patrick.net

indigenous says

Don't flatter yourself I would be willing to bet my world would bitch slap you out of business in short order.

LOL. Nope mine's bigger.

Seriously, big guy is trying to turn this into a dick swinging contest.

Internet tough guy routine always impresses me.

indigenous says

The variable costs are a small fraction of cost above the break even point.

In a small, very low volume, service based business, yes that can be true. Why don't you ask the largest retailer in the world how the size of their fixed costs compare to their variable costs, Mr. Big-time CEO. Suspect Walmart's "Cost of Good sold" outpaces their fixed costs by a factor of 5 or more....
indigenous says

Actually I have run one for over 3 decades.

Then unless you understand variable and fixed costs better than you have led on here, you have run a business poorly for 3 decades.

david1 says

LOL. Nope mine's bigger.

Seriously, big guy is trying to turn this into a dick swinging contest.

Internet tough guy routine always impresses me.

Says the winy bitch

david1 says

Then unless you understand variable and fixed costs better than you have led on here, you have run a business poorly for 3 decades.

You are still flattering yourself

tatupu70 says

I'll grant you that it's hard to tell the exact end of the chart. I think it's later than 2007, but I'm not 100% certain.

Wow, you're just flailing here, aren't you?

tatupu70 says

The assertion was that the Federal Reserve was the cause of increasing income/wealth disparity.

It's like you didn't read a single word I wrote. The assertion was that the Fed causes wealth disparity, but nobody said the Fed was the ONLY POSSIBLE CAUSE of wealth disparity. There can be other causes, too. I told you that, and you just ignored me.

tatupu70 says

A chart showing that income disparity was occuring since 1980 pretty much kills that theory.

No it doesn't.

Consider the following statement:

"There were birth defects before Thalidomide was developed; therefore Thalidomide does not cause birth defects."

Is that true? No, it is not true. That is the exact same faulty reasoning you are using. I would suggest buying a book on logic and boning up on it a bit.

tatupu70 says

I don't assume that. I was told that tax cuts weren't the cause

I don't think you were told that.tatupu70 says

Well, if true, that would just return it to the established trendline. The tax cuts are the cause.

Makes no sense. If tax cuts were the sole cause, then wealth disparity would not have changed when the financial sector collapsed, since the tax rates didn't change at that time.

John Bailo says

The troika of Volcker-Greenspan-Bernanke may yet be broken!

By an Obama appointee? One can only hope, of course as long as we are wishing how about getting rid of the FED entirely.

Homeboy says

Wow, you're just flailing here, aren't you?

Yes, because a chart I used to show 30 years of increasing wealth disparity is a little unclear whether it ends in 2007 or 2009. Please tell me again why that matters?

Homeboy says

It's like you didn't read a single word I wrote. The assertion was that the Fed causes wealth disparity, but nobody said the Fed was the ONLY POSSIBLE CAUSE of wealth disparity. There can be other causes, too. I told you that, and you just ignored me.

Well, maybe you didn't, but others did. I'll find the quotes. Several posters indicated that the Federal Reserve is THE cause of wealth disparity. Obviously not the 100%, only cause. But the MAIN cause.

Homeboy says

No it doesn't.

Consider the following statement:

"There were birth defects before Thalidomide was developed; therefore Thalidomide does not cause birth defects."

Is that true? No, it is not true. That is the exact same faulty reasoning you are using. I would suggest buying a book on logic and boning up on it a bit.

lol--you need a little primer on logic yourself. I never said that the Fed policy of buying MBS wouldn't lead to inflation. My point was that that policy was a very recent event and couldn't explain 30 years of increasing disparity. Homeboy says

Makes no sense. If tax cuts were the sole cause, then wealth disparity would not have changed when the financial sector collapsed, since the tax rates didn't change at that time.

I never said tax cuts were the sole cause. I was told that Federal Reserve policy was the cause and was trying to understand that theory.

Homeboy says

Let me summarize this for you:

Tatupu: The Fed can't cause wealth disparity, because tax policy causes wealth disparity, and there can be only one cause of wealth disparity.

LOL. Wow--twist words much? That is NOT at all what I have ever said.

Homeboy says

Tatupu: This stupid chart I posted proves that tax policy was the sole reason for wealth disparity, and wealth disparity actually went down during the bailouts.

I guess the only way you can attempt to win an argument is by completely mischaracterizing the opposing points.

Homeboy says

I didn't say the Fed caused wealth disparity to go down. I said they caused it to go UP. I said it went down BEFORE the Fed intervention, and then went up again AFTER the Fed intervened. Jesus Christ, this should not be so difficult for you to understand.

You've said a lot of things. Most of them make no sense and are completely incorrect.

Homeboy says

And then, after I specifically told tatupu that there can be more than one cause for wealth disparity,

Again--of course there is more than one cause. The point is that disparity has been trending up pretty consistently since around 1980 so the underlying cause started then.

Homeboy says

I clearly wrote that wealth disparity went DOWN when the banking industry collapsed, and didn't go back up until intervention took place. I got from Fed to "wealth disparity goes UP", not "down".

lol--if you say it, then it must be true?

sbh says

If Bernanke had let the banks fail you'd likely be dead.

That is tantamount to Lenny being ever grateful to George for saving him from drowning, Lenny not realizing that George is the one who threw him in the river in the first place.

Greenspan threw us in the river by financing the nonsense in the first place. Now you want us to be grateful to Benny for saving us?

As far as TARP being necessary goes there are as many who say it was not necessary as say it was.

If you want to give Benny a well deserved BJ go for it. I don't see it.

You say that we will be digging out of this for decades which quite possibly be the greater depression as Benny is just prolonging the misery and the recovery will never start as long as he keeps playing God. Oh and screw you ideas of financial laws, they are contrived Krugman Keynesian Kool Aid.

You are defending the institution that has created more instability than any other in the history of the U.S., Nope it absolutely positively needs to go.

Homeboy says

reading comprehension:

That really is it, an inability to look. What we have here is a failure to communicate.

tatupu70 says

Homeboy says

I clearly wrote that wealth disparity went DOWN when the banking industry collapsed, and didn't go back up until intervention took place. I got from Fed to "wealth disparity goes UP", not "down".

lol--if you say it, then it must be true?

Tatupu, just to refute one more time, this is NOT your standard left-right issue. The economist Dean Baker, who is quite left-leaning, has described this clearly.

>>
No this entire fiasco is manufactured, by big business, and the media. The media especially are cupable for the disgraceful way they whip up hysteria at every opportunity. Money is not a force unto it's self, it's merely a function of economic activity. And we all still gotta eat, replace stuff, there was never going to be an economic meltdown as described. What there was going to be is a *massive distribution of wealth*, richly deserved mind you, since the rich clearly haven't got a clue they deserve to lose their money. The bail it had one purpose, to save their asses not yours. Bare 5 mins later their smug smiles are back, and their 'order' has been restored. As in, we're still rich, you're still screwed.

Source: www.guardian.co.uk/commentisfree/cifamerica/2009/may/18/us-economy-bank-bailout

tatupu70 says

Good. I expected that would be your answer. So, my next question is: how big do you have to grow to be "too big to fail"? What's the cut-off? Because if the banks don't KNOW that they will get rescued, they can't operate recklessly. IndyMac was pretty big. So was Lehman Bros. They must have just missed the cut-off, huh?

Clearly, you are still pretending to not understanding it.
Everyone should be allowed to fail, irrespective of their size. Typically, those big banks would not have been that big unless they had an implicit guarantee of bailouts. Remember dot com bursts? A lot of tech companies did fail. But that did not eliminate the tech industry.

gsr says

Clearly, you are still pretending to not understanding it.

Everyone should be allowed to fail, irrespective of their size. Typically, those big banks would not have been that big unless they had an implicit guarantee of bailouts. Remember dot com bursts? A lot of tech companies did fail. But that did not eliminate the tech industry.

I apologize--I don't mean to pretend. You are right, I do understand it. My point is that in order for moral hazard to exist, the banks must KNOW that they will be saved and that any losses will be socialized. Neither of those conditions is met in this case. Banks took huge losses. And large banks were allowed to fail. I don't see any moral hazard here.

To be clear--I agree that TBTF banks should be broken up and alllowed to fail. But I also understand that allowing tech companies to fail is not the same as allowing the entire world banking industry to fail.

gsr says

Tatupu, just to refute one more time, this is NOT your standard left-right issue. The economist Dean Baker, who is quite left-leaning, has described this clearly.

gsr says

The bail it had one purpose, to save their asses not yours. Bare 5 mins later their smug smiles are back, and their 'order' has been restored. As in, we're still rich, you're still screwed.

Sure--I don't typically take only the left or only the right side of an argument, so that doesn't surprise me. My take is that it's very easy to say a bailout wasn't necessary AFTER the bailout has been largely successful. It's impossible how events unfold without a bailout. Maybe things go like Mr. Baker says and it's like the year 2000 scare--all bark, no bite. But if there's even a 1% chance that the world economy stops and we're left with a Depression like we've never seen before, don't you have to act to prevent it?

tatupu70 says

Neither of those conditions is met in this case. Banks took huge losses. And large banks were allowed to fail. I don't see any moral hazard here.

WTH are you talking about? Which large bank was allowed to fail?

tatupu70 says

But if there's even a 1% chance that the world economy stops and we're left with a Depression like we've never seen before, don't you have to act to prevent it?

I am sure bailing the people out who with big money who causes the crisis in the first place is not the way to do it.

tatupu70 says

My take is that it's very easy to say a bailout wasn't necessary AFTER the bailout has been largely successful.

It is successful?? It has further widened the wealth disparity. It has just kicked can down the road.
This is worse than saying the original Housing bubble sponsored by Greenspan was largely successful after the burst of the tech bubble.

If you follow what Baker wrote just above, you will realize it is silly to consider that people of the world will stop buying food and clothes just because a few big banks were allowed to fail.

There might have been fewer bonuses, which would have reduced demand of big ticket luxury items. But it essentially did the opposite.

gsr says

I am sure bailing the people out who with big money who causes the crisis in the first place is not the way to do it.

I don't necessarily disagree. I would probably have preferred that the government take over the banking industry. Unfortunately the cries of socialism would have been heard on the moon if that were to ever happen.

What would you suggest have been done?

gsr says

It is successful?? It has further widened the wealth disparity. It has just kicked can down the road.

I disagree that it just kicked the can down the road. It allowed time for the banks to get their books in order and take care of the issues.

gsr says

If you follow what Baker wrote just above, you will realize it is silly to consider that people of the world will stop buying food and clothes just because a few big banks were allowed to fail.

Well, it sure looked like that exact thing happened in 1929. Maybe Baker needs to study a bit of history.

tatupu70 says

I don't necessarily disagree. I would probably have preferred that the government take over the banking industry. Unfortunately the cries of socialism would have been heard on the moon if that were to ever happen.

What would you suggest have been done?

There were three ways a problem can be approached.
1. Socialist way: As you mentioned by temporarily taking over the banking industry.

2. Capitalist way: Let the big investment banks fail. This would prevent future bubble from occurring again.

3. Facsist way: This is the easiest way for politicians, and this was chosen.

tatupu70 says

Well, it sure looked like that exact thing happened in 1929. Maybe Baker needs to study a bit of history.

Really? You think there was no bailout during that time?

gsr says

There were three ways a problem can be approached.
1. Socialist way: As
you mentioned by temporarily taking over the banking industry.

2. Capitalist way: Let the big investment banks fail. This would prevent
future bubble from occurring again.

3. Facsist way: This is the easiest way for politicians, and this was
chosen.

Well, option 1 was politically impossible. Option 2 might have led to a world economy collapse.

So it's not surprising option 3 was chosen.

gsr says

Really? You think there was no bailout during that time?

I didn't know that was ever asked. Care to explain how a bank bailout causes people to stop buying food and clothes? Is that what you are proposing?

indigenous says

That really is it, an inability to look. What we have here is a failure to communicate.

Or an unwillingness to communicate.

tatupu70 says

Again--of course there is more than one cause. The point is that disparity has been trending up pretty consistently since around 1980 so the underlying cause started then.

Then, again - if there can be more than one cause, postulating one cause does not disprove ANOTHER cause. So your chart where you say wealth disparity changed in the 1980s when Reagan changed the tax rates does not prove that the Fed hasn't changed wealth disparity now.

For example: "People were murdered before guns were invented. Therefore, people are never murdered with guns."

The above is false. It is illogical. Are you really not seeing that?

Homeboy says

Then, again - if there can be more than one cause, postulating one cause does
not disprove ANOTHER cause. So your chart where you say wealth disparity changed
in the 1980s when Reagan changed the tax rates does not prove that the Fed
hasn't changed wealth disparity now.

Of course not. I would never have said otherwise. But the chart does prove that Fed actions taken in 2008 cannot explain wealth disparity that started in 1980.

If you'll remember, what started this debate was other posters telling me that increasing wealth disparity was/is caused by the Federal Reserve.

I asked if anyone could explain how the Fed caused the 30 year trend in increasing disparity. The ONLY answer I have gotten is the very recent Fed action to buy MBS.

Would you care to explain the 30 years?

Homeboy says

For example: "People were murdered before guns were invented. Therefore,
people are never murdered with guns."

The above is false. It is illogical. Are you really not seeing that?

I see it, but it is a useless analogy because it doesn't apply. If you care to properly characterize my statements, then we can talk.

tatupu70 says

Would you care to explain the 30 years?

You are ignoring the information about the tax law changes. Also the household income slight of hand that Elizabeth Warren hangs her hat on. Also the fact that government transfers do not show up in the stats this misreports the poor's income by 30%.

No the change in disparity is bullshit.

The remainder more recently is absolutely from inflation.

I have stated this before and the number were inadvertently proved by David.

indigenous says

You are ignoring the information about the tax law changes. Also the
household income slight of hand that Elizabeth Warren hangs her hat on. Also the
fact that government transfers do not show up in the stats this misreports the
poor's income by 30%.

No the change in disparity is bullshit.

OK--so now it's not the Federal Reserve that causes wealth disparity, it's that all the statistics that measure it are wrong?

tatupu70 says

indigenous says

You are ignoring the information about the tax law changes. Also the

household income slight of hand that Elizabeth Warren hangs her hat on. Also the

fact that government transfers do not show up in the stats this misreports the

poor's income by 30%.

No the change in disparity is bullshit.

OK--so now it's not the Federal Reserve that causes wealth disparity, it's that all the statistics that measure it are wrong

It is both, recently it is inflation, the last 30 years are the reasons I have shown

indigenous says

It is both, recently it is inflation, the last 30 years are the reasons I
have shown

You've shown nothing. You've given no explanation (that is backed by any evidence) for how inflation causes wealth disparity and the "reasons you have shown" were refuted by the 4 articles that Marcus posted earlier. Did you forget about those?

tatupu70 says

You've shown nothing. You've given no explanation (that is backed by any evidence) for how inflation causes wealth disparity and the "reasons you have shown" were refuted by the 4 articles that Marcus posted earlier. Did you forget about those?

He actually posted 3 links 2 were to the same article. Which was short and all conjecture, I followed the link to a 47 page mind numbing article that I don't have the time nor the inclination to read it.

The NPR article is long with no statistics.

This, from this, http://townhall.com/columnists/thomassowell/2013/03/06/economic-mobility-n1525556/page/full

But the very opposite conclusion arises in studies that follow actual flesh-and-blood individuals over time, most of whom move up across the various income brackets with the passing years. Most working Americans who were initially in the bottom 20 percent of income-earners, rise out of that bottom 20 percent. More of them end up in the top 20 percent than remain in the bottom 20 percent.

This, from this, http://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_United_States:

An absolute majority of the people who were in the bottom 20 percent [of income] in 1975 have also been in the top 20 percent at some time since then. Most Americans don't stay put in any income bracket. At different times, they are both "rich" and "poor" -- as these terms are recklessly thrown around in the media. [...] There are of course some people who remain permanently in the bottom 20 percent. But such people constitute less than one percent of the American population, according to data published by the Federal Reserve Bank of Dallas in its 1995 annual report. Perhaps the intelligentsia and the politicians have been too busy waxing indignant to be bothered by anything so mundane as facts.[26]

This video directly refutes the notion that you only do better if you have rich parents

http://www.youtube.com/embed/UbueX92CKPk

They both cannot be right?

But they do not talk about how inflation helps the cronies as it does. Marcus' articles do not refute anything to do with inflation. Or for that matter social mobility.

Clearly you did not read the Marcus articles

tatupu70 says

Of course not. I would never have said otherwise. But the chart does prove that Fed actions taken in 2008 cannot explain wealth disparity that started in 1980.

If you'll remember, what started this debate was other posters telling me that increasing wealth disparity was/is caused by the Federal Reserve.

I asked if anyone could explain how the Fed caused the 30 year trend in increasing disparity. The ONLY answer I have gotten is the very recent Fed action to buy MBS.

Would you care to explain the 30 years?

Are you really this stupid or are you a troll?

tatupu70 says

I see it, but it is a useless analogy because it doesn't apply. If you care to properly characterize my statements, then we can talk.

Now you're just lying. If the analogy weren't apt, you would be able to explain WHY it's not apt. All you can muster is to stammer, "it doesn't apply". I don't know which is worse, you making an illogical argument, or you doggedly insisting that it's valid when it clearly is not.

tatupu70 says

You've shown nothing. You've given no explanation (that is backed by any evidence) for how inflation causes wealth disparity and the "reasons you have shown" were refuted by the 4 articles that Marcus posted earlier. Did you forget about those?

Where is you?

http://www.youtube.com/embed/Hk_-XWpUFmU&feature=player_embedded

tatupu70 says

You've given no explanation (that is backed by any evidence) for how inflation causes wealth disparity

http://research.stlouisfed.org/fred2/graph/?g=kfn

is the main dynamic of that, since everyone's budget is dominated by housing costs, but LL's cost of ownership do not rise with inflation at all.

The more inflation, the more the LLs get something (from wage-earners) for nothing.

This actually works more with wage inflation. Price inflation in the 1970s actually put a damper on rent inflation to some extent.

Homeboy says

Now you're just lying. If the analogy weren't apt, you would be able to explain WHY it's not apt. All you can muster is to stammer, "it doesn't apply". I don't know which is worse, you making an illogical argument, or you doggedly insisting that it's valid when it clearly is not.

Uh, I did explain it. I do not, nor have I ever, insisted that there only be one explanation. Why do you continue to portray otherwise??

Are you that slow that you can't understand the discussion at hand?

BB at least offers a reasonable explanation for inflation driven wealth disparity, but it is not related to the Federal Reserve necessarily.

Homeboy says

Are you really this stupid or are you a troll?

Talk about stammering... Have you given up then?

Homeboy says

Tatupu has demonstrated that he is not capable of following a simple train of thought, or understanding simple logic. I call 'em like I see 'em.

lol--it's not hard to follow your train of thought. It's simple and incorrect. You keep callin' 'em, though.

indigenous says

But they do not talk about how inflation helps the cronies as it does. Marcus' articles do not refute anything to do with inflation. Or for that matter social mobility.

I stand corrected--his articles are more on mobility not on disparity.

indigenous says

You are ignoring the information about the tax law changes. Also the household income slight of hand that Elizabeth Warren hangs her hat on. Also the fact that government transfers do not show up in the stats this misreports the poor's income by 30%.

No the change in disparity is bullshit.

OK--just so we're clear---it's not the Federal Reserve, the gold standard, or inflation that has caused the increase in wealth disparity. Now you're saying the wealth disparity index is a lie? And it really hasn't changed over the last 30 years?

That's your new theory?

tatupu70 says

indigenous says

You are ignoring the information about the tax law changes. Also the household income slight of hand that Elizabeth Warren hangs her hat on. Also the fact that government transfers do not show up in the stats this misreports the poor's income by 30%.

No the change in disparity is bullshit.

OK--just so we're clear---it's not the Federal Reserve, the gold standard, or inflation that has caused the increase in wealth disparity. Now you're saying the wealth disparity index is a lie? And it really hasn't changed over the last 30 years?

That's your new theory?

Point 1

In recent times inflation creates disparity by the anointed ones getting free or cheap money ahead of the ensuing inflation.

Point 2

I have stated before that it is due to the "rich" filing their taxes as an S corp or an LLC instead of a C corp as the marginal tax rate on an individual went from 50% to 28% in 1988. There were also tax changes in other years that contributed to this.

Additionally Elizabeth Warren (the part Cherokee lady) chatters endlessly about household income dropping steadily over the past 30yr. Problem is that the divorce rate has gone up during that time causing household income to be cut in half with every divorce.

Additionally the income of the poor is under reported because government transfers are not counted in the income of the poor. Also many of the middle class benefits are not counted as income.

I would also add that the main reason for the growing income disparity is the unpredictability of the government the current and last POTUS are wild cards which changes the odds, which hugely discourages investment.

I would also add that the cost of wasting resources on companies that should go away cannot be over stated as those resources would otherwise be used to create start ups who are literally the seed corn of the future. But the economically illiterate POTUS is eating the seed corn.

tatupu70 says

Homeboy says

Now you're just lying. If the analogy weren't apt, you would be able to explain WHY it's not apt. All you can muster is to stammer, "it doesn't apply". I don't know which is worse, you making an illogical argument, or you doggedly insisting that it's valid when it clearly is not.

Uh, I did explain it. I do not, nor have I ever, insisted that there only be one explanation. Why do you continue to portray otherwise??

Uh, no. Just spitting out "that doesn't apply" is not an explanation. My analogy is perfect. If one claims no murders take place with guns, and then ones "proof" is that there were murders before guns were invented, then ones proof is not valid. Likewise, if you claim the Fed isn't a cause of wealth disparity, and your "proof" is a chart that supposedly shows wealth disparity before there was Fed intervention, then your proof is not valid. Explain why that is not a valid analogy. Go ahead, explain it. Don't just call me names; explain it. You know you can't.

tatupu70 says

Are you that slow that you can't understand the discussion at hand?

Don't just call me names; explain it.

tatupu70 says

Talk about stammering... Have you given up then?

I've given up on you providing an explanation as to how my analogy isn't spot on. Go ahead and surprise me though.

tatupu70 says

lol--it's not hard to follow your train of thought. It's simple and incorrect. You keep callin' 'em, though.

WHY is it incorrect? You don't have an answer, do you?

The main thing that drives wealth disparity is income differential between households. For instance if one household makes $200K and the other makes $50K, the household making $200K will increase wealth disparity gap vs $50K household at ever increasing rate just like galaxies in universe that become further apart with every passing second. Whether the $200K household is getting taxed at 39% vs 35% or whatever is not going to drastically alter this development, thus the main driver of disparity is income differential not taxes. Related issues to this is the gap between so called knowledge workers and manual laborers, outsourcing, offshoring and destruction of unions for manual workers which results in household income differential. About federal reserve - when economy crashed in 2008, the net worth gap closed at the time between the upper 10% and the rest since the upper 10% tend to have the money in equities at a very disproportionate level vs bottom 90%. Quantivative easiing allowed the stock market to recover by making alternative investment and holding money in cash non competative. But we must acknowledge the postitives in that quantitative easing drove down mortagage rates which rescued the middle class since most of their net worth is in their homes and of course their 401Ks benefited as well. However, this medicine again increased the wealth disparity for the top 10% vs 90% since they have the most money in stocks and stock value recovered.