Chicagoist: Don't Say the R-Word

ChG

Wed, 23 Jan 2008 11:18:03 -0600

I'm confused. Are you advocating against reason? Quality of life is highly subjective.

Navin

Wed, 23 Jan 2008 10:14:33 -0600

lol, And yet European countries (and Canada) always kick the U.S.'s ass in standard of living/quality of life. So much for 'reason'.

ChG

Wed, 23 Jan 2008 03:05:54 -0600

whymustiregister, you are a much needed voice of reason amidst the hysteria. By Neoconservative, Navin, I think you really mean Conservative, but a more appropriate term is probably Classical Liberal. The problem of the banlieues, Yoknapa, has much to do with France's over-regulation of the business practices, which makes absorbing immigrants into the job market very difficult. And it is not just France but, to various degrees often corresponding to proportion of foreign-born residents, all of Western Europe. Also, the unemployment rate in Germany has been and continues to be embarrassingly high for a country of that economic stature.

irishman1

Tue, 22 Jan 2008 16:06:16 -0600

Hi Julene, I'm sorry to be the one that keeps saying this but you are wrong. Your first paragraph: Companies announce their earnings and growth and it is public information. Nobody can act on that information until it becomes public (this is regulated). Your second paragraph: Couple of things...Mutual Funds are based on fundamental financial philosophies, and the Financial Planners who run Mutual Funds cannot just "buy and sell" at will. If you have a large-cap Mutual Fund, they cannot buy small-cap companies into that fund...you must put large-cap companies in a large-cap Mutual Fund and small-cap companies in the Small Cap Mutual Fund (for example). If you do not like the philosopy of the Mutual Fund you are in, then switch it to a philosophy you want. (Once again, this is regulated). Also, if you want to know what analysts or institutional investors are thinking about, look for it...it is public information. What does the Futures Market look like? Are the analysts revising their estimates? Up or down? There are a dozen indicators out there that will point you on which way the market is headed. Take today for instance...everyone KNEW the market would take a hit today and we knew why. No hidden secrets, no conspiracy, this is all public information. I don't mean to go back and forth on such a mundane subject as a definition...but this is not the 1920's anymore. There is public information and there are regulations professionals must abide by.

YoknapatawphaTourismBoard

Tue, 22 Jan 2008 15:59:44 -0600

Julene, I apologize for my harsh tone. It wasn't helpful at all. The picture you paint, though, that financial analysts have invented a definition that allows them dump all the bad investments before the consumer can do so, just doesn't work. The institutions you mention take on investments in pretty much the same way any project at any company happens: a team is assembled, reports are drawn up, people surf the internet, miss deadlines, and eventually a plan is executed. That plan includes, in advance, the conditions for ending said plan. Most "panic selling" isn't so panicked (though that happens, too, I'm sure), but the result of the plan itself ("sell if it drops > 20%" -> more drop). The only reason to sell in this environment is if you need that income, as an institution, before the economy will recover. But banks don't do that, they go to sugar daddies that will make heaps of money when there is a recovery. Aren't we just nitpicking, though? I think you and I are on the same (or similar) side of this argument, making my 'cartoon' comment even dumber and cartoonish itself.

Julene McCoy

Tue, 22 Jan 2008 15:31:47 -0600

Exactly Irishman - you can't by definition ever know if you are in a recession until you are way into one - which said undefinition only allows those who actually control the capital to know before any of us. And to YTB: 85% of investments in the US are held by institutions and financial analysts have little say in how those investments are structured. Did I say that financial analysts structure investments? No. But, I'd bet that all those financial analysts at Bank of America, Merrill Lynch and TIAA-CREF and whoever else has my mutual funds actually do have something to do with how those funds are invested. Thanks for calling me names, though. That's really helpful in making sure that I take your knowledge seriously.

whymustiregister

Tue, 22 Jan 2008 15:21:39 -0600

And here comes the Navin's demand for "strict regulation". Can I use "Nanny Stater" to counter the "neocon" slur? So we get a situation like Europe where few people own their homes? Is that what you want? A mandated 40% down payment like in Germany? I don't know about you, but I wouldn't own my home under such a scheme, and I'm a 2 income professional family. All the expansion of home ownership that happened in the last decade would be thrown sharply into reverse. There ain't a free lunch. There are tradeoffs. We trade easy credit for some number of bad loans. We trade precarious employment for high wages. We trade a minimally regulated economy for high growth. Some loans were the result of crimes, but most were just stupidity. Those people who bet on endless cheap credit were grownups (and so were the bankers who offered the loans) and they are going to suffer the consequences of bad decisions. The point here is that even if the situation isn't great [and it is nowhere near as bad as the sturm und drang here indicates], the alternatives are far, far worse. The call for regulation is a cure worse than the disease.

YoknapatawphaTourismBoard

Tue, 22 Jan 2008 14:51:23 -0600

If you want to see how well that works in practice, there are some Parisian suburbs you might want to visit. The French may have a lot of problems from their poor economic management, but the banlieues' problems have a hell of a lot to do with racism.

YoknapatawphaTourismBoard

Tue, 22 Jan 2008 14:37:18 -0600

Community advocates have been complaining about predatory lending for a long time, unfortunately in a system where moneyed lobbyists are only given a voice neither party was doing much (I belong to neither). Anyway it seems that we've all forgotten about the GOP's "Contract With America". As for me using 'Neocon', it's referring to "Whymustiregister" who's always using neocon/libertarian bumpersticker slogans like "Naysayers". Tons of people have been warning of corporate and personal financial responsibility for years now, it's not a "Now" thing, they just got called "Naysayers". Very very true and a number of organizations in Chicago were pursuing avenues to have predatory lenders prosecuted. But the bulk of people defaulting weren't victims of predatory lending (or deception), but willingly signed ARMs assuming that they would be able to refinance using the accumulated equity (including increased value). The adjustment (in and of itself) isn't the thing that's screwing these people over, but the fact that there is no credit to extend for the refinancing. This is worse than the decline in value (though it's part of the motivation for the declining valuations), because the banks have screwed themselves and will continue to restrict lending until they can attach hard numbers to the business called mortgage lending again. (Yes, they screwed the customers, too, and that's what matters but that wasn't the idea... just like the customer they assumed that cheap credit was without end.) Until then, it's a vicious cycle. I'll defer to you on whyimustregister.

Navin

Tue, 22 Jan 2008 14:36:08 -0600

If you want to see how well that works in practice, there are some Parisian suburbs you might want to visit. Yeah and make sure you ignore Scandanavia and just about every other country in Western Europe. For the millions of U.S. citizens who've lost their homes: No worries the bloated corpse of Milton Friedman will rise from the dead and help you come up with your bill money.

whymustiregister

Tue, 22 Jan 2008 14:26:37 -0600

I never said that the fact that idiots signed for foolish loans had anything to do with excessive government regulation. My contention is that most of the time interfering in the economy causes more harm than good. Kevin, I know you believe that the government, if properly headed by trained experts like yourself and given enough power will fix anything. Soon the golden day will dawn when it will just legislate wealth and prosperity for all. If you want to see how well that works in practice, there are some Parisian suburbs you might want to visit.

Navin

Tue, 22 Jan 2008 14:18:38 -0600

But that violates Modern American Liberal Tenet 16: "everything sucks and is always getting worse [ despite all evidence to the contrary ]and the only hope is for the Government to step in and save us [despite its track record]." The government should not bail them out but the industry should be strictly regulated to stop these disasters from happening in the first place. Maybe you can go tell the global markets today about all the evidence that proves the economy is so great now. So much for letting the market sort it out...

Navin

Tue, 22 Jan 2008 14:16:41 -0600

Liberals were thrilled that home ownership among the poor and minorities were sky rocketing and few were calling for effective regulation. Community advocates have been complaining about predatory lending for a long time, unfortunately in a system where moneyed lobbyists are only given a voice neither party was doing much (I belong to neither). Anyway it seems that we've all forgotten about the GOP's "Contract With America". As for me using 'Neocon', it's referring to "Whymustiregister" who's always using neocon/libertarian bumpersticker slogans like "Naysayers". Tons of people have been warning of corporate and personal financial responsibility for years now, it's not a "Now" thing, they just got called "Naysayers".

irishman1

Tue, 22 Jan 2008 14:14:44 -0600

Hi Julene, You said, "I realize it goes back to the undefinition of recession" That is wrong...if you study Economics or study the market, there IS a definition of what a recession is. A recession is six consecutive months of negative economic growth (or two quarters). At most, December 2007 would be our first month, so we wouldn't know until sometime in June 2008 if, by the end of May 2008, we'd been in a decline for six straight months.

Navin

Tue, 22 Jan 2008 14:14:42 -0600

YoknapatawphaTourismBoard

Tue, 22 Jan 2008 14:08:50 -0600

Which is honestly, the most annoying thing ever - I realize it goes back to the undefinition of recession, but all that undefinition does is allow all those financial analysts to sell their stocks off and still have some money before things get too bad. Seriously, your understanding of how markets work is like a cartoon. 85% of investments in the US are held by institutions and financial analysts have little say in how those investments are structured. I agree with the first half of your sentiment, that recognizing that you're in a recession is like being diagnosed with the flu... the doctor is telling you why you feel like shit, but you already feel like shit and have been feeling that way for some time. Putting a word to it doesn't stop the aches.

E

Tue, 22 Jan 2008 14:02:14 -0600

We better get building on the Olympic Village...

Julene McCoy

Tue, 22 Jan 2008 13:59:10 -0600

The perception of a recession compared to the reality of a recession... Which is honestly, the most annoying thing ever - I realize it goes back to the undefinition of recession, but all that undefinition does is allow all those financial analysts to sell their stocks off and still have some money before things get too bad.

Kevin Robinson

Tue, 22 Jan 2008 13:53:14 -0600

But that violates Modern American Liberal Tenet 16: "everything sucks and is always getting worse [ despite all evidence to the contrary ]and the only hope is for the Government to step in and save us [despite its track record]." Right, since the subprime lending crisis has everything to do with excessive government regulation. Nice straw man, though. You're almost as good at knocking them down as Bill Maher.

YoknapatawphaTourismBoard

Tue, 22 Jan 2008 13:50:16 -0600

Never mind that the foreclosure rate has tripled or that lenders have lost $125 billion and many have filed for bankruptcy. We're now reaping the rewards of failed neocon/libertarian philosophy and massive corporate influence. I imagine those cheap houses will remain empty. I can still remember conservative free-market worshipers making fun of the naysayers who warned of the housing bubble waaay back. Lol whoops! They called people who pushed for regulation and transparency naysayers too while the lobbyists of this former 6.6 billion dollar industry were more successful pushing in the opposite direction. Ok, setting aside that there is nothing "neocon" in any of this, I think you're missing the point. Namely that everyone (conservative, liberal, and otherwise) kept repeating that home prices never decline over the long term and even in the short term only regionally. Liberals were thrilled that home ownership among the poor and minorities were sky rocketing and few were calling for effective regulation. (Moreover, the construction boom was helping support many lower middle class blue collar workers, a core constituency.) So, really, no one wanted to regulate it, not just the libertarians and free-market worshippers. Point me to a piece of proposed legislation that indicates otherwise and I'll stand corrected. Now everyone wants to play the blame game, but a year ago, when your siblings or parents or friends were taking out that ARM, what did you say to them?

irishman1

Tue, 22 Jan 2008 13:48:21 -0600

Hi Julene, The way I read the article, not so much the one paragraph, is that the press, sometimes, is irresponsible when talking about issues such as a recession. Further, consumers read this…consumers who all the while are not following the day to day activities of the market or the economy…and consumers jump on the “the sky is falling the sky is falling” type of mentality. The perception of a recession compared to the reality of a recession is what I think he was addressing. There are worries, not everything is fine and there is work to be done. But the sky is not falling either. Hi Spook, You are just the cutest. :-) Not quite a Bush guy here, but he does make me laugh. As I mentioned in the first post, this was an article I found that may shed more light on this subject. The more information people have about the Economy, how it works, how the market works, should allow people to take a more sophisticated take on the issues. Not once did I sweep anything under the rug. Interestingly enough, this was an article talking about an upcoming recession. The issues you raised in your post do not need a recession to happen for them to be real. The issues you raised are there even in the most robust times of our Economic History.

Spook

Tue, 22 Jan 2008 13:35:44 -0600

Irishman1 I was wondering if you could get me some tickets for the White House Tour. As as part of the P.R. cog for Bush, I'm sure you have access to those perks. And I know you aint into no “hand outs” so I’ll trade you a broom, so you can continue to sweep trivial facts under the rug. Such as both of our immense foreign and trade deficits, and our growing hidden unemployment rate, which includes, under employment and workers who have dropped out of the work force due to growing structural unemployment.

whymustiregister

Tue, 22 Jan 2008 13:33:45 -0600

Do you even put any thought into this or is it all just knee jerk reaction? The houses won't remain empty. Plenty of people will live in the unwanted condos as renters reaping the benefits of developers' foolishness. I know two families who live in "nice stainless steel and granite" digs because the developers couldn't sell them and ended up renting them out. There are winners and losers here, and the renters or property are winning over the owners, for now. But that violates Modern American Liberal Tenet 16: "everything sucks and is always getting worse [ despite all evidence to the contrary ]and the only hope is for the Government to step in and save us [despite its track record]."

Julene McCoy

Tue, 22 Jan 2008 13:27:35 -0600

What's his point? That things will still be sold? Of course, they will be. No worries then -everything's fine. Nothing to see here. Keep shopping.

Navin

Tue, 22 Jan 2008 13:16:31 -0600

1) you will never, ever read good economic news. Right now we are in a "housing crisis" because housing is becoming too cheap. Funny, I always figured a "housing crisis" is when people can't find housing cheaply enough. Never mind that the foreclosure rate has tripled or that lenders have lost $125 billion and many have filed for bankruptcy. We're now reaping the rewards of failed neocon/libertarian philosophy and massive corporate influence. I imagine those cheap houses will remain empty. I can still remember conservative free-market worshipers making fun of the naysayers who warned of the housing bubble waaay back. Lol whoops! They called people who pushed for regulation and transparency naysayers too while the lobbyists of this former 6.6 billion dollar industry were more successful pushing in the opposite direction.

irishman1

Tue, 22 Jan 2008 13:04:48 -0600

Hi Julene, Fair enough. I'll be sure to forward your response to the author of the financial magazine I was reading. If that was your response then I think the point he was making flew way over your head. No big deal.

Stephen

Tue, 22 Jan 2008 13:04:41 -0600

Right now we are in a "housing crisis" because housing is becoming too cheap. Funny, I always figured a "housing crisis" is when people can't find housing cheaply enough. You're oversimplifying the issue. The crisis is the number of foreclosures coming as a result of borrowers (buyers) no longer able to afford their ARM payments, and as a result not even being able to afford more reasonably priced real estate.

Julene McCoy

Tue, 22 Jan 2008 12:58:03 -0600

Just because you "need" something doesn't mean you will have the money to purchase it. In a recession, more than 10 percent of workers who want to work will not be employed. Even in a recession, some businesses will not make a profit. Even in a recession in this era, more than 10 million men and women will need cars and trucks, but be unable to afford them. Many millions will need new homes, but won't be able to get loans. Tens of millions will need retirement investment products and life insurance, but will have to go without. In the United States, even in a recession, there are plenty of people with money to spend, but they won't because it isn't financially prudent.

matty

Tue, 22 Jan 2008 12:46:19 -0600

There will always be a market for garbage.

whymustiregister

Tue, 22 Jan 2008 12:41:27 -0600

Two important caveats: 1) you will never, ever read good economic news. Right now we are in a "housing crisis" because housing is becoming too cheap. Funny, I always figured a "housing crisis" is when people can't find housing cheaply enough. 2) doomsaying is without consequences. Be totally wrong about dire consequences and you will be feted and lauded. Predict good times and you will be mocked and derided when your prediction is late or off by 10%.

Kevin Robinson

Tue, 22 Jan 2008 12:27:58 -0600

Even in a recession in this era, more than 10 million men and women will need cars and trucks. Many millions will need new homes. Tens of millions will need retirement investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend. The concern isn't whether there will be money to spend. There will be. The concern is who will be spending the money. How many plants have Ford and GM closed? You can buy all the millions of cars you want. If they aren't manufactured in the US, it really doesn't matter, as far as economic stimulus goes. As for "irrational exuberance", I hear the mergers and acquisitions market is the next hot bubble.

Hugh G Rection

Tue, 22 Jan 2008 11:42:55 -0600

"There's reason to believe that the real estate market will again stabilize in 2008" Wondering how this optimism will comfort those who have lost homes already? Should we really look forward to more "irrational exuberance"? I would argue you are missing the point of the "crisis" and that is, a significant part of the market was/is, for all intents and purposes, fake. Lots of shiny condos downtown are indeed thrilling. It's important to consider when those buildings were planned and what the market speculation was at the time. My guess is the mortgage vultures have already begun to circle many of those units. In other news, dot com stocks are at an all-time high!

irishman1

Tue, 22 Jan 2008 11:35:39 -0600

Here are some quick stats I read: A recession is six consecutive months of negative economic growth. At most, December 2007 would be our first month, so we wouldn't know until sometime in June 2008 if, by the end of May 2008, we'd been in a decline for six straight months. So no matter what anyone tells you, we can't know if we're in a recession yet. There have been 10 recessions in the last 63 years. The average length of these downturns has been about 10 months. The average decline in economic activity from peak to trough was about 2.5 percent. No decline has been worse than about 3.7 percent. In the past 25 years, there have only been 2 recessions, which is an extremely good record. The two recessions -- in the early 1990s and the 2000-2001 correction -- have been extremely brief. The really severe recessions of the postwar era have been engineered by the Fed to fight inflation -- in the early 1970s and early '80s. Even in a recession, more than 90 percent of workers who want to work will be employed. Even in a recession, most businesses will make a profit. Even in a recession in this era, more than 10 million men and women will need cars and trucks. Many millions will need new homes. Tens of millions will need retirement investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend.

Thunderbelly

Tue, 22 Jan 2008 11:12:19 -0600

This lucrative neighborhood appears to actually be Ukranian Village, and not Wicker Park at all. Some would more specifically call it the East Village.