Is it time to ban Christmas presents? Across the country people are growling at the enforced obligation to waste money on that they can't afford, for people who won't use it. Festive gift-giving has lost its point, risks doing more harm than good, misteaches our children about values and kills the joy of anticipation of what should be a joyous time.
Before you think this is just curmudgeonly bah humbug, this rant isn't about presents under the spruce from parents or grandparents to children or spouses. It's about the ever growing creep of gifts to extended family, colleagues, children's teachers and more.
The next year, I polled 10,000 people on whether we should ban presents. Seven per cent said ditch all of them, 30 per cent said to all but children, and a further 46 per cent said limit it to the immediate family. Fewer than one in five supported giving beyond that.
Social convention says give a gift to someone, or their children, and you usually create an obligation on the recipient to buy back, whether they can afford it or not. If that obligation is something they will struggle to fulfill, you actually let them down.
Gift giving misprioritizes people's finances.
Christmas presents are a "zero sum" game, as people usually swap gifts of similar value. Look at it as a simple equation:
David gives Nick a £40 blue tie for Christmas; Nick gives David a pair of £40 designer orange socks.
The net result ... Nick has spent £40 and got a blue tie; David has spent £40 and got orange socks.
Effectively, you pay to receive someone else's choice of object. Fine if people have wealth, but consider Janet and John. Financially, everything's bonzer for her, so she decides, generously, to buy gifts for all and sundry. In her cousin John's case, it's a pair of £25 funky cufflinks. Yet he's skint, in debt, and has three kids but pride obliges him to buy her something of equal value.
Without the gift giving obligation, would John have really chosen to prioritise spending £25 to receive cufflinks? Instead, perhaps he'd have replaced his children's shoes or repaid some debt. Worse still, maybe he borrowed more to buy Janet her gift.
In other words, giftswapping skewed John's priorities. He would've been better off if Janet hadn't bought him a present.
Final thought
Some will say my view is unromantic, and others more bluntly call me Scrooge. However, this isn't about stopping festive fun, it's a challenge to pressured, blithe and habitual gift giving.
When buying's a chore, a thing to tick off a list, does that really help our pockets or our souls? Spending your time making tokens others appreciate, or even just being more considerate, is more in keeping with the spirit of winter festivals. Perhaps the real gift is to release someone from the obligation of buying you a present.
Banning Goes Too Far
Certainly banning voluntary actions goes well overboard. We do not need more ridiculous regulations telling people what they can or cannot do.
That said, it is certainly a sad testimony that every year people trample others to death, rushing to get the latest hot to for their kid, when the toy will be forgotten or abandoned days or even hours later.
Gift Cards
Gift cards are popular, but what the hell is the point?
I give you a $50 gift card to Kohls and you give me a gift card to Home Depot? Is there any point to this madness?
Getting a gift card to a place I shop certainly is better than getting something I have to exchange (or throw away), but how is a gift card better than just getting $50 in cash. Yet, if I give you $50, and you give me $50 what is the point?
The obvious answer (yet one that few see), is there is absolutely no point at all.
Christmas Is For Kids
Young kids cannot shop for themselves, nor do they have any money, so I suppose a case can be made for getting children presents, provided one does not break the bank to do so.
Matter of Practicality
Other than shopping for kids, the whole Christmas charade makes no practical sense whatsoever.
Yet every year, the vast majority acts like a herd of lemmings, rushing around wondering whether or not Aunt Martha or Sister Suzie will like will like the gifts we bought them.
I actually like shopping. However, I hate crowds and I hate shopping under pressure.
Instead, I buy gifts for people that I am sure they will like, whenever I see them. Frequently my Christmas shopping is nearly finished by June.
This way, shopping is a joy, not a chore. And gifts from the heart are always more appreciated.
For everyone else it's high time to be practical.
Call the Whole Thing Off
If all you are going to do is exchange gift cards, or worse yet buy any damn thing just to get Aunt Martha, Sister Suzie, or cousin Louie something they may not need and/or could not afford to buy on their own, then why bother?
There is no need to ban Christmas, but there is certainly a need for common sense, and common sense suggests the best thing to do is have a "family gathering" suggesting to call the whole Christmas exchange charade off.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
For now, the EU budget talks have collapsed. One major problem is cross agendas. All 27 nations have to agree to budget changes, and disputes are many.
Countries that rely heavily on EU funding, including Poland and its ex-communist neighbours, want current spending levels maintained or raised.
The UK and some other net contributors say cuts have to be made. At stake are 973bn euros (£782.5bn; $1,245bn).
France objects to the proposed cuts in agriculture, while countries in Central and Eastern Europe oppose cuts to cohesion spending - that is, EU money that helps to improve infrastructure in poorer regions.
They are the biggest budget items. The Van Rompuy plan envisages 309.5bn euros for cohesion (32% of total spending) and 364.5bn euros for agriculture (37.5%).
German Chancellor Angela Merkel says another summit may be necessary early next year if no deal can be reached in Brussels now.
In a speech to the European Parliament on Wednesday, the EU Commission President, Jose Manuel Barroso, complained, "No one is discussing the quality of investments, it's all cut, cut, cut."
UK Prime Minister David Cameron has warned that he may use his veto if other EU countries call for any rise in EU spending. The Netherlands and Sweden back his call for a freeze in spending, allowing for inflation.
Any of the 27 countries can veto a deal, and the European Parliament will also have to vote on the MFF even if a deal is reached.
Failure to agree would mean rolling over the 2013 budget into 2014 on a month-by-month basis, putting some long-term projects at risk.
If that were to happen it could leave Mr Cameron in a worse position, because the 2013 budget is bigger than the preceding years of the 2007-2013 MFF. So the UK government could end up with an EU budget higher than what it will accept now.
"No One Is Discussing Quality"
Barroso complains "No One Is Discussing Quality".
I for one am happy to discuss quality. There isn't any.
The agricultural subsidies are a joke, primarily aimed at propping up inefficient farms in France at the expense of higher costs for everyone. Those subsides should be cut to zero immediately.
And precisely why should the UK or anyone else contribute to infrastructure building in Poland? At what cost? Who determines quality?
Questions abound.
Pray tell, what is the basis for Barroso's statement "it's all cut, cut, cut"?
Point blank, there isn't any. There has never been a cut in the EU's budget in history and Barroso is actually bitching about a freeze at a time the Brussels' nannycrats are imposing huge austerity programs on Greece, Spain, Portugal, and Ireland.
Best Case Scenario
The best case scenario is the talks collapse, the EU raises the budget, and in response the UK tells the EU to go to hell and exits the EU.
We can hope.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
Note that the first step in liquidation will be the firing of 15,000 workers including the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores.
At least a dozen readers sent emails in response to my previous two posts on Twinkies.
One misguided soul from the Netherlands wrote "Your article on the bankruptcy of Hostess is so extremely biased. I am NOT surprised because you're ALWAYS bashing the unions."
One person accused me of being an extreme right-winger. I also received comments about me being an extreme left-wing Obama fan.
Silliness is clearly in the eyes of the beholder as it is impossible for both of those to be true. (In fact, neither is true because I am issue-based, not political party based, and I have huge differences with both major political parties).
I sometimes wonder if people can read.
Regarding Twinkies, I distinctly stated on my blog and I repeat (emphasis added)...
There is plenty of blame to go around, including untenable wages and benefits, leveraged debt, untenable management salaries etc.
However, the enabling factor behind the debt is loose monetary policy by the Fed coupled with fractional reserve lending. Factor in unions and corrupt management and there is no way the company could make it without huge concessions from the union.
Still, it is difficult to have much sympathy for those who vote to have no job in these trying times.
The union will likely see pension benefits slashed by 50% or more when handed over to the Pension Benefit Guarantee Corporation (PBGC). The PBGC is of course US taxpayers who should not have to pick up any of this tab at all (but they will).
The person who accused me of being an extreme right-winger heard me on Coast-to-Coast where I mentioned "vulture capitalists" and leveraged debt.
So yes, I am aware of leverage. I am also aware of huge raises and other poor management decisions.
The facts remain as follows
The Fed's loose monetary policy and fractional reserve lending enable leveraged buyouts
The unions made a piss poor choice
Past is Irrelevant
There was an offer on the table that would have saved 15,000 jobs. The union said no. Are those 15,000 people better off with no job than a job?
That is all that matters. Management salaries and leveraged debt are in effect sunken costs. If the majority of those people can go out and find a better deal, then they made the correct choice. If not, they didn't.
Given that accrued pension benefits went up in smoke in addition to all those jobs, I strongly suggest the union made a very poor choice.
I freely admit that if a majority of those workers can find better jobs with better benefits, then I am mistaken. However, that begs the question: If those workers could do better elsewhere, than why were they working for Hostess in the first place?
Like it or not, nothing else matters. Cutting off your nose (or your job) to spite management is not a smart thing to do.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
We can't get enough of Marquese Scott's incredible dubstep moves, but this time, he's in the company of Atlanta's Dragon House dance group as they go for anything but your typical walk in the park.
Your Daily Snapshot for Thursday, November 22, 2012
Weekly Address: Wishing the American People a Happy Thanksgiving
During this holiday season, President Obama gives thanks in his weekly address for all of the blessings we share as Americans, and expresses his gratitude to the brave men and women who are defending our freedom around the world.
Here are some of the top stories from the White House blog
President Obama Pardons Cobbler, the National Thanksgiving Turkey Yesterday, President Obama pardoned Cobbler, the National Thanksgiving Turkey. This year marked the first time the American people cast their vote via the White House Facebook page to decide which of two turkeys would receive the honor (though both received a pardon).
Shop Small on Saturday, November 24th 2012 In between the Black Friday sales and the Cyber Monday deals is Small Business Saturday (November 24th) – a day set aside to support the small businesses that play a vital role in creating jobs and economic opportunities all across the country.
Yelp and other sites make it easy to honor a favorite restaurant. Amazon lets you praise the author of a book that touched you.
But what about the hard-working and insightful organizations we work with to make our businesses succeed? We spend all day with them, and bet our reputations on them, but it's not often we get to highlight the vendors who bring humanity to their work. It's so easy to focus on the broken software and the broken promises that take up so much of our time, but it turns out that it's the miracle workers that actually make our best work possible.
As I finish up my huge Kickstarter project, I wanted to share the names of some of the folks I counted on to make it work:
Michael Quinn is a print broker who keeps his promises, no matter how complicated the job is.
Alex Miles Younger runs Unozip, a graphic design firm that will both make you look good and help you enjoy the process.
Robyn and the team at Global are a patient and wise fulfillment house.
Dan runs a classic letterpress shop in Brooklyn, and does it with generosity and talent. Go take a class and bring your coworkers.
And Brian continues to deliver professional web work with his team at Viget.
I'm also delighted to be able to work with caring, insightful people like my copyeditor Catherine E. Oliver, my agent Lisa DiMona, librarian Bernie Jiwa, artist Lori Koop, connectrix Michelle Welsch, rights guru Teri Tobias and the editorial duo of Adrian Zackheim and Niki Papadapolous.
Every day I'm amazed that I have the privilege of doing the work I do, and I know that I wouldn't be able to do it without the combined efforts of literally thousands of people who do more than they have to. From the infrastructure that gives us the stability we need to dream to the person who says yes instead of no, I'm grateful.
I guess that's what we all we need. People with a point of view who do more than they have to.
And thanks to you, of course, for reading and for cheering us all on.
Defaults on local councils put back on the ropes to urban sanitation companies. No respite worth. If the final plan provider payment partially interrupted the problem, the situation again becomes serious. "Since the beginning of the year delinquencies has skyrocketed. In just eight months to August, the accumulated debt of the sessions with cleaning companies was around 1,680 million.
This rise is worrisome for a sector in Spain employs over 120,000 people, "said the president of Aselip (Association of Public Cleaning), Francisco Jardón.
The result is that today the municipalities pending bills with these companies together account for nearly 2,000 million euros. As also in the pharmaceutical sector, the debt problem is that, far from disappearing, is regenerated by now.
"When the government launched the provider payment plan in April the problem was corrected by 90 percent. Then consistories debt with sanitation companies was nearly 3,000 million euros and around 300 million were left payable "adds Jardón. Why? "For the Royal Decree which implemented that plan did not, do not know why, consortia or associations, which also have hired urban sanitation".
Strike in Jerez
Urbaser stars in these days one of the main problems related to the debts. The ERE submitted by the company, which includes 125 layoffs and pay cuts, has meant that employees call for a strike in garbage collection that has lasted 19 days.
According to the City, more than 3,000 tons of garbage piled in the streets of the city of Cadiz, which last night had its second day of riots and burning container. Sources Provincial Fire Consortium reported traffic costs due to the garbage thrown by neighbors to the street as a barricade, and clashes with the police and firefighters who came to put out the flames.
That is quite a choppy translation but I believe you get the gist.
Cement consumption fell by 33.8% in the first ten months of the year, reaching 11.74 million tons, thus scoring one of the biggest percentage declines since the beginning of the crisis.
The association warns that if this fall in consumption is not stopped "using government" not ruled out further adjustments in business capacity of a sector that has already lost one third (33%) of their jobs since the onset of the crisis.
The Spanish cement industry currently employs 5,158 workers in Spain, compared to 7730 it had in 2007, pre-crisis period.
With these settings, the industry is adapting its production volumes to the current demand for cement, affected by the housing slowdown builder and civil works. According to his data, registered until October consumption accounts for less than 40% of the sector's production capacity.
Thus, in the first ten months of the year were made in Spain 13.84 million tons of cement, resulting in a decrease of 28.6%.
Regarding last October, production fell by 33% compared to the same month in 2011, after consumption fell by 24.7% to 1.14 million tonnes.
No Good Economic Outcome Possible
There is no possible economic outcome that Europe will be happy with. There is roughly a 10 percent chance the eurozone does not break up.
Moreover, should the eurozone not break apart, it will mean prolonged economic depression for Spain, Greece, and Portugal, and that depression in turn will hammer Germany and France.
Can-kicking exercises hoping to hold the eurozone intact are a huge part of the problem.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
Japan's grand experiment of decades-long QE coupled with Keynesian foolishness is about to take one last gigantic leap forward before it plunges straight off the cliff into a massive currency crisis.
For years, proponents of aggressive monetary policy have offered this unusual piece of advice as a way to end Japan's deflationary slump and invigorate the economy. Print lots of money, they said. Keep interest rates at zero. Convince the market that Japan will allow inflation for a while.
Japan's central bankers long scoffed at such recklessness, which they feared would ignite runaway inflation. But now, the bank's hand could be forced by an unlikely alliance of economists and lawmakers who have argued for Japan to take more monetary action after more than a decade of weak growth and depressed prices.
Championing their cause is the former prime minister Shinzo Abe, who is favored to return to the top job after nationwide elections next month. Otherwise deeply conservative, Mr. Abe surprised even his own supporters by calling for the Bank of Japan to be much bolder in tackling deflation, the damaging fall in prices, profits and wages that has choked Japan's economy for 15 years.
In escalating remarks over the last week, Mr. Abe has said that he will press the Bank of Japan to act on government orders if his Liberal Democratic Party wins the Dec. 16 election and even rewrite Japanese law to reduce the bank's independence.
In a speech in Tokyo on Thursday, Mr. Abe said he would call for the Bank of Japan to set an inflation target of 2 to 3 percent, far above its current goal of about 1 percent, with an explicit commitment to "unlimited monetary easing" — an open-endedness that has caused jitters among some economists. The bank's benchmark interest rate should be brought back to zero percent from 0.1 percent, Mr. Abe added.
He went even further over the weekend, saying in the southern city of Kumamoto that he would consider having the bank buy construction bonds directly from the government to finance public works and force money into the economy, according to local news reports. That raises concerns, however, the bank may be called on to bankroll unrestrained spending on more roads and bridges that Japan does not need.
Economists cite several missteps by the central bank that have entrenched Japan's deflationary mind-set and made consumers and businesses wary that the bank's policies will stick. In early 1999, as the country's economic woes deepened, the bank lowered a benchmark interest rate to virtually zero and said it would keep rates at zero until deflationary concerns disappeared. But an economic uptick in mid-2000 caused the bank to raise that rate to 0.25 percent despite protests from the government that the move was premature.
Monetarist Mush
Anyone who thinks an interest rate hike from 0% to .1% or even .25% has much influence on economic growth has "monetarist mush" for brains. Seriously.
The NYT does not name the economists, but I have no doubt they exist. Highly respected (for no reason) Richard Koo is one of them.
I have written about Koo on numerous occasions. From Japan's decade long experiment resulting in public debt of a 1,000,000,000,000,000 yen (a quadrillion yen), Koo reckons Japan failed to defeat deflation because it did not do enough!
Japan is in a crisis alright, and it was entirely self-made, by politicians listening to clueless economists all begging Japan to do something.
One Thing Worse
Central banks are bad enough on their own, but history shows that one thing worse than central banks acting on their own is central banks acting under control of politicians.
Committing to a little inflation will push stock prices higher, while a weaker yen will bolster Japan's exporters and strengthen corporate balance sheets. Incomes will rise, fueling consumption and raising tax revenue for the government, said Kozo Yamamoto, a lawmaker of Mr. Abe's Liberal Democratic Party.
"Basically, it's what the Bank of Japan should have been doing for the past 15 years," he said. "A few percent of inflation is nothing to be worried about."
US Populist Position
It's not just Japan loaded up with populist fools. The US has its share of them as well.
For example, Ellen Brown wants to end the Fed and put California politicians (state politicians in general) in charge of printing money to support "growth" as well as union causes.
As I have said, the one thing worse than having a Fed in charge of monetary policy is having politicians in charge of monetary printing!
Inflation will not raise consumption. People do not stop buying things just because prices are falling. Computers are proof enough. Prices of computers and electronic goods have been falling for decades, yet every year the volume of merchandise sold reaches skyward.
History suggests people buy things when they need to or want to not just because prices are rising. Government interference and tax breaks can shift demand forward by a few months (for no real economic benefit of course). There is only so much room to store things.
How much food or clothing can you store? Will you buy a coat you do not need, just because prices are going up? US QE Example
Take a look at the US.
QE has put a floor (for now) on asset prices but it has not done a damn thing for wages.
I come in at about the 3:00 mark, but the first few minutes of Lauren are entertaining as usual.
Average Hourly Earnings vs. CPI
Average hourly earnings has been falling for years and lagging CPI inflation since September 2009. Simply put real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly.
If inflation and QE forces wages and hiring up, then why didn't it?
The fear for Japan should be rising interest rates not deflation. If interest rates rise a mere 2%, interest on the national debt will consume 100% of government revenues.
When that happens a currency crisis awaits. I have long stated a currency crisis would happen far sooner in Japan than the US, and I believe we are about to find that out soon enough.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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