its a long haul min max program really:


if you allow some folks to unfetteredly

exploit other folks

then in the long run

the exploited will end up producing

much more total stuff

then if they had remained unexploited

and here's the gig's prize

the exploited will
even end up getting

much more stuff themselves

then they could ever have gotten without being exploited

if the scooopy part of the j
is made 10 thousand years

long and you conceed

it completed its mission by say … 1850

who could disagree

Posted by js paine at 08:49 PM

further tales of the wicksteed residual :

“Reducing the claims of workers on the surplus of the firm can be seen as the next step in the emancipation of workers”

amazing
free to be on your ownership

your human capital is your fate

amazing

as is the whole article

as is the trend of articles
at vox economiciii

the science is peeking thru here
but the fast footed work

and hand shuffles ….geez

————
where to start ????

i ruminate
with out conclusion

i can but peck at this mountain of bad seeds

take
the often very useful word surplus

i prefer it to rent

because though it includes rent
it also includes various supply regulating…. revenues as well

like profits of enterprise and patents and …

the real magila oblongata

risk

recall though
if comparative rents exist

then long run incentives exist

equal to the difference

between em….eh ??

but i digress

the concept of surplus also has another distinction

between
buyers surplus and sellers surplus

the surplus falls to either to the one or other

depending on the transaction price

now the perfcomp model
turns all surplus into dynamic vanishing revenues

by price grinding competition

and the only final non pure dynamic surplus

is initial fixed factor surplus

and final consumers surplus

to descend from the clouds

question

are these only the wagery here getting freed

from the risks of surplus sharing

or top management too ???

i wonder

of course we can define
any surplus the top guys grab

as incentive based comp

ahh the alchemy of it all

and to return to risk
it partakes of enterpise surplus

because baring it

requires a fair reward

for baring in

now the risk of employment
to the employed

and the risk of risk they face itself

are very different layers

enter uncertainty or at least ignorance

taking a job for certain hours of the day or night
excludes you

from taking another at those same hours

that we can agree on

and often jobs require a further degree of exclusivity

related to competing firms

but two possible employments may well

present very differing risks

and a strong uncertainty

about just what those differences might be

enter as an off set
to job risk and uncertainty

universal employment insurance and wage insurance
and other flex-curity programs

compulsory or otherwise

and —-drew's panacea—-
sectoral wage setting

which makes comp differences transparent and socially acceptable

—which seniority-teniority doesn't

jseniorit premia
and tenure entitling

works much like housing rental control

and it from a goo goo pov

may well scotch its own good intentions

by splitski ing

the wage class into tenured and untenured

and the tenured into

at risk and less at risk

—-as opposed to plain

shit outa luck ——

i loss my energy

this smells of teutonic must
more then anglo saxon craft

but none theless

it only seems to imply

its deceptions

not state them

towit
the present social market system

can be tweaked

and tweaked to bene wagery

vide denmark you cuffs

even if it has a very paradoxical transition period
where it looks like …a rip off

trust us
its in the long run good

or

as frank's monster might say it

“GOOOOOOOD”
————

might i suggest this
the systemic tendency favors

the atomization of the job force

and the impersonalization of job /worker match ups

the portable notion
is self built human capital

invest in your skill set and then
proceed at your own risk

or societies

as in

get insured wage state side 

get pensioned state side

get health and welfared state side too

in fact

let the nanny state take care of everything

but private profits

nice eh ???

frank's m comes into frame again

with a brief jerky wave
of his huge pale greenish hand

“arrrrhhh “

Posted by js paine at 08:26 PM

its by a pair of rootin teutons

and its an A-mazing t'ing in deedee”

“Harry Truman is supposed to have asked for a single-handed economist. Whenever he asked for an economist’s advice, the answer invariably would be: “on the one hand…, but on the other hand…” This is indeed how economists often reason. They think in terms of trade-offs, and the optimal policy response is almost always a combination of various sides of the trade-offs. Extremes usually do not work that well and compromises do better.

One should thus expect a similar response on issues of corporate governance. Should the management of a company take account of the interests of all of its stakeholders (that is, its workers, customers, suppliers and shareholders), as in the Rhineland model? Or should the management further only the interest of the shareholders, as in the Anglo-Saxon model? The Rhineland model aims to give all stakeholders their fair share of the firm’s surplus, and therefore seems to be preferred in view of the economists’ tradition of compromises between extremes. We argue, however, against a fair compromise between labour and capital and advocate the radical solution of putting the long-run interests of shareholders first in corporate governance.

Shareholders rather than workers should bear firm-specific risks

The main reason for making shareholders the ultimate owners of the firm is that this allows for diversification of firm-specific risks. Firm-specific risk can be well diversified on the capital market. By holding equity of a large number of different firms whose risks are imperfectly correlated, shareholders can ensure that the bad luck of one firm cancels out the good luck of another. Since capital markets provide a much better device for diversifying firm-specific risks than labour markets do, this risk should not be assigned to risk-averse workers.

By bearing firm-specific risks, shareholders are the residual claimants on the surplus of the firm; the ultimate goal of the firm is thus to maximise shareholder value. The other stakeholders collect only their outside option and are thus not exposed to firm-specific risks. Diversification of firm-specific risk on capital markets by shareholders is an efficient form of social insurance. This mitigates the risk of job loss due to globalisation. Whereas international competition on product markets has increased this risk, globalisation of capital markets has expanded the scope for diversification.

Workers face a commitment problem

At first sight, relinquishing a claim on the profits of the firm may seem to contradict the interest of workers because in this way workers give up part of their remuneration. Although this may indeed be so ex post (after a worker has been employed by the firm), it is not true ex ante (before being hired). Firms invest in new jobs to maximise profits. The expected returns on the investment in the marginal job must be sufficient to offset the costs of the investment. If workers are expected to capture part of the future profits in case demand evolves favourably, then the firm’s expected return on investments in new jobs is lower – the firm will create fewer jobs. Hence, the demand for labour will be lower, as will starting wages. For workers as a group, the adverse effect of less job creation on wages more than outweighs the positive effect of capturing part of the firm’s profits.

The desired outcome, in which incumbent workers give up their claim on profits, is not easy to realise in an economy with decentralized bargaining. The reason is that workers face a serious commitment problem. When being hired, workers are likely to be willing to accept an agreement that combines a high starting wage with the promise not to share in the firm’s future profits in good states. But after the firm has sunk its investments, workers are likely to see no point in giving the firm excess profits. This time-inconsistent behaviour gives rise to a so-called hold-up problem. Workers cannot credibly commit ex ante to not capture part of the excess profits ex post, so employers forego investments in new jobs. As a direct consequence, workers end up bearing too much firm-specific risk; they make up for a low starting wage only if they are lucky enough to work for a firm that performs well.

Collective action may address the commitment problem…

Addressing this commitment problem requires some form of collective action in order to encourage incumbent workers to account for the impact of their wage claims on the labour-market prospects of marginal workers. In particular, collective wage bargaining may reduce the impact of firm-specific risk on wages. Collective wage contracts do not specify the wage rate for each individual worker, but they do provide a norm for wage negotiations at the individual level. To the extent that this norm is common to all firms, it restricts the impact of firm-specific factors. In this way, coordination and some shared norms regarding what constitutes proper compensation help address the commitment problem faced by workers as a group.

…but may also worsen it

Unfortunately, collective action is a mixed blessing. The reason is the limited capacity of politicians to commit when pursuing collective action. Resolving the commitment problem requires a long time horizon but politicians often exhibit only a short time horizon. They are therefore tempted to support the claims of incumbent workers on the excess profits of the firm while ignoring the costs of these claims in terms of reduced future employment prospects and lower wages for marginal workers.

In this connection, politicians may find employment protection legislation (EPL) an attractive instrument to transfer resources from shareholders, who usually have limited voting power, to workers, who are the backbone of the electorate. By strengthening the position of incumbent workers, however, EPL worsens the hold-up problem. It therefore weakens the labour-market position of those who are not lucky enough to work for a well-performing firm. The net effect is that workers face more risk as their income depends more upon the performance of the specific firm for which they happen to work. The paradox of EPL is thus that it creates exactly the feeling of job insecurity that it is meant to cure.

Denmark’s example

Subtle institutional differences between countries may explain whether collective action alleviates or exacerbates the commitment problems faced by workers. Denmark, for example, seems to have been able to sail between Scylla and Charibdis. Collective norms affecting wage bargaining there constrain the claims of workers on profits. At the same time, politicians have resisted the temptation to strengthen the position of insiders through EPL. As a result, workers change jobs easily, their wages do not strongly depend on the tenure in their current job, and workers who lose their job find another job with about the same wage rather easily.

Transitional problems

Although giving up the moral claim on the surplus of the firm may be in the long-run interests of workers, it may give rise to difficult transitional issues. While society reaps efficiency gains, in the short run a generation of insiders has to give up their rights without benefiting from increased job creation and higher starting wages. These insiders already have a job and have paid their dues in the past in terms of a low starting wage. The claims of older workers on the surplus of a firm may thus have some moral legitimacy. These transitional problems require extreme political skill to solve. Among other things, they may require some grandfathering provisions or explicit transfers from younger to older generations (e.g. by giving elderly workers fiscal privileges).

Conclusions

In any case, political rhetoric and ideology should no longer give legitimacy to new claims of workers on the surplus of the firm. These claims should gradually be phased out. The flattening of seniority wage profiles is a cultural change involving collective norms and political rhetoric. Reducing the claims of workers on the surplus of the firm can be seen as the next step in the emancipation of workers. Workers derive their security not from the firm that employs them but from the value of their own human capital. In this way, free international trade in corporate control, free international competition, and the associated creative destruction become more legitimate”

Posted by js paine at 08:25 PM

not all thoughtful educated cultivated
self display is enlightening

to

“others”

conviction over evidence

us over them

race oval over think quadrangle

what bland broth this boils up from

then again

I Kant was DOCTOR Conventional Wisdom PHD too

i'd rather see green here with his doeskin gloves off
not

parson fairplay with a doctorate in econ con

…
“Senator Obama and Speaker Pelosi appear willing to spend up to $50B in taxpayer funds to buy the votes of auto workers in Ohio and Michigan”

rusty
u amaze me some times

50 bills —uncle borrowed —
is chicken feed

“It is a rewording of the old objection “uppity” used re blacks.”

not so sure ….

yes the Pap like
' uppity N in a clean white shirt ' trope

may fit his wife's initial

white gal cat yowl reception

but

—- as with c powell's quite different “act “and visage—-

ob's himself has teflon

uppity

puttin on airs

those types of “white loser projections”

don't reflect back

off

his kool sincerity and mild motions

nice sunday ride from hick shack

to housing project

but then your density express
seems to de rail :

“What also happens is that meritocracy becomes more prevalent as opposed to other rules for recognition
…When (and if) the Chinese model of authoritarian capitalism wins the US urban liberal democrats will be angry too, but it won't really be about “values”

if density begets meritocracy

what begets chinese authoritarianism ???

too fast transition
from feudalism to the future

or is there

such a thing as

too dense

for liberality

we get along the poulation density axis

a hump function for individual political “freedoms”

all very 18th century rational enlightenment
don't you think

that is

untill the mob enters stage left

…
kharris

beware conventional thought on conventional thought

fad thought of course is only the influenza stage of CT

my take
real stuff inevitably happens

when the two wings of conventional thought

like in a cyclotron collide with each other

as to the generative source
of ll our heterogenious

and mutually contradictory

patterns of conventional “thought “…

we might spend a few decades on that project

…
the thinker “class”

has a power elite too ..no ???

kharris

“Power elites must, almost by definition, propogate views and make decisions based on their own and their constituents' interests, where as the intellectual elite, almost by definition, must apply reason to a body of fact and theory to make decisions.”

think factories are not yet the norm
in many humanist fields

mostly still a cottage industry

think tanks still use collegial model
unlike say..

our news orgs which are well

along the way from the grub street

to the fact messaging factory model

…

“One think you don't see my Party (the Republicans) doing, is getting mired in intellectual self-criticism.)”

in the prescriptive words of danton

in politics it must be

“audacity ….always audacity “

one might suggest lenin
as well

as reagan here

…

laff

i just read

your comment above

and with an ever broadening grin

at the end
i looked like the joker

jalrin

i find the stars and bars
“a symbol” among lower order whites

of popular rebellion

okay so the real deal was a fabrication
of slave holding planters and their bag carriers

the celtic cross is the hick swastika

from my experience
most blacks —-of job class station—-

have very little truck

with

star and bar burners

ps the naval flag bit is correct

its all too well known
that the star and bar element

adorns many a dixie symbol field

yes
the cotton south has a keen sense of class conflict

and when not aroused by bloody flap doodling

cross race class solidarity too..

its equally well known
the poor record

of class organization …is the beautiful product

of 100 hundred years

first of pure “top down ” civil terror

and later in addition

trans legal petty public enforcements

both were duck soup
south of washington for too long indeed

terror has its class side obviously
as well as its race side

the song of the south
makes for great fiction

but tragic history

…

nb

the above comment was me as laff

…
“… I doubt seriously they (the founding 'patriots') would picture themselves as elitists”

elite and elitest laff
check out the '87 con con talk

the yeomans tribune jefferson
was far from a bryan or even a jackson

so where does that place the rest of em

resentments come at all levels

even intra ivy

i was rejected by harvard

and had to settle for …columbia

whilst 25-30 of my class mates

better spellers and swifter readers all no doubt

got in

ecce moi…

my cankered soul flew all the way to mao tse tung

…
as with contradiction within the body

of conventional thought

mutual steroetyping leads to collisions
often fruitful collisions

is that so wrong ???

the cult of the we all be unique souls
leads directly to the dark side of buridan's ass

Posted by js paine at 08:43 PM

EPAR

“private-label issuers were pushed to the sub-prime margins of the mortgage business because there was no way they could compete with the GSEs in the prime market”
U OUTLINE THE WALL STREET WHY

OF THE PRESENT PRETEXTUAL CASTRATION OF MACMAY

THE CRISIS NOW

the two are taking over the entire house mortgage biz
so

the pri sec cries wolf here

when they cry uncle

thy mean for the gub backed outfits

to surrender not themselves

the two ain't fragile
the f's are in fact just the opposite

too sound

okay gse or soe

makes no mind

key question

what class interest controls the top policy spots

in either or both of the two F's

the prevailing posse of outside policy “guiders”
determines whether the two become

garbage cans again

or

commonwealth generators

if its wally world that gives them their marching orders
then private to public risk transfer

and the inside looting of outside little folks nest eggs

will reach jamboree proportions once again …

eventually if not sooner

if the hi fi corporate raiders and professional bilkemen
take the lead

both private looters profits

and public trash cans

will symbioticate again

now f and f are purported to have become
7 trillion dollar containers

with an in mix of 300 billion in worhless trash

not realy that bad

but here's the rub
the guys who made em trash cans

with heroic impudence

now want to castrate em

before they can morph into

commonwealth generating

reformed prudentiary institutions

hell if that happens
they might become ….

why if we the weebles
got our agents into the drivers seats….

if wally world
get's its way

in the future
as it has these past 40 years

and with increasing audacity

a reconditioned

— street zombee —

f and f

will morph even further into

freddie ” big dumb sucker” mac

and

fanny “pass me your frauds please ” may

its the pri caps hegemony
down in the fed district

that led to this present

300 bill scare story

diversion dispersion reversion conversion

its all a meaningless card shuffle

a vamp a rear guard action

to cover wally's flight

from the crime scene

unless uncle's foolish policy spawn
—his gse hi fi kids—-

get under the firm intelligent

non rube

control of job class agents

de ja vu will ride again

Posted by js paine at 08:37 PM

latest CBO estimate of fed tax receipts

“Social insurance (payroll tax) receipts grew by about 4 percent, and corporate receipts fell by about 15 percent during the period”

talk about spontaneous burden shift ……

and the rebate off set ….well total household income tax receipts fell by 3 %
so even if that were all rebate related and it isn't obviously

4-3 = net burden increase

Posted by js paine at 12:33 PM

nurse ratchet's respect
for you

is no respect at all

agreed ????

u respect…

that is really respect

only what you dare not

trifle or tamper with

true respect is like
how you act around

say ….a rattlesnake

sarah palin is a garter snake

Posted by js paine at 03:23 AM

“Subsistence farming, using older methods, became virtually impossible with the advent of the property tax”

score one for george and progress

if land is not under highest yield practices

imaybe it ought not be subsidized

by reduced taxation

museum quality cultivation
as a theatrical production is one thing

as a life style choice…

what's the social benefit

that deserves a subsidy here ??

i submit we put it to a state wide vote
proposition xz:

is the externality of an amish community

embedded among us

a net positive externality ????

Posted by js paine at 03:13 AM

this wasn't a choice
any more then hosing down

a roof on fire is a choice

the time for choices is past

now its a fight to save stuff

like global output growth

from the hi fi confligration

slow mo fire balling

around and around the planet

our national fire department is

faced with only one of about 200 national fires

ya its way the biggest and badest

but the fire brigades so far are not even containment capable

my guess a japaning of the global economy

is a 50 50 shot at this point

what with the euro zone

the nordic belt england etc etc

under mr potter's school of tight ass credit management

suffer the hapless north wagery will indeed

practical elite talk about fiscal action
is suggesting demand boosts magnitudes too low

i can only hope come january
the right o appoint sureme chief judge

swears in

the air pirate as our commander in chief

and his

fronteer fremont films

polar star

as vice president hockey mom

then we can watch

the babbits' for jesus wing

of repubs catch the hell

oh ya my new slogan:

arm the foetuses

they have a right at conception
to defend themselves

against any

potentially

hostile womb terrorist

that might happen to be their hostess

Posted by: paine | Link to comment | September 08, 2008 at 07:01 AM

paine says…
on a lighter note

the evocation of irv fisher

circa the depths of the Great One

reminds us all:

one head can contain

both keen analytic insight

and absolutely wrong policy solutions

and

both at the same time

Posted by: paine | Link to comment | September 08, 2008 at 07:06 AM

paine says…
bakho

“those at the bottom will have too few resources to sustain the economy”

and i'm sure u agree
those “at” the middle of the heap too….

you stagger
miraculously

—as if guided
by a higher powered

invisible hand—

past uncovered mind holes

to the right of u :
“the value of the debt to be paid back

must sharply increase…. “

and

to the left of u :
“we need massive downward redistribution of wealth “

and arrive at the correct destination:

the road thru shitsville could be
long and winding

bravo

apropos the wealth bit :

since
under present class power co-relations

wealth share —real wealth —

can't be moved “down”…much

in fact

—-contrary to your implied “harden the dollar “

remedfy implied above

uncle can only attack the value of

private paper wealth in general

and that only by raising

the relative value

of life's real stuff —ie piling

macro policy induced product inflation

atop our spontaneous asset deflation—-

but
that hurts

the toiling victim class

more even then it hurts

the thieving culprit class

so i suggest instead
nt a quixotic call for a massive

downward wealth transfer

but instead

a nice big broad bold and yet sustainable

disposable pay raise

thru

a macro policy of

hyper-full employment ….for ever

“The structural deficit is left out of his evaluation”

structural deficit ????

hari please come to terms with

the near tragic

mind shackling

produced by your pre keynesian

paradigm

i take you for one

not addicted to

the warming solidarity

of widely shared ….and worshipped

conventional delusions
im1dc quotes:

“If government intervention was so helpfull as Anotole claims, the richest country on the planet would have been the USSR “… yikes !!!!

the brothers free marketovich strike again

ps & nb
the comment so sliced from

by imilack-1

is signed

” Fred, Cambridge, UK “

hmmmmm
i smell a free slav here

should we try
something more like …

i-b-free range zbugnik, west kiev (uk)raine

am i crazy ….i wonder …

at any rate

even if in this case

the true identity of fred is to wildly to the contrary

the air is filthy with “zbugniki” and their ilk

which provokes this cri de heart strings :

stop anglo-american corporate press
stop

stop giving such lavish public

space and time

to the glib gibberings

of these moth eaten

disguised gosplan survivors

i guess just properly phrasing the plee

provides the answer …don't it ??

” Nyet !!!!!”

alas i must trudge on …

but geez
some of us north american

urecovered corporate market rubes

are starting to tire

of all this apish radio free europe

-uncle milty friedmanesque quip-ski ing

“Private ownership of Fannie and Freddie never made any real sense, and was always a crisis waiting to happen”

change “Private ownership ” here to
“arms length independent management”

and i totally dis-agree

for a moment
put aside the equity skin game

to see the core problematique

unlike the FED

THESE OUTFITS OUGHTA STAY CLEAR OF CONGRESS

that leaves the nub
bad management

what we have here
is a simple failure to perform as commanded

uncle “appoints his creatures “
ie the mangement team

sets them free in 68

“in market eden ”

gives thenm a rival

and tells em both

to do as they please more or less

invest more or less

as they please

within the bounds of market eden

perpetuate themselves as they please

all and for ever

so long as they follow

one rule :

“thou shalt not drink too much red ink “

they transgress

they end up in nod

as has happened here

after a 40 year run

how many pri sec created

publically owned corporations

have a mangement run that long ???

so now the red ink must get absorbed
and

a new mangement team must step in

imposed from the outside

but this round
what outha get left out

when uncle re frees these gse credit shops ??

imo:
the thin living equity ring

around the ever thicker debt trunk

next time
replace that pseudo risk baring profiteers belt

that filthy rotten private scambo

with a publically exacted risk premium

assigned bundle by bundle

and paid in full

on the fly

out of operating margins

to uncle

any operating profits not paid out as incentives

by management to management *

get plowed back into

a risk premium reducing escrow account

*of course comp plans require confirmation

by a fig leaf public board

appointed as necessary

by an ad hoc citizen jury

bruce

“Liberals and progressives need to walk away from being responsible volunteer firemen, and get serious about destroying the arsonists”

destroying or castrating ?????

anne
the gist ??

get wall street at least one step back
from uncle's houseing blood bank

ie remove the private equity play

at fan/fred

uncle's too big to fail pack mules
oughtn't allow private direct participation

risk accounting should be imposed thru an quarterly premium
and

the risk rating entity for the two

oughta have no stake direct or indirect in

the outcomes and no perverse avenue or byway of gain

from

playing it dumb and trusting

while the two

operate with blind abandon

recall the ultimate balloon here

house lot value

pure capitalized ground rent

no replacement cost check on what's proper prudent valuations

add the weird flux and flex or credit rationing

and you need ..well note my jury idea above

apply here too

and probably escrot management incentive

earnings too with a very slow pay out period

all the while still availible ask first line funds

against

operating loses

oh this gets tedious
its a burden being so sage like

andrew hartman

why play flack shooter for wall street thieves

its a criminal process

any participant no matter how partial

deservs a keel haul

any debacle like this …or iraq
has its dynamic means ..even objective modifying aspects

as to a single founder thru finisher
how silly a notion

the aggregate will of the profiteer class
— their over soul so to speak—-

emerges from the hord of greedyindividual heterogenious

partial aware players

what emerges as a purpose from their colective play
gets modified

by changing fads facts and fancy

why does this process need a single

homoculian core ???

or even a full spansion thread

a one player play line

reaching back to an orignal conspiracy

or forward from that dirty original deed

to the present dabacle

to turn highly redundent

the plan is a collectively emergent pattern

a conjnction of asocial micro plans

sharing a common self centered gain max goal

and self aware enough to feed back on itself

and take on intentional characteristics

even as each player only strives to gain max

his or her program

the conglomeration can have collective endemic sponateous

common intention driven behaviours eh ???

which one of us can't see the common intent of a street
full of shop looters

— society's

highest form of catabolic progressive heros

to me btw —-

looters are not co ordinated by a hierarchy with a unitary plan and yet we an call their acts predictable in outline
given certain “conditions”

collectively intended even if improvised in detail

So the problem in time became management independence”

yes the original spin off design failure
was precisely the equity buffer scheme

versus a socially imosed premium

that itself becomes the buffer

it was obvious from jump street

top management would inevitably

lack independence

from wall street's will

so long as the two operations were tied

at least collectively

“to wall street interests”

thru each outfits private equity ownership pool

now as bruce suggests
that was the intention

make them

—-even if creatures of uncle sam——

none the less

zombies of wall street's

many voooodooooo warlocks

anne

“the whole point of the move was for the sake of the credit markets, international bond markets, and there the move will be effective”

exactly
after 4 decades of tireless portage

the two —as private pack mules

for wall street —are useless now

for equity purposes

and will remain so

till uncle assumes

all …all the waste removal costs

of trucking off the balance sheets

any and all …any and all surfacing bad debt

truck it to where ???

where else
to the imperial dollars

endlessly shafted gold mine and financial yuka mountain

ie

uncles unmoved mover

the national credit card

ps barro finkery aside
tax payers need not beware

it will create its own rewards

in higher if irregularly distributed incomes

we need the effective demand stretch here
of putting a floor under house lot values

other wise

the far greater down slide of the wealth effect

will have additional nasty effects on household spending

incon writes:

“There is no economic reason
for a depreciating commodity to increase in value as it nears the end of its useful life “

correct
but

house lots as locations

do not depreciate my friend

the inflate and deflate perhaps

but they never depreciate

confusing the replacement cost of a house
with the lot value f a location

is the road to self confoundation

Posted by: paine | Link to comment | September 08, 2008 at 05:06 PM

paine says…
“never actually pay back the debt, just borrow ever more to continuously roll it over to new flippers at higher prices”

just as it must have a beginning

all personal house lot ownership must have an ending

the house lot market
has first time buyers and last time sellers

in a very fundemental sense

all sales in between are irrelevent

tab these two price trends

and the picture clarifies

andy hartman

you waltz in circles

“I see it more
as an intellectual FAILURE TO LAUNCH”

more the missile's nth stage failed to ignite

bso what about the pre nth stage short
by

some of the pokes in on the flight

maybe even plan makers ????

“people with limitations

getting in big trouble …”

that's what pre positioned escape capsules are for

”..when they leave their mental backyards”

not sure any of us can do that well

Posted by: paine | Link to comment | September 08, 2008 at 05:24 PM

paine says…
pat

ken perhaps confuses
the size of future mortgages

with the number of same

if the ratio of mortgage value
to borrower's income

needs a correction ..fine

i think we all agree once that is set right

the market can churn along quite nicely

but how do we get there from here

from todays over geared lot values to tomorrows

properly geared lot vaues

without a wave of loses ???

if we expand the f and f portfolio value just enough

the PEAK THE FAMILY ARK teeters on today

IS the result of the fed and treasury engineered

lot value balloon

people didn't buy too much house
just paid too much for their zone required lot

as simple home owners buyers and sellers
the outcome of this process was beyond our control

but not beyond the control of the fed and treasury

soooooo

those two fine federal instittions

have an obligation to prop in place

our value stranded arks

at least till

household incomes rise high enough

to refloat our homes

so we can slide along through the payment stream

easily

just on our earned income cash flows

long run sane ratios
can be re claimed… with a transition

and don't mean resale prices must fall

Posted by: paine | Link to comment | September 08, 2008 at 05:44 PM

paine says…
“Among the deeper problems is the huge foreign indebtedness of the US”

bark is prolly gone

but i'd prefer to frame this as our trade imbalance problem

the pile up of dollar debt
by the dollars creator nation

is not a sin its

in the worse case scenario

a policy hazard

but our staved in production platform
and our chronic product trade gap

are crimes

against the job class

Posted by: paine | Link to comment | September 08, 2008 at 05:50 PM

paine says…
“everybody has known that this was a tiger that could not be ridden forever”

but why must it be ???

we can move toward national balanced trade
without exporting recession

that is keynes' gift to all the nations

even the greatest and most debauched of them

another thread :

if the fed had a fred and fanny crumpling
dollar debt crash on its hands….

“The flow of capital from them and from other central banks, sovereign wealth funds,.. would shut down very quickly”

crapola…

the strategic national self interest behind
for example

the rmb peg

hardly goes away because they find their holding some

dollarized duds

okay so maybe their estimate
of the long run cost to the nation

of their industrial development plan

—-based on eating trade surplus dollars

to maintain their aggresive north market penetration—-

needs an up tweak now and again

ps hey have u noticed
the dollar moves

both ways

over the longer term trade imbalance
adjustment cycles

errr …at least against most north currency blocs

if not the gang of resolute south pegsters

the imperial dollar makes its own rules

Posted by js paine at 03:07 AM

evil ken rogoff strikes again

“the financial industry now needs to undergo a period of consolidation and pruning..”

like a back yard shade tree
over growing onto the porch ???

rogoff acts as if the hi fi sector

is like say ….the auto sector

don't its meta role
in our credit fueled

tans national corporate economy

require we give it to special treatment

at least fairly commensurate

with its qualitatively different

status and function ????

rogue is a harsh creature
both by self intent

and superior perch

his recommendation

of painful protracted surgery

on us

comes without regret

no mr and mrs jobster
his recommended procedure

is not going to hurt him

more then its going to hurt you

“You tell them Ken. It is time someone pointed out how regressive inflation is. Inflation makes inequality greater”

sky hooked arguing

counter example

inflation as a bi product of a hyper employment growth macro policy

hardly hits the jobbled “poor” harder

and no
the stag in stagflation is not the inevtiable

final stage of hyper employment

look over the record carefully
induced recessions with their inflation cooling

net job loss

may be the chosen policy way

but its hardly the only way

or best way from a jobholders viewpoint

top fight inflation

its in other words the response to inflation that produces the nasty bits poor toiler wise

…
“..love Rogoff. What a novel idea to have those, who created and benifited from this financial kleptocracy, actually take some of the losses.”

do u actually think
this is what he has in mind here ???

punish the bad guys don't bail em let em sink

hardly

he wants to claim so perhaps
to prove

a hi fi half nelson

will be not only good for the global economy

but just too

because it will punish the wrong doers of yesterday

today and ooops i almost said tomorrow

true enough but inconvenient

since the fact these sharp elbowed players

will ride again

makes the unishment seem wet noodle ish

but of course it is
why ?

well not because the big boys might take loses
but because their system gets saved from itself

to live to thieve another day

in fact rogue really just wants to de rail
the current global expansion

as he puts it

because “we” the people of earth

need a period of below trend global growth

or else what ??

or else the system ruins itself for sure ???

no
the system morphs

the malformations will only get more malformed
and in the end the remedy will of necessity

be even harsher-er still

”..ultimately ” good intentions mean a worse finale
as ameliorations will “..only prolong and exacerbate the problem. …”

but what if todays incipient malformations
the bails and the interventions and the top down command and control

become the new norms

like the vamps in i am legend

…
“excessive risk taking”

risk taking ???

throwing other folks money into lng term obligations
of toxic content

while pulling out your own bundle up front

is looting not risk taking

and the looters must be caught
their long gone

their not around for a hair cut

…
“the consequences of a rapid vs. a slow pace of financial sector re-adjustment”

rapid means bury the paper trail under the rubble
and go right back to doing the same old same old

wam bam thank u …man

—pc ed eh ??? —-

slow might …might ..mean
on the other hand

developing new institutional arrangements

by trial and error ..at the margin

ie

doing it like we don the new deal

bit by bit up the rock face

doing the necessary

protracted groping

toward a systemic self sublation

Posted by js paine at 02:45 AM