Sandy Stimulus?

From Bloomberg:

Sandy Seen Boosting U.S. With as Much as $240 Billion Rebuilding

John Cataneo is working his 20 employees overtime and still can’t keep up with demand from customers who need plumbing repaired after superstorm Sandy. He says he’s hired two new workers and may need more.

“We’re just not getting to some people that are asking for help,” said Cataneo, co-owner of Gateway Plumbing & Heating in Manhattan. “But we’re doing the best we can.”

Cataneo’s experience shows how the storm is giving the U.S. Northeast — and the rest of the country — an economic boost that may eventually surpass the loss of business it caused. Reconstruction and related purchases and hiring may range from $140 billion to $240 billion and increase U.S. economic growth by 0.5 percentage point next year, assuming $50 billion in losses, according to Economic Outlook Group LLC, a Princeton, New Jersey-based forecasting firm.

“Construction costs to rebuild all that was lost will be more than simply replacement because a lot of the work will also involve fortifying structures,” said Bernard Baumohl, chief global economist at Economic Outlook. “We’ll see construction ramped up, and that’s going to bring in jobs and an increase in demand for material of all sorts, and that’s going to further stimulate the economy.”

Estimates of insured damage caused by Sandy range from $7 billion to $25 billion. When lost wages and sales are added, the total comes to $50 billion, according to Oakland, California-based catastrophe risk modeler Equecat Inc. — a figure that may be recouped next year as repair and reconstruction efforts spur new building and sales of household goods.

Sandy may reduce economic growth by 0.25 percent to 0.5 percent in the fourth quarter after it disrupted industrial production, retail sales and employment, according to economists at Goldman Sachs Group Inc. Most of the reconstruction will take place in the first quarter of 2013, adding as much as half a point to growth, according to a Nov. 21 note to clients.

Reconstruction following a storm has an effect similar to a government-funded stimulus program, said Gary Schlossberg, a San Francisco-based senior economist at Wells Capital Management, which oversees about $331 billion.

“It’s certainly a form of stimulus, no doubt, and the ripple effects of the spending could leave you further ahead than where you were at the start before the storm,” said Schlossberg. “The administration wouldn’t want a hurricane to be a source of stimulus because the costs in losses and suffering outweigh the benefits.”

This entry was posted in Economics, New Development, New Jersey Real Estate. Bookmark the permalink.

153 Responses to Sandy Stimulus?

  1. Phoenix says:

    First

  2. Hughesrep says:

    Inventory for repairing and replacing just boilers for example for Long Island is being sucked up from as far away as wholesalers in the Philly area. Boiler manufacturers can’t keep up, and are running out of inventory and parts. Guys will take whatever line they can get right now.

    It’s been great for business. December and November are usually horrible months to be selling to plumbing and HVAC wholesalers. November will finish out as my best of the year so far, and I don’t even cover New York. Lots of NJ and PA business is being pushed to NY.

  3. Mikewaited says:

    Anybody need one of these for their kids.
    http://www.buylifetime.com/products/blt/pid-71566.aspx
    Come & get it 100 bucks, fine shape net is like new , must never have used came with the house.
    You can take apart but will still need pick up or van.

  4. Ernest Money says:

    Three words in response to Sandy Stimulus:

    Broken Window Fallacy

    http://www.youtube.com/watch?v=erJEaFpS9ls

  5. Ernest Money says:

    sima (4)-

    SOSDD. There have always been cut-rate real estate companies out there. The one thing they all have in common is that 100% of them fail. You could take every agent in that “office”, put all their skills and knowledge together, and it wouldn’t be 30% of what a guy like grim has forgotten.

    When a company has no value to add, they direct the consumer to focus on price. This is also how low-level scams work step 1 of a bait-and-switch.

    Remember Foxtons?

  6. Ernest Money says:

    Remember these cretins? They burned through a few mil of Kevork Hovananian’s money, then flipped the keys to Foxtons:

    http://hub.gmnews.com/sites/hub.gmnews.com/files/images/2000-08-16/04p1_lg.jpg

  7. cobbler says:

    Anecdotal evidence: the plumbers tell they are not available for non-emergency work for the next 3 weeks, had taken everybody to the shore. Don’t want to give any price concessions, either.

  8. grim says:

    Broken Window Fallacy is an interesting argument, but to take it as a priori law?

    From an economics perspective, wouldn’t the scenario need to take into account the propensity to save, spend, or pay down debt, in addition to the velocity of money, current economic conditions, and to some extent foreign trade deficits?

  9. grim says:

    For example, what if the cobbler was in China, and not down the road, what then? Who says the baker would even buy a new pair of shoes? How does the scenario change when the velocity of money is higher than average? What about the future payback in energy savings from the baker replacing that leaky single pane window with an energy efficient double pane?

  10. Ernest Money says:

    grim (10)-

    I take it as a priori law in an environment where the mechanism of credit extension/expansion is completely broken.

  11. Ernest Money says:

    Ich bin ein Mogadishuer.

  12. Ernest Money says:

    My first thought is that the Broken Window effect- as far as Sandy goes- is intensified by the fact that the original loss to homeowners is compounded by the gubmint’s subsidy of the repairs.

  13. reinvestor101 says:

    Saxby Chambliss is a RINO. DAMMIT.

  14. Mike says:

    Good Morning New Jersey

  15. Mikewaited says:

    Re 101 “Lighten up Francis” to early to be going off the hook.

  16. Mikewaited says:

    Morning Mike.

  17. Ernest Money says:

    One day closer to death.

  18. Mikewaited says:

    Clot 19 aren’t we always.

  19. Anon E. Moose says:

    Clot [19];

    One day more…

    http://youtu.be/IddP8AAIGTQ?t=1m57s

  20. Fast Eddie says:

    Meat,

    Shorter of breath… one day closer…

    http://www.youtube.com/watch?feature=player_embedded&v=ntm1YfehK7U#!

  21. joyce says:

    (11)
    Grim,
    If the baker doesn’t buy a new pair of shoes, the money not spend goes into savings/investment. If the baker doesn’t have any money to replace the window, he has to borrow it… now compare the future energy savings to the interest payment and debt overhang he never should have had to incur.

  22. Brian says:

    Not to mention the tax man comes and assesses your home higher in my town. that immediately gobbles up the energy savings.

    However, you can claim it as a deduction on your federal taxes….

    Sheesh this is complicated.

  23. Ernest Money says:

    Entropy. Wasted resources, classic good-money-after-bad scenario.

  24. grim says:

    So what happens when the money doesn’t even come out of the baker’s pocket at all? But from insurance and government subsidies?

  25. reinvestor101 says:

    >> Mikewaited says:
    November 24, 2012 at 8:50 am

    Re 101 “Lighten up Francis” to early to be going off the hook.<<

    ANYTIME IS THE RIGHT TIME TO DEFEND AMERICA FROM RINO'S AND LIBERALS. This wuss Chambliss signed the damn no tax pledge and is now trying to weasel out of it to cooperate with Obama. I get up first thing in the morning thinking about this after tossing and turning all damn night. HE IS NOT SUPPOSED TO BE REACHING ACROSS THE DAMN AISLE.

    Let's get something damn straight, they'll be holding the ice follies in hell the day I ever cooperate with stinking liberals/socialists on any damn thing. Chambliss needs to be banned from the damn party just like Lugar and the rest of these RINO's who want to cooperate.

  26. joyce says:

    Insurance premiums will go up for the baker in the future.
    or
    Govt subsidies come from?… taxes/deficit spending.borrowing/inflation.printing

    The problem is there is always a finite or scarce amount of resources & purchasing power to go around. When we have to replace what was a functioning product (the window), the resources and purchasing power have to come from somewhere (someone).

  27. NJGator says:

    Still for sale: Greg Schiano’s N.J. home, custom-built with Rutgers’ help

    http://www.nj.com/news/index.ssf/2012/11/still_for_sale_greg_schianos_n.html#incart_river_default

  28. cobbler says:

    Many of the homeowners at the Shore don’t have to borrow for the storm repairs, but will be forced to change their spending pattern towards stuff with higher domestic content (instead of a home theater system which is 100% foreign ex-install costs, or a trip to France that is 100% foreign ex-airline ticket tax, they are buying mostly domestic building materials and 100% domestic construction labor). Also, they are likely to pull more money out of their savings accounts (thus, increasing velocity). Not that they will feel happy about all this, but the economy will be aided, even without govt payments.

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  30. Ben says:

    It’s amazing to me that people still buy into the broken window fallacy. I wonder if they would still buy into it after they pay the tree removal guy 6 grand.

  31. Brian says:

    Cobbler,
    At least 90 percent of the materials used on my addition last summer were domestically produced. If this is true for much of the construction industry, it supports your theory.

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  34. joyce says:

    (30)
    Cobbler,

    “pull more money out of their savings accounts” which reduces ‘investment’ by the exact same amount. if we use the uselessly flawed GDP equation =

    C + I + G + (X-M)

    You increase C and reduce I by identical amounts, so again, no net growth, no positive. All that happens is certain groups benefit during the repair process such as builders. Not inherently bad, just as long as they’re not going around breaking windows.

    Lastly, I’m not so sure that most shore owners will not have to borrow.

  35. cobbler says:

    joyce [36]
    Savings = Investment only if the timeframe is infinity. Lots of people have 100K+ in their CDs and savings accounts paying close to nothing in interest, which banks use to buy Treasuries paying marginally more. Talk about this being an investment is simply not serious. Ditto, buying physical is not an investment… it is speculation (possibly, quite enriching or totally ruinous) which may indirectly help the capital formation in South Africa, but not stateside.

  36. joyce says:

    Would you consider money in a CD with a higher rate of interest an investment? If yes, that seems like a pretty arbitrary distinction. Even though rates are historically low, people still keep some money in a CD because they like their low risk/high liquidity features.
    If one chooses to keep a portion of their savings in the form of gold/silver, that’s still not an investment to you? Then what is an investment? Is it stocks and bonds? Can’t we also claim that people speculate in those instruments?

    Unless you’re calling for capital controls, yes of course people are going to invest locally as well as globally to fit their risk/return appetite.

  37. Fast Eddie says:

    We just came back from looking at 4 houses; 1 in Wash. Twp., 1 in Paramus and 2 in Wyckoff. Again, the inventory is sparse and we’re continuously trying to squeeze lemonade from a stone.

    The biggest problems with all of them was totally, totally illogical layouts based on additions gone wrong. It was like they slapped pieces of house together in random fashion.

    There’s not just 1 or 2 things to overlook in these houses, there’s multiple things. When you start talking about knocking out existing walls and trying to decide if it’s a bedroom or little office you’re looking at, you know that it’s not the house for you.

    In fact, I just opened the mail when I walked in and there’s a HAND WRITTEN letter from a realtor we met 2 years ago at an open house begging for inventory. It’s that bad.

  38. NJGator says:

    Gary – why don’t you throw a low ball offer at Schiano’s house. I doubt they’re going to have any takers – $2M in Pisc*taway!

  39. cobbler says:

    Joyce [38]
    No, I don’t consider something that yields less than the inflation rate (CD, specifically) as an investment; it is very marginally different from keeping money under the mattress. Neither I consider a commodity (gold or hog bellies, or whatever) an investment – gold mine or hog farm can be one. Rebuilding after the Sandy is about people adding to the velocity of the money by putting their savings to use. Again, what is good for the economy may be upsetting for the individual – my anxiety level will certainly go up if I am forced to spend say 50% of my savings, though it doesn’t affect my quality of life.

  40. Ernest Money says:

    Watch Schiano stiff Rutgers for the 300K he owes ’em.

    That house is the symbol of everything that’s wrong with kollege football. I hope some of the potential head injury lawsuits get traction and put that whole rotten sport under.

    BTW, my mom lives down the street in Memphis from Calipari’s house. She doesn’t think anyone will ever buy it.

  41. Ernest Money says:

    I can’t imagine Alex Ferguson or Mourinho living in some state-subsidized cathouse…

  42. joyce says:

    cobbler,

    It is not good for the economy; it ‘appears’ good only in the immediate – not the medium or long term.

    “Rebuilding after the Sandy is about people adding to the velocity of the money by putting their savings to use. Again, what is good for the economy may be upsetting for the individual – my anxiety level will certainly go up if I am forced to spend say 50% of my savings, though it doesn’t affect my quality of life.”

    It is good for some individuals at the expense of others. Of course lowering your or anyone else’s savings will affect their standard of living. These people are not spending their savings (or borrowing) on things to improve their lifestyle; they are rebuilding what was previously an asset.

  43. Hughesrep says:

    42

    Was it the stains on the drapes?

    Shouldn’t take long to get out. Or was that pitino?

  44. joyce says:

    (32)
    Ben,

    Amen. Why won’t the broken window fallacy just die? (I know why, too many people make a living touting it as justification for this and that). Christ

    32.Ben says:
    November 24, 2012 at 1:59 pm
    It’s amazing to me that people still buy into the broken window fallacy. I wonder if they would still buy into it after they pay the tree removal guy 6 grand.

  45. cobbler says:

    joyce,
    Many people have way more savings than what they expect to spend “to improve their lifestyle”, simply because knowing they have this money adds to their comfort level. If they suddenly have to spend some of it, their psychological comfort level will drop – while the only actual loss will be that their children inherit less 30 years from now.

  46. joyce says:

    cobbler,

    Why don’t you just come out and say it? Let’s have a wealth tax … they have TOO MUCH savings and they don’t need it so let’s take it to “benefit” society.

  47. Ernest Money says:

    joyce (48)-

    If cobbler isn’t scary enough, the thought that there are lots more people like him- and they way outnumber us- should cause you to piss yourself.

  48. Ernest Money says:

    Wow. I inadvertently made two posts (49, 50) that have something to do with real estate.

    My apologies.

  49. cobbler says:

    joyce,
    It should be obvious to you that I do support the inheritance tax for non-productive assets, and at a rather high rate. We should be encouraging charitable giving, and discouraging the proliferation of trust-fund kids. I don’t agree with the wealth tax concept though, since so much of wealth is linked to RE. It will be a property tax on steroids.

  50. 3b Buying says:

    Checked out this house needed work, but not horrible. However it was 3 doors away from the back of the middle school parking lot, so yhat killed it.

    http://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=1232122&dayssince=&countysearch=false

  51. cobbler says:

    and… we are talking about rebuilding after Sandy, right?..

  52. 3b Buying says:

    #47 Who are you to determine and decide what wealthy people should or should not do with their money?

  53. joyce says:

    cobbler,
    And where in your thought process does it occur to you that it’s their property (RE, savings, whatever) and they should be able to do with it what they please? as long as they don’t commit unlawful acts of course

    Ernest,
    very VERY scary

  54. joyce says:

    (55)
    Yes, we are talking about rebuilding after Sandy and the broken window ‘theory’ IS a fallacy… unless you have a problem with arithmetic.

  55. cobbler says:

    3b, joyce
    I most certainly agree the wealthy people should be able to do with their money as they please. I just pointed that when they are spending some of this money on rebuilding (rather than keeping it under the mattress), it stimulates the overall economy.
    People claiming the fallacy of the broken window theory are assuming the equivalency between forced (window is broken, and it’s cold outside) and unforced (you think your windows are outdated) spending for the economy which is simply not true – beginning with unforced spending being highly pro-cyclical.

  56. joyce says:

    “I most certainly agree the wealthy people should be able to do with their money as they please.”

    Pull the other one, as you support the inheritance tax.

    “I just pointed that when they are spending some of this money on rebuilding (rather than keeping it under the mattress), it stimulates the overall economy.”

    Lie #2, it’s not ‘under the mattress’ … it is invested. Because you personally don’t consider a CD for example an investment does not change the fact that it is one.

    “People claiming the fallacy of the broken window theory are assuming the equivalency between forced (window is broken, and it’s cold outside) and unforced (you think your windows are outdated) spending for the economy which is simply not true – beginning with unforced spending being highly pro-cyclical.”

    Do you even understand the difference between ecomonic growth and just economic activity?

  57. Ernest Money says:

    cobbler (53)-

    Never mind that it’s an illegal double taxation, and in practice, it tends to punish people like kids who are inheriting a family farm or business.

    There is also a difference between encouraging charitable acitivity and mandating it. Your ideas have been proved to be failures by history, and punitive inheritance/cap gains taxes will only accelerate the creation of the class of “trust fund kids” you detest. The funny thing is, those trust fund families CAN AFFORD to pay the taxes, will do so and will continue along, unabated.

  58. Ernest Money says:

    joyce (57)-

    We are a Third World jerkwater. The proliferation of the cobbler mindset will lock us into that status in perpetuity.

  59. 3b Buying says:

    #60 It should be there decesion what they do with their money. First they are encouraged, than they ae mandated. My whole problem with the Liberal mindset, is “we know whats best mentality. It starts with nicely trying to explain it to us liek we are children, and then when we continue to disagree or have a different opinion, than the hostility starts, then the we must be forceibly converted.

  60. Ernest Money says:

    3b, certainly you jest. Look at what liberalism has done for fine towns such as the Peoples’ Republic of Montklair.

  61. Ernest Money says:

    What I find funniest is that when people start to make sense, liberals use every trick in the book to silence them.

  62. Ernest Money says:

    Kinda like…uh…Stalin.

  63. Ernest Money says:

    The sad thing about liberalism in Amerika is that we won’t come to that Thatcher moment of running out of rich people to tap. The truly rich are completely insulated and protected by the state, so the segment who will be tapped out will be the upper middle class.

    At that point, better hope you’re armed and prepared.

  64. cobbler says:

    clot [68]
    Upper middle class people hadn’t paid federal estate tax, at least in the last 20 years… and nobody expects them to. As to your family farm concern, I clearly stated that I believe productive assets that the family manages – farm, factory, restaurant, store – should be excluded from the tax (but if you’ve inherited a “farm” selling $5K worth of Christmas trees , that also contains a mansion worth $15 Mln, I am sorry…).

  65. cobbler says:

    joyce [61]
    For the country’s economy it doesn’t matter whether your money is under the mattress, in a vault you are renting, or in a CD at today’s rate – in any case, it is not circulating; so, its velocity is zero. Whether you call it investment or not, doesn’t change this fact.

    And yes, I understand the difference between growth and activity… and rebuilding after the (limited) natural disaster in a wealthy country always results in the acceleration of GDP growth, since the capacity utilization increases… Situation is different in the poor countries (see Haiti), we are on the road there, but still a way to go – though certainly if we manage to make libertarian economic thinking widespread, the road will get shorter.

  66. joyce says:

    (70)
    cobbler,

    You’re killing me. What do you think banks do with the money that they have from people with CD’s?” They lend it out; well to be technical, they have the ability to lend out much more than that. Please tell me you already knew that… so yeah, you’re incorrect, it is circulating.

    If GDP increases after a disaster, it is due to government borrowing (G in the equation) and/or pulled forward demand. What happens when we have to pay back the debt PLUS interest? I guess we’ll just never do that.

    What road are you talking about getting shorter?

    Criticize libertarian thinking all you want. All libertarian-ism is in the belief of non-aggression, non-violence, force is never justified unless in self-defense. If you have a problem with that, I’d love to hear it.

    I’m all ears…

  67. Phoenix says:

    I myself don’t believe in the inheritance tax so much, but I do understand cobblers thinking– If I were to hit the 350 mil lottery, I would not want to hoard all of that cash-circulating money does help the economy-Personally I would start a charity to help kids with dental issues such as braces. But what do you do with 10 billion dollars? I can’t imagine walking past a starving kid if I had a Billion dollars. Yet there are those who do that every day. I don’t believe in taxing them, they just disgust me.

  68. Comrade Nom Deplume says:

    [70] Joyce,

    I like cobbler. He’s good for business.

  69. joyce says:

    Comrade,
    His line of thinking is good for your line of business. Wasn’t it a couple of weeks ago that some random poster ranted about you being dependent on government just as much if not more than the welfare people you routinely demean.

    That poster was right.

  70. chicagofinance says:

    Joyce: I am joining in here very late, but to inject my unneeded $0.02….

    broken window fallacy ….. as someone suggested, the key about spending is the from whom/what/where TO whom/what/where……

    what you would hope is that spending (or directing resources) benefiting interests outside of NJ and/or the U.S., is redirected as a result of the storm, so incremental stimulus is focused directly at NJ and/or U.S. interests….

    who is paying? Multi-national/global re-insurance companies…..federal programs etc….and now more of these resources are directly at NJ.

    In short, finite pie, but hopefully NJ interests get served up a bigger piece…..

    to recall, I had heard NJ ranked 50th in the U.S. for $ collected by the IRS being remitted back to NJ. The placeholder in my head was $0.71 on the dollar, although I heard it had dropped to $0.61 in 2011…..I was since shocked to learn that pre-Sandy, it had dropped to a $0.48/$ run rate for 2012.

  71. Brian says:

    Mohawk house bitches……

  72. Ben says:

    Circular logic and arguments aside, there’s no way you can spin the broken window argument in NJ’s favor. Even if we bring in a ton of cash from out of state, we ain’t making it past the 24.5 billion dollar mark that this storm hit us for.

  73. Ernest Money says:

    cobbler (68)-

    You are completely full of shit.

  74. Ernest Money says:

    ben (76)-

    Exactly. I wonder how many people carry a $2,500 deductible on their homeowners insurance and won’t get past the start line on a claim because of that.

  75. Fabius Maximus says:

    #77 Clot

    No, this is the biggest pile of Sh1t posted here today.
    “The sad thing about liberalism in Amerika is that we won’t come to that Thatcher moment of running out of rich people to tap.”
    Here is the reality of the Iron Lady. She ran the best political campaign EVER!. She won on the strength of one image. http://johnlyle.files.wordpress.com/2010/03/labour-isnt-working-poster-for-the-conservatives-from-the-1979-general-election.gif
    The reality of her administration was that she came in to 6% unemployment and blew it up to 12%. This not manipulated M3 numbers. The only reason she won reelection was the Falklands war.
    I found a nice quote from a Toon fan that sums her up perfectl.

    Toonite
    Thatcher: Decimated industry, spent north sea oil revenue on unemployment benefits, sold our publicly owned assets to private business, waged colonial war, propped up apartheid, friend of dictators -more tea Gen Pinochet?, bringer of poverty to millions. Creator of ‘underclass’, denier of society, architect of housing shortage, destroyer of hope.

  76. cobbler says:

    clot [77]
    Sorry, I didn’t realize you are so committed to abolishing the estate tax, even if after paying it the all of the estate’s heirs are still richer than 99.9% people in this country, and without having to move a finger. For me, to have some brake on accumulation of the inherited wealth is a worthy thing for the society. And you’d found a very decisive argument for persuading people about something – just tell they are full of sh1t; maybe you should run for office…

  77. cobbler says:

    joyce [70]
    You know pretty well that banks, corporations and [many] individuals right now all sit on large piles of cash; that the banks technically can lend it doesn’t matter if they are not doing this… And I haven’t heard back why you think my statement about the difference between forced and unforced spending is invalid.

  78. Comrade Nom Deplume says:

    [73] Joyce,

    I don’t care anymore.

  79. Phoenix says:

    Remember to thank American corporations this holiday season by purchasing their Chinese made goods. Profit is good. The world is a business, Mr Beale.

    http://www.reuters.com/article/2012/11/25/us-china-carrier-idUSBRE8AO05V20121125

  80. Essex says:

    Bummer about England. Yo.

  81. joyce says:

    Comrade,

    When did you stop caring? Did you ever?

  82. joyce says:

    (80)
    cobbler,

    You said above you think people should be able to do with their money/property what they want… so… which one is it?

    (81)
    You’re still on this invalid assumption that just spending money is what drives an economy. As long as you hold this view, every conclusion you draw will be incorrect.

  83. Juice Box says:

    Speaking of Trust Funders we had a few interns this year children and grandchildren of the C Suite and Board. One has just landed here full time even though we supposedly have a policy against nepotism being a publicly traded company and all. This is someone who should have at least $20 mil in the bank waiting for 25 0r 30 years old. I gather they are trying to teach their grandchild a lesson and all about hard work but that should have been done a decade ago not when they are in their young 20s.

    Last time I had to work with one of these coddled trust fund kids I was constantly turning a blind eye to the drug dealers arriving at the office to fund the kids habit, the daily late arrival, long liquid lunches and constant use of sick time and the really condescending attitude that almost got that kid a blanket party from the other people busting their tail every day. Thankfully the kid just stopped showing up and probably spent the last decade or so in rehab.

  84. Commanderbob says:

    Very interesting discussion of liberalism and other things today… like the inbalance of trade with the far east:
    #83 Phoenix said:
    “…Remember to thank American corporations this holiday season by purchasing their Chinese goods…”
    My #1 Daughter who is a woman’s clothes designer is in the far east right now on a three week all expenses paid fact-finding trip to countries like Korea and Vietnam, etc
    and is visiting factories in these and other places. Should be a quite interesting conversation between father and daughter when she returns.. As I see it, all of the children and grandchildren are right-of-center in political beliefs and that goes for the college educated and the ones who are in presently in High school/college …. No liberals in this family, thank G_d !!
    By the way: This past Augest my First Great-Grandchild was born. Feels really strange to be a Great Grandfather !

    Hope that everone here had a great Thanksgiving.
    CommanderBob

  85. grim says:

    You’re still on this invalid assumption that just spending money is what drives an economy. As long as you hold this view, every conclusion you draw will be incorrect.

    Personal Consumption is currently around 71% of US GDP.

  86. cobbler says:

    joyce [86]
    (a) Dead people can’t do anything, and
    (b) Yes, the wealthy and developed economy running significantly under capacity (like ours in 2012) is primarily demand-driven – and it is pretty boneheaded to claim otherwise. There are other economies in the world, with different constraints – but fortunately we don’t live there (they affect us though via competition for resources and dumping their goods and services here).

  87. Juice Box says:

    Grim – Yes for the 40 years annual growth in PCE in the US is what is needed to stimulate GDP growth and the eventual economic recovery our economy. We are hardwired to blow if we try and restructure and grow our economy any other way other than perhaps a massive WWII like expansion in manufacturing for war. Nobody can come up with any other way other than Gov spending to fill the current output gap so we are stuck in a long slog. Some are calling it stagflation but it really does not meet the definition of our new normal 5 years after the “Modern Depression” began. We should see some frightening numbers soon that will encourage Congress to act to spend, spend, spend more and more on bridges to nowhere and sand dunes for the rich.

  88. Fast Eddie says:

    CommanderBob,

    Nice to see a post from you once in a while. :)

  89. chicagofinance says:

    Ever heard of the cliche Money Burning a Hole In Your Pocket? Just because the money is there, it shouldn’t be pissed away without discretion…..

    The money is there for other reasons….assets on the balance sheets are less certain than in the past; the cost of the money is low; the business environment is completely opaque for 2013; and for the people banging on the door for lending/investing…..put together a real business plan with skin in the game, also tell the legislative and executive branches to enact some semblance of fiscal policy……your comment is a combination of specious arguments, naivete, and misguided and entitled populism…..

    cobbler says:
    November 25, 2012 at 1:28 am
    joyce [70]
    You know pretty well that banks, corporations and [many] individuals right now all sit on large piles of cash; that the banks technically can lend it doesn’t matter if they are not doing this… And I haven’t heard back why you think my statement about the difference between forced and unforced spending is invalid.

  90. chicagofinance says:

    BTW Cobs….there is really little difference between GM and Hostess, except the Obamunists completed the bailout of GM and ran for office on the result, and the American people actually want to buy what Hostess produces……althought the correct policy would have allowed both to incinerate, it appears the wrong company was bailed out…..

  91. chicagofinance says:

    Putting aside the actions themselves, which are reprehensible, who has the stones to tell these C-suiters that they are poisoning their own company through attrition of the best and brightest. It is not as simple as giving junior some place to punch the clock. It is the open contempt that management voices toward the rank and file. Any manager who tolerates, or worse subscribes, to this policy is second rate.

    Juice Box says:
    November 25, 2012 at 10:47 am
    Speaking of Trust Funders we had a few interns this year children and grandchildren of the C Suite and Board. One has just landed here full time even though we supposedly have a policy against nepotism being a publicly traded company and all. This is someone who should have at least $20 mil in the bank waiting for 25 0r 30 years old. I gather they are trying to teach their grandchild a lesson and all about hard work but that should have been done a decade ago not when they are in their young 20s.

  92. cobbler says:

    chi [94]
    The crux of my argument was that unforced spending (by the individuals and corporations) is largely pro-cyclical – it happens when the economy is already booming. Forced spending (which is rebuilding of NJ Shore) paid by the insurance money and savings will be happening now, and will provide a boost to the depressed economy.

    [95] I don’t know why you decided to move to GM v. Hostess… but the key difference between the two is non-globalized industry (junk food) v. globalized one (auto). Since the overall sales of bakery goods will stay more or less the same, laid off Hostess workers are likely to get re-employed in the same occupation, and fairly quickly (maybe some of them need to relocate though). Also, Hostess suppliers will just ship the same quantity of flour, sugar and yeast elsewhere. For GM, the hole in the auto supply resulting from its going out of business would have been filled by the foreign producers – so even if some of the lost assembly jobs would have come to Hyundai or VW plants stateside, majority of GM workers would be long-term unemployed. Also, many of the parts suppliers’ operations would have become unsustainable.

  93. Phoenix says:

    One thing I never understood-of all the things to tariff-why the solar panels? We could tariff lead painted toys, electronics, poisoned dog food, clothing– but why did we tariff the solar panels and not the other items? It’s the one thing that a cheap price would have helped the USA. If I could purchase them cheap enough I would use them.

  94. 3b Buying says:

    Fast: We are still looking, nothing out there. Guess it will be this way until after the holidays.

  95. Phoenix says:

    94 ChiFi Ever heard of the cliche Money Burning a Hole In Your Pocket? Just because the money is there, it shouldn’t be pissed away without discretion…..

    Those with the money are the ones that can make the changes. And no, the money should not be pissed away, but leaving it idle is not productive either. Finding the correct place to put it where it can do the most good can be very challenging but the effort to do that needs to continue.

  96. Fabius Maximus says:

    #95 Chi

    “there is really little difference between GM and Hostess”

    The fact that GM is 4% of GDP has no impact? I wonder if Cargill and the other big suppliers will be pondering their futures as Hostess goes under?

  97. Ernest Money says:

    gluteus (79)-

    Where in my post did I mention I was a Thatcher fan?

  98. Ernest Money says:

    joyce (86)-

    One the one hand, you and I are addressing a dolt (cobbler) and a semi-clever builder of straw men (gluteus), who would rather portray me as some kind of Maggie Thatcher fan (I’m not) than address the issue that history has proved soci@lism to be a failure.

  99. Ernest Money says:

    phoenix (100)-

    Agreed. However, folks like cobbler think the spending should be determined by the gubmint and cumpulsory for the “rich”.

    I’d like to think that the free market can handle this function better. And, in the end, the bond vultures will extract a measure of value/yield across the board.

  100. cobbler says:

    clot[103]
    Just run for office – you will be able to call names those who disagree with you, and be heard by many more people than when posting here. As we all know, validity of the argument doesn’t matter…

  101. cobbler says:

    [104]
    … and I never said the spending should be compulsory for the “rich” or whoever… just noted that if someone has a shore property that had been damaged and money to rebuild, they will do this… forced spending is not by the govt but by the circumstances – whether it is your daughter’s shotgun wedding or a flood.

  102. Ernest Money says:

    “…and I never said the spending should be compulsory for the “rich” or whoever…”

    Actually, you did say this, and you backtracked after joyce called you on it.

  103. Ernest Money says:

    BTW, I’m not calling you names, cobbler. I honestly think that you are a dolt.

  104. Ernest Money says:

    Perhaps the more appropriate clinical description would be “imbecile”.

  105. cobbler says:

    [107]
    Sorry to waste the valuable blog space… but where did I say this? Again, “forced spending” as opposed to “unforced” by the economic actors is a widely accepted term and has nothing to do with the government action. Basically, it is spending on “needs” (mostly, urgent) rather than “wants”.

    Btw, does your health insurance cover mental disease?

  106. relo says:

    68: Cobbler,

    What is the basis of your statement below? Whom do you consider upper middle class?

    Upper middle class people hadn’t paid federal estate tax, at least in the last 20 years… and nobody expects them to.

  107. Fantastic issues altogether, you simply received a new reader. What might you recommend about your post that you just made a few days ago? Any certain?

  108. njescapee says:

    I wish all of you well. There is more to life than just beating our heads against the wall to decide who should pay more or less taxes. The reality is we’re still here even after the great recession. We just bid on a pretty nice short sale 1 br / 1 ba w/ garage condo short sale close to our son’s family @asking of 80k in a very nice and neat Broward County development. Hang in there, things are getting better. Best regards from Key West, Fl.

  109. Ernest Money says:

    escape (113)-

    You live in a place where the periodic economic brush fires that purge the system and allow it to reset were permitted to happen. We live in a command/control state in which dopes like cobbler reign.

  110. Fabius Maximus says:

    #102 Clot

    I never said you were a fan. I’m calling your assertion that there was ever a “Thatcher moment of running out of rich people to tap” complete Bullsh1t.

  111. Comrade Nom Deplume says:

    [85] Joyce,

    1. After the election or so I thought.

    2. Probably not. I was just deluding myself with pointless idealism.

  112. relo says:

    113: Escapee,

    In case you have trouble sleeping, what with the discomforting warm sea breeze and all.

    https://www.jct.gov/

  113. Ernest Money says:

    gluteus (115)-

    Our Amerikan brand of soft soci@lism protects the rich from getting tapped. We will, however, tap out the upper middle class.

    I hope you are well-armed when this happens.

  114. Phoenix says:

    Ernest 118
    Hope you are wrong. Not for me as I could care less at this point. For my child, however, I worry.

  115. chicagofinance says:

    Fabius Maximus says:
    November 25, 2012 at 3:50 pm
    #95 Chi “there is really little difference between GM and Hostess”
    The fact that GM is 4% of GDP has no impact? I wonder if Cargill and the other big suppliers will be pondering their futures as Hostess goes under?
    FabMax: If GM were that important, then it would persist in a new form subsequent to liquidation….
    as you likely know, we need this thing to trade to $53 for us to get our capital returned….as opposed to the banks and AIG who have already repaid…
    http://finance.yahoo.com/q?s=gm&ql=1

    [95] I don’t know why you decided to move to GM v. Hostess… but the key difference between the two is non-globalized industry (junk food) v. globalized one (auto). Since the overall sales of bakery goods will stay more or less the same, laid off Hostess workers are likely to get re-employed in the same occupation, and fairly quickly (maybe some of them need to relocate though). Also, Hostess suppliers will just ship the same quantity of flour, sugar and yeast elsewhere. For GM, the hole in the auto supply resulting from its going out of business would have been filled by the foreign producers – so even if some of the lost assembly jobs would have come to Hyundai or VW plants stateside, majority of GM workers would be long-term unemployed. Also, many of the parts suppliers’ operations would have become unsustainable.

    COBS: You disagree, but your arguments support my position. How are you making sense?

  116. Fast Eddie says:

    Meat [103],

    I’m rooting real hard for soc1alism, progressive transformation or whatever else these ivory tower sh1heads wanna call it. Whatever it is, I’m for it. I’m done supporting these freaktards. I’m part of the mainstream now, baby. Free phones, free unicorns, free c0ndoms, free anything at no expense to me. It’s a mandate… let the s.uckjobs pay for it.

  117. Buying Hunt says:

    We don’t live in a death spiral state… At least according to one definition from today:

    http://www.forbes.com/sites/baldwin/2012/11/25/do-you-live-in-a-death-spiral-state/

  118. cobbler says:

    relo [111]
    This chart http://en.wikipedia.org/wiki/File:Estate_Tax_Returns_as_a_Percentage_of_Adult_Deaths,_1982_-_2010.gif

    shows that no more than 2.3% of the adult deaths triggered the estate tax filing in any given year since 1982. Even the widest definition of the upper middle class brings it to the 95-th percentile, but not higher. So I think we are OK with the historical claim. As for the future, nobody can predict it – but the only chance for this tax to trap more than the historical numbers is if the “fiscal cliff” thing is not at all dealt with for the whole 2013… and if this happens, the value of most estates will plunge enough to make them non-taxable, anyway. I don’t believe there are any proposals in Congress to bring the exclusion to less than $1.5 mln or so.

  119. cobbler says:

    chi [120]
    I don’t see any contradiction here.
    If you are a 100% citizen of the world, yes – saving GM didn’t make sense, as global auto industry suffers from the overcapacity. I am sure Toyota and VW had been rooting for the liquidation. If you plan to stay in the U.S., sacrificing nominal $20B on a bailout that saves $600B/yr (4%) of GDP or even a quarter of this, should be a pretty good deal – it prevented much bigger than $20B plunge in income tax returns and a huge added outlay in UE payments.
    As for Hostess, there will be a small blip in weekly UE claims, and that’s it… For that matter, multi-year decline in Pharma jobs in NJ and USA overall is much more detrimental (scientists are better paid than most bakers – and you never know, maybe they’d discover something important…) and was perfectly preventable – R&D credit should have been made permanent and competitive with Holland and Singapore.

  120. Essex says:

    WASHINGTON — The corporate CEOs who have made a high-profile foray into deficit negotiations have themselves been substantially responsible for the size of the deficit they now want closed.

    The companies represented by executives working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills.

    The CEOs are part of a campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, which plans to spend at least $30 million pushing for a deficit reduction deal in the lame-duck session and beyond.

    During the past few days, CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council — most visibly, Goldman Sachs’ Lloyd Blankfein and Honeywell’s David Cote — have barnstormed the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs — Medicare, Medicaid, and Social Security — which would disproportionately impact the poor and the elderly.

    As part of their push, they are advocating a “territorial tax system” that would exempt their companies’ foreign profits from taxation, netting them about $134 billion in tax savings, according to a new report from the Institute for Policy Studies titled “The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks” — money that could help pay off the federal budget deficit.

    Yet the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting “entitlement” programs, as well as what they call “low-priority spending.”

    Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.

  121. chicagofinance says:

    Barring interference, global production capacity moves to the most cost efficient for the value added. If unionized manufacturing in the U.S. is grossly overpaid, then if it dissipates, so be it. Your big error is assuming that your quoted figure (i.e. 4%) disappears…..why should it? It only disappears if this POS industry was in fact being wet-nursed through its pathetic existence. I argue that U.S. workers that are non-union are inherently superior, and with our new energy resources (not withstanding Obamunism) we should possess a cost advantage, and a natural currency hedge for production. All we’ve done is wasted a lot of money, and made the U.S. government an investor, who gets to choose who prospers on arbitrary grounds.

    cobbler says:
    November 25, 2012 at 7:06 pm
    chi [120]
    If you plan to stay in the U.S., sacrificing nominal $20B on a bailout that saves $600B/yr (4%) of GDP or even a quarter of this, should be a pretty good deal – it prevented much bigger than $20B plunge in income tax returns and a huge added outlay in UE payments.

  122. joyce says:

    Thank you, grim.
    The US economy’s economic imbalances have been growing for decades (primarily enabled by the FED reserve system).

    89.grim says:
    November 25, 2012 at 11:01 am
    You’re still on this invalid assumption that just spending money is what drives an economy. As long as you hold this view, every conclusion you draw will be incorrect.

    Personal Consumption is currently around 71% of US GDP.

  123. joyce says:

    I’m glad I missed the rest of today’s discussion.

    To cobbler and fabius, I cannot believe you’re supporting any kind of bailout. Is your line of thinking, ‘how can we bail out the banks and not the car companies’?
    Neither should be bailed out… in the past or future.

  124. joyce says:

    (126)
    Essex,

    It’s not a surprise that certain industries, let alone individual companies, would not exist (and certainly not in their current form) without the government funneling money into their coffers on a continuous basis.

    Where do we think the money the federal government collects eventually ends up? It’s hardly shocking if you’ve been paying attention.

  125. cobbler says:

    chi [127]
    Barring interference, global production capacity moves to the most cost efficient for the value added. If unionized manufacturing in the U.S. is grossly overpaid, then if it dissipates, so be it. Your big error is assuming that your quoted figure (i.e. 4%) disappears…..why should it? It only disappears if this POS industry was in fact being wet-nursed through its pathetic existence. I argue that U.S. workers that are non-union are inherently superior, and with our new energy resources (not withstanding Obamunism) we should possess a cost advantage, and a natural currency hedge for production. All we’ve done is wasted a lot of money, and made the U.S. government an investor, who gets to choose who prospers on arbitrary grounds.

    Barring any government intervention (and assuming all our competitors continue intervening as they please), in 10 years we won’t have any productive industries except mining, farming and maybe perishable foodstuffs. I prefer overpaying a little for the products made stateside to paying a lot more in various ways for protection from the unemployed hordes.

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  127. Fabius Maximus says:

    #118 Clot

    So where does Thatcher fit into your argurment, or are you just throwing the name out there for effect?

  128. Fabius Maximus says:

    #120 Chi,
    So nationalize it. The US could turn that inot a cash cow supplying so much of the country needs. Run the Volts into the federal car fleets and revive Hummer to retool the military.

  129. chicagofinance says:

    “I don’t always fumble the ball, but when I do, I prefer to smoosh my face into the gloriously supple cheeks of my offensive lineman.”
    — Mark Sanchez

  130. Fabius Maximus says:

    #127 Chi

    This is a BS argument as the production in some ways has to flow that way as the capacity to produce domestically has been ripped out. Look at steel, how can you complain about chinese steel when the heart of US steel is gone. You can’t restart those PA steel mills . The demand didn’t go anywhere and has to be satisfied, so how else does this play out.

  131. Essex says:

    Giants came to play some football.

  132. Fabius Maximus says:

    Joyce

    The big problem here is that no-one is looking at the full picture. It is not a case of bailing/stimulating this industry vs that industry. It is more a case of is the investment worth the payoff and this comes back to the velocity of money. For instance, back in 2008 funding shovel ready jobs did not do that much for NJ. Infrastructure spending here missed the mark as the work is provided be a few large highly efficent companies. The doller spent is going into the bank. Now with Sandy rebuilding the dollargoing to the day laborer will have a higher velocity and will be spent and that is the demand that we need to generate. We need however to stem the flow of dollars spent going abroad via the balance of payments.

    Through the past few years we have heard all this noise on the burden on the middle class. What got lost in the arguement is that the working class has been taking it sideways for the past 40 years.

  133. Fabius Maximus says:

    On Small business Saturday I spent a large wedge in a local radio shop on a new rig, so I’m off to play.

  134. joyce says:

    (138)
    I couldn’t disagree more. Shocking, I know. Where does the legality of the govt’s actions come into play in your cost-benefit analysis? Oh right, it doesn’t.

    The trade imbalances couldn’t not exist for very long if the Federal Reserve System didn’t exist. It’s pure arithmetic. But please, keep treating the symptoms.

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  136. chicagofinance says:

    In your mind, anything that doesn’t agree with your Elite 140 view is a BS argument. Simply put, the US has no business producing steel, so we should not. You can build a partial argument about predatory dumping by other governments at below cost. Fine. However, if you are advocating for old mills with obsolete technology (and frankly obsolete management), and a hapless workforce unwilling to fight for their lifestyle, being the standard bearers for government charity, you are posting on the wrong blog. Your obstinate attitude is as repulsive as your tone deaf arguments.

    Fabius Maximus says:
    November 25, 2012 at 9:04 pm
    #127 Chi This is a BS argument as the production in some ways has to flow that way as the capacity to produce domestically has been ripped out. Look at steel, how can you complain about chinese steel when the heart of US steel is gone. You can’t restart those PA steel mills . The demand didn’t go anywhere and has to be satisfied, so how else does this play out.

  137. chicagofinance says:

    “a hapless workforce unwilling to fight for their lifestyle” I should clarify. I mean that people should walk onto the shop floor at 18, and expect to retire at 55 with full pension and benefits without ever lifting a finger to better themselves…..then complain that they get kicked to the curb when circumstances dictate.

  138. chicagofinance says:

    Everything you need to know in a headline……Twinkies YES / GM NO

    AUTOS
    November 25, 2012, 7:15 p.m. ET
    GM’s Leap of Faith on Impala
    A Once-Celebrated Sedan Tries to Shake Off Rental-Fleet Image

  139. Ernest Money says:

    gluteus (133)-

    You really are a shit for brains. I simply used the Thatcher quote because she got it right on that account. The cynical reality of what has come to pass is that the rich have insulated themselves and passed the burden of oppressive taxation onto the upper middle class.

    Can we move on to another topic now?

  140. Ernest Money says:

    sx (137)-

    Football is played with a ball that is round and with players who don’t wear helmets.

  141. Ernest Money says:

    There is a decent steel industry in the US. It’s mostly focused on cold rolled steel and there are lots of companies like this that do pretty well:

    http://romestripsteel.com/contact.asp?tab=2

  142. Ernest Money says:

    Is there a way to turn Twinkies into crack?

  143. Ernest Money says:

    joyce (140)-

    You are a silly girl. The rule of law died in Amerika a couple of years ago.

  144. Ernest Money says:

    EAST RUTHERFORD, N.J. – Bill Belichick once famously quit the New York Jets, without ever coaching a game, by scribbling “I resign as HC of the NYJ” on a piece of paper.

    The Jets’ most attention-seeking fan, “Fireman Ed”, aka former New York firefighter Ed Anzalone, used 275 words to do essentially the same thing. In a self-penned column in the Metro, the free newspaper handed out mostly at subway stations, Anzalone announced he will no longer attend games as “Fireman Ed.”

    Anzalone became famous for leading the “J-E-T-S, Jets, Jets, Jets” chants at home games while wearing a fireman’s helmet.

    Anzalone cited the coarsening of conditions at Jets games due to fans’ anger at the team’s struggles this season and the quarterback controversy between starter Mark Sanchez and backup Tim Tebow. Anzalone wears a Sanchez jersey to games and said he left Thursday’s blowout loss to the New England Patriots at halftime due to heckling.

  145. Comrade Nom Deplume says:

    [150] money,

    VICTORY!

    And Fireman Ed should talk. I used to go to Jets games with a season ticketholder whose seats were near Ed’s. None of the folks around him, all of whom had season tickets, could stand the guy. They considered him an egotistical asshat who was waiting to cash in but never did.

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