Yves here. This post gives a good recap of where QE is and isn’t having an impact on the economy, and the “isn’t”s clearly prevail.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Originally posted at MacroBusiness
More from Eliott Clarke of Westpac today on why QE is dangerous road:
Each month, the ISM indexes are amongst the most watched and reported market releases. As has been the case throughout this recovery, ‘positive’ readings for both of these surveys in 2013 have sparked optimism around the outlook, irrespective of what other data may indicate. In November, the manufacturing PMI rose to 57.3, a level only surpassed in two periods during the past ten years – late 2010/early 2011, and almost a decade ago in 2004. Further, both the production and new orders indexes have risen to be comfortably above 60.
The manufacturing ISM outcomes noted above are strong relative to history. Indeed, with respect to GDP growth, ISM notes that the current level of the manufacturing composite is consistent historically with growth circa 4.7%, while the average level of the composite through 2013 corresponds with real growth of around 3.6%. Both of these growth rates are well above trend US growth, circa 2.25%, and the 2.2% average pace of growth experienced throughout the now four-year long recovery. The non-manufacturing ISM survey also saw robust gains in 2013, but these have faded, with the composite now back at long-run average levels.
The disparity between the manufacturing PMI and real GDP outcomes is difficult to justify without casting doubt over the index’s accuracy; to a lesser extent, the same can be said about the non-manufacturing ISM, with its 2013 burst to above-average levels out of kilter with the sub-trend domestic final demand growth of mid-2013. Arguably, the disparity in both sectors is being driven by two key factors: ISM respondents are typically larger firms with global exposure and comparatively strong market positions; also, the larger rise in production and activity versus employment points to a degree of spare capacity, limiting the pass through of momentum to the broader economy.
To test this thesis, it is instructive to consider the NFIB small business survey. Firms surveyed by NFIB arguably focus more on the domestic economy than export markets. Being smaller, their market position is also likely to be weaker. Cross referencing the results of this survey against the ISMs then provides a means to assess the breadth and depth of the strength reported by the headline-grabbing ISM surveys.
Starting with aggregate activity, whereas the ISM measures have generally pointed to conditions in 2013 being above average, this is not true of the NFIB ‘optimism’ composite which is well below its long-run average. Of the components, despite improving through 2013, ‘general business conditions’ and ‘outlook for expansion’ both remain well below average levels, indicative of very subdued economic conditions. Earnings are also sub-par, a function of poor volumes and margin concerns – actual prices and sales are both below average. It is little wonder then that capital expenditure and hiring plans remain soft.
Arguably, not only are these comparably smaller firms unable to benefit from global demand, but they are also finding themselves at a competitive disadvantage against larger competitors in the domestic market. As is the case with households, herein we again see a disparity in conditions across US firms, limiting aggregate momentum in the US economy to a trend pace – at best. It is also worth noting that, despite hiring plans remaining below average, actual small business employment has remained around average levels for the past two years; ergo, as for large businesses, small businesses also likely have excess capacity, limiting their need for additional staff.
Aside from the detail on activity and employment, the NFIB survey is also of use when considering smaller firms’ appetite for debt to fund expansion as well as banks’ willingness to provide the necessary funding. As at October, just 6% of respondents saw now as being a “good time to expand facilities”. It is hardly surprising then that “a record 66% expressed no interest in a loan” and that a record-low 28% of business owners reported borrowing on a regular basis. In terms of supply, a net 6% of regular borrowers saw loans as being “harder to get” compared to their last attempt, and a net 8% expect a further deterioration – a tightening in credit conditions. This is yet more evidence of QE’s very limited effectiveness in spurring activity in the real economy.
Before concluding, it is worth noting that, just as the confidence of big business is not shared by small business, it is also not shared by households. October’s fiscal malaise and higher mortgage interest rates obviously had a material impact on households, as evinced by the recent deterioration in both sentiment measures. This is despite households remaining relatively optimistic about the labour market, frequent new highs for equity markets, and the ongoing (albeit arguably frail) recovery in house prices.
The take out from this analysis is that market participants and policy makers alike would be well advised to remain cautious on the outlook for the real economy. Main Street remains under considerable pressure, limiting growth opportunities in this household centric economy.
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It seems obvious that a main purpose of QE is to cloak the fiction that the financial sphere creates anything – and hide the lack of bank activity (liquidity) in this crisis.
Additionally, I cannot get my head around the huge figure of 85bil. monthly – how is it that enough MBS exists in the firmament to satisfy this FEDS insatiable demand? Or are the chosen banks creating new fictions monthly to get paid $$$?
That makes me wonder too. How many loans are made monthly to justify $85 billion? We can’t know since the banks book are secret. What we can know is what they want us to know. I just tried to google how many loans are made monthly and yearly in the US and there are no good links for data. Hmmmm. The Fed is still padding the banks reserves, estimated at over $2 trillion 2 years ago?
Does this have anything to do with (reported 2 years ago):
http://www.opednews.com/articles/BoA-Dumps-75-Trillion-In-by-Ralph-Lopez-111108-355.html
“Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.”
If the Fed cannot cut an 85 billion dollar monthly QE to a 84.999999999 billion dollar QE, it should send a very clear signal that they don’t even believe in their own Ponzi scheme. They just want to retire and die before it crashes and leave the roadkill to everyone else. We have an economy built on the 70s game KerPlunk, in which sticks hold up marbles and the loser is the one that pulls the stick that causes it all to fall down. Meanwhile, the greatest wealth transfer in the history of the solar system continues unabated. They will then cry poverty and take everyone’s Social Security and 401Ks.
The “Kerplunk” this time will be the bankster CEO’s heads, as I think they seriously misjudge the mood of the public re a repeat performance of the 2007-2013 blockbuster comedy farce “On Being At The Fed”.
Or how much of that $85B/mo represents MBS’s that are total crap that aren’t worth the paper they are printed on.
My gut tells me that QE will not be dropped until most big underfunded pension plans get restructured… Detroit, Chicago, etc.
You know… all those plans which pay their retirees more than those currently working. And events there seem to be accelerating.
http://www.institutionalinvestor.com/Article/3080337/Investors/Bank-of-Englands-QE-Hit-Underfunded-Pensions-Badly.html
I’m sure it’s part of THE plan.
Is there a PLAN, or is this all a series of selfish stop-gaps that are simply intended to avoid bank insolvency until the next crisis hits and another set of stop-gaps gets implemented? I really don’t know. Certainly it all favors the few over the many, the investor class and the financial elite over everyone else, but that may be a pure byproduct of who is making the decisions and what their narrow, short-term interests are. Is it them trying actively to loot us, or them trying desperately to save themselves at our expense? Perhaps it doesn’t matter, but it would be interesting to know what the decision makers are actually thinking (or are they just impulsively and recklessly trying to save their own skins, to hell with plans, the system, or any long-term interests).
I think it’s a mish-mash of everything you stated but I do believe there is a plan to cut DB pensions.
Is that relish at the prospect of the devastation of DB plans I detect when you say “You know… all those plans which pay their retirees more than those currently working.” ? Or are you (correctly) bemoaning the fact that corporate globalization has virtually destroyed wages (and benefits) for more recently hired employees?
I am disgusted by how the pensions have been managed. Too many retirees are enjoying benefits that have been gamed. The pension system is broken and the longer the charade goes on, the less money for everyone else.
I just want a cleanup.
In the case of Detroit, the average pensioner receives $19K/yr. IDK, this might be more than the average employee now earns. The pensions there are not the cause of Detroit’s insolvency and reason for bankruptcy filing either. The primary cause was/is a demand clause on 20 yrs interest from the city’s rate swaps deal being triggered by any of three pre-specified events (all three were triggered, with help from the state). I don’t recall the exact amount Detroit was required to immediately cough up, but it was in the hundreds of millions.
Was it Chicago that hasn’t made a contribution to employee pension plans for ten years?
LucyLulu,
You should give this article a look as it addresses the 19k figure you mention.
http://city-journal.org/2013/eon1204sm.html
While that $$ amount may be somewhat accurate it does not at all tell the entire story. The unions, pension recipients, current city workers, elected officials and basically the entire apparatus continually dipped into the funds to give themselves unjustified (you could argue theft) financial bonuses.
These bonuses (which are a huge factor in undermining the solvency of the pensions now in jeopardy) were openly endorsed by the unions and elected officials. It was “free” money and they plundered it…… now they are crying.
The problem as I see it is…
1) the unions and pensioners want to blame it all on the banks or greedy politicians or some other boogeyman
2) the bond holders, banks and other financially vested parties want to blame it on the unions and pensions
3) the politicians cater to whichever group will help them get reelected, while not acknowledging the truth/reality
THEY ARE ALL TO BLAME, a very inconvenient truth none of them want to admit
Aside from the detail on activity and employment, the NFIB survey is also of use when considering smaller firms’ appetite for debt to fund expansion as well as banks’ willingness to provide the necessary funding. As at October, just 6% of respondents saw now as being a “good time to expand facilities”. It is hardly surprising then that “a record 66% expressed no interest in a loan” and that a record-low 28% of business owners reported borrowing on a regular basis. In terms of supply, a net 6% of regular borrowers saw loans as being “harder to get” compared to their last attempt, and a net 8% expect a further deterioration – a tightening in credit conditions. This is yet more evidence of QE’s very limited effectiveness in spurring activity in the real economy.
That’s the crucial bit. The monetarists always think that you can make the economy grow by shoving credit down the throats of people wandering in the desert of non-existent opportunity.
Dan you’re a thoughtful guy and probably more focused than me. What confuses me is the nature of the origins of the “opportunities”.
A few facts help illuminate the situation: nature is a constant, the world is a constant sphere, all the rocks and trees and rivers are constants, more or less. Money is simply a form of social imagination. In the aggregate, it cannot be “lost” or “run out of”. It is not a Newtonian particle. Debt is only a form of imagination. But it’s a potent form, like jealousy or envy or a sense of self and identity. And it certainly shapes behavior. But nothing is real except nature, cooperation and conflict. Everything else — even money and debt and “govermint” — is simply malleable imagination that regulates cooperation and conflict.
The ‘opportunities” arise when people somehow find ways to form themselves into cooperational structures that allow them to service and serve each others’ needs. These structures can arise autonomously or in a directed way. They certainly can arise without money, as the history of world cultures shows. But in those cases they typically arise around the harvesting of nature and are mediated through social thoughts structures called “myths” or “totems and taboos”. Now those have given way to “money”– the great operative myth of our time.
The current challenge we face is how a society can form healthy cooperational structures when autonomous formation seems to be constipated. And when existing structures, i.e. “industries, companies, products and services” seem generally acceptable to society. People don’t want new structures, new things or a revolution, they want access to the things that are already there that they see other people have. The conclusion is that such structures need to be directed or commanded into existence by the ‘super-ego” of government action. Since the collective consciousness cannot, by itself, form these structures in a sufficently energetic way.
This is a complex situation. Commanded action by government violates the myth of freedom. But inaction violates the myth of fairness. Freedom and fairness seem to be in opposition. Unfortunately, an entire new lexicon is required to mediate this dilemma, but such a lexicon is nowhere in sight. It’s like somebody stammering for lack of words to express their thoughts and then punching out the wall, breaking their fist in the process. Then what? Faaaaak.
I think what you say makes a lot of sense. It is complicated by the fact that our collective malaise is not, in my view, economic but cultural. From a collective POV, we are confused. We don’t know what we want other than escapism. I think we want, at some subconscious level (always disregarded by most American intellectuals), want a no-growth steady-state system at this time until we can come up with some new forms and new ideas. I think it has to start with approaching a new moral philosophy–is it indeed true that we ought to pursue our own individual self-interest or is there something about being connected and interrelated that we are missing?
In my view the cult of individualism is as absurd as the cargo-cults. People are social animals who are deeply connected to their social milieu and if they don’t have one it will be created for them. This is the crisis–we live in a culture that provides artificial communities, i.e., the entertainment media, social media, “news”, and so on. They use profit-making entitites to supply what any healthy human community provides for free. There is no logical reason for this and Americans must lead the world in debunking this weird notion that we have to pay to have fake everything when the real is available. This is why we are, collectively, losing our ability to discern, to evaluate, to take up the great variety of sane solutions to our collective problems through the fabulous power of our technology. Indeed, if it is sane, logical and based on reason the solution will be ignored.
Both my mother and MIL keep on saying that they worked hard for their money while they had a good life which permitted them to stay home to care for their children. They are convinced they (their husband) paid enough taxes in their lives to cover what is owed to them.
When I tell them that one of my friend’s father died in a mine making less money than their husbands and that they did not pay enough taxes since there is a huge public debt, they shut me off. It is the fault of others with no values.
You can’t say that money has no meaning. People have a balance sheet in their head and money is central to the balance.
I would never say money has no meaning. In fact, I said just the opposite in as plain a language as can be written. The challenge is to understand the nature of this meaning and how that effects policy options. I’m done with this one! It’s back to bitching about the Doomers and Gloomers and how they kept me from getting rich quick.
Yes and no. You said it’s a social imagination.
The thing is that some people really worked hard for their money. Others not so much.
So yes the value of money is based on imagination but it also based on real work and effort.
I think it was Ian Fraser who recently quipped something to the effect of, “if wealth were the result of hard work then every woman in Africa would be a billionaire.” Pretty much sums it up.
Re your market participation, craazy, what would Charles Bukowski have done?
Plus, you never know when the racketeers are going to pull the plug on their engineered bubbles.
He would have bet on the horses, lost it all, gone home, screwed a prostitute, gotten drunk, woken up with a headache, then composed a poem of such beauty and magnificence you read it years later and just say “Wow.”
It’s good if you can do it. A little piece of something that lasts.
Sure, 3,603,344 people have watched this cheezy TV clip of Amy Winehouse I just stumbled upon.
http://www.youtube.com/watch?v=yosuht3rI3o
(I can see you’ve been riding the bus again).
Holy Velveeta, that is so cheezy you could put it on crackers with spoon!
I think one important factor in economic stagnation is that an economy can get stuck in a low output Nash equilibrium. Suppose there are a thousand companies in some imaginary economy and a bunch of unemployed resources and workers. Suppose the economy has persisted in this state for some time, sales are steady and there is no demand pressure coming from consumers. Each company has the option of hiring more workers and expanding their production. Doing so imposes a cost on them. Will it pay off? Only if most of the other companies do the same thing. If they all expand, then there is more output of every kind, monetary claims on which the newly employed workers can then take into the market to exchange for other kinds of output. But if only a few companies expand while the others stand pat, there will not be adequate demand for their new output and the expanders will suffer a loss. In game theory terms, the economy is facing a massive coordination problem: there are different Nash equilibria, some with high employment and high capacity utilization, some with low employment and low capacity utilization. The economy can move from the sub-optimal equilibrium to a higher one if everyone acts in concert to expand output. But no individual producer has any control over the behavior of other producers. And so the individual producers will not expand unless they have a high degree of confidence that others are expanding at the same time.
This is where government can play a role. The government is not a financially concerned profit seeker. It is not one of the private firms “stuck” in the low activity equilibrium. It can enter the marketplace by either engaging in some production of its own or by placing giant and loudly communicated orders for goods and services. This will immediately expand the hiring and production of firms directly selling to the government, and those firms signals about their intention to expands, and their workers’s signals about their increased consumption desires, will “trickle up” through the economy in a cascade.
I think mainstream microeconomists understand this stuff pretty well. But a lot of macroeconomists, who sneer at “microfoudations” seem to have romantic views about economic production and risk. They think businesses are full of bold adventurers and visionary titans taking mighty leaps of faith and practicing a “build in and they will come” philosophy on their field of economic dreams. But most businesses have a low appetite and tolerance for risk, and tend to respond to clearly detectable market demand. That is, they innovate and expand production only when they are pretty damn sure the customers are already out there. Improving credit terms can help at the margin, but is not going create customers ex nihilo.
But that was the mistake to begin with – the notion of “growth” as the one and only solution to any “economic” problem formed in the same soup as the period WWI-Depression-WWII. An economy producing at global war levles and speed was defined as “normal”. Instead of standing back, realizing technology had created conditions which could have, and should have, revolutionized our thinking about “jobs” vs “work” and “wages” vs “income” and “growth” vs “redistribution”.
As a result of that monumental error, liberal economists have sanctioned ever-greater stupidity in the quest for “growth” no matter what is “growing” or how; “jobs” no matter how shitty, wasteful, redundant so long as some “living – barely – wage” is generated, and so on.
So you have the US “producing” $16 trillion in GDP, a far higher percentage of global wealth that anyone else, yet instead of finally tackling the grotesquely skewed income distribution curve, and long after the population stopped growing rapidly the “solution” is to keep on accelerating the entire ship, not stop and think about where this ultimately takes us – ever more serious conflict over global resources and ever more severe damage to our planet – an outcome which clearly requires a different solution, i.e., guaranteed access to a suite of social “goods” on board, including opportunities to work usefully, study, perform, create, etc. if desired, but not required for a decent income or successful voyage.
We can and will be happier with a much smaller footprint if we are assured we are going to save our futures. Not tackling what we all know needs tackling is a big piece of why “investors” are disinclined to invest. Just ask around.
I think that the differences seen between the ISM and NFIB surveys have not been sufficiently explained. I doubt that external demand makes all the difference since the world is experiencing weakening demand. What about dollar exchange rates? Are american companies increasing market share abroad? Alternatively, there migth be fiscal benefits that only companies in the ISM enjoy.
I’ve not seen anything in a LONG time that policy makers in general are particularly concerned about the American economy. Global economy seems to be where it is at, and any support, artificial or real, only goes to those companies that are global.
Other than trying to make sure that the American economy is “healthy” enough to keep buying whatever it is that is being sold, there is no interest. So it doesn’t surprise me that the focus is not on any measure of a more localized economy.
Like many things in America (although not limited to America necessarily), there are competing forces within our own sphere that both seek to seemingly attempt to help the situation yet at the same time seemingly attempting to destroy us. The ACA fits this bill. Although the ACA like so many other things is just con devised by those who cannot make an honest buck.
Paul Craig Roberts has a knack for econ-splainin’ QE for us Laypersons. Recently he explained QE:
“The Money Changers Serenade: A New Plot Hatches”
http://www.paulcraigroberts.org/2013/11/29/money-changers-serenade-new-plot-hatches-paul-craig-roberts/
PCR gives a summary of Geithner’s career, then discusses QE, and then reveals Larry Summer’s new Bail-In idea for American Taxpayers.
If the Summer’s information doesn’t make the case for Bitcoin, I don’t know what does.
China just denounced Bitcoin as a virtual commodity, not a real currency. Stake thru the heart. The Bitcoin movement really is analogous to the gold rush, except that it is virtual. And speaking of gold, PCR’s advocacy of gold is the only thing I do not like about him. Since gold is as precarious as Bitcoins in that neither commodity is backed by anything. Key here would be a good definition of the word “anything” but I don’t have one. Anyway, I like PCR too on all his political insights.
Gold has the advantage of at least the historical basis of value. Whether that will hold true in the future is anyone’s guess, but there is still quite a root structure in the psyche. In the end, there is no real basis for any of our exchange mediums.
turtles all the way down
http://en.wikipedia.org/wiki/Turtles_all_the_way_down
Not quite. Fiat is backed by the taxation authority and power of government and also because it can extinguish the debt the counterfeiting cartel, the banks, are allowed to drive us into it. And even bank credit is backed, by our promises to repay it OR ELSE.
Otoh, gold by itself is backed very flimsily. Even its commodity value can be damaged by the reduced demand of a bust.
I’m disappointed in PCR if he’s a gold-bug – I thought he was smarter.
I do not think PCR is a gold bug, Beardy. Here:
http://www.paulcraigroberts.org/2013/05/18/washington-signals-dollar-deep-concerns-paul-craig-roberts/
He seems to be very focused on the collapse of the US dollar.
That articles indicates PCR DOES have a gold or silver fetish, imo. Both gold and silver are in a bubble UNLESS they become fiat by government decree.
The dirty secret of PMs is that they do NOT back fiat but that the taxation authority and power of government backs PMs should fiat be made from them.
Taxation authority of fiat by our current vs. taxation of gold by TPTB in ages past, the only difference is social context. OK, fiat is more flexible, but that is only because it is more virtual. We’re not even talking about paper anymore, we’re talking about bits at this point.
Regardless of what the medium is, it all relies on mutual trust in the validity of that medium.
turtles – all the way.
The medium DOES matter unless you think deliberate waste to profit special interests is good. Do you?
Inexpensive fiat is the ONLY ethical money form for government debts! Every hear of the Tally Stick?
So where do we stand today in the USA? We have fiat, we have waste, and the only segment in our country getting ahead are the special (inside) interests – and not by coincidence, but by design of which fiat manipulation seems to be the main vehicle.
I’m no money expert, nor a gold bug (although I do have a hedge) – just someone trying to come to an understanding who as of now feel nothing but sand under my feet.
Gold is merely a previous tool of banker oppression so going back to it won’t help. Instead, we need to eliminate all explicit and implicit privileges for the banks.
As for the possibility of fiat being abused, the solution is that it only be legal tender* for government debts, not private ones, and that genuine private currencies for private debts only be allowed.
*But voluntarily useable for private debts too.
Regardless of what the medium is, it all relies on mutual trust in the validity of that medium.
Tim, there is no medium of exchange. There never was. That is one of the most important ideas that Mitchell-Innes expounded in his great papers. Money isn’t trust in the validity of some medium. Money is just pure, abstract trust, credit, promises, owing (or being owed). Period. A purely immaterial social relationship between economic entities. We quantify and denominate this trust and call it e.g. “dollars”.
If we have a gold standard, say, then we set a price for gold in terms of this quantified trust. A gold standard is just a government buying and selling a not intrinsically valuable metal, gold – for its intrinsically valuable “fiat” money. That is what has backed gold throughout the millennia – fiat money. And in turn what has backed the fiat money is the fiscal operations of the government – its issuance, e.g. in return for work for the public purpose, and its taxation = purchase of private benefits with the “fiat money” issued by the government.
@ susan— if you believe what you wrote about Bitcoin, then you do not actually understand it.
If you need a primer on the actual-factuals of Bitcoin, I am sure I can find one for you. What you just wrote is exactly what TPTB want you to believe. Since when have you started listening to them?
I do agree with you OMH that the financial industry has usurped our sovereignty. We are their captives. But I see the solution as restoring our sovereignty over our currency – a public banking system. And sovereignty is also my problem with Bitcoin because it is above sovereignty. As long as Bitcoin remains above sovereignty (i.e. the government and its authority to tax a willing citizen) I don’t see how it can be used as a currency. I do agree with the Chinese that Bitcoin is a commodity. As such it is inflexible and does not lend itself to the legitimate financing of the business of a nation. I agree it is immune from the inflationary pressures of a debased currency, but it is also susceptible to the maintenance of a strong currency and that then makes Bitcoin too volatile as well.
Also too, I am at a loss to find that PCR promotes Bitcoin. This is all I can find on his perspective:
“Bitcoin Note: On May 16, PCWorld reported: “The seizure of funds of the largest bitcoin exchange, Mt. Gox, was triggered by an alleged failure of the company to comply with U.S. financial regulations, according to a federal court document. The U.S. District Court in Maryland on Tuesday ordered the seizure of Mt. Gox’s funds, which were in an account with Dwolla, a payments company that transferred money from U.S. citizens to Mt. Gox for buying and selling the virtual currency bitcoin.”
Reports subsequent to my column suggest that instead of funds being seized, a money transfer mechanism was shut down. Whatever happened, the government has demonstrated that it can disable or destroy Bitcoin at will. Bitcoin might be tolerated unless it becomes widely used. If the government regards Bitcoin as a refuge from the dollar, it can simply have its agents buy up the Bitcoins, driving the price skyhigh, and then dump the purchases all at once, just as tons of gold shorts were dumped on the gold market.
Bitcoin showed its vulnerability in April when, according to news reports, someone gave away $13,627 worth of Bitcoins, and Bitcoin values crashed from $265 to $105. Some people who watch this market concluded that the exercise was a covert central bank stress test.
The fact that I reported on Bitcoin does not mean that I oppose Bitcoin. The point of my article is to demonstrate that the government will take all steps to protect the dollar from Quantitative Easing.”
It seems he does not promote nor oppose Bitcoin. If you know more about his stance on Bitcoin, I would be much obliged for the info. Thanks!
http://globaleconomicanalysis.blogspot.com/2013/12/auto-lending-standards-plunge-new-car.html
“Lenders made 26.04 percent of their loans on new cars to buyers with subprime credit scores, up from 24.84 percent a year earlier, said Experian, which collects car title and financing information to compile its reports. For loans on used cars, the portion to subprime borrowers rose to 54.95 percent from 54.43 percent.
As the lenders made bigger loans, they also extended credit further beyond the value of the vehicles. The average loan-to-value on new cars rose to 110.6 percent, up by 1.17 percentage points. On used cars it rose to 133.2 percent, up by 2.18 percentage points.
Auto lenders often provide loans that exceed the value of cars they are financing because borrowers want cash to pay sales taxes and fees.”
We’ll reach escape (or is that “enslavement”???) velocity when every single person has 100$ of debt to 1$ of income. After all, you all have livers, kidneys, lungs….and a good portion of you have testicles that are just hanging around not doing anything. Plenty of opportunities to extract value…
funny guy
Wages of Integrity
Of course the prevailing wage of Empire City is corruption, with window dressing. You cannot change the law of gravity, like seeks like. But you can employ it, by setting your distance to provide for your family, which is how nations are built, and what the old-timers can teach you, implicitly, or you can compete to be employed by it, as an automaton replicant.
That sun out there is a crushing machine. Gold, like all the other PERIODIC elements, is a tail-end byproduct. You cannot learn to navigate space by running away from gravity in fear. To the extent you barter your self identity to join a known group, you will always fall to its least common denominator.
“He who walks with integrity walks securely, (But he who perverts his way will be known); And the light shines in the darkness and the darkness did not comprehend it; He shall pluck my feet out of the net; He himself will dwell in prosperity, And his descendents shall inherit the earth.”
The Bible is talking about Empire City water:
“How you have perished, O one inhabited by seafaring men, O renowned city, Who was strong at sea, She and her inhabitants, Who caused their terror to be on all her inhabitants! Now the coastlands tremble on the day of your fall; Yes, the coastlands by the sea are troubled at your departure.”
“The River is mine, and I have made it. Indeed, therefore, I am against you and against your rivers…; The strong among the mighty Shall speak to him out of the midst of hell. The weak you have not strengthened, nor have you healed those who were sick, nor bound up the broken, nor brought back what was driven away, nor sought what was lost, but with force and with cruelty you have ruled them; On the day that I cleanse you of your iniquities, I will also enable you to dwell in the cities, and the ruins shall be rebuilt.”
Life is not a choice between the politics of Silicon Valley and a street fight in Bagdad. Those are two sides of the same coin, economic death. Choose C. All digital choices, and their derivative multiple choices are false, except one, your spouse.
Build a city on the sea, build a city under the sea, build anything you like, but your vision must allow 7 billion other people to exceed their expectations of themselves as well, if you want to build a nation, be the leader of the free world, and avoid the gravity of war.
The world doesn’t need a more efficient food processor, or a program that will complete 3 million transactions per hour to arm the tax collector. Put up, shut up, or prove Kissinger correct, that you cannot escape an irrational divide and conquer civil contract, a marriage of expedience, ruling out love for your neighbor, that best is the enemy of better, which is always the choice presented, ruling in the status quo.
Do you remember what Mrs. Kennedy said about why she was still wearing that blood-stained dress?
The only difference between governments, regardless of ism, is the number of social class event horizons. America is clearly faltering and taking all the old empires down with it. Left to its own designs, consumption may only follow the law of diminishing returns, to income disparity. The empire blows itself up every time, by shorting out production, one expedient step in the same direction as the last, more consumption. It takes two to climb.
Your body is an antenna, split into many I/O channels, many more than you are led to assume, and the empire is pretty much limited to its oral and visual components, because it is always mapping the inside of an increasingly irrelevant box, and with which it seeks to drown/short out the rest in you, with all manner of Pavlov swaps.
The reason the old-timers can see you long before you see them is because they can measure your gravity from a farther distance, the empire baggage you carry, which is why legacy capital sends a child, the middle class lies in wait for a teenager, and escaping gravity, thousands of years in the making, is so difficult. It’s a distillation gradient.
The old-timers are going to their grave with what you need, and it’s not best business practice of a union cartel protected by Family Law bankruptcy regulation. You might want to catch up to the curve before they go.
It’s always a space travel problem, and you always need a generator, made of variable inputs, delivering outputs to make your feedback. You have a relatively open positive feedback system serving as the negative feedback to a relatively closed positive feedback system, creating a vortex mirror as your tuner.
Integrity is like Santa Claus, only not. Think twice about what you put in your mouth, to avoid equivocation once. If you do what you say, you will soon find your self intersecting with others doing the same, because empire rules out integrity.
You have 7 billion people, all with latent talents regressed out by empire. Don’t worry about the future. Multiply your talents and everything else will take care of itself. Nature is your friend, if you put it to work, increasing diversity to stabilize the system. Kindness to a stranger is anything but stupid.
Pioneers are that which is rare and valuable, not money and property. As you can plainly see, the latter are everywhere and the former is nowhere to be seen. You are government, which sets the wage to rent ratio in each horizon. Your community is your school. Build it accordingly. The empire is just a derivative regression, and it will tap you dry from the lowest point in the water table if you let it.
What is not light and not mass?
Is it them trying actively to loot us, or them trying desperately to save themselves at our expense?
A false dichotomy–the latter is simply a subtype of the former.
Who does NFIB survey in its “small business survey”–
Does it use the government’s definition of a “small business”?
Or is “small” defined in a more meaningful way for its small business surveys?
According to http://www.sba.gov, the SBA’s definition is:
What is SBA’s definition of a small business concern?
SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:
Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;
General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
Special Trade Construction: Annual receipts may not exceed $7 million; and
Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.
For more, see Steve Cooper’s blogpost “The Government Definition of Small Business is B.S.” at http://www.forbes.com/sites/stevecooper/2012/09/20/the-government-definition-of-small-business-is-b-s/
First, I have had no faith in the ISM numbers at all since Markit became involved in their business – far too much potential to manipulate the market at stake to allow the likes of JPM and GS to develop business ties with a high-profile data series producer.
My take is that what we’ve seen in the “real” economy the last few years is a function of successive rounds of QE together with a radical effort by businesses of all sizes to manage production runs, taking the model of “just in time delivery” to “just in time pulling back”, with employees and jobs so “re-engineered” they can be dialed back or forth with far greater speed and precision with far fewer layoffs, or hires.
So you have a pattern of asset price/market ups when the Fed is buying and downs when not since March 2009, each cycle accompanied by whatever activity/spending in the rest of the economy that could honestly be attributed to those Fed actions – not much from the average guy’s perch, but remember, the top 20% account for 60% of consumer spending (US year 2010), so apparently some temporary (for the wealthy) loss through “trickle” has kept the high-end whim sector going roughly in tandem with the so-called Consumer Confidence Survey that is itself a proxy for the stock market.
This pattern of Central Bank intervention, on top of the long-standing seasonal patterns of production/consumption, has repeatedly skewed seasonality in ways that can amplify signals either way – and I think it’s fair to say lots of people, including big supply/purchasing managers, have been wrong-footed a number of times by an economy throwing off such mixed signals for several years now.
There is already chatter about a big inventory overshot based on the latest retail results, so it’s perfectly conceivable the ISM, or Chicago PMI, etc., could contract abruptly a month hence if sales are off. But attention will soon focus on whatever Obama and Congress are up to.
So what QE delivers are blue skies and sunshine for thems that has, and a chunk of tundra for thems that don’t – but what it’s finally spent on is private and unproductive, not public money well spent at all.