by ilene - May 28th, 2015 12:07 pm
Courtesy of Yves Smith, Naked Capitalism
Yves here. One of the high potential areas for robot substitution that I see on the list below is staffing of fast food restaurants (as in cooking). Fast food restaurants have limited menus and pre-set, highly specified procedures, making them prime candidates for labor substitution. But notice also the high end professional on the list.
I have to differ a little with the cheery, “Better policy will create new/different jobs.” What passes for our leadership believes in the mantra of more education and more skilled workers as the answer. In fact, America is going in reverse in this category, as educational attainment has fallen and college and higher education costs rise into the stratosphere. Moreover, the notion that there is a raft of highly technical jobs with lots of unmet demand is a canard. As we’ve discussed at some length, STEM graduates are finding it hard to obtain work (see confirming evidence in The Myth of the Science and Engineering Shortage from the Atlantic last year). And even if that were an area of hot demand, not everyone has the aptitude and self-discipline to become highly skilled in highly technical fields (and rarefied expertise make your more vulnerable, since if conditions in your field change, you need to acquire new know-how to move into a different area). The Japanese believe that it is critical for society to generate enough paid work, hence their refusal to rationalize a highly inefficient retail sector and belief that the most important duty of an entrepreneur is to create jobs. We’ve completely lost sight of this need.
By Zaid Jilani, an AlterNet staff writer. Follow @zaidjilani on Twitter. Originally published at AlterNet
One of the next great challenges American workers are starting to face is the increasing automation of jobs that previously could only be done by a living, breathing human being. Here are eight jobs that robots are taking over as they take over the world:
- Chef: In Shanghai this month, visitors at the Consumer Electronics Show (CES) Asia were able to have meals cooked by an entire robotic kitchen. London’s Moley Robotics designed the kitchen, which features two robot arms that will cook a variety of dishes for you
by ilene - May 28th, 2015 11:55 am
Courtesy of The Reformed Broker, Joshua Brown
When (if) interest rates rise, perhaps in 6 months or sometime around when my grandchildren are graduating space college, there will likely be some pressure on various portions of your portfolio. But where? And how bad might it be? And for what duration will the pain last?
We can’t know in advance. But we can try to get an understanding of what went down during previous hiking cycles. This will be the hysterical topic du jour in the financial media for the rest of the summer (trust me, I attend the planning meetings). My new article for Fortune Magazine, published today, encompasses all of the historical context you need to inure yourself (and your portfolio) from the noise.
I hope you enjoy it:
My partner Michael Batnick has a companion blog post on our research into the topic, with some additional insights. (Irrelevant Investor)
JC says don’t hold your breath for a rate hike anytime soon anyway (All Star Charts)
by ilene - May 28th, 2015 9:47 am
Courtesy of Keith Weiner at Acting Man
“The top 25 hedge fund managers made more than all the kindergarten teachers in the country,” declared President Obama in a discussion of poverty at Georgetown University. Calling them “society’s lottery winners,” he proposed to hike their taxes.
Predictably, battle lines have been formed between two polarized sides. One side—let’s call them the Gauche for convenience’s sake—is unhappy with the pay disparity. CBS News, in an almost neutral tone, asks, “Which group provides more value to America?” The reader is supposed to somehow answer that question, presumably in favor of teachers. Gawker goes much farther, calling hedge fund managers the biggest gangsters of all. It asserts, “It is, as the myth goes, capitalism at its most pure …”
The imposing HQ of the US Federal Reserve. Central banks are socialist central planning institutions, and are subject to the constraints the socialist calculation problem imposes on all planners. An economy with a central bank is no longer a free market economy – it is at best a hampered market economy. Photo credit: Susan Candelario
The other side—let’s call them the Adroit—defends hedge fund managers. PJ Media said, “That single comment [about winning the lottery] defines the president’s economic worldview. Success doesn’t come to those who act rationally in pursuit of their values. It doesn’t come from hard work performed intelligently.”
The US Gini coefficient, a measure of income disparity. The question one must ask is: why is it growing so much? Partly the reasons are legitimate: the advent of the computer industry in the widest sense has led to growing demand for skilled workers, who command a high price for their labor in the marketplace. But mostly, it is the result of government intervention, especially market distortions created by central bank policy. Ironically, most on the political left actually love the central bank (since in their book, all central planning of the economy must somehow be good).
by ilene - May 28th, 2015 9:30 am
Courtesy of Pam Martens.
Stanley Fischer, the Vice Chairman of the Federal Reserve, was seated in the audience when author and consultant, Margaret Heffernan, dropped her bombshell at the “Finance & Society” conference on May 6 of this year. The conference panel was themed “Other People’s Money: Governance, Integrity, & Ethics” and Heffernan fired the equivalent of a heat-seeking missile through one of Wall Street’s biggest lies: that there is a legitimate basis for the obscene pay of its CEOs and traders.
Heffernan told the audience:
“There’s another assumption in this which is performance-related pay is going to make people do a better job. This is not substantiated by the research. It just isn’t…I can find proof that it will make people run a little bit harder for about 15 minutes, but I can’t find the proof that over the long term, over time, it really delivers better work from more qualified people. But this has been a truism in all capitalist societies for a very long time. And it’s about time we started questioning some of these shibboleths because I would say that not only does performance-related pay not deliver superior results, I would say it almost guarantees inferior results because it encourages, incentivizes really some very perverse decision making.” (See Heffernan’s extended comments on video below.)
Stanley Fischer is someone with more than just a casual familiarity with that subject matter. Fischer is a former Vice Chairman at Citigroup, a bank that became insolvent in 2008 and required the largest taxpayer bailout in U.S. history. That was after it had paid almost $1 billion in compensation and stock awards to its former Chairman and CEO, Sandy Weill, and a severance package of $32 million to Jack Grubman, a corrupted stock analyst who was barred from the securities industry for life for issuing fraudulent research to the public to seduce them into buying dog stocks.
If one wants to study “perverse decision making,” there is no better case study than Citigroup. Last week the bank became an admitted felon for conspiring with other banks to rig foreign currency trading. This week one of its former Libor interest rate traders is on trial in London for rigging that market.
by ilene - May 28th, 2015 3:31 am
Courtesy of Mish.
On May 13, Moody’s shocked the municipal bond market by downgrading Chicago to junk.
At that time S&P rated Chicago five notches higher, the widest spread between bond raters in history.
Kristi Culpepper, AKA “Bond Girl” comments on the event in What Chicago’s Fiscal Emergency says about the Quality of Credit Analysis in the Municipal Bond Market.
In a sense, Moody’s was only validating the bond market’s opinion of the city’s creditworthiness — the bonds had already been trading at junk levels for several months. This should have been a straightforward event for the chattering class to process intellectually. Rating actions tend to lag the market rather than lead it.
Oddly, however, Moody’s downgrade sparked a debate over whether Moody’s was being “fair” to Chicago.
How could Moody’s cut the city to junk when the other rating agencies rate the city so much higher? (That has obviously never happened before in an era of ratings shopping and superdowngrades.) Wouldn’t having a diverse economy and large tax base cancel out the costs associated with machine politics? (It’s not like this is Chicago’s third fiscal crisis in the past century.)
This was probably the first instance in the history of the capital markets that a rating agency was accused of having too radical an attitude toward risk.
There is a conversation to be had about how politics influences the perception of financial commitments and whether bond structures can further evolve to protect bondholders. If the general obligation pledge — absent a statutory lien, which few states have — lacks teeth in court, why isn’t it obsolete? Why is this bond structure still the foundation for credit analysis? Does the general obligation pledge allow governments to over-commit themselves financially in certain political contexts? I would submit to you that this absolutely the case with Chicago.
What financial risks does Chicago pose to investors?
Let’s examine Chicago’s credit profile and you can decide whether or not the city’s bonds are speculative investments.
Chicago’s combined annual debt and pension costs are substantially higher than any [of the ten largest US cities] when these obligations are indexed to total governmental revenue. Chicago’s fiscal 2015 debt service and annual pension costs account for 44.8% of fiscal 2013 governmental revenue. San Jose is the next closest city at 27.8%. The nine cities other than Chicago averaged 22.4% of revenue.…
by ilene - May 28th, 2015 2:57 am
Financial Markets and Economy
Iraq is taking OPEC's strategy to defend its share of the global oil market to a new level.
The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout. The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.
FDIC: Fewer Problem banks, Residential REO Declines in Q1 (Calculated Risk)
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $39.8 billion in the first quarter of 2015, up $2.6 billion (6.9 percent) from a year earlier. The increase in earnings was mainly attributable to a $4.3 billion rise in net operating revenue (net interest income plus total noninterest income). Financial results for the first quarter of 2015 are included in the FDIC's latest Quarterly Banking Profile released today.
German consumer confidence hits 13.5-year high (Business Insider)
Consumer confidence in Germany is at its highest in 13.5 years, as the positive economic outlook and low inflation persuade consumers to open their purses, a poll found on Wednesday.
"Very strong domestic demand in Germany and the low rate of inflation are fuelling economic expectations and consumers' willingness to spend," market research company GfK said in a statement.
By contrast, income expectations have slipped slightly from their previous record high, the statement said.
by ilene - May 28th, 2015 12:26 am
Courtesy of Mike Krieger of Liberty Blitzkrieg
It’s mostly not about trade. Only 5 of the 29 chapters are about traditional trade.
– Julian Assange in a recent interview with Democracy Now
I’ve focused a little bit more of my attention on the Trans-Pacific Partnership lately, as the Obama Administration scrambles to attain “fast-track” authority from Congress.
The content of this unbelievably dangerous gift to multi-national corporations is being kept secret from the public, and for very good reason.
* * *
For some background on the TPP and where it stands, see:
* * *
What little we know about the TPP has come from whistleblower site, Wikileaks. This is what Julian Assange thinks of this “trade” treaty in his own words.
by ilene - May 27th, 2015 9:24 pm
The happenings on Wall Street in 1999 prove that sometimes truth is stranger than fiction.
Although the events of 1999 are ancient history by many standards, some very clear memories no doubt remain for many investors. With technology and biotech stocks once again hot, a number of comparisons to the last bubble have been made. But the current environment can’t come close to matching 1999, either in terms of valuations or in the sheer madness of the markets.
Below are 19 events that actually happened in 1999, highlighting the irrational exuberance that swept over investors (well, most investors).
19. Yahoo! was worth more than Berkshire Hathaway.
Buffett at his computer-free desk
High-flying Yahoo! had a market cap of nearly $100 billion in 1999, putting it ahead of Warren Buffett’s Berkshire Hathaway. Barron’s even ran a cover story on the Oracle of Omaha titled “What’s Wrong, Warren?” that questioned whether the end was near for Buffett:
To be blunt, Buffett, who turns 70 in 2000, is viewed by an increasing number of investors as too conservative, even passe.
Barron’s noted that it wasn’t the only voice questioning Buffett; critics from a new corner of the world were becoming increasingly vocal:
Indeed, Buffett has even started taking flak on Internet message boards. One contributor called Berkshire a “middlebrow insurance company studded with a bizarre melange of assets, including candy stores, hamburger stands, jewelry shops, a shoemaker and a third-rate encyclopedia company.”
Today Berkshire is worth approximately $360 billion, or about $320 billion more than Yahoo!
18. Whoopi Goldberg promoted Flooz.
Flooz launched in 1999 as a currency designed to be used by Internet merchants. Users could either purchase Flooz directly or accumulate credits from online retailers as a loyalty bonus. The product proved to be tremendously popular — with a Russian mafia syndicate that used it as a key part of a stolen credit card ring.
When the company shut down in August 2001, all unused Flooz became nonrefundable.
by ilene - May 27th, 2015 7:38 pm
Courtesy of The Automatic Earth.
Dorothea Lange Salvation Army, San Francisco, California. Unemployed young men 1939
There are many things going on in the Greece vs Institutions+Germany negotiations, and many more on the fringe of the talks, with opinions being vented left and right, not least of all in the media, often driven more by a particular agenda than by facts or know-how.
What most fail to acknowledge is to what extent the position of the creditor institutions is powered by economic religion, and that is a shame, because it makes it very difficult for the average reader and viewer to understand what happens, and why.
Greek FinMin Yanis Varoufakis has often complained that he can’t get the finance ministers and others to discuss economics. As our mutual friend Steve Keen put it:
Steve Keen said the finance minister was frustrated with the progress of Greece’s talks with the euro zone, adding Varoufakis had compared the talks to dealing with “divorce lawyers”. Keen said the finance ministers of Europe refused to discuss certain euro policies, according to Varoufakis. [..] When asked what [Varoufakis and he] mainly discuss at the moment, Keen said, “Mainly his frustration, the fact that the one thing that he can’t discuss with the finance ministers of Europe is economics..”
“He goes inside, he is expected to be discussing what the economic impact of the policies of the euro are and how to get a better set of policies, living within the confines of the euro and the entire European Union system, and he said they simply won’t discuss it. He said it is like walking into a bunch of divorce lawyers, it is not anything like what you think finance ministers should be talking about..”
They won’t discuss these things because they have found religion, in the sense that there is for them only one truth, to the exclusion of all others. They toe the preconceived line, because if they didn’t they would lose their positions.
They are undoubtedly also very hesitant to discuss economics with Varoufakis because they are aware of his prowess in the field. They are much less knowledgeable, which makes it tempting to hide behind numbers, behind Germany, and behind their faith that their views are the only right ones. Which is precisely what Varoufakis challenges.
by ilene - May 27th, 2015 7:00 pm
Courtesy of Robert Berke of OilPrice.com
Part 2: Cold War or Competition on the New Silk Road.
In Part 1 of “The New Silk Road,” we examined the China’s plan for rebuilding the Silk Road, stretching from Europe to Asia.
In Part 2, we look at currently proposed projects, and geopolitical rivalries that could stall and hamper progress.
Silk Road Projects:
It is important to understand that the new “Road’ is not a formal plan in any sense but merely a broad outline of goals, a work in progress, being filled in, opportunistically, with projects as they are developed, and as negotiations with target countries allow. The Road is also not a 'start-up' from scratch, but builds upon and extends a number of projects that have been ongoing with China's partners.
The Iran-Pakistan-China project (described in Part 1) is one of the few that provides more details, but it is still very much in the planning stage. The second proposed project, only recently made public, focuses on Russia. China is also proposing a partnership with India for its third project.
The Pakistan program is an important economic development project that ties in with the Road as one of the connecting dots along the way, while the proposed program for Russian could become the nexus for the entire Road project, and the proposed India project could become the crucial piece in tying it all together.
Russia and China, the Emerging Partnership:
What makes Russia important enough to include in the plan? A better question might be: how is it possible to leave out Russia, the largest country in Eurasia, from a plan to build across the entire region?
In a recent meeting in Moscow, celebrating the 70th anniversary of the allied victory in World War II – which saw Indian, Chinese, and Russia troops parading in Red Square – China and Russia signed multiple agreements to tie development of the Chinese sponsored Silk Road to the Russian sponsored Eurasian Economic Union (EAEU).
The EAEU plan is a Kremlin-sponsored trade union between Russian, Kazakhstan, Kyrgyzstan, Belarus and Armenia, that has been pilloried in the western press as part of Russia’s supposed underlying agenda to re-establish the Soviet Union. With Russia’s inclusion, the…