Mega Millions estimated Jackpot is $640 MILLION
Why buy stocks and bonds?
If one ticket matches all six numbers for the mega-jackpot, the winner would have the choice of receiving the full jackpot in 26 annual payments of about $24.6 million, or a cash option of approximately $462 million.
Let's do the math on the Cash Option:
If the taxes are 40%, then the amount left after tax is $277,200,000.
Friday, March 30, 2012
Wednesday, March 28, 2012
Watching the Ivory Tower Topple
From the Wall Street Journal online:
Spring break is winding down, and college students are heading back to campus—which, if they're at a name-brand school, is the one place, whatever their actual smarts or behavior, that guarantees them approval.
Kids don't put Harvard stickers on their rear windshields, parents do.
But for how long? These schools have ... impressive students, organic dining halls, presidential alumni. To maintain their reputations, however, elite colleges have long relied on limiting access—Harvard's class of 2015 is about 1,700 students, Yale's is 1,300—and that may be coming to an end.
Revolutionaries outside the ivy walls are hammering their way not onto campus but straight into class.
...Last fall, a couple of hundred Stanford students registered for Sebastian Thrun's class on artificial intelligence. He offered the course free online, too, through his new company Udacity, and 160,000 students signed up. For the written assignments and exams, both groups got identical questions—and 210 students got a perfect overall score. They all came from the online group.
...In this new educational model, the shy and the easily distracted get advantages. You can rewind a video and watch whenever and as many times as you like. Plus, teachers save time with computerized grading and students save money. (U.S. college debt, nearly $1 trillion, is bigger than housing or credit card debt.)
Most important, the system promotes driven and talented students who might otherwise be denied access to higher education: a kid in Afghanistan, a young mother in Scotland, an ignored pupil in Detroit. From Mr. Thrun's class (translated into 44 languages) Udacity chose 200 students based purely on performance and, a few weeks ago, forwarded their resumes to companies including Amazon, Bank of America and BMW.
There are glitches, of course, including a high online dropout rate, complaints about speed, questions on accreditation and the predictable whining from old-school alumni who have gotten too cozy in their club chairs.
To be truly egalitarian, classes will need to go not just online but mobile. Still, the upshot of it all is clear: more smart people is better. Just watch that ivory tower topple.
---------
Link: http://online.wsj.com/article/SB10001424052702304636404577293430981335366.html?mod=WSJ_hps_sections_careerjournal
Spring break is winding down, and college students are heading back to campus—which, if they're at a name-brand school, is the one place, whatever their actual smarts or behavior, that guarantees them approval.
Kids don't put Harvard stickers on their rear windshields, parents do.
But for how long? These schools have ... impressive students, organic dining halls, presidential alumni. To maintain their reputations, however, elite colleges have long relied on limiting access—Harvard's class of 2015 is about 1,700 students, Yale's is 1,300—and that may be coming to an end.
Revolutionaries outside the ivy walls are hammering their way not onto campus but straight into class.
...Last fall, a couple of hundred Stanford students registered for Sebastian Thrun's class on artificial intelligence. He offered the course free online, too, through his new company Udacity, and 160,000 students signed up. For the written assignments and exams, both groups got identical questions—and 210 students got a perfect overall score. They all came from the online group.
...In this new educational model, the shy and the easily distracted get advantages. You can rewind a video and watch whenever and as many times as you like. Plus, teachers save time with computerized grading and students save money. (U.S. college debt, nearly $1 trillion, is bigger than housing or credit card debt.)
Most important, the system promotes driven and talented students who might otherwise be denied access to higher education: a kid in Afghanistan, a young mother in Scotland, an ignored pupil in Detroit. From Mr. Thrun's class (translated into 44 languages) Udacity chose 200 students based purely on performance and, a few weeks ago, forwarded their resumes to companies including Amazon, Bank of America and BMW.
There are glitches, of course, including a high online dropout rate, complaints about speed, questions on accreditation and the predictable whining from old-school alumni who have gotten too cozy in their club chairs.
To be truly egalitarian, classes will need to go not just online but mobile. Still, the upshot of it all is clear: more smart people is better. Just watch that ivory tower topple.
---------
Link: http://online.wsj.com/article/SB10001424052702304636404577293430981335366.html?mod=WSJ_hps_sections_careerjournal
Tuesday, March 27, 2012
Fire Up America’s Jobs With Aid for Startups
From Bloomberg.com:
Politicians, even those who vilify corporate America, inevitably laud small businesses.
They are right to appreciate the enormous role that entrepreneurship plays in the U.S. economy, but it’s not clear how much public policy can do to conjure up entrepreneurs.
.... In 2009, new businesses created 2.33 million jobs,
while older businesses destroyed, on net, more than 7 million jobs. The share of Americans working in startups has fallen to 2 percent in 2009 from 3.8 percent in 1979.
Historical View
The history of America’s local economies illustrates the dangers of relying solely on large, established companies. Fifty years ago, the economist Benjamin Chinitz noted that New York appeared more resilient than Pittsburgh, which he credited to the entrepreneurship inculcated by New York’s garment industry.
Chinitz noted that “the average establishment in the apparel industry, for example, has one-sixth as many employees as the average establishment in primary metals.” Since big companies produce middle managers more than entrepreneurs, he said, “You do not breed as many entrepreneurs per capita in families allied with steel as you do in families allied with apparel.”
Chinitz’s claim has been supported by many studies that have identified strong links between initial measures of entrepreneurship, such as average establishment size and the share of employment in startups, and regional economic success, typically measured by employment growth....
... I am less optimistic about the ability of the government to make the U.S. more entrepreneurial by playing venture capitalist or by reducing financial regulations. My colleague Joshua Lerner ... has written an excellent book, titled “Boulevard of Broken Dreams,” which describes the vast number of failed public efforts to boost entrepreneurship.
Train Smart People
... the best way to encourage local entrepreneurship is to attract and train smart people and then get out of their way ... the U.S. can best lay the foundation for long-term entrepreneurship by improving education, so that more Americans acquire the knowledge needed for technological innovation.
An even easier way to engender entrepreneurship is to import it from abroad. The Kauffman Foundation, which is “devoted to entrepreneurship,” notes that, “Immigrants found companies here at greater rates than native-born Americans do, and are disproportionately successful in starting successful high-tech firms.” Kauffman advocates the expansion of visas for foreign entrepreneurs and more green cards to enable foreign students who study science to work in the U.S....
(Edward Glaeser, an economics professor at Harvard University, is a Bloomberg View columnist. He is the author of “Triumph of the City.” The opinions expressed are his own.)
-----------------
Link: http://www.bloomberg.com/news/2012-03-26/fire-up-america-s-jobs-factory-with-aid-for-startups.html
Politicians, even those who vilify corporate America, inevitably laud small businesses.
They are right to appreciate the enormous role that entrepreneurship plays in the U.S. economy, but it’s not clear how much public policy can do to conjure up entrepreneurs.
.... In 2009, new businesses created 2.33 million jobs,
while older businesses destroyed, on net, more than 7 million jobs. The share of Americans working in startups has fallen to 2 percent in 2009 from 3.8 percent in 1979.
Historical View
The history of America’s local economies illustrates the dangers of relying solely on large, established companies. Fifty years ago, the economist Benjamin Chinitz noted that New York appeared more resilient than Pittsburgh, which he credited to the entrepreneurship inculcated by New York’s garment industry.
Chinitz noted that “the average establishment in the apparel industry, for example, has one-sixth as many employees as the average establishment in primary metals.” Since big companies produce middle managers more than entrepreneurs, he said, “You do not breed as many entrepreneurs per capita in families allied with steel as you do in families allied with apparel.”
Chinitz’s claim has been supported by many studies that have identified strong links between initial measures of entrepreneurship, such as average establishment size and the share of employment in startups, and regional economic success, typically measured by employment growth....
... I am less optimistic about the ability of the government to make the U.S. more entrepreneurial by playing venture capitalist or by reducing financial regulations. My colleague Joshua Lerner ... has written an excellent book, titled “Boulevard of Broken Dreams,” which describes the vast number of failed public efforts to boost entrepreneurship.
Train Smart People
... the best way to encourage local entrepreneurship is to attract and train smart people and then get out of their way ... the U.S. can best lay the foundation for long-term entrepreneurship by improving education, so that more Americans acquire the knowledge needed for technological innovation.
An even easier way to engender entrepreneurship is to import it from abroad. The Kauffman Foundation, which is “devoted to entrepreneurship,” notes that, “Immigrants found companies here at greater rates than native-born Americans do, and are disproportionately successful in starting successful high-tech firms.” Kauffman advocates the expansion of visas for foreign entrepreneurs and more green cards to enable foreign students who study science to work in the U.S....
(Edward Glaeser, an economics professor at Harvard University, is a Bloomberg View columnist. He is the author of “Triumph of the City.” The opinions expressed are his own.)
-----------------
Link: http://www.bloomberg.com/news/2012-03-26/fire-up-america-s-jobs-factory-with-aid-for-startups.html
Home Prices Stay Flat as Housing Market Still Struggling
From CNBC:
U.S. single-family home prices were unchanged in January, suggesting the battered housing market continues to crawl along the bottom, a closely watched survey said on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas was flat in January on a seasonally adjusted basis. A Reuters poll of economists forecast a decline of 0.2 percent after December's 0.5 percent drop.
But on a non-seasonally adjust basis, prices tumbled 0.8 percent.
On a yearly basis, prices fared a little better with January notching a 3.8 percent decline compared to the year before, in line with expectations and an improvement from December's 4.0 percent drop.
----------------
Link: http://www.cnbc.com/id/46866705
U.S. single-family home prices were unchanged in January, suggesting the battered housing market continues to crawl along the bottom, a closely watched survey said on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas was flat in January on a seasonally adjusted basis. A Reuters poll of economists forecast a decline of 0.2 percent after December's 0.5 percent drop.
But on a non-seasonally adjust basis, prices tumbled 0.8 percent.
On a yearly basis, prices fared a little better with January notching a 3.8 percent decline compared to the year before, in line with expectations and an improvement from December's 4.0 percent drop.
----------------
Link: http://www.cnbc.com/id/46866705
Friday, March 23, 2012
Hey Wilbur: Long-Term Bond Bubble Getting Ready to Burst
From CNBC:
Long-term government debt, which has provided some of the best market returns for decades, now poses the greatest threat to portfolios, investor Wilbur H. Ross told CNBC.
Ross added his voice to the warnings regarding Treasurys at the far end of the yield curve, cautioning that the inflation specter is about to creep up and hammer the value of fixed-income government securities.
"I think the greatest bubble that is about to burst is the 10-year and longer Treasury, because the idea that inflation is gone forever and for all time, and therefore these artificially low rates can last, is silly," the president of W.H. Ross & Co. said in an interview.
-----------------
Link: http://www.cnbc.com/id/46805820
Long-term government debt, which has provided some of the best market returns for decades, now poses the greatest threat to portfolios, investor Wilbur H. Ross told CNBC.
Ross added his voice to the warnings regarding Treasurys at the far end of the yield curve, cautioning that the inflation specter is about to creep up and hammer the value of fixed-income government securities.
"I think the greatest bubble that is about to burst is the 10-year and longer Treasury, because the idea that inflation is gone forever and for all time, and therefore these artificially low rates can last, is silly," the president of W.H. Ross & Co. said in an interview.
-----------------
Link: http://www.cnbc.com/id/46805820
"Dumb Money" Refuses To Be The Dumb Money For Yet Another Week
From Tyler Durden at zerohedge.com:
Goldman screams it is a generational buy, Larry Fink goes all in stocks, Notorious BIGGS is 90% long, anchors on comedy-financial fusion channels are channeling the producer in their earpiece and screaming at the teleprompter to "sell bonds and buy stocks", even as stocks are at their highest in nearly 5 years and... what happens?
In the latest week, ICI just reported that domestic equity retail funds just saw another $2.9 billion outflow, the 4th consecutive in a row, and the 23 of out 27 outflows during the entire parabolic blow off top phase the market has undergone since October, and instead put another $9 billion in fixed income funds "soaring" yields be damned.
What does this mean? Probably that the stock ramp is about to get uber-parabolic for the simple reason that this is the only thing left in the status quo's arsenal - to keep doing the same old same old, hoping for a different outcome, because this time it's different. Only this time the dumb money either doesn't have the cash to burn, or just doesn't want to participate in a rigged, corrupt, centrally-planned market.
Whatever the case ... Joe Sixpack is done being the "dumb money."
--------------
Link: http://www.zerohedge.com/news/dumb-money-refuses-be-dumb-money-yet-another-week
Goldman screams it is a generational buy, Larry Fink goes all in stocks, Notorious BIGGS is 90% long, anchors on comedy-financial fusion channels are channeling the producer in their earpiece and screaming at the teleprompter to "sell bonds and buy stocks", even as stocks are at their highest in nearly 5 years and... what happens?
In the latest week, ICI just reported that domestic equity retail funds just saw another $2.9 billion outflow, the 4th consecutive in a row, and the 23 of out 27 outflows during the entire parabolic blow off top phase the market has undergone since October, and instead put another $9 billion in fixed income funds "soaring" yields be damned.
What does this mean? Probably that the stock ramp is about to get uber-parabolic for the simple reason that this is the only thing left in the status quo's arsenal - to keep doing the same old same old, hoping for a different outcome, because this time it's different. Only this time the dumb money either doesn't have the cash to burn, or just doesn't want to participate in a rigged, corrupt, centrally-planned market.
Whatever the case ... Joe Sixpack is done being the "dumb money."
--------------
Link: http://www.zerohedge.com/news/dumb-money-refuses-be-dumb-money-yet-another-week
Bank of America Getting Into the Landlord Business
From CNBC:
Bank of America, the nation's second-largest lender, is launching a pilot program this week that will offer a limited number of customers behind on their mortgages to transition from owner to renter.
The bank, which was saddled with thousands of delinquent loans when it took over mortgage giant Countrywide, says that beginning this week "in targeted hard-hit markets," it will offer a limited number of mortgage customers who are facing foreclosure an opportunity to remain in their homes, and transition to tenant status. The program is called “Mortgage to Lease.”
...Borrowers will not be able to apply for the program, rather it is through "invitation" only, and the pilot will be less than 1,000 customers. It will be tested in Arizona, Nevada, and New York.
--------------
Link: http://www.cnbc.com/id/46829774
Bank of America, the nation's second-largest lender, is launching a pilot program this week that will offer a limited number of customers behind on their mortgages to transition from owner to renter.
The bank, which was saddled with thousands of delinquent loans when it took over mortgage giant Countrywide, says that beginning this week "in targeted hard-hit markets," it will offer a limited number of mortgage customers who are facing foreclosure an opportunity to remain in their homes, and transition to tenant status. The program is called “Mortgage to Lease.”
...Borrowers will not be able to apply for the program, rather it is through "invitation" only, and the pilot will be less than 1,000 customers. It will be tested in Arizona, Nevada, and New York.
--------------
Link: http://www.cnbc.com/id/46829774
Friday, March 16, 2012
Watch Bernanke’s ‘Little’ Inflation Capsize U.S.
By Amity Shlaes, author of "The Forgotten Man: A New History of the Great Depression" and "The Greedy Hand: Why Taxes Drive Americans Crazy":
A little is all right. That’s the message Federal Reserve Chairman Ben S. Bernanke has been giving out recently when asked about the evidence of inflation in the U.S. recovery.
Sometimes Bernanke doesn’t even go that far. He simply says he doesn’t see inflation. The Fed chairman recently described the prospects for price increases across the board as “subdued.”
“Sudden” is more like it. The thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.
“Sudden” has happened to us before. In World War I, an early version of what we would call the CPI-U, the consumer price index for urban areas, went from 1 percent for 1915 to 7 percent in 1916 to 17 percent in 1917. To returning vets, that felt awful sudden....
The reason that markets haven’t jumped yet is that the last great inflation and correction happened in the late 1970s and early 1980s, just long enough ago that most adults in the financial markets don’t remember it.
We can debate whether today’s challenge resembles that faced in the early 1980s, or something worse. But one thing is clear: pretty soon, we’ll all be in deep water.
-------------------
Link: http://www.bloomberg.com/news/2012-03-14/watch-bernanke-s-little-inflation-capsize-u-s-amity-shlaes.html
A little is all right. That’s the message Federal Reserve Chairman Ben S. Bernanke has been giving out recently when asked about the evidence of inflation in the U.S. recovery.
Sometimes Bernanke doesn’t even go that far. He simply says he doesn’t see inflation. The Fed chairman recently described the prospects for price increases across the board as “subdued.”
“Sudden” is more like it. The thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.
“Sudden” has happened to us before. In World War I, an early version of what we would call the CPI-U, the consumer price index for urban areas, went from 1 percent for 1915 to 7 percent in 1916 to 17 percent in 1917. To returning vets, that felt awful sudden....
The reason that markets haven’t jumped yet is that the last great inflation and correction happened in the late 1970s and early 1980s, just long enough ago that most adults in the financial markets don’t remember it.
We can debate whether today’s challenge resembles that faced in the early 1980s, or something worse. But one thing is clear: pretty soon, we’ll all be in deep water.
-------------------
Link: http://www.bloomberg.com/news/2012-03-14/watch-bernanke-s-little-inflation-capsize-u-s-amity-shlaes.html
Thursday, March 15, 2012
Breaking up with Goldman Sachs
From Jennifer Rubin on her blog Right Turn at Washingtonpost.com:
I’ve heard of people proposing on the jumbotron at baseball games ... but resigning on the op-ed page of the New York Times? Greg Smith, definitely in the 1 percent, quit his job at Goldman Sachs because the cads there were . . . drum roll . . . interested in making money. Lots of it. All the time. And from really rich people.
I’m appalled, too. At Smith, not those profit hounds at Goldman Sachs....
Oh my heavens: make as much money off your clients as you can??!!
Next thing you know car dealers will be trying to sell you cars others don’t want, realtors will be pushing you to buy a more expensive home (shhh, don’t tell — but they work on a commission) and your kids will be selling you magazine subscriptions you don’t want. (This month’s “Travel+Leisure” sits on the counter.)
Put aside the jerkiness of quitting on the pages of a newspaper, and you still have to wonder if Greg Smith is really this silly or is playing silly, well, to get a column in the New York Times (which remains shocked by the entire capitalism thing) and a book deal or an appearance on Oprah....
This is victimology to the nth degree. He’s made gazillion dollars and now has decided its beneath him. And for this he gets space in The Gray Lady.
I can hardly wait for President Obama to call him and tell him his parents should be proud of him....
-----------------
Link: http://www.washingtonpost.com/blogs/right-turn/post/breaking-up-with-goldman-sachs/2012/03/14/
I’ve heard of people proposing on the jumbotron at baseball games ... but resigning on the op-ed page of the New York Times? Greg Smith, definitely in the 1 percent, quit his job at Goldman Sachs because the cads there were . . . drum roll . . . interested in making money. Lots of it. All the time. And from really rich people.
I’m appalled, too. At Smith, not those profit hounds at Goldman Sachs....
Oh my heavens: make as much money off your clients as you can??!!
Next thing you know car dealers will be trying to sell you cars others don’t want, realtors will be pushing you to buy a more expensive home (shhh, don’t tell — but they work on a commission) and your kids will be selling you magazine subscriptions you don’t want. (This month’s “Travel+Leisure” sits on the counter.)
Put aside the jerkiness of quitting on the pages of a newspaper, and you still have to wonder if Greg Smith is really this silly or is playing silly, well, to get a column in the New York Times (which remains shocked by the entire capitalism thing) and a book deal or an appearance on Oprah....
This is victimology to the nth degree. He’s made gazillion dollars and now has decided its beneath him. And for this he gets space in The Gray Lady.
I can hardly wait for President Obama to call him and tell him his parents should be proud of him....
-----------------
Link: http://www.washingtonpost.com/blogs/right-turn/post/breaking-up-with-goldman-sachs/2012/03/14/
Wednesday, March 14, 2012
"Why I Am Leaving Goldman Sachs"
From the New York Times online:
By GREG SMITH
"Today is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for....
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence....
I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them....
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail....
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave...."
_________
Link: http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html
By GREG SMITH
"Today is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for....
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence....
I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them....
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail....
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave...."
_________
Link: http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html
Thursday, March 8, 2012
Americans Don't Benefit From Fed Inflated Asset Prices
From Real Clear Markets:
There are few who would deny that the rates of return for stocks, real estate, and business equity depend primarily on the strength of the economy and how fast the economy is growing. Board members at the Federal Reserve, however, believe the converse: that the strength and pace of the economy is primarily dependent on the rates of stock, real estate, and business returns.
As such, their accommodative monetary policies target and inflate these very assets before the underlying economy justifies their returns. All Americans benefit from a healthy economy that provides higher wages, more purchasing power, and gains in productivity and innovation. Few benefit from higher asset prices when targeted and juiced by loose money.....
The Dow's recent rise above 13,000 arguably owes much of its appreciation to the accommodative monetary policy of the Federal Reserve. This should not, however, be a reflection of an improving economy as Fed chairman Ben Bernanke is so quick to reference and take credit for. Much of the profits and investments of Dow Jones and S&P 500 companies take place and stay in other countries and do not benefit Americans who are themselves not invested....
A growing economy only benefits the economy as a whole, and thus those at the bottom, if growth comes in the form of operational innovation and gains in productive efficiencies. This means the ability to do more with less, to grow by leaps and bounds while driving down the cost of inputs.
This was the case in the ‘80s and ‘90s, where for two decades technological and industrial innovation and efficiency gains allowed America to grow tremendously while having little to no effect at all on the price of commodities and the relative cost of labor. Real mean incomes grew nearly every year between 1981 and 2000 and 38 percent over the entire period according to the U.S. Census Bureau. Real wealth was created. The economy grew as a whole.
Then loose fiscal and monetary policies entered the story, and over the past decade the exact opposite has occurred. Commodity prices are skyrocketing, real mean incomes are at 1997 levels; having fallen nearly every year since 2000 according to the Census, and yet the relative cost of labor in America is still high.
Real wealth is not being created.
Supporting stocks, business equity, and real estate through accommodative monetary policy merely accumulates wealth at the top and starves the remainder of the population from innovation and efficiency gains so needed for benefits to be felt by all members of the economy....
------------
Link:
http://www.realclearmarkets.com/articles/2012/03/08/middle_class_america_doesnt_benefit_from_inflated_asset_prices_99554.html
There are few who would deny that the rates of return for stocks, real estate, and business equity depend primarily on the strength of the economy and how fast the economy is growing. Board members at the Federal Reserve, however, believe the converse: that the strength and pace of the economy is primarily dependent on the rates of stock, real estate, and business returns.
As such, their accommodative monetary policies target and inflate these very assets before the underlying economy justifies their returns. All Americans benefit from a healthy economy that provides higher wages, more purchasing power, and gains in productivity and innovation. Few benefit from higher asset prices when targeted and juiced by loose money.....
The Dow's recent rise above 13,000 arguably owes much of its appreciation to the accommodative monetary policy of the Federal Reserve. This should not, however, be a reflection of an improving economy as Fed chairman Ben Bernanke is so quick to reference and take credit for. Much of the profits and investments of Dow Jones and S&P 500 companies take place and stay in other countries and do not benefit Americans who are themselves not invested....
A growing economy only benefits the economy as a whole, and thus those at the bottom, if growth comes in the form of operational innovation and gains in productive efficiencies. This means the ability to do more with less, to grow by leaps and bounds while driving down the cost of inputs.
This was the case in the ‘80s and ‘90s, where for two decades technological and industrial innovation and efficiency gains allowed America to grow tremendously while having little to no effect at all on the price of commodities and the relative cost of labor. Real mean incomes grew nearly every year between 1981 and 2000 and 38 percent over the entire period according to the U.S. Census Bureau. Real wealth was created. The economy grew as a whole.
Then loose fiscal and monetary policies entered the story, and over the past decade the exact opposite has occurred. Commodity prices are skyrocketing, real mean incomes are at 1997 levels; having fallen nearly every year since 2000 according to the Census, and yet the relative cost of labor in America is still high.
Real wealth is not being created.
Supporting stocks, business equity, and real estate through accommodative monetary policy merely accumulates wealth at the top and starves the remainder of the population from innovation and efficiency gains so needed for benefits to be felt by all members of the economy....
------------
Link:
http://www.realclearmarkets.com/articles/2012/03/08/middle_class_america_doesnt_benefit_from_inflated_asset_prices_99554.html
Subscribe to:
Posts (Atom)