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mikef
03-05-2012, 04:59 PM
Somewhere along the line the..... The social construct has been shattered..... There was a time, Corporate America did look out a little bit for their employees, and the citizens of this country..... Those days, it seems are in the past..... You could look it up in old textbooks..... Once upon a time the rich earned income by investing in economic growth..... Corporate profits were reinvested in plant, equipment and labor..... all in an effort to raise productivity...... Now they just slash payroll and outsource jobs..... All at the alter of return on investment, and shareholder value.

Wal Mart is the best at what they do..... There is no doubt..... But best doesn't always mean best for all.

jimboe7373
03-05-2012, 09:01 PM
trying to avoid the political and stick with the financial ...If there is a 'moral' aspect to this it is financial 'moral hazard'. This basically boils down to lower income Americans being granted credit cards and mortgages - to then maxx out those credit cards and fall behind on mortgage payments - and to then either 'settle' or file for bankruptcy and thus avoid ever having to actually pay the full amount of these financial commitments. Nice try Mel, most of those lower-income Americans weren't "granted" credit cards and mortgages, in most cases they were target-marketed and sold those items by unscrupulous finance people who were seeking to make tons of short-term profit by using people not financially savvy enough along with a system they knew they could exploit ie. packaging bunches of bad loans and selling them off, fraudulently fudging numbers and data along the way.


Another manifestation of 'moral hazard' is the available amount of SNAP, unemployment, social security etc. ... which now boils down to X dollars being provided by the gov't to some 25 plus percent of American households as their primary means of support. With the US gov't being 'broke', they are not likely to increase the dollar amount of these payments. As such, the recipients have a strong motivation to find the lowest possible price for food, clothing, household items etc. ... which leads them straight to WalMart !!! That's one way of looking at it, the other is that the practices of the above named unscrupulous finance people (and banks) caused a major financial downturn which in turn created many people who then had no choice but to search for the lowest possible prices for various goods. In addition to that, there is also the case that Wal-Mart by forcing so many mom and pop and local businesses to close their doors and fire their employees, created a large number of people who also had no choice but to search for the lowest possible price. This was further extended by Wal-Marts practice of cutting their vendors prices to bone, thereby depriving their vendors of extra revenue that likely leads to the vendor having to fire people to keep costs down as well as the vendor's company having less profit to distribute thereby creating even more people who must....."search for the lowest possible price".

jimboe7373
03-05-2012, 09:03 PM
Somewhere along the line the..... The social construct has been shattered..... There was a time, Corporate America did look out a little bit for their employees, and the citizens of this country..... Those days, it seems are in the past..... You could look it up in old textbooks..... Once upon a time the rich earned income by investing in economic growth..... Corporate profits were reinvested in plant, equipment and labor..... all in an effort to raise productivity...... Now they just slash payroll and outsource jobs..... All at the alter of return on investment, and shareholder value.

Wal Mart is the best at what they do..... There is no doubt..... But best doesn't always mean best for all. Very well put Mike.

eagle2
03-05-2012, 11:40 PM
trying to avoid the political and stick with the financial ...

If there is a 'moral' aspect to this it is financial 'moral hazard'. This basically boils down to lower income Americans being granted credit cards and mortgages - to then maxx out those credit cards and fall behind on mortgage payments - and to then either 'settle' or file for bankruptcy and thus avoid ever having to actually pay the full amount of these financial commitments.


What is your problem that you're constantly attacking poor people? Just because someone is "lower income" doesn't automatically mean they're going to maxx out their credit cards and fall behind on mortgage payments. Also, just because someone is upper income doesn't mean they're not going to max out on their credit cards or fall behind on their mortgage payments.

eagle2
03-05-2012, 11:42 PM
There are plenty of wealthy people that either don't or can't honor their financial commitments.

http://realestate.aol.com/blog/2012/02/23/millionaire-foreclosures-on-the-rise/

Melonie
03-06-2012, 04:09 AM
^^^ absolutely true that many wealthy Americans also choose to take advantage of this 'moral hazard' situation. I have posted entire past threads about 'strategic default' ... which essentially allows wealthy Americans to 'cut their losses' in regard to declining real estate values. This eventual result, combined with months or years worth of 'mortgage payment free' residency prior to eviction, arguably provides these wealthy Americans with yet more disposable income on a temporary basis at least. However, these wealthy Americans are apparently choosing to spend that extra money at their local Porsche dealer, or at Saks 5th Avenue, as opposed to WalMart. It is the non-wealthy, or those with lower incomes, who are attracted to the 'lower quality but lowest cost' attributes of WalMart products.

And, technically speaking, it is those with lower incomes who have the least to lose if they default on their financial commitments. Odds are that their lower income level will relegate them to a 'subprime' credit rating whether they have a history of default or not.

It's probably also helpful to raise another aspect ... that many higher earning Americans who DO have access to additional 'cheap' credit no longer care much about the actual purchase price. Instead they care about the monthly payment amount. Those lower earning Americans who no longer have access to 'cheap' credit are forced to care about purchase price. And that either pushes them to the lowest price alternative of WalMart, or to their local RentACenter.

eagle2
09-13-2012, 11:55 PM
Well, if the FED goes for broke on QE3, printing up new US dollar bills at warp speed, it's not inconceivable that future $40 an hour union auto wages won't be too far ahead of a future $30 US minimum wage. Of course, this would also mean that a gallon of gasoline would cost $20, a loaf of bread would cost $8, and an ounce of gold would cost $10,000, and a bargain basement new car would cost $50,000 !

Well, the Fed announced QE3. Let's see how accurate Melonie's above predictions are.

Melonie
09-14-2012, 01:55 PM
^^^ to provide prospective, the $40 billion per month = 1/2 trillion per year. While the actual total is unknown, M2 domestic money supply is something on the order of 10 trillion dollars. So the implied annual 'price inflation' that would accompany the FED's money supply expansion would be 5%. Granted that actual retail prices of some items will increase significantly more than 5% ( i.e. food, energy, precious metals etc. ). Also granted that actual retail prices for other items may actually decline ( non-essential middle class consumer goods ). This is because there are many, MANY domestic 'secondary' mechanisms that will be triggered by QE3 ... from the 'rich' shifting their US dollars into less 'volatile' real assets, to the middle class having less discretionary dollars available to spend on non-essential consumer goods after they pay for higher priced necessities, to US businesses 'blowing out' unsold inventory on their way to higher 'input' cost induced bankruptcies.

However, foreign 'secondary' mechanisms are more worrisome than the domestic ones. China, Japan, Saudi etc. are estimated to be sitting on at least 5 trillion dollars worth of US dollar reserves. If they choose to 'dump' 1/2 trillion of their US dollar holdings, the above 5% US annual inflation trajectory suddenly becomes 10%. If they choose to dump more than that, within a short time frame, 'welcome to Weimar'. Personally speaking, I can't see a major selloff in the cards because a vastly devalued US dollar would make imported Chinese and Japanese goods far more expensive for US customers thus 'killing' sales / profits / jobs for Chinese and Japanese exporters.

eagle2
09-16-2012, 01:55 PM
You're just making stuff up and pulling numbers out of thin air. The stuff you make up is so far removed from reality, it's unbelievable. There's no comparison between the US and Weimar. There is no conceivable action that could bring the US anywhere near that.

Melonie
09-16-2012, 04:26 PM
Actually, I saw an updated figure for M2 today which was $10.066 trillion dollars. Sorry that my estimate was off by 1% ! The 40 billion per month = ~ 1/2 trillion annual figure for QE3 money printing was the number officially released by the FED. Granted that the exact amounts of China / Japan / Saudi US dollar trade surplus dollars a.k.a. foreign exchange US dollar reserves are not published ... but speculation has China alone in excess of 3 trillion.

As to similarities between Weimar and the US dollar today, as stated above I don't see this as a realistic possibility either. Instead, ongoing price inflation in the 5%-10% range is what is 'forecast' by the FED's announced money printing plus expected reaction by foreign holders of US dollars. But there ARE some possible scenarios which do bear some resemblance to Weimar, most notably the rest of the world's increasing independence from / reluctance to use US dollars to settle their foreign trade. Along those lines, since September 6th both China and Russia have been transacting oil without the 'benefit' of US dollars ... which of course is in addition to Iran.

Weimar arguably developed because the rest of the world became reluctant to accept devalued DeutscheMarks ... and the rest of the world did not NEED to conduct transactions in DeutscheMarks ... thus external 'demand' for DeutscheMarks collapsed, and Weimar's domestic economy quickly became awash in repatriated DeutscheMarks. If the US dollar's world reserve currency status collapses, i.e. if the rest of the world suddenly becomes able to buy and sell oil, food and other essential commodities using Euros or Rubles or Renmimbi, then some element of a Weimar scenario could definitely be a possibility.

eagle2
01-01-2013, 07:59 PM
Well, if the FED goes for broke on QE3, printing up new US dollar bills at warp speed, it's not inconceivable that future $40 an hour union auto wages won't be too far ahead of a future $30 US minimum wage. Of course, this would also mean that a gallon of gasoline would cost $20, a loaf of bread would cost $8, and an ounce of gold would cost $10,000, and a bargain basement new car would cost $50,000 !

The Fed did "go for broke on QE3" and your predictions are so far off, it's just unbelievable. Wages are about the same as before QE3. The price of gas has gone down. An ounce of gold is below $1,700.

Melonie
01-02-2013, 04:20 AM
Wages are about the same as before QE3

yes, but the same number of US dollars earned don't buy as much as they previously did. Admittedly, US oil / gasoline prices have declined from historical peaks. But US natural gas / electricity prices have increased, as has the price of food and other 'necessities'.

And the comment you snipped was talking about longer term cumulative effects of QE ... for which 2013 should provide additional 'evidence'.