Friday, October 31, 2008

Don't Even Think About Not Voting

I don't care what polls you blue your state sure you are that your vote won't make any difference this long the lines busy your life cold or wet or snowy or hot or humid or windy or muggy or foggy it is hung over you tired you cynical you frightened you worried about the economy you unsure he's experienced enough you anything you are.

Come this Tuesday, if not before, complete your civic duty and cast your vote. If it takes all freaking day...cast your vote. No excuses! This time it really does matter. It will probably be close. Do your part!



Anonymous mbg said...

You are so right, it DOES matter. Get out and vote. It counts.

Obama for change.

11/01/2008 04:15:00 AM  
Blogger lisa said...

If you see something dodgy happening at your polling station:

11/01/2008 07:55:00 AM  
Blogger George said...

This is an election which will shape the future of America.

It matter even more now because of the ongoing financial crisis. Todays NY Times has an article on deflation which is frankly, scary. "Depression" was a word coined in the 30's because the politicians wanted to avoid using the term "deflation."

The short pitch is that this country must avoid deflation at all costs or face double digit unemployment and a long long recession. This will be extraordinarily painful for everyone here.

McCain's economic positions are pointing at absolutely the wrong solutions, they are no solution to the problem. His rhetoric on these issues is extraordinarily dangerous and must not be allowed to be put into effect. McCain is receiving bad advice and worse, he doesn't know it.

Obama is philosophically open to the correct solution and he has the best group of economic advisors to provide the advice he will need as president.

If you are a young voter, the next ten years, your formative future is at stake. There are a differences between the two candidates, substantial differences on a number of issues and a CRITICAL DIFFERENCE on economic policies.

It is very very important that you vote, and that you vote for Obama.

On a tomorrow, don't say "I wish I had voted."

Vote. Get a friend to vote.

11/01/2008 12:49:00 PM  
Anonymous good cop bad cop said...

Obama/McCain is philosophically open to the correct solution and he has the best group of economic advisors to provide the advice he will need as president.


Ultimately, the system is the same and does what it needs to to function.

Critical for WHO? When, and where?

11/01/2008 03:58:00 PM  
Blogger George said...

My appologies to Ed for the length of this comment.

But I believe there is a critical difference in the positions of the two cadidates for president and that it does matter who you vote for.

The easy stuff first, gcbc asked "Critical for WHO? When, and where?"

WHO? It's critical for everyone, for the rich and the poor, for main street and wall street.

When? Starting immediately and ramping up over the next year, the problem is preventable but requires immediate response.

Where? World wide, everywhere. The US is one of the worlds largest consumers, if we stop consuming we stop importing, the problem will be felt by all exporters. It's a global economy.

gcbc suggests that "Ultimately, the system is the same and does what it needs to to function."
The proponents of laissez-faire capitalism would have you believe that the markets are self regulating and will self correct imbalances. This is probably true, but at a very high price as we are seeing now.

The problem I am addressing is deflation. What is deflation? In the normal course of a capitalist economy, prices for goods tend to rise and fall depending on supply and demand.

Inflation occurs when prices increase because of a supply-demand imbalance, or a debasing of the currency, or self fulfilling prophecy, people buy because the price is going up. Obviously in an economy it is more complicated than this, but inflation is rising prices. In normal economic situations it can be controlled by raising interest rates. In the 1970's Paul Volker raised rates to nearly 25% in order to stem the inflationary spiral set off by the mid-east oil crisis.

Deflation occurs when prices decrease over time. At the present real estate prices are deflating, going down. As prices continue to fall, demand shrinks, in part because the 'buyer' believes the price will be lower tomorrow. In an economy, deflation is the worst of the two evils. It may seem good that pries would fall, but the resulting collapse of demand means that production is curtailed, employees are laid off, secondary suppliers lose business and also lay off employees, the unemployed cannot afford to buy anything, so demand shrinks and prices fall. To a point this can also be controlled by interest rates. Lowering interest rates can make investment in goods and equipment more affordable and therefore profitable. This stimulates the economy which increases employment and demand.

Interest rates can only go to zero. Then what?

In a macro economic situation like we are discussing, there are some other ways for the governing bodies to inject capital into the markets. One might be something like the current "bailout plan"

*** Another is direct government investment in the infrastructure of the nation. This is the McCain bugaboo of government spending, but building bridges, roads, and whatever injects capital into the economy and creates jobs.

*** In order to do the above, the government borrows money by issuing treasury bonds, it is deficit spending. Deficit spending is a POSITIVE when the goal is to stimulate the economy out of a recession or to prevent deflation.

John McCain has been campaigning on the gotcha word of taxes and saying he will curtail government spending yadda yadda yadda. These are precisely the wrong approaches to be suggesting at this point in time.

The economy needs a stimulus, not a $600 check to you or me, but a real stimulus plan to invest in America. This is the direction Obama is leaning, that his advisors will be suggesting. McCain is flat out wrong on this and that is the CRITICAL DIFFERENCE.

--- What happens if it doesn't happen?

Deflation, once it has started is very difficult to stop, it took Japan ten years to get their economy back somewhere near normal, their stock market is miles from its old high a decade ago. If the government does not take the correct course of action it is likely we will have a severe recession with unemployment over 15%, a 80%-90% peak to trough decline in the US stock market, and roughly 8-10 years of a flatlined economy.

It won't be the end of the world but it will be politically destabilizing, and personally painful for most Americans.

McCain is seriously wrong on the economic issues. Worse, his delays in action will be costly. At any other time over the last 50 years none of these issues would matter that much.

Right now the ECONOMIC ISSUES MATTER A LOT. I believe Obama is the best choice for all Americans.

11/01/2008 05:40:00 PM  
Anonymous WIN WIN said...

George, Thank you for your Thoughts.

I'm pleased that your remarks move one to think that there is a belief in such a system. I appreciate this.

e.g. even if the system is fucked up we can hope fix/regulate it with the correct tools at a given time/over time.

this appears to be a belief in a system.

this is the crux of the problem.

what do people know or believe about a system.

does a blind spot exist.

is a certain candidate good "just for" the system regardless of a "win."

11/01/2008 05:58:00 PM  
Anonymous Anonymous said...


When all else fails, jailbait works."

The sacrifice... the oldest method, hey?

11/01/2008 06:09:00 PM  
Blogger George said...


The 'system' has it roots in tribal barter. The capitalist system, the notion of free trade, becomes problematic in today's society because of the size of the 'tribe'. The methods of self regulation in daily barter can produce events paralleling what we see in our financial system today, but it will be a problem between two people and therefore a non event in the larger social sense.

Greenspan put his belief into the idea that 'the system' would act to self-regulate itself. He failed to take into account how pernicious greed can be. Greenspan understood the dangers of deflation, it was why he kept interest rates so lo for so long. He is widely criticized for this which I believe is a mistake, the credit problem we face now are the result of a lack of regulation which occurred later. These are failings which are the directly connected to the lack of leadership of the Bush administration.

McCain continues to offer up the same economic solutions we had with Bush, why should we continue to make the same mistakes.

It is possible to have a progressive, socially conscious, capitalist economy but this kind of evolution can only occur at certain crisis moments of history. This is such a moment, the possibilities for evolution exist if we elect the right man president. Obama is the man.

my captcha = aright

11/02/2008 09:26:00 AM  
Anonymous two people said...

Thank you George,

"it will be a problem between two people and therefore a non event in the larger social sense."

the above articulates a scenario I am very interested in.

Interior Exterior

how does this evolution effect the interpersonal behavior of "two people."

Perhaps Thanatos serves eros.

I still have a difficult time in adjusting to the concept of the "right man" given the proposed concept of evolution. I am not against the concept I find it interesting, but not so different than a similar progress that has
come into being for certain people.

George, what kind of Future do you see? e.g. Creative approaches to overpopulation when the mechanism of the workforce (people as cogs) are more of a detriment to the harmony of such a system?

Also, it is very possible that many of the same social "problems" are actually created and required at a given time for such a system.

Two people

11/02/2008 10:48:00 AM  
Anonymous James Bond, communist villain said...

James Bond: "Do you expect me to talk, Goldfinger?"

Auric Goldfinger: "No, Mr Bond, I expect you to die."

Three cheers to that thought.

11/02/2008 11:14:00 AM  
Blogger George said...

In the context of barter Capitalism between few people, if one person or the other cheats on the transaction, the results can have negative consequences of some sort but it will have a limited affect within the overall system because the group is small by definition.

In a larger system the economic distortions can persist longer because individual transactions may be moderately self regulating within the context of a larger trend which lacks regulation. In a sense we could view the macro-trend as being a separate system composed of a large number of micro-trends. When the macro-trend reaches a point which is no longer sustainable it self-corrects and while this appears as a single event it involves thousands of other sub-participants (the micro-trends) who are devastated by the results.

The current economic crisis had its roots in the real-estate speculation bubble. This could have been prevented by raising interest rates until the speculation abated. Along with several others, Sheila Blair, head of the FDIC, warned of the potential problem two years ago but no action was taken. Why? We were entering an election year and raising interest rates would cause a slow down in the economy which would have a negative for the incumbent Republican party in the upcoming election. By making a political decision, rather than a sound economic decision, the Treasury department allowed the real estate speculation to spiral out of control and finally to collapse.

It is the responsibility of the government to act in a way which is beneficial to the population as a whole, not to just the rich or to just the poor but for everyone when it is possible. This means that the government has a responsibility to prevent the powerful from acting in a way which is unfair and destabilizing to the social order.

Any way you look at it, the current economic crisis was brought upon us by a few powerful people acting out of either hubris or greed. The result was the economic collapse we are trying to prevent, and more importantly it has negatively affected millions of people who bear no responsibility at all for the problem.

For the economic system to evolve progressively, in a way which can manage transactions on a global scale, in a way which does the least amount of harm to the populace, will require that we rethink capitalism at its very core. It should be clear that some changes are required, laissez-faire capitalism, has again failed in the most spectacular fashion since 1929, and we need to choose leaders who possess a vision receptive to the future. Without a doubt, John McCain is backwards looking, "it ain't broke, don't need fixin", more of the same rhetoric that got us where we are today. Booo.

So I believe that Barack Obama is the 'right man' for the moment, the one person who can lead this nation forward into the 21st century.

11/02/2008 03:02:00 PM  
Blogger George said...

how does this evolution effect the interpersonal behavior of "two people."

It probably doesn't. I was speaking primarily of an evolution of Capitalism in a macro sense where large scale destructive behavior will need some form of regulation.

George, what kind of Future do you see? e.g. Creative approaches to overpopulation when the mechanism of the workforce (people as cogs) are more of a detriment to the harmony of such a system?

I believe we are a turning point in history which we will be able to look back upon and recognize as the point 'when things changed' How they will change is hard to say but they will change. Overpopulation will be solved by agreement, war or starvation, we can take our pick.

Also, it is very possible that many of the same social "problems" are actually created and required at a given time for such a system.

Until we form a utopian society, the powerful will seek to subvert and control the masses through the use of force and carrots.


11/02/2008 03:15:00 PM  
Blogger George said...

Maybe, this will help those who are still undecided, decide.

Sarah Palin gets a phone call from the French president, Nicolas Sarkozy.

Talk to me Nicolas

Do we want this wide eyed deer, caught in the headlights with her hand on the nuclear button of armageddon?

11/03/2008 08:49:00 AM  
Anonymous Cedric C said...

Hahaha I never thought to read about Les Vengeurs Masqués on here.
But yes they've been doing major prank calls these guys.

Cedric C

11/03/2008 09:58:00 AM  
Anonymous Cedric C said...

Les Justiciers Masqués!!! Sorry.
Les Vengeurs Masqués is a band (based on the name of a comic).

I got confused by the Guardian translation, there.

At any rates, I hope America remembers Quebec has helped them.
Because that Palin call was the nail in the coffin for Republicans. Haha!

Cedric C

11/03/2008 10:09:00 AM  
Anonymous Franklin said...

Greenspan's admission ("I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms") was extraordinary in its wrongness. The idea that a free market would operate correctly, given that we have a government-controlled prime rate and massive government-sponsored enterprises involved in the housing market, is ludicrous on the face of it. On the contrary, one would predict, as the Soviet Union proved over and over again, that these government-sponsored intrusions into the market introduce huge inefficiencies and distortions that eventually decimate the economy. In a free market, interest rates would adjust according to risk and competitiveness, not stay artifically low according to government diktat with the intention of "encouraging growth" (thanks, Alan!). A free market would not offer implicit government guarantees of bad home loans (thanks, Fannie!).

There is only one candidate in this race who has a workable platform for a functioning, globalized economy, and that candidate is Bob Barr. But if you vote for Obama, it will deal a crushing blow to the fundamentalist, police-the-world neocons that dominate the Republican party's thinking. That in itself would be worth doing.

11/03/2008 10:29:00 AM  
Blogger George said...

A little bit of knowledge can be more dangerous than outright ignorance. I know Franklin means well but he is misguided by nice sounding rhetoric which will never be implemented because it would not work.

I would agree that it was a mistake for Greenspan to expect that the self-interests of financial institutions would result in their own self regulation

Greenspan's confidence in the idea that financial institutions would act in their own best interests to correct market excesses was misplaced. Markets under stress can behave unpredictably in a manner not unlike predator-prey simulations where one population will suddenly collapse. There is a long history of these types of manias leading to catastrophic collapses and they represent an area of the marketplace where preemptive regulations are appropriate.

The idea of a "free market" is just an idea. It is no longer possible, what might work at a community or tribal level fails when it is scaled to the proportions of todays economies. As the size of any institution increases, its ability to make rapid changes in order to adapt to changing conditions decreases. Visualize the differences required to turn a sailboat and a super tanker. Some degree of intervention and regulation turn out to necessary in order to prevent unwanted market behavior.

While the Fed does set a "prime rate" the actual mechanism of how interest rates are set is more complex than Franklin would have us understand. Mush of the time the prime rate is set in response to market rates which are anticipation future behavior. Further down the food chain, interbank rates are set in London daily for all the major currencies (LIBOR)

Further, the Fed's ability to adjust the prime rate is one method of controlling the expansion and contraction of the economy.

I strongly disagree with Franklin's assumption that rates were kept "artifically low" by Alan Greenspan. Mr Greenspan understood the very real dangers of a deflationary economy which were a potential outcome of both market forces and an aftermath of the 911 attacks.

In a deflationary environment, asset values tied to loans as collateral collapses making the value of the loans greater than the asset. This causes the value of the loans to decline with the results we have experienced in the last year. This isn't good and there are no reasonable arguments to the contrary, we need a credit system to finance capital assets like homes.

Fortunately Bob Barr has no chance of getting elected. His positions are wrong bordering on dumb. His " administration’s number one job will be to drastically reduce spending by limiting federal outlays to only the government’s legitimate functions, as provided in the United States Constitution."

Ho hum, sounds nice. If put into effect, the result would be a depression with unemployment well into the teens. No major economist would advocate such a policy under the current conditions. Not for me thank you very much.

The problem with government as we know it today is George W Bush. John McCain is more of the same and equally dangerous.

It matters who you vote for. Vote for your kids future, vote for Obama.

11/03/2008 12:21:00 PM  
Anonymous Franklin said...

To a man with a hammer, everything looks like a nail. And when Greenspan saw the day of reckoning come, he regretted only that he did not regulate more perfectly.

Help me understand something, George, given your apparently total knowledge of finance. We had a housing market that was massively distorted by Fannie and Freddie, which resulted in bad debt being securitized and resold, and those securities getting hedged with credit default swap. Then the housing market corrected, as all markets do eventually, and the whole house of cards came down. We added $500B to the national debt in the space of one month in an attempt to correct the problem by nationalizing some enormous, failing banks. What level of government interference in the economy are you prepared to endorse given that said interference set all this into motion in the first place? If the free market is "just an idea" that doesn't scale, what do you propose to replace it, and how to do you intend to enforce this replacement?

His positions are wrong bordering on dumb.

His positions are Constitutional. And I am intensely skeptical of persons who spout positions that presume that the Constitution is a quaint bit of 18th Century parchment.

11/03/2008 03:55:00 PM  
Blogger George said...

Franklin, I don't claim to have a total knowledge of finance but I do believe I know more about it than you do.

First of let me say I'm not happy about the way Fannie and Freddie conducted their business which appears at times to have skirted the bounds of legality.

If you've read the Wiki, you know that Fannie and Freddie don't make loans directly, they buy, bundle and securitize existing mortgage debt, then resell it into the investment market. This activity adds liquidity by providing capital into the real estate debt market and facilitates the trading of real estate debt instruments. All in all it's a good thing, it makes it possible for thousands of families to own their home.

You are correct in identifying credit default swaps, and the other derivative instruments, as being a problem. They are a huge part of the problem. They were totally unregulated, meaning there was no checking or verifying that the counter-parties involved had sufficient capital to back their positions. Swaps became a chip in a big casino game that eventually beat the house.

Some things to think about. How come all these "bad loans" got made to "those people" right at the top of the real estate market? It's called "distribution", selling to the unwary, in this case thousands of Americans who were just trying to get a piece of the American dream, and told they could, "here's how".

Well we now know that didn't work, but where were all these "flexible" loans when prices were affordable? This wasn't Fannie and Fredie's problem, had it been, we wouldn't be where we are today.

It is also true that housing prices declined, precipitating some of the problems which lead us to the present financial crisis. These problems could have be adverted, had reserve requirements been strengthened, interest rates raised, and some form of regulation or governance of the CDO's established, by the Bush administration during his second term. They weren't because the politicians were afraid of harming the economy going into a presidential election.

The problems are extraordinarily complex, opaque and will take time to solve. At this point we do not know what the affect of the $700 billion bailout bill will bring, either in its final cost or its final effect. I believe it is the right approach, but that it was initiated later than would have been optimum. The headline cost pales by what might have been the financial pain had something not been done.

I have my concerns, among them is the specter of deflation which looms on the horizon. I don't think it will occur, but it could and I take exception to economic policies which will create a contraction in the economy at this critical time. I read Barr's page, and disagree with his economic position as I stated previously. I can think of at least one Nobel Prize winning economist who agrees with me.

I realize I have presented my economic points aggressively here on Ed's blog. This is because I feel that the McCain campaign has attempted to distort Obama's positions and to mask their own inability to adequately discuss the problem. It is what we had with Bush, a hearty handshake and a beer on the porch, all the while this great country was going down the drain.

I think it is very very important to vote an end to this type of political bullshit
The best way to do this is to vote for the Democratic candidates, including Barack Obama.

PS, I can answer you question "how would I", but this isn't the time or place.

11/03/2008 08:36:00 PM  
Anonymous Franklin said...

Fannie and Freddie aren't guilty of making bad loans - they're guilty of securitizing toxic debt into opaque financial products, and reselling them with the implication that if it all hit the fan, the Fed would bail everyone out. And indeed it did, to the tune of $700B and more to come.

Meanwhile, those exotic home loans have been all over the place for several years - I know, because I was offered some in 2001 - and did not suddenly appear "right at the top of the real estate market." That's ridiculous. Lending was profitable and relatively safe, because borrowing was cheap, and borrowing was cheap because of interest rates set nice and low by one guy under heavy political pressures. Trading in credit default swaps collateralized with thin goddamn air is perfectly acceptable if the payoff is tens of millions of dollars, and the worst case scenario is that you or your guarantor will be deemed too big to fail by the government.

So you can believe, if you want to, that we should have regulated individual loans, regulated credit default swaps, regulated the creation of collateral debt obligations, let Fannie and Freddie operate as is, and find someone even smarter than Alan Greenspan to regulate the interest rate, and none of this pain would have come to pass. But since it did, the right thing is to hand out gauze now that the banking system has shot itself in the head. This is, after all, Greenspan's recently contrite position. I think it's delusional. I say we get the government out of the business of home ownership, and let individuals decide how much interest to charge each other and how much risk they want to assume in their investments.

I can answer you question "how would I", but this isn't the time or place.

I'll assume the converse until you demonstrate otherwise.

11/04/2008 03:08:00 PM  

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