In the final debate, Mr. President said there will be NO sequestration. I thought the congress would decide on it. Is there something I’m missing here. Or can nthe White House prevent it by printing more. I think sequestration is good to curtail maasive spending that has been going on and reduce our deficits.
The Post reporting that 1 million jobs already lost because of possible sequestration, and predicting unemployment will reach 12 percent by 2014 if it happens:
He said a lot of things. Don’t worry about it as we know the pols will all do whatever they can to avoid it, then when it happens will blame each other.
A recent CNN poll found almost half of Americans believe another Great Depression is “very likely” or “somewhat likely” in the next year. Robert McElvaine warns many Americans and politicians misunderstand what went wrong during the Great Depression and risk leading the country into another one.
NEAL CONAN, host: The stalemate on the debt ceiling and the debt reduction - deficit reduction takes place in the broader context of a stagnant economy and rising unemployment. A CNN poll conducted last month found that almost half of Americans believe another Great Depression is very likely or somewhat likely in the next 12 months. In The Washington Post Outlook section on Sunday, history professor Robert McElvaine argued that many current politicians misunderstand the history of the Great Depression and risk leading the country right into another one.
Robert McElvaine, professor of history at Millsaps College in Jackson, Mississippi, with us today here in Studio 3A. Nice to have you with us today in Washington, sir.
ROBERT MCELVAINE: Glad to be with you.
CONAN: And that CNN poll, half Americans think we’re close to another Great Depression. You say that’s a term tossed around a little too casually.
MCELVAINE: Yeah. I think there are a lot of terms from that same era - like Nazi and Holocaust and so forth - that people just throw around and mean it’s like really bad, you know, man? However, I think we are seeing some things based mainly on the fact that people don’t know what went on in the Depression or misinterpret the sort of events and policies that produced it and kept it going, that could lead us down a path that we would not like at all.
CONAN: Well, give us a little the historical context then. How does this era compare with the era of the Great Depression?
MCELVAINE: Well, one thing that is very different is that when the stock market collapsed in 1929, the Depression began. The country was not deeply in debt to begin with. You were just doing the news and saying that Mitch McConnell said that Republicans weren’t elected in order to make it easier…
CONAN: That was Jim DeMint, but…
MCELVAINE: Oh, it was Jim DeMint, sorry. OK. But nonetheless, he was saying that they weren’t elected for the purpose of making it easier to increase the debt. However, they’ve been doing that for the eight years under George W. Bush and seem to have only gotten religion on debt once Obama was elected. However, the basic ideas that Franklin Roosevelt followed, he had the same beliefs as Herbert Hoover. He thought that we needed a balanced budget.
And the main reason that the New Deal was not able to end the Depression was that Roosevelt was too cautious in spending. He was willing to incur deficits in order to keep people from starving. But he wasn’t willing to give the big boost to the economy that was really needed, and it was only World War II that forced that to happen.
…
That is clearly one of the stupidest commentaries I have read in some time, with perhaps the exception of anything written by Paul Krugman.
Turning the entire National Economy into a WAR Machine, rationing, material drives, shortages, no cars or trucks for the public, but lots of stuff for the military……ALL built to be destroyed. But, true, 100% employment, working in factories to produce war materials.
That’s the Leftist view of economic “success”.
It’s ridiculous.
All the spending didn’t end the depression. People lived like paupers while sending massive supplies out to be destroyed.
The “Depression” ended After the war ended, when the soldiers returned and started re-building the American Economy, with Europe and Japan wiped out and their countries in ruins.
Nice dream.
Perhaps Obama can get a good war going (I mean a world war event with Millions of troops, not a 100,000 troops) with the Muslims in Libya (the rest of the world can take sides) before he gets kicked out, and help “stimulate” war production.
Oh, and keep in Mind, the German economy was “booming” too. They had a shortage of workers and had to get them from other countries like Poland, first by paying them, then by conscription.
There are no stupider People than professors of Keynesian (we can’t spend enough money we don’t have) Philosophies. But keep in mind Keynes’s final commentary about the end result:
“In the end, we’re all dead, anyway”.
I guess if you’re 65 and not worried about what will happen 20 years from now, it’s a good choice.
For you, and you kindred souls.
I was recently given a cache of Saturday Evening Post magazines from the late WW2 era, and was struck by an article I found in the December 9, 1944 edition written by Pulitzer Prize winning historian, Henry F. Pringle. In it he discussed the massive state budget surpluses and how they might be wisely spent after the close of the war.
He wrote:
“…the reserves in state treasuries now amount to $3,000,000,000. In addition, the states have reduced their debts by $700,000,000 in the last four years…further, the states have accumulated about $5,000,000,000B in unemployment compensation reserves….” (NOTE: remember, these are in 1944 dollar amounts.)
But the fascinating part was this:
“The causes for these enormous funds are simple enough. The states have not had to mass armies, build navies or finance Lend-Lease shipments. The cost of state government has risen nominally if at all…(as) war priorities have postponed normal maintenance of highways and public buildings….”
The take-away point here being that wartime spending didn’t account for the surpluses, wartime NOT SPENDING did (which rather changes the perceived historical context, does it not?)
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Comment by Diogenes (Tampa, Fl)
2012-10-26 10:47:56
It’s an interesting perspective, but what you are really saying, in essence, is that FEDERAL Spending skyrocketed, and unemployment fell to zero, as everyone had a job building bombs, planes, helmets, flak jackets, and various and sundry implements of destruction and counter-attack supplies.
The States, with Federal government hiring had more revenues and less expenses.
However, the FEDERAL debt skyrocketed.
So, there’s really no savings, it’s ALL the Public’s debt to pay. This is just an accounting statistic. It’s interesting, but the DEBT didn’t disappear until it was gradually inflated away by the FED.
Comment by Steve J
2012-10-26 13:16:03
Lack of raw materials ( iron, rubber, paper, etc ) lead to the halting of local projects.
“The causes for these enormous funds are simple enough. The states have not had to mass armies, build navies or finance Lend-Lease shipments. The cost of state government has risen nominally if at all…(as) war priorities have postponed normal maintenance of highways and public buildings….”
If war is good for the economy, then the U.S. economy ought to be in great shape by now, as (in case you didn’t notice) we have been fighting several in the Middle East for going on ten years…
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Comment by Diogenes (Tampa, Fl)
2012-10-26 10:58:14
Which, of course, is not even a real comparison.
The US has been spending TRillions to support the bombing operations and sending steaks and beer across the world to the troops, but this is not a NATIONAL War.
If this was a REAL WAR, then NO ONE would be unemployed. There would be no massive student loan program. All those smart (not a good term due to “diversity” requirements), young, healthy, candidates for advanced degrees would be getting uniforms and guns and put on ships to the front lines.
We have a TV war, run with computers and satellites, and Drones. The troops are mop up operations. There is NO enemy army. There is a rag-tag group of “insurgents”.
This is a military operation of policing. It is called a war, but unless your neighbor has been drafted, it’s not anything to compare to WWII. Not even close. The number of people killed in this entire event over 10 years doesn’t reach the tally of a single assault by US forces in any of it’s “theaters” during WWII.
We’re talking MILLIONS of lives destroyed and everyone in the country effected.
The only thing most moronic American males are concerned with today is the latest sports “battle”. That’s the only real contest that transfixes American brains and lives.
So, get real.
“If this was a REAL WAR, then NO ONE would be unemployed.”
So you suggest what the economy needs to get out of the doldrums is a REAL WAR?
Hmmm….
Comment by Diogenes (Tampa, Fl)
2012-10-26 11:37:57
I’ve made absolutely NO such suggestion.
War is not an economic “win” for anybody, except economists. That is because economists are STUPID. They measure things using numbers and metrics that don’t have any real bearing to the real world.
I dropped out of Econ classes after my Intro to Macro and Micro. When they introduced GDP as a “measure” of economic strength, I argued with my professor that it was no such measure.
It simply measured dollars spent.
IF the dollars spent were used for things like “war”, no one’s lives were improved.
It is a False metric.
Having women work outside the home, and pay taxes on their earnings, while having to pay someone else to do the household chores and cook meals and raise their children increases GDP. The hired help gets paid. The government gets paid and the new “women in the workforce” get paid.
That shows a whole lot of economic activity, but no real change in the wealth or well-being of the new workers, when changing from a non-paid household worker, to a tax-paying debt serf. (That should get some comments).
As I said, Hilter’s Economy was booming. Couldn’t get enough workers.
I OPPOSE wartime economies. It’s Economists and Government bureaucrats that speculate that War is an economic necessity. They have all the numbers to prove it.
Comment by AmazingRuss
2012-10-26 22:06:01
You sound like an economist.
Comment by Happy2bHeard
2012-10-26 22:51:45
“Having women work outside the home, and pay taxes on their earnings, while having to pay someone else to do the household chores and cook meals and raise their children increases GDP.”
Most of the women I know who work outside the home still do the household chores and cook meals and raise their children.
Would you be happy to see the U.S. tipped back into recession in order to achieve your holy grail of deficit reduction?
26 October 2012 Last updated at 10:14 ET US economic growth up sharply in third quarter
Barack Obama and Mitt Romney at the Hofstra debate 16 October 2012 Mr Obama and Mr Romney have clashed on the health of the US economy
The US economy grew more than expected in the three months to September, official figures showed.
The world’s largest economy expanded at an annualised rate of 2% in the third quarter, the Commerce Department said.
The jump was partly due to a large increase in government spending.
…
US Economy
US jobless rate in surprise fall
Low US rates ‘to stay until 2015′
US economy weaker than thought
US home sales at two-year high
CHAPEL HILL, N.C. (MarketWatch) — Fears of falling off the fiscal cliff have become this Halloween season’s nightmare scenario.
And that scenario is very scary indeed — double-digit drops in the stock market, an economic recession if not depression, and so forth.
But when lots of investors become gripped by the same scary scenario, my contrarian instincts kick into gear, leading me to explore the possibility that things might not be as bad as they otherwise seem.
Here’s a list of reasons why we might not want to be freaked out by the fiscal cliff:
…
Just once, wouldn’t it be nice if America simply bit the bullet and took a one-year 10%, across-the-board national pay cut? No excuses, no “security interests”, no “but, but, we’re specials”, just a good start of cleaning up the mess we’ve made of our national credibility?
We could have been halfway through with it by now….
That’s primarily true everywhere except for “Public Unions” and special groups such as “private sector” unions. The remaining sector not cut is BANKING, and the Traders who skim for a living, all supported by Government mandates about “too big to fail” policies.
The majority of the American Public has been taking losses.
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Comment by Happy2bHeard
2012-10-26 23:00:45
“That’s primarily true everywhere except for “Public Unions” and special groups such as “private sector” unions.”
Always with the unions.
Teachers have been cut in many places. Class sizes are increasing.
States and municipalities have been cutting their workforces.
Public and private sector unions have been negotiating reductions and give-backs for decades. I remember reading about an auto strike in the 80s that was settled with give-backs by the unions. Shortly thereafter, the company announced large bonuses for management. I thought that was supremely stupid.
It would allow Americans to realize that we can, indeed, survive without some of the graft, the excess, and the entitlements we’ve come to see as imperative to our national survival. That democracy works if everyone subscribes to its basic tenants as a matter of civic duty. And that even in times of tribulation, amazingly enough, life goes on.
Why don’t you just wait for an actual military strike to take place and then blame it on a conspiracy that started with the death of the US ambassador, rather imagining a strike that hasn’t even taken place and blaming it on a conspiracy that started with the death of our amabassador?
These articles surface once every several years in the non-MSM, then silence resumes. Why is the MSM so oblivious to what seems like one of the major U.S. economic developments (innovations?) over the past quarter century?
Since financial journalists have largely missed reporting on this story in real time, is there any chance economic historians might eventually pick it up?
Saturday is one of the most important anniversaries for Wall Street.
No, it’s not the anniversary of the big market crash in 1987. That took place with a lot of fanfare last Friday. And the 23rd commemoration of the 1989 mini-crash quietly took place two weeks ago.
This Saturday isn’t on anyone’s calendar. But it should be because on Oct. 27, 1989, a guy named Robert Heller proposed rigging the stock market so that crashes like those in ’87 and ’89 would never happen again.
Kooks propose things like this all the time. But Heller was the real thing. He was a renowned banker who had just left the Federal Reserve board weeks before he gave a speech that was reprinted in the Wall Street Journal.
Heller worried that the Fed was dangerously pumping too much money into the financial system whenever crashes occurred. All it really had to do, he said, was buy enough stock to keep the market afloat until the markets calmed down. Simple enough!
“The stock market is certainly not too big for the Fed to handle,” said Heller. “The stock market is the only major market without a market-maker of unchallenged liquidity or a buyer of last resort,” he added, noting that the Fed already had the much larger currency market’s back whenever it got into trouble.
In short, Heller wanted the Fed to rig the stock market when things looked dire — and only when they were dire. And he said stocks could be bought easily and cheaply enough through index futures contracts.
Just the year before President Reagan had put together the apparatus for rigging the market when he signed an executive order that created the President’s Working Group on Financial Markets. The commander-in-chief had created the rigger-in-chief or, as it came to be nicknamed, the Plunge Protection Team.
I mention this now because the Fed today is rigging the stock market. Indeed, ever since the day Heller proposed the unthinkable, Washington has been making sure stocks don’t go into an unstoppable slide.
…
As much as we would have preferred a schizophrenic ticket of Paul/Kucinich, with a platform of universal health care, ending the Federal Reserve, and ending the global military industrial complex and illegal wars, the chance of that happening was near zero.
We have decided to vote for Gary Johnson in the past few months, as there are nothing more than cosmetic differences between The One and R/R.
Also as a big middle finger to Citizens United and the duopoly spending over $2 billion this election cycle, the hundreds of millions spent on TeeVee advertising we’ve never seen since we don’t have TeeVee.
Apparently 2012 is going to end with no resolution to the financial crisis which has already afflicted Greece for several years running.
When will this end, and how?
wsj dot com
October 25, 2012, 11:35 a.m. ET
Greek Bank Lending Continues to Fall in September
By Nektaria Stamouli
ATHENS–Net lending to Greek businesses and households in September shrank 4.5% on the year, as demand for bank loans continued to slide, data released by the Bank of Greece Thursday show.
The decline was slightly smaller than the 4.8% drop recorded in August.
According to the data, the monthly net flow of loans to Greece’s private sector fell by 468 million euros ($606.5 billion) compared with a year earlier, while the total amount of credit outstanding fell to EUR231.8 billion in September, down EUR21.1 billion from a year earlier. Net lending to households fell by EUR312 million in September after declining EUR347 million in August.
The net flow of credit to businesses contracted by EUR158 million from a year ago and compared with a EUR657 million contraction in August.
Greek banks have restricted the flow of credit since the start of the country’s financial crisis as they attempt to deleverage and cope with liquidity shortages and a rise in non-performing loans.
BEIJING ( Caixin Online ) — Mining has been a boom-bust industry throughout its history. The reason is the long development process of a mining asset. When demand pushes up prices for minerals, supplies take time to respond. Hence, prices can go very high in the initial phase of a demand boom.
The eye-popping profitability draws all kinds of people into speculating for new mines, massively increasing the supply capacity years down the road. When the demand boom cools and prices decline, supply capacity keeps rising rapidly, which throws the industry into a depression with severe repercussions for its financiers.
A decade ago, some Australian investors came to my office for advice on how to invest in China. I told them to go home and buy shares of Australian companies in the mining industry. Bellwether stocks like BHP have appreciated ten times since.
The story began with China joining the WTO. This change would increase China’s share of global trade. As China’s expenditure is heavily weighed towards fixed-asset investment, this redistribution of income would increase the demand for mineral resources. Hence, I believed that the industry would have good times ahead.
As the prices of minerals like iron ore surged, the super profitability attracted all sorts of people into prospecting all over the world. Numerous investors went into African jungles and Mongolian grassland to strike it rich.
Even though risks for investing there very high, like getting one’s head chopped off by upset locals, the fantastic margins pumped up these people’s courage. Unfortunately, if and when these assets become productive, the margins are gone. Most stories about chasing riches in faraway lands end like this. Some smart people have sold undeveloped assets to others through initial public offerings in Hong Kong. Those who haven’t sold are stuck.
‘There are such opportunities’
The market went from not believing in China’s growth story a decade ago to extrapolating past performance into the infinite future. In particular, China’s massive stimulus in 2008-09 that revived demand for commodities amid a global downturn convinced investors or speculators in this industry not to worry, i.e., China could do the same again if there was another downturn.
As demand has weakened and prices collapsed, the faith in demand and prices coming back is surprisingly strong. That is why so many marginal projects continue to seek funding.
The year 2008 should have been the end of this boom cycle. China’s stimulus misled the market into believing otherwise. China’s demand revival in 2009-10 was purely a governmental phenomenon. It piled more capacity formation on top of overcapacity.
It merely postponed the inevitable adjustment and made it bigger. This is where the economy is now, paying for past mistakes. But the mining industry continues to believe and propagate the view that a big stimulus like in 2008 is coming.
…
How about a housing decision scenario for us to kick around. A friend was asking my advice yesterday. He has enough money to pay the balance of the mortgage on his house off. He says he owes about $75,000 and I would guess his house would now appriase around $300,000 in a nice neighborhood, but one that ended up with crazy high prices at the bubble’s peak. Several houses in the neighborhood are in foreclosure where once high earners have reduced income and can’t pay bubble era mortgages any more.
He works in a job that relies on government contracts and is feeling that his employer may ask him to take a paycut if they can’t replace some of the current work. Dis not indicate he thought he would lose his job, but the current income in the low 100’s would probably be cut pretty dramatically.
He can’t decide whether to pay the mortgage off and have no debt or hold onto all the cash he can. My first reaction is always to pay off debt if you can, but if I were worried about my future income, I might not want to part with any cash before I had to.
What would you guys do in his situation?
If I was worried about my job, the last thing I’d be doing was throwing cash at the mortgage. I want that cash in case I have to live off of it. Which I just did for the first 10 months of this year.
What interest rate is he paying? I think about that with the car loan I took out at the beginning of the year. I’m only paying 0.9% so I think I’d be better off maintaining the liquid cushion.
Carl: He’s in the 4’s. Heck, at 4.5% he could refinance and save $1500 in interest the first year if he could do it with no closing costs.
Slim: I’ve got the impression he’s got another stash of cash that would last him a year - or so he implied. My concern would be you hear so many stories now about people taking 2 years to replace their old job. Is one year cushion enough any more?
Does he have the discipline to put all (and I mean ALL) the money that he would have spent paying the mortgage into increasing the money stash to at least two years of living expenses (taking into account the lower living expenses without a mortgage but higher ones if he has to buy his own health insurance). Any other debt? Any other big expenses coming up (like kids going to college)? It is not a single question.
I’d use the cash cushion and his current W-2 to refinance his loan into a new 30-year at (presumably) a lower rate, but new amortization schedule.
At that point, he can keep making the same payment IF HE WANTS, and keep on the same schedule as before to pay it off if all is going swimmingly with his job.
At the same time, if he runs into problems with his job, he can cut what he pays each month, and make his cash cushion last longer.
In the meantime, I’d keep the cash cushion, and keep it safe.
The cost to this would be the refinance costs of the loan, but it would be essentially an insurance cost to be able to cut down his monthly.
If at some point he felt much better about his job and/or interest rates on treasuries were above his mortgage rate, he could invest the money in treasuries and use the return to pay the interest on the mortgage…although this could be a few years waiting for that math to work.
Does anyone have a clue what either candidate would do on housing if elected? I guess in Obama’s case, we can expect more of the same; who knows what Romney would do?
On housing, disappointing silence from Obama & Romney
By David Rohde
October 25, 2012
For the last six months, Barack Obama and Mitt Romney have battled ferociously to be seen as the true champion of the middle class. Yet neither candidate has offered concrete solutions for — indeed they have rarely raised — a central economic issue: the housing crisis.
How can the collapsing home prices that pummeled the middle class hardest — accounting for three-quarters of the loss of wealth since 2007 — not be a campaign issue? Why is a principal cause of the economic downturn the focus of so little debate?
One explanation is simple. Across the country, the housing market is picking up. In September, new home construction increased by fifteen percent, its fastest rate in four years. And after seeing home mortgages become economic yokes that prevented their parents from moving out of depressed areas, many young Americans are less interested in buying homes.
For existing homeowners and the government, though, housing remains an enormous issue. If new government initiatives are not implemented, it could take another three to five years for the market to fully recover, analysts estimate. And The Wall Street Journal reports that neither candidate has offered ways to remake failed mortgage giants Fannie Mae and Freddie Mac, which have already cost taxpayers $140 billion and face further losses.
Across the United States, nearly 10.8 million properties — 22 percent of homes with a mortgage on them — remain underwater, according to CoreLogic, a data analysis firm. The numbers of properties where owners owe more than their home is worth is shrinking, but analysts say the process can, and must, be sped up.
Both Obama and Romney, though, have been silent on the issue. Why?
“It turns out to be a lose-lose issue for both candidates,” John Vogel, a professor at Dartmouth’s Tuck School of Business, recently told MarketWatch. “And therefore gets ignored.”
For each candidate, the reason for staying mum on housing is different. Obama does not have the strongest record to run on. And Romney has found that wading into housing opens himself up to being painted as a heartless corporate mogul.
In an interview with Reuters TV this week, Nobel Prize winning economist Joseph Stiglitz said it was “shocking” that neither candidate had spoken more about the issue or offered concrete solutions. He and other critics from the left say both men remain beholden to Wall Street.
“In some sense, they don’t want to offend the banks,” Stiglitz said. “The banks have been a major problem to doing something about the problem.”
…
I’ve been pondering the idea of a credit system wherein nobody participates. For those old enough the remember the Vietnam “war” and the public restlessness with it, there was a slogan or saying that was going around, besides the “make love not war” stuff, there was “What if the gave a war, and nobody came”?
The United States and most of the Western World has become entranced in a multi-decade long debt bing that started to unwind when leverage overcame the ability to pay in 2008. The solutions have been to Print, Print, Print money. Give it to the Banks. Take their bad loan papers and try to provide MORE credit to support more lending, to support more Buying to “stimulate” economic activity.
There are still countless Debts and promises that can’t be paid. We’ve all been watching this play out for the past 5 years and trying to figure out what’s behind the Fed’s “door number 3″.
So, I’ve been pondering the War question: What if they gave a Debt Party and nobody came? I thought I was beginning to see a new brand of Frugality amongst the working population, in the sense that they see that vast Debt isn’t really vast wealth.
What does this mean for the economic future of the US if this is a trend? And is this a trend?
IF so, then, we won’t see people “competing” for housing with $30,000 over the asking price to “Get In”.
Is it possible?
Or will the FED win again, and start a debt binge to push up prices? I don’t know. I mean, the money’s almost FREE now, and still the markets are suppressed, at least housing. The Stock market is tettering at the 1420 level I mentioned a couple weeks back. Support is becoming a ceiling. People are pulling their money OUT of stocks. It bodes for a suspicion of no-confidence in the markets and a desire to deleverage.
I’m on the side of Stupidity being the winner. I think the debtor’s prison isn’t near full enough and American’s can’t wait to get in line. But the actions of the markets are similar to the polls of the elections, a draw.
Are we going to buy a debt binge, or are we going for austerity and paying down debt as a national trend?
I’m a tightwad. A saver. I want austerity. Will I get it?
Not really. It will be a disaster for those without any real skills. I think the hype up in jobs relating to supply chain - a.k.a the middle men in anything and everything that do the talking and take a cut: from shipping, to finance need to be rebalanced. The heady 2005-2007 years contributed heavily to the REIT fields. We have still not re-balanced.
Next year there will be more pain in these professions and more - across the board. People will adjust - they have to. I really wonder about those sales types in all professions that are over 50 that are high income deadweights. The companies will shed these quickly.
I’ll add to this my view. Apartment rents have soared, developers racing to build new stock. 1 bedroom apts going for $2-3K in North
San Jose. Traffic getting as bad as Dot Com era of 2000. Houses for sale hard to find, but Condos still lagging market after getting hammered badly in housing bust. The many house foreclosures I saw over the past few years have all been rehabbed and sold. The buildings mentioned in this article are by San Jose Airport and have been largley vacant for many years. Iron work for a large new office building is being prepped on land that has never been developed before. I’ve also seen small housing projects start construction that have been mothballed since 2008.
Is the fiscal cliff going to translate into something that will continue the decline of average housing prices, or did we hit the bottom in the Summer of ‘11 or ‘12. Additionally, how should I change my stock purchases because of the fiscal cliff? I personally have been selling the majority of my stocks in anticipation that I can buy them back at a bargain after the gas in the bubble leaks out after the election. I also feel the next 6 months should push down stocks since Congress and the new president is going to have a tough job on their hands in the next six months no matter what.
My question is being a member of the Medical Profession a wise move?
The answer I suspect I will get is yes, good job prospects and high salaries, but is this always true? When the Soviet Union collapsed I seem to remember that Health Care Professionals where amongst the worst effected. In Greece at the present time Health Care Professionals again are being badly effected, if the USA is forced to cut back in Health expenditure will Doctors and Nurses be similarly impacted?
if the USA is forced to cut back in Health expenditure will Doctors and Nurses be similarly impacted?
well, of course they will, and already are.
the so-called “savings” in medicare and medicaid that Obama brags about having made has been done with a simple government mandate:
You will get LESS money for the same procedures. I.e. you now get 80% of the money you previously got.
There. Fixed the cost problem.
That’s how fascists and Democrats “fix” problems.
Take from one, and give to the other, so its “fair”.
The medical profession here is a highly protected species. If you look at it there is absolutely no competition. Ultimately, with the boomer old age issues this profession will have to change - to be able to provide affordable care. Either the rules for doctors trained in other countries will be relaxed or enterprising people will operate “medical ships” off the coast to do complex surgeries - medical tourism right next door 20 miles offshore.
I would like to think that someone will figure out a way to make decent money (note that it is not indecent amounts) by building private hospitals in central american countries in less than 10 years. These hospitals will solely treat aging Americans with deals made with insurance companies at half the cost or less.
I met a women from Romania yesterday. She was leaving a local hospital and was looking for directions to the free bus shuttle. After pointing her in the right direction she said that if you visit an emergency room in her country they give you a ride home after your visit. I said “Welcome to the land of the free, where if you don’t have a job you starve”. I know we have SNAP benefits but I hope you get my point.
Hopefully she wasn’t molested too bad by the TSA goons.
How often do you have to bury somebody who saved your life?
For those who care about such things, my sweet old mastiff, Decoy, died in my arms today. My son rescued him from a hellish fate in the dog pits, and he in good turn, saved me from mine by attacking the bear that was trying to eat me. All those of you who have ever loved an animal friend, please drink a toast to a damned fine dog?
I truly believe animals, like people, come to this earth for a reason. Deke did his job and he did it well. How wonderful to die in the arms of the woman that loved him so.
Don’t cry because it’s over.
Smile because it happened.
Ted Geisel (Dr. Seuss)
ahansen, words fail. Please allow me to be there in spirit, as a fellow celebrant in honor of this fine dog’s life. If it is possible, please consider taking some comfort in the fact that the best years in Deke’s life were spent with you. Best to you.
Thanks, all. After a hard day’s digging, we commemorated him last night with an appropriate bottle of 2009 Decoy cabernet.
BTW, for HBB’s resident oenophiles, “Decoy” is Duckhorn Vineyard’s eminently drinkable second pressing, available with none of the fanfare at 1/3 of the price.
(Im not trying to start a peak oil debate because I think its been done.)
The concept of “peak oil” is in dispute; there is data for and against it. That being said, the question I have for Orlov is: “which dynamic is the driving destructive force in his collapse scenario?
Peak oil, or Peak fraud (debt, growth addiction…)
Or, if both true, does one reinforce the other?
Finally in an ironic twist “brace yourselves” is not a suggestion he seems to be making; matter of fact, I think he’s suggesting the exact opposite?
Also, in this 30 minute clip he doesn’t discuss the impact of war?
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In the final debate, Mr. President said there will be NO sequestration. I thought the congress would decide on it. Is there something I’m missing here. Or can nthe White House prevent it by printing more. I think sequestration is good to curtail maasive spending that has been going on and reduce our deficits.
The Post reporting that 1 million jobs already lost because of possible sequestration, and predicting unemployment will reach 12 percent by 2014 if it happens:
http://www.washingtonpost.com/business/economy/fiscal-cliff-already-hampering-us-economy-report-says/2012/10/25/45730250-1ecf-11e2-ba31-3083ca97c314_story.html
These totally unforseen, totally unforcasted, totally out-of-the-blue surprises just keep right on coming.
(sarc)
Martin,
He said a lot of things. Don’t worry about it as we know the pols will all do whatever they can to avoid it, then when it happens will blame each other.
“…when it happens…”
In your opinion, sequestration is inevitable?
“I think sequestration is good to curtail maasive spending that has been going on and reduce our deficits.”
There is a precedent.
Economic Lessons From The Real Great Depression
Talk of the Nation
July 13, 2011
A recent CNN poll found almost half of Americans believe another Great Depression is “very likely” or “somewhat likely” in the next year. Robert McElvaine warns many Americans and politicians misunderstand what went wrong during the Great Depression and risk leading the country into another one.
NEAL CONAN, host: The stalemate on the debt ceiling and the debt reduction - deficit reduction takes place in the broader context of a stagnant economy and rising unemployment. A CNN poll conducted last month found that almost half of Americans believe another Great Depression is very likely or somewhat likely in the next 12 months. In The Washington Post Outlook section on Sunday, history professor Robert McElvaine argued that many current politicians misunderstand the history of the Great Depression and risk leading the country right into another one.
Robert McElvaine, professor of history at Millsaps College in Jackson, Mississippi, with us today here in Studio 3A. Nice to have you with us today in Washington, sir.
ROBERT MCELVAINE: Glad to be with you.
CONAN: And that CNN poll, half Americans think we’re close to another Great Depression. You say that’s a term tossed around a little too casually.
MCELVAINE: Yeah. I think there are a lot of terms from that same era - like Nazi and Holocaust and so forth - that people just throw around and mean it’s like really bad, you know, man? However, I think we are seeing some things based mainly on the fact that people don’t know what went on in the Depression or misinterpret the sort of events and policies that produced it and kept it going, that could lead us down a path that we would not like at all.
CONAN: Well, give us a little the historical context then. How does this era compare with the era of the Great Depression?
MCELVAINE: Well, one thing that is very different is that when the stock market collapsed in 1929, the Depression began. The country was not deeply in debt to begin with. You were just doing the news and saying that Mitch McConnell said that Republicans weren’t elected in order to make it easier…
CONAN: That was Jim DeMint, but…
MCELVAINE: Oh, it was Jim DeMint, sorry. OK. But nonetheless, he was saying that they weren’t elected for the purpose of making it easier to increase the debt. However, they’ve been doing that for the eight years under George W. Bush and seem to have only gotten religion on debt once Obama was elected. However, the basic ideas that Franklin Roosevelt followed, he had the same beliefs as Herbert Hoover. He thought that we needed a balanced budget.
And the main reason that the New Deal was not able to end the Depression was that Roosevelt was too cautious in spending. He was willing to incur deficits in order to keep people from starving. But he wasn’t willing to give the big boost to the economy that was really needed, and it was only World War II that forced that to happen.
…
That is clearly one of the stupidest commentaries I have read in some time, with perhaps the exception of anything written by Paul Krugman.
Turning the entire National Economy into a WAR Machine, rationing, material drives, shortages, no cars or trucks for the public, but lots of stuff for the military……ALL built to be destroyed. But, true, 100% employment, working in factories to produce war materials.
That’s the Leftist view of economic “success”.
It’s ridiculous.
All the spending didn’t end the depression. People lived like paupers while sending massive supplies out to be destroyed.
The “Depression” ended After the war ended, when the soldiers returned and started re-building the American Economy, with Europe and Japan wiped out and their countries in ruins.
Nice dream.
Perhaps Obama can get a good war going (I mean a world war event with Millions of troops, not a 100,000 troops) with the Muslims in Libya (the rest of the world can take sides) before he gets kicked out, and help “stimulate” war production.
Oh, and keep in Mind, the German economy was “booming” too. They had a shortage of workers and had to get them from other countries like Poland, first by paying them, then by conscription.
There are no stupider People than professors of Keynesian (we can’t spend enough money we don’t have) Philosophies. But keep in mind Keynes’s final commentary about the end result:
“In the end, we’re all dead, anyway”.
I guess if you’re 65 and not worried about what will happen 20 years from now, it’s a good choice.
For you, and you kindred souls.
I was recently given a cache of Saturday Evening Post magazines from the late WW2 era, and was struck by an article I found in the December 9, 1944 edition written by Pulitzer Prize winning historian, Henry F. Pringle. In it he discussed the massive state budget surpluses and how they might be wisely spent after the close of the war.
He wrote:
“…the reserves in state treasuries now amount to $3,000,000,000. In addition, the states have reduced their debts by $700,000,000 in the last four years…further, the states have accumulated about $5,000,000,000B in unemployment compensation reserves….” (NOTE: remember, these are in 1944 dollar amounts.)
But the fascinating part was this:
“The causes for these enormous funds are simple enough. The states have not had to mass armies, build navies or finance Lend-Lease shipments. The cost of state government has risen nominally if at all…(as) war priorities have postponed normal maintenance of highways and public buildings….”
The take-away point here being that wartime spending didn’t account for the surpluses, wartime NOT SPENDING did (which rather changes the perceived historical context, does it not?)
It’s an interesting perspective, but what you are really saying, in essence, is that FEDERAL Spending skyrocketed, and unemployment fell to zero, as everyone had a job building bombs, planes, helmets, flak jackets, and various and sundry implements of destruction and counter-attack supplies.
The States, with Federal government hiring had more revenues and less expenses.
However, the FEDERAL debt skyrocketed.
So, there’s really no savings, it’s ALL the Public’s debt to pay. This is just an accounting statistic. It’s interesting, but the DEBT didn’t disappear until it was gradually inflated away by the FED.
Lack of raw materials ( iron, rubber, paper, etc ) lead to the halting of local projects.
Remember that Detroit even stopped building cars.
“The causes for these enormous funds are simple enough. The states have not had to mass armies, build navies or finance Lend-Lease shipments. The cost of state government has risen nominally if at all…(as) war priorities have postponed normal maintenance of highways and public buildings….”
If war is good for the economy, then the U.S. economy ought to be in great shape by now, as (in case you didn’t notice) we have been fighting several in the Middle East for going on ten years…
Which, of course, is not even a real comparison.
The US has been spending TRillions to support the bombing operations and sending steaks and beer across the world to the troops, but this is not a NATIONAL War.
If this was a REAL WAR, then NO ONE would be unemployed. There would be no massive student loan program. All those smart (not a good term due to “diversity” requirements), young, healthy, candidates for advanced degrees would be getting uniforms and guns and put on ships to the front lines.
We have a TV war, run with computers and satellites, and Drones. The troops are mop up operations. There is NO enemy army. There is a rag-tag group of “insurgents”.
This is a military operation of policing. It is called a war, but unless your neighbor has been drafted, it’s not anything to compare to WWII. Not even close. The number of people killed in this entire event over 10 years doesn’t reach the tally of a single assault by US forces in any of it’s “theaters” during WWII.
We’re talking MILLIONS of lives destroyed and everyone in the country effected.
The only thing most moronic American males are concerned with today is the latest sports “battle”. That’s the only real contest that transfixes American brains and lives.
So, get real.
“If this was a REAL WAR, then NO ONE would be unemployed.”
So you suggest what the economy needs to get out of the doldrums is a REAL WAR?
Hmmm….
I’ve made absolutely NO such suggestion.
War is not an economic “win” for anybody, except economists. That is because economists are STUPID. They measure things using numbers and metrics that don’t have any real bearing to the real world.
I dropped out of Econ classes after my Intro to Macro and Micro. When they introduced GDP as a “measure” of economic strength, I argued with my professor that it was no such measure.
It simply measured dollars spent.
IF the dollars spent were used for things like “war”, no one’s lives were improved.
It is a False metric.
Having women work outside the home, and pay taxes on their earnings, while having to pay someone else to do the household chores and cook meals and raise their children increases GDP. The hired help gets paid. The government gets paid and the new “women in the workforce” get paid.
That shows a whole lot of economic activity, but no real change in the wealth or well-being of the new workers, when changing from a non-paid household worker, to a tax-paying debt serf. (That should get some comments).
As I said, Hilter’s Economy was booming. Couldn’t get enough workers.
I OPPOSE wartime economies. It’s Economists and Government bureaucrats that speculate that War is an economic necessity. They have all the numbers to prove it.
You sound like an economist.
“Having women work outside the home, and pay taxes on their earnings, while having to pay someone else to do the household chores and cook meals and raise their children increases GDP.”
Most of the women I know who work outside the home still do the household chores and cook meals and raise their children.
Would you be happy to see the U.S. tipped back into recession in order to achieve your holy grail of deficit reduction?
26 October 2012 Last updated at 10:14 ET
US economic growth up sharply in third quarter
Barack Obama and Mitt Romney at the Hofstra debate 16 October 2012 Mr Obama and Mr Romney have clashed on the health of the US economy
The US economy grew more than expected in the three months to September, official figures showed.
The world’s largest economy expanded at an annualised rate of 2% in the third quarter, the Commerce Department said.
The jump was partly due to a large increase in government spending.
…
US Economy
US jobless rate in surprise fall
Low US rates ‘to stay until 2015′
US economy weaker than thought
US home sales at two-year high
I love the “up sharply” line…all the way to 2%…due to a large increase in government spending…
Of course contrarians should find plenty to like in the fiscal cliff scare…
Oct. 26, 2012, 6:02 a.m. EDT
A contrarian take on fiscal cliff worries
Commentary: What are the odds U.S. will really jump off cliff?
By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — Fears of falling off the fiscal cliff have become this Halloween season’s nightmare scenario.
And that scenario is very scary indeed — double-digit drops in the stock market, an economic recession if not depression, and so forth.
But when lots of investors become gripped by the same scary scenario, my contrarian instincts kick into gear, leading me to explore the possibility that things might not be as bad as they otherwise seem.
Here’s a list of reasons why we might not want to be freaked out by the fiscal cliff:
…
Just once, wouldn’t it be nice if America simply bit the bullet and took a one-year 10%, across-the-board national pay cut? No excuses, no “security interests”, no “but, but, we’re specials”, just a good start of cleaning up the mess we’ve made of our national credibility?
We could have been halfway through with it by now….
Considering wage stagnation and the real rate of inflation, we already have.
That’s primarily true everywhere except for “Public Unions” and special groups such as “private sector” unions. The remaining sector not cut is BANKING, and the Traders who skim for a living, all supported by Government mandates about “too big to fail” policies.
The majority of the American Public has been taking losses.
“That’s primarily true everywhere except for “Public Unions” and special groups such as “private sector” unions.”
Always with the unions.
Teachers have been cut in many places. Class sizes are increasing.
States and municipalities have been cutting their workforces.
Public and private sector unions have been negotiating reductions and give-backs for decades. I remember reading about an auto strike in the 80s that was settled with give-backs by the unions. Shortly thereafter, the company announced large bonuses for management. I thought that was supremely stupid.
Doing it with inflation rather than sequestration (budget cuts + taxation) is also far more politically palatable.
Wouldn’t that immediately cause a recession by definition?
“Just once, wouldn’t it be nice if America simply bit the bullet and took a one-year 10%, across-the-board national pay cut?”
What would this accomplish economically?
It would allow Americans to realize that we can, indeed, survive without some of the graft, the excess, and the entitlements we’ve come to see as imperative to our national survival. That democracy works if everyone subscribes to its basic tenants as a matter of civic duty. And that even in times of tribulation, amazingly enough, life goes on.
I don’t know about the rest of you, but I took my 10%-20% nominal pay cut in 2009/2010.
Same here.
Why did The Administration sacrifice their Ambassador to Libya???
If you think they didn’t, you need to open your eyes to what’s really going on in Washington.
Could it be the reason they needed to launch a military strike just in time for the election?
Why don’t you just wait for an actual military strike to take place and then blame it on a conspiracy that started with the death of the US ambassador, rather imagining a strike that hasn’t even taken place and blaming it on a conspiracy that started with the death of our amabassador?
Polly,
The news about what really happened is just breaking today. If you rely on the MSM, you probably won’t hear about for days. Just watch and wait.
The Administration left them all there to die and they told the Special Forces/CIA to stand down when they might have saved them.
What a bunch of scum!
Yes we heard but you’re contradicting your prior comment:
“Could it be the reason they needed to launch a military strike just in time for the election?”
Are you saying this was an opposite wag the dog (non) operation?
They let them die because they were going ot reveal secret proof that the president is a muslim Kenyan, obviously.
They are also selling our children to atheist aliens.
…and my, are they tasty!
How about a broader view of markets(clearly rigged) in lieu of the petty BS used by the PTB to distract.
It’s no conspiracy. But the sheeple prefer their petty BS to thinking.
http://en.wikipedia.org/wiki/Plunge_Protection_Team
These articles surface once every several years in the non-MSM, then silence resumes. Why is the MSM so oblivious to what seems like one of the major U.S. economic developments (innovations?) over the past quarter century?
Since financial journalists have largely missed reporting on this story in real time, is there any chance economic historians might eventually pick it up?
How the Fed began rigging the stock market
By JOHN CRUDELE
Last Updated: 1:13 AM, October 23, 2012
Posted: 11:58 PM, October 22, 2012
Saturday is one of the most important anniversaries for Wall Street.
No, it’s not the anniversary of the big market crash in 1987. That took place with a lot of fanfare last Friday. And the 23rd commemoration of the 1989 mini-crash quietly took place two weeks ago.
This Saturday isn’t on anyone’s calendar. But it should be because on Oct. 27, 1989, a guy named Robert Heller proposed rigging the stock market so that crashes like those in ’87 and ’89 would never happen again.
Kooks propose things like this all the time. But Heller was the real thing. He was a renowned banker who had just left the Federal Reserve board weeks before he gave a speech that was reprinted in the Wall Street Journal.
Heller worried that the Fed was dangerously pumping too much money into the financial system whenever crashes occurred. All it really had to do, he said, was buy enough stock to keep the market afloat until the markets calmed down. Simple enough!
“The stock market is certainly not too big for the Fed to handle,” said Heller. “The stock market is the only major market without a market-maker of unchallenged liquidity or a buyer of last resort,” he added, noting that the Fed already had the much larger currency market’s back whenever it got into trouble.
In short, Heller wanted the Fed to rig the stock market when things looked dire — and only when they were dire. And he said stocks could be bought easily and cheaply enough through index futures contracts.
Just the year before President Reagan had put together the apparatus for rigging the market when he signed an executive order that created the President’s Working Group on Financial Markets. The commander-in-chief had created the rigger-in-chief or, as it came to be nicknamed, the Plunge Protection Team.
I mention this now because the Fed today is rigging the stock market. Indeed, ever since the day Heller proposed the unthinkable, Washington has been making sure stocks don’t go into an unstoppable slide.
…
For those who didn’t know from the very beginning who they would vote for, at what point did you decide?
As much as we would have preferred a schizophrenic ticket of Paul/Kucinich, with a platform of universal health care, ending the Federal Reserve, and ending the global military industrial complex and illegal wars, the chance of that happening was near zero.
We have decided to vote for Gary Johnson in the past few months, as there are nothing more than cosmetic differences between The One and R/R.
Also as a big middle finger to Citizens United and the duopoly spending over $2 billion this election cycle, the hundreds of millions spent on TeeVee advertising we’ve never seen since we don’t have TeeVee.
+eleventy-billion.
(although I AM still undecided as to whether to vote Johnson or write in Paul/Kucinich)
Make a statement: Write in Ozzy Osbourne and Tiny Tim
Bruce Dickinson.
Run To The Hills….. One of the greatest rock anthems ever.
And don’t forget Eddie! (Not eddietard)
Waiting Line @ Applebee’s for Prezident (sic)!
Apparently 2012 is going to end with no resolution to the financial crisis which has already afflicted Greece for several years running.
When will this end, and how?
wsj dot com
October 25, 2012, 11:35 a.m. ET
Greek Bank Lending Continues to Fall in September
By Nektaria Stamouli
ATHENS–Net lending to Greek businesses and households in September shrank 4.5% on the year, as demand for bank loans continued to slide, data released by the Bank of Greece Thursday show.
The decline was slightly smaller than the 4.8% drop recorded in August.
According to the data, the monthly net flow of loans to Greece’s private sector fell by 468 million euros ($606.5 billion) compared with a year earlier, while the total amount of credit outstanding fell to EUR231.8 billion in September, down EUR21.1 billion from a year earlier. Net lending to households fell by EUR312 million in September after declining EUR347 million in August.
The net flow of credit to businesses contracted by EUR158 million from a year ago and compared with a EUR657 million contraction in August.
Greek banks have restricted the flow of credit since the start of the country’s financial crisis as they attempt to deleverage and cope with liquidity shortages and a rise in non-performing loans.
Write to Nektaria Stamouli at nektaria.stamouli@dowjones.com
Can cargo cult beliefs on future stimulus save Oz from a hard landing?
Caixin Online Archives
Oct. 25, 2012, 10:18 p.m. EDT
Australia facing a hard landing: Andy Xie
Australia may suffer a financial crisis in 2013
By Andy Xie
BEIJING ( Caixin Online ) — Mining has been a boom-bust industry throughout its history. The reason is the long development process of a mining asset. When demand pushes up prices for minerals, supplies take time to respond. Hence, prices can go very high in the initial phase of a demand boom.
The eye-popping profitability draws all kinds of people into speculating for new mines, massively increasing the supply capacity years down the road. When the demand boom cools and prices decline, supply capacity keeps rising rapidly, which throws the industry into a depression with severe repercussions for its financiers.
A decade ago, some Australian investors came to my office for advice on how to invest in China. I told them to go home and buy shares of Australian companies in the mining industry. Bellwether stocks like BHP have appreciated ten times since.
The story began with China joining the WTO. This change would increase China’s share of global trade. As China’s expenditure is heavily weighed towards fixed-asset investment, this redistribution of income would increase the demand for mineral resources. Hence, I believed that the industry would have good times ahead.
As the prices of minerals like iron ore surged, the super profitability attracted all sorts of people into prospecting all over the world. Numerous investors went into African jungles and Mongolian grassland to strike it rich.
Even though risks for investing there very high, like getting one’s head chopped off by upset locals, the fantastic margins pumped up these people’s courage. Unfortunately, if and when these assets become productive, the margins are gone. Most stories about chasing riches in faraway lands end like this. Some smart people have sold undeveloped assets to others through initial public offerings in Hong Kong. Those who haven’t sold are stuck.
‘There are such opportunities’
The market went from not believing in China’s growth story a decade ago to extrapolating past performance into the infinite future. In particular, China’s massive stimulus in 2008-09 that revived demand for commodities amid a global downturn convinced investors or speculators in this industry not to worry, i.e., China could do the same again if there was another downturn.
As demand has weakened and prices collapsed, the faith in demand and prices coming back is surprisingly strong. That is why so many marginal projects continue to seek funding.
The year 2008 should have been the end of this boom cycle. China’s stimulus misled the market into believing otherwise. China’s demand revival in 2009-10 was purely a governmental phenomenon. It piled more capacity formation on top of overcapacity.
It merely postponed the inevitable adjustment and made it bigger. This is where the economy is now, paying for past mistakes. But the mining industry continues to believe and propagate the view that a big stimulus like in 2008 is coming.
…
“But the mining industry continues to believe and propagate the view that a big stimulus like in 2008 is coming.”
And they do this because:
1. That’s all they’ve got.
2. That’s all they’ve got.
3. Both 1 and 2.
How about a housing decision scenario for us to kick around. A friend was asking my advice yesterday. He has enough money to pay the balance of the mortgage on his house off. He says he owes about $75,000 and I would guess his house would now appriase around $300,000 in a nice neighborhood, but one that ended up with crazy high prices at the bubble’s peak. Several houses in the neighborhood are in foreclosure where once high earners have reduced income and can’t pay bubble era mortgages any more.
He works in a job that relies on government contracts and is feeling that his employer may ask him to take a paycut if they can’t replace some of the current work. Dis not indicate he thought he would lose his job, but the current income in the low 100’s would probably be cut pretty dramatically.
He can’t decide whether to pay the mortgage off and have no debt or hold onto all the cash he can. My first reaction is always to pay off debt if you can, but if I were worried about my future income, I might not want to part with any cash before I had to.
What would you guys do in his situation?
If I was worried about my job, the last thing I’d be doing was throwing cash at the mortgage. I want that cash in case I have to live off of it. Which I just did for the first 10 months of this year.
What interest rate is he paying? I think about that with the car loan I took out at the beginning of the year. I’m only paying 0.9% so I think I’d be better off maintaining the liquid cushion.
Carl: He’s in the 4’s. Heck, at 4.5% he could refinance and save $1500 in interest the first year if he could do it with no closing costs.
Slim: I’ve got the impression he’s got another stash of cash that would last him a year - or so he implied. My concern would be you hear so many stories now about people taking 2 years to replace their old job. Is one year cushion enough any more?
Does he have the discipline to put all (and I mean ALL) the money that he would have spent paying the mortgage into increasing the money stash to at least two years of living expenses (taking into account the lower living expenses without a mortgage but higher ones if he has to buy his own health insurance). Any other debt? Any other big expenses coming up (like kids going to college)? It is not a single question.
Dump it and do it quickly.
+1
WTF that he only has one year of living cushion? How do these people get out of bed each morning?
I had more than 5 years of living expenses stocked up back when I was a graduate student. These people just effin’ amaze me.
And then they buy a depreciating asset on leverage!
lots of guys spend all their money chasing P___Y
There is no law against that, is there?
I’d use the cash cushion and his current W-2 to refinance his loan into a new 30-year at (presumably) a lower rate, but new amortization schedule.
At that point, he can keep making the same payment IF HE WANTS, and keep on the same schedule as before to pay it off if all is going swimmingly with his job.
At the same time, if he runs into problems with his job, he can cut what he pays each month, and make his cash cushion last longer.
In the meantime, I’d keep the cash cushion, and keep it safe.
The cost to this would be the refinance costs of the loan, but it would be essentially an insurance cost to be able to cut down his monthly.
If at some point he felt much better about his job and/or interest rates on treasuries were above his mortgage rate, he could invest the money in treasuries and use the return to pay the interest on the mortgage…although this could be a few years waiting for that math to work.
Does anyone have a clue what either candidate would do on housing if elected? I guess in Obama’s case, we can expect more of the same; who knows what Romney would do?
On housing, disappointing silence from Obama & Romney
By David Rohde
October 25, 2012
For the last six months, Barack Obama and Mitt Romney have battled ferociously to be seen as the true champion of the middle class. Yet neither candidate has offered concrete solutions for — indeed they have rarely raised — a central economic issue: the housing crisis.
How can the collapsing home prices that pummeled the middle class hardest — accounting for three-quarters of the loss of wealth since 2007 — not be a campaign issue? Why is a principal cause of the economic downturn the focus of so little debate?
One explanation is simple. Across the country, the housing market is picking up. In September, new home construction increased by fifteen percent, its fastest rate in four years. And after seeing home mortgages become economic yokes that prevented their parents from moving out of depressed areas, many young Americans are less interested in buying homes.
For existing homeowners and the government, though, housing remains an enormous issue. If new government initiatives are not implemented, it could take another three to five years for the market to fully recover, analysts estimate. And The Wall Street Journal reports that neither candidate has offered ways to remake failed mortgage giants Fannie Mae and Freddie Mac, which have already cost taxpayers $140 billion and face further losses.
Across the United States, nearly 10.8 million properties — 22 percent of homes with a mortgage on them — remain underwater, according to CoreLogic, a data analysis firm. The numbers of properties where owners owe more than their home is worth is shrinking, but analysts say the process can, and must, be sped up.
Both Obama and Romney, though, have been silent on the issue. Why?
“It turns out to be a lose-lose issue for both candidates,” John Vogel, a professor at Dartmouth’s Tuck School of Business, recently told MarketWatch. “And therefore gets ignored.”
For each candidate, the reason for staying mum on housing is different. Obama does not have the strongest record to run on. And Romney has found that wading into housing opens himself up to being painted as a heartless corporate mogul.
In an interview with Reuters TV this week, Nobel Prize winning economist Joseph Stiglitz said it was “shocking” that neither candidate had spoken more about the issue or offered concrete solutions. He and other critics from the left say both men remain beholden to Wall Street.
“In some sense, they don’t want to offend the banks,” Stiglitz said. “The banks have been a major problem to doing something about the problem.”
…
oh noooo! somebody has to dooooo something about our house prices!
I think they will both encourage low interest rates for many many years.
I think Romney would intervene less than Obama, but I don’t know.
What is this based on? Just his statements that we should let the market clear…but then again, that might have been before he changed his mind
The nice thing about the etch-a-sketch approach is that no matter what Romney ends up doing as president, nobody can really claim he didn’t warn us.
I heard Romney promise 4% growth today, while chastising Obama for promising 4% growth.
He chastised Obama for promising 4% growth, but not achieving it.
He’s promising 4% growth, and we won’t know if he succeeds for a while.
I’ve been pondering the idea of a credit system wherein nobody participates. For those old enough the remember the Vietnam “war” and the public restlessness with it, there was a slogan or saying that was going around, besides the “make love not war” stuff, there was “What if the gave a war, and nobody came”?
The United States and most of the Western World has become entranced in a multi-decade long debt bing that started to unwind when leverage overcame the ability to pay in 2008. The solutions have been to Print, Print, Print money. Give it to the Banks. Take their bad loan papers and try to provide MORE credit to support more lending, to support more Buying to “stimulate” economic activity.
There are still countless Debts and promises that can’t be paid. We’ve all been watching this play out for the past 5 years and trying to figure out what’s behind the Fed’s “door number 3″.
So, I’ve been pondering the War question: What if they gave a Debt Party and nobody came? I thought I was beginning to see a new brand of Frugality amongst the working population, in the sense that they see that vast Debt isn’t really vast wealth.
What does this mean for the economic future of the US if this is a trend? And is this a trend?
IF so, then, we won’t see people “competing” for housing with $30,000 over the asking price to “Get In”.
Is it possible?
Or will the FED win again, and start a debt binge to push up prices? I don’t know. I mean, the money’s almost FREE now, and still the markets are suppressed, at least housing. The Stock market is tettering at the 1420 level I mentioned a couple weeks back. Support is becoming a ceiling. People are pulling their money OUT of stocks. It bodes for a suspicion of no-confidence in the markets and a desire to deleverage.
I’m on the side of Stupidity being the winner. I think the debtor’s prison isn’t near full enough and American’s can’t wait to get in line. But the actions of the markets are similar to the polls of the elections, a draw.
Are we going to buy a debt binge, or are we going for austerity and paying down debt as a national trend?
I’m a tightwad. A saver. I want austerity. Will I get it?
If everyone chooses austerity, it will be a diaster for everyone.
Not really. It will be a disaster for those without any real skills. I think the hype up in jobs relating to supply chain - a.k.a the middle men in anything and everything that do the talking and take a cut: from shipping, to finance need to be rebalanced. The heady 2005-2007 years contributed heavily to the REIT fields. We have still not re-balanced.
Next year there will be more pain in these professions and more - across the board. People will adjust - they have to. I really wonder about those sales types in all professions that are over 50 that are high income deadweights. The companies will shed these quickly.
+1
The problem is congress will participate, which means everybody is forced to participate, at least indirectly.
Still, I do wonder what would happen if say, Fanny & Freddy loans were limited to 20 year terms.
San Jose making a comeback: Silicon Valley attracting jobs.
http://www.mercurynews.com/business/ci_21856421/san-jose-is-line-big-wave-technology-company
I’ll add to this my view. Apartment rents have soared, developers racing to build new stock. 1 bedroom apts going for $2-3K in North
San Jose. Traffic getting as bad as Dot Com era of 2000. Houses for sale hard to find, but Condos still lagging market after getting hammered badly in housing bust. The many house foreclosures I saw over the past few years have all been rehabbed and sold. The buildings mentioned in this article are by San Jose Airport and have been largley vacant for many years. Iron work for a large new office building is being prepped on land that has never been developed before. I’ve also seen small housing projects start construction that have been mothballed since 2008.
My company HQ is moving today from a building in Fremont to a building in San Jose.
Traffic is an under-appreciated indicator. Particularly the proportion of pick-up trucks.
I haven’t seen the traffic this bad here since 2000.
“I want austerity”
So go on a rice and red beans diet. Save money and lose weight.
too high in carbs
The beans too?!?
Is the fiscal cliff going to translate into something that will continue the decline of average housing prices, or did we hit the bottom in the Summer of ‘11 or ‘12. Additionally, how should I change my stock purchases because of the fiscal cliff? I personally have been selling the majority of my stocks in anticipation that I can buy them back at a bargain after the gas in the bubble leaks out after the election. I also feel the next 6 months should push down stocks since Congress and the new president is going to have a tough job on their hands in the next six months no matter what.
” or did we hit the bottom in the Summer of ‘11 or ‘12.”
Yeah, yeah. Just like we bottomed in 07, 08, 09, and definitely 10.
Bubblefucious say, he who picks bottom…
Stay on’em mugzter.
Beans are a complex carb.
My question is being a member of the Medical Profession a wise move?
The answer I suspect I will get is yes, good job prospects and high salaries, but is this always true? When the Soviet Union collapsed I seem to remember that Health Care Professionals where amongst the worst effected. In Greece at the present time Health Care Professionals again are being badly effected, if the USA is forced to cut back in Health expenditure will Doctors and Nurses be similarly impacted?
if the USA is forced to cut back in Health expenditure will Doctors and Nurses be similarly impacted?
well, of course they will, and already are.
the so-called “savings” in medicare and medicaid that Obama brags about having made has been done with a simple government mandate:
You will get LESS money for the same procedures. I.e. you now get 80% of the money you previously got.
There. Fixed the cost problem.
That’s how fascists and Democrats “fix” problems.
Take from one, and give to the other, so its “fair”.
The medical profession here is a highly protected species. If you look at it there is absolutely no competition. Ultimately, with the boomer old age issues this profession will have to change - to be able to provide affordable care. Either the rules for doctors trained in other countries will be relaxed or enterprising people will operate “medical ships” off the coast to do complex surgeries - medical tourism right next door 20 miles offshore.
I would like to think that someone will figure out a way to make decent money (note that it is not indecent amounts) by building private hospitals in central american countries in less than 10 years. These hospitals will solely treat aging Americans with deals made with insurance companies at half the cost or less.
I met a women from Romania yesterday. She was leaving a local hospital and was looking for directions to the free bus shuttle. After pointing her in the right direction she said that if you visit an emergency room in her country they give you a ride home after your visit. I said “Welcome to the land of the free, where if you don’t have a job you starve”. I know we have SNAP benefits but I hope you get my point.
Hopefully she wasn’t molested too bad by the TSA goons.
Let freedom ring!
If you want to get rich, probably no.
If you want to stay employed, and probably do OK all the way to Upper/Middle Class, then yes.
Even a surgeon is basically at the end of the day, a blue-collar profession.
You’re working with your hands and there’s no amplification scale that you can achieve whatsover.
It may be very lucrative but scale matters.
Amazon scrapes pennies out of transactions but it’s the scale that allows it to reap in vast riches.
How often do you have to bury somebody who saved your life?
For those who care about such things, my sweet old mastiff, Decoy, died in my arms today. My son rescued him from a hellish fate in the dog pits, and he in good turn, saved me from mine by attacking the bear that was trying to eat me. All those of you who have ever loved an animal friend, please drink a toast to a damned fine dog?
RIP, Deke, the Hero Dog. You will be missed.
http://www.oprah.com/spirit/When-Things-Fall-Apart-4-Women-Deal-With-Change/4
I’m sorry.
A salute (and a toast.)
My condolences Allena.
I truly believe animals, like people, come to this earth for a reason. Deke did his job and he did it well. How wonderful to die in the arms of the woman that loved him so.
Don’t cry because it’s over.
Smile because it happened.
Ted Geisel (Dr. Seuss)
ahansen, words fail. Please allow me to be there in spirit, as a fellow celebrant in honor of this fine dog’s life. If it is possible, please consider taking some comfort in the fact that the best years in Deke’s life were spent with you. Best to you.
If only dogs were eligible for beatification.
Thanks, all. After a hard day’s digging, we commemorated him last night with an appropriate bottle of 2009 Decoy cabernet.
BTW, for HBB’s resident oenophiles, “Decoy” is Duckhorn Vineyard’s eminently drinkable second pressing, available with none of the fanfare at 1/3 of the price.
(Im not trying to start a peak oil debate because I think its been done.)
The concept of “peak oil” is in dispute; there is data for and against it. That being said, the question I have for Orlov is: “which dynamic is the driving destructive force in his collapse scenario?
Peak oil, or Peak fraud (debt, growth addiction…)
Or, if both true, does one reinforce the other?
Finally in an ironic twist “brace yourselves” is not a suggestion he seems to be making; matter of fact, I think he’s suggesting the exact opposite?
Also, in this 30 minute clip he doesn’t discuss the impact of war?
http://www.youtube.com/watch?v=zrz5ucQACo8&feature=relmfu