This year’s bubble

As predicted, T-bills are tanking.

An economically inclined friend writes

If you just look at treasuries maturing after 2030, that’s a value of about $130 billion dollars notional, which got bid up to about $190 billion, and now have lost half that so $30 billion. You throw in treasuries issued with maturity after 2027, that’s a little over $50 billion in losses. So roughly Maddoff.

But if you want to be really scared, check out this graph of total debt as a percentage of GDP (from Matt Yglesias):

The same economically-inclined friend writes of this:

There’s no way out but an adjustment in standard of living.

Remember, an adjustment in standard of living doesn’t just mean that one of Ben Stein’s friends has to move to San Bernardino. It means people like a friend of mine with a disabled kid who just got laid off doing God knows what to get by. And I don’t delude myself that anyone I know is facing the worst of any of this.

The reason articles like Stein’s do the public a disservice is that they make it sound like the tragedy of this crisis is that a few people living beyond their means will have to eat a little shit. It’s a lot worse than that, and it affects plenty of people who weren’t raking in alimony and blowing it all on a shop that “has never come close to earning a dime”.

Update: But if the gold standard and deregulation won’t work, maybe the Sam Donaldson tax credit plan will.

Fucking idiot (Donaldson, not Krugman).

And, by the way, check out Cokie’s nonsensical assertion that the fact that unemployment is especially high in Michigan and Rhode Island is indicative of something (I’m not sure what). She says “it (unemployment) is already that in Michigan and Rhode Island” (at around 3:10). What does that have to do with anything?






84 replies
  1. 1
    Laura W says:

    (doing God knows what)

  2. 2
    DougJ says:

    @Laura

    Thanks. Proofreading’s not my specialty.

  3. 3
    TheHatOnMyCat says:

    Nothing short of a cross between drastic measures, and a miracle, will save the organization that I work for from massive cutbacks this year. I have no confidence that I will have a job a year from today, or even six months from today.

    And that’s based on what the numbers look like right now. Personally, I think that we haven’t even begun to see the true effects of the trainwreck yet. We’ve only seen the tip of a looming iceberg.

    This is going to be a year to remember … and not fondly. Fasten your seat belts. Wear your kevlar. Hope for the best but expect the worst.

  4. 4
    Laura W says:

    @DougJ: You betcha!

  5. 5
    mikkel says:

    I disagree, I think that Stein’s column (and similar ones about how the wealthy are "suffering") is a great public service. It shows how extremely out of touch the 0.1%ers are and will help get people pissed enough to put pressure on the government to stop throwing money down the money hole.

    The two graphs you showed are two of the most important data points about our future, and if we’re not careful, we’re going to waste trillions trying to keep the system propped up in a way where millions will suffer on a fundamental level needlessly.

    If it’s a given that our standard of living is going to go down (which I think it is) then we need to make sure that it goes down in a way where the wealth disparity is compacted, instead of having people starve.

  6. 6
    DougJ says:

    If it’s a given that our standard of living is going to go down (which I think it is) then we need to make sure that it goes down in a way where the wealth disparity is compacted, instead of having people starve.

    I agree completely.

  7. 7
    Just Some Fuckhead says:

    @TheHatOnMyCat: Pretty much the same here and I agree with your overall assessment. On the up side, we’ll have plenty of spare time to make fun of other people’s music.

  8. 8
    TheHatOnMyCat says:

    On the up side, we’ll have plenty of spare time to make fun of other people’s music.

    Proving once again that every cloud has a silver lining.

    I have always been a fan of Dr. Pangloss.

    Heh.

  9. 9
    Comrade Mary, Would-Be Minion Of Bad Horse says:

    I’m a freelancer who’s still doing pretty well, but despite all the optimism from the Bank of Canada that we’ll be out of this by next year, I really, really have my doubts.

    … the bank assumes that everything will go right for Canada in the coming year. The forecast hinges on federal and provincial spending, stimulus packages around the world driving up commodity prices, and credit conditions easing. In addition, the U.S. economy would need to bottom out and start to pick up so that demand for Canadian goods such as cars and lumber improves.

    I have a real estate agent coming in to look at my tiny house tomorrow. It feels more and more like I’ll have to take that leap.

  10. 10
    The Dangerman says:

    As a person that was born and raised in San Bernardino, I can say with little doubt that it was a shithole. Hell, it was a shithole when it was founded (a cowboy redlight district that grew into a city). Sadly, it has regressed, and people that live in San Bernardino now just long to vacation in actual shitholes; I’ve lost track if it is now the meth or crack capital of the world (it could very well be both). So, I wouldn’t sentence anyone that sad fate of having to move there.

  11. 11
    Laura W says:

    @Comrade Mary, Would-Be Minion Of Bad Horse: What’s the RE market like up there? Is it reasonable to assume you could sell relatively quickly at the price you’d like?

  12. 12
    dm says:

    T-bills tanking aren’t necessarily a bad thing. That means that the government can borrow money at, basically, 0% interest. 0% interest makes it a lot easier to contemplate borrowing money to build needed stuff — repairing infrastructure or building new infrastructure, rebuilding New Orleans, building labs in schools or building an intelligent power-grid to bring wind-generated electricity from the prairie to the cities.

    For such expenditures, don’t think of it as borrowing, think of it as investment.

  13. 13
    DougJ says:

    T-bills tanking aren’t necessarily a bad thing. That means that the government can borrow money at, basically, 0% interest.

    That’s if the yield tanks. The price tanking has the opposite effect.

  14. 14
    SGEW says:

    Personally, I think that we haven’t even begun to see the true effects of the trainwreck yet. We’ve only seen the tip of a looming iceberg.

    In all of the discussion recently (Tarpit! T-Bills! TED Spread! DND TNT! DND TNT!) everyone seems to completely ignore the gigantic elephant in the room. The wild card. The X factor.

    I.e., the Chinese economy.

    Predicting future Chinese events is a mug’s game, of course (the phrase "nobody could have predicted" is rather appropriate for a lot of Chinese history, imho), but everyone who seems to know anything about China agree: big things are afoot. And that is not a very comforting thought, as any "big thing" in China is going to wind up shaking the rest of the world to the core.

    It’s going to be a very strange couple of years, economically speaking. "Interesting times" indeed.

  15. 15
    robertdsc says:

    So roughly Maddoff

    It’s amazing how quickly we adapt events into shorthand descriptions.

  16. 16
    Comrade Mary, Would-Be Minion Of Bad Horse says:

    Laura, I’m ready to price aggressively but not desperately, and I do have a floor in mind. Our RE market is nowhere as bad as the worst of the U.S., but it’s definitely softening and it’s definitely a buyer’s market. If I list now before a bunch of similar houses come back on the market in spring, I should be OK.

  17. 17
    tavella says:

    I’d like to believe that Krugman is right, that we can avoid a depression with enough stimulus, but I don’t see how. That bubble, that giant debt bubble, has to come out, and I simply do not believe that can happen and not trigger a deep depression.

    And the bleak black thing is that depressions in America have averaged about six years, and I do not trust the American people to not go "well,it’s all *Obama’s* fault", in four years.

  18. 18

    Your friend is wrong DougJ. There is a way out of this and I will now present it in three sentences:

    1. Institute a protectionist trade policy to bring back jobs.

    2. Lift the oil shale ban, use that resource, and become energy independent.

    3. Isolate America, as much as possible, from the reality that is life in the rest of the world.

    Reference.

  19. 19
    amorphous says:

    If only we’d actually had a President before last Monday. Surely he would have at least attempted to have done something.

    Is Bush being prosecuted for anything yet?

  20. 20
    Montysano says:

    @TheHatOnMyCat:

    Nothing short of a cross between drastic measures, and a miracle, will save the organization that I work for from massive cutbacks this year from going belly up. I have no confidence that I will have a job a year from today, or even six months from today.

    That’s where I’m at, after 18 years of helping build the business.

    @SGEW:

    but everyone who seems to know anything about China agree: big things are afoot. And that is not a very comforting thought, as any "big thing" in China is going to wind up shaking the rest of the world to the core.

    Then I guess it’s "bring it on". Making shoes 10,000 miles from where they would be worn was a bad idea, an idea that only benefited the suits. Rush would argue that it benefited you and I, essentially making us "richer", i.e. able to afford to buy more stuff. For a while, maybe it did, but the end result is not pretty.

  21. 21
    DougJ says:

    3. Isolate America, as much as possible, from the reality that is life in the rest of the world.

    Hiding our head in the sand has always worked so well before, right?

  22. 22
    SGEW says:

    You know, BOB, you make a lot of sense, in your very particular way.

    Alas, your science is flawed (oil shale, no less . . . scoff scoff!), your philosophy is ethically repulsive, and your economic ideas are about, oh, a hundred years out of date (and were invalidated back then as well).

    Other than that, spot on!

    Why is this guy haunting Balloon Juice now?! Can’t he go bother someone else?

    Additionally: linking to your own blog is not a "reference."

  23. 23

    There is a way out of this

    Bill, Bill, Bill. This is not a corn maze.

    It’s the front edge of a global economic (kook-a-poo-choo!) implosion thing. It’s bigger than both of us, buddy.

    Big. Bigger than your wayhot oven.

  24. 24
    Punchy says:

    Speakin of money, juss found out Friday that the interest I made on my savings account was……wait for it……..0.15 % . One dollar fity cents a year for $1K. Unreal

  25. 25
    SGEW says:

    It’s bigger than both of us, buddy.
    Big. Bigger than your wayhot oven.

    Yeah, I guess in Bill’s defense, I do have to admit: his oven is way hot. Like, unreasonably so. But it’s America, so he has the right to do that if he likes.

  26. 26

    Speakin of money, juss found out Friday that the interest I made on my savings account was……wait for it……..0.15 % . One dollar fity cents a year for $1K. Unreal

    Just remember us little people when you get to the top, Punchmeister.

  27. 27
    AnneLaurie says:

    Remember, an adjustment in standard of living doesn’t just mean that one of Ben Stein’s friends has to move to San Bernardino. It means people like a friend of mine with a disabled kid who just got laid off doing God knows what to get by. And I don’t delude myself that anyone I know is facing the worst of any of this.

    If what was printed during the last Great Depression is an indicator, Ben Stein will soon be explaining in the NYT that Megan McCardle having to move from her trustafarian co-op to some dingy little apartment in Williamsburg is worse than your friend having to put his kid in an institution so at least they’ll get regular meals and some semblance of medical care. Remember, in Randworld, "defectives" are a drag on the productivity of the John & Jane Galts, and if it weren’t for a lot of lazy sloppy sentimentalist do-gooders, we’d efficiently remove them from the body politic by… some method or other, mumble mumble.

  28. 28
    TenguPhule says:

    1. Institute a protectionist trade policy to bring back jobs.

    Except you know, we import more then we export. And every time we do something like that, the WTO kicks our ass.

    So Yeah.

    2. Lift the oil shale ban, use that resource, and become energy independent.

    And while we’re wishing for ponies, I’d like Bush’s head mounted on a pike and bronzed in front of the Whitehouse.

    3. Isolate America, as much as possible, from the reality that is life in the rest of the world.

    Let us know how your view from inside your ass works out.

  29. 29
    Comrade Jake says:

    Anyone catch Krugman on ABC’s This Week?

    I assume at some point they’ll stop inviting him on, since he quickly makes it clear that every other panel member is talking out of their ass.

  30. 30
    TenguPhule says:

    Nothing short of a cross between drastic measures, and a miracle, will save the organization that I work for from massive cutbacks this year from going belly up.

    Well I have my plan B: Eat Republicans.

  31. 31
    SGEW says:

    Megan McCardle having to move from her trustafarian co-op to some dingy little apartment in Williamsburg is worse than your friend having to put his kid in an institution so at least they’ll get regular meals and some semblance of medical care.

    I know that it’s improper (and rather unforgivable) to wish ill upon another human being, but I can’t help but hope that someone in Billyburg mugs the hell out of McCardle. She’ll blog about it and everything. Hee!

  32. 32
    DougJ says:

    I know that it’s improper (and rather unforgivable) to wish ill upon another human being, but I can’t help but hope that someone in Billyburg mugs the hell out of McCardle.

    You know, unless she tries to steal someone’s idea for a graphic design or stiffs a barista on a tip, that’s pretty fucking unlikely. But you probably know that already.

  33. 33

    I have worked in the Central American fields alongside people happy to be making three dollars a day and have watched people being turned away from work. Chicken with your rice and beans is a luxury for those who work construction, who make slightly more.

    These jobs have benefits however. The workers are assigned a small concrete room, in a long line of small concrete rooms, with no windows, where they raise their families. I do not know if there is indoor plumbing, because I could not see, but kind of doubt it.

    This is the value of labor in the world marketplace. The Globalists know it. The idealists do not.

    SGEW; My oven is not unreasonably hot. Ask Rado, my leader.

  34. 34
    SGEW says:

    You know, unless she tries to steal someone’s idea for a graphic design or stiffs a barista on a tip, that’s pretty fucking unlikely.

    No no, my friend. Mugging in Williamsburg is a god damned growth industry.

    People who live there don’t mug people: people who live there get mugged. It’s within easy walking distance of Bed Stuy (‘scuse me: "East East Williamsburg"), and it’s like shooting fish in a barrel.

    Gentrification + bar culture + nearby projects = muggings for all!

  35. 35

    I have my plan B: Eat Republicans.

    I dunno, they’re awfully bitter.

  36. 36
    DougJ says:

    Gentrification + bar culture + nearby projects = muggings for all!

    Sounds like a shovel-ready project to me.

  37. 37
    DougJ says:

    I have worked in the Central American fields alongside people happy to be making three dollars a day and have watched people being turned away from work. Chicken with your rice and beans is a luxury for those who work construction, who make slightly more.

    Did you ever sing in any of the restaurants there?

  38. 38
    Joshua Norton says:

    Eat Republicans.

    Here’s the politician, so oily
    It’s served with a doily,
    Have one!
    Put it on a bun.
    You never know if it’s going to run!
    -Sweeney Todd

  39. 39
    Church Lady says:

    Given the global nature of the ecomomy, I think we’re all up shit creek and no one has a paddle. We have a customer in Canada that is having trouble paying us due to problems in the Russian economy. Suppliers from China are asking us if we can pay them early, because their business has slowed down so much. We’re cancelling production orders, where we can, because our customers are facing downturns in their business. Calls are coming in every day from old business contacts, letting us know that they have been laid off from jobs they were in for fifteen or twenty years and wanting to know if we are hiring.

    It really, really sucks for almost everyone right now and I’m afraid it’s going to get a whole lot worse before it ever starts to turn around. If I sound gloomy, it’s because I am. There is nothing in the economic news coming out of anywhere to be optimistic about.

  40. 40
    burnspbesq says:

    The following six words appear, in italics, at the end of Kristol’s column in Monday’s NYT:

    This is William Kristol’s last column.

    Please tell me it’s not April Fool’s Day.

  41. 41
    Joshua Norton says:

    This is William Kristol’s last column.

    Don’t bet on it. He hasn’t been right about anything yet.

  42. 42

    DougJ; You bait me once again.

    My work in Central America was as an engineer. Central America is a fascinating place. In many ways certain countries have higher levels of civility than we have here. But the government is corrupt, and workers live in long lines of small concrete rooms. They make $3/day. This is reality.

    Americans take many, many things for granted.

  43. 43
    Adrienne says:

    Now, is it just me or did the debt as percentage of GDP, in modern history, seem to SKYROCKET under supposedly conservative Presidencies?

    I find it incredibly ironic that these assholes, who after EIGHT years of GWB more than doubling the national debt by spending money like John Thain in an interior design studio are suddenly rediscovering what fiscal conservatism means during the middle of a fucking recession, always seem to assworship St. Ronnie who also doubled our national debt. Cognitive dissonance anyone?

    No, I’m not bitter or anything, I’m just saying.

  44. 44

    I have worked in the Central American fields alongside people happy to be making three dollars a day and have watched people being turned away from work. Chicken with your rice and beans is a luxury for those who work construction, who make slightly more.

    Oh! I have slipped the surly bonds of Earth
    And danced the skies on laughter-silvered wings;
    Sunward I’ve climbed, and joined the tumbling mirth
    Of sun-split clouds, — and done a hundred things
    You have not dreamed of — wheeled and soared and swung
    High in the sunlit silence.

    That’s no shit, Bill. I actually have. So I think you and I have a lot in common. Come on, man, I’ll buy you a beer.

    Say, that is some oven you have there ……..

  45. 45
  46. 46
    DougJ says:

    I find it incredibly ironic that these assholes, who after EIGHT years of GWB more than doubling the national debt by spending money like John Thain in an interior design studio are suddenly rediscovering what fiscal conservatism means during the middle of a fucking recession, always seem to assworship St. Ronnie who also doubled our national debt. Cognitive dissonance anyone?

    Assworship?

    Between that and the things men offer you and the walking around naked, you’re starting to concern me.

  47. 47
    Adrienne says:

    Assworship? Between that and the things men offer you and the walking around naked, you’re starting to concern me.

    Well, when you put it that way I guess one could get the wrong idea.

    Yeah, my life is strange and beautiful in ways you can’t even begin to fathom. We’ll just leave it at that:-)

    BTW: I think it says more about YOU than it does about me that out of my entire paragraph, YOU focused on assworship. Someone *might* have a fetish. I’m just sayin.

  48. 48
    Fulcanelli says:

    @ThymeZoneThe Plumber:

    Oh! I have slipped the surly bonds of Earth
    And danced the skies on laughter-silvered wings;
    Sunward I’ve climbed, and joined the tumbling mirth
    Of sun-split clouds, — and done a hundred things
    You have not dreamed of — wheeled and soared and swung
    High in the sunlit silence.

    And reached out and kissed the ass of God…

    Would it be bad form to just confiscate the billions in ill-gotten gains the uber-rich wall street vermin made over that last 8 or so years that put us in this fucking mess? Can we put it to a vote? This voting thing seems to be working pretty good lately.

  49. 49
    Adrienne says:

    And reached out and kissed the ass of God…

    But *I* concern you DougJ? LOL

  50. 50

    Still in moderation, eh?

  51. 51
    gopher2b says:

    1. Institute a protectionist trade policy to bring back jobs.

    2. Lift the oil shale ban, use that resource, and become energy independent.

    3. Isolate America, as much as possible, from the reality that is life in the rest of the world.

    1 and 3 are terrible, terrible, terrible ideas. This is the same policies that turned a recession into the Great Depression

  52. 52
    gopher2b says:

    I just watched This Week. A few points:

    (1) Krugman’s point isn’t that the stimulus will pull us out. His point is that its the only tool the government as left because we’ve used virtually all the monetary policy we have.

    (2) Sam Donaldson, Cokie and that other woman are really really dumb.

    (3) I think if China’s $500 billion stimulus works (and its a real stimulus, not like our’s), then it will pull us all out. If it doesn’t….then you will see serious wars in about 5-7 years.

  53. 53
    rachel says:

    @gopher2b: I believe that "other woman" is Carly Fiorina. After doing her damnedest to run Hewlett-Packard into the ground (and getting the boot before she could quite manage it), didn’t she re-surface last year as part of McCain’s campaign?

  54. 54
    passerby says:

    @Comrade Jake:

    Anyone catch Krugman on ABC’s This Week?
    I assume at some point they’ll stop inviting him on, since he quickly makes it clear that every other panel member is talking out of their ass.

    Ain’t that the truth. And it was abundantly clear. They all looked like the bullshitters they always are, but it really stands out next to Krugman’s expertise.

    I was actually embarrassed for Sam Donaldson. Fiorina was just reiterating the problem. She speaks in that affected, CEO, confident tone but says absolutely nothing of note. Cokie felt she had to chime in with some facts she picked up in some front page article she scanned, jibberish.

    Except Krugman, they were just trying so hard to sound informed and intelligent, and to no avail.

    Here’s hoping for someone to come up with the Deus Ex Machina Plan.

  55. 55
    Martin says:

    Actually, it is the standard of living of the top 1/3 or so that really needs to be curtailed. The money for those Gulfstreams are coming out of the bottom 2/3. Knock those guys back to earth and the bottom 2/3 won’t have to cut back quite so much. Sure, everyone needs to cut, but much of the problem has been that everyone keeps chasing up way beyond what’s reasonable. Pull down the top, and that trend really comes to a halt.

  56. 56
    robertdsc says:

    didn’t she re-surface last year as part of McCain’s campaign?

    She gained notoriety for saying that McCain, Palin, and Obama weren’t qualified to run a Fortune 500 company. She said this while serving as an advisor of the McCain campaign.

    She was tossed down into the memory hole posthaste. Quite amusing.

  57. 57
    Anastasius says:

    I don’t know how Krugman manages to stay calm every time he does one of those clown shows. All he ever has is this stare and slightly irritated expression, probalby thinking "you can’t be that fucking stupid" but then he catches himself.

  58. 58
    georgia pig says:

    The absurdity of cocktail weenies Cokie, Sam, Carly and George lecturing a Nobel laureate on economics is breathtaking. They really are a dumb as a post. Krugman’s self-control is amazing, but you miss JK Galbraith’s rapier wit at times like these.

  59. 59
    headpan says:

    I want to ask some of these fuckers who can NOT let go of the "spread the wealth" comment how they would feel if they were one of those laid-off DHL employees with a starving kid or a kid that was in need of critical medical care. Would you take some of that "wealth" in the form of social services? Or are you just too, too principled for that and would let your kid die, because that’s what it comes down to in the end. And the fucking repubes are STILL playing on that sense of resentment towards anyone receiving help from the government.

    They still don’t think it’s going to happen to them. Wait till it happens to all of us plebes. Then they will get a clue and then it will be too late because Obama will have wasted precious time and money appeasing the repubes who will never be satisfied until every mega-corp and billionaire (and no, that’s not you Mr. or Ms. $30,000 – $50,000 a year, PAY ATTENTION!) pays no taxes at all.

  60. 60
    Hawes says:

    Watching Krugman, I’m reminded why I’m glad I don’t teach Freshmen anymore.

    "No, Biff. Simply defaulting on the debt won’t solve the budget deficit."

    No, Buffy. Returning to the gold standard is not a good idea."

    Of course, watching the whole segment, I’m just glad to be teaching anyone….

  61. 61
    Xenos says:

    Come the revolution, we can seize the dachas in the Hamptons and convert them into public resorts. I am tired of being passive and waiting for another damn hurricane.

  62. 62
    milo says:

    WTF is Carly Fiorina doing on my teevee? Does running a corporation into the ground qualify you for anything?

  63. 63
    woodrowfan says:

    FWIW, my postman swears that the Post Office will be laying off thousands in 09. Has the Post Office EVER had large layoffs? granted it’s due to drops in mail volume due to email, etc., but it’s damn poor timing….

    (it may just be rumor, but he does pay a lot of attention to what the Postal Worker’s Union is saying so I thought I’d toss it out there to see what others may have heard)

  64. 64
    Incertus says:

    @woodrowfan: My father-in-law is a letter carrier and he’s mentioned that as well. As I understand it, the Postal Service has reduced its size over the years via attrition rather than with layoffs, but layoffs aren’t out of the question.

  65. 65
    CT says:

    Far be it for me to defend Cokie "is Hawaii a state" Roberts, but her comment was directed at Will, who was poo-pooing 8% unemployment as less than the 10% unemployment in the early 80’s (I guess with the implication that everything’s not that bad). Her point was that some states are already officially bad-off on the Will scale.

  66. 66
    DougJ says:

    Her point was that some states are already officially bad-off on the Will scale.

    But what does that prove? Unemployment always varies between states. I’m sure there was some state with higher than the national average of 10% in the early 80s too.

  67. 67
    Ed Marshall says:

    T-Bills had to come down. The "flight to quality" was exaggerated and a symptom of fear. The interesting bit would be to know is where that money is going as it left the short term treasury market.

  68. 68
    Rick Taylor says:

    Interesting to see the meme that the spending from the stimulus isn’t going to get into the economy any time soon is now part of the common wisdom.

  69. 69
    Rick Taylor says:

    It’s fascinating how in this country we pay people a bunch of money to pontificate on a subject they know virtually nothing about (in this case economists). It’s as though they were having a panel discussion on quantum gravity, and only one of the participants was a working physicist, yet the others felt entirely free to present their opinions as though they had some authority. It’s an aspect of something about this country, a denigration of expertise and elevation of the wisdom of the common man (think joe the plumber, or Sara Palin). It’s gotten us into a horrendous amount of trouble.

  70. 70
    germ78 says:

    Heh, I remember seeing those charts as part of Chris Martenson’s Crash Course. The economy is certainly headed towards turbulent waters.

  71. 71
    Xenos says:

    If T-Bills collapse then the planet earth is well on its way to being run by cockroaches.

    @Ed Marshall: Are T-Bills (bonds and notes for less than a one year) really at risk? I can understand that 10 and (godforbid) 30 year treasuries are also overpriced and have tremendous interest rate, inflation, and political risk, but T-Bills?

    Update and correction– it was DougJ that conflated Treasuries and T-Bills, not you. Scared me for a bit there!

  72. 72
    Fritz says:

    Per the Post Office — well, yeah. Who uses the Post Office any more? I pay my bills electronically. Almost the only thing I get in the mail is junk mail and Netflix.

    And the next kicker will be pension funds. And the one after that will be Medicare.

    One step should be to increase the retirement age by 3 months each calendar year until it hits 80. If 60 is the new 50 then 80 can be the new 65.

  73. 73
    ksmiami says:

    I don’t post here a lot, but I am glad BJ is finally getting in on the economic action… Note:

    We are totally fucked and the last 30 years has pretty much been a ginormous waste and misallocation of resources on a scale so vast it is mind numbing. When we ask ourselves what did we get for it? (See Ewe Reinhardt, Princeton economist for more info)

    Rows of McMansions (about to go empty), friggin Ipods and a partial interest in a middle eastern country that may or may not end up as a thugocracy.

    The worst part is that our total boneheadedness is going to filter to many many parts of the world where people who were on the cusp of prosperity, may not like having to go back to complete destitution and the social upheaval will be Extremely dangerous. I don’t want to sound pollyannish, but I do believe the Black Swan in the room is the fact that the extent of modern financial globalization has a plus multiplier effect on the potential for global unrest.

    My friends think I am a little bit overboard on this, but ask the Romans…

  74. 74
    passerby says:

    @CT:

    I re-watched the clip and I can see now that’s what she was doing. It makes more sense in context. I was blinded by the stoopid that was winging its way around the table.

    WRT to un employment figures, I wonder what all these 8%s or 10%s really mean in the grand scheme.

    Aren’t these kinds of numbers based only on those who have filed for unemployment benefits? and if so, wouldn’t that mean that "Unemployment Figures" are a severe misunderestimate of the number of Americans who don’t have jobs since millions of out of work people are not eligible for these benefits?

    Either way, quoting figures at this point seems kinda moot. Things suck and are gonna suck more before they begin to suck less. The "facts and figures" they’re spewing are only stage props to make us think they know what they’re talking about.

    WRT a solution: the "experts" can hardly agree on what will work because this collapse is part of a global dynamic not seen before. Behind the scenes, across the globe, there are those who have been tracking the wealth and I’m willing to guess that a nice chunk of money will come from wealthy individuals and corporations who have illegally been hiding from the tax man in offshore havens like the caymans and certain suisse banques:

    "UBS [aka The Swiss], which U.S. authorities say helped wealthy Americans hide cash in offshore bank accounts, will shut about 19,000 offshore accounts, the paper said, quoting unnamed U.S. clients."

    The 19,000 are the small potatoes, it’s probably a shot across the bow to the major corporations who owe gazillions in taxes to the American people.

    " "You can either transfer the money to new banks, or deposit somewhere and get busted," a UBS client was quoted as saying in the newspaper report.""

    No one is talking about how much thi$ could plump up our coffers. Meanwhile, they’ll pick on Geithner for failing to toss a few coins in the basket so Paulsen can stave off the wolf at the door. Those who have been creaming off money from our system are grabbing themselves right now.

    Change is a’comin’.

  75. 75
    Svensker says:

    @dm:

    That means that the government can borrow money at, basically, 0% interest.

    Um, who’s going to lend it to them at that rate?

    We have a friend who had two stores in rich NJ suburbs. He’d been making a decent living, nothing amazing, but enough to support himself and his son. One of the stores went belly up last July. The other store is dying. He’s shipping his son — who can’t find another job — off to live with relatives in another state. He’s looking to close his remaining store and find a job himself. If he can’t find a job, he will be homeless in 2 months. We have offered him our (small) spare room and expect he will be moving in. (Which we’re not looking forward to, but how can you say no?)

  76. 76
    CT says:

    @DougJ: It doesn’t prove anything at all-its a bit like cherry picking a cold day in Louisiana as a counter to global warming. I was just pointing out that she was attempting to shut down GWill’s line of nonsense (also a cherry picked statistic) about how this downturn isn’t as bad as the one which St. Ronnie saved us from back in the 80’s-so it wasn’t a complete non sequitor.

    @passerby: My only consoling fantasy is the the economist who were wrong about this downturn will be equally wrong about how low it will go-this is some scary sh!t.

    Watching the clip, I very much wanted Krugman to erupt at Donaldson’s tax-credit fellatio with a "WTF do you know about economics, helmet-hair!" He certainly looked like he was thinking it-maybe he did and they cut it out.

  77. 77
    Martin says:

    Far be it for me to defend Cokie "is Hawaii a state" Roberts, but her comment was directed at Will, who was poo-pooing 8% unemployment as less than the 10% unemployment in the early 80’s (I guess with the implication that everything’s not that bad). Her point was that some states are already officially bad-off on the Will scale.

    Except that we changed how we count unemployment between now and the time he states. Back then, the 10% included people that were underemployed seeking full-time and a few other groups. They changed the ‘official’ unemployment statistics to leave out those groups. Today’s unemployment rate by the same metric used in the early 80s would be closer to 12%.

  78. 78
    passerby says:

    @CT:

    My only consoling fantasy is the the economist who were wrong about this downturn will be equally wrong about how low it will go-this is some scary sh!t.

    Since I think the media are lying propagandists anyway, I too share this fantasy. The details of this collapse are being kept within a tight circle in order to prop up what remains of a failed market system and so-called "economists" (brokers who stand to benefit from an up market) who frequently appear on these types of shows are nothing more than self-serving snake oil salesmen.

    Few know all the facts surrounding the cause and effects of our current market failures. Krugman knows Ps and Qs but I get the impression that he is also at a loss at times. That’s why I’m (seriously) holding out hope for a Deus Ex Machina plan.

  79. 79
    Marshall says:

    Um, who’s going to lend it to them at that rate?

    Investors who have the desire or the need to invest in the safest securities. I heard, for example, that a lot of pension funds and the like, having pulled money out of stocks, have to put that money somewhere, and the safest "somewhere" around is US Treasuries, and that legally they have right now almost nowhere else to go. (I.e., they may not be able to legally invest in, e.g., corporate bonds.)

    I guess the next step will be for the US Government to start charging people to buy treasuries (i.e., negative interest rates).

  80. 80
    passerby says:

    @Fulcanelli:

    Would it be bad form to just confiscate the billions in ill-gotten gains the uber-rich wall street vermin made over that last 8 or so years that put us in this fucking mess? Can we put it to a vote? This voting thing seems to be working pretty good lately.

    Here, Here! I hadn’t read your comment before adding my 2 cents @74 & 78.

  81. 81
    Adrienne says:

    3. Isolate America, as much as possible, from the reality that is life in the rest of the world.

    Yeah, because hiding under the covers with a pillow over your head, squeezing your eyes closed real tight always seems to work in horror flicks, right?

  82. 82

    what i’m hoping most of all is that things will finally get bad enough for us to jettison or at least downsize the parasite class.

    you know how we always keep hearing that 5% of the population of the us controls half of all the wealth, or something like that? well, seems to me that the logical first step is to cut them out of the picture (not literally; i don’t think we’re yet to the point of needing literally to eat the rich), or at very least bring them back down a little closer to parity with the rest of us.

    seems like a pretty good place to start. i mean, i don’t have a big problem with people getting rich for working hard or inventing something useful or that brings people joy. but we’ve got a whole class of people who got themselves rich by inventing an imaginary sector of the economy that nobody understood and then clapping their hands and believing in fairies and paying themselves multimillion-dollar retention bonuses whether they succeeded or not, and now that the whole house of cards is revealed for the charade it always was, they actually want the rest of us to pony up and pay not only the bill but pack them a golden parachute as well.

    i say fuck ’em. i say let them pony up and then get back down and scrabble in the dirt with the rest of us. let’s fund the stimulus with multimillion dollar fines on the john thains and bernie madoffs of the world. we could probably cover half the necessary outlay just from that.

    and cheers to paul krugman, by the way, a) just for being him, and b) for making cokie, carly, and sam look like the uninformed idjits they truly are. he is a better man than i, for i would surely have throttled one of them, probably sam, because it ain’t right for a man to raise a hand against a lady.

    ps i see i’m not the first person with the idea of repatriating some of the money these fuckers made/took. glad to know there are others.

  83. 83
    LosGatosCA says:

    There’s no way out but an adjustment in standard of living.

    That’s partly true. But there’s a way to lessen the long term pain.

    Inflation.

    Just keep debasing the currency until the debt service is the same % of GDP it was in 1992.

    IT section managers making $1.5M a year and paying $250K per year in taxes, and everyone else similarly aligned – heart surgeons making $10M a year, and paying $2.5M in taxes – should do it.

    Screw the people owning the debt, fixed income non-COLA folks will get killed. Own long term bonds? Interest rate risk right now is enormous, and even if you hold until maturity 10 years down the road – they’ll be worth 1/3 in purchasing power.

    Get used to it. Nixon/Burns have nothing on Bush/Greenspan/Bernanke -except price controls.

  84. 84
    Peter Principle says:

    Your economically inclined friend appears to have little or no understanding of how the T-Bill market actually works. The higher yields on new bills will compensate investors for any capital losses on the old bills, leaving them either roughly even or, at worse, slightly worse off — not a bad deal given what’s been happening in the rest of the money and fixed income markets.

    Higher yields will also allow the banks to borrow from the Fed at approximately zero and earn at least a meager spread on Treasuries — helping, at least in some small way, to repair their imploded balance sheets.

    In other words, this is marginally good news, not bad — at a time when good news of any kind of pretty hard to come by.

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