What If The Economy Crashes? - The First 12 Hours after the US Dollar Collapse

The first 12 hours after the U.S. dollar collapse
With the ongoing economic turmoil that is taking place world wide [although mainstream media would like you to believe the issue is only in Greece], there is much worry among those seeing the writing in the world. Many have even gone on record stating that the dollar's collapse is a mathematical certainty, and it is.

On a long enough time-line, EVER single fiat currency that has ever existed has failed. The dollar will be no different. When that day comes, will you be prepared? Do your own due diligence.

We cannot afford to lack preparation when the signs are so obvious. Read more.....

MATTERS OF FAITH

I spend my days at work looking through vast quantities of public opinion data. Nothing I see is surprising anymore, and most of it is, if not predictable, easily explainable. A throwaway poll from the South Carolina primary, however, left me scratching my head. Among voters who stated that religion matters "a great deal", 46% voted for thrice-married serial adulterer and pretend Catholic Newt Gingrich compared to only 10% for Mitt the Mormon.

Not being a practitioner of any organized religion, I understand the factionalism and various interdenominational rivalries adequately but not completely. I get it that evangelical Christians (let's safely assume they made up the vast majority of religiously inclined South Carolina GOP primary voters) have extremely negative views of Mormonism. It was clear that this would be an issue with his candidacy from the outset, but I never really processed it or attempted to understand it. Read more....

Fairness, the Buffet Rule and Capital Gains Taxation

Eliot Spitzer has a post on fairness and the capital gains tax code at Slate: “So is the call for a ‘Romney rule’ mandating that capital gains be treated as ordinary income, and so be subject to the same top marginal rate of 35 percent that applies to ordinary income, rather than the current top rate of 15 percent. But we shouldn’t raise the capital gains tax just because it’s a popular idea. The rate should rise for philosophical, economic, and political reasons.”

There’s one way of approaching fairness in the tax rate that involves two dimensions, and capital gains violates both of them. That approach has a vertical and horizontal approach to fairness. There’s vertical equity – where those with more pay more – and there’s horizontal equity, where people who are the same should be taxed the same. (Whether these are necessarily two principles of equity or one is a debate for another day.) That capital gains are taxed less than income violates both. Read more....

The Truth About the Economy

Robert Reich describes what’s wrong with the economy in 2 minutes. His bullet points (thanks to Stephanie Kelton):

• The economy doubles since 1980, but wages flat. 
• Where did the money go… 
• All (or most) of the gains went to the super rich. And… 
• With money comes political power. Taxes on super rich slashed, revenues evaporate. This leads to… 
• Huge budget deficits. Middle class agitated, fights for scraps… 
• Middle class divided. Buying and borrowing slow. Resulting in: 
• Anemic recovery/economy. Read more...

Unemployment at 8.3% still leaves a vast and destructive jobs deficit

US jobless numbers are falling, but not far or fast enough. We should forget about the budget deficit until unemployment is 5%

The most significant aspect of January's jobs report is political. The fact that America's labor market continues to improve is good news for the White House. But as a practical matter, the improvement is less significant for the American workforce.

President Obama's only chance for rebutting Republican claims that he's responsible for a bad economy is to point to a positive trend. Voters respond to economic trends as much as they respond to absolute levels of economic activity. Under ordinary circumstances, January's unemployment rate of 8.3% would be terrible. But compared to September's 9.1%, it looks quite good. And the trend line – 9% in October, 8.6% in November, 8.5% in December, and now 8.3% – is enough to make Democrats gleeful. Read more....

A Mortgage in the State of Nature?

Nick Rowe writes US fixed rate mortgages aren’t fixed rate mortgages; they are weird, stupid, and dangerous. It’s a good discussion, especially in the comments.

For the bond nerds in the audience, Nick thinks they are stupid because they are callable (can be prepayed) which creates negative convexity, which is dangerous with a fixed rate.

It’s interesting, one of the reasons investors desired subprime was that it was believed to be more stable on the prepayment front; everyone was looking at interest rate risk instead of credit risk, and while the former was fine the second exploded (a situation relevant to Fannie as well, as John Hempton points out). I’ll have more to say on this when we start to dig into housing reform, but I just want to point this out for now. Read more....

A Hidden America: Children of the Mountains

Diane Sawyer and 20/20 take a deeper look into the poverty and addiction stricken side to Kentucky. It's a side of America that many choose to overlook and ignore.

"In the hills of Central Appalachia, up winding, mountain roads, is a place where children and families face unthinkable conditions, living without what most Americans take for granted. Isolated pockets in Central Appalachia have three times the national poverty rate, an epidemic of prescription drug abuse, the shortest life span in the nation, toothlessness, cancer and chronic depression.

But also in Appalachia young fighters and dreamers filled with hope struggle to survive: a high school football superstar who sleeps in his truck; a 12-year-old who wants nothing more than her own bed and a cupboard full of food; an 18-year-old who must decide whether or not to spend the rest of his life in the coal mines; and an 11-year-old determined to save her mother's life. Diane Sawyer continues her award-winning reporting on America's forgotten children with an eye-opening hour on rural kids living in poverty. Read more...