Thanks for the update. It sounds like your neck of the woods could really use some help.

Sorry for the delay in responding. Been dealing with one of those infrastructure issues. Our water plant is in need of replacement due to age, poor design and, inadequate maintenance. In Missouri a majority of our roads are secondary farm to market roads, but since the traffic counts are low the state can justify not spending much money on them and still keep the public happy because they do not see the deteriorated condition of the roads that bring the food they eat to the table. The waste water collection systems are antiquated and though you are rarely made aware of it they are failing at an alarming rate. Many of these systems are working well beyond their designed life. Water lines are also working beyond their designed life. Your point on unions is spot on. One community I worked for wanted to build a bathroom facility in a park. Just a simple Men/Women two stall bathroom 10 by 20 building. Prevailing wage laws drove the cost way over $100,000! I will agree governments waste money on projects, but it is often at the expense of true need infrastructure. I think about 10% of federal transportation dollars have to go to alternative transport projects like trails. Ludicrous when our bridges are failing. Just last month a major bridge in downtown Kansas City was closed due to a dramatic horizontal crack in the bridge deck. Deferred maintenance is sneaking up on us.

What does Ralph Loren closing 50 stores have to do with it, directly? The economy is very weak. Maybe Ralph Loren should have been a banker...

This is perhaps a correction to my previous statement: I am not sure whether the collateralized mortgage obligation is the worst kind of mortgage-backed security, or whether the collateralized debt obligation is worse. Both are pure junk.

Well we agree for sure on one thing
It's what the founding fathers hoped to avoid

This sounds exaggerated for political reasons, but even if it's 10% true and gov't influence in the economy changed 5.3% in five years due to the influence of one person, it's astounding. It's what the Founders hoped to avoid. Executive power needs to be limited.

Yes. I think we're saying the same thing but with different words.

Duly noted.

While your statements are correct, your correction of me ignores other definitions of the word derivative, including the way that I meant it.

Mortgage-backed securities are a derivative investment, but not in the way that most financial types classify derivative investments. Mortgage-backed securities are a pool of assets that has been securitized. In that sense, they are not derivatives. However, in another sense (the sense that I meant it), mortgage-backed securities are backed by other assets (i.e. mortgages), and therefore are a derivative investment. There are multiple meanings to the word derivative. If the economists truly understood the proper meaning of the word derivative (i.e. the calculus definition), then options and futures investments would be bets on the slope of the price, rather than the prices themselves. A classic example of this type of derivative investing is the VIX.

Also note the following document by
Joseph G. Haubrich, Derivative Mechanics: The CMO (which stands for collateralized mortgage obligation, the worst kind of mortgage-backed security), Economic Commentary, Federal Reserve Bank of Cleveland, Issue Q I, pages 13-19, (1995).

Negative interest rates mean one thing, period. Growth is negative and the economy is in decline. That is it. Period. If a country wants to set them, they should deal with that conclusion, like Japan.

+1 for you.

I actually appreciated the sarcasm - and your analysis. I completely agree with you that the whole thing is a racket designed to bury us in debt and still give the politicians cover to keep milking us for more tax revenues!

Please don't feel at all like your comments are not appreciated or worthy of discussion and debate. Keep the discussion alive and we all benefit!

Jbrenner Sorry to correct because I agree with your premise.
Mortgaged backed securities are
not derivatives they are typically a pool of mortgages lumped by duration or coupon.
What Are Derivatives? Derivatives are securities with a price tied to an underlying asset and can be classified into forwards, futures, options and swaps. These instruments are useful to businesses seeking to hedge their risks, whether they are a producer or consumer of agricultural products, metals or energy, or a pension fund needing to reduce its exposure to fluctuating interest rates.

Standardized derivatives have detailed terms and specifications for each class and series of contract and are usually traded on an exchange. Other types of derivatives are traded over-the-counter (OTC) and are unregulated. However, their implicit leverage and risk can be dangerous when used for investment or speculation without enough supporting capital.
- See more at: http://www.ncpa.org/pub/the-role-of-d...

I would also add Clinton eliminating Glass Steagle Act, oh and not to forget the ratings agencies giving AAA ratings to junk.

Thanks Blarman for your reply.
I totally agree re: govt. mandating wages in private sector.
Supply and demand should determine with mutual consent of the parties involved.

The minimum wage issue is a prelude to slavery.

who is responsible for bridge maintenance?
Feds control the purse!
The Federal Highway Administration distributes billions of dollars in federal grants each year to state, local and tribal governments to support highway efforts. Responsibility for building and maintaining highways is the charge of state and local governments, but the FHWA provides enormous support in the form of funding. Using monies collected from fuel and motor vehicle excise taxes, FHWA disperses federal highway funds to cities, counties, state agencies.

My comments that you replied to; were focused on the ability to use low rates to in effect bury us in debt. As I have stated numerous times interest rates at historical averages ( last 100 years) on our debt would be 1 trillion dollars annually without paying a dime of principal.

I for a bit of sarcasm I apologize. My intent was not to debate the infrastructure I find it thought provoking to discuss current affairs.

The blame came from the government looters and Federal Reserve bankers that gave us the TARP crap sandwich in the first place.

Good value? Of course not and I appreciate the sarcasm.

"In my area the Interstate 35 bridge over the Mississippi river in Minneapolis collapsed in few years back."

Yeah, heard about that one. Here's a question: who is responsible for bridge maintenance? Hint: it's not the Federal Government! They may provide some of the funds, but it is ultimately left to the States to do inspections and schedule repairs and replacements. If there are really that many bridges which are structurally deficient, you need to get on your local and State representatives to get things addressed. I personally would be surprised if even half of that 60K number are actually found to be deficient, however. I'd be more worried about the recent construction: stuff built back in the 60's and 70's was built to last.

"BTW I would rather see a construction worker get the cash then a moocher who won't work."

While I agree that moneys should be paid only for services rendered, what I object to is the Federal Government setting the wage rates. Our local construction jobs cost only 35% of the Federal ones because they aren't paying Davis-Bacon rates, but if you want to get Federal funding for a job, it has to be done using Davis-Bacon. But let's take a step back for a minute and look at where the money for paying for this stuff is coming from? It's coming from you and I: the taxpayers! That they spend more than 50% more on a job than they need to means that they are wasting a LOT of our tax money which could be staying in our pockets!

"I don't see it having changed in my lifetime"
Maybe you don't look. Or you are a teenager.

Major Regulations 153% Higher in First Five Years Under Obama Than Bush

Government report finds regulations have spiked under Obama | TheHill

The pace of agencies issuing new rules and regulations has hit a record high under president Obama, whose administration’s rules have filled 468,500 pages in the Federal Register.

Red Tape Rising: Six Years of Escalating Regulation Under Obama

Obama pushing thousands of new regulations in Year 8 - Politico

For starters.

The low interest rates allowed your "hope and change guy" to virtually bury us in debt.

Yes. Take a look at Venezuela where the government has totally screwed up the currency. The people STILL dont just kill Maduro or hang him in the public square. Maduro is just usurping more and more power to paper over his terrible policies. I think it would happen here if there were a meltdown. They would restrict how much money could be taken out of the banking system, and maybe even redistribute what people had IN the banking system to the people in "need"- directly.

Ahh so, does that mean you think we got a good value for the 19 trillion we owe?

My point was regarding the massive debt we owe.

In my area the Interstate 35 bridge over the Mississippi river in Minneapolis collapsed in few years back.
For example, approximately 250 of the U.S.' most heavily crossed and structurally deficient bridges are on urban interstate highways, the ARTBA reported. Of these, more than 85% were built prior to 1970. Estimates are over 60000 bridges nationwide are structurally deficient.
BTW I would rather see a construction worker get the cash then a moocher who won't work.

The scare tactics alone would be sufficient to persuade most of the "sheeple" currently in the US. That's why I say that barring a total meltdown, it won't happen.

I think you are right. Hillary would die trying to keep stretching the rubber band to help out her contributors. And I agree that people would not vote to get rid of the federal reserve. The political trashing that CNN would do I can only imagine !!

What needs to be done?

Abolish the Federal Reserve and allow individual banks to issue currency. That would re-introduce the competition you correctly observe as being absent from the picture. It would also push us back towards a physical asset-type currency because the banks wouldn't be able to simply issue fiat-based currency.

The only way any of this is going to happen, however, is if the entire system breaks down completely worldwide or some natural disaster takes place that effects a collapse. People certainly wouldn't vote for it to happen.

I wonder what we can actually do and still function in our lives. Competition in currency has been made illegal here in the USA. Alternative banks are illegal, so we cant open up physical locations. Bitcoin seems to me an interesting approach, but its another fiat money system at heart, given that nothing backs it up. there are pre '65 silver coins that could work in person-to-person transactions.

My solution so far is to use the banking system as little as possible, assuming that whatever I put into it will be subject to confiscation at any time- depending only on my relative insignificance and obscurity to keep me out of the political spotlight.

I can see why John Galt made just enough money to survive and didnt interact with the system any more than that. Its amazing to me that Ayn Rand could predict what was going to happen so long ago. Smart lady.

Yes. And gold ownership is one of the most fraudulent derivative markets out there. I read one report that stated that there are 65 claims on each ounce of gold in the world. That means that if you aren't holding it, you don't have it and your "ownership" is about as valuable as a piece of paper.