Now we just wait for the coast to play catch up. Patience, Grasshopper!

CR,

Granted the coasts are magnets, but let's say we split the difference at mid-90's prices?

In San Diego the early 90's were the bottom, I think.

91-92 was a recession right? That was why I went from being a resident flipper to being a long term investor and wound up living in one house for 13 years, the longest I ever lived anywhere except my parents house...

Why don't we lower the capital gains tax even more? Then people will buy more stocks, and bonds, and derivatives of stocks, and derivatives of bonds, and derivatives of derivatives. That will bring employment back.

The more you tax something, the less of it you get - so if you tax work... or investment.... The answer is to cut spending... lets start with a zero based budget and get rid of everything that has been hanging around our neck for decades... lower taxes, pay the debt service, fund a disaster fund, and all other spending must be no more than is collected, producing a balanced budget... Mish has some very good articles on things that can be eliminated... We had the Grace Commission which produced a list of about 1100 things to eliminate from the fed. budget, including several cabinet posts and combining or eliminating a lot of federal departments... That needs to be done at every level of government...

And we need to stop paying poor women to have babies.

I think every housing price forecast I've ever read on this site shares the same assumption: that there will always be mortgages available to a large percentage of working adults.

Is it really that unlikely at this point that we no longer have federal reserve/gse support of the mortgage market? Because "they will never let it happen" is not a good enough answer.

To avoid hyperinflation we might actually have to raise rates and cut spending, which might require either withdrawing support from the mortgage market or at least jacking the standards sky high.

What happens to prices then? Could easily see coastal prices go below 1989.

You may get accustomed to alcohol taxes and keep on consuming... But I know that as we travel around when we are in a place where the alcohol taxes are really high, we dont consume as much...

My most esteemed college adviser says tax luxury consumption, has a new book out this month.

Amazon.com: Robert H. Frank: Books, Biography, Blog, Audiobooks, Kindle

Co-authored a textbook with Bernanke.

Well you do have the transportation cost of goods manufactured in India and China... When fuel prices were sky high in 2008 there was some talk of bringing manufacturing back to the US - that it would be cheaper... Wages are not low here if you have some skills... Even a skilled mechanic or other tradesman can make a decent living wage in the US... Of course it helps a lot if you have a good attitude for work which is lacking in a lot of the workforce now...

OT--analysis of last weeks unemployment numbers. (Not sure if anyone already posted this, I'm a little slow.) Basically it says that: 1) -345k indicates an economy contracting at 2 to 4% and 2) hours worked is continuing to fall indicating economy is still very weak.

David Rosenberg:

We have to put the data into perspective. Before the Lehman collapse, when equities were in a moderate bear market and bonds in a moderate bull market, the worst nonfarm payroll result we saw was -175,000. We don’t seem to recall too many pundits rejoicing over employment declines at that time, which were basically half of what was just posted in May. Moreover, the worst nonfarm payroll number in the 2001 recession — right after 9-11 — was -325,000; and before that, at the depths of the 1990-91 recession, the worst report showed a -306,000 print. So basically, what we saw today was a number consistent with a deep recession — just not quite as deep as the near-6% at an annual rate contraction we saw in the first quarter. It is difficult to rejoice over an employment data that is consistent with real GDP still declining anywhere from a 2% to 4% at an annual rate. Now here we are, close to nine months after the Lehman collapse, and we are still printing employment numbers that are double what they were before pre-Lehman. That is the bigger picture.

Moreover, the internals of today’s report, in a word, were awful. Not only are businesses still cutting jobs but they are also reducing the hours that their employees are working; the private workweek hit a new record low of 33.1 hours (from 33.2 hours in April). So, total labour input was much weaker than the headline payroll suggests and this is vividly illustrated in the aggregate-hours worked index, which fell 0.7% MoM and something ‘green shoot’ advocates will not like discuss since this was actually worse than the 0.3% MoM drop in April; this takes the three-month trend to a -8.6% annual rate. Think about that for a moment because what goes into GDP is total hours worked and productivity — so the latter better continue to hang in there or else we are going to be seeing some nasty output data going forward that may well take Mr. Market by surprise. Put another way, if companies had held hours worked constant in May instead of cutting them, to achieve the total labour input they achieved last month would have required — get this — a 927,000 payroll cut. ‘Green shoot’ indeed.

I'd certainly like to cut things like the Tarp etc.... I'm trying to give Timmy and Ben a chance because I certainly dont know enough about the financial system and I have to take their word for it that everything would fail otherwise... But we have had almost 100 years of creeping socialism in the US and we need to go in the other direction - there is no question that the economy is a hollow shell and that family values and personal values have gone way down the tubes, particularly since the 1960's... I'm too simple maybe - I remember a time when everyone behaved themselves and life was comfortable... people trusted each other a lot more...

Exploding Debt Threatens America

"I believe the risk posed by this debt is systemic and could do more damage to the economy than the recent financial crisis. To understand the size of the risk, take a look at the numbers that Standard and Poor's considers. The deficit in 2019 is expected by the CBO [congressional Budget Office] to be $1,200bn (€859bn, £754bn). Income tax revenues are expected to be about $2,000bn that year, so a permanent 60 per cent across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP?

"Inflation will do it. But how much? To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100 per cent increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82 per cent. A 100 per cent increase in the price level means about 10 per cent inflation for 10 years. But it would not be that smooth -- probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession."

FT.com / Comment / Opinion - Exploding debt threatens America

No, that's a memory trick. You were more naive and optimistic in your youth, like everyone, so you associate those days with better times. They were worse. The financial system is a Ponzi scheme, sad to break it to you.

Broward was a bit abrasive and i think rude to our host but the man has a point, wages do need to rise -- a lot.

They've dropped about 30% since the 70's after all

If we want growth we must get wages in consuming nations up by an amount equal to tax increases + debt payments + expected savings rates +rate of inflation === once this is done consumption will rise ..

The rub is everyone involved in trade has to do it and nations with big welfare states and falling populations or who are crooked have far to much incentive to cheat

I suspect the best way to get American prosperity up is to do the counter institutive thing and trade less -- we will have to make, sell and buy as much of what we want as we can and close our door to the cheaters

this won't happen for a couple of reasons --- #1 the US government is bought and paid for and #2 there isn't enough public agreement to make the policy happen

One other thing -- computers are destroying a lot of jobs in manufacturing, "information services", retail and other areas (efficiency is not always a good thing) rather then being a boon this is proving to be a bad bad thing -- unless we take the Robot Jox approach and ban the things from a lot of uses (automated voice mail, self checkout etc) something thats likely illegal and useless anyway we will have to cut work hours and get more people jobs..

A chronically underemployed class of people is a certain way to find yourself in a hard left state -- if people can't earn what they want or need they turn to either the state or to extremism --

And no sending them off to churches is exactly what you should not do -- that a quick trip to theocracy -- unless A Handmaidens Tale is your idea of liberty -that is

distribute or die

Having a person with 10 years of college sitting around all day isnt doing anyone any good

Yes, that;s brilliant. However, work in the US is no longer about skill, it's about politics and bullshitting people.
Because the amount of real work is too small.

My sister with a Master's and CPA is sitting idle, too, embroiled in a lawsuit with the Alaskan government who FORGED a letter of resignation. The whole game is about lying, cheating and setting other people up to fail to cover your own ass.

My brother, with 20 years of IT experience also sits idle now, the victim of internal politics and about to battle the IRS.

You see it every day here at work with the Federal Reserve, the bankers, the Feds, Geithner, Bernanke, AIG but somehow it's eluded you that it also permeates the workplace, too.

Here's the newsflash in case you haven't figured it out yet.

The US is a fascist country now. It's not what you do, it's not what you make, it's what you SAY, it's how well you lie, how well you cover your ass, how well you redirect blame onto others, how well you fall into lline and nod your head "YES, SIR", "YES, SIR", "YES, SIR", which is exactly how we got a big, huge real estate bubble and crash.

You think nobody KNEW the fraud was going on?
EVERYONE did.
They still do.

They've learned to keep their mouths shut and play the game or end up washing dishes.

You truly are as clueless as I used to be if you haven't figure that yet.

There's no shortage of human labor because of the efficiency gains made through harnessing fossil fuels and all the other inventions of the industrial revolution. It has taken a lot of government intervention to keep people busy "working" or getting high to pass the time without getting disruptive.

You cannot simply increase consumption as a way to growth because there are both limits to marginal increases in production as well as absolute resource constraints that we are already bumping into, much more so than most seem to realize.

Personally, I don't want growth. I want(from a macro POV, don't actually want it to happen tomorrow) a quick and painful reduction of the population without harming the planet anymore than necessary for the good of humanity and the earth. The other routes are more growth(the road to hell), or a gradual reduction of the population while everyone lives happily, which is the biggest fantasy of all because it ignores the current fucked up reality that many in the world live in.

You think nobody KNEW the fraud was going on?
EVERYONE did.
They still do.

The cynic in me says that the only thing they didn't know was that everyone else was doing it, too. They thought their little fudging of the numbers wasn't a big deal in the scheme of things, but since everyone faked it, there's no longer a there there.

"Personally, I don't want growth. I want(from a macro POV, don't actually want it to happen tomorrow) a quick and painful reduction of the population without harming the planet..."

Try self-immolation. Makes quite a photo-op.

PRODUCTION == CONSUMPTION.

Make sure it is understood this is a long-term "philosophical" equivalence.

Year-to-year, the Government economists add production to consumption to arrive at production. And the public buys it.

The more you tax something, the less of it you get... And we need to stop paying poor women to have babies.

So, can we start taxing bankers compensation NOW?

Those poor women haven't been picking my pocket quite as much lately as the former.

jim: it might take a generation or two to die off before we forget the travails that we are about to go through.

It will be like the Great Depression when all sorts of regulations and restraints were put in place. Fast forward two generations when the Boomer grandchildren dismantle all the controls that their grandparents installed.

So, Broward or anyone: if you back-tested a weighted commodity index algorithm (the basis for our new currency) using all available price data, and it beat every paper currency, over time, it would be an easy sell, no?

Broward, you're conflating the general uselessness of the baby boomer generation with some kind of imaginary cultural flaw (when the only real flaw is the existence of baby boomers like bernanke, W, Clinton, geithner, dimon in positions of influence and the narcissistic self-delusion of boomers in less exalted places who think they are entitled to employment). You're also insulting fascists. Work on that.

If you truly decentralize it, which isn't actually possible in practice, then nobody with any power would support it, and it would have very little if any advantage over gold and silver. Though there are surely plenty of disadvantages.

It represents a weighted basket of tangibles. It is backed by mutual understanding that a free independent system works better for all in the long run, like Mozilla Firefox.

jesus, yogi, it is called GSG (aka the GSCI, which goes way back), it has been traded for a few years. just buy friends a few shares if you need to evangelize.

Whoops, the poor women having babies comment was super snark. Wanted to clarify, welfare moms show nobility and honor everyday by getting up and making an effort. Of all the things we waste taxpayer money on I will grant them a pass on my outrage express.

But it's not independent, it's completely dependent on both the algorithm and the inputs(along with their flaws, and any manipulation).

Also there always has to be some kind of issuer, which gets back to centralization. Not to mention most people would not understand it and therefore would not trust it. It's quite easy to trust that a piece of gold in your hand is a piece of gold in your hand and other will see it as a piece of gold in your hand.

Bazaar style software development is hardly a good proof of concept for an unbacked currency based on desire for the public good. The whole idea seems to fly directly in the face of human nature.

Anything digitally tracked can also be digitally faked, especially without centrally trusted authorities. Why do websites need Certificates on top of encryption?

For the record, I was a workaholic until around 2006 when I finally realized that outsourcing was going to wipe out the technical end of IT and what's left is the political end which I'm too honest to succeed at. I have no school loans because I worked full-time during most of my college years.

The reason this is a discussion about me is so we can avoid the real issue, which is that wages are the problem.
Free market fanaticism is the problem.
Gov't spending is a counterbalance for the lack of real work and consumer debt is a counterbalance to lack of wages.

This is all pretty easy to understand if you actually read the history books instead of listening to Mish.

Today I played pool with some retired guys and I have to admit, I liked it better than the jobs I've done during the past five years. Just a bunch of frantic CYA, makework, sabotage and general kookiness like loading 112,000 rows into a web page or having my DA and PM sabotaged by a 30-year-old guy with political power but zero experience.

I need to get on disability somehow.

Gov't spending is a counterbalance for the lack of real work and consumer debt is a counterbalance to lack of wages.

I agree but how can you say free market is the problem when we haven't had anything close to a free market for so long? Fiat currency and corporate rights alone are enough to completely distort the distribution of wealth.

1cn-y:

Don't start up on the Joseph with the coat of many colors meme. That's my shtick.

A few years is too short. The Federal Reserve Note is taking 100 years to collapse.
Mozilla with its flaws is more reliable than IE.
I don't see how these facts support your currency idea.

Do you think the Indians wanted glod from Columbus? But they established trade.
Do you think they wanted digital IOU based on commodity algorith?

Like the FED? The IMF? Warm that arm up, this is the big league.
We have digital money already. Do you think Buffet's billions are in a vault somewhere?
The fed works because it is centralized. Smaller banks form a hierarchy. This along with the government dictate is why it has trust.

Your digital currency idea is like the fed without centralization, which simply cannot work.

Who issues it? If you can't answer that simple question then your idea is half baked at best.

Yogi-

I've brought up real questions to your idea that you have chosen not to respond to.

Your argumentation is like this-

Open source software is good, so an open algorithm commodity index as the bases of a currency is good.

Explain precisely how A leads to B. I'm very familiar with the subject so I think I can understand.

A group of big international traders, or gamers, or online poker players issues it first, and it only spreads to those who trust it..

---The Federal Reserve Note is taking 100 years to collapse.
----Mozilla with its flaws is more reliable than IE.
"I don't see how these facts support your currency idea."
"The fed works because it is centralized. Smaller banks form a hierarchy. This along with the government dictate is why it has trust."

Sorry, but the Fed has lost its trust. See, e.g. 2:33 above. The new currency will not be perfect. Some will be defrauded and have no good remedy, but the guilty will not be able to use the system. It only has to be better than the next best thing. It can coexist with other currencies. Keep your gold, keep your grain silo. They will keep their relative value against an index of all other tangibles.

Why would I accept something that a group of gamers can issue? Why would I trust anything that can be "issued", if I don't also trust the issuer? There has to be a finite amount of the currency, who decides how much, when to issue more, and who gets the new issuance? Obviously if there's no actual backing then whoever is getting the new issuance is getting something for free, as they can't pay in something real first, because who gets the real thing?

My personal belief is most of America is afflicted with CRS, where they Can't Remember Shit. Just one opinion.

I thought of a few ways that you could impose an apparent ten year cycle over a larger generational span, but in reality, I agree with your diagnosis, doctor Jimmy. (Flashback to Quadrophenia)

ac- Why are you up? Worried about the economy? Don't worry, we're fixing it, one comment at a time.

The float of the currency is indexed to the gross amount of tangible value above ground. Of course there has to be an arbitrary starting peg, say the US dollar on day 1. Then it floats free.

"Took me a few months to understand Broward. The pseudo misogyny and the ego were a bit off putting but the intellect and the rapier wit won me over. I simply think he is ahead of the curve in disillusionment and seeing through the facade."

He's no further along than many, many of us.

And I'm all for him on the disability thing. HeyBroward, be consistent, adopt a crazy look when you go see the psychs. Don't shave or bathe for a few days, wear ratty old clothes. Mention you harbor resentment and anger. Get a CWP. Carry a good knife.

It'll work. You also need a good attorney who knows how to game the system. Takes about a year to 18 months according to my brother.

Watch the video of the day, scroll down and look right. Krugman is on ABC's This Week with Geo. Snuffalottapuss. And he once again proves why we're in the mess we're in with his words. And he got a Nobel. Oh, well.

It's actually an inevitable evolution of cheap barcoding, Forex, Comex, debit cards... Information travels faster than the Fed can print, so their machinations are useless. There is no more 3-card monty in Manhattan, and not because of the cops. The tourists wised up.

Where's the morning shift guy? I'm off.

The float of the currency is indexed to the gross amount of tangible value above ground.

Yikes. Maybe it's time for a tutorial on the subject of money.

Of course it helps a lot if you have a good attitude for work which is lacking in a lot of the workforce now.

"Good attitude to work" mostly helps the owner of the capital.

Narrow concentration of wealth, lack of stake holding in the operation = You have to be a head case who has succumbed to some kind of propaganda to have a "work ethic".

If you want people to work, give them a profit motive and a substantial share of the gains. There's a reason peasant / slave economies are the most inefficient forms of labor known to man. If slave labor wasn't free and self reproducing, and if you didn't push the indirect costs of slave justice and escaped slave control off on the state that the slave owning class controls, it would never be worth doing.

You have to be pretty stupid to think that the "protestant work ethic" is anything other than a gateway to your rape.

Exploit me and I will surely learn to load watermelons with a pitchfork. People are stupid not to get this, but America today is full of people who have been carefully educated in the habits of stupidity, and surely someone will pop up to tell me I am a bad person for observing that when you turn your country into a third world shithole, the people there behave like third world peasants, because "You pretend to pay me, I pretend to work" is a rational response.

Byzantine_Ruins,

Good explanation.

Byz: you're such a cynic 8).

Well, is it today we have the longer term treasury auctions? What is it and how much is it and will it fail?

Why no tipping point?

Counterpointer,

No tipping point, Yet!

YouTube -

That skit never gets old to me.

"On and on the Great River rolls..."

Line from poem author (Oregonian guy I think) escapes me): "One can never look at the same river twice."

the signals may be the shadow of the Fed with checkbook out and pen poised

volker the viking (profile) wrote on Wed, 6/10/2009 - 7:31 am

Byz: you're such a cynic.

No, I'm a Confucian/Taoist idealist, I'm just not self-deceiving. I am heterodox as a neo-Confucian, I agree with Xun that man is inherently base.

Well, is it today we have the longer term treasury auctions?

What is it and how much is it and will it fail?

19 yards of 10 years.

Just IMO, you will never have another Treasury auction failure. It's the new large bank failure. As of last week, it became clear that the Primary Dealers are told to overbid, then the Fed will buy the overage back off them through QE in a week or two, assuming they don't brute force it and have a foreign central bank do it via a swap line, or just lie. The people who conduct and report the auctions are the same people who make the offering, so any trust for them you have is mostly habit based on the assumption they wouldn't kill the goose who laid the golden eggs. Unfortunately, this is the endgame of the capital markets and they have chosen to destroy the dollar and the Treasuries market as a totality rather than accept results they don't like. Again, just IMO.

Byz: we think very much alike, though I base my spirituality from a different place, as if there is such a thing.

So: all you bond vigilantes--will they take the 10 to a 4 handle or will they not let it?

re: the end game of the capital markets--like baseball, there is no clock. The 27th out is difficult to discern.

volker the viking (profile) wrote on Wed, 6/10/2009 - 7:52 am

Byz: we think very much alike, though I base my spirituality from a different place, as if there is such a thing.

Cool, brother. Got any work? =)

Counterpointer (profile) wrote on Wed, 6/10/2009 - 7:54 am

Byz - well, yes, Ben as in TALF, and the misc crookery that tamed the A2P2 beast. Just wonder how long that bike can be simultaneously clogging through the asset value decline sh!tpile, while forestalling,

Always way longer than you think it can. I don't think there's any rational reason that the Treasuries market is trading at the levels it is, so, it's basically established procedure / habit that's driving it. It'll work until it doesn't.

Black Star Ranch (profile) wrote on Wed, 6/10/2009 - 8:13 am

......morning.......Damn - I'm too old to be sore from building corrals. That's a teenager's work but he wimped at 4pm. The Mrs talked me into pigs. Held her off by telling her, "Yeah, OK - gotta build a yard & hut for 'em first".

The young are great but their batteries are shallow draw.

Priior to the big meeting this month the Russians put their money where their mouth is.

June 10 (Bloomberg) -- Russia’s central bank may switch some of its reserves from U.S. Treasuries to International Monetary Fund bonds, the bank’s first deputy chairman, Alexei Ulyukayev, said in Moscow today. His comments were confirmed by a bank official who declined to be named, citing bank policy.

Finance Minister Alexei Kudrin said last month that Russia planned to buy $10 billion of IMF bonds using money from its foreign reserves.

MBA refi index at a 7 month low due to back up in mtg rates. those refi's that did get done acted like a tax cut for many, now not much more of that going to happen:
Yahoo! 404 - Page Not Found

exports down 2.3% imports down 1.4%, trade deficit up to $29 b
No green shoots there

Dirk, better than Germany is doing

...morning, Dirk..........nice plug in 'falling off the backside of UE', a bit ago.......

If IE is hitting 1989 and the coast is going to hit 1999, then it averages out to 1994. My SWAG for So Cal has come out to 1993. Still a ways to go.

warlock (homepage, profile) wrote on Wed, 6/10/2009 - 8:31 am

I dare say we may perhaps have a slightly longer perspective on this side of the atlantic.

I would say most of my perspective comes from the other side of the Pacific. You need to study the Dynastic cycle if you haven't already. They have a much better structural understanding of state lifecycle and the mechanism, due to the multiple millenia of (nominally) continuous language and culture running over multiple state-system epochs.

No offense, but I decided a couple decades ago that the ordering of matters on the resource-poor left armpit of Eurasia is the most boring part of the global human experience, and considered of general interest only because of the maxim gun's use as a cultural propaganda tool. I'm all for women's suffrage, but "between the four seas, all men are brothers" is not purely a product of the Enlightenment.

As you said yesterday, I have a very good understanding of the problem scope / shape. Don't let cultural prejudices inform you. You can know about Aethelflaed of Wessex without living in her home county, and mankind is essentially the same in all times and places.

Broward, I served 18 months in Germany in Frankfort in the late '60s, and then there was a lot of conformity with young people. The older forlks survived WWII, so they thought differently. They just wanted to be left alone, and spend their pension. Young peope wanted a revolution, to stop the Vietnam War. I don't know why it mattered to them.

God forsaken bleak territory, IMO. I don't know why anybody would want to live there anyway.