Markets still falling like whoa

[Pig Bellmont 8712]

18 minutes ago, Bozo_Casanova said:

Oh jeez I have no idea why people aren't happy with their incomes. It's not like the entire implicit bargain with the labor force that built the American middle class and domestic consumer market ceased to fucking exist or anything. No, not concern trolling at all. 
Let's look at some graphs and imagine they have the Air Jordan logo on them!

First of all it's well understood that workers are keeping less of what they create than they used to.  But it's actually worse than it looks. 


The black line is the dollars created by work. 
The green line is what most people make. 
See that blue line? Thats the average comp, which is distorted upwards by income inequality. That's the line in the graph above.  But that line is what things (housing, phones) are priced for. Do you know what fills that gap betseen green and blue? Cheap debt. 

Do you know what cheap debt does and why we keep debt cheap? To prop up home values. It works!

But why aren't these kids saving money like you did? Well, in part because they are punished for it.

And partly because they pay higher payroll taxes than you did, in addition to everything being more expensive.




How about it @HRSchenker, could there be something to this income thing - that younger workers got fucked? Or are people just buying too much fried chicken?

No no no. Everyone’s economic station is a direct correlation to their own abilities and willingness to forgo luxuries. Did you even SEE how many people bought iPhones?

[Wally Fairway 5543]

I need this one updated to have a line for mortgage rates (30 year or 15 year, your choice) - okthanxbai

[jimmyjazz 45898]

I'd like to see the ratio of average home price to average salary.  If I squint I can convince myself it was ~ 6X in 1971, and is probably 8X now.  How bad has it gotten in the interim?

[52-80 19150]

2 hours ago, Captainant said:

Have you considered that you're attacking a straw man argument? People are so economically fragile right now that a single trip to the hospital can bankrupt them, or they're paying more than their rent/mortgage in student debt payments (or have student debt in excess of $100k). 

People are hurting and the economy is slowing because that "gold" trickling down is just piss. Wage growth has gone to the top earners, profits and earnings go to shareholders first and not employees, and as mentioned before the cost of living (specifically, housing and medical care) have increased disproportionately from median wage growth. 

https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.html

 

[52-80 19150]

47 minutes ago, Bozo_Casanova said:

How about it @HRSchenker, could there be something to this income thing - that younger workers got fucked? Or are people just buying too much fried chicken?

 

[tantric superman 4667]

We bought our house back in 1989 and I think the price to salary ratio for us was about 2.0

I always was a tad bummed out that most of my friends had a good deal more house than I did, and the kids didn't have a pool, but in the end, I'm happy that I never even thought about the mortgage.  

Plus, I had walking around money for hookers and blow.

[HRSchenker 2268]

35 minutes ago, Pig Bellmont said:

No no no. Everyone’s economic station is a direct correlation to their own abilities and willingness to forgo luxuries. Did you even SEE how many people bought iPhones?

Let me be very clear: if you are making monthly payments on a pair of sneakers, you are a dumbass. Don't ever use the word "frugal" when describing our generation if you support that nonsense.

[tantric superman 4667]

3 hours ago, HRSchenker said:

Maybe you need to rent in south Dallas rather than scratch and claw for a 30 year mortgage in Lake Highlands. 

You poors should stay south of NW Highway.

 

[hornhorn 100]

18 minutes ago, Bozo_Casanova said:

Oh jeez I have no idea why people aren't happy with their incomes. It's not like the entire implicit bargain with the labor force that built the American middle class and domestic consumer market ceased to fucking exist or anything. No, not concern trolling at all. 
Let's look at some graphs and imagine they have the Air Jordan logo on them!

First of all it's well understood that workers are keeping less of what they create than they used to.  But it's actually worse than it looks. 


The black line is the dollars created by work. 
The green line is what most people make. 
See that blue line? Thats the average comp, which is distorted upwards by income inequality. That's the line in the graph above.  But that line is what things (housing, phones) are priced for. Do you know what fills that gap betseen green and blue? Cheap debt. 

 

 

So what you're saying is that costs are rising and worker's share of the output is decreasing? While at the same time you're arguing that costs are rising so salaries should go up for workers? Do you wonder if those same rising costs ALSO impact the companies they work for? So the margins that were going to workers are now going to the cost structure? And its ok if some of if goes to the cost structure since the percentage of worker's share has gone from 66% to 58% during that same period the productivity has gone from:

66% of indexed labor productivity of 20 is less than 58% of indexed labor productivity of 120. Disclaimer: Its unclear whether your chart is in line with the indexes. 

 

18 minutes ago, Bozo_Casanova said:

Do you know what cheap debt does and why we keep debt cheap? To prop up home values. It works!

But why aren't these kids saving money like you did? Well, in part because they are punished for it.

And partly because they pay higher payroll taxes than you did, in addition to everything being more expensive.




How about it @HRSchenker, could there be something to this income thing - that younger workers got fucked? Or are people just buying too much fried chicken?

Now let's talk about the other charts. There's a reason we use Median house prices over Average house prices. Also a national data on it skews it completely given the extremes on both ends. Here's a source that measure income multiples in specific areas of their own markets. 

You'll notice that 1980(at extremely high interest rates) was worse than 2000 and 2017 has the worst multiple but the debt is much cheaper making those same homes expensive but affordable monthly payments. Source: https://www.jchs.harvard.edu/home-price-income-ratios

 

Younger people are paying less and less taxes, the wealthy are paying more and more as time has gone on. The lowest quintile used to pay 10% in federal income taxes in 1979, today they pay less than 2%. While the Top one percent has stayed steady above 33%.

 

[52-80 19150]

1 hour ago, HRSchenker said:

Let me be very clear: if you are making monthly payments on a pair of sneakers, you are a dumbass. Don't ever use the word "frugal" when describing our generation if you support that nonsense.

But they're yeezies tho

[Bozo_Casanova 26444]

1 hour ago, hornhorn said:

So what you're saying is that costs are rising and worker's share of the output is decreasing?

I said no such thing. However prices of many things, particularly housing, has ridden and workers share of output has declined. 

1 hour ago, hornhorn said:

While at the same time you're arguing that costs are rising so salaries should go up for workers?

I made no such argument. I don't think about what "should" happen, but  the workforce will eventually act on their diminishing return on their contribution. What form that takes I have no idea. A few years ago they were declining to participate in the workforce. 

1 hour ago, hornhorn said:

Do you wonder if those same rising costs ALSO impact the companies they work for?

Oh, if only such a thing was knowable! Wait

Now I'm here as a hardcore free market capitalist saying profit is good. But fucking over your domestic market and your workforce is bad and dumb. 

1 hour ago, hornhorn said:

So the margins that were going to workers are now going to the cost structure?

Clearly not. 

1 hour ago, hornhorn said:

You'll notice that 1980(at extremely high interest rates) was worse than 2000 and 2017 has the worst multiple but the debt is much cheaper making those same homes expensive but affordable monthly payments

Yep - that was my point early in my post. Cheap leverage has replaced savings as a means of accruing wealth through real estate appreciation. 

1 hour ago, hornhorn said:

Younger people are paying less and less taxes, the wealthy are paying more and more as time has gone on. The lowest quintile used to pay 10% in federal income taxes in 1979, today they pay less than 2%. While the Top one percent has stayed steady above 33%.

They pay less of the taxes because they make less of the money. 

Edited October 8, 2019 by Bozo_Casanova

[staboner 4969]

2 hours ago, Wally Fairway said:

I need this one updated to have a line for mortgage rates (30 year or 15 year, your choice) - okthanxbai

this is what i regularly think about. its not just a US thing though, but rather a worldwide phenomenon. property has just soared since 2001's recession.  you can go to any desirable city in the world and living in anything remotely nice and central is 5X to 8X an annual salary now. 

somehow, somewhere, it has to change right? or was the moment we had previous (in the US from 50s to 90s) just that abnormal? i mean i get that it was a unique time for prosperity anywhere, so yeah there must be something to it. some global data sets would be interesting here - US vs Europe for example over the same timeline

Edited October 8, 2019 by staboner

[Fudge Nuggets 19190]

6 hours ago, Aqua Buddha said:

I find it fucking ridiculous that 6 and 7 year car loans are now the norm.

Loans?  For a car?  Bwahahahaha.

[Viking 301]

24 minutes ago, Fudge Nuggets said:

Loans?  For a car?  Bwahahahaha.

If any financial entity offers to loan me long term money at 0% interest, I take it.

[Wally Fairway 5543]

1 hour ago, Viking said:

If any financial entity offers to loan me long term money at 0% interest, I take it.

meh, real ballers are getting negative interest rate loans, just not in the US...yet

[TwiceHorn 31449]

7 hours ago, Bozo_Casanova said:

Oh jeez I have no idea why people aren't happy with their incomes. It's not like the entire implicit bargain with the labor force that built the American middle class and domestic consumer market ceased to fucking exist or anything. No, not concern trolling at all. 
Let's look at some graphs and imagine they have the Air Jordan logo on them!

First of all it's well understood that workers are keeping less of what they create than they used to.  But it's actually worse than it looks. 


The black line is the dollars created by work. 
The green line is what most people make. 
See that blue line? Thats the average comp, which is distorted upwards by income inequality. That's the line in the graph above.  But that line is what things (housing, phones) are priced for. Do you know what fills that gap betseen green and blue? Cheap debt. 

Do you know what cheap debt does and why we keep debt cheap? To prop up home values. It works!

But why aren't these kids saving money like you did? Well, in part because they are punished for it.

And partly because they pay higher payroll taxes than you did, in addition to everything being more expensive.




How about it @HRSchenker, could there be something to this income thing - that younger workers got fucked? Or are people just buying too much fried chicken?

Am I misreading the last one, or has everyone except Armybrat and maybe Tahoe paid the same payroll tax their entire career?

[LABEVO 928]

10 hours ago, HRSchenker said:

People say that kind of stuff but is that really the reason why people are making monthly payments for Air Jordans? Maybe you just need to stick to Sketchers. Maybe you should get an android tracphone rather than splurge for the iPhone every year. Maybe you should buy a used car rather than take out a 6 year car loan for a Ford 500. Maybe you need to rent in south Dallas rather than scratch and claw for a 30 year mortgage in Lake Highlands. 

But you can't say that to people in my generation because it's almost like a personal attack.

Yay antidotal data point. Anytime you give tax breaks to the bottom %, they spend it all, because they lack the funds for basic necessities. When you are living on the margin, you spend every dollar you make and tend to still forgo basics. 

[cactusflinthead 27598]

1 minute ago, LABEVO said:

Yay antidotal data point. Anytime you give tax breaks to the bottom %, they spend it all, because they lack the funds for basic necessities. When you are living on the margin, you spend every dollar you make and tend to still forgo basics. 

I don't know if that is vernacular now or I'm being a grammar nazi.

Anecdotal 

And he ain't gonna listen. Will Rogers said what you did long ago. His ancestors didn't listen then either. 

Stop being poor. Or die.

There. Done and dusted. 

Nvm that shit like food stamps to poor people are one of the best damn returns on a dollar. Oh hell no. Fuck them. 

[LABEVO 928]

13 minutes ago, cactusflinthead said:

I don't know if that is vernacular now or I'm being a grammar nazi.

Anecdotal 

And he ain't gonna listen. Will Rogers said what you did long ago. His ancestors didn't listen then either. 

Stop being poor. Or die.

There. Done and dusted. 

Nvm that shit like food stamps to poor people are one of the best damn returns on a dollar. Oh hell no. Fuck them. 

I’m an idiot and can’t type on iPad 

[52-80 19150]

6 hours ago, Viking said:

If any financial entity offers to loan me long term money at 0% interest, I take it.

Lenders in Denmark used to offer mortgages at negative interest rates.  Ofcourse the fees offset the total costs, but the base rate was ridiculous

[Girdwood 118]

This thread is steering into CR territory. 

[Homercles 10205]

Well duh, and it’s also one of those threads that seem to bring low-rep/low-post posters out of the woodwork to drop certain wisdom on the rest of us...maybe with a ‘long time lurker but now I’m going to jump into the fray on a heated topic’.  

My take is trickle down is a total failure and the stereotype of poor people on food stamps pimpin iPhone 11 Pro’s is mostly false, perpetuated by those who don’t want to talk about the middle class being squeezed. 

[Nice Guy Eddie 13510]

America doesn’t make too many new mid-to-high paying, low skill jobs anymore. The result is that more lower skilled workers are fighting for fewer jobs.  Add in that technology has made labor markets more efficient so hiring companies don’t overpay.  these gig economy jobs that basically job auctions every day. How low can Uber and others pay drivers right this second to deliver a person or package.

 

[HRSchenker 2268]

Do any of you subscribe to market related newsletters like Bob Brinker or the Prudent Speculator?

[bernorange 8359]

The BiS published a report on Monday that states:

Quote

the unprecedented growth in central banks’ balance sheets since the financial crisis has had a negative impact on the way in which financial markets function

The Fed just announced that POMO is back.

USC cheerleader dot gif

[Rusty Shackelford 414]

7 hours ago, 52-80 said:

Lenders in Denmark used to offer mortgages at negative interest rates.  Ofcourse the fees offset the total costs, but the base rate was ridiculous

And here comes the other side to that coin (savers pay for the debtor's reward) I'm sure the wealthy will gladly pay that penalty

https://www.reuters.com/article/unicredit-rates-idUSL5N26U440

Spoiler

Italy's Unicredit working on measures to transfer negative rates to depositors

 

 

2 Min Read

 

MILAN, Oct 9 (Reuters) - Unicredit, Italy’s biggest lender, is working on measures to transfer the European Central Bank’s negative rates onto clients holding more than 100,000 euros ($110,000) in their accounts, Chief Executive Jean-Pierre Mustier said on Wednesday.

The ECB last month cut rates deeper into negative territory as part of monetary stimulus aimed at reviving an ailing euro zone economy, nearly a decade after the bloc’s debt crisis.

In particular, the ECB’s deposit rate was reduced by a further 10 basis points to -0.50%

Mustier, who chairs the European Banking Federation, said in an interview with French TV channel BFM Business that “negative rates have a significant impact on European banks’ revenues”.

To counter this, banks “can transfer negative rates case by case onto big companies or some big clients”, Mustier said, describing such clients as those with deposits of more than 100,000 euros. He did not elaborate.

Unicredit is working to finalise such measures in the countries where the bank operates “so they are fully in place next year”, Mustier said.

 

 

[Rusty Shackelford 414]

The BiS published a report on Monday that states:

the unprecedented growth in central banks’ balance sheets since the financial crisis has had a negative impact on the way in which financial markets function

The Fed just announced that POMO is back.
USC cheerleader dot gif

[Tailgate 3021]

Happy Friday!

[jdhorn92 1545]

On 10/8/2019 at 8:22 PM, Viking said:

If any financial entity offers to loan me long term money at 0% interest, I take it.

Exactly.  Plus , use other people’s money for depreciating assets. Use your own money for appreciating assets. If you buy a car, put down 20-25% , finance the balance  for 36-48 mos., forego gap but buy a 100k warranty with $50-100 deduct.   Invest /save the difference or pay down higher apr debt or apply it to mortgage. 
 

If you are so fortunate to have no debt, and have the disposable income to pay cash (you would be a 1%’er) , then pay cash , otherwise see action plan above. 

Edited October 15, 2019 by jdhorn92

[Texas Jeff 1945]

On 10/8/2019 at 4:34 PM, hornhorn said:

Younger people are paying less and less taxes, the wealthy are paying more and more as time has gone on. The lowest quintile used to pay 10% in federal income taxes in 1979, today they pay less than 2%. While the Top one percent has stayed steady above 33%.

Add in the payroll tax and things flatten out quite a bit.

For federal income tax, the top 1% pay an average rate of about 27%, the top 10% pay an average rate of about 21%, the top 25% pay an average rate of about 18%.  A minimum wage worker will pay around 15% in payroll tax, if you include the employer and employee portion.

Those top 25% folks pay payroll tax too, but the social security portion rolls off after the limit, which really decreases their marginal tax rates.

[Incredulity 11664]

1 hour ago, Texas Jeff said:

Add in the payroll tax and things flatten out quite a bit.

For federal income tax, the top 1% pay an average rate of about 27%, the top 10% pay an average rate of about 21%, the top 25% pay an average rate of about 18%.  A minimum wage worker will pay around 15% in payroll tax, if you include the employer and employee portion.

Those top 25% folks pay payroll tax too, but the social security portion rolls off after the limit, which really decreases their marginal tax rates.

Why would you include the employer portion?

[Anastasis 23469]

19 minutes ago, Incredulity said:

Why would you include the employer portion?

Not sure why you would use the employer portion in that calculation, but if you are going to use payroll taxes in calculating the effective tax rate you should also include the earned income tax credit.

[Captainant 27653]

1 hour ago, Incredulity said:

Why would you include the employer portion?

Well if an employer has a bucket of money to cover all associated costs of an employee, ranging from salary to payroll taxes to benefits, than an increase in one of those costs necessarily must decrease the balance available to other costs. Meaning: even if it's not coming directly out of that employee's paycheck as a line-item deduction, it's still reducing that employee's take-home pay, and is still felt by that employee.

To ignore the employer portion is to ignore a significant percentage of taxation that employees are subject to - it's just "below the fold". And it's also another avenue that taxes are expressed asymmetrically (meaning, lesser for the wealthier compared to average) if you're a top-earner vs an average joe.

[Incredulity 11664]

so that portion would trickle down if the government wasn't charging it?

[Bozo_Casanova 26444]

Why would you include the employer portion?

Because it’s part of the price of your labor, funding a benefit program for you. For what possible reason would you not include it?

[Bozo_Casanova 26444]

so that portion would trickle down if the government wasn't charging it?

Trickle down? The employer isn’t doing you a favor by paying it. It’s the price of labor. You’re just disintermediated from it, like when you charge your employer a healthcare plane for working.

[BradInATX 9208]

2 minutes ago, Bozo_Casanova said:

Trickle down? The employer isn’t doing you a favor by paying it. It’s the price of labor. You’re just disintermediated from it, like when you charge your employer a healthcare plane for working.

I think he thinks that you just write the employee's salary down as their associated cost when a company does their books.

Edited October 15, 2019 by BradInATX

[Bozo_Casanova 26444]

To ignore the employer portion is to ignore a significant percentage of taxation that employees are subject to - it's just "below the fold". And it's also another avenue that taxes are expressed asymmetrically (meaning, lesser for the wealthier compared to average) if you're a top-earner vs an average joe.

Well said- the idea of an “employer” portion is an absurd, paternalistic fiction that doesn’t exist among the self-employed and shouldn’t exist anywhere.

[Captainant 27653]

53 minutes ago, Incredulity said:

so that portion would trickle down if the government wasn't charging it?

Not what I'm arguing or saying, but good attempt at moving the goalposts. I'm simply stating why you shouldn't ignore the "employer" portion of taxes when considering the effects and outcomes of tax policy decisions, and highlighting its asymmetrical (read: bottom-heavy) impact on different income brackets.

[elfenix 34230]

On 10/8/2019 at 10:44 PM, TwiceHorn said:

Am I misreading the last one, or has everyone except Armybrat and maybe Tahoe paid the same payroll tax their entire career?

pretty much correct.  the payroll taxes used to go up every couple-few years.  despite that, from the mid 50s until the mid 70s the amount in the trust fund decreased from a 3x multiple of yearly expenses to a fraction of yearly expenses (assuming everyone just stopped paying taxes).  after a string of negative income years the trust fund was down to about 2 months expenses (again, assuming everyone stopped paying taxes).  everyone panicked and put the rates on auto pilot to go up through the early 90s.  and the economy did well in the 80s so the trust fund quickly inflated up to 1x (1993), peaking at about 3x in 2011-12.  but now the multiple is falling again.  last year social security only took in 3 billion more than it spent (so about 3% cushion).  and an entire generation of workers is conditioned into feeling that payroll taxes are fixed.  that's a political problem.

i think inflating the trust fund is a bad idea because it takes money out of workers hands and doesn't pay it out to beneficiaries.  that's a net drag on the economy.

 

https://www.ssa.gov/oact/STATS/table4a3.html

 

https://www.ssa.gov/oact/progdata/taxRates.html

 

 

 

[Trey3216 15346]

So WeWork has gone from super trendy IPO to needing an emergency deal by mid-Nov or they’re gonna fold in less than 3 months.   Good God 

[Wally Fairway 5543]

19 minutes ago, Trey3216 said:

So WeWork has gone from super trendy IPO to needing an emergency deal by mid-Nov or they’re gonna fold in less than 3 months.   Good God 

I was in the room with one of my kids and the debate was on last night, they thought I'd lost it when I started laughing at the WeWork commercial that played during one of the breaks.
Good see they are spending their ad $$$'s during the cash crisis.

[Aqua Buddha 14588]

24 minutes ago, Trey3216 said:

So WeWork has gone from super trendy IPO to needing an emergency deal by mid-Nov or they’re gonna fold in less than 3 months.   Good God 

It's astounding, if you think about it.  Worth $50B (supposedly) to completely out of money by Feb.  Might be the biggest/quickest flameout in history.  All it took was a few probing questions about the IPO filing.  

[Wally Fairway 5543]

15 minutes ago, Aqua Buddha said:

It's astounding, if you think about it.  Worth $50B (supposedly) to completely out of money by Feb.  Might be the biggest/quickest flameout in history.  All it took was a few probing questions about the IPO filing.  

Quickest/biggest  flameout in history is still Enron - from being named (multiple times) Fortune Magazines most Innovative company and a stock price of $90 ($80 as late as Feb 2001) with an entity value of $70 billion to bankrupt just 15 months later.

Or I'd have to dig a little, but lots of shit was crashing during the dot.com bust

Edited October 16, 2019 by Wally Fairway

[Aqua Buddha 14588]

2 minutes ago, Wally Fairway said:

Quickest/biggest  flameout in history is still Enron - from being named (multiple times) Fortune Magazines most Innovative company and a stock price of $90 ($80 as late as Feb 2001) with an entity value of $70 billion to bankrupt just 15 months later.

Or I'd have to dig a little, but lots of shit was crashing during the dot.com bust

That's prolly tops.  That was a legit valuation whereas WeWork's value was just speculation.  Similar flameouts, though.  Just a few probing questions got the ball rolling.

[Nice Guy Eddie 13510]

WeWork base business model seems like it could work but they intentionally grew too fast and I would guess the monthly nut is strangling them.  
 

[elfenix 34230]

3 hours ago, Nice Guy Eddie said:

WeWork base business model seems like it could work but they intentionally grew too fast and I would guess the monthly nut is strangling them.  
 

maybe having a dorm with your colo office space isn't as great as they were making it out to be

[Nice Guy Eddie 13510]

1 hour ago, elfenix said:

maybe having a dorm with your colo office space isn't as great as they were making it out to be

WeWork is great for their customers. You get a great (assumed) location for an extremely large discount that is being subsidized by VCs. The problem is that the VCs can't permanently fund that business model.  They have something like $47B in lease obligations but basically next to zero in customer commitments.  Maybe that will eventually work out well for the WeWork owners but it's a large risk for someone.

[Wally Fairway 5543]

32 minutes ago, Nice Guy Eddie said:

WeWork is great for their customers. You get a great (assumed) location for an extremely large discount that is being subsidized by VCs. The problem is that the VCs can't permanently fund that business model.  They have something like $47B in lease obligations but basically next to zero in customer commitments.  Maybe that will eventually work out well for the WeWork owners but it's a large risk for someone.

That formula only works well while the economy is strong, in a downturn WeWork still has the lease commitments and there will be far fewer customers looking for space. 
I know this because I went to work (contract basis) for a property management firm that had a similar model, that they were moderately successful right up until late 2008 early 2009. But instead of lease payments they were buying and refurbishing older buildings and leasing them out; same imbalance in risk and balance sheet - they had debt payments on properties and when people walked from leases and no one else was lined up the whole thing went into restructuring virtually overnight. 
(A year and a half into my working there, they had a restructuring deal fall apart and {poof} Wally and others were let go overnight)

[Nice Guy Eddie 13510]

I can only see WeWork greatly reducing their risk if they signed up large corporations to fill a certain percentage of their buildings. Presumably the large corps could provide a consistent revenue even through downturns.