Yet another odd letter comes from under Bill Gross' pen, in which he continues to bash "The Ben Bernank's" Ponzi policies ("policymakers at the Fed write trillions of dollars’ worth of checks under the guise of quantitative easing, a policy which takes Charles Ponzi one step further by purchasing the government’s own paper in a last gasp effort to support asset prices") while making it all too clear that the only beneficiaries are "Newport Beach mega-millionaires." Has Warren Buffet-style self-flagellation become trendy among the billionaire jet set? Lastly, Gross makes it clear that the American economy is doomed in the long-run absent a "policy revolution" in DC: "Unless developed economies learn to compete the old-fashioned way – by making more goods and making them better – the smart money will continue to move offshore to Asia, Brazil and other developing economies, both in asset and in currency space. The United States in short, needs to make things not paper, but that is not likely unless we see a policy revolution in Washington DC. In the meantime, our unemployed will continue to fill out forms and stand in line." And the Newport-beach mega-millionaires will continue to front-run the Fed. Nothing ever changes indeed.
From Bill Gross' Monthly Investment Outlook (who has been buying MBS on margin like there is no tomorrow).
Allentown
– Billy Joel, 1982 We’re all Allentowners now. Granted, 90% of the 1) The global economy is suffering from a lack of aggregate demand. This shortfall of global demand is a nearly Developing nations and 2) With insufficient demand, nations compete furiously for their share of the diminishing global growth pie. And so the United States and its developed This phrase of a “level playing field” opens up endless possibilities. If, in fact, the solution to how The second route to the level playing field Faced with these two decidedly different routes If so, investors should recognise that an Unless developed economies learn to compete the William H. Gross
Well we’re living here in Allentown
And they’re closing all the factories down
Out in Bethlehem they’re killing time
Filling out forms
Standing in line
And we’re living here in Allentown
workforce is still reporting for work on time, but our standard of
living, our confidence in the future – we’re standing in line in
Allentown. Lost in the policy debate surrounding the elections and the
subsequent demonisation of the Federal Reserve’s Quantitative Easing
(“QE2”) policies has been any recognition of why we no longer live on Ronald Reagan’s shining hill or how we might possibly reclaim higher ground. There are two fundamental explanations:
In simple English that means that consumers are not buying enough
things and that companies are not hiring enough people because of it.
Growth slows down, especially in developed as opposed to developing
countries, and the steel mills of Allentown, USA and Sheffield, England
close down.
impossible concept to grasp amongst politicians and their citizenry.
Don’t people always want to buy more things and isn’t demand
theoretically insatiable? They do, and it is. Yet economic growth is a
delicate dance between production and finance and when a nation’s or a
family’s credit card gets maxed out, then demand/spending slows
measurably. We are witnessing these commonsensical repercussions across
the entire continent of Europe today and to a lesser extent in the
United States.
their consumers want to buy things too. And while their economies are
growing fast, their overall size is not yet sufficient to pull along the
economies of Europe, Japan and the US. Their financial systems are
still maturing and reminiscent of a spindly-legged baby giraffe, having
lots of upward potential, but still striving for balance after a series
of missteps, the most recent of which was the trio of the 1997–98 Asian
crisis, the 1998 Russian default and the 2001 Argentine default. And so
their policies are oriented towards export to debt-laden developed
nations instead of internal consumption, leaving a gaping hole in global aggregate
demand. China is a locomotive to be sure, but it cannot pull the global
economy uphill on the basis of mercantilistic exports alone. It needs
to develop many more of its own shopping malls and that will take years,
if not decades.
All look to borrow growth from somewhere else. Nearly a half century
ago, the undisputed champion of global growth was the United States – it
held all the cards: an unscathed post-WWII industrial base, an
acknowledged Bretton Woods reserve currency and an educated workforce
able to out-innovate any and all competitors. No wonder our policies
encouraged open markets and free trade policies that would only feed the
United States hegemon. At some point in the 1970s to 1980s, however,
the rest of the world began to catch up. Japan produced better cars than
Detroit, the Iron Curtain fell, and the rise of China was soon to rock
American/developed economies out of their presumption that the world was
their export oyster. Billy Joel’s Allentown was transformed from an
iron and coke/chromium steel behemoth into an unemployment centre,
filling out forms – standing in line.
economy counterparts face an unfamiliar crisis of unrecognised
dimensions and potentially endless proportions. Politicians and
respective electorates focus on taxes or healthcare when the ultimate
demon is a lack of global demand and the international competitiveness
to thrive. The solution for more jobs is seen as a simple quick step of
extending the Bush tax cuts or incenting small businesses to hire
additional workers, or in the case of Euroland, shoring up government
balance sheets with emergency funding. It is not. These policies only
temporarily bolster consumption while failing to address the
fundamental problem of developed economies: Job growth is moving
inexorably to developing economies because they are more competitive.
Free trade and open competition, like a stretched rubber band, have
snapped the US and many of its Euroland counterparts in the face. By
many estimates, Chinese labour works for 10% or less than its American
counterparts. In addition, and importantly, it is able to innovate as
quickly or replicate what we do. Jobs, in other words, can never come
back to the level or the prosperity reminiscent of 1960s’ Allentown,
Pennsylvania until the playing field is levelled.
we can reclaim the vision of Ronald Reagan’s “shining hill” and the
Allentown of decades past is to “level the playing field,” there are
obviously a number of ways to do it. The constructive way is to stop
making paper and start making things. Replace subprimes, and yes,
Treasury bonds with American cars, steel, iPads, airplanes, corn –
whatever the world wants that we can make better and/or cheaper. Learn
how to compete again. Investments in infrastructure and 21st century education and research, as opposed to 20th
century education are mandatory, as is a withdrawal from
resource-draining foreign wars. It will be a tough way back, but it can
be done with sacrifice and appropriate public policies that encourage
innovation, education and national reconstruction, as opposed to Wall
Street finance and Main Street consumption.
involves political and financial chicanery: trade and immigration
barriers, currency devaluation and military domination of foreign
oil-producing nations. It is by far the less preferable route, but
unfortunately the one that is easier and, therefore, most politically
feasible. Politicians do not get elected on the basis of “sacrifice.”
They get elected by pointing to foreign demons, be they in the Middle
East or in Asia. The Chinese yuan is a far easier target than the
American workers earning ten times their Chinese counterparts and
producing an inferior product to boot. Politicians also get elected by
promising to keep taxes low, even for the rich, with the argument that
small business owners cannot afford the increase. The real beneficiaries
however, are the mega-millionaires of Wall Street and Newport Beach.
And yes, policymakers at the Fed write trillions of dollars’ worth of
checks under the guise of quantitative easing, a policy which takes
Charles Ponzi one step further by purchasing the government’s own paper
in a last gasp effort to support asset prices.
to “level the playing field” it seems obvious that the United States is
opting for “Easy Street” as opposed to “Buckle Down Road.” Granted,
“The Ben Bernank” as a YouTube cartoon rather hilariously labelled him,
has for several months importuned Congress and the Executive Branch to
institute substantive reforms, while he attempts to keep the patient
alive via non-conventional monetary policy. But very few others are
willing to extract their heads from the sand. The President’s debt
commission with its insistence on low personal and corporate income tax
rates and a mere 15 cent increase in the gasoline tax was one example.
The Republicans’ reluctance to advance detailed ideas for budget
balancing is another. And the Democrats’ two-year focus on the biggest
entitlement program since Social Security – healthcare – as opposed to
fundamental reforms to counter our lack of global competitiveness – is
perhaps the most grievous example of lost opportunity. Unlike the United
Kingdom, where Prime Minister Cameron has championed fiscal
conservatism, or even Euroland, which is being forced in the direction
of Angela Merkel’s Germanic work ethic, the United States seems to
acknowledge no bounds to what it can spend to bolster consumption or how
much it can print to support its asset markets. We will more than likely continue to “level the playing field” via currency
devaluation and an increasing emphasis on trade barriers and
immigration, as opposed to constructive policies to make this country
more competitive in the global marketplace.
emphasis on currency depreciation and trade restrictions are counter to
their own interests. Not only would their dollar-denominated investments
lose purchasing power over time from a global perspective, but they
would do so also via a policy of near 0% interest rates, which are
confiscatory in real terms when accompanied by positive and eventually
accelerating inflation. In addition, although corporate profits are in
many cases broadly diversified across national borders,
there should be little doubt that the objective of tariffs and trade
barriers is to advantage domestic labour as opposed to domestic capital;
profits, therefore will ultimately not benefit.
old-fashioned way – by making more goods and making them better – the
smart money will continue to move offshore to Asia, Brazil and other
developing economies, both in asset and in currency space. The United States in short, needs to make things not paper,
but that is not likely unless we see a policy revolution in Washington
DC. In the meantime, our unemployed will continue to fill out forms and
stand in line. We’re living here in Allentown.
Managing Director
Next time you hear an economist or denizen of Wall Street talk about how the "American economy" is doing these days, watch your wallet.
There are two American economies. One is on the mend. The other is still coming apart.
The one that's mending is America's Big Money economy. It's comprised of Wall Street traders, big investors, and top professionals and corporate executives.
The Big Money economy is doing well these days. That's partly thanks to Ben Bernanke, whose Fed is keeping interest rates near zero by printing money as fast as it dare. It's essentially free money to America's Big Money economy.
Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They're merging and acquiring other companies.
And they're going abroad in search of customers.
Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They're selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America's biggest investors are also going abroad to get a nice return on their money.
So don't worry about America's Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.
The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America's largest corporations are heading upward.
But there's another American economy, and it's not on the mend. Call it the Average Worker economy.
Last Friday's jobs report showed 159,000 new private-sector jobs in October. That's better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.
Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force -- including everyone too discouraged to look for a job -- we're down about 22 million.
Or to put it another way, we're still getting nowhere on jobs.
One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn't working, chances are high that family incomes are down compared to what they were three years ago.
And that means the bills aren't getting paid.
According to a recent Washington Post poll, more than half of all Americans -- 53 percent -- are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.
Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.
Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.
And even though interest rates are falling, most people in the Average Worker economy can't refinance their homes. They can't get home equity loans. Banks don't want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.
And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.
Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.
Inhabitants of the Average Worker economy aren't so sure. The economy has been so bad they're angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.
But if nothing changes in the Average Worker economy, there will be hell to pay.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
bench craft company rip off
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
<b>News</b> Alert: Big Growth for Internet Ads Through 2014: Tech <b>News</b> «
eMarketer, a New York-based research firm estimates spending on US internet advertisements will grow 13.9 percent to $25.8 billion for the full year. It expects a 10.5 percent increase in US online ad spending in 2011, ...
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
bench craft company rip off
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
<b>News</b> Alert: Big Growth for Internet Ads Through 2014: Tech <b>News</b> «
eMarketer, a New York-based research firm estimates spending on US internet advertisements will grow 13.9 percent to $25.8 billion for the full year. It expects a 10.5 percent increase in US online ad spending in 2011, ...
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
bench craft company rip off
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
<b>News</b> Alert: Big Growth for Internet Ads Through 2014: Tech <b>News</b> «
eMarketer, a New York-based research firm estimates spending on US internet advertisements will grow 13.9 percent to $25.8 billion for the full year. It expects a 10.5 percent increase in US online ad spending in 2011, ...
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
bench craft company rip off
Esta semana en la tarjeta de crédito <b> Noticias </ b> - MoneyBuilder - sentido de lo que <b> Siempre ...</ b> por LowCards.com más de ocho millones de personas abandonan la tarjeta de crédito utilizar más de ocho millones de consumidores dejaron de usar las tarjetas de crédito durante el año pasado, según un nuevo estudio de TransUnion. El uso de propósito general ...
<b> Noticias </ b> Alerta: gran crecimiento para los anuncios de Internet a través de 2014: Tecnología <b> Noticias </ b> «eMarketer, una firma de investigación de Nueva York, estima el gasto en anuncios de Internet en EE.UU. crecerá 13,9 por ciento, a 25,8 mil millones dólares para todo el año. Se espera un aumento del 10,5 por ciento en el gasto de EE.UU. de publicidad en línea en 2011, ...
Habitaciones Lujiazui: <b> Noticias </ b> & puntos de vista sobre las existencias de China (06 de diciembre <b> ...</ b> Inversores y comerciantes en el principal distrito financiero de China se trata de la siguiente antes del inicio del día de hoy el comercio: Con las expectativas sobre la inflación y la política monetaria cada vez más claro, los inversores están tomando las señales desde el extranjero ...
bench craft company rip off
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
<b>News</b> Alert: Big Growth for Internet Ads Through 2014: Tech <b>News</b> «
eMarketer, a New York-based research firm estimates spending on US internet advertisements will grow 13.9 percent to $25.8 billion for the full year. It expects a 10.5 percent increase in US online ad spending in 2011, ...
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
bench craft company rip off
Yet another odd letter comes from under Bill Gross' pen, in which he continues to bash "The Ben Bernank's" Ponzi policies ("policymakers at the Fed write trillions of dollars’ worth of checks under the guise of quantitative easing, a policy which takes Charles Ponzi one step further by purchasing the government’s own paper in a last gasp effort to support asset prices") while making it all too clear that the only beneficiaries are "Newport Beach mega-millionaires." Has Warren Buffet-style self-flagellation become trendy among the billionaire jet set? Lastly, Gross makes it clear that the American economy is doomed in the long-run absent a "policy revolution" in DC: "Unless developed economies learn to compete the old-fashioned way – by making more goods and making them better – the smart money will continue to move offshore to Asia, Brazil and other developing economies, both in asset and in currency space. The United States in short, needs to make things not paper, but that is not likely unless we see a policy revolution in Washington DC. In the meantime, our unemployed will continue to fill out forms and stand in line." And the Newport-beach mega-millionaires will continue to front-run the Fed. Nothing ever changes indeed.
From Bill Gross' Monthly Investment Outlook (who has been buying MBS on margin like there is no tomorrow).
Allentown
– Billy Joel, 1982 We’re all Allentowners now. Granted, 90% of the 1) The global economy is suffering from a lack of aggregate demand. This shortfall of global demand is a nearly Developing nations and 2) With insufficient demand, nations compete furiously for their share of the diminishing global growth pie. And so the United States and its developed This phrase of a “level playing field” opens up endless possibilities. If, in fact, the solution to how The second route to the level playing field Faced with these two decidedly different routes If so, investors should recognise that an Unless developed economies learn to compete the William H. Gross
Well we’re living here in Allentown
And they’re closing all the factories down
Out in Bethlehem they’re killing time
Filling out forms
Standing in line
And we’re living here in Allentown
workforce is still reporting for work on time, but our standard of
living, our confidence in the future – we’re standing in line in
Allentown. Lost in the policy debate surrounding the elections and the
subsequent demonisation of the Federal Reserve’s Quantitative Easing
(“QE2”) policies has been any recognition of why we no longer live on Ronald Reagan’s shining hill or how we might possibly reclaim higher ground. There are two fundamental explanations:
In simple English that means that consumers are not buying enough
things and that companies are not hiring enough people because of it.
Growth slows down, especially in developed as opposed to developing
countries, and the steel mills of Allentown, USA and Sheffield, England
close down.
impossible concept to grasp amongst politicians and their citizenry.
Don’t people always want to buy more things and isn’t demand
theoretically insatiable? They do, and it is. Yet economic growth is a
delicate dance between production and finance and when a nation’s or a
family’s credit card gets maxed out, then demand/spending slows
measurably. We are witnessing these commonsensical repercussions across
the entire continent of Europe today and to a lesser extent in the
United States.
their consumers want to buy things too. And while their economies are
growing fast, their overall size is not yet sufficient to pull along the
economies of Europe, Japan and the US. Their financial systems are
still maturing and reminiscent of a spindly-legged baby giraffe, having
lots of upward potential, but still striving for balance after a series
of missteps, the most recent of which was the trio of the 1997–98 Asian
crisis, the 1998 Russian default and the 2001 Argentine default. And so
their policies are oriented towards export to debt-laden developed
nations instead of internal consumption, leaving a gaping hole in global aggregate
demand. China is a locomotive to be sure, but it cannot pull the global
economy uphill on the basis of mercantilistic exports alone. It needs
to develop many more of its own shopping malls and that will take years,
if not decades.
All look to borrow growth from somewhere else. Nearly a half century
ago, the undisputed champion of global growth was the United States – it
held all the cards: an unscathed post-WWII industrial base, an
acknowledged Bretton Woods reserve currency and an educated workforce
able to out-innovate any and all competitors. No wonder our policies
encouraged open markets and free trade policies that would only feed the
United States hegemon. At some point in the 1970s to 1980s, however,
the rest of the world began to catch up. Japan produced better cars than
Detroit, the Iron Curtain fell, and the rise of China was soon to rock
American/developed economies out of their presumption that the world was
their export oyster. Billy Joel’s Allentown was transformed from an
iron and coke/chromium steel behemoth into an unemployment centre,
filling out forms – standing in line.
economy counterparts face an unfamiliar crisis of unrecognised
dimensions and potentially endless proportions. Politicians and
respective electorates focus on taxes or healthcare when the ultimate
demon is a lack of global demand and the international competitiveness
to thrive. The solution for more jobs is seen as a simple quick step of
extending the Bush tax cuts or incenting small businesses to hire
additional workers, or in the case of Euroland, shoring up government
balance sheets with emergency funding. It is not. These policies only
temporarily bolster consumption while failing to address the
fundamental problem of developed economies: Job growth is moving
inexorably to developing economies because they are more competitive.
Free trade and open competition, like a stretched rubber band, have
snapped the US and many of its Euroland counterparts in the face. By
many estimates, Chinese labour works for 10% or less than its American
counterparts. In addition, and importantly, it is able to innovate as
quickly or replicate what we do. Jobs, in other words, can never come
back to the level or the prosperity reminiscent of 1960s’ Allentown,
Pennsylvania until the playing field is levelled.
we can reclaim the vision of Ronald Reagan’s “shining hill” and the
Allentown of decades past is to “level the playing field,” there are
obviously a number of ways to do it. The constructive way is to stop
making paper and start making things. Replace subprimes, and yes,
Treasury bonds with American cars, steel, iPads, airplanes, corn –
whatever the world wants that we can make better and/or cheaper. Learn
how to compete again. Investments in infrastructure and 21st century education and research, as opposed to 20th
century education are mandatory, as is a withdrawal from
resource-draining foreign wars. It will be a tough way back, but it can
be done with sacrifice and appropriate public policies that encourage
innovation, education and national reconstruction, as opposed to Wall
Street finance and Main Street consumption.
involves political and financial chicanery: trade and immigration
barriers, currency devaluation and military domination of foreign
oil-producing nations. It is by far the less preferable route, but
unfortunately the one that is easier and, therefore, most politically
feasible. Politicians do not get elected on the basis of “sacrifice.”
They get elected by pointing to foreign demons, be they in the Middle
East or in Asia. The Chinese yuan is a far easier target than the
American workers earning ten times their Chinese counterparts and
producing an inferior product to boot. Politicians also get elected by
promising to keep taxes low, even for the rich, with the argument that
small business owners cannot afford the increase. The real beneficiaries
however, are the mega-millionaires of Wall Street and Newport Beach.
And yes, policymakers at the Fed write trillions of dollars’ worth of
checks under the guise of quantitative easing, a policy which takes
Charles Ponzi one step further by purchasing the government’s own paper
in a last gasp effort to support asset prices.
to “level the playing field” it seems obvious that the United States is
opting for “Easy Street” as opposed to “Buckle Down Road.” Granted,
“The Ben Bernank” as a YouTube cartoon rather hilariously labelled him,
has for several months importuned Congress and the Executive Branch to
institute substantive reforms, while he attempts to keep the patient
alive via non-conventional monetary policy. But very few others are
willing to extract their heads from the sand. The President’s debt
commission with its insistence on low personal and corporate income tax
rates and a mere 15 cent increase in the gasoline tax was one example.
The Republicans’ reluctance to advance detailed ideas for budget
balancing is another. And the Democrats’ two-year focus on the biggest
entitlement program since Social Security – healthcare – as opposed to
fundamental reforms to counter our lack of global competitiveness – is
perhaps the most grievous example of lost opportunity. Unlike the United
Kingdom, where Prime Minister Cameron has championed fiscal
conservatism, or even Euroland, which is being forced in the direction
of Angela Merkel’s Germanic work ethic, the United States seems to
acknowledge no bounds to what it can spend to bolster consumption or how
much it can print to support its asset markets. We will more than likely continue to “level the playing field” via currency
devaluation and an increasing emphasis on trade barriers and
immigration, as opposed to constructive policies to make this country
more competitive in the global marketplace.
emphasis on currency depreciation and trade restrictions are counter to
their own interests. Not only would their dollar-denominated investments
lose purchasing power over time from a global perspective, but they
would do so also via a policy of near 0% interest rates, which are
confiscatory in real terms when accompanied by positive and eventually
accelerating inflation. In addition, although corporate profits are in
many cases broadly diversified across national borders,
there should be little doubt that the objective of tariffs and trade
barriers is to advantage domestic labour as opposed to domestic capital;
profits, therefore will ultimately not benefit.
old-fashioned way – by making more goods and making them better – the
smart money will continue to move offshore to Asia, Brazil and other
developing economies, both in asset and in currency space. The United States in short, needs to make things not paper,
but that is not likely unless we see a policy revolution in Washington
DC. In the meantime, our unemployed will continue to fill out forms and
stand in line. We’re living here in Allentown.
Managing Director
Next time you hear an economist or denizen of Wall Street talk about how the "American economy" is doing these days, watch your wallet.
There are two American economies. One is on the mend. The other is still coming apart.
The one that's mending is America's Big Money economy. It's comprised of Wall Street traders, big investors, and top professionals and corporate executives.
The Big Money economy is doing well these days. That's partly thanks to Ben Bernanke, whose Fed is keeping interest rates near zero by printing money as fast as it dare. It's essentially free money to America's Big Money economy.
Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They're merging and acquiring other companies.
And they're going abroad in search of customers.
Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They're selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America's biggest investors are also going abroad to get a nice return on their money.
So don't worry about America's Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.
The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America's largest corporations are heading upward.
But there's another American economy, and it's not on the mend. Call it the Average Worker economy.
Last Friday's jobs report showed 159,000 new private-sector jobs in October. That's better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.
Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force -- including everyone too discouraged to look for a job -- we're down about 22 million.
Or to put it another way, we're still getting nowhere on jobs.
One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn't working, chances are high that family incomes are down compared to what they were three years ago.
And that means the bills aren't getting paid.
According to a recent Washington Post poll, more than half of all Americans -- 53 percent -- are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.
Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.
Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.
And even though interest rates are falling, most people in the Average Worker economy can't refinance their homes. They can't get home equity loans. Banks don't want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.
And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.
Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.
Inhabitants of the Average Worker economy aren't so sure. The economy has been so bad they're angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.
But if nothing changes in the Average Worker economy, there will be hell to pay.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
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Yet another odd letter comes from under Bill Gross' pen, in which he continues to bash "The Ben Bernank's" Ponzi policies ("policymakers at the Fed write trillions of dollars’ worth of checks under the guise of quantitative easing, a policy which takes Charles Ponzi one step further by purchasing the government’s own paper in a last gasp effort to support asset prices") while making it all too clear that the only beneficiaries are "Newport Beach mega-millionaires." Has Warren Buffet-style self-flagellation become trendy among the billionaire jet set? Lastly, Gross makes it clear that the American economy is doomed in the long-run absent a "policy revolution" in DC: "Unless developed economies learn to compete the old-fashioned way – by making more goods and making them better – the smart money will continue to move offshore to Asia, Brazil and other developing economies, both in asset and in currency space. The United States in short, needs to make things not paper, but that is not likely unless we see a policy revolution in Washington DC. In the meantime, our unemployed will continue to fill out forms and stand in line." And the Newport-beach mega-millionaires will continue to front-run the Fed. Nothing ever changes indeed.
From Bill Gross' Monthly Investment Outlook (who has been buying MBS on margin like there is no tomorrow).
Allentown
– Billy Joel, 1982 We’re all Allentowners now. Granted, 90% of the 1) The global economy is suffering from a lack of aggregate demand. This shortfall of global demand is a nearly Developing nations and 2) With insufficient demand, nations compete furiously for their share of the diminishing global growth pie. And so the United States and its developed This phrase of a “level playing field” opens up endless possibilities. If, in fact, the solution to how The second route to the level playing field Faced with these two decidedly different routes If so, investors should recognise that an Unless developed economies learn to compete the William H. Gross
Well we’re living here in Allentown
And they’re closing all the factories down
Out in Bethlehem they’re killing time
Filling out forms
Standing in line
And we’re living here in Allentown
workforce is still reporting for work on time, but our standard of
living, our confidence in the future – we’re standing in line in
Allentown. Lost in the policy debate surrounding the elections and the
subsequent demonisation of the Federal Reserve’s Quantitative Easing
(“QE2”) policies has been any recognition of why we no longer live on Ronald Reagan’s shining hill or how we might possibly reclaim higher ground. There are two fundamental explanations:
In simple English that means that consumers are not buying enough
things and that companies are not hiring enough people because of it.
Growth slows down, especially in developed as opposed to developing
countries, and the steel mills of Allentown, USA and Sheffield, England
close down.
impossible concept to grasp amongst politicians and their citizenry.
Don’t people always want to buy more things and isn’t demand
theoretically insatiable? They do, and it is. Yet economic growth is a
delicate dance between production and finance and when a nation’s or a
family’s credit card gets maxed out, then demand/spending slows
measurably. We are witnessing these commonsensical repercussions across
the entire continent of Europe today and to a lesser extent in the
United States.
their consumers want to buy things too. And while their economies are
growing fast, their overall size is not yet sufficient to pull along the
economies of Europe, Japan and the US. Their financial systems are
still maturing and reminiscent of a spindly-legged baby giraffe, having
lots of upward potential, but still striving for balance after a series
of missteps, the most recent of which was the trio of the 1997–98 Asian
crisis, the 1998 Russian default and the 2001 Argentine default. And so
their policies are oriented towards export to debt-laden developed
nations instead of internal consumption, leaving a gaping hole in global aggregate
demand. China is a locomotive to be sure, but it cannot pull the global
economy uphill on the basis of mercantilistic exports alone. It needs
to develop many more of its own shopping malls and that will take years,
if not decades.
All look to borrow growth from somewhere else. Nearly a half century
ago, the undisputed champion of global growth was the United States – it
held all the cards: an unscathed post-WWII industrial base, an
acknowledged Bretton Woods reserve currency and an educated workforce
able to out-innovate any and all competitors. No wonder our policies
encouraged open markets and free trade policies that would only feed the
United States hegemon. At some point in the 1970s to 1980s, however,
the rest of the world began to catch up. Japan produced better cars than
Detroit, the Iron Curtain fell, and the rise of China was soon to rock
American/developed economies out of their presumption that the world was
their export oyster. Billy Joel’s Allentown was transformed from an
iron and coke/chromium steel behemoth into an unemployment centre,
filling out forms – standing in line.
economy counterparts face an unfamiliar crisis of unrecognised
dimensions and potentially endless proportions. Politicians and
respective electorates focus on taxes or healthcare when the ultimate
demon is a lack of global demand and the international competitiveness
to thrive. The solution for more jobs is seen as a simple quick step of
extending the Bush tax cuts or incenting small businesses to hire
additional workers, or in the case of Euroland, shoring up government
balance sheets with emergency funding. It is not. These policies only
temporarily bolster consumption while failing to address the
fundamental problem of developed economies: Job growth is moving
inexorably to developing economies because they are more competitive.
Free trade and open competition, like a stretched rubber band, have
snapped the US and many of its Euroland counterparts in the face. By
many estimates, Chinese labour works for 10% or less than its American
counterparts. In addition, and importantly, it is able to innovate as
quickly or replicate what we do. Jobs, in other words, can never come
back to the level or the prosperity reminiscent of 1960s’ Allentown,
Pennsylvania until the playing field is levelled.
we can reclaim the vision of Ronald Reagan’s “shining hill” and the
Allentown of decades past is to “level the playing field,” there are
obviously a number of ways to do it. The constructive way is to stop
making paper and start making things. Replace subprimes, and yes,
Treasury bonds with American cars, steel, iPads, airplanes, corn –
whatever the world wants that we can make better and/or cheaper. Learn
how to compete again. Investments in infrastructure and 21st century education and research, as opposed to 20th
century education are mandatory, as is a withdrawal from
resource-draining foreign wars. It will be a tough way back, but it can
be done with sacrifice and appropriate public policies that encourage
innovation, education and national reconstruction, as opposed to Wall
Street finance and Main Street consumption.
involves political and financial chicanery: trade and immigration
barriers, currency devaluation and military domination of foreign
oil-producing nations. It is by far the less preferable route, but
unfortunately the one that is easier and, therefore, most politically
feasible. Politicians do not get elected on the basis of “sacrifice.”
They get elected by pointing to foreign demons, be they in the Middle
East or in Asia. The Chinese yuan is a far easier target than the
American workers earning ten times their Chinese counterparts and
producing an inferior product to boot. Politicians also get elected by
promising to keep taxes low, even for the rich, with the argument that
small business owners cannot afford the increase. The real beneficiaries
however, are the mega-millionaires of Wall Street and Newport Beach.
And yes, policymakers at the Fed write trillions of dollars’ worth of
checks under the guise of quantitative easing, a policy which takes
Charles Ponzi one step further by purchasing the government’s own paper
in a last gasp effort to support asset prices.
to “level the playing field” it seems obvious that the United States is
opting for “Easy Street” as opposed to “Buckle Down Road.” Granted,
“The Ben Bernank” as a YouTube cartoon rather hilariously labelled him,
has for several months importuned Congress and the Executive Branch to
institute substantive reforms, while he attempts to keep the patient
alive via non-conventional monetary policy. But very few others are
willing to extract their heads from the sand. The President’s debt
commission with its insistence on low personal and corporate income tax
rates and a mere 15 cent increase in the gasoline tax was one example.
The Republicans’ reluctance to advance detailed ideas for budget
balancing is another. And the Democrats’ two-year focus on the biggest
entitlement program since Social Security – healthcare – as opposed to
fundamental reforms to counter our lack of global competitiveness – is
perhaps the most grievous example of lost opportunity. Unlike the United
Kingdom, where Prime Minister Cameron has championed fiscal
conservatism, or even Euroland, which is being forced in the direction
of Angela Merkel’s Germanic work ethic, the United States seems to
acknowledge no bounds to what it can spend to bolster consumption or how
much it can print to support its asset markets. We will more than likely continue to “level the playing field” via currency
devaluation and an increasing emphasis on trade barriers and
immigration, as opposed to constructive policies to make this country
more competitive in the global marketplace.
emphasis on currency depreciation and trade restrictions are counter to
their own interests. Not only would their dollar-denominated investments
lose purchasing power over time from a global perspective, but they
would do so also via a policy of near 0% interest rates, which are
confiscatory in real terms when accompanied by positive and eventually
accelerating inflation. In addition, although corporate profits are in
many cases broadly diversified across national borders,
there should be little doubt that the objective of tariffs and trade
barriers is to advantage domestic labour as opposed to domestic capital;
profits, therefore will ultimately not benefit.
old-fashioned way – by making more goods and making them better – the
smart money will continue to move offshore to Asia, Brazil and other
developing economies, both in asset and in currency space. The United States in short, needs to make things not paper,
but that is not likely unless we see a policy revolution in Washington
DC. In the meantime, our unemployed will continue to fill out forms and
stand in line. We’re living here in Allentown.
Managing Director
Next time you hear an economist or denizen of Wall Street talk about how the "American economy" is doing these days, watch your wallet.
There are two American economies. One is on the mend. The other is still coming apart.
The one that's mending is America's Big Money economy. It's comprised of Wall Street traders, big investors, and top professionals and corporate executives.
The Big Money economy is doing well these days. That's partly thanks to Ben Bernanke, whose Fed is keeping interest rates near zero by printing money as fast as it dare. It's essentially free money to America's Big Money economy.
Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They're merging and acquiring other companies.
And they're going abroad in search of customers.
Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They're selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America's biggest investors are also going abroad to get a nice return on their money.
So don't worry about America's Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.
The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America's largest corporations are heading upward.
But there's another American economy, and it's not on the mend. Call it the Average Worker economy.
Last Friday's jobs report showed 159,000 new private-sector jobs in October. That's better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.
Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force -- including everyone too discouraged to look for a job -- we're down about 22 million.
Or to put it another way, we're still getting nowhere on jobs.
One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn't working, chances are high that family incomes are down compared to what they were three years ago.
And that means the bills aren't getting paid.
According to a recent Washington Post poll, more than half of all Americans -- 53 percent -- are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.
Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.
Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.
And even though interest rates are falling, most people in the Average Worker economy can't refinance their homes. They can't get home equity loans. Banks don't want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.
And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.
Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.
Inhabitants of the Average Worker economy aren't so sure. The economy has been so bad they're angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.
But if nothing changes in the Average Worker economy, there will be hell to pay.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
bench craft company rip off
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bench craft company rip off
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
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<b>News</b> Alert: Big Growth for Internet Ads Through 2014: Tech <b>News</b> «
eMarketer, a New York-based research firm estimates spending on US internet advertisements will grow 13.9 percent to $25.8 billion for the full year. It expects a 10.5 percent increase in US online ad spending in 2011, ...
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
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bench craft company rip off
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
<b>News</b> Alert: Big Growth for Internet Ads Through 2014: Tech <b>News</b> «
eMarketer, a New York-based research firm estimates spending on US internet advertisements will grow 13.9 percent to $25.8 billion for the full year. It expects a 10.5 percent increase in US online ad spending in 2011, ...
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
bench craft company rip off
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
<b>News</b> Alert: Big Growth for Internet Ads Through 2014: Tech <b>News</b> «
eMarketer, a New York-based research firm estimates spending on US internet advertisements will grow 13.9 percent to $25.8 billion for the full year. It expects a 10.5 percent increase in US online ad spending in 2011, ...
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
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