Now that the world is in the throes of the mother of all financial messes, economists are scrambling to develop expertise. Carmine Reinhart and Kenneth Rogoff recently had this beat largely to themselves. but in the last two weeks, the IMF came out with a stud of 124 modern banking crises.
The latest addition to this growing body of knowledge comes from Stijn Claessens, M. Ayhan Kose,and Marco E. Terrones at VoxEU.
While we will excerpt the paper at greater length below, here is the key paragraph:
The episodes of credit crunches and housing busts are often long and deep. For example, a credit crunch episode typically lasts two and a half years and is associated with nearly a 20 percent decline in real credit. A housing bust tend to last even longer: four and a half years with a 30 percent fall in real house prices. And an equity price bust lasts some 10 quarters and when it is over, the real value of equities has dropped to half.
More from VoxEU:
The unique nature of the current financial crisis—combining a house price bust, a credit crunch, and an equity price bust—unlike any other one the US has experienced before, makes it difficult to assess its implications for the real economy. Barry Eichengreen recently assessed the lessons from the Great Depression (Vox 2008), but what of the evidence from modern times? However, around the world we have witnessed many such episodes of credit crunches and busts in house and equity prices. In fact, in recent work, we identified 28 credit crunches, 28 house price busts, 58 equity price busts, and 122 recessions in 21 advanced countries over 1960-2007 (Claessens, Kose and Terrones, 2008). These episodes provide some insights on how financial crises evolve and their implications for the broader economy….
How costly are recessions?
As shown in Figure 1, a recession on average lasts about 4 quarters (one year) with substantial variation across episodes — the shortest recession is 2 quarters and the longest 13 quarters. The typical decline in output from peak to trough, the recession’s amplitude, tends to be about 2 percent. For recessions, we also compute a measure of cumulative loss which combines information about both the duration and amplitude to proxy the overall cost of a recession. The cumulative loss of a recession is typically about 3 percent of GDP, but this number varies quite a bit across episodes. We classify a recession as a severe one when the peak-to-trough decline in output is in the top-quartile of all output declines during recessions. These recessions tend to be more than a quarter longer and much more costly than do typical recessions.
Crunches and busts: Often Long and Painful
The episodes of credit crunches and housing busts are often long and deep (Figure 2). For example, a credit crunch episode typically lasts two and a half years and is associated with nearly a 20 percent decline in real credit. A housing bust tend to last even longer: four and a half years with a 30 percent fall in real house prices. And an equity price bust lasts some 10 quarters and when it is over, the real value of equities has dropped to half.
Are recessions associated with crunches and busts worse than other recessions?
Contrary to the view of some commentators, the triple whammy of a house price bust, a credit crunch and an equity price bust has not always led to an eventual recession. What is true is that many recessions are indeed associated with credit crunches or asset price busts. In about one out of six recessions, there is also a credit crunch underway, and in about one out of four recessions a house price bust. Equity price busts overlap for about one-third of recession episodes. There can also be considerable lags between financial market disturbances and real activity. A recession, if one occurs, can start as late as four to five quarters after the onset of a credit crunch or a housing bust.
One of the key questions surrounding the current financial crisis is whether recessions associated with crunches and busts are worse than other recessions. Here, the international evidence is clear: these types of recessions are not just slightly longer on average, but also have much more output losses than others. In particular, although recessions accompanied with severe credit crunches or house price busts last only a quarter longer, they have typically result in output losses two to three times greater than recessions without such financial stresses. During recessions coinciding with financial stress, consumption and investment usually register much sharper declines leading to the more pronounced drops in overall output and unemployment.
Global nature of economic and financial cycles
For some, the global nature of the current crisis has been unprecedented as several advanced economies have simultaneously witnessed declines in house and equity prices as well as difficulties in their credit markets. However, this is not unusual as recessions, crunches and busts often occur at the same time across countries. Recessions in many advanced countries have been bunched in four periods over the past forty years—the mid-70s, the early 80s, the early 90s and the early-2000s—and have often coincided with global shocks. Moreover, when many countries experience a recession, many also go through episodes of credit contractions, declines in house and equity prices.
What are the lessons for the current episode?
The lessons from the earlier episodes of recessions, crunches and busts are sobering, suggesting that recessions, if they were to occur, would be more costly since they would take place alongside simultaneous credit crunches and asset price busts. Furthermore, although the effects of the current crisis have already been felt gradually around the world, its global dimensions are likely to intensify in the coming months.
The main take-away of the past episodes is that some tough times are ahead for the global economy before matters get better. Nevertheless, the nature of a recession in a particular country, if it happens, would ultimately depend on a number of factors, importantly how healthy the financial positions of its firms, banks, and households are prior to the recession, and what policies are being employed. This is high time for policy makers to act swiftly and decisively to undertake the necessary measures at both the national and global levels to meet the challenges of the crisis.
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Matt Dubuque
If we are truly to learn from the Swedish rescue operation, we must understand that they ACTIVELY managed the assets they acquired.
As houses are being abandoned and falling into disrepair in the US, the cash flows based on them will continue to take enormous hits that will amplify and prolong the crisis.
As the very deep recession (if we are lucky) intensifies, people will spend less on residential upkeep and the vicious downward cycle in property values will continue.
As such, we need a nationwide program of communities restoring and adding value to their neighborhoods.
Otherwise, any attempts to imitate the Swedish approach will merely be palliative.
Matt Dubuque
thanks for posting this. it’s a little scary that financial crisis research is studied so little; it makes you wonder even more if they have what it takes to solve the issue.
i found this paper frustrating at its superficiality.
it never got into the effects that new financial products, irrational exuberance, fiscal policy, leverage, currency imbalances, internal and external financial flows, and all the other elements that turn a few snowflakes into an avalanche.
the only one i could think of is roubini and brad’s paper. maybe we’ll get more in the future.
SNL bailout video
http://msunderestimated.com/SNLBailoutSkit.wmv
Crises are not studied because we have abolished them!
Who you going to believe me… or your own lying eyes?
Yves, I’m not a scholar of the Great Depression, but isn’t there a tremendous amount of risk associated with the Fed allowing basically the entire financial industry (and now the corporate industry as well with their foray into asset backed paper) to become dependent upon the Fed for everything to function normally?
How on Earth is the Fed going to wean everyone off of their aid?
I guess my main question is, will all of this place strain on ratings agencies to downgrade U.S. debt? – or are the ratings agencies so heavily controlled by the government and Fed that they wouldn’t dare do this?
Thanks.
PS: You have, without question, the most intelligent blog on the planet.
The analysis ends with:
“This is high time for policy makers to act swiftly and decisively to undertake the necessary measures at both the national and global levels to meet the challenges of the crisis.”
This is very suggestive. For one, it is these “policy makers” who have to an extent been steering this mess as the ship sinks. Now we are to expect that they can get the ship back afloat?
Crisis management has now distilled down to “confidence” management. The idea is that the problem is one of confidence, failing to acknowledge the conditions that lay behind the crisis in confidence. The game is delegated to the psychological arena, rather than that of the ‘real’ world. These are real world conditions, which of are such a scale that the ability to manage them has long been lost.
With governments/central banks (uniting financial wizardry with state intervention), now the last bastion of hope, a lot rests on the ability of so-called policy makers to pull a rabbit out of the hat.
So . . . what happens one the confidence in the belief in the potency of state and central bank intervention melts away?
It will be at this point, should this point arrive, that the real crisis unfolds – psychologically as well as materially. And it is at this point that psychology takes on its real importance.
Where is that darn Reset button?
Seriously. When the last, best chance for the 99% is a lottery ticket, how long will the Social Contract survive? For all the great discussions here, it would seem that the ending has already been written and only the financial spasms of government delay the eventual conclusion.
Then what?
Is that Don as in Mafia or as in Oxford?
Its the diffrenec between “break a leg” and “break some legs!”
If our problem is too many houses, what we need is more buyers. This country should revisit its immigration policy. Populate the Inland Empire and similar areas with well-educated immigrants from India, China and other parts of the world. Help them finance the purchase on condition that they learn English and undertake other efforts to jump into the melting pot. We will emerge a stronger nation.
Low-priced housing is a good thing, not a bad thing for the economy, in the long run.
Sigh….
” Nevertheless, the nature of a recession in a particular country, if it happens, would ultimately depend on a number of factors, importantly how healthy the financial positions of its firms, banks, and households are prior to the recession, and what policies are being employed. This is high time for policy makers to act swiftly and decisively to undertake the necessary measures at both the national and global levels to meet the challenges of the crisis.”
This is not good news for Americans…
Another fine writer in the apocalyptic mode, with tons of mainstream media quites in all is pieces,is Mike Whitney at
http://www.dissidentvoice.org/author/MikeWhitney/
Tompain, US high-tech jobs continue to vanish. It is cheaper to employ Indians and Chines in their countries, where there is no cost for employees healthcare and protecting the environment.
Our government prefers instead to welcome illegal immigrants, thus subsidizing private business employing them with the public funds.
Proper economic policies should not rely on immigration for solving accumulated imbalances.
Most economists seem to ignore that we have never seen a crisis like this before. The scale, power balances, modern communication, the post WW2 western world is unlike anything we have seen before. The social environment, the social contract, social mores have also changed since the GD.
Yet economist cling to their dogmas, be it gold, classical economics, neo-classical economics etc. There also seems to be a number of people who believe in using remedies, that have not been effective, based on dogma.
The best we can do is control panic, effect stability, allow transparency, keep people employed. The rest is BS.
Hopefully this stabilization and readjustment will lead to a more reasonable, functional and innovative economy over time. Survivalism and dogmatism, on the other hand, will doom us all.
I repeat- we do not understand economics well enough to safely manipulate it for a desired outcome. We can only keep things centered (most of time.. anyway)and concentrate on what matters- civilization.
What our fearless leader said was that it will take time to recover. What he didn’t say was that he measures time in generations.
Re: economists are scrambling to develop expertise.
>> This is the problem of this financial canard which is spreading like cancer, i.e, outdated models and outdated thinking about social policies dis-connected from the reality of a financial market that was fueled by chaos. Why is it a surprise that non-regulation and un-realistic economic and risk modeling resulted in this mess? Most risk models were based on historical data which was linked to your granddaddy working his ass off and saving every penny so that he could keep his family from being in debt, and then paying his mortgage on time and being connected to a bank that wasn't run by crooks and supported by crooked government politics. That era, fifty years ago, was based on accountability and reality, versus relying on lotto tickets and synthetic derivatives that were placed in front of a massive group of spoiled rich nepotistic brats that use wall street like a Playstation that connects The Treasury to their XMAS bonuses and life of luxury. These brats, however, need to spend a few years playing games in prisons and thus re-educating themselves about the reality of in your face risk!
That was a poem…
Just a rant..
One of the persistent failings of humans, especially those in successful civilizations, is that we understand the universe.
The sad part is that though we keep on learning more, we still do not understand it.
We do not understand basic stuff such as the scaling of gravity over interstellar distances or why humans, of all apes, are semi-aquatic.
Most of our understanding of the universe is based on simplified versions of reality- models. While you can appreciate that a model can reproduce only a part of reality, there are two bigger issues.
1] How does the model behave over long time periods. Does it track reality? Are we mistaking correlation for causation? Many of the recent spectacular failures in the pharma industry come from overconfidence in disease models. It turns out that there are causes that are not obvious or measurable when the models/ paradigms were created.
2] Predicting the behavior of emergent systems is a challenge as we often cannot predict how an emergent system will “emerge”. The interactions of emergent systems with unknown externalities are such that prediction is impossible.
Consider why the dominant animal on this planet is a mammal. Why not an archosaur (dinosaur) derived creature. Everything we know about them tells us that their physiology (accelerated healing – skeletal evidence, lack of aging -living crocodiles + dinosaur bone remodelling patterns, vastly superior immune systems- living crocodiles) was infinitely superior to ours. But they did not make it- we did.
Or consider why almost all animal species above a certain threshold of intelligence can recognize themselves in a mirror. Is it an emergent phenomenon associated with brain complexity, or did it evolve as an survival advantage (in certain animals) or did the survival advantage come as a side benefit.
We do not understand things that are far more fundamental to our existence than whether a purely private banking sector is a more efficient and desirable player, than one with significant but rational government intervention..
Oops..
“One of the persistent failings of humans, especially those in successful civilizations, is that we understand the universe.”
Should be
“One of the persistent failings of humans, especially those in successful civilizations,is the belief that we understand the universe”.
12:55, we are long past the time of worrying what the “proper” economic policy is for the long term. We need something to work in the short term. We have created an imbalance that immigration can solve. It is not true at all that US high-tech jobs continue to vanish. US engineers continue to vanish. Tech firms for years have been complaining about overly restrictive visa policies. Any economy anywhere benefits from an increase in its highly educated workforce. We already have the housing for them. Plenty of them will want to come to the US, which, even with all its flaws remains a land of opportunity from the perspective of most of the world’s population.
It can’t hurt to give it a try. Worst that happens is you extend the invitation and no one shows up.
I have to say that unless we fix the scams of the healthcare industry, and stand up their FUD tactics regarding innovation/ quality etc, we will never be competitive again.
For too long we have allowed doctors, other medical professionals, hospitals, insurance companies to operate without genuine competition and accountability. We pay much more than everyone in the first world but get a poor overall outcome. The funny thing is that we pay more and more for less and less.
Wait a tick here, I'm wondering with The new Fed SPE, how pouring jet fuel down an oil well — which is on fire will help provide future liquidity?
This is insane and this does not help build confidence at all! The problem I refer to is, that by adding jet-fuel cash into the commercial paper oil well fire — The Fed is supplying more oxygen to a fire and will start a bigger fire that will burn hotter and longer.
Commercial yields will go down, as the paper cost goes up, thus they are doing exactly the opposite of what needs to be done, just as with lowering FF rates. We have too much cash centered into pools of concentration and that is freezing liquidity, thus to de-thaw or put out the fire, cash has to be forced into new places, like longer term notes and things like mortgages. Obviously there is this short term lack of flow, but The Fed, IMHO, needs to jumpstart the yields on longer stuff and get money off the sidelines and into longer term bonds which can then be used as supportive capital for collateral — then, as less demand is placed on the short term redemptions, that will allow more water for the fish to swim around in, or, back to the oil well problem, The Fed needs to cut off oxygen to the panic and shock investors into a panic towards higher yields which are removed from the short term fire.
Any thoughts Ben, Warren …
oh Warren… yah, Warren is being offered sweet future value deals which place him in a long-term position for future cash flow yields, coupons that will reward him — does anyone think Buffett will toss his cash into this short term fire>> Huh, huh, do you punk>
Just to make another point related to this on-going rant of mine, which no one wants to discuss:
See: Instruments of the Money Market
Chapter 4 – Large Negotiable Certificates of Deposit
http://www.richmondfed.org/publications/economic_research/instruments_of_the_money_market/ch04.cfm
Since banks were unable to raise funds by issuing domestic CDs, they turned to the Eurodollar and commercial paper markets as additional sources of funds. Businesses also raised money by issuing commercial paper. After the failure of the Penn Central Transportation Company in June 1970, however, some borrowers found it difficult to issue commercial paper. The Federal Reserve eliminated interest rate ceilings on large CDs with maturities of less than three months so that banks could return to the domestic CD market and thereby fund loans to businesses that were having difficulty issuing commercial paper. In 1973 the Federal Reserve also dropped the ceilings on rates of large CDs with longer maturities. Ceilings on rates of large CDs have not been imposed since then.
Topmain, one of the problem with the housing bubble is affordability, more precisely wage stagnation in this country.
Immigration helps to keep the wages down, exacerbating the problem.
Young US college and doctoral graduates are struggling to find employment.
Unemployment is picking up everywhere, *including* high-tech jobs.
HP announced a layoff of 24,600 employees (http://www.pcworld.com/article/151102/.html?tk=rss_news),
GlaxoSmithKline announced a third layoff this year. This list can be continued for pages.
Promoting more immigration in this environment is ludicrous if not deliberately deceptive.
Just received this. 3:06PM URGENT call from marketwarnings.blogspot.com.
Short-term market bottom call.
http://marketwarnings.blogspot.com/2008/10/spx-spy-dow-stock-market-trading-price.html
“immigration helps to keep the wages down, exacerbating the problem.”
Really? Who is cleaning your house, and watching your kids? they need a raise!
I’m not saying the previous poster was justified, however, I thought their post was quite inane…but that sentence you wrote just got me.
I know tons of immigrants making a very good living! Perhaps they have taken jobs away from Americans, but other Americans have let them. Call it:
Democratic Darwinism if you will…
Yeah, the layoffs suck, but listen fool, we’ve all been through it!
Because wall street doesn’t value Human capital.
A confederacy of dunces it would seem…caught in a web of our own making.
I earned my Masters degree in computer science 9 years ago. I’ve been saving to buy a house since then. Still housing prices are way, way too expensive for me to even consider buying a house in a city I’d like to live in.
I say let the system collapse. If I’m out of work for 2 years, it will be a bargain for me. The money I save by house prices collapsing will be more than offset the savings I would have been able to accumulate during those 2 years.
I watched the Bernanke address on tv a short time ago. Ben, in one of his parting comments, reiterated that what ‘we are facing is a liqidity crisis, not a solvency crisis’…
I am not from Missouri but I insist that Ben prove to me that we are not facing a solvency crisis.
If we are not facing a solvency crisis then those sitting on ‘mark to fantasy’ assets should trot them out and show us what they are holding. If those holding fantasy marks do not show their assets then the market will short them into oblivion if/when the shorting ban is lifted. This is not a lot different than a table stakes poker game…If Paulson’s bluff didn’t work, even though he had a bazooka in his hand, how will GS bluff their way to winning hand?
Ben is making ever more desperate moves to no avail…just burning more $s.
What's up with the 30s Depression analogy that is being continuously peddled?
The US GDP contracted by nearly half in that period. We've barely got a couple percentage point GDP contraction and the Fed & Treasury are in panic mode justifying the absolute trashing of the taxpayer balance sheet, debasing the currency and propping up of the miscreants that made off with the loot.
What can you expect when a corrupt Wall Streeter that played a significant role in creating the mess (of course he already pocketed his millions) and a clueless academic bereft of common sense are entrusted with the "rescue"? Middle class American's wealth is being looted!
Here is some background (below) on general mortgage thinking a few years ago. I point this out, because banks and mortgage lenders that are "out of the money" wanted to push for Fannie mortgage pools that were supercharged by links to MBS-linked derivatives which The FDIC was well aware of, i.e, everyone was happy to see mortgage rates go down — and to see a tsunami of refinancing — but this tsunami of refinancing linked to synthetically engineered securities, resulted in wide spread corruption.
Hence, as The Fed lowers FF rates, which may eventually result in lower long-term mortgage rates, how will they structure new re-constituted mortgage pools in a way which takes the lotto mentality out of linking these asset pools to more derivatives, and the same engineering that brought us to this Space Shuttle Challenger moment?
The problem here, is to not to just re-fuel a housing bubble with rocket fuel which gives a green light to real estate developers or mortgage underwriters — but to engineer this solution in a way which brings people back to safe banks that pool re-financed loans into pools that are more like covered bonds — which are out of the hands of the SIFMA derivative crooks.
If long term money can be stabilized, it will free up short term liquidity problems, but then again, we got into this mess with crooks using derivatives, and by God, we better keep all the drunk crooks that started this Chernobyl meltdown in the control rooms and give them unlimited cocaine and then hope they push the right buttons next week, and the week after…
Risk Management Webinar: Risk Management in a Flat-to-Inverted Yield Curve Scenario
FTS-FDIC
http://www.fdic.gov/news/conferences/roundtables/riskmgmttrans.html
Moderator: Mike Dando
May 1, 2006
FYI: We think the best opportunities for investment are in mortgages, even though 90 percent of existing 30-year mortgages are out of the money for refinancing. That is to say, they have coupons that are lower than current mortgage rates—30-year mortgages are around 6.5 percent.
One would think that as a result, the cash flows coming out of mortgage bank securities would be significantly reduced. And while they are lower than they were the last couple of years, it is the case that the Mortgage Bankers Association Refinance Index, which is the best gauge that we have of the refinancing of mortgages that leads to prepayments, remains above 1,500. That compares to the range of 300 to 400 that it was in for most of 2000, the last time we had a rate spike. And it most dramatically compares to between 100 and 200 where it was in 1994.
.. Norm Williams: Yes. We look at data from Loan Performance and our estimates indicate that in the last few years, maybe 40 to 50 percent of the combined alt-A and B&C [subprime] was IO plus pay-option ARMs.
There's another good study out there by First American Real Estate Solutions who recently acquired Loan Performance by a gentleman named Cagan who directs their research service and he's also looked at the vulnerability of rate shock or rate reset. His calculations focused in on the 2004 and 2005 ARM book as being the most vulnerable.
In particular, he cited that low teaser rate mortgages and above market rate ARMs—which would suggest they're either loans to investors or
sub-prime borrowers—are a fairly significant chunk of mortgage originations, close to a fifth based on data from the Federal Reserve as of the end of last year.
>> Is my time up, did I win anything, do I get a bonus this XMAS for helping solve this problem … huh, huh, do I, punk?
“I earned my Masters degree in computer science 9 years ago. I’ve been saving to buy a house since then. Still housing prices are way, way too expensive for me to even consider buying a house in a city I’d like to live in.”
I agree. Let the system fail. When creative technical people (who actually create the wealth of our society) are paid more than slimy Investment bankers(*), you’ll be in a world I want to live in.
(*)-errata- “25 year old Ivy investment bankers” sorry.
“What’s up with the 30s Depression analogy that is being continuously peddled?”
Because everyone with the exception of Wall Street faker investment types know the GDP numbers, like the employment numbers are falsified.
Real GDP = Negative
Real Unemployment = 15%
The FED has in essence, BECAME OUR ECONOMIC SYSTEM!
The recent release of government funds can only increase the ability to lend but those with a lack of confidence in the future will refuse to borrow. A media campaign might trick potential consumers into believing that things will soon get better resulting in a jump start for the economy. But The public has been frightened by reports of banks going under and a depression looming on the horizon. Ordinary people are now in a panic and are holding onto their money like a shipwrecked sailor holds onto a life raft. It is difficult to cure a person that has been tramutized by the fear of becoming homeless and then forced to stand in a soup line. The economy will remain depressed until consumers regain confidence through time or the help of a good psychiatrist
The market just closed and I am looking at the most active list…BAC down 24.80%, C down 10.68%, NCC down 8.20%, MS down 24.47%, MER down 27.40%, etc…
Dow down over 500 at the close…
I generally do not pay much attention to one day of trading but since the shorting ban is to be lifted tomorrow (reported but questionable) I think today’s trading is of interest.
Anyone else think that the shorting ban will be extended? The sharks…er…shorts are sharpening their teeth for a feeding freenzy. CEOs are running for cover and crying ‘help us Hank’…
The recent release of government funds can only increase the ability to lend but those with a lack of confidence in the future will refuse to borrow. A media campaign might trick potential consumers into believing that things will soon get better resulting in a jump start for the economy. But The public has been frightened by reports of banks going under and a depression looming on the horizon. Ordinary people are now in a panic and are holding onto their money like a shipwrecked sailor holds onto a life raft. It is difficult to cure a person that has been tramutized by the fear of becoming homeless and then forced to stand in a soup line. The economy will remain depressed until consumers regain confidence through time or the help of a good psychiatrist
.
let’s just re-write the rules by the seat of our pants, as they’ve been doing for forever!
why not, we’re all creative people!
Hi, my name is BLANK and I’m an American…
Hi BLANK!
Let’s start there shall we?
Federal Reserve Chairman Bernanke is drunk with power and trying desperately to atone for his sins. Paulson and Bernanke, shills for the banking industry, allowed this financial mess to happen by not regulating Wall Street and should not be in charge of $2 trillion dollars of taxpayer money to bailout their pals. The Federal Reserve is too important to be in the hands of bankers who dominate this semi-private institution. We should learn from Fannie Mae and Freddie Mac that semi-private enterprises do not work and make the Fed a strictly government institution . As it stands now, we live in The Socialist States For Bankers. Where is the US Congress?
Immigration of skilled workers does not keep wages down, it stimulates economic activity. Those immigrants don’t only supply labor, they consume it. They will participate in the global economy one way or another. You can have them sitting in homes in India contributing to the economy there, or sitting in homes here, contributing to the economy there.
One lesson we can take from prior financial crises is that this crises will pass.
Might take a decade though.
Cary said:
PS: You have, without question, the most intelligent blog on the planet.
I read this blog often, and the contents are indeed intelligent. While not a contest, the ‘planet’ needs wider boundary discussions than just about financial capital – one such commentary, from an ecological economist was posted on theoildrum today:
http://www.theoildrum.com/node/4617
Without natural resources there is no financial capital.
“Really? Who is cleaning your house, and watching your kids? they need a raise!”
Yeah, and the CEOs have pushed for rampant uncontrolled immigration.
Its also
1. The computer/IT folks
2. The engineers
3. The scientists of all flavors
There are currently NO enforced caps on the h1b or L-1 visa. If you’re over 30 you might as well cyanide pill. (Oh I should say over thirty and not of the proper Indian caste). We’ve seen the establishment of tribal societies within all our tech companies.
We should INSTANTLY CAP ALL IMMIGRATION!
>>We should INSTANTLY CAP ALL IMMIGRATION!<<
Great – can we all go home then?
Seriously, can we then have our manufacturing back? How about the cold war – GEE really miss THAT!
Are you friggin kidding me? What planet are you on? We are, in case you haven't noticed, a GLOBAL ECONOMY, dependent on EACH OTHER.
Doesn't matter where you go – there you are my friend!
You may be a scientist, an IT person, an engineer, a teacher, a writer, a technician, an actor, a singer.
Many people have immigrated (as such) to many other countries. You don't have to stay here friend! Your services may be needed/wanted/desired somewhere else! They will call you an ex-pat and you may be really happy!
Why should there be a cap? Exporting intelligent people is what other countries excel in. What do WE excel in? That is the problem friend…and capping ALL immigration will NOT solve the problem.
Free your mind, and the rest will follow…
anon @3:21: “Really? Who is cleaning your house, and watching your kids? they need a raise!”
———-
Those who do usually work for cash and do not pay taxes. Therefore, they and their families are heavily subsidized by the taxpayers. They receive free healthcare. Free education for their children. Not to mention the cost of crime control in many immigrant communities.
BTW, the use of the word “fool” hardly adds to your argument or vocabulary and in English language may be considered offensive.
I too have a lot of immigrant colleagues and some immigrant friends whose education and contribution to our society are exemplary.
However, I do not see immigration as a solution to the economic problems we are confronted with. Moreover, at this particular time I would argue in favor of slowing down immigration, as the economy will slow.
Your propagandistically flavored post would be certainly welcomed on the pages of the NYT.
However, I personally will vote against any politician who activeley promotes immigration.
anon 3:21 here, I also said:
“I know tons of immigrants making a very good living! Perhaps they have taken jobs away from Americans, but other Americans have let them. Call it:
Democratic Darwinism if you will…”
so I agree that there are lots of people who contribute a great deal.
however, to say that those people work for “cash” don’t pay taxes is untrue and remarkably shortsighted as there are *some* employers who do pay taxe,s etc. for their legally immigrated household help.
I think perhaps your propaganda in your post refers to “immigrants” who are here “illegally”.
sorry about the “fool” word, there’s no ‘erase’ button on these things and afterwards I did regret it. I apologise.
I also added that my response was to the poster who said that immigration was the answer, which, if you read my post in its entirety, I didn’t agree with.
What politician actively promotes immigration? None that I know of. As for “propaganda” I prefer the word “yellow journalism” – I think it’s more appropriate given these times.
The recent release of government funds can only increase the ability to lend, but those with a lack of confidence in the future will refuse to borrow. A media campaign might trick potential consumers into believing that things will soon get better resulting in a jump start for the economy. But The public has been frightened by reports of banks going under and a depression looming on the horizon. Ordinary people are now in a panic and are holding onto their money like a shipwrecked sailor holds onto a life raft. It is difficult to cure a person that has been tramutized by the fear of becoming homeless and then forced to stand in a soup line. The economy will remain depressed until consumers regain confidence through time or the help of a good psychiatrist
.
Downsizing throughout the 80’s and 90’s has been one of the causes of the problem IMO. Quite often the best workers leave if they see no future in a company and many of the older (more experienced and more expensive) workers were also made redundant making companies weaker (since the skills had gone). When these companies were exposed to greater global competition many of them weren’t able to compete and those at the top resorted to financial engineering to maintain their profits.
“Without natural resources there is no financial capital.”
and without production capital, financial capital loses its base and society its ability to reproduce.
so, you might find it interesting that capital is not only some particular thing or claim but more importantly a particular set of historically limited social relations of production that, just as all the earlier sets, Must interact with nature but unlike earlier sets is inherently expansionary…an expansionary drive that’s also generated a larger than required artificial nature partially seen as permanent excess capacity and crisis of overaccumulation and overproduction.
One thing that is sorely needed here is a paradigm shift away from trying to get back to the level of growth we experienced in the last few years. Bernake and Geithner seem to keep thinking that if we could just get the economy back ‘on track’ with ever increasing growth it would fix this problem. Unfortunately what fueled that growth is exactly what consumers and business simply cannot afford any more of: Debt! Businesses and consumers are either tapped out or maxed out. No amount of credit being offered is going to fix this problem. Many businesses and consumers either cannot or will not take on any more debt no matter what the terms. The only thing that will reset our economy is when insolvent businesses and consumers default on their debt through bankruptcy and clear the excessive amount of debt out of the system.