Central Perk

duminică, 2 decembrie 2012

Mish's Global Economic Trend Analysis

Trends in College Tuition vs. Bachelor’s Degree Wages; Interesting Demographics of Student Loan Debt History

Posted: 02 Dec 2012 09:48 PM PST

According to the New York Fed, Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008. Moreover, student loans balances have eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages.

The Fed has some interesting charts on Student Loan Debt History through first quarter of 2012.

Debt levels are higher now, with student debt at $956 billion through third quarter. What caught my eye however, is skyrocketing debt in the age group 30-39.

First Quarter Overall Debt

Student Debt Under Age 30

Student Debt Age 30-39

Even if it took someone age 18, eight to ten years to finish college, they would still be 28 years old at most when they finished their education.

Yet, student debt in the 30-39 demographic group now exceeds that of the under 30 age group. Moreover, the under age 30 group accounts for less than a third of the overall student debt.

Points to Consider

Over-two thirds of student debt is held by those well outside the normal student demographic!
This trend is not entirely recession-related given that it has been steady since 2005.
Someone exiting military service would be covered for 36 months of in-state education by the GI Bill.
Someone working for a major employer for any significant length of time would likely have some or all education expenses paid for by the company.
Those aged 30-39 would be far more likely to have steady income than someone 18-24, thereby avoiding the need to rack up as much debt.

Have a Story to Share?

If you are 30 years or older, sitting on a pile of student debt, and are willing to tell your story how and why that happened, Please Email Mish.

If I get any interesting letters, I may share some of the stories.

Trends in College Tuition vs. Bachelor's Degree Wages

Meanwhile, as student debt piles up, wage growth for college grads certainly doesn't. Please consider a Shocking Chart on Tuition vs. Earnings for College Grads on The Fiscal Times.

Student debt levels have reached a new high – rising $42 billion in the last quarter to $956 billion, according to a report this week from the New York Fed. At the same time, tuition rates have seen a staggering 72 percent increase since 2000.

As if those two upward trends weren't hitting students hard enough – the average earnings for full-time workers ages 25-34 with Bachelor's degrees has also dropped 14.7 percent since 2000. The chart below from Citi shows the striking contrast:

Howard Dvorkin, author of Credit Hell, told The Fiscal Times last month: "It's hard to predict when the student loan meltdown could occur, but if the bubble explodes, the consequences will be devastating for the economy."

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

"Wine Country" Economic Conference Hosted By Mish
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US Fiscal Cliff Blame Game Between Geithner, Boehner; UK Deficit Cut Taking Longer Than Planned

Posted: 02 Dec 2012 09:27 AM PST

Agreement that something needs to be done with soaring deficits is easy to find, in the US and abroad. Actually doing something reasonable about huge deficits has proven impossible to date.

Fiscal Deficit Blame Game

Bloomberg reports Geithner Joins Boehner in Trading Blame Over Fiscal Cliff Talks.

U.S. Treasury Secretary Timothy F. Geithner and House Speaker John Boehner hardened their positions over the fiscal cliff, each blaming the other for a standoff that could lead to more than $600 billion in tax increases and spending cuts in January.

"There's not going to be an agreement without rates going up," Geithner said in a taped interview that aired today on CNN's "State of the Union." Republicans will "own the responsibility for the damage" if they "force higher rates on virtually all Americans because they're unwilling to let tax rates go up on 2 percent of Americans."

Republican Boehner said the White House is wasting time.

"I would say we're nowhere, period," Boehner said on the "Fox News Sunday" program. "We've put a serious offer on the table by putting revenues up there to try to get this question resolved. But the White House has responded with virtually nothing."

There's "clearly a chance" that there won't be an agreement in time to avert the fiscal cliff, Boehner said on the Fox program. "Just the threat of the fiscal cliff is already hurting the economy."

Geithner appeared on five talk shows today. In the interviews, taped Nov. 30, he challenged Republicans to make a counteroffer to the Obama administration's framework plan.

Republican Ball

Gene Sperling, Obama's top economic adviser, challenged Republican congressional leaders to put an offer on the table.

"It's for them now to come forward with their plan, with their details, so that we can start working quickly to getting an agreement," said Sperling, director of the White House National Economic Council, on "Political Capital with Al Hunt," airing this weekend.

"The ball really is with them now," said Geithner, the administration's lead negotiator on the fiscal cliff, on CNN. "They're having a tough time trying to figure out what they can do, what they can get support from their members for."

One good thing is happening in January. Tim Geithner is stepping down as US Treasury Secretary.

UK Deficit Cut Taking Longer Than Planned

The BBC reports Deficit cut is taking longer than planned

Chancellor George Osborne has admitted that curbing the UK's financial deficit is "taking longer" than planned.

But he told the BBC the government was "making progress" and that to "turn back now would be a complete disaster".

Mr Osborne, who delivers his Autumn Statement on Wednesday, said well-off people would "pay their fair share".

"The deficit is down by a quarter. There are a million more jobs in the private sector and to turn back now, to go back to the borrowing and the debt and the spending that Ed Balls represents would be a complete disaster for our country."

He added that some people were calling for more borrowing and others for more spending cuts, but the government had "got the right plan and we should stick to that plan".

As you can see, political bickering over needed budget cuts is rampant on both sides of the Atlantic.

It's important to maintain a global focus instead of looking at US problems in isolation. There is not a good fiat currency anywhere (and there cannot be by definition actually).

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

Seth's Blog : Soft and hard

Soft and hard

The hard stuff is measurable, quantifiable and easy to put into a spreadsheet. This concrete stuff gives you an easy way to demand a bonus or track progress.

The soft stuff is merely essential, the real reason you do what you do.

Ironically, then, hard is easy and soft is difficult.

The question, I guess, is whether or not you and your team spend most of your time on the hard stuff, merely because it's easier to measure, to argue about and to hide behind?

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sâmbătă, 1 decembrie 2012

Mish's Global Economic Trend Analysis

Italy Retail Sales Sharpest Drop in 17 Months; Germany Retail Sales Stagnate as Margins Squeezed; Eurozone Retail Sales Drop Sharply

Posted: 01 Dec 2012 05:49 PM PST

Dismal economic conditions in the eurozone accelerate to the downside as evidenced by falling retail sales. Let's take a look at the Eurozone in aggregate, as well as the three largest countries.

Eurozone Retail Sales Drop Sharply

The Markit Eurozone Retail PMI® shows Eurozone retail sales continue to fall sharply towards end of 2012.

Key points

Sales fall for thirteenth month running in November

German sales remain flat while Italy records another severe fall

Rate of decline in France slows to weakest in five months

Summary of November findings

The Eurozone retail sector remained stuck in a sharp downturn during the penultimate month of 2012, according to Markit's PMI® data. Sales fell for the thirteenth consecutive month, and remained well below the level seen one year earlier.

The PMI rose slightly in November to 45.8, from October's 45.3. The latest figure signalled a sharp fall in retail sales compared with one month previously, and the
average for the fourth quarter so far (45.5) is the second-lowest since Q1 2009. Moreover, the trend for 2012 so far (45.6) is the lowest annual average of any year since the survey started in 2004. The previous record low was in 2008 (46.1).

Retail sales across the single currency area fell on an annual basis for the eighteenth month running in November. The rate of decline was sharp, and
stronger than the average over this sequence. Year-on-year sales rose in Germany, but fell at a near-record pace in Italy. The annual rate of decline in France slowed since October, but remained sharp overall.

Comments

Commenting on the retail PMI data, Trevor Balchin, senior economist at Markit and author of the Eurozone Retail PMI, said:

"November's set of numbers portrayed the weak position the Eurozone's retailers find themselves in going into the crucial festive season. Actual month-on-month sales continued to fall sharply, resulting in another marked drop compared with one year previously. The data are consistent with consumer spending having declined for five straight quarters come the end of the year.

Italy Retail Sales Sharpest Drop in 17 Months

The Markit Italy Retail PMI® shows sharpest drop in retail sales for seven months.

Key points

PMI falls to lowest since April

High street employment falls at solid rate

Sharper decrease in stock levels

Summary

Italian high street businesses recorded a further sharp decrease in sales in November, leading to more job losses in the sector. There was also a steep drop in purchasing activity as firms made efforts to reduce inventory levels. Meanwhile,
average prices paid for goods for resale rose at a modest rate largely on the back of higher oil-related prices.

The seasonally adjusted Italian Retail Purchasing Managers' Index® (PMI®) fell to a seven-month low of 35.5 in November, from October's reading of 37.3, signalling a further sharp month-on-month decrease in total high street spending. The headline
index has posted below the neutral mark of 50.0 continuously since March 2011, and remains below its average over that period.

In line with the sustained downturn in sales, November data showed that high street spending was down sharply compared with the situation one year previously. Furthermore, the annual rate of contraction was the steepest since May's survey
record. November saw actual sales again fall well short of planned levels, with the overall degree of underachievement the most pronounced for five months.

November data pointed to a further sharp decrease in retailers' gross margins, which anecdotal evidence suggested was the result of discounted selling prices as well as a fall in sales. The rate of decline was little-changed since the previous
survey period and faster than the historical trend. Also dampening profitability over the month was a rise in average purchase prices. Firms commonly linked the increase in their cost burdens to higher oil-related prices.

Germany Retail Sales Stagnate as Margins Squeezed

The Markit Germany Retail PMI® shows German retail sales continue to stagnate in November.

Key points

Month-on-month sales remain broadly unchanged

Margins squeezed amid sharp rise in wholesale prices

Actual sales underperformed initial targets in November

Summary

At 50.2 in November, the seasonally adjusted Germany Retail PMI was little-changed from 50.3 during October and, by remaining close to the 50.0 no-change value, signalled broadly stagnant month-on-month retail sales in Germany. This has been
the general trend throughout the second half of 2012 to date. Anecdotal evidence from survey respondents largely suggested that subdued consumer confidence was the main factor weighing on retail sales during November.

French retailers report slower fall in sales during November

The Markit France Retail PMI® shows French retailers report slower fall in sales during November.

Key points

Decline in sales eases to weakest in five months

Gross margins fall at slower, albeit still marked, rate

Further reductions in purchasing and stocks

Summary

The contraction in French retail sales continued in November, but at a weaker rate. Both the monthly and annual measures showed less marked declines. Sales once again disappointed relative to previously set plans. Gross margins continued to be squeezed, although the rate of decline moderated.

The headline Retail PMI® posted 48.8 in November, up from 46.0 in October. The latest reading was indicative of a moderate pace of decline that was the weakest since June. Where a decline in sales was recorded, this was generally attributed by panellists to a difficult economic climate, reduced levels of customer footfall and strong competition.

European House of Cards

This entire European house of cards comes crashing down the moment either Germany or France takes a sharp turn to the downside.

I believe both are a given.

As noted on November 29, French Unemployment Highest in 14 Years (And It's Going to Get Much Worse).

Germany will follow (in a major way) the rest of Europe soon enough. It is simply impossible for the German export machine to keep humming with a massive slowdown in Asia, and an outright disaster happening in Greece, Italy, Portugal, and Spain.

Warning bells are flashing loudly, but few hear the call.

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

Stalemate: Obama Warns of Prolonged Talks as Republicans Rebuff Plan

Posted: 01 Dec 2012 07:56 AM PST

The word of the day is "stalemate".

Last year the Republicans had a chance to accept spending cuts to tax hikes at a 10-1 ratio. They declined. Now president Obama does not want to bargain. Who can blame Obama (except Republicans)? We may disagree, but that is part of the platform that got him elected.

The Republicans do not want to bargain either. And who can blame them (except Democrats)?

Regardless, Republicans blew a golden opportunity last year and that chance is gone. Obama has the upper hand now, and nothing will change that setup.

I certainly am opposed to tax hikes without something substantial in return.

Yet, if Obama holds his ground, the only way to have some cuts across the board right now is for the fiscal cliff to happen.

Could it be that the best political outcome may actually be the dreaded "fiscal cliff"? The fiscal cliff will hit military spending but why shouldn't it? The US could easily defend itself on half its current budget actually.

While pondering those questions and thoughts, please consider Obama Warns of Prolonged Talks as Republicans Rebuff Plan.

President Barack Obama and House Speaker John Boehner stood their ground with opposing plans to avert the fiscal cliff and warned there was no quick path to a solution.

Obama has proposed a framework that would raise taxes immediately on top earners and set an Aug. 1 deadline for rewriting the tax code and deciding on spending cuts, according to administration officials.

It calls for $1.6 trillion in tax increases, $350 billion in cuts in health programs, $250 billion in cuts in other programs and $800 billion in assumed savings from the wind-down of the wars in Iraq and Afghanistan, according to the officials, who asked for anonymity.

Boehner said less than 30 minutes later during a news conference at the Capitol in Washington, that the proposal, presented to congressional leaders by Treasury Secretary Timothy F. Geithner, did nothing to move talks along.

"There's a stalemate, let's not kid ourselves," he said.

Stalemate Solution

The stalemate "solution" comes with its own set of problems.

Contrary to popular belief, the risk is not that too much is done, but rather that both sides unwind nearly the entire "fiscal cliff", achieving no budget reductions at all.

Speaking of which, it's high time we "stop kidding ourselves" about what is happening. There are no budget cutbacks at all under discussion. Rather the discussion centers around reductions in assumed increases, and politicians are having a tough time even with that.

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

Damn Cool Pics

How Facebook Merges Business and Personal [Infographic]

Posted: 01 Dec 2012 11:40 AM PST

While Facebook began as a personal platform, it's now a top resource for businesses to find and engage new customers.

The stats are astounding. 86% of small businesses now consider Facebook a valuable marketing tool. Fans of a business are 79% more likely to buy from it than non fans. One fifth of consumers now feel more comfortable buying from a business' Facebook page than from its website.

Here's the full story on why Facebook means business, and why your business needs to be on it (and hey – we can help).

Click for full-sized image:

Via: Vocus

Weekly Address: Urging Congress to Extend the Middle Class Tax Cuts

Saturday, December 1, 2012

Weekly Address: Urging Congress to Extend the Middle Class Tax Cuts

President Obama speaks to the American people from a busy factory floor in Pennsylvania about the urgent need to pass the middle class tax cuts, which will give families and businesses preparing for the holidays the certainty they need going into the New Year.

Democrats and Republicans must come together to pass one thing that everyone agrees on—extending income tax cuts for 98 percent of American families and 97 percent of small businesses, and there is no reason to wait. The President urges Congress to take action to help grow our economy and strengthen the middle class.

Watch President Obama's weekly address.

Tell us what #My2K means to you.

President Obama delivers the Weekly Address

In Case You Missed It

Here’s a quick glimpse at what happened this week on WhiteHouse.gov:

#My2k: This week, President Obama called on the American people to speak out in favor of keeping taxes low on the middle class. He explained:

If Congress does nothing, every family in America will see their taxes automatically go up at the beginning of next year. A typical middle-class family of four would see its income taxes go up by $2,200. That's $2,200 out of people's pockets. That means less money for buying groceries, less money for filling prescriptions, less money for buying diapers. It means a tougher choice between paying the rent and paying tuition. And middle-class families just can’t afford that right now.

The President asked the American people to speak loudly by sharing what $2,000 means to them online on Facebook and Twitter using the hashtag #My2k. Here's how to get involved:

Holidays at the White House: Earlier this week, the First Lady previewed the 2012 White House holiday decorations, showcasing this year’s theme: “Joy to All.” The decorations embrace several beloved White House traditions, including 54 decorated trees throughout the residence and a White House gingerbread house. The First Lady explained that this year’s theme “celebrated the many joys of the holiday season: the joy of giving and service to others; the joy of sharing our blessings with one another; and, of course, the joy of welcoming friends and family as guests into our home over these next several weeks.”

President Obama Welcomes Mexico President-Elect: On Tuesday, President Obama welcomed President-elect of Mexico Enrique Peña Nieto to the Oval Office. They discussed the close relationship between Mexico and the United States, and the President noted that President-elect Enrique Peña Nieto’s reform agenda is one that Americans will watch closely.

Cabinet Meeting: On Wednesday, the President held a Cabinet meeting—the first one since the election. He first thanked Cabinet members for doing “a remarkable job on behalf of the American people,” and reminded them there’s still much work to be done.

Vice President Biden Goes to Costco: On Thursday, the Vice President visited the newly opened Costco in Washington, DC. After picking out a few Christmas presents and other items, he spoke about the importance of extending tax cuts for middle-class families.

World AIDS Day 2012: Today, to commemorate World AIDS Day, the White House hosted a special office hour session with Senior Advisor Valerie Jarrett and Gayle Smith, Senior Director, National Security Council, to answer questions on Twitter about the Obama administration’s role in the global fight against HIV/AIDS. Learn more about how the White House is honoring World AIDS Day 2012 here.

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Seth's Blog : The cycle of customers who care

The cycle of customers who care

Organizations that grow start by selling their serices and products to people who care.

These organizations are staffed by people who care making something that demands "caring-about" for people who have chosen to care.

It can be colored shoelaces or vinyl records or handmade medicine balls. These aren't for everyone, and they require effort to find, to buy and to maintain, but for those that care about the cutting edge or innovation or style, they're perfect.

Then, over time, many of these organizations start to make products and services that are carefree. The people who produce them care so much about what they're making that they get good at it, the design becomes simpler, the pricing becomes better, and more people use it. The result is efficiency and distribution.

Until soon, the product or service is used by people who don't care so much about the original intent, they just want something easy and functional and available and cheap.

This is the classic diffusion of innovations process. (Learn more about this key concept here, here and here). Those in the mass market choose to be the mass market because they're too busy or distracted or bored to be the innovators and the geeks. They don't care enough to be on the edge.

Some examples: ebooks were first sold to just a few people. They were tricky to download, they weren't cheap and they required more effort. Over time, the price of the reader comes down, more books are available and it becomes more attractive to the mass market.

Or the car transforms from something for millionaires and hobbyists into the Honda Civic. You don't buy a Civic because you want to do your own tune ups. You just want it to work, and to be inexpensive.

Or the charity that starts out on the bleeding edge of technology, raising speculative money from a few philanthropists, but then moves into the mainstream and becomes an easy cause to explain and support.

Or the musician and his band and his label who goes from hand-crafting music to mass-producing live spectacles.

Apple, of course, is the classic example. The Mac was, for the longest time, only bought by people who cared a lot about which computer they bought. And the iPhone transformed the market because it became a phone for people who wanted to care about their phone.

The recent launch of the iPhone5 disappointed the geeks, but that was on purpose. Apple introduced a phone for their target market, which is people who don't care as much about the phone as the geeks do. They introduced a phone that worked, not one that was fascinating because it was loaded with untested new features.

But here's where it gets interesting...

The first step is people who care making a product for people who care.

The second step is people who care making a product for people who don't care.

And the third step, so difficult to avoid, is that the growing organization starts hiring people, not necessarily people who care, to grow their ever-industrializing company. And since they are servicing customers who don't care, those employees who don't care can get away with it (for a while).

Think General Motors, 1986. No one pushed back on the horrid design and build quality of the Cadillac. No, the people who cared all bought a Mercedes instead, and those that didn't care, didn't care. Until it was too late.

You're not going to have hordes of disappointed mass market customers cursing you out about quality or design. They don't care enough to do that.

It's totally okay for an organization to have the mission of making a carefree, ubiquitous product or service for people too busy or focused elsewhere. Totally fine to make something that's popular largely because it's popular. The danger creeps in when your team listens to their (mass) market and stops caring as well. When that happens, a new company comes along to care again.

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duminică, 2 decembrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Soft and hard

Soft and hard

More Recent Articles

sâmbătă, 1 decembrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Damn Cool Pics

Damn Cool Pics

Weekly Address: Urging Congress to Extend the Middle Class Tax Cuts

Seth's Blog : The cycle of customers who care

The cycle of customers who care

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duminică, 2 decembrie 2012

More Recent Articles

sâmbătă, 1 decembrie 2012

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Arhivă blog

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