of the world outside his high society.

During Fox News’s Democratic primary coverage earlier this year, Barnes described “working class” voters as a euphemism because “it’s kind of mean to say ‘lower class.’ It’s as simple as that.” He explained that the “lower class” are people of low “social class.”

[Icarus]

Bupa,

Put aside my Audi...let's look at the likely future for the US middle class.

There will be continued labor arbitage across the globe, and that will change the wage rates in developed societies.

The key to having a secure life will have more to do with the skill sets you offer, and not the social contract you once depended upon. Capital can move production to more hospitable locations, and, with the supply of labor at a historic high, low end skills are easily replaceable.

The US middle class lived through a unique era of prosperity after WW2, and it is unsustainable. They rested their consumerist lifestlyes on the spoils of empire, and the profligacy of obese living. It's over. There are new entrants who will work harder, study more, and employ better strategy.
This is the reality.

Alerting the US middle class to their whines is a method to wake them up. No longer will a quasi-education high school dropout have some nation-given right to a living which generates enough income to raise a family in a home, with 2 cars. That's the 1950's reality which is over.

Now, if you have that level of skill...yes, you do have to stop whining, and wake up. The world is competing with you, and you kind of suck.

[anne]

"The world is competing with you, and you kind of suck."
"The world is competing with you, and you kind of suck."
"The world is competing with you, and you kind of suck."

Wow.

[Bupa]

Icarus, very compassionate of you to slap the American working class in the face to wake them up. Perhaps Phill Gramm will hire you as a strategist on his campaign.

For my taste your political philosophy is wanting. It doesn't take into account the fact the playing field is tilted in favor of the extremely wealthy and well connected.

A loser like George Bush is sent to Yale because his daddy and grand-daddy went there. He was mediocre or worse in every endeavor he tried his hand at. He was always bailed out by his daddy and his daddy's friends. Then when he was given the presidency the put a college drop out as his VP to watch over him an make sure he didn't screw up.

Yesterday I said that I "...agree with you that Americans should be more environmentally aware, stop driving SUVs, insulate their houses, produce less garbage, be more frugal, eat less and healthier food, educate their children to world class standards in every major subject matter, and fit in better with the world that they live in.

A more redistributive system, like Europe, is not inconsistent with any of those things."

We need better social safety nets. Every international trade 101 text book admits that there are losers from trade. If we are going to have free trade we need to take care of the losers from free trade. Perhaps you think it is sufficient to slap the losers when they whine. I don't think that is the most effective way to approach the problem.

[cm]

Icarus: I don't feel particularly secure in my current skill set, even though I consider myself highly skilled. I will not be able to build a similarly strong skill set in another specialty. And the one "skill" I'm losing simply with time is that of youthful appearance and gung-ho naivete.

The "bullshit" element in the quote is mostly the implication that people should have done something else because their choice of the past has not worked out, in hindsight.

The truth that you are glossing over in all your presentations is that for the most part, building a "second career" (of the skilled variety) after the first has not worked is generally impossible, at scale. That's true everywhere, not just in the US.

What has "worked" in the US for a while was a conversion to "services", but as we see that also cannot be sustained when the "rest of world" does not give you an endless supply of cheap fuel and consumer products.

[cm]

Icarus: I don't feel particularly secure in my current skill set, even though I consider myself highly skilled. I will not be able to build a similarly strong skill set in another specialty. And the one "skill" I'm losing simply with time is that of youthful appearance and gung-ho naivete.

The "bullshit" element in the quote is mostly the implication that people should have done something else because their choice of the past has not worked out, in hindsight.

The truth that you are glossing over in all your presentations is that for the most part, building a "second career" (of the skilled variety) after the first has not worked is generally impossible, at scale. That's true everywhere, not just in the US.

What has "worked" in the US for a while was a conversion to "services", but as we see that also cannot be sustained when the "rest of world" does not give you an endless supply of cheap fuel and consumer products.

[Icarus]

CM...

Why, o why, can you not acquire another skill?

[Icarus]

Bupa,

But, the american working class has to get ready to compete with other working classes, and not just the wealthy within their own nation. Their real battle is not with Warren Buffet...but with the Infosys employee in Bangalore. And...the competition will be stiff, as new entrants from Brazil, Mexico, Russia, etc...want some of those service jobs.

As for Yale and President Bush...sure. This happens. If you're super wealthy, or politically/culturally connected, entrance for progeny into great universities is easier. But, there is a rational trade off here. Yale wanted Bush...Yale wants those connections. It's good for the university to acquire and maintain such social capital.

Social Capital will always screw the poor...this is the nature of an economy. I don't know if there's anything inherently 'unfair' about this...it's just the reality of power.

Social redistribution in Europe is also cracking, Bupa...give it another decade or two.

The future is in rampant indivudualism. Self reliance, crude market rationality, fractured borders, big jails, small cars, expensive food, and disneyworlds in every nation.

[Icarus]

CM...

If you, or anyone else, truly has the will power to succeed, they can. It does require some sacrifices, and you may not get 8 hours of sleep...but, there is a path.

I have a recent friend who couldn't get work, after being a mortgage broker for the past 4 years. She was unemployed for 6 months...but, used that time to train in dealing blackjack. She now makes $25-30/hour dealing in a local casino...enough to survive quite well. And, she also has enough time off to pursue a master's degree in an area she wants to focus on.
Sure, not everyone can deal blackjack, and not everyone wants to go to grad school...
But, the intention of the anecdote is to suggest that change isn't impossible, and will power is the key. Each of us may arrive at a slightly different plan...but, there is one.

[cm]

Icarus, not getting your 8 hours of sleep, or whatever you individually require, is a sure path to permanent health damage. It should be on your standard list of "unwise choices".

[Icarus]

CM...

In the long run...sure. But, plenty of successful people have to sacrifice that in order to grab that great life. Every medical student, every corporate exec, every attorney with a tough case. It's just part of life.

The 8 hours is simply lower on the priority list than "do what it takes to succeed".

You can prioritize anyway you see fit...but, if you end up on welfare or broke...you may (in hindsight) have to re-evaluate that priority list.

[Francois]

" ken melvin says...

Let me guess what the connection to the WaPo is."

By all means, share your guesses with the rest of us.

[Francois]

H Sloboda wrote:
" Republicans have no concern for the little folks that make up the bulk of this country's population.

I work in healthcare and am seeing older folks who don't yet qualify for Medicare and poor working folks with no insurance being sent home to die of treatable diseases, because they can't afford care. This has never happened in the past. We need to do something now before this gets worse!!"

I also work in healthcare and see the same terrible situations increasing with alarming frequency. Alas, it'll get MUCH worse before it gets better.

Why do I say that?

Because in times of scarcity, (like jobs and money/credit) the natural reaction of pretty much any living specie is an increase in aggressive behavior and hoarding to secure individual survival. Even if we, humans, are more evolved than animals, we fall prey to these same patterns. Only when leadership of the specie enforce a redistribution to ensure survival of the WHOLE clan can we escape those atavisms.

I do not see any sign whatsoever in the actual leadership. Thus, if Senator Gramm think we're whiners, wait until he hears the screams of the desperate and the forsaken.

It'll be quite an enlightening experience, even for someone as obtuse and close-minded as he is.

[Melancholy Korean]

"The future is in rampant indivudualism. Self reliance, crude market rationality, fractured borders, big jails, small cars, expensive food, and disneyworlds in every nation."

Sounds lovely.

"but with the Infosys employee in Bangalore. And...the competition will be stiff, as new entrants from Brazil, Mexico, Russia, etc...want some of those service jobs."

I always thought free trade was just another way for Americans to extend their economic dominance and hegemony. I'm a conservative Republican and that's why I support(ed) free trade. If we have to compete against the smart, starving math geniuses of Infosys who will work for ten cents an hour, twenty-eight hours a day, eight hundred days a year, well... can't trade barriers go up as quickly as they go down? It's one thing for these countries to build our toys and televisions cheaply, but to take away middle class and (gulp) upper-middle class jobs???

Why should American capital be used to finance the destruction of the American way of life? I wouldn't underestimate the backlash against free trade and globalization that the current financial crisis might trigger, from BOTH the left and the right, especially the right, the long-dormant, soon-to-be-awakened, populist and nationalistic right-wing. You see, your assumption is that because a person works hard they should get ahead. No, no, no. That's the rhetoric we feed to the rest of the world to get them to liberalize their markets. If this so-called free market, however, works against our interests, especially the interests of the middle and upper-middles, in the way it screwed the working classes, why do you think Americans would promote, subsidize, or support such policies? Americans are too fat and lazy to win this game, ok, if that's true, and it's probably true, the rational response is to change the game.

[anne]

"Americans are too fat and lazy to win this game, ok, if that's true, and it's probably true...."

"Americans are too fat and lazy to win this game, ok, if that's true, and it's probably true...."

"Americans are too fat and lazy to win this game, ok, if that's true, and it's probably true...."

Hate, hate, hate, hate, hate, hate.

[Icarus]

Melancholy Korean,

A funny post...

But, the error is in labelling capital "american". It is no longer. This capital which you think you have lassoo'd has sprung free, and is looking for the best labor at every price point.
And that labor isn't going to be largely american, now, and in the future.

The Infosys employee doesn't work for 10 cents an hour, and doesn't work 800 days a year...
Their lives are pretty much in synch with typical professional life in a developed nation...and they earn anywhere from $10k US - $$40k US, which is enough for a great 'middle class' life in India. They're not sufferring.

The trade walls you speak of have little resonance. We've seen Lou Dobbs belabor about this topic for years (alongside rants against mexicans)...it's just not that arresting.

The strange irony is that the same dismissal you seek in terms of trade (cancel trade deals which don't help the average american)...is apparent by those who engineer the trade deals...they're willing to disconnect from the US middle class.
There is a sense of dismissal going on...no doubt. But, I think trade will win, and the former US middle class won't.
Their best bet is to stop waiting for any policy change, and embrace a strategy of success within the parameters of modern capitalsim.

[Holly W.]

[I] find this discussion unbelievable in a hegemonic super power of a country that wants to destroy all we've struggled to build since end of WWII - in terms of multilateral conventions and treaties to safeguard humanity from ravages of war and starvation and so on ...

I'm coming in late, but Hari, please don't confuse the actions of the Bush Administration/Republican Congress from 2001 to 2007 with the desires of the general American public. I don't think most Americans want any of those things, regardless of their political position.

I've been startled by the tone of some of the comments on this thread from the non-Americans. I know the US has lost alot of international respect and sympathy since the 2000 election, but it's still a bit shocking to come face to face with the results of that.

[Icarus]

Holly,

Many around the world have a suspicion of the US, including its indolent citizenry, far before the response to US imperialism in the middle east, which was 9/11.

Whether we're discussing Nicaragua, Pakistan, Indonesia, IndoChina, Palestine, or numerous other atrocities, there is a long littany of horror, and compliance by its ignorant, slightly obese, gas guzzling, profligate citizenry.

The bottom line is that watching the middle classes of the US suffer isn't all that arresting to many. In fact, it's probably a great thing, as this group of consumers have lived an untenable existance for a long time.

Perhaps other nations can't fly over the atlantic/pacific and actually battle Empire...but, we can be happy as their population grows slow, fat, ignorant...without healthcare, without needed gasoline, without cheap imports, etc, etc.

There simply are other populations more deserving of empathy and sympathy.

[Patricia Shannon]

Haiku - Easy
copyright Patricia M. Shannon
Nothing is too hard
if you are not the person
who has to do it.

[Patricia Shannon]

Notice that the only people who respond to Icky are fairly new to this blog. The rest of us know that trying to engage him in rational discourse is a waste of time.

[Patricia Shannon]

http://www.sciencedaily.com/releases/2008/07/080707161429.htm

Early-life Nutrition May Be Associated With Adult Intellectual Functioning

ScienceDaily (July 8, 2008) — Adults who had improved nutrition in early childhood may score better on intellectual tests, regardless of the number of years they attended school, according to a new article.
...
Research also suggests that poor nutrition in early life is associated with poor performance on cognitive (thinking, learning and memory) tests in adulthood. "Therefore, both nutrition and early-childhood intellectual enrichment are likely to be important determinants of intellectual functioning in adulthood."

[Icarus]

Patricia,

You've said nothing new on this blog...all you ask for are handouts, crying about some silly waffle house. And, worse, when anyone suggests a better plan, or a more effective method towards material security, you cry for sleep, or scream 'unfair'. It's just sad.

In some situations, certain people in life have a tiny shot at material security, and we should have empathy (and policies to support them).

In other situations, some are just meant to live in states of want, whining (yes, Phil Gramm was probably talking about people like you) about what others should give them.
Some strive for the house on the hill...some are content being paycheck to paycheck in the trailer park. It's just the nature of humans.

[Icarus]

I'll bet you research will suggest that children born to dumbass parents also have a tougher time competing in adulthood.

This is why all of our policies have to create incentives such that people not ready to take on such a great responsibility, don't.

[Lafayette]

MT: here's the NBER

Very interesting. I too was laboring under the more simpler assumption (as expressed in the article above).

And, yet, when we look at the more developed criteria that are applied, this is noted in their explanation: (About a previous recession:"It was not until eight months later that revisions in the GDP data showed declining real GDP for the first, second, and third quarters of 2001".

What, pray tell, is the purpose of declaring a recession eight months after the fact? It could delay even further any policy decision undertaken to remedy the recession.

Which makes one think that the two month-period of successive economic activity retraction is not so bad a marker, even if not "official". It should be a trip-wire to get policy makers not only thinking but acting.

[Lafayette]

Acknowledgement

MK: I wouldn't underestimate the backlash against free trade and globalization that the current financial crisis might trigger

The paradigm change had begun at least a decade ago. The massive doubling of the labor supply on the world market, and the lowering of tariff barriers gave the Far East a chance to enter the mainstream of International Commerce. Which they did.

The consequence, we should not forget, is to have brought millions out of abject or relative poverty to a middle-class existence (in their terms). That was a huge amount of goodness for humanity.

Of course, it comes at a price, which is presently translated into a regressed standard of living for a great many people in both the US and the EU. This is unfortunate.

Life's vicissitudes are often unfortunate. History repeats itself, but not always in the same way. The nationalist militarism of Japan resulted in Pearl Harbor. China's nationalism is growing and on-track for another Clash of Cultures in the making. This conflict will surface dramatically in the next decade, probably in the former half, if not addressed quickly.

The brouhaha over the Olympics is right out of Orwell's 1984, where BigBrother was continually accusing the "aggressors on the frontier". Which is a well-proven tactic to reinforce local nationalism and get people's minds off democracy and dissuade democratic expression.

But, a "backlash against Free Trade"? Why? Both the EU and the US, not to mention Australia and India, have more to lose than to gain from such a conflict. It would be stupid. Which, admittedly, is nonetheless not beyond the capability of mankind.

A world of peaceful coexistence is one principally in which all nations realize their rightful place. US economic dominance, and the heady economic vitality that it brought, is over. Which doesn't mean necessarily that the Far East will dominate in the future. We saw what happened in Japan when home-grown hubris resulted in embarrassing Japan (in the early-to-mid 1990s realty Boom 'n Bust). The same vicissitude may be repeating itself in America today.

There's plenty of economic growth on this planet to be had. If we are not Individual Gluttons regarding the manner in which it is shared. China must take the accent off export growth-at-all-costs and now accentuate internal economic growth. And, America must work hard to reduce its chronic current account debt and also assume monumental internal challenges as well. Its free-ride is over.

We know the solutions. We are having great difficulty, however, in getting our respective populations to acknowledge and accept them.

That is our real challenge.

[Patricia Shannon]

Icky, you're so cute when you get your feelings hurt.

[Icarus]

Patricia213...you know what helps...I go to a waffle house and flirt with the waitresses. They make little, so I can tempt them with a trinket.

[Crusader]

Icarus says...

Patricia213...you know what helps...I go to a waffle house and flirt with the waitresses. They make little, so I can tempt them with a trinket.

Posted by: Icarus | Link to comment | July 16, 2008 at 02:06 PM

Wow, talk about hate, hate, hate.

[Irv]

Please dont have a lot of sympathy for all the people getting foreclosed on. Some yes, many no. Why? I was a Wholesale Mtg exec for a national lender in south Florida during the bubble. My bank offerred subprimes as well as the neg-am loans and Alt-A programs. But the crucial key to this mess is to understand the process by which the end borrower came to the loans they ultimately received. The conduit was the Mtg broker. We never dealt with the borrow directly, we dealt with the broker who was the adviser. There is a form everyone needs to fill out in order to get a mtg, its called the 1003. On this form is all the financial info a lender requires such as income and assets. It is up to the borrower to be accurate and truthful when they fill this out and actually they sign attesting to accuracy.
Along with the 1003 was the credit report, and it was NEVER from just 1 bureau, it was a Tri-merge, meaning all 3 credit reporting firms gave the scores and we picked the middle one. This is due to the fact that many of your creditors will report to only 2 of the 3. Therefore a collection on a car may not show up on Fico, but does from TRW.
Now to the point. There are multiple programs for mtgs because we have a very dynamic economy. For example, because a small or single business owner, due to tax reasons, wrights of so much of their expenses through the business, their actual income on their tax returns is a fraction of what it really is. Ask any biz owner. Why is this significant? Because the program that these borrowers HAVE to utilize is one called "Stated Income". This means that the borrower just states their income and we belive them!! This sounds crazy, but there are controls for checking, but commonsence is a big one. If someone owns a residential landscaping business (which, in sunny FLA is very commen) and claims they make $200k, well red flags go up. This is just a thumbnail view and there is a lot more that goes into the underwriting process, but it is very accurate.

The program for this ever-growing segment of the economy is great. But then the stated program was offerred to W-2 earners. They would pay a quarter point higher for the privilage, but nevertheless, it was available to the W-2 earner. We used to call these loans "liar loans" because EVERYBODY lied to get one. The reasoning went like this (as told to me from our investors): many people in places like CA or FL have jobs that pay under the table, or tips(big service economies will have this issue) or spouses that babysit 5 kids and get paid cash etc... The regular loans most Americans not living on the coasts will get are called Full Doc loans and basically your W-2's are the determing factor in regards to income. You make $50k, you show the paystubs, its that simple.

I ran Palm Beach county, and I would only look at 1 Full Doc loan out of 50 stated income, and that was because the borrower was really in Ohio, but the broker was in Florida. EVERY Florida loan app was stated or if their credit was over 700, No Doc. I never seen so much fraud in my life, and here is the part you need to understand: The BRORROWERS were in on the fraud. Lie about the occupancy (2nd home or investor deals costs about .5 to 2% higher rate) and get a lower payment!! Most of the people in Fl or even CA knew exactly what they were getting, and the sorry few who were duped into complicated neg-ams, they should have legal recourse against the damn broker whose job it was to make sure the borrower knew what they were getting. But this group is small, overall to the problem loans.

People wo took out a subprime loan did so because Fannie would buy them!! Yes, thats right, Fannie was the biggest buyer of these loans. And that is ok, thats what they were supposedly created for in the 1st place. But people were told that these loans were "band-aid loans", not permenate ones. The deal was that you the borrow with shaky credit, but good work history would have 2 years to prove that you could actually pay your mtg on time. And not abuse your credit with stupid credit card purchases. Then after the 2 years, you would refi into a 30 yr with Fannie or any of the banks at a decent rate. It never worked like that though. I did so many cash-out refis, in fact 75% of my loans were exactly that. People who had great 30 yr rates would pull out as much equity as possible to buy SUVs(you really need an Escalade in florida due to all the snow) flat panals and other consumer goods. They would then run up those credit card bills again, and do it again!! No joke on this. When your house goes up a $100k in a year, and you only make $50k/year, what other time will you have access to that kind of dough? I understand the reasoning behind it, but the actual practise is the underlying problem today.

Many of the people today that are getting FC'd in FL or CA were speculating and they got on the wrong side of the trade. Keep in mind that 70% of ALL FC's are in CA, AZ, NV, and FL. The folks who got clobbered in the mid-west due to macro economic forces are not being blamed here. Their problems should be addressed by the Govt, instead of bailing out fraudulant speculators. I apologize for the length, but most people just hear stories in the news without knowing the details, and the devil is ALWAYS in the details.

[Montag]

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