Zero from zero is still zero.
Herbert Hoover. George W. Bush.

The Y2K disaster is here.

The central bank has already indicated it will buy $600 billion worth of mortgage-related securities next year, -WashPo at "employ all available tools" link.

Wow! TARP 2? Will they attach executive pay limitations?

George W. Bush was the Y2K disaster.

Given widespread knowledge of Japan’s recent economic history, 0/5 percent is the new zero. Other than the power of belief, Bernanke has no more Viagra.

Oh, speaking of the Fed and economic Viagra, The One’s Treasury designee has some ’splaining to do about how he and his boss, Big Ben, decided to let Lehman die.

Bush just told Candy Crowley (CNN), "I obviously have made a decision to make sure the economy doesn't collapse. I've abandoned free market principles to save the free market system." Wow!

Danp:Sounds like, "In order to save the village it was necessary to destroy it."

After today's Fed rate cut, the American economy will not escape collapse.

I'm not an economist so perhaps I'm just out of my depth here, but there's something that's been driving me crazy: no one in politics, economics, or the press will connect the dots for people. The problem is too many people with too little money. The credit markets could be operating like shit through a goose and still no one would loan or borrow money for business expansion, etc. while no one can afford to buy their product or service. It looks to me like raising wages would be the clearest path out of the thicket - and that, of course, would have to come at the expense of shareholders and CEOs, which is probably why no one will even whisper the idea on a deserted country road.

Am I nuts here, or is the whole approach to the problem thus far been exactly ass-backwards?

"...Krugman adds, "Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too."

Precisely but the conservative party and POP (People's Obstructionist Party...formerly the republican party) are obstructing anything new if initiated by liberals despite the fact that the majority of Americans poll liberal. They can afford to block any change for political reasons for if the entire economy collapses they stand to lose very little for it is mostly the middle class and the poor who will suffer from their obstructionism.

Roll back the Reagan tax cuts, financially support manufacturing in this country and its workers by reinstating tariffs, providing incentives to companies who do not outsource labor to slave working countries and create jobs by directing our labor toward making energy alternatives, rebuilding infrastructure and providing a not for profit national health care plan. End predatory lending, cap CEO salaries (through taxation if necessary) and make taxpayer campaign financing mandatory to get the bribe money out of politics. Now there's a start. Break up the press monopolies so all media does not belong to six corporations. We have a virtual media propaganda machine rather than a free press.

From driftglass.com on Sunday's talking heads:
"...From drift glass 12/15/08...Andrew Sullivan: Why is this a distraction at all? When it is clear this has nothing to do with Obama.

Andrea Mitchell: Well, y’know, White Houses get all tangled up in stuff like who called who, when, about what.

driftglass: No, Andrea, it is you people who get hair-on-fire obsessed over this kind of trifling shit and then will not stop talking about it wall-to-wall no matter how bright and hot Rome is burning. You people are the ones who could not stop lighting votive candles at the altar of Bill Clinton’s penis because you are glorified tabloid trollops who cannot wrap your tiny, tiny brains about the important, complex issues that are actually vital to the life of the republic.

Mitchell (rudely continuing over my mental rant): Like Scooter Libby.

Sullivan: Scooter Fucking Libby? He was committing crimes at the behest of the President!

And that’s the point, Sully: the Andrea Mitchells who clot your media constellation have moral sensibilities so debauched and degraded that they literally cannot distinguish between trivia and treason.

Matthews: So will the GOP be trying to help the Obama Administration to fix the hurricane of economic feculence that is bearing down on us, or with the be the same whiny, obstructionist pricks they have been for the last 30 years?

Sullivan: The 20%…the Palin/Hannity/Limbaugh crowd… will obstruct everything Obama tries to do.

And of course, when Sullivan says “The 20%�, what he means is “The entire GOP�. Because after 30 years of Nixon politics and Reaganomics, there is nothing left on the Right but the “Palin/Hannity/Limbaugh crowd� and a handful of the stunned, useless political walking-wounded like Sullivan who have not yet come to terms with the grim reality that while the Dirty Fucking Hippies have been pretty much right all along, they have spent their entire adult lives building lucrative careers enthusiastically pimping themselves out as the intellectual arm-candy of evil men who despise them.

And that while the Right will always need its Hannity/Limbaugh stooges and lackeys to push their poison, the Golden Age of the Useful “Respectable Conservative� Idiot is coming to an end...."

Next week the Fed will start paying banks to borrow money from the government! Of course, this will be aimed (like the TARP program) to bankers who have connections with the Jewish bankers who are running the Fed & the Treasury department.

Like the corporate media, they don't have any idea what they are doing or what they are talking about, but they are the 'wise men' so we will listen to them.

"Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too."

Who is the we. I am not in trouble, I do not expect sixty thousand dollar/year job to keep going, my housing and food are covered.

My main troublesome expense is the massive retirement bill I pay for government workers. That is a future liability that I did not sign up for and I refuse to pay it, as do a few thousand of us on strike here in Fresno Ca. If Krugman thinks I can pull us out of this mess by hiring more government workers on my non-existent paycheck, he is a fool.

Next week the Fed will start paying banks to borrow money from the government!

That's only fair, since a week ago, investors were paying the government to borrow money from them ("The annualized yield on three-month T-bills dipped slightly below zero at one point Tuesday, to negative 0.01%, according to Bloomberg News data.")

@Jennifer: "I'm not an economist so perhaps I'm just out of my depth here, but there's something that's been driving me crazy: no one in politics, economics, or the press will connect the dots for people. The problem is too many people with too little money."

You have hit upon the blind spot in this whole mess; I have been saying this or similar for a long time. I am happy someone else agrees.
First of all, consumerism is going to die a slow and painful death, or maybe it will only be painful. In order for the current model to operate, many people have to make lots of money to purchase the goods and services that keep the wealthy, wealthy. But, for the wealthy to stay wealthy, they have to find ways to keep wages low and the cost of production low, so their standard of living remains obscenely high and they can remain untouched by the lower working class. It is a paradox which the MBA mentality does not comprehend. Money has to move to have value. Paper or electronic markers that do not move have no market value. If the CEOs of GM, Ford, Chrylser, WalMart, etc do not value their workers enough to pay them a living wage that encourages them to keep their money moving, everything stops. We are seeing it, now. Lower interest rates on banks do nothing for the interest rates on consumer credit. I stopped paying on my credit cards and will be filing BK very soon. My interest rates are in the high 20s and will probably go higher before I file. When I asked for a reduction in rates to make it possible to continue to pay at least the minimum on my cards, which is not a good solution, but one I felt I could afford, I was turned down. So, instead of getting 10 or 12% interest on my balances, they will get nothing. Now, there is a wise business decision by them. I will be joined by millions who are the same or worse. Good luck, JP Morgan/Chase. And, what will this cost in lost jobs for the lenders? Those people who were calling me to collect my debt will be out of work, soon, since their jobs will be outsourced to a collection agency. The collection agency will lose my account when my BK is filed and settled. Those employees will lose their jobs. Do you see what I mean?

This is a very long post and most will not get this far, but if you do, I thank you for your patience. There is no longer a them and us. The wealthy will soon be joining the not so wealthy in the game of survival. Welcome to the community of humans, playing the game of Life.

peace,
st john

I'm not an economist so perhaps I'm just out of my depth here, but there's something that's been driving me crazy: no one in politics, economics, or the press will connect the dots for people. The problem is too many people with too little money.

Plenty of people in politics have made that point. Some people in economics (people like Krugman, Brad De Long, etc.) do say it, but they tend to say it elliptically.

The press won't, because that takes looking at more than top-line numbers and discussing distributional impacts. Ideological biases aside (and I'm not saying those don't play a major role, too), the press largely too lazy to do that.

"I'm not an economist so perhaps I'm just out of my depth here, but there's something that's been driving me crazy: ... The problem is too many people with too little money. ...raising wages would be the clearest path out of the thicket ...

Am I nuts here, or is the whole approach to the problem thus far been exactly ass-backwards?"

BINGO! Along these same lines I had an admittedly crazy idea. Pay off every single primary residence mortgage under $350,000. I'm not talking about vacation homes or spawling McMansions, just run-of-the-mill homes lived in by actual families. Think about it. Suddenly every one of these households would have an extra $1000-$1600 to spend every month! Crazy? You bet. Would it work? I believe it would. People would have more money and security...exactly what they need to start spending again.

@ jennifer & st john

You're both absolutely right. Everything's focused on the banks and credit markets right now. That's not the problem. Right now people are losing their jobs, houses, and savings and have no fucking money. There's one thing that needs to happen now, before there's even going to be the dimmest light at the end of this tunnel:

Amend the Help for Homeowners bill passed earlier this year to make banks, or at least Fannie Mae and Freddie Mac, join the FHA Hope for Homeowners program and refinance upside down mortgages. Right now the government is underwriting new loans for people with Option ARMs or other unsustainable mortgage situations at 90% ltv, but the banks continue to go with foreclosure, or slight, temporary modifications that don't really make sense in the context of the underlying problem: the total collapse of the real estate market. They seem to be thinking that next year, prices will return to their 2005/2006 levels or something so they'll just wait this out.

So apropos of this, can someone out there explain why banks for some reason think it's smarter to spend tons of money foreclosing on a property and then resell it at a ridiculous loss, rather than write off some of the loan principle and refinance the owners and earn back some of that loss in interest over the next 30 years? Does it have to do with accounting practices, or asset/liability balance sheets? If someone owed you $50 and could not pay it back, but promised to pay you $20 plus some interest, why would you insist on suing the guy, have him declare bankruptcy, get none of the principle back, but accumulate thousands of dollars in legal bills and think you came out ahead? This is how mortgage bankers evidently think and someone really needs to explain it to me.

Or they could just be really, really stupid, arrogant people, which is how we got into this mess in the first place. That would also make sense.

@independent thinker: Crazy Ideas are the only ones that make any sense, at this point. I don't happen to have one of those mortgages, but I think this is not a totally unreasonable consideration. Now, granted, many of those receiving this grace would not "responsibly" use that extra windfall. So, what else is new? Just removing the stress of that monthly mortgage payment that may be crushing the spirit could have a huge rippling effect across the society.

Another idea could be developing educational tools that teach people of all ages how to handle money and manage opportunities that having "extra money" afford. Maybe make these courses a conditon of receiving the total payoff. We don't pay for 4 years of college up front on a scholarship; we pay semester by semester, with GPA conditions being met, etc. So, with any kind of monetary "bailout".

No matter what is done, there will be those who try to abuse the system. The system has to be made as comprehensive as possible to address immediate abuses and possible future ones. The Constitution of the United States of America initiated such a system. With relatively few corrections, it has served us well. The nature of the human condition is one of change. Let us learn to adjust to change with grace and ease. Change & pain are inevitable; suffering is optional. The more we resist the more we suffer. Learn to flow with what is and enjoy the ride.

I am committed to Oneness through Justice and Transformation
peace,
st john

Jennifer, St John, Independent Thinker -

Been there, done that. My BK was due to medical bills, worker's comp.

Problem is, yes, the creditors won't work with, they will even play hardball with Consumer Credit Counselors.

My problem was, I had a home, had over $100k in equity, had stocks...because I had no income I couldn't refinance or get a loan without refinancing the unsecured debt to secured debt. So, I filed BK, kept my home, and then sold 5 years later.

The problem with filing BK is now, banks are not loaning new money. If you have to rent a new place be prepared to get a co-signer, or maybe you'd get lucky to be able to put down 3-6 months rent.

Everyone is boxed in, no way out. If you rent, your rent is higher than mortgages. If you own, chances are your mortgage is an adjustable (negative amortization) or interest only.

Job markets are unstable - employed today, unemployed tomorrow. It used to be that you could quit a job today, and find another by the end of the week. Not anymore.

There's no more easy credit. There's no more quick job hunts.

However, don't worry. You will see more investment advisors, newscasters and the like joining the unemployment lines as well.

Join the credit union, it's easier to get loans if you have a history with the credit union.

None of it makes sense what the banks are doing. However, I can say the rich are playing psychological warfare with everyone.

Think about it, they scared the public into going to war
They scared everyone into the bank bailout.
They scared everyone into "keeping the country safe" and took away basic liberties
Now they are trying to scare everyone about the bailout - saying unions are busting corporations

Fear is a helluva control method.

The move, which affects the rate at which banks lend their reserves to one another, was to a large degree symbolic. Demand for interbank loans has been so low [...] NYT

"Funny"... Where there's no demand for loans -- bank to bank -- they're willing to lower their rates to zero. But, where there *is* a demand for loans (like, your Visa card, your house, your payroll), the rates either aren't budging or are going up and up and up, like some demented, hell(ium)-filled balloons...

Got a notice from my bank yesterday, telling me of a new "agreement"; my Visa rates are going up, as are the fees (late, international buys etc). No skin off my nose, since I always pay off my Visa bill in full (the day it's due. Eff 'em. I ain't in the business of lending money to *them*, not even for a week) but, still... Mighty annoying, when I hear how the finance industry "titans", who screwed things up in the first place, are getting off scott-free and , even, getting big money to make their boo-boos feel better.

I'm by no means an economist either. However, I did take Macro & Micro economics.

The problem is, the GOP and corporate America knows the majority of Americans have no clue about finances. This allows them to take advantage of you.

For instance, you have no clue on financing a car, the salesman knows it, so he takes advantage of you.

The banks knows people don't know about mortgage loans, so they take advantage of you. Do you know what LIBOR means (London Interbank Offered Rate), how about COFI (Cost of Funds Index). They tell you oh, your interest rate is 5% on an ARM - they don't tell you if that included the margin - margin is added to whatever your loan is tied to (index) e.g. MTA (monthly treasury averages). The margin stays the same, say 3%, so, 3% + 5% = 8%, so actually your interest at the time is 8% not 5%.

As far as Matt Young saying he's tired of paying for government workers retirement - the government take involuntarily deduct retirement funds from employees every check.

The talking points of GOP - less government. This means more outsourcing. A perfect example, Blackwater, these private contractors are making more the military.
That's where government waste comes in!!!!

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Given widespread knowledge of Japanese recent economic history..

Japan took 10 years to get to 0.. the Fed took 2 months. This is probably going to help my portfolio; however, I fear it may trigger a new bubble.. aren't low rates one reason we got into this mess in the first place?

aren't low rates one reason we got into this mess in the first place?

Low rates during an expansion may have contributed something, though divorcing risk from reward was a much bigger factor. A recession with deflation evident is not the same circumstance as an expansion. And the Fed moving the fed funds target rate to near 0 has essentially no effect because the fed funds rate has been near zero despite the higher target, anyway.

Its part of the same phenomenon as the near zero (and even occasionally negative) short-term T-bill yields. Deflation fears are so prevalent that institutions expect that having money to spend now is worth less than having the same (or even slightly less) money in the future, so they are willing to give away money now, if the risk is near zero as it is for interbank loans or T-bills, for near zero, or even negative, returns.

Which is, incidentally, also a sign that monetary stimulus can't work, and that fiscal stimulus is not only the only option, but currently an unusually cheap option, since the government can borrow money for free.