Tuesday, June 7, 2016

Karl Denninger, "Still? Really?"

"Still? Really?"
 by Karl Denninger

NEW YORK (AP) — "Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to an exclusive poll released Thursday, a signal that despite years after the Great Recession, Americans' finances remain precarious as ever.

These difficulties span all incomes, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research. Three-quarters of people in households making less than $50,000 a year and two-thirds of those making between $50,000 and $100,000 would have difficulty coming up with $1,000 to cover an unexpected bill. Even for the country's wealthiest 20 percent- households making more than $100,000 a year- 38 percent say they would have at least some difficulty coming up with $1,000."

One of the definitions of being an adult is that you are able to handle your own financial life. Part of dealing with life is the ever-present unpleasant surprise, and in the adult world those usually come with a bill of some sort. $1,000 used to be a lot of money.  You could buy a transmission for your car (or a rebuild of your present one) for $500 or so.  A set of four ordinary tires were rarely over $250.  A windshield might be $100.  A water heater was a couple hundred, installed.

Now? A lost key on your car can cost you $500 and I've seen $1k+ bills. Said keys now can only be made by the dealer as there is an electronic chip in there that has to be "married" to your vehicle's computer, and nobody but the dealer has the software to do it. It gets worse for some modestly-older vehicles; there are instances where the ECU itself has to be replaced at a cost over $1,000! Transmission goes out? $2,000+ virtually every time, and sometimes a lot more. Tires?  $200 each is not unusual with mounting, balancing and taxes. Windshield?  $500+, and that "plus" can be big (double or more) if you have fancy electronics in that car. Water heater?  $500 or more, easily. AC unit fails in your house?  Get out three large- or more. Roof leaking (oh by the way, they all wear out eventually)? Don't ask.

In short a $1,000 "surprise" is not only reasonable to expect it's utterly routine every few years if not annually in most people's life! We have a big problem in this country when it comes to our financial situation folks. It has been caused by the stoking of leverage through policies of both the Federal Government and the tied-at-the-hip Federal Reserve.

Those ranting about The Fed are flat-out foolish or worse; they are either ignoring the actions of major industries and the protection they receive from the Federal Government (e.g. the medical and insurance "businesses") or worse, are excusing same. I remind everyone that The Fed cannot buy Treasury debt that does not exist. It would not exist if there was no deficit spending; by definition Treasury debt only exists because government spends money it does not have. Abolishing or curtailing The Fed will do exactly zero to solve the problem when the underlying issue of debasement is coming not from The Fed but from Congress and the White House.

Who sends people to Congress and the White House and allows them to remain there?


Never mind Boobus Americanus' obsession with fruity phones and $100/month cell plans- that's well north of $1,000 a year all on its own, which is more than sufficient to cover said "surprise." Either put a stop to the outrages, especially in the medical and insurance business or shut the hell up when it comes to complaining about your financial and political situation. It is your fault that this crap has occurred and continues today. Period."
"What other kind of candidate would such people elect?"
Seems clear to me... no other kind.

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