This is why Westboro Baptist Church is a joke

[kandrathe]

There are, roughly, three reasons people are unemployed.

1) They want to be unemployed.
2) They want to be employed, but are delaying to find a better job.
3) They want to be employed, but aren't able to find jobs, at all.

Increasing or decreasing unemployment benefits alters categories 1 and 2, but doesn't have much traction on category 3. You can't really cause businesses to expand by making workers more desperate. Indeed, if workers are desperate, they'll cut back spending, depressing demand, and further reducing incentive to hire.

The current jobs crisis has almost nothing to do with 1 and 2, and everything to do with 3. People didn't suddenly and collectively shift their preferences for leisure, or raise their expectations for better jobs. The jobs just up and vanished, and aren't coming back until demand picks up. Failing to pay unemployment insurance now, or cutting it back, would be bad for everyone.

I'm just going by what the majority of studies have shown. It doesn't account for those people who are in the wrong jobs, or underemployed. I think there is also a big problem with structural unemployment. It seems too many of our jobs were ones of convenience that could be easily shed to tighten the bottom line as needed (e.g. greeter at Wall-mart). We need more doctors and nurses, but former greeter at Wall-mart is not enough of a qualification.

But hey, you're right, we can also think of this as a party! Hellz yeah, the federal government continues to pay us a pittance to survive without work! Woo! Unemployment roolz! Somebody pass the beer bong!

It's called a simile.

"The government is like the worst venture capitalist ever. It's like we gave them some billions of dollars and they blew it on a big party, instead of careful investments in things that would grow the jobs market."

So, yes, it's like the federal government was sent out with a $Trillion to get us some jobs, and they blew it on a kegger. Yes. It's a simile. No offense to drunken sailors meant.

Cash for clunkers was popular, but by and large a waste. Also, it has no traction on the poorest, who do not have clunkers, because they do not drive. Tax cuts largely benefit those who pay taxes, again, not the poorest, who don't. That the states did not default on their various obligations is fantastic, but that's just continuing the status quo, not contributing anything new.

Cash for ____ only pulls future activity into the now, leaving a void in the future. Bailing out the states pushed the critical decision needed at the moment into the future, and there was great hope the recession would be a short term spike. They expected tax revenue to return within a year. Their remedy is a placebo. In the past the recessions were short, so when the economy got better everyone would say, "See! The placebo works!"

But, it doesn't. This is because the government produces nothing. It can only take from one pile and put into another, or take from our children's future by borrowing for today's malinvestments.

The banks, on the other hand, were basically forgiven the whole credit default swap issue, with their terrible decisions being "insured" not by AIG, who couldn't foot the bill, but by the taxpayer.

Yes, I would blame the mortgage originators, whether they be banks or not. But, just because a bank got caught holding the toxic asset doesn't mean it was their fault it was created. Still, I agree that "Buyer beware" applies to corporations as well as consumers.

And what was the cost, to those who led the financial sector down this path? Rack and ruin? Jail time? Tar and feathers? Smaller bonuses? Nope, they're pretty much still rich and powerful. Bonuses here in London just reached a new record high - I don't know the US case, but nothing fundamental has changed. The same old casino playing the same old games.

What law was broken? It was congress who allowed CDO, and CDS (through Fannie and Freddie), who repealed Glass-Steagal, and who didn't reign in derivatives (or other junk investments). Is it the foxes guarding the hen house?

We'll see. But many of them would have gone under already, many times over, were it not for massive injections of government liquidity. If they still fail, well, maybe they shouldn't have been playing with fire in the first place. (By fire, I mean an ever-increasing web of collateralized debt obligations backed by credit default swaps, all insured by AIG, which could not possibly cover the kind of losses the industry would face in the event of a serious crisis.)

I agree, but as we discussed at the time, there was a serious downside to allowing the worlds largest financial organizations to collapse.

There are many ways the government could prop up the mortgage market. They could do it directly - just shave a whole whack off mortgage values on primary residences, financed directly by the government. Or they could nationalize the banks' balance sheets, sort them out, guarantee mortgages as part of a larger restructuring, and spit them back out in a couple years when things have calmed down.

They probably should have temporarily nationalized those in trouble, and eventually fired the executives (without golden parachutes) and their boards of directors. Actually fix the debacle with the laws that allowed the mess to happen. Bring in financial resuscitation teams to clean up the balance sheets, then relaunch them as private.

But no, they decided to just give enormous sacks of cash to Wall Street, and hoped they'd go do the right thing with them. Their risks were insured ex post, their balance sheets were propped up, they got loans at absurdly good rates. The folks who were supposed to fix the crisis were all drawn from the same pool of Wall Street financiers and high-end Econ/Finance academics, a three-legged technocratic chimaera. If that's not a textbook case of regulatory capture, I don't know what is.

Here is where we wholeheartedly agree. Government and Wallstreet are incestuously close, however I tend to blame government more rather than the sharks on Wallstreet who are true to their nature.

It is our republic that was purchased with blood such "... that government of the people, by the people, for the people, shall not perish from the earth."

I don't think we meant to replace the word "people", with "wealth" or "corporation". The corruption of government should be illegal, but it is not apparently. I do hold both those doing the corrupting and the corrupted accountable, but more-so the corrupted. Corporations are self serving, and profit is their motive. But, our elected officials deceive us into believing they will bring "change", accountability, and actually serve us for once. Politicians with principle are extremely rare. What I like about the tea party republicans is that they seem to be acting to principles, but they bring much conservative baggage along with that.

I still believe the root of the problem is that our Congress believes they can take an ever growing amount of GDP and dole it out as they please. They believe they can pick the winners and the losers, and its this ongoing policy of malinvestment that disrupts our economy. There probably is a more neutral way to create incentives and disincentives, but I think the stronger they are the more they will distort the "natural order".