they aught to have been so much better - 2000: relative fiscal stability, future entitlements not obscene, general peace in the world, the greenback truly mighty, a tech bubble which encouraged genuine technological advancement, if not sustainable equity markets...
Is the stock market zero sum? Seems to me a lot of people contributed a lot of money over the last ten years in their 401ks etc. And they all have less than what the contributed...
Seems to me a few of people made a lot of money.... It just wasnt me....
Back to short- I guess one could say that oil is working out just fine.
I am now within $1500 on my last retirement account to get back to where I was before the crash- now 90% in cash too.
Watch the slide and buy some cheap oil stocks again!!!
Lather, rinse, repeat!
If only one could trade houses so easily.
I had a thought on the bk thread which got pigged- how many more bk's are coming with the layoffs?
Reading the income test in the new bk code leads one to the conclusion that one should wait 6 months or more beyond the layoff- preferably after you get your last tax refund and cash the check.
Chapter 7 surge- well I guess it really means that instead of going slowly broke and trying to keep some assets, people will now blowout totally and start over with nothing.
The system is now set to reward that total destruction and discourage the pain of a straightened 13 filing.
Too bad BK judges can't cram down residential debt.
As of 4:09: NYSE extends trading to 4.15 p.m. Eastern by Nick Godt
NEW YORK (MarketWatch) -- The New York Stock Exchange said it extended trading until 4.15 p.m. Eastern on Thursday due to system irregularities. The NYSE, which normally ends trading at 4 p.m. Eastern, said it would provide another 15 minutes "in order to settle customer transactions that were affected by systemic irregularities," according to Eric Ryan, a spokesman for the exchange. No further information was immediately available on the nature of the irregularities or on which stocks might have been affected, he said.
Double or triple in size does not mean double the amount of employees
Among those meeting with Obama were chief executive officers John Berger of Standard Renewable Energy Group LLC, Stephanie Burns of Dow Corning Corp., and Amit Chatterjee of Hara Software, as well as Michael Splinter, president and chief executive of Applied Materials Inc., and FPL Group Inc. President and Chief Operating Officer Jim Robo, the White House said.
“The CEOs here told me that they’re looking to hire new people, in some cases to double or even triple in size over the next few years,” Obama said. “They are making money, and they are helping their customers save money on the energy front.”
Well that is the first installment that we have to pay for all the living beyond our means we have been doing for decades.
I figure at some point (either via declining markets or through stagnant markets for a long time or some combination of the two) we will be looking at a 20 or even a 30 year period with no net movement in equities before we bottom out for good. The next 15 years are going to be a grind IMO.
And that is the "good" scenario that does not assume a total financial and political collapse.
@Nades: All shares are priced at whatever any share will sell for right now. The total value of the stock market is usually quoted as that price times the number of shares, summed over all the stocks traded etc..
But if someone (say, Angelo Mozilo) wanted to sell ALL the shares of a company (say, Countrywide), in a hurry, the price would drop as each block was sold (unless someone else really wanted to buy the whole thing that day). The total value recovered by the seller would be much less than the market cap at the time prior to the first sale. Thus, negative sum.
On the other hand, if someone (say, Bill Gates) wanted to buy ALL the shares of a company (say, a tasty little dot com), in a hurry, the price would soar as each block was bought (and everyone else saw the price rising and wanted to hold or buy too). The final price would be much higher than the initial price. Positive sum.
More realistically, if a large and foolish hedge fund holding 3% of a stock were to liquidate their holdings after getting a margin call in October 2008, the rapid surge in volume would press the price down, and ALL the prior holders of the stock would see (on paper) significant losses. Negative sum.
The wise hedge fund that bought up a lot of the shares would get to start from a much lower basis and then sell to retail investors after Goldman pumped up the market... Positive sum for all concerned, until the bubble burst...
The extra 15 seems to have been used for purposes of entering even more sales; I do not know yet know volume.
But there was certainly no pumping going on, just more running to the hills. Went from down 2.94% to over 3% down in a real hurry in the overtime. What's up with that?
Someone wanted clear over the weekend and didn't make it out in time, perhaps?
Did volume ramp heavily after 3 on the sell side, making it difficult for the exchange to keep up?
Did someone trip over a cord on the floor somewhere?
of course i do. a good friend started one of the first webpage boutiques at 2nd and bryant circa '95 (sold out too early).
the difference is that we ended up with genuine advancement despite all of that hype. the average joe can buy a dell for $400 and use 'google earth'. that's amazing, and should be compared to 1995.
the subsequent real estate and commodity bubble did nothing in the way of value creation or technological advancement. nothing.
you are right in that the welfare state was set to grow - but as of 2000, we had a chance to forestall the entitlement tsunami. instead, the donut bill, a few wars of choice, etc.
and late '01/early'02 was much better in terms of gold, of course. i did buy some around then, actually. berkshire was the smart buy at the .com peak.
The John Warner Bank, Clinton, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with State Bank of Lincoln, Lincoln, Illinois, to assume all of the deposits of The John Warner Bank.
The three offices of The John Warner Bank will reopen on Friday as branches of State Bank of Lincoln.
As of April 30, 2009, The John Warner Bank had total assets of $70 million and total deposits of approximately $64 million. State Bank of Lincoln paid a premium of 4.1 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, State Bank of Lincoln agreed to purchase approximately $63 million of assets. The FDIC will retain the remaining assets for later disposition.
the subsequent real estate and commodity bubble did nothing in the way of value creation or technological advancement. nothing.
Houses are wealth. The fed just has to let the prices fall to where people can afford the houses. That would kill the banks of course so we have this epic battle taking place.
Strong banks and homeless or new banks and homeowners.
+1 to mmckinl, but I'd say it's a tossup between 32 hours with a 4-day 8-hour workweek, and 30 hours with a 5-day 6-hour workweek... Lowering the retirement age would've been an option 9 years ago but Uncle Sam no longer has the cash to support the increased draw on Social inSecurity
The RE was non-productive capital. I mean these McMansions are not even energy efficient. Humnity has not advanced any due to the trillions of underwaster mortagatges. Now with the Vulture investors we are throwing more money after bad
We would have been better off if we built a billion GEO metro's.
That was some nice selling into the close. Nordstrom (down over 7%) and Whole Foods (down over 6%) took it on the chin today. Even Apple (down 2%) and Amazon (down almost 3%) investors saw some reason to sell today.
I have mixed emotions, as I have been waiting to buy more puts on all of these!
Rob - I recently learned that a surprisingly large percentage of the economic underclass are aware that you should wait until after you cash your tax refund check to declare bankruptcy. Word gets around.
Maybe this wont be the recession of bank failures (like the depression) but rather of pension failures.... Compound that with Bonddad's Blog posting and were in some serious green shit....
A few weeks ago, I got a completely incomprehensible letter from the CA Franchise Tax Board that concluded by saying that I owed another $25 in taxes for 2008. It far easier to write the $25 check than re-read the letter, let alone figure out if they were right or wrong.
Got me thinking if this might be a partial solution to the budget mess- send out false, but incomprehensible demands for more money, make sure there is at least a 30 minute hold time on anyone’s phone calls for answers, and just hire a bunch of idiots who will say "all I can tell you, sir, is that our records show you owe the money,” and then threaten everything short of arrest if its not paid right away.
Its how MCI stayed in business for most of the 90's, so it should work for CA as well.
@mmckinl "Workers efficiency has doubled over the last 40 years yet
wages are lower in real terms and the two income family
is now a necessity in the vast majority of cases ..."
Or perhaps, with devil's advocate hat on: Because two people in each family were willing to work, they had more income to compete for homes in good school districts, and drove up home prices. Because two people were willing to work, they bought more expensive, more feature-laden cars. Because two people were willing to work, they put more wealth into the stock market and drove the bubble. Because two people were willing to work, they were more willing to take on credit (no need to save as much when you can always fall back on the one income if you need to), and bought into the credit bubble. Because two people were willing to work, they hired more service helpers (daycare, kids' sports) and drove down unemployment. All of this was pro-cyclical.
If those people would stop trying to chase their neighbors into bankruptcy, and just live sane lives, they might not need the second job because the price of houses would return to production cost, and more people would have time to produce intangible value -- good families, enjoyable recreation. A smile from a child will not change the GDP, but it will help you live a happier and longer life.
"Its how MCI stayed in business for most of the 90's, so it should work for CA as well. "
Speaking of telephone companies and rip-offs, I just paid some enormous phone bills last weekend, and today we're building an Asterisk server. We're going VOIP.
Apologies to the non geeks - translation is we're preparing to route around the public telcos for long distance.
Wisdom Speaker (homepage, profile) wrote on Thu, 7/2/2009 - 3:44 pm
All of this was pro-cyclical.
If those people would stop trying to chase their neighbors into bankruptcy, and just live sane lives, they might not need the second job because the price of houses would return to production cost, and more people would have time to produce intangible value -- good families, enjoyable recreation. A smile from a child will not change the GDP, but it will help you live a happier and longer life.
Yes. Social arms-races are good for producers (REALLY good), but for consumers... not so much. Economic forces tend to mold US into the most efficient economic units for the market's purpose, not our own. And it seems to have worked really, really well for the market and its servants. Being the "consumer" is far from a psychologically ideal position.
@mmckinl: "People are more indebted than anytime in history ... Where's the wealth ?"
I didn't say they had accumulated any! Because the two people were consumers, and not wealth accumulators, they spent what they earned and then lost the rest when their bubbles popped.
But imagine, if fewer people wanted to work, real wages would have to rise, because the demand for labor would drop slower than the supply.
"Jeff Madrick said of Warren's book:
“
The upshot is that two-income families often have even less income left over today than did an equivalent single-income family 30 years ago, even when they make almost twice as much. And they go deeper in debt. The authors find that it is not the free-spending young or the incapacitated elderly who are declaring bankruptcy so much as families with children. ... And Ms. Warren and Ms. Tyagi draw too fine a point here and there. There is surely some mere status-seeking in sending a child to the right day care institution and living in the right neighborhood. ... But their main thesis is undeniable. Typical families often cannot afford the high-quality education, health care and neighborhoods required to be middle class today. More clearly than anyone else, I think, Ms. Warren and Ms. Tyagi have shown how little attention the nation and our government have paid to the way Americans really live."
I see the FDIC is only closing banks if they can afford to cover the losses -- $16M (with an M) is the grand total estimated cost to the FDIC (for those two banks in Illinois today).
ghostfaceinvestah (profile) wrote on Thu, 7/2/2009 - 3:52 pm
Nixon also privatized (or semi-privatized?) Fannie Mae.
The Fannie/Freddie GSE's would have probably been fairly beneficent entities if they had been allowed to exercise sane risk management instead of becoming political footballs used to push the "ownership society" ideal on J6P and creating moral hazard through implicit guarantees on the bad financial decisions that were forced on those those entities.
The answers run contrary to popular wisdom as well as to Warren's own assumptions. Today's family is spending 21 percent less on clothing, 22 percent less on food - including eating out - and 44 percent less on appliances than they did a generation ago. Warren notes that a combination of lowered production costs and changing lifestyles are at work. Discount stores, meals that include less red meat and are more likely to have been purchased in bulk from wholesalers like Costco, and casual dressing at all ages have spelled savings for families.
Nor are warehouse-sized McMansions to blame; this type of housing is generally not going to middle-class families. Although housing costs have skyrocketed nationwide in the past generation, the size of average homes has grown far more modestly, by less than one room between 1975 and the late 1990s, Warren found.
Instead, Warren points the finger at two concepts dear to the hearts of almost all Americans: safety and education. Both are perceived to be more elusive now than a generation ago, when families bought a house they could afford and sent their children to the school down the street without a second thought. Now, she says, middle-class families are stretching themselves to the breaking point to afford homes in safe neighborhoods and "better" school districts."
"The Fannie/Freddie GSE's would have probably been fairly beneficent entities if they had been allowed to exercise sane risk management instead of becoming political footballs used to push the "ownership society" ideal on J6P and creating moral hazard through implicit guarantees on the bad financial decisions that were forced on those those entities. "
That is part of the problem - the combination of political interference and management incentives to maximize their payouts was fatal.
One or the other is bad enough - both combined and you get multi-billion dollar losses.
"Both are perceived to be more elusive now than a generation ago, when families bought a house they could afford and sent their children to the school down the street without a second thought."
impossible to address that one without looking at the relationship between immigration in the past few decades and public schools
CR, isn't the actual unemployment figure comparison even worse? According to John Williams (yes, he's sometimes totally off the mark, but still..) the unemployment reporting was significantly changed in 2004.
Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.
Any ideas on whether you're comparing apples and oranges when looking at the 1999 vs. 2009 numbers?
"Now, she says, middle-class families are stretching themselves to the breaking point to afford homes in safe neighborhoods and "better" school districts.""
Good points. The breakdown of society has compromised both safety and schools, while the MSM has amplified awareness with sensational reporting.
ghostfaceinvestah (profile) wrote on Thu, 7/2/2009 - 4:03 pm
That is part of the problem - the combination of political interference and management incentives to maximize their payouts was fatal.
One or the other is bad enough - both combined and you get multi-billion dollar losses.
The perfect formula for catastrophe. This is why I'm not exactly optimistic or reassured at the prospect of GSE healthcare, which is a social need even more vital (and politically visceral) than shelter.
@mmckinl - we're thinking the same sorts of thoughts. Warren's book was on my mind when I went into Devil's Advocate mode. I'm not convinced of everything she wrote, but it opened my eyes to the fact that mainstream America, in pursuing what they'd been sold on as the "best" way to approach life, may have been making individual choices that collectively were self-defeating. The contrarian in me thinks that about the time that "everyone" starts to buy into something, it's probably time to get out.
Here's another thought exercise about "wealth" while we're waiting to get pigged:
Joe#1 earns $500,000 over 10 years, spends half of it on food and clothing, lives with his parents, and spends the other half on cars, electronics, and bling. At the end of the 10 years, his cars are in need of repair and worth less than 1/4 of what he paid for them. The other stuff is worth even less and the food is gone. His net worth is less than $50,000. As was to be expected: Joe #1 is a consumer.
Joe#2 earns $500,000 over 10 years, spends half of it on food and clothing, lives with his parents, and puts the other half in the high-risk segment of the stock market during the bubble. At the end of the 10 years, his portfolio is worth less than 1/2 of what he paid for it. His net worth is less than $125,000.
Joe#3 earns $500,000 over 10 years, spends half of it on food and clothing, but somehow finds a way to close his mind to the ads and marketing hype, sees through the Wall Street financial intermediation BS, and not only puts the other half of his income into the stock market but pulls it back out again near the peak. He alone has a net worth that is larger than $250,000.
Where's the wealth? Here it seems that the wisdom to know when not to do what everyone else is doing, may be all that one needs. So just because everyone else is working long hours and double jobs to go into debt to buy the huge home that causes them all sorts of maintenance expenses and headaches... maybe that's not the road to wealth...
mmckinl: the arms race i'm referring to is the astronomical spending on facilities and faculty by the top colleges, throwing price structures way out of whack. And Harvard Law School is the poster child of that behavior. They've been throwing obscene amounts of money to poach professors from other institutions. trust me, a lot of other schools are amused at the difficulties facing Harvard FAS and HLS.
This is the nastiest recession in living memory. It amuses me that some pundits think we're going to start recovering already and that the stock market has bottomed.
In 5 years, looking back, the bottom callers are going to look as ridiculous as some $900 dot com stock.
I just wish things would speed up and crash faster. The market's struggle against reality is getting tedious.
"I just wish things would speed up and crash faster."
there's absolutely no reason our RE and equity bear should be any shorter than Japan. we're following their playbook down to the letter. they're on year 17 or so, and still falling.
I suspect the big universities are entrained in the entrails of the long credit bubble, just like the rest of us. If the endowment is growing like mad, then the expectation of large endowment payouts leads Trustees to envision a larger, grander university with higher fixed costs.
If students can get large loans, more students apply for a fixed number of slots and the University sees that it can raise tuition with impunity. (And for those who can no longer afford the higher tuition, those endowment payouts can provide more student aid.) In the limit where the bubble runs off to infinity, tuition can be $1,000,000/year and yet free to all those who can't afford it!
And then there's the Federal research bubble... and the bogus meme that a "high-paying" "white collar" job (say, pushing FIRE sector paperwork around) is "better" than a real job producing tangible goods...
"there's absolutely no reason our RE and equity bear should be any shorter than Japan. we're following their playbook down to the letter. they're on year 17 or so, and still falling. "
Americans do not have the patience of the Japanese. Our heads will explode if this drags out for 17+ years...
That was some nice selling into the close. Nordstrom (down over 7%) and Whole Foods (down over 6%) took it on the chin today. Even Apple (down 2%) and Amazon (down almost 3%) investors saw some reason to sell today.
I have mixed emotions, as I have been waiting to buy more puts on all of these!<i/>
the 1/2 yearly sale was not all it used to be for nordstoms....its ripe...better at 23
@mmckinl "The best predictor of wealth is family wealth ..."
And yet it's also true that a family tends to go from rags to riches to rags in 3 generations, no?
Now, why might it be that the best predictor of wealth is family wealth?
(a) Wealthy families find ways to leave the actual wealth to their kids, or
(b) Wealthy parents know more about how to become wealthy than poor parents do, and they find ways to help their kids acquire the habits and skills that can make them wealthy in turn?
Wisdom Speaker (homepage, profile) wrote on Thu, 7/2/2009 - 4:22 pm
And then there's the Federal research bubble... and the bogus meme that a "high-paying" "white collar" job (say, pushing FIRE sector paperwork around) is "better" than a real job producing tangible goods...
That and our fascination with and society greatly oriented around celebrity/notoriety in any and all forms and obsession with the emulation of their lifestyles and details of their personal habits/idiosyncracies. If anything we need more "Working-class heroes" now than ever before.
Well those diplomas did mean something when the most recent recent grads started school, much less when most of their parents started planning for it. And it seems student's desires to get better and more credentialed is still increasing. Applications up, acceptances of offer up, etc. I wonder how long it will be before it sets in that that economy won't bounce back enough to justify the debt.
"Our heads will explode if this drags out for 17+ years..."
demographics make it more likely than not. a nation of, by and for sixty year olds has a certain kind of patience (which is really more a byproduct of exhaustion and resignation).
"(b) Wealthy parents know more about how to become wealthy than poor parents do, and they find ways to help their kids acquire the habits and skills that can make them wealthy in turn?"
"It;s all about the Alumni and social networking .... "
tell that to the thousands of incoming 'big law' JDs being deferred for a year, with a strong chance of not getting an offer when the year is up - many shiny degrees from chicago, nyu, columbia, etc, many with matching undergrad sheepskins, don't mean shit.
If kids are trained to be pathological spenders, that works against any possibility of their becoming wealthy. This is what Larry Roberts calls the pathology of spenders.
"It;s all about the Alumni and social networking .... "
tell that to the thousands of incoming 'big law' JDs being deferred for a year, with a strong chance of not getting an offer when the year is up - many shiny degrees from chicago, nyu, columbia, etc, many with matching undergrad sheepskins, don't mean shit.
~~~~~
They will still do much better than those without degrees ....
Still pays to have a wealthy family that can hire you right into the business ...
Judge was chatting about healthcare to previous atty. They mentioned
the healthlobbiests, and the judge sez, " yeah, our federal government is
bought and paid for". He is a nice guy and squeaky clean.
"Investors should favor bonds and dividend-paying equities as the U.S. heads into a “new normal” of higher savings and lower consumption, said Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co. "
what is the point of owning a stock that doesn't pay out earnings? so management can rob the company blind to pad their lifestyle?
The Japanese consumer overseas was a weird beast in the late 1980's-1990's...
Saving face and buying an impressive enough gift for say 30 people, meant one had to buy 30 of the same expensive item, like say a Louis Vuitton wallet, or a Hermes scarf.
mmckinl
Actually having done some studies on the generational transfer of wealth I can tell you that the old saw of 3 up followed by 3 down is true.
Three generations from rags to riches and back agin.
There are of course exceptions, but they are relatively few and far between.
A very illustrative one is the history of the Frick and Clay fortunes. Many of the 3rd generation decendents are essentially upper middle class or worse.
Inherited wealth and concentration are only possible in families with few children, and successful management of the wealth.
Look at the Kennedy family. Old Joe died, and the financial savvy that made fantastic wealth went mostly right out the door. The great grandchildren are mostly trading on a famous political name- they certainly don't have the wealth of Joseph Kennedy- rumrunner and stock manipulator.
mmckinl
Actually having done some studies on the generational transfer of wealth I can tell you that the old saw of 3 up followed by 3 down is true.
Three generations from rags to riches and back agin.
There are of course exceptions, but they are relatively few and far between.
A very illustrative one is the history of the Frick and Clay fortunes. Many of the 3rd generation decendents are essentially upper middle class or worse.
Inherited wealth and concentration are only possible in families with few children, and successful management of the wealth.
Look at the Kennedy family. Old Joe died, and the financial savvy that made fantastic wealth went mostly right out the door. The great grandchildren are mostly trading on a famous political name- they certainly don't have the wealth of Joseph Kennedy- rumrunner and stock manipulator.
Rock River Bank, Oregon, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with The Harvard State Bank, Harvard, Illinois, to assume all of the deposits of Rock River Bank.
indeed. and too bad for anyone who was thinking that tax remittances from the kids leaving school now would be able to support a tiny fraction of the entitlement pyramid scheduled to arrive on their backs in a decade or so... doubly so for anyone who needs to rely on programs funded by said remittances
@mmckinl: "The wealthy mostly keep their wealth it is just spread over many generations ..."
Divide by 2 or 4 enough times (and toss in a couple of divorces), and it's gone unless the younger generation can make it grow, in which case they've (partly) earned it. Of the descendants of the British or American aristocracies from 100 years ago, how many are still as wealthy as their forebears (after inflation)? There are certain families that pull it off, but most do not. (Thanks to AllenM for chiming in.)
Also, the "wealth begets more wealth" is clearly a credit-bubble phenomenon. I think it will be less true in the "Naught for the Naughts" -- in a world where the long-term investments are all depreciating relative to the minimum wage, or even the median wage, it should become easier for those who keep jobs, and choose to save rather than consume, to accumulate assets again.
Sure the S&P is down.
However, if you had embarked on a periodic investing plan using dollar cost averaging, you may have obscured your losses enough that you wouldn't cut your wrists.
"Those with debt are not from the 'right' families ... "
even the "right" families often bit off more than could be chewed in the recent RE/leverage bonanza...
no matter your income level and net worth, there was a house out there somewhere 2004-2007 that was waiting to suck it all out...
or, in context:
"So, Dad, I took your advice, and even though we could have covered the tuition, I stuck that money in the market - dumb not to make that 15% in the meantime, right? Just like you taught me. So, sorry about the split with Mom. Is she keeping the hamptons place?"
"However, if you had embarked on a periodic investing plan using dollar cost averaging, you may have obscured your losses enough that you wouldn't cut your wrists."
LOL. Actually, someone had a report on that a while ago. showed the return on dollar cost average equities vs bonds over the past 10 years.
Hollywood, just wait for the inflation to come.
Further- the only part of the retirement system that is seriously deficient is the Medicare- which will be rolled up into universal healthcare to make all of the populace pay for the rock bottom health care system.
With the 1987 fix, the Social Security System is quite solvent- the recession will force many folks to take early retirement, yielding much lower social security payments over their lifetime, with many still working and essentially just getting a partial tax rebate. Oh yeah, inflation adjustment? Bwaahhahhaaa!!
Because two people were willing to work, they hired more service helpers (daycare, kids' sports) and drove down unemployment. All of this was pro-cyclical.
If the second person was no longer willing to work, the service helper would be able to take the second worker's former job.
The pro-cyclical part comes in where the second worker's income was a luxury and the overleveraging turned the second worker's income into a necessity.
The overleveraging began in the 70's. It'll take just as long to unwind.
lawerliz,
Agree. Also when the wealthy dad (or mom) dies, frequently the legal battle over the division of the estate is very destructive to the family.
The estate tax could be managed around- the biggest problem is quite frankly lifestyle.
The rich use the wealth to smooth consumption, but if the level of consumption is too high- goodbye to wealth.
Making the problem even more complex is the changing optimal investment mix. When large country houses went out of style due to the costs of upkeep (viz higher taxation due to WWI), the value of the properties fell to what they could actually produce. Well, with antique agricultural habits and low imported ag commodity prices, they fell to nearly nothing.
Now they are back in style, they are expensive. But look how many stately houses ended up in the National Trusts of England and Scotland due to inheritance taxes (i.e. the money pit costs more to maintain than the cashflow of the "wealthy" hanging on by their fingernails)!
Don't bother being envious of the rich, most of them are not really that rich, nor will their children be that rich ultimately.
I read Vanity Fair, and I think, what a waste some of these kids are, but their children will most likely end up being productive out of necesity.
CR,
You can't just throw up that first graph with coloring it pink!
How many banks go under tonight? Inquiring minds want to know...
Rob, yeah ... I need to add the Mortgage Pig!
best wishes
Edit: Naught for the naughty naughts. Plenty of malfeasance and misfeasance to go around...
Yeah, the average investor lost money IF they held onto their money and didn't sell.
Like my mother.
sigh
So, I guess that VH1 special, "We Heart the 00s" is out of the question?
That Greenspan guy worked wonders.
could you use the Bloomberg futures or does it capture all of today's movement?
Stock Futures on Bloomberg
I prefer "aughts"
they aught to have been so much better - 2000: relative fiscal stability, future entitlements not obscene, general peace in the world, the greenback truly mighty, a tech bubble which encouraged genuine technological advancement, if not sustainable equity markets...
homedad43
our Condolences to your mother
What's up with the market. Glitches? Shouldn't the smoothing mechanisms fix this over the course of the day?
CR,
I already did: here
Better to have monkey's flying out than pigs, so be grateful.
CR, you just need to focus in on the wealthiest 1% of the country, and then things look pretty damned good for the naughts!!!
CR, I love the pig graph!
Is the stock market zero sum? Seems to me a lot of people contributed a lot of money over the last ten years in their 401ks etc. And they all have less than what the contributed...
Seems to me a few of people made a lot of money.... It just wasnt me....
// dup.....
Fourth of July sentiment: Long Live the Oligarchs and Royalty
Love it!
Back to short- I guess one could say that oil is working out just fine.
I am now within $1500 on my last retirement account to get back to where I was before the crash- now 90% in cash too.
Watch the slide and buy some cheap oil stocks again!!!
Lather, rinse, repeat!
If only one could trade houses so easily.
I had a thought on the bk thread which got pigged- how many more bk's are coming with the layoffs?
Reading the income test in the new bk code leads one to the conclusion that one should wait 6 months or more beyond the layoff- preferably after you get your last tax refund and cash the check.
Chapter 7 surge- well I guess it really means that instead of going slowly broke and trying to keep some assets, people will now blowout totally and start over with nothing.
The system is now set to reward that total destruction and discourage the pain of a straightened 13 filing.
Too bad BK judges can't cram down residential debt.
Someday this war's gonna end...
As of 4:09: NYSE extends trading to 4.15 p.m. Eastern by Nick Godt
NEW YORK (MarketWatch) -- The New York Stock Exchange said it extended trading until 4.15 p.m. Eastern on Thursday due to system irregularities. The NYSE, which normally ends trading at 4 p.m. Eastern, said it would provide another 15 minutes "in order to settle customer transactions that were affected by systemic irregularities," according to Eric Ryan, a spokesman for the exchange. No further information was immediately available on the nature of the irregularities or on which stocks might have been affected, he said.
@Nades: No, it can be positive-sum or negative-sum, depending on whether the bubble is inflating or deflating...
I see on Marketwatch.com that they have extended trading due to some glitches (or due to a desire to close over 900???)...
Maybe I ought not tell you this, but I thought it was aughts not naughts.
Fox in Sox. Toy boat, toy boat, toy boat...
Wisdom Speaker beat me to it (and with a snippet too!)
Hollywood Hack;
Take off the rosy-colored rearviews please.
Remember the dot.bomb crash? Y2K? People going BK from the phantom gains on their options? Pets.com?
The welfare state was well entrenched and set to grow, and the dollar was doomed - 2000 was a great year to buy glod.
Wisdom Speaker - thanks. You mean the 'value' of the total market right? If it were liquidated on monday then it would be zero sum? (Serious question)
Double or triple in size does not mean double the amount of employees
Among those meeting with Obama were chief executive officers John Berger of Standard Renewable Energy Group LLC, Stephanie Burns of Dow Corning Corp., and Amit Chatterjee of Hara Software, as well as Michael Splinter, president and chief executive of Applied Materials Inc., and FPL Group Inc. President and Chief Operating Officer Jim Robo, the White House said.
“The CEOs here told me that they’re looking to hire new people, in some cases to double or even triple in size over the next few years,” Obama said. “They are making money, and they are helping their customers save money on the energy front.”
(Actually thats a dumb question cause if you sold it then someone would be buying it.... nevermind...
)
nades. you assume that the number of shares are constant. companies can "naked print" shares, so even if you don't sell, you can lose.
Well that is the first installment that we have to pay for all the living beyond our means we have been doing for decades.
I figure at some point (either via declining markets or through stagnant markets for a long time or some combination of the two) we will be looking at a 20 or even a 30 year period with no net movement in equities before we bottom out for good. The next 15 years are going to be a grind IMO.
And that is the "good" scenario that does not assume a total financial and political collapse.
Aughts were fraught with loss
Charts were taught by Ross
Ross taught charts in the aughts
A most astute post from Bonddad Blog:
The Bonddad Blog: Just "Shoot" Me
the new new is coming.
And man, is it boring.
Someday this war's gonna end...
Basel Too
+1 Lots of ways to lose money in the market. Only one way to win really. Stock options.
CR
I'd love to see a graph of Historical Price to Revenues.
BREAKING
John Warner Bank of Clinton, Ill. fails
@Nades: All shares are priced at whatever any share will sell for right now. The total value of the stock market is usually quoted as that price times the number of shares, summed over all the stocks traded etc..
But if someone (say, Angelo Mozilo) wanted to sell ALL the shares of a company (say, Countrywide), in a hurry, the price would drop as each block was sold (unless someone else really wanted to buy the whole thing that day). The total value recovered by the seller would be much less than the market cap at the time prior to the first sale. Thus, negative sum.
On the other hand, if someone (say, Bill Gates) wanted to buy ALL the shares of a company (say, a tasty little dot com), in a hurry, the price would soar as each block was bought (and everyone else saw the price rising and wanted to hold or buy too). The final price would be much higher than the initial price. Positive sum.
More realistically, if a large and foolish hedge fund holding 3% of a stock were to liquidate their holdings after getting a margin call in October 2008, the rapid surge in volume would press the price down, and ALL the prior holders of the stock would see (on paper) significant losses. Negative sum.
The wise hedge fund that bought up a lot of the shares would get to start from a much lower basis and then sell to retail investors after Goldman pumped up the market... Positive sum for all concerned, until the bubble burst...
The extra 15 seems to have been used for purposes of entering even more sales; I do not know yet know volume.
But there was certainly no pumping going on, just more running to the hills. Went from down 2.94% to over 3% down in a real hurry in the overtime. What's up with that?
Someone wanted clear over the weekend and didn't make it out in time, perhaps?
Did volume ramp heavily after 3 on the sell side, making it difficult for the exchange to keep up?
Did someone trip over a cord on the floor somewhere?
Inquiring minds want to know!
john warner bank? wtf
"Remember the dot.bomb crash?"
of course i do. a good friend started one of the first webpage boutiques at 2nd and bryant circa '95 (sold out too early).
the difference is that we ended up with genuine advancement despite all of that hype. the average joe can buy a dell for $400 and use 'google earth'. that's amazing, and should be compared to 1995.
the subsequent real estate and commodity bubble did nothing in the way of value creation or technological advancement. nothing.
you are right in that the welfare state was set to grow - but as of 2000, we had a chance to forestall the entitlement tsunami. instead, the donut bill, a few wars of choice, etc.
and late '01/early'02 was much better in terms of gold, of course. i did buy some around then, actually. berkshire was the smart buy at the .com peak.
"Inquiring minds want to know! "
some new-fangled ETFs have already been trading until 4:15 for a while. this may be a new end-of-week thing just to make settling easier with those.
Oddly enough, not a peep on Yahoo Finance about the market "overtime period".
john warner bank? wtf
liz pulled the funding
The pig is warming up for BFT...
John Warner Bank of Illinois is up first in BFT
The John Warner Bank, Clinton, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with State Bank of Lincoln, Lincoln, Illinois, to assume all of the deposits of The John Warner Bank.
The three offices of The John Warner Bank will reopen on Friday as branches of State Bank of Lincoln.
As of April 30, 2009, The John Warner Bank had total assets of $70 million and total deposits of approximately $64 million. State Bank of Lincoln paid a premium of 4.1 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, State Bank of Lincoln agreed to purchase approximately $63 million of assets. The FDIC will retain the remaining assets for later disposition.
I smell a better future. And it smells like bacon.
"after you get your last tax refund and cash the check"
You have no idea how true that is.
The only way forward is to reduce the full time workweek to 30 hours or less ...
Clearly, the naughts will be remembered as the decade dominated by terrorism.
Domestic(sociopathic "bankers", "businessmen","borrowers"), Foreign(9/11), and Porcine(needs no explanation here).
The teens are bound to be remembered as the supernova decade.
the subsequent real estate and commodity bubble did nothing in the way of value creation or technological advancement. nothing.
Houses are wealth. The fed just has to let the prices fall to where people can afford the houses. That would kill the banks of course so we have this epic battle taking place.
Strong banks and homeless or new banks and homeowners.
B2 and WS - thanks... and happy BFT
Speaking of bacon, maybe it's t ime for a BFT BLT
+1 to mmckinl, but I'd say it's a tossup between 32 hours with a 4-day 8-hour workweek, and 30 hours with a 5-day 6-hour workweek... Lowering the retirement age would've been an option 9 years ago but Uncle Sam no longer has the cash to support the increased draw on Social inSecurity
Hollywood Hack
+!
The RE was non-productive capital. I mean these McMansions are not even energy efficient. Humnity has not advanced any due to the trillions of underwaster mortagatges. Now with the Vulture investors we are throwing more money after bad
We would have been better off if we built a billion GEO metro's.
Thirsty Thursday.....Sheila6Pack
Workers efficiency has doubled over the last 40 years yet
wages are lower in real terms and the two income family
is now a necessity in the vast majority of cases ...
albrt (profile) wrote on Thu, 7/2/2009 - 1:31 pm
"after you get your last tax refund and cash the check"
You have no idea how true that is.
I'm in California. What is this check thing and how do you cash it?
"Houses are wealth."
really? a half-completed 4000sqft mcmansion somewhere lonely off the 15 in a ghost town without water rights is 'wealth'?
Houses are wealth. The fed just has to let the prices fall to where people can afford the houses.
Perhaps we have too many houses? Even if everyone could afford one? Or perhaps the wrong size houses?
does everyone have their trigger finger ready? Nemo we're all gunning for you... (as always...)
Who will be the winner?
Last one to post before the pig.
WILBUR !!!!!!
That was some nice selling into the close. Nordstrom (down over 7%) and Whole Foods (down over 6%) took it on the chin today. Even Apple (down 2%) and Amazon (down almost 3%) investors saw some reason to sell today.
I have mixed emotions, as I have been waiting to buy more puts on all of these!
Omen?
This failed bank in Illinois -- it's not even 5 pm there yet? What's up?
We have our first failure.
FDIC: Failed Bank List
@monetize, time to refresh - you're 5 minutes late to this party!
My monkey is already drunk.
CR must be at In-and-Out....
I think CR got tired of posting so many times last Friday (5 failures), and is waiting to do 'em all at once this week!
Rob - I recently learned that a surprisingly large percentage of the economic underclass are aware that you should wait until after you cash your tax refund check to declare bankruptcy. Word gets around.
Damn banks going down already???
FDIC: Failed Bank Information - Bank Closing Information for The John Warner Bank, Clinton, IL
While we're waiting...
PBGC Assumes Pension Plans of Interlake Material Handling Inc. (July 02, 2009)
PBGC Protects Pensions at Sencorp (July 01, 2009)
PBGC Assumes Pension Plans at Precision Custom Components LLC (June 30, 2009)
CR must be at In-and-Out....
I thought he was vegan?
I just ran across this on Forbes.com:
Bull Market Confirmed
Jim Stack, InvesTech Research, 07.01.09, 06:00 PM EDT
If this guy doesn't feel like a jerk today -- he has no shame!
Basel
What's up with all the dead canary's???
It is still a bull market in taking individual investors' money. Or taxpayers' money. Same deal, different intermediaries.
looks like we're already at the transition from the FDIC being the focus to the PBGC - hoocoodanode...
Maybe this wont be the recession of bank failures (like the depression) but rather of pension failures.... Compound that with Bonddad's Blog posting and were in some serious green shit....
We should get CR a catheter and a chair pan.
A few weeks ago, I got a completely incomprehensible letter from the CA Franchise Tax Board that concluded by saying that I owed another $25 in taxes for 2008. It far easier to write the $25 check than re-read the letter, let alone figure out if they were right or wrong.
Got me thinking if this might be a partial solution to the budget mess- send out false, but incomprehensible demands for more money, make sure there is at least a 30 minute hold time on anyone’s phone calls for answers, and just hire a bunch of idiots who will say "all I can tell you, sir, is that our records show you owe the money,” and then threaten everything short of arrest if its not paid right away.
Its how MCI stayed in business for most of the 90's, so it should work for CA as well.
@mmckinl "Workers efficiency has doubled over the last 40 years yet
wages are lower in real terms and the two income family
is now a necessity in the vast majority of cases ..."
Or perhaps, with devil's advocate hat on: Because two people in each family were willing to work, they had more income to compete for homes in good school districts, and drove up home prices. Because two people were willing to work, they bought more expensive, more feature-laden cars. Because two people were willing to work, they put more wealth into the stock market and drove the bubble. Because two people were willing to work, they were more willing to take on credit (no need to save as much when you can always fall back on the one income if you need to), and bought into the credit bubble. Because two people were willing to work, they hired more service helpers (daycare, kids' sports) and drove down unemployment. All of this was pro-cyclical.
If those people would stop trying to chase their neighbors into bankruptcy, and just live sane lives, they might not need the second job because the price of houses would return to production cost, and more people would have time to produce intangible value -- good families, enjoyable recreation. A smile from a child will not change the GDP, but it will help you live a happier and longer life.
nades said, "we're in some serious green shit"
LOL! Green shits are showing up everywhere!
Wisdom Speaker
People are more indebted than anytime in history ...
Where's the wealth ?
we consume more than we produce.
these numbers should be no surprise.
"Its how MCI stayed in business for most of the 90's, so it should work for CA as well. "
Speaking of telephone companies and rip-offs, I just paid some enormous phone bills last weekend, and today we're building an Asterisk server. We're going VOIP.
Apologies to the non geeks - translation is we're preparing to route around the public telcos for long distance.
Wisdom Speaker (homepage, profile) wrote on Thu, 7/2/2009 - 3:44 pm
All of this was pro-cyclical.
If those people would stop trying to chase their neighbors into bankruptcy, and just live sane lives, they might not need the second job because the price of houses would return to production cost, and more people would have time to produce intangible value -- good families, enjoyable recreation. A smile from a child will not change the GDP, but it will help you live a happier and longer life.
Yes. Social arms-races are good for producers (REALLY good), but for consumers... not so much. Economic forces tend to mold US into the most efficient economic units for the market's purpose, not our own. And it seems to have worked really, really well for the market and its servants. Being the "consumer" is far from a psychologically ideal position.
Employment Dec 1999: 130.53 million
Employment Jun 2009: 131.69 million
It's been almost 40 years since Nixon took us off the gold standard, announced "We're all Keynesians now", and began intervening in the markets.
40 years of monetarism and Nixon/Keynesian economics.
The results speak for themselves.
@mmckinl: "People are more indebted than anytime in history ... Where's the wealth ?"
I didn't say they had accumulated any! Because the two people were consumers, and not wealth accumulators, they spent what they earned and then lost the rest when their bubbles popped.
But imagine, if fewer people wanted to work, real wages would have to rise, because the demand for labor would drop slower than the supply.
"It's been almost 40 years since Nixon took us off the gold standard, announced "We're all Keynesians now", and began intervening in the markets.
40 years of monetarism and Nixon/Keynesian economics.
The results speak for themselves. "
AMEN to that!
Nixon also privatized (or semi-privatized?) Fannie Mae.
and First State Bank of Winchester makes 2!
Who's got CR's pager number? He must have thought he had time to grab a sandwich before 5:00 eastern.
we will not monetize (homepage, profile) wrote on Thu, 7/2/2009 - 1:53 pm
and First State Bank of Winchester makes 2!
I don't konw. If a bank falls and the Pig™ isn't there to hear it does it make a squeal?
2 banks already john warner and the first state bank of winchester, both in il
guess the peeps over at the Illinois Department of Financial and Professional Regulation wanted to enjoy their long weekend a couple hours early.
Beardstown Ladies Bank makes three
easy Sheila, we got young impresionable minds here.....
DRINK
-hey, somebody wake up Soylent Green is People
"Jeff Madrick said of Warren's book:
“
The upshot is that two-income families often have even less income left over today than did an equivalent single-income family 30 years ago, even when they make almost twice as much. And they go deeper in debt. The authors find that it is not the free-spending young or the incapacitated elderly who are declaring bankruptcy so much as families with children. ... And Ms. Warren and Ms. Tyagi draw too fine a point here and there. There is surely some mere status-seeking in sending a child to the right day care institution and living in the right neighborhood. ... But their main thesis is undeniable. Typical families often cannot afford the high-quality education, health care and neighborhoods required to be middle class today. More clearly than anyone else, I think, Ms. Warren and Ms. Tyagi have shown how little attention the nation and our government have paid to the way Americans really live."
Does a Mortgage Pig shit green on the corner of Wall and Broad?
First National Bank of Beardstown fails
guess the investment club didn't do good.
Corus is HQ'd in Illinois, isn't it?
"If a bank falls and the Pig™ isn't there to hear it does it make a squeal? "
It's the ex-stockholders doing the squealing.
And I think I hear banjos as well.
I see the FDIC is only closing banks if they can afford to cover the losses -- $16M (with an M) is the grand total estimated cost to the FDIC (for those two banks in Illinois today).
TRIFECTA---soon to followed up by
"Sweet Johnny its a fourbagger !!"
sorry, looks like the Beardstown Ladies were winners, Bloomberg had the wrong headline, they had them failing.
maybe CR is waiting for the haikus....
Everyone give CR a break ... nature calls every once in awhile, you know.
ghostfaceinvestah (profile) wrote on Thu, 7/2/2009 - 3:52 pm
Nixon also privatized (or semi-privatized?) Fannie Mae.
The Fannie/Freddie GSE's would have probably been fairly beneficent entities if they had been allowed to exercise sane risk management instead of becoming political footballs used to push the "ownership society" ideal on J6P and creating moral hazard through implicit guarantees on the bad financial decisions that were forced on those those entities.
Our very own lost decade.
More from Elizabeth Warren ...
"How did being middle class get so expensive?
The answers run contrary to popular wisdom as well as to Warren's own assumptions. Today's family is spending 21 percent less on clothing, 22 percent less on food - including eating out - and 44 percent less on appliances than they did a generation ago. Warren notes that a combination of lowered production costs and changing lifestyles are at work. Discount stores, meals that include less red meat and are more likely to have been purchased in bulk from wholesalers like Costco, and casual dressing at all ages have spelled savings for families.
Nor are warehouse-sized McMansions to blame; this type of housing is generally not going to middle-class families. Although housing costs have skyrocketed nationwide in the past generation, the size of average homes has grown far more modestly, by less than one room between 1975 and the late 1990s, Warren found.
Instead, Warren points the finger at two concepts dear to the hearts of almost all Americans: safety and education. Both are perceived to be more elusive now than a generation ago, when families bought a house they could afford and sent their children to the school down the street without a second thought. Now, she says, middle-class families are stretching themselves to the breaking point to afford homes in safe neighborhoods and "better" school districts."
Yes, Comrade, you are right. Corus is headquartered in Illinois. Very interesting...
CR might as well wait.
Funny, my Bloomberg says "First National Bank of Beardstown, Illinois Closed", "FDIC Appointed Receiver of First National Bank of Beardstown"
But clearly on the FDIC site, the Beardstown ladies were winners.
No doubt some Beardstown folks had a heart attack for a second - "wait, you let us take over a bank, and then are shutting us down".
How about the Dead Red Zeds? Seems appropriate, given Lenin's old handle (Dead Red Fred) and our return to the socialist state.
Death comes in threes, but for some reason I feel Corus may slip the noose.
"The Fannie/Freddie GSE's would have probably been fairly beneficent entities if they had been allowed to exercise sane risk management instead of becoming political footballs used to push the "ownership society" ideal on J6P and creating moral hazard through implicit guarantees on the bad financial decisions that were forced on those those entities. "
That is part of the problem - the combination of political interference and management incentives to maximize their payouts was fatal.
One or the other is bad enough - both combined and you get multi-billion dollar losses.
E. Warren kind of ignores the fact that her employer's endowment fund ignited the higher education arms race.
"Both are perceived to be more elusive now than a generation ago, when families bought a house they could afford and sent their children to the school down the street without a second thought."
impossible to address that one without looking at the relationship between immigration in the past few decades and public schools
CR, isn't the actual unemployment figure comparison even worse? According to John Williams (yes, he's sometimes totally off the mark, but still..) the unemployment reporting was significantly changed in 2004.
Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.
Any ideas on whether you're comparing apples and oranges when looking at the 1999 vs. 2009 numbers?
....crickets chirping.....chirping...
I just think it's great to see more people reading Warren's work. Now if only she would knee Geither and Summers for me
"Now, she says, middle-class families are stretching themselves to the breaking point to afford homes in safe neighborhoods and "better" school districts.""
Good points. The breakdown of society has compromised both safety and schools, while the MSM has amplified awareness with sensational reporting.
ghostfaceinvestah (profile) wrote on Thu, 7/2/2009 - 4:03 pm
That is part of the problem - the combination of political interference and management incentives to maximize their payouts was fatal.
One or the other is bad enough - both combined and you get multi-billion dollar losses.
The perfect formula for catastrophe. This is why I'm not exactly optimistic or reassured at the prospect of GSE healthcare, which is a social need even more vital (and politically visceral) than shelter.
"E. Warren kind of ignores the fact that her employer's endowment fund ignited the higher education arms race."
~~~~~
Doubtful ... The higher education arms race was because to get the right job you had to go to the right school ...
and it stiil applies ....
Well the school issue may be fading after the ruling on special needs children in June.
When I say this year out loud in person, I like to pronounce it:
"Twenty-Nine"
Not in every case.....I have two nephews who just graduated one from USC, one from LMU..they can't find jobs............
mmckinl (profile) wrote on Thu, 7/2/2009 - 4:10 pm
Doubtful ... The higher education arms race was because to get the right job you had to go to the right school ...
and it stiil applies ....
In feudal society, one's position in the social hierarchy was almost entirely determined by the accident of birth. We've come a long way, baby!
@mmckinl - we're thinking the same sorts of thoughts. Warren's book was on my mind when I went into Devil's Advocate mode. I'm not convinced of everything she wrote, but it opened my eyes to the fact that mainstream America, in pursuing what they'd been sold on as the "best" way to approach life, may have been making individual choices that collectively were self-defeating. The contrarian in me thinks that about the time that "everyone" starts to buy into something, it's probably time to get out.
Here's another thought exercise about "wealth" while we're waiting to get pigged:
Joe#1 earns $500,000 over 10 years, spends half of it on food and clothing, lives with his parents, and spends the other half on cars, electronics, and bling. At the end of the 10 years, his cars are in need of repair and worth less than 1/4 of what he paid for them. The other stuff is worth even less and the food is gone. His net worth is less than $50,000. As was to be expected: Joe #1 is a consumer.
Joe#2 earns $500,000 over 10 years, spends half of it on food and clothing, lives with his parents, and puts the other half in the high-risk segment of the stock market during the bubble. At the end of the 10 years, his portfolio is worth less than 1/2 of what he paid for it. His net worth is less than $125,000.
Joe#3 earns $500,000 over 10 years, spends half of it on food and clothing, but somehow finds a way to close his mind to the ads and marketing hype, sees through the Wall Street financial intermediation BS, and not only puts the other half of his income into the stock market but pulls it back out again near the peak. He alone has a net worth that is larger than $250,000.
Where's the wealth? Here it seems that the wisdom to know when not to do what everyone else is doing, may be all that one needs. So just because everyone else is working long hours and double jobs to go into debt to buy the huge home that causes them all sorts of maintenance expenses and headaches... maybe that's not the road to wealth...
Oh but they did graduate with a mountain of debt...........
is there a new contest to see who can be the first to get pigged - you know like reverse 'first'
Forgive me Girlbear, but as Bruin's fan, I have to snicker at the idea of an unemployed USCer
"Not in every case.....I have two nephews who just graduated one from USC, one from LMU..they can't find jobs............ "
~~~~~
The schools for the cream jobs are ...
The Ivy League schools, Duke , Stanford , Chicago ...
And there are many more students than there were 40 years ago for those same slots
mmckinl: the arms race i'm referring to is the astronomical spending on facilities and faculty by the top colleges, throwing price structures way out of whack. And Harvard Law School is the poster child of that behavior. They've been throwing obscene amounts of money to poach professors from other institutions. trust me, a lot of other schools are amused at the difficulties facing Harvard FAS and HLS.
LAST!!! oh wait...........
This is the nastiest recession in living memory. It amuses me that some pundits think we're going to start recovering already and that the stock market has bottomed.
In 5 years, looking back, the bottom callers are going to look as ridiculous as some $900 dot com stock.
I just wish things would speed up and crash faster. The market's struggle against reality is getting tedious.
"And there are many more students than there were 40 years ago for those same slots "
And many of those students probably should have gone to a trade school.
"In feudal society, one's position in the social hierarchy was almost entirely determined by the accident of birth. We've come a long way, baby!"
~~~~~
To a point .... actually Europe is better at social mobility ....
As far as education ... look at 'legacies"
Example numero uno : George Bush
Tomorrow is arriving at the same rate yesterday is leaving.
"I just wish things would speed up and crash faster."
there's absolutely no reason our RE and equity bear should be any shorter than Japan. we're following their playbook down to the letter. they're on year 17 or so, and still falling.
"The schools for the cream jobs are ..."
i don't know that an undergrad diploma alone means much anymore, even from harvard, yale, stanford etc.
mmckinl (profile) wrote on Thu, 7/2/2009 - 4:17 pm
"In feudal society, one's position in the social hierarchy was almost entirely determined by the accident of birth. We've come a long way, baby!"
~~~~~
To a point .... actually Europe is better at social mobility ....
As far as education ... look at 'legacies"
Example numero uno : George Bush
LOL, I guess I left off the snark tag, though my user name is probably pretty telling by itself.
BREAKING
First State Bank of Winchester fails; 47th of 2009
Wisdom Speaker
Much of a person's fate is personal choice ....
But the larger picture is the wealth of his family and the the era in which he is born ....
The best predictor of wealth is family wealth ...
We are now looking at a time where due to no fault of their own millions
of college graduates can't find work ... they will be handicapped going forward
if they do not find work in their field sooner rather than later ...
"there's absolutely no reason our RE and equity bear should be any shorter than Japan. "
I choose to comfort myself by imagining that our equity bear started in spring 2000.
But I do think that we are applying more stimulus than Japan did. Whether or not it makes a difference is still an open question.
I suspect the big universities are entrained in the entrails of the long credit bubble, just like the rest of us. If the endowment is growing like mad, then the expectation of large endowment payouts leads Trustees to envision a larger, grander university with higher fixed costs.
If students can get large loans, more students apply for a fixed number of slots and the University sees that it can raise tuition with impunity. (And for those who can no longer afford the higher tuition, those endowment payouts can provide more student aid.) In the limit where the bubble runs off to infinity, tuition can be $1,000,000/year and yet free to all those who can't afford it!
And then there's the Federal research bubble... and the bogus meme that a "high-paying" "white collar" job (say, pushing FIRE sector paperwork around) is "better" than a real job producing tangible goods...
"there's absolutely no reason our RE and equity bear should be any shorter than Japan. we're following their playbook down to the letter. they're on year 17 or so, and still falling. "
Americans do not have the patience of the Japanese. Our heads will explode if this drags out for 17+ years...
the bank failure wave is breaking....
everybody in outta the RIP....
May I interest you in our sizzling fajita bank failure thursday trio platter?
That was some nice selling into the close. Nordstrom (down over 7%) and Whole Foods (down over 6%) took it on the chin today. Even Apple (down 2%) and Amazon (down almost 3%) investors saw some reason to sell today.
I have mixed emotions, as I have been waiting to buy more puts on all of these!<i/>
the 1/2 yearly sale was not all it used to be for nordstoms....its ripe...better at 23
@mmckinl "The best predictor of wealth is family wealth ..."
And yet it's also true that a family tends to go from rags to riches to rags in 3 generations, no?
Now, why might it be that the best predictor of wealth is family wealth?
(a) Wealthy families find ways to leave the actual wealth to their kids, or
(b) Wealthy parents know more about how to become wealthy than poor parents do, and they find ways to help their kids acquire the habits and skills that can make them wealthy in turn?
Wisdom Speaker (homepage, profile) wrote on Thu, 7/2/2009 - 4:22 pm
And then there's the Federal research bubble... and the bogus meme that a "high-paying" "white collar" job (say, pushing FIRE sector paperwork around) is "better" than a real job producing tangible goods...
That and our fascination with and society greatly oriented around celebrity/notoriety in any and all forms and obsession with the emulation of their lifestyles and details of their personal habits/idiosyncracies. If anything we need more "Working-class heroes" now than ever before.
Celebrating our Independance this weekend..........
Look at how far we've come.........
Well those diplomas did mean something when the most recent recent grads started school, much less when most of their parents started planning for it. And it seems student's desires to get better and more credentialed is still increasing. Applications up, acceptances of offer up, etc. I wonder how long it will be before it sets in that that economy won't bounce back enough to justify the debt.
spx 5/4 907.24
spx 7/1 896.42
more Fed spoos buying needed.
Japan of the early 1990's was a place where most retail transactions were all done in cash, and saving face was as important as saving money.
Credit cards were a relatively new thing...
"Our heads will explode if this drags out for 17+ years..."
demographics make it more likely than not. a nation of, by and for sixty year olds has a certain kind of patience (which is really more a byproduct of exhaustion and resignation).
"(b) Wealthy parents know more about how to become wealthy than poor parents do, and they find ways to help their kids acquire the habits and skills that can make them wealthy in turn?"
Bingo.
"i don't know that an undergrad diploma alone means much anymore, even from harvard, yale, stanford etc."
~~~~~~
It;s all about the Alumni and social networking ....
bloomberg indicated div yield on SPY = 2.31%
hardly seems like a bargain.
the old boy network,in other words and it makes the world go around.
The New York times had a story about a law student who acquired 400k in school loans and the
bar wouldn't admit him, 'cause he had too many loans.
Not last!
"It;s all about the Alumni and social networking .... "
tell that to the thousands of incoming 'big law' JDs being deferred for a year, with a strong chance of not getting an offer when the year is up - many shiny degrees from chicago, nyu, columbia, etc, many with matching undergrad sheepskins, don't mean shit.
If this drags on, pissed gen x and y-ers will be dragging boomers out of nursing homes and golf resorts and going "rodney king" on them.
"And yet it's also true that a family tends to go from rags to riches to rags in 3 generations, no?"
~~~~~
The answer is NO ...
The wealthy mostly keep their wealth it is just spread over many generations ...
div yield on SPY = 2.31%
loss on SPY today = 2.73%
i.e. if you bought yesterday, you lost an entire year's worth of dividend today.
hardly seems like a bargain.
To expand on that, it works the other way too.
If kids are trained to be pathological spenders, that works against any possibility of their becoming wealthy. This is what Larry Roberts calls the pathology of spenders.
That Greenspan guy worked wonders.
Kinda like Obama - no substance but gee he makes you just feel so good!
Color on the PBGC actions this week:
Interlake Material Handling, Inc: Assets M$16.7, Liabilities M$34.5. 49% funded. Shortfall to PBGC M$17.7.
Sencorp: Assets M$79, Liabilities M$126, 62% funded. Shortfall to PBGC M$47.
Precision Custom Components LLC: Assets M$30, Liabilities M$62, 48% funded. Shortfall to PBGC M$32.
So far this week, the PBGC has the FDIC beat in terms of "socializing losses". But the night is still young!
Can't we all just get a loan?
HollywoodHack
"It;s all about the Alumni and social networking .... "
tell that to the thousands of incoming 'big law' JDs being deferred for a year, with a strong chance of not getting an offer when the year is up - many shiny degrees from chicago, nyu, columbia, etc, many with matching undergrad sheepskins, don't mean shit.
~~~~~
They will still do much better than those without degrees ....
Still pays to have a wealthy family that can hire you right into the business ...
The jobs pyramid is built too steep. Too many lawyers and not enough brick layers.
This too will change.
Went before a probate judge in Miami-Dade today.
Judge was chatting about healthcare to previous atty. They mentioned
the healthlobbiests, and the judge sez, " yeah, our federal government is
bought and paid for". He is a nice guy and squeaky clean.
not a big fan of Bill Gross, but I think he is on to something here
Gross Prefers Bonds, Dividend Stocks in ‘New Normal’ (Update1) - Bloomberg.com
"Investors should favor bonds and dividend-paying equities as the U.S. heads into a “new normal” of higher savings and lower consumption, said Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co. "
what is the point of owning a stock that doesn't pay out earnings? so management can rob the company blind to pad their lifestyle?
no thanks.
Love your pink pig Dawg. Do I gather the mkt went down today?
NPR dopes repeating that we are at the bottom now. I think we
won't be at any bottom until they give up saying we are at the bottom.
"They will still do much better than those without degrees ...."
some with 150K+ in debt might be reaching a different conclusion this winter
http://overlawyered.com/
The Japanese consumer overseas was a weird beast in the late 1980's-1990's...
Saving face and buying an impressive enough gift for say 30 people, meant one had to buy 30 of the same expensive item, like say a Louis Vuitton wallet, or a Hermes scarf.
Like sitting ducks for designer anything~
mmckinl
Actually having done some studies on the generational transfer of wealth I can tell you that the old saw of 3 up followed by 3 down is true.
Three generations from rags to riches and back agin.
There are of course exceptions, but they are relatively few and far between.
A very illustrative one is the history of the Frick and Clay fortunes. Many of the 3rd generation decendents are essentially upper middle class or worse.
Inherited wealth and concentration are only possible in families with few children, and successful management of the wealth.
Look at the Kennedy family. Old Joe died, and the financial savvy that made fantastic wealth went mostly right out the door. The great grandchildren are mostly trading on a famous political name- they certainly don't have the wealth of Joseph Kennedy- rumrunner and stock manipulator.
Someday this war's gonna end...
mmckinl
Actually having done some studies on the generational transfer of wealth I can tell you that the old saw of 3 up followed by 3 down is true.
Three generations from rags to riches and back agin.
There are of course exceptions, but they are relatively few and far between.
A very illustrative one is the history of the Frick and Clay fortunes. Many of the 3rd generation decendents are essentially upper middle class or worse.
Inherited wealth and concentration are only possible in families with few children, and successful management of the wealth.
Look at the Kennedy family. Old Joe died, and the financial savvy that made fantastic wealth went mostly right out the door. The great grandchildren are mostly trading on a famous political name- they certainly don't have the wealth of Joseph Kennedy- rumrunner and stock manipulator.
Someday this war's gonna end...
Rock River Bank, Oregon, Illinois
Rock River Bank, Oregon, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with The Harvard State Bank, Harvard, Illinois, to assume all of the deposits of Rock River Bank.
Agree, Ghost, except there is no normal.
How many banks are we up to?
what a confusing headline.
"The Harvard State Bank, Harvard, Illinois, Assumes All of the Deposits of Rock River Bank, Oregon, Illinois "
Harvard, Illinois and Oregon, Illinois
mmckinl
further, as an alumni of the glorious job market of 1980s to 1996- this generation gets it's turn in the barrel. Too bad.
Someday this war's gonna end...
yes, somewhat annoising
The I.V. League
"The Harvard State Bank, Harvard, Illinois, Assumes All of the Deposits of Rock River Bank, Oregon, Illinois "
Lawyerliz (profile) wrote on Thu, 7/2/2009 - 2:39 pm
How many banks are we up to?
Today? 3
48 YTD
"Too bad."
indeed. and too bad for anyone who was thinking that tax remittances from the kids leaving school now would be able to support a tiny fraction of the entitlement pyramid scheduled to arrive on their backs in a decade or so... doubly so for anyone who needs to rely on programs funded by said remittances
@mmckinl: "The wealthy mostly keep their wealth it is just spread over many generations ..."
Divide by 2 or 4 enough times (and toss in a couple of divorces), and it's gone unless the younger generation can make it grow, in which case they've (partly) earned it. Of the descendants of the British or American aristocracies from 100 years ago, how many are still as wealthy as their forebears (after inflation)? There are certain families that pull it off, but most do not. (Thanks to AllenM for chiming in.)
Also, the "wealth begets more wealth" is clearly a credit-bubble phenomenon. I think it will be less true in the "Naught for the Naughts" -- in a world where the long-term investments are all depreciating relative to the minimum wage, or even the median wage, it should become easier for those who keep jobs, and choose to save rather than consume, to accumulate assets again.
Sure the S&P is down.
However, if you had embarked on a periodic investing plan using dollar cost averaging, you may have obscured your losses enough that you wouldn't cut your wrists.
Where has FFDIC been?
HollywoodHack
"They will still do much better than those without degrees ...."
some with 150K+ in debt might be reaching a different conclusion this winter....
~~~~
Those with debt are not from the 'right' families ...
@Lama: Looks like I picked the wrong week to start my dollar-cost averaging plan!!! /shades of Airplane
Illinois is the new Georgia.
"Those with debt are not from the 'right' families ... "
even the "right" families often bit off more than could be chewed in the recent RE/leverage bonanza...
no matter your income level and net worth, there was a house out there somewhere 2004-2007 that was waiting to suck it all out...
or, in context:
"So, Dad, I took your advice, and even though we could have covered the tuition, I stuck that money in the market - dumb not to make that 15% in the meantime, right? Just like you taught me. So, sorry about the split with Mom. Is she keeping the hamptons place?"
"However, if you had embarked on a periodic investing plan using dollar cost averaging, you may have obscured your losses enough that you wouldn't cut your wrists."
LOL. Actually, someone had a report on that a while ago. showed the return on dollar cost average equities vs bonds over the past 10 years.
equities lost (including dividends).
Old Middle Eastern saying;
My Father rode a camel
I drive a car
My son owns a jet plane
His son rides a camel
ga is still here and it isnt 6pm yet.
Hollywood, just wait for the inflation to come.
Further- the only part of the retirement system that is seriously deficient is the Medicare- which will be rolled up into universal healthcare to make all of the populace pay for the rock bottom health care system.
With the 1987 fix, the Social Security System is quite solvent- the recession will force many folks to take early retirement, yielding much lower social security payments over their lifetime, with many still working and essentially just getting a partial tax rebate. Oh yeah, inflation adjustment? Bwaahhahhaaa!!
Follow the bouncing ball!!
Someday this war's gonna end...
Because two people were willing to work, they hired more service helpers (daycare, kids' sports) and drove down unemployment. All of this was pro-cyclical.
If the second person was no longer willing to work, the service helper would be able to take the second worker's former job.
The pro-cyclical part comes in where the second worker's income was a luxury and the overleveraging turned the second worker's income into a necessity.
The overleveraging began in the 70's. It'll take just as long to unwind.
is there a new contest to see who can be the first to get pigged - you know like reverse 'first'
Some ideas are "inverted pig", also "pigwardation" for the commodity traders, or perhaps "marginal pig"?
Somehow this seems important.
I wonder if you followed the genes there would be some ups further down
the generational line. Look at the Churchills.
I think the first generation to acquire wealth is usually destructively mean to
their kids. I have seen it.
"The Harvard State Bank, Harvard, Illinois, Assumes All of the Deposits of Rock River Bank, Oregon, Illinois "
Maybe deposits mailed to Oregon, Illinois ended up somewhere else. No wonder the bank there failed...
"Old Middle Eastern saying"
How old is that saying?
The FDIC went down to Georgia
They were looking for a bank to seal...
Don't forget pig tango.
The first derivative of pig is BACON!!!!
"equities lost (including dividends). "
Pathetic, isn't it?
What ever happened to the risk premium for stocks?
Citizen AllenM
Certainly there are those families ... but you are correct, wealth did dissipate
during the post FDR period as the Estate Tax was raised very high ....
That is not a problem these days ...
Then there are marriages that preserve and increase wealth ....
They used to arrange them but now they send them to college to get their MRS ...
The last tranche of pig is the pickled pigs feet and fried ears-
Rated CCC- by the American Heart Association
Offal what's become of this country...
lawerliz,
Agree. Also when the wealthy dad (or mom) dies, frequently the legal battle over the division of the estate is very destructive to the family.
"The first derivative of pig is BACON!!!! "
Buh-buh-buh-Bacon!
So what's the second derivative? Gas?
The last tranche of pig is the pickled pigs feet and fried ears-
Ah, the Z-pig-tranche, or Z-pig?
Yes!
Coinz gets the piggy award!
mmckinl
The estate tax could be managed around- the biggest problem is quite frankly lifestyle.
The rich use the wealth to smooth consumption, but if the level of consumption is too high- goodbye to wealth.
Making the problem even more complex is the changing optimal investment mix. When large country houses went out of style due to the costs of upkeep (viz higher taxation due to WWI), the value of the properties fell to what they could actually produce. Well, with antique agricultural habits and low imported ag commodity prices, they fell to nearly nothing.
Now they are back in style, they are expensive. But look how many stately houses ended up in the National Trusts of England and Scotland due to inheritance taxes (i.e. the money pit costs more to maintain than the cashflow of the "wealthy" hanging on by their fingernails)!
Don't bother being envious of the rich, most of them are not really that rich, nor will their children be that rich ultimately.
I read Vanity Fair, and I think, what a waste some of these kids are, but their children will most likely end up being productive out of necesity.
Someday this war's gonna end...
The jobs pyramid is built too steep. Too many lawyers and not enough brick layers.
This too will change.
I dunno. Every time a new bill is signed into legislation, another lawyer gets his wings.
I don't know what you guys are smoking, It is all green-shoots and mustard-seeds.
...investors saw some reason to sell today.
The other shoe begins to drop:
Finding the Dream
It hasn't hit the floor yet, and could even be grabbed in mid-air, but that would be quite a catch.
People are more indebted than anytime in history ...
Where's the wealth ?
(1)I just wish things would speed up and crash faster.(2) The market's struggle against reality is getting tedious.
(1) - sadist
(2) - move to the jungle