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Doomsdayer financial analysts and coming second recession?

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4K views 42 replies 10 participants last post by  63Blazer 
#1 · (Edited)
I have a couple of friends who are in the financial industry and their usually very conservative game plans and pointing to the volatility of the market has usually been accurate. It's very pessimistic. I will always hear the 12% percent rule around here (silicon valley region in California) where after a downturn in real estate, any growth past 12% percent of the bottom value in a 12 month period can and will spell trouble down the line. Hope your real estate grows, yes, but slowly as to avoid big, sudden falls. And this can relate to other investments, too.

But then I read a lot of business "pop" magazines who have to entertain as well as educate and those publications like Forbes, Fortune, and Businessweek love to break the story on the next big thing (Gold, then dot.com, then real estate, sure fire companies like Enron and Worldcomm, then US oil, etc) and emphasize get rich quick. There are a lot of returning and new real estate agents who are thrilled to see the local real estate growing at 15% percent, and even 20% percent and think the market is mostly isolated from the woes of Wall Street. There's a huge sense of optimism that the recession is over and things will snap back into play "right away".

............

I see merit in both sides and both have times in history that can back their point, but I often wonder about another big recession (mostly guaranteed by modern era volatility). I lived through the big drops and downturn in the early 1980s just as I finished high school, saw how the economy in 1992 shaped a presidential election and brought it to the forefront, and then saw this latest downturn. I don't know if it's my generation having seen more bad than good, or if things are as unstable as they seem and will continue on that path.

Below is an article on Canada but represents some of the fear based "facts" I heard right before the giant downturn in San Jose which rivaled dot.bomb. When hearing about how things are connected I stayed put but my buddies who didn't heed real estate market vulnerabilities lost several lifetimes worth of earnings:

http://blogs.reuters.com/financial-...-overheated-housing-market-central-bank-says/

Thoughts?
 
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#2 ·
Canada will experience a market value correction, just as the US did in '08 & '09. I live in Florida, where financial institutions were handing out $350,000 mortgages to barely-qualified buyers for houses worth up to half what their true value was.

Where the US is concerned, I think we'll see a flat-line in growth for 2015, or perhaps a very modest growth.

BUT... the stage is set for a recurrence of the precursors that led to the Great Recession. 2016 is when another recession could come.

Four things are required to allow a recession to occur: (1) greed, (2) poor risk assessment / management, (3) poor regulatory enforcement, and (4) short memories. Greed will never go away. It is incredibly clear that the greedy financial community will never develop more than a quarterback's memory (i.e., very short). Risk management procedures and regulatory mechanisms have improved somewhat, but since things picked up in 2011/12, they've been diluted to further gain economic momentum as time has passed and people have come to have a little more disposable income.

We just forget. Until the recession demon comes calling again...

My advice? If your chosen profession/industry doesn't do well in lean economic climates, diversify now - before the proverbial **** hits the fan. My wife & I were decimated at the start of the previous recession in '08. As a result, we opened our own businesses. We own and do well today, with a pair of service-based businesses opened during the last recession. Now we both sell services and deal in items people must have - recession or not. Never again will my butt be caught off guard.
 
#3 · (Edited)
I hear you. Thanks for your experiences.

I don't know it but that combination of greed and little/no regulation seems to be very close to a guarantee of an ongoing rollercoaster ride. The dips tend to be worse than the recoveries imho (or at least in and around silicon valley) so that's why I have been self-employed my whole life. During recession Santa Clara County had the second worst level of poverty of all counties in the USA and that was due to overspeculation and overheating. People were going into huge debt paying rent just to live here waiting for that sudden gold rush. Yeah you get the early investors of a Google or post-iPod Apple but there are many more losers.

I never made that much (compared to the general public, but maybe better than my fellow musicians in general ;) ) but I also never put myself in a place where it can all end in one day like getting fired. Service based keeps income coming in but it also doesn't go big like having a hit record or buying and selling high risk properties to the Chinese. I certainly don't need that type of stress and a tiny downturn in China in commercial real estate basically "decimated" my friends commercial real estate business. When things were good they were great but the business required a certain amount of growth or it was total ruin. It was not unlike those successful farmers you hear who are high on the hog until it can all go south with ONE bad crop season. That's not the high stakes I like but then again the super successful people I know played high stakes games with a lot of risk. And yes, many of those totally got busted down to zero, too. Live by the gun die by the gun I guess.

Successful investor, formerly great Dallas QB Roger Staubach, got into doing long term safer stuff outside of football knowing that one blind hit was all it could take to end his great career and star NFL income. He was America's quarterback but he knew that he could be totally forgotten a year outside of his last game. He could have gone a couple of more years and maybe got another Super Bowl ring, but before he was done in the NFL he was already looking to get something safer than just a volatile football gig. As we know now, it's not just your body on the line and getting over a banged up limb or two, but unrecoverable injuries to the brain. I kind of think totally blind faith in real estate investing is like one huge head injury!
 
#4 ·
A broken clock is right twice a day, as they say.

The truth is almost certainly somewhere in the middle. Unemployment is falling, workforce participation is picking up, and while wage inflation has been very low, recent voluntary moves by WalMart and, I believe, TJX to increase their minimun wage were probably partly politically motivated but also partly due to a tightening labor force. GDP growth has slowed somewhat since the last couple quarters (where it was exceptionally strong), but we've also seen a significantly stronger dollar since; my gut feeling is that the strengthening dollar has a lot to do with the impending ECB quantitative easing, but also with the collapse in the price of oil, which has not been without a stimulative effect of its own.

The real test I think will be what happens when the ECB begins bond-buying next week, and how exports hold up against a strengthening dollar. Imports will, in USD terms, become cheaper if the dollar continues to strengthen, and between foreign investors chasing yield and the drop in inflation expectations that could cause, bond yields may actually continue to drift lower in this move's wake.

Long story short, we're not out of the woods yet, but I'd rather be an American than a participant in virtually any other economy right now.
 
#5 ·
A broken clock is right twice a day, as they say.

The truth is almost certainly somewhere in the middle. Unemployment is falling, workforce participation is picking up, and while wage inflation has been very low, recent voluntary moves by WalMart and, I believe, TJX to increase their minimun wage were probably partly politically motivated but also partly due to a tightening labor force. GDP growth has slowed somewhat since the last couple quarters (where it was exceptionally strong), but we've also seen a significantly stronger dollar since; my gut feeling is that the strengthening dollar has a lot to do with the impending ECB quantitative easing, but also with the collapse in the price of oil, which has not been without a stimulative effect of its own.

The real test I think will be what happens when the ECB begins bond-buying next week, and how exports hold up against a strengthening dollar. Imports will, in USD terms, become cheaper if the dollar continues to strengthen, and between foreign investors chasing yield and the drop in inflation expectations that could cause, bond yields may actually continue to drift lower in this move's wake.

Long story short, we're not out of the woods yet, but I'd rather be an American than a participant in virtually any other economy right now.
That's good enough news for me right now. I don't expect miracles or being completely out of the woods yet, but I may have to just relax a little knowing that it's not as bad as it once was.
 
#6 ·
In my opinion income inequality is the big issue. The paradox in my mind is that I don't like any of the ideas to fix this as artificial adjustment would likely lead to inflation. The market should really be the driver behind rising wages. But with everything being made in China and a race to the bottom in manufacturing costs there's zero pressure upwards on wages in that realm. Sure, there's pressure upward in jobs that are needed and go unfilled. I'm lucky enough to be in (somewhat) of a STEM field but even those jobs aren't immune to a sharp economic downturn.
The secret is paying people more - but no company will voluntarily do that without good reason as it runs counter to macro and microeconomic theory.
And it's the people in lower income brackets that need to make more as they are more likely to turn around and spend more. I believe in the velocity of money and IMO the more wealth concentrated into fewer hands slows that velocity down.
There's no easy fixes! IMO, with the advancements in technology and the greater interconnection between global economies we may see a sea change in economic structures. As it stands, the younger generation cannot pay for the healthcare and social safety nets for the Baby Boomer generation; and I'm talking globally! Many countries in the world are even trying to get people to have more children to pay into those pension systems but, seriously, more people on the planet means less resources for each person as a whole. All resources are finite and many markets will evolve into zero sum game scenarios.
That's just my $0.02. I probably took that a bit far into left field than intended but... :D
 
#7 ·
Well, it's also been argued, successfully I think, that the primary determinant of economic growth is intellectual capital and the greater efficiency of usage of primary resources.

What are your thoughts on progressive taxation as an approach to decrease income inequality?
 
#8 ·
Well, it's also been argued, successfully I think, that the primary determinant of economic growth is intellectual capital and the greater efficiency of usage of primary resources.

What are your thoughts on progressive taxation as an approach to decrease income inequality?
If anything we see forces at work to go the opposite direction. I think progressive taxation is fair (writing as someone who has a fair tax bill due as well) and I'd like to believe I'd feel the same way if I were actually rich. But we've seen a big push to reduce taxes on the higher income brackets and transfer the expense of government to the poor via increased payroll taxes or, at a state and local level, via use taxes. Florida loves use taxes it seems. Also, I paid for a good chunk of my education out of pocket and tuition in my time at a state college only went up, up, up every semester. You can bet a lot of the fat cats that pass these cuts send their kids to far more expensive private colleges I bet! Okay, so maybe I'm revealing a bit of a bias BUT it's an illustration how taxes are being pushed down for those at the top to be paid for at those at the bottom.
ALSO add to that the rich seemingly feeling that state and local governments should give them free stuff. Okay, I can totally get behind tax breaks to bring jobs into an area. But to pay for a stadium? Steven Ross had a group out looking for $300+ million in tax breaks to reno Dolphins Stadium. It gets rejected and what's the very next thing he did? Donate $200 million to the University of Michigan. He was only going to pay like $30 million out of his own pocket for stadium renovations. WHY should MY tax dollars go to that when clearly he has more money to throw into HIS business???
Then there's the companies that now seem to expect the federal government to back them up if they make unwise business decisions. People gripe about socialism creeping into the country at lower levels of income but having the federal government back your company is something at the HEART of socialist ideology. If a business makes a bad decision they should be allowed to fail, not have OUR tax dollars cover the expense. Okay, I plugged my nose and supported the bailouts and stimulus because the option IMO was the fall of western civilization itself - but under normal circumstances a business that fails should be allowed to fail! In the run up to the recession it seemed like all these mortgage brokers were counting on Fannie and Freddie to get backed up by the Fed. They seemed to see the car accident before it happened but said, "eh, let the taxpayer handle it." Maybe I'm wrong and I have my facts mixed up but that's how it seemed to me.
So, yes, I fully support progressive taxation. It kind of evens things out, no?
 
#9 ·
Typing quickly at work so I won't elaborate tremendously, but the main appeal of progressive taxation for me is that, rather than being simply re-distributive, it actually tends to impact the growth of wages at the margins. I don't think it's a coincidence that we saw executive compensation absolutely explode in the years after Reagan dropped the top marginal rate so significantly.
 
#10 · (Edited)
I can see that. I should elaborate that I don't ever think someone should be "punished" via taxation for being rich. Society just has bills to pay and IMO a progressive tax system is fair. The constant mantra of the right is lowering taxes and, so long as it's done smartly and for everyone, I support that. I just wish for once someone would say, "well we're shutting down or consolidating this government organization because it's redundant or unnecessary". That never happens! It took the sequester to get all those babies to take their medicine.
As far as doing other things like raising minimum wage I'm on the fence. I don't believe in artificial controls on markets but maybe it's an idea that's time has come. Perhaps in small increments.
Pay needs to rise. Rising tides lift all boats. If more people in this country were paid a fair wage we wouldn't be having a lot of these tough debates. There would be fewer problems in the economy.
I will add that if everyday Americans don't end up with more disposable income we will continue to o skip along the bottom at 2-3% GDP growth and moderate job increases. I'd say if the trend continues we might see a small recession in a year or so, maybe like the one in 2002. I don't think we'll have another big one for a while - fingers crossed!
 
#11 ·
I can see that. I should elaborate that I don't ever think someone should be "punished" via taxation for being rich. Society just has bills to pay and IMO a progressive tax system is fair.
The income/wealth disparity is so great, and control of taxation is so far up that same "wealth ladder", how does a society go about overhauling and installing such a system? In essence, you're asking the wealthiest upper-echelon to tax themselves in greater amounts. That's highly unlikely to happen. Rock <-> hard place.

As far as doing other things like raising minimum wage I'm on the fence.
As a business owner with employees who get paid across a wide range of incomes, raising minimum wage too regularly or too significantly hurts all businesses - small and large alike.

Minimum wage should remain minimal. It's there to propel people to better themselves. It is not for people to make a life of it, all the while receiving continuous, government-mandated raises. Business have to be able to afford that uptick, which is what should matter most - otherwise more jobs are lost! If minimum wage is the life a person chooses voluntarily, that person has failed. This kind of "everybody gets a trophy" mentality is ludicrous. It dilutes society's potential as a whole through trying to erroneously achieve an impossible balance between have's and have-not's. It can't be forced into a workable existence through legislation. Hasn't the de facto failure of the recent healthcare law proved that?

In practical application, it means that as a small business owner, I have already begun to choose NOT to hire low-end workers anymore. I'd rather search a little harder (and pay a few bucks more an hour) for an employee with some training, experience, and motivation. I won't hire and take on the cost of training entry-level nOObs who expect to get paid a premium (with little or no skills) just because the gov't says so.
 
#12 · (Edited)
Min. wage...begin rant.

When I got out of college within a couple of years I started my own business. I was a business major and this was the 1980s and the very definition of business was having a business. The political rhetoric of the Reagan era economics was that you can't go anywhere unless you do it yourself and you grow a business. The concept of working for others, even as a doctor or lawyer, was largely of a bygone era when socialism and the Great Society ruled the day. But from January 1981, all bets were off and everyone seemed to be "making it" whether it was starting a microchip processing plant or a dry cleaning business in the city. You could start a business selling aluminum siding or open a dealership selling sportscars but the whole secret was being your own boss and taking advantage of the huge incentives that were coming for owning a business.

When you are still a student in the dorms and when a roommate's older sibling, not much older than you, comes driving up in a new BMW because they started a new tech business in San Jose, you get very, very hungry to try and be the next Steve Wozniak or Bill Gates. And being in California, 9 times out of 10, the rich kid who started a great high tech business is a college dropout and the average age of such a person is often 19 when they start whether it's Larry, M. Dell, Fanning, Facebook dude, Steve and Steve, or Bill and Paul. The greed sets in, unfortunately, and those days in the 80s and 90s pretty much defined, or redefined the "me" generation. While I was a typical liberal in Northern California, and still am, we were possibly more greedy than any traditional Wall Street business conservative. These were weird times and there was this almost entitlement to having invented (per se) high tech and that we were all going to make it. Even kids working at Burger King were making close to $40K just working the line. What started with a few hundred tech companies grew into more than 3,000 in San Jose alone. The money investors threw into the region pretty much fed this myth and there were skads of companies without locations and without products yet the money kept on flowing. This of course was the recipe for dot.bomb.

But I still had some of my altruistic college beliefs at the inception of my business, but within a short time in my limited experience I got employees and was like any struggling, growing business who believed in paying the least possible to get by, keep employees happy, and keep customers happy. That worked for my small, entrepreneurial world which was me, my employees, and my customers.

But as I saw a few upturns and downturns in the economy and realized that it actually began to affect "me", then I realized that there's more to being a business owner and more to the concept of social responsibility. As a college student, it's easy to sing the praises of social responsibility and helping others and the community, and your state and your nation. But when you are in your 20s and you have to pay people, and you have bills of expenses of growing a business, it's not too uncommon to have all the ideals go out the window.

As I looked at more seasoned pros/business owners in what I did, I saw that some of them gave back to the community and were more liberal than me when it came to social programs and minimum wage. Why?

But now nearly 30 years later I do understand that if you don't have a decent minimum wage, you won't have a large customer base. Though I worked mostly for rich people who were my customers, I also did have some middle class and working class customers. There's no way I could just cut out the working class customers and think I am going to make bills at the end of the month. Some of those working class customers did make minimum wage but still constituted maybe 10-15% percent of my business. What business can sluff off 10-15% percent off the top and still survive? Very, very few.

So in the a macro sense I realized that moves to help the working class, gives me a more secure customer base, and that overall richer base gives me more work, and more work translates into things like more and better Ibanezes!

You can become rich and successful and hoard all the money you made selling your wares and services, but if all the money gets into the hands of entrepreneurs like Bill Gates and Steve Jobs, and there's little left over for the middle and working classes, then you end up with nobody to sell stuff to. And when you run out of customers, you too go down and quicker than you may think. Imagine if unemployment was 12% percent and then imagine if you are Apple Inc trying to sell the next iPhone. It doesn't take that much of a downturn for "luxury" items like the iPhone 6 to take a dive. Sales of stuff like Range Rover SUVs, which are cool but terribly unreliable, go down and wifey is not as likely to buy Jimmy Choo shoes when the economy as a whole is in trouble.

To make a long story short, you can't sustain an economy where too much money is held by too few people. Most of the big wealth made their gains selling to the middle and working classes.

Wealth redistribution as forced by the government? OK with me in this context. Looking at just a few articles and reading propaganda on youtube can make one say it's a conspiracy of the rich alone that created the disparities but I think certain booms and overestimation and greed led to the real reason for income inequality.

And knowing more than a fair share of EAs, CPAs, and tax lawyers, there's still a way to run a business and make it, even in business-unfriendly California. You can pay higher taxes and still make it and if you are wealthy and blame your loss of your money due to Uncle Sam raising your taxes, it's probably a fair chance that it was you, and not Uncle Sam, who spelled your financial doom. Many successful entrepreneurs, who also shape the wealthy in their respective countries, get by quite well and pay far higher taxes than the American business owner does.
 
#13 ·
Bluestreak: I totally get what you're saying how minimum wage shouldn't be a way of life. I've had minimum wage jobs in the past and worked a low-paying job through college. And that's one of the motivating factors of bettering yourself - of course! I went to college not just to make more money. My big motivating factor is so others would have far less of a say in determining my worth as an employee. I've read "Harrison Bergeron" and don't think the successful should be punished or that people should get an award for nothing. I get that.
HOWEVER, I don't see any other mechanism to help people earn more than potentially raising minimum wage. I'll repeat: I DON'T like the idea. But nowadays even college grads who don't have STEM degrees are being forced into low-paying jobs. This is ridiculous! And in my analysis it's because money isn't flowing through the system like it should. The velocity of money (for all it's imperfections of analysis) isn't increasing because more wealth is in fewer hands. I can give Bill Gates $1,000 and I can give a poor guy $1,000 and the poor guy will be far less likely to save it and far more likely to spend it - end of story.
Also, the idea that paying people more will result in higher prices for employers and automatically lead to layoffs is just not true. That's a scare tactic based off a linear equation that simply doesn't exist! Your success as a business to sell and retain (and gain) market share is dependent on a number of variable (and often chaotic) inputs. My business has had to increase prices over the last few years due to supply issues. This is not labor related and something industry-wide. Still, there are a number of other factors that keep us not only competitive but thriving! Your success as a business is not only dependent on how much you pay your employees. It depends on being able to hire well, attracting talent, having a good product, and delivering. There are also a number of other things that can affect your costs. Weather. Geopolitical issues. Energy costs. Currency valuation. The list goes on and on.
Above and beyond all of that your business still exists in a market - and typically most businesses have competitors. And with competition comes downward pricing pressure. The idea that pizza will cost more because you give the guy making it $2 more is not cause and effect. Who's to say that upward cost pressure doesn't spur innovation somewhere further down the line in making preparation of that pizza more efficient to offset that increased cost? I know I see this in construction. You pay your guys more and figure out a better way to do things cost effectively. Innovation. It's what this country was built on!
Lastly, I tend to see the labor market as lightning going to ground. Electricity is going to find the most efficient way of getting to ground as possible. Let's face it, if a business could get people to work for $0 and get away with it they would. Fortunately slavery is illegal in most countries so there has to be some kind of cost. People are paid a wage and we call that fair these days. Now, I don't universally like unions BUT they act as a counterbalance for business owners who would pay people nothing if they could get away with it. It's a balance - and in my opinion most systems work best when they find equilibrium. There's tons of BIG companies that are already trying to roll the clock back to 1890 trying to get people to do work for free. There was recently a band called Ex Cop who put up a rant on social media about McDonalds trying to get them to play their stage at SXSW. Mickey D's didn't offer to pay them but promised them free food and the "exposure" that comes from being helped by a major brand. Ooooo! How generous! Good for Ex Cop for calling them out online. How much does Mickey D's make anyway a year? You also see this with companies trying to get writers to provide free content on websites. Or especially people abusing the concept of interns, making them do things paid personnel used to do and expecting more while paying nothing; all for the promise of "prestige" or having a "quality name" on one's resume.
So, while I certainly don't agree people should be paid a lot to do nothing, I don't think they should be exploited to do things for next to nothing by those who have so much.
Carly Fiorina once said people don't have a God-given right to jobs. Well, guess what? Companies don't have a God-given right to customers either. If people don't have money they tend to buy less stuff.
 
#14 ·
I should also add that while I have genuinely mixed opinions of the new healthcare law there are two issues I have with it and healthcare in general.
On one side, yes, it isn't fair that a guy like me pays a lot more for health insurance while others get it for practically nothing.
But consider this: why, after all costs are considered should a pill that costs $50 to make cost $5,000? No one talks about how that's bad for insurance rates, how that blunts consumer spending, or outright gouges the public. If I did that in my business I'd be walked away in handcuffs!
 
#15 ·
On one side, yes, it isn't fair that a guy like me pays a lot more for health insurance while others get it for practically nothing.
Someone or entity pays heavily for each and every personal health insurance policy. It's just that some businesses (mostly government) stupidly negotiated health care benefits not considering the real OOP (out of pocket) costs that rise significantly for those policies (and for aging workers who get more sick and ring up higher health care costs).

But consider this: why, after all costs are considered should a pill that costs $50 to make cost $5,000?
Lawyers, lobbyists & bribery of course is the reason. That $50 pill cost increases 100x to get it to market and make profits in our corrupt system run by lobbyists... glen
 
#16 ·
Both sides want us convinced that this is a partisan argument. I think the real reason behind the ACA was that Baby Boomers were set to retire and tax and already weak medicare system. I think secretly both sides want it. It's like pro wrestling. Behind the scenes it's more civil but in front of the camera the folding chairs come out.
Considering that another problem I see is our economy is less about value and more about being cheap and trickery. So what if my shoes cost only $25 if they only fall apart two months later. It's that mentality that hollows out the middle class.
 
#19 ·
I will note one more thing that shows up in no one's financial analysis. It will probably make me rather unpopular to bring this up but one thing that is dragging down the economy, and will continue to do so, is rampant theft of music and movies.
We are taught in school that one of the best drivers for an economy is the emergence of a new market. The telegraph is invented. Boom! The jet airplane. Boom! The Internet. Boom! Yet no one talks about what happens when a market like the entertainment industry is systemically destroyed by rampant theft. The problem is so ubiquitous that I have old friends and even know little old ladies who think it's okay to take thing for free off the net!
And I know quite a few people that are affected by this. They're not the millionaire record executives one envisions snorting coke off a hooker's backside! They're the everyday $30-$50k a year support staff jobs. Those notes you see at the end of movies that say "this movie supported 15,000 jobs"; that's no BS!
Now some of the spending shortfalls there get picked up a little, I think, elsewhere. The $10 million drama that doesn't get made because Spider-Man isn't in it is left to the hobbyist to make, who spends his or her own coin on more affordable cameras and such. And all of us now buy DAW software and other related stuff and make our own albums. So the problem is offset a bit, but there's only so much a guitarist of an armchair Speilberg will spend.
 
#21 · (Edited)
^ I know a lot or people that refuse to work more than 40 hours a week and are stuck because of that. I don't think there's really any excuse for working under 100 hours a week unless you have severe health problems. That's a general attitude problem with Western countries though, which is one of the main reason I really want to move to Singapore.

As a business owner, I think min wage is necessary but at the same time I honestly end up outsourcing a lot of my work because of it, even to places like the US where I can hire people generally as good as a Canadian, but cheaper. The best are expats living in places like Thailand off sites like elance who charge very little because of their low costs of living. Soooo....I dont know how I feel about min wage because I have avoided hiring canadians multiple times because of it.
 
#24 ·
I don't think there's really any excuse for working under 100 hours a week unless you have severe health problems.
Because I can make damned good money working about 50 on average, and there are other things I want out of life than my paycheck. Admittedly, and maybe this is part of your point, Iused to work 40-50 hours a week while studying 10-20 outside of work to get through the CIPM and CFA exams, and at this point in my career by and large I've paid my dues to get to the point where I don't HAVE to work crazy hours to get ahead, and I've spent time in positions where I was spending 60+ hours a week in the office (in a 5 day workweek) and being glued to my blackberry outside of the office. But, I'd rather do a solid 50 hour week and, on my own time, read financial textbooks and keep an eye on market news, then work 100 hours, simply because if I tried I'd burn out, and my efficiency would get shot all to hell.

There's a LOT to be said about quantity vs quality.
 
#22 ·
I haven't read this entire thread but see some replies here & there via email notification. Some ideas are simply unhumane.

Anyone who posted or has read this thread owes it to themselves to read the book Onward: How Starbucks Fought for Its Life without Losing Its Soul by Howard Schultz

for the simple reason of seeing how a major corporation can strive to "partner" with employees, charity and ethical purposes instead of just pandering to shareholders without purpose (the oldest excuse in the book to abuse employees). This mission statement implemented by a few people, for example you'll learn the motivation to give part-time workers health care benefits, etc. Knowledge is power and allows you to see truth vs excuses.

Must read... glen
 
#23 · (Edited)
I haven't read this entire thread but see some replies here & there via email notification. Some ideas are simply unhumane.

Anyone who posted or has read this thread owes it to themselves to read the book Onward: How Starbucks Fought for Its Life without Losing Its Soul by Howard Schultz

for the simple reason of seeing how a major corporation can strive to "partner" with employees, charity and ethical purposes instead of just pandering to shareholders without purpose (the oldest excuse in the book to abuse employees). This mission statement implemented by a few people, for example you'll learn the motivation to give part-time workers health care benefits, etc. Knowledge is power and allows you to see truth vs excuses.

Must read... glen
Great points.

Initially I was raised with all the right motives, Boy Scout, honors student, college, good grooming, staying out of trouble, church, etc ... but what drove me and many like me in dot.com was GREED. I can now see it for what it was but at the time I didn't think I was hurting anybody.

But in my field then at that precise moment, high tech, it was the most aggressive and often unethical set of practices I have seen to date. It went on fueled by regular people like me who wanted to better themselves but didn't see the big picture and vultures (often called venture capitalists) out there hurting employees, employers, and investors alike getting their piece and ditching town. One guy I looked up to had no background in high tech, as was the case in most successful high tech startups, and did WELL. It was only later I found out he would fund a company, own a certain part, grow it, and then make it dive and sell off the parts. He made more money this way but many thought he was there to finance your vision.

He was kind of a guy who bought and sold money and appeared to be in high tech when he was really just a smooth talking thief. Greed from ordinary people, who may have realized what he was doing, made too many look the other way. Maybe some of that happened with Madoff, too but maybe Drew or somebody in the financial services could draw a clearer picture. One lost investor didn't blame Madoff per se, and said what he did was "common" enough, but blamed their own personal greed which clouded their judgment so they put money in Madoff as did thousands of others.

I knew something was not on the level when kids right out of college, but often taken after second year, were getting brand new sports cars from data, computer office app, and device companies in Silicon Valley and these companies were building a wall of people who would do anything to protect said company who hired them. What really got me was (as I have shared before) when a computer networking giant hired illegal aliens to lay cable for ridiculously high pay and gave then $250 dollars lunch money each day to 1) eat lunch, but mostly to 2) keep their mouths shut.

I don't think the regular human animal wants to go around and naturally exploit others but when something is too good to be true and there's greed, or (like above) the promise of free virtually unlimited downloaded music and movies, then working people get hurt. The movie and music industries took a hit from many who thought that it was OK to download stuff illegally. Greed, basically.
 
#25 ·
@Stealth. Not to sound rude but... no reason to work less than 100 per week?
I can give you a good one. Family. I actually turned down much higher pay because it meant lots of travel and super long hours.
You only go around once on this rock. Money isn't everything.
 
#27 · (Edited)
You guys are taking what I said out of context. If you're broke as hell there's no valid excuse for it if you're only working 40 hours a week. The whole, "I work 40 hours I'm entitled to a living wage" thing is bull****. If you have to work more than 80 or 100 a week and you still aren't making enough to get out of your current situation then that's a problem with the system. If you work 40 hours a week and complain about being broke then...welllll

And trust me, I'm aware of quality vs quantity. When you work for yourself, you don't really feel like it's work. I have 3 main businesses I focus on so my work is super varied and fun.
 
#31 ·
That's a huge philosophical question, man. And, I'm singling you out here and keeping this going not because I'm trying to be a jerk or want to "prove you wrong" or something like that, but IMO because I think it's an important question, and I'd like to discuss it further and maybe get some more context and a bit more of your thought. So, in case it's not clear, I just want to make sure you understand the tone I'm debating from. :)

First, I think in practice, I don't disagree with you - if you're working 40 hours a week and you can't make ends meet, then you should absolutely be looking to work 50 hours a week, or 60 hours a week, or 80 hours a week, or however many it takes. You may not be ABLE to get the hours you need, but if that's the position you're in, then of course you try. You have to.

However, this poses two problems - one that's also logistic, and one that's more philosophical.

First, if you're working 80 hours a week at a low-paid minimum wage job... How are you supposed to build the necessary skills to improve your position? If it's something you CAN learn on the job, then great - do it, become better at what you do, and hope that it's something you can eventually be paid more for. However, what if the problem is you didn't finish high school? How can you work on your GED if you're working almost 15 hours a day, 7 days a week? What if a college degree is all that's holding you back from that next step, how can you physically take classes, much less study, when you're working 15 hours a day, seven days a week? Obviously you can do anything for short periods of time and a few weeks of 4 hours of sleep a night may allow you to do a lot... But, as a guy who's tried to get by on that little sleep before, eventually you hit a point where your body gives out. So, what do you make of someone who has the drive, the ambition, and the raw untapped abilities to, say, earn a degree in statistics and take a $$$$ position doing quantitative risk modeling for a firm, but physically can't because working an 80 hour day doesn't allow them enough time to put the requisite time into their coursework? What then?

Second, the more philosophical question - our society has arrived at 35-40 hours a week of work - 5 days a week, 8 hours a day, with or without a paid lunch break - as the standard of what it means to work "full time." Is it fair, then to pay someone working full time less than the poverty line? Minimum wage in America is, I believe, $7.25 an hour. Fll time is defined as 35 or more hours, legally. Maybe 36, I forget... So let's go with 36. Working for $7.25 36 hours a week, 52 weeks a year will earn you $13,572 a year. The poverty line is defined as about $16,000. Is it morally defensible to pay someone a wage that, if they worked an 8 hour day Monday through Friday every single week of the year and never took a day off, would not pay them an income above the federal poverty line? Again, this is for what we as a society view as "full time" employment.

I do agree that, if you can't make ends meet at 40 hours a week, then you should absolutely try to work as many hours as you need to in order to make ends meet. However, I also don't think it's an unreasonable expectation to have a minimum wage that would allow a full-time worker to make at LEAST the poverty line salary. And Mike's point about around 70% of the US GDP being driven by consumer spending is VERY well taken here.
 
#30 · (Edited)
I'm just saying you can't legitimately complain about being broke if you're only working 40 hours a week and not putting anytime into studying or working extra to get financially ahead so you can invest in education to reduce the amount of hours you're working in the future.

Like Drew said, he worked 40 hours a week + 20 of studying for his CFA, and now he can relax a lot more. That's all I'm saying.

Personally, the reason I work a lot now is because there's a good chance my chronic health issues will get worse with age so I'm building up cash reserves to hedge against the risk of being totally screwed financially.
 
#32 ·
I'm just saying you can't legitimately complain about being broke if you're only working 40 hours a week and not putting anytime into studying or working extra to get financially ahead so you can invest in education to reduce the amount of hours you're working in the future.

Like Drew said, he worked 40 hours a week + 20 of studying for his CFA, and now he can relax a lot more. That's all I'm saying.

Personally, the reason I work a lot now is because there's a good chance my chronic health issues will get worse with age so I'm building up cash reserves to hedge against the risk of being totally screwed financially.
More than worrying about the semantics about whether 40, 60, or 80 hours is enough, what is key here right now between of all us regardless of social beliefs or political persuasion, is that you don't get worsening health with age.

You may have your reasons of working 100 hours and none of us have the right to judge you. My grandparents and parents ran a successful, small retail store and managed assets and that was an obsession every waking moment for nearly four decades. I have enormous respect for anybody who can do that and know that I don't have the ability to wake up at 6 or 7AM, do paperwork, run the store, finish up paperwork and go to sleep at 11PM and continue this process seven days a week from the 1950s through the 1980s. The responsibility of owning a business that takes up that much time has to be a choice, too because no amount of money can sustain that type of work which in this case can't be anything short of an obsession.

Working as a volunteer musician in a rest home and seeing young people there (massive stroke, ALS, MS, muscular dystrophy, brain injury, or other ailments), I realize it doesn't matter about work life, beliefs, hobbies or anything else if your body/mind are shot. You can have all the money in the world, like one famous athlete I can't mention for legal reasons, if you played your sport to the hilt but then ended up unable to move your limbs or concentrate and you are in the rest home. Sure, he made or could have made enough to actually buy the rest home but when you see a young man stuck there with what could have been a productive, non-athletic life in front of him had he not been such a promising boxer, he says he would have traded it all.

I have never heard of anybody here, with all that we talk about, who is facing health problems as serious as you are mentioning. Beyond this thread and points of view, take care of yourself and godspeed.
 
#35 · (Edited)
I too honestly don't think people should complain about minimum wage. I was just thinking about what tool might be used to get more money into hands at lower incomes. To make my point clearer; it's probably going to be one of those necessary evils - like the stimulus.
And I dig what you're saying, Stealth. Things turned south for me in early '02 and I didn't have a degree so I went to school. While I like writing I decided to take computer science as I figured math and science would help me more in life; even though I sucked at math at the time. I had to move back home for a while because there was no way I could do both, but I still did work part-time. Eventually I went back to working full time while doing school at night so I get where you're coming from.
I think what gets conservatives most should be something that is understood by all. No one who works wants to see people doing nothing and getting paid for it. Now the trick is some people legitimately can't work, and I think most people would be up for helping them in some way via a social safety net. And believe me, I know people out there with chronic and difficult illnesses who still go to work every day who legitimately can qualify for disability but choose not to because they want to feel productive. THOSE people, I think, more than anyone hate the lazy f**ks who scam the system to stay home and watch Maury. But the trick is filtering out who's legit and who's BS'ing. I honestly think, despite popular belief, that our government has a decent grasp of finding out who's legit and who isn't. It's Pavlov's Bell for politicians to say "this group of people is undeserving and lazy" but I suspect since the reform in the 90's that people gaming the system are less of a percentage than some people would think.
Now, I only bring that up to highlight what I believe to be a disconnect between popular rhetoric and what may be the truth. One might say that the misconception extends to minimum wage earners. I know lots of working poor people who are genuinely hard working. They're not looking for a handout. Maybe they don't try to better themselves out of pride, or they like their routine, or fear, or whatever other reason. How do you lead a horse to water and make them drink? I don't know. I think if we could figure that out there'd be a lot less partisan bickering. My hope is the internet can fill that gap. Okay, so you can't physically attend college - but you can do a free online class on trig, or political science, or biology. Knowledge is an intangible thing that has great power. It's just a matter of vectoring that knowledge into people's heads and getting them to take advantage of that knowledge.
Lastly, I will go back and say I believe a big problem is the structure of social pension systems. It's incredibly unpopular to describe something like Social Security as a ponzi scheme but it does share a similar structure. And the idea of increasing the population simply to pay current recipients is insanity. Considering that in the aggregate the Earth's resources are all finite there HAS to be an upper limit on what the whole system can handle. I suspect we've already exceeded it. Neoclassical economics. Keynesian economics. Socialism. I know I rant but ALL of these things will come to a head in the next few decades I think and we will simply have to reshape how these things work and go about society in a radically different way.
That means change. And people aren't comfortable with change; ever! It's in our DNA I think. I'm hoping the change is good in the end and that maybe, as a species, we can grow up a bit.

I should make an amendment: On the flip side there's a lot of people who talk a lot of s**t about hard work and deride the "takers" of society, but some of them at the end of the day don't work as hard as the people they're criticizing. Some of them barely work at all but make millions an hour. Just some food for thought.

I should make another amendment: I think work is a grey area for some too. Yes, there's a 40 hour work week but the mind doesn't shut off then does it. There are LOTS of times I figure out something in my head at 2 AM when I'm awake, or in the shower, or on a Saturday clear out of the blue. That's my time, yeah, but sometimes the old grey matter factory churns something out after hours, yeah? :D
 
#37 ·
Have you guys ever seen any of the ILO directives? A person working for 100 Hrs/week (14/day) is very prone to errors so he/she is a potential hazard for him/herself and also for society. There is no way a person can function rationally and be emotionally healthy with this amount of work. Just an empty zombie.
 
#39 · (Edited)
We are built very differently and there are people who could work big hours and not drop off in quality. I wouldn't think this is that common though. We can't make any blanket statements that a workaholic always has to lose productivity if they put in too many hours. If your work is something that is also your hobby, your religion, your life then it's possible to do so.

But the work has to become nothing less than an obsession if we are talking 14+ hours a day, 7 days a week but it can pay off.

In our town one lady who worked in a small clothing store drew up patterns and sewed early in morning, then ran the store, and then came back and did her hobby (clothing design) some more until bed. Apparently she had patterns and clothing material everywhere (bathroom, bedroom, kitchen) until family decided she needed small workshop outside of home and store. She fell asleep with a needle and thread in hand as that was how they often found her.

She got that small workshop so family wouldn't have to be tripping over her sewing equipment and it became a factory that has 50 full time clothing designers and assemblers in warehouse, a winery, and other business ventures including small wine tasting bar. While the small store they had for 40 years did well, only she had the vision to make her business a "Martha Stewart" type lifestyle business and today much of that legacy is attributed most to her long hours and obsession with sewing. So many people tried to slow her down, especially family, but now with over 100+ people working for various enterprises due to her, it's a good thing somebody who was able to work 100 hours a week kept on going.

Had it been run by her husband or other family members, they had admitted that the one successful store was enough to keep the family occupied and financially sound. But with the mom a person who couldn't work less than 100 hours a week, the payoff after a seemingly long time with just that one family store, is now the town's (pop. 1,600) largest employer.

Sometimes that 100 hours a week can help others too.
 
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