Bits Bucket For December 12, 2009
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The Housing Bubble
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Insomnia, but an opportunity to visit with the HBBers and get some paperwork done.
Seems like the Wall Street traders are trying to figure out what is the next trade. Sold the stocks I bought last year, and I’m done with stock investing until it takes the next huge dip down. Here’s why:
http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=BAC&ShowChtBt=Refresh+Chart&DateRangeForm=1&C9=2&ComparisonsForm=1&CE=0&DisplayForm=1&D4=1&D5=0&D3=0&ViewType=0&CP=0&PT=11
http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=AA&ShowChtBt=Refresh+Chart&DateRangeForm=1&C9=2&ComparisonsForm=1&CE=0&DisplayForm=1&D4=1&D5=0&D3=0&ViewType=0&CP=0&PT=11
http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=PG&ShowChtBt=Refresh+Chart&DateRangeForm=1&C9=2&ComparisonsForm=1&CE=0&DisplayForm=1&D4=1&D5=0&D3=0&ViewType=0&CP=0&PT=11
Until the 1990s the stock market was a boring place. I remember standing under a sign lit with the DJIA when I was a kid waiting for a bus in Detroit. That sign moved up and down by fractions of a dollar a day. During the 90s every stock moved into the stratosphere, and every chart looks like we’re slowly drifting back to the old days. It seems to me that any stocks bought after 1995 are destined to drop and should be sold unless they pay a high dividend.
“It seems to me that any stocks bought after 1995 are destined to drop and should be sold unless they pay a high dividend.”
I’m reading this sentiment expressed here and there on the net. I follow a little real estate blog up in Greenwich, Connecticut. It is interesting, seeing as how so many fundies, traders, etc. live up that way. Some of the chatter right now is about stocks taking a major dive.
Stocks, like houses, are way overvalued, IMO. Unless the underlying company is doing or producing something useful, with high demand, I don’t see any reason for major appreciation. Other than that, it is speculation, when there isn’t a dividend.
Yes its a very short commuter to Manhattan, or there were a lot of reverse Manhattan commuters to Greenwich when they built a lot of high rise office buildings right next to the train station..
Plus Greenwich keeps out the riff raff by having 4 acre zoning for sfh, and Darien has no apartments, except for the grandfathered ones near the train station..its either SFH or condozes…you cant build a 2 fam house.
I had an interview at LTCM once. Beautiful offices. They seemed to think the biggest benefit they could offer was to let employees into the fund at drastically reduced intial investment amounts.
Oops.
Isn’t that sort of what Enron did?
Lucky you didn’t work for Fairfield Greenwich Group. A family of posers who thought they struck gold with Madoff and now have to face all the folks who put money in their feeder fund. Good times!
“Lucky you didn’t work for Fairfield Greenwich Group. A family of posers who thought they struck gold with Madoff and now have to face all the folks who put money in their feeder fund. Good times!”
Amazing how greed induces selective amnesia on laws of risk and reward. People were making 15-20% return consistently with Madoff (direct or feeder fund, who cares) over last 20 years and now it is boo hoo hoo, I lost my money, boo hoo. Some of these people will actually get their original investment back - which in my opinion is unfair. Meanwhile, schmucks that happen to have over 100K cd earning .000001% interest at their local bank that defaulted have lost that money. Can you believe that? People with FDIC insured CDs lost money just as banking system is injected with tons of the very same taxpayer’s cash. We stand by while our country’s leadership robs us all blind and makes the Wall streeters and bankers rich. Where is the rioting in the streets? We are all a bunch of tools and drones - me included as I sit here blogging rather than organizing a street protest.
Greenwich Mean Time:
http://www.vanityfair.com/style/features/2009/04/noel200904
Go ahead and organize a street protest. Hope you have a good lawyer and a lot of savings, because even if you beat the trumped up charges, you will never be able to get a decent job again.
Ask me how I know. Better yet, don’t.
Well, I never considered that angle. But if it is peaceful nobody gets arrested and I get on the nightly news, right?
Palmetto-
can you share the name of the greenwich real estate blog? That is my neck of the woods and I have never seen any decent real estate coverage up this way on blogs
Well, I think I would replace “high dividend” with “reasonable dividend.” At some level, an emphasis on asset price inflation (growth stocks) and the double taxation of dividends meant that in the last 20 years, dividends have become tiny compared to stock price, making reasonable dividends look high by comparison.
“Until the 1990s the stock market was a boring place.”
Boring is good if you are a buyer. Exciting is good if you are a seller.
I wonder if what those graphs are showing is mostly just the fact that over that time frame more and more people began investing in the stock market via 401(k)s. What would those graphs look like if they were controlled by “number of people owning stocks” or something.
From what I’ve read over the years, the average boomer saved less than $100,000 for retirement. I’ve always been astonished at how little prepared they are. In 1995 at age 36 my net worth was $50,000 and my salary was $50,000.
I am suspecting due to their small balances in stocks, retiring boomers won’t do much to the stock market. I am going to convert a good deal of my traditional IRA to a Roth in 2010 and hope I will be healthy enough to wait until 2040 to withdraw.
Also hope that by 2040 “they” haven’t changed the rules on Roth IRAs!
Michael, I recommend you do a google search on Roth IRAs. Whatever you contribute to Roths, (the basis) can be withdrawn tax free any time after five years.
After age 59 and a half, any distribution of the earnings are tax free.
Yeah the rules may change, but if they do change after I turn 59 and a half, I will know enough in advance to just take everything out of the Roth.
I think it’s more likely the tax rates will come down in twenty years, making traditional IRAs and traditional 401ks a much better deal than Roths. This is why I diversify within my tax avoidance strategy. Anyone who puts all their eggs in one basket is foolish.
Yeah the rules may change, but if they do change after I turn 59 and a half, I will know enough in advance to just take everything out of the Roth.
Sure you will, just like in 1933 where everyone knew in advance that gold was going to be confiscated!
Oh, wait…
Boomers are inheriting a ton of money, stocks and property. Hence their laziness and lack of planning for retirement.
How is that wealth significant?
http://www.bargaineering.com/articles/average-retirement-savings-by-age.html
Average retirement savings by people over 75 (in 2007) does not show up. In the age groups, the amounts are paltry. Some boomers will inherit a lot. Most will inherit little. I already got my inheritance in 2001 when I was 42. It was far less than my net worth at that time.
You can just google for yourself. I also think boomers are delaying retirement because their 401ks took a hit. My sisters don’t even talk retirement and they are in their mid 50s. They don’t have any savings.
Indeed there some boomers that will inherit. However a larger % will get little, squat, or even have to provide some minor support (me), to their parents.
I also think boomers are delaying retirement because their 401ks took a hit. My sisters don’t even talk retirement and they are in their mid 50s. They don’t have any savings.
That’s going to suck for us 20 and 30-somethings, as the opportunities for us to move up in the workplace will be limited as a result.
Lots of us boomers are trapped more by the inability to get health insurance outside the workplace than a lack of money on which to retire. Meaningful health insurance reform, which would make non employer based coverage available regardless of pre-existing conditions, at a price similar to what a group premium would be would induce a bunch of us to retire. Otherwise, we have no choice but to hang in until we are at least 63 1/2 so we can COBRA our way into retirement.
My coworkers were going to retire @ 60, now, 2 yrs ltr are planning for 65, not even 63 1/2.
Anecdote for F who says folks had mjr $ in banks/investments etc, but now due to several yrs of alzheimers and caregivers etc, have less than $15k. And even if there were an inheritance, there are 5 siblings.
Another anecdote of inheritance lost, my grandma went into assisted living around the age of 80 with quite a stash, obviously statistics would suggest a large inheritance. Fifteen years later and still going strong, now the worry is insolvency (at 5 grand a month, you do the math)
Bill, you have no dependents. It is really easy to save if you have one income supporting one person.
And before you start into the choices discussion, I made the choice to marry a man who already had kids and then we had 2 together. I did not choose for him to have a cardiac arrest at 48 and leave me as sole support for the family.
I am content with my choices, even though those choices will see me working past traditional retirement age.
The flip side is that it could have been me with debilitating health problems that would have left my husband as sole support. Having a larger family group increases the risk that something will go wrong with one person, but it also decreases risk for the individual, because you have someone to back you up.
Why is it astonishing that most boomers don’t have a lot of money saved for their retirement, Bill? The majority of boomers got just as screwed as everybody else over the last 30 years.
Contrary to popular folklore, wife’s tales, children fairy tales and myth, most boomers were and still are J6P.
My point was to express my doubt that the stock market will collapse due to boomers pulling money out of stocks. Also I would be darned sure to have life insurance if I had a family. I don’t get benefits as a consultant but I am educated enough to buy my own disability income, health, and dental insurance.
Happy2b, I am sorry about your situation. I don’t have luck and certainly had tragedies in my own family that we siblings are still reeling over. And I am betting a huge amount of what I saved will go to support my siblings who never learned to save.
Real estate woes beget real estate woes beget real estate woes.
http://www.boston.com/news/local/breaking_news/2009/12/harvard_officia.html
“Amid the recession, Harvard’s endowment has dropped 27 percent to $26 billion. ”
27%, wow.
Amid the recession, my endowment produced two kids.
(Yes, NYC, I am setting this up for you)
NYC isn’t around,he can’t handle your endowment…comment. hehe
LOL
In an area where I’m from (Kernersville N.C.), the median income is something like 30K a year. With a median income like that, how is it possible to build 500k+ homes and have them sell? Is the credit market still crazy? This particular home started out listing at 820K. Now it’s well over 900k! WTF, why the increase in price? I have passed by it before while at home and it’s a beautiful house, but I just dont see the incomes to justify it.
http://www.fizber.com/north-carolina-buy-single-family-home-10114606.html
Well, part of the problem is in looking at median. One presumes that those with median incomes are not the market that 500k homes are aimed at. And that there are at least SOME people rich enough to afford 500k houses. And it is true that new construction tends to skew to more expensive homes, while older, smaller, more out of date houses, tend to become slowly less desirable over time and are bought by those in lower income brackets. But in many areas, not nearly enough people have high enough incomes to afford the payments on the large number of “high end,” homes that have been constructed.
I was also wondering about the increase in price. I distantly remember an $800k asking price for that home.
Changed brokers when one told them they would be giving it away at $800K and all it needed was the right staging and a little more publicity to sell for $900K.
See? Mystery solved.
“…older, smaller, more out of date houses…
This idea that being old, small, or out of date makes a house less desirable should now being going out the window. For something like 20 years newly built houses have been getting bigger as families have been getting smaller. I read that builders who are still building in this recession have decided to build smaller houses.
I think that people will realize that the idea that certain kinds floor plans or bathrooms or whatever go in and out of style every few years makes no sense either. If you look at your five-year old winter coat and decide that is no longer stylish and needs to be replaced, it’s probably affordable. The vast majority of all Americans simply cannot afford to have the same attitude about their houses.
“…older, smaller, more out of date houses…
Most of these older, smaller houses were built on premium lots, not like the newer houses of today which are mostly built on the less desirable lots.The premium sites were built on years ago. It always amazes me when I see these huge McMansions built on less than desireable lots. I just can’t understand why anyone would want to own one; most have no privacy, no mature landscaping and they ALL look alike.
I’d take an older, smaller out of date house any day.
During the boom in the Seattle burbs, lots of small 50’s era ranchers with a smidgen of a view of Lake Washington were bought for big bucks, torn down and replaced with a McMansion. So you would have alternating small old 50’s era ranchers interspersed with bib new McM’s. A rather odd sight. I don’t know if this is still going on, but I don’t think the Seattle market has dropped as badly as some. Yet.
Sort of like that old ladies house in Atlantic City that Trump and others kept trying to buy away or legally take it away from her. I dont’ know if she is still alive, but last I saw/heard her tiny little boardwalk house was wedged in between a giant parking structure and Trumps casino.
And in the desert you get in some areas a huge house, next to an old desert house/near shanty- Doesn’t affect the valuation. But that was then.
People will pay a high premium for older, and smaller homes with vintage acccoutrements (real plaster, hardwood floors, tile), so new/bigger isn’t always better. the price per sq foot in older neighborhoods near downtown San Diego is much higher than in McMansion suburbia. Sure, some older neighborhoods were never nice, but those that were upscale to begin with usually stay upscale unless they were sliced up by freeways. Here in SD you have Mission Hills, Talmadge, Kensington and areas near Balboa Park. All built in the 1900-1920s…
Multiply Kernersville x (every town and city in the USA)
About 95% of the population around here are government employees/retirees, railroad retirees, and 10-15 buck/hour manufacturing, warehouse, and call center jobs. Area got a bounce from California equity locusts in the early 2000s, when BNSF shut down some of their California operations and transferred them here.
Strangely enough, most of the foreclosures seem to be in the low end housing. The high dollar (for around here) spec houses just sit when/if completed. One that I liked sat for 18 months before it sold for @$350K.
(350K buys a LOT of house & around here).
As of 2005, the local banks were still doing income verification, 10% down, etc……. of course, the bankers around here are the losers that stayed here, instead of leaving town for the Wall Street gold strike. Lots of vacant CRE around here…….by this time next year, we’ll find out for sure how many of the locals are “wearing clothes”.
There are three duplexes near me; one appears finished (except for the landscaping), the other two were framed and Tyvek wrapped……..at this point, work stopped.
That was two years ago. Tyvek was blown off after the first exposure to tornado season. About all they are good for now is bulldozing.
‘Now it’s well over 900k! WTF, why the increase in price? ‘
The bigger the price, the harder they fall.
Good morning all.
I have a question for all the enquiring minds here.
I keep hearing how consumer spending makes up 70% of our gdp. OK, but I gotta admit I’m not entirely sure what that really means… What is the other 30%?
SO, what is it elsewhere?
How does an economy function (or dis-function) if you don’t spend all your time selling each other designer jeans and over-priced real estate?
“How does an economy function (or dis-function) if you don’t spend all your time selling each other designer jeans and over-priced real estate?”
That’s a good question. Stay tuned; looks as if we are in the process of finding the answer.
consumer spending makes up 70% of our gdp. OK, but I gotta admit I’m not entirely sure what that really means… What is the other 30%?
Government and business spending?
“Government and business spending?”
But a lot of business spending is dependent on consumer spending.
Some definitions are needed here: Wikipedia says consumer spending is also known as “personal consumption expenditures”.
Which brings up a lot of questions. Is buying a house a personal consumption expenditure? Is buying a car? What are the boundaries that define this term?
And where does the “financial industry” fit in? Are THEY part of the 30%? ‘Cause alot of their funds have been lent to consumers through mortgagages and credit cards.
“Is buying a house a personal consumption expenditure? Is buying a car?”
Dunno how the govt accountants classify these, but on grounds of first principles, long-lived assets such as houses and cars represent investment if they are purchased new (i.e., the economy has to produce new ones in order to satisfy investment demand for long-lived assets) or consumption if purchased used or rented.
“What is the other 30%?”
Y = C + I + G + (X - M)
C = 70%
I + G + (X -M) = 30%
where
Y = GDP
C = consumption
I = investment
G = government spending
X = exports
M = imports
Y = C + I + G + (X - M) + W
W= x2 Wars
Wars are not part of a “normal” economic equations are they Mr. Bear?
I believe your W is subsumed in my G.
Kinda like China is subsumed here? (X - M)
Yup. With a negative sign on the term, no less…
“Consumer spending” means retail. The rest is business to business. Mfg. Logistics. Finance. All to support the end customer, retail.
In other words, you make a widget for x. You sell it for x+1. You ship it for (x+1)+1. If it’s for retail, it is then sold for ((x+1)+1)x400%.
(where 1=profit)
You see that 400% markup? That’s what powers our economy.
Govt and business spends the other 30%.
“What is the other 30%?”
Perhaps you might consider government spending and the money peculating through the underground economy.
consumption (C)
investment (I)
government spending (GS)
exports minus imports (X-I)
=gross domestic product (GDP)
How about that thing called current account balance? Manufacturing, who needs it? We’re too industrialized and rich to need that sector! Party on at the mall. China needs its economy feed.
“(X-I)”
M is used for imports so as to not confuse it with domestic investment (I).
PB- its been a while. Thanks for the refresher.
So how about all that awful news coming out this week? Retail sales higher than expected. Foreclosure rate down yet again, for the 4th month in a row. And what else was there….oh yeah Dow is at yet another high for the year.
Conclusion: better run for the hills the end of the world is right around the corner.
I up in NYC this week. All the hotels downtown were booked (another sign of the depression, right?). So I stayed near Time Sq. For anyone who has been there you know it’s the ultimate tourist trap. And the place was full of people each of the 3 nights I was there. Thousands of mid-west yokels taking pictures of the purty lights and waiting in line for 30 mins to eat at the Times Sq Olive Garden, since it tastes better in NYC don’t you know?
Lesson learned for me though. Never wait to book a hotel room until the last minute, lest I go through the pain of Times Sq again.
The dates between Thanksgiving and New Years are historically a peak season for hotels in Manhattan. Normally this means higher occupancies and higher room rates.
Did you go see the Christmas tree at Rockefeller Center?
Foreclosure rate down yet again
But arent they still up 20% from last year? :Source: Money.com
I think you are right Eddie. Extrapolate November’s gasoline sales to infinity and the stock market is the economy.
People aren’t really unemployed. They are just lazy.
There was an analyst on this morning who said that the increased sales were entirely upper end stuff - rich people who could have afforded to buy last year who held back a bit because of embarrassment or panic about the stock market crash that was then only a 2 months old. Said the lower end stores sales were all down because of job worries.
I guess we are back to classic trickle down economics. Wealthy cutomers buying stuff at Tiffany’s are going to save the economy. Thank goodness. I was so worried there. Jobs don’t matter anymore. Only the stock market.
Oh, and the same person also warned that sales numbers for Christmas season are meaningless until late January when you find out if there was a surge at the end, whether the merch had to be drastically cut in price to create that surge, and what the sales are from gift cards (profits can’t be booked until they are used because you can’t know cost of goods sold until someone actually uses them).
Polly,
The January #’s will be posted on Feb. 4th.
Expect to see numbers in the mid 800’s and
a corresponding plunge in the market.
You read it here first.
Polly -
Are the handsomely-paid politicians and lackeys frolicking around the Beltway beginning to spend money again?
Maybe there’s enough money amongst The Set in Washington to support the trickle-down theory? I’d prefer that than the trickle-ON theory that we are getting from D.C. and nearby environs.
Politicians are not all that well paid, though most of them are wealthy. Neither are their lackeys all that well paid while they are being lackeys. Former lackeys that are now lobbyists and lawyers can get paid a lot. I haven’t noticed a lot of pull back in shopping in this area except that last week a mall was a little empty but as I mentioned then, it was probably because of snow. Then again, I don’t shop enough to notice when shopping is dropping off.
The one area where I see a real pull back is in apartment rents. Places are practically begging for tennants. I just made an appointment to look at a place right in downtown Bethesda for less than $1200 a month. The good deals disappear pretty quickly, but wow, they do show up.
Told a f/ co-worker that he had better lower his weekly asking rate for his Rancho Mirage condo- even high season, as based on my past condo hunting exp, it is still a renters mkt. as Polly points out. You can get a good deal at a hotel resort, as well as condos everywhere seasonally.
To some extent, that’s correct, Blue Skye.
Many people WOULD be employed if they didn’t think a given job was beneath them. All of us know people who won’t take a job because they simply do not want to do it. Too menial. Too embarrassing. It doesn’t pay them what they think they are worth.
Naturally, their thinking is correct. No way could you parlay a “beneath me” job into something lucrative and satisfying. No way could you make valuable contacts at a “beneath me” job.
Right? Right.
Thank god it has nothing to do with lack of jobs. Phew! Problem solved!
Eddie! I missed you!
Hey eddie you could have book a space at LaQuinta, just a 15 min ride to times square on the 7 for $99 on the weekends……lots of iriahs bars in the area cute stores yeah we have a starbucks but its still old time and a real hand made donut shop like my grandmother used to make.
We were all pretty thankful the hotel you stayed in mercifully offered no wi-fi service. Thank you Times Square!
Hey Eddie, come on out West and check out our Depression. I’m staying with a friend who lives in one of Colorado’s more expensive areas, just down the road from Aspen. She currently has a couple and their two year old camped in her yard in a little camper, it’s been 16 below zero. Neither can find work, here in the land of milk and honey. He’s an unemployed driller. The homeless shelters are overflowing and we have record food stamp usage. Never seen so many beggars. The ski areas are down in visitation in spite of record snow. Tell these guys about the end of the recession and how high the DOW is.
To be fair, when the heck could anyone find a job in Aspen that involved anything other than shoveling some wealthy Californian’s fecal matter, or groveling for some Chicagoan’s hush money?
This area has been supported by Aspen, no doubt, but it’s also oil patch country. But it’s not just here, it’s going on in many places, which was my point to Eddy, there’s more to the world than his sphere of ref.
So, if we take a small enough sample size from one of the busiest areas of the nation and one of the busiest times of the year, we can clearly determine that everything is great everywhere, forever.
Right…
And you thought consumer spending was bad in America. Get a load of these numbers:
From Bloomibergi:
Spain Says Adios to Xmas as 19% Jobless Hits Spending
By Emma Ross-Thomas
Dec. 11 (Bloomberg) — For the first time in their lives, Consuelo Serrano’s kids won’t get a visit from Santa Claus.
The Spanish mother will give presents only on the Jan. 6 Epiphany holiday, a Christian feast that marks when three wise men visited Jesus….
Spanish holiday spending will drop 9.1 percent this season, according to Deloitte, more than the 6.3 percent decline forecast for western Europe. El Corte Ingles SA, the nation’s biggest department store operator, is advertising 70 percent discounts to lure shoppers…
The protracted crisis means more than half the jobless, including Serrano’s husband, have been out of work too long to get full benefits. Spain’s unemployment rate is 19 percent….
Fewer than half of Spain’s 3.8 million unemployed are still receiving their contributions-based jobless pay, which lasts a maximum of two years, according to Labor Ministry data. Another 1.2 million receive smaller subsidies, such as a 420 euro-a- month benefit introduced in August…
Unemployment among people younger than 25, who account for 10 percent of the labor force, is more than 40 percent..
Mortgages, consumer credit and other loans account for 77 percent of Spanish GDP.
“Mortgages, consumer credit and other loans account for 77 percent of Spanish GDP.”
Whoa! That’s pretty grim. I read this stuff, and it makes me wonder, what the heck are all the people on this planet going to DO to justify their carbon footprint. You have to DO something useful in life, like make something or sell something or provide some sort of viable service. Something that others can use. If people don’t want houses, then what?
Many years ago I read an article (an opinion) that implied the worst thing that happened to Spain was their looting of the New World of its riches.
These riches were finished goods - gold and silver - and instantly made Spain and Spain’s population extremely rich.
Rich people don’t have to work; Rich people can hire others to do their work for them. But people who don’t have to work don’t need to learn a trade. All they need to do is exist.
People who don’t learn a trade become unemployable and grow dependent on others for support. But as long as the riches keep flowing in from somewhere else everything remains fine. This worked well for Spain until they were defeated by England and the New World riches stopped flowing in.
England, on the other hand, didn’t benifit all that much from new World finished goods - gold and silver. England benifitted mostly from importing raw materials that they could convert into their own finished goods.
Converting raw materials into finished goods requires a skilled work force, something that sprung up in England during the Industrial Revolution, the years that followed the discovery of the New World.
In my view this helps explain why England and its skilled work force was able to replace Spain as the world’s number one power.
There is a hint of a point to this post which involves the U.S., India, and China if anyone cares to spend any time thinking about it.
‘looting of the New World of its riches…gold and silver - and instantly made Spain and Spain’s population extremely rich.’
I remember watching Milton Friedmans series where he pointed out that Spain actually experienced inflation during this time, even though precious metals were the currency. I think the show was called Free to Choose.
Makes sense — more ‘money’ chasing the same amount of goods.
ISTR that my history book refered to large amounts of inflation in Spain brought about all the silver from the new world as the “price revolution.”
Make sure you have a damn good navy?
I’m not sure about that, Combo. Spain had its problems because there was little gold to be had Spain; the injection from the New World was new. But all the labor that went to China/India can be had in America, if the economics cooperate. In fact most of it is unskilled or semi-skilled and can be re-instated very quickly. If the US retrenches into isolationism, then the US could avoid this particular problem. (of course it would cause other problems…)
(of course it would cause other problems…)
What would those problems be? I’m just curious. I think a good dose of isolationism would be good for the US, although the terms “isolationism” is sort of a pejorative. Maybe looking out for our own interests would be more like. “Prudent self-interest”, how does that sound?
I agree with you of course palmetto . It is my belief that the first duty of a Country is to provide jobs for its Citizens and sustain a functioning economy with the proper trade balances .
I don’t think the American people actually understood the ramifications and the unintended consequences of this global wage expansion that would end up affecting their own jobs because the PR machine is so crafty at selling the unsellable ,or selling out right myths .
Saw a documentary the other day about a China worker who was making a whole 40 cents a hour in a factory making a electronic product she couldn’t afford herself .These are the migrant workers from the country sides that they exploit .
“But all the labor that went to China/India can be had in America, if the economics cooperate.”
But why should China/India cooperate? What incentive do they have? They both have a good thing going.
They make stuff for us to buy and loan us the money to do so from payments for stuff we previously bought. This reults in a relentless transfer of wealth from us to them.
Why should they want to change this?
“why should they want to change this?”
They won’t want to, but we might. And it takes two to tango (or trade).
Which problems? Well, where your next tank of gas is coming from, for one thing. And your next glass of orange juice. but really I was thinking of what Smoot Hawley did during the Depression (which, admittedly, I don’t know very well).
The three groups fighting to shape trade policy:
1) Greedy Politicans who sell out to highest bidder and plan to retire rich.
2) Corporations seeking access to markets abroad. They are most interested in making a profit not WHERE the profit comes from.
3) Average citizen trying plan for self + family.
As long as multinationals like Walmart, GE and Johnson&Johnson define what is best for the rest of us we will keep going down this slippery slope.
The boogieman of trade tariffs is a lie fostered by the transnational corporations to scare the rubes. Besides, did you know that we have import trade tariffs but the larger corps get a pass on them?
Almost all other countries in the world have very high tariffs on imported goods. And try to get a foreign job without major corporate sponsorship.
Prudent self interest is not only a good idea, it’s a fundamental law of nature that you ignore literally at your own peril.
“England benifitted mostly from importing raw materials that they could convert into their own finished goods.”
C’mon now. I don’t expect revisionist history from by bro Combo.
The UK, being the imperialistic thugs that they still are, extracted their ill gotten booty from the blood and sweat of the people in nations they invaded and enslaved. Then had the audacity to call it colonization.
This is true, but this doesn’t contradict my post.
“I don’t think the American people actually understood the ramifications and the unintended consequences of this global wage expansion that would end up affecting their own jobs because the PR machine is so crafty at selling the unsellable ,or selling out right myths . ”
The people didn’t notice because the free money that flowed into the economy created bubble jobs that were a lot easier to do than manufacturing. It was easy to believe that you were in charge if you had a construction company, owned a restaurant, a tanning salon, a gift shop etc. Now the bubble jobs are disappearing. People on the MSM are always chiming in about how small business creates the most jobs. Most small businesses create bubble jobs and they won’t be coming back. You are correct that the PR machine has been able to get a lot of people to vote against their own economic interests.
Exeter, besides Castro and Hugo Chavez, are there any other good guys in your world?
Exeter, besides Castro and Hugo Chavez, are there any other good guys in your world? The victims of ‘colonization,’ of course. Victims in general. Oppressed masses waiting for a redeemer. People focused on wrongs done them rather than making a life.
Like hell people didn’t notice! People noticed right away in the 1980s! But since it only affected the “uneducated” blue collar “overpaid union” labor pool, no one cared.
Now that white collar jobs are affected, it’s a different story, ain’t it?
As I say, good for the goose, good for the gander. Or as ol’ Ben Franklin said “We must, indeed, all hang together, or most assuredly we shall all hang separately.”
“Exeter, besides Castro and Hugo Chavez, are there any other good guys in your world?”
Your FreexNews mentality is glaring at you again Billy.
Check stories under stock symbol OMEX. In 2007 they found a ship with 500 Million dollars in silver Spain wants it all back.
There is a hint of a point to this post which involves the U.S., India, and China if anyone cares to spend any time thinking about it.
Exactly, Combo. Allowing for the inevitable differences due to the different eras, there are lots of similarities between the American and the Spanish Empires. You could also argue that although empires have their own identities, their fall usually rhymes. I read somewhere that every modern empire has fallen when it decided that it was no longer going to “produce”, it was just going to be a “financial nerve center” for whatever. That sounds familiar too.
History. I love history. The saying is true. Those that forget are doomed to repeat it.
ell i could become a full time dj again…if uncle sam would cover my expenses…i could dj 5 days a week in senior homes…handicapped people etc…..not the most fun gigs, but far better then flippin burgers
I guess i’m still not a digital person , maybe that’s all we will be soon…everything on the iphone whole 2000+ uncompressed music on a 10 Terabyte hard drive where do i store my records?
seems like that is the only answer…being a gypsy traveling the country getting TV jobs and moving….like i was 25 again…
——————————————–
You have to DO something useful in life, like make something or sell something or provide some sort of viable service
I have been to two weddings in the past few years where the “DJ” was an iPod plugged into a large home stereo. One of these weddings was at the Brooklyn Botanical Gardens.
Actually, the other was in Jersey City - both in your radius. Sorry, man. Yeah, that is a shrinking business.
I’ll bet you a dinner that she posted the ad on Craigslist….I think i remembered that one…Botanical gardens
Yes Muggy people are willing to pay gawd awful amounts on things like the gardens but nickle and dime the help…..I have to feed the dj too…you’re kidding me
————————
One of these weddings was at the Brooklyn Botanical Gardens.
DJ,
It has been a while since I said, so I’m going to mention it again. You really need to do a search on USAjobs. Federal agencies do a certain number of broadcasts for public consumption and internal CC TV (mostly training). The places probably are using slightly outdated equipment which would put you at an advangtage since you know how to use the stuff from a few years back. And if you have the experience they need, the initial evaluation does not care how recent that experience is. There is no age discrimination from HR and there shouldn’t be for actual hiring either.
Please take a look.
I will but I think i mentioned it a few times i have a GF who never drove in her life a real NYC girl…so it would be a big change to move anywhere not close to public transportation at least in the beginning, but she is more open then last year, so it could happen
Well, this one is in NYC.
http://jobview.usajobs.gov/getjob.aspx?JobID=81109433&vw=d&brd=3876&ss=0&FedEmp=N&FedPub=Y&pg=2&cnme=New+York&rad=30&rad_units=miles&re=4&rfn=1&AVSDM=2009-05-20+10%3a51%3a00&rc=2&TabNum=2
But it is for a bartender, not a dj!
While USAjobs is a good source, you should also mention they favor veterans and your life history better be squeaky clean.
You must also love bureaucracy. Eat, live and breath it. And that’s just to complete the on-line employment forms.
Eco is right. Took me a solid week to fill out the application for the job I got. Not fun. And yes, US citizen and able to pass a background check with finger print scan is part of the process. And your finger prints will be in the system forever.
See, there is the problem. In Spain they are still counting people whose benefits have run out as “unemployed”.
May 2005:
‘Household debt in Spain surpassed disposable income for the first time last year, posing risks for the stability of the financial system, the Bank of Spain said Monday.”
“The increase in indebtedness of Spanish households is largely the result of much bigger mortgages to acquire the family home due to an ongoing property boom in which house prices have risen about 150 percent since 1997.”
“According to figures from the Spanish Mortgage Association (AHE), total outstanding mortgage loans at the end of March stood at a new record of €615.132 billion, a rise of 24.5 percent from a year earlier.’
http://thehousingbubble.blogspot.com/2005/05/spanish-mortgage-debt-up-2_111697891501662198.html
Same month, 2005:
‘If you go back to the mid-1980’s, Spain has had the most rapid price increase in housing of any large country in the world,” said Michael Ball, the author of an annual survey of the European housing market published by the Royal Institution of Chartered Surveyors in London.
For all that, Mr. Ball and other economists doubt that Spain is at risk of a Japan-style meltdown in property prices. The more likely outcome, he said, is for prices to peak and then decline gradually.
As prices continue on their vertiginous path, however, Spaniards are starting to talk about a “burbuja,” Spanish for bubble.
“Bubbles grow quicker than we think, and they burst quicker than we think,” said José Manuel Campa, a professor of finance at the IESE Business School of the University of Navarra.
Spain’s housing boom is fueled by other factors, including rising incomes, mass immigration and demographic trends. But the main propellant is interest rates, which the European Central Bank has kept at 2 percent, a record low in the post-World War II era, for nearly two years.’
http://www.tuscaloosanews.com/apps/pbcs.dll/article?AID=/20050520/ZNYT01/505200366
Once you’ve “taught” investors you’ll provide the money, and keep on providing it in spades at even the first sign of trouble, how do you stop doing that at ever increasing rates without risking market values themselves in big way? Start to take away the money candy and the terrorist banks (commercial and investment) will tell the Fed the world is about to come to an end. They’ll pull the pin on themselves and supposedly take everyone else with them unless the Fed comes across. It will be fascinating to watch the Fed ultimately be forced to stop the free money game.
“the terrorist banks (commercial and investment) will tell the Fed the world is about to come to an end. They’ll pull the pin on themselves and supposedly take everyone else with them unless the Fed comes across.”
And that, my friends, is how we got TARP.
What a load that was, eh? Looks like we’re gonna take a hit on that.
Sheesh, end this crazy system. Re-set the board, please.
hi palmy,
for some reason the reply option wasn’t there for your comment about isolationism and self-interest, so i’ll answer here.
self-interest = good
isolationism = bad
self-interest is flexible and can cover isolation if needed.
isolationism is bad because we need to interact with the world just we interact with the environment. it is in our self-interest to buy the highest quality, lowest costs items. of course in my own self-interest there would be a few exceptions. an obvious one for me would be blood diamonds. but most of the time buying the cheapest item no matter where is comes from is good for everyone in the long run.
Riiiiiight….
Self(ish) interest=THE problem.
selfishness isn’t the same as having self-interest.
what’s the problem with self-interest?
Yeah. if you say so.
“Riiiiiight….
Self(ish) interest=THE problem.”
How does your own cushy $100,000+ a year job square with your own comment, exeter?
Just wondering as the average annual per capita salary is something like $42,000.
There is nothing to fear and backpedal from. Come on out of hiding and step up to the selfish-interest=good comment.
Hmm, no response to the $100K bait. I wonder why.
Hmm, no response to the $100K bait. I wonder why. His rhetorical autocannon has limits on its traverse and elevation.
But neither of you have the capacity to defend the self-interest comment. Not that we anticipated anything more than your typical ducking, weaving and backpedalling. But do step up at least try.
you’re the one claiming there is a problem with self-interest. i’m asking you what the problem is. evidently, you see it and i don’t. so why won’t you answer so we can debate it a little?
give some evidence, or some logic for your position.
Wow… some you fringe types have a clear propensity to run from your own words and assign words to others where they didn’t exist. You said “self interest=good”. I said self interest=selfish=the problem. And of course you denied that fact and truth even though it is quite evident that interest in self is a mild, innocent means of communicating “me first”. Now if there is an inability to accept established american english, logic will do you no good.
i denied nothing. i asked you to support your position. you said self-interest was the problem. i said i don’t see it, so please explain. why won’t you?
“Sheesh, end this crazy system. Re-set the board, please.”
x kabillion.
Interstingly, if you look at the comments in Idahobusiness on the story that Ben posted the dumbRealtor quote from yesterday, some self-identified Realtors were commenting on how stupid they were.
Wow, here’s the end result of the Iraq war. Makes me sick to my stomach. I wonder how the families of dead and maimed American servicemen feel about this.
http://www.google.com/hostednews/ap/article/ALeqM5jUgnf_h1tymdmTHrMf8uSi8NkDPgD9CHPR1O0
Notice that ExxonMobil and BP and Chevron chose not to bid on those oil reserves at all. The article then states that Exxon and BP have better technology.
This is worth a thread in itself. Why didn’t supermajors bid? Theories, anyone? Is Exxon anticipating a civil war when the US finally leaves? Were the prices just not worth the effort? 20-year contract too much of a commitment? And what about the remaining 2/3 of Iraq’s oil? If Russia starts producing heavily, the price will drop and Exxon might be able to buy some of the remaining reserves at a reduced price.
Why didn’t supermajors bid?
They know something we don’t know. Don’t worry China will come scoop them up real cheap.
Yeah, I saw that too.
Were are spending blood and treasure making the world safe and secure, for Mercedes Benz, Toyota, Lukoil, Total, and Royal Dutch/Shell.
So much for “ensuring access to the oil supply”. I guess it’s okay to get oil from the Russian oligarchs.
I’d like to know if anyone has done a study on how badly exports have been affected by the application of “economic embargos”. Nobody is going to buy any critical infrastructure/commercial equipment from the USA, if they think that spares and support are going to be unavailable, because of some diplomatic tiff.
wait, was it blood for oil or not? I’m so confused…
I agree you’re confused. Tell me how you did your patriotic duty?
Man, you sure can tell when he’s off his meds.
Typically Billy…. duck, weave and backpedal. Keep going though as it’s been a while since BJ delivered you a smackdown.
The ultimate goal is to steer the oil profits into Iraq’s public infrastructure and general welfare rather than terror funding to used against Israel. Fingers crossed!
They didn’t bid because the whole Iraqi oil system is still controlled by DC and is a royal Cluster F.
You have to remember that Iraq’s oil was supposed to be used to pay for the war AND the rebuilding of Iraq. Who in their right mind would willing step into THAT mess? Especially with Hali-what-missing-4-BILLION-dollars?-burton lurking about.
Some light is starting to shine on the subprime mortgage lending kingpins’ roles in the financial crisis:
* DECEMBER 12, 2009
Goldman Fueled AIG Gambles
Wall Street Titan’s Role Shown in Journal Analysis; Firm Says Problems Hidden
By SERENA NG and CARRICK MOLLENKAMP
Goldman Sachs Group Inc. played a bigger role than has been publicly disclosed in fueling the mortgage bets that nearly felled American Insurance Group Inc.
Goldman was one of 16 banks paid off when the U.S. government last year spent billions closing out soured trades that AIG made with the financial firms. A Wall Street Journal analysis of AIG’s trades, which were on pools of mortgage debt, shows that Goldman was a key player in many of them, even the ones involving other banks.
Goldman as Middleman
Goldman originated or bought protection from AIG on about $33 billion of the $80 billion of U.S. mortgage assets that AIG insured during the housing boom. That is roughly twice as much as Société Générale and Merrill Lynch, the banks with the biggest exposure to AIG after Goldman, according an analysis of ratings-firm reports and an internal AIG document that details several financial firms’ roles in the transactions.
In Goldman’s biggest deal, it acted as a middleman between AIG and banks, taking on the risk of as much as $14 billion of mortgage-related investments. Then Goldman insured that risk with one trading partner—AIG, according to the Journal’s analysis and people familiar with the trades.
The trades yielded Goldman less than $50 million in profits, which were mostly booked from 2004 to 2006, according to a person familiar with the matter. But they piled risks onto AIG’s books, which later came to haunt the insurer and Goldman. The trades also gave Goldman a unique window into AIG’s exposure to losses on securities linked to mortgages.
When the federal government bailed out the insurer, Goldman avoided losses on its trades with AIG covering a total of $22 billion in assets.
…
Sorry about the link. Some times I miss when I try to type …
if only there were a tool to help catch any unclosed tags…
Does anybody think that Hank Paulson (former Goldman CEO )was objective in his bail-out of AIG ,and on top of everything else GS got 50 million for booking credit default swaps with a Insurance Company that didn’t have the money to pay . GS avoided 22 billion in loss by the bail out …oh the truth comes out .
Absolutely not. It’s all just a coincidence.
OK, here is where I agree with you guys. I’m not sure you have to call it a conspiracy or anything since there really aren’t that many people involved, but this was a case of a clear conflict of interest and it is the single worst thing that has been done in the entire course of the bailouts, etc. I am embarrassed at how much ill I wish on the people that did this.
I would have dealt with the AIG issue piecemeal - bail out the CDSs that clearly sold to people who had no way to understand what they were getting into and had no idea about the danger of the counterparty risk. Even those needed to be done with a large haircut on 100% reimbursement and a demand that the people who made the decision to do it without understanding it be fired with no severace package. For orgs that must have understood that there is counterparty risk in such a transaction - nothing at all. There are ways to deal with problems to the system if it was commercial banks that should know better. If it meant that the FDIC took a bigger hit than expected, well, at least you would wipe out the equity and bond holders first. Let the bad investment banks fail and then, if there aren’t enough of them left, force the survivors to split up
PPIP is the only other program that comes even close to the disaster that the AIG bailout was and is.
“I am embarrassed at how much ill I wish on the people that did this.”
This is how we can tell you are a good person. I wish ill on them, but feel no remorse.
This is how we can tell you are a good person. I wish ill on them, but feel no remorse.
Should we then conclude that you’re not a good person?
It would be interesting if GS only insured through AIG. That to me would suggest a set up. ie they planned for AIG to go down early and be saved by the FED. This of course would suggest that they knew about the looming crash, I also believe that they timed the crash for just prior to Obamba taking over. That way a lame duck president could hand out all kinds of cash and then skip town, and each side could blame the other.
The repubs have their favorite corporate “charities” just as the dems do. But GS is a constant. It doesn’t matter one iota who appears to be running Washington. GS is running it.
Welcome to our own post-Soviet-style oligarchy.
Got pitchforks?
You have problem with Corporate Communist Capitalism©®™, comrade?
I suspect this legislation is written to play well on Main Street but to also offer plenty of loopholes that enable savvy banksters to hang on to their bonuses.
* DECEMBER 12, 2009
House Strikes at Wall Street
Bill Would Usher in Biggest Change to Finance Regulation Since ’30s; Curbs on Fed
By DAMIAN PALETTA and ROBIN SIDEL
WASHINGTON — The House of Representatives, in a display of anti-Wall Street sentiment, passed sweeping legislation Friday that rewrites the rules governing financial markets, aiming to restrict the operations of big banks and the powers of the Federal Reserve.
The News Hub panel discusses legislation passed that will create a consumer-oriented regulatory body to address concerns about financial institutions, a resurgence of support for John McCain, James Cameron’s new movie, Avatar, and more.
The legislation, if enacted, would bring the biggest change to financial rules since the 1930s, changing business practices for everyone from mortgage brokers in California to traders on Wall Street. The vote advances a major White House initiative designed to tackle the perceived causes of last year’s financial crisis.
The House’s action isn’t the final word. The Senate has yet to act, and an early version of its bill is different from the House version in many respects. But senators hope to have an agreement in principle by the end of December and to pass a bill in the first half of 2010.
Under the House version, large financial companies including Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. would be hit with billions of dollars in fees and would see new restrictions on their operations.
The bill would strip nearly all of the Federal Reserve’s powers to write consumer-protection laws and would allow — for the first time — an arm of Congress to audit the Fed’s monetary policy decisions, supposedly a politics-free zone. The Fed has fiercely resisted the idea.
…
More
* Loopholes Lurk in Bank Bill (12/11/09)
* Econ Blog: Bill Highlights
“…..audit the Fed’s policy decisions……..”
A basic law of nature. If you screw people over badly enough for long enough, someone in government will eventually step in and “help” you do the right thing.
This can be good or bad, or both.
I don’t know. Sounds like the bill does many of the things many here have been calling for. To say ’somehow’ it won’t really work is like saying we’ll never solve these problems, in which case why do we bother posting here? Of course it was written by Barney Frank, so that will automatically make it evil in many eyes.
Oh, I also noticed that every republican opposed the bill (as did the major banks and the US Chamber of Commerce) so I guess that blows a big hole in the “both parties are the same” mantra that many here chant.
Sounds like the bill does many of the things many here have been calling for. To say ’somehow’ it won’t really work is like saying we’ll never solve these problems, in which case why do we bother posting here? Some here have been calling for a restoration of Glass-Steagall, retraction of Gramm-Leach-Bliley, and a ban on credit default swaps and severe limitation of other exotic instruments. Don’t see anything like that in the published summaries of the bill. If Congress follows its usual path, news bites about the bill will look good, it will cost a lot, and won’t accomplish much. The banksters will continue to make out like the bandits they are, until they can’t anymore.
I read & post here to understand just what went into making this crisis and what might be done to repair the damage & prevent something similar from happening in the near future. This not a partisan issue except for rabid partisans.
Now that`s a lot of change!
For feds, more get 6-figure salaries
Average pay $30,000 over private sector
By Dennis Cauchon
USA TODAY
The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA TODAY analysis of federal salary data.
Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months — and that’s before overtime pay and bonuses are counted.
Federal workers are enjoying an extraordinary boom time — in pay and hiring — during a recession that has cost 7.3 million jobs in the private sector.
The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.
When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.
The trend to six-figure salaries is occurring throughout the federal government, in agencies big and small, high-tech and low-tech. The primary cause: substantial pay raises and new salary rules.
“There’s no way to justify this to the American people. It’s ridiculous,” says Rep. Jason Chaffetz, R-Utah, a first-term lawmaker who is on the House’s federal workforce subcommittee.
Jessica Klement, government affairs director for the Federal Managers Association, says the federal workforce is highly paid because the government employs skilled people such as scientists, physicians and lawyers. She says federal employees make 26% less than private workers for comparable jobs.
USA TODAY analyzed the Office of Personnel Management’s database that tracks salaries of more than 2 million federal workers. Excluded from OPM’s data: the White House, Congress, the Postal Service, intelligence agencies and uniformed military personnel.
The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.
•Pay caps eased. Many top civil servants are prohibited from making more than an agency’s leader. But if Congress lifts the boss’ salary, others get raises, too. When the Federal Aviation Administration chief’s salary rose, nearly 1,700 employees’ had their salaries lifted above $170,000, too.
“She says federal employees make 26% less than private workers for comparable jobs.”
I call major BS. Salaries plus benefits plus current value of retirement benefits are AT LEAST 26% HIGHER than private workers for comparable jobs. Then there are the intangible benefits of not really having to produce or even do anything, and never having to worry about a layoff.
A federal job puts you on the gravy train for life.
Are GM employees and the UAW considered federal employees?
How about bank managers? They seem to make more and throw away money faster than almost anyone in any government on the planet (Zimbabwe possibly excepted…). And I don’t think the government employs many bankers, except for perhaps the Treasury and (if it counts as government) the Fed.
PB, if you recall, my list of the most well-off groups in America puts Wall Street banksters at the top. Govt employees are second.
Dream on. Find me one scientist or engineer on the public payroll that doesn’t earn less than those in any firm including my own.
Dream on. Find me one scientist or engineer on the public payroll that doesn’t earn less than those in any firm including my own. I suspect publicly-employed scientists & engineers are a small fraction of all public employees, in which case your point, misses the point.
DOT and Public Health agencies are almost all entirely engineers/engineer techs and scientists. Both agencies are the largest public employers.
Nice try though.
I call BS Bill post some numbers. Heads of most gov agencies make under 200k vs private agency w same budget. va docs make far less than private. soldiers make less than mercinaries. IRS agents and those in the SEC make fare less than wall street. College prof make far less than scientists at big pharma.
Measton, do 19% of the employed people in your community make over $100K? Plus great benefits? Plus a great retirement plan?
If so, you live in a very rare ZIP code.
Measton, do 19% of the employed people in your community make over $100K? Plus great benefits? Plus a great retirement plan?
Don’t forget the other benefits - company cell phone and other things us private sector folks have to pay for. Consider the POTUS - he makes what, $500k/year now (or is it 400k), but doesn’t have to pay a penny for anything during the 4 years in office. That’s a pretty considerable amount of money saved.
While not to the same degree, things like a company car, free gas (police officers/detectives), and the like can really add up.
I’m asking you to compare similar jobs in the private sector to the gov. I suspect most of the minimum wage jobs in gov are farmed out.
I’m a lawyer. I make far less than someone who has comparable education and experience employed by a firm or a corporation. However, I am still employed and a lot of those folks have been laid off. There is a lot of added value there. Also, I can feel morally justified in what I do. Lot of extra value there too.
Where you find a very large difference with the federal employee making more is general paper pushing positions when the employee has many, many years of experience. By the time an administrative person is at the very top step of a pay grade, they have done the job (or one in the same pay grade) for about 18 years if they started at step one. In the private sector, they probably would have been told that they are at the top salary for their position over $10K or $15K ago. Maybe more. If they had wanted a pay increase in the private sector, they would have had to get a new job, possibly needing more education to get it.
Now, given that a lot of the federal work force has been in their positions for a long time, it is not surprising that there is plenty of annecdotal evidence of people who make more in their long time government positions than they would if they hit the pavement in the private sector. There are plenty who make less, though they tend to be more educated and more recently hired.
And the top, people are pretty much maxed out once they hit $177K. I think that is the very top of the senior executive service pay scale. You are dealing with folks who are in charge of hundreds or even thousands of employees, who may get called up to capitol hill to answer for the actions of their departments. And they take home just a bit more than a first year associate at an NYC law firm.
it is not surprising that there is plenty of annecdotal evidence of people who make more in their long time government positions than they would if they hit the pavement in the private sector. You have to consider the likelihood of a federal employee being laid off due to downsizing, buyouts, or outright closure of the entity employing him, something non-governmental employees have to face rather often.
Which I did. In my first paragraph.
The ONLY purpose of this article is to distract you from who really screwed us all over: the FIRE sector.
+1 LMAO, so true!
I would argue that David Wessel doesn’t get it, as he seems to miss the fact that “financial reform” amounts to no more than political theater to quell the people’s anger over the riches currently reaped by the architects of the financial crisis. Once the crisis blows over, the impetus for substantial reform will have passed, and the banksters will keep laughing all the way to the bank.
* CAPITAL
* DECEMBER 10, 2009
The Public’s New Fear of Finance
* By DAVID WESSEL
Too many of the leaders of the world’s largest banks, brokerage houses and other financial powerhouses don’t get it.
They don’t understand why the public is so angry at them and their paychecks. They cannot comprehend why elected politicians who used to court them are now so hostile. They don’t see that they are widely seen as the ones who drove the world economy frighteningly close to the abyss of a second Great Depression.
Oh, they know they have a problem. They are, slowly, learning to sound grateful in public that taxpayer money was used, for good reason, to arrest the collapse of the financial system. “All banks are benefiting,” says Robert Diamond, president of Barclays PLC, which didn’t take government capital. They decry “excesses.” But some act as if the past 18 months were a bad dream from which they have awakened; now they can go back to making money much as they did before.
“You have not come anywhere close to responding with necessary vigor to the crisis we have had,” Paul Volcker, the former U.S. Federal Reserve chairman, told financiers this week at The Wall Street Journal’s Future of Finance conference outside London.
Politicians, exquisitely sensitive to public sentiment, are warning them: “You have to pass the next-door neighbor test,” Alistair Darling, Britain’s finance minister, told some of the City of London’s best-paid financiers at the conference. “You have to be able to look at your next-door neighbor and justify what you are doing.”
…
“You have to be able to look at your next-door neighbor and justify what you are doing.”
Hey neighbor, what think ye?
http://www.tokyomango.com/.a/6a00d8341c5d3253ef0111690745c7970c-320wi
Is anyone in the market for a slightly-used prison, located on a prime piece of bay view property?
* REAL ESTATE
* DECEMBER 11, 2009, 7:58 P.M. ET
California Hires Broker to Sell Government Buildings
By CHRISTINA S.N. LEWIS
The strapped state of California has hired a broker to sell a battery of government-owned offices, a step in its attempt to raise $660 million.
The buildings will be sold fully leased by the government, in what is known as a sale-leaseback transaction. Such assets offer a stable income stream and can be desirable to private investors, even in the sluggish sales market.
…
Gov. Arnold Schwarzenegger garnered nationwide headlines when he initially proposed that the state sell several well-known and valuable landmarks, including the San Quentin state prison, to raise funds. But that drastic initiative was scaled back. The state has also put the 150-acre Orange County Fairgrounds on the auction block. Bids are due Jan. 8.
I am guessing Megabank, Inc will snap up San Quentin and make a mint off the purchase when the real estate market comes back to life.
The beauty of the State of CA selling off San Quentin is that one of the most beautiful pieces of real estate on the planet in the hands of a private buyer will be able to raze a horrible prison and replace it with bay-side real estate developments. Whoever wins the bid on this gem is going to make a killing if the California economy ever recovers.
Sorry for the grammatical hash I just made of that paragraph… my real-time editing capabilities are rather poor today.
I think it’s a great paragraph. Picturesque yet to the point.
Steady income streams from Government leases can dry up quite a bit when the government has to eliminate entire departments or decides to pay in IOUs instead of money.
When the Governator got elected in CA, a bunch of people I knew with a strong committment to the Democratic Party, were all upset. I told them, they had nothing to worry about. After all, Arnold was a moderate Republican, Constitutionally ineligible to run for president, and he was inheriting a financial mess in CA that was not fixable without causing so much pain that no one would love the messenger at the end of the day. I don’t think I really understood how bad the financial mess in CA was. I certainly did not understand that problem was embedded in a much larger global problem. And, even with those limitations, I didn’t think it would take this long to come to an actual crisis, but boy, oh boy, the basic sentiment was correct.
Just sayin’….
Polly:
Its the 3rd 4th and 5th rail…gov pensions and work rules and firing procedures
Why does it take so long to fire anyone? Just make it like a real business get the bottom 10% out each year and change work rules so no one can say “it’s Not my job”
Pensions should be paid only at 65, unless you are totally disabled or really retired and have the w2’s to prove it
Herein NYC they pay hundreds maybe thousands of bad teachers to do nothing, because we cant fire them and hire real teachers who care.
Wait a few years and you guys can steal Michelle Rhee from DC to fix the teacher stuff. My understanding is that part of the issues in NYC is that administrators have the power to get teachers out of their buildings, but not out of their jobs. Now, as anyone who has had a few jobs knows, it is perfectly possible to be great at what you do but not get along with a particular boss. Not sure if not getting along with one boss should basically make a teacher unusable all over the system.
I agree that 30 years should not be enough to retire at anything like a large percentage of your last few years salary if you aren’t actually of traditional retirement age. But changing that sort of stuff is very, very hard.
I agree that 30 years should not be enough to retire at anything like a large percentage of your last few years salary if you aren’t actually of traditional retirement age. But changing that sort of stuff is very, very hard.
I suspect defined-benefit pensions will disappear except for employees like Congressmen who write their own packages and can enforce them. The future burden of pensions for government workers looks impossible for the rest of us to carry. If ‘that sort of stuff’ is impossible, then it will change.
I presume you are aware that current federal government pensions are literally HALF of what they were a few decades ago? Some of the very senior people in my office are on the old system and their pensions after 30 years are 60%. The ones earned by people with less than 25 years in (that is about where the cut off is) get 30% after 30 years. No overtime or other payments other than base salary and location adjustment are included.
Very different from state and local employees who get 100% of the average of their three highest years including all overtime earned, after 20 years.
Fire the bottom 10% each year: will result in people spending more time sucking up and stabbing others in the back vs. actually producing since doing real work takes more effort.
IMHO, the Jack Welch model of gutting businesses really doesn’t work well in the long run.
“After all, Arnold was a moderate Republican…”
As one who lived more than half is life in California, a fiscal conservative Republican in California is more socialist than a liberal Democrat in the deep South!
I remember some of the reps in central Cal: Ken Maddy (state assembly), very mixed economics and a Repub. Bernie Sisk, a Democrat Congressman, Pashayan, a Republican who replaced Sisk - or replaced Democrat John Krebs. All the Central San Juaquin Valley Republicans were big government socialists who only gave rhetoric to small government. They were the GWB type without the Bible thumping.
I lived in CA for a little while in the early 1990s. I could tell then they were in trouble.
I left as soon as I could.
It isn’t just the government, but the whole mindset of Californians in general. F’d up in the head. And that’s putting it nicely.
Lol. In what part of the Bay Area did you live?
The problem is to keep party going for a few more months poloiticans will sell everything they have. The next generation of politicans will pay rent.
As the US standard of living declines we will pay more for less and have lesser than before.
Yep I suspect we’ll see public parks and buildings sold at teh bottom of the market to the very thieves that have cuased this crisis.
I’m on a low budget
a low budget
I’m on a low budget
I’m a cut price person in a cut rate land!
60 something occassional substitute teacher doubling his living expenses to move from a rent stablized studio in East Village to co-op studio in Upper West Side because of 15% drop in prices? What can possibly be the tax advantages to someone whose income is from occassional substitute teaching? Oh, and he only had managed to save 30% (just under $100K) in almost 3 decades of rent stabilization, so the guy isn’t just frugal but secretly wealthy.
http://www.nytimes.com/2009/12/13/realestate/13cov.html
Polly:
And he just blew his chance to get the landlord to buy him out maybe $30-40K to give up his lease…$1000 a month more rent for 30-40 months is a good average for a buyout
The landlord is going to be super nice to him now that he is getting back a Rent stabilized apartment for FREEEEEEEEEE!
But if he reneges on buying the landlord will use any way to get him out and run up his legal bills since he told the world he saved $100K for a down payment.
The only advantage at 61 no more climbing a lot of stairs….worth it? maybe but double the rent?
From Newsweek: Who Owes the Most?
foreign debt per capita
Greece- $27,746
Belgium- 27,023
Austria- 26,502
Ireland- 24,247
Norway- 21,402
Italy- 21,089
Holland- 20,412
France- 18,946
Germany- 15,574
Finland- 13,617
USA- 11,094
Denmark- 9,410
Spain- 8,715
Sweden- 7,058
Britain- 6,526
Hungary- 5,802
Japan- 5,322
Canada- 5,213
Israel- 3,843
Slovenia- 3,635
Japanese ?
Who do they owe money to?
And why does Germany owe two and a half times more than Britain? I thought they had their house in order.
I don’t really understand the numbers either, and they weren’t explained well in the ‘article’, which was on the back page of my dead-tree edition of Newsweek. (I couldn’t find it online.)
Iceland…have they been downsized…like Pluto?
They’re now using fish as currency, so they didn’t get included on the list. Each Icelander owes ~35,000 medium-sized fish.
And all this money is owed to a tiny minority, who believe that they own our bodies and souls.
Where’s the other end of this chart? Like, who owns the most?
And most or all are printing fiat currency to pay off the debt.
Oh, of course, this is not a harbinger of inflation.
( sarcasm off )
This is good for stocks in the short run, I give it another year of ZIRP. Bernanke is trying to re-elect a Keynesian Congress. In the longer run, five years, this is great for precious metals.
Worldwide fiat money. And some people think that means deflation?
Does anyone understand how this HAMP program works exactly? My brother signed up and has been paying $200 less since September. He was hoping for a far higher discount, but his current mortgage doesn’t include an impound account and this modified loan does. This December payment is supposed to be his last and then it’ll be made permanent. However I’m just a tad concerned from reading articles here and elsewhere that maybe it won’t become permanent for one stupid reason or another. Then, what happens to him? Does any of the payments he’s made in the last few months count? Is he suddenly drastically delinquent on his original mortgage?
Did he use a “liar loan” to qualify for the first and/or second mortgage(s)?
Unfortunately huge numbers of debtors couldn’t qualify for their original mortgages without an inflated income, and now they need honest paperwork to get into the fixed rate mortgage.
You may want to repost this question again on Monday as early as possible.
(Wish I could help you but I am clueless on this subject.)
1 out of 4 of my acquaintances in the OC are not making mortgage payment anymore as they are so underwater. They all got advice from financial planners beforehand. Most have had hrs or wages cut back on top of the crashing real estate. All had jobs related to real estate and thought the good times were permanent. There must be a lot of people squatting like this.
Will the lenders let them squat forever, or is there an end to rent-free periods, the way my $25,000+ annual lease has an end date?
If these rent-free stays have no end date, then I guess we renters collectively made a huge mistake by deciding to pay rent rather than buying and then stopping payment on our mortgages (per the OC financial planners’ advice)?
One got evicted finally after 16 mos. Had a $4000+ mortgage.
“One got evicted finally after 16 months. Had a $4000+ mortgage.”
16 months X $4,000/month = $64,000.
That’s $48,000 tax-free dollars a year of if you wanted to count it as income.
So, can your friend handle a $48,000/year tax-free cut in pay?
Given the Fed’s stated commitment to keep the lid on interest rates until the economy is recovering strongly, I find articles like this one puzzling.
The Financial Times
Easy money could have a high price
By Michael Mackenzie in New York
Published: December 11 2009 19:01 | Last updated: December 11 2009 19:01
From the perspective of US financial markets, a Japanese-style lost decade has defined the performance of equities and bonds since the start of 2000.
From the heady days of the technology bubble, the S&P 500 is 11 per cent lower over the decade, when you include the reinvestment of dividends. In contrast, an index of long-term Treasury bonds has risen more than 116 per cent, according to Barclays Capital.
The doubling in the value of long-term Treasuries helps explains why the famed “bond vigilantes” of prior decades have been missing in action. This has largely been a decade of disinflationary forces thanks to the internet and globalisation. There have been two very aggressive cycles of rate-cutting since 2000 by the Federal Reserve and it is little wonder that bonds have been the big beneficiary. Instead of “bond vigilantes” worried about inflation and rising deficits, the decade is described by some as one where “risk vigilantes” have ruled the roost.
When the technology bubble popped, the risk of a nasty recession and deflation meant markets moved quickly to price in big rate cuts. On that score, the Fed delivered – an extended period of easy money softened the blow of recession in 2001, sowing some of the seeds of a massive mortgage and credit bubble which culminated in the financial crisis of 2007/2008.
Today, the current policy prescription of even cheaper money has many worried about the value of the dollar and the risk of higher inflation in coming years, given the outlook of massive budget deficits and record issuance of US Treasuries. Amid fears of a new financial bubble in commodities and bonds, some forecast the Fed could start raising rates late next summer and wean the US economy off easy money. Except, by next March, the Fed will cease its planned purchase of $1,250bn in mortgages. The central bank’s hefty purchases this year has encouraged investors and banks to buy either corporate bonds and/or Treasuries.
That has kept market rates low, but as new mortgages and other debt is priced into the market next year and the US Treasury keeps pumping out government bonds at a record pace, the odds of the clearing price for debt rising are very short.
Unless the private sector is rapidly hiring workers next year, rising long term rates could easily derail a sustainable recovery.
…
EDITOR’S CHOICE
Long View: A return to boring - Dec-11
US Treasury debt sales rely on dealer network - Dec-10
Short View: The lost decade for US stocks - Dec-08
Amid fears of a new financial bubble in commodities and bonds, some forecast the Fed could start raising rates late next summer and wean the US economy off easy money. Except, by next March, the Fed will cease its planned purchase of $1,250bn in mortgages. The central bank’s hefty purchases this year has encouraged investors and banks to buy either corporate bonds and/or Treasuries..
Banks don’t care about inflation. If they borrow in dollars at 0% and invest in treasuries priced in dollars. This is definitely what is keeping interest rates low. The FED has already suggestedk that prior to lowering their lending rate they will start selling MBS securities.