Monday, June 30, 2014

Malinvestments, New Normal Economy

The Changing Nature of Middle Class Work Washington's Blog: "...In general, subsidies are mal-investments that siphon money from productive sectors to prop up politically powerful unproductive sectors. Economies that enforce mal-investment eventually decline, as years of under-investment hollow out the parts of the economy that are propping up all the parasitic sectors. The protected sectors beset by soaring costs (healthcare, higher education, major weaponry programs, finance, etc.) will undergo the creative destruction of technology-based productivity gains for the reason that they are already unaffordable, not just to households but to the nation. These low-productivity bastions of secure, high-paying middle class jobs cannot keep increasing their share of the national income. Either productivity will increase and costs fall or these sectors will implode as their costs exceed the nation’s ability to fund them. Take fast-rising healthcare costs and slow-growth GDP and extend the lines on a chart: can healthcare absorb 90% of GDP? Clearly that won’t happen; the sickcare system is already breaking down at 20% of GDP...." (read more at link above)

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Monday, June 16, 2014

New Normal: Labor Force, Employment, and Population April 2008 vs April 2014

Mish's Global Economic Trend Analysis: Labor Force, Employment, and Population April 2008 vs. April 2014: "In the core age 25-54 age group, the population is down 1,053,000 but employment is down a whopping 4,614,000. Thus, in the 25-54 age group, roughly 3,561,000 people are not working who should be working. The figure is higher if you include other age groups. Clearly things are not close to normal." (read more at link above)

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Monday, June 9, 2014

Household Debt Did Not Cause the Great Recession

It Wasn't Household Debt That Caused the Great Recession - Heather Boushey - The Atlantic: "“Economic disasters are man-made,” they write in the opening pages, “and the right framework can help us understand how to prevent them.” By the end of the book, the reader cannot but be left appalled at the sheer enormity of the policy failures. It’s not just that 7.4 million workers lost their job during the years of the Great Recession of 2007-2009 but also that the employment crisis continues to this day. While jobs are no longer being shed at the rate of 20,000 a day, the share of the U.S. population with a job fell to a low of 58.2 percent in November 2010 from a high of 63.4 percent in December 2006, but has only increased by a fraction of a percentage since then, hitting just 58.9 percent in April 2014. Missing the housing bubble was a massive failure on the part of policymakers. As a result, our new normal is one where there are nearly 10 million fewer people at work. This book's contribution helps us understand the important mechanisms through which this occurred."  (read more at link above)

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Monday, June 2, 2014

Work and Live OR Retire and Die

Some 11 percent of 18- to 29-year-olds polled expect to retire before age 55. Unless as a group they manage to stash away a lot more money during their working years than any other group, this isn’t going to happen. If anything, as longevity rises, retirement ages will head even higher. These people are in for a surprise.

Work and Live, Retire and Die - Bloomberg View: "Retirement age may be increasing because many baby boomers are reluctant to retire. This may be purely anecdotal, but too many people have seen retirees settle into their new life on a golf-course community, and then promptly drop dead. Work and live, retire and die seems to be the message for some. A few statistical oddities: Like all polls, people say they expect to do one thing, but typically end up doing something else. Gallup notes that since they began tracking the issue of when people plan on retiring, expectations are “consistently higher than the average age at which they actually retire.”"

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New Normal - Google News