Virgil Showlion
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Post by Virgil Showlion on Nov 12, 2013 10:11:21 GMT -5
Well it does make sense that they would be worried. Extreme pay inequality would mean limited economic growth opportunities. But the fact remains that standard of living and total compensation has at least continued to grow (over the long term of roughly 30yrs) for pretty much everyone except the bottom 20% or so. Now while the existence of a severe income gap might be a problem, taking money away from the rich simply isn't the solution. Nor is raising the minimum wage to an absurd level which would probably make the problem worse. My concern is more about stopping the behaviours that directly benefit the super-rich (i.e. the Fed's ongoing market operations and permanent low interest rate policies). But in a sense they have no choice to continue what they're doing. Can you imagine what would happen to the markets if interest rates jumped back to 5% (their 2000 level) by the end of 2014?
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Post by Deleted on Nov 12, 2013 10:38:03 GMT -5
25-30% hair cut
but it would be short lived
companies adjust....
and profits will come back.....
sometimes i wonder if we shouldnt take our medicine now......
artificially keeping rates low gives too many a false sense of reality
if we actually had to pay higher rates on the debt....maybe that would spur some action on actually doing something about it
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Post by workpublic on Nov 12, 2013 10:41:40 GMT -5
i'm hoping it will continue this way for 12 more years. then i'll get out of the market, take SS and work a part time job. ![](http://images.proboards.com/new/cool.png)
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billisonboard
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Post by billisonboard on Nov 12, 2013 10:46:34 GMT -5
It would be interesting to see a period of some higher inflation. What would be the impact of consumers paying pennies on the dollar for existing debt?
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Virgil Showlion
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Post by Virgil Showlion on Nov 12, 2013 11:04:19 GMT -5
25-30% hair cut but it would be short lived companies adjust.... and profits will come back..... sometimes i wonder if we shouldnt take our medicine now...... artificially keeping rates low gives too many a false sense of reality if we actually had to pay higher rates on the debt....maybe that would spur some action on actually doing something about it Your long-term debt holders would be taking a real bath. But I agree 5% interest rates would get some feet moving. Even the US's short-term debt is somewhere around $10 trillion. That's $500 billion in annual interest in addition to everything else.
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Post by Deleted on Nov 12, 2013 11:10:06 GMT -5
Well it does make sense that they would be worried. Extreme pay inequality would mean limited economic growth opportunities. But the fact remains that standard of living and total compensation has at least continued to grow (over the long term of roughly 30yrs) for pretty much everyone except the bottom 20% or so. Now while the existence of a severe income gap might be a problem, taking money away from the rich simply isn't the solution. Nor is raising the minimum wage to an absurd level which would probably make the problem worse. My concern is more about stopping the behaviours that directly benefit the super-rich (i.e. the Fed's ongoing market operations and permanent low interest rate policies). But in a sense they have no choice to continue what they're doing. Can you imagine what would happen to the markets if interest rates jumped back to 5% (their 2000 level) by the end of 2014? I don't see how such policies benefit only the rich. In the short term, they benefit everyone. In the long term, they hurt everyone.
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Virgil Showlion
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Post by Virgil Showlion on Nov 12, 2013 11:28:45 GMT -5
My concern is more about stopping the behaviours that directly benefit the super-rich (i.e. the Fed's ongoing market operations and permanent low interest rate policies). But in a sense they have no choice to continue what they're doing. Can you imagine what would happen to the markets if interest rates jumped back to 5% (their 2000 level) by the end of 2014? I don't see how such policies benefit only the rich. In the short term, they benefit everyone. In the long term, they hurt everyone. I agree with both statements. The issue tends to be that the short term benefit is disproportionately beneficial to the super-rich. Or more specifically, many of the current policies disproportionately benefit the valuation of assets the super-rich happen to own. The obvious solution is to "invest like a rich person", but doing so presumes a) one has enough money to do so, and b) one is capable of pulling his money out of the wrong market quickly enough to avoid holding the bag.
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Post by happyhoix on Nov 12, 2013 11:41:37 GMT -5
There is a clear inflection point that happened in the 70s. So going back that far is useless unless someone can identify what caused that inflection point. It's not as if it gradually changed. Some specific event or several events caused the change at a defined moment in time. Part of it is the soaring executive pay. en.wikipedia.org/wiki/Executive_compensationBy 2006 CEOs made 400 times more than average workers—a gap 20 times bigger than it was in 1965.[5]
Although that didn't really start to take off until the 1990's.
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Post by Deleted on Nov 12, 2013 11:51:16 GMT -5
The real value of CEO compensation in the S&P 500 increased by more than 5 percent per year from 1980 to 1996, stimulating considerable interest in the determinants of managerial pay (Murphy 1999). However, very little is known about the compensation arrangements of corporate officers prior to this period. This paper adds a historical perspective to the recent run-up in executive compensation by setting forth and analyzing the trends in the level and composition of executive pay from the 1930s to the present. Although prior studies have reported information on managerial pay for earlier time periods, these data cannot provide a consistent description of the long-run evolution of executive compensation because they are based on short time periods with different sample designs and employ different methodologies to value the components of pay.1 We document these trends by constructing a comprehensive panel dataset on the compensation of individual executives that extends from 1936 to 2005. This information is collected from proxy statements and 10-K reports of publicly-held firms, which have been required to disclose the remuneration of their top officers ever since the Securities and Exchange Commission (SEC) was established in 1934. We begin by presenting the central facts on the longer run trends in executive compensation over the past seventy years. After a sharp decline in the real value of pay during World War II, compensation grew at a sluggish rate of 0.8 percent per year during the following 30 years. The rate of increase in the level of pay began to pick up during the 1970s and rose at a faster rate in each subsequent decade, reaching an average growth rate of more than 10 percent per year from 1995 to 1999. The composition of pay also underwent a marked transformation over our sample period, as stock option grants and other forms of incentive pay have been growing shares of total compensation ever since the 1950s. These trends characterize the patterns in compensation for most of the executives in our sample, and are broadly characteristic of the largest 200 to 300 publicly-traded firms in the economy. www.vanderbilt.edu/econ/sempapers/Frydman1.pdfstock option grants are a major portion of the executive pay now that wasnt the case before 1980 mystery solved.....
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happyhoix
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Post by happyhoix on Nov 12, 2013 11:51:42 GMT -5
G the working poor CAN save.
The problem is, if you can only save a little at a time, say 20 bucks a week, you're just one disaster away from being broke again.
Car breaks down, kid gets sick (lots of working poor don't have insurance), refrigerator dies.
If you earn enough money that you can set enough aside each paycheck to make a nice size emergency fund, you can weather these kinds of events without emptying your savings account, and you can even start investing some of the surplus. You like to think that poor people are poor due to stupidity or lack of motivation. In fact, you can work very hard but get stuck in a cycle of poverty that's very difficult to break out of.
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Post by Opti on Nov 12, 2013 11:56:56 GMT -5
Exactly. If income goes down and expenses like rent, property taxes, food, gas go up the number of people who might have been able to invest is going to drop as they lose disposable income.
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Post by Opti on Nov 12, 2013 12:08:59 GMT -5
IMO this needs to be mathmatically and physically possible. I don't think that's the case for many minimum wage workers here in HCOL NJ. In theory, the government believes I should only be spending $463 or less a month on housing. Which cannot be done immediately as the cheapest I think might be $125/wk for a room that would allow me minimal possessions and probably expensive food as it likely allows for no cooking or at best reheating from a microwave oven. (BTW, one huge retailer defines FT hours for a schedule down to 28 hrs./wk. now. Officially it used to be 32 in 2004, although that guideline was regularly broken downward. FWIW.)
Affordable housing and section 8 housing isn't instant and is not quick. At least not here. And not always all that affordable. In NJ each town had its own income guidelines which appear to have changed since last I looked so perhaps dodging through different requirement for each town and each individual property is over.
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Post by usaone on Nov 12, 2013 12:17:52 GMT -5
That article is from the Wall Street Journal from the other day.
The problem is we have had a transfer of wealth over the last 30 years toward the top.
Before the 1980's profits from a company were for the most part dispersed to the owner and employees in various ways. You worked your 40 hours or so a week and that was it.
Now profits go into the stock price and you work your 40 hours and try to chase your companys profits before the big boys can get it.
I enjoy investing but I think many Americans would like to go back to the way it was.
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Post by usaone on Nov 12, 2013 12:18:45 GMT -5
Investing $20 a week gets you no where.
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Post by happyhoix on Nov 12, 2013 12:20:53 GMT -5
G the working poor CAN save. The problem is, if you can only save a little at a time, say 20 bucks a week, you're just one disaster away from being broke again. Car breaks down, kid gets sick (lots of working poor don't have insurance), refrigerator dies. If you earn enough money that you can set enough aside each paycheck to make a nice size emergency fund, you can weather these kinds of events without emptying your savings account, and you can even start investing some of the surplus. You like to think that poor people are poor due to stupidity or lack of motivation. In fact, you can work very hard but get stuck in a cycle of poverty that's very difficult to break out of. I'm confused, isn't saving for these types of expenses a good thing. If it's in the savings account and it covers it, who cares if the savings account is empty after. That's better than being forced to pay with credit which is more expensive. Right? I guess maybe I'm missing something, but being broke is preferable to being in debt, correct? G is saying even people on minimum wage ought to be able to save 20 bucks a month to invest, and having investments is the way out of poverty. I'm pointing out that most of the working poor probably do save, but if you can only save 20 bucks a month, the next time your car breaks down, all that savings will be gone. You'll go from disaster to disaster, saving what you can in between to try not to go into debt for the next disaster (or have to rely on those check into cash places). So you'll never be able to pile up enough money to start investing it, to invest your way out of poverty. Not unless you can increase your income.
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Post by Opti on Nov 12, 2013 12:24:53 GMT -5
OK Happy, sorry I missed that on the quick skim through.
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Post by Deleted on Nov 12, 2013 13:00:00 GMT -5
There is a clear inflection point that happened in the 70s. So going back that far is useless unless someone can identify what caused that inflection point. It's not as if it gradually changed. Some specific event or several events caused the change at a defined moment in time. Part of it is the soaring executive pay. en.wikipedia.org/wiki/Executive_compensationBy 2006 CEOs made 400 times more than average workers—a gap 20 times bigger than it was in 1965.[5]
Although that didn't really start to take off until the 1990's. Soaring executive pay has little or nothing to do with how much everyone else gets paid. And again, I'm asking for data. Also, the average CEO makes closer to $200k, not 400x the average worker. Only the CEOs of the biggest companies make that much, and their pay has grown largely due to globalization (i.e. bigger companies, more responsibility). Also, if it started in the 90s, then it doesn't corellate with the inflection point in the 1970s. So this really isn't related at all.
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Post by Deleted on Nov 12, 2013 13:04:43 GMT -5
Before the 1980's profits from a company were for the most part dispersed to the owner and employees in various ways. You worked your 40 hours or so a week and that was it. Now profits go into the stock price and you work your 40 hours and try to chase your companys profits before the big boys can get it. Please post data to back this up. Nothing about company ownership structures change in the 70s or 80s.
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Post by Deleted on Nov 12, 2013 13:06:44 GMT -5
Exactly. If income goes down and expenses like rent, property taxes, food, gas go up the number of people who might have been able to invest is going to drop as they lose disposable income. Fine, but except maybe for a few years as a result of the latest recession, this is not happening. Total compensation for all groups except the bottom 20% has grown significantly and steadily (adjusted for inflation) for decades. The main thing that has changed is that non-wage income has become an increasingly large percentage of the typical employee's compensation. And wages (which doesn't even count all regular income) have at least held steady with inflation.
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Post by AgeOfEnlightenmentSCP on Nov 12, 2013 13:19:49 GMT -5
fund managers aren't worried about inequality- they're worried about perception- which is the exact WRONG thing to be concerned with. The markets are already fairly political, but when they become completely political, equities will go to $0.
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Post by Deleted on Nov 12, 2013 13:20:22 GMT -5
G the working poor CAN save. The problem is, if you can only save a little at a time, say 20 bucks a week, you're just one disaster away from being broke again. Car breaks down, kid gets sick (lots of working poor don't have insurance), refrigerator dies. If you earn enough money that you can set enough aside each paycheck to make a nice size emergency fund, you can weather these kinds of events without emptying your savings account, and you can even start investing some of the surplus. You like to think that poor people are poor due to stupidity or lack of motivation. In fact, you can work very hard but get stuck in a cycle of poverty that's very difficult to break out of. please dont try to put words in my mouth the reason MOST are poor.....bad decisions quit school at 15, have a kid at 16, and yeah.....you are in a world of hurt not having a saleable skill.....if everyone you know can do the exact job you do, you will always be poor that isnt stupidity.....that isnt laziness.....that is the result of bad decisions there are of course exceptions.....illness, accidents, etc and then there are those that CANT help themselves......mentally or physically handicapped to a point of needed specialized care but when a child drops out of school at 15 or 16, and isnt the one in a million athlete, model, or actor, they are in trouble for the most part
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Post by djAdvocate on Nov 12, 2013 16:09:21 GMT -5
The real value of CEO compensation in the S&P 500 increased by more than 5 percent per year from 1980 to 1996, stimulating considerable interest in the determinants of managerial pay (Murphy 1999). However, very little is known about the compensation arrangements of corporate officers prior to this period. This paper adds a historical perspective to the recent run-up in executive compensation by setting forth and analyzing the trends in the level and composition of executive pay from the 1930s to the present. Although prior studies have reported information on managerial pay for earlier time periods, these data cannot provide a consistent description of the long-run evolution of executive compensation because they are based on short time periods with different sample designs and employ different methodologies to value the components of pay.1 We document these trends by constructing a comprehensive panel dataset on the compensation of individual executives that extends from 1936 to 2005. This information is collected from proxy statements and 10-K reports of publicly-held firms, which have been required to disclose the remuneration of their top officers ever since the Securities and Exchange Commission (SEC) was established in 1934. We begin by presenting the central facts on the longer run trends in executive compensation over the past seventy years. After a sharp decline in the real value of pay during World War II, compensation grew at a sluggish rate of 0.8 percent per year during the following 30 years. The rate of increase in the level of pay began to pick up during the 1970s and rose at a faster rate in each subsequent decade, reaching an average growth rate of more than 10 percent per year from 1995 to 1999. The composition of pay also underwent a marked transformation over our sample period, as stock option grants and other forms of incentive pay have been growing shares of total compensation ever since the 1950s. These trends characterize the patterns in compensation for most of the executives in our sample, and are broadly characteristic of the largest 200 to 300 publicly-traded firms in the economy. www.vanderbilt.edu/econ/sempapers/Frydman1.pdfstock option grants are a major portion of the executive pay now that wasnt the case before 1980 mystery solved..... stock options reduce shareholder value.
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Post by djAdvocate on Nov 12, 2013 16:11:09 GMT -5
G the working poor CAN save. The problem is, if you can only save a little at a time, say 20 bucks a week, you're just one disaster away from being broke again. Car breaks down, kid gets sick (lots of working poor don't have insurance), refrigerator dies. If you earn enough money that you can set enough aside each paycheck to make a nice size emergency fund, you can weather these kinds of events without emptying your savings account, and you can even start investing some of the surplus. You like to think that poor people are poor due to stupidity or lack of motivation. In fact, you can work very hard but get stuck in a cycle of poverty that's very difficult to break out of. please dont try to put words in my mouth the reason MOST are poor.....bad decisions your belief/opinion. can you back it up?
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Post by Deleted on Nov 12, 2013 16:18:57 GMT -5
IMO this needs to be mathmatically and physically possible. I don't think that's the case for many minimum wage workers here in HCOL NJ. In theory, the government believes I should only be spending $463 or less a month on housing. Which cannot be done immediately as the cheapest I think might be $125/wk for a room that would allow me minimal possessions and probably expensive food as it likely allows for no cooking or at best reheating from a microwave oven. (BTW, one huge retailer defines FT hours for a schedule down to 28 hrs./wk. now. Officially it used to be 32 in 2004, although that guideline was regularly broken downward. FWIW.) Affordable housing and section 8 housing isn't instant and is not quick. At least not here. And not always all that affordable. In NJ each town had its own income guidelines which appear to have changed since last I looked so perhaps dodging through different requirement for each town and each individual property is over. ever hear of sharing space? i lived with 5 other guys after my divorce place was a pigsty couldnt stand 2 of the guys.....but i did it anyway, because i NEEDED to my rent was 300 mo. + share of utilities..... and this was in Washington DC....a fairly HCOL area it can be done....
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Post by Deleted on Nov 12, 2013 16:27:12 GMT -5
I'm confused, isn't saving for these types of expenses a good thing. If it's in the savings account and it covers it, who cares if the savings account is empty after. That's better than being forced to pay with credit which is more expensive. Right? I guess maybe I'm missing something, but being broke is preferable to being in debt, correct? G is saying even people on minimum wage ought to be able to save 20 bucks a month to invest, and having investments is the way out of poverty.
I'm pointing out that most of the working poor probably do save, but if you can only save 20 bucks a month, the next time your car breaks down, all that savings will be gone. You'll go from disaster to disaster, saving what you can in between to try not to go into debt for the next disaster (or have to rely on those check into cash places). So you'll never be able to pile up enough money to start investing it, to invest your way out of poverty. Not unless you can increase your income. if you are minimum wage.....you have probably NEVER invested in yourself training. classes, new skills.....all can be BOUGHT and saving $ 20 a week, or every payday helps get you into those classes or training events all will help to increase your income...... people make choices everyday......sometimes those choices SUCK...... there is an old saying.....when theres a will, theres a way......i have seen enough people pull themselves out of extreme circumstances to know it isnt easy, but it can be done
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Post by Deleted on Nov 12, 2013 16:31:17 GMT -5
dj said
stock options reduce shareholder value.
true.....but we werent talking about values of companies going up or down except in share price
executives starting getting stock options and that led to the excessive payouts and compensation numbers
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Post by djAdvocate on Nov 12, 2013 16:34:21 GMT -5
dj said stock options reduce shareholder value.
true.....but we werent talking about values of companies going up or down except in share price executives starting getting stock options and that led to the excessive payouts and compensation numbers correct. but it is still compensation, and it still impacts shareholder value. that is the essence of what we are talking about, right?
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Post by Deleted on Nov 12, 2013 16:37:14 GMT -5
please dont try to put words in my mouth the reason MOST are poor.....bad decisions your belief/opinion. can you back it up? well there are countless studies on income disparities between high school grads versus college grads care to ponder the even bigger discrepancy between high school dropouts and college grads? i know it is only ONE decision in a long line of them..... but you have to admit....the numbers are pretty glaring whether or not someone has ACTUALLY made a study of peoples decisions...and the results.......probably not...... why dont you get on it.....i am pretty sure what the results will already be.......
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Post by billisonboard on Nov 12, 2013 16:39:36 GMT -5
If only everyone graduated from college, we wouldn't have any poor people.
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Post by djAdvocate on Nov 12, 2013 16:41:22 GMT -5
If only everyone graduated from college, we wouldn't have any poor people. ![](http://images.proboards.com/new/grin.png)
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