LATimes: Dismal jobs report shows unemployment rising to 9.2%

[twa]

You said the roots of the housing crisis were in the government attempts to loosen lending restrictions with respect to mortgages. Maybe you and I have a different idea as to what "roots" means when you're talking about the cause of a problem.

it is what enabled the massive growth of sub-prime loans.

w/o the original loans,the other schemes never grow.(there are numerous other factors of course)

the localized nature of the excesses illustrate targeted malfeasance

[PeterMP]

it is what enabled the massive growth of sub-prime loans.

w/o the original loans,the other schemes never grow.

I'd like to see some evidence of that.

[twa]

I'd like to see some evidence of that.

so would I...at some of their trials

[PeterMP]

People should try reading this.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1669401

Completely government entities like Ginnie Mae never relaxed their lending standards beyond what was required by the government. Remember Freddie and Fanny were owned by people and had an interest in mantaining profits.

---------- Post added July-12th-2011 at 01:16 PM ----------

so would I...at some of their trials

That's pretty much the sort of reply I expected I'd get.

[deejaydana]

People should try reading this.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1669401

Completely government entities like Ginnie Mae never relaxed their lending standards beyond what was required by the government. Remember Freddie and Fanny were owned by people and had an interest in mantaining profits.

---------- Post added July-12th-2011 at 01:16 PM ----------

Read this Peter if you doubt Fannie Mae's cupability in this regard, they have as much guilt as anyone, perhaps more:

Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon:

Linke>>>> http://www.amazon.com/gp/product/0805091203/ref=s9_simh_bw_p14_d3_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-3&pf_rd_r=05DFCNM0CTM3GG3FJ4G8&pf_rd_t=101&pf_rd_p=1287771322&pf_rd_i=283155

[Hubbs]

That's not a lie in the least Larry. The roots of the housing crisis can be dated back to the early 1990's when the gov't in their infinite wisdom decided that minorities were getting the shaft and that lending standards needed to be relaxed. You can find the answers & documentation on this if you're willing to look.

Wrong. Just wrong. And I'm one of ES's resident libertarians, so believe me, if this particular government policy created the "roots" of the housing crisis, I'd be the first to say so. But the crisis would have happened with or without the CRA, which, to me, eliminates a fundamental requirement for describing something as the "roots" of the bubble.

There is much more blame, with Fannie Mae at its center, then you might be aware of. Of course the gov't now just wants to move on but if you could read up on it and specifically 2 things, Jim Johnson's involvement as CEO and the deliberate efforts made within Fannie, to significantly relax lending standards. Let me know what you think once you've read up on this. People like Christopher Dodd, who enriched himself at taxpayer expense, should be behind bars right now. It's disgusting.

It should be illegal for Chris Dodd and Barney Frank to think any thoughts about housing.

[PeterMP]

Read this Peter if you doubt Fannie Mae's cupability in this regard, they have as much guilt as anyone, perhaps more:

Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon:

Linke>>>> http://www.amazon.com/gp/product/0805091203/ref=s9_simh_bw_p14_d3_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-3&pf_rd_r=05DFCNM0CTM3GG3FJ4G8&pf_rd_t=101&pf_rd_p=1287771322&pf_rd_i=283155

I don't doubt that Fannie has some cupability, BUT Fannie was privately owned AND it was responding to "innovations" in the private setting.

Read the piece I linked. It is even free.

I think Dodd's behavior had little to do with the government part of Fannie. Just look at his relationship with Country Wide.

[deejaydana]

I don't doubt that Fannie has some cupability, BUT Fannie was privately owned AND it was responding to "innovations" in the private setting.

Read the piece I linked. It is even free.

I think Dodd's behavior had little to do with the government part of Fannie. Just look at his relationship with Country Wide.

Seriously? Dodd is as dirty as anyone in the private sector. I think it's even worse that this fink is now writing financial reform bills.

[PeterMP]

Seriously? Dodd is as dirty as anyone in the private sector. I think it's even worse that this fink is now writing financial reform bills.

I agree, but it isn't because Fannie was a GSE. Countrywide wasn't a GSE, but he was still in bed with them.

[Hubbs]

Well, for one, we won't need $10 trillion.

You're making a whole lot of assumptions with that simple sentence. You know that, right?

And too much debt will bring about inflation. I know deficit hawks have said too much stimulus would raise interest rates, which hasn't happened. Honestly, with interest rates so low, now would be the time to borrow.

Interesting analysis of cause and effect there. On the one hand, you say we shouldn't borrow so much that we cause rampant inflation. On the other hand, you say that low interest rates mean we should borrow... but the most likely thing to drive interest rates up is higher inflation created by the borrowing that we "should" do as long as rates are low.

Hmmmm.

I'm quite sure you can find some sort of consensus.

And I'm quite sure that if you honestly think that, then you should read/listen to a wider variety of economists.

I honestly didn't pay attention to this stuff back then. You are about a year behind me, so if you were paying attention then I'm impressed.

Eh, it's not about whether or not I was paying attention back then. It's about going back and looking at the data.

The deficit is a long term problem. You don't need to be cutting things right this second in a weak economy. In fact, you could end up with higher deficits because of more people on unemployment, more people on food stamps, and more people on medicaid.

If the unemployment rate is at 7.5%? I think it would be OK to start easing off the gas. I wouldn't just yank all stimulative measures out from under the economy's feet. I'd do it slowly and make sure the economy doesn't slide. But that's just me. I have a basic understanding of economics, but I'm not an economist obviously. Your questions involving very specific scenarios would be much better answered if you were to ask economists who believe in more stimulus. In fact, I'd love to hear their answers, too.

And what if every time you tried to ease off the gas, the economy immediately worsened? Which would you choose?

By the way, I do think we can reduce the deficit right now -- just not in ways that hurt the middle class and the poorest people in this country. Start at the top -- the very rich -- and work your way down. Cut the budget at the Pentagon. Update the tax code to reflect the huge surge of millionaires in this country. Increase the capital gains tax on the very rich so they aren't paying just a 15% tax rate. Cut loopholes that actually encourage companies to ship jobs overseas. And seriously crack down on off-shore tax havens.

Pretty much agree with all of that, except perhaps the capital gains part. I think I'd at least try to differentiate between capital gains achieved through, say, flipping stocks via high-frequency trading computers, and actual investments that, if successful, would result in productive economic activity.

I'm probably the only self-described libertarian you'll ever hear say that the notion that jobs are "created" by the upper class is a giant load of crap. Jobs are created by customers, and the vast majority are not in the top 1%. In fact, I'm pretty sure that 99% of them aren't.

These are very good questions, again better answered by somebody more qualified. Krugman is an expert on what happened in Japan, and given how much of a proponent he is of more stimulus, I suspect he's very confident we'd be able to avoid having a situation like Japan. I believe his concern is that we are headed into a loss decade ourselves if we don't step up and do more to help the economy.

But I'd also like to here from him, just what if he gets the exact stimulus he wants, and things still aren't better...then what?

I have to quibble here: Krugman is an expert on what he thinks would have worked in Japan. Their debt to GDP ratio grown all the way to over 200%, by the way, and it hasn't gotten them out of their mess. They're royally ****ed. There's no way out of the debt trap at this point. The only question is when the tipping point will finally be reached, and the suspended animation falls apart.

I know the White House said they got as big a package as they could, but people warned them, you better go big because you probably won't be able to come back for more. And like many other times, they compromised with themselves looking for Republican votes when they were never going to get any. They started from a position of compromise. They should have asked for something huge and then come to a middle ground in the $1.5 trillion range. Don't know if they would have gotten that much, but they would have gotten a bigger package than what they ended up getting.

Oh, and they shouldn't have sold the package as something that would get us out of the hole we dug because it wasn't designed to do that. That made defending the package much more difficult.

And like I said before, I'm entirely confident that such a package would have done a much better job of kicking the can down the road, while making the can heavier in the process.

[zoony]

The roots of the subprime crisis were...

wait for it...

wait for it...

subprime lending.

And no, I'm not being sarcastic. Financial institutions began tapping a largely untapped market in the 1980s and into the 90s. By 2000 even the big players were moving to get into this largely untapped market and making money hand over fist.

Now if you want to talk about players and responsibility, plenty of that to go around.

-Fannie/Freddie bought up too many bad loans with the blessing of the Dems.

-Paulson allowing 35:1 leverage = insane.

-2 PHD Math geeks in a room building CDO trenches that nobody understood, the least of which the people selling them, rating them, and buying them.

-CDS sold, sans reserve and regulation, on top of the CDO's that nobody understood.

That's the gist of it. with the above list you could blame anyone from Barney Frank to Bill Clinton to George Bush to irresponsible lenders to rating agencies to de-regulated markets... and yes, even poor people.***

Root cause though? Yah. Subprime lending. That's the root cause. Anyone else saying anything different is either dumb or selling something you don't want to buy.

__________________

***Because they should be educated about money just like me and you. And just because they are poor and ignorant, that's not an excuse for personal responsibility.

Therefore, I think we should de-fund public education and encourage more home-schooling. That should fix our ignorance problem.

/tea party twit.

[HailGreen28]

I mean that " Causes are where we get down to the devils (or angels) in the details". Eyeballing a graph doesn't do it for me. More sophisticated analysis is needed to tease out things like this.

Besides, the raw eyeballing you seem to be after doesn't seem to offer much difference, once inflation adjusted, between the 50s and 80s and the 80s and today. I guess LBJ's policies were as good as Reagan's? :whoknows:

Causes are important. But to claim the economy of the country the past 30 years is a result of Reaganomics, is an endorsement rather than any criticism.

I posted an inflation adjusted chart, the relative jumps in GDP are the same. The economy was good under LBJ. It helped that he didn't have to deal with hard economic times at the start of his term, like Reagan and Obama had to. LBJ was unpopular for other reasons.

[Hubbs]

Causes are important. But to claim the economy of the country the past 30 years is a result of Reaganomics, is an endorsement rather than any criticism.

Sure about that?

[techboy]

I posted an inflation adjusted chart, the relative jumps in GDP are the same.

Yes, look at that chart. I see a steady, upward climb, and it's about the same under every President, despite the fact that each President pursued sometimes very different policies. You cannot, therefore, automatically give Reagan's specific policies credit, because it sure seems like the chart's doing pretty much the same thing under Presidents that did not follow those policies.

More (and deeper) analysis is needed.

This would even be true if the chart showed the economy dragging until it suddenly took off under Reagan. Clinton's policies, for instance, are often argued to have not been as good as people think, because the economy benefited from the internet boom.

To tease this kind of thing out requires more than just looking at one graph.

[Stillers6SB]

Yes, look at that chart. I see a steady, upward climb, and it's about the same under every President, despite the fact that each President pursued sometimes very different policies. You cannot, therefore, automatically give Reagan's specific policies credit, because it sure seems like the chart's doing pretty much the same thing under Presidents that did not follow those policies.

More (and deeper) analysis is needed.

This would even be true if the chart showed the economy dragging until it suddenly took off under Reagan. Clinton's policies, for instance, are often argued to have not been as good as people think, because the economy benefited from the internet boom.

To tease this kind of thing out requires more than just looking at one graph.

True. Analyze HailGreen's GDP chart and Hubbs' Debt chart together.

With Reagan's terms, the debt needed to produce the steady rise in GDP takes a serious turn upwards. The debt bubble started expanding massively. Maybe trickle down economics shouldn't get so much credit for the expansion.

The 30 year explosive growth in credit is ending.

[twa]

That's pretty much the sort of reply I expected I'd get.

You want it in a nice tidy package....it ain't gonna happen

it will come out as the sub-prime trials progress and expand

[DRSmith]

That's not a lie in the least Larry. The roots of the housing crisis can be dated back to the early 1990's when the gov't in their infinite wisdom decided that minorities were getting the shaft and that lending standards needed to be relaxed. You can find the answers & documentation on this if you're willing to look.

Yes let us ignore the Pubs pushing to end the need for documentation to help the self employed get homes

Let us ignore also the removal of regulation that kept personal banks seperate from investment banks and the regulations that had banks holding onto mortgages they made and forget the fact that they were making mortgages they knew the buyer could not repay but did not care since they were planning to sell the morgage anyways

[heyholetsgogrant]

Cisco to axe 16% of its workers

By David Goldman @CNNMoneyTech July 18, 2011: 5:55 PM ET

NEW YORK (CNNMoney) -- Cisco announced plans on Monday to lay off 9% of its workforce and to transfer another 7% of its staff to another company in a sale of one of its businesses.

The networking giant said it would hand out pink slips to 6,500 employees, including 2,100 who volunteered for early retirement packages.

Source: CNN Money

http://money.cnn.com/2011/07/18/technology/cisco_layoffs/?hpt=hp_t2

Ouch...IMO if Cisco didn't charge astronomical prices for their products they wouldn't be in such rough shape...this is why everyone is buying juniper and 3com routers, switches, and firewalls. But it still sucks that many people have to lose their jobs; My grandmothers next door neighbor was laid off from Cisco last year.

Borders liquidates: 10,700 jobs lost

By Ben Rooney @CNNMoney July 18, 2011: 6:47 PM ET

NEW YORK (CNNMoney) -- Borders Group will liquidate its remaining assets after efforts to find a buyer fell through, the bookstore chain announced Monday.

The nation's second largest book seller, which filed for bankruptcy protection earlier this year, currently operates 399 stores and employs approximately 10,700 workers.

Source: CNN Money

http://money.cnn.com/2011/07/18/news/companies/borders_liquidation/?hpt=hp_p1&iref=NS1

Ouch again, so between cisco and borders we lost 17k jobs in one day...