January 30, 2012

Bits Bucket for January 30, 2012

Post off-topic ideas, links, and Craigslist finds here.

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Comment by Mike in Miami
2012-01-30 05:03:05

Did the gold bubble already burst?
How about that sovereign debt bubble? When is that scheduled to burst? I hear Euroland is having a hell of a time patching things up.

Comment by Darrell_in_PHX
2012-01-30 05:16:31

Ignoring the accountin gimiks known as trust funds, real us government debt has increased from $5T to $10T over the last 4 years.

That gives us another 4 years, at current deficits, before we hit 100% of GDP. It seems most countries pop at about 110-115% of GDP. So, that gives us 5-6 years, assuming we’re able to keep recession away that long.

While that seems like a long time, I have to keep remining myself that it has already been 5 years since sub-prime started this. So, we’re right about half way there.

Comment by SA
2012-01-31 06:25:04

You’re a little late:

“Our national debt is now equal to our GDP.”


Comment by Hard Rain
2012-01-30 05:24:49


DUBLIN (Reuters) - It would be difficult for Ireland to remain in the euro zone if its voters rejected a proposed new fiscal treaty, its European Affairs minister said on Monday, raising the stakes in a political battle over whether to put the plan to a referendum.

Irish citizens have twice rejected changes to EU treaties before voting through amended versions.

Comment by Steve J
2012-01-30 10:36:13

Luckily, they won’t be allowed to vote on this one.

Comment by Jerry
2012-01-30 11:25:10

It’s not what the people want, it’s what the bankers want. Money and bonus always comes first!

Comment by Darrell_in_PHX
2012-01-30 05:06:53

People with money will not spend it unless they have an oppertunity for positive RoI.

Positive RoI requires more money. Money is other peoples’ debt. More money requires more debt.

People with debt are already way above reasonible carrying capacity. They need less debt. This requires those with money have less money.

We are using massive government spending to create the new debt/money necessary to keep the economy functioning, but that too is limited.

So, is debt defautl into depression inevitable?

Is there anything we can do to get people with money to spend it before the debt cascade defaults and the money poofs out of existance?

Is it possible for the federal government to just go on spending forever, until the debt is inflated away?

Without wage inflation, price inflation will cause slowing economic activity and cascade default. Does it get to the point that wage inflation becomes inevitable as trade partners refuse to accept our money in exchange for goods and services?

Seriously, what is the end game here people?

Comment by AbsoluteBeginner
2012-01-30 05:29:27

End game is a decline in all the disposable money we had at one time or thought we could cover with monthly installments. It’s rather easy. Don’t expect much real growth. There are worse things though, I think.

Comment by Overtaxed
2012-01-30 06:41:34

“Seriously, what is the end game here people?”

IMHO, inflation. Not Zimbabwe inflation, more like our past where we had 10%+ YOY inflation.

The Fed seems to be trying every trick in the book to cause this inflation to take place (and it is, just not where they want it). Eventually they will be successful in pushing more $$$ through the pipeline that wind up in the Average Joe’s paycheck.

Comment by Darrell in Phoenix
2012-01-30 07:00:55

The problem with that, as I see it, is that would require wage inflation.

Devalue the dollar in increase the price of imports, you don’t create wage inflation just increase the price of imports. People buy less, and the economy tanks, like 2008.

With a cost of employment in the US for an entry level factory worker about $20 an hour, but in China $3 and Mexico $2, we would need to devalue the $ by 90% before inflation resulted in wage inflation.

Long, long before the prices of imports increased 10x, people would be unable to keep paying on their debt, triggering a cascade default into depression and undoing all the inflation you say the fed is attempting to create.

I’ve thought long and hard about the “inflate it away” scenario, and I just don’t see how it works without wage inflation, nor do I see how we’re going to get wage inflation in the face of global labor wage.

At least, not without a massive trade war, that I see NO reason to believe is coming.

Comment by Jojo
2012-01-30 08:10:40

The government could just give money directly to the people, say $2,000 per month to every citizen and increase as necessary.

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Comment by Darrell in Phoenix
2012-01-30 10:32:57

And, people stop working once they get paid whether they work or not.

Soon you are USSR or Greece.


Better is to use a steep tax code to encourage people with money to spend it, employing Americans, creating goods and services.

Comment by Posers
2012-01-30 16:50:26

No, the best way to get people to spend their money is to create a desire to do so.

As I’ve already said, our leaders aren’t interested in doing so.

Comment by aNYCdj
2012-01-30 19:47:39

Yeah pay down my Credit card by $3000 and i’ll spend it just catching up on stuff i need. like rotors/brakes for the car. Glad i dont need to drive much anytime soon.

Comment by Steve J
2012-01-30 10:37:49

Chinese currency is pegged to the dollar.

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Comment by Blue Skye
2012-01-30 07:10:39

30 years of inflation in the rear view mirror. The credit expansion has stopped. Sure, the Fed is pushing more $$ but the piston is froze and the lube is squirting out from all the fittings. These efforts are only strangling the struggling economy. For the past couple of years, this hot money has been used for hoarding commodities. You and I are not getting raises. We are paying too much for gasoline and red meat. We can’t get a loan to open a restaurant or a candle shop. Suckers in the housing market are getting scarce. FedGov cooperation in debt expansion is not nearly making up for contraction in private debt. The expansion has reversed.

Who knows what the end game is? The road we are on now isn’t inflation. It’s a slow grind down to the dynamics that our grandparents thought was normal, except we’ve more debt to service than they did. The Masters of the Universe will keep trying though, so who knows.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:21:00

Nice post. I hope Overtaxed reads it, as his sounds quite a bit like a prediction that the 1970s will repeat themselves. I don’t see it, as the world is different now. It is much harder for wages to keep up with inflationary pressures, with so much low-cost overseas labor on line, not to mention ever-high U.S. unemployment.

Efforts to spark inflation in this state of the world seem more likely to throw the vanishing American Middle Class further under the bus than to jump-start household spending.

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Comment by Overtaxed
2012-01-30 07:33:23

“It is much harder for wages to keep up with inflationary pressures”

Not if you devalue the dollar. Which is what the Fed is trying to do (which, IMHO will spark inflation).

There are only 2 real possible end-games that I see. Inflation or default.

I tend to agree that the Fed is pushing on a string. However, at some point in the future, I think that there efforts are going to be successful.

Comment by In Colorado
2012-01-30 07:37:36

Efforts to spark inflation in this state of the world seem more likely to throw the vanishing American Middle Class further under the bus than to jump-start household spending.

Yesterday I was pointing out that the definition of “middle class” in Mexico is very different from ours, as in their middle class is comparable to poverty in the US. I suspect that our definition will be steadily and progressively redefined until it matches Mexico’s middle class.

Comment by Prime_Is_Contained
2012-01-30 09:24:21

I suspect that our definition will be steadily and progressively redefined until it matches Mexico’s middle class.

That sure seems to be the broad brush-stroke pattern, if you look at the last couple of decades.

Comment by polly
2012-01-30 10:48:00

The details of how it could come about are fascinating. When I was a kid, we were 4 people in a 1400 square foot 3/2 on a quarter acre with a cement patio in the back (cracked in half, never even thought about fixing it) a 2 car driveway (no garage) and an unfinished basement. No AC at all. We didn’t have a color TV until I was 8 or 9 and that was a gift from my grandparents - about 7 channels came in. Meals were meatless 2-3 times a week,but that included fish because fish was cheap. Ate out rarely if at all. One car until I was 7 even though we did not live a realistic walking distance to any useful stores. My mother didn’t work. We depended on my grandparents for hand me down cars, child care, rides to the store when dad was at work, entertainment (they lived near a lake) and providing a meal at least twice a week. We went to the library a lot.

What part of this is coming back? The whole thing only really worked because of the extended family support and a stay at home parent. There is no way my mother could have earned enough to justify paid childcare and a second car and her having professional clothes (she wore $3 vinyl shoes from Bradlees until they had holes in them and then glued them back together until they disintegrated).

Comment by cactus
2012-01-30 11:47:16

What part of this is coming back?

none of it. I predict people won’t have kids unless they get government cheese as payment for kids and can’t figure out its not enough.

Comment by MrBubble
2012-01-30 12:01:33

“from Bradlees”

Polly, your posts always take me right back to my childhood!

Comment by Montana
2012-01-30 13:37:11

Different scenario for me, but I recall there was not a lot of cash floating around back in the 60s. If a family had a second car, or could afford to buy a kid’s musical instrument, it was a big deal.

We ate at home all the time, never took vacations, never really went anywhere.

Comment by aNYCdj
2012-01-30 15:09:15

Ok i’ll admit i worked there in HS and carvel and IHOP….they also use to have lots of really funky shirts with embroidery metal buttons perfect for a dj and Friday nights …the store was always downscale from Caldors , and that was their downfall once they tried to upgrade to compete all that funky shirts pants shorts etc were gone

from Bradlees

Comment by Darrell in Phoenix
2012-01-30 07:28:14

“FedGov cooperation in debt expansion is not nearly making up for contraction in private debt. The expansion has reversed.”

Not to be disagreeable, but this is not correct.

According to teh Fed Reserve Z1., table D3, debt outstanding by sector, over the last 2 years:
Household debt; -$418B
Business debt: +$255B
State and local debt: +$51B
Federal government: +$2578B

Private sector debt expansion has reversed, but total debt expansion continues at more than $1T a year. This is how we continue to fund $650B a year in international trade deficit and record profits that continued widening the wealth disparity.

Maybe the government is borrowing to give to the poor, but as soon as the poor spend the money, it funds the trade imbalances and ends up in the hands of the “not poor”.

There has not been a single quarter in the last 3 decades (including 2007-2008 crash) that total debt (public + private) has not increased.

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Comment by In Colorado
2012-01-30 07:40:40

Yup, bottom line, we have to make our own stuff and employ Americans to do so. The global exporting community that has been relying on the USA to be the consumer of last resort had best deal with this, unless they will continue to accept our fiats as payment for their exports into perpetuity.

Comment by Blue Skye
2012-01-30 08:50:55

Hey, I’l try that agreeable thing too.

Let’s compromise and just use the Ministry of Truth’s math, like this guy:


He says we are at the end of the exponential growth of debt, back to 1982 growth rate. 1982! That is FPSS’s end of the game scenario.

BTW, it is my bet that if we hadn’t put all the real accountants in a gulag somewhere, we’d be looking at negative numbers.

Comment by Darrell in Phoenix
2012-01-30 11:24:38

I am not sure that I understand what data he is using.

His first chart claims to be increase in debt quarter to quarter and it shows numbers like $1T per quarter. Looking at the actual z.1, D.3, this just is not the case.

For example, in 2007, when he shows debt increasing by $1T a quarter, the actual z.1 shows household debt: $13.1T, $13.4T, $13.6T, $13.8T. Business debt: $9.7T, $10.1T, $10.4T, $10.8T.

Adding them together, that’s about $1.7T in a year. Yeah, totally unsustainable, but no where near the $4.5T his graph implies.

Even if he is talking total debt, not just public (which it can’t be since total never went negative) we “only” went from $30T in 2006 to $32.5 in 2007 to $34.5T in 2008. That is not more than $1.2T a quarter as his chart shows.

The second graph shows the same issues. He claims debt increase averaged a bit over $900B a quarter from 2002-2007. That is 20 quarters, > $900B per would be more than $18T over those 5 years. Actual increase 2002-2007 in total debt (including government) was a little under $12 trillion and private only was more like $5.5T+$3.5T = $9T.

His comment that we’re looking more like 1982 than 2012 seems to indicate that we’re looking only at private sector debt. Yes, private sector debt went negative. Yes, private sector debt is increasing at only $40-50B a quarter, (businesses have been adding $100B and households reducing at $60B or so a quarter), which would put us back to 1982 type debt growth IF we ignore government.

Even if I disagree with the specifics of the data, I agree with the conclusion. We have been using unsustainable debt growth to fund economic growth.

But look beyond that. We have added $10T in new debt/money into the the economy in the last 6 years (total debt 2005Q4: $25.6T, 2011Q3: $37.8T).

Where did the money go?

Hint: $4T went to international trade imbalances, and the rest went to record corporate profits (80% of which end up in the hands of the 10% richest Americans).

In conclusion, he offers two solutions. 1) Cascade debt default into depression (sorry… economic contraction). 2) Just keep running on unsustainable debt growth until debt collapses.

Both of his solutions are rally the same. Massive cascading debt default into depression.

What I’m trying to convince people of is that there is a 3rd option. Look beyond the fact of unsustainable debt growth to the underlying cause, trade imbalances.

Attack and reverse the trade imbalances by ending free trade and returning to a very steep income tax code with lots of deductions for spending on things that employ Americans.

We have a gun shot victim with large bullet holes. His suggestions are to 1) stop pumping in blood and let the patient die or 2) keep pumping in the blood until we run out of blood, then let the patient die.

I’m saying, let’s patch up the wounds so that we can stop pumping in the blood.

Comment by Pete
2012-01-30 17:31:07

“Attack and reverse the trade imbalances by ending free trade and returning to a very steep income tax code with lots of deductions for spending on things that employ Americans.”

Let’s say this suddenly became a politically viable plan. It takes a long time for a large, complex production like this to show results to voters. It would have to be instituted at the start of a president’s term, since short-sighted voters will blame whatever leaders sign off on this scheme, matters not which party. And then poof goes the plan.

Comment by MightyMike
2012-01-30 09:18:45

IMHO, inflation. Not Zimbabwe inflation, more like our past where we had 10%+ YOY inflation.

The Fed seems to be trying every trick in the book to cause this inflation to take place (and it is, just not where they want it).

Yes inflation remains around 3%. If the Fed is trying to bring about 10%, It’s a good thing that they don’t know how to do that.

Comment by Overtaxed
2012-01-30 09:35:05

Well, part of this is true “they don’t seem to know how to do it”. However, they also don’t seem to know how to count, because 3% is not the inflation that most people seem to “feel”. Remember that 3% was also around the inflation numbers we were getting when gas prices doubled and housing prices went up 30% in one year. That number is so “baked” as to be next to useless.

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Comment by measton
2012-01-30 09:52:57


If you scroll down there is a public + private debt as a percentage of GDP. This does show some contraction or atleast flatlining in debt vs GDP.

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Comment by turkey lurkey
2012-01-30 07:44:08

“Is it possible for the federal government to just go on spending forever, until the debt is inflated away?”

Sure it is! Just ask the Master(bators) of the Universe! (except, well, the debt part doesn’t go away)

Comment by BetterRenter
2012-01-30 09:50:14

The “end game” is a default on sovereign debt. Naturally this will be structured to avoid outright honesty, like everything else the Holy American Empire does. But it must still happen. After all, the wealthy didn’t just spend the last generation stealing all the money, just to allow it to be inflated away. That makes no sense at all. They are currently enjoying asset deflation on real property, so that’s the trend.

And for inflation to actually hit, in our massive glut of producers and products, we’d have to increase the purchasing power of the masses. There is no plan or trend for that; in fact, the plan and trend is to DECREASE that purchasing power. Producers have bills too, and they need to make SALES in order to stay in business. That’s why the home builders are still building, albeit at lesser prices. Take a moment to look that over: At. Lesser. Prices.

That’s a clue for ya. Free of charge (which is more deflation).

We may not see hyperdeflation, but we are seeing average deflation, and that trend will continue as Western consumers lose purchasing power (since they progressively lack money). As deflation continues to be fought, it will merely stretch it out. That will lead inevitably to a very long period of stagnation. And that’s why we sensible analysts call this this Greatest Depression. Nothing we’ve had before will match it. Entire First World governments will collapse from it.

Comment by Blue Skye
2012-01-30 10:24:30

“Entire First World governments will collapse from it”

Now that sounds silly. How can one have only parts of governments collaspe?

Comment by rms
2012-01-30 12:28:15

The “end game” is a default on sovereign debt.

Eventual default on unfunded obligations is coming as we muddle along; think private and public pensions. Health-care promises will likely ring hollow too.

Comment by mathguy
2012-01-30 13:35:24

First, money is not debt. Money is a medium of exchange with intrinsic value.
Anything can be money. Some things are inherently better at being money. It’s not that something is/is not money, but rather to what extent a particular thing functions well (reliably) as money.

Money has these properties:
easy to transport and identify,
easily divisible,
hard to duplicate
easy to store
medium of exchange

Gold is money. Oil is money. Any natural resource is money. gold may be a “better” money than oil because it is easier to store and transport. If you drop gold on the ground you can pick it up. If you drop oil on the ground.. you lost your money.

debt is a promise. To the extent that it validly fulfills the properties of money it is a valid money. The problem with promises is, they are pretty easy to make, in other words, they are easy to duplicate. Therefore, the value of debt as money is closely tied to the “reputation” of the person issuing the promise to pay.

At different points in time, different forms of money may be better suited for use. Generally, during periods of extreme shortage of a commodity necessary for life or business, that commodity becomes a defacto money or currency. For instance, in prison, cigarettes are effectively “money”.

You started off with a “kind of” valid statement in your post: “People with money will not spend it unless they have an oppertunity for positive RoI.” We could debate the merits, but your intention is clear… so accepting that and moving on, you make another statement: “Positive RoI requires more money. Money is other peoples’ debt. More money requires more debt.”

Hopefully based on the intro I laid out we can put to rest that this statement is false. Debt is only one form of money. Therefore, more money could just require more of a particular alternate form of currency. Could be gold, cigarettes, oranges, grain, oil, automated cnc machines, solar cells, etc…

For instance, someone could start turning all the worthless sand in the sahara desert into refined silicon solar cells that generate power. This requires no new issue of debt. This person could trade those solar cells for freshly mined gold. They could then use that gold to trade for the wheat from the field of a farmer. In no case would there need to be debt, and all three of these stores of value had their own intrinsic value. This is savings, not debt. The value in the commodity comes from the time that the producer put in to change a natural resource into a commodity of value: gold from ore, silicon cells from sand, a silo of grain from a field of bare earth. To the extent that you create a new commodity you can effectively create money from nothing.

Comment by Robin
2012-01-30 18:26:40

Finally some sanity in response to Daryll’s Gingrich-like rants!

Comment by ahansen
2012-01-31 01:05:56

Thank you, mathguy.

Comment by Posers
2012-01-30 16:48:37

One way you can encourage those with money to spend their money is create a climate of predictabiity and confidence.

Right now, our leaders are interested in creating neither.

Comment by Robin
2012-01-30 18:30:10

Bernanke recently telegraphed the continuance of low FED rates. Many detractors said it was lacking and business needed to know the cost of borrowing years out.

Problem solved.

Comment by Realtors Are Liars®
2012-01-30 05:21:37

Realtors Are Liars®

Comment by goon squad
2012-01-30 11:02:38


Comment by Realtors Are Liars®
2012-01-30 13:13:20

That place slithers with realtors in hiding.

Why won’t realtors take off their internet masks??

Comment by Hard Rain
2012-01-30 05:31:08

Suze a shill. Couldn’t have seen that coming…

What You Can Learn From Suze Orman’s Mistakes

Perhaps most troubling is an article in The Wall Street Journal by respected financial journalist Jason Zweig. Zweig discussed glaring problems with a newsletter issued by Mark Grimaldi, an investment manager. Orman is a 50 percent owner of the newsletter, which costs $63 a year. She has given away more than 50,000 trial subscriptions. Issues of the newsletter contained a number of errors, which included providing returns for a fund managed by Grimaldi prior to the time the fund was in existence, and understating the performance of the S&P 500 in nine of the 10 years cited. The accurate returns of the S&P 500 meant that Grimaldi’s portfolio trailed–rather than beat–the performance of the index in 2009.


Comment by oxide
2012-01-30 07:12:06

Suze jumped the shark years ago. Folksy frugality does NOT help a $500/week Lucky Ducky in the face of $500/month health insurance. Suze know this full well.

Comment by turkey lurkey
2012-01-30 07:45:35

How dare you degenerate into class warfare!


Comment by Bad Chile
2012-01-30 09:12:29

Back when mini-Chile #1 was a wee lad, Ms. Chile and myself would occasionally find ourselves wide awake at 5.00am, watching Orman.

At one point, cup of coffee in hand, I turned to Ms. Chile and observed, “If you need to call into a tv show and discuss with a stranger in a bad suit if you can afford a $3,000 handbag, you can’t.”

Total shill.

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Comment by polly
2012-01-30 09:22:54

To the extent that I’ve been aware of her, I thought of her as useful to two groups (possibly overlapping a great deal):

1) lower and regular middle class who want an upper middle class lifestyle - she is pretty good at giving them reality check they need

2) people who have some money but don’t have any idea how to handle it - perhaps because no one talked about money at home when they were kids or perhaps because they are the first generation in their family to do anything other than work until they die or work until they retire on a pension sufficient to keep body and soul together

I don’t see her as being all that useful to the rest of the population. The fact that she occasionally takes calls, etc. from people a lot wealthier or a lot poorer is just good entertainment. The poor ones know that they can’t afford the $200 purse and I can’t figure why the rich ones bother to call. Don’t they value their privacy? And some of the people who have major problems need a lot more held than she can give them in 5 minutes. I hope her staff is providing them with a lot more support than is evident in the show, because telling someone to do something and helping them do it are very different things.

Comment by Steve J
2012-01-30 10:41:45

I always figured the callers were staff members.

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Comment by polly
2012-01-30 10:55:18

Writing the scenarios so that staff members could pretend to be them is more work than using real people. I have no doubt that she is using real people, I just don’t get why they want to expose themselves that way. Then again, I am sure that I don’t understand a lot of people.

Comment by Montana
2012-01-30 13:41:19

Just look how the FBs expose themselves in local news stories. Unbelievable, the stupidity they confess.

Comment by Montana
2012-01-30 13:42:38

Oops, that didn’t sound right..expose their stupidity I meant…lol

Comment by Hard Rain
2012-01-30 05:37:39

Wonder how long that “consideration” would last?

Gingrich Labels Romney ‘Wall Street Elite’ Before Florida Vote

Newt Gingrich, accusing Republican presidential primary opponent Mitt Romney of being a “fundamentally dishonest” tool of Wall Street, pledged to stop big banking firms such as Goldman Sachs Group Inc. (GS) from “rigging the game.”

Gingrich said his plans, like eliminating the capital gains tax and repealing the Wall Street regulations of the Dodd-Frank Act, would benefit the banking industry. Gingrich also said he’d consider new legislative changes, including replacement of the Glass-Steagall Act, a 1933 law that increased bank regulations and was repealed in 1999. He said he would stop deals like the $13 billion payment Goldman Sachs received for American International Group, Inc. (AIG) investment guarantees after the bailed-out insurer received billions from the U.S. government.


Comment by Ben Jones
2012-01-30 06:12:31

‘I’m totally unique,’ Gingrich said in an interview. ‘My campaign resembles nothing that has ever been run. It’s a very idea-oriented, Internet-based, constantly-evolving,’ he said. ‘It’s organic.’

This just in; Gingrich has proposed the construction of a Death Star to protect his planned moon colony from “existential threats,” presumably referring to Iran.

Comment by Blue Skye
2012-01-30 07:15:35

Stop! You are making me cry.

Comment by oxide
2012-01-30 07:21:34

My campaign resembles nothing that has ever been run. It’s a very idea-oriented, Internet-based, constantly-evolving.

Resembles Obama/Biden ‘08.

Comment by Ben Jones
2012-01-30 07:56:15

It gets better!

‘Gingrich said he went into the debates with one goal: ‘I didn’t want to get mad enough to lose my poise. I felt that the Romney people had a very deliberate strategy. They’d all been talking about my temperament and they were looking for an excuse,’ he said. ‘So I just wanted to be very calm no matter what. I spent a lot of my energy just staying disciplined.’

I don’t know if we can trust this hot-head with the keys to the Death Star.

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Comment by CrackerBob
2012-01-30 09:30:49

Perhaps Newt can get together with Dick Cheney and run as the angriest old rich men ever to shout “Get off of my lawn”.

Comment by turkey lurkey
2012-01-30 10:10:11

“…you damn hippies!”

You left out that part. :lol:

Comment by Montana
2012-01-30 13:43:40

Resembles Obama/Biden ‘08.

Well we know that..I think he meant GOP campaigns.

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Comment by turkey lurkey
2012-01-30 07:48:43


For some reason I’m thinking “fertilizer”.

Comment by BlueStar
2012-01-30 10:11:58

When Herman Cain and Chuck Norris indorsed Newt I knew then that Gingrich would be the next president of the Confederate States of America. The South will rise again!!

Comment by turkey lurkey
2012-01-30 12:27:11


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Comment by Muggy
2012-01-30 12:38:08

“The South will rise again!!”

Still one of my favs:


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Comment by turkey lurkey
2012-01-30 14:35:59


Comment by BetterRenter
2012-01-30 10:25:53

Oooh, lookie: Noot is proposing to reinstate Glass-Steagall… well after its absence had done the maximum amount of damage. It’s one thing to close the barn door after the animals have left. It’s another to check around carefully to make sure ALL the animals had left, before slowly walking (just to make sure a fast animal still hiding can get past you) to the barn door to softly close it (to make sure you don’t pinch any animal still trying to get out).

By the time they were bailing out Fannie and Freddie, the need to re-impose G-S was like the world’s largest neon sign. Noot is just making election noises again, just like with his moonbase farce. I’m really coming to hate this guy. He’s probably thinking that if Obama can lie more than a rug, then the bar has been re-set to a new level of prevarication.

Comment by ruffnearedges
2012-01-30 06:18:48

Little bit of a gripe session here - There have been comments in the past about “war on savers” and responsibility being discouraged by the current policies. These comments really ring true with me and completely frustrate and anger me. I cannot earn any kind of interest rate at the banks. I can not buy a properly sized house for my growing family at a fair price. The stock market is ever rigged by the Goldman Sacks types. What, just work, put money under mattress, and veg out. Is this what prudent money management is reduced to? The more I learn about this stuff, the deeper into maddening despair I sink. Maybe a financial/anger management class where everyone sits in a circle and vents. Yeah, that’s the ticket — yeeeeeesh.

Comment by Ben Jones
2012-01-30 06:33:36

‘The more I learn about this stuff, the deeper into maddening despair I sink’

IMO that’s a sign you are looking at things in the wrong way.

Comment by Liz Pendens
2012-01-30 07:09:39

If you are feeling bummed, just think about the $100 billion Facebook IPO and you will instantly be cheered. Monumental acheivements of humanity are intensly uplifting.

Comment by Ben Jones
2012-01-30 08:19:17

‘just think about the $100 billion Facebook IPO and you will instantly be cheered’

‘(Reuters) - Facebook’s initial public offering is likely to set a new standard for how low investment banks are willing to go on advisory fees to win big business…That has set up a fierce competition on Wall Street, particularly between the presumed front-runners Morgan Stanley and Goldman Sachs Group Inc.’

HBB wire: Goldman has offered to broker the deal in exchange for 100 billion Facebook “likes.” Morgan Stanley undercut the Goldman offer with a proposal to handle the deal for only 50 billion Twitter “friends” and a dozen smartphones with unlimited minutes.

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Comment by turkey lurkey
2012-01-30 14:45:07

In. Sanity.

Comment by ahansen
2012-01-31 01:18:17

One more reason to stay off FB–though they’re making it harder and harder to do so.

Comment by oxide
2012-01-30 15:01:27

Thank god I don’t have Facebook. FB is offensive enough without adding greedy profit motive.

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Comment by Darrell in Phoenix
2012-01-30 07:31:50

So, what is the correct way to look at it?

Comment by Prime_Is_Contained
2012-01-30 09:33:04

Gotta admit, Ben: your comment left me curious and wanting more as well…

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Comment by Ben Jones
2012-01-30 09:40:51

Getting upset just makes it hard to think clearly.

Comment by Robin
2012-01-30 19:27:26

New currency: Likes vs. Tweets.

Which is more valuable and why?

I am ignorant; I do neither.

Comment by aNYCdj
2012-01-30 06:35:25

I posted a reply last night…why cant you add on a room or two finish the basement etc if the school districts are good?

Also add this it will make reading this blog a lot easier


Comment by In Colorado
2012-01-30 07:31:58

In many parts of the country houses do not have basements. They don’t in California or Texas.

Comment by palmetto
2012-01-30 07:34:18

Or in Florida. At least, not in the lower 2/3 of the state.

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Comment by Darrell in Phoenix
2012-01-30 07:44:00

No basements in AZ either.

Which is strange. The basement is the cheapest square footage to build into a house. It isn’t like the water table here is 10 feet below the ground here like it is in, say, Lincoln Nebraska.

In Nebraska you get a basement, and then have to fight water intrusion. Here in Phoenix, no risk of water, but no basement.

I guess it is a tornado thing.

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Comment by In Colorado
2012-01-30 09:39:45

It’s cheaper to build a house on a slab than dig a basement.

Comment by Steve J
2012-01-30 10:45:20

Slab should never freeze in AZ, so you can run your pipes through the slab.

Comment by yensoy
2012-01-30 12:00:16

Or rattlesnakes

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 06:48:55

Sounds like you are stuck in the anger phase of the housing bubble stages of grief. I suggest you move on and live your life. This includes structuring your personal finances so they buffer your household as best as possible against Megabank, Inc’s shenanigans.

Comment by In Colorado
2012-01-30 07:33:37

But how do you do that? Buy gold? Buy risky foreign securities?

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:41:11

My personal solution: Buy something of lasting value, which will give you lasting personal enjoyment. For instance, if you are of the Ebenezer Scrooge type (which I, btw, am not), buy yourself a stash of gold coins and rub them between your finger every morning upon waking up.

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Comment by rusty
2012-01-30 08:50:28

Buy gold and silver on the dips. not the ETFs, physical metals. If you do, keep quiet about it, and don’t keep it in a safe deposit box at your bank.

Comment by Prime_Is_Contained
2012-01-30 09:40:55

My personal solution: invest in cash-equivalents that are earning nothing for the moment, in the hopes that one day there is something worth investing in again.

Comment by drumminj
2012-01-30 16:13:37

in the hopes that one day there is something worth investing in again.

My personal happiness is worth investing in. Please send your investment dollars to:

Happy Dude
742 Evergreen Terrace

Comment by Overtaxed
2012-01-30 06:49:03

There are places to get reasonable yield, however, none of them are risk free. I own 2 funds (which I would NOT recommend for anyone, do your own research, I’m just talking about my personal holdings) of muni-bonds, BFK and PIA which are currently yield 5-6% tax free. The problem with this strategy is that when interest rates go up, these funds are going to get a serious beating. However, IMHO, interest rates aren’t going anywhere for the foreseeable future, so I continue to invest in them.

However, I’m totally in sync with your original statement; the war on savers is on in earnest. It’s just so cheap to borrow right now, unless you think that deflation is coming (which I don’t), you’re almost crazy not to borrow. If I had the guts, I could borrow at a tax advantaged (deductible) 4.5% and buy bonds that yield a tax free 5-6%. I don’t do it, but, if I was a more risk tolerant person, I could have made a reasonable sum of money over the past few years following that strategy.

Comment by Ben Jones
2012-01-30 06:52:55

‘It’s just so cheap to borrow right now…you’re almost crazy not to borrow. I could borrow…and buy bonds. I don’t do it’

Pushing on a string in action.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 06:55:35

“…buy bonds that yield a tax free 5-6%.”

How large is the default risk premium on those?

Comment by Overtaxed
2012-01-30 07:27:46

I’d investigate it for yourself if you’re interested. However, historically, muni bonds have low defaults and these are funds of many different bonds packaged up (diversifying the risk, theoretically). Not that it mattered for MBS buyers, but, IMHO, the main risk with this trade is interest rate, not default.

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Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:29:45

“I’d investigate it for yourself if you’re interested.”

Not interested; actually the question was meant to be rhetorical. To spell it out, above-market yields in a below-historical-norm yield environment typically come at the price of high default risk.

Comment by Overtaxed
2012-01-30 07:35:29

“above-market yields in a below-historical-norm yield environment typically come at the price of high default risk.”

I agree. I think that munis are a safer pick than other high yield investments, but, you’re absolutely right, where ever there is higher than normal yield there is also risk. It’s just a question of “is the risk appropriately priced”.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:44:53

‘It’s just a question of “is the risk appropriately priced”.’

Can also depend on unpredictable factors, such as the extent of govt guarantees.

Case in point: My above-market yields on an S&L CD during the 1980s were at risk when the S&L collapsed. Turns out the FSLIC made good on both principle and interest, but I recall a point of debate on whether interest was included under the guarantee when I doubted my luck would hold up.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:47:12

P.S. I suppose if you are a true believer in efficient market theory, you could argue the markets price in the risk that a govt guarantee will apply to interest and/or principle on an investment backed by a failed institution.

Comment by Prime_Is_Contained
2012-01-30 09:43:56

if you are a true believer in efficient market theory


Are there any of those left?

I’ve never seen a good efficient-market explanation for the massive swings gyrations the markets endure.

Comment by Montana
2012-01-30 13:48:36

GNMA has been good, but be ready to jump out if interest rates rise.

I think.

Comment by bill in Phoenix and Tampa
2012-01-30 17:42:39

Started with an initial investment of $10,000 in AAZBX in 2002. Been dollar cost averaging into that and lower expense AAZAX the last 11 years. Today my holdings between the two amount to a little over $188,000. they yield between 3% and 4% and that is about average annual over ten years. Nice to get currently $560 per month income free of Arizona taxes. aAZBX moves whatever you buy into AAZAX after six years. So it is fun to open up my statements monthly and see the income grow.

I am not too concerned about what a rate hike would do, since I have been flowing into these funds for so long and I am hedged into cash and t-bills.

t-Bills are important to own and re-buy when they mature. This is so that when rates start to go up you could start to sell the T-bills at a trickle and slowly start buying bonds. Reverse psychology sort of, but you suy when people sell. Buy
more when people sell more, and so on.

Gold is a great deal now, just like munis, for the same reason Overtaxed gave. My dad knew a wealthy California rancher in the 70’s who was earning a $30,000 per month income on his California munis those days. He was probably getting 12%.

Comment by Professor Bear
2012-01-30 18:08:39

“I’ve never seen a good efficient-market explanation for the massive swings gyrations the markets endure.”

An efficient market is one where all predictable price movements, even those which can be merely predicted in expectation, are arbitraged away. It is very hard to predict those massive swings / gyrations, even in expectation, which makes them near-impossible to arbitrage.

Comment by Prime_Is_Contained
2012-01-30 18:23:56

In my opinion, those huge gyrations are all about emotion. The efficient market theory is about perfect information available to everyone, and rational reactions based upon that information.

The fundamentals never change 20% in a matter of minutes.

Comment by Robin
2012-01-30 19:53:15

When my dad died, he held many CDs at rates up to 18%.

I took over the family finances until, after following rates down over many years with higher and higher expenses, the investments were finally exhausted.

I have saved well over $100k and cannot reach a CD return near 1%. Pathetic.

My father died at 65. I am 59.

Similar savings but disparate returns.

Comment by Darrell in Phoenix
2012-01-30 06:52:08

There is $37T out there.

We have increased each household’s share of total debt from 2.8x median income to 6.5x median income over the last 30 years.

If we allowed everyone with money, to make a “reasonable rate of return”, then the majority of households would not be able to afford to pay the interest on their share of the debt.

Comment by Liz Pendens
2012-01-30 07:02:24

So? Why would anyone repay debt? Just make it bigger. That works best. Austerity is for the future. We spend now.

Comment by Darrell in Phoenix
2012-01-30 09:54:14

Once upon a time we have very Libertarian economic and political philosophies. We also had wild swings of boom and bust as unregulated markets created too much debt, only to see the debt crash into depression. The 1800s saw no less than 24 recessions, depression and panics.

Couple years of boom, couple years of bust, repeat for 100 years.

We moved away from Libertarian policies in hopes of creating a more stable business cycle where we regulated and controlled the booms in hopes of minimizing the booms. Somewhere (1980cough) we forgot that the goal was to flatten the business cycle, and we made the goal endless boom.

Like a forest where we have fought all fires to the extreme, the economy has become overgrown with excess fuel waiting for the mother of all cleanings.

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Comment by turkey lurkey
2012-01-30 07:52:04

Just mooo-ve your money on over to Wall St. and don’t feel baaa-d about it.

Comment by rms
2012-01-30 08:43:42

I cannot earn any kind of interest rate at the banks. I can not buy a properly sized house for my growing family at a fair price. The stock market is ever rigged by the Goldman Sacks types.

They didn’t cover this part in school.

Comment by BetterRenter
2012-01-30 10:30:01

Frugality is pretty much your only ticket out of slavery. Somebody’s gotta tell you the truth, guy. You can’t get more income without cashing out your sanity, health or family, or some combination thereof. (I’m watching this happen to friends and it’s just something I have to put out of my mind, since they are adults and are responsible for how they destroy their own lives.) As they try to crush you with debt and added taxes and decreased income, you really have no sane choice: Become frugal. Do it before it’s too late for you.

Comment by Neuromance
2012-01-30 19:03:10

“That man is richest whose pleasure are cheapest.” - Thoreau

Comment by Ol'Bubba
2012-01-30 19:56:51

Frugality Rocks!

Comment by ruffnearedges
2012-01-30 06:55:10

I guess it boils down to, I want a different solution to the mattress. At times though, that solution has been beneficial. But, I want to move on. I have been on “financial hold” for 4 or 5 years now, hec it has been so long I would have to look it up to know for sure. This “financial hold” starting when I sold my last condo - shortly after availing myself of this blog I might add, (arms raised and lowered to show proper respect and humble thanks). I did get it into my head that things would fall faster and farther. Maybe the powers that be really can stop a train wreck. Lord knows enough taxpayer money has been thrown at the “problem”.

Comment by turkey lurkey
2012-01-30 07:58:39

I’ve been on “financial hold” for the last 10 years since the dot com days.

I have YET to recover my earnings and savings and I’m WAY over 40. In fact, it may never happen in my lifetime. There is NO retail investment out there that even keeps up with real inflation.

Comment by turkey lurkey
2012-01-30 08:00:07

“…dot com bomb recession days…”

Comment by Blue Skye
2012-01-30 09:08:07

Was buying dot com stocks “saving”?

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Comment by Darrell in Phoenix
2012-01-30 09:57:23

I thought so. I pumped a lot of my income into my employer’s stock, along with the 401(k) match. The the CEO and CFO went to jail.

My 401(k) balance went from $40K to $3K. But, I did get $337 back after the CEO’s and CFO’s assets were liquidated and lawyers were paid.

Oh how I wish WorldCom had never bought MCI.

Comment by Montana
2012-01-30 13:51:10

Sorry Darrell. That is rough.

Comment by Prime_Is_Contained
2012-01-30 17:46:11

Yes, it is rough—I’m very sorry Darrell—and I do not mean to minimize it by what I am about to say.

When I have made financial mistakes and learned something from them, I call that “paying tuition” to the school of life. For example, I paid tuition when I bought the dead-cat bound in the Nasdaq meltdown. It was a very valuable valuable lesson, more valuable than what I lost, which was not insignificant.

The lesson of not holding one’s employer’s stock in your retirement account is also a very valuable one. When you think about it from a diversification standpoint, it makes perfect sense that you would not want to hold something that might lose value in a significant way precisely when a meltdown at the company could imply the loss of your job and primary source of income. That lesson might well be worth $37K, depending on how/where/when you are able to apply it in the future.

Comment by rms
2012-01-30 12:42:48

But, I want to move on. I have been on “financial hold” for 4 or 5 years now, hec it has been so long I would have to look it up to know for sure.

I moved my family north from California in the middle of the dotcom crisis thinking that this financial madness would crash within five years; didn’t envision Greenspan’s housing bubble hampering my modest plans.

Comment by Prime_Is_Contained
2012-01-30 13:11:59

It’s much easier to be correct about the outcome than it is to be correct about the timing of that outcome. IMHO.

Comment by Blue Skye
2012-01-30 13:35:45

I agree!

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Comment by Liz Pendens
2012-01-30 06:58:45

Yesterday I was driving home in the afternoon and saw some Ron Paul supporters holding up Ron Paul signs at an intersection. I honked then was driving away and thought: “I should do more”. Went back and picked up a sign to join their rally for a coulple hours until it got dark. One in a hundred cars would honk or give thumbs up, an equal one in one hundred would give thumbs down The supporters running the Ron Paul support rally were really good people who seemed very educated on the issues and it was refreshing to meet them if nothing else. I felt a touch better the rest of the drive home. Just because he is “unelectable” does not mean he is unsupportable.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:00:56

Here is a promising sign: An MSM article calling out serial bottom callers for the frauds they are.

The housing recovery that wasn’t
By Nin-Hai Tseng, writer-reporter January 30, 2012: 5:00 AM ET

The evidence for a recovery is compelling, but optimists should actually be watching rising interest rates.

FORTUNE — Over the past few months, a spate of good news about the U.S. housing market has led some to think a recovery is finally on the horizon.

The evidence is compelling. It now costs almost as much to rent as buy. Since the housing bubble burst in 2006, home prices have fallen by 33% nationwide — more than they did during the Great Depression. Waves of foreclosures and tighter lending standards have helped drive a surge in rentals. And during the third quarter, the median monthly mortgage payment totaled $698 compared to the median monthly asking rent of $700, according to Capital Economics, citing data from the National Association of Realtors and the Census Bureau. What’s more, the cost of borrowing has fallen to record lows, with interest rates for 30-year fixed rate mortgages hovering around 4%.

Builders are even building again. (Albeit, at a very modest pace and driven largely by construction of multi-family homes.) As a January report by CoreLogic shows, both single-family starts and permits rose at an annualized pace of 15% over the six months ending November 2011. The California-based mortgage data provider also notes that existing home sales nationwide have been trending up, rising 12% higher in November 2011 compared with January 2011. “While we cannot say with a high degree of certainty that 2012 has in store for us, indications based on the latter part of 2011 are that both the broad economy and the housing market are moving toward positive growth in 2012,” CoreLogic wrote in a research note.

That optimism is well-deserved, right? Not exactly.

Since the housing market imploded, analysts have predicted year after year that prices might at long last bottom out. Will it finally happen this year? Perhaps next? Bottoming out necessarily precedes turning the corner — and until that happens optimists should be cautious. Economists widely cite the short-term obstacles weighing down prices. These factors range from high unemployment and household debt to the so-called “shadow inventory,” or all the properties that have yet to come into the market because of pending foreclosures or skittish homeowners delaying sales until prices improve.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:07:18

I see considerable irony in the news that Florida’s GOP primary rides on housing crisis blame, as arguably none of the leading GOP candidates or Obama had much to do with putting Floridians into the pot of underwater mortgage debt in which they stew. What is the sitting president supposed to do in 2013: Wave a magic wand and make all the bad Florida mortgages go POOF?

Konrad Yakabuski
Florida GOP primary rides on housing crisis blame
LUTZ, FLORIDA— From Monday’s Globe and Mail
Published Sunday, Jan. 29, 2012 10:18PM EST
Last updated Monday, Jan. 30, 2012 4:38AM EST

The packed pews at Exciting Idlewild Baptist, a 5,100-seat mega-church in the Tampa exurbs, are proof enough that there is at least one thing booming in Florida.

But as worshippers poured in for Sunday service at the sprawling complex – so big it has its own Starbucks – few could say as much about their own livelihoods.

When they’re not attacking one another, Republican presidential candidates vying for the Florida primary say the president is to blame for the state’s continuing economic woes. The AP’s John Mone explains.

“Oh, bad,” Tonya Templeman, 40, said of the order book at her custom drapery business. “When the housing market declines, the interior designers I work with go out of business.”

The housing crisis is at the heart of 2012 politics in the quintessential swing state. Florida Republicans are making their choice in Tuesday’s GOP primary based on which candidate they feel bears less blame for the mess their state is in.

The collapse that sent the massive luxury homes around Lutz plunging to a quarter of their 2007 values upended not only the lives of those with underwater mortgages and unbending bankers. It cut a swath through every sector and social stratum.

With 44 per cent of Florida homes still worth less than the mortgages on them, and the unemployment rate stuck near 10 per cent, you would need a Wall Street-sized appetite for risk to bet on Mr. Obama’s chances of carrying the state that is a reliable bellwether in presidential politics.

But with Mitt Romney and Newt Gingrich accusing each other of profiting from the mortgage meltdown that turned Florida into a collection of “zombie” subdivisions, the damage they are inflicting on each other may be giving Mr. Obama reason for hope.

As she rushed to take up her spot in the church orchestra, Ms. Templeman, wearing a black bucket hat with a pink ribbon, knows why her order book is so thin. “The banks,” she said. “They gave people mortgages they couldn’t pay for. They set them up to fail.”

Her antipathy toward the banks is typical of the mood among Florida voters, who are not sure whether they are madder at Wall Street or the politicians who enable it.

It is still too early to tell whether they will take it out on Mr. Obama or on his Republican rival. But to win in November, the GOP nominee will likely need to fight off devastating Democratic attacks that he profited on the backs of distressed homeowners.

Comment by Darrell in Phoenix
2012-01-30 08:57:39

Didn’t you hear that lady that was ripping into Romney?

If the banks can afford to eat the loss in a foreclosure, surely they can eat the loss in a principal reduction refi.

Oh, the loan has been packaged and resold, and the bank isn’t on the hook for the loss, someone else is, and that someone else is really a few thousand people all over the planet, and there is no mechanism by which they could all agree to a principal write down, even if they all wanted to????

People just do not get it.

Comment by In Colorado
2012-01-30 09:46:40

The only way would be for a 3rd party to payoff the bondholders and then take the loss.

Comment by Darrell in Phoenix
2012-01-30 09:58:27

A 3rd party like? Oh….. Maybe…….

The US tax payer?

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Comment by In Colorado
2012-01-30 10:29:43

Who else?

Comment by Prime_Is_Contained
2012-01-30 09:54:22

Exciting Idlewild Baptist,

The first time I skimmed this, this phrase registered as “Excitable Wildebeest” in my brain.

More coffee… :-)

Comment by Darrell in Phoenix
2012-01-30 10:06:54

“the mortgage meltdown that turned Florida into a collection of “zombie” subdivisions”


It was the BOOM that created the zombie sub-divisions, not the bust.

There were never enough people for all the houses we built, nor were incomes sufficient to allow people to pay for the houses even if they existed.

It could be argued that guns don’t kill people, the hunks of lead traveling at super-sonic speeds kill people. Personally, I’d prefer to go back to the root cause. You know, the person that put the ammo into the gun, aimed it at someone, disabled the safety and pulled the trigger. From that action on, the rest was inevitable.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:13:17

I haven’t paid much attention to news of the Greek debt crisis as of late. Is it all ‘contained’ by now? How is financial waterboarding, aka ‘austerity measures,’ working out for their national economy?

Greeks grow weary of austerity measures
Painful austerity measures haven’t solved Greece’s debt crisis. Politicians and ordinary people alike are now pushing back.

“Whatever that is — bankruptcy, default, a return to the drachma or end to the euro — well, let’s just get it over with,” a baker in Marathon, Greece, said of efforts to solve the debt crisis. (Petros Giannakouris / Associated Press / December 15, 2011)

By Anthee Carassava, Los Angeles Times
January 29, 2012, 8:26 p.m.
Reporting from Marathon, Greece—

Legend has it that when the ancient Athenians defeated the Persians here in 490 BC, a messenger named Pheidippides ran over 25 miles of rough and rocky plains to announce the victory in Athens.

“We have won!” he shouted. But then, exhausted, he dropped dead.

Today, deeply indebted and nearly bankrupt, Greeks fear a similar fate.

It’s not because they haven’t held up their end of the bargain, Greeks argue, enduring a punishing course of austerity measures to fix the country’s disastrous economy. It’s because the austerity measures haven’t worked.

And as they watch politicians and economists lurch from one emergency summit to another, like a Pheidippides who has lost his way, Greeks are answering with a swelling tide of black-clad workers at near-daily anti-austerity marches and splashes of graffiti reading “Help,” “No more pain” and “We won’t pay” on walls across the country.

The mood has shifted from rage over the brutal budget cuts to fear and uncertainty: When will there be good news?

“One minute we’re being told to do one thing; then, they tell us something else. Then, they modify that with something different, and in the end, it’s scrapped and replaced with something even more brutal,” grumbled Nikos Tassos, a carpet salesman in Marathon.

“It’s nerve-racking,” he said. “Does anyone really know where this is all heading?”

Greece was supposed to have pulled out of its tailspin by now. The thinking was that by the end of 2011, the rash of austerity reforms would drop the deficit to under 7.5% of the country’s total economic output, and a yard sale of $71.5 billion in state entities would help pay down the country’s crippling $500-billion debt.

But none of that happened. In fact, for all the austerity-driven pain and suffering Greeks have had to put up with, the nation’s finances and indicators of growth have drastically deteriorated. Officials in Athens and international creditors are now scrambling to map a new course of action.

Comment by Darrell in Phoenix
2012-01-30 09:06:25

“It’s nerve-racking,” he said. “Does anyone really know where this is all heading?”

Actually, yes.

Trade imbalances do not allow themselves to be persisted. They result in excess debt. Interest on the debt makes the trade imbalance wider. The trade imbalance prevents the debt from being paid back.

Eventually, those in debt default, the money created by the debt poofs out of existence, the people that had the money that poofed away out from under their fingers lose faith in money, cascade default into depression.

That, or we can directly attack and reverse the trade imbalances that created the debt in the first place?

Oh, your common Euro currency was created to prevent things like currency exchange rates from messing with trade imbalances? The Euro zone was created to prevent use of trade wars or other tools to mess with trade imbalances?

So, you have created political and economic structure that are designed to promote and persist trade imbalances, but the very fundamental principles of economic dictate that trade imbalances can not be persisted?

Oh, yeah…. Time for reality to remind people why trees do not grow to the sky, even if we choose to pass laws saying that they must.

Comment by Steve J
2012-01-30 10:50:26

It will shock a lot of free marketers when Greece closes its borders and shutdowns all the banks.

Comment by Posers
2012-01-30 17:21:10

It will also shock a lot of anti-free marketers when Greence closes its borders and shuts down all the banks.

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Comment by measton
2012-01-30 10:05:22

Germany is really pushing to implant a hand picked unelected oversear to control gov spending.

Me thinks the last set of riots was just a warm up.

Comment by frankie
2012-01-30 12:16:15

Swedish prime minister Fredrik Reinfeldt today called Greece “bankrupt” and said he supported Germany’s position on future oversight of the Greek national budget.


The Northern European burden to bring civilisation to backward third world people. This will not end well.

Comment by In Colorado
2012-01-30 12:45:59

The Northern European burden to bring civilisation to backward third world people.

I though the Greeks invented civilization?

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Comment by Steve J
2012-01-30 14:07:13

Swedes invented sauna baths and ABBA.

Comment by CarrieAnn
2012-01-30 13:18:53

Pheidippides ran over 25 miles of rough and rocky plains to announce the victory in Athens.

“We have won!” he shouted. But then, exhausted, he dropped dead.

Pheidippides dropped dead because he hadn’t practiced until that much mileage became manageable. Marathoners and ultra runners (50 miles in a day or even 50 miles per day over 3 days are routinely done by female runners that aren’t exactly 20 year olds)

My point being that the Greek people and everyone can handle austerity just fine the same way our grandparents did. It’s just that today’s cast of characters have not practiced it yet and so they have not developed the survival mechanisms that gets one through that type of challenge. Really, the sooner they apply themselves and figure out old survival tricks, things will become much easier. They’re still fighting it the way a new runner fights all the bodily pains cardio vascaular restrictions like untrained lungs gasping for air. But practice, practice, practice and soon the body grows efficient and strength remains despite heavier and more challenging hurdles.

Comment by Happy2bHeard
2012-01-30 18:06:45

Right, but you don’t start out practicing 25 mile runs. You start with something more manageable. If you can only do 100 yards the first day, then that is where you start. And if your knees are already 60 years old and athritic, you may never be able to get to 25 miles.

I have tried too much too fast and ended up with injuries that sidelined me for weeks. Even young, fit athletes can be sidelined by stress fractures and other overuse injuries.

My point being that people can cope with small changes in short periods of time or large changes over long periods of time, but may not be able to cope with large changes over short periods of time.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:17:26

Greece seems to have entered a Twilight Zone of Dickensian dystrophy. This seems like a terrible time in history to run out of aspirin, too.

Children abandoned by Greek parents as cuts also sees country running out of medicine
Youngsters abandoned as parents struggle
4-year-old found clutching note: ‘I can’t afford her’
Country also running out of medicine
Aspirin stocks low as austerity measures bite

By Lee Moran

Last updated at 4:08 PM on 16th January 2012

Children are being abandoned on Greece’s streets by their poverty-stricken families who cannot afford to look after them any more.

Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis.

It comes as pharmacists revealed the country had almost run out of aspirin, as multi-billion euro austerity measures filter their way through society.

Comment by turkey lurkey
2012-01-30 08:03:36

Just going back to the way the human race has been for 99% of its history.

99% suffer while the 1% prosper.

Comment by rms
2012-01-30 12:52:08

Children are being abandoned on Greece’s streets by their poverty-stricken families who cannot afford to look after them any more.

I really doubt this assertion. Parents who would be willing to stoop this low might pimp them for the financial gain before the pimp on the street does the same thing.

Comment by CarrieAnn
2012-01-30 13:30:16

The only way I would abandon one of my kids is if I believed someone else could keep them safer than I was able to. If I thought someone on the street (sex offender, gang, organized crime) might get to them while I was at work because there was no door to lock them behind, I could see doing it under extreme duress and probably with the idea I’d be back for them when I could provide that locked door.

I wrote a spiel above about adjusting to how to live frugally and that it would take time. Then I read this. I dunno. Maybe I just don’t understand how deep these austerity measures are. If the above is true, then things are truly frightening.

Comment by Posers
2012-01-30 17:19:19

I think what you may be underestimating is the typical Greek’s means/ability to save.

When you’ve spent a lifetime drinking out of the communal punchbowl (toilet?) and that bowl is removed, there’s nothing to save. You can’t save what doesn’t exist.

Those not on the public dole the world over will find it much easier to be austere. It’s how these things work.

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Comment by Happy2bHeard
2012-01-30 18:22:14

“Those not on the public dole the world over will find it much easier to be austere.”

Until they lose their jobs because the company they work for folds. At that point, there will be nothing left in the food banks and churches will be overwhelmed with the needy.

Comment by rms
2012-01-30 19:01:34

The only way I would abandon one of my kids is if I believed someone else could keep them safer than I was able to.

That’s what King Laius and Jocasta thought too.

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Comment by chilidoggg
2012-01-30 07:20:34

Can someone explain something to me?

If the Federal Reserve contends that the economy cannot withstand interest rates higher than 0.25% for the next eight quarters, does that mean that government deficit spending today is too low?

I understand that transfer payments or general tax cuts don’t do much good if the money is spent on imported goods. There are still plenty of crappy roads in Southern California that can be repaved.

Comment by Darrell in Phoenix
2012-01-30 07:40:28

Higher spending would increase growth, short-term (as in this or next year). It would simple reduce the time between now, and the point we have a credit event in US bonds.

We spend money to fix roads. The road builders use the money to by imported oil, imported TVs and smart phones, cars manufactured in the USA from imported parts, etc. etc. etc. And, it goes to higher corporate profits, 80% of which ends up in the hands of the people that already have more money than they spend.

Your car’s tire has a hole. You are pumping in air, but the tire won’t get any more full. Sure, you could increase the rate you are pumping in the air to get the tire to inflate a little, but that isn’t going to fix the problem.

We are spending too much. The problem is, even that much is not enough to keep the economy inflated.

There is an obvious answer, but it’s name dare not be spoken. FIX THE HOLE!

End free trade and revert to a 1950s style tax code that was intended to prevent too much money from ending up in the hands of too few.

We need to stop living on imports and the people with money need to have a lot less money.

Comment by Neuromance
2012-01-30 12:05:42

I’ve been pondering the whole free trade paradigm.

So, with Keynesian thought, the government as the largest economic actor in the economy, can step up its spending via deficit spending and thus keep the economy “humming along”, until private spending comes back. But, in the theory, in good times, the debt should be paid off. In reality, the debt is never paid off, it just becomes a smaller percentage of GDP through growth (except for the occasional freak incidence during the tech bubble. But not other than that).

So, in the free trade model, the actors that have an advantage in building some good or providing some service provide that to the others, while the other actors focus on the good/service in which they have a competitive advantage.

I think the problem is that the model works well enough WITHIN a country, but not between countries.

Say you have countries X, Y, Z. If countries Y and Z are better at making the basic necessities than country X, they will have a great deal of capital inflows - more money being injected into their economies, from country X. If country X is good at some limited, abstruse service, it will have massive capital outflows as local necessities producers are put out of business, and the population goes into debt to purchase the necessities being produced by X, Y and Z.

It seems to me more and more that balanced trade is the name of the game, not free trade.

Free trade within a country. Balanced trade between countries. That should be the new paradigm.

Comment by Neuromance
2012-01-30 12:08:39

typo: “and the population goes into debt to purchase the necessities being produced by X, Y and Z”

should be:

“and the population goes into debt to purchase the necessities being produced by Y and Z.” [- X]

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Comment by Darrell in Phoenix
2012-01-30 14:32:36

Comment by Neuromance
2012-01-30 12:05:42

“Free trade within a country. Balanced trade between countries. That should be the new paradigm.”

In the words of Mohammad Elarian of PIMCO, this is necessary but not sufficient.

You still have the issue that money tends to pool into the hands of very few people. A business owner puts $1 in the bank. I borrow it and spend it in his store. He puts it in the bank again. I borrow it again, sped it again….

Soon, he has $33 and I have $32 in debt.

In addition to balanced trade between countries, you still need limitations on total debt and a mechanism to prevent too much money from pooling into too few hands.

So, something like gradually returning to a 10% reserve requirement from our current 3%, and a steep tax code with a 90+% top marginal rate with lots of exemptions for spending on things that employ Americans.

You would hear the 1% screaming like banshees about how they are killing business. Meanwhile, demand for goods and services would skyrocket.

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Comment by michael
2012-01-30 16:03:24

“I think the problem is that the model works well enough WITHIN a country, but not between countries.”

ever been to Tchula Mississippi?

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Comment by rms
2012-01-30 19:04:24

ever been to Tchula Mississippi?

What do they make there…other than babies?

Comment by yensoy
2012-01-30 12:05:53

No, all it means is that the Fed is signalling that the Chinese will continue to invest billions of export earnings back in the US for such low rates at least for the next 8 quarters.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:26:12

Would the Greek people be best off declaring bankruptcy sooner, later or never? If ‘never’ is off the table, wouldn’t sooner be best? I am completely missing the upside of austerity measures.

Eurozone crisis live: Greek bankruptcy fears loom over EU summit

• Lucas Papademos: Greece faces spectre of bankruptcy
• Brussels hit by general strike
• Spanish economy shrinks by 0.3%
• Italian borrowing costs drop
• Today’s agenda

European leaders including Belgium’s PM Elio Di Rupo have arrived in Brussels for today’s EU summit. Photograph: Thierry Charlier/AP

1.51pm: Quick update on Portugal — its sovereign debt has continued to fall in value today, pushing up the yield on its 10-year bonds to a new high of 17.2%.

As Peterbracken points out in the reader comments below, price changes in the secondary bond market don’t have an immediate impact on Portugal’s borrowing costs - but do reflect how much it would have to pay if it sold new debt.

Another worrying development today — the cost of insuring Portuguese debt against default has hit a new record high. As the FT put it:

the market is now pricing in a 71% chance that the country will default over the next five years.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:51:17

When I first skimmed the posted article, I didn’t notice the “71% chance that the country will default over the next five years” applied to Portugal, not Greece.

Comment by Prime_Is_Contained
2012-01-30 10:25:55

I am completely missing the upside of austerity measures.

The point of austerity measures is to allow the banksters to continue to fleece the people for a bit longer… Surely that is obvious to you, GS??

The only “upside” that I can see is that they will generate sufficient economic pain that we will not see excessive debt in Greece again for a few generations.

Comment by palmetto
2012-01-30 07:31:58

I’ve been working on a little project that brings me into contact with small and medium sized business owners and managers, even a manager of a division of a larger corporation (who is trying to do that “business within a business” thing) And I can tell you that when it comes to hiring, with one exception, these guys DO. NOT. GET IT.

Oh, the complaints and bellyaching about how people “don’t want to work”, how they don’t show up for interviews, or if hired, don’t show up for the first day at work, that sort of thing.

We’re talking about $10.00 (plus bogus incentives) an hour marketing support jobs, no benefits. And, LOL, the corporate unit guy has a really scintillating position that’s 1099, with a three month runway until any income is realized and then another month to get paid (because they pay, get this, ONCE A MONTH!!!). Not to mention the training is unpaid. “But, but, we’re_____________(insert name of fairly well known company)!!!!!!!

These people all want someone with a college degree, a list of computer skills, etc. but the main thing they want is people who will pick up the phone (or physically go out to other companies or even to the consumer) and get new business prospects. And they just can’t figure out why they can’t find people to fill these positions when the unemployment rate is so high.

Good lawd amighty, I had to explain to them that these jobs are actually a dime a dozen, but the people who can do them are not. Just because a former data entry person in unemployed doesn’t mean they all of a sudden developed people skills and the sort of thick hide it takes to carry on despite constant rejection. (ooh, here’s a little nugget I picked up while working this project: outsourced mass telemarketing as a marketing tool is dropping like a stone in terms of success. Which is why many small businesses are now trying to do their own outreach, rather than outsourcing. It’s actually now cheaper to hire some people directly and train them)

The one guy I worked with who does get it is having some success with his outreach program. No surprise there. He allocated money from the budget for leads into direct personnel. He’s very flexible with his staff and incentivizes them fairly, if not generously. And he was sharp enough to realize that he needed his people to qualify the leads they were getting BEFORE the sales folks went out to make the big commission bucks. So what did he do? He had some of the salesmen team up with marketing support staff to show them how to qualify (back in the day, this was something the sales people did, prospect, qualify, then sell, but now this method has changed to having marketing support personnel do the prospecting and in the course of that, the “qualify” step was dropped out, but this guy was smart enough to realize that).

But for the most part, small and even medium sized business is in deep doo-doo, as far as I can see. These guys have had so much smoke blown up their butts by politicians and consultants about how they’re the “engine of the economy”. They just can’t understand why someone wouldn’t want to work from 8-5 at a job that involves considerable rejection (they short the hours just enough so that the employees are classified as part time, but effectively they are working full time) and lousy pay, not to mention driving 45 minutes to even get to the job. They really don’t get it when you patiently explain to them about the cost of gas and drive time and you’d think they would, since presumably they have to pay at the pump just like their employees.

Oh, yeah, that’s another thing you hear bellyaching about, how their employees have transporation problems and don’t have decent cars. Well, you gotta have money or credit for a halfway decent ride. And these guys want people with dependable transportation, which I can understand, but people can’t afford cars or gas or repairs if they can’t make the money to cover those things. DUH!

After what I’ve seen recently, small business is in a real state of shambles. Some will make it, some won’t. True to the victim mentality that has infected the US, many of these guys blame “socialism” and the fact that people are getting food stamps and unemployment for their hiring woes. LOL! Talk about denial!

Comment by palmetto
2012-01-30 08:06:45

Oh, yeah, here’s another gem: Let’s hire college students!!! But, but, why can’t those college students work full time? Why do they have to take classes? How come they have transportation problems? Can’t they afford decent cars? (Tampa Bay area sucks for public transportation)

That’s another trend I’m seeing. Whereas not long ago, these businesses were only hiring for 20-25 hours a week, now they want “full time”. They call it “part time” (35-38 hours, which is effectively full time, IMO).

So, more people want to hire, and offer more hours, but I think a lot of their potential personnel disappeared during the pucker-butt period.

Comment by turkey lurkey
2012-01-30 08:11:28

On. The. Head.

Many, many small business owners are just very lucky morons who will claim “self-made” the loudest.

There’s an old saying: “It’s good to save money in business but you can save yourself right out of business.”

Comment by palmetto
2012-01-30 09:02:42

I’m tellin’ ya. I listened in on one interview an owner had with an older lady who was perfect for the job. Had lots of experience, people skills and had done some business negotiating back in the day. Exactly what they were looking for.

I think the owner was in the mood to vent. On his part there was lots of desk-pounding and preaching about work ethic. He kept repeating loudly “It’s HARD work”. She just wanted some part time hours (that’s how the job was advertised), but he wanted that bogus part time/full time arrangement. She didn’t need any benefits, either and didn’t ask for them. Oh, also a lot of talk about his business and how it had changed, etc.

They did want to hire her, but wanted her to know who’s boss first. Yep, they sure told her. She graciously declined. Gee, can’t imagine why.

Comment by palmetto
2012-01-30 09:41:57

Oh, another constant complaint is the quality of the prospective employees they get. Where do they advertise? Craigslist. Why? It’s free. Didn’t get any good potential employees (or no one showed up for the interviews)? Put up another Craigslist ad. LOL. That’ll show ‘em.

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Comment by Steve J
2012-01-30 10:58:41

Qualified people with jobs never troll CL job ads.

Comment by palmetto
2012-01-30 11:22:31

However, qualified people without jobs DO troll CL job ads out of desperation. So says my sis in the recruiting biz, anyway. Supposedly recruiters disguise themselves on that site.

Comment by Carl Morris
2012-01-30 13:01:34

I actually found my current job on CL. Maybe it’s different here (I think it actually is when it comes to tech jobs).

Comment by Kirisdad
2012-01-30 08:22:29

Here’s what I don’t get- if FL is a right-to-work state ( i.e. no unions) why aren’t manufacturing companies moving to FL?

Comment by palmetto
2012-01-30 09:03:46

“why aren’t manufacturing companies moving to FL?”

Too expensive to re-locate from China and Mexico.

Comment by turkey lurkey
2012-01-30 10:15:12

Beat me to it.

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Comment by palmetto
2012-01-30 12:06:04

turkey, regarding your comment about lucky morons, that describes it to a T.

Just like some bloated corporations, some of these “small businesses” are rather top-heavy with “management”, relative to the working staff. There’s always a sales manager, then you’ve got the operations manager, the general manager (love that one), the finance manager, the program manager, the field manager, the customer service manager, etc.

The real fun begins when they manage to have a “good month”. The arm punching, back-slapping and self-congratulations is incredible. Not that they did anything to produce that “good month”. It was their sales and tech guys (and gals) who produced the “good month”. Maybe one of the sharper managers came up with and implemented a program that actually worked. But that “good month” is always good for a few management bonuses, cocktails, happy hours, etc.

Lucky morons indeed. They do tend to mimic their betters in the larger corporate world, I’ve noticed. Monkey see, monkey do. They had a good month. Must be because they’re such incredible managers.

Comment by palmetto
2012-01-30 12:21:00

Oh, I forgot the “office manager”. But that doesn’t really qualify, since the “office manager” is usually some poor low paid put-upon woman who doubles as an administrative catch-all and gate-keeper of sorts and isn’t admitted to the towel-snapping boyz club.

Comment by turkey lurkey
2012-01-30 12:35:38

I sincerely wish it were otherwise.

While there are many well run small businesses with good owners, mostly, they are not.

We are our own worst enemy. I’ve seen far too many times when I could prove mom-n-pop would save money by doing X and they could verify it themselves and they STILL wouldn’t make the change.

You can’t fix that kind of stupid.

Somebody said it better than I: “They are small for a reason and they really are almost not worth the time to sell them.”

I’ve fired a few clients. About to fired a couple more this year despite the economy. I don’t work for free.

Comment by palmetto
2012-01-30 13:00:56

mom n’ pop seems to be a thing of the past and maybe that’s all for the good.

What I’m seeing is a groups of “buddies” in the small tech and telecom, home improvement and equipment businesses, repair, automotive, delivery, franchises, those sorts of businesses. Even legal and small finance. Somebody somehow got some money together and they started doing this business and dang if it didn’t grow somehow. Well, they got this old building in a marginal business part of town for offices, but the toilet usually backs up and there’s crap all over the floor because they fired the cleaning service and they’re all too good to do it themselves. And they sit around and assign titles (You be the___________and I’ll be the________) and get business cards and office equipment and phones and such.

And then it dawns on them they need to hire some people to actually bring in NEW business because they’ve exhausted their own resources. So they put out ads for reps and techs and such. And they’re sitting around going “Hey, we’ve got a bunch of stuff (or a service) here and we’re a swell buncha guys and if you get us some customers or clients, we’ll give you____________” Such a deal.

Usually there’s one guy or two in the bunch who has to do all the heavy lifting (actually deliver the product or service), which makes for some pretty heavy duty resentment when the other partners come back from lunch drunk or something.

Comment by Carl Morris
2012-01-30 13:05:18

Lucky morons indeed. They do tend to mimic their betters in the larger corporate world, I’ve noticed. Monkey see, monkey do. They had a good month. Must be because they’re such incredible managers.

I think it’s more human nature than mimicry. It’s the natural state of things whenever the tribe has enough food.

Comment by palmetto
2012-01-30 13:34:27

“You can’t fix that kind of stupid.”

Here’s another kind of stupid you can’t fix: shorting the pay of salespeople and techs while doing business on their dime. I wouldn’t believe how prevalent it is if I hadn’t seen it firsthand on a number of occasions (I’ve had personal experience with this myself).

It’s done in a number of ways, like “Well, gee, Joe, we can’t pay you as much for this particular job, the tech got there and had to do this and that, it kinda reduced the profit, ya know? We’ll take care of ya on the next one”. Or Joe, who is really good at selling, lands a bunch of business and the sales manager, whose son has just come on board in sales, starts giving the good leads to his son, who bungles things and doesn’t get the sales, but still gets a nice “draw” against non-existent commission.

What’s the strawberry-nosed sales manager doing? Penalizing the good sales guy and rewarding his son, who isn’t selling. What’s that result in? Lower sales. And where’d the money go they shaved off Joe’s commission on the job above? Well, Pete, the general mis-manager, his wife needs a new vehicle to run the kids back and forth to private school. So he needs a bonus, because Randy, the owner, is his best buddy and he says so.

That’s some serious stupid.

Comment by turkey lurkey
2012-01-30 14:53:12

Seen many a good business killed by all that.

Comment by rusty
Comment by In Colorado
2012-01-30 12:49:49

100 jobs. How many were lost when the Shuttle program ended? Thousands?

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Comment by drumminj
2012-01-30 08:25:44

My girlfriend recently got a job at a small business that does “get it”. It’s a doctor’s office that charges a monthly fee in addition to the cost of treatment - effectively a “club” where the fee basically guarantees a level of treatment. The docs have a very open schedule and will spend as much time as necessary with each client.

The docs want to project a certain image — it’s what differentiates them — and so it’s very important to have folks look a certain way (very professional) and also project a certain level of “friendliness”.

Anyway, the docs know that not everyone can afford the type of clothes they want everyone to wear, so they actually provide a stipend for it and will take them shopping. Additionally, they buy expensive parking passes downtown to help ensure their staff is on time every day.

Comment by palmetto
2012-01-30 08:48:43

See, that’s what I’m talking about, drummin. The one guy I worked with who does get it (and interestingly, he was a career middle manager with a major corp who got laid off after 20 years and now manages a marketing program for a small to medium sized territory based business) is realistic about the sort of people he manages and understands their issues. As he says “we’re talking part time $10.00/hour employees here, fer chrissakes”. He got the owners to agree to pay for driving time for employees to get to different locations. He makes sure they get their bonuses (which were “falling through the cracks” before). He’s flexible if someone has to leave early, or change hours, or needs to take a day off here and there.

Don’t get me wrong, he only does this for decent, relatively stable workers. He has no problem firing non-productive personnel. But he gives them a chance, first. He’s even hired some semi-disabled folks who have turned out to be quite good.

The company wouldn’t have a program if it weren’t for him, he really knows how to manage at a down and dirty level. Of course, some of his pay depends on how well his outreach team does, so that’s why he’s more flexible with the good ones. He’d rather put up with someone who’s five minutes late but produces the prospects than someone who’s always on time but can’t get the prospects.

Comment by aNYCdj
2012-01-30 10:51:19

You guyz are making me sad, I would love to find employers like this…I used to but the last few years they all but disappeared.

——See, that’s what I’m talking about, drummin. The one guy I worked with who does get it

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Comment by palmetto
2012-01-30 12:31:16

Well, the jobs I’m talking about are jobs that people generally don’t want to do, like prospecting, both in-office and on-site. These jobs require skills that can’t be taught. You are either able to talk to people or you can’t. You are either able to take rejection or you can’t. Pretty much anyone can learn Microsoft Office products, Excel, Powerpoint, etc. But not everyone has the people skills and cojones needed for some of these jobs. Or the ability to think on their feet (or azz, if they’re hooked up to a headset.)

Some who never did stuff like that before have found that they actually can do it.

There’s a whole outsource industry that’s grown up to fill this need. Except their approach is generally to throw enough sh*t against the wall and see what sticks. And they charge a pretty penny, so a lot of small and medium bidnidz have caught on that they couldn’t possibly do a worse job than these outsource firms, and they can do it cheaper themselves. It’s just a matter of who are they going to use to do all the hiring and training and implementation and deal with all these front line, low paid folks with issues.

Comment by palmetto
2012-01-30 12:37:56

And you have to have a program manager with the patience of a saint. The guy I met is exactly like that. I don’t think he ever met a person he didn’t like. (Well, maybe one or two). I have never met such an even-tempered guy. He just rolls with the punches. When he gets blindsided by one thing or another, he just shrugs and smiles and solves the problem. His staff love him. I’m convinced that some of them could probably move on to something better, but stay on because they like working for him.

His motto? “People are people, ya just gotta understand them”.

Comment by Steve J
2012-01-30 11:01:15

Buying everyone matching scrubs would seem like an inexpensive alternative.

Comment by RioAmericanInBrasil
2012-01-30 10:11:56

We’re talking about $10.00 (plus bogus incentives) an hour marketing support jobs, no benefits.

Uniquely American… Phil Gramm (The Gramm–Leach–Bliley Act, also known as the Financial Services Modernization Act of 1999) was right when he said the recession was “mental” and that America is a nation of “whiners”.

It’s time to buck up and quit whining. Look. 32 years is not enough time to make a judgment on trickle-down economics. It’s going take much longer than only 3 decades of the rich getting richer to achieve the much promised benefits for the middle-class. We need to double down and give it another 30-40 years. And this is why we need to eliminate the capital gains tax. Right now it’s theft. A producer making 50 million dollars a year is having to pay 15% of that in taxes but the parasite guy he’s giving a $10 an hour job to is paying no federal taxes and this means that the guy with the $10 an hour job is stealing the hard earned money of the guy making 50 million a year and this is unfair and I never got a job from a poor guy before and why do liberals hate the rich?

Comment by Darrell in Phoenix
2012-01-30 10:31:14

My sister worked for a company that wholesaled brick-a-brack type collectibles to, well, mostly to Hallmark type stores. You know, figurines, collectible plates, ornaments, etc.

She would go drive around from suburb to suburb visiting pretty much any store she could find that might like to carry her stuff. It was 1099, pure commission.

The problem was, that they were having trouble getting sales people to move up to district management. They needed people to process the orders, qualify customers, ensure payments, perform training, etc. However, they didn’t want to pay these people enough.

SO, they came up with a policy that district managers could direct sell to stores on commission. They could get paid to do the paperwork, but could also run their own accounts.

Well guess what. The district managers would just pouch accounts off the sales people in their district.

My sister had several of her best customers, that she’d spent years developing, suddenly taken over by her boss. She was told that she could not sell to them.

Letting the district managers poach the best accounts allowed them to have district managers without really having to pay them what they were worth.

AND, it then cost them all their best sales people.

The company no longer exists.

Comment by Steve J
2012-01-30 11:05:39

Screwing over your sales people is a time honored tradition of bankrupt companies. I think it’s called the ‘Circuit City’ approach now.

Comment by polly
2012-01-30 11:08:55

The unintended consequences of incentives.

Comment by Happy2bHeard
2012-01-30 18:39:18

“the corporate unit guy has a really scintillating position that’s 1099, with a three month runway until any income is realized and then another month to get paid”

It doesn’t take people very long to figure out that they can’t afford to work at a job like this. It doesn’t matter if you will pay me $5K per month starting in 4 months if I know I will be homeless in 2.

Comment by jeff saturday
2012-01-30 07:32:33

“No more red tape. No more runaround from the banks,” he pledged.

To qualify for HARP 2.0, borrowers must be current on payments, have no late payments in the past six months and no more than one late payment in the past 12 months.


Where is the shock, the anger , the outrage? The failure to question why the CEOs who are paid MILLIONS of Dollars can’t get the computers reprogrammed to DELETE a requirement is mindboggling. Also how abt a follow-up story on how many mtges in Fl are current…….
6:56 PM, 1/29/2012

“Also how abt a follow-up story on how many mtges in Fl are current…….”

How many mtges in Fl are current and upside down? Not many.
jeff saturday
7:26 PM, 1/29/2012

Because of all of the bureaucratic runarounds, most all ofthe people who formerly qualified will no longer qualify due to they are no longer current on their mortgage payments.
So much for Presidential Executive Orders…
Obama blew it - He should have made the housing / foreclosure crisis his priority instead of Obamacare which is turning out to cost us a fortune…
Prescriptions that used to cost me $8 now cost me $30…
I guess it is time for another change…
Just N Observation
9:19 AM, 1/30/2012

http://www.palmbeachpost.com/money/real-estate/as-aid-access-eases-in-foreclosure-crisis-barriers-2133127.html - 76k -

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:35:39


1) I see no sign to date the eurozone debt crisis is anywhere near resolved.
2) The centipede still has a hundred or so shoes left to drop.
3) Try not to catch yourself a falling shoe to the head.

Jan. 30, 2012, 7:25 a.m. EST
U.S. stock futures lower amid fresh Greece worries
Thomas & Betts soars; Personal income, spending data ahead
By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) — U.S. stock index futures fell on Monday, tracking losses in Asia and Europe, as investors eyed a European Union summit amid fresh worries over Greece’s ability to sort out its financial difficulties.

Futures for the Dow Jones Industrial Average (DJIA -0.80%) fell 70 points, or 0.6%, to 12,544. Those for the Standard & Poor’s 500 index (SP2H -0.84%) declined 8 points to 1,304.50.

Futures for the Nasdaq (100 ND2H -0.89%) shed 15 points, or 0.6%, to 2,441.25.

A new month begins with a barrage of data, from manufacturing surveys to unemployment. Markets also will absorb quarterly results from Exxon Mobil, Pfizer, UPS, Amazon and more.

China stocks reopened lower after a week of holidays and the Stoxx Europe 600 index (XX:SXXP -1.19%) fell 0.8% to 253.51, as tensions appeared to be brewing over Greece ahead of a summit of European Union leaders set for later on Monday.

German Finance Minister Wolfgang Schaeuble said in an interview with The Wall Street Journal on Monday that Greece must take the necessary steps to get its economy and finances in order, or euro-zone leaders may not grant it a fresh bailout.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-01-30 07:37:44

“Risk-off” = “The theater is on fire! Quick — run for the exits!!!”

Treasurys draw buyers
U.S. pivots to risk-off trade

Investors train their attention on European Union leaders’ Brussels gathering. M&A also figures in the mix before Monday’s opening bell, but the mood on Wall Street’s bearish.

Comment by Ben Jones
2012-01-30 09:06:36

You can’t make this stuff up.

Stun gun vs Occupy DC: Cops tase protester in pj’s


Check out what’s printed on the guys red shirt as they take him away. Not suitable for children!

Comment by palmetto
2012-01-30 10:02:59

I was trying to read it. I got the gist, but couldn’t make out who he was referring to.

I’m sure the female cop who tasered him went all moist with delight. Nothin’ says war between the sexes like tasering some white trash looking guy. You can almost hear her thinking “Well, he’s not an older, toothless Vietnam Vet with an open beer can, but he’ll do.”

Comment by Ben Jones
2012-01-30 10:18:17

You have to pause it to see it clearly. I’m pretty sure if I was running around the local park in my PJ bottoms with that shirt on, I’d get arrested too.

Comment by turkey lurkey
2012-01-30 10:21:38

:lol: Too true. There’s free speech and then there’s discretion, but it’s still a civil rights violation to arrest people for speech in public of any kind… except incitement to violence.

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Comment by RioAmericanInBrasil
2012-01-30 10:41:27

I was trying to read it. I got the gist, but couldn’t make out who he was referring to.

It has a hand with a finger pointing towards his left printed above the text “he loves it in…..” An interesting jail-time shirt.

Some hostile comments from the youtube site: (Maybe from Europeans or Arabs?)

“You call your selves activists, but all i see are pacifists. No wonder people cant get sh$t done. Learn to back eachother the f*&k up.”

“expect nothing from sheep,,in egypt they’ll make chicken soup out of that b!t@h with the taser gun..”

Comment by palmetto
2012-01-30 11:54:42

Ah, a raunchy version of “I’m with Stupid”, perhaps?

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Comment by turkey lurkey
2012-01-30 10:19:13

By god those are the pajamas of tera-ists!

Pajamas of mass destruction fer gawds sake!

Comment by Steve J
2012-01-30 14:13:32

Sleeper Cells.

Comment by turkey lurkey
2012-01-30 14:57:04


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Comment by Prime_Is_Contained
2012-01-30 18:20:38

LOL! That was a great one, Steve! :-)

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Comment by cactus
2012-01-30 11:44:38

maybe this is already posted ? I’m at work so I have to post and dash. I think its a big headline? I’ll check it out this pm

NPR and ProPublica released an explosive report Monday that found government-owned mortgage giant Freddie Mac betting against the very homeowners it is supposed to help. According to the news article, the investment division of Freddie Mac (or as Henry calls it, Freddie’s “gambling desk”) placed billions of dollars of bets against homeowners who were trying to refinance their mortgages at lower rates.

According to NPR/ProPublica’s review of public documents, Freddie Mac invested in securities called “inverse floaters,” which receive all the interest payments from a specified mortgage-backed securities. “If lots of people ‘pre-pay’ their old loans and refinance into new, cheaper ones, then Freddie Mac starts to lose money,” ProPublica’s Jesse Eisinger and NPR’s Chris Arnold explain. “If people can’t refinance, then Freddie wins because it continues to receive that flow of older, higher interest payments.”

Comment by measton
2012-01-30 12:20:12

Nice to know who was on the other side of those. This doesn’t sound like they bet against home owners it sounds like they bet against themselves. My guess is that this is yet another way to transfer the problem to the gov and wealth to some unknown entity. They had to know that interest rates would drop and people would refi. I want to know who is on the other side of this trade. My guess is a nameless faceless Hedge Fund that the PTB is heavily invested in.

Comment by turkey lurkey
2012-01-30 12:40:14

Sometime during the 1700s, England passed a series of progressive maritime laws, one of which was that only the principle owners of the ship themselves and the owners of the goods being shipped… could buy insurance for the ship and cargo.

Think about that for a second. Sound familiar?

Comment by turkey lurkey
2012-01-30 12:43:49

Sorry. That was little vague.

The laws were passed against what was then, hedge funds for shipping.

In other words, there was incentive and much speculation in favor of the ship not arriving. Ever.

Some pirates never set foot on a ship.

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Comment by Darrell in Phoenix
2012-01-30 13:16:39

Comment by polly
2012-01-30 10:48:00

“The details of how it could come about are fascinating. When I was a kid, we were 4 people in a 1400 square foot 3/2 on a quarter acre.”

We had 7 in a 1600 4/2.

“No AC at all.”

Ditto. We did have an evap.

“about 7 channels came in.”

In L.A. it was 2, 4, 5, 7, 9, 11, 13 and a couple UHF.

“Meals were meatless 2-3 times a week”

Spaghetti, bean soup, some Welsh cabbage stew thing my mom grew up on. Every once in awhile, we’d get a choice cut of round steak… is it meat, is it bubble gum? Not really sure.

“Ate out rarely if at all.”

We would eat out if we were on a road trip or some such, but just as a regular routine? No way.

We had a drive-in that charged by the carload. We would pack the 7 of us, plus half a dozen neighbor kids into the station wagon and go to the movies with a jug of kool aid and popcorn we popped at home.

“We depended on my grandparents for hand me down cars, child care, rides to the store when dad was at work, entertainment (they lived near a lake) and providing a meal at least twice a week.”

We didn’t have family in the area. We had beater cars. Mom would work seasonal at KMart to pay off the xmas presents on lay away.

“What part of this is coming back? The whole thing only really worked because of the extended family support and a stay at home parent.”

I suspect there will be a lot of kids living with their parents until they are in their upper 20s if not 30s.

Heck, with 1 or 2 kids now the normal, many may have kids at home until it becomes the kid’s home and the parents are considered living with the kids instead of the other way around.

When I lived in Hawaii, this seemed to be not too uncommon. If I recall, the average household in Hawaii had 4 wage earners.

Comment by Blue Skye
2012-01-30 17:24:19

We got our first car when Grampa passed away. My folks had been married for over ten years by then. Long distance phone calls were as rare as holidays. Most of our toys in that pre-electronic era were found things. I admit I usually got something cool, like lincoln logs at Christmas. There were no credit cards, period. Clothes were hung to dry. One of the neighbors had a TV. Bunk beds. A varnished peach crate served as a dresser, with a drawer built in the closet reserved for me as well. A special meal was Roast cooked to death in the pressure cooker, with carrots and potatoes. Roast was cheap. Still my favorite meal. Mom canned tomatoes. Mom sewed a lot of clothes. I had to wear a bow tie to Sunday school, yuck. Vacation involved tents. Jeans got patched, as did the elbows of sweaters. Butter and sugar sandwiches were a coveted snack, when cookies were not on the go. Math was done with a pencil. Cars had keys but they were rarely used, if you didn’t lock the ignition you didn’t need it. “Your” and You’re” were not interchangable. It wasn’t really that long ago.

Sure, lots of these things are not going to come back, but still, life can be much simpler and be fine. Most of the things we “need” are just habits.

Comment by Prime_Is_Contained
2012-01-30 18:30:07

Great post, Blue Skye! Some of those things sure triggered memories for me! :-)

Comment by Realtors Are Liars®
2012-01-30 19:41:14

Wow blue…. you just brought me back in time 40 years.

Comment by In Colorado
2012-01-30 20:31:16

I grew up in SoCal in the 60’s. Our home life was nowhere nearly so austere, and my dad was a lowly tool & die maker.

Comment by Blue Skye
2012-01-30 21:22:47

We were in Buffalo in the 50s. Austere? What are you talking about? We were Middle Class! Not like there was snow blowing in through the clapbaords in the back bedroom of the farm house. That was the other side of the family.

We had a “transistor radio” and a refrigerator (Einstien’s absorption techinque - really cool) rather than an ice box. Milk was delivered and there was recycling! A guy with a truck drove down the street every week and you gave him any scrap metal you didn’t have a use for. We even had a dalmation named Dal.

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Comment by Prime_Is_Contained
2012-01-31 01:11:20

Einstien’s absorption techinque - really cool

It took me a long time to understand how you could cool something by burning propane… Doesn’t burning generally produce heat?? :-)

Comment by Muggy
2012-01-30 18:53:37
Comment by rms
2012-01-30 19:43:43

Emperor Gingrich’s decree…

“Gingrich’s Day 1 agenda: Repeal health care, eliminate new financial rules and fire the czars”
http://tinyurl.com/7z2nkgm (washington post)

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