Getting it wrong.

[Griff]

David Brooks wrote a very interesting piece in yesterday's Times.

But an economy is a society of trust and faith. A recession is a mental event, and every recession has its own unique spirit. This recession was caused by deep imbalances and is propelled by a cascade of fundamental insecurities. You can pump hundreds of billions into the banks, but insecure bankers still won’t lend. You can run up gigantic deficits, hire road builders and reduce the unemployment rate from 8 percent to 7 percent, but insecure people will still not spend and invest.

If you've read him over the last couple years you'll realize he's been reading a lot of brain science and psych stuff. He is shedding his ideology in favor of a more clear-eyed view of humanity.

Mechanistic thinkers on the right and left pose as rigorous empiricists. But empiricism built on an inaccurate view of human nature is just a prison.

DB is getting it right.

[lumberjim]

In 2003, the fed had dropped to 1%, prime was 4%. I could get you a car loan for 72 months at 3.99% if you were 730+ fico. today, the fed is .25% , prime is 3.25%. I can get you 5.99% x 72 on a new car if you're 730+.

the 2.75% difference is profit to the banks.
they're just as bad as the oil companies, folks.

http://www.moneycafe.com/library/primerate.htm#chart

[xoxoxoBruce]

As Andrew Lo of M.I.T. has demonstrated, if stock traders make a series of apparently good picks, the dopamine released into their brains creates a stupor that causes them to underperceive danger ahead

Irrational exuberance.

Most important, people seek relationships more than money. If behaving a certain way helps a stock trader or a regulator fit in with his crowd, he’s likely to keep doing it without too much rigorous self-examination.

A culture of personal gain. Mo money trumps humanitarian, as a measure of a man's worth.

This recession was caused by deep imbalances and is propelled by a cascade of fundamental insecurities. You can pump hundreds of billions into the banks, but insecure bankers still won’t lend.

I don't understand why this "bailout" money didn't come with the caveat that they move it, rather than just balance their books and sit tight.

It can't be a surprise that the public is scared to make financial moves. They suddenly are told their 401k is crap, their monthly nut for the mortgage and debt has tripled, there hasn't been a newscast for 6 months that hasn't included at least, "these economic times". Every magazine and newspaper has articles on how to ride out the recession, cut your food budget and how to find thrift shop bargains.

I think the only thing that will get people confident enough to relax their grip on their wallet, is signs of progress like the unemployment rate dropping "from 8 percent to 7 percent", infrastructure projects moving ahead, signs that the government has a handle on the problem, and is keeping a close eye on those we perceived to have fucked us over...

...or the media tells them the recession is over.

[classicman]

Originally Posted by xoxoxoBruce

~snip~ the media tells them the recession is over.

I think they will begin that process soon after the inauguration.