It’s a slow news weekend, so let’s discuss some interesting Tweets on a variety of subjects. 
Unlimited Vacations
I have a hard time believing that offering unlimited vacations is the key to success.
China’s Evergrande Crashes 87 Percent
Halting shares for 17 months did not fix the problem. Fancy that.
Personal Finances
BRICS
Chandler offers another reason most of the BRICS discussion is nonsense.
Here’s my position: What Would it Take for a BRIC-Based Currency to Succeed?
I offer two definitions of success. The conventional definition won’t happen.
Credit Card Default Rates
When to Buy Bonds
Student Loans
With average rent, car payments, and home prices at a record high, and given the fact most acted as if they would never have to repay those loans, high default rates were to be expected.
Also consider The Complicated Mess to Restart Student Loan Payments Is On Purpose
61 Percent of US Workers Live Paycheck to Paycheck, 21 Percent Struggle With Bills
Meanwhile, please note 61 Percent of US Workers Live Paycheck to Paycheck, 21 Percent Struggle With Bills
For discussion of spending vs income, please see Consumers Go on a Spending Spree in July, but Income Doesn’t Match
“I have a hard time believing that offering unlimited vacations is the key to success.”
Unlimited vacation does not result in people taking lots of days off. It leads to the exact OPPOSITE.
I worked in a company where the number of vacation days went from 2-3 weeks per year (depending on length of service) to “unlimited”. Once it went into effect, people took a lot less time off, because they all wanted to “impress” the management by taking as few vacation days off as possible.
I owned a Co in the SillyCon Valley. We had 2-4 weeks, depending on the number of years on board. NO ONE COULD take vacation days because we were LEAN. VERY few employees, TOP performers (in Sales, Marketing, Mfg Ops, Finance and Engineering). We were simply VERY smart. We went public and ALL of we founders were out in less than 3 years and we sold the company to another Company.
I see WCP announced that they have paid off more debt and hit their next debt target of $1.3 billion. As such they raised their dividend again. Which I predicted just a week ago.
Love it when a plan comes together like that!
nice job. thanks for the stock pick. gonna look at.
In Colorado our General Assembly has a saying: “Long-term is the next election, and short-term is lunch.” It appears to me that the Feds have no plan at all to stop and reverse government deficit spending. Doesn’t that doom the currency?
Whether or not it dooms the currency has a “it depends” answer. The economy on the other hand is almost certainly harmed.
Regarding personal finance: selling into strength and booking some profits is usually a good strategy. I sold a bit more into strength the last few trading days. Raising a bit more cash, patiently waiting for the next opportunity. Sitting at 15% cash now. Still holding a lot of oil stocks as I remain a long term bull; just a little bit less now.
Unlimited vacation time… I thought it’s why they started “Work From Home” programs. Most articles I read on this topic treat it as such, as does everyone I know doing it. They go away whenever they want, unless a rarely event comes up that requires them in person. They Skype just like at home or wherever they are at if need be. They mow the lawn, take kids to soccer practice, and have their laptop right there with them. What’s with this so called new, but really a very old way at this point of doing so.
1) “Game of Trades” bs : delinquency rate on c/c reached 8%.
2) Delinquency isn’t Default. Before the recycle bin, most delinquent payers become zombie payers, paying 4%/5% (?) for 60-72 months.
3) Banks assets are kept intact, but the profit spread drops to zero instead of 20%/30%. The small banks don’t care, because their profit margin is the second highest ever.
4) More people are aware of the rules of the game. That’s why the all time high.
Having a global reserve currency is nothing short of electing a king of the world. Nobody needs that. The reason it was accepted in the first place was trust. The small players can not and do not trust each other to be fair and transparent about their money printing. So lets say Russia and China do a currency swap. And then big floods hit China which they need to pay for the cleanup on. Since you can’t get blood out of the turnip citizens, printing is the only way. And that means the holder of any currency before that helps pay for the cleanup which they do not want to do. The brics countries need to come up with a system for trusting each other. Hmmm, what could possibly do this? OH, I KNOW!! Instead of doing currency swaps (ruble for yuan and yuan for ruble) so that your partners can pay for your goods in your own currency, do gold swaps (ruble for gold and yuan for gold). So if russia wants to buy stuff from china, it has to pay in yuan. So before it can pay, it has to buy yuan for gold. And same for china wanting to buy from russia.
Once you have this, you can factor out the local currency and simply pay in ozt of gold. So to get started, build a metals exchange for BRICS members and then if you want to trade with other BRICS, you deposit physical metal into the exchange. And then you can electronically transfer ownership of it in order to settle up monthly trade imbalances.
Is it really anymore difficult than this once people STOP trying to gain economic advantage from the money system itself (i.e. stealing from your trading partners…)?
They already have a gold exchange. That is not the issue. Trust and acceptance in the overnight markets have very little to do with specific instances of “money printing” by the monetary authorities in the nations of their counterparties.
Unproductive and uneconomic investment in fiscal spending by those nations as a whole, yes, but only in regards to the economic prospects of financing trade and growth as a whole go. Not so much with funding specific.
How many countries do you think are holding substantial amounts of CNY in their national trade accounts?
And the problem in the system right now isn’t the small players but the big players. It’s the large commercial banks of the G7 that determine the collateral base for funding needs. That’s where “trust and acceptance” are an issue and it’s affecting the entire world, not just China. It’s a global recession, not a China recession. China just makes for such an effective canary in the gold mine that it gets such close attention.
Good answer. AND, there is too much DEBT held is US Dollars all over the Globe. SOME day, maybe, we will see the Hegemonic Dollar go away, but not in our lifetimes.
Unless: there is a WORLDWIDE DEBT JUBILEE! But, that means SYSTEMIC COLLAPSE and even I do not want to see that happen before I am six feet under.
Who is going to go “gold swaps” like that? “Deposit physical metal”?! Did you not read about why America went off the gold standard, when European countries, like France started demanding the gold America owed them for the trade that had taken place? Where’s your metal exchange going to be? Dubai? Why are countries like China and Russia going to allow countries like UAE to administer their gold for them?
How are you going to stop fundamental human nature to try and gain an advantage in any system? Are you some kind of Communist?!
Maybe the Big Default is coming. Student loans, mortgages, Japan and EEUU bonds, credit cards…
With regards to unlimited vacation time, it’s like one of those perks that look great to prospective employees, but is incredibly elusive in practice. I’d rather have a set number of days, so that you actually can use what you have.
Student loans suck, but I paid off my tuition and went to cheaper schools, rather than the elite schools that rip out your financial soul in exchange for the “brand”. There’s a tradeoff with everything, especially when it comes to school choice.
i know plenty of folks that don’t pay back student loans. they just get cash jobs or don’t care. i personally have never had a note for school or r/e. only thing i’ve ever got financed was gambling drugs and hookers. proper items that are never wasted money
In the late seventies CA defense co went bust : TRW, Hughes Aircraft… Prop 13 1978 stopped CA RE bleeding. Who will save SF RE bust in 2024.
Dunno about that, I was making good money at TRW in the 80’s
Yes, and the Valley companies, one that I actually OWNED, made millions. I sold Motherboards (designed by my team) and we kicked ass. I retired before I was 40.
Pollyannas are great for selling positions into and rebalancing one’s portfolio.
Thank the heavens for Pollyannas and their irrational exuberance.
Means more profits for me and thee.
Yep. The whole world is in turmoil. Just like it always is. Nothing new there.
And the doomsayers are proclaiming “the end is near” just like they always do.
Yet the world keeps muddling along. More people every year. More economic growth. More wealth. More energy consumed. More food consumed.
And there is always “opportunity” to improve one’s life if you are willing to look for them. Or you could hide in your bomb shelter waiting for the apocalypse.
CORRECT
You don’t preemptively hide in a bomb shelter. You wait for the apocalypse and then go.
Lol! The point I was making is that if you are always waiting for an economic collapse, you are too afraid to invest.
If you are always waiting for house prices to collapse, you will never buy a house.
I know people who have been waiting 40 years for housing prices to come back down. And so, they will never buy a house.
Papa, time to buy a few guns and some boxes of rounds, IF you live near where the turmoil will occur. Have you missed the news stories about the LOOTING of STORES, where the angered just walk out with THOUSANDS in purses, and stuff? AND, you think that this era is NORMAL?
You are in a delusional bubble.
I think living paycheck to paycheck may also be a function of what age group you are in. Just getting out of college or just joining the labor force, I am thinking, living paycheck to paycheck is par for the course, at least for a while. Part of the problem is that most people are fiscally irresponsible and pee money away at Starbucks and going out to lunch daily, etc. My wife makes my lunch every day and its more nutritious and less costly.
most people on planet earth forever have lived day to day. and die broke.
MPO45,
1) In 1979 Paul Volcker hiked to 21%, mortgage rates were 18%, the 10Y was 15%.
Two decades of oil glut beat inflation. What kind of glut do we have : people from
all over the world, blond/black/latinos…which debunk labor shortages.
2) In the 1980/82 recession SPX dropped from a new all time high in Nov 1980, thanks to Exxon, SLB and other oil co, to test Jan 1973 high for the last time.
3) SPX 1M : Lazer #1 : 1974 to 1982 lows, parallel from Nov 1980 high. Oct 1987, Mar 2009 and Oct 2011 lows tested Lazer #1. Lazer #1 isn’t far below.
4) In a deep recession we might visit Lazer #1 again, a rd trip to the seventies.
True. A lot of fiction is put about about Volcker – Volcker was incompetent, and nearly made things much worse with his policy calls.
The list of differences between now and then are many:
Debt was miniscule, and the whole debt system was in it’s infancy.
Population was much lower, and much growth from that to come too.
Energy extraction grew with population; and with debt, led to consumerism.
Whilst it’s true there needs to be some new source of energy to fuel growth; underneath it all, is the need for population growth, and that really is more of a developing world thing… Africa, Asia particularly, hence the world economy is best rescued by a shift towards the Indo-Pacific zone, and away from the Indo-Atlantic zone.
Ricky, after Volcker was out, all that I recall was moderate inflation, drizzled out over decades to right now when suddenly the shit hit the fan. I rent apartments for under $200 a month. FUEL was 40 cents a gallon.
A car could be had for well under $2K (Honda Accords, cheap, 4-bangers, 44mpg) and FOOD was cheap, a Mexican meal for two was under $10 with FOUR BEERS.
I have grown from that time, in my 20’s, to now whereupon I see nothing but misery based upon Powell/GRANDMA YELLEN, The BERNANK and so on, which has led to HYPERINFLATION being the only way out.
Re: “Fed pausing for longer and pickup in long end duration supply lining up for bond weakness even as recession risk rises.”
The $734b drawdown in the O/N RRP facility since 4/24/23 (removing cash from the FED), has kept interest rates from going higher.
“Absolutely love the insights shared in this article! Building a solid financial foundation is key, and you’ve outlined the essential steps beautifully.
Budgeting is where it all starts – understanding where your money goes is crucial for making informed decisions. And having that emergency fund? It’s like having a safety net that provides peace of mind during uncertain times.
I wish we had the internet back in the 1970’s archiving everything so we could look up what was happening in 79. I suspect the “Tweets of the day” would be almost exactly the same as they are now with the exception of prices being lower but heading higher in almost the exact same fashion.
Were people living paycheck to paycheck in 79?
Instead of the BRICS there was the Soviet/communist hegemony.
Has anything really changed or than the positions of the chairs?
“Were people living paycheck to paycheck in 79?”
I was in the Navy due to the crappy economy, my parents were not doing very well either, so yes.
FRED does that.
Nothing every changes. My standard when I read that people are OUTRAGED by how things are going is this:
NOTHING.CAN.CHANGE.
NOT.UNTIL.REGIME.COLLAPSE.
The narratives are constant, and banter is constant, and the outrage has not hit shrill levels YET. When that happens, we will then see the collapse which will be a heap of shit under the excrement of RIOTS.
Ukraine war killed 400K men. US war mongers sucked millions of white women
out of Ukraine. Most of these women and their children will settle in the US and
survive on transfer payments. When their inflow stops ==> ceasefire.
Why would Russia agree to a ceasefire in a war they’re winning?
“Ceasefire” would need to be upgraded to “Peace talks” or “Capitulation” just to get them to listen.
Yeah, they’re winning by going backwards for the last year?!?!
Getting their Strategic Bombers and Airborne Military Transport Aircraft blown up inside of Russia and Crimea.
The USSR lost a long slow grinding War in Afghanistan and then collapsed soon thereafter.
Russian Federation is doing the Microwave version of the Afghan Debacle and is on its way to self-destruction in half the time at ten times the cost.
Putin’s destroying his country’s demographics, which were already really bad. Sending off all his men to die and taking in more old refugees. Nope. Losing $700 Million Missile Cruisers and Flagship of the Black Sea fleet…in a fight with a country with no Navy is a colossal screwup.
Sorry Solon. The first casualty in war is the truth. Russia isn’t “winning”. Neither is Ukraine.
They are both losing. Men, women, children, resources, economic growth, etc.
To say that Russia is winning simply tells me that you are likely one of the following; a russian troll; a believer of conspiracy web sites (which are probably russian sponsored); or just a plain old idiot.
And you don’t strike me as an idiot.
AND, to top off your comments, someone who READ your comment down-voted it. That means that we have an idiot in our midst that thinks that Negotiating a peace plan is worse than keeping this nonsense going on …. anyone with a brain NOW knows that it is the Military-Industrial Complex and the Bidens who are getting rich (Plus the RINO’s).
NO. They’ll settle in Europe. Poland, Germany, etc.
They provide a lot of slim attractive consorts and concubines to replace those fat angry western women.
I find the chart showing credit card default rates to be a statement of negligence by the banking industry. Defaults in 2017-2019 surpassed those in the Great Recession. Nobody learned anything about irresponsible lending leading up to the Great Recession. The moment defaults were on trajectory to exceed those in the Great Recession within 6 months, banks should have been tapping the brakes until the trajectory of default rates flattened. The moment defaults actually exceeded those in the Great Recession, banks should have been stomping on the brakes until default dropped 25-50%.
“Tapping on the breaks” = global depression. 80% of the world economies are essentially consumption. Slow or stop that and it’s total chaos.
When Biden admin tried to stop student loan payments it wasn’t out of the goodness of his heart, the repayments will take money away from consumption.
The only way the “system” works is with ever growing consumption, as soon as it stops it all falls apart. This is capitalism 101.
The sooner the economic detritus is cleared the better off we are. Delaying the inevitable will only makes things exponentially worse.
Add an asterisk to the last sentence. It’s called crony capitalism.
We have such a mixed economy, where aside from the SMBs, we can’t say that the large corporations practice anything remotely similar to real free enterprise.
No one can be left to fail anymore: big education, big banks, nor the US auto industry.
Demographic change will tap the breaks for you on that consumerism.
Hans Rosling famously presented how the more economies develop, the less population grows.
This is further illustrated by how when developed wokefascists regimes import mass immigrants (both legal and illegal), demographic trends of the host country changes these over-reproductive immigrants into the same low-reproductive host population… why?
…because the cost of achieving status for yourself and your offspring is higher in developed countries… the costs of completing school, going on to further and higher education, and further still to postgraduate and professional qualifications that don’t exist (at least not in any real or significant way) in the developing world.
Developing world populations, by their nature, invest more in pumping out children and grabbing shorter-term cash… as they develop, it’s replaced by having few to no children, and acquiring longer-term assets.
As such, the system is self-regulating; so to is debt… you can only accrue so much debt before the repayments exceed viable income, and the repayment period exceeds a human working lifespan.
Much of the world is being currently corrected by these forces… some of it artificially induced, like in China with demographics; or in the EU with suffocating public-funded services; or in America, with debt-funded proxy-warmongering.
…eventually the wheels come off, and the system derails and scrapes along slowly for years; or crashes (including war) and allows a reconstruction to occur.
When the system is spinning so many plates and trying to enlist unwilling hands to help keep them spinning, eventually things start failing anyway – especially when you run out of hands to enlist.
brakes
Ever growing debt = Ever growing consumption
Irresponsible lending is very profitable, and if everybody does it, the bailout is right behind the corner. They are not stupid, the stupid are those who believe there’s still some financial responsibility left.
100% CORRECT
Bail out with what though? Monopoly money?
The profiteering is dependent on the system not breaking. Trying to make too many institutions too big to fail, fundamentally breaks the system, because participants will exit the game if the rules are too pervasively and obviously rigged.
Lending institutions betting that way. What if it doesn’t happen?
This negligence was borne of Fed policies, making Money worth NOTHING. If you can lend money to Banks with ZERO interest rates then that means the money is WORTHLESS.
It is EASY to lend out worthless shit.
Offering “unlimited vacation” might not be as bad as it sounds, as long as it is not “paid vacation”. Why have people in the office who aren’t doing anything, and why pay them to be there doing nothing? Let them go on vacation, and when it becomes obvious that they aren’t necessary to the organization, transition the temporary vacation to permanent.
And the ones who turn out to be necessary to the organization get paid by the hour and made non-exempt.
You could make them contractors, but then they (and you) need more than one client to stay out of trouble with the law. And if they have multiple clients you might not be the top priority at a given moment of your next crisis.
You hire them as employees so you have exclusive access to their time. Do you need that? It’s the employer’s call.
murica has had much lower hourly productivity than nations that offered much longer vacation paid days. makes sense. we are no longer a world of factory workers or mule powered farmers…………anyone worth a damn already knows they can crank out 10 hours of work in 2 hours when feeling peak performance with white collar rich world tasks………..
Good point.
Unlimited vacation is paid vacation, but employees take less vacation under this scenario than if they are given 3 or 4 weeks, which they tend to use 100%. Also, unlimited vacation is not a liability the way accrued vacation is.
Correct – “unlimited vacation” just means that vacation does not appear on the company books as a liability. In general this set-up is provided to high-paid, driven industries (tech, medical devices, etc.) with lots of driven managers, who end up taking less time off than if they had been given four weeks, took two, and then accumulated 2 weeks/year for 5 years then get a “10 week exit package” when the worker quits, gets laid off, etc.
My wife got this “benefit” her last two years (just retired) and really hated it as both worker and manager don’t have a guideline to go with.
I get something like 5 weeks/year, take usually 3, and now have months of accumulated vacation sitting there when I take my own retirement. That ability to “accumulate” is also limited to CA and a few other places where it is required by law since the other thing companies do that still provide fixed days is implement a “use it or lose it” rule that does not allow accumulating vacation days.
This is a VERY well-thought out reply. I stopped working 30 plus years ago (in my 30’s) retired with a huge net worth which we STILL have and we have not spent any of the principle. NOW, when I parted ways with my OWN company, I had NEVER taken a day off in over 7 years….and our plan allowed us to KEEP those unspent Vacation days, 4 weeks a year. So, I had 28 weeks of retained hours paid to me when I quit with my Incentive and other Stock options and with all of that, we never worked again.
Yes, and in the event of a layoff, people would get paid for unused vacation days. In cases where it is more than a few weeks, that’s precious money that can help the employees cope with expenses while they search for another job. With “unlimited” vacations, they get zilch.
On unlimited vacation: I work in HR and a well known effect of unlimited vacation is that people take less of it, because now they feel as if they’re judged if they take too much. Whereas before people would typically take their full allowance. Unlimited vacation makes it a choice and therefore unsafe to take more than the rest. Corporations save while looking generous.
100% agree. When I was in the job market, I always considered employers with “unlimited vacation” plans to be a very big negative regarding accepting a position.
Welp, with tweets and headlines like that, you’d expect investors would be gearing up for a recession, if not worse. Which leads me to this: What’s driving stocks higher? With yields on US Treasuries higher than they’ve been in decades, why are investors preferring stocks over bonds?
Carl Futia has said that bull markets usually tend to last longer and go higher than most are expecting, so maybe that’s what’s happening here?
The follow-on question is: How low will stocks go after stocks top out and we get a real bear market?
Hyperinflation.
you’re saying inflation is driving stocks higher? So investors are playing a timing game, they’re going for stocks to ride the inflation wave, but because they know a recession/depression is right around the corner, they plan to get out near the top and believe they can time that exit?
Why should there be a top in a recession? If inflation keeps running away then share prices can still rise but at a much lower rate than inflation. So nominally they are rising but relative to inflation they are going backwards.
“you’re saying inflation is driving stocks higher? So investors are playing a timing game, they’re going for stocks to ride the inflation wave, but because they know a recession/depression is right around the corner, they plan to get out near the top and believe they can time that exit?”
“They” don’t need to, and certainly don’t, know anything. At all.
Except for this: The Fed Will, without exception; steal absolutely every single penny in existence, by way of inflation, and hand it to the “owners” of what the Fed and its indoctrinati brand “investments.” Such as stocks and bonds and fund shares and “real estate” and whatever other nonsense stupid people have been told are “the markets.”
If you own the above: The Fed will rob your neighbours who has less of the above, into outright starvation. Then hand you the proceeds. All in order to maintain the illusion that privileged idiot dilettantes on Fed Welfare, picking random numbers, are some sort of valuable “feature” of an “economy.”
So, your options are: “Own” what is in effect membership in the Fed Groupie Club. OR: Be robbed into starvation in order to enrich those who do. Which one would you pick?
That’s it. All the rest is just mumbo jumbo, passed around to make Fed dependent welfare recipients feel better about themselves.
Not just yet.