"Our analysis identifies offshoring of the labor-intensive part of the U.S supply chain as a leading potential explanation for the decline in the labor share."
Your articles add to the site. Just recently even the Pope was challenging how the economy is not for Wall Street, but is main street and your articles help amplify that point.
Meet one of Mitt Romney's "takers" in the 47 percent. Jason is a 35-year-old (college educated) military combat Vet who now is unemployed and using food stamps.
"When you're poor, you learn to make sacrifices --- food shouldn't be one of them. I didn't risk my life in Afghanistan so I could come back and watch people go hungry in America. I certainly didn't risk it so I could come back and go hungry."
1) The increase in the retirement age has also led to a substantial rise in disability rates, even if there had been no underlying change in the incidence of disability.
2) The final approval rate for disability claims is below 50 percent, so it's reasonable to believe that the vast majority of frivolous claims are rejected.
3) Less educated workers are far more likely to have worked at physically demanding jobs that could result in a disability.
A back problem may only be an inconvenience for an educated desk worker, but may make it impossible for someone with a GED to find work in a physically intensive and low-paying job. And it's much easier for an employee who already holds a job to request a reasonable accommodation, rather than getting hired somewhere else with an existing disability. Also, when the rewards are high enough, people are more willing to put up with some pain and discomfort at their work because people often prefer to work, even after they have qualified as "disabled." If more attractive employment were available, they would be doing so.
Yeah..., I think that people are pretty much fed up with a lot of things that are going on in the halls of power..., and I think they know it. Part of a comment I made on one of Don's pieces over at The Agonist was, "The Occupy movement and the government crack-down response to it demonstrated just how concerned they are of a populist uprising. And the overwhelming public response to the Syria situation…, and the government response to it…, demonstrates to me that they are still very concerned about a popular uprising. I gotta hope that we turn the right corner…, but I am preparing for otherwise."
On another note..., I see the coming implementation of Obamacare as a disaster in the making. He has already had to do an aboutface on the 50 employee mandate..., for at least one year. And once all the folks with medical issues sign on..., and healthy people opt for the penalty..., well, with all the issues you have already mentioned..., I just can't see anything good coming our way.
"...the labor share, which has been driven by a decline in the share of payroll compensation in national income over the last 25 years, is likely due to the offshoring of the labor-intensive component of the U.S. supply chain... the majority of the decline is related to the import exposure of U.S. businesses...the decline of the labor share does not reflect an
increase in corporate profit rates, but rather an increase in the share of income paid for the use of structures and equipment... if globalization continues apace, the labor share will most likely continue to decline, especially in sectors that face the largest increases in foreign competition...the most recent decline has been dominated by changes in the trade and manufacturing sectors, even prior to 1980...there is limited evidence that the share is dropping due to the substitution of capital for (unskilled) labor to exploit technical change embodied in new capital goods...the Affordable Care Act is also likely to drive movements in the near future. “Since health insurance benefits are part of payroll compensation, a change in the prevalence of these benefits that is not offset by changes in wages and salaries will affect the labor share."
A new study from the Center for Economic and Policy Research (CEPR) shows that the vast majority of U.S. workers would see wage losses as a result of the pending "free trade agreement" called the Trans-Pacific Partnership (TPP) --- while estimates of U.S. economic gains would be very small --- only 0.13 percent of GDP by 2025.
1) Yellen backed the repeal of the landmark Glass-Steagall bank reform.
2) Yellen also pressured the government to develop a new statistical metric [chained CPI] intended to lower payments to senior citizens on Social Security.
3) In 1993 Yellen signed a letter to Clinton advocating for the North American Free Trade Agreement -- "Specifically, the assertions that NAFTA will spur an exodus of U.S. jobs to Mexico are without basis."
Studies on the impact of the global economic crisis on suicides showed men in the U.S. had the largest number of excess suicides related to unemployment --- 8.7% higher (Any connection?)
This would make for an interesting post, the winners and losers of QE, in terms of profits and easy money. I'm fairly certain MBSes are the winners and as you note, T-bills, but the trade offs on the minute are not known.
The big thing here is jobs. Right now we have Zuckerberg lying his head off, demanding more guest worker Visas and I think all of America should apply to Facebook to watch them reject all. These companies have absurd rejection rates, like 97-99.9% for applications received, so their claim is really bullshit. You don't have to have an IQ of 168 to do server maintenance or even write some code, and the reality is they like H-1B due to indentured servitude plus they made huge savings on labor costs.
I'm just glad I went out on a limb over a month ago and pointed to the odd lack of inflation considering these purchases and said taper wouldn't happen. I'll leave the nasty effects to you if you are of a mind to educate us further.
Smaller banks have much higher profit margins and therefore higher spreads from their customer base. Big banks are squeezed because their customers are largely multinationals who don't really need them. The biggest complainers about QE have been the CEOs of Goldman Sachs and Wells Fargo.
But like most U.S. policy, it is the smaller companies and in this case banks which get killed for they are not able to offshore outsource and manipulate global markets.
It's true the big banks get 0.25 on their potload of reserves, which cost them nothing. But their bread and butter, anywhere from 50% to 75% of their net income, is NII, or the spread between their weight average cost of funds and interest rate on earning assets. This is where they are getting killed. A flat yield curve is just deadly for banks for any prolonged period of time, and in a ZIRP environment where yields in general are being pushed to zero, it can be fatal eventually. Add to this the whole problem of collateral shortages, and you have an exposed industry, including community banks. If this goes on through 2016 many of them will only be able to survive by enacting substantial cuts in their expense base, which in banking means getting rid of people.
Of course it helps the banksters, free loot to invest in the DJIA and commodities. That's the only reason we have regular folks withdrawing money to live on (in Versailles parlance, the 'commoners that eat cake aka the 99%ers') while the DJIA reaches records.
But that's how lame and idiotic banksters making six to ten figures are. They sit at the Fed table, get a pass from future bankster defender Holder and others at the DOJ and SEC and CFTC, know all the players on the inside, and still lose on the markets despite rigging it all! I mean these people can actually forge signatures and get away with it, bribe/lobby Congress, meet with officials every day all day, and still lose $? How freaking stupid do you have to be to do that?! I mean I've had jobs for less than $10/hr. where you'd be fired for not, well, doing a task like placing something here or there or doing this or that one time! One time. And that was for close to $10/hr. And these are the "best and brightest"?! Ha. Ha. Ha! HA HA HAHAHAHAHAHHAHAHAHAHAHHAHAHAHAH! I love idiocy and lies and double standards.
He cannot make Congress and this administration enact policies needed to employ America.
Right now we have evil Zuckerberg lying and strong arming Congress to get more cheap labor. They are going to pass TPP, list goes on and on about how this government is making sure Americans are economically screwed and the Fed just doesn't have a lot of power to counter that.
I thought they were getting free money, borrowing at nothing and making money off of the margin.
On Treasuries most interesting. I agree the Fed should quit pushing this drug that somehow if Wall Street does well that helps the economy. We should do an analysis, markets up, they layoff, record profits, they offshore outsource, market goes down they use it as an excuse to have an internal employee bloodbath.
I just did up CPI, I am having technical issues so didn't get to it, but decided to overview it for exactly the reason you mention, Wall street/traders are oblivious to anything beyond what number is programmed into the HFT platform.
Who cares, honestly. QE, really? ZIRP, really? Who sits at the Fed's table? Who controls the Fed? Where's Corzine? In jail, or still free? Is Dimon still on the Board of Governors at the NY Fed despite White Whale, derivatives, bribing govt. officials in Alabama, oil, silver, aluminum manipulation, mortgage fraud? At this point the whole circus tent is burning down with the folks inside and the jackasses in charge are having us debate whether Bozo looks better with blue or red shoes or which corrupt jackass will sit at the head of the Bankster-controlled Fed. You know what? I don't care anymore because it's obvious we're all burning to death. Words, words, words mean nothing. There's democracy for you - it means nothing! The folks in charge will remain in charge and keep getting richer no matter what, no matter who or what runs or gets elected, or or what sits in this or that CEO's office, etc.
Oh, will QE or ZIRP until 2099 help us? I'm guessing not, but it sure as Hell will help create Monopoly $ for the banksters, their relatives and cronies, and inflate us to death. Unemployment, gosh is it 6 or 7% like Bloomberg or CNBC or politicians tell me? Or is it truly closer to 25% or above? And those with jobs can work part-time gigs for 1980 wages. What an honor. So glad we all got those degrees and arthritis busting our asses in jobs across the globe.
But hey, call me a cynic, but this whole thing is a circus. Words, words, words, and the clowns in charge don't give a sh*t because they run it and keep getting richer. So where's the real change? Where's the outcry? Where's the reform? Where's the PRISON TIME in a maximum security state prison or FCI for life without parole after tens of millions of people have been destroyed, watched as friends and family killed themselves or became homeless, or just gave up on hope? Eh? Where? Words, words, words. Because all I see is the same old corruption and bullsh*t and crickets and tumbleweed. And words, more words. But hey, someone over there went through a Stop sign. And if he doesn't pay his fine within 30 days, he'll be in jail right quick. Ain't it great. More words. And while reading these words, some assclown probably made ten billion dollars for bribing an official here or there and betting against his own country's safety or selling national security info. and calling it "profit seeking." Awesome, how far we've evolved from sludge.
All he has to do is end QE. That would take away the juice that is pushing the stock market to record highs. The trajectory of the S&P 500 has been exactly that of the growth in Fed assets. The stock market is benefiting the upper class only, which is widening the income gap.
I do agree deflation ought to concern them, but we're probably alone in that worry other than the Fed. The market is paying no attention. PPI and CPI consistently show modest if any inflation, but no deflation. While they definitely are concerned about the sharp increase in interest rates, I don't sense any explanation from Bernanke why that occurred. Obviously it had something to do with the talk of tapering QE, but wouldn't it be logical to assume that the market was trying to find the interest rate at which Treasuries would be priced at without QE, which means the rate if the buyer who has been snapping up 75% of new issuance were to quit buying. That market clearing rate is probably even higher than what we have seen so far. Add to that an even more interesting risk. China and Japan have been holding steady on their Treasury portfolio, no longer buying. What if they had to sell? What if China had to dump $1 trillion to rescue their banks? The market clearing rate would then be 7% or higher for 10 years and up. If the Fed is contemplating this prospect, I wonder if they have to continue QE as they are in a race to mop up as many bonds as they can before such a calamity strikes - in other words help the Treasury get their duration into the 2 year or less area, like Japan has now done. That keeps interest costs down until some really bad day arrives when the Fed is forced to push up Fed Funds rate.
Also, don't be surprised if you hear the banks squawk louder. QE and ZIRP are really starting to pinch their bottom line and the removal of quality collateral from the system is worrisome. This alone, I thought, would force them to taper on QE, so I was wrong on that point. From a market practitioner perspective, this is really concerning, and suggests that your fear about deflation is right on and underestimated by the market.
"Our analysis identifies offshoring of the labor-intensive part of the U.S supply chain as a leading potential explanation for the decline in the labor share."
http://www.brookings.edu/~/media/Projects/BPEA/Fall%202013/2013b%20elsby...
Your articles add to the site. Just recently even the Pope was challenging how the economy is not for Wall Street, but is main street and your articles help amplify that point.
Talking about how the American people want them to stop giving to the rich instead of what Congress is doing.
Meet one of Mitt Romney's "takers" in the 47 percent. Jason is a 35-year-old (college educated) military combat Vet who now is unemployed and using food stamps.
"When you're poor, you learn to make sacrifices --- food shouldn't be one of them. I didn't risk my life in Afghanistan so I could come back and watch people go hungry in America. I certainly didn't risk it so I could come back and go hungry."
http://www.huffingtonpost.com/jay-kirell/veteran-food-stamps_b_3963203.html
1) The increase in the retirement age has also led to a substantial rise in disability rates, even if there had been no underlying change in the incidence of disability.
2) The final approval rate for disability claims is below 50 percent, so it's reasonable to believe that the vast majority of frivolous claims are rejected.
3) Less educated workers are far more likely to have worked at physically demanding jobs that could result in a disability.
A back problem may only be an inconvenience for an educated desk worker, but may make it impossible for someone with a GED to find work in a physically intensive and low-paying job. And it's much easier for an employee who already holds a job to request a reasonable accommodation, rather than getting hired somewhere else with an existing disability. Also, when the rewards are high enough, people are more willing to put up with some pain and discomfort at their work because people often prefer to work, even after they have qualified as "disabled." If more attractive employment were available, they would be doing so.
SOURCE
http://www.cepr.net/index.php/blogs/beat-the-press/the-rise-in-disabilit...
Yeah..., I think that people are pretty much fed up with a lot of things that are going on in the halls of power..., and I think they know it. Part of a comment I made on one of Don's pieces over at The Agonist was, "The Occupy movement and the government crack-down response to it demonstrated just how concerned they are of a populist uprising. And the overwhelming public response to the Syria situation…, and the government response to it…, demonstrates to me that they are still very concerned about a popular uprising. I gotta hope that we turn the right corner…, but I am preparing for otherwise."
On another note..., I see the coming implementation of Obamacare as a disaster in the making. He has already had to do an aboutface on the 50 employee mandate..., for at least one year. And once all the folks with medical issues sign on..., and healthy people opt for the penalty..., well, with all the issues you have already mentioned..., I just can't see anything good coming our way.
"...the labor share, which has been driven by a decline in the share of payroll compensation in national income over the last 25 years, is likely due to the offshoring of the labor-intensive component of the U.S. supply chain... the majority of the decline is related to the import exposure of U.S. businesses...the decline of the labor share does not reflect an
increase in corporate profit rates, but rather an increase in the share of income paid for the use of structures and equipment... if globalization continues apace, the labor share will most likely continue to decline, especially in sectors that face the largest increases in foreign competition...the most recent decline has been dominated by changes in the trade and manufacturing sectors, even prior to 1980...there is limited evidence that the share is dropping due to the substitution of capital for (unskilled) labor to exploit technical change embodied in new capital goods...the Affordable Care Act is also likely to drive movements in the near future. “Since health insurance benefits are part of payroll compensation, a change in the prevalence of these benefits that is not offset by changes in wages and salaries will affect the labor share."
http://www.brookings.edu/about/projects/bpea/latest-conference/2013-fall...
A new study from the Center for Economic and Policy Research (CEPR) shows that the vast majority of U.S. workers would see wage losses as a result of the pending "free trade agreement" called the Trans-Pacific Partnership (TPP) --- while estimates of U.S. economic gains would be very small --- only 0.13 percent of GDP by 2025.
http://www.cepr.net/documents/publications/TPP-2013-09.pdf
They slashed food stamps as this article warns about. Folks, this is just cruel and sadistic.
Looks like people overlooked Yellen for Summers is so bad. Making Bernanke look like a Saint here.
1) Yellen backed the repeal of the landmark Glass-Steagall bank reform.
2) Yellen also pressured the government to develop a new statistical metric [chained CPI] intended to lower payments to senior citizens on Social Security.
3) In 1993 Yellen signed a letter to Clinton advocating for the North American Free Trade Agreement -- "Specifically, the assertions that NAFTA will spur an exodus of U.S. jobs to Mexico are without basis."
SOURCE:
http://www.huffingtonpost.com/2013/09/17/janet-yellen-glass-steagall_n_3...
Studies on the impact of the global economic crisis on suicides showed men in the U.S. had the largest number of excess suicides related to unemployment --- 8.7% higher (Any connection?)
SOURCE:
http://www.bmj.com/content/347/bmj.f5239
This would make for an interesting post, the winners and losers of QE, in terms of profits and easy money. I'm fairly certain MBSes are the winners and as you note, T-bills, but the trade offs on the minute are not known.
The big thing here is jobs. Right now we have Zuckerberg lying his head off, demanding more guest worker Visas and I think all of America should apply to Facebook to watch them reject all. These companies have absurd rejection rates, like 97-99.9% for applications received, so their claim is really bullshit. You don't have to have an IQ of 168 to do server maintenance or even write some code, and the reality is they like H-1B due to indentured servitude plus they made huge savings on labor costs.
I'm just glad I went out on a limb over a month ago and pointed to the odd lack of inflation considering these purchases and said taper wouldn't happen. I'll leave the nasty effects to you if you are of a mind to educate us further.
Smaller banks have much higher profit margins and therefore higher spreads from their customer base. Big banks are squeezed because their customers are largely multinationals who don't really need them. The biggest complainers about QE have been the CEOs of Goldman Sachs and Wells Fargo.
But like most U.S. policy, it is the smaller companies and in this case banks which get killed for they are not able to offshore outsource and manipulate global markets.
The TBTF are probably just fine, correct?
It's true the big banks get 0.25 on their potload of reserves, which cost them nothing. But their bread and butter, anywhere from 50% to 75% of their net income, is NII, or the spread between their weight average cost of funds and interest rate on earning assets. This is where they are getting killed. A flat yield curve is just deadly for banks for any prolonged period of time, and in a ZIRP environment where yields in general are being pushed to zero, it can be fatal eventually. Add to this the whole problem of collateral shortages, and you have an exposed industry, including community banks. If this goes on through 2016 many of them will only be able to survive by enacting substantial cuts in their expense base, which in banking means getting rid of people.
Of course it helps the banksters, free loot to invest in the DJIA and commodities. That's the only reason we have regular folks withdrawing money to live on (in Versailles parlance, the 'commoners that eat cake aka the 99%ers') while the DJIA reaches records.
But that's how lame and idiotic banksters making six to ten figures are. They sit at the Fed table, get a pass from future bankster defender Holder and others at the DOJ and SEC and CFTC, know all the players on the inside, and still lose on the markets despite rigging it all! I mean these people can actually forge signatures and get away with it, bribe/lobby Congress, meet with officials every day all day, and still lose $? How freaking stupid do you have to be to do that?! I mean I've had jobs for less than $10/hr. where you'd be fired for not, well, doing a task like placing something here or there or doing this or that one time! One time. And that was for close to $10/hr. And these are the "best and brightest"?! Ha. Ha. Ha! HA HA HAHAHAHAHAHHAHAHAHAHAHHAHAHAHAH! I love idiocy and lies and double standards.
He cannot make Congress and this administration enact policies needed to employ America.
Right now we have evil Zuckerberg lying and strong arming Congress to get more cheap labor. They are going to pass TPP, list goes on and on about how this government is making sure Americans are economically screwed and the Fed just doesn't have a lot of power to counter that.
I thought they were getting free money, borrowing at nothing and making money off of the margin.
On Treasuries most interesting. I agree the Fed should quit pushing this drug that somehow if Wall Street does well that helps the economy. We should do an analysis, markets up, they layoff, record profits, they offshore outsource, market goes down they use it as an excuse to have an internal employee bloodbath.
I just did up CPI, I am having technical issues so didn't get to it, but decided to overview it for exactly the reason you mention, Wall street/traders are oblivious to anything beyond what number is programmed into the HFT platform.
Who cares, honestly. QE, really? ZIRP, really? Who sits at the Fed's table? Who controls the Fed? Where's Corzine? In jail, or still free? Is Dimon still on the Board of Governors at the NY Fed despite White Whale, derivatives, bribing govt. officials in Alabama, oil, silver, aluminum manipulation, mortgage fraud? At this point the whole circus tent is burning down with the folks inside and the jackasses in charge are having us debate whether Bozo looks better with blue or red shoes or which corrupt jackass will sit at the head of the Bankster-controlled Fed. You know what? I don't care anymore because it's obvious we're all burning to death. Words, words, words mean nothing. There's democracy for you - it means nothing! The folks in charge will remain in charge and keep getting richer no matter what, no matter who or what runs or gets elected, or or what sits in this or that CEO's office, etc.
Oh, will QE or ZIRP until 2099 help us? I'm guessing not, but it sure as Hell will help create Monopoly $ for the banksters, their relatives and cronies, and inflate us to death. Unemployment, gosh is it 6 or 7% like Bloomberg or CNBC or politicians tell me? Or is it truly closer to 25% or above? And those with jobs can work part-time gigs for 1980 wages. What an honor. So glad we all got those degrees and arthritis busting our asses in jobs across the globe.
But hey, call me a cynic, but this whole thing is a circus. Words, words, words, and the clowns in charge don't give a sh*t because they run it and keep getting richer. So where's the real change? Where's the outcry? Where's the reform? Where's the PRISON TIME in a maximum security state prison or FCI for life without parole after tens of millions of people have been destroyed, watched as friends and family killed themselves or became homeless, or just gave up on hope? Eh? Where? Words, words, words. Because all I see is the same old corruption and bullsh*t and crickets and tumbleweed. And words, more words. But hey, someone over there went through a Stop sign. And if he doesn't pay his fine within 30 days, he'll be in jail right quick. Ain't it great. More words. And while reading these words, some assclown probably made ten billion dollars for bribing an official here or there and betting against his own country's safety or selling national security info. and calling it "profit seeking." Awesome, how far we've evolved from sludge.
All he has to do is end QE. That would take away the juice that is pushing the stock market to record highs. The trajectory of the S&P 500 has been exactly that of the growth in Fed assets. The stock market is benefiting the upper class only, which is widening the income gap.
I do agree deflation ought to concern them, but we're probably alone in that worry other than the Fed. The market is paying no attention. PPI and CPI consistently show modest if any inflation, but no deflation. While they definitely are concerned about the sharp increase in interest rates, I don't sense any explanation from Bernanke why that occurred. Obviously it had something to do with the talk of tapering QE, but wouldn't it be logical to assume that the market was trying to find the interest rate at which Treasuries would be priced at without QE, which means the rate if the buyer who has been snapping up 75% of new issuance were to quit buying. That market clearing rate is probably even higher than what we have seen so far. Add to that an even more interesting risk. China and Japan have been holding steady on their Treasury portfolio, no longer buying. What if they had to sell? What if China had to dump $1 trillion to rescue their banks? The market clearing rate would then be 7% or higher for 10 years and up. If the Fed is contemplating this prospect, I wonder if they have to continue QE as they are in a race to mop up as many bonds as they can before such a calamity strikes - in other words help the Treasury get their duration into the 2 year or less area, like Japan has now done. That keeps interest costs down until some really bad day arrives when the Fed is forced to push up Fed Funds rate.
Also, don't be surprised if you hear the banks squawk louder. QE and ZIRP are really starting to pinch their bottom line and the removal of quality collateral from the system is worrisome. This alone, I thought, would force them to taper on QE, so I was wrong on that point. From a market practitioner perspective, this is really concerning, and suggests that your fear about deflation is right on and underestimated by the market.
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