Central Perk

luni, 30 aprilie 2012

Behind the Scenes: Screening "To Kill A Mockingbird" at the White House

Your Daily Snapshot for
Monday, April 30, 2012

Behind the Scenes: Screening "To Kill A Mockingbird" at the White House

President Obama commemorates the 50th Anniversary of "To Kill a Mockingbird" – a 1962 film adaptation of author Harper Lee’s 1960 novel about racial inequality in the Deep South – by hosting a screening in the Family Theater at the White House.

Take a behind-the-scenes peek at the "To Kill a Mockingbird" screening:

Seth's Blog : What's the right size? The quantum mechanics of growth...

What's the right size? The quantum mechanics of growth...

How come there are no ants as big as Buicks (except in the movies)? Why not have a college with a million students (or ten)?

The physics and economics of a business determine whether it's the right size or not, whether it ought to get bigger or smaller. Starbucks, for example, was not the right size when it had 11 stores. That's too many stores for just one senior manager to handle, but not enough stores for centralized purchasing and marketing and organization. The cash flow from an eleven-store chain just doesn't easily connect to the staff requirments necessary to make it efficient.

A web company might do really well with thirty people and a few million dollars in revenue. To get to a thousand people (big enough for an IPO, say), it will need to transform both the product and the way it's sold. And in between the size it is now (which is working) and the size necessary for the public offering, there's a dead zone. This is a leap, not a stroll.

When I was growing my first successful business, I kept saying that one day I'd hire enough people that the people I was hiring could manage themselves. I went from having four direct reports to eleven before I realized that I wasn't going to be able to make the leap in scale that was going to be necessary to reach a comfortable size.

The same rule applies to independent musicians and comedians. At the solo level, you might be very happy making a living gigging at certain kinds of venues and being supported by a given audience. On the other hand, to support a manager, a band and a label, you can't just add a few more fans. You need different venues, different gigs, different revenue streams. If you can't (or don't want to) get to that new level, the new team isn't going to help, and it might destroy everything you've built.

It's worth charting both profit per employee and owner satisfaction against the number of people in the organization. Perhaps getting a little bigger isn't what you want, and it might not even be possible.

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duminică, 29 aprilie 2012

Mish's Global Economic Trend Analysis

Spain's Latest Bad-Bank, Non-Bank, Shell-Game Proposal; Can One-Winged Pigs Fly?
Showdown in Europe: Hollande Takes on Merkel and Draghi, Insists on Renegotiation of Merkozy Treaty; Does It Matter Whether France Signs?
"Flying Piano" Costs Pentagon $1.5 Trillion

Spain's Latest Bad-Bank, Non-Bank, Shell-Game Proposal; Can One-Winged Pigs Fly?

Posted: 29 Apr 2012 11:13 PM PDT

Spain has floated a number of bad-bank proposals recently, all of which were fundamentally flawed and doomed from the start.

The latest shell-game proposal will supposedly take bank assets, put them in a non-bank, while forcing the banks to come up with sufficient capital to cover losses.

Please consider Spain in Talks Over 'Bad Bank' Scheme

Spain's government and its banks are discussing a new scheme to segregate problematic property loans into one or more asset management companies to relieve the burden on struggling lenders, according to officials and bankers.

The "bad bank" scheme is the latest attempt by the centre-right government of Mariano Rajoy, prime minister, to avoid an international rescue programme of the sort required by Greece, Ireland and Portugal.

Ministers had decided they had no need of an Irish-style bad bank. But economists say the crisis is so dire that weak banks will need further recapitalisation of about €100bn.

Government officials insist that the scheme should not be called a bad bank, because it will not be a bank and participating lenders will be able to park assets in it only if they have set aside sufficient bad loan provisions, independently valued.

The scheme is being developed by Luis de Guindos, economy minister, and is in line with a recommendation by the International Monetary Fund.

Can One-Winged Pigs Fly?

If banks have sufficient loan-loss reserves then why don't they simply take the losses now? If they can raise capital now, then why don't they? If they cannot raise capital now, how will will they be able to do so in the process of moving the assets to a non-bank bank?

This ludicrous plan has the flight capability of a one-winged pig.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Showdown in Europe: Hollande Takes on Merkel and Draghi, Insists on Renegotiation of Merkozy Treaty; Does It Matter Whether France Signs?

Posted: 29 Apr 2012 08:09 PM PDT

German chancellor Angela Merkel says the Merkozy treaty is not renegotiable.

There is just one "slight" hitch: France has not signed the treaty and will not sign the treaty unless it is reworked says François Hollande who on May 6 will in all likelihood replace Nicolas Sarkozy as president of France.

Moreover, Hollande's demands have gotten steeper and steeper as he inches closer to election.

Please consider Hollande rebukes Berlin over crisis role

François Hollande, the Socialist candidate for the French presidency, has claimed support from across Europe for his demand for a growth plan, saying it was not up to Germany to decide what action should be taken in the face of the eurozone crisis.

With opinion polls predicting he will beat President Nicolas Sarkozy in the run-off vote a week on Sunday, Mr Hollande has stepped up his insistence that he would not ratify the European fiscal discipline treaty without a renegotiation to add a package of growth measures.

In a television appearance on Thursday night, Mr Hollande said: "It is not for Germany to decide for the rest of Europe. I'm getting lots of signals, direct and indirect, from other governments, even if they are conservative."

Mr Hollande was delighted on Wednesday when Mario Draghi, governor of the European Central Bank, also called for a growth pact to accompany the austerity measures being implemented across Europe, including in France.

But he has made it clear that his growth prescription differs markedly from the market-oriented structural reforms envisaged by Mr Draghi – and endorsed by Ms Merkel.

His immediate demands are for common European project bonds, an increase in investment by the European Investment Bank, better targeting of underused European structural funds and the introduction of a financial transaction tax, all measures Mr Hollande's camp believes can win widespread backing, including from Germany.

Election Posturing?

Many think this Hollande's antics are nothing but election posturing. I am not so sure. After all, what does Hollande have to lose by holding out?

One thing is for sure, and that is eurobonds are not going to fly. Germany will not approve. Will Hollande settle for some meaningless "growth package"?

Does it Matter What France Does?

Short-term, the squabbles and finger-pointing will be far more entertaining if France refuses to sign the treaty. However, given the pathetic state of affairs in Greece, Spain, and Portugal, I fail to see why it really matters in the long-term whether France signs or not. The Eurozone will not last as-is in either case.

That said, the bigger and deeper the squabbles, the sooner Germany many do the right thing for all involved: exit the Eurozone before it splinters led by the Club-Med countries.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

"Flying Piano" Costs Pentagon $1.5 Trillion

Posted: 29 Apr 2012 10:08 AM PDT

The Pentagon is about to waste $1.5 trillion, 38% of entire defense budget for a "virtual flying piano". That may sound preposterous, and it is. Unfortunately, it is also true.

Foreign Policy Magazine discusses the sad saga of The Jet That Ate the Pentagon.

This month, we learned that the Pentagon has increased the price tag for the F-35 by another $289 million -- just the latest in a long string of cost increases -- and that the program is expected to account for a whopping 38 percent of Pentagon procurement for defense programs, assuming its cost will grow no more.

How bad is it? A review of the F-35's cost, schedule, and performance -- three essential measures of any Pentagon program -- shows the problems are fundamental and still growing.

Although the plane was originally billed as a low-cost solution, major cost increases have plagued the program throughout the last decade. Last year, Pentagon leadership told Congress the acquisition price had increased another 16 percent, from $328.3 billion to $379.4 billion for the 2,457 aircraft to be bought. Not to worry, however -- they pledged to finally reverse the growth.

The result? This February, the price increased another 4 percent to $395.7 billion and then even further in April. Don't expect the cost overruns to end there: The test program is only 20 percent complete, the Government Accountability Office has reported, and the toughest tests are yet to come. Overall, the program's cost has grown 75 percent from its original 2001 estimate of $226.5 billion -- and that was for a larger buy of 2,866 aircraft.

The total program unit cost for each individual F-35, now at $161 million, is only a temporary plateau. Expect yet another increase in early 2013, when a new round of budget restrictions is sure to hit the Pentagon, and the F-35 will take more hits in the form of reducing the numbers to be bought, thereby increasing the unit cost of each plane.

A final note on expense: The F-35 will actually cost multiples of the $395.7 billion cited above. That is the current estimate only to acquire it, not the full life-cycle cost to operate it. The current appraisal for operations and support is $1.1 trillion -- making for a grand total of $1.5 trillion, or more than the annual GDP of Spain. And that estimate is wildly optimistic: It assumes the F-35 will only be 42 percent more expensive to operate than an F-16, but the F-35 is much more complex.

The F-35 isn't only expensive -- it's way behind schedule. The first plan was to have an initial batch of F-35s available for combat in 2010. Then first deployment was to be 2012. More recently, the military services have said the deployment date is "to be determined." A new target date of 2019 has been informally suggested in testimony -- almost 10 years late.

What Happened?

You can actually blame president Clinton for this debacle. You can also blame every president since Clinton for stupid decisions upon stupid decisions and for not scrapping the program. The sad saga continues ...

The design was born in the late 1980s in the Defense Advanced Research Projects Agency (DARPA), the Pentagon agency that has earned an undeserved reputation for astute innovation. It emerged as a proposal for a very short takeoff and vertical-landing aircraft (known as "STOVL") that would also be supersonic. This required an airframe design that -- simultaneously -- wanted to be short, even stumpy, and single-engine (STOVL), and also sleek, long, and with lots of excess power, usually with twin engines.

President Bill Clinton's Pentagon bogged down the already compromised design concept further by adding the requirement that it should be a multirole aircraft -- both an air-to-air fighter and a bomber. This required more difficult tradeoffs between agility and low weight, and the characteristics of an airframe optimized to carry heavy loads. Clinton-era officials also layered on "stealth," imposing additional aerodynamic shape requirements and maintenance-intensive skin coatings to reduce radar reflections. They also added two separate weapons bays, which increase permanent weight and drag, to hide onboard missiles and bombs from radars. On top of all that, they made it multiservice, requiring still more tradeoffs to accommodate more differing, but exacting, needs of the Air Force, Marine Corps, and Navy.

Finally, again during the Clinton administration, the advocates composed a highly "concurrent" acquisition strategy. That meant hundreds of copies of the F-35 would be produced, and the financial and political commitments would be made, before the test results showed just what was being bought.

This grotesquely unpromising plan has already resulted in multitudes of problems -- and 80 percent of the flight testing remains. A virtual flying piano, the F-35 lacks the F-16's agility in the air-to-air mode and the F-15E's range and payload in the bombing mode, and it can't even begin to compare to the A-10 at low-altitude close air support for troops engaged in combat. Worse yet, it won't be able to get into the air as often to perform any mission -- or just as importantly, to train pilots -- because its complexity prolongs maintenance and limits availability.

The Dustbin Awaits

Foreign Policy Magazine arrives at a rational conclusion: "There is only one thing to do with the F-35: Junk it. America's air forces deserve a much better aircraft, and the taxpayers deserve a much cheaper one. The dustbin awaits."

Who supports the program?

Defense Contractors

Defense contractors are at the top of the list. For example, Lockheed Martin, Northrop Grumman, BAE Systems, and Pratt & Whitney support the F-35.

Please consider this Lockheed Martin Propaganda.

Establishing air superiority in today's complex global security climate requires the unprecedented capabilities and versatility that only the F-35 Lightning II can offer.

And the F-35's strong global partnership and broad industrial base ensures affordability through economies of scale while delivering thousands of technology sector jobs around the world.

Visit our partners

Northrop Grumman

BAE Systems

Pratt & Whitney

To show you what incredible liars the defense industry has, Lockheed Martin has the gall to claim "economies of scale".

Senator John McCain Supports the Boondoggle

Senator John McCain wants F-35 training in Arizona at Luke Air Force Base.

McCain was presented with the Wing Coin and Chairman's Award by Brig. Gen. Kurt Neubauer, 56th Fighter Wing Commander, and Charley Freericks, Chairman of Fighter Country Partnership's board of directors. The award was given in recognition of McCain being a champion of Luke during his years of public service.

Neubauer thanked McCain for speaking at the gathering of more than 250 Fighter Country Partnership members and guests at the annual meeting. He noted the 27,000 sorties, 35,000 hours of flight, the training of 350 new pilots and 400 crew chiefs that took place at Luke in 2009. He told the crowd that Luke trains 95 percent of all the fighter pilots for the Air Force, and has deployed 600 down range to 17 different countries.

Spirit of Idaho

The Spirit of Idaho organization hopes for training mission in Idaho.

Idaho citizens are second to none in their enthusiastic support for the men and women of our Armed Forces and for their military missions. Hosting the F-35 Lightning II Joint Strike Fighter would be a great way to continue that tradition while helping to secure the future of Mountain Home Air Force Base and Gowen Field. That's to say nothing of the thousands of great jobs and economic opportunities that having the F-35s here would create. C.L. "BUTCH" OTTER, GOVERNOR

Greed, Graft, Public Unions

In general, states where defense contractors are located, states that will house or train the pilots want the jobs support the F-35. Those states, and politicians in those states do not give a rat's ass about how inept or costly the program is.

The greed, graft, and waste are bad enough as it is. However, no amount of greed, gall, and waste is so great that unions will be satisfied with it.

Please consider Lockheed F-35 workers ready for long strike, union says

Unionized workers on strike against Lockheed Martin Corp (LMT.N) over healthcare benefits and pensions are prepared for a long work stoppage, a top union official said on Tuesday as the company said it would be able to keep operations running.

Nearly 3,650 union workers walked off the job on Monday at the Fort Worth, Texas, plant where Lockheed builds the new F-35 fighter plane and at two military bases where it is tested.

Paul Black, president of the local chapter of the International Association of Machinists and Aerospace Workers (IAM), said three earlier strikes in 1984, 2000 and 2003 lasted from two to three weeks, and union leaders have warned workers the current dispute could take longer to settle.

Workers in the union voted overwhelmingly on Sunday to hit the picket line rather than accept the company's "best and final offer," which called for an end to the defined benefits pension that current workers receive and a switch to a retirement account similar to a 401(k).

The F-35 program deserves to be scrapped because of cost overruns, inept design specs, and poor test results. Yet 3,650 union ingrates were arrogant enough to walk off the job demanding still more money to build this boondoggle.

Every last one of them deserves to lose their job permanently. Let's hope this is the final straw that kills the program.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Seth's Blog : Low prices

Low prices

It might be that low prices are the final refuge of the marketer who has run out of ideas and is left with nothing but a commodity.

Or it might be that organizing your business around lowering prices through efficiency, mass scale and smart choices is a powerful way to grow.

My guess is that both are true, but you better be really sure about which one you're choosing. Hint: doing the second one successfully is really quite difficult, so if all you're doing is writing a lower number on the pricetags, you're probably playing the first game.

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sâmbătă, 28 aprilie 2012

Mish's Global Economic Trend Analysis

Giant Sucking Sound; Demand for Credit in Europe Collapses; Pritchard Misses the Boat

Posted: 28 Apr 2012 06:40 PM PDT

In a report on fixed income, David Owen, Chief European Financial Economist at Jefferies, notes that demand for credit in Europe has plunged.

Owen asks Is it the supply or demand for credit that matters?

25 April 2012

Perhaps the most memorable comment Mario Draghi made to the European Parliament today was the need for a euro area Growth Pact, but he did draw comfort from the results of the ECB's latest Bank Lending survey.

Draghi made reference to the fact that the balance of firms tightening credit conditions had fallen (from 35% in January to 9%). However, that it is not to say that credit conditions are actually easing, just that they are no longer tightening at the same rate as in January.

Not only are credit conditions still tightening, albeit at a slower rate, but importantly the ECB's latest Bank Lending survey shows credit demand collapsing. This is not something that Mario Draghi mentioned to the European Parliament at all.

Europe Faces Japan Syndrome

In reference to the above chart, Ambrose Evans-Pritchard at The Telegraph says Europe faces Japan syndrome as credit demand implodes

Europe (minus Germany) looks more like post-bubble Japan each month.

The long-feared credit crunch has mutated instead into a collapse in DEMAND for loans. Households and firms are comatose, or scared stiff, in a string of countries.

Demand for housing loans fell 70pc in Portugal, 44pc in Italy, and 42pc in the Netherlands in the first quarter of 2012. Enterprise loans fell 38pc in Italy. The survey took place in late March and early April, and therefore includes the second of Mario Draghi's €1 trillion liquidity infusion (LTRO).

The ECB said net demand for loans had fallen "to a significantly lower level than had been expected in the fourth quarter of 2011, with the decline driven in particular by a further sharp drop in financing needs for fixed investment." Demand fell 43pc for household loans, and 30pc for non-bank firms.

This slump in loan demand is more or less what happened during Japan's Lost Decade as Mr and Mrs Watanabe shunned debt. Zero interest rates did nothing. The Bank of Japan was "pushing on a string" (though it never really launched bond purchases with any serious determination).

The credit squeeze is entirely predictable – and was widely predicted – given that banks must raise their core Tier 1 capital ratios to 9pc by July to meet EU rules, or face nationalisation. (The pro-cyclical folly of this beggars belief: by all means impose higher buffers, but not during a recession, and not by letting banks slash their balance sheets. The US at least forced its banks to raise capital, an entirely different policy since it does not lead to a lending crunch.)

The IMF said last week that Europe's banks would slash their balance sheets by €2 trillion – or 7pc – by next year. This amounts to an economic shock. The Fund said deleveraging on this scale at a time of sharp fiscal tightening risks a "bad equilibrium".

Or one analyst said, the LTRO lets northern banks dump their bond holdings onto Club Med banks. The renationalisation of the eurozone financial system goes a step further.

The LTRO "carry trade" is already revealing the sting in its tail in any case since the banks are by now underwater on a lot of bonds. What happens if and when they need to sell those bonds to cover debts falling due over the next year?

Until the ECB conducts monetary policy with proper energy, calls for "Growth Compacts" from governments amount to humbug. The ECB needs to do its own work.

We all know why it will not do so: because Hayekian romantics at the Bundesbank hold sway, and none of the other governors dare say boo. Live with the consequences.

Live with the Consequences Indeed

Pritchard conveniently ignores the fact that Japan is struggling right now to "live with the consequences" of numerous misguided monetary and fiscal stimulus efforts over 20 years. Japan has debt-to-GDP exceeding 200% and little to show for it. And Japan now has to live with the consequences of numerous misguided QE and stimulus proposals.

Pritchard apparently wants more QE for Europe as if that would increase demand for credit.

Note that two rounds of QE did not increase the demand for credit in the US as per my post The Real Consumer Credit Story: Virtually No Recovery in Revolving Credit, No Recovery in Non-Revolving Credit.

Moreover, QE did not succeed in increasing the demand for credit in Japan over 20 years. So pray tell why would QE increase the demand for credit in Europe? More importantly, even if it did, would that be a good thing?

European banks are already over-leveraged and under-capitalized so how the hell is providing cheap credit going to possibly do anything good?

Would 0% interest rates help when they did not help Japan?

Pritchard Misses the Boat

Clearly Pritchard missed the boat on QE as well as the desirability of attempting to cram more credit down banks' throats when banks are over-leveraged and under-capitalized.

Everyone wants to do something "but not now". While there is immense merit to not hiking taxes in a recession as Brussels forced on Greece, Spain, and Portugal, work rule and pension changes are badly needed.

Pritchard's idea of raising capital instead of selling assets seems reasonable enough. However, nothing stops banks from doing that, at least in theory. Is practice another matter?

Giant Sucking Sound

William Wright discusses Tier-1 Capital requirements in A rough guide to surviving the great deleveraging of 2012

As if Basel III weren't enough of a headache, big European banks face a deadline of June 30 from the European Banking Authority to increase their core Tier-1 capital ratios to 9%, equivalent to raising €115bn in equity.

In theory, banks can meet this by retaining profits, raising equity or shrinking assets. But with equity markets all but closed to banks and earnings falling, a crash diet to reduce their bloated balance sheets is the only realistic option.

Analysts expect that the great bank deleveraging of 2012 could see as much as $2 trillion to $3 trillion of assets trimmed from European banks' balance sheets – or about 5% of total assets – with damaging consequences not only for the banking industry but for the fragile European economy.

Here is a rough guide to some of the inevitable consequences – some deliberate, some unintended and some obscure – of this deleveraging on the investment banking industry.

Death of profits, jobs and banks

The most obvious impact of deleveraging will be the devastation it will wreak on the profits of investment banks. In 2006, Goldman Sachs posted a return on equity of 33% and its core leverage – assets divided by equity – was 29 times. Fast forward to the first nine months of this year, and its return on equity was 3.7% with leverage of 14 times. Not because it has radically shrunk its balance sheet (yet) but because it has more than doubled its equity.

The same process will play out across the industry, where the combination of an increase in the cost of business driven by regulation is colliding with a downturn in activity. This will choke off profits, with JP Morgan forecasting that average ROE for the industry will fall to just 8% next year. That's in line with research by Financial News that shows average pretax ROE in the first nine months of this year was 12% (or about 8% net).

Structurally lower profitability has already prompted banks such as Credit Suisse and UBS to slash their fixed income trading activities. While the thousands of job cuts seem harsh, they are often in the low single digits in terms of overall headcount. As more banks grasp the nettle in 2012, they will pull out of entire business lines, cutting 10% or 20% of their staff – or pull out of investment banking altogether.

Is That All Bad News?

Wright concludes that is not all bad news. I agree, but for some different reasons.

First Wright ...

The Promised Land

In all of this, there is some good news. For those banks that can survive the rigours of deleveraging without having to pull out of entire regions or businesses while retaining a profitable operation, there is a Promised Land on the other side. Overcapacity in the investment banking industry will be whittled away to leave a smaller number of bigger and (relatively) more profitable global banks whose scale will increasingly play to their advantage.

Bankers talk of JP Morgan, Deutsche Bank, Goldman Sachs and perhaps one other – maybe Bank of America Merrill Lynch, Barclays Capital or Citi – emerging stronger than ever. At the same time there will be a larger number of product and sector specialists, which will drop the "me-too" approach of the past decade.

In this new world, with a realistic price for risk and credit and less competition, margins can only go one way: up.

Banks Should Be Banks, Not Hedge Funds

I do not believe that bigger is better and I am sick of the notion "too big to fail". Indeed, it most often means two things:

Too Big To Succeed
Taxpayer Bailouts

However, I do believe that banks should be banks, not hedge funds. To the extent that Basel III forces banks to shed trading activities and other non-tradition activities that banks now find themselves in, I view that as a good thing.

I certainly agree with Wright regarding the need for "a realistic price for risk and credit", but "less competition" is certainly not the essence of well-formed free markets.

My conclusion is that Wright does not understand the Fed's role in the creation of this mess or sound Austrian economic principles needed to fix it.

We will indeed see a "a realistic price for risk and credit" if and only if we get rid of the Fed and end fractional reserve lending. Bigger banks are not the answer.

By the way, Wright is not quite correct when he says "equity markets all but closed to banks".

Let's phrase it properly: "equity markets all but closed to banks, on terms that banks want". Banks do not want shareholder dilution that comes with raising equity now.

Bondholders do not want to take a hit either. Both should have happened already, but Bush, Obama, Congress, and the Fed acted in unison to prevent what desperately needed to happen.

If Not Now, When?

Pritchard thinks the time to raise Tier-1 Capital requirements is not now. OK When is it? 10 years from now or will Spain, Greece, and Italy still be too fragile?

Japan shows the folly of waiting and depending on QE and fiscal stimulus to spawn inflation.

Japan's Four-Pronged Approach

Fiscal Stimulus
Monetary Stimulus (QE)
Misguided Hope
Ignore Capital Impairments of Banks Waiting for Things to Get Better

Did Japan succeed?

In the case of Europe, there is also this "not-so-little" problem that Pritchard is extremely aware of yet mysteriously avoids every time he rails about the ECB not doing enough. I am obviously talking about the Euro.

The LTRO increased leverage and risk on Spanish and Italian banks. QE is useless, something Pritchard should see. Reducing interest rates will shift imbalances to other countries, and may send oil and food prices higher, but it sure will not increase lending.

Pritchard says "The ECB needs to do its own work, with proper energy." What "work" is that? Does any "work" make any sense?

The first irony is Pritchard compares Europe to Japan, while essentially proposing the same four-pronged policy of failure followed by Japan.

The second irony of Pritchard's column is that if Basel III moves forward the date of the inevitable breakup of the eurozone, that would be a good thing. A eurozone breakup would place Europe on a faster pace of ending the very "Japan Syndrome" that Pritchard rails against.

Proper Energy

Not only do I want to raise tier-1 capital requirements, I want to see a 100% gold-backed dollar, the end of fractional reserve lending, and the end of duration-mismatched lending (e.g. selling 5-year CDs and making mortgage loans for 30 years).

Finally, lending of money that is supposed to be available on demand is fraudulent and must be stopped. I would be more than willing to phase those ideas in, but the time to start is now, not 10 years from now, under the misguided notion things will be better if only banks would lend more.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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The No Retirement Plan: 25% Expect to Work Till 80 (Greater than Life Expectancy); What About the Expected Retirement of Nuclear Power Plants?

Posted: 28 Apr 2012 08:52 AM PDT

Given major delays in retirement plans, 80 is the new 65 says CNN Money.

A quarter of middle-class Americans are now so pessimistic about their savings that they are planning to delay retirement until they are at least 80 years old -- two years longer than the average person is even expected to live.

It sounds depressing, but for many it's a necessity. On average, Americans have only saved a mere 7% of the retirement nest egg they were hoping to build, according to Wells Fargo's latest retirement survey that polled 1,500 middle-class Americans.

While respondents (whose ages ranged from 20 to 80) had median savings of only $25,000, their median retirement savings goal was $350,000. And 30% of people in their 60s -- right around the traditional retirement age of 65 -- that were surveyed had saved less than $25,000 for retirement.
As a result, many people aren't in a hurry to quit their day jobs.

Three-fourths of middle-class Americans expect to work throughout retirement. And this includes the 25% of Americans who say they will "need to work until at least age 80" before being able to retire comfortably.

Job Insecurity, Debt Weigh on Retirement Confidence, Savings

The Employee Benefit Research Institute (EBRI) reports Job Insecurity, Debt Weigh on Retirement Confidence, Savings

Executive Summary Points

Americans' confidence in their ability to retire comfortably is stagnant at historically low levels. Just 14 percent are very confident they will have enough money to live comfortably in retirement (statistically equivalent to the low of 13 percent measured in 2011 and 2009).
Employment insecurity looms large: Forty-two percent identify job uncertainty as the most pressing financial issue facing most Americans today.
Worker confidence about having enough money to pay for medical expenses and long-term care expenses in retirement remains well below their confidence levels for paying basic expenses.
Many workers report they have virtually no savings and investments. In total, 60 percent of workers report that the total value of their household's savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.
Retirees report they are significantly more reliant on Social Security as a major source of their retirement income than current workers expect to be.
Although 56 percent of workers expect to receive benefits from a defined benefit plan in retirement, only 33 percent report that they and/or their spouse currently have such a benefit with a current or previous employer.
More than half of workers (56 percent) report they and/or their spouse have not tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement.

What About the Expected Retirement of Nuclear Power Plants?

I picked up links to the above articles in a surprising place. Dawn Stover, writing for the Bulletin of the Atomic Scientists compared the retirement of workers to the "The new retirement" for nuclear power plants

Today, only 14 percent of Americans age 25 and older are confident that they will have enough money to retire comfortably, according to a recent survey by the Employee Benefit Research Institute (EBRI). Another recent survey, by Wells Fargo, reported that a quarter of middle-class Americans now plan to postpone retirement until they are at least 80 years old -- longer than many of them are expected to live. For Americans facing an uncertain financial future, 80 is the new 65.

Some are calling it "the new retirement." But it really should be called "the no retirement."

And senior citizens aren't alone. Nuclear reactors are experiencing some of the same woes: Retirement age is fast approaching or already in the rearview mirror, but there is a lot less money in the nest egg than anticipated.

At the 44 US nuclear reactors that have already received license extensions, 60 is the new 40. And even when those reactors reach the end of their working lives, they may not be able to move on to the final stage. According to a recent article in The New York Times, the operators of 20 US nuclear reactors -- including some with licenses that expire soon -- do not have sufficient funding for prompt dismantling. If these reactors can't keep working, their owners "intend to let them sit like industrial relics for 20 to 60 years or even longer while interest accrues in the reactors' retirement accounts."

Is it crazy for someone to delay his retirement past the age he can expect to live? Sure, but that's essentially what the nuclear industry plans to do with many of its reactors. And it should not come as a surprise that the NRC has no problem with this plan. After all, we're talking about a regulatory agency that issues 40-year licenses for a process that creates a radioactive waste problem lasting tens of thousands of years.

Crazy to Plan Retirement Past Life Expectancy?

Dawn says "Is it crazy for someone to delay his retirement past the age he can expect to live". Sorry Dawn, that's not crazy at all. If you have insufficient money, you need to work. Some want to work because they like what they are doing.

If you are seeking crazy, try these:

What is crazy is to expect social security to take care of all your retirement needs.
It's also crazy to expect to receive defined benefits even if you are not in a defined benefit plan.
Finally, it's crazy for public unions to think they are going to get all of their promised benefits when it will bankrupt cities and states to do so.

Economic Craziness

If you are looking for more craziness, Dawn wants a "carbon tax to lift job prospects".

Here is another crazy idea: Dawn talks of "forcing people to save more and protect retirement savings from the vagaries of the financial markets".

Yikes!

Nuclear Craziness

One point I happen to agree with Dawn on. It's crazy to issue "40-year licenses for a process that creates a radioactive waste problem lasting tens of thousands of years" and have no plans for anything but the first 40 years.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Damn Cool Pics

Bohemian Rhapsody On The Way To School
Brass knuckles iPhone Case Can be Used for Self-Defense
Crime On Campus [Infographic]

Bohemian Rhapsody On The Way To School

Posted: 27 Apr 2012 11:25 PM PDT

Parenting: You're doing it right. From the video description on YouTube:

It has become a morning habit to sing Bohemian Rhapsody on the way to school in the morning. Depending on traffic, we can usually start the song as we pull out of the driveway, and pull into the school just as the song ends.

Brass knuckles iPhone Case Can be Used for Self-Defense

Posted: 27 Apr 2012 10:49 PM PDT

iPhone can do all sorts of things thanks to its accessories, but iPhone cases can transform your iPhone and enhance its functionality as well, and today we're going to show you Brass knuckles iPhone case. This case transforms your iPhone into a self-defense weapon, or into brass knuckles to be precise. Although Brass knuckles iPhone case is designed to work as a self-defense weapon, it's probably not recommended to use it, because you might damage your phone while using it.

Luckily for you, Brass knuckles iPhone case is just a concept for now, so you don't have to worry that you might hurt someone with it, or damage your iPhone while using it.

Via: gadgetlite

Crime On Campus [Infographic]

Posted: 27 Apr 2012 09:17 PM PDT

In 2010, the United States Secret Service, Department of Education, and FBI released a report focusing on violence at institutions of higher education. By understanding these occurrences and learning from them, we can better protect ourselves in the future.

Click image to see a larger version.

Via: onlinecolleges

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