Financial topics

[Higgenbotham]

The (neo)Keynesians can point to what I quoted from Hayek and claim he was wrong in 1974 and I would concede they are somewhat right about that. But there are two reasons I quoted it: one, I think Hayek is right, right now, and two, I think Hayek got the big big picture right, the evidence being what he said before and after the part I quoted. It indicates a depth of understanding particularly for that time that exceeds that of what we might call the Newtonian economists. I believe over a 100 year time frame Hayek will be shown to have been right overall but the (neo)Keynesians will have to blow up the world economy first. Probably what Hayek didn't understand correctly was the degree of complexity that could be built on the foundation of floating exchange as well as the extreme disequilibrium that would create. But now it appears the fork in the road he posits has arrived. I can imagine what Krugman will say, that if Ben had printed more money everything would have been OK. Krugman debunked Estonia's achievements in very simple terms on his blog by invoking GDP, which is an incorrect measure that has nothing to do with quality, only quantity, from an incorrect point of origination (the top of the 2007 false bubble), then said oh well, I am now hated, when he got slapped for being the self-serving phony that he is. When we circle back to Hayek's lecture from 1974, Krugman is advocating for the "rate of inflation which would rapidly lead to a disorganisation of all economic activity", the worst possible outcome.

The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society - a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

[John]

Spain disaster.
Italy disaster.
Greece disaster.
China falling.
Dow futures down 200.

[thomasglee]

Spain disaster.
Italy disaster.
Greece disaster.
China falling.
Dow futures down 200.

Meh, by the end of the week they'll convince themselves that all is fine and the market will rebound. At some point this yo-yo has to break, but as you always say.... kick the can.

[John]

Spain disaster.
Italy disaster.
Greece disaster.
China falling.
Dow futures down 200.

Meh, by the end of the week they'll convince themselves that all is fine and the market will rebound. At some point this yo-yo has to break, but as you always say.... kick the can.

You're right, but consider this: Europe is only able to handle
one crisis at a time, and with bond yields spiking, there
are three crises at once.

John

[thomasglee]

Spain disaster.
Italy disaster.
Greece disaster.
China falling.
Dow futures down 200.

Meh, by the end of the week they'll convince themselves that all is fine and the market will rebound. At some point this yo-yo has to break, but as you always say.... kick the can.

You're right, but consider this: Europe is only able to handle
one crisis at a time, and with bond yields spiking, there
are three crises at once.

John

Very true. Perhaps this week will prove to be the tipping point.

[aedens]

Any thinking person knows better.
http://www.youtube.com/watch?v=qaMLoLtF ... r_embedded

Hayek Knew: a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

Even Putin knows this.
"Anyone who doesn't regret the passing of the Soviet Union has no heart. Anyone who wants it restored has no brains." - Vladimir Putin

What does the red and blue convey other than silence about the right and left coast. The sheep have no money left unless you consider fiat a value.

Do the math in America. They lie, so think since more than a few know what they are doing. You better start asking better questions on why
you vote the way you do.

So when you hear Paul Krugman and his analogs in Europe complain about the lack of a response to the New Austerity, remember that their pain is mostly political. Krugman worries that his fellow “progressives,” really fascists in sheep’s clothing, are most worried about their loss of political power rather than the economic standing of their fellow citizens. When you hear Krugman and the other New Dealers at the New York Review of Books whining about the lack of federal spending, there is a simple answer: “Get used to it.”
http://www.zerohedge.com/contributed/20 ... t?tw_p=twt
And as the flow of subsidies from Washington slowly ebbs, the TBTF banks will begin to feed upon one another to win the remaining private business on Wall Street. Look for the largest universal banks such as JPMorgan and Citi to eventually win that contest, with Morgan Stanley likely getting sold and Goldman Sachs, like Bear and Lehman before them, being fed to the proverbial wolves.
http://www.sfgate.com/business/article/ ... php#page-1
"She's probably very smart. But how do you select someone who's not an organic farmer to represent organic farmers?"
Driscoll's nominated Beck for one of the handler seats - but Tom Vilsack, the agriculture secretary, appointed her to one of the seats reserved for farmers.

We know who owns Vilsack

[aedens]

http://omrpublic.iea.org/demand/it_tp_ov.pdf ty cork

http://news.yahoo.com/tea-party-threat- ... 38634.html
"There has to be a course correction," Hatch said in a recent interview.
To late. Even when we asked you ignored us. They own you.

Also theis sums up rather well for some the inertia we are seeing.
http://advisorperspectives.com/dshort/u ... cators.php
If I was bear I would keep the stops in mind but no one here needs to hear that.
IMO if Ben prints it would not be his decision. We have enough evidence when
and what level he would.

[Higgenbotham]

Also this sums up rather well for some the inertia we are seeing.
http://advisorperspectives.com/dshort/u ... cators.php
If I was bear I would keep the stops in mind but no one here needs to hear that.

I think I understand why there is a difference between what ECRI is saying and what Short is showing. I based that on inverviews with ECRI. I believe ECRI is looking at the first derivative or rate of change of the data. When ECRI says the data is rolling over, I think they mean the first derivative of the data is rolling over. Again, I am only basing this guess on public interviews I have listened to over time. Then, they may be correlating the first derivative behavior to the onset of the recession.

[aedens]

Italy oil consumption rolling over linked above. Most idicate -25 adjustment. Mondays are back to your trend on monday.
News drives the present augmented indexes. We are not even slowing down in a few segments.
Ben needs to do nothing to clear the dead wood in consolidations. Not to mention 1200 reasons
why it has not crashed yet.
http://www.quotecounterquote.com/2010/0 ... verns.html
I think that due diligence will be over run by incompetent policy unless you get your senate inside buy list. I think we can agree on rope burn when it slips. I have moved my view from pockets as we churned over a few quarters ago. Nobody leaves level 3 or 4 assets on the table now.
http://paperempire.net/2010/11/20/exter ... ic-cycles/

Probably what Hayek didn't understand correctly was the degree of complexity that could be built on the foundation of floating exchange as well as the extreme disequilibrium that would create.

I would contend the malinvestment and master builder dilema would cost input enough and would suffice to cover his micro view since as we have
discussed all the micro's is macro. I have dealt with keyanasians before as they deride the lack of aggregate study. The other side as we are every day we live and work in balance. Some of us still work providing billions of dollars in value added realities just as we balance our own checkbook. They have deluded themselves and the public long enough, and oh do they love a crisis never to go to waste. Fact is they are the waste. Greenspan may take alot of shit and Rubin and Summers sure as hell adulterated the public and it would not even be civil to convey what should be done with Gramm. Meanwhile we all know the pure intent today to bury the past since they do not have the backbone to nueter these ideologues and I feel as a few that enough is enough. Go Nash, do not play since the logical move is none by the end of the day. Thats why level 3 or 4 or higher assets are lunatic bait for the actual predators of the street. Maybe the village and usefull kind will just Tainter us to the utopian paradise and get the shovel ready jobs going since all they can do is rule by gun powder for the only purpose those shovels are used for by these lunatics. Nobody is opposed to balance and we sure as hell did not cause these problems. I am glad I am of the minority. We choose freedom and judged by 12 and will not be going alone carried by six in any age.

[aedens]

Here's a stat from the other end of the economy... the poor.
1976: Median household income: $10,962
1976: Poverty threshold (assuming a 2 person household, no kids): $3,838
Earning 35% or less of the median was legally considered poverty.
Minimum wage in 1976 was $2.30 an hour.
2011: Median household income: $51,413
2011: Poverty threshold (assuming a 2 person household, no kids): $15,063
Earning 29.3% or less than the median was legally considered poverty.
Minimum wage in 2011 was $7.25 an hour.
"Median individual income" stats would make this easier, as "per capita" is kinda bullshit. And I would really be interested in calculating this all out on an individual basis using a poverty line for singles.
So, anywho, looking at this. To hit the poverty threshold in 1976 at minimum wage it would take 32.1 hours a week, 52 weeks a year.
At present, it takes 39.955 hours just to hit poverty.
Poverty in 2012 means a full time, 40-hours a week job at minimum wage. You have to work 19% more just to get to the same fucking place you would be at 36 years ago.
How about how much you get to keep of that poverty wage? (No, I am not bothering with state taxes here)
1976 tax rates:
14%: $0-$1000
15%: $1001-$2000
16%: $2001-$3000
17%: $3001-$4000
Standard minimum deduction of $2100 filing jointly. FICA was 5.85% leaving $3,613 pretax and $1,513 taxable. Taxes would be $217. End of the day, in your pocket you have $3,396 or an effective overall tax rate of 11.5%. Or in real terms, you worked 3.69 hours a week for the taxman. Inflation adjusted, this is $13,696.09 today.
2011 tax rates:
10%: $0-$17,000
Standard deduction of $11,600 filing jointly. FICA was reduced temporarily to 5.65% leaving $14,212 pretax and $2,612 taxable. Taxes would be $261. End of the day, in your pocket you have $13,951 or an effective overall tax rate of 7.4%. Or in real terms, you worked 2.95 hours a week for the taxman. Inflation adjusted, this is $14,232.51 today.
Sure, I could have picked a few years later on, but this was more or less near the end of good times, and when things started turning to shit.
Let's look at 1982, 30 years ago... just for laughs.
1982: Median household income: $18,422
1982: Poverty threshold (assuming a 2 person household, no kids): $6,487
Earning 35.2% or less than the median was legally considered poverty.
Minimum wage in 1982 was $3.35 an hour.
To hit the poverty threshold in 1982 at minimum wage it would take 37.24 hours a week, 52 weeks a year.
1982 tax rates:
12%: $3401-$5500
14%: $5501-$7600
Standard minimum deduction of $3400 pre-figured in for filing jointly. FICA was 6.70% leaving $6,052 pretax and an income tax of $329. End of the day, in your pocket you would have $5,723 or an effective tax rate of 11.8%. Or, in real terms, you worked 4.38 hours a week for the taxman. Inflation adjusted, this is $13,609.35 today.
Of course, what's not being included in that inflation stat, are the actual costs of things like health insurance or education. CPI is also manipulated (obviously). In 1970, total health care expenses (average per capita) was $356. By 1980 it was $1,110.
Rent has outpaced inflation as well.
Poverty levels, in relation to the median have not tracked at all, they are off 6 percentage points from what it was before. To hit that poverty level, you also are working more at a minimum wage job. Working that 1976 minimum wage job for a full 40 hours a week. After FICA, taxes, and inflation, you'd be looking at the equivalent of $16,732.94 right now. Pre-tax, it's an equivalent of $9.28 an hour.
Compare that to today @40 hours a week.
1976: $16,732.94
2011: $14,232.51
That sound you hear is you being fucked out of 15%, right off the top.
Let's readjust poverty levels by those 6 points now eh, just bump it to the 35% to keep the figure nice.
Adjusted 2011 Poverty Level: $17,995
That results in you needing to work 47.73 hours a week to hit it at minimum wage, or $8.65 an hour at 40 hours a week.
So, cool.. let's factor for that. Post tax you're sittin' on $16,440 or $16,771.74 in 2012 dollars. Sure hope you got that raise to keep up with the inflation. Bust that hump for that extra $40 a year slave!
Let's look at college again eh?
http://i.imgur.com/vvJyG.png
This is looking at public, in-state, 4-year universities including tuition and all other fees. Average rate in 1976-77: $1,218 per year. That's a whopping 10.2 hours a week at minimum wage. Or essentially a solid summer of full time if you ignore taxes. In 1982-83 it was $2,139. Ok, it got bumped up to 12.28 hours a week now. Working all summer is gonna gap you about $500.
How about now? Well, in 2009-2010 it was $12,804. Obviously higher now, but what the fuck, let's use that number. Assuming no changes, a minimum wage job is going to demand 34 hours a week (ignoring taxes). Working all summer full time? Not even fucking close. You're only out? Loans obviously, which are all much higher than inflation even for the fed ones. The ones that don't fuck you as much are capped at $5500 a year for freshmen. You have been gapped, enjoy the fun of private loans and co-signers! You are now destined to graduate into an economy that increasingly does not need you and has been screwing you for 40 years.
What's really funny is looking at that 34 hour figure. To get through college, you have to work more than it took to get to poverty status for an empty nest couple back in 1976 (ignoring taxes of course). But let's look at taxes! Using standard deductions and the education deduction it's $13,925 pretax or 37 hours a week at minimum wage. Congrats! You are now doing 1982-levels of poverty threshold work for a empty nest couple! If you are not being claimed, you can snap up to $13,500 a year with no income taxes. That's still 36 hours a week.
So it totally makes sense now if you have boomer parents. Dad worked as a part-time janitor to pay for all of college. Grandpa did a little side-work to put mom through. No debts at all in the end. Why the hell can't you bootstrap your ass and do the same? After all, they were able to do it just fine.
Scholarships, grants... sure ya might get a few to help out. If you are lucky maybe you saved some cash up to pay for college. If you are lucky you have parents who are willing to foot the bill. But we're not looking at those, we're looking at poor average people. For the simple fact that being at a level of poverty back in the day wasn't as easy as it is now. A blue collar, minimum wage household could still find a little room to put a kid through college. Or the kid could, with a little work put themselves through at a decent place. I'm not talking about the gifted, the lucky, the talented here... I'm talking average realities.
Now if you want to talk median... $51,413 in a state with no income taxes and taking no credits or deductions beyond the standard is $43,822 a year or $3652 a month. How much is left after rent/mortgage+taxes+insurance/utilities, car expenses, medical and other insurance, food, etc? Now, do keep in mind, that it's the median, so 50% are below that number.
And here's a nifty little thing for you consumer units to calculate with: http://www.bls.gov/news.release/cesan.nr0.htm
How much is left over after all taxes and I do not believe that this covers loan payments.
And yet, people wonder why everything is fucked....
So, once you take all of this into account, you can see how everything is just barely (read "not at all") scraping by. Unwilling to face the reality of the situation, it's just far easier to yell about taxes, which would free up a tiny bit more money. When there's enough money already, taxes are not really a big issue. When money's tight, it feels like theft. Unfortunately, no one is really putting forth the question of WHY everything is fucked, but that really has more to do with who actually controls the national dialogue, and it sure as hell isn't the self-declared "middle class". h/t loa

http://www.youtube.com/watch?v=JmkrgfOP ... redirect=1