Roubini: “We Are in ‘Worse Situation Than in 2008”

[Veritas]

TG,

Not sure about the gold reserves either. What they say is gold and what is really gold concerns me as in all that glitters is not gold. Otherwise, I really enjoyed your take on Roubini. Well done.

Brian,

What in the world is a “new worldly foreign student”? How much wine did you drink while reading this thread? You always act like you know what a real American says, thinks or wants, so why don’t you go ahead and define real American for us, so we do not have to guess. I am kind of tired of your pseudo cosmopolitan persona.

As an American, unknown if I am real or unreal, I welcome skilled immigrants and if they take the best jobs, I have to believe they were the most qualified for the job. It they live here and make money here and spend it here, it only enriches this country. This is a country of immigrants and even the natives had to arrive here from somewhere else long ago. I do not think that real Americans are as full of class envy and xenophobia as you think. Perhaps you are projecting your own feelings on them, then attributing them to real
Americans.

End of rant.

[DomoArigato]

[quote=carlsbadworker]Agree with CAR. The reason deadbeats use their houses as ATM is because they have no where else to get money for consumption.[/quote]

My bank now literally allows one to use their home as an ATM as the ATMs now have an option for direct withdraws from a home equity line of credit. I haven’t seen this before. It used to be you could only withdraw from a checking account or a savings account.

Is this something new or was my bank just behind the curve?

[SK in CV]

[quote=Veritas]
Brian,

What in the world is a “new worldly foreign student”? How much wine did you drink while reading this thread? You always act like you know what a real American says, thinks or wants, so why don’t you go ahead and define real American for us, so we do not have to guess. I am kind of tired of your pseudo cosmopolitan persona.

As an American, unknown if I am real or unreal, I welcome skilled immigrants and if they take the best jobs, I have to believe they were the most qualified for the job. It they live here and make money here and spend it here, it only enriches this country. This is a country of immigrants and even the natives had to arrive here from somewhere else long ago. I do not think that real Americans are as full of class envy and xenophobia as you think. Perhaps you are projecting your own feelings on them, then attributing them to real
Americans.

End of rant.[/quote]

Touche on that. I was going to respond to the same thing. But you said what I was going to say.

I will add an overlay of recent personal experience. A couple weeks ago I attended my daughter’s white coat ceremony. (First day of medical school.) There were about 120 students. Rough estimate would be about 75 to 85 Asians both by name and appearance. I recognized a few names as Japanese, a few as Viet Namese, the rest I’d only be guessing. I asked my daughter (who is not Asian) how she felt about that. She didn’t understand the question. She said it was like asking how she feels about Thursday following Wednesday. I have no idea how “American” these kids are. I suspect just as “American” as my daughter. I know her two roommates grew up in upstate NY and LA. One is of Japanese descent, and the other from Sri Lanka. Whether their parents were born or have ever lived in the US, I have no idea. I know that like my daughter, they are among the best and the brightest, otherwise they wouldn’t be there. I’m not sure why anyone would have a problem with that.

[briansd1]

[quote=SK in CV] Whether their parents were born or have ever lived in the US, I have no idea. I know that like my daughter, they are among the best and the brightest, otherwise they wouldn’t be there. I’m not sure why anyone would have a problem with that.[/quote]

Neither you, nor me, nor your daughter have a problem with that.

Ok, I’ll admit that I like to make fun of real Americans as Sarah Palin defines them. I like to build a mental picture of them as uneducated, intolerant rednecks.

But seriously, on the right, and on the left too, there is an unease about fast changing democraphics. We must recognize that otherwise we’re not in touch with the pulse of the country.

That is manifested in anti-immigration legislations like in Arizona, Georgia, etc…

There used to be a certain pecking order in America. We had the Whites and the Blacks, and the Puerto Ricans and the Asian immigrants, the Prebesterians, the Baptists, etc…

Immigrants came to America tired, poor, and yearning to breathe free. They worked hard, played by the rules, and then were admitted as “real” Americans after paying their dues.

Now the world is a lot more globalized. There are a lot of shortcuts that take brains and talents, but don’t require paying the traditional dues, so to speak.

Immigrants these days come and go. Their continue to speak foreign languages without feeling out of place, and they keep strong ties to their home countries. They frequently travel back and forth and live part-time in different locales. We increasingly see immigrants who belong to a class of global professionals.

In the work place, especially in tech, you have young, smart new employees who jump ahead of more established long-time employees. Is that due to age discrimation of changing skill sets? Are employers required to train their employees, or do employees need to bring their own skills?

I know professionals who can’t use a touch pad or an iPad. They can’t make and transfer pdf files in a world where everything is electronic. Is that acceptable? Do they deserve their jobs?

There are lots of changes in the world that are causing unease and anxiety. So despite the good economic parameters that temeculaguy listed, people don’t feel secure.

[njtosd]

[quote=briansd1]
Real Americans don’t like it when the new worldly foreign students come here to attend the best universities and drive Lexus to class. [/quote]

You must not be a real American, then, Brian, as you have recently expressed how much you like the “worldly foreign” women, especially those with advanced degrees who aren’t too Americanized but who speak English beautifully.

[Allan from Fallbrook]

[quote=njtosd][quote=briansd1]
Real Americans don’t like it when the new worldly foreign students come here to attend the best universities and drive Lexus to class. [/quote]

You must not be a real American, then, Brian, as you have recently expressed how much you like the “worldly foreign” women, especially those with advanced degrees who aren’t too Americanized but who speak English beautifully.[/quote]

Nj: That was a good one, and I think it shows that Brian’s Freudian slip is showing a bit.

Americans are, in spite of their faults, some of the most accepting people in the world.

Alexandra Pelosi recently did an excellent documentary about legal immigration and becoming an American citizen. It was nearly impossible to watch it without getting choked up and also without realizing that no one appreciates this country more than those who immigrate here from all over the world.

A good friend of mine, who worked at Intel, was in China a few years back, scouting locations for a proposed Intel chip fab plant. Without fail, nearly every Chinese engineer he met surreptitously slipped my friend their resume/CV. When he pressed one engineer on his reasons for wanting to immigrate to America when everything in China was new and fast and there was so much money to be made, the engineer replied that he wanted to raise more than one child and do so in a place where he wasn’t constantly looking over his shoulder.

For much of the world, we are still that “shining city on a hill”.

[Veritas]

Awesome post Allan. I do still believe we are the shining city on the hill and I believe in our exceptionalism even though Stalin may have coined that term. Huge congrats to you SK in CV for raising a brilliant daughter with great character. Kids do not raise themselves.

[SK in CV]

[quote=Veritas]Awesome post Allan. I do still believe we are the shining city on the hill and I believe in our exceptionalism even though Stalin may have coined that term. Huge congrats to you SK in CV for raising a brilliant daughter with great character. Kids do not raise themselves.[/quote]

Thank you, but it’s not deserved. I wish I could take credit. I can’t. This one did it herself. I stood back and watched. And marveled. I was there, that’s all. The credit is hers. I just paid the bills. And continue to pay some of them. The world must have been in need of angels when she was born. I just got lucky.

[Veritas]

Sometimes just providing them the support and believing in them is all it takes. It certainly means everything to a child when they know you are proud of them. We definitely need great doctors and you helped her succeed by being there.

[sdrealtor]

sk
When you put them in the right environment, water then every day and allow them to grow they often blossom.

I appreciate this because I grew up in such a garden even though I am one of the weeds;)

[Veritas]

A flower is an educated weed.”…Luther Burbank

[CA renter]

[quote=EconProf][quote=CA renter]The financial crisis has its roots in the trickle-down economic policies that began in the early 80s. The notion that we could reward speculation over labor, and somehow create a thriving economy from buying and selling things at greater prices and with higher debt levels was and is absurd. The idea that we could impoverish the majority of our population (by outsourcing their jobs) so that the capitalists who produce nothing could become wealthier and wealthier is completely ignorant and totally dismisses psychology and human behavior, not to mention simple math. A healthy economy will ALWAYS require us to actually MAKE things that can be sold here and abroad. A healthy economy requires JOBS for people so they can continue to buy goods and services from one another. There is no other way.

.”[/quote]

CAR, not sure what you mean by the trickle-down policies of the 1980s, but assume it is the supply-side, incentive-based policies of the Reagan years: cutting marginal tax rates drastically, closing tax loopholes, and deregulation. The result, once the policies fully took hold in about 1984, was a rapidly expanding economy (7 & 8% YOY in some quarters, compared to 1% so far this year), a rapidly falling unemployment rate, and a steadily falling rate of inflation. American living standards and consumption increased accordingly, as we freely chose to buy more foreign-made cars, clothes, tools, and appliances made in factories where no American unions dictated work rules and pay. From your post, it appears you would like to limit American consumers to US made goods in the above categories. I wonder what prices we would pay, and what quality we would get. Do you really want to let Detroit have that kind of power over our car-buying public?
Free (or freer) trade is always disruptive. There are winners and losers. The losers are easily identified, vocal, and elicit our sympathy and that of the superficial mainstream media. The winners are the broader consuming public, who are far more numerous but not organized into a lobby with any clout.
Another winner is the US exporters, who capitalize on American advantages in certain goods with higher labor skills and costs than the rest of the world. Let the Indonesians and Indians do the drudgery of making shoes and shirts–our workers won’t go back to that job.[/quote]

We saw a rapidly expanding economy and a falling unemployment rate during the credit bubble, too. Does that mean creating a credit bubble was a good thing?

IMHO, the inflation of the 1970s was largely due to the currency problems/end of Bretton Woods brought about by ending the relationship between gold and the dollar.

In addition to this, the Baby Boomers were entering their peak earning/purchasing years. Not only that, but women were entering the workforce en masse at the same time. These two events created a rather sudden shift in demand that increased prices, but also increased unemployment because there were so many new entrants into the job market.

Once the market adjusted to these changes (new demand was created, so new jobs followed with a slight lag), unemployment decreased. This increase in demand and jobs — largely the effect of demographic changes — was largely responsible for the expanding economy that lasted through the 80s and 90s, IMO. The expansion of credit was also a factor in this expansion, but all too often, people neglect the fact that this debt must be paid back…with interest. That’s a negative for *future* growth.

As for inflation, I believe Volcker’s interest rate shock was largely responsible for slowing the inflation rate. Without the higher rates, inflation probably would have skyrocketed.

As for buying US-made goods, I think (inflation-adjusted) prices would be similar to those paid when we DID manufacture in the US, with comparable quality to what we had then — far superior to the quality we have now, IMO.

I don’t have a problem with fair trade — trading with other countries who have similar labor and environmental standards — but have no desire to continue spiraling toward the bottom with regard to wages, work environment, pollution, etc. Of course, if we are totally incapable of producing something ourselves, we should import it without any tariffs; however, we need to offset the wage disparities, environmental disparities, and subsidies provided by other nations.

Not sure “winners” of “free trade” are the consumers. Those consumers are the very same people whose jobs have been lost due to outsourcing. More often than not, the beneficiaries of cheaper wages and lower environmental standards have been the corporations who’ve seen their profit margins grow to historical highs. Oddly enough, there are many items for which we have to pay prices that are hardly lower than what we paid for domestically-produced items (when we used to make them for ourselves). Also, when we have to replace these goods on an accelerated timetable — because they are cheaply made and designed to break in a shorter period of time — we often end up paying MORE for the use of that item over time (paying 1/3 less, but having to replace it 5X as often). This also contributes to greater environmental damage on both the production side, as well as the end-of-life side.

[EconProf]

CAR: I agree with you about the importance of demographics in shaping economic outcomes. But I doubt the impact of the baby-boomers was as big as you suggest in boosting the economy during the Reagan years.
Reagan’s supply-side policies aimed to increase output by freeing up businesses and workers to produce more in a free market environment. In contrast, the Keynesian demand-side policies of the past ten years pump out monetary stimulus and government spending in hopes that the economy recovers. We now have great empirical evidence contrasting the two approaches. Reagan inherited a recession and inflation in some ways worse than Obama, with inflation peaking at about 13% in 1980, and unemployment peaking at 10.8% in November of 1982. Yes, that was two years after Reagan got elected, but supply-side policies were not fully in place yet, and Volcker’s harsh (and necessary) tight monetary policy was still wringing inflation out of the economy. But real GNP growth resumed as the economy bounced back like a coiled spring and unemployment steadily fell to 5.5% in 1988.
The demand-side policies of recent years have served to drive us deeper into debt and sapped our appetite to hire and expand production via the exact opposite of supply-side incentives. Businesses and entrepreneurs are afraid of the EPA, looming Obamacare costs, and Dodd-Frank compliance costs, among other job-killing laws. Of course they are moving jobs overseas! Worse yet, the new programs, handouts, and government agencies are entrenched now in our economy, and will be impossible to pare back, as demonstrated by the recent budget debate that achieved so little. The new recipients of the largesse, whether banks, car manufacturers, “green” companies, or those getting 99 weeks of unemployment will fight to keep the money coming.

The Reagan-Obama comparison above is imperfect in many ways, as nit-pickers will point out. But there are plenty of lessons we could learn from that era, and I suspect the coming months will give us a fuller debate about the contrast between supply-siders and Keynesian demand-siders. I
welcome it.

[SK in CV]

[quote=EconProf] In contrast, the Keynesian demand-side policies of the past ten years pump out monetary stimulus and government spending in hopes that the economy recovers. [/quote]

Right, because low taxes in a stable and growing economy is just so Keynesian. Bush was a Keynesian. Who knew?

[EconProf]

Actually you are right, SK, tax cuts are Keynsian in the sense that they aim to spur aggregate demand by consumers. Conservatives would argue that if you must have demand stimulus, do it with tax cuts rather than new permanent government programs and handouts.
Tax cuts aimed at businesses are more aimed at stimulating investment in new plant and equipment.

[Author]

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