Why China Couldn’t Care Less About Its Stock Market

Following the latest liquidity injections by the PBOC (set to make 2014 the biggest credit creation year since Lehman), countless bailouts of insolvent companies by Beijing and local governments despite promises there would be no bailouts, and what some have dubbed is an actual Chinese QE, all making it quite clear that China was clearly not serious when it threatened to burst the housing bubble (it hoped it could do a “controlled landing”; it failed which means full steam ahead onto the inevitable NPL collapse), Chinese stocks have clearly responded by jumping higher with the Shanghai Composite spiking to its highest in 7 months.

This in turn has brought the permabullish Chinese penguins out of hiding, who, having been wrong on the Shanghai Composite for 6 years, now see a sudden resurgence in the Chinese stock market. Their thinking is predictable: like the US stock market is to the Fed’s “wealth effect”, so China’s would be to the PBOC, right?

Wrong.

The reason: while in the US the bulk of America’s $67 trillion in household wealth is in financial assets, read the S&P 500, with only 28% of wealth invested in real estate (according to the latest Flow of Funds reports), in China the wealth distribution is a mirror image, with a negligible amount of wealth invested in stocks and the bulk of household wealth invested in real estate. By bulk we mean a whopping 75%!

From Xinhua:

About one percent of Chinese households own one-third of the nation’s wealth, raising concerns about income inequality in the world’s most populous country, according to a study by Peking University.

 

Chinese households on average had a net worth of 439,000 yuan (about 71,000 U.S. dollars) in 2012, up 17 percent from the 2010 level, the university’s Institute of Social Science Survey said Friday in its latest report on China’s livelihood development.

 

However, income inequality rose rapidly during the period, the report said, as the top one percent of Chinese households held more than one-third of the nation’s wealth, while 25 percent of households at the bottom owned only 10 percent of the country’s property value.

 

The researchers based their main analysis on 2012 data from the China Family Panel Studies, a large-scale survey project conducted by the institute.

 

The report showed about 74.7 percent of Chinese household wealth came from owning real estate.

Which confirms what we have been saying for years namely that “to China housing is like the stock market to the US: both mission-critical bubbles designed to give a sense of comfort and boost the “wealth effect”.”

The allocation of household wealth to real estate is shown in the chart below, but the message is clear: when it comes to chasing China’s latest and greatest bubble reflation, focus on real estate; nobody cares about Chinese stocks.




via Zero Hedge http://ift.tt/1nYK1Pe Tyler Durden

Cop Shoots Dog on Friday, Gets Fired on Monday, No Appeal Available

story not a website experimentOn Friday, an unidentified police officer
in Hometown, a suburb of Chicago, shot and killed a 14-month-old
family dog in front of the dog’s owner and the owner’s 6-year-old
daughter.
ABC 7 has the story
:

[Owner Nicole] Echlin says [her dog] Apollo had run out of the
front door. Hometown police had been alerted, and encountered the
dog as he returned to the front yard. Echlin says she tried coaxing
Apollo back in the house, but he turned and bared his teeth at one
of the officers. According to police, that’s when the officer
withdrew his weapon and fired one shot, striking the dog.

Echlin says she questioned the use of deadly force- especially
in front of her daughter- but she says the officer showed no
remorse.

“He just said it had to be done. He walked up to me, told me
that and walked away,” said Echlin.

Killing a dog for doing what dogs do most certainly didn’t have
to be done. Firing Echin did, and Hometown’s police chief, Charles
Forsyth, did just that on Monday, calling the incident and
aftermath an “emotional rollercoaster” for the family, the
community, and the police department. A Justice for Apollo Facebook
page garnered more than 10,000 likes since being created on
Friday.

ABC7 identified the police officer only as a 15-year-veteran of
the force. Forsyth told me this morning he would not be releasing
the name of the fired officer but also said there is no built-in
arbitration or appeals process for the now ex-cop to turn to. He
suggested the officer, like any employee fired by his employer,
could launch a lawsuit if he wanted, but confirmed that the officer
was no longer with the department and would not be drawing a
pension.

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Study: Rise in 'Overworked' Men Helps Explain Gender Wage Gap

A recent study looks at
the gap between men and women’s earnings in America
. This
“gender wage gap” is the cause of ample animosity between those who
believe pay differences stem from sexism and those who believe the
gap can be explained by differences in men and women’s work
choices—a false dichotomy if their ever was one (I’ll take
a-little-of-column-A, a little-of-column-B here, please). Those who
believe the gap stems from life choices tend to focus on women
taking time off for childrearing and going into less lucrative
fields. According to researchers from Indiana and Cornell
Universities, the wage gap’s persistence can also be attributed to
a greater proportion of men working 50 or more hours per
week. 

“Despite rapid changes in women’s educational attainment and
continuous labor force experience, convergence in the gender gap in
wages slowed in the 1990s and stalled in the 2000s,” explain
researchers Youngjoo Chaa and Kim A. Weedenb in their paper’s abstract.
Looking at data from 1979 to 2000, Chaa and Weedenb found that
while hourly wages overall stagnated during the period, the hourly
wage of workers who put in 50 or more hours per week—a practice
they describe as “overwork”—actually went up. “Because a greater
proportion of men engage in overwork, these changes raised men’s
wages relative to women’s,” they write.

It’s not merely that more men than women were working
50-hour-plus workweeks but that hourly workers in this category are
the only ones who saw their wages rise in the last decades of the
20th century. Kind of a double-whammy of wage gap exacerbation, if
you will. Taken together, the increasing prevalence of “overworked”
employees, the fact that more men than women fall in this category,
and “the rising hourly wage returns to overwork” have
magnified the gender wage gap by an estimated 10 percent according
to the paper, published in the American Sociological
Review

“This overwork effect was sufficiently large to offset the
wage-equalizing effects of the narrowing gender gap in educational
attainment and other forms of human capital,” the researchers note.
The effect was strongest in professional and managerial jobs,
“where long work hours are especially common and the norm of
overwork is deeply embedded in organizational practices and
occupational cultures.”

With child care and shuffling still falling much more heavily on
women, it’s no surprise that less female employees are able to put
in 50 or more working hours weekly. And I think this illustrates
nicely why the sexism vs choices dichotomy is wrong.
Clearly no one is discriminating against women by paying
them less for working less hours—there is no central sexist actor
here. But there is a subtly sexist view permeating our
culture that says caregiving is a gendered job.

Surely many women have zero qualms about being the primary
parent; surely many others feel somewhat slighted by the situation.
It’s impossible to separate gendered choices from gendered
disadvantages. 

With this in mind, it makes no sense for the government to try
and rectify the wage gap administratively because there is
literally no way to account for all the contributing variables—such
as this overwork one. How could anyone have predicted that hourly
wages for “overworkers” would rise while general wages stagnated?
How can bureaucrats possibly correct for cultural expectations?
Focusing on the wage gap per se will go nowhere near as
far toward closing it as focusing on the culture that creates it
can. 

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Study: Rise in ‘Overworked’ Men Helps Explain Gender Wage Gap

A recent study looks at
the gap between men and women’s earnings in America
. This
“gender wage gap” is the cause of ample animosity between those who
believe pay differences stem from sexism and those who believe the
gap can be explained by differences in men and women’s work
choices—a false dichotomy if their ever was one (I’ll take
a-little-of-column-A, a little-of-column-B here, please). Those who
believe the gap stems from life choices tend to focus on women
taking time off for childrearing and going into less lucrative
fields. According to researchers from Indiana and Cornell
Universities, the wage gap’s persistence can also be attributed to
a greater proportion of men working 50 or more hours per
week. 

“Despite rapid changes in women’s educational attainment and
continuous labor force experience, convergence in the gender gap in
wages slowed in the 1990s and stalled in the 2000s,” explain
researchers Youngjoo Chaa and Kim A. Weedenb in their paper’s abstract.
Looking at data from 1979 to 2000, Chaa and Weedenb found that
while hourly wages overall stagnated during the period, the hourly
wage of workers who put in 50 or more hours per week—a practice
they describe as “overwork”—actually went up. “Because a greater
proportion of men engage in overwork, these changes raised men’s
wages relative to women’s,” they write.

It’s not merely that more men than women were working
50-hour-plus workweeks but that hourly workers in this category are
the only ones who saw their wages rise in the last decades of the
20th century. Kind of a double-whammy of wage gap exacerbation, if
you will. Taken together, the increasing prevalence of “overworked”
employees, the fact that more men than women fall in this category,
and “the rising hourly wage returns to overwork” have
magnified the gender wage gap by an estimated 10 percent according
to the paper, published in the American Sociological
Review

“This overwork effect was sufficiently large to offset the
wage-equalizing effects of the narrowing gender gap in educational
attainment and other forms of human capital,” the researchers note.
The effect was strongest in professional and managerial jobs,
“where long work hours are especially common and the norm of
overwork is deeply embedded in organizational practices and
occupational cultures.”

With child care and shuffling still falling much more heavily on
women, it’s no surprise that less female employees are able to put
in 50 or more working hours weekly. And I think this illustrates
nicely why the sexism vs choices dichotomy is wrong.
Clearly no one is discriminating against women by paying
them less for working less hours—there is no central sexist actor
here. But there is a subtly sexist view permeating our
culture that says caregiving is a gendered job.

Surely many women have zero qualms about being the primary
parent; surely many others feel somewhat slighted by the situation.
It’s impossible to separate gendered choices from gendered
disadvantages. 

With this in mind, it makes no sense for the government to try
and rectify the wage gap administratively because there is
literally no way to account for all the contributing variables—such
as this overwork one. How could anyone have predicted that hourly
wages for “overworkers” would rise while general wages stagnated?
How can bureaucrats possibly correct for cultural expectations?
Focusing on the wage gap per se will go nowhere near as
far toward closing it as focusing on the culture that creates it
can. 

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Gene Healy Says Conservatives Should Resurrect Reagan's Foreign Policy

“What
would Ronald Reagan do?”

That’s become the go-to inquiry for conservatives on nearly
every public policy question, from the downing
of Malaysia Airlines Flight 17 to corporate welfare in
Oklahoma.

When likely 2016 contenders Sen. Rand Paul,
R-Ky., and Texas Gov. Rick Perry squared off for an op-ed
duel on the Iraq crisis recently, it quickly degenerated
into a rapid-fire “Reagan-off,” with Perry unleashing a hellstorm
of Gipper references, roughly one per 100 words.

It’s not obvious that channelling a president who left office
more than a quarter century ago is the best way for Republicans to
craft sound policy for the 21st century Middle East. But if
you think the Reagan legacy holds lessons for today, Gene Healy
suggests they start with a question we can actually answer, like:
“WDRD?” — that is, “what did Reagan do” in the region?

View this article.

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Gene Healy Says Conservatives Should Resurrect Reagan’s Foreign Policy

“What
would Ronald Reagan do?”

That’s become the go-to inquiry for conservatives on nearly
every public policy question, from the downing
of Malaysia Airlines Flight 17 to corporate welfare in
Oklahoma.

When likely 2016 contenders Sen. Rand Paul,
R-Ky., and Texas Gov. Rick Perry squared off for an op-ed
duel on the Iraq crisis recently, it quickly degenerated
into a rapid-fire “Reagan-off,” with Perry unleashing a hellstorm
of Gipper references, roughly one per 100 words.

It’s not obvious that channelling a president who left office
more than a quarter century ago is the best way for Republicans to
craft sound policy for the 21st century Middle East. But if
you think the Reagan legacy holds lessons for today, Gene Healy
suggests they start with a question we can actually answer, like:
“WDRD?” — that is, “what did Reagan do” in the region?

View this article.

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Our Marginal Economy

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Before you jump on the Bull market bandwagon of "don't fight the Fed," perhaps you should take a look at the quality of the debt the Fed has enabled and the diminishing returns on all that debt.

The mainstream media is delighted to highlight positive economic data, but nobody ever asks about the quality of the borrowers who are behind the rosy numbers. Behind the rosy numbers, sales and profits are increasingly dependent on marginal buyers and borrowers: those buying on credit who would not qualify to borrow money in a system ruled by prudent risk-management.

These marginal borrower/buyers are last on, first off: they qualify for loans at the end of a credit expansion, when lenders throw caution to the winds to reap the profits from issuing new mortgages, auto loans, student loans, credit cards, etc. to marginal borrowers.

These marginal borrowers are the first to default, because they have insufficient income and collateral to support their loans.

This rising dependence on marginal borrowers/buyers leads to an economy of diminishing returns: ever-rising rates of debt expansion are required to generate ever-declining rates of expansion of sales, profits, GDP, etc.

The waterfall decline of the quality of debt-based sales is masked by the rosy headline numbers. Auto sales are soaring; nice, but does anyone ask how many of those vehicles were sold to marginal buyers, the kind of borrowers who are one paycheck away from insolvency and default?

How many issuers of junk bonds are one recession away from insolvency and default?

Let's look at a few examples of diminishing returns/dependence on rising debt for marginal returns. Once again, we must keep in mind the quality of the debt and the borrowers is not revealed in rosy headline numbers.

Anecdotally, I see plenty of people who defaulted/declared bankruptcy in previous downturns who are once again in hock to the hilt, and they know the drill: borrow and spend as much as you can, because all you have to do is stop paying.

Yes, your credit score will be lousy for a few years, but lenders and retailers are so desperate for sales that you won't have to wait long to start getting a flood of credit card offers in your mailbox. After all, anyone with a pulse can buy a car now.

Here's total credit and GDP: this screams "diminishing returns":

The Fed's "free-money for financiers" balance sheet and the S&P 500: once again, this screams "diminishing returns:"

Money velocity: diminishing returns:

Small biz: fading at the margins:

Federal student loans: this fairly screams, "go ahead and default, there is literally no risk management here":

The return on a college degree? Diminishing faster than you can say "default":

Labor participation and real median income: diminishing returns on all the outlandish money pumping and Federal deficit spending:

Fulltime employment: going nowhere after 5+ years of unprecedented expansion of central bank "free money for financiers" and Federal debt:

Real household income: declining for all but the top 5%:

Household income has declined significantly in real terms: Five Decades of Middle Class Wages (Doug Short).

Federal Reserve "free money for financiers" has greatly expanded wealth inequality:

So before you jump on the Bull market bandwagon of "don't fight the Fed," perhaps you should take a look at the quality of the debt the Fed has enabled and the diminishing returns on all that debt.




via Zero Hedge http://ift.tt/1uDM3d0 Tyler Durden

House Bill Introduced to Make it Harder for Feds to Take Your Stuff

Rep. Tim WalbergA Republican congressman from Michigan has
introduced a House version of
legislation
to reform the federal government’s highly abused
asset forfeiture regulations. It’s not Justin Amash, as we might
expect, but Tim Walberg, a strong religious and national security
conservative who is also concerned about the abuse of federal
authority. He couches his concerns in terms of the
IRS abusing businesses
as opposed to law enforcement officials
snatching cash from people at traffic stops:

H.R. 5212 was introduced in direct response to several recent
stories involving innocent property owners having their property
seized by federal officials.  In Michigan, a longtime grocer,
Terry Dehko, had his bank accounts seized by IRS because they
suspected him of being a money launderer.  The charges were
never filed but Mr. Dehko had to prove that his money was not used
in a criminal enterprise.

“This legislation provides commonsense reforms to restore the
balance of power away from the government and back to protecting
individual rights and due process.  We cannot abide a system
where citizens fear that law enforcement can seize, forfeit and
profit from their property,” Walberg stated.

Walberg’s legislation has some differences from legislation
recently introduced by Sen. Rand Paul (R-Ky.). Scott Alexander
Meiner at
Americans for Forfeiture Reform
makes some comparative notes.
 Like Paul’s
Fifth Amendment Integrity Restoration (FAIR) Act,
Walberg’s
bill increases the threshold for attempting to seize property from
the “preponderance of evidence” standard to the “clear and
convincing evidence” standard that the property being seized was
connected to a crime. However, Meiner notes, Walberg’s bill does
not attempt to eliminate the twisted incentives for government
officials to try and seize property by shifting the assets gained
from the Department of Justice to the Department of the Treasury.
Arguably, that shift may well be more important than changing the
threshold of proof, because of the significant leeway judges give
law enforcement and federal officials to do whatever the heck they
want. Judges usually haven’t been a good check on police power in
decades. At least removing the profit motive would have an
impact.

Meiner provides some more analysis of Walberg’s bill
here
. And in about half an hour Walberg will be joining former
Reason Editor (and current Washington Post blogger)
Radley
Balko
and Scott Bullock, senior attorney for the Institute of
Justice, at the Heritage Foundation for a discussion
about asset forfeiture reform. Details here.

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Is Common Core on the Ropes?

BoxerOpponents of rigid and controversial Common
Core education standards just may be winning the battle. That
pending victory is something Reason has
pointed out in the past
, as we’ve urged that libertarians
should
cheer for such an outcome
, and work instead for expanded
flexibility in education, and more consideration for the diversity
of the kids on the receiving end of educrat ambitions.

It’s impassioned moms who are defeating Common Core,
suggests Stephanie Simon at Politico
, overwhelming
“sedate videos” and “talking points.”

Honestly, though, Common Core supporters have also resorted to
less cerebral tactics, such as
condescension
and
political smears
.

Simon’s article is tilted more than a little toward the idea
that Common Core has the facts on its side, while opponents are
driven by emotion.

Teachers who like the Common Core say it’s revolutionized their
classrooms, prodding students to read texts more closely and think
more analytically. But it’s hard to convey that in a tweet. Really
good sixth-grade essay questions rarely go viral. A nonsensical
math problem might, whether or not it truly has anything to do with
the Common Core.

In fact, though, while some of the arguments against the
standards—as with anything coming from a grassroots movement—can be
a little wild-eyed, opponents raise serious concerns about the way
the standards were developed and their one-size-fits-all
nature.

In the Washington Post, teacher Edward Miller and Nancy
Carlsson-Paige, an academic specializing in early childhood
education,
questioned the appropriateness
of the standards for younger
students. “It appears that early childhood teachers and child
development experts were excluded from the K-3 standards-writing
process.”

The Cato Institute’s Jason Bedrick
focuses on the standards’ rigidity
, warning that “Common
Core-aligned tests (particularly college entrance exams) will
essentially dictate content: what concepts are taught when and
perhaps even how.”

Which is to say, moms (and others) may have good reason to be
pissed off.

Whatever the arguments wielded by the opposing sides, though,
though, opponents seem to be gaining the upper hand. The public is
still split, but opposition to the standards is on the rise in
places like
California
and
New York
. Nationally, Republicans
take a dim view of the scheme
.

EdWeek
tracks state efforts to ditch Common Core
, though its tracker
isn’t up-to-date. Oklahoma isn’t even listed, though that state’s
Supreme Court
recently upheld the legislature’s torpedoing of the
standards
.

Simon says that Common Core supporters “consider it a victory
that just five states, so far, have taken steps to back out.”

Well, that’s a start.

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Video: The Drug War, the Fourth Amendment, and Anal Cavity Searches in New Mexico

The Drug War, the Fourth Amendment, and Anal Cavity Searches in
New Mexico is the latest video from ReasonTV. Watch above or
click on the link below for video, full text, supporting links,
downloadable versions, and more Reason TV clips

View this article.

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