33 comments:

  1. 1
    Jonness says:

    Happy Tofurky day!

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  2. 2
    redmondjp says:

    It will if it’s on wheels!

    I am thankful as well that I saw this sign and pointed it out to The Tim – it’s the gift that keeps on giving, year after year!

    I am thankful for my home, and for the leaf blower that I used to blow leaves off of the roof for an hour today. I’m also thankful for the pressure washer that I used a year ago to clean off the roof. Thankful as well for products such as moss-out, which I will have to treat the roof with sometime this winter to knock back the moss that has already reappeared in the past year. I am thankful that I still have the health to take care of most of this stuff myself.

    Be thankful for whatever you have, wherever you are. And appreciate your neighbor’s green grass, and be thankful that you don’t have to take care of it!

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  3. 3
    3rd Generation says:

    “is shown to be the ridiculous dribble that it is.”

    People in glass houses shouldn’t throw stones.

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  4. 4
    The Tim says:

    Pardon me, “drivel,” not “dribble.” Posted this from my smartphone at my grandma’s house this morning, so I didn’t quite have my normal editing tools at hand, and had the phone’s auto correct feature to contend with.

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  5. 5
    Scotsman says:

    A Happy Thanksgiving to all!

    In negotiating on the house I live in now it looks like the price is going to come in right at about half of what it was in 2006. I’m thankful for that.

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  6. 6

    By The Tim @ 4:

    Posted this from my smartphone at my grandma’s house this morning, so I didn’t quite have my normal editing tools at hand, and had the phone’s auto correct feature to contend with.

    Not auto-correct, but I learned the hard way to double-check my text messages created with Android voice-recognition. It’s incredibly accurate, but not 100% accurate.

    I love using VR for texts because rather than use abbreviations, you can use lengthy, obscure words to make your text message stand out! ;-)

    And happy Thanksgiving, everyone.

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  7. 7
    Jonness says:

    The bond vigilantes showed up in Europe today as Italy’s yield curve inverted (a very bad sign). 2-year notes are at 7.8%.

    http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/11/25/bloomberg_articlesLV84IX6KLVRA.DTL

    This is extremely scary. If Italy goes down, we all go down. Be very careful of leveraging your life savings into low rates at a time when prices are falling and we are stuck in a liquidity trap.

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  8. 8
    Macro Investor says:

    I’m thankful I’ll be able to enjoy my retirement years because I didn’t give it all away to the banks in the stock market and housing bubbles.

    (NOT from a crappy little hand held made for women and children’s tiny hands.)

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  9. 9
    Scotsman says:

    RE: Macro Investor @ 8

    Now, now- don’t get all prissy just because your fat fingers can’t work keys you can’t see. ;-)

    I’m finally upgrading to 4G- now I’ll be able to make mistakes twice as fast as before!

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  10. 10
    David Losh says:

    RE: The Tim @ 4RE: Jonness @ 7

    I never saw the global economy as over heated. In 2006 it was possible we would have had massive hyper inflation to make the Ruth Realty sign come true. It would have calmed the debt market, and our dollars would be paying a cheap price for the rapid expansion of the Euro.

    I’d like to know what the heck happened. Why did everything stop, all at once, globally? I understand about too big to fail or the AIG, or the Lehman Brothers selling crap, or Goldman Sachs maybe forgetting they had no backing for the securities that they held, but what happened to our old friend inflation? How did all currency settle down to just holding on?

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  11. 11
    Dirty Renter says:

    RE: Jonness @ 7

    Yep, it was just a few weeks ago everyone was panicking when the 10yr. hit 7%.
    When the bond vigilantes storm the shores of America, the superdopeycommittee, including that dingbat senator from Washington, best hightail it for the hills. Make no mistake, if we monetize it, it’s the same as a default, and we’ll be a banana republic selling trinkets and possibly our relatives, for sustenance.
    Did I forget to say Happy Thanksgiving?

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  12. 12
    Scotsman says:

    RE: David Losh @ 10

    “Why did everything stop, all at once, globally? ”

    Lack of sufficient/growing income to service new additional debt. Once new spending stopped and growth slowed the reverse began to happen- the debt spiral began to unwind. Inflation never had a chance to get started because wages remained flat. With wages flat eventuially we ran out of spending capacity, even with ever lower intererst rates. Now we’re playing the same old movie. . . backwards.

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  13. 13

    RE: Scotsman @ 12
    And why are wages flat? Because we’re doing far less manufacturing here, and the higher paying high tech jobs don’t require as many employees, and some of that work can be done in places like China or India. Which is why inflation is somewhat troublesome in China…because the economy is growing, the middle class is growing, and there’s demand for things.
    We’re actually seeing inflation here…the things we need and buy cost more. It’s not massive inflation, and it’s at a rate that could be sustained if wages were growing along with it. But it’s not just government that’s overleveraged, it’s people too. We have less money to buy things with because we bought houses we couldn’t afford( even though the banker took our pulse and said we were good for the loan)…Corporate profits are up, but it hasn’t resulted in employees getting more money. In fact, corporate profits are up because there are less employees, and we’re subcontracting work to China, and Sri Lanka, because we have things like minimum wage, child labor laws, and we’re not allowed to chain our employees to their machines.

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  14. 14
    Scotsman says:

    RE: Ira Sacharoff @ 13

    Yup.

    “corporate profits are up because there are less employees”

    Yup. Globalization strikes again. Are we having fun yet?

    People talk about housing prices hitting bottom when long term the real question should be “have wages hit bottom?”

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  15. 15
    David Losh says:

    It’s not wages, because even if there is a shift in who does the work, there is growth. Our growth here may have changed, but that should have been off set in China, India, Sri Lanka, and Europe. How about new economies like Dubai?

    Even at that, the money, the shear volume of money, that has been made in the past ten years should be growing the global economy, like crazy.

    Why did it all stop? Why did all the money, the staggering profits, the new currency strengths, all stop moving, all at once?

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  16. 16

    By David Losh @ 15:

    It’s not wages, because even if there is a shift in who does the work, there is growth. Our growth here may have changed, but that should have been off set in China, India, Sri Lanka, and Europe. How about new economies like Dubai?

    Even at that, the money, the shear volume of money, that has been made in the past ten years should be growing the global economy, like crazy.

    Why did it all stop? Why did all the money, the staggering profits, the new currency strengths, all stop moving, all at once?

    The staggering profits didn’t stop. I think the near collapse of the economy/banking system in ’08 put the fear of the lord in CEOs. They’re still making boatloads of money, they’re just not spending it. The money is just sitting there. Apple Computer has more cash than the US Treasury.

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  17. 17
    Blurtman says:

    Flat or falling wages, even with stable prices, is inflation.

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  18. 18
    Born Here, Done That! says:

    Could Mitch McConnels’ commitment to make Obama a one term president have anything to do with why we can’t get out of the Bush Depression?

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  19. 19
    David Losh says:

    RE: Born Here, Done That! @ 18

    I have thought that Obama was a game changer. No one knew what he would do, so they pulled back. We kind of hear the same thing today with the Republicans saying business wants certainty about the future. How bizarre is that?

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  20. 20
    gr8day says:

    RE-David Losh @10 – you stated “but what happened to our old friend inflation?

    Inflation is here, but the government does not measure inflation the same way I would. I would measure it like this: If a basket of products costs me $25.00 in January of 2010, how much does this exact same basket cost me in January of 2011?

    Bill Clinton introduced some fuzzy math in regard to inflation. According to Chris Martenson: “In 1996, Clinton implemented the Boskin Commission findings, which now have us measuring inflation using three oddities: substitution, weighting, and hedonics. To begin with this list, we no longer simply measure the cost of goods and services from one year to the next, because of something called the “substitution effect.” Thanks to the Boskin Commission, it is now assumed that when the price of something rises, people will switch to something cheaper. So any time, say, that the price of salmon goes up too much, it is removed from the basket of goods and substituted with something cheaper, like hot dogs. By this methodology, the BLS says that food costs rose 4.1% from 2007 to 2008.

    Next, anything that rises too quickly in price is now subjected to so-called “geometric weighting,” in which goods and services that are rising most rapidly in price get a lower weighting in the CPI basket, under the assumption that people will use less of those things. Using the government’s own statistics from two different sources, we find that health care is about 17% of our total economy, but it is weighted as only 6% of the CPI basket.

    But the most outlandish adjustment of them all goes by the name “hedonics,” the Greek root of which means “for the pleasure of.” Hedonics are a one-way trip. If I get a new phone this year and it has some new buttons, the BLS will say the price has dropped. But if it only lasts eight months instead of 30 years, like my old phone, no adjustment will be made for that loss. In short, hedonics rests on the improbable assumption that new features are always beneficial and are synonymous with falling prices.

    If inflation were calculated today, the exact same way it was in the early 1980’s, Mr. Williams (John Williams of shadowstats.com) finds that it would be running at closer to 13% than the currently reported 5%. This is a stunning 8% difference, which explains much that we see around us. It explains why people have had to borrow more and save less – their real income was actually a lot lower than reported. A higher rate of inflation is consistent with weak labor markets and growing levels of debt. It fits the monetary growth data better. So many things that were difficult to explain under a low-inflation reading suddenly make sense.”

    I have been reading about this since Clinton was in office – but this explanation from Martensen is the simplest that I have ever read.

    So, in answer to your question – inflation is here. But the government is not being really honest about the real, actual rate of inflation.

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  21. 21
    Born Here, Done That! says:

    RE: David Losh @ 19
    Obama was never my pick. He is a Centrist/Corporatist and ran on that.

    The “Change” he promised was to stop the “Politics as Usual” of DC.

    Mitch McConnel stopped him from being able to do that.
    His one major accomplishment, health care reform, was a Right Wing Dream.
    Senator Brown of Massachusetts is the only Republican who has even attempted to be non-partisan. Vote with the Tea Party or you’re out!!

    Obama is the best republican president since Bill Clinton.

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  22. 22
    Born Here, Done That! says:

    RE: gr8day @ 20

    How many substitutions can we continue to make to keep inflation down.
    Buy more pork and chicken and the price of pork and chicken eventually go up.
    The FDA ratings on beef have been replaced with “brand ratings” like “Rancher” or “Angus”

    Drive less and lower your thermostat and your energy costs go down.

    Lower interest rates and the housing market crash have helped keep the inflation rate down.

    Eventually the Government will have no new lies to justify a lower COLA figure, except the destruction of a living wage keeping laor costs down.

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  23. 23

    By David Losh @ 19:

    RE: Born Here, Done That! @ 18

    I have thought that Obama was a game changer. No one knew what he would do, so they pulled back. We kind of hear the same thing today with the Republicans saying business wants certainty about the future. How bizarre is that?

    Why do you think that’s bizarre?

    Before you spend money you want to know what the return after taxes will likely be. If you don’t know the future tax rate, you can’t determine the expected return. Spending money in ways that employ people becomes less attractive.

    I would add that right now they also cannot accurately determine their future employee medical costs. That uncertainty also leads to less employment. But hey, no problem–we’ll all be covered because we’ll all be required to buy insurance!

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  24. 24

    By Scotsman @ 14:

    RE: Ira Sacharoff @ 13

    Yup.

    “corporate profits are up because there are less employees”

    Yup. Globalization strikes again. Are we having fun yet?

    People talk about housing prices hitting bottom when long term the real question should be “have wages hit bottom?”

    In decades past, technological change allowed companies to become more productive. That lead to fewer employees, and changeover pain for those employees, but the end result was more productivity as the employees obtained new jobs creating goods and services that simply didn’t exist before. There was a larger pie to divide.

    More recent technological advancements have been more in the consumer areas. And while investment and spending in those areas does contribute to GDP, the assets manufactured and purchased are not productive assets. They don’t increase the pie, they just increase their owners’ enjoyment (and in some cases decrease their future ability to spend/invest).

    The old economic argument against military spending was that if business spends $1,000,000 it does so in in a manner that creates future return and jobs, where the military might spend that $1,000,000 on things that go boom, providing no future return or jobs after the bomb is built. In many ways, an iPhone is no different than a bomb when it comes to economic growth. Actually, the iPhone is worse because the bomb components are likely mainly built in the U.S.

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  25. 25
    Born Here, Done That! says:

    I don’t believe “uncertainty” about taxes was a major part in the pullback. It was actually the certainty that with a divided government nothing would get done when we needed something, anything, to stimulate the economy.

    Multinationals don’t care about local economies. They just care about short term profits and the accumulation of wealth.

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  26. 26
    David Losh says:

    RE: gr8day @ 20

    Is that inflation or speculation?

    It’s like investors buying up farm land because the price of goods is going up.

    What I think is that credit explains inflation. We go to the grocery store with a credit card and buy beef even though we can’t afford it. We fill up the gas tank, buy a TV, and any other item in that basket of goods, but it’s not with dollars, it’s with bank credit.

    The inflation that I’m looking for is the bricks of worthless cash that get exchanged for a loaf of bread. Where did the governments, all governments, go wrong.

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  27. 27
    gr8day says:

    David Losh @10 and 20- You stated: “How did all currency settle down to just holding on?” and “What I think is that credit explains inflation”

    Whenever we have more dollars in the marketplace, we have inflation. That is why the “quantitative easing” of today’s administration is causing inflation. The government is spending more that it takes in. To finance the excess, they can borrow the difference, or print money for the difference. They have to do one or the other. No one will go for additional taxes right now – so they print money. This ends up really being a hidden tax. (We cannot repeal the tax breaks on the ultra rich, so we print money instead. So…granny in the trailer park has a social security check that is suffering from inflation. But that is OK – because the 1% need to keep their tax break. Oops – sorry for the sarcasm.)

    There was a 100 year period that there was no inflation in this country – 1665 to 1776.

    Printing money results in inflation. When there is too much money in relation to goods and services, then inflation is created. We experience prices going up – but actually, inflation is the value of a dollar going down.

    Whenever the government overspends and borrows money, it creates a probable environment of inflation. If the debt is spent on wars…we get lots more inflation. If the debt is spent on roads and bridges – not so much inflation results. Just like our personal budgets. A reasonable mortgage and a school loan are probably OK. A credit card balance with meals out/vacations/other consumables gets us in trouble.

    John Maynard Keynes, (economist) had this to say about inflation: “Lenin was certainly right, there is no more positive, or subtle or surer means of destroying the existing basis of society than to debauch the currency.

    DL – You asked where the governments went wrong. IMO – excessive debt/borrowing/no gold standard. The lawmakers in Washington make short-term financial decisions. They want to make it look like things are going well. It keeps them in office. Plus – it does not hurt them personally. They have lifetime incomes with nice health benefits, we do not. Both personal debt and nation debt in this country are unmanageable. The Chinese are a nation of savers – and we are going further and further in debt to them. “The debtor is servant to the lender”. We are on the road to being servants to the Chinese (and others).

    I agree with Scotsman @12. Flat/decreasing wages, inability to take on more debt let alone service what we have, inflation, reduced spending capacity etc. All of these are Key Metrics that are causing the country financial pain today. It is also why people are hesitant to commit to a mortgage right now.

    And that is what is happening to our currency.

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  28. 28
    Jonness says:

    By Born Here, Done That! @ 25:

    I don’t believe “uncertainty” about taxes was a major part in the pullback. It was actually the certainty that with a divided government nothing would get done when we needed something, anything, to stimulate the economy.

    Multinationals don’t care about local economies. They just care about short term profits and the accumulation of wealth.

    Small businesses are responsible for creating about 2/3rds of new jobs in the U.S. The head of the Small Business Association recently cited uncertainty about taxes and costs (including health care) as a major factor in small business owners’ reluctance to hire.

    Of course, certainty about the divided government is also a major factor in employers’ reluctance to hire. However, that certainty is what is creating uncertainty about taxes and costs.

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  29. 29
    Jonness says:

    By gr8day @ 27:

    Printing money results in inflation.

    I think printing money can result in inflation but it doesn’t always happen. It depends on whether wealth is being destroyed faster than money is being printed. It also depends on whether the printed money ever makes it to mainstreet.

    If $1 trillion is printed and gifted to mainstreet, but $10 trillion of simultaneous wealth destruction occurs out of citizens’ pockets, it can result in deflation instead of inflation.

    If banks are gifted $1 trillion in excess reserves but refuse to lend it to mainstreet and instead park it at the Fed, it can result in deflation instead of inflation.

    If $1 trillion is gifted to corporations who invest the money in foreign markets instead of main street, it can result in inflation in other countries that drive up costs of imported goods as well as exported goods that experience foreign demand increases. However, prices of domestic assets can simultaneously fall if the money never reaches mainstreet. This can be confusing because some things will inflate while other things simultaneously deflate.

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  30. 30
    gr8day says:

    Jonness @ 28 –

    I agree. Generally speaking companies max out the production of their current staff before they hire new staff. With the uncertainty of what it will cost to hire someone, it is better to pay a current employee overtime until you know the costs of additional staff.

    The health care increase in costs are huge, but no one knows really how much.

    The greatest uncertainty is the divided congress and their inability to get anything done. Really…..anything.

    Uncertainty/unpredictability is a major component of an employers inability to make solid, predictable financial decisions.

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  31. 31

    By gr8day @ 27:

    There was a 100 year period that there was no inflation in this country – 1665 to 1776.

    I can’t believe no one has pointed out that someone needs a history lesson. ;-)

    I once heard that inflation statistics are also really pretty non-existent for North America before 1492.

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  32. 32

    By Born Here, Done That! @ 25:

    I don’t believe “uncertainty” about taxes was a major part in the pullback. It was actually the certainty that with a divided government nothing would get done when we needed something, anything, to stimulate the economy.

    Multinationals don’t care about local economies. They just care about short term profits and the accumulation of wealth.

    How do you think they calculate short term profits and expected accumulation of wealth if they don’t know the future tax rates.

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  33. 33
    m-s says:

    Maybe corporations are acting just like us. If they see no inflation in the future, keeping money instead of spending it becomes more attractive. The fear that the money sitting in the coffers is going to be worth less is what will loosen it up. Inflation, rather than destroying society, is the way to get tight-fisted bean-counters to let all that profit go. Unless they give it all to the shareholders, who will see the same thing and spend, too. China is a country of savers because they have not seen inflation… yet.

    Of course, inflation must be managed…

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