Free Republic

Thanks for that - I’ll order a copy of that book.

If we ever reached the point of a civil war, the scenario you laid out would certainly be possible especially the secession by governors.

The only major logically problem I see is, culturally the difference is not between the North and the South or the East and the West. It is between the young and the old.

To explain: A few months ago, the Pew Research center did one of the biggest studies in their history about the demographics and beliefs of the 29-and-under crowd. With a median national age of roughly 35, this group will, within the next 6 years, be the majority as the older generation dies off day by day. I myself am (barely) a member of this generation.

Of these Americans, (the 29 and under crowd), almost 4 out of 10 are black, Hispanic or Asian, 65% believe that gay couples getting married and having children is either a "good thing" or "makes no difference" to society, 77% believe couples living together before marriage isn't a problem at all, and the list goes on and on and on.

The things that seem radical today are not radical to a significant portion of that younger generation. With the older people dying off (or at least getting older) each year, society is more likely to drift to where those things become the new "norm" just like no-fault divorce and single mothers are today.

Please do not misunderstand me. I'm not saying this is a good thing or desirable, I'm simply pointing out that short of - as you said - a specific event that causes an uprising, the slow, steady drumbeat of Father Time is more likely to transform society, just like it did for black people, women, child labor, etc. Looking at the sociological data, my guess is that no matter what happens on November 2nd, or in 2012, the real tipping point comes in 2016 or so when the Millennial generation has taken over as a majority of society.

With that, how could you have a civil war where battle lines must be drawn? It is likely that two fighting-age 19 year olds, one from Atlanta and one from San Francisco, are going to have more in common in terms of belief about society than they would with 40 year olds in their own city.

Put another way, the polling shows that "liberal" conservatives (how's that for an oxymoron?) like Meghan McCain are in almost 100% in line with their generation as a whole. Six years from now, that is the majority and the people who would fight it are one step closer to jello and reheated country fried steak at the nursing home. The fact that it is a drip-drip-drip like water is one of the reasons I think a civil war just couldn't happen. Once we tipped over so that group is the majority, the older folks that tried to start one would get a horrible awakening.

(Also, it's not all bad - this is also the most pro-life generation to have ever lived. Maybe it has to do with sonograms now being widespread?)

What are your thoughts? Do you not see it as a generational conflict? Is there anything I'm missing? If it were to ever happen, how would you see the battle lines drawn?

You can download the whole study from this page.

No, you incorrectly extrapolated my microeconomic argument into a macroeconomic prediction that I never made.

My point is simple: People who lack any marketable skill other than a high school degree and who refuse to retrain to meet market demand (which is just another way of saying “provide stuff people want”) are going to be poor. They will always be poor. Nothing the government does can change that in any sustainable long-term way. No one “owes” them a job. You aren’t entitled to make a living just because you are willing to work. You MUST provide something people want of their own free God-given will.

Your argument simply reinforces, rather than repudiates, my position. Society in the past progressed because the base population progressed forward WITH technology not against it. The generation that made automobiles and planes in domestic factories LEARNED THOSE SKILLS FROM SCRATCH because those industries didn’t exist in the prior century. They progressed to meet market demand. As I said before, the wise horse and buggy manufacturers retooled and become car plants. The ones that didn’t adapt probably bitched about their bygone glory days and wondered why they couldn’t feed their kids.

So I will say it again: Those who lack any discernible skills other than manual labor, which has become virtually free due to productivity gains in technology, will find themselves increasingly irrelevant and unable to survive because the wage a “free market” would set would be below a sufficient level necessary to feed oneself. That wage level is already artificially increased by the Federally mandated minimum wage.

To think that THOSE TYPES jobs are going to come back is delusional. But the free market presses on ... when the whalers died out, the kerosene market rose. When it fell, the crude oil market grew to power. Then came natural gas.

Society will be just fine. But the guy waiting for the steel mill to return? For the auto plant to start hiring again? Yeah, he’s out of his freaking mind. It isn’t going to happen. I’m sure there were old sea captains that were convinced the whaling days of blubber powered fat fuel were destined for a resurrection. They died hoping to see it with empty bank accounts.

Civil war will never happen in America again under the current system because the last time around, corporations were still a novelty (the greatest original corporation, Standard Oil, was still in its relative infancy compared to what it became).

If it really got that bad, imagine a civil war breaks out and Coca-Cola, General Electric and Exxon Mobile are looking at huge profit cuts during the fighting as their factories are bombed, etc. You don’t think GE is going to hire mercenaries to protect its property? It alone generated more than $156 billion last year in revenue. It would simply go to China or Russia, pay soldiers huge fees and fly them over to help put down a rebellion.

They would kill the rebels and then get Congress to push through some sort of immunity bill protecting them from prosecution for actions taken during “the rebellion”.

Andrew Carnegie was a foreshadowing when he hired what could politely be called union busters, but were really, effectively soldiers, to crush those who threatened his steel mills.

I would have 100% agreed with that before he (the business owner) was stupid enough to go on the local television station and admit to a reporter the reason they didn’t do it was due to their opposition to the group. The wife, on the other hand, had the good sense to stick to the “no special orders” line.

Any attorney worth his fee could put that couple out of business because he opened his mouth, on camera, only days after the incident happened.

That is why I was so impressed with the other poster’s response. If you make it a known policy that all special orders go to finance Focus on the Family, not a penny gets spent on legal costs saving the business owner tremendous hardship *plus* he still gets to abide by his religious convictions. It is almost flawless in its logic.

The definition of wisdom is “a deep understanding and realizing of people, things, events or situations, resulting in the ability to choose or act to consistently produce the optimum results with a minimum of time and energy.” Putting up a single sign, which takes 5 seconds, is wise and achieves the same ends compared to a potentially bankrupting legal battle with well-funded special interest groups.

I still think it is hilarious anyone would go to a business called “Just Cookies” to order cake. I get the feeling everyone involved isn’t necessarily the brightest crayon in the box.

>> They should have just put a sign up in the window saying “All proceeds from Rainbow cakes will be donated to Focus on the Family.” <<

I’ve been thinking about your post and come to the conclusion ... your solution is brilliant.

Here’s why: From what I understand, this tenant signed the lease, which required him to abide by the city’s non-discrimination rules, so he’s going to get his a** handed to him if he tries to sue. He had a choice to enter into that lease or not and now won’t abide by the terms. Legally, he’s completely in the wrong.

But your solution would effectively achieve the same thing because no self-respecting liberal would buy cupcakes from a business with a sign like that. He is honoring his contract, keeping his word, acting pleasantly and yet creating an environment where his customers will filter themselves based upon their response to that sign. If someone does buy from him, he donates the money and knows that the profits went to support a conservative religious group with a powerful political arm.

Your solution is so utterly simple and profound when everyone else is screaming “get the lawyers” or “discrimination”!

You win Strategy 101 for the day =) That was a moment of Solomon-like discernment.

Not even close. I’m just a guy who actually looks at the real data for myself, not what the media feeds me.

You can keep telling yourself what you want it doesn’t change the fact that government regulation is only *part* of the reason unemployment is high. Once the microchip was invented, the game changed. There will NOT always be work to do for unskilled workers. They are destined to become more and more redundant with the passing of each year. Anyone who thinks otherwise is fooling themselves.

To illustrate: In the 1950’s, a grocery store would have a fruit and vegetable man on staff to go around to each location and figure out how much foodstuffs to order - strawberries, bananas, watermelon, etc. Today, that job doesn’t even exist because the moment a melon is taken out of inventory, the computer notifies the central warehouse of the existing stock units and places an order for a new melon. The distribution systems have become so overwhelmingly efficient that most don’t even require human interaction except on the retail floor where inventory must be checked and adjusted periodically to account for theft, spoilage, etc.

You also hear much about the ‘decline of American manufacturing’. Yet, virtually every economist in the United States knows that manufacturing profits, on an inflation-adjusted basis, are the EXACT SAME as they were in 1960, it has just become a smaller part of the overall economy, not due to decline, but rather due to industries such as ecommerce and finance becoming LARGER from very small or non-existent bases.

So how is it that during that same time manufacturing jobs disappeared? If manufacturing is exactly as profitable in “real” dollars after inflation as it was in 1960 why do we have fewer jobs? Most of it isn’t China and India but software automation and productivity gains. For us to be having this conversation 30 years ago would have required both of us to write on a piece of paper, stuff it in an envelope, and send it through the mail. That meant more logging jobs for paper, more manufacturing jobs for pens, most mailmen jobs, etc. Now, sites like Free Republic can handle millions of conversations, posts and comments on - what - a few servers?

The unions, politicians, and other support systems know this. But if they go to their people and say, “We’re going to keep losing jobs in this industry - you should probably go become an anesthesiologist - they will be voted out office and a job, along with their comfortable paychecks and benefits. So they put on a good show.

But anyone who ignores the underlying reason our economy is shifting does so at his own (or her own) peril. In 20 years, they will still be broke or bankrupt, still be unemployed, and wonder why the hell the world left them behind. It’s no different than horse and buggy manufacturers lamenting the rise of the automobile. Those who were smart enough to go work in Detroit made bank but those who kept trying to sell saddles and whips didn’t fare very well.

To think otherwise is an exercise in self-delusion that is the adult equivalent of believing in Santa Claus.

I know it seems that way and it can be discouraging, but it isn’t as bad as the media makes it seem. A vast majority of millionaires in America are small business owners, with the rest being made up of doctors, lawyers, accountants and dentists. More than 90% did *not* inherit their wealth - they made it first generation. Go look at research such as that done by Dr. Thomas J. Stanley, in Georgia, who specializes in studying America’s rich.

These same classes make up most of the top 50% of income, too. For every 1 Brad Pitt or LeBron James, there are literally thousands of Steven and Anthony Markels, who built Markel Insurance from almost nothing and own a combined $110 million in stock, or Robert Stiller, who owns nearly $480 million worth of Green Mountain Coffee, which was a tiny startup only a few short years ago.

It’s easy to think of the Paris Hilton’s or the Tom Cruises. The reality is, they are a statistical aberration but they stand out because you know about them. 1 out of every 25 Americans is a millionaire. It’s just they are driving (again, statistically) a Toyota or Ford, not a Bentley. If you, like most Americans, know 250 people, that means that you personally know 10 millionaires in your own life. The odds are also that you have no idea they are rich because they probably own a local restaurant or are a professor at the local community college.

Most of this is the media. They have kids in the inner cities of America convinced that they need to become a rapper to be successful when, if they were a heart surgeon instead, they would be in the top 1% of wealth in the United States. There are a lot of successful heart surgeons - if you make the cut and live wisely, the odds are good you’ll retire rich - but only a handful of rappers that can feed themselves. How many heart surgeons are on MTV or endorsing sneakers, though? It has to do with exposure. Yet, most of the homes in Beverley Hills and Palm Springs are owned by those same “boring” people.

Despite all of our current challenges, The United States of America is still the best hope in the world when it comes to converting your dreams to reality. It just happens that the rift between the “have” and the “have notes” is going to blow wide open because technology makes the “have notes” unnecessary from a labor viewpoint.

That is always the case - companies get hit first when things go south and then lay off employees. Likewise, when things turn for the better, companies experience the uptick first and then, only after they are confident do they start hiring.

Going back through past recessions, unemployment typically didn’t peak until up to 18 months AFTER the recession ended. It is a lagging indicator. Always was and always will be.

My guess: In a year and a half, things will be significantly better regardless of what Washington does. Shipping and logistics show more goods are moving and the manufacturing index, which was supposed to fall, actually rose. Companies have the strongest balance sheets since they have since the mid-1950’s.

Part of the problem is people who lack a higher education and rely on physical labor for work WILL NOT see a recovery even when things are growing again because the growth is coming in areas like Silicon Valley and pharmaceuticals. We’ve reached the tipping point. If you don’t have rare skills that satisfy the market or you can’t build your own business to meet a demand, you’ll never be able to get above the poverty line.

The United States will NEVER be able to go back to a time when a guy could graduate high school, get married, have kids and earn a decent living right out of school. That was possible when most of the world was illiterate and couldn’t feed itself. Now, the 300 million Americans need to compete with 6.2 billion other people in the world. They don’t just get a free pass because we are American. If someone in China or India is better or cheaper at their job, they are going to get the contract. To think it is going to change given the structural constraints and relationships that have been developed over the past century is delusional.

The phrase “good job” will only exist for people who can do things like code CSS and PHP in seconds or a geologist who can help convert shale to energy. Software automation means that the only jobs available to people who don’t fall into categories like that will be asking, “Do you want fries with that?” People will either have to accept it or be willing to retrain themselves to meet the free market’s needs.

>> The smart people can move their money faster than Obama can even begin to find it..... <<

Amen, amen, glory hallelujah, amen.

Milton Friedman is one of the greatest thinkers and men who have ever lived. My understanding of the world and intellectual framework were immensely helped by his writings during my teenage years. I always felt fortunate to live in a civilization that could produce a mind like his.

The article is utter nonsense, not to mention the factual errors. It would be funny if it weren’t sad someone is writing about something they don’t understand.

The so-called “naked” puts sold by Berkshire Hathaway were collateralized by a massive up-front cash payment upon which the firm got to hold and earn interest and dividends for years. Factoring in the time value of money, the maximum potential liability was approximately $40 billion over a period stretching long after Buffett’s expected lifespan.

The only way - LITERALLY - the ONLY way - the entire amount could have been “due” was if the entire stock markets of the combined European Union, representing a massive portion of the industrialized world, went to ZERO. Even in the case of hyperinflation (which isn’t likely because the printed money from the western nations still has barely exceeded the M2 and M3 money supplies caused by the credit bubble), the nominal value of the markets would be astronomical, meaning Berkshire got to keep ALL of the money.

Furthermore, unlike the idiots at AIG, Buffett was intelligent enough to negotiate terms that mean that under NO CONDITION can Berkshire be required to come up with ANY cash prior to the maturity date on the underlying positions. It was the collateral calls that caused AIG’s meltdown. It cannot happen here.

So if we do have high inflation = no payout plus all the dividends and interest

If the market does fall over the next few decades = $40 billion represents a relatively small portion of the total pre-tax profits generated by the subsidiaries over the same period! The loss could be thought of as interest expense on a loan.

But the major point is, if the entire European Union goes to ZERO a few decades from now, the whole world has gone into Armageddon hell-in-a-hand-basket.

The same author further displays the depths of his ignorance when talking about the bailout and how banks like Wells Fargo raped the American people. Anyone who was within 3,000 miles of Montgomery in San Francisco knows that the Board and executives of WFC were beyond livid that the government FORCED them to take TARP money, basically threatening to put them out of business if they didn’t.

The White House knew that if only the weak banks took the cash, the market would know which ones were on the verge of failing. That is why it forced the stronger banks with virtually no problems relative to tangible capital, such as U.S. Bancorp and Wells Fargo & Company to take the money anyway. Everyone involved bitched to high heaven and repaid the funds as soon as allowed by the Treasury department. To act like it was some great raid of the public coffers by those players when the real thieves were the folks at Citigroup, etc. is just moronic.

The whole thing oozes the kind of ignorance of someone who doesn’t have more than a third grade education in accounting, economics, finance and banking regulations but their own life sucks so they want to blame someone.

Unfortunately, they are blaming the wrong people - you want to know who is guilty? Take a look at the Tier 1 capital ratios and adjust the Basel II figures for asset quality a year before the meltdown. Wachovia was screwed. Washington Mutual was screwed. Citigroup was screwed.

But Wells was a damn fortress. Northern Trust was a goldmine. U.S. Bancorp was so strong it looks like they were overcharging reserves to purposely drop profit (the local branch managers were buying shares at $8 each, some of whom were putting most of their liquid assets in it during the crash!).

The original author’s diatribe is neither conservative nor intelligent. The civilization would be greatly improved if he had the good sense to pull it down before anyone else saw it.

Wait ... it’s been a few months since I last read Wal-Mart’s SEC filings but I know that north of 200 million Americans shop there each year out of a population of 310 million. Now, some of those 110 million who don’t shop at Wal-Mart are babies, toddlers and infirm elderly.

Even if you ignore those folks that means that roughly 2 out of every 3 Americans is a “Wal-Mart shopper”.

So how did they define Wal-Mart mom? Aren’t they basically just saying America hates congress and wants to fire everyone in it right now because of the direction of the country?

It’s not quite that simple - Pierre was really in charge by every metric that counted. He created eBay in his house, then after it started to become successful, recruited and hired Whitman because he knew she could grow the business better than he ever could (he understood computer code, not commerce).

He didn’t want to work as much so he turned over the reigns to her, they raised capital, and he got to go do what he wanted with his life as she grew it from a tiny small business to a worldwide powerhouse.

That is why Meg is worth $1.5 billion and Omidyar just shy of $5 billion. She was the employee and got a lot of stock but Omidyar was the small business owner who owned far more shares, started it in his house and had the idea.

Other than their difference on social policies (Whitman is a moderate and Pierre is a flaming liberal), they reportedly got along really well. CNBC has run some specials where they went back and talked about the early days of the company together and how they’d have to go down to Office Depot to get their own desk and put it together by hand.

Nikos,

This isn’t government money that was lost, this is individual household wealth - you take up all of the money held by all American citizens in their primary residence, cars, stocks, bonds, retirement accounts, savings accounts, checking accounts, etc.

The thing is, we didn’t so much “lose” $12 trillion as it was an illusion to begin with because we were in a leverage-induced asset bubble. Was a 2,000 square foot, unremarkable house in California *really* worth $800,000 or was it just that money was so easy and people could lie on the applications they borrowed money to drive up the price, hoping to profit from selling it at a still higher price?

I still think we as a nation got off lucky given how massive the speculation and stupidity was.

The estimates I’ve seen look like it will take us until roughly 2015-2016 to regain all of that money as people using savings and / or pay down debt to strengthen their personal balance sheets. We’ve gotten through it before and we will again. The government just needs to stay out of the way of the private sector.

People don’t understand that, Jim. I want to bang my head against a wall each time someone starts complaining about the unemployment situation and then proceeds to talk about how their local state legislature, Congress, the President, etc. etc. aren’t doing anything about it. THEY CAN’T BECAUSE ONLY THE PRIVATE SECTOR CAN CREATE JOBS!

I don’t understand why it’s so difficult for people to grasp. Every $1 the government has it must confiscate from a productive person or business. Business cycles take time. Companies will start hiring again once they feel confident enough that adding fixed expenses in the form of payroll and / or additional fixed assets such as equipment isn’t going to put them in a bad liquidity situation if things go south again.

I think it’s because finance, accounting and economics aren’t taught in schools. But then again, they can’t get reading, writing and arithmetic right so what hope do they have of explaining monetary policy?

P.S Sorry for the typo: TI

The buybacks are the most rational use of capital right now given that TE is trading at only a bit more than 12x earnings. If profits remain constant, every dollar used for a buy back generates a nearly 8% return for stockholders. If the company expects growth when the economy recovers, that figure could be much higher.

Share repurchases are really a backdoor dividend that are more tax efficient. If a company has 100 shares outstanding, the profit must be divided into 100 “pieces”. If the firm repurchases 12 of those pieces, next year, the profit only has to be divided among 88 pieces. Over time, investors who hang on for the long-term are rewarded. If the company had instead sent the owners a check for that money in the form of a dividend, the IRS would tax it again, leaving less cash in the hands of the private market.

This has nothing to do with jobs. This has everything to do with requiring people who run a business to be accountable to the owners. That is why capitalism works.

>> Capitalism of itself does not preclude social liberalism; but social liberalism cannot help but attack and erode capitalism. <<

You know, that is probably one of the most politically astute statements I’ve ever read.

>> “That’s different. The dead vote for Democrats, so their politicians should at least talk with them.” <<

That is awesome. (and sad at the same time because it’s true ...)