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patientrenter
Participant[quote=davelj][quote=TheBreeze]
So much for TARP being ‘money good’.[/quote]
….it would be nice to wait until perhaps the latter innings of the game to start discussing how things are progressing.[/quote]
I am not going to spoil a good spat, and I don’t know the history of what sounds like a long-running feud, but…. I think Breeze (I like Breezhnev) has a point about the estimates the general public has been fed about the cost of the bailouts. Larry Summers and Chris Dodd and others had the temerity to spin stories about how the bailouts were mostly providing temporary liquidity, with not much chance that they would be providing a lot of solvency repair. That was a pretty straightforward twisting of the truth, and I think anyone who propagates that yarn should be called on it. Most of us are aware that solvency is the real fear, and the number isn’t small.
Participant[quote=davelj][quote=TheBreeze]
So much for TARP being ‘money good’.[/quote]
….it would be nice to wait until perhaps the latter innings of the game to start discussing how things are progressing.[/quote]
I am not going to spoil a good spat, and I don’t know the history of what sounds like a long-running feud, but…. I think Breeze (I like Breezhnev) has a point about the estimates the general public has been fed about the cost of the bailouts. Larry Summers and Chris Dodd and others had the temerity to spin stories about how the bailouts were mostly providing temporary liquidity, with not much chance that they would be providing a lot of solvency repair. That was a pretty straightforward twisting of the truth, and I think anyone who propagates that yarn should be called on it. Most of us are aware that solvency is the real fear, and the number isn’t small.
Participant[quote=davelj][quote=TheBreeze]
So much for TARP being ‘money good’.[/quote]
….it would be nice to wait until perhaps the latter innings of the game to start discussing how things are progressing.[/quote]
I am not going to spoil a good spat, and I don’t know the history of what sounds like a long-running feud, but…. I think Breeze (I like Breezhnev) has a point about the estimates the general public has been fed about the cost of the bailouts. Larry Summers and Chris Dodd and others had the temerity to spin stories about how the bailouts were mostly providing temporary liquidity, with not much chance that they would be providing a lot of solvency repair. That was a pretty straightforward twisting of the truth, and I think anyone who propagates that yarn should be called on it. Most of us are aware that solvency is the real fear, and the number isn’t small.
ParticipantAllan,
Do you think that the marketing of the “American Dream” began in earnest in just the last 20-30 years? I honestly don’t know, because I am a foreigner, and wasn’t here before 1981.
My own guess, picked up – probably hopelessly inaccurately – from movies and historical accounts, is that the vigorous pursuit of the American dream was alive and well in the 1960’s and 1950’s, and maybe even earlier. The real differentiator since 1981 or so is the emergence of the baby boomers as a dominant economic and political force. This is a large and diverse group, doubtless, but their sheer numbers, and the common views many of them share because of the forces that were at work during their formative years, make them a force that can and did move the entire country, including our economics.
When most baby boomers were growing up, it was a time of unparalled optimism in the US. The country dominated world wealth and knowledge as never before. Growth rates here and around the world were persistently high. People began to ask not how they could sustain their own personal wellbeing, but what they could do with that wellbeing. Wealth and growth were taken for granted.
When asset prices started their 20-27 year upward trajectory in the early 1980’s, and it just kept going and going, those baby boomers began to believe that the production growth of their youth could be replicated in asset price growth, leading to comfortable consumption and retirement patterns without the inconvenience of consuming much less than they produced during their working lifetimes.
None of us knows for sure, but I think what we are seeing now is the inevitable breakdown in that giant “free lunch” dream of an entire generation. Trouble is, instead of a uniform, fairly apportioned reversal of the unsustainable gains, there will be many winners and losers. Some baby boomers will walk away with gains well in excess of their savings; others will not; and many members of younger generations will lose through higher future income taxes and inflation.
BTW, Allan, always love your incisive and erudite comments.
ParticipantAllan,
Do you think that the marketing of the “American Dream” began in earnest in just the last 20-30 years? I honestly don’t know, because I am a foreigner, and wasn’t here before 1981.
My own guess, picked up – probably hopelessly inaccurately – from movies and historical accounts, is that the vigorous pursuit of the American dream was alive and well in the 1960’s and 1950’s, and maybe even earlier. The real differentiator since 1981 or so is the emergence of the baby boomers as a dominant economic and political force. This is a large and diverse group, doubtless, but their sheer numbers, and the common views many of them share because of the forces that were at work during their formative years, make them a force that can and did move the entire country, including our economics.
When most baby boomers were growing up, it was a time of unparalled optimism in the US. The country dominated world wealth and knowledge as never before. Growth rates here and around the world were persistently high. People began to ask not how they could sustain their own personal wellbeing, but what they could do with that wellbeing. Wealth and growth were taken for granted.
When asset prices started their 20-27 year upward trajectory in the early 1980’s, and it just kept going and going, those baby boomers began to believe that the production growth of their youth could be replicated in asset price growth, leading to comfortable consumption and retirement patterns without the inconvenience of consuming much less than they produced during their working lifetimes.
None of us knows for sure, but I think what we are seeing now is the inevitable breakdown in that giant “free lunch” dream of an entire generation. Trouble is, instead of a uniform, fairly apportioned reversal of the unsustainable gains, there will be many winners and losers. Some baby boomers will walk away with gains well in excess of their savings; others will not; and many members of younger generations will lose through higher future income taxes and inflation.
BTW, Allan, always love your incisive and erudite comments.
ParticipantAllan,
Do you think that the marketing of the “American Dream” began in earnest in just the last 20-30 years? I honestly don’t know, because I am a foreigner, and wasn’t here before 1981.
My own guess, picked up – probably hopelessly inaccurately – from movies and historical accounts, is that the vigorous pursuit of the American dream was alive and well in the 1960’s and 1950’s, and maybe even earlier. The real differentiator since 1981 or so is the emergence of the baby boomers as a dominant economic and political force. This is a large and diverse group, doubtless, but their sheer numbers, and the common views many of them share because of the forces that were at work during their formative years, make them a force that can and did move the entire country, including our economics.
When most baby boomers were growing up, it was a time of unparalled optimism in the US. The country dominated world wealth and knowledge as never before. Growth rates here and around the world were persistently high. People began to ask not how they could sustain their own personal wellbeing, but what they could do with that wellbeing. Wealth and growth were taken for granted.
When asset prices started their 20-27 year upward trajectory in the early 1980’s, and it just kept going and going, those baby boomers began to believe that the production growth of their youth could be replicated in asset price growth, leading to comfortable consumption and retirement patterns without the inconvenience of consuming much less than they produced during their working lifetimes.
None of us knows for sure, but I think what we are seeing now is the inevitable breakdown in that giant “free lunch” dream of an entire generation. Trouble is, instead of a uniform, fairly apportioned reversal of the unsustainable gains, there will be many winners and losers. Some baby boomers will walk away with gains well in excess of their savings; others will not; and many members of younger generations will lose through higher future income taxes and inflation.
BTW, Allan, always love your incisive and erudite comments.
ParticipantAllan,
Do you think that the marketing of the “American Dream” began in earnest in just the last 20-30 years? I honestly don’t know, because I am a foreigner, and wasn’t here before 1981.
My own guess, picked up – probably hopelessly inaccurately – from movies and historical accounts, is that the vigorous pursuit of the American dream was alive and well in the 1960’s and 1950’s, and maybe even earlier. The real differentiator since 1981 or so is the emergence of the baby boomers as a dominant economic and political force. This is a large and diverse group, doubtless, but their sheer numbers, and the common views many of them share because of the forces that were at work during their formative years, make them a force that can and did move the entire country, including our economics.
When most baby boomers were growing up, it was a time of unparalled optimism in the US. The country dominated world wealth and knowledge as never before. Growth rates here and around the world were persistently high. People began to ask not how they could sustain their own personal wellbeing, but what they could do with that wellbeing. Wealth and growth were taken for granted.
When asset prices started their 20-27 year upward trajectory in the early 1980’s, and it just kept going and going, those baby boomers began to believe that the production growth of their youth could be replicated in asset price growth, leading to comfortable consumption and retirement patterns without the inconvenience of consuming much less than they produced during their working lifetimes.
None of us knows for sure, but I think what we are seeing now is the inevitable breakdown in that giant “free lunch” dream of an entire generation. Trouble is, instead of a uniform, fairly apportioned reversal of the unsustainable gains, there will be many winners and losers. Some baby boomers will walk away with gains well in excess of their savings; others will not; and many members of younger generations will lose through higher future income taxes and inflation.
BTW, Allan, always love your incisive and erudite comments.
ParticipantAllan,
Do you think that the marketing of the “American Dream” began in earnest in just the last 20-30 years? I honestly don’t know, because I am a foreigner, and wasn’t here before 1981.
My own guess, picked up – probably hopelessly inaccurately – from movies and historical accounts, is that the vigorous pursuit of the American dream was alive and well in the 1960’s and 1950’s, and maybe even earlier. The real differentiator since 1981 or so is the emergence of the baby boomers as a dominant economic and political force. This is a large and diverse group, doubtless, but their sheer numbers, and the common views many of them share because of the forces that were at work during their formative years, make them a force that can and did move the entire country, including our economics.
When most baby boomers were growing up, it was a time of unparalled optimism in the US. The country dominated world wealth and knowledge as never before. Growth rates here and around the world were persistently high. People began to ask not how they could sustain their own personal wellbeing, but what they could do with that wellbeing. Wealth and growth were taken for granted.
When asset prices started their 20-27 year upward trajectory in the early 1980’s, and it just kept going and going, those baby boomers began to believe that the production growth of their youth could be replicated in asset price growth, leading to comfortable consumption and retirement patterns without the inconvenience of consuming much less than they produced during their working lifetimes.
None of us knows for sure, but I think what we are seeing now is the inevitable breakdown in that giant “free lunch” dream of an entire generation. Trouble is, instead of a uniform, fairly apportioned reversal of the unsustainable gains, there will be many winners and losers. Some baby boomers will walk away with gains well in excess of their savings; others will not; and many members of younger generations will lose through higher future income taxes and inflation.
BTW, Allan, always love your incisive and erudite comments.
ParticipantI don’t see anything to disagree with in your post, Allan.
I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.
I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.
ParticipantI don’t see anything to disagree with in your post, Allan.
I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.
I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.
ParticipantI don’t see anything to disagree with in your post, Allan.
I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.
I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.
ParticipantI don’t see anything to disagree with in your post, Allan.
I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.
I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.
ParticipantI don’t see anything to disagree with in your post, Allan.
I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.
I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.
Participant[quote=davelj]
…PR, what you’re saying is that you’d rather cut off your nose to spite your face. Which is fine, but obviously I don’t share that view…..
I’m not one to cut off my nose to spite my face.[/quote]
Where’s my nose? I’ve lost my nose!
More seriously, what I am saying is that fairness is a goal just as valid as cost minimization. For some of us, it is less important than cost minimization; for some, more important. Your characterization of my priorities clearly places you in the first category. Obviously, I am in the second category. I accept the variety of views, but I don’t accept that fairness should be swept aside entirely.
I am not prepared to achieve fairness at any cost, but I think the public debate should acknowledge it as an important goal for many of us, and give it serious weight and priority. At the moment, fairness is receiving only a perfunctory acknowledgment, as something that must be deferred. I am suggesting that is a mistake, because it means that, in this first and most significant phase of the unwind, when vast amounts of wealth are being reallocated, the most irresponsible people will benefit the most from the entire bubble and its aftermath. You mentioned, davelj, that many of the well-paid professionals who actively aided and abetted, and profited from, the bubble will see no really large personal pain now. I am saying that part of what we should be doing, as part of a focus on fairness, is to change that.
I am a financial technician in the heart of the financial services industry, and near to some of the companies and issues that we read about every day on the front page of the WSJ. The lesson I personally am learning from the bubble and the unwind, and the way the unwind is being managed, is that reckless behavior, executed carefully to maximize my personal upside and to socialize as much downside as possible, will pay off handsomely.
If I buy a home in the future, I will make sure to do so using government-subsidized loans that require next to no downpayment. As home prices eventually start on their next up cycle, I will buy many homes with little or no money down, signing whatever the mortgage broker says about my living in each of the homes to get the best deal, and when prices eventually become frothy again, I will HELOC the hell out of each one, and walk when prices start to go down again.
And that is just the beginning. Knowing that the whole game is driven by selfish populism, I owe no moral allegiance to the rest of the population. All that scrupulous paying of taxes, regardless of how easily I could avoid some if I tried? Gone.
By demoting fairness to the bottom of the pile, we are allowing a corrosion of trust in our community that may have long-term consequences. I’d rather take my medicine now. My belief is that if we all did that, we’d all be much better off 20 years from now. So I don’t see putting fairness high on the priorities as self-denial or self-mutilation in any way. It’s in our best long-term interest. The biggest obstacle is that very few people think for the long term.
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