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'The Real Economy'

Last night I told my middle daughter, Isabella, the one person in the family who always seems to have money, that the stock market had dropped 778 points in a single day.

"What does that mean?" she said.

Good question. And I'm not sure anyone knows the answer to it. To say we're in uncharted waters doesn't quite do justice to the situation. It's more like we're in uncharted waters on the planet Solaris.

You may have noticed that in recent days I've been nibbling around the edges of the mortgage crisis. A couple of days ago, I had a piece on a little townhouse now owned by Fannie Mae (and implicitly the taxpayers). And today a bunch of us have put together a story on widespread outrage over the proposed bailout.

Nut graf: "To a degree that few Americans could have appreciated just a few weeks ago, the economy runs on credit. But politics runs on a form of credit, too, generically known as trust, and trust has been a scarce commodity recently in Washington."

Here's what I don't know: How much will all this undermine what people call "the real economy"? Because although many of us have a rooting interest in Wall Street (via investments), our primary financial concerns involve jobs, housing, the day to day commerce of modern life. So that's the next area to poke around: What's happening on the streets?

Robert Samuelson invoked "the real economy" in his column yesterday in The Post, as did Michael Darda in a Wall Street Journal column.

Samuelson: "A hallmark of the crisis has been the stark contrast between the 'real economy' of production and jobs and the tumultuous financial markets of stocks, bonds, banks, money funds and the like. Even with the 60 percent drop in housing construction since early 2006, the real economy has so far suffered only modest setbacks. Yes, there are 605,000 fewer payroll jobs than there were in December; still, 137.5 million jobs remain. Meanwhile, financial markets verge on hysteria."

But Darda says we'll see a lag effect -- a recession, inevitably:

The Treasury bailout plan to recapitalize the U.S. banking system may help the U.S. avoid a deep and protracted recession. But even if the plan succeeds, it almost surely will not prevent a recession.

The major reason for this is that the credit markets have been under incredible stress for well over a year, and have recently taken a significant turn for the worse. During the last two weeks, the spread between Libor (the cost of borrowing between banks) and the rates on zero-risk Treasury bills exploded to more than 300 basis points, the widest gap since October 1987. This kind of stress reflects fear and a lack of trust among banks, which will be reflected in the real economy with a lag.

So, in six months, will it be possible to get a loan? To help pay for college tuition, for example?

Not that I have any personal interest in such esoteric concerns.

By Joel Achenbach  |  September 30, 2008; 8:10 AM ET
 
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Next: Enter the Grown-Ups

Comments

Be right back

Posted by: Anonymous | September 30, 2008 9:33 AM | Report abuse

I'm having my roof replaced with a nice new galvanized steel one that should outlast me by many years. Thanks to a lack of hurricanes in our state this summer, declining steel prices, and the collapsed housing market, the project is less horrifyingly expensive than it might have been (it's still costing about as much as a Pontiac Vibe).

I'm fortunate in being able to do this project. I wonder how many cars aren't getting their oil changed, air conditioners going without routine maintenance, and various other things left to rot.

Might I suggest that Sony's Blu-Ray player might be a bellwether for disposable income? It's an expensive semi-replacement for dvds, which work quite well on most televisions, especially with reasonably-priced newer players. Only an exuberant consumer would spring for one now.

Posted by: Dave of the Coonties | September 30, 2008 9:40 AM | Report abuse

Repost:
Good morning.
dr, you're right. I'll try(italics) to be fair from now on.

I liked Joel's article ending with the musings of the funeral directors. When people in their line of business are worried about the economy you know it's in trouble.
Martooni, have you considered retooling from Fairy Doors® to plywood caskets?

Posted by: Boko | September 30, 2008 9:04 AM

Posted by: Boko | September 30, 2008 9:42 AM | Report abuse

Off kit, but a topical New Yorker cover:

http://www.huffingtonpost.com/2008/09/29/the-emnew-yorkerem-can-se_n_130354.html

Posted by: dbG | September 30, 2008 9:54 AM | Report abuse

Jeepers Joel, if I had the answers to such questions I wouldn't be working here.

I remember back in 1987 when the market had that huge "meltdown" and the catastrophic effects were, well, nuthin' much.

Which isn't to suggest that we aren't in bad shape. (Perlstein has a nice column about that.) It's just that the way all this manifests itself may be wildly uneven. And probably unpredictable.

I do think, though, that you will see people working a lot longer. Retiring at 65 will become a theoretical construct, like driving 55 on the freeway. Although this bites pretty much for those who don't love working, I can also see economic upsides such as increased tax revenue.

Mostly, though, I think you will see a real pull back in consumer spending. People will start to find their inner Puritan. This will certainly hurt luxury goods like, you know, fancy shmancy phones.

I hasten to add that newspapers will probably not be affected. For consistent purchase of newspapers is all that separates us from barbarians. (Look, I'm just trying to be helpful.)

The impact of this decreased spending is the real wild card. If I'm not mistaken, one of the problems the economy had pulling itself out of the Great Depression was the money-filled mattress effect. Maybe this will increase real savings and reduce dependence on credit. Maybe it will lead to another depression. I really don't know.

I do know that market losses only really count if you sell. Markets lately are crazy volatile (Hey- one of my other screens shows that I've just recovered several thousand dollars just typing this!)

I have been told that college loans should be readily available. (By which I mean loans to students for the purpose of college education.) The problem, of course, is in paying them off. Now, this, in theory is the responsibility of the student. But history suggests that recent College Graduates in financial distress can become highly-educated boarders. Who don't pay rent.

Which is why it might be prudent to suggest that your College-bound senior majors in Fantastically Wealthy.

I'm certainly doing so with mine.


Posted by: RD Padouk | September 30, 2008 10:00 AM | Report abuse

JA, I'm with you on the daughter with money regardless of what is going on around her. My daughter is the same way. When I took her to the emergency room yesterday, while she was sleep, if I had rummage through the bag, I probably would have found a dollar or two laid back. Homey, (this is what I call her when being sarcastic) always has a dollar set back, never spends the last. But she can do that because she tries to keep me penniless.

Great kit. It seems I can hear the tiredness in your voice, via, the kit. What a great way to start a week, *sigh*.

I can hear the hysteria on television, but no one has really broken this thing down where people like me, and all those that basically live on entitlements will fair in these events. I suspect it cannot be good, seeing the upper sector is crying and screaming. What will it be like for those of us on the bottom ? Can it get worse? If people living on fixed incomes suffer any more than they already do, well I'm just going to leave it at, you ain't seen nothing yet. All bets are off.

Posted by: cassandra s | September 30, 2008 10:01 AM | Report abuse

Babysitting is a growth industry, you know.

Posted by: RD Padouk | September 30, 2008 10:03 AM | Report abuse

Dave,

That reminds me that the Bush has yet to ask us all to go shopping. Thanks for stepping in and making "the plea."

Dolphie!

Posted by: Dolphin Michael | September 30, 2008 10:05 AM | Report abuse

One positive thing is that the problem of the aging federal workforce (and backfilling it) is no more. No one can afford to retire.

Posted by: Raysmom | September 30, 2008 10:14 AM | Report abuse

Indeed Raysmom. Unfortunately, my whole strategy for career advancement was based on having everybody else retire.

Posted by: RD Padouk | September 30, 2008 10:16 AM | Report abuse

Pssst, Isabella, see Arthur M. Schlesinger Jr.'s 1986 book, "The Cycles of American History," the chapter titled "Affirmative Government and the American Economy":

Last graf:
One must add, though this is doubtless personal prejudice, that undertakings which rely on social cooperation rather than individual greed, which call on people to work together rather than do the other fellow in, may be somewhat more elevating for the nation than the dog-eat-dog, devil-take-the-hindmost ethic of self-interest. It would still appear that affirmative government offers the best chance if this horrid world of strengthening our democracy, preserving our institutions and enlarging the liberties of the world."

Examples of devil-take-the-hindmost from economist Scott Burns, whose column was titled "Who Started the Lying Game?" In our Sunday paper. Among the candidates are:

"Bear Stearns engaged in abusive and illegal loan practices.'

"Countrywide engaged in deceitful lending.'

"GMAC Bank and other student loan companies engaged in deceptive advertising.'

"Bank of American, UBS, Merrill Lynch, Morgan Stanley and Wachovia deceived investors by selling hem risky auction-rate securities as perfectly safe."

These are only four of the 12 examples that Burns lists. And Burns has a lot more to say in this particular column:

"So let's ask a rude question, *Where did htey learn to make deception a basic operating procedure*?'

"Answer: Washington, D.C., the home of the federal government and the source of current eforts to rescue our economy.'

"When it comes to deception, misleading accounting and lack of disclosure, Uncle Sam is the father of all con artists. Indeed as large as the current crisis is, alll the losses racked up by the Nitwit Sector pale to what our governemnt has done."

You can read the rest of Burns' most recent column here:

http://www.dailybreeze.com/ci_10585060

P.S.: Burns also takes on the truthiness of presidential candidates toward the end of this column:

"But politicians of both parties continue the convenient fiction of our $5 trillion-plus in public federal debt. Coming up with $70 trillion is impossible without radical reform of entitlements. That's the last thing Sen. John McCain or Sen. Barack Obama wants to discuss in the run-up to the election. [Lehrer did try to draw them out.]

"So Washington's deception remains business as usual. It continues to provide a terrible example to Wall Street and the general public."

Posted by: Loomis | September 30, 2008 10:18 AM | Report abuse

To paraphrase Lloyd Bridges in Airplane, "Looks like I picked the wrong time to try to get a car loan."
Seriously.

Posted by: LadyWesley | September 30, 2008 10:26 AM | Report abuse

My husband and I had an interesting discussion about the economic crisis blame game last night before nodding off. I thought many are to blame: individuals, business, government, so pointing fingers is difficult.

My husband rapidly made the analogy to being fat. Why are people fat? Is it the person who gorges himself and eats too much? The gormand who knows better but does it despite himself? The poor soul who knows nothing about nutrition and can claim complete ignorance, yet stuffs his jowls? Is gluttony in the genome? Is it the fault of restaurants that typically serve huge portions of food, many laden with fats and sugars? I added: Is it the federal government for its failure to push the food pyramid, enforce more stringent food labeling and wage an effective public relations campaign stressing caloric intake and exercise?

Where does the blame fall when there's more than enough blame to go around. And yes, I enjoyed reading Pearlstein's column last night.

Posted by: Loomis | September 30, 2008 10:28 AM | Report abuse

I'm happy to see the issues this kit and discussion are bringing out! I was becoming worried that the post-911 mentality of "OMG! Disaster! Be afraid! Quick! Do what we say! Or you'll be....subject to disaster! Scary!!" was all too dominant -- not in these discussions, but in our nation.

Yes, what about the real economy? And working people? And support for those in real need? Effect of a bailout or bad-asset-buyout or whatever you call it on these? Effect of doing nothing? Or something else? Good questions raised, kit and boodle!

Posted by: friend of tbg | September 30, 2008 10:30 AM | Report abuse

I'm 55 yrs old, have been out of the work force for 7 years, and my income depends on market investments that were reduced by a third from the fallout from the dot.com bust and are looking more anemic by the day.
Look up 'screwed' in the dictionary and you'll see my photo.

Posted by: Boko | September 30, 2008 10:33 AM | Report abuse

Welcome, friend of TBG!

What, us worry? :-)

Posted by: dbG | September 30, 2008 10:34 AM | Report abuse

The sky has been falling ever since GWB took office!

I've been warning everybody, but people just. don't. listen!

Posted by: Henny Penny | September 30, 2008 10:44 AM | Report abuse

Part of the problem is that the mythical "main street" doesn't readily see what's happening. For most folks right now, it's business as usual. Their bank deposits are safe (FDIC insured), they're still getting a regular paycheck, and have become somewhat inured to high gas prices.

A related part of the problem, as I heard on the radio this morning, is how this crisis is being described by the politicians and the media. It's a Wall Street bailout, and "main street" doesn't give a tinker's da*n about Wall Street problems. Someone needs to re-package this thing as an economic safety net for the nation. It's going to be when folks begin to realize that they can't get, or can't afford a home equity loan, or that their employer can't get operating expense loans to cover paychecks and new stock/equipment and have to lay folks off that things will begin to hit home. When they realize that their 401(K) isn't worth half what they thought it would be. That may take 6 months or more to manifest itself. By then, the effects may take years to work through the system.

Posted by: ebtnut | September 30, 2008 10:53 AM | Report abuse

*checking*

Nope, no front page alert yet...

Hey FoTBG!! *wave*

:-)

Posted by: Scottynuke | September 30, 2008 10:54 AM | Report abuse

Exactly, ebnut. I have been trying to explain this in terms of the credit crisis - tighter loans for small business, home and car loans, etc. Without some sort of relief I believe this will be particularly true of the smaller, community banks, of which we have so many. Most of them had lots of holdings in Fannie and Freddie, and those are worthless now. The "bailout" plan offered some relef for that. As it is, as someone explained in the last Boodle, those banks have to be more careful with credit (even to good longstanding customers) to meet their required reserves. I understand that many Americans really don't pay attention to problems unless they believe they personally are affected (thus the difficulty with social issues and the poor). I'm afraid that will result in a lot of hindsight here.

RD, this was my career strategy too!: "Unfortunately, my whole strategy for career advancement was based on having everybody else retire."

Posted by: Ivansmom | September 30, 2008 11:12 AM | Report abuse

Gee Whiz, Loomis, can you make fat people feel any worse than they already do, please try?

Posted by: cassandra s | September 30, 2008 11:26 AM | Report abuse

Jon Swift sees the fault with the failed bail-out package as being too draconian on Masters of the Universe:

http://jonswift.blogspot.com/2008/09/can-happy-days-be-here-again.html

I caused some marital disharmony yesterday when I blew my stack at the cost of the window blinds my wife ordered to replace our broken ten-year-old lead-laced Chinese cheapies from BigBoxOfHardware. I ranted about tough times and college tuition and our limited disposable income versus her unlimited desire to travel.

She responded by canceling the order on the home security system she had wanted. So if you know where I live, in a few weeks you can come steal some really nice window treatment.

Posted by: yellojkt | September 30, 2008 11:28 AM | Report abuse

An article I thought very good on why some people are fat (dangerously so).

The reasons are many included genetic for some.

http://www.theglobeandmail.com/servlet/story/RTGAM.20080923.wobesity0929/BNStory/specialScienceandHealth/home

Posted by: dmd | September 30, 2008 11:30 AM | Report abuse

Belated good mornings everybody...

Was up late watching all the commentary on the fallout. Nothing like a good horror flick before bedtime, except when it's for real.

Boko... I do make a little coffin y'know. As for making large people-sized plywood ones, I think that's a market I'll try to steer clear of. I prefer making things that make people smile.

Speaking of which, I made a bunch of tombstones out of plywood and particle board scraps to decorate the front yard. Little Bean and I spent some time yesterday afternoon painting the epitaphs. The best ones are on a group of three smaller tombstones kinda clustered together. The first says "I'm not dead yet!", the second says "Neither am I!" and the third says "Are too! Liars!"

My favorite, though, is a big one that reads "Try the fish, she said... and now I'm dead" with a fish skeleton painted under it.

They're no works of art, but they were fun to make. I'll try to post some pics later.

Posted by: martooni | September 30, 2008 11:31 AM | Report abuse

Martooni, with the expansion in halloween decorations there could be a great addition to your line of doors there.

We have the styrofoam gravestones for our yard - but they break easily. Custom ones would be great fun.

Posted by: dmd | September 30, 2008 11:34 AM | Report abuse

Ivansmom! you have me rolling!

I am really hoping that real old fashioned banking will return on some basis. OR, at least survive. Around here, folks are running to Eagle and Chevy Chase Bank amongst others. (Bethesda)

Posted by: Dolphin Michael | September 30, 2008 11:35 AM | Report abuse

http://en.wikipedia.org/wiki/Don%27t_Panic_(Hitchhiker%27s_Guide_to_the_Galaxy)


Posted by: omni 2 words | September 30, 2008 11:37 AM | Report abuse

It's the only possible strategy for me. Thanks to our direct payment from gunmint pension scheme it may still work.

Posted by: shrieking denizen | September 30, 2008 11:37 AM | Report abuse

I was filing old papers and found a statement from my wife's 403(b). It had declined 10% in the first quarter this year. Our fund manager at AIG must have been way ahead of the curve.

Posted by: yellojkt | September 30, 2008 11:41 AM | Report abuse

The big weakness in the "fat" analogy is that nobody ever thinks that getting fat is a virtue. However, at one point, issuing sub-prime mortgages was consider quite virtuous. Remember, the idea was to help economically disadvantaged people live the American Dream of Home Ownership.

Posted by: RD Padouk | September 30, 2008 11:53 AM | Report abuse

boko - Ouch. I feel for you. I would hate to have to rely on the market real time.

Posted by: RD Padouk | September 30, 2008 11:57 AM | Report abuse

Wow, Milbank isn't pulling his punches.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/29/AR2008092903406.html?hpid=opinionsbox1

Posted by: RD Padouk | September 30, 2008 11:59 AM | Report abuse

I'm so used to being in financial pain that this new situation shouldn't even phase me.

But now the wood I use to make my little doors just went up $5 per board -- a 30% increase. My other supplies, like paints and stains and hardware and copper (copper is a big ouchie right now) have all been rising steadily in cost -- about the same percentage. And don't even ask me about shipping costs -- they've doubled and tripled over the past year.

I blame most of it on high fuel costs and hurricanes, but if the business climate gets any worse I really don't know what I'm going to do.

Sales are good, but my profit margin has shrunk to damn near nothing. I could raise prices, but then sales will go down, especially in a consumer market like now -- and I'm not exactly selling a needed commodity. I've been banging my head against the walls trying to figure out how I can cut costs and/or increase production, but I don't have the capital or credit (even before this mess) to invest in the equipment and people necessary to do that.

So what's a struggling gnome to do?

I guess I'll just do as I've always done... Deal with it. I'll b!tch and moan to high heaven about it, but I'll eventually run out of hot air and curses and deal with it.

Posted by: martooni | September 30, 2008 12:08 PM | Report abuse

martooni - I wouldn't be scared to increase your prices by a little. I imagine that your goods are unique enough that they won't be terribly sensitive to price. You might be surprised how much the right customers will pay. And, of course, you can always drop the prices down again if you need.

Posted by: RD Padouk | September 30, 2008 12:22 PM | Report abuse

"It's hard to see how a depression could get under way when so much capital is waiting in the wings," writes Jason Zweig of the Wall Street Journal in his column headlined "The Depression of 2008? Don't Count on It"

http://online.wsj.com/article/SB122272238714287459.html

Thanks, yellowjkt, for the link to Jon Swift hilarity.

Posted by: friend of tbg | September 30, 2008 12:30 PM | Report abuse

SCC - yellojkt

Posted by: friend of tbg | September 30, 2008 12:32 PM | Report abuse

RD, there was a time when being fat was desirable (evidence of good health and plenty of resources.) So I guess "rich is the new fat" in that sense and there may come a time when it's understood that wealth after a certain point (say, 1950's style middle class) does everybody more harm than good.

Posted by: kbertocci | September 30, 2008 12:34 PM | Report abuse

Yello, um, what size are those windows and how many?

Posted by: dbG | September 30, 2008 12:37 PM | Report abuse

kbertocci - that's a good point. I guess one could argue that giving people sub-prime mortgages they can't afford is kind of like a well meaning mother forcing her child to "clean his plate."

Posted by: RD Padouk | September 30, 2008 12:40 PM | Report abuse

dbG,
Don't break the windows. I'll tell you where I hide the key. Oh, you're seeing if they'll fit your house. Come over one day and I'll let you measure them yourself.

Posted by: yellojkt | September 30, 2008 12:41 PM | Report abuse

I agree with RD. Raise your prices a touch.

It may not be a "needed commodity" but you're selling imagination, and that always makes money (look at how the movie industry has expanded despite selling tickets for 20 bucks and popcorn for 50 bucks. Honestly, between fairy doors and Dumb and Dumber...).

Posted by: Wilbrod | September 30, 2008 12:52 PM | Report abuse

martooni: I have plenty of wood that I've squirreled away for the life of our restoration project. The majority of this is pine, some of it quite old. Let me know about the dimensions you use most, and I'll be happy to try and help you out.

Posted by: jack | September 30, 2008 1:02 PM | Report abuse

Boko,
I live in a retiree-heavy town (including me, soon). Losses of savings, not to mention inability to sell houses, mean quite a lot.

Posted by: Dave of the Coonties | September 30, 2008 1:06 PM | Report abuse

Obama getting off the plane, cell phone in hand, talking to someone. I thought, I feel really, really, old. I've never seen a Presidential candidate talking on a cellphone. I wonder if John McCain talks on the cellphone? Perhaps he's like me, totally lost on the cell phone. I'm going to have my daughter teach me how to use a cell phone. Is it one word or two?

Posted by: cassandra s | September 30, 2008 1:06 PM | Report abuse

Thank you, ftb; shanah tova to you, too. And to a bea c and her family.

I know this will come as a shock, but I think i need to be somewhat contrarian: I usually regard Pearlstein's columns pretty highly, but I think his last one is seriously off the mark. His basic contention is that people aren't taking this economic thing seriously. Well, I see absolutely no sign anywhere that people aren't taking it seriously. Quite the contrary. The thing is, "taking it seriously" isn't the same thing -- even remotely -- as "knowing what to do about it," or "agreeing what to do about it," much less "trusting what the gummint [Bush et al.] say needs to be done."

And there is yet a fourth caveat: what, exactly, CAN "the American people" (meaning you and me, boys and girls) do about it? Hell if I know what I'm supposed to do; do you know what it is Steve wants YOU to do? "Cuz he sure doesn't say in his column.

Further, Steve seems to be implying that if only [somebody? you and me? Congress? Wall Street?] took this thing "seriously" and undestood just how bad it was, well, why then, we'd all just jump on the Bush-Paulson bandwagon and vote for the bailout.

Um, no, Steve, if that's you're point, then you are just flacking for the bailout plan (initial plan or revised version, it doesn't matter).

Here are three points that bother me:

1) The public, overall, does NOT seem to support the bailout, by about 55-45, according to one set of numbers I saw. Be that as it may, I don't think this is from lack of seriousness, and possibly not from lack of understanding. That said, it is a reasonable point that the Congs who voted against the bailout were not so much craven cowards who want to be re-elected (though of course a good many are); to some extent they are adequately reflecting their constituencies. And that always comes back to the never-to-be-resolved question of when does an elected official do what his constituency wants, and when does he/she defy them?

2) It is assumed that the bailout plan was a good plan, and only some kind of moron wouldn't see that. But I think there is reasonable room for discussion of whether the plan was any good or not. (I'm damn certain the initial Paulson version WAS a really bad idea.)

3) For me, this is the clincher: yes the Dow fell 778 points. Right now it is back up 263 points, and who knows how much it will recover by the closing bell-- or by tomorrow, or the day after. So people saying the American economy "lost" one trillion dollars in a day ought to be running around saying, well, maybe we only lost half of that. Or maybe in three days it'll all be back to where it was--but nobody will run around saying that we "made" a trillion dollars in three days. In short, the sky hasn't fallen yet. Yes, pieces of clouds have tumbled down, but let's not panic prematurely, nor run for the bunker just yet.

Posted by: Curmudgeon | September 30, 2008 1:11 PM | Report abuse

The inescapable fact is that there is a lot of lost money sloshing around out there in the form of bad mortgages and someone is going to end up without a chair and holding the hot potato when the fiddler calls the tune.

Now that I've thoroughly mashed that metaphor, I'm getting less and less inclined to think that throwing good (or even freshly minted) money after bad is the best way out of this.

All those re-fi cash-outs went somewhere. I hate to think that I'm footing the bill for some deadbeat's basement rec room remodeling.

Posted by: yellojkt | September 30, 2008 1:19 PM | Report abuse

Mudge (as I've seen you called, not trying to be unduly familiar) -- I couldn't agree more. That's what I've wished I could say so well.

Posted by: friend of tbg | September 30, 2008 1:19 PM | Report abuse

Martooni, get yourself over to my blog and email me at my "pretty secure" address, and you will get some white oak, heart pine, walnut, and brazilian cherry boards. 3/4" floorboards in various widths. Also, I had a tip for you anyway today. Now's the time. Or if by some chance you know TBG, she's got my regular email address.http://jumpersbloghouse.blogspot.com/

Posted by: Jumper | September 30, 2008 1:27 PM | Report abuse

Quick! I need 700 bil and things will be all better, you know, business as usual.

Trust me on this one!

Posted by: Wall Street Junkie | September 30, 2008 1:29 PM | Report abuse

Obama's got the bully pulpit now. My general idea is bail the thing out and fix blame later. Just make sure later gets here.

I'm less paranoid now that I found a gas station open. They did an odd thing there; turned the pump pressure way down, so it takes 10-14 minutes to fill up. What they didn't know is, my temperamental truck has always refused to take a fillup at the normal rate; spits it back out the tank hole if I try full-speed pumping. So I was used to it.

One thing the article on overeating didn't mention: The horrible, icy vacuum maw of existential void at my very center, the Lovecraftian horror that comes late at night and can only be filled with that exquisite simulacrum of love; that warm thing of hope and goodness that brings me back from 2,000 light-years from home: the big, indeed too-large, plate of pasta.

Posted by: Jumper | September 30, 2008 1:37 PM | Report abuse

Obama on a cellphone. Now there's a number I'd love to have!

Dow's up 353 when I just looked. Maybe the sky won't fall just yet.

I'm with you, yello. I'm for keeping liquidity in the system, we gotta have that, but darned if I want to pay for somebody else's stupidity. I've been frugal and saved all my life, and I'm pretty comfortable now. I'm for keeping people in homes they can afford. Just stick it to the a$$hats who lied and cheated their way to riches.

Posted by: slyness | September 30, 2008 1:41 PM | Report abuse

In fact, the stock market has lost $4.5 Trillion in value from its peak last year. The $1.2 Trillion lost in ONE DAY is the historic record that sets a new benchmark for market sensitivity and is a harbinger of the potential for a 1929 kind of crash.

And since when are constituencies financial gurus? Are they always right? If a majority of e-mails and telephone calls advocated fascism, should it be enacted? It is the Congressional constituencies that got us into this mess with profligate borrowing and spending. Wall Street simply did what it does - make money on money and lose it the same way, with the help of the blind eye towards regulation that the cyclopean Bush administration fostered.

Posted by: Shiloh | September 30, 2008 1:43 PM | Report abuse

I know what you mean Cassandra,my cellphone came with a handbook that is bigger then a novel. I usually only use it for emergencies. last week unknown to me,it was on vibrate mode? and I missed a couple of calls. I will figure it out eventually.

As for yesterdays big drop, it would be easy for me to say who cares,I don't have any money in the market,so I didn't lose any. But it just makes everything tougher even for those of us that don't have much. I have friends and family that lost a good bit of money over the past week.It may be a while before they can recoup any of that money.

As for the bailout,I think it is a good thing,a necessity for our economy as a whole.We certainly don't want to go into a depression.If we as a country and a society have the means to save all those jobs that would be lost without a bailout.Then we should do it. Now I don't mean the CEO's that are making 7 figures or even the other folks making 6 figure salaries. I am talking about all the other folks that would lose their jobs. The janitor who cleans the buildings,all the secretaries,the mail room people,everyone who can't get by without their jobs.

We need something to jump start our economy,if a bailout is the way, so be it.I think things will turn around after the election.But it will be a long and hard road. We just have to try and make out economy work for us,not against us.I want us to do good as a nation/world leader. Everyone usually follows our lead as a major player in the global economy.We must do what is not only good for us,but the rest of the world too.

Posted by: greenwithenvy | September 30, 2008 1:47 PM | Report abuse

Dow now up 333 and a half.

That's the thing that has always bugged the crap out of me: the Market (Wall Street) is every bit as irrational as my nutso third daughter. Kinda hard to either (a) take seriously or (b) respect something that has about the same stability as a chameleon with PMS.

FotTBG, you may call me Mudge any time. But ya might wanna consider giving yourself a new monicker. Or not.

Posted by: Curmudgeon | September 30, 2008 1:50 PM | Report abuse

(1) Yes, I have seen a photo in the WaPo showing McCain talking on a cell-phone. He did not seem to be fazed by the newfangled thingamajiggie, so I suspect it did not belong to an aide.

(2) Lots of cultures like what they call "a little meat on them bones" although it is actually the same amount of meat but more fat. Lots of cultures that are around right now, but just don't happen to be part of the continental U.S. And even some folks who ARE part of the continental U.S.

Posted by: PlainTim | September 30, 2008 1:52 PM | Report abuse

The fact that the markets are back up today does not mean that there is not a problem to address. Someone over on Lori Montgomery's chat said it very well: It won't solve the problem completely, but you never solve a problem by *doing nothing*.

OK, so the modified Paulsen plan failed. Let's come up with something better. And let's hope the markets don't completely unravel while we're working on it.

But refusing to do something that's in the country's best interest because people who made boneheaded (or greedy) decisions might profit is short-sighted.

Posted by: Raysmom | September 30, 2008 1:56 PM | Report abuse

Rudy Giuliani used to take cell phone calls from his wife during speeches. Look where he is now.

Posted by: yellojkt | September 30, 2008 1:58 PM | Report abuse

It bears repeating that the DJIA (Dow) represents only 30 of more than 5000 companies. The top 3 - and only double-digit percentage gainers today - are the nation's 3 biggest banks: Citigroup, Bank of America and JP Morgan/Chase. They disproportionately lead the increase in the Dow today. Two factors can be attributed to the increase: (1) bargain hunters, and (2) the expectation that Congress will revisit the rescue. At the end of the day, it is the major indexes that will tell the story of the "recovery," if any.

Posted by: Shiloh | September 30, 2008 2:13 PM | Report abuse

Raysmom said "...you never solve a problem by *doing nothing*."

Not true at all. Lots of organisms deal with the challenges of evolution by doing nothing, with the best nothing-doers living to produce another generation of slackers: bunnies. Crinoids. Barnacles. One could argue that much of the stock market's problems would not have arisen if more people were inclined to do nothing, so that the whipsawing reactions could be moderated by deliberation rather than exacerbated by rumors, fear, and misplaced intuition. However, "doing nothing" is not the typical human problem-solving strategy. Our way is to analyze (briefly), then act (decisively), then look for the next problem (often caused by insufficient analysis and excess decisiveness).

My childish, unsophisticated, and ill-informed understanding is that the stock market is heavily influenced by the attempt to predict everyone else's prediction and attempting to do what you think everyone else will do, before they think of doing it. This creates stampedes in one direction or another, failing to absorb the metaphoric value of Head-Smashed-In Buffalo Jump ( http://en.wikipedia.org/wiki/Head-Smashed-In_Buffalo_Jump ). There is no negative feedback in this system to restrain behavior -- anything worth doing is worth doing to excess, until resources are exhausted or you run off a cliff.

My childish, unsophisticated, and ill-informed proposition is that we must institute a system in which there is some finite minimum response time to follow any course of action -- say, it will take you a half-hour either to buy something or to sell -- but you can instantaneously choose to rescind the order and do nothing. Dong nothing is underrated as a strategy.

Posted by: ScienceTim | September 30, 2008 2:20 PM | Report abuse

We'll have an interesting year or two or perhaps five--and certainly some fat must be cut because of yesterday's merger between Wachovia and Citi.

Our next-door neighbor, the husband, works for Citibank, in the call center that is on a campus that is perched high on a lovely, yet rather isolated, hilltop on the far west side of town. It's across the highway from Texas Research Park, in which the feds may situate the proposed National Bio- and Agro-Defense Facility.

Hy husband also works at a very large campus setting closer in to town (and amenities), by about eight or so miles, adjacent to Sea World and very close to one of San Antonio's newest community colleges, Northwest Vista, the land donated to the city by World Savings.

Alamo City is the city of corporate backroom operations. As I mentioned before, Washington Mutual and JP Morgan Chase also have large backroom operations in Alamo City. With the recent shotgun marriages of these four financial entities, it's going to be interesting to observe the survival of the fittest or finest--as far as campuses goes.

Posted by: Loomis | September 30, 2008 2:21 PM | Report abuse

jumper (and jack, too)... free or cheaply obtained wood is wonderful and appreciated, but getting it to Ohio would probably offset any benefits of freeness or cheapness. But I really do appreciate the thought.

The wood I use is still relatively cheap, even though its price just shot up, so that's not the core issue -- inflation happens. The problem I'm facing is that as costs go up (as they tend to do and all of them have) I need to decide whether to charge more for a better product, or charge less for a still-good-but-inferior one.

The *real* problem is that I'm very picky about my work and sign my name to the back of each little door and window I make, so nothing ships out that doesn't pass this ultimate self-critic's very critical eye. A practice that drives costs up. But I am also afflicted with an altruistic desire to charge the least I possibly can for my work -- sustainability vs. profitability.

I really, honestly, truly feel like I'm Santa or something, making magical things that'll make a little kid smile (or a big one) and transport them, even if just for a second or two, to some alternate reality where their imaginations can run wild.

I guess they'd call me "bait" on Wall Street.

Or a "fool" on Main Street.

Or "dude... you are like sooooo effin' high" at Woodstock.

I dunno... I just love what I do and really want to keep doing it, but if I'm going to keep at it, I'm going to have to find a way to make it more profitable. The "simply sustain" approach doesn't seem to be working so well.

Reality meets Fairyland.

{* sigh *}

Posted by: martooni | September 30, 2008 2:23 PM | Report abuse

Mudge -

I was thinking a similar thing about the Market. I was telling astrodad yesterday that the reaction to the failure of the bailout bill seemed a little over the top. I mean did everyone really expect Congress to get a major bill that costs $700 billion dealt with in only a week. Way too optimistic in my opinion given the Congressional track record.

Posted by: astromom | September 30, 2008 2:24 PM | Report abuse

Dong nothing? Unappreciated brother of Dong Something, both overshadowed by their more popular brother Dong Lots.

Posted by: ScienceTim | September 30, 2008 2:25 PM | Report abuse

What you need, martooni, are some little fairy helpers.

Posted by: yellojkt | September 30, 2008 2:27 PM | Report abuse

No more yankie my wankie. The Donger need food.

Posted by: Long Duk Dong | September 30, 2008 2:29 PM | Report abuse

Paulson is trying to break-up the credit logjam. Nobody is lending money to anybody and the effects of that jam will soon be apparent in the form of an economic recession. Business can't do business without credit, it is as simple as that. Whether Paulson's solution will work or not or if it is the best solution I haven't the foggiest idea but he is trying to deal with a real, serious problem. It is not just a case of funny securities gone bad.
msnbc has an interesting economic monitoring tool developed by Standard&Poor. Very humble that name BTW, Extraordinary&Rich was already taken I guess.
http://www.msnbc.msn.com/id/26902590/

Paulson is mostly working on item no.3, the one S&P put on 'discouraging' status. The democrat legislators that have voted no probably want some action on items 1&2. Republican legislators seem to be mad at the whole thing.
"Standard & Poor's Market, Credit and Risk Strategies [MCRS] has created a short checklist of economic and market variables and identified the general developments to track. We will continue to monitor and report on these crucial metrics in the months to come:
1. Real estate values -- must stabilize or edge higher
2. The rate of existing and new home sales -- must rebound
3. Credit conditions -- must ease up substantially
4. Crude oil prices -- must continue to decline, and then stabilize
How are things tracking now?
1. Real estate values: encouraging
2. The rate of existing and new home sales: less encouraging
3. Credit conditions: discouraging
4. Crude oil prices: encouraging "

I got an e-mail today with this great pick-up line after the signature block. I couldn't help myself and LOL.
"Ask us about Aminoethylpiperazine (AEP), Furfuryl Alcohol, Sucralose, Triacetin and Yucca Extract."

Yes sweetheart, I'll make sure to ask about a furfuryl alcohol & Triacetin cocktail.

Posted by: shrieking denizen | September 30, 2008 2:34 PM | Report abuse

Wasn't Dong Lots in the "Lincredible Pister Mimpet?"

And both candidates have called for Congress to raise the FDIC insurance limit to $250,000. Not sure what the point of that is, but at least they'be being bipartisan. Or nonpartisan.

Feh.

Posted by: Scottynuke | September 30, 2008 2:40 PM | Report abuse

Timing of stock market trades using current technology allows plenty of opportunity to consider and cancel operations. For example, at the moment I have 4 sell and 2 buy orders of 60-day duration at pre-set prices. If a stock is rapidly falling or rising, I can cancel the order and re-set at a lower or higher price, but in most cases the price decision was based on the most current information and price history. External events can affect price - witness 9-11 and yesterday's do-nothing Congress - as can unseen factors, such as a company with plenty of working capital on its balance sheet, that is unfortunately tied up in failing investments.

Posted by: Shiloh | September 30, 2008 2:40 PM | Report abuse

Shiloh, is that your choice to have a long lead time, or is that a requirement? It seems like mad rushes could be prevented if it were not possible to make an instantaneous decision.

Posted by: ScienceTim | September 30, 2008 3:01 PM | Report abuse

I'm also a big fan of sometimes "doing nothing" as a viable solution, although I'll be the first to admit, sometimes it's a darned hard thing to learn/implement.

Posted by: Curmudgeon | September 30, 2008 3:07 PM | Report abuse

Scotty, James Galbraith's article explains what the FDIC could do to help the situation:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033.html

It also lays out an alternative course of action for Congress to consider.

"Doing nothing" might be a good short-term strategy while a viable plan is worked out. Trouble is, we have a pretty good idea what it will lead to in the long term, and it ain't pretty.

Face it, no solution will be *perfect* but we do need to address this mess before businesses have to start laying people off due to a lack of working capital.

Posted by: Raysmom | September 30, 2008 3:18 PM | Report abuse

Tim: I think many people use that system, including the big institutional traders (mutual funds, retirement funds, etc.) who program huge stop-loss sales and if-then buys. Stock prices change second to second and there are rules that govern trades, but no "stop and think" rule. The thinking is usually done up front - like safe driving. Value of a stock can disappear or explode in value in a matter of minutes. To much volatility in a single stock or the entire market can halt trading - after 9-11, for example. But day-to-day trades cannot be stopped any more than a speeding car can be stopped in time to avoid hitting a child that runs into the road.

Posted by: Shiloh | September 30, 2008 3:22 PM | Report abuse

Raysmom, I'm still not sure I see it, and in any case the candidates basically want to double the FDIC cap, not eliminate it as Galbraith suggests.

But as I've said before, I'm a simple-minded boob, whadda I know?

:-)

Posted by: Scottynuke | September 30, 2008 3:30 PM | Report abuse

Scotty, given the seriousness of the situation (pace, Pearlstein), I don't think we should be discussing boobs. I have enough trouble concentrating as it is.

Posted by: Curmudgeon | September 30, 2008 3:40 PM | Report abuse

External events can also affect programmed stock transactions. My favorite personal story is about an approaching storm (Alberto) in 2006. Anticipating being without electricity, I programmed trades in buy-sell ranges that seemed reasonable. One stock was a recently purchased new issue (IPO) that I had just bought for $3 a share. With no track record, I programmed it to sell at $6 - and during the local power outage it sold. I was pleased to have doubled my money, but the stock I sold at $6 had climbed to over $18 in the week I was without electricity.

Posted by: Shiloh | September 30, 2008 3:41 PM | Report abuse

Scotty, basically, it's to keep people from galloping off to the bank to withdraw their money.

Posted by: Raysmom | September 30, 2008 3:42 PM | Report abuse

Well, I could call myself a simple-minded bubbeleh, howzabout that?

Posted by: Scottynuke | September 30, 2008 3:42 PM | Report abuse

Shipping was gonna be free, Martooni. It's not psychically possible for me to toss this stuff OR burn it, and I have plenty of firewood anyway. Your only problem would be repeat customers who want the good stuff. Last call!

Posted by: Jumper | September 30, 2008 3:43 PM | Report abuse

My tip was little chimneys. Little tiny black stovepipe chimneys for the trees with the fairy doors. With the pipe coming out horizontally, the 90 degree elbow, pipe pointing up with little conical sheetmetal cap on top. Oh well.

Posted by: Jumper | September 30, 2008 3:49 PM | Report abuse

Hey Martooni, I would like to commission something a bit special out of Jumper-wood.

So, consider a pre-order to make you bite on the free wood.

Off to a class on the rhetoric of incommensurability in economic schools of thought. I shall try to understand some nugget of wisdom and post this evening. What does this name really mean?

Try:

Why people in the various sub-tribes of economics refuse to speak nicely to one another?


Posted by: College Parkian | September 30, 2008 3:58 PM | Report abuse

THAT part I get, Raysmom. But how many more depositors would you fully cover with a $250K cap v. $100K? I kinda really really doubt my FDIC-covered accounts will ever be able to do a Grover wave at the existing cap.

Posted by: Scottynuke | September 30, 2008 3:59 PM | Report abuse

Thanks, yellojkt, but don't tell me where the key is. I might take the window treatments and leave a labrador retriever.

Jumper, cute idea. :-)

I have an order to bring 2 butter cakes to the MBPH. Anyone want anything else?

Posted by: dbG | September 30, 2008 4:01 PM | Report abuse

WE INTERUPT THIS BOODLE TO BRING YOU A MEGA-BPH WEATHER ADVISORY:

For you out-of-towners who want to know how/what to pack, here's your weekend weather forecast:

Friday, party cloudy, high 73, overnight 53.
Saturday: sunny and high about 72 (perfect walking/touristy weather), overnight low: 55. Sunday: partly cloudy, high about 73 (great for marathoners and bikers), overnight low about 55.

In other words, a light jacket should be all you'll need.

This divine weather has been brought to you by your omnipotent Mega-BPH Planning Committee, motto: We think of everything.

Posted by: Curmudgeon | September 30, 2008 4:04 PM | Report abuse

Actually, Sunday may actually turn out to be sunny, as well, depending on which forecast you consult.

The Redskins play at 1 p.m., by the way, so that makes Sunday afternoon and ideal time for you non-believers, since most of the locals will be otherwise engaged. You'll have the town to yourselves: go crazy, whydoncha.

Posted by: Curmudgeon | September 30, 2008 4:07 PM | Report abuse

Good afternoon, all.

Been unbelieveably busy today, but wanted to do a bit of drive-by Boodling.

RD, the econonic problems in '87 weren't so bad everywhere but they were in some places. There were an awful lot of home forclosures in places like Houston and Oklahoma City back then.

Didn't expect to see anything like that again, but I've learned over time that if you wait long enough, everything comes back around. Even pleated pants.

With the Internet and the high volume of 24-hour news/information flow, our economic cycles (as people look at treands and try to anticipate, as *Tim and others point out) seems to be shorter and more intense.

I may write something about that when I have time.

Gotta run.

bc

Posted by: bc | September 30, 2008 4:09 PM | Report abuse

Great column today, Chief. Our family is coping with the economic situation by:
1. Buying nothing that involves credit cards (unless it's over the internet)
2. Not buying a new car even though we need one
3. Not buying a large screen tv even though we want one.
4. Not paying for or borrowing for a 4-year college education for our kids
5. Encouraging our daughters to marry wealthy men

Posted by: CowTown | September 30, 2008 4:10 PM | Report abuse

An interesting, little talked about aspect of the financial catzastropy and how to deal with it, are the currency reserves held by Russia and China.

China depends a lot on the US market. I see it moving in and shoring up the American economy once it becomes clear what is broken and what is fixable.

Posted by: Brag | September 30, 2008 4:11 PM | Report abuse

bc - you're right. I remember now reading about the problems in those areas. Weren't oil prices involved somehow too?

Anyway, it's been Mr. Toad's Wild Ride the last two days hasn't it?

Posted by: RD Padouk | September 30, 2008 4:15 PM | Report abuse

Mega BPH related, just a reminder to Yoki, under no circumstances state to US Immigration you are off to attend a conference of imaginary friends!

Posted by: dmd | September 30, 2008 4:18 PM | Report abuse

Dow closed up at 485.21.

See? It got 61 percent of the previous day's loss back in one day. That's nuts--but there it is. So take whatever dire claims were made yesterday and substitute 39 percent of those numbers.

FYI, at the "How Stuff Works" site, there's good explanations of the economy problem as well as "How Sarah Palin Works." (See subhead under How Joe Biden Works.) http://www.howstuffworks.com/

Say, Joel, that "how stuff works" idea...might be worth you looking into. Might be a column idea, or ...hey! how about this?...maybe a series of books.

Posted by: Curmudgeon | September 30, 2008 4:24 PM | Report abuse

Brag, you just brought up one more reason why we need to put this house back in order.

Posted by: Raysmom | September 30, 2008 4:27 PM | Report abuse

Humankind holds its breath and waits. Will the MegaBPH save the world from financial catastrophe?

Only the Boodle knows.

Posted by: Brag | September 30, 2008 4:32 PM | Report abuse

Hey, I just saw that there is not one, but two, complimentary letters to the editor in today's WaPo that mention Joel's work.

Posted by: RD Padouk | September 30, 2008 4:43 PM | Report abuse

While the 30 stocks on the DOW may have recovered 61%, my portfolio only recovered 37% of yesterdays losses. But that may be because I only own one of the DOW financial stocks.

Posted by: Shiloh | September 30, 2008 4:52 PM | Report abuse

...and now for something completely different...

http://www.nytimes.com/2008/09/28/automobiles/28LEMONS.html

Posted by: jack | September 30, 2008 4:59 PM | Report abuse

How percentages can mislead is apparent on the New York Stock Exchange today. The number one increase of 90.3% was Wachovia, up to $3.50 today over yesterday. Except that 3 trading days ago it was $15.50, so, while up over 90% today, its really down 80% from 3 days ago.

Posted by: Shiloh | September 30, 2008 5:02 PM | Report abuse

Link, RD? I always have trouble finding letters to the editor in the dead photon version.

Posted by: Wilbrod | September 30, 2008 5:05 PM | Report abuse

One of letter to the editor regarding Joel's story about the housing market suggested a follow-up about how tax assessors increase value and thereby, local tax revenue, and through those taxes the real cost of property.

A case in point is a friend who bought a one acre parcel for $90,000 a few years ago. It was assessed for that the first year. Then it was subdivided into 5 lots - no development, just a paper change - and the assessment increased to $90,000 per lot or a $450,000 taxable value for the same one acre piece of dirt. Property taxes quintupled in a declining market.

I told my friend to list the lots at $39,900 - it would double the investment after costs. We took the listing to the property assessor and are waiting to see if the taxable value is adjusted accordingly.

Posted by: Shiloh | September 30, 2008 5:30 PM | Report abuse

Hi all,

I was thinking of Shrieking Denizen's post about credit drying up and preventing businesses from doing business. Lots of people have been predicting this, but I have a real-life example as of last week. The San Fransisco law firm Heller Ehrman, one of the top firms in the U.S. announced Thursday that it was closing its doors on Friday. Seriously short notice. Apparently it had a lot to do with the tight credit markets, (although I'm sure there were many other factors) as this note from the SF Gate shows:

Ferruolo (former partner) said Heller Ehrman was a partnership made up of professional corporations, and in order to avoid double taxation of its income, it distributed all its earnings at the end of each calendar year and used a line of credit to fund operations until the subsequent year's cash flow caught up with its outlays.

"It was always a big thing for us to be 'out of the bank' as we used to say," said Ferruolo, who speculates that a bad 2007, combined with the tight financial climate, made this annual financial juggle even tougher this year.

So, bye bye 118 year old firm, 650 lawyers, 14 worldwide offices, and more than 1000 support staff. Overnight, more or less. Makes you think, don't it?

Posted by: CJ | September 30, 2008 5:39 PM | Report abuse

Yes, I'm thinking financial or legal foul play.

Such a financing scheme sounds fishy and high-risk to me. I'm sure this will be investigated as to whether it was a simple matter of not making enough money to meet overhead (and why didn't they downsize or take other steps?) or having some major clients go bust.

Posted by: Wilbrod | September 30, 2008 6:27 PM | Report abuse

Heller's been going down for quite some time -- profits dropping like stones for a couple of years, merger rumors all this year. The initial cause wasn't really the market...they demoted or fired a lot of underproducing partners last year, which caused a bunch of overproducing partners to jump ship this year (the entire IP group, no less). No partners, no law firm.

Posted by: Anonymous | September 30, 2008 6:33 PM | Report abuse

Wilbrod - the letters to the editor are under the "Opinions Main" submenu beneath the "Opinions" tab way up at the top of this page. Oddly, only one of the letters I mentioned seems to be there. The other one, which I obviously read in the dead tree version, praises Joel's "vivid" writing, which I think is a humdinger of a way to describe it.


Posted by: RD Padouk | September 30, 2008 6:34 PM | Report abuse

No, Wilbrod, it isn't uncommon for firms to let attorneys "draw" on their projected income, waiting until receipts from clients catch up. Generally speaking big law firms don't require cash up front, and in some cases there is no payment unless contingencies (like winning, variously defined) are met. A bad year can cause layoffs at a small firm; a disastrous year can wipe one out. That said, I am shocked that such a major firm has gone under.

Posted by: Ivansmom | September 30, 2008 6:36 PM | Report abuse

Ah, I only worked at an one-lawyer firm once. I do know that clients can be late, that wouldn't surprise me. But folding as a result of the stock market sounds odd.

Posted by: Wilbrod | September 30, 2008 6:42 PM | Report abuse

Found it. Opinions, Opinions Home, Feedback, actually. The WaPo needs to have alternative paths to this site.

Posted by: Wilbrod | September 30, 2008 6:46 PM | Report abuse

The credit crunch is one of those things for which some people have trouble generating sympathy. There still exists a mindset that views loans as an indication of moral failure. And, of course, they often can. But they are also how wealth is created - with student loans being front and center.

Yet this distaste for credit is still strong. For example, my wife's grandparents used to refuse to use a credit card, even if they paid it off in full. (As, of course, everyone should.) They felt that it was much more respectable to make even large purchases with cash. You know, like drug dealers do.

Posted by: RD Padouk | September 30, 2008 6:53 PM | Report abuse

Well! Our friends across the pond - I use the term loosely - are not impressed with Congress:
http://www.timesonline.co.uk/tol/comment/columnists/camilla_cavendish/article4856393.ece

Or with Republicans:

http://timesonline.typepad.com/comment/2008/09/this-was-an-imp.html

Posted by: slyness | September 30, 2008 6:55 PM | Report abuse

Found one letter. I post this as proof that the Boodle isn't an elaborate program cooked up by Hal to deceive Joel into thinking he actually has readers.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/29/AR2008092902954.html

Posted by: Wilbrod | September 30, 2008 6:56 PM | Report abuse

I wish that banks could do finance like Joel does journalism. The Old Fashioned Way.

Posted by: Last Dude | September 30, 2008 7:10 PM | Report abuse

Re the Heller Ehrman debacle, I have a friend who worked there a couple of years ago, in the IP practice, who is now a partner at another firm. He promised to give me the skinny one of these days when we have enough time and a couple of drinks. If it's not confidential or actionable, I'll pass along his opinions.

Posted by: CJ | September 30, 2008 7:51 PM | Report abuse

Ah yes. Do it like Joel...

With old-fashioned blogging, e-mails, and being parachuted into trouble areas. None of this mucky muck about mortgaging anything.


Posted by: Wilbrod | September 30, 2008 7:53 PM | Report abuse

Boy, nothing like a tornado alert to really spice up an evening. Everybody comes a running down here to the bunny bunker - including the dog. Now I'll never get those poor rabbits settled back down.

Posted by: RD Padouk | September 30, 2008 8:34 PM | Report abuse

I'm tired of being torqued about the shape of things, so I'm temporarily fixated on cars. Neil Young is converting this big, old Lincoln to an alternative fueled vehicle. See the future:

http://www.lincvolt.com/stateoflincvolt1.html


Posted by: jack | September 30, 2008 9:12 PM | Report abuse

Rabbits and Cairn Terrier make a lively mix RD Padouk. Like a Jack Russell and a Dogue de Bordeaux. My arm socket will never be the same.

Posted by: shrieking denizen | September 30, 2008 9:47 PM | Report abuse

On the WaPo weather blog, blog commenters share virtual chocolate bars when storms and tornado warnings go through.

Posted by: College Parkian | September 30, 2008 10:04 PM | Report abuse

LeMons racing.
I had a 1994 minivan from a dodgy company that would have fitted right in. Mind you that car would have been reduced to a small pile of the rightly named limonite by now.
http://www.nytimes.com/2008/09/28/automobiles/28LEMONS.html?_r=1&oref=slogin

Posted by: shrieking denizen | September 30, 2008 10:14 PM | Report abuse

I don't know about that law firm in particular, but many professional partnerships are organized to show no corporate profit. All the money is given away in bonuses and profit-sharing. Or they set up shell real estate holdings to provide a safe haven to turn profit into capital gains.

It keeps income from being taxed at the corporate level instead of at both the corporate and individual level. Nothing illegal as long as all the anti-top-heavy distribution rules are applied.

The overhead for a law office or architectural firm or CPA group is pretty light. Rent, utilities, salaries for staff. Not that there is no risk, because a few deadbeat clients can ruin your whole year.

Posted by: yellojkt | September 30, 2008 10:47 PM | Report abuse

The acoustic version of this song puts it in an entirely different context. A more proper one, methinks.

http://video.google.com/videoplay?docid=8630286886344161470&ei=nu7iSJykHIruqAK49YjLDg&q=born+in+the+usa&vt=lf

Posted by: jack | September 30, 2008 11:32 PM | Report abuse

Someone (Dolphin Michael, I think) mentioned Republicans running as GOP. I can attest it is true. Dino Rossi, a Republican, is listed on the ballot as "Prefers GOP". Democrats took him to court, but lost, partly because absentee ballots have already gone out to the military.
http://seattlepi.nwsource.com/local/6420ap_wa_rossi_gop.html

jack, I agree - that's a powerful version of the song. Oh, and I have a colleague in Wichita that got to talk to Neil Young while he was there, last spring.

Posted by: mostlylurking | September 30, 2008 11:45 PM | Report abuse

Brooce has done a lot of acoustic versions of BITUSA. When I saw him a few years back at FedEx Field, they did a very angry full band version with the bass turned up so high that it fluttered my shirt from the end zone.

Posted by: yellojkt | October 1, 2008 12:05 AM | Report abuse

Reacting to something from the WaPo front page, at least as of a moment ago: I keep seeing references to Sarah Palin as a former 'beauty queen.' Not to get too snide, but I think this kind of overstates her level of success. She was Miss Wasilla, and 4th runner-up for Miss Alaska, a pageant that one would have to say has a more limited pool than many other states -- like, pretty much, any of them. Royalty-wise, I think this might qualify her only as a beauty princess, perhaps a duchess -- she haas a place in the royal succession, but she is unlikely to inherit the crown. A more precise term might be 'former beauty contestant.' In my petty little mind, my first impression is that beauty pageant success is inversely proportional to depth of intellect/character/personality. Thus, 'former beauty queen' actually is more unnecessarily derogatory in her current line of work than 'former beauty contestant.' Perhaps she lost because she was unwilling to be shallow enough, y'know? Not that she is presently providing much support for this theory.

Posted by: PlainTim | October 1, 2008 12:16 AM | Report abuse

Don't get me started on beauty contests, Plain Tim. Many beauty contests are won by people who've been taught to do it since they were like 5-- all the superficial stuff like how to move gracefully and what to do down pat, PlainTim.
It is a serious subculture of America, and one that produces books.
http://pageantcenter.com/bookstore_listings.html

I will say that all the Miss Deaf Americas I knew were not shallow women concerned with their looks, but intelligent outgoing women who rarely wore makeup at all in daily life.

Part of this may be that they don't have a "talent" section, but instead require a 3-minute presentation, as being Miss Deaf America requires a lot of public speaking in ASL.

The emphasis is on community service, academics, knowledge of current events, deaf culture.
http://deafness.suite101.com/article.cfm/miss_deaf_america

Posted by: Wilbrod | October 1, 2008 12:57 AM | Report abuse

SURPRISE!!

Posted by: Boko | October 1, 2008 1:01 AM | Report abuse

Now that's the kind of October surprise I like, Boko. Well done.

Posted by: mostlylurking | October 1, 2008 1:54 AM | Report abuse

I've been such a chump. All these years, I've assumed that I was supposed to have some actual birds in hand. So, the proper way to do business is to eat, lend, or throw away any birds I might actually have captured, and deal only in potential bush meat, yes?

Posted by: Bob S. | October 1, 2008 2:16 AM | Report abuse

'morning all. The dawn patrol would be a low-visibility affair this morning. It's a dark and gloomy morning to start this brand new month. Asian and European market are up a bit because of "new US deal hopes". Humm.
I hope to have a better day than this guy:
"Scottish-born war veteran 'taken' by Charlie the monster crocodile"
http://www.timesonline.co.uk/tol/news/world/article4858232.ece

Posted by: shrieking denizen | October 1, 2008 6:43 AM | Report abuse

God loves us so much more than we can imagine through Him that died for all, Jesus Christ.

Morning,friends. I'm up and moving, have been for a while, just doing it rather slow. I had to pick the g-girl up from school yesterday. The teacher called and wanted someone to pick her up. Her mother spent the afternoon in the doctor's office with her. She's okay, got medication, and spent the rest of the afternoon with me. I'm hoping this thing doesn't work like, daughter, granddaughter, and then grandmother.

Well this is the busy day. I don't have cake in the pan this morning. We're going light today. Who needs all that sugar anyway?

The weather here seems to have a sneaky chill. It's not in your face, kind of sneaks up on you. Plenty of sun yesterday, hopefully that will be the case today.

I'm hoping the station is on the air this morning. We have another guest. I told the mayor we want him back. All dependent on air time.

Have a great day, folks. I'm not touching the bail out conversation. I want to start my day as calm as possible.

Mudge, Slyness, Martooni, Scotty, and all, good morning to you. *waving*

Time to swim.

Posted by: cassandra s | October 1, 2008 6:47 AM | Report abuse

Maureen Dowd today wrote a rather touching tribute to Paul Newman that is largely politics free.

http://www.nytimes.com/2008/10/01/opinion/01dowd.html

Not much I could add to that, but it is my job.

http://dowdreport.blogspot.com/2008/10/paul-newman-1925-2008.html

Posted by: Mo MoDo | October 1, 2008 7:14 AM | Report abuse

Visibility's so poor the Brunswick wing of the Dawn Patrol is still at home. And of course, there's that pesky yearly furnace maintenance to oversee, so I guess I'll be stuck Boodling while I watch the tech get covered in soot.

Darn.

And my condolences to frostbitten and the Boodle's other Twins fans.

Hey, only about 80 hours to the MBPH!!

Given recent interview results, I'd have to take exception to Ms. Copeland's assertion that "the Republican veep nominee knows how to play to the camera." *shrug*

*waiting-for-the-sun-to-break-thru-and-not-holding-my-breath-for-it Grover waves* :-)

Posted by: Scottynuke | October 1, 2008 7:25 AM | Report abuse

Bom dia os Boodleiros (Portuguese)

Roaring off into the chilly morning. Sufering from disaster indigestion.

Posted by: Brag | October 1, 2008 7:37 AM | Report abuse

Good morning all. Kind of sneaky chilly here as well, Cassandra. It's very damp and with ominous black clouds keeping things gloomy. I was interested to hear that RD had a tornado warning last night because it looked pretty tornado-ish here too.

Frank Deford also had a touching tribute to Paul Newman that I heard on NPR on the way to work this a.m. Made me all weepy.

Looking forward to the MBPH is helping me to keep my normal chipper self chipper on this gray morning!

There must be all kinds of things wrong with that sentence but you get my drift.

Posted by: Kim | October 1, 2008 7:39 AM | Report abuse

Re ScienceTim's 2.20 pm yesterday, here's one physicist's take on the economy:

http://www.nytimes.com/2008/10/01/opinion/01buchanan.html?ref=opinion

Posted by: DNA Dirl | October 1, 2008 7:47 AM | Report abuse

G'morning all. No dawn patrol for me, I overslept. Now must get on with the day.

Posted by: slyness | October 1, 2008 7:58 AM | Report abuse

morning, all. i read about how the s.e.c. changed an accounting rule yesterday:
http://www.nytimes.com/2008/10/01/business/01audit.html

now, correct me if i'm wrong since i'm no economic expert, but doesn't this just allow people to totally b.s. the value of their assets and hide their financial problems? does this help, or does it just delay the fallout? isn't this just a form of de-regulation?

Posted by: L.A. lurker | October 1, 2008 8:08 AM | Report abuse

Okay, I’m all excited about our trip to DC and it dawns on me that I’m going to miss the Kit and Boodle, especially tomorrow night for the debate. Oh how I wish we had a laptop! I’ve been watching the weather forecast for DC and as the weekend gets closer, it’s looking warmer and warmer. I keep substituting clothes I had ready for ones I was ready to put away. By this time tomorrow we will be well on our way, can’t wait!

Posted by: Bad Sneakers | October 1, 2008 8:12 AM | Report abuse

Here is a somewhat different analysis on the financial swamp.

http://atimes.com/atimes/Global_Economy/JJ02Dj02.html

Posted by: Brag | October 1, 2008 8:45 AM | Report abuse

DNA Girl,
Great article. Not enough is being reported on the market as being an inherently chaos-ridden (as in the butterfly effect) system. Perhaps it's too personally insulting to tell people their behavior is not always rational and subject to extreme over-reactions.

One great idea is the minuscule transaction fee on currency transactions. A little bit of friction would slow wild swings. Part of the inherent stability of the real estate market (historically and comparatively) is the relatively large transaction costs. When it costs 5-10% of the transaction to transfer a property, a lot of the velocity gets sucked out of the turnover rate.

The bondification of the mortgage market seems to have taken a lot of that inertia out of the system. The rapidity with which fraudulent flipping took place seemed to have had a deleterious effect on the legitimate portions of the market.

Posted by: yellojkt | October 1, 2008 8:48 AM | Report abuse

CJ & Shrieking Denizen,
The NY Times has a story on credit problems and the auto industry. Buyers can't get loans, or if they can the interest rates are too high. At the same time, dealers are stuck paying interest on unsold SUVs and can't afford to put more desirable vehicles on the lot.

By the time demand for vehicles recovers, could the industry be so shriveled that it can't meet demand?

Posted by: Dave of the Coonties | October 1, 2008 9:00 AM | Report abuse

http://www.sc-democrat.com/archives/2001/sports/08August/28/miss.htm

Janna Worden of Grahamsville had a couple of very good reasons to enter the 2002 Ms. Monticello Raceway Beauty Pageant.

If her 4-year-old daughter Brianna won the Little Miss Monticello Raceway title, it would give her a heads up on the way to a hospital in Boston, MA, where on Monday, the little contestant was scheduled to undergo treatment for Neuro Fibromatosis (NF), a genetic disorder that causes tumors to develop on nerves throughout the body.

Second, if the 26-year-old native of Sullivan County was crowned Ms. Monticello Raceway, she could use the notoriety to promote her cause for starting a local NF support group.

http://www.community.goredtv.org/recent-posts/default.asp?item=2220584&rttpagenum=9

Anyone can have heart problems...even a 16 year old Beauty Queen! My name is Michelle Dawn Smith and I am Miss Teen Maine International 2008. I am also a Teen who is living (successfully) with the Marfan syndrome (MFS).

The Marfan syndrome is a life threatening genetic disorder of the connective tissue that affects many organ systems including, the skeleton, lungs, eyes, skin, heart, and blood vessels. If undiagnosed and not carefully managed, those affected are at risk of dying suddenly - from an aortic disection - or suffering severe disabilities.

http://www.thebostonchannel.com/mostpopular/11127793/detail.html

A local beauty queen is doing whatever she can to save your heart. She's trying to raise awareness about heart disease -- a cause that is very close to her own heart.

NewsCenter 5's Heather Unruh reported that Michaela Gagne was crowned Miss Massachusetts 2006. But the beauty queen wants to be recognized for more than her bright smile.

"When I was 17, I was diagnosed with a disease called long QT syndrome. When you hear about athletes suddenly dropping dead on the field with no warning-- it's the same family. It can come on unexpectedly," Gagne said.

Posted by: Loomis | October 1, 2008 9:32 AM | Report abuse

Tip #6 in this guide to beauty pageant contestants sounds like part of the Couric interview responses.
http://www.associatedcontent.com/article/46598/beauty_pageant_tips_from_former_and.html?page=2&cat=7

When questioned about that interview, Palin decries the lowering of journalistic ethics held during her school days, but invites further scrutiny.

http://blogs.abcnews.com/politicalpunch/2008/10/palin-suggests.html

Posted by: dbG | October 1, 2008 10:01 AM | Report abuse

'Morning, Boodle. I got trouble right here in River City. When I got home last evening I discovered my computer was kah-blooie. It appears a virus of some sort has wrecked havoc on it, and until I get it fixed I won't be boodling or e-mailing from home.

Which is why I was AWOL at muster this morning. And will be for a few days.

Good Meyerson column (but that's all I've had time to look at).

Soooo...weho's got interesting plans for the weekend? Guess I'll just hang around the house. *sigh*

Posted by: Curmudgeon | October 1, 2008 10:03 AM | Report abuse

New Kit!

Posted by: dmd | October 1, 2008 10:04 AM | Report abuse

So instead of world peace and an end to hunger beauty pageant contestents now hope for personal medical care.

I find the whole thing deeply warped but I suppose visits to the ER will be more interesting.
"Little Miss Pawphuque had her hangnail treated after her brilliant showing in the 'Dress Like a Hooker' segment, beating out a heart attack patient and gun-shot victim."

Posted by: Boko | October 1, 2008 10:16 AM | Report abuse

New kit!

Posted by: Curmudgeon | October 1, 2008 10:27 AM | Report abuse

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