Robert J. Samuelson: F$#@ You White Man

Some background here, I belong to a membership only^* BBS called Stellar Parthenon.

On December 21, 2003, I posted a thread on SP, called We are Unbelievably Screwed, which has continued to this day, with more than 3500 posts.

5 Years before Robert J. Samuelson wrote "hoocoodanode", I said:

• US Society was entering into unsustainable debt.
• Housing prices were at unsustainable levels.
• That finance and housing were creating a phony economy.
  
• A reckoning was at hand.

While I was wrong on some stuff:

• Predicting that the dollar would fall off a cliff.
• Assuming that this would cause a spike in interest rates which would destroy housing.

That being said, I have evidence that I was predicting the problems, and their basic causes, 5 years ago (actually I was doing this even earlier, but my posts on the Netslaves BBS went away when the website got shut down).

So now Mr. Samuelson, who rarely misses an opportunity to bash labor protections interfering with free trade, and to suggest that the only way our society will ever be prosperous is to gut the social safety net, particularly Medicare, Medicaid, and Social security, is wringing his hands and asking what went wrong, and why was everyone caught by surprise.

Well, I have 4 Words to Robert J Samuelson: F@#$ You White Man!!!!!

What is this "we" shit about anyway?

Roubini predicted this, Krugman predicted this, Dean Baker predicted this, and I predicted this!!!

I’m not an economist. I'm not a Wall Street type. I'm not a business writer.

I'm just an engineer with a background in design, and I recognized the problem.

Humbled By Our Ignorance

By Robert J. Samuelson
Monday, December 29, 2008; A15

It's the end of an era. We [what do you mean we, f@#$ you white man] know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best. The great lesson of the past year is how little we understand and can control the economy. This ignorance has bred today's insecurity, which in turn is now a governing reality of the crisis.

Go back to the onset of the crisis in mid-2007. Who then thought that the federal government would rescue Citigroup or the insurance giant AIG; or that the Federal Reserve, striving to prevent a financial collapse, would pump out more than $1 trillion in new credit; or that Congress would allocate $700 billion to the Treasury for the same purpose; or that General Motors would flirt with bankruptcy?

Me, that's who you pig felching soak the poor putrescence! The system was a lie, and it was created to extract savings from the poor and give them to the rich.

In 2008, much conventional wisdom crashed.

No, conventional stupidity crashed. People were willfully blind because it made them money, and it got them cushy gigs writing for the Washington Post or Newsweek.

It was once believed that the crisis of "subprime" mortgages -- loans to weaker borrowers -- would be limited, because these loans represent only 12 percent of all home mortgages. Even better, they were widely held, diluting losses to individual banks and investors.

And again, Alt-A and all the rest of the exotic mortgage products were headed for a crash, and the rent to own ratio was out of whack, while people like you and Alan "Bubbles" Greenspan (remember him?) were suggesting that people really should go with adjustable rate, negative equity mortgages from Mars.

Roubini predicted this, Krugman predicted this, Dean Baker predicted this, and I predicted this, you festering lump of pig droppings.

Wrong. Subprime mortgage losses (20 percent are delinquent) triggered a full-blown financial crisis. Confidence evaporated, because subprime loans were embedded in complex securities whose values and ownership were hard to determine. Similar doubts afflicted other bonds. Demand for all these securities shriveled. Lenders hoarded cash and favored safe U.S. Treasuries. Because investment banks and others relied on short-term debt (a.k.a. "leverage"), a loss of confidence and credit threatened failure. Lehman Brothers failed. The financial system had overborrowed and underestimated risk.

It was once believed that American consumers could borrow and spend more, because higher home values and stock prices substituted for annual savings. Consider: From 1985 to 2005, the personal savings rate dropped from 9 percent of disposable income to almost zero. But over the same years, households' net worth (assets minus liabilities) quadrupled, from $14 trillion to $57 trillion.

Which, of course, means nothing, because for 90% of the population, that net worth went to other people.

That growth in net worth was mostly going to the top 1% in our society.

What you speak so glowingly of was nothing more than the efforts of the connected to extract the wealth of those who work for a living, and put it in their back pocket.

Wrong. In recent years, consumers increasingly overborrowed, especially against inflated home values.

Wrong....People borrowed because contemptible greed heads like you have spent the past thirty years waging an assault on wages and the social safety net.

People borrowed because they could not earn the money they needed, because of a war on labor and labor rights.

With the housing "bubble" now collapsed, net worth is falling. Homeowners' equity in their homes -- the share not borrowed -- is at a record low of 45 percent, down from 59 percent in 2005. Consumers have responded by retrenching big-time. Retail sales have dropped for five straight months; vehicle sales are a third below 2006 levels.

It was once believed that the rest of the world would "decouple" from the United States. As Europe, Asia and Latin America expanded, their buying would cushion our recession. A better-balanced world would emerge, with smaller U.S. trade deficits and lower surpluses elsewhere.

Wrong. The crisis has gone global; economic growth in 2009 will be the lowest since at least 1980. Even China has slowed; steel output was down 12 percent in November from a year earlier. The crisis has spread through two channels: reduced money flows and reduced trade. Global financial markets are interconnected. Customer redemptions forced U.S. mutual funds and hedge funds to sell in emerging markets (such as Brazil or Korea), whose stocks have dropped about 60 percent from their peak. Credit has tightened, as money flowing into developing countries is expected to shrink 50 percent in 2009 from 2007 levels, estimates the World Bank. The bank expects trade, up 7.5 percent in 2007, to fall in 2009 for the first time since 1982.

So much that has happened was unexpected that the boom and bust's origins are obscured. These lie in the side effects of declining inflation that started in the 1980s and, in the process of reducing interest rates, boosted stock prices and housing values.

Only the dropping inflation was a fiction created by the BLS with the acquiescence of Alan "Bubbles" Greenspan (remember him?), who has been calling for even more extreme massaging of the inflation numbers since at least 1980.

Recall that in 1981, when inflation was 9 percent, 30-year mortgages averaged 15 percent. As rates fell (mortgages were 10 percent by 1990, 7 percent by 2001), home prices rose. People could afford more. With lower interest rates, stocks became more valuable.

Homes did not become more affordable, people buy on monthly payment, not price, so falling interest rates just raised the price of the house, and falling interest rates did not make stocks more valuable, it chased people away from other, more secure, investments because their returns fell...It's basic economics, but I guess that it's beyond you.

All the bad habits of recent years -- excessive borrowing by consumers and money managers, careless and reckless lending -- grew in a climate when gains seemed ordained. Even after the "tech bubble" burst in 2000, stock prices at year-end 2002 were seven times their year-end 1981 level. Home prices increased steadily; in the 1990s, they rose 45 percent.

Prosperity, apparently forgiving of mistakes, bred the complacency that undid prosperity. On bad mortgages, losses could be recovered by selling the homes at higher values. Thus rationalized, bad loans were made. Some stocks might decline, but over time, most would rise. Risk seemed to recede, so investors and money managers undertook riskier strategies.

People undertook risky strategy because, like the people at Long Term Capital Management, because Alan "Bubbles" Greenspan (remember him?), was always there to bail them out, and they undertook riskier strategies.

So, you were arguing that that regulation was the problem, when it turned out all you were doing was handing our economy to sociopaths with capital.

What will emerge from these shattered illusions? Will the crash stir social unrest, abroad if not here? Will Americans become so thrifty that they hamper recovery? Will economic nationalism surge? How will capitalism be reshaped? Much depends on whether the frantic policies to combat the recession succeed. Probably they will, but there are no guarantees. Our ignorance [your ignorance, not mine, I spotted this, as die Mssrs Roubini, Krugman, Baker, Ritholtz, Tanta, etc.] is humbling.

(end of OP/Ed)

No sir, you are just stupid and venal, and because you cannot see … because you refuse to see that the policy of supporting the phony economy of Wall Street and basic shelter as a revenue stream was an illusion just as certain as the Dutch Tulip mania.

You did so because because you and yours benefited from the system, even as it hollowed our society and our nation.

^*It's membership only because it was started by refugees from the old Netslaves board when it was torn apart by right wing trolls.^† SP is a chatty community with a decidedly liberal bent, with a refreshing absence of trolls, though there are still arguments, but there are good faith exchanges of opinion...Which is good...I like to argue.
^†The trolls were never dealt with because the sysop, Splat ,was getting paid off by one of the worst trolls^‡ who fed him consulting contracts.
^‡F$#@ You Lauren Bandler, aka "Uncle Meat".