Can We Survive Another Four Years Of Central Bankers?
I suggested this topic. “Can the nation survive another four years of Bernanke?”
A reply, “Now that we have perma-QE its only matter of time until it all comes crashing down. It seems that they refuse to see the 800 lb gorilla in the room, namely that the world is awash in goods that low paid workers around the globe have no hope whatsoever of being able to afford or buy. Meanwhile the middle class has become an endangered species in the first world. Who is supposed to buy all the crap?”
One asked, “What does the inevitable collapse look like? He may win his battle but at what cost?”
A reply, “I say yes, but it won’t be pleasant. Our economy has a lot of inertia. I’ve seen large companies take decades to dwindle after their business model no longer worked. We have been sitting here watching this meltdown in suspended animation for the better part of a decade already.”
“Half the country is so happy with where we’ve been for the past few years that they want to keep the current administration. Then we’ll get six more years of Bernanke. The other half is so clueless about what is happening, they think a new, yet clueless administration will make everything better. The very few who think we have more than a flesh wound to deal with cannot be heard over the party music.’
“I don’t believe we will get any real changes from our leadership until a significant number of the citizens see clearly what has happened and get animated about it. Change will come when the pols are more afraid of the citizens than they are of their campaign contributors. We are not even close to that.”
Another question, “Can a nation free itself from behavioral economics? Can they reverse 6 decades of quick gratification consumerism? Will the population shrink? There will always be another chairman like Greenspan/Bernanke but will there ever be another Volcker?”
One had this, “All I know is that the last 7 years has been a big waste as far as the Powers doing anything that would correct the problems that got us into the jams to begin with . Nothing but policies designed to either bail out the Money Changers or keep the corrupted systems going. I won’t be able to stand another 4 years of Ben Bernanke.”
And another, “Instead of moving to protect consumer deposits from the Wall Street gambling machine, breaking up the TBTF entities, nothing of consequence has been done to reign in Wall Street over the four years since Lehman.”
“The US economy is morphing from one where a cautious financial sector serves to provide loans to the real economy, we’ve moved to a system where the rest of the economy is bled to keep Wall Street profitable. This makes a small group of people fabulously wealthy. Is this sustainable? Is it just?”
And finally, “Can I expand the question slightly? Can the World survive another four years of central bankers?”
From MarketWatch. “The Federal Reserve’s third round of asset purchases should put some downward pressure on home-mortgage rates and help the housing sector recover, Sandra Pianalto, president of the Cleveland Federal Reserve Bank, said Thursday. ‘These lower rates should provide further support for the housing sector by encouraging home purchases and refinancing,’ she remarked in a speech.The program might help bolster consumer confidence if it can help stabilize housing prices, she said.”
The Financial Times. “Guido Mantega, Brazil’s finance minister, has warned that the U.S. Federal Reserve’s ‘protectionist’ move to roll out more quantitative easing will reignite the currency wars with potentially drastic consequences for the rest of the world. ‘It has to be understood that there are consequences,’ Mr. Mantega told the Financial Times. The Fed’s QE3 program would ‘only have a marginal benefit [in the U.S.] as there is already no lack of liquidity . . . and that liquidity is not going into production.’”
“The Bank of Japan on Wednesday said it would buy another Y10tn ($128 billion) of government bonds, expanding its asset-purchasing program to Y80tn – an operation aimed in large part at weakening the yen. Mr. Mantega said Brazil had ’so far only seen the consequences of a change in expectations’ from the launch of QE3 as the resources had not yet been released. ‘Risk aversion has fallen and animal spirits have increased,’ he said.”
The Telegraph. “(At) the World Economic Forum in Tianjin last week, Jamil Anderlini from the Financial Times reported a pervasive tone of ‘despondency and cynicism’ from Chinese officials and economists, in marked contrast to the bullish certainties — or naïveté? — of foreigners at the event. ‘I believe China is going to experience a very serious economic downturn and I think it has already started,’ said one leading economists. ‘The government is trying now to stabilize the economy but the instruments they have are very limited. If it can’t turn things around then I expect huge and widespread social unrest.’”
“The Politburo clearly misjudged the difficulty of deflating a property bubble after letting loans grow by almost 100pc of GDP in five years (IMF data), almost double the rate in Japan over the five years before the Nikkei bubble burst or in US before the sub-prime peak. Let us not forget that reserve accumulation — the side-effect of holding down the yuan to pursue export share — was the prime cause of China’s credit bubble in the first place.”
“It automatically forced China to import a US monetary policy that was far too loose for the needs of a fast-growing, over-heating economy, as Alan Greenspan warned at the time. It seemed to work marvellously, but Faustian Pacts come due. This powerful process is now going into reverse. Lombard Street Research estimates that capital flight has reached $320bn over the last year. Monetary policy is tightening by default.”
“‘It is a massive shift down through the gears for the monetary printing press. And if the capital outflows accelerate, the next gear may yet be reverse,’ said Albert Edwards from Societe Generale.”
“China’s $3.2 trillion reserves may be large at 22pc of the M2 money supply, but they were even larger — 35pc — for the Asian Tigers just before their currencies buckled in 1997. The reserves prove nothing either way. The issue that matters is whether they are enough to overwhelm the actions of China’s own elites, should they continue to squirrel money abroad as fast as they can.”
From News Talk CJME. “They say a housing boom is a good indicator of how a city’s economy is doing, but in Regina the housing market is also helping increase our economy. That was the finding of a new Conference Board of Canada report issued on Tuesday. It says the city’s economy is expected to improve by 3.7 per cent in 2012 thanks in part to our on-going housing surge. Both the Conference Board and the Regina Home Builders Association agree that the city will likely see 2500 new housing units built in 2012. If that number seems high, that’s because it is.”
“Stu Niebergall with the Regina Home Builder’s Association says the housing boom leads to a lot of positive spin-off effects for the economy. ‘That translates into a little over $1 billion worth of investment, over 5,000 jobs in new construction, renovations and related fields, over $300 million dollars in wages which will certainly show up in purchases across the whole regional economy, and actually millions and millions of dollars contributed to three levels of government through taxation of fees and levies,’ he said.”
“Dundee Development’s Paul Moroz says they are building as fast as they can. He explains the market has simply undergone a formative change in recent years. He says the old Regina market, with two-story houses on 50 foot lots and bungalows on 40 foot lots with a few condos in corners around the city, isn’t the reality today. ‘That was six or seven years ago when you could get that big house on the 50 foot lot for $150,000. That world doesn’t exist anymore,’ Moraz commented.”
“He points out that the new norm is for smaller lots and denser construction. He says basement suites are routinely being built into new homes in the area, something that would have been inconceivable just a few years ago. ‘We’ve had to change our entire business model so that we can build stuff that people can actually afford. Things are getting smaller, smaller and smaller - density is getting higher and higher and higher,’ Moraz explained.”
I was at a non-chain local lumberyard/hardware store yesterday. A gentleman came down the aisle I was in and started lamenting about how the prices for some faucet handles had doubled in the last six months and the quality was still crap. I suggested that he order online but he needed them for a job he was doing-now! We chatted for a while and both had the same observation that the stores are carrying less variety in their inventories while pricing is edging upward. Seems like we are coming full circle where we will buy all our plumbing supplies from a plumbing store, electrical supplies from an electronics store, quality tools from a tool store, etc.
Sear’s, Montgomery Wards, and J.C.Penny’s catalog stores that faded away are being resurrected with online buying. I resisted buying online until I needed some quality parts and found that was the only place that had the selection. Does this mean more mortar and brick stores are on their way out–I think so. If so, more commercial RE not needed.
Same story here. One of our toilets has a float assembly that is in need of replacement. Rather than buy the first available plastic junk at the local hardware store, I looked until I found a nice solid brass valve…online.
Not all commercial RE is the same. We may not need more Retail space, but do we need more Industrial space (warehousing/distribution)?
The efficiency of online stores is really unstoppable. I think retail is toast for everything but fashion.
“…everything but fashion.”
Ahem.
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Fashion is troublesome due to fitting. Women’s sizes are inconsistent from brand to brand. Men can buy pants by waist size and length. Women are stuck with sizes that do not correlate directly to any measurement but only give a general idea of fit.
And then there is the consideration of material. I want to be able to feel the fabric before I buy.
I refuse to buy pants or shoes online. I might buy a sweater or sweatshirt where the fit is not so critical.
Even with free returns, the hassle of returning the product inhibits my willingness to buy online.
You’re mistaken if you think men’s sizes are consistent. There are too many different fits for Levis jeans to Docker’s brand trousers. Are there people that really follow all that and pay attention? Guess so. It just makes it so hard to shop. Of course explains way I am such a sartorial mess.
That should be good news for UPS, FedEx and the Post Office.
U can’t FEDEX an ice cream cone.. Or frozen yogurt
Use your imagination.
Frozen Yogurt Delivery New York
Ummmmm… Ok. But I want it… right NOW!! Not 2 days from now!!
There are also online places where you can submit your measurements and have custom jeans or dresses made, which is a boon to women who aren’t of standard proportions. (The cost is roughly the same as off-the-rack.)
This is interesting. I was not aware that you could do this online. Is that roughly the same as off the rack full retail price? I usually shop end of season sales if I am looking for something and can often buy 50% or more off full retail.
The efficiency is one thing. The other (and bigger factor, IMHO) is that the stores have cut everything so close to the bone that they are effectively just a “out of stock” copy of Amazon with sales tax. Not a great business strategy.
What do I mean by this? Well, let’s say you want to buy a big ticket item. Call it a TV. You could walk into your local big box store and ask for help. But, what kind of help are you going to get? A 20 year old kid who couldn’t articulate the benefit of a dynamic iris if his life depended on it.
Go on Amazon, look at the same TV, and you’ll see hundreds of well written, well informed reviews. And it’s cheaper. And I don’t have to lug it to my car and then to my house. And they have an unbeatable return policy. And they will ship a 60″ TV next day air for 3 dollars (or 2 day for free). And I don’t have to pay sales tax.
I mean.. What possible advantage does a big box retailer have in this equation? Yeah, you can see the TV. Setup all wrong, in terrible lighting, with crappy source material you’d never watch at home. I’d much rather have the wisdom of the crowds behind me, read reviews, figure out what is/isn’t important to me and then make a decision. And, if I’m wrong, I’ll just send it back.
I hate shopping in person more and more all the time. It’s so time consuming and stressful, I don’t want people in my face, and I don’t want to have to check 3000 websites to see if this is the old model you’re trying to pawn off on me.
I also hate conducting business face to face or on the phone. I’d much rather talk, come to an understanding, write it all down in e-mail, and negotiate the details that way. When we bought our car, one of the buying criteria was “Can you make an appointment online” for service. I can’t stand calling in and hoping that a 10 dollar per hour employee actually does the scheduling correctly. E-mail is so much more precise. As is online shopping. And lots of other things where we’ve managed to remove human error (airline booking, hotel booking, etc).
I probably spend (except for cars and housing) 80% of my discretionary income online. The only big expense that I regularly make in person is the grocery store (and the gas station). And I love it; it’s a huge step forward for me, I wind up with better products at better prices and never have to listen to a single sales pitch.
Overtaxed, you act like people doing physical shopping is some sort of dinosaur. In fact it happens millions of times a day across the USA. The sociopaths like you (no offense meant) are in the minority, and it will always remain that way. Catalogs didn’t kill the storefronts. Neither will the Internet.
Also, I never heard of shipping a 60″ TV via next-day air for $3. Nobody can make money doing that, not the seller or the shipping company. You must be talking about a loss leader.
The internet IS killing the storefront, and it’s doing it rather quickly. Best Buy, Circuit City, etc. All victims of the internet. Blockbuster is another great example, a business model that’s totally irreverent in the age of the Internet.
That shipping price is curtsey of Amazon Prime. It’s a membership that costs 50 (I think) bucks a year that lets you ship everything (that’s Prime eligible) for free 2 day air, or for 3 bucks overnight. It’s a loss leader for Amazon, but… What the heck do I care, that’s their business, and, apparently having me spend a vast percentage of my discretionary income with them is worth losing some money on shipping.
Physical shopping isn’t totally gone, and yes, there are a lot of people who enjoy the social aspects of it (primarily women). Which, BTW, is why you are seeing “male dominated purchases” being the first types of businesses that fold; most men don’t want to go fight with other people in line, deal with undereducated “experts” in the store and pay a big markup for the pleasure.
IMHO, almost all B&M stores that are selling those male dominated items today will be gone (either entirely, or moved to the Internet) in the next 10 years. And women, I think at some point, are going to catch on; my wife must order 20 things a month from Victoria’s Secret, she hardly ever goes to their B&M store anymore.
People still send millions of faxes a year too, it’s still a “dead/dying” paradigm. Same thing with landline phones, Verizon still makes a ton of money with “home phones”, even though, for almost everyone, they’d be better served with a cell phone and getting rid of the 20 bucks a month they are paying to VZ today. I’d argue that the B&M retailers, for many items, are in that same category.
I can think of 10 bad “person to person” transactions I’ve had over the past year. I can’t think of a single Internet transaction I’d put in that category. The more that I can do online without speaking to another person (except via e-mail), the happier I am.
I’m not sure sociopath is the term I would use. I hate getting ripped off, and, in my experience, the vast majority of my person-person transactions start with the seller trying to take advantage of me. It’s so tiring to fight with people about the details of something, and, also, because nothing’s written down, it’s darn near impossible to get a handle on what I actually paid for (or what I paid for anything). I can’t stand walking around the store not knowing how much I have in my cart and what everything costs until I get to the register (thank you everything on sale culture). As such, I try to stay away from it as much as possible.
Physical shopping isn’t totally gone, and yes, there are a lot of people who enjoy the social aspects of it (primarily women).
Ever notice how the Lion’s share of floorspace in Department stores is dedicated to women? Men have always hated shopping. That’s why you’ll never find a JC Whitney store in a mall (or anywhere for that matter).
And then there are the myriad of small shops in the mall, which almost all cater to women. For men? Let’s see … maybe a sporting goods shop, a Sharper Image or a Brookstone (are those still around?) and maybe an Eddie Bauer store.
I do very little shopping. Most of my retail trips are buying trips. This is akin to the way men shop. They have a specific objective.
The exception is Christmas, where going to the store is a way for me to figure out what someone might like. Sometimes I will end up buying at the store. I am doing less of this every year, preferring online ordering for its convenience and time saving. I can order cheese from all over the world or sourdough bread from San Francisco for my folks and not have to worry about packaging it myself.
My 56″ tv shipped free. Price was $200 less than the local store too.
INSTANT gratification. Don’t underestimate it. Being able to see/feel/touch the device then cart it out to the car.
Versus waiting a few days. Plus, unless you have a house, delivery is sketchy. So for renters, buying at a big box is the way to go.
Some big box retailers are starting to push their weight around…they don’t want to simply be a showroom for internet businesses. Do you think anyone is going to buy a big TV on the internet without first seeing it first in real life?
I’m willing to wager that over 80% of the time, an internet TV purchase is preceded by the buyer looking at the TV in real life at a physical retail location.
I think I first heard of Target trying this (can’t find the article though)…they are asking certain brands to make a Target specific version of products. In other words, some of the TVs offered by a name brand in Target will ONLY be available at Target.
I’m waiting for someone to create a mobile scanning application that gives money to the physical retailer where the scan was completed (has this happened yet)…don’t know how, or even if it would work…
I’ll bet Amazon could do it…you need to link your Amazon account to the scanning software…if the scan occurs in Target, and then that account buys the product via Amaon, the retailer gets x% of the revenue generated. You could make it generic by online retailer, but you would need to have all sorts of online purchase accounts linked to the software…might make people nervous.
In other words, some of the TVs offered by a name brand in Target will ONLY be available at Target.
Actually, that’s been done for a long time. Originally, it was so they could give you those “price guarantee offers”, you know, the “We won’t only match their price, we’ll beat it by X%”.
HP did this with its DeskJet printers. All they did was ad a couple of letters after the model # and voila! Best Buy now had its own unique version of the DeskJet 870, which was indistinguishable from the one sold at Costco, except that the model stickers on the back of the printer would say DeskJet 870xj vs. DeskJet 870yj.
“indistinguishable from the one sold at Costco”
My understanding is that these would be different than just the model number, unique offerings. May be a very similar 42″ LED for instance, but with some very real differences.
About 15 states collect tax now for Amazon purchases, as of this month, and this will probably be the rule for the entire US in the near future.
Placed a sizable Amazon order on September 11, 2012. Some items shipped before Sept 15, others on or after. The latter were charged sales tax, the former were not.
The stores themselves aren’t helping any, by making their employees hit you with “are you findin’ everything okay??” as soon as you walk in the door. And then if you can’t find something, they go to where you just looked and say they don’t have it.
I’ve found a lot of food items that stores stopped carrying by going to Amazon.
They say a housing boom is a good indicator of how a city’s economy is doing, but in Regina the housing market is also helping increase our economy.
I recommend using Google Maps to take a look at where Regina is located, and what surrounds it. “They’re not making any more land” may be true, but there doesn’t seem to be any shortage of it near Regina.
The question is whether the PTB in and around Regina allow that land to be developed.
That is the problem in some places, not others.
This gets thrown around a lot, but misses the real issue, IMO. In the mid 90’s I was working just south of Austin near I 35. It’s very easy to develop land in Texas. Co-workers were buying new houses for around 60k with 5% down. When I was there in 2010, similar new houses were being marketed for 150k, with zero down. There’s land in every direction just like that under these houses.
There is an important aspect to the Fed action that doesn’t get much coverage. Price tells the market when supply needs to be increased. If prices are artificially held higher, this provides incentive to build when in fact more supply is not needed. In a mania, speculation hides the oversupply. And now, we have govt/bank hoarding also masking inventory.
Did you read my post a while back about builders ramping up in the Vegas area? Talk of a shortage of lots, etc. Does anyone really think there is a shortage of any housing in Vegas? This is just one of the dangers distortion of supply and demand holds.
I remember telling a reporter back in 2005 or 6 that several times when the bubble was running out of steam, the lenders had unnecessarily juiced it, making things much worse. I’m curious why no one in the media, that I have heard, is making comparisons of current govt/Fed policy to that period.
The reason is very simple. The “media” are handpuppets of the Banksters. They don’t report any news that wouldn’t make it out on phone lines across America, just propaganda to support their current “System”.
The Banksters only role for the FED is to shore up the Banks and make them more money. That is it’s real and only goal. The rest is window dressing.
The FED is doing what the Banksters want, so the Papers report what a great job Bernanke is going “saving the economy”, meaning the Banks.
No further analysis is required, or desired.
Understand, but lack of developable land serves as a supply restriction that in bubble times (caused by Fed interest rate policies) that can give the home price increases rocket fuel in the face of artificially increased demand at all price points.
Rental Pimp just can’t resist invoking the “we’re running out of land” lie.
The reality is a mere 5% of the globe is developed.
I never said we are running out of land. I simply said that in some municipalities it is easier to get approvals on said land than other municipalities.
The fact of the matter is that the “running out of land” phrase is wrong for more reasons than you state. You are talking about green field development. The reality is that whenever a developer creates a new condo map, they are creating more “land” in the sense that there are more housing units that can be created on the same piece of dirt.
However, if no one allows those units to be built, availability of green fields, or desire to map a new condo will not result in more homes being built.
That is the problem in some places, not others.
It kept prices up in Boulder.
At a minimum, we have a bit over a year left of Bernanke (term over Jan-2014). The problem is this…of those voting on QE-infinity, only ONE voted against, ELEVEN for.
When Bernanke’s term as Chairman is up, the next Chairman is appointed by the President from the sitting Governors (who serve 14 year terms). All seven of the current Governors voted for the last FOMC action. Two of the Seven have terms expiring before the next Chairman appointment (will they be re-appointed?). Bernanke’s term as Governor ends in 2020.
My counter to the question of whether we can last another X years of Bernanke is: Given who will likely be sitting in his chair next, does it matter whether it is Bernanke or someone else?
Bernanke will be re-appointed. After his subprime gaffes, there’s obviously no political willpower to holding such a banking establishment to account. Geither, Summers, Bernanke… and other insider names that I’m not aware of… will all remain at the helm of this sinking ship.
Unless someone takes them all out…
ISTR the 100-year charter Fed’s charter ends soon. What’s the chance it can be stopped from being renewed?
Are negative numbers allowed?
“Things are getting smaller, smaller and smaller - density is getting higher and higher and higher, …”
If you have traveled to Europe you will see what urban density is. 4 story building on zero lot lines. I cannot even speak to Asian or South American conditions. Some folks like this kind of living. Not me, I am a far from the madding crowd kind of guy. I am weary of this kind of shift even if it does make things more affordable. I was fairly disgusted by the McMansion and Garage Mahjal housing development during the bubble, but increasing density may have another driver beyond affordability. Municipal tax revenues increase with every additional family unit added per square mile. Damn the quality of life, gov wants increased revenues to stoke the fiscal fire they have built pandering to get votes and contributions.
What does open, free space vs dense living do to a person? A society? What are the financial consequences of each short and long term?
I know I prefer eclectic over cookie cutter, open versus dense properties, honest and helpful people vs cut throat arrogant folks to live amongst.
With so much of our quality of life being determined by folks like Bernanke and gov I see my job is to figure out what works for me, look at what is going on and how these things from above may impact me and adjust my actions to move in a course that I am content with. Right or wrong at least it will be my life by my choice as much as possible.
As far as I’m concerned, they should stack ‘em as high and tight as possible. Leaves more room for me.
“What does open, free space vs dense living do to a person? A society? What are the financial consequences of each short and long term?”
Dense living, in general, turns us far more savage. When there’s a perceived competition for a resource, the worst in people will inevitably come out. Case in point, NYC.
More people in this country (immigrants or children) is the last thing that we need. Put enough people here and suddenly your just like Japan (only a lot bigger), a he**-hole if there ever was one.
That is my sense of things as well, but then if we look at Japan and how the people there behaved when the tsunami wreaked havoc it does not support the increased density == increased savagery position does it? Those folks were civil and there was not one instance I saw nor heard of looting nor savagery in any form. How do we explain that? Is it the culture?
When you compare that to Katrina and how the folks behaved in New Orleans it is night and day. Why? And I am not going to even go into race on this one. Is it possibly some level of built up frustration coupled with perceived oppression? I have no clue, I have only my experience and observation to work from and I know I would not be happy in a dense urban space or even a cookie cutter development.
I am only in my eclectic and funky suburban space because it has a great school for my kid. After he is done I am outta here and off to wild open spaces. So, like AmazingRuss said, let em build em high and tight because it leaves more space for me.
The price to pay for bottling up Americans into cities with little to look forward to but police brutality and welfare checks, is RIOTING.
Anyone who knows American culture can predict that in two shakes of a lamb’s tail.
They can riot all they like, so long as they’re kept in the cities.
Don’t be so smug about suburbia, according to a recent study
the number of suburban households in poverty grew 53 percent between 2000 and 2010, compared with 23 percent in urban areas.
That is my sense of things as well, but then if we look at Japan and how the people there behaved when the tsunami wreaked havoc it does not support the increased density == increased savagery position does it? Those folks were civil and there was not one instance I saw nor heard of looting nor savagery in any form. How do we explain that? Is it the culture?
Social norms are powerful things. For better or for worse.
A follow on comment about behavioral economics.
There maybe a formal name for the theory of ‘behavioral economics’ like ‘Freudian’ economics’ but what ever it is, it could be dangerous to inform the public about it.
What we are told is that Supply-Side or Keynesian economics is what is really makes western economies work. I reject those explanations even though there are clearly elements of both at work at the macro scale. My question is if we are living in a world of behavioral economics rules then how could it be used to improve the standard of living of the maximum number of citizens? My second question is if we think behavioral economics are bad then how will we change it and what will we change it to?
I guess it really depends on who is deciding what an improvement is and if you improve things for 47 percent of the folks, but degrade conditions for 46 percent is that an improvement? There seem to be a lot of folks out there who are quick to tell me what I should be doing, but if you dig a bit you find that only applies to me, not them.
“‘These lower rates should provide further support for the housing sector by encouraging home purchases and refinancing,’ she remarked in a speech.The program might help bolster consumer confidence if it can help stabilize housing prices, she said.”
Why is it again that the Fed thinks it is good policy to pour kerosene onto a bonfire?
Because everyone oohs and ahhhs during the big, if brief, flare up?
Oh Sandra, you are so caring, god bless you.
We’re not going to make any headway against the bankers unless we either start going on a Mortgage Strike, or we start supporting Libertarian government. As long as we keep collaborating with our oppressors, we can’t improve.
A Mortgage Strike? How about you live within your means, not borrow for convenience or greed’s sake, and dry up the well for the bankers. There is no high ground in borrowing the money and then calling foul.
How about you live within your means, not borrow for convenience or greed’s sake, and dry up the well for the bankers.
+1, Blue Skye.
STARVE THE BEAST!
That SHOULD work, except for the fact the Bankers would simply scrape their plates of your (and everyone else’s) late mortgage(s) on the Fed.
I may or may not be able to survive another four years on Weimeranke. I came dangerously close to Bank of Dad this summer. If my LL raises rent next year and food/gas keep going up, I will need to borrow money from my pops until my son makes it to Kindergarten.
I work too many hours to take on a second job.
But… it’s not about me, it’s about chartzengrafs, and “saving the market.”
If things come off the rails in Florida (like, really off the rails) I will move my family in with my folks in NY state. I’m beyond caring how that looks to other people.
“I’m beyond caring how that looks to other people.”
That feeling is liberating for just about every issue in life. Do what you have to do and good luck out there.
Also good to know you will likely have lots of company.
Case in point: I never pondered it much at the time, but when I was in my early adult years, there was a period when three of my parent’s four adult children were living at home with them, after college. That period just so happened to coincide with the last time of my adult years when the economy was as FUBAR as currently.
A couple years hence, we were all on our merry paths to the four corners of the U.S., without looking back.
From Ben’s “Guaranteed Victory” thread of yesterday:
So it sounds like both China and the U.S. have similar issues with respect to millions of homes in shadow inventory. Here are a few questions:
1) Has anything of this nature ever before happened in the world economy?
2) If yes, how did it resolve?
3) If no, how is the situation at hand likely to resolve?
So far, I have little clue on 2) and 3). As to 1), my answer is, “I doubt it, but trying to keep an open mind.”
‘In a companion essay to the two forecast reports, UCLA Anderson economist William Yu discusses economic conditions in China. In his essay “The End of China’s Economic Marvel,” Yu says that a prediction the Forecast made last December about China’s economy has proved true. “We predicted that China would experience a ‘hard landing’ and expect that it will be worse than the free-fall in the 2008 financial crisis because their stimulus medicine will not work this time,” Yu writes.’
‘He anticipates that China’s hard landing will be ongoing through 2013 and that the country’s three decades–long period of rapid growth will end in 2012.’
‘Yu explains that the structural change in China’s economic growth was both natural and inevitable; that if China continues its current investment spree, it will delay — but exacerbate — the hard landing in 2013 and 2014′
http://newsroom.ucla.edu/portal/ucla/ucla-anderson-forecast-predicts-238839.aspx
‘A senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees, unless Tokyo reverses its decision to nationalise the disputed Senkaku/Diaoyu islands in the East China Sea. Jin Baisong from the Chinese Academy of International Trade – a branch of the commerce ministry – said China should use its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.’
http://www.telegraph.co.uk/finance/china-business/9551727/Beijing-hints-at-bond-attack-on-Japan.html
‘Around 50 Chinese protesters surrounded the official car of the United States ambassador in Beijing, who escaped unharmed, according to the US State Department. The melee occurred outside the gates of the US embassy and security guards had to intervene to protect Gary Locke. The Chinese artist and dissident Ai Weiwei tweeted a photograph of the protest on Tuesday afternoon, and said the crowd had chanted: “Down with US imperialism” and “Pay us back our money!” referring to the trillion dollars or so of US government debt that China holds.’
http://www.telegraph.co.uk/news/worldnews/asia/china/9552356/Crowd-attacks-US-ambassador-in-Beijing.html
it will delay — but exacerbate — the hard landing
Glad we would never do anything that stupid.
“Pay us back our money!”
Give us back our industries and our jobs, and we’ll be more than happy to pay you back. And who’s stopping them from selling their Treasuries?
Who are they kidding? If we stop buying their crap they’ll go down like the Titanic. They have no other choice than to continue financing our deficits.
All our complaints about trade point straight at OUR trade policies which were hand crafted in congress by these same companies so why are we so mad at the rest of the world?
Let’s play a mind game.
China could chop 15% off the NASDAQ tomorrow morning by blocking manufacturing or shipping IPhones. As the markets start to buckle they will follow up next day with actions against Caterpillar, 3M and GE and while the indexes plummet they will unload a hundreds of billions at all time historic high bond prices and use the proceeds to shift the world balance of power by announcing a strategic defense pact with Russia, buying up some of their debt and still have billions left over to buy off a few more strategic allies.
Sounds like fun.
unload a hundreds of billions at all time historic high bond prices
I agreed with you up to that point. As soon as they start unloading I really doubt prices will be historically high.
But yes…they could crash this whole thing any time they wanted. But it certainly wouldn’t be in their best interest, at least for the short term.
“We predicted that China would experience a ‘hard landing’ and expect that it will be worse than the free-fall in the 2008 financial crisis because their stimulus medicine will not work this time,” Yu writes.’
Did the ever-bullish Anderson Forecast really say this, or is this yet another instance of revisionist history to fit emerging evidence?
“Pay us back our money!”
The f’d creditors are getting mighty uppity.
“A senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees”
The next war may not involve guns.
The next war may not involve guns.
Then I assume it’s already begun.
RETIREMENT PLANNING
September 22, 2012, 9:19 p.m. ET
Prospects for Stock and Bond Returns Are Dim
By TOM LAURICELLA
When it comes to expecting stocks to provide them with any kind of decent return, many investors are throwing in the towel. After all, it’s been years of back-and-forth swings in their portfolios.
Meanwhile, the double-digit returns on bonds over the last 25 years have investors piling into fixed-income investments in record numbers—even as many money managers and analysts warn that investors shouldn’t expect those kinds of returns to continue.
It’s an especially confounding time to be sketching out expected returns on a portfolio, with both stock and bond markets buffeted by significant and unusual forces that could play out for many years to come.
A Grim Five Years
The outlook for stocks stretching out for the next five years or more would seem to be grim, thanks to entrenched fiscal and economic woes in the U.S., Europe and Japan. The U.S., for one, continues battling stubbornly high unemployment and the lingering effects of the housing collapse.
At the same time, some argue that the Federal Reserve’s unprecedented efforts to pump money into the financial markets will eventually lead to a flare-up in inflation. That would send interest rates higher and lead to a nasty bear market for bonds.
Throwing fuel on that fire was the Fed’s decision earlier this month to expand its effort to effectively print new money and prop up the economy. The Fed said it would make an additional $40 billion per month in bond purchases until the unemployment situation materially improves.
But those same efforts by the Fed are keeping the bond bull market alive by capping interest rates and, at the same time, feeding investor demand for riskier and higher-return investments, such as stocks.
In the face of entrenched investor skepticism, the U.S. stock market has staged a powerful rally in 2012. The Standard & Poor’s 500-stock index is up 16% so far this year.
This convoluted backdrop has sparked a vigorous debate over the kind of expectations investors should have for stocks and bonds. Keep in mind that returns are measured by more than just changes in bond or stock prices. What matters is total return—plus stock dividends or bond interest.
Attracting considerable attention have been particularly gloomy arguments from famed bond-fund manager Bill Gross, of Pacific Investment Management (Pimco). Mr. Gross believes bond returns will likely drop to 2% a year on average and stocks will gain only 3% to 4% a year.
Though it may seem like a meaningless debate among the talking heads on financial television networks, expectations matter for individual investors. “They’re a critical component to strategic asset allocation, establishing tolerance for risk and thinking about how asset classes interact” within a portfolio, says Joe Davis, head of Vanguard Group’s investment strategy group.
For Shawn Rubin, a financial adviser at Morgan Stanley Smith Barney, return expectations are central to conversations with clients about their asset allocation and rebalancing strategies.
Often, investors “underestimate the lumpiness of returns and how frequently riskier investments have 5% or more of paper losses,” he says.
Another issue is coaxing investors to think about expected returns in relation to inflation, and not just on a nominal basis. For investors whose primary goal is to avoid having inflation erode the value of their savings, “right now, you don’t need a lot of return to achieve that goal,” says Mr. Rubin.
Take the debate over bond returns. Hal Ratner, an asset-allocation specialist at Morningstar, is among those who think bond returns will dwindle in coming years. He notes that on a short-term basis, investors owning U.S. government bonds are effectively losing money once inflation is factored in.
“That makes you think, ‘Should I really buy government bonds?’ ” says Mr. Ratner. “But in the event that something bad happens [in the stock market], we know that they will protect your portfolio…like buying insurance.”
So for investors with a shorter time horizon, bonds, even with minimal returns, still can act as a cushion should the rest of your portfolio lose money. “Time horizon is absolutely critical,” says Mr. Ratner.
On the stock side of the equation, the calculus gets a lot more complicated.
For starters, expectations are often colored by recent experience, especially a negative one. In the case of stocks, they’re shaped by the financial crisis, even though the S&P 500 has returned more than 6.5% a year for the last 10 years once dividends are factored in.
“For investors, the last 10 years don’t feel like they’ve been up 7%, what they feel is what they felt [like] in 2008″ when stocks collapsed, says Lisa Emsbo-Mattingly, director of asset allocation at Fidelity Investments.
Fidelity’s asset-allocation group, which sets the investments for the firm’s target-date retirement mutual funds, believes that over the next five to 10 years, U.S. stocks can generate average to slightly-below-average returns—roughly in the neighborhood of 6% a year.
This forecast is based on expectations that the U.S. economy is not mired in a Japan-like extended recession and will be able to post moderate—though below historical trend—growth of about 2%. Add in the productivity of U.S. companies and strong corporate balance sheets, and Fidelity thinks earnings growth should be able to power better future returns than many investors are currently expecting.
…
“…thanks to entrenched fiscal and economic woes in the U.S., Europe and Japan.”
What about the world’s 2nd-largest economy?
Stephen Harner, Contributor
International
9/20/2012 @ 10:46PM
Should Japan be Worrying More About a Deep Chinese Recession than Conflict over the Senkakus?
Not to make light of the crisis (no other word suffices) over the Senkaku/Diaoyu islands, claimed by both Japan and China, all this week (and we can expect for weeks or months to come) the scene of dueling patrols of Coast Guard vessels from both countries, as well as anti-Japanese demonstrations, involving tens of thousands, and attacks on Japanese businesses in scores of Chinese cities.
Against this background, the Nikkei article–written by a member of the newspaper’s editorial board–should give us even greater pause. The author is speaking about the risk to many of Japan’s large manufacturers and exporters (and their shareholders) of a severe, prolonged, structural recession in China.
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