Lost In A Keynesian Puzzle Palace
A weekend topic starting with Bloomberg. “Robert Litan and Ian Hathaway, writing in Harvard Business Review, surmised that many American entrepreneurs are no longer looking for ways to produce more useful stuff, and are instead looking for new techniques for extracting money from each other and from the government. In other words, crony capitalism may be slowly cannibalizing productive capitalism. Litan and Hathaway draw on an argument by the late economist William Baumol, who warned of the possibility that entrepreneurs could turn their energies toward useless rent-seeking.”
“As examples, Baumol cited historical cases of business people who found novel ways to sue their competitors out of existence. Litan and Hathaway, noting a slowdown in U.S. entrepreneurship, fear that something similar might be happening today. If big companies are using new and creative ways to crush the competition, it’s bad news for economic dynamism.”
“So which companies are sucking rents out of the productive economy? Litan and Hathaway don’t point fingers, but it’s easy to make an educated guess. In an influential 2014 paper, Thomas Philippon speculated that financial industry profits and salaries rose spectacularly since 1980 because banks, securities firms and fund-management companies found new methods for extracting rent.”
From David Stockman. “The American people are being brought to ruin by three institutions that are mortal threats to liberty and prosperity. To wit, the Federal Reserve, the military/industrial/surveillance complex and a sinecured Congress that is burying unborn generations in debt — even as it sanctimoniously presumes that it is doing god’s work by servicing the beltway racketeers who keep it perpetually in office.”
“On the latter score, it is worth reminding once again. An incumbent House member standing for reelection has a smaller chance of losing his seat than did a Politburo member during the heyday of the post-war Soviet Union.”
“Perhaps by the looks of today’s sea of red, the whopper told by Yellen during her presser yesterday may finally be sinking in. Our clueless Keynesian school marm not only falsely claimed ‘mission accomplished’ and that the US economy is heading for the promised land of permanent full employment and unprecedented prosperity. She also claimed that the Fed would soon begin normalizing its balance sheet to the tune of $50 billion per month of bond holdings runoff (i.e. effectively bond sales) — ultimately shrinking its holdings by more than $2 trillion — and that there would be nary a negative ripple effect thereupon.”
“As we will soon document further, the first part of Yellen’s proclamation is a risible lie. But the real whopper was her assurance that the Fed’s balance sheet normalization would be of no more moment than ‘watching paint dry’ on a wall.”
“The fact, is when there are no new breadwinner jobs, there is no gain in living standards or real prosperity. Indeed, Janet Yellen is lost in a Keynesian puzzle palace — and that is extremely bad news for the casino punters who still refuse to acknowledge the obvious.”
From Professional Adviser. “Société Générale’s bearish analyst Albert Edwards has said the ‘unelected and unaccountable’ central bankers who caused the global financial crisis will be - and ’should be’ - the next casualty of the current political landscape. Edwards said central bankers would be ’sacrificed at the altar’ as political turmoil continues to shows no sign of waning.”
“He said: ‘There is no recognition at all by central bankers that it may well be their own easy money and zero interest rate policies that are actually causing the stagnation in growth while at the same time wealth inequality surges to intolerable heights. Yellen et al will inevitably be sacrificed at the altar of political expediency as citizen rage explodes. And if I am right and it is clear for all to see that the central banks have caused yet another global financial crisis (GFC), of 2008 proportions, I personally believe central banks deserve to lose their independence.’”
“Edwards said the next financial crash as a result of another global asset bubble bursting is ‘inevitable’ and politicians will once again look for a scapegoat, like they did with the bankers in 2008. He went on to criticise central banks’ policy of quantitative easing, saying it had only created further bubbles.”
“‘The problem in creating asset bubbles to try and reflate the economy is that when the asset bubble bursts and blows up the economy, you are more likely to get the very deflation outturn that you were seeking to avoid in the first place. Even after the GFC these dudes simply have not learnt that loose money policies to blow asset price bubbles is a catastrophic policy destined to end in failure.’”
From Rupert Hargreaves. “The problem with market bubbles is they are hard to spot. Even for those investors who have experienced market booms and busts in the past, market bubbles can creep up on them as there is really no definitive way of predicting them. This collection of quotes from some of history’s greatest investors, policymakers and economists discusses market bubbles and how to prepare for them.”
“‘Fear and euphoria are dominant forces, and fear is many multiples the size of euphoria. Bubbles go up very slowly as euphoria builds. Then fear hits, and it comes down very sharply. When I started to look at that, I was sort of intellectually shocked. Contagion is the critical phenomenon which causes the thing to fall apart.’ — Alan Greenspan.”
“‘Investment bubbles and high animal spirits do not materialize out of thin air. They need extremely favorable economic fundamentals together with free and easy, cheap credit, and they need it for at least two or three years. Importantly, they also need serial pleasant surprises in such critical variables as global GNP growth. Bubbles have quite a few things in common, but housing bubbles have a spectacular thing in common, and that is every one of them is considered unique and different.’ — Jeremy Grantham.”
Back from a couple of weeks in the Netherlands … appreciated InColorado’s reporting from London, so I’ll add real-estate related anecdotes from my own trip.
- Snakecharmer wrote the other day about “una burbuja inmobiliaria” in Argentina; in NL the word for real estate bubble is “vastgoedzeepbel.” This isn’t just a thing in every market worldwide, now it’s a thing in every language, like a clock, or a hammer.
- I heard from several people that, after a couple of years of picking up again, the housing market has gone crazy in the last year. You have to be really fast and aggressive if you want a house now, etc. Same sh-t, different country, but that’s where they are on the bubble curve.
- I saw a lot of For Sale signs. Some were out-of-date ones wearing “Sold Super Fast!” stickers, and of course when you travel you tend to spend more time on busy streets where I’d sell at the first sign of an up market too. But offhand, there seemed to be a lot on the market.
- A major proportion of billboard advertising was about real estate. Lots and lots of “Coming Soon,” “Luxury Plans”, “Sales start July 1″, etc. Saw a number of “Thinking about selling your house? Call me for a friendly chat” or “How much is your house worth? Find out!” ads too.
- Spoke to a couple of architects who are suddenly busy out of their minds after years of barely hanging on. Apparently someone threw a switch, everybody’s building again and there’s no one available. One of the ones I talked to graduated from the top technical university in the NL in 2008, and said that of her class, 90% of the architecture grads had left the field to do something else years ago, as there was almost no work for years after the crisis.
- Was at a lunch with a bunch of people, where one person talked at length about “how buying a house works in the NL” which basically came down to easy-peasy howmuchamonth + the Dutch version of the mortgage interest deduction (a subsidy, which apparently is substantial), plus complications having to do with historical housing stock meets future energy efficiency goals. I didn’t make any comments about the subsidy driving the bubble, but two other people at the table mentioned knowing people who still have debts from the last crash. One guy does road construction and was quiet, but level, about having a lot of friends who’d lost a lot of money the first time around. Got the sense that it’s the dynamic as here; people who see the madness don’t want to be the nutjob at the table, and speak carefully.
- Heard a couple of stories about people moving or divorcing with a house in the mix, who just “decided to hold on to the old house”; also several stories about property owners who want to sell but are holding out for a big payday (including the owner of an allegedly beautiful old farmhouse down the street from a relative that ended up more or less collapsing from a few years of neglect). Saw a few instances of recourse to AirBNB while waiting for said payday.
- Ancient farmhouses aside, the quality of Dutch housing is amazing. Saw a house from 1930s; the owner mentioned to me that, after almost 90 years (I checked twice to confirm this), it’s getting to be time to replace the roof tiles! Saw another place that was only a couple of years old, the energy efficiency was amazing. No A/C but it was cool inside with 19 hours of sunlight a day and a nasty heatwave. Also, they build small, nice places, and even if there’s also luxury building going on, I didn’t see any of the McMansion crap we have over here. Got the impression that maintenance/remodeling work is usually done at a high level of quality, too.
- Despite a lot of sensible housing being built, I was repeatedly told that first-time buyers (”starters”) still can’t afford it at current prices.
- Talked to one person who has a really nice townhouse flat in a recently gentrified area of The Hague (think Washington DC), and was surprised to hear something that I hadn’t heard elsewhere; namely, that the tide of gentrification is starting to run the other way, to the extent that he’s looking to move. Lots of massage parlors opening in the neighborhood; can’t park off the main drag or his car gets vandalized; had his (large) front window broken by a couple of drunk Poles having a fight (perpetrators were identified and caught). This is an RE blog and I won’t get into experiences/discussions I had re: immigration, health care (we visited a doctor once and a hospital once while I was there, which was interesting), EU regulations, populism, Trump, etc. without further prodding; but the fact that the gentrification bubble is leaking seemed worth a report.
I think that was most of it, if I remember something else I’ll add it.
Everybody must want to live there.
When are we going to accept, this is a global mania/bubble and Chinese money has nothing to do with it?
Your view is that China did NOT fuel the commodities market? Its ten million millionaires did NOT seek other HAVENS for their money abroad?
True Believers abound.
China’s QE was multiples of the US. My understanding is QE is ongoing in Japan and the EU.
I’d bet when Bernanke first started this, he peeked out the window to see if crowds were gathering on the lawn. Would people and markets really go along with massive printing up of the colored pieces of paper everybody goes to work for each day? “Phew, they fell for it, let’s do some more.” Negative interest rates? Sure, let’s turn age old concepts of money and lending on their head. It’s unprecedented! Courageous even.
And the media seriously reported Bernanke say he couldn’t refinance his shack fresh off a $150,000 speech.
“China’s QE was multiples of the US”
Much of what QE finances is destined to collapse. Things that are sustainable don’t need QE and things that aren’t are gone when the QE stops accelerating them. We’ll have some smouldering piles of rubbish here but we sure won’t be alone.
Ten million millionaires?
I guess everyone is a millionaire measured in Zimbabwean dollars.
If they have 1.3 billion people then there must be 13 million 1%ers! If we assume that the top 5% are at least millionaires then there are 65 million chinese millionaires looking to ‘diversify’. Obviously this is open to debate but it is an important issue.
https://en.wikipedia.org/wiki/Millionaire#Number_of_millionaires_by_country
There is a theme here.
Bigger and bigger government with more and more regulations and higher and higher taxes is the ONLY answer to every problem.
Any answer that does not agree with the above statement is racist, homophobic and sexist.
++++++
American entrepreneurs are no longer looking for ways to produce more useful stuff, and are instead looking for new techniques for extracting money from each other and from the government.
“The American people are being brought to ruin by three institutions that are mortal threats to liberty and prosperity. To wit, the Federal Reserve, the military/industrial/surveillance complex and a sinecured Congress that is burying unborn generations in debt — even as it sanctimoniously presumes that it is doing god’s work by servicing the beltway racketeers who keep it perpetually in office.”
“American entrepreneurs are no longer looking for ways to produce more useful stuff, and are instead looking for new techniques for extracting money from each other and from the government.”
(smile)
Uber undercuts traditional taxis. Airbnb does the same with hotels. Amazon the same with retail. OK, competition is good but why can’t some of these companies follow existing laws and/or make a profit?
Profit? Ben you dinosaur, don’t you know profit is dead?
I worked for a dot-com and some other businesses that scorned profit. They all ended in bankruptcy, lost all the invested capital and a lot of people never got paid.
I worked for a dot-com and some other businesses that scorned profit. They all ended in bankruptcy, lost all the invested capital and a lot of people never got paid.
“… a lot of people never got paid.”
Bahahahahahahaha … these people were on the wrong end of the transactions.
Mr. Banker would like this. Late 90’s, I worked for a bay area “dot com”. We actually made some good tech but the whole thing got corrupted with the mania craze, etc.
Prior to going bankrupt, we went IPO and the stock zoomed into the stratosphere, for a time. The founders + execs cashed out big of course. The vast majority of the rank + file employees had lots of stock options, but most/all of it was unvested because everyone was on 4 year vesting schedules and had only been employees for a year or less at the time of IPO. (Plus add the typical 6-month lockup).
On paper, these employees were “rich”, but they couldn’t sell because they were mostly unvested.
One day, my phone rings and a banker finance guy I’d never heard of, offers to give me a cash loan for the entire amount of ALL my unvested options, at the then-current stratospheric stock price, using the options as collateral or something. Basically, it was like being able to get all the money up-front instead of waiting. (Then pay off the loan later on when those shares became vested and sold — assuming the stock price would still at those stratospheric levels.)
I didn’t take the bait, and I’m glad I didn’t. The stock crashed several months later, and eventually went to zero.
A couple years later, I found out that many, many other employees got called too, and they DID take the bait, and they bought houses and cars and stuff — and then got into a lot of financial problems later on because of it.
More recently, I’ve heard anecdotal stories from some friends, that type of thing still happening in the bay area today, with some of the “unicorn” companies that haven’t even gone public yet. Employees taking out loans based on some future expectation of value of their options if/when the company goes public.
Beware of friendly bankers offering you money on your stock options…
On paper, these employees were “rich”, but they couldn’t sell because they were mostly unvested.
wouldn’t they been able to buy put options and cover it with their stock???
“Mr. Banker would like this.”
Does it involve the infliction of long-enduring self-inflicted pain? If so then, yes, I will probably like this.
Let’s see …
“On paper, these employees were ‘rich’”, but they couldn’t sell because they were mostly unvested.”
I like this part. I call this part “The set up”.
“One day, my phone rings and a banker finance guy I’d never heard of, offers to give me a cash loan for the entire amount of ALL my unvested options, at the then-current stratospheric stock price, using the options as collateral or something. Basically, it was like being able to get all the money up-front instead of waiting. (Then pay off the loan later on when those shares became vested and sold — assuming the stock price would still at those stratospheric levels.)”
Suck ‘em in.
“The stock crashed several months later, and eventually went to zero.”
Bahahahahahahahahahahaha … what a surprise!
“A couple years later, I found out that many, many other employees got called too, and they DID take the bait, and they bought houses and cars and stuff — and then got into a lot of financial problems later on because of it.”
Bahahahahahahahahahahahahahahahahhaha.
Up comes a favorite part, the part the demonstrates that the Learning Curve, if it exists at all, is totally - TOTALLY - flat …
“More recently, I’ve heard anecdotal stories from some friends, that type of thing still happening …”
… STILL HAPPENING …
“… in the bay area today, with some of the ‘unicorn’ companies that haven’t even gone public yet. Employees taking out loans based on some future expectation of value of their options if/when the company goes public.”
And there it is: A nation of dummies. Send them - The Best & The Brightest - to college and then unleash them into the Real World to be used as debt slaves.
I like it, I love it, I want some more of it.
Comment by butters
2017-06-24 08:38:09
aNYCdj, maybe? I’m not sure how that would have worked, or if it was possible. I doubt many of the regular employees did either. As for me, I hung on for a while, sold what I could, when I could, before it completely collapsed, and I was happy with what I got. I never got the high priced ‘toys’ like the other FBs, but I never had any financial disasters either. Plowed much of it into gold, then made money on that! My dumb luck.
Mr. Banker, glad you enjoyed it.
It was orgasmic.
I want to cut the government by expanding the military/war/surveillance.
Defense Spending = 15% of the Federal Budget
Entitlements = 61% of the Federal Budget
Why doesn’t the left ever discuss the elephant in the room?
https://en.wikipedia.org/wiki/United_States_federal_budget#/media/File:CBO_Infographic_2016.png
Entitlements are mostly Social Security and Medicare. A big chunk of Medicaid is also spent on senior citizens. So the same question could asked about the right, even the far right. Why don’t they speak of drastic cuts to benefits for senior citizens?
Social security is not an entitlement. The employee and employer put cash in during their work years. Incredible how this category now is an entitlement.
That’s generally how the word is used. It just means that the spending is for a long established program that doesn’t need an appropriation every year.
#SteveB: Read this and get back to us.
Social Security
Understanding Supplemental Security Income Social Security Entitlement — 2017 Edition
Understanding SSI Home Page / Understanding Supplemental Security Income Social Security Entitlement
SOCIAL SECURITY ENTITLEMENT REQUIREMENTS
Many people who are eligible for Supplemental Security Income (SSI) may also be entitled to receive Social Security benefits. In fact, the application for SSI benefits is also an application for Social Security benefits. We often need to obtain additional information from the person before we can award Social Security benefits.
The following sections provide information on who may be entitled to Social Security benefits.
TO BE ELIGIBLE FOR SOCIAL SECURITY BENEFITS AS A WORKER YOU MUST BE:
- Age 62 or older, or disabled or blind; and
- “Insured” by having enough work credits.
For applications filed December 1, 1996, or later, you must either be a U.S. citizen or lawfully present alien in order to receive monthly Social Security benefits.
…
Are you being stupid on purpose? Or making a joke with your false budget stats? Lies.
Military spending is generally ~60% of federal budget. This has been true since I was in grade school.
The cost of carrying national debt is the other huge amount as well as unlisted war debts “thanks W.”
http://www.politifact.com/truth-o-meter/statements/2015/aug/17/facebook-posts/pie-chart-federal-spending-circulating-internet-mi/
Everything else, tinier slices almost so as to be insignificant when people claim cutting them will solve a budget problem.
“In other words, crony capitalism may be slowly cannibalizing productive capitalism…..”
I used to be astounded by the dull minds that populate esteemed institutions such as Harvard Business Review. They have just embarrassed themselves once again.
One liners such as the one above are painfully obvious to anyone that works in productive capacity of any type.
Evidence and outcomes of crony capitalism abound, and have for decades. (”Crony capitalism” itself is a misnomer, as Keynesian-based economics is NOT a capitalist concept to begin with.)
(1) Washington DC is the wealthiest metropolitan area in the country.
What does it produce? How does it produce wealth of its own? No. It siphons its wealth. It cuts deals to move money from elsewhere in the country into its own pockets.
(2) Housing price increases that far outstrip increases in income. How does a house produce wealth of its own to justify those increases? It doesn’t. Housing speculators and “investors” are making money by siphoning money from elsewhere into their own pockets.
None of this is new. What IS new is that a majority of people in this country apparently believe this behavior to be perfectly justified.
I don’t.
“How does a house produce wealth of its own to justify those increases?”
It doesn’t; The wealth production (and I tend to choke when I use such a term) is produced by the actions of neighboring idiots that decide by their idiotic actions to pump up the prices of the comps.
As to the house itself … not much happens with the house itself. The house is just an object used to express financial madness. The madness could just as well be express by Beanie Babies or tulips, (except the money for Beanie Babies or tulips won’t be as easily obtained as it is for houses).
Beanie Babies, tulips, houses - use whatever it is that works.
Whatever the financial madness that takes over the psyches of crowds it is generally the enablers of this madness that profit in the end - not the direct participants of the madness but the enablers, the ones in the middle that get paid up front.
Of course a house doesn’t produce it’s own wealth. All of us here know that.
“Of course a house doesn’t produce it’s own wealth.”
I’m not so sure about that. There’s such a thing as equity, wealth magically created by rising house prices that can be cashed out and spent.
If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years. It’s as if you had 500,000 dollar bills stuffed in your mattress.
David, I’ll remind you what you did when you left the NAR gig. You went off to start a shack foreclosure investment company.
“Harvest your equity”
We know how that ended
I enjoy swinging both ways.
“It’s as if you had 500,000 dollar bills stuffed in your mattress.”
To be polite: You are wrong.
Cheap money tends to make a speculative asset of everything, including the roof over a family’s head. Interest, the rate of return based on some risk or deferment of immediate consumption, was suppressed and so the mad hunt for yield / speculative profits began.
Anything that can be inflated when targeted by a blast of cheap money (stocks, housing, etc), has been. Here we stand, in the center of a giant, Fed induced momentum trade. Once the Fed start to sell assets, David Tippett will be on reversing his famous ‘buy everything’ call and the great unwind will begin. The choices then will be print and inflate (again) or allow the inevitable collapse.
“Once the Fed start to sell assets, David Tippett will be on reversing his famous ‘buy everything’ call and the great unwind will begin. The choices then will be print and inflate (again) or allow the inevitable collapse.”
You missed a choice, which is to forever talk about unwinding extraordinary accommodation, but never follow through. Wouldn’t this be the prudent choice, rather than allowing markets to collapse, only to immediately turn around and institute another round of bailouts in order to prop them up again?
Wouldn’t it be less painful and more efficient to just keep them propped up on a permanently high plateau?
Wages haven’t gone up for decades. Sure in the ivory tower of central bankism, foaming the runway for banks is pretty important. For the average person not so much. (I’d go so far as to suggest a pay per view of banker tar and feathering would yield record audiences). The modern central bank system is built around globalism. The modern military arraignments too. In the space of a couple of years, we’ve gone from a situation where criticizing globalism was a third rail to a not uncommon political position. There are many anti-globalist parties in the major countries of Europe.
Have you noticed a distinct reduction in the use of the word “elite” in fawning Davos type reports? I haven’t seen one of those for a few months.
This isn’t their sandbox anymore. If globalism has failed, the issue won’t go away. I said long ago when the Chinese government deliberately kicked off that dumb stock bubble, these guys are out of ideas. And China is the big juggernaut of globalism. Where does that leave countries who got a bad deal out of the whole thing? People are in a mood to try something different, and the Yellen gang think speeches about low inflation has a meaning to them. They are increasingly seen as out of touch in a world kinda fed up with the status quo.
“less painful and more efficient…”
To whom?
The inflation, debasement, QE, whatever you call it is wealth transfer, in other words; theft. Historically, it is the ruin of civilizations. How efficient do you want it to be?
“Historically it is the ruin of civilizations.”
Yeah? But until such a time … PARTY PARTY PARTY!
“(I’d go so far as to suggest a pay per view of banker tar and feathering would yield record audiences).”
I’m not much for pay-per-view, but this I would subscribe to.
You missed a choice, which is to forever talk about unwinding extraordinary accommodation, but never follow through. Wouldn’t this be the prudent choice, rather than allowing markets to collapse, only to immediately turn around and institute another round of bailouts in order to prop them up again?
Wouldn’t it be less painful and more efficient to just keep them propped up on a permanently high plateau?
All of these manipulations, from stimulus to interest rate suppression, are funneling wealth from one party to another, indirectly. This has consequences as well.
Washington DC is the wealthiest metropolitan area in the country.
I think that it was found somewhere that six of the ten highest income countries are in the DC area. But if you look at the highest income ZIP codes, they’re not all concentrated there. Once again, the anger at government is focused on the wrong thing.
Wrong Mikey. The DC metro is sucking the taxpayer dry. Trump was elected to stop that.
That’s just big business propaganda. They want no rivals to their influence, their power.
Maybe you’ll get some tax cuts from Trump. It’s quite likely that “deficits don’t matter” will return. But you won’t actually get much out of it unless you’re already rich.
https://www.google.com/search?q=swamp+draining&source=lnms&tbm=isch&sa=X&sqi=2&ved=0ahUKEwj6gKrildfUAhVS-mMKHTR6BsIQ_AUIBigB&biw=1360&bih=651#imgrc=peSUMsbBv3pJbM:&spf=1498330958880
Trump was elected to stop that ??
LOL..
Some say Trump was elected to stop Hillary.
Many votes for Trump were votes against Hillary (and Bill). When he was campaigning, saying “you get two of us for the price of one,” people were recoiling in disgust.
Those people always vote Republican.
Whether it’s Trump or Hillary, Mr. Banker wins either way. Also Bill’s line about two for one makes me gag.
“Whether it’s Trump or Hillary, Mr. Banker wins either way.”
Yep. Either way.
‘‘There is no recognition at all by central bankers that it may well be their own easy money and zero interest rate policies that are actually causing the stagnation in growth while at the same time wealth inequality surges to intolerable heights…The problem in creating asset bubbles to try and reflate the economy is that when the asset bubble bursts and blows up the economy, you are more likely to get the very deflation outturn that you were seeking to avoid in the first place.’
We’ve looked at this many times: if creating money produced inflation, gold would be in the many thousands after QE. We’d be pushing wheelbarrows of Yellen bucks around. This past week I read a Fed guy named Evans wondering if Amazon was deflationary. Look at oil: I heard a radio quote on wholesale gasoline a couple of weeks ago at $1.40. Here we are two years past the oil peak and even the Saudi’s are borrowing money. If credit wasn’t so abundant, many more oil producers would be out of business by now.
I’m not advocating for higher oil, just pointing out that QE and artificially low interest rates merely distort equilibrium, resulting in oversupply. Same with food: the world added 83 million acres of food production after QE began. Vast increases in fish farming. The problem with central bank theory is it attempts to solve market issues as if the market is in a vacuum. No, it will respond to higher prices. Oh we have a shortage of air boxes! Yet San Francisco is at a 72 year high in construction, Boston a 60 year high. Miami Beach has a 20 year supply of $5 million condos with more on the way. Billionaires are walking away from multi-million dollar apartments loans in Manhattan.
It is amazing what those in power will do to avoid a recession and win the next election.
Eight years of obama cheap and easy ZIRP money.
Adding more to the deficit than all of administrations COMBINED and accounting for inflation
And still Hillary lost.
“It is amazing what those in power will do to avoid a recession and win the next election.”
It is amazing that you find this amazing.
It’s amazing that you are amazed in 2banana’s amazement.
A regular daisy chain of amazement.
‘resulting in oversupply’
Miraculous you call it babe
You ain’t seen nothing yet
They’ve got Pepsi in the Andes
Mcdonalds in Tibet
Yosemite’s been turned into
A golf course for the Japs
The Dead Sea is alive with rap
Between the Tigris and Euphrates
There’s a leisure centre now
They’ve got all kinds of sports
They’ve got Bermuda shorts
The had sex in Pennsylvania
A Brazilian grew a tree
A doctor in Manhattan
Saved a dying man for free
It’s a miracle
‘Massive bridges are going up all across China, The New York Times notes, in a simultaneous display of engineering ingenuity and economic folly: ‘The Chishi Bridge is one of hundreds of dazzling bridges erected across the country in recent years. Chinese officials celebrate them as proof that they can roll out infrastructure bigger, better and higher than any other country can. China now boasts the world’s highest bridge, the longest bridge, the highest rail trestle and a host of other superlatives, often besting its own efforts. […]‘
‘But as the bridges and the expressways they span keep rising, critics say construction has become an end unto itself. Fueled by government-backed loans and urged on by the big construction companies and officials who profit from them, many of the projects are piling up debt and breeding corruption while producing questionable transportation benefits. […]‘
‘A study that Mr. Ansar helped write said fewer than a third of the 65 Chinese highway and rail projects he examined were “genuinely economically productive,” while the rest contributed more to debt than to transportation needs. Unless such projects are reined in, the study warned, “poorly managed infrastructure investments” could push the nation into financial crisis.’
‘China’s bridges galore are another sign of an economy that has run out of legitimate investment opportunities, but that nevertheless has a huge and politically well-connected infrastructure industry determined to build, no matter what.’
China is a good example, and we get these gee-whiz reports from the MSM. But why don’t they ask: if China is growing so much, how could they tolerate such waste? Only if you count the waste as growth, with some pocket lining in for good measure. If digging ditches and filling them in on borrowed money worked, China wouldn’t be choking on its air.
Why not put all this wasted non needed “infrastructure” spending into pollution control spending? Sewers? Waste water control. Scrubbers? Etc.
A dollar spent is a dollar into the economy according to Keynesians.
Why not at least get some real benefits?
Am I remembering correctly that the construction of bridges to nowhere was a key feature towards the end of Japan’s economic boom in the late 1980s?
‘The tallest building west of the Mississippi River opened its doors on Friday in once-stodgy downtown Los Angeles, which is sprouting a crop of new skyscrapers. Vacant office buildings have become pricey lofts and apartments, a new art museum opened and with changes to density and zoning laws, plans are moving ahead to create gigantic complexes of residences, hotels and shopping districts. About 150 building projects are in the works, including some 20 skyscrapers of 35 stories or more.’
But we aren’t building enough.
A comment:
‘Beautiful building. Los Angeles is trending high. Who says the economy of California is in trouble? It’s a boom town all over. Who says people are moving out of California. Traffic everywhere, particularly on the freeway is busier than ever. L.A. is just the place to be.’
“Traffic everywhere…”
LA has become unbearable for the above reason. I think it has also to do with the minimum wage bumping up, though not yet at $15. This has brought the people from the boondocks into LA driving 2.5 to 3 hours one way and the those plying marginal trades (read lawn care, repair etc.) There is a mad scramble from 2pm to 3:30pm to get on the 91 freeway to get back home. Everyone is hustling, people are eating out. Reminds me of 2007-2008.
‘Reminds me of 2007-2008.’
History rhymes.
I’m sure giving out 600,000 drivers licenses to illegal aliens is a big part of the increasingly insane traffic we endure in LA.
Bigger and bigger government meets Uber like tactics to get you your Amazon package…
+++
RIGGED! Forced into debt. Worked past exhaustion. Left with nothing.
USA Today | 16 June 2017 | Brett Murphy
In October 2008, that changed dramatically in southern California, home of the nation’s busiest ports, Los Angeles and Long Beach. State officials, fed up with deadly diesel fumes from 16,000 outdated trucks, ordered the entire fleet replaced with new, cleaner rigs.
Truckers at dozens of companies describe the same basic scene. They were handed a lease-to-own contract by their employer and given a choice: Sign immediately or be fired.
Drivers gave their old trucks – many of which they owned outright – to their company as a down payment. And just like that they were up to $100,000 in debt to their own employer. The same guys would have had a tough time qualifying for a Hyundai days earlier.
A former house painter and father of two, Lopez lost all his money after pouring his savings into a truck at Total Transportation Services, where more than 80 drivers have said they were cheated out of fair pay or charged for equipment their employer should have covered.
After making payments for six years, about $700 a week for the lease and maintenance, he lost the truck and the tens of thousands of dollars he had scraped together to keep it.
At Pacific 9, 20 drivers testified at the California labor commission that they had to work up to 19 hours a day, violating federal fatigue laws for truckers.
They said dispatchers ordered them to doctor their driving logs every Friday to hide the overtime from regulators.
“We were told to write 12 hours on the log sheet,” former driver David Figueroa testified in a 2015 labor commission case. “They said they would withhold our checks.”
“RIGGED! Forced into debt. Worked past exhaustion. Left with nothing.”
Yeah? Well that’s nothing; This morning my butler called in sick.
When I first saw the headline:
“RIGGED! Forced into debt. Worked past exhaustion. Left with nothing.”
I thought it was going to be an article on FBs…
It is an article about FBs, but instead of the objects being houses the objects are trucks.
What I find interesting is that several individuals here believe that emissions tests are a standard practice nationwide.
I live in flyover.
It’s been more than 20 years since I’ve been required to have an emissions test on ANY vehicle.
Chew on that one for a while.
Freedom in the 50 States. An interesting survey, for those interested. For those out there who have never seen this, it is illuminating. (With no click-through nonsense present).
https://www.freedominthe50states.org/
I am sure it is just a coincidence that democrat run blue states are the least free…
Websites that tout freedom or liberty usually just promote policies that benefit rich people.
Cuba and Venezuela are probably pretty high on your list then…
So why do most rich people live on the coasts? Why is Washington DC the wealthiest metropolitan area across the entire United States?
Could it be they are wealthy because they purposely and most doggedly siphon wealth from the most productive?
Could it be that draconian laws and regulations in coastal states allow them to siphon that wealth most effectively and efficiently?
Hmmm…….
I remember not too long ago when liberals used to openly despise the wealthy. Now they embrace them.
Why the change, Mighty Mike? What happened?
So why do most rich people live on the coasts? Why is Washington DC the wealthiest metropolitan area across the entire United States?
I’m not sure what this question has to do with my statement about freedom and liberty websites. Also, DC is around 100 miles away from the coast.
If you add up all of the Americans who live within 100 miles of the coasts, including the Gulf Coast, you might have nearly half of the American population.
Also, I’ve never expressed any attitude despising the wealthy.
Cuba and Venezuela are probably pretty high on your list then…
That’s not a logical conclusion from my statement regarding those websites.
Summary of MightyMike:
M: I came here for a good argument!
O: AH, no you didn’t, you came here for an argument!
http://www.montypython.net/scripts/argument.php
Incomes Taxes By State
https://taxfoundation.org/state-individual-income-tax-rates-and-brackets-2016/
And one last one (thanks, Ben)….
I first found this maybe six years ago, as I was contemplating preemptive moves I could take in case of a real economic meltdown.
Strategic bankruptcy, anyone? It’s interesting, this bankruptcy thing. Let’s say you WANT to declare bankruptcy, not out of need, but out of desire.
There are about 10 states where it is to your advantage to declare bankruptcy as compared to other states. There are huge differences among the states.
Iowa and Kansas, for example, allow you to shelter your entire house from creditors, regardless of home value. Best states overall: Iowa, Kansas, Florida, Montana, Arizona, South Carolina, Minnesota. That’s my assessment for housing, cash, income exemptions, autos, etc.
See the website below. An ungainly site - written by lawyers, so of course the site’s navigation sucks - but potentially useful information to anyone here.
The site could really use a spreadsheet that allows one to eyeball all the states and numbers side-by-side. Alas, no such chart.
http://www.nolo.com/legal-encyclopedia/bankruptcy-exemptions-state
What kind of liabilities are you trying to protect yourself from, in case of meltdown?
None, actually. I currently rent; have no debt whatsoever.
If I ever do buy property again, it might be wise to do so in a state that is favorable to me re: bankruptcy. If push comes to shove, I’d like to be in a position of least vulnerability.
I can envision a time when IRAs get stolen by the Feds. Lots of carnage, lots of bankruptcies.
Even if you do not have a debt, one can be created for you by a judgement. The BK homestead exemption here in rural NY is not grand at all, I just looked it up. $82K, double if married. Only the modest would be judgement proof on the house, except in a meltdown, what will houses be “worth”? IRA, if not stolen by the Feds, would be BK proof. My boat would be low hanging fruit, but in a meltdown there would be a fleet of upgrades to choose from on the cheap.
I don’t worry much about a total meltdown. I do have a portable insurance policy.
This supports my point. Many states rely heavily on sales taxes, making their total state taxation regressive overall. That would be most likely in the states with the lowest income taxes.
Mighty Mike:
I have no idea what points you are trying to make. You draw some very strange correlations and conclusions at times in your efforts to refute whatever you disagree with.
You seem to be grasping at straws.
Are you stating that low income taxes equates to high sales taxes? Is that your rebuttal to everything that has been stated in this thread?
Yes? Good. Prove it.
And, yes, I am well aware that you’ve answered none of my earlier questions. If what you’re attempting is a bait and switch, you haven’t been successful.
I explained that one of your questions was based on a false premise. That’s why I didn’t answer it.
The other answer was implied. If half the population lives near a coast, assuming that 100 miles is near, than it shouldn’t be so surprising that most rich people live near a coast.
What’s the obsession with the coasts anyway? Do you have something against coastal regions? Do you dislike seafood?
Are you stating that low income taxes equates to high sales taxes? Is that your rebuttal to everything that has been stated in this thread?
No, it wasn’t a rebuttal. It just supports the points that I made, which weren’t in opposition to anything that you said. If you prefer regressive taxation and other arrangements that benefit rich people, that’s OK.
Pointless.
Agreed.
“Lots of massage parlors opening in the neighborhood.”
There is one next to a Chase bank, on Alhambra Circle, Coral Gables, Florida. Prime real estate. Asian ethnicity. It has an OPEN sign on its door at night.
“See no evil, hear no evil”— Chase employee
“Litan and Hathaway draw on an argument by the late economist William Baumol, who warned of the possibility that entrepreneurs could turn their energies toward useless rent-seeking.”
My inner Austrian suspects they are spot on.
P.S. I’ll also mention that I coincidentally happen to be making these posts from Austria.
Are the hills really alive with the sound of music?
The only music I heard on the streets of Vienna was drivers honking their horns.
Can confirm, heard the horns from inside the Mozart museum.
We went to this interesting restaurant tonight where one band was playing indoors and another outdoors. We were sitting out on the patio where we could hear both playing different songs simultaneously, which might appeal to folks who enjoy the music of Charles Ives.
Awesome. I just found a little watercolor painting of Grinzing this morning. Nice onion dome parish church there,
And coincidentally, Grinzing is the area of Vienna where we dined tonight.
Good for you Professor
I hope you and Mrs. Bear have the time of your lives.
Our clueless Keynesian school marm not only falsely claimed ‘mission accomplished’ and that the US economy is heading for the promised land of permanent full employment and unprecedented prosperity. She also claimed that the Fed would soon begin normalizing its balance sheet to the tune of $50 billion per month of bond holdings runoff (i.e. effectively bond sales) — ultimately shrinking its holdings by more than $2 trillion — and that there would be nary a negative ripple effect thereupon.
Two trillion at 50 billion should take 40 months. I think that someone was saying 400 months last week. I didn’t bother to try to figure what he was going on about. Now we know that should have checked his arithmetic.
It also appear that Stockman has been increasing the intensity of his rhetoric. It’s probably the need to compete with others on the internet saying the same stuff.
I have talking about this for the last year…
Good photo album.
******
Haunting Photos of Shuttered Stores on Madison Avenue
Wolf Richter • Jun 24, 2017
So here is the excerpt of an essay with haunting, beautiful photos of this meltdown as seen from the sidewalk on Manhattan’s glorious Madison Avenue, “Crown Jewel in American retailing.” The essay, “Walking the Avenue with a Camera,” was originally published on New York Social Diary, a great place to read about the goings-on in New York City.
http://wolfstreet.com/2017/06/24/haunting-photos-of-shuttered-stores-on-madison-avenue/
I know this turf. Speechless I am. Absolutely one of the most expensive real estate stretches on the globe. (We are NOT talking about a small percent of the total, either.) No mention of this elsewhere.
Thanks for the post.
Closed down fashion stores. So hot right now.
Arconic knowingly supplied flammable panels for use in tower: emails
By Tom Bergin | LONDON
Six emails sent by and to an Arconic Inc (ARNC.N) sales manager raise questions about why the company supplied combustible cladding to a distributor for use at Grenfell Tower, despite publicly warning such panels were a fire risk for tall buildings. The emails, dating from 2014 and seen by Reuters, were between Deborah French, Arconic’s UK sales manager, and executives at the contractors involved in the bidding process for the refurbishment contract at Grenfell Tower in London, where 79 people died in a blaze last week.
When asked about the emails, Arconic said in a statement that it had known the panels would be used at Grenfell Tower but that it was not its role to decide what was or was not compliant with local building regulations.
The company manufactures three main types of Reynobond panel– one with a polyethylene (PE) core, one with a fire retardant core and another with a non-combustible core, according to its website.
Diagrams in a 2016 Arconic brochure for its Reynobond panels describe how PE core panels are suitable up to 10 meters in height. Panels with a fire resistant core — the FR model — can be used up to 30 meters, while above that height, panels with the non-combustible core — the A2 model — should be used, the brochure says.
Grenfell Tower is more than 60 meters tall.
http://www.reuters.com/article/us-britain-fire-arconic-idUSKBN19F05M
Do you really want to live in tower designed by government?
Do you really want to depend on retirement designed by government?
Do you really want to depend on health care designed by government?
Etc.
Do you really want to depend …
From what I saw over there, Londoners would have it no other way. They expect .gov to solve all their problems.
One of the clerks at the hotel where we stayed was a young Hungarian dude. He flat out told me that he couldn’t stand London or the UK and was making plans to move to the USA. I wished him well with getting visas and such, and warned him that it would be an uphill battle.
How come the tower didn’t collapse from the fire?
:/
Concrete doesn’t melt when you park a jet upstairs?
There’s likely large chunks of spalled concrete that exposed rebar.
Mr. Banker, a (naive) question: Do you care if the principle is ever repaid?
Not if the principle belongs to somebody else.
What I like are the fees associated with the principle, the immediate up-front fee and monthly cuts I get to extract from the monthly payments made by the schmucks.
Illinois could be 1st state with ‘junk’ credit due to budget
BY SARA BURNETT
Associated Press
JUNE 24, 2017
The agencies are concerned about Illinois’ massive pension debt, as well as a $15 billion backlog of unpaid bills and the drop in revenue that occurred when lawmakers in 2015 allowed a temporary income tax increase to expire.
http://www.kentucky.com/news/business/article158027064.html
Naming rights, Illinois. It won’t be Chicago anymore. It will be Shamwow.
How about Chicalore? americas version of Bangalore
Urbana Champaign will be named Amazon Prime.
Can they pull a Venezuela and sell debt at fire-sale prices to the likes of Goldman Sachs in order to shore up their financial picture?
I still say we should toss a bone to the victicrats and let Japan nuke chicongo (and springfield), killing off the corrupt pols and their feral voters and then require the Japanese that what they rebuild they will own and that they move in, replacing the losers with smart, hard-working, polite people. Win-win-win all around.
Japan doesn’t have nukes.
Not portable ones.
Gee, you want to encourage a foreign power to murder a million Americans. That’s about as offensive as it can get. Anyone else agree?
MM
Military folk are more concerned about foreign tankers coming into port.
Who’s world is this?
The world is yours:
https://m.youtube.com/watch?v=_srvHOu75vM
From the post and courier:
That’s not an insignificant amount of money. Around $16k per eligible “homeowner” on average. That would pay a year of my rent.
Father thought he buried his homeless son, turns out he’s alive
Updated 9:19 pm, Saturday, June 24, 2017
SANTA ANA, Calif. (AP) — Eleven days after laying his son to rest, Frank J. Kerrigan got a call from a friend.
“Your son is alive,” he said.
“Bill (Shinker) put my son on the phone,” Kerrigan said. “He said ‘Hi Dad.’ ”
Orange County coroner’s officials had misidentified the body, the Orange County Register reported Friday.
The mix-up began on May 6 when a man was found dead
http://www.greenwichtime.com/
“Lost In A Keynesian Puzzle Palace”
In keeping with the title of this blog post, I humbly submit The Cheese in the Maze Strategy:
http://bigleaguepolitics.com/trumps-cheese-maze-strategy/
Gee, this sounds an awful lot like something I wuz just writing about the other day.
Special Bugs Bunny bonus:
https://www.youtube.com/watch?v=HNtefWOnWWk
OT just weird…….After being pulled over for driving the WRONG WAY, 81-year-old grandma pulls off and leads police on car chase
http://www.crimeonline.com/2017/06/24/after-being-pulled-over-for-driving-the-wrong-way-81-year-old-grandma-pulls-off-and-leads-police-on-car-chase-video/
Arconic knowingly supplied flammable panels for use in tower - emails
https://uk.news.yahoo.com/arconic-knowingly-supplied-flammable-panels-tower-emails-070427865–finance.html