Women & Children First
 

In I, Cringely today, the tech journalist Mark Stephens (his real name) poses an interesting alternative to the way the economy has been handled since the mortgage meltdown began:

As he puts it, that would have been putting the women and children first....

Of course the major difference is that this would be a flat-out giveaway, while, at least theoretically, the banks are supposed to be paying back. We'll see.

His "solution" would only affect a small aspect of the problem, and would only postpone the adverse effects for six months.

If by that you mean that with corporations continuing to ship out good paying jobs and replacing them with low wage, dead-end jobs, prospects would still be dismal, I agree.

Big feature in the business section of today's Globe & Mail showing that outsourcing was having several undesirable effects (from memory):

1. The original idea was to free folks from the tedium of manufacturing while simultaneously converting to a service economy. The actual result has been the loss of the middle class (Detroit was the exemplar) and an ever growing split between the rich and the poor. Turns out that the service jobs (maintenance, reprogramming, better equipment, new methods) went with the manufacturing.

2. Worse, it turns out that a lot of R&D is directly tied to manufacturing so when those jobs go offshore, so does R&D. The net result is a decline in productivity at home (who's going to come up with new methods) and an improvement elsewhere, thus cutting into exports and increasing reliance on imports.

3. Innovation lags because the innovators are not involved in the entire life cycle of the product. One of the drivers of innovation in North America has been finding new ways to do things. Sure the iPhone was designed in California and the Blackberry in Ontario, but neither are manufactured in NA any more so all the clever packaging, circuitry, etc. is designed elsewhere. Virtually all other phones are conceived, designed, and built in Europe or the Orient.

Demanding equity, ensuring Taxpayers’ profit, and reinforcing the Social Contract
 

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I think the Treasury Department should have demand equity (shares) in bailed-out banks -- and at rock-bottom stock prices. Same thing for the trillions injected by the Federal Reserve. Then, as stock prices recovered, those shares could have been sold, at a hefty profit to Taxpayers. After all, that’s what other investors get!

In fact, those winnings would have gone a long way toward financing real, single-payer Health Reform. Most likely covered the entire bill...

Alternatively, the Social Contract should have been made crystal clear -- in writing. To inject money into banks, without demanding that they inject money into the Real Economy, was IMHO folly.
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By that I meant that making mortgage payments for six months for people who can't afford their mortgage payments only postpones the inevitable by six months (and throws away the money for six months of mortgage payments). It doesn't solve any problems.

They received money because they were insolvent. The financial injections allowed them to remain solvent, which was what it was supposed to do. Immediately re-lending that money would not have solved the solvency issues.

Click me for more information.

True, but bailing out companies that are shipping jobs out of the country doesn't solve anything either. They simply go on destroying jobs, which means more people can't pay their mortgages!
:rolleyes:
Who cares about their solvency? How does their being solvent make things better for real people?

Because their solvency allows them to pay their debts, i.e. allows depositors to withdrawal their money from their accounts.

The show I linked to in my previous post is extremely informative and not editorialized. I highly recommend listening to it.

It does when one takes into consideration the problems that were caused by netting CDO's. It should have been a highly regulated practice, but since it wasn't, if any link in long chains of companies participating in the practice fails, the results could be catastrophic, causing large institutions to fall on after another like dominoes.

I don't like the idea of helping out such businesses either, but when one is faced with the option of being punched by George Foreman or run over by a Mac truck, being punched by Foreman starts looking like the lesser of the evils.

But it doesn't get rid of their bad loans. The net effect is the same: postponement of the inevitable, only with the added insult of giving bonuses to the people responsible for those loans. Better to pay individual mortgages, which allows people to pay their debts while also allowing the banks to pay theirs. Two for the price of one, and you give people a better chance of holding on to their homes, which in the long run is better for banks too!

Bailing Big Business out is just a way of confirming that they run the show, both economically (no free market) and now politically. "We the people" has now become "We the international corporations" and children pledge allegiance to their logos.

The goal wasn't to get rid of the bad loans. It was to allow the banks to remain solvent. The two are not the same thing.

No, doing nothing would have postponed the inevitable. The people are on the hook either way, either through tax revenues injected into the system or extremely high unemployment (think >20%).

That would result in costing the same as the bailouts, but only postponing the inevitable, effectively doubling the cost. It would do nothing to solve the problem.

Not two for the price of one, double the cost with none of the benefit.

That has been the case for several decades now. I support changing that, but trying to do that now instead of addressing the current crisis is like trying to remodel a kitchen while a house is flooding. It would be a waste of time, energy and money.

Welcome to America. It's a shame that "we the people" have allowed it to happen. Make no mistake, in the representative democracy that we live in, "we the people" allowed it to happen. Out of our irrational fear of socialism, we have placed capitalism and an insufficiently regulated free market (i.e. laissez-faire), and along with it, big business, on the holy alter for us to worship. That's what happens when we base our economic system on rhetorical Cold War propaganda instead of sound mathematical concepts.

Do I support changing that and removing big business from power? Absolutely, in much the same way that I support cosmetic surgery for burn victims. However, saving the life is a higher priority, and must come before the cosmetic surgery. The same principle applies to the economy. It must be kept alive if we are to have the opportunity for reform.

I think you've got it completely backwards. The source of the problem is that we've placed Big Business above all else. That isn't a cosmetic problem at all. It's a major structural weakness.

No, I don't have it backwards. Reread my post. You just restated what I said.

Perhaps a better than the burn victim analogy: If a person suffers from a compound fracture of the femur in which the femoral artery is damaged, it is important for the femur to be repaired in order to allow a full recovery, but the bleeding must be stopped first, lest the patient bleed to death.

The problem with analogies is that none of them are ever completely accurate. Sorry if mine gave the impression that the fundamental issues with the economy are only cosmetic in nature. My intent was to show that we have to prioritize (i.e. perform in the proper order) our treatments in order to maximize our chances of success.

Well said!

But in this case, the bleeding is caused by catering to Big Business at the expense of small business and workers. Making a mismanaged Big Business solvent doesn't stop the bleeding, it increases it!

Here we are nearly a year after the bailouts began and we're still losing nearly 10,000 jobs per day. That's 10,000 people every day who can no longer afford to pay mortgages, all because we've prioritized making criminal organizations (Big Banks lied to, ie: defrauded, their customers and the government) solvent!

No, that's the broken bone. The bleeding is the crisis itself. The cause of the bleeding (broken bone) cannot be effectively addressed until the bleeding is stopped.

It does stop the bleeding. What it doesn't do is repair the broken bone. Economic reforms are necessary for that.

Or, stated another way, because of the bailouts, we are losing jobs at a much lower rate than was predicted had the bailouts not occurred.

Right. And the worst thing we can possibly do is to let those big businesses start failing and falling like dominoes and cause unemployment to increase at a much faster rate than we're currently seeing. We have to stop the bleeding before we can repair the bone.

But if we let those businesses fail, they would be replaced by many smaller businesses, which means many more middle management jobs, at least until those businesses merge, which is where regulation should begin. Mergers only benefit the corporation, not consumers (less choice) and not workers (fewer jobs), so they need to be regulated.

Instead, we have the cause of the bleeding: Big Business, free to create more bleeding, which they will continue to do because it's in their short term best interests.

Why would you expect smaller business to provide more middle management jobs?

The very first place I would start regulation is to regulate credit default swaps as insurance. Particularly, purchasing a CDS should not be allowed unless the purchaser has an insurable interest, and selling a CDS should require asset reserves in the same way selling insurance policies does. Some of the effects of those two changes would have been to reduce the amount of leveraged speculation, reduce the demand for mortgage backed securities, retain higher home loan borrowing standards (e.g. no stated income loans, no no income, no asset loans), reduced the severity of or completely eliminated the housing price bubble, and the reduced home foreclosure rate.

BTW, CDS's shelter from government regulation had strong bipartisan support in Congress.

That statement isn't absolutely true, as you've stated it. Sometimes mergers do benefit consumers. Sometimes they don't. At any rate, mergers are already regulated.

Unregulated business and financial transactions is indeed the cause of the bleeding, i.e. the broken bone that damaged the artery. That doesn't change the fact that the patient must be stabilized and the bleeding stopped before the broken bone can be treated. That's what the bailouts do.

"In the first round of repayments" from financial institutions that received TARP money, "the government has actually turned a profit." - Barack Obama

The Truth-O-Meter Says:
True

That's pretty much what did happen. The US Government received warrants as part of the exchange for TARP money. Warrants are guarantees to buy stock at a set, fixed price at any time during the period of the warrant. As the stock prices of the financial institutions rise with the economy, these warrants become increasingly valuable.

The warrants were received in addition to the financial obligations of TARP. In other words, banks have to pay back all the loaned money with interest, plus they have given up the warrants so the US government can own large portions of these institutions for rock bottom prices. In effect, taxpayers are being paid back twice for the loans to banks.

Trevor

The same thing that motivates mergers: corporations get economies of scale by eliminating positions in the acquired company. No need for two of everything if you've got one company. The reverse is also true: Split a company up and its managers can't work for more than one of the resulting companies.

That's just the most obviouse place. There are many more areas that need more regulation. Truth in advertising for example!
Never said I didn't think both parties are too friendly to Big Business.
What statement is absolutely true? That one's plenty true enough.

Sure, but you can't stabilize a patient while they're still being attacked. Unregulated Big Business isn't the broken bone. It's the thug who is breaking bones!

That's a fair observation. Keep in mind that smaller companies will need fewer layers of management, though.

Agreed, that is not the only place in which regulation is needed.

Sometimes it's true; sometimes it's not true. Treating it as though it is always true doesn't help people.

No, it is the break in the bone. If we want the patient to survive long enough to be able to repair the bone, the bleeding must first be stopped.

The bleeding is a symptom, but it is a symptom that poses a greater immediate threat than the underlying problem, and thus, should be addressed first.

I agree that we need to look toward the future and take steps to prevent this from reoccurring. Where I disagree is that I don't believe we can neglect the present as we do so. We can't shut down the economy in order to redesign it. We have to deal with problems with the economy in its present state, and make improvements where we can as we go along.

Bones don't keep breaking by themselves. Big Business has been sending good jobs to cheap labor markets where it can pollute and ignore human rights for a couple of decades now, and the bleeding finally got to be too much to handle. They haven't stopped doing that because of this crisis. They've accelerated the practice, which is why we have many more people who can't pay their mortgages.

That isn't a primary cause of the current financial crisis.

Really? It seems obvious to me that if jobs disappear slowly over time, and the losses accelerate over the last decade, people will do whatever they can to maintain their standard of living, even if only for the short term. This will naturally make it easy for predatory lenders to make unethical/illegal loans. The rest is just details: Credit Default Swap, Mortgage Backed Securities, No Doc loans, etc. are all just the means by which banks did bad things, and not a cause of the overall problem any more than a gun is a cause of a crime.

The jobs going overseas are just more of those "details," not the underlying problem.

I don't know how you can think that. Movement of jobs is always a fundamental issue. Moving them to give a corporation the ability to cut costs by breaking laws is even more serious.

Because I've done a fair amount of research on the crisis. Sending jobs overseas didn't help matters, but it wasn't a primary factor. Some of those "details" you mentioned played much larger roles.

But those details wouldn't come about if not for shipping jobs! If jobs hadn't been shipped out, wages would have kept up with inflation. That would mean far fewer people who couldn't afford homes, and therefore far fewer bad loans! Far fewer bad loans means far less trouble for banks. As always, everything rests on jobs.

Wholly incorrect.

You're significantly underestimating the full effect CDS's and MBS's had on the housing bubble and collapse.

Agreed.

Incorrect.

And your evidence is?

No, I'm saying that it was the loss of jobs that affected them. People couldn't afford to buy houses, but banks wanted to make loans so they made risky loans. If those people had better paying jobs, the banks could have made the same loans without the high risks.
If you agree with that, then how can you not see that a loss of jobs means that in order to make the amount of loans the banks wanted, they had to take higher risks?

:eek:
Our entire economy rests on the backs of workers! Do you think that some CEO is going to spend thousands of times more money on goods and services just because he is paid thousands of times more? :rolleyes:

While I agree that economies depend on workers with jobs that afford them the means to join the ranks of consumers (Ford's basic idea that a worker should be able to afford a car), I disagree that "our economy rests on the backs of workers" as I think you mean the term "workers", because that assumes that the US economy is based on manufacturing, and I don't think that's true any more.

Sorry, but I don't think that sales people, teachers, firefighters, carpenters, waitresses, cabbies, etc., are less "workers" than factory workers.

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I don’t think of workers as exclusively, or even primarily, connected with manufacturers.
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Because loss of jobs was not the reason for the lowered standards for mortgages. The demand for mortgage backed securities is what drove those standards down, since mortgage backed securities could not be sold without the underlying mortgages.

Banks made the risky loans because they were not keeping the mortgages, they were selling them to other financial institutions. This is supported by the fact that banks that were less likely to sell their mortgages saw lower foreclosure rates than banks that did sell them. That would not have been true had shipping jobs overseas been the primary cause of the foreclosures.

The high risk loans were made in an effort to satisfy demand for mortgage backed securities. Even people with good jobs were taking out high risk loans, because they could get them. Decreasing income isn't why most people affected were no longer able to pay their mortgages. Increasing mortgage payments on adjustable rate mortgages was a more common reason.

Traditionally, the mortgage industry has had had a built in safeguard against such things happening. Banks wouldn't approve mortgage applications from unqualified buyers. That built in safeguard disappeared. Unfortunately, people still assumed, albeit incorrectly, that they could afford the loans they were getting, because, if they couldn't, the bank wouldn't approve them. Thus, people were able to apply for and receive mortgages that they couldn't afford.

Because, even without the loss of jobs, the banks would have had to offer the high risk loans to satisfy the increasing demand for mortgage backed securities. Housing prices were increasing. Without correspondingly increasing incomes, the portion of Americans who could afford to buy a home decreased. There didn't need to be an increase in unemployment to make the higher risk mortgages necessary in order to keep up with the demand for MBS's.

It's naïve to believe that shipping jobs overseas was a major contributing factor to the bursting housing bubble. The evidence suggests otherwise. To be clear, I'm not supporting the practice of shipping jobs overseas. But, it would be disingenuous of me to use my loathing of that practice as an excuse to assign to it blame for the current financial crisis.

I think you're missing the point. The demand for mortgage backed securities was generated by the banks, who marketed it as a "safe" investment. What made it unsafe was the fact that the banks couldn't find enough qualified home buyers, so they made risky loans. Without the loss of jobs, the banks wouldn't have had as large a pool of risky home buyers to give loans to. Instead, they'd have had a much larger pool of qualified buyers. No matter how you slice it, the root always goes back to jobs.

Now, if you want to look at the housing bubble/crisis as if it were an event occurring in a vacuum, I suppose you could blame it on a few managers at a few banks, pointing out as you correctly did that some banks didn't fall into the trap.

Right. They could do this because they had no intention of keeping the mortgages. Banks who kept their mortgages didn't suffer from such high foreclosure rates. Since those banks could not foresee customers losing their jobs, their lower rate of foreclosures is strong evidence that jobs being shipped overseas was not a primary factor.

Yes, they would have. Did you even read my previous post?

No, they wouldn't have. Sorry, but many, many people who were unable to pay their mortgages were unable to do so because the mortgage payments went up, not because they lost their jobs.

No matter how you slice it, the evidence doesn't support your assertion.

Sure I did. You're assuming that because the banks were willing to make bad loans, they'd have had the same number of people available to make bad loans to. I'm assuming that while the banks would have been willing to make bad loans, they'd have had many more qualified people to give loans and fewer unqualified people to take them. That would have brought down the number of bad loans.

No, those people got adjustable rate mortgages because of the banking industry's ridiculous idea that they could mitigate the risks of giving bad loans by charging more for them, but hiding the fees with low starter rates. Once again, if those people had better paying jobs, they wouldn't have needed the low starter rates and would have qualified for better, less risky loans. And we're back to jobs again.

Feel free to explain what the banks used for a crystal ball to see into the future in order to turn down loans top those who would lose their jobs after taking out loans if approved. Your argument rests on the banks having such an ability, at least if the argument is to be considered logical.

No, you're back to the jobs issue again. Those of us who have actually researched the causes of the crisis realize that there were other reasons that played a MUCH larger role.

No crystal ball necessary! They gave ARMs to people with poor credit and/or high debt/income ratios. The knew these people would have trouble, which is why they tried to charge them more. Completely illogical, but that's the way the banks did it!

Yes, those other issues figured more prominently in the specifics of the crisis, but that doesn't mean they played a larger role. Think of it this way: if everyone made great wages, they'd have been like my in-laws who paid cash for their home in the early 60s. No chance of a bad loan there, no matter what the banks did! Who pays cash for their first home in the US now? Practically no one, but it was fairly common 50 years ago when people were paid well.

Correction: They knew they would be reselling the mortgage, therefore were not concerned that the customers would have trouble making the payments when they increased, even if the customers didn't lose their jobs in the meantime.

Actually, it's completely logical and rational behavior in an insufficiently regulated market such as the one in which such mortgages were given.

Actually, it means exactly that.

FAR more likely, if everyone made better wages, they would have borrowed even more money for nicer homes that they couldn't afford after payment went up on their ARM's.

Higher wages would not have reduced the demand for mortgage backed securities, and thus would not have reduced the need to lure customers into mortgages in any manner they could so that there would be a steady supply of new mortgages to resell.

Higher wages typically only mean that American families can go into debt purchasing nicer stuff. It requires lifestyle changes, not increased wages, to stop living on credit. Higher wages actually make it easier to live on credit, since living on credit costs more than paying as you go.

Huh? It's never logical to give a loan to somebody you think might have trouble paying it and expect that you can reduce risk by charging them even more than normal risk applicants!

No, it means that it appears like they were major factors, when the real causes had set things into motion before they ever had any affect.

Like people did in the 50s and 60s? :rolleyes:

Once again, I never said that they would. I said that if everyone has a good job, no one needs to accept a bad loan. If very few people have bad jobs, very few bad loans can be made, despite any effort the bank makes in that direction, and no matter how big the demand for MBSes.

So Americans today are significantly dumber than Americans of the past, when they did make more money and didn't go deep in debt?

They only needed to worry about the borrower's ability to make payments until the mortgage was bundled and sold to others, at which point it became someone else's problem. The bank would have already made their profit by then.


:confused::confused::confused: Banks don't charge higher interest rates to reduce risk. Why would you think that?

I hate to break it to you, but jobs being shipped overseas is not the underlying problem. It is only another symptom, a symptom that, in this case, didn't even play a major role.

Have you checked a calendar lately? I think you'll find that we are not living in the 50's or the 60's. Pining for the good ol' days won't solve today's problems.

No one needed to accept bad loans even without good jobs. A lack of good jobs didn't cause the demand for adjustable rate mortgages, stated income mortgages, NINA mortgages. That was caused by a demand for mortgage backed securities. Better jobs would have only resulted in larger mortgages, not affordable mortgages.


BS. People with good jobs still took out mortgages that ultimately resulted in payments larger than they could afford to pay. It is woefully naïve to believe that higher wages would have prevented the problem. Focusing on that, instead of the actual causes, does nothing but help enable the same problems to occur again, only on an even larger scale.

With respect to financial intelligence, yes, that is generally true, as evidenced by the higher consumer debt to income ratios of today compared with the 50's and 60's to which you keep referring.

Yes, and the reason they needed to worry about it at all was so that they could resell it. Not worrying about it would have sent up red flags to investors.
Maybe the fact that they always give that as the reason for any higher rate they offer to one person versus others.

Simply stating it as fact doesn't make it so.

Sigh. Those who refuse to learn from history are condemned to repeat it. There are major differences between those days and now. If we don't learn from them, we'll get to repeat these days again, shortly after we've recovered from them.
BS. Simply stating it as fact doesn't make it so, and I've given you evidence of a time when that did not happen. History matters.
BS. Some people with good jobs took bad mortgages. Most did not, and those who did represented a small percentage of the bad mortgages.
So debt has nothing to do with income? That's absurd. Poor people are always in greater debt than rich people, especially when credit is eased.

In 1960, the average family paid approximately twice their annual salary for a modest house. Same in 1970 when I paid $29,500 for a house while making $14,000/year. I sold it in 1975 for $44,500 when I was making about $16.5K. By 1980, that multiple had climbed to 4 and in 1990 it was 5, but I didn't bite; I paid $262K for the home I'm in now when our family earnings were about $120K. In 2006 in California where the bubble burst first, that multiple was reported as 8! In order for workers to have been paid enough to manage that, their productivity would have had to be 3 or 4 times higher than it actually was. There's a lot more to this than worker's wages.

J. Christopher, I don't remember you being around these economic threads earlier this year? There were several people identifying as "financial household conservatives", whatever their political beliefs. NovaScotian, Aehurst, myself and others. We just don't buy stuff with money that we don't have, period. I'm not in the USA, but it's much the same in the UK and Northern and Eastern Europe. People have been screwed in different ways, for example earning in forints and taking loans in Swiss francs was a really bad idea. The French, OTOH, seem to have a gene for saving and prudence, probably on the same chromosome to the one that lets them eat advanced cheeses and patés without getting obese; and I think the other Mediterraneans are much the same. The Japanese save like mad, despite their love of gizmos. In other words, disastrous personal extravagance seems to some extent to map onto penetration by the "Anglo-Saxon" version of capitalism. Now, CWT will say that people have put themselves in hock to keep afloat in an era wherein (as even "The Economist" admits) the pie has been redivided in favour of the bosses, and I think that covers some of the ground, but not all of it. A second factor is banking practices: some countries have simply not had an indigenous banking crisis, because their banks didn't do the derivative stuff, or push people to borrow beyond their means. Not least because more people in such countries rent their dwellings, even the middle classes.

Norway and Canada being very good examples. There were no bank bailouts in Canada or Norway.

Nope. They weren't worried at all. The investors weren't worried either, since they hedged their investments in the MBO's with credit default swaps. Unfortunately, without sufficient regulation, they institutions offering the CDS's were not required to set aside sufficient assets to pay out benefits if necessary.

Charging higher interest rate due to higher risk does not lower the risk. I've never seen any claims that it does prior to yours.

Oh, the irony!

That's what I said.

What you have repeatedly failed to offer evidence of is that shipping jobs overseas was a major contributory factor in the crisis of today. OTOH, I've explained why the evidence suggests that not to be the case, but you repeatedly overlook that fact in order to keep standing on your soapbox.

I never said any such thing. Please read my posts before you reply. :rolleyes:

You are incorrectly tying wages to one's status as rich or poor. Higher wages allow one to qualify for more debt, a qualification commonly taken advantage of in the USA today. I know more people making low wages than high wages who live their lives with no credit.

Agreed to this point.

Actually, it is their income that would need to be higher. In the US, income does not tend to increase with productivity like it used to. That changed in the mid 1970's; productivity began increasing at a much faster rate than income.

How does the level of banking regulation in those countries compare to the level in the US? Our financial institutions behaved the way they did in large part because they were legally allowed to do so.

Insufficient regulation and greed in our financial industry allowed them to build up a house of cards in which they could fool themselves into believing that high risk derivative investments were not really high risk at all and, instead, were actually low risk investments offering unusually high returns compared to other low risk investments. When the house of cards collapsed and reality set in, the options for the nation were, unfortunately, bailouts for the banking system or a second Great Depression.

In countries like Spain, Italy and France, much tighter. There was also the factor that the banking system in e.g. Italy was "primitive", that is, it did its core business on a national basis without any involvement in Wall Street shenanigans. Such primitivism we should have more of.

In Spain, Banco Santandér (one of the two biggest) had long ago made a decision to stick to retail banking; consequently it was fine, except for exposure to Madoff, and went round buying up bust British banks. Tee hee! Unfortunately the smaller Spanish savings banks are being hit badly by the puncturing of a construction-boom bubble by the global meltdown, but that's not the same thing or really their fault.

Scandis got burned a decade ago, we've been here before, and are still the most successful model for a bank bailout. My own, Swedish, bank has what it calls its "church tower" principle; each branch is autonomous, only doing business as far as it can see from its church tower, that is, locally, and there is no central investment unit full of whizz-kids in red suspenders. On the other hand an investment arm of the Norwegian biggie talked several municipal authorities in the sticks into investing in American municipal bond derivatives. The bonds were safe enough in themselves, but there was some weird stuff no one understood in the boonies or anywhere else, and the vehicles made a capital call on the municipalities. It was then found that such derivatives were illegal in Norway, and had been sold fraudulently, the investment subsidiary is now being wound up amid lots of litigation. The municipalities will probably be held harmless. We also have a TV reality programme whereby experts do financial makeovers on retards who overspent by millions without even noticing; we are not such good savers as the French and Japanese, and apart from our better bank regulation I might say we belong to the Anglo-Saxon culture.

That implies we can't get both at once, which remains to be seen.

Sorry, I didn't mean to imply exclusive or with my statement. Both options simultaneously is possible.

Fortunately, it thus far appears that (in the US) the bailouts are working at least to the extent that we aren't facing Great Depression II. However, things can happen very quickly, and we won't be sure until we're well into recovery.

Banks in Canada are required to hold more reserve than in the US. Fortunately, their exposure to the funny paper market was less than 15% of their assets and one bank just wrote off it's bad paper. They are also prevented from merging to form huge entities. The Canadian population is thin on the ground (33 million in a huge country) so the only way to maintain competition is to limit size. Finally, there are only 7 nationwide banks here; relatively easy to watch over.

A substantial chunk of my retirement savings are in dividend-paying bank stocks and while they took a hit in value, they all continued to pay regular dividends and are all climbing steadily back up to their previous values (of 2 years ago).

I would like to point out that 'recovery' will mean many things to many different people. It is not like there is going to be a moment in time where economist announce that the recession is over.

The media machine would like that though. I notice already here in the US that 'recovery over' and 'things are look'in so up' type of media are suddenly everywhere. Good reports from all government agencies and if there is a loss it is LESS than expected and So it is all good.

It is amazing though that economists now know exactly when the ressesion will end but in the last 12 Years, NoBody Saw It Coming.

Typically, the generally accepted dates of entering and exiting economic recessions are those provided by NBER. To clarify what I posted previously, those dates are only known in hindsight, not in real time.

Yep, What we have here is a typical case of predicting the future without the past.

The indicative trends can sometimes be seen before the actual recession or recovery occurs. For example, if the rate at which real GDP is shrinking decreases, that is a sign that the recession could be bottoming out, though not yet recovering.

JC you have made many good points but how can you go along with the claim that someone can predict the end of recession when no one saw the recession coming?

Many, many economists (& others) saw this recession coming and publicly said so.

I didn't predict the end. I said that there are economic indicators that can give insights w/r/t current trends.