Daily Digest

Daily Digest - August 9

Sunday, August 9, 2009, 10:56 AM
  • Geithner asks Congress for higher U.S. debt limit (H/T Montana Native)
  • The Truth Behind Today's BLS Report
  • From Big Picture: For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period. (Chart)
  • $550 Million Slated for Purchase of Eight More Planes as Lawmakers' Travel Soars
  • Amory Lovins (Video, H/T Fred)
  • California Won't Accept Its Own IOUs
  • Jim Kunstler - The Fog of Numbers
  • Six Impossible Things Before Breakfast
  • NODs Increasing, Foreclosures Decreasing

Economy

Geithner asks Congress for higher U.S. debt limit (H/T Montana Native)

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner formally requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October.

"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Geithner said in a letter to Senate Majority Leader Harry Reid that was obtained by Reuters.

The Truth Behind Today's BLS Report

Here are facts from John Williams' Shadow Stats:

July usually sees a regular pattern of planned automobile production line shutdowns to accommodate retooling for the new model year, but recent disruptions to the auto industry have changed pattern this year. Without the usual pattern of shutdowns, the government’s computers nonetheless responded by creating the usual offsetting boost in jobs, not only in the auto industry, but in supporting industries as well. The auto industry itself was alone among durable goods manufacturing industries in showing a reported, seasonally-adjusted monthly gain in July, up by 28,000 jobs. [Would anybody who recently got a job at Chrysler and GM please write us immediately]
...
While Wall Street likely will hype the July employment results as confirmation that economy has turned the corner, such hype and resulting overly optimistic expectations should be slammed in the months ahead, when the positive reporting distortions reverse out in a normal catch-up process.
...
The unadjusted annual declines in the June and July payrolls remain the deepest since a similar decline at the trough of the 1958 recession, but still shy of the 4.9% trough seen in the 1949 downturn. When the 1949 annual low growth is broken, most likely next month, the annual percentage contraction in payrolls will be the most severe since the production shutdown following World War II.
...
- Birth-Death/Bias Factor Adjustment. As discussed in SGS Newsletter No. 51, Birth-Death Model biases tend to overstate payroll employment during recessions. Never designed to handle the downside pressures from an economic contraction, the model adds a fairly consistent upside bias to the payroll levels each year, currently averaging about 76,000 jobs per month. The unadjusted July 2009 bias was 32,000, up from 25,000 the year before, but down from 185,000 in June.

From Big Picture: For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period. (Chart)

$550 Million Slated for Purchase of Eight More Planes as Lawmakers' Travel Soars

[Congress to Buy Eight New Planes]

Amory Lovins (Video, H/T Fred)

California Won't Accept Its Own IOUs

Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California "paid" her with an IOU that two banks refused to accept - yet she had to pay California sales tax on the so-called "sale" of the uniforms.

Jim Kunstler - The Fog of Numbers

We have flown up our own collective numeric bung-hole.

The number problems we face are now hopeless. America will never be able to cover its current outstanding debt. We're effectively finished at all three levels: household, corporate, and government. Who, for instance, can really comprehend what to do about the number problems infesting Fannie Mae and the mortgages associated with her? There's really only one way out of this predicament: to get ready for a much lower standard of living and much different daily living arrangements. We can't wrap our minds around this, so the exercise du jour is to play games with numbers to persuade ourselves that we don't have to face reality. We're entertaining ourselves with shell games, musical chairs, Chinese fire drills, Ponzi schemes, and Polish blanket tricks (where, to make your blanket longer, you cut twelve inches off the top and sew it onto the bottom).

Now that Newsweek Magazine -- along with the mendacious cretins at CNBC -- have declared the "recession" officially over, it's a sure thing that we are entering the zone of greatest danger. Some foul odor rides the late summer wind, as of a rough beast slouching toward the US Treasury. The stock markets have gathered in the critical mass of suckers needed to flush all remaining hope out of the system. The foreign holders of US promissory notes are sharpening their long knives in the humid darkness. The suburban householders are watching sharks swim in their driveways. The REIT executives are getting ready to gargle with Gillette blue blades. The Goldman Sachs bonus babies are trying to imagine the good life in Paraguay or the archepelego of Tristan da Cunha.

Six Impossible Things Before Breakfast

And we wonder why funds and banks, full of the best and brightest, have made such a mess of things. Part of the reason is that we have taught economic nonsense to two generations of students. They have come to rely upon models based on assumptions that are absurd on their face. And then they are shocked when the markets deliver them a “hundred-year flood” every 4 years. The models say this should not happen. But do they abandon their models? No, they use them to convince regulators that things should not be changed all that much. And who can argue with a model that was the basis for a Nobel Prize?

NODs Increasing, Foreclosures Decreasing (Graphic on page)

And that the only reason prices appear to have stabilized "is because of the artificial choking-off of inventory, thereby creating urgency and multiple-offer scenarios."

36 Comments

vinnya's picture
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Re: Daily Digest - August 9

I have a few questions and am hoping to get some opinions.  I feel like in the near future everything in this country is going to collapse, but the majority of the people I talk to feel that things are getting better and Obama is doing a great job.  How is it that educated intelligent people fail to see whats going on?  How can they think that the amount of debt can just keep on going and never stop?  How can they tell me with a straight face that the market is up, unemployment is getting better, retail sales are up etc and the recession is coming to an end?  Is there a chance that all the fabricated numbers the government release can actually prevent a collapse and make things better?  I don't think so, but maybe I'm wrong.  Any opinions would be appreciated. 

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Re: Daily Digest - August 9
vinnyandreula wrote:

...How is it that educated intelligent people fail to see whats going on?  How can they think that the amount of debt can just keep on going and never stop?  How can they tell me with a straight face that the market is up, unemployment is getting better, retail sales are up etc and the recession is coming to an end?  Is there a chance that all the fabricated numbers the government release can actually prevent a collapse and make things better?  I don't think so, but maybe I'm wrong.  Any opinions would be appreciated. 

Hello Vinny:

Short answer: Even though change is the only constant, we as creatures don't like it, when it is percieved to be bad I think we don't believe it.

As to the specifics: We have turned into a bread and circuis country. Forget which book it was I read on empires but it pretty much summed it up. Like David Walker says, we have lost our way.

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Re: Daily Digest - August 9

This is the "best news" we have had in months. USA loses 270,000 to 300,00 jobs and unempoyment goes down by a tenth of a point . maybe if we lost 600,000 jobs unemployment would have gone down a whole quarter point.

At least we can chuckle at the complete incompetense of the whole system.  We DO need something to smile about.

Maybe the President will invite me for a beer (Budweiser) next week and explain that one.

 

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Re: Daily Digest - August 9

I forgot to complement Davos for the excellent posts. The real information being presented here is invaluable.

I am tighteng my stop loss numbers in the market next week and advise all to do the same.

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Re: Daily Digest - August 9

Thanks its just mind boggling to me that I am making plans for major life changes and my friends and family are acting like everything is fine.  Its very frustrating because I think when things go bad its going to be tough for my loved ones to deal with it.  I won't even talk to them about it anymore because they think I am crazy.

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Re: Daily Digest - August 9

 Titanic, Twin Towers, Katrina and I'm sure there are lots of other disasters where people fell into this.

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Re: Daily Digest - August 9
griffin wrote:

I am tighteng my stop loss numbers in the market next week and advise all to do the same.

Griffin,

I think you'll find that most participants here have little to nothing in the market so we appreciate the cautionary sentiment but you're preaching to the choir.   

 

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Re: Daily Digest - August 9

Many people keep harping on the argument that the Efficient Markets Hypothesis is dead.

This is utter stupidity.

You can't claim that a theory is dead when you are testing it in a filthy laboratory. The United States economy, and the global economy (which is based strongly on the US as a center of consumption), has of late not been fertile ground for efficient markets. In fact, one could make the argument that efficient markets have not existed for several decades.

With numbers being massaged, skewed, and falsified everywhere; politicians and sectors of corporate America (financials, automobiles, energy) sleeping together; and international trade so badly NOT a free market, OF COURSE MARKETS WON'T EFFICIENTLY PRICE IN NEW INFORMATION.

New information is spun in all sorts of ways that investors have no idea what to base their decisions on, so no decisiosn will seem rational. With the data available, given the arguments posed by the array of political and economic commentators, I could make any decision you make seem irrational. And I could get people to believe. Then, I could sell them a financial product, and make a buck. 

In the long run, markets are always efficient. There will be a correction. Somewhere down the line, information will diffuse and reality will dawn.  Just as markets are self correcting, as is society. When assessing this situation, you have to realize that power holders can almost indefinitely game the system when they've got the gun and it's implicitly pointed at Americans' heads. Either Americans will wake up and realize that the government reallly can't pull the trigger without shooting itself in the leg, or they'll starve to death on their knees. 

People fail to realize that if you play the wrong notes, then the music's not going to sound right. With tuning and accuracy in decision, we can make markets efficient. Unfortunately, markets today aren't listening to any easy tune. Today they are blasted by hundreds of instruments, all in different keys, playing different songs. The loudest one wins in the short term, and the loudest instrument right now is Team Bernanke-Geithner. 

Maybe their piece sounds nice through all the static, so the market will hum along, but it's only a matter of time until realization dawns on just how out of tune to reality it is.

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Re: Daily Digest - August 9
By David Wilson
 
Aug. 7 (Bloomberg) -- The U.S. economy may be just as sluggish during the next 20 years as Japan’s economy was in the last 20, according to Comstock Partners, a money manager founded and run by Charles Minter.
 
 
                                                                                                                                                                                                       Stimulus programs and a surging money supply aren’t likely to “solve a problem of excess debt generation that resulted from greed and living way beyond our means,” the firm wrote yesterday in an unsigned report on its Web site. “We could wind up with a lost couple of decades.”
 
 
                                                                                                                                                                                                          The CHART OF THE DAY shows U.S. total debt and gross domestic product since 1952, along with the ratio between them, based on data compiled by Bloomberg. The ratio rose in the first quarter to 372 percent even as household borrowing dropped for a second straight quarter, an unprecedented streak.
 
 
                                                                                                                                                                                                     The U.S. is headed for “a deleveraging period” in which the amount of so-called private debt, including consumer borrowing, collapses as government borrowing explodes, Comstock wrote.
 
 
                                                                                                                                                                                                         Assuming that private borrowers pay down debt at the same pace as they did in Japan after its 1980s economic bubble burst, the savings rate will climb to about 10 percent in 2018, the report said. The estimate was made in a study by the Federal Reserve Bank of San Francisco that Comstock cited. It’s more than double the 4.6 percent rate for June.
 
 
                                                                                                                                                                                                     Citing the study in addition to its own research, Comstock wrote that reduced borrowing may curtail growth in U.S. consumer spending by 0.75 percentage point annually on average during the next nine years.
 
 
                                                                                                                                                                                                        To contact the reporter on this story: David Wilson in New York at [email protected]

 

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Re: Daily Digest - August 9

Vinnyandreula - I recently read that the US Postal Service has a 90% approval rating. Yet, it's going to run a budget deficit this year of $7 billion. Maybe Americans aren't so highly intelligent after all? They've been delivering less and less mail for years, mainly because of the internet, yet they still deliver mail 6 days a week. I mean, how could the Postal Service not see that and make changes to acommodate to a drastically changing business environment?

In any event, one book you might want to read to understand why people can't or don't want to see change is Jared Diamond's book Collapse: How Societies Choose to Fail or Suceed. I especially enjoyed reading about the collapse of Easter Island and the question of what were those people thinking when they cut down the last tree on that island? It rings so true today in our society.

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Re: Daily Digest - August 9

Hello idoctor,

I've posted this chart before (Nikkei 225, 1960 to date) - when we talk about the Japan economy being sluggish here's what's been happening with the Japanese stock market, slowly going down. There appear to be four ideas at the moment (any others, anybody?) 1) 'The recessions's over!', 2) 'sluggish growth' (whatever that means and with all the timebombs in the background) 3) a repeat of Japan (see the chart!) and 4) a repeat of the Great Depression (some say worse).

Wherever we are going, I don''t think number 1 is true!

DavidC

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Re: Daily Digest - August 9

rht1786

With numbers being massaged, skewed, and falsified everywhere; politicians and sectors of corporate America (financial, automobiles, energy) sleeping together; and international trade so badly NOT a free market, OF COURSE MARKETS WON'T EFFICIENTLY PRICE IN NEW INFORMATION.

 

But that IS the market in action. A little bit like say the environment includes everything except anything to do with humans

We'd all like to think that somehow the "free market" is somehow a pristine, honest and free enterprise, but unfortunately it is not. When left to the so-called free market, the greed and dishonesty slips in and we get badly skewed situations including monopolies, paid off politicians and Wall Street thieves as we currently have. And, yes, the market will correct these excesses given time, but it will be painful and a long time before we can get back on out collective feet -- As I see it, one of our objectives is to figure out how to operate without these impediments . Our challenge is how to have the benefits of the free market while keeping the downside elements out of it. Government involvement is most often brought into play when the private sector screws up however it has to be part of the system whether we like it or not. I don't see any solution except to learn how to play fairly in the sandbox.

Perhaps an improved collective sense of morality and what is just and  right will help - and a renewed vision of where we are going.

Jim

 

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Re: Daily Digest - August 9

Hello DavidC,

Thanks for that chart, I have looked at it many times thinking we are in that 1st leg up between 1991 & 1992. If so & we follow Japan we have a long hard ride on the next leg down. I am still half in the market at the moment. You might call it my semi salvage operation. What I have left is in more defensive things. So far so good.

I watched CNBC Friday & wow are they bullish. Makes me wonder at times if we have it all wrong here but my instincts tell me different. The MSM seems almost desperate with spinning the slightest bit of good news.

When someone like Peter Schiff has a wonderful track record of calling this all correct from 2006-2008 it is obvious he is on to something & sees something most are missing. Yet they are still laughing at him & making fun of him. That is not even logical too me. You would think they would be more cautious than this (common sense?).

I wish someone would invite Chris Martenson on CNBC. IMHO he has a very calm sensible approach to all this and he comes across very balanced genuine & unbiased I fee when I here him speak.

Maybe they can spin this market higher (10% more I hope) but this will make it fall all that much harder it would seem. I still like the market but I feel better shorting something like the SPY or the QQQ once this market breaks. The double & triple shorts I feel maybe too risky since they may get caught with "naked" shorts.

It looks like we may live long enough to see some real crazy times. Nothing will be truly safe as every form of stored wealth has it's drawbacks.

We are quite a bit different than Japan since they had savings to fall back on & we don't. Even so I wish someone could post some things about how gold & silver interacted with the Yen through their 20 year decline in stocks & properties.

http://www.forbes.com/2009/02/20/japan-america-recession-opinions-columnists_john_tamny.html

http://seekingalpha.com/article/118957-gold-s-performance-relative-to-dollar-yen-and-euro

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Re: Daily Digest - August 9

I have a theory that the frontal lobe expansion (if you believe in evolution, etc....) in recent millenia has contributed to this denial thing.  People like me get too involved in their thoughts and forget to respond to their environment.  More concerned with dealing with how things "should be" than "how they are".  But that is just a theory.  Maybe that was the point of Dr. Martenson's tunnel vision exercise at the Virginia seminar now that I think of it.

I look to animals to remind me that, as well fed and comfy as you can be, it is natural to respond to each and every threat appropriately. My cat is quite spoiled but still runs at the first sign of danger and pays attention to all the signals around him.  He doesn't complain about how unfair it is or obsess (unlike his owner.....) he just responds as he sees fit.  Flee, attack, watch, etc....

I feel sympathy for the people who are in denial, it will be very hard for them.

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Re: Daily Digest - August 9

I feel sympathy for the people who are in denial, it will be very hard for them.

Good points Denise

Makes me think if things do get as bad as some of us feel the people still in denial will be hit so hard by the reality they will be a very angry crowd. At least I feel we have moved well beyond this.

 

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Re: Daily Digest - August 9

I feel sympathy for the people who are in denial, it will be very hard for them. 

+1 indeed!

Reality lags perception and I don't think this is going to be a pretty reality. I think Enron was living, breathing prrof that numbers can only be conned for so long.

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Re: Daily Digest - August 9

I feel sympathy for the people who are in denial, it will be very hard for them.

 

http://www.abc.net.au/tv/fora/stories/2009/04/17/2546038-p.htm

About six minutes into the talk, Dmitry Orlov says this:

....when times get really bad, as they did when the Soviet Union collapsed, a lot of people just completely lose it. Men, especially. Successful, middle aged men, breadwinners, bastions of society, turn out to be especially vulnerable. and when they just completely lose it, they become very tedious company. My hope is that some amount of preparation, psychological or otherwise, may make them a lot less fragile, and a bit more useful, and generally less of a burden.

Women seem far more able to cope. Perhaps it is because they have less of their ego invested in the whole dubious enterprise, or perhaps their sense of personal responsibility is tied to those around them and  not some nebulous grand thing. In any case, the women seem far more able to put on some gardening gloves and go do something useful, while the men tend to sit around, groaning about the empire, or the republic, or whatever it is they lost. And when they do that, they become very tedious company. And so without a bit of mental preparation, the men are all liable to end up very lonely and very drunk.

So, that's my little intervention.
 

Just in case anyone here has yet to hear of Mr. Orlov

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Re: Daily Digest - August 9

Cash for Clunkers??? How many times can we fix the problem with the problem?? I guess until the hand of collapse finally comes down.

http://www.youtube.com/user/InflationUS

http://www.youtube.com/user/InflationUS

http://www.youtube.com/user/InflationUS

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Vinny

Hi Vinny- GOOD POINT!

I have come to the conclusion that only a handful of people no longer believe the news fed the public on television and only that handful of people bother to collect information and read what is really going on.

I can't blame those who have no time to look deeper into what is the real news - they live busy lives to make a living, raise kids and keep up with the Jones.  99% of our population has no time, interest or has had any reason to look into the news further. To them - we are all doomers.

The only thing you can do is offer up information when you have the opportunity as sooner or later - they will feel the need to know.   But it's kinda like religion - you can't force it on people.    Peace-EGP

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$5.5M for Nacncy Peloski to fly around?

So California is going broke - and Nancy is out spending money on traveling like an insane person.  $5,5M for Peloski to fly

I couldn't rack that much up in traveling if I never came home in a lifetime! 

And the Meek Shall Inherit the Earth.....EGP

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Re: Daily Digest - August 9

I like Kunstler's in-your-face commentary....

He mentions in this latest piece about the possibility of a "bank holiday" being forced upon us.

How likely could this be? How quickly could it happen? If it would happen, how long could it be expected to last?

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Re: Daily Digest - August 9

AFAIC, it isn't just the markets that will die, CAPITALISM itself is as good as finished..... and if we're not careful, civilisation wtll go down with it, and THAT would be a shame, because I won't miss the markets and capitalism one little bit! But civilisation? Now THAT's a whole different concern....

Mike

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Re: $5.5M for Nacncy Peloski to fly around?
EndGamePlayer wrote:

So California is going broke - and Nancy is out spending money on traveling like an insane person.  $5,5M for Peloski to fly

I couldn't rack that much up in traveling if I never came home in a lifetime! 

And the Meek Shall Inherit the Earth.....EGP

Hello EGP:

Over 3,000 hours of abroad travel for Congress and many are taking their families. Germany and many other countries this recess. I don't want to go political here, but at a time when we take in 2 trillion and spend 4 trillion this issues are and should be focused here is my view.

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Re: Daily Digest - August 9
ELIZABETH S. wrote:

I like Kunstler's in-your-face commentary....

He mentions in this latest piece about the possibility of a "bank holiday" being forced upon us.

How likely could this be? How quickly could it happen? If it would happen, how long could it be expected to last?

Hello Elizabeth:

You might want to read about FDR and how he devalued the dollar and closed the banks for a bit. Timing? No idea myself. I'd have enough food to make it a few months. Reading about Arentina might shed some light on how these things work out.

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Re: Daily Digest - August 9

I don't think we have to worry to much about a bank holiday.  Panic is what they want us not to do and a bank holiday would cause chaos. 

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Hunger hits Detroit's middle class

The poor bastards - their food parcels only contain 8 pounds of meat

http://informationclearinghouse.info/article23226.htm

Hunger hits Detroit's middle class

Food has long been an issue in this city without a major supermarket. Now demand for assistance is rising, affecting a whole new set of people.

 

August 08. 2009 "CNNMoney" -- DETROIT  -- On a side street in an old industrial neighborhood, a delivery man stacks a dolly of goods outside a store. Ten feet away stands another man clad in military fatigues, combat boots and what appears to be a flak jacket. He looks straight out of Baghdad. But this isn't Iraq. It's southeast Detroit, and he's there to guard the groceries.

"No pictures, put the camera down," he yells. My companion and I, on a tour of how people in this city are using urban farms to grow their own food, speed off.

In this recession-racked town, the lack of food is a serious problem. It's a theme that comes up again and again in conversations in Detroit. There isn't a single major chain supermarket in the city, forcing residents to buy food from corner stores. Often less healthy and more expensive food.

As the area's economy worsens --unemployment was over 16% in July -- food stamp applications and pantry visits have surged.

Detroiters have responded to this crisis. Huge amounts of vacant land has led to a resurgence in urban farming. Volunteers at local food pantries have also increased.

But the food crunch is intensifying, and spreading to people not used to dealing with hunger. As middle class workers lose their jobs, the same folks that used to donate to soup kitchens and pantries have become their fastest growing set of recipients.

"We've seen about a third more people than before," said Jean Hagopian, a volunteer at the New Life food pantry, part of the New Life Assembly of God church in Roseville, a suburb some 20 miles northeast of Detroit. Hagopian said many of the new people seeking assistance are men, former breadwinners now in desperate need of a food basket.

Hagopian is an 83-year old retired school teacher. She works at the pantry four days a week, spending two of those days driving her own minivan around town collecting food from local distributors.

The pantry, housed in the church basement, gives away boxes of food that might feed a family of four for a week. It includes dry and packaged goods like cereals and pasta, peanut butter, canned fruits and vegetables, 7 or 8 pounds of frozen meat (usually chicken or hot dogs), and eight pan pizzas donated from a local Pizza Hut. Most of the other food is purchased from a distributor or donated by the county food program. Last month they gave out 519 boxes.

<MORE>

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Re: Daily Digest - August 9
vinnyandreula wrote:

Thanks its just mind boggling to me that I am making plans for major life changes and my friends and family are acting like everything is fine.  Its very frustrating because I think when things go bad its going to be tough for my loved ones to deal with it.  I won't even talk to them about it anymore because they think I am crazy.

Vin --

Just buckle down and prep your tushie off for those you're responsible for (immediate circle over which you have say).  I try to talk to my mother & brother about this, but in my bro's words "I think everything's just gonna go sideways for a couple years and then we'll be okay."  Ironically, my brother & mother have waaaay more financial resources to prepare.  I'm the one with the knowing, but have to scratch and claw for each piece of prep.  They could wave a wand and have their major issues covered in a matter of weeks.  Ain't life funny that way?   Whaddayagonnado?

Like I said, do all you can for you & yours, and if you're fortunate enough to be able to do so, prep on behalf of the next circle out (parents, siblings) so when it all goes kerflooey, you have the luxury of helping them out.  I only wish that was my circumstance.  Good luck!

Viva -- Sager

 

 

 

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Re: Daily Digest - August 9

It was Ma Joad in Steinbeck's "The Grapes of Wrath" who made he following obervation:

Well, Pa, a woman can change better'n a man. A man lives sorta - well, in jerks. Baby's born or somebody dies, and that's a jerk. He gets a farm or loses it, and that's a jerk. With a woman, it's all in one flow, like a stream - little eddies and waterfalls - but the river, it goes right on. Woman looks at it thata way.
 

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Re: Daily Digest - August 9

Sorry, My Ma Joad quotation was in response to No Logos comment #17...

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rht1786
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Posts: 36
Re: Daily Digest - August 9
jpitre wrote:

But that IS the market in action. A little bit like say the environment includes everything except anything to do with humans

We'd all like to think that somehow the "free market" is somehow a pristine, honest and free enterprise, but unfortunately it is not. When left to the so-called free market, the greed and dishonesty slips in and we get badly skewed situations including monopolies, paid off politicians and Wall Street thieves as we currently have. And, yes, the market will correct these excesses given time, but it will be painful and a long time before we can get back on out collective feet -- As I see it, one of our objectives is to figure out how to operate without these impediments . Our challenge is how to have the benefits of the free market while keeping the downside elements out of it. Government involvement is most often brought into play when the private sector screws up however it has to be part of the system whether we like it or not. I don't see any solution except to learn how to play fairly in the sandbox.

Perhaps an improved collective sense of morality and what is just and  right will help - and a renewed vision of where we are going.

 

I understand your argument, but my perspective is slightly different. 

It is said that mixing religion and politics creates a volatile concoction. Doing so can bring the occasionally fiery rhetoric of preaching into what should by all means be a civilized discussion about how to run a country. Additionally, it is rare that a nation in today's interconnected, culturally diverse political landscape is completely unified by religion.  Mixing the concepts will marginalize religious minorities in the political sphere. Instead, keeping political discussions political, rather than spiritual, and keeping the role of politicians in context will act to focus lawmakers.

Likewise, politics needs to be separated from finance. The idea of banks acting as the "backbone" of a country, too critical an element to remain unregulated, is simply a line of defense against the logic that politics and finance should be separated. The U.S. Constitution has explicit guarantees within it against politics becoming entangled in fields other than lawmaking and simple oversight. The idea of the U.S.'s Founding Fathers was to create a state where politics was free of the choking vines of special interests - be they religious, financial, or what have you.

In a free market, light regulation exists on banks, but if a bank fails, then it is allowed to fail completely. The people who ran the bank into the ground are forced to suffer a tarnished reputation, which will give them incentive to learn from their mistakes and come back stronger. Under a system where the government props up the financial institutions, ... well... if someone reading this discussion doesn't know the results of that, then they need a heavy dose of reality. 

However, we have generations of citizens in the US who have been brought up under the impression that politics naturally involves the discussion of how banks should be run, whether certain religious ideas should be practiced or not, and how government can control an economy. The latter half of this century has seen the power of government grow exponentially in our everyday lives. Likewise, we've seen the power of financiers grow exponentially. Now, I'm by no means an anarchist, but a well run democratic republic's government is minimalist in nature. When greed for power seeps into this form of government, it will find easy pray if politicians lack a certain degree of moral fiber. The U.S. government has been succumbing to this greed. Turning back will be like pulling a barbed hook out of one's flesh. But it can be done!

In my opinion, I think that this lack of morality has stemmed mainly from a degeneration in quality of education associated with the Cold War's sceptre of fear hanging over all of society. Living in fear for so long can be psychologiaclly damaging. 

Although I'm realistic, as an American citizen, I'll always be hopeful we can turn around. Given history - Rome, Greece, the United Kingdom - it seems unlikely.

rht1786's picture
rht1786
Status: Bronze Member (Offline)
Joined: Aug 13 2008
Posts: 36
Re: Daily Digest - August 9
jpitre wrote:

But that IS the market in action. A little bit like say the environment includes everything except anything to do with humans

We'd all like to think that somehow the "free market" is somehow a pristine, honest and free enterprise, but unfortunately it is not. When left to the so-called free market, the greed and dishonesty slips in and we get badly skewed situations including monopolies, paid off politicians and Wall Street thieves as we currently have. And, yes, the market will correct these excesses given time, but it will be painful and a long time before we can get back on out collective feet -- As I see it, one of our objectives is to figure out how to operate without these impediments . Our challenge is how to have the benefits of the free market while keeping the downside elements out of it. Government involvement is most often brought into play when the private sector screws up however it has to be part of the system whether we like it or not. I don't see any solution except to learn how to play fairly in the sandbox.

Perhaps an improved collective sense of morality and what is just and  right will help - and a renewed vision of where we are going.

 

I understand your argument, but my perspective is slightly different. 

It is said that mixing religion and politics creates a volatile concoction. Doing so can bring the occasionally fiery rhetoric of preaching into what should by all means be a civilized discussion about how to run a country. Additionally, it is rare that a nation in today's interconnected, culturally diverse political landscape is completely unified by religion.  Mixing the concepts will marginalize religious minorities in the political sphere. Instead, keeping political discussions political, rather than spiritual, and keeping the role of politicians in context will act to focus lawmakers.

Likewise, politics needs to be separated from finance. The idea of banks acting as the "backbone" of a country, too critical an element to remain unregulated, is simply a line of defense against the logic that politics and finance should be separated. The U.S. Constitution has explicit guarantees within it against politics becoming entangled in fields other than lawmaking and simple oversight. The idea of the U.S.'s Founding Fathers was to create a state where politics was free of the choking vines of special interests - be they religious, financial, or what have you.

In a free market, light regulation exists on banks, but if a bank fails, then it is allowed to fail completely. The people who ran the bank into the ground are forced to suffer a tarnished reputation, which will give them incentive to learn from their mistakes and come back stronger. Under a system where the government props up the financial institutions, ... well... if someone reading this discussion doesn't know the results of that, then they need a heavy dose of reality. 

However, we have generations of citizens in the US who have been brought up under the impression that politics naturally involves the discussion of how banks should be run, whether certain religious ideas should be practiced or not, and how government can control an economy. The latter half of this century has seen the power of government grow exponentially in our everyday lives. Likewise, we've seen the power of financiers grow exponentially. Now, I'm by no means an anarchist, but a well run democratic republic's government is minimalist in nature. When greed for power seeps into this form of government, it will find easy pray if politicians lack a certain degree of moral fiber. The U.S. government has been succumbing to this greed. Turning back will be like pulling a barbed hook out of one's flesh. But it can be done!

In my opinion, I think that this lack of morality has stemmed mainly from a degeneration in quality of education associated with the Cold War's scepter of fear hanging over all of society. Living in fear for so long can be psychologiacally damaging. 

Although I'm realistic, as an American citizen, I'll always be hopeful we can turn around. Given history - Rome, Greece, the United Kingdom - it seems unlikely.

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Hotrod
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Posts: 183
Re: Daily Digest - August 9

Dear Vinny,

Remember that little argument a few years back called the Civil War?  Where poor, dumb southern and northern farm boys went off to fight for Honor and Glory!  And ended up as cannon fodder to determine which side of rich ruling masters would prevail?  The war that both sides were sure God was on their side as well?  You can continually brainwash a significant segment of society  to do the predator class's dirty work.  All of history is a huge battle between the top 1% and the rest of us.  And they don't care if you live or die-as long as they come out on top.  By the way, propaganda works, and we are inundated  with it daily.  Sites like this are invaluable.  To answer your question, the government (and top1%) will do and say anything to maintain power as long as possible.

girlflower's picture
girlflower
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Posts: 15
Re: Daily Digest - August 9

I have not seen or heard anyone on this site mentioned this subject so may I ask a question of all of you pls: (1) Do you all think it is a good idea to get an insurance policy from an oversea insurance company, dominated in that country's currency? (2) If so, which are the countries you will consider buying the insurance from?

Purpose of the insurance plan: Providence for family & protection of assets in the event I die before them.

Thanks in advance! :)

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - August 9
girlflower wrote:

I have not seen or heard anyone on this site mentioned this subject so may I ask a question of all of you pls: (1) Do you all think it is a good idea to get an insurance policy from an oversea insurance company, dominated in that country's currency? (2) If so, which are the countries you will consider buying the insurance from?

Purpose of the insurance plan: Providence for family & protection of assets in the event I die before them.

Thanks in advance! :)

If you pick a country that has a currency that tanks then your premium will be cheap but the payout may be as well. My wife is the ex-underwriter, but I'm not myself even certain they write buisiness/have books out of country. Also, if the dollar in the US tanks then your premium could be quite expensive if theirs remains stronger.

girlflower's picture
girlflower
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Posts: 15
Re: Daily Digest - August 9

Thank you, Davos, for giving me your honest & much needed opinion! :)

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Jeff Borsuk
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Joined: Jul 25 2008
Posts: 150
Re: Hunger hits Detroit's middle class

we're going to see a lot more of this in the USA!

Jeff

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