America's Race to the Bottom

Discussion in 'Business & Economics' started by kmguru, Jan 25, 2010.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Here is some documentation of the six decade race to the bottom:

    “… In the last three decades, gross domestic product doubled but the typical worker's real wages barely increased. … In fact, real wages for middle class men have declined by 28 percent since 1969, according to a report from the Hamilton Project. For men without a high school degree, they've fallen by a whopping 66 percent.…" {Read this report at:}

    "... When you factor in millions of men without weekly salaries, {instead of just average salaries of workers} male wages sink to their lowest level since the 1950s. – {I.e. >60 years of huge corporate gains have been distributed 0% to America’s potential male work force. – No wonder unemployment cost are up and the “consumer economy” is failing}

    “… Almost one of every 12 white-collar jobs in sales, administrative support, and nonmanagerial office work vanished in the first two years of the recession," Peck writes, and one in six blue-collar jobs disappeared in production, craft, repair, and machine operation. We know where the jobs are going -- to machines, software, and foreign workers. We also know why they're going away. Global competition gives companies the incentive to be more productive, and technology and foreign labor gives companies the means to be more productive. Automation lets one employee handle the work of three, or three hundred. Off-shoring lets ten Asian workers receive the salary of one. As these corporate “Getting-Things-Done strategies” make the typical worker increasingly expendable, real wages have stagnated, or declined, to their 1950s levels. ..."

    “…Before the Great Depression, about 35% of family expenditures went to food and threads. Today, we spend only 10% of our income on food and 3% of our income on clothes. Again, this is an achievement of manufacturing and farming efficiency.It doesn't end there. Behind the most important technology stories of our time, there is a clear theme: The triumph of software ...” {and lower cost, more powerful, electronics like computers, iPads, video downloads instead of going to movies, etc.}

    “…You could say that everything is getting cheaper except for almost everything you need. We need places to live,* energy to move, education to move up, and insurance to stay healthy. The productivity revolution isn't doing much to make those things more affordable….”

    *{True, the cost of buying older house is down ~35% from inflated peak, but rents are up as more are forced into renting. Even those retainly the home have huge loss of net worth with its decline in value.}

    Quotes from:
    {…}s are Billy T inserts.

    SUMMARY: Except for electrons, US life for Joe American has been getting worse for 60+ years. The current generation is worse off than that of their parents. For reasons I have explained and mathematically proved here:

    This upward transfer of wealth to the already rich is built into the economic system and has become much more destructive of a stable society with GWB’s policies and decisions. The "middle class" is shrinking and the poor are in pain. Food and job riots followed by marshal law may be only few years away, especially if either my long standing prediction of a run on the dollar by Halloween 2014 is correct; Or China ceases to finance our growing debt and deficits.
    Last edited by a moderator: Sep 8, 2011
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I'm getting tired of just up dating the continuing decline in the housing market, house prices, foreclosures, etc. {post 197, 192 and dozens of earlier ones} so here is a little of why:

    "...Jobless claims climbed by 11,000 to 428,000 in the week ended Sept. 10 that included the Labor Day holiday, figures from the Labor Department showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 411,000, according to the median forecast. ..." From:

    Even if you have a typical job the news is bad:

    Yesterday, the front page of The Wall Street Journal read: "INCOME SLIDES to 1996 LEVELS"

    But prices are about double - any wonder that the US's 2/3 "consumer economy" is dying? That companies selling in the US are not hiring? Those selling in Asia or South America, especially Brazil, are doing very well, thank you. Labor shortage in China & Brazil are getting to be a problem.
    Last edited by a moderator: Sep 15, 2011
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    In the "better late than never" department:

    "... AP is reporting that the Securities and Exchange Commission is considering recommending civil legal action against the Standard & Poor's debt ratings agency over its rating of a 2007 collateralized debt offering. ..."

    Billy T comment: GWB kept the SEC on “a tight leash" - the phrase used by former SEC director before Congress in explaining why they had done nothing to catch Maddoff or curb the market excesses.

    If GWB's SEC had been doing its job as Obama's appears to be doing, then S&P would not have given the toxic trash AAA ratings and the banks could not have moved it off their books at face value, causing the buyers (mainly Fanny & Freddy) to go under (tax payers picking up the bill).

    Furthermore, because GWB's business friendly POV neither the banks nor the SEC did "due diligence” and banks even had "robo signers" plus did not record the transfers of ownership when the toxic trash was re packages into "trances" and resold all over the world.

    Thus now many states and local jurisdictions are in court asking for the mortgage transfer recording fees the banks skipped paying and many owners are making the case that there is no legal owner of their mortgage now so they do not need to pay it - several have won this POV in New England courts. (At best there are hundreds if not thousands of owners of tiny pieces of each mortgage as they were "sliced and diced' into dozens of different trances each of which was globally marketed as an AAA "collateralized debt" security.) If it is even possible to straighten this mess out, it will require more than a million lawyer man years of legal unwinding.

    GWB's administration turning a "blind eye" to the law when it was profitable for his supporters is now a large part of why the banks are in trouble although the greedy bankers themselves were quick to take advantage of the lack of enforcement of the regulations.

    GWB was probably the only man to ever bankrupt an oil company, which the Saudis bought for him, but that was nothing compared to bankrupting the Western world!

    There were other reasons too but when the depression comes, remember it was GWB who made it inevitable, as I predicted while GWB still had two years left as POTUS. It probably will come no later than in last months of 2014 or early 2015 as I predicted back when GWB was making it inevitable.

    My long standing prediction is actually that there will be a "run on the dollar' by Halloween 2014, which will in a few months be followed by world's worst ever depression in US & EU, but not in China or its suppliers of raw materials and energy - They will become "economic colonies" of Asian nations, especially China.
    Last edited by a moderator: Sep 26, 2011
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    A small update on the difference between Obama's and GWB's SEC:

    Just heard on Bloomberg TV: Obama's SEC is forcing Reebock to return 25 million dollars to shoe buyers (in lower prices, I think) for making false claims that its shoes would boost muscle tone, compared to regular shoes or other tennis shoes, etc. That would never have happened under GWB's SEC, which served the rich, the crooks*, the banks, and wall street, not the people.

    * Sorry to be redundant here with the three already named.
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Many hope that as US industry dies, new IT jobs will take up the slack. Not likely:

    "...Offshoring has become so engrained in IT processes that 65% of businesses now do it for some aspect of their business, according to an annual survey of IT budgets and technology trends by the Society of Information Management.

    This survey, which is based on data collected from CIOs and senior IT leaders at 275 companies, found that nearly a quarter of the companies using offshore services did so to run existing systems applications. And another 20% said they used offshore services to manage their infrastructure. ..."


    Even medical jobs are being increasingly outsourced. Emergency X-ray are of course locally read but many routine exam X-rays now go thru the internet to be read by Indian doctors (who do that and write the report in English during the US's night). The Report will be back in the US clinic's computer before the clinic opens the next AM for less than half the cost of a US radiologist doing that work. A couple of modest Indian cites have as their main source of income "surgate mother" service. Drug testing and development is a rapidly growing Indian medical activity - much cheaper to do there than in the US.

    In a decade or so, the US economy will mainly be the export of coal and food grown in the Mid West's fertile farms - what else will the US have a competitive advantage in then?
  9. Mrs.Lucysnow Valued Senior Member

    LOL! I love the short and sweet summation.
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... Demand {for new home sales} is on pace to reach 301,000 this year, less than the 323,000 in 2010 that was the lowest since data-keeping began in 1963.

    An overhang of distressed properties in the foreclosure pipeline that is weighing on prices of existing houses may keep luring buyers away from new construction. ..." From:

    Billy T comment: New "Lowest Ever" annual new home sales record to be set in 2011. It will be 7% lower than the old "lowest ever" record, despite still growing population!** The lousy job picture for young men is delaying marriages, and forcing many to live with parents instead of new wife in a new (to them at least) house. When they cannot buy their "starter house" the current owner of it (assuming that is not the bank) cannot "move up" - buy the bigger house.

    New home sales drive many other sales, such as dish washers, refrigerators, stoves, garage door openers, trash cans, even light bulbs.

    The US race to the bottom is accelerating.**

    In 1963 more new homes were sold and the population was only 189,241,798. Now it is 312,684,364 or 65% greater, yet new home sales are about 10% lower than in 1963 when records began to be kept!
    Last edited by a moderator: Nov 28, 2011
  11. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    This is what we'd expect in the aftermath of a housing bubble, no?

    I.e., we spent many years overbuilding new houses, and so now we are correcting and building very few new houses. Frankly, I'm amazed that the number of new houses sold was as high as you mention (over 300k), given that construction of new houses ground to a halt years ago. I can think of exactly one new home development proceeding in my city, and that's only because the company stands to lose all of their easements and contracts acquired years ago if they don't proceed now. There's plenty of recent construction getting foreclosed and sold at steep discounts, and so little reason to build or purchase new houses at the moment.

    Given that we just went on a binge of new home construction and sales for several years, it doesn't strike me as worrisome that we're doing a lot less of that than normal these days.

    Your data is on new house sales, so the "current owner" is the development company that built them. There are no "current occpants" involved.

    What's keeping first-time buyers from bumping existing owners into fancier houses is the decline in prices: the first-time buyer can afford to buy the houses (especially since the prices are so low now), but the current owners can't afford to sell them because they're underwater.

    I'd include a comparison to sales of existing homes, and also avoid focussing narrowly on years in the aftermath of the worst housing bubble in US history, if you want to get any kind of useful, valid insight into home sales trends.
  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    If you had read and re-posted the prior sentence before the one you quoted, It would be clear I was not referring to the new house sales data, but to used houses and small ones which the young people would like to buy, but cannot even afford that.

    These bottom of the market, but still too expensive homes do have a "current owner" which is some cases may be bank that foreclosed, but certainly (less than 1 in 1000) is a never-sold, newly-constructed, home. Even my "new (at least to them)" indicates I am NOT referring back to the earlier dismal data on new home sales. I was clearly speaking of the effects of the "lousy job picture" for young people who in normal times would be getting married and buying their first "starter house."

    It is true that many in underwater home owners are trapped there - cannot afford to eat the loss at settlement of a sale; however, there are still 3 houses not underwater for every one that is. So the main reason many young people are living with parents, delaying marriage etc. is not that there are no homes the current owner can sell as he is under water. It is the lousy jobs (or no job) they have.

    While I agree there is an overhang of unsold houses slowing being reduced the effect of it on new homes sales would be greater a few years ago and less now if it were the main cause of poor new home sales. But exactly the opposite is true. New home construction and sales are declining DESPITE the reduction of the excess number of houses produced in the bubble era.

    I.e. these facts show your point is not very important as why new home construction and sales are steadily dropping. If your POV were correct the new home sales should be steadily increasing as we work thru that excess of construction during the housing bubble. The facts (7% fewer new home sales than last year) show your POV is not correct.
    Last edited by a moderator: Nov 29, 2011
  13. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    First of all: that topic remains tangential (if not outright irrelevant) to the subject of new home sales, which is what your whole post there was about.

    Second of all: there is no visible distinction in your post. The sentences in question are in a paragraph about new home sales, and are immediately followed by another sentence about new home sales. You made no effort to separate these topics, and the reasonable reading of your post is exactly that you are trying to explain new home sales numbers by talking about purchases of existing homes.

    So, again, it looks for all the world like you simply screwed up when writing your post and now are trying to dodge admitting such. And, as usual, this simply compounds the error. You'd be better off just admitting that you screwed up and correcting yourself, rather than levelling accusations at me.

    Meanwhile, your putative argument remains incorrect, as I've already informed you:

    Again, the problem isn't that the bottom of the market is "too expensive" for anybody (well, anybody with a job, which is still many millions of people). The problem is that they are not expensive enough - and so the current owners would rather sit on them than sell them. There's a serious lack of liquidity in the housing market, and it's not on the demand side. Such houses sell very, very quickly when they do go onto the market. But mostly you have to wait for people to get foreclosed upon, and then try to buy the house from the bank. Except that process has gotten gummed up by the backlog of foreclosures, disincentive for the banks to trash their portfolio values by flooding the market with foreclosures, limits on how much losses the banks can write down per years, etc.

    Anyway: the problem is not demand on the low end. Entry-level houses (and mortgage financing) haven't been this cheap in a long time. The problem is supply - nobody wants to sell their house (because they're underwater) and nobody wants to build new ones (because it's not profitable enough).

    Then you shouldn't have put that material in the middle of a paragraph about new home sales, and followed it with another sentence about new home sales, in a post about new home sales. At least, not without taking some kind of effort to delineate the two subjects, or argue some connections between them. You are demanding a loopy, unreasonable standard for reading your posts, that just happens to be immensely self-serving to boot. I'm not buying it.

    Still a bad time to sell if you don't need to. Just because you won't end up bankrupt, doesn't mean that you find the prospect of losing hundreds of thousands of dollars palatable.

    Of course - such young people could always rent, if they had jobs. But what does this have to do with new home sales data? This appears to be an unrelated tangent, so why are you pursuing it?

    Nah, you make a bunch of wrong assumptions there.

    For one: it takes several years from the onset of a financial crisis to work out all of the foreclosures that are going to result. We still haven't hit the bottom of that barrel, so there's an absolutely massive downward pressure on new homes stemming from turn-over in existing homes (many of which are fairly new - those that were bought in 2005-2008 being the most vulnerable for default). This pressure has been slowly growing since 2008, and probably is at or near it's peak right now.

    Second, new home sales closely track new home construction. People don't tend to build homes they can't sell, and already-built homes tend to sell for whatever can be gotten for them. So a decline in new home sales is the same thing as a decline in new home construction - and since such construction is planned and committed to long in advance, it takes years to wind down in the event of a sustained housing downturn. Again, there are developments in my area being built right now, for the sole reason that they were committed to before the crash, and so will incur massive losses if abandoned. So the reason that new home sales are low now, is because developers decided to refrain from starting new projects back in 2009.

    If you could show a gap between new home sales and new home construction - a bunch of empty new houses sitting somewhere, with nobody trying to buy them - then your analysis would make sense. That would indicate exactly that buyers can't afford the new homes. But you won't find that, absent a few late-bubble developments that are still being held onto out of pure hope and grit.

    It will take a lot more than 3-4 years to clear that excess. We built something like 600k more new houses than we really needed, every year, for about 10-12 years. That's something like 6-7 million excess new(ish) houses. Catching up with that will require substantial population growth - which will take many more years.

    Meanwhile, we did this right as the Baby Boomers were headed into retirement, and so set to contribute negative demand for new houses over the coming decade.

    No, they just show that you have screwy ideas about how long it takes to work through excess housing after a bubble. We're still in the phase where the excess housing is being expressed. That process takes years; it isn't as if everyone just up and defaulted back in 2008. When you stop seeing tons of short sales and hearing news reports about people that haven't made a mortgage payment in 3 years, then we will have hit the bottom of the barrell. But as of now, we haven't even entered the phase where we start to work down the excess supply (although we should before too long now). This is why housing prices are still dropping. And when we do start working through the excess supply, it will take many more years.
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Nonsense. My post is about SEVERAL aspectS of the race to the bottom. When discussing the "America's race to the bottom" (The thread's subject in case you did not notice) one is allowed to mention more than one factor causing the decline.

    As I usually do, my post started with a quote of some just released news: That new home sales for 2011 were the lowest EVER (even going back to 1963, when records were first made) and this despite a 65% increase in US population since then.

    Then I noted one of the reasons why this had happened despite the much larger population: New family were not forming as they should because of the lousy job situation, especially for the young who should be getting married but must live with their parents instead. I.e. I said:

    " The lousy job picture for young men is delaying marriages, and forcing many to live with parents instead of new wife in a new (to them at least) house. When they cannot buy their "starter house" the current owner of it (assuming that is not the bank) cannot "move up" - buy the bigger house. ''

    And then I noted this negative feed back made fewer jobs as fewer items used in new houses were being sold by:

    "... New home sales drive many other sales, such as dish washers, refrigerators, stoves, garage door openers, trash cans, even light bulbs. ..."

    All the post is very much on the thread's subject with SEVERAL causal factors quite logically tied together.

    You cheery picked the one of my CORRECT* sentences, now blue, out of context and even ignored the "they" in it that is a direct reference to the young men who can not afford to marry or buy even a "starter house" in the prior sentence and claimed:
    My next sentence noted that the current owner of the "starter house" they might have bought in normal times "could not move up" as this is another reason (In addition to fewer appliances being sold. etc.) that there is negative feed back making the problem grow worse every year (annual sales of new homes are 7% lower than ever before).

    You seem to think that "starter house" are only new construction, but that is rarely the case: Normally starter houses are small and old and do have prior owners.

    I'll follow your example and cheery pick a sentence, which unlike my blue one above which you cheery picked, yours is simply wrong:
    I have already noted (in post 209) that your "nobody" is far from correct by pointing out to you that for every owner under water there are three that are not - many who bought years ago even have a net paper gain. ~75% can sell, pay off their mortgage at settlement and put money in their pocket! Perhaps rent for at least a few years (if not forever) before buying still cheaper home in the future if the trend of several years continues, as it still is now:

    "... Just before the opening bell {29Nov11}, the 20-city composite S&P/Case-Shiller Home Price Index showed a decline in home prices of 3.59% y/y in September, compared to the 3.00% drop that economists surveyed by Bloomberg had expected. Month-over-month (m/m), home prices were 0.57% lower on a seasonally adjusted basis, compared to forecasts, which called for a 0.10% decline. ..."

    Note 0.57% drop in last month compared to 3.59% in last 12 months indicates (if one month means anything and may not as weather etc. can effect sales, but not much the sales prices) the fall in prices is actually accelerating. Some years ago, I said that if I had a house, I would sell it before value drops more - perhaps even buy it back for less later. If my long standing prediction of run on dollar by or before Halloween 2014, quickly followed by "worst ever" depression is correct, you could sell your house even now and buy it back during the depression for half what you sold it for. During the last depression, the 8 story "Medical Arts" building in Charleston W.Va. with at least 50 doctor's offices (my father had one still in use, but could not pay the rent) sold for $5,000! as owner could not pay taxes.

    * If you don't think blue sentence is correct - please tell what is false in it.
    Last edited by a moderator: Nov 29, 2011
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member


    Please Register or Log in to view the hidden image!

    Is this time different? Or the global (except China and it suppliers) encore?

    “…As panic built in 1931, country after country faced capital flight. The effort to defend against bank and currency runs prompted rounds of austerity and plummeting money supplies in pressured economies, helping generate the collapse in output and employment that turned a nasty downturn into a Depression. …”

    BILLY T COMMENT: Getting out of dollars (into gold or Brazilian Real, both of which are up several fold from a few years ago) is still just starting. In Greece it is now panic: At start of 2010 Greeks had 237.7billion Euros in their banks at the end of 2010, 49 billion Euros less. In September 2011, 5.4 billion was removed. In October 2011, 8.5 billion more removed. This of course makes it impossible for banks to lend and soon their vaults will be empty – forcing sale of assets at very depressed prices – I.e. the Greek banks will fail, just as the Greek people believe.

    I expect same panic (a run on the banks to buy gold, real estate, especially small farms near small towns, etc. while dollar still has some value) in US by or before Halloween 2014, as I posted ~5 years ago. Central banks and many are buying gold, etc as it holds value – does not become just paper as fiat money always does in the end.

    “…Mr Obama’s stimulus is winding down; state- and local-government cuts continue. Republican candidates for the presidency echo the arguments of Mr Morgenthau, {who presidents followed into the "sound money" constrictions that made the depression longer lasting and harder on all but the rich.} claiming that deficit-financed stimulus spending has done little but add to the obligations of future taxpayers. …
    Prolonged economic weakness is contributing to a broad rethinking of the value of liberal capitalism. Countries scrapping for scarce demand are now intervening in currency markets—the Swiss are fed up with their franc appreciating against the euro. America’s Senate has sought to punish China for currency manipulation with tariffs. Within Europe the turmoil of the euro crisis is encouraging ugly nationalists, some of them racist. …”

    Both quotes and joined photos from current issue of The Economist:

    BILLY T COMMENT:Starting with GWB, US deficits and unemployment grew. Clinton’s budget surpluses were never to be repeated again. Before this Tea Party inspired and elected Congressional change (“rethinking of the value of liberal capitalism” as The Economist put it) the US debt the debt grew to 14, now 15 trillion and climbs at ~1.5 trillion per year now with little chance a divided government (part Keynesian, part Hoverish / Ron Paul “sound money” types) can do anything useful.
    Last edited by a moderator: Dec 10, 2011
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Leaders of the race down are the lying, greedy banker CEOs:

    "... On September 21, 2008, Morgan Stanley CEO John Mack said, "Morgan Stanley is in the strongest possible position." By September 29, 2008, they had borrowed $107 billion from the Fed and took another $10 billion in TARP money.

    On January 16, 2009, Citicorp CEO Vikram Pandit said, "We have an irreplaceable franchise." By January 20, 2009, they had borrowed $99.5 billion from the Fed and took $45 billion in TARP money.

    On January 22, 2009, Bank of America CEO Kenneth D. Lewis said, "The diversity and strength of our company is allowing us to continue to invest in our business to drive future profit growth." By February 26, 2009, they had borrowed $91.4 billion from the Fed and took $45 billion in TARP money.

    On December 16, 2008, Goldman Sachs CEO Lloyd Blankfein said, "Our deep and global client franchise, experienced and talented people and strong balance sheet position our firm well." By December 31, 2008, they had borrowed $69 billion from the Fed and took $10 billion in TARP money.

    On February 23, 2009, JPMorgan Chase CEO Jamie Dimon said, "We believe we have a fortress balance sheet." By February 26, 2009, they had borrowed $48 billion from the Fed and took $25 billion in TARP money.

    On March 6, 2009, Wells Fargo CEO John Stumpf said, "We couldn't feel better about the future." Meanwhile, as of February 26, 2009, they had borrowed $45 billion from the Fed and took $25 billion in TARP money.

    They are all liars. They should all be prosecuted for misleading their investors, the public, and Congress.

    It was these very banks that were feeding crap to Fannie and Freddie ..." (Billy T adds: which tax payers will eat one way or another)

    Quote from 22Dec11 Email sent by: Shah Gilani of WallStreet Insights & Indictments.

    Fraudently misrepresenting a car as new (when it has been the dealer's demo for a year with Odometer turned back to 20 miles) can get the dealer sent to Jail but if fraud is in the millions of dollars then there is nothing that can be done - not one banker CEO has gone to jail and more than a dozen should.
    Last edited by a moderator: Dec 22, 2011
  17. kmguru Staff Member

    The problem is the USA economy is not growing...and therefore all the derivatives and lies will catch next 3 to 4 years...
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Perhaps sooner - I.e. in first half of 2012, a rapid slow down, if not at least one quarter of negative GDP growth. Here is why:

    "... A purchase made this year may be fully expensed as opposed to being depreciated over a number of years. Same as the earlier "Home Buyer Credit" and "Cash for Clunkers" programs did. It is inflating current year {capital expenses} numbers as businesses take advantage of a temporary benefit. This has improved the look of various economic data series.

    ... Auto sales collapsed after "Cash for Clunkers" finished. The "Home Buyer Credit" led to inflated numbers for a few months which then fell back after the program went away. There would not seem to be any reason to think that capital goods activity would play out any differently. ..."


    Also the de-leveraging US consumer will be worrying about how he will pay for the goods he purchased for Christmas, when he could not afford too. I.e. will have locked his credit away for a few months at least. Those who got Christmas sales jobs, and made the un-employment data for November (and soon December when it is available) look a little better, will no longer have an income. And don't forget, Europe the US biggest customer, is even more broke than the US is. Plus, a few businessmen do have hearts - did not want to lay off Joe or June, just before Christmas but now can switch back into their normal Scrooge mode.
  19. kmguru Staff Member

    As I was talking to a friend today, I was told that there are empty manufacturing building in Hungary and France is having issues and hence putting a lot of pressure in their African nations. Looks like both Europe and USA will call it quits in 2013 (not this year as the President will keep it going) or later as BillyT says.

    Then in 6 month China will nose dive with a 20% drop in production while supplying a $23 Trillion economy that are broke. Then everything gets messed up....just an idea...
  20. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    US´s two top bonus CEOs based on 2010 results were:

    1. John H. Hammergren
    > Company: McKesson (NYSE: MCK)
    > Total 2010 compensation: $145.3 million

    McKesson’s shares were up 13% in 2010, underperforming the S&P 500. It is hard to imagine how the board of McKesson’s could have given Hammergen such an extraordinary award. McKesson’s revenue was $112 billion in 2010, up from $108.7 billion in 2009. EPS, however, fell to $4.62 to $4.29.

    2. Joel F. Gemunder
    > Company: Omnicare (NYSE: OCR)
    > Total 2010 compensation: $98.3 million

    Gemunder’s 2010 pay package cannot be justified based on shareholder returns. The firm’s stock was up only 2% for the period. The company’s EPS fell from $1.81 in 2009 to a loss of $0.91 in 2010. Revenue fell from $6.2 billion to $6.1 billion.

    Read more: America’s 10 Highest Paid CEOs (Which Are Worth It?) - 24/7 Wall St.

    Billy T comment:Part of the reason US is racing to the bottom is that the most incompentent CEOs are racing to the top. A monkey throwing darts at a list of S&P stocks to buy in 2010 would have out performed these top two bonus collectors and gladly do the better job for a few bananas!
  21. kmguru Staff Member

  22. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Yes, if you did not already think the future belongs to China, you should watch that; however, below this quote is my advise on what to watch and how to protect your self:

    "... The U.S. 10-year yield increased 13 basis points to 2.26 percent as of 2:13 p.m. in New York {today} and the dollar strengthened versus all 16 major peers. The Standard & Poor’s 500 Index drifted between gains and losses near the 1,396 level after yesterday closing at its highest level since June 2008. ..." From:

    Billy T comment:Considering how slow bonds normally change value, that is someting to watch. Less than a month ago, the 10 year´s yield was less than 2% and the 30 year bond paid less than 3%. For bonds, this is a storm! Ben´s printing presses may not be able to make fiat money fast enough to hold interests rates down - certainly he won´t be able to do so until end of 2014, as FED promissed.

    I don´t think this rapid rise of interest indicates the start of the "run on the Dollar" I predicted will come on or before Halloween 2014, but that it is caused by the stock maket hitting new nominal (not real) highs. I.e. people are pulling funds out of bonds to buy stocks. The rise in dollar´s value has the same cause - people without dollars buying them to invest in US stocks. By CoB Friday, I expect the DOW wil be North of 13,333, but it is much easier to correctly predict two years or more into the future than two days. (I note, this is a way out on the limb prediction as market is strongly DOWN today but it does take the buyers of dollars a day or two to convert them into US stocks.)

    A forewaring of the approah of the run on the dollar will have the 10 yields rapidly climbing thru 4%. When you see that, sell everything you can valued in dollars (certainly US stocks, although some people will be buying them as an effort to preserve purchasing power, before the dollar fully collapses, but IMHO, better not to try to get the last blood from the dying corpse.

    When, you get dollars for you assets, buy gold and/or better in long run, currencies of sound economies, like Canada, Brazil, Australia, NZ, etc. Especially the Yuan, if you can and perhaps even Russia.
    Last edited by a moderator: Mar 14, 2012
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    The storm I spoke of in post below is growing stronger (T bonds are droping values rapidly). Even Canada pays less now than US to borrow for 10 years:

    U.S. 10-year 2.374% +0.078 ..... From post below on a week ago the rate was 2.26%
    Canada 10-year 2.273% +0.037 .... And while rate is rising also, not nearly as fast as they US rate is.
    U.S. 30-year 3.475% +0.063
    Data from Bloomberg about 1:30 PM today (19March12) (Last column is % change from Friday, COB).

    AS stated below, I still don´t think this is the start of the dollar collaps, but I´m not quite so sure now with interest rates continuing to rise very quickly. Thus it might be a good idea for you to consider some of the defensive measures I suggeted in post below.
    Last edited by a moderator: Mar 19, 2012

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