Paul Krugman: A grim morning

[LSK]

October 3, 2008, 8:42 am
A grim morning

Double plus ungood news on multiple fronts this morning. The credit crunch is getting worse: LIBOR jumped again, the TED spread is at a new record. Bad news on employment: payrolls down 159,000, average work week down, official unemployment rate flat at 6.1 percent but broad measure (U6) up from 10.7 to 11.

We are going over the edge.

http://krugman.blogs.nytimes.com/2008/10/03/a-grim-morning

[redqueen]

1. Wow... he mentioned the real unemployment rate.

Bright side.

[tandot]

2. And Arnold asked Paulson for a $7 Billion federal emergency loan

or the State of California can't run their day-to-day operations or pay their employees.

I'll be out of a job in January. At least I have some time to prepare.

[LSK]

3. earlier this week the state of Massachusetts could not get all the money they needed

[nadinbrzezinski]

6. Cali has been in the hole for years now

it is not pretty

[tandot]

8. they already passed the budget late and couldn't pay nursing homes

and other companies and organizations taking care of the elderly and/or disabled. Some of those had to take out loans just so they can continue to care of those people.

[nadinbrzezinski]

5. I knew California was next....

Though it is partly from our own doing. We need a tax increase, I know I will get shot, but that is the truth

[leveymg]

4. Oh, shit.

Is this 1929 or 1932, redux? The beginning of the end, or the end of the beginning?

[ProfessorGAC]

7. We're Not Going Over The Edge

As bad as things may be, and as little respect i have for any economist who doesn't think the monetary and fiscal policies of the last 7.5 years are directly responsible for it, things were actually more dire in the mid and late 70's. That was a far worse recessionary economy, inflation was worse, and the unadjusted UE rates were at least as bad, despite the fact that we still had most of our mfg. jobs in the U.S.

It may be bad, but we're not going over the falls.
The Professor

[LSK]

11. in the 70s we still made things and did not have anything close to this debt

[HamdenRice]

13. The only thing that was better was the "wage price spiral"

Inflation in the late 60s and early 70s at least had the benefit of being caused by a so called wage price spiral, with strong unions demanding wage increases to match price increases.

This time, wages have been stagnant for years, prices are increasing, and there is almost no prospect that wages will rise with these price increases. That means inflation creates real impoverishment of family budgets, whereas I recall the 70s inflation being experienced more as an inconvenience to wage earners and retailers, but a more devastating blow to investors.

That's what scares me about this one, even though the 70s were indeed very bad.

[ShortnFiery]

16. We're going DOWN. Now, without manufacturing base and much of this bail out OVERSEAS,

America is going to tank. Thanks Congress. :grr:

[Skidmore]

17. Well, are you going to be one of those who go "Glub, glub" and

belly up like a whale? Or how about we all start standing up and fighting for our economic wellbeing as a nation? And, I don't mean through political channels either. Or Wall Street. Or investment firms.

In our area, small farmers got sick of dealing with the greater market and a group of them have formed a partnership with a nearby Amish community. They are converting their land to organic farming, and are really excited about the changes they are making. Right now, they are reconditioning the soil and it will be a couple of years before some of them can get their first real crop going. We were out at one of the farms last night and they were testing out the equipment purchased for this venture. Meanwhile, our little town, the citizens of which needed to travel a minimum of 20 miles in any given direction to purchase a gallon of milk, has been nurturing a young couple's startup grocery store which specializes in organic and locally grown products. It had a shaky first year a couple of years ago and was only open 3 days a week. Now it is open 5 days a week, with some early evening hours. The product line has increased and they have formed working relationships with all sorts of local gardeners and they obtain dairy products from the organic dairy operation of the Amish. The result is that I can buy products that have not been treated with insectides in soil not treated with herbicides for prices cheaper now than those of the grocers in the towns. Our costs are reduced because we do not have to pay for much to be shipped in and we don't have to travel longer distances to get the basics.

I suggest you drop by the Frugal/Thrifty Living Forum and read through some of the threads. Simplifying the way you live is a good start to reorganizing what you think you need in terms of finances.

Quit mourning and relying on these corrupt systems to bail you out too. We can rejuvenate our land, but it will take rejuvenating our souls first. Our family collectively has never earned more that $50K a year and now we are down considerably in income. As distressing as I find this current economic situation, I know that we will be alright because we have skills we can develop and others to be learned. And we have the most important ingredient of all--a community of likeminded people who are willing to give of themselves and not leave anyone behind. If enough communities band together, it will ripple out. I believe this firmly. I also believe that this nation can be built anew amidst the wreckage of the old ways. I believe that this is where we are headed. There is much work to be done and no time for slacking.

[dixiegrrrrl]

21. I saw a newspaper story about the farms, Skidmore.

Glad it was getting publicity.
And you are correct.
Working on a community level is good.
Been there, done that.

[Hannah Bell]

22. no, it wasn't. wages were more or less keeping up.

the reagan recession was worse than the 70s. The 70s were decent times for most people: the rich just didn't like the high wages. In the 70's, our main street was still full; in the reagan recession, it died, & never came back.

[nadinbrzezinski]

9. But, but, but there is no crisis now

really

:sarcasm:

Link to the LIBOR article Krugman linked too... 5.3% LIBOR for Euros, an all time high

not good

4.3% for the Dollar (which is less valuable)

I know, we are talking chinese

[Alcibiades]

The Dow is up 189 points

Surely we must trust the wisdom of the marketplace. There's no crisis, so no need for a bailout.

[Alcibiades]

10. One reason why we shouldn't do the bailout

It could well be that all the bailout does is to postpone the collapse until after Obama is in office. Wall Street gets $700 billion they would not have had, and we get the blame. If the collapse is allowed to happen naturally, then the blame will fall where it should: on Bush, McCain, and the Republicans in charge of every branch of government except Congress.

Oddly, conservative economic theory also suggests that the best course of action in a crisis like this one is for government to do nothing.

[LSK]

12. I'd rather have the crash hold off and happen with smart people in charge

Politics be damned, some of us like to eat.

[nadinbrzezinski]

14. Oddly you are advocating Hoover economics

Which was to do nothing.

[bemildred]

18. Hoover had 4 years to do nothing.

This is a matter of a few months. We should let the new Congress and new President deal with the mess, not it's perpetraitors.

[Alcibiades]

19. Giving $700 billion to Wall Street and doing nothing

are not the same thing. Pointing out the incongruity between conservative economic theory and Bush's economic practice is not the same thing as advocating either.

If we're worried about credit, we could make that money available to financial institutions without bailing out Wall Street. There are lots of things we could do that don't entail giving this administration a blank check in its final hours.

[Imagevision]

15. payrolls down 159,000 - Hewlett-Packard letting 24,000+ in January

[MindMatter]

20. This is the price we are paying for the "Reagan Revolution"

We damn well better win this election because this is the last stop before officially becoming a banana republic.

25 years of deficit spending.
25 years of exporting our best jobs.
25 years of destroying our public education system.
25 years of shoving credit down every consumer's throat.
25 years of unbridled corporate gangsterism.
25 years of obscene military spending.
and 10 year becoming the world's greatest debtor nation.

That is what the Reagan fascism has delivered to America.