Author Topic: The Next Big Stink, The killjoys are back. What do they have in store for us?  (Read 14270 times)

Offline ziggy

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This may not be your thing, but this was one of the funniest things I have read in a very long time.  I can't recall the last time I laughed this hard.  Political satire at its absolute best.
 
The Next Big Stink
The killjoys are back. What do they have in store for us?
 

by P.J. O'Rourke
02/09/2009
 
The killjoys are back in charge--the mopes, the fusstails, the glum pots. Their wet blanket has been thrown over the White House and Congress. They're worrying up a storm. (Good thing that George W. Bush is no longer in charge of the weather and FEMA the way he was during Hurricane Katrina.) America is experiencing a polar ice cap and financial meltdown, causing sea levels to rise and sending cold water flooding into Wall Street where the rapidly acidifying ocean is corroding our 401(k)s and releasing mortgage securities full of hot air into the atmosphere until our every breath is full of CO2 especially when we exhale, which should be banned when children are present lest their uninsured health care be harmed by second-hand greenhouse gases that are causing endangerment of plant and animal species (Republicans are extinct already), leading to a shortage of green, leafy vegetables vital to the fight against America's growing epidemics of obese hunger and housing foreclosures on the homeless.

You remember the killjoys. They've been all over liberal Democratic politics like ugly on an ape since the Carter adminis-tration. They are the people who conceived the late, little-mourned, double-nickel speed limit, which is doubtless now rising undead from its grave to turn us all into road zombies dragging ourselves down I‑70 numbed to a state of murderous catatonia by our 55-mile-per-hour rate of travel.

The killjoys initiated automobile crash standards so rigorous that we can't buy a car that hasn't been dropped from the top of a phone pole with our whole family strapped inside. (Click It or Ticket!) And they wrote the infant car seat regulations that require devices so complex, with such arcane rules for use, that each car seat now comes from the manufacturer with its own mechanical engineer and each infant comes from the maternity ward with its own lawyer.

 
Nor is the kid exempt from legislative backseat driving just because she (the pronoun that every publication with a Second Class mailing permit is federally mandated to use in alternate sentences) has emerged from the car. Children must now wear helmets to bike, ski, rollerblade, or skateboard and wear an additional helmet--in case they collide with hard porcelain and injure their tailbones--on their butts when they go to the toilet. The only time children are allowed to remove their safety helmets is when they catch a parent smoking cigarettes. In that case they can doff protective headgear to better reveal facial expressions of shock, horror, shame, and disappointment. (Barack, you stand warned.) Children learn these facial expressions in the 1,000 hours of compulsory anti-tobacco education that America's public schools have made time for by eliminating the minute of silence in the morning (courtesy of the ACLU) and also reading and math.

The only way I can sneak a smoke nowadays is to borrow a buddy's hunting cabin in the Maine backwoods, lock myself in the bathroom, and stand in the shower stall with the curtain pulled tight and the water running. You'd think this would extinguish my Marlboro Light. However, thanks to low-flow shower heads required by federal law to conserve a precious resource that I thought we were about to have too much of due to the melting of polar ice, I can smoke in the shower with the faucets on full blast and stay bone dry. (Flushing the filter tip down the water-conserving john is another matter.)

Sucking the fun out of life has always been a key component of political science. The inventors of modern politics, the English Puritans, are rightly a byword for buzz-kill and gloomocracy. The Puritans banned all theatrical performances because of the dangers of .  .  . mmmmm .  .  . they'd think of something .  .  . actors playing Mercutio and Tybalt having a sword fight in Romeo and Juliet without wearing bike helmets.

Creating alarms about trans fats or energy sustainability expands the purview of government almost as well as war, without all the patriarchal, exclusionist, sexist heroism and hurtful, insensitive, patriotic language. Gas prices frighteningly high? Declare a moral equivalent of Nagasaki. Arteries clogged? Pass a law requiring the chicken nugget fry-basket to be dunked in boiling mint tea.

Raining on parades requires no skill or effort on the part of a politician. This is what draws people--and Democrats--into politics. All a Democrat needs is the upper-story window of public attention and the chamber pot of rhetoric. How else to explain Joe Biden's rise as a flannel-mouthed, four-flushing, limelight-stealing head louse?

Being a poke-nose, a nanny-pants, and a wowser satisfies the pathetic need of the political class to feel self-important and powerful. Banning paper and plastic and making shoppers carry their groceries home in their mouths like dogs is just the thing to make a little tin humanist in the Obama West Wing think he's admiral of the Uzbek Navy.

Not that Pecksniff Buttinskiism is a strictly partisan matter. Long-lipped howler Republican Drys teamed up with spigot-bigot William Jennings Bryan to 
enact Prohibition. The GOP is home to blue noses of a size as if room had been made on Mt. Rushmore for a bust of Andrew Volstead. Meanwhile Democrats do have their pleasures--drinking bong water at gay weddings and so forth. Plus there is the Kennedy family to be considered, with their penchant for exciting risk--skiing into trees, sleeping with the babysitter, and claiming entitlement to New York Senate seats.

 Republicans stick their schnozollas into other people's underpants and stashes (but not gun cabinets). In the matter of scolding foreigners and muscling in on the governance of lesser breeds without the law, Republicans are a regular pain in the atlas. But it is the Democrats who've learned to make political honey out of minding other people's beeswax. Not satisfied with mere bossy irritation of the public, Democrats have created whole branches of government--the Department of Labor, the Department of Health and Human Services, the Department of Education, the Department of Tofu and Sprouts. Democrats have opened barrels of (USDA inspected!) pork sufficient to feed all of their high-binding and wire-pulling friends, relatives, cronies, and the state government of Illinois. Democratic wisenheimers have managed to get themselves elected Big Chief Itch-and-Rub of every worry and to be appointed Pharaoh of Fret for every concern. They are the Party of Eliot Spitzer. And we the citizenry are Eliot Spitzer's wife.

How are the Democrats going to demean and humiliate us next? What issue will the Democrats fasten upon as a threat to the commonweal and a hazard to the planet? What busybody ordinance and ass-and-elbows regulation will be put upon the books for our own good?

It's important to find out what type of private interest or kind of human enjoy-ment the Democrats are going to pass a law against. We could lobby to defeat it. (Although our best lobbyists are in jail.) We could brace ourselves to endure it. (Although our endurance--witness the paltry vote against Timothy "H&R Block" Geithner--is nearly exhausted.) Or we could plan strategies to resist the oppression. (Dig hole behind garage; buy enormous freezer; hide the red meat.)

There are several ways to make a prediction about what the Democrats will outlaw. We might calculate the greatest statistical danger to Americans. That would be death. According to The Statistical Abstract of the United States there is a 1:1 rate of occurrence. But it's hard to engage in an Obama-style "dialogue" with dead people, even though they do vote in Cook County. There is, in theory, a "death tax," but enforcement difficulties arise when the deceased don't pay it. Rahm Emanuel is, we are almost certain, a vampire. But whether this will give the Obama administration a pro- or anti-death tilt is unclear.

Another way to foretell proscription is to look at the most common or frequently occurring danger to Americans. What causes the most crime, violence, unemployment, divorce, disease, and mental illness? But that brings us back to Andrew Volstead, who was a Republican. Democrats will have to be satisfied with nibbling around the edges of this issue, providing additional funding for local enforcement efforts to curtail Managing a Hedge Fund While Impaired, etc. Also Democratic party loyalist trial lawyers can be given greater scope, allowing more bar and restaurant patrons to sue for being "Over-Served." Some friends of mine and I are bringing a class action suit against P.J. Clarke's in New York, where we met our first wives.

Or we could simply poll the nation and determine what the average American perceives as the greatest danger. Young black males in hoodies. But any action on this front would put the Obama administration in danger of support by Bill Cosby.

In fact, we'd be wrong to use any of the above methods to foresee what Democrats will attempt to constrain or forbid. A better way to approach the problem is to ask, "What would annoy the most people the most often?" That is the true test of government intervention in life. The Secular Grail of liberal Democrats is a program or policy that combines the intrusion of the census, the depredations of the income tax, the duress of school busing to achieve racial balance, the expense of Social Security, the nuisance of Medicare paperwork, the inconvenience of car registration, the pettiness of a congressional investigation, and the fine print on the label of flame-resistant children's pajamas.

My guess is that the next great government crusade will be against soap. The president will appoint a Blue Ribbon Commission, which will determine that soap releases polluting grime into the ecosystem, leads to aquifer depletion, and contains fatty acids that laboratory studies have shown to be acidic and not fat-free. Soap encourages teenage pregnancy as well as adult sexual activity with multiple partners, driving America's divorce rate higher, causing more children to live under the poverty line in single-parent households. Soap is a factor in many cases of child abuse, according to small boys in bathtubs. Soap bubbles may contain methane, especially if rising to the surface of bath water containing small boys. Soap marketing sends the wrong message about the Ivory trade and also about Irish Spring, which is being altered by climate change. Soap degrades the flame-resistant properties of children's pajamas. And soap makes whales foam when they spout.

Socialism--you can smell it coming.
A third-rate mind is only happy when it is thinking with the majority. A second-rate mind is only happy when it is thinking with the minority. A first-rate mind is only happy when it is thinking.

A quotation is a handy thing to have about, saving one the trouble of thinking for oneself.

AA Mil

Offline westkoast

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Can I ask you (and anyone else here understands the finaicial situation better than I) a question?

I've seen a number of people who are against the bail out, both the first one and this latest one.  They are saying 'F them' and think the government should do anything.  If the government doesn't do anything wouldn't we be in even worse shape?  Are these people going against the grain just to do it?  Are they letting their party affiliations buck logic? Or do you think we wouldn't all the sudden shift into Mexico if they just let this run its course?

If only our economy wasn't so heavily relied on people purchasing crap.
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Offline Joe Vancil

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Many of us who are against the bailout(s) (I was completely against the bank one, but more open toward the auto one) believe that saving a company from its own predatory, bad business practices is doing a disservice to all.  We don't feel public money will be used for the methods which it was intended.  We think it will be used to continue things that got us in trouble in the first place.

You see, there are companies out there that DIDN'T need bailouts;  that's because they had solid business plans, made reasonable, solid investments, pursued long-term goals rather than went after the quick, easy buck.  Banks that gambled - LOST;  that's one of the downsides of gambling. 

The biggest, baddest boys out there were the biggest, baddest boys out there because of unchecked greed.  They used their prominence to gobble up the smaller guys who were actually doing things smarter.  The government bailout gives them the money to keep doing that.

Think of it this way:  two guys get a paycheck - the first guy gets a $2000 paycheck, and the second guy gets a $1000 paycheck.  #1 takes his paycheck, goes to the casino, and gambles with his money.  #2 takes his paycheck home.

If #1 wins at the casino, he might make enough money to buy #2's company.  But if he loses, he can't pay his rent.  #2 isn't going to be able to buy #1's company in short order, but he won't have any trouble fending for himself.

Well, #1 loses at the casino.  The landlord comes around to both guys, and wants his rent money.  #2 gives him the rent.  #1 says, "I can't pay you.  In fact, I can't pay anybody."  In comes the US government to save #1.  They give #1 his rent money.  They'll eventually get it back by charging taxes on everyone - including #2.

#1 now has rent money.  But instead of paying it directly to the landlord, the government gave it to #1.  He might pay his rent - but he might use the money to buy something else - or he might go back to the casino....no one can say.

"Everybody will be in horrible shape."  Of course we will;  we're in a recession, and a bailout is not going to stop that.

"People will lose jobs."  Of course they will.  The bailout will not stop that.  Whether it will lessen it is questionable.

"People won't have access to money."  If they don't have any, then DARN RIGHT.  Banks that have money to loan will loan it to the people most capable of paying them back - which is how it's supposed to work.

I don't think the current crisis would be appreciably worse if the bailout had not happened.  It would essentially weed out the speculators - which, coincidentally, is what happened in 1929.
Joe

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Offline Lurker

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Also while there are pockets of really high unemployment and housing problems; overall the US is not in that bad of shape.  Most of the housing crisis occurred in 5 or 6 states.  Most of the worse unemployment is in 5 or 6 states.  Things are rolling along like they were in the boom times but even as recessions go this one is not that bad yet.  National unemployment of less than 10% is no where near the 25-30% of the Great Depression.

Also the biggest cause of this whole mess is uncontrolled borrowing...from the college kid given 5 credit cards before he gradauates right up to the 436 idiots in DC.  And now the govt answer is to massively borrow more money.  The interest on the debt will slowly grow to consume the majority of tax revenues.  Thus our govt will either have to have maasive tax increases (which will kill the economy) or cut back massively on spending (leading to a social uprising).

Either way this new "stimulus" bill sucks for hardworking, fiscally-responsible Americans.
It riles them to believe that you perceive the web they weave.  Keep on thinking free.
-Moody Blues

Offline westkoast

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Thanks for your input guys.  When I asked a similiar question to a Republican/Conservative in Orange County I got the typical bashing the left, calling me dumb (even tho I didn't state my personal opinion, just asked for his stance), socialism responses.  You know instead of a well thought out answer that really explains why he felt the way he did. 

Personally I haven't really felt the effects of the recession.  My bills are paid on time (as usual), my car loan is paid on time (as usual),  My credit card debt is at a whoppin 600 bucks, I continue to have a job, and I continue to lead the same lifestyle I had before.  I guess I am very lucky and at the same time smart enough not to put myself in the position others have with over spending and living above my means.  Is this the same for you guys?  Or not so much?
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Offline WayOutWest

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Thanks for your input guys.  When I asked a similiar question to a Republican/Conservative in Orange County I got the typical bashing the left, calling me dumb (even tho I didn't state my personal opinion, just asked for his stance), socialism responses.  You know instead of a well thought out answer that really explains why he felt the way he did. 

Personally I haven't really felt the effects of the recession.  My bills are paid on time (as usual), my car loan is paid on time (as usual),  My credit card debt is at a whoppin 600 bucks, I continue to have a job, and I continue to lead the same lifestyle I had before.  I guess I am very lucky and at the same time smart enough not to put myself in the position others have with over spending and living above my means.  Is this the same for you guys?  Or not so much?

Do you have kids or a mortgage?  No?  Then STFU!   :P
"History shouldn't be a mystery"
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"My people's culture was strong, it was pure"
"And if not for that white greed"
"It would've endured"

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Offline westkoast

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Thanks for your input guys.  When I asked a similiar question to a Republican/Conservative in Orange County I got the typical bashing the left, calling me dumb (even tho I didn't state my personal opinion, just asked for his stance), socialism responses.  You know instead of a well thought out answer that really explains why he felt the way he did. 

Personally I haven't really felt the effects of the recession.  My bills are paid on time (as usual), my car loan is paid on time (as usual),  My credit card debt is at a whoppin 600 bucks, I continue to have a job, and I continue to lead the same lifestyle I had before.  I guess I am very lucky and at the same time smart enough not to put myself in the position others have with over spending and living above my means.  Is this the same for you guys?  Or not so much?

Do you have kids or a mortgage?  No?  Then STFU!   :P

1) There are people with out kids who are HURTING right now.

2) There are plenty of people with both kids and mortgage who are not hurting big time.  My mother seems to be doing just fine (my youngest brother lives at home).

3) Let's not pretend like you even know all of the kids you fathered.  ;)
« Last Edit: February 05, 2009, 06:55:42 PM by westkoast »
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Offline Lurker

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Thanks for your input guys.  When I asked a similiar question to a Republican/Conservative in Orange County I got the typical bashing the left, calling me dumb (even tho I didn't state my personal opinion, just asked for his stance), socialism responses.  You know instead of a well thought out answer that really explains why he felt the way he did. 

Personally I haven't really felt the effects of the recession.  My bills are paid on time (as usual), my car loan is paid on time (as usual),  My credit card debt is at a whoppin 600 bucks, I continue to have a job, and I continue to lead the same lifestyle I had before.  I guess I am very lucky and at the same time smart enough not to put myself in the position others have with over spending and living above my means.  Is this the same for you guys?  Or not so much?

Do you have kids or a mortgage?  No?  Then STFU!   :P

1) There are people with out kids who are HURTING right now.

2) There are plenty of people with both kids and mortgage who are not hurting big time.  My mother seems to be doing just fine (my youngest brother lives at home).

3) Let's not pretend like you even know all of the kids you fathered.  ;)

My wife and I are doing fine.  We are both still employed, pay our bills timely, continue to save and generally live within our means.  And I would venture to guess that a majority of Americans fall into this area.  However, the press can't sensationalize this story.

And my kids...both are married, have mortgages, one has a kid and they have jobs, pay their bills and generally are doing well.   

The majority of those who are struggling are those who lived beyond their means and borrowed heavily to do so.  And that has always been a sure path to financial diaster.  It is always just a matter of "when" not "if".
It riles them to believe that you perceive the web they weave.  Keep on thinking free.
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Offline WayOutWest

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3) Let's not pretend like you even know all of the kids you fathered.  ;)

 :D :D Frigging TJ skanks!
"History shouldn't be a mystery"
"Our story is real history"
"Not his story"

"My people's culture was strong, it was pure"
"And if not for that white greed"
"It would've endured"

"Laker hate causes blindness"

Offline ziggy

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My take.
If you are going to have the government step in then they need to step in first in the area where they have responsibility and control and that is with the money supply.  If you have a money supply crash then clearly you need the gov't to step in and support the money supply.  

I supported part of the concept of TARP because it was about supporting the money supply, but I do have serious concerns with how it was implemented, and the fact that it was not implemented as it was sold.  I find it ironic that we bash the banks for making bad loans, and then we provide cash to support their balance sheets, and now we bash them again for not loaning the money out.  These are the kinds of perverse mixed signals which create the problem in the first place.  I am not trying to excuse the banks, or rationalize and justify their behavior, and am just making the observation that it is absurd to bash them for taking on excessive risk and engaging in bad lending, and after we then support their balance sheets we then bash them for not returning to their profligate ways.

As far as the stimulus I do have great difficulty in supporting this concept on principal.  In practicality my support is even less.  This stimulus bill is the most egregious example of pay to play corruption I can imagine.  It is one gigantic earmark.  I believe absolutely that the issue at hand is focused on one thing, and that is money supply.  For too long we had way to much, which lead to inflation and massive mal-investment.  We are in the process of flushing the system of the mal-investment, and excessive leverage, and the money supply has shrunk rapidly, though it is slowly increasing again.  The Keynesian concept of demand stimulus through increased governmental spending and deficits has not worked in the past, and there is no reason to believe it will change this time.  I am more in support of the concept of tax decreases.  I do not believe we need to cut the cap gains tax right now, because lets be honest we aren't going to have any measurable cap gains for 5-10 years.  We need to cut taxes, including payroll taxes, as this will increase the velocity of money which is what is ailing us right now.  Doing some large capital project in 2011-2012 will not accomplish anything.

In my opinion the single most important piece of legislation we should pass is a radical overhaul of Mark-To-Market.  Here is a very good article on it  ]
http://mises.org/story/3301
I would love to hear Lurkers opinion of it since he is an accountant.

Mark-To-Market is forcing banks and financial institutions to write down their assets because the supposed "market price" for similar assets have been marked down.  Same for marking up.  This means MTM is extremely pro-cyclical, in other words it adds to the increase near the top of the cycle through upward revisions in assets, which leads to the ability to borrow more, which further increases the asset side of the balance sheet allowing for still further write ups and additional borrowing.  In the down cycle of the business cycle it causes the downward cycle to accelerate, because assets have to be written down, forcing more asset sales, which causes further write downs which leads to further asset sales.  That is where we are.

As I stated above, and as I have at least tried to say for the past couple of years on this subject, the situation we are in is a direct result of excessive money creation which has lead to massive mal-investment all over the world.  This extra money found its way into Chinese manufacturing, US homebuilding, carry trade in Aus, NZ and Iceland, excessive home building in a number of places in Europe (GB, Spain, Ireland etc) plus a huge amount of bad investments elsewhere in the world.  These investments would never have been made if interest rates has been allowed to float to the level they would have floated to in an unimpeded market.  Interest rates though were held too low for far too long, which made borrowing cheap, and which lead to increased risk taking in an effort to find return.  While we did not experience high consumer inflation we did see high producer price inflation and asset value inflation, and commodity inflation.  I do not try to toot my own horn, but in this case I will.  Go back and look at my posts starting in September 2007, and I spoke regularly about the coming inflation, which we saw until mid-July 2008.  Also go back and see that I have said that the price of oil on a inflation adjusted basket of currencies was below $50.  We saw oil run to $147 because of this Fed generated inflation, and when the deleverage hit and the velocity almost stopped the price of oil fell into the low 30's.  The rapid increase in oil was about money supply.

What is happening now is these mal-investments are getting cleared out of the system.  While I agree with mark-to-market supporters that we need to get rid of this mal-investment and we should not hide mal-investment on a balance sheet at a level above where it should be valued, I disagree that we should allow the arbitrary trade of THE WORST PERFORMING EXAMPLE OF A SIMILARLY STRUCTURED INVESTMENT by another party to determine the value of all other similar assets regardless of the NPV of expected future cash flows.  It is fine to force everyone to value a single share of Microsoft the same, as it is an identical security that is traded in a highly liquid and transparent market, but these investments are not Microsoft shares.

As far as this recession and how it is affecting me and the people I know and work with, this situation is beyond your wildest imagination.  In 2005 the company I work for had about 1600 employees in total.  Today we have about 650 with a high probability of further layoffs to come.  Of those still working most are lucky to be getting 20 hours a week.  I know of dozens and dozens of our suppliers, customers, and competitors who are slashing hours, staff, expenses, inventory.  I know of companies that are operating at perhaps 10% of their peak levels.

The average unemployment in Central Oregon was over 10% at the beginning of January, and layoffs have been significant in January.  Two of the 3 counties have unemployment rates in excess of 13%.  There were 35,000 unemployed, with only 13 job openings.  Foreclosures are at record highs, home prices are crashing.
« Last Edit: February 05, 2009, 09:26:00 PM by ziggy »
A third-rate mind is only happy when it is thinking with the majority. A second-rate mind is only happy when it is thinking with the minority. A first-rate mind is only happy when it is thinking.

A quotation is a handy thing to have about, saving one the trouble of thinking for oneself.

AA Mil

Offline Joe Vancil

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Financially, I'm in an odd situation.  Last year, I paid off my house, and I spent the last year setting aside money in preparation for expanding my house.  High prices for corn and soybeans and wheat, plus my brother's business sense in when to sell, made last year the most profitable year I've seen from the farm.  Bonus at Carfax was exceptional last year, and our company is still growing, although not at the pace we had projected.  Bonus this year will be the worst we've seen it, according to what we're being told, but I'm betting even still it's better than bonuses at my last two jobs.  Apparently what qualifies as "awful" for Carfax qualifies as AWESOME at other Columbia, MO businesses.  My job is solid, the company is strong, and I love my work.

That leaves me with a good chunk of spending cash right now.  I'm looking at taking advantage of Circuit City's closing to finally get the home audio system I've wanted for a long time.  I'm looking to go on a cruise at the end of April with my brother and his family, and now, my mom is talking about going on a cruise in July, which I'm currently considering. 

Right now, the only debt I have is my credit card debt, which I pay off completely every month.  Plans for building onto the house are still happening, and I should be able to pay for that entirely within two years - if I want to take that long.

That puts me in an unusual situation of having the money to spend, but feeling uneasy spending it, given the doom and gloom supposedly all around us.  Amidst some of the doom and gloom, I'm seeing BARGAINS.  My challenge is to fight the urge to get things just because they're bargains.

My financial portfolio is down significantly - just like everyone else's - but my net worth is as good as it's ever been, mostly because of the fact that I've been saving for a year instead of doing any sort of major spending, despite the fact that last year was the best year of my life in terms of income.
Joe

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Offline ziggy

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A smattering of the news that came out today.

U.S. employers slashed 598,000 jobs in January, the deepest cut in payrolls in 34 years, but only slightly higher than the December and November numbers [577,000 and 597,000].  No one-off events, these numbers are very serious and very large.  The severity of the employment situation enhances the odds for passage of the stimulus package and possible further packages in the coming months. The unemployment rate has moved up to 7.6% from 7.2% with expectations for something north of 9%, perhaps even double-digit, in the coming quarters.

The manufacturing sector bled jobs at the sharpest rate during January in more than 26 years, shedding 207,000 workers after cutting 162,000 in December. The last time more factory jobs were lost in a single month was in October 1982 when 221,000 were cut. An index measuring total paid hours for factory workers dropped to its lowest level since 1940, department officials said.

Construction industries dropped 111,000 jobs in January after 86,000 in December.  It?s amazing that there were jobs left to cut.  Retail businesses cut another 45,000 positions after shedding 82,700 in
December.


Canada suffered its worst job losses in over three decades, possibly ever, in January as the recession forced employers to cut a record 129,000 workers, including just over 100,000 manufacturing jobs. The   unemployment rate spiked to 7.2% from 6.6%. "I can't see one glimmer of hope in this report when we dig beneath the headlines," said Derek Holt, economist at Scotia Capital.  The Bank of Canada last month projected the economy would shrink 4.8% in the first quarter after contracting 2.3% in Q4.  Finance Minister Jim Flaherty forecast yesterday that the job numbers would be "very regrettable" and that there was a risk that Canada's recession would get much worse.

German industrial output suffered a record fall in December, falling 4.6% m/m and 12.0% y/y ! ! The Bundesbank report showed the fourth consecutive decline in output.

The German Steel Federation said new orders fell by 47% in the final quarter of 2008, the biggest drop since World War Two.

British factories endured the biggest slump in production in nearly 35 years in Q4. The Office for National Statistics said industrial production fell 4.5% q/q in the quarter, the biggest drop since 1974 when the government imposed a three-day working week because of energy shortages during the coal miners' strikes.   In December, production fell 1.7% m/m and 9.4% y/y.  Expectations are growing that policymakers may need to resort to unconventional measures to revive the economy once interest rates near zero and there is also speculation that the government will have to take further supportive fiscal action.

The International Monetary Fund believes Britain will be the hardest hit of the leading G7 industrialized nations during the downturn, forecasting a 2.8% drop in GDP this year.

Bank of Japan Governor Masaaki Shirakawa said that "the worsening of economic activity in the past three months has been very severe." Japan's economy is expected to have suffered its biggest contraction since 1974 in the last three months of 2008.

Japan on the Edge of the Abyss
http://www.nakedcapitalism.com/2009/02/japan-on-edge-of-abyss.html


All of this relates directly to what is happening in international trade.  This is the Baltic Dry Index which is a measurement of international shipping rates for dry bulk shipping. 
http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm
The index collapsed 92% from the high in mid-July to the low in late-October.  International shipping has crashed, because credit has dried up worldwide.  The scope of this will take your breath away.

This article came out about a week ago.  Don't confuse this with the Baltic Dry Index, which measures dry BULK shipping, not container shipping.  This is an article related to container shipping.

Shipping rates hit zero as trade sinks  Shippers are charging ZERO for container shipping, and asking only for the bunker fuel surcharge.
http://www.telegraph.co.uk/finance/4229198/Shipping-rates-hit-zero-as-trade-sinks.html


This came out on Tuesday.
20 Million Migrant Worker Jobs Lost in China
http://www.calculatedriskblog.com/2009/02/20-million-migrant-worker-jobs-lost-in.html
This is a pretty stunning number ...

From the NY Times: Joblessness Jumps Sharply Among China?s Migrants
http://www.nytimes.com/2009/02/03/world/asia/03china.html
About 20 million of the total estimated 130 million migrant workers, whose cheap labor underpins China?s manufacturing sector, have been forced to return to rural areas because of lack of work, according to a survey conducted by the Agriculture Ministry that was cited at a briefing.

In late December, employment officials estimated that at least 10 million migrant workers had lost their jobs in the third quarter of 2008 as waves of factories and businesses shut their doors.
A third-rate mind is only happy when it is thinking with the majority. A second-rate mind is only happy when it is thinking with the minority. A first-rate mind is only happy when it is thinking.

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AA Mil

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Some quick off the top of my head answers...

Unemployment 7.6%  Employed Americans  92.4%

Manufacturing sector has been shrinking anyway over the past 20 years.  Part of the whole "moving jobs overseas to cheaper labor" argument.

Construction in major media markets may be dropping but then there are pockets in the US where they aren't dropping so fast.  Retail business are of course cutting jobs...they were the fastest growing job segment before.  With consumer spending dropping then there is an obvious oversupply of retailers.  But again over 90% of Americans are working and buying necessities if not luxuries.  As Joe said...he is being deliberate in his spending choices.

Most of the foreign stats are just putting numbers on the disaster that happened in Oct/Nov.  I would expect most countries to record massive drops.  However is that comparing current output to some of the highest outputs?  What is the output in median terms or compared to rolling 5 yrear averages?

Or in basketball language... a career 40% shooter has a couple years where he shoots 42% then 44%.  In the next season he shoots 40% again.  He just had a 10% drop (44 to 40) in his shooting %.  But in real terms he is back where you would expect him to be.  Is international (as well as US) production and shipping falling off that far or only back towards the mean?

It riles them to believe that you perceive the web they weave.  Keep on thinking free.
-Moody Blues

Offline ziggy

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Some quick off the top of my head answers...

Unemployment 7.6%  Employed Americans  92.4%

Manufacturing sector has been shrinking anyway over the past 20 years.  Part of the whole "moving jobs overseas to cheaper labor" argument.

Construction in major media markets may be dropping but then there are pockets in the US where they aren't dropping so fast.  Retail business are of course cutting jobs...they were the fastest growing job segment before.  With consumer spending dropping then there is an obvious oversupply of retailers.  But again over 90% of Americans are working and buying necessities if not luxuries.  As Joe said...he is being deliberate in his spending choices.

Most of the foreign stats are just putting numbers on the disaster that happened in Oct/Nov.  I would expect most countries to record massive drops.  However is that comparing current output to some of the highest outputs?  What is the output in median terms or compared to rolling 5 yrear averages?

Or in basketball language... a career 40% shooter has a couple years where he shoots 42% then 44%.  In the next season he shoots 40% again.  He just had a 10% drop (44 to 40) in his shooting %.  But in real terms he is back where you would expect him to be.  Is international (as well as US) production and shipping falling off that far or only back towards the mean?


Perspective is always important when evaluating any set of data, so it is important to put all of these numbers in their appropriate context.  With regards to unemployment we had unemployment on the low 4% range perhaps a year ago, and we are now at 7.6%.  7.6% is not a disaster it is difficult, but not a disaster.  At the same time job losses of 1,772 million in 3 months is not like dropping from 44% to 40% FG shooting.

To put into context the BDI.  It fell 92% in the period of about 3-4 months, albeit from record highs.  This is the way I would describe it in basketball terms

League Wide FG% (not an individual player, but every single player in the league)
2001  -  44%
2002  -  47%
2003  -  51%
2004  -  56%
2005  -  62%
2006  -  69%
2007  -  6%

German manufacturing fell 12% year over year, even though it grew at an annualized rate through July.  In the span of 3-4 months it fell 14-15% in absolute terms, so what is the annualized drop over that 3-4 month period?  You start 2008 at 100, then you grow to 103 by July, and from October to December you fall to 88 (a 12% YoY drop).  If they fall at that same 3-4 month rate for the next year (which I am sure they won't), then they would be at 75 at the end of April, 64 at the end of August, 54 at the end of 2009.  Anyway you want to slice it that is severe.
A third-rate mind is only happy when it is thinking with the majority. A second-rate mind is only happy when it is thinking with the minority. A first-rate mind is only happy when it is thinking.

A quotation is a handy thing to have about, saving one the trouble of thinking for oneself.

AA Mil

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Some quick off the top of my head answers...

Unemployment 7.6%  Employed Americans  92.4%

Manufacturing sector has been shrinking anyway over the past 20 years.  Part of the whole "moving jobs overseas to cheaper labor" argument.

Construction in major media markets may be dropping but then there are pockets in the US where they aren't dropping so fast.  Retail business are of course cutting jobs...they were the fastest growing job segment before.  With consumer spending dropping then there is an obvious oversupply of retailers.  But again over 90% of Americans are working and buying necessities if not luxuries.  As Joe said...he is being deliberate in his spending choices.

Most of the foreign stats are just putting numbers on the disaster that happened in Oct/Nov.  I would expect most countries to record massive drops.  However is that comparing current output to some of the highest outputs?  What is the output in median terms or compared to rolling 5 yrear averages?

Or in basketball language... a career 40% shooter has a couple years where he shoots 42% then 44%.  In the next season he shoots 40% again.  He just had a 10% drop (44 to 40) in his shooting %.  But in real terms he is back where you would expect him to be.  Is international (as well as US) production and shipping falling off that far or only back towards the mean?


Perspective is always important when evaluating any set of data, so it is important to put all of these numbers in their appropriate context.  With regards to unemployment we had unemployment on the low 4% range perhaps a year ago, and we are now at 7.6%.  7.6% is not a disaster it is difficult, but not a disaster.  At the same time job losses of 1,772 million in 3 months is not like dropping from 44% to 40% FG shooting.

To put into context the BDI.  It fell 92% in the period of about 3-4 months, albeit from record highs.  This is the way I would describe it in basketball terms

League Wide FG% (not an individual player, but every single player in the league)
2001  -  44%
2002  -  47%
2003  -  51%
2004  -  56%
2005  -  62%
2006  -  69%
2007  -  6%

German manufacturing fell 12% year over year, even though it grew at an annualized rate through July.  In the span of 3-4 months it fell 14-15% in absolute terms, so what is the annualized drop over that 3-4 month period?  You start 2008 at 100, then you grow to 103 by July, and from October to December you fall to 88 (a 12% YoY drop).  If they fall at that same 3-4 month rate for the next year (which I am sure they won't), then they would be at 75 at the end of April, 64 at the end of August, 54 at the end of 2009.  Anyway you want to slice it that is severe.

I didn't work exact numbers, ziggy.  So thanks for adding in with some detail.  My point though was that some of the drop is from record highs and that is a factor to take into consideration.  And I don't mean to imply that everything is rosy either.  We are in very tough economic times although I also believe that there has been almost too severe of a reaction in the opposite direction as far as cutting production.

Some things to look at around you to gauge how severe the times are getting:

How many people do you know that have cut back or eliminated their cell phone costs?

How about cable TV packages?  High speed internet?  $5 lattes?

How many people do you know that are getting by on rice & beans (except for WOW's family)?



It riles them to believe that you perceive the web they weave.  Keep on thinking free.
-Moody Blues