The market continued to fall this week, closing decisively below the 1120 support level. People are nervous about China and the PIIGS (Portugal, Italy, Ireland, Greece, Spain.) China has shut down all bank lending for the rest of the month, due to fears about their overheating property market. They do this routinely, and the money spigot will turn back on in a few weeks due to their fears of not making enough new jobs to keep everyone happy. Obama has announced plans for a major new tax on banks, the only major segment of our economy that's making money. You can see that the market has been remarkable smooth the last couple of months, and a correction of this magnitude is not at all unusual. I don't believe a crash is eminent, as there's been nothing dramatic to change the basic outlook for our economy.
Massachusetts had an election and filled Teddy Kennedy's senate seat with a republican. I believe I felt a slight tremble in the ground out here in California as Teddy turned in his grave. This means the democrats no longer have a filibuster majority in the senate, and they actually have to make slight concessions to the republicans if they want to get anything done. There were various schemes proposed to ram health care through before the republican took his seat, but the votes for them are not available. To his credit, Obama said that health care should wait until the republican is seated, then start over. I guess now we're going to consider a less partisan approach.
A Pew Research Center report shows that over the past 40 years American women outpaced men in both education and earnings growth. A larger share of today's men, compared with their 1970 counterparts, are married to women whose education and income exceed their own, and a larger share of women are married to men with less education and income. The report's authors, Richard Fry and D'Vera Cohn, said "In the past, when relatively few wives worked, marriage enhanced the economic status of women more than that of men. In recent decades, however, the economic gains associated with marriage have been greater for men."
Median household income rose 60 percent for married men, married women and unmarried women, but only 16 percent for unmarried men, showing that women would rather stay single than marry a low income man. The Pew report found that unmarried women in 2007 had higher household incomes than their 1970 counterparts at each level of education, while unmarried men without post-high school education lost ground because their real earnings decreased and they didn't have a wife's wages to offset that decline. Unmarried men with college degrees made income gains of 15 percent, but were outpaced by the 28 percent gains of unmarried women with degrees.
The shifts in earnings capacity coincided with a marked decline in the share of Americans who are married. Among U.S.-born 30 to 44-year-olds, 60 percent were married in 2007, compared with 84 percent in 1970. For African- Americans, the rates were even lower: 33 percent of black women and 44 percent of black men were married in 2007.
This recession has only accelerated this effect, as we've already seen in a previous blog that three-quarters of the lost jobs are falling on men, and 85% of the new jobs in government and health care are going to women. Marriage is dead for the working class. You may expect it will soon be dying in the middle class. You heard it here first.
Harley lost money in the 4th quarter, their first loss in 16 years. Their sales are off by 30% and dropping, as their primary market, the baby boomers, turns from buying Electra-Glides to paying off credit cards and trying to save for retirement. Harley finds themselves today in the same position Cadillac and Buick were in 10 years ago: their average buyer is over 50 and getting older, younger people don't seriously consider Harleys. Harley is introducing new models (the "48", modeled after a 1948 Sportster, shown at right) to attract younger customers. Interesting that they would think 30 year olds would be attracted to a bike modeled after something made when their parents were just being born. Harley marketing is strongly based on nostalgia for the 50s and 60s, a time that baby boomers remember as a simpler happier time but that Gen-Xers don't remember at all. Note the picture at the right shows gas pumps from the 50s, which Gen-Xers likely think are porta-potties for midgets.
Harley is losing market share due to aggressive discounting by the Japanese - Harley CFO John Olin said "You gotta pay full price for a Harley." Perhaps I should send him a photo of my local Harley dealer, whose windows scream out that there are $2000 discounts on Road Kings. Harley dealerships are closing left and right, after building huge expensive stores at Harley's urging that they can no longer support. I consider all this interesting as, to my eyes, Harley is a canary in a coal mine: Harley sales dropping like this show that the Baby Boomers are serious about reining in spending. I don't expect these sales will return anytime soon: five years from now when the recession is truly over boomers are going to be too old for this nonsense. Not including your esteemed writer, who refuses to grow up.