Labor bubble

[Fisher]

Of course the 20% interest isn't because of the wages earned by a particular person. They are high because the risk is high. Duh. And FHA loans require a minimum down payment of 5k. Learn your facts. The interest rate on FHA loans are fixed, either 30 year, or 40, though 40 year loans are rair. A 25-30% down payment on a 200k house is pretty tough to swing even for moderately wealthy people, without say, selling a house. Hondas are made in the US, just not by union labor. But you, being a good, party line towing, mainstream republicrat, don't mind that, right?

Yeah early this week or late last week I was speaking to a broker about zero downs and he said FHA does them for 1.5%

 

[KevinKohler]

Yeah early this week or late last week I was speaking to a broker about zero downs and he said FHA does them for 1.5%

When I bought my house, via an FHA loan, about...3 years ago now...it was a minimum 5k down payment, regardless of the loan amount.


Only other criteria set by FHA was the condition of the house...it could not be a "fixer upper".

 

[Fisher]

When I bought my house, via an FHA loan, about...3 years ago now...it was a minimum 5k down payment, regardless of the loan amount.


Only other criteria set by FHA was the condition of the house...it could not be a "fixer upper".

They went up after the bubble and are back down to zero down but PMI has tripled. Can't get them in the city though.

 

[Ahlevah]

Most folks refer to the 50s, 60s, and to some extent the 70s, when they talk about the golden years of American production and exportation. It was this time period that the middle class emerged as the dominant force driving our economy. And a great many, even MOST, of the jobs that enabled this growth...were union jobs.

I believe the reason unions thrived was because the US more or less enjoyed a monopoly on most types of production for most of this time period. Europe was rubble. The Japanese were slightly better off, but they were still playing catch up, technologically speaking, in a few areas. And Russia...well, Russia was communist, and I heard that didn't work out to well for them. So, mass produced goods were largely US made. This meant that sales were such that, even with low prices, both profits, and union wages could be high, without hurting the bottom line. True?

Would that, then, be a bubble? Was/is our middle class, hailed by many as the driving power of the American economy, nothing more than the byproduct of monopolization on a global scale?

And if so, then is it fair to say that said middle class will never return in force?

I think there's some truth to the "lack of competition" argument. I also think legislation such as the Taft-Hartley Act., state "right to work" laws, and regional trade pacts such as NAFTA helped speed the decline of private-sector unions. Then there was the natural maturity and progression of the U.S. economy from a manufacturing economy to a service/information-based economy. But here's another idea to chew on: the ascendancy of the consulting firm/investment bank alliance. The thesis goes like this:

There was a time in the U.S. when people, even those of different socioeconomic levels of society, shared a sense of common purpose. WWII, especially, had the effect of bringing the country together in this regard. After the war, corporate suites and boardrooms were populated with executives who saw value in having workers and management in the same boat. Books such as Peter Drucker's Concept of the Corporation set the management tone and style for a generation of business school graduates. Then something fundamental changed.

Workers, instead of being considered as valuable sources of innovation and partners in the operation of the business, were just another input. As foreign competition heated up in basic industries like autos and steel, companies increasingly sought advice from consulting firms such as McKinsey and Company and Booz Allen Hamilton. The old culture of retaining employees and reinvesting in the business evolved to "maximizing shareholder value." Companies that were once run by scientists and engineers were now run by MBAs and accountants. Traditionally, commercial banks were where companies went to borrow money and investment banks were where companies went to raise capital. Then some smart investment bankers at firms such as Lehman Brothers and Goldman Sachs figured out that there was a lot of money to be made advising corporate managements on takeovers and breakups. Drexel Burnham Lambert refined the art of the "leveraged buyout," in which corporate managements were advised to take over companies with solid cash flow by borrowing heavily against their assets and then selling off the pieces in order to pay off the debt. Or managements were advised to take over other firms and achieve "synergies" by combining with other firms and jettisoning overlapping pieces. If that meant some workers lost their jobs that was just too bad. There was money to be made, much more than just collecting a salary or underwriting fees.

Now, I think, our country is paying a price for this change in the corporate point of view, but I sense that in some fundamental ways the tide is turning. I have hope for the newer generation of workers who have seen themselves and their families struggle to get ahead. Someday many of these people will be in positions of influence, and, hopefully, it will be for the better. The Occupy Wall Street movement, even with all of its warts, gave us a hint of the idealism and concern for their fellow man that seemed to be lacking from an earlier generation.

http://www.insead.edu/v1/projects/cgep/Papers/msv.pdf

 

[KevinKohler]

I agree. Once, companies were ran by people who were emotionally invested in them, because they had started out somewhere in that company...the proverbial mail room. Then we shifted to hiring MBAs. Who, frankly, weren't doing so poorly...but then they got rich, gave their kids a job in the office next to theirs.


Fact is, you think things are changing...the higher I go, the more I see that they stay the same, or are getting worse. Businesses consistently acting in favor of short term gains at the expense of long term viability, enacting policies that further belittle the bulk of their assets, human labor, etc.

The way I see it...some of these people had better change, and change fast...or unions will come back, hard and fast. And then I think we're in for a world of hurt. Even at BJs, a company with fairly high turnover, I see the occasional sign...a flier, a suspicious person there. Only a matter of time, at our present course. And when retailers unionize....lol...well, I just don't think it'll be a good thing for, economically. At least not with the way unions currently operate.

 

[Fenton]

But here are a few theories:

• Our population has become desensitised to income disparity, basically just accepting that if the median worker gets a 3% raise, the boss should get a 20% raise
• the lowering of the top income tax rate may have affected income disparity
• inheritance, the passing on of unearned multigenerational wealth
• shifts away from unionization
• increased consolidation of power amongst the wealthy
• greed is now considered to be good, and lying, cheating and stealing are now acceptable ways of obtaining it.

It's probably a little of all of that.

Income disparity is irrelevent. Honestly, you think the current economic woes of our Country are tied to the fact CEOs make allot more than they use too ?

Hell with Bernakes perpetual QE, and Obama's 7 trillion in new debt in 5 years, I think there is plenty of money out there.

 

[imagep]

Income disparity is irrelevent.

As those who have the lease propensity to spend the marginal dollar of income gain in percentage of GDP acquired, those with higher propensities to spend loose income percent of GDP acquired, thus demand becomes lower than it otherwise would be. As demand becomes lower (or fails to increase), business profits tend to decline, and unemployment goes up, causing a further drop in demand and business profits. Thus, income disparity is very relevent to our economy. It's not a coincidence that income disparity peaked the years that the Great Depression and the Great Recession began.

Honestly, you think the current economic woes of our Country are tied to the fact CEOs make allot more than they use too ?

Not just CEO's, but virtually everyone in the top one percent.

Hell with Bernakes perpetual QE, and Obama's 7 trillion in new debt in 5 years, I think there is plenty of money out there.

Unfortunately, it is in the hands of the bankers, the fed, and the rich, not the consumer class. Money that is not in active circulation might as well not exist as far as main street is concerned.