Daily Digest

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Daily Digest 8/26 - The Fed Is Not As Powerful As We Think, U.S. Housing Bull Market Over?

Tuesday, August 26, 2014, 7:48 AM


Generation Later, Poor Are Still Rare at Elite Colleges (jdargis)

It is true that low-income enrollment at some top colleges has been slowly climbing. And some studies suggest that colleges are well intentioned but simply ineffectual in addressing economic diversity. College leaders also point to studies showing that most low-income students with high grades and test scores do not apply to highly selective colleges.

But critics contend that on the whole, elite colleges are too worried about harming their finances and rankings to match their rhetoric about wanting economic diversity with action.

The Fed Is Not As Powerful As We Think (jdargis)

The Fed has not always occupied this role. Once upon a time, the chair of the Federal Reserve was simply one of a number of major players in the economic policy firmament, but not seen as the axis around which all revolved. The Treasury secretary, for instance, was typically thought of the primary economic policymaker, along with Congress itself.

U.S. Housing Bull Market Over? House Prices Trend Forecast Current State (adam)

“We’re seeing a sort of boom in the housing market,” he said. “We’ve got stocks and bonds highly priced and now we’re starting to see maybe housing going in the same direction. It’s like everything is pricey.”

Shiller looped back to his weekend article, which laid some but not all of the blame on the idea that anxiety can actually spur investors to grab on to any available asset, pushing up prices.

Blackouts in Egypt Prompt Accusations (cbandi)

The power cuts have left Mr. Sisi facing the first real domestic headache of his presidency, undermining his repeated pledges to provide stability, and diverting attention from high-profile megaprojects he has championed, including an expansion of the Suez Canal.

Uncertainty for Workers Losing Jobs at Atlantic City Casinos (jdargis)

The effect on a city that already had an unemployment rate of about 13 percent will be seismic, said James W. Hughes, the dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. After the pending layoffs, the number of casino jobs will have been cut in half in just eight years, about three times as fast as the state’s manufacturing industry declined, Mr. Hughes said.

“I don’t think we’ve seen a shrinkage of that magnitude in any industrial sector in New Jersey in that period of time,” he said. “It really is unprecedented.”

The Aftershocks (jdargis)

During the winter and early spring of 2009, Selvaggi and other seismologists at Italy’s National Institute of Geophysics and Volcanology had been monitoring numerous tremors around L’Aquila. The sequence of small quakes over a short period of time, known as a “seismic swarm,” is distinct from the aftershocks that follow a big quake.

And in places like L’Aquila, they are not necessarily abnormal. Local media repeatedly relayed that generic message to the public. Regional government officials insisted there was no need to fret, despite chronically unenforced building codes. The Civil Protection Department for Abruzzo, the region where L’Aquila is located, even issued a press release flatly proclaiming there would be no big earthquake.

Emission-free Hydrogen May Now Be Truly Emission-free (James S.)

The problem with emission-free hydrogen fuel is that the process of making it is definitely not emission-free. Hydrogen-powered devices (cars, mostly) run on hydrogen made from natural gas, a fossil fuel that produces greenhouse gas emissions.

7 Seriously Farmed Bugs (jdargis)

If we all ate insects, the world would be a better place. Say goodbye to confined animal feeding operations and hello to cricket burgers; surely America’s bacon fetish will fade away once we acquire a taste for fried caterpillar. That’s the storyline, anyway.

Gold & Silver

Click to read the PM Daily Market Commentary: 8/25/14

Provided daily by the Peak Prosperity Gold & Silver Group

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KugsCheese's picture
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Re: Aftershock

Never let political leaders make a call like that.   No one can predict a non-linear event but clues like volatility are indicative.  With the FED suppressing useful volatility  watch out for a massive financial earthquake.   

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Emission-free Hydrogen May Now Be Truly Emission-free (James S.)


Am I being dense, or is the person who wrote that article dense?

They electrolyse water to get hydrogen using a AAA battery, and reckon it's emission free? How about the emissions caused by making the AAA battery?

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Regarding the friction between the haves and the have nots: it's getting worse and worser.


I was in line for 45 minutes. I got to see and hear more than I ever wanted. The "shoppers" were rude, angry, smug, and beyond ungracious. They attacked the cashiers, the managers, the poor old guy greeting at the door, and any shopper who didn't look like them. My fellow non-voucher shoppers were looking grimmer, angrier, and a little sick. I watched one brave/stupid older woman approach a very large woman with six kids hanging off her cart ($420+ of free stuff), and tell her "I know gratitude is beyond you, the least you could do is be polite." The oldest of the boys, about 12ish, menaced her, got in her face and said, "Fuck you, bitch! You owe us!", while momma smirked in approval. Two gentleman took her and her cart, hopefully all the way out to her car. I finally got checked out, and like all the non-voucher shoppers before me, exited the store by the doors closest to avoid having to walk the gauntlet. It hadn't taken long for the voucher shoppers to hone in on us. By the time I left, security guards had been placed in the alleyway between the registers and the little businesses (bank, eyeglasses, customer service,etc.)

So this was probably the first time I truly got a taste of how bad it's gotten, how far society has slipped, how poisoned the populace has become with entitlements. Some people, out of the goodness of their hearts, tried to do something nice for some people who didn't appreciate it in the least. Things are rapidly getting worse, but I'm ready.

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Emission free hydrogen


Perpetual motion has been achieved at last. Use a AAA battery to generate hydrogen. Use the hydrogen to produce the energy to power a vehicle while bleeding off a small amount equal to a AAA battery energy and generate enough hydrogen .......

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The disappearing middle class...
thc0655 wrote:

Regarding the friction between the haves and the have nots: it's getting worse and worser.


So this was probably the first time I truly got a taste of how bad it's gotten, how far society has slipped, how poisoned the populace has become with entitlements. Some people, out of the goodness of their hearts, tried to do something nice for some people who didn't appreciate it in the least. Things are rapidly getting worse, but I'm ready.

And who is paying for all of this?  It's the ever-shrinking middle class, the small and medium sized enterprises and everybody else who cannot afford the absurdly high costs of evading taxes.

Those who cannot afford the tax dodges end up footing the bill.  

I work hard, I pay my taxes, and I suffer ever-increasing burdens placed on small businesses by regulators eager to regulate more (to justify their own jobs, I suppose) and tax authorities hungry for new revenue.

Just look at the massive increases in costs raining down thanks to Obamacare, coupled with skyrocketing deductibles (yay...we're paying more for less), for just one example.  There are many others every year...

In the meantime, there sits a large and growing entitlement class that feels they are owed something by and/or from somebody. 

And so the middle class gets squeezed and squeezed harder.   Functions get blurred, such as when police departments become revenue centers (this is a part of the tension in Ferguson, and elsewhere).  My own town spent money hiring new meter maids who are so aggressive someone who came to visit me got a ticket seconds after they got out of their car and while they were still within 6 feet of it (the meter maid said they had 'turned away' and therefore had left the vehicle...no matter that the payment kiosk requires one to leave and return...)

The list of fees, taxes, permits, licenses, and levies just grows and grows again year after year.

No wonder the disability roles have exploded...why bother working hard to simply pay it all into a system when you can not work at all and receive about the same amount once all is said and done?

Charlie Munger (Buffet's right hand man all these many decades) said that he's always been in the top 5% of people who 'get' the importance of incentives...and yet the older he gets the more he realizes that he's managed to underappreciate just how important they really are.

Incentives.  They really do matter. 

Perhaps we should seek to elect people who actually built and run something in their lives...not just gone to law school and worked on a few campaigns until it was their turn?

At any rate, if you think it's harsh now, just wait until the next financial correction/accident and we really have to live within our means and there's simply not enough to skim from and payoff everyone.

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Not my experience

While the article that Tom posted may be the experience of the person who wrote it, it is not my experience. And before I go on, I am responding to the post itself and not to Tom, because I don't have any reason to believe that Tom subscribes to everything written in the post or the comments.  :)

The article is a first person account in a right wing blog.  This is not to say that the author's testimony is not accurate; it may well be.  But, it's being printed in a place where the whole story is unlikely to be challenged for veracity or put into a larger context  To get an idea of how right wing, just read the comments.  Mr. Miracle says he's waiting for "open season to be declared" in order that he can shoot members of the underclass.  BobF is so afraid of the underclass that he always arms himself when he goes out in public.  Anonymous just said "N*ggers --- 'nuf said."  

 More importantly, I think this article gives a limited view of how things are. The reason I am writing this is because on the internet - as in other media venues where real experiences are distilled into abstract representations - we tend to get a limited view of the situation.  As a basic example, just reading the post that Tom shared is a very different experience than reading the post plus the comments, which would not copare to being in that WalMart on that day, which itself would be different than living for along period of time in the area where this event took place.

The term Free Sh*t Army (FSA) is becoming popular now, and it describes what its purveyors consider to be a politically empowered underclass that votes itself all sorts of entitlements.  The FSA will supposedly riot and loot as well.  Certainly the looting in Ferguson supports this meme and encourages people to think like this.

But, there are also some basic falsehoods associated with this meme.  One is that the poor underclass are becoming more powerful than the middle class, and Obama's election is sometimes used as evidence of this.  But, this belief is undermined by the fact that the poor of all races vote at a lower rate than the rich or middle class, and that people with a high school diploma or less vote less frequently than people with a college degree or more.

More importantly, there is not as much difference in terms of the granting of entitlements between Democratic and Republican politicians as people often claim.  Reagan was very generous in terms of Social Security in part because the older people that knew him from his film days were some of the Gipper's biggest supporters.  How often do you hear people saying that the elderly, led by AARP, comprises a Free Sh*t Army that votes itself unsustainable Social Security benefits?  Yet the size of Social Security and Medicare combined makes the total cost of AFDIC (i.e. welfare), EBT, and Obamacare look puny in comparison.  

It was a Democratic president - Bill Clinton - who cooperated with a Republican Congress to reform welfare.  And Bush II championed the Medicare Drug Benefit, a major expansion of entitlements for the retired middle class (as well as poor and rich, but the main beneficiaries of Social Security and Medicare in terms of total spending are middle class retirees because - thankfully - America is still (for a little while longer) mostly a middle class country, especially in the upper age brackets. Then there's the major middle-class entitlement of the home mortgage interest deduction; your neighbor is a member of the FSA, and so are you, if you are a homeowner.

In summary, the difference between Republican and Democratic support for entitlements not NEAR as big as often represented.  Furthermore, the difference between the amount of entitlements that the underclass receives vs. the middle class is much less than represented.  In fact, in terms of gross numbers, as opposed to percentages, the people of the middle class get WAY more from the federal government - mostly in their retirement years - than do the poor.

Whites and blacks and latinos have been living side by side, in a mix of cooperation and trust on one side and fear, hatred and violence on the other, since English people started coming to Virginia and Massachusetts Bay. So, we know that part isn't new.

How different individuals choose to respond to this reality is up to them.  I'm from Missouri, a former slave state with a significant black population and rough history in terms of bad relations between black and white.  I attended a very racially mixed elementary school located right between the predominantly white and predominantly black part of town.  My Jr. High and high school were also very racially mixed.  I also lived in other places with a significant underclass including San Antonio, West Virginia & Western North Carolina (where the underclass is mostly white), and the DC area.  Sometimes I had work, school or volunteering efforts that took me to tough parts of town, sometimes on my bike, on the metro, or a public bus. My uncle, who is white, lives in DC southeast of the Anacostia River. Almost all of his neighbors are black and just down the road are some big housing projects. He doesn't carry guns.

I never carried a gun or thought about shooting people who clamor greedily for school supplies or otherwise behave differently than I like to think I would in the same situation. Even though I live overseas now, I go home regularly and this summer I was in mid-Missouri - including predominantly black neighborhoods - as well as in Saint Louis.  Also, my parents and siblings still live in Missouri and in the DC area so this is not all experience from several decades ago.  We live near and amongst poor blacks (and poor whites, and middle class blacks and whites....) and for the most part we don't have the same type of experience with poor blacks (and latinos) that the person had at the Wal-Mart in this post.  

I'm not saying that there is no problem with entitlement among people of the underclass.  I think this is a real problem in American society.  I am saying that it's important not to distil our picture of what "those people" are like into some distorted and narrow facsimile.

Also, let's face it, friends and neighbors, we're all entitled.  We are burning a great banquet of fossil fuels in a couple of centuries and every single person who is wealthy enough to have regular access to a computer or smart phone in order to regularly participate in the discussions at PP is part of a very entitled group in the world.  We are inadvertently shortchanging our grandchildren's future with our computer time, our car rides, our plane flights, our dryers and dishwashers and legions of other machines.  Even if you don't think climate change is part of this dynamic, the depletion of resources led by the global rich and middle class is something that will make it harder for many many many generations of humans to survive.

The goal of this is not to make anyone feel guilty; I try not to engage in guilt. The goal is to help us acknowledge that some of the division we imagine are not as great as we might think, and that we're probably better off identifying with others as opposed to dehumanizing them by calling them zombies or fearing them.

For this same reason, I also do not subscribe to the meme of a good, honest hard-working middle class being squeezed between rapacious super-rich, encroaching government, and the Free Sh*t Army of entitled poor. As I have tried to show with some examples above, it's way more complicated than that, as the middle class also receive a lot of entitlements and, more importantly, the rising tied of increasing fossil fuel production up until about 2006 has lifted all of our boats to an unsustainably comfortable and prosperous level. As this surge ebbs, we will all feel it, as we are ultimately all in the same boat.



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Thank you for your post,

Thank you for your post, Hugh.  What I find of further interest is how much we are willing to complain about a problem that we are so unwilling to help solve as though it is someone else’s problem to help clean up.   In a sense, I would say our attitude toward the entitlement problem is one of entitlement.  Without intervention does the problem become resolved?  Surely the government has no incentive to change the current environment and certainly we have contributed to it by turning a blind eye hoping it will go away if we just ignore the matter long enough, or perhaps we believe that people will get what they deserve if we simply deprive them of that which they abuse.


This is not a problem created overnight because the government decided to suddenly throw money at a situation.  Rather, this is an issue that has been decades in the making.  We’ve failed long ago at implementing programs to aid children growing up in impoverished or crime ridden homes which may have had the effect of breaking the cycle.  We’ve failed in providing intelligent resources to parents that they might be able to find meaningful employment while ensuring that their children are all the while at a place of good care.  We have failed in demonstrating to children of all walks of life the opportunities that are available to them. Largely, we’ve failed children generation after generation by allowing a cycle to not only perpetuate but fester & metastasize.  We are so deep into the problem now, that working our way out seems daunting so we complain, point fingers, and shake our heads at those that behave poorly while continuing to do nothing to actually mitigate the circumstances in which we now find ourselves.


For some time I participated in jail ministry.  I heard my share of sob stories which were largely the result of poor choices, but I also heard stories in which women had their backs to the wall and unjustly handed a fait over which every opportunity they had to make it right was systematically removed.  I heard the stories of women who were traded into prostitution at a young age to feed their parent’s drug addiction and it is no wonder that crime would be pervasive among people born into such environments.  When we look at the state of the underclass today, we are seeing only a symptom of a problem that is much more endemic and one that we have the means to at least begin to address.  Continuing to fail in addressing the core problem will be an enormous part of our undoing when it becomes both economically unfeasible to sustain (which arguably it already is) and the pot of desperation boils over—a future that the Walmart experience may indicate is not far off and when that day comes the problem won’t be isolated to other’s anecdotal experiences as it will be at our front door.         



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Thank You, Hugh

As the pressure increases it will be easier and easier to allow ourselves to be stampeded into an "Us vs. Them" mindset.  I think that that mindset will lead to an appalling loss of life, if not genocide.  I work in a rather racially polarized environment.  It has been my experience that if you make eye contact, smile and stick out your hand, the other person will almost always do the same, often with a palpable sense of relief.  It has also been my experience that class and race are not good predictors of social skills or expectations.  A small proportion of people are obnoxious and the vast majority of Americans have a wholly unrealistic idea of what they're "entitled" to regardless of their background. 

Realistically I believe that very, very few people alive in industrial societies today have the tools or the skills to survive a major collapse on their own.  Clearly it would be fool hardy not to regard people you don't know as a potential threat, but I think it will be just as fool hardy not to regard people you don't know as a potential asset regardless of their background.

I can take no satisfaction from the idea that if the shit hits the fan a woman and her children may die horribly just because they may be stupid, ignorant and have poor social skills.

Time to butcher chickens,

John G.

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