Inflated Prices, Increasing Rents And Poor Job Prospects
A reader suggested a topic on his circumstance. “Can we have a topic about ME? Gen Y renters unable to buy given the inflated prices, but also facing increasing rents and poor job prospects.”
A reply, “Patience, Grasshopper. When your elders die off you’ll get all the goodies.”
Another added, “In the long run, all the Baby Boomers are dead, and to the survivors go the spoils. Hopefully today’s young people won’t mind future life in a home formerly occupied by debt people. Most amazing aspect of the current U.S. housing situation: They are trying to crank up the home building industry at the onset of a three-decades-long drop in demand due to the retirement and eventual die-off of the Baby Boomers. This can only end badly.”
One had this, “Haven’t we established that Gen Y alone is bigger than the baby boom generation? I’m pretty sure I’ve provided the wikipedia link about twenty times.”
And finally, “Young guy in my office was talking about being outbid on a house earlier this week. I don’t think he is as young as you, but pretty darn young anyway. Seems the winning bid was all cash. I don’t know exactly where they were looking. Maybe we should just rip this article to shreds:
Why rising house prices could be great for American consumers, Posted by Neil Irwin.
“One of the biggest questions for the economy in 2013 is how much a stronger housing market will translate into more consumer spending. It matters a great deal; residential investment is 2.5 percent of overall economic activity right now, while personal consumption is 71 percent. It would be great to see a rise in building activity, but the consumer is where the major macroeconomic action is.”
“It seems at least plausible that this vicious cycle could work in reverse. If homeowners who ended up underwater on their homes accounted for a disproportionate drop in spending, could home price increases that bring their net worth into positive territory have a disproportionate positive effect on spending? Maybe, just maybe, there exist tipping points by which a rise in home prices pushes families from owing more than their home is worth to owing less, and once they cross that tipping point, they will spend more freely.”
‘of overall economic activity right now…personal consumption is 71 percent’
See, this is why we are on the this road. We never cast off foolish notions about the economy during this bubble. Sure, we’d see people say ‘that was unsustainable, it was an illusion’. But there was never a real public discussion of what is wrong. So, the government and central bank falls back on the only theory they know; borrow and spend. Should we really be surprised when the dominant economic theory in DC believes in digging ditches and filling them back in?
‘Gen Y renters unable to buy given the inflated prices, but also facing increasing rents and poor job prospects’
I feel bad for people growing up in this. We’re now in year 5 or 6 of the govt/Fed push to make houses into something they cannot be, something they wish were true. Houses aren’t money machines, with jobs springing out of the chimney and gold running down the rain spouts. It’s unfortunate that these people in DC don’t know we need jobs, not low interest house loans. We need affordable housing, not rents that eat up 50% of what we earn.
What do you mean “we?” The price of housing is distributional. If the young buyers can be forced to pay more, the older sellers — and those who lent to them — can have their purported wealth preserved.
Now some of us aging owners are concerned with the effect this will have on our children. Most, apparently, are not.
‘What do you mean “we?”
I’m referring to the segment of the population that don’t have their head up their asses.
All 146 of them?
“I feel bad for people growing up in this. We’re now in year 5 or 6 of the govt/Fed push to make houses into something they cannot be, something they wish were true. Houses aren’t money machines, with jobs springing out of the chimney and gold running down the rain spouts. It’s unfortunate that these people in DC don’t know we need jobs, not low interest house loans. We need affordable housing, not rents that eat up 50% of what we earn.”
The Government can’t stimulate the economy in a meaningful way that will create jobs. The only jobs they can create come with the expense of taxpayer funds. It isn’t a sustainable cycle. They can only create the right conditions for the economy to grow, which they aren’t doing. Add to this the private sector mantra that quarterly profits are all that matters and you have the current situation.
The only thing Government has shown the ability to do is blow bubbles, we are in a boom-bust cycle economy that seems to be increasing in frequency or shortening in duration. The only people thriving in this are those already monied, the connected, and the lucky.
This goes back to the question I have been asking for some time now. What conditions or events will force an end to the cycle of bad Government behavior and release the majority of the public from the grip of these cycles?
‘They can only create the right conditions for the economy to grow, which they aren’t doing.’
I agree with that, but I’ll add a couple of things. We could have perfect conditions, but as long as US workers have to compete with wages/lax regulation off-shore, I don’t see the jobs market gaining much traction. I wish Mexico and China had a trade deficit with the US because they were doing so well, but it hasn’t happened and isn’t going to happen.
So people say, “oh gosh, you can’t mean protectionism!” To which I always say, how about we have trade agreements like we used to; 5 or 7 year agreements on specific goods, only with countries that meet labor pay and related environmental standards, etc. This is always shouted down, of course. But I’m still asking; what if we keep doing what has failed for 20 or 30 years? Jeebus, it must be clear that globalism has failed by now. We have to think about our future, not China’s.
“…only with countries that meet labor pay and related environmental standards, etc.”
Amen, brother. We have outsourced our environmental problems to China along with our manufacturing base, and our consumption-based economy is living on borrowed time.
Pollution is gonna kill panda bears in China
I’m curious if we really have outsourced our environmental problems. During the nuclear crisis in Japan, there was talk in Washington state (where I reside) of radioactive milk, and there is strong evidence that particulate matter from China reach the US and cause damage. There are correlational studies showing a relationship between rain levels and autism diagnoses. Obviously there are nearly limitless confounds, but it does make me wonder if some form of acid rain is causing in vitro damage.
Couldn’t agree more. Our economy isn’t a closed loop, all of this stimulus leaks out of our economy eventually so there is actually a net negative return. Everything is produced offshore, that is ultimately where the stimulus money ends up.
If we don’t start producing things of value here in the US we are doomed.
“If we don’t produce things of value here in the U.S. we are doomed.”
Which brings us back to housing. If the perception that houses forever increase in value then they will be produced. And houses - and the supporting infrastructure (i.e. roads, sewers, water supply, etc.) - are things that are produced here and not somewhere else.
The things that houses are made from and the things that go into houses once they are built can be made somewhere else but houses need workers here to put them together.
Anyway, IMO, this seems to be the thinking. The same sort of thinking that kept Vegas going after they lost their lock on gambling.
“And houses - and the supporting infrastructure (i.e. roads, sewers, water supply, etc.) - are things that are produced here and not somewhere else.”
And once produced here, they sit and rot to the ground if there is nobody using them. Further they cannot be traded*. So unless more housing is really needed, producing them to satisfy command-and-control directives from the Fed is pretty much a matter of pouring money and valuable resources down a rat hole.
* The exception might be all-cash Chinese and Canadian investors who expect to make capital gains off the Fed’s housing price reflation program.
“And once produced here, they sit and rot to the ground if there is nobody using them.”
This is true but it is not immediate, they do not “rot to the ground” immediately. And since the economy is run on what is happening now - immediately - this is the route that is taken.
Not the best route maybe but nevertheless this seems to be the route that is taken.
‘…they do not “rot to the ground” immediately.’
The statement was obviously a simplification to make a point.
A more nuanced statement is that either they rather quickly deteriorate, or else they require high ongoing maintenance costs to prevent them from quickly deterioration. This is a part of the cost of homeownership which is easily overlooked.
Our lucky landlords have renters who share in these costs, as I take care of minor repairs such as replacing toilet seats, door locks, etc. However, if a substantial amount of time, money or expertise is required, I push the burden up to our landlords, as it is their investment, and hence their liability to provide for maintenance.
My point wasn’t that the houses rot or do not rot, my point was the money that is spent today on a house has a immediate effect in that the money begins to immediately flow through the economy as soon as it is borrowed into existence or taken out of the valults or whatever.
If money is borrowed from tomorrow and spent today then the economy gets a benifit today at the expense of whatever may or may not happen tomorrow.
Short-sided thinking but there it is.
“My point wasn’t that the houses rot or do not rot, my point was the money that is spent today on a house has a immediate effect in that the money begins to immediately flow through the economy as soon as it is borrowed into existence or taken out of the valults or whatever.”
And my point was that the long-term real cost of this house rot and/or required maintenance to prevent it is among the real prices paid for the short term boost in spending needed to generate the sugar rush that immediately flows through the economy as soon as the money is spent today on a house.
I wonder why they dont seal the ends of all the wood or the entire piece before they build it. At least seal in the bathrooms.
my wood always rotted at the bottom where the wood end soaks up moisture.
Cost avocado, cost.
I agree too Ben.
But I have to disagree that “No one in DC knows that we need jobs.” President Obama knows this as well as anybody. He spent a lot of time effort trying to stimulate job creation. For his pains he received only derision and scorn.
’spent a lot of time effort trying to stimulate job creation’
That’s a DC formula. Jobs that pay well and won’t eventually go away don’t come from DC. All these people have bought into the idea that if we tinker with the tax code enough, or spend money on ‘targeted’ research and make student loans, all will be solved. IMO, they really have no idea how the economy works.
Let me note this; Obama said his refinancing FBs would stimulate the economy because these people would have a few hundred $ more to spend each month. So how much would be freed up to spend if we put all these foreclosed houses on the market? Probably a million times as much.
Making 9 Million Jobless “Vanish”: How The Government Manipulates Unemployment Statistics
By Daniel R. Amerman, CFA
When we look at broad measures of jobs and population, then the beginning of 2012 was one of the worst months in US history, with a total of 2.3 million people losing jobs or leaving the workforce in a single month. Yet, the official unemployment rate showed a decline from 8.5% to 8.3% in January - and was such cheering news that it set off a stock rally.
How can there be such a stark contrast between the cheerful surface and an underlying reality that is getting worse?
The true unemployment picture is hidden by essentially splitting jobless Americans up and putting them inside one of three different “boxes”: the official unemployment box, the full unemployment box, and the most obscure box, the workforce participation rate box.
As we will explore herein, a detailed look at the government’s own data base shows that about 9 million people without jobs have been removed from the labor force simply by the government defining them as not being in the labor force anymore. Indeed - effectively all of the decreases in unemployment rate percentages since 2009 have come not from new jobs, but through reducing the workforce participation rate so that millions of jobless people are removed from the labor force by definition.
When we pierce through this statistical smoke and mirrors and factor back in those 9 million jobless whom the government has defined out of existence, then the true unemployment rate is 19.9% and rising, and not 8.3% and falling.
For the small percentage of people who are aware that the purported decline in unemployment rates is primarily based on the mysterious rapid decline in “labor force participation rates” rather than the number of new jobs, the government has a ready and sensible-sounding explanation: the Boomers are beginning to retire in large numbers, and with an aging population, the percentage of adults who are in the workforce should logically be declining.
Based on in-depth analysis of the government’s own numbers, we will present herein the true picture: 74% of the jobless who have been removed from unemployment calculations are in the 16-54 age bracket, with only 26% in the 55 and above bracket. Yes, the population is aging - but the heart of the workforce participation deception isn’t about the old.
In an extraordinarily cynical act, the government is effectively saying that because the job situation has been so bad for many millions of unemployed people in their 40s, 30s, 20s and teens, they can no longer be considered to be potential participants in the work force at all. Because there is no hope for them - they no longer need to be counted. And it is this steady statistical cleansing from the workforce of the worst of the economic casualties - of these very real millions of individual tragedies - that is being presented as a rapidly improving jobs picture.
http://danielamerman.com/articles/2012/WorkC.html - 52k -
Cities Where People Can’t Find Work
by Kathleen Hager | January 25, 2013 at 2:39 PM | Economy, General, Jobs
By Mike Sauter, 24/7 Wall St.
Despite many in the United States still feeling the pinch, there’s no denying that the job market is improving. Last week, the number of Americans seeking unemployment benefits fell to a five-year low of 330,000. The current unemployment rate, five years after the start of the Great Recession, was 7.8% last month. At the height of the recession, it was 10%.
Despite the fact the general job market is improving, the unemployment rate in certain metro areas continue to be awful. Based on the latest data available from the Bureau of Labor Statistics, 24/7 Wall St. reviewed the 10 metro areas with the highest unemployment rates in the country.
5. Atlantic City-Hammonton, N.J.
Unemployment: 14.5% (tied-5th lowest)
12-month unemployment change: 2.2 percentage points
Pct. below poverty line: 13.4%
4. Merced, Calif.
Unemployment: 15.7%
12-month unemployment change: -0.7 percentage points
Pct. below poverty line: 27.4%
3. Yuba City, Calif.
Unemployment: 15.8%
12-month unemployment change: -0.8 percentage points
Pct. below poverty line: 16.3%
2. El Centro, Calif. (Alexis)
Unemployment: 26.6%
12-month unemployment change: -2.3 percentage points
Pct. below poverty line: 26.8%
1. Yuma, Ariz.
Unemployment: 27.5%
12-month unemployment change: 1.2 percentage points
Pct. below poverty line: 21.8%
“So how much would be freed up to spend if we put all these foreclosed houses on the market? Probably a million times as much.”
I agree, however I don’t think this will happen. The problem is that this ‘jobs creation’ program would be funded by Wall Street gambling losses. Apparently a top priority for the central bankers at the top of the Fed and the Treasury over recent years has been to make sure that Wall Street banks don’t suffer the consequences of their foolish housing investments.
Making 9 Million Jobless “Vanish”: How The Government Manipulates Unemployment Statistics
Wow, that was a great read. Thanks, MH.
One of the reasons for gambling in Atlanctic City was to reduce unemployment. It’s was back in the late 70’s.
We have to start making things and selling those things to others in other countries to shift wealth from other countries to the U.S. When people get poor enough here, they will work for lower wages which will allow us to compete and hopefully, despite lots of pain along the way, our country and those poor people will work their way up. It’s not just people who will speed up the creation of goods to sell, it’s power. We need cheaper power and it’s hard to do that when we constantly thwart efforts to drill for oil and gas here. We sit on the world’s largest recoverable coal reserves and the official policy (as stated) is to “bankrupt new coal plants”. Not to mention the benefits of wealth influx by selling these fuels abroad.
If we don’t take some drastic actions to fix all this and commit oureslves at a Manhattan-Projectesque clip, we will become an indentured servant nation.
And by the way, China is not our friend. Don’t make the mistake of thinking otherwise, as there may be no second chances.
“And by the way, China is not our friend”
China’s Economy
By Kimberly Amadeo, About.com Guide
China’s Economy Depends on Exports to U.S.:
China exports $1.9 trillion of its production, making it the world’s largest exporter, surpassing the EU in 2011. China ships 17% of its exports to the U.S., which created a $272 billion trade deficit in 2011. While China needs the U.S., it’s increasing its trade with Hong Kong (14.1%) and Japan (7.8%). It’s encouraging trade with African nations, investing in their infrastructure in return for oil. Finally, China is increasing trade agreements with other Southeast Asian nations, and with many Latin American countries.
What Does China Export?:
China does a lot of manufacturing for foreign companies, including U.S. companies. The raw materials are shipped to China, where factory workers build the final products and ship them back to the U.S. In this way, a lot of China’s so-called “exports” are really for American companies for American consumers. China primarily exports electrical and other types of machinery, especially computers and data processing equipment, as well as optical and medical equipment. It also exports apparel, fabric and textiles. It imports raw commodities from Latin America and Africa, such as oil and other fuels, metal ores, plastics and organic chemicals.
China Is the Largest Foreign Owner of U.S. Treasuries:
As of September 2012, China owned $1.155 trillion in U.S. Treasury bills, bonds and notes. This is 21.1% of the total $5.5 trillion of debt held by the public. China has cut back only slightly, from its peak holdings of $1.173 trillion held in July 2011.
Nevertheless, China is the largest foreign holder of Treasuries. China does this to support the value of the dollar. China pegs its currency (the yuan) lower than the U.S. dollar to keep its export prices competitive.(Source: U.S. Treasury, Major Foreign Holders)
China’s role as America’s largest banker gives it leverage. For example, China threatens to sell part of its holdings whenever the U.S. pressures it to raise the yuan’s value. China counters by saying it did raise the yuan’s value by 20% between 2005-2010. For more, see What Is the U.S. Debt to China
“We need cheaper power and it’s hard to do that when we constantly thwart efforts to drill for oil and gas here.”
“U.S. Oil Production Hits Highest Level in 20 Years, Projected to Increase an Additional 14% in 2013″
“The International Energy Agency (IEA) recently forecasted the U.S. will become the world’s largest oil producer by 2020.”
http://www.marketwire.com/press-release/us-oil-production-hits-highest-level-20-years-projected-increase-additional-14-2013-nyse-cjes-1747659.htm
“We have to start making things and selling those things to others in other countries to shift wealth from other countries to the U.S.”
http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/
“The Insourcing Boom”
“After years of offshore production, General Electric is moving much of its far-flung appliance-manufacturing operations back home. It is not alone. An exploration of the startling, sustainable, just-getting-started return of industry to the United States.”
To be handled by robots.
We have to think about our future, not China’s ??
At every level….
Wars are expensive.
We have to think about our future, not China’s….
How could you even say such a thing. Obama is going to put Illegal Aliens to the front of the line to help out Mexicans and Guatemalans, and others from south of the Border. It’s his first order of business in the New Term. It’s not about “our” Future, meaning Americans, it’s about our “global community”.
We are, after all, a member of the United Nations, whose goals are for World Government, One-world Religion, and world-wide equality of races, religion, creed, language, culture, etc.
So, you need to get on board.
Nationalism is a thing of the past.
As Obama said in Berlin, he was a “world citizen”.
So, we need to have it one way or the other.
WE are either a world of Nations, each with our own self interests, or we are “all in it together”, meaning whatever you have is mine, until we achieve “equality”.
You must also understand that there are over a BILLION Catholics who would like to conform to the Pope’s “Social Doctrine”. In this doctrine, everything is really owned by God, and the “Church”, meaning the Catholic Church is the “custodian”. We are to follow the dictates of Rome concerning distribution of goods, both natural and man-made. You can read the Church’s social doctrine at http://www.Vatican.va. (They have their own country address).
Would you deny a poor AFrican some of your money to get food? Or Free housing? or free clothing? Or any of the necessities of life? Don’t you care for poor Chinese? Aren’t you responsible for the plight of those around the world?? Forget yourself. Forget America.
We are ALL One. “We are the World……we are the children…..we are the world…..we are the children….
The Catholic Church is very wealthy.
My aunt’s Catholic and is one of the most liberal people I know.
A couple I know in Portland is as Catholic as any people I’ve ever met and conservative to the core.
You probably don’t realize this but it’s laughable that you think you know the motivations of 1 BILLION people, Dio.
The government CAN stimulate jobs in the following two ways:
1. Stop strangling our energy production. Let us drill and let us mine and let us export oil, gas and coal while ensuring Americans reap not only the influx of wealth, but lower fuel and electricity prices via reasonable government policies. (And dump all the BS government interventions in BS things like ethanol and wind which are nothing but lullers of complacency).
2. Pull back on welfare and things such as 100 weeks of unemployment benefits. Without such a “safety net” (which longterm causes danger), American workers will be willing to work for less and jobs will return. It’ll be a hard road working their way back up and a hard road for America working its way back up, but there is no way to get better without feeling this pain.
Anything else is unicorn fairy dust.
I’ve seen the mountain tops in West Virginia leveled to get at the coal beneath.
The leftovers ain’t pretty.
Fracking is destroying water supplies.
So what’s gonna happen to the unemployment rate if you force all those welfare recipients into the labor pool?
“So what’s gonna happen to the unemployment rate if you force all those welfare recipients into the labor pool?”
You would have a true unemployment rate which like affordable housing ain`t gonna happen anytime soon.
Not there for work: Connecticut’s disappearing labor force
Rob Varnon
Published 12:34 am, Saturday, January 26, 2013
Donald Klepper-Smith, chief economist of New Haven-based Data Core Partners, said the number of people actively engaged in the work force in Connecticut, defined as those who are working or looking for work, fell 51,000, or 2.68 percent in 2012, the largest drop in the nation.
“We’re moving in the wrong direction, and we’re moving there fast,” Klepper-Smith said of the chart he produced using U.S. Bureau of Labor Statistics data.
In December, the state’s unemployment rate fell 0.3 percent to 8.8 percent despite losing 1,800 jobs. The reason the unemployment rate fell was because there were fewer people in the labor force, not because there were more jobs.
http://www.ctpost.com/news/article/Not-there-for-work-Connecticut-s-disappearing-4225211.php -
“So what’s gonna happen to the unemployment rate if you force all those welfare recipients into the labor pool?”
Not much if the minimum wage law is enforced, as more low-end workers can only serve to further suppress the fundamentally-determined reservation wage, as opposed to the government-enforced minimum wage. If more low-end workers seek work at the minimum wage than the market will bear, then some of them will not be able to find employment, and will need to turn to government assistance or other alternative means of sustenance.
Since welfare is only 2% of the budget and Romney’s 47% moochers included medicare and soc sec receivers. IT IS WAY CHEAPER to give out welfare and food stamps then build prisons. Get it??? the GOP does not, maybe they just want more soldiers??
It is not about takers and makers. Heck even Paul Ryan TOOK soc sec at age 16, frickin moocher!!
“alternative means of sustenance.”
“IT IS WAY CHEAPER to give out welfare and food stamps then build prisons.”
Food banks are already at or over capacity. Crime is one alternative. Begging is another. When there are 10 beggars on every street corner, how long will it be before begging is a crime?
“maybe they just want more soldiers??”
I suspect the GOP does want more soldiers. Defense seems to be the only thing they think the government should fund. Not everyone can be a soldier.
MORE soldiers? They haven’t killed off the ones we already gave them!
“Not everyone can be a soldier.”
+1 According to a study published in The Atlantic roughly 70% of the 18-26-yr male population couldn’t pass the physical exams to get into boot camp. Lack of muscle mass and obesity were cited.
Go troll someplace else, Norton. It ain’t gonna fly here.
Troll? Surely you have to be kidding.
As a borderline Gen X/Y, we are not unable to buy, we are unwilling to buy.
The rents may be going up on the coasts but not here in flyover.
I spent a day in the hole known as the Manhattan. Having the leisure time commiserate with colleagues at headquarters, the reality is that rental rates are falling there too.
Isn’t it amazing how the finance media would lead you to believe the opposite?
Albeit this is just one data point, but our rent in a nice area of SD, 20 minutes out from the coast, is at the same level it has been for several years running.
I’m assuming you’ve been a good tenant…any idea what the landlord would try to get if you moved out?
I rented our last place for 7 years, my rent moved a total of 10% during that time (’04-’11). When I moved out, the landlord jumped it 30% for the next guy–rented the place in a day.
We might be a little under but not a lot comparable rents. It’s a little hard to price out our home, as it would be a 3 br 2 1/2 ba except our landlord added a wall to turn the large master bedroom into a small bedroom and a larger one.
I guess my point is that just because your rent level has been flat doesn’t mean the market has been.
I wasn’t trying to generalize my experience. I frankly pay little attention to the rental market, at least so far as trying to figure out whether rents are going up or down for different tiers.
But based on what I know and read, I would have to guess that rents are fairly stable at the high end, as there aren’t many folks ‘crazy’ enough to ‘throw away’ more than, say, $2K a month on rent.
By contrast, given the large number of former homeowners trying to repair their credit plus a large cohort of young folks who have neither the income nor the bank to compete in the SD owner-occupied housing market, I would guess that demand is fairly strong in the under $2K/mo segment of the market.
Taken together, I would guess there is a sort of ’squeezing up’ of rents onto a narrower range (higher average / smaller variance) which looks like inflation to those at the low end and stabilization to those at the high end.
“Taken together, I would guess there is a sort of ’squeezing up’ of rents onto a narrower range (higher average / smaller variance) which looks like inflation to those at the low end and stabilization to those at the high end.”
This makes a ton of sense to me, and is consistent with what we are seeing. The visibility I have into the home rental market in So Cal, is that homes under $2k per month lease in a matter of days (for the most part).
Thanks, Ben. Perhaps if we keep recycling these points for another few decades, they will eventually “trickle up” to the big thinkers who run the show?
“I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.”
Was the National Association of Realtors™ even around when John Maynard Keynes wrote this?
‘if we keep recycling these points for another few decades, they will eventually “trickle up”
I’m aware that we are going in the opposite direction. On a few matters like govt debt, it is easy to make the argument that it’s too late to fix. But other countries have defaulted and the sun still rose. IMO we have to think about further out than that.
That’s right. A case in point is the former Soviet Union. I believe they managed to default on their debt and dump their communist command-and-control economic governance system in one shot — a two-for!
“We need affordable housing, not rents that eat up 50% of what we earn.”
I was talking to a guy from Canada last week who had lost both of his parents recently. He was telling me that when his parents bought their house the fathers weekly take home pay was $36 and their mortgage payment was $32. They were clearly better off than a young couple starting out today.
It’s unfortunate that these people in DC don’t know we need jobs, not low interest house loans. We need affordable housing, not rents that eat up 50% of what we earn.
+1
“In the long run, all the Baby Boomers are dead, and to the survivors go the spoils.”
Actually, when the Baby Boomers are gone those coming after will find that their country had been sold to the Chinese and Arabs in exchange for stuff consumed when the boomers were alive. And they’ll be expected to pay back the debts.
Younger generations, beginning with the second half of the Baby Boom, will find out how bad off they are when they reach old age without pensions, with devalued savings, and perhaps without even Social Security and Medicare — and life expectancy starts to fall.
‘And they’ll be expected to pay back the debts…reach old age without pensions, with devalued savings, and perhaps without even Social Security and Medicare’
Are you saying these politicians have been lying to us? Here’s my take on that; back in the 80’s someone did a poll that showed more people believed in UFO’s or that Elvis was alive than that they would receive Social Security. That’s how well known the numbers were. Now we’re 25-30 years down the road and guess what? The King ain’t back in Graceland folks!
I can’t help but think back to when this whole global consumption scheme was thrust upon us. The US will borrow and buy stuff from Mexico and China, for example. These countries will grow a middle class and eventually buy stuff from the US and everybody will prosper!
So why is China building ghost cities, and bullet trains to nowhere? To escape the smog someday?
“So why is China building ghost cities, and bullet trains to nowhere? To escape the smog someday?”
This is a typical consequence of top-down, command-and-control economic policies, such as those recently adopted by the U.S. Federal Reserve.
I’ve seen many posts related to ghost towns and such in china, but I’ve never seen any actual pics. I wonder if there’s some tumblr account depicting this situation.
A Surreal Skateboarding Journey Through China’s Infamous Ghost Town
By Alessandra Ram
inShare1 Oct 15 2012, 4:36 PM ET
In this video, director Charles Lanceplaine follows a group of skaters looking to try their tricks in a new and different environment — only to discover a glittering, modern city devoid of human occupants.
Originally built to house one million residents, the city of Ordos in northern China is now almost completely deserted. Despite China’s much-lauded building boom, soaring property prices have kept occupants at bay. Ordos is now the largest ghost town in China — thought to be a stark example of China’s impending real estate bubble.
…
“In the long run, all the Baby Boomers are dead ??
In the long run we are all dead…
Yes, I was channeling Keynes, but my point was that so far as housing demand for the next half-century is concerned, it’s the die-off of the Baby Boomers which will have a huge impact.
They may not even need to die Pbear….Assisted living also comes into play…Problem for the thirty somethings is they will be fifty something before it starts to really accelerate…Well beyond your starter home purchasing years…It will likely be kids that are in Highschool right now that may see the biggest benefit of that housing turn-over…
“Assisted living also comes into play…”
Totally agreed; the collapse in family-sized housing demand will begin long before the Baby Boomers die off, and will continue for a decade or two.
My parents are a case in point: They are in their early-eighties, still living in their paid-off family-sized house, but ready to move on to assisted living on short notice in case a change in health status warranted it. And they are members of the Greatest Generation; once this choice is facing increasing numbers of Baby Boomers over the next three decades, you can expect plenty of used family-sized housing to weight down prices.
We see a large number of large homes held by 80 something year old widows/widowers in this are. However, once they go up for sale you find out many of these homes have not been updated since circa1974, (a few years before they retired?) They end up being properties that tend to sit while the home bought by the transferring 30 something 5 years ago that is now back up for sale as they make the next move is in higher demand. Even with people who I tend to hear are penny pinching, when you finally see photos of what they purchased it’s a newer, updated home, not a renovation project. LOL, now that I think about it, the last couple I saw present photos of a new place, he is a refinishing contractor and yet they bought an already updated home.
“early-eighties”
So born in 1932-1937. They were too young to remember much of the Depression. They were 4-9 when WW2 began and 8-13 when it ended. And were at the age of family formation in the 1950s. I think they are really part of the Silent Generation.
Still your point that excess family sized houses will weigh down prices has some validity. Contributing to that may be multi-generational households occupying those houses. So instead of 2 families occupying separate houses, you may see them occupy only one.
These are all very sobering ideas. If true, I may well be 70 myself before housing again costs what I’d consider a fair price.
Haven’t we established that Gen Y alone is bigger than the baby boom generation? I’m pretty sure I’ve provided the wikipedia link about twenty times.
We have. Now, provide the wikipedia link where Gen Y has more JOBS than the baby boomer generation.
That is a completely different story…
We have. Now, provide the wikipedia link where Gen Y has more JOBS than the baby boomer generation.
Ah, but that’s a different question. There may well be fewer jobs for them, but can we lose the canard that there are fewer of them in overall number?
Misinformation implies a weak argument- why use it if your argument is strong?
“…but can we lose the canard that there are fewer of them in overall number?”
We certainly can lose the canard that this issue is relevant to the balance of supply, driven by exiting Baby Boomers, versus demand, driven by jobless, debt-strapped Gen X/Y members.
And before anyone jumps in to mention the recent waves of all-cash Canadian/Chinese investors and FHA-financed American buyers, let me clarify that I am talking about fundamentals-based demand over the next couple of decades, not transient artificial stimulus-based demand which has recently driven the market.
“Haven’t we established that Gen Y alone is bigger than the baby boom generation?”
“We” have? It’s not remotely close to the truth.
This is more tripe from a few of the untrusworthy types on the blog. You know who they are.
“Haven’t we established that Gen Y alone is bigger than the baby boom generation?”
That’s a red herring. The relevant comparisons are the following:
How does the cohort of new households formed by generation Y and other younger generation compare in terms of numbers and financial means to the exiting cohort of Baby Boomers?
The rather obvious answers are (1) the rate of exiting Baby Boomers will numerically swamp the rate of entering new households; (2) absent a considerable amount of future inflation, the financial positions of entering new households will not be sufficient to meet the sales price expectations of Baby Boomers trying to downsize from their empty nests to age-appropriate housing for retirees.
That’s a red herring
Quit repeating the misinformation that there are fewer young people than boomers, and the red herring will go away.
Quit insinuating your point matters to the balance of housing supply and demand and the debate will go away.
If it doesn’t matter, why do you keep misrepresenting the truth?
“If it doesn’t matter, why do you keep misrepresenting the truth?”
The truth is that your oft-repeated point about whether the Baby Boomers or Gen Y is a larger cohort borders on irrelevant
to the discussion on future housing demand.
What does stating this plainly obvious fact have to do with misrepresenting the truth?
What does stating this plainly obvious fact have to do with misrepresenting the truth?
I don’t know, why do you keep stating or implying that there are fewer post-boomers than there are boomers, when it’s been shown many times not to be true?
Just like how it sounds?
CIBT, to put some numbers behind the analysis (from the 2010 Census):
Population by age group (http://www.census.gov/compendia/statab/2012/tables/12s0007.pdf):
Under 5: 20.2 million
5-9: 20.35 million
10-14: 20.7 million
15-19: 22.0
20-24: 21.6
25-29: 21.1
30-34: 19.96 (I didn’t want to put 20.0, for fear of someone saying I was inflating numbers)
35-39: 20.2
40-44: 20.9
45-49: 22.7
50-54: 22.3
55-59: 19.7
60-64: 16.8
65-74 (10 year grouping): 21.7
75-84 (10 year grouping): 13.1
85+: 5.5
So, at the peak of the baby boom, we have approximately 22.5 million per 5 year age cohort (45-49 and 50-54). That peak won’t start retiring in large numbers until approximately 2020 (when these peaks will be 55-59 and 60-64). We never reach this size cohort in the Millennials. But we are damn close at 22.0 and 21.6 in the 15-24 year olds (who will be 25-34 years old when that cohort of boomers begin to retire).
But that isn’t the point I want you to think about. In the near/medium term (next 5-15 years), what matters is how many homes will the boomers be dumping on the market in favor of downsizing/moving to assisted living, etc. to REALLY impact the market.
It is tempting to point to the low ownership rate of those in the young age cohorts at, say 20%, and say that you only need 15-20% of boomers to decide to downsize, etc. before your run into problems with them swamping the market.
However, as each of the other cohorts also age, so does their propensity for home ownership (higher ownership rate for 35-39 years old than 30-34 years old–you can’t ignore more of each cohort looking to buy as time passes). Since it is pretty common for the 5-year age cohorts to be approximately 20 million, what you would be worried about is if of the 22 million boomers, more than 20 million of them decided to downsize/move to assisted living/pass on, to see if it would impact move-up homes, etc.
However, what you see in the near term is that well less than 25% of boomers intend to downside upon retirement (I saw a number quoted as 10%). This number needs to be well in excess of 50% to be all that concerned in the near- to medium-term.
There will be a shift in housing needs (more assisted living than previously, more retirement communities, etc.), but it will be a shift over time in terms of new development, not a wholesale moving out of existing homes leaving them vacant and rotting.
This is more tripe from a few of the untrusworthy types on the blog. You know who they are.
Yes, and we all know you’re one of them. Here’s yet another example. From wikipedia (marking the 21st time I’ve posted this):
“Seventy-six million American children were born between 1945 and 1964 [Boomers]…
Today, there are approximately 80 million Millennials in the U.S.[15]“
Comment by Cantankerous Intellectual Bomb Thrower™
2013-01-25 21:20:59
“The scary thing is outside the HBB forum, how many see the manipulation?”
Still scarier thought: Inside the HBB forum, how many fail to see the manipulation, or worse yet, deliberately misrepresent it?
=======================================================
And you know who they are. But “scary”? Don’t be afraid. Be angry.
Not angry — just perpetually amused.
Realty’s new reality
Bunny, bunny, bunny…
By Siobhan Braun, Jan. 16, 2013
I am in a conference room at the Hillcrest Keller Williams office among roughly 75 realtors that are pretending to be bunny rabbits. A middle-aged woman places her hands in front of her face, simulating buck teeth. She shouts, “Bunny, bunny, bunny!”
A woman in a pink-and-black-striped sweater lifts her lanky arms above her head, giving them the appearance of floppy ears. She hops in place before yelling, “Bunny, bunny, bunny!”
A man with a microphone hushes the bunnies.
“Very good,” he says enthusiastically. The room applauds.
“That was about lowering your inhibitions,” he continues. “Moving out of that fear of this will make me look stupid is really valuable in real estate. This next game pushes that teamwork thing even further.”
…
A relative worked at Keller Williams, this article pretty much summed in her experience. Sounded like a “prosperity gospel” cult to me.
According to wikipedia, depending on how you define Generation Y or “millenials” (those born from approximately 1982-2000), there are approximately 80 million. Again, according to wilipedia and how you define the baby boomers (generally those born from 1946-1960), there are about 75 million.
Given the softness in defining the start and end years of these demographics, it is probably ok to say they are close in size.
Are we talking headcount or gross weight?
This comparison is bogus, as it compares an arbitrarily defined “generation” born over a 16 year period (1945-1960) to another arbitrarily defined “generation” born over the 19 year period from 1982-2000. After accounting for (presumably) greater early mortality in the Baby Boom cohort than for Gen Y, and an extra three years thrown in to the Baby Boom cohort’s birth range, it should come as no surprise that the two generations are comparable in size, even if the Baby Boom generation is larger when standardized on a comparable period of birth years.
And as I pointed out before, the size comparison is irrelevant. What matters are relative numbers of entrants and exits from the pool of households who ‘have to live’ in a single family home, and the ability of entering households to purchase exiting households’ homes, given either their permanent incomes or their abilities to acquire adequate financing. At peak rate of Baby Boomer household exit from the pool of current or potential homeowners, there is no conceivable possibility this will be met by entering households.
Northeasterner….. Are you a liar?
I wouldn’t accuse him of being a liar based on his post; I think it is accurate, so far as the formal definitions of Baby Boomer versus Generation Y go.
The point of my post is that this oft-cited comparison is irrelevant to the discussion.
The point of my post is that this oft-cited comparison is irrelevant to the discussion.
But the overall point of contention is the claim that there aren’t enough people to buy all the houses the boomers will be selling. This has been shown to be a lie, but some insist on repeating it. Gen Y alone outnumbers the boomers, add in Gen X, and whatever the heck the next gen is (GenZ?) and there are plenty of people to replace the boomers.
Maybe not plenty of money, but that’s a different issue.
The standard definitions that I have always seen is that baby boomer goes to 1964 and gen Y starts in 1965.
Sounds right.
I tried to clarify in a recent post why I think this head-to-head comparison of the sizes of Baby Boomer and Gen Y cohorts is irrelevant to the discussion on the balance of residential supply and demand. Don’t have the time, energy or patience to rehash at the moment…
gen Y starts in 1965.
Gen X starts in 1965.
Their argument that more expensive home increases spending makes no sense to me…
The more expensive the house is, the larger your monthly payment is. Thus, you have less money to spend in other areas (trips, restaurants, clothes). Isn’t it obvious that lower housing costs would stimulate other sections of the economy besides housing?
They have engrained in our heads that expensive housing is good, and I don’t understand why people bought into that.
“They have engrained in our heads that expensive housing is good, and I don’t understand why people bought into that.”
People consume most things they spend their money on but the money they spend on houses is not considered by them to be consumption, it is instead considered by them to be an investment.
People want the prices of the things they consume to drop but they want the prices of their investments to rise.
People will buy less of a consumption item if the price rises and more if the price falls, but just the opposite is true for investment items; People are slow to buy houses (or stocks) when prices fall but they rush in to buy when prices rise.
Take a good look around you and see for yourself if this is true.
If you are a renter then a house is a consumption item. If you are a buyer then a house is an investment item.
If you are a renter then you would want rents to go down. If you are a buyer then you would want rents to go up. (You would want rents to go up because rising rents adds value to houses.)
If most of the voters were renters then there would be enormous political pressure to keep rents down. But most people are not renters so the pressure is not to keep rents down but to keep RE prices up.
“If you are a renter then a house is a consumption item. If you are a buyer then a house is an investment item.”
Actually, owner-occupants are both consumers of and investors in housing. By contrast, the all-cash Chinese or Canadian buyers most likely are in it solely for potential investment returns.
Maybe, just maybe, there exist tipping points by which a rise in home prices pushes families from owing more than their home is worth to owing less, and once they cross that tipping point, they will spend more freely.
OK. And where will that money come from? Will they borrow it from the house?
“OK. And where will that money come from? Will they borrow it from the house?”
No kidding. Higher taxes, expensive groceries, gas, health insurance won’t help either.
OK. And where will that money come from? Will they borrow it from the house?
They may save less and spend more, if they view their house as ’saving’ for them by increasing in value.
“Save less”? How many of them are saving anything right now?
Dr Doom says quantitative easing will create zombie banks, firms and borrowers
Nouriel Roubini said at Davos that central bankers risked saddling the economy with debt-burdened QE addicts
Heather Stewart in Davos
The Guardian, Wednesday 23 January 2013 14.37 EST
Nouriel Roubini has warned of the dangers of too much QE. Photograph: Keith Bedford/REUTERS
Nouriel Roubini, the economist dubbed “Dr Doom” for predicting the credit crunch, has sounded a stark warning about the long-term effects of relying on quantitative easing to keep crisis-hit western economies afloat.
At a lively debate in Davos, Roubini, who runs a New York-based consultancy, said central bankers risked saddling the economy with debt-burdened banks, businesses and consumers that should have been allowed to go bust.
“Over time, you get zombie banking, zombie corporates, zombie households, which is damaging in the long term,” he said. The phrase “zombie banks” was coined in Japan, to describe insolvent lenders propped up by cheap cash.
Roubini stressed that “QE” had been critical in fending off a new Great Depression after the collapse of Lehman Brothers in 2008. But, asked to argue against the motion, “The short-term benefits of QE outweigh the long term risks,” he offered nine reasons why such unconventional monetary policy could damage the economy in the longer term.
Roubini went head to head with Adam Posen, the outspoken former member of the Bank of England’s monetary policy committee, who pushed for an extension of QE during his time in Threadneedle Street.
Posen said central bankers should be “humble” about what they can achieve but there was no evidence from the past five years that QE was sowing the seeds of a future crisis. And in response to the increasingly widely aired argument that QE could lead to a Japanese-style economic stagnation, he said: “If you look accurately at the data, being Japan wasn’t so bad: in the five years to 2007, per capita growth in real GDP was higher than anyone else in the G8.”
Instead, Posen said opposition to QE in the current circumstances could only come from a “deep spiritual belief that somehow this must create inflation”.
However, Roubini argued that even if the policy was beneficial today, there could be unintended consequences if central bankers misjudged their “exit strategy”. He was critical of the Federal Reserve’s recent promise to keep buying bonds until unemployment sinks to 6.5%, for example, saying that policymakers may have misjudged how far the jobless rate can fall without sparking inflation.
…
Vampire Squids run amok during the Zombie Household Apocalypse.
20-something guy I know from work and his wife here in L.A. are buying a new $800,000 house in Orange County. The wife wants kids - and she wants a house for the kids. The husband wants to impress - they travel all over the world, three vacations a year to different spots. He drives a Lexus. California is the state where he was born so he would not consider elsewhere. I suppose he can find work in the southland for his skills. But he’s more manipulative and lying and lazy than productive and technical. He’ll do well I’m sure and I think his wife will keep him. She’s an SAP or Oracle whiz and now works from home - preparing for being a homemaker / home business type.
But they will be servants to the illegal aliens pouring into California. Their taxes are already high and they are complaining about it - he asked me what tax avoiding ideas I had. Unfortunately the biggest way I save taxes, and I told him that way, is off his list. It makes sense only for those who live alone and travel for work, jumping to other cities for a year at a time.
That lifestyle of being stuck in California as a sheep to be shorn is not for me.
Something’s gonna give in a few years. It could be the big San Andreas Fault or it could be severe rioting when the Bernanke printing press shuts down.
The advantage of being over the age of 40 is the experience and skills in learning how to deal with people in the work place, and about how to do personal finance and react to new tax laws. There are a few young people who have the insight to learn from older ones, with the recognition that the older people have done stupid things and learned from them. The younger bright ones are open to learning what is stupid. My last major mistake was at age 31 when I bought a new starter house in a community that was experiencing a lot of people moving out. I learned from that mistake.
I advised the young guy above to avoid buying the most expensive house in the area. He said they are not. The other subdivisions are running in various levels above $1,000,000. Still, they would be in the People’s Republic of Irvine Company’s jurisdiction…
Sometimes those younger people are aware of my personal finance advice for several years and go the opposite way before they come back and try my way. Good that they eventually learn.
The culture here is still to marry and to have kids, particularly among the Asian-Americans who seem to still have the faith in the institution of marrage. They tend to be more like European-Americans were in the 1950s. Very family-oriented. But after a couple generations they will be assimilated into the reality of divorce laws. The people I know are more open to hearing about personal finance but they think I have it all wrong about marriage. They know I’m against marriage.
Bill,
your comments are very perceptive. Love reading them. You see that the taxpayers are providing for the illegal aliens in their community. You see that the marriage thing is one weird contact.
thanks
sp - contact = contract
Thank you Trapper.
I can write dozens of paragraphs on these very issues. I suggest you google “marriage strike” and read comments from men. It is more advantageous for a man to be single than marry. The MSM (mainstream media) is still pushing big lies that married men live longer, married men are happier, married men are wealthier. But single men are also becoming more aware of diet, lifestyle choices, and do not have to pay for expensive housing or expensive cars because they are not trying to impress women.
As for illegals, they are still flooding into California and will eventually cause the Federal government to steal more from taxpayers in 49 states to keep California from going bankrupt.
Note that 30% of all eligible voters voted for Mr. Obama. 28% of all eligible voters voted for Romney. 40% of all eligible voters did not vote for EITHER Obama nor Romney. The government has no consent of the governed. We are at the August stage of democracy where it’s mob rule, those receiving government checks are doing the voting. The rest of us are hunkering down.
So, pray tell, who are hiring the illegal aliens? Besides the farmers, there’s the contractors, the light manufacturers. On the home front, yuppies complaining about taxes which support illegal aliens have no problem hiring the cheapest landscapers, nannies, housekeepers, house painters, etc. and are complicit as to them being undocumented. It all evens out, right?
“But single men are also becoming more aware of diet, lifestyle choices, and do not have to pay for expensive housing or expensive cars because they are not trying to impress women.”
That works if you are asexual, but don’t you need some action once in a while?
There are ways
Indeed there are. And if you are cool with that, it makes the most economic sense.
Yes. Good to see you caught on to what “the ways” are.
Here’s a thought:
Since the Federal Reserve Bank is allegedly a U.S. government agency, how about if their meetings were held in the light of public scrutiny, in line with the House of Representatives, the Senate, and so far as I am aware, all other federal government deliberative bodies?
That would certainly be a giant leap towards giving the little guys tools to keep Davos Man in check. How come the Fed gets to conduct business in smoke-filled rooms behind closed doors?
Schumpeter
Davos Man and his defects
The global-leadership industry needs re-engineering
Jan 26th 2013 |From the print edition
THE two most popular words in the business lexicon are probably “global” and “leadership”. Put them together and people in suits start to salivate. That is perhaps why more than 1,000 corporate bosses are flocking to Davos, a Swiss ski resort, this week. There, at the annual bash of the World Economic Forum (WEF), they sip vin des glaciers with some 50 heads of state and 300 cabinet ministers. Whatever the topic, from deficits to deadly diseases, the talk is all of providing “global leadership”. And not just in the short term: the WEF rigorously selects and nurtures “Young Global Leaders” to form a “next-generation leadership community that is mission-led and principle-driven”.
The rise of the rootless
The cult of the global leader is spreading. Business schools are full of it. INSEAD calls itself “the business school for the world” and has campuses in Singapore and Abu Dhabi as well as Fontainebleau. Fuqua School of Business at Duke University boasts that it is “the world’s first legitimately global business school”; it has campuses in six countries. Big firms no longer aspire merely to train competent managers. They pride themselves on their ability to select and train leaders for global roles.
This is not all guff. Many industries are globalising fast, creating waves of disruption. Parochial companies may perish. Global ones complain that a shortage of global talent impedes their growth, especially in emerging markets. Yet they rapidly burn through what global talent they have: by one estimate, nearly 80% of CEOs of S&P 500 firms are ousted before retirement.
So there is clearly a need for global leadership. But when the public look at what is on offer, they are not impressed. Many of the bankers and politicians caught dozing by the financial crisis were regulars at Davos. Ordinary folk trust Davos Man no more than they would a lobbyist for the Worldwide Federation of Weasels. A survey by Edelman, a public-relations firm, finds that only 18% of people trust business leaders to tell the truth. For political leaders, the figure is 13%.
What can be done? Much of the answer lies in giving the little guys better tools to keep Davos Man in check: stricter accountability for government leaders, sounder regulations to curb corporate abuses. But there is also a case for reforming the global-leadership industry. The people who run it need to think hard about what they mean by both globalisation and leadership.
…
I can see the advantage of being a multi-lingual global white collar professional unencumbered by family ties. There are very few of this type of people currently, so the pay should be top dollar, without the hazard of working in say, Riyadh, Saudi Arabia and getting your head cut off.
If I was multi-lingual, I would do this. You don’t necessarily have to renounce your citizenship of your base country, but you gain the advantage of learning a lot about how to gear your personal finance to avoid taxes back home. You can immediately start an offshore business on the side and protect it with a trust (Proprietary Trust?), then keep that business going. In turn you could operate the business when you are out of that country and in some other country. That business can make some investments into international stocks as a foreign account, rather than as a Frenchman with a France-based investment account. This type of thing has been discussed on the escape artist web site.
Of course the school marm would call this criminal and say we must obey big government because the nanny state knows best…
I would call that sort of arrangement prudent diversification, as if you ever needed to leave your home country on short notice, due to intolerable political circumstances*, you would already have a fallback plan in place.
* This happens to describe my ancestors’ decisions to migrate from Germany to the U.S.
On my dad’s side too - from Germany.
The Federal Reserve Bank is NOT a US agency.
That is the biggest misrepresentation of the whole banking scam.
It is an “INDEPENDENT” agency that works to keep it’s member banks solvent, no matter how horrendous the workings of it’s member banks.
The President gets to appoint the FED Chairman, giving the impression that the FED is part of the Government.
The “fix” is already in with appointees, but the “power” to make the appointment deceives the American Public and people like you to believe the US government has ANY say in FED Policies.
The Policies are BY, OF and FOR the FED, meaning:
Bank of America, GOldman Sachs, Wells FARgo, etc. They get FREE MONEY to “lend”. You and I get to pay the “fees” and “interest payments”.
Wake up.
My staffing company’s president was remarking in an interview the unemployment rate among IT programmers is 3.5%. For clinical research medical writers the unemployment rate is 2.5%.
Temporary work is still in demand because the Obamacare law mandates that full time employees must be provided health care by their employers while part time employees’ health care does not have to be provided by their employers.
Temporary employment does not necessarily mean you do not work 40 hour weeks. It means you are not expected to continue working at the client site for years and you don’t get benefits.
Not all news is bad on jobs. Many people just do not want to study the technical fields in college and wind up working at Starbucks.
Federal employment, both full-time and contract work, still faces the gauntlet of sequestration. I seriously doubt many folks are cognizant of what this entails, myself included.
Party leaders predict temporary sequestration cuts are likely
Posted by Josh Hicks on January 24, 2013 at 9:17 am
Lawmakers are gearing up for a pair of upcoming budget battles despite making progress on the debt limit, which the House agreed on Wednesday to suspend until mid-April — the president has signaled he will not block the measure, but the Senate still needs to vote on it.
Still looming are a March 1 deadline that could trigger the automatic spending cuts known as sequestration and a March 27 cutoff for avoiding a government shutdown once Congress’s last short-term spending plan expires.
The prospect of sequestration seems increasingly likely these days, with a growing number of Republicans and Democrats suggesting they’re resigned to the idea.
Leaders from both political parties predicted Wednesday that sequestration would take place at least temporarily while lawmakers try to come up with a longer-term plan for reining in the national debt, according to an article by Lori Montgomery and Rosalind S. Helderman in Thursday’s Washington Post.
Sen. Richard J. Durbin (D-Ill.) reportedly said, “I think we are committed to some form of sequestration spending cut.” He added that the White House is considering options for blunting the impacts on government services and the federal workforce, according to Thursday’s article.
So what does that mean for federal agencies?
A Jan. 10 report from the Congressional Research Service said sequestration would entail “largely across-the-board spending reductions.” The operative word there is “largely,” meaning some programs — but not the federal workforce — would be shielded.
A host of so-called “mandatory” programs would be exempt from cuts, including Social Security, the Earned Income Tax Credit, the Additional Child Tax Credit, and low-income programs such as Medicaid, the Children’s Health Insurance Program and Supplemental Nutrition Assistance, according to the report.
Federal agencies would see across-the-board budget cuts of between 8 percent and 10 percent.
The government would have until Sept. 30 to make the required reductions, giving lawmakers time to forge a deal for less-painful cuts. In the meantime, agencies would absorb the impacts slowly, which is what Durbin was referring to when he said “I think we are committed to some form of sequestration spending cut.”
The idea is that lawmakers might be willing to let sequestration run its course for awhile to reduce spending without having to choose where the trimming occurs.
Post reporter Lisa Rein explored what that might entail for federal agencies in a Dec. 24 article. Here’s what she wrote:
“Most agencies would continue spending, but with caution, eliminating travel and training programs and slowing or halting hiring. Overtime would be phased out, as would temporary help. Managers may have to decide whom to furlough and for how long.”
“Managers say that without knowing how long the cuts will be in effect, they can’t make smart decisions.”
Post reporter Eric Yoder noted in a blog item Wednesday that sequestration furloughs likely wouldn’t begin right away and would be spread out over the year. He also explained that employees forced to stop working would not be able to substitute paid leave for the time off, although benefits such as health and life insurance would generally continue.
…
I am a federal employee, so I am watching this the shenanigans of our elected officials with great disappointment. I think the republicans lost when they capitulated on the December 31 deadline.
I think mandatory tax increases, cuts in domestic spending, and cuts in defense spending would have been a small step in the right direction. I think the republicans blinked because they couldn’t take the defense spending cuts. bummer
I’m up for that. Cut the contract work. I have plenty of opportunities in IT in areas such as medical devices and automotive devices. Along with big federal spending cuts in defense, big entitlement cuts and big cuts to social disease subsidies such as Section 8, health care for illegals, education for illegals, and so on. This is a win win situation.
Can the typical federal government employee cover monthly expenses after a 20% pay cut? We may soon find out:
AP: Sequestration means mass furloughs in April
Jan. 25, 2013 - 03:57PM
By STEPHEN LOSEY
The Pentagon is planning to furlough hundreds of thousands of civilian employees beginning in April if a deal is not struck to avert sequestration, according to an Associated Press report.
The AP said that Deputy Defense Secretary Ash Carter told reporters Friday that if sequestration’s budget cuts go into effect as scheduled on March 1, employees will be furloughed one day per week between April and Sept. 30, the end of fiscal 2013. The AP reported that Carter said the furloughs would likely save $5 billion.
The Army also on Jan. 22 officially froze civilian hiring and ordered managers to lay off temporary employees and let term employees’ appointments lapse once they expire. Thomas Lamont, the Army’s assistant secretary for manpower and reserve affairs, said in a memo that day that the Army may not extend any job offers. Firm job offers extended before Jan. 22 will be honored as long as an entry-on-duty date had been set.
…
My buddy in civil service just retired from the DOD. He was hoping to retire sooner or later and actually got a chance for an early out. In a few weeks in his area the budget cuts are going to start, if what you are saying is right. It’s mostly federal defense dollars there keeping that community going. He and his wife have a paid off house. Not sure of the details of pensions or whatever, but he has a Thrift savings Plan. If he’s on top of things, he would roll it over to an IRA in Vanguard and out of government’s clutches. There was a threat a few years ago of government tapping TSP to extend its budget for a few months. That’s why I got my money out of the TSP to an IRA.
A few months ago I read that 108,000 DOD employees will lose their jobs in 2013. This seems like it still could happen.
I’m all set financially for whatever consequences of budget cuts.
The results of this poll suggest most federal employees have not been briefed whatsoever about possible sequestration. I wonder for how many it would seem like a black swan if they suddenly found themselves working (and paid for) only four days a week instead of five?
Poll: What do you know about sequestration?
By Kellie Lunney
January 24, 2013
Sequestration is nearly upon us. Every day it’s looking more likely that automatic, across-the-board spending cuts will happen, at least for a little while. Earlier this month, Congress delayed them until March 1, but at this point they feel almost inevitable, after more than a year of debate, dread and deadlock. Because the Obama administration waited so long to even acknowledge the possibility of sequestration, there’s still a lot of uncertainty over how the indiscriminate spending cuts will affect government services and the federal workforce.
The Office of Management and Budget has said furloughs are a last resort, but even so, no one really knows where, how or when the ax will fall. Agencies lately have been more forthcoming about their sequestration plan, and how they expect the spending cuts to play out. But there are still more questions than answers.
if they suddenly found themselves working (and paid for) only four days a week instead of five ??
I think its a reasonable solution….Can we move the whole federal bureaucracy to a four day work week ?? Included with that some shrinking of the federal government….At least if you had four dependable days of work you can plan around it…Kind of hard to plan with no job…
“At least if you had four dependable days of work you can plan around it…Kind of hard to plan with no job…”
That would be a clever way to sneak in a 20% across the board pay cut: Say they are getting paid at the same rate, though only working four days instead of five.
I wonder if anyone will figure out what is really going on if they do this?
Another added, “In the long run, all the Baby Boomers are dead, and to the survivors go the spoils. Hopefully today’s young people won’t mind future life in a home formerly occupied by debt people. Most amazing aspect of the current U.S. housing situation: They are trying to crank up the home building industry at the onset of a three-decades-long drop in demand due to the retirement and eventual die-off of the Baby Boomers. This can only end badly.”
You are completely forgetting about the 20 MILLION illegal Aliens, all their children and all their relatives that have come across the border and will continue to stream across the border when they are given “LEGAL” status.
Think of it.
World-wide, where poverty exists, it is much easily to board a plane, train, bus or car and cross a border than it is to BUILD a community for yourself. That’s a lot of work. Much easier to move in and commandeer another people’s neighborhood.
During the past 10 years, the entire complexion of the Neighborhoods I grew up in have changed, all across the Tampa Bay Area, the new-comers all speak Spanish or a form of Spanish. Most don’t even try to speak English.
Almost every new resident in formerly abandoned houses is a “Latino”. Where are they coming from?
Supposedly only about 1 million are Legally allowed in each year. Spread across America, I don’t see how Tampa/St. Pete could get 50,000 of that Million, but maybe they like the weather here.
We are not even a “sanctuary city”, but law enforcement has been told to turn a blind eye.
So, you see,
There is no “overbuilding”. We are building in advance of the “new Americans”. Not Native-Born Americans, New Welfare recipients from Abroad.
We already have ready-made domiciles for them in a town near you.
Obama will set up “one-stop” welfare offices wherever they are needed to collect “benefits” (That has typically been the local school).
There is not an oversupply of houses. There is an under-supply of immigrants. Obama will fix this for you.
Supposedly only about 1 million are Legally allowed in each year. Spread across America, I don’t see how Tampa/St. Pete could get 50,000 of that Million, but maybe they like the weather here.
There must be something attracting them to your neck of the woods. Out here, in my little burg, it is visibly noticeable that there are far fewer of them than before. Six years ago, if I walked into a Walmart, it would be crawling with them. Today, not so much.
Maybe it is the weather. Maybe snow and freezing weather are somewhat of a deterrent.
Colorado is more of an exception. You have been over-run with the former Californians escaping the over-run of their state by Illegals from South of the Border and from boats across the Pacific.
You are the land of the Once -a -Californians.
Give it time.
And pick up a Mexican Lexicon book. You’ll need it.
And look for Undercover ways the local government accommodates the new illegals. Here in Clearwater, there is a Middle-school that runs its soccer field lights every night of the week. Hundreds of “latino” kids and adults use the fields for entertainment. Mostly adults.
Typically, NO ONE is allowed on school grounds during working hours, as they are all new prisons for children.
However, after hours, it’s an open house.
The Local community gets the power bill. And I’m talking about 6 to 8 full fields all lit up, bright as daylight. every night. About 6 to 10 or 11pm.
And pick up a Mexican Lexicon book. You’ll need it.
I lived 12 years in Mexico City. I speak better Mexican Spanish than they do.
We also don’t seem to get as many California transplants out here like we did 10 years ago. I think it has a lot to do with the job market. HP and Agilent pretty much only lay off these days, as do our few other local quality employers, which is why I find my self commuting to Denver (fortunately I can work from home two days a week).
And we did have our illegal swarm during the housing bubble, when they were building 1500 houses a year in Loveland. Once that fell to about 100 a year the illegals began to leave, big time.
Our schools have very low budgets (we are in the bottom 10% nationwide). There is only one school field in the district that has lights, which is Ray Patterson stadium at Thompson Valley HS. That field is used exclusively for American football games (it’s shared with Loveland and Mountain View High Schools).
We do have a sports park in town, which was donated by a developer. It has several, unlit soccer fields which you have to pay to use. It also has a multipurpose (soccer/lacrosse/American football) field with artificial turf and lights. If you have a night game you are charged $100 to use that field, no exceptions (even my sons HS Soccer team had to pay the fee).
Sounds to me like you guys molly coddle your illegals beyond what federal law requires.
All the fields here have lights and the newest field turf. The city matched private donations. Ray Lewis gave a lot of money to redo the field where Dunbar h.s. plays. It cost a few hundred thousand. Lots of the fields here are used for football and lacrosse, which is big here. Loyola defending division 1 champs, plus johns Hopkins and Maryland a top 5-top 10 teams. Suburban high schools beat city ones in lax though.
Patterson high got all new tennis courts last spring. I will never play another surface, it is amazing. Best footing I’ve had. And free. I used to play at Paterson park or ccbc. They ripped up 2 of the Paterson park courts to add a public water park next to the indoor skating rink and pool complex.
In CA we welcome the illegals. We could drive them all away over night if you made it illegal for them to rent a place, get a bank account, get a bus pass, buy a car, get car insurance, use our schools…
But we love our cheap produce and $2 Buck Chuck! (now $2.49)
corporate farms win, taxpayers lose. sound familiar?
Here let me help solve your dilemma Dio…Move to Idaho;
Idaho 2000 population of Idaho: 1,293,953 (2000 census)
Rank Ancestry % of Population
1. German 18.8
2. English 18.1
3. Irish 10
4. American 8.1
5. Mexican 5.5
Read more at http://names.mongabay.com/ancestry/Idaho.html#5s1tHz4VvGpDjmPA.99
We’re up to about 1.6 million in the last census. And that’s in a state that has about 2/3 the area of California. I tell people to think of Idaho as California sans the coastal area.
8.1% redneck.
I get updates from a Realturd in my local area. Saw one in ugly Lompoc (best thing about it is that it is 60 miles to Santa Barbara) for $169k. 3/2 about 1600 sq ft, good bones, needed all surfaces improved.
SOLD - in less than a week 4 offers! This limited inventory is creating a buying frenzy on the central coast of CA. Probably bought by an investor as you could own for under $1000 a mo, with 20% down and rent out at $1500 -$1600.
How does 60 miles from Santa barbera = the coast???
Everything ive ready about central inland California suggests it’s a dreadful place. Flyover country jobs but ca taxes, regs, and migrant workers. Awful schools too.
It’s a heck of a lot closer to the coast than flyover, not that those people ever go to the beach. Then again, I doubt you could buy anything for $1000 a month in actual Santa Barbara.
look at a map Lompoc is near the coast Northwest of SB
Vvandenberg AF base lots of rocket launches out of there
We will get the “spoils” when the selfish baby generation dies, sure. But it will be unmaintained and outdated houses. Even if w scoop them up cheaply in all cash transactions, it will be no great windfall. The characteristic of baby boomers is consumption, which will yield only the carcasses of house.
Moreover, we will get to pay for baby boomers to have medicare and social sec. “evil” government programs that will be bled dry by selfish Olds who supported mittens, oddly enough.
I suspect that those houses will be acquired by the richies at low prices and then rented out to the lucky ducky generation, who will have to dish out 50% of their incomes to pay the rent on old dumps.
If by richies, you mean Chinese with truckloads of dollars they got for cheap plastic crap, I think you’re right.
I find it troubling that so many foreign investors seem to be flocking in to buy U.S. residential real estate, presumably to cash in on the Fed’s housing price reflation program.
How do these buy to rent deals work on the assumption that rents are $1500 and up across the US? That’s $18k a year and what’s the avg net household income? in Fl? in AZ? I just don’t buy it.