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Sunday, March 1, 2009

Obama is No Match for Economic Reality

[ HT Financial Armageddon ]

When the economically and financially illiterate make the rules, chaos and destruction are the consequence. No other outcome is possible.

A friend of mine asked me recently if I expected the S&P 500 to hit 1 000 again relatively 'soon'. I had to tell him it was IMPOSSIBLE... in real terms... and that in even in nominal terms it would take at least 10 years. (Real versus nominal value)

Even Obama is no match for the cruelty of reality.


Anonymous said...

Clues for the clueless:

Worth spending some of your Sunday reading time on, IMO.
I find it fascinating: both free-market guys and leftys seem to dislike these so-called "bailouts".
That makes me think that that which they are agreed upon (which is usually nothing) may in his case be close to the truth.

At least, that's how I try to read histories written by those who were antagonists while the history was being made.

Anonymous said...


One sees that you are a big fan of idealized capitalism. That's fine as far as it goes. But a somewhat gratuitous post like this one - - gratuitous because it lacks context - - misses the point. Your guys, the capitalists, messed up completely, so far beyond anyone's wildest imagination that even capitalism's critics, those of us who saw the flaws of unbridled markets as significant, are stunned. Someone has got to fix this awful mess and since the "invisible hands" have only raped us, human agency with all its imperfections are all we have left.

More specific policy criticism in this regard would be helpful as opposed to these all encompassing dismissals of those faced with one of the worst governance crisis of the modern state. Emotionally those of you with policy reservations or an ideology wedded to a failed past may enjoy hurling insults but it is singly unhelpful and immature.

That said I enjoy your market insights and have largely agreed as i predicted the crisis except its devastating depth, all the way down.


Hulu said...

I see Obama and his SS soldiers are making a big push for total world control.

Our government is gonna save you...NOT!!!

Worst investment I ever forced to make is Social Security. If I don't paid the taxes, I go to jail!!! It is the biggest Ponzi schema EVER! EVER!!!

Where's freedom in this???

Now he wants to socialized housing, college eduction, and health care!!!

Ben Bittrolff said...

@ SS,

"You guys, the capitalists, mess upe completely, so far beyond anyone's wildest imagination..."

Careful. You can't call the system we had leading up to this mess 'capitalist'. You can't call the housing bubble, and the mess on Wall St. the product of 'capitalism'.

You could call it Crony Capitalism or Corporatism or Finance Capitalism, BUT you cannot call it 'ideal' Laisse-Faire Capitalism.

fajensen said...

Your guys, the capitalists, messed up completely,


This mess is entirely the work of the often tried & always failed communist concept of the Central Planner - in this case letting the central banks deciding on the price of money!!

Anonymous said...

I am amazed at people appearing on this site and blaming "Capitalism".
Words such as, "Your guys, the capitalists, messed up..." indicate to me you just don't get it at all !
There is nothing wrong with capitalism, which allows those who produce benefits for others to get rewarded and to save and invest those rewards.
If you really want to encapsulate the cause of this crisis in one word, well how about "Parasitism" ?

Anonymous said...


Looks like I'm in the lead big time on this one! I think you need Ben to weigh in. Your arguments make up in fervor what they lack in examples and cogent reasoning but unfortunately fervor on the right is what got us in to this mess. If capitalism needs to be perfect "laissez faire" capitalism to work than it was obvious to anyone with half a brain (not many apparently) that it was not going to work. Instead this is what we've got. Fortunately socialism is a human being based system which includes accepting people with all their flaws and trying to get the system to adjust for them e.g., by way of universal education (including primary through college), health care, prisons, market regulation etc. Welcome! By the way ranting won't make it go away. Best


maximus said...

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Towelie said...

Ben, you're splitting hairs. The de-regulation and free-market policies that have been pushed since Reagan are and have always been labeled as "capitalism" to the general public. Trying to re-label it now won't change anyone's opinion of it. Whatever you want to call it, we know we want less of it in our diet, not more.

Glen Beck loses all credibility by glossing over the policies and actions that got us *into* these bubbles. To solely focus on "evil socialist" policies now is childish. FDR and Obama were not elected by accident.

He seems to blame much of this on the Fed. As if that chart would be a perfect horizontal line without them. While they certainly own their share of this mess, it is very convenient of him to just say "The Fed did it." He ignores the possibility that it may be Fed policy that is flawed, not some systemic flaw. Why is that? Perhaps if the Fed was allowed to do something instead of nothing when times are good, we might not have huge bubbles. Why not mention some of the deregulation that got us into this? Or would that make you look foolish because your political cause supported it? This partisan crap is getting old. Us vs. them, right vs. wrong. Get a grip people.

Do you guys really think we will be going back to the gold standard? How exactly could you do this short of dissolving our current form of government? Where's my straight line chart of housing prices pre-Fed? Currency shock anyone? Glen's argument is silly in that it imparts far too much into an entity that the majority of Americans don't understand. Again, very convenient.

Anonymous said...

The rentier income should be curtailed and given back to the people who paid it.
parasitism by big $$ on the little wage-earners is the problem.
They should make stuff not trade paper.
let's de-concentrate wealth: re-distribute from up to down, the reverse of the past thirty+ years.

Anonymous said...

Anonymous at 6:15PM, you completely understand the trouble we face. Rent incomes are unsustainable over time, they must be reset or removed over time or they start to drag the economy down. We are about to see that happen in the United States. Debt forgiveness was a staple of the ancient world because they understood this. Debt forgiveness was done back in the 30's through the devaluation of the dollar vs gold. It started the US down the road to recovery. Prepare for a haircut bondholders!

Anonymous said...


we are doomed if everyone thinks like you.....!

Anonymous said...

For more on debt forgiveness (history)

Anonymous said...

@Ben Bittrolff said...
There is no thing like "ideal" "'ideal' Laisse-Faire Capitalism."
In every theoretical system, you can get "ideal" to work out well in most imaginations. Even Marxisms would have worked out in the "ideal" case.
There's nothing wrong about imagining a heaven or paradise. Heck, I think about shagging delicious women all the time. In my mind it works "ideal" all the time. In reality, I end up with women with saggy tits.

fajensen said...

Fortunately socialism is a human being based system which includes accepting people with all their flaws and trying to get the system to adjust

SS: Un-fortunately you are wrong:

Socialism, like the other 'isms of the 20'th century, tries valiantly to create a new kind of 'better' human being via a network of coercion and rewards all setup by The Infallible Central Planning Committee - the system does not bother with "adjust to" anything. It *adjusts* the peons!!

Granted, Socialism is friendlier than the Communist forced labor re-education camp and/or bullet-in-the-head method of peon adjustment but the idea is the same: You do not own yourself, Society (i.e. the central planning committee) does, and "Society" knows best how your talents should be used.

This leads inevitably to the rise of the totalitarian Nanny-state, where one is not allowed to take any personal risk just for the pleasure of it because your irrational irresponsibility can damage the States property - you! Since individuals are just "resources" it naturally follows that any opinion other than the officially approved is *never* heard in the media. The UK, Sweden and Norway are neat examples (although the nannies does seems to be losing their grip on power in Norway).

Universal education, the rule of law, health-care, basic social-security e.t.c. are *not* an expression of "socialism". They are common, shared infrastructure like roads, bridges and telephone lines; they "glue" society together and provide an environment where growth and human development *can* happen.

The alternative, If the state did not provide any culture-carrying infrastructure like that, why bother paying taxes at all? The money would be better spent in arming your own tribe to fend off intruders; especially the do-nothing parasite central government. This is indeed the rational choice many places like Somalia, the Swat valley e.t.c.

Anonymous said...

@fajensen said...
"Since individuals are just "resources" it naturally follows that any opinion other than the officially approved is *never* heard in the media. The UK, Sweden and Norway are neat examples"

Maybe you missed the buildup for the war in Iraq in the US. You could barely hear dissenting voices. Oh, yea everybody knew Iraq had WMD. If you read newspaper in the UK you were concerned after Powell's speech at the UN. The nazis would have been jealous of the US propaganda machine. You got 300+ million people in the US and so few voices. Manufacturing consent.

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