"We're in for catastrophic economic events for the foreseeable future."

I just spoke to my wealthy friend who is very concerned with the prudent husbanding of the legacy his father entrusted to him.  (His father's father, I believe, owned the Empire State Building at one point.)  He's been talking to other people at the same level, and the word from backstage is, it is very bad.  Folks, if these people say it's bad, it's bad.  "Not a two-year recession but at least a decade. . . . As drastic as the changes that took place after the Civil War," when the U.S. economy was first federalized." 

It doesn't seem real to many of us yet, because few of us are old enough to have lived through anything remotely comparable.  We've been pretty well protected.

It might have been better, my friend said -- if short-term worse -- if they could have let all the giants fall.  We would have plunged into a catastrophic depression, but "people would have been forced to get their act together really fast," and we would have emerged with a chastened, restructured economy.  Of course, there's no way Bernanke and Paulson as public servants could have let that happen.  They're obliged to patch the behemoth up and let it stagger on, prolonging the agony -- cushioning the fall somewhat, at the price of making it longer-lasting and less cathartic.

My friend quoted Bill Bonner of The Daily Reckoning:  "Taking the creative destruction out of capitalism is like taking the crucifixion out of Christianity." 

Notes I made while listening:

A lot more insolvencies on the horizon . . . Schwarzenegger just asked for 7 billion; basically, CA is broke.  Seven more states are insolvent, will go broke by the end of the year, have completely overspent, and can't print money like the feds can. 

L.A. seeks 400 million dollar bailout separate from CA as a state.  Cannot meet its obligations on its bonds, or anything.  Expect other municipal bonds to tank. The city of Detroit is gone.  Bonds worthless.  Black hole.  (Hi, Ron?)

Iceland just went broke . . . other European countries will follow. 

Auto companies are about to ask for 75 billion.  They can no longer extend auto loans.

In 2012 the boomers start to retire; they can't afford to. 

If "B. Hussein Obama" (as my friend calls him) keeps his promise that health care is a right -- there is not enough money on the planet to provide universal health care in America. 

Silver lining -- unbelievable opportunities for those who can hang in there and who have more cash than debt; and a more rational economic structure ultimately emerging.  (Kind of below my friend's radar:  you can imagine that it's the most vulnerable who may never recover.)

Comments

[Simon]

So a rational observer would certainly look at this dire situation and say "gee - you know what would be good right about now? How about a whole pile of new federal mandatory spending!"

If they really had cajones, they'd advocate said spending and tell you that they weren't going to raise your taxes, and criticize their opponent for pointing out the obvious saying that they have said they're going to reduce taxes and hang the bloody numbers that say you'll inevitably have to...

This election shouldn't even be close. This should be an election where Obama counts himself as lucky if he wins Massachusetts. How are the polls - how are the voters - so out of step with reality?

[amba]

But how's the federal government going to buy up all those bad mortgages??

[wj]

California is broke. But that's not really new. The reason that Schwarzenegger warned the Feds that he might have to ask for a loan is part of the general credit problem: the usual (and it is usual) borrowing of money from private sources to pay the bills until the tax receipts come in is unlikely to be available.

At the moment, we have two problems:
1) a long term problem of some individuals and institutions having borrowed more money than they can repay.
2) an immediate problem of those with money being reluctant to lend to anybody. At least until they can get a clearer idea of who those individuals and institutions are.

Unfortunately, the second problem means that even some companies which do not have debts beyond their ability to pay may end up bankrupt, simply because they cannot get short term financing for current operations. And others may have to scale back abruptly for the same reason.

Take an example of how the second problem works: An individual has $50,000 in a CD which matures in 6 months. (Assume the CD is with a lender who is NOT in danger of not being able to pay up.) He has an income which covers normal living expenses just fine.

Then he has an accident, and needs an operation, which will cost $40,000. If he can get a short-term loan, he can pay for the operation and pay off the loan when the CD matures. No problem. But if he cannot get that loan (and cannot find anyone willing to by the CD), he has big trouble.

He is solvent, but he has a cashflow problem. One which would not be critical in ordinary times, but is today.

[Simon]

But how's the federal government going to buy up all those bad mortgages??

More important even than how - why is it even a credible idea that it should? Why is a Republican who claims to admire Reagan and Goldwater proposing to go along with it? Believe me, I understand that we're down to bad or worse, but it doesn't take any subtlety to work out which is bad (McCain) and which is worse (Obama).

[Simon]

I mean, the fact is, the people I'd really like running things will never be running things. Why? Because they can't win elections, primarily because they have the politically fatal malady of telling people truths they don't want to hear. And I mean truths they really don't want to hear, not this fluffy "inconvenient truth" stuff where Al Gore tells lefty audiences an extremely convenient (for them) truth that they're dying to hear.

[michael Reynolds]

With all due respect to your friend, Amba, I smell ideology all over his analysis. That doesn't mean he's wrong -- it may be the end of the world as we know it -- it just means he seems like he's spinning.

Kind of like Simon, for whom the answer to absolutely every question is: Obama bad!!!!!

[Ruth Anne]

Maybe the herd needs culling anyway.

[realpc]

I think the bailout not only prolongs the agony, it tries to prevent us from learning lessons we desperately need to learn. I could not believe it when I heard the bailout finally passed in the house because it was full of unnecessary wasteful spending. That is absolutely the last thing needed now.

The government is playing psychological games right now, hoping to inspire confidence so life will continue as usual, even though in reality Paulson et al. have absolutely no idea what they're doing. We're all supposed to think "They're doing something, they must have good ideas, they're the experts." But it is not true!

Just because everything looks the same does not mean it is the same, or will be the same. We will have to slow down and cut back and stop being so crazed. Well I won't really have to, hopefully, because I never was that much of a crazed consumer or status-seeker.

I think your friend is right about capitalism -- it is how our species lives, and we are part of nature. Therefore, capitalism is part of nature. Nature is not safe and comfortable all the time; it has crises and cataclysms and upheavals, and it's full of competition. We think of flowering plants, for example, as lovely and graceful, but in reality they compete for their brief survival like every other living thing.

Capitalism is painful because life on earth is painful. Modern Western civilization has tried its best to deny this and to create pleasant utopias. Technology has made life physically easy, and therefore physically unhealthy. Modern medicine has given us pain-killers so we don't have to experience mental and physical reality.

And now the experts are trying frantically to maintain the illusion that what goes up can continue going up forever, that there is no downside, and there are no trade-offs.

[Spud]

This election shouldn't even be close. This should be an election where Obama counts himself as lucky if he wins Massachusetts.

Simon, how do you arrive at your analysis? Real Clear Politics has Bush's approval rating at 26%. Don't you think that might have something to do with McCain currently behind in the polls? People really do want change from a Republican administration.

[Simon]

Spud, I don't accept the basic assumptions of your point that the Bush administration is "conservative," that the current problems are reasonably be attributable to either conservative policy in a platonic sense or this administration's policies regardless of their label, that in any event a McCain administration will be like the Bush administration in terms of tone, focus and thrust, and lastly, that this issue ought to be dominant in people's decisionmaking.

Let me also point to something I said over at Althouse (and may yet say in some form at SF). It's important to challenge assumptions that underly the claims that this "crisis" is a result of the free market and that solution is "more" of an ill-defined class of chemicals - some curative, some poisonous - called "regulation." Assumptions such as: that the markets that precipitated the crisis were free, that the crisis is a failure of the free market, that new regulations in abstracto or any particular new regulations are the solution.

Even if we assume - I think correctly - that "something must be done," Ann's commenter Paul Zrimsek gives us a timely reminder of the politian's litany: "Something must be done. This is something. Therefore this must be done." It's terribly important to resist that flawed logic; that way lies Sarbox and Smoot-Hawley. So what do we do?

Let us assume, arguendo, that the right response is a regulatory response - of some kind. Isn't the prudent approach to determine with specificity what the problem was, examine the structure of the markets we propose to regulate, and impose a narrow, carefully-tailored regulatory regime that is crafted with sensitivity to the interests and needs of the market? The market, that is, to whose prosperity that of the wider economy is tied, as has been so viscerally demonstrated recently? And isn't it more likely - far far more likely - that we will see that kind of reform as a compromise between President McCain and a Democratic Congress than as the punitive response of a President Obama egged on by Democratic Congress that has not generally shown appreciation or understanding of the link between economic prosperity and jobs, preferring to think of business as the enemy of "their people"?

If this was not a failure of "the free market," generically, then it is likely that the situation is more complex than to be solved by "more" generically-defined "regulation." The right response is the right regulatory response - not just any regulatory response, particularly with the economy in trouble. Getting it wrong would be a real mistake, and one I think that any Democratic administration is temperamentally and ideologically more prone to than any Republican administration. Generally-speaking, all but the most hardcore freemarketeers in the GOP concede that some regulation is good. I am all in favor of regulations that are constructive and that function to keep the market operating efficiently; for example, I have no beef with the antitrust laws, generally-speaking, and I doubt you'd find anyone likely to serve in McCain's administration who disagrees with that. I don't know any Republicans who want to dismantle FDIC. Republicans don't mind good regulation, whereas I don't know that Democrats at this point understand the concept of "good" regulation because such a concept implies that there must exist something they don't believe in: bad regulation. That's a dangerous mindset in such times.

[michael Reynolds]

Spud:
Be nice to our Republican friends: it's very hard for them to think straight while wearing tinfoil hats.

[Ruth Anne]

Michael:
That 'friends' was about as sincere as when John McCain says it.

[RW Rogers]

Ruth Anne: Sincerity and integrity are not his strong suits. If you are a bridge player, I'd assume voids and bid accordingly.

[michael Reynolds]

Randy:
Did I run over your dog at some point?

[RW Rogers]

This election shouldn't even be close. This should be an election where Obama counts himself as lucky if he wins Massachusetts. How are the polls - how are the voters - so out of step with reality?

Simon, it seems to me that this statement is the one out of step with reality. Combine an unpopular GOP administration with the worst polling support in history, an unpopular war (the success of the escalation doesn't offset the reality of the poor execution), and imploding home prices with what is now the near-total collapse of the financial sector and quite likely a severe recession to follow, and it is hard to imagine ANY GOP nominee winning by more than hair's breadth against the most inept of Democrats, and Obama is far from being the most inept of Democrats.

[RW Rogers]

No Michael, I don't own a dog. I just checked on my cats, however. rest assured there are no tire tracks to be found on their bodies.

[Simon]

Randy: Did I run over your dog at some point?

I'm sure you accused him of racism, directly or indirectly.

[Donna B.]

I don't know. My daughter has been sending me email updates she gets from an old econ professor. I posted what he thinks about the bailout mess, and how it should be handled.

Even if somebody listened to him, is to late?

Obama doesn't frighten me, Pelosi doesn't scare me, and Reid doesn't shake me up -- as long as they aren't collaborating with each other. But put them to scheming together, I feel I need to hang onto my wallet.

And vote for McCain because there's a slight chance he might actually veto some of Pelosi's and Reid's wilder schemes and dreams.

[RW Rogers]

Not to my knowledge, Simon. He'd have a hard time proving that, believe me! Then again, facts do not appear to be terribly important to him. It does appear that he has repeatedly accused most people who disagree with him here of being racist. IMO, that cudgel is used in hopes of silencing or intimidating any and all who disagree. It's a conversation stopper.

[RW Rogers]

Professor Brandl sounds like a very smart man, Donna! Thanks for the tip. I think he identifies the next problem: Paulson picked a crony from Goldman to run things. Talk about not inspiring confidence. If I were a Democrat, I'd be running against the continuing self-dealing amongst insiders. Unfortunately, Warren Buffett just dumped a large chunk of money to buy part of Goldman so that probably won't happen. Maybe we ought to buy a few shares of the company because it sure looks like the fix is in for them. (Have you seen a picture of Kashkari? He even looks just like Paulson.)

[RW Rogers]

As to what your friend said, Annie: He may be right. (He exaggerates CA's situation a bit - the state is a mess - but this particular $7 billion isn't extraordinary. They always have a shortfall of money in Autumn, and short-term finance it until December when tax payments start rolling in. What happened is no one is willing to give them any short-term financing this year.) But I digress. If we do end up in a deep recession with 10%+ unemployment, then all "reforms" end up being possible, and health care is a likely suspect because it can generate lots of government jobs and unionized workers while promising the moon to the American people. (Call me a cynic if you want to, just not late for dinner.) BTW, if your quote from the debate is accurate, this is a revealing statement by Obama on a couple of levels:

He says no country has maintained its military superiority when its economy was in decline.

[Simon]

Randy, certainly didn't mean to imply that you were - I was alluding to his rhetorical tactic that you've mentioned.

[Ally]

Everyone seems to agree, more or less, on one key point: we're in a godawful mess and the way out is unclear.

And yet somehow it's riskier to put Obama in the White House than to put Sarah Palin one step away? This is a relevant question, because to me McCain looks and acts old, sick and befuddled. His performance last night was ghastly.

I have no evidence to back this up (a not-so-subtle attempt to hold at bay the lawyerly Republicans who dominate here-- after all, this is a blog, not a courtroom), but I'd bet that Obama will make himself unpopular with the leadership of his party within 30 days of taking office. I'm willing to gamble (and it's all a gamble now, folks) that he will craft more workable and effective solutions than McCain ever could. I may be wrong about that. we'll just have to see. Because unless al Qaeda strikes in the next three weeks, Obama will be our next president.

[karen]

I believe that if Mc or the Fed does help out those regular folk that are in dire straits- it would be the moral thing to do. Too many wrongs have occurred to not help and i think re-adjusting mortgages to a realistic and actual #$$$$ is proper. Then peoplew will be able to make pymts and live in their homes- hell, they were overpriced to begin w/.

The alternatives suck more(not harder). Bail out the banks like AIG so they can blow 400,000$ on a spa junket? Yeah. How noble of them.

Let everything go down a black hole and the whole f**king world w/it? Yeah- we'll so be loved then.

I hope the stranglehold of regulations that were cut way-back-when by (mostly)Dems are put back into act ASAP. We had to put 20%down to buy our place and start another herd from scratch 'cuz we had to sell the starter herd for the freaking 20% DOWN!!! And had to borrow for the herd, as well. Duh. But, we're still here.

Gov't is too big. Maybe break responsibility down to state size? IDK- it just seems wrong to let so many innocent people(not the thieves)burn because of a perfect storm of wrong.

[karen]

Ally-
it sure would be nice if that were to happen, but all you have to do is look@ who B.Obama chose as a running mate. Biden is very partisian, it seems to me. It'll be business as usual and the American citizens pay to watch it all... not happen. Again.

I hope you're right. I bet you're wrong.

[Charlie (Colorado)]

If there is any rule that seems to work out for me, it's that predictions of the End Of The World As We Know It never quite seem to turn out. (Of course they can; Rome fell, there really was a Great Depression.) Iceland has problems, but they're looking for a "mere" $5 billion: what Warren Buffett invested in Goldman Sachs alone.

On the other hand, they just auctioned some of the "bad Fannie Mae" paper yesterday, and it came out to sell for about 92 cents on the dollar. Home sales are actually up, and there's already more commercial paper on offer.

So I recommend John Dillinger's famous advice.

[Simon]

Randy, I guess my answer to your 07:06 PM comment would start with rehashing a diagnosis of what went wrong to produce the landscape we have now. What was it that poisoned the Republican brand?

It's worth remembering that four years ago, when Grover Norquist penned The Democrats are Toast, it didn't seem an unrealistic proposition. What went wrong? There had already been some problems in Bush's first term, to be sure, but in his second term, new and more severe challenges arose, and problems in Republican Washington that had been hidden from view came to public attention.

To my way of thinking, today's toxic environment is attributable to what I've called in some comments the "Axis of Avarice - Bush, DeLay and Frist. They are the Gregory Cousins and the Joe Hazelwood that grounded us. It overstates it only a little to charge them with betraying the principles and policies they were hired by the party to implement; worse yet, not only did they feel to implement the conservative agenda, they instead governed like exactly the big government fiscally reckless liberals we sent them to Washington to cast out. It is a matter of deep concern, for example, that measures as improvident as Medicare Part D and as patently unconstitutional as BCRA were passed on the GOP's watch.

If all that wasn't bad enough, the CGOP and hte administration were consumed by pathologies of their own: the Bush administration by sheer incompetence, particularly in terms of communication, and the House and Senate by corruption. Let me give an example and a clarification. The example - and there are so many to pick from, both in terms of substantive failures and communications blunders, the bailout being only the most recent - is the US Attorneys "scandal." There, the administration did something indisputably legal, yet stood by haplessly as the Democrats weaponized the issue and used it to great effect. They never competently explained to the public why there was no "there" there; it wasn't enough to leave the job to surrogates and supporters. And the clarification is that by corruption I don't mean Bill Jefferson corruption. I don't mean to suggest that Tom DeLay or anyone like that was personally on the take, and I don't think they were. I do believe, however, that "pork for votes" and the K Street Project's influence-peddling are corruption. The public isn't dumb. They gave us a thrashing for that in '06, and they may not be done yet.

Those are, in my estimation, the roots of why this is such a monumentally difficult year for Republicans. Even on the war fits into this paradigm: the war wasn't popular, but what made it politically toxic was the administration's incompetence in prosecuting it and communicating with the public on it. McCain advocated the surge long before it happened, and Bush resisted; had Bush had fired Rumsfeld even as late as summer '06, and had he listened to McCain about the need for more troops sooner, our losses in Congress would have been far less pronounced, and Hillary Clinton might have served as the Bob Dole nominee of 2008.

If these are the problems, however, it's hard to see why voters would be hostile to the McCain-Palin ticket. Palin is an outsider. McCain is an insider but has outsider cred: for seven years the MSM sold him as the anti-Bush. He has been on the side of the good guys on issues such as spending and the surge. No matter how many times Obama says he was right to oppose the war, he was wrong to oppose the war, his decision to do so was cheap, and his continued recalcitrance in opposing the surge has been shown to be flawed. If our nominee was Dick Cheney, it would make perfect sense that we would be down in the polls. But our ticket is a repudiation of many aspects of the tone and substance of the Bush administration, and while it isn't perfect, it comes a lot closer to good governance than the Bush administration ever did. It would seem anomalous that the electorate would punish themselves by rewarding eight years of an administration that has deviated from sensible conservative principles by selecting a candidate who doesn't even pretend to subscribe to those principles and is even further from them.

[karen]

Charlie- :0).

I always thought the reason Clinton was ok on the economy was because he decimated the military...

[Simon]

Ally said...

[McCain's] performance last night was ghastly.

Let me go out of my way to take the opportunity to agree with Ally. but not for long:

And yet somehow it's riskier to put Obama in the White House than to put Sarah Palin one step away?

Without any doubt. Maybe I've said this before, but I would still support the McCain-Palin ticket if I knew as a matter of absolute fact that McCain would drop dead seven seconds after taking the oath of office. I'd rather see Hillary in the White House than Obama or Biden - at least she's honest and I can respect her.

I'd bet that Obama will make himself unpopular with the leadership of his party within 30 days of taking office.

Why is it that so many of the liberal talking points about what Obama will do in office rely wholly on the assumption that after inauguration he will completely change everything about what he believes and how he operates?

unless al Qaeda strikes in the next three weeks, Obama will be our next president.

I don't know at this point that even that would do it. McCain needs to pull something truly groundshaking out of the hat - and soon. The alternative is a live reenactment of that movie "Pitch Black" - years of darkness surrounded by vicious predators.

[amba]

Michael -- Of course my friend has an ideology that accompanies his station in life ("the conditions of existence determine consciousness"), but other than "B. Hussein Obama" (I had to shame him for sending me paranoid skinhead e-mails, and for him it's all about dread of having his taxes raised), this seemed to be apart from the elections, just an assessment of the economic situation by people he'd spent the day talking to. They were anti-bailout, I guess, maybe in part on genuine free-market beliefs, in part because at worst they're not going to be the ones in the bread lines, and in fact people who were genuinely conservative enough to come out of this mess with cash are going to have fresh opportunities to become wealthier than ever.

By the way, my friend is averse to taxes not only because he doesn't want his money (hard-inherited, hard-husbanded, hard-grown) taken away, but because he believes the government is going to waste it, doing the wrong things with maximum inefficiency. He belongs to the growing number of wealthy people who are serious about philanthropy and trying to apply business standards of efficiency to it.

[Charlie (Colorado)]

Amba, all of those are good things, but there's also been a really strong Puritan streak in this kind of commentary on the Righter side of things: see, you profligate spenders wasted everything and now you're gonna suffer you mark my words.

In the mean time, though, Bernanke is one of the great practical economists of his generation as well as a profound student of the Greate Depression; he can call Greenspan any time he wants; and he's carefully not doing the things that led to the Great Depression in the early 30's.

[amba]

an old econ professor. I posted what he thinks about the bailout mess

Donna, don't ever be embarrassed to link to yourself -- I do it shamelessly myself -- so we can easily hop over and read what you've posted. Here's the link, folks.

[amba]

Have you seen a picture of Kashkari? He even looks just like Paulson.

He's Paulson's Mini-Me!

[amba]

I agree with Ally that McCain's age was showing last night -- scarily, if intermittently. I don't think I have any prejudice against people that age -- I better not, I'll be it myself soon enough. But one of the really unfair things about life is that any beating you take when you're young comes back to bite you in the ass again when you're old. That may be what we're seeing.

[reader_iam]

I did talk this week to a number of people in very different circumstances, and, boy, did they all seem nervous. No one's happy. It's hard to not get mired in doom and gloom. And given the hit in pension accounts, and the likely outlook, I sure wish I were at least 10 years younger.

[Simon]

Amba, I don't think it was his age prompting his behavior. I would simply add an R to the front. I think he's angry and frustrated - seething, even - that America refuses to see through his opponent. I think he feels much as I do: how can this schmuck - this candyass wet-behind-the-ears piece of crap - be beating us?! He's not an idiot, he sees the poll numbers - and he has to be asking himself, what can I throw at this guy? Do I have to use an actual wrench? What will break the spell?

McCain hasn't been abe to change the conversation all year. He tried a positive, issues-based campaign, and the media completely ignored him. So he started attacking Obama - the media clucked their tongues and said how it wasn't Presidential. Then he anounced Sarah Palin as his veep and the media went apeshit, engaging in a campaign of rhetorical violence and character assasination that knows no paralel in modern American history in its brutality and shamelessness. To judge by the numbers, it has worked: this admirable, talented, competent woman retains every once of her poise, but she's been whacked in the polls and I suspect that it must have taken a personal toll.

I'm going to wrap this up before I get any more angry. You get the idea. In all events, I think that's what you're seeing. Not age.

[RW Rogers]

Simon, what you wrote at the beginning of that long post lays a good foundation for why it is next to impossible for any Republican to win this year. I live in districts gerrymandered by bipartisan agreement to guarantee safe GOP seats for the state legislature and Congress. At the moment, the former Code Pink member running for Congress is up 7 points, and I've been at the receiving end of two push-polls for the Democrat running for State Assembly. (The last was so lame - the guy pronounced Biden as Bidden and Palin and Palintino! LOL!) Spending any money on an assembly campaign here is unheard of. I think the GOP has held the seat for 50+ years.

People are hostile to McCain precisely because he's a Republican and they are damned tired of Republicans right now. It doesn't help that he has been there for almost 30 years and that he is 72. His "maverick" reputation sounds good to some people, I agree, but a lot of others find the idea of someone "erratic" occupying the White House at this point in time very discomforting. Most people are just now paying attention, and what they want to see is reassurance and that boring debate provided it in abundance. And that plays to Obama's advantage, whether you like it or not. As for Palin, I expect that in the end she'll be like most VP candidates, neither costing nor gaining any significant votes. People vote the TOP of the ticket not the bottom.

[reader_iam]

I just don't think people are getting how badly the Republicans blew it. Now, one can say it's not the principles that failed, it's the people sent to implement them. But in practice, it's how the people sent implement their principles--in practice!--or not that ultimately define their worth--practically speaking!--for the mass of unsent people whose only recourse is, on occasion, to throw the bums out and given a different collection of power elites a chance. (And make no mistake: Anyone participating in politics on the national level, or even getting a serious bite at that apple, is by definition, a member of an elite group. What, you don't think so? Then think again.)

There's not much point in railing against the thickness/insanity/stupidity/contemptible nature of those who don't see things your way. It doesn't help; it doesn't change things; it arguably makes things worse and hurts your own side and prospects over at least the mid to long term; and, above all, it blinds you and cripples you in terms of what needs to be learned from mistakes in order to be successful the next time the mass of people entrust you with power.

[reader_iam]

Woo! That was effort. I hate posting from the phone. But here I am, in a hotel bar in South Bend, Indiana (JUST got here) and it's what I have to work with at present. It'll be good to get home tomorrow.

[huxley]

At least we aren't Iceland, which has a $14 billion GDP and $100 billion in financial liabilities. Essentially, the country of Iceland became a hedge fund and now it has blown up.

Meanwhile oil has dropped into the $80 range and may go lower. The price of other commodities--their prices held high by all the loose money sloshing around--have also tumbled.

I don't think anyone knows how this is going to turn out beyond that it is going to be a mess for some time.

I suggest a wary calmness.

[michael Reynolds]

Huxley:
I think wary and calm is exactly right. As I said to Simon on another occasion, I've lived through 10 of the last zero apocalypses. Disaster is a bit like the Second Coming: it may happen, but don't line up for the mother ship just yet.

[michael Reynolds]

Randy:
You know that's simply not true. But if you need someone to be angry at I'm content to play the part.

[Simon]

Reader:

In practice, it's how the people sent implement their principles--in practice!--or not that ultimately define their worth--practically speaking!--for the mass of unsent people whose only recourse is, on occasion, to throw the bums out and given a different collection of power elites a chance.

Exactly. This was a failure of execution being misrepresented as a failure of the plan.

Welcome to Indiana, by the way. :)

[amba]

, I've lived through 10 of the last zero apocalypses.

Or, as Mark Twain said: "I have been through some terrible things in my life, some of which actually happened."

[Outis]

Charlie wrote: Iceland has problems, but they're looking for a "mere" $5 billion....

One has to look at that in context. Iceland's GDP is only $14B. If the USA were to seek a similar sized loan (relative to GDP) we would be seeking a $5.3 TRILLION dollar loan. Our country is roughly three orders of magnitude larger than Iceland's in terms of population and GDP. Just multiply/divide by 1,000 and you'll get a good comparison between the countries.

(Also note that the $5.3 trillion mentioned below isn't that much larger than what we're currently facing.)

[Outis]

Amba, the person that sent you the analysis isn't saying that much new, at least to some of us. Something he neglects to mention is that public pension plans will probably be the next thing to go. Governments have been allowed to underfund their pension plans. That will likely precipitate another crisis, but this one will start in a thousand places and will slowly roll through society.

[RW Rogers]

I agree, Michael, it is not true that you ran over my non-existent dog. FWIW, I'm not mad at you, just disgusted.

[wj]

Outis, it's already started. A local city (Vallejo, CA) has gone bankrupt this summer. And city pensions are one of the things that are likely to get cut by the folks how are taking custody of managing the city. Not to mention serious cuts in numbers and pay (worse, limits on overtime) for city workers.

Yes, it's only one city in one state. So far. But if anyone who thinks it won't be a couple of states in the next year, is far more optimistic than I.

[Outis]

WJ, it will be a stampede of millipedes at first. The horses will come later, as will the elephants and the dinosaurs. If one wave doesn't trample you, I can damn sure guarantee that one of the later ones will!

[reader_iam]

Simon: I'm willing to take the burden of the fault on myself--since I wrote the damn thing and assumed what I did as to what "implicational" thinking it would lead--but you missed something like 3/4 of the point of my comment.

Oh, well. It's not like it matters or anything.