Friday, January 15, 2010

Doom, despair, and agony on me.

So I've been reading about life during the Great Depression lately, partly for entertainment and partly for information. Hopefully it's more for entertainment, but lately I'm looking around the news and just not getting that recovery "vibe", man.

For example, I see that 2009 was a banner year for foreclosures; Nevada seems to have hit a foreclosure rate of one mortgage in ten:

I'm thinking that if you're looking for a field with growth potential, you might want to look into what it takes to be an auctioneer.

Meanwhile, with tax revenues cratering, state budget shortfalls are getting huge, as the towering entitlement edifices of places like California and New York are left with nothing to support their pie in the sky programs:

Of course, this leads to talk about fixing the problem by raising taxes, instead of shutting off the spigot to the trough:
But borrowing is no help in fixing so-called structural deficits, in which spending exceeds revenue over a prolonged stretch. And so far there has been little sign legislators are willing to make the obligatory tough choices, particularly issuing more or higher taxes.

Many of the so-called fixes for current state deficits are mere Band-Aids that push the problem forward rather than address it, observers said.

"It's surprising that political leaders don't seem to be taking seriously the magnitude of the problems," said Reschovsky. "You would hope it wouldn't come to this, but it might take schools closing and programs being eliminated to create a sense of urgency."

Well, you're right there, Mr. Reschovsky, but for the wrong reasons. It's time and past time to do a national gut check: How much are we willing to raise taxes to provide for crappy services the government doesn't provide very efficiently in the first place? Or would we rather admit that this jalopy's just not worth fixing, write it off as totalled, and go back to doing for ourselves? State legislators have a historic opportunity to slash deadwood here, rather than continuing to try to buy Band-Aids by the bushel.


Standard Mischief said...

There may be a crapload of foreclosures, but not a lot of auctions. Banks are sending the foreclosure letter but not following with an eviction and auction. The reason why? Because as soon as they do that they have to stop "marking to myth", and actually take a red line on the balance sheet.

The funny thing is, if there is to be a mass dumpage onto the market, the bank that does it first would tend to get dimes on the dollar price rather than pennies on the dollar. Thus I expect if the fed can't manage to re-inflate the unsustainable housing bubble first, when the housing market crashes, it will crash hard. Real hard.

Kinda gives me a good feeling about the secret backroom deals to pass a major expansion of healthcare coverage while not doing a damn thing to control costs. Just what we need, expand the Medicare we can't possibly pay for by wrapping it inside of some kind of forced ponzi-like scheme just like social security (which we can't pay for either).

We had a depression inside the Great Depression, now I'm worried we'll have a recession inside the Great Recession.

chiefjaybob said...

Don't expect Illinois to make any cuts. How do you expect the political hacks and puppets to get re-elected if they don't give away all the handouts the ignorant and lazy electorate have come to expect?!?

JimB said...

That's never going to happen in NY or NJ. They'll keep upping the taxes until there is no one left to tax.

Anonymous said...

" one left to tax." The working wealthy are leaving New York in droves. This may happen sooner than they think.

Anonymous said...

There are too many Progressives in power across the country, both big and small, to cut welfare, I mean "services".

Cuts cost votes. Not enough votes, they don't stay in power, and they just couldn't deal with that.

Talking of government taking away bread and circuses is as silly as talking about the Feds doing away with the National Firearms Act.

Anonymous said...

"The squeaky wheel gets the most grease" has been a truism of politics since before I was born. Legislators will raise taxes on the producers to continue to appease the drones, just because the drones and their leaders get more coverage--noise--in the media.

Interest rates will have to rise, soon, because of monetary actions by TPTB. That means that more variable rate home loans will reset upwards, which means an accelerated rate of foreclosure. The commercial real estate market is in the toilet--and worsening.

One result of legislative policy is an Exodus of producers from high-tax states to lower-tax states. Limbaugh is not the only one to leave New York. I saw a report that around a thousand millionaires left California in 2007. Small and viable businesses are leaving in droves. All that exacerbates the tax-income problem, but legislatures don't seem to understand causality.

Green shoots? Hey, cure 'em and smoke 'em.


Aaron said...

nah, they'll start shooting the hostages first - close schoiols, reduce police and fire departments, road construction and winter servicing - anything to make the tax payers howl and cough up money for the essential services.

Meanwhile they'll keep plugging along and expand the non-essential but very lucrative (for politicians and their supporters, anyways) services and budget areas of government that caused the budget shortfall in the first place. That's been the Democrat plan so far here in Michgian and it may be working.

Frank W. James said...

I had an interesting conversation with my combine mechanic here recently. The company he works for is a 'CAT' distributor and mainly handles heavy construction equipment, but they are also an 'AGCO' distributor and as such they are trained for my 'Silver Seeder' and other tools of the Ag related AGCO product line.

I figured Ag Sales were a small sideshow for their firm. Not so, according to the mechanic. They got into AG because construction is so 'down' and Ag has been a big profit maker for them.?????

So the question is, "Where did ALL the Stimulus money go?" Other than the obvious, Into some politician's pocket...

All The Best,
Frank W. James

Brad K. said...

I have noticed that some of the Stimulus money comes with organized labor strings attached.

Little things, like a state that accepts *any* stimulus money is forbidden to cut any contracts or programs - like education - that hires union workers.

So I guess we better unionize those nursing homes and mental and prison facilities. 'Cause there isn't much left to cut expenses.

I shudder to think what happens to the first state to go bankrupt - will B. Hussein Obama give the states to the labor union leaders, too?

Ed Foster said...

Standard Mischief is spot on. If you don't read another book on the "Great Depression", read The Forgotten Man by Amity Shlaes.

Bottom line, after 5 years of waste, fraud, corruption, and general bureaucratic incompetence (but then I repeat myself), the U.S. was worse off than we were the spring following the depths of the crash.

Capital flight and wildly inefficient public works projects drained the ability of the market to recover, and the man who pulled us out of the depression wasn't FDR, it was Adolph Hitler.

Beginning in 1938, the export of American goods and munitions revitalized our industry, as we drew investment capital from overseas to replace what was lost on government projects here.

Old CCC joke. Why does it take 4 government employees to mow a lawn?

One coming, one going, one shitting, one mowing.

Word Verification opystede. What was Hopalong Cassidy's horse's name?

Mark B. said...


As The Perfessor likes to observe, no mileage in that -- reduce the opportunities for graft, corruption, patronage or kickbacks? Ain't gonna happen, Sistah . . .


Tam said...

If I'm gonna ask Santa for something, it may as well be a pony.

Old Grouch said...

@Frank James:
"Where did ALL the Stimulus money go?"

Well, half a million bucks went to this guy.

Homer said...

I'll concur with Standard Mischief; there are houses in my neighborhood that have been in foreclosure for months and still occupied. Guy next door hasn't made a payment since early 2008, been scheduled for foreclosure auction twice and fast-talked his way out of it with a couple of pittance payments. The lender has no incentive to foreclose and auction because it isn't costing them any more to let him live there for free than to have it empty. I suspect there are a ton of houses here (Florida) in that state; when/if housing prices rise to the point that lenders think they can sell for enough to get it off the books, you'll see a huge amount of evictions and auctions, and the first one or two lenders to start that will win, everyone else will lose, including Joe and Jane Schmoe who just want to sell their house to retire.

Jenny said...

That is the one redeeming grace to unsustainable financial idiocy - it won't be sustained. Gonna be hella painful though.

Don Meaker said...

Once could have a special state income tax with automatic witholding of 50% of everything that the state pays to anyone who works for the state, or collects retirement from the state.

That has the advantage of following retired workers out of the state (since their check is cut in Sacramento). Good people would quit looking at the state as a cushy job. Bad people would complain, so we could identify them.

Chip said...

Bad news for California, Illinois New York and all. It is against Federal Law for a state to go Bankrupt. The choices are raise taxes or cut spending or both. Or petition the Federal government to ignore the Constitution and allow them to default. Nah, that would never happen.

Ian Argent said...

NJ just elected a governor who has said that he will not raise taxes or borrow money, but cut, cut cut. His appointee for education head is the NJEA's "public Enemy #1" for proposing vouchers and merit pay. His last job was, essentially, perp-walking NJ Politicians (US Attorney for NJ). Oh, yeah, and he has said he expects to be a 1-term governor for doing what has to be done. And has told NJ cities who received 11th-hour checks from the NJ state gov that he's going to stop payment on them...

Looks like some interesting time in the Garden State.