The Nation's Financial Condition

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MDlaxfan76
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Re: The Nation's Financial Condition

Post by MDlaxfan76 »

HooDat wrote: Mon Jun 17, 2019 12:27 pm
MDlaxfan76 wrote: Mon Jun 17, 2019 12:20 pm methinks you exaggerate for effect. ;)

The 'part time' is exactly the issue, though don't kid yourself. Their time is spent either in session of fundraising/campaigning. Very few can have another job and do their Congressional one with seriousness.

But to do their Congressional job, they need to be in DC and at home. They need to maintain two residences, one at home for the family, the other somewhere nearby to the Capitol.
i may exaggerate a little - but you ignored my idea of converting a couple of military bases into congressional housing. Ft. Belvoir comes to mind.
Didn't mean to ignore it; No objection to the concept.
Even better idea perhaps for the staffers who get paid truly bupkes.
Key would be transportation.
jhu72
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Re: The Nation's Financial Condition

Post by jhu72 »

HooDat wrote: Mon Jun 17, 2019 12:24 pm
OCanada wrote: Fri Jun 14, 2019 8:04 am Low interest rates and what they reflect.

John C. Williams, President and Chief Executive Officer
Remarks at Council on Foreign Relations, New York City As prepared for delivery
Interesting - thanks for posting.

A few things that I take away from his remarks.

1. Our corporate leaders, economists and governments have become overly dependent on growth and inflation to bail them out of irresponsible borrowing decisions. When you can assume that a dollar borrowed today will be paid back at 50 cents (and spread across a LOT more people) in 20 years, it makes leveraging the government a little easier to swallow. And this applies to more than federal borrowing and corporate bonds - it includes pensions, particularly the government pensions which were/are the most egregious form of hidden leverage even Enron would be proud.

2. Perhaps economists are finally coming to the realization that they have no idea how to "control" our economy. Stimulation can (and does work), but like any drug, when you start needing stimulation just to maintain a steady state ... you are in trouble.

3. At least they are now trying to look for other ways for governments to play a role that isn't just spoon feeding fees to Wall Street.

4. We better get a handle on the complete disenfranchisement of workers via technological replacement or we are going to be in deep do-do.

5. We NEED to find a system that is not dependent on growth. Growth for growth's sake made sense when half the world was uninhabited, or at least very lightly inhabited. We are running out of room, and it is time to stop borrowing from our grandchildren.

Capitalism as defined today requires growth. It does not work otherwise. We are fortunate as a global society to have lots of problems that need to be solved. Ie, there is lots of useful work to be done. Some of this work is to cleanup the mess we have made of this planet. Some of this work is to colonize another body to mitigate the risk the species runs only having a single home. Improving infrastructure worldwide is useful work. Building and obsoleting a new mobile phone model every two years is not useful work!
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HooDat
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Re: The Nation's Financial Condition

Post by HooDat »

jhu72 wrote: Mon Jun 17, 2019 12:42 pm Capitalism as defined today requires growth. - Not sure why you say that. Debt "requires" growth, capitalism does not. Just because Wall Street kneels at the altar of "shareholder growth" doesn't mean your every day mom-and-pop business owner requires that. All they need is a niche to fill and steady income to pay the bills; no growth required. - It does not work otherwise. We are fortunate as a global society to have lots of problems that need to be solved. Ie, there is lots of useful work to be done. Some of this work is to cleanup the mess we have made of this planet - - don't you think there will be machines to do that? - . Some of this work is to colonize another body to mitigate the risk the species runs only having a single home - well, that will help solve the problem of violence - send the poor people to mars.... - . Improving infrastructure worldwide is useful work - again, machines will do this work. - . Building and obsoleting a new mobile phone model every two years is not useful work! - whole-heartedly agree -
With the track we are on, in the end, the only "work" I see left for people to perform will be related to art and entertainment. And I guess managing the continuous improvement process that will be required for the machines. Oh, and telling people what to do - so the politicians are good...
STILL somewhere back in the day....

...and waiting/hoping for a tinfoil hat emoji......
foreverlax
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Re: The Nation's Financial Condition

Post by foreverlax »

HooDat wrote: Mon Jun 17, 2019 3:21 pm
jhu72 wrote: Mon Jun 17, 2019 12:42 pm Capitalism as defined today requires growth. - Not sure why you say that. Debt "requires" growth, capitalism does not. Just because Wall Street kneels at the altar of "shareholder growth" doesn't mean your every day mom-and-pop business owner requires that. All they need is a niche to fill and steady income to pay the bills; no growth required. - It does not work otherwise. We are fortunate as a global society to have lots of problems that need to be solved. Ie, there is lots of useful work to be done. Some of this work is to cleanup the mess we have made of this planet - - don't you think there will be machines to do that? - . Some of this work is to colonize another body to mitigate the risk the species runs only having a single home - well, that will help solve the problem of violence - send the poor people to mars.... - . Improving infrastructure worldwide is useful work - again, machines will do this work. - . Building and obsoleting a new mobile phone model every two years is not useful work! - whole-heartedly agree -
With the track we are on, in the end, the only "work" I see left for people to perform will be related to art and entertainment. And I guess managing the continuous improvement process that will be required for the machines. Oh, and telling people what to do - so the politicians are good...
Ma and Pa need "growth" the way we all need W2 growth....inflation.
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HooDat
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Re: The Nation's Financial Condition

Post by HooDat »

foreverlax wrote: Mon Jun 17, 2019 4:11 pm Ma and Pa need "growth" the way we all need W2 growth....inflation.
inflation is the result of growth.....
STILL somewhere back in the day....

...and waiting/hoping for a tinfoil hat emoji......
OCanada
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Re: The Nation's Financial Condition

Post by OCanada »

Some of the risk that seem embedded in the financial system. Recall after the great recession Paul Voelker worked to produce some constraints to stabilize known issues. Trump gutted them.

If anyone wants r=to read a book on the necessity of regulating the economy Hyman Minsky wrote one in 2005 or so that was eerily predictive on issues.

U.S. stock prices have exhibited a pattern of behavior as erratic as that of the U.S. commander in chief.

By Alexei Bayer, June 11, 2019


Takeaways

The erratic behavior of Wall Street’s key indices started on the night in November 2016 when Donald Trump was elected.
The Trump administration loosened regulations and environmental protection rules. That made companies more profitable.
US bubbles -- corporate debt, consumer debt, student loan and labor market -- are interlocking. If one bursts, it could trigger others.
By antagonizing America’s allies and friends, and initiating spurious trade conflicts, Trump is laying the groundwork for America’s failure as a world leader.

Donald Trump likes to point to rising stock prices on Wall Street as a measure of “his” economic miracle. In reality, U.S. stock prices have exhibited a pattern of behavior as erratic as that of the U.S. commander in chief.

While the Dow Jones Industrial Average is trading where it was at the start of 2018, it has fluctuated wildly in recent months. Sharp declines and rallies, often in the course of a single trading session, have become the norm.

At the end of last year, the market dropped 20% from its peak, meeting the definition of a bear market. Then in the first quarter of 2019, it clawed back most of the losses. Then, stock prices started to weaken once more. Now there is another rally — but one wonders for how long?

Actually, the erratic behavior of Wall Street’s key indices started earlier — notably, on the night in November 2016 when Donald Trump was elected. The initial reaction when the voting results started to pour in was highly negative.

$10 trillion of wealth created

Then, there was a huge reversal. Stock prices surged and by the time the Dow set its all-time high at nearly 27,000 last year, the U.S. stock market added one-third of its value. Thus, in just two years, a whopping $10 trillion of wealth has been created by Wall Street.

The gains, moreover, came not from a low point — such after the 2008-09 sell-off — but from record highs.

The Dow is an index of 30 bluest of the blue chips, the largest and the most solid U.S. companies with tried and true business models and extensive track records. They are also the most thoroughly analyzed companies in the world, with literally thousands of analysts poring over their balance sheets.

Stock prices represent the discounted present value of all dividends the company will pay out in perpetuity. In other words, it is a reflection of what investors think is going to happen to a given company’s profitability in the future.

A seismic shift?

Obviously, there had to be some kind of a seismic shift in the overall economy to warrant such a dramatic repricing of those 30 companies and the creation of all that wealth. Was the election of Trump and the appointment of his cabinet such a seismic shift?

The Trump administration did loosen a number of regulations and environmental protection rules, especially those that had been put in place under Barack Obama. That made companies more profitable and cut the red tape and associated expenses.

However, these were marginal changes adding a piddling amount to the corporate bottom line. Moreover, U.S. regulations had been far less onerous than in most other rich industrial countries. In addition, U.S. multinationals continue to function successfully under more restrictive regulatory regimes abroad, for instance in Western Europe.

The Trump tax cut scam

And then there was the Trump tax cut. It has always been a scam, since it put money into the hands of corporations and the very rich, doing very little for the real economy. Recent studies confirm that it provided no boost to investment or consumption, just a short-term infusion of liquidity.

So why does the U.S. stock market sustain its value? Why has it been so resilient, with corrections proving to be short-lived and followed by new rallies?

The answer may lie in the nature of pyramid schemes. Sergei Mavrodi, who set up a massive pyramid scheme in Russia just as the Soviet Union collapsed, argued that his business model was workable.

His MMM pyramid could have gone on paying dividends to existing investors forever — as long as his well-publicized success brought in new investors and confidence in his scheme endured. But when the Russian government moved in, it undermined confidence and the whole thing collapsed.

The nature of pyramid schemes

It is a spurious argument, but it is not without merit. Large new inflows could continue to buoy the scheme, and if the government or some other respectful entity pledged to back it, it could have gone on for a very long time. As to the long term, John Maynard Keynes did once say that in the long run we’re all dead.

The world economy, fronted by the U.S. economy and underpinned by the U.S. dollar and dollar-denominated financial assets, has been in a bubble stage ever since it came out of the 2008-09 Great Recession.

This is not to say that the real economy is a bubble: Industry produces goods, businesses provide services, farmers grow food and the technology revolution powers ahead at an accelerating pace. But in many asset classes, there are massive — and ultimately unsustainable — bubbles.

Like other pyramid schemes, they go on because government entities give them their imprimatur and infuse liquidity. Another successful swindler Bernie Madoff claimed after the incomplete financial regulations had been enacted following the 2008 global financial crisis that the whole government was a Ponzi scheme.

Now there is a bubble in U.S. stocks and in international bond markets, where yields are often negative, meaning that governments are paid to pile on debt.

In real estate markets in key metropolitan areas, property is overpriced by trillions of dollars. A collapse of the massively overbuilt New York market alone would send shockwaves through the global financial system.

And that’s a bubble that Donald Trump personally has a decided interest in keeping from popping.

So many bubbles in the U.S.

There is a corporate debt bubble, a consumer debt bubble and a student loan bubble in the United States. There is even a bubble in the oil market, despite the fact that oil prices have dropped by some 50% since 2010-14.

And, remarkably, there is a labor market bubble: A record low unemployment rate principally achieved with the help of still low labor force participation.

Other key ingredients are the sea of low-paying service sector jobs and the Uber-style gig economy, both of which aren’t allowing people to earn their cost of living. That bubble was in evidence before the financial crisis, and all those jobs evaporated within a few months. Now the situation is far worse.

These U.S. bubbles — the corporate debt bubble, a consumer debt bubble, a student loan bubble and a labor market bubble — are interlocking. If one bursts, it could trigger the bursting of others.

Donald Trump, bubble maker

Trump’s policies have acted to protect the bubbles and to inflate them further. The tax cut infused liquidity into financial markets and high-end real estate.

Even his reckless trade wars have been beneficial for stocks and bonds. Fearing global economic and political turmoil, investors are piling into the safest assets, which are dollar-denominated securities, especially U.S. Treasuries.

Meanwhile, concern about a possible global economic slowdown is making the U.S. Federal Reserve nervous. It has hinted that it may cut interest rates, spurring a rally on Wall Street last week. The Fed is acting as a government guarantor of a pyramid scheme.

“If something cannot go on forever, it will stop,” said conservative economist Herbert Stein back in the 1970s. Accordingly, the bubble economy will inevitably come to an end. Bubbles are bicycle-like phenomena: They tumble when they stop moving — and the stock market has not moved up for a year and a half.

Conclusion

The bursting of a number of interconnected bubbles may change the configuration of the global economic and political system. As if that weren’t bad enough, Donald Trump is piling on. By antagonizing America’s allies and friends, and initiating spurious trade conflicts, Trump is laying the groundwork for America’s failure as a world leader.

It is an interesting sign of the times that the bitcoin, which many economists believe is inherently worthless, refuses to go away. After dropping sharply in late 2018, it has rallied this year.

Possibly, this is another bubble, but it may also be a troubling indicator for the future of the U.S. dollar as a global reserve currency.
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Re: The Nation's Financial Condition

Post by OCanada »

Bloomburg.

This is going to become a major problem especially when you add it on top of our demographic problem. Well not only ours we share it with countries like Italy as well. There is a solution but the administration will never find it. They would rather live in their cleansed world than have the USA have a strong and vibrant economy over the years. As Trump has said he doesn't care what happens after he leaves office.


One of the toughest problems retirees face is making sure their money lasts as long as they do.

From the U.S. to Europe, Australia and Japan, retirement account balances aren’t increasing fast enough to cover rising life expectancy, the World Economic Forum warns in a report published Thursday. The result could be workers outliving their savings by as much as a decade or more.

“The size of the gap is such that it requires action” from policymakers, employers and individuals, said report co-author Han Yik, head of institutional investors at the World Economic Forum. Unless more is done, older people will either need to get by on less or postpone retirement, he said. “You either spend less or you make more.”

In the U.S., the forum calculates that 65-year-olds have enough savings to cover just 9.7 years of retirement income. That leaves the average American man with a gap of 8.3 years. Women, who live longer, face a 10.9-year gap.

The forum assumed retirees would need enough income to cover 70% of their pre-retirement pay, and didn’t include Social Security or other government welfare payments in the total.

The retirement savings gap is about 10 years for men in the U.K., Australia, Canada, and the Netherlands, the forum says. Longer-living women in those countries face an extra two to three years of financial uncertainty.

Retirement Savings Gap
Estimated years of life expectancy past retirement savings, by country

Source: World Economic Forum
Most of the world’s retirees are doing well compared with those in Japan, where the retirement savings gap is 15 years for men and almost 20 years for women.

While Japanese workers save no less than others, they tend to invest in very safe assets that produce few gains over time, Yik said. As a result, average savings in Japan are only enough to cover 4.5 years of retirement.

Meanwhile, life expectancy at birth for Japanese women is 87.1 years -- the highest in the world, according to the Organization for Economic Cooperation and Development -- and 81 years for men.

Across the world, governments and employers have pushed more responsibility for retirement onto individuals, by shifting from traditional pensions to defined contribution plans, mostly known as 401(k) plans in the U.S.

“All the risks that governments and employers used to have, we’ve shifted that onto workers,” Yik said.

The size of the world’s collective retirement savings gap could exceed $400 trillion by 2050, up from $70 trillion in 2015, according to the report. The U.S.’s savings gap will be the largest at $137 trillion, followed by China at $119 trillion and India at $85 trillion.

Widening Global Shortfall
Total retirement savings gap by country

Source: Mercer analysis for the World Economic Forum
Among the forum’s recommendations are making sure more workers are covered by retirement plans on the job. Employers should be doing more to improve investment options while pushing workers to save a sufficient amount of their income, according to the report.

Fewer than half of the 1,900 retirement plans served by Vanguard Group automatically enroll workers, according to the firm’s“How America Saves 2019” report released Tuesday. That number has risen quickly, however, doubling to 48% last year from 24% in 2009.
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Re: The Nation's Financial Condition

Post by CU88 »

Can someone inform me of the last time the Fed cut rates during, as o d says, "The Best Economy Ever!"?
by cradleandshoot » Fri Aug 13, 2021 8:57 am
Mr moderator, deactivate my account.
You have heck this forum up to making it nothing more than a joke. I hope you are happy.
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CU88
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Re: The Nation's Financial Condition

Post by CU88 »

Can someone inform me of the last time the Fed cut rates during, as o d says, "The Best Economy Ever!"?
by cradleandshoot » Fri Aug 13, 2021 8:57 am
Mr moderator, deactivate my account.
You have heck this forum up to making it nothing more than a joke. I hope you are happy.
This is cradle and shoot signing out.
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foreverlax
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Re: The Nation's Financial Condition

Post by foreverlax »

CU88 wrote: Wed Jun 19, 2019 4:26 pm Can someone inform me of the last time the Fed cut rates during, as o d says, "The Best Economy Ever!"?
Never.

Stephen Moore, the head economist at Heritage, stood in front of the WH podium and supported the WH unprecedented attacks on Powell. He went further to say how wrong Trump was during the election for ragging on Yellen for keep rates low AND he said the Fed is now wrong, again.

Some of these clowns lie, this one is just stupid.
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holmes435
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Re: The Nation's Financial Condition

Post by holmes435 »

Trump gives the Presidential Medal of Freedom to a guy (Laffer - appropriate name) who says tax cuts pay for themselves... when they never have in the history of this nation. Ford saw it as idiotic. Reagan tried it and failed, then had to to raise taxes again and again, leaving Bush to raise them again afterwards, costing him re-election. Kansas tried it and imploded. Trump tried it and is seeing record deficits in a boom year.

I'd be laughing at Laffer and Trump if they didn't screw us so severely. I'm not sure how bad they have screwed us and my kids, but it's going to take decades to fix. F U Laffer. F U Donny.
OCanada
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Re: The Nation's Financial Condition

Post by OCanada »

Trump’s tax cut was fiscal stimulus. It has been an epic fail on its merits and what it was supposed to provide. That according to the WSJ and the CRC and anyone with any common sense. It provided a boost to the economy.

Fiscal stimulus is not an option now so he turns to monetary stimulus and since he can’t have his way starts politicizing SCOTUS to try and leverage one. I can’t tgink of a sector in this country he has not damaged.
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Re: The Nation's Financial Condition

Post by foreverlax »

holmes435 wrote: Wed Jun 19, 2019 11:54 pm Trump gives the Presidential Medal of Freedom to a guy (Laffer - appropriate name) who says tax cuts pay for themselves... when they never have in the history of this nation. Ford saw it as idiotic. Reagan tried it and failed, then had to to raise taxes again and again, leaving Bush to raise them again afterwards, costing him re-election. Kansas tried it and imploded. Trump tried it and is seeing record deficits in a boom year.

I'd be laughing at Laffer and Trump if they didn't bag us so severely. I'm not sure how bad they have screwed us and my kids, but it's going to take decades to fix. F U Laffer. F U Donny.
"In March of 2020 I'm really going to look at the political world very carefully," Laffer said. "Because if you'll remember, coming into the election in 2008, when Obama started rising in the polls, and doing well in the polls, the stock market crashed, the stock market tells you what will be and not what has been. And the stock market looks forward -- If they see an Obama coming into the office they'll crash and that's what led to the Great Recession."
...and there you have it.
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Re: The Nation's Financial Condition

Post by Farfromgeneva »

There was a 70% probability of the next Fed move being down rather than up more than a month ago,long before these minutes. That’s based on all the forward and future rate contracts and I confirmed with the head of derivatives at SunTrust when I saw that.

If only certain work is productive, as JHU72 states and I tend to agree at least partially, think like most things there’s more nuance to it, then that would also include all the unproductive and wasted money by both russia and China interfering internationally and more importantly building ghost cities and roads to nowhere. That’s like Enron creating a mirage of a trading business when bankers came that never actually existed (that happened).

72 & OCanada, I agree with a lot of your points just differ on parts of diagnosis and prescription but see what your pointing out. If you haven’t done so,I’d encourage you to read one of my two favorite books, player Piano by kirt Vonnegut - https://en.m.wikipedia.org/wiki/Player_Piano_(novel).
Same sword they knight you they gon' good night you with
Thats' only half if they like you
That ain't even the half what they might do
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See Jesus, Judas; Caesar, Brutus
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CU88
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Re: The Nation's Financial Condition

Post by CU88 »

Interesting:

https://www.washingtonian.com/2019/06/1 ... mazon-hq2/

Highly educated workers, Moretti concluded, have become the knowledge economy’s most precious resource. “In the twentieth century, competition was about accumulating physical capital,” he wrote. “Today it is about attracting the best human capital.” But these college and graduate-school degree holders are not dispersed evenly throughout the country. Instead, they’ve been clustering in a handful of already-thriving cities—places like San Francisco, Raleigh, Minneapolis, and Boston—which, as a result, have also become magnets for forward-looking employers.
by cradleandshoot » Fri Aug 13, 2021 8:57 am
Mr moderator, deactivate my account.
You have heck this forum up to making it nothing more than a joke. I hope you are happy.
This is cradle and shoot signing out.
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jhu72
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Re: The Nation's Financial Condition

Post by jhu72 »

What kind of moron is this guy? Such a cry baby. He starts a trade war and is unhappy when another country strikes back. :o :o :o What world does this clown live in??
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Re: The Nation's Financial Condition

Post by OCanada »

Well I think you already know:). Economic illiteracy
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youthathletics
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Re: The Nation's Financial Condition

Post by youthathletics »

CU88 wrote: Mon Jun 24, 2019 10:47 am Interesting:

https://www.washingtonian.com/2019/06/1 ... mazon-hq2/

Highly educated workers, Moretti concluded, have become the knowledge economy’s most precious resource. “In the twentieth century, competition was about accumulating physical capital,” he wrote. “Today it is about attracting the best human capital.” But these college and graduate-school degree holders are not dispersed evenly throughout the country. Instead, they’ve been clustering in a handful of already-thriving cities—places like San Francisco, Raleigh, Minneapolis, and Boston—which, as a result, have also become magnets for forward-looking employers.
Great article CU88. After reading it, I can not fathom that being in Federal Gov't ground zero territory was not the end goal all along. In the article, and reading between the lines, Holly Sullivan, the Amazon executive who led the search, insists that political considerations played no role in the company’s decision.

It also speaks volumes about private sector (very large) businesses not risking setting up shop in rural america, just because labor rates are lower. The gov't/federal teet is quite filling AND when Amazon begins to fall the local governments will fight tooth and nail to keep them afloat. It is a win-win for everyone.
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jhu72
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Re: The Nation's Financial Condition

Post by jhu72 »

Farfromgeneva wrote: Thu Jun 20, 2019 8:56 pm There was a 70% probability of the next Fed move being down rather than up more than a month ago,long before these minutes. That’s based on all the forward and future rate contracts and I confirmed with the head of derivatives at SunTrust when I saw that.

If only certain work is productive, as JHU72 states and I tend to agree at least partially, think like most things there’s more nuance to it, then that would also include all the unproductive and wasted money by both russia and China interfering internationally and more importantly building ghost cities and roads to nowhere. That’s like Enron creating a mirage of a trading business when bankers came that never actually existed (that happened).

72 & OCanada, I agree with a lot of your points just differ on parts of diagnosis and prescription but see what your pointing out. If you haven’t done so,I’d encourage you to read one of my two favorite books, player Piano by kirt Vonnegut - https://en.m.wikipedia.org/wiki/Player_Piano_(novel).
Farfromgeneva,

Sorry for the late reply. I was not ignoring you, I just don't look at every thread regularly. I love Vonnegut but I find some of his writing very dark. It scares me actually.

I really hate the way this board software interacts with my browser. It has some really annoying 'features'. I just spent almost two hours writing a reply to you, which I think you will find interesting, going into more detail than my previous post. In saving a draft, I lost all my work. I will retype the post as I get a chance and will get back to you.

I will just leave you with an interesting question, what happens when the value of human labor is going to zero at the same time as the value of all products is going to zero??
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jhu72
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Re: The Nation's Financial Condition

Post by jhu72 »

CU88 wrote: Mon Jun 24, 2019 10:47 am Interesting:

https://www.washingtonian.com/2019/06/1 ... mazon-hq2/

Highly educated workers, Moretti concluded, have become the knowledge economy’s most precious resource. “In the twentieth century, competition was about accumulating physical capital,” he wrote. “Today it is about attracting the best human capital.” But these college and graduate-school degree holders are not dispersed evenly throughout the country. Instead, they’ve been clustering in a handful of already-thriving cities—places like San Francisco, Raleigh, Minneapolis, and Boston—which, as a result, have also become magnets for forward-looking employers.

Really interesting article. Moretti is a bright guy but I have to wonder just how long this type of advantage lasts. I suspect it is shorter lived than he does. Success is emulated quickly and worker / employee life style preferences do change. Seems to me this (paradigm) too shall pass.
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