NY Fed President Dudley Thinks A New Housing Bubble Is A Perfect Cure For Soft Retail Sales

via by Tyler Durden on Wed, 18 Jan 2017 01:10:24 GMT

In general, most people would agree that the housing collapse of 2008/2009 was a negative event in U.S. history.  A combination of misinformed regulations from Washington D.C., low interest rates, poor underwriting standards that allowed for, among other things, the idiotic "cash out" mortgage, and an insatiable demand for securitizations drove one of the biggest asset bubbles in history which almost brought down the entire global financial system.

But, at least one person, namely New York Fed President Bill Dudley, thinks that a repeat of the 2008 mortgage crisis is exactly the cure for America's stagnant retail sales.  Speaking at the National Retail Federation's annual convention in New York, which was undoubtedly full of perplexed retailers wondering why their store traffic remained so weak amid Obama's stunning "economic recovery", Dudley intimated that the cure for weak retail sales was a return to 2006 practices in which debt thirsty Americans repeatedly withdrew every dollar of equity in their homes to fund their trips to the mall.

“The good news is that, while the current expansion is quite old in chronological terms, it is still relatively young in terms of the health of household finances,” Dudley said in a speech to the National Retail Federation.

 

“Whatever the timing, a return to a reasonable pattern of home equity extraction would be a positive development for retailers, and would provide a boost to economic growth,” Dudley said.

 

Homeowners may have overlearned the lessons from the housing boom and bust, the New York Fed President said.

 

Even though home values have risen over 40% since 2012, housing debt has stayed virtually flat, he said.

 

“The previous behavior of using housing debt to finance other kinds of consumption seems to have completely disappeared,” and people are leaving the wealth generated by rising home prices “locked up” in their homes, he said.

Sure, just forget that the last cycle resulted in millions of personal bankruptcies, short sales and ruined personal credit scores...we're sure this time will work out much differently.

Dudley continued by noting that at the "height of the boom, annual consumption was being supplemented by around $400 billion in cash flow from debt, much of it collateralized by housing."  Apparently he is convinced that levering up your personal life to such an extreme level that you couldn't possibly survive even a modest economic blip, all so you can buy just 3 more pairs UGGs from the mall on that brand new credit card with a $500 limit, is a brilliant idea.

In order to be able to assess the evolution of household finances more precisely, we worked with Equifax—a major credit bureau—to create a new database that tracks the credit files of a random sample of households over time.  From this consumer credit panel data, we conclude that between 2004 and 2006, households were increasing their cash flow by over $200 billion a year by borrowing against their housing equity collateral.  They supplemented that with another $185 billion through non-mortgage borrowing.  So, at the height of the boom, annual consumption was being supplemented by around $400 billion in cash flow from debt, much of it collateralized by housing.

Finally, a perplexed Dudley asks "why has household behavior with respect to housing debt apparently changed so much?"  Could it be that Americans actually learned a lesson from their financial ruin just 8 years ago...a lesson the Fed certainly wishes they would promptly forget?  Unpossible.

Suppressors - The First Battle In The New Push For Gun Rights

via by Tyler Durden on Wed, 18 Jan 2017 00:45:00 GMT

Submitted by Duane at Free Market Shooter blog,

Donald Trump Jr. firing a suppressed rifle

The first push for gun rights in the upcoming Trump administration is already shaping up, and Trump hasn’t even taken office yet.

The Hearing Protection Act of 2017 (HPA) was introduced a week ago today, on Monday January 9th.  The bill is aimed at removing suppressors from regulation under the National Firearms Act (NFA), which requires an extremely difficult application process and a $200 “tax stamp” to “transfer” ownership from one individual to another.  The NRA sums up the truth on suppressors and the HPA below:

The HPA would remove sound suppressors from regulation under the National Firearms Act (NFA) and treat them as ordinary firearms under the Gun Control Act of 1968 (GCA). As with other firearms, commercial manufacturers, dealers, and importers would still have to be licensed, and the items’ retail sales would be subject to the GCA’s background check and transfer form requirements.

 

Currently, suppressors (misleadingly referred to as “silencers” in federal law) are subject to the NFA’s cumbersome and lengthy application process and a $200 tax stamp. Lawful purchasers can expect a raft of red tape and months of waiting. This is so, even though the devices themselves are completely harmless and very rarely used in crime.

 

Contrary to their portrayal in movies and television shows, suppressors do not render firearms all but soundless. They do, however, make them safer and quieter to operate.

 

Suppressors have soared in popularity in recent years, as more and more hunters and firearm owners have discovered their benefits. Private ownership is legal in 42 states, and they are lawful for hunting in 40 of those states.

 

Ironically, regulation of suppressors is one area where American gun owners are at a relative disadvantage to their counterparts in other countries. In England – which has gone a long way toward eradicating private firearm ownership – suppressors are nevertheless encouraged for private firearm owners and mandatory for uses such as pest control. 

I’ve previously detailed this exact point – suppressors are hardly the scourge the gun control crowd portrays them as.  The sound reduction is in the 20-30db range, maximum, and that sound reduction is only achieved by attaching a large, bulky device to the barrel of a firearm.  Given the fact that the sound reduction still keeps the firearm quite loud, even for a .22LR (generally considered the smallest widely available caliber), it is hardly practical for criminals to use them.

Take a look at the above chart – if you assume a 160db shot can be suppressed to 130db (still quite loud), the only real practical use for suppressors is to reduce the net effect of the deafening sound of a gunshot.  The excessive noise of gunshots is a nuisance for anyone nearby (within a mile or more), makes building and licensing shooting ranges difficult due to NIMBY, and the same nuisance problems apply for hunting.

Just think – would you want to hear the constant sound of gunshots from a shooting range near your home?  If firearm suppression were to become more commonplace, it would make the devices less of an auditory threat to the user and non-user alike.  Would automobiles have become as commonplace as they are today without mufflers?

However, that hasn’t stopped the MSM from jumping in to demonize suppressors.  Jeff Bezos’s blog, The Washington Post, recently released an article with the click-bait headline “Gun silencers are hard to buy. Donald Trump Jr. and silencer makers want to change that.”  WaPo did manage to push another bit of fake news in the article with its quote from the gun control crowd:

The silencer industry and gun rights groups say critics are vastly overstating the dangers, arguing that Hollywood has created an unrealistic image of silencers, which they prefer to call “suppressors.” They cite studies showing that silencers reduce the decibel level of a gunshot from a dangerous 165 to about 135 — the sound of a jackhammer — and that they are rarely used in crimes.

 

But gun-control activists say silencers are getting quieter, particularly in combination with subsonic ammunition, which is less lethal but still damaging. They point to videos on YouTube in which silencers make high-powered rifles have “no more sound than a pellet gun,” according to one demonstrator showing off a silenced semiautomatic ­.22LR.

If you check out the video cited by the gun control, you’ll realize the firearm is still quite auditory.  Not only that, the .22LR caliber is extremely weak, commonly being used to hunt animals of squirrel size, and the subsonic ammunition used for maximum suppression could have difficulty cycling the action of the gun.  Take a look at the videos in my original article to get an accurate idea of what sound suppression in firearms is actually like.

Sebastian of PA Gun Blog detailed the way this battle will be won and suppressors moved out of NFA restriction:

You can hate the Washington Post’s ignorant article about suppressors, but I have to admit that tying it to the Trumps was an effin’ brilliant way to frame the issue if the aim is to derail the bill. Why? Because most people don’t really give a shit or understand this issue, but if you try to imply the Trumps have something to gain from it, you trigger all the lefty hate rage, and that gets people who otherwise wouldn’t care motivated to oppose it. If the Trumps want it, surely it must be the Worst. Idea. Ever. That’s exactly what I’m seeing around social media.

 

The key is to speak out in favor of the issue. Put a human face on it. A lot of the same folks who complain about this bill are the same types who complain about noise emanating from gun clubs. Imagine if clubs could encourage members to use suppression? Right now that’s not a reasonable request because of the regulations. Push the training angle, and how it makes it much safer during instruction if the person being instructed can actually hear commands. This is one of those issues where we have really good arguments, and the other side is stuck hoping people believe Hollywood portrayals of how silencers work, and are willing to jump in and ra! ra! team! in opposition is the issue is framed in a way that triggers an emotional response.

The easiest way to win the battle is to show people the truth about what these devices are, and what they aren’t.  Listen to Sebastian and put a human face on the issue.  In addition, put an inhuman face on The Washington Post – Jeff Bezos – and expose the ignorance and duplicity of the MSM and Hollywood’s portrayal of suppressors.

"Get Paid Fighting Against Trump" - Ads Across American Cities Reportedly Offer Money To Inauguration Agitators

via by Tyler Durden on Wed, 18 Jan 2017 00:20:00 GMT

President-elect Donald Trump has complained about paid activists both before and after the 2016 presidential campaign, and as The Washington Times reports, he may have a point.

Job ads running in more than 20 cities offer $2,500 per month for agitators to demonstrate at this week’s presidential inauguration events.

 

Demand Protest, a San Francisco company that bills itself as the “largest private grassroots support organization in the United States,” posted identical ads Jan. 12 in multiple cities on Backpage.com seeking “operatives.”

 

“Get paid fighting against Trump!” says the ad.

 

“We pay people already politically motivated to fight for the things they believe. You were going to take action anyways, why not do so with us!” the ad continues. “We are currently seeking operatives to help send a strong message at upcoming inauguration protests.”

 

The job offers a monthly retainer of $2,500 plus “our standard per-event pay of $50/hr, as long as you participate in at least 6 events a year,” as well as health, vision and dental insurance for full-time operatives.

An example of one of the ads...

Source: Tulsa.backpage.com

While there have been "fake" ads in the past, as The Washington Times notes, if the Demand Protest ads are ruses, however, someone has gone to a great deal of trouble to sell the scam.

The classifieds are running in at least two dozen cities, including Los Angeles, New York, Chicago, Dallas and Houston, and the company operates a slick website that includes contact information.

 

A San Francisco phone number listed on the website was answered with a voice-mail message identifying the company by name. A request for comment left Monday evening was not immediately returned.

 

The website, which says that the company has provided 1,817 operatives for 48 campaigns, promises “deniability,” assuring clients that “we can ensure that all actions will appear genuine to media and public observers.”

 

“We are strategists mobilizing millennials across the globe with seeded audiences and desirable messages,” says the website. “With absolute discretion a top priority, our operatives create convincing scenes that become the building blocks of massive movements. When you need the appearance of outrage, we are able to deliver it at scale while keeping your reputation intact.”

A search by the Washington Times showed the Backpage.com ads also ran in Austin, Charlotte, Colorado Springs, Columbus, Denver, Detroit, El Paso, Fort Worth, Jacksonville, Oakland, Oklahoma City, Omaha, Philadelphia, Phoenix, San Diego, San Francisco, Seattle, Tulsa, and Washington, D.C.

Currency Woes Force Apple, Inc. to Increase U.K. App Store Prices

via Motley Fool Headlines by on Wed, 18 Jan 2017 00:25:00 GMT

5 Top Home Automation Investments

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Ron Paul Asks "Will Trump Continue The Bush-Obama 'Big Spending' Legacy?"

via by Tyler Durden on Tue, 17 Jan 2017 23:55:00 GMT

Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

This week, Congress passed a budget calling for increasing federal spending and adding $1.7 trillion to the national debt over the next ten years. Most so-called “fiscal conservatives" voted for this big-spending budget because it allows Congress to repeal some parts of Obamacare via “reconciliation." As important as it is to repeal Obamacare, it does not justify increasing spending and debt.

It is disappointing, but not surprising, that the Obamacare repeal would be used to justify increasing spending. Despite sequestration’s minor (and largely phony) spending cuts, federal spending has increased every year since Republicans took control of the House of Representatives. Some will attribute this to the fact that the Republican House had to negotiate with a big-spending Democratic president — even though federal spending actually increased by a greater percentage the last time Republicans controlled the White House and Congress than it did under President Obama.

The history of massive spending increases under unified Republican control of government is likely to repeat itself. During the presidential campaign, President-elect Donald Trump came out against reducing spending on “entitlements.” He also called for a variety of spending increases, including spending one trillion dollars on infrastructure.

One positive part of the infrastructure proposals is their use of tax credits to encourage private sector investments. Hopefully this will be the first step toward returning responsibility for building and maintaining our nation’s infrastructure to the private sector.

Unfortunately, the administration appears likely to support increased federal spending on “shovel-ready” jobs. Claims that federal spending helps grow the economy rely on the fallacy of that which is not seen. While everyone sees the jobs and economic growth created by government infrastructure projects, no one sees the greater number of jobs that could have been created had the government not taken the resources out of the hands of private businesses, investors, and entrepreneurs. Despite what some conservatives seem to think, this fallacy applies equally to Republican and Democrat spending.

President-elect Trump has criticized the past two administrations’ reckless foreign policy, and he has publicly shamed the powerful Lockheed Martin company for wasting taxpayer money. Yet, he continues to support increasing the military budget and has called for increased military intervention in the Middle East.

The fact is the United States already spends too much on militarism. Not only does the United States spend more on the military than the combined military budgets of the next eight highest spending countries, but Pentagon waste exceeds the total Russian military budget.

America can no longer afford to waste trillions of dollars on a militaristic foreign policy. Donald Trump should follow-up his attacks on wasteful military spending by dramatically changing our foreign policy and working to cut the Pentagon's bloated budget.

If the new administration and Congress increase spending, they will need the Federal Reserve to monetize the growing debt. The need for an accommodative monetary policy gives the Federal Reserve and its allies in Congress and in the deep state leverage over the administration. This leverage could be used, for example, to pressure the administration to abandon support for the Audit the Fed legislation.

Fed action can only delay the inevitable day of reckoning. Raising levels of federal spending and debt will inevitably lead to a major economic crisis. This crisis is likely to be reached when concerns over our national debt cause more countries to reject the dollar’s status as the world's reserve currency. The only way to avoid this crisis is to stop increasing spending and instead begin reducing spending on all aspects of the welfare-warfare state.

CSX Disappoints With Falling Earnings Despite Stronger Coal

via Motley Fool Headlines by on Tue, 17 Jan 2017 23:48:00 GMT

Gun Owners Vs. Social Justice Warriors

via by Tyler Durden on Tue, 17 Jan 2017 23:30:00 GMT

There's only one thing worse than bringing a knife to a gunfight... that's bringing whine...

Snowflakes vs SIG SAUERs: "I'm tolerant... but not that tolerant"

Here's Everything You Need to Know About Microsoft Corporation's Latest AI Acquisition

via Motley Fool Headlines by on Tue, 17 Jan 2017 23:19:00 GMT

In A Free Market, No Profit Is "Excessive"

via by Tyler Durden on Tue, 17 Jan 2017 23:05:00 GMT

Authored by Ludwig von Mises via The Mises Institute,

Profits are never normal. They appear only where there is a maladjustment, a divergence between actual production and production as it should be in order to utilize the available material and mental resources for the best possible satisfaction of the wishes of the public. They are the prize of those who remove this maladjustment; they disappear as soon as the maladjustment is entirely removed. In the imaginary construction of an evenly rotating economy there are no profits. There the sum of the prices of the complementary factors of production, due allowance being made for time preference, coincides with the price of the product.

The greater the preceding maladjustments, the greater the profit earned by their removal. Maladjustments may sometimes be called excessive. But it is inappropriate to apply the epithet “excessive” to profits.

People arrive at the idea of excessive profits by confronting the profit earned with the capital employed in the enterprise and measuring the profit as a percentage of the capital. This method is suggested by the customary procedure applied in partnerships and corporations for the assignment of quotas of the total profit to the individual partners and shareholders. These men have contributed to a different extent to the realization of the project and share in the profits and losses according to the extent of their contribution.

But it is not the capital employed that creates profits and losses. Capital does not “beget profit” as Marx thought. The capital goods as such are dead things that in themselves do not accomplish anything. If they are utilized according to a good idea, profit results. If they are utilized according to a mistaken idea, no profit or losses result. It is the entrepreneurial decision that creates either profit or loss. It is mental acts, the mind of the entrepreneur, from which profits ultimately originate. Profit is a product of the mind, of success in anticipating the future state of the market. It is a spiritual and intellectual phenomenon.

The absurdity of condemning any profits as excessive can easily be shown. An enterprise with a capital of the amount c produced a definite quantity of p which it sold at prices that brought a surplus of proceeds over costs of s and consequently a profit of n per cent. If the entrepreneur had been less capable, he would have needed a capital of 2c for the production of the same quantity of p. For the sake of argument we may even neglect the fact that this would have necessarily increased costs of production as it would have doubled the interest on the capital employed, and we may assume that s would have remained unchanged. But at any rate s would have been confronted with 2c instead of c and thus the profit would have been only n/2 per cent of the capital employed. The “excessive” profit would have been reduced to a “fair” level. Why? Because the entrepreneur was less efficient and because his lack of efficiency deprived his fellow-men of all the advantages they could have got if an amount c of capital goods had been left available for the production of other merchandise.

In branding profits as excessive and penalizing the efficient entrepreneurs by discriminatory taxation, people are injuring themselves. Taxing profits is tantamount to taxing success in best serving the public. The only goal of all production activities is to employ the factors of production in such a way that they render the highest possible output. The smaller the input required for the production of an article becomes, the more of the scarce factors of production is left for the production of other articles. But the better an entrepreneur succeeds in this regard, the more is he vilified and the more is he soaked by taxation. Increasing costs per unit of output, that is, waste, is praised as a virtue.

The most amazing manifestation of this complete failure to grasp the task of production and the nature and functions of profit and loss is shown in the popular superstition that profit is an addendum to the costs of production, the height of which depends uniquely on the discretion of the seller. It is this belief that guides governments in controlling prices. It is the same belief that has prompted many governments to make arrangements with their contractors according to which the price to be paid for an article delivered is to equal costs of production expended by the seller increased by a definite percentage. The effect was that the purveyor got a surplus the higher, the less he succeeded in avoiding superfluous costs. Contracts of this type enhanced considerably the sums the United States had to expend in the two world wars. But the bureaucrats, first of all the professors of economics who served in the various war agencies, boasted of their clever handling of the matter.

All people, entrepreneurs as well as non-entrepreneurs, look askance upon any profits earned by other people. Envy is a common weakness of men. People are loath to acknowledge the fact that they themselves could have earned profits if they had displayed the same foresight and judgment the successful businessman did. Their resentment is the more violent the more they are subconsciously aware of this fact.

There would not be any profits but for the eagerness of the public to acquire the merchandise offered for sale by the successful entrepreneur. But the same people who scramble for these articles vilify the businessman and call his profit ill got.

The semantic expression of this enviousness is the distinction between earned and unearned income. It permeates the textbooks, the language of the laws and administrative procedure. Thus, for instance, the official Form 201 for the New York state income tax return calls “earnings” only the compensation received by employees and, by implication, all other income, also that resulting from the exercise of a profession, unearned income. Such is the terminology of a state whose governor is a Republican and whose state assembly has a Republican majority.

Public opinion condones profits only as far as they do not exceed the salary paid to an employee. All surplus is rejected as unfair. The objective of taxation is, under the ability-to-pay principle, to confiscate this surplus.

Now one of the main functions of profits is to shift the control of capital to those who know how to employ it in the best possible way for the satisfaction of the public. The more profits a man earns, the greater his wealth consequently becomes, the more influential does he become in the conduct of business affairs. Profit and loss are the instruments by means of which the consumers pass the direction of production activities into the hands of those who are best fit to serve them. Whatever is undertaken to curtail or to confiscate profits impairs this function. The result of such measures is to loosen the grip the consumers hold over the course of production. The economic machine becomes, from the point of view of the people, less efficient and less responsive.

The jealousy of the common man looks upon the profits of the entrepreneurs as if they were totally used for consumption. A part of them is, of course, consumed. But only those entrepreneurs attain wealth and influence in the realm of business who consume merely a fraction of their proceeds and plough back the much greater part into their enterprises. What makes small business develop into big business is not spending, but saving and capital accumulation.