Are you sure there's not a bond bubble?

Nice job Dean once again reminding us that elites have their own agenda, and they use the media they control to advance it.

There is a bubble, as N. Roubini points out, as the dollar becomes the vehicle of the "carry trade" (borrow in dollars at low nominal interest and (acutal negative real insterest rates as the dollar declines in value versus foreign currencies and commodidities) to make highly leveraged investments in commodities and foreign stocks, bonds, and real estate). When this bubble unwinds we will see how all the "important people" suddenly forget about the deficit to argue for another "emergency" bailout of financial institutions that are "to big to fail." Private profits, socialized losses.

Given the current employment environment, community colleges and other post-secondary institutions are being called upon to play an even greater role in helping young adults gain the skills needed to qualify for work. A new report from Workforce Strategy Center (WSC) and funded by the Bill & Melinda Gates Foundation titled “Employers, Low-Income Young Adults and Postsecondary Credentials,” highlights programs in 14 communities that are successfully addressing the challenge of providing disadvantaged young adults with the technical and postsecondary education that may qualify them for skilled positions. For the full report visit www.workforcestrategy.org.

Dean Baker has woefully underestimated the Neptune menace. If, as Baker suggests, Samuelson is alerting us to this planetary peril, we should congratulate the Post for serving mankind.

Boy, if only I could get a dime each time Dean Baker gratuitously mentions the housing bubble as if that translates into "Don't believe those people about anything, believe me about everything", I could probably soon accumulate enough money to pay off our federal debt.

Yes, the cash position of firms has grown which keeps the short term rates low at the moment.

"At the end of the second quarter, the 54 biggest information-technology firms held $280 billion -- or 27% of their assets -- in cash, according to the Journal's analysis, a higher percentage than any other industry group. Cash balances grew further in the third quarter for the 34 companies in that group that have reported results.

Consider Google. The search giant's cash and short-term investments rose 53% to $22 billion in the third quarter from a year earlier, accounting for 58% of its total assets."

http://online.wsj.com/article/SB125712303877521763.html

It won't last forever.

Brooks wrote, Boy, if only I could get a dime each time Dean Baker gratuitously mentions the housing bubble as if that translates into "Don't believe those people about anything, believe me about everything", I could probably soon accumulate enough money to pay off our federal debt.

There's nothing gratuitous about it. Dean promptly warned his readers about the last two great bubbles (dot com and housing). The Wash Post? Not so much.

liberal,

It's amazing and amusing that someone (e.g., you) can so consistently present what you consider to be relevant, valid arguments/refutations that are actually nothing of the sort. Do you have any idea what my point was? Apparently not, because you think that if Dean did indeed warn about the housing bubble and WaPo did not (assuming arguendo that those premises are valid) that is invalidates my point.

the real problem is the slow motion default of inflation.

Brooks blithered, It's amazing and amusing that someone (e.g., you) can so consistently present what you consider to be relevant, valid arguments/refutations that are actually nothing of the sort.

LOL! You need to look in the mirror, pal. You're an ill-informed, ignorant, dishonest crank.

Liberal,

Well, I'm not surprised that, lacking any capacity for relevant, valid argumentation, you respond with nothing but ad hominem. Of course, that doesn't change the fact that you demonstrated that you just don't (and perhaps can't) grasp the point I made earlier, and that you are oblivious to your confusion. But if it provides some catharsis to you, ok. Of course, one would think that responding in such a childish, substance-less manner, thus further indicating your inadequacy, would cause further embarrassment rather than emotional relief (on balance), leading you into a downward emotional spiral (which is perhaps what is now in the process of playing out in your mind and behavior...let's see).

You could, of course, respond in a rational way, acknowledging your misunderstanding, or inquiring to try to gain an understanding of any such misunderstanding, or even trying to provide an argument supporting the notion that you demonstrated no misunderstanding. But those would be rational responses (which isn't to say that your attempt at a relevant, valid argument would actually be relevant and valid, just that the effort itself would be a rational response).

I gotta tell ya', if I were a hyperpartisan liberal it would bother me that you use "Liberal" as your handle, since your argumentation is so consistently so poor.

Liberal,
Brooks is SOOOO right again. Don't use your logic with him, or he will brilliantly decimate you with ad-hominen(and ad-nauseum) genius rants that only he is capable of understanding. As a hyperpartisan laughable who just can't grasp his superior knowledge, surely you're also unable to see that he never stoops to using "personal attacks", but only sticks to rational argument.

Foster,

Re: your sarcastic
he never stoops to using "personal attacks", but only sticks to rational argument.

Thanks for showing your inability to make basic distinctions in the arguments of others (which is comcally ironic, given that you were trying to point out, via sarcasm, that I my arguments are no more valid or logical than those of others).

I never claimed to "only stick to rational arguments", nor "never stoop to using personal attacks". My point is that I DO offer rational arguments, rather than JUST personal attacks (or irrational arguments). Do you get it at this point? Probably not.

Heck, you're probably really one of the other regulars here -- some immature, not-too-bright, frustrated dude who still hasn't recovered from embarrassment after failing repeatedly to offer any valid argumentation after confronting me -- commenting under this new "Foster Brooks" handle just to create an artificial sense of agreement/consensus. One of these days why don't you try substantively challenging some argument I've made. Oh wait, you can't -- that's why you do what you do. Keep it up. It's kinda funny to see such pathetic behavior.

Well the bloke did write it was "very , very unlikely" to happen.

He just forgot to add the two more "very"s

Man, Brooks has really gone off the deep end if he think that this

Boy, if only I could get a dime each time Dean Baker gratuitously mentions the housing bubble as if that translates into "Don't believe those people about anything, believe me about everything", I could probably soon accumulate enough money to pay off our federal debt.

constitutes rational argumentation. You've really slipped a few notches since we last discussed health reform, Brooksy Boy. Is Keith Hennessey still ignoring you worthless walls of text on his blog? Yet again, when it comes to what is valid discourse, it all boils down to a single, stupid criterion, Brooks's fiat.

PMA, you consistent, oblivious idiot, my snark which you quoted was an abbreviated version of an argument I spelled out previously, broken down into bite-sized pieces for the thinking-impaired such as you.

As for your reference to Hennessey's (excellent) blog, whatever you're referring to has no basis in reality. I can't remember the last time I commented on that site, and what in the world you mean by his ignoring me even back when I did comment is a mystery.

By contrast, one thing is indeed clear: that you are offering nothing but ad hominem, and that you are still seeking emotional relief from the embarrassment you apparently endured from all the times I challenged you to engage substantively and you essentially ran away.

If anyone is interested in PMA's pathetic history, it starts at this link http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=reuters_editorializes_on_the_b#comment-6287253 and continues in my subsequent comments.

As follow-up to my 2:02am comment...

Oh, this is even funnier than I thought. I just checked, and it turns out...PMA knows I spelled out that argument, because he showed oblivious (and combative) confusion over at least one part of it on at least one occasion, which I see I corrected here http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=what_if_the_captain_of_the_tit#comment-6285810 Most likely understanding still eluded PMA, but the point is that he knows that my comment upthread is shorthand for the argument I've spelled out several times on this site. I elaborated further in response to another commenter on that thread here http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=what_if_the_captain_of_the_tit#comment-6285839

Jeez, maybe it's cruel of me to keep pointing out that PMA is stuck in some sort of embarrassment and frustration-induced PTSD that compels him to spew ad hominem at me to try to "get even" (for doing nothing more than pressing him to engage substantively)

Unlike many well-paid and highly respected "experts", Dean realized the bubble in the US housing market, and he has every right to be proud of that. If policymakers had listened to him, the federal debt would certainly be much less of what it is today, and we wouldn't need Brooks to pay it off one dime at a time.

And nary a peep on the ill timed, supply side tax cuts that are at the root of the budget morass.

My God, Dean, the housing bubble was a gazillion years ago. Surely you don't think that it really had any lasting effect, or anything at all to do with the near depression we are desparately trying to avert, do you?

Meanwhile, people are stealing a trillion dollars, and we debate the merits.

yeah, I'll confess, I think missing a housing bubble that led to a loss of of more than $6 trillion in output, put tens of millions of people out of work, ruined the retirement of tens of millions of workers, and added about $6 trillion to the government's debt is a big deal. I know I'm old-fashioned in believing that economists should be held accountable for their work, but that's just the way my mother raised me.

I obviously can't speak for Dean, but if I had to interpret his remarks, he's indicating that it's nuts to take anyone and perhaps any organization that speaks with such certitude and authority about a subject when they missed such a recent major call. You can't shut out the economics profession as a whole, since most of them missed it just like Samuelson. But you can demand a little humility from people who let some major pass under their noses.

Foster Brooks wrote, As a hyperpartisan laughable who just can't grasp his superior knowledge...

Yeah, I love that term.

Brian J wrote, ...it's nuts to take anyone and perhaps any organization that speaks with such certitude and authority about a subject when they missed such a recent major call...

Since there are so many "experts" out there, we need some filters just to whittle down the numbers a bit.

IMHO two good filters:
(1) Did the expert oppose the Iraq War?
(2) Did the expert see the housing bubble coming?

Dean,

Re: I think missing a housing bubble...is a big deal. ...economists should be held accountable for their work

Nice straw man. I'm certainly not suggesting otherwise. What I'm saying is that you constantly say "X missed the housing bubble" as if that translates into "I must have more credibility than X", and you apply this across all sorts of matters as if there is some broad, generalized superior expertise, objectivity, sincerity and/or openness that people should attach to you, all because you (and I'm taking your word for it) called one thing right -- yes, an important thing, but just one thing, and as I've mentioned before, I don't even know whether or not it's a case of the economist who "predicted 10 of the last 2 recessions" (i.e., your overall predictive track record even on housing prices), but more importantly, again, just one thing (and by the way, I think you admitted previously that you totally missed the whole related, concurrent mortgage-backed securities time bomb / bubble).

My point, again, is that you take getting one call in one area (housing prices) at one time right and you try to milk it across all dimensions as far as anyone can imagine stretching it to imply that people should attach greater credibility to you. Just because some sports writer picked the Giants to upset the Patriots in the Super Bowl a couple of years ago (contrary to the vast majority of picks by others) doesn't mean we should necessarily believe he's a much better predictor of NFL games, let alone football games at all levels, let alone all sports, let alone picking stocks on the NYSE. So if he is constantly saying "I'm tellin' ya', you should put all your savings in shares of X, and don't believe anyone who tells you otherwise -- after all, why should you believe anyone who didn't pick the Giants to beat the Patriots in that Super Bowl??", it's kinda ridiculous.

Boy, if I had a dime for every time Dean mentioned the housing bubble and then Brooks started protesting "but that doesn't make you omniscient!" like a whiny little ferret, and then followed up with several ponderous, overheated posts exhibiting his severe inferiority complex, I could pay back all the defrauded taxpayers.

Brooks wrote, because some sports writer picked the Giants to upset the Patriots in the Super Bowl a couple of years ago (contrary to the vast majority of picks by others) doesn't mean we should necessarily believe he's a much better predictor of NFL games, let alone football games at all levels, let alone all sports, let alone picking stocks on the NYSE.

That's a stupid example.

The point is that Dean called the housing bubble on fundamentals, just like he called the dot com bubble on fundamentals.

You'd have a point if Dean called some market turn that was more or less random, not predictable by fundamentals. But that's not at issue, so you don't have a valid point (surprise surprise).

Rivers wrote, Boy, if I had a dime for every time ... Brooks started protesting "but that doesn't make you omniscient!" like a whiny little ferret...

Heh.

Brooks wrote, What I'm saying is that you constantly say "X missed the housing bubble" as if that translates into "I must have more credibility than X", and you apply this across all sorts of matters as if there is some broad, generalized superior expertise, objectivity, sincerity and/or openness that people should attach to you, all because you (and I'm taking your word for it) called one thing right...

First, Dean called two things right: he also called the dot com bubble.

Second, I think the proper way of reading Dean's boasting isn't that Dean is infallible---he clearly isn't---but that the people who couldn't see the housing bubble for what it was (given the obvious unsustainability of the trend, and the centuries-long history of bubble behavior which any reasonable well-read commentator should know) have no credibility whatsoever.

In sum, Dean's claim is equivalent to "someone who while not omniscient yet does have at least a modicum of credibility is more credible than someone with no credibility whatsoever" is almost a tautology.

Well, I know how unlikely it is to introduce some contrary notion into one of these typical, hyperpartisan echo chamber group therapy sessions, but it is my general impression that Dean milks this "I called the housing bubble [so you should automatically believe me on X and not that guy/institution]" farther, wider, and more frequently than is reasonable. If one wished, he could (1) research and assess Dean Baker's overall predictive track record (i.e., what he predicted in what areas and when with what "score(s)"), and also (2) do content analysis on this "I called the housing bubble!" question, collecting all the posts in which Dean made this implication regarding his superior credibility, assess the respective frequencies with which he pulls that one on matters of varying degrees of relevance (in terms of transferability of expertise -- leaving aside the very important question of sincerity of objectivity), and (3) assess how reasonably he uses such an approach as a general practice.

Of course, the above would require some actual competence and reasonable objectivity in research and analysis, things most regulars here surely lack. Heck, I wouldn't be at all surprised if most wouldn't even understand what I've written above.

I can't recall economists or finance columnists noticing our energy problems or mention oil prices or energy within economic crisis discussions ... other than Andy Xie in Caijing.

We don't have a credit crisis, we have an energy crisis. It seems the entire economics profession is blind.

Not only are the experts wrong but traders are also wrong and all on the same side of the wrong trades.

The relationship between dollars and oil is making the dollar a hard currency, not backed by gold but by petroleum. The consequences are unfolding around us. There is a funding risk for assets that has not been priced, instead the risk itself has been subsidized/amplified by the dollar carry trade.

That the dollar is a hard currency can be seen in the S&P/Nymex correlation. $80 oil is deflationary to asset prices, this has been seen already and its next manifestation will be telling. At that point, the establishment strategy of shorting the dollar will be effectively ended as it cannot be shorted against oil without crashing real production.

The consequence will be a dollar short squeeze and an unwinding of the carry trade.

Oil prices do not have to rise to triple digits, only for traders to come to the same conclusion I have here. The first to close their short positions will pocket a nice profit, the rest will be guillotined.

sesli sohbet sesli chat Thnx...

weight loss tips The relationship between dollars and oil is making the dollar a hard currency.

The consequence will be a dollar short squeeze and an unwinding of the carry trade.coach handbags

So, Baker's argument for why the dollar won't default is that the Efficient Markets Hypothesis is true. I.e., since markets currently don't expect a dollar default, it can't happen.

Wow.

Brooks = Mel Brooks??
Mr. Baker,
Add a function to your comments section: Edit/Delete and ignore
Some of us don't want to have to scroll thru a pissing match that we are not interested in.
Thanks

This little battle corroborates my new theory about American politics, and why, for example, otherwise intelligent Republicans had to attack the health care bill on ridiculous grounds instead of on its many true flaws.

For Republicans to be elected, they have to appeal to people like Brooks. But Brooks has no brain in his head. Hence the policies our Republican congressional representatives espouse must be more or less insane. Sane policies would lose them Brooks' vote.

Which leads to a tragic result and my worst fear: A democracy of the uneducated cannot stand.

I'll add as evidence Samuelson's claim that the US will default on its debt.

There are at least a dozen big legitimate reasons to be worried about debt's role in the US economy. But a country that prints the reserve currency will never, ever default on its debt. My 6 year-old even understands that.

And yet Samuelson must fearmonger because that's what gets the votes of Brooks and the rest of the brainless.

How I long for real debate on substance. Where the parties, whatever their disagreements, at least feel morally obligated to tell the truth, and where observers demand it.

But as long as America is full of people like Brooks, who don't have the capacity to reason things out on their own, and in that void just do what Rush tells them to, the decline of a once great nation must continue.

Dean - I respect you and prefer your politics. But I think you have to consider the possibility that your greater knowledge of the housing bubble was luck rather than skill. *Somebody* has to be right occasionally when making outlier predictions. There will always be some analyst who, ex-ante, saw the crash; witness 1987 equity crash.

Look, both Roubini and Jim Rodgers were right about the housing bubble. But now one is predicting gold at 2000 Usd (inflation) and the other is saying nonsense (deflation). Not both will be right. And that's pretty much what you would expect in a world where predictions are luck rather than skill, where past predictive success does not determine future success.

Which brings me to Neptune. You seem to think the U.S. having problems with its debt is remote, because long-rate interest rates are low. This is a touching belief in the efficiency of markets, when it would seem that probably the one thing that the current crisis should have taught us is that markets *aren't* efficient and can send false price signals over long periods of time. (If rejection of efficient markets wasn't part of the context in which you knew that there was a bubble in housing prices, then the prediction really must have been luck rather than skill.)

Since the U.S. is currently funding most of its deficit at the short end rather than the long, the fact that long-term rates are low is irrelevant for the U.S. fiscal position. It has not locked in those low rates, and so rolling over the massive debt, which it will have to do, puts it at risk that interest rates will shoot up and face a fiscal crisis in the future.

Which leads to a tragic result and my worst fear: A democracy of the uneducated cannot stand.