another site
With the growth of the shadow economy and the surveillance society, it is no surprise that so much is now transacted in the so-called “black-market.”
     |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HlTE6nlY5-s/story01.htm Tyler Durden
.
.
.
.
.
.
.
Virtual Beings in space
Connect with a virtual face
Floating through time
A virtual crime
Humanity now out of place
The Limerick King
.
.
The dope that’s addicted the nation
Is FED produced fiat inflation
A dangerous high
We think we can fly
It’s only a hallucination
The Limerick King
.
Support Your Local Artist
VISUAL COMBAT BANZAI7 FINE ART PRINTS
Inquiries: banzai7institute@gmail.com
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/z3QO9aEvTAs/story01.htm williambanzai7
Submitted by Michael Snyder of The Economic Collapse blog,
Shouldn't Internet companies actually "make a profit" at some point before being considered worth billions of dollars? A lot of investors laugh when they look back at the foolishness of the "Dotcom bubble" of the late 1990s, but the tech bubble that is inflating right in front of our eyes today is actually far worse.
For example, what would you say if I told you that a seven-year-old company that has a long history of not being profitable and that actually lost 64 million dollars last quarter is worth more than 13 billion dollars?
You would probably say that I was insane, but the company that I have just described is Twitter and Wall Street is going crazy for it right now. Please don't get me wrong – I actually love Twitter. On my Twitter account I have sent out thousands of "tweets". Twitter is a lot of fun, and it has had a huge impact on the entire planet. But is it worth 13 billion dollars? Of course not.
When it comes to the Internet, what is hot today will probably not be hot tomorrow.
Do you remember MySpace?
At one time, MySpace was considered to be the undisputed king of social media. But then something better came along (Facebook) and killed it.
It is important to keep in mind that Facebook did not even exist ten years ago. Yes, almost everybody is using it today, but will everybody still be using it a decade from now?
Maybe.
But the way that the financial markets are valuing these firms can only be justified if they are going to make absolutely massive profits for many decades to come.
Will Twitter eventually make a little bit of money?
Probably, as long as they get their act together.
In fact, Twitter should be making significant amounts of money right now if it was being run correctly.
But will Twitter ever make 13 billion dollars?
No, that simply is not going to happen. But that is what Wall Street says that Twitter is worth.
The utter foolishness that we are witnessing on Wall Street right now is so similar to what we saw back in the late 1990s. It is almost as if we have learned nothing from our past mistakes.
These days I keep having flashbacks of the Pets.com sock puppet. For those too young to remember, the following is a brief summary from Investopedia about what happened to Pets.com…
It's impossible to think of the first Internet era without thinking of the Pets.com sock puppet. He was everywhere and was nearly as well-known as the Geico gecko is today.
That familiarity, in part, persuaded many investors to lay down money in the company's February 2000 IPO (which was backed by Amazon.com). Pets.com raised $82.5 million – but nine months later it folded, due to major recurring losses. Part of the reason for that was aggressive advertising, but the company also lost money on virtually every item it sold. In the third quarter of 2000, Pets.com reported negative gross margins of $277,000. (The second quarter had seen a $1.7 million margin loss.) That same quarter (its last full quarter as an operating entity), the company lost $21.7 million on $9.4 million in revenue.
As for the puppet, he went on to shill for BarNone, which helps people with bad credit histories get car loans. He's still there today, front and center on that website.
Everyone loves to laugh at the poor little sock puppet, but the truth is that the tech bubble that is inflating right now is far worse than the Dotcom bubble of the late 1990s. The following are 14 facts about the current tech bubble that will blow your mind…
#1 In just a few days, the Twitter IPO is expected to raise close to 2 billion dollars even though Twitter actually lost 64.6 million dollars last quarter and has a long history of not being profitable.
#2 It is being projected that after the IPO Twitter could have a market valuation of more than 13 billion dollars.
#3 Twitter is not expected to make a profit until 2015 at the earliest.
#4 According to CNBC, Pinterest is currently valued at 3.8 billion dollars even though it has never earned a profit.
#5 Yahoo paid more than a billion dollars for Tumblr even though Tumblr's revenues are so small that Yahoo is not even required to report them on financial statements.
#6 Snapchat, an Internet service that allows people to send out messages that "self-destruct", is supposedly worth 4 billion dollars. But it actually has zero revenue coming in, and many believe that it is essentially worthless as a money making enterprise. For one extensive analysis by a tech blogger, please see this article.
#7 The stock of Rocket Fuel, an online advertising company, is trading at about 60 dollars a share and it has a market valuation of about 2 billion dollars even though it has never made a profit.
#8 The stock of local business review website Yelp is up 241 percent this year even though it has never earned a quarterly profit.
#9 Fab.com just raised 165 million dollars from investors even though it recently laid off 44o employees.
#10 LinkedIn stock has risen in price by 136 percent since the 2011 IPO, and it is now supposedly worth more than 18 billion doll
ars.
#11 The head of engineering at Twitter, Chris Fry, got a 10.3 million dollar pay package when he joined Twitter last year.
#12 Facebook's VP of engineering, Mike Schroepfer, earned 24.4 million dollars in 2011.
#13 Office rents in San Francisco (where many of these tech companies are based) are now 23 percent higher than they were at the peak of the real estate market in 2008.
#14 Facebook stock is up close to 140 percent over the past 12 months and the company is now worth more than 120 billion dollars.
And I am certainly not the only one that is concerned that we are repeating the mistakes of the late 1990s…
“When you look at valuations and look at the lack of earnings and revenue, it seems to me much like the dot-com bubble,” said Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc. who helps oversee $10.2 billion. “This market looks a little frothy and Twitter is the personification of a risky trade.”
In fact, as the Wall Street Journal recently noted, we have seen some of these tech stocks crash more than once during the Internet age…
"It's fascinating to me that today's mini-mania includes shares of Amazon, Netflix and Priceline that have previously peaked and crashed before—in some cases they've peaked and crashed twice before," says Darren Pollock, portfolio manager at Cheviot Value Management. "Stocks like these have again captured the imagination of speculators. We're skeptical that there is enough underlying intrinsic value to many of the highfliers to support today's prices."
So how long will it be until the current tech bubble implodes?
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jQt3bWlcxGY/story01.htm Tyler Durden
Is it possible the war on drugs is to blame for increased potency in marijuana and for how crack ravaged inner cities in the 1980s? Prof. Adam Martin explains how the drug war has altered incentives for both drug buyers and sellers, leading them to favor higher potency drugs. This is what economists call the potency effect.
As penalties for purchasing marijuana go up, for example, the cost difference between high- and low-potency marijuana decreases and people may think that if they’re risking a fine or jail time anyway they may as well buy the stronger drugs. Similarly, cartels and dealers have shifted their focus to high-value, high-potency drugs like cocaine as a result of the steeper fines and penalties for drug trafficking.
The potency effect is just one of many economic forces that make markets so complex. Public policies that alter the incentives people face – as the war on drugs does – can lead to unintended and even dangerous consequences.
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/zGXLb25H9Ns/story01.htm Tyler Durden
How fickle are the wealthy? Six weeks after having never been happier relative to the poor, and mere days after we showed their recent collapse in confidence, it seems the rich are no longer amused by Bernanke’s game. As The FT reports, for the second time in a week, an elite art auction has failed for all intent and purpose. One-quarter of the high-profile Impressionist and Modern paintings under the hammer at Christie’s went unsold on Tuesday night, signalling a bleak start for the autumn auction season in New York. The muted results came hot on the heels of disappointing sales on Monday evening for Christie’s, after the collection of the late art dealer Jan Krugier went under the hammer yet failed to dazzle. But how will the wealth effect trickle down?
Sales from the evening totalled $144.2m – excluding the 12 per cent buyer’s premium – a figure well below the low estimate of $188m initially made by the house.
Twelve out of the 46 artworks on offer went unsold.
…
Observers at the evening said the combination of sky-high valuations and mixed quality had weighed more heavily on the purchasing decisions of dealers and collectors than in previous stellar years.
Christie’s demurred, saying it had seen an encouraging flurry of activity surrounding lots priced at the midpoint range, as well as a sharp increase in interest from bidders in China and Southeast Asia.
The muted results came hot on the heels of disappointing sales on Monday evening for Christie’s, after the collection of the late art dealer Jan Krugier went under the hammer yet failed to dazzle.
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bRtZqN8JOEc/story01.htm Tyler Durden
Submitted by William L. Anderson via the Ludwig von Mises Institute,
When the U.S. economy dipped into an inflationary recession in 1969, Murray N. Rothbard in his introduction to the Second Edition of America’s Great Depression wrote that the Keynesian paradigm could not explain that phenomenon, but Austrian economics could explain what was happening. If Rothbard was correct — and he was — then one might believe Keynesian “economics” should have been deep-sixed permanently, given it could not explain what everyone saw happening.
Likewise, during the turbulent 1970s and 1980, the bouts of inflationary recessions grew worse and even die-hard political liberals such as ABC News’ economics correspondence, Dan Cordtz, bemoaned the fact that the “rules of economics” no longer seemed to apply. Those so-called rules were not laws of economics at all, but rather were dogma first given by John Maynard Keynes in his infamous work, The General Theory of Employment, Interest, and Money.
Joyous economists such as Arthur Laffer, who espoused a form of what he and others called “Supply Side Economics,” declared that Keynesian “economics” was discredited, perhaps for good. The advent of three more inflationary recessions, including the current downturn, should have resulted in the permanent death of Keynesianism, but, alas, it seems that the Keynesian paradigm is more influential than ever.
Exhibit A is President Barack Obama who in 2009 shortly after taking office declared that America would “spend its way out” of the current recession.
Exhibit B has been Obama’s recent announcement that he would nominate Janet Yellen to head the Federal Reserve System. Yellen, not surprisingly, is a True Believing Keynesian.
Exhibit C is the ongoing popularity of Paul Krugman, who has done more than any other person in the world to promote Keynesianism and to demand it be applied, chapter and verse, to the world economy.
Exhibit D has been the continuing Keynesian policies of the Federal Reserve and the central bank of Japan.
Academic economists who hold to the “market test” view of economics should be puzzled. Here is a paradigm that claims there cannot be an inflationary recession, yet all of the recessions that have wracked the U.S. economy in recent decades have been inflationary. Furthermore, despite the spending of more than a trillion dollars in the name of the Keynesian “stimulus,” the economy continues to founder, as unemployment rates remain stubbornly high and millions of workers either have abandoned their search for work or work in part-time jobs just to keep food on the table.
Given the fact that both the George W. Bush and Barack Obama administrations (not to mention Congress) have followed the Keynesian playbook, the sorry results should be enough to discredit Keynesianism, this time for good. Either a theory explains and predicts phenomena or it does not, and it should be clear that Keynesian theory has failed.
Alas, the academic “market test” really does not embrace the actual success or failure of a theory. It seems that many academic economists do not wish to be bothered by what happens in the real world. The vaunted “market test” is not about actual results, but is about what many economists are willing to accept as what they wish to be true and what politicians believe is good for their own electoral purposes.
The assumption that comes with attempting to apply Eugene Fama’s “Perfect Market Hypothesis” to academic economics presupposes that economists are interested only in what actually occurs. Furthermore, the belief presumes that when presented with a set of facts, academic economists will give the same analysis and not be influenced by partisan politics.
Given the interpretations that economists such as Krugman, Alan Blinder, and others have made in the aftermath of the disastrous first week of “ObamaCare,” not to mention their shilling for the Obama administration itself, the latter is clearly untrue. Furthermore, we see there are “gains from trade,” as politicians tend to flock to those economists who can offer the proverbial “quick fix” to whatever ails the economy, as being seen as doing something confers more political benefits than doing the right thing, which is to curb the power, scope, and influence of state power.
Even Krugman admits that the appearance of expertise has fueled the Keynesian bandwagon:
In the 1930s you had a catastrophe, and if you were a public official or even just a layman looking for guidance and understanding, what did you get from institutionalists? Caricaturing, but only slightly, you got long, elliptical explanations that it all had deep historical roots and clearly there was no quick fix. Meanwhile, along came the Keynesians, who were model-oriented, and who basically said “Push this button” — increase G, and all will be well. And the experience of the wartime boom seemed to demonstrate that demand-side expansion did indeed work the way the Keynesians said it did.
In the past five years politicians have been pushing “button G” and all is not well. Yet, in this age of unrestrained government, the Keynesian promise of prosperity springing from massive government spending is attractive to politicians, economists, and public intellectuals. That it only makes things worse is irrelevant and beside the point. If the economy falters, politicians and academic economists blame capitalism, not Keynesianism, and they get away with it.
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/P6ExI6PivFc/story01.htm Tyler Durden
Submitted by William L. Anderson via the Ludwig von Mises Institute,
When the U.S. economy dipped into an inflationary recession in 1969, Murray N. Rothbard in his introduction to the Second Edition of America’s Great Depression wrote that the Keynesian paradigm could not explain that phenomenon, but Austrian economics could explain what was happening. If Rothbard was correct — and he was — then one might believe Keynesian “economics” should have been deep-sixed permanently, given it could not explain what everyone saw happening.
Likewise, during the turbulent 1970s and 1980, the bouts of inflationary recessions grew worse and even die-hard political liberals such as ABC News’ economics correspondence, Dan Cordtz, bemoaned the fact that the “rules of economics” no longer seemed to apply. Those so-called rules were not laws of economics at all, but rather were dogma first given by John Maynard Keynes in his infamous work, The General Theory of Employment, Interest, and Money.
Joyous economists such as Arthur Laffer, who espoused a form of what he and others called “Supply Side Economics,” declared that Keynesian “economics” was discredited, perhaps for good. The advent of three more inflationary recessions, including the current downturn, should have resulted in the permanent death of Keynesianism, but, alas, it seems that the Keynesian paradigm is more influential than ever.
Exhibit A is President Barack Obama who in 2009 shortly after taking office declared that America would “spend its way out” of the current recession.
Exhibit B has been Obama’s recent announcement that he would nominate Janet Yellen to head the Federal Reserve System. Yellen, not surprisingly, is a True Believing Keynesian.
Exhibit C is the ongoing popularity of Paul Krugman, who has done more than any other person in the world to promote Keynesianism and to demand it be applied, chapter and verse, to the world economy.
Exhibit D has been the continuing Keynesian policies of the Federal Reserve and the central bank of Japan.
Academic economists who hold to the “market test” view of economics should be puzzled. Here is a paradigm that claims there cannot be an inflationary recession, yet all of the recessions that have wracked the U.S. economy in recent decades have been inflationary. Furthermore, despite the spending of more than a trillion dollars in the name of the Keynesian “stimulus,” the economy continues to founder, as unemployment rates remain stubbornly high and millions of workers either have abandoned their search for work or work in part-time jobs just to keep food on the table.
Given the fact that both the George W. Bush and Barack Obama administrations (not to mention Congress) have followed the Keynesian playbook, the sorry results should be enough to discredit Keynesianism, this time for good. Either a theory explains and predicts phenomena or it does not, and it should be clear that Keynesian theory has failed.
Alas, the academic “market test” really does not embrace the actual success or failure of a theory. It seems that many academic economists do not wish to be bothered by what happens in the real world. The vaunted “market test” is not about actual results, but is about what many economists are willing to accept as what they wish to be true and what politicians believe is good for their own electoral purposes.
The assumption that comes with attempting to apply Eugene Fama’s “Perfect Market Hypothesis” to academic economics presupposes that economists are interested only in what actually occurs. Furthermore, the belief presumes that when presented with a set of facts, academic economists will give the same analysis and not be influenced by partisan politics.
Given the interpretations that economists such as Krugman, Alan Blinder, and others have made in the aftermath of the disastrous first week of “ObamaCare,” not to mention their shilling for the Obama administration itself, the latter is clearly untrue. Furthermore, we see there are “gains from trade,” as politicians tend to flock to those economists who can offer the proverbial “quick fix” to whatever ails the economy, as being seen as doing something confers more political benefits than doing the right thing, which is to curb the power, scope, and influence of state power.
Even Krugman admits that the appearance of expertise has fueled the Keynesian bandwagon:
In the 1930s you had a catastrophe, and if you were a public official or even just a layman looking for guidance and understanding, what did you get from institutionalists? Caricaturing, but only slightly, you got long, elliptical explanations that it all had deep historical roots and clearly there was no quick fix. Meanwhile, along came the Keynesians, who were model-oriented, and who basically said “Push this button” — increase G, and all will be well. And the experience of the wartime boom seemed to demonstrate that demand-side expansion did indeed work the way the Keynesians said it did.
In the past five years politicians have been pushing “button G” and all is not well. Yet, in this age of unrestrained government, the Keynesian promise of prosperity springing from massive government spending is attractive to politicians, economists, and public intellectuals. That it only makes things worse is irrelevant and beside the point. If the economy falters, politicians and academic economists blame capitalism, not Keynesianism, and they get away with it.
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/P6ExI6PivFc/story01.htm Tyler Durden
And they are off as Twitter prices just shy of the whisper $27 upper end of the IPO range, raising $1.82 billion in equity proceeds before the greenshoe is exercised.
All we have left now is the debacle of the opening of this to the public at tomorrow’s NYSE open… For now Topeka’s Victor Anthony tops the pile of analyst with a $54 PT…
Here are the financials…
And here are where the analysts see it…
Of course – now that TWTR is done, we move to the next one…
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/pe0IxfzxVv8/story01.htm Tyler Durden
Bitcoin, an online-only currency scarcely four years old, is breaking out to new highs this week and now sports a total value of $2.8 billion. Just a few months ago, it looked like this economic experiment as the world’s first decentralized technology-based form of money would crash and burn. Since then, ConvergEx’s Nick Colas points out that the U.S. government has shut down a large drug website which accepted bitcoins and promised further scrutiny of its uses; and omputer science experts have warned that bitcoin is neither especially private – one of its notional values – or especially well constructed. The market doesn’t seem to care, with incremental demand from U.S. citizens (through Second Market) and Chinese nationals leading the path higher. Could bitcoin still fail? Sure. But, as Colas notes, its success to date speaks to how much the world is changing… Technology – properly packaged – can engender enough trust to develop a new asset class.
Bitcoin will eventually have to develop a lot more infrastructure to be a useful global currency, to be sure. But there’s close to $3 billion of real money to help back that transition.
Via ConvergEx’s Nick Colas,
Bitcoin – The Lazarus Currency
Every great religion, or company, or country, or rock band has a dramatic ‘Creation myth’ – the story of its birth. The Judeo-Christian tradition has the story of God creating the world in seven days. Google has the grad-student thesis story. American culture is still informed by the Revolutionary War. And where would the Rolling Stones be if Keith hadn’t chatted up Mick on the train, just because he holding some new R&B albums from the States?
Bitcoin, the online-only stateless currency, has its own creation myth and it is purpose-made to appeal to exactly the kind of people who would find value in it. The highlights are:
The original design for bitcoin comes from a 2008 paper published by a person named Satoshi Nakamoto. Who, by the by, doesn’t actually exist.
Bitcoin’s basic architecture is decentralized – no one is “In control.” People with fast computers and some coding skills compete to solve a puzzle created by the algorithm described in Satoshi’s paper. Simultaneously, they track all the transactions in the bitcoin universe – people and businesses exchanging value for goods and services. Every ten minutes, on average, some lucky coder – or group of coders – solves the puzzle, gets a few new bitcoins, and validates the transaction list. Then the whole thing resets and everyone gets to work on the next puzzle.
In principle, this process leaves everyone exchanging or “mining” (cracking the code gets you 25 bitcoins currently) anonymously in the system. Everything in bitcoin is identified with a nearly-impossible-to-crack coding of letters and numbers. No names, phone numbers, or addresses needed.
Now, who do you think would find this creation story appealing? A few candidates:
Tech savvy people, who by their nature and high-functioning professional skills tend to have a few shekels lying around? Yep – classic early adopters.
Then there might be independence-minded older white males in the U.S., ticked off by the Federal Reserve and government in general. Yes, they like the story as well.
And then there are the criminals – drug dealers and so forth – who might not know a creation myth from crystal meth, but appreciate the potential for secrecy.
Offshore millionaires from essentially anywhere in the world, looking for classic diversification and a liquid investment. All you need to access your bitcoins is that long alphanumeric key and a local bank account which links to a ‘Wallet’ – an online repository to hold the currency. Deposit money in China, write down the key, fly to Monaco and go into an Internet café. Easy-peasy.
The basic appeal of this “Genesis” creation story lit a fire under bitcoin, starting at the beginning of 2012 at around $5 and ending up in a spectacular bubble top at $240 in April 2013. The cause of that peak – overwhelming tulip-bulbish demand for bitcoin – was its undoing. Exchanges where people went to trade dollars or euros for bitcoin couldn’t keep up with the volume. Accounts froze or moved very slowly, and confidence in the currency dropped, along with the price. Just a few days after the $240 high, bitcoin was trading for less than $60.
Creation myths are great anchors for a belief system, but there have to be other parts to the narrative; bitcoin is safely into its own “Exodus” – the second book of the Old Testament. That fall from the highs was just the beginning of its problems.
The U.S. government made it clear that they expect all currencies and their users to adhere to anti-money-laundering laws, including know-your-customer statutes which eliminate the notional secrecy of bitcoin.
The Feds also went after the druggies, shutting down Silk Road – a widely known website for the purchase of illicit substances.
In an odd twist of fate, the U.S. government now owns about 174,000 bitcoins, with a current value of $42 million thanks to the Silk Road bust and other actions.
If bitcoin were a company, the class action lawyers would be circling, fighting for air with the bankruptcy experts. There is simply no way so much legal action, let alone several ongoing problems with security in the system, would have left Satoshi Nakamoto’s creation as anything but roadkill on the world’s economic superhighway.
But here’s the beauty part: bitcoin is making a new high this week, breaking through the spiky bubble levels of April in a pretty controlled and orderly manner. What gives? A few points:
The biggest bitcoin exchange is now in China, displacing Japanese, American and European sources of demand. That enterprise is called BTC China, and its CEO Bobby Lee hails from Yahoo! and Walmart China. Oh, and he graduated from Stanford with a degree in Computer Science. In short, an apparently pretty clever fellow.
Our sources in the bitcoin community also agree that Second Market, the New York based business best known for trading pre-IPO company stock, has become a major player in demand for bitcoin. Earlier this year they started the Bitcoin Investment Trust, an open ended product to buy and hold bitcoins. There’s no way to know how much Second Market has purchased on behalf of its clients, but it must be a popular offering – the banner ad on their site for the trust occupied the top third of their front page.
It’s not all been roses for bitcoin, even in this recent run-up. Back in September computer science researchers from UC – San Diego showed that it was actually fairly easy to track individual transactions in the bitcoin transaction ledger.
Just this week, academics at Cornell proposed that bitcoin could eventually be coopted by a handful of “Miners” who could hijack the system.
So why is bitcoin seemingly minted on Teflon? Limited supply, for one reason. There will never be more than 21 million bitcoins, and there are only 12.0 million currently. In the 4-ish minutes it has taken you to read this far, the most new bitcoins that might have been issued is 25, or $6,250. In the same timeframe, the Federal Reserve has pushed another $7.8 million into the financial system with Quantitative Easing. And then there is the undeniable creation-story appeal – a technology based sort-of-secret store of value. If James Bond, Sergey Brin and Paul Volcker all got together and designed their ideal currency, it might look a lot like bitcoin.
At the same time, the story isn’t over yet. If the “Exodus” analogy is to fit at all, then bitcoin is still in the wilderness. It has clearly withstood many challenges, and there are probably more to come. The end of the journey actually has little to do with how much bitcoin is worth, but what it might be good for.
That’s the piece some investors – many made quite wealthy by the incredible increase in bitcoin’s value – are working on now. A few final thoughts here:
Bitcoin is a more efficient method of transferring money than the current global banking system. The transaction ledger is essentially kept for free by the mining community. Want to send $100 to someone in England and have them redeem British pounds? It will likely cost you $5 or more. A bitcoin transfer is essentially free.
Merchants can accept bitcoin payments without paying the typical credit card fees of 1-5%. That’s one reason for the growing acceptance of bitcoin in China – online merchants are starting to accept this online currency.
Bitcoin could become a country’s ‘Second currency’. One of the more interesting conversations with one of our industry sources is the thought that one or more sovereign nations would entertain making bitcoin a parallel currency to their existing monetary system. Keep in mind that our source owns a lot of bitcoin personally…. But it is an intriguing thought nonetheless.
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jSxlmZS1wrU/story01.htm Tyler Durden
By EconMatters
China-US Wealth Transfer
There are usually unintended consequences from paradigm shifts, and the outsourcing paradigm of the last 25 years has been no exception. Where do you think all that wealth responsible for building all those cities in China came from? The United States, European and other developed countries of the world, think of it as a vast wealth transfer from the richer nations to the poorer nations mainly on the backs of the ‘middle of the bell curve’ in terms of jobs.
Outsourcing Includes Management Positions
It isn`t just the lower wage manufacturing jobs that are lost in such a major paradigm shift of the last 25 years, it is all the jobs that support these manufacturing jobs, from administrative, support, and white-collar management jobs. Then add all the supply chain industry jobs that feed into the local manufacturing supply chain for the given goods and services and this is a monumental exporting of good jobs to foreign competitors. It should be reemphasized that these are not just the low paying manufacturing jobs, but all the college degreed mid and upper level management jobs as well being outsourced.
1950s Glory Days
It used to be the case that if you worked hard and got an education that you were guaranteed a job in this country in the 1950s, but due to the major transfer of jobs overseas, this is no longer the case. Furthermore, this structural disconnect in the jobs market was partly masked by the booming financial sector of Wall Street and the Housing Mortgage underwriting sector jobs, but once the tide went out with the financial crisis America found out that these jobs are no longer needed now that the Mortgage Underwriting bubble has burst – those jobs are never coming back to the United States.
Structural Jobs Disconnect – Masked
The Technology sector has helped mitigate only a slight fraction of these lost manufacturing and management exported jobs, and now that the financial markets have been losing jobs due to consolidation, improved technology requiring less people, and bubbles bursting there are just not enough good paying jobs in the United States for all the college educated working professionals who want to be gainfully employed.
25 Years of Outsourcing – Unintended Costs
The US Companies, Politicians, Tax system, and Legislation have sold out the American worker from the lower middle class all the way upwards to the upper middle class in this country with 25 years of an outsourcing good jobs policy.
There just aren`t enough jobs for the citizens of the United States, and with colleges being big business these numbers are only going to get worse until there is a major correction in the bubble that is college education. And you guessed it the college education bubble is largely the result of governmental subsidies driving up tuition prices and making the business of college highly profitable and well beyond market pricing.
Add to this all the manufacturing workers needing to go to college due to the evaporation of these good paying middle class jobs being outsourced, and you have more kids going to college than the Job Market can support – thus exacerbating the education bubble in this country.
Until the education bubble collapses, and there is a major consolidation in the number of colleges, and degreed individuals competing for the same jobs in the market this dynamic of structural disconnect is only going to get worse.
Manufacturing Renaissance?
The other alternative is to bring back a large portion of the exported manufacturing industries to the United States but if the last 25 years is our guide, and the perpetual ineptitude of the leaders in this country persists, this seems like a real longshot.
Student Loan Debt
We see this played out in the student loan debt issue, all these American citizens take out loans to become educated in the hopes of attaining a decent paying job, and when they graduate they find that the jobs related to their education are just not available in the economy. This problem is acerbated by the American ideal of sending one`s kids to college as a core value.
In the future American students are really going to have to conduct a thoughtful analysis whether they should go to college at all? It is starting to look like there are only so many good jobs to go around in the modern economy, and that America is going to have a large portion of their citizenry on social welfare programs just due to the lack of jobs relative to available candidates in the economy as a result of poor structural planning of our economy.
The Bell Curve
We are not just talking about lazy people or those unwilling to work but the structural effects might necessitate large portions of the population being severely under-employed relative to their education.
Those at the top of the food chain having good paying jobs, the lowest rungs being largely housed in prisons and on welfare, and the main difference from the past is large segments of the middle and upper middle class being out of the job market and largely supported by employed family members or social welfare programs for the bulk of their professional lifespan.
It will really get bad when the military is finally forced to cut back jobs and downsize due to constrained budgets in 15 years when the interest on the National Debt far exceeds incoming tax revenues.
The leadership of the United States over the last 25 years has really screwed up this once great country!
© EconMatters All Rights Reserved | Facebook | Twitter | Post Alert | Kindle
| |
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/qoQlGz-34fY/story01.htm EconMatters