The Week America’s Economy Almost Died

The terrific National Public Radio / Public Radio International team that brought you May’s fantastic story on the subprime meltdown, The Giant [Global] Pool of Money, have prepared a new show on the ongoing credit crisis to air this weekend on PRI’s This American Life.

It will be available for streaming or downloading shortly afterward, but in the meantime, they have produced a cut-down version of the story for NPR’s All Things Considered, which you can listen to now.

It’s just as gripping as the original. I can’t wait for the full-length version!

Listen to the short version here on NPR’s Planet Money site:

“The Week America’s Economy Almost Died”
All Things Considered
September 26, 2008

Skeptics Caucus! Congressman Brad Sherman!

So there I was, reading random news reports about the horrible bailout bill, and thinking bitter thoughts about our ‘representatives’ in Congress, apparently heedless of the calls and faxes that have been running anywhere from 100-to-1 to 300-to-1 against (“They’re running 50% ‘No’, and 50% ‘Hell No!'”, as Rep. Paul Kanjorski (D-PA) put it).

And then, in a piece dated today on how perhaps the votes aren’t there for passage after all, I see the name of my actual Congressman:

[Sen. Dennis] Kucinich [D-OH] attended a meeting of the “Skeptics Caucus,” organized by Rep. Brad Sherman (D-CA) and consisting of House Democrats skeptical of the bailout effort. The meeting’s speakers included economic professor James Galbraith of the University of Texas and former FDIC chairman William Isaac. Sherman called the legislation a Bush administration “power grab” and a handout to Wall Street. “This is greatest shift of power to the imperial presidency and the greatest shift of wealth to a still wealthy Wall Street that anyone could imagine,” Sherman said.

“None of this has been subject to a critical analysis,” charged Rep. Kucinich. “We haven’t had access to the books to the people who are claiming they are going broke.”

“They rushed this Congress into the Iraq resolution and look what happened,” he added, comparing the rushed tone behind the bailout effort with the push to invade Iraq, “Catastrophe for this nation as well as for the people of Iraq.”

Yes, finally! Go, House! Represent!

Read the full article on The Raw Story:
“Kucinich says bailout doesn’t have the votes”
September 28, 2008

Google Publicly Backs Gay Marriage

What a good company! Makes our family want to buy more of their stock, or do a search, or something:

…while there are many objections to this proposition [banning gay marriage] — further government encroachment on personal lives, ambiguously written text — it is the chilling and discriminatory effect of the proposition on many of our employees that brings Google to publicly oppose Proposition 8. While we respect the strongly-held beliefs that people have on both sides of this argument, we see this fundamentally as an issue of equality. We hope that California voters will vote no on Proposition 8 — we should not eliminate anyone’s fundamental rights, whatever their sexuality, to marry the person they love.

Read the full Google announcement:
“Our position on California’s No on 8 campaign”
September 26, 2008

Mortgages are less than half the problem

From a Weiss Research white paper on the financial crisis:

Although it is true that the current debt crisis in America originated in the mortgage market, it is not accurate to say that the root of the crisis is strictly in this one sector. Rather, the debt crisis has multiple and varied roots, with excessive risk-taking in credit cards, auto loans and virtually every other form of private-sector debt.

There are currently $14.8 trillion in residential and commercial mortgages in America. But beyond mortgages, there is another $20.4 trillion in consumer and corporate debt. This means that mortgages represent only 42% of the private-sector debt problem in America.

Holy hell. And those auto loans and credit-card debt are underwater from the get-go.

Read the whole white paper from Weiss Research:
“Proposed $700 Billion Bailout Is Too Little, Too Late to End the Debt Crisis; Too Much, Too Soon for the U.S. Bond Market”
September 24, 2008

The View From Over There

A global perspective from Jonathan Freedland, in The Guardian, on our horrible election:

If Americans choose McCain, they will be turning their back on the rest of the world, choosing to show us four more years of the Bush-Cheney finger. And I predict a deeply unpleasant shift.

Until now, anti-Americanism has been exaggerated and much misunderstood: outside a leftist hardcore, it has mostly been anti-Bushism, opposition to this specific administration. But if McCain wins in November, that might well change. Suddenly Europeans and others will conclude that their dispute is with not only one ruling clique, but Americans themselves. For it will have been the American people, not the politicians, who will have passed up a once-in-a-generation chance for a fresh start – a fresh start the world is yearning for.

And the manner of that decision will matter, too. If it is deemed to have been about race – that Obama was rejected because of his colour – the world’s verdict will be harsh. In that circumstance, Slate’s Jacob Weisberg wrote recently, international opinion would conclude that “the United States had its day, but in the end couldn’t put its own self-interest ahead of its crazy irrationality over race”.

Even if it’s not ethnic prejudice, but some other aspect of the culture wars, that proves decisive, the point still holds. For America to make a decision as grave as this one – while the planet boils and with the US fighting two wars – on the trivial basis that a hockey mom is likable and seems down to earth, would be to convey a lack of seriousness, a fleeing from reality, that does indeed suggest a nation in, to quote Weisberg, “historical decline”. Let’s not forget, McCain’s campaign manager boasts that this election is “not about the issues.”

I would remind you all that the Obama “Donate!” link beckons on the right-hand column.

Read the Full Column in The Guardian
“The world’s verdict will be harsh if the US rejects the man it yearns for”

Worst. Housing. Ever.

For those thinking that a bottom in California housing is near, and that buying now is urgent, I’ve got a message:

“Not so much.”

Were the Kuznets Cycle to confirm to past patterns, real median CA house prices will not again return to the ’04-’06 levels for another 15-20 yrs., if then, given the longer-term demographic profile, normalized lending standards, and likely slower real GDP growth trend (2% vs. 3-3.5%).

Seen another way, nominal SoCal median house prices will not bottom until prices return to the ’99-’01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter.

Click on the image for a larger, clearer version:
Southern California Housing Prices

Read the Full Story at Mish’s Global Economic Trend Analysis:
“When Will Southern California Home Prices Bottom?”
September 1, 2008