Monday, November 29, 2010

"Black Friday" Sales Volume Has No Bearing on GDP

A great article at Zero Hedge shows that, like most things that everyone "knows", Black Friday is an urban myth when it comes to the economy:
  • Holiday retail sales are only 3.4% of U.S. GDP
  • Holiday retail sales as a percentage of ANNUAL retail sales is between about 20% (not 50% as is often assumed).  If we assume Christmas shipping is two months, this is not too far off from linear (16.7% would be the amount of sales if a retail store had linear monthly sales).
So if there were a huge gain in Christmas sales, it would be statistical noise in total U.S. economic output.  On the plus side, this means that a drop in Christmas sales is noise too, but either way the media makes a too big a deal out of it either way.

Monday, November 15, 2010

New TSA Choice: Full Body Scanner or Getting Felt Up

I wrote in June that I refuse Full Body Scanners on sake of principle.  They do not make flying safer, are slower and more tedious than metal detectors, and are a colossal waste of money and resources that does nothing to prevent terrorism. 

The other complaints of Body Scanners - privacy and radiation - don't bother me.  I have the body of a Greek god and don't mind showing it off, and I get quite a bit of radiation just being on a plane at 30,000 feet.  But I am sympathetic to and support those who do object on these grounds (especially pregnant women and those who object due to modesty).

I have successfully managed to dodge body scanners since June, and figured if I did encounter one I would go through the usual brief pat-down, maybe a wand.  But now the TSA has raised the stakes with "Enhanced" Pat Downs.

So what, officially, is an "enhanced" pat down?  The TSA doesn't document it and they won't tell anyone.  And why would that be?  Because they are so invasive.

Based on traveler reports the new enhanced technique is a full, hand's-on grope of the entire body - genitals are felt up, the edge of the hand is rubbed up and down between your butt cheeks, women have their entire breast region felt up.  It in an intrusive feel-up of the entire body, including areas that are illegal to be touched by licensed massage professionals, even if those areas are clothed (I am serious here).

I don't care who it is, no one working for government is going to touch me that way unless they have me handcuffed and subdued.  So I am not going to allow them to do it just to get on a plane; not just to create the illusion of safety for everyone else.

This whole molestation effort is an attempt to force people into the scanners - hoping that people like me are so disgusted that I will just go along.

Short term I have no choice.  But I do have the choice to fly, and the choice to complain to the government. I am pretty certain the latter will not do any good, however, so I see myself flying a lot less in the future.

Wednesday, November 10, 2010

The New Social Security Program for Professionals - We'll Take Out More, Give Back Less

I knew this was coming.  If you wade through the powerpoint from the Federal Debt Commission, here is what they want to do with Social Security:

  • " Gradually increase the taxable maximum to capture percent of wages by 2050" (Page 46) - In other words, the cap at which SS is taken out of paychecks would go up and up.
  • "Increase progressivity of benefit formula" (Page 45) - In other words, the more you make, the less you get.
So all that money taken out for Social Security (and which you are still taxed for at 100% at your total income level) is going to go up, but you are going to get a lot less back.  This shouldn't surprise anyone.

Thursday, November 04, 2010

I Thought QE2 Was the Queen Elizabeth Luxury Liner

So the Fed embarks on Quantitative Easing II in order to try to pump the economy. They are doing this to avoid "deflation", which apparently is worse than the hyper-inflation they are planting into the system (and if this word seems alarmist, take a look at the price of gold, wheat, oil, or any other commodity over the past six months. These price increases are starting to be factored into food, gas, and anything else that uses raw materials, and these price increases haven't led to increased employment).

Why does the Fed think that a lower dollar and lower interest rates will boost business spending? Businesses are sitting on giant cash hoards and not investing. Why would lower borrowing costs change this?

And why is deflation so bad? I have been working in an industry where deflation is a part of life: technology. Anything we sell today will be selling much less a year from now. In fact, our customers expect to see a "cost down" roadmap of 15% per year MINIMUM, sometimes much higher. We work with it, factor it into our planning, and of course it inspires us to do more with our products, to put more things into them so we don't have to reduce prices so much (which is why you get so much more for a laptop for the same price today as you did five years ago - the price has deflated, but more memory, larger disk storage, etc. was added to keep the price even).

We hear about how the poor spend everything they get, and how an increase in benefits goes directly into their spending. So if there is deflation, doesn't that mean they get to buy more things for less? So deflation helps the poor. The only people who spend less during deflation are people who can plan their purchases, so the better off supposedly delay purchases, but the big ticket items that group already buys - TVs, appliances, anything with technology - already has deflation, and has for years.

"Required" inflation is a theory from Keynesian economics, but that theory was put forth for increasing populations pushing for more goods. But what if the population is decreasing (like Japan)? Or what if people are just tired of buying crap (including housing) like we have now? The theory is silent in these conditions, but that doesn't stop the Central Bankers from using the only tool in their box instead of letting things work themselves out.

This will be a case of the cure being worse than the disease.