marți, 24 septembrie 2013

Seth's Blog : Deleting 'must have' features

 

Deleting 'must have' features

One way to invent a new category is to delete the must have features that others insist a product or feature or design has to have in order to be worth something.

Another way is to build in features that others say can't possibly appeal to more than just a few.

       

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luni, 23 septembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Illusion of Prosperity: Deflating the American Dream; No Recovery in "Real" Income

Posted: 23 Sep 2013 12:20 PM PDT

In The Morning After; Price Discovery is Zero; PUT on the Bond Market? Is Inflation Really Under 2%? I posted a chart with a caption of "wages" but the corresponding chart showed "income".

The post is now fixed, but newer data has come in, and Doug Short at Advisor Perspectives has updated charts that I would like to share.

click on any chart for a sharper image

From Median Household Income Growth: Deflating the American Dream, by Doug Short.
What is the single best indicator of the American Dream? Many would point to household income growth. My study of the Census Bureau's data shows a 600.7% growth in median household incomes from 1967 through 2012. The ride has been bumpy, but it equates to a 4.5% annualized growth rate. Sounds impressive, but if you adjust for inflation using the Census Bureau's method, that nominal 614.2% total growth shrinks to 18.8%, a "real" annualized growth rate of 0.39%.

But if we dig a bit deeper into the method of inflation adjustment, the American Dream looks more like an illusion, as in "money illusion".


The data for the charts is from Sentier Research. Sentier uses the CPI as the deflator for computing their real household income data series.

The above chart goes back to 1968. It shows that income growth since 1968 is nearly all inflation. Closer scrutiny shows "real" income growth has been negative since the year 2000.

Incredible Shrinking Income

Please consider this chart from Real Median Household Incomes: Another Monthly Decline by Doug Short.



Real median incomes are down 7.3% since 2000. That means at least half of the population is worse off now than 13 years ago!

Think the CPI is a flawed measure? Doug Short has a comparison using different deflators, including the Alternate-CPI from John Williams' Shadowstats.



Doug comments "The Alternate CPI is a rather bizarre outlier. What this deflator is telling us translates into something like this: The 1967 median household income of $7,143 chained in 2012 dollars would have had the purchasing power of $185,588."

By the way, a close look at the above chart shows that the Williams' deflator is 72% since 1989, not all the way back 1967!

Although it's easy to believe CPI is off somewhat, "bizarre"  is a polite description of how far off Williams is in the other direction. And Williams' views of hyperinflation in the US and when it is likely, go far beyond bizarre to the point of absolute ridiculousness.

No Recovery in Real Economy

While Bernanke can talk of "recovery" things started deteriorating badly, not in 2008 but all the way back in 2000. The stock market is back to previous highs, but the real economy sure isn't.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

Europe Hooked on Easy Money Too: ECB President Draghi Threatens Another LTRO, Sings Praises of Excess Liquidity

Posted: 23 Sep 2013 10:21 AM PDT

ECB president Mario Draghi is in on the no-normalization act along with the Fed. Of course, a mere reduction in asset purchases by the Fed from $85 billion a month to $75 billion is not even a baby step towards normalization.

Anyway, it's liquidity full throttle in the Eurozone as well because Draghi Says ECB Will Offer More Long-Term Loans If Needed.
"We are ready to use any instrument, including another LTRO if needed, to maintain the short term money markets at the level that is warranted by our assessment of inflation in the medium term," Draghi said in response to questions from lawmakers in the European Parliament in Brussels today.

Euro-area money-market rates rose to a level that Draghi described as "unwarranted" in July after the U.S. Federal Reserve signaled that it would begin to ease stimulus and signs emerged of a recovery in the 17-nation region. While those rates have since declined, excess liquidity in the financial system is approaching the 200 billion-euro ($270 billion) level the ECB has previously signaled as a lower limit.

In his opening remarks at the hearing, Draghi said while repayment of central bank credit is "certainly a sign of normalization, the resulting reduction in excess liquidity can reinforce upward pressures on term money market rates."

As the buffer of excess cash held by the financial system falls, the rates that banks charge each other for liquidity can rise as they shoulder more risk.
In Praise of Excess Liquidity

LTRO stands for Long-Term-Refinance-Operation. Here is a simple, easy to understand explanation:  The ECB is willing to offer unlimited loans against questionable collateral, at excessively low interest rates, to any bank that wants them. 

Draghi wants to build back up the "buffer of excess cash" by any means if interest rates do not go where he wants them to go.

Heaven forbid that any baby steps towards normalization reduce "excess liquidity" causing interest rates to rise, either in the US or Eurozone.

The largest global-coordinated financial gambit in history shows no real signs yet of slowing down.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

Reflections on Conspiracy Theories and Sensible Accounting by Reader "Alice", 89 Years Young; True Meaning of Banking Safely

Posted: 23 Sep 2013 01:19 AM PDT

I received several emails regarding my post on Risk-Free Banking and Fractional Reserve Lending that I would like to share.

Reader Alice who travels the world at a ripe young age of 89, says ...
Hello Mish

It is wise always for professionals to stand aside from conspiracy theories,  There is no sense compromising the future because the past misread the tea leaves.

Bernanke is doing what he was appointed to do....keep the money coming for the US Government to spend, thereby monetizing all expenditures no matter the purpose.

The growing call from citizens for some form of fiscal sanity is beyond the purlieu of the Fed.  It never was established to settle accounts, or keep them within bounds. 

The founder of modern international finance, Amschel Rothschild, gave the aims and direction of his enterprise simple instruction when he declared he cared not what governments did, all he wanted was the right to control, print their money. Governments took him at his word and his business grew exponentially so he must have been doing something right or as Lloyd Blankfein said "doing God's work!"

Bernanke knows Obamacare may be "defunded" and other excesses curbed, and he doesn't like that. His stewardship of the Fed is not to maintain status quo but to expand its power, its "credit" base worldwide, to continue the momentum his predecessors started. He doesn't have to curry favor with politicians, since they love to spend and he provides the means to do so across national borders and in all commodities sold worldwide. So long as that function maintains any semblance of order, the Fed goes on and on, gathering more followers in every year.

I would love to see a return to "sensible accounting" but I am hard pressed as to what constitutes "sensible" these days. When I began investing, one looked at the real property on balance sheets. In today's tech driven world, the definition of value is more cloudy than ever before, especially since all transactions and exchanges are literally fabricated from thin air and deposited in "The Cloud".

The third dimension is printing money as if it was a magic wand to create everyone's dream.

All I know is that when I travel the world, (and I do every year) I see people who have never lived so well in any other time in history, including the poor and downtrodden. I know the American Century has something to do with that but I also know the British Empire had almost the same effect in its time at bat and I am waiting to see what happens, progresses next.

Alas, I don't have much time to assay such things. At coming of age at 89, I may have to settle down here in Florida in my small villa and get reports second hand.

I do love your approach and you can be assured I will be reading you as you write.

Thank you,

Alice Maxwell
Moral Hazards

Reader Rick comments on the moral hazards of Fed policy.
Hi Mish

The title of Megan McArdle's article is "Banking Without Risk Is Impossible", yet she supports a policy that creates moral hazards. Instead of a system where both parties take a risk, one party is off the hook. This leads to bad lending policies because there are hardly any consequences to bad lending policies.

Rick
Indeed, as it stands banks are always bailed out at taxpayer expense, the very epitome of "moral hazard". In effect, the Fed encourages excess risk taking, and bubbles are the inevitable result.

True Meaning of Banking Safely

Reader Bruce pinged me with his thoughts on teaching his children the true meaning of "risk-free".
Hello Mish

I have tried to educate my children on this very subject. We as a family are working our way to being debt free.

This is the only way I can see to bank safely. We have purchased rental property, business property, and are in the process of paying off our last home. We are also building up a large cash reserve (aware that inflation takes it toll).

We also have gold reserves, and liquid assets.

Owning property free and clear, especially income property, gives one options that those with mortgages don't have.

Bruce
Thanks to all who wrote regarding fractional reserve lending (whether I commented or replied).

And also thanks to many of those who commented on Attack of the "Digger Bees".

Yes, I knew that "digger bees" (yellow jackets) are not bees but wasps.

Bees, as many readers pointed out are generally docile. I like bees actually and put out a "humble bumble" home and nests for mason bees.

We are looking into the EpiPen antidote system, because this is now the third stinging event regarding yellow jackets on my property.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

Damn Cool Pics

Damn Cool Pics


Photos of Eight Month Pregnant Lea-Ann Ellison Lifting Weights

Posted: 23 Sep 2013 09:32 AM PDT

35-year-old Lea-Ann Ellison from Los Angeles has posted these pictures on Facebook. Most people think that it's inappropriate for her to lift weights two weeks before she is due to give birth. Lea-Ann Ellison replied: "I want to thank everyone for their kind and supportive responses! Haters will hate and it's ok. My life is not their life thank goodness!"























Gamer's Girlfriend

Posted: 23 Sep 2013 08:55 AM PDT

I don't know the story, but the girl is pretty.






















Speaker Boehner has a choice to make

 

Hello --

Right now, Congress has two jobs: to pass a budget that invests in the middle class and to pay the bills it has already incurred.

But instead of doing their jobs, a few reckless Republicans in Congress are so obsessed with refighting old political battles over Obamacare that they're threatening to shut down the government and stop paying the country's bills.

On Friday, these House Republicans voted to shut down the government unless the Senate and the President agree to defund Obamacare. This week, instead of playing those games, the Senate is set to send a simple budget resolution back to the House -- one that keeps the government open for a few months while leaders continue to work on a budget that creates jobs and cuts the deficit in a balanced way. That's a reasonable solution.

But some Republicans still care more about scoring political points on Obamacare than keeping the government open and our economy moving forward.

This kind of up-to-the-final-hour brinksmanship is beyond irresponsible, and it could reverse the hard-earned economic progress we've made by creating another crisis. Unfortunately, we've watched them run this play before, and we know what it looks like. Two years ago, these Republicans held the economy hostage, and as a result our credit rating was downgraded, the stock market plummeted 17 percent, consumer confidence dropped like a rock, and businesses stopped hiring.

That's why it's time for GOP lawmakers to pass a simple budget resolution that doesn't defund Obamacare and move on. 

We need your help to spread the word so that Americans know what's going on, so forward this message to your friends and family.

In the five years since the financial crisis began, the American people have pushed the economy forward. Over the past 42 months, businesses have added 7.5 million jobs. American manufacturing is growing again, and the auto industry is back. We've reformed Wall Street so that no company is ever again too big to fail and created the toughest consumer financial protections this nation has ever seen. We've cut our deficit by more than half, made the tax code more progressive, and reformed our health care system.

Today, there is record demand for American products abroad, and our tech companies are booming. The housing market is coming back -- sales of existing homes are up by double digits and new foreclosures are down to the lowest levels since the start of 2006.

We need to keep building momentum. So we're asking Congress to join the President in creating a better bargain for the middle class, and give up on manufacturing a new political crisis. For that to happen, reasonable Congressional Republicans have to stand up to a few extreme members of their party for the good of the country and our economy.

From the day he took office, President Obama has been open to any good idea when it comes to the budget, as long as supporting middle-class families remains our North Star. Republicans won't extract concessions over the full faith and credit of the United States.

Will you help spread the word? Share this message so that people know what's about to happen to the economy if Congress doesn't act.

Thanks,

Dan

Dan Pfeiffer
Senior Advisor
The White House
@Pfeiffer44 

P.S. -- Want to learn more about where we are five years after the start of the financial crisis? Check this out.

Visit WhiteHouse.gov

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Seth's Blog : Q&A : Poke the Box vs. meh

 

Q&A : Poke the Box vs. meh

Our series continues with a question about one of my shortest books, a manifesto about starting (and art): Poke the Box.

Ben Nesvig asks, "I find myself getting uninterested/unmotivated on projects that I start. The emotion of deciding to start has faded and the results are slow to keep me motivated.  Is this the resistance/lizard brain that is keeping me from pushing forward? Or is this a signal that I am not passionate about what I am doing and I should look somewhere else for what I am truly passionate about because there I will find endless motivation?"

Variations of this question, some more honest and self-aware than others, come up more than just about anything else. Now that the world has handed us a microphone, a media platform and a productive way to create a ruckus, why do we hesitate? And why does it get more difficult as we get closer to the reality of shipping the work out the door?

The question is as important as the answer. Starting is fun, of course, because it's fresh, it might work, it breaks the rhythm, it is filled with possibility. The starting overcomes what Steve Pressfield calls the Resistance, the heckler, the lizard brain, the primeval desire to hide and find safety. Neophilia and our desire for shiny objects is enough to at least temporarily get us going. Alas, there's another word for this desire to start but not finish: daydreaming.

The real work comes after the novelty wears off. This work creates value, because given control over our actions, most of us stall, float sideways or sabotage the work. Because it's unsafe. How could it be any other way? Change is always risky, because change moves us from what we know to what we don't.

So we say, "meh." We talk ourselves out of shipping, because, hey, it's easier to just stay here, where at least it is safe and warm. There's no building on fire, no layoffs today. At least for now. So we don't jump, we wait until we're pushed, when, of course, it's too late.

Yes, the answer is yes. Yes we're stuck, and yes we're stuck because we're afraid of a different path than the one we signed up for.

And no, no you must not go try to find "motivation," because if you can't be motivated by this opportunity, this one, right now, the odds are that you're unlikely to find a better sort of Oz, where there is no fear. Our desire to shop around for a place to jump is driven by the lizard brain, not by the actual knowledge that there's a better opportunity around the corner.

       

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