Main Street en-us Sat, 12 Jul 2014 10:52:08 -0400 Sat, 12 Jul 2014 10:52:08 -0400 The latest news on Main Street from Business Insider Business Insider These Roadblocks Are Killing Marijuana Advertising's Vibes Thu, 17 Apr 2014 10:00:00 -0400 Michael P. Tremoglie <p><img class="float_right" src="" border="0" alt="Woman smoking a marijuana joint" width="480" /></p><p>NEW YORK (MainStreet) &mdash; Marijuana is a boon to advertising. Not only have marijuana legalization proponents utilized an effective public relations campaign to legalize the drug in Colorado and Washington - and are looking elsewhere - but now the product will also be marketed and sold where it is legal.</p> <p>The sales campaigns include advertising. But advertising marijuana is running into speed bumps.</p> <p>A pro marijuana legalization ad from Weedmaps, the self-described "Yelp! for pot," was supposed to be displayed on an electronic billboard in Times Square beginning in April. But CBS asked Neutron Media to pull the ad while its legal department reviews the propriety of it. CBS has veto rights even though it does not own the billboard since its logo is on it.&nbsp;</p> <p>Advertising is an industry that is over $150 billion a year. The biggest segment is for television ads. But this is the segment that is resisting the marijuana ad dollar the most.</p> <p>Colorado only permits advertisements of recreational marijuana if the medium can show that the audience is more than 70% over the age of 21. With regard to advertising, TV stations are approaching cautiously or not at all. CBS's Denver affiliate, for example, does not accept dispensary advertising.</p> <p>The Partnership for a Drug Free America (PDFA) is concerned about marijuana advertising. This organization started back in the 1980s with a group of advertising professionals, who pooled their talents to sell people on the idea that crack use should be avoided. The organization now campaigns against prescription drug abuse and underage drinking.</p> <p>The organization acknowledges that everyone is influenced by advertising - even unwittingly. The most sought after group is kids, because children are more easily influenced and brand loyalty can be established.</p> <p>As Steve Pasierb noted in a recent PFDA blog post regarding marijuana ads that have surfaced in states that have passed legalization initiatives, this marketing has the potential to have a strong influence on children.</p> <p>"What we see &ndash; as a public health nonprofit with roots in the advertising industry &ndash; is the potential for significant childhood exposure to marketing of an alluring, newly legal drug," he wrote. "Advertising that will have the net communication that it's O.K. to use marijuana. And some might argue that the future pool of customers for the legal marijuana industry will be kids and teens since past-month marijuana use &ndash; particularly heavy use &ndash; has increased significantly among U.S. high school students since 2008."</p> <p>He then makes an excellent point about marijuana advertising and the law.</p> <p>"Kids are still more likely to smoke marijuana than adults and even twenty-somethings, presenting a real marketing conundrum for marijuana retailers who seek to increase their business and expand their markets, while also claiming they are only targeting consenting adults," Pasierb wrote.</p> <p>"No matter what advertisers try to do the teenagers are going to see these ads," said Tom Gorman, the head of the Rocky Mountain High Intensity Drug Area. "The magazine stands are full of pot advertising."</p> <p>PFDA's research reveals that about 50% of parents have smoked pot and marijuana, and 40% of adults favor legalization. But parents want serious regulations for legal marijuana for sales and distribution - this includes advertising. They are concerned about their kids.</p> <p>According to the PFDA, more than 80% of parents surveyed in Colorado and Washington believe "marijuana advertising should still be banned." When forced to choose, a majority of parents identify the number one place where it should be permissible to advertise marijuana as "nowhere."</p> <p>But says PFDA's Pasierb, "...those expectations from parents far exceed how legal marijuana is actually being implemented...advertising limitations that are in place in these states will be subject to future court challenges over first amendment protected speech."</p> <p>This is true, because Colorado's advertising regulations concerning marijuana are already in court. But tobacco and alcohol advertising have been heavily regulated for years. So why would PFDA or anybody else expect the court's to loosen strict laws about advertising for pot?</p> <p>"In general, the Supreme Court has said that if the product is legal then you cannot ban advertising about a product as long as it is not misleading," said Ronald Rotunda, a constitutional scholar and law professor at Chapman University law school, Orange, California. " Right now we simply do not know what the courts will do."</p><p><a href="">Join the conversation about this story &#187;</a></p> How To Build Your Suit Collection Fri, 28 Mar 2014 11:58:00 -0400 Nicholas Pell <p><img class="float_right" src="" border="0" alt="suits" width="480" /></p><p>How many suits are in your closet? Are they the right ones?</p> <p>Whether you need to wear a suit every day to work or just need something in your closet for special occasions, the task of buying suits can seem daunting. However, it doesn't need to be. Buying suits can be easy and even fun without breaking the <a href="" rel="nofollow"><span id="itxthook1w">bank</span></a>.</p> <h3>How Many Suits Do You Need?</h3> <p>If anyone in the world wants you buying a closet full of suits, it's Kyle Vucko, co-founder and <a href="" rel="nofollow"><span id="itxthook2w">CEO</span></a> of Indochino, a company making some of the best inexpensive made-to-measure suits around. <br /><br />Still, he says that the first consideration in how many suits you need is what you do for a living.</p> <p>"Everyone needs at least one suit," he says. "You can even get by at a job where you have to wear suits every day on three."</p> <p>Samantha Shih, founder and CEO of 9Tailors thinks that three is the magic number for all men.</p> <p>"You need a grey suit, a black suit and a navy suit," she says.</p> <h3>What Suits Get Worn Where?</h3> <p>Another question guys <a href="" rel="nofollow"><span id="itxthook3w">building</span></a> their suit wardrobe up often wonder about is where to wear what they have. Shih explained that black suits are very formal, while navy is more professional. Medium grays are good for just about any occasion.</p> <p>Vucko recommends that you go with the navy suit first, or maybe a charcoal. After that, you should get a light grey or a sharkskin blue. Solids come first, then pinstripe, then checks. Why?</p> <p>"If you're not wearing suits every day, it's important to keep them more neutral," says Shih. The reason being that you're more likely to wear the same suit on multiple occasions. "If you're <a href="" rel="nofollow"><span id="itxthook4w">buying</span></a> suits to wear to special occasions, people are going to notice that you've recycled your suit if it's a more memorable pattern," says Shih.</p> <p>Indeed, Vucko recommends that you avoid even pinstripes until you buy your fifth or sixth suit.</p> <h3><strong>How Do You Buy a Suit?</strong></h3> <p>"I'm a big proponent of purpose," says Shih. "Ask yourself, 'What's the purpose of what I'm wearing?'" After that, the main consideration is fit. "Definitely try things on," she says. And while not everyone can afford even the most inexpensive made-to-measure suits (which generally come in at around $600 to $800), basically anyone can afford to buy something off the rack and get it tailored.</p> <p>"Zara is a great place for guys who want a mid-range suit," says Shih, who also likes what J. Crew has on offer for off-the-rack men's suits. Tailoring will come in at under $100, making even an off-the-rack suit noticeably less expensive than something bespoke.</p> <h3><strong>What About Shirts?</strong></h3> <p>Vucko is a huge fan of the crisp white shirt. However, he acknowledges that for the man on a budget, they come with problems. "White shirts can be tough to clean," he says. "They fade and lose their luster."</p> <p>On the other hand, pastel shirts are less versatile, but hold up better in the long run. "Ginghams are a great way to go, because you can dress them up and dress them down," he says.</p> <p>Another advantage? They can be worn with either suits or jeans, depending on your preference.</p> <h3><strong>Ties and Other Accessories</strong></h3> <p>Another thing Vucko loves? Using a tie or pocket square to color pop an otherwise unmemorable suit.</p> <p>"I'd say that I strongly encourage men to wear a pocket square," he says. "It's an easy and inexpensive way to add fun to an outfit." What's more, Vucko thinks that they might even be better in outfits with no tie. "It's one of those places like socks where you have almost total free reign," he says.</p> <p>The ultimate accessory, however, is the shoe and this is an area where the otherwise easy going Vucko has some decidedly strong opinions. "It's really easy to say 'I'll just get an $80 pair of shoes,' but I see them as an investment. Spend the money." On what? For Vucko, it's an emphatic "brown." "I think the name of the color that I swear by is called 'tobacco,'" he says. "Unless you're wearing a tux or going to a funeral, you can even wear them with black suits."</p><p><strong>SEE ALSO:&nbsp;<a href="" >Here's How To Pack A Suit Without Getting It Wrinkled</a></strong></p> <p><a href="">Join the conversation about this story &#187;</a></p> The 15 Most Charming Main Streets In America Mon, 13 Jan 2014 12:14:00 -0500 Emily Wasserman <p><span><img src="" border="0" alt="BroadSt" width="800" />Friendly neighbors, family-run businesses and&nbsp;quaint restaurants serving comforting diner fare &mdash; these are the images conjured up by the phrase&nbsp;&ldquo;Main Street USA.&rdquo;&nbsp;</span></p> <p><span>Even in this fast-paced&nbsp;era, many small towns have held onto their historic roots and preserved their central&nbsp;thoroughfares. From a harbor town on the west coast with ornate Victorian architecture to Key West&rsquo;s colorful Duval Street, visitors can find unique cultural attractions and warm, welcoming communities in small towns across the country. </span></p> <p><span>A few steps along each of these&nbsp;main streets prove that small-town America is alive and well&mdash;and can hold its own against larger, neighboring cities. Here are our picks for America&rsquo;s best main streets.</span></p><h3>Main Street in Galena, Ill.</h3> <img src="" alt="" /> <p><p><span style="line-height: 1.5em;">Galena&rsquo;s Main Street epitomizes small town America. Just three hours outside Chicago,&nbsp;</span><a href="">Galena</a><span style="line-height: 1.5em;">&nbsp;provides a retreat from urban hustle and bustle.</span></p> <p>The downtown area includes antique shops, restaurants, and boutiques&mdash;all housed in mid-19th century storefronts. Visitors can browse the work of local artists at the street&rsquo;s art galleries or stop by the&nbsp;<a href="">DeSoto House Hotel</a>&nbsp;for a breakfast or lunch buffet.</p> <p>Those with a sweet tooth will enjoy Galena&rsquo;s old-fashioned ice cream parlor. Guests can choose from more than 40 flavors of ice cream and sample old-fashioned sodas, floats, malts, and shakes.</p> <p><strong>Plan Your Trip:</strong>&nbsp;Visit Fodor&rsquo;s&nbsp;<a href="">Galena Guide</a></p> <h3><strong>Check Out:&nbsp;<a href="">10 Best New Spas in North America</a></strong></h3></p> <br/><br/><h3>Water Street in Port Townsend, Wash.</h3> <img src="" alt="" /> <p><p><span style="line-height: 1.5em;">Once named the &ldquo;City of Dreams,&rdquo;&nbsp;</span><a href="">Port Townsend</a><span style="line-height: 1.5em;">&nbsp;was slated to become the West Coast&rsquo;s largest harbor. Plans changed, but the town still retains much of its original charm.</span></p> <p>Visit Water Street to explore historic business districts and watch Victorian ships sail across the water. Port&nbsp;<a href="">Townsend Gallery</a>&nbsp;showcases the work of some of the town&rsquo;s best artists, and visitors can sample house-made ales at&nbsp;<a href="">Port Townsend Brewing Co</a>. Stop by&nbsp;<a href="">The Spice &amp; Tea Exchange</a>&nbsp;for gourmet seasonings and spices as well as custom-made rubs and blends.</p> <p><strong>Plan Your Trip:</strong>&nbsp;Visit Fodor&rsquo;s&nbsp;<a href="">Port Townsend Guide</a></p></p> <br/><br/><h3>Main Street in Denton, Tex.</h3> <img src="" alt="" /> <p><p><span style="line-height: 1.5em;">Just north of Dallas,&nbsp;</span><a href="">Denton</a><span style="line-height: 1.5em;">&nbsp;boasts a vibrant community with attractions for every age. Main Street is located next to the city&rsquo;s historic courthouse and features unique shops, numerous dining options, and a variety of museums, galleries, and art venues.</span></p> <p>Watch live performances outside the courthouse, or browse one of the street&rsquo;s antique stores.&nbsp;<a href="">A Creative Art Studio</a>&nbsp;features the work of local artist and offers classes for budding artists.</p> <p>For a sweet treat, visit&nbsp;<a href="">Denton Square Donuts</a>: the store is open during evening hours so you can satisfy your late night cravings.</p> <p><strong>Plan Your Trip:&nbsp;</strong>Visit Fodor's&nbsp;<a href="">Texas Guide</a></p></p> <br/><br/><a href="">See the rest of the story at Business Insider</a> Wall Street Has Smoked Main Street Since The Financial Crisis Tue, 10 Dec 2013 15:21:00 -0500 Steven Perlberg <p>The U.S. stock market has spent much of 2013 blowing past its all-time highs, which is great for... about half of Americans.</p> <p>According to a <a href="">recent Gallup poll</a>, just <a href="">52% of Americans</a> are personally or jointly (with a spouse) invested in stocks, the lowest level since at least 1998.</p> <p>The fact is, this bull market has been lucrative for Wall Street, but with wage and employment figures still lagging behind, Main Street has yet to catch up on the good times.</p> <p>The gap between the two has only further entrenched inequality, with almost 75% of American wealth <a href="">owned by the top 10%</a>.</p> <p>Take a look at this chart from Bank of America's Michael Hartnett overlaying the labor force participation rate with stocks and bond returns.</p> <p><img src="" border="0" alt="bofa main street wall street" width="800" /></p><p><a href="">Join the conversation about this story &#187;</a></p> PBS Frontline Nails It On How Wall Street Screws Main Street Sun, 05 May 2013 07:11:00 -0400 Andrew Haigney <p><img class="float_right" src="" border="0" alt="florida, retirement community, 1970s" width="400" /></p><p>&ldquo;The Retirement Gamble,&rdquo; a <a class="hidden_link" href="">PBS</a> Frontline documentary, looks critically at inherent conflicts between the financial services industry and investors.&nbsp; The program excellently frames these complex issues in an easy to understand manner.&nbsp; Of particular note, the producers did an outstanding job of breaking down how investment-related fees destroy investment returns.</p> <p>Readers of our work will recognize that the issues raised in the program are near and dear to our hearts. &nbsp;We&rsquo;ve previously described these very issues raised in the program as the greatest consumer scam of our time, a scam that is so enormous and wide reaching that is almost difficult to fathom.</p> <p>We were thoroughly entertained when correspondent Martin Smith, armed with data from the investment legend Jack Bogle, confronted Michael Falcon, the head of retirement for J.P. Morgan Asset Management, about the eye-opening negative impact J.P. Morgan mutual fund fees have on investors&rsquo; returns.&nbsp; Mr. Falcon appears totally baffled by Mr. Smith&rsquo;s question&mdash;he literally fumbles around, struggling to articulate a single word.</p> <p>Having worked for a major Wall Street firm for many years, I can tell you that the folks like Mr. Falcon, who run big divisions of these large institutions, are very savvy and highly trained with respect to making media appearances.&nbsp; They&rsquo;re the best of the best, and they never fumble. His awkward response to the question underscores the fact that this industry has run virtually unquestioned.</p> <p>We don&rsquo;t mean to pick on Mr. Falcon, the fact is that there is no intelligent way for anyone in his shoes to defend the punitive nature of investment-related fees and expenses.&nbsp; The mainstream media, or more specify the financial media, wouldn&rsquo;t dream of asking a high profile industry executive these kinds of &ldquo;gotcha&rdquo; questions.&nbsp; If they embarrass their industry guest they will be boycotted, and no major financial firm will allow their firms to be exposed like this. These media outlets also risk losing large advertising clients if they alienate the industry.</p> <p>The program puts a large focus on the demise of traditional pensions plans and the rise of contribution plans, e.g., IRA and 401k accounts, but misses an important point about this transition.&nbsp; Individual investors today are investing for capital appreciation; they want their nest egg to grow so they can harvest capital gains to fund their retirement.&nbsp; On the other hand, the investment objective of a pension plan is to generate a stream of future income and these goals can be achieved by investing directly in income-generating assets, like office buildings, shopping centers and bonds.</p> <p>The individual is handicapped straight out of the gate as they&rsquo;re forced to take far more risk to achieve their goals compared to the pension plan.&nbsp; Add to this the current Federal Reserve ultra low interest rate policies and most of these investors are seeking these investment returns in higher risk assets, generally equities.&nbsp; Not surprisingly, these higher risk assets generate higher profit margins for the financial services firms.</p> <p>The only real disappointment in the program came when the topic of fiduciary duty was addressed.&nbsp; The producers, who overall did an admirable job of analyzing the costs and benefits of various financial products and services, really dropped the ball here.</p> <p>While it&rsquo;s true that, in the purest sense, a fiduciary has to put the clients&rsquo; interests first, in the real world of financial services you don&rsquo;t get a pure fiduciary, in fact it&rsquo;s far from it.&nbsp;</p> <p>Fiduciary duty has become just another financial industry marketing gimmick.&nbsp; Make no mistake, all the conflicts of interest are alive and well in the land of fiduciary advisers. &nbsp;Once the fiduciary discloses the conflicts in the fine print, the conflicts are fair game.&nbsp; On top of this, fiduciary advisers tend to be higher cost, which further erodes investor value.</p> <p>The Retirement Gamble is a must-watch for individual investors.&nbsp; The producers have done a great job making these complex issues easy to understand.&nbsp; But there is much more ground to cover on this important topic and we hope to see a sequel.</p><p><a href="">Join the conversation about this story &#187;</a></p> How Streets In America Get Their Names Tue, 09 Oct 2012 20:19:00 -0400 Jacqueline Shannon <p><img class="float_right" src="" border="0" alt="Main Street sign" width="400" /></p><p>Yes, there really is a Farthell Road (Chambersburg, TX), as well as a Durt Road (<a href="">Casco, ME</a>), a Poop Deck (<a href="">Freeport, TX</a>) and a Crummy Road (<a href="">Clark Fork, ID</a>).</p> <p>Who decides whether you will be fated to live on one of those unfortunately named streets or on something with a more pleasant ring, such as Lucky Lane (<a href="">Rockford, IL</a>, among many other cities), or a whimsical and memorable one, such as Haveteur Way (<a href="">San Diego</a>)?</p> <p>It depends on your city and/or county, but most often street names are requested by the developers of&nbsp; new subdivisions.</p> <p><strong>Developer&rsquo;s choice</strong></p> <p>Catherine Nicholas, agent/owner of the CADO Real Estate Group in San Diego, which builds new subdivisions, says that what happens in the city of <a href="">Carlsbad</a> (a San Diego suburb) is typical.</p> <p>&ldquo;The developer submits street names to the city through the relevant departments for review,&rdquo; said Nicholas, who worked in Carlsbad&rsquo;s Planning Department for years and coordinated the street naming process, which often takes weeks from submission to approval. &ldquo;The building, engineering and public works departments all comment, but the departments that have the most input and veto power are police and fire. The concern here is that the street names are unique and intelligible enough for them to distinguish and find a street and property in an emergency.&rdquo; She says the post office also gets a final review, as a general rule.</p> <p>Many cities also have guidelines on the type of street names required for an area of town. &ldquo;When I worked in Carlsbad, there were four main areas and other subareas with &lsquo;themes&rsquo;&mdash;such as bird names or historic names,&rdquo; she said. &ldquo;I would reject a name if it didn&rsquo;t follow the appropriate protocol.&rdquo;</p> <p>And then there are the more personal associations.</p> <p>&ldquo;Many developers try, often successfully, to name streets for themselves, their partners, wives, mistresses and children,&rdquo; she said.</p> <p><strong>Common monikers</strong></p> <p>In the United States, most streets are named for numbers or trees. According to the National League of Cities, the most popular street name is Second (or 2nd). This is often because what would have been First is instead designated as Main or something similar, like Broadway.</p> <p>Streets are also commonly named for current or former landmarks (Windmill View Road, <a href="">El Cajon, CA</a>), American presidents (especially Washington) and famous people who were born in the area. There&rsquo;s an East Bryan Street in <a href="">Salem, IL</a>, for example, named for William Jennings Bryan, the politician best known for his involvement in the famous Scopes &ldquo;Monkey&rdquo; Trial of 1925.</p> <p>Developers also often tender names that are representative of an area&rsquo;s primary business or industry (Promenade Chardonnay in the wine country of <a href="">Temecula, CA</a>) or for a physical characteristic of the road itself (17 Mile Drive in Carmel-by-the-Sea, <a class="hidden_link" href="">CA</a>). Another popular strategy is to name a street for its ultimate destination. In San Diego, for example, University Avenue once led to the first location of San Diego State University while College Avenue will take you to its current location.</p> <p><strong>Name changes</strong></p> <p>Can the name of a street affect the sale of a property? Yes, says Nicholas. &ldquo;People always respond to the street name,&rdquo; she said. &ldquo;The street name can be a real turn-off or an advantage."</p> <p>So, what if you don&rsquo;t like the idea of living, say, on Butt Road (<a href="">Fort Wayne, IN</a>)? Can you get the street name changed?</p> <p>&ldquo;Changing a street name is a very, very big deal, and this sort of thing is very, very rarely approved,&rdquo; Nicholas said. &ldquo;In Carlsbad, the only successful change I remember during my tenure was changing the name of Carlsbad&rsquo;s main street from Elm to Carlsbad Village Drive, which was very controversial, as all attempted changes are.&rdquo;</p> <p>She says you have to take into consideration how a name change would impact everybody with a home or business on the street.</p> <p>&ldquo;In a case like the Carlsbad Village Drive one, it required every property owner or <a href="">renter</a> to change all of their advertising, their stationery and business cards, to name just a few of the hassles,&rdquo; she said. Street name changes also affect external companies, such as those that produce maps and GPS apps.</p> <p>&ldquo;In my research and experience, I know that trying to get a street name changed is not uncommon,&rdquo; Nicholas said. &ldquo;But unless everyone on the street concurs, or the city is behind it&mdash;such as, say, renaming a major thoroughfare for Martin Luther King&mdash;it rarely happens.&rdquo;</p> <p><em>This <a href="">post</a> originally appeared at <a href="">Zillow</a>.</em></p> <p><strong>See Also:</strong> <a href=""><strong>Meet A Person Who Lives At 50 Main Street In Every State</strong></a></p><p><a href="">Join the conversation about this story &#187;</a></p> Here's Why You're So Uncomfortable With Spending Right Now Mon, 23 Jul 2012 19:02:00 -0400 Tim Mullaney <p><img class="float_right" src="" border="0" alt="closed supermarket, vacant storefront, parking lot, blight " /></p><p>After a big spring, Zach Atya thought the Solstice Sunglass Boutique would have a boffo summer.</p> <p>Instead, July sales at the McLean, Va., store are 7 percent short of its target, even with promotions.</p> <p>"People are shopping around and comparing prices," said Atya, the store's assistant manager. They're "uncomfortable with spending money now."</p> <p>When the job market began to crack in April, most economists said they weren't worried about the recovery. They're worried now.</p> <p>As the recovery slows, optimism is giving way to caution, with undercurrents of something darker. Economic forecasts are coming down all over Wall Street: <a class="hidden_link" href="">Goldman Sachs</a> and <a class="hidden_link" href="">Deutsche Bank</a> both cut forecasts of second-quarter growth to just over 1 percent.</p> <p>Companies from chipmaker <a class="hidden_link" href="">Intel</a> to <a class="hidden_link" href="">Morgan Stanley</a> have missed or lowered earnings forecasts -- 99 companies in the Standard&amp; Poor's 500 lowered second-quarter projections. In June, 22 of 30 U.S. economic data reports also missed forecasts, <a class="hidden_link" href="">Merrill Lynch</a> said.</p> <p>"We're worried about growth slowing down everywhere, and about it being self-reinforcing," said <a class="hidden_link" href="">Peter Fisher</a>, global head of fixed income for Black Rock, the world's largest asset manager. "I'm less worried about whether growth is slowing, and more worried about how much farther we have to go."</p> <p>It could get much worse if we hit the "fiscal cliff": A combination of expiring tax cuts and slashed federal spending set for Dec. 31 would cut the federal budget deficit by an amount equal to 4 percent of U.S. gross domestic product, throwing millions of people out of work if Congress doesn't stop them. Many economists think even a compromise that extends some tax cuts and reduces or delays spending cuts could reduce growth.</p> <p>Three years into its recovery, the economy is once again on a rough road. Gross domestic product -- the leading barometer of the nation's economic health because it measures the value of all goods and services made in the U.S. -- equals consumer spending plus business investment plus government outlays, less the trade deficit. And all four are in trouble.</p> <p>Since 1990, unemployment has generally fallen when growth is 2.5 percent or better. As growth has stalled this year, so has the improvement in unemployment, now stuck at 8.2 percent. And as Federal Reserve Chairman <a class="hidden_link" href="">Ben Bernanke</a> told Congress last week, reining in the budget deficit too fast at year's end could cost 1.25 million jobs.</p> <p>"It's about fear and uncertainty," said Mike Collins, a bond portfolio manager at <a class="hidden_link" href="">Prudential</a> Fixed Income. "When corporations have uncertainty, they cut back hiring and they cut capital spending. It feels like that's what's happening."</p> <p>Consumption</p> <p>What's hurting consumption? A shortage of good-paying jobs for one. Just ask Janet Beaman.</p> <p>The 61-year old from Manassas, Va., was a mortgage underwriter until losing that job in 2007 as the housing market began to fracture. She became a security guard for half the pay. Then her tight budget took another hit when her hours got cut several months ago.</p> <p>Nights out have been traded for movies at home, and her 13-year old Jeep Cherokee is being asked to keep rolling. She went back to college to upgrade her skills, and $800 a month in student-loan payments begin next month.</p> <p>"The big night is if we go through the drive-through" at a fast-food joint, Beaman said. "I pray every day, 'Let me drive this car a little longer.'"</p> <p>As gas prices have risen and fallen this year, the job market has been the best predictor of consumer spending, which made up 71 percent of last year's GDP. When the U.S. was adding an average 225,000 jobs a month in wintertime, discretionary spending on clothing, cars and restaurants rose at double-digit rates despite more-expensive gas.</p> <p>Now, with gas cheaper than two months ago, the needle is moving the other way as job growth has averaged about 75,000 the past three months. Furniture, home improvement and electronics are being hit especially hard. Overall, consumer spending grew 2.5 percent in the first quarter -- faster than the overall economy. From April to June, that may have grown by as little as 1.1 percent, consulting firm IHS Global Insight says.</p> <p>Investment and trade</p> <p>Until April, investment looked like pretty much the best thing in the economy. It still does -- it's just that the distinction means less and less.</p> <p>Investment is only 13 percent of the economy, but it's central to boosting productivity and jobs. Companies boosted spending on new equipment and software -- the biggest class of investment -- by 10 percent last year but only 3.5 percent in the first quarter. That's one-fourth of the late-1990s pace. Investment in commercial buildings and structures grew less than 1 percent the past six months, after jumping nearly 15 percent in 2010.</p> <p>The future, if anything, looks worse.</p> <p>Nearly half of corporate economists expect their companies' capital spending to stay the same over the next 12 months, according to a new survey by the National Association of Business Economists. Only one in eight think it will climb 10 percent. The share of businesses reporting higher capital spending has fallen by half since December, the association said.</p> <p>One reason investment is weak is that trade partners in Europe are in bad shape. The trade deficit takes only about two-tenths of a point off of growth this year, according to Merrill Lynch, but blips in exports hurt high-profile companies. One example is <a class="hidden_link" href="">Ford</a> Motor, whose unit sales rose 7 percent in the U.S. in the first half -- but fell 10 percent in eurozone nations, including 16 percent in June.</p> <p>Capital spending depends on business confidence, which is falling for lots of reasons. Some small-business people even blame heath care reform: Steve Diels, whose Los Angeles-based Aamcom runs answering services for doctors, has curbed hiring and investment because he fears small medical practices will be squeezed by the law.</p> <p>"We're not going to hire until we know we can grow," Diels said.</p> <p>Government</p> <p><a class="hidden_link" href="">Bob Stevens</a> knows his way around Washington. The chief executive of <a class="hidden_link" href="">Lockheed Martin</a> is responsible for 93 lobbyists, and Lockheed's political-action committee has given $2.8 million in contributions since 2010.</p> <p>On Capitol Hill last week, Stevens said year-end budget cuts will make him lay off 10,000 people &acirc;&euro;" and are already making Lockheed cut investment and hiring. The fiscal cliff will also force layoffs and furloughs for everyone from FBI agents to people who process Social Security claims if Congress doesn't act, he said.</p> <p>"Tragically, we can't reliably estimate how many people will be affected," Stevens told a House committee. "How many family lives are going to be disrupted?"</p> <p>Already, government spending is one of the economy's weakest parts. Since 2010, state and local governments have cut 400,000 workers, including 225,000 educators. Government's shrinkage has reduced GDP at an annual 0.8 percent clip for the last six months.</p> <p>That's all before $1 trillion in "fiscal cliff" cuts, split between national security and the rest of government. President George W. Bush's 2001 and 2003 tax cuts, and President Obama's 2010 payroll tax cut, also expire Dec. 31.</p> <p><a class="hidden_link" href="">Indeed</a>, a newly hot debate is whether the fiscal cliff is already slowing the economy. One who thinks it is: Ethan Harris, co-chief economist for Merrill Lynch. Some companies may be expecting less government business, some people might save money to pay more taxes next year, and others may anticipate that their customers will be poorer. No one really knows, he said.</p> <p>"The cliff matters this year because it's a huge uncertainty shock," Harris said. "Both corporations and consumers have incentives to delay spending."</p> <p>A full-bore rush off the fiscal cliff would equal a recession, <a class="hidden_link" href="">Moody's</a> Analytics said last week. Even a compromise would push America close to recession, Merrill Lynch's Harris said. He thinks the economy would grow 3 percent in 2013 with no policy changes, and a compromise package of spending cuts and tax increases will cut that to 1 percent. .</p> <p>"The tax increases and spending cuts slated to hit next year equal more than 4.5 percent of GDP," Moody's chief economist Mark Zandi wrote. "An economy growing at 2 percent can't withstand this."</p> <p>A way out?</p> <p>With all the disappointing economic news, stock investors stayed fairly optimistic -- at least until another round of selling on Friday. But interest rates moved to a new all-time low, a now-familiar sign investors are buying U.S. Treasuries as a haven.</p> <p>Markets don't trust Congress to manage the economy, and investors think that while the Fed may do another round of bond-buying to stimulate the economy, Fed action alone isn't enough, Merrill Lynch's Harris said.</p> <p>"The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery," Bernanke testified last week:</p> <p>"Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence."</p> <p><img class="nc_pixel" src="" border="0" alt="" width="1" height="1" /></p><p><a href="">Join the conversation about this story &#187;</a></p> Why You Should Stop Paying Attention To The Stock Market Thu, 29 Mar 2012 07:00:00 -0400 The Daily Reckoning <p>What&rsquo;s new in the markets? More importantly, what kind of market are we talking about&hellip;and why does it matter to you?</p> <p>We&rsquo;ll get to that in a second. First, here&rsquo;s a conventional response to the question, one you&rsquo;d expect to find in your morning paper or on the evening news:</p> <p style="padding-left: 30px;"><em>Stocks in the US were down this morning after yesterday afternoon&rsquo;s selloff snapped a two-day winning streak for the thirty bluest chip companies. The Dow closed at 13,197 points yesterday, down 44 points for the session, though still up roughly 8% on the year. Investors sold shares across the board in early morning trading today after a weaker than expected durable goods report. All twelve sectors, from Capital Goods to Utilities were down at time of print with Energy and Basic Materials off the most, down 1.7 and 1.8% respectively.</em></p> <p>Zzzzzzzzz&hellip;..Zzzzzzzzzz&hellip;.</p> <p>There. Now what does that tell you? Nothing. A bunch of slack-jawed gibberish best suited to helping your screaming toddler fall asleep of an evening. We almost dozed off just writing it. Not that intellectual fatigue and drone-like data regurgitation are sufficient disincentives to ward off embarrassingly enthusiastic prognostications from the mainstream press, mind you. Here are a couple of actual, real life headlines we chanced upon this morning:</p> <p>&ldquo;US Stock Futures Pare Gains After Disappointing Durable Goods&rdquo; &mdash; the <em><a class="hidden_link" href="">WSJ</a></em>.</p> <p>&ldquo;Wall Street opens flat after durables data&rdquo; &mdash; <a class="hidden_link" href="">CNBC</a>.</p> <p>Sheesh. We even saw one daily claiming to know the unknowable in the form of the following headline: &ldquo;Why the Dow Fell Today.&rdquo;</p> <p>We didn&rsquo;t subject our pre-caffeinated, A.M. state of mind to the omniscient diatribe beneath that offending claimline, but we imagine it contained plenty of candidate material for <a href="" target="_blank" title="Chris Mayer">Chris Mayer&rsquo;s</a> <a href="" target="_blank" title="You Can't Maket This Stuff Up">&ldquo;You Can&rsquo;t Make This Stuff Up&rdquo;</a> file, which he delivers to attendees of our <a href="" target="_blank" title="Vancouver 2012">investment symposium</a> in Vancouver each year.</p> <p>&ldquo;News is systematically misleading,&rdquo; observed Chris in a <a href="" target="_blank" title="Lose the News">recent <em>Daily Reckoning</em> contribution</a>, &ldquo;reporting on the highly visible and ignoring the subtle and deeper stories. It is made to grab our attention, not report on the world. And thus, it gives us a false sense of how the world works, masking the truer probabilities of events.&rdquo;</p> <p>Chris quoted an essay by Swiss entrepreneur, Rolf Dobelli, unambiguously titled, Avoid News:</p> <p style="padding-left: 30px;">&ldquo;We don&rsquo;t know why the stock market moves as it moves. Too many factors go into such shifts. Any journalist who writes, &lsquo;The market moved because of X&rsquo;&hellip; is an idiot.&rdquo;</p> <p>Which brings us back to our second question of the day; what does &ldquo;the market&rdquo; mean to you? Generally, when inch-filling columnists talk about &ldquo;the market,&rdquo; they are referring to a bunch of stocks you may or may not own that trade on dubious fundamentals you may or may not care about and that move in ways we almost certainly cannot predict or understand.</p> <p>&ldquo;Dow up on <a class="hidden_link" href="">ABC</a>,&rdquo; says one paper. &ldquo;Euro markets rattled after XYZ&rdquo; chimes another. But how does this actually affect you? In what way does this news impact your life? Does the movement of this particular market determine what happens on Main Street, or simply reflect the general &ldquo;sentiment&rdquo; of automated machines and high-frequency trading desks on Wall Street? And should you care either way?</p> <p style="text-align: left;">There are many factors at work here. In <a href="" target="_blank" title="Hitler's Blackberry">yesterday&rsquo;s issue</a>, for example, <em>Aussie DR</em> editor, <a href="" target="_blank" title="Dan Denning">Dan Denning</a>, reckoned on the consequences of Ben Bernanke&rsquo;s deflation phobia. The Fed Head has a fear of declining asset prices, wrote Dan, something he and his credulous acolytes mistakenly define as deflation. (In fact, deflation &mdash; as with its ugly stepsister, inflation &mdash; is, as Milton Friedman correctly observed, &ldquo;always and everywhere a monetary phenomenon.&rdquo; The rise and fall of asset prices are <em>symptoms</em> of inflation and deflation, <em>not</em> causes.)</p> <p>Spurious definitions notwithstanding, Bernanke believes that by stomping on interest rates, printing truckloads of new money and otherwise fiddling with the levers and pulleys at the Fed, he can discourage and punish savers to the extent that they will be <em>forced</em> to put their money in stocks&hellip;thereby buoying the indexes he and his central planner friends point to as measures of the health and vitality of the economy.</p> <p>For reasons that Dan went into yesterday, this is at least as absurd as it sounds. Artificially manipulated interest rates do not encourage healthy investment&hellip;instead, they spawn malinvestment based on compromised information and market distortions.</p> <p>&ldquo;It&rsquo;s a shame he can&rsquo;t understand that the US rate policy is unsound,&rdquo; wrote Dan. &ldquo;And since the rest of the world more or less keys off from US interest rates, an unsound US monetary policy leads to an unsound global monetary policy. By &lsquo;unsound&rsquo; we mean a policy that keeps interest rates too low, leads to asset price inflation, and a giant boom in debt.&rdquo;</p> <p>Given the many and varied forces &mdash; both natural and unnatural &mdash; pressuring stocks this way and that, is there any practical benefit in quoting stock averages or, worse still, attributing causal agents to their largely unpredictable trajectories&hellip;and then only after the fact? There&rsquo;s much more to it than that.</p> <p>For instance, what if shares of <a class="hidden_link" href="">Google</a> rise to $1,300 each &mdash; a roughly 100% gain &mdash; by year&rsquo;s end? And what if the whole market does likewise, racing to enormous paper gains over the coming months. In a context vacuum, this might appear to be a good thing. You can write the headlines today:</p> <p><em>Google Rallies, Leads Market to All Time High! Dow Doubles, Wall Street Hails Hero Bernanke!</em></p> <p>But what if the value of money depreciates to such an extent over the same time that it costs $100 to buy a loaf of bread? A single share of Google would then be worth a (baker&rsquo;s) dozen loaves of bread. The headlines above are at least meaningless and, more to the point, downright deceptive. What things are valued in is at least as important as the number preceding them. One million dollar per ounce gold means nothing if it&rsquo;s denominated in Zimbabwean dollars&hellip;except insofar as it indicates the Zim bucks are worth next to nada.</p> <p>&ldquo;The market,&rdquo; in any case and as it pertains to most people, is less likely to be the Wall Street Casino variety of leveraged buyouts, inside (the 495 Beltway) trading and high frequency, automated jockeying and, rather, more likely to be the local market&hellip;the market for goods and services people buy, sell and trade on a daily basis.</p> <p>And there are, believe it or not, markets that are springing up &mdash; flourishing, even &mdash; that exist very much outside the relatively narrow spectrum of activity crawling across the bottom of the CNBC news screen. The vapid neckties appearing on that show, and their like, don&rsquo;t report on these markets because they aren&rsquo;t supposed to exist. We&rsquo;re talking, of course, about what the state dysphemistically refers to as the Black Market.</p> <p>Now, before discounting this unregulated sector of the economy as a gun running, drug smuggling bastion of hedonistic activity, consider that, as reported in these pages before (<a href="" target="_blank">here</a> and <a href="" target="_blank">here</a>), this is an economy that will employ roughly two thirds of the world&rsquo;s workforce by 2020. (Consider too that the drug- and gun-running businesses are only made profitable/possible by a state that outlaws them or, rather, that monopolizes these markets for its own sick and tragic ends.)</p> <p>Instead, &ldquo;System D,&rdquo; as Robert Neuwirth, author of <em>Stealth of Nations</em>, describes this community of free and unregulated entrepreneurs&hellip;</p> <p style="padding-left: 30px;">&ldquo;&hellip;is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them <em>d&eacute;brouillards</em>. To say a man is a <em>d&eacute;brouillard</em> is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of &ldquo;<em>l&rsquo;economie de la d&eacute;brouillardise</em>.&rdquo; Or, sweetened for street use, &ldquo;<em>Systeme D</em>.&rdquo; This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.&rdquo;</p> <p>Today, System D is estimated to be worth about $10 trillion, the second largest marketplace in the world. Its companies appear on no exchanges and are, thus, monitored by no index averages&hellip;or SEC-like wolves and/or incompetents. Its workers are subject to no oppressive labor laws and are free to contract with whomever they wish and at a price mutually agreed upon. It is dynamic, unrestricted by petty bureaucracy and, as such, is able to adapt at lightning speed to the varied demands of a rapidly and increasingly evolving global environment. It asks permission from no politician and, as you might expect, it is by far the fastest growing economy in the world.</p> <p>A <a href="" target="_blank">recent column</a> that appeared on <a class="hidden_link" href="">Forbes</a>.com went all the way to synthesizing two aspects of this market that your editor has addressed in these pages before: System D as a market itself and Bitcoin, the bare-knuckeled cyber-cryptocurrency tapped by adherants as the answer to the tyranny of central banking, as a viable currency to carry and facilitate transactions within it. Both topics are relatively new; Bitcoin is barely 3 years old and, although System D has been around since people first began contracting and exchanging goods and ideas &mdash; or rather, since people claiming the right to do so began trying to regulate and tax them &mdash; Neuwirth&rsquo;s book, published just last year, is the first real effort at quantifying it.</p> <p>Expect more on these rapidly developing, highly adaptive markets as debt-laden states around the world struggle to catch their dying breaths and mainstream indexes and markets are increasingly stifled by their burdensome regulations.</p> <p>The answer to the above question, What is the market?, is simple: It is people. And people are beginning to notice they don&rsquo;t need arbitrary regulations imposed on them by self-serving lawmakers and central planners in order to trade and interact peacefully with one and other.</p> <p>Instead, they are coming to realize the power of free and open markets. And they are joining a growing chorus each and every day.</p> <p><a href="" target="_blank" title="Joel Bowman">Joel Bowman</a><br /> for <a href="" target="_blank" title="The Daily Reckoning"><em>The Daily Reckoning</em></a></p> <p><a href="">What Does &ldquo;the Market&rdquo; Mean to You?</a> originally appeared in the <a href="">Daily Reckoning</a>. The Daily Reckoning, published by <a href="">Agora Financial</a> provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.</p> <p>&nbsp;</p> <p><strong>Read more posts on <a href="">The Daily Reckoning &raquo;</a></strong></p><p><a href="">Join the conversation about this story &#187;</a></p> Dear Main Street, Occupy Wall Street Is Not Your Friend Mon, 24 Oct 2011 09:49:00 -0400 Scott Shane <p><img class="float_right" src="" border="0" alt="Occupy Wall Street" /></p><p>David Meinert, owner of Big Mario's Pizza in Seattle, has been giving <a href="">free pizza to Occupy Wall Street</a> protesters. While many small-business owners, like Mr. Meinert, share the movement's anger at the Wall Street banks, they should be wary. Occupy Wall Street is no friend of Main Street.</p> <p>To start with, small-business owners should consider who is supporting the movement. The big labor unions are firmly in the Occupy Wall Street camp, and small-business owners and the unions don't exactly sing from the same hymnal. The National Federation of Independent Business's continued efforts to protect small business from the power of the big unions are testimony to this fact.</p> <p>The Occupy Wall Street movement has very different objectives from most small-business owners. Doug Schoen, a political pollster and <a class="hidden_link" href="">Fox News</a> analyst, recently <a href="" target="_blank">surveyed 200 protesters</a> and concluded that the majority of the movement's members want higher taxes to redistribute wealth and heavier regulation on the private sector. But most small-business owners have been calling for less regulation and lower taxes to get the economy going again.</p> <p>Moreover, most small-business owners believe in the capitalist system, while Occupy Wall Street expresses some anti-capitalist views. Take a look at some statements made in <a href="" target="_blank">the movement's first official release.</a>&nbsp;"Corporations &hellip; have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions&hellip;. have consistently outsourced labor and used that outsourcing as leverage to cut workers' health care and pay&hellip;. [and] have spent millions of <a href="" class="kLink">dollars</a> &hellip; to get &hellip; out of contracts in regards to health insurance."</p> <p>What about views of health care? According to <a href="" target="_blank">CNBC</a>, most of the movement is calling for universal health care. And to the extent that Occupy Wall Street opposes the health-care reform legislation passed in 2010, it's because the new law wasn't extreme enough. David Maris, a health-care equity research industry analyst, wrote on <a href="" target="_blank"></a> that he spoke to 50 of the protesters and found that 49 of them believe that health care should be free.&nbsp;By contrast, a <a href=";p=irol-newsArticle&amp;ID=1516926&amp;highlight=" target="_blank">January 2011 Discover Card survey</a> shows that the majority of small-business owners want to repeal the new health-care law, and only a little over a third want to keep it.</p> <p>If the protesters get their way and Wall Street is more heavily regulated, small-business owners will bear the cost. Like it or not, small businesses need the banking system because that's where they get the credit they need. As regulators have tightened their control over the banks in recent years, the lenders have become very conservative, cutting back dramatically on small-business lending. If Occupy Wall Street succeeds and the <a href="" class="kLink">government</a> exerts even more control over the banks, the end result will be even less small-business credit.</p> <p>While small-business owners, like most U.S. voters, are likely to avoid extreme groups on either side of the aisle, if forced to choose, their interests are better aligned with the Tea Party than with Occupy Wall Street. As <a href="" target="_blank">I have argued elsewhere</a>, Party movement has called for three changes most small-business owners favor: cutting taxes, repealing health-care reform laws, and cutting government regulation.</p> <p>So Mr. Meinhart, how about some pizza for the Tea Partiers? No need to give it to them for free, though. They believe in capitalism, so if their actions are consistent with their views, they would pay for it.</p> <p><em>This <a href="">post</a> originally appeared on <a href="">Entrepreneur</a>.</em></p><p><a href="">Join the conversation about this story &#187;</a></p> Herman Cain On Why He's Better Than Mitt Romney: He's Wall Street, I'm Main Street Mon, 17 Oct 2011 08:55:00 -0400 Courtney Comstock <p><img class="float_right" src="" border="0" alt="bain-romney" /></p><p>Herman Cain articulated why he's a better candidate for the GOP nomination than <a href="" class="hidden_link">Mitt Romney</a> on Meet the Press on Sunday.</p> <p>"He has been more of a Wall Street executive, I have been more of a main street executive," <a href=",0,812972.story?track=rss&amp;utm_source=feedburner&amp;utm_medium=feed&amp;utm_campaign=Feed:+latimes/news/politics+(L.A.+Times+-+Politics)&amp;utm_content=Google+Feedfetcher">Cain said</a>.</p> <p>This is a plus for Cain for obvious reasons, because <a href="">everyone hates Wall Street right now</a>.&nbsp;</p> <p>"I was a Main Street executive. I&rsquo;ve actually made pizzas, made hamburgers, cleaned restaurants, swept the parking lot, Okay? I&rsquo;ve been a hands-on business executive throughout my career, so I can better connect with people who are working for hourly wages. I can relate to the small businessman. Why? I have been one, and I&rsquo;m still one," he&nbsp;<a href="">told CBS News last week</a>.</p> <p>To see just how much of a "Wall Street executive" Romney is, look no further <a href="">than this photo</a>.</p><p><a href="">Join the conversation about this story &#187;</a></p> All Those People Moving Home To Save Money Will Cost Investors Sat, 17 Sep 2011 06:00:00 -0400 Gary Anderson <p><img class="float_right" src="" border="0" alt="china chinese family mother tiger" width="401" height="301" /></p><p>I recently <a href="">wrote an article about multi generational living</a> that didn't spark much interest from the <a href="" class="hidden_link">Business Insider</a> crowd, because most of the readers do not have to deal with the challenges of the average Joe.</p> <p>I understand that.</p> <p>But perhaps this crowd had better pay attention if they have investments founded upon the idea that those slipping away from middle class status will add to their bottom line anytime soon.</p> <p>Same goes for those thinking about China and making a buck there.</p> <p>There are severe social dislocations in China, and sacrifices to be made in order to accumulate wealth.</p> <p>Right after my article was written, an article appeared from the <a href="">Wall Street Journal titled "More Americans Are Doubling Up".</a></p> <p>The Journal realizes that this phenomena is becoming a real issue for the investment community.</p> <p>The Journal essentially parroted my point, (though I am not accusing them of copycat behavior), that if junior lives at home, you need fewer TV 's, and I had said certainly you don't need another cable subscription.</p> <p>Acted out throughout the United States, this adds up.</p> <p>Investors beware.</p> <p>Of course the article was "glass half full" and pointed out the possible massive demand from those who want to escape from mom and dad. The first commenter spoke of how crucial it was to get out of mom and dad's house in order to personally grow. But I view all this posturing as a bunch of BS.</p> <p>No one can really tell if these people are going to move out of mom and dad's house. Family formation may take place, but within a multi generational setting and that will severly hurt investors thinking that real estate, or cable, or power will pick up in usage. All that could happen, but with the financial headwinds such as low wages, it may not happen after all.</p> <p>Some bank on the<a href=""> Republicans desire to extend lending.</a> <a href="" class="hidden_link">Davos</a> in 2011 is seeking a doubling of world debt. The Republicans see debt as profit, and their handlers, the big banks and hedge funds do as well.</p> <p>So, we need to<a href=""> look at China</a> to see if there are any answers there. <a href="" class="hidden_link">Indeed</a>, China is quite an eye opener. It turns out that single families cannot afford to live in cities after all. One third of Chinese families in the city farm out their children to grandparents and relatives. That is a big, big number folks. Chinese moms and dads are working their butts off to take care of their children in the COUNTRYSIDE. Wow. What a revelation.</p> <p>So the Chinese cope with the high cost of living in a very disciplined manner. That is because they are warned that too much credit can land people in jail. Failure to pay on credit in China has massive penalties. Ah, but those penalties keep the Chinese from screwing up. They will eat rice all day before going into debt. As much as the Chinese leadership wants to squeeze the Chinese citizen, the more he is disciplined to cope.</p> <p>That would drive bankers bonkers in the United States wouldn't it? Without credit they can't make a dime.</p> <p>Looking at both systems for practicing strategic frugality, I like the US system better. Multi generational families make for parents and children bonding and that is missing in China.</p> <p>As for investors, I think you could be cooked. I am no financial advisor and don't offer stock advice, But if you think that you can make money off of main street while you churn the value of commodities upward in price, you have another think coming. You cannot squeeze blood out of a turnip. It will be interesting to see what happens in the next Republican housing bubble.</p> <p>I know that <strong>both parties</strong> had a major hand in the last bubble, allowing the bankers to<a href=""> run wild under Clinton</a> and W. But the next one will likely be generated by the Republicans. The question is whether the new strategic frugality will impact this bubble and shorten the duration of it. I could see a lot of folks who just get out from being under water in their mortgages trying to sell their way out of their mess before the crash takes hold.</p> <p>Oh, the inventory!</p> <p>So, without household formation there is an increase of wealth, but there is not a recovery of debt extension. The secret is out. To Wall Street and to our miserable government, recovery means recovery in <strong>the demand for debt</strong>. How novel if we recover without debt, with strategic frugality leading the way, putting more money in our pockets.</p> <p>The Chinese, in a very difficult way, are already practicing strategic frugality. They don't want a credit card from Chase. They would rather pay in cash, don't you know? If doctors can work in China and have their kids live outside the city, we can at least make the jump to more multi generational living.</p> <p>Oh I know, you kids still home will be ashamed. Grandma will miss out on the independent living where they charge an arm and two legs for crappy food. Oh, what a sacrifice! Truth is, that is a great way for everyone to have more money in the end isn't it? <strong>To hell with the bankers I say, because they only make money on debt. And we don't want their stinkin' debt do we folks?</strong></p> <p>Whether in China or in the United States, frugality starts in the home. Proper set up of structure will keep the creditor away and heck, he may have to find a real job. And hedge fund guys won't be able to screw with the value of your home.</p> <p>Wouldn't that be great? To the <a href="" class="hidden_link">Wall Street Journal</a> I leave this message: the silver lining is not recovery into the same massive cost of living trap Americans face. No, the silver lining is in the big middle finger of multi generational living that is shoved into the faces of greedy bankers everywhere.</p><p><a href="">Join the conversation about this story &#187;</a></p> Wow, Main Street Really Has No Clue What Wall Street Does Sun, 14 Aug 2011 10:33:22 -0400 Courtney Comstock <p><img class="float_right" src="" border="0" alt="president barack obama" /></p><p>When President Obama says tax breaks for best selling book authors and hedge fund managers are contributing to the high national debt in speeches about the debt ceiling and the anemic recovery, this is why it's really bad.</p> <p>Check out what <a href="">this article</a> says about job creation and Wall Street:</p> <p style="padding-left: 30px;">In 2008, two hedge fund managers, <a class="hidden_link" href="">John Paulson</a> and <a class="hidden_link" href="">George Soros</a>, earned $4 billion and $3 billion respectively. In 2009, the five largest Wall Street financial institutions paid out $140 billion in bonuses while one in six Americans was unemployed. When the financial crisis was at its peak, those firms held $14 trillion in debt, including $11 trillion in speculative real estate mortgages. The U.S. GDP is $17 trillion.</p> <p style="padding-left: 30px;">This is not a clarion call for class warfare, but I hope it helps explain the difficulty in creating jobs. <strong>None of the trillions of dollars wagered by Wall Street was used to create new companies, expand markets, spur innovation or establish long-term stability in the financial sector.</strong> When so few companies control so much money so irresponsibly, jobs become secondary.</p> <p>The bolded sentence is not true.</p> <p>Wall Street provides loans to create new companies, and it expands markets. For example, Wall Street is why the securitization of mortgages, which allows more Americans to take out mortgages and live in houses they couldn't otherwise afford, took off. In the 1980s, mortgage securitization became a multi trillion dollar industry, offering many new jobs.</p> <p><a class="hidden_link" href="">Lloyd Blankfein</a> explained in his <a href="">testimony before the Senate</a> in 2010 some of what Wall Street in general does. He was talking specifically about <a class="hidden_link" href="">Goldman Sachs</a>, which loans to small businesses much less than banks like JPMorgan Chase and Citigroup.</p> <ul> <li>We help governments raise capital to fund schools and roads.</li> <li>We advise companies and provide them funds to invest in their growth.</li> <li>We work with pension funds, labor unions and university endowments to help build and secure their assets for generations to come.</li> <li>We connect buyers and sellers in the securities markets, contributing to the liquidity and vitality of our financial system.</li> </ul> <p>No wonder people on Wall Street feel that President Obama is engaging in class warfare and speak out against it, like when hedge fund manager Dan Loeb <a href="">wrote recently</a>, "President Obama has yet to speak to Americans as adults, insisting instead on his preferred technique -- stirring up class warfare."</p> <p>The information is readily available, and after the financial crisis, it's something everyone should have learned by now, but Main Street has no clue what Wall Street does.</p> <p>So when Obama says in speeches that tax breaks for best selling book authors and hedge fund managers are contributing to the high national debt in speeches about the debt ceiling and the anemic recovery (before that his target was bankers getting bonuses), Main Street hears it, has no clue that it's just rhetoric and a total exaggeration, and gets angry.</p> <p>While many on Main Street still have the misconception that Wall Street does nothing to create jobs, expand markets, etc, it's irresponsible to use generic anti-Wall Street rhetoric to point the finger at them for contributing to the anemic recovery.</p> <p>It's perpetuating the us vs them mentality, keeping Main Street angry at Wall Street, and misinforming them about the causes and possible solutions for economic growth.</p><p><a href="">Join the conversation about this story &#187;</a></p> Step Away From The Quantitative Easing Tue, 09 Aug 2011 15:57:00 -0400 Market Anthropology <p>Is it the height of naivet&eacute; for me to continue to believe that if the Fed stepped away from additional rounds of quantitative easing here, it would provide the most bang for the buck by continuing the precipitous decline of energy and commodity costs to the worlds largest economy? <br /><br />Or is the threat of deflation to any asset class too risky a gamble for the Fed to take?<br /><br />At this point in the recovery and considering consumer spending makes up 2/3 of the US economy - it's Main Street that needs the most help right now, no? <br /><br />Banks - Saved - Check.<br />Corporations - Saved - Check.<br />Consumers - Help!<br /><br />I am sure that the designers of quantitative easing did not foresee that by indiscriminately stimulating risk during a commodity bull market that they could in fact control the mechanism that would deflate the cycle just when the economy needed it most.<br /><br />What I mean by that rather convoluted statement is quantitative easing was certainly an imperfect transmission vehicle for restoring confidence or risk appetite back into the financial system during the crisis.<br /><br />It failed if you measured its efficacy along the lines of stimulating lending to Main Street in what was certainly a deflationary and de-leveraging environment in 2009. It was a hail mary pass for all intents and purposes, but it could still find the end zone through a series of unintentional fumbles, creative footwork and accommodative officiating. <br /><br />Let's just call it luck.<br /><br />Our economy through tremendous gains in productivity (and accounting) has transitioned to profitability at such a historically high petroleum and commodity cost multiplier, that by dialing energy and commodity prices lower here through the relative tightening of monetary policy could in fact provide the most comprehensive stimulus to the economy and the consumer - just when the Fed was perceived to have no additional rounds left in the chamber.<br /><br />To think that even five years ago before the financial crisis hit, that the US economy would be able to maintain the degree of profitability it has exhibited today (with over 9% unemployment, a 12% output gap and until lat week - $100 oil) would have been perceived as pure academic fiction. No economist in their right mind would have believed that these economic conditions could have produce such results.<br /><br />And yet here we stand with corporate profits at all time highs and corporate balance sheets in the best shape in a generation.<br /><br />The latter was a direct result of quantitative easing maintaining confidence in the financial system and directing corporations to the issuance trough to restore their balance sheets at historically low interest rates.<br /><br />This has only been realized because of the good fortune of where we sit in the long term interest rate cycle (see chart) and the Fed becoming the lender of last resort through QE. If the crisis had occurred during the 1970's where inflation expectations where on the upswing, Bernanke's Frankenstein monetary experiments would have gone terribly wrong from the outset.</p> <div style="margin: 0px;"><img src="" border="0" alt="Bond yields over 200 years" /></div> <div style="margin: 0px;">Fortunately, and as personified in the extraordinary yield environment - inflation expectations are still on the benevolent backside of the interest rate cycle (see <a href="" target="_blank">here</a>) - and as exhibited by this week's impressive relative strength of the US Treasury market in the face of their first downgrade by a major ratings agency. <br /><br />My hope is that Bernanke is not scared&nbsp; once again to the monetary alter and realizes that he still holds a few powerful rounds in the psychological chamber of market influence.</div> <div style="margin: 0px; padding-left: 30px;">The greatest trick the devil ever pulled was convincing the world that he didn't exist. And like that - poof, he's gone. - Kayser Soze</div><p><a href="">Join the conversation about this story &#187;</a></p>