Stuff of possible interest

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JohnRoberts

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1: Home prices finally eclipsed the 2006 bubble high. Adjusted for inflation they are still 15% below peak levels but should be good for consumer sentiment. Note most inflated cities are still below prior peaks but that is expected. There are shortages of entry level housing and mortgage rates are historically low. Another wild card in housing is all the underwater foreclosures that were bought up by investors to rent out. If and when the economics shift to where it makes more sense to sell than rent these again, that could impact marginal supply and prices. Of course they would be crazy to kill their own golden goose by collapsing prices with mass sales so will probably manage the conversions better than consumers would by metering out small number of homes at a time as the market will support.. 

2: Student loan debt: The 2010 government takeover of student lending that they claimed was to save money (cough). The taxpayer exposure to this lending balance sheet is $1.3T, with more than $100B set to be forgiven. I can't find a hard number but a few tens of percent (30-40%) are not actively being paid down. Most are not technically in default because the government offers generous forbearance where students can postpone paying back the debt for a number of reasons. But the interest keeps accumulating and gets capitalized (added to the principal), so the loan amount keeps increasing.  Just like the easy lending fueled the housing bubble, easy lending for student loans has lead to tuition and college cost increases (basic economic theory). I won't inspect political motives to closely but this last campaign had candidates dangling free college as a campaign promise.

3: In another related "too-easy" credit situation, sub-prime car loans are showing signs of stress. I didn't even know sub-prime car loans were a thing, but apparently they are.  Low interest rate longer duration loans, allow lower credit quality buyers to buy brand new cars (I'm still driving my '97 Mustang).  A new trend is that these long term loan cars are getting traded in for new cars with balances left on the original loans some even underwater.
wsj said:
The number of new-car purchases to buyers underwater on previous loans reached 31.3% of all trade-ins last month, the highest in a decade, according to J.D. Power. The average amount of negative equity hit a record of $4,832 per vehicle earlier this year, according to Edmunds.com.
Probably cheaper to sell them a new car, and roll-over the old debt than watch them walk away from underwater car loans (much easier than defaulting on home mortgages).

These are just a few examples of how too low central bank rates for too long create credit/asset distortions that ripple through the economy. Time will tell if we  can restore normal (?) interest rates without bursting sundry asset bubbles, that we won't even see until the tide goes out (and we find out who isn't wearing trunks). 

The fed is expected to raise the interbank rate this month (Dec). Last December they raised the rate 0.25% and are expected to go  another 0.25% this month.  It is remarkable how much drama these modest interest rate numbers cause all around the world. Markets tend to over-react worrying about the next half dozen rate increases, that used to happen one every quarter ion the past, not once a year like the current fed.

All the monetary engineering that we have experienced over the last several years is a huge, once in a lifetime economic experiment that everyone is or should be uncertain about. We need to return to normal interest rates as soon as we can without triggering a melt down in this "easy money" dependent economy.  There are probably young businessmen and market traders who never knew double digit interest rates.  Lets not even consider the affect of normal interest rates on servicing our roughly $19T sovereign debt.  :'(

Merry Christmas everybody, and for my PC friends seasons greetings.

JR
 

dmp

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I expect next week will be interesting as the Fed meets and most likely raises the rate by another increment. Perhaps more interesting will be the forecast for the coming year. And if the markets go bonkers again.
The excitement last year (stock market losses) was more about the Fed forecast for multiple rate increases over the year, than the single 0.25% increase (and that turned out to be the only increase - possibly due to the 'temper tantrum')
The way the fed controls rates is interesting. I believe they are now going to push rates higher by paying banks to not lend money at lower rates. The world is awash with capital looking for ROR. I'm not sure what a 'normal' interest rate is at this point.
I attached the data. What can we see here?
Rates were tending up from 1960 to 1980 (stagflation) then tending down for the last 30 yrs.
High rates (15-20%) are pretty much considered bad by everyone, while low rates are considered bad by a few (considered great by many as they can borrow like crazy).



 

JohnRoberts

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dmp said:
I expect next week will be interesting as the Fed meets and most likely raises the rate by another increment. Perhaps more interesting will be the forecast for the coming year. And if the markets go bonkers again.
The 1/4 point seems to be fully priced into the market so only drama will be if they don't raise.

I would not be surprised to see a slight increase in GDP growth projection. The Fed is still telegraphing low for long interest rates. 
The excitement last year (stock market losses) was more about the Fed forecast for multiple rate increases over the year, than the single 0.25% increase (and that turned out to be the only increase - possibly due to the 'temper tantrum')
Do you mean "taper tantrum"... In 2013 when the fed started to taper off (just slow down) the QE (quantitative easing by buying less  debt as it naturally rolled off their balance sheet). There was a huge reaction in bond market interest rates.  This is all new territory so markets are not well prepared with historical precedent to rely upon. 
The way the fed controls rates is interesting. I believe they are now going to push rates higher by paying banks to not lend money at lower rates. The world is awash with capital looking for ROR. I'm not sure what a 'normal' interest rate is at this point.
I attached the data. What can we see here?
The interest rate is only part of the picture. QE programs have introduced a ton of liquidity inflating hard assets, hoping for a "wealth effect" where consumers will feel richer and spend more. There are some reports that home price inflation has spurred some home owners to now view their homes as an investment where home improvement is a better bet. (Don't tell them prices are still down 15% from highs adjusted for inflation.)
Rates were tending up from 1960 to 1980 (stagflation) then tending down for the last 30 yrs.
High rates (15-20%) are pretty much considered bad by everyone, while low rates are considered bad by a few (considered great by many as they can borrow like crazy).

We have discussed fractional reserve banking before. Interest rates are somewhat relative but need to low enough to support business activity, but not so low that they distort business decisions and lead to dangerous economic activity (like now IMO). The real thing that central banks must manage is money supply and grow it just enough to track the GDP growth. Too much money supply causes inflation, too little slows business activity. However the QE has changed the natural relationship or cause and effect driving debt pricing. What is the correct price (interest rate) for sovereign debt when the government itself is the marginal buyer keeping interest rates low. Of our roughly $19.5 T in sovereign debt the federal reserve owns about $2.5T, enough to affect prices in the margin. Hard to know the real market price when the government is buying debt from itself.  ::) The public (or non-government entities) only hold $14.4T (only  :eek: ), other government agencies hold a couple $T of US debt too. 

As we saw before with leveraged buy-outs, too easy lending allowed people to buy businesses with borrowed money that they never should have. Just like many home buyers during the housing bubble. I submit that we don't know all the asset bubbles that exist before us, hidden in plain sight, until the interest rate tide goes out. The fed is working very hard to make that tide go out very very slowly, to reduce risk of collapses in sundry asset classes from too rapid re-pricing. 

One scary moment was Trump being critical of Yellen during his campaign, suggesting he might upset the "low for long" apple cart, but he has since walked that back like so many other intemperate campaign utterances, so she gets to run the current game plan for now. I though it was unfair to let Bernanke resign, in the middle of this grand economic experiment, but it may not be completely unwound by the time her term is up in 2018.

I expect the market is a little too optimistic about what Trump can deliver, and if he creates a trade war, GDP growth will surely suffer, but again I suspect he is mostly "negotiating" for some marginal improvements to deal terms, not blowing up world trade. (Perhaps this is me being optimistic).

If Trump allows a businesses a tax holiday, or reduced penalty, to repatriate several $T of offshore retained earnings, I suspect a bunch of that will go into corporate stock buy backs that will put a bid under stock prices. The big multi-national companies with the most retained offshore earnings are the same ones who would be hurt by a stronger dollar and possible trade retaliation to tariffs.

I try to be optimistic about the future (more now than before) but we are driving into a curve blind (never done this before) so who knows how this all ends?  Not to mention I failed*** economics in college.  ::)

Sorry I'm sure I glossed over a lot in this description. There are many moving parts and it is difficult to tie them all together in a way that makes sense.

JR

*** Freshman econ 101 using the popular (back then) Samuelson text... I crammed for it and should have passed but the professor changed when and where the final exam was given during his last class, screwing guys like me who didn't attend any of his lectures.  I was not a model student for attendance when all you need to do is read the text. :mad:
 

alexc

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2017 is going to be a really interesting year for everyone I think.

Really, really hope the USA does well - so much of what goes on everywhere depends so much on what goes on there.

I'm no political analyst, but I hope Mr Trump does some good across the board when he is inaugurated as the next POTUS.

As Mr R Ashcroft opined in his  recent 2016 album release,  "Hold On" is probably a bit of good advice.

Hope it's better in 2017 than this year has been, geo-politics wise.
 

dmp

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The 1/4 point seems to be fully priced into the market so only drama will be if they don't raise.
I would not be surprised to see a slight increase in GDP growth projection. The Fed is still telegraphing low for long interest rates. 
It will be interesting how the Fed responds to the talk of stimulus spending & higher deficits from the Pres elect and Congress.  Obviously stimulus spending would be a push towards higher inflation, where it seems the inflation numbers are already starting to creeping up along with some wage growth.  If the status quo persisted (steady improvement and growth) I think the Fed would have done a .25% increase and been moderate in their statement. With the apple cart about to be overturned, I expect they will be more worried about monetary policy. Again it will be interesting how the market reacts. Of course, I expect a lot of political blustering as well.
Do you mean "taper tantrum"... In 2013 when the fed started
I was mixing up two separate events. There's already been some behavior this year in the bond market like 2013. I was also talking about the correction in the stock market at the end of last year after the Fed meeting. 
home price inflation has spurred some home owners to now view their homes as an investment where home improvement is a better bet. (Don't tell them prices are still down 15% from highs adjusted for inflation.)
Region dependent - in my area, houses are up double digits from the lows (I think).
One scary moment was Trump being critical of Yellen during his campaign, suggesting he might upset the "low for long" apple cart,
  For years, republicans en mass have been criticizing the Fed and the Obama administration for monetary policy, warning that crippling inflation is just around the corner. The expectation would be for monetary policy to tighten considerably next year - unless the Republican party is entirely hypocritical. So far what I'm hearing is not encouraging.  The economy is WAY stronger now than it was for years after the recession, when stimulus and easy money were pretty justifiable (and Republicans were yelling for austerity).
I would expect Republicans to move to cut the deficit, pay down the debt, and normalize monetary policy.
 

JohnRoberts

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dmp said:
It will be interesting how the Fed responds to the talk of stimulus spending & higher deficits from the Pres elect and Congress.  Obviously stimulus spending would be a push towards higher inflation, where it seems the inflation numbers are already starting to creeping up along with some wage growth.
The fed has been having difficulty hitting inflation targets, and the extra monetary easing has been to stay safely away from deflation that can spiral in upon itself. 

Indeed wages are slowly ticking up for sundry reasons. For whatever reason more inflation will justify higher interest rates so a good thing for eventually getting back to normal.
If the status quo persisted (steady improvement and growth) I think the Fed would have done a .25% increase and been moderate in their statement. With the apple cart about to be overturned, I expect they will be more worried about monetary policy.
As I posted Trump has walked back his threats to dump Yellen, so her "low for long" apple cart seems intact.

Monetary policy seems to have run its course (pushing on a string for years), the more optimistic among us see this as a passing of the baton from monetary policy (fed), to fiscal policy (congressional taxation and spending). The less optimistic are wondering how the Trump administration will both reduce taxes, increase spending, and reduce a $19T+ sovereign debt bomb.  We will have to wait and see how this plays out (I'm wondering too). 
Again it will be interesting how the market reacts. Of course, I expect a lot of political blustering as well. I was mixing up two separate events. There's already been some behavior this year in the bond market like 2013. I was also talking about the correction in the stock market at the end of last year after the Fed meeting. 
The market seems a little optimistic to me.  I am up nicely in several recent market positions but that is mostly luck.  8)

The market is past due for a major correction but has suffered a series of shallow corrections that may have relieved much of the pressure. I would be surprised if we don't have a correction next year, but it appears we are in a bull market with more time to run. I have avoided bonds and am not crazy enough to buy them now, while at my age I should have a major fraction of my portfolio in bonds... we'll see, I have a problem painting inside the lines.
Region dependent - in my area, houses are up double digits from the lows (I think). 
Perhaps I was unclear, the housing stat was that home prices have retraced to pre-bubble highs, albeit not adjusted for inflation so still some 15% below actual previous highs. Of course real estate is local so varies regionally from the average. 
For years, republicans en mass have been criticizing the Fed and the Obama administration for monetary policy, warning that crippling inflation is just around the corner.
The concern was increasing inflation high enough and supporting employment. I have been critical of the dual fed mandate. Monetary policy alone cannot reliably modulate employment (thus my concern about unintended asset bubbles from the surplus liquidity).
The expectation would be for monetary policy to tighten considerably next year - unless the Republican party is entirely hypocritical.
Hypocritical politicians?  ;D
So far what I'm hearing is not encouraging.  The economy is WAY stronger now than it was for years after the recession, when stimulus and easy money were pretty justifiable (and Republicans were yelling for austerity).
I would expect Republicans to move to cut the deficit, pay down the debt, and normalize monetary policy.
The president elect has appointed several well respected business leaders to his cabinet so I don't expect them to screw up the economy blindly. There are perverse economic incentives we should address. The ACA that incentivizes  employers to hire part time workers preferentially over full time employment to keep their health care costs down, is not good for those workers or business. It may make employment numbers look better than they are but are not a good career path or effective workforce. In fact tax policy should not influence any business decisions, and hopefully tax reform will get them out of that decision making loop, or at least less dominant. Same goes for regulation. Ideally business should be spending their management time improving their business based on actual business needs.   

I remain optimistic in general, and there does seem to be some low hanging fruit (like repatriating offshore earnings), but we don't need the typical one-time shot in the arm programs that short-term thinking politicians generally trade in, but long term systemic reforms. Instead of a(nother) one time amnesty to repatriate  offshore earnings, lets fix the tax code, to stop incentivizing businesses to do that in the future. If business is free to invest their money where it makes the most sense (not just tax avoidance), they will make better business decisions. 

I remain optimistic but there are plenty of risks ahead. I favor free trade and it stands to be seen what Trump will actually do. I stopped listening to his posturing some time ago.  I can tell from the people he is surrounding himself with that they do not favor a trade war. Of course we need to be on the lookout for cronyism.

The Carrier deal has received a lot of criticism but I do not see it as a template for future policy. He is still 6 weeks away from taking office, so did what he could with the tools at hand. After he takes office he can influence broad fiscal policy to affect all businesses equally.

JR
 

dmp

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The Blackstone group purchased 50,000 homes since the foreclosure crisis ($4billion spent). Other hedge funds, etc have been on a buying spree - taking advantage of the opportunity.  A few percent of homes in the USA are now owned by these types of investment groups.
There are many players in capitalism that do really well when economic shocks happen (like 2008). Maybe there is a movement by a these modern day Robber Barons to create shocks perhaps?  "The shock doctrine" by Naomi Klein is on my to-read list. 

well respected business leaders to his cabinet so I don't expect them to screw up the economy blindly

I don't share the same faith. I expect they have profited greatly from past screw ups (see: Mnuchin). As I've posted before, bankrupting the gov will be seen as a buying opportunity to some.

Same goes for regulation.
 
This is a subject that needs specificity. Unfortunately, what I take it to mean from conservatives is wanting increased freedom to pollute, pressure employees, and collude to raise prices. All of these things help increase economic output, but have great drawbacks to the population in general.  If I were to talk about the regulations that I found frustrating (from when I started / ran a business), it was mostly at the state level.  My gripes were mostly that the regulations for employing people were difficult to understand and comply with and cost wise gave advantage to large companies through the economies of scale. Seeing that Scott Walker has not done anything about this stuff, it's apparent to me that these real concerns to small business are not of concern to Republicans. If you want me to see your point, be more specific and try to show that Republicans are interested in improving those particular items.
The ACA is a big complicated subject on it's own, so I would suggest different examples, unless you want this thread to veer off that way ( I would rather not ).  And I expect Republicans will be changing their tune soon as the hypocrisy metastasizes. They've already said they will probably keep the foundation of the law (preexisting conditions).
 

JohnRoberts

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dmp said:
The Blackstone group purchased 50,000 homes since the foreclosure crisis ($4billion spent). Other hedge funds, etc have been on a buying spree - taking advantage of the opportunity.  A few percent of homes in the USA are now owned by these types of investment groups.
Yes, I've mentioned this before and smart risk capital is inclined to buy when everyone is selling (buy low-sell high). If I was younger I'd consider buying a larger house or rental property, but don't need more space or more head aches.

These are still not huge numbers of houses, but helps fuel the scarcity in housing stock. I doubt they will ever dump these en masse, but more likely to flip them to renters when the rental market softens, eventually.  It looks like Blackstone has filed an IPO registration to sell shares of this rental business to the public (dumb slow money).  This would be my opportunity to put my money where my mouth is, but I expect the easy money has already been made, and this is mostly the initial investors cashing out and taking their profit to invest elsewhere. Of course you can institutionalize home rentals, but that becomes an ongoing business that needs to be managed profitably, not a short term trade taking advantage of a systemic pricing distortion (recall that home prices have recovered nominally already). So a great trade in 2008 becomes a maybe business investment in 2016. 
There are many players in capitalism that do really well when economic shocks happen (like 2008). Maybe there is a movement by a these modern day Robber Barons to create shocks perhaps?  "The shock doctrine" by Naomi Klein is on my to-read list. 
I am not big on conspiracy theories while investors willing to make risky bets can make huge profits. George Soros famously bet against the UK currency years ago and won big. It would take stones larger than his to somehow engineer a crisis just to invest in it (IMO). Traders are arrested all the time for manipulating markets. (A recent SCOTUS decision ruled that you do not need to receive a benefit to be guilty of insider trading, making prosecution for that much easier.)

I suspect there are smart money investors betting against the sundry asset bubbles I predict to arise from the massive liquidity injection we see worldwide. The problem with these bets is that they can stay wrong for years. An old saying that applies "The market can stay irrational longer than the smart investor can stay solvent."
I don't share the same faith. I expect they have profited greatly from past screw ups (see: Mnuchin). As I've posted before, bankrupting the gov will be seen as a buying opportunity to some.
 
George Soros who I mentioned before is on record as purchasing shares of Arch Coal and Peabody energy, last august. Two companies beaten down by President Obama's energy policy. If President elect Trump relaxes the policy against coal, George Soros stands to profit handsomely.  I somehow doubt they are in cahoots.  Now that would be news.  :eek:
This is a subject that needs specificity. Unfortunately, what I take it to mean from conservatives is wanting increased freedom to pollute, pressure employees, and collude to raise prices. All of these things help increase economic output, but have great drawbacks to the population in general.  If I were to talk about the regulations that I found frustrating (from when I started / ran a business), it was mostly at the state level.  My gripes were mostly that the regulations for employing people were difficult to understand and comply with and cost wise gave advantage to large companies through the economies of scale. Seeing that Scott Walker has not done anything about this stuff, it's apparent to me that these real concerns to small business are not of concern to Republicans. If you want me to see your point, be more specific and try to show that Republicans are interested in improving those particular items.
It is difficult to be very specific before he is even sworn in, and it will be mostly the work of Ryan in the house, who has been preparing for years, but the ultimate policy will be influenced by Trump and his advisors.

One perhaps unintended consequence of Dodd-Frank is that we now have some 6,000 community banks (defined as less than $10B assets). We have lost almost 2,000 small banks since 2008. Of course this is not completely because of Dodd-Frank but the market share for small banks has dropped from 27% to 11% as big (too big to fail) banks get bigger. This is just one statistic but seems to be moving in the wrong direction for strong local banking and small business lending.
The ACA is a big complicated subject on it's own, so I would suggest different examples, unless you want this thread to veer off that way ( I would rather not ).  And I expect Republicans will be changing their tune soon as the hypocrisy metastasizes. They've already said they will probably keep the foundation of the law (preexisting conditions).
I would rather wait until next year when we can hear some actual proposals and not argue about some future that may not happen. The president elect has already telegraphed preserving two aspects (pre-exisiting conditions, and keeping children on parents policy until 26 yo). This will take years to sort out to minimize disruption to an industry already turned upside down by the process of adapting to the current laws.

I started this thread by posting some "happening now" statistics (facts), that I thought were interesting.

JR
 

dmp

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One perhaps unintended consequence of Dodd-Frank is that we now have some 6,000 community banks (defined as less than $10B assets). We have lost almost 2,000 small banks since 2008. Of course this is not completely because of Dodd-Frank but the market share for small banks has dropped from 27% to 11% as big (too big to fail) banks get bigger. This is just one statistic but seems to be moving in the wrong direction for strong local banking and small business lending.

Regulatory requirements can be much harder for small companies to comply with and give large corporations an advantage. I think reviewing and revising laws is a good thing, especially when the law makes big changes to the current status quo. Undesired effects will emerge requiring tweaking. There is also a movement to bring back Glass Steagall, which would help financial stability and I would support.
I expect low interest rates have made things difficult for small banks as well.
 

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I am always looking for economic trends that may reach out and bite us, like those submerged stumps underwater that can sink the boat.

A few tidbits,

The last few weeks there were a number of huge fines/settlements made by the outgoing administration, still collecting money over the last housing crisis.... perhaps an unintended consequence of these fines, big banks have stopped lending to these less credit worthy borrowers. But the market for packaged FHA guaranteed mortgages did not go away, so non-bank lenders started making mortgage loans. These bundled securities have passed the $1T mark. Quicken loans is now the largest FHA program participant.  I should be encouraged by change and innovation, but why did the big banks get out of this business (perhaps to prevent government from raiding them like a piggy bank in the future)? 
=====

Another tidbit, I couldn't find the article for numbers, but the government just updated the figures on non-performing student loans and the percentage was much higher than previously published. This is another drag on a whole generation of young people saddled with debt that will hurt their ability to reach financial independence (and probably result in more  tax payer bail outs).

I bet there are more stumps below the water line.

JR 
 

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OK here's some news about the housing market.  Fannie has just announced they will back $1B in mortgage loans for Blackstone (big wall street firm) that is active in buying undervalued housing to rent out.  I thought this was just a short term trade to take advantage of a temporary market distortion (housing was cheap after the bubble burst).  Later when the market normalized they could flip the houses at a decent profit.  Now it looks like the market may not normalize and they are preparing an IPO to raise funds for a long term expansion of their single family house rental business.

Apparently young adults are still living in their parents basements, or saddled with so much student loan debt that they can't afford to buy a house. Speaking of student loan debt the outgoing administration announced an oops in how they were measuring student loan performance, it turns out more than half are not being paid down. The way these loans are structured if they don't get paid down, the interest gets added to the principle (capitalized) so a big loan debt becomes even bigger.

I have not heard any serious discussion about fixing this yet, or even that it needs to be fixed (admittedly not high on the list of more important stuff).... I don't think tax payers should be backing up public mortgages in the first place (Fannie and Freddie should be privatized), and backing up a public corporation's mortgage debt is even worse...  :mad:

How did we get here? Just like a bunch of people should not have received loans for homes they couldn't afford, student loan debt for educations that do not deliver enough employment income to pay them off, are likewise bad decisions. Both sides of the same coin, government/politicians assistance to model the "appearance" of success (home ownership, and college degrees).

"We're from the government and here to help you".  ::)  Wise up, they just want your vote, or worse to make you dependent on them. This action by Fannie seems a little crazy to me. Maybe nobody is paying attention.

JR
 

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I'm sure opinions will vary especially from the teachers unions that seem to be the losers, but 5 years after Wisconsin passed the "act 10" legislation that allows school system to ignore union seniority rules and reward teachers for better performance, this common sense approach is yielding positive results. More good teachers, less bad ones, and better student outcomes. 

A good trend i would like to see more of... education is too important to ignore.

JR
http://www.will-law.org/wp-content/uploads/2016/03/Untold-Act-10-apple-cover-FINAL.pdf
 

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I saw the editorial in the WSJ on this today as well.
Important to realize that Act 10 killed all collective bargaining. It was not about re allocating wages to better teachers, although I agree that is a good thing, it was to kill all collective bargaining, cut benefits, and generally push a downward trend of income for public sector workers - to follow the downward trend for private workers of the last few decades.

Doesn't there need to be some means to support wages of working people? Is there anything in your playbook for that?

As I've posted before, the 30 yr trend for incomes has been terrible for workers, while great for capital / business owners. Republican Governors (as well as Federal Republicans) have been continuing supply side policies and driving down work's wages. Where will it end?

 

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I am all in favor of pushing down wages for bad teachers, and up for good teachers. That link I posted talks about better performing teachers getting bonuses and higher pay.  On a related subject I am not a fan of collective bargaining for government employees. Do they need protection from us taxpayers?

Better education is one way to make workers worth paying more...

Working in government used to be a lousy job with low pay for less than sharp workers. Now it seems to be much better paid.  This too is probably subject to inspection (if he really is reading my mind).

JR

PS: I do not disagree that there is a wealth gap, always has been. I favor raising up the poor, not dragging down the wealthy, but there will always be a difference. Viva la difference. 

PPS: we have too many people in prison and apparently most are for violent crimes, not non-violent drug crimes like some think.  I am not opposed to shorter sentences for violent criminals who do not appear like they will revert to their former behavior (It didn't take me two years to learn I didn't like the army, I suspect prison is even more convincing.) Incorrigible recidivists could be paroled with ankle bracelets that monitor where they are and what they are doing (mics/camera). We can pay the under employed to monitor  groups of them, maybe give them a shock for misbehaving. 

PPPS: outlawing plastic shopping bags for food use is a little crazy.  A 2011 study found that 97% did not wash reusable bags, 99% of bags tested positive for bacteria, half carried coliform, 8% E coli. In 2012 the oregon public health officials traced a nastry norovirus outbreak in a group of soccer players to a contaminated shopping bag.

Regarding energy usage, some reusable shopping bags need to be reused over 100 times to improve upon the energy cost of disposable bags, and that probably doesn't count the energy used cleaning the reusable bags.
 

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I am all in favor of pushing down wages for bad teachers, and up for good teachers.
But as I said, and is easily verifiable, the point and result of act 10 was to drive down compensation for all public employees.
Although imperfect in my opinion, the role of unions in improving worker conditions and compensation in the last century is undeniable.  Without unions (which at a record low 10% in the US are nearly defeated), what method will there be to restore balance between labor and capital? As I've stated with data several times, wages have been stagnant for 30 yrs while productivity and business profits have been steadily increasing.

Better education makes a minority of worker's high earners. The statistics are still thestatistics of average wages, which show a decades old imbalance of power between labor and capital. What is a structural solution to this?
 

JohnRoberts

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dmp said:
But as I said, and is easily verifiable, the point and result of act 10 was to drive down compensation for all public employees.
Although imperfect in my opinion, the role of unions in improving worker conditions and compensation in the last century is undeniable.  Without unions (which at a record low 10% in the US are nearly defeated), what method will there be to restore balance between labor and capital? As I've stated with data several times, wages have been stagnant for 30 yrs while productivity and business profits have been steadily increasing.

Better education makes a minority of worker's high earners. The statistics are still thestatistics of average wages, which show a decades old imbalance of power between labor and capital. What is a structural solution to this?
In case I wasn't writing clearly, I am concerned about better education for more kids.

Better education across the board will help all children, but we have to start somewhere, so lets help as many as we can, now. 

We are looking at this from different ends of the telescope. Using government force to redistribute wealth (income?) will not end well. It hasn't in the past.

JR
 

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As I said, I agree with better education for kids and merit based pay for teachers.
Driving down the pay for ALL teachers in aggregate, is not good for educating kids or communities, especially when they are low already and struggle to attract highly educated talent.

Using government force to redistribute wealth (income?) will not end well.
Since the same mislabeling keeps coming up I will try once more. Of course you are free to disagree...
Government force has had a hand in redistributing wealth - but in reality, it has been in the opposite way that you elude to. In a well functioning system, increases in productivity WOULD have led to increases in wages. Instead, wages across the board have been stagnant for workers while returns on capital have been disproportionately high.  Why?
Having run a business with employees, I know that the $$ is conserved - the income minus expenses (payroll) is the net profit or loss. (Like Kirchoff's law: should be easy for an electronic's guy to get)... As the wages paid to employees go up or down, the profit from business goes up or down. The cliche of wealth not being a fixed quantity as an abstract argument - disconnected from the reality of capital vs labor, wages vs profit, and the root of income inequality -doesn't change the fact that the increased returns from capital over the last few decades has come at the expense of wages. This driving down has been contributed to by the hand of government policy - supply side economics -  yes, Republican principles in action.

The long term result from the Republican goals to defund & privatize education will be to reduce the share of $$ to teachers, let private business make a profit, and bring down the quality for the majority of people. Of course, the very wealthy will still send their kids to private schools, so it won't affect them much, but their taxes will probably be lower. 
 

JohnRoberts

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dmp said:
As I said, I agree with better education for kids and merit based pay for teachers.
Driving down the pay for ALL teachers in aggregate, is not good for educating kids or communities, especially when they are low already and struggle to attract highly educated talent.
------clipped---
The long term result from the Republican goals to defund & privatize education will be to reduce the share of $$ to teachers, let private business make a profit, and bring down the quality for the majority of people. Of course, the very wealthy will still send their kids to private schools, so it won't affect them much, but their taxes will probably be lower.
This is a very old debate that education quality is limited by the amount of funds spent and not the management of the process.

A recent federal analysis reports that billions of dollars pumped into the nations worst (public) schools (by Obama administration) failed to produce meaningful results (Wash Post's words not mine).

This may not be very fair if they were failing schools beyond repair,  but the concept of vouchers and school choice is to allow parents to escape failing schools, and get a better education for their children elsewhere.

US ranks 5th in spending per student but ranks 21st in science and 17th in reading among OECD countries. US is below average in math skills too... not very surprising.

Education is our future and important IMO. 

JR
 

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OK a couple more economic tidbits that the press seems to have missed.

#1 while the unemployment rate is hovering around lows, the workforce participation rate is increasing (a good thing.) So workers that dropped out of the workforce and were not being counted as unemployed are now re-entering the workforce. More workers working means more GDP.  ;D

#2 while the headlines about inflation talk about central bank interest rate increases, the several $T of debt held by the central bank is expiring and having a tightening effect on the money supply (good IMO), which means we may not need 3 more rate increases this year to keep economy from over heating.  Of course we have never seen a $4.5T debt balance sheet tapered down before, so disrupting markets is a very real possibility.

This is still a massive economic experiment in process.  ???

JR
 

dmp

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#1 while the unemployment rate is hovering around lows, the workforce participation rate is increasing (a good thing.) So workers that dropped out of the workforce and were not being counted as unemployed are now re-entering the workforce. More workers working means more GDP.  ;D

Yes, the Trump economy is putting his 98 million dropouts back to work. Too bad if they were retired, disabled, in school, or laying in a nursing home....
Seriously though, the increase from almost 81% to 82% is the first up tick in 4 yrs and a good sign - not surprising either as the unemployment rate of those actively searching dropped below 5%.. The argument that people retired or went on disability due to no decent work opportunity is interesting and we will see if it plays out in reality. Will disability numbers decrease now?
 
 

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