Friday, April 11, 2008

Homage to the Optimists

US April consumer confidence slumps to 26-year low

"There have only been a dozen other surveys that have recorded a lower level of consumer sentiment in the more than 50-year history of the survey."

The Illusion of Prosperity is fading. Pay no attention to the man behind the curtain! There's no place like home! There's no place like home! There's no place like home!

The herd is not always wrong. I just want to point that out to the optimistic contrarians. Sometimes the forest really is on fire. Sometimes the herd's best defense is to run away.


It's always darkest just before it goes pitch black.

Perfect for: Unrelenting Optimists


MAB said...


I'll share some of my tax season reflections with you. Over the last ten years, my largest expenses BY FAR are:

Taxes (payroll, income, sales & real estate)
Inflation (purchasing power loss)
Interest (no debt other than a mortgage)

In light of the above, I just don't see how people can believe that government spending and money creation by the fed will make them prosperous.

One more tidbit. I keep hearing the Republicans shouting that the lower four income quintiles pay almost NO income taxes. This is true. But you never hear this:

2004 federal payroll taxes were 802 billions vs 2004 federal individual income taxes of 801 billion.

Stagflationary Mark said...


Taxes are by far my largest expense as well.

I was once a Republican. All I wanted was a smaller more fiscally conservative government. Isn't that a hoot?

The truly rich continue to grow richer while the truly poor continue to grow poorer. It turns my stomach every time I hear the truly rich attempt to push more of their tax burden onto the truly poor. Somebody's got to pay eventually, right? These days, based on the price of food and energy, the poor are certainly paying.

Although I am not truly rich by any stretch of the imagination, I was ashamed just the same to benefit from the capital gains and dividend tax cuts. I did not ask for the government's help and certainly did not need it. Further, the money redistributed to me did not spur the economy as it did not alter my spending habits in the slightest.

Income inequality is just one more indicator of the decline of the American empire.

Automation and Inequality

I suspect that someday we're not just going to be talking about non-farm payrolls. We'll be talking about non-economy payrolls. As seen in the charts, the changes in the farm industry appear to have simply redistributed the wealth (in a most disturbing manner). Those that lose jobs are out of luck. Those that keep their jobs get paid more. That's a recipe for income inequality and a long-term broken economy.

MAB said...


Income inequality is just one more indicator of the decline of the American empire.

To me this is a troubling trend. I just don't see the wisdom or aggregate benefit to having inflationary monetary & fiscal policies with declining real incomes as a backdrop. When you project the trend forward, it really makes you wonder what the point of it all is. The situation is even more dire if you bifurcate the data and look at government wages & benefits vs. private wages & lack OF benefits.

Nobody is ever going to convince me that hedonic adjustments are going to add to my savings. Are computing power or push button car windows going to pay my bills in retirement? Plus, to be fair, the government should have hedonically adjusted all CPI data prior to the 1990s. If they did, I'm quite certain today's real growth would be dismal when compared against past periods. Same with real wage growth. I once heard Bernanke say he thought that CPI overstated inflation due to hedonics. Apparently, you need to be an economics whiz to see the emporers clothes or believe that subprime was contained.

Also, I'm curious as to whether or not your farm productivity chart accounted for illegals in any way. I worked at a big indutrial farm in the 70s. Many of the the grunts showed up in vans from the nearby cities of Trenton, Philly & Bristol. No illegals whatsoever.