interest rates – Shortwoman.com

Good Signs?

Yesterday there was a report on jobs and employment in the United States. And the news was good. In fact, the news was better than anybody expected! Unemployment is at a 7 year low. The economy is not just showing signs of growth, but robust economic growth.

Nor was this “growth only an economist could love.” Many things I’ve been harping on for years got better: wages grew faster than inflation; more people are working; there’s growth in more areas; more people are working full time! I’m not ready to say yet that the economy is all healed up — I know too many people who are unemployed or underemployed — but I’m willing to say that the light at the end of the tunnel is probably not a train.

Now all the Very Smart People are talking about how the Fed will now have an excuse to raise the interest rates banks charge one another when they meet next month. Some are saying that’s a bad thing. However, I think it’s long overdue.

A Whole Weeks Worth of Economy in One Post!

So USA Today has helpful hints for people of my generation towards saving for retirement. Unfortunately they forgot Step 0: have a job with a retirement plan and that pays well enough that you can actually save money.

So then, about jobs. Earlier this week, the jobs report came out. The good news is that there are more jobs. They’re even paying a bit more — by a whole $0.05 per hour (don’t spend it all in one place, kids). Yet still, unemployment claims are up and Very Serious People are speculating about plateaued progress and The Next Recession.

Just maybe that’s why consumer spending and factory orders are down.

Even so, I am NOT among those calling for the Fed to avoid raising interest rates. For one thing, the Fed doesn’t have as much control as many people think. Second, the last several years should have proven that the interest rates banks charge one another really doesn’t have much to do with whether or not your boss gives you a raise. Third, I’ve been saying for a decade now that super low interest rates don’t actually stimulate the economy. Yeah, we’ve had super low interest rates for a decade now. Maybe if interest rates went up, corporations would spend some of their cash.

Of course, if you are very wealthy, the economy looks just great. Remember that when you listen to the 2-ring circus we’re calling “2016 presidential candidates.”

In Closing: Warren Buffet has single handedly prevented many unwanted pregnancies (and probably a few cases of cancer); The TPP is on life support, but still out there and it still is a no good very bad thing for average people; ain’t nobody but spies like us; more studies tell us the same damn thing; I am still not sure why anybody ever thought this was a good idea; to hell with the H-1B program.

Good News on the Economy

Seriously, I’m coming up on 9 years of writing here, and this is the first time I’ve been able to write those words without meaning it sarcastically.

First, unemployment is down to 8.1% (locally, down to 12.4%). That’s still too high, and it still doesn’t account for people who have given up on finding a job and people who have settled for part time work. And the economy still isn’t quite up to making enough jobs for people new to the workforce, and new grads are still going to have a crappy time out there. However, not that long ago we were looking at almost 10%.

Second, there are signs of life in American manufacturing. Auto plants are working at capacity, and may have to actually hire an additional shift of workers — which is much less expensive than building a new plant and then having it sit idle 16 hours a day. Some industries that decided it was cheaper to make it overseas and ship it here are thinking twice. Senior executives are cautiously optimistic, and 40% report moving operations to the United States.

Finally, home prices are starting to inch up. Granted, this is at least in part because of reduced supply (and at least in part because prices got stupid-low on a per-square-foot basis in some places).

So there you have it. People are getting jobs and buying stuff. Some manufacturers are running out of the ability to make more stuff — so they may have to build places and hire people to make even more stuff. Maybe soon the Fed can raise interest rates from the supposedly “stimulating” levels they are today, and in turn banks will be able to make a reasonable profit lending money without making up fees or outright committing fraud.

In Closing: Who could have guessed that Citizens United could open the door to ordinary people taking over elections?; never forget Romney’s dog; Tokyo Sky Tree now open; too useful to be real; cheap and free ebooks; yet one more reason I’m against school vouchers; FISA; $27,000??; and the Vatican gets outraged when nuns actually act on What Would Jesus Do.

Just What We Don’t Need

Back in February, I said this:

Recently, people have been having a lot of success losing weight on a gluten free diet. It worked because people on these diets knew they couldn’t eat cookies, candies and cakes. They know that they have to look carefully in ingredient lists for things that might contain gluten, and for some of them this is a matter of life and death. Now I see “gluten free bakeries” and all kinds of chemistry lab crap labeled “gluten free” and I see the end of gluten free dieting on the horizon.

Now, Domino’s Pizza wants a slice of the action: Gluten Free Pizza.

Well, sort of.

First and foremost, even the CEO points out that they will be baked right alongside the gluten-containing pizzas. For pity sakes, there’s gluten all over a pizza shop. There is no guaranty that these pizzas will in fact be gluten free by the time they reach your home. I find it unlikely they will be. So right off the bat, we know that this product is not aimed at people with a genuine gluten sensitivity or Celiac Disease. If you really must avoid gluten, you really must still avoid these pizzas.

Second — and of great importance to the kind of people who think they are eating healthier by avoiding gluten — I can’t find a word about what this gluten free crust is made of. Not wheat, obviously. What kind of flour is involved: soy, almond, tapioca? Sawdust? The fact that they won’t come out and say “made from wholesome [insert foodstuff here] flour” makes me suspect that this is just another chemistry lab experiment, for which they will charge an additional $3.

Cheesy.

If you really are craving pizza and really don’t want to (or can’t!) eat gluten, you really need to check out this review of alternative homemade pizza crusts. Many are vegetarian. A few are vegan.

Follow Up: The Benevolent Beastie.

In Closing: public banking?; Body by Marilyn; black holes; Empire State Building goes green (and saves money); Buffett says to pay attention to more than the news; losing weight can prevent and sometimes even cure diabetes; truth; and interest rates.

Misdirection

OK, Maybe CNN wasn’t terribly subtle when they said “Washington could take down a mega-bank” and then immediately below showed a row of Bank of America ATMs. And don’t get me wrong, everything I have read about B of A lately indicates that they are skating on thin ice.

But don’t lose track of the prize. Fannie Mae just ~~was forced to buy~~ bought $500,000,000 in crappy loans from B of A — despite having plenty of foreclosures and pre-foreclosures of their own — in what Fortune calls a “back-door TARP.”

Gee, this couldn’t possibly have anything to do with the motivation behind a proposed program to help get rid of Fannie, Freddie, and HUD’s foreclosed properties, now could it? By the way, the headline is just a tweak misleading. They aren’t talking about slapping a “For Rent” sign in the lawns of these houses; they are talking about finding some ~~sucker~~ investor to buy them in bulk (that means with limited ability to pick and choose) under the condition of renting them out. Never mind that these homes are in conditions that vary from pristine to bulldozer-ready. Never mind that investors are already cherry-picking the best of them. Never mind that Fannie, Freddie, and HUD all have systems in place to favor owner-occupants when selling foreclosed properties.

Not gonna work.

In closing: I hope he’s still open for civil damages; She-Ra; Clavell did this as a novel, but with helicopters; If I Had $1000 Dollars; it hasn’t worked yet so let’s keep doing it; S&P and 63% of Americans agree about one thing; I know things are bad when Ron Paul starts to make sense; check your LinkedIn prefs; and Bert and Ernie are puppets, they have no sexual orientation.

Just a few items on the economy

So let’s just start with Robert Reich, pointing out the disconnect between Washington and the economy.

The economy, by the way, is in lousy shape. It’s just that between inflation reporting that automatically inflate GDP and corporations raking in record profits, it’s easy to pretend that things like anemic jobs numbers, people leaving the workforce, dropping housing prices, declining wages, high fuel prices, and all the other things that effect those of us in the trenches don’t matter.

But here’s an odd glimmer of hope. One Fed official thinks it’s time to start raising interest rates. His reasoning is that it will encourage saving. Traditionalists should be ripping their hair out yelling about how it will kill the “recovery” (you know, the one we aren’t really having) by making it harder for businesses to borrow money (you know, the money banks aren’t really lending).

Some of those traditionalists might stop for a moment to consider that it would also stifle inflation (the inflation the feds have been trying to pretend hasn’t existed since the Clinton Administration). None of them will point out that it will make it more attractive for everyone to own bits of the national debt (the debt that Congress is arguing about). It is too much to hope that anyone other than myself is beginning to question whether super-low interest rates actually do much for the economy.

In Closing: porn; abortion; blast from the past; War on Drugs; humiliation; security; and cats.

Huh.

I’m going to start by saying the only thing I intend to say about politics today: if are an American adult and you didn’t vote in Tuesday’s elections, I have no desire to hear any of your opinions about politics, the law, or the economy. You had your opportunity to make your voice known, even if it was to vote for “none of the above.” Got that? Now get lost.

Now that that’s out of the way!

This week I’ve been collecting stories that just make you say “huh.” Like the newly found San Diego to Tijuana drug tunnel, complete with lights, ventilation, and a rail system! You know, if pot were legal and regulated, not only would this stuff have come into the country in a relatively safe truck, it would have generated taxes and tariffs. As a bonus it would be easier to keep it out of the hands of kids because the nice lady at 7-11 is actually going to check IDs. It would also cut the head off Mexican drug violence. (Funny, you heard a lot less about American gangsters after prohibition was repealed).

Elsewhere, CNN took it upon themselves to point out that cat costumes, Starfleet T-Shirts, teeny tiny miniskirts, blankets, evening gowns, and swimsuits are not appropriate attire for a job interview. Oh Really??

Another good one was USA Today informing us that kids who use “electronic media at night” sent an average of 34 texts or emails, and were often woken at night by calls or texts. Not surprisingly, they “may have mood or learning problems during the day….” Do you think??

But by far my favorite is the FBI manhunt for a couple involved in a Ponzi scheme. They allegedly defrauded a dozen investors of $3,000,000. Now here’s the strange part: the man met several of their victims while in prison. Now, would you take investment advice from a guy who was in prison? Apparently some people would.

In Closing: immaculate conception of snakes; the Great Wall of Croatia; T-Shirts for travelers; disaster coloring books; on unemployment and interest rates; shades of grey; JP nails it; amazing cure-all proven in study after study; Happy NaBloPoMo; the damage doesn’t look as bad from out here; and Samurai Reformer.

Interest Rates Must Go Up

Just about 5 years ago, I wrote this:

It is my theory that beneath certain levels, low interest rates do not stimulate the economy. There are several factors which combine to this result: First, when rates are very low, there is no incentive for lenders to extend credit to individuals and companies. Since the available rate of return is so low, they would rather take the sure thing on government bonds. Housing lending has continued partly because there is a real asset involved, and partly because such loans can be sold to aggregators such as Fannie Mae. [edit: this was before the housing bubble burst; the last sentence isn’t entirely true any more.]

Second, when interest rates are very low, corporate borrowers — who are supposed to be goaded into action by super low rates — are mindful that the Powers That Be feel the economy is lousy. It is a bad idea to incur debts and invest in infrastructure when the economy is lousy. What will the stockholders say? What cash they do have they will sit on until the moment is right [edit: leaving them in a position to, say, buy out a competitor who imprudently overspent]. After all, if the economy is lousy, they may well need the cash cushion. As for loans, they will wait for some kind of signal that things are improving — an increase in interest rates, maybe — before calling for cash.

Finally, the third leg of the economic table, Joe and Jane Average do not experience added liquidity. While the banks are more than happy to lend them money for concrete things like houses and cars, the banks are reluctant to lend them cash for things that have a lasting impact on the economy. They can’t get cash to start a business (or to help along their existing business) because it’s too risky — for the bank, that is.

Here we are, 5 years later. The Fed Funds Rate has been 0-0.25% for two years. That means banks are able to borrow essentially free money, and have been for two years! Mortgage rates did rise this week, after 12 weeks of declines and record lows, including the lowest rates since this data has been tracked. Under traditional economic theory, all kinds of growth should be stimulated!

So where’s the jobs that should be created by all this stimulation? Oh, right.

The truth is that monetary policy can’t fix what’s really wrong with our economy: banks and businesses we won’t admit are really failing; a workforce that can neither take advantage of job opportunities in other regions nor start small businesses because their houses have lost so much value as to leave them underwater; businesses that pay millions upon millions to executives and stockholders while paying as little as possible to laborers here, overseas, and/or illegal; tax and regulatory policies that encourage bad corporate behavior; a still-broken health insurance system that discourages hiring and will soon force all of us to pay tribute to profitable insurance companies; a failure to manufacture much of anything that somebody somewhere in the world would want.

But it gets worse. Those super low interest rates create one more problem for our economy. It punishes people who are trying to prudently save money for retirement, college, or just a rainy day. A side effect of this is that the Social Security Trust Fund is also getting low rates on their investments — which directly impacts the future of the system and gives future seniors a double-whammy even if they do everything “right.” Further, the low interest rates encourage people (and the government) to borrow money they might have a hard time paying back. While this might boost the economy in the short run, in the long run it’s just a longer bit of rope with which to hang.

Interest rates must rise. Bernanke must stop hiding the fact that some banks are already busted without effectively no-interest loans from the Fed. Institutions that are not solvent or are “too big to fail” must be broken up and turned into organizations that serve their customers. Investors must own up to the fact that their Mortgage Based Securities are worth no more than 70% of the face value and allow homes to be properly valued. Tax code must encourage corporations to spend money instead of hoarding it. And there must be incentives to hiring people here for decent wages, and better yet making something here that can be sold and exported. Let’s stop pretending we can build an economy on cheap credit and lattes.

In Closing: pants; T-shirts; it’s more intellectually honest than Megan’s Law; school reform hasn’t done much for learning; people with a prescription for painkillers might have painkillers in the house; and am I the only person with a tape measure in her bag?

Shorties Saga: Eclipse

Ok, the title was kinda a cheap one.

Solar Airplane!: “The organizers said the flight was the longest and highest by a piloted solar-powered craft, reaching an altitude of just over 28,000 feet above sea level at an average speed of 23 knots, or about 26 miles per hour.” The biggest problems were drinking water that froze and an iPod battery that ran out. Maybe he could have used a solar powered MP3 player!

How to reduce unemployment, Republican style:

Susie’s Right: Maybe paying attention to the base instead of the cash, the cash and the votes will take care of themselves.

Comrade E.B. Misfit is right too: on Declining Sales and Spying on Americans (which seems to me a colossal waste of resources).

Roman Treasure: Amateur with a metal detector stumbles on thousands of rare old coins.

Well, I guess I’m willing to give up on ever being on MSNBC too: No really, a female employee was once found dead on the floor of then Congressman Joe Scarborough’s office. It’s true! And then the strange part happened.

Shoppers are back, but they’re picky: 10 months of retail gains, but things aren’t improving as fast as experts thought they would (or as fast as retailers would like).

Another Cartoon About Republicans (Because I Feel Like it):

Yeah, but you have to do business with Chase: Chase is offering discounted interest to small businesses that borrow money and then hire new employees. Interesting that they are trolling for “qualified” borrowers. I wonder how hard it is to actually qualify for the program.

This is going to be a mess: New reporting rules that were stealthily placed into the health insurance reform bill would require small businesses to report and file a form 1099 on any vendor from whom they bought more than $700 of goods or services. For example, I will have to report my office rent, my cell phone bill, and probably my office supplies. I might be able to get around reporting my NAR membership because the money gets split between national, state, and local organizations. Sounds like the “Put IRS Agents and Accountants To Work Act”. Hat tip to Jukkou-san, sorry it took so long to find an authoritative source.

Raise interest rates?: That’s what Kansas City Federal Reserve Bank President Thomas Hoenig says. His reasoning is that the economy is growing and rates are too close to 0% now. I agree, but for different reasons.

And Finally: Look out for sub-standard olive oil. I honestly don’t know what to tell you other than to make sure you trust your supplier, sniff it before you use it, and hope.