The American Spectator

Deborah D| 4.27.09 @ 6:56AM

Government + Business = Corruption and the Screwing of American Taxpayers.

Say that over and over in your head everyday until you believe it, because it's true. Government corrupts business and business corrupts government.

Flowers| 4.27.09 @ 7:03AM

I accept this site why because I learn more information from this site

JP| 4.27.09 @ 7:15AM

If there was ever a case calling for a special prosecutor, this is it. Heck, the President has been everywhere blaming everything on his predecessor; this case is picture perfect for the Anointed One.

Bob| 4.27.09 @ 7:41AM

Vadum -- "bumbling", "tax-evading", "thugish", "corporatist" -- those bombs continue coming....

Let me quote from BofA's first quarter results:

"Net income more than doubled to $510 million due to the acquisition of Merrill Lynch partially offset by lower net interest income from legacy Bank of America."

While none of us like what Paulson did, it helped BofA dramatically during 1Q09. Do you want a translation of their first quarter report? ML helped their business. Without it, they would be weaker.

In the analysis thus far, Paulson helped BofA stay solvent. ML was a "buy" for BofA. Those are simply the facts.

But who cares about "facts" when you are posting here?

Tim| 4.27.09 @ 8:41AM

In Soviet Union, YOU take dictation from Secretary.

Ran| 4.27.09 @ 9:21AM

"But who cares about "facts" when you are posting here? Um...

"Mr. Lewis has told investigators for New York Attorney General Andrew Cuomo that in December Mr. Paulson threatened him not to cancel a deal to buy Merrill Lynch. BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger. But Washington decided that America's financial system couldn't withstand a Merrill failure, and that BofA had to risk its own solvency to save it. So then-Treasury Secretary Paulson, who says he was acting at the direction of Federal Reserve Chairman Bernanke, told Mr. Lewis that the feds would fire him and his board if they didn't complete the deal. [...]" Right. Walter, er, Bob ... You were saying?

Bob| 4.27.09 @ 9:58AM

Er... Ran... most of us can read.... But again, you seem to look not very far beyond the nose on your face. The fact is that this has turned out to be a positive for BofA even though it was forced.

This has ended up being a real positive for Lewis. But then again, you don't seem to know a lot about finance. Lewis made a huge mistake by overpaying for Countrywide by a wide margin. This was not forced by a "corporatist".

Without ML, it is highly possible that Lewis would be out of a job today. But then again, you and others here really don't want to know the whole story -- only that part which proves your point. That is why Republicans are in trouble.

Regarding Paulson's actions, I have been on record that Paulson was the wrong choice for Treasury. He was basically a glorified day trader whose primary job at GS was to make deals. He didn't really know a great deal about banking and economics -- that was not his job.

However, do you really think any of this would have occurred without the approval of George Bush -- the first MBA President?

So if you are really interested in "facts", I suggest you learn how to do research other than just listening to Beck and Limbaugh.. But then again, you aren't really interested in facts and data, are you?

By the way, I thought you weren't going to respond to my posts! Caught in a lie again....

Aaron| 4.27.09 @ 10:12AM

In the long run the BofA and ML happy little family may indeed work out, so far not so bad. What is "disgraceful" is the fact that the feds got their dirty little fingers in the mix. Sink or swim that is BofA and MLs business and ours, not the Feds.

L. Ross| 4.27.09 @ 2:21PM

Bob:

I think that what irks people isn't that so far, the ML acquisition has worked out well for BoA, but rather the fact that BoA was FORCED to acquire ML when they didn't want it. This direct violation of free market principles rankles us.

Another thing which rankles a bit is the arrogant tone in your posts. I know you feel a strong need to promote your bona fides in your posts so people will take you seriously, but your posts come off like "I'm so smart; you're all a bunch of dummies." It tends to turn people off.

Finally, you speak with authority that just isn't attainable in the field of economics. Any economy is a chaotic system filled with millions of buying and selling decisions both rationally and emotionally driven. Like weather forecasting (another chaotic system), economic forecasting is of limited value; the further out you forecast, the less value your predicitions have. So, please do understand that I take your "facts and data" with a fistful of salt. After all, if your knowledge of the economy was as razor sharp as you always make it sound, I doubt you would have time on your hands to post here. You would be too busy making a killing in the market.

Bob| 4.27.09 @ 3:49PM

L. Ross:

As far as forcing mergers, this is done all of the time with financial institutions. When a bank fails, the FDIC goes in, takes it over, and sells the assets cheaply to another institution. In many cases this is forced with some arm twisting. Why do you and others think this is any different? It's been done for several decades now. The reason this is brought up is purely political.

As far as economics goes, you seem to confuse investing with economics. Given the housing bubble, I took most of my money out of the market almost two years ago and put it into money market instruments. I have not gotten back into the market. The people who trade on Wall Street are not academics, they are gamblers. For example, when Obama looked like he was going to be elected, I made a small sector buy into infrastructure companies, and then sold just before he took office. It was a pretty safe bet, but I am not a gambler so my investment was small.

Good economists usually agree on the analysis. For example, those who follow buying, production, and inventories all look at the same data and will tell you exactly what I have said. However, predicting the future is not what good economists do -- and they are not good at it. They can provide a range of reasonable parameters. For example, with the reduction in inventories and purchases higher than production, we absolutely know that at some juncture in the not too distant future we will see a rise in jobs. What we cannot predict, is whether this will occur in the fall, at the end of the year, or at the end of next year. Probabilities indicate it will be at the end of this year but there is a significant range around that target point.

Seeing the housing bubble, which is obvious if you look at the charts, I pulled my money back long before the housing market peaked. If I were a real investor, I might have held on longer, but being older, I am quite risk averse. I told my children not to buy a house over the past four years -- and this housing downturn has now given them the opportunity of a lifetime. This is how you apply economics.

So if you want to take "facts and data" with a fistful of salt, be my guest. By the way, there is another economic bubble brewing in treasuries. It is a different kind of bubble, but it is getting fairly severe. You don't hear much about unless you are into "facts and data". I don't know when it will hit -- next year or in two years -- but it will come.

Regarding my attitude, I find so many comments here relatively dumb because they contradict analysis and data and are based primarily on belief rather than reason. For example, making a post like the one above that talks about banks being forced into taking the assets of another financial institution without realizing this is done all of the time and has been done for decades, only tends to misinform the public. And yes, when voters make decisions based upon faulty information, it does make me very angry.

L. Ross| 4.27.09 @ 5:51PM

Bob:

Very well put, and one of the reasons I read your posts. You do know more about this stuff than I do.

As a lay person, it's not too hard to spot a housing bubble either. I knew we were going to be in deep trouble in the summer of 2005 in Sacramento when I saw about 20% of the houses in the city up for sale. You can't have that kind of unsold inventory and keep the price of housing up.

I also remember when a bunch of very, very bright people came in and sold Congress on TARP. TARP was going to stabilize the housing market, stabilize the banking industry, keep home owners in their houses, keep the stock market from plummetting, and eventually morphed into a way to keep the Big Three profitable.

Now I don't know if the guys who thought up TARP were investors or economists. To us lay people, we kind of lump them all into the "finance guy" category. What I do know is that they were predicting the economic future of the nation as a result of their relatively small input into the macro-economic system. Tragically, it is impossible to run a controlled experiment on an economy (running repeated experimental tests, changing one variable at a time, to reveal the long term effects of your inputs). The scientific method, which has yielded so many advances in physics and biology, is useless in the face of the economy.

As a casual observer, I thought TARP had very little chance for success because the odds that the money would be directed to the agents of change most capable of turning the economy around were quite slim. Since TARP, we have seen billions and soon to be trillions more thrown at the problem. All without any experimental data to indicate that it is going to work. Even computer modeling isn't worth a darn. Let's not forget that most of the risk analysis for the mortgage backed securities was done using computer models. Computer modeling in a chaotic and even emotion driven environment isn't worth spit. I hope that this helps you to understand my position on your facts and data. I'm sorry, but if you can't apply the scientific method, you really are dealing with an art, not a science.

All of which leads to the general anger and frustration you see in the posters here. Trust me, we are not stupid. So I appplaud your research into current crisis, and I know your economic education exceeds mine (one sememster, got a D). But Bob, the track record established by the best and the brightest for the past eight months has not been heartening. It appears to me that the best and the brightest have placed our economy in a very precarious position, and that their attempts at remedy have the double joy of being unsuccessful while still being incredibly expensive. Amazingly expensive. And it seems to me, at least, BHO's only solution is to spend trillions and trillions more. All this leads to a feeling of intense cynicism and distrust of people in the financial sector. Try to understand, watching these professionals work on the economy has led many people to think "Those idiots don't know the first thing about what they are trying to do."

So, Bob, keep up the good work. I learn more from your posts than most. Just remember to cut us unwashed masses some slack. Just because we don't have a degree in economics, doesn't mean we're dumb. If you do, you might find more people getting valuable information from your posts here.

L. Ross| 4.27.09 @ 6:10PM

Bob:

I do have a question, and I'm not being a smart ass. I just want to understand. I was very suprised when you said "predicting the future is not what good economists do -- and they are not good at it."

My question is this. What is the point of economic analysis, if not to attempt to predict the future? Otherwise, wouldn't it be called economic history? Or, do you mean that you do predict the future within certain constraints. Like I said, I got a D.

Bob| 4.27.09 @ 7:14PM

L. Ross -- I have a problem with ideologues, not guys like you. It has nothing to do with education or intelligence (although I believe strongly in education). It has to do with wanting to know and willing to do the research to find out.

The point of economic analysis is to look at past data and find theories to explain the data. It is highly mathematical. Economists are like historians, only data oriented in nature. When you manage a business, you speak to economists to learn about what happened in the past that is similar to the current situation. It is then up to the manager to determine future possibilities, not the economist. It is rare to find an economist who will run a company.

Like mathematicians, economists can take historical data and apply it to current situations. You then develop assumptions about GDP, unemployment, etc., and apply those to your model. You then vary the assumptions and develop a range of outcomes. Then you assign probabilities to those outcomes. That's why we talk about "consensus estimates" from economists. Each economist will vary their assumptions and come up with sometimes very different outcomes.

Therefore, it is not the prediction you look for with economists, it is using them to try and understand the underlying data and assumptions. No economic theory, in my opinion, is totally right or totally wrong. You may learn something from each theory.

Economists also "normalize" data. That means for a particular analysis, you want to get out extraneous factors. For example, if you are looking at GDP growth, you want to take inflation out of your calculations because, as we all know, inflation is not real growth. This is why so many people who don't know what they're doing think that Reagan's results were so good. He came in at a time of high inflation. Once you take inflation out of the picture, his results were about the average rate of growth before and after his presidency.

You can always tell if a real economist is making a statement versus a political ideologue by looking at the data they provide. If they make the argument by saying the between 1981 and 1988 this or that happened, they are making a political argument. If they show you a graph of the data before, during, and after the event with all years showing, you then have an objective view of trends.

Real economists will also talk more about the underlying data than the end result. They will talk about inventories, production, GDP, unemployment, etc., and list factors that are favorable or unfavorable to a specific result.

This is why I am so adamant about things like tax cuts not being stimulative -- the true economic data doesn't support that theory. But then again, while spending is mildly stimulative, it is questionable whether there is sufficient stimulation to offset the costs of that stimulus.

There we go, L. Ross... That's my viewpoint...

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