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Did The Fed Blow It?
Kristina Peterson of Dow Jones Newswires reports in the WSJ, US Small-Cap Stocks Plunge As Investors' Economic Anxiety Climb:
U.S.
small-capitalization stocks plunged Wednesday in their biggest two-day
drop since early June, highlighting the anxiety that flooded the
market over worries of a global economic slowdown.
The
Federal Reserve's more cautious assessment of the economic recovery
and data showing slower growth in China sent the broad market into a
tailspin Wednesday. Small-caps, thought to sink further in times of
economic weakness, fell most steeply as investors fled from riskier
assets.
The Russell 2000 index of small-capitalization
stocks tumbled 25.97 points, or 4.02%, to 620.39, its third largest
point drop of the year.
The Standard & Poor's SmallCap 600
index skidded 13.13, or 3.80%, to 332.16, its fourth biggest point and
percentage drop of 2010.
Both indexes wiped out their
year-to-date gains on Wednesday. The Russell 2000 is now down 0.80%
year-to-date, while the S&P 600 is off 0.14% since the year's start.
"Small caps had a nice start to the year as they tend to
outperform coming into an economic recovery, but that recovery is now
much more doubtful," said David Carter, chief investment officer at
Lenox Advisors. Investors interpreted the Fed's statement as an
"about-face," reversing its earlier more optimistic view of the
recovery, he said.
Cyclical
sectors led the broad decline in small caps as worries mounted over
whether the economy could enter a second slump. Materials weakened as
investors fretted that the slowing growth in China could cut into
demand.
"If China can't pull along the global economy,
who can?" asked Carter. Agricultural products company American Vanguard
plummeted 88 cents, or 11%, to 7.38, on the New York Stock Exchange.
Century Aluminum fell 88 cents, or 8.1%, to 10.01.
Energy
stocks took the steepest tumble Wednesday. Investors avoided
commodities as the dollar surged, sending the price of oil down 2.8% to
settle just above $78 a barrel. Oil-well-services provider Basic
Energy Services (NYSE) fell 99 cents, or 11%, to 8.34.
Offshore-drilling company Seahawk Drilling shed 93 cents, or 10%, to
8.08.
Safe-haven consumer staples slid, but posted the
most modest drop. Gainers included tobacco company Alliance One
International (NYSE), up 4 cents, or 1.2%, to 3.35, and snack-foods
maker Lance, which rose 4 cents, or 0.2%, to 22.04.
The drop in energy and commodity stocks slammed Canada's main stock index as it fell to its lowest level in nearly three weeks. The Canadian dollar lost more than a penny as stocks took a beating.
After the close on Wednesday, tech giant Cisco Systems was down nearly 8% as its CEO warned that a return to normal economic conditions would take longer than previously expected.
It's pretty much all doom & gloom again, prompting some market observers to ask whether the Fed's move against deflation will end up backfiring:
If
you weren't worried about deflation, you may be now—thanks to the
Federal Reserve's latest move to jumpstart the languid economy.
In
fact, some economists think the central bank's implicit concern about
falling prices could help bring about the very situation the Fed is
trying to avoid.
"This gets to
be a gamesmanship situation," says economist A. Gary Schilling. "On the
surface, the Fed is reacting to the threat of deflation and a weak
economy. Does it have deflationary implications? I think it does
because it says the Fed is concerned. They're obviously preparing more
and more for it. People say, 'Maybe I ought to prepare for it?'"
With
both Wall Street and Washington looking to the central bank to do
something else to revive what many see as a flagging growth, the Fed's monetary policy committee Tuesday said
it would "help support the economic recovery in the context of price
stability" by buying longer-term Treasury securities, while downplaying
inflation.
"The
Fed didn't use the D word in its statement but that's certainly
implicit in its thinking," says Scott Anderson, senior economist at
Wells Fargo.
After
the statement's release, stock prices cut losses and more importantly
Treasury prices rallied further. But investors woke up Wednesday and
essentially asked, "What just happened?"
In a double-take Wednesday morning, almost every asset class, from gold to oil to stocks, fell ... except Treasurys—the prime beneficiary of the Fed's move—whose monster is inflation.
Few
economists see actual deflation in the wings. But given the the
economy's slow growth, marked by weak demand, and a spate of recent
reports showing falling prices for goods and services, they say
deflationary expectations are real and growing.
Economists
admit that though the price of many durable goods has been falling, if
you take food, housing and oil out of the consumer price index, prices
are decidedly higher. What's more, wages—a key ingredient in the
deflationary equation—are not falling.
"It isn't deflation per se that bothers the Fed, it's deflationary expectations," explains Schilling.
Economists
say Fed boss Ben Bernanke and the FOMC members may have wanted to seem
assertive and reassuring in its policy initiative, but at this point
the move appears to have backfired.
"It's
almost as if their statement now is contributing to deflationary
expectations," says Chris Rupkey, chief economist at Bank of
Tokyo-Mitsubishi, who otherwise does not subscribe to the deflation
argument.
Economists
and money managers say the Fed clearly intends to push intermediate
and long term rates lower, much as it has with short term rates, to
encourage demand and risk, whether it's lending and borrowing or
production and consumption, all of which supports price appreciation,
not depreciation.
"They're hoping it
creates a positive economic impact to avoid that [deflation]," says Jim
Awad, managing director at Zephyr Management.
Much like with the recent rally in Treasurys, analysts and investors are rightly asking just how low the Fed can go.
A relentless push has its hazards. One is a perpetual flight to quality and the safe haven of Treasurys.
Schilling,
for instance, says he's still buying 30-year bonds, now yielding about
four percent and headed to three percent. That's probably a safer bet
than stocks yielding a big return anytime soon, he says.
"It's
OK if they can jawbone long-term rates lower," says Rupkey. "It's not
the Fed pushing rates lower today. it's the Dow falling 200 points
that brings rates down. If it's also hurting the stock market, the
impact of wealth loss is going to overwhelm the lower prices and
potential consumption."
Another
risk is that cheaper and cheaper money becomes another reason for
consumers and businesses to wait to do anything, defying the normal
inflationary cause and effect.
"They're
pumping up money as much as they can, which is supposed to be
inflationary," says Ken Goldstein of the Conference Board. "But in the
short term you do have kind of a deflationary pressure to it. It's
about timing."
Meaning , if the strategy works, it reinflates the economy, before deflation sinks it.
Alright,
let me give you my take on Wednesday's action. The media will spin it
as "pure panic", but this is just another day for Wall Street crooks
to make a killing. After the Fed's announcement, they brought the
market up, a classic head fake before they cut risk across the board on
Wednesday.
Don't be fooled. This market
is so corrupt, so manipulated, that it's no wonder the big banks and
their elite hedge fund clients are the only ones that can navigate
through it properly, making a killing in the process. Multi-million
dollar computers performing high-frequency trading (HFT) provide the
illusion of an "imminent catastrophe".
Total
rubbish. I really wonder which institutional investor was dumb enough
to sell stocks after the Fed's announcement. I bet you elite hedge
funds and big banks' prop desks are loading up on risk
assets, using this as another opportunity to make enormous profits.
All
this gloom & doom is way overdone. I don't know if the bounce will
happen this week or next week, but it will bounce back and global equity
markets will rally sharply. In fact, all risk assets will bounce back
because asset classes are highly correlated.
Cheap
money may not benefit consumers and businesses in the near term, but it
means more cheap financing for Wall Street's financial elite to
continue borrowing at zero and investing in risk assets all around the
world. They'll continue trading, not lending.
And what about pension funds? On Wednesday, the Canada Pension Plan Investment Board announced its Q1 fiscal 2011 results:
The
CPP Fund ended the first quarter of fiscal 2011 on June 30, 2010 at
$129.7 billion compared to $127.6 billion at the end of fiscal 2010, on
March 31, 2010.The $2.1 billion increase in assets after
operating expenses this quarter was the result of contributions, which
totaled $3.8 billion in the first quarter, offset by an investment
return of negative 1.3%, or negative $1.7 billion. The investment
result was primarily due to the decline in public equity markets, and
this was reflected in CPPIB’s public markets investment portfolio.As
global financial stimulus efforts tapered off and concern about
economic conditions in Europe increased, many public equity market
indices dropped significantly in the three-month period ended June 30,
2010. For example, the S&P 500 fell by 11.9%, and the TSX was down
6.2%.“This was a challenging
quarter for public equity markets around the world, many of which
experienced double-digit declines,” said David Denison, President and
CEO, CPP Investment Board. “This was also a quarter where the CPP Fund
benefited from diversification into private equity, real estate,
infrastructure and private debt holdings.”For the
five-year period ended June 30, 2010, the CPP Fund has generated an
annualized investment rate of return of 3%, or $13.8 billion of
investment income. For the 10-year period ended June 30, 2010, the Fund
has generated $36.6 billion in investment income, reflecting an
annualized rate of return of 5.1%.
Investment Portfolio Update
CPPIB investment teams were active on a broad range of
transactions during the first quarter. Completed investments included
the acquisition of ownership stakes in 1221 Avenue of the Americas and
600 Lexington Avenue in New York City, a U.S. shopping centre
acquisition joint venture with Kimco Realty Corp., a property
development joint venture in Australia with Goodman Group, and the
acquisition of a 17.5% stake in oil sands developer Laricina Energy.Transaction
activity has continued since the end of the first quarter. In July,
CPPIB submitted a conditional proposal to acquire Australian toll road
operator Intoll Group, whose assets include a 30% interest in the 407
ETR in the Greater Toronto Area, and through an entity jointly owned by
CPPIB and Onex, reached an agreement with Tomkins plc to acquire all
of the issued and to be issued share capital of Tomkins, a global
engineering and manufacturing group. CPPIB also recently entered into a
joint venture with U.K. property manager and developer Hammerson plc
to acquire an office building at 10 Gresham Street in the City of
London.“We continue to focus on
putting to work our comparative advantages including scale,
predictable cash flows, and the long investment horizon of the CPP Fund
to diversify our global portfolio,” said Mr. Denison. “We now have in
place the resources and expertise to execute private asset transactions
such as these most recent ones around the world.”“Looking
ahead, while we see a modest global recovery underway, we also see a
number of challenges, particularly in international credit markets.
Since access to credit markets remains a critical element in our
ability to complete private asset transactions, we expect that they
will continue to be difficult to execute throughout the balance of
fiscal 2011. Notwithstanding these difficulties, this environment
affords us opportunities to earn attractive risk adjusted returns,
especially in the area of private debt. As a global organization, we
also have the benefit of being able to invest in geographies that offer
the best forward looking return characteristics on a risk adjusted
basis and, as a result, we are continuing to pursue expansion of our
investment activities into emerging markets,” Mr. Denison said.At the end of June 2010, approximately 25% of the CPP Fund, or $33 billion was invested in private assets.
Given CPPIB's asset mix, these results shouldn't surprise anyone:
Equities represented 53.9% of the investment portfolio or $69.9 billion. That amount consisted of 40.8% public equities valued at $52.9 billion and 13.1% private equities valued at $17.0 billion.
Fixed
income, which includes bonds, money market securities, other debt and
debt financing liabilities, represented 32.0% or $41.5 billion.Inflation-sensitive assets represented 14.1% or $18.3 billion. Of those assets,
- 6.1% consisted of real estate valued at $7.9 billion
- 4.7% was infrastructure assets valued at $6.1 billion
- 3.3% was inflation-linked bonds valued at $4.3 billion.
Keep
in mind that CPPIB only reports results on its private markets once a
year, when their annual report comes out, so the quarterly results
pretty much follow what is happening in global stock and bond markets
(ie. beta).
A key question to consider is how are most pension
funds going to react to the Fed's announcement? How are they going to
deliver 8% actuarial return in this environment dominated by high-frequency trading and outright manipulation of the markets? You can bet
that senior pension officers around the world are holding asset
allocation meetings following the Fed's announcement.
Finally, I
leave you with a clip where John Ryding, of RDQ Economics, and Brian
Fabbri, of BNP Paribas, discuss whether the Fed's made a mistake. As I
stated in my last comment,
there is no choice but to continue reflation policies, and while
markets are selling off, I still think this dip will be bought hard. But
they will first scare all the weak hands away, much like they did in
late October 2009 when everyone feared another Black Monday.
»
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Feels like the music's slowing down, better find a chair.
I don't understand why everyone thinks the US economy will be like Japan's. Two major differences are that education is much better in Japan, and Japan continues to have a strong manfacturing base (i.e. they still make good stuff ).
In the end, the correct comparison for the American economy will be Argentina.
"In the end, the correct comparison for the American economy will be Argentina."
C'mon, if you were talking about Greece, I'd say fine, but this is a ridiculous comparison. The US economy has its problems, but at the end of the day, it's nowhere near as structurally lethargic as Japan or Europe. It's a dynamic economy with lots of high value added manufacturing. Low end manufacturing has been shipped off to southern Asia, but who cares? And still, those large US multinationals are making profits on this activity (too bad they're not paying their fair share of taxes!)
For an economic sophisticate, you sure don't know much about corporations and their expenses.
Since when do corporations pay one cent in taxes?
I'll wait........
++ if Obama would fix that ill stand naked in front of him for free.
$100,000 to Go Naked in Front of President Obama - CNBC
Did the Fed blow it or are Wall Street crooks gearing up for another big payday?
Why is this an "either/or" question?
We need to get the story straight,
So, are they buying risk assets or treasuries, or both, and how do we know?
"So, are they buying risk assets or treasuries, or both, and how do we know?"
Both, easy money, borrow at zero, invest in higher yielding bonds and risk assets.
So Leo,
Whats todays catch? Buy another dip? The only way it would work for you and your dip buying is if you have Benrons wallet and can ride it through, although I doubt you ever could get out of your longs in that case.. Feeling strong today Leo?
Bye bye bye or buy buy buy
Prices are still very inelastic. The normal fluctuation of pricing in response to market conditions has had a monkey wrench thrown into the gears.
What I've learned about pricing, forget what the inflation/deflation government lies about them are, is that existing businesses especially the small and midsized ones at the street level, are gouging. Anecdote: I recently had to replace a window. 5 years ago I replaced a dozen of them with a product that cost 1/3 of the price of a new window (leave out labor for both installations as I did it myself). Yesterday I called to buy another one and the price was double what it was 5 years ago. Then I asked for the price of a new window, frame, sashes all assembled, ready to fit the r/o. There was a $25.00 difference between a second rate installation and the brand new one.
I asked the owner who was quoting me the prices if that made any sense to him. He asked what I meant. Totally obtuse to his own 'logic' he failed to grasp the ludicrous pricing scheme that he offered. He was not alone as I called 4 other sellers and got approximately the same pricing. If this is what passes for pricing today, then these men and their businesses, such as they are, have a major disappointment, and likely bankruptcy headed their way.
Sooner or later prices will begin to react to market conditions, or else.
"What I've learned about pricing, forget what the inflation/deflation government lies about them are, is that existing businesses especially the small and midesized ones, are gouging."
I was going to call you an idiot, but perhaps you have not educated yourself to the cost of doing business in the USA..please do so.
You can call me whatever you like, and if you agree with what these 'businessmen' have done in my example, the only idiot here is you.
Try and justify the cost of $150.00 in replacement parts equating with the cost of an entirely new unit.......I'll wait..................
++ my HVAC guy, who is my friend..wants to charge me for the time it takes to drive to my house and then charge me 80/hr for a service tech.
mostly a sign that labor costs here in america are very expensive for small businesses. if they dont charge that much money they will hardly make a profit.
Leo, are you so certain of this that you will make me even if I buy a 1000 Triple SPX 1200 calls, Nov expiry, and they are lower then than what they cost today?
Leo,
Where did you start buying this dip? At the figure? Well you are 19 points under water now, are you doubling down? When do you puke your longs? At 1165? Its certainly been a traders market, nice daily 10 point swings. But, stop ranting that this will bounce, maybe it will but its lower highs all the time and we have now broken the rising wedge (bearish pattern) so Ill say you will puke rather than collect any (fiat) profit as I doubt you have much skin in the game...
Seriously, if you don't see whats happening in the world, get out while ahead..
those of us old enough to remember the mantra of the 80's...America is becoming an information economy..smoke stack economy is on the way out..so we outsourced the production of goods. I was employed in 70's at RCA plant, Mountain Top. PA making circuits.. the plant next door was making tubes for TV's we are talking 3000 jobs that paid good wages that went off shore in the next 10 yrs.
We now have an economy based on services.. that is what the FED and GOV are stuck with and that is why they are making the economy worse..they changed the economy but kept the same economic theory developed for our old smoke stack economy. (we are not Japan which did not rape it's production)..
so what do you do when we make nothing.
my answer is simple..you incentivize the return of those jobs.
but todays elites are into freeee trade and NWO CFR BS..they can not comprehend the solution . PS GM is opening a new factory in MEXICO and buying Batteries from Korea.
can anyone justify this after taxpayers bailed them out?? can it even be explained with our current economic state???
to add a fine point or as it were a cherry on top there is this:
Marcy Gordon, AP Business Writer, On Thursday August 12, 2010, 6:20 amWASHINGTON (AP) -- The $700 billion U.S. bailout program launched in response to the global economic meltdown had a far greater impact overseas than other countries' financial rescue plans did on the U.S., according to a new report from a congressional watchdog.
Billions of dollars in U.S. rescue funds wound up in big banks in France, Germany and other nations. That was probably inevitable because of the structure of the Treasury Department's program, the Congressional Oversight Panel says in a new report issued Thursday.
The U.S. program aimed to stabilize the financial system by injecting money into as many banks as possible, including those with substantial operations overseas. Most other countries, by contrast, focused their efforts more narrowly on banks in their nations that usually lacked major U.S. operations.
Most if not all the regulars here, knew back then that China and Japan as well as other internationals were the primary beneficiaries as soon as the trillion dollars was forced upon us. (and if you believe 'only' $700 Billions was the real number, I have a CDS I'd like to sell you. We will never really know how much was given to make them whole.
That is why Paulson wanted complete tyranny over the funds: he didn't want to reveal that the american taxpayer was going reward these parasites for their catastrophic failure to manage their risk competently.
One small correction: the "taxpayers" didn't bail anyone out.
Hank Paulson and Timmay Geithner, the semites of Wall Street and their brothers and sisters in every key financial position in the world forced the taxpayer to underwrite the bail money.
Saying the taxpayer bailed them out when we were overwhelmingly against any bail out---- particklelerly when the money was used to pay hundreds of billions in bonuses to incompetent, lying, cheating but very well connected semites and their consiglieres---- is like saying blackmail and theft are now virtues.
If the Fed is concerned that a deflation minset is gripping the populace - its easy to fix. They should tell their goons to lay off the gold market. Gold going to 2000 and beyond will certainly kill off any deflation mindset.
The ONLY safety valve the Fed now has - deprciate the dollar. They will put their best minds to work on killing the currency - a 20% broad decline of the Dollar against everything - that would also kill off any deflationary mindset.
Well, in that case won't China (and Europe for that matter) accuse US of being a currency manipulator?
This is interesting times indeed, and could be a paradigm-shifter for J6P. If the Fed continues to muck up the economy in its' indecision and banks continue to load up on riskier and riskier assets, then the average citizen will see that low-price credit is a thing of the past and in any case he has bigger things to worry about - like how to make ends meet. Maybe then US taxpayers will have a huge deleveraging and in doing so hand the the banks a big can of FuckYouVeryMuch.
Actually if the Fed and Banks were more practical they could have just agreed to put toxic assets under the rug from day one and continue to load up the debt on the population. But everybody was running scared, so the debt consumer base has critically shrunk thabks to layoffs, foreclosures and wage cuts. Now the banksters see that more and more of the general populace is out of their reach no matter what the rosy-economy propaganda says. They are trying to change the situation (e.g. the new mortgage refi rumours) but I think it is too little too late. Now nothing short of game-changing event can save them from the downward spiral they are in. Possible ones are - a debt jubilee for one and all, war with Iran, throwing wads of cash from Benlicopters.
Put out a Global Advertisement that in-migrants purchasing one or more homes currently on the Feds books gets fast tracked into the country. All other restrictions would continue to apply.
What the US is missing is the in-migrant class of years past which is now being increasingly displaced by Mexican labour. New in-migrants keep a Nation vigorous and dynamic.
To wrap this up, I'm saying that the US lacks not from spending but from the dynamism and energy of free people whose freedom is born from desire, not destiny.
Fun times indeed.
Back to a big underground barter economy like in the 70s early 80s, I was there, I remember.
Someone is missing the point-- we're talking (a lot) about wages and salaries; that's of limited scope - there are two roads: one is the system of wage-push inflation we've just been and two, one of demand-led (,if you like) inflation. Where the aggregate numbers turn around. ..Demand-led is different, structurally, when there are significant levels of individual debt but, Cost, or Wage-push, outside of inventories build, is pushing-on-a-straw in a situation of high unemployment. ..In the end, the cost-push route brings wages right the way down and bang! Demand-led, individuals either can't borrow, go bankrupt, or pull through due to flukey timing. .. so here's a choice - get a job, go back to the money supply dynamics they way they were or, Do-it-yourself, where individuals think about honing the art in some aspect of self-sufficiency, and where more can begin to make use of the exorbitant increase in liquidity. ..but then, I would increase benefits to include art material stamps.
Does anyone else see the insanity of looking to a private cartel of banking interests (The Fed)to save them. Definition of fucking insanity... This ship is going down.
There is no ship.
If you can't cover yourself then yes, your ship is sinking. If you know where you are, your hands and feet. You haven't got a problem. Everyone else does.
LEO I don't know if you trade but there were many indicators of a near trm market top.
you had a nqarrowing ascending traingle, on currencies (which I think is the only market that matters) on the dollr bear the rsi was above 80 and going back under the wsignal line. you had the macd dropping.
the last peak in april lasted seven weeks after end of quarter window dressing (we are getting close). and the public isn't in the game as much so you know the big boys will have to take money off the table.
the japanese characters were a hanging doji at the end of a trend on resistance. if futures are lower a classic sell signal.
this could be like april where the golamn news is the real top, then the boys play around.
We also had three dys last week than opened at the low with no follow through. when you see that the market is really wanting to sell off. the only reaso9n it doesn't is because of HFT algos
you alos had a break out on treasuries a couple (tlt) a couple of days ago
My favorite mad hedge fund guy said to by TBT (short treasuries) an indicator of topping on the security without gail three or four times for me now!!
In summary you had two really big signals. the currency move (also an ascending triangle, and the treasuries of a big sell off.
You also had very low volumes.
It does mean the big boys will front run the fed for profits, anbd that will be turned into risky assets. But the time to do it is after end of next quarter window dressing.
I think the gang wanted to keep things up until september when people came back from vacation. then get them to buy. my trend lines had the peak in september. usually they really manage to push things out to the exact peak of the triangle. maybe the forward data is so bad they can't do it.
honestly I figured 6 to seven week rally after end of quarter window. So maybe we get a few more days with fed front running as they push the mart up, sell into strenght and buy treasuries ffor the end of quarter.
But if you missed this top it was on of the easiest I have ever seen, the fed announcement was just a stupid head fake to get the masses to buy at the wrong time.
"But if you missed this top it was on of the easiest I have ever seen, the fed announcement was just a stupid head fake to get the masses to buy at the wrong time."
Do you really think the masses had time to buy or were waiting for the Fed to buy? LOL!!!
Leo, you gotta love the job numbers this AM.
I have been told the unemployed are snaping up solars.
boooyaaah ...buy the dips.
There are no technicals unless looking at five minute spans and subscribing to the NASDAQ/BATS services. Head fakes aren't a daily occurance, they are in ten minute spurts.
I say that there is no TA because there is no TA. All bad news, piss poor earnings. When earnings are good a stock drops. Seriously the candles worked four years ago.
You know what works better now.
A nice tight stop loss. If you trade as you mention. Who gives a crap about crosses anymore. Tell me, how have you profited from it daily? Zero, negative? Maybe broke even? Doubtful on the last one. Don't study books, get your ass to a trainer and do it again. Come back when you have something sensible to say.
Leo,
Seriously man. Who cares? Equities are dog shit with maggots for children. Pretending that you want a flip and move forever isn't how you or those turd blankets in Toronto have EVER preformed. EVER.
You're still holding, I know you are. Worth a million dollars in 2006, worth 120k now. Do not hold your breath on returning equity. I won't put a thin red dime into this slop. The other assholes that I know that actually made their money aren't doing it either in Canada.
So the media can talk all they want about these jerks that own "capital", like buildings and crap. I'm staying in cash. From the performance of your trading ability I'm not not on a shine to you to say the least. Difference between a CEO and me, I'm educated, I built it and you sell used cars for lack of a better term. but more idiots need a place to stick their cash and wish with the lotto ticket.
Here's a suggestion, stop trying to sell negatives like your ability to sell companies (which you've have an awful time picking...stop and just pick your nose, you'll get a winner every time). Tell your customers to just throw it all into gold or in a savings account.
In fact most of you asswipe hedge funds, I suggest you do the same thing, sloppy poorly run process driven crap. Most couldn't dance with a post right now so give up just because your daddy was "awesome" at business. All you are doing is annoying people.
YouTube - Dogpile on the Rabbit! - Looney Tunes/Bugs Bunny
lol Dog pile on leo!
"We need juice and we need it now!"
QEII ... "Save the financial system" ... if the market plunges the FED step in with 1 Trillion QEII buying Treasuries.
"Economists admit that though the price of many durable goods has been falling, if you take food, housing and oil out of the consumer price index, prices are decidedly higher. What's more, wages—a key ingredient in the deflationary equation—are not falling."
Wages are not falling? For whom? The 200,000 jobs that Jobs created in China at the Ipad/Iphone shop where pay is $2-$20 per day sure isn't helping wages stay stable in the US for the unemployed.
I guess once a person is out of the official employement scene because they have given up that their wages aren't falling either. So I guess demand has stabalized.
Nominal wages continue to fall => less demand => no growth! What is that?
I am investing all my money in caffeine pills so I don't miss a second of this ride!
The dude is nuts on H1-B. H1-B is one of the major reasons for this mess. Best and brightest Americans were put out of work on a wholesale basis after the tech bubble burst, and most of their replacements were from the 3rd world. The H1-B's used the jobs they stole from Americans to make one-way bets on real estate, while, at the same time, the formerly employed (at great salary) Americans were forced to borrow increasingly heavily against their houses to make ends meet.
Predictably, this has collapsed. The way to get the economy back to health is to deport the guest workers and green card workers, not to import more.
The H1-B's used the jobs they stole from Americans to make one-way bets on real estate, while, at the
same time, the formerly employed (at great salary) Americans were forced to borrow increasingly heavily against their houses to make ends meet.
First, this sounds like protectionism\xenophobia\thinly veiled racism.
Second, you seem to be suggesting that these "H1-B's" were somehow responsible for the speculation in the housing market. Do you have any data to back that up?
Finally, "at great salary" was why H1-Bs were imported in the first place. Globalism leads to wage deflation. What did you expect would happen over time as the world becomes more educated? Education becomes another commodity that can be imported cheaply at great profit.
That's capitalism for you.
SFBay, 2000-present, house prices have risen at a rate much higher than tech salaries, and haven't corrected much. Employment has shifted from being mostly US Citizens, to being overwhelmingly, at least at the margin, H1-B/guest workers.
Same happens in NYC. Wherever you have a lot of guest workers, you tend to have far higher and stickier housing prices because not only do the guest workers buy, as a 'one-way' speculation device, but the formerly-employed, but now displaced locals look towards real estate speculation as a means of survival.
I know it sounds racist/xenophobic, but its pretty hard to ignore the facts.
Hey pitz
Don't try to shift blame here
SF,san Jose doesn't mean whole of USA
Are you trying to say that a few thousand H1B's were responsible for the nationwide real estate bubble?
I would have agreed with you if you had said the same about RE prices in Bangalore, Hyderabad and Mumbai-Yes the IT boom helped the real estate boom there for sure
200k H1-B visas were granted when the cap was 85k last year. In previous years, the cap was much higher. There are potentially 2 million people in the USA on the H1-B visa, and then add in a spouse and/or anchor baby, and you're up to 4 million.
That's an enormous shock to the economy, especially considering that such people end up in the major centres. Most certainly don't end up in Omaha or Fargo, that's for sure.
I'm betting there are more truly talented H1Bs who are stuck here because they've got the lawyers from their employer basically holding a sword to their throat (leave and you'll have to pay us back for processing your visa paperwork and no green card). They have to underpay these people by quite a bit in order to justify 10-20k in wrangling to get their sponsored employee on-site.
Many of them pay 10% higher taxes for their first 6 months and take care of a family on only one salary because their spouse isn't granted worker status along with them.
The idea that a US corp would prefer that hassle over hiring an equally qualified citizen is borderline retarded. Perhaps you should look in the mirror and ask if you're really a better choice for the job than they are, or if you're just blaming 'the other' for your inadequacies.
FWIW, I'm a citizen and was born in MI; I just know a large number of incredibly talented and productive people that happen to be from elsewhere.
That hate will eat you inside out, if you don't let it go.
What sounded racist to me was the suggestion that these guest workers somehow "stole" American jobs. It was likely American managers who hired them, so how is it theft?
And who enabled those displaced, jobless locals to speculate on houses when they were clearly credit risks?
To lay the blame solely on guest workers is ignoring the bigger picture.
Yes, ask yourself - Who created this g.... bubble ?
Oh, they'll be importing more.
I predict the gov't. will expand the H1-B into medicine next. I think they will begin importing doctors and dentists who will be happy to work for half of what our doctors can (no student loans).
They'll steamroll opposition by claiming it's for the new diverse American population (people want doctors who are culturally similar to them) but really they want to find MDs who will accept ever-decreasing Medicare and Medicaid payments.
Re: the doctors:
Not only do the foreign doctors have no student loans, but they have the ability to hide assets overseas and simply 'dissappear' (in the eyes of the US legal system) if they commit malpractice and get sued. Hence, they can charge lower rates while externalizing the long tail risks of massive malpractice payouts.
Also, if a H1-B doctor is ever called to testify against another doctor, as to the professional practice or conduct of another professional, or the conduct of their employer, they can simply be threatened with deportation, by their employer to keep their mouthes shut.
not true. Check out the rural South and ask how many US born docs wanna work there. Sadly not many. Just like the farms from East coast to West and North to South border - even folks who worked on farms prior to 70s now look down upon farm work. The "bubble mystique" created by our Fed since 1971 (gold standard taken off) and encouraged by Wall Street via the 401k (1982) have caused the bubble in the H1-B programs.
Thankfully this time the bubble aint reflating and likewise the H1-Bs will not be needed.
Good points! I didn't think of those.
Yeah no surprise that someone on the Hindu1-B visa imported by the traitors junked me already. Lol.
My advice to H1-B's: its time to leave. A krystalnacht style event awaits you if you don't GTFO out of the USA soon.