The number of Americans on food stamps just hit an all-time high. During January and February 2008 (latest data available) an average of 27,675,000 Americans participated in the program, 1.4 million more than at the same time last year (see chart below, click to enlarge).
What is troubling is that the number rose and remained high, though six years passed since the official end of the last recession. It is now rising again as the economy weakens. The comparison with the 1991-92 recession and subsequent expansion is quite disturbing.
While food stamps are clearly a lagging economic indicator, the continuous rise in recipient numbers during 2002-2008 causes me to conclude that real GDP growth in previous years was not as robust or widespread as the headline numbers suggested. Unlike other data, I believe food stamp numbers are not greatly "adjusted" and thus provide a truer picture of the economy - or, at least one aspect of it: how difficult it is for real people to make ends meet. As opposed, say, to those phantom employees created by BLS models. (I guess they don't need food stamps because, if we are to believe the official inflation figures, they don't eat.)
For example, after adjusting and re-adjusting, the BLS reported that the economy added a net 800,000 jobs in the 12 months to February 2008. And yet, in the same time food stamp participation increased by nearly double that number. While the two statistics are not necessarily mutually exclusive, which one provides a better "feel" for what is actually happening in the "un-adjusted" economy?
Looking at the entire 2002-07 period, the economy added a net 8 million jobs and 10 million more people went on food stamps.
____________________________________________
Retail and food service sales were reported today (-0.2% from the previous month) and the media spin machine immediately went into overdrive to cushion the bad numbers. The favorite ploy is to exclude autos and various other sectors to come up with "core" retail sales. (It's a bit like core inflation that excludes food and fuel, also known as inflation without the inflation...).
Today's spinning involved the exclusion of auto sales, since they dropped by a very sharp -2.8% in April. So, without the drag of such a terrible figure, "spun sales" become a much more palatable +0.5%, supposedly signifying all kinds of "robust core spending" nonsense. Only problem is, at $72 billion/month auto sales are by far the largest segment, accounting for 20% of all retail and food service sales.
Since two can play at this game, how about total sales minus gasoline, food stores and restaurants? After all, these are exactly the items most impacted by rising food and fuel prices and rising sales there are not exactly a sign of higher discretionary spending. This total was down -0.4% from March.
Robust..not!
While food stamps are clearly a lagging economic indicator, the continuous rise in recipient numbers during 2002-2008 causes me to conclude that real GDP growth in previous years was not as robust or widespread as the headline numbers suggested. Unlike other data, I believe food stamp numbers are not greatly "adjusted" and thus provide a truer picture of the economy - or, at least one aspect of it: how difficult it is for real people to make ends meet. As opposed, say, to those phantom employees created by BLS models. (I guess they don't need food stamps because, if we are to believe the official inflation figures, they don't eat.)
For example, after adjusting and re-adjusting, the BLS reported that the economy added a net 800,000 jobs in the 12 months to February 2008. And yet, in the same time food stamp participation increased by nearly double that number. While the two statistics are not necessarily mutually exclusive, which one provides a better "feel" for what is actually happening in the "un-adjusted" economy?
Looking at the entire 2002-07 period, the economy added a net 8 million jobs and 10 million more people went on food stamps.
____________________________________________
Retail and food service sales were reported today (-0.2% from the previous month) and the media spin machine immediately went into overdrive to cushion the bad numbers. The favorite ploy is to exclude autos and various other sectors to come up with "core" retail sales. (It's a bit like core inflation that excludes food and fuel, also known as inflation without the inflation...).
Today's spinning involved the exclusion of auto sales, since they dropped by a very sharp -2.8% in April. So, without the drag of such a terrible figure, "spun sales" become a much more palatable +0.5%, supposedly signifying all kinds of "robust core spending" nonsense. Only problem is, at $72 billion/month auto sales are by far the largest segment, accounting for 20% of all retail and food service sales.
Since two can play at this game, how about total sales minus gasoline, food stores and restaurants? After all, these are exactly the items most impacted by rising food and fuel prices and rising sales there are not exactly a sign of higher discretionary spending. This total was down -0.4% from March.
Robust..not!
There are no doubt many aspects to this problem.
ReplyDeleteBut it is also clearly tied to immigration, especially of Hispanics, who are disproportionate users of food stamps. Illegals are self-selected immigrants, i.e. with regard to education and skills (employability). Clearly most illegals are Hispanic, and the reality is that a disproportionate share of them are poor and not well educated, and this does not seem to change all that significantly in succeeding generations (I've seen some data that suggests as few as 15% of fourth generation Hispanics graduate from college). So one reason food stamp usage is high(er) is that, basically, the US is importing poor people.
Per capita income in state is expected to sink over 20 years - Growth in poorly educated population is blamed in study
Californians' per capita income will drop 11 percent over the first two decades of this century unless the state closes the educational gap of its expanding Latino population, a nonpartisan research center forecast in a report released today...Latinos are the fastest-growing segment of the state's population and work force, and among the least-educated, said the National Center for Public Policy and Higher Education...According to 2000 census figures, in the 25-to-64 age group, 52 percent of Latinos lacked a high school diploma, compared with 8 percent of non-Latino whites, and 12 percent of Latinos had a college degree, compared with 46 percent of whites...If those rates persist as the population continues to change, the report said, the state's average educational level will decline through 2020 and drag down per capita income.
Immigrants and the children of immigrants account for more than 90% of the population growth in California.
I don't think that the entire 27 million on food stamps can be explained by Hispanic "illegals." That number is almost 10% of the American population. That's quite an astounding number. And I don't think that it is that easy to qualify for food stamps, either.
ReplyDeleteNo, I suspect the disparities of wealth and income in this country explain a lot more than blaming it on Hispanics. Actually, it is in difficult economic times precisely like these that populations will seek to blame those that are weaker than themselves. Immigrants are "low hanging fruit" when it comes to the blame game.
Have you ever stopped to consider that those with wealth and power instigate hatred of poor and minority populations as a way of diverting attention from their own thievery?
No, the real problem in this country is not immigrants. It is the disproportionate compensation arrangements due to disparities in bargaining power between the owners of capital and labor. A much greater threat to the working class is the treatment of pensions and health care in bankruptcy.
eh... I have often wondered if this is the case. Do you have any links to actual foodstamp data confirming this possbility?
ReplyDeleteOkie said: "the real problem in this country is... disparities in bargaining power between the owners of capital and labor"
Okie, we agree! Only not in the way I think you are suggesting. From my point of view, it is one of those 'The World is Flat' issues. Globalization is now making everyone compete in this world compete with everyone else.
In the blink of an eye (on a human time scale) the world's workforce has expanded by perhaps 1/4-1/3 with the integration of the BRIC countries into the world's economy? With this has come a MASSIVE shift is the balance between labor and capital.
But there is nothing ANY government can do to improve this issue unless it wants to make everyone poorer (except better regulation).
No, I suspect the disparities of wealth and income in this country explain a lot more than blaming it on Hispanics.
ReplyDeleteSuch disparities are worsened when the fastest growing portion of your population is the least educated and so has the least earning power.
I don't think that the entire 27 million on food stamps can be explained by Hispanic "illegals."
Of course this is true. But it is also not what I said; in fact, it has nothing to do with what I said. The data suggests that it is almost certainly true that Hispanics are accounting for a disproportionate share of the growth in food stamp usage.
Incidentally, Hispanics are also disproportionately criminal: per US DOJ statistics, they are about 4x as likely as American Whites to be incarcerated.
These are just simple demographic facts.
And considering that in many locales their numbers are growing so strongly that they are practically a replacement population, it is perhaps worth the effort to think about what this portends for the future of America, e.g. as a competitive economic nation.
Have you ever stopped to consider that those with wealth and power instigate hatred of poor and minority populations as a way of diverting attention from their own thievery?
You've got to be kidding.
Good data, however, two points of reference missing:
ReplyDelete1. that number compared to the total population as a percentage. You are bound to make new highs with population growth.
2. The value of the food stamps. I don't know the details of the food stamp program, but surely it's value and it's use might be different now than in previous years? Could be worse now for all i know.
As per my post of several days ago, about what people's debt is being used for, this report is, at least, suggestive.
ReplyDeletehttp://news.yahoo.com/s/ap/20080513/ap_on_bi_ge/economy_survey
To stalemate:
ReplyDeleteIt is not so much the absolute number of people on food stamps that matters, as the dynamic of the numbers, i.e. not going down with the supposed economic expansion after 2002.
It is VERY obvious, to me at least, that what happened was a bifurcated expansion: some few did extraordinarily well and dragged the overall GDP numbers up, while all the rest tread water.
Remember the hedge fund manager who made $12 billion in salary and bonus in 2007? That's what? Half a million regular folks?
_________
The average food stamp benefit per person has remain broadly steady in recent years:
2005 $92.5
2006 $94.3
2007 $95.6
"Hard working, (white) blue collar workers."; destitute (Cuban) real estate speculators; unemployed (Easter European) super models; insolvent (Haitian) arbitrageurs; distraught (Evangelical) contrabandistas; underemployed (Islamic) muftis.
ReplyDeleteThere's your answer gentlemen.
Econolicious
"GDP growth in previous years was not as robust or widespread as the headline numbers suggested"
ReplyDeleteNationwide, employment fell from 2000 to 2003, and didn't surpass the 2000 peak until 2005. The recession of 2000 - 02 was a lot deeper than the government statistics show. The later expansion was primarily in the FIRE sector.
I doubt if illegals who are scared of deportation would apply in large numbers for food stamps.
Forensic economist
one year anniversary of Blackstone IPO coming. Those who bought the IPO made a huge killing - more than anything else. :)
ReplyDeleteI grew up in San Diego and am forced to go back about twice a year. The wealth has been a complete facade. Its an overpopulated desert. IMO Mexico has the nicer land, but the government is heinously corrupt. Can't blame people for wanting to come here, but I can get a bit peeved that they're not trying to assimilate to the culture that they apparently found so alluring.
ReplyDeleteThere has been an anti-intellectual sentiment growing in many subcultures (of all races). Until recently a lot of money could be made without education (whether native or foreign-born)so it wasn't valued. A rude awakening is coming.
So will foreign countries lend us more money to dole out subsistence to our too-cool-for-school population? LuckyS? ;)
Re: Spending on necessities.
ReplyDeleteStraight from the horse's mouth -
Liam McGee, president of the consumer and small business division at Bank of America, today said:
Credit and debit-card purchases for ``necessary'' items, including fuel, food and utilities, grew by 13 percent in the first quarter, while spending for retail, travel and entertainment increased 0.5 percent.
http://www.cis.org/articles/2004/fiscalexec.html
ReplyDeleteAmong the largest costs (of illegals) are Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and free school lunches ($1.9 billion)..
Dink, I know what you are talking about-- I grew up in Laguna and we always wondered what those schools down south were teaching you folks ;-)
ReplyDeleteBut I think Okie's point is that even were this true, it would not explain some of the differences we are witnessing in income and wealth spreads within this country.
The wide disparities are appearing in almost every field-- Were you to take medicine as only one example, the disparity between the highest and lowest paid physicians is widening significantly (I guess you have to assume all physicians are equally intellectul, which might not be fair since some may have grown up in San Diego).
Where I differ with Okie is his interpretation WHY this is occuring. I just don't think the rich are talented enough to to pull this kind of thing off on their own volition, even if they wanted to do it in the first place. I agree with eh in this regard.
And wildbill, pulled right off your Center for Immigration Studies website: "The Center is animated by a pro-immigrant, low-immigration vision which seeks fewer immigrants but a warmer welcome for those admitted." I guess they at least have the integrity to share their bias with the rest of us up front.
There was an article in the Progressive magazine 2-3 ago about food banks in small town America. All the pantry managers interviewed said they were seeing unprecedented demand from people who never before had to rely on food handouts, not illegal immigrants. The supposed prosperity of the past few years wasn't reaching very far to the people who needed it most.
ReplyDeleteDink,
Nobody likes to assimilate; the Pilgrims didn't start wearing moccasins and feathers in their hair when they came over and western expats don't assimilate into the countries where they work, sometimes for decades, and usually have residential compounds built for them where they can live, play and eat just like home.
Econolicious,
No offense but I can't figure out what point you're trying to make.
Greenie,
Are you auditioning for the role of The Riddler in the next Batman movie? Alot of your posts lately have been either cryptic or mockingly sarcastic.
"And wildbill, pulled right off your Center for Immigration Studies website: "The Center is animated by a pro-immigrant, low-immigration vision which seeks fewer immigrants but a warmer welcome for those admitted." I guess they at least have the integrity to share their bias with the rest of us up front."
ReplyDeleteErr, ain't "my" Center!
And although I am no expert, it seems to me that your comment is a fine example of an ad hominem argument. I.e., *sounds* like a rebuttal but is actually content free.
Did you find some data in the study that you believe is erroneous?
wildbill said: "I.e., *sounds* like a rebuttal but is actually content free"
ReplyDeleteLOL!!! My wife would give you a medal :-)
"Greenie,
ReplyDeleteAre you auditioning for the role of The Riddler in the next Batman movie? Alot of your posts lately have been either cryptic or mockingly sarcastic."
I mentioned Blackstone in the context of hedge fund manager making billions. Unlike some of the more talented hedge fund managers, Stephen A. Schwarzman, is a total thug in my opinion. He and his company always talked about how beneficial it is to be private equity instead of public company, and then he dumped the company on the unsuspecting public at the most opportune time. Unlike other IPOs, his stock did not stay above IPO day price for a single day.
And forgot to add that Blackstone advanced its IPO day by two weeks, because Bears Stearns news was coming out. And that IPO marked the bull market top very closely.
ReplyDeleteIf Americans bring back guillotine some day, I would recommend Schwarzman among the first to go (along with my 'hero' Greenspan of course).
Okie Lawyer:
ReplyDeleteI have been saying for decades, we don't have enough poverty in this country so must import it. Please don't "mau mau" people. That's no argument. About 14% of Americans are Hispanic. Their use of food stamps is about 2.5X that of Caucasians, to the best of my recollection. George Borjas, Harvard professor estimates illegal immigrants cost the US about $338 billion annually. If you want to see what's coming, look at Claifornia. If you want to call me racist, go ahead. I call 'em the way I see 'em. Look at California's hospitals!
Eh, how can Hispanics graduate from college? Most of our Mexican immigrants are from southern Mexico, average IQ 82. Here we go, racism at work.
BTW Okie lawyer, our elites favor illegal immigration. Look at Bush.
Thai-
ReplyDelete"assume all physicians are equally intellectual, which might not be fair since some may have grown up in San Diego"
You treacherous reptile! UCSD was plenty intellectual (it even had a library). Laguna?? Not even the most debauched SDSU frat party could compare with an average weekend for a Laguna 6th-grader. There were legends about you people...
Yoyomo-
"Nobody likes to assimilate; the Pilgrims didn't start wearing moccasins "
Ah, but the pilgrims weren't coming for the culture, they were coming for the land. I worry that many groups think that they can pick and choose whichever part of Western culture they like and ignore others, but in reality the system only operates as a whole. The prime example that comes to mind are Muslim immigrants to Europe (i.e. if you want to succeed you're going to have to accept some secularization, your wife is going to need to be literate, etc.).
I do not understand you guys. The money stolen away from the society by one thuggish hedge fund manager, investment banker or their backers in government is more than what is taken away by 1 million Mexican immigrants. If you have any intelligence, go after people like Rubin, Schawartzman, Sandy Weil, Greenspan, Bernanke....
ReplyDeleteHave you seen how much of our money is given by Bernanke to his buddies based on flimsiest collaterals? Over 400 billion and counting, just in 8 months. Are you crying over that 400 billion as much as that 338 billion you stated? Why not? Because the people receiving the 400 billion are owner of the propaganda machine that teaches you that the Mexicans are the root of all evils.
Greenie, I certainly agree with you. Are you feeeling I (we) don't.
ReplyDeleteBut realistically, beyond bitching about it (and writing our representative), is there anything else we can do?
"is there anything else we can do?"
ReplyDeletewe can at least stop complaining about the Mexicans and tell people who the bigger culprits for our misery are.
Eventually people will get angry about loss of homes. I am worried that they will end up punishing the wrong people.
I agree... but perhaps it's because you and I must be elites ;-)
ReplyDeleteThe money stolen away from the society by one thuggish hedge fund manager, investment banker or their backers in government is more than what is taken away by 1 million Mexican immigrants.
ReplyDeleteThank you, greenie. That actually was my point. But attacking "brown people" is so much easier because they have far less political power and money.
Thai:
In regards to the "Flat Earth" theory (propagated by NY Times writer Thomas Friedman), we actually agree. And I appreciate your bringing up the point about the disparity of incomes among doctors. The same is true of lawyers, too. You are right that the disparity is cutting across all professions and skill sets.
We actually agree more than we disagree, believe it or not.
Greenie, thoughts?
ReplyDeleteGreenie,
ReplyDeleteThank you for demystifying.
I don't believe that $338B figure;
although illegals don't file, they still have withholding deducted.
Dink,
"...they were coming for the land." And why do you think they come over for now? I'm glad you brought up Muslims in Europe because I was referring to expat compounds in the mideast. The expats go for the jobs and insist on jumping in the pool with Speedos and bikinis behind their compound walls. How is that different from wearing headscarves. You can't get the labor without the baggage that comes with it. Why did Italian and Chinese food become popular 60-80yrs ago and Mexican and Indian food more recently.
okielawyer writes:
ReplyDelete"Have you ever stopped to consider that those with wealth and power instigate hatred of poor and minority populations as a way of diverting attention from their own thievery? "
Excellent! It's called class warfare and the rich wage it against the non rich every ^%!! day!
As George Orwell quoted in '1984':
ReplyDeleteIt does not matter if the war is not real or if it is. Victory is not possible. The war is not meant to be won, but it is meant to be continuous.
A hierarchical society is only possible on the basis of poverty and ignorance, this new version is the past and no different past can ever have existed. In principle the war effort is always planned to keep society on the brink of starvation. The war is waged by the ruling group against its own subjects and its object is not the victory over either Eurasia or east Asia but to keep the very structure of society in tact.
"Greenie, thoughts?"
ReplyDeleteThai,
If supply-demand is everything, why does crude price rise or fall by 20-30% in a matter of week's time?
Demand for crude is ultimately directed by demand for the end-product - gasoline. If demand for gasoline is so high and supply is tight, why cannot refiners raise prices of gasoline and are instead losing money themselves?
Greenie
Thai, Let me answer the question that I posed. Crude price is so volatile, because the traders anticipate supply -demand rather than reacting to it. So, one fine morning, you will see perfect news for crude, but it will peak and then continue to drop day after day. I do not know, whether that drop will come at $125 or $250 or when, but eventually. Then one month later, you will receive the news that huge inventories of oil piling up.
ReplyDeleteIn markets prices lead news, because the market anticipates rather than reacts to supply-demand picture. I thought Krugman knew better.
Greenie
I agree with allot of these responses. Immigration is certainly and issue. Population growth is obviously an issue. Our entitlement society factor as well. I think its embarassing what makes it onto the ML Implode site. It's like a Michael Moore flick; half the story.
ReplyDeleteHellasious: You are exactly right. There is something wrong when the food stamp rolls grow during a time of supposed economic growth, and what it means is that the growth is a lie. This is the same thing that happened under Reagan. Many like to use the "all boats rise with the tide" image, but in reality this is a Titanic scenario: A few people are in the lifeboats, and the bulk of us are still on the ship as it breaks and goes to the bottom.
ReplyDeleteeh and Wild Bill: Blaming illegals (read: Hispanics) for this mess is like blaming the spotted owl for the loss of timber jobs after 90% of them were either exported or automated. It's a red herring to distract attention from the real culprits. Greenie is right: The system has been crashed by a group of bazillionaires who right now are putting the finishing touches on their "vacation homes" in places they can't be extradited from.
As for Hispanics being incarcerated at a higher rate, trust me that higher incarceration rates for minorities does not higher rates of criminal activities. When I was a prosecutor, my glorious sheriff's office brought me a steady stream of charges based on stopping people for DWM (Driving While Mexican). To the extent there is a correlation, it may be summed up as this: Poverty produces crime. Rudy Giuliani's "Broken Windows" campaign was a crock. The reason he got results was because his campaign coincided with broad economic gains. Poverty decreased, and so did crime. Further, if your very existence is illegal, how much convincing do you need to engage in additional illegal activity, especially when you have mouths to feed.
OkieLawyer: DON'T get me started on Friedman. I have no problem with his version of the facts; I think it's a given that the labor market is now global. My problem is that he treats what is as what should be. Sorry Tom, but until you can move labor as easily as you can move capital, labor needs protection. Let's face it, Okie, the only reason our services haven't been outsourced to Mumbai is that we have we have ruthless trade unions, excuse me, bar associations, that make our states closed shops.
BTW, there's something bollocksed with the HTML tags. I couldn't get my italics to work.
How interesting... an entry about economic hardship facts turns into a partisan discussion about immigration.
ReplyDeleteFirst, a note to all: unless of native stock, we're all immigrants to America. Some emigrated earlier than others and had "papers", others came later and didn't. But we all have to eat. And that's the point of the food stamp chart.
An economy that creates strong real growth across the entire economy is not accompanied with a constant and significant increase in the need for basic food aid. Real growth in employment and wages across the entire population spectrum is supposed to take care of that,no matter WHERE our residents come from.
It matters not the color of their skin or suffix on their surname. It does not even matter if they are "illegal" because a tight labor market will bid up wages everywhere and for everyone. That's plain old common sense.
Don't look at the food stamp numbers statically. Look at them dynamically and in comparison with other periods, i.e. what happened during other boom/decline cycles.
Regards,
H.
Knute:
ReplyDeleteThanks for stopping by. I think we are in almost complete agreement on the issues discussed here. One quibble: I don't think poverty causes crime, but it certainly compounds it. It takes choices away. I know a little bit about that.
Another small quibble: I suspect many people would have less problems with illegal immigrants were it not for violent criminal gangs such as MS-13 (who often prey on Hispanic communities). As a former prosecutor, you would know more about the problems with criminal gangs than I.
Regarding our "powerful" trade unions, I don't know about where you are, but there is a movement to allow Mumbai to start performing legal work (to save money) and Wal-Mart is wanting to get in on the act, too. Wal-Mart was lobbying to be able to set up offices inside their stores where their employees could start doing "simple" legal work. It may be just a matter of time before even our jobs are "outsourced." (Actually, read: your job -- I'm currently working in an oil-related job that cannot really be outsourced.)
In any case, keep coming back and commenting here. We could use your insight and experiences.
@knute rife, don't kid yourself for a second, 'most' of us Americans are NOT on the side of your trade association.... some of us would even contribute good money if it led to your services being outsourced to Mumbai a day sooner.
ReplyDeleteYou lawyers are WAY above the Gazillionaires as the source of America's calamities.
I will not document the damage the medical-legal system has done to medicine in this country, but I can add that when nationalized medicine does finally come, your professions contributions (extortions?) will be the first to go (as they did in Scandinavian countries).
In fact many physician friends of mine who also a conspitaorial view are convince we will never have nationalized medicine in this country because the trail lawyers will never let it happen once they see their own obituaries on the paper.
Outsource the lawyers? Amen!
Hellasious said...
ReplyDeleteFirst, a note to all: unless of native stock, we're all immigrants to America. Some emigrated earlier than others and had "papers", others came later and didn't.
****
Yes, and those "that didn't" broke the law and are criminals. They are costing the country billions, and should be incarcerated first, then deported.
The failure on the part of government to ensure that all families have sufficient income to meet their basic human needs has caused holes in the financial safety net to steadily worsen over the years. Our government’s failure to prioritize the needs of the poorest of the poor is causing increased hardships among those least suited to survive them.
ReplyDeleteSimultaneously, other challenges facing many of these same families are growing worse as a result of insufficient support for basic child welfare, mental health and substance abuse programs. These issues are bound together. It is virtually impossible to resolve many of the behavioral health issues families are facing when they must focus all of their energy on simply surviving.
We must place a greater priority on financial resources for the poorest of the poor. We must provide sufficient benefits through our safety net programs to meet all basic needs for these families. This is already a crisis for the people affected by these issues.
We call upon our state and federal elected representatives to not turn away from these serious problems.
We must take immediate action!
Please contact your federal and state elected officials to urge them to address these issues!
http://dontturnawayoh.blogspot.com/
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