From the Washington Post: Fix income inequality with $10 million loans for everyone!
For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them.
So why not let everyone participate?
Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)
Think of what we can do with all that money. We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office. With a few quick keystrokes, we’ll be golden for the next 10 years.
Source: http://www.washingtonpost.com/opinions/fix-income-inequality-with-10-million-loans-for-everyone/2012/04/13/gIQATUQAFT_story.html
Saturday, April 14, 2012
Sunday, April 8, 2012
Ghost Towns of China
China has pumped a lot of stimulus into its infrastructure and housing markets. They make the US and European Central Bank look like amateurs.
So, China's government loaned a bunch of money to developers and investors to build cities. And build they did. Unfortunately, the housing units are way too expensive for the average person (i.e. they will never, ever, be able to afford them) leading to relatively few purchases, and in some cases, no purchases. This has been going on for the past few years.
At least China's willingness to abuse its people by suppressing wages, civil liberties (don't worry, the US government will put China to shame with the NSA's Utah Data Center), manipulating its currency (the US also puts the world to shame on this front), completely ignoring the collateral environmental damage, inviting Westerners to take advantage of the low-cost of manufacturing (at the expense of its people), subsidizing industries (e.g. solar and rare earth minerals) to bankrupt cross-border competitors, and its sole focus on GDP growth has catapulted into the world's second largest economy.
Can you guess how it will end? Hint: Not well.
So, China's government loaned a bunch of money to developers and investors to build cities. And build they did. Unfortunately, the housing units are way too expensive for the average person (i.e. they will never, ever, be able to afford them) leading to relatively few purchases, and in some cases, no purchases. This has been going on for the past few years.
At least China's willingness to abuse its people by suppressing wages, civil liberties (don't worry, the US government will put China to shame with the NSA's Utah Data Center), manipulating its currency (the US also puts the world to shame on this front), completely ignoring the collateral environmental damage, inviting Westerners to take advantage of the low-cost of manufacturing (at the expense of its people), subsidizing industries (e.g. solar and rare earth minerals) to bankrupt cross-border competitors, and its sole focus on GDP growth has catapulted into the world's second largest economy.
Can you guess how it will end? Hint: Not well.
A Fat, Aging, Indebted-to-Our-Eyeballs Country, with a Horrific Future
From Zero Hedge:
- We are accumulating debt at a rate of $3.7 billion per day, or $154 million per hour.
- The National Debt is on track to surpass $20 trillion in 2015 and $25 trillion by 2018. And this is before the Medicare and Social Security costs blast into orbit in 2020. Kicking the can down the road works until math catches up with you. It is insane to believe we can dig ourselves out of this debt induced mess with more debt, but empires tend to act insanely in their death throes.
- Strauss and Howe: The Boomers’ old age will loom, exposing the thinness in private savings and the unsustainability of public promises. The 13ers (generation after the Boomers) will reach their make or break peak earning years, realizing at last that they can’t all be lucky exceptions to their stagnating average income. Millenials will come of age facing debts, tax burdens, and two tier wage structures that older generations will now declare intolerable.
- Thus far the older generations have refused to yield. They demand promises made be promises kept. The Boomers did not save enough to sustain themselves during their retirement. Many are entirely reliant upon Social Security and Medicare as their only savings and health insurance. Generation X is caught between aging parents and indebted jobless children. The Millenials are saddled with $1 trillion of student loan debt and few decent job opportunities.
I don't see anything wrong with this chart, do you?:
- We are accumulating debt at a rate of $3.7 billion per day, or $154 million per hour.
- The National Debt is on track to surpass $20 trillion in 2015 and $25 trillion by 2018. And this is before the Medicare and Social Security costs blast into orbit in 2020. Kicking the can down the road works until math catches up with you. It is insane to believe we can dig ourselves out of this debt induced mess with more debt, but empires tend to act insanely in their death throes.
- Strauss and Howe: The Boomers’ old age will loom, exposing the thinness in private savings and the unsustainability of public promises. The 13ers (generation after the Boomers) will reach their make or break peak earning years, realizing at last that they can’t all be lucky exceptions to their stagnating average income. Millenials will come of age facing debts, tax burdens, and two tier wage structures that older generations will now declare intolerable.
- Thus far the older generations have refused to yield. They demand promises made be promises kept. The Boomers did not save enough to sustain themselves during their retirement. Many are entirely reliant upon Social Security and Medicare as their only savings and health insurance. Generation X is caught between aging parents and indebted jobless children. The Millenials are saddled with $1 trillion of student loan debt and few decent job opportunities.
I don't see anything wrong with this chart, do you?:
Maybe being in your seventies these days are like being in your forties decades ago? Seriously though, people are living much longer these days, therefore, they don't get sick? Or they get sick, but for shorter periods?:
We are one fat country. More than one-third of U.S. adults (35.7%) are obese. Approximately 17% (or 12.5 million) of children and adolescents aged 2-19 years are obese.
CDC's Obesity by State:
Source: http://www.usdebtclock.org/
Wednesday, April 4, 2012
When the Music Stops...
Tuesday, April 3, 2012
Sovereign Debts of the World
Central banks Assets indexed to 100 on Dec. 31, 2006. Band of England and the US Fed are up over 3x while the European Central Bank is up over 2x. Japan looks good though!
This chart shows central bank assets as a % of nominal GDP, Japan and the US bank assets represent over 25% of GDP (not good). Japan no longer looks good. Recent actions from the ECB make Bernanke look like an amateur at money printing.
Here's a chart of everyone piled on top of each other. That's the beauty of technology, none of us have to even truly print money, they're just electronic entries in computers.
Source: http://www.businessinsider.com/ecb-vs-fed-vs-boj-vs-pboc-money-printing-2012-3
Source: http://globaleconomicanalysis.blogspot.com/2012/01/chart-of-day-central-bank-balance-sheet.html
Source: http://kostasgeorgioy.blogspot.com/2011/12/central-bank-balance-sheets-ecb-fed-boj.html
Source: http://payden.com/pdf/econview02222012.pdf
This chart shows central bank assets as a % of nominal GDP, Japan and the US bank assets represent over 25% of GDP (not good). Japan no longer looks good. Recent actions from the ECB make Bernanke look like an amateur at money printing.
Central bank assets in US dollars. China is the clear winner here. Don't forget though, the US is the largest economy of the world (~$15 trillion GDP per year) and China in second (~$6 trillion). I guess we'll soon see the unintended consequences of all that currency pegging and mega-sized stimulus in China (don't worry China, the rest of the world isn't safe either).
Here's a chart of everyone piled on top of each other. That's the beauty of technology, none of us have to even truly print money, they're just electronic entries in computers.
Source: http://www.businessinsider.com/ecb-vs-fed-vs-boj-vs-pboc-money-printing-2012-3
Source: http://globaleconomicanalysis.blogspot.com/2012/01/chart-of-day-central-bank-balance-sheet.html
Source: http://kostasgeorgioy.blogspot.com/2011/12/central-bank-balance-sheets-ecb-fed-boj.html
Source: http://payden.com/pdf/econview02222012.pdf
Remember that Stimulus Plan, Cash for Clunkers?
Nothing better than knowing that taxpayers got to pay for $3 billion programs like Cash for Clunkers.
The program was promoted as providing stimulus to the economy by boosting auto sales, while putting safer, cleaner and more fuel-efficient vehicles on the roadways.
Wikipedia: A study published after the program by researchers at the University of Delaware concluded that for each vehicle trade, the program had a net cost of approximately $2,000, with total costs outweighing all benefits by $1.4 billion. Another study by researchers at the University of Michigan found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009.
Want more?
http://www.youtube.com/watch?v=fQy8Gi403RY
http://www.youtube.com/watch?v=jiORhKnwXF4
http://www.youtube.com/watch?v=RATW0-Oy3OY
Source: http://en.wikipedia.org/wiki/Car_Allowance_Rebate_System
Source: http://www.youtube.com/watch?v=iD0Pv6yyGek
The program was promoted as providing stimulus to the economy by boosting auto sales, while putting safer, cleaner and more fuel-efficient vehicles on the roadways.
Wikipedia: A study published after the program by researchers at the University of Delaware concluded that for each vehicle trade, the program had a net cost of approximately $2,000, with total costs outweighing all benefits by $1.4 billion. Another study by researchers at the University of Michigan found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009.
Want more?
http://www.youtube.com/watch?v=fQy8Gi403RY
http://www.youtube.com/watch?v=jiORhKnwXF4
http://www.youtube.com/watch?v=RATW0-Oy3OY
Source: http://en.wikipedia.org/wiki/Car_Allowance_Rebate_System
Source: http://www.youtube.com/watch?v=iD0Pv6yyGek
Sunday, April 1, 2012
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