<![CDATA[Grist - Comment Feed for Ramblings on the financial crisis]]> Grist Comment Feed en Comment #1 by Spence http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 07:22:49 -0700 http://www.grist.org/article/750-billion/1 Preach it Brother.

Price of the Wall Street bailout: 700 Billion.
Price of the foreign oil America buys annually from various terror-coddling despots and vulgar plutocrats: 700 Billion.
Price of the damage that oil does to the environment: Priceless. Literally.

]]> Preach it Brother.

Price of the Wall Street bailout: 700 Billion.
Price of the foreign oil America buys annually from various terror-coddling despots and vulgar plutocrats: 700 Billion.
Price of the damage that oil does to the environment: Priceless. Literally.

]]> Comment #2 by Pangolin http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 07:33:09 -0700 http://www.grist.org/article/750-billion/2 Amen.

At least when you buy a solar panel it produces power. A windmill produces power. A twisty bulb saves power. A tree planted provides shade, maybe some fruit, and cellulose.

What we get for 750 billion is back to zero (if we're lucky) with the same clown circus in charge.

Put the Carbon Back


]]> Amen.

At least when you buy a solar panel it produces power. A windmill produces power. A twisty bulb saves power. A tree planted provides shade, maybe some fruit, and cellulose.

What we get for 750 billion is back to zero (if we're lucky) with the same clown circus in charge.

Put the Carbon Back


]]> Comment #3 by Tom Philpott http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 07:49:11 -0700 http://www.grist.org/article/750-billion/3 'Nobody clearly understands how we got in...

...situation."

What? No!!!! Seriously, listen to Alex Blunberg's recent This American Life Report called "Giant Pool of Money."http://www.thislife.org/Radio_Episode.aspx?sched=1242

Long story short: Wall Street convinced itself that housing prices always go up, no matter what. (Just like tech stocks go up, until they stopped in 2000.) Based on this comically faulty logic -- which I doubt few top execs believed, unless they're literal imbeciles -- they rigged up a novel "product" called "mortgage-backed securities," essentially vast clumps of mortgages. Selling these "safe," triple-A rated, solid-yielding securities was so profitable that they wanted more, more, more. So they completely gutted the requirements for loaning money for mortgages -- and then proceeded to bundle these dodgy mortgages into more "safe," triple-A rated, solid-yielding securities. Didn't they worry that folks making 40k a year and buying 400k houses would default? Sure, but they crossed their fingers that today's 400k house would fetch 500k next week. Rather than holding a loan in the case of default, the mortgage-backed security would now hold a  house that could be sold at a tidy profit. But they knew what they were doing carried enormous risks. And then the housing market did what it wasn't supposed to do, ever: it contracted. And the economy soured. And when people started to default on those 400k mortgages, guess what? They were only fetching 300k on the market. So the whole absurd house of cards began to crumble. And all the crappy debt these banks had sold to each other (at enormous fees) began to dive in value -- and the banks scrambled to flip it yet again. But this time, everyone was suddenly too smart to buy -- until Paulson stepped in and offered to buy all that worthless junk with your money. So we get the crappy debt, without the fat fees. Get it now? By all means, let's scratch our heads about what will happen; we're not seers. But we're not dolts, either. Let's not let ourselves be confused, dazzled, and flummoxed about what just happened. We got mugged.

Yes, the world runs on credit, and credit was threatening to seize up, risking a global depression. Something had to be done. But let's make sure this vast bailout results in real oversight over financial markets.

Victual Reality


]]> 'Nobody clearly understands how we got in...

...situation."

What? No!!!! Seriously, listen to Alex Blunberg's recent This American Life Report called "Giant Pool of Money."http://www.thislife.org/Radio_Episode.aspx?sched=1242

Long story short: Wall Street convinced itself that housing prices always go up, no matter what. (Just like tech stocks go up, until they stopped in 2000.) Based on this comically faulty logic -- which I doubt few top execs believed, unless they're literal imbeciles -- they rigged up a novel "product" called "mortgage-backed securities," essentially vast clumps of mortgages. Selling these "safe," triple-A rated, solid-yielding securities was so profitable that they wanted more, more, more. So they completely gutted the requirements for loaning money for mortgages -- and then proceeded to bundle these dodgy mortgages into more "safe," triple-A rated, solid-yielding securities. Didn't they worry that folks making 40k a year and buying 400k houses would default? Sure, but they crossed their fingers that today's 400k house would fetch 500k next week. Rather than holding a loan in the case of default, the mortgage-backed security would now hold a  house that could be sold at a tidy profit. But they knew what they were doing carried enormous risks. And then the housing market did what it wasn't supposed to do, ever: it contracted. And the economy soured. And when people started to default on those 400k mortgages, guess what? They were only fetching 300k on the market. So the whole absurd house of cards began to crumble. And all the crappy debt these banks had sold to each other (at enormous fees) began to dive in value -- and the banks scrambled to flip it yet again. But this time, everyone was suddenly too smart to buy -- until Paulson stepped in and offered to buy all that worthless junk with your money. So we get the crappy debt, without the fat fees. Get it now? By all means, let's scratch our heads about what will happen; we're not seers. But we're not dolts, either. Let's not let ourselves be confused, dazzled, and flummoxed about what just happened. We got mugged.

Yes, the world runs on credit, and credit was threatening to seize up, risking a global depression. Something had to be done. But let's make sure this vast bailout results in real oversight over financial markets.

Victual Reality


]]> Comment #4 by GonzoDon http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 08:09:17 -0700 http://www.grist.org/article/750-billion/4 No-win Wall Street Journal

Over at WSJ, Keith Johnson hints that the rising price of oil will squash all the eco-talk from politicians. Of course, he predicts the same thing when the price of oil is low, so ...

I love it.  It's so true.  When oil and gas prices are high, consumers are suffering, so for god's sake we've got to open up ANWR to drilling, cut gas taxes, release oil from the strategic reserve, set the drilling companies loose on our public lands will all due haste, yadda yadda yadda.

Conversely, when oil prices and gas prices are low, the consumer economy hums along on the happy-motoring model and by gar we can't afford to upset that applecart with environmental concerns like demanding increased fuel efficiencies (we don't need it!  gas is cheap!), investing in public transit (no one will use it! gas is cheap!), building more compact and pedestrian-friendly communities (it's pointless!  people want to drive everywhere including their remote suburban mcmansions!  gas is cheap!).  Yadda yadda yadda.

Good observation, David Robers.  So true!  

]]> No-win Wall Street Journal

Over at WSJ, Keith Johnson hints that the rising price of oil will squash all the eco-talk from politicians. Of course, he predicts the same thing when the price of oil is low, so ...

I love it.  It's so true.  When oil and gas prices are high, consumers are suffering, so for god's sake we've got to open up ANWR to drilling, cut gas taxes, release oil from the strategic reserve, set the drilling companies loose on our public lands will all due haste, yadda yadda yadda.

Conversely, when oil prices and gas prices are low, the consumer economy hums along on the happy-motoring model and by gar we can't afford to upset that applecart with environmental concerns like demanding increased fuel efficiencies (we don't need it!  gas is cheap!), investing in public transit (no one will use it! gas is cheap!), building more compact and pedestrian-friendly communities (it's pointless!  people want to drive everywhere including their remote suburban mcmansions!  gas is cheap!).  Yadda yadda yadda.

Good observation, David Robers.  So true!  

]]> Comment #5 by gmobus http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 08:42:18 -0700 http://www.grist.org/article/750-billion/5 The world doesn't run on money

It runs on energy. Money used to be a token of how much energy you had to do useful work. As long as you were producing more such energy per unit time, as in pumping more oil year over year, you could assume that you would always have more energy in the future. So why not borrow against it a little? Take a little more out of reserves than you would have otherwise needed to boost an economic activity. You were betting on a future that would surely come to pass.

That's it. We can grow the economy (create jobs, produce more stuff, all have a merry time) by simply pumping more oil, digging more coal. What a great idea!

But then oil production started to tail off. It was still rising but not as fast. We pumped energy into the economy as if we would always be able to boost production of energy in the future. Only now we can't. Yikes! How are we going to keep the economy growing in the future? How are we going to pay back for the fact that we were not investing in other energy sources which might have produced more net energy in the future?

We borrowed energy to make bigger houses, bigger cars and SUVs, bigger TV sets so we can all feel like we are sitting in a movie theater, bigger sports arenas, more highways, more people, more, more, more. Just not more energy production capacity.

Give me a break. I agree with you that not that many people really understand what has happened. But they should. You cannot do any work without energy. And if you don't channel some of that work toward creating renewable sources of energy (appropriately scaled) and you are totally dependent on a diminishing source of energy, what else could you expect. We're screwed.

Unless some bright bulb figures a way around the second law of thermodynamics you can expect both economic contraction (as in depression) and --- wait for it --- inflation (as measured in fiat monetary units). If you thought stagflation was bad just wait to see how contractflation suits you.

It's right around the corner, coming to an economy near you. If my understanding (outlined above) is wrong then it won't happen. Maybe we'll have a few years of stagflation/recession and then happy days will be here again. But if I am right...

Question Everything

George

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life


]]> The world doesn't run on money

It runs on energy. Money used to be a token of how much energy you had to do useful work. As long as you were producing more such energy per unit time, as in pumping more oil year over year, you could assume that you would always have more energy in the future. So why not borrow against it a little? Take a little more out of reserves than you would have otherwise needed to boost an economic activity. You were betting on a future that would surely come to pass.

That's it. We can grow the economy (create jobs, produce more stuff, all have a merry time) by simply pumping more oil, digging more coal. What a great idea!

But then oil production started to tail off. It was still rising but not as fast. We pumped energy into the economy as if we would always be able to boost production of energy in the future. Only now we can't. Yikes! How are we going to keep the economy growing in the future? How are we going to pay back for the fact that we were not investing in other energy sources which might have produced more net energy in the future?

We borrowed energy to make bigger houses, bigger cars and SUVs, bigger TV sets so we can all feel like we are sitting in a movie theater, bigger sports arenas, more highways, more people, more, more, more. Just not more energy production capacity.

Give me a break. I agree with you that not that many people really understand what has happened. But they should. You cannot do any work without energy. And if you don't channel some of that work toward creating renewable sources of energy (appropriately scaled) and you are totally dependent on a diminishing source of energy, what else could you expect. We're screwed.

Unless some bright bulb figures a way around the second law of thermodynamics you can expect both economic contraction (as in depression) and --- wait for it --- inflation (as measured in fiat monetary units). If you thought stagflation was bad just wait to see how contractflation suits you.

It's right around the corner, coming to an economy near you. If my understanding (outlined above) is wrong then it won't happen. Maybe we'll have a few years of stagflation/recession and then happy days will be here again. But if I am right...

Question Everything

George

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life


]]> Comment #6 by vakibs http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 09:29:35 -0700 http://www.grist.org/article/750-billion/6 we have sustainable energy reserves forever

.. and thus, we are not borrowing any energy from the future.

.. and there will never be any contractflation.

@George Mobus :
You should be aware of this 2006 article in the scientific american.

More information on breeder reactors.

Let's think in terms of eco-dollars.


]]> we have sustainable energy reserves forever

.. and thus, we are not borrowing any energy from the future.

.. and there will never be any contractflation.

@George Mobus :
You should be aware of this 2006 article in the scientific american.

More information on breeder reactors.

Let's think in terms of eco-dollars.


]]> Comment #7 by gmobus http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 11:59:31 -0700 http://www.grist.org/article/750-billion/7 good luck with that BELIEF vakibs

Your SciAm link was not correct.

Nuclear will be part of the future. But any future that assumes we will be able to support the current population in the style to which we have become accustomed is delusion, friend.

DO THE MATH.

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

]]> good luck with that BELIEF vakibs

Your SciAm link was not correct.

Nuclear will be part of the future. But any future that assumes we will be able to support the current population in the style to which we have become accustomed is delusion, friend.

DO THE MATH.

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

]]> Comment #8 by amazingdrx http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 15:14:50 -0700 http://www.grist.org/article/750-billion/8 Squeeze play

Market manipulation by insider trading.

If enforcement returned it would dissipate.  There, that's a bold pronouncement. Nabbing Martha Stewart (because she was a dem fundraiser)did not put the fear in the perps.

Unlike  pronouncements of affection for "Reason", and their free marketeerian think tankery, this one is not as likely to be embarrassing, later on.

Mock me if you dare.  Oh, cowardly corporate libertarians.

Everyone prestending they don't know how we got into this.  With their valiant propaganda as a lobbying aid.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

]]> Squeeze play

Market manipulation by insider trading.

If enforcement returned it would dissipate.  There, that's a bold pronouncement. Nabbing Martha Stewart (because she was a dem fundraiser)did not put the fear in the perps.

Unlike  pronouncements of affection for "Reason", and their free marketeerian think tankery, this one is not as likely to be embarrassing, later on.

Mock me if you dare.  Oh, cowardly corporate libertarians.

Everyone prestending they don't know how we got into this.  With their valiant propaganda as a lobbying aid.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

]]> Comment #9 by GreyFlcn http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 16:41:13 -0700 http://www.grist.org/article/750-billion/9 This wouldn't be so bad

If it weren't for this.

In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch
http://www.huffingtonpost.com/2008/09/22/dirty-secret-of- ...

Didn't we get into this problem in the first place because of a lack of oversight, and a lack of regulation.

-David Ahlport


]]> This wouldn't be so bad

If it weren't for this.

In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch
http://www.huffingtonpost.com/2008/09/22/dirty-secret-of- ...

Didn't we get into this problem in the first place because of a lack of oversight, and a lack of regulation.

-David Ahlport


]]> Comment #10 by vakibs http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 19:37:47 -0700 http://www.grist.org/article/750-billion/10 the math is done..

@george mobus

Infact, we have sufficient energy to support more than the current population, and at lot more lavish lifestyles.

But this is not an excuse to not conserve energy, to not reduce the populations in the long run, and to not care for the environment.

The PDF that I linked above is still working (It is a December 2005 SciAm article archived at another website).

Let's think in terms of eco-dollars.


]]> the math is done..

@george mobus

Infact, we have sufficient energy to support more than the current population, and at lot more lavish lifestyles.

But this is not an excuse to not conserve energy, to not reduce the populations in the long run, and to not care for the environment.

The PDF that I linked above is still working (It is a December 2005 SciAm article archived at another website).

Let's think in terms of eco-dollars.


]]> Comment #11 by KenG http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 22:59:55 -0700 http://www.grist.org/article/750-billion/11 Counter Views

How about considering that the "financial crises" was not caused by lack of regulation but a combination of over-regulation (perhaps meddling) and incompetant regulation. Fannie Mae and Freddie Mac have to seen as drivers (but not the sole drivers) in this mess. These are quasi governmental corporations that were, theoretically, under the complete control of congress. Under the guise of encouraging home ownership, congress allowed these entities to become politically controlled houses of cards. This is not a party issue - Dems and Reps both had extensive involvement in this.

Also, this bail out seems to be viewed as real money. It's not. True to form, the bail out money won't come from  other sources, it will just increase the deficit. I can't imagine that whatever action is being taken will actually impact taxes or other spending. The most likely effect will be a small long term increase in inflation. Also, the Federal government will be buying "stuff" (bankrupt companies and questionable loans). There will be some equity value and no one can predict the ultimate "cost" of the bail out.

Ordinarily I would be opposed to Federal involvement here, but in this case I think the Feds were involved in breaking the system and need to be involved in fixing it.

]]> Counter Views

How about considering that the "financial crises" was not caused by lack of regulation but a combination of over-regulation (perhaps meddling) and incompetant regulation. Fannie Mae and Freddie Mac have to seen as drivers (but not the sole drivers) in this mess. These are quasi governmental corporations that were, theoretically, under the complete control of congress. Under the guise of encouraging home ownership, congress allowed these entities to become politically controlled houses of cards. This is not a party issue - Dems and Reps both had extensive involvement in this.

Also, this bail out seems to be viewed as real money. It's not. True to form, the bail out money won't come from  other sources, it will just increase the deficit. I can't imagine that whatever action is being taken will actually impact taxes or other spending. The most likely effect will be a small long term increase in inflation. Also, the Federal government will be buying "stuff" (bankrupt companies and questionable loans). There will be some equity value and no one can predict the ultimate "cost" of the bail out.

Ordinarily I would be opposed to Federal involvement here, but in this case I think the Feds were involved in breaking the system and need to be involved in fixing it.

]]> Comment #12 by John former Marine http://www.grist.org/article/750-billion/ Mon, 22 Sep 2008 23:56:41 -0700 http://www.grist.org/article/750-billion/12 Bring on the inflation!!!!!

Ok, I know it's not so good for you old folks but those of us who have just started out in life with extremely overpriced homes (prices driven up, of course, by speculation, second-home owners, and baby boomer resource hogs) want inflation.  When bread is going for $100 a loaf, paying $2,000 a month mortgage on a small townhouse won't feel so rediculous anymore.  You know, it's kinda crazy in a way but I almost hope that re-electing McBush to a 3rd term would put the final nail in the coffin and end this wasteful, money-worshipping, earth-destroying, humanity-devaluing way of life.

And as for my job....working is overrated anyways.  I know you Boomers love doing it...you designed a society for your kids to enjoy where we get to drive 1 or 2 hours to work at a boring job then drive 1-2 hours back home again to watch TV.  I'm not really into it, personally.  If the economy crashes and I have to leave my comfy little townhouse, I'll move in with my little brother, who I just helped buy a very well-priced home...a trailer.

Il faut cultiver notre jardin.

]]> Bring on the inflation!!!!!

Ok, I know it's not so good for you old folks but those of us who have just started out in life with extremely overpriced homes (prices driven up, of course, by speculation, second-home owners, and baby boomer resource hogs) want inflation.  When bread is going for $100 a loaf, paying $2,000 a month mortgage on a small townhouse won't feel so rediculous anymore.  You know, it's kinda crazy in a way but I almost hope that re-electing McBush to a 3rd term would put the final nail in the coffin and end this wasteful, money-worshipping, earth-destroying, humanity-devaluing way of life.

And as for my job....working is overrated anyways.  I know you Boomers love doing it...you designed a society for your kids to enjoy where we get to drive 1 or 2 hours to work at a boring job then drive 1-2 hours back home again to watch TV.  I'm not really into it, personally.  If the economy crashes and I have to leave my comfy little townhouse, I'll move in with my little brother, who I just helped buy a very well-priced home...a trailer.

Il faut cultiver notre jardin.

]]> Comment #13 by vakibs http://www.grist.org/article/750-billion/ Tue, 23 Sep 2008 04:17:33 -0700 http://www.grist.org/article/750-billion/13 GNEP funding is zeroed !!!

I don't ever want to hear again about how expensive renewables are. If we have $3 trillion for a pointless war and $750 billion to clean up the messes made by biz school grads playing with funny money, we by God have enough money to get off fossil fuels. It's a matter of will, not cost.

@David Roberts

You should know that the US senate has recently zeroed on GNEP (global nuclear energy partnership) funding. This is perpetrated by the supposed defenders of environment and human safety, whereas the funding is vital in the R&D of three important problems

How to get rid of our nuclear waste ?
How to solve our energy crisis ?
How to avoid terrible famine and mass human murder in the future due to sinking water table and rising sea-levels ?

The senate has cut down the funding to zero for all the projects which are demonstrating "existing " technology, which is already sufficient to solve all our energy and environmental problems.

This stupidity has to stop ! If the Clinton administration has not taken its bone-headed decision of discontinuing the IFR project in 1994, we would not have been seeing the rapid coal-plant build up  in China, India and Africa. Sacking the funding for GNEP is an equally monumental blunder.

So what is GNEP ?

It is a program to close the loop in nuclear power production. This will be done by breeder reactors which (a) don't produce nuclear waste and eat up the existing nuclear waste (b) are better resistant to proliferation and are safer than existing 2nd generation nuclear plants.

Why would such a nice thing be discontinued by the government ?

Because, general public is not aware. Special interests which have ties to coal and natural gas industries are stifling the scientists.

Please do the environmentalist community a service and report on this travesty.

Let's think in terms of eco-dollars.




]]> GNEP funding is zeroed !!!

I don't ever want to hear again about how expensive renewables are. If we have $3 trillion for a pointless war and $750 billion to clean up the messes made by biz school grads playing with funny money, we by God have enough money to get off fossil fuels. It's a matter of will, not cost.

@David Roberts

You should know that the US senate has recently zeroed on GNEP (global nuclear energy partnership) funding. This is perpetrated by the supposed defenders of environment and human safety, whereas the funding is vital in the R&D of three important problems

How to get rid of our nuclear waste ?
How to solve our energy crisis ?
How to avoid terrible famine and mass human murder in the future due to sinking water table and rising sea-levels ?

The senate has cut down the funding to zero for all the projects which are demonstrating "existing " technology, which is already sufficient to solve all our energy and environmental problems.

This stupidity has to stop ! If the Clinton administration has not taken its bone-headed decision of discontinuing the IFR project in 1994, we would not have been seeing the rapid coal-plant build up  in China, India and Africa. Sacking the funding for GNEP is an equally monumental blunder.

So what is GNEP ?

It is a program to close the loop in nuclear power production. This will be done by breeder reactors which (a) don't produce nuclear waste and eat up the existing nuclear waste (b) are better resistant to proliferation and are safer than existing 2nd generation nuclear plants.

Why would such a nice thing be discontinued by the government ?

Because, general public is not aware. Special interests which have ties to coal and natural gas industries are stifling the scientists.

Please do the environmentalist community a service and report on this travesty.

Let's think in terms of eco-dollars.




]]> Comment #14 by vakibs http://www.grist.org/article/750-billion/ Tue, 23 Sep 2008 04:23:39 -0700 http://www.grist.org/article/750-billion/14 Correct Links

Integral Fast Reactor (IFR) is a technology already capable of addressing energy and environmental crises.

The vital importance of GNEP :  Several countries in the world are already building breeder reactors, and if their Uranium/Plutonium (say in Pakistan) runs loose, the bombs will explode in New York.  GNEP actually addresses these dangers and helps the cause of non-proliferation.

Read the book of Tom Blees.

Let's think in terms of eco-dollars.

]]> Correct Links

Integral Fast Reactor (IFR) is a technology already capable of addressing energy and environmental crises.

The vital importance of GNEP :  Several countries in the world are already building breeder reactors, and if their Uranium/Plutonium (say in Pakistan) runs loose, the bombs will explode in New York.  GNEP actually addresses these dangers and helps the cause of non-proliferation.

Read the book of Tom Blees.

Let's think in terms of eco-dollars.

]]>