[patientrenter]

It sounds like outsourcing has been a mixed bag.

Just to add some balance to the comments trashing outsourcing: The two companies I’ve worked for recently have used Indian programmers on a small scale and have been pleasantly surprised at the good quality and rapid learning. In the long run, more is planned, but in the current environment they will be amongst the first to suffer if expenses need to be reduced. (I work in the first purely private-sector industry to use computers on a large scale, so I suspect what we do is a leading indicator outside the software industry itself.)

[patientrenter]

It sounds like outsourcing has been a mixed bag.

Just to add some balance to the comments trashing outsourcing: The two companies I’ve worked for recently have used Indian programmers on a small scale and have been pleasantly surprised at the good quality and rapid learning. In the long run, more is planned, but in the current environment they will be amongst the first to suffer if expenses need to be reduced. (I work in the first purely private-sector industry to use computers on a large scale, so I suspect what we do is a leading indicator outside the software industry itself.)

[patientrenter]

It sounds like outsourcing has been a mixed bag.

Just to add some balance to the comments trashing outsourcing: The two companies I’ve worked for recently have used Indian programmers on a small scale and have been pleasantly surprised at the good quality and rapid learning. In the long run, more is planned, but in the current environment they will be amongst the first to suffer if expenses need to be reduced. (I work in the first purely private-sector industry to use computers on a large scale, so I suspect what we do is a leading indicator outside the software industry itself.)

[patientrenter]

It sounds like outsourcing has been a mixed bag.

Just to add some balance to the comments trashing outsourcing: The two companies I’ve worked for recently have used Indian programmers on a small scale and have been pleasantly surprised at the good quality and rapid learning. In the long run, more is planned, but in the current environment they will be amongst the first to suffer if expenses need to be reduced. (I work in the first purely private-sector industry to use computers on a large scale, so I suspect what we do is a leading indicator outside the software industry itself.)

[patientrenter]

dave lj, I won’t argue against your thesis that market pricing sometimes overestimates true values and sometimes underestimates them.

What we’re discussing is what government actions should be taken in response to that fact. It’s pretty clear that, when market prices may be too high, government does not intervene effectively. (“What bubble?”) It’s also pretty clear that when market prices may be too low, government intervenes vigorously, apparently without limits. This asymmetry is often not acknowledged (e.g. “if you allow us to inflate low prices now, we promise in the next bubble we’ll do what it takes to deflate prices”), but the asymmetry is real. I don’t accept without a good argument that this asymmetric government intervention is better than no intervention. That’s why I am skeptical of your arguments for asset price and banking industry supports now.

[patientrenter]

dave lj, I won’t argue against your thesis that market pricing sometimes overestimates true values and sometimes underestimates them.

What we’re discussing is what government actions should be taken in response to that fact. It’s pretty clear that, when market prices may be too high, government does not intervene effectively. (“What bubble?”) It’s also pretty clear that when market prices may be too low, government intervenes vigorously, apparently without limits. This asymmetry is often not acknowledged (e.g. “if you allow us to inflate low prices now, we promise in the next bubble we’ll do what it takes to deflate prices”), but the asymmetry is real. I don’t accept without a good argument that this asymmetric government intervention is better than no intervention. That’s why I am skeptical of your arguments for asset price and banking industry supports now.

[patientrenter]

dave lj, I won’t argue against your thesis that market pricing sometimes overestimates true values and sometimes underestimates them.

What we’re discussing is what government actions should be taken in response to that fact. It’s pretty clear that, when market prices may be too high, government does not intervene effectively. (“What bubble?”) It’s also pretty clear that when market prices may be too low, government intervenes vigorously, apparently without limits. This asymmetry is often not acknowledged (e.g. “if you allow us to inflate low prices now, we promise in the next bubble we’ll do what it takes to deflate prices”), but the asymmetry is real. I don’t accept without a good argument that this asymmetric government intervention is better than no intervention. That’s why I am skeptical of your arguments for asset price and banking industry supports now.

[patientrenter]

dave lj, I won’t argue against your thesis that market pricing sometimes overestimates true values and sometimes underestimates them.

What we’re discussing is what government actions should be taken in response to that fact. It’s pretty clear that, when market prices may be too high, government does not intervene effectively. (“What bubble?”) It’s also pretty clear that when market prices may be too low, government intervenes vigorously, apparently without limits. This asymmetry is often not acknowledged (e.g. “if you allow us to inflate low prices now, we promise in the next bubble we’ll do what it takes to deflate prices”), but the asymmetry is real. I don’t accept without a good argument that this asymmetric government intervention is better than no intervention. That’s why I am skeptical of your arguments for asset price and banking industry supports now.

[patientrenter]

dave lj, I won’t argue against your thesis that market pricing sometimes overestimates true values and sometimes underestimates them.

What we’re discussing is what government actions should be taken in response to that fact. It’s pretty clear that, when market prices may be too high, government does not intervene effectively. (“What bubble?”) It’s also pretty clear that when market prices may be too low, government intervenes vigorously, apparently without limits. This asymmetry is often not acknowledged (e.g. “if you allow us to inflate low prices now, we promise in the next bubble we’ll do what it takes to deflate prices”), but the asymmetry is real. I don’t accept without a good argument that this asymmetric government intervention is better than no intervention. That’s why I am skeptical of your arguments for asset price and banking industry supports now.

[patientrenter]

No need. California will be getting federal bailouts soon. Good ol’ greenbacks will flow freely.

[patientrenter]

No need. California will be getting federal bailouts soon. Good ol’ greenbacks will flow freely.

[patientrenter]

No need. California will be getting federal bailouts soon. Good ol’ greenbacks will flow freely.

[patientrenter]

No need. California will be getting federal bailouts soon. Good ol’ greenbacks will flow freely.

[patientrenter]

No need. California will be getting federal bailouts soon. Good ol’ greenbacks will flow freely.

[patientrenter]

Well, davelj, at last you have some realism in your outlook. And I’ll even agree with you that there is money to be made in some of the flavors of mortgage-backed securities for sale out there now. But the only reason is that the money will come from the government. Without government money pouring into the housing market, the CDOs and MBSs etc out there would mostly still be overpriced.

You draw a comparison between the current govt intervention and the Marshall Plan. I think the differences are bigger than the similarities. Enormous amounts of Europe’s physical capital was destroyed or neglected during WW2. There was still a lot left, and there was a large educated population with institutional capital like education, a tradition of law, etc. What was needed was the plugging of certain gaps, mostly filled by simply supplying specific missing equipment or financing specific needed construction projects.

To draw my own exaggerated analogy, consider a car plant producing Toyota Camrys very efficiently. (Europe before WW2.) Then remove all the welding equipment in the plant. (WW2) The plant produces nothing of any high value or worth. (Europe right after WW2.) Now give the plant welding equipment and help them install it. (Marshall Plan.) Result is a highly productive plant once again. (Europe after Marshall Plan.) Lot of oversimplifications, but you get the idea.

Our current economic problem is not that our capacity to shop or buy more houses or build more retail is devastated unnecessarily by some external force, and we just need to restore it through the power of govt spending. Instead our problem was that were were shopping too much, and buying too many houses, and building too many retail stores… What we need is to reduce incentives for people to do those things, and increase the incentives to produce the world’s most efficient, reliable cars and power plants, and electronics, and….

Funneling money into mortgage lending and housing etc does nothing except delay and divert from what we need to do. Extended unemployment benefits are what we need, not govt money to perpetuate some house price levitation.

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