duminică, 22 decembrie 2013

Seth's Blog : "Am I supposed to like this?"

 

"Am I supposed to like this?"

If we think we are, we probably will.

We're more likely to laugh at the comedy club. More likely to like the food at a fancy restaurant. More likely to feel like it's a bargain if we're at the outlet store.

Am I supposed to applaud now? Be happy? Hate that guy? Use a fork?

Judgments happen long before we think they do.

And successful marketers (and teachers and leaders) invest far more into "supposed to" than it appears.

       

 

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sâmbătă, 21 decembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Australia's Alleged Conservatives Surrender to Unions; GM Australia vs. GM US; Currency Madness Everywhere

Posted: 21 Dec 2013 06:13 PM PST

Here is a link from a couple of weeks ago from my "Down Under" friend "Bisbane Bear" regarding Australia politicians surrendering to unions for absolutely no reason, and for no possible benefit.

For US readers not following Australian politics, Conservatives won a landslide victory in the September election with Labor Party percentage vote the lowest in 100 years.

Conservatives could have and should have demanded change. Instead Minister Ian Macfarlane decided to create a panel to advise on unions, and one of the three appointees was a huge Labor Party advocate.

Surrender to the Weak

In response, News.Com.Au commented "Surrender to the weak and willful will cost us all".
INDUSTRY Minister Ian Macfarlane made an incomprehensible decision this week. After talks with Coca-Cola Amatil, a taxpayer-funded three-person panel was created to advise on a request from SPC Ardmona for assistance. The panel's charter includes "workplace practices, productivity" and "product range".

Labor Party heavy and former ACTU secretary Greg Combet is one of the appointees - he is going to advise on enterprise bargains with the unions.

After the announcement of the SPC panel, between fielding calls from the bewildered and outraged, I scrabbled for an explanation for Macfarlane's reckless move. I have been writing on these issues since 2007 and have never found reason to criticise the Coalition, but this action is naive, irresponsible and indicates the government is captured by the big business-big union nexus.

Australia is at a crossroads. For 20 years, regardless of the legislation, about half of our companies have been incrementally enterprise bargaining themselves into bankruptcy, while the other half have not.

Increasingly, many of those that have bargained are on the verge of ruin. A growing number will be seeking government subsidies during the next few years.

It is not always easy to say no to unions, and occasionally you must negotiate, but no company can be forced to make an enterprise agreement. Any business can simply pay its workers the modern award wage.

About 20 per cent of Australian workers are paid only the award wage, while roughly 30 per cent are paid a rate above the award, with the award remaining as the legal minimum.

Many companies have never bargained with their workers, while others stop bargaining after seeing its adverse effects.

Roughly 50 per cent of Australian workers are employed by companies that have chosen to enterprise bargain. Enterprise bargaining agreements are binding contracts that sit over and above the award, like gold-plated awards. Agreements include extra productivity restrictions, often doubling, tripling or even quadrupling the total employment cost of a workforce. These agreements have the force of law. The employer cannot change them without an employee vote.

Enterprise bargaining is the main reason that Holden, Toyota, Simplot and SPC Ardmona are in strife. These companies seek government subsidies because they need money for the inflated wages and conditions they have agreed to pay but cannot afford.

During this election term the list of companies needing help will grow. No one in their wildest dreams would have envisaged a Coalition government would create a crack team of taxpayer-funded faux toecutters to run the ruler over and advise on the internal workings of distressed companies.

Let me just cut to the chase here. Companies that are financially distressed because of unaffordable enterprise bargaining agreements should be instructed to lodge a form with the Fair Work Commission to have their agreement dissolved, at their own cost. All of their workers and unions should sign the form and be returned to the award wage before any of them even consider putting their hand out for money.

For a government to have a policy other than this is to reward sections of the business community for doing the wrong thing, for being foolish, irresponsible and weak. A government should never send the signal to business that taking the easy way out - giving in to the unions and paying workers wages it cannot afford - will result in financial assistance.
Conservative in Name Only

I asked Brisbane Bear a few questions including "Why would Macfarlane toss such a negotiation offer to unions in the first place?"

He responded ...
Hello Mish

Macfarlane is a Country politician. They are the worst type of socialists. He is conservative in name only.

These food companies that have their hands out are based in the farm belts or food growing regions. Huge US companies like Simplot own many Australian food brands. If they close down these small towns are decimated.

We have award wages in this country. They are the basis wages and working conditions which are the bare minimum. We have a system whereby companies can do an enterprise bargaining agreement (EBA) at individual companies.

Companies in strong union dominated industries have written very lucrative EBA's in recent years during the mining boom and have subsequently pushed wages and benefits thru the roof.

These companies can't possibly afford these wages and now they are losing money hand over fist.
The idea these car makers or any other manufacturer can pay whatever the unions demanded and now think they can simply get taxpayers money to help subsidize these wages is ridiculous.

I have argued for about 3 or 4 years that wages are too high and working conditions too generous.
I sign off most letters to the papers by saying "they can't afford these wages and neither can we".

"We" being the rest of us in the real world trying to run a business with these high wages and generous working conditions and no free money from the taxpayer to offset them.

Businesses in trouble don't need to go broke or close down. They just have to go back to paying award wages. That would mean pay cuts of 50% or more in most cases.

Looking for madness? Baggage handlers for QANTAS earn up to $85k per annum.

When these protected companies and industries cave in to unions, these new wages and working conditions become the benchmark and these wages flow onto every other sector. It is not sustainable and the repercussions are being felt right now.

GM has decided to shut down their Holden plant in Australia. 50,000 jobs are directly and indirectly on the line. BP announced 300 jobs going in Australia saying our costs are way too high.

There will be hell to pay as these jobs disappear in the 100,000's. Our property bubble has been blown off the back of these outsize wages.

Hope that helps make it a clearer picture.

Regards
Brisbane Bear
GM Closes Australia Plants, Toyota to Follow

On December 11, Yahoo!Finance reported General Motors to close Australian plants by 2017
Auto giant General Motors said Wednesday it will close its Holden plants in Australia by 2017, prompting Toyota to review its operations as unions warned the car industry was finished.

Holden's decision to move to a national sales company, costing 2,900 jobs, comes after Ford said in May it would stop making vehicles at its unprofitable Australian factories in 2016, with the loss of 1,200 jobs.

With Mitsubishi closing its Adelaide plant five years ago, only Toyota Australia -- which employs more than 4,000 workers -- will be left making cars in the country.

Even that appeared uncertain, with the Japanese auto firm immediately announcing a review of its own position in Australia.

"This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota Australia said in a statement about Holden's closure.

The Australian Manufacturing Workers Union said it expected Toyota to follow Holden's lead.

"It's now highly likely that Toyota will leave Australia. In fact it's almost certain," AMWU national vehicles division secretary Dave Smith told reporters.

"It's a very bleak day indeed."

GM chief Dan Akerson said the decision to shutter Holden's Australian operations reflected a "perfect storm of negative influences the automotive industry faces in the country."

"This includes the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world," he said.
Reflections on GM Australia and GM U.S.

How did GM U.S recover?

In bankruptcy GM shed a mountain of debt. Equally important, if not more important, unions agreed to work rule and pay changes. The same thing needs to happen in Australia, across the board: in manufacturing, in restaurants, and in retail stores of all kinds.

Instead of pushing that agenda industry minister Macfarlane wants to ask unions what needs to be done.

I can tell you the answer in advance: the unions will seek still more handouts in return for trivial rule changes and little if any pay structure changes.

Currency Wars

The Reserve Bank of Australia is in on the act as well.



As with Japan striving to sink the yen, Australia's central bank wants to sink the Australian dollar. Of course the ECB wants a lower euro, and the Fed wants a lower US dollar.

Madness is everywhere.

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

Expect Higher Mortgage Loan Rates in 2014; New "QM" Rules May Mean Less Lending

Posted: 21 Dec 2013 11:27 AM PST

In regards to Average 30-Year Mortgage Rate Hits 4.47% (Not Counting Fees); Affordability Check Michael Becker at WCS Funding Group just pinged me with his thoughts on why mortgage rates will go up in 2014 even if treasury rates stay flat.

Michael writes ...
Hey Mish,

I was just reading your post on rising mortgage rates and I can confirm that mortgage rates are approaching the highs reached earlier this year in early September.

Additionally, they are set to go higher in 2014 regardless of whether or not the yield on the 10 year Treasury continues to rise.  The agency that oversees Fannie and Freddie, the FHFA, has announced another increase in their guarantee fees or g-fees and increases in their loan-level price adjustments or LLPA.

The former are charges to lenders for guaranteeing mortgage backed securities and the latter are risk based adjustments to pricing on mortgages. The new increases in both will be charged to borrowers and will increase mortgage rates as much as .375% for many borrowers.

The FHFA has stated the reason for these increases is to encourage private money, non-Fannie or Freddie, to return to the mortgage market.  While that is a good idea and many in the industry would like to see that happen, it's hard to see that happening with the new Qualified Mortgage (QM) rules issued by the Consumer Finance Protection Bureau CFPB starting on January 10, 2014.

Without going into much detail these new rules will restrict lending in the future and I believe discourage private money from entering the mortgage market.

So with rising rates, increased fees making rates even higher than they would be otherwise, and mortgage credit being further restricted it's hard to see how real estate will continue to recover in 2014 as affordability decreases.

Regards,

Michael Becker
WCS Funding Grp.
New "Qualified Mortgage" Rules May Mean Less Lending

The Chicago Tribune reports It'll take time to see effect of new mortgage rules
New regulations governing home loans take effect Jan. 10, but it's likely to take a few months to see how much they really alter a prospective borrower's ability to get a mortgage.

Combined with other tweaks made in the past few months, the changes will mean new terminology and revamped paperwork for lenders to understand and then explain to borrowers in 2014. They also could lead to less lending, experts say.

The goal of the new mortgage rules from the Consumer Financial Protection Bureau is to better protect borrowers from the lax underwriting that wreaked havoc on people and the housing market. The regulations are designed to ensure a borrower's "ability to repay" a mortgage while also offering lenders protection from borrower lawsuits so long as they make safer so-called qualified mortgages.

"I think the mainstream borrower is going to be OK," said Bob Walters, chief economist at Quicken Loans. "Lenders will go through a period of adjustment. There will be some upset in the first half of the year as people digest the rules."

The borrowers most likely to be affected are those on the lower and higher ends of the lending spectrum.

The rules bar some loan products that all but disappeared during the housing crisis — interest-only loans, balloon-payment loans and mortgages with terms that extend past 30 years — from being considered qualified mortgages.

Under another part of the rule, a borrower's overall debt can make up no more than 43 percent of gross income. The effect of that provision will be muted, however, because, at least temporarily, it does not apply to loans that will be purchased by Fannie Mae or Freddie Mac or backed by the Federal Housing Administration. Those agencies continue to account for the overwhelming majority of new mortgage loans.

However, Fannie Mae, Freddie Mac and the FHA all are looking to limit their exposure, and thereby the taxpayer's exposure, in the housing market.

The FHA last month decreased its maximum loan limits for 2014. The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, this month said it was considering reducing the maximum loan size it may buy.

Housing experts say one effect of that rule could be that consumers looking for loans in the $100,000 to $150,000 range may find fewer lenders from which to choose. That's because a loan has to go through the same amount of paperwork and underwriting, regardless of whether it's for $100,000 or $400,000.

"Lenders may not do those loans," said Ken Perlmutter, president of Perl Mortgage. "It's just as much work, and you can't change the fees."

That 3 percent cap also could affect a borrower's ability to buy down their interest rate by paying points upfront, as well as restrict the ability of people with lower incomes and risky credit, who typically have paid higher fees, to receive a mortgage.

Jumbo mortgages also could become harder to receive because they too must meet the 43 percent debt-to-income ratio to be considered a qualified mortgage. However, Perlmutter said he already is seeing investors step in who are interested in purchasing mortgages that fall outside the government's regulations.
2014 Summary

  1. More Consumer Protections
  2. Loans Harder to Get 
  3. More Fees
  4. All things equal, 0.375 Percentage Point Hike in Mortgage Rates

Actual amount of increase or decrease of mortgage loan rates in 2014 will depend on treasury rates, but the base assumption (if treasury yields remain unchanged) is a hike in mortgage rates of 0.375 percentage points, with some loans harder to get irrespective of rates.

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

Working Together on Behalf of the American People

Here's What's Happening Here at the White House
 
 
 
 
 
 
  Featured 

Weekly Address: Working Together on Behalf of the American People

In his weekly address, President Obama highlights the bipartisan budget agreement that unwinds some of the cuts that were damaging to the economy and keeps investments in areas that help us grow, and urges both parties to work together to extend emergency unemployment insurance and act on new measures to create jobs and strengthen the middle class

Click here to watch this week's Weekly Address.

Watch: President Obama's Weekly Address

 

 
 
  Top Stories

President Obama Holds a Pre-Holiday Press Conference

On Friday, President Obama held a press conference from the White House briefing room. Before taking questions from the media, he discussed our economic progress over the last year, and laid out the work ahead for 2014.

READ MORE

The Affordable Care Act Means Peace of Mind for Moms

On Wednesday afternoon, President Obama and the First Lady met with a group of moms (and one aunt!) in the Oval Office to talk about how health reform has benefitted their families.

READ MORE

West Wing Week: 12/20/13 or "26 Candles"

This week, the White House honored those lost at Sandy Hook on the one year anniversary. The President met with newly elected mayors and executives from America's leading technology companies, discussed the benefits of health care reform with a group of moms, and celebrated the holidays with Christmas in Washington.

READ MORE


 

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Seth's Blog : Noise-tolerant media

 

Noise-tolerant media

Twitter is the noisiest medium in history. Do you actually believe that Taylor Swift has 33,000,000 million (and counting) people eagerly waiting for her next tweet, ready to click on whatever she links to?

In fact, less than one in a thousand people who 'get' one of her tweets will click. Most of the 33 million won't even read it, making the word 'get' worthy of quotation marks.

And yet Twitter works just fine at this level. That's because it immerses the user in waves of media, a stream of ignorable content that people can dip into at will. More noise makes it better, not worse.

Email was wrecked by many marketers for many people, because email isn't structured for noise. Noise is the enemy. Instant messages, because there is no easy accessible API, isn't overwhelmed, but it too is noise-intolerant. Texts you don't want to get are a huge hassle.

The simple rule is that the easier it is to use a medium, the faster it will become noisy, and the noisier it is, the less responsive it is.

You can play at Facebook and Twitter, and make them work. But they will only work if treat them like a cocktail party, as an opportunity to eavesdrop and layer general connection and value and insight. No, it's not an ideal direct marketing medium. It's a metropolis.

       

 

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vineri, 20 decembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Average 30-Year Mortgage Rate Hits 4.47% (Not Counting Fees); Affordability Check

Posted: 20 Dec 2013 12:04 PM PST

USA Today reports Average 30-year mortgage rate moves up to 4.47%
Mortgage buyer Freddie Mac said Thursday the rate on the 30-year loan increased to 4.47% from 4.42% last week. The average on the 15-year fixed loan rose to 3.51% from 3.43%.

A government report issued Wednesday showed that U.S. builders broke ground on homes in November at the fastest pace in more than five years, strong evidence that the housing recovery is accelerating despite higher mortgage rates.

Data from the National Association of Realtors released Thursday showed the number of people who bought existing homes last month declined for the third straight month as higher mortgage rates made home-buying more expensive.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan declined to 0.6 point from 0.7 point.
Bankrate 30-Year Fixed Mortgages



Chart courtesy of bankrate.

10-Year Treasury Yield



Mortgage rates tend to follow the yield on 10-year treasuries. At 2.984% the 10-year treasury yield is as high as any time since mid-2011. Since mid-2012 the 10-year treasury yield is up from 1.394% in mid-2012, a rise of 159 basis points (1.59 percentage points).

Affordability Check

In December 2012, the 30-year fixed rate mortgage was 3.4% Today it is 4.52%, a rise of 1.12 percentage points.

Housing analysts point out that rates are low on a historical perspective, and they are correct. Nonetheless, a one percentage point rise in rates affects affordability by 10-11%.

Recall that a record number of Millennials, adults aged 18 to 32, put off household formation and stay at home to live with parents. See Kids Living in Basements a Drag on U.S. Services Spending

Each uptick in mortgage rates, even near "historic low rates", discourages household formation.

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

All-Cash Home Sales Hit Record 42% of Sales

Posted: 20 Dec 2013 11:18 AM PST

Even though household formation by millennials is at a record low percentage, home sales are at modest levels thanks to investor all-cash buying.

Market-Watch notes All-Cash Home Sales Reach New High.
More Americans are buying homes in all-cash deals, according to a new report. But real-estate experts say this increase may not be a good sign for the health of the housing market, which may also be impacted by the Federal Reserve's decision to pull back on its bond-buying program.

All-cash purchases accounted for 42% of all sales of residential property in November 2013, up from 39% during the previous month, according to data from real-estate data firm RealtyTrac released Friday. "This is still a very cash- and investor-driven market," says Daren Blomquist, vice president at RealtyTrac.

The cities [states?] with the biggest month-over-month jumps in the number of all-cash sales, according to RealtyTrac, included Florida (63%), Georgia and Nevada (both 51%), South Carolina (50%) and Michigan (49%). This helped boost overall sales of U.S. residential properties, which sold at an annualized pace of 5.1 million in November 2013, a 1% increase from the previous month and a rise of 10% from a year ago.

The decision by the Federal Reserve Wednesday to reduce its bond-buying program to $75 billion per month starting in January, from $85 billion per month currently, may also encourage more cash-purchases — at least for those who can afford it, Blomquist says. "They're going to do everything they can to keep interest rates low, which may be tough to do," he says. To reduce cash buyers, he says there will need to be low interest rates and a cooling off in home price appreciation. "Otherwise, you'll see the market skew even further toward cash buyers," Blomquist says.

When interest rates went up slightly in June, there was a notable increase in cash sales, Daren Blomquist says. "Some markets are more interest-rate sensitive than others based on affordability," he says. "Just a slight increase makes homes a lot less affordable." In fact, another report by Goldman Sachs in August was even more strongly in the cash-is-king camp, estimating that cash sales now account for 57% of all residential home sales versus 19% in 2005.
A record number of Millennials, adults aged 18 to 32, put off household formation and stay at home to live with parents.

See Haircut Deficit: Kids Living in Basements a Drag on U.S. Services Spending; Since Recession Ended, Durable Goods +34%, Services +6.3%; What's Next?

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

Damn Cool Pics

Damn Cool Pics


Danica Patrick Wears Muscle Suit for Super Bowl Commercial

Posted: 20 Dec 2013 11:36 AM PST

Danica Patrick was taped wearing a muscle, or fit suit, while taping a GoDaddy Super Bowl commercial.























Epic Christmas Greetings From Chuck Norris [Video]

Posted: 20 Dec 2013 10:27 AM PST



Chuck Norris doing a split between two Air Force planes with soldiers standing on his shoulders has to be one of the greatest thing that ever graced the internet. It's a CGI parody of Jean-Claude Van Damme's Volvo trucks split made by Hungarian animation studio Delov Digital and probably the most epic Christmas greeting card you'll see this year:

Watch: Press Conference at 2 p.m. ET

Here's What's Happening Here at the White House
 
 
 
 
 
 
  Watch Live

Today at 2 p.m. ET, President Obama will hold a news conference in the Brady Press Briefing Room.

Click here to watch on WhiteHouse.gov/Live.


 
 
  Featured

An Important 60 Seconds

1.3 million Americans are about to lose a vital lifeline of unemployment insurance benefits if Congress doesn't act. This is money that helps pay the bills while folks work hard to find their next job.

That's why Jason Furman, Chairman of the Council of Economic Advisers, sat down for a special edition of On The Clock.

Watch the video to find out -- in under 60 seconds -- why this issue is so important:

Watch: On the Clock


 
 
  Top Stories

West Wing Week: 12/20/13 or "26 Candles"

This week, the White House honored those lost at Sandy Hook on the one year anniversary. The President met with newly elected mayors and executives from America's leading technology companies, discussed the benefits of health care reform with a group of moms, and celebrated the holidays with Christmas in Washington.

READ MORE

First Lady Michelle Obama Collects Toys for Kids in Need

First Lady Michelle Obama visited Joint Base Anacostia-Bolling in Washington, D.C. to deliver hundreds of toys that Executive Office of the President staff donated to the United States Marine Corps' Toys for Tots campaign, an annual holiday toy drive.

READ MORE

The Affordable Care Act Means Peace of Mind for Moms

On Wednesday afternoon, President Obama and the First Lady met with a group of moms (and one aunt!) in the Oval Office to talk about how health reform has benefitted their families.

READ MORE

 

 
 
  Today's Schedule

All times are Eastern Time (ET)

9:45 AM: The President receives the Presidential Daily Briefing

10:30 AM: The President meets with senior advisors

2:00 PM: The President holds a news conference WATCH LIVE

6:45 PM: The First Family departs the White House en route Andrews Air Force Base

7:00 PM: The First Family departs Andrews Air Force Base en route Honolulu, Hawai’i

5:05 AM: The First Family arrives in Honolulu, Hawai’i

 

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