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Austerity, Spending, And The Black Market In The Room
Via Peter Tchir of TF Market Advisors,
A dull morning with the Euro markets shut down. Stock futures have meandered throughout the overnight session, trading up and down, but in a narrow range. We get the ISM data and vehicles sales today. It would be surprising if ISM didn’t disappoint, which means the market has already priced in a print lower than the expectations of 53 calculated by Bloomberg. Vehicle sales will be more interesting. They have been helpful for the markets, but weather, and some evidence of channel stuffing, could make for a disappointing report this time around. Any upside surprise in this number will be a welcome relief for the bulls.
In spite of the holiday in Europe, it is still one of the biggest issues in the market. I am not sure how the debate has turned into austerity versus growth? Growth, or at least sustainable debt levels is the goal. Austerity and Spending are ways of achieving that sustainable debt level.
Growth is one way of achieving a sustainable debt level. A bigger economy would more easily support the existing debt. The key here is not creating more debt than the growth can cover. That has been one of the big problems in recent years the spending hasn’t resulted in enough economic growth to cover the cost of that growth. If finding an investment that could easily pay for itself was that easy, the earnings of the S&P 500 would be much higher. Projects that can create more than enough growth to cover their cost should be pursued. It has to be a mix of near term projects and longer term projects. Longer term projects may offer the best possible return, but they have more risk, and the market may be too impatient if the spending outpaces the growth potential for too long before the project comes on line. So yes, spending to create growth has to be an option on the table, but assuming it is easy, is wrong. The tendency to fund fancy projects, like Green Energy, rather than dull things like highway expansion, is bad, because the dull project may add a lot more value.
Reducing debt and reducing expenses is another way of achieving a sustainable debt level. It is depressing and a bit scary that governments have promised far more than they can deliver. We all know that the social security and medical care that has been promised will be very difficult, if not impossible to deliver. Demographics, life expectancy, low interest rates, advancement in medicine, etc., all have played a role in making these promises so difficult to fulfill. Cutting these now is realistic and actually lets people prepare and adapt. Cutting these programs has limited impact today, but is key to creating a sustainable future, and as bad as it is to take away promised benefits, it is better for people to have a realistic expectation of the future and be able to prepare for it. This may be very difficult to achieve from a political perspective, but has the least impact on the current situation while creating a future bond investors can trust in.
Then there is all the existing spending that has limited value. Just like new spending should be examined in terms of what can generate growth, existing plans need to be reviewed. Obama never got around to the line item review of all expenses (at least not that I know of), but that might be required. While embarking on new spending programs, let’s figure out what programs should be cut. Clearly they aren’t achieving the goal of a sustainable debt goal. Some things may have to be cut back. This also won’t be easy, but can probably create some immediate benefits without disrupting the economy much. Yet, for politicians, this is also hard. Spending new money is easy, taking money away from someone is hard, yet that is what needs to be done.
So new spending that creates more growth than it costs should be pursued. It won’t be easy to find that many obvious projects, but at least politicians have an easy time spending more money. Cuts, both in the near term and to future promises are also required to create sustainable debt levels. These are easier to find, but more difficult for politicians to implement.
Then there is the pink elephant in the room, or in this case, the black market. Spain has an official unemployment rate of 24%. They project it to be 22% in 2015. This is structural. I cannot imagine the U.S. surviving with that level of unemployment. The unemployed would have taken to the streets long before it hit that level to demand change. In fact, I find it difficult to imagine any country surviving on that level of unemployment, unless it is structurally encouraged. Are the benefits too good? Is it too easy to avoid working? The longer that unemployment insurance lasts, the more likely people are to use it. The closer the unemployment benefits come to covering your working wage, the more likely you are to stay on it. Then if you can supplement your unemployment benefits with a thriving black market and some under the table jobs, why not? The U.S. may have too small of a safety net and that creates its own tensions, but it seems likely that other countries have too comfy of a safety net, especially when combined with an underground economy. If a country like Spain is paying huge amounts of money to the unemployed, and that is causing a spike in debt to unsustainable levels, then something needs to be done. Maybe the benefits can be tied to work or doing some of the projects deemed necessary for growth? This is a touchy subject for everyone, and I certainly don’t have the answer, but it is time to stop ignoring the pink elephant in the room as these economies and countries try to revive themselves.
Anyways, back to a dull and quiet morning in the markets.
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I just came to this thread for the free donuts...
Here's a brief youtube on why the budget can't be balanced. It makes this idea of tweeking the entitlement programs along with some spending cuts mute.
http://www.youtube.com/watch?v=EW5IdwltaAc&feature=youtu.be
chubbar
"It makes this idea of tweeking the entitlement programs along with some spending cuts mute."
That is a much more poetic way of expressing the idea instead of simply making it moot.
"Something needs to be done"
Was this written by Tyler, or some psycho banker?
Do you seriously think there's any difference between bankers printing themselves trillions for free, and the unemployed millions getting a paycheck for free?
Blaming the unemployed that have nothing for the problems caused by the rich that own everything...
Thats just plain stupid Tyler
It is not difficult to look at the top of a post and see whether it was written by a guest poster. In this case at the top of the article are the words.....
"Via Peter Tchir of TF Market Advisors,"
I missed the part where the unemployed were blamed for everything.
As well as the part the part excusing bank bailouts.
It must be your imagination and/or that propaganda programming affecting your ability to analyze reality. You cant even read the post and think about it without projecting ideas onto the author.
Although, judging from your failure in determining who wrote the post, when it is clearly the first part of the post, I didn't have much hope for the rest of the comment.
Christ, I hate when I do dumb shit stuff like that. Correction noted.
Good Video but already known to anyone with a pulse paying attention to US politics. The budget will never be balanced. Instead money will be printed, full stop.
How come the net interest on the debt works out to under 2 percent? Is it just because of the way the rollovers work? or are they not counting any interest from the debt that goes to the federal reserve, social securtiy, etc?
Unemploymeny worldwide blah blah blah.
What we need is a cheap hooker metric.
Like High Times did with dope, compare prices and see just how much specifics acts are per nation.
That way we can assess the true impact of worldwide unemployment.
When blowjobs drop to a buck a pop we know shit has bottomed out.
If you have to pay women for blowjobs you're dating the wrong women.
Really? And what IS a "date"? If it's not them paying for your full ride...then indirectly you ARE paying for blowjobs. Having a WIFE is PAYING for blowjobs unless YOU are the lucky bastard that get's to play stay at home Dad without the kid. Are you a "kept" man? If not...you're paying for blowjobs. I've met few women worth "dating" but may worth buying a blowjob from. Speaking of dating...besides the possibility of sex...what DO you get from it? Do you REALLY enjoy the conversation?
you're asking good questions - I hope you get some answers that work for you.
beyond that - if "women" are really just used for sexual favours, it IS more honest to pay for them, as you go, then build up a fairy story of "marriage" etc. - just be honest and negotiate mutually beneficial terms.
and if you don't really like women, consider men - blowjobs don't need anything but mouths, something everyone has (obviously) - and we already know that men also like anal, which is another service they could keep in house.
you really don't need to patronise women at all, if you're ruthlessly honest. . .
Dull and quiet markets. I'm going out to find something to protest. Got that protesting mood on.
Stinky hippies are not bright enough to figure out their "green" crap doesn't work. Our politicians are smart enough to pick up on this and bankrupt our system promoting this waste. Where the hell are people with sense at?
Agreed.
Projects like wind power work fine if they receive large quanitities of subsidy from the government in the form of ROC's.
ie: in Europe, wind gets 2 ROC's per unit of energy created, whereas coal (which generates something like 40% of the world's electricty) only receives 0.5-1.0 ROC's.
Plus coal subsidies get further cuts in 2013 additionally forcing us to rely on the wind crap.
So when the next cold snap comes on and the turbines stop spinning just thank your politician.
It takes a desire to perpetuate what exists to contribute full effort to it.
the system today won't get people who have the best interest of humanity in mind, people who have the capacity to design and create a better future, because those people are smart enough to see that the end goal isn't that, but instead pure control at every level.
they would know that they are just being used by the parasite classes.
a free country requires a middle class to act as administration between the elite and poor. if the elite think they've finally found a way to get rid of the middle men and administer directly over the working class, while gaining all benefit, with none lost to the watchers, then they will follow that path.
the people with sense are most likely just waiting for a time when they can apply themselves to something that isn't morally bankrupt.
this country lost an entire generation of people at least, because of their hubris and greed.
the elite will see though, what a world like that is really like for them.
.
very well put, and so these people work with each other, under the radar, almost invisible at times. . .
Yes, the mood arrives with the springtime air. Come the dog days of August (and the political conventions), you won't have to look far to find a crowd of like-minded individuals.
Via Peter Tchir of TF Market Advisors,
Spain has an official unemployment rate of 24%. They project it to be 22% in 2015. This is structural. I cannot imagine the U.S. surviving with that level of unemployment. The unemployed would have taken to the streets long before it hit that level to demand change. In fact, I find it difficult to imagine any country surviving on that level of unemployment, unless it is structurally encouraged. Are the benefits too good? Is it too easy to avoid working? The longer that unemployment insurance lasts, the more likely people are to use it.
Comment:
Perhaps Peter Tchir needs a lesson on socialism. What he described above includes all of it. What it does (create high dependency on government through high unemployment and subsidies or social programs and the reason why it is structurally intended - for that dependency on government and thus control over the population.
I find it fascinating that some considered educated or vary smart can't put 2 & 2 together.
Maybe corporations can get that sand out of their vagina and start hiring?
Maybe central bankers can go fuck themselves and stop printing money at the expense of both small business owners and workers to avor their technocrat buddies (Goldman)?
There is another country I can think of that forces it workers to work for the state in the name of serfdom - its called China. Which is where, really, the right Neo-Cons and the Left Neo-Libtards really all want the majority of us to belong.
Remember, big corporations LOVE communism. Except for the whole, "equality" thing.
Bravo.
I second that!
Maybe corporations can get that sand out of their vagina and start hiring?
Why would they do that when the ROI is so uncertain?
There is another country I can think of that forces it workers to work for the state in the name of serfdom - its called China.
It's called the USA. Check out our own gulags, where, for smoking the wrong kind of plant, you might find yourself having to make licence plates for $0.13 an hour. And I mean, really having to make them:
http://www.prisonpolicy.org/prisonindex/prisonlabor.html
Which is where, really, the right Neo-Cons and the Left Neo-Libtards really all want the majority of us to belong. Remember, big corporations LOVE communism.
No, big corporations love fascism, because they get to keep their assets, while becoming part of the Borg. They loathe communism because the state puts them and their families up in front of a firing squad whilst nationalising their assets.
Austerity must start at the top; with banks, insurers, corporations, and governments.
If there are bailouts for these entities then it is not acceptable to impose austerity for households.
It's fine to talk about responsibility and the repurcussions of unemployment; that time is about 20 years in the past.
Banks, insurers, corporations, governments, and all the lawyer and lobbyist leeches have parasitized world economies for the past 20-40 years at the least - while offshoring productive employment with a vengeance - while jiggering markets, taxes, fees, rates, and the rule of law.
Go ahead and try austerity on the household and see what it gets you.
If austerity is good for the household than it is even better for the kleptoligarchy.
Unfortunately, it is too late to do what is right.
You would not want to live in any society that was bereft of lawyers. They enable production by facilitating the rule of law and by reducing the risk of uncertainty in transactions. These functions are essential to a highly specialized economy.
What rule of law?
The U.S. may have too small of a safety net and that creates its own tensions,...
But president Obama is working on relieving that tension, one transfer payment at a time!
Death spiral. Cut social spending and tax revenues thus shrink. Revenues shrink & debt as % of GDP increases. Bond yields increase and Debt increases again. Bond yields increase some more. Cars burn, people riot and the bankers exit on private jets with their pockets stuffed. The end.
Drug always used to be a good investment... It doesn't cost much to produce and the returns are high.
What would the CIA do....
Then there is the pink elephant in the room, or in this case, the black market. Spain has an official unemployment rate of 24%. They project it to be 22% in 2015. This is structural. I cannot imagine the U.S. surviving with that level of unemployment. The unemployed would have taken to the streets long before it hit that level to demand change
Are you kidding me? They can't even bring themselves to get off the couch. Hell we have TPTB giving the bankers trillons and the citizenry just sits on their ass and does nothing while the political class makes plans to rape them even further.
DE, the US' unemployment rate is not far from 24 %. Just because the propaganda does not say so does not mean it is less.
I know where it actually is. My point is that the U.S citizens are too lazy to demand anything.
they're not hungry. Not yet. Be patient and watch.
Don't forget. Paul Krugram's on reddit today @ 4:45 EST. Ask him anything.lol.
http://www.reddit.com/r/IAmA/
Paul, how long have you and Larry Summers been lovers?
Larry Summers only loves the Man in the Mirror
Iceland shat on the banks.....now has unemployment near zero.
http://www.reuters.com/article/2012/04/30/us-iceland-economy-idUSBRE83T0OR20120430
Mmmm. Books, music and fish. I'm in.
and 10% population emigrated to Norway looking for work according to MIke Hudson
Yeah, but that is only 30,000 people out of a total Icelandic population of 300,000. Norway needs the labor, and better to have fellow Vikings than people from elsewhere. Alway been a lot of back and forth between Iceland and Norway. As energy costs go up globally, cheap geothermal energy becomes ever more a competitive advantage, and the Icelanders can take advantage of their resources. It will be a generation at least before they get themselves sidetracked again into being financial Master of the Universe wannabes.
22% unemployment? Shadowstats has real US unemployment at that level already.
Noone in the US notices though so long as daytime TV is running
I was in Espana post Franco, 78 and 79, paro was at 15% for 17 to 24 years old. There was mandatory paticiaption in the mili for all males.
What about the homos?
~~~
http://www.youtube.com/watch?v=aotlEpmAFVQ
Spaniard here....it's an interesting combination of socialism and nationalized industries that keep unemployment at 24% - a level it has been around for decades. To wit, the laws protect the workers to such a degree that once you hire someone on a permanent basis, it's nearly impossible to fire them. Even with cause. Which is why most hires now are temp hires so you have some flexibility. Then you have protected industries like the airlines that are owned by the government which, restircts who can and cannot fly into and out of Spain, and you end up with a clusterf*ck situation.
Yes, funny that...how did they manage to enter the EU without reforming any of their "Spanish Practices" ? I suppose it was like Rumania not quite getting rid of the Mafia running its Government - or Bulgaria for that matter
Alex Jones says FEDs are going to false flag because of Agenda 21 and NDAA is being rejected by states and localities. Lady called and said FBI chatter about dirty bomb hardware. May Day May Day
Euro-Idiots celebrate their demise.....May 1.....wallowing in their wrongheadedness ! Monedas 1929 Comedy Jihad Celebrate Autism PS 90% of the cure is diagnosing the disease....Chronic SOCIALISMMMMMMMMM !
Chronic capitalism hasn't worked that great either, quit your whining and come up with a solution
Capitalism?!? Where? Where?
Responsibility and accountability fix a large amount of problems.
Depends what the debt is created for, doesn't it? if for banker bonuses and bailouts then zero growth ...if for real growth then we have a slow cure for the deficit.
You are quite correct. It also depends upon Sectoral Balance. If the public sector runs a deficit it can be matched by private sector savings which was after all what Keynes postulated in Paradox of Thrift. The weird thing is that the Private Sector is loaded up with LBO Structures - and if you look at the refinancing requirement for LBOs in Europe in 2012-2013 take a deep breath. It is also loaded up with Household Debt; and Banks that have "Assets" which are really Junk Debt so slide across the Balance Sheet to boost Liabilities.
The fact that European countries are saddled with Bank Liabilities to keep the pyramid upright means they have let the banks extract REAL resources from the Private Sector by Credit Squeeze and Interest Rates hikes thus undermining national budgets as tax revenues collapse. The absurd situation whereby Banks which are masters of tax avoidance now extract huge REAL resources from Households through the Government and directly through Interest Charges on EXISTING Debt is a form of scorched earth harvesting.
The situation has to explode.
uardian.co.uk/world/2012/apr/30/italian-women-husbands-recession-march
ww.telegraph.co.uk/finance/personalfinance/9238464/One-in-five-couldnt-afford-food-if-mortgage-payments-rose.html
"Please allow me to introduce myself..."
Sympathy for the Devil
Another worthless article - nothing but conversational style writing (which sucks). This "feels" like some other author is doing this writing.... and it doesn't belong in ZH.
Well, it is written by an outside contributor.
Just ordered some 5th string spikes so I can finally start working on this classic in Dm:
http://www.youtube.com/watch?v=_8mUyLD8aV4
What would be great is if we could all come around and "see" this classic.
http://www.youtube.com/watch?v=cox7i6vBM3w&feature=relmfu
I'll second that.
"Via Peter Tchir of TF Market Advisors"
He meanders a bit; a continuation of the Krugman debate and benefits/evils of central planning and planned economies.
It's tough for lifelong capitalists and socialists to get a grip on right and wrong when both of their ideologies are being utilized for evil by TPTB.
The unemployed would have taken to the streets long before it hit that level to demand change.
Um...I doubt it. Another Occupy movement will be crushed and amerika will get the change it deserves.
Tchir should stop drinking the government kool-aid drenched employment numbers(as well as all other numbers) and take a look at the reality of the work John Williams is providing us with at shadowstats.com.