Outlook 2013: Americans Are Going Broke [View article]
Income disparity, especially as it relates to wages, is THE big systemic imbalance undermining our economy. The trends shown here just underscore the problem. Just as Laffer showed there is a point of diminishing returns on taxes, similar elasticity exists with income disparity. Some disparity is absolutely necessary to provide the motivation that defines a true meritocracy. Too much disparity undermines the consumer middle class, serving as a de-motivator as the economy shifts from a free market meritocracy to a plutocratic oligarchy.
This exploding disparity fuels the double edged sword of exploding private and public debt that is crippling economies around the world. Runaway disparity becomes a siphoning of wealth, that is horded by an extremely narrow segment of the population. Increasingly larger portions of society cannot afford to maintain existing standards of living. Governments are forced to step in to bolster the flow of money through the economy - leading to unsustainable levels of debt. Consumers increase their reliance on credit to make up their diminishing purchasing power.
There's no doubt that our economy is dangerously dysfunctional. We must move NOW to find a peaceful, manageable means to reverse the fundamental imbalances caused by this growing disparity. Otherwise, history will repeat itself and violent social upheaval will reset the bar for everybody.
Weren't people commenting here a couple months ago that unemployment was going bump back up as folks re-entered the job market as conditions (slowly) improved?
It was also reported a couple days ago that "Employment in the nonfarm private business sector rose 179,000 from March to April on a seasonally adjusted basis, according to the latest ADP National Employment Report®".
I come to SA for actionable information, not political rhetoric. Can all the kiddies leave this pool and head over to faux news to post their rants?
Over the past month, the percentage of Americans pessimistic about the direction of the economy has jumped to 39% from 26%. [View news story]
I agree with you Cynic, the logic is immutable. It's generally accepted that the leaders of this country don't know what they're doing. And these same leaders were elected by a majority of Americans, who obviously make bad choices every election. Therefore, the odds the are against American public opinion being right, and the smart play would be to invest against the growing sentiment.
But since today is a market holiday, it probably doesn't matter anyway. A lot can happen over the course of a long weekend. So much for my Easter candy induced ramblings...
Wall Street firms can do no right: Critics are angry that bonuses are set to surpass record levels set in 2007. Bonus recipients are upset about the bonus structure, saying a recent tilt towards stock over cash could create potential liquidity problems, keeping them from paying expenses like mortgages and school tuition. [View news story]
Wall Street is having trouble paying their bills with their bonus because their 6 and/or 7 figure salaries is just not big enough? Boo 'effin' hoo. This is just a tiny taste of the widespread pain these greedy idiots spread around the globe. In any other industry, these morons would be hearing the same speeches about reduced revenue and tight budgets that would lead them to pray for a salary cut instead of a layoff.
The only sympathy these 'poor financiers' should expect from a wide swath of America (i.e. the taxpayers who provided the liquidity that rescued their struggling bottom lines) is whether to beat them unconscious before we burn them at the stake.
Jan. Nonfarm Payrolls:+36K vs. consensus of +136K, +121K (revised from +103K) in December. Unemployment 9% vs 9.5% expected. Avg. hourly earnings +$0.08. to $22.86. [View news story]
Papaswamp - you're talking about Nothing In Life is Free and not the other definitions of NILF, right? (Consider this your Fri morning chuckle)...
President Obama draws his first key lines on tax-cut legislation, saying any bills have to extend unemployment benefits and renew his own tax credits, including those for working poor, college students and adoptive parents. Jobless aid ended Nov. 30 and the early-2000s tax cuts expire Dec. 31. [View news story]
Here we go, the apologists for the corporate shills and billionaire-greed-class are trotting out their tired old anti-liberal propaganda. Dems are bad - blah blah blah. Give billionaires more cash they can stash away outside of the normal economic flow. You idiots are killing the American middle class with your partisan driven crap.
In a new paper, two leading economists back up government claims that stimulus spending, the Wall Street bailout and other emergency economic measures helped prevent Great Depression II; without them, U.S. GDP would be 6.5% lower this year, there would be 8.5M fewer jobs and the economy would be experiencing deflation. [View news story]
AxiosCap - if we really want to 'take our medicine' and address the structural imbalances, then we needs to include all the industrialized economies, not just the US. The old centers of production need to undergo significant deflation and the new centers (emerging markets) need a measure of inflation to get a level of parity in costs and prices across the global market. Then we can get to competing on a level playing field.
But ignoring the social side-effects of that medication has its own risks. Every major social change throughout history comes about when social forces try to address economic and political imbalances that have grown to ridiculous levels. The greater the disparity, the more violent the change.
Your post shows that you understand one simple fact about this current mess - there are no easy answers. And anyone peddling 'easy answers' is really part of the problem.
Nassim Taleb's take on the Flash Crash: It wasn't me. Taleb falls in line with Felix Salmon in the view that events like this have structural origins, and aren't about single trades like the $7.5M options trade by Universa, which Taleb advises. “When a bridge collapses, you don’t look at the last truck that was on it, you look at the engineer.” [View news story]
Well, if the truck was seriously overloaded and the driver ignored the posted weight limits, then you also look at the truck, driver and the trucking company; as well as the bridge engineer and the DPW in charge of bridge maintenance and the state agency in charge of bridge inspections.
A 6% drop followed by a rally back to the starting point, all in the space of 15 minutes looks more like something more criminal than negligent. Any big selloff should have kept the indices low.
I hope all the big traders are checking their security protocols to make sure this wasn't the first instance of a new form of cyber-terrorism.
CNBC: A human trading error at a major firm could have caused the market selloff. [View news story]
Anyone who really believes that a single accident can cause an 700+ point swing down and back up again in the space of 15 minutes in the major indices is smoking crack. It was too damn shortlived to be an instand panic (10500 to 9800) followed by an instant rally (back up to 10500).
I think there's more to this than anyone is reporting, yet. I want to see some serious investigation into this.
Is anyone else regretting setting what they thought was a low-bid limit buy with an 8% stop-loss today? I think we all just got royally ripped off.
Remember the mutual fund scandal a few years ago - what DC wants is a new set of regs to send more of the risk (and related cost) back onto the risk takers. GS deals with the big players and if there's a chance to recoup some losses, they'll hang GS up like a butchered pig and squeeze every drop of blood they can get.
Some of the mainstream (read: fluff) media outlets are mentioning GS and Enron in the same sentence. Whether or not they go to jail, people's careers are going to get ruined. Damage will be done in a strategic way - smart bombs that shrapnel into subpoenas, sound bites and video clips. It is an election year.
The EU is now investigating them for a debt swap where they may have have abused as-of pricing. There's blood in the water and some very big sharks are circling...
Leaving capital in private hands does not necessarily translate into more effective investment. Witness the growing pool of private capital stagnating on the sidelines while economic growth flounders. There are a lot of reasons why investors are sitting on their hands (or just speculating on very short term plays). There is also plenty of evidence that private capital will sometimes follow the herd like lemmings over the proverbial cliff. The most recent recession is the result of private capital and sovereign funds gorging themselves on grossly overvalued, mis-managed derivatives.
Government spending should always be the investor-of-last-resort. Responsible capitalists following investing traditions focused on financial fundamentals, value-adding innovation and long-term growth should be the engine that drives our economy. But even a casual study of western economic history will show that the private sector will sometimes fall far short of their better traditions and values. When greed and stupidity overpower smarter minds in the private sector and fear pushes most investors to the sidelines, it's time to use these measures of last resort.
"Jobs now, deficits later" is the way to lift the economy, Paul Krugman writes, but it's not what the "serious" people in D.C. pursue: "Self-styled deficit hawks want to punish the unemployed even as they oppose any action that would address our long-run budget problems. And here’s what we know from experience abroad: The confidence fairy won’t save us from the consequences of our folly." [View news story]
Isn't consumer spending the foundation of our economy? With home valuations down and real wages down and unemployment up, what is left to fuel the consumer spending? With hundreds of billions in private capital sitting on the sidelines, the only other source of money is the government.
Put the name calling aside so we can all grow up and face reality. Liberals don't want to drive up the federal deficit any more than conservatives do. We both know that without a strong balance sheet the government will not be able to address the various issues we hold dear.
And there are moderates on both sides who realize that we cannot just slash the remaining source of capital without causing seriously long-term damage to our economic infrastructure. The real issue is whether the private sector is going to start practicing some of the proactive management they preach and get off the sidelines and start hiring. Or if it really makes sense for the government to join the private sector on the sidelines while the Middle Class collapses, taking the entire economy with it.
Makes you wonder if the Tea Party isn't really just a big scam, secretly funded by our enemies to accelerate our economic collapse.
Lowe's (LOW) is up 1.3% after announcing it's cutting 1,700 middle-management jobs. The company is however adding 8,000 to 10,000 weekend sales jobs to address its busy time. As of last January, Lowe's had about 239K employees to Home Depot's (HD) 317K. [View news story]
Jack Nicholson (as Col Jessup in A Few Good Men) said it best: "You can't handle the truth!".
The sad truth is that the US priced itself out of the global labor market a long time ago, on the premise that trees grow to the sky and that we can ignore economic reality as we pursue our selfish interests. I'm just as guilty as anyone else here on that count.
But as the President (and so many others here on SA over the years) have said, we're in a global market. The notion that geography, or politics or economics serve as a moat to protect our (relatively) extravagant lifestyle is a woefully outdated idea.
Nationalism is dead. It died in Europe, Russia, Asia and in the Americas. International capitalism rules the day. Political rhetoric is just so much useless "blovating". International trade hews only to market rules. Those who futilely cling to outdated ideas like nationalism and the relative entitlements that come with citizenship will continue to find themselves wondering what ran them over and left them struggling in the gutter. Meanwhile the rest of us will work to embrace the new reality and try to make a buck or two on the market.
Don't single out the raters for criticism, Warren Buffett tells the FCIC with Raymond McDaniel (MCO) at his side; Moody's managers just "made a mistake that 300 million other Americans made" in overestimating housing-related assets. Buffett had a stake in Moody's since 2000 and says if he knew the bubble would get that big, he'd have sold. [View news story]
Nor were those 300 million people paid handsomely for their ratings. It seems like Buffett may be putting the cart before the horse - how many of those 300 million folks based their mistaken judgement on the info from the raters?
Outlook 2013: Americans Are Going Broke [View article]
This exploding disparity fuels the double edged sword of exploding private and public debt that is crippling economies around the world. Runaway disparity becomes a siphoning of wealth, that is horded by an extremely narrow segment of the population. Increasingly larger portions of society cannot afford to maintain existing standards of living. Governments are forced to step in to bolster the flow of money through the economy - leading to unsustainable levels of debt. Consumers increase their reliance on credit to make up their diminishing purchasing power.
There's no doubt that our economy is dangerously dysfunctional. We must move NOW to find a peaceful, manageable means to reverse the fundamental imbalances caused by this growing disparity. Otherwise, history will repeat itself and violent social upheaval will reset the bar for everybody.
Initial Jobless Claims: +43K to 474K vs. 410K consensus. Continuing claims +74K to 3,733,000. [View news story]
It was also reported a couple days ago that "Employment in the nonfarm private business sector rose 179,000 from March to April on a seasonally adjusted basis, according to the latest ADP National Employment Report®".
I come to SA for actionable information, not political rhetoric. Can all the kiddies leave this pool and head over to faux news to post their rants?
Over the past month, the percentage of Americans pessimistic about the direction of the economy has jumped to 39% from 26%. [View news story]
But since today is a market holiday, it probably doesn't matter anyway. A lot can happen over the course of a long weekend. So much for my Easter candy induced ramblings...
Wall Street firms can do no right: Critics are angry that bonuses are set to surpass record levels set in 2007. Bonus recipients are upset about the bonus structure, saying a recent tilt towards stock over cash could create potential liquidity problems, keeping them from paying expenses like mortgages and school tuition. [View news story]
The only sympathy these 'poor financiers' should expect from a wide swath of America (i.e. the taxpayers who provided the liquidity that rescued their struggling bottom lines) is whether to beat them unconscious before we burn them at the stake.
Jan. Nonfarm Payrolls: +36K vs. consensus of +136K, +121K (revised from +103K) in December. Unemployment 9% vs 9.5% expected. Avg. hourly earnings +$0.08. to $22.86. [View news story]
President Obama draws his first key lines on tax-cut legislation, saying any bills have to extend unemployment benefits and renew his own tax credits, including those for working poor, college students and adoptive parents. Jobless aid ended Nov. 30 and the early-2000s tax cuts expire Dec. 31. [View news story]
In a new paper, two leading economists back up government claims that stimulus spending, the Wall Street bailout and other emergency economic measures helped prevent Great Depression II; without them, U.S. GDP would be 6.5% lower this year, there would be 8.5M fewer jobs and the economy would be experiencing deflation. [View news story]
But ignoring the social side-effects of that medication has its own risks. Every major social change throughout history comes about when social forces try to address economic and political imbalances that have grown to ridiculous levels. The greater the disparity, the more violent the change.
Your post shows that you understand one simple fact about this current mess - there are no easy answers. And anyone peddling 'easy answers' is really part of the problem.
Nassim Taleb's take on the Flash Crash: It wasn't me. Taleb falls in line with Felix Salmon in the view that events like this have structural origins, and aren't about single trades like the $7.5M options trade by Universa, which Taleb advises. “When a bridge collapses, you don’t look at the last truck that was on it, you look at the engineer.” [View news story]
Fat-Finger Trading? [View article]
I hope all the big traders are checking their security protocols to make sure this wasn't the first instance of a new form of cyber-terrorism.
CNBC: A human trading error at a major firm could have caused the market selloff. [View news story]
I think there's more to this than anyone is reporting, yet. I want to see some serious investigation into this.
Is anyone else regretting setting what they thought was a low-bid limit buy with an 8% stop-loss today? I think we all just got royally ripped off.
What a Bunch of Ashes [View article]
Some of the mainstream (read: fluff) media outlets are mentioning GS and Enron in the same sentence. Whether or not they go to jail, people's careers are going to get ruined. Damage will be done in a strategic way - smart bombs that shrapnel into subpoenas, sound bites and video clips. It is an election year.
The EU is now investigating them for a debt swap where they may have have abused as-of pricing. There's blood in the water and some very big sharks are circling...
The Real Fiscal Cliff [View article]
Government spending should always be the investor-of-last-resort. Responsible capitalists following investing traditions focused on financial fundamentals, value-adding innovation and long-term growth should be the engine that drives our economy. But even a casual study of western economic history will show that the private sector will sometimes fall far short of their better traditions and values. When greed and stupidity overpower smarter minds in the private sector and fear pushes most investors to the sidelines, it's time to use these measures of last resort.
"Jobs now, deficits later" is the way to lift the economy, Paul Krugman writes, but it's not what the "serious" people in D.C. pursue: "Self-styled deficit hawks want to punish the unemployed even as they oppose any action that would address our long-run budget problems. And here’s what we know from experience abroad: The confidence fairy won’t save us from the consequences of our folly." [View news story]
Put the name calling aside so we can all grow up and face reality. Liberals don't want to drive up the federal deficit any more than conservatives do. We both know that without a strong balance sheet the government will not be able to address the various issues we hold dear.
And there are moderates on both sides who realize that we cannot just slash the remaining source of capital without causing seriously long-term damage to our economic infrastructure. The real issue is whether the private sector is going to start practicing some of the proactive management they preach and get off the sidelines and start hiring. Or if it really makes sense for the government to join the private sector on the sidelines while the Middle Class collapses, taking the entire economy with it.
Makes you wonder if the Tea Party isn't really just a big scam, secretly funded by our enemies to accelerate our economic collapse.
Lowe's (LOW) is up 1.3% after announcing it's cutting 1,700 middle-management jobs. The company is however adding 8,000 to 10,000 weekend sales jobs to address its busy time. As of last January, Lowe's had about 239K employees to Home Depot's (HD) 317K. [View news story]
The sad truth is that the US priced itself out of the global labor market a long time ago, on the premise that trees grow to the sky and that we can ignore economic reality as we pursue our selfish interests. I'm just as guilty as anyone else here on that count.
But as the President (and so many others here on SA over the years) have said, we're in a global market. The notion that geography, or politics or economics serve as a moat to protect our (relatively) extravagant lifestyle is a woefully outdated idea.
Nationalism is dead. It died in Europe, Russia, Asia and in the Americas. International capitalism rules the day. Political rhetoric is just so much useless "blovating". International trade hews only to market rules. Those who futilely cling to outdated ideas like nationalism and the relative entitlements that come with citizenship will continue to find themselves wondering what ran them over and left them struggling in the gutter. Meanwhile the rest of us will work to embrace the new reality and try to make a buck or two on the market.
Don't single out the raters for criticism, Warren Buffett tells the FCIC with Raymond McDaniel (MCO) at his side; Moody's managers just "made a mistake that 300 million other Americans made" in overestimating housing-related assets. Buffett had a stake in Moody's since 2000 and says if he knew the bubble would get that big, he'd have sold. [View news story]