Global Economy Bursting?

[Jungle Boy]

University of California regents approved rollbacks in pension and retiree health benefits, and raising the retirement age for future employees to 55. Unions represent about half of UC's 115,000 employees.

Monica Martinez, a certified nursing assistant at UCLA Medical Center for the last nine years, said her job involves a lot of physical labor, including lifting and moving patients. Martinez, who is 38 and is active with the American Federation of State, County and Municipal Employees union, said she does not think most people can perform the demanding work until age 65, when new employees would receive full benefits.

With the average age rising, and if the retirement age remains what it has been in the past, at some point people have to start realizing that anyone not producing, is costing. There is only so much cost the producing portion of the population can bear.

Start walking, lifting weights, eating right, and doing crossword puzzles. In order to survive in the future, one will need to be fit, both physically and mentally.

 

[Big ole Boy]

Hey I got an idea .

If deficits don't matter and Keynesian is really the way to go .....

... then lets not tax anybody and just print money till the cows come home ...

.... that way nobody has to pay for anything .... and that is the truest sense of Keynesian economics ....

...let the reserve currency of the world just pring money and let the chips fall where they may ...

.... maybe this is the pot of gold at the end of the rainbow ...... maybe this is the 0 point currency that can be printed faster and transferred digitally at a speed that is always faster than any measurable velocity ..

.... either way, we can get to the bottom of this financial morass sooner rather than later

 

[Austin]

Last night Tuesday December 12, I watched “FrontLine” on public TV. This was a documentary about the unemployed management types in NYC. The story first aired in October 2009 and was rerun last night. The story originated when a woman who makes documentary films went downtown NYC to get her hair cut from a woman who cuts hair for both men and women in her one chair shop. They were discussing how bad the economy was and the hair stylists stated to her that if she wanted to hear just how bad things are that she should sit in her place one day and listen to the stories she hears from her clients.
So, that is exactly what she did. She taped people getting their hair cut and heard their stories. After listening to a number of stories, about ten in all, a pattern emerged. All of these people were 50+. They followed one man around to the unemployment meetings he attended for networking and job finding help and all the people at the meetings looked just like him, 50+ years old. It suddenly dawned on me what was going on when this one man they followed around to the meetings told the story of the day he was fired. His woman boss entered his office, closed the door and told him they were cutting back due to the economy and his job was on the cut list. She handed him an envelope and told him it would be nice and helpful if he would pack his things and be out of the building in ten minutes. After 30 years with the company you fire an employee and give him or her 10 minutes to basically get the hell out of the building?
After further review, I believe a lot of unemployment in this country is just people that companies used the depression as an excuse to get rid of. Companies just don’t want people over 50. This seems to be part of the new paradigm. In the future people will work for a company until they lose their sex appeal and then leave their own public work job and go it alone in a second career. This happening at the same time retirement age is being advanced. At the end of the program they showed four of the people, this one man they followed to the meetings in particular, and still no job as of this date. Last year he had sent out 200 job applications about 4 per week.
One of the ladies in the story purchased a house in Florida in 2006 during the boom. She had a 9% loan and facing foreclosure but lucked up and got it refinanced. She moved from NYC to this home in Florida and rented out rooms to make the payments to 6 men in the same boat she was in. All over 50 years old and canned from their careers. Due to the depression? This is a view into the future for some people. It’s back to the old boarding houses of yester year. One of the men was formerly a real estate appraiser among other things.

 

[Randolph Kinney]

Jerry Brown warns educators to brace for more cuts



Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/14/BAK91GQJRV.DTL#ixzz18CEwU09c

New governor says California should brace for more budget cuts. California will spend $36.2 billion of the $86.5 billion general fund on K-12 education and community colleges.

Looks like the democrat controlled legislature, now with a new democrat governor, will really have to reduce state spending. What is it that can be cut? Education, of course.

The irony is that the teacher's union spent millions on electing Jerry Brown, thinking they would be spared and Jerry would raise taxes to cover the budget shortfall.

Meanwhile, the municipal bond market is taking a bath with yields skyrocketing. Borrowing is more expensive than what it use to be and it subtracts from the tax revenue in 2 ways; the interest has to be paid out of the general fund and that interest is tax exempt so the state will not be able to tax the rich.

 

[The Warrior Monk]

One of the men was formerly a real estate appraiser among other things.

It's interesting that you put that last, because as I was reading your post I was thinking how being an appraiser is much less affected by age considerations. In fact, I never gone into a courtroom where the other appraiser was younger was me...and I've been doing this for 20 years. Naturally, if one is corporate, age may play more of a role.

 

[Randolph Kinney]

Accelerated Rate Climb Jolts Mortgage Market

http://www.originationnews.com/dail..._medium=email&utm_campaign=ON_Bulletin_121510

10 year Treasuries at 3.48% this morning with mortgage money rising in response.

 

[Randolph Kinney]

Avalanche of "Bids Wanted" for Munis, but "Nobody’s bidding"

http://www.bloomberg.com/news/2010-...shes-yields-to-16-month-high-muni-credit.html

Part of the problem is the Build America Bonds program ends renewed after December 31, 2010. A huge amount of state and local projects were financed using these bonds that had 30% of the interest paid by the federal government.

The other problem is interest rates are rising on Treasury debt.

And still another problem; rising risk of default.

Signs that a credit market is beginning to seize up when sellers out number bidders by wide margin. That in part is due to an unwinding of an arbitrage trade involving U.S. Treasury paper.

 

[Randolph Kinney]

I have discovered what the banks and Wall Street are doing now to suck individuals into the "new" derivatives products, marketed as safte and 100% guaranteed return of principal in 5 years with a participation in the stock market that you get to keep a gain capped at 70 to 80%. Insurance companies have been doing this for awhile; they call them guaranteed investment contracts.

Sounds like a no-lose proposition, right?

For example, B of A has gotten into several of these derivative products. One of them is called MITTS (Market Index Target-term Securities). These securities feature unlimited upside potential, zero risk to principal and, best of all, guaranteed profit. In other words, they are the Holy Grail of investing. So what's the downside?

These instruments are guaranteed by B of A. What does that mean? If B of A gets it wrong on its transfer of risk through hedging and arbitrage, then it could fail.

MITTS will rank equally with all other unsecured and unsubordinated debt of Bank of America, and any payments due on the MITTS, including any repayment of principal, will be subject to the credit risk of Bank of America. The value of the Index at the maturity valuation period are affected by a number of other interrelated factors, including, among other things: the general level of interest rates, the volatility of the Index, the time remaining to maturity, the dividend yield of the stocks comprising the Index, and the credit ratings of Bank of America.

This looks to me as a complex instrument and a way for B of A to transfer risks to individuals albeit "safe" in the way of a guarantee. If interest rates move up dramatically, if the stock market goes down dramatically, MITTS will suffer a loss of value. Holding to maturity is the only way to recoup the loss via the guarantee. But - will B of A have the capital reserve to pay off all those MITTS? Yes, if they took opposite positions - betting interest rates are going up and the market is going down and capturing the risk premium and yield differential of stocks versus bonds in the way of derivatives.

It is the big crap game with the house taking a percentage on the trades and new roll of the dice from each player.

 

[Randolph Kinney]

Canadians warned to rein in borrowing on cheap money before it's too late

http://ca.news.yahoo.com/red-alert-...ns-bank-canada-chief-20101213-090401-019.html

Household debt to income ratios have jumped to record highs.


Consumers warned: 'brutal reckoning' ahead

http://www.windsorstar.com/business/Consumers+warned+brutal+reckoning+ahead/3972687/story.html

Canadian household debt soars to record, surpasses U.S.


Debt picture not so bleak?

http://www.cbc.ca/money/story/2010/12/14/f-debt-analysis.html

Canadian household debt has risen to 148% of disposable income.

 

[Randolph Kinney]

Think U.S. Doest't Have Exposure to Europe's Sovereign Debt?

The U.S. is in third place for exposure.


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