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It still seems unfathomable to be that in most of the rest of the country mortgage payments could possibly be less than rents. Can you show me some examples?

On average they aren't. Mortgage payments are higher than rents on average in the US.

This is historically odd though. Traditionally rents and mortgage payments have been about the same. They started diverging in the late 1990s. They've converged a bit since the housing crash, but I don't know that they ever got back to parity.

Link showing the average price to rent ratio: http://www.calculatedriskblog....

That's certainly been true for the bad years of the recession, but is becoming less and less true ... the current administration / congress have shrunk the deficit faster than at any time in history.

So, even if we don't count the off-budget wars and so-called non-military-defense-related spending, yes, the military budget IS in fact sizable compared to our deficits going forward.

Considering I think we could cut 50 - 75% of our military budget and STILL be spending more than any other country (certainly it would be the most PER CAPITA), I think most people in command of the numbers and a bit of logic would agree that cutting military spending to reduce the deficit is actually a GREAT strategy. Even if we call "the deficit" and "military spending" as EVEN for 2014 (they won't be; the deficit will most likely be considerably smaller), i think getting a 50-75% reduction in the deficit by simply NOT trying to be the world's police would be a GOOD thing.

Of course, this only applies to those ACTUALLY interested in reducing deficits, and not just posturing politically while they really try to INCREASE deficit spending on the industries THEY believe are most in need of government handouts (not hard to figure out this describes the vast majority of our politicians who self-style themselves to be "fiscal conservatives" ... )

Speaking of reading graphs, we have this one. It projects "percent job losses relative to peak employment month" for all of the US recessions since the end of the Second World War.

Without exception, all of the job recoveries before 1981 lasted less than two years till they met or exceeded the earlier peak employment and all the job recoveries after 1981 took longer than two years. Further, each subsequent recession from 1981 on, took longer to recover from than the previous one with the current one being the longest of all. The US still hasn't recovered to old employment levels from the beginning of the recession in late 2008 (glancing at job growth data, I think the threshold will be achieved shortly after March 2014).

That's why I continue to claim that the US hasn't recovered from the last recession and why it could have recovered, if it weren't for the current policies in place.

Now sure, we can continue to claim that this recession was "worse than expected" or we recognize that employers were punished by regulation for hiring more workers (and not just in the US!).
br. Obamacare for example forces employers of more than 50 full-time (here only 30 hours a week) workers to pay at least $2k per person over 30 full-time employees. For a 40 hour a week person, that's $1 per hour surcharge on top of everything else. That's pretty darn big for someone near the minimum wage level.

The same is happening in the US, before the financial crisis the employment-population ratio was about 63% now it's hovering between 58% and 59%, despite what the unemployment rate says.

Far be it from me to paint rosy pictures in these economic times ... BUT ... to be fair, the majority of that change you note is due to demographic changes, e.g. the leading edge of the Boomers retiring ... which will continue to cause the ratio you mention to decline for some time.

Data.

There are parts of the US economy that are actually doing quite well ... not as good as those currently in office would have you believe, but also not as bad as those not currently in office would have you believe.

Wow. You manage to bring in one thing to explain this thing and get it spectacularly wrong. As someone else pointed out, the Columbus Day weekend is the traditional ramp down time for refineries in the U.S. as they rejigger their formulation for fall (You didn't know refineries changed formulas for the season?). Also, several major supply routes got messed up:

From California gasoline prices soar amid refinery and pipeline shutdowns By The Associated Press:

"Among the recent disruptions, an Aug. 6 fire at a Chevron Corp. refinery in Richmond left one of the region's largest refineries producing at a reduced capacity, and a Chevron pipeline that moves crude to northern California also was shut down. There also was a power failure that affected an Exxon Mobil Corp. refinery in Torrance, but the refinery has resumed normal operations."

As for Krugman and this being all the fault of QEx: there's a reason gas is not part of the core measure of inflation. Last I checked, we aren't in an inflation cycle yet. Gas is a volatile price (no-pun intended) that jumps way up and down responding to things like, you know, refineries having fires and pipeline shut downs. It's left out of most inflation conversations among economists.

Anyway, thanks for playing! Here's a home version of the game "The Eeeevil Fed Is Coming For Your Savings!!"

Mod parent up.

I'm always surprised at how energetic the pro-nuke zealots are on /. The fact is nuclear energy has some nasty-ass waste AND IT SUCKS. Yes I know there are other designs that don't make the 4.5-billion-year stuff. Anybody who says it isn't a big deal can volunteer to host it in their own fucking back yard (for pay of course and only provided those in the affected radius approve).

That folks say renewables will "never" work is also irritating. Some facts::
1) according to a government agency, Nuclear produces 9% of US energy, Renewables produce 8%. That's not the huge difference some would have you believe:
http://www.eia.gov/cneaf/alternate/page/renew_energy_consump/rea_prereport.html
2) More than half our the US trade deficit is due to Petroleum imports:
http://www.calculatedriskblog.com/2011/06/trade-deficit-decreased-to-437-billion.html

Please note these facts stand quite independently of any controversial discussions about the environment or evil petroleum dictatorships.

More importantly, whatever happened to innovation? People moaning about the government funding research in renewable energy while they drive their Hummer and watch the Miami Heat on their giant screen plasma TV while they play Playstation over the Internet need to STFU. If it weren't for government-funded innovation, there'd be no Hummer, no computers, and no Internet.

Paying for research is good. It makes things better for everyone. Clean energy is good because it doesn't leave nasty shit behind (as much anyway). Lastly, you can make money building it and exporting it. Surely people on /. can appreciate that.

Oh no, you don't.

"The video is from 2006. The guy is explaining the incoming 2008 crash in vivid details. He made money on shorting the mortgage market. So you are a fucking retard who is also ignorant, and with my SIGNATURE I refute your stupid ass claim that you sucked out of your asshole in that idiotic, retarded paragraph, moron."

You still don't get it? The scenario of the crash was predicted by Paul Krugman back in 2000-s and a dozen of other economists. It has NOTHING to do with gold standard or pegged currency. Absolutely NOTHING at all - bubbles can happen just fine in the gold-based economy, in fact they are AIDED by it because the limited supply of currency forces firms to use various credit mechanisms.

So you still have NO predictions at all. Zero. Zilch. None.

You're back at redefining what the "inflation" means. For morons - it means an increase of prices which is nowhere to be seen. Indeed, it has actually fallen http://www.calculatedriskblog.com/2010/02/core-inflation-declines-for-first-time.html which had been PREDICTED by the Keynesian economists.

I think, next time you'll redefine 'sunrise' as 'inflation'.

And here's what happens when people listen to idiots like you: http://en.wikipedia.org/wiki/File:Ee_real_gdp_growth.svg - 20% of the GDP had been wiped by the austerity measures forced by the de-facto 'gold standard' (pegging the local currency to the euro).

Oh, or maybe an example of Britain should help you? http://www.usatoday.com/money/world/2011-01-25-britain-economy_N.htm - austerity measures kick in and economy 'surpisingly' stalls. Why would that happen when government slashes spending and pledges austerity?

Do you understand that you have exactly ZERO

It's happened very recently, and was widely publicised, at least in the UK.

Images of queues outside Northern Rock branches

No kidding! All blogs are worthless. AMIRITE??

That is certainly better than what I am reading as overall United States unemployment via calculatedriskblog:

"The current recession has been bouncing along the bottom for a few months - so the choice of bottom is a little arbitrary (plus or minus a month or two)."

The graph on this news blog shows 6% currently, for the United States overall.

http://www.calculatedriskblog.com/2010/04/percent-job-losses-during-recessions.html

You Sir are spot on: it is only fair that people should be compensated for their work. However I think you are presenting a false choice. The choice is not 1) the 'incredibly valuable service' of the NYT and 2) 'crappy blogers that can't spell.'

There are plenty of high quality sources of information that are still available for free online, including most major newspapers and media companies. Fortunately there are also quite a few blogs who are a good source of information, opinions, and independent research, and whose authors are quite well versed in their field, and include Nobel prize winners. For example, on economics and finance you have Calculated Risk, Greg Mankiw's blog, Becker and Posner, Zero Hedge. Really, when you think about it, NYT does not have an especially compelling offer.

particularly in U.S.A..

Marx was correct.

Yours In Samarkand,
Philboyd Studge

G.M. vehicles are vaporware.

Chrysler will be sold for scrap in Chapter 7.

Yours In Communism,
Kilgore Trout

• Laid-Off Foreigners Flee as Dubai Spirals Down
• More on Dubai
• Goodbye Dubai

This is entire economic meltdown has been caused by the shipping of jobs, especially manufacturing jobs, overseas.

You realize that US manufacturing output rose over the last 10 years (until last year). We've had decreasing manufacturing employment because US manufacturing has become more and more efficient (i.e. mechanized). US minimum wage laws make it impossible for the lowest skill manufacturing to be done here (some people think that is a good thing.)

I think you have the causality backwards. The meltdown has decreased US manufacturing over the last year. US exports have also been rising over the last 10 years, until the most recent crisis.

I believe the cause of the most recent crisis is the bursting of the real estate bubble, period. It was a bubble created by tax rules on mortgage interest deduction, the implicit and later explicit government guarantees on Fannie and Freddie, and the private sector forgetting that mortgages should be limited to 80% loan-to-value because sometimes house prices do go down, and if you don't have a 20% cushion, your borrowers will default on a house that will need to be sold for at a loss to the lender. This tremendous shock is working its way through the global economic structure, and it will take a while for the global economy to rebalance jobs away from house construction and finance.

What "banks" did, was take a lot of "similar" mortgages (rate,maturity, etc.) and bundle them into a financial instrument. The mortgage itself is no longer something that can be negotiated, it is part of a larger financial formula and changing it requires *all* the share holders of the instrument to be informed and consent.

It's not nearly as clear-cut as you put it. The loan servicers normally have some latitude in modifying terms on loans where default is reasonably imminent, as a form of loss mitigation. Skim this link for a brief explanation of this toward the beginning.

In any case, even if you assume a modification that the servicer isn't ordinarily allowed to do, it doesn't follow that all shareholders must consent to that modification. It really depends on how the instrument is structured and managed. A really simple example: if the investment is structured as a holding corporation for the assets, approval for modifications would be subject to the bylaws of the corporation. Modifications could be at the discretion of the management of the corporation; they could require approval from the board; or they could require shareholder vote. There's no general answer.

And one thing I failed to mention that I wish I had (not that it adds much to the argument) is the still present trade deficit. We are buying more than we are selling. What we are selling is largely to ourselves in decreasing numbers.

Actually exports have been rising (until 2009) as well as imports: see here. And keep in mind that those $3 trillion in imports are still pretty small compared with the $13 trillion domestic, non-imported US economy.

On the other hand, a global trade war would risk the $1.8 trillion in US exports and all of their respective jobs (my industry makes 1/3 of its revenue from exports), so let's not mess around with that! Plus it would raise prices on basic consumer goods, which would affect the poor the worst!

peragrin, you are wrong.

The current delinquency rate is over 6% for residential real estate and skyrocketing with no apparent end in sight. http://www.calculatedriskblog.com/2009/02/fed-delinquency-rates-rise-sharply-in.html

This is relatively new data, but I have been following the mortgage markets closely since the credit crisis began as ARM/and Option ARM mortgages reset and the situation is certainly going to deteriorate a great deal.

I don't know if I can accept the total balance of commercial debt outstanding as a suitable proxy for amount lending. I'm also not very likely to take my econ information from a website that photoshops people's faces onto cereal boxes; this would tend to indicate they're in need of a distraction.

Your argument, essentially, is that there is no credit crisis, and that it's a conspiracy of government, bank, and media types. Yet for some bizarre reason, we had four bank failures yesterday, putting us at 13 for the year and 26 since late 2007. Home Equity lines of credit have been frozen by most banks since February '08. Mortgage insurance guidelines are getting stricter and Fannie/Freddie are larding on fees and points for anyone with credit score not in the 90th percentile. Credit card companies are reducing credit lines, which must go down as one of the biggest barn door closing after the cows leaving in history. Of course, now things have swung in the completely opposite direction from where we were in '06 and everyone in the banking industry is all conservative, just when we need growth the most! Have you tried to get a home loan recently? I have. You can get a good rate but you have to have over 800 FICO and the fees are ridiculous. Meanwhile the houses are usually a least 30-50% off their last sale prices, particularly if those were in the last 5 years, and short sales/REOs are something like half of all the places I'm seeing. These lenders are slowly drowning.

Let's say you're right and the credit markets are returning to normal. Are you actually suggesting the banks are not insolvent? What evidence do you have that their MBS and loan assets have any value whatsoever, and they've simply become zombified and are only able to fulfill depositors withdrawals by getting TARP money? They have no positive NAV at this time in history aside from what TARP is handing them, and any lending they're doing right now is off those drafts, and grudgingly at that.

I think what you're also seeing on that chart you cited is interbank lending, not lending to any productive activity. The banks are all still pretending to each other they're holding good paper, just don't make them print any more of it by loaning out to deadbeat consumers or businesses!

You're going to need more than the Mises Institute (I'm sure they have no interest in proving some hobby-horse dogma!) to convince me there isn't a credit crisis :P

I don't know if I can accept the total balance of commercial debt outstanding as a suitable proxy for amount lending. I'm also not very likely to take my econ information from a website that photoshops people's faces onto cereal boxes; this would tend to indicate they're in need of a distraction.

Your argument, essentially, is that there is no credit crisis, and that it's a conspiracy of government, bank, and media types. Yet for some bizarre reason, we had four bank failures yesterday, putting us at 13 for the year and 26 since late 2007. Home Equity lines of credit have been frozen by most banks since February '08. Mortgage insurance guidelines are getting stricter and Fannie/Freddie are larding on fees and points for anyone with credit score not in the 90th percentile. Credit card companies are reducing credit lines, which must go down as one of the biggest barn door closing after the cows leaving in history. Of course, now things have swung in the completely opposite direction from where we were in '06 and everyone in the banking industry is all conservative, just when we need growth the most! Have you tried to get a home loan recently? I have. You can get a good rate but you have to have over 800 FICO and the fees are ridiculous. Meanwhile the houses are usually a least 30-50% off their last sale prices, particularly if those were in the last 5 years, and short sales/REOs are something like half of all the places I'm seeing. These lenders are slowly drowning.

Let's say you're right and the credit markets are returning to normal. Are you actually suggesting the banks are not insolvent? What evidence do you have that their MBS and loan assets have any value whatsoever, and they've simply become zombified and are only able to fulfill depositors withdrawals by getting TARP money? They have no positive NAV at this time in history aside from what TARP is handing them, and any lending they're doing right now is off those drafts, and grudgingly at that.

I think what you're also seeing on that chart you cited is interbank lending, not lending to any productive activity. The banks are all still pretending to each other they're holding good paper, just don't make them print any more of it by loaning out to deadbeat consumers or businesses!

You're going to need more than the Mises Institute (I'm sure they have no interest in proving some hobby-horse dogma!) to convince me there isn't a credit crisis :P

The concept of the thing was to get as many paychecks printed as physically possible in the next 18 months. I guess you could call that "pork," but I think your problem is with Keynesian theory and not waste-fraud-abuse.

Here's the current job losses, in absolute numbers and percentages. These people can work, but aren't being asked to essentially because banks aren't lending. Banks aren't lending because they're D-Bags who spent the last 5 years defrauding each other and calling shitpiles gold. Even if the gov nationalized the banks tomorrow, most of them are still insolvent and the shock of that fact would probably cause a run on the dollar. The bad paper has to be gotten rid of, and it's better people be paid doing something instead of getting welfare or starving to death while the banks straighten out the incompetent. fucking. house.

If it means breaking every window in the country, the gov is going to do it to keep people working, because intact windows are less important than starving kids.

I recommend you read this discussion of the history of subprime lending. To put it shortly, the issues around subprime lending are a lot more nuanced than you seem to think.