Why I Adore Gail Collins

http://www.nytimes.com/2008/11/22/opinion/22collins.html

What a lovely idea. Have Cheney resign, followed by Bush (because we're desperate, but not crazy), then Pelosi can be (briefly) the first woman president implementing the policies of the President-elect.

Plus, what fun for constitutional law folk to chew on in future years as to whether it was legal for her to act as President and Speaker at the same time.

Let me be _utterly_ clear here: I'm not being sarcastic. I _love_ this idea, and I've been loving Collins' columns for a few months now.

best website EVER! www.lolfed.com

Seriously.

Or maybe, srsly.

lots of bank failures and one cool chart

http://dshort.com/charts/bears/four-bears-large.gif

Downey finally went under as did PFF. All of this thanks to Calculated Risk.

Apparently there are a lot of people (a) forecasting unemployment to break past 8% (nationwide -- it's that bad already in California) and (b) the recovery isn't going to start until the end of next year or later.

That chart is actually really creepy.

ETA: Want to know where the TARP money has gone?

http://www.treas.gov/initiatives/eesa/transactions.shtml

What's really scary is how many individual financial houses have gotten $25 billion already -- and in at least one case, that's not nearly enough (Citi). Poor Detroit. Three companies can't even get collectively what more than three companies on Wall Street got individually.

At what point are we allowed to start discussing doing violence to the persons of the executives who got us into this mess?

a comment or two on deflation

First off, we made the mistake of walking through Sears a couple days ago when we were wandering through the mall. There, we saw fleecy Levi's jeans jackets, an item that is memorable enough from both R.'s and my young adulthood that we remember precisely what we paid for ours. On sale. And let's just say that a solid two decades later, these jackets were regularly priced considerably less, and on sale even lower.

Hunh.

The last few days has seen a massive flight to quality, and the Fed seems to be engaging in a lot of talk about whether to cut further, which seems like a pointless waste of time because we all learned a long time ago that cutting to zero is inevitable in this situation. AND it won't do you any good. Japan (which is where we learned about this) went further, and engaged in banking innovations which amounted to negative interest rates on loaned money -- basically, if you were willing to borrow money, they'd pay you to take it.

So why wouldn't you do that?

Well, in the ordinary course of economic life, money is getting worth less every day. This is why everyone urges the retail investor to stay fully invested; staying in cash just guarantees that you lose money at the rate of inflation. But in a deflationary environment, cash is king. You may have had $5 yesterday, and $5 today, but if GM stock cost $50/share yesterday, and $4/share today, you'd rather have cash than GM shares (especially if GM is on its way to zero, which under that scenario -- and in reality -- appears to be true).

Here's my question: what are _we_ going to do to convince people to borrow money? Right now, we're trying to convince lenders to loan money, on the assumption that people want to borrow. In the aggregate, however, people are pretty damn smart. Around the time we get the lenders to loan, we're going to discover that everyone has wised up and no longer wants to borrow. Well, except for GM.

ETA: Did that make sense? Here's another way to think about it. Would you borrow a dollar, if you knew that it would be harder to pay that dollar back tomorrow -- and harder still every day thereafter -- than it would be to pay that dollar back today? Borrowing a dollar when it's easier to pay it back tomorrow -- and practically effortless a decade hence -- is one thing. Once the population at large internalizes deflation, it's all over.