From the Star Ledger:
Notorious ‘subprime villain’ Howie Hubler unloading Rumson estate for $4.5M
The former Morgan Stanley bond trader believed to have lost more money than any single trader in the history of Wall Street has put his Rumson estate on the market for $4.5 million, according to its Zillow.com listing.
Howie Hubler’s disastrous bets against risky subprime loans cost Morgan Stanley $9 billion and was chronicled by Michael Lewis in his book about the 2008 financial meltdown “The Big Short.”
The 6-bedroom estate, built in 1928, includes a pool, spa, cabana and tennis court on four acres. The home has an “awe-inspiring kitchen” with high-end appliances, a walk-out lower level with a 10-foot coffered ceiling, full kitchen, wine room, gym and second laundry room, according to the listing.
He paid $4.65 million for the home in 2006, near the peak of the housing bubble. That’s $150,000 more than the current listing price.
It’s the eighth most expensive listing in Rumson, according to Zillow. Taxes are $65,754 a year, records show.
Hubler, according to Time, “was a thriving derivatives trader up until his excruciating blunder. From 2004 to 2006, he placed big bets against the U.S. real estate bubble using credit default swaps — complex financial instruments that pool and repackage risky sub-prime mortgages to sell on to investors.
But the economy’s decline happened slower than he expected, and Hubler had to cover his costs by delving even deeper into the CDO business. When the real estate market collapsed in 2008, he was wiped out — nearly taking Morgan Stanley itself with him.” The Observer called him a “subprime villain” and “an unwitting icon of the financial crisis.”
From the Star Ledger – Thanks Howie!
Where does N.J. rank nationally in foreclosure rate?
New Jersey’s share of distressed properties is the highest percentage in the nation, a new study shows.
In the United States over the last year, the number of homes in foreclosure dropped 23.9 percent to 427,000, the lowest rate since the finical crisis, according to CoreLogic’s March 2016 National Foreclosure Report.
New Jersey’s share of distressed properties is the highest percentage in the nation, a new study shows.
In the United States over the last year, the number of homes in foreclosure dropped 23.9 percent to 427,000, the lowest rate since the finical crisis, according to CoreLogic’s March 2016 National Foreclosure Report.
Hahaha. Ironically, Hubler thought most of the sub-prime mortgages were garbage and would explode. He put that trade on, going short the subprime garbage.
Unfortunately, he was a few years early in being proved correct so in the interim he needed to finance that trade. To do so he sold a ton of insurance (went long) on the AAA mortgage loan market.
Oops, as everyone found out AAA did not mean AAA. Morgan Stanley, like nearly everyone else, had to pay out 100% on AAA securities that literally statistically never defaulted at any meaningful rate.
I’ve always said the real villain of the housing crises were the rating agencies and their blown call in rating CDOs, likely one of the the largest screw ups (financially) in history.
Hubler, instead, would have felt right at home here in 2004. He thought – and put massive money behind the proposition – that NINJA loans and their like were cr@p and going to end badly.
Best scene from the Big Short was the Florida stripper with like 5 investment properties.
4. Didn’t see the movie, read the book.
One of my faves was that they were ‘too’ right. They moved heaven and earth to be able to get a massive short position which, theoretically, pays the most if the underlying security becomes worthless.
Problem was if their short position went to zero, generating maximum paper gains for them, they would get nothing because the other side of their trade that needed to pay them out (Morgan, etc) would be bankrupt.
At one point they found themselves rooting against their position to maintain some profit that they could actually realize.
LOL, make the trade of a lifetime for a generational changing amount of money and come close to watching it all slip away because you were ‘too’ right.
“Recent remarks by Donald Trump, the presumptive Republican presidential nominee, have turned the spotlight back to the U.S.’s $18 trillion federal government debt. The attention follows a period of substantial decline in the budget deficit that countered claims the country was heading rapidly toward debt Armageddon.
U.S. Budget Deficit
Here are key facts to remember as you assess what is likely to be a loud and contentious political conversation on debt:
1. There are five major ways to reduce the burden of debt: by growing faster, thus generating incremental resources for debt servicing while maintaining and enhancing living standards; by raising more tax revenue and earmarking it for debt repayment; by cutting government spending and diverting the funds to higher debt servicing, including prepayments; by defaulting on contractual debt terms; and through financial engineering that captures interest-rate arbitrage opportunities, buys back debt cheaply, improves the mix of issued securities and delivers greater financial efficiency.
2. There are practical limitations to the ability of these approaches to deliver big results in the short run. As a result, there is no realistic, orderly manner to eliminate the stock of national debt within just a few years. Default is extremely costly, disrupting both public and private capital flows while sharply increasing borrowing costs. There is a limit to what financial engineering — a strategy that is gradual and opportunistic — can achieve. Significant fiscal adjustment, be it via sharply higher tax rates for almost everyone or draconian expenditure cuts, risks devastating growth and rendering the overall debt burden even harder to sustain. And it is not easy to generate an immediate growth spurt, especially when the world economy is fighting structural headwinds.
3. Given the other ailments of the post-recession economy, it isn’t easy to argue that a sharp reduction in the national debt should be an immediate, standalone priority, and it does not belong among the three top urgent economic goals for the next administration. Although the longer-term trajectory of debt should be kept under close scrutiny and contained, there is no evidence that the U.S.’s existing stock of federal debt is a major problem. Borrowing costs are extremely low. The U.S. has access to abundant financing. And unlike many developing countries, it has historically issued almost no debt that is denominated in a foreign currency.
4. The focus on debt should not divert attention from the need for greater infrastructure spending, both through public projects and public-private partnerships. The potential gains far exceed the incremental cost of debt servicing, especially with such low interest rates. Infrastructure shortfalls are already holding back productivity, cutting into actual and potential growth and, in some cases, causing social difficulties.
5. The best way to deal with the country’s debt is by unleashing the higher and more inclusive growth that the U.S. is capable of, and by bolstering its future potential. This involves addressing structural impediments to growth, not just by plugging infrastructure gaps but also through pro-growth tax reform and better labor market retooling. It also requires countering the excessive worsening of inequality, which aggravates the problem of deficient aggregate demandby channeling the incremental income to the rich who have a lower marginal propensity to consume. In addition, steps should be taken expand the options for alleviating the crushing burden of student debt and to lead a more effective global policy coordination effort.
Rather than a narrow focus on federal debt, the presidential candidates need to lead a national economic debate on the comprehensive growth strategy that Congress should be implementing. Otherwise, political polarization on Capitol Hill will further undermine the country’s growth performance, erode future potential, and turn debt from mere fodder for political sound bites to a hard-to-solve problem for future generations.”
http://www.bloomberg.com/view/articles/2016-05-11/how-to-tell-facts-about-the-debt-from-political-hype
5- This is exactly what I spoke of with the dangers of income inequality. Mock me all you want, but our economy is based on consumerism. It’s common sense, having so much capital in the hands of the few will limit economic activity in a consumer based economy.
” It also requires countering the excessive worsening of inequality, which aggravates the problem of deficient aggregate demand by channeling the incremental income to the rich who have a lower marginal propensity to consume. “
(2, 4)- Perfectly said.
6. Donkey, not responding to your posts today beyond this one.
If you cannot understand capital (balance sheet item, long term, necessary for investment) and spending (income statement item, short term, crowds out investment) no one can have any meaningful conversation with you.
It is impossible because you don’t have a grasp of even the most basic facts and concepts.
Re: your post 5 there are two salient points and one glaring omission.
“Borrowing costs are extremely low. The U.S. has access to abundant financing.”
It is until it isn’t. Credit markets turn on a dime. Anyone who runs personal, corporate, or government books assuming otherwise is a fool and deserves any consequences.
“And unlike many developing countries, [the US] has historically issued almost no debt that is denominated in a foreign currency”
This is the single most important sentence in the whole quote, and produces the omission, the sixth way and how the US will actually resolve its national debt.
Inflation.
Since we owe our creditors in money we print, we will simply print more. Domestic affairs will suffer but it is the path of least resistance especially for those in control and held accountable for the consequences of the other choices at the ballot box.
Anyway, over and out for you my little friend. Have fun bouncing around the echo chamber of your mind today.
“Have the U.S. Federal Reserve’s policies contributed to wealth inequality? Probably, but not in the way the central bank’s detractors think.
Critics of the Fed’s efforts to support economic growth often argue that policies such as low interest rates and asset purchases have disproportionately benefited the rich. After all, they work in part by pushing up the values of stocks and bonds, most of which belong to wealthy households. Logical as this may seem, I can’t find much support for it in the relevant data.
Consider the three-year period after 2010, when the Fed started the second round of a bond-buying program designed to stimulate spending by pushing down long-term interest rates. Asset values soared: The Standard & Poor’s 500 Index rose by about 50 percent from November 2010 to the end of 2013. If the hypothesis that easy money helps the rich were true, wealth inequality should have risen as well.
That’s not what happened. Judging from the 2013 Survey of Consumer Finances, the rich didn’t fare particularly well. From 2010 to 2013, the typical family in the top 10th of the wealth distribution saw a 6.3 percent decline in wealth. The decline was greater than for the median family in almost any subgroup of poorer families, though the differences were not very large.
Here’s a table showing the evolution of the distribution of wealth over time (caution — the survey doesn’t follow the exact same families over time, and changing fortunes can cause families to switch wealth categories from one survey to the next):”
http://www.bloomberg.com/view/articles/2016-05-11/the-fed-made-the-poor-poorer
9- cont.
“The picture was very different between 2007 and 2010 — a period during which the global financial crisis and associated recession took a heavy toll. The wealth of the typical family in the bottom three-quarters of the distribution declined by a lot more than that of the typical family in the top 10th. This was partly the result of leverage: The poorer families tended to have more debt for each dollar in assets, so any decline in assets translated into a much larger percentage decrease in net worth. Even looking at assets alone, though, the poorer families suffered larger losses.
What drove this increase in inequality? It wasn’t the result of the Fed propping up housing or stock markets, which declined sharply from 2007 to 2010. Rather, it seems that the poor would have been better off if the Fed had done more to support asset prices — and particularly home prices. In other words, inequality rose because monetary policy was too tight, not because it was too easy.
All told, Americans have slid backwards in time in terms of their economic capabilities — and the poorer families have lost the most. Specifically, the typical family in the bottom half of the wealth distribution was worse off in 2013 than it had been in any of the years covered by the Survey of Consumer Finances, going back to 1989. The following table shows this “time reversal” effect for different wealth categories.
It’s not surprising that poorer American families got the impression that the Fed did more to help banks during the financial crisis and associated recession than it did to help them. The decline in wealth means they are less able to prepare for retirement, to insure against adverse shocks, and to use accumulated savings to pay for goods and services. This increase in inequality could affect the country’s economic and political life for years to come.”
Boom, how many times did I get bashed for backing the fed? How many times did I say monetary policy was too tight, and that the labor market couldn’t grow the economy because of it’s dwindling piece of growth in the income pie?
“What drove this increase in inequality? It wasn’t the result of the Fed propping up housing or stock markets, which declined sharply from 2007 to 2010. Rather, it seems that the poor would have been better off if the Fed had done more to support asset prices — and particularly home prices. In other words, inequality rose because monetary policy was too tight, not because it was too easy.”
Grim needs to spoof this website then create auto-generated responses 38th handle of top 20 poster. The posts would say “Pumpkin, you are 100% right. Please post more about income inequality, how capitalism works and the coming inflationary period.” Maybe throw in a disagreeing post to keep him off scent. Secretly, eveyrone else moves to a new blog. Either that or clot’s solution. I don’t see any other choice.
I’ll leave this blog alone. It’s clear people only want to hear similar pts of view. Why, no idea.
Leftwing [8];
It is impossible because you don’t have a grasp of even the most basic facts and concepts.
Between that and his frequent and complete flip flops are how I came to the conclusion that he is a sock, and a troll. Could very well be the same person behind JJ. Tough to keep up two of those at one time in one place, hence JJ went away.
Gourd [13];
I’ll leave this blog alone. It’s clear people only want to hear similar pts of view. Why, no idea.
I’ll take the other side of that bet. You couldn’t possible stand to leave this place alone.
Rumson has a pretty good tax rate of 1.44 ,this house is fully assessed at 4.6 mill .most towns rates are north of $2.00 per .except Spring Lake (.80 cents per ) or Sea Girt which is .70 cents per)
15- I’ll try my best, I do enjoy posting, but I’m not here to ruin this blog for the people that have been here from the beginning.
14 – No, he’s a real person, he lives a few miles from me. 2 miles maybe?
Pumps – you are talking to yourself again.
The accumulation of government debt is the real hamstringing to growth. Government debt limits economic activity in any country. Politically debt write downs have been the third rail. Before WW II everything was on the table including the outright write-down of debt. After Bretton Woods in 1944 and later when Nixon unilaterally terminated convertibility of the US dollar to gold in 1971, all the world has been doing is piling up debt upon debt. After the crisis in 2008 when trillions in-private debt were transferred to the public the world began to move away from “free-market” principles, and now we have capital controls and negative interest rates with massive un-payable debt on the public sectors balance sheet.
The social inequality your rail against will never go away unless we get rid of all of the debt.
So Pumpkin now run off an find us some tibits on how the debt is the private sectors fault and the politicians were just saving the world by transferring private debt to the public sector.
This is his third threat of departure, if I am not mistaken. If we are lucky, he’ll leave when wage growth occurs.
I still find him incredulous. His lack of self-awareness, combined with the ease in which he takes the bait is truly entertaining. I stopped reading his economic garbage soon after he shared his love of Krugman. His latest missive on everyone having the same opinion is interesting too. I love this place due to the variance of opinion which has truly disappeared from everywhere else. If there is anything most of us have in common, it’s that we don’t accept things on the surface, except perhaps, by the far rights and lefts here. Oh where oh where have the centrists gone? Those who could think for themselves rather than taking the path more traveled. I guess it’s marketing. And Trump is the master!
19- Thanks for posting that. It made me think about my position. My conclusion; I’m focused on the symptoms, instead of the main problem. You are right, debt is responsible for the income inequality and every other symptom that is affecting economic growth. Debt is okay at times, but when it gets to the point where it gets too large, you are just sucking capital away from productive economic activity and putting it towards debt service. It’s impossible to grow an economy under these conditions. I can’t believe how blind I was to this. It’s so simple, yet I fell down the rabbit hole overthinking it. Fell too far into the camp that thinks you can borrow and spend your way out of debt. Drank the stuff till I was drunk off it. What are you going to do? Another lesson learned.
So I’m sitting here mentally ma$turbating over the (hyper)inflation/debasing the currency option on the national debt.
Normally as untouchable as repudiation. But doable under some circumstances:
Limited future foreign borrowing required
Eliminate foreign trade requirements, ie higher self sufficiency
Capital constraints on inbound foreign investment
Is there a perfect storm brewing of an unholy alliance of the Right and Left with Trump as a catalyst to allow this to happen?
Usually the Right would never allow trade constraints, however, free trade appears off Trump’s platform (America First!). The Left is fully on board already. Ditto capital flow constraints, which Obama has effectively started putting in place with offshore cash repatriation, and the Right has put up only nominal resistance. The first steps toward full constraints. Everyone wants higher self sufficiency, and closing the borders to trade it will be argued brings more goods and services in-house (higher domestic employment) which appeals to both the Left and the America Firsters.
The US used to print $100,000 bills. Never in the public domain, they were used among banks for settlement. The plates probably still exist. You could easily fit $8 trillion on Trump’s 747. One printing run. Land it in Shanghai, with a stopover in Dubai, and say “thanks, see you in a decade or two”.
Who is going to stand in the way? Cruz? Rubio? Ryan? Hillary? Bernie? Please.
In London, a three star hotel room may run you the equivalent of $600 and a Haagen Daz bar in Hyde Park $25 but, hey, visit the Grand Canyon instead.
As long the US can keep a near zero trade balance, not need to access international capital markets in the near term, and prevent Europeans from buying Manhattan at 50 cents on the dollar who cares?
Not only is Trump crazy enough to try to ram something like that through, the Berninistas and America Firsters will grease the skids. The Left always wanted this outcome, and the Republicans are no longer an organized or united opposition.
Trump’s take.
“The irony is: His critics are the ones who don’t understand.
Trump’s comments get at the heart of the one big problem in the global economy: The ongoing accumulation of government debt that’s hamstringing growth and economic vitality. Just look at Japan’s multi-decade debt-deflation malaise. It’s time to at least consider how we could hit the reset button.
The solution of those on the left, to paraphrase: Borrow and spend even more, funding government largesse in the hopes we can grow out of our debt hole. The politically unlikely solution of moderates such as the Committee for a Responsible Federal Budget: Cut spending, including entitlement programs like Medicare and Social Security, while raising taxes.
Debt-to-GDP ratios, overall debt levels and demographically driven budget deficit projections are all downright scary. The accumulation of debt like we’re seeing now is without precedent outside of a global war. And the rise of the national debt threatens the government’s ability to respond to unforeseen crises such as war, pandemic, recessions and disasters.
Related: As the Debt Hits $19 Trillion, Has the US Reached a Tipping Point?
A struggle against these trends has manifested in what is the greatest experiment with cheap money stimulus ever —including swelling the Federal Reserve’s balance sheet to more than $4 trillion (up from $800 billion before the financial crisis), negative interest rates in much of the developed world and fresh chatter of dropping money from helicopters (by both the European Central Bank and the Bank of Japan), alluding to a 2002 speech by former Federal Reserve Chair Ben Bernanke.
All of this is pretty unorthodox. Where is the outrage? Only some nontraditional voices on the right — the likes of Sen. Rand Paul (R-KY) and even Trump — seem to be proponents of more traditional monetary policy.
And Trump’s latest idea fits right in with historic tradition. Harvard economist Kenneth Rogoff, who specializes in the study of historical high-debt scenarios, notes in a forthcoming Journal of International Economics article that advanced countries have relied on unorthodox debt-management strategies far more often than many realize, including “restructuring debt contracts, generating unexpected inflation, taxing wealth, and repressing private finance.”
America and many other developed economies have a long history with credit defaults. It’s only in the modern post-war era that America’s sovereign debt has become sanctified, along with the elevation of the dollar to the status of global reserve currency of choice (replacing the British pound).
Related: Why People Are Worried About Donald Trump Learning State Secrets
Rogoff, along with Harvard colleague Carmen Reinhart, has written that before World War II “the outright write-down of debt in advanced countries was common and consequential” and that “the message from dozens of episodes of significant debt reductions in advanced economies since the Napoleonic War is that everything is on the table.”
Back in 2013, I wrote of the desperate need for America to default on its debt — using the idea of a debt-for-equity swap — and why there is historical precedent for the kind of outside-the-box thinking Trump is bravely pushing:
Robert Wright, a market history professor as Augustana College, reminded me that many state governments endured “hard default” scenarios in the early 1840s in response to a plunge in real-estate values in the wake of President Jackson’s closure of the Bank of the United States and the resultant Panic of 1837. Also contributing was a restive pre-war population that didn’t like the idea of paying back losses via tax revenue.
So they defaulted, reset the books and added balanced-budget amendments to their constitution to stay out of trouble in the future. Perhaps it’s time for Washington to follow an example of fiscal discipline and creative thinking set nearly 200 years ago. Hit reset, prevent another debt binge and move on with the reforms and investments we need to get this economy revved up.
After all, it seemed crazy and unorthodox when President Nixon ended the dollar’s convertibility into gold in 1971, undermining the post-war Bretton Woods currency regime. It seemed crazy when private ownership of gold was outlawed during in the Great Depression. And it seemed crazy when the Treasury started issuing fiat currency — known as “greenbacks” for their distinctive coloration — to bolster the war effort against the rebels in the South.
Perhaps history books will mark President Trump’s write-down of the national debt as another entry in the list of crazy economic ideas that got America back on track.”
http://finance.yahoo.com/news/why-trumps-u-debt-default-222400110.html
re # 22- debasing the currency.
You think last year when the PBOC declared their currency action to debase a one-time fix they were telling the truth?
McKinsey ….Diminishing-returns
http://www.mckinsey.com/~/media/McKinsey/Industries/Private%20Equity%20and%20Principal%20Investors/Our%20Insights/Why%20investors%20may%20need%20to%20lower%20their%20sights/MGI-Diminishing-returns-Full-report-May-2016.ashx
Ragnar: check out Exhibit 3 in that McKinsey thing……booya…
Leftwing [22];
You think the Chinese wouldn’t respond militarily to such an event?
There’s also the domestic debt holders to be concerned about – retirees whose pensions are in treasuries.
Moose. I sensed the Chinese military threat as well.
If it were up to me, I would continue down the current road of playing survival of the fittest. In the race to the bottom, I think we are one of the last comedians standing. America #1.
Speaking of debt default.
http://www.nytimes.com/2016/05/11/business/dealbook/clinton-son-in-laws-firm-is-said-to-close-greece-hedge-fund.html?_r=0
And more debt default news….Sorkin paints a not so rosy picture.
“Puerto Rico’s Fiscal Fiasco Is a Harbinger of Mainland Woes”
“To tourists, Puerto Rico means piña coladas and sunbathing. To Puerto Ricans, it looks very different: The unemployment rate is 45 percent, schools and hospitals are closing, and the government debt is so huge it makes Detroit’s look modest.
Puerto Rico is now supposed to pay an unfathomable $2 billion to bondholders on July 1 — which it cannot do — even as it accrues pension obligations to its workers and lets public works lapse. A relief bill is expected to be introduced in Congress on Wednesday, but even if it passes and works, the island will not be able to pull out of its financial tailspin for years.
But mainland residents should not look smugly at Puerto Rico. Across America, dozens of cities, counties and states may be heading down the same financial rabbit hole. Illinois, New Jersey, Philadelphia, St. Louis and Jacksonville, Fla., to name just a few, are all facing their own slowly unspooling financial disasters.”
http://www.nytimes.com/2016/05/11/business/dealbook/puerto-ricos-fiscal-fiasco-is-harbinger-of-mainland-woes.html?ref=dealbook
@HillaryClinton
We need to raise the minimum wage,
lift millions of families out of poverty,
and make the economy work for everyone.
and drinking. unless I’m confusing you with another alcoholic
leftwing says:
May 11, 2016 at 10:39 am
So I’m sitting here….ma$turbating
@realDonaldTrump
Big wins in West Virginia and Nebraska. Get ready for November – Crooked Hillary, who is looking very bad against Crazy Bernie, will lose!
GOP’s broken
@realDonaldTrump
I will have set the all time record in primary votes in the Republican party
–despite having to compete against 17 other people!
Maybe because there is strong and accepted proof that 2 + 2 =4 and not 5?
I’ll leave this blog alone. It’s clear people only want to hear similar pts of view. Why, no idea.
Maybe like this?
Central banks are planning to implement a new form of currency that has the potential of being an even more profound change than 1913, 1933, 1945, or 1971. Back in early 2014 I wrote what is now The History and Introduction. In it I discussed an option that the government and banks might use to get us out of the monetary mess we find ourselves in, it was called the E Dollar. The E Dollar is simply a digital currency that has an exchange rate with cash. The central bank would set a rate at which old paper dollars would lose value against E Dollars held in a bank account. Under an E-Dollar system any physical cash removed from the banking system would lose value against the E Dollars retained in an account, this would effectively eliminate the zero lower bound. Central banks would be free to implement significantly negative rates. The E Dollar would also a carry the added optional benefit of a gradual debt jubilee if the powers that be decided to allow old debt to remain denominated in old dollars.
http://www.debtcrash.report/all-posts-list/all-post-list/entry/e-dollar-update-2
“gradual debt jubilee”
Where can I get my ticket?
Declare the national debt odious, then default.
Problem solved.
30. Almost time to buy real estate in P.R…..
I’m going to change my name to Odious.
Macy’s, Kohl’s, Gap, Target and others getting crushed in the stock market today, because of disappointing sales.
Expect more and more layoffs in the near future.
Low IQ anon’s solution? Raise the minimum wage. Looks like anon won’t be satisfied until everyone is fired and all businesses closed.
[41] Yep, and add the ruling against the Staples/Office Depot merger and Consumer Discretionary is leading the way down today.
Macy’s, Kohl’s, Gap, Target and others getting crushed in the stock market today, because of disappointing sales.
Expect more and more layoffs in the near future.
Low IQ anon’s solution? Raise the minimum wage. Looks like anon won’t be satisfied until everyone is fired and all businesses closed.
re: Macy’s
Trump effect?
http://money.cnn.com/2016/05/11/investing/macys-earnings-donald-trump/
Have you heard of this? If *everyone* gets the same “basic income” check, then I’m all for it. Give me mine and I’ll earn a whole bunch on top of it. If, OTOH, you have to sit around and do nothing to get paid, fcuk that. I *do* like the potential of eliminating a whole bunch of social service gubmint workers in that you don’t need to administrate any programs just to send every adult the same check every month.
http://www.basicincomecanada.org
[44] ^^^btw, that’s a red herring. Transfer payments iz transfer payments, period. I think they give a math test to all prospective liberals and if you pass it…you aren’t allowed to join.
I think they need a catchphrase to promote it. Some thing like, Basic Income Canada – Full Employment without the Hassle of a Job
[41-43] AMZN up 1.45%, Brick and Mortar retailers – flushing sound
44+
Expat,
That’s brought up from time to time (sometimes called a guaranteed income or negative income tax). Example from wiki:
https://en.wikipedia.org/wiki/Negative_income_tax
Example:
The income tax rate is 50%.
The tax exemption is $30,000.
The subsidy rate is 50% and equal to the income tax rate.
Under this scheme:
A person earning $0 would receive $15,000 from the government.
A person earning $25,000 would receive $2,500 from the government.
A person earning $30,000 would neither receive any money nor pay any tax.
A person earning $50,000 would pay a tax of $10,000.
A person earning $100,000 would pay a tax of $35,000.
I’d potentially be in favor of that if we eliminate every single program in its place.
47-
As we’ve seen and continue to see, Amazon will rely more and more on automation, so it won’t be just the brick and mortar retailors that will be flushed but employee jobs as well.
Amazon and automation? This is new?
Welcome to 1998.
Back in 2000 our warehouses were pick-to-light, tilt tray sorter, had drive by wire forklifts, algorithmic carbonization, etc etc.
If it weren’t for returns, a handful of people could ship thousands, of packages a day. In many cases, it was more economical to destroy returns than to pay a person to manage it. Some of our customers went as far as to allow good customers to keep items, why even pay for the return label?
A pretty routine Monday had nearly 50,000 packages being shipped.
And we were a rookie player in the market.
We should ban email and telephone – all business needs to be conducted via carrier pigeon.
What the Amazon oversimplificiation leaves out is that a very large number of daily shipments are “marketplace” orders – where a large number of small players are using Amazon’s systems for logistics, fulfillment, and sales.
What are marketplace sales up to annually? 3 billion items? I’ve heard whispers that this number was close to 40% of revenue.
There are tens of thousands of small businesses that are directly benefitting, able to run their small businesses with a reach that is IMPOSSIBLE otherwise.
Likewise, eBay – nobody talks about this, but it’s massive.
http://fortune.com/2016/01/05/amazon-sellers-holidays/
51-
The words “As we’ve seen…”, would seem to imply it’s already happened, Grim.
It’s all already happened. We’re just waiting now for the tears to start flowing.
Jobless 294k vs 270k est
Cue the Twitiot with some faint praise for His O’ness
@NYTimes
George Zimmerman plans to auction the gun he used to kill Trayvon Martin.
The bidding starts at $5,000.
[58] twitiot
You’ve outdone yourself
Further to the Tepper issue, I came across this from one year ago. It’s from a NJ Dept of Treasury press release:
“New Jersey’s highly progressive income tax is notoriously volatile due to its extreme reliance on a relative handful of taxpayers. In recent years for example, just 400 taxpayers have accounted for almost 10 percent ofNew Jersey’s Gross Income Tax,the top one percent of state income taxpayers accounted for almost 40 percent, and the top 10 percent of all income taxpayers accounted for approximately 70 percent of total income tax revenues.”
As one commenter back then put it, “Clearly, they aren’t paying their fair share.
Won’t be no damn taxes when we’re roaming the countryside in armed packs, sleeping in the open next to trashcan fires.
re#60 – Does not really hold water when it comes to folks like Tepper. We all know why Tepper was living in NJ and why he left. He separated from his wife and was living in his Hamptons mansion for the last few years as he tore down Corzine’s old place and built his new Mega Mansion. It is only natural he want’s to get out of dodge for good.
http://hamptons.curbed.com/david-tepper
Also top rate in NY is 8.82%, + add on the top rate in NYC an additional 3.876%, so no reason for Tepper to move to NYC and pay additional taxes. Top rate in NJ 8.97%.
But hey you can rub elbows at the art galleries in Miami too when the super rich are down in Palm Beach for the winter. Tepper business requires rubbing elbows, he will be up here in NY all summer long. Hedge funds have to constantly work their rich clientele and institutional investors, you cannot do that from a beach chair in Miami.
Yeeeshh..
@AnnCoulter
I’m worried. When Trump says he’s narrowed VP list to “five or six people,” that could be the equivalent by kilo of one Chris Christie.
Carney previously said he would not take sides in the referendum debate, but he has warned that dropping out of the EU would present “the biggest domestic risk” to financial stability.
http://money.cnn.com/2016/05/12/news/economy/brexit-eu-referendum-pound-carney/index.html?iid=hp-stack-dom
glad he’s not taking sides
She’s still playing to her Canadian fan(s).
Yeeeshh..
@AnnCoulter
I’m worried. When Trump says he’s narrowed VP list to “five or six people,” that could be the equivalent by kilo of one Chris Christie.
[62] juice
I don’t deign to know Tepper’s motivation. And for this point, it’s irrelevant. Fact is, he left and the issue it raised isn’t a new one.
re: #66 – I agree we should not rely on the super rich to pay 10% of all state income taxes collected. Where Tepper leaves off people like Pumpkin will step in to fill the coffers after all NJ is a great place to live.
http://www.bloomberg.com/view/articles/2016-05-12/trump-s-sway-over-moderates-should-scare-democrats
[68] I called that 5 months ago:
The Original NJ ExPat says:
December 8, 2015 at 8:57 am
[8]Nom – I think Trump’s silent majority comes right out of the center. Guys like you and I will never shrink from a fight with a gang of loony lefties, but I think there are too many people who have just labored through the last decade, never opening their mouth on anything political (lest they be shouted down as a racist), just going to work, paying their taxes, etc. Along comes Trump who gets to say anything he wants, whenever he wants and seemingly answers to no one after the fact. I think a lot of centrists are living vicariously through him. They may never say a word, might even lie about who they are voting for, and then they’ll just pull the “T” lever at the polls. I wonder if he wins, will the electoral college actually let him win?
[69] And now I’ll posit that there is, as Trump would say, a HUGE swath of DINOs, such as myself, that don’t scream at the top of their lungs from every soapbox that everything Republican is racist and the only tolerable form of racism is that which is directed at white Christian males.
“Crazy things are happening in the world economy. In Europe and Japan, interest rates have turned negative, something long thought impossible. In the U.S., workers’ productivity is improving at the feeblest five-year rate since 1982. China is a confusing welter of slumping growth and asset bubbles.
Through it all, Federal Reserve Chair Janet Yellen practices the central banker’s art of draining the drama from any situation. She insists that conditions are returning to normal, albeit slowly. Her favored approach, “data dependence,” is nonpredictive and noncommittal, like finding your way in the dark by pointing a flashlight at your toes.
Lawrence Summers, the Harvard economist who almost got Yellen’s job, has no patience for such patience. Since losing out to Yellen in 2013, he’s been jetting around the world—from Santiago to St. Louis to Florence, Italy—to argue that the world economy is in much worse shape than central bankers understand. Focusing on monetary policy alone, he says, they’re doomed to fall short of reviving growth. They need to reach out to the governments they work for, he argues, and insist on strong fiscal stimulus in the form of infrastructure spending and the like. As an intellectual brawler from way back, he’s in his element.
The jury’s still out on Yellen vs. Summers. Boring does not equal wrong, and provocative does not equal right. If the U.S. economy heals nicely over the next few years under business as usual, Yellen’s incrementalism will look smart. But the longer things stay weird, the more Summers appears to be onto something.
“My sense is that if Larry’s hypothesis is true, it’s a total game changer. It will affect how we think about macroeconomic policy for the next several decades,” says Gauti Eggertsson, an Iceland native who worked in the Federal Reserve System for eight years and is now a macroeconomic theorist at Brown University. In November, after Summers presented his ideas at the Peterson Institute for International Economics, its president, Adam Posen, himself a former policymaker at the Bank of England, blogged that “all of us in the profession have a lot of work to do” to respond to the “disturbing questions” Summers raised.
For economic policymakers, the most disturbing question is why global growth remains paltry and uneven. The annual growth rate of gross domestic product in the U.S. in the January-March quarter was just 0.5 percent. The euro zone was stronger than the U.S., at 2.2 percent; Japan, which has been flipping in and out of recessions for a quarter century, shrank 1.1 percent. Deflation once seemed to be a strictly Japanese problem—now it’s a worldwide threat. Pessimism about growth prospects is reflected in low forecasts for long-term interest rates. The annual yield on German 10-year notes is only 0.13 percent.
It wasn’t obvious in the summer of 2013, when President Obama was choosing between Yellen and Summers, that Summers would turn out to have such out-of-the-box ideas. Obama said that “when it comes down to their basic philosophy on the future of the Fed,” the differences between the candidates were so small “you couldn’t slide a paper between them,” according to Democratic Senator Dick Durbin of Illinois, who attended a meeting with the president. Both were highly credentialed—she as a longtime Fed official who was a labor economist at the University of California at Berkeley’s Haas School of Business; he as Treasury secretary under Bill Clinton, former Harvard University president, and former head of Obama’s National Economic Council. If anything, Yellen seemed more likely to be an activist Fed chair and “would probably be more committed to keeping stimulus in place until the economy was definitely recovered,” Michael Feroli, chief U.S. economist at JPMorgan Chase, said at the time.
But in November 2013, after Yellen was chosen but before she replaced Ben Bernanke as chair, Summers went to the International Monetary Fund in Washington and raised the specter of “secular stagnation,” a term coined in the Great Depression by Harvard economist Alvin Hansen, who lamented “sick recoveries which die in their infancy, and depressions which feed on themselves and leave a hard and seemingly immovable form of unemployment.” “Secular” is econospeak for long-lasting, as opposed to cyclical. Hansen’s warnings about secular stagnation seemed to be disproved when U.S. growth accelerated in World War II and then remained strong after the war stimulus ended.
For Summers, bringing the idea of secular stagnation back into the academic debate was like putting on a moldy old coat from Grandpa’s attic. But revive it he did. “Now, this may all be madness, and I may not have this right at all,” he told the IMF audience, before coming around to saying, “we may well need, in the years ahead, to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activity, holding our economies back below their potential.”
In other words, Summers claimed world economies could be so imbalanced that even zero interest rates would be too high—and for many years, not just briefly as economists had believed. The speech lit up the Twitterverse and drew heavy news coverage. Journalists’ attention has waned a bit, but Summers has kept developing the concept on his blog, in his Financial Times columns, in speeches, and in papers written with other economists, including Brown’s Eggertsson, who’s translated Summers’s thinking into the formal language of general-equilibrium economics. The real world is helping Summers’s case. The longer stagnation lasts, the more it looks secular rather than just cyclical. “I’ve come to a growing conviction” that the theory is right, he says.
To be clear, Summers is challenging much more than when and how much the Fed should raise interest rates. True, he criticized it for voting in December to lift the federal funds rate by a quarter of a percentage point after seven years at just more than zero. But that’s an ordinary argument over how high to set the monetary thermostat.”
http://www.bloomberg.com/news/articles/2016-05-12/how-to-pull-the-world-economy-out-of-its-rut
71- Holy sh!t, my theory is going mainstream. Summer’s states the same exact points that I have stated to fix the economy. This is crazy. This article reads like a post from pumpkin.
“Summers’s deeper argument is that world growth is stuck in a rut because there’s a chronic shortage of demand for goods and services and a concomitant excess of desired savings. The U.S. and other industrialized nations tend to save more as their populations age, he says. Meanwhile, growing inequality puts a bigger share of the world’s income in the pockets of rich people; they can’t spend everything they make, so they save it. The investment that would ordinarily soak up those savings is falling short. That’s partly because the new economy is asset-lite: Companies such as Uber and Airbnb prosper by exploiting assets (cars and houses) that already exist. Software, which is pure information and doesn’t require the construction of factories, accounts for a bigger share of the economy. Slow growth in output and productivity reduces investment as executives lose faith in the payoff from capital spending.”
Everyone knows I have been saying this for years on this blog. I don’t feel like an idiot anymore. Might not be right, but my thought process is right up there with a former president of Harvard. Def don’t feel like an idiot anymore.
Check it out, a world renowned economist stated “hoard it”. Def don’t feel like an idiot anymore and glad I stood my ground.
“Exhibit No. 1 in Summers’s case: Interest rates have been trending down for 30 years, even after taking into account the decline in inflation. The interest rate, like any price, reflects supply and demand. It’s fallen because the demand for loans is weak and the supply of loans from savers, who have extra cash to deploy, is strong. It used to be thought that interest rates couldn’t go below zero, but the Bank of Japan and the European Central Bank, among others, are so desperate to kindle growth that they’ve pushed some rates below what used to be called the “zero lower bound” into negative territory.
Despite opposing the Fed’s December hike, Summers continues to worry that an extended period of ultralow and even negative rates will cause bubbles in assets like stocks and housing, as desperate investors chase after higher returns. He says fiscal policy needs to play a much bigger role than it has. How? On the investment side, he favors government spending to fix America’s dilapidated roads and bridges, combat global warming, and improve education—big, expensive projects that would provide value while soaking up excess savings. A favorite line: “The United States right now has the lowest infrastructure investment rate that it has had since the second world war.” On the savings side, he favors, among other things, changing the tax code to get more money into the hands of lower-income and middle-class families who’d spend rather than hoard it.”
re:M # 69 – PC has gotten so bad that our company’s social network policy will not allow us to “like” anything co-worker posts.
Remember…you cannot use the term pussification without my expressed written permission.
I’m gonna do an upperdecker in every ladies room I can find until we get past this whole PC movement.
New Mantra, pumps? “I don’t feel like an idiot anymore. I don’t feel like an idiot anymore. I don’t feel like an idiot anymore…..”
Hey, it worked for Senator Franken.
https://www.youtube.com/watch?v=6ldAQ6Rh5ZI
Everyone knows I have been saying this for years on this blog. I don’t feel like an idiot anymore. Might not be right, but my thought process is right up there with a former president of Harvard. Def don’t feel like an idiot anymore.
I’m gonna do an upperdecker in every ladies room I can find until we get past this whole PC movement.
Good. I’m so s1ck of this bullsh1t along with all the other paper thin nonsense that passes as top priority in this country. What an ass1nine nation we’ve become.
Pumpkin seed,
Do you really have a job? If I was your employer, I would have f1red your @ss by now. H0ly sh1t, all you do is post wasted words all day long!
Stu’s beat box career is over, boom boxes now allowed in JC.
http://www.northjersey.com/news/jersey-city-lifts-decades-old-boom-box-ban-1.1577971
Honestly, what do you think of Summers’s fix on the economy? Why do you think it’s wasted words?
Fast Eddie says:
May 12, 2016 at 11:57 am
Pumpkin seed,
Do you really have a job? If I was your employer, I would have f1red your @ss by now. H0ly sh1t, all you do is post wasted words all day long!
Artificially Intelligent Lawyer “Ross” Has Been Hired By Its First Official Law Firm
http://futurism.com/artificially-intelligent-lawyer-ross-hired-first-official-law-firm/
Maybe cause he was part of the group that greatly influenced public policy in causing financial problems, didn’t recognize them at the time, and is now hawking his advice on how to fix it? pass
Maybe cause he lost $1.8 billion of Harvard’s endowment.
“boom boxes now allowed in JC.”
Split my Halil investment with cardboard manufacturers?
You younger folks here won’t get it. Don’t worry. Your kids probably will at some point.
“Honestly, what do you think of Summers’s fix on the economy? Why do you think it’s wasted words?”
It’s wasted words because there will be no fix. Not as long as the rich keep getting richer at the expense of the middle and bottom. As long as our government continues to be owned, we will be stuck fighting over the crumbs. There was a reason President Cigar opened up free trade. Do you really think it was meant to benefit you and me?
Great answer.
Libturd questioning the gender of Hillary’s Cankle fluid. says:
May 12, 2016 at 12:53 pm
“Honestly, what do you think of Summers’s fix on the economy? Why do you think it’s wasted words?”
It’s wasted words because there will be no fix. Not as long as the rich keep getting richer at the expense of the middle and bottom. As long as our government continues to be owned, we will be stuck fighting over the crumbs. There was a reason President Cigar opened up free trade. Do you really think it was meant to benefit you and me?
Juice [81];
I’m not at all surprised that any (many) BigLaw firms would try to take advantage of whatever IBM has to offer. The only thing that surprises me is that the firm would go along with this ridiculous “new hire” press release.
Redux [88];
Should be Juice [83];
Re: Lib [77];
Thank you for that bit of enlightenment. I don’t know how I’ve managed to survive this long not knowing that term in context.
re #88 – monetizing AI has been a tough sell, they probably got it for free from IBM for the press release.
Blumpkin,
There is no housing bubble bc:
“The [rapid] increase in home prices is due to strong economic fundamentals”
– The smartest economist in the world, Ben Bernanke, circa 2005.
You are truly naive to believe any of the sh!t you post. These people are exploiters of the market, not leaders. They like mics in their face and massive egos stroked. Also, you are constantly opining on economic changes that will never, ever pass…at least, not until DC looks like 1945 Dresden. There is no policy solution. Accept that this is as good as it gets. The whole thing is a confidence trick to create appearance of stability while using complex words, models, and charts that baffle the masses. Most economics is horse-sh*t theory that looks back at why things occurred after it no longer matters. It can never account for the back door govt manipulation, collusion and intervention that keeps the lights on today. Hey but keep staring at the pretty lights, trying to make sense of it all. Just stop posting the relentless drivel.
This was a really good post. It seriously helps me. It’s obvious I’m trying my best to understand this. I’m naive because I’m young, I haven’t gone through all the life experiences that you guys have. That’s why I like hanging around here. There is something that comes with age that can’t be taught by the books. It must be experienced to learn. You guys have lots of experience combined with a critical eye that does not trust anything. I’ve learned more from the participants in this blog than I have in college. This is real world lessons. This blog provides a priceless education. Thank you ladies and gents.
Bystander says:
May 12, 2016 at 2:08 pm
Blumpkin,
There is no housing bubble bc:
“The [rapid] increase in home prices is due to strong economic fundamentals”
– The smartest economist in the world, Ben Bernanke, circa 2005.
You are truly naive to believe any of the sh!t you post. These people are exploiters of the market, not leaders. They like mics in their face and massive egos stroked. Also, you are constantly opining on economic changes that will never, ever pass…at least, not until DC looks like 1945 Dresden. There is no policy solution. Accept that this is as good as it gets. The whole thing is a confidence trick to create appearance of stability while using complex words, models, and charts that baffle the masses. Most economics is horse-sh*t theory that looks back at why things occurred after it no longer matters. It can never account for the back door govt manipulation, collusion and intervention that keeps the lights on today. Hey but keep staring at the pretty lights, trying to make sense of it all. Just stop posting the relentless drivel.
Gourd-o;
Seems your exile didn’t even last a single thread, much less a single day.
No mention of TRADE Bloomberg?
“U.S. Budget Deficit Here are key facts to remember as you assess what is likely to be a loud and contentious political conversation on debt”
Bloomberg article length: 642 words
Number of times “trade” is mentioned: 0
http://www.bloomberg.com/view/articles/2016-05-11/how-to-tell-facts-about-the-debt-from-political-hype
That Summers article was difficult to not comment on for obvious reasons. I promise to only post articles without comment. If I do post it will be a question. Going to shut up and learn from the big boys.
I finally realized that most of you guys have already been down my road and know why those ideas are wrong. You used to believe in those same ideas, but age has taught you right from wrong.
Have my word that I will not post till I am able to bring something to the table.
And don’t kill me, know this issue has been beaten over the head. Why is wage inflation never going to come?
Anon E. Moose says:
May 12, 2016 at 3:58 pm
Gourd-o;
Seems your exile didn’t even last a single thread, much less a single day.
80. He actually works for the New Jersey chamber of commerce. duh
Heard about this on one of the business channels while driving to a meeting this morning. Definitely Clot’s wet dream.
https://m.youtube.com/watch?v=MdDHDh0s_BQ
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Blood in the water at work today. Fun times….
Speaking of retail the other day, is it too late to short the malls?
Amazon is about to overtake Macy’s as biggest seller of clothing in U.S
http://www.marketwatch.com/story/traditional-retailers-stumble-in-their-efforts-to-compete-with-amazon-2016-05-12
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