I forgot to mention that, as a member of G3N3R4T10N 4W3S0M3, I, like, totally probably, you know, WTF man, deserve this comeuppance.
I feel your pain, Stanley. I feel your pain.
2: Thank you. Unfortunately, due to redundancies, your commenting privileges are hereby revoked.
This has always been my opinion on the subject.
4: Never mind! The internet still works!
Don't toy with me, Stanley. Don't toy with me.
7: You should feel grateful to have a blog upon which to be toyed with, Di.
In times like these, we cannot forget all those who went before, computerless or tapping out BASIC on a Commodore 64, left untoyed with in a world where technology had not yet blessed us with this gift of all-night connectivity. And so it is with this memory that I thank you, Stanley, and all of Unfogged, that I have this night been toyed with once more.
1: I know what you mean, dude. Whenever I feel down about the situation, I just go back and reread the collected NYT works on how we feel entitled to too much, and it straightens me right out.
9: Yes, back in the day I had to sit alone and toy with myself late at night.
Sorry, that was way too forced. Time for bed, clearly.
those who caused this shit-show aren't the ones getting canned
A lot of them are.
Of course, they're already rich, but still.
I mean, just read this and tell me you don't start tearing up a little.
#9: In times like these, we cannot forget all those who went before, computerless or tapping out BASIC on a Commodore 64, left untoyed with in a world where technology had not yet blessed us with this gift of all-night connectivity.
Or how about before iPods, when you had to make mixes of just a few songs on cassette tapes for your Walkman? Man, that sucked.
Bank of America was supposed to be stable, but they paid too much for Countrywide and then Merrill. British Banks are all taking a beating.
More locally, State Street's stock dove 59% yesterday.
1: Speaking of Generation Awesome where's its namer, SomeCallMeTim?
Unfortunately, due to redundancies, your commenting privileges are hereby revoked.
One of my favorite British usages is their term for layoffs: they say that workers were made redundant.
Yes, back in the day I had to sit alone and toy with myself late at night.
Here, too, the Internet has made major contributions to both innovation and efficiency.
Just watching the inauguration speech in full now on Japanese TV. It sure is nice to have a president who can string two words together again.
Listening to Leonard Cohen singing "Democracy is Coming"...
20: They aren't doing those damn voiceovers?
I guess I'm in the minority here, but I think being grateful for having a job in a modern industrial economy is entirely appropriate. The average person today is a third worlder living in shitty conditions with a crap life expectancy. The fact that the assholes at the very tippy-top of the economic heap aren't getting anything like their just deserts is irrelevant.
Be glad for what you have. Work to make sure that the assholes who did such an awesome job of fucking up the economy (a) get their just deserts, but more importantly (b) are prevented from pulling this shit again.
People constantly recalibrate their expectations so that what they have in the bag is taken for granted. It's normal, natural human behavior. It's also a gross failure to maintain perspective.
By all means, let's eat the rich. Bear in mind, though, that below us on the global economic totem pole are billions of people for whom "eat the rich" means barbecuing *our* sorry asses.
24: Thanks, togolosh! I was thinking I had to post a comment saying something like that, but I'm so inarticulate I would have spent all morning thinking about it and then just made a stupid joke instead.
Obaa is inaugurated, and the stock market goes down. Coincidence? I think not.
Fully agree with 24, and was thinking of writing something along the same lines. Do, however, think there's a meaningful difference between being grateful for living and working in a modern industrial economy in general, and being grateful about one's continued current employment as a response to current economic misfortune. Indeed, one could quite easily be grateful for the for former and pissed about latter at the very same time.
Indeed, one could quite easily be grateful for the for former and pissed about latter at the very same time.
An apt distinction. I think it's dumb luck that I ended up where I ended up existing. That's not what I'm on about in the original post, to clarify.
|| Chuck Schumer just quoted the Onion in his introduction of Tim Geithner at the nomination hearing. That article, "Recession-Plagued Nation Demands New Bubble to Invest In". It was a good little speech actually, saying we couldn't rely on credit-led financial bubbles any more ||>
I'm certainly in the "grateful for the former and pissed about the latter" category.
On the one hand, it's important to be aware of our relatively privileged position. On the other, we are here because people busted their asses to make it possible, and some lost their lives in the process. We have an obligation to try to extend our good fortune to others and to make further improvements.
Among the further improvements I would very much like to see is assholes like the ones who brought about this mess being held to account. That serves a twofold end: Justice on the one hand and discouragement of future abuses on the other.
I think the liberal blogosphere can serve a very useful role in keeping accounts of who the guilty parties are in this. Unfortunately the Democrats seem not to be inclined to do so. The problems are structural and the Democrats are proposing fixes that do not deal with the brokenness of the underlying structure.
17: yeah, where is the timbot?
I saw him comment over at Yglesias the other day. That bastard isn't dead, he's just ignoring us.
24: Well, yeah, the homeless guy who begs for change in front of my store is better off than, say, someone living in Gaza or Darfur, but if I go up and tell him that it's not going to cheer him up much, is it? The thing about being unemployed or otherwise economically screwed in America is that you're living in a country that has the resources to actually help you, and has chosen, as a matter of policy, not to do so. Now, it's true that America also has the resources to help out people living in squalor in third-world countries, but historically that's never been a significant concern of American policymakers and most American policymakers don't even pretend that it is. But those policymakers do tend to claim that they're invested in bettering the lives of the economically downtrodden, even when their actions overwhelmingly favor the super-rich at the expense of the poor. So I tend to think that resentment is justified given the circumstances.
The average person today is a third worlder living in shitty conditions with a crap life expectancy.
I read this as roughly the equivalent of the ol' "it could be worse!" response to someone's personal distress. Okay, not "roughly." The equivalent.
People constantly recalibrate their expectations so that what they have in the bag is taken for granted. It's normal, natural human behavior. It's also a gross failure to maintain perspective.
Rather than a failure to maintain perspective, it's sort of the necessary prerequisite of progress. Being happy with what you have instead of trying to make it better because "it could be worse" is the sort of complacency that stands in the way of progress.
It could be worse, sure, but it could also be better.
Maha of Mahablog could use a little help. Links at Digby, LGM, etc. I have to find a way to feed the dogs til Friday or they will tear my throat out in my sleep. Drip, drip, layoffs at my F500 company every week. Sales down 1/3 YOY. Bose laid off 10% of its workforce. Not furloughs. Geithner hearings...blah blah blah.
Under best estimates, unemployment is going to rise for at least a year. UK is going down, down, down. Maybe all big banks in the fricking world will be nationalized in 2009.
Good news? I did hear Geithner say that after the stimulus bill, Obama will approach Congress with a financial restructuring bill. Then a mortgage relief bill. Then a health care/entitlement bill. Then a budget. Together all these could double the stimulus. Or triple it. In bits & pieces. But Obama is still reactive, rather than
I think we need a major initiative like FDR's Bank Hoiday. Something to grab attention, notice of Naomi Klein Shock Doctrine comin from the left.
Friend of mine has gone all metasasized(?). 4 days ICU, 4 days rehab, 4 days home, back to hospital. Medicare rules.
Mad at bankers? I can't talk about my feelings for fear of being arrested.
I do feel profoundly lucky to have my job, and I repay that gratitude by commenting here. Hmm.
But then I do actually like it.
I just had a brilliant idea. The stimulus project could put a lot of money into demolition. Once enough things were demolished, construction would revive. Just level all the walkaway houses, the unfinished houses, the unsold houses, and maybe forgive debt and give ten or twenty thousand to anyone willing to allow their house to be demolished.
My nephew works in demolition and they tend to be dependent on construction. This way the creative destruction of housing would precede the construction and make it possible, instead of following it, as Bakunin and Hayek said.
I'd feel a whole lot luckier to have my job if I had any confidence I'd be keeping it.
36: Some of the Guantanamo detainees must have explosives expertise. Two birds with one stone!
Whenever I run into someone complaining whose present situation is still better than mine, I'm pretty darn hard-hearted. If they're someone who's scrimped and saved and slaved and sacrificed and worked nast jobs for decades and still has lost everything, I'm a tiny bit more sympathetic. But if they're someone who was all giddy about their windfalls three years ago, I'm positively sadistic.
Someone should lock the Dow 36000 guys alone in a room with about 30 people who followed their investment strategy, and then film and record the results.
I agree with Togolosh. Ordinary American should realize that they're very lucky.
Dow 36000 review (1999):
Despite the sensational title, Glassman and Hassett have written a very useful, and fundamentally conservative, book. It is really two books in one: the first half outlines an economically sound method for how to determine the "perfectly reasonable price" of a stock based on the future earnings of the underlying company. The second half is a very useful guide to the intricacies of the market for the beginning to intermediate investor: someone who is familiar with P/E's, but has not yet mastered REITs and DRIPs.
Unlike many financial books, the combination of a rigorously trained economist and market savvy journalist has lead to a very readable book, which none the less is based on sound principles. Anyone who is investing in the market should read this book.
Reading the other reviews, I was fascinated how they are split between 5 star and 1 star ratings. Clearly, many of the 1 star raters did not bother to read the book, or completely misunderstood its central message. Others claimed the mathematics is wrong.
As a Ph.D. scientist, I made the effort to run the numbers myself, and, given the assumptions of the book, they are right. Anyone who cannot follow the arguments presented probably should limit their involvement in the market to purchasing broadly based mutual funds: several good ones are recommended in the book.
36: The demolition would be fine, but a lot of those homes shouldn't actually be reconstructed. At least out here there are developments seemingly landed from space with nary a human job in sight. But that's where the developer bought the cheap farmland, so that's where the struggling family paid too much to drive too much to and from. So we should raze them all and replant the crops we can't water.
metasasized(?).
+t , which c-r? if gastric or pancreatic iirc
TS-1 seems pretty effective hopefully
40: Heh, it still makes me laugh after all these years. I also love how sorta-depressing the thesis of Dow 36,000 actually was if you followed it through to the logical conclusion. If risk premia disappeared (which is why they thought they could discount (bullshit) future earnings estimates at their (less bullshit) risk-free rate assumptions), then it would be fantastic for the people who invested through the period when the risk premia disappeared, but would suck balls for everyone thereafter. I mean, they were actually suggesting a future world in which no investor could ever get a return better than US government bonds, because everything would just be that safe. Man, that would be boring. And impossible, but also boring.
33.last - agreed. Keep what's good, improve what can be improved.
45: OK, everyone count off by fours.
"Keep what's good,
improve the old.
One is silver,
and the other gold."
44:Boring is good. Very very good. Time to read Plutarch and learn German.
As a Keynesian, I share their dream of a very low risk-premium and no return better than Treasuries. Obviously, the way there is a little different, as in the elimination of rents.
Keynes, in effect, declared the crisis a failure of ideas; Obama makes it a failure of will...Krugman
Paul, stop being so negative about the Leader. It is not about failure, failure is impossible. It is about Triumph des Willens.
44: It wasn't the future earnings that was really the problem, though, was it? I think it was their lunatic idea that you could remove the risk premium. I think there were two problems with this: first, no you can't remove the risk premium on stocks since investors don't have an arbitrarily long investment horizon. And secondly, part of the risk premium is protection against an increase in the return on the US bonds.
Also, the fact that they were somewhat giddy about the prospects for Dow 36,000 suggests that at some level they knew they were being deceitful. As pointed out earlier, once we get to 36,000, it won't be a great investment opportunity anymore, so it's only 'great' for those who can invest now. The real life example of those who participated in this kind of evaluation upwards are those invested in the market from the mid 40s onwards. Stocks are still valued higher than they were in 1945, I believe.
44:Boring is good. Very very good.
if you're actually employed as a speculator, it's threatening.
I'm watching Barack Obama on television talking about his plan for a "pay freeze" for White House senior staff.
Neo-Hooverism. "Everybody's gonna have to sacrifice."
It wasn't the future earnings that was really the problem, though, was it? I think it was their lunatic idea that you could remove the risk premium.
They were all problems. Risk-less ventures just plain don't exist, and the earnings estimates of the late 90s were unsustainable (related to the whole "analysts never forecast a recession" phenomenon). It was one big fat joke. And I believe DeLong pointed out that they actually got the math wrong.
51: Okay, I'm sure there were lots of problems. But I think if you start with the observation that business growth is better than the returns on US bonds (which has been historically true), assume that's a certainty and subsequently claim there should be no risk premium, you can always get an arbitrarily high stock index, right? It's the 2nd and 3rd steps that are foolish, nothing wrong with the initial observation, afaik.
if you're actually employed as a speculator, it's threatening.
see? win-win!
"eat the rich" means barbecuing *our* sorry asses.
Have to admit, if you have to go about barbecuing humans for food, the US is about the best place to start, no? Who wants some skinny guy who has done physical labor most of his life?
52: Well, not arbitrarily high, as there will likely be some non-zero discounting factor applied to future cash flows that would ensure a finite "true value".
As for the main observation, that equity stakes have returned more than bonds over almost every multi-decade period within the modern financial era where we have data, I suppose it is pretty incontrovertible.
Of course, even the vastly simplified models of returns that we use in finance don't assume that this will be the case in the future. Even if the raw probability of underperformance converges to zero over long time periods, the potential size of underperformance grows even faster. I.e., the cost of insuring a portfolio of equities from underperforming the risk-free rate remains non-negligible for periods of any length, and in fact grows with the length of the insured period under most assumption sets. So there's really no way to say "but with a really long time period, it's riskless!" even in a purely theoretical sense.
But you're right that the more useful point is that No Investor actually has an infinite time horizon, or even a particularly long one. Even pension funds, endowments, etc., have annual spending obligations that produce effective average time horizons for their investments.
There are other sources of risk that just can't be wished away through magic like "diversification", such as the risk of changing correlations between assets, the inherent risk of imperfect predictions of future growth/income, exogenous wealth-destroying events such as hurricanes, etc. But wishing those away was just the maraschino cherries of absurdity upon the giant fucking joke sundae of that book.
As for your point about whether today's market looks pricier than in 1945, it's something I really want to look into. I've seen a lot of citations of market valuations that claim to use Schiller and Campbell's methodology for prices divided by ten years' trailing inflation-adjusted earnings, but I'm a bit wary of their data sources and how they're rolling up the denominator on the calculation. I also want to pull the main academic database and run the numbers myself using free cash flows instead of earnings (particularly given the amount of not-so-real stuff that goes into accounting earnings numbers, especially in the past several years of financial company earnings on both the upside and now the downside). But that's a project for when I can convince my bosses to just not give me any other work for a week or two.
Have to admit, if you have to go about barbecuing humans for food, the US is about the best place to start, no? Who wants some skinny guy who has done physical labor most of his life?
A common misconception. While the desirable amount of fat itself may be a matter of taste, there's no doubt that the less-exercised muscles of many US residents are better suited to quick, high-heat methods like grilling. For barbecue, the tougher cuts from hard-working Third World peasants are far superior in flavor due to all the collagen that gets broken down.
On a different subject, can anyone recommend things to do or places to eat in downtown Albany, NY? And by things to eat, I don't mean human flesh. I had too much of that over the holidays, I'm trying to cut down.
I became professionally aware of the existence of a strip club in Albany patronized by many in state government, and notable for its lack of a liquor license -- sodas only. But I don't have an address for you, and I don't think they serve food.
I could live with only soda to drink if the strip club served food; but in researching this trip I'm learning that Albany has a way of dashing even low expectations.
56: I was back briefly over the holidays. It looks like El Loco is still there on Madison just above Lark. Pretty good Mexicanish fare as I remember. Debbies Kitchen across the street is good for sandwiches. There are plenty of places to drink heavily in that area, and that was pretty much the only activity I really looked for.
Thanks. Both of those look reasonably convenient to where I'll be--I may give Debbies Kitchen a try when I get in. Sad to say, drinking heavily and Mexican food, while wonderful things together and apart, wouldn't endear me to my travel companions. Best left for home, I think.
1: Speaking of Generation Awesome where's its namer, SomeCallMeTim?
Namer s/b popularizer.
that equity stakes have returned more than bonds over almost every multi-decade period within the modern financial era where we have data,
There are several multi-decade periods where the broad stock index ran behind inflation...if you kept rolling over fairly short-term bonds you could definitely beat that.
On the original topic, I'm glad that I'll be starting a new job next week after months of not having one, but not happy about lowering my pay expectations nearly as far as they'll go. It helps that it's a temporary thing and something I'm doing more for experience before going to library school, but it would nice to be able to build some savings before going into debt. I'm also glad that I'm in a position to be able to get help from my parents, but really not happy that I've had to ask for it. And yes, I'm aware that I'm in a better position than most people in the US and in the world.
I just started a marketing agency with a buddy of mine. We have a pitch meeting on Friday, and a tentative one for 2 weeks out. So everybody keep your fingers crossed for me, because being unemployed sucks ass.
Albany has a good brewpub, with a slightly ridiculous name - C. H. Evans Brewing Company at the Albany Pump Station. I stop over there for lunch when I'm driving to western New York (all I-90, all the time), so I don't have any sense if it's usefully close to downtown.