


However, cleaning these mugs could be a problem…

Your kids’ economy is being robbed!

Years ago, when I took undergraduate economics, we were taught that as a person’s income increases, their savings increase as a percentage of their income.  The rationale is that wealthier people would rein in their consumption as their incomes rose.  No doubt there more than a few Republican, supply-side boosters who parroted the line to justify why it was fine and dandy for the rich to get so much richer than everyone else.

Reality hasn’t been so accommodating to that line of thought, what with the fall in the savings rate as income inequality went through the roof.  However, i didn’t have good figures until this post by Yves Smith of Naked Capitalism.  Her graphs (which she gets from a Citigroup report on Plutonomy, and why it is a good thing) sum things up nicely:

Picture 69

That is savings rate on the right and share of income claimed by the top 1%.

Picture 70

Here is the same data as a scatter plot showing the relationship even better. 

Certainly, correlation does not equal causation, but falls in the savings rate seems to lag behind rises in the share of income claimed by the top 1%.  I cannot think of a way that falls in savings rates would trigger a rise in the income of the top 1%.  However, as Yves says:

“If you are rich, you can afford to spend all your income. You don’t need
to save, because your existing wealth provides you with a more than
sufficient cushion.”

To simplify things, many folks who are poor don’t have the income to save.  Folks in the middle class have more of an ability to save and see saving for retirement as possible and so do.  The rich don’t need to save.  There is a status incentive for the middle class to spend beyond their means and emulate “their betters.”  Of course, incomes have shrunk for everyone who isn’t in the top 90%, so perhaps folks are spending to keep the status quo.

One interesting result of this condition is that as the savings rate decreases, we need to borrow more from other countries, assuming investment and government deficits are stable as a percentage of income.  Or perhaps investment could fall, leading to a future dismal economy.

On possible solution is to tax the rich and reduce the federal government’s deficit or even create a surplus.  After all, if the rich aren’t willing to save, there is no reason we cannot have the federal government do it for us.  Indeed, reversing Bush the Lessor’s tax cuts and cutting military spending would go a long way to balancing the federal government’s budget as Doug Henwood pointed out in a recent issue of the Left Business Observer.

[Yes, the title is semi-recycled.]

Nonviolence in Palestine

nonviolence in Palestine & Israel:

Opposition protesters in Thailand continue campaign. Success in the air?






Greenspan takes no blame, has no shame

Well it seems former Fed Chairman Alan Greenspan is saying he saw the housing bubble, except that he wasn't able to stop it.  If his inability to fess up to his own complicity in the financial meltdown wasn't bad enough, now he wants to blame Fannie & Freddie (GSEs).  As Barry Ritholz wrote back in 2008:

  • 50% of subprime loans were made
    by mortgage service companies not subject comprehensive federal
    subject to routine
    supervision or examinations
    . How was this caused by either CRA or
    GSEs ?
  • What about "No Money Down"
    Mortgages (
    0% down
    ? Were they
    required by the CRA? Fannie? Freddie?
  • Did the GSEs require banks to
    not check credit scores? Assets? Income?
  • What was it about the CRA or
    GSEs that mandated fund
    thinly traded, and poorly understood

I expect that there will be more attempts by conservatives to blame government laws & regulation for causing the crisis and ignore the fact that a lack of government financial regulation caused the crisis.



the opposite thing will start happening any day now.

have to pay for what they watch and use.”

spelled out in full, it would read something like this:


Social Surplus

I started
telling her about the Wikipedia
this activity on Wikipedia. The talk pages light up, people
a little bit
at a time they move the article–fighting offstage all the
while–from, "Pluto is the ninth
orbit at the edge of the solar system."

have a conversation about authority or social construction or
time comes from. It comes from the cognitive surplus you've been
masking for 50 years."

exists in–that represents something like the cumulation of 100
million hours of human thought. I worked this out with Martin
it's the right order of magnitude, about 100 million hours of



Rent a dedicated ssl pipe for a day?




The iPad is out today, I will not be an early adopter

As most people know judging from the volume of hype, Apple's iPad is out today.  Being a long-time NeXT supporters and now a Mac/iPod/iPhone convert, you might think that I would be receiving an iPad today.  Thankfully for our bank account, I won't be.  It certainly looks cool, and I am sure it will do well and I know I will drop by the Apple store to take a look at it, but there is no way we can justify an additional LCD screen in the house.  Besides, I like to wait until they fix the inevitable bugs in the first generation of any product.

That being said, the inexpensive, bare-bones Kobo eReader looks intriguing.  If only I had the time to read enough books to justify it.