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livinincali
Participant[quote=The-Shoveler]I respectfully disagree, while they could not stop the 50% drop they did prevent it from turning into a depression and they did know what they were doing and what would happen IMO.
I say no big crash until everyone is feeling really over confident and inflation brings local municipalities back above water (not going BK left and right) we are not there yet (IMHO anyway).
[/quote]How do you know that they actually prevented a depression rather than just postponing it and potentially making the next downturn worse. At this point most people would agree that fed policy was a significant driver in the housing bubble and that policy was put in place to avoid the pain of the 2000 stock market bubble popping.
Every time we’ve gone into recession in the past 20 years it’s worse than the previous one and the fed does more and more policy accommodation. What are they going to do the next time we inevitably go into recession. I really think we’re all just hoping we don’t go into recession soon because we all know there’s nothing much the fed or congress can do to bail us out.
Participant[quote=The-Shoveler]Watching this unfold is like watching that dumb and dumber movie.
I doubt it will have much effect for our markets at this point, Ben and his buddies in Japan have their targets for the markets and I think they really do have the ability to hit them.
They cannot afford not to.
I think that is key IMO.[/quote]
Japan has been trying to push their market higher for 20 years. Ben Bernanke didn’t stop the market from dropping more than 50% in 2008. The people that are pushing the market higher are those that now naively believe in a power that Bernanke doesn’t really have. They’ll eventually get slaughtered in the popping of the bubble like they always do. Might need to go a lot higher first, I can’t tell you when it will happen, just that it will. The only sure thing from the fed is that they can always create a bubble somewhere and they never see it until after the fact.
ParticipantAnybody with a little bit of math skills should understand the excessively leverage in system is going to end badly. The only real question is how and when? This just proves that even if you get the how and when right, the government might be there to take away you winnings in the name of fairness.
Participant[quote=spdrun]Hope they get a lawyer and soak Loser Angeles for the cost of 1000 new trucks.[/quote]
Too bad soaking Los Angeles doesn’t mean LAPD gets their salaries cut and the budget slashed. Instead it means the taxpayers get to pay more and the citizens get less services. It sure is nice to be king. Until you actually punish the people that actually committed the act through personal loss of wealth or jail time it’s never going to matter.
March 11, 2013 at 7:17 AM in reply to: OT: Public Employee Unions Attack the City of San Diego/Prop B #760539Participant[quote=CA renter]It’s a **service** industry. Of course most of their costs are labor-related!
The reason they are struggling, though, is because their market share is declining as electronic communication grows.[/quote]
Well the biggest reason their struggling is because they’re extremely handicapped by government regulation over how they can right size their business. If FedEx or UPS see declining business they can layoff workers. They can choose to exit markets that operate at a loss. It’s the inflexibility placed upon the post office from the unions on one side and the government regulations on the other.
The biggest problem with most public sector business is that they can’t improve their labor costs with efficiency because it’s difficult to lay people off. Your water/sewer bill use to require a small army of people to open and process the mail each day. About 15 years ago they got a machine to process mail automatically which cost quite a bit of money but they didn’t layoff that previous army of workers to see the cost savings. They just moved them into other jobs whether they needed them or not. Maybe that was a nice thing to do but it certainly wasn’t an efficient use of tax payer dollars.
ParticipantSome of the recent landlords will succeed others will fail. I figure that with hot money chasing single family property as investments there will be some negative consequences but it’s unsure what they are going to be.
I figure that at least one or 2 investments groups will get over levered betting on appreciation and fail. I figure some investment group will securitize their rental portfolio and sell it off to some pension fund. Some investment group will be massive slumlords looking to squeeze every penny which will get the states to move in and establish even more friendly tenant laws. Stuff like increasing property taxes on rental properties, tenant bill of rights, etc.
There will still be some profit in owning and renting real estate, but I think there will be a period of adjustment and difficulty that will take some wherewithal to hold through.
March 8, 2013 at 7:36 AM in reply to: OT: Public Employee Unions Attack the City of San Diego/Prop B #760464Participant[quote=CA renter]
Most union members do NOT want higher sales taxes, but they are left with no options because larger and more powerful interests are doing everything in their power to protect the interests of the very wealthy — challenging any moves to increase income, property, or other taxes that are less regressive.
[/quote]Really. Then why did SEIU contribute over 10 million to proposition 30. Why did CA teacher union contribute over 11 million to propsition 30 that included a sales tax increase.
Public sector union will do what’s good for them. They might prefer to take the tax money from the rich and give it to themselves. Pretty much everybody is fine with taxing somebody else to get a beneficial service.
Participant[quote=SK in CV]
Consumer choices drive inequality? I don’t think so. What’s happened over the last few decades, and magnfied over the last decade is that the share of corporate revenues that end up in the hands of the workers who actually produce that revenue has declined dramatically.See charts here: http://dispatches.us/post/11571145361/workers-wages-fall-corporate-profits-soar
Corporate profits are at record levels, measured both in real dollars and as a share of GDP. The delta in that income has remained in the hands of business owners, while wages have shrunk. The result is that the wealth built by those record profits remain in the hands of those who own the stock. That has always been the case, except that prior to the last few decades, workers have shared in that growth. That’s not the case now.
It has almost nothing to do with irresponsible consumption.[/quote]
You’re looking at one side of the balance sheet and I’m looking at the other. Where do corporate profits come from. They come from people consuming their goods or services. If you wanted greater wealth equality you would have many people selling each other goods. Instead we have tended to be more and more monopolistic, i.e. one person selling many people a particular good or service. In general a consumer makes a personal choice to support the growth of the monopoly. Monopolies are the primary driver of income inequality. If there’s one guy that controls most of the oil or most of the consumer goods he’s obviously going to be extremely rich because there’s millions of people that buy things from him that he sells for a profit.
Your solution seems to be allow the monopoly to exist but somehow force them to distribute their wealth more fairly. Another solution would be to break up the monopoly. Another would be to allow the monopolies to fail. Unfortunately pension funds and 401Ks rely heavily on those near monopolies existing and thriving. You can fix wealth inequality by allowing debt deleveraging and failure of over leveraged companies but you’re going to destroy your retirement fund in the process.
The scam is that 401Ks and pensions make you have a vested interest in maintaining the wealth inequality
ParticipantHow do you propose to reduce wealth inequality when consumer choices drive the wealth inequality in the first place. Every day a consumer goes to Walmart to buy groceries instead of the local grocery it increases the wealth inequality. Every time a consumer goes out and buys the latest and greatest iPhone rather than keeping the one they have increases the wealth inequality. Consumers making choice to consume and to go in debt to consume rather than save increases the wealth inequality. Every time you put more money into your 401K it makes Wall Street a little more wealthy.
What is wealthy? Taking a little bit from a lot of people. There’s plenty of stupid consumers that voluntarily give away a little bit of their productivity everyday.
Participant[quote=moneymaker]I do think interest rates could rise in the near term. However my play today was swapping HPQ for some AAPL, anybody think that was good/bad call?[/quote]
Tough to say. There’s nothing technical about AAPL that suggests a bottom here but you never know. AAPL was an over owned growth momentum stock. It will probably overshoot to the downside even though it looks undervalued. Look at long term charts of some other high flyers like MSFT, CSCO or KO. They went parabolic and when the parabolic run ended they got chopped in half and performed terribly. That’s probably where AAPL is right now, it’s run is likely done although it will take awhile until we believe it.
March 4, 2013 at 10:55 AM in reply to: OT: Public Employee Unions Attack the City of San Diego/Prop B #760282ParticipantIt certainly looks like the public unions will win in the courtroom on prop B. State law concerning collective bargaining seems to trump the proposition city voters passed. Of course with that said if the public unions ignore the will of the voters they could face some wrath down the line. If you really piss off the voters it wouldn’t surprise me to see an attack on collective bargaining at the state level.
In my eyes the problem is defined benefit plans where you assume an above market risk free rate of return where the tax payer makes up the loss. Even in the rare event where the risk pays off the tax payer doesn’t get any benefit and instead the public sector employee gets an increase in benefits based on the better than average return.
If the unions members want to set up a defined benefit plan where they bare the risk that’s fine but right now they get to gamble on the risk curve and then force somebody else to make up the losses. Of course we all know what’s going to happen in the future. It will be easy to throw that small minority of the beneficiaries under the bus when the funds run out whether it’s legal or not.
Participant[quote=poorgradstudent]Seriously though, this sequester fight is truly stupid. If there’s one thing markets hate, it’s uncertainty. There’s clear evidence these constant battles are already dragging down the recovery.
Jack up taxes and slash spending, but set them to kick in in 2016 or whatever. Boom, problem solved.[/quote]
So let me get this straight we’re in 2011 and the market hates the uncertainty of the debt ceiling. I know let’s agree to cut spending at the end of 2012 in exchange for raising the debt limit, boom problem solved. Well we’re here in 2013 and opps that problem isn’t solved, let’s kick the can again. Of course you can see that this never ends unless your willing to take the cut/tax increases when it might not be the best time or wait until it gets worse and the bond market blows up.
ParticipantLooks like sequestration would cut about 30,000 jobs in San Diego County. That’s about 2.5% of the total jobs.
http://www.cbs8.com/story/21232555/federal-sequester-to-impact-local-families
I figure it will initially effect rents/vacancy and then eventually cool off the investor demand. I figure home prices will be a bright spot for a while as we enter a recession. Housing will likely follow the recession rather than lead it this time around.
February 21, 2013 at 7:44 AM in reply to: Why American is failing to prepare for their retirement? #759895Participant[quote=bearishgurl]
A 30 yr+ worker who has a DB pension is going to be fine. Ditto for the 25 yr+ worker with a DB pension and other investments or a 20 yr+ worker with a ~$500K net worth (exclusive of home equity) and/or spouse who also has a DB pension.
[/quote]Let’s think about where the money is going to come from to pay these DB pensions. Most pensions are heavily invested in various assets and assume a rate of return of 7-8%. Most of these pensions are still currently net buyers of assets but that should start to change in the next 5-10 years where they will become net sellers. Now if Gen X and gen Y are over indebted and don’t have any money who exactly are these pensions going to sell their assets too. What price are they going to get for those assets? Are those assets going to keep rising in price at the assumed rate of return if there aren’t many buyers that can afford them?
In the end whether you have a defined benefit plan or not you’re still ultimately relying on the ability and willingness of Gen X and Gen Y buying your assets or in other words trading a portion of their productivity for your assets. How safe is that assumption and what do you do if that assumption doesn’t work out.
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