Tuesday, December 20, 2011
myths about wealth inequality
Since many of our clients have closed their books on the year we had some extra time today ,on the trading floor ,and we used it to solve some of the worlds problems....it's no secret that wealth inequality has exploded in this country but there seems to be some confusion as to how we arrived at our current place....if you have time please take a look at the 25 year chart of the u.s. 2 year, crude,corn and wheat and the dollar..someday I will have the technological savvy to attach charts to this blog but today is not that day...since 1985 the u.s. 2 year has trended progressively lower, from 9% to it's current level of .2%...the dollar has had a corresponding and predictable down trend in this same time period which has pushed up prices of food and energy..obviously, greater costs of basic nessecities takes a disproportionate chunk out of lower and middle income salaries than it does for the evil 1%.....now china enters into the picture and their appearance has a negative effect in several different ways...first they depress the crap out of their currency( that's is a highly technical economic expression in case you were unaware),to the tune of 60% undervalued to the dollar(according to some). this has the effect of drawing 22 million manufacturing jobs from the u.s. Remember that manufacturing jobs ,along with the corresponding shipping and packaging jobs are traditionally drivers of a vibrant "middle class"..at the same time, they flood the market with cheap shit that they manufacture which ,when coupled with the ridiculous interest rates provides incentive to buy stuff instead of to save....keep in mind that in a perfect global economic model manufacturing would have eventually shifted to china anyway, but their blatant manipulation(with our blessing) probably cut the time it took from 40 years to about 18, causing tremendous shock to our economic model...at this point in the discussion we can probably mix in low tax rates but only as it applies to the ultra wealthy as people in the 150k-400k are taxed at a higher level now than at almost anytime in our nations history---------now if you're a liberal whos head is about to blow off at that last sentence, remember we are defining taxes as TAXES, dumbass, not the convenient deffinition you use which is federal taxes....jeez, my tollway tax has gone from 100 per year to 1500 per year in a short time, but i digress.......last thing i'll mention is some "non economic" factors that have contributed to wealth inequality like breakdown of traditional family units with marriage being at historical lows and single parent homes at corresponding highs...this has the obvious effect of dragging some from the middle to the lower class.....if we can agree on these things than our course is clear...we should put the argument on sturdy poster board and then beat the occupy chicago protestors into submision with them..whos with me?.....
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Perhaps the most awesome thing is that is all 1 sentence. Epic.
ReplyDeletei cant tell you how hard im laughing...its the belly laugh..the kind that comes from way down low. its good to laugh...and when i need to laugh i always turn to the 1% arguments. simple...conclusive...always backed by concrete empirical data which put the cause on trial and not the effect. your arguments are undeniable, yet all the dislocation you speak of has only seemed to benefit the 1%. the 99% have suffered due to the policies..events...distortions in the market you speak of...yet the 1% have only gotten fatter...richer...and consistently bailed out by #freemoneyforever ben. the dumbass you speak of is the poor middle class salary man/woman who has seen no wage growth...company downsizing...and outsourcing to foreign lands...eventually scab labor takes over with low wage unskilled foreign workers.
ReplyDeletehah, a classic trading rant (something I do often at school over beers with fellow mates). 100% on board. Agreeing on that fact that the country has gone through an epic front loading of demand event is one thing (which you nailed). Now, the question is, how on earth do we deleverage the leverage? As we briefly discussed, we need to be able to have everyone (dare I say FORCE?) all home owners to refi at lower rates, alleviating the cash flow issue plaguing the deleveraging issue. Now I suggest (and bear with me here Jim) that we dismantle the GSE's and create a new type of 'clearing house' where there will be a forced write down of ALL mortgages of say 20%. This would solve the balance sheet dilemma. Now I know, thats big government rearing its ugly head. But listen, its a near term stimulus, would have a net positive effect, wouldnt actually cost THAT much, would alleviate the black holes on banking balance sheets, and if the Fed got its head out of its ass and stopped financing our debt (theres a problem in itself) at 5 years duration, and pushed it to 50 year duration....my guess is the taxpayer would recoup as would the housing market on the long term. But, in any event, what do I know, I'm a 22 year old College kid working his way thru school. If we stop debauching the dollar, we'll at least start going in the right direction. I could keep ranting, but my beer is running low
ReplyDeleteI would add that cherry on top was TARP and the money printing that followed. Capitalism is a bit of a gruesome game, but the beauty of it is that the pendulum swings back and forth. When they didn't allow that pendulum to naturally swing back the other way, a large portion of the middle class sadly became just plain poor.
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