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Underwater mortgages and the economy

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  • Nick Arnett
    Interesting perspective in the LA Times. http://www.latimes.com/business/la-fi-economy-mortgages-20101101,0,7338975.story By Don Lee, Los Angeles Times
    Message 1 of 19 , Nov 1, 2010
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      Interesting perspective in the LA Times.

      http://www.latimes.com/business/la-fi-economy-mortgages-20101101,0,7338975.story


      By Don Lee, Los Angeles Times

      November 1, 2010

      Reporting from Washington —
      For almost two years, home foreclosures have swept the nation, spreading misery among once-buoyant families, spattering lenders with red ink and undermining efforts to restart the economy.

      But a bigger problem may turn out to be the millions of Americans who are still faithfully paying their mortgages, but on houses worth far less than before the bubble burst. It's not that these homeowners will stop making their payments. It's just the opposite — that they will keep doing it.


      Nick
    • Dan Minette
      ... still faithfully paying their mortgages, but on houses ... will stop making their payments. It s just the opposite ... I thought about this, and I think
      Message 2 of 19 , Nov 1, 2010
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        >Interesting perspective in the LA Times.


        >But a bigger problem may turn out to be the millions of Americans who are
        still faithfully paying their mortgages, but on houses
        >worth far less than before the bubble burst. It's not that these homeowners
        will stop making their payments. It's just the opposite
        >— that they will keep doing it.

        I thought about this, and I think the article misses the real
        problem....that the rise in home values fueled the '00-'08 economy. There
        is ample reason to argue that folks didn't save, because they saw their net
        worth going up every year, as their home appreciated. Folks who sold their
        homes for bubble prices spent the money; it's gone. Some people took out
        second mortgages on their houses and spent the money...with their house
        value rising, they spent the value.

        I understand it might be better for the national economy if we took the big
        hit now, and lots of folks would start over with no credit rating, and banks
        took big hits on their books now, and the government spent what it had to
        now instead of later so we didn't have the slow drip drip drip of expected
        foreclosures putting deflationary pressures on the economy.

        In an unrelated note on the economy, we're now in an age where the economy
        has to grow 5%/year to put a dent in unemployment. If we forget the last
        decade, when GDP grew sub-par and jobs barely grew, and focused on the '80s
        and '90s, we'd find that the average GDP growth in that period would be
        enough to lower the jobless rate to 7.5% in about 20 years or so. The
        numbers are rough because real 3%/year GDP growth is what's required to keep
        employment growth matching worker growth, and I'm calculating a 0.1%
        variation above this, so your numbers might be a bit different. But, that's
        a scary thought.

        Dan M.


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      • Nick Arnett
        ... No question, either extreme is bad. But how to manage the volatility is the billion - or is that trillion? - dollar question. Nick ... still faithfully
        Message 3 of 19 , Nov 1, 2010
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          On Mon, Nov 1, 2010 at 8:40 AM, Dan Minette <danminette@...> wrote:

          >Interesting perspective in the LA Times.


          >But a bigger problem may turn out to be the millions of Americans who are
          still faithfully paying their mortgages, but on houses
          >worth far less than before the bubble burst. It's not that these homeowners
          will stop making their payments. It's just the opposite
          >— that they will keep doing it.

          I thought about this, and I think the article misses the real
          problem....that the rise in home values fueled the '00-'08 economy.  There
          is ample reason to argue that folks didn't save, because they saw their net
          worth going up every year, as their home appreciated.  Folks who sold their
          homes for bubble prices spent the money; it's gone.  Some people took out
          second mortgages on their houses and spent the money...with their house
          value rising, they spent the value.

          No question, either extreme is bad.  But how to manage the volatility is the billion - or is that trillion? - dollar question.

          Nick
        • Dan Minette
          ... the billion - ... There are several things to consider here. First is the obvious. We require real truth in selling, and for the sellers to know what
          Message 4 of 19 , Nov 1, 2010
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            >No question, either extreme is bad.  But how to manage the volatility is
            the billion -
            >or is that trillion? - dollar question.

            There are several things to consider here. First is the obvious. We
            require real truth in selling, and for the sellers to know what they are
            selling. Along with this we have hard reserve requirements, like we had for
            decades (with a kinda exception in Houston in the mid-80s that fueled the
            S&L crisis. All financial institutions can be leveraged no more than 10-13
            to 1.

            Then, we need to recall that this is the first gigantic, nation wide housing
            bubble we've seen in 150 years. There are several causes for it. First,
            the balance of trade deficit, kept by foreign governments and other
            investors as cash meant there was cash looking for a place to roost. The
            inherent trust in the US dollar helped fuel this. So did the lack of the US
            actually producing much of anything. The US is, by far, the most flexible
            economy, so it handles disruptive innovations better than any other economy
            in the world. The last significant one was the mass use of the PC, which
            Japan missed out on when they spent tens, maybe hundreds of billions on
            worthless "fifth generation" computers in the '80s. This lead to their lost
            decades.

            But, the internet bubble of the late '90s showed that the 'net didn't have
            earth shattering profitable changes inherent in it. It allowed consultants
            like me to get drawings and email results, had some nice multi-billion
            dollar companies, but didn't change the economy the way fast cheap computers
            did. For example, the trillion dollars of wealth created by geosteering
            would have existed without the internet, but not without cheap computing.

            So, we had a US economy that was really doing nothing, but lots of money
            looking for a US home...thus real estate, which the Risk Assessment Model
            said couldn't go down more than a couple %.

            Third, to get out of this, the US needs a positive black swan to change all
            the rules again. This will soak up investment capitol, with a real return
            on investment, because wealth will be created. Until it comes, we're
            treading water.

            Dan M.


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          • Doug Pensinger
            ... Add to that the (hundreds of?) billions of dollars of tax cuts Bush gave to the wealthiest people in the nation who already had more money than they knew
            Message 5 of 19 , Nov 1, 2010
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              Dan wrote:

              > So, we had a US economy that was really doing nothing, but lots of money
              > looking for a US home...thus real estate, which the Risk Assessment Model
              > said couldn't go down more than a couple %.

              Add to that the (hundreds of?) billions of dollars of tax cuts Bush
              gave to the wealthiest people in the nation who already had more money
              than they knew what to do with.

              > Third, to get out of this, the US needs a positive black swan to change all
              > the rules again.  This will soak up investment capitol, with a real return
              > on investment, because wealth will be created.  Until it comes, we're
              > treading water.

              Or a negative black swan, pardon me for pointing out what might happen.

              The blackest of black swans.

              Doug

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            • Dan Minette
              ... It is quite possible that we falter over the next two years, sliding back into depression. One of the most depressing figures is that the average GDP
              Message 6 of 19 , Nov 2, 2010
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                Doug wrote:

                >Or a negative black swan, pardon me for pointing out what might happen.
                >The blackest of black swans.

                It is quite possible that we falter over the next two years, sliding back
                into depression. One of the most depressing figures is that the average GDP
                growth rate for the last 30 years will result in unemployment increasing,
                since we need 3%/year growth to tread water.

                China will continue to rise, because planned economies work well with no
                surprises. We will have exhausted the wonders of invention and new
                possibilities that have fueled this nation since its start, and we will fall
                behind a ruthless dictatorship, who will bring a new world order. For
                example, our "green" cars are economical because China has an environment be
                damned technique for processing rare earths....and sells very cheaply
                because of that.

                We'll spend all of our money on things like bypass surgery for 90 years old
                Alzheimer patients. Palin will be President with a cowed Democratic
                minority rolling over and playing dead. The Hispanics and blacks will say a
                plague on both your houses, and not vote, and the poor whites (who I live
                amongst) will focus on the elitist tendencies of the Democrats and would
                rather have an economic than an intellectual elite rule.

                It's possible, but not probable, thankfully. This was predicted in the '80s
                remember. China has lotsa problems that it hides because it controls all
                media. I predict it will be the new Japan. And, the US still has abundant
                natural resources. What leftists can do to help is pick two piles:
                regulations and lawsuits that help and regulations and lawsuits that simply
                make practical plans politically impossible.

                The sad thing is that I think the author of Wingnuts is correct, more people
                will believe wild falsifiable ideas after they are falsified than deal with
                real possibilities.

                Dan M.


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              • Alberto Vieira Ferreira Monteiro
                ... Sorry for the long, unedited quote, but this was not _predicted_ in the 80s, this was _written about_ in the 40s, by many science fiction writers. Orwell
                Message 7 of 19 , Nov 2, 2010
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                  Dan Minette wrote:
                  >
                  >> Or a negative black swan, pardon me for pointing out what might happen.
                  >> The blackest of black swans.
                  >
                  > It is quite possible that we falter over the next two years, sliding back
                  > into depression. One of the most depressing figures is that the average
                  > GDP growth rate for the last 30 years will result in unemployment
                  > increasing, since we need 3%/year growth to tread water.
                  >
                  > China will continue to rise, because planned economies work well with no
                  > surprises. We will have exhausted the wonders of invention and new
                  > possibilities that have fueled this nation since its start, and we will
                  > fall behind a ruthless dictatorship, who will bring a new world order.
                  > For example, our "green" cars are economical because China has an
                  > environment be damned technique for processing rare earths....and sells
                  > very cheaply because of that.
                  >
                  > We'll spend all of our money on things like bypass surgery for 90 years old
                  > Alzheimer patients. Palin will be President with a cowed Democratic
                  > minority rolling over and playing dead. The Hispanics and blacks will say
                  > a plague on both your houses, and not vote, and the poor whites (who I
                  > live amongst) will focus on the elitist tendencies of the Democrats and
                  > would rather have an economic than an intellectual elite rule.
                  >
                  > It's possible, but not probable, thankfully. This was predicted in the
                  > '80s remember.
                  >
                  Sorry for the long, unedited quote, but this was not _predicted_
                  in the 80s, this was _written about_ in the 40s, by many
                  science fiction writers.

                  Orwell (for the World) and Heinlein (Nehemiah Scudder, for the USA)
                  wrote about that, and since they wrote about that, this will
                  not happen. Not unless suddenly everybody becomes illiterate.
                  That's Brin's ideas about the importance of sf: to paint
                  such a horrible future that people will fight to prevent it. Maybe
                  the Holocaust could have been prevented had more people
                  read Monteiro Lobato's "O Presidente Negro" (an awfully
                  racist and anti-american book, BTW).

                  > China has lotsa problems that it hides because it controls
                  > all media. I predict it will be the new Japan. And, the US still has
                  > abundant natural resources.
                  >
                  And you are not using it - the USA economy could benefit if the
                  USA could lift the ban on exporting oil and gas.

                  Alberto Monteiro

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                • Doug Pensinger
                  ... Not what I meant, sorry, but I was sticking with your definition of black swan as a solution to economic malaise. War, global conflict, would be the most
                  Message 8 of 19 , Nov 2, 2010
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                    Dan wrote:

                    > It is quite possible that we falter over the next two years, sliding back
                    > into depression.  One of the most depressing figures is that the average GDP
                    > growth rate for the last 30 years will result in unemployment increasing,
                    > since we need 3%/year growth to tread water.

                    Not what I meant, sorry, but I was sticking with your definition of
                    black swan as a solution to economic malaise.

                    War, global conflict, would be the most drastic "solution".

                    Doug
                    history repeats

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                  • Dan Minette
                    ... GDP ... Well, the US did prosper from wars it has been in, but that s fairly unique. Germany didn t, France didn t. The USSR didn t; the Cold War broke
                    Message 9 of 19 , Nov 3, 2010
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                      > It is quite possible that we falter over the next two years, sliding back
                      > into depression.  One of the most depressing figures is that the average
                      GDP
                      > growth rate for the last 30 years will result in unemployment increasing,
                      > since we need 3%/year growth to tread water.

                      >Not what I meant, sorry, but I was sticking with your definition of
                      >black swan as a solution to economic malaise.

                      >War, global conflict, would be the most drastic "solution".

                      Well, the US did prosper from wars it has been in, but that's fairly unique.
                      Germany didn't, France didn't. The USSR didn't; the Cold War broke them.
                      The UK lost its fortune in WWI and WWII.

                      And, 'Nam hurt the US economy after a while. We couldn't afford "guns and
                      butter" as the saying went at the time. Even those who argued it was a
                      mangled but essential part of containment, it cost.

                      Finally, as more countries get nuclear weapons, the odds on any real
                      conflict going nuclear increases. For example, what would happen if Chinese
                      territorial zones kept expanding and were enforced by China's navy? Would
                      the US honor treaties, and what would happen then?'

                      Dan M.


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                    • Doug Pensinger
                      ... Eventually, but they were our supposed equals for the better part of forty years and one can easily imagine scenarios in which they continued to prosper in
                      Message 10 of 19 , Nov 3, 2010
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                        Dan wrote:

                        > Well, the US did prosper from wars it has been in, but that's fairly unique.
                        > Germany didn't, France didn't.  The USSR didn't; the Cold War broke them.

                        Eventually, but they were our supposed equals for the better part of
                        forty years and one can easily imagine scenarios in which they
                        continued to prosper in at least some sense of the word.

                        > And, 'Nam hurt the US economy after a while.  We couldn't afford "guns and
                        > butter" as the saying went at the time.  Even those who argued it was a
                        > mangled but essential part of containment, it cost.

                        Global conflict, to reiterate.

                        > Finally, as more countries get nuclear weapons, the odds on any real
                        > conflict going nuclear increases.  For example, what would happen if Chinese
                        > territorial zones kept expanding and were enforced by China's navy?  Would
                        > the US honor treaties, and what would happen then?'

                        What would happen to our debt to China in the event of such a conflict?

                        Doug

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                      • Dan Minette
                        ... From: brin-l-bounces@mccmedia.com [mailto:brin-l-bounces@mccmedia.com] On Behalf Of Doug Pensinger Sent: Wednesday, November 03, 2010 9:49 PM To: Killer Bs
                        Message 11 of 19 , Nov 3, 2010
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                          -----Original Message-----
                          From: brin-l-bounces@... [mailto:brin-l-bounces@...] On
                          Behalf Of Doug Pensinger
                          Sent: Wednesday, November 03, 2010 9:49 PM
                          To: Killer Bs (David Brin et al) Discussion
                          Subject: Re: Underwater mortgages and the economy

                          Dan wrote:

                          > Well, the US did prosper from wars it has been in, but that's fairly
                          unique.
                          > Germany didn't, France didn't.  The USSR didn't; the Cold War broke them.

                          >Eventually, but they were our supposed equals for the better part of
                          >forty years and one can easily imagine scenarios in which they
                          >continued to prosper in at least some sense of the word.

                          Sure, if they invaded Europe in '79 and Carter wasn't willing to start
                          Armageddon. But, the military was a drain on their GDP, rising to 45% of it
                          at the end. Look at the war surrogate, the race to the moon. They weren't
                          close. I think they grew faster than the US for about 5 years. Planned
                          economies are OK for a while, but tend to get caught up in artificial goals.
                          China has been the exception, but that's because we are in an era of no real
                          disruptive innovations....and China doesn't have to adapt. Why Japan is in
                          a funk now is interesting....socially they couldn't make the obvious
                          decisions.

                          > Finally, as more countries get nuclear weapons, the odds on any real
                          > conflict going nuclear increases.  For example, what would happen if
                          Chinese
                          > territorial zones kept expanding and were enforced by China's navy?  Would
                          > the US honor treaties, and what would happen then?'

                          >What would happen to our debt to China in the event of such a conflict?

                          We'd probably repudiate it. But, there's a much easier way to handle it.
                          Get the deficit (not national debt) down, and put inflation up at 15%/year.
                          After a decade, we'd owe them zilch. That's one very unique thing about the
                          US debt. We owe dollars. We can, by one statement of the Fed, get rid of
                          the debt. It wouldn't matter if interest rates went up, fixed debt in
                          inflationary times is good for the borrower, not the lender.

                          But, if it got to the point of not paying the debt due to conflict, it would
                          probably get to WWIII. China's nukes aren't that good, so we'd probably
                          only lose LA, NY, Chicago, Houston, Washington, areas. I'd guess we'd get
                          by with less than 50 million killed.

                          But, I'd also guess that would set back the economy a good bit.

                          In general war is profitable to the victor if:

                          1) The homeland isn't hit.
                          2) They can make money off the conquered.

                          Traditionally, that's been empire and/or pillaging. The US was different in
                          that it gave money to Europe and then used it as a market for US goods.
                          That's why business taxes were 40% of the Federal budget in the '50s and
                          only a few percent now. In essence, we had foreign consumers pay for our
                          government.

                          Dan M.


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                        • Doug Pensinger
                          Dan wrote: Me: First, let me assure anyone reading this that I in no way advocate war as a solution for anything, I m just discussing the possible consequences
                          Message 12 of 19 , Nov 3, 2010
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                            Dan wrote:

                            Me: First, let me assure anyone reading this that I in no way advocate
                            war as a solution for anything, I'm just discussing the possible
                            consequences of the State's current situation.

                            > Sure, if they invaded Europe in '79 and Carter wasn't willing to start
                            > Armageddon.  But, the military was a drain on their GDP, rising to 45% of it
                            > at the end. Look at the war surrogate, the race to the moon.  They weren't
                            > close.  I think they grew faster than the US for about 5 years.  Planned
                            > economies are OK for a while, but tend to get caught up in artificial goals.
                            > China has been the exception, but that's because we are in an era of no real
                            > disruptive innovations....and China doesn't have to adapt.  Why Japan is in
                            > a funk now is interesting....socially they couldn't make the obvious
                            > decisions.

                            The point is that after the war they had a large empire and access to
                            abundant resources. Their subsequent mismanagement of those resources
                            does not negate the fact that they had the potential to prosper as a
                            result of the war.

                            > We'd probably repudiate it.  But, there's a much easier way to handle it.
                            > Get the deficit (not national debt) down, and put inflation up at 15%/year.
                            > After a decade, we'd owe them zilch.  That's one very unique thing about the
                            > US debt.  We owe dollars. We can, by one statement of the Fed, get rid of
                            > the debt.  It wouldn't matter if interest rates went up, fixed debt in
                            > inflationary times is good for the borrower, not the lender.

                            Do you really think that China would just let that happen?

                            > But, if it got to the point of not paying the debt due to conflict, it would
                            > probably get to WWIII.  China's nukes aren't that good, so we'd probably
                            > only lose LA, NY, Chicago, Houston, Washington, areas.  I'd guess we'd get
                            > by with less than 50 million killed.

                            I can imagine a scenario in which the likelihood that any of China's
                            nukes hit us is very low, but it would involve a preemptive strike of
                            some sort, defensive nukes, and a way of keeping other powers such as
                            Russia out of it.

                            Considering our power and ability to deliver it to their doorstep,
                            China has much more to fear from a nuclear conflict than we do, but
                            considering the rate at which they are catching up to us, this could
                            change.

                            There are other scenarios that lead to war as well. The people
                            running the PRK are lunatics and they have nukes, though I wouldn't be
                            surprised if they blow themselves up before they blow anyone else up.
                            Then there is the Middle Eastern bag of worms especially when Iran
                            joins the N club.

                            > But, I'd also guess that would set back the economy a good bit.

                            At some point, it's set back so far already that it doesn't matter
                            >
                            > In general war is profitable to the victor if:
                            >
                            > 1) The homeland isn't hit.
                            > 2) They can make money off the conquered.

                            Well, trillions of dollars of debt disappearing overnight might be one
                            source of gain. The fact that we'd have to ramp up our manufacturing
                            capability again would be another. Another thing is that the current
                            atmosphere of internal divisiveness would be ameliorated.

                            Again I make these arguments as devil's advocate; please don't infer
                            that I favor war as any kind of solution for our problems.

                            I do imagine that there _are_ people that would make these kinds of
                            arguments seriously.

                            Doug

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                          • Charlie Bell
                            ... ARRRRRGH!! it s unusual it s very rare OR it s unique . Unique can t take a qualifier except maybe possibly or almost and even then you need care.
                            Message 13 of 19 , Nov 4, 2010
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                              On 04/11/2010, at 8:32 AM, Dan Minette wrote:

                              >
                              >> It is quite possible that we falter over the next two years, sliding back
                              >> into depression. One of the most depressing figures is that the average
                              > GDP
                              >> growth rate for the last 30 years will result in unemployment increasing,
                              >> since we need 3%/year growth to tread water.
                              >
                              >> Not what I meant, sorry, but I was sticking with your definition of
                              >> black swan as a solution to economic malaise.
                              >
                              >> War, global conflict, would be the most drastic "solution".
                              >
                              > Well, the US did prosper from wars it has been in, but that's fairly unique.

                              ARRRRRGH!! "it's unusual" "it's very rare" OR "it's unique". Unique can't take a qualifier except maybe "possibly" or "almost" and even then you need care. Sorry, bugbear.

                              > Germany didn't, France didn't. The USSR didn't; the Cold War broke them.
                              > The UK lost its fortune in WWI and WWII.

                              We profited from lots of wars. Your point may be "countries can't prosper from wars repeatedly" which is a lesson the USA is about to learn.

                              >
                              > And, 'Nam hurt the US economy after a while. We couldn't afford "guns and
                              > butter" as the saying went at the time. Even those who argued it was a
                              > mangled but essential part of containment, it cost.

                              And the USA is in a far worse position now - a similar war that's unwinnable, and a far worse economic situation. Interesting, in a bad way.

                              And now with the mid-term results you're even worse off... Spiralling is the word, i think.

                              Charlie.
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                            • Charlie Bell
                              ... ...and judging by GDP figures, the USA is still fighting the Cold War. Charlie. _______________________________________________
                              Message 14 of 19 , Nov 4, 2010
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                                On 04/11/2010, at 2:15 PM, Dan Minette wrote:
                                >
                                > Sure, if they invaded Europe in '79 and Carter wasn't willing to start
                                > Armageddon. But, the military was a drain on their GDP, rising to 45% of it
                                > at the end.

                                ...and judging by GDP figures, the USA is still fighting the Cold War.

                                Charlie.
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                              • Pat Mathews
                                I m trying to imagine us as being in shape for any large enterprises in 1979, and I was there and 40 years old at the time. Everything we d started either in
                                Message 15 of 19 , Nov 4, 2010
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                                  I'm trying to imagine us as being in shape for any large enterprises in 1979, and I was there and 40 years old at the time. Everything we'd started either in the lush postwar years or in the wake of the Fourth Great Awakening had fizzled out, the young people were moving into middle age, the giants of yesteryear were beginning to die, the memory of the Vietnam fiasco colored our decisions as well as our budget, and we were way overdue for a course change.

                                  Naah -- never happen. Not on our part, anyway.


                                  http://idiotgrrl.livejournal.com/





                                  > Date: Wed, 3 Nov 2010 22:32:52 -0700
                                  > Subject: Re: Underwater mortgages and the economy
                                  > From: brighto@...
                                  > To: brin-l@...
                                  >
                                  > Dan wrote:
                                  >
                                  > Me: First, let me assure anyone reading this that I in no way advocate
                                  > war as a solution for anything, I'm just discussing the possible
                                  > consequences of the State's current situation.
                                  >
                                  > > Sure, if they invaded Europe in '79 and Carter wasn't willing to start
                                  > > Armageddon.  But, the military was a drain on their GDP, rising to 45% of it
                                  > > at the end. Look at the war surrogate, the race to the moon.  They weren't
                                  > > close.  I think they grew faster than the US for about 5 years.  Planned
                                  > > economies are OK for a while, but tend to get caught up in artificial goals.
                                  > > China has been the exception, but that's because we are in an era of no real
                                  > > disruptive innovations....and China doesn't have to adapt.  Why Japan is in
                                  > > a funk now is interesting....socially they couldn't make the obvious
                                  > > decisions.
                                  >
                                  > The point is that after the war they had a large empire and access to
                                  > abundant resources. Their subsequent mismanagement of those resources
                                  > does not negate the fact that they had the potential to prosper as a
                                  > result of the war.
                                  >
                                  > > We'd probably repudiate it.  But, there's a much easier way to handle it.
                                  > > Get the deficit (not national debt) down, and put inflation up at 15%/year.
                                  > > After a decade, we'd owe them zilch.  That's one very unique thing about the
                                  > > US debt.  We owe dollars. We can, by one statement of the Fed, get rid of
                                  > > the debt.  It wouldn't matter if interest rates went up, fixed debt in
                                  > > inflationary times is good for the borrower, not the lender.
                                  >
                                  > Do you really think that China would just let that happen?
                                  >
                                  > > But, if it got to the point of not paying the debt due to conflict, it would
                                  > > probably get to WWIII.  China's nukes aren't that good, so we'd probably
                                  > > only lose LA, NY, Chicago, Houston, Washington, areas.  I'd guess we'd get
                                  > > by with less than 50 million killed.
                                  >
                                  > I can imagine a scenario in which the likelihood that any of China's
                                  > nukes hit us is very low, but it would involve a preemptive strike of
                                  > some sort, defensive nukes, and a way of keeping other powers such as
                                  > Russia out of it.
                                  >
                                  > Considering our power and ability to deliver it to their doorstep,
                                  > China has much more to fear from a nuclear conflict than we do, but
                                  > considering the rate at which they are catching up to us, this could
                                  > change.
                                  >
                                  > There are other scenarios that lead to war as well. The people
                                  > running the PRK are lunatics and they have nukes, though I wouldn't be
                                  > surprised if they blow themselves up before they blow anyone else up.
                                  > Then there is the Middle Eastern bag of worms especially when Iran
                                  > joins the N club.
                                  >
                                  > > But, I'd also guess that would set back the economy a good bit.
                                  >
                                  > At some point, it's set back so far already that it doesn't matter
                                  > >
                                  > > In general war is profitable to the victor if:
                                  > >
                                  > > 1) The homeland isn't hit.
                                  > > 2) They can make money off the conquered.
                                  >
                                  > Well, trillions of dollars of debt disappearing overnight might be one
                                  > source of gain. The fact that we'd have to ramp up our manufacturing
                                  > capability again would be another. Another thing is that the current
                                  > atmosphere of internal divisiveness would be ameliorated.
                                  >
                                  > Again I make these arguments as devil's advocate; please don't infer
                                  > that I favor war as any kind of solution for our problems.
                                  >
                                  > I do imagine that there _are_ people that would make these kinds of
                                  > arguments seriously.
                                  >
                                  > Doug
                                  >
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                                • Dan Minette
                                  ... Hmmm, I looked it up, and military outlays under GWB as a % of GDP were less than they were under Carter, around 4% or a bit less. vs. Carter s 5%+. And
                                  Message 16 of 19 , Nov 4, 2010
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                                    Charlie wrote:

                                    >...and judging by GDP figures, the USA is still fighting the Cold War.

                                    Hmmm, I looked it up, and military outlays under GWB as a % of GDP were less
                                    than they were under Carter, around 4% or a bit less. vs. Carter's 5%+. And
                                    he said that the US was going to have to increase defense spending. Under
                                    Kennedy, they were about 10% of GDP, Reagan close to 6%. They've risen
                                    under Obama, but that's due to the slowdown in the GDP more than anything.

                                    So, only if you take the bottom of the Cold War spending, when anti-war
                                    Democrats were in the forefront, and this year under Obama, which is a
                                    special circumstance (defense spending rates are projected to fall to 3.6%
                                    in the budget), is that close to true.


                                    Dan M.


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                                  • Charlie Bell
                                    ... Now compare it to everyone else in the world... Charlie. _______________________________________________
                                    Message 17 of 19 , Nov 4, 2010
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                                      On 05/11/2010, at 5:32 AM, Dan Minette wrote:

                                      > Charlie wrote:
                                      >
                                      >> ...and judging by GDP figures, the USA is still fighting the Cold War.
                                      >
                                      > Hmmm, I looked it up, and military outlays under GWB as a % of GDP were less
                                      > than they were under Carter, around 4% or a bit less. vs. Carter's 5%+. And
                                      > he said that the US was going to have to increase defense spending. Under
                                      > Kennedy, they were about 10% of GDP, Reagan close to 6%. They've risen
                                      > under Obama, but that's due to the slowdown in the GDP more than anything.
                                      >
                                      > So, only if you take the bottom of the Cold War spending, when anti-war
                                      > Democrats were in the forefront, and this year under Obama, which is a
                                      > special circumstance (defense spending rates are projected to fall to 3.6%
                                      > in the budget), is that close to true.

                                      Now compare it to everyone else in the world...

                                      Charlie.
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                                    • Mitch
                                      I seriously doubt it, since the first part isn t what people assume about war in the first place. But the second; I d suggest the US is in this war for the
                                      Message 18 of 19 , Nov 4, 2010
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                                        I seriously doubt it, since the first part isn't what people assume about war in the first place.
                                        But the second; I'd suggest the US is in this war for the benefit of several corporations, and that they still can and will benefit. There was never any possibility these wars would benefit the country, anyway; it always has been about providing opportunity for Halliburton, et al.
                                        Such wars also will continue as long as government thinks they need to help corporations instead of citizens (as long as they think the two are synonymous).

                                        Mitch

                                        [from mePad]

                                        On Nov 4, 2010, at 1:44 AM, Charlie Bell <charlie@...> wrote:

                                        > We profited from lots of wars. Your point may be "countries can't prosper from wars repeatedly" which is a lesson the USA is about to learn.

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                                      • Dan Minette
                                        ... OK, what about the first Gulf War, what about the war in the Balkins? With all due respect, there were folks who were strongly against the war who wrote
                                        Message 19 of 19 , Nov 7, 2010
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                                          >But the second; I'd suggest the US is in this war for the benefit of
                                          >several corporations, and that they still can and will benefit. There was
                                          >never any possibility these wars would benefit the country, anyway; it
                                          >always has been about providing opportunity for Halliburton, et al.
                                          >Such wars also will continue as long as government thinks they need to help
                                          >corporations instead of citizens (as long as they think the two are
                                          >synonymous).

                                          OK, what about the first Gulf War, what about the war in the Balkins?

                                          With all due respect, there were folks who were strongly against the war who
                                          wrote about the decision making process. The mistakes made were obvious,
                                          and we don't have to come up with unfalsifiable conspiracy theories to
                                          explain them.

                                          The two biggest mistakes made were the idea that shock and awe would change
                                          the ground rules so much that we wouldn't have to worry about what happened
                                          after the war was won. It took about 1 year of incompetence so bad that Bin
                                          Laden couldn't have done better ruining the US's chances of rebuilding Iraq
                                          than Cheney and company. For example, having the former manager of a day
                                          care center running the Iraq economy?

                                          Second, they took the 3 sigma value of the likely risk Hussein presented and
                                          took it as the likely value. Any intelligence data that contradicted them
                                          was tossed.

                                          Still, the intelligence data had big error bars. Few, even in the command
                                          structure in Iraq, knew what was there. Interviews with Hussein stated that
                                          he lied to hide the fact that he didn't have WMD, because he thought the
                                          idea that he had WMD was the only thing stopping an Iranian invasion.

                                          No-one from any country's intelligence service thought that. I read
                                          extensively before the war, and that wasn't offered as an option. But
                                          still, anyone with experience in IR knew of the inherent problems in
                                          Afghanistan, and that COIN takes over a decade to succeed. After trying
                                          every other possibility, Bush fired Rumsfeld, put in Gates and let the man
                                          who wrote the book on COIN (literally) run the war. And, given what _the US
                                          military though was possible, Petreus (sp) performed near miracles to get
                                          Iraq to where it is today. They probably won't take advantage of the
                                          opportunity, but if he had control in '03, we'd have been spared a lot of
                                          grief.

                                          So, to mix adages, never postulate secret conspiracies to explain something
                                          when mere incompetence will do...and the arrogance of incompetence at that.

                                          Dan M.





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