Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1222.8 | 8 | 0.66% |
| Eurostoxx Index | 2250.2 | 7.420 | 0.33% |
| Oil (WTI) | 99.87 | 1.050 | 1.06% |
| US Dollar Index (DXY) | 77.748 | -0.533 | -0.68% |
| 10 Year Govt Bond Yield | 2.01% | 0.05% |
Markets are rebounding after the pummeling of the last two days. Italian and Spanish sovereign yields are slightly tighter this morning, and a number of banks are raising their 4Q GDP estimates. This has been the underlying story – the US economy is on the mend, but European headlines dominate the markets. If the US banks are taking up their GDP estimates, then analysts will be taking up their earnings estimates. The S&P 500 is trading at 11.8x forward earnings, which is a multiple last seen in the early 80s. Right before the bull market of a generation. I am not saying the secular bear market which began in 2000 is over, but it is getting long in the tooth, and the pieces are setting up for a new secular bull market, probably in the next few years.
Apologies for no report yesterday – was in the city all day yesterday.
Edit: Update 10:00 am – Leading Economic Indicators came in at .9%, higher than the .6% expected and close to the 2011 highs in March.
Filed under: Uncategorized |
All Things in Moderation 
Silver Lining, Cloud Follows:http://www.washingtonpost.com/business/economy/us-industrial-production-rises-at-the-fastest-pace-in-3-months-while-consumer-prices-fall/2011/11/16/gIQA3i2TRN_story.html?wpisrc=nl_wonkHow about a short bull market followed by a longer bear market?
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Tom Coburn is a true fiscal conservative, IMO.http://www.washingtonpost.com/politics/coburn-report-pans-gao-budget-cuts/2011/11/17/gIQA3JHfVN_story.html?wpisrc=nl_fedinsider
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Mark, certainly a possibility. I am not saying that the secular bear market is over yet, but that the pieces are coming into place for a new secular bull market in the next few years which will be based on cheap energy. As far as a longer bear market, the last time multiples were at these sorts of levels was during the early 80s, when interest rates were in the high teens. If you could get 15% on a FDIC guaranteed CD, why in the world would you own a stock? This is a much different interest rate environment, where the dividend yield on the S&P is higher than the dividend yield on the 10 year bond. Valuations can only get so cheap before they can't be ignored. When that mentality changes is anyone's guess. In other words, your scenario and mine could well be compatible.
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No need to apologize, Brent. Glad you're back. I have no idea what the markets will do, bull-and-bear-wise. I am amused that there is now chatter about undoing the triggered budget cuts that will go into effect should the Supercommittee fail to reach its $1.2 trillion goal. The deficit showdown that was supposed to have come to a boil in August of this year has been magically pushed into next year. Oh goody.About four dozen people got ticketed in Chicago yesterday for blocking a downtown bridge as part of the Occupy protests. Small potatoes compared to the clashes in other locations.A favor to the music fans amongst us. As a favor to a friend, I'm compiling a boatload of photos she took this year into a DVD photo show. I need background music ideas. Imagine eight kids, ages 4-10, having fun doing what suburban kids do: playing at a playground, riding bikes/scooters, going to an amusement park, swimming, picnicking, etc. I need upbeat, peppy, songs with a minimum of sexually explicit lyrics. Am already using:"Unwritten", Natasha Beddingfield"Don't Stop Me Now", Queen"One", from A Chorus Line"We Are Family", Sister SledgeThanks in advance!
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NP brent on missing yesterday, I filled in for you, lol. I'm sure everyone was thrilled. I don't know if anyone saw the Reuters piece this morning but I think it helps explain a little of the disconnect between Main Street and Wall Street. And I hope we get a bull market soon so I can make a little on my retirement funds before they're gone. :)MsJS, what about the Charlie Brown theme, overused? And it may not be upbeat enough but I love "Somewhere Over the Rainbow" by Israel K……, can't think of his last name right now but I'll look it up if you're not familiar.
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Oooops here's the link to the Reuters piece and a blurb.David Mooney, chief executive officer of Alliant Credit Union in Chicago, one of the nation's larger credit unions, used to work at a one of Wall Street's top banks, JPMorgan Chase. There's a vast cultural gap between Wall Street and his new world, he says: Old friends from the Street, he says, now jokingly refer to him as a "socialist." A credit union is supposed to be run in the interests of all members, he says, while commercial bankers tend to see consumers as customers who can be "exploited" by layering on more fees.Says Mooney: "I don't say this lightly, but the consumer is simply an income stream and exploiting that is the purpose of the banking organization."In conversations with nearly two dozen current and former bankers, finance professionals and money managers across the United States, the prevailing sentiment is that the anger at Wall Street's elite is misguided and misdirected. Blame the politicians and policymakers in Washington, many of them say, for encouraging people to buy homes they couldn't afford and doing nothing to stop or discourage U.S. consumers from piling on more than $10 trillion in household debt."I think everyone gets what the anger is about… But you just can't say, 'Well I want all debts forgiven.' That is not happening," says one West Coast trader, who like most still working in the financial services industry, declined to be identified by name in this article.The disconnect, says Jason Ader, a former top Wall Street casino analyst turned hedge fund manager, is in part a simple product of Wall Street's isolation from the hardship out there. Ader says he spends a lot of his time in Las Vegas, one of America's hardest-hit housing markets, and thus wasn't too surprised by this fall's anti-Wall Street outburst.
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Thanx, Brent.And 10Q for the Main Street story, Lulu.
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This is a pretty decent Main Street story as well.Every year, young adults leave the nest, couples divorce, foreigners immigrate and roommates separate, all helping drive economic growth when they furnish and refurbish their new homes. Under normal circumstances, each time a household is formed it adds about $145,000 to output that year as the spending ripples through the economy, estimates Mark Zandi, chief economist at Moody’s Analytics.But with the poor job market and uncertain recovery, hundreds of thousands of Americans like Ms. Romanelli (and her boyfriend, who also lives with his parents) have tabled their moves. Even before the recession began, young people were leaving home later; now the bad economy has tethered them there indefinitely. Last year, just 950,000 new households were created. By comparison, about 1.3 million new households were formed in 2007, the year the recession began, according to Mr. Zandi.Some economists are optimistic that there is considerable pent-up demand for new homes because so many young adults are reluctantly staying with their parents. Several of Mr. Bouvier’s friends, he said, are “itching to get out.” As soon as they find work, he says, they’ll leave.“Once we get a little bit of job growth, or even expectations of better job market, those households are going to start breaking apart pretty fast,” said Mr. Zandi, of Moody’s Analytics. Household formation probably won’t lead the recovery, but once set into motion by other good economic news it can “supercharge growth.” He estimates that there is pent-up demand for close to 1.1 million new households, which is approximately equal to the number of excess vacant homes for sale and rent.
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As always I have to put in every story UEI (unless Europe implodes), expect at least 3% GDP growth by the first quarter of next year, possibly even in the 4th quarter depending on the holiday season.
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We're economically speaking at a similar point to when Yip Harburg wrote:You're out of the woods You're out of the dark You're out of the night.Step into the sun Step into the light.for the Wizard of Oz score. (or, I'm completely wrong and will be bankrupt by January. It's definitely one of the two!)
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lol, john. You and Brent are both more or less optimistic and I'm getting there. If the "super committee" fails I might even become whatever the opposite of "debbie downer" is (a little ray of sunshine?). I think gridlock is our friend. If we could see our way by the end of 2012 to let the Bush tax cuts expire, we'll be even better, IMO. All that's left is fixing health care, uggghhhh.
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MsJS: "Perfect Day" by Hoku. "We've got the Beat" by the GoGos. "Rainbow Connection", by the Muppets from the original soundtrack, or by Sarah McLachlan.Can't go wrong with "Beautiful World" by Louis Armstrong. "Blessed" by Martina McBride. "You've got a friend in Me" by Randy Newman. There are a few covers."Back for More" by the A-Teens.Oooh! Oooh! I know! "Smile", by Vitamin C. You can't go wrong with "Smile" for a family video. You should be able to listen to any of these on Youtube. I currently can't get to youtube, so can't check the links, otherwise I'd provide you with those, too. I'm a big fan of "Hello, Again" by the Cars. Great for slideshows of parties or family get togethers or class reunions. Also consider: Love Shack by the B-52s. Art of Noise's cover (with Tom Jones) of Prince's "Kiss". "Make Someone Happy" by Jimmy Durante. "Take on Me" by Aha. "Walking on Sunshine" by Katrina and The Waves. "Our House" by Madness. "Love will Keep us Together" by Captain and Tennille. You could also take a listen to Fatboy Slim's remix of the Beastie Boys "Body Movin'", but it needs to be the Fatboy Slim remix. "Don't Stop", by Fleetwood Mac, there are also some nice covers. "Top of the World" by the Carpenters. "Word Up" by Cameo. "One Way or Another" by Blondie. "Dreaming", also by Blondie. "You Make My Dreams" by Daryl Hall & John Oates. "Dancing With Myself" by The Donnas. Great for slideshows with still-images: "Freeze Frame", by the J. Geils Band. Out-of-left-field possibility (emphasis on Left Field): The Laughing Gnome, by David Bowie. From The Deram Anthology. "We Care A Lot" by Faith No More. "The Yeah Yeah Yeah Song" by the Flaming Lips. "Time Warp" (Glee Cast Version). Safety Dance (Glee Cast Version). I'll come up with a few more.
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Just have to share, i've been laughing all morning about a radio ad I heard in the car this morning for the new Muppet move. it ends with Waldorf and Statler: Is the movie going to be in 3D? No, the Muppets are as one dimensional as they've always been."
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Re songs for your DVD, I second lms: Here's the version she's talking about if you've never heard it. I love this one. . . can't hear it often enough as far as I'm concerned.Now I'm going to have to try to think of some more.
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"Imagine eight kids, ages 4-10, having fun doing what suburban kids do"Well, it won't fly b/c of the language, but Rockin the Suburbs by Ben Folds would be fun.
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"Funkytown" by Lipps, Inc. is a classic. "Hello" by Martin Solveig & Dragonette. It's very peppy!"Break my Stride" by Matthew Wilder."Fireflies" by Owl City."Holiday", by The Other Ones, is great for vacation/holiday pictures. "A Funny Thing Happened on the Way to the Toystore" by Pianosaurus. Slow, but great for retrospective shots of a girl/daughter/mother. Just file it away for future reference: "Beautiful Girl" by Poe. "Celestial Soda Pop" is a great contemplative, by Ray Lynch. "What I Like About You" by the Romantics. "I Could Not Ask for More" by Sara Evans. "And She Was" by the Talking Heads. "Everybody Have Fun Tonight" by Wang Chung.
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John, for Europe not to implode, Germans have to agree to subsidize the entire European welfare state. I say Germans because their high court has said that it can only be done by vote, not by government proclamation. Further, the rest of Europe will have to be administered by Germany. I don't see that happening, do you?
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"the rest of Europe will have to be administered by Germany." Smithers: You looken sharpen todayen, Mein Herr.
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McWing:Further, the rest of Europe will have to be administered by Germany.Third time's a charm, perhaps?
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Our dollars will be going overseas laundered through the IMF. Even now they are working on how to do it. Yesterday there were rumors about the ECB sending money to the IMF which would then lend it back to the sovereigns. It's not hard to imagine our contribution simply disappearing into that operation, or am I cynical?
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MsJS, not that Kevin hasn't given you plenty of great ones to choose from, but James Taylor's "Shower the People" (you love with love) might fit well.
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Third time's a charm, perhaps?Hilarious, Scott. It can't be worse than the last two times, right?Also, I put up a post about a couple of Michigan related items.
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So, we're all thinking the whole Euro thing turned out awesome, right?Why don't we call our money "The Americ"?
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Thanks so much, everyone. These are awesome.I've even used a few in past videos 🙂
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We have to measure what the euro was intended for as well as what it was not. The euro is not a fiscal union, but strictly a monetary one. That can be seen as it's weakness. However when in history has Europe not only enjoyed 60 years of almost warfare free time, but integrated and rebuilt the entire Eastern bloc countries, effectivley speaking winning out over communism and totalitarianism? No matter how it falls apart now, if you remove the strict economic issues, and view it in a geo-political sense, it has been remarkable.
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Scott:You owe me a new keyboard.
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Pretty good piece about the German pre-eminence:"Debt Crisis Shows Angela Merkel Is the Boss"http://www.cnbc.com/id/45351565They WILL get what they want, the question is will they get it in time?
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ashot/Mich:Kind of ironic that after 2 world wars and millions of deaths, they're on track to finally take over without firing a shot.
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"If the "super committee" fails I might even become whatever the opposite of "debbie downer" is"Pollyanna
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John, are you saying that the US will be underwriting the European welfare state? or us in combination with Germany? Finally, why would the Italians, Greeks, Spaniards, et al accept German administration of their governments? If, for example, the Greeks won't pay their taxes to a government made up of Greeks, why would they pay them to a government made of of German or German puppets? Why would a bondholder believe it? I guess that's what I don't get, NO ONE actually believes that the Greeks are ever going to behave any differently, so who is kidding who?
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"Kind of ironic that after 2 world wars and millions of deaths, they're on track to finally take over without firing a shot."Japanese almost pulled it off in the 80s; Chinese are well poised too, after a half millennia of laying low.
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Maybe the Germans will try to flip Greece to the Turks.
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troll:Welfare state is too inflammatory for me. As to whether we will be bailing out Eruopean institutions, well we bailed out a lot of them only 3 years ago, so it's not like anything new. Your last about the actual administration, they don't want to take over the governments. They want to end the ECB One Nation One Vote principal that makes no sense. As long as Greek debt and German debt are linked, then it makes no sense to let the tiny Greek economy have the same power as the German one. "Report: Germans About To Launch Bomb Within Heart Of Europe" http://seekingalpha.com/article/307732-report-germans-about-to-launch-bomb-within-heart-of-europe
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And Turkey could send displaced Syrian workers to Deutschland in exchange.
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John, I get your impression that it's inflammatory, I obvioulsy disagree. What would be a phrase that we both could agree on? As an aside, it seems to me that the problem with many of the troubled EU economies arise from bloated, underfunded governments (hence the need to borrow) who are spending money propping up their rather luxurious social welfare safety net. If that's not the problem, what am I missing?
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troll:Perhaps Scott will join me in believing that it’s all about mispricing of risk, just as it was in 2007.There was never any reason for Greek debt and that of the other southern tier nations to trade at the same grade as German debt. If your borrowing costs are unaligned with risk then it’s a license to do stupid things. So effectively speaking each nation COULD choose whatever social policies it wished to follow, as long as the issued sovereign debt accurately reflected the risks in pursuing those policies.
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One more thing, which perhaps Scott will also jump in on. The CDS market which was SUPPOSED to have been instrumental in alleviating risk management mistakes, has turned out to be the exact opposite. In any kind of system wide financial problem, the CDS market has exacerbated risk both by unsoundly encouraging lower interest rates on covered debt, AND by offering payout ratios totally divorced from any underlying capital reserves.
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"So effectively speaking each nation COULD choose whatever social policies it wished to follow, as long as the issued sovereign debt accurately reflected the risks in pursuing those policies." I understand your position on EU debt and how is should have been and should be shaped. That being said, what were the EU countries who are having debt issues borrowing the money for? What lead them into the debt they now have?
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There is no right or wrong on expenditures. Other nations might say that our defense budget is too high, while we say that their socisl spending is. These are choices that sovereign nations are entitled to make, provided they can pay for them.
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john:Perhaps Scott will join me in believing that it’s all about mispricing of risk, just as it was in 2007.Well, there's two problems. The problem for investors is certainly that risk was mis-priced. But that, at its core, is the result of the creation of the Euro in the first place. The notiion of a monetary union with a common currency and central bank amongst several sovereigns in the absence of any meaningful political union has, since the day it came into being, struck me as supreme folly. I have to confess to a certain amount of grim satisfaction (perhaps I should say schadenfreud, given the subject) at seeing my predictions from 12 years ago of inevitable doom for the Euro slowly coming to pass.Surely the existence of the Euro, by tying stronger economies to much weaker ones, did much to lead to the mis-pricing of risk, what with the implicit assumption that, should anything go wrong, the stronger nations would just have to come to the rescue of the weaker ones.But the problem for Greece itself is not a mispricing of risk. It is a desire to spend more than it produces, which is simply unsustainable in the long run. Blaming the poor risk assessments in the capital markets for a nation's pursuit of wreckless national spending policies seems to me to have it backwards. It's not up to the capital markets to tell a nation how much they can afford to spend. It is up to the capital markets to assess the likelihood of getting their money back. The responsibility for establishing sound fiscal policy lies with governments, not the capital markets.BTW, why is the term "welfare state" inflammatory? It is a well used term to describe a certain kind of social structure in which government takes on wide responsibility for various forms of welfare of citizens. If it carries negative connotations, that is because of the nature of the thing it refers to, not the nature of the word. It seems to me a perfectly reasonable way of characterizing Europe in general and Greece in particular.
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"It seems to me a perfectly reasonable way of characterizing Europe in general and Greece in particular."So we agree then, that it is a hyperbolic term when applied to the US?
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Welfare state rests on a shifting sand does it not? Compared to pre WWII we ourselves have an extreme welfare state, but compared to Europe not so. "Blaming the poor risk assessments in the capital markets for a nation's pursuit of wreckless national spending policies seems to me to have it backwards."I would argue however that it's a chicken/egg type of situation. Without low cost borrowing, the Greeks could never have legislated the improved benefits in question in the first place.
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Bsimon, why would it be hyperbolic when so many here are interest in expanding our welfare state so that it equals many in Europe? Who would view the phrase "welfare state" as apples to the U.S. as hyperbolic?
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"So many here are interest in expanding our welfare state so that it equals many in Europe"Like who?Specific political leaders please.
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Perhaps it is only amusing to me that you want to both describe our system as a welfare state, yet admit that we have far less welfare than Europe.
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john:The CDS market which was SUPPOSED to have been instrumental in alleviating risk management mistakes, has turned out to be the exact opposite. CDS is not exactly my expertise, but I wouldn't quite put it that way. CDS was created as a cheap and easy way to help manage credit risk, not alleviate mistakes in risk assessment. And it does. But what it also does is provide a cheap and easy way of taking on credit risks. So, yes, in a system wide financial crisis, it seems possible that CDS will exacerbate the net risks across the market, particularly if the risk assessments as reflected in the CDS market were wrong. Which, in a crisis, they often prove to be.On this…the CDS market has exacerbated risk both by unsoundly encouraging lower interest rates on covered debtThis would be true only if the risk as assessed by the CDS market was considered to be lower than as assessed by the regular capital markets. On covered debt, the risk is simply transferred from the debt holder to the insurer. If the premium paid to the insurer reflected a lower risk premium than that reflected in the capital markets, then the lender would be incented to charge a lower rate. But if the CDS premium reflects the same risk premium as the regular capital markets (as it should to eliminate arbitrage opportunities), then that incentive would not be there.BTW, the opposite of what you describe can also happen, and did back in '08. For example, as doubts about Morgan Stanley's viability began to grow, CDS traders were driving up the cost of CDS on Morgan. The capital markets, takinga cue from CDS spreads on Morgan, would then begin to charge higher rates for short term borrowing, making the liquidity squeeze that much tighter. This, in turn, would drive more doubts about MS's viability, pushing CDS up further. A viscious circle.
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scott:Agree with yours about the possibilities even of arbitrage, but some things are too esoteric, even for this august body.
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bsimon/john:Of course there are relative levels of welfare statism. I don't think that fact makes the characterization either a) inflammatory or b)inaccurate when applied to the US.Particularly as to the latter…It is certainly accurate to describe the sun as hot. That doesn't mean it would be inaccurate to describe the burner on my stove as hot. The US has not yet descended into welfare statism to the degree that most countries in Europe have. But the burner on the stove has been turned on and heating up for quite some time.
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For a quick summary of some problems in the commercial real estate market and how they differ from the residential market, this isn't bad from the NYT;"Loans Lose All Value, and More"http://www.cnbc.com/id/45356438/page/2/
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scott:As you may recall I prefer empirical discussions to "squishy" ones. LOL So I will now let the forces of nature finish the "welfare state" part.
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Nancy Pelosi comes to mind.
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There is a current argument started by Brad DeLong about a proposed down and dirty grab of "free money" 500 billion or more and spending in on infrstructure in two years. http://www.project-syndicate.org/commentary/delong118/EnglishEzra has a similar idea and perhaps had it first though he is less set on the numbers and dates. since he wrote it today, here is my rough answer, minus all the usual accompanying research. If I made a mistake, please let me know. The first thing you’d have to do is get the Fed to stop Operation Twist, because their current operation of selling short and buying long Treasuries is the opposite of what this program would require, namely massive new issuance on the part of the Treasury. Next, you have to realize that on the day the rumors begin, Treasuries will jump 50 basis points, pushing to at least 100 basis points at the announcement. So all the numbers that you are using today will be gone before the first auction. You have to remember too that the euro zone follies contribute greatly to our low interest rates. Many bond market veterans are absolutely shocked at the willingness to lend to the US at such rates. You won't be able to get all your money in one auction, and the potential for yields to double in a short period of time is high, ask the euro zone nations. Now too, you're not just adding to Treasury debt. You'd be adding billions in rising Social Security COLAs at the same time you want to cut payroll taxes. For your scheme to work, you'd have to manage both to keep interest rates at or near 60 year lows while at the same time avoiding rising inflation that would result from pumping a ton of borrowed money into the economy especially in the commodities sector, the cause of our most recent 3.6% SS cola. Now you said that the cost of raw materials are cheap. Well that’s a relative term. Spot copper for instance is HIGHER today that it was 5 years ago at the height of the building boom. The ONLY reason it appears lower in the last year is because the effects of QE2, which pushed most raw materials to new records, have gone. Once again, the moment you announce the program, those material costs will jump 25-30% . (now my friend sanjait, suggests a Chinese influence here which is undoubtedly strong. However that's even MORE favorable to my argument namely that absent a turndown in Chinese demand, greater US demand would have a synergistic effect on raw material prices) Nothing stands still Ezra. Now how about the housing market? Well all this borrowing will drive up the yield of the 10 year which of course will make it MORE difficult for people to get mortgages. That might be palatable except for this. The list of the 10 states that are in the biggest need of infrastructure repair: http://www.businessinsider.com/worst-state-road-sy… has only ONE state on it that is also in the 5 worst underwater mortgage states, California. So If the money went where it was MOST needed, it would not do much for where the housing crisis is the worst CA, NV, FL, AZ and MI.
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conclusion:Finally, why do you never take into account that as the President found out, there are no such things as shovel ready projects? You are talking about, at minimum, an 12-18 month window, and that’s being very charitable, when you are borrowing like crazy and yet not generating a significant amount of jobs. Meanwhile back at the ranch, the monetary expansionist effects of this policy will be rippling all throughout the economy!
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Bsimon, are you saying that we do not have a welfare state?
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I can answer the question if you define the term. I think our political system is doing an increasingly poor job of identifying good ROI of our tax dollars. One example is the home mortgage deduction – its enormously expensive, skews the real estate market & offers dubious benefits. But is it a form of welfare? You tell me.
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McWing:Nancy Pelosi comes to mind. So does Barack Obama.
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bsimon:But is it a form of welfare?No.
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What specific proposals of pelosi/ Obama amount to increased welfare?There're plenty of allegations out there entirely absent of evidence; I recall a lot if 2nd amendment fans claiming Obama would come after their guns, which he hasn't.
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Nancy Pelosi proposed doing for child are what she did for healthcare, either today or yesterday. As an example.
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Here's a link for Pelosi.http://hotair.com/archives/2011/11/18/pelosi-proclaims-her-goal-to-do-for-childcare-what-we-did-for-healthcare/
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Healthcare reform, for instance, is as much corporate welfare as individual. While some number of people will get subsidies, most of us won't – but the I surance companies have a much larger market of guaranteed customers. If thats a welfare state, I must not understand the meaning of the term.
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bsimon:What specific proposals of pelosi/ Obama amount to increased welfare?Well, off the top of my head there is of course Obama's Studen Loan Forgiveness Program.And I vaguely remember some obscure bill called the Affordable Care Act that Obama supported.
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"Pelosi proposed doing for child are what she did for healthcare, either today or yesterday."I don't have a clue what that means. A childcare mandate?
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"I don't have a clue what that means. A childcare mandate?"Like everything else, child care is now a right and will be provided by government at taxpayer expense, much like health care for certain populations. This is either a boon to the working poor who will have access to quality child care so they can work. I, however, consider this to be an insidious plot to indoctrinate the children and have them spy on their parents, must like how the Stasi encouraged children to report on their parents habits and association.
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Thinking further, ACA is a nanny state program "you must buy health insurance!" It is not a welfare program "you will get state-provided healthcare and a 50% tax rate." Nanny state <> welfare state.
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Nanny state <> welfare state.Agree, bsimon.
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Bits & Pieces is up for the evening.
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Bsimon:Thinking further, ACA is a nanny state program "you must buy health insurance!" It is not a welfare program "you will get state-provided healthcare and a 50% tax rate." Really? Under ACA there will be no increased government spending for the provision of either insurance or healthcare? Are you sure?BTW, while it is certainly true that nanny state <> welfare state, it is equally true that a nanny state and a welfare state are not mutually exclusive.
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Scott, feel free to take up the challenge that mctroll did not by defining the welfare state. Again, I am amused that tax expenditures are excluded. Why is the mortgage deduction not welfare? Its a gov't handout. And, worse, it is one that skews a market. Yet this undue gov't influence is apparently acceptable to conservatives. Why the double standard?
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bsimon:Scott, feel free to take up the challenge that mctroll did not by defining the welfare state. You are being disingenuous in pretending not to understand the term, as your nanny state equation and claims about ACA not being welfare demonstrate. but if you insist, a welfare state is one in which the government takes responsibility for providing for the welfare of citizens. As I already pointed out, there are varying degrees of welfare statism. Why is the mortgage deduction not welfare? Its a gov't handout.No, it isn't a handout. There is a difference between giving someone something and not taking something from them. Obviously.Yet this undue gov't influence is apparently acceptable to conservatives.The entire tax structure is unacceptable to this conservative, so you are wrong with regard to me. I think there should be a flat tax with no deductions.
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"No, it isn't a handout. There is a difference between giving someone something and not taking something from them. Obviously."Obvious as to form, but not as to function.I own a home and it is paid for.Neighbor owns a home and it is mortgaged.He gets a savings on his tax bill that I do not. Same result as if there were no mortgage deduction and the Treasury wrote him a check, but not me.Tax expenditures for shaping behaviors are both nanny statism and welfare, in the typical case, IMO.As you know from a PL exchange we had, I could go with a flat rate and no special credits and deductions – but I would impose a large standard deduction that would affect all similarly situated folks equally. I would take into account the fact that below a certain income level not even the thriftiest could afford to pay taxes, so I would not try to get blood from turnips.
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Mark:Same result as if there were no mortgage deduction and the Treasury wrote him a check, but not me.Yes, and neither is welfare. Not only is there a difference between giving a person something and not taking that something away, there is also a difference between giving them something and giving back something you just took away. If all taxes were going to fund classic public goods, then it might be reasonable to argue that targeted tax breaks represent "welfare", if one could show that the tax break resulted in the receiver not paying an equal share of the cost of the public goods provided. But as it is, very large portions of taxes paid are simply wealth transfers, not funding public goods. And it is definitely incorrect to say that if person A is forced to transfer his wealth to person C while person B is not, that person B is getting "welfare". Some may call this a matter of semantics, but I disagree very strongly. It is a corruption of language, based upon false premises about the rightful owner of wealth created, to equate the government's failure to take money from person A with the government's actively giving money to person B. And I think it has, and has had, very nefarious consequences.
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"You are being disingenuous in pretending not to understand the term, as your nanny state equation and claims about ACA not being welfare demonstrate."I am not being disingenuous, I am trying to establish a definition in order to answer McWing's question. If, as you say, "a welfare state is one in which the government takes responsibility for providing for the welfare of citizens," my answer to McWing's question is: if we're a welfare state, we're not doing a very good job of it. The rate of poverty is rising, as is the rate of extreme poverty. We used to lead the world in the quality of the education we provide our citizens, but that's been slipping for several decades. Coincidentally(?), our investment in our citizenry has also declined over that time. What I wonder is: what kind of society do conservatives expect to create if we continue to reduce the size of the welfare state in the us?
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bsimon: if we're a welfare state, we're not doing a very good job of it. The rate of poverty is rising, as is the rate of extreme poverty.Since poverty is a relative measure and, even more importantly, since poverty statistics do not include government aid, pointing out the rate of poverty tells us nothing whatsoever about how effective the welfare state is.We used to lead the world in the quality of the education we provide our citizens, but that's been slipping for several decades.Has spending on education increased or decreased over that time?Coincidentally(?), our investment in our citizenry has also declined over that time. What does "investment in our citizenry" mean? And by what measure has it decreased?What I wonder is: what kind of society do conservatives expect to create if we continue to reduce the size of the welfare state in the us?By what measure could it possibly be said that the welfare state has been reduced over the past several decades?!?!? In any event, the answer is: a much better one.
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bsimon:BTW, if you think our welfare state is doing a poor job, do you wish it did a better job? Do the welfare states of Europe do a better job? Do you wish we were more like them?
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"if you think our welfare state is doing a poor job, do you wish it did a better job?"Again, it depends on what welfare state means. if public schools are part of the welfare state, yes, I do wish they were doing a better job. This article hits on some of the failures of the current 'welfare state': http://www.minnpost.com/communitysketchbook/2011/11/18/33200/why_minnesotas_poorest_kids_will_stay_poor"since 2003, the state has "frozen payment levels" to families on MFIP who have more children. Under the so-called "family cap,'' financial payments to these families do not increase with the birth of another child. The family cap has not been shown to keep women from having babies, according to the report, only to push families deeper into poverty. (A family of one parent with two children receives a monthly MFIP payment of $532.) Other financial sanctions such as non-compliance with requirements to document job searches reduce cash assistance by 10 percent or 30 percent, but don't take into account family circumstances, such as families having children with disabilities or chronic health problems or adults struggling with depression, domestic violence or illiteracy, according to the report." The above refers to a state program, not fed, but makes a valid point none the less: the children of parents who are unable to properly care for them end up with lower grades & poorer health. Why should we care? Because these are the kids that end up choosing crime over productive work, costing us more money for police, prisons and the opportunity cost of them not being productive members of society. I suspect conservatives don't consider spending like the war on drugs or prisons as part of the 'welfare state' but they're a direct result of a failure to invest in children adequately enough that they can become productive adults.
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New post is up, guys!
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bsimon:Since you didn't respond to my question about education spending, I looked into it myself. According to this, total federal spending on K-12 education has increased 138% in inflation adjusted dollars since 1985. So, while you may be correct that our education system has declined, it certainly hasn't been for lack of welfare state "investment".I also remain curious what measure you have used to determine that the welfare state in the US has been "reduced".The family cap has not been shown to keep women from having babies, according to the report, only to push families deeper into poverty.That is a bizarre interpretation of cause and effect. It seems to me that it's not the cap that pushes them deeper into poverty. It's the decision to have more and more babies, usually without having the father around for support, that does so. And, at least from my perspective, the cap isn't in place to stop women from having more babies. It is in place to stop everyone else from having to pay limitless amounts for the irresponsibility of others.I suspect conservatives don't consider spending like the war on drugs or prisons as part of the 'welfare state' but they're a direct result of a failure to invest in children adequately enough that they can become productive adults. I am not a particular fan of the war on drugs, but no, I do not consider law enforcement to be part of welfare statism. It is one of the most fundamental purposes of government.Nor do I think that criminal behavior can properly be characterized as the "result" of inadequate government spending, or "investment" in your term. Plenty of poor people, indeed most of them, are not criminals, despite this inadequate "investment".
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I wrote a long reply to your 7:09AM of yesterday, which was lost in the ether, I think for passing a magic # of words.Suffice to say I don't agree with you.:-)
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