True, but some of those spending "habits" are baked in high COL, not necessarily choice. Housing and healthcare primarily, but also secondary education, and even transportation.
True, but some of those spending "habits" are baked in high COL, not necessarily choice. Housing and healthcare primarily, but also secondary education, and even transportation.
The system creates incentives to spend. Economy is a videogame with some non intuitive hidden rules some players discover the hard way. Buy now, because:Originally Posted by Loki
* Tomorrow it may be more expensive
* We may run out of stock
* You may win a prize if you buy now.
* Social pressure to show off that you have "style" (live like rich).
* There are plenty of incentives at stores so people buy like crazy, like black friday discounts, or others.
In Japan, the system creates incentives not to spend. Deflation creates a great incentive not to spend money and to buy government bonds. Deflation increases profitability of bond rates. Deflation makes people to procrastinate purchases, as the more you wait, the cheaper it is.
People just play with the rules. Who would guess that the best move is to go agaisnt the system?
There are some markets where price is inelastic (people pay whatever price to stay alive), does not change when supply/demand changes. Healthcare is one of them. Also, customers suffer asimetric information (dopctors know a lot, you do not), so customers are unable to determine the quality or efficiency of healthcare services. These two single rules make health economy to be one of the most complex branches of economy, where conventional wisdom about competition, free market, etc does not work.
For example, there may be lots of hospitals and lots of ambulance companies. If you suffer an accident, the first ambulance in place with pick you up and will deliver you to the closest hospital. You had no way to choose. There is no choice. Ask an ambulance to take you to the next hospital and they may refuse as if you die they may get sued.
If you are not conscious, you may not go through paperwork for pre-approved ambulance expenses.
Freedom - When people learn to embrace criticism about politicians, since politicians are just employees like you and me.
Once you control for education level (i.e. large cities have lots of poorly educated immigrants), there isn't any more poverty in large cities than smaller ones. The cost of living might be higher, but so are the salaries. And there are generally ways to save money if one looks hard enough.
Inflation in the West is generally 2-3% a year. Hardly a reason to to spend now. As for the other things, anyone with an ounce of self-control would steer clear.
Hope is the denial of reality
My last year of college I wasn't working and after I graduated I had 3 months of glorious leisure time before I found a position. I admit that 30 years is different then 3 months but with all the potential things I could be doing I really don't think I'll be bored.
Those factoids are changing in the 'new economy'. In general, college grads have higher employment rates and wages....but almost half are under-empolyed or not working in their chosen field at all, and many are loaded with debt. Their starting wages are equal to 1970's rates adjusted for inflation, and don't keep pace with costs of housing or healthcare (as % of income). That's why they're being called the Boomerang Generation and moving back home with parents.
Isn't that tax rate something like 10% on top of one-time income taxes paid upon rollover? Doesn't seem like it's worth it...
No, it's just counted as ordinary income. So, whatever your marginal rate is, which would be how you'd fund a Roth IRA anyways.
That's because you're using an academic metric for "work". That's a fairly derogatory attitude toward people who've worked 30+ years as laborers.
I'd say plenty of hard-working laborers need to retire long before they're 65-67 years old. And their retirement isn't "just sitting at home". Well, unless their bodies are so debilitated from their labor that's all they can manage.
Um, if you read what I actually wrote, it's pretty clear that I do think that manual laborers have a good reason for wanting to retire early...I also know Lewk isn't engaged in manual labor.
Hope is the denial of reality
Oh, I read and understood your post. I was nitpicking at your insinuation that manual workers retire to boredom, sitting around at home all day. Unlike academics, who sit all day long, for decades, and get paid for it.
They also go to conferences and talk with their colleagues and sometimes perv on college girls
"One day, we shall die. All the other days, we shall live."
Tax deductible, of course.
I have several professors in their mid to late 50s who regularly work 60 hour weeks, and this excludes hours spent replying to emails (you can't imagine how many) and seeing students.
Last edited by Loki; 02-06-2013 at 03:42 PM.
Hope is the denial of reality
I know, these people are often workaholics in ways both good and bad.
"One day, we shall die. All the other days, we shall live."
Wealthiest US colleges suing students over default loans
http://rt.com/usa/news/us-colleges-suing-students-539/
And the outlook looks grim...
Debt crisis looming as Washington 'hides the real fiscal cliff numbers’
http://rt.com/usa/news/debt-crisis-us-kotlikoff-535/
The US national debt is twenty times higher than is officially reported, approaching $222 trillion, and today’s children could soon be paying their parent’s debts, reputed American economist Laurence Kotlikoff told RT.
JIM ROGERS: The Government Is Lying About Inflation And It's Crushing The Consumer
http://www.businessinsider.com/jim-r...onsumer-2012-3
Freedom - When people learn to embrace criticism about politicians, since politicians are just employees like you and me.
Finally seeing some realism popping into the press. I can only hope for some correction and then I'll buy some things.
Meanwhile I'm hoping to invest in a kid's shoe maker. Kid's shoes are a fucking insane business.
Ironically, Loki, this is how many hedge funds shear IRAs and 401Ks institutions. Run up a stock on a pump and dump, and institutions pay for it. The lower return is seemingly OK because of the tax advantage.
Government!
Pump and dumps are illegal. If you know of any hedge fund doing this, report them to the FTC.
Not only that, but most reasonable institutional investors don't get fleeced in such schemes. It's more the day traders (and, admittedly, some dumb fund managers) who get caught on such short term shenanigans.
I do think that the new thing is the whole 'public short' deal. There are all these investors (lately, in Chinese equities) who reveal serious fundamental issues with the company (funny accounting, overvalued assets, whatever) - purportedly just to inform the public. A number of these funds have large short positions, though. Even if their critique is accurate (which is often is, at least partially), it ends up being a big moneymaker for them.
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