Battles over cost externalities to heat up

Jim Jubak has a great column about how, on global warming, pollution and many other issues, companies attempts’ to push their “externalities” costs onto the public sector will be a big part of 21st-century capitalism.

Will 2011 be the new 1937?

Jim Jubak worries that all the talk about "green shoots" will lead to a "W" style recession, for reasons similar to 1937 being the second trough of the Depression.

He notes that FDR and his brains trust reacted quickly when they realized they had made a mistake, though. On something like a second stimulus, he said Obama might find it next to impossible, politically, to do that.

And, elsewhere, Jubak argues we do need to at least consider the possibility of a second stimulus, but an actual, targeted, stimulus bill, not pork.

As for all the worry about debt and deficits, Jubak says the private sector should look in the mirror, and that includes businesses, not just households.

Jubak – Giethner’s TARP 2.0 might be OK

I think MSN financial analyst Jim Jubak is being pretty charitable with his interpretation of Geithner’s Know-Nothing performance last Tuesday, but, Jim has had a lot of good takes on our economy the last three years, so maybe I can up my charitable level a couple of degrees myself.

And, Jubak shows that even economics types can tell a funny, too, when talking about bankers’ new version of the N-word:

No one in the Obama administration wants to say that some banks will be nationalized if they fail the stress test, because the term is as emotionally charged as "communist" and "Red Sox fan" are.

Well, that’s understandable, but there are alternate words to use, like “repossession” or something.

That said, part of the issue is going to be transparency. Will Geithner at least partially reveal stress-test results to the general public? Will he at least partially reveal what his “questions” are on the stress test?

Stay tuned.

Jubak – a few signs of economic hope

MSN financial analyst Jim Jubak says that even amidst a T.S. Eliot economic April, he sees signs of hope.

The first ones he cites are hybrid and all-electric battery manufacturing research and production upticks; unfortunately, they’re all outside the United States! (Die, die, die, damn you, GM.)

Other green industries, such as solar power, also pop up on his tout sheet.

The Fed - another reason Obama stimulus might not work

If the Federal Reserve is antiquated or obsolescent, can it really be a key to economic recovery or stability?

Exactly that question is on the mind of top MSN financial analyst Jim Jubak. Not afraid to call the Fed, in essence, an obsolescent pile of crap, he lists five specific failures/problems/issues from the recent past.

Yet another argument, in my opinion, for getting the Federal Depository Insurance Corporation involved.

Jim Jubak gives you a complete stimulus roundup

(With a side of recession analysis, too.)

First, Jubak, MSN’s top financial analyst, offers a simple five-point guide on how stimuluses can work, or why some don’t. In the process, he takes a shot at the GOP claim that FDR did nothing to ameliorate the Depression.

Next, he explains WHY we need plenty of infrastructure projects in the stimulus package. He says if we don’t do more about infrastructure needs, our standards of living are in jeopardy.

Next, if you’re an investor through theese times, Jubak says the dollar actually should be good this year — but will likely go in the tank big-time next year.

Finally, he explains how the Federal Reserve is an obsolescent pile of crap, mainly by listing five specific failures/problems/issues from the recent past.

Is OPEC imploding?

Jim Jubak has the answers to both questions.

Shorter version? Yes on the implosion, and no, especially assuming Peak Oil is lurking, it’s NOT good for us in the longer run.

If you believe in some version of peak oil, which I do, then a post-OPEC free-for-all in the oil markets looks like a disaster. As it becomes more and more expensive to extract conventional and unconventional oil, the world is already looking at a bad case of underinvestment. The International Energy Agency has warned that a huge supply crunch awaits the world on the other side of the current supply glut because of underinvestment in new supplies of oil. Lower oil prices would just make that underinvestment worse.

Read the full story for more on Jubak’s answer to Question No. 2, as well as fallout within OPEC, and the Russian oil bear outside, on Question No. 1.

If Jim Jubak says it’s going to get worse …

Not just worse than now but worse than he previously predicted, then I’m really worried about the next year or two economically:

I was wrong. I no longer think we're facing a garden-variety recession. At a minimum, it will last longer than the two quarters I projected on Sept. 30. Economists are now talking about a recession that will last three, four or even five quarters.

From what else he describes, I think we’re talking about a multiple-trough, multiple-impact recession like the Carter-Reagan one of 1980-82.

Jubak thinks that, among other things, all the liquidity being pumped into the economy right now is going to sink some inflationary teeth in our butt in the future.

So, the Fed going a poor job of getting that money back out of the system could produce a second dip. Remember the inflation that Paul Volcker had to bat down?

And, the bailout itself could cause problems:

If the government's purchase of busted assets forces banks and other financial institutions to mark down their portfolios too much, those companies could suddenly find themselves short of capital when an inability to raise capital in the financial markets has led to the failures and takeovers in this crisis.

And, if you expect Paulson and Bernanke to handle that smoothly, I’ve got a new development on the Anacostia River to sell you.

Read the whole article; on page 2, Jubak takes a page from Warren Buffett with some investment advice.

Jim Jubak rounds up some bailout issues

Did you know the 2005 bankruptcy reform changed the rules on derivates? That they can still be sold even if a company is in bankruptcy?

It puts a new spin on some of the Fed’s individual bailouts already in place, as well as the Mother Of All Bailouts now on the table.

And, speaking of that, Jubak calls it the maybe bailout.

On the next page of this story, he explains why many banks are NOT likely to line up for Treasury help.

The result:

So yes, we could actually throw $700 billion at the financial industry and not put an end to this crisis. And it is almost certain that we wouldn’t know for months whether the plan was working.

Meanwhile, Jubak is running a contest for the best of “Save the Derivatives” bump stickers contest.

(In the same column — Hello, John McCain, Jubak says Securities and Exchanges Commission Chairman Christopher Cox is, indeed, one of the biggest contributors to the current situation. That said, you didn’t hear McCain mention this two weeks or two months ago.)

And, derivates’ “insuring” a flow of $700 billion per year, estimated, may be where Paulson/Bernanke pulled that number from.

Oh, if you want to enter the “Save the Derivatives” bumper sticker contest, e-mail Jubak here.

The ‘ownership society’ outwits even economics Nobelists

Jim Jubak has the lowdown on page 2 of his latest column.

We've gradually discovered, for example, that most people are terrible managers of their own retirement money. Most people, in this case, includes the more than 20 winners of the Nobel Prize in economics that (Peter) Gosselin interviewed.

Jubak has other insights, including that the “ownership society” has produced almost as much income variability among people in the top 10 percent of incomes as the bottom 10 percent.

Now, as he notes, the bottom 10 percent don’t have any buffer or cushion, but it’s interesting the top 10 percent hasn’t opened its eyes yet. After all, in many ways, the “ownership society” has only benefited the top 1 percent of society, not top 10 percent.

Gosselin is the author of the newly- published “High Wire: The Precarious Financial Lives of American Families,” from which Jubak drew his column.

Ten trillion here we come!

Yes, our national debt is about to hit the $10 trillion mark. Much of that, of course, is courtesy of two two-term Republican presidents, in large part due to the fact that neither Ronald Reagan nor George W. Bush met a military-industrial complex they didn’t like.

Jim Jubak explains what that, and other debt, mean for you.

That $9.4 trillion is just part of what we as a nation owe collectively. There's also the $700 billion trade deficit we ran up in 2007 as a result of importing more than we exported.

And then there's what we owe individually. Like the $950 billion in credit card debt we owed as of the end of March. And the $1.6 trillion in auto loans and other nonrevolving debt.

Face it: We live in a debt-addicted culture.

One day, the bill for all that debt will come due. That's a dead certainty. As sure as it is that the interest due on the federal debt will show up in the income tax you pay next year. And the year after.

We'll pay some of that bill directly, as formal taxes. And we'll pay some of it indirectly — maybe even so gradually we won't notice — as what I'd call informal taxes, such as lower living standards and a sinking U.S. dollar. But pay it we will.

Jubak then delivers on his promise to spend the rest of his column depressing the hell out of his readers.

First, credit card debt is up 20 percent in ground zero of the subprime crisis, Nevada, followed closely by 15 percent jumps in California and Florida. But, that probably won’t go far enough, especially with stagnant wages.

Second, when the “good times” come back, they won’t be as good as in the past, due to inflation, Jubak says.

Third, Congress simply can’t afford to index the Alternative Minimum Tax for inflation, let alone raise its bottom line.

Fourth, the government may look to new tax sources. Jubak says, hold on to your 401(k). And he’s not joking. There’s $4 trillion in IRAs, he says, a tempting target for changes in tax code.

Jubak promises a solution of sorts in his next column. He says it’s called “infrastructure.” Sounds good to me.

Meanwhile, the Street knows we haven’t turned the corner yet.