patrick.net

Entitlemented says

2. US schools tax credit for limiting Art and Humanities, and soft science majors to 80% of college enrollments.

3. Reinstate Glass Stegall and make derivatives as hard to get as it is 4% interest at a bank right now.

4. Elementary Schools must have 2 Science Teachers on staff to get any title 1 or other classes, (art, dancing, all good but but not exclusive). All student must take and pass 3 Science classes in Jr. High, and 6 in High School to graduate.

The only thing I disagree with is limiting the arts and humanities. School systems that encourage both the art and the humanities statistically score better in math and science. There are very significant studies that prove that studying music improves math scores, and studying dance improves science, especially classical music and ballet. I was a science major, and the majority of the successful students in the sciences double majored as a music or dance major. Many of the students who do well in the areas of math and science often talk about how they showed no interest in science or math as a child, but devoted themselves to music or dance at that stage in their lives. They were helping set their minds to receive the information easier while studying music and dance, studies have proven that. At the same time I do not believe that we should keep the arts and the humanities in the schools for the sole purpose of creating better scientists and engineers for the future tech jobs. The world needs more humanitarians and artists. Success means many different things to each individual, and a successful society is also a matter of opinion. I believe a successful society to be one rich in the arts and humanities. We need more beauty and gentleness in the world, not less. Throughout history the eras of great scientific advancement were also the eras of great movements in the arts. It's not a coincidence, they go hand and hand. We need to honour our great artists and humanitarians, not demean them. All the great societies in history treated their great artists as heroes. I dare say what it says about a society that considers movie stars and sports stars worthy of money and status. If the system must eliminate something from the school system I would start with sports, no the humanities and the arts.

Entitlemented says

2. US schools tax credit for limiting Art and Humanities, and soft science majors to 80% of college enrollments.

Kahil Gibran ( a dreaded artist) writes:
"And a merchant said, "Speak to us of Buying and Selling."
And he answered and said:
To you the earth yields her fruit, and you shall not want if you but know how to fill your hands.
It is in exchanging the gifts of the earth that you shall find abundance and be satisfied.
Yet unless the exchange be in love and kindly justice, it will but lead some to greed and others to hunger.
When in the market place you toilers of the sea and fields and vineyards meet the weavers and the potters and the gatherers of spices,
- Invoke then the master spirit of the earth, to come into your midst and sanctify the scales and the reckoning that weighs value against value.
And suffer not the barren-handed to take part in your transactions, who would sell their words for your labour.
To such men you should say,
"Come with us to the field, or go with our brothers to the sea and cast your net; For the land and the sea shall be bountiful to you even as to us."
And if there come the singers and the dancers and the flute players, - buy of their gifts also.
For they too are gatherers of fruit and frankincense, and that which they bring, though fashioned of dreams, is raiment and food for your soul.
And before you leave the marketplace, see that no one has gone his way with empty hands.
For the master spirit of the earth shall not sleep peacefully upon the wind till the needs of the least of you are satisfied."

The focus of the article is far to narrow, and shows a general lack of understanding when it comes to how economics works. I suggest reading Rothbard's summation of boom bust cycles to start with.

As far as action, dump dollar investments(anything paper), pay off all debt, and invest in physical assets that maintain, or gain value in times of economic depression, and that are under your direct control.

FortWayne says

I always said the same thing, save till you have enough cash to not need a loan. Smart once listen, everyone else gets a mortgage.

Depends on the interest rate you get... sub-3% interest rates on auto loans and such... It makes more sense to throw all that cash in the stock market the past few years. You would be able to buy 3 new cars with the profits by now.

A monkey could have made a bundle on the stock market throwing darts at tech stock symbols over the past 5 years. Hell, just investing in every new tech IPO would have made you a bundle.

hrhjuliet says

Couldn't agree more. It shocks people, but I never buy things made in China

Wow, that would make for what's considered a very small and expensive(per item) wardrobe. American jeans, for example, are very expensive. But a pair lasts a couple years, so buy one pair, wear a couple years, buy another.

Electronics would be very difficult. In fact, not buying electronics made in China would essentially mean not having any modern video players, mobile phones, computers, TVs, appliances. Just about anything with a circuit board is made in China.

corntrollio says

Johnston & Murphy didn't just use the same quality leather and the same type of construction any more.

I tried to rebel against this decline in quality and just buy MiA, it is hard.
Alden, in your dress shoe example, makes a great shoe in America.
I would guess comparable to the old J&Ms. 500 bucks.
I used to work in Levis and Redwing Irish Setters when I was young, and they were never the cheapest option.
But now the Redwings that are MiA are $250, and up. The Levi MiA line of jeans are $200. And the re-crafting that you mention (I was very nostalgic about the old shoe repair shops) THAT is most of a hundred dollar bill. Enough to go buy a pair of throwaway work boots.
I sometimes buy shit I don't need (recently a Gilmore garden hose) just because it seems high quality and is MADE IN AMERICA.

Jeans from the United States of America.

http://raleighworkshop.com/
http://www.nobledenim.com/

FunTime says

Jeans from the United States of America.

http://raleighworkshop.com/

http://www.nobledenim.com/

That is the point I was making, exactly.
Although I will admit that, absent the hipster premium, there are:
https://www.pointerbrand.com/index.php/jeans-men.html
I really feel happy about the small victories of wearing non-sweatshop gear.

RS said: I really feel happy about the small victories of wearing non-sweatshop gear.
Does American Apparel qualify? No longer just for young hipsters.

Friend of mine just opened a new show in Portland with Alden shoes as one of the primary lines.

http://www.gq.com/style/blogs/the-gq-eye/2014/01/winn-perry-co-portland-menswear-store.html

Call it Crazy says

corntrollio says

Call it Crazy says

hrhjuliet says

Couldn't agree more. It shocks people, but I never buy things made in China.

Really??? How do you avoid that in this country today??

It takes research and spending a bit more money sometimes, but not always. For example, you can find US-made shoes, jeans, and other clothing quite easily these days.

Well, it's a good thing that you only buy shoes, jeans and other clothing...

What about your cell phone, computer, TV, car, tools, baby items, appliances and a bunch of other items you use every day??

Sure, it doesn't work for everything, and I'm not pretending that everything I buy is US-made and that I have nothing from China in my house. I still would rather have something made in Europe or Japan or another jurisdiction that stands for quality than China, which is all about cutting costs. As I mentioned, I would considering buying something Chinese if it were high quality, but more often than not, manufacturing in China is about cost-cutting and quality suffers.

Maybe what I'm saying is that I try not to buy low quality throwaway crap very often, regardless of where it's made. The good stuff lasts longer and saves me more money in the long run.

How hard is it to buy an American car? Even a Toyota Camry could theoretically count if you need more choices because it's made here by US-based workers. These days, there are plenty of high quality Ford and GM cars to buy. It's not like the 80s/90s. Also, there are plenty of good options from Germany or Japan, obviously, that are made in jurisdictions that typically make quality goods. Luckily, Chinese cars are of too low quality to be successfully marketed here, and our admittedly onerous automotive regulations keep the bottom-feeders out (except maybe Yugo).

For tools, it's hard but not impossible to avoid China. I'd rather buy Taiwan or Korea than China, and I have done so. I've bought some US-made automotive tools too.

Appliances are doable, but you will pay money because US or Euro tend to be high end goods, as opposed to basic ones.

Baby stuff is doable, although you may have to pay more depending on what it is. As an example, here are some US-made toys:

http://www.greentoys.com/toys.html

Does this require you to be a more thoughtful consumer? Sure. In order to embrace quality, you can't just find the cheapest 50 cent widget everywhere and call it a day.

EBGuy says

Does American Apparel qualify? No longer just for young hipsters.

I won't buy American Apparel after bad experiences with it. Cheap sweatshop stuff is usually better-made than American Apparel. Their quality control is garbage, as anyone who has sourced t-shirts from there for printing purposes has noticed.

It doesn't have to be an all or nothing is what I think Corntrollio is trying to say. It is true, we don't have a lot of clothes, because it is expensive, but we don't see a need to have a lot, and the cotton stuff is often made in the USA and cheaper than the stuff that is made in China. I see families with their closets and drawers stuffed, especially families with kids. What are all those clothes for anyway? There are only seven days in a week and it's not like most people don't have a washer and a dryer.

We are not draconian about it. All of our electronics are used, but if we need to buy new there are options: http://www.computersmadeinusa.com/ As for baby stuff, that's the easiest one. There are tons of sights dedicated to products not made in China, and we did attachment parenting, which doesn't require a lot of baby gear, if any. Our car is a numi plant Toyota, which is clearly not American, but we bought it used and long before our effort to buy from America and countries that are practising fair and safe labour; it's my car from college and it has never given me trouble, so why get a new one? There will come a time where we may need to buy something new from China that is a necessity, and that's okay. It's doing our best that counts. Each family's best is going to be different. Some people may only be able to switch to made in America cotton basics to start, or buying less plastic junk they don't need. I think what counts is truly making an effort at all. (:

Robert Sproul says

I tried to rebel against this decline in quality and just buy MiA, it is hard.

It's definitely not easy.

The good news is that American manufacturing has been upticking lately. Companies are realizing that outsourcing isn't the panacea they all thought it was. In addition, China is no longer nearly as cheap as it used to be, and many companies that use China realize that their supply chains aren't as nimble and are far more fragile and require more US-based inventory to buffer against supply shortages (and because it's a long trip via boat). China also isn't as good at high quality manufacturing, and everyone knows about its intellectual property issues.

Over time, we will probably see more and more goods destined for the US market made in the US, and I'm not the only one saying this:

http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/ (GE moving manufacturing of appliances back to the US from China, and in fact gives a great story about its water heater being cheaper to make in the US than China)
http://www.forbes.com/sites/stevedenning/2012/12/07/why-apple-and-ge-are-bringing-manufacturing-back/ (GE, Apple, Whirlpool, Otis, Wham-O)
http://www.economist.com/node/18682182 (suggesting multinationals should be indifferent between China and the US by 2015, and mentions Caterpillar, Sauder, NCR, and Wham-O

If you are a clothing manufacturer with facilities in Los Angeles, you have much more direct control over quality and the ability to get your designs out faster. When stuff goes wrong, it's much easier to fix and it's easier to meet your critical deadlines. The same is true in a variety of other industries.

The natural gas boom in the US due to fracking is also helping because it means industrial energy use is cheaper.

Even Apple could easily make iPads in the US. It would be slightly more expensive, but they would still make massive profits on them because labor is so little of the actual cost of selling an iPad. They'd probably still make more profit than anyone else selling something similar.

These days, on an overall cost basis, Mexico has probably become cheaper than China:

http://www.economist.com/news/special-report/21566782-cheaper-china-and-credit-and-oil-about-start-flowing-mexico-becoming

Call it Crazy says

corntrollio says

How hard is it to buy an American car? Even a Toyota Camry could theoretically count if you need more choices because it's made here by US-based workers. These days, there are plenty of high quality Ford and GM cars to buy.

They are ASSEMBLED here... Where do you think the individual parts are made??

Depends on the part. Not all the individual parts are made in China, certainly. That said, would you rather they be assembled elsewhere? I don't really understand the point of your comment.

What I'm saying is that high quality stuff tends to be more likely made here than China. Just because certain components might be made in China doesn't really defeat that point. Certain commoditized items in manufacturing are made in other countries because we no longer have the factories here because a bunch of MBA-guys decided to get rid of those sectors several years ago. The complex stuff still tends to benefit from being made here or somewhere else with a higher quality workforce and often tends to benefit from engineers and designers being closer to manufacturing.

It sounds like you're trying to quibble about issues around the edges rather than make a coherent counterargument.

hrhjuliet says

We are not draconian about it. All of our electronics are used, but if we need to buy new there are options: http://www.computersmadeinusa.com/ As for baby stuff, that's the easiest one. There are tons of sights dedicated to products not made in China, and we did attachment parenting, which doesn't require a lot of baby gear, if any. Our car is a numb plant Toyota, which is clearly not American, but we bought it used…..

If everybody lived like you (I do, by the way) the entire financialized, predatory, exploitive, consumer economy would collapse into smoking rubble.

This is my most fervent prayer.

Here is the wily old piratical billionaire Sir Jimmy Goldsmith, in 1994, explaining how GATT and NAFTA were going to decimate the, already suffering, middle class worker in America.
They knew the downstream effect of what they were doing. They didn't, and don't today, give a damn.
http://www.youtube.com/embed/4PQrz8F0dBI

I completely agree.

When I was a young sob, all the dudes I ran with looked the same -- like Lil' Abner. We all wore the same stuff because it was standard. Clothes were made tough and they were affordable. A couple new pair of ready-made jeans and a box of tees was less than 15 dollars and would last you the better part of two years. I bought all my Levis and socks and sweats from army surplus stores. My nicer togs came from Sears or Monkeys.

JodyChunder says

When I was a young sob, all the dudes I ran with looked the same -- like Lil' Abner. We all wore the same stuff because it was standard. Clothes were made tough and they were affordable. A couple new pair of ready-made jeans and a box of tees was less than 15 dollars and would last you the better part of two years. I bought all my Levis and socks and sweats from army surplus stores. My nicer togs came from Sears or Monkeys.

And there is no doubt that men and women looked better in those days. Nicer clothes and often healthier looking, and not because they went to the gym, because most people got off their butt and ate food that was recognizable as food. Oddly enough, everyone always compliments my clothes and I have very few items, but classic pieces, and I change them up. My English riding boots are 20 years old, but I oil them and take care of them. People still ask me where I got them. I wear them almost everyday in the winter and they look new. Good shoes, like Alden, are only an investment if you take care of them.

First the Fed must taper as the supply of new Treasuries shrinks as Treasuries are the liquid collateral that lubricates global trade.

Second, Zero Interest Rate Policies (ZIRP) mostly benefit asset markets and discourages savings. ZIRP is forcing pension plans to invest in risky assets and retirees to cut their spending to the bone.

Third, the only purpose for ZIRP and QE was to allow the banks to earn their way out of insolvency. It was never to increase employment. The Fed does have the power to kill jobs but cannot increase employment.

Much of the heavy lifting to recapitalize the Fed's member banks has been done and these banks are again engaging in risky behavior.

In the past real estate did very well with mortgage interest rates in the range of 6% to 8%. We even had local bubbles with 8.5%.

hrhjuliet says

Patrick readers, what steps should Americans take as interest rates rise?

Typically, rising interest rates are due to the economy overheating. We're no where close to that point yet. The Fed has been pumping money into the system to prevent us going into a deflation environment.

If interest rates were to rise, this is fantastic for homeowners and real estate investors, who locked in 30-year fixed at historical low interest rates. They are paying the lenders back with cheaper dollars. This phenomenon would put even more pressure on home prices since homeowners don't want to sell their houses to buy another one only to borrow at a much higher interest rate.

The best solution would be to keep their house, renting it out and buy a new one if they want to move up. It's hard to make a case for investors to sell their investment properties when they have fixed their holding costs at extremely low interest rates and property taxes.

Let em' rise. I'm tired only getting 1% or so on my CD's.

E-man says

If interest rates were to rise, this is fantastic for homeowners and real estate investors, who locked in 30-year fixed at historical low interest rates. They are paying the lenders back with cheaper dollars. This phenomenon would put even more pressure on home prices since homeowners don't want to sell their houses to buy another one only to borrow at a much higher interest rate.

That scenario is possible in a booming economy, but if paired with job-losses people will be forced to sell their houses or get foreclosed upon again, even with rising rates. The problem is that because rates got so cheap suddenly millions got included again and could "afford" to buy that expensive house when they really shouldn't have. I have said the market may stay propped up by foreign buyers for a longer time, esp. in desired areas, but overall the party is over and I see declining prices on the horizon. Worse if big investors start exiting from their rentals.

Assuming people don't die, lose jobs, and assuming builders don't find cheaper profitable ways to build homes.

bgamall4 says

jvolstad says

Let em' rise. I'm tired only getting 1% or so on my CD's.

You think they want to give you much more than that? Don't hold your breath.

+1. The gap between rate they pay you and rate they charge for a loan will be wide for foreseeable future.

The overall unemployment rate for college graduates, according to Georgetown's annual study, is 7.9%. Unemployment for recent (within a few years of graduation) Comp Sci majors is about 9% contrasted with Education at about 5.7%. If you want a job, choose Education over Comp Sci. Especially if you value steady employment.
http://www.usatoday.com/story/money/personalfinance/2013/07/30/tech-job-unemployment/2595669/

From the Georgetown Study:

And not confined to the US - Comp Sci has the highest unemployment rate in the UK among recent graduates, too:
http://www.theguardian.com/higher-education-network/blog/2013/sep/16/computer-science-graduates-unemployment-bme

"Also, what would you do if you were in charge?"

Default.

If I'm in charge, I've got the world's largest military. Bring it on.

Hi hrhjuliet,
I have an idea, please read and consider.
ES is Edward Snowden.
ES-related content/actions get the attention of many!
USAgov is USA federal government.

my IDEA is
We electronically communicate to ES, suggesting that he propose to USAgov a two part deal (in any order).
(1) USAgov grants ES amnesty.
(2) ES does his best efforts for eight hours to helpfully inform the deceived USA people of the content here:
"The Public Be Suckered (that's you)", at
http://patrick.net/?p=1230886

We will need electronic address(es) for ES. We will seek high online visibility options copying our communication to ES.

What think you?
RW&B,
ttsmyf

E-man says

If interest rates were to rise, this is fantastic for homeowners and real estate investors, who locked in 30-year fixed at historical low interest rates.

I'm not so convinced. When those people try to sell their houses, they will find a softer market. You can't fully assume that pricing is completely independent of interest rates. Most organic home owners (as opposed to investors spending other people's money) are dependent on mortgages, and the monthly payment matters. It's easy to note that 4% of 800,000 is the same as 8% of 400,000.

$400K at 8% = $2935 monthly with $31,879 interest paid in the first year
$800K at 4% = $3819 monthly with $31,744 interest paid in the first year
Note that an equivalent monthly of $400K at 8% with a 4% interest rate gives you a mortgage of $614782.

Now, I'm not saying that if interest rates suddenly shoot up to 8% that a formerly $615K house at 4% will instantly only be worth $400K, but it is guaranteed that higher interest rates will put pressure on prices because it is so monthly payment sensitive. Housing markets are fairly illiquid, so this happens somewhat gradually.

I would rather pay $400K at 8% than $615K at 4% because at 8%, there's a good chance that one day I will be able to refinance to lower my payment, and it will be much easier for me to make extra payments to pay down principal quickly vs. $615K. At 4%, it's unlikely I'll be able to refi too much in the future, and I'll be pretty much stuck with that payment forever, and I have a much higher principal to pay down.