A president above corruption?

What a joke.

Republicans steal with big business, Democrats with big government.

If confidence in US Treasury Bonds falters, we’re all doomed. This is not an exaggeration.

I'm dumb, but why? I don't even have any clue how the economy's going if I don't see it in the news.

"investors are correct"?

wall street wants mccain. perhaps they should get him.

today, i'm inclined to let mccain preside over the collapse of america's (and the planet's) economny rather than let the GOP blame obama for the inevitable.

Warren Buffett, an Obama supporter, has been talking about this lately too. These Fannie and Freddy bonds were sold on the premise that they'd go up 15% a year, no prob, forever and ever, no risk. That's the key; finance is all about the price of risk. These bonds were WAY oversold, based on the housing market.

McCain's problem isn't so much that he's corrupt; the Keating business was a long time ago. His problem is that he doesn't know a fucking thing about government finance (as he has admitted), and he's surrounded himself with sleazebags and morons for advisers. He's going to continue to drive the US credit market into the ground.

Stock markets go up more in Democratic administrations. I expect a McCain victory to result in global financial crisis, with massive losses everywhere and US dollar becoming totally worthless -- 100% inflation? It's possible. He's a freaking disaster.

"Blah blah blah! I'm a smart liberal talking about complicated economy stuff! I'm sooo smart!" What? Huh? Who the fuck cares? McCain was a POW. P. O. effing W. I know that makes you liberals hate him cause you hate badass American shit... Barack Obama was a "community organiser". Community, as in commune, as in communist. That's all you need to know.

@1: example of how "democrats steal with big government", please. with citation.

I was really interested by this post until I linked to that horrid cartoon. When you've really got nothing visual to express, try using a narrative - even multiple paragraphs are easier to digest when they're not emanating from fucking stick figures.

There are perfectly good regulations in place, but the regulators have no incentive to apply those regulations. They just look the other way because "going along to get along" is the easy way to do their jobs. That's the situation in DC, and it's the situation in Washington State. When you're a government employee it is in your best interests NOT to see any problems with the security backing bonds. That's why bonds are bad - EVEN IF DEMOCRATS WANT TO AUTHORIZE A PILE OF THEM. Sorry for yelling, but some people around these parts like to paint all R's as evil and all D's as divine. Their ALL pigs at the trough when it comes to selling bonds and pretending to enforce financial regulations.

Long story short, don't give any of 'em the right to sell bonds (if you can help it). It's a suckers' game, and we're the suckers.

I'd think those Asian central banks would be very hesitant to pull out of T-bills, simply because they're already so invested in them that any display of unease about them would seriously damage their existing investment, and in turn their own economy.

But you're right that the #1 priority should be regulation of debt rating systems, which is where the whole system really broke down.

Careful with this Ron Paul type of bunk, Jonathan. The commenters may not like these things called "facts".

But Palin has said that Fannie Mae and Freddie Mac have "gotten too big and too expensive to the taxpayers". Are you calling sweet Sarah a liar?!

"@1: example of how "democrats steal with big government", please. with citation."

I'm not number 1 (and certainly not no. 2), but one example of what you are asking about would be ST's latest taxing proposal.

ST's new measure says it requires $7.5 billion of "ST2" taxes for the Phase II work. Yet if voters approve the mess in November ST would haul in over $40 billion in regressive taxes (conservatively) over the next three decades. It would need to do that to secure its long term debt, or the bond market wouldn't buy its paper. That's massive excessive taxing. That's a very local, very relevant example of Democrats using big government to steal.

More pertinent info: Sarah Palin doesn't know who Fannie and Freddy are:
http://mudflats.wordpress.com/2008/09/08/fannie-mae-and-freddie-mac-who-are-they-asks-palin/

Actually, it seems like one of the big lessons of the past decade should have been that you can't trust insufficiently regulated private companies to evaluate other private companies. The same forces that led brokerage firms to give "Strong Buy" ratings to doomed dotcoms led credit rating agencies to pronounce doomed mortgage debt a sure thing. How many bubbles is it going to take?

@3,

I don't know about that; the DOW took a plunge during the RNC convention. The fat cats might want him, but regular investors maybe not so much.

That's really scary. I'm going to start storing food and water in my basement. I should get a gun too, seems like a person should have a gun when the world falls apart and breaks out into pandemonium.

What about the news that one of the other banks that the government is taking over was headed by McCain's son, who in the last few weeks left the board of directors?

I heard a blip about it on CNN, but doesn't that seem shady? Or is it just me?

@2 Essentially because a large, very large portion of the US government runs on revolving credit, and because high investor interest in low interest Treasuries keeps interest rates low for the rest of us.

For the first part, think of it as the person who pays off a high interest credit card with a lower interest credit card, which gets paid off with another credit card, ad infinitum.

As long as Treasuries are seen as safe (and ceasing to offer 30 year T-bonds was not a smart way to shore up confidence), people want them. The safer a bond is, the lower the interest rate is. Treasuries are seen as, bar none, the safest bonds in the world, so they can pay less than 4%. In other words, they can pay less than the rate of inflation, which means that we can sort of make money, as long as the demand remains steady.

If it doesn't, then you have to offer higher interest rates, ones that are profitable in real dollars. That means that the money going out of the US goes out at an even faster rate, causing massive inflation.

@5: Totally true. You have summed up American thought almost completely.

@12: i guess i don't see that as "stealing" on an Ken Lay scale - i don't see individuals being enriched.

but i see your point.

Monique, how do you know what the rest of America thinks?

@20 As far as "individuals being enriched" on a Ken Lay scale, I suppose the Merrill Lynch guy Stan O'Neill comes close to being the worst. And that was done with the full acquiesence of the ML board. I have no idea if he hung more to the R or to the D side, but the kind of ripping off of taxpayers his kind engages in really is apolitical.

@6

Here you go: http://en.wikipedia.org/wiki/House_banking_scandal

@18, thanks for the explanation, but I still don't get it. Someone mentioned 100% inflation. That doesn't sound that bad to me. Maybe some rich white guys will have to sell some boats, maybe I'll get downsized and will have to stop buying $100 jeans.

I know I'm naive and I'm sure it would be bad, but I don't get this quote:

If confidence in US Treasury Bonds falters, we’re all doomed. This is not an exaggeration.

Smart people, please use the following scale to inform me. I have a feeling it's more like a #1 than a #10.

SCALE OF DOOMEDNESS
1- $5.00 gas prices
2
3- 9/11
4
5- Iraq War
6
7- Internet explodes
8
9- Darfur invades USA and wins
10- Jesus comes back and won't stop throwing lightning bolts at people

@24 You are ignorant. It means that your salary has half the buying power each year. It's essentially a 50% pay cut each year.

@24,

Are you kidding? 100 percent inflation means prices will double. That $3 loaf of bread will cost $6. Your rent will double. This isn't just a matter of not buying luxury goods. You'll be lucky if you can afford to buy anything. We're talking Great Depression levels of misery. Does that sound good to you?

@12: Your example seems like saying that the bank "steals" from you by issuing you a long-term mortgage where you end up paying the value of the property again in interest. True, it would be cheaper to buy the property up front and pay no interest, but if you don't have the money you must finance. Similarly, it would be more efficient if the public would pay for large public works up front and avoid costly bond financing schemes, but it hardly amounts to theft on the part of the government when this is not the case. No program asking for the money up front to build a public transportation system would be approved by taxpayers, who would see the sticker price and freak right the fuck out. Thanks largely to the Republican cult of Never Paying A Goddamn Dime In Taxes No Matter How Much Help From The Government You Expect.

Also, in most cases of theft, you don't wake up to find your car's been ransacked and you now have light rail. Generally in a theft one party loses something and one party gains something dishonestly. What you're describing is the process of paying for things that the public uses.

So, basically "doomed" means the same thing as $5 gas prices?

Most of the planet would love having 50% of our buying power, which would bring us to the level of those doomed people in nations like South Korea and the Czech Republic. When I think "doomed" the first thing I think of is Prague or Seoul.

I know it's gotta be worse than that, but I have no clue why and I'm starting to think nobody else does either.

Doomed means not living like 1994-1999

Ziggity @7. My cartooning abilities are indeed horrid. Thankfully I also have a text version of the same stuff.

jrrrl: Why and how doomed? I'd put it about seven on your scale, maybe an eight, if the US government cannot sell treasury bonds and defaults.

Gitai@18 does an admirable job of explaining why this could happen--with the credit card metaphor.

What would it be like? The great depression is a fairly poor example. The US government didn't default in 1929; it would in this case. Without a solvent government, programs like the New Deal will be impossible.

Also, feeding us and keeping us warm is a much more complicated and costly problem than it was in the 1930's. It is possible that many people might starve or die from thirst in places like the desert southwest during a total collapse of government.

For a more reasonable modern scenario, consider what happened in Argentina during the 1999 Argentinian economic crisis. Look it up to see how the collapse of the Argentinian currency affected life there.

doomed means having to defend your kitchen garden, chicken coop, & woodpile with a gun & a pit bull. doomed means schlepping down to lake washington to filter water. doomed means hunting pigeons, possums & squirrels for protein. doomed means no more jet travel. doomed means no more snowboarding. doomed means a cornpone fascist like sarah palin as president.

jrrrl:

The other example would be Russia in the 1990's after the collapse of the Soviet Union. Check out this gloomy discussion.

and doomed means no more internet porn. i'll miss you, belladonna.

Jrrrl, another consequence of "doomed" is 50% unemployment. An awful lot of jobs depend on people buying stuff -- goods and services. Let's say EVERY haircutter goes out of business, and 3/4 of the restaurants, and 90% of the car dealers, and so on. Now you have 100 million newly unemployed people queuing up at the unemployment office, but the unemployment office is closed because the government is bankrupt.

Thanks for the great explanations. I'm satisfied that we don't want this to happen anymore! I've heard of confidence in US bonds before and I'd only heard nebulous consequences like "100% inflation" or "gov't goes bankrupt!" That Soviet/USA collapse page was pretty good.

I still doubt we'll have a 7 or 8 on the doomed scale anytime soon, but I still have no idea how the economy works. I'll continue weathering the recession until my bank tells me I can't buy $100 jeans anymore.

jrrrl:

The best imaginable thing you could do is:
1. Vote for Obama.
2. Donate to Obama.
3. Volunteer for Obama.

Just by seeming to change, to recognize the problems of captive regulators and an incompetent executive branch under Republicans, we'll boost confidence in US Government Bonds. Even if Obama is no better than Bush (and I think that's unlikely.)

That way, you can stay in $100 jeans.

Seems to me like a little Doom would shake things up around here... Viva La Revolución!

Of course, I'm not going to be caught in the middle of the urban carnage that every even moderately sized city will inevitably become. I'm taking my guns and heading to the country when the shit comes!

Now... who do you think will come out of the revolution on top? Meat and potato eating country bumpkins who cling to God and guns. Or tofu eating, latte sipping city slickers obsessed with consensus and nuance?

I know who I'm betting on. But I'm not telling.

#37: You've got a rural bunker stocked with food and ammo? Why aren't you there right now? Hurry! Somebody might be occupying it in your absence.

You Bet!

No worries. Only I know how to get past the boobie traps.

I'm going to wait until the pilaging starts, and then offer safe haven to the hottest stud I can find and take him with me to keep my bunker warm.

Can't wait!

Hey, #36 ... it's no less a person than Andrew Cuomo whom we have to thank for putting the power of HUD into forcing lenders to make loans available to anyone who had a utility bill to show. That conservative rag the Village Voice has the story, "Andrew Cuomo And Fannie And Freddie." Let's see, what Administration did Mr Cuomo serve under ...?

Shock horror!

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