iTulip?

[DSpencer]

Re: iTulip?

DSpencer, in general what has the commentary been to your post over there?

EJ has closed itulip before and then reopened it later so it wouldn't be unprecedented.

About the same. Some people say just be patient. Finster mentioned he posts less because there's less to respond to. Sort of a downward spiral of inactivity I guess.

[Chris]

Re: iTulip?

The members forums are pretty quiet. EJ mentioned something happening with the site in March but that hasn't materialised.

I've been taking his advice and made some big life changes in order to spend more time enjoying life with the family instead of hawking the markets. It has been great advice so far.

Of course, as a subscriber I would love to see more of EJ's iconic articles and some life in the forums again, but I'm happy taking the rough with the smooth. Others' mileage may vary.

[jk]

Re: iTulip?

with manipulation determining the macro-economy, i think the most interesting things going on recently at itulip have been at the micro-economic level: the presentation and discussion of a a few very specific private investment opportunities. but although ej said he was trying to figure out a way for non-accredited investors to participate, so far that hasn't happened.

[llanlad2]

Re: iTulip?

There is nothing unique about the S&P 500 companies, or their CEOs. Can anyone name one business enterprise that does not depend on consumers? Even the investment banks need someone willing to pay to "consume" their products and services (and gawd knows some of those folks would sell their own grandmothers if they got paid to do so).

I've been thinking about this recently and I think it's fair to say that the economy and markets have always been driven politically by powerful groups but in favour of who has always been up for grabs. I think we are transitioning from one in favour of bankers (which we were used to and so could predict) towards one in favour of "other" business interests whose needs are no longer aligned with bankers. However it is not totally clear to the general public that this has happened yet.
My thinking is that CEOs and executives at SP 500 companies all made out like bandits in the last 25 years along with the bankers with the continuous fall in interest rates etc. However the newer generation of Executives (especially those in the retail sector) can't maintain and justify their pay. Their interests are no longer aligned with those of the banks. The bankers are now denying them a free ride to which they feel they are entitled just like their predecessors.
Call me optimistic but I don't think we are headed for a 1937 style "mistake". It's just against the interests of too many other powerful lobby groubs. The Starbucks, Apples, GMs, Fords etc of this world depend on consumers in the long run. They depend on disposable income. Now consumers will have to earn their disposable income rather than cash it out of the house. Business knows this. Slow real wage rises are happening and interest rates will be allowed to lag behind without crashing the economy. So called bond vigilantes may demand higher interest rates but they won't have their wishes fulfilled.

jk's comments support what EJ has posted. He feels the economy and markets are now driven by political decisions, the Fed has no idea what it is going to do next (they are making it up as they go) since it (and many other major Central Banks) are wandering around in uncharted territory, and therefore the outlook is virtually impossible for anyone, including EJ, to discern with any degree of confidence. If the Fed doesn't know what it is going to do, how would anyone else?

In the post above I stated that other business interests would soon be complaining about housing costs now that their interests weren't aligned with bankers. And guess what? The business lobby has just come out with a comprehensive report that supports my viewpoint. Coming to your country soon will be some sort of inflationary fiscal stimulus. In the UK it will be new housing and infrastructure - because that's what non-FIRE businesses now want. Interest rates will rise so as to dampen down housing demand allowing more money to be spent into the consumer economy. It is no coincidence that this is happening at the same time as statutory rises in minimum wages over the next 5 years.
Everything is in alignment for a managed inflationary outcome.

The report below comes from Centre for Economics and Business Research which is a very influential business lobby group and has a number of consumer based companies, retailers, supermarkets etc as its clients. Their report was widely reported in the British media today.

HOUSING CRISIS: THE ECONOMIC IMPACT REVEALED
Rocketing house prices and rents are costing London’s economy over a billion pounds a year and thousands of jobs, according to new research by Cebr.

[QUOTE]

Rocketing house prices and rents are costing London’s economy over a billion pounds a year and thousands of jobs, according to new research published today. The data also shows the pressure that high housing costs are inflicting on people working not just in low-paid jobs but in many traditionally middle-class occupations.

The research is being published by a new business-backed campaign called Fifty Thousand Homes to be launched tomorrow (Tuesday) as employers across sectors face increasing competitive and staff retention problems as a result of the capital’s housing crisis.

Key findings of the independent study, conducted by the Centre for Economics and Business Reseach (CEBR) for Fifty Thousand Homes, reveal the impact of high housing costs:

– Businesses face a £5.4bn wage premium in 2015, equivalent to £1,720 per person. This is set to reach £6.1bn by 2020.
– Nearly 11,000 extra jobs could have been created in 2015 (a result of businesses benefiting from greater revenue and therefore being able to generate more jobs).
– Impact on the money in people’s pockets: unnecessarily high housing costs is removing £2.7bn a year in consumer spending or 1.6% of total consumer spending.
– The economic growth (GVA) lost by diverting money away from more productive expenditure will be £14.5bn between 2006 & 2020 – equivalent to £1.04bn a year.

Workers hit hardest

It also paints a bleak picture for many workers in London, who are being priced out of living in the capital (see full tables of occupation and industry impact below):

• Workers in shops, cafés and restaurants, those cleaning buildings, and those doing office admin would have to pay their entire pre-tax salary to rent an average private home in London.
• Social workers, librarians, museum attendants, teachers, postal workers, and gym employees are under extreme financial pressure as a result of rents taking up more than half their salaries.
• Only the best paid workers – including company directors and those in financial services earn enough to rent in central London “affordably” (less than a third of their salaries on rent).

Baroness Jo Valentine, Chief Executive of London First, one of the business organisations that helped launch the campaign, said:

“This needless housing shortage needs urgent action. If we carry on as things stand, in 10 years’ time London will be a no-go zone for employees across sectors and at almost all levels.

“I want the next Mayor of London to wake up each morning thinking about how to increase housebuilding – because only doubling our current levels of housebuilding to 50,000 a year will we solve this crisis.”

Scott Corfe of CEBR, which conducted the research for Fifty Thousand Homes, said:

“Our research shows that the housing crisis is resulting in substantial costs to businesses and risks undermining the capital’s position as a global centre of enterprise, talent and success.”/QUOTE]