A fantastic graphical breakdown of how people spend their money. I wish I could have this personalized.

All of Inflation’s Little Parts - The New York Times

Behind the recent bad news lurks a much deeper concern: The world economy is now being driven by a vast, secretive web of investments that might be out of anyone's control.

The black box economy - The Boston Globe

w1ld wrote:
Good message, but why does Jim have to yell so much??

Everyone in the Wallstreet media yells. They yell on CNBC too. I guess they are trying to sound like traders. It is annoying.

Flynn23 recently asked me what the impact of the Ron Paul campaign would be. Could the impact be the idea that it becomes more acceptable to criticise the federal reserve system? It strikes me that the "open process" that Cramer seems to desire is FAR less radical than Paul's objective.

YouTube - Ron Paul on Mad Money with Jim Cramer 12-14-07

"It's only when the markets are perceived to have exhausted themselves on the downside that they turn," he said. "Trying to prevent them from going down just merely prolongs the agony."

Taken as a general principal that argument is anarchocapitalist.

Greenspan sees early signs of U.S. stagflation: Reuters Business News - MSN Money

Both peasants and Soviet officials were often uncertain as to what constituted a kulak, and the term was often used to label anyone who had more property than was considered "normal."

Burning the middle class. Literally - with fire.

Kulak - Wikipedia, the free encyclopedia

This is a handy tool, and it's one you aren't likely to find on a lender's web site.

From the accompanying article:

By the Realtors’ way of thinking, it’s always a good time to buy. Homeownership, they argue, is a way to achieve the American dream, save on taxes and earn a solid investment return all at the same time.

That’s how it has worked out for much of the last 15 years. But in a stark reversal, it’s now clear that people who chose renting over buying in the last two years made the right move. In much of the country, including large parts of the Northeast, California, Florida and the Southwest, recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime. It’s almost as if they have thrown money away, an insult once reserved for renters.

Most striking, perhaps, is the fact that prices may not yet have fallen far enough for buying to look better than renting today, except for people who plan to stay in a home for many years.

Is It Better to Buy or Rent?

Historical Income Tables - Families -- Mean Income Received by Each Fifth and Top 5 Percent of Families, All Races: 1966 to 2005

America's class system in numbers.

Historical Income Tables - Families

This is your country on Medicare and Social Security.

The ratio of federal debt held by the public to GDP would climb from 37 percent currently to roughly 100 percent in 2030 and would continue to grow exponentially after that. The only time in U.S. history that the debt-to-GDP ratio has been in the neighborhood of 100 percent was during World War II. People at that time understood the situation to be temporary and expected deficits and the debt-to-GDP ratio to fall rapidly after the war, as in fact they did. In contrast, under the scenario I have been discussing, the debt-to-GDP ratio would rise far into the future at an accelerating rate. Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both.

There is some very sound advice in here. The following statement seems so logical and obvious that one wonders why the Fed Chief has to say it.

Members of the Congress who put special emphasis on keeping tax rates low must accept that low tax rates can be sustained only if outlays, including those on entitlements, are kept low as well. Likewise, members who favor a more expansive role of the government, including relatively more-generous benefits payments, must recognize the burden imposed by the additional taxes needed to pay for the higher spending, a burden that includes not only the resources transferred from the private sector but also any adverse economic incentives associated with higher tax rates.

Unfortunately, there are a whole lot of people who are living in total denial about this.

Fed chief Bernanke's prepared testimony before Senate - Jan. 18, 2007

Some really nice infoporn over at The Big Picture right now. The linked chart compares the assets of various nations organized into geopolitical buckets. (The embedded image comes from wikipedia's GDP page, as the chart I'm referencing here is protected against embedding.)

Notice that Asia, for all its mindshare, is still relatively tiny, and the U.S., despite her plethora of self-inflicted woes, remains globally dominant.

In other words, America can screw up an aweful lot for a long time before international competitors are really a threat to her economic position. (Although a commenter in the thread observes that U.S. asset prices may be unfairly high due to foreign currencies being pegged to the dollar.) Also worth a look is this chart which vaugely compares the GDP of various nations with various U.S. States. I'm sure you're heard before that California has roughly the GDP of France (and half the population) but I didn't know that Texas has a comparable GDP to Canada. And Georgia, oh Georgia, if only your ski slopes were as nice as your GDP...

Its worth comparing top lists for GDP between 1995 and 2005. There have been some significant changes. For example, Canada appears to be falling behind in international terms, although I don't know if that is due to failings on her part, or simply that far more populous countries are starting to get their acts together. Brazil is rocketing up, but they have 6 times the population of Canada. Canada's population is comparable to California, but it is spread out over a far wider area, which probably makes it less efficient. (I also think that weather plays a role. Snow plows cost money.)

As various countries begin to figure out how to operate effective economies and stable politics you'd think that these charts would normalize toward a reflection of population differences, with some effects due to geographic constraints such as those I mentioned for Canada. Of course, I'm describing a vision for world peace. I think we're a long way off, but it appears progress is being made.

A longer term investment in ETFs targetting countries that have moved significantly between 1995 and 2005 might be a very sound idea if coupled with a reasonable understanding of and monitoring of the political and economic stability of the countries in question. Of course, I'm not an economist, so take that with a grain of salt.

The Big Picture | How big IS the US anyway?

Milton Friedman, the Nobel-prize winning economist who helped shape and define free-market economic theory, died Thursday at the age of 94 in San Francisco.

We owe much to Friedman. Time sucks.

Nobel economist Milton Friedman dead at 94 - Nov. 16, 2006