Bits Bucket for May 29, 2012
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Spanish retail sales dived in April, showing the biggest fall since the figures started being collected in 2003.
Sales fell 9.8% last month compared with the same month last year, after adjusting for calendar differences, according to official figures from the National Statistics Institute.
http://www.bbc.co.uk/news/business-18246886
Ireland’s government has been doing the same, making inroads into an enormous budget deficit and recapitalising a near-collapsed banking system. The policies have been painful - the Irish consume 12 percent less than they did in 2007 - but Dublin has won praise around Europe for acting hard and fast.
Unfortunately, it may not matter. The political crisis in Greece and banking woes in Spain now threaten to end the modest Irish recovery spotted by Martin on last month’s flight.
“I think if there is a major crisis, people will literally stop spending money. That little bit of confidence that was coming back will be gone,” said Martin, who employs 20 people in three cities
http://www.reuters.com/article/2012/05/29/ireland-contagion-idUSL5E8GNBRR20120529
stat, the official Italian statistics body, said Italy’s manufacturing business confidence index fell to 86.2 from 89.1 in April, below a consensus forecast of 88.7.
Economists warned that conditions would only worsen, with some of the tax increases introduced by Mario Montin, the prime minister, due to kick in later this year. He has vowed to implement a €20bn (£16bn) austerity plan to eliminate the deficit in the next two years.
http://www.telegraph.co.uk/finance/financialcrisis/9295618/Italian-business-confidence-falls-to-three-year-low.html
Austerity is working well in Europe; and yes it may be necessary, but it isn’t popular.
Spain Delays and Prays That Zombies Repay Debt: Mortgages
(bloomibergi)
“Spanish banks are masking their full exposure to soured property loans while they continue to prop up insolvent “zombie” developers, leading to credit-rating downgrades and plummeting share prices…
The Economy Ministry says that Spanish banks have 184 billion euros of developers’ loans and assets that are “problematic,” while the remaining 123 billion euros are performing.
Many Spanish banks are avoiding property sales so they don’t have to make “mark to market” valuations…. “The larger banks have been selling bits and pieces and can absorb the losses,” Manso said. “Smaller savings banks are acting in bad faith in their refusal to allow transactions and saying they can’t mark to market because there isn’t one.”
———-
Sounds familiar…
“I think if there is a major crisis, people will literally stop spending money.”
Macro clashes with Micro.
For the good of all everyone (Macro) needs to keep the money flow going. But for one’s own good (Micro) one needs to cut back on his spending.
For the good of all everyone (Macro) needs to keep the money flow going. But for one’s own good (Micro) one needs to cut back on his spending.
Precisely Keynes’ point. When times are tough, people quit spending. If the government does too, we enter a deflationary spiral that feeds on itself, as people spend less, which causes the economy to contract, which causes the government to reduce its spending in response to its diminishing tax revenue, which causes the economy to contract further, which causes people to spend even less, which causes…
and you think this cycle can be sustained forever?
and you think this cycle can be sustained forever?
Hard to say how long and low a deflationary spiral can go, as a major war usually results, and the government spending spurs the next recovery.
As I’ve said, some will take their stimulus no other way.
The cycle bottoms out eventually regardless of what government does, but it will bottom out sooner and with less destruction if government maintains spending. The theory runs into trouble, however, if said government has gone so far into debt that there is a default risk.
default risk? it’s not gonna take a defualt.
when the interest rate rise just a few 100 basis points…the u.s. is toast.
The question I think is, “What’s the “Keynesian Limit”"?
I’d define the Keynesian Limit as the multiple of GDP that debt can reach before the system “breaks”. The range of L-K would be from 0 to N, where N is a non-negative decimal value.
“Break” can mean a couple of things: 1) The currency is no longer a credible store of value (hyperinflation) or 2) Some shock leads to default (e.g. sudden interest rate rise).
OK, so it sounds like what we’re really saying is that Keynes theories work similarly to how double-or-nothing your way out of gambling debts works. As in, it actually works pretty well right up to the moment some outside force cuts you off and it all goes horribly wrong.
right up to the moment some outside force cuts you off and it all goes horribly wrong.
You mean like a Reagan/Greenspan team that thinks any brakes on a boom is commie interventionism in God’s work?
You can’t blame Keynes for people choosing to follow another, different, economic philosophy- in this case, monetarism- which leads to disaster.
We can debate what is or isn’t Keynesian theory, which is a nice academic discussion. Or we can debate whether the current path we’re actually on is a beneficial or destructive path.
We can debate what is or isn’t Keynesian theory, which is a nice academic discussion
Or we can ‘git-r-done’, right? Lol.
Don’t you think that mislabeling a philosophy may serve to discredit a philosophy that worked well, but didn’t work in the way that those doing the mislabeling want the economy to work? ie it created a string middle class, a consistent rule of law, and put the 1% on a leash.
The mislabeling gets in the way of determining what actually will ‘git-r-done’.
“OK, so it sounds like what we’re really saying is that Keynes theories work similarly to how double-or-nothing your way out of gambling debts works.”
Actually, no. This is how I would apply Keynsian theory. The government would base their budgets on the actual expenditure from 3 years previous. Under normal circumstances of some level of economic growth, this would produce small surpluses that would accumulate as strategic reserves or some such.
The government would have the right to keep the budget fixed instead of reducing it if that is what should happen based on receipts from 3 year ago. This would draw on the reserve. This would prevent having governments cut spending in response to an economic downturn, which reinforces the deflationary forces.
Another possibility would be to give the government the right to implement emergency expenditures to a maximum of 10% of the reserve.
Everyone defaulting on their debts. Then those who still have jobs can spend again, and the distribution of wealth is more equal.
Everyone defaulting on their debts. Then those who still have jobs
Who would still have jobs if everyone defaulted on their debts?
Alpha-sloth has a major point.
Money is debt. As debt defaults, money poofs out of existence. As money poofs out of existence, economic activity slows, leading to lay offs, and feeding back into more defaults, more money poofage, and further slowing economic activity, and additional rounds of jobs losses.
The negative feedback loop is multiplied if you have money flowing out of the economy via trade imbalances. We currently have a global economy that required MASSIVE new debt creation to fund the trade imbalances. Debt collapse not only poofs much of the existing money, but it also crushes the ability to generate new debt/money needed to fund the imbalances.
“Who would still have jobs if everyone defaulted on their debts?”
Primary producers. Farmers, miners, fishermen, that kind of work.
Ultra limited secondary producer/services like refineries. Maybe a cannery? Ammo factory?
“Vital” service providers. Doctors, lawyers, maybe some engineers. Most of .mil. Not pirate shop and scrapbook store retail.
Generally speaking, small to very small firms.
Pretty much look at who still has a job in rural america
Farmers, miners and fishermen all use debt extensively. If all the debtors stop paying, where are they going to borrow the money they need to do all that primary producing?
We aren’t talking about little house on the praire here with the seed corn behind a false wall in the back room.
We aren’t talking about little house on the praire here with the seed corn behind a false wall in the back room.
I remember that part of the story :-). I thought it was wheat, though? But yeah, they tried to keep it a secret even as everyone in town was starving…
“Farmers, miners and fishermen all use debt extensively.”
And the USDA and its’ banks loaded up farmers with debt back in the 1970’s…. New silos, new equipment, new milking parlors… you name it….. then milk prices collapsed and farmers went bankrupt left and right. Destroyed.
Yeah…. debt is great.
“For the good of all everyone (Macro) needs to keep the money flow going”
Perhaps true in a system without significant parasitic drains. Otherwise, a lower level of excitation results in a more stable system.
“Perhaps true in a system without significant parasitic drains.”
Yup. And that’s something the Keynesians never, ever mention…
parasitic drains.
Yup. And that’s something the Keynesians never, ever mention…
No, Keynes was well aware of the dangers of a rapacious 1%. That was why he was only half-joking when he said it would be better to bury the money and have people dig it up, rather than them having to borrow it from the banksters.
I don’t think there are many Keynseisans out there, though they invoke his name. The idea of spending everything you have, and more, during the good years and then borrowing like crazy to keep the party going doesn’t appear in his writings, does it?
The idea of spending everything you have, and more, during the good years and then borrowing like crazy to keep the party going doesn’t appear in his writings, does it?
No, Keynes calls for government austerity when times are good- to reel in the boom cycle, and government stimulus when times are bad- to end the deflationary bust cycle.
It’s a counterweight thingy which worked well for decades until it was discarded in the 80s by Reagan, his boy Greenspan, et al. At which time we see the beginnings of today’s problems- great wealth disparity, loss of the middle class, robber barons, crony capitalism, massive credit bubbles blown by a deregulated financial sector, the return of the boom/bust cycle, etc.
Bush tax cuts #1 & #2 prime example of anti-Keynseisan sabotage(thanks to Grover Norquist). In fact, if you add in the wars+Homeland Sec. there was no way Keynseisan economic policies could overcome the debt crisis. What should have been done in 2008 was a complete roll-back of Bush era tax cuts + raise them 20% for the top 10%, restart the draft and cut the DoD by %30. Establish free Govt. universities in every state large enough to put out 50,000 Phds. a year. Put in single payer health system.
None of this stuff happened so now we live under a plutocracy. I do think Romney will make it worse though.
There is not a problem in the world that can not be solved with higher taxes and a bigger government.
Here is a hint:
Defense spending is about 20% of federal government spending (and shrinking)
Entitlements spending is about 55% of federal government spending (and growing)
The US government borrows 40% of every dollar it spends.
You are going to need a bigger boat…
———-
Bush tax cuts #1 & #2 prime example of anti-Keynseisan sabotage(thanks to Grover Norquist). In fact, if you add in the wars+Homeland Sec. there was no way Keynseisan economic policies could overcome the debt crisis. What should have been done in 2008 was a complete roll-back of Bush era tax cuts + raise them 20% for the top 10%, restart the draft and cut the DoD by %30. Establish free Govt. universities in every state large enough to put out 50,000 Phds. a year. Put in single payer health system.
I agree….
Bush tax cuts #1 & #2 prime example of anti-Keynseisan sabotage(thanks to Grover Norquist). In fact, if you add in the wars+Homeland Sec
You forgot the medicare prescription drug plan.
This is the starve the beast mentality. They want to destroy medicare social security and create a society of elites and proles similar to what you see in third world countries. Democracy falls to the way side once all the wealth has been consolidated into a small # of hands and you have things like Citizens United.
The US government borrows 40% of every dollar it spends.
But not for those “entitlements” you seem to hate so much, which are funded via the payroll tax. But for your beloved wars of aggression, yes we borrow up the wazoo. And it’s actually worse. If you factor out SS and Medicare, the percentage borrowed for every dollar spent gets worse.
“This is the starve the beast mentality. They want to destroy medicare social security and create a society of elites and proles similar to what you see in third world countries.”
And we are well on our way there, with half the workforce in Lucky Ducky mode. Its beginning to suck so bad here that the illegals are starting to go home on their own.
Here is another hint.
There is NO lock-box for SS or separate accounts for SS or a private stash for SS from your payroll taxes.
IT ALL GOES INTO THE GENERAL TREASURY.
LBJ (D) did that to cover the true cost of the Vietnam war. Every president since then has kept the scam going (including obama).
Medicare is another story. It has never covered it expenses.
I don’t “hate” entitlements nor do “belove” war (nice strawman arguments) - but we need to be able to afford what we pay for.
Because if you can’t - there will be NOTHING when it collapses. And it WILL collapse.
———————————-
But not for those “entitlements” you seem to hate so much, which are funded via the payroll tax. But for your beloved wars of aggression, yes we borrow up the wazoo. And it’s actually worse. If you factor out SS and Medicare, the percentage borrowed for every dollar spent gets worse.
Comment by scdave
2012-05-29 07:52:32
I agree…
Just to be clear, I agree with Blue Skye….
Bye the way, how would a privatize SS (Bush) would have worked out for a retiree in the Fall of 2008 ??
Grover Norquist naively underestimated the fecklessness of politicians. He innocently believed that by limiting tax revenue, government spending would have to be reigned in. Politicians smiled and winked at each other. And they redoubled their borrow and spend tactics. “No tax increases? Sure. Ain’t gonna have any impact on our spending by the way.”
Now, if ol’ Grover asked them to sign a pledge for no spending increases, they would have burned him in effigy on the Capitol steps.
49% of households now have a member dependent on the govt for some form of welfare.
But it’s those dastardly Bush tax cuts (that led to higher tax revenues after passed) that are to blame.
49% of households now have a member dependent on the govt for some form of welfare.
I don’t think “dependent” is the right word in all cases. I think the 49% number comes from everybody receiving a check in any form. My wife’s $250/mo check that she gets for the government screwing up her knee is almost certainly included in that. We are not dependent on it.
“I don’t think “dependent” is the right word in all cases.”
Agreed. Plus I’ll bet that number includes people on Social Security. But see how we are being conditioned into making it easier for them to take it away. George Carlin was so right.
49% - that number includes things like social security and Medicare.
“They want to destroy medicare social security and create a society of elites and proles similar to what you see in third world countries.”
I agree. Obama, the Wall Street Obama campaign donors, the Hollywood elitist Obama campaign donors, the global progressives, the social justice community organizers and the so called anarchist (read communist) demonstrators are rushing to bring about exactly what you describe.
The elite leftists will not come out and directly say they want to destroy SS and Medicare, but they are definitely using social welfare spending and massive amounts of unfunded promises like government worker pensions to bring about a collapse of the whole system. It’s the Cloward and Piven strategy, look it up.
So please spare me the right wing boogy man rhetoric. The middle class is being systematically destroyed by the globalists, the progressives and other extreme ideologues from both sides of the aisle. Their greed and lust for power sickens me.
see how we are being conditioned into making it easier for them to take it away.
Nice catch. +5
Simpson-Bowles Plan.
Please. Someone, anyone in congress, come to your senses.
Long phased-in change in entitlement programs, raise revenue through tax code simplification, and MORE progressive code (reduce deductions, make cap gains=ordinary income, lower all rates).
Make it credible enough that the world believes. No more Fed intervention (printing) to keep rates low, the world would flood away from Europe…in even greater amounts.
Where Keynes breaks down is in the face of massive trade imbalances. His policies work, assuming the money that the government borrows into existence stays in circulation. In the face of massive trade imbalances, with money draining out of circulation as fast or faster than we can pump it in, even massive Keynesian spending can not keep an economy inflated.
In the United States, we have a situation where we have to generate new debt equal to 10% of total GDP to keep the economy functioning in the face of our massive trade imbalances, both domestic and international.
In Europe, we have a common currency that was created to persist trade imbalances between member nations by preventing currency exchange rates from adjusting to imbalances and forcing corrections. However, because of massive debts that result from trade imbalances, they can NOT be persisted.
The Euro can no exist long term without creating massive trade imbalances, but massive trade imbalances can not persist without massive debt creation, and massive debt creation can not persist…. Therefore, the Euro can not exist long-term.
If A then B. If B then C. Not C.
Therefore, not A.
It is fundamentally cogent argument that the trade imbalances, and therefore, the Euro that requires them, can not exist long-term.
‘His policies work, assuming…’
Actually, they don’t. Debating economics with these people is pointless because their entire ‘theory’ is balderdash. All of it; it’s been discredited for decades and they still don’t get it. Go ahead if you want to waste time. Next thing they’ll be telling you about space aliens, digging ditches and filling them in, handling snakes to get closer to God, etc.
Why is debate pointless?
That’s a huge statement
“their entire theory is balderdash. ” All of it; it’s been discredited for decades and they still don’t get it.”
Well maybe you can make others see your point of view by engaging in debate. Personally I haven’t seen much evidence that we’d be better off with cutting spending at a time of recession. Certainly Europe has not been a shining example for Austrian’s.
meatson: debate is pointless because it’s not debate. How many times has Darrel’s “Money is debt” statement been discredited? has it changed anything? Does he still continue to say “Money is debt” ? When you discuss facts and people choose to ignore facts and continue with disproven statements, you stop engaging because you have more constructive ways to spend your time.
I must have missed the discrediting. I’ve heard opinions that differed, but nothing that proved anything to me. Mostly it was people using different definitions of “money”.
Actually, they don’t. Debating economics with these people is pointless because their entire ‘theory’ is balderdash.
truer words were never spoken Ben.
Austerity is working well in Europe;
It’s working well if the goals are the end of the euro as we know it, and the destruction of the PIIGS’ economies.
Now we call running out of credit “austerity”. No one has to destroy the European economies, they baked it in the cake when they borrowed to live beyond their means.
Euro-FLOP!
European countries will go back to their own currencies and their own nationalistic interests. As it should be.
Conditions war springs from.
Yeah, that was the propaganda that brought about the EU, with fabulous jobs and perks for Eurocrats in Brussels.
Here’s the scoop on how this “war” propaganda was used.
http://www.telegraph.co.uk/news/worldnews/europe/9289992/At-the-heart-of-Europes-crisis-is-the-abolition-of-the-nation-state-and-the-attempt-to-impose-monetary-union.html
Like I said previously, a monetary union without a political union was doomed to failure. Of course, even the US will eventually fail…
I always thought it weird that Jean Monnet dreamed of fostering a US-type relationship among the European states, but didn’t seem to take into account the different languages and cultures that went with them. The US population was much more mobile and homogenized even in 1950.
I always thought it weird that Jean Monnet dreamed of fostering a US-type relationship among the European states, but didn’t seem to take into account the different languages and cultures that went with them. The US population was much more mobile and homogenized even in 1950.
I found that strange too. Especially when so many of those countries tie their nationalism to a certain ethnic identity.
Take Germany, for example. There are people of Turkish descent whose families have been there for generations. But no way are they going to get full German citizenship anytime soon. Because they’re not German.
OTOH, there’s the United States. A veritable casserole of ethnicities. Oh, yes, we don’t always get along, but for the most part, we make it work. Something about that larger American identity.
“Oh, yes, we don’t always get along, but for the most part, we make it work. Something about that larger American identity.”
I want some of what you’re smokin’! LMAO!
http://www.latimes.com/news/local/la-me-indigenous-derogatory-20120528,0,3018233.story
Wishin’ don’t make it so….
Yeah that Oxnard story was a doozy. That community could use some diversity. Reminded me of that line from The Blues Brothers: We play all types of music, Country AND Western.
Sheesh, someone forgot to tell these folks to all join hands and sing “Kumbaya”.
‘We play all types of music’
It was ‘we play both kinds’.
Anyone else on HBB been watching the Hatfields & McCoys on the History Channel? It’s a doozy, and historically accurate. Two families of similar ethnic background, living in the same area (but different states), warring for over 30 years. How uniquely American!
“Living within our means is now either “impossible” or a sin re-branded “austerity.” So we borrow staggering sums every year to maintain the artifice that the contraption of lies, leverage and debt is sustainable, because we have become so brittle and diminished that we cannot bear the truth or our responsibility for the fetid trash-heap that is the national psyche.” - Charles Hugh Smith
the fetid trash-heap that is the national psyche.
I bet he’s fun at a dinner party.
Did this Charles Hugh Smith raise any complaints back when Bush was increasing the deficit rapidly with wars, tax cuts and the new prescription benefit for Medicare and Cheney said that “deficits don’t matter”? If he didn’t, he should be ignored.
so it doesn’t matter if he is right or not…just how he felt when bush was president…that’s what matters?
i’ll let you research his past opinions on your own…to see if he is worthy of your respect.
“Did this Charles Hugh Smith raise any complaints back when Bush was increasing the deficit rapidly with wars, tax cuts and the new prescription benefit for Medicare and Cheney said that “deficits don’t matter”? If he didn’t, he should be ignored.”
Add up all 8 Bush deficits and that number is less than the 3 Obama deficits added up.
Add up all 8 Bush deficits and that number is less than the 3 Obama deficits added up.
Add the cost of Bush’s wars to his account, like you add them to Obama’s, who was at least honest enough to put them on the books.
Arguably, you should add all the costs of the wars to Bush’s account. They were his disasters.
so it doesn’t matter if he is right or not…just how he felt when bush was president…that’s what matters?
Actually, I’m not sure what the guy might be right or wrong about. He states that the “national psyche” is “fetid trash-heap”. Is that right or wrong? Who knows?
He does express some sort of opposition to the large deficits that the federal government is currently running. If he in fact thought that the large Bush/Cheney deficits were just fine, that would be the exact opposite of Keynesian economics - run deficits in years when growth is good and unemployment is low, but keep the budget balanced in a recession. I’d like to hear some of these Republicans explain why they think that that would be a good policy.
he ususally speaks in terms of overall debt.
there was just as much debt before these huge defecits…it was just private debt.
that all dried up and left uncle sam as the only game in town.
darell in phoenix gets it.
Now we call running out of credit “austerity”. No one has to destroy the European economies, they baked it in the cake when they borrowed to live beyond their means.
Except that Japan has a higher debt to GDP than Greece adn the US has a higher debt to GDP than spain. The difference is we print our own currency.
It’s a question of what the “Keynesian Limit” is for any particular economy. As I noted above, I see the “Keynesian Limit” as the multiple of GDP at which the system “breaks”.
It’s different for the US, Greece, Japan, Zimbabwe. But it is apparent to me that there is a Keynesian Limit, or we could just literally print every citizen a million dollar stack of bills, and proclaim, “Problem solved!”
Typo: “the multiple of GDP” should be “the multiple of GDP of government debt.”
“the multiple of GDP of government debt.”
And that multiple was getting smaller and smaller through every post-WW2 presidency (following Keynesian economics) until Reagan (who essentially fired Keynesian Volcker in favor of monetarist Greenspan).
No, no - the Keynesian Limit isn’t the existing “debt to GDP percentage” to which you’re currently referring.
The Keynesian Limit is the maximum debt to GDP ratio before the system breaks.
As much as Germany doesn’t want to admit it, it needs the PIIGS countries. After all, you’ll never guess where Germans like to go on vacation.
Speaking of Germans on vacation, ever heard of that Ugly American stereotype? Well, the Germans have us beat by a mile. And the residents of the PIIGS countries, who have the misfortune of waiting on them while they’re on vacay, don’t like their behavior at all.
the Germans have us beat by a mile
So do the Brits.
Oh, brother. I could cry you a river about that one too.
When I was visiting my family in County Cornwall back in the 1970s, I heard more than a few pointed remarks about the English coming there for Holiday. (The Cornish consider themselves to be Cornish first, even though the county is very much part of Great Britain.)
To put it mildly, my Cornish cousins were less than amused by the antics of the English vacationers in their midst.
So do the Brits.
The Brits in Krakow last August were horrible. At least the ones ranting on the street outside the club even after it started getting light and normal people were walking past them on their way to work. *Every* night.
Germans would do fine if they didn’t have the PIG countries (I’m leavingout Ireland) for vacations. They do need the rest of the Eurozone to buy their products and to keep the value of the Euro low enough that they can sell those products to the rest of the world. Seriously, they got all the benefit of a major currency devaluation without having to create major inflation within their own borders. The excess cash went into house prices in Spain and whatever they spent it on in Greece and whatever else. The exact issues the German banks have is another story….
the Germans have us beat by a mile
That was my experience hiking the Cinque Terre in Italy in fall 2008. Apparently that’s their holiday season. Very loud. And, the walking sticks. Oh, the walking sticks. A good 90% of them, young and old, would come barreling down the trail expecting you to yield right-of-way to them and their sticks.
“And the residents of the PIIGS countries, who have the misfortune of waiting on them while they’re on vacay, don’t like their behavior at all.”
I don’t doubt what you say, but what do they have against the Germans? I’ve met more than a few on my job, and while these are professionals, I’m assuming that these are the same types that can afford a few vacations. Do they just act differently when on break?
It seems that everywhere I’ve been in the world, I have encountered Germans on vacation, to the point where I wonder what percentage of the German population is actually home at any given time. Can’t say I have had any issues with them. The ones I meet tend to be in groups of two or three, not enough numbers there to cause a stir. They do like to travel, and have plenty of time off from work to do that.
Austerity is working well in Europe;
Working well for who? It sure isn’t working well for most. With falling GDP paying off those debts despite the cuts may be even harder. The rising bond yields suggest this is the case.
Ireland should have let thier banks fail.
College loans are next debt crisis
By Fred Grimm
fgrimm@MiamiHerald.com
Posted on Saturday, 05.26.12
Marlins Park, financed by bonds that will take four decades and $2.4 billion to pay off, makes a perfect setting for commencement exercises. Vice President Joe Biden, when he addresses a happy throng of graduates from Cypress Bay High School in that fancy new baseball stadium on June 4, will be looking out at the unwitting perpetrators of the next great debt crisis.
Biden, nice guy that he is, probably won’t open with, “Hello, you likely deadbeats.” Maybe he should.
Most of the students from the big suburban high school in Weston have college plans. But the next time these kids queue up for diplomas, they’ll also be getting hefty IOUs. Plus interest charges.
Some 62 percent of the grads from U.S. public universities emerge with both a diploma and debt, according to figures compiled by the federal Department of Education’s Project on Student Debt. About 72 percent of grads from private nonprofit universities owe money. An astounding 96 percent of the kids who attend for-profit schools venture out into the real world as debtors.
The study was conducted in 2008. It’s only gotten worse amid a recession and slow, slow recovery, as state legislatures hack away at higher education allocations.
http://www.miamiherald.com/2012/05/26/2818547/college-loans-are-next-debt-crisis.html - 107k -
Most people don’t know that this country was first settled by people in bonded servitude. White people at that.
The roots go deep.
You mean to tell me that Africans weren’t the only ones ever to be enslaved or abused as a people? Really? I’m shocked, I tell you, SHOCKED!
It isn’t slavery when you enter in the contract voluntarily. Or did that little detail escape your racist notice?
In Williamsburg the docents told us that convicts in England regularly chose to go to jail rather than come to work in the brickyards. They got to pick. And their kids didn’t inherit the status.
Some people…
There’s a difference between bonded servitude and slavery, palmetto. Really. You can look it up, even.
And before you start in on the racist claptrap, there’s a difference between being imprisoned and enslaved, too. Oh, and having your offspring sold off as chattel….
“your racist notice?”
“racist claptrap,”
Yawn. Snooze. That word has been so indiscriminately bandied about and misapplied for so long, it has ceased to have any real meaning.
And actually, the only people I really have a problem with are phoney bluenose whites who use it as a weapon against others to alleviate some sort of guilt of their own by projecting it onto others and try to make themselves feel superior. Stick it. I grew up in the Northeast, I’ve seen each and every head game played along that line and I can play it better than either of you if I so choose.
And maybe not in your case, but I always find out, that the biggest racists are those who get rather frantic about hanging others with the label.
“Look over there, not at me!”
No, palmetto, the word is NOT being bandied about or misapplied indiscriminately. Nor is it a “game” that’s being played with you.
Your language is boorish, and its intent is unworthy of Ben’s blog–your constant attempts to deflect responsibility for it by disparaging those of us who call you on it notwithstanding.
How sad you’ve chosen to define yourself with Taki’s ignorant blather and yes, *racist* trolling instead of offering the board something reasoned and thoughtful in its stead. You’re a better man than your words suggest and it diminishes your otherwise worthy commentary to keep inflicting them on yourself like this.
I am shocked as well. It often was other Africans who sold their fellow Africans into slavery.
As it is with Anglos, Anon. The truth is, the real problems people have with “racism” are the jerks among their own races. I’m sure there’s nothing more the Blister Sisters would like to do than sell my speckled old arse into slavery.
I’d rather listen to an hour of the Rev Al than a buncha smarmy bluenosing from a coupla self-righteous cougars.
Palmy you could always watch to these 2 late great preachers….the stuff us late night master control operators were paid to.
http://www.revike.org/
http://www.drgenescott.org/
I used to watch Scott in the 80’s. It was better than the comedy channel. Remember how he would go on about his race horses? I never heard of Ike before, but this is interesting:
UPC Launches
“GOD’S PRIVATE
TELEPHONE NUMBER”
Oh, man, Rev Ike is a CLASSIC. Down in So Flo, we had the Rev. Dr. T.G. Thompson. Used to urge his viewers to put a bottle of water on the TV set and he’d turn it into holy water. Rumor had it that he was a cousin of James Brown. And supposedly JB used him as the model for the preacher in the Blues Bothers.
“the stuff us late night master control operators were paid to.”
Are you old enough to remember 2″ quad, dj?
LOL, we had a late night engineer in master control where I worked back in the day, a funny little gnomey type guy who was severely henpecked by his wife. He used to try to attract young women over the phone by telling them he was “in television”. Yeah, running back and forth all sweaty puttin’ up those 2″ quads. He was definitely “in television”.
Actually WTNH tv 8 in new haven CT used the RCA 2″ quad for commercials this should bring back memories…and this was in 1993 they were so cheap…..they bought 3 of these from a station in Colorado for Nuthin…and paid to have it trucked to CT….
http://www.youtube.com/watch?v=wM_2upiGUO0
Well they easily had over 3000 of those cartridges and it worked with very little failures…..you just couldn’t run 2 10 seconds back to back…
Except that debt was paid off in 7 years.
Student loans - maybe in 20 years. And you can’t discharge them in bankruptcy.
That is correct.
Not only was it paid off, but there some kind of bonus given as well, usually land. Lots of land.
We literally live in a type of corporate feudalism these days.
“He didn’t misread you at all; you just don’t understand the implications of what you’ve written, Mr. “MESNA”. You’re arguing that a kid’s college options should be limited to what he’s able to afford. You and the embarrassingly phony persona you attempt to project here are pathetic apologists for a class that you will never join”
just one of the comments from the article.
It all comes back to how do you foreclose on a college degree?
You spent your money on a tangible item, so return your European Medieval Art History degree and keep working at Starbucks….without the debt….cancelling your degree sounds like a fair trade off.
Would lawyers turn in their degree and law license and work as a paralegal for half the money, debt free?
What percentage of grads major in fluff like “European Medieval Art”? When I attended school those types were but a small majority. Go to any commencement today and you will most likely see a majority getting degrees in Business Administration.
What did the looser who harpooned and killed the London Whale major in?
Philosophy.
Probably objectivism.
Probably objectivism.
Lol. It’s rare to find it taught at colleges. There are a few places that teach it but usually (only?) after getting a grant for a chair from the Objectivist Institute.
Boaz Weinstein, the hedge fund trader in question, is also an expert card player, having been ejected from a casino for counting cards, and having won a Maserati in a poker tournament. He’s also a chess master from a young age, and that connection is how he got into Wall Street.
Green studies?
Women’s studies???? Diversity officer????
How about just plain old “Communications” and “Poli Sci”? Plenty of those degrees going around.
Heck, the COO of my employer has only youthful looks, connections, and a Bachelor of Arts in Liberal Studies from a satellite campus of a not-to-well-regarded public university.
I’m not convinced there is really is a ‘college degree glut’, as only about 30% of Americans over the age of 25 actually have a bachelor’s degree or higher. Only 10% have a master’s degree. Another 29% attend college, but never graduate.
You’re missing something there. It’s true that only 30% of Americans over the age of 25 actually have a bachelor’s degree. It’s also the case that only 20% of the jobs in America require a bachelor’s degree.
I draw two conclusions from these statistics.
1) A college degree is completely irrelevant to the incomes of the vast majority of Americans.
2) We’re sending far too many of our young people to college and have been doing so for decades now.
The problem is most jobs that don’t require a college degree are paying next to nothing. College these days is a lot like baseball spending money won’t guarantee you are around in October (sucessful), but not spending it pretty much guarantees you’ll be watching the playoffs on TV.
” … a majority getting degrees in Business Administration.”
Hence a bubble in Business Administration degrees.
Or degrees in general. If there are no jobs, what good is a degree?
The Metro is full of ads hawking the night school “continuing studies” programs not just at U of Phoenix but at local private colleges; associates degrees or certifications. They try to sell the degree as a way to be promoted or to expand your horizons, but the real reason is to keep the job you have. In our rank-and-yank business environment, you need more and more letters after your name just to avoid being in the bottom ranking and therefore subject to yanking.
HBB poster Jane would know more about this.
“Comment by In Colorado
2012-05-29 07:24:22
Or degrees in general. If there are no jobs, what good is a degree?”
The degree in Biology helped my niece get a job as a waitress.
Was the same in the 90s. ALL of my friends who dropped out of Engineering school went into business…and flourished. Not sure of their current employment status, however.
Student loan debt threat
By Becky Yerak, Chicago Tribune
Published 07:05 p.m., Saturday, April 21, 2012
CHICAGO — Move over, mortgages. Get out of the way, Greece. Another economic doomsday scenario is emerging.
Student loan debt has reached about $870 billion, exceeding credit cards and auto loans, and balances are expected to continue climbing, the Federal Reserve Bank of New York said last month. In February, the National Association of Consumer Bankruptcy Attorneys referred to a “student loan ‘debt bomb’” and wondered if it was shaping up to become “America’s next mortgage-style economic crisis.” Such a burden could crimp an already weak economy.
“Student debt poses a large and growing threat to the stability of our economy,” Illinois Attorney General Lisa Madigan testified March 20 before a U.S. Senate judiciary subcommittee hearing in Washington on the looming student debt crisis.
“Just as the housing crisis has trapped millions of borrowers in mortgages that are underwater, student debt could very well prevent millions of Americans from fully participating in the economy or ever achieving financial security,” Madigan said.
Read more: http://www.timesunion.com/business/article/Student-loan-debt-threat-3500301.php#ixzz1wGSfm3yb
who could have seen it coming?
but…but…my financial advisor told me it would cost half a million dollars to send my kid to a school like harvard in 15 years.
One of the problems with going to the elite schools is that much of the effort was expended on getting in. After you’re there, well, it’s not that challenging. So, enjoy that, ahem, networking time, because that’s what you’re really there for.
BTW, I have it on good authority (via a friend who graduated from Boston University) that the best college parties in the Boston area are at…
…Harvard.
undergrad is irrelevant IMHO.
i do think you get your money’s worth at higher lvles…perhaps.
MBA (for now)
med school
law school
i would never pay for an ivy league shool for undergrad.
So what comes after grad? PHDs for everyone? We’ve devalued everything else, I assume grad school is next.
So what comes after grad? PHDs for everyone? We’ve devalued everything else, I assume grad school is next.
Richard Vedder, of the Ohio State University’s Center for College Affordability and Productivity, quipped that it won’t be too long before kids will need a Ph.D. in order to apply for a janitor’s job. Or words to that effect.
i think the “education debt bubble” will collapse before then.
saying that one will need a PhD to get a janitor’s job = buy now or be priced out forever.
just like housing prices…the cost of education is just not sustainable.
Most common grade now an “A”:
http://gradeinflation.com/
May 29, 2012, 12:03 a.m. EDT
Warning: America’s new Age of Austerity starts now
Commentary: Denials, delays will deepen the impact
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Warning, tighten your belts, America’s new Age of Austerity is already here, today. There I said it. I admit it. And you better too. Prepare now. Could be like the 1930s depression austerity.
You’ve seen the warnings all across the major newspapers about a global slowdown. But why no warnings of austerity dead ahead? Why? America’s still deep in denial. We prefer happy talk to the truth. No, nobody will get honest about austerity till after the elections. Then it’ll hit hard.
Unemployed men in February 1931 queued outside a depression soup kitchen opened in Chicago by Al Capone.
Wake up. You were warned: America’s new Age of Austerity is already here.
Till the elections, nobody else will tell you the truth about what comes with this slowdown: Plan on classic economic austerity. Maybe not austerity as deep as the euro zone’s Spain and Greece. Yet maybe deeper than the 1930s as Nobel economist Paul Krugman writes in his new book, “End This Depression Now.”
Yes, America’s already in a depression. Wake up America, to a long bear market, a recession cycle, to austerity where everything slows down, income, jobs, retail, global trade, and market returns. Listen to the latest warnings just last week:
Austerity is so predictable, so obvious, yet we chose hype and denial
…
“Austerity is so predictable, so obvious, yet we chose hype and denial.”
Hype and denial keeps the money flowing. The cold, hard reality of austerity will stop it in its tracks.
Starts now?
So what were the last 30 years, 5 recessions, falling wages and millions jobs sent overseas? A day at the spa?!
It should be a warning, alright: to the PTB.
Indeed. It was only hidden by a housing bubble and massive HELOC extraction. Now that the home ATM is shut down the reality of stagnant and even falling wages has become self evident in the lack of home and automobile sales.
we already have soup lines…seen the increase in food stamps lately?
+10. If it weren’t for those hated government handouts, the streets would look like the 30’s.
I’m seeing a huge increase in the number of panhandlers at the street corners. Minor intersections, and far out intersections, are riddled with cardboard signs. As an example, there are a couple regulars at the corner of Route 355 and Route 27. (This is 25 miles outside of downtown.) Many of them are immigrants (all countries), many of them are amputees. On nicer days, the charities come out with buckets to collect money for kid’s cancer research.
the charities come out with buckets to collect money for kid’s cancer research ??
We have more important things to spend our money on…Like $1,000,000. Tomahawk missiles…
I hear you on the increase in panhandlers, oxide. That’s certainly the case here in Tucson.
Now, that raises the question of what we are to do to help these people. Many are mentally ill, with a spotty work history, and multiple addictions. Not the easiest set of problems to remedy.
We have more panhandlers at intersections now than I’ve ever seen in my lifetime.
There is actually a tent city near my employers offices.
Breaks my heart.
Well yes. The sequestration is about to be at hand. Well less than a year away and some think the “lite” sequestration has already begun. Defense companies are laying off now.
I am being proactive though. I’m studying like crazy to increase my knowledge in areas of software engineering that are on the commercial side. I am not posting as much partly because of that and partly because I work free overtime too.
I’m studying like crazy to increase my knowledge in areas of software engineering that are on the commercial side.
Bill, if you find yourself looking for a gig, send a note my way. I assume you’ll be looking to stay a contractor (which I won’t be a hookup for), but on the off chance you’re looking for FTE, we’re still hiring like crazy.
Defense companies have bee laying off the last three years.
Defense companies are laying off now.
Thats what I here from a contractor that works @ Lockheed…
Yikes. Our former neighbor is a machinist for defense and aerospace, and they just moved up in rental lifestyle due to his new high paying job. Is aerospace laying off as well?
Three months on the job and they are out of this tenement. Personally, I would have socked some serious dough away, and then moved with a reserve. To each his own. The wife is a stay at home w/4 kids. We’re the only long term tenant left.
Actually Lockheed is in the last stages of breaking the machinist union. They are hiring scabs to put the squeeze on them now here in DFW.
Actually Lockheed is in the last stages of breaking the machinist union. They are hiring scabs to put the squeeze on them now here in DFW.
Look for something spectacular to happen when one of those scabs screws up in ways that a union machinist wouldn’t have.
Say what you want about unions, but you do have to have a certain level of competence to get through the apprenticeship program. It’s not like such programs are a rubber stamp. You have to earn that union card.
We can’t really afford those $300 million F-35s anyhow.
F-35 = “Multi-role aircraft” = not good at anything.
Seems like we’ve learned nothing from the F-111 (or the Douglas B-18).
Disclaimer……the F-111 wasn’t bad, one McNamara got kicked out, and the adults convinced everyone that the two missions (low level tactical/nuclear bomber, and high-altitude carrier-based Fleet Defense fighter) were incompatible.
When you don’t have any real threats you have the luxury (if you want to spend the money) of doing crap that would never work against a real threat. I don’t know any specific details of this plane but I feel safe in assuming it’s mostly a way to create high paying jobs in certain congressional districts.
It’s intent is to replace the F-16, AV-8 and F-18 with a “stealth” platform. One land based version, another with S/VTOL capabilities to operate off smaller aircraft carriers, and for the USMC. Also looking at something that can replace some/all of the previously mentioned types in NATO, etc. Air Forces/overseas sales.
The Brits are involved, because they won’t have an airplane for their new carriers to operate if it fails. The USN will have the same problem in 10 years, when all of the F-18s are worn out…….carrier ops are tough on airplanes.
Putting aside the legal/ethical/moral arguments about war/police actions/peace-keeping, it’s been proven repeatedly that you can’t win without air superiority
(”Win” = at minimum, not losing”
The USAF/USN assumption has been that we can’t afford to “outnumber” Russia or China, so we have to “out quality” them. As the Russians and Chinese get better, we find that maintaining a technological superiority is really expensive (at US Labor pay scales). Aircraft wear out and become obsolete, so they need to be replaced.
IMO, all of the money spent on the F-35 should have been spent on “navalizing” the F-22, making a cheaper “stripper” version to get the production numbers up (to lower unit costs), and to have a platform to sell overseas, without having to worry about the technology being copied/stolen/neutralized…..But I wasn’t asked.
Or we could buy SU-35s from the Russians or Chinese. This presents an entirely new set of problems.
I predict austerity for CA state workers when voters fail to vote yes on more taxes even “temporary ” ones
That and the streets will never be clean again, etc.
Prediction: No bottom in the Case-Shiller home price index will be reached until decreases in U.S. housing affordability are no longer considered “an improvement.”
May 29, 2012, 9:03 a.m. EDT
Case-Shiller home price index unchanged in March
By Jeffry Bartash
WASHINGTON (MarketWatch) - U.S. home prices were unchanged in March, according to the S&P/Case-Shiller 20-city composite index. The three-month rolling index includes transactions that took place from January to March. Over the past 12 months, prices have fallen 2.6% as measured by the Case-Shiller index, which is now at a post-recession and all-time low. “While there has been improvement in some regions, housing prices have not turned,” says David M. Blitzer, chairman of the index committee at S&P Indices.
How can prices fall 2.6%, yet remain unchanged?
‘Tis a puzzlement.
Unexepctedly?
Turns out they “went up” in most places…except for Atlanta, Chicago and Detroit.
Puh Eddie…
Home prices rise in most major U.S. cities
By Christopher S. Rugaber, Associated Press
Updated 11m ago
WASHINGTON – Home prices rose in March from February in most major U.S. cities for the first time in seven months. The increase is latest evidence of a slow recovery taking shape in the troubled housing market.
The Standard & Poor’s/Case-Shiller home price index shows that prices increased in 12 of the 20 cities it tracks.
Prices increased in Tampa and Miami — two of the hardest hit markets. Las Vegas— the nation’s worst market — saw no change in prices.
Prices dropped sharply in Detroit, Chicago and Atlanta.
…
It is in the article. Unchanged month over month, down 2.6% Year over Year.
So…
March 2012 unchanged from February 2012.
March 2012 off 2.6% from March 2011.
My guess: Prices normally go up from February to March, but not this year. And the MSM reporters have overlooked this inconvenient truth, in the interest of not offending their REIC sponsors.
wait, cbs this mornming said the market is coming back??
Yeah, this is unbelievable. This morning I heard on DC news radio that Case Schiller said prices in DC were up 1% from last year, and nationally prices were up 0.2% from last year.
WTF? I know all media must be viewed with skepticism, but I was just looking at Case Schiller:
http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us—-
… and I wonder what the heck they’re looking at. The Case Schiller summary actually states:
“New York, May 29, 2012 – Data through March 2012, released today by S&P Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2.0% in the first quarter of 2012 and was down 1.9% versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8% and -2.6% in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1% compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006.”
I mean, has DC news radio completely dropped any pretense of reporting accurately when it comes to the housing market? I know they’re cheerleaders, but this I see their numbers nowhere in the report.
well…the nasdaq had quite a few ups on its way to the bottom.
The most meaningful change appears to be in Phoenix, where prices according to Case-Shiller are up 6% year on year. This appears to be consistent with what folks were saying last week who live in Phoenix.
We fell HARD and fast.
In my hood, prices fell from $270 insanity level at the peak, down to $100K, below cost of rebuilding, level.
So, up from what?
The Case-Shiller fell from 230 to 99. So, we’re up to 108…. big jump from 99, but minuscule change from the bubble peak. 230. We have increased almost 10 points in 6 months. IF that pace could be maintained (which, of course, it can not) it would still take the better part of a decade to return to peak prices.
In short, LET prices come crashing down to pre-bubble prices, then maybe the low interest rates will lift your prices out of the pits, slightly.
In cities that are still above pre-bubble prices… well, yeah… still falling.
Nationally C-S is at 130. 20 city is at 140, and 10 city is at 150.
We can easily see that nationally we need a 25-30% drop before they too can bottom as Phoenix seems to have done (for now). if we move into austerity mode, or interest rates move off the bottom, then even Phoenix will resume its crash.
Opps… $270K nor $270. $270 for a house would have been a good deal. $270K, not so much….
My understanding is that the Case-Shiller indices look back several months (a pretty lagging indicator).
The 6% change seemed high to me given this. Time will tell if it continues.
Darrell, I think the main point for me is that a year-on-year trend has changed…sounds like you agree that at the Case-Shiller level of 99, we were below replacement cost. What drove us that low?
The answer is sentiment, and supply of distressed housing on the market for sale.
What changed?
I think the answer is a piece of both…less distressed housing on the market, and an improvement in sentiment. Will the decrease in distressed housing continue? And will sentiment continue to improve?
With rates being at all-time lows, there is a risk of partial bubble reflation. I don’t think full bubble reflation is possible, since there are still markets in the tank…no massively loose lending to fuel a full reflation.
Starting to see evidence that this could be a dead cat bounce here in Phoenix Metro. Here is one example: We toured some new home communities in Chandler about a month ago. One of the communities was approaching close out, there were about 15 lots left and due to construction limitations they could not be released for sale until mid May. These homes were kind of cool, very energy efficient but also over priced.
The sales lady at the time told us the last time she released lots, she had people lining up at the door before the sales office opened and a couple of buyers almost got into a fist fight. So with 15 lots left, you would figure the same thing happened in mid May. Got an email from her a couple of days ago asking how our home search was going (we were actually just browsing), she stated there are lots available for sale and to let her know if she could helps us out.
That tells me that interest is waning once the prices reach a certain level, even with the easy money. I would actually be a buyer for this community if the prices were closer to 100/sf vs 125/sf. I am sure they will eventually sell, but for her to contact us shows me that the high flying days of 2005 are not back, at least not yet.
You can rationalize all you want, but home prices are still falling…
General
Home Prices Hit Lows, But ‘We See Signs of Hope’
By CNBC 05/29/12 - 04:12 PM EDT
By Diana Olick, CNBC Real Estate Reporter
NEW YORK (CNBC) - All three “headline composites” of the latest and widely watched S&P/Case Shiller home price indices ended the first quarter of 2012 at new post-crisis lows.
But one of the authors of the indices, Robert Shiller, told CNBC Tuesday: “We have encouraging signs in the market, we are seeing some signs of hope.”
His cohort, S&P’s David Blitzer, agreed. “Digging into the details, it’s a whole lot better than the headlines,” he said in the same interview.
Finally, index co-author Karl Case explained: “We lag, and the indicators for the last three, four months on the quantity side have been real positive, so we look like a bottom. You have to pick to find real negatives.”
…
I think he meant to say, “we look like an ass. You have to pick to find real shit”
ECB bailout prospects lift Grexit hopes among S&P 500 investors.
May 29, 2012, 2:43 a.m. EDT
Credit Suisse: Greece exit could boost S&P 500
By Barbara Kollmeyer
MADRID (MarketWatch) — An exit by Greece from the euro-area could initially trigger a fall to 1,200 for the Standard & Poor’s 500 index SPX -0.22% , but such an exit would also prompt an “aggressive policy response” that could lift the market 20%-plus, said analysts at Credit Suisse in a research note Tuesday. “Into a euro area breakup scenario, we believe the S&P 500 would fall to 950,” the analysts said, adding that the probability-weighted fair value of the different scenarios is 1,440. The bad news, they said, is that the crisis will need to ramp up before the European Central Bank delivers the needed policy response. “Given markets tend to over-price in political risk and given probable lagged response of the ECB, we would not be surprised if equities fell another 5%, even in our core scenario,” the analysts said.
‘Kit Juckes, global head of foreign exchange at Societe Generale, told CNBC’s “Worldwide Exchange” that the best outcome was “the status quo.” “A Greek economy in depression, austerity that guarantees they’ll stay in depression and living on life support from the rest of Europe is the best,” he said.’
http://www.cnbc.com/id/47587509
Dear god.
While Greece’s youth head for the exits to leave the country. The only question that remains: where could they possibly go and find work?
“where could they possibly go and find work?”
washington d.c.
Ta da da!
I’d like to hear his worst case scenario.
Over the weekend, Krugman said Japan is a best case scenario for the U.S.
Bottom line — we’re screwed either way.
How did Japan live through their lost decade? I don’t recall news stories about Japanese bread lines or citizens dying in the streets (or dying at home in pain for lack of care). Did they have to walk miles to work? I guess everybody moved in together?
Part of it is the Japanese culture.
Conform, do not complain and hard work.
Part of it is that the average Japanese family lives in a 700 sq ft apartment.
And part of it is that Japan still makes products that the world wants and was (until recently) a huge net exporter.
From what I have read, the Japanese Lucky Duckies are just shrugging and living with mom and dad. I read one article that mentioned that most would have to sell the apartment when mom and dad pass away as they can’t even afford the upkeep on their meager wages.
As for exporting, they too have offshored plenty to China. So they have their share of college grads working part time in retail, pretty much like we do. The main difference is that Americans kick their kids out when they turn 18.
Japan’s ‘Lost Decade’ hasn’t really been that bad. They came off a RE/stock market bubble that put ours to shame, and have spent a decade recovering. But they’re still the third largest economy in the world, they have a very high standard of living, and China’s rise has actually helped them, as their manufacturing is, like Germany’s, of the more complex stuff that China still has to buy from others, not having been able to reverse engineer it yet.
Japan’s big problems are an aging population and an aversion to immigration.
Japan’s big problems are an aging population and an aversion to immigration.
I’ve heard that, if you want to become a Japanese citizen, you have to consent to a home inspection. This includes a peek inside your fridge. The inspectors want to know if your food choices are Japanese enough.
It’s kind of a “Mercantilist” (beggar they neighbor) mindset.
“As long as they remain a conduit to funnel cash to our financial sector, it’s all good.”
Sovereign bond yields are so low, even my octogenarian parents, who normally are oblivious to financial developments, have taken note. Dad was asking me last night what it means for German bunds to pay an interest rate of zero percent.
May 29, 2012, 9:10 a.m. EDT
Treasurys gains, eyeing Spanish markets
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose modestly on Tuesday, pushing yields down, as traders return from a three-day weekend to find more worries about Spain.
Yields on 10-year notes, which move inversely to prices, fell 2 basis points to 1.72%, hovering just above their all-time lows.
A basis point is one one-hundredth of a percentage point.
Thirty-year bond yields decreased 1 basis point to 2.84%.
Just over a week ago, long-bond yields ended at their lowest level since October — which was the weakest since the record low of 2.57% set late in 2008.
…
German bonds ripe for fall however crisis plays out
By Marius Zaharia
LONDON | Mon May 28, 2012 2:30pm BST
(Reuters) - A growing number of fund managers are questioning exactly how much protection German government bonds offer from the euro zone crisis, fearing a sudden plunge in value from the record high prices at which they trade.
Trading on a reputation for sound money built up over decades, bonds issued by the German government - known as Bunds - have become the ultimate refuge in Europe for investors looking to shield their cash from the worst ravages of the debt crisis.
Since Greece’s inconclusive election on May 6 opened up the prospect of the country falling out of the euro zone - and potentially unleashing financial market chaos on a par with the Lehman bankruptcy - demand for German bonds has been unrelenting, driving the country’s borrowing costs down to record lows almost on a daily basis.
But some investors say that if Greece does crash out of the euro and default on its debts, Germany will wind up bearing a heavy cost of cleaning up the mess - whether it be in writing off previous bailouts, propping up banks or taking more responsibility for other euro zone governments’ debt.
“We’d rather not be in Bunds at these levels,” said Luke Hickmore, an investment director who manages a 26 billion pounds credit fund and a 92 million pounds strategic bond fund for Scottish Widows IP.
“The wall of money trying to find a safe haven has ended up in Germany and may end up disappointed in how safe it actually is. Germany is on the hook for a lot of problems,” he said.
…
Treasurys gain, gold looses…
wsj dot com
May 29, 2012, 3:29 p.m. ET
PRECIOUS METALS: Spain Ratings Cut Dents Gold Futures
–Comex June gold down 1.3% at $1,548.70/oz
–Gold retreats in lockstep with euro on Spain downgrade
–Impala Platinum’s Rustenburg mine back at 84% of full output after strike
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Gold prices ended lower Tuesday after Spain’s credit rating was downgraded and the euro weakened against the dollar.
The most actively traded contract, for June delivery, fell $20.20, or 1.3%, to settle at $1,548.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
Credit ratings firm Egan Jones slashed Spain’s borrowing standing to B from BB-. This was the third time in a month that Egan Jones reduced Spain’s credit rating. The decision pushed Spain’s debt further into junk status and hammered on investor worries that Europe’s debt crisis is spreading and getting worse.
While Egan Jones, which is smaller than the three big ratings firms, Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, considers Spanish debt as junk, all three of the larger firms still see Spain as investment grade.
“After a good morning on the upside we had a reversal to the downside right after the Spain downgrade,” said George Gero, senior vice president with RBC Capital Markets Global Futures.
Gold prices are vulnerable to such news as concerns about global liquidity tend to drive investors out of hard assets, like precious metals, and into highly liquid markets like the dollar.
The euro slipped below the psychologically important $1.25 level on the Spain news, adding further pressure on gold. The single European currency traded as low as $1.2461 during Comex floor trading hours.
…
Switzerland Makes Plans for the End of the Euro
May 28, 2012
Switzerland is considering capital controls to fight a sharp rise in the Swiss franc in the event of a euro-zone collapse. Dow Jones’s Katie Martin explains why investors run to it in times of trouble and why this is bad news for the Swiss. Photo: AP
Everyone knows that it’s the USA’s job to have the strong currency and to be the consumers of last resort of the world’s exports.
At least that’s what the rest of the world is hoping.
Sure is fun to live during “interesting times”. Lest just hope this doesn’t end in some nasty world war.
May 29, 2012, 3:59 a.m. EDT
Cash remains king
By Kevin Marder
In light of the concerted downdraft of the prior week, last week may be considered a modest victory of sorts, in that shares stopped going down.
It is difficult to handicap the twists and turns of the European saga. The yield on Spanish 10s rose from Friday’s 6.31% to Monday’s 6.48%. And the spread of Spanish 10s over German 10s hit a high not seen since ‘95, according to Bloomberg.
At some point, most of the bad news will be priced into shares. This will be evident by prices rising in the face of negative news. Longer term, however, it is hard to see how the euro zone morphs from a monetary union to a fiscal and monetary union.
…
From the case shiller article
In addition to the three composites, five cities - Atlanta, Chicago, Las Vegas, New York and Portland - also saw average home prices hit new lows.
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245334287526&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true
Yes, Virginia, tuna migrates. Don’t eat it, or you’ll glow in the dark.
http://www.medicalnewstoday.com/articles/245939.php
Changed my name. Seems appropriate.
Do tell?
Previously
FB wants a do over
So you bought yourself an FB?
I believe it is a reference to Facebook.
FB used to be F#(&ed Buyer who bought a house in the bubble. FBs wanted a do over… as in a mortgage “workout” that involved lowering their principal on their loan to the current market value of the house.
Now FB is the NASDAQ symbol for Facebook. Buyers of FB (the stock) want a do over… as in not buying the stock at 38, which a week later is trading down about 25% at 29.
Geez, I wuz a little slow on the uptake there.
Thanks!
As I keep saying, taxes should only go to public goods, not FIRE sector profits.
Under Pressure, FHA Skews to Wealthier Home Buyers
Published: Friday, 25 May 2012 | 12:20 PM ET
When no one else would lend to lower-income borrowers, the FHA stepped in, its share of mortgage originations rising from around 3 percent during the height of the housing boom to close to 40 percent of the home purchase market at the height of the crash.
12 percent of FHA loans were delinquent at the end of the first quarter of 2012, with an additional 4 percent already in the foreclosure process; 16 percent of FHA loans are in some form of distress. That is far higher than the 11 percent of all loans nationally in distress, according to the most recent data from the Mortgage Bankers Association. The higher delinquency is expected, given that FHA, historically, serves borrowers with lower credit scores and lower down payments. A borrower needs just 3.5 percent down payment and a 580 credit score to qualify, according to FHA guidelines.
“Partly in an effort to redeem its mounting and highly publicized delinquencies, it has expanded to a market – higher income borrowers – that it has not traditionally served,” notes the reports co-author, Robert Van Order, professor of finance at GW.
http://www.cnbc.com/id/47566852?__source=mnd|news|&par=mnd
I’m of the mind that if house prices were more in line with historic metrics of incomes and rents, these FHA loans wouldn’t be in so much trouble.
I mean, come on, people at the lower ends of the income scale have been buying houses for generations. I used to live next door to such a guy.
He worked as a groundskeeper, and before that, an underground miner. The house he lived in was paid for, and before it was, there never was a time when the payments were a burden.
“When no one else would lend to lower-income borrowers, the FHA stepped in, its share of mortgage originations rising from around 3 percent during the height of the housing boom to close to 40 percent of the home purchase market at the height of the crash. ”
FHA should help LOW INCOME buyers get a home. By that, the current limit on FHA should probably be around 100K (a house for someone making around 30-40K/yr).
The purpose of FHA has been totally distorted, it’s now used by people as a subprime loan to get into a 500K house. That’s NOT low income, that’s a high risk, high income loan.
Put reasonable limits on FHA (3X median area income as the limit seems reasonable) and I’ll support it. In it’s current fashion, it’s simply a way for people to borrow more than they should with a low downpayment.
Overtaxed, I agree with you.
One of the other things I’d like to see is some sort of financial self-defense course for low-income people. All too often, they’re targeted by unscrupulous lenders. The book Broke USA is a good primer on this topic.
With regards from your HBB Librarian…
A year or so ago I was contemplating relocating to the DC area. I looked at houses (insane prices of course). I got in touch with a couple of lenders just to see what I could realistically afford to buy. Turns out with an FHA loan I could buy pretty much anything I wanted, even houses in the $750K to $800K range.
WHAT A COUNTRY!!
Didn’t end up going partly because when adding in the cost of living increase, the higher taxes I’d pay living in DC or VA or MD compared to where I am now, it just wasn’t worth it.
When I first went looking for a house in FL (around 2006), a realtor told me, to determine affordability “Just take your combined yearly income and multiply by 10″. As soon as I heard that, I immediately understood how West Palm Beach, with a 45K median income, had a 400K median home price.
I also immediately backed out of the room with the Realtor realizing that I just saw the devil and needed to get away as quickly as possible.
Fannie and Freddie: “Where the Money Went.”
Mortgage News Daily
May 24 2012, 11:51AM
As part of its semi-annual report to Congress, the Federal Housing Finance Agency’s (FHFA) Office of the Inspector General (OIG) included a section detailing, in financial terms, the fall of the two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac which were placed under FHFA conservatorship in September 2008. The GSEs’ fall was both swift and devastating so it is helpful to see, in one place, the numbers and the time-line underlying their implosion.
http://www.mortgagenewsdaily.com/05242012_gses_conservatorship.asp
“The big losers from the fall of GSE are the stockholders.”
“The big winners are the holders of bonds and Guaranteed MBS. By placing the GSEs into conservatorship and committing to capital investments in them, FHFA and Treasury provided assurance that the GSEs would be able to make contractually required payments.”
The big losers are the taxpayers. This was the crime. No one took a haircut.
Here is how I would have handled the “implied guarantee.” I would have been willing to guarantee the PRINCIPAL, IF the bondholder agreed to accept the interest on U.S. Treasury obligations. Not one dime more. Including a haircut on interest already paid.
The bondholders got the security of Treasury Bonds with additional interest. Why?
Bond holders were given their interest because without it, even more losses would have been incurred by banks, retirement accounts, insurance companies, etc,. etc, etc. That would have continued the negative feedback loop of money poofage causing insolvency, causing money poofage, causing insolvency.
We were looking to short-circuit the negative feedback loop and the cascade default that was occurring. This is also why the AIG credit default swaps were paid out $1 on the $1.
Haircuts cause insolvency cause haircuts cause insolvency…. we had to step in and put a blockage in the line of dominoes to prevent them all from falling.
How Corzine Steered Regulators To Protect MF Global Strategy
May 22, 2012, 12:59 pm ET by Jason M. Breslow
Frontline / PBS
At the same time, Corzine was using a finance strategy known as “internal repo.”* In essence, MF Global was borrowing money from the firm’s own accounts and using it to fund trading in another part of the firm. During the summer of 2011, however, just months before MF Global filed for bankruptcy, internal repo was a strategy regulators were hoping to do away with.
As shown in the above excerpt from tonight’s film Six Billion Dollar Bet, internal repo transactions were so important to Corzine that he met with officials at the Commodities Future Trading Commission (CFTC) on three occasions to lobby for their preservation. As CFTC Commissioner Bart Chilton told FRONTLINE:
Sen. Corzine was one of the more prominent individuals who came in and told us what a drastic mistake it would be to curtail the use of these internal repurchasing agreements … And when he told me that we were making a big mistake, it certainly put some doubt into my mind for a little bit there as whether or not we were going down the right course. But certainly somebody that had his stature … added respect, in my view.
http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/mf-global-six-billion-dollar-bet/how-corzine-steered-regulators-to-protect-fatal-mf-global-bet/
An interesting case. We have years of experience to see what the net result of various financial innovations has been. The experiments have been run. The results have been generally disastrous.
But even today, when trying to institute regulations to protect the country, the regulators are primarily concerned not with erring on the side of safety, but on the side of industry profit. I can see how this attitude might have been useful prior to the experiments being run. But today, we’ve seen the results of these kinds of financial innovation. So today, there’s utterly no excuse for not erring on the side of safety when it comes to financial innovation.
Innovations should be treated like new drugs. The CFPB should be the FDA for financial constructs.
The financial industry is concerned with one thing: immediate term profit. It doesn’t matter if the profit is from fleeced clients. And they sound like banana-republic dictators in that hurting their personal profit hurts the country. But the problem is that they’re more like Mafia bosses, where their profit comes from a net destruction of wealth, not a net increase.
Innovations should be treated like new drugs. The CFPB should be the FDA for financial constructs.
Agreed. If you have experienced the FDA in action, and one of my former clients did (he founded several pharma companies), they’re pretty tough cookies.
Indeed they are. They can arrest you for negligence.
That, in essence is what my former client said. And he used much more colorful language than you just did, In Colorado.
Dang, I miss that old client. He doesn’t have any projects that I could help with right now, but he is such a character.
“The experiments have been run. The results have been generally disastrous.”
That, of course, depends entirely on your point of view. Are you talking the economy as a whole or the individuals making million a year in bonuses while running these experiments?
And, if you are talking “the economy as a whole” what are you using as a baseline to compare to? Are you assuming that we would still have a $15T GDP even without these financial innovations? Or, are you counting your baseline case from the 1970s stagflation having persisted for the past 40 years had it not been for all these financial innovations being able to generate the 10% of GDP, annual, unsustainable debt growth that our trade imbalance plagued economy needs to function?
As far as “financial innovation” being responsible for a 10% higher GDP, it’s unclear to me that case can at all be made.
During 2008 the two GSEs had combined losses of more than $100 billion. For some perspective, over the 37 year history of the two companies (1971-2008) they earned $95 billion less than they lost in 2008 alone. During the next three years ending in Q3 2011 the GSEs lost another $251 billion. “In other words, the losses incurred during the conservatorships are more than double the cumulative net income the GSEs reported as public companies.”
http://www.mortgagenewsdaily.com/05242012_gses_conservatorship.asp
Ultimately, the chickens come home to roost. Financial innovation may in the short term look massively profitable, but with the GSE’s, when the chickens came home to roost, they lost more in one year, than they made in 37 years.
When talking about financial innovation, we have to look at the net result, not the results for this or that quarter. When the financial innovations exploded for the GSEs, the losses were more than double what they made during the previous 37 years. And we’re still counting.
THAT’s the real legacy of financial innovation, not a sustainable 10% increase in GDP.
“When the financial innovations exploded for the GSEs, the losses were more than double what they made during the previous 37 years. And we’re still counting.”
And let me make this point: It’s not the financial company or real estate executives that suffer for this. They make vast sums during the run-up and hold on to it. Financial innovation is great for them. The cost of financial innovation is borne by the rest of the citizenry.
Can you imagine if Corzine was a “mega-bundler” and a best friend of Bush?
It would be front page news for MONTHS.
Instead, we barely hear a peep of this in the news.
It is 7 month old news…
“Instead, we barely hear a peep of this in the news.”
Worst. Troll. Ever.
What he said is true. There is a double standard.
Dos Chiquita is right on this one.
Yeppers.
Another great example of how you can break the law as long as you call your crime something else and have several million dollars to argue it.
“Comment by 2banana
2012-05-29 08:20:59
but we need to be able to afford what we pay for.
Because if you can’t - there will be NOTHING when it collapses. And it WILL collapse. ”
The true source of the trouble is not the federal government deficits. Those are a necessary evil.
The true underlying fatal gun shot wound to our economy are the massive international and domestic trade imbalances that make massive debt/money creation a necessity.
For almost 30 years, from Reagan deregulation until the housing bubble collapse in 2008, private sector debt was increasing at 3x the sustainable rate as determined by population growth and wage inflation. This was no more “long term sustainable” than the current massive government deficits that are feeding the trade imbalance beast with the 10% of GDP new debt/money creation that our trade imbalance plagued economy needs to operate.
Whether it is private sector or public that is generating the massive debt creation needed to fund the trade imbalances is irrelevant. Either is unsustainable, as are the trade imbalances.
So, the only real question can be boiled down to this…. Since the trade imbalances, and the new debt/money creation that fund them are ultimately unsustainable, should we A) directly attack and reverse the trade imbalances before the debt collapses, or B) continue to embrace trade imbalances while pretending that the unsustainable debt generation needed to fund them is completely unrelated.
For 30 years we’ve managed to convince people that the trade imbalance plagued economy was booming DESPITE the unsustainable private sector debt growth. This is like convincing people that the ugly chick got hot, DESPITE you having gotten drunk.
So figure this one out;
2009- Owner defaults on house. Declares bankruptcy. He and wife bail out and head to Colorado… and is there to this day.
2010- I put in offer on shack. Falls into black hole. Yearly taxes paid by BofA. BofA assigns property management outfit to winterize house. House still in defaulted owners name.
2011- House still in defaulted owners name. Taxes and maintenance paid by BofA
2012- House still in defaulted owners name. Taxes and maintenance paid for by BofA.
Last week- BofA REO dept states the former owner is still the owner.
WTF????
Can not afford to eat the loss, so just carry it on the books waiting, like all the other FBs, for the market to recover…..
What don’t you understand? Seems perfectly straight forward to me.
The same thing’s happening here in Tucson. People let their houses go back to the bank, but said bank just doesn’t want to admit that it now owns the place.
You can see all sorts of examples in our county assessor records.
The bank/bondholders for whom the bank is action don’t own it until a foreclosure takes place. The bank/bondholders can decide to pay the taxes to prevent the town or county from bringing the action (or that may be reqired in the servicing agreement). That is their choice. The tax collector doesn’t care who pays. Why would they?
I still don’t know what the confution is.
confution = confusion
Ok I’ll explain.
Why wouldn’t the lender take legal possession and liquidate? Why leave it in the name of the defaulted borrower for 3 years?
Confution say: “Realtors are swindlers!”
“Many Spanish banks are avoiding property sales so they don’t have to make mark to market valuations, which reflect current prices. Instead, they’re giving developers new loans to pay debt coming due to prevent defaults, said Ruben Manso, an economist at Mansolivar & IAX and a former Bank of Spain inspector. ”
“You won’t find that data anywhere,” Manso said. “There has been a lot of cheating going on where banks have lent developers new money, classed as new lending, so they can pay off their original loans.” That’s masking delinquency, he said.
http://www.bloomberg.com/news/2012-05-28/spain-delays-and-prays-that-zombies-repay-debt-mortgages.html
Accounting shenanigans probably. Mark to fantasy valuations likely makes the bank look much better off than it is. Probably done with the full knowledge of the government.
Do you think it has to do with the exemption from forgiven debt to expire on dec 31???? Watch all the short sales happen in January 2013 just in time for a new president…
Local signs of recession/depression:
-As noted above, more panhandlers and homeless. Starting to see female panhandlers.
-More old cars broken down by the roadside. The weather is starting to hit 90 degrees, perfect weather to kill marginally functional old cars. Tires are now a problem, people can’t afford new ones, so they are running the old ones until they blow. Expect a summer filled with stories about old SUVs having rollover accidents.
The new Business in America paradigm is becoming increasingly evident. Dump your over 45 employees, and hire newbie college grads, then bring the old guys back under contract until the newbies are semi-trained. If you can’t find anyone to fill a position for what you are willing to pay, then the position doesn’t get filled.
Something new is rearing it’s head in our business….the “Contractor Broker”. Guys that make their living by having an active Rolodex of people looking for contractors, who then go out and “low-ball” all of the newly minted independent contractor workforce to fill the temporary (as short as 2-3 day) positions. The economics of the business force people into taking these positions, at break even, or a slight loss, in an effort to stay “current”
On the wrench side, another shop has lost it’s entire workforce to the “lucky ducky” pay of the airlines. Told the guy who told me about this that the fix was easy, all the shops had to do was pay better…..
His reply? “They can’t do that, their customers don’t want to pay what they are paying now……” So the shop is being run by a 30- something full time mech, and whatever local help willing to contract out on top of their regular jobs.
IOW, a spit and baling wire work force. So much for supply and demand.
I’ve thought for a couple of years that this plan would blow up in people’s faces, as soon as business picked back up to 2006-2007 levels of flying. We are now 4 years into this downturn, and it is becoming apparant that things may not “recover” for 10-15-20 years. Like “mark to fantasy accounting”, a problem can exist for a long time, if the PTB want to hide it by kicking cans down the road.
I can add to your rant, X-GSfixr.
Just got off the phone with a guy who’s on the board of a local organization in search of a website redesigner. Well, I can certainly do that. And work with the budget that he mentioned over the phone.
But what got me all but blowing my stack was his group’s request for a volunteer to help with the website after it’s redesigned.
I told him that I could redesign the site in such a way that he and his fellow volunteers would be able to maintain it themselves. They wouldn’t have to call on outside helpers (like me) at all. And, yes, when I build such a site, I will teach you (the client) how to maintain that.
Then I went on to say that small one-person studios like mine simply can’t afford to volunteer on client projects. We simply don’t have the wherewithal to do such things. Sure, the big ad agencies can, under the heading of “giving back to the community.” But they’re big and have a lot more bucks than we little guys and gals do.
Speaking of big bucks, that’s what the members of this committee have. Many more bucks than I’ve been able to shake a stick at recently.
Okay, so I’ve kept you in suspend long enough. Now I’m going to tell you what this organization’s mission in life is. So, cue up the drumroll, because here’s the answer:
They’re involved in affordable housing.
So…they were willing to pay you to design it if you’d volunteer to maintain it after that?
Yes. And lemme tell you something, volunteering to maintain a client website can REALLY turn into a time sink.
It’s the sort of thing that one really ought to be paid for. Especially when the board members of the organization can easily afford to do so.
Yes. And lemme tell you something, volunteering to maintain a client website can REALLY turn into a time sink.
Well, inevitably they want more features and more design work. But hey, the volunteer can do that.
Well, inevitably they want more features and more design work. But hey, the volunteer can do that.
Yes, and when you, the volunteer, say that you’ll need to draw up a formal proposal so that the additional work is paid for, oh, brother. It’s as if you just whacked a hornets’ nest with a stout stick.
Next thing you know, there’s a whole swarm of angry board members…
Why can’t you just make this problem go away for free so I can get on with my fabulous life? Huh? Why? I’d be eternally grateful. Or something.
Do it like the military contractors do.
Give the initial website for free, for an exclusive, cost-plus contract to maintain it for the next 20 years.
When they were designing the M-1 Abrams tank, and trying to decide whether to go with a US-built 105mm, or German made 120mm smooth-bore cannon, the joke was that you could give away the guns for free, if you got an exclusive contract to supply ammunition.
Or like printer manufacturers do.
I don’t have any more respect for the sanctimoniouis affordable-sustainable-grantwriting-tax increment-financed nonprofit trolls working the levers of local govt than I do for any other scam artists.
I don’t have any more respect for the sanctimoniouis affordable-sustainable-grantwriting-tax increment-financed nonprofit trolls working the levers of local govt than I do for any other scam artists.
The sanctimonious attitude that greeted my news of small studios being unable to afford offering their services for free was what got me off on my post-phone call cussing and shower curtain boxing match.
Because I was supposed to be all happy and cheerful about being a volunte-e-e-e-e-er and offer website maintenance for fre-e-e-e-e-e.
Oh, gosh. I was so busy ranting and then going into the bathroom to punch out my shower curtain* that I forgot all about proper spelling.
I meant to say “kept you in suspense long enough.” My bad.
——————
*Around the Arizona Slim Ranch, punching out the shower curtain is my way of letting off steam. Well, that and stomping around the house and cussing out that person I just got off the phone with. You should have heard my creative juxtapositions of the word “volunteer” with the saltier words in my vocabulary.
Unfortunately, I decked the shower curtain and the rod it’s suspended from. Took a few minutes to get the rod back up and level.
I feel better now.
You need a nice cat to kick.
Naaah, the neighborhood feral cats are too fast for that. They see me and take off before I could even raise my foot.
I’d rather just stomp around the house (with all doors and windows closed) and cuss up a storm at those who think I’m so made of money that I can afford to volunteer for something I’m paid to do.
Eff ‘em. All of ‘em.
A classic example of what I’m seeing across the board.
The rich fooks giving people the opportunity to work for free, in exchange for the chance to “get your foot in the door” or “expand your network/list of contacts”. And act like they are doing you some kind of big favor.
Then they get pizzed and offended about how “ungrateful” the wretched refuse are getting.
The rich fooks giving people the opportunity to work for free, in exchange for the chance to “get your foot in the door” or “expand your network/list of contacts”. And act like they are doing you some kind of big favor.
That’s exactly what’s pissing me off, two hours after I got off the phone with that guy. And the very idea that I would point out that the proprietors of one-person studios can’t afford to work for free. Well, I sure had my nerve, now didn’t I?
What will be even more interesting is that board meeting tomorrow, when I won’t be there. Nope, I’m not going. Too much risk of my giving those folks a piece of my mind.
I’ll bet the guy I spoke with will have a thing or two to say to the woman who referred me to him. Like what an uppity little so-and-so I am, and where did you find her anyway.
I’ll see the woman who referred me on Sunday. That will also be a very interesting encounter.
Gotta resist………feel another rant coming……….
The 1%er LIKE having 25% of the workforce unemployed. God forbid they pay (even highly specialized) Wretched Refusers some kind of living wage. And why do they need to save money? I can pizz it away much more efficiently than they can.
The “Dump the 50 year olds Plan” is a classic. Dump your experienced, 15,000 hour pilots, and replace them with 25-30 year old, 3000 hour TT/500 hour in jets/$100K in student loan debt types. Because the kids are “go-getters” and “can-doers”, unlike the 50 year olds, who have the experience to point out the problems with your plan.
Only in America is experience and judgement considered a liability.
The “Can-Do Plan” works, until someone paints themselves into a corner they can’t get out of.
I like this change in you.. Are you starting to channel Olympiagal?
I like this change in you.. Are you starting to channel Olympiagal?
To whom are you referring? Moi?
Arizona Slim:
I don’t see why you’re shocked that an agency that is involved with low income housing would try to get the best deal out of you. Doesn’t matter if it’s GE or a local charity. Both clients will negotiate to get the best deal they can.
Also, they can ask for whatever they want. If you are as talented as you think you are, then you tell them no deal. Any post-deployment work will be billed at $X/hour. The flipside of that of course is, there’s probably someone out there starving and willing to give away the free hours. But chances are if they’re starving they’re not very good at what they do. And eventually clients realize you can’t get top quality work for below quality pricing.
True story: I know of another local non-profit org that’s been involved in a website redesign for a year. No way is the job that complicated.
But the studio that got the gig gave the organization a real sweetheart deal on the pricing, and guess what? They must have found other work that pays a lot more because the aforementioned website redesign just ain’t gettin’ done.
So, there’s the sweetheart deal that turns into a project that’s taking way longer than it must.
Back to today’s situation: I’ve been in the web field since 1995, and I’m pretty good at what I do. So, yes, I agree with your suggestion: “Any post-deployment work will be billed at $X/hour.”
And, oh yes, I will bill for it. Yes I will.
But they’ll probably not hire me after I got so testy about being asked to volunteer after getting paid for the job. Eff that.
Arizona Slim,
Just remember the great thing about volunteer work is you’re not getting paid for it, so you can do the work at the pace YOU want. Just take the job, agree to do the volunteer work, then make your volunteer time subject to your own availability. If that amount is 0, so be it.. If it becomes more urgent to them, then you can remind them that $$ makes urgency a priority for you also. Great way to turn “volunteer” work into paid work.
“after I got so testy”
Yeah, that’s one lesson the palmster has had to learn many times over in biznizz. Put on the old bland face, withdraw gracefully and take things under advisement, figure out the angles under the guise of presenting a proposal that “takes into account their needs”.
Sister-in-law works for a flight attendant for American, which, of course, is in bankruptcy and re-negotiating all union contracts. She said that if all the changes they are asking for go through, her pay will be cut about 30%.
Her first knee-jerk response was that she would just leave the travel industry rather than absorb the 30% cut in pay. Months of looking for another, better paying job have not panned out. Now she is not sure what she will do.
Tell her to look into the patented X-GSfixr “GTFOO Aviation, and go work at Jiffy Lube” plan.
The future belongs to whoever can survive on $15/hr, Lucky Duck lower than whale-crap, salaries.
The future belongs to whoever can survive on $15/hr, Lucky Duck lower than whale-crap, salaries.
Wrong idea… as others here have said, you can’t cut your way to prosperity, and that goes for the individual families trying to cut their budgets to live on $15/hr.
At the end of the day, you either have capital or you have labor/time to trade. My suggestion, and it is one that I’m following for myself, is to come up with the means to translate that labor/time into vast sums of capital.
In your case, X-GSfixr, I would suggest instead of trying to work on planes on contract (or work a barely-above-minimum-wage job), you research leveraging your knowledge of the aviation industry and connections into a middle-man job broker for other aviation mechanics… i.e. you take a slice of each contractor placed. It is a common theme in various industries from IT/software development to cellular infrastructure. Get yourself into those streams of money, leverage your knowledge and connections, or don’t, and become a statistic…
In your case, X-GSfixr, I would suggest instead of trying to work on planes on contract (or work a barely-above-minimum-wage job), you research leveraging your knowledge of the aviation industry and connections into a middle-man job broker for other aviation mechanics… i.e. you take a slice of each contractor placed. It is a common theme in various industries from IT/software development to cellular infrastructure. Get yourself into those streams of money, leverage your knowledge and connections, or don’t, and become a statistic…
The trouble with brokering is that it’s a completely different skillset than being a mechanic.
Plus I get the idea that Fixer is too ethical to put together an employer and a person who doesn’t have enough experience to provide the work they really need. Telling a bunch of business guys that their budget for overhead is a third of what it should be is no way to get hired. In US business you have to be “positive.”
“At the end of the day, you either have capital or you have labor/time to trade. My suggestion, and it is one that I’m following for myself, is to come up with the means to translate that labor/time into vast sums of capital.”
You do realize that what you suggest is a non-scalable solution, yes?
Individuals can indeed amass capital and then live off the profits of that capital without actually trading wages for labor. However, the society as a whole, is reliant on their being large numbers of people willing to trade labor for wages.
I’m not saying you are professing a bad idea. I’m simply adding this to the list of things where micro and macro economics collide. What works for the individual, does not work for the masses.
Either way it is kind of a dice roll.
Take your chances hoping to amass a large chunk of capital, even though it is mathematically impossible for everyone that attempts to do this to succeed. The vast, vast majority will fail, and end up bankrupt.
Or, you can take your chances on a dice roll that whatever skills you develop, you will be able to exchange at a nice wage/labor ratio… that you industry will not be off shored, on shored, out sourced, or broken by the corporate machine into low wages? Again, the vast majority attempting to enter a field with a high wage/labor exchange ratio will fail.
It is simply impossible for everyone to have above median assets, and it is equally impossible for everyone to have above median income.
Perhaps the only way for it not to be a dice roll with a low probability of success is to do as ExGSFixer suggests, and just aim lower. If you are content to be at or below median income/assets, then it is much more likely you will be able to roll a winning number.
Hate to tell you this, but every newly minted “independent contractor” pilot and mechanic in the industry is working the “broker” angle.
I know of a dozen guys on our area implementing that plan right now. I’ve got an advantage over them, because I have a job that doesn’t pay that well, but does pay the insurance, and doesn’t mind my “on the side program”, as long as my “real job” is Priority #1.
The other guys don’t know what I know. That income and Social Security taxes make it a break even/keep your foot in the door proposition at best, unless you can generate enough business to get past the $150-200K year threshold. They haven’t figured this out yet, so I get underbid. It will take them a few years to figure it out.
This won’t change anytime soon…..still too many people getting their walking papers..
Basically, too many people are chasing too few deals. I’m perceived as “too expensive” because I don’t want to sell my services at breakeven/loss.
That, and I’m not a BS Artist. Pilots appreciate this, but unfortunately, very few of them get to make the financial decisions. Can’t tell you how many times I’ve seen some sales guy come around any lay out a line of total BS to the Owners/CFO/Accountants, whereupon I blow up their BS with the facts, and the money pukes still go with the BS artists.
A year later, their error is obvious, but gets papered over, because to admit an error in judgement is an admission that maybe the dumbazz underpaid pilot/aircraft mechanic was right, and their overpaid azzes were wrong. Better to get rid of everyone who knows they screwed up, lest their six-seven figure salaries be threatened.
I don’t see any of these problems being fixed anytime soon.
There’s no more security in brokering than laboring.
“A year later, their error is obvious, but gets papered over, because to admit an error in judgement is an admission that maybe the dumbazz underpaid “peon/assistant peon” was right, and their overpaid azzes were wrong. Better to get rid of everyone who knows they screwed up, lest their six-seven figure salaries be threatened.
I don’t see any of these problems being fixed anytime soon.”
You just described the history of the human race in one paragraph AND the reason empires fall.
I don’t see the breakeven point in terms of aircraft mechanics coming back towards the mechanics until a few US planes start dropping out of the air. Hopefully they will be private planes rather than commercial airliners. Safety costs tend to get swept under the rug when the safety record goes up and stays up for too long…
“……just described the history of the human race in one paragraph…….”
Thank yah, thank yah very much…..
One of the skills I’ve acquired over the years is learning how to describe complex technical/personnel/administrative issues in 30 seconds.
30 seconds = The average attention span of the typical Corporate Officer/teen-age female, before their eyes glaze over, and they start looking at their watches.
There’s no more security in brokering than laboring
Agreed. However, his labor + a piece of other mechanics’ labor at scale creates more income than just his labor alone… the idea isn’t job security, as there is none. The idea is capital accumulation as quickly as possible. The only way to do that is to move up the money stream, closer to the source and try and scale.
You do realize that what you suggest is a non-scalable solution, yes?
Of course this isn’t achievable for everyone, nor is it scalable. At a certain level, this is survival of the fittest. Those who are smart, driven, dedicated, resourceful, and lucky are the ones who will come out on top. The idea is to be in the group that succeeds, not the group that fails. If you do fail, try again until you succeed… What other choice is there? Give up? Accept the fate that has been given? Not an option for me. Hopefully not an option for XGSfixr and others here. Not everyone will succeed, but you still have to try.
Hate to tell you this, but every newly minted “independent contractor” pilot and mechanic in the industry is working the “broker” angle.
Then partner up with other like-minded contractor/brokers and try and squeeze out the competition. If you don’t, someone else will. Or else, move up the value-chain. Provide consulting services (i.e. not actual labor, rather paid-advice) specializing in cost-savings and/or safety improvements (yes, I understand they are diametrically opposed), etc. Instead of competing for the actual labor contracts, use your experience to help a companies bottom line via consulting. You know your industry better than I do, it’s up to you to come up with a niche that is high-enough up the income stream to provide you the ability to accumulate capital. Talk to Arizona Slim and Drumminj about building a web app for online brokering of labor for the aviation industry. Come up with your “unfair advantage” and make it happen.
Of course this isn’t achievable for everyone, nor is it scalable. At a certain level, this is survival of the fittest. Those who are smart, driven, dedicated, resourceful, and lucky are the ones who will come out on top. The idea is to be in the group that succeeds, not the group that fails. If you do fail, try again until you succeed… What other choice is there? Give up? Accept the fate that has been given? Not an option for me.
IMO you’ve described quite well what is wrong with our country. Our best and brightest have given up on making the pie bigger and are 100% focused on carving off bits of other people’s pieces.
She said that if all the changes they are asking for go through, her pay will be cut about 30%.
They don’t earn much as it is now, so 30% less isn’t worth climbing out of bed in the morning. It’s time for an industry change of employment.
Just make sure she uses up as much of her medical dental insurance as possible….
“There is not a problem in the world that can not be solved with higher taxes and a bigger government.
Here is a hint:
Defense spending is about 20% of federal government spending (and shrinking)
Entitlements spending is about 55% of federal government spending (and growing)”
Clearly, the solution is to implement Logan’s Run style Carousel for anyone too old or sick to work. Or, I guess, too stupid or lazy to get a job… unemployed for 2 year? Guess it is time for you also to go?
Looking at the 2012 budget:
Social Security: $781B
Defense: $676B
Medicare: $500B
Medicaid: $270B
Other health: $100B (Offset by $50B earmarked receipts)
Net Interest $225B
Education: $170B
Transpo: $140B
Fed Employee retirement and disability: $135B (offset by $100B earmarked receipts)
Vets: $125B
Unemployment $100B (Offset by $50B earmarked receipts)
Justice: $60B
International affairs: $60B
That is $3.3T of Total Spending $3.75T.
What is the other $450B?
Food stamps: $90B
Section 8 housing = $30B
Tax credits (per child and EITC) = $78B
A dozen programs that are $10-20B each….
So, assuming you were going to cut spending by $1500B needed to balance the budget without increasing tax revenues, what would you cut and by how much….
Then, what do you think the effects on the economy would be if the government suddenly cut spending by an amount of money equal to 10% of the GDP? What effect would that massive hit to GDP have on tax receipts? Would slicing $1.5T or 10% of GDP from federal gov spending really balance the budget, or would we have a crashing economy that resulted in the same federal deficits?
Hint, in the Euro countries that are attempting to balance their budgets largely through spending cuts are finding that tax receipts are falling almost as fast as their spending cuts are being implemented, meaning that the deficits persist even after they have slashed spending.
Hint… if we can not spend our way out, nor cut our way out, perhaps government spending is not really the underlying root problem. Maybe there is another underlying problem that is making unsustainable debt generation necessary? Why is it that countries that have large trade imbalances (international and/or domestic) are forced to have unsustainable debt growth?
Hmmmmmm… Maybe it is the trade imbalances that are the REAL problems, and the unsustainable debt growth (whether it is public or private sector) is just the tail being wagged by the trade imbalance plagued dog known as the global economy.
Since I listed several other “earmarked receipts” I think I should edit slightly…
Social Security: $781B
Medicare: $500B
Combined, $1281B offset by $798.9B earmarked receipts (SS+MC Payroll and SS+MC tax on SS benefits) in 2011.
Because of the 2% payroll cuts, SS was reimbursed $103B from general funds… meaning the 2% payroll tax cut is NOT coming out of SS, but rather it is coming out of general funds…
Medicare received $225B from general funds, as is usual since the tax does not come close to covering costs.
Then there was another $130B transferred from general funds in the form of interest, which doesn’t show up in the federal budget since it is only concerned with NET interest, not gross.
These various sources of income ($800B SS+MC tax and $400B from general funds) allowed the trust funds to increase by about $49B, in fiscal 2011, the latest I could find full accounting of.
Gee……offload the tax burden onto the wretched refuse instead of corporations and the 1%er, export the job base, reduce the incomes of those still working by 30-40%, and act mystified why your tax receipts are down, and your unemployment spending is up.
Too bad us wage serfs didn’t pick up on the “Taxation is theft” meme 30 years ago.
Gee……offload the tax burden onto the wretched refuse instead of corporations and the 1%er, export the job base, reduce the incomes of those still working by 30-40%, and act mystified why your tax receipts are down, and your unemployment spending is up.
Ding-ding-ding! We have a winner!
I my ideal tax code, we would eliminate the corporate income tax…. and replace it with a tax on retained earnings, including carried interest. Spend it or hand it out to shareholders.
I’d also eliminate the payroll tax. Then double the income tax rates, while also doubling the size of the brackets. Lots of deductions for spending money on things that actually create jobs in the USA. I do not want to tax money away from rich people. I want them to spend it employing Americans. Only tax it away if they refuse to spend it.
Of course, I would treat ALL income the same, regardless of source, including capital gains and inheritance (allow you to set up an IRA type account to hold inheritance, then require you to withdraw it over 10-20 years, to spread out the income tax, if you want).
Finally, a tax on money leaving the country… as large as necessary to balance the international balance of payments and plug the international trade deficit.
End free trade, reverse the widening wealth disparity, bring back manufacturing jobs, rebuild the middle class…. Make the economy work for the 80% in the middle, not just the top 10% (of which I am a member of, if we count income only).
“Of course, I would treat ALL income the same, regardless of source, including capital gains and inheritance”
Capital gains and inheritance (and dividends) income has already been taxed once. That’s why the rate is lower. That’s one reason.
The other reason is dividends and capital gains carry risk not applicable to ordinary income. No employee ever has to put up money upfront to earn ordinary income. But to earn capital gains or dividend income, you have to invest money upfront…money that you could lose.
I support the Fair Tax.
zero income tax (corporate and personal), zero capital gains tax, zero payroll tax (all Federal).
Just a ginormous sales tax of N%. It might start at N=30. Of course, like with any other tax, the percentage can be increased by politicians.
There will also be a universal tax prebate of N% of the poverty level income. This means that up to the poverty level you pay zero tax, period.
The Fair Tax encourages production, savings and investment. It discourages spending. How that will impact a country where 70% of the economy is consumer spending is debatable. My guess is that most people will continue to buy stuff. But unlike in today’s system we will have illegals and “under-the-table” workers contributing to the tax base. Tourists will also contribute, but there might be a tax rebate for them for certain items when they leave, as you see in European countries.
Either way, the individual gets far more control over their earned money than is presently the case. If you need more cash you can simply reduce your spending. This is harder to do when 20-50% of your earnings are being handed to the govt off the top.
Any thoughts on the Fair Tax? How would you like to keep 100% of your 100k salary, but pay $7 instead of $5 for milk and $6 instead of $4.50 for gas? Keep in mind that actual prices may in fact be lower than simply tacking on the N%, as the lower Federal taxes for companies will bring production costs down.
“Any thoughts on the Fair Tax?”
Only that it’s Orwellian doublespeak for something the 1% would love to implement at the expense of the masses. It’s a regressive tax that would disproportionately impact the lower and middle classes.
Any thoughts on the Fair Tax?
yes, it’s the absolute best tax solution possible. it would greatly improve the economy (providing it wasn’t ridiculously high). something a little less than 10% would bring in the most revenue.
Euro trades for $1.25. This is cited as a bad thing.
But I remember that it was introduced at $1.10. And it cost $1.21 when I went there a few years ago, in 2005 I believe.
I won’t go back until it is under $1.20.
I said about Keynes:
‘His policies work, assuming…’
“Actually, they don’t. Debating economics with these people is pointless because their entire ‘theory’ is balderdash. All of it; it’s been discredited for decades and they still don’t get it. Go ahead if you want to waste time. Next thing they’ll be telling you about space aliens, digging ditches and filling them in, handling snakes to get closer to God, etc.”
I’m not sure who the “these people” you are referring to here is, but I fear you are talking about me.
As for having been discredited for decades, in which decades have we been attempting Keynesian style stimulus, in which we have not ALSO had massive trade imbalances draining money out of circulation as fast or faster than we were pumping it in?
Keynesian economics is not working because of the $700B a year international trade deficits, and the just as large drain on money in circulation that comes from the rich getting richer.
As for the rest of your rant, I’m an atheist to both God and Space Aliens, so I assure you I will not be professing visitations by aliens or the handling of snakes to be closer to God (gods).
Paying people to dig holes and fill them back in…. Really any less productive than paying people to sit home while pretending to look for work? At least the “digging holes and filling them back up” would actually give people a reason to TRY to find another job.
And, no… I would not argue that we should be paying people to dig holes and fill them back up. I profess a philosophy that an economy based on unsustainable debt growth needed to create the new money needed to maintain an economy that is plagued by $1.5T a year in money being drained from circulation via trade imbalances, is fundamentally unsustainable. I profess a policy of attacking and reversing the trade imbalances, making the unsustainable debt growth no longer a prerequisite to a smoothly operating economy.
Only then, AFTER we have plugged the MASSIVE holes that drain $1.5T a year from active circulation in the USA economy, can we begin to worry about small fine tuning such as small deficits in bad years and small surpluses in good years, as Keynes professed would help flatten the business cycle by adding/removing small amounts of money to be counter cyclical.
‘I fear you are talking about me’
No, I don’t know what your background is but it doesn’t look Keynesian.
Keynesian theory is contrary to common sense. We all can see the value of living within your means, keeping debt as low as possible, producing goods and services that have real value, etc. They say forget all that; borrow, print the money and spend it defending against space aliens and all will be super. You never have to pay it back; something for nothing. It’s just bunk.
Now, you might say, but there are all these professors that believe this stuff, that guy who writes for the New York Times! Well, there’s lots of big shots that think we can close all our factories, send them overseas, and borrow/spend our way to prosperity too. And most people in power think we can borrow gobs of money for the military, stick our head in every hornets nest in the world, and we’ll be safer for it.
Keynesians are the equivalent of religious snake handlers. It’s so stupid it isn’t worth arguing about. And I know, I did it for years in college with my professors.
Keynesian theory is contrary to common sense. We all can see the value of living within your means, keeping debt as low as possible, producing goods and services that have real value, etc. They say forget all that; borrow, print the money and spend it defending against space aliens and all will be super. You never have to pay it back; something for nothing. It’s just bunk.’
It is bunk and that is not at all what Keynesian theory says. He advocates counter cyclical spending. The examples of filling in holes and space aliens were made to make a point not put forth as equivalent or better than rebuilding infrastructure and investing in science and manufacturing. Keynes does recommend keeping debt low in the good years so the gov can keep the economic crashes from destroying society when times are bad. Just because this was not done by those who now preach austerity doesn’t mean that it doesn’t work.
Now, you might say, but there are all these professors that believe this stuff, that guy who writes for the New York Times! Well, there’s lots of big shots that think we can close all our factories, send them overseas, and borrow/spend our way to prosperity too. And most people in power think we can borrow gobs of money for the military, stick our head in every hornets nest in the world, and we’ll be safer for it.
1. There aren’t a lot of big shots that think we can close all of our factories, send them overseas, and borrow and spend our way to prosperity. They do however believe that they can enrich themselves if they can buy gov policy and convince the sheeple of these points. They also believe that they can consolidate their power and that appears to be happening.
2. I doubt Most people in power think we can borrow gobs of money for the military, stick our head in every hornets nest and be safer for it. Again I would suggest that this is done so that big oil and the military industrial complex can make mountains of money. You’ll notice that we are much more likely to stick our head in if their is an oil interest, or a threat to our dollar, or military sales. There are plenty of sorry places in Africa with much larger atrocities that are ignored.
The argument that says Krugman is wrong because there are others who believe crazy things seems a bit weak as well.
“Keynesians are the equivalent of religious snake handlers. It’s so stupid it isn’t worth arguing about. And I know, I did it for years in college with my professors.”
3. So if we didn’t have WWIi or stimulus spending at the time of the last depression how long would it have taken to recover? Would society have survived the rapid fall into poverty? What should Europe do? Do you really think the continent would be better off right now if the central banks stopped stimulating and governments cut spending to match GDP right now? My guess is no. Greece voted in 6% neo nazi’s and the sht hasn’t even hit the fan yet. If the EU hadn’t been propping them up you can bet some bad people would come to power.
I tend to agree with Darrell that the big problem for stimulus spending is that it quickly leaves our shores and goes to China, although i imagine his argument would be that eventually the dollar will fall in value and the trade imbalances will correct.
What economic theory do you think we should be following and where has this been applied with good success?
‘if we didn’t have WWIi or stimulus spending’
Yeah, always going back to ancient history. What would the people of Athens have done without the public works of Pericles!
‘He advocates counter cyclical spending’
Well, he’s dead, but that isn’t what happens is it? This stuff doesn’t work in the real world, which is why it’s been discredited.
The argument that says Krugman is wrong because there are others who believe crazy things seems a bit weak as well.
Oh yeah? Who are the big proponents of this gibberish these days? The space alien guys.
‘What economic theory do you think we should be following and where has this been applied with good success?’
Living within your means, keeping debt as low as possible, producing goods and services that have real value. That’s not too hard to understand is it?
Or anything but space alien defense. These people are a joke.
‘PAUL KRUGMAN, NEW YORK TIMES: This is hard to get people to do, much better, obviously, to build bridges and roads and healthcare clinics and schools. But my proposed, I actually have a serious proposal which is that we have to get a bunch of scientists to tell us that we’re facing a threatened alien invasion, and in order to be prepared for that alien invasion we have to do things like build high-speed rail. And the, once we’ve recovered, we can say, “Look, there were no aliens.”
Read more: http://newsbusters.org/blogs/noel-sheppard/2012/05/26/krugman-scientists-should-falsely-predict-alien-invasion-so-governmen#ixzz1wK4UBL1k
I think Krugman’s facial hair has grown up through his nostrils and into his brain, I really do. I used to think the guy had something here and there to contribute, regarding his comments on the bubble of years ago.
He doesn’t even rise to the level of useful idiot anymore. Now he comes off as a complete whack-job.
hi Palmy,
i think it’s that your understanding of economics has improved. krugman is as dense as he ever was. no change there. the change has been in you. congrats.
Why does NO ONE want to live in a socialist wet dream of a city that has been run into the ground by 60 years of unbroken democrat/liberal rule?
Why are they NOW contracting out maintenance? In the end - public unions even destroy their liberal hosts.
——————————————–
]Half of Detroit’s Streetlights May Go Out as City Shrinks
Bloomberg | May 25, 2012 | Chris Christoff
Detroit, whose 139 square miles contain 60 percent fewer residents than in 1950, will try to nudge them into a smaller living space by eliminating nearly half its streetlights.
Solution: higher taxes, more spending, more regulation, more borrowing, more power to unions.
It hasn’t worked for 60 years, but in the 61st year I’m confident we’ll get it right!
Yet we’ve been getting for the past 30 years:
lower taxes
less regulation
less unions
And things have become setadily and progressively worse.
You have to put it in context: what made Detroit great were the auto manufacturers and the ancillary businesses that supported and fed off that. When they moved out of Detroit, most of the jobs went with them (as well as the tax base).
The question you need to ask is why did the auto manufacturers (and their suppliers) move to Dearborn or Auburn Hills?
Before the auto industry rose to prominence, Detroit had a highly diversified manufacturing economy. Afterward, Detroit became a monoculture, with predictable effects.
Was by Detroit last week. Apparently the City is trying to offer outlying homes to persons still in a area that has been mostly razed.
I guess the motor city is getting into manure.
Darrel / Ben
From the sounds of it one doesn’t believe in Keynes and the other sort of does when not faced with a depression scenario.
Keynesian economics have never been favoured by me. I think it is impossible for any simple servant to rifle stimulus in any meaningful way.
Darrel, you mentioned 1.5T yearly. Please don’t forget that this is actually 50% higher when you consider the average cost of capital reduction the feds are enjoying, and spending elsewhere.
News Summary: Research group finds surprising drop in consumer confidence in May
By Associated Press, Updated: Tuesday, May 29, 12:07 PM
THE NEWS: The Conference Board, a private research group, said Tuesday its Consumer Confidence Index stands at 64.9 for May, down from a revised 68.7 in April. The measure hasn’t been near the 90 reading that indicates a healthy economy since December 2007.
THE CONTEXT: With gas prices falling, analysts expected the 500 Americans surveyed to push the measure up. But worries about home values, slow hiring, big drops in the stock market and the impact of a worsening European economy on the U.S. overshadowed that improvement.
…
3 years of high double digit REAL inflation will do that.
Unexpectedly.
THE CONTEXT: With gas prices falling, analysts expected the 500 Americans surveyed to push the measure up.
They always ask these questions when the subject just walks out the door with a cold fresh 12-pack. Why not ask when he’s down to a can or two?
on memorial day i re-watched (listened) to Presiden’t Eisenhower’s fairwell address in its entirety.
If you haven’t listened to the entire thing…there is much more to it than just the warning regarding the military industrial complex.
needless to say…we didn’t heed any of his recommnedations…we should have though.
“military industrial complex”
Which presidential candidate is most likely to increase the amount of pandering to it?
Rmoney. And yes, that’s a deliberate typo.
He’s not the guy behind domestic drone spying and the out of control NSA information gathering apparatus, I am pretty sure that is happening under Obama.
Obama is also pandering to the more destructive Wall Street Bank Government Housing Crime Syndicate Industrial Complex, the WSBGHCSIC.
The REIC/MIC/WSIC owns the office and whoever occupies the office. No elected office holder can change it.
An exit from the euro would cause a significant drop in the living standards of Greek citizens — with a reduction of at least 55 percent in per capita income,” the authors of the 17-page report wrote.
“This would affect those on a lower income the most, with a significant devaluation of the new currency, by 65 percent, and financial contraction of 22 percent on top of the (GDP) reduction of 14 percent that occurred between 2009 and 2011.”
The bank report also warned that if Greece did exit the euro, unemployment would rise to 34 percent while inflation would hit 30 percent and then higher. Unemployment in Greece currently stands at around 22 percent while inflation is 2 percent.
Gee you think the banks might want to paint a bad picture for those considering defaulting on the debt handed out like candy by the banks.
above from yahoo finance
The bottom line is things will get worse either way. Default and a new currency will allow Greece to compete better and draw more tourists and increase exports, it’s citzens will be more self reliant, ie eat Greek Cheese, drink Greek Wine, fix things instead of buying new German/Chinese goods. This may decrease unemployment vs what’s going on now. I certainly wouldn’t base my vote on what the banks say.
LONDON (Reuters) - Elite companies in Europe and the United States are hoarding $1.2 trillion of cash on their balance sheets, potentially missing opportunities to cut debt, reward faithful investors or accelerate their growth, a survey on Wednesday showed.
In its Annual Working Capital Management Survey, auditors Ernst & Young found that 2,000 of the largest U.S. and European firms were keeping the sum - equivalent to nearly 7 percent of their aggregated sales - unnecessarily tied up in working capital, amid fears of a fresh credit squeeze or economic downturn.
“While there have been signs of corporate confidence in the global economy, macro-economic uncertainty in Europe has left many businesses and financial institutions cautious on financing and growth,” said Jon Morris, Head of Working Capital Management at Ernst & Young for Europe, Middle East, India and Africa.
“Now’s the time for companies to challenge their working capital performance and seek effective strategies to free up excess cash from the balance sheet to reduce net debt, fund growth or business transformation or even return value to shareholders,” he said.
Gee who to believe the collective wisdom of the Elite companies or Ernst and Young???
The elite companies know the shit is not through hitting the fan. They need their payroll in cash five times over, or the next financial crisis could wipe them out.
Professor Fixr’s Explanation on how doors on airplanes can fall off “unexpectedly”……
The long version:
Most large bizjets have “Airstair” type doors,….they hinge at the bottom, open down, and the steps are integrated with the door.
These things are heavy. They all have some type of “pre-catch”, that latches the door in the closed position, with the locking mechanisms lined up, so the crew can turn to door to “locked” without having to hold the door/linkages/catches in alignment at the same time.
These pre-catches are NOT designed to hold the door closed against a pressurized cabin. Put one psi on the cabin, and YOU WILL blow the door off the precatch……a 3′ x 5′ door for example, will have 2160 pounds of pressure on it, at ONE PSI.
I’ve seen it happen at least 3 times myself….two times on the ground, and once in flight. It tears up a bunch of stuff, least of all the door…..even if it stays attached to the airplane.
If passengers are on board, you can add a bill to reupholster all of the seats.
And yes, there are warning lights letting the crew know that the door isn’t locked. At least double redundant. Some airplanes have six switches, any one of which will turn on the “DOOR UNLOCKED” light….if one doesn’t match the rest, it will illuminate the light.
The short version:
-Crew didn’t lock door.
-Crew ignored/didn’t get “DOOR UNLOCKED” light.
-Pre Catch let go when cabin got to around one psi.
-Owner of aircraft has two pilot jobs open.
If passengers are on board, you can add a bill to reupholster all of the seats.
??
Mechanic humor in regard to passengers soiling themselves :-).
+1 Thanks!
From Bloomberg
Starting in the 1970s, these limits were progressively removed. The deregulation unquestionably increased the efficiency of the banking sector and fostered economic growth. But with this growth came concentration. In 1980, there were 14,434 banks in the U.S., about the same number as in 1934. By 1990, this number had dropped to 12,347; and by 2000, to 8,315. In 2009, the number was less than 7,100.
Most important was that the concentration of deposits and lending increased significantly. In 1984, the top five U.S. banks controlled only 9 percent of the total deposits in the banking sector. By 2001, that figure had increased to 21 percent and, by the end of 2008, to almost 40 percent.
This process of deregulation and consolidation culminated in 1999 with the passage of the Gramm-Leach-Bliley Act, which completely removed the separation between commercial banks and investment banks. The real effect was political, not economic, at least directly. Under the old regime, commercial banks, investment banks and insurance companies had different agendas, so their lobbying efforts tended to offset one another. But after the restrictions ended, the interests of all the major players aligned. This gave the industry disproportionate power in shaping the political agenda.
This process of consolidation is also affecting other industries and oligopolies exert more and more control over our gov. Forget economic theory the big problem is political and the concentration of power and wealth.
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