patrick.net

dublin hillz says

So their salaries are clearly insufficient to keep up with extra expenses.

http://www.numbeo.com/cost-of-living/rankings_by_country.jsp

And housing cost is immensely high right now over there. Nearly 57% of mortgages in 2013 were interest only.

tatupu70 says

Reality says

Of course private corporations need to pay market rates to compete: both for labor and for capital.

Complete BS. How are corporations making record profits then?

Simple reasons:

1. Unit of count devaluation in that chart

2. Government spending crowding out availability of private capital available for investment, therefore return on capital has to be higher. Corporations not only have to compete for labor but also have to compete for capital. If there is less capital to invest, then return on capital is higher. Fairly simple stuff.

Reality says

Government spending crowding out availability of private capital available for investment, therefore return on capital has to be higher. Corporations not only have to compete for labor but also have to compete for capital. If there is less capital to invest, then return on capital is higher. Fairly simple stuff.

So with a shortage of capital available, like you say, would you expect cost of capital to be high or low?

Interest rates are incredibly low right now. You know why?? Because there is a virtual sea of capital looking for somewhere to invest. I can't believe you could type that last post without busting out laughing.

dublin hillz says

Comparing the stats between united states and denmark, we find that things cost more over in denmark and their purchase power is worse than ours. So their salaries are clearly insufficient to keep up with extra expenses.

The devil is in the details. They use AVERAGE wage to calculate their purchasing power. It doesn't take too many billionaires to make the US look like it has a nice average wage.

I've always said the US doesn't have a wealth problem--it has a distribution problem. The link obscures that by using averages.

yeah, the price level has to calibrate itself to incomes (and credit when looking at things bought on credit like cars and houses)

The better an economy is in keeping money circulating among the W-2 masses, the more vibrant it is -- the more opportunity wage earners have to find employment, the more consumption and demand wealth producers aka businesses will be able to serve.

This is obvious to everyone except those who have fucked their minds with bullshit like Austrian economics.

Housing supply constrictions just give landlords the whip-hand in setting the price level, sucking more monthly incomes out of the paycheck economy into the rent-seeking one.

Since housing is everyone's dominant life expense, everything calibrates to it.

When comparing such disparate economies as the US and DK, you just can't look at broad-based averages. You have to look at the reality the man on the street faces.

Health Expenditure Per Capita
Denmark $4,467
United States of America $8,233

is $4,000 PER PERSON cost savings the Danish economy "provides" to its citizens, which they can (and do!) then use to bid up the cost of housing etc.

DK also runs the typical nordic trade surplus economy:

in my naive analysis I think this concentrates capital at home and pushes down interest rates (low interest rates weaken a currency, the weak currency regime is what trade surplus countries need to defend).

There's a strong overlap between trade surplus and healthy economies

tatupu70 says

So with a shortage of capital available, like you say, would you expect cost of capital to be high or low?

Interest rates are incredibly low right now. You know why?? Because there is a virtual sea of capital looking for somewhere to invest. I can't believe you could type that last post without busting out laughing.

Interest rates are low for government subsidized nonsense, like the FED buying government bonds, and loans on GSE sponsored home purchases, etc. Try the borrowing cost of actually starting a business, it is not low. You laugh only to cover up your own lack of clue.

Also notice, your failure to counter the far more important point I made in my initial response: the lack of purchasing power of those Denmark pay stubs.

Bellingham Bill says

The better an economy is in keeping money circulating among the W-2 masses, the more vibrant it is -- the more opportunity wage earners have to find employment, the more consumption and demand wealth producers aka businesses will be able to serve.

This is obvious to everyone except those who have fucked their minds with bullshit like Austrian economics.

Your blind hatred of Austrian School of Economics is funny: money can not circulate among the W-2 masses for the simple reason that W-2 is issued by an employer, by definition. W-2 masses do not get paid by customers but by the employers. W-2 masses can not circulate money among themselves without them getting out of the W-2 employment framework.

If you want money to circulate more among the bottom 95% of the population, you need to remove government barriers preventing people from entering businesses by themselves. In other words, you'd have to agree with some of what the Austrian School proposes: remove government barriers so smaller businesses and individuals working for themselves can compete in a relatively free market place.

tatupu70 says

dublin hillz says

Comparing the stats between united states and denmark, we find that things cost more over in denmark and their purchase power is worse than ours. So their salaries are clearly insufficient to keep up with extra expenses.

The devil is in the details. They use AVERAGE wage to calculate their purchasing power. It doesn't take too many billionaires to make the US look like it has a nice average wage.

I've always said the US doesn't have a wealth problem--it has a distribution problem. The link obscures that by using averages.

http://en.wikipedia.org/wiki/Median_household_income

Even when it comes to median income, when adjusted for purchase power parity, denmark is ranked lower than united states. Ultimately, purchase power is the true measurement of financial well-being regarding the items in question.

Reality says

Interest rates are low for government subsidized nonsense, like the FED buying government bonds, and loans on GSE sponsored home purchases, etc. Try the borrowing cost of actually starting a business, it is not low. You laugh only to cover up your own lack of clue.

Nope--I'm fairly secure that I'm correct. Obviously there is a risk adjustment in the interest rate that businesses receive on their loans, but when you compare apples to apples vs. other time periods using the prime rate--rates are at historically low levels.

Reality says

Also notice, your failure to counter the far more important point I made in my initial response: the lack of purchasing power of those Denmark pay stubs.

Maybe you didn't read far enough--I answered it.

dublin hillz says

Even when it comes to median income, when adjusted for purchase power parity, denmark is ranked lower than united states. Ultimately, purchase power is the true measurement of financial well-being regarding the items in question.

I'd be curious to see the source and the details of this calculation. As Bill pointed out, taxes in Denmark pay for things that taxes don't pay for in the US.
I'd be curious to see the details of that determination as well. As Bob pointed out--the taxes in Denmark include health care

tatupu70 says

Nope--I'm fairly secure that I'm correct. Obviously there is a risk adjustment in the interest rate that businesses receive on their loans, but when you compare apples to apples vs. other time periods using the prime rate--rates are at historically low levels.

Why don't you actually go ahead and try taking out one of those and create some jobs for your fellow losers? You can't. The loan qualification standard is very high right now. There is a reason why so many people have to borrow at loan shark rates.

tatupu70 says

Also notice, your failure to counter the far more important point I made in my initial response: the lack of purchasing power of those Denmark pay stubs.

Maybe you didn't read far enough--I answered it.

No, you did not.

Reality says

Why don't you actually go ahead and try taking out one of those and create some jobs for your fellow losers? You can't. The loan qualification standard is very high right now. There is a reason why so many people have to borrow at loan shark rates.

So, the actual interest rate isn't a good judge of available capital then? You're flailing now.

tatupu70 says

Reality says

Why don't you actually go ahead and try taking out one of those and create some jobs for your fellow losers? You can't. The loan qualification standard is very high right now. There is a reason why so many people have to borrow at loan shark rates.

So, the actual interest rate isn't a good judge of available capital then? You're flailing now.

A published loan interest rate for big businesses that is not available to the typical individual or small business owner is by definition not "available capital" to the latter . . . because it is not available to the typical individual and small business owner. Duh!

Are you completely ignorant of the reality of founding and running a small business?

APOCALYPSEFUCKisShostikovitch says

There is no such thing as wage theft, only criminal taxation.

Stop the crime!

There is indeed no such thing as "Wage Theft" in private employment relationship. The reason is obvious: wage in the private sector is negotiated and agreed upon by both parties in the employment relationship.

The only "Wage Theft" is in the public sector where public employees unions steal from the public purse. That's a reality recognized by even FDR! Here is Saint FDR's writing on the subject:

"All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable. "

Reality says

A published loan interest rate for big businesses that is not available to the typical individual or small business owner is by definition not "available capital" . . . because it is not available to the typical individual and small business owner. Duh!

Are you completely ignorant of the reality of founding and running a small business?

Capital is capital. There is no special pool that's only available to big business. The interest rate reflects the supply and demand for money--there is obviously a risk premium placed on any business, large or small, that has a higher chance of defaulting.

And if that risk premium is higher now than in the past, it's likely because the economy is very fragile due to the current levels of wealth and income inequality. 90% of the people have very little money to spend.

Finally, enough with your attempts to distract about the founding a small business. That's not what we're talking about. We're talking about your belief that there is a lack of available capital despite interest rates being at near historic lows.

tatupu70 says

Capital is capital. There is no special pool that's only available to big business. The interest rate reflects the supply and demand for money--there is obviously a risk premium placed on any business, large or small, that has a higher chance of defaulting.

Of course there is a difference. The difference is where the wealth disparity and increasing corporate profit at large corporations due to lack of competition come from! Big businesses can borrow at much lower rate than the small businesses and individuals can under the central banking system. Big businesses consume capital at the expense of the small businesses and individuals. That's the root cause of rising wealth disparity and rising corporate profit while wage stagnate ever since the central bank was completely untethered from sound money since the 1970's.

And enough with your attempts to distract about the founding a small business. That's not what we're talking about. We're talking about your belief that there is a lack of available capital despite interest rates being at near historic lows.

Interest rate is not at historical low for individuals and small businesses. That's why ordinary individuals and small businesses are suffering while the big businesses (and their owners) favored by the FED are prospering . . . exactly the phenomenon you are decrying. Stop being willfully blind and intellectually dishonest.

Reality says

Interest rate is not at historical low for individuals and small businesses

Really? Mortgage rates look pretty damn low to me.

You are purposely conflating small business with risk. Those are two completely different concepts. Small businesses with long track records of good performance get good rates.

Reality says

Of course there is a difference. The difference is where the wealth disparity and increasing corporate profit at large corporations due to lack of competition come from! Big businesses can borrow at much lower rate than the small businesses and individuals can under the central banking system. Big businesses consume capital at the expense of the small businesses and individuals. That's the root cause of rising wealth disparity and rising corporate profit while wage stagnate ever since the central bank was completely untethered from sound money since the 1970's.

More BS from the undisputed king of crap.

Bellingham Bill says

Denmark $4,467

United States of America $8,233

is $4,000 PER PERSON cost savings the Danish economy "provides" to its citizens, which they can (and do!) then use to bid up the cost of housing etc.

To the point that they would go for interest only loans, and have highest level of private debt among OECD countries? 😃

tatupu70 says

Interest rate is not at historical low for individuals and small businesses

Really? Mortgage rates look pretty damn low to me.

You are purposely conflating small business with risk. Those are two completely different concepts. Small businesses with long track records of good performance get good rates.

I already addressed that issue earlier, you are talking about government GSE backed mortgages. Those have very high qualification standards, to such a degree that first time buyers are having difficulty qualifying.

The real market interest rate for small businesses and individuals for job creation in the real estate sector is that of the hard-money loans (for flippers etc.) Those are not low right now.

tatupu70 says

Of course there is a difference. The difference is where the wealth disparity and increasing corporate profit at large corporations due to lack of competition come from! Big businesses can borrow at much lower rate than the small businesses and individuals can under the central banking system. Big businesses consume capital at the expense of the small businesses and individuals. That's the root cause of rising wealth disparity and rising corporate profit while wage stagnate ever since the central bank was completely untethered from sound money since the 1970's.

More BS from the undisputed king of crap.

In other words, you have no counter-argument.

Reality says

I already addressed that issue earlier, you are talking about government GSE backed mortgages.

Nope--I'm talking about all mortgages. Rates on non-GSE guaranteed mortgages from banks or S&Ls are at near historic lows.

Reality says

Those have very high qualification standards, to such a degree that first time buyers are having difficulty qualifying.

The qualifications may seem high compared to mid 2000s, but they are really pretty standard. Some first time buyers may have a hard time qualifying, but that's more on them than on the strictness of the standard.

Reality says

The real market interest rate for small businesses and individuals for job creation in the real estate sector is that of the hard-money loans (for flippers etc.) Those are not low right now.

First--are you calling flippers "job creators"? Just want to make sure I'm understanding you correctly.

Second--we've been over this. There is always a risk premium. That doesn't change the fact that interest rates are near historic lows.

Reality says

In other words, you have no counter-argument.

lol---is a counter argument needed? Do I need to argue that the sun rises in the east and sets in the west?

A lot of small biz owners defaulted during the recession. Many of them went too far and used home equity loans and when market/economy died, they were either unwilling or unable to pay back the debt. That's why the banks don't trust them and hence charge them higher interest rates today.