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Old 2015-01-01, 07:42   #1
ewmayer's Avatar
Sep 2002
República de California

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Default Mystery Economic Theater 2015

Happy New Year, everybody! By way of reference, here are links to previous installments of this thread series: 2014, 2013, 2012, 2011, 2010, 2009 and 2008. The approximately exponential-decay in #posts and #views over the past few years means that we'll probably hit 0 activity right around the time the inevitable next global blowup hits.

Couple of leftover December links to start 2015 off:

o What Happened When Marissa Mayer Tried to Be Steve Jobs -

I especially liked the Most Interesting Man in the World bit. "Stay thirsty, my friend..."

o Man can't challenge $280K tax bill he probably doesn't really owe, Pa. court says

o The Crowdsourcing Scam | The Baffler
Crowdsourced work is supposed to be a new, more casual, and more liberating form of work, but it is anything but. When companies use the word “crowdsourcing”—a coinage that suggests voluntary democratic participation—they are performing a neat ideological inversion. The kind of tentative employment that we might have scoffed at a decade or two ago, in which individuals provide intellectual labor to a corporation for free or for sub-market wages, has been gussied up with the trappings of technological sophistication, populist appeal, and, in rare cases, the possibility of viral fame. But in reality, this labor regime is just another variation on the age-old practice of exploiting ordinary workers and restructuring industrial relations to benefit large corporations and owners of the platforms serving them. The lies and rhetorical obfuscations of crowdsourcing have helped tech companies devalue work, and a long-term, reasonably secure, decently paying job has increasingly become a MacGuffin—something we ardently chase after but will likely never capture, since it’s there only to distract us from the main action of the script.

Last fiddled with by ewmayer on 2015-01-01 at 22:39 Reason: += MMXIV
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Old 2015-01-01, 08:23   #2
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You don't link 2014?
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Old 2015-01-01, 10:41   #3
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Dear sir or madam,
My brother, the prince, is moving funds from accounts, including your account, to pay for gambling debts from our senile uncle. I was given your name as an important person. The secretary to the prince can help adjusting amounts if funds for transcripts and lawyers are provided so we can prove that you do not owe our uncle any moneys. Please wire some funds immediately for necessary paperwork, care of Lagos, Pennsylvania.
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Old 2015-01-01, 21:04   #4
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I scanned several of the previous years and found enough interesting reading to keep me riveted to my computer for nearly 2 hours. It was surprising how much happened as we discussed. It was amazing how much we got wrong. It was stupendous how much was swept under the rug "out of sight, out of mind".

Are we actually better off now? Is 2015 finally a year that the world economy will recover? Do we have enough sunshine, lollipops and rainbows to go around?
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Old 2015-01-01, 22:40   #5
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Sep 2002
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Originally Posted by Dubslow View Post
You don't link 2014?
I do not - but someone else pretending to be me seems to have done so. I've been hacked!
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Old 2015-01-03, 11:10   #6
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Within a month, Tsipras stands a 50:50 chance of becoming the Greek prime minister. Though he is ready for a prolonged negotiation with Frankfurt and Washington over debt reduction, he is pledged to cancel the austerity measures imposed by Greece’s creditors on day one.

A clash with the ECB, the commission and probably parts of the Greek state are pretty likely thereafter - and the outcome will be watched closely across Europe. Because if basic Keynesianism and an expanded welfare state are not permissible, and if the European institutions are seen actively to collude with attempts to sabotage them, a change of sentiment about the EU on the centre-left might follow.
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Old 2015-01-03, 15:40   #7
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Originally Posted by ewmayer View Post
Happy New Year, everybody! By way of reference, here are links to previous installments of this thread series: 2014, 2013, 2012, 2011, 2010, 2009 and 2008.
My, we have been busy !

Philosophy rules, but Economics rocks !
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Old 2015-01-03, 16:49   #8
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Thanks for the update, Nick. Maybe there is some hope of breaking the stranglehold of counter-productive austerity.
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Old 2015-01-05, 23:15   #9
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Couple good articles from Naked Capitalism - first one dates from the 2012 presidential-electoral season:

o Exclusive: How Obama’s Early Career Success Was Built on Fronting for Chicago Real Estate and Finance

o Something That Changed My Perspective: Karl Polanyi’s The Great Transformation

All students of economics, whether professional or amateur, should have a copy of Polanyi's classic on their bookshelves, next to - or perhaps in place of - Adam Smith's The Wealth of Nations, which for all its valuable insights presents a rather tendentiously optimistic view of the same economic & societal transformation.

Note the updated link(s) to Adam Curtis’ The Century of Self in the reader comments.
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Old 2015-01-12, 01:02   #10
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Sep 2002
República de California

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Another couple of good NC articles:

o ObamaCare “Shared Responsibility Payments” Come Due on April 15, and It Won’t Be Pretty
ObamaCare’s useless complexity is a tax on time, and for those who can’t afford to have their accountants handle such things. Even Megan McArdle gets this:

There’s been a lot of talk about the “hidden taxes” in the Affordable Care Act, but here’s one I hadn’t thought of before or seen mentioned anywhere: the sudden need for folks with simple tax returns to avail themselves of the services of a paid professional. If you have no income outside a modest salary, and not much in the way of potential deductions such as huge mortgage interest or state tax bills, then there was really no reason to use a tax preparer. Even the mathematically challenged should, with the aid of a calculator, be able to fill out their 1040EZ forms just fine. But Obamacare has introduced a significant level of complexity into the taxes of lower-middle-class wage earners. More of them are going to need an accountant to negotiate the process — or risk owing the government hundreds of dollars because they didn’t fill out the forms correctly.

The money doesn’t go to the government, of course, but in many ways this looks like a tax: Suddenly, people with simple incomes are going to need to pay a significant sum to keep themselves out of trouble with the IRS. This tax will be extremely regressive, because the people most likely to be hit by it are people whose incomes are (or have been) low enough to qualify for subsidies.
o Wolf Richter: Subprime Spikes Auto Sales, Delinquencies Soar, Industry in Total Denial, Fallout to Hit Main Street | Naked Capitalism
Over 8.4% of subprime auto loans taken out in the first quarter of 2014 were already delinquent by November, according to an analysis of Equifax data by Moody’s Analytics for the Wall Street Journal. That’s the highest rate of early subprime delinquencies since Financial-Crisis year 2008.

Stuffing people into cars they can’t afford and ultimately may not be able to pay for is big business. Auto loans to subprime borrowers (credit scores below 640) make up over 31% of all auto loans, according to Equifax. Outstanding loan balances have soared nearly 17% over the last two years. At this rate, they’ll breach the $1-trillion mark by the end of the first quarter this year.

In broader terms, 2.6% of the auto loans taken out in Q1 2014 were delinquent by November, the highest rate of early delinquencies since crisis-year 2008, when they rose above 3%.

The bailed-out former auto lending unit of bailed out GM, Ally Financial, now the largest non-captive auto lender, reported $355 million in nonperforming auto loans in Q3 2014, up 8% from a year earlier. And during the first three quarters, it charged off as uncollectible $341 million, up 18% from the prior year.

Santander, one of the top 15 auto lenders in the US, discovered that it’s overall auto-loan delinquency rate in Q3 was a vertigo-inducing 16.7%, highest in the nation, followed by Capital One’s delinquency rate of 6.6%.

Lenders are on the hook for nearly $1 trillion in auto loans. A good part is subprime, and if the subprime bubble blows up, losses will hit these banks, and they’ll bleed, and their stocks will swoon, but it won’t take down the megabanks. The amounts aren’t big enough. A specialized lender or two might sink, and nerves on Wall Street would get rattled until a member of the FOMC tells Bloomberg TV that QE4 might be a possibility, which will jar stocks back into rally mode. But it won’t bring down the financial system.

Lenders, while licking their wounds, will tighten lending standards and shorten terms, and they’ll keep an eye on LTV ratios and credit scores. With shorter terms, payments jump. And with limits on LTV ratios, people who’re upside-down in their trade, have no cash, and want title, taxes, and license fees rolled into the deal, have trouble financing a new car.

These aren’t just a few individual cases, but much of the hollowed-out, over-indebted, underpaid middle class, the new American proletariat, the 62% of the population that has no emergency savings to cover a $500 car repair or medical bill. These households face, as the Federal Reserve said last year, “large-scale financial strain.” They’ve been bypassed by the Fed’s “wealth effect.” And with tighter lending standards, many of these folks won’t be able to buy a new car.

Auto sales have been a big force in boosting retail sales, consumer spending, manufacturing, transportation (trucking, railroads), and service activity. So when the auto subprime bubble pops, it won’t take down the financial system; but it will hit the broader economy.

Let’s hope – knowing that hope is not a strategy – that it doesn’t pop in synch with another debt-fueled economic miracle, now imploding, the shale oil and gas boom. Because that would knock down in one fell swoop the two major growth industries that have largely been responsible for whatever “recovery” we’ve had in the US.

Last fiddled with by ewmayer on 2015-01-12 at 01:13
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Old 2015-01-19, 18:03   #11
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