49% Of Americans Aren't Saving For Retirement

From the No Shit, Sherlock Network CNN, here comes a report that shows just how dire our collective long term economic predicament really is:

America has a serious problem saving for retirement.

About 49% of Americans say they aren't contributing to any retirement plan, according to a new survey conducted by LIMRA, a trade association for the financial services industry.

"The findings from this survey were disturbing, given that people will increasingly need to rely on their personal savings to make ends meet in retirement," said Matthew Drinkwater, associate managing director at LIMRA's retirement research division.

People ages 18 to 34 are the least likely to be saving, with 56% reporting that they are not currently contributing to a retirement plan like an IRA or a 401(k).

"In order to have the adequate savings necessary to meet their financial needs in retirement -- which could last 20 or more years -- it is critical that these individuals begin saving systematically early in their working years," Drinkwater said.

So what is the reason that so many people are being so neglectful in preparing for their future?

Nearly half of consumers said they aren't planning to contribute to an IRA because they can't afford to, and only a quarter of Americans have worked with a financial professional to plan for retirement, the survey found.

In order to "work with a financial professional to plan for retirement" you gotta have something to plan WITH. If you don't have jack shit, you can't very well make a plan with it. What's maddening is just how much difficulty the mainstream media seems to have in grasping this basic concept.

The Type 2 Diabetes Epidemic Among Young People Is A Calamity Just Waiting To Happen

At first glance, this story that appeared on CBS News over the weekend seems to be yet another depressing reflection on just how few people seem to give a damn that their unhealthy lifestyles are not only slowly killing them but their children as well:

There is a growing epidemic among American children, and now there is a new recommendation on how hundreds of thousands of those kids should be treated.

The problem is type 2 diabetes, and it is a problem that is confounding more doctors, families, and health care professionals every day.

CBS News correspondent Tony Guida reports type 2 diabetes was never seen in young people as recently as 15 years ago. Now it's occurring with alarming frequency. Doctors know that a major risk factor is obesity. Beyond that, they were mostly in the dark about this disease.

"Very little is known about the right way to both prevent it and treat it," said Dr. Robin Goland.

A new study out today in the New England Journal of Medicine finds that the standard treatment for type 2 diabetes in children is ineffective because the commonly prescribed drug Metaformin - effective in adults - has a high failure rate in children. Still, a combination of two diabetes drugs is far more effective in treating young people.

"Two drugs right off the bat, that's an important finding," Goland said.

It is important because type 2 diabetes appears to be more aggressive in young people between the ages of 10 and 17, putting them at great risk for life-threatening illnesses typically associated with seniors.

"We want them to grow up and have healthy lives and not be having heart attacks and strokes at terribly young ages," Goland said.

When it comes to preventing type 2 diabetes, more exercise and a healthier diet are key, but doctors know young peoples' habits are tough to change.

"The first surprise that we saw was, number one, how incredibly difficult it was to effect lifestyle change in these children, in these youth that have type 2 diabetes," said Dr. Kenneth Copeland.

Well, of course it is going to be difficult to effect a lifestyle change in those children. If their parents aren't willing to MAKE them change their habits, its a hopeless cause. Right here I could get up on my soapbox about parental responsibilities and and our mindless teevee-dominated culture that has created a generation of fat, slovenly couch potatoes and blah, blah, blah. If you're looking for that kind of commentary, read Karl Denninger's take.

Instead, I'll boil my reaction down to one very simple observation: what in the hell is going to happen to these kids and their parents when our unsustainable health care system starts to break down within probably the next few years? Not to mention that when energy prices become prohibitively expensive, suddenly these wheezing, waddling fools won't be able to rely on their cars and all of the gadgets that make their lives so effort free. I don't think it takes too much imagination to realize that there are many millions of people who are going to be is deep trouble from a health standpoint long before the collapse finally comes.


Bonus: "I hope that you got fat...'cause if you got really, really fat, you might just want to see me come back"

"My Faith Based Retirement"

Since it is Sunday, I'm going to take a break this morning from writing a longer post and instead allow op-ed columnist Joe Nocera do the talking from a column published on Friday in the New York Times:

My 60th birthday is less than a week and a half away, and if there is one thing I can say with certainty it’s that 60 is not the new 50.

My body creaks and groans. My eyes aren’t what they used to be. I don’t sleep as soundly as I did just a few years ago. Lately, I’ve been seeing a lot of doctors, just to make sure everything still more or less works.

I’ve also found myself with a sudden urge to get my house in order — just, you know, in case. Insurance, wills, that sort of thing. Sixty is when you stop pretending you’re going to live forever. You’re officially old. Or at least old-ish.

The only thing I haven’t dealt with on my to-do checklist is retirement planning. The reason is simple: I’m not planning to retire. More accurately, I can’t retire. My 401(k) plan, which was supposed to take care of my retirement, is in tatters.

Like millions of other aging baby boomers, I first began putting money into a tax-deferred retirement account a few years after they were legislated into existence in the late 1970s. The great bull market, which began in 1982, was just gearing up. As a young journalist, I couldn’t afford to invest a lot of money, but my account grew as the market rose, and the bull market gave me an inflated sense of my investing skills.

I became such an enthusiast of the new investing culture that I wrote my first book, in the mid-1990s, about what I called “the democratization of money.” It was only right, I argued, that the little guy have the same access to the markets as the wealthy. In the book, I didn’t make much of the decline of pensions. After all, we were in the middle of the tech bubble by then. What fun!

The bull market ended with the bursting of that bubble in 2000. My tech-laden portfolio was cut in half. A half-dozen years later, I got divorced, cutting my 401(k) in half again. A few years after that, I bought a house that needed some costly renovations. Since my retirement account was now hopelessly inadequate for actual retirement, I reasoned that I might as well get some use out of the money while I could. So I threw another chunk of my 401(k) at the renovation. That’s where I stand today.

When I related my tale recently to Teresa Ghilarducci, a behavioral economist at The New School who studies retirement and investor behavior, she let out the kind of sigh that made it clear that she had heard it all before. The sad truth, she told me, is that I’m the rule, not the exception. “People have income shock, like divorce or loss of a job or a health crisis,” and those crises tend to drain retirement accounts, she said.

But even putting income shocks aside, she said, most human beings lack the skill and emotional wherewithal to be good investors. Linking investing and retirement has turned out to be a recipe for disaster.

“People tend to be overconfident about their own abilities,” said Ghilarducci. “They tend to focus on the short term rather than thinking about long-term consequences. And they tend to think that whatever the current trend is will always be the trend. That is why people buy high and sell low.”

Because I don't want to reprint the entire article, I'll now flash forward to the money quote, so to speak:

What, then, will people do when they retire? I asked Ghilarducci. “Their retirement plan is faith based,” she replied. “They have faith that it will somehow work out.”

In yesterday's post, I asserted that people who have bought houses in the past couple of years in the mistaken belief that the "bottom was in" on the housing market are like sheep being led to the slaughter because of their blind optimism. This column makes it plainly apparent just how widespread the problem really is. Obviously, I don't know Joe Nocera, but if he is writing op-ed pieces for the New York Times he must be a pretty smart guy. If he got tripped up by his own stupid blind faith, what hope is the for the average mope?


Bonus: I may end up linking to every song on this album before its all over

Housing Crash Porn: One Million More Suckers Now Underwater

It is an established fact that one of the biggest drivers for the insane monetary policies of the Federal Reserve since the financial crash of 2008 was trying to save the crashing housing market. The Fed's zero interest rate policy has driven mortgage rates to historical lows below 4%, while the bank bailouts were designed, in part, to give lenders the capital to continue making home loans so the market wouldn't implode completely. The results have been, shall we say, less than impressive given that home sales and home prices remain mired near their post crash lows.

As if record low mortgage rates were not enough to entice buyers back into the market, in the media there have been repeated calls that "the bottom is in" on housing as a means of trying to convince people that they are no longer risk of losing money on their "investment." So how is the second part of the strategy to save the housing industry working out? Not too well, actually. Here is Reuters with the details:

More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.

It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.

As of December 2011, the latest figures available, 31 percent of the U.S. home loans that were in negative equity - in which the outstanding loan balance exceeds the value of the home - were FHA-insured mortgages, according to CoreLogic.

Many borrowers, particularly since late 2010, thought they were buying at the bottom of a housing market that had already suffered steep declines, but have been caught out by a continued fall in prices in wide swaths of America.

Even for loans taken out in December - less than four months ago and the last month for which data is available - nearly 44,000 borrowers, or about 7.5 percent of the total, now find themselves under water.

"The overwhelming majority of the U.S. is still seeing home prices decline," said CoreLogic senior economist Sam Khater. "Many borrowers continue to be quickly wiped out."

The problem is not uniform around the country. In some areas, such as Washington, D.C., Miami and parts of northern California, prices are on the rise.

CoreLogic predicts the overall U.S. housing market will finally bottom out this year.

And the number of homeowners falling under water each month has decreased significantly since the peak of the financial crisis in 2008 and early 2009.

Still, Khater said, since October 2010 average home prices have fallen 7.4 percent. Overall, CoreLogic data shows that 11.1 million, or 22.8 percent, of U.S. residential properties with a mortgage are in negative equity, unchanged from the summer of 2010.

According to the S&P/Case-Shiller 20-city composite index, which tracks home values in 20 major U.S. metropolitan areas, U.S. home prices were down 3.5 percent in February from a year earlier and are now at their lowest level since late 2002. Over the past 12 months, 15 of the 20 major metropolitan areas monitored saw declines.

We in the reality-based community have, of course, been warning for years that anyone who believed the hype from the politicians, the media and corporate America about the phantom housing recovery were like sheep waiting to get sheared. Meet one of the lambs:

Jason Opalka took out an FHA-backed loan on his two-bedroom property in the suburbs of Orlando, Florida, in August 2010. He was helped by Certified Mortgage Planners of Orlando, who negotiated the FHA-backed loan with the lender, Freedom Mortgage, based in New Jersey.

Opalka was refinancing another FHA-backed loan he had obtained in 2008, for $196,000, then at an interest rate of over 6 percent.

Under the refinancing, he borrowed $192,278 at an interest rate of 4.5 percent. Opalka, looking at the paperwork, is still surprised at the down payment he had to make in 2010, for a property valued at the time for little more than the loan was worth and in which he had almost no equity.

His down payment was just $3,000 - or about 1.5 percent of the total loan.

Less than two years later, local real estate estimates now value Opalka's home at no more than $110,000.

"I'm at least $80,000 under water," Opalka told Reuters. "We never expected to go under water. We never expected prices to fall like they have. We definitely didn't see this coming. If I'd known this, we probably would have rented."

Just how many times do people have to get beaten over the head after listening to the mainstream media before they finally wake up and realize that they are being played for suckers? It is bad enough that the snake oil is being peddled by the real estate industry. You would expect that, and if you have any common sense you won't trust a Realtor or a mortgage broker any more than you would a used car salesman. But having the federal government be complicit in the scam just makes it all the worse.

We have arrived at the point where all of the biggest frauds preying upon working and middle class families are now a combined effort of the banks, big corporations and the federal government. Mortgages and student loans are just two of the largest such swindles--and they very much tie in together since those who have been saddled with large amounts of the latter can hardly afford to take out one of the former, even at these insanely low interest rates.

How any impartial observer can look at what is happening in these sectors as not realize that a huge crackup is coming is beyond my puny powers of comprehension. Interest rates cannot fall much farther, and when they do finally start to rise, they are going to kill what little does remain of the housing market. Anyone inclined to believe the latest call from just this past week that "the bottom is in" and is planning to buy a house is a sheep not only about the be sheared but eventually slaughtered.


Bonus: The lambs are lying down on Broadway...and every other street in the U.S.

Great Recession Porn: Illegal Mexican Immigrants Are Going Home

When your mind isn't clouded by partisan politics or rigid ideological dogma, it is easy to apply common sense about any given issue. I have been saying for many years that the most effective way to combat the problem of illegal immigration is not to demonize the poor souls crossing the border in hopes of a brighter economic future, but to instead vigorously prosecute the corporations who hire them. At a time of high structural unemployment, it is even more unforgivable that American employers refuse to pay a living wage and instead undercut American workers by hiring illegal aliens. And I've never bought into the bullshit that there are jobs that "Americans won't do." Offer a decent wage and see what happens. Will prices go up? Sure, but people in this Spoiled Rotten Nation buy way too much shit they don't need anyway.

Until recently, I had no evidence to back up my theories about the economic driver for illegal immigration because U.S. government policy was solidly behind the corporations and their nefarious schemes to destroy the working and middle class wage structure in this country. Which was the real reason, incidentally, that President George Bush the Lesser infuriated the nativists in his own party by not backing draconian anti-immigration laws. Yeah, a real humanitarian, that asshole.

But now, as the lingering effects of the Great Recession are dragging on, the data is trickling in that support my position. Here is the Atlantic Wire with the story:

A new study says that for the first time since the Great Depression, there may be fewer Mexican immigrants coming into the United States than there are moving from the United States back to Mexico. According to the Pew Research Center, the net migration between the U.S. and Mexico over the last five years was essentially zero, and the downward trend suggests that flow of both legal and illegal immigrants may have actually reversed back toward Mexico.

There are many possible reasons to explain the decline, but the most obvious one would seem to be the struggling U.S. economy, which has cost millions of available jobs, particularly in construction and in the South, where recent immigrants generally thrive. There have also been big increases in enforcement, deportations, and border security, although the report also says that arrests of illegal immigrants trying to cross the border has actually plummeted by nearly 75%. Whether that's because fewer people want to come here or they just don't think it's worth the risk is hard to pin down, but the number of folks willing to take the chance is definitely declining.

Given the continued hysteria over illegal immigrants and how demographic shifts might change the country in the future, many Americans might be shocked to learn that the shift is actually heading in the other direction. There have been several state laws just within the last couple of years that were passed on the premise that illegal immigration was out of control, even as the population of Mexican immigrants is apparently lower than it has been in decades. (Some might argue that the news laws are responsible for that, but the trend was clearly in place even before they were passed.) The Supreme Court will actually hear arguments this week about the harsh Arizona law that has been at the center of the debate for the last couple years, but this new evidence may put the crackdown in a new light, since the problem it was intended to resolve may not actually exist.

Gee...dry up the pool of available jobs and the illegal immigrants stop coming to America. Who would have ever thunk it? So much for the ridiculous idea that the immigrants come here to have babies who become American citizens just so they can collect welfare benefits. I daresay the average Mexican migrant farm worker is far better acquainted with what it means to perform hard labor than your average brain dead dittohead.

Consider this story one of the strongest indicators yet that America is experiencing an ongoing slow motion economic collapse. When the world's poor, tired, huddled masses no longer see our country as a great and glorious land of opportunity, but instead decide that being destitute back at home where they at least have a family and social support structure is better than being here where they are reviled just for trying to earn a meager living, the end cannot be all that many years away.


Bonus: Arlo Guthrie covers his legendary father

High Gas Prices Eat Into Nonprofits' Funding

This story merely served as yet another reminder of just how precarious and dependent upon cheap gasoline so many of the more vulnerable members of our society really are. Here is delmarvanow.com with the details:

Rising gas prices are siphoning money the Food Bank of Delaware would rather spend to feed a record number of low-income families, at-risk kids and impoverished seniors.

“We definitely feel the impact,” spokeswoman Kim Kostes said. Every added $1 pumped into its trucks and vans could provide four nutritious meals, she said.
Gas in Delaware hit an average of $3.82 per gallon Sunday, and is expected to soon top $4 a gallon.

The food bank now is also working to raise the last $1 million effort for a $2.7 million to add a kitchen to expand its Milford site, serving southern Delaware, where need is growing fastest, she said. “Gas cards are great,” Kostes said, but money for operations and a new kitchen is also needed.

For nonprofits, rising gas prices mean not only higher costs for food and goods, but also a drop in donations, because people already suffering in the recession “just aren’t feeling like they have as much to give,” said John D. Baker, spokesman for the Delaware Association of Nonprofit Agencies.

The worst-hurt programs are those like the food bank and Meals on Wheels, which directly involve transportation or delivery, he said.

Some longtime volunteers at the Modern Maturity Center in Dover, where Meals on Wheels rolls out 700 meals each weekday, are starting to ask for help buying gas, said Executive Director Carolyn Fredricks.

Some volunteers have asked for shorter routes, some long routes have been split and there have been modest gas reimbursements when donations made them available, Meals on Wheels Deputy Director Ken Bock said.

Still, he said, paid staff members often end up doing a lot of deliveries that were done by volunteers before gas prices spiked.

Leaders of Delaware nonprofits say they already have been poaching from other budgets, doing more fund-raising and asking for gas card donations to help cover rising costs.

“We appreciate every bit of help,” said Newark Senior Center Executive Director Carla Grygiel. “We need it.”

Fuel costs are up 39 percent from last year for the center’s thrice-weekly member pick-up bus, she said. But the center is determined not to raise its $1 fare.

“We can’t raise our fees to our people who take the bus, because they are our most frail individuals,” Grygiel said, adding even a $1 fare “is difficult for some of them.”

Right now there is still enough latent wealth spread out around our economy to keep rising gasoline prices from turning into a potential humanitarian disaster. So what is going to happen when the day finally comes that those prices do rise to $5.00 or $6.00 a gallon or even more?

The Bubble Sport Goes Completely Insane Again

For those of you who are not big sports fans and may not realize it, today is Opening Day in Major League Baseball. Once again, hope springs eternal, with every team starting out with a blank slate, dreaming of the possibility of October games and World Series title. I’ll admit, I became hooked on baseball as a kid watching the Big Red Machine back in the mid-1970s, and despite souring on it for awhile after the so-called “labor” dispute that resulted in the cancelling of the 1994 World Series, it has always been my first sporting love.

Like so many other things in America, however, the influence of big money has greatly tarnished America’s game. Beginning in the 1970s, player salaries began to escalate to previously unimaginable heights thanks to the efforts of an aggressive players union. I remember being shocked as a kid back in 1977 when slugger Reggie Jackson, one of the very first superstar free agents, signed a contract with the New York Yankees that would pay him over a half-million dollars per year. But Jackson’s union wasn’t through by a long shot, and over the next 20 years would aggressively confront the owners and stage a couple of strikes which would wipe out large portions of the 1981 and 1994 seasons. The end result could not possibly have been more ironic, during a period in which labor unions in general greatly declined in power and influence and the wages of the average American stagnated in real dollar terms, a professional association representing a group of professional athletes won more and more concessions until Alex Rodriguez really broke the bank by signing a truly staggering $250 million contract with the Texas Rangers in 2001.

Not, however, that we should at all feel sorry for the exclusive billionaire boys club that represents Major League Baseball owners. Starting in the 1980s, no group benefitted from the 30-year debt fueled bubble and the coddle-the-rich tax policies ushered in by Reaganomics. Even as player salaries were exploding, the values of major league baseball teams were rising even faster. Franchises that exchanged hands for $10 million back in the 1970s were suddenly going for hundreds of millions of dollars. And because nearly every city that hosted a major league team was eagerly ready to rape its own taxpayers to build new stadiums featuring revenue generating corporate skyboxes, life was truly good for the fat cat owners.

The only blip on the radar screen was the aforementioned dispute that resulted in the cancelling of the 1994 World Series. At the time, it seemed that the millionaire players and billionaire owners may have finally gone too far in antagonizing the fans. Attendance actually dropped for awhile and the brilliant “leaders” of the game began desperately searching for a way to put fannies back into the seats. Realizing that “chicks (and everyone else) dig the long ball,” what they came up with was a nefarious scheme to “juice” the baseballs and to look the other way while the players juiced themselves so they could hit more home runs. Soon, roided up Goliaths with swollen heads and shrunken testicles were bashing the livelier balls out of the park in record numbers, eventually shattering the two most sacred numbers in all of American sports: 61 and 755. Integrity of the game be damned, we've got millions of tickets to sell.

Baseball finally seemed to at least partly reclaim its senses during the middle of this past decade. Public outcry over steroid use finally helped purge the sport of that particular scourge. Free agent contract awards also leveled off, and for more than a decade no other player signed a contract for even close to the amount of Rodriguez’s deal. In the wake of the 2008 financial crisis, in fact, baseball owners became particularly stingy about giving out the big money, no doubt recognizing that their sport, lacking the massive national television deal that so buoyed the NFL, was far more dependent on the now financially distressed fans for its survival. Attendance, which had been steadily growing since the late 1990s, leveled off in the wake of the crash.

Then suddenly, this past offseason all restraint fell by the wayside and Major League Baseball has resumed throwing money around like there is literally no tomorrow. The Miami Marlins, who had always had a reputation for being a notoriously cheap franchise that would trade star players rather than pay them the big bucks, went all out after a shady, taxpayer funded new stadium deal, giving out over $200 million in free agent contracts to several players. Not to be outdone, the Los Angeles Angels, Detroit Tigers and Cincinnati Reds each paid out well over $200 million for just one player, bringing the 2001 Rodriguez deal much closer to the norm.

But even all of that paled in comparison to the mind boggling figures involved in the recent sale of the Los Angeles Dodgers. Prior to this past month, no major league team had ever fetched more than the $845 million the Cubs were purchased for in 2009. Yet despite that precedent, the Dodgers were sold to a new ownership group for the staggering sum of $2.15 billion, a figure as unprecedented today as the Rodriguez contract was a decade ago.

Right about now, those of you who have indulged me to this point in the article are probably very reasonably asking: “so what does this have to do with peak oil and economic collapse?” Well, the fact is that baseball wouldn’t be throwing around these incredible dollar amounts if the sport wasn’t confident that it is going to see vastly increased revenues going forward. It is, of course, the fans who ultimately pay those nine-figure salaries being doled out to star players and whose support is what increases the value of a franchise well into the ten-figure range. The billionaires who made these decisions clearly believe that in the near future the economy is going to start booming again, and that the average fan will have plenty more money in their pockets to blow on attending baseball games and buying lots of overpriced food and memorabilia at the stadium.

Obviously, I don’t subscribe to that theory. It is really hard to imagine that with all of the headwinds facing working and middle class Americans—underwater mortgages, massive student loan debts, skyrocketing health care costs, tepid job market and high gasoline prices to name a few—that they are suddenly going to experience a surge in their disposable incomes. And all of that is not even counting what will happen when the economy does finally slip back into recession.

The fact is that Major League Baseball, which benefitted greatly from the loose fiscal policies of the bubble years, is now in the process of blowing the biggest bubble of all at precisely the worst possible time. The sport is setting itself up for a spectacular blow up akin to the way Las Vegas kept building larger and more lavish casinos right up until the moment when the gamblers stopped coming in such large numbers and the local economy cratered.

So, as I said before, it’s Opening Day. Hope springs eternal for every baseball fan, who can for at least this one day imagine that this will be the year their team makes it to the World Series. Enjoy it while you can, because the idiots who run the game have virtually ensured that the sport is heading for a very spectacular downfall.

Let’s play ball!

Addendum: Here's a little story from Deadspin about how if you have cable or satellite teevee, you are subsidizing billionaire sports team owners, whether you want to or not.


Bonus: "Put me in, coach...I'm ready to play today"

The Latest Trend in Metal Thefts: Truck Tailgates

As I have posted here before, metal thefts, especially copper, have been an epidemic even since the beginning of the Great Recession back in 2008 as desperate people do whatever they can to raise cash. Now there is an alarming new angle to this problem, as reported by AOL Autos (warning, annoying slideshow format):

Thieves, especially in a tough economy and high unemployment, have been known to steal seemingly odd things that most people wouldn't think had much value. But the thieves know different. Among the vulnerable: copper pipes from building and vacant condos; freshly planted landscaping; plumbing fixtures from vacant condos. Now you can add tailgates from pickup trucks. Huh?

That's right. Law enforcement in at least eight states this year have been reporting rashes of tailgate thefts. Unlike the stuff you might leave on the seat of your truck, the tailgates are not protected by locks or barriers such as windows. Thieves have become adept at wrenching the tailgates, as well as pricey accessories, off the truck.

What's the take? Tailgates, depending on the model of pickup can sell for between $1,000 and $4,000 on Craigslist.com or out of black-market parts shops. Thieves often sell them for much less, but they can cost that much for the victim to replace through legal means.

Recently, criminals have been targeting truck tailgates across the country. In Marple Newton, PA, a truck tailgate was reported stolen from a local school's bus garage parking lot. Similar thefts have occurred everywhere from Georgia to California in recent weeks.

In Spring, Texas, authorities caught up with a man who specializes in selling tailgates on Craigslist.com. It was pretty obvious that the man, actually advertising himself as "Mr. Tailgate," was dealing in stolen tailgates when one of his victims was looking for a replacement, and spied the perfect tailgate on the classifieds website: it was his own! The thief-turned tailgate seller was lured to a parking lot by authorities where he as apprehended trying to sell the tailgate back to its rightful owner for $350.00.

Harris County Texas authorities had received numerous complaints about heisted tailgates before hitting on "Mr. Tailgate," identified as 35-year old Noel Cabello of Spring. Local deputies later searched the suspect's garage and found some 24 tailgates with a combined retail value of at least $50,000.

Police around the country are warning truck drivers about the rise in tailgate theft and some recommend locking tailgates after hours.

According to police in Oswego, Illinois, six tailgates were stolen from Ford pickups between May 2 and Oct. 14 of last year. Two tailgates were taken off Ford F250s, three from Ford F350s and one from a Ford F450. None of the trucks was more than three years old. One of the tailgates had a rearview camera installed on it, police said.

Anyway, a word to the wise for any of my readers who own or drive pickup trucks.


Bonus: A appropriate track from the dawn of electronica

Saturday Night Video: Louis CK on Currency, Economic Collapse and "White People Problems"

I really wish the outstandingly funny Louis CK would do more social commentary in his routines, because he is really good at it. In this clip he makes fun of lazy, complacent Americans and our "white people problems," speculating that we're not going to do so well when economic collapse hits.

Choice bit: "We're the fattest people in the world, and we have all this stuff. And we HATE it."

Enjoy!




Bonus Video: Juice News did a excellent rap report on the whole Kony 2012 controversy (otherwise known as white people for once actually worrying about black people in Africa problems). Too bad it was recorded before Jason Russell was detained Thursday after his rather bizarre public breakdown because then it would no doubt have been even funnier.

"Recycled" Diamonds Yet Another Bad Economic Indicator

Boy, that economic recovery is going great, isn't it? That's what the stock market and all of the financial pundits keep telling us. Party on, Garth. It's 2004 again.

Unless you're a seller of diamonds, that is. Here is Yahoo News with the details:

Experts say a growing cadre of people, especially in North America, are thinking along the same lines. Rather than hanging on to memories of a failed relationship or departed relative, they are opting to "recycle" their diamonds.

"You have no money to pay your medical insurance, you have no money for your mortgage," said Chaim Even-Zohar, a consultant with Israel's Tacy Ltd. "So you take your jewelry and your diamonds to the pawn shop."

It's a trend that is sending ripples through the gem industry at a time when high-quality rough diamonds have become more difficult to find, and more expensive to mine.

The growing influx of "used" gems means prices could stagnate over the long term despite the supply restraints, Even-Zohar said during a presentation at PDAC, the huge mining industry convention held last week in Toronto.

To be sure, analysts were already expected a short-term dip in prices as a weak global economy cuts disposable income in Europe and North America. But the forecast by Even-Zohar, a respected expert, seemed to confirm a nagging fear that recycling could hurt explorers and miners for years.

The numbers already point in that direction, he says. The rough diamond market, before the stones are polished and cut, was worth about $15.2 billion in 2011, and could drop some 10 to 13 percent in 2012. At the same time, Even-Zohar expects $1 billion worth of recycled diamonds to be put back into the market this year.

I guess the takeaway here is that if you are looking for a hard asset in which to try to protect your wealth, diamonds might not be the best choice.


Bonus: Lots of great diamond songs out there, but I've always really liked this one

High Gas Prices Take A Bite Out Of "Meals On Wheels"

Back when I was in college I had job working in the dietary section of the public hospital in my hometown. One of the things we used to do was put together Meals On Wheels so they could then be delivered to needly elderly people in the community. It was a nice feeling to know that part of your job involved actually helping someone.

I hadn't thought about the Meals On Wheels program since those days, until I read this distressing story from a local South Dakota television station:

The high price of fuel not only affects families and businesses, but non-profit agencies as well. Volunteer drivers who deliver food to low-income elderly people are looking for answers from members of Congress.

Meals On Wheels driver Gayle Sagmoe has a VIP riding shotgun on her route: South Dakota Congresswoman Kristi Noem.

"It's the number-one issue that our office hears about right now, is gas prices," Rep. Kristi Noem, R-South Dakota said.

The 500-plus volunteer drivers with Meals On Wheels furnish their own vehicles and pay their own gas.

"I go probably average of 12-15-18 miles a day for a route; at $4 a gallon that's not going to go very far," Sagmoe said.

Drivers like Sagmoe worry that if gas prices climb too high, she may have to cut back on deliveries or stop volunteering altogether.

Unfortunately, the main interviewee for this article is looking for help in all the wrong places:

"I hope it doesn't because volunteering for me is the joy of my life, so I'm hoping and crossing my fingers that somebody will fix something and we can get prices back down," Sagmoe said.

Meals On Wheels hopes lawmakers like Noem can do the heavy lifting toward finding a solution to high prices.

"People are asking us, 'Why?' And simply, it's the uncertainty in the world and that we've got a lot of resources out in the country that we're not accessing," Noem said.

Sorry, Ms. Sagmoe, but your dingbat Congresswoman is far more interested in trying to score political points against Obama than she is in helping you. Because otherwise, she would explain to you that there is not much she, Obama or any other of our national "leaders" can do to bring down the price of gasoline in this era of peak oil. If she really wanted to help, she would suggest that the government provide a fuel subsidy for the Meals On Wheels program, because high gas prices are not only here to stay, they are going to get even worse in the future. But she doesn't want to do anything that might be construed as "socialism," so she'd rather look you in the eye and lie her ass off about all of the bountiful supposed resources America still has that for some inexplicable reason we refuse to access.


Bonus: Just because this story is from South Dakota, here is "Badlands"

U.S. Job Quality Crashes During The "Recovery"

I've asserted here at TDS a few times that the quality of the jobs being created during our great and glorious economic "recovery" on average pay less and provide fewer benefits that the jobs that were destroyed during the 2008-2009 timeframe. Now comes the confirmation in a story published this week by Market Watch:

U.S. employment is still down almost 6 million jobs since the Great Recession began, and industry growth has been uneven during the recovery.

A July report from the National Employment Law Project, a New York–based advocacy group, found that while employment losses during the recession were concentrated in midwage occupations, gains during the early part of the recovery were greatest in lower-wage occupations. During the early recovery, there was relatively large employment growth in lower-wage jobs such as retail salespeople and office clerks, compared with losses in higher-wage occupations such as police officers, first-line supervisors, and managers of construction trades and extraction workers.

With almost 13 million unemployed workers, competition is intense, and some workers with new jobs are taking cuts in pay and responsibilities. Henry Farber, an economist at Princeton University in New Jersey, studied employment in the Great Recession, and found that job losers who found new positions earned on average 17.5% less in the new job.

Not one to nitpick there, Professor Farber, but "job losers" is a rather unfortunate term to use when describing these people.

But wait, lower wages aren't the only problem:

Good jobs are associated with good benefits, said Austin Nichols, an economist at the Urban Institute, a Washington-based think tank.

“There’s a widening gap between the haves and the have-nots,” Nichols said.

According to the U.S. Census Bureau, those covered by health insurance declined to 83% in 2009 from 86% in 1999. Over that time period, those with employment-based coverage fell to 56% from 64%...

Given the staggeringly high price of health insurance these days, it is pretty much a given that the 8% of the workforce that has lost its employer provided health care has a lot less money to spend on other things if they are paying the full amount themselves. Or maybe they are not paying at all, which means they are just one serious health problem away from bankruptcy and destitution.

Nevertheless, hope still springs eternal, especially if you are a Harvard economist who doesn't actually have to work for a living:

The economy is just starting its jobs recovery, and it will take years for the full impact of the current administration’s policies to manifest in the labor market in areas such as health care and infrastructure, said Lawrence Katz, an economist at Harvard University. While Republicans deride President Barack Obama’s record, the economy would be worse without federal stimulus, Katz contended.

“We probably have several million more jobs today than we would have had,” Katz said. “Given the direction that things were going, I think the administration’s policies played an important role in preventing something that looked like the Great Depression. No matter how bad things are now it wasn’t as bad as it could have been.”

See, all it took was for the country to borrow over $5 trillion it didn't have in just over three years to bring us all the way back to where we are slowly creating shitty jobs with no benefits. Of course, the author of this piece didn't bother to ask the esteemed Professor Katz what will happen when the day comes that the federal government can no longer afford to engage is such wild reckless deficit spending. Being a Harvard economist automatically shields you from ever being asked to come down out of your ivory tower and actually observe how things are in the real world.

So this is where we stand today: an anemic economic recovery purchased with trillions of dollars borrowed from the future that will never be repaid, with skyrocketing gasoline and food prices putting ever more pressure on the poor souls who even if they have been lucky enough to find another job are making far less money than they used to. The Great Muddle continues on, as clueless economists like Lawrence Katz cheerlead for the rearranging of the deck chairs on The Titanic.


Bonus: This fucking job

St. Louis Food Pantry Demand Doubles In One Year

While the national news media narrative continues to be one of economic recovery, many local news stories appear every day that completely contradict the idea--far more stories, in fact, that I could ever hope to post here. Stlouistoday.com has one particularly telling such report:

Kornblum Jewish Food Pantry, which is wrestling with a spike in demand, will soon move into a new building that has more space.

The pantry, at 10950 Schuetz Road, recently bought a 21,000-square-foot building less than a mile away at 10601 Baur Boulevard and plans to move there by midyear. The nonprofit organization said the upgrade will cost $1 million.

"We were feeding 2,500 people a month last year, and now we are feeding over 5,000 people per month," said Fred Steinbach, board chairman of the Jewish Family and Children's Service, which runs the food pantry. "We didn't have room to run the facility efficiently."

The pantry serves the St. Louis region, but in recent years more clients are coming in from areas such as Ladue, Chesterfield and Creve Coeur. Other food pantries in the region have also seen spikes in demand from people in affluent suburbs.

"We have people picking up food at the pantry this year who donated last year," Steinbach said. "What we are hearing is people have mortgages that they can't unload and a house that they can't sell, and their families still need to eat."

Maybe some of those national news reporters stenographers who keep repeating that same old tired recovery line should venture out of their little bubbles sometime and interview some of these people down at ground level. Too bad they would never condescend to do so.

Will the Culture War Soon Turn Hot?

Perhaps the most galling trend to yet take hold of the obscene clown show that America’s national politics has become is the sudden widespread assault against women’s reproductive rights. Abortion has been always been a hot button issue going back to the days of Rowe vs. Wade, of course, reflecting the religious right’s frustration at being unable to overturn the ruling despite the country’s rightward political shift over the past four decades. But until recently, most Republican politicians with national ambitions were smart enough to be content with merely pandering on the issue, knowing that actually repealing abortion rights and returning the country to the days when scared young women routinely died in illegal back alley clinics was a political loser.

The recent crumbling of the restraint on the part of the Republican Party, however, has been shocking in its breadth and scope. No longer content with just the occasional demagoguery on the issue, Republican controlled legislative bodies around the country have launched an all out assault in various ways, politics apparently be damned. What’s worse is that they have also felt emboldened to go beyond just attacking abortion to even going after birth control. It’s as if the party which a generation ago was still almost universally represented by white males has decided that now that it has plenty of prominent women in its highest ranks, those women and all others should go back to the days of being perpetually barefoot, pregnant and in the kitchen.

This insanity taking hold of the Republican Party was dramatically illustrated yet again during the most recent presidential debate. Here is Talking Points Memo with the details:

On Wednesday, contraception became the latest topic to raise the ire of conservative debate goers.

During a CNN-sponsored Republican presidential debate in Arizona, the crowd booed wildly at the mention of birth control.

Former House Speaker Newt Gingrich used the opportunity to attack the moderators as he had done in almost every other debate in this campaign cycle.

“Not once did anybody in the elite media ask why Barack Obama voted in favor of legalizing infanticide,” Gingrich complained.

CNN moderator John King neglected to note that several organization have debunked the claim that President Barack Obama ever supported a so-called “infanticide” provision in an Illinois measure that would have required doctors to administer medical treatment to fetuses that survived an abortion.

Former Massachusetts Gov. Mitt Romney called the Obama administration’s decision to have all health plans cover contraception for women an “attack on religious conscience.”

“I don’t think we’ve seen in the history of this country the kind of attack on religious conscience, religious freedom, religious tolerance that we’ve seen under Barack Obama,” the candidate explained.

For his part, former Pennsylvania Sen. Rick Santorum defended his earlier remarks about “the dangers of contraception.”

“The crowd booed wildly at the mention of birth control.” Just like when, in earlier debates, they cheered at the idea of letting a comatose man without health insurance die, or cheered at the idea of U.S. soldiers pissing on the bodies of dead Afghans, or cheered Rick Perry’s reckless execution record in Texas, or cheered the removal of restrictions on child labor, or cheered the idea of Americans waterboarding prisoners.

By now a pattern is emerging that should make any thinking person’s blood run cold. As the real economic conditions in this country have slowly deteriorated, the mood on the far right of the political spectrum has been gradually turning darker and meaner.

Many mainstream pundits would no doubt say that the bad temper of the right wing is similar now to how it was during Bill Clinton’s first term in office, which saw the rise of the militia movements around the country. They would no doubt add that all it took was one shocking event (the Oklahoma City bombing) and a rapidly improving economy from 1995 forward through the rest of the decade to largely defuse that anger. There have been periodic bouts of right wing demagoguery throughout our history, they would additionally assert, but in the end American politics always corrects itself and sanity eventually returns to our public discourse.

As a student of history, I completely agree with that as an interpretation of history. Even Joseph McCarthy was eventually dethroned and discredited for taking his attacks too far after politically terrorizing Washington for the first half of the 1950s.

But, and here is the rub: it isn’t 1956 anymore, or even 1996. The difference between the bout of extreme right wing anger we see today and those of previous generations is that there will be no economic recovery to create the conditions that will allow a restoration of that supposed sanity to our national politics. The beginning of the long era of permanent economic contraction means that the root cause of this explosion in right wing fury, severe economic distress, is just going to be exacerbated from this point on as people continue to lose their jobs and gasoline prices soar to previously unknown heights.

Those who dismiss the idea that true fascism could ever take hold in the United States point out that our representative democracy has far deeper roots than say, Weimar Germany, in which democracy was artificially imposed on an authoritarian culture in the wake of a massive military defeat. This is, of course, yet another accurate assessment of history. The problem with putting too much stock in history, however, is that sometimes it does NOT adhere to the old cliche and repeat itself, but instead begins to write its own new narrative, such as when the Bolsheviks seized control of Imperial Russia.

The end of economic growth in not just the United States but the entire world is a crisis unprecedented in human history. There will be no eventual return to normalcy this time. How exactly it will all play out is anyone’s guess, but this writer’s guess is that one thing we may well see in the near future is America’s long running culture war begin to turn hot, erupting into widespread violence which will then threaten to engulf us all.


Bonus: This little ditty from the dawn of the culture wars describes the forming battle lines remarkably well. Too bad it was recorded by a guy who eventually switched sides

Great Recession Porn: Economic Crisis Slows U.S. Population Growth

As it turns out, a bad U.S. economy is not conducive to robust U.S. population growth. Here is the USA Today with the details:

The U.S. population is growing at the slowest rate since the Great Depression after two decades of robust increases.

For two consecutive years since 2009, the population has grown just 0.7% a year, down from annual increases around 1% in previous years and the lowest since the late 1930s. The U.S. gained 2.2 million people from 2010 to 2011 — fewer than the 2.8 million added a decade earlier — reaching a total of 311.6 million.

"Almost anybody who observes these things over the years can say this is almost all recession-related," says Carl Haub, demographer for the Population Reference Bureau.

The government says the recession ended in June 2009. Although the economy has improved, the downturn's effect on birth and immigration lingers. The number of babies born from July 1, 2010, to July 2011 dropped 200,000 from the same period in 2008-09. The number of additional immigrants fell 150,000.

"It's an indicator of an unhealthy economy," Haub says. "People are obviously still delaying births, and immigration has continued to drop because job opportunities are not there."

The U.S. fertility rate — which has been close to the replacement level of 2.1 children per woman in contrast to many developed nations that are well below that level — now is estimated to have fallen to 1.9, says demographer Joseph Chamie, former director of the United Nations Population Division and more recently research director at the Center for Migration Studies.

Putting aside the looming collapse of our economy for a moment, long term this portends a real disaster for an aging population which expects to be supported by government programs post-retirement. Demographics were already working against the long term solvency of Social Security and Medicare even before the downturn hit.

Though the article doesn't say so, I would gather that a large percentage of those delaying having children are the sons and daughters of the middle class who have not been able to find the types of secure employment that would allow them to settle down and raise a family. Which means the trend is doubly bad because it is the middle class that pays the lion's share of the overall taxes in our society.

Nevertheless, somehow despite this very bad news hope still springs eternal:

Demographers expect population growth to pick up when the economy rebounds fully, but a bounce-back in births is likely to lag.

"Many — but likely not all — of the postponed births can be expected to be made up," Chamie says. "Even with the slight current downturn in births, the U.S. population will very likely reach 400 million midcentury."

There it is again, that completely faith-based belief that real economic growth just HAS to resume, because in always has in the past. The demographers would do us all a much better service if they would instead devote some time studying what the effects would be if economic growth DOESN'T resume. Because that is the reality we all face and the one for which we need to start basing our planning for the future.


Bonus: "I think I'm sophisticated 'cause I'm living my life like a good homosapien. But all around me everybody's multiplying 'till they're walking round like flies, man"

Recession, High Commodity Prices Hurting...the Gum Ball Machine Industry?

Okay, it's guilty pleasure confession time. I am one of those not fully mature adults who from time to time cannot resist when passing by a gumball machine. If I've got a quarter in my pocket when it happens, that sucker is as good as spent. I guess the childhood nostalgia rush that comes with the momentary sugar high is what causes me to do it.

Thinking about it though, I guess I haven't noticed as many gum ball machines around in recent years. This article from the Los Angeles Times explains why:

Amid shifts in the gum industry, a bit of Americana might be going away — the colorful gum balls once sold for a penny from machines at drugstores, arcades and supermarkets.

The main problem with the classic, round gum balls is that although they're available in many flavors and colors, almost all of them have one thing in common — a heavy dose of sugar. Long the scourge of dentists, this product has come in for a drubbing at a time when child obesity has focused attention on sweets.

"More gum ball operators are finding it harder to make a living," said Spencer Williams, president of Gumball.com, an Irvine gum, candy and vending machine wholesaler.

The struggles in the gum ball business mirror the challenges facing the entire chewing gum industry. The amount of all gum sold in the U.S. was expected to be static in 2011 compared with the previous year, according to a September report from research group Euromonitor International. Overall revenue was expected to rise slightly.

Many gum ball machines aren't even being used for gum balls anymore.

Williams said that about 45% of the gum ball machines operated by his clients now dispense small toys. Only about 27% dole out gum balls, with the rest stocked with candy and other items.

Research figures on gum balls are hard to come by, but Richard Ackerberg — whose American Gumball Machine Co. in Marina del Rey sells the machines to vendors — said he has seen the decline firsthand.

Although machine sales are still strong — mostly to entrepreneurs hoping to use them for part-time income — each unit is now pulling in only about half the money it did a decade ago, Ackerberg said.

"The industry has tried many different things — sugar-free gum balls, organic versions — but those have over and over again been unsuccessful," Ackerberg said. "We've tried to elevate the taste, and quite frankly, it hasn't changed anything. Customers still don't want it."

Add the rising price of sugar to those woes.

Unlike more technologically advanced vending machines for which prices can be easily adjusted, old-fashioned gum ball machines usually accept only one kind of coin — once a penny, now typically a quarter. And that makes it tough to implement incremental price hikes.

I must say, the very idea of a sugarless gumball fills me with profound loathing. The real problem here, of course, is that the industry needs to raise prices, but very few people carry half-dollar or dollar coins around with them. So they are kind of (ahem) stuck, so to speak.

But gum ball machines are not the only part of the industry that is hurting:

But gum ball sellers aren't the only ones in a rut. Chewing gum makers are also trying to boost sales.

"We're certainly not satisfied with our gum results," said Irene Rosenfeld, chief executive of Kraft Foods Inc., one of the country's top gum producers. In a conference call with food industry analysts in August, she blamed the slide on "the decline of pocket money among teens, our biggest consumer segment," as well as on disappointing sales of some new products.

Kraft — whose brands include Dentyne, Trident and Stride through its Cadbury subsidiary — said its North American gum and candy division suffered a double-digit revenue tumble midway through 2011.

Mars Inc., the top gum manufacturer in the U.S., owns Wrigley and its brands, which include Doublemint and Extra. As a privately held company, it doesn't publicly disclose much about its business.

Vic Mehren, a senior marketing director for Wrigley, said that keeping gum desirable for consumers is an industrywide challenge.

"Gum is a discretionary purchase, an impulse purchase," Mehren said. "We need to evolve along with how consumers' lifestyles are evolving. We need to be bringing new reasons for people to be chewing gum."

It's still early, but that last paragraph is likely to make my list of the 10 dumbest utterances from a Corporate Flack for 2012. Chewing gum isn't a "lifestyle choice," Mr. Mehren...it's a cheap way to pass the time and soothe your sweet tooth. If gum isn't cheap any more, your industry is doomed. Nobody is going to pay five bucks for a pack of Doublemint. Those are the facts, and there is no use crying about it.


Bonus: speaking of which, the new Doublemint commercial with a surprise ending (warning: NSFW)

The Great Muddle

image: downtown Freeport, Illinois...courtesy Wikipedia Commons

In what should have come as a surprise to precisely no one, it was reported this past week that the Republican congressional “leadership” has backed down on President Obama’s request to extend the payroll tax cut. I’ve posted before that I believe gutting the already-insolvent Social Security program’s designated revenue stream is exceedingly bad public policy, so I’m not going to beat that particular dead horse yet again.

Instead, I’d rather discuss a different aspect of this story—why exactly it is that after riding the Tea Party Tsunami to regaining control of the House of Representatives last year, the Republican Party since then has backed down on every single “fight” it has taken up with a president who was supposedly mortally wounded politically. The only such engagements the Republicans can claim to have “won” since their victories in the midterm elections are those in which President Hopey-Changey backed down before the battle was even joined—on freezing federal employee salaries for instance (indicating, of course, that doing so actually fit the Obama agenda, even if you will never convince his die hard supporters of that fact). From the multiple federal government shutdown threats, to raising the debt ceiling, to creating the utterly ineffectual deficit reduction commission, to extending the payroll tax cut, when push came to shove the Republicans, for all of their tough guy rhetoric, blinked every single time.

The pattern by now is so clear that it should be obvious to all but the most addle-minded of observers. When it comes to the economy, conventional left-versus-right politics no longer exists in America. Instead, policies which enable extend and pretend to carry on a bit longer will ALWAYS win the day, no matter which party is nominally pushing them. Whether they consciously realize it or not, most politicians across the political spectrum instinctively know that nothing will effectively end their careers faster than enacting legislation that can be directly attributable to setting off the next round of economic collapse.

This is why the Democrats, and Obama in particular, have resisted calls from the likes of Paul Krugman to greatly increase government deficit spending above its already insane levels in order to “jump start” the economy. The result of such madness would quickly be $200 oil and $7-a-gallon gasoline, and a crash in the consumer economy that would make 2008 look like a boom year by comparison.

On the other side of the aisle, the Republicans, for all of their bashing of “out of control" federal spending, have scrupulously avoided pushing through any form of genuine austerity programs such as the ones in fashion now all over Europe. Doing so would also result in another huge economic crash, just a deflationary one rather than an inflationary one.

Back on July 29th of last year, in my post, "GDP Checkmate – Four Choices of the Apocalypse" in the run up to the "last minute" agreement to raise debt ceiling, I wrote that our “leaders” were backed into a corner and faced with having to make one of four choices. It’s pretty clear now that they have chosen Option 2:

2). Raise the debt ceiling and MAINTAIN current levels of deficit spending. This would probably be Obama’s first choice to get him past Election Day 2012. This option would achieve results similar to those above, but it would take a little longer to get to hyperinflation and economic ruin, most likely at some point in Obama’s second term.

Anyone who thought the politicos would act any differently made the mistake of thinking that they really mean what they say whenever they open their mouths. In reality, Option 2 was their only real choice, given that their whole existence is staked in the system as currently constituted. The alternative is an economy resuming its free fall and the voters placing the blame squarely upon any incumbent they can vent their wrath against the next time around at the ballot box.

In closing, regarding my prediction that Option 2 would likely push back the day of economic reckoning until sometime in Obama’s second term, I see no reason six months after I first made that assertion to alter that time line. The Great Muddle will continue on…until one day some event beyond the control of the politicos rocks the system sufficiently to kick off the next phase of collapse.


Bonus: "Beat your feet in the Mississippi mud"

Spa Tub Industry Has Seen Sales Fall By More Than Half Since 2004

Return with me now to the giddy days of 2004: The housing bubble was nearly bursting at the seams. The economy was roaring thanks to millions of people treating their homes like a giant ATM. The Iraq War wasn't yet considered a debacle. A cocky George W. Bush was confident of his reelection. And people were buying spa tubs so fast the industry couldn't keep them in stock.

Well, times have changed just a bit, as this article from the Los Angeles Times points out:

Amid the squeal of machinery and the hiss of plastic being molded, the Pomona factory owned by LMS Inc. turns out a signature California creation: the hot tub.

But the squealing and hissing have slowed in recent years, so much so that company President Casey Loyd says the operation these days is less like an assembly line and more like a hospital where "all kinds of babies are coming out at all different times," each a custom job.

"We don't build orphans here," Loyd said. "Every one of these spas has already got a home."

That's one way that LMS, which produces Cal Spas and other well-known lines, has survived an industrywide slump that began well before the recession.

Sales peaked at 417,000 units in 2004, according to the Assn. of Pool & Spa Professionals. In 2010, the industry saw a modest increase of 7,000 units from the year before, but those 182,000 sales came too late to prevent dozens of spa manufacturers from going out of business. The trade group is still gathering 2011 sales data, but officials are hoping for at least a slight improvement from 2010.

And yet, despite this dramatic drop off in business, hope still springs eternal in the industry:

LMS' 2011 market study, for example, showed that nearly two-thirds of spas are purchased by professional and technical workers, executives and upper management, healthcare professionals, mid-level managers and retirees. Look for the sweet-spot age group, 25 to 54, or as he puts it, "the people trying to become cool to the people trying to stay cool."

The least obvious guidance: Don't blow it by only focusing on the affluent. The sweet spot of the income range for spa buyers is $50,000 to $99,999 (34%), followed by $100,000 to $149,000 (29%). Sales drop precipitously at higher income levels.

They don't even call them "hot tubs" anymore, preferring the less libidinous "spa" label with its connotations of stress relief and health. A promotional video talks about company products as not for the rich, but for ordinary folks who want to create "lasting memories with family and friends."

Yep--bankruptcy is a great way to create a lasting memory for your family. Because that is where you are headed in this economy if you keep throwing your money away on frivolous expenditures like building your own spa.


Bonus: This should be the motto of the spa industry - "Life's been good to me...so far"

California's January Tax Revenue was $528M Below Estimate

More and more data continues to come in which indicates that the media narrative about the economy being on the upswing, fueled in large measure by the January month jobs report from the Bureau of Labor Lying statistics and the booming of the horrendously manipulated stock market, is a flat out falsehood. Just in the past week there have been reports that American gasoline consumption is cratering along with the Baltic Dry Index (which measures global shipping rates), indicating a massive slowdown in the economy. And now comes word that taxes revenues in the nation's largest state also went into free fall in January. Here is Bloomberg with the details:

California collected $528 million less in taxes in January than Governor Jerry Brown estimated in his latest budget, Controller John Chiang said.

The majority of the shortfall was in income taxes, down $525 million, or 6.3 percent less than projected in the spending plan Brown released Jan. 5, Chiang said. Corporate taxes were down $127.9 million, while sales taxes were up $42.8 million.

California’s cash may be exhausted by March, Chiang reported Jan. 31. The nation’s most populous state will need $3.3 billion by mid-April without additional borrowing and payment delays, because it has spent more and received less than anticipated for the current fiscal year.

“January revenues were disappointing on almost every front,” Chiang said today in a statement. “Thankfully, the decisive actions taken recently by the state to stabilize its cash flow will ensure that California can pay its bills through the end of the fiscal year.”

Love that bit of FlackSpeak there at the end by Controller John Chiang. "Stabilizing cash flow" actually means "massive budget cuts," but obfuscation has now become official policy just about everywhere.

If the economy really is recovering as the pundits would have you believe, why did California's income tax collections plummet by over half-a-billion dollars in just one month? That sounds like either, a) people are losing their jobs in large numbers again, b) wages and salaries are declining rapidly, or c) all of the above. Combined with the gasoline usage data and the BDI numbers, it also sounds like the economy is on the brink of a major crash.

So what does California plan to DO about this depressing state of affairs? Oh, the usual same old tired bullshit:

Treasurer Bill Lockyer plans to obtain as much as $1 billion from Wall Street to ease the shortfall. Lawmakers passed a bill to let the state borrow $865 million from internal accounts to avert a cash shortage.

That's their strategy: borrow, borrow and borrow some more until you can't borrow so much as another nickel. And that, my friends, will be the end game, not just for California, but for America as a whole.


Bonus: Well, if nothing else this story gave me the excuse to play some Social Distortion

Ha-Ha! Struggling Bank of America May Liquidate All of Its Real Estate Holdings

Here's a story to warm the hearts of anyone who despises America's big banks for all of the damage they have wrought upon our economy. The Atlantic Wire has the details:

A week after news broke that Bank of America Plaza in Atlanta was facing foreclosure, the financial giant is thinking about selling almost all of its real estate. "We are currently reviewing all of our properties across our portfolio, with the exception of Bank of America Corporate Center in Charlotte and Bank of America Tower at One Bryant Park," a spokeswoman told Bloomberg on Friday. It's all a part of chief executive Brian Moynihan's process of "reevaluating the bank’s real estate needs as he eliminates at least 30,000 positions and seeks to trim as much as $8 billion in annual expenses."

Turns out it's pretty expensive to rip off your customers, help cause a recession and then have to pay America back through SEC settlements.

I couldn't have said it better myself.


Bonus: Dedicated to Bank of America