Category: economy

Maximize value when rents won’t do it.
Now that’s putting infra to structure !
Or, we could say, Roofs-R-Roots.

Well? What are we selling?

Media will sex things up at the expense of the truth, i.e. misleading investors into thinking returns are better than they really are.

It’s odd to me media is never bonded. A bond makes production liable. Instead we shelter media thoroughly. We will war for their right to lie when what we do not trust is a greater danger.

Sensationalism sells.

Why does this happen? Well, for one thing, a lot of journalists are innumerate and a lot don’t know much about history.

But for another, darker reason: it’s an easy story.

Gold price at record high. Nope.
In inflation-adjusted dollars, it’s 65% short of true 1980 peak.

The actual gold record was 30 years ago when the price hit $2,318.

Gold is at a record only if you fail to adjust for inflation. And you should almost always adjust for inflation.

Otherwise, you end up with a series of meaningless records — Gold reaches record high! Oil reaches record high! Lettuce reaches record high!

Still distracting gumming as far as I’m concerned. Dollars chase gold when too little in the economy is better. And that’s the task.

Jim Grant speaking on gold price: “the reciprocal of trust in the dollar”.

Why not aluminum, another metal that will not go away? That’s a light bet on the reciprocal of weight.

Bumped into this wonderful comment at Illusion of Prosperity:

Can we unfleece sheep?”

Central governments famously have Five Year Plans.

China’s recently released a draft plan for the next five years is nothing short of full-blown strategy for transforming the nation’s development model.

In a first for the government’s planning process, the 12th Five-Year Plan for the 2011-2015 period outlines specific steps designed to raise consumption levels and make China a leading consumer market.

One message is clear: The Chinese government wants to foster a national transformation from ‘world’s factory’ to ‘world’s market’.

Editor’s comment:

Size is only one of many factors that determine whether a market leads the world. More important are a market’s depth and breadth, which it turn depend on a nation’s integrated development. This is why a responsible government should focus on employment, fair allocation of resources, education and public services.

As China’s per capita income approaches US$ 4,000, the vision and abilities of the central leadership are being tested.

Leaders are  struggling to balance growth and income distribution, fairness and efficiency. The outcome will determine China’s development for the next five years.

“Sarah Palin says she wants limited government. Does that mean politicians quit midterm?”

“Former President George W. Bush reveals in his book that he considered dropping Dick Cheney. But Cheney nixed the idea.”

Dismantling discretionary spending, extending retirement, pooling health services, aggregating oversight, stripping incentives, buggering education, abandoning infrastructure, ignoring corruption, bailing the wealthy, and they call that a pledge, nay, a vision. Phooey.

Our Banana Republic – NYTimes.com:

“You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24% of all income, up from almost 9% pre-Reagan Republican.

As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

CEOs before Reagan earned 42 times the average worker but 531 times more after Republican laissez-faire supply-side no tax bankster free markets.

Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

Paul Davidson writes:

I am not surprised by the failure of the Obama Administration to win over the American people to a progressive economic program.

After all, we all hate Franklin Roosevelt. Right? Wasn’t he related to the Czars?

Paul Davidson argues that the Obama Administration and its allies in Congress have not actually followed the prescriptions laid out by the British economist Lord Keynes in making economic policy – and that this is a principal reason for their failure to deliver.

Who’s Lord Keynes? Oh, I remember. He’s bro’ of Karl Marx and begat the loather Hunter Thompson. Wingnuts know so much Adam Smith, just enough to keep evolution true, because it sells. No government. No tax. We’re free boat hands after all, last on deck, last on deck, but juicing stagnation. Yes, as Republicans say, you’re better off with that ol’ Reagan revelry.

Doesn’t every town have this?
• link to ODAC. • Background on its Oxford trustee. • Or audio interview.

Our dollar of not and both:

I was reading about the paradox of complexity and certainty. To plan is Soviet. To distribute is Socialist. To regulate is Democrat. To defer is Republican. And for the Tea Party, it’s dismantle.

‘As If By An Invisible Hand The Wealth Of The Nation Will Grow’

Is there room on a bumper for this slogan of the times?

Yes, invisible hands took the wealth of this nation. What do we say about national pilfering and the concentration of finance?

http://twitter.com/cate_long/

• “Today, Financial Stability Oversight Council (FSOC) has clear responsibility for examining emerging threats to our financial system.”

• “No more bailouts. Instead, the Dodd-Frank reforms provide the government with the authority to wind down any firm.”

• “Today, there is one agency for one marketplace with one mission – protecting consumers.”

• “Before Dodd-Frank, consumer protection was fragmented over 7 fed regulators … [with] higher priorities than protecting consumers.”

• “Today, the OTC derivative market is comprehensively regulated for the first time.”

• “Before Dodd-Frank, the OTC derivatives markets- $700 trillion at its peak–grew up in the shadows, with little oversight.”

• “Today, ‘too big to fail’ is gone. We no longer have to make the untenable choice between taxpayer bailouts and market chaos.”

• “And the regulators have clear authority to restrict excessively risky activity, including proprietary trading, by banking firms.”

• “Today there is authority for clear, strong & consolidated supervision of every financial firm-regardless of legal form.”

Assistant Secretary Michael S. Barr Remarks at the American Bar Association. http://www.treas.gov/press/releases/tg947.htm

Good ol’ Urban Cartography:

A very large percentage of our healthcare line items are ruthless extraction.  If it mattered to mood-driven America, Chris Corrigan’s summary of health care would be premier campaign material.

Chris Corrigan:

Harpers, since 1859:

The corruption of our institutions manifests itself in a variety of ways, but in none so dramatic as the imbalance of national wealth, which in recent decades has shattered records formerly set in the late 1920s.

Although it is often claimed that the gap between rich and poor began decisively to widen in the late 1970s, as if to absolve Ronald Reagan for what his followers no doubt count as his primary accomplishment, the total share of income of the wealthiest 10 percent of American families was well within the postwar norm until 1982, when Reagan’s policies began a massive, decades-long transfer of national wealth to the rich.

…

Such a distortion of the nation’s balance of wealth did not come about by accident; it was the result of a long series of policy decisions—about industry and trade, taxation and military spending, by flesh-and-blood humans sitting in concrete-and-steel buildings—that were bought and paid for by the less than 1 percent of Americans…

Nemo says:

So my choice of parties is between
a) owned by Wall Street and
b) totally owned by Wall Street.
Just pick a side, and start sniping!

Well, the pirates succeeded, pointing scorn to government.

This is one of the areas that are very easy to demagogue.

By accusing government of being the enemy and promising people that if we simply shrink government they will be better, some politicians and ideologues are attempting to improve their own positions of power. They are misleading the voters.

We know that when the private sector is unwilling or unable to spend and when consumers are under a huge debt load, government is the last remaining spender, at least in the short term. Long term deficits do have to be reduced, but unless we get the economy growing in the short term through government spending, we’re all going to be experiencing a much longer and more painful so called recovery.

And stop blaming China. The USA is a greater threat to the world.

Tax practitioners are so serious and dry. Why are their blogs scary?

Not a single news organization reported this data, this basic information, when it was released October 15.

The story the numbers tell is one of a strengthening economic base with income growing fastest at the bottom until, in 1981, we made an abrupt change in tax and economic policy.

The Founders were concerned first and foremost with preventing tyranny, oppression and policies that retard the human spirit. Economies have rules and those rules have a huge influence on the distribution of benefits. Specific rules raise or lower incomes, for example.

There are hundreds of thousands of pages of these rules.

These rules distort economic outcomes. Hardly anyone but the people who get rich off them through what economists call ‘rent seeking’ has ever read them, much less explain how they distort the economy.

When those rules allow huge interest-free loans to some, or limit how much the vast majority can save on a tax-favored basis but lets those at the top save unlimited amounts, when some workers can defer paying their taxes for years or decades and then at rates lower than that of the median income worker the outcomes are heavily influenced by those rules.

The current federal income and payroll tax burden on a single worker who made the median wage of $26,000 in 2007 was 21.6%, but by the same measure for the 400 highest income taxpayers, who made almost a million dollars a day, this tax burden was just 16.6%.

Only the wealthy pay low taxes.

Why do you think corporations spend all that money in Washington? They did not always run huge lobbying shops. They do it to win favors that shape, influence and in some cases rig markets, and that in turn alters how the benefits of the economy and the burdens of government are distributed.

We are a terrible thing to waste:

1) The data show that the tectonic shifts have taken place since the Reagan administration began, with its ‘new theory’ about wealth creation, jobs and taxes.

2) The data show that these policies have not worked out well for the vast majority, but they have helped a relative few really prosper.

Oops. Bloomberg cites the data October 25; thanks Zo. Tax returns were made secret in the 1920s, yet last year’s pay at the very top is up more than 500%.

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There’s something to gain understanding where our money goes went.

Who dares believe Republicans are defending this nation? It’s plundering and pillaging and marauding since the neoconservative launch; since Reagan’s Budget Director David Stockman, never an economist nor taxation analyst, but a one-time Representative of a 95% white rural Michigan district plucked as Sarah Palin is plucked, a political operative and willing trumpet.

Renting Congress.
Now that’s rent seeking!

And there’s the rub, put into a practical series, for our own good.

If we’re going to spend way more than any other country on health care, then we should absolutely, positively have the best health care system in the world.  We don’t.

1. Introduction –I can’t blame you.
2. Population Statistics –This may seem like a small thing, but.
3. Available Technology –Well, we’re not the worst.
4. Disease Care –Here’s where we shine. Not.
5. Infrastructure –I won’t lie to you.
6. Health Care Utilization –Nowhere near the top.
7. Physician and Practice –They are, after all, essential.
8. Patients –They should have some say.
9. Executives –Let’s move on to something new.
10. Conclusion –I expected more arguments.

So why do two in three Americans not know that TARP expects to turn a small profit, the economy is crawling upward, Obama significantly cut taxes?

It ain’t just email. I came to learn, to grow, and found the whole world forwarding crap. HA!  I’m stunned that’s true, proud to know it, but utterly squandered while we lie.

There’s enough witless rage to light a match under the fat lady. And there’s a new job for me to find wiser folks no longer quiet. John Mauldin I do not trust but that’s because I’ve lost the trust put in my birthing.

He’s no Paul Revere. He should have told our risks before he runs up the road with ‘the redcoats are here’. So many profit near pirates. But I think there are more John Mauldin-s appearing, sick of politely shutting up. Economics blogs copy his newsletters.

He argues against our mistakes, much better than business sheets throwing up a few facts, yet he generally hides names, perhaps until he’s paid, or his children are grown, but you knew that. http://www.frontlinethoughts.com/gateway.asp

We have been amazed that, as one financially sophisticated entity after another found widespread fraud by Countrywide in the entire gamut of its operations, the administration, the industry, and the financial media act as if this is acceptable.

Countrywide made hundreds of thousands of fraudulent loans.

• It fraudulently sold hundreds of thousands of loans through false reps and warranties.

• It fraudulently foreclosed on large numbers of loans.

• It victimized hundreds of thousands of people and hundreds of financial institutions, causing hundreds of billions of dollars of losses.

• It has defrauded more people at a greater cost than any entity in history.

70% Of All Stock Market Trades Are Held for An Average of 11 SECONDS

“We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional reforms should be developed to counter it.”

This may be the wrong era to be rational. We’re raising bullying and bigotry and paranoia against both global and local ‘other’. We wrongly blame a global financial crash on house flipping and overstretched subprime borrowers. We wrongly blame Obama for debts before he was elected. The more the person earns, the lower the tax rate. For corporations, taxes is a sex act —the game is to not pay taxes anywhere. We’re distracted by crackpot politics and fundamentalist celebrity paraded by billionaires.  Secret money pours into shadowy groups —expect as much as $250 million between now and Election Day. Lobbyists and pundits are paid more to sway opinion than  leaders to build policy.

Where’s reasonableness and diligent analysis?

Two hundred thirty-four years ago, our country’s founders concluded this country’s founding document by declaring: “We mutually pledge to each other our lives, our fortunes and our sacred honor.” How odd that the document we call the Declaration of Independence concludes as a Declaration of Inter-Dependence. Furthermore, that interdependence was not just some feel-good, wishy-washy sentiment.

Rather, it demanded that we put all toward the general good – not just money, but everything we are and ever will be.

This is not a hypothetical.

Steven Rattner, who helped restructure the automobile industry, tells the story of getting a new General Motors plant online in Michigan by bringing management and unions together. “The unions agreed to allow 40% of the new plant to operate at $14-an-hour wages,” he says, “which is half of GM’s normal wages. The management agreed to invest in this new plant.

But here’s the problem:

Workers at GM’s Mexican operations make $7 an hour, and today they are as productive as American workers. And think of this: $14 an hour translates into about $35,000 a year. That’s below the median family income. The whole experience left me frightened about the fate of the American worker.”

Service jobs now also exposed:

Since the service sector is a much larger part of the economy, 28 million to 42 million jobs will be ‘susceptible’ to being shipped offshore — jobs such as customer-service representative and stock analyst, which we tend to think of as local.

But, but, but, forget offshoring and outsourcing, forget the recession, immigration and the mortgage industry collapse — when it comes to loss of American jobs, robots are to blame.

Our workforce is splitting in two:

The number of high-skill, high-income jobs (think lawyers or research scientists or managers) is growing. So is the number of low-skill, low-income jobs (think food preparation or security guards). Those jobs in the middle? They’re disappearing.

A leading explanation for the disappearance of the middle class is “ongoing automation and off-shoring of middle-skilled ‘routine’ tasks that were formerly performed primarily by workers with moderate education (a high school diploma but less than a four-year college degree).”

Routine tasks “can be carried out successfully by either a computer executing a program or, alternatively, by a comparatively less-educated worker in a developing country.”

The culprit, in other words, is technology.

The hard truth—and you don’t see it addressed in news reports—is that the middle class is disappearing in large part because technology is rendering middle-class skills obsolete.

India is today expected to become the first country in the world to commit to publishing a new set of accounts which track the nation’s plants, animals, water and other ‘natural wealth’ to include with financial measurements such as GDP.

Guardian: value of ecosystems and their ‘services’ for humans

“Natural capital is a massive asset class, and developing nations’ biggest asset. For it to be missing from the balance sheet of the nation, or for failures not to be counted, does not make sense.”

well, double entry just won’t do it

The real situation

In truth, the U.S. banking system as a whole is probably insolvent.

By that I mean the likely future losses of loans and assets already on balance sheets at U.S. financial institutions, if incurred today, would reveal the system as a whole to lack the necessary regulatory capital to continue functioning under current guidelines.

In fact, some prognosticators believe these losses far exceed the entire capital of the U.S. financial system !

Yeh. But what’s the critical bit?

How about ‘cronyist financial sector’.

Even if the sector were more competitive it is inevitable that monetary policy focused on shoring up asset prices will benefit the primary asset-holders in the economy, which in itself is a regressive transfer of wealth to the rich.

The idea that supporting asset prices is the best way to support the wider economy is not far away from the notion of trickle-down economics (or as Will Rogers put it: “money was all appropriated for the top in hopes that it would trickle down to the needy.”).

We know some things about what happened between the start of the Iraq war and 2008 in the commodities market. We know the amount of speculative money in commodities exploded, that between 2003 and 2008 the amount of money in commodities overall went from $13 billion to $317 billion, and that because virtually all investment in commodities is long investment, that nearly twenty-five-fold increase necessarily drove oil prices up around the world

Nuts if Republicans take midterms.

One reason for our more modest outlook is that no sector of the private economy stands ready to drive a robust recovery.

As federal fiscal stimulus wanes and state and local government cutbacks accelerate, the private sector has failed to pick up the slack. With only modest gains in private economic activity, the overall pace of growth has slowed.

Sloppy, sloppy, sloppy.

Ideological theories leading voters by the nose while…

Here’s yet another diabolic cycle for ordinary Americans, engineered by the grifter class… business decline thanks to soaring oil prices that have been jacked up by a handful of banks that paid off a few politicians to hand them the right to manipulate the market,

Why stop there?

The problem from the get- go has been the lack of accountability.

The same entities responsible for inflating the bubble with shoddy underwriting are the same entities evicting citizens with the same shoddy underwriting.

Neglect and regulatory capture have become the gift to the Obama administration that keeps on giving … more and more headaches.

Wingnuts and Sarah Palin will fix it. Yeh sure.

Lowering taxes hurts the economy. That’s a slogan.

If facts matter, let’s look at the measurements, the metrics, the data, ladies and gentlemen.

Higher top tax rates don’t reduce economic growth.

Depending on how you look at it (i.e., growth over several years, growth over one year, going back to 1929, focusing only on the period since Reagan took office, etc)… higher top marginal income tax rates have not caused slower real economic growth in this country.

Not the message you’ll get from most economists, but the data says what the data says, and where economists disagree with the data, its a sign that something is seriously wrong with the profession, not the data.

1. Top marginal tax rates are simply not high enough to induce people who pay it to reduce their efforts.

2. Dissuading people from putting in certain efforts doesn’t prevent others from putting in the same efforts.

3. Rising top marginal tax rates may dissuade some people from working, but generally won’t dissuade those doing productive work.

4. A substantial percentage of people who are motivated enough by money that they might reduce their output in the face of even small changes to the top marginal rates are engaged in activities that are not good for society. Loss of their services is to be encouraged, not decried.

5. At the margin… paying as little in taxes as possible… The result, in many cases, is paying vast sums to accountants and keeping the money parked or hidden rather than in productive use.

There is a bit of a self-selection bias at play; people who care enough about money to become homo universitus of chicagus are also the kind of people willing to generate massive negative externalities with nary a thought to the victims (except perhaps to call them ‘losers’).