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EJ
07-01-09, 05:41 PM
http://www.itulip.com/images/available300.jpgPhysiognomy of Economic Depression

The reporting of today's auto unit sale numbers reminds us that most people still don't understand that this is not just a bad recession

The collapse of the FIRE Economy caught most mainstream economics reporters and editors by surprise. Since then the quality of coverage of economic data has improved somewhat. Sure, we still hear "green shoots" sold hard, as if the load of debt that holds the economy back can be wished away, yet we also see more skepticism and less willingness to accept assertions by industry analysts and economists at face value. Reports on economic data still lack historical perspective, but at least most don’t read like press releases anymore, yet readers are still being set up for major disappointment.

Take today’s report by Reuters business reporter David Bailey on today's annual auto sales data issued monthly. Here are excerpts of the Reuters coverage of today's auto sales news with my comments.
June auto sales show stability, led by Ford (http://www.reuters.com/article/newsOne/idUSN0151523820090701?pageNumber=2&virtualBrandChannel=0)

Major automakers posted better U.S. auto sales for June than in recent months on Wednesday, led by Ford Motor Co as results pointed to signs of some stabilizing in the hard-hit industry.
So far so good. Saying that the data reveal a slower rate of decline point to signs of some stabilizing is fair. Better than “adding to signs of recovery” or used as an excuse to repeat of that horrid phrase “green shoots.”
Ford reported a 10.9 percent drop in U.S. sales in June, near the top of its expectations for a decline of from 10 to 20 percent, and Nissan Motor Co Ltd posted a 23.1 percent drop, in line with analysts' expectations.
I'm confused. Is the 10.9% drop in sales revenue or unit sales? Over what period of time?

Retail sales data are always reported in dollars. In inflationary times these are rarely if ever adjusted for either politically inexpedient inflation--which items are classified as "volatile" by economists working for the FIRE Economy--or long term inflation which is buried by statistical maneuvers via the indexes. High gasoline prices in 2008, for example, were regularly reported as increased retail sales. This helped create the "surprise" of the crash that occurred in late 2008. The economy had already been in recession since late 2007, yet few noticed because prices were rising due to energy cost-push inflation. Few reports bothered to mention that the "increase in retail sales" was really a measure of gasoline and heating fuel price inflation not rising sales volume.

In either case, whether revenue or units, the statistic that tells us whether or not a market segment is improving or getting worse is a comparison of sales year over year. For all we know car sales always dip in June from May for seasonal reasons, or maybe they usually rise and this drop is unusually bad. A 10.9% drop in June sales versus May tells us nothing.

In fact, unit sales of autos on a year-over-year basis have been rising for several months as occurs at the beginning of economic recovery periods.

http://www.itulip.com/images/autounitsales1978-Jul2009.gif





On the surface the data point to recovery--if this FIRE Economy Depression were like any other recession since the end of WWII. But it is not.

Context, context, context

To understand what the new auto sales data mean we first need to understand where we are and how we got here.

http://www.itulip.com/images/autounitsalesvsrgdp1976-Jul2009.gif





The blue line on the chart above shows unit sales of autos and light trucks going back to 1976 and the scale on left hand side of the graph shows unit sales in millions per month. The red line shows real GDP and the scale on the right hand side of the graph shows annual real GDP in billions of dollars.

At 9.1 million units in February 2009, auto unit sales fell during the early stages of the FIRE Economy Depression to within 3% of the all time record low of 8.9 million units since 1976 in December 1981, 28 years ago.

Two important points of comparison between these two economic periods


The U.S. economy was a $5,292 trillion (real GDP) economy in 1981 compared to a $11,665 trillion economy in 2008. The economy was 55% smaller in real terms. Adjusted for the real change in the size of the economy, unit sales of cars have fallen more than twice as much during the FIRE Economy Depression than during the early 1980s recessions.
The Federal Reserve created the early 1980s recessions intentionally by raising short term interest rates to over 20% in order to bring down high inflation, then pushing 20%. High borrowing costs led to a fall in demand, business failures, layoffs, and high unemployment. High unemployment cut wage earner’s pricing power, just as today. That shut down a wage-price inflation spiral that had spun out of cost-push inflation from high oil prices years before. Before that, high oil prices had spun out of oil imports due to a weak dollar and an oil supply shock. To stop multiple inflation feedback loops the Fed hit the economy with a sledge hammer. All the little happy loops of inflation process stopped. Crude but effective.





To make a long story short, this time the U.S. economy blew up in late 2008. It did not slow down. It did not fall into recession. The Fed did not create it on purpose to bring down inflation.

A financial system and credit system polluted with excessive risk and debt broke down and the economy started to collapse, a process that continues--driven by inexorable asset price deflation--despite efforts to contain it. The asset price deflation spilled over into the real economy via the credit markets and negative wealth effects.

Auto unit sales data are but one piece of evidence of this obvious fact. Now the question is, Are efforts aimed at stimulating the economy working to end the FIRE Economy Depression, with what unintended consequences, and will the U.S. run out of credit before the economy becomes self-sustaining, free of government subsidies?

http://www.itulip.com/images/autounitsales2006-Jul2009.gif





That’s the context. Now let's re-frame the question about today's auto sales data: Will they take off from here along with the economy, or will they rise and fall in response to government stimulus and bounce along at the 9 to 10 million annual level as the depression malingers?

Back to the auto unit sales data report from Reuters.
Toyota Motor Corp posted a 31.9 percent sales decline in June. The automaker trailed Ford for second place in the U.S. market through the first half of 2009.

Chrysler Group LLC, in its first sales report following its sale to a group led by Italy's Fiat SpA in June, said U.S. June sales fell 42 percent.
Again, does the 42% decline in unit sales represent June 2009 versus May 2009 or June 2009 versus June 2008?
Industry analysts and experts expect U.S. auto industry sales to be down less than 30 percent in June, which would be the first time the year-over-year results were even that strong since the financial-market collapse in September.
There we go. They meant year-over-year percent change all along.
In the context of the U.S. auto industry, where sales have been slumping for four years, that would constitute good news and support the view that sales are near bottom after a punishing decline to nearly 30-year lows.
An interesting point that most reports failed to make.

http://www.itulip.com/images/autounitsales1995-Jul2009.gif





Auto unit sales were flat from 1999 until the housing bubble started to collapse in 2006 (A). Auto sales, partially financed with cash-out refinancing of homes and benefiting from the same loose lending standards that helped inflate the housing bubble, were hit with a series of shocks including a gasoline price shock in 2008, followed by declining real incomes in late 2008, then sharply rising unemployment, then the credit collapse (B). Under the circumstances, it is encouraging that sales did not fall even moe (C).
Economists follow the annualized rate of U.S. auto sales as an early snapshot of the appetite for big-ticket items. A 10 million-unit range would still be among the weakest results since the early 1980s.
We show our apples and oranges economic eras chart again below as we will every time we come across a facile comparison between the FIRE Economy Depression and the early 1980s period.

http://www.itulip.com/forums/../images/1980vs2009.gif






That said, the observation that the appetite for big ticket items is related to auto sales is correct. More generally, there is a strong historical correlation between the sales of autos and the strength of the economy a year later.

http://www.itulip.com/images/autosalesgdp1976-Jun2009.gif





The question is, will the correlation hold again or has the economy fundamentally changed?

I argue in an article in the current month’s Harvard Business Review Selling to the Debt-Averse Consumer (http://hbr.harvardbusiness.org/2009/07/selling-to-the-debt-averse-consumer/ar/1) that the economy has changed, that the debt overhang of the FIRE Economy will change consumption patterns for a generation. I make a recommendation to consumer products companies about how to address this shift that long time iTulip readers are familiar with.

Incentive dependent consumption

What are auto makers doing by way of incentives to maintain even this awful level of sales volume? Are they able to do so profitably? As we have pointed out before, we cannot have a sustained economic recovery without profits.
RECORD AUTO INCENTIVES

Automakers also have been plying record incentives in the form of cash or special financing to press customer traffic into dealerships, making it more difficult to determine the long-term demand for vehicles.

Edmunds called the month the most expensive June on record, with the average U.S. incentive at $2,930 per vehicle sold, up 20 percent from a year earlier. Edmunds expects incentives to fall as production cuts in recent months pare inventories.
Ford’s profit margin is -12.66% and Operating Margin is -5.49%. Hard to imagine how increasing incentives by 20% will improve on that. Input costs, such as payroll, are not down 20%.
"June incentives have never been higher, but we anticipate that the tide is about to turn," Edmunds executive director of industry analysis, Jesse Toprak, said in a statement.
What is the basis of this assertion? None are provided. That's hopeful reporting. The reporter's editor likely insisted on at least one of these throw away hopeful sounding lines from an industry expert.

Rising incentives that reduce profits result in less investment in future product. That reduces future competitiveness. Less competitiveness means a greater need for more incentives in the future. An auto company caught in this death spiral had better not be counting on a quick economic recovery to pull out of it, and we do not see one coming.

Spring 1930 versus Summer 2009

This period reminds us of the spring of 1930. The following was compiled in 2001 by futurecasts.com (http://www.futurecasts.com/Depression_descent-beginning-%2730.htm) from articles published in the New York Times in 1930, re-posted by us with checks and minuses to denote similarities and differences.
There were great expectations of a quick business revival in the spring of 1930 (green shoots, check). Credit was ample and available at low rates (check). Bank rates had been cut sharply by the Federal Reserve Bank and all the major European national banks (check). Private interest rates had been cut even faster and sharper as people with money found it increasingly difficult to profitably employ it. Not only were business risks rising, the profit inducement to borrow was clearly declining, making the availability of money at sharply declining interest rates increasingly irrelevant (check).

Governments responded to the crisis with substantial tax cuts and public works projects (check).

Auto manufacturers increased steel orders, as auto inventories were at last worked down (check). Railroads, responding to a plea from Pres. Hoover (Obama), accelerated steel rail buying and other planned maintenance and capital projects (today highways fulfill a similar role, check). Many other public utilities and major industries responded similarly (check).

Federal taxes were cut substantially and public works projects were accelerated (check). Steel production rebounded to 69% of capacity and continued climbing towards its usual March-April peak (minus) (http://www.steelonthenet.com/production.html).

The higher wheat prices, a rise in steel production to about 80% of capacity, revived auto production and sales, and the general revival of domestic economic activity, pushed stock market prices higher (minus). April auto production of 467,000 units was better than any April save April, 1929 - but the revival in auto production would probably have been about 40,000 units higher that month but for the collapse of its export market (minus).

Total NYSE stocks reached just under $80 billion by April 10, 1930, making up about 73% of its losses since its September, 19, 1929 highs. The Big Board had surged about $30 billion in five months, a gain of about 65% (minus, still 40% below peak). Its loss from its September, 19, 1929 highs, was just about 12%. Bond prices were running above 1929 levels, and bond financing was now running at 10 times the rate of stock flotation - reversing the tendency in 1929.

The securities markets had staged a nearly complete recovery by any measure, and, despite weak spots, the domestic economy was doing well. But brokers loans were rising sharply, indicating the speculative nature of much of the recovery (check and minus, not a complete recovery but lack of earnings and other factors are evidence that speculation is driving it).

However, the revival was fatally flawed.

In spite of heavy Farm Board purchases, the price index for all commodities had already plummeted to the lowest levels since 1916 (check and minus, did plummet but recovered half way in response to massive global central bank liquidity). The Farm Board now controlled about 1/3rd of the total visible domestic wheat supply (check, the government now controls most of the U.S. auto industry).

Along with the sharp drop in agricultural exports, there was a 46% drop in auto exports for the first quarter of 1930. Exports were a very important factor for the auto industry. They had accounted for about 20% of total sales (minus, the U.S. is a net importer of autos).

Railroad car loadings remained at the lowest levels since 1922 - obviously heavily impacted by the downturns in agriculture and auto exports (check). U.S. foreign trade was now running 23% below 1929 levels - about half consisting in price cuts and half in volume cuts. It was now running below 1928 levels as well (check). First quarter earnings were disappointing, especially when compared with the earnings of the booming first quarter of 1929 (check).
And so on. You get the idea. On to the detailed comparisons.

Exports falling during the FIRE Economy Depression?


http://www.itulip.com/images/exports1959-Jul2009.gif
June 2009


Railroad traffic still declining?


http://www.itulip.com/images/railtraffic2009vs2008.gif
June 2009


Speculation driving the stock market?



<object height="344" width="425">


<embed src="http://www.youtube.com/v/g0U1vMUa2sc&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" allowscriptaccess="always" height="344" width="425"></object>

Hat tip to member WildspitzE (http://www.itulip.com/forums/member.php?u=16366) for the video via zerohedge.com (http://zerohedge.blogspot.com/)


No two events of this type are alike. The similarities and differences show up in the data. What impresses us most is how unimpressed many appear to be about the seriousness of this depression. They ask why many restaurants are still booked up and why many malls are still busy, even if apparently the shoppers in them are buying less. Where are soup lines? Where is the high crime rate?

We remind them that we are only one year in to a multi-year process.

The average man or woman does not change his or her behavior until years after an economy has changed around them. No one likes change, even positive change but especially negative change. The tendency is to ignore change as long as possible, and hope it goes away and "normalcy" returns. Meanwhile, change goes on.

This depression is transforming the world around us. If you don't think so, I encourage you to take a closer look. On the surface much appears to be the same as, say, two years ago, but under the surface much has changed and is changing--shifting relationships among friends, families, and colleagues. Changes in circumstances affect the range of choices people can make. They make different decisions than before. Different decisions produce different results. Those results impact someone else's decisions. Collections of decisions combine in unexpected ways. One of the most obvious is that consumers buy less as a sustained reduction income and wealth influences purchasing decisions. As they do, after a lag, they will find that they have less to buy because retailers, wholesalers, and manufacturers eventually respond by consolidating or going out of business.

The economy has changed, behavior follows

The Great Depression is taught in American schools as a market crash on a Monday in October 1929 with soup lines forming shortly thereafter. Blurred-over are years of failed trial and error policies by politicians who desperately wanted to undo the damage caused by the preceding decade of credit excess. But as time went on, the damage that started off as abstract data on defaults, output, debt, and incomes began to show up unmistakably in the physiognomy of the economy. The world began to look depressed. That itself will later to have consequences, feeding back into changes in behavior.

To get a street level view of this process, I brought my camera with me on my latest bike ride into Boston from the western suburbs where I live. On the usually pristine Minuteman Bike Trail that I ride on as far as Arlington, not seen on previous trips over the past ten years are now: graffiti, piles of burned trash, groups of teenagers hanging out, and police cars parked on the side of the trail. When their parents are struggling with bills and unemployment, teenage kids tend to take it out on the local neighborhood.

Riding down Newbury Street, Boston’s posh shopping district, I took 15 pictures of retailers that had gone out of business, eight of them side by side. So desirable is the location that even during the 1980s recessions a single vacant Newbury Street shop was a rare sight.

Here they are in a collage, a visualization of the graph from the St. Louis Federal Reserve web site that shows PCE falling at the end of 2007, reflected in conditions on an upscale street of a major U.S. city 18 months later.

http://www.itulip.com/images/pcecollapse2009.jpg
No crowds on a warm Sunday afternoon in June to interfere with the photographer





This picture as a marker, documentation of a lengthy process to help our readers calibrate the rate of the process. Over the next few years we'll go back to keep a photo record of the street. If the FOR SALE and FOR LEASE signs disappear and out-of-business retailers are replaced by new retailers, then we know that some kind of recovery has indeed occurred, even if the composition of retailers there changes.

We shall see if this depression turns out better than the last one.




iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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cbr
07-01-09, 11:57 PM
i see the same signs appearing, but agree, no one around me seems to get that anything structural has changed. indeed it has not for the average upper middle class american yet.

however, i agree with the premise that the combination of baby boomer inheritance and spending of greatest generation savings, false credit availability and debt levels, the end of successful exploitation of third world economies and possibly diminishing advantage of fiat currency, and emaciation of productive economic development and redirection of intellectual capital into the FIRE sector (to use itulip jargon) is a lethal combination that never made sense to my young adult mind as it all unfolded.

compounding the problem is blindly irrational social net government spending that never made sense, which is only accelerating now - the worst possible result.

i dont see the way out, but what disturbs me and makes me wonder how to react is that i cant predict what the international economic and government response will be; debt is after all simply a creature of contract, and our government has already abrogated fundamental concepts of contract law; so what happens from here?

Jim Nickerson
07-02-09, 12:17 AM
i see the same signs appearing, but agree, no one around me seems to get that anything structural has changed. indeed it has not for the average upper middle class american yet.

however, i agree with the premise that the combination of baby boomer inheritance and spending of greatest generation savings, false credit availability and debt levels, the end of successful exploitation of third world economies and possibly diminishing advantage of fiat currency, and emaciation of productive economic development and redirection of intellectual capital into the FIRE sector (to use itulip jargon) is a lethal combination that never made sense to my young adult mind as it all unfolded.

compounding the problem is blindly irrational social net government spending that never made sense, which is only accelerating now - the worst possible result.

i dont see the way out, but what disturbs me and makes me wonder how to react is that i cant predict what the international economic and government response will be; debt is after all simply a creature of contract, and our government has already abrogated fundamental concepts of contract law; so what happens from here?

http://www.investmentpostcards.com/2009/07/01/stock-market-performance-during-economic-phases/

"...Merrill Lynch (again via US Global Investors (http://www.usfunds.com/docs/alert/alert_main.asp)) has just published The Global Wave indicator, which quantifies trends in global economic activity. This measure signaled a downturn in September 2007 and troughed in June, suggesting that the global economy could be on the road to recovery. Following troughs in The Global Wave, global emerging markets tend to be the best-performing category with a median return of 39.6% over the subsequent 12 months, whereas the US usually lags with a more pedestrian 10.0%."http://www.investmentpostcards.com/wp-content/uploads/2009/07/stock-market-performance-pic-2.jpg (http://www.investmentpostcards.com/wp-content/uploads/2009/07/stock-market-performance-pic-2.jpg)

"Based on past economic cycles, the above studies indicate a favourable environment for stocks over the next six to 18 months, short-term corrections aside."

CanuckinTX
07-02-09, 12:26 AM
"June incentives have never been higher, but we anticipate that the tide is about to turn," Edmunds executive director of industry analysis, Jesse Toprak, said in a statement.
What is the basis of this assertion? None are provided. That's hopeful reporting. The reporter's editor likely insisted on at least one of these throw away hopeful sounding lines from an industry expert.



Great timing on this article. I read this one the other day in the WSJ and just had to shake my head at the lack of thought this reporter put into it. Her throw away statement at the end killed me since it was based on nothing other than the assumption that everything will go back to 'normal', rather than trying to figure out if what happened was the abnormal phase.

McMansions Out of Favor, for Now (http://online.wsj.com/article/SB124630276617469437.html)


A new study out Monday by the American Institute of Architects shows that Americans have fallen out of love with McMansions. The 500 residential architects surveyed said that only 4% of their clients wanted more square footage in their homes this year, compared to 16% last year.

...

Homes are getting smaller now because people feel poorer, but all that will change once the recession ends and consumer confidence is restored.

...

Still, if the recession is forcing consumers to re-examine both their need for status space and their knee-jerk opposition to higher density, even temporarily, then builders will follow suit—at least temporarily. A story in this month's Urban Land (http://www.uli.org/ResearchAndPublications/Magazines/UrbanLand/2009/June/%7E/media/Documents/ResearchAndPublications/Magazines/UrbanLand/2009/June/Jones.ashx), the magazine of the Urban Land Institute, notes that several big suburban builders, including K. Hovnanian, KB Homes and Toll Brothers, have started divisions for building urban housing, while other companies have started to convert failed suburban shopping malls, office parks, car dealerships and even golf courses into denser mixed-used buildings.


But nothing lasts forever, except perhaps human nature, which is why I suspect that when the recession ends, and today's first-time buyers are ready to move up, they'll want a home just like the one they grew up in. In other words, a McMansion.


Really? How many people have actually grown up in McMansions? It's not like they've been around for generations and have imprinted on the lives of countless millions of Americans. I think they're still a relatively new phenomenon that was just part of the illusion of wealth. If anything they may become a symbol of a cause of the depression and be shunned.

metalman
07-02-09, 12:26 AM
http://www.investmentpostcards.com/2009/07/01/stock-market-performance-during-economic-phases/

"...Merrill Lynch (again via US Global Investors (http://www.usfunds.com/docs/alert/alert_main.asp)) has just published The Global Wave indicator, which quantifies trends in global economic activity. This measure signaled a downturn in September 2007 and troughed in June, suggesting that the global economy could be on the road to recovery. Following troughs in The Global Wave, global emerging markets tend to be the best-performing category with a median return of 39.6% over the subsequent 12 months, whereas the US usually lags with a more pedestrian 10.0%."http://www.investmentpostcards.com/wp-content/uploads/2009/07/stock-market-performance-pic-2.jpg (http://www.investmentpostcards.com/wp-content/uploads/2009/07/stock-market-performance-pic-2.jpg)

"Based on past economic cycles, the above studies indicate a favourable environment for stocks over the next six to 18 months, short-term corrections aside."

did the global wave indicator catch the recession start? do you have a 'Merrill Lynch Global Wave indicator' report from 2006 when itulip forecast the recession start in q4 2007? curious to know the track record of this methodology.


Merrill analyst David Rosenberg (http://search.bloomberg.com/search?q=David+Rosenberg&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who previously forecast the Fed would lower interest rates in the second half of 2007, said there are two possible scenarios. With a rate cut, economic growth will slow to about 1 percent. If rates are left unchanged, and housing prices fall 10 percent, the probability of a recession is ``very close to 100 percent,'' Rosenberg wrote.

so, mar 2007 merrill lynch's token bear rosenberg saw a recession if the fed did not lower rates & for sure if it didn't.

well.... the fed lowered rates in oct 07 and again in dec 07 and the economy still went into a depression.

metalman
07-02-09, 12:45 AM
Great timing on this article. I read this one the other day in the WSJ and just had to shake my head at the lack of thought this reporter put into it. Her throw away statement at the end killed me since it was based on nothing other than the assumption that everything will go back to 'normal', rather than trying to figure out if what happened was the abnormal phase.

McMansions Out of Favor, for Now (http://online.wsj.com/article/SB124630276617469437.html)


Homes are getting smaller now because people feel poorer, but all that will change once the recession ends and consumer confidence is restored.


far cry from the itulip forecast... (http://www.itulip.com/housingbubblecorrection.htm)


Step F: Ten years into the downturn, real estate will be widely regarded as a terrible, "can't win" investment. McMansions (http://www.tracypress.com/local/2005-06-07-homes.html) will be subdivided for rental as multi-family homes.

that was jan. 2005 :eek:

these f&cking reporters can't smell a pile of shit when they're standing in it.

GRG55
07-02-09, 01:07 AM
Great timing on this article. I read this one the other day in the WSJ and just had to shake my head at the lack of thought this reporter put into it. Her throw away statement at the end killed me since it was based on nothing other than the assumption that everything will go back to 'normal', rather than trying to figure out if what happened was the abnormal phase.

McMansions Out of Favor, for Now (http://online.wsj.com/article/SB124630276617469437.html)


A new study out Monday by the American Institute of Architects shows that Americans have fallen out of love with McMansions. The 500 residential architects surveyed said that only 4% of their clients wanted more square footage in their homes this year, compared to 16% last year.

...

Homes are getting smaller now because people feel poorer, but all that will change once the recession ends and consumer confidence is restored.

...

Still, if the recession is forcing consumers to re-examine both their need for status space and their knee-jerk opposition to higher density, even temporarily, then builders will follow suit—at least temporarily. A story in this month's Urban Land (http://www.uli.org/ResearchAndPublications/Magazines/UrbanLand/2009/June/%7E/media/Documents/ResearchAndPublications/Magazines/UrbanLand/2009/June/Jones.ashx), the magazine of the Urban Land Institute, notes that several big suburban builders, including K. Hovnanian, KB Homes and Toll Brothers, have started divisions for building urban housing, while other companies have started to convert failed suburban shopping malls, office parks, car dealerships and even golf courses into denser mixed-used buildings.


But nothing lasts forever, except perhaps human nature, which is why I suspect that when the recession ends, and today's first-time buyers are ready to move up, they'll want a home just like the one they grew up in. In other words, a McMansion.


Really? How many people have actually grown up in McMansions? It's not like they've been around for generations and have imprinted on the lives of countless millions of Americans. I think they're still a relatively new phenomenon that was just part of the illusion of wealth. If anything they may become a symbol of a cause of the depression and be shunned.

McMansions are the tail fins of the 2000s. Fun while it lasted, but never to return...even if credit again becomes cheap and plentiful.

Eleven years ago architect Sarah Susanka published a book titled "The Not So Big House" . A few early adopters saw the light long before the McMansion insanity peaked and burned out.

http://www.youtube.com/watch?v=OhcOq6iDOmE

http://books.google.com/books?id=cKSasdS-GdoC&dq=the+not+so+big+house+susan&printsec=frontcover&source=bn&hl=en&ei=VkFMStHRM8SJtge-5tC7AQ&sa=X&oi=book_result&ct=result&resnum=4

No word yet on whether Susanka intends to publish a follow up book about "The Not So Big Bunker"...;)

santafe2
07-02-09, 01:40 AM
http://www.itulip.com/forums/../images/1980vs2009.gif



Thanks EJ. I'd seen this graph published on iTulip before and didn't get it. So tonight I took a few minutes to think about the nice red and blue lines as they trace their way through the ups and downs of the last 40 years and the gray columns of doom. I think it's the call outs that threw me off. Here are a few things I took away from the graph:


Left call out - Unemployment fell about 2MM after both the 1975 and the 2001 recession not just the 1975 recession. That unemployment kept rising after the 2001 recession is more a function of gaming what we call recessions.
Right call out - Unemployment has indeed gone up 7MM+ in the current downturn but it went up 6MM in the 1979-1983 employment downturn. If we compare the ~17% increase in unemployment to the ~35% increase in population we have to ask if this is a statistic we care about...yet.
What I find interesting with regard to the two economic downturns is that rising unemployment is an echo of rising CPI and the government's efforts to bring inflation under control in 1980.
Today, unemployment is rising quickly while CPI is falling.

If I can make a suggestion, I would change the call outs to:


Left: 1980, Government sponsored recession, (add an arrow to both the red and blue peak).
Right: 2009, Modern depression, (and the orange should not look so fresh...;)).

Only time will tell if this is indeed the end of a really nasty, housing and commodities lead recession or the beginning of a sea change. Since September of last year I've tended toward the latter view. I appreciate your navigation skills.

Mega
07-02-09, 05:34 AM
Just read that, thank you Eric.
Mike

jpatter666
07-02-09, 07:45 AM
Disturbing read. Got lots to think about this extended weekend. Many neighbors put on extensive fireworks shows, I'll be curious to see how many do it this year and how extensive (or not) they are.

So far as the Depression goes (let's just call a spade a spade), will this move faster (both down and up) because of faster communications or might we track the previous event (which it looks like we are doing).

If so, we have a bleak decade more ahead of us.

I haven't gone jtabeb (95% PM) yet, but I think I might add some silver to the stockpile this weekend.

hayekvindicated
07-02-09, 07:51 AM
Unless politicians really foul it up, there shouldn't be soup lines as long as during the 1930s. This is a simple function of technology and productivity - both of which have advanced by leaps and bounds in eight decades.

However, in the relative sense, this Depression could turn out to be worse than the last one. Back in the 1930s, Americans still had faith in their political institutions. The worst thing about this crisis is that this faith may be destroyed. There will be political consequences if this were to happen.

ax
07-02-09, 08:48 AM
Unless politicians really foul it up, there shouldn't be soup lines as long as during the 1930s. This is a simple function of technology and productivity - both of which have advanced by leaps and bounds in eight decades.

However, in the relative sense, this Depression could turn out to be worse than the last one. Back in the 1930s, Americans still had faith in their political institutions. The worst thing about this crisis is that this faith may be destroyed. There will be political consequences if this were to happen.

Hayek, you're probably right, but one thing to note about shelters and soup kitchens. As unemployment increases, donations go down dramatically just as there are more mouths to feed, creating a vicious cycle.

cindykimlisa
07-02-09, 09:33 AM
Great Info,

I got the deal of the century on a new Honda yesterday.

Expecting its "Value" too hyperinflate over the next few years!

Nicholas Carroll
07-02-09, 09:36 AM
Here is Australian vehicle sales trend data:

FRED
07-02-09, 12:02 PM
Thanks EJ. I'd seen this graph published on iTulip before and didn't get it. So tonight I took a few minutes to think about the nice red and blue lines as they trace their way through the ups and downs of the last 40 years and the gray columns of doom. I think it's the call outs that threw me off. If I can make a suggestion, I would change the call outs to:


Left: 1980, Government sponsored recession, (add an arrow to both the red and blue peak).
Right: 2009, Modern depression, (and the orange should not look so fresh...;)).

Only time will tell if this is indeed the end of a really nasty, housing and commodities lead recession or the beginning of a sea change. Since September of last year I've tended toward the latter view. I appreciate your navigation skills.

santafe2,

Thanks for the feedback. Better now?


http://www.itulip.com/images/1980vs2009.gif

steveaustin2006
07-02-09, 12:10 PM
To make a long story short, this time the U.S. economy blew up in late 2008. It did not slow down. It did not fall into recession. The Fed did not create it on purpose to bring down inflation

That is debatable. By July 13th, 2008 the Fed and other central bankers had already met to discuss the inflation issues with oil and all other commodities rocketing higher. Their announcement to back Freddie and Fannie, they must have known, would trigger a dollar bull market, a sharp move higher in bank stocks and a strong counter against the trade which every hedge fund and their dog had hopped on board - commodities long. Knock the legs out of this trade and you knock down a lot of leveraged bets which were pro inflation. To think that Paulson could not see this would be naive.

pescamaaan
07-02-09, 01:31 PM
Will they take off from here along with the economy, or will they rise and fall in response to government stimulus and bounce along at the 9 to 10 million per month level as the depression malingers?.

Is this accurate? when i read sales report, I understand the auto sales numbers posted on a monthly basis are then annualized....thus we are in a period where sales levels (in units) is 10 million per year (Not Month). the height of the bubble they were running at 18-19 million per year.

therefore the charts should be labeled as "monthly annualized sales volumes", No?

I think a correction is needed for the description of some of the charts...

peakishmael
07-02-09, 02:48 PM
Great Info,

I got the deal of the century on a new Honda yesterday.

Expecting its "Value" too hyperinflate over the next few years!

Hmm. Am I misreading you? In the best of times, cars have always been terrible investments, depreciating quickly, as soon as you drive them off the lot.

If hyperinflation hits, I suspect that demand for vehicles of all kinds (new and used) will continue to fall below supply.

Enjoy your car, but don't expect to turn it into a gold mine in 5 years.

don
07-02-09, 03:10 PM
Spot on Eric, with one caveat.

The FIRE economy did not collapse. It's most recent bubble collapsed and the even greater credit bubble is going with it but Goldman's plans with Cap & Trade sure looks like a FIRE to me.

More akin to the IMF. Emerging markets finally free themselves of IMF debt servitude. Welcome global meltdown. IMF re-born.

What's to hold back FIRE from simply being the institutional drain on a subsistence economy here? And there's still a few relatively fat porkers to be skewed. Pension funds have been only half wiped out and SS remains. White collar and professional outsourcing continues to rise and there's plenty of mischief left to be done with derivatives and other Dark Matter.

I don't see a political economic sea change anywhere in sight.

Guess that makes the 2009 Depression unique.

santafe2
07-02-09, 05:25 PM
Thanks for the feedback. Better now?

Fred, I think the original chart posted again.

charliebrown
07-02-09, 05:34 PM
about 70% of the mcmansions i know are owned by dinks (dual income no kids), or dionks (dual incomes one kid).

FRED
07-02-09, 05:47 PM
Fred, I think the original chart posted again.

You might have to clear your browser cache to see it, or maybe just hit "refresh."

raja
07-02-09, 06:35 PM
Hmm. Am I misreading you? In the best of times, cars have always been terrible investments, depreciating quickly, as soon as you drive them off the lot.

If hyperinflation hits, I suspect that demand for vehicles of all kinds (new and used) will continue to fall below supply.

Enjoy your car, but don't expect to turn it into a gold mine in 5 years.
My wife, who lived through the Ukrainian economic meltdown after the Soviet breakup, just bought a new 2009 Camry Hybrid with a $2000 cash discount incentive. She said, "Better buy it now, because the cars they'll be making in the future will be a lot lower quality, (like cars in Ukraine)." She also got the Toyota 7-year warranty vs. the 8-year 3rd party warranty at the same price figuring that Toyota was less likely to go out of business than the 3rd-party insurer.
We are also buying everything we can now, figuring on shortages later . . . plus inflation.

Retired Commish
07-02-09, 06:47 PM
Terrific read! Having just bought my first new car since 1974, want to relate a strange experience:

"What are auto makers doing by way of incentives to maintain even this awful level of sales volume? Are they able to do so profitably? As we have pointed out before, we cannot have a sustained economic recovery without profits.
RECORD AUTO INCENTIVES

Automakers also have been plying record incentives in the form of cash or special financing to press customer traffic into dealerships, making it more difficult to determine the long-term demand for vehicles.

Edmunds called the month the most expensive June on record, with the average U.S. incentive at $2,930 per vehicle sold, up 20 percent from a year earlier. Edmunds expects incentives to fall as production cuts in recent months pare inventories."

I have typically bought a two-year old car whenever I traded for the last 30 years. Always make an offer and am prepared to walk if they can't deal. This time was somewhat different. Finding the used cars a bit more expensive than I expected, I began looking at the new ones because of the rebates. Made an offer of $11,000 cash plus my 2004 ION for a well-equipped Nissan Sentra. Two hot-dogs later, the sales manager asked if I could split the difference (another $500) and I said no and began leaving. He ask me to stay for another 10 min. while he checked something. He came back out to the big tent and said I could get another $1000 rebate if I was willing to finance the car. This made a total of $3000 in rebates and brought the actual price to $10,500 instead of the $11,000 cash I offered. There was no penalty for early payoff so I said OK and bought the car. I'm now waiting for Nissan to send me the contract and I'll pay it off when I receive it.
I realize it's a depreciating asset but at my age (67) I can afford to enjoy a new car and will likely drive it for 10 years if I live that long. Anybody else ever had an offer like that where they pay you to not part with your money?:rolleyes::rolleyes:

flintlock
07-02-09, 07:26 PM
I have also been surprised at how so many just think this is another typical recession. I live in an "affluent" area and its amazing how many empty retail stores I see. Drive over into the next county and large swaths look like a ghost town. Premium corner retail sites sitting boarded up.

Those who still have good jobs are living pretty much the same in my area. Spending is down some, but most think this is merely a bump in the road. I hear quite a lot of " When housing comes back next year" talk, as if its a certainty.

Some people still feel wealthy, despite losing big in the stock market and their home values. But I get the idea that some of the spending is just habit and not something they really feel confident about. Its the American pastime and gosh darn it, what do you expect us to do?

santafe2
07-02-09, 10:23 PM
You might have to clear your browser cache to see it, or maybe just hit "refresh."

Excellent economic advice and IT support...:D...this place is a bargain! Thanks for the help.

metalman
07-02-09, 11:07 PM
Excellent economic advice and IT support...:D...this place is a bargain! Thanks for the help.

thanks for fixing the chart... couldn't figure it out either. now i get it! :D

Basil
07-02-09, 11:57 PM
McMansions are the tail fins of the 2000s. Fun while it lasted, but never to return...even if credit again becomes cheap and plentiful.

Eleven years ago architect Sarah Susanka published a book titled "The Not So Big House" . A few early adopters saw the light long before the McMansion insanity peaked and burned out.

http://www.youtube.com/watch?v=OhcOq6iDOmE

http://books.google.com/books?id=cKSasdS-GdoC&dq=the+not+so+big+house+susan&printsec=frontcover&source=bn&hl=en&ei=VkFMStHRM8SJtge-5tC7AQ&sa=X&oi=book_result&ct=result&resnum=4

No word yet on whether Susanka intends to publish a follow up book about "The Not So Big Bunker"...;)

I love the book, but ever notice that she lives in a house that is around 3000 sqf? That is much larger than what I or any of my friends have, and I work from home.

TheServant
07-03-09, 12:15 AM
No two events of this type are alike. The similarities and differences show up in the data. What impresses us most is how unimpressed many appear to be about the seriousness of this depression. They ask why many restaurants are still booked up and why many malls are still busy, even if apparently the shoppers in them are buying less. Where are soup lines? Where is the high crime rate?



This, to me, is one of the more fascinating psychological aspects of this episode. People just do not want to think about it, even though we seem to be well beyond the point of no return. Even now, with the seriousness of the situation just dawning on a smattering of journalists, the possibility of this being as bad as the Great Depression is still scoffed at, while the idea that it may turn out to be worse is not even entertained.




To get a street level view of this process, I brought my camera with me on my latest bike ride into Boston from the western suburbs where I live. On the usually pristine Minuteman Bike Trail that I ride on as far as Arlington, not seen on previous trips over the past ten years are now: graffiti, piles of burned trash, groups of teenagers hanging out, and police cars parked on the side of the trail. When their parents are struggling with bills and unemployment, teenage kids tend to take it out on the local neighborhood.



From "ground-zero"?

To give a different perspective from Metro Detroit, I drove down to a few Tigers' games last month. I traveled into Pontiac from the west and then down Woodward Ave (25 miles) into the city of Detroit. Other than the staggering difference in wealth between the richest and poorest, the most notable difference to me was the lack of congestion since so many people have left the actual city of Detroit in the past decade. That really caught me off guard. I had not really considered that aspect of the "downturn".

In terms of being run down, the city has been for years. I have only been in the area for 6 years, and in that time, the rundown buildings with "For Sale" signs, in many instances, have been burned out or are starting to fall in on themselves. If you are lucky, someone has been industrious enough to raze the property to leave a vacant lot. This seems true once you get a mile or so out of downtown and continues for 5 miles anyway. If anyone has been in the area longer, I would appreciate a critique if this perspective seems a bit off. I only make it into downtown once or twice a year.

Sorry, no pictures. I forgot my camera.:rolleyes:

santafe2
07-03-09, 01:08 AM
That is debatable. By July 13th, 2008 the Fed and other central bankers had already met to discuss the inflation issues with oil and all other commodities rocketing higher. Their announcement to back Freddie and Fannie, they must have known, would trigger a dollar bull market, a sharp move higher in bank stocks and a strong counter against the trade which every hedge fund and their dog had hopped on board - commodities long. Knock the legs out of this trade and you knock down a lot of leveraged bets which were pro inflation. To think that Paulson could not see this would be naive.

Hadn't oil just moved so high in price that it finally toppled the economy? Demand destruction and all that good economic stuff? I can't support this so much as I'm just not a great believer in government as competent much less government so competent that it could conspire and pull it off.

TheServant
07-03-09, 01:48 AM
Some people still feel wealthy, despite losing big in the stock market and their home values. But I get the idea that some of the spending is just habit and not something they really feel confident about. Its the American pastime and gosh darn it, what do you expect us to do?



I think you hit upon an important point. A majority of people, particularly those 40 years old and younger?, seem to truly think that they haven't really taken a loss in their retirement account or house. They see it as a "temporary" phenomenon, that will correct itself by the end of the year.

Even those who have "seen the light" and are seriously asking my opinion on how long this mess might go on are asking in the context of "should I get back in the stock market now or later this year?" or "should I buy my house this year or next?".

Tybee Island
07-03-09, 09:03 AM
EJ's thoughts here get to the core of something that has troubled me over the past several months:

"No two events of this type are alike. The similarities and differences show up in the data. What impresses us most is how unimpressed many appear to be about the seriousness of this depression. They ask why many restaurants are still booked up and why many malls are still busy, even if apparently the shoppers in them are buying less. Where are soup lines? Where is the high crime rate?

We remind them that we are only one year in to a multi-year process.

The average man or woman does not change his or her behavior until years after an economy has changed around them. No one likes change, even positive change but especially negative change. The tendency is to ignore change as long as possible, and hope it goes away and "normalcy" returns. Meanwhile, change goes on.

This depression is transforming the world around us. If you don't think so, I encourage you to take a closer look. On the surface much appears to be the same as, say, two years ago, but under the surface much has changed and is changing--shifting relationships among friends, families, and colleagues. Changes in circumstances affect the range of choices people can make. They make different decisions than before. Different decisions produce different results. Those results impact someone else's decisions. Collections of decisions combine in unexpected ways. One of the most obvious is that consumers buy less as a sustained reduction income and wealth influences purchasing decisions. As they do, after a lag, they will find that they have less to buy because retailers, wholesalers, and manufacturers eventually respond by consolidating or going out of business."

The recent cries of the NAR to relax appraisal standards because it is hampering the "housing recovery" yet it was the flagrant corruption between appraisers and mortgage brokers that greased the skids of the bubble and was cited as a target by state attorney generals as an abuse to be rectified immediately to prevent a bubble from happening again less than a year ago.

Barney Frank's forcing of 125% LTV loans by Freddie and Fannie that again just returns us to bubble making and severely impairs borrowers in an environment of falling housing values, yet somehow is the perceived panacea to return us to how things were.

Helen Thomas challenging the administration for "staging the news" for pre-screening questions and participants to somehow create a Kabuki Theater of news events for public consumption.

It seems that "hope" and "prayer" have become the means to assuage our predicament and never-mind the compelling facts and gross economic distortions occurring that will forever change the way we live.

It is clear to me that so many do not have the right internal wiring to grasp the truth and accept the change thrust upon them. They prefer the untrue and purposely obfuscated government generated reports from the BLS and others.

Why do we trust the Fed data that is so frequently the basis of so many charts here and elsewhere. Why is it that we believe this information? If we know the Government has purposely used inaccurate CPI numbers to calculate GDP, then we know that it has been overstated for years and we have been a far less productive nation for decades and our creditors have all been duped into lending us their savings.

I sense that many will wake up from their self induced fog and will move even closer to those that promise them a better future and offer a variety of potions to soothe their fears rather than accept the new reality.

Hedge Fund managers will be replaced by evangelicals creating new churches offering a better life be it here and now or at the very least in the thereafter.

don
07-03-09, 11:26 AM
<!--><xml> <w:WordDocument> <w:View>Normal</w:View> <w:Zoom>0</w:Zoom> <w:DoNotOptimizeForBrowser/> </w:WordDocument> </xml><![endif]--> [I]“As long as people are saving or paying down their debts, this economy cannot recover. People must begin borrowing and spending again.”


The People's FIRE Daily
<o></o>

metalman
07-03-09, 11:38 AM
<!--><xml> <w:WordDocument> <w:View>Normal</w:View> <w:Zoom>0</w:Zoom> <w:DoNotOptimizeForBrowser/> </w:WordDocument> </xml><![endif]--> [I]“As long as people are saving or paying down their debts, this economy cannot recover. People must begin borrowing and spending again.”


The People's FIRE Daily
<o></o>



"...we will charge the people to keep their money in the bank..." (http://www.riksbank.com/templates/Page.aspx?id=32047)


http://imgur.com/6wNjM.gif

bart
07-03-09, 11:39 AM
"Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services."

-- Ben Bernanke, the current (2009) Chairman of the Board of Governors of the Federal Reserve Bank of the United States, in a speech he made on November 21, 2002 before the National Economists Club in Washington, D.C.

sishya
07-03-09, 01:59 PM
santafe2,

Thanks for the feedback. Better now?


http://www.itulip.com/images/1980vs2009.gif




The unemployed is absolute numbers of the left vertical axis. I don't think it correctly takes into account the increase in population. So I think it should be % of unemployed could be better measure. I think the unemployment in this recession is still not as bad as early 1980's.

bart
07-03-09, 02:21 PM
The unemployed is absolute numbers of the left vertical axis. I don't think it correctly takes into account the increase in population. So I think it should be % of unemployed could be better measure. I think the unemployment in this recession is still not as bad as early 1980's.


Here are unemployment claims as a percent of the total civilian work force which does somewhat show what you're talking about.

http://www.nowandfutures.com/images/unemp_claims_percent_workforce.png




But actual unemployment stats show a very different picture, especially when one takes definition changes and the idiotic birth/death model into account. They are based on workforce numbers too.


http://www.nowandfutures.com/images/unemployment_sa.png

mickeyc21
07-03-09, 03:27 PM
I've met two people playing golf in the last two days (on LA's depression era public works courses) who are unemployed or significantly under-employed.

Both had "real" jobs - not a given in LA at all. One was a lawyer whose firm has gone through two rounds of lay offs. He said he never even considered it possible he would be unemployed as lawyers do fine in recessions. The other guy installed air conditioning and said at this time of year he was normally working huge hours and the demand for his time was always more than he was capable of providing. He was a Korean guy living in the Koreatown section of LA and was strongly considering leaving the state.

What was unusual about the two interactions was that they both wanted to discuss how bad things were for them. This is new. Up until now people have hinted that things aren't perfect but have been unwilling to actually say it. The lawyer told me "I'm on the edge of complete financial disaster".

On an entirely different topic: to the people buying new cars as inflation hedges or because of fears of shortages, WTF are you thinking?! If you can afford a new car by all means knock yourself out but there is no reason to come up with bizarre justifications.

Quincy K
07-03-09, 05:55 PM
I've met two people playing golf in the last two days (on LA's depression era public works courses) who are unemployed or significantly under-employed.

Both had "real" jobs - not a given in LA at all. One was a lawyer whose firm has gone through two rounds of lay offs. He said he never even considered it possible he would be unemployed as lawyers do fine in recessions. The other guy installed air conditioning and said at this time of year he was normally working huge hours and the demand for his time was always more than he was capable of providing. He was a Korean guy living in the Koreatown section of LA and was strongly considering leaving the state.

What was unusual about the two interactions was that they both wanted to discuss how bad things were for them. This is new. Up until now people have hinted that things aren't perfect but have been unwilling to actually say it. The lawyer told me "I'm on the edge of complete financial disaster".

On an entirely different topic: to the people buying new cars as inflation hedges or because of fears of shortages, WTF are you thinking?! If you can afford a new car by all means knock yourself out but there is no reason to come up with bizarre justifications.


I have heard similar stories regarding attorneys. I believe that one compelling reason is the high possibility of never being paid and the tremendous up-front costs involved. Just think of all those cases against Chrysler and GM that are now worthless because of the BK. Also, how many people are now just insuring themselves to the legal limit and nothing more?

In a bankrupt society, the need for attorneys greatly diminishes.

flintlock
07-03-09, 06:57 PM
We have 2500 sq ft "starter homes" around here.:D What people think they need these days really shot up in the housing boom.

I used to wire new homes back in the 80s. I remember thinking, "Wow, look at these fancy rich folks homes" while working on them. Now I go back to the same homes 25 years later and they are 2300 sq feet and look like crap compared to the new homes 20 somethings are buying right out of college with the money their parents gave them as a graduation present. :D

flintlock
07-03-09, 07:06 PM
My parents totally ignored the warnings last year from my brother and I about the impending stock crash. Lost 40%+ of their retirement, plus a large chunk of their home value, which while a modest home, sits between a $3.7 and a $7 million home, so potentially was worth a lot.( they've been there 25 years) They of course had to admit we were right and that my Uncle the stockbroker was wrong. Lesson learned right?


I asked my mom recently, "Are you hedged against inflation?" She replied " What's hedge mean?" And yes, my uncle still manages their money. :rolleyes: Dad is convinced things will snap back by the fall.

we_are_toast
07-03-09, 07:08 PM
Here are unemployment claims as a percent of the total civilian work force which does somewhat show what you're talking about.

http://www.nowandfutures.com/images/unemp_claims_percent_workforce.png



As always, very nice graphs Bart.

I'm not sure how you chose the scales for the data, but using these scales, one thing that sticks out is the degree to which the current Continued claims exceeds the initial claims. It could simply be the result of the scales chosen, or maybe it really does mean something.

Wildly speculating; maybe it indicates the broadness of the depression. These numbers reflect job losses, but don't indicate anything about job creation. During normal business cycles or sector shifts in the economy it seems there's a much better chance to find a job in a different sector, or the need to rebuild inventories comes fast enough to prevent continued claims from exceeding initial claims on your graph. Maybe this steep crossover shows how deep and broad the depression is and that there are simply no new jobs to be found anywhere.

GRG55
07-03-09, 09:56 PM
I love the book, but ever notice that she lives in a house that is around 3000 sqf? That is much larger than what I or any of my friends have, and I work from home.

It's the "American way", I suppose...:)

I'm building a home that is quite a bit smaller than that, and I think is still too big. But I rationalize it as we are trying to make it somewhat wheelchair compatible, which means wider halls & doors, an enlarged bathroom and so forth.

But my wife used quite a few of the learnings from Susanka's books in the planning. In part this was because of how much we enjoyed living in our last home, a 70-year old inner-city Craftsman that we renovated and restored as faithfully as we could to the period [You haven't really lived until you find yourself spending holidays searching through architectural salvage yards as far afield as Portland, Oregon trying to match the original door hardware in the home :) ]. Although this was long before we discovered anything much that had been published on such things, we only began to really understand why we so much appreciated the spaces in that home after we read Susanka [and another important book*] and realized how much of this stuff was routine and typical design in many homes built decades ago.

* A Pattern Language; Christopher Alexander, Sara Ishikawa and Murray Silverstein, Oxford University Press, New York, 1977.

GRG55
07-03-09, 10:22 PM
...This depression is transforming the world around us. If you don't think so, I encourage you to take a closer look. On the surface much appears to be the same as, say, two years ago, but under the surface much has changed and is changing--shifting relationships among friends, families, and colleagues. Changes in circumstances affect the range of choices people can make. They make different decisions than before. Different decisions produce different results. Those results impact someone else's decisions. Collections of decisions combine in unexpected ways. One of the most obvious is that consumers buy less as a sustained reduction income and wealth influences purchasing decisions. As they do, after a lag, they will find that they have less to buy because retailers, wholesalers, and manufacturers eventually respond by consolidating or going out of business.

The economy has changed, behavior follows...




From Gluskin Sheff's David Rosenberg (http://www.businessinsider.com/david-rosenberg-wage-deflation-is-here-2009-6)[formerly @ Merrill]:



...Most pundits who crow about green shoots and about an inventory restocking in the third quarter giving way towards some sustainable economic expansion live in the old paradigm. They don’t realize, for whatever reason, that the deflationary aftershocks that follow a post-bubble credit collapse typically last for 5 to 10 years. Businesses understand better than the typical Wall Street or Bay Street economist and strategist that everything from order books, to output, to staffing have to now be restructured to adequately reflect a permanently lower level of leverage in the economy.

Indeed, by our estimates, there is up to another $5 trillion of household debt that has to be eliminated in coming years and that process is going to require that consumers go on a semi-permanent spending diet. Companies see this, which is why they are not just downsizing their payroll, but have also cut the workweek to a record low of 33.1 hours. Fewer people are working and those that are still working have seen their hours dramatically cut this cycle...

...The op-ed column by Bob Herbert in the Saturday New York Times really hit the nail on the head on this whole ‘green shoot’ issue — how can there be ‘green shoots’ when the labour market is deteriorating at such a rapid clip fully nine months after the Lehman collapse. The full brunt of the credit collapse may be behind us, but please, the other two shocks, namely deflating labour markets and deflating home prices, are very much still front and centre...

...As we said above, companies have permanently reduced the size of their operations with the knowledge of how much credit is going to be available to them in the future to survive because the financial sector is going to be operating under more supervision and regulation and leverage ratios, which means the funds available to support a given level of GDP is going to be measurably smaller than what we had become accustomed to during the secular credit expansion, which really began in the mid-1980s, only to turn parabolic during the ‘ownership society’ era of 2002 to 2007.

What makes this cycle “different” is that three-quarters of the workers that were fired over the last year were let go on a permanent, not a temporary basis. A record 53% of the unemployed today are workers who were displaced permanently — not just temporarily because of the vagaries of the traditional business cycle. This means that these jobs are not going to be coming back that quickly, if at all, when the economy does in fact begin to make the transition to the next expansion phase. In turn, this implies that any expansion phase is going to be extremely fragile and susceptible to periodic setbacks...

Slimprofits
07-03-09, 10:29 PM
Sure, we still hear "green shoots" sold hard, as if the load of debt that holds the economy back can be wished away, yet we also see more skepticism and less willingness to accept assertions by industry analysts and economists at face value. Reports on economic data still lack historical perspective, but at least most don’t read like press releases anymore, yet readers are still being set up for major disappointment.

What channels are you all watching? The tone of reporting has not changed by one iota, even since the Lehman crash.

GRG55
07-03-09, 10:38 PM
What channels are you all watching? The tone of reporting has not changed by one iota, even since the Lehman crash.

I agree. EJ has clearly been hanging out with the converts [convicts?] on iTulip far too much lately [his comparatively prolific recent output serving as ample evidence]. He needs to watch more Bubblevision and get out into the real world more. Maybe we should pool together and buy him a plane ticket so he can visit Mega in Liverpool? :rolleyes:

GRG55
07-03-09, 10:47 PM
The unemployed is absolute numbers of the left vertical axis. I don't think it correctly takes into account the increase in population. So I think it should be % of unemployed could be better measure. I think the unemployment in this recession is still not as bad as early 1980's.

Perhaps not yet, but the leading indicator weekly jobless claims trend and the record low work week don't paint an encouraging picture. One couldn't help but laugh at the main stream media claims that yesterday's jobs report came as a "surprise"...

Slimprofits
07-04-09, 04:45 AM
I agree. EJ has clearly been hanging out with the converts [convicts?] on iTulip far too much lately [his comparatively prolific recent output serving as ample evidence]. He needs to watch more Bubblevision and get out into the real world more. Maybe we should pool together and buy him a plane ticket so he can visit Mega in Liverpool? :rolleyes:

I didn't say that EJ should watch more bubblevision or that bubblevision = the real world, so I have to assume that you agree with him that the tone of the reports about economic data crafted for an American audience has changed.

Jobless claim press releases masquerading as reporting:

http://news.google.com/news/more?um=1&ned=us&cf=all&ncl=dxLVeh_Wnbt8ByMSS8oPq7Ie6e0_M

On a different variation of the same theme, over on CNBC, they're running a series of ads based on the "We told you it (the crash) would happen" theme.

bart
07-04-09, 02:20 PM
I'm not sure how you chose the scales for the data, but using these scales, one thing that sticks out is the degree to which the current Continued claims exceeds the initial claims. It could simply be the result of the scales chosen, or maybe it really does mean something.

Wildly speculating; maybe it indicates the broadness of the depression. These numbers reflect job losses, but don't indicate anything about job creation. During normal business cycles or sector shifts in the economy it seems there's a much better chance to find a job in a different sector, or the need to rebuild inventories comes fast enough to prevent continued claims from exceeding initial claims on your graph. Maybe this steep crossover shows how deep and broad the depression is and that there are simply no new jobs to be found anywhere.

I didn't do anything special to the scaling, other than using both the left and right hand scales since the data is so different. Both scales start at zero too.

I probably should have linked both charts so the actual difference could be seen due to using raw data and then raw data adjusted by total workforce since that was your initial point, so here they are.


http://www.nowandfutures.com/images/unemployment_claims_long_term.png



http://www.nowandfutures.com/images/unemp_claims_percent_workforce.png



Your speculation is certainly as good as any - the continuing claims gap above initial claims is unprecedented in the entire data series history. Gallup poll tracking sure does confirm the difficulties in finding a job.

Perhaps its my cynicism, but it also wouldn't surprise me greatly to see a data revision sometime in the future to initial claims or even both series. Its also quite possible that there was a change to the series definitions of which I'm unaware. BLS BS is not an unknown concept.

raja
07-04-09, 03:02 PM
My parents totally ignored the warnings last year from my brother and I about the impending stock crash. Lost 40%+ of their retirement, plus a large chunk of their home value, which while a modest home, sits between a $3.7 and a $7 million home, so potentially was worth a lot.( they've been there 25 years) They of course had to admit we were right and that my Uncle the stockbroker was wrong. Lesson learned right?


I asked my mom recently, "Are you hedged against inflation?" She replied " What's hedge mean?" And yes, my uncle still manages their money. :rolleyes: Dad is convinced things will snap back by the fall.
I had a similar experience with my relatives . . . .

Even though I proved to be right in my predictions -- born out by the fact that they lost a good chunk of their wealth -- they still don't call me to hear my opinions.

What is more amazing is that they believe financial advisers -- who obviously have a self-interest conflict -- over their own relative that only has their best interests at heart. I point out that that I've been studying the economy of the past 3 years, and have given them good advice so far, unlike their "experts" . . . yet they ignore me.

When/if they lose even more, and they come to me for help, I will have a clear conscience when I refuse. If I'm not worth listening to, certainly I'm not worthy of giving them a loan. :rolleyes:
Life punishes the ignorant and the arrogant . . . who am I to go against Natural Order?

cobben
07-04-09, 07:01 PM
Here is a recent chart from Gene Inger's daily that does not look encouraging, this would be interesting to see extended back through the '30s.

1790

ThePythonicCow
07-04-09, 07:09 PM
That http://www.ingerletter.net chart will not be accessible to those of us who don't subscribe. Instead anytime we reload this iTulip web page, we get prompted for our Ingerletter login and password :(.

cobben
07-04-09, 07:19 PM
Noticed that, think I managed to fix it.

ThePythonicCow
07-04-09, 07:21 PM
Noticed that, think I managed to fix it.
It's still prompting me for my Inger letter password - sorry.

The URL __http://www.ingerletter.net/id/images/7-2-excess%20labor%20supply%20truth%20revealed.png__ is simply not accessible to us unwashed cows.

cobben
07-04-09, 07:24 PM
I saved it as a file and then uploaded it to iTulip, should work now.

jk
07-04-09, 07:33 PM
I saved it as a file and then uploaded it to iTulip, should work now.
works fine. the "(millions)" in the chart title is funny.

ThePythonicCow
07-04-09, 07:33 PM
I saved it as a file and then uploaded it to iTulip, should work now.
Ok - it works now. I had to remove a second URL to that same chart, embedded in my quoting of your post, to finally fix it. Thanks!

ThePythonicCow
07-04-09, 07:35 PM
works fine. the "(millions)" in the chart title is funny.
Dang - you're right :D. Six million people unemployed people for each job opening. That's getting ugly.

bart
07-04-09, 09:48 PM
Another way to view the existing employment picture. 1964 is as early as the data set goes.


http://www.nowandfutures.com/images/total_hours_worked.png

BigBagel
07-04-09, 10:15 PM
This, to me, is one of the more fascinating psychological aspects of this episode. People just do not want to think about it, even though we seem to be well beyond the point of no return. Even now, with the seriousness of the situation just dawning on a smattering of journalists, the possibility of this being as bad as the Great Depression is still scoffed at, while the idea that it may turn out to be worse is not even entertained.



From "ground-zero"?

To give a different perspective from Metro Detroit, I drove down to a few Tigers' games last month. I traveled into Pontiac from the west and then down Woodward Ave (25 miles) into the city of Detroit. Other than the staggering difference in wealth between the richest and poorest, the most notable difference to me was the lack of congestion since so many people have left the actual city of Detroit in the past decade. That really caught me off guard. I had not really considered that aspect of the "downturn".

In terms of being run down, the city has been for years. I have only been in the area for 6 years, and in that time, the rundown buildings with "For Sale" signs, in many instances, have been burned out or are starting to fall in on themselves. If you are lucky, someone has been industrious enough to raze the property to leave a vacant lot. This seems true once you get a mile or so out of downtown and continues for 5 miles anyway. If anyone has been in the area longer, I would appreciate a critique if this perspective seems a bit off. I only make it into downtown once or twice a year.

Sorry, no pictures. I forgot my camera.:rolleyes:

This NY Times op-ed is a nice add on to your details about Detroit:
http://www.nytimes.com/2009/07/05/opinion/05barlow.html

TheServant
07-05-09, 12:22 AM
That is a very interesting article, and probably not completely outlandish given the economic transformation that will presumably get underway in the coming few years.

Being the Motor City, the mass transmit system has never been developed to any extent. I mean, you don't want to take away the incentive to buy vehicles if that is what you sell. To be fair, if you want to be completely honest with the situation, this is probably a by-product of segregation as well.

Anyway, assuming energy and infrastructure will be the foundation of the economic paradigm in the coming decade, Detroit would be a logical poster child for making a transformation to a friendlier energy/environmental city.
Not only is there a lot of work to be done in these arenas, there will be an abundance of empty factories readily available for any new industries that would be required, as the auto industry settles into its new equilibrium.

...or maybe the area just fades into the night as the country comes to the realization of how difficult it will be be transform to energy sources that are far less efficient than "oil", aside from nuclear that is.

I had to add that to keep some perspective. After all, I'm not frequenting iTulip because I think everything is rainbows and puppy dogs. I come to try to put some perspective on the challenges that we face, and how best to deal with them, both from an investor's and policy maker's point of view.

skidder
07-05-09, 09:58 AM
That is debatable. By July 13th, 2008 the Fed and other central bankers had already met to discuss the inflation issues with oil and all other commodities rocketing higher. Their announcement to back Freddie and Fannie, they must have known, would trigger a dollar bull market, a sharp move higher in bank stocks and a strong counter against the trade which every hedge fund and their dog had hopped on board - commodities long. Knock the legs out of this trade and you knock down a lot of leveraged bets which were pro inflation. To think that Paulson could not see this would be naive.

Don Coxe addressed this line of thought with some interesting tidbits back when this happened via a taped interview I listened to. IIRC, he posited that the announcement that Freddie and Fannie would be backed was put out when Asian markets were open and US markets were closed on a Sunday night. By the time the US markets were opened the shorts were so far underwater it prompted a selloff in the (to date) winning commodity trades to cover losses/margin calls. I also recall hearing something about trading margins being restricted and other banking tactics being implemented right around that time that acted to restrict the ability of hedgies to ride out that storm without liquidating stock to raise cash. Just FYI and I have no actual knowledge whether any of those items mentioned above are fact.

GRG55
07-05-09, 11:17 AM
Don Coxe addressed this line of thought with some interesting tidbits back when this happened via a taped interview I listened to. IIRC, he posited that the announcement that Freddie and Fannie would be backed was put out when Asian markets were open and US markets were closed on a Sunday night. By the time the US markets were opened the shorts were so far underwater it prompted a selloff in the (to date) winning commodity trades to cover losses/margin calls. I also recall hearing something about trading margins being restricted and other banking tactics being implemented right around that time that acted to restrict the ability of hedgies to ride out that storm without liquidating stock to raise cash. Just FYI and I have no actual knowledge whether any of those items mentioned above are fact.

I think Coxe's reasoning included the view that Paulson and Co. realized there were political limits to the amount of government bail out funds that could be flowed to the banks, and therefore the banks were going to have to start raising more capital in the markets to offset their continuing losses. The move was designed to arrest the continuing fall in the value of bank stocks to facilitate the raising of the capital. A look at the BKX shows it worked...for a little while.

metalman
07-05-09, 11:45 AM
I didn't say that EJ should watch more bubblevision or that bubblevision = the real world, so I have to assume that you agree with him that the tone of the reports about economic data crafted for an American audience has changed.

Jobless claim press releases masquerading as reporting:

http://news.google.com/news/more?um=1&ned=us&cf=all&ncl=dxLVeh_Wnbt8ByMSS8oPq7Ie6e0_M

On a different variation of the same theme, over on CNBC, they're running a series of ads based on the "We told you it (the crash) would happen" theme.

what'd you expect from liars but more lying? cnbs 'we told you so'. right... :rolleyes:

ej's said for ten years he'd change his 'doomer' tone after tshtf... who needs it after the fact? what's the point? too late to prepare... you're f&cked.

now it looks like he's still trying to keep us on the timescale... not crash on monday/soup lines on tues ala doomers or 'green shoots' ala cnbs.

http://www.kevinbauman.com/test_site/images/abandoned_house_8.jpg

mcgurme
07-05-09, 01:04 PM
Bart, great plot, thank you.

Now, is what this plot is telling us really a bad thing in the "big picture"? Sure, it will be a nasty readjustment for all. But ultimately, was quality of life really rising as Americans worked harder and harder - especially compared to their European counterparts?

I did a trip through Italy a few years back. Every single day, we had excellent locally raised and prepared food and wine. There weren't a lot of trinkets around - not everyone owned a computer, ipod, etc - but they lived the good life. Up late in the morning, some work, a big lunch, a nap, a bit more work, and then dinner and drinks. We stayed on a working farm, and this was the routine. It was simple, but good.

I for one will not miss the idea here that one must work 50-60 hours per week to "succeed". Right now the people who still have jobs are working harder and harder (Speaking of which, I'll be doing a bunch of work this afternoon... because in my job, 60 hours/wk is considered "normal").

But eventually this will have to stop, or the economic hole will just get deeper and deeper as fewer and fewer people try to shoulder the economy. It can't function that way. A few people will work themselves to death while everyone else will be without jobs, food and shelter. Something will break.

I know it is "socialist" thinking that the US might have a shorter workweek and more vacation time (actually, I don't think it is socialist, I think it is "human"). This would give people time to plant their gardens, get to know their neighbors, and re-build social networks that have long since been frayed or dismantled by our workaholic lifestyles.

While I think the change is not going to be easy, the sooner that folks wake up and realize that this is the new reality - and learn to enjoy it - the better off we'll all be.





Another way to view the existing employment picture. 1964 is as early as the data set goes.


http://www.nowandfutures.com/images/total_hours_worked.png

bart
07-05-09, 01:14 PM
...
I for one will not miss the idea here that one must work 50-60 hours per week to "succeed". Right now the people who still have jobs are working harder and harder (Speaking of which, I'll be doing a bunch of work this afternoon... because in my job, 60 hours/wk is considered "normal").
...
While I think the change is not going to be easy, the sooner that folks wake up and realize that this is the new reality - and learn to enjoy it - the better off we'll all be.

I don't recall the last week that I only "worked" 50 hours... and I'm supposed to be retired. ;)

And more seriously, I can sure think of worse longer term outcomes than a new reality like you describe where more humane and human values gain credence, and some or much of the "Organization Man" stuff falls away... and without precluding those who may want to work that 50-60 hour week too.

grapejelly
07-05-09, 02:26 PM
People in the "private" sector are working harder and harder simply because they are being taxed, directly through taxes and indirectly through inflation, more and more, to pay for a bigger and bigger freeloader class including:

public "servants"
people on welfare
people on medicare/medicaid
etc.

I am not saying the above people are bad, or haven't earned their monies, or anything like that.

Just pointing out that as this depression drags on, there is a bull market in government largesse and this has to come from somewhere.

Where does it come from?

It comes from people who still work and are productive, a class that is shrinking all the time.

And this happens while real savings are shrinking as their value is taxed indirectly through inflation.

The same thing happened in the 1930s and was responsible for a brief depression turning into an endless one.

So it is happening today.

From some points of view, this is a good thing.

From other points of view it is not.

Like everything else of course.

From a utilitarian perspective, the "total good" of society declines due to disincentives heaped upon the productive class, and due to loss of savings through the inflation tax.

From another perspective, it hardly matters.

goadam1
07-05-09, 10:40 PM
I think anectdotal stuff is important at this stage and I'm surprisde that so few have chimed in with reports of the real world.

I was working in Boston on newbery street last June. It was packed. The biggest worry I heard from retailers was that one store front wasto be converted into condos and maybe more would follow. I remember having lunch at one of the sidewalk cares with my clients and tried to explain what was coming they didn't believe me. They both lost their jobs and have not found full time work.

In new York, the first stores to close were related to housing(furniture and fixtures). Then came the restaurants and retail that I assume lost their line of credit. Then came the chains to close or cut outlets. But in the last couple of months some new places have opened and things stopped closing. Was it because credit started to flow? Mostly I see new restaurAnts. A new organic coffee places sells out of cookies everyday. Meanwhile, I keep my eye on the big empty space across from my office that used to hold barnes and noble. When it rents and what goes into the space will determine how I invest for the new cycle. So far it is empty. I heard landlords wanted $550 dollars a square foot around the area of the empty b an n. Now they want $150.

The town that I drive to in long island to catch the ferry to my beach house was wiped out in this depression. On the little mainstreet, a third of the stores closed. Not surprisingly, most were housing related ( realtors, furniture, etc.).

metalman
07-05-09, 11:06 PM
I think anectdotal stuff is important at this stage and I'm surprisde that so few have chimed in with reports of the real world.

I was working in Boston on newbery street last June. It was packed. The biggest worry I heard from retailers was that one store front wasto be converted into condos and maybe more would follow. I remember having lunch at one of the sidewalk cares with my clients and tried to explain what was coming they didn't believe me. They both lost their jobs and have not found full time work.

In new York, the first stores to close were related to housing(furniture and fixtures). Then came the restaurants and retail that I assume lost their line of credit. Then came the chains to close or cut outlets. But in the last couple of months some new places have opened and things stopped closing. Was it because credit started to flow?

nah... recession wiped out the morons who can't manage a 3 mo. dip in cash flow.


Mostly I see new restaurAnts. A new organic coffee places sells out of cookies everyday. Meanwhile, I keep my eye on the big empty space across from my office that used to hold barnes and noble. When it rents and what goes into the space will determine how I invest for the new cycle. So far it is empty. I heard landlords wanted $550 dollars a square foot around the area of the empty b an n. Now they want $150.

now the rent's low enough they can make money selling cookies. lower still, dance club. lower still strip club. lower still... etc. etc.

ThePythonicCow
07-05-09, 11:53 PM
lower still... etc. etc.Thank-you, MM, for not decorating this post with your usual fine imagery ;).

goadam1
07-06-09, 11:16 AM
nah... recession wiped out the morons who can't manage a 3 mo. dip in cash flow.


now the rent's low enough they can make money selling cookies. lower still, dance club. lower still strip club. lower still... etc. etc.

That was my point. What goes in the old spa es say a lot about the post crash economy. If they just stay closed, then either credit isn't working or landlords are holding out if a new balance is acheived, then what does that balance look like. I think a slowing of closing business says her is enough cash flow to maintain business.

metalman
07-06-09, 11:57 AM
That was my point. What goes in the old spa es say a lot about the post crash economy. If they just stay closed, then either credit isn't working or landlords are holding out if a new balance is acheived, then what does that balance look like. I think a slowing of closing business says her is enough cash flow to maintain business.

my guess is it comes in waves... 1st the retailers with not enough cash to weather a few weak months... 2nd the better run retailers who run out of cash after 6 - 9 months. 3rd come the retailers who throw in the towel 'not worth the trouble' after a year of off business.

flintlock
07-06-09, 12:10 PM
People in the "private" sector are working harder and harder simply because they are being taxed, directly through taxes and indirectly through inflation, more and more, to pay for a bigger and bigger freeloader class including:

public "servants"
people on welfare
people on medicare/medicaid
etc.





The time is coming when people working in the private sector are going to be considered the "suckers". Working longer hours for less pay while the freeloader class moves smoothly along working 35 hour weeks at a snail's pace. Those that still work. Meanwhile our retired citizens will continue to vote to collect benefits that total more than the average private sector worker makes.

I for one have decided not to play the rat race game anymore. I'm slowing down and working at the pace I want to work. If the customer can't handle that, then too bad. Most don't mind. I'd rather make do with less than kill myself working for that last dollar, half of which ends up paying for the freeloaders anyway.

goadam1
07-06-09, 12:39 PM
my guess is it comes in waves... 1st the retailers with not enough cash to weather a few weak months... 2nd the better run retailers who run out of cash after 6 - 9 months. 3rd come the retailers who throw in the towel 'not worth the trouble' after a year of off business.

Fair enough. But there will be survivors even if the profit is lower. Smart and effecient businesses that supply what people need will exist. What they are and what they do:tbd. In my business, advertising, the pie is smaller but clever new businesses will grow.

The overarching issue of if here is enough productive economy to create escape debt velocity, I say no. So we see waves of inflation versus deflation. At some point it will all reset. Lois like ej called it spot on on the next downwave

aaron
07-06-09, 01:50 PM
I for one have decided not to play the rat race game anymore. I'm slowing down and working at the pace I want to work. If the customer can't handle that, then too bad. Most don't mind. I'd rather make do with less than kill myself working for that last dollar, half of which ends up paying for the freeloaders anyway.

IMO you are not working for the free-loaders, you are working to improve the lives of millions of Chinese and Indians. You are also working to improve infrastructure and schools in Iraq. You are working to pull people out of caves in Afghanistan. You are working to feed huge families south of the border.

The only people's lives who have improved in the past 20 years are the 3rd world countries'. I am tired too. Hard work is not rewarded anymore. Even when I had my own business, most of my money was lost to FIRE & taxes. I'd love a 4 day work week now. It is not like I'd miss a day's salary.

On the other hand, I am getting the itch again to strike out on my own. This time will be different! No more "investing" in anything FIRE. Maybe I will have something to show for my efforts. Perhaps this is the difference between the communism of USSR and the communism of USA. Here you still have a chance for success, albeit out of the reach of most people.

metalman
07-06-09, 02:01 PM
Fair enough. But there will be survivors even if the profit is lower. Smart and effecient businesses that supply what people need will exist. What they are and what they do:tbd. In my business, advertising, the pie is smaller but clever new businesses will grow.

The overarching issue of if here is enough productive economy to create escape debt velocity, I say no. So we see waves of inflation versus deflation. At some point it will all reset.

cash flow net of debt repayment...


Lois like ej called it spot on on the next downwave

first bounce, mar 27, 2009... (http://www.itulip.com/forums/showthread.php?p=86995)

bounce over, jun 17, 2009... (http://www.itulip.com/forums/showthread.php?p=104806#post104806)

http://imgur.com/LadNp.jpg

we shall see...

mcgurme
07-06-09, 02:13 PM
my guess is it comes in waves... 1st the retailers with not enough cash to weather a few weak months... 2nd the better run retailers who run out of cash after 6 - 9 months. 3rd come the retailers who throw in the towel 'not worth the trouble' after a year of off business.

I know someone who recently threw in the towel for exactly that reason: "not worth the trouble."

They hadn't earned a dime in a few years of business, and just decided life would be simpler without the business. So they returned to being a single income family.

shiny!
07-06-09, 02:28 PM
"Where are soup lines?"

and

"Unless politicians really foul it up, there shouldn't be soup lines as long as during the 1930s. This is a simple function of technology and productivity - both of which have advanced by leaps and bounds in eight decades."


Today's equivalent of the soup line is Food Stamps. I seem to recall reading that in some states and localities, approx. 10% of the population is on Food Stamps. That would translate into some ginormous soup lines.

Someone earlier in the thread was wondering where the personal anecdotes are. Here's what I see happening around the Phoenix, AZ area. My "View from the Bottom":

Freeway traffic is way down... fewer cars on the road, even at rush hour. I think a lot of it is accounted for by AZ making it harder for illegal aliens to get work here. Many of them have moved on to other states.

Yesterday's Sunday paper had only two pages of classifieds (way down from times past) and NO coupons!

My husband and I are in our early 60's and 50's respectively. He's a Spec. Ed. teacher facing a pay cut this fall. The school district let a lot of teachers go this spring (administrators got to keep their jobs), but Spec. Ed jobs are considered essential for now. He's also a skilled handyman/plumber/jack-of-all-trades and gets side work to help make ends meet.

I work part time for a company that owns mobile home communities, mostly for the 55+ senior crowd, but a few are "all-age" family communities. We live in one of their 55+ communities. Along with some pay I get our rent and utilities comped.

This industry is one of the few growth industries during a housing and economic crash. These are mid-level communities, not fancy, not trashy. Lot rents are about $350/mth plus utilities. About 25% of the homeowners here are year-round occupants. They mostly get by on SS and Medicare, with little in the way of pensions. These old folks are barely surviving now... I worry about how they will fare in the times to come. My husband does home repairs for them at no charge, just to help them out.

The snowbirds come down in the winter and fill the parks up. A lot of them are retired auto workers from Michigan. They're seeing their insurance and retirement pensions evaporating. I'm wondering how many of them will be able to continue owning their winter homes. My neighbor would like to sell his nice Michigan home and live here full-time, but he can't find a buyer.

As long as gas stays low, the RVers will keep coming in the winter. The all-age communities are filling up as families find their mortgage payments and apartments too expensive. But a lot of these people are losing their low-paying jobs and finding it hard to pay their rent.

Personally, we live in a 1986 model 750-sq.ft home that we bought for $3,000 in 2002. It's in good shape but we're cramped for space. We chose to buy a used manufactured home because it never occurred to us to finance a stick-built house on our income. We eat well but live frugally: no Cable TV, cell phones, or expensive toys. Our only splurge is Tivo. We have a little old TV and drive old cars that we bought used for cash.

We have no credit card debt, no mortgage, and property taxes of about $50 annually. We do have medical bills from a major surgery, and a government student loan that my husband will be working to pay off until the day he dies. That student loan helped him get a dual Master's degree in SpEd, with pay so low he can never pay it off.

I built my own computer to save money, and have a little e-commerce business that brings in a few hundred a month after expenses. We had planned to put the profits into our IRAs because we had totally failed to save for retirement. But we cashed out our paltry IRAs last summer to pay the high health insurance deductible, and now use the business income for preps. SHTF preps = "retirement planning." I'm seeing my sales start to decline and wonder if I should order more products or not.

By today's McMansion standards, with people on welfare having Cable and cell phones, we live like poor people. But we've been able to save and prepare a bit for the hard times coming. When it hits, maybe we won't feel a big drop in our living standards (dropping much further would be called "living under a bridge").

This is us, living the American Dream.

Hopefully we'll see a lot of people who lose their overpriced, mortgaged homes moving into our communities, thus keeping me employed with a roof over our heads. Our friends with big new houses and car payments are actually in worse shape than we are.

mcgurme
07-06-09, 02:40 PM
I was going to post about the "freeloaders" that grapejelly mentioned, then I decided to let it rest. But since you brought it up again, I must respond.

Assuming that all public servants are "freeloaders" is pure BS.

There are plenty of us who work our assess off. I train future scientists while working on solutions for antibiotic resistance. My colleagues work on problems like diabetes, cancer, HIV, and heart disease.

And of our 60+ hour workweeks, we spend an ever increasing portion of our time writing grant proposals, because the neocons have hoodwinked everyone into thinking that we must have "constant competition" to prevent the "freeloaders" from surviving in the system. Sure, this may squeeze a few freeloaders (unproductive tenured profs) out, but it also creates a vast waste of time for everyone, that drags productivity down far more than a few "freeloaders" would have. I spend more time now writing grants than I do working with students or doing science. By all standards, I am considered "productive," yet my productive time is nearly all spent writing grant proposals to assure everyone that I'm still productive. It has become a sick joke.

Let's cut off our noses to spite our faces.

It is like the case of someone I know who worked for the government. They used to allow the use of a credit card in the agency for small purchases. Then someone was caught abusing it. Punishing the abuser was not enough - they decided they had to get rid of all the credit cards, to avoid any potential for abuse. And the end result was that purchasing anything had to go through 3 levels of bureaucracy, wasting vastly more time and money than the previous system where an occasional abuse might slip through. Purchasing a computer consumed 6 months of time and involved a bloated procurement contract system that was seen by all as insane. That is the end result of "leech" paranoia. No individual is going to get away with anything untoward under that system - but they also can't do their jobs effectively. Of course, many here seem to think that no public servant can or actually wants to do their job. How irresponsibly cynical.

Same with teachers. There are a few bad teachers. But the anti-"leech" sentiment is so strong, that we've instituted reams and reams of testing to try to rid the system of these few bad teachers (NCLB). And, again, a few bad teachers and schools may be eliminated - at a vast expense to the education of our children. There is nothing more irksome to me now about the public school system than teaching to a test, which is mostly teaching useless knowledge. So, to avoid the "leeches", the baby has been thrown out with the bath water. We care more about the leeches than our kids' education. It disgusts me when I think about it.

In any system there will always be leeches. It is true of corporations and governments (less true of small businesses, because of close supervision by the owner). Leeches exist. The only question is how to handle them. The prevailing sentiment here seems to be "those leeches don't deserve a cent of 'my money'" and so let's let them starve. Or some such tripe. That is not a solution, because it will not make them go away.

Someone has to pay for the unproductive members of society, unless we want a truly ruthless society (and such ruthless societies have typically devolved to places like Somalia, medieval England, etc). It used to in our country that the very richest would pay their fair share of supporting the very poorest. But Reagan nipped that in the bud. Why should the rich pay their share?

Now, I pay more in taxes than the rich do, and yet I use less of society's infrastructure than they do. Funny that.

It is a nice distraction from this reality to talk about freeloaders. It takes the scrutiny off the people who are really responsible, which are the big leeches (banks and the hyper rich). That's exactly how they want it.

On a more positive note, I don't disagree with your sentiment of slowing down. Too bad I am stuck in a public sector job that will not allow it.


The time is coming when people working in the private sector are going to be considered the "suckers". Working longer hours for less pay while the freeloader class moves smoothly along working 35 hour weeks at a snail's pace. Those that still work. Meanwhile our retired citizens will continue to vote to collect benefits that total more than the average private sector worker makes.

I for one have decided not to play the rat race game anymore. I'm slowing down and working at the pace I want to work. If the customer can't handle that, then too bad. Most don't mind. I'd rather make do with less than kill myself working for that last dollar, half of which ends up paying for the freeloaders anyway.

shiny!
07-06-09, 02:53 PM
Totally agree with you about the teachers. My husband gets hit with more and more "accountability" paperwork each and every year. He can bring a dyslexic child's reading up 3-5 grade levels in a year, if he has the time to work with that child. But he has to spend hours every day doing paperwork mandated by the Fed and State govt. Mandated by the district that wants to keep getting funded by the gov't.

The US Dept of Education provides 10% of the district's funding, and is the cause of 80% of their paperwork! My husband wants to ask for an aide to teach his class because he's so tied up in paperwork, but that kind of talk at staff meetings tends to bring the label of "troublemaker".

dcarrigg
07-06-09, 02:59 PM
Assuming that all public servants are "freeloaders" is pure BS.

And of our 60+ hour workweeks, we spend an ever increasing portion of our time writing grant proposals, because the neocons have hoodwinked everyone into thinking that we must have "constant competition" to prevent the "freeloaders" from surviving in the system. Sure, this may squeeze a few freeloaders (unproductive tenured profs) out, but it also creates a vast waste of time for everyone, that drags productivity down far more than a few "freeloaders" would have. I spend more time now writing grants than I do working with students or doing science. By all standards, I am considered "productive," yet my productive time is nearly all spent writing grant proposals to assure everyone that I'm still productive. It has become a sick joke.


As a fellow public sector "freeloader" working double the 35 hours that they pay me for, I must say...

A true observation about grants - not only for academia - but for government agencies as well. "Block and Formula" grants require a vast amount of paper - or at least .pdf - for funds that are earmarked for a specific jurisdiction.

Every municipal government with a population over 35k now nows this well, and the smaller ones will follows as states disburse stimulus funds.

This is what happens when the Federal share of the pie (by pie, I mean the amount of available funds for local work - think of your university or 501c(3)) grows against the Private, State, and Local.

We now have massive transparent data being generated everywhere - a constant rush to write more and more grants - and a need to report on them more often and in more detail.

This is another trend that I do not see slowing down.

There are 117 grant related jobs open in the Boston area on Monster.com right now - and while that piece of anecdotal evidence doesn't mean too much, it is illustrative in a time of growing unemployment. By the way, there are only 96 restaurant jobs posted in the same area.

I only wish I had back data, because I am certain that this is abnormal.

-- --

grapejelly
07-06-09, 03:01 PM
I know lots of people who work hard in the public "sector." But they get paid more generously, have a much harder time being fired, and have much more vacation time and more generous benefits than do their opposites in the private sector. There is no comparison.

ASH
07-06-09, 03:21 PM
Someone earlier in the thread was wondering where the personal anecdotes are. Here's what I see happening around the Phoenix, AZ area. My "View from the Bottom":

Thanks for the anecdote, shiny!

Jim Nickerson
07-06-09, 03:33 PM
Thanks for the anecdote, shiny!

Yes, shiny, I too appreciated your post, what did you call it "View from the Bottom?" Seemed to be a lot of candor there which is not always how people communicate, and I like candor.

Whatever is "The American Dream" I have never understood. Anything to do with living life based on "dreams" has always struck me as bullshit. You play the cards you are dealt, or either "cheat" in some sense of the word.

I think what most struck me about your post is that you appear to be making do with the problems you and husband face without a lot of moaning, groaning, and looking for someone to blame--not that a whole lot affecting the US today is not due to some serious errors in judgement by some of the poplulace as well as the government.

Good post, and thank you for putting it up.

ASH
07-06-09, 03:41 PM
What impresses us most is how unimpressed many appear to be about the seriousness of this depression. They ask why many restaurants are still booked up and why many malls are still busy, even if apparently the shoppers in them are buying less. Where are soup lines? Where is the high crime rate?

We remind them that we are only one year in to a multi-year process.

The average man or woman does not change his or her behavior until years after an economy has changed around them. No one likes change, even positive change but especially negative change. The tendency is to ignore change as long as possible, and hope it goes away and "normalcy" returns. Meanwhile, change goes on.

The lag between circumstances and behavior feels surreal to me. The local malls are still busy, and rush hour traffic seems the same. This in the state with the second highest unemployment rate. Maybe there are a few more pan-handlers at the highway on-ramp. But nothing looks as dingy as I (dimly) remember from the early 80's. So far, the new depression is apparent only in the handful of local retail chains which have gone out of business in the last year... perhaps in the sprouting of "for rent" signs in my neighborhood. Nothing much has changed there yet, but we put in a burglar alarm system -- trying to stay ahead of events.

On the positive side, orders at Triquint Semiconductor (manufactures cell phone chips) are up, and this week they re-hired some of the temporary workers they let go last fall. My friend who is leaving a job there for a science policy fellowship in DC says the quality of interviewee has gone way up. Staff at the custom circuit board/digital logic house we subcontract FPGA work to still seem busy. Not everything is withering on the vine.

Jim Nickerson
07-06-09, 04:13 PM
The time is coming when people working in the private sector are going to be considered the "suckers". Working longer hours for less pay while the freeloader class moves smoothly along working 35 hour weeks at a snail's pace. Those that still work. Meanwhile our retired citizens will continue to vote to collect benefits that total more than the average private sector worker makes.

I for one have decided not to play the rat race game anymore. I'm slowing down and working at the pace I want to work. If the customer can't handle that, then too bad. Most don't mind. I'd rather make do with less than kill myself working for that last dollar, half of which ends up paying for the freeloaders anyway.


flintlock, I surmise that you are a self-employed electrical contractor. If that is correct, you still very much work for someone (as opposed to the often heard concept of "I work for myself.") and if you worked for me and it was my sense that you were slowing down and there was anything I was paying you for that had to do with productivity, then I would fire your ass and look for someone else to work for me.

My wife doesn't sweat, and in very hot weather 10 days or so ago, our fan went out on our airconditioner. So happens a HVAC guy, who owns his own business, lives just down the street from me and I called him, and he immediately returned the call from another job he had going with his gang, and in 30 minutes was at my house, and in an hour went and got a new motor and in 1.5 hours had my a/c running. I didn't offer him any extra to work efficiently; I assume he may have charged me for that, but I have no comparison. I have recommended him twice since since then, and he already has had a call from one to whom I recommmeded him--again coming out immediately for what was an after hours call.

I have always thought that you cannot get a worker, including myself, to do some job better solely by paying them more. Given two people whom one has observed working, assuming the finished work was the same, I'd always re-employ the one who was most efficient.

How many people do you know who actually have killed themselves working hard? Maybe worrying hard will kill some, but seldom from hard work in my experience have I seen or heard of people dying. Maybe not working hard if it means putting food on the table has killed some people.

If you employ and pay two people both of whom can do the task you give them, but one does it with greater efficiency and then is ready for another task, while the other is still "working at his own pace because he thinks he isn't getting paid enough" and push comes to shove in your business which guy will you keep on? If you need both of them, which guy would you promote to greater responsibility?

Good luck with your work.

cjppjc
07-06-09, 04:49 PM
How many people do you know who actually have killed themselves working hard? Maybe worrying hard will kill some, but seldom from hard work in my experience have I seen or heard of people dying. Maybe not working hard if it means putting food on the table has killed some people.




This is the truth. It is the thinking, and associated tension that comes from it, that lead to dying. Hard work, even very hard work done properly is a liberating thing.

shiny!
07-06-09, 05:12 PM
Yes, shiny, I too appreciated your post, what did you call it "View from the Bottom?" Seemed to be a lot of candor there which is not always how people communicate, and I like candor.

Whatever is "The American Dream" I have never understood. Anything to do with living life based on "dreams" has always struck me as bullshit. You play the cards you are dealt, or either "cheat" in some sense of the word.

I think what most struck me about your post is that you appear to be making do with the problems you and husband face without a lot of moaning, groaning, and looking for someone to blame--not that a whole lot affecting the US today is not due to some serious errors in judgement by some of the poplulace as well as the government.

Good post, and thank you for putting it up.

I'm glad I didn't bore you. My view from the bottom comes from living "low on the hog" in a "high on the hog" society. I also "look up" to all of you who post at iTulip. Compared to you, my level of understanding is definitely at the bottom! Most of what I read here is way over my head, but the effort to understand it has been well worthwhile, and keeps my brain from turning into mush as I get older.

I grew up in the "American Dream": a nice house in the suburbs on an acre of land, Dad worked in the family business, Mom stayed home. Vacations to the beach in the summer, a pair of brand new 1965 Pontiacs in the garage. I didn't know it at the time but my parents lived greatly beyond their means. Every day my Dad would come in with the mail and say, "More bills". I kept asking who "Bill" was. The "Dream" came unraveled in the '70s, my parents divorced, and my mother had to enter the workforce.

I broke off from my family when I was 17. At various times in my life I've been sick, broke and homeless but I've never felt "poor". "Poor" was other people; I was just without money. Maybe it's my upbringing, but I would be ashamed to take charity or be on public assistance. At the lowest time of my life, sick and sleeping on friends' sofas, I did yard work and cleaned houses just to bring home money every day to pay my way. I sold some possessions, invested in materials, and went into business for myself.

I was pretty liberal at that time. Now, I feel like if I could do it, then most of the people on the public dole could do more, too.

Because I've lived through real hardship, I'm grateful for what I have. We actually have it pretty good, maybe not by USA standards, but by World standards. All I have to do is look at how much of the world lives with no food or running water, no education, no shoes, picking through trash, to know that we live like Kings!

A few years ago I was standing in a long line to buy textbooks at a Community College. The line was moving really slowwwwwly and people were grousing and complaining. I mentioned out loud that I thought we were lucky to be able to stand in line to buy our books, because all over the world there were millions of people who had never even owned a book, who would give anything to get an education, but couldn't. People actually took it in and stopped complaining.

When I first saw "Lifestyles of the Rich and Famous", I thought it was going to make a lot of people feel envious and want to live above their means, just to keep up with an impossible standard. When I first saw "Jerry Springer" I saw it as a celebration of self-disrespect, and believed it was going to lead to a coarsening of our society.

Unfortunately, I was right on both counts. Now both these trends are mainstream and there's a generation that can't remember how things were before. I don't know enough about economics to compare this depression with 1980 or 1930. But I do know that peoples' expectations of themselves, of others, and of government were very different in those eras. If for no other reason, I fear that this is going to get very ugly.

metalman
07-06-09, 05:24 PM
The lag between circumstances and behavior feels surreal to me. The local malls are still busy, and rush hour traffic seems the same. This in the state with the second highest unemployment rate. Maybe there are a few more pan-handlers at the highway on-ramp. But nothing looks as dingy as I (dimly) remember from the early 80's. So far, the new depression is apparent only in the handful of local retail chains which have gone out of business in the last year... perhaps in the sprouting of "for rent" signs in my neighborhood. Nothing much has changed there yet, but we put in a burglar alarm system -- trying to stay ahead of events.

On the positive side, orders at Triquint Semiconductor (manufactures cell phone chips) are up, and this week they re-hired some of the temporary workers they let go last fall. My friend who is leaving a job there for a science policy fellowship in DC says the quality of interviewee has gone way up. Staff at the custom circuit board/digital logic house we subcontract FPGA work to still seem busy. Not everything is withering on the vine.

the stimulus... it's working!

http://www.nypost.com/seven/05282008/photos/iron_lung.jpg

ThePythonicCow
07-06-09, 05:27 PM
Now, I feel like if I could do it, then most of the people on the public dole could do more, too. For many of us in America this last sixty years, yes. Unfortunately, we've been living beyond our means.

The time has come to pay the piper.

Finster
07-06-09, 07:34 PM
To make a long story short, this time the U.S. economy blew up in late 2008. It did not slow down. It did not fall into recession. The Fed did not create it on purpose to bring down inflation.

That is debatable. By July 13th, 2008 the Fed and other central bankers had already met to discuss the inflation issues with oil and all other commodities rocketing higher. Their announcement to back Freddie and Fannie, they must have known, would trigger a dollar bull market, a sharp move higher in bank stocks and a strong counter against the trade which every hedge fund and their dog had hopped on board - commodities long. Knock the legs out of this trade and you knock down a lot of leveraged bets which were pro inflation. To think that Paulson could not see this would be naive.

The Fed may have wanted to bring down inflation, but it was tap-tap-tapping on the brakes ever-so-lightly, as if walking on eggshells. What happened bore little resemblance to what it intended.

It clearly envisioned, through a process of gradual, well-telegraphed, baby-step rate hikes a correspondingly gradual, baby-step cooling of inflation without a depression, or even recession. That it didn't work out that way doesn't mean it wasn't intended. To imagine the Fed always gets just what it wants is to invest it with more power than any central planning agency has successfully wielded before.

No, the problem was the imbalances it had nursed into being over the previous two decades being like having raised King Kong, having created such an inherently unstable condition that the least disturbance was all it took to blow it up.

mcgurme
07-06-09, 08:39 PM
Yes, I actually have contemplated just quitting the faculty job and doing freelance grant writing, since I have a very good track record. I figure that I'd work less hours and that it would be more honest to be a "grant mercenary" that to continue pretending that I can be an educator in this environment. Of course, quitting a job (even if it is a crazy 60hr/week one) right now makes me a bit nervous, given the unemployment stats and all...

I am sure you are right about the abnormality of it. In May, the NIH put out a call for grant proposals related to the stimulus package. They had 800 proposals to fund, and they received 20,894 applications! It has gotten crazy, folks.


As a fellow public sector "freeloader" working double the 35 hours that they pay me for, I must say...

A true observation about grants - not only for academia - but for government agencies as well. "Block and Formula" grants require a vast amount of paper - or at least .pdf - for funds that are earmarked for a specific jurisdiction.

Every municipal government with a population over 35k now nows this well, and the smaller ones will follows as states disburse stimulus funds.

This is what happens when the Federal share of the pie (by pie, I mean the amount of available funds for local work - think of your university or 501c(3)) grows against the Private, State, and Local.

We now have massive transparent data being generated everywhere - a constant rush to write more and more grants - and a need to report on them more often and in more detail.

This is another trend that I do not see slowing down.

There are 117 grant related jobs open in the Boston area on Monster.com right now - and while that piece of anecdotal evidence doesn't mean too much, it is illustrative in a time of growing unemployment. By the way, there are only 96 restaurant jobs posted in the same area.

I only wish I had back data, because I am certain that this is abnormal.

-- --

metalman
07-06-09, 09:06 PM
Yes, I actually have contemplated just quitting the faculty job and doing freelance grant writing, since I have a very good track record. I figure that I'd work less hours and that it would be more honest to be a "grant mercenary" that to continue pretending that I can be an educator in this environment. Of course, quitting a job (even if it is a crazy 60hr/week one) right now makes me a bit nervous, given the unemployment stats and all...

I am sure you are right about the abnormality of it. In May, the NIH put out a call for grant proposals related to the stimulus package. They had 800 proposals to fund, and they received 20,894 applications! It has gotten crazy, folks.

don't know where you are teaching but wherever it is... i hope you keep doing it. we need more smart & sane folks teaching our kids.

flintlock
07-07-09, 08:26 AM
flintlock, I surmise that you are a self-employed electrical contractor. If that is correct, you still very much work for someone (as opposed to the often heard concept of "I work for myself.") and if you worked for me and it was my sense that you were slowing down and there was anything I was paying you for that had to do with productivity, then I would fire your ass and look for someone else to work for me.

My wife doesn't sweat, and in very hot weather 10 days or so ago, our fan went out on our airconditioner. So happens a HVAC guy, who owns his own business, lives just down the street from me and I called him, and he immediately returned the call from another job he had going with his gang, and in 30 minutes was at my house, and in an hour went and got a new motor and in 1.5 hours had my a/c running. I didn't offer him any extra to work efficiently; I assume he may have charged me for that, but I have no comparison. I have recommended him twice since since then, and he already has had a call from one to whom I recommmeded him--again coming out immediately for what was an after hours call.

I have always thought that you cannot get a worker, including myself, to do some job better solely by paying them more. Given two people whom one has observed working, assuming the finished work was the same, I'd always re-employ the one who was most efficient.

How many people do you know who actually have killed themselves working hard? Maybe worrying hard will kill some, but seldom from hard work in my experience have I seen or heard of people dying. Maybe not working hard if it means putting food on the table has killed some people.

If you employ and pay two people both of whom can do the task you give them, but one does it with greater efficiency and then is ready for another task, while the other is still "working at his own pace because he thinks he isn't getting paid enough" and push comes to shove in your business which guy will you keep on? If you need both of them, which guy would you promote to greater responsibility?

Good luck with your work.

Jim, where the heck do you get this whole silly story out of the fact I CHOOSE of my own free will to cut back on my work load?? Did I say I quit doing good work? Or giving my customer's a great value? I am extremely efficient in what I do due to my 26 years of experience. I can easily beat the pants off two 20 something electricians, even at 46 years old. You of all people should understand the value of experience over "effort" in a technical field.

I didn't say I loafed on jobs. Where did you get that? My meaning was that I now work 4-5 day work weeks vs the 6 of old. My point was that diminishing returns have reduced my incentive to bust my ass when the pay is getting lower due to a variety of reasons . I also am not in good health and choose to spend some of my life actually getting to know my kids. What's your problem with that?

There's always another potential "customer" out there. I learned that long ago. I also learned that you can't please everyone and trying to do so will send you straight to the asylum. My point about customers "getting over it" was merely to point out that every time they call with a minor problem( I don't advertise myself as a emergency company btw) I can't drop everything and rush over there. There are VERY few real electrical emergencies on homes. Very few. The few I do get I usually work late to accommodate. What I'm talking about is the customer who calls and wants me to clear my schedule because they have a tennis match they don't want to miss, or made a spur of the moment decision to buy a Hot Tub and want it hooked up the same day so they can play in it. You tell me, which customer of mine should I screw over and cancel on so this prick can be accommodated? Cant' do both. So which one? There are companies who provide that level of same day service. Of course they charge accordingly. Be prepared to pay $300+ hour for that kind of service. No thats not a typo. Most folks would call them a rip-off and send them packing. But there is a market for it and I'm amazed but they do very well. I choose to offer my customers a good value and 95% are thrilled with the service they get(100% referral business). My problem is with the 5% who want that $300 hour level of service but don't want to pay for it. They can frankly kiss my ass.

Don't sit there and try to tell me you haven't had the same issue in your practice. Or do you hop out of bed every time someone calls your office with a toothache? Horsesh#%.

Jim Nickerson
07-07-09, 10:51 AM
The time is coming when people working in the private sector are going to be considered the "suckers". Working longer hours for less pay while the freeloader class moves smoothly along working 35 hour weeks at a snail's pace. Those that still work. Meanwhile our retired citizens will continue to vote to collect benefits that total more than the average private sector worker makes.

I for one have decided not to play the rat race game anymore. I'm slowing down and working at the pace I want to work. If the customer can't handle that, then too bad. Most don't mind. I'd rather make do with less than kill myself working for that last dollar, half of which ends up paying for the freeloaders anyway.


Jim, where the heck do you get this whole silly story out of the fact I CHOOSE of my own free will to cut back on my work load?? Did I say I quit doing good work? Or giving my customer's a great value? I am extremely efficient in what I do due to my 26 years of experience. I can easily beat the pants off two 20 something electricians, even at 46 years old. You of all people should understand the value of experience over "effort" in a technical field.

I didn't say I loafed on jobs. Where did you get that? My meaning was that I now work 4-5 day work weeks vs the 6 of old. My point was that diminishing returns have reduced my incentive to bust my ass when the pay is getting lower due to a variety of reasons . I also am not in good health and choose to spend some of my life actually getting to know my kids. What's your problem with that?

There's always another potential "customer" out there. I learned that long ago. I also learned that you can't please everyone and trying to do so will send you straight to the asylum. My point about customers "getting over it" was merely to point out that every time they call with a minor problem( I don't advertise myself as a emergency company btw) I can't drop everything and rush over there. There are VERY few real electrical emergencies on homes. Very few. The few I do get I usually work late to accommodate. What I'm talking about is the customer who calls and wants me to clear my schedule because they have a tennis match they don't want to miss, or made a spur of the moment decision to buy a Hot Tub and want it hooked up the same day so they can play in it. You tell me, which customer of mine should I screw over and cancel on so this prick can be accommodated? Cant' do both. So which one? There are companies who provide that level of same day service. Of course they charge accordingly. Be prepared to pay $300+ hour for that kind of service. No thats not a typo. Most folks would call them a rip-off and send them packing. But there is a market for it and I'm amazed but they do very well. I choose to offer my customers a good value and 95% are thrilled with the service they get(100% referral business). My problem is with the 5% who want that $300 hour level of service but don't want to pay for it. They can frankly kiss my ass.

Don't sit there and try to tell me you haven't had the same issue in your practice. Or do you hop out of bed every time someone calls your office with a toothache? Horsesh#%.

Sorry, flintlock, I misinterpreted what you wrote and did not anticipate what you finally wrote.

I see nothing wrong with choosing to work fewer days in order to free time to do whatever one desires. For anyone so inclined to dillydally in doing a job, I do see a problem.

I only took out teeth for any reason for 9 of the 18 years I practiced commercially, but I was almost always on call somewhere for trauma and always for any problems of patients under my care unless I made arrangements for someone else to take the call--which I did not do under usual circumstances. It grew old, and even trauma was an area of work for which one did not always get paid, so was life. For 10 years I did not take a vacation and was in office working on something to do with care for 6 to 6.5 days a week. It was not the work, or the amount of pay I got or didn't get that made me quit. It was other frustrations.

I always thought and still do, even in the US, life is hard for most people, but not nearly as hard as for many on the planet.

Still, good luck with your work and lifestye, seriously.

snakela
07-07-09, 05:38 PM
now the rent's low enough they can make money selling cookies. lower still, dance club. lower still strip club. lower still... etc. etc.

This sounds like green shoots to me :)

In all seriousness, maybe i missed it but does any of the unemployment data actually count # of people working vs. # of people in the population?

Everything is adjusted some way or another. eligble to work, looking for work etc etc. I'd like to see something that doesnt adjust for people who are truely disabled or permanently on the dole.

bart
07-07-09, 06:37 PM
This sounds like green shoots to me :)

In all seriousness, maybe i missed it but does any of the unemployment data actually count # of people working vs. # of people in the population?

Everything is adjusted some way or another. eligble to work, looking for work etc etc. I'd like to see something that doesnt adjust for people who are truely disabled or permanently on the dole.


Percentage of full population working is as close as one can get without a custom chart.


http://research.stlouisfed.org/fred2/data/CIVPART_Max_630_378.png



You may be able to fiddle with it here and get closer
http://research.stlouisfed.org/fred2/series/CIVPART

Jay
07-07-09, 08:51 PM
Percentage of full population working is as close as one can get without a custom chart.


http://research.stlouisfed.org/fred2/data/CIVPART_Max_630_378.png



You may be able to fiddle with it here and get closer
http://research.stlouisfed.org/fred2/series/CIVPART
Interesting that there is no uptick after 2001. More fuel for the possibility of the real crash starting then?

bart
07-07-09, 09:08 PM
Interesting that there is no uptick after 2001. More fuel for the possibility of the real crash starting then?

As an ex Valley girl I used to date said a few times - "Fer shure". ;)

The year 2000 about was when my hard vs. paper asset cycle turned... and its not much like the crash starting in 1929 either. I look at it very generally as a hybrid between the '30s and the '70s, and with a few overtones of other periods like the 1870s.

metalman
07-07-09, 11:59 PM
As an ex Valley girl I used to date said a few times - "Fer shure". ;)

The year 2000 about was when my hard vs. paper asset cycle turned... and its not much like the crash starting in 1929 either. I look at it very generally as a hybrid between the '30s and the '70s, and with a few overtones of other periods like the 1870s.

you might call it... argentina currency crisis and inflation with usa characteristics... (http://www.itulip.com/forums/showthread.php?p=106493#post106493) plus a real great depression (http://www.google.com/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla%3Aen-US%3Aofficial&hs=MhO&q=the+real+great+depression+itulip&aq=f&oq=&aqi=) ;)

jtabeb
07-08-09, 12:54 AM
you might call it... argentina currency crisis and inflation with usa characteristics... (http://www.itulip.com/forums/showthread.php?p=106493#post106493) plus a real great depression (http://www.google.com/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla%3Aen-US%3Aofficial&hs=MhO&q=the+real+great+depression+itulip&aq=f&oq=&aqi=) ;)

Oh, is that all. Damn, I was worried there for a second.

@#$@#% Bankers! &*^*&^ Economists! *&%^*&%^ MSM Media! (*&(*# Politicians! (*&(*& umm, Bankers!:mad::mad::mad:

bart
07-08-09, 02:24 AM
you might call it... argentina currency crisis and inflation with usa characteristics... (http://www.itulip.com/forums/showthread.php?p=106493#post106493) plus a real great depression (http://www.google.com/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla%3Aen-US%3Aofficial&hs=MhO&q=the+real+great+depression+itulip&aq=f&oq=&aqi=) ;)


Then I'll take argentina currency crisis and inflation with usa characteristics... (http://www.itulip.com/forums/showthread.php?p=106493#post106493) plus a real great depression (http://www.google.com/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla%3Aen-US%3Aofficial&hs=MhO&q=the+real+great+depression+itulip&aq=f&oq=&aqi=) for $2,000 Alex. ;)

snakela
07-08-09, 09:14 AM
Percentage of full population working is as close as one can get without a custom chart.


http://research.stlouisfed.org/fred2/data/CIVPART_Max_630_378.png



You may be able to fiddle with it here and get closer
http://research.stlouisfed.org/fred2/series/CIVPART

Thank you, sir!

Sure looks like growth is dependent on the first derivative of that number.

ASH
07-08-09, 05:23 PM
Thank you, sir!

Sure looks like growth is dependent on the first derivative of that number.

possibly backwards

or possibly the big trend in participation rate has to do with women moving into the work force over the span of several decades

snakela
07-08-09, 05:53 PM
the big trend in participation rate has to do with women moving into the work force over the span of several decades

I didn't think about that, its has to be a big driver.

dcarrigg
07-09-09, 07:01 PM
Yes, I actually have contemplated just quitting the faculty job and doing freelance grant writing, since I have a very good track record. I figure that I'd work less hours and that it would be more honest to be a "grant mercenary" that to continue pretending that I can be an educator in this environment. Of course, quitting a job (even if it is a crazy 60hr/week one) right now makes me a bit nervous, given the unemployment stats and all...

I am sure you are right about the abnormality of it. In May, the NIH put out a call for grant proposals related to the stimulus package. They had 800 proposals to fund, and they received 20,894 applications! It has gotten crazy, folks.

Yes, I worked on one of them - C20 I believe, the brick and mortar grant to be used as a statewide resource.

There's more money to be made in freelance work - but it's less stable. Although, if one assumes that there's at least one more stimulus coming, it may be smart...

flintlock
07-09-09, 09:27 PM
possibly backwards

or possibly the big trend in participation rate has to do with women moving into the work force over the span of several decades

Bingo! You win the prize. All that chart shows( pre 1985) is women coming into the workforce. Its the part AFTER 2000 that worries me. Some of that could be early retiring baby boomers.

Jay
07-10-09, 10:04 AM
So we just need some good old child labor to make things right again. Solving a debt deflation is easy!

flintlock
07-11-09, 10:43 AM
No, child labor would only increase unemployment. We need to eat the children and elderly who are stealing out jobs.:D

Slimprofits
08-06-09, 10:25 AM
I argue in an article in the current month’s Harvard Business Review Selling to the Debt-Averse Consumer

FYI, you've been cribbed: http://www.nuno-id.com/styles/pdf/article-july-09newsletternunoid.pdf

http://www.nuno-id.com/

Ann
08-06-09, 10:50 AM
FYI, you've been cribbed: http://www.nuno-id.com/styles/pdf/article-july-09newsletternunoid.pdf

http://www.nuno-id.com/

Blatant plagiarism. Yikes! :eek:

cjppjc
08-06-09, 10:55 AM
FYI, you've been cribbed: http://www.nuno-id.com/styles/pdf/article-july-09newsletternunoid.pdf

http://www.nuno-id.com/


It does have a "familiar ring" to it. As far as we know EJ is not an avid equestrian however. So all is good.

Imitation is the sincerest form of flattery. But it may be time to get mad.

Slimprofits
08-06-09, 11:02 AM
BTW, FREDs, EJ: Here is the html version on the Juno-Id website: http://www.nuno-id.com/articles-newsletters/the-death-of-the-monthly-prayer.php

and US Airways magazine with some love: http://www.usairwaysmag.com/articles/selling_to_the_debt-averse_consumer/