Posted by: The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

253 responses to “Global Economic April Thread”

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  1. Blurtman

    Central bank voodoo isn’t working
    Quantitative easing in all its many forms hasn’t helped

    Instead of being lent to customers, the reserves created by QE have persistently sat on bank balance sheets or been recycled into government securities. US commercial banks now have holdings of cash and government securities in excess of loans to customers. This echoes precisely what was observed in Japan when QE was implemented.

    The sclerotic credit growth reflects the fact that banks are capital constrained to varying degrees, due to losses and also planned increases in regulatory capital reserve requirements. A fragile financial system and the risk of funding shocks means that banks are husbanding liquidity. The uncertain economic outlook has also made banks cautious in extending credit to entities, other than those that are “too big to fail.”

    The general impact on real economic activity has been limited. The Fed’s QE programs to date have reduced long term interest rates, but bank credit has contracted, the housing market remains weak and economic recovery remains tentative. The experience is consistent with that of Japan where a prolonged period of QE did not result in economic recovery, growth, reduced unemployment or inflation.

    http://www.marketwatch.com/story/central-bank-voodoo-isnt-working-2011-04-27?pagenumber=1

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  2. pfft

    By Blurtman @ 200:

    RE: pfft @ 197 – I never said not raising the debt ceiling would not matter. I said there is more than enough money to pay bondholders without raising the debt ceiling and that Geithner lied when he said not to raise the debt ceiling would trigger default by the USG. The links are all above. You cannot seem to comprehend written text, apparently believing that the excerpted Geithner letter to congress were my words. Pointlessly argumentative, ignorant and lazy is no way to go through life, son.

    I don’t think you understand. I said days ago to post something that said not raising the debt ceiling wasn’t a problem. I didn’t say link to what geithner said. post something like an op-ed or a blog post from something like cato or some hack republican economist. how hard is that to understand? it’s like pulling teeth. my guess is you can’t find it. if you could you would have posted it days ago.

    you posted a link from karl d. he’s a crazy tea-partier who used to have a newt gingrich gavel. who listens to him?

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  3. pfft

    By Blurtman @ 201:

    Central bank voodoo isn�t working
    Quantitative easing in all its many forms hasn�t helped

    I posted links to krugman 6 months ago saying it wasn’t all that great.

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  4. David Losh

    RE: pfft @ 202

    Oh, sorry, you are also correct there are no links like that. The entire economic system, as we know it, would collapse if we don’t raise the debt ceiling. That is very true.

    There is no political will to change our present course. My only question is where Scotsman sees Armageddon based on all the numbers presented in the past few days.

    It looks to me as though we have a manageable budget if Congress would work together. Both Bush, and Obama followed the same course of action by dumping in massive amounts of currency. It also looks like every major government player, except Russia, has done the same thing.

    I also don’t see why global corporations, who have benefited the most from this free currency, don’t step in to help make the economy more robust, and in turn pay a fair share of taxes.

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  5. One Eyed Man

    T. Boone Pickens was on CNBC at 5AM today. He said an economist is a numbers guy who doesn’t have enough personality to be a CPA.;-)

    He also said he now has 200 sponsors in the House for a bill to provide 5 billion in tax credits over 5 years to subsidize the extra cost to put about 150,000 long haul NG fueled big rigs on the road. He said the sponsors were from both parties in about equal numbers. The bill will supposedly come up for a vote in May.

    Also on CNBC, Moody’s reported they had blow out first quarter profits. Its also rumored that they’ve reached a settlement decree with the Dept of Justice. The settlement will involve no monetary compensation but they’ll have to change their name to “Hank Moody’s,” their ratings will be called “Californications” and at the end of each rating they will include a required disclosure that states: “Why are you looking at us like we just _____ed your cat?”

    Moody’s ratings will now be available in the following format.

    http://www.youtube.com/watch?v=IWJhAOnJIzI

    Once again, my apologies to The Tim for the paragraph on Moody’s.

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  6. DeeDee

    I’m hoping to start some conversation here about what to invest in other than a house…I am a renter because the math supports that it is best for now…..I am investigating what to invest in and I am in agreement with many of the regulars here that the economy is not stable. I avoided the housing crash and the stock crash by cashing out in 2007…now what? I would appreciate some intelligent input on this topic. I am thinking about investing in land…kinda wish I had 3 years ago.

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  7. Kary L. Krismer

    By One Eyed Man @ 205:

    He also said he now has 200 sponsors in the House for a bill to provide 5 billion in tax credits over 5 years to subsidize the extra cost to put about 150,000 long haul NG fueled big rigs on the road.

    That would be good news for those who heat with oil.

    I wonder if that’s for the cost of the trucks or the fueling stations. I wouldn’t think the extra cost for the truck would be that significant, given what those things cost.

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  8. Blurtman

    RE: pfft @ 202 – How about debating the issue itself? My position is that at about 5% of total spending, interest on the debt is in no danger of being unpaid, and therefore that the USG is in no danger of defaulting on its bonds, and therefore that Tim Geithner is lying when he claims otherwise.

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  9. pfft

    By Blurtman @ 208:

    RE: pfft @ 202 – How about debating the issue itself? My position is that at about 5% of total spending, interest on the debt is in no danger of being unpaid, and therefore that the USG is in no danger of defaulting on its bonds, and therefore that Tim Geithner is lying when he claims otherwise.

    still can’t post a link huh?

    anyways you are wrong. the government has to issue a trillion or so a year in new debt to pay for the government. if they can’t they have to slash spending by more than a trillion dollars. do you really think they can do that and slash everything except debt payments? of course not.

    the catch is because fiscal contraction is contractionary, you have to cut more than a trillion dollars to get rid of the deficit because that will reduce revenues. there is no credible plan to cut a trillion from the government and not touch debt payments. the US would default.

    austerity FAILS real-time in Portugal and Greece. this was predicted by Keynesians before hand.

    Greek Deficit Exceeds Target Set by Bailout
    http://www.nytimes.com/2011/04/27/business/global/27euro.html?_r=2&scp=2&sq=greece&st=cse

    austerity reduces demand which lowers growth and tax revenues. that makes debt levels higher.

    the best way to deal with the deficit is to get people back to work paying it off. there is also the added benefit of less people collecting food stamps and unemployment which lowers the deficit.

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  10. pfft

    By Blurtman @ 208:

    RE: pfft @ 202 – How about debating the issue itself? My position is that at about 5% of total spending, interest on the debt is in no danger of being unpaid, and therefore that the USG is in no danger of defaulting on its bonds, and therefore that Tim Geithner is lying when he claims otherwise.

    you are wrong about this point also. if the bond market doesn’t think issuing no more debt is good it would raise interest rates which would make interest payments much higher. we’d have to cut even more spending. this would reduce demand and cause more cuts. this is the austerity spiral happening in greece and portugal right now.

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  11. pfft

    so sad.

    Deficit Hawk Drums Drown Out Cries of Jobless
    http://my.firedoglake.com/dakine01/2011/04/26/deficit-hawk-drums-drown-out-cries-of-jobless/

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  12. Scotsman

    RE: One Eyed Man @ 205

    “Why are you looking at us like we just _____ed your cat?”

    OK, just when I think I’ve got an inkling of where your brain is at you pull this stuff. I did not see that one coming.

    What do you have against cats? Or are you “captivated” by them? ;-)

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  13. David Losh

    RE: DeeDee @ 206

    I think the best investment is in small business. On my desk some place is a flyer from West Seattle Natural Energy. I haven’t researched the company at all. It’s here because I think it’s a great idea for a company that could expand in a number of ways.

    Let’s take something you love and look at the business aspects, or profit potential, of it.

    Think and Grow Rich is a book that I keep on my other desk, because it’s worth rereading. The guys who started the Red Balloon Company were just a couple of guys who saw balloon delivery in Phoenix, I think, and started that business here. They liked the concept, and grew into a global balloon enterprise.

    I prefer to have control over how much I win or lose depending on my own abilities. Other people invest in ideas that look good.

    I write a lot about a guy who buys Volks Wagen parts. It’s what he knows, makes a good living at it, loads up the bus, and makes rounds to swap meets. A woman, who has now passed, left an estate worth millions of dollars in Christmas Decorations. I’ve also said that I like cars. Some cars are worth garaging.

    There’s no limit to what you can make if you have a passion for something. If you just want to invest, short term business loans, within your own community, are something that I think will pay higher returns. You can buy a tile saw for a person who does tile, or do advertising for your local hair salon, start a service business for yourself, or sell a local product you believe in. That guy who sells bird houses? Builds them with scrap lumber, sells them for $30 and takes less than an hour to make.

    My opinion is that you have all the investment opportunity in the world within three miles of your home.

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  14. One Eyed Man

    RE: Scotsman @ 212

    For the record, my love of animals including cats, is purely Platonic. That’s my story and I’m sticking to it. The quoted language is just a paraphrase of a line stolen from Duchovny in Californication ( a show in which he plays a depraved character named Hank Moody). It was intended to place Moody’s in the light Blurtman would cast Moody’s (depraved and beyond redemption). To some degree, I share Blurtman’s belief that ratings agencies are depraved, but I try not to begrudge anyone their right to redemption.

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  15. DeeDee

    RE: David Losh @ 213 – I have also thought about investing in a Franchise or starting my own business..we owned our own computer consulting business for 12 years..I know the good and bad of that..our plans have changed now..my husband has a very good salaried job in his field, and I am one interview away from a good job as well…kids have started working and we are looking for a place to diversify our savings out of cash…I don’t have faith in real estate or the stock market. I think gold and silver are also a bubble (wish I rode that one on the way up to) but we are safe people…haven’t lost any money but haven’t made any either. I am worried about the US dollar.

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  16. Scotsman

    RE: David Losh @ 213

    David, sometimes you nail it. This is one of them. Then there are other days. . . ;-)

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  17. Blurtman

    RE: pfft @ 209 – Let’s stay on target. The debate is not whether austerity is good or bad, but whether Tim Geithner lied.

    The facts: USG spending – approximately $3.5 trillion. USG revenue – approximately $2.1 trillion. Interest payments as a percent of total USG spending – approximately 5% (around $200 billion.)

    To balance the budget would require approximately $1.4 trillion in spending cuts, or approximately 37% reduction in spending. There is more than enough room in the remaining $2 trillion to pay interest on the debt, even if as a result of the cuts, tax revenue would decline.

    You lose. Geithner lied.

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  18. Blurtman

    RE: pfft @ 210 – Interesting perspective. So Greece should issue more debt then, to lower the interest rate on their existing debt. Sounds like a great plan!

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  19. David Losh

    RE: DeeDee @ 215

    Silver, and gold are really a drain on your resources from a buy, and sell stand point. Buying is great, selling is difficult. Diamonds are also fickle. Jewelry however can be a great investment. You put it in a safety deposit box and forget about it. When you want to sell you take it out one piece at a time, put it on Craigslist, EBay, or whatever, call it a family heirloom, cry a little bit, and sell to a private party. You can buy using a little ad asking for a wedding set for cheap, or offer to purchase estate jewery.

    That’s just an example using gold as a starting point.

    You can do anything. The return on an investment can be for anything.

    If you live in Seattle maybe you know who Henry is. Henry did building art in Ballard, Fremont, and around. A woman I know bought some of his early work and just sold them to pay for her wedding.

    How about fishing poles, reed fishing baskets, or lures? Anything.

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  20. David Losh

    RE: Scotsman @ 216

    I’m going to start dumping corporate welfare links here as a counter point to some of the links you put up about how screwed we are with the deficit.

    That’s not actually my point. Our tax system is all screwed up. Reagan started to fix it with the Grace Commission. Bush the first side tracked the spending with his no new taxes. Clinton raised taxes, then never addressed spending. Little George sold us all down the river by giving away the company store to his dad’s buddies.

    We need Congress to stop amending every piece of legislation with more give aways, usually to the very wealthy. We need a comprehensive set of spending cuts coupled with strategic tax increases, or at least plug some glaring tax loop holes.

    http://www.cato.org/pubs/handbook/hb105-9.html
    http://www.ourfuture.org/corporate-welfare

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  21. Blurtman

    RE: David Losh @ 219 – Many folks warn about the impracticalities of owning gold. What is your experience cashing in something like Canadian Maple Leafs?

    It is hard to deny the long term trend in gold. $300 to $1,500 in 10 years is about a 20% average annual return. You would have doubled your investment in five years, and tripled it in seven.

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  22. David Losh

    RE: Blurtman @ 221

    I took a hit on the conversion of gold, that’s what it’s called, conversion to cash. When I did I doubled my money in six months.

    Coins need a market place. At $300 you would be buying at $225, at $1500 you would be buying at $1200. You have to get a deal, or why buy it?

    Holding the gold is no picnic either. It needs to go in a safe, or safe deposit box.

    You are always selling the gold at a time of another investment opportunity so it isn’t always the right time to sell gold. The buyer pool is also very small and the people buying or selling gold are pretty tight with a buck.

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  23. pfft

    By Blurtman @ 217:

    RE: pfft @ 209 – Let’s stay on target. The debate is not whether austerity is good or bad, but whether Tim Geithner lied.

    The facts: USG spending – approximately $3.5 trillion. USG revenue – approximately $2.1 trillion. Interest payments as a percent of total USG spending – approximately 5% (around $200 billion.)

    To balance the budget would require approximately $1.4 trillion in spending cuts, or approximately 37% reduction in spending. There is more than enough room in the remaining $2 trillion to pay interest on the debt, even if as a result of the cuts, tax revenue would decline.

    You lose. Geithner lied.

    it’s laughable to think that interest payments wouldn’t be touched. two of our biggest expenses are the military and SS. you think we’re going to cut those and not touch debt payments? you don’t know the budget or the politics then.

    “To balance the budget would require approximately $1.4 trillion in spending cuts, or approximately 37% reduction in spending.”

    wrong. remember we went over this again and again during the Greece crisis in 2010. reducing spending at a time like this reduces revenue because it depresses demand. the multiplier is 0.65. by cutting $1.4 trillion we’d still end up with $500 billion of new debt to issue only we can’t because we’ve reached the debt ceiling. #FAIL!

    in order to enact your cuts we need to cut $2 trillion. good luck with that while trying to not default.

    the math doesn’t add up.

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  24. pfft

    By Blurtman @ 218:

    RE: pfft @ 210 – Interesting perspective. So Greece should issue more debt then, to lower the interest rate on their existing debt. Sounds like a great plan!

    I didn’t say that. this should have been all thought out when the Euro was put together. it’s the original sin of the euro. greece if it had it’s own currency would be Iceland(who hasn’t been in the news in years) instead of greece. the currency would plunge and an export recovery would begin. grinding deflation makes repaying debt impossibel.

    what should have happened since greece has the euro is some combination of default(which would hurt German banks btw) and a low interest loan from the EU.

    the failure of austerity was predicting by the keynesians in the summer of 2010 by people you guys continually bash…

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  25. Blurtman

    RE: pfft @ 223 – Whether or not Congress can agree on budget cuts is not the topic of the debate. Stay on target. Even under your scenario, $1.5 trillion would remain, more than enough to pay the current $200 billion in interest. it would be truthful if Geithner said that if we don’t extend the debt ceiling, we have to cut this much and cut these programs. If he did not want to induce a panic, he could say that even if these cuts were enacted, which he would not recommend nor foresee, bondholders would still be paid as there would be more than enough money and they would be at the front of the line. But to state categorically that no debt ceiling extension = default is an out and out lie. How can you logically aruge that no one would vote for this size of cuts, but that interest payments would be part of the cuts if enacted? Doesn’t have to be the case at all. Mathematically, it is obvious, hence he lied.

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  26. David Losh

    RE: Blurtman @ 225

    Tecniquely he is correct we would default on something. Bonds are backed by trust. There would need to be a workable plan on the table that allowed for just paying bond holders while other committments were left unpaid. Default is default, it’s not an isolated incident.

    However, leaving Geitner? out of the equation, the United States, like any country, could stop the madness, and pay what it can afford to pay. To use the house hold budget as an example, if Americans just priotitized thier bills, and paid what was allowed in thier budgets, with a clear understanding they needed to pay off debt, we would all be more prosperious.

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  27. Blake

    Not sure if Kary is reading this and still believes that speculators have NOT had an adverse affect on real food prices…
    http://www.foreignpolicy.com/articles/2011/04/27/how_goldman_sachs_created_the_food_crisis?print=yes&hidecomments=yes&page=full
    -snip- The result of Wall Street’s venture into grain and feed and livestock has been a shock to the global food production and delivery system. Not only does the world’s food supply have to contend with constricted supply and increased demand for real grain, but investment bankers have engineered an artificial upward pull on the price of grain futures. The result: Imaginary wheat dominates the price of real wheat, as speculators (traditionally one-fifth of the market) now outnumber bona-fide hedgers four-to-one.

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  28. Blake

    Guys… we just gotta start our own bank: Seattle Bubble Bank!?
    http://www.ritholtz.com/blog/2011/04/bank-arbitrage/
    -snip- Q2 2009, Citigroup received over $23 billion in Fed loans with an interest rate of 0.5% while holding $24.3 billion in U.S. government securities with an average yield of 2.3%.
    … Similar arbitrage has existed for the top 20 banks since the Fed took rates down to zero.

    The bailout has always been about rescuing the banks, their management, shareholders, and most especially, their creditors and bond holders.
    -end quote-

    Do the numbers… 1.8% of $23 billion = $414 million in profit!
    Heck, I could be a banker!!!

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  29. pfft

    By Blurtman @ 225:

    RE: pfft @ 223 How can you logically aruge that no one would vote for this size of cuts, but that interest payments would be part of the cuts if enacted? Doesn’t have to be the case at all. Mathematically, it is obvious, hence he lied.

    mathematically huh? that’s all you’re considering? nothing political? sure during a war and a recovery from the bush great recession we’ll make deep cuts to SS and the military but keep paying those bond holders! yeah.

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  30. Blurtman

    RE: David Losh @ 222 – I have never bought or sold gold, bur a few dealers (http://www.golddealer.com/) charge about 3% either way. So in a buy and sell round trip hypothetically one would lose about 6%. If you spread that out over several years, the hit gets averaged out. Nowhere on these dealers’ websites is a guarantee that they will re-purchase the gold.

    You are saying that gold is not very liquid I guess, but your 25% cut seems to be at odds with the advertised 3% re-purchase cut. Could you shed some light on this discrepancy?

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  31. Blurtman

    RE: pfft @ 229 – Well, there is no way the debt ceiling will not be extended, and now we are getting somewhere. Geithner lied for politcal reasons as you insinuate. Imagine if he threatened the Republican House with having to slash Social Security and Medicare/Medicaid if the debt ceiling were not extended. Rosuing applause would result. Of course in Washington, what Geithner said would not be considered to be a lie, but a skillful spinning of the truth, I suppose. Part of the problem.

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  32. Kary L. Krismer

    RE: Blake @ 227 – Total BS.

    But where do you think these funds are storing all the food? Remember to actually affect the prices they have to hold the product off the market. Food might be a bit easier to store than oil, at least in some crops, but it’s still unlikely it’s something someone is going to do.

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  33. Blurtman

    RE: David Losh @ 226 – Depends what your definition of “is” is, eh? Geithner is on the record of claiming a default on the national debt.

    “Treasury Secretary Timothy Geithner says Republican leaders have privately assured the Obama administration that Congress will raise the government’s borrowing limit in time to prevent an unprecedented default on the nation’s debt.”

    http://www.usatoday.com/news/washington/2011-04-17-debt-limit.htm

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  34. Kary L. Krismer

    By Blake @ 228:

    Do the numbers… 1.8% of $23 billion = $414 million in profit!
    Heck, I could be a banker!!!

    You must be quite the business person if you can run a company with no expenses! ;-)

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  35. DeeDee

    RE: Blake @ 228 – this sounds interesting

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  36. Blurtman

    The recovery gathers steam, or at least grease:

    “(Bloomberg) McDonald’s Corp. (MCD), the world’s biggest restaurant chain, said it hired 24 percent more people than planned during an employment event this month.

    McDonald’s and its franchisees hired 62,000 people in the U.S. after receiving more than one million applications, the Oak Brook, Illinois-based company said today in an e-mailed statement. Previously, it said it planned to hire 50,000.

    The April 19 national hiring day was the company’s first, said Danya Proud, a McDonald’s spokeswoman. She declined to disclose how many of the jobs were full- versus part-time. McDonald’s employed 400,000 workers worldwide at company-owned stores at the end of 2010, according to a company filing.”

    http://www.doctorhousingbubble.com/economics-trends-wages-home-prices-lower-mcjobs-college-student-loan-bubble-debt-shadow-inventory/#more-4549

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  37. Kary L. Krismer

    RE: Blurtman @ 236 – Ignoring the employer, I’m not really sure that helps the economy because it probably to a great extent means some existing employees will work fewer hours. It might help the outflow of government funds to unemployment expenses.

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  38. Blurtman

    RE: Kary L. Krismer @ 237 – Right. It is troubling, to say the least, that 1 million people applied for these jobs. It would be interesting to know the breakdown – chronically unemployed, seniors impoverished by the Fed’s low interest rate, money printing policies, unemployed college grads, etc. Not a good indication of what this economy has become and what it is by any stretch of the imagination, although I expect pffft to describe why this is actually a good sign.

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  39. Blurtman

    One Million Exhausted Jobless Benefits in Past Year

    “Roughly 1 million people in the U.S. were unable to find work after exhausting their unemployment benefits over the past year, Labor Department data released Thursday suggest.

    Economists said the back-of-the-envelope calculation is yet another sign that the labor market remains weak.

    About 8.2 million idled workers were receiving unemployment benefits as of the week ended April 9, the Labor Department said in its weekly jobless claims report. This compares with about 10.5 million individuals at the same time last year, resulting in a decline of roughly 2.3 million people.

    The federal government estimates that the economy created 1.3 million jobs during the 12 months ended in March.

    “That leaves, roughly speaking, about 1 million people who have exhausted their unemployment benefits and have very likely not yet found a job,” said Joshua Shapiro, chief U.S. economist at MFR Inc. in New York.

    But Nicholas Tenev of Barclays Capital said a precise figure is hard to calculate. He estimated the labor force has shrunk by 638,000 since March of last year, largely because of a demographic shift as baby boomers retire.

    “While we don’t have an estimate of our own of how many people have exhausted all their benefits and are unable to find work, 1 million sounds high to me,” Tenev said.”

    The analysis is a bit shaky. Of the claimed 1.3 million created jobs, new grads as well as those not on unemployment are filling these jobs, too, so it is very likely that the number of unemployed who have recently exhausted unemployement benefits in the last year and have no source of income is higher than 1 million.

    http://blogs.wsj.com/economics/2011/04/28/one-million-exhausted-jobless-benefits-in-past-year/

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  40. David Losh

    RE: Blurtman @ 230

    Why would you buy gold at par? Let’s use the example of buying at $900 per ounce. You put it in the safe and wait. You are out of pocket $900 while you wait. It’s the lost opportunity cost. With $900 of investment capital I can do a lot of things to get a greater return over the course of time that it takes the gold to go up to $1500 per ounce.

    Gold is a real crystal ball investment. You could say gold always goes up, but you would be wrong about that, especially this time.

    Things will either go to heck quick, or they will get better. If things go to heck no one, and I mean no one, will be bartering in gold. That’s just ridiculous. You can’t eat gold. That’s why the super seeds people are making a fortune.

    If things get better people will convert back to cash, and opportunity.

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  41. David Losh

    RE: Blurtman @ 238RE: Kary L. Krismer @ 237RE: DeeDee @ 235RE: Blake @ 228
    A bank is a good start. I have made money in all of the stupidest ways in the world. There is money in everything you can imagine.

    Micro loans are an excellent way to make money. A tile setter who was doing tub surrounds for us at $700 using subway tiles told me if he had one of those big a$$ tile saws he could do a lot more. We bought it, he did more jobs, that he found, paid us, plus interest, and expanded what we could offer to our clients.

    So let’s say it was $1000, he paid us back $1100 in six months, and we had a service that we could sell, and mark up.

    If you just look around there is money everywhere, and that’s what makes this a great country. Software Engineer keeps talking about illegal immigrants, and Scotsman is talking about welfare, or maybe they are both talking about the same thing I can’t keep track.

    The fact is that people come to this country because they are allowed to make money here. They may not have the right to work at McDonald’s, but they are allowed to have a business. All they have to do is figure out how to pay the taxes. We allow foreign investment.

    Two women I know sell tamales for events in town. They compete with each other. One is out doing the other.

    Labor is by far the greatest asset we have right now. Really, who wants to work at McDonald’s if they can make more money doing less work?

    Anyway it’s the end of the month so I just thought i would throw that out there.

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  42. Blurtman

    RE: David Losh @ 240 – Speculation. The momentum is there, rightly or wrongly tied to a dropping dollar. It is enables a bit of diversification, too. BTW, if you can routinely turn your money into a 20% annual return, that is a money machine, so good luck in your ventures, that is great to hear. I’m looking at an almost nil savings rate and CD rate, and if you factor in inflation, a net negative return. I can sit out changes in gold for the long term, over which time I expect it to go up. I thought to go in at 1200. If I go in at 15-1600, and it drops to 1000, I can live with that. Is it speculation? Absolutely. Can I predict if and when it will drop? Nope.

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  43. David Losh

    RE: Blurtman @ 242

    Every one is looking for a sit on your ess investment. It’s always about easy money. Microsoft rich, off of sitting at a computer is today’s thing. Gold is always the luxury investment.

    Let’s look at my point from a different way. If I buy a shovel for $20, and charge $15 per hour to dig, then my return is astronomical. If I buy 20 shovels and pay 20 people $10 per hour to dig, still bill out at $15 per hour, then I make $100 per hour, and it takes me four hours to recover my original investment, and anything I make above that is a return.

    All I need is a return on my investment. I’ve paid off my 20 shovels, I’ve paid off my workers, I get a return. After that I can gift each worker the shovel, each worker has an opportunity, and I always have the opportunity to do more.

    I know some one will say buy a back hoe, or some other cute remark, but the fact remains there is always more money. There is always a return on any investment, and if you want to wait, great, but you will always have a lost opportunity.

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  44. pfft

    By Blurtman @ 236:

    The recovery gathers steam, or at least grease

    did you see cat earnings? not bad. the recovery is gathering steam there is no doubt about that.

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  45. Kary L. Krismer

    RE: pfft @ 244 – My cats are still unemployed. :-(

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  46. Ben
  47. Blurtman

    Geithner called out by Congress for his bullshat. Terrible choice for Treasury Secretary unless you are a Wall Street bank.

    H.R. 41 Full Faith and Credit Act – To require that the Government prioritize all obligations on the debt held by the public in the event that the debt limit is reached.

    http://www.opencongress.org/bill/112-h421/show

    “A pitiful scare tactic already being used by the Treasury Secretary in the debt ceiling debate is the threat of allowing the federal government to default on its obligations,” Jordan said. “This is government mismanagement at its worst. Secretary Geithner knows full well that he has the authority to prioritize federal spending so that default is not an option. This bill will take Secretary Geithner’s disastrous scenario completely off the table.”

    http://www.placercountyonline.com/2011/01/26/mcclintock-bill-would-prevent-us-from-defaulting-on-debt/

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  48. Kary L. Krismer

    RE: Ben @ 246 – That seems like an odd story. Cat is well known as the type of company whose sales recover before the overall economy recovers. If the article were written as an explanation as to why that is, that story would make a bit more sense. Instead it’s written as if they think they’ve uncovered some great secret or something.

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  49. Kary L. Krismer

    RE: Blurtman @ 247 – I like the fact that the second piece you posted links to and describes the contrary opinion. It’s fairly balanced. Here’s the contrary piece:

    http://www.treasury.gov/connect/blog/Pages/Proposals-to-Prioritize-Payments-on-US-Debt-Not-Workable-Would-Not-Prevent-Default.aspx

    Not answered by either is just where such a prioritizing would get us. I’m presuming all non-essential US Government employees would be laid off, but what about payments to military, social security, medicare, medicaid, etc.? If not raising the debt limit would be basically the same as not having a budget, then I would agree Geithner is over-stating the case. And I’d even agree he’s over-stating his case by making it sound as if there would be an immediate default on the debt instruments. But that doesn’t mean there wouldn’t be an effect beyond mere delay if entitlements were delayed.

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  50. Blurtman

    RE: Kary L. Krismer @ 249 – Right. Not extending the debt ceiling would have to cause huge cuts to budgeted programs. That I don’t think, is at all debatable. But on the basis of his public statements, Geeithner is purposely mixing default on the national debt with cuts to programs. This serves to confuse the public, as well as the media, which is not hard to do, I guess.

    And it is extremely debatable if by cutting budgeted programs that the bond vigilantes would jack up rates on Treasuries. The opposite might very well occur.

    My point has been that Geithner has lied, and has lied transparently and poorly, which he has done several times publicly on major issues. He is a disgrace, but then again, so was Hank Paulson.

    Coke or Pepsi, that’s all you get.

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  51. Ben

    RE: Kary L. Krismer @ 248 – its not disputable as it is from CAT executives. It’s always helpful to know the context before drawing conclusions.

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  52. David Losh

    RE: Kary L. Krismer @ 232

    This is really the discussion that is important. Agribusiness, along with energy, is dominated by quick buck speculators who dabble in pushing up prices, of crashing prices as they buy long or short.

    There is no storage. It’s based on production numbers of phantom product that is always there. You don’t need to start, or stop production. You’ve pointed that out.

    The question is if production is a global constant, why is it so volatile?

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  53. Blake

    RE: Kary L. Krismer @ 234
    How much overhead and staff would you need to borrow form the govt and buy the govt’s bonds?
    -snip- Q2 2009, Citigroup received over $23 billion in Fed loans with an interest rate of 0.5% while holding $24.3 billion in U.S. government securities with an average yield of 2.3%.

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