patrick.net

shrekgrinch says

Kevin says

Yes, it will happen, and when it does the wealthy must accept higher taxation.

Why? The jobs it will replace will be in China. We already got rid of those jobs.

Not even close. Unemployment will be in the 30-40% range with our current model.

Kevin says

We’re 10-20 years away from robots that can do the kind of high dexterity work needed for assembling small electronics and children’s toys for less than the cost of a chinese laborer.

Sooner than that. Change is happening exponentially. We are just at the bottom of the hockey stick graph currently.

Yes, change is happening exponentially, but the machines are still very, very primitive. If they weren't growing exponentially, we'd be looking at 100+ years.

These things can even be programmed w/o software:

The arm and gripper can be quickly trained to do a repetitive task just by moving them, no software code required.

That's what "general purpose" means. There is software here, it just has a primitive AI. AI needs to be much much better before it will be good enough to be used for this stuff.

Kevin says

I suspect we will wind up with a situation where the cost of goods approaches the cost of raw materials, energy, and shipping, and tax rates will be roughly double what we have in the US today. A national basic income isn’t unrealistic.

Nice fantasy. Akin to what the physicists have regarding ‘nuclear fusion is just around the corner’ only for socialists. They have been predicting that for over a hundred years now.

I don't understand what you're saying. The cost of goods is already approaching the cost of materials in many industries. There is no reason to think that won't continue.

Services will not be cheap, though. Productivity in that field has not kept pace yet wages have risen likewise, which is causing problems. We’re going to have a bad case of Baumol’s Cost Disease: http://www.dailyfinance.com/story/taxes/americas-economic-illness-baumols-dis/19752285/?source=patrick.net#articleHeader
There will be two groups of people: Those who invested in production and will hence reap the dividends and those who didn’t. A very harsh Grasshopper & the Ants story, to be sure.

No, that won't happen, because the people who don't "have" will murder those that do and take it. This happens every time there is gross inequality.

TechGromit says

I guess the point was to keeping uninsured people from being a burden to the system. I feel anyone should be able to go without medical coverage, but they need to

Whats the resistance to tacking costs into taxes, exactly?... Why does this discussion seem to focus on complicating something that many other countries have solved quite simply? Canada, for example: "In general, costs are paid through funding from income taxes, although three provinces also impose a fixed monthly premium which may be waived or reduced for those on low incomes. There are no deductibles on basic health care and co-pays are extremely low or non-existent (supplemental insurance such as Fair Pharmacare may have deductibles, depending on income)."source

and here's a silly pic. not entirely apropos of the discussion at the moment, but funny:
http://cosmicnavellint.blogspot.com/2010/12/tea-partys-vision-of-healthcare.html

I was just telling my daughter that I refer to masturbation in nearly every stoopid thread (or at least, that's what makes it stoopid). Now, like an automatron, Nomo does it.

I've been replaced by a robot!

How long have people been predicting this?

Obligatory animated gif:

I 'm going to start marketing a new technical indicator:

It's called The Reverse Fu-Manchu with a Triple Axel.

If anyone donates 100k to patrick.net I will forgo the riches and just post how it works right here. Or it may get Wiki-leaked if someone hacks my computer.

justme says

I ‘m going to start marketing a new technical indicator:
It’s called The Reverse Fu-Manchu with a Triple Axel.
If anyone donates 100k to patrick.net I will forgo the riches and just post how it works right here. Or it may get Wiki-leaked if someone hacks my computer.

I like it. Sounds like something out of Hong Kong Phooeys book of Kung Fu

shrekgrinch says

And right now you remind me of the ’smart people’ who told me I was stupid because I wouldn’t buy a house during the bubble and stuck to my guns that their precious equity would evaporate one day

There you have it - shrek predicted the housing crisis but Ya'll didn't listen!

shrekgrinch says

You won’t think it is stupid when the social impacts are felt. Kevin at least is treating this seriously.

I take masturbation quite seriously - I practice all the time. ;)

shrekgrinch says

Kevin says

Not even close. Unemployment will be in the 30-40% range with our current model.

We’ve already outsourced those jobs over the course of the last two decades. They are already ‘lost’. It will be the Chinese workers who will get hit.

There is still an enormous manufacturing base in the U.S, more than 25% of all jobs.

Kevin says

I don’t understand what you’re saying. The cost of goods is already approaching the cost of materials in many industries. There is no reason to think that won’t continue

The national basic income part is what I was referring to. The other part about costs and prices for goods I agree with.

What do you think welfare, foodstamps, etc. amount to? Eventually such programs will expand to cover most people, or else the people will revolt.

Only the Social Credit folks have done the most work on figuring out how to set up a national income. But the bankers will never go for that plan…because they want to continue the Pretty Good Deal of having all the fiat monetary expansion allocated to them to make loans with.
Kevin says

No, that won’t happen, because the people who don’t “have” will murder those that do and take it. This happens every time there is gross inequality.

Funny. Other nations still exist that have tremendous income inequality. The super rich have to fly in helicopters from penthouse to penthouse in Brazil, but hey…they are still alive.

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

Not a single country on that list with an unemployment rate over 35% is able to maintain a stable democracy. The same thing will happen here.

Brazil has a lower unemployment rate than the U.S. Many people are poor, sure, but they at least have jobs.

Nomograph says

I’m pretty sure you think about socialism even when you jerk off.

Hey, it was the socialists who were spewing forth all the national income nonsense going back 100 years now. Look it up. But of course, you have nothing to contribute BUT to jerk off on these forums.
elliemae says

I was just telling my daughter that I refer to masturbation in nearly every stoopid thread (or at least, that’s what makes it stoopid). Now, like an automatron, Nomo does it.

You won’t think it is stupid when the social impacts are felt. Kevin at least is treating this seriously.
And right now you remind me of the ’smart people’ who told me I was stupid because I wouldn’t buy a house during the bubble and stuck to my guns that their precious equity would evaporate one day. But this time it will be different, right?

Just because a certain group advocated a certain thing at a certain time does not mean that the idea is fundamentally bad or impossible to implement.

Thousands of years ago people tried to have a global economy, but their approach was all wrong.

tatupu70 says

Sounds like something out of Hong Kong Phooeys book of Kung Fu

Good idea. But, as with all technical indicators, there are many ways of looking at it.

The other way is that the chart looks a lot like the the upside-down mustache of Fu-Manchu, but with some extra twirls similar to a move you would see in figure skating.

Just tilt your head a little bit to the side, and it will become obvious.

For at least 3 years now, maybe 4, I've been having my chart-loving friends tell me:

BONDZILLA RIGHT AROUND THE CORNER RUN FOR YOUR LIVES!

A recent example:

http://thehousingtimebomb.blogspot.com/2010/09/bondzilla-returns.html

Or even last week from Denninger:

http://market-ticker.org/akcs-www?singlepost=2310886

But instead of getting this guy:

We get this:

Charts are pretty and cool, but I wouldn't bet the farm on one.

shrekgrinch says

Hence why I’ll wait to see the pigs fly first, thank you very much.

http://abcnews.go.com/US/story?id=95217&tqkw=&tqshow=&page=1

from the article:

"There’s no way to know if hell has frozen over, but it’s official — pigs can fly.

An embarrassed US Airways is promising it will never again allow barnyard animals onto its flights after a 300-pound hog accompanied 200 human passengers on a six-hour flight from Philadelphia to Seattle on Oct. 17.

“We can confirm that the pig traveled, and we can confirm that it will never happen again,” US Airways spokesman David Castelveter said. “Let me stress that. It will never happen again.”

=======================
always willing to help out where I can. ;)

shrekgrinch says
Yeah. And those will go the way of the Dodo and (agricultural jobs) too. But like you say, most of those will take a while — the manufacturing jobs left in the US of A are rather sophisticated ones.

No, they aren't. Some are, but very few -- and that wasn't even my point. Losing 25% of current jobs means we'll have a 30-40% unemployment rate. This is simple math.

I guess its a case of poor terminology on your part, then. What you describe is not a ‘national income’ as was defined by those who promoted it over the past century.

There is really no difference between "welfare for everyone" and "national income".

You said, “No, that won’t happen, because the people who don’t “have” will murder those that do and take it. This happens every time there is gross inequality.” and that is what I was answering back about. Democracy was not even remotely involved in that.

The most important aspect of democracy is the rule of law. The countries in the list I provided do not have the rule of law. Leaders are murdered regularly, and nobody has any sort of stability -- "rich" or not.

That is exactly what will happen in the U.S. if such inequality ever exists here. Hungry people don't stay hungry for long.

…and they have ‘housing’ too…cardboard shantyvilles or — if they are really lucky — corrugated siding for walls.

Well, that's not really true either. Brazil has a higher poverty rate than the U.S., but it's not sub-saharan africa.

And, again, this is about *inequality*, not absolute quality of life. Inequality in Brazil is only slightly worse than in the U.S. at present. All of that changes if half of the population has no work.

And that is where we will be: Poor but with jobs.

Doing what?

And like Brazil, society will survive.

Unlikely, at least not in any form that we know it today. "Work" is one of the main reasons that we have a society at all, rather than simply being a bunch of hermits.

Like communism? Oh yes…lets try THAT again. This time we’ll get it right for sure! All we need is the proper amount of ‘wise men’ to guide us. That’s the ticket!

Well, we've never actually tried communism at scale, so no. Existing actual examples of communism are strictly at the tribal level, where they're remarkably successful. It's unlikely we'll ever be able to find a large enough population willing to try it out to see how it works at scale.

Now, you're probably just equating socialism with communism, which people tend to do. I definitely agree that socialism, in the pure sense, is pretty much guaranteed to fail, but certainly mixed economies seem to do well.

You’re right…but because of actual history, the idea doesn’t have much credibility and so the first time a workable attempt actually is adopted will be the most difficult. Hence why I’ll wait to see the pigs fly first, thank you very much.

Again, we already have plenty of examples of national / local incomes. Whether we're talking about guaranteed pensions for all citizens, welfare, or outright cash payments like in Alaska, it's the same.

The only investment ideas I have for 2011 is buying call options on Nikkei stocks because I think Japan is about to see a huge outflow from bonds into equities. Right now, call options on equities in Japan are pretty cheap and the options market is completely betting against any rise in the Nikkei. It's a low cost play with a potential high payout.

Outside of that, Natural Gas is cheap so Natural Gas Producers will eventually show nice returns.

As far as gold and silver go, I'm a permabull, but I'm simply holding. I'm still about 75% in gold/silver/mining stocks.

@E-man,

If you believe that the Dow will drop next month, are you considering a short ETF such as SH?

cheers.

This price should get you a pretty decent SFR in your area, no?

Patrick should have this site for free, no ads. Who cares if he can't eat or feed the kiddies?

Will see how silver and gold work off the recent sell-off. Looks like they’ll have to establish a new base before they can move higher.

That's the luxury of positioning yourself early. Anyone who piled into the gold/silver markets in 2008 or any time prior doesn't care about short term movements any more. It doesn't matter how volatile they are. I'll sit back and watch. The Johnny come lately investors are either going to get slaughtered from a huge pullback or drive the market into bubble status.

The 111s FYs are 2010 and 2011, not 2009 and 2010. The budget for 2009 was already mostly set when they took office.

That said, the biggest portion of the increase in debt was the $1T lost in tax revenue during the recession, followed closely by the $900B increase in spending on medicare, social security, and Iraq/Afghanistan. TARP cost us a whopping $30B. ARRA was actually significant, at about $550B spent so far.

So, yeah, about $1T of the debt increase since January 1st 2009 has come from completely unavoidable changes related to the recession, nearly a trillion came from the bullshit expectation that military and health care spending only go up, half a trillion was spent trying to dig us out of the recession, and the rest was deficits that already existed in the budget going back to 2001.

But it's fun to be outraged, isn't it?

I'll certainly agree with anyone who wants to complain that ARRA was an ineffective use of $555B so far. Economists seem mixed on the issue, but I'll accept at face value that it was a pure waste of money. Without it we'd still have had over two and a half trillion in debt.

The good news is that deficits are just about guaranteed to shrink in 2011 and 2012. All signs point to an increase in tax receipts for 2011 (even with the tax cut extension), and with ARRA winding down 2012 may actually have a smaller deficit than 2009.

But maybe we would have been better off if congress had tried really hard to reduce the deficit during the recession. You know, kind of like they did under the hoover administration. Didn't that work out really really well?

I've modified the chart I posted yesterday to add the increasing debt:

FRED Graph

The red line is household debt, the blue line is wages, and the green line is the national debt (less the SSTF etc).

I think there are some important dynamics that can be seen here.

1) entering the 2001 recession, debt take-on separated from wages (debt expanded while wages were flat). This was the beginning of the Bush bubble economy

2) The bubble economy was strengthened by the tax cuts, which from 2002-2003 were clearly the primary driver in increasing salaries. We were robbing our kids futures to pay ourselves more last decade. Good thing I don't have kids I guess.

3) 2005 through 3Q07 featured a stupendous rise in household debt, from $10T to $14T. The deficits were going down during this timeperiod thanks to the stimulus of the housing bubble and credit expansion.

4) But from 2009, with the Home ATM blowed up and credit no longer growing at $2T/yr, the US Treasury stepped in to counter-cyclically dump $4T of borrowed money, keeping the blue line from continuing the collapsing trend it had entering 1Q09.

It was ALL Bush’s fault.

Indeed it was, Shreck. Indeed it was. Once you blow an economy up, there is no real fix. Just pain for a very long time.

See that gray bar in my graph stretching from 2008 through 1Q09? That's all Bush's fault. It was his "voodoo economics" that blew up the economy in 2008 and its his administration's laissez faire policies that gave us that $14T debt overhang that is killing us now.

shrekgrinch says

Hoover jacked up income tax rates from the highest of 25% to 90% in just one year

http://en.wikipedia.org/wiki/Revenue_Act_of_1932#Tax_on_Individuals

Looks like a pretty smooth tax regime. Hoover was always an engineer first.

shrekgrinch says

Kevin says

That said, the biggest portion of the increase in debt was the $1T lost in tax revenue during the recession

No, it was from spending more than $1T than they had coming in. It is ALWAYS about spending more because they have full control over that but not as much on the revenue side.

No shit, sherlock. The point here is that even if spending had been completely flat, we would have added $1T to the deficit, because of lower tax revenue. That would have happened no matter what the policies were, unless those policies magically ended the recession.

Still, the $3.22 trillion in new debt accumulated during the record-setting 111th Congress is more than three times the $1.054 trillion in new debt accumulated by the last Republican-majority Congress (the 109th) which adjourned on Dec. 8, 2006.

Thus, it happened under their watch. That’s all John Q Public understands and reacts to. Like they say, “In politics, perception IS reality”. This is true no matter how many excuses folks on here make for them.

Oh, right, since the American voters are fucking morons, it's OK to lie. I forgot.

Kevin says

You know, kind of like they did under the hoover administration. Didn’t that work out really really well?

Given how Hoover jacked up income tax rates from the highest of 25% to 90% in just one year — something the Left is screaming we should also do now — no, I don’t think it will work out any more than it did then.

Well, the top marginal rate was raised to 63%, a rate which affected less than a thousand families in the united states at the time. The rate for the average family was effectively zero, since the standard deduction was $2500 and the average salary was only about $1600.

But that's beside the point.

Hoover managed to screw up in two ways:

1. He reduced personal spending
2. He reduced government spending

Effectively, he made the depression worse.

The only thing that ends recessions is increased economic activity.

Tax rate changes may or may not effect economic activity. It's complicated, and the results of various tax changes throughout america's history are mixed. At best, you can say that tax rates are uncorrelated with economic activity.

However, there is a very strong correlation between government spending and economic activity.

The best time for the US government to have cut spending would have been from about 1995 to about 2005. That money could have been used to eliminate debt, thus better preparing us for taking on necessary debt in the current recession.

But, well, people are stupid and won't re-elect someone who either raises taxes or cuts spending, so we'll just gradually move closer and closer to a complete collapse and reset. Hopefully when that happens here it will be closer to modern day greece and less like 1930s germany.

You forgot the word putz on your bio

That's not true. 90% of his comments are hilarious

shrekgrinch says

tatupu70 says

That’s not true. 90% of his comments are hilarious

Ok Tatu — admit it: This guy even tops me in your book.

I'll drink to that.

Repo4sale, just out of curiosity, why are you yelling at Nomo with poor grammar? If you believe that Patrick shouldn't accept ads, why don't you send him some of your $100m?

repo4sale says

Please stop, because I cannot keep wasting my time with you! I’m trying to join the Billionaire boys club by 2020.

Keep giving blood. You'll get there.

shrekgrinch says

tatupu70 says

That’s not true. 90% of his comments are hilarious

Ok Tatu — admit it: This guy even tops me in your book.

Were you the kid in school who, after the teacher complimented a fellow student, immediately raised his hand yelling--But what about me? I'm smart too!

repo4sale:

I'd like to know what it is that you're smoking, because I'll avoid it like the plague. You make less sense than my confused elderly patients with Alzheimer's Disease.

repo4sale says

I try to be “basic and funny”

You've got the "and" part down pat.

$450,000 for that? Just take that money and buy a decent SFR in Aliso Viejo 10 miles away.

shrekgrinch says

Oh yeah…sure…the taxes were jacked up overnight. That doesn’t constitute ’smooth’. Then the rich folks that had 99% of all the investment capital took their toys home and the rest we all know about.

Except that they didn't. They lost their capital when the stock market collapsed.

shrekgrinch says

Doesn’t matter about the rest. It was those ‘less than a thousand families’ that had the capital to create new jobs who decided ‘oh yeah? Time to invest in tax free munis or even stuff my millions in the mattress instead’. Business investment plummeted as a result. Smooth move.

So you're claiming that investment halted AFTER the tax rate changes? Really? Nice historical revisionism.

shrekgrinch says

Not if the necessarily debt de-leveraging doesn’t happen first, as in our case today.

No, always, in every instance of every recession since the dawn of time. It is the very definition of how recessions end.

shrekgrinch says

Completely ridiculous. Hey! Let’s raise taxes to over 100% then! See how much income tax revenue the government collects! Seriously, in the 1980s Sen. Bob Packwood asked a congressional budget research arm (wasn’t CBO, so they saved face) what the revenue would be for tax rates at 100% and the morons gave back actual numbers.

So, two things here:

1. You don't seem to understand what 'uncorrelated' means. Compare tax rates vs revenue in 1920, 1940, 1960, 1980, and 2000.

2. 100% taxation wouldn't end economic activity, it would just move economic activity to a barter-based model. Don't confuse "money" with "economic activity" (or "government revenue" for that matter!)

shrekgrinch says

No, there isn’t. During the Depression they spent but hardly got any results. It was only after WWII started did they get results. Why? Because FDR was forced to abandon the New Deal JIHAD against the rich/business in order to avoid getting his head chopped off by a katana sword on the White House lawn a few years later down the road, that’s why.

"hardly got any results" other than the 10 point drop in unemployment and a 35% increase in GDP during FDR's first term? Again, nice historical revisionism.

shrekgrinch says

That included removing the disincentives they were constantly putting in place for business to not expand/hire much like Obambi does right now. The cost-plus contracts were invented.

Please enumerate these disincentives that were removed. Be specific. Because things like the wagner act can hardly be classified as "removing disincentives" for hiring.

shrekgrinch says

Uh, now. They had complete control on the policy level to CUT spending to meet revenues.

And where do you suggest that they cut $1T from? Please be specific. Also, please explain how this would have helped bolster the economy.

shrekgrinch says

They had complete power to do so to compensate for the lack of power they had to raise more revenues. Hence why DEFICIT SPENDING is always a SPENDING problem.

So if you lose your job and need to borrow money from your sister so that you can pay your rent, you have a spending problem? That's a very, very interesting point of view.

I suppose third-world countries have spending problems, too, right? The problem isn't that there isn't enough business activity to provide employment and development, it's that they're just spending too much money!

shrekgrinch says

Try going to the store with only $10 in your pocket and attempt to buy $15 in stuff. If the store owner or anyone else won’t spot you that extra $5, what happens? You have to settle for $10 in stuff. You have to cut your ’spending budget’ by $5. If you do get a loan to cover that extra $5, then you are engaged in DEFICIT SPENDING.

Yes, you are, but you're mistaken for insinuating that all debt is bad. Debt is how we smooth the curve from good times in life to bad. The ability to finance purchases and secure lines of credit is what separates poor countries from rich countries in the first place.

We are diversifying into foreign currencies, chinese and euro, while holding onto (long term) dividend paying stocks of large entities with a proven track record.

Ah, that ain't nothin... on the health insurance thread he writes:

repo4sale says

This is an example of why I “date women between 20-30″…. and why I refused to get married. 3 women in the past did not sign my Pre-Nuptial contract (very fortunate). I am looking for a “10 DNA surrogate”… $100-200k???? Must pass background & DNA analysis by my Dr. Present Net worth without Debt about $50-150m. 2020 goal is $1b. Need DNA child to transfer Estate to!

Sounds like he's having trouble getting laid.

I just read it again - I think that he wants the strand of DNA to have a net worth of about $50-150 million, plus be able to pass a background test. I do have a couple of questions:

- how much of a background could a strand of DNA accumulate - or would it be a calculation of predictability? You know, "based on my calculations, this strand of DNA will fail high school and get his girlfriend pregnant. They'll live in a studio apartment over a laudromat in a seedy part of town and work at the tastee freeze..."

- how could the DNA have amassed a net worth of any amount?

- was it "pass background & DNA analysis by my Dr. Present?" Where can I get a doctor present? (all I got was some crappy stuff in comparison...)

- "Net worth without Debt about $50-150m." I'm really struggling with this one. According to about.com, the definition of net worth is:

"Your net worth is essentially a grand total of all your assets minus your liabilities."

So, if he wants a strand of DNA that has a net worth of $50 to $150 million without debt, wouldn't that be equivalent to a double negative? Therefore, he would like his strand of DNA to have a net worth of minus fifty million?

------------------------------------------------------

...can anyone tell that I'm snowed in with nothing to do?

Kevin says

The 111s FYs are 2010 and 2011, not 2009 and 2010. The budget for 2009 was already mostly set when they took office.
That said, the biggest portion of the increase in debt was the $1T lost in tax revenue during the recession, followed closely by the $900B increase in spending on medicare, social security, and Iraq/Afghanistan. TARP cost us a whopping $30B. ARRA was actually significant, at about $550B spent so far.
So, yeah, about $1T of the debt increase since January 1st 2009 has come from completely unavoidable changes related to the recession, nearly a trillion came from the bullshit expectation that military and health care spending only go up, half a trillion was spent trying to dig us out of the recession, and the rest was deficits that already existed in the budget going back to 2001.
But it’s fun to be outraged, isn’t it?
I’ll certainly agree with anyone who wants to complain that ARRA was an ineffective use of $555B so far. Economists seem mixed on the issue, but I’ll accept at face value that it was a pure waste of money. Without it we’d still have had over two and a half trillion in debt.
The good news is that deficits are just about guaranteed to shrink in 2011 and 2012. All signs point to an increase in tax receipts for 2011 (even with the tax cut extension), and with ARRA winding down 2012 may actually have a smaller deficit than 2009.
But maybe we would have been better off if congress had tried really hard to reduce the deficit during the recession. You know, kind of like they did under the hoover administration. Didn’t that work out really really well?

@KEVIN...you crack me up, you seem to always come back with common sense fact based arguments when arch-conservatives attempt to lay blame. Just stop it already. :)

Uhhh ohh --- Kevin vs Shrek.......Part XVIXXIII

shrekgrinch says

Clarence 13X says

KEVIN…you crack me up, you seem to always come back with common sense fact based arguments

I guess the New Year’s Party has started earlier for some people.

You must realize that you rarely cite non-partisan facts, right?....most of your citings seem to be aimed at defaming the Obama administration in any form possible. It almost reminds me of when Bush was in office, how Liberals would attack his policies regardless of their outcome.

Seeing that the recent housing and economic downturn were pretty much caused by BUSH Sr and CLINTONS gramm-leach-bliley act dont you think your anger should be directed towards them?