California Economy

[LuckyInOC]

Re: casual observations.

The other day I overheard an manager at HomeDepot tell an employee to stop standing in material isles and walk the main isle and help customers. Times must be bad…

Lucky In OC

[UCGal]

[quote=kev374]I’m generally a bear but I also make real life observations. As of now I cannot see any significant impact on consumer spending. Infact, restaurants and shops are busier than any other time I have ever seen. The data I am hearing does not seem to align with what is going on in reality. Every single time I have been to a restaurant this week, it has been packed full with long waits. If we are in a downward spiral and consumer sentiment is low then I simply cannot see how people are spending so much.

I would imagine that eating out is the first thing to be curtailed if consumers are feeling the pinch but just the opposite, the crowds have not been bigger.[/quote]

link via CalculatedRisk

http://www.rimag.com/article/CA6610451.html

The Restaurant Industries own figures show that sales and traffic as fallen to record lows.

I’ve observed that GOOD restaurants are still crowded – but the mediocre ones, eh, not so much. And there are a lot of mediocre restuarants out there.

[UCGal]

[quote=kev374]I’m generally a bear but I also make real life observations. As of now I cannot see any significant impact on consumer spending. Infact, restaurants and shops are busier than any other time I have ever seen. The data I am hearing does not seem to align with what is going on in reality. Every single time I have been to a restaurant this week, it has been packed full with long waits. If we are in a downward spiral and consumer sentiment is low then I simply cannot see how people are spending so much.

I would imagine that eating out is the first thing to be curtailed if consumers are feeling the pinch but just the opposite, the crowds have not been bigger.[/quote]

link via CalculatedRisk

http://www.rimag.com/article/CA6610451.html

The Restaurant Industries own figures show that sales and traffic as fallen to record lows.

I’ve observed that GOOD restaurants are still crowded – but the mediocre ones, eh, not so much. And there are a lot of mediocre restuarants out there.

[UCGal]

[quote=kev374]I’m generally a bear but I also make real life observations. As of now I cannot see any significant impact on consumer spending. Infact, restaurants and shops are busier than any other time I have ever seen. The data I am hearing does not seem to align with what is going on in reality. Every single time I have been to a restaurant this week, it has been packed full with long waits. If we are in a downward spiral and consumer sentiment is low then I simply cannot see how people are spending so much.

I would imagine that eating out is the first thing to be curtailed if consumers are feeling the pinch but just the opposite, the crowds have not been bigger.[/quote]

link via CalculatedRisk

http://www.rimag.com/article/CA6610451.html

The Restaurant Industries own figures show that sales and traffic as fallen to record lows.

I’ve observed that GOOD restaurants are still crowded – but the mediocre ones, eh, not so much. And there are a lot of mediocre restuarants out there.

[UCGal]

[quote=kev374]I’m generally a bear but I also make real life observations. As of now I cannot see any significant impact on consumer spending. Infact, restaurants and shops are busier than any other time I have ever seen. The data I am hearing does not seem to align with what is going on in reality. Every single time I have been to a restaurant this week, it has been packed full with long waits. If we are in a downward spiral and consumer sentiment is low then I simply cannot see how people are spending so much.

I would imagine that eating out is the first thing to be curtailed if consumers are feeling the pinch but just the opposite, the crowds have not been bigger.[/quote]

link via CalculatedRisk

http://www.rimag.com/article/CA6610451.html

The Restaurant Industries own figures show that sales and traffic as fallen to record lows.

I’ve observed that GOOD restaurants are still crowded – but the mediocre ones, eh, not so much. And there are a lot of mediocre restuarants out there.

[UCGal]

[quote=kev374]I’m generally a bear but I also make real life observations. As of now I cannot see any significant impact on consumer spending. Infact, restaurants and shops are busier than any other time I have ever seen. The data I am hearing does not seem to align with what is going on in reality. Every single time I have been to a restaurant this week, it has been packed full with long waits. If we are in a downward spiral and consumer sentiment is low then I simply cannot see how people are spending so much.

I would imagine that eating out is the first thing to be curtailed if consumers are feeling the pinch but just the opposite, the crowds have not been bigger.[/quote]

link via CalculatedRisk

http://www.rimag.com/article/CA6610451.html

The Restaurant Industries own figures show that sales and traffic as fallen to record lows.

I’ve observed that GOOD restaurants are still crowded – but the mediocre ones, eh, not so much. And there are a lot of mediocre restuarants out there.

[sdduuuude]

This talk of feedback is interesting to me. My degrees are in control systems and Engineering Economics. Using engineering principles to describe economic systems is what I’m supposed to know.

Describing this downward spiral as a negative feedback loop is not quite right, but not entirely wrong. (As you can tell, I prefer the term “downward spiral.”) It may very well be negative feedback that is adjusting the market down, stabilizing an overly bubbly economy. If it doesn’t overshoot to the downside, then negative feedback is doing its job.

If it overshoots to the downside, then we may have an underdamped and possibly unstable system (positive feedback or open loop), as I suspect.

I see three major feedback mechanisms that have failed. First, the models used by the banks to determine loan quality failed miserably. The fear of failure, or risk, is a critical feedback mechanism that helps stabilize economic behavior. With broken models, this feedback was destroyed.

Second, Greenspan set rates too low. Because the rate is set by a person, and it does not adjust to the market in real-time, this is an open loop control. Bad. Very bad. This reminds me of a digital control system where the feedback is sampled at too low of a rate.

Third, if we don’t let the banks fail and we bail out the homeowners, we eliminate yet another natural feedback. Moral hazard is just another term for “positive feedback” and those who understand what that means know it forces the system to go unstable.

Undoubtedly, the government will try to replace natural negative feedback with regulations because they think they know how to manage the market better than natural feedback loops. Regulators move so slowly and often with poor information, it always ends up being open-loop.

Eliminating these negative feedback mechanisms from the system makes it unstable, as the current global economic system demonstrates.

Getting the economy out of the hands of the government is the most important issue America faces.

[sdduuuude]

This talk of feedback is interesting to me. My degrees are in control systems and Engineering Economics. Using engineering principles to describe economic systems is what I’m supposed to know.

Describing this downward spiral as a negative feedback loop is not quite right, but not entirely wrong. (As you can tell, I prefer the term “downward spiral.”) It may very well be negative feedback that is adjusting the market down, stabilizing an overly bubbly economy. If it doesn’t overshoot to the downside, then negative feedback is doing its job.

If it overshoots to the downside, then we may have an underdamped and possibly unstable system (positive feedback or open loop), as I suspect.

I see three major feedback mechanisms that have failed. First, the models used by the banks to determine loan quality failed miserably. The fear of failure, or risk, is a critical feedback mechanism that helps stabilize economic behavior. With broken models, this feedback was destroyed.

Second, Greenspan set rates too low. Because the rate is set by a person, and it does not adjust to the market in real-time, this is an open loop control. Bad. Very bad. This reminds me of a digital control system where the feedback is sampled at too low of a rate.

Third, if we don’t let the banks fail and we bail out the homeowners, we eliminate yet another natural feedback. Moral hazard is just another term for “positive feedback” and those who understand what that means know it forces the system to go unstable.

Undoubtedly, the government will try to replace natural negative feedback with regulations because they think they know how to manage the market better than natural feedback loops. Regulators move so slowly and often with poor information, it always ends up being open-loop.

Eliminating these negative feedback mechanisms from the system makes it unstable, as the current global economic system demonstrates.

Getting the economy out of the hands of the government is the most important issue America faces.

[sdduuuude]

This talk of feedback is interesting to me. My degrees are in control systems and Engineering Economics. Using engineering principles to describe economic systems is what I’m supposed to know.

Describing this downward spiral as a negative feedback loop is not quite right, but not entirely wrong. (As you can tell, I prefer the term “downward spiral.”) It may very well be negative feedback that is adjusting the market down, stabilizing an overly bubbly economy. If it doesn’t overshoot to the downside, then negative feedback is doing its job.

If it overshoots to the downside, then we may have an underdamped and possibly unstable system (positive feedback or open loop), as I suspect.

I see three major feedback mechanisms that have failed. First, the models used by the banks to determine loan quality failed miserably. The fear of failure, or risk, is a critical feedback mechanism that helps stabilize economic behavior. With broken models, this feedback was destroyed.

Second, Greenspan set rates too low. Because the rate is set by a person, and it does not adjust to the market in real-time, this is an open loop control. Bad. Very bad. This reminds me of a digital control system where the feedback is sampled at too low of a rate.

Third, if we don’t let the banks fail and we bail out the homeowners, we eliminate yet another natural feedback. Moral hazard is just another term for “positive feedback” and those who understand what that means know it forces the system to go unstable.

Undoubtedly, the government will try to replace natural negative feedback with regulations because they think they know how to manage the market better than natural feedback loops. Regulators move so slowly and often with poor information, it always ends up being open-loop.

Eliminating these negative feedback mechanisms from the system makes it unstable, as the current global economic system demonstrates.

Getting the economy out of the hands of the government is the most important issue America faces.

[sdduuuude]

This talk of feedback is interesting to me. My degrees are in control systems and Engineering Economics. Using engineering principles to describe economic systems is what I’m supposed to know.

Describing this downward spiral as a negative feedback loop is not quite right, but not entirely wrong. (As you can tell, I prefer the term “downward spiral.”) It may very well be negative feedback that is adjusting the market down, stabilizing an overly bubbly economy. If it doesn’t overshoot to the downside, then negative feedback is doing its job.

If it overshoots to the downside, then we may have an underdamped and possibly unstable system (positive feedback or open loop), as I suspect.

I see three major feedback mechanisms that have failed. First, the models used by the banks to determine loan quality failed miserably. The fear of failure, or risk, is a critical feedback mechanism that helps stabilize economic behavior. With broken models, this feedback was destroyed.

Second, Greenspan set rates too low. Because the rate is set by a person, and it does not adjust to the market in real-time, this is an open loop control. Bad. Very bad. This reminds me of a digital control system where the feedback is sampled at too low of a rate.

Third, if we don’t let the banks fail and we bail out the homeowners, we eliminate yet another natural feedback. Moral hazard is just another term for “positive feedback” and those who understand what that means know it forces the system to go unstable.

Undoubtedly, the government will try to replace natural negative feedback with regulations because they think they know how to manage the market better than natural feedback loops. Regulators move so slowly and often with poor information, it always ends up being open-loop.

Eliminating these negative feedback mechanisms from the system makes it unstable, as the current global economic system demonstrates.

Getting the economy out of the hands of the government is the most important issue America faces.

[sdduuuude]

This talk of feedback is interesting to me. My degrees are in control systems and Engineering Economics. Using engineering principles to describe economic systems is what I’m supposed to know.

Describing this downward spiral as a negative feedback loop is not quite right, but not entirely wrong. (As you can tell, I prefer the term “downward spiral.”) It may very well be negative feedback that is adjusting the market down, stabilizing an overly bubbly economy. If it doesn’t overshoot to the downside, then negative feedback is doing its job.

If it overshoots to the downside, then we may have an underdamped and possibly unstable system (positive feedback or open loop), as I suspect.

I see three major feedback mechanisms that have failed. First, the models used by the banks to determine loan quality failed miserably. The fear of failure, or risk, is a critical feedback mechanism that helps stabilize economic behavior. With broken models, this feedback was destroyed.

Second, Greenspan set rates too low. Because the rate is set by a person, and it does not adjust to the market in real-time, this is an open loop control. Bad. Very bad. This reminds me of a digital control system where the feedback is sampled at too low of a rate.

Third, if we don’t let the banks fail and we bail out the homeowners, we eliminate yet another natural feedback. Moral hazard is just another term for “positive feedback” and those who understand what that means know it forces the system to go unstable.

Undoubtedly, the government will try to replace natural negative feedback with regulations because they think they know how to manage the market better than natural feedback loops. Regulators move so slowly and often with poor information, it always ends up being open-loop.

Eliminating these negative feedback mechanisms from the system makes it unstable, as the current global economic system demonstrates.

Getting the economy out of the hands of the government is the most important issue America faces.

[EconProf]

Sduuuuude: Well put indeed.
You should be teaching economics to those minds-of-mush college students.
BobS

[EconProf]

Sduuuuude: Well put indeed.
You should be teaching economics to those minds-of-mush college students.
BobS

[EconProf]

Sduuuuude: Well put indeed.
You should be teaching economics to those minds-of-mush college students.
BobS

[EconProf]

Sduuuuude: Well put indeed.
You should be teaching economics to those minds-of-mush college students.
BobS

[Author]

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