Scary Chart

And we especially need (0.00 / 0)

The grants to the states to help them pay their current bills!

If we see the states laying hundreds of thousands of workers off in the next few weeks because Congress cut that $40 billion, those "shovel ready" projects will being at a much lower point on the graph. (Meaning, there will be another New Hampshire's worth of workers unemployed.)

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by: elwood @ Sat Feb 07, 2009 at 19:47:17 PM CST

Definitely, grants are needed. (4.00 / 1)

The alternative is for states and local communities to issue bonds for capital improvements which is exactly what the financial vultures are waiting for.  That's the back-door way for them to get into a stable revenue source and, because money seems to be tight, they may look to get higher rates.  Normally, because governments have a high degree of trustworthiness, the interest rates they pay on bonds are relatively low but sure.  This has made bonds attractive to investors and in recent times, since industrial capital facilities construction has become moribund, they've been looking at the public facilities.  Indeed, they've been making proposals to states to bond the infrastructure that's already been paid off to get money to pay for current operations.

The thing about people who accumulate money is that they are never satisfied to just put it in a closet or a savings account.  They're always looking for "opportunities" to stash it where it will increase automatically--i.e. without them having to do any work.
To a certain extent, the government just printing more money frustrates that interest.

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by: hannah @ Sun Feb 08, 2009 at 06:05:56 AM CST

[ Parent ]

It's not a recession (4.00 / 3)

It's a depression.  They just haven't started calling it that yet.

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by: Dartmouth Dem @ Sat Feb 07, 2009 at 19:47:46 PM CST

It's starting (0.00 / 0)

to get me depressed... ughh...

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by: Alex Gallichon @ Sat Feb 07, 2009 at 22:37:16 PM CST

[ Parent ]

Jobs, homes, jobs, homes. (0.00 / 0)

The current stimulus, mostly, addresses jobs, which is great.

(I'm with Atrios in thinking that the $15G homebuyer tax credit simply keeps the bubble afloat w/o addressing the core problem of people with distrssed mortgage problems.)

I hope to see quickly something else down the line which addresses reducing large structural monthly payments - mortgages, car loans, student loans, credit cards, etc...

Forcing the banks to re-fi customers at a below 5% rate would be a great way to loosen up $200 or so for consumers every single month.  Now that's "stimulus".

The money banks would lose on this is peanuts compared to foreclosures and defaults.

birch, finch, beech

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by: Dean Barker @ Sat Feb 07, 2009 at 20:08:21 PM CST

I was wrong. (4.00 / 1)

I thought having 60 seats--as opposed to 58 or 59--was a less consequential thing than it was being made out to be.  The fight over the stimulus is proof otherwise.

The Republicans are very good at banding together and standing in the way when they're in the minority.  And we can see how much damage the "moderate" Republicans in the Senate are doing to the stimulus.  They're forcing Dems to take out actual stimulative things--restoring the National Mall is good for tourism and for giving jobs to people in DC, food stamps are the most scientifically stimulative thing there is. And they're replacing those actual stimulus items with 42% tax cuts that don't stimulate the economy.  That's just hundreds of billions in waste.  We don't need the federal government to take out $500 mortgages for us, THAT is what I call the wrong kind of 'big government'.  If you're going to rack up the debt, do something useful.

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by: This Was The Moment @ Sat Feb 07, 2009 at 21:32:39 PM CST

i wonder if the Dems will drop the 60 vote cloture rule (4.00 / 2)

It is only a Senate rule. The GOP was more than willing to jettison it if they didn't get their way in appointed radical right wing judges to undo the twentieth century.

I question why we would let an undemocratic rule limit the responses available to an impending catastrophe.

"But, in the unlikely story that is America, there has never been anything false about hope." Si se puede. Yes we can.  

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by: Paul Twomey @ Sun Feb 08, 2009 at 15:23:33 PM CST

[ Parent ]

I don't think we should lose the 60 vote rule. (4.00 / 1)

We won't have the majority forever, and think of what Bush could have accomplished if we didn't have the filibuster.

That said, for things this big, Reid should not accept the threat of a filibuster.  Don't make the bill worse.  Make them actually filibuster.  Half a million people are losing their jobs every month, and they should see, in a well-publicized display of political theater over an important issue, who is standing in the way of saving jobs and making new ones, who would take out real stimulus from the bill and insist that 42% of it be pure waste.

Let them suffer the consequences of playing games while the country is on fire.

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by: This Was The Moment @ Sun Feb 08, 2009 at 16:05:08 PM CST

[ Parent ]

well i agree with the idea of making them fillibuster. There should be a price for obstruction in the midst of a crisis. (4.00 / 2)

but i think bush would have accomplished the same as he did with the filibuster because he used the threat to eliminate it whenever it got in his way.
They dont call him 'Justice Alioto' for nothing.

did the fillibuster stop the packing of the court with radicals?
did it stop an illegal war?
did it stop torture?
did it stop the dismantling of economic safeguards?
did it stop global warming?
did it stop the incarceration epidemic that has destroyed a generation of black youths?

I welcome some examples of areas where it was useful, and am sure there are some, but it seems to me that once the GOP showed they were ready to do away with it, they got what they wanted anyway.


"But, in the unlikely story that is America, there has never been anything false about hope." Si se puede. Yes we can.  

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by: Paul Twomey @ Sun Feb 08, 2009 at 16:49:23 PM CST

[ Parent ]

Some of those examples are unfair. (4.00 / 2)

There's little the Senate can do to stop a President who doesn't respect the rule of law in the first place...particularly when the House refuses to even consider impeachment.

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by: This Was The Moment @ Sun Feb 08, 2009 at 17:27:08 PM CST

[ Parent ]

In a way that is the point i was trying to make (0.00 / 0)

but it wasn't just the president that refused to play by the rules. The GOP senators very clearly manifested an intent to do away with the cloture rule if it was used to stop anything they really wanted to do. I am at a loss as to who on earth would have merited a filibuster if Samuel Alito didnt. When the democrats backed down on his nomination, they signaled that they would filibuster nothing. As a result the rule only existed as a brake on future democratic majorities.

This is pretty much its history-- it has served to empower a minority of a minority to defeat progressive measures, especially civil rights measures. The Senate itself is an anti-democratic anachronism designed to provide extra votes for smaller slave holding states.

Most democracies in the world seem to manage quite well without requiring super majorities for all legislative initiatives.

"But, in the unlikely story that is America, there has never been anything false about hope." Si se puede. Yes we can.  

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by: Paul Twomey @ Sun Feb 08, 2009 at 18:36:34 PM CST

[ Parent ]

I think the Senate still has its place, though maybe not the filibuster. (0.00 / 0)

The proportion of Dems to Republicans in the House and in the Senate are almost equal, so it's really the filibuster that keeps the party in charge from getting something done, not a failure of representation based on the Senate's makeup.

Christopher Hayes recently remarked that while Teddy Roosevelt said to "speak softly and carry a big stick", Reid's MO as Majority Leader has been to talk a big game and then capitulate.  That's the real problem.  Democrats, when in the minority, fear being seen as obstructionist, whereas Republicans have a far less complicated formula: make the base happy.

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by: This Was The Moment @ Sun Feb 08, 2009 at 19:27:25 PM CST

[ Parent ]

you may be right or there might be two independant anti-democratic things at work (4.00 / 1)

the House seats are greatly gerrymandered, something that cant be done in the Senate. After the 2000 census, the GOP used its dominance in state houses to  create unfair districts.

In the House pervasive gerrymandering results in over representation of GOP (although this could change in 2012).

In the Senate it is the unequal representation based
on states-- where Wyoming and California both have the same two Senators.

"But, in the unlikely story that is America, there has never been anything false about hope." Si se puede. Yes we can.  

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by: Paul Twomey @ Sun Feb 08, 2009 at 19:46:49 PM CST

[ Parent ]

I don't think we should lose the 60 vote rule. (4.00 / 2)

We won't have the majority forever, and think of what Bush could have accomplished if we didn't have the filibuster.

That said, for things this big, Reid should not accept the threat of a filibuster.  Don't make the bill worse.  Make them actually filibuster.  Half a million people are losing their jobs every month, and they should see, in a well-publicized display of political theater over an important issue, who is standing in the way of saving jobs and making new ones, who would take out real stimulus from the bill and insist that 42% of it be pure waste.

Let them suffer the consequences of playing games while the country is on fire.

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by: This Was The Moment @ Sun Feb 08, 2009 at 16:05:08 PM CST

[ Parent ]

I'm not sure that the number of jobs are (0.00 / 0)

really comparable over time.  Jobs being tracked represent people getting paid for work they do.  They not only leave out work that gets done without being paid (e.g. grandparents taking care of babies), they don't account for individuals holding more than one job (working 16 hours instead of 8 for pay) or people who work two jobs but only get paid for one (that registers as increased productivity).

That said, I'm hopeful that two things will happen:
1) that the underground economy will pull us through (it really bugs economists that they don't know the size of it)
2) that economists will finally recognize that the economy cannot be "managed" via any automatic processes such as restricting the money supply or jiggling the interest rates and that they will come to appreciate that it's human behavior that needs to be regulated--that the cheaters and gamblers need to be removed.

We need to get the crooks out.

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by: hannah @ Sun Feb 08, 2009 at 05:43:07 AM CST

That becomes a really big concern (0.00 / 0)

when we compare to much earlier periods. These three examples go back to the 1980s. Posters at dKos and elsewhere have asked, what about the recessions of the 70s and 50s - or even the Great Depression?

We definitely could not use the same metric to compare those. At the very least we would need to somehow compare percent of workforce versus millions of jobs. And the changes in calculations of various unemployment statistics over the years would skew things.

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by: elwood @ Mon Feb 09, 2009 at 07:38:23 AM CST

[ Parent ]

I found this analysis really interesting-- (0.00 / 0)

http://www.bnet.com/2459-14037...

because I agree with it.  I didn't know there was an identified cadre of people giving bad advice known as "quants."

Earlier this month, two of the field's leading figures, Emanuel Derman, a Columbia professor and former Goldman Sachs managing director, and Paul Wilmott, whose online hub Wilmott.com is a water cooler for the quant community, issued what they called "The Financial Modeler's Manifesto," a new code of conduct for quants, in the wake of the financial collapse. "We do need models and mathematics - you cannot think about finance and economics without them - but one must never forget that models are not the world," Derman and Wilmott wrote. "You must start with models and then overlay them with common sense and experience."

Interviews with quants, both in finance and academia, paint of picture of chastened field engaging in a round of self-examination. To be sure, mathematics and computer programs will be part of the future of finance, but the financial meltdown has led many quants to revisit old questions about the unpredictable role of humans in finance and economics. For example: How do you model dishonesty? Unscrupulous mortgage brokers peddling home loans to people they knew couldn't afford them are at the root of the sub-prime meltdown. How can models account for that? How about ineptitude? The federal government's response to the crisis has been characterized by a very small group of people making enormously consequential - yet sometimes seemingly arbitrary - decisions.

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by: hannah @ Sun Feb 08, 2009 at 05:55:34 AM CST

Foreclosures (4.00 / 6)

I think the NH legislature and the Governor should take immediate action to suspend foreclosures on primary residences in New Hampshire until July 1 (the start of the new fiscal year).  Since Congress is supposed to be taking action on foreclosures at some point in the near future, stop foreclosures here in NH until we see what Congress does.  An "escape" clause could be built in so that if people were not maintaining the property, or not paying utility bills, or for some other good cause (like, the homeowner has more than a certain amount of other non-bankruptcy exempt assets) the lender could go to court for an order to permit the foreclosure to go forward.

Alternatively, legislation could be passed giving homeowners the right to go to state court to have state court judges order the terms of homeowner mortgages rewritten as appropriate.

This isn't rocket science.

 



"When you get to the end of your rope, tie a knot and hang on."  Franklin D. Roosevelt    

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by: Kathy Sullivan 2 @ Sun Feb 08, 2009 at 06:20:59 AM CST

Great suggestion (4.00 / 2)

Mortgage suspensions have been done voluntarily for a limited time period by some banks (Freddie, Fannie, ING, and JPMorgan)and by a few states and cities. Gov. Crist did it temporarily in Florida over the holidays.

In the Great Depression, about half the states outlawed some form of foreclosure, mostly on farms.

I think a good case could be made that the lenders who made "bad" loans in the past few years in NH should not have the right to foreclose on them. They failed to make sure their borrowers would be able to pay, one of their obligations. Almost all of these guys are out-of-state banks, so this won't hurt our banking community. NH is 22nd in number of foeclosures. VT was 50th.  Our foreclosure rate was 30 times VT's! This was due almost mostly because VT has better laws than we do.

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by: Michael Marsh @ Sun Feb 08, 2009 at 07:28:21 AM CST

[ Parent ]

New Hampshire makes it very easy (0.00 / 0)

NH's foreclosure laws make it very easy - which is fine if you have someone who just isn't paying, but absurd when you have the equivalent of a natural disaster taking place.

And some loan sevicers are idiots.  I know of someone who lost her job, couldn't make her payments; she tried to contact the lender to say, I am moving out, I can't make payments, you need to take care of heating the house.  No response whatsoever.  The lender will probably end up paying an auctioneer and the costs of publicizing the foreclosure, when the lady would have been happy to sign a deed in lieu of foreclosure. So there is another $10,000 or so in costs to the lender that are unnecessary. And who knows if the lender ever got around to turning the heat on?  



"When you get to the end of your rope, tie a knot and hang on."  Franklin D. Roosevelt    

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by: Kathy Sullivan 2 @ Sun Feb 08, 2009 at 08:05:25 AM CST

[ Parent ]

The loan servicer has no economic incentive to be smart (4.00 / 1)

Generally the company that is servicing is not the loan holder. They get paid a small amount for processing payments. They get paid more when they handle foeclosures.

Even worse, in our strange modern mortgage environment, there isn't even a bank who holds the loan that has an economic incentive to keep the homeowner in the home. That loan has been bundled with 500 other mortgages into a CDO, then that was sliced into different tranches with different risk profiles and sold to insurance companies, hedge funds etc.

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by: Michael Marsh @ Sun Feb 08, 2009 at 10:36:37 AM CST

[ Parent ]

There is a huge incentive (0.00 / 0)

Keeping the national and global economy from getting worse.  If the bright lights don't see that every mortgage default and foreclosure is part of the problem, well, they really don't deserve those huge bonuses, do they?



"When you get to the end of your rope, tie a knot and hang on."  Franklin D. Roosevelt    

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by: Kathy Sullivan 2 @ Sun Feb 08, 2009 at 13:15:17 PM CST

[ Parent ]

Sorry I didn't make my point better (0.00 / 0)

There may be a national interest in keeping a mortgage from foreclosing, but as of today, the nation isn't making that decision. A mortgage servicing business is, and their incentive is often to put a non-performing loan into foreclosure, because they get paid more for servicing the foreclosure than servicing a loan. It's a pretty perverse incentive.

You are sort of right that the holder of that mortgage might not want to see an unnecessary foreclosure because that will mean write-downs of the loan. The problem is that the mortgages have been divided into pieces so much that in many cases no one "holds" the mortgage any more. They own pieces of it as part of a bundle of mortgages, and cannot dictate whether or not a loan should be foreclosed on. The mortgage business is very different from what it was 20 years ago.

You very are right in  one thing. The guys that engineered this mess "really don't deserve those huge bonuses". Tar-and-feathering would be a good start for these guys.

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by: Michael Marsh @ Sun Feb 08, 2009 at 19:48:43 PM CST

[ Parent ]

Sorry you didn't get my point (4.00 / 1)

I understand the mortgage lending business and the problems securtization of packaged loans with multiple trancehs of slices of the pies has caused.  My point was that you were describing the short term, micro view of mortgage servicing, which is a view that totally undercuts the long term, macro view which would be in their overall economic inerest. If everyone in this boat does not start pulling at the long term best interest oar, instead of the short term oar, the boat ain't going nowhere.




"When you get to the end of your rope, tie a knot and hang on."  Franklin D. Roosevelt    

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by: Kathy Sullivan 2 @ Mon Feb 09, 2009 at 06:23:13 AM CST

[ Parent ]

We try to make sure that long-term considerations (0.00 / 0)

don't drive business decisions - at least in publicly traded companies.

We tax the dividends that a stodgy, careful company provides to its shareholder at a higher rate than we tax the capital gains an investor can get by betting on a quickly-rising stock. (And New Hampshire taxes dividends but not capital gains.)

For capital gains, we provide a "long term" discount rate at 12 months. The codes provide no incentive to look beyond one year.

And if the investors are impatient, so will be management.

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by: elwood @ Mon Feb 09, 2009 at 07:29:43 AM CST

[ Parent ]

Which has caused severe problems (4.00 / 1)

Until the short term view gives way to the long term view, we will continue to be in trouble. Investors and management need to start acting like adults, not adolescents.



"When you get to the end of your rope, tie a knot and hang on."  Franklin D. Roosevelt    

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by: Kathy Sullivan 2 @ Mon Feb 09, 2009 at 08:03:50 AM CST

[ Parent ]

I wonder about the consequences of your first suggestion (4.00 / 1)

The ramifications of a blanket suspension of mortgages raise a couple of questions--- why would anyone pay their mortgage and why would anyone issue a new mortgage if there were no consequences for not paying? Right now we need to encourage credit, not undermine it, so we need to tread carefully here. There probably are a lot of other collateral consequences, known and unknown.

Before we get there, ( and we may have to)  I think we should try empowering courts, perhaps bankruptcy, perhaps a state commercial court (something which some say has been long needed), to re-set mortgage rates where appropriate. Factors in choosing when to offer relief could be the nature of the original loan-- if the terms weren't transparent, if the lender knowingly entered into a 'liars loan', etc.  

"But, in the unlikely story that is America, there has never been anything false about hope." Si se puede. Yes we can.  

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by: Paul Twomey @ Sun Feb 08, 2009 at 12:35:10 PM CST

[ Parent ]

I don't think a forecloseure ban (0.00 / 0)

would be enough to make the financially strong homeowner hurt his/her credit rating by stopping payments - which would have to be made later, with interest, anyhow.

But yes, parity for resetting primary residence terms, just like resetting terms on a sailboat.

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by: elwood @ Sun Feb 08, 2009 at 12:59:23 PM CST

[ Parent ]

I included an escape clause (4.00 / 1)

Give the lender the opportunity to get a court order to permit the foreclosures to go forward under certain limited circumstances, such as waste of the property or someone who has the assets to pay. The interest continues to accrue, so no one is really making money on the deal.

And, I said to last through June 30. That is about  4 1/2 months.  Just enough time for congress to get its act together to do something. The problem with the court rewriting solution, which I also suggested, is that the resources are not there to represent all these people. The NH Bar already is getting overwhelmed with requests for pro bono help from people losing their homes.

A timeout for 4 1/2 months is not going to put the financial system in any worse shape than it is now, and can help stop the downward pressure  on housing prices, in addition to keeping people from losing their homes today who might be able to keep them under whatever program congress may come up with if it gets it act together. Is it bold? Yes. But desperate times call for creativity and initiative.



"When you get to the end of your rope, tie a knot and hang on."  Franklin D. Roosevelt    

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by: Kathy Sullivan 2 @ Sun Feb 08, 2009 at 13:29:44 PM CST

[ Parent ]

These are indeed desperate times. And we have to be open to all options . (4.00 / 2)

Which is something the GOP (aka the party that created the catastrophe) cant seem to accept.

"But, in the unlikely story that is America, there has never been anything false about hope." Si se puede. Yes we can.  

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by: Paul Twomey @ Sun Feb 08, 2009 at 15:27:09 PM CST

[ Parent ]

Please write a diary on this (0.00 / 0)

that I can front-page.

Didn't Hillary have this position at some point in the campaign, under different circumstances, of course?

I am positively obsessed with the idea of overstressed  "structural monthly payments" being the prime mover of people to economic despair - mortgage, car, credit card, student loan, etc...

People can't spend if every available dollar goes to debt servicing.

birch, finch, beech

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by: Dean Barker @ Mon Feb 09, 2009 at 05:55:54 AM CST

[ Parent ]

And I forgot to add: (0.00 / 0)

health care premiums, a catastrophe so large it gets mentally excluded from those others, but in reality that's another out-of-control structural monthly payment that is killer.

birch, finch, beech

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by: Dean Barker @ Mon Feb 09, 2009 at 05:57:35 AM CST

[ Parent ]

Failure of the media (0.00 / 0)

Old media wasn't shangri-la but if you go back to previous recessions they covered the recession more than the political horse-trading.

That chart should be the most familiar graphic in america right now, but all i see on my TeeVee are republicans whining about not being included.

Put that next to a media which uncritically presents the New Deal as an planned experiment in Keynesian theory (Keynesian theory was developed in 1936 partially as a response to why certain government actions were not working -- WW II confirmed the theory much more than the new deal did).

Where are our nightly reports on the state of the economy instead of the state of Republican ego? Why aren't republicans being asked to point to the red line on that chart and show how the bush cuts helped?

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by: Mike Caulfield @ Sun Feb 08, 2009 at 07:54:24 AM CST

Keynes (0.00 / 0)

Perhaps it was not formalized into a doctrine until later, but Keynes published an open letter to FDR in Dec. 1933, strongly promoting stimulative government spending.

(Still, later than I realized beforehand.)

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by: elwood @ Sun Feb 08, 2009 at 21:24:52 PM CST

[ Parent ]

The Powell Doctrine applied to the stimulus (0.00 / 0)

1. Be very reluctant to embark on a spending program to stimulate the economy. But when you decide that's necessary...
2. Move in with overwhelming force.

If we need to slow down the economy, then we can be bi-partisan: the Republicans have a good record at accomplishing that.

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by: elwood @ Sun Feb 08, 2009 at 09:42:04 AM CST

Why not a Manchester or NH stimulus ? (0.00 / 0)

It seems unfair that the Congressional delegation has to take all the heat for increasing deficits - why can't the state and the cities pitch in?

Because the federal government is the ONLY level of government that can run deficits.

If the stimulus plan doesn't pass, or if it doesn't include the big block grants to the states to fund existing state and local programs, the states and cities can only raise taxes or lay people off. They cannot run deficits now to prime the pump.

Only Congress can do that. That's the job you have, Senators and Congressmen. Get to work!

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by: elwood @ Mon Feb 09, 2009 at 06:13:08 AM CST

Additional charts (0.00 / 0)

A correspondent provides a link to a similar chart covering all recessions since WW II.

The discussion over there complains that the numbers are not normalized for the size of the workforce: one million lost jobs was a bigger deal in 1950. (An additional chart addresses some of that.) But the charts are still scary.

Recessions have not bottomed out sharply. Instead, the numbers of jobs lost each month starts getting smaller, and then we start seeing a new job gain (at which point the curve goes horizontal - maybe way below 0, but no longer falling.)

We see no sign of that bottom yet.

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by: elwood @ Mon Feb 09, 2009 at 16:08:00 PM CST

Scary Chart (0.00 / 0)

If you go back to the seventies and eighties and compare charts then it is not quite so scary. Remember : "We have nothing to fear but fear itself" . You seem to be fear mongering and a chicken little outlook has never helped anything.  

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by: Kitster @ Wed Feb 11, 2009 at 08:31:43 AM CST

Some queries await you (0.00 / 0)

In this thiread.

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by: JimC @ Wed Feb 11, 2009 at 09:19:29 AM CST

[ Parent ]

Ahem. (0.00 / 0)

You posted this right below a comment that includes links to previous recessions going even earlier. If you would care to explain why that earlier data gives you comfort, go right ahead.

I won't hold my breath. You seem to be here only to as an apologist for the Bush Administration's torture and economic policies.

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by: elwood @ Wed Feb 11, 2009 at 09:42:13 AM CST

[ Parent ]

Fear no chart n/t (0.00 / 0)

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by: JimC @ Wed Feb 11, 2009 at 09:19:45 AM CST