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Tuesday, January 25, 2011
Monday, January 24, 2011
Being Right or Making Money
China has been ranked as the top growing country among the G20 since 2001 and is expected to retain that title for at least another five years (See Growth Chart). However, the news coming out of China for the past three months has not been good. It is looking more and more that it is not a question of if China is a bubble and going to burst, but when.
The country has major infrastructure issues, troubling population dynamics, poorly aligned employment outcomes, inflation problems, a real estate bubble, an opaque and potentially insolvent banking system (had mark-to-market accounting been applied), geo-political problems with North Korea and Taiwan, and an underperforming stock market in 2010 (see stock comparison chart).
Smart Money Rushing Out
While the hot money is flooding into China, the smart local money is doing everything they can to get their money outside of China, which partly explains why Shanghai SE Composite has underperformed other markets for the past year or so (see Comparison Chart).
The many issues of China could conspire to become the biggest train wreck waiting to happen, and potentially dwarf any little budget problems in Europe by a factor of ten.
Big Trouble In Big China
China has a population related societal structural problem. The nation has tried to utilize the vast manpower to its advantage over the last two decades building a powerhouse manufacturing economy through the availability of low cost workers, which supplied the world with lower cost goods.
Nevertheless, the harsh reality is that the nation's infrastructure, quality jobs, food, and overall resources are too scarce to support such mass population, while achieving the government`s goal of a smooth transition to a developed middle class to sustain an internal demand model going forward.
If you think you have riots in Greece over the pension retirement age being raised is bad, just wait till riots breaking out in Beijing and other cities over the fact that a 90 cent bowl of noodle soup now costs four dollars due to food shortages, and a runaway inflation problem.
Loose Lending = Non-performing Projects
This is only reinforced by some of the news events taking place over the last three months. Let`s start with the raising of banks reserve requirements by the central bank, which is the sixth such increase in 2010.
These measures are meant to curb the excess lending which has fueled much of the overbuilding and real estate speculation occurred over the past two years as China`s central bank initially wanted to avert a recession by artificially creating demand for workers and construction projects to replace lagging demand from the developed economies.
The problem is that too much lending has occurred, and bad lending at that. Because of the cheap available credit, now you have cement companies and manufacturing firms getting bank loans to invest in endeavors such as real estate, which is outside of their core expertise and competency.
Real Estate Misery Loves Company – China & Spain
The result is a bunch of excess inventory and poorly thought-out construction projects which have no means of recouping the initial investment needed to repay the bank loans.
This practice is similar to Spain`s situation now where they have entire uninhabited building complexes that have yet to be marked to market, and will probably ultimately be demolished. But at least in Spain, even though it was a construction boom, it was engineered by developers in Spain, and not by some manufacturing outfits like those in China.
So, multiply the bad business project factor by ten and you get an understanding of the magnitude of bad loans on the books of Chinese banks. The problem is being further exacerbated by the practice similar to Spain`s of banks making additional loans to the businesses just so that they can then turnaround and pay back the interest owed on the original loans.
The only way this would work out is if these projects magically develop revenue streams. Unfortunately, in the case of Spain, a 20% unemployment rate, coupled with a still overvalued housing market in which prices still need to come down significantly, would suggest that by the time the Spanish economy recovers enough to support the excess inventory, the abandoned projects are run down and uninhabitable.
A similar scenario could play out in China as well.
True Smart Money Wary of the Write-off Domino
Furthermore, China`s practice of overbuilding at the height of real estate valuations makes even haircuts on loan write-offs an untenable practice for banks, and by further throwing good money after bad, the ultimate mark- to-market effect could be catastrophic for Chinese Banks.
This is the main reason all the major Chinese banks have gone to the market in 2010 to raise more capital before investors wise up to the underlying deficits these banks face, as these bad loans eventually would need to be written off the books.
Victor Shih, a Northwestern University professor estimates that Chinese local governments borrowed some 11.4 trillion renminbi at the end of 2009, and that local government financing loans to be roughly one-third of China's 2009 GDP. The most likely scenario over the next few years is that there would be increases of non-performing loans ratio from local governments. This would require a large scale of recapitalization of the Chinese banking system, which would eat up a large share of China's foreign exchange reserves and possibly slow down growth.
Although Beijing is quite capable of a few bailouts and surviving a widespread banking crisis, it most definitely will not bode well for the financial markets. So, insiders are removing capital from direct exposure to the inevitable re-pricing that will happen throughout Chinese markets from real estate to the stock market, and can be seen at this early stage by the underperformance of the Chinese stock market compared to other global markets. Remember, foreigners cannot invest directly in these markets, so these capital outflows are truly the smart money.
Logistic Gridlock Crimping the Middle Class
Next let`s look at the recent news regarding a severe cutback in automobile registrations in Beijing to 240,000 in 2011 from 700,000 registered in 2010 by the municipal government. Other large cities in China are bound to follow. This is most likely related to the reported 9-day traffic jam on the Beijing-Tibet expressway in August, and other extended traffic jams throughout China in 2010.
China is trying to build infrastructure projects after the fact; whereas with proper central planning these should have been established far ahead of the massive transition from a rural, agricultural based populous to that of a modern, large city based business and manufacturing concentration.
Simply put, it is impossible for all the Chinese citizens who want and can afford automobiles to be able to own and utilize this form of transport without a total breakdown in the transportation system. We are seeing the early stages of complete and counterproductive gridlock in the transportation system of China, and it is only going to get worse over the next decade.
No Jobs for College Grads
For all the talk about how China graduates more engineers each year, and other college educated young people who have strong backgrounds in the hard sciences than most developed nations combined, this is actually another sign of problems to come over the next decade in China.
China`s wealth and emergence into the second largest business economy hasn`t been built around the need for these types of mind and skill set. So literally you have a large mismatch between the types of available jobs in China, that are supported by the heavy manufacturing and construction intensive focus of the past twenty years, to that of the recently educated pool of graduates who have grown in sizable numbers over the past five years.
The Mind Is A Terrible Thing To Waste
This results in a large human asset class that China is currently wasting, as most of the newly educated workforce is working in jobs which require little or no advanced education at the university level. So you have highly educated university graduates in areas like engineering and accounting working low level service and sales jobs that pay less than many manufacturing jobs.
In short, there are too many highly educated Chinese citizens graduating each year for the number of jobs available needing their skill set because China`s economic model isn`t built around these type of jobs. This type of misaligned employment outcomes never ends well; it usually manifests itself in increased civil and social unrest.
8% Inflation in 2011
The next major challenge for China is a skyrocketing inflation, which at its root is the fact that there are too many people chasing too few resources. This fundamental flaw in population dynamics underpins many of the problems that China faces going forward.
Recent CPI data for November illustrates the inflation problem in China with a reading of 5.1% from a year ago comparison, this is up from a 4.4% reading for the previous month. Couple this with the latest 4% hike in fuel prices in China because of rising oil prices, you could expect future CPI and PPI reports to reflect even higher rates of inflation.
For now, most of the year over year spike has revolved around higher food prices as energy has mainly been flat for 2010 thanks mostly to government subsidies. Now that energy prices have entered the picture, China will start to experience even more inflation pressures in 2011.
Furthermore, with the undervalued yuan pegged to the dollar, it is only getting worse for China in 2011 due to Fed's QE2 pressures on the dollar. The real inflation rate for Chinese citizens for 2011 will probably approach 8% next year.
An Asian Contagion by China?
This escalating inflation concern is further compounded by Beijing's lack of decisive action to combat the problem by delaying a much needed currency appreciation, and hiking interest rates in a timely fashion. There is no getting around the fact that these two things need to occur as soon as possible.
By the time the Chinese government is forced to implement these tightening tools, the damage to the economy is most likely already done. The longer China delays the inevitable serious tightening measures, the harder the economic crash that will occur in the aftermath of these policy changes. And it is unlikely to end well. The resultant impact will probably take the rest of the Asian economies down with it – an Asian Contagion scenario.
History Repeats Itself
Eventually central planners and finance ministers around the world might start to understand that policies which lead to bubbles being formed in the first place are counterproductive in the long run. But until that lesson is learned, it seems like we are doomed to repeat the same mistakes over and over again.
Right now, there are more and more signs coming out of China that all is not well with its economy, and the likelihood of a more severe downturn in the future is a distinct possibility, unless its policy makers take decisive and prudent actions to minimize the damage of a hard landing.
Dian L. Chu, | Mobile Reader, Website | | Facebook | Twitter
Watch, Learn, Market Trend TVShare
It's an enormous relief to find someone at a large, powerful company who is kind, helpful, and able to solve your problems. Unfortunately, reader Flora learned that just because a person is kind and helpful, that doesn't mean that you shouldn't document your conversations with them in case things go horribly wrong.
I am writing with the hope that someone else might read my story and not make my mistake. I've had a lot of trouble paying my bills this year. I moved in with my parents in November to get things under control. One of the companies I owed money to was Citibank Student Loans. I finally contacted them in mid December to try to make things right so my loan would not go into default. The customer service rep could not have been friendlier. After I made a payment on the loan over the phone, she told me she had set me up on a payment plan, that as long as I continued to pay the same amount every month, my loan would not default. She wished me a Merry Christmas before I hung up the phone hugely relieved.Last week, I called Citibank again to make another payment on my loan by the appointed date, as she had instructed. The very friendly customer service rep told me that my loan was in the process of being sent to collections, but that I could call Citibanks' default department to make a payment. I called the number prepared to pay 300% of the payment I owed to keep this from happening, 800-967-9977. No one answered. The call went to voicemail. And the voicemail box of the number was full. I just tried it again, and it's still full.
I called the main citibank number back, explaining that I wanted to make a payment. They just told me to keep calling the default office every hour or so until they emptied their voicemail box. After four hours, I finally left a voicemail which was returned the next afternoon while I was in a doctor's appointment. I called again to leave a voicemail that night, being sure to keep my phone on me at all times so I could answer them. They called back the next afternoon. The customer service rep I talked to explained that my loan had been sent to collections in the 3 weeks since I had last talked to citibank, she claimed they had no record of any payment plan, and explained that they had the right to send my loan off to collections whenever they chose to. When I protested, asking if they had any recording or computer record of the conversation I had with the representative, and awe-struck that they completely ignored our deal, the customer service rep immediately changed her tone to shouting at me over the phone, explaining very brutally that it was all completely my fault for not paying. I waited long enough to hear the number of the collection agency to call before I hung up the phone literally in tears. I'm now trying to reach the collection company so I can start to clean up my credit score, bit by bit. I realize that I should have been paying more sooner, but that shouldn't change the fact that they made an agreement with me, and then broke it immediately after, right? I don't even know where my last payment went, if it's in the citibank system or with the collection agency. All of my information has been removed from my online account. I was really trying to make this work.
I hope that anyone having difficulty making payments to citibank student loans records any and all conversations they have with customer service representatives. I was so naive, and trusted that such a large business would not completely lie to me. I hope that you let other people know not to make the same mistake.
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
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Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
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Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
bench craft company reviews bench craft company reviews
Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
bench craft company reviews bench craft company reviews
Mideast Peace As Seen on TV « Liveshots
The Palestinian/ Israeli conflict and the fragile Peace Process is now back on the priority list of.
Probably Bad <b>News</b>: Headline FAIL - Epic Fail Funny Videos and <b>...</b>
epic fail photos - Probably Bad News: Headline FAIL.
Phase One unveils IQ series digital backs: Digital Photography Review
Phase One unveils IQ series digital backs: Phase One has released the IQ180, IQ160 and IQ140 medium format digital camera backs with 80, 60.5 and 40 megapixel CCD sensors respectively. All three backs feature 3.2" multi-touch rear ...
Tuesday, January 18, 2011
Making Easy Money
This market just won’t quit! The S&P500 hasn’t had a one percent correction since November 23rd and those waiting for a better entry just keep waiting and waiting and waiting. France’s CAC was the best weekly performer of the major equity markets we monitor. Our indicator species for global risk appetite, the Hang Seng, was up 2.5 percent as was the Russell 2000, followed by the Nasdaq. India’s Sensex had another rough week, now down 8 percent for the year. The Shanghai Composite, the Mexican Bolsa, and the Nikkei were all down for week. The Hang Seng is now the top performing market, year to date, followed by the CAC and the Nasdaq. The S&P500 is 2.83 percent.
The Euro rose 3.60 percent against the dollar as the ECB President put the big hurt on the shorts. The Dollar index gave up its gains from the prior week and is now flat for year. Crude oil rose 3.83 percent and the CRB foodstuffs sub-index spiked 4.84 percent. The sharp rise in food price is sparking riots across North Africa. The sharp rise in food prices will improve the U.S. terms of trade and should bolster the dollar, in our opinion.
Next week will be earnings 24/7. Given the few majors that have reported – Alcoa, Intel, and JP Morgan — the markets seems to be in a “sell the news” mode. Take a look at our analysis of how Apple reacts after earnings. We found that if the stock has large run-up before the release, the company needs to beat big for the rally to continue. Apple is up 8.04 percent for the year.
We suspect the Shanghai will break its 200-day moving average next week as Asia gets serious about inflation. If the Apple news is sold, this may be the catalyst for the overall market to correct. This was exactly the case last quarter as Apple ran up big into earnings, beat estimates, then sold off and took the S&P500 down 1.6 percent the next day. Volatility so cheap we couldn’t help but load on some out of the money SPY puts at close to protect our long positions, which are much lighter going into next week.
We’re trying to find a way to play natural gas without making our spouses widows and still don’t like commodities and emerging equities, in general, because of our “nontransparent” view of China. We’re patiently waiting for the 200-day for reentry into gold at around $1,275, but not sure it will get there.
We believe the U.S. economy is in the early innings of a very messy and painful structural transition to one based on disruptive and transformative technology. The “American Dream” of our children will not be the McMansion economy of the baby boomers.
Our sense is the bears are “beating a dead horse” and missing the metamorphosis, which is taking place before our very eyes and easy to overlook given the very noisy and ugly macro picture. Nevertheless, this is very powerful and is reflected and anticipated in the stock market rally, in our opinion. We were once blind, but now we see; as we saw the amazing growth of Apple during the depression of the past two years. They are the leaders of this “new economy.”
We are absolutely cognizant of the mine field of risks that could blow-up the transition beginning with our propensity to address structural problems with cyclical and short-term solutions. The markets are clearly signaling that gig is now up. A painful and very loud complete restructuring of the public sector is coming. We just don’t think Steve Jobs will stop innovating and engineers stop creating if Ireland and Greece restructure their debt. Stay tuned.
The Middle East’s largest online auction and buying site has decided auctions are so last decade.
From the beginning of 2011 sellers won’t get the option to sell their products in an auction. It’s fixed price, or none at all.
The decision comes as a shock to many as Souq.com, which opened its doors to the public in 2005 and has since launched in 5 countries in the region, has always been portrayed as the eBay of the Middle East. At least in terms of online auctions, not anymore.
“We (and most of our sellers) want to offer the best online shopping experience to users in the region, and this is one step along the way to support this goal.” said CEO and Founder of Souq.com Ronaldo Mouchawar in an email about the recent shift.
This change, as most in life, will have its supporters and detractors. The good thing is, it looks like a only slim minority might end up annoyed.
To illustrate the above, lets say you’re a painter and you work from home during your spare time. I’m one of those who believe art has no price, but since it’s good to have paint to create priceless masterpieces, putting the occasional price tag on your work isn’t entirely evil. The only problem with that is how do you put a price tag on art in the first place? Van Gough considered giving money for art is as important as being an artist yourself. That’s where auctions come in strong.
By putting up a painting to sell through an auction, the seller allows the highest bidder to give her as much it takes to win the auction, or otherwise ask to ‘Buy Now’ according to a price the seller sets. Will this shift be good for those who realistically don’t know how much their work is worth? I would say no.
On the flip-side regional retail stores tend to invest large amounts of money to put their products online on their own, and usually fail miserably. Many factors come into play, but the most obvious are a large user base and an easy to use website to buy from.
This encouraged Souq.com to build a platform for merchants and retail stores to offer their products on Souq through fixed prices (almost all the time), and through Souq Stores which are customizable online outlets for retailers such as UAE’s
Source:http://removeripoffreports.net/
Knight Science Journalism Tracker » Blog Archive » Mammoths <b>news</b> <b>...</b>
“Japanese scientists attempt to resurrect Mammoth” shouted the news agency AFP (source: The online version of the Japanese newspaper “Yomiuri Shimbun”: Daily Yomiuri Online). The article lacks any hints about the major hurdles of such ...
Small Business <b>News</b>: Social Entrepreneurship on the Rise
In recognition of Martin Luther King Day, we present a roundup about an important new trend, the rise of social entrepreneurship. Instead of profit, the.
Shelf Life: Broadcast <b>News</b> - The Moviefone Blog
Although almost no one saw it, James L. Brooks released a film in December. Its name was 'How Do You Know,' and it disappeared after just a week or two.
Friday, January 14, 2011
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How do you usually start your morning? Lunatic rush, eternal lack of time, work, where we come sleepy, irritated and seedy? Delaying the time for getting up to the critical moment and again being late, we convulsively invent excuses about a stuck lift or traffic jams.
Getting up earlier you can clear up your head and thoughts. Morning hours carry silence and peace, which we are usually lack of during the noisy day. This is the time of solitude, when we can read, reflect, and just take a breath.
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Make sure to pay ALL future fills and obligations online. This is an obvious one of course, but it is so very important to keep things completely clean at all points forward.
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There are several other specific and little-known steps that can accelerate your success with getting the right kind of mortgage and can help you avoid a bad credit mortgage--make sure to keep reading and researching.
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Getting up earlier you can clear up your head and thoughts. Morning hours carry silence and peace, which we are usually lack of during the noisy day. This is the time of solitude, when we can read, reflect, and just take a breath.
Free rental agreement forms in europe
Make sure to pay ALL future fills and obligations online. This is an obvious one of course, but it is so very important to keep things completely clean at all points forward.
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There are several other specific and little-known steps that can accelerate your success with getting the right kind of mortgage and can help you avoid a bad credit mortgage--make sure to keep reading and researching.
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Apple, <b>News</b> Corp. Delay "Daily" iPad Newspaper | Peter Kafka <b>...</b>
Turns out you'll have to wait a bit longer to see The Daily, Rupert Murdoch's long-awaited iPad news service. Apple and News Corp. have made a joint decision to push back next week's planned launch. The delay is supposed to give Apple ...
Great <b>news</b>: Elected officials know less about the Constitution <b>...</b>
So claims the Intercollegiate Studies Institute, which just concluded a five-year study on the American public's knowledge of its foundational legal document. The bad news: the general public gets an F, with just a 54% average on the ...
Crunch Gym app lets you avoid check-in lines | Health Tech - CNET <b>News</b>
Crunch Fitness unveils its first app, created with IdeaWork Studios, enabling iPhone and Android users to find locations, see class schedules, and check in. Read this blog post by Elizabeth Armstrong Moore on Health Tech.
Thursday, January 13, 2011
Making Money on Line
We’ve commented before on the near-impossibilty of teasing decent inflation estimates out of China. Despite that, we were early to comment that inflation was getting out of control. From a joint post with Marshall Auerback in February:
The government has engineered an enormous increase in money and credit in the past year. In fact, it seems to be as great as 5 years’ growth in credit in the previous Chinese bubble. The increase in money and credit is so great and so abrupt that you tend to get a high inflation quite quickly even if there are under utilised resources. Add to this the fact that China simultaneously is providing massive fiscal stimulus.
This combination is the making of a very messy situation. If China seeks to sustain demand via fiscal policy, the result is likely to be a big inflation problem. With many Chinese students steeped in Chicago School monetary theory coming home and assuming positions of authority, they could push for an aggressive, Paul Volcker-style effort to stop inflation.
But, what if the they don’t? Inflation can take off and thereby begin to ERODE the competitiveness of Chinese exports. Nouriel Roubini pointed out this issue in 2007: if China didn’t revalue, inflation would do the trick regardless. A continued high rate of inflation relative to its trade partners would push up the price of goods in home currency terms, which in turn translates into higher export prices. This might be the real reason why China is so reticent to revalue its currency. The Americans might go crazy if the Chinese devalued, but if the inflation is high enough, they might have to do it, as it will severely erode their terms of trade and cause their tradeables sector to collapse.
Or the hard-line monetarists triumphing by fighting inflation and the result is riots as unemployment increases.
Note that we pointed out that China was becoming less dependent on exports, but by increasing investment, which we also saw as unsustainable:
Exports are the only area where China makes any kind of money because they can sell these products for about 10 times what they obtain for a comparable product in the domestic economy (where profits are virtually nil). The export sector is a big contributor to overall super excessive fixed investment in China. Dollar appreaciation means foreign direct investment will go to zero net.
There will be strong forces for a reduction in fixed investment in this large sector. Hence, there is a good chance that even without monetary tightening by the Chinese authorities, the overall fixed investment boom in China will turn down….Nobody is thinking about this scenario but it is a real possibility. And with fixed investment now at fifty per cent of GDP (which is unprecedented in any economy) and exports at more than thirty, we’re looking at ratios that have never been reached before on a combined basis.
And the story in recent months from China has been of evidence of inflation. Consider this recap from Patrick Chovanec:
I’ve consistently argued that pent-up inflation poses a serious threat to China in 2011, I’ve also been predicting that we would almost certainly see the CPI rate dip in December, given the government’s high-profile crackdown on food prices. My reasoning was based on politics, not economics: it was politically imperative for China’s leaders to show they were taking action to rein in the skyrocketing cost of living, and they had the tools at their disposal to enforce a short-term, targeted result.
Price controls, and related crackdowns on speculation and hoarding, make bold headlines but do nothing to solve the economic pressures causing inflation. In China, those pressures arise from the fact that, due to China’s stimulus policies, its money supply has expanded more than 50% over the past two years. There’s just more money out there chasing the same amount of goods. Capping prices can’t change the fact that money buys less; it only changes how people are forced to deal with that fact – usually in a way that creates even bigger problems, like shortages or black market corruption.
Peter Tasker, in a Financial Times comment, argues that rising wages pose a fundamental challenge to China’s strategy:
The China story that has been sold so skilfully all over the world is simply another version of the “new era” thinking that has characterised every investment mania from the South Sea bubble to the dotcom frenzy….
There are good grounds for concern about the future. A significant increase in the profit share of national income, as we have seen in China this century, implies a significant decrease in the labour share – meaning that wages fail to keep up with economic growth. The other side of this is apparent in the gross domestic product numbers – a decline in the contribution of consumption and a ballooning dependence on investment. The longer these trends continue, the greater the ultimate reversal.
We’ve seen this movie before – 40 years ago, to be exact. In the 1960s Japan was achieving year upon year of double-digit GDP growth, fuelled by government-directed investment into infrastructure projects….
In the mid-1950s, Japanese labour had taken 60 per cent of total value added. In the miracle years this ratio fell to 50 per cent, then started a V-shaped recovery in 1970 as the labour market tightened. Ten years later it had soared to a plateau of 68 per cent. These gains had to be fought for. In the 1970s, Japan’s now dormant union movement was in its heyday. Profit margins were squeezed, and in real terms the stock market went nowhere for a decade.
Can workers grab a bigger share of the economic pie before the urbanisation process is complete? In Japan they did. In 1970 Japan’s urbanisation ratio (the proportion of urban population to total population) was still just 53 per cent. Currently the Chinese urbanisation ratio is 45 per cent, roughly where Japan was in 1964. However, Chinese statistics are notoriously unreliable. The floating population of unregistered urban migrants is estimated at between 50m and 140m people. So China’s true urbanisation ratio may already be close to Japan’s in 1970.
If China were to follow Japan, the next stage would be labour strife and inflation. The best way to avoid that outcome would be a radical tightening of the current super-easy monetary policy. But that would risk a serious slowdown and probably necessitate a large revaluation of the renminbi – both anathema to Beijing. Meanwhile, China’s reliance on a cheap currency is helping to fuel a trade war, in the words of the Brazilian finance minister.
There is no good way out of the corner into which China has painted itself. Rebalancing the economy is absolutely necessary. It is also a long-term project fraught with risks for China’s rulers – and for investors who have bought the story of inevitable western decline and unstoppable Chinese ascent.
The tendency of businesses and economies is to push successful models to their breaking point. We’ve over-relied on consumer debt and a cancerous growth of the financial sector; China has become unduly dependent on exports and investment. And each nation is fighting tooth and nail to stick with its old habits, precisely because the elites who’ve benefited from these strategies still wield considerable clout. So change is likely to come about only via disruption.
Values, Value and Valuation — The money is all relative
Oh how timing sometimes works out to be funny. I was driving home tonight and started thinking about the value of products, the valuation of companies and how the values that a company portrays can change the rest. No sooner had I sat down to write this piece than the news of Goldman Sachs investing $500 million into Facebook broke and refreshed the entire thing in my mind. So let’s look at these three things, and try to see if one manages to sway the rest.
Values
Do you, like me, find yourself more inclined to use or purchase something that comes from a company that you can believe in? The ethos of a company can — for me at least — completely break me away from the product. That very fact, because I feel that I’m likely not alone in my actions (or lack thereof) can have a serious impact on the bottom line of a company.
Look at Facebook, for instance. When the Social Graph was announced and the new privacy changes went into effect, many people threw up their hands in disgust. But many others continued with life as usual, even if a bit annoyed. Why? Because Facebook has this outward appearance of a company that’s simply trying to do cool things, and it needs information in order to do them. The company’s values seem, for the most part, to be in line with the things that we Internet users want. As such, there was a lot more wagging and a lot less barking from the angry dogs crowd.
You’re starting a company? There’s likely something to be said for developing an ethos ahead of time, making it known and then sticking to it. Would Google be where it is today if not for the “don’t be evil” tag line? Even if you don’t fully believe that the company runs that way, you still remember it. Point made.
Value
When value exceeds cost, even by a single cent, the purchase will be made – Grant Cardone
That quote is one that has stuck with me for some time now. A few years ago I was making my living selling cars and it is sometimes exceedingly difficult to overcome the objection of price. In the technology world, we’re constantly being offered products for “free”. The only cost? A bit of information, a slice of our privacy or somethings similar. But then, after using those “free” products, we start to build our own value for them.
Don’t believe me? Just look at some of the things that you likely use every day. Gmail? You’d pay for that. Twitter? You don’t want to admit it, but it’s likely become a valuable asset to your daily Internet life. The same can be said for so many things and yet we get them for “free”. But there’s a down side to this issue as well — it becomes very difficult for a maker to charge for a product when there are free alternatives. Don’t believe that? When was the last time that a box office movie didn’t get a torrent version?
And yet, even as companies try to build value in their products, still others think that the economy allows for them to set their own values and tell us what something is worth. TV networks are probably the most well-known perpetrators of this heresy. Apple TV launched, ABC and Fox decided to jump on board and see what would happen. Some of the rest? They decided that $.99 was devaluing the product and yet as the provider of the product, there is no one entity that is more unqualified to name the value.
Consider it a lesson in business, I suppose. The potential buyer will determine the value of your product. Always.
Valuation
Now here’s a sticky one. Valuation is one of those strange things because it means so many different things to different people. To the potential investors, it’s a measure of how much money can be made. To the business owner it’s a gauge of how well the business has done. To the end user? It’s…honestly not much.
As a case in point, around TNW we love Twitter. We want to see it succeed and we are sure that it will. The valuation continues to climb prior to any IPO and yet, as users of the service, it really doesn’t matter much to us. Sure, it would matter if the site closed its doors, but beyond that there simply isn’t anything about the valuation number that matters.
And so, as an entrepreneur you have to ask yourself where the balance lies. Do your company values allow you to build value in your product? If so, then the chances are that your valuation will end up right where it needs to be. There’s a fair amount of truth in the thought that, if you handle the small stuff, the big stuff will fall into place.
So with that, I offer you a thought going into the new year — start with your values. The rest will fall into place.
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Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
bench craft company reviews bench craft company reviews
Bruno Mars Continues Hot 100 No. 1 Rotation with 'Grenade <b>...</b>
Bruno Mars circles back to the top of the Billboard Hot 100, as Grenade once again replaces Katy Perry's Firework at No. 1 (1-2).
Harvard Undergrads Launch Newsle To Find <b>News</b> About Your Friends <b>...</b>
Social news has many flavors. Twitter and Facebook function as social news feeds with your friends pushing out stories they find interesting. But what about news about your friends or other people you care about?
Visualize This: Where the public gets its <b>news</b>
Perhaps the label should be something like “Percentage of respondents.” (The folks who collected the data allowed respondents to cite two “main” sources of news, which confused me.) I'll make the change. Thanks! ...
Monday, January 10, 2011
Making Money Tips
Top Stories
Obama's budget has been delayed a week, reports Jonathan Weisman: "President Barack Obama's budget proposal for fiscal 2012 will be released in mid-February, a little more than a week after its planned release date. The administration is scrambling to assemble what could be a pivotal document following a six-week delay in the confirmation of the White House's new budget director, a senior administration official said Monday. The budget's release date will be pushed back from Monday, Feb. 7, to some time the following week, the official said. The White House's new budget director, Jacob Lew, saw his confirmation put on hold by Louisiana Democratic Sen. Mary Landrieu, who was protesting the administration's moratorium on offshore oil drilling. Mr. Lew was confirmed Nov. 19."
Members of Congress are finding ways besides earmarks to fund pork projects, reports Ron Nixon: "Lettermarking, which takes place outside the Congressional appropriations process, is one of the many ways that legislators who support a ban on earmarks try to direct money back home. In phonemarking, a lawmaker calls an agency to request financing for a project. More indirectly, members of Congress make use of what are known as soft earmarks, which involve making suggestions about where money should be directed, instead of explicitly instructing agencies to finance a project. Members also push for increases in financing of certain accounts in a federal agency’s budget and then forcefully request that the agency spend the money on the members’ pet project. Because all these methods sidestep the regular legislative process, the number of times they are used and the money involved are even harder to track than with regular earmarks.
Real talk: The move from earmarking to lettermarking, phonemarking, hearingmarking, etc, wasn't just predictable. It was inevitable. And make no mistake: Within three-to-five years, we're likely to be back to earmarking as well.
Corporations are using their cash supplies to fuel mergers, not job growth, reports Jia Lynn Yang: "The volume of global mergers this year rose 19 percent, according to Dealogic, ticking up for the first time since 2007 as firms looked for ways to deploy the record amount of cash sitting on their balance sheets...Conditions are ripe for a comeback in mergers and acquisitions because U.S. companies are holding a record nearly $2 trillion in cash. They have been hesitant to use these massive piles of funds to hire as they wait to see whether the economic recovery picks up more speed. Instead, this year they've been making safer bets: buying back stocks to help boost their share prices and spending money on modestly sized mergers."
Fuzz-pop interlude: Wavves plays "King of the Beach".
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Still to come: Foreign banks benefited from a Federal Reserve program; being unemployed is bad for your health; Obama's federal pay freeze is being extended to more civil service workers; the incoming House Energy and Commerce chair outlines his plan to derail the EPA's climate regulations; and a genetically engineered singing mouse.
Economy
The Obama administration is cracking down on banks that are delinquent on their TARP payments, reports Zachary Goldfarb: "The Obama administration has begun monitoring the high-level board meetings of nearly 20 banks that received emergency taxpayer assistance but repeatedly failed to pay the required dividends, according to Treasury Department officials and documents. And it may soon install new directors on some of their boards. The moves come as the number of banks that failed to make at least one dividend payment to the government rose to 132 in the last quarter. These 'deadbeats,' as they are sometimes called, are virtually all community lenders and collectively received billions of dollars in taxpayer assistance. In addition to those firms, seven others have failed, resulting in the total loss of the government's investment."
Looking for a rigorous overview of the various methodological difficulties involved in assessing stimulus proposals? Alan Auerbach, William Gale, and Benjamin Harris have you covered (pdf).
Non-US banks have benefited from Federal Reserve credit, report Robin Harding, Bernard Simon, and Christian Oliver: "Some of the world’s strongest banks have profited from an emergency credit facility set up by the US Federal Reserve to shore up confidence in the global financial system, according to a Financial Times analysis of data released by the Fed. More than half of lending under the Fed’s term auction facility - the largest of its crisis programmes - went to foreign banks. Details of the varied uses to which they put it may add to political criticism of the Fed. The Taf was set up in December 2007 to provide one-month loans to creditworthy banks as markets dried up for lending longer than overnight. In August 2008, it began offering three-month loans as well."
A new study suggests startups are central to job growth: http://on.wsj.com/fDs2eV
There's much Obama could do for the economy that wouldn't require congressional approval, write Paul Krugman and Robin Wells: "Democrats could pressure the administration to fix the inexcusable mess at the HAMP (mortgage modification) program--a program whose Kafkaesque complexity has in many cases made matters so bad for home owners that it has triggered the foreclosures it was supposed to avoid. In addition, mortgage relief would benefit the wider economy. Furthermore, the scope of mortgage relief could be made much wider if Fannie Mae and Freddie Mac were used to guarantee mortgage refinancing. Other proposals go even further: for example, that Fannie and Freddie engineer reductions in mortgage principals. All of this could be done, conceivably, by executive order."
Prizes for spurring innovation work, writes Annie Lowrey: http://slate.me/dFXZgh
A survey of jobless workers shows the extent of their suffering, writes Bob Herbert: "More than 15 million Americans are officially classified as jobless. The professors, at the John J. Heldrich Center for Workforce Development at Rutgers, have been following their representative sample of workers since the summer of 2009. The report on their latest survey, just out this month, is titled: 'The Shattered American Dream: Unemployed Workers Lose Ground, Hope, and Faith in Their Futures.' Over the 15 months that the surveys have been conducted, just one-quarter of the workers have found full-time jobs, nearly all of them for less pay and with fewer or no benefits. 'For those who remain unemployed,' the report says, 'the cupboard has long been bare.'
The American political system is corrupted in favor of the upper classes, writes Jeffrey Sachs: http://bit.ly/icPQdh
Extreme sports interlude: Russian-style bungee jumping.
Health Care
Enrollment is lower and costs higher than expected in health care reform's high-risk pools, reports Amy Goldstein: "An early feature of the new health-care law that allows people who are already sick to get insurance to cover their medical costs isn't attracting as many customers as expected. In the meantime, in at least a few states, claims for medical care covered by the 'high-risk pools' are proving very costly, and it is an open question whether the $5 billion allotted by Congress to start up the plans will be sufficient... According to some health-policy researchers, the success or failure of the pools also could foreshadow the complexities of making broader changes in health insurance by 2014, when states are to open new marketplaces - or exchanges - for Americans to buy coverage individually or in small groups."
Real talk: High-risk health-care pools never work very well. The Democrats knew that when they rejected Republican plans that would've put them at the center of the health-care system for sick individuals. Then, of course, they turned around and made them one of health-care reform's early deliverables. I'm skeptical of arguments that say they "foreshadow" larger market reforms, which work very differently than segregating a tiny fraction of sick patients in state-run insurance programs.
Unemployment could cause serious health damage, reports David Wessel: "A new National Bureau of Economic Research paper suggests that increases in unemployment lead to a decrease in fruit and vegetable consumption, with potentially long-lived effects on workers’ health. 'Among those who are predicted to be at the highest risk of unemployment, a one percentage point increase in the resident’s state unemployment rate is associated with a 2% to 4% reduction in the frequency of fruits and vegetable consumption, and an 8% reduction in the consumption of salad,' economists Dhaval Dave of Bentley University in Waltham, Mass., and Inas Rashad Kelly of Queens College in Flushing, N.Y, said...Research by Daniel Sullivan and Till von Wachter finds that mortality rates in the year following a layoff among high-seniority male workers increases sharply."
The White House denies its new regulation on end-of-life care represents a policy change: http://politi.co/gkMbRZ
Domestic Policy
The federal pay freeze is being extended to more civil servants, reports Lisa Rein: "The two-year pay freeze that is now law for federal employees on the pay scale known as the General Schedule will also apply to hundreds of thousands of civil servants whose wages are set under a separate salary system, according to an executive order signed last week by President Obama. Employees covered by the so-called Administratively Determined pay scale - not legislated by Congress but set by federal agencies - make up about 30 percent of the workforce of 2 million. They include public health doctors and nurses, medical personnel in the Veterans Affairs system, administrative law judges and attorneys, auditors and other staff at financial agencies such as the Securities and Exchange Commission."
Nobelist James Heckman is urging early childhood education as a path toward economic growth, reports James Warren: " James J. Heckman, who has won the Nobel in economic science, offered a provocative idea for reducing spiraling budget deficits and strengthening the economy: investing in early childhood development. Mr. Heckman marshals ample data to suggest that better teaching, higher standards, smaller classrooms and more Internet access 'have less impact than we think,' as he put it at the Spertus Institute. To focus as intently as we do on the kindergarten to high school years misses how 'the accident of birth is the greatest source of inequality,' he said. He urges more effectively educating children before they step into a classroom where, as Chicago teachers tell me, they often are clueless about letters, numbers and colors -- and lack the attentiveness and persistence to ever catch up."
Public universities are getting creative about tuition fees: http://on.wsj.com/ifgrV1
Obama should push for Social Security reform, writes Michael Gerson: "Obama's liberal base contends that the Social Security trust fund is not in immediate trouble. But this argument depends on an elaborate accounting trick. The trust fund is not filled with assets - gold bullion and Apple stock. It is filled with debt issued by the government to itself. The surpluses of the trust fund are in fact liabilities for the government as a whole. And these illusory surpluses are regularly used to subsidize the rest of the budget. The scheme begins to collapse in 2037, when promised benefits for Social Security recipients will suddenly drop by about 25 percent - unless the system is reformed...Obama's urgent political need is to polish his image among Independents on spending and debt."
Fun with genetic alterations interlude: Scientists create a singing mouse.
Energy
Congress should stop the EPA from regulating carbon emissions, write House Energy and Commerce chair Fred Upton and Todd Phillips: "The best solution is for Congress to overturn the EPA's proposed greenhouse gas regulations outright. If Democrats refuse to join Republicans in doing so, then they should at least join a sensible bipartisan compromise to mandate that the EPA delay its regulations until the courts complete their examination of the agency's endangerment finding and proposed rules. Like the plaintiffs, we have significant doubt that EPA regulations can survive judicial scrutiny. And the worst of all possible outcomes would be the EPA initiating a regulatory regime that is then struck down by the courts."
The EPA is well within its rights to regulate carbon emissions, writes Brad Plumer: "Over at The Atlantic, Conor Friedersdorf thinks the EPA is 'disregarding [the] separation of powers.' But why? How? The Clean Air Act is a law that was passed by Congress and amended several times. The law originally focused on specific toxins like lead and sulfur-dioxide, but it was intended to be updated periodically, as new science on pollution and human health came in. The Supreme Court ruled that greenhouse gases fit within this framework--and, so, the Obama administration has begun enforcing the relevant laws. Set aside whether you agree with the policy outcome. What about this is constitutionally troubling?"
The Department of Energy is circulating a "list of accomplishments" from the past year: http://bit.ly/gbQFTh
Sen. Jay Rockefeller is challenging the administration on mine safety, reports Andrew Restuccia: "Sen. Jay Rockefeller (D-W.Va.) is raising questions about whether the federal agency charged with mining safety is adequately funded. In a letter to Labor Secretary Hilda Solis, Rockefeller said he is concerned that the Senate’s inability to pass an omnibus spending bill that would have increased funding for mine safety could 'undermine the progress that is being made and further limit MSHA's [Mine Safety and Health Administration] ability to fulfill its mission.' Instead of the broad omnibus spending bill, the Senate passed a narrow continuing resolution that largely funds the government at current levels until March."
John Tierney makes the case for optimism about the world's energy supply: http://nyti.ms/fKyVGN
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: White House.
Worried about inflation? Neither Federal Reserve Chairman Ben Bernanke nor all those traders currently dumping gold seem to be, but that may be the best time to make sure you're covered if prices go haywire.
Some people think the combination of an expansive Fed policy and an expansive fiscal policy make that inevitable. Oh, and as I'm writing this, the United Nations is announcing that world food prices are at an all-time high.
The last time consumer prices went crazy, it happened pretty fast: They rose roughly 3 percent in 1971, 6 percent in 1972, and 12 percent in 1973, according to the Labor Department's Consumer Price Index data. Back then, it took almost a decade and a deep recession to get that genie back in the bottle.
"The rapidity with which that ... changes is actually pretty astonishing," says Hans Olsen, chief investment officer for J.P. Morgan Private Wealth Management.
Olsen's clients already have roughly 25 percent of their portfolios in inflation hedging assets. "You want to skate to where the puck will be, not to where it is," he said in a recent interview.
But not everyone thinks inflation is looming, or that typical inflation-fighters, such as gold, are a good place to keep money right now.
"I'm concerned with investors making big bets on gold" and other traditional inflation hedges, says Dave Loeper of Wealthcare Capital Management in Richmond, Virginia.
Loeper, a former adviser to the Virginia Retirement System, recently studied the behavior of anti-inflation assets during inflationary periods. He concluded that the payoffs for hedging inflation might not be worth the extra trading and holding costs.
"Adding gold and real estate to a 60/40 (60 percent stocks, 40 percent bonds) portfolio looks pretty similar to a 50/50 balanced portfolio," he wrote. "Those extra positions... are certain to add cost... and do not appear to be worth much unless we do have that perfect storm" of an unusual and severe double-spike in inflation.
Loeper looked at the most recent three major periods of inflation and observed that there was not one asset class that produced positive real returns in all three periods. Because gold, in particular, has been bid up as a safety plan during recent low-inflation years, he's concerned that it may not perform its typical anti-inflation role when prices rise.
The yes-it's-coming/no-it-isn't debate about inflation can be seen in market prices and consumer expectations, too. Both bond market swaps and inflation-protected securities seem priced with an expectation that prices will rise a modest 1.5 percent or so, says Olsen.
But consumers responding to the Conference Board's last survey had a different view: They expect prices to rise about 5.3 percent in the next 12 months.
So, what's an investor to do? Here are some tips for preparing for a run-up in prices, which may or may not materialize.
* Let some investments do double duty. Loeper and Olsen agree on this: Some investments already in your portfolio might protect against inflation without being strictly anti-inflation plays. For example, if you own a large-cap stock fund, you probably already own shares of Exxon Mobil Corp. or Weyerhaeuser, two traditional inflation-fighters.
Similarly, Olsen's clients own foreign stocks; they'll be some protection if runaway prices hurt the U.S. dollar more than other currencies.
* Go long on items you'll use. Not all investments happen in your brokerage account. If you're a year or two away from buying a new car, lawnmower or retirement house, think about buying now while prices and interest rates are comparatively low. You can stockpile canned goods and paper towels, too, but not to the extent that you end up on A&E TV's reality show, "Hoarders."
* Keep carrying-costs low. There are now many inexpensive exchange-traded funds which focus on commodities and other anti-inflation strategies. Many are available for an annual expense charge well below 0.8 percent.
* Stay safe. You may lose purchasing power, but you won't lose money by buying individual Treasury inflation-protected bonds and holding them to maturity. Yields are low, but guaranteed to rise as the CPI does. The big risk there? If interest rates rise faster than prices, you could find yourself losing ground to better-yielding short-term securities.
Is inflation the real threat going forward? The answer is nobody really knows for sure. Inflation is already present in China and emerging markets, but it has not picked up significantly in the US and Europe. We are likely to see higher energy prices, but even this is not enough to kick start a severe inflationary episode. Only wage inflation can do this, and to compare what is going on now with the 1970s is simply wrong. Despite December job gains, unemployment remains stubbornly high, unions are not as strong as they used to be, and the structure of the global economy has changed significantly in the last three decades.
Demographics, global competition, the internet, deleveraging, are all factors weighing down inflation. It is possible that we start importing inflation, but even this is debatable. Bottom line: the great inflation debate will continue for quite some time, and while you should hedge against all scenarios, be careful not to jump on any inflation bandwagon. Deflation hasn't died; it might just be hibernating.
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