I would say the feeling is mutual - yet you rarely stay on sideways
The main difference is I am concerned with society and I have to go back to our discussion of Somalia.
I think everyone in a country should derive benefits of living under that government. I think people underestimate things like roads, teachers, police, firemen, national defense, a working national monetary system, etc. They want these things or benefit from these things, but they don't want to pay for them. That's theft.
The cost of welfare in American society is so tiny you couldn't even see it in a pie graph - it's 3% of the national budget counting FS and AFDC payments, and those are transitional and involve people moving off and on them as necessary, for the good of society as a whole.
Unless you count people paying into an entitlement program like SocSec to be welfare. Frankly the idea of paying into a system being ok, but drawing it back out is considered 'sucking off the system' is like saying you can deposit your money in your savings account but if you take it out you're a lowlife. You can pay auto insurance premiums but if you expect benefits if you have an accident you're a scumbag.
Entitlement programs mean just that... you are entitled to them because you paid into the system your whole working life.
I don't know why some people have such a problem with that.
The elite of the U.S. suck a lot more out of the system than all the poor or elderly or disabled combined. If we could see the uber-secret figures on how much a few Americans keep in Swiss banks, we'd have something to compare the national spending on the destitute too. I'm betting it's a lot less.
I'm more worrried about this country being robbed blind by the rich and powerful than the little drips we give to those who already have tough lives.
What would you rather do, put money into Social Security, where it just sits there, or invest it in productive companies that pay dividends so you'll have an income that grows over the years? The second is more difficult to do, but not impossible, you have to educate yourself. Which is fine because if you take care of yourself you're not a burden on anyone else.
That in a nutshell is what is killing us. Fewer productive people mean less and less to spread around. The problem is that by socializing the costs of these things you increase the number of less productive people and decrease the number of unproductive people.
The cost of welfare is hidden from us because the government monetizes the debt. We feel it in increased prices whenever we pay for something, but we don't feel it in increased taxes. That's why most people don't notice it. There's no real reason that prices have to always go up, that's only true in an economy run by a central banks. You can't raise prices forever, sooner or later people will no longer be able to support the higher prices and the economy will collapse. We saw this on a small scale with housing. Prices kept going up and up and fewer and fewer people could afford them, once enough people were priced out of the market, the market collapsed because it couldn't support the price increases forever. The housing bubble is a warning. A tremor before an eruption, if you will.
Somalia is a bit different because the country is run by feudal thugs. It's still a form of government, just one we're not used to.
I can see we will have to explore this at length off and on again.
The way I've been seeing price growth is this. A company, say oil, raises it's prices. I'll give you an example. About 4 years ago in Texas we had a 50% across the board rate hike on electricity and gas. This is during the same time that just prior and most certainly after oil companies were making unprecedented increases in profit. Was there a need to increase prices? No, they were already making eye-numbing profit, but according to free market theory, a company should be maximizing it's profits for the stockholders, so ok, the companies are doing what they are supposed to which is charging whatever the market will bear. Since people in America won't generally 'choose' to live without electricity or natural gas, it's a trap and they have to pay these increased prices... no competition.
Simultaneously in my area, rent doubles. Ok, so you have more profit for leasors and more profit for stockholders whose main income is oil stock. And it's paid for by basically everyone. A person with after tax wages of $700 a month was getting by barely on that when rent was $350 and electric was $100 and gas was $50. Now that rent is $600 and electric is $150 and gas is $75, suddenly that worker, through no fault of his own, is underwater. Anything that worker might previously been purchasing ie: movie rentals, fast food, or haircuts, suddenly he can't purchase - this hurts small businesses area wide. To get back what they lose in sales, they increase prices thus cutting out more customers. We are calling all this 'growth'.
Now... if this worker tries to get an increase in pay to keep up, we call that inflation.
How do you solve this, profit for the few off the misery of a huge mass of others?
Who sets the prices utilities can charge. Here in Missouri, the state sets the prices. There's been a huge fight over allowing electricity companies raise their rates. Basically it's one of those public-private monstrosities. The public part wants to keep prices low so they can get reelected, the private part wants to maximize profit. Problem is neither part has an incentive to work on maintaining what they have. The public part wants to ignore the problem unless and until it becomes noticeable by the electorate, the private part, since they can't raise rates to account for peak usage, wear and tear, etc. don't want to lose profit on infrastructure. It's only a matter of time until we see rolling blackouts and brownouts. We're already seen a dam fail. Have you heard about the Taum Sauk disaster? In any case you have to figure out who sets the price of electricity. It might not be as clear cut as the electricity company.
So why did rates rise? They just don't go up for any reason. If I had to guess, and at this point it's only a guess, but I'd say that the reasons rent went up was due to the property values going up and consequently the property taxes went up. Plus as property values go up, you'll see rent go up. So that probably had something to do with it. Since I hope we've established that the Fed caused the growth in housing prices, that would be a government caused problem not a free market one.
Inflation is not workers' wages rising. Inflation is the expansion of the monetary supply. Let's see if I can explain this. John Maynard Keynes, an economist in the 30's, came up with this hypothesis that you could ensure full employment by fiddling with the interest rate, and thus the amount of money in circulation. By inflating the money supply, he theorized that people would be forced to spend money which would then flow to companies which would then pay workers who would buy more stuff, ad infinitum. He ignored the value of money however. Money is something exchanged for labor. That's important. It's the difference between spending your labor today or saving it for a rainy day. So you can spend your money or save it. With me so far? OK, with real money, the value of your labor doesn't change. If you save an ounce of gold's worth of work, ten years from now the value of that ounce will be the same.
Inflation, on the other hand, destroys that value. Just like anything else, the more you have of something, the less value it has. When you apply that to money, the value of money changes. In fact, it goes down. Since that value goes down, people are encouraged to spend and not save. Unfortunately, the only way to ensure a healthy economy is to save and invest. Instead, we're now forced to acquire debt in order to keep business going, since the savings rate has fallen. Not only that but because the value of the wages of workers is constantly falling, they need to acquire debt in order to keep up, never mind getting ahead. The problem with using debt as a foundation to the economy is that sooner or later people with too much debt repudiate, or walk away, from it. Then the whole economy collapses because it was run on debt not because it was fueled by savings and investment.
Now people are saving more and putting off purchasing today to put by for the future. This is good, that savings will be instrumental in the recovery, whenever that happens. But government is inflating the money supply massively, because they have made the assumption that Keynes knew what he was talking about. So even though people are saving, the value of those savings are falling, which will delay recovery. People don't really understand the effects of inflation, so they don't raise a hue and cry against it. People still think that spending creates an expanding economy. It does, for a while, but then people reject debt and the economy fails. So we're in a trap of government design, not one of market design.
We are in a trap. The government is letting the federal reserve essentially decide whether we will have inflation or deflation. It really is up to the fed and up to their desire concerning whether to expand or contract the money supply. America is under complete financial control of the moneychangers who know beforehand if they will inflate or deflate.
It will be interesting to see how it plays out. A lot of people who bet wrongly will lose money. The people that the fed let know of their plans will make the money.
See also: http://forums.myspace.com/t/4535901.asp … viewthread
Not really. Economics works according to natural law. You can force the game for a while, but sooner or later things spring back to their natural state. In a way we're seeing that now. The feds are trying like mad to get people to spend, they've lowered the interest rate to nearly zero and people are still saving. All they'll really accomplish is the destruction of the dollar. Then people will use something else as currency, my bet is gold. Of course the government will try to outlaw it, but much like the old Soviet Union a "black market" will thrive where people will exchange real money for real goods. So in a way it's kind of funny that these people think they run things. They won't think that when the final collapse comes. Look at Zimbabwe. They had so much hyperinflation that they no longer use their currency, they use dollars. But hey, the Zimbabwean stock market was booming, so everything must have been OK.
I am not sure about natural law as it applies to markets. That is, as an example, the oil market futures appear to be manipulated. They halted trading on the UNG ETF today and maybe they are going to try to establish a control over this pumping of oil prices.
Also the Hunt family controlled silver for a time. Somehow they were discovered but had they not been it could have been a long time before prices came down.
If oil prices can be manipulated so can the value of the dollar. It just takes enough people or the right people doing it to make it happen. It has happened in the past, under the Presidency of Andrew Jackson.
Banks are sending out 38 percent fewer credit cards. That is a way of controlling the money supply.
related news from today, you might find of interest:
http://news.yahoo.com/s/nm/us_banks_del … .t1LB0fNdF
"Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt and home equity loans to all-time highs in the first quarter as a record number of cash-strapped consumers fell behind on their bills.
Delinquencies on the value of all card debt soared to a record 6.60 percent from 5.52 percent in the fourth quarter as more cardholders relied on plastic to meet day-to-day expenses, the American Bankers Association said."
From the comments on yahoo:
"Is it any wonder?? Bank of America and Amex are cutting credit lines by as much as 50% so small businesses are now forced to lay off employees. Mortgages are still well over 5% and now banks are only giving 60% valuation for new and existing mortgages so guess what; there are a lot more foreclosures waiting to happen. Read your history because we're following the exact time line of the 1920's which led to the great depression. We the people better start demanding the government start comming down hard on public companies who still think that double digit profit is the norm. FYI, mortagages in Canada are below 3% and no forclosure problems there!"
LeDefense. Our state sets the utility rates, so yeah, it was the state. But we didn't really come into the housing bubble until the late stages and we never should have. Average wage in my town is $7 an hour.
I personally had to move out of town too, after watching my entire neighborhood empty out one house at a time. Then people started clumbping up, two or three or even four households in a single family dwelling.
To combat that, the city passed laws that only two households could be in a single house dwelling causing even more vacancies.
Will the slumlords lower the rent? No. They are still sitting on property which remains vacant some of it for more than a year. Talk about stubborn.
This gouging thing by specific people, ie the Sunday school teacher from 1st Baptist whose property would never pass inspection should anyone bother to check it and yet wants to rent a house she is paying a $125 note on for $600. If that isn't greed, what is it? the market?
How stupid are these people, they are forcing small businesses to close so one lady can take 4 vacations a year, and the next slumlord and the next.
Maybe the city needs to set a ceiling on slum housing.
And on full employment, I don't know any theory that pushes that, certainly not Keynes. It dampens wages. Some unemployment is actually good and works in tandem with inflation. Full employment = high inflation.
It sounds like your landlords are killing themselves. It doesn't make much sense if they're holding rents high and keeping things vacant. Cost is the only thing I can think of. Time will force rents down because it sounds like the market won't bear what they're trying to charge. And they will have to lower rents. Real estate has a lot of costs associated with it and unless you're renting you're eating those costs. Of course they might be using those properties as a tax write off or they might be getting some other benefit from the government, but again, it's a government problem, not a free market one. A free market wouldn't allow those things to happen. Free markets are known for lowering prices over time, not raising them over time.
LeDefense... also, every time anyone brings up the idea of increasing wages to meet rising cost of living, they DO call it inflation. 'Wah wah, we're going to have to close our uber-profitable business if we have to pay a living wage.'
Was it Chicago where that bluff was called? The mayor of some town was haggling with Walmart saying it wasn't fair for them to employ people full time and have them still be eligible for welfare. Walmart threatened not to open. The mayor told Walmart to suck it, he didn't want them if they wouldn't pay living wages. Walmart opened and paid living wages because in the end, not doing so would be cutting off their nose to spite their face.
If anyone has a business and can't pay a living wage to employees, they don't need a business, they need a job.
Greed is not only not the best economic policy... it's not remotely good.
THIS is where it gets you. Gouging people until they have to put everyday expenses on debt. Capitalism. Some great theory there.
It is struggling for sure. I will agree with Led that it is possible, but only possible that the banks did not bank on people not paying back their loans. But really, they had to know that the bubble would someday end and that people would walk away. So, I think the evidence points to them knowing that while it may take awhile longer, eventually the bubble would burst. They may have been surprised at how quick it burst.
And those delinquencies are getting alot worse.
I just don't see how deflation can be defeated right now.
I think Bush and his cronies were surprised by how quick it burst. He did everything possible to make sure it didn't happen on his watch even though it was a result of his supply side policies, but it did anyway and I laughed my ass off.
yeah, it's going to get a lot worse.
nice plummet today on the dow, btw. I think it closed at 8150, 8190, something like that. I always enjoy a good plummet.
nice to see somebody besides the poor take a beating once in a while.
Well, I guess we all can take comfort that the Wall Street roaches are recovering nicely. All is back to normal at Goldman Sachs with average compensation up to $700,000 including secretaries, doormen and janitors, and at Goldman's satellite operations at Treasury, the Fed and in the White House.
I read that to make up for the lowered bonuses they just upped regular salary for these guys.
If the market keeps crapping out though, these masters of the universe might become a shrinking breed. One can only hope so.
Hi Ralph and Iounn. This just shows that markets are manipulated but apparently Goldman Sachs is permitted to manipulate to their hearts content. I say don't trade anything if you don't know what you are up against. No natural law here: http://www.zerohedge.com/article/gold-a … ng-program
Only the law of Goldman Sachs. Pathetic.
The Wall Street roaches are recovering nicely:
http://dealbook.blogs.nytimes.com/2009/ … ;st=Search
There is way too much zero sum nonsense in that article, but what can you expect from the New York Times?
What do these idiot reporters expect? There will always be a need for banks. All we're seeing here is a restructuring of banks. Which is to be expected after the Fed induced lunacy of the last two and a half decades. It must be nice to have a job where you don't have to think too much.
Just wait Ralph, look up the term "dead cat bounce", I think you'll find it interesting. We'll see the cat bounce this fall, I think, after the start of the Alt-A resets. If you look at the Price to Earnings ratio of the Dow it has to fall to about 3000 until the P/E ratio hits the historical average. So we have a way to go until the markets correct themselves from government interference.
I heard the term, "dead cat bounce," when you were in knee pants, thank you very much!
You may have heard it, but you obviously don't understand it. Heck you must have lived through it, it happened all the time in the 1970's.
Why would you say I "obviously don't understand it?" Why don't we agree to avoid ridiculous, baseless ad hominem comments? I learned a long time ago not to trust short term market forecasts other than "It will fluctuate."
I think a Harvard (or was it Yale?, I forget), educated economist and former Clinton appointee probably obviously 'gets it.' But that's my admittedly biased and left-leaning opinion.
It's not a short term forecast. History has shown time and again that when you increase the supply of money, certain things follow: inflation, collapsing bubbles, etc. The journalists in your posted article showed no knowledge whatsoever of history, much less economics. If these people want to put themselves up on pedestals, so be it, but don't expect people to fall all over themselves when something that incorrect is printed.
I'd be more concerned about your precious Obama and his seeming insanity by giving the keys of the Treasure to Goldman Sachs. They're using that power to destroy their rivals and make sure they get back from companies like AIG what is owed them. He's either actively colluding with these guys or he's more ignorant about economics than even I thought. Government really has no place in business and the nonsense coming out of Washington these days only makes my case stronger.
I share your concern about Goldman. However, it was Bush who recruited Secretary of the Treasury Paulson straight out of Goldman. And Bush and Paulson were the ones who gave $180 billion to AIG because of concern for the ripple effects among AIG's counterparties. Of course Goldman was the biggest AIG counterparty. This all happened before Obama took office.
Geithner's from Goldman Sachs too. The faces may change, but the players remain. Eisenhower saw it. In his first draft of his farewell address he called it the Military-Industrial-Congressional Complex, later to be edited to Military-Industrial Complex. He should have kept the original. That's what I find so despairing about liberals. You mean well, but then you ignore reality in favor of your ideals. That's not always a good thing. Sure ideals are good for kindling hope, but most times you need to really take a look around and see things for what they are, not what you'd like them to be.
Not that I'm excusing Bush, but have you ever considered the effect money has when certain big businesses donate to both political parties in order to gain access to power no matter who wins? So who are our supposed representatives beholden to? Us, most of whom vote along party lines anyway, or the guys with the money? It's the guys with the money and that's why any government, no matter the party will do anything to bail out the banks. It's not a new story, it's happened before. France, Germany, England. The common thread? Central banks. All "The People" are just big dumb cows who line up to get milked by these guys thinking that you can get something from nothing.
I'm in basic agreement with your comment. Our regulatory agencies have been to a great extent co-opted by the industries they're supposed to regulate and too many of our Congressmen are bought and paid for by special interest groups including unions, Big Oil, Big Pharma, parasitic health care insurance companies , mining companies, electric power companies and, as you've pointed out, Goldman Sachs and the Wall Street Banksters. The Banksters may have overreached with the latest round of bonuses paid out of taxpayer money.
Sure we're in agreement, most people are when you put it that way. But where most people leave the logic train for parts unknown is finishing that train of thought. If government gets co-opted and run by the very interests that the agencies are supposed to regulate, why do we still have these agencies. There must be a better way. If every time you set up a regulatory agency and it gets filled with people from that industry, you have a problem. Look at banking, Treasury, the SEC, etc. It's plain as day. The funny part is that these people have wavers supposedly proving that they do not have any conflicts of interest in overseeing the banking industry.
As I've said before, the root cause of the problem with banking is twofold. First fractional reserve banking is inherently unstable. Second we need a stable monetary supply in order to have a stable economy. Of course then we couldn't pay for the welfare-warfare state and a lot of lobbyists and politicians would be out of jobs, so that will never happen.
So if their computers were so smart, how come they didn't see this meltdown coming? They'll find nothing, this is just a scam by the government to make it look like they're doing something. Government manipulation is the problem, not the answer.
I think it was like an addiction for them. They knew they would have to 'come down' sometime but ignored it thinking only of their 'next hit'.
Too bad they took the rest of us down with them, when their veins blew out.
It's more like the computers had no idea that the dice don't have a memory. Past performance is no indication of future performance. That's why you have to understand the industry if you're going to invest in it. Otherwise you're just pulling a big slots lever. Heck I've been following one guy on paper who has invested in commodities and utilities, stuff like that and we're down 4% for the month. But since people need those things the stock only becomes more valuable as it gets hammered along with everything else. At least I'm beating the S&P 500, they're down 6% for the month. I really wish I had some money to invest in the companies I'm following on paper.
well, despite my aversion to the market and to trading in general, you have my well wishes on your success with it. my dislike of the entity doesn't translate to wishing you ill with it.
myself, I like to predict the dow and on occasion certain sets of stocks as something of a hobby. I have no idea why. I would never invest. I know some good metals if you're interested.
good to see you this evening.
I can't even envision a market that runs by natural law. lack of manipulation of stock in an entity that was created in order to manipulate stock would be the unnatural thing.
for the market, manipulation IS the primary purpose.
ralph, good article. from that piece in the times:
"Ambitious new rivals traditionally bid up pay scales and undercut pricing to win business, slamming profitability for the entire industry, the publication argues."
now that will be interesting to watch. sounds like more banks folding like chairs down the line to me.
Long time ago I was posting something about 911 on youtube and some guy called me a COMMIE. Then I see something like this:
"Lenin said that a country with a central bank was 90 percent communist already, and he was in a position to know."
source: http://books.google.ca/books?id=hlpe2tQ … p;pg=PA120
Little did that guy know he was 90% COMMIE, heck I didn't know it either, did you?
What do you peeps think of that? Don't say Lenin (or myself) wore a tinfoil hat pls, those things don't breathe and rarely would it match the suit.
Hmmm..OP did this five weeks ago?
Wow, took you that long to discover the news that started in 1996?
Better late than never!
It's true that Federal Reserve System is playing us all. Check my hub
Truth About Federal Reserve System
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