Making Money Job

The New York Times reports this morning ("TARP Bailout to Cost Less Than Once Anticipated") that the true cost of TARP will be less than $50 billion. I find this type of reporting to be incredibly misleading and deceitful. Focusing solely on TARP and ignoring the other more costly portions of the government bailout of our biggest banks and corporations ignores the true cost of the government's (both the Bush and Obama administrations, the Fed and Congress) inept response to this crisis. One of the reasons that TARP did not cost more was because of the government's other more costly bailout policies, and to ignore them is to dramatically understate the true cost of the bailout.

By claiming a narrow TARP success, the Times attempts to invalidate citizen anger at the bailout by making it appear that the electorate is somehow misinformed about its costs or is just plain stupid. Nothing could be further from the truth. Claiming that TARP was successful, but ignoring the much larger and more relevant costs of other areas of the government bailout is like claiming the voyage of the Titanic was successful because many of the lifeboats were recovered. It is important to remember that the ship sunk.

Here are my estimates of some of the total costs to American consumers and taxpayers of the entire government bailout. Many of these costs could have been absorbed by creditors and lenders to these highly leveraged large banks and financial institutions without involving taxpayer funds, but both administrations instead chose to stick it to the electorate rather than risk alienating their biggest corporate and wealthy campaign donors.

Estimated Total Costs of Bailout

• Fannie and Freddie bailout = $700 billion estimated, at least, on their $5 trillion portfolio.



• Federal Reserve's increased printing of money to fund purchase of mortgage securities in market and bad assets from banks (which directly leads to an equal amount of inflation, a hidden tax on consumers and savers) = $2 trillion.



• Eventual FDIC losses = $500 billion.



• Credit union guarantees = $50 billion.



• Present value cost of lost interest income to US retirees and other savers due to government's zero interest rate policy = $2 trillion.



• Present value cost of additional high unemployment and lost wages caused by government's focusing on bank and Wall Street profitability first, rather than on job creation = $5 trillion.



• Total loss in housing values due to inappropriate response to overbuilding and high foreclosure problem = $4 trillion (a fraction of the total housing value loss of10 trillion, much of which was necessary to return to non-bubble levels).



• Cost of future bad loans created since 2008 by Fannnie, Freddie and FHA by continuing to lend aggressively into declining real estate markets = $300 billion.



• Wasted stimulus money (Where exactly did this money go and what do we have to show for it?) = $300 billion.



• Total estimated cost of government bailout = $14.85 trillion.

This is more than an entire year's economic output for the entire country. It is as if we Americans worked an entire year for free to pay for our government's inappropriate response to this crisis.

I am not saying that government caused the crisis by itself. I do believe that Wall Street and the big banks are mostly to blame. But government does have to accept responsibility for its inept response to the crisis and the fact that they burdened the US taxpayer with most of its cost rather than the debt and equity investors in these corrupt financial institutions.

John R. Talbott is the bestselling author of eight books on economics and politics that have accurately detailed and predicted the causes and devastating effects of this entire financial crisis including, in 2003, "The Coming Crash in the Housing Market", in January 2006, "Sell Now! The End of the Housing Bubble" and in 2008, "Contagion: The Financial Epidemic that is Sweeping the Global Economy".

Label Complains That Amazon Devalues Artists By Making Music Cheap

from the you-got-it-backwards dept

This is unfortunate. Nearly two years ago, we wrote about the indie music label Asthmatic Kitty, which seemed to take a really forward looking attitude towards the new music market. In that interview, the label noted the reality of the new world, and why it was important to focus on reasons to buy, rather than assuming that people would just pay to hear music. This is what was said at the time:

I operate under the conviction that people buy records because they want to own them, not because they want to hear them. It is too easy these days to hear a record without having to buy it. I don't resent that fact, rather I feel we at Asthmatic Kitty embrace it through streaming albums and offering several free mp3s (even whole free albums). And why do they want to own it? They want it to illustrate to others their taste and identify who they are as a person. I also believe they want to be part of something bigger than themselves, they want to belong.



Our job is no longer to sell folks things they want to hear. They want an experience and to identify themselves as part of a community. Ownership then becomes a way of them supporting your community through investing in that community. Fostering that in an honest, transparent and "non-gross" way takes a combination of gracefulness, creativity and not taking oneself too seriously, while still taking art and music seriously.

Apparently, however, they do resent Amazon for making music available cheaply. Reader Colin points us to a recent article about how Asthmatic Kitty has sent out a letter to fans of artist Sufjan Stevens, complaining that Amazon's pricing is too low and asking people to go to Bandcamp and pay more instead. They do admit to being somewhat conflicted about this, at least:

"We have mixed feelings about discounted pricing," the label explained.



"Like we said, we love getting good music into the hands of good people, and when a price is low, more people buy. A low price will introduce a lot of people to Sufjan's music and to this wonderful album. For that, we're grateful.



But we also feel like the work that our artists produce is worth more than a cost of a latte. We value the skill, love, and time they've put into making their records. And we feel that our work too, in promotion and distribution, is also valuable and worthwhile."

While they're certainly not attacking Amazon or fans, the whole email does feel a little off. The simple fact is, if people want the music (as the label seemed to recognize last year), they can find it somewhere for free. Amazon's prices are meaningless when it comes to the "value" of the music. Price and value are not the same thing. Rather than complaining about the price that Amazon sets on the album, why not give people additional reasons to pay directly at Bandcamp -- such as providing valuable extras if they do. Or discounts on other merchandise. There are all sorts of positive ways to get people to find it worthwhile to spend money without making them feel guilty and bad for paying a price that is legitimately offered by a retailer.

47 Comments | Leave a Comment..

robert shumake

Fox <b>News</b> Poll: GOPer Raese Leads By Five Points In WV-SEN | TPMDC

The new Fox News poll of the West Virginia Senate race is giving Republican businessman John Raese a solid lead against Democratic Gov. Joe Manchin, in the race to succeed the late Dem Sen. Robert Byrd.

<b>News</b> and Publications - <b>News</b> Release

News and Publications - News Release. ... Academy in the news � News links � Ingenia � Photo Gallery. News Release. 08 July 2010. Academy elects 'unique national resource' to assist in economic recovery. Fifty three of the UK's leading ...

Why diversity turns into conformity in online <b>news</b>: An interview <b>...</b>

If you talk to any of the number of young academics who occasionally contribute to the Lab, it's likely the name Pablo Boczkowski will come up sooner rather.

robert shumake

Fox <b>News</b> Poll: GOPer Raese Leads By Five Points In WV-SEN | TPMDC

The new Fox News poll of the West Virginia Senate race is giving Republican businessman John Raese a solid lead against Democratic Gov. Joe Manchin, in the race to succeed the late Dem Sen. Robert Byrd.

<b>News</b> and Publications - <b>News</b> Release

News and Publications - News Release. ... Academy in the news � News links � Ingenia � Photo Gallery. News Release. 08 July 2010. Academy elects 'unique national resource' to assist in economic recovery. Fifty three of the UK's leading ...

Why diversity turns into conformity in online <b>news</b>: An interview <b>...</b>

If you talk to any of the number of young academics who occasionally contribute to the Lab, it's likely the name Pablo Boczkowski will come up sooner rather.

robert shumake

The New York Times reports this morning ("TARP Bailout to Cost Less Than Once Anticipated") that the true cost of TARP will be less than $50 billion. I find this type of reporting to be incredibly misleading and deceitful. Focusing solely on TARP and ignoring the other more costly portions of the government bailout of our biggest banks and corporations ignores the true cost of the government's (both the Bush and Obama administrations, the Fed and Congress) inept response to this crisis. One of the reasons that TARP did not cost more was because of the government's other more costly bailout policies, and to ignore them is to dramatically understate the true cost of the bailout.

By claiming a narrow TARP success, the Times attempts to invalidate citizen anger at the bailout by making it appear that the electorate is somehow misinformed about its costs or is just plain stupid. Nothing could be further from the truth. Claiming that TARP was successful, but ignoring the much larger and more relevant costs of other areas of the government bailout is like claiming the voyage of the Titanic was successful because many of the lifeboats were recovered. It is important to remember that the ship sunk.

Here are my estimates of some of the total costs to American consumers and taxpayers of the entire government bailout. Many of these costs could have been absorbed by creditors and lenders to these highly leveraged large banks and financial institutions without involving taxpayer funds, but both administrations instead chose to stick it to the electorate rather than risk alienating their biggest corporate and wealthy campaign donors.

Estimated Total Costs of Bailout

• Fannie and Freddie bailout = $700 billion estimated, at least, on their $5 trillion portfolio.



• Federal Reserve's increased printing of money to fund purchase of mortgage securities in market and bad assets from banks (which directly leads to an equal amount of inflation, a hidden tax on consumers and savers) = $2 trillion.



• Eventual FDIC losses = $500 billion.



• Credit union guarantees = $50 billion.



• Present value cost of lost interest income to US retirees and other savers due to government's zero interest rate policy = $2 trillion.



• Present value cost of additional high unemployment and lost wages caused by government's focusing on bank and Wall Street profitability first, rather than on job creation = $5 trillion.



• Total loss in housing values due to inappropriate response to overbuilding and high foreclosure problem = $4 trillion (a fraction of the total housing value loss of10 trillion, much of which was necessary to return to non-bubble levels).



• Cost of future bad loans created since 2008 by Fannnie, Freddie and FHA by continuing to lend aggressively into declining real estate markets = $300 billion.



• Wasted stimulus money (Where exactly did this money go and what do we have to show for it?) = $300 billion.



• Total estimated cost of government bailout = $14.85 trillion.

This is more than an entire year's economic output for the entire country. It is as if we Americans worked an entire year for free to pay for our government's inappropriate response to this crisis.

I am not saying that government caused the crisis by itself. I do believe that Wall Street and the big banks are mostly to blame. But government does have to accept responsibility for its inept response to the crisis and the fact that they burdened the US taxpayer with most of its cost rather than the debt and equity investors in these corrupt financial institutions.

John R. Talbott is the bestselling author of eight books on economics and politics that have accurately detailed and predicted the causes and devastating effects of this entire financial crisis including, in 2003, "The Coming Crash in the Housing Market", in January 2006, "Sell Now! The End of the Housing Bubble" and in 2008, "Contagion: The Financial Epidemic that is Sweeping the Global Economy".

Label Complains That Amazon Devalues Artists By Making Music Cheap

from the you-got-it-backwards dept

This is unfortunate. Nearly two years ago, we wrote about the indie music label Asthmatic Kitty, which seemed to take a really forward looking attitude towards the new music market. In that interview, the label noted the reality of the new world, and why it was important to focus on reasons to buy, rather than assuming that people would just pay to hear music. This is what was said at the time:

I operate under the conviction that people buy records because they want to own them, not because they want to hear them. It is too easy these days to hear a record without having to buy it. I don't resent that fact, rather I feel we at Asthmatic Kitty embrace it through streaming albums and offering several free mp3s (even whole free albums). And why do they want to own it? They want it to illustrate to others their taste and identify who they are as a person. I also believe they want to be part of something bigger than themselves, they want to belong.



Our job is no longer to sell folks things they want to hear. They want an experience and to identify themselves as part of a community. Ownership then becomes a way of them supporting your community through investing in that community. Fostering that in an honest, transparent and "non-gross" way takes a combination of gracefulness, creativity and not taking oneself too seriously, while still taking art and music seriously.

Apparently, however, they do resent Amazon for making music available cheaply. Reader Colin points us to a recent article about how Asthmatic Kitty has sent out a letter to fans of artist Sufjan Stevens, complaining that Amazon's pricing is too low and asking people to go to Bandcamp and pay more instead. They do admit to being somewhat conflicted about this, at least:

"We have mixed feelings about discounted pricing," the label explained.



"Like we said, we love getting good music into the hands of good people, and when a price is low, more people buy. A low price will introduce a lot of people to Sufjan's music and to this wonderful album. For that, we're grateful.



But we also feel like the work that our artists produce is worth more than a cost of a latte. We value the skill, love, and time they've put into making their records. And we feel that our work too, in promotion and distribution, is also valuable and worthwhile."

While they're certainly not attacking Amazon or fans, the whole email does feel a little off. The simple fact is, if people want the music (as the label seemed to recognize last year), they can find it somewhere for free. Amazon's prices are meaningless when it comes to the "value" of the music. Price and value are not the same thing. Rather than complaining about the price that Amazon sets on the album, why not give people additional reasons to pay directly at Bandcamp -- such as providing valuable extras if they do. Or discounts on other merchandise. There are all sorts of positive ways to get people to find it worthwhile to spend money without making them feel guilty and bad for paying a price that is legitimately offered by a retailer.

47 Comments | Leave a Comment..