L.A. Times: Iceland is Steamed

Iceland is steamed
Its economic meltdown, and the violent reaction of its people, may be echoed worldwide.
(Los Angeles Times, 2/8)

By the mid-1990s, Iceland had, through dicey finance and lots of debt, launched its journey to becoming one of the world's most affluent societies. Fortune continues: "But the principal fuel for Iceland's boom was finance and, above all, leverage. The country became a giant hedge fund, and once-restrained Icelandic households amassed debts exceeding 220% of disposable income -- almost twice the proportion of American consumers."...

"It's official: capitalism is monstrous. Try talking about the benefits of free markets and you will be treated like someone promoting the benefits of rape."

Las Vegas Home Prices Dropping by Half?

Total decline in median price of homes could top 50 percent
(Las Vegas Sun, 2/2)

Moody’s Economy.com projects the total decline in the market will reach 52 percent by the end of the first quarter of 2010, says Mike Helmar, director of industry services and an economist who oversees Nevada forecasts.

“We don’t have much good news for you,” Helmar says. “We do have them continuing to go down.”

The firm listed the median price of Las Vegas homes reaching a peak of $320,000 in 2006’s first quarter and projects it dropping to $153,000 by 2010.

N.Y. Times: Analysis of Stimulus Plan

News Analysis: Components of Stimulus Vary in Speed and Efficiency
(New York Times, 1/28)

There is no doubt that the impact of the $819 billion economic stimulus package advanced by President Obama and approved by the House on Wednesday will start to be felt within weeks once the final version becomes law.

But estimating how effective the huge program of tax cuts and spending will be in getting America’s economic engines humming again is a far more complex calculation requiring almost line-by-line scrutiny of the 647-page bill, lawmakers, economists and policy analysts say.

While it may be difficult to predict how well the overall plan will work, it is easier to draw conclusions about its individual components, gauging them against the basic goal of any stimulus: to promote economic activity and create jobs as quickly and efficiently as possible.

WSJ: You won't believe what's in that stimulus bill

A 40-Year Wish List: You won't believe what's in that stimulus bill
(Wall Street Journal, 1/28)

The 647-page, $825 billion House legislation is being sold as an economic "stimulus," but now that Democrats have finally released the details we understand Rahm's point much better. This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.

We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

Wash. Post: Korean Blogger Predicted Downturn

Prescient Young Blogger Did What S. Korea Couldn't -- Foresee Global Financial Crisis
(Washington Post, 1/24)

He had been a so-so student who studied communications at a so-so junior college in a backwater town south of Seoul. Thirty-one years old and single, he spent much of his time alone in his room. As his father noted, "He can't even get a job."

But he knew a global economic smack-down when he saw one.

Minerva saw it coming last fall, far earlier and with far more acuity than the South Korean government, which his blog has humiliated and angered.

Besides getting mad, the government got even. In a move widely perceived by the public as a chilling echo of the 1970s, when a military dictatorship ruled South Korea, the government detained Park this month, invoking a seldom-used telecommunications law that charges him with harming the public by spreading "false rumors."

Washington Post: Downturn Accelerates

Downturn Accelerates As It Circles The Globe: Economies Worse Off Than Predicted Just Weeks Ago
(Washington Post, 1/24)

The world economy is deteriorating more quickly than leading economists predicted only weeks ago, with Britain yesterday becoming the latest nation to surprise analysts with the depth of its economic pain.

N.Y. Times: Milan, Why So Gloomy?

Gloom is "In".

Fashion Review: Milan, Why So Gloomy?
(New York Times, 1/22)

DARK times call for dark coats. That was the impression the Milan designers gave after four days of runway shows in which the particularities of individual labels got lost in a continuous loop of gloom.

L.A. Times: U.S. economy may sputter for years

U.S. economy may sputter for years
(Los Angeles Times, 1/19)

Transfixed by the daily spectacle of dismal economic news and wild Wall Street swings, few Americans have looked up to see what a wide array of economists say lies beyond the immediate crisis.

And with good reason: The picture isn't pretty.

The sleek racing machine that was the U.S. economy is unlikely to return any time soon despite the huge repair efforts now underway. Instead, it probably will continue to sputter and threaten to stall for years to come.

L.A. Times: Bush was a uniter after all

Bush was a uniter after all
(Los Angeles Times, 1/15)

Bush broke many of his initial campaign promises, but he ended up keeping his promise to be "a uniter, not a divider," though hardly in the way he intended: He leaves behind a united nation, brought together at last by a heartfelt desire to see him gone.

Wall Street Journal: American Power Is on the Wane

American Power Is on the Wane
(Wall Street Journal, 1/14)

The first reason, surely, is the U.S.'s truly exceptional budgetary and trade deficits. There is nothing else in the world like them in absolute measures and, even when calculated in proportion to national income, the percentages look closer to those you might expect from Iceland or some poorly run Third World economy. ...

The third thing I'm really scared about is that we'll likely have very little money ourselves to pay for the Treasury bonds that are going to be issued, in tens of billions each month, in the years ahead. Sure, some investment firms, bruised by their irrational exuberance for equities and commodities, will take up a certain amount of Treasury issues even at a ridiculously low (or no) rate of return. But that will not cover an estimated budget deficit of $1.2 trillion in 2009.

The big question now is whether the world will have a market for all the new treasury bonds the government will be issuing. There comes a point where the "full faith and credit" of the U.S. Government implodes. --GC

L.A. Times: "Audacity as economic experiment"

Audacity itself as economic experiment
(Los Angeles Times, 1/11)

In a measure of how quickly its options are shrinking, the United States is about to embrace an economic theory that was widely thought for most of the last generation to have been discredited: the idea that great bursts of deficit-funded government expenditure can jolt an economy back to growth.

And the nation is poised to put this theory to the test on a scale untried in peacetime by any developed country on Earth. ...

Obama's plan represents an unexpected comeback for the ideas of the late British economist John Maynard Keynes, who argued in the 1930s that governments could end the Depression by spending heavily to maintain demand for goods and services until frightened consumers and damaged businesses gained the courage to resume buying and selling on their own.

Bush Says U.S. is Not Heading for Recession

Bush Says US Not Headed Into a Recession
(AP via ABC News, 2/29/08)

Okay, so this article isn't exactly new. It was published Feb. 29, less than a year ago. I was cleaning out my old queue of articles I haven't reviewed yet, and this turned up. (It must have seemed absurd even in February, which is probably why I saved it.)

Poor guy! How can one man be so wrong on so many things? (Answer: Through faith in God.)

Las Vegas Sun: Leaving Las Vegas

The latest trend: Leaving Las Vegas
(Las Vegas Sun, 1/6)

Young is part of the new migration trend: Clark County is now losing population, according to county officials — 10,000 from July 2007 to July 2008, based on the number of empty houses and apartments.

U-Haul measures the trend a different way: Are there more trucks coming to town or leaving? In 2007, outbound U-Haul rentals just barely outpaced those arriving here, the company said. In 2008 the number of outbound rentals was 1 percent greater than that of those arriving.

Washington Post: Tom Toles Cartoons

Here's a great archive of political cartoons from Tom Toles of the Washington Post.

Tom Toles Cartoons

L.A. Times: Gambling Runs Dry in Mesquite

Out in Nevada desert, gambling runs dry

(Los Angeles Times, 1/3)

Locals and travelers passing through have long kept Mesquite's casinos afloat. But like the spent mines that have busted many Western towns, Mesquite's source of wealth ran out. As the economy soured, tourists hoarded their cash, and the town's gross gambling revenue plummeted 11%. Visitor volume fell 7.4% last year; the average daily room rate fell 35.4%.

N.Y. Times: Divorcing Couples Now Battle Over Who DOESN'T Get The House

"With homes worth less than their outstanding loans, some divorcing couples are battling not to get the house."...

In Housing Fall, Breaking Up Is Harder to Do
(New York Times, 12/30)

Washington Post: Ponzi - Name Stands Alone

One Name Stands Alone in The Grand Scheme of It All (Washington Post, 12/20)

Sorry, Mr. Madoff. Despite your prodigious alleged accomplishments -- $50 billion of investors' money, vaporized! -- you're no Charles Ponzi.

The feds, in their complaint, allege that you, Bernard L. Madoff, admitted to colleagues that you've "been conducting a Ponzi-scheme" through your investment advice business. Some Wall Street experts, struggling to convey the scope, say it's perhaps "the biggest Ponzi scheme in history."

Wow! And there have been so many.

But for all your Palm Beach Country Club connections and your sterling Wall Street résumé, you're still just walking in the shadow of the great Charles Ponzi.

New York Times: Wall Street Bonuses

From today's New York Times:

The Reckoning: On Wall Street, Bonuses, Not Profits, Were Real

As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers’ money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.

Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning.

Fortune: Why a $1 Trillion Deficit is a Good Thing

From Fortune magazine (12/12/08)...

Why a $1 trillion deficit is a good thing (for now)

All of the above forces represent an inescapable reality. Neither the recession nor the financial crisis were developments that could have been brushed aside. ...

Although specific aspects of how the bailout funds have been used so far can be open to question, not undertaking a massive program of stabilizing the financial system in the last few months was never really an option, as it would have exposed the entire U.S. economy to a potentially catastrophic outcome.

L.A. Times: Paul Volcker is Back

From today's Los Angeles Times...

Paul Volcker is back, and he warns of tough times ahead

His concerns go to the very core of how America lives and how Wall Street operates. A child of the Great Depression and a man of legendary personal thrift, Volcker thinks Americans have been living above their means for too long.

"It is the United States as a whole that became addicted to spending and consuming beyond its capacity to produce," Volcker lectured the Economic Club of New York in April. "It all seemed so comfortable."

Bringing consumption back in line with income would not only crimp individuals and families, but also require major readjustments in the global economy, which has relied on the U.S. as consumer of last resort.