In a Nutshell

[Jay]

Re: In a Nutshell

It was cheap then. But to keep the game going it had to keep getting cheaper still. Just as it became cheaper and cheaper prior to the "apex".

Do you really think income growth between 2000 and 2005 was an important factor in creating the bubble?

OK I misunderstood you and see were you are coming from now. No I do not think income growth was a factor.

[Jay]

Re: In a Nutshell

Prozac IndigNation

What Engels failed to understand was advanced capitalism's deft wielding of complexity, the cloaking of risk, the originate-and-distribute 'hot potato' model, securitization as camouflage, the democratization of credit, the false hope of counter-partied and unanticipated concentration risk, etc. Heck, who beyond a select few people understood it even nine months ago? Even now, the rationale of post-bubble fervor is hard to reconstruct. My guess is Engels would resist the anomalous language of 'bubbles' and argue that the so-called anomaly is simply the business-as-usual, crisis-to-crisis nature of the capitalist system. He might also marvel at the financial capitalist's ability to 'feed at the socialist trough' whenever it suits him. I know I do. I suppose greed subscribes to the ideology of expedience.

Anyway as the elite stole from the top via stock options, ridiculous salaries, acquiescent boardrooms etc., they simultaneously (and ingeniously) created credit models that augmented stagnant wages and sustained the workers' consumption patterns against the Marxist cul de sac of overproduction. In short, cheap credit caused the worker to believe he was still keeping ahead and enjoying the fruits of his production. For a time it masked his real wage declines.

The Freddie/Fannie paper factory also benefited from an implied governmental (read: socialist) backstop which, as it turned out, was ultimately invoked; this aggressive credit creation relied upon the gumption of relatively less sophistocated and emergent capitalist markets (many prior Marxist-Leninist states ironically) that, for a variety of currency and developmental reasons, were happy to remain production-bound and vendor-oriented.

Like any Ponzi scheme, this dog-and-pony trick can only succeeed once. No one will be fooled again. Meanwhile the American worker is being unceremoniously dumped back into a classic Marxist overproduction trap as credit sources evaporate, home equity disappears, manufacturing jobs vanish and inflation looms. The new cars and houses are stacking up. Absent credit, no one can afford them. Which is to say, no one can afford them. When the deleveraging process completes itself, we will be back to 'merely' wages --and horrendous wage disparities-- once again i.e. a more classic Marxist playing field.

The question to me is, when will the American pot finally boil over into meaningful social unrest? Or are Americans so naturally docile (and/or medicated) that outrage is not an available response? Is Prozac Huxley's soma? If so, they sure as hell better find a way to keep the pills rolling.

Thank you, well put.

[Rantly McTirade]

Re: In a Nutshell

WTF is the wrong with Tennessee or Alabama, vs. any place else, as a source of politicians?
We already had a Governor from Arkansas, and the current crises were germinated or encouraged to grow in that time.

[derelict54]

Re: In a Nutshell

You're right these politicians can come from anywhere, for some reason I started thinking in a southern drawl last night when I was typing that up. must have been the good Tennessee whiskey hispering at me......Looking at it today, it reads better in a southern toungue, try it.

Anyhow..... who's with me? Jeb and Hillary ticket for 2016? Start the Masochistic political party of America right here, right now.

[GRG55]

Re: In a Nutshell

...Like any Ponzi scheme, this dog-and-pony trick can only succeeed once. No one will be fooled again...

Are we sure? Apparently time heals everything. Including "investor's" memories... ;)

1920's:

...While Ponzi was languishing in a federal correctional facility in the early 20's, speculators in Florida seized upon real estate as a moneymaking scheme which would ultimately prove more enduring than trade in postal reply coupons. In Miami alone, the land boom increased the assessed value of property 560 percent between 1921 and 1926. This speculation provided many opportunities for overreaching, and gave rise to a familiar, if less personal, phrase for another species of fraud: "Swamp land in Florida."

Ponzi answered Florida's siren call, arriving In Jacksonville on September 28, 1925, as the boom was beginning to fade. As his name had become synonymous with fraud, he used the alias Charles Borelli. Once his presence and true identity were revealed, he announced plans to recoup his fortune, through the subdivision of real estate, and repay all investors. He would advertise nationally, selling lots at an affordable ten dollars each...

2005:

http://www.palmbeachpost.com/news/co...oom031906.html
Red-hot spots of 2005

PUBLISHED MARCH 19, 2006 | BEHIND THE HOUSING BOOM
The Palm Beach Post analyzes the neighborhoods
that fueled last year's real-estate frenzy.

[GRG55]

Re: In a Nutshell

You're right these politicians can come from anywhere, for some reason I started thinking in a southern drawl last night when I was typing that up. must have been the good Tennessee whiskey hispering at me......Looking at it today, it reads better in a southern toungue, try it.

Anyhow..... who's with me? Jeb and Hillary ticket for 2016? Start the Masochistic political party of America right here, right now.

Anybody who is an aficionado of good Tennessee sippin' whiskey would get my vote [if I could vote in the USA ]

[don]

Re: In a Nutshell

Prozac IndigNation

What Engels failed to understand was advanced capitalism's deft wielding of complexity, the cloaking of risk, the originate-and-distribute 'hot potato' model, securitization as camouflage, the democratization of credit, the false hope of counter-partied and unanticipated concentration risk, etc. Heck, who beyond a select few people understood it even nine months ago? Even now, the rationale of post-bubble fervor is hard to reconstruct. My guess is Engels would resist the anomalous language of 'bubbles' and argue that the so-called anomaly is simply the business-as-usual, crisis-to-crisis nature of the capitalist system. He might also marvel at the financial capitalist's ability to 'feed at the socialist trough' whenever it suits him. I know I do. I suppose greed subscribes to the ideology of expedience.

Anyway as the elite stole from the top via stock options, ridiculous salaries, acquiescent boardrooms etc., they simultaneously (and ingeniously) created credit models that augmented stagnant wages and sustained the workers' consumption patterns against the Marxist cul de sac of overproduction. In short, cheap credit caused the worker to believe he was still keeping ahead and enjoying the fruits of his production. For a time it masked his real wage declines.

The Freddie/Fannie paper factory also benefited from an implied governmental (read: socialist) backstop which, as it turned out, was ultimately invoked; this aggressive credit creation relied upon the gumption of relatively less sophistocated and emergent capitalist markets (many prior Marxist-Leninist states ironically) that, for a variety of currency and developmental reasons, were happy to remain production-bound and vendor-oriented.

Like any Ponzi scheme, this dog-and-pony trick can only succeeed once. No one will be fooled again. Meanwhile the American worker is being unceremoniously dumped back into a classic Marxist overproduction trap as credit sources evaporate, home equity disappears, manufacturing jobs vanish and inflation looms. The new cars and houses are stacking up. Absent credit, no one can afford them. Which is to say, no one can afford them. When the deleveraging process completes itself, we will be back to 'merely' wages --and horrendous wage disparities-- once again i.e. a more classic Marxist playing field.

The question to me is, when will the American pot finally boil over into meaningful social unrest? Or are Americans so naturally docile (and/or medicated) that outrage is not an available response? Is Prozac Huxley's soma? If so, they sure as hell better find a way to keep the pills rolling.

Enjoyed your comments. I don't think Americans are inherently docile, however. I tend to think any population that enjoyed the crumbs of empire for half a century would be in a similar state of acquiesce. And don't discount the most powerful propaganda apparatus in history.

[c1ue]

Re: In a Nutshell

Indigence,

I don't think you're giving Industrial era proletariat enough credit.

It was only when living conditions got REALLY bad that the activism started to take hold.

It is no different today than feudal peasants: if the crops were good and the lord wasn't causing starvation by his take, the peasants were by and large fine with it.

Only when starvation was being caused - i.e. drought/famine years - did you start seeing the 100K person peasant armies rise up (and get crushed by 5K to 10K armored knights).

Even slave rebellions - where each and every slave knows exactly whats coming to him/her - have a dismally poor track record.

[due_indigence]

Re: In a Nutshell

I would agree guys there is an inertia born of 50 years of (eroding) affluence. The tragedy is that the boiling point couldn't have been hurried when there was time to effect substantive changes.