FIRE Economy | - Part 4

Global Inequality Grows

Not having watched more than the first ten minute of the Democratic Presidential debate last night, I’m not sure how big an issue wealth/income inequality was (I’m sure Bernie Sanders talked about it a lot), but one thing seems clear, the situation isn’t getting any better, at least according to a  new Credit Suisse survey as detailed in this Guardian story.

Of course, the big headline from this survey (and the actual headline of the Guardian story) was that the top one percent own half of the world assets, but, for us ‘Mericans, an equally important takeaway is how much we, as individuals, move up in charts such as this one when all the poor people of the world are included.

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More evidence that the giant student loan bubble will someday wreak havoc on the U.S. economy in one enormous delayed reaction comes from two charts that go a long way in explaining why and how the labor force participation rate is so low.

First, it’s not retirees that are causing more people to not work or look for work – the 16-24 age group accounts for all of the net decline in participation rate per the St. Louis Fed.

What are these 16-24 year-olds doing if they’re not working or looking for work?


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Financial Markets and the Fed

After the financial market turmoil of recent months, the response of the Federal Reserve to said turmoil, and then the reaction of markets to yesterday’s dovish September Fed meeting minutes, it’s not at all clear that this cartoon accurately characterizes the relationship between Wall Street and the nation’s central bank.

Lately, it looks like markets are telling the Fed what to do and, in the process, making them look foolish as a result (either that or Fed economists just don’t have a clue about anything).

From the cartoon archive of Daryl Cagle.

Half of Americans Have No Savings

I guess this shouldn’t be surprising given the number of cars you see lined up at Starbucks every morning and extrapolate from there about the state of personal finances in America.

GoBankingRates offers up this item today about how much money people have in their savings accounts (granted, this doesn’t include retirement accounts, so it’s not the end of the world – it’s just moderately disturbing), along with the rather simple explanation that out-of-control spending is the primary reason for the chart below.

I remember getting lots of blank stares when people would ask how my wife and I retired at such a young age and I’d say, “It’s not just how much money you have, how much money you spend is pretty important too – the little things really add up”.

Then again, conventional wisdom these days is probably, “Why do I need a savings account as long as I’ve got credit cards”, an attitude that banks probably just love to hear.

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This Bloomberg story details the boom-turned-bust known as the surrounding communities to the shale oil fields in North Dakota, the “empty campers everywhere” comment above coming from one Tom Novak of TJ’s Autobody & Salvage who wakes up “and RVs are in my driveway”, that is, along with souped-up pickup trucks, presumably purchased by young men fresh out of high school who once drove a truck and made $100,000 a year.

There’s lots of fascinating (if unsurprising) detail in the report about the impact the boom-bust has had on the local economy (man-camp vacancy rates now as high as 70 percent) and the local government struggling to cope with it all (two-thirds of the $226 million of new debt issued by shale boom epicenter Williston, ND is outstanding).

Adding insult to injury, you have the recent debut of ABC’s “Blood and Oil”, set in North Dakota, that prompted this comment at IMDB:


27 September 2015 | by rickmtbslag

Who ever wrote and produced this horrid show has never, ever been to North Dakota, spoke to a person from North Dakota or looked at a map to find out where North Dakota is located. They could have watched the movie “Fargo”, at the very least, in order to get an idea of the landscape and dialect of the region if they did not want to travel to find out for themselves. Here is a hint; There are no snow capped mountains in North Dakota. Its highest point is White Butte at 3508 feet. Not a single jagged peaked mountain in sight. A white moose? Really? All they had to do is a web search to find out that North Dakota is not part of the moose habitat. Takes less than a second.The producers should be embarrassed that this show made it to air. And fired.

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