Economics and Annoying Smart Guys
September 24, 2008
Or "How America Stopped Worrying and Learned to Love the Nerds"
Posted by jsmooth995 at September 24, 2008 12:08 AM
Posted by: G.D. at September 24, 2008 12:38 AM
I don't totally understand the economic crisis either, but we've got to stay alert because right-wing is trying to use this moment of crisis to their advantage. Check out this article:
Posted by: blandau at September 24, 2008 12:51 AM
Jay I couldn't agree with you anymore! If we don't stand up & fight for change now we are doomed to another 4 years of suffering, & I honestly don't think American can survive another term of turmoil!!!
Posted by: Soldier Of Truth at September 24, 2008 12:54 AM
I don't totally understand the economic situation either, but I do know that the right-wing is trying to use this moment of crisis to advance their agenda. Check out this article:
Posted by: blandau at September 24, 2008 1:00 AM
The whole "Stat means" part was played real well, on some spoken word ish. And you are right on about how people need to remember this economic issue on Nov. 4th. It's not even an issue any longer, it's a stark reality. I truly hope and pray that the voting decision-making process of the average American does not rely on the image of the candidate, but more so on what they are capable of doing.
Posted by: Jay B at September 24, 2008 1:13 AM
As always, great podcast Jay. It's scary that some people are rooting for those who remind us of those who are in power. What are they thinking?
We need a change of heads, we'll be very masochists if we let the same people rule with their idiocracy for four more years.
Posted by: baakanit at September 24, 2008 2:49 AM
you're never afraid to say what's on everyone's mind first and without apology and I absolutely love you for it. never let the little hater's keep you from doing what you do because it keeps me laughing and speaks the truth all at the same time. say word.
Posted by: Isa at September 24, 2008 2:49 AM
Great post! So do you really wanna know what's up with the economy? Another blogfriend was wondering about this:
"Somebody give me the kindergarten version of how this all works. It's all going by a little fast for me...OK, the bad mortgages make up about 2% of the total. That's high by industry standards, but doesn't seem so overwhelming."
(read the whole post here:http://bjbass.livejournal.com/)
Here is my answer (WARNING - it's simplified but still long. Go get something to drink.):
Here's my take as to why 4% of bad mortgages upset the whole apple cart(so to speak).
1) the 4% is not really 4% : It is only 4% of all total mortgages that are going bad, but a lot of those mortgages - the vast majority of them/the good ones - were made before the latest looting...er, "deregulation" scheme. The number of bad mortgage loans made in recent years is somewhere between 15 and 20%. Yes, VERY bad numbers.
2) Those with lots o' money to invest, and believe me since the Reagan years these folks have gotten **astronomically** richer so they have PILES to invest, used to invest a whole lot in oil, but that became really volatile and there's that pesky war, and terrorists mucking up the supply side, so sub-prime mortgages became the new hot investment. This basically untested, untried, and largely unregulated (read "give the foxes the keys to the henhouse") type of investment was literally flooded with money. Not only did big money families and individuals line up to buy these risky financial instruments, but so did ginormous corporations who, generally speaking, don't jump on the bandwagon/join the mass hysteria. But not only could it be massively profitable, it was all insured, so these things are safe. What could go wrong?
3) Along with everything else - the massive profiteering of CEOs and CFOs. In a nutshell, corporate boards are all about the bottom line. However, and rather ironically IMO, since the "peace and love" generation has overwhelmingly become the people on those corporate boards in the last 20 years, the long range view has become shorter and shorter until it's now about 9 months long (and I'm not really exaggerating). The stockholders/shareholders and boards put enormous pressure on companies to make a big profit every single quarter without fail AND they give absolutely mindboggling (and truly ridiculous) financial benefits to CEOs and CFOs who accomplish this. Imagine you are the CEO of XYZ Corp. and you make a verra healthy 12 million a year. BUT if your company shows a handsome profit every quarter? You could get a 60 million dollar bonus - yep 5 times yer salary in bonuses. There's also been limits very quietly legislated on the $ amounts of personal liability when CEOs/CFOs/board members are actually caught stealing. Yes, it used to be that folks like this were forever ruined by this kind of behavior but that isn't the case now.
This system is guaranteed to create corporate shortsightedness and a great incentive to jump on the newest hot financial instrument before it gets played out (just like a pyramid racket), as well as participate unethical behavior. Look at Enron and all the other big institutions who have been caught bending the now flimsy laws.
SO - with all this cash pouring into the sub-prime market and corporate dare-I-say piracy becoming the norm, happening alongside ever growing globalization....it's a big market out there, and the US having the biggest GNP on the planet and lots of multi-national corporations have fingers in many pies all over the world, it's true that a mess in the US financial world can upset everybody everywhere.
So let's give them MORE money to fix it. That makes a whole lotta sense, doncha think?
One more thing to think about in this wonderfully uplifting comment/novella I'm writing: when the last worldwide depression happened in the 1930's, in the US, approximately 80 to 85% of the population had relatives on a family farm. That means, you could go to Aunt Bertha and Uncle Hiram's place to live, work and eat when the dookie hits the fan in the city. Now it's something like less than 5% of the population has relatives with a family farm.
So what would YOU do if the bottom fell out tomorrow? Because it could.
I'm now off to spread joy and laughter somewhere else. :o)
Posted by: Helen at September 24, 2008 4:28 AM
Posted by: Green Lantern (Al Jordan) at September 24, 2008 4:59 AM
I’m fairly sure you’re right that the economists don’t really understand this all either.
Economics isn’t like physics or chemistry, where you’re measuring fairly well-defined, discrete things. Economics is every person on the planet eating, buying crap they don’t need, and laying crazy bets because they’re sure this is the Red Sox’s year (please mentally substitute an appropriate American sports team back there, I’m British).
If anyone’s actually figured out how all that works, they’re the greatest genius who’s ever lived. And I’m also pretty sure they wouldn’t tell people about it like scientists usually do, because boy, they could sure get rich off it.
Posted by: Paul D. Waite at September 24, 2008 5:34 AM
Posted by: beez at September 24, 2008 7:32 AM
Totally loved it. I'm glad others are admitting that they don't get it. :)
Posted by: Rebecca at September 24, 2008 9:33 AM
(and thanks jay.)
Posted by: giles at September 24, 2008 10:17 AM
Read NYT for cultural stuff, but stick to FT for real news.
The only weird thing about this is how it reveals how dumb cable news and tv news is, but people are still turning to it for answers.
The whole credit mess did NOT just show up over night. Financial news has been covering it for more than two years now. You can find congressional testimony on subprime as far back as 2001.
People on TV right now are straight up liars if they don't talk about CDO's, or if they are blaming this on "poor people that didnt pay back their loans" There is a massive cover your ass job going on right now, on so many levels.
Posted by: xjohnharpx at September 24, 2008 10:27 AM
I've got an easy way to understand this whole mess: AVARICE
Those are all synonyms for "Golden Parachute", "De-Regulation", "Trickle Down Economics", and "Getting Government out of the Way of Business".
McCain '08!!! - Because Having a Healthy Economy is Over Rated...
Posted by: ColbyCheese at September 24, 2008 12:21 PM
This video is exactly what I would make if I had any talent.
Posted by: Adrian at September 24, 2008 12:21 PM
Your political and moral views (hell just your views in general) need to be seen by a larger audience.
Posted by: Jamari at September 24, 2008 1:21 PM
Perfect. Thanks so much for this. I'm sharing it with everybody I know.
Posted by: jonb at September 24, 2008 3:25 PM
In light of the McCain suspension announcement, I am crying laughing at this. You nearly took my life with the ER reference. Brilliant. Absolutely brilliant.
Posted by: RPM at September 24, 2008 3:55 PM
Dude, I don't even read Paul Krugman :)
I don't know shit about hip hop, but I love your vids.
Posted by: PastaQueen at September 24, 2008 7:37 PM
Bringing it hard like always and straight to the point. I was starting to think you checked out again, but it's good to see that you're keepin em comin.
Posted by: withoutscene at September 24, 2008 9:58 PM
Economics is a social science, and social sciences are like a mixture of REAL science and religion. Like real science, observations are made, data is collected, but no one really knows what to make of it all because there's nothing in the natural world to measure it against. That's where the "religious" dogma comes in. As an article of faith, economists believe certain things which are not provable or disprovable.
For example, tax breaks for the rich. It worked when Reagen did it, so, as a matter of faith, adherents to the Church of Fiscal Conservatism guaranteed it would work this time too. But it didn't. Maybe the "invisible hand" is testing us? lol.
Some other social sciences are psychology, history, political science, and, of course, sociology. These aren't exactly what people think of when they hear the term "exact science". And for good reason. All the possibilities that free will makes possible cannot be reduced down and quantified. Fields of study that attempt to do so, such as economics, are not reliable.
Every crisis is accompanied by a grab for power. Sometimes those opportunities present themselves, other times they're created. This is an administration known for its lies and miscalculations; these claims are based on economics; and they're asking for a lot of money and a lot of power.
Posted by: SDLN at September 25, 2008 5:37 AM
Having problems getting this to play, only plays the first 3 seconds with no sound then freezes. :(
tried a variety of browsers too.
Any chance of a youtube/etc mirror?
Posted by: TakaM at September 25, 2008 7:01 AM
Honestly...watch President Bush's economic address.
It was well done and outlines exactly what the problem is and what the government is poised to do about it.
Posted by: John at September 25, 2008 11:13 AM
I myself am tired of having to pick the "lesser of two evils" to run our country. It's either the "Bad Guy", or the "Really Bad Guy". It boils down to the artists of the media painting the worse picture of the other candidate who wins. Where is the sense in that? I know there's a LOT of "cents" involved. Enough to rack up billions of dollars in debt. But hey, so what if there is a "Cancer" growing in our Gov't. We need to continue to apply the "Band-Aids" upon that "Cancer". That way once the "Cancerous Growth" is big enough to be visable by the public, they will only see a huge mound of "Band-Aids". That will help calm America in a time of crisis, as we will not be able to differentiate the problem. We will only see the "Lump" of "Band-Aids" and won't know for certain if it's just a lot of "Band-Aids" on top of each other, creating a mound, or a "Cancerous Growth". BTW "Band-Aids" stock just went up 36%. Cheers!
Posted by: Jon Dough at September 25, 2008 5:21 PM
Posted by: Jay B at September 25, 2008 10:10 PM
Jay has a point, and I wonder
why the corporate-media don't
more often have panel discussions -
- of "experience experts on the issues"
with both presidential candidates,
rather than having the every now and then one
"news reporter" that always seem to spend
so much time on questions to issues that
aren't important to the country.
This would help Americans make a more
informed decision on who they should want
as their president.
It would be nice if every party ...
Dems, Cons, Libs, Green, etc. ...
have every party get their own economic advisers,
and every economic adviser from every party,
all sit down together with both presidential
candidate, and have periodic panel discussions,
every party not included in the debates,
should band together and demand this,
or something similar.
Posted by: bwm at September 25, 2008 11:27 PM
Jay I'M SCARED SHITLESS! WHAT THE HAM SANDWHICH IS GOING ON? ALL MY MONEY IS NOW UNDER MY MATTRESS AND I AM A DOCTOR!!!!!!
Posted by: stezo at September 26, 2008 9:39 AM
Jay I think the tides have turned definitively, as of right after you posted this :-)
Posted by: Richard Walker at September 26, 2008 1:17 PM
Jay, another nerd you need to keep believing in is yourself. This is another spot on post that shows that when you tell the little hater to STFU, you put together your ideas into awesome posts that just. make. sense.
Posted by: Aaron at September 26, 2008 2:44 PM
This American Life did a great job of investigating the mortgage crisis and how it is now influencing our economy with a podcast called "The Giant Pool of Money"... good stuff.
Posted by: Dawn at September 26, 2008 6:23 PM
I know that my jaw dropped when, in Bernanke's first comments, he said: "This isn't really about economics, it's about psychology." (I happen have my Masters in psych.) But I have to agree, it really is about "behavioral economics". It's an endless cycle, the market drops, we lose our minds, WaMu fails, we lose our minds again.
Maybe they should drip the dollar bills in valium before the distribute them to us; then we could truly be the silent, docile sheep that the gov't. desires.
Posted by: Stadol at September 27, 2008 10:18 AM
You're so cute.
Can I say that?
Not really relevant, sorry. But that's what I kept thinking while watching, since, well, I don't really get it either.
Posted by: rmf at September 27, 2008 10:22 PM
why isn't anyone talking about going after these CEO's etc, personal wealth? I mean, their greed got us into this mess, they got rich off of it, and now that their corp. is broke, they want money from the taxpayers they ripped off to go and do it again, and keep their own personal profits? When a regular person goes bankrupt don't they garnish their wages, take their car, and call them everyday lecturing them about responsibility? Shouldn't these ceo's own personal bank accounts, houses, cars, stocks and bonds all be seized to pay for this, before they get government money? And even if that can't happen...shouldn't they fire all the executives that let this happen because they're incompetent, and put in new, capable ceo's without a history of bankrupting their corps before they hand over the cash?
And Paulson...who just a few months ago said that the American economy was fine even though I heard the word 'recession' everywhere, for Gods sake I saw this coming and he didn't? and Bush is finally saying the word 'recession' now that everyone else is saying 'Great Depression'...these are the guys that are going to fix this??
Posted by: jaye at September 28, 2008 8:41 AM
Great video, great points.
Posted by: Clintus at September 28, 2008 3:25 PM
Its sad how little people think on their own these days...
People even suggesting reading Naomi Klein in this discussion. Wow.
Good video that needs to be seen by Digg.com. I swear they are all econ professor on there this week.
Posted by: mattg at September 28, 2008 8:32 PM
It's important that everyone know what money/currency is, as well as how it's generated and flows within our economy in order to fully understand what's at stake here. Money=debt and vice-versa. And this "bail-out" ensures that we will all soon be able to return to consuming, borrowing and accumulating even more debt.
Just for the hell of it, I'd like to pretend that the government doesn't intervene, and allows the supposed "free market" to fix itself, regardless of how long it takes. Maybe that's one necessary lesson we need to experience and learn something from.
There's a really simple yet effective 45-minute animation that explains what money is, how it's created and flows through our economy, and how we arrived at our modern-day system of currency. It's worth a look and can be found here: What Is Money?
Posted by: WATCH US EXPLODE at September 28, 2008 10:06 PM
Great clip as usual, genuine thoughts in a lyrical manner.
You basically say please vote for Obama, but without saying his name. Is it inappropriate to say, "we need Obama"?
Posted by: Andrew at September 29, 2008 10:05 AM
I love Dr. Strangelove, by the way. I feel as if we have collectively started living in a Kurt Vonnegut novel. Things are beginning to not make a whole lot of sense. At least there are a few voices in the mechanized wilderness speaking the truth.
Posted by: anthony g at September 29, 2008 3:33 PM
He didn't really say anything except that we need "change". Sounds like somebody's political motto...
It possible to educate yourself too and not just blindly let someone who THINKS they are "smarter than us" and has alterior motives make decisions that affect us all with no accountability.
Posted by: C'mon at October 1, 2008 10:04 AM
Jay - I just want to say thanks for putting in all this effort to reach out to the all of us scrolling around the net. I love your thoughts and the spirit you have behind all your observations - and I was starting to feel sort of stalkerish for always watching and never commenting. So here. Love the politics and life observations. Know (and hate) the little hater. Recognize those smart kids making stupid choices (I'm a Chicago Public School teacher). Don't know much about music but I'm with you on who the fuck gave them the moral high ground? Damn those Puritans. And it's always ok to cry. And thank god for Smart Guys - you are one of them (high school self-esteem issues aside). Thanks.
Peace - DD
Posted by: Deb at October 1, 2008 10:35 AM
I've been giving this particular video a lot of thought now since the "crisis" doesn't look like it will be neatly resolved. I agree, we have to trust the hard working nerds. Those folks who largely go un-noticed and have committed their lives to understanding the complexity of the issues and are now being called upon to tape a band aid on what appears to be a great big ugly gash that's going to need stitches (must have been your ER reference :-) What I have been thinking about lately is how a lot of the stuff we're seeing stems from people basically not "acting right." By "acting right" I mean, in a very basic way, those actions that would make the world a better place. What if, for example, you were a company CEO and your company was heading to ruin. "Acting right" perhaps would be forgoing the gazillion dollar bonus knowing that for the greater good, those resources could help prevent the loss of jobs, pensions and benefits for the majority of us who will never be in the position of being handed a gazillion dollar bonus. I don't know about you but most jobs I've had have job expectations that if not met result in termination, not additional reward. The person at the top gets to parachute to safety (and most likely another opportunity to be in line for another gazillion dollar bonus somewhere else) while the rest are left to fall to the ground. Acting right would also pertain to some, vulture-like mortgage brokers who, in the interest of racking up sales, preyed upon individuals and families with the promise of home ownership if they signed up for choking amounts of debt. Yes, there was the promise of increased home values, but selling a mortgage without making sure the client understands all the details is, again, not right. For most people buying a home is a huge undertaking full of proud emotions. How devastating to then not be able to keep your home (not just "house," but "home"). The greater good would have been served with real education around home ownership and budgeting. I guess that would have interfered with getting the signatures on the application and the commission check in the bank. I don't see "acting right" as some type of value judgement. We all have different perceptions of things and it is through the sharing of those perceptions in honest dialogue (my shameless Paulo Freire plug) that we move forward as humans. Acting right is thinking about the impact of our actions on other people before we take those actions. How as humans have we strayed so far from being accountable to each other? Were we ever accountable to each other?
Posted by: Kristin at October 1, 2008 4:52 PM
I haven't commented in a while but your videos AS USUAL are on point. Do you write this or does someone write this for you, because you are seriously brilliant.
P.S. I have a crush on you too LOL
Posted by: SeattleSlim at October 2, 2008 7:56 PM
the "annoying smart guy" is Ralph Nader. stop sleeping. votnader.org
Posted by: fuckaname at October 3, 2008 4:38 AM
My friend sent me to this site for a different video, but this one really rang true. The economy, global politics, etc. are hella complicated. People who understand those things (or who at least can understand other people who understand them) are better equipped to lead than people who you might feel more comfortable going moose hunting with.
Posted by: Cerebral Paulie at October 13, 2008 11:00 PM
I get it ..... but I'm not tell you !!!
Posted by: Ai at October 17, 2008 9:18 AM
Posted by: Jon Plummer at November 5, 2008 1:05 AM
Wow! Greets! Really funny. Big ups! Tnx! Saw!
Posted by: pavlo at November 6, 2008 3:59 AM
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