Can't find these two "we're screwed" articles I know I read

October 15, 2010 8:16 AM

[Econpocalypsefilter] Help me find these two articles on how the economy is F*cked even worse than most people give it credit for

The first article was re: the housing market. Basic premise as I remember it:
-Since about the mid 1970s, the vast majority of American economic growth has been in the home-building (and associated) sectors of the economy. Hold those sectors constant in the analysis and the American economy looks like there's been drastically less growth than we've been led to believe.

This necessitated an ever-expanding pool of home-buyers, since homes had gone from a place you lived in to an investment property based on the principle of There will always be one more fool down the line willing to pay more for it than I paid, since housing prices do nothing but go up. Which led to the entire system becoming corrupt, fraudulent mortgages given to people who had no proof that they could afford to pay the loans back, while the brokers got their fees and got out, not caring what kind of damage they left in their wake

And now the whole housing ponzi scheme is coming apart at the seams, and people are going to keep trying fruitlessly to put Humpty Dumpty back together. I think this may have been a James Kunstler article. but I'm not finding it.

The second article was on how Obama's recovery plan for was doomed to failure before it even began. Because it was/is premised on "getting the banks to start lending again".

But another way to phrase that is to "Get Americans to go further into debt than they already are", and Americans are already up to their eyeballs in debt that they can't repay.

This is a problem because our entire economic system is based on money created out of debt rather than on real-world goods. If people don't go into debt, new money is not created. And since all debt needs to be paid back with a vig interest, the money for that interest has to be created by... yep, more debt.

posted by Pirate-Bartender-Zombie-Monkey to work & money (3 answers total)

Sounds like some of the interviews done on www.businessinsider.com. You might search within that domain.
posted by PickeringPete at 9:26 AM on October 15, 2010

There's been bunches of articles about these topics lately. You'll need to narrow it down.
posted by chairface at 10:19 AM on October 15, 2010

not the articles in question, but some pieces which cover the same ground:

a quote from chris martenson's piece, 'things will unravel faster than you think'

The most important part of this story is getting our minds to accept reality without our passionate beliefs interfering. By ‘beliefs’ I mean statements like these: * “Things always get better and are never as bad as they seem.” * “If Peak Oil were ‘real,’ I would be hearing about it from my trusted sources.” * “Dwelling on the negative is self-fulfilling.” While each of these things might be true, they also might be false and therefore misleading, especially during periods of transition. Our job is to remain as dispassionate and logical as possible. Let's now examine more closely the three main events that are converging -- Peak Oil, sovereign insolvency, and currency debasement -- using as much logic as we can muster.

and from felix salmon's reporting on the mbs fraud (the mbs's are trusts, and probably 60% are invalid and empty)

But remember that Clayton had tested only a small portion of the loans in the pool. So Citi knew that if there were a bunch of bad loans among the loans that Clayton tested, there were bound to be even more bad loans among the loans that Clayton had not tested. And those loans it couldn’t put back to the originator, because Citi didn’t know exactly which loans they were. If there had been any common sense in the investment banks, that would have been the end of the deal. But there wasn’t. Rather than simply telling the originator that its loan pool wasn’t good enough, the investment banks would instead renegotiate the amount of money they were paying for the pool. This is where things get positively evil. The investment banks didn’t mind buying up loans they knew were bad, because they considered themselves to be in the moving business rather than the storage business. They weren’t going to hold on to the loans: they were just going to package them up and sell them on to some buy-side sucker.

posted by kimyo at 2:03 PM on October 15, 2010