View Full Version : So you think the economy is "good"
loosecannon
05-03-2007, 10:51 PM
But Dick Cheney's financial advisor knows better and points at you and laughs:
How high will the Dow go? 15,000? 20,000?
How about 36,000?
While euphoria sweeps stock markets here and worldwide, there are at least a few voices of dissent.
One, unsurprisingly, is legendary value investor Jeremy Grantham -- the man Dick Cheney, plus a lot of other rich people, trusts with his money. Grantham, chairman of Boston firm Grantham Mayo Van Otterloo, has been a voice of caution for years. But he has upped his concerns in his latest letter to shareholders. Grantham says we are now seeing the first worldwide bubble in history covering all asset classes.
Everything is in bubble territory, he says.
Everything.
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'The bursting of this bubble will be across all countries and all assets.' -- Jeremy Grantham
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"From Indian antiquities to modern Chinese art," he wrote in a letter to clients this week following a six-week world tour, "from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips; it's bubble time!"
"Everyone, everywhere is reinforcing one another," he wrote. "Wherever you travel you will hear it confirmed that 'they don't make any more land,' and that 'with these growth rates and low interest rates, equity markets must keep rising,' and 'private equity will continue to drive the markets.' "
As Grantham points out, a bubble needs two things: excellent fundamentals and easy money.
"The mechanism is surprisingly simple," he wrote. "Perfect conditions create very strong 'animal spirits,' reflected statistically in a low risk premium. Widely available cheap credit offers investors the opportunity to act on their optimism."
And it becomes self-sustaining. "The more leverage you take, the better you do; the better you do, the more leverage you take. A critical part of a bubble is the reinforcement you get for your very optimistic view from those around you."
It's something to think about the next time you hear someone tell you that the stock market will keep rising simply because the world economy is doing so well. That would make sense only if we were paying a constant price for each unit of world GDP, instead of higher and higher prices for one slice of that GDP -- equity.
Grantham concludes that every asset class is expensive today compared with historic averages and compared with the cost of replacing it. By his calculations, the only assets likely to beat inflation by any significant margin if you hold them for the next seven years are managed timber, "high-quality" U.S. stocks, and bonds.
"The bursting of [this] bubble will be across all countries and all assets, with the probable exception of high-grade bonds," Grantham warned. "Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity."
Ouch.
Grantham sees two big potential catalysts that might turn this bull market into a bear: a surge in inflation, leading to higher interest rates, and a squeeze on profit margins, which are currently running way above long-term averages.
As for timing, he concedes that's impossible to predict. But here's the kicker: Even Grantham thinks you probably need to be bullish right now. The reason? Most bubbles, he notes, go through a short but dramatic "exponential phase" just before they burst. Like Japan in 1989 or the Internet in early 2000.
"My colleagues," wrote Grantham, "suggest that this global bubble has not yet had this phase and perhaps they are right. ... In which case, pessimists or conservatives will take considerably more pain."
Enjoy the "must come down" phase.
http://www.thestreet.com/funds/followmoney/10353243.html
MtnBiker
05-03-2007, 10:53 PM
link?
loosecannon
05-03-2007, 11:21 PM
link?
whoops! fixed, thanks
But Dick Cheney's financial advisor knows better and points at you and laughs:
Enjoy the "must come down" phase.
http://www.thestreet.com/funds/followmoney/10353243.html
That's a lousy thing to say.
loosecannon
05-03-2007, 11:32 PM
That's a lousy thing to say.
Not to folks riding the false euphoria of a fake economic trajectory.
It would be much more cruel to say, enjoy the excellent economy.
Hobbit
05-04-2007, 12:07 AM
So, because the economy won't be good forever, that makes it bad? I'm trying to follow your logic here, but nothing good lasts forever, and I don't recall that meaning that nothing can possibly be good.
It is also not necessarily true that the bigger the rise, the harder the fall. Such crashes have happened before, but they are the exception, rather than the rule. It is also worth noting that the stock market averages about 12% over any 10 year period in history, and any 5 year period that does not include the 1929 crash.
Psychoblues
05-04-2007, 12:27 AM
Here is a quote from Mr. Grantham that you need to pay very close attention to:
"The more leverage you take, the better you do; the better you do, the more leverage you take. A critical part of a bubble is the reinforcement you get for your very optimistic view from those around you."
Kinda reminds me of the ramp up to the WAR ON IRAQ. With equal consideration it tells me that credit is not forever. Do any of you psuedo-economists want to tackle this? How about the nationalists that want to be worldists? You want to tackle it?
Does anyone understand even what Mr. Grantham means by "bubble?" I doubt it.
loosecannon
05-04-2007, 12:42 AM
So, because the economy won't be good forever, that makes it bad?
Do you understand what a bubble is Hobbit? Think Nasdaq 2001.
Do you have a clue what a worldwide bubble is across every sector of the financial spectrum?
The worlds best and brightest economists don't know what the net results will be, we are in unchartered territory. And LOTS of folks think that they have devised a way to buck trends that have always prevailed.
But lemme spell out the worse case scenario:
In the era after 1929 we reached a mere 25% unemployment and the depression spread world wide.
Worse case is this depression "could" be 3-15 times more massive.
The leveraging we are experiencing today along with the debt load on nations, central banks,iinvestors and consumers is astronomical compared to 1929.
And leveraging is blamed as the cause of the last depression.
Do you trust Dick Cheney's financial advisor?
Bubbles inflate and then deflate. Like the crash in 2001. What goes up, must come down.
This bubble is at least 20 times as large as the 2001 bubble that sparked a recession.
Psychoblues
05-04-2007, 01:00 AM
Good analogy, lc. Many look at the pendulum that forever swings without the due consideration of the momentum that generates the swinging.
Do you understand what a bubble is Hobbit? Think Nasdaq 2001.
Do you have a clue what a worldwide bubble is across every sector of the financial spectrum?
The worlds best and brightest economists don't know what the net results will be, we are in unchartered territory. And LOTS of folks think that they have devised a way to buck trends that have always prevailed.
But lemme spell out the worse case scenario:
In the era after 1929 we reached a mere 25% unemployment and the depression spread world wide.
Worse case is this depression "could" be 3-15 times more massive.
The leveraging we are experiencing today along with the debt load on nations, central banks,iinvestors and consumers is astronomical compared to 1929.
And leveraging is blamed as the cause of the last depression.
Do you trust Dick Cheney's financial advisor?
Bubbles inflate and then deflate. Like the crash in 2001. What goes up, must come down.
This bubble is at least 20 times as large as the 2001 bubble that sparked a recession.
This will not be the first or even the 1,000th time the suckers have paid the price for swingers. They were warned.
Get your kicks on Route 66.
Hobbit
05-04-2007, 02:12 AM
Do you understand what a bubble is Hobbit? Think Nasdaq 2001.
Do you have a clue what a worldwide bubble is across every sector of the financial spectrum?
The worlds best and brightest economists don't know what the net results will be, we are in unchartered territory. And LOTS of folks think that they have devised a way to buck trends that have always prevailed.
But lemme spell out the worse case scenario:
In the era after 1929 we reached a mere 25% unemployment and the depression spread world wide.
Worse case is this depression "could" be 3-15 times more massive.
The leveraging we are experiencing today along with the debt load on nations, central banks,iinvestors and consumers is astronomical compared to 1929.
And leveraging is blamed as the cause of the last depression.
Do you trust Dick Cheney's financial advisor?
Bubbles inflate and then deflate. Like the crash in 2001. What goes up, must come down.
This bubble is at least 20 times as large as the 2001 bubble that sparked a recession.
The crash of 2001 had another cause. Care to guess what it was? I also don't really see any need to fear a huge crash. I've seen people predicting that we were mere months away from another black tuesday since 1994. This is not the .com boom or the 1920s artificial stock price age, which were both unsustainable.
I would also like to point out that anybody who thinks the stock market is a long-term risk is a complete and total moron. Since its founding, the stock market, as a whole (which means stock-based mutual funds and any group of stocks spread out across the market), has increased an average of at least 12% per year over any given five year period, except those which contained the crash of 1929. Extend that to 10 years, and even the decades including the 1929 crash saw an average 12% growth rate per year (those who held their stocks through the crash got excellent returns a few years later). Inflation averages out to around 4% per year, so the stock market will always beat inflation.
Psychoblues
05-04-2007, 02:40 AM
First off I will name the United States Postal Service that can still deliver a letter in many cases overnight for 39 cents. No postal service on Earth can do better, cheaper or more consistently.
Secondly, I would like to point out the Veterans Administration Hospitals, Health Care Clinics and Convalescent Homes. There are no other such administrations or health care entities on Earth that can claim the successes, the quailities of services or the amount of services provided for so many at any price lower than that which the VA operates and provides direct benefits to our most important citizens, our VETERANS!!!!!!
Thirdly, I would recommend that you take a hard look at the TVA (Tennessee Valey Authority) and what it does for flood control and power production and the coststo the peoples it benefits. With that, please look at the Army Corps of Engineers that do the same as well as riverbed dredging, dam building and resource management. The Bureau of Land Reclamation is another to look at in this venue.
Fourthly, have you ever known of a public/municipal water/sewage entity that didn't at least double the price paid for their services within 5 years of going "private?" Even though other publicly managed municipals around them remained approximately level?
"Name one thing the government does better than the private sector and I'll show you something that requires the use of force to accomplish."
I won't name one thing for you, hibbit. I'll name a thousand. Do you desire to continue your idiocy and ignorance or would you rather take an honest look at what government can do well and what it doesn't?
Loose leave the board unless you come to the queer marriage thread you big fucking pussy ass hypocrite you.
I OWN YOU!:laugh2: :laugh2: :laugh2:
Don't post anywhere else, your credibility is in tatters.
Hobbit
05-04-2007, 09:44 AM
First off I will name the United States Postal Service that can still deliver a letter in many cases overnight for 39 cents. No postal service on Earth can do better, cheaper or more consistently.
Secondly, I would like to point out the Veterans Administration Hospitals, Health Care Clinics and Convalescent Homes. There are no other such administrations or health care entities on Earth that can claim the successes, the quailities of services or the amount of services provided for so many at any price lower than that which the VA operates and provides direct benefits to our most important citizens, our VETERANS!!!!!!
Thirdly, I would recommend that you take a hard look at the TVA (Tennessee Valey Authority) and what it does for flood control and power production and the coststo the peoples it benefits. With that, please look at the Army Corps of Engineers that do the same as well as riverbed dredging, dam building and resource management. The Bureau of Land Reclamation is another to look at in this venue.
Fourthly, have you ever known of a public/municipal water/sewage entity that didn't at least double the price paid for their services within 5 years of going "private?" Even though other publicly managed municipals around them remained approximately level?
"Name one thing the government does better than the private sector and I'll show you something that requires the use of force to accomplish."
I won't name one thing for you, hibbit. I'll name a thousand. Do you desire to continue your idiocy and ignorance or would you rather take an honest look at what government can do well and what it doesn't?
All of those are done through the use of force, as they require tax money, which is collected through the use of force, to accomplish.
I also challenge you on the Post Office and the VA. You're bringing 'cost' into it without including tax cost. Federal Express and UPS deliver packages and notes far faster and with far less risk of damage that the Post Office, and at less cost. As for letters, who uses those any more? We have e-mail.
On the VA, I know several veterans, and the VA system is terrible. It's not 'free' either, unless you spell free 'T-A-X.' It provides inferior care at a greater cost per patient, all paid for by the U.S. taxpayers.
As for sewage and water systems, yeah, once again, the reason the city can operate at lower cost is because they subsidize their own departments with tax money, eliminating the need to be profitable.
loosecannon
05-04-2007, 10:26 AM
This is not the .com boom or the 1920s artificial stock price age, which were both unsustainable.
No this is much, much much larger than the dotcom boom and the 1920's stock market bubbles.
It is worldwide, across all markets from realestate to oil, and it involves 100 times more debt.
I would also like to point out that anybody who thinks the stock market is a long-term risk is a complete and total moron.
Then there are a LOT of highly paid morons working in the financial industry. You should prob let them all know that you know better, starting with Dick Cheney. Let him know he is wasting his money on bad management.
I am sure he will listen to you.
Inflation averages out to around 4% per year, so the stock market will always beat inflation.
The first phrase does not beget the latter. The stock market is a risk. Even your broker will tell you that past results are no guarantee of future performance.
What goes up, must come down.
darin
05-04-2007, 10:27 AM
I like the economy. :) My pay is 160% of what it was 5 years ago. Definately ahead of the cost of living...not counting gas prices. :(
loosecannon
05-04-2007, 10:32 AM
Such crashes have happened before, but they are the exception, rather than the rule.
No they are the rule.
>Panic of 1819 (1819 - 1824), the first major financial crisis in the United States.
>Panic of 1837 (1837 - 1843), a sharp downturn in the American economy caused by bank failures and lack of confidence in the paper currency
>Panic of 1857 (1857 - 1860), failure of the Ohio Life Insurance and Trust Co. bursts a European speculative bubble in U.S. railroads and loss of confidence in U.S. banks
>Panic of 1873 (1873 - 1879), economic problems in Europe prompt the failure of Jay Cooke & Company, the largest bank in the U.S., bursting the post-Civil War speculative bubble
>Long Depression (1873 - 1896), begins with the collapse of the Vienna Stock Exchange and spreads throughout the world. Some historians do not believe it is actually one large recession. It is important to note that during this period the global industrial production greatly increased. In the US for example, industrial output increased 4 times.
>Panic of 1893 (1893 - 1896), failure of the U.S. Reading Railroad and withdrawal of European investment leads to a stock market and banking collapse
>Panic of 1907 (1907 - 1908), begins with a run on Knickerbocker Trust Company stock October 22nd 1907 sets events in motion that will lead to a depression in the United States.
>Post-WWI recession - marked by severe hyperinflation in Europe over production in North America. Very sharp, but also brief.
>Great Depression (1929 to late 1930s, stock market crash, banking collapse in the United States sparks a global downturn, including a second but not heavy downturn in the U.S., the Recession of 1937.
>Post-Korean War Recession (1953 - 1954) - The Recession of 1953 was a demand-driven recession due to poor government policies and high interest rates.
>1973 oil crisis - a quadrupuling of oil prices by OPEC coupled with high government spending due to the Vietnam War leads to stagflation in the United States.
>1979 energy crisis - 1979 until 1980, the Iranian Revolution sharply increases the price of oil
>Early 1980s recession - 1982 and 1983, caused by tight monetary policy in the U.S. to control inflation and sharp correction to overproduction of the previous decade which had been masked by inflation
>Great Commodities Depression - 1980 to 2000, general recession in commodity prices
>Late 1980s recession - 1988 to 1992, collapse of junk bonds and a sharp stock crash in the United States leads to a recession in much of the West
>Japanese recession - 1991 to present, collapse of a real estate bubble and more fundamental problems halts Japan's once astronomical growth
>Asian financial crisis - 1997, a collapse of the Thai currency inflicts damage on many of the economies of Asia
>Early 2000s recession - 2001 to 2003: the collapse of the Dot Com Bubble, September 11th attacks and accounting scandals contribute to a relatively mild contraction in the North American economy.
loosecannon
05-04-2007, 10:34 AM
Loose leave the board unless you come to the queer marriage thread you big fucking pussy ass hypocrite you.
I OWN YOU!:laugh2: :laugh2: :laugh2:
Don't post anywhere else, your credibility is in tatters.
You don't own an idea.
Leave this board or stfu
loosecannon
05-04-2007, 10:37 AM
I like the economy. :) My pay is 160% of what it was 5 years ago. Definately ahead of the cost of living...not counting gas prices. :(
Then you have probably received a 20% pay cut in 5 years.
Since 2001 the prices of real estate, oil, gasoline, gold, silver, copper aluminum, steel have all doubled or more.
Real inflation since 2001 is likely 100% cumulatively measured.
darin
05-04-2007, 10:47 AM
Then you have probably received a 20% pay cut in 5 years.
Since 2001 the prices of real estate, oil, gasoline, gold, silver, copper aluminum, steel have all doubled or more.
Real inflation since 2001 is likely 100% cumulatively measured.
No - the cost of living is NOT 160% of what it was. Fuel is higher. My utilities are marginally higher. Food has stayed about the same...Housing costs have gone up - only because we bought a more-expensive house. Oil? Eh? I still pay $4/quart, same as always. :)
Hobbit
05-04-2007, 11:11 AM
No they are the rule.
>Panic of 1819 (1819 - 1824), the first major financial crisis in the United States.
>Panic of 1837 (1837 - 1843), a sharp downturn in the American economy caused by bank failures and lack of confidence in the paper currency
>Panic of 1857 (1857 - 1860), failure of the Ohio Life Insurance and Trust Co. bursts a European speculative bubble in U.S. railroads and loss of confidence in U.S. banks
>Panic of 1873 (1873 - 1879), economic problems in Europe prompt the failure of Jay Cooke & Company, the largest bank in the U.S., bursting the post-Civil War speculative bubble
>Long Depression (1873 - 1896), begins with the collapse of the Vienna Stock Exchange and spreads throughout the world. Some historians do not believe it is actually one large recession. It is important to note that during this period the global industrial production greatly increased. In the US for example, industrial output increased 4 times.
>Panic of 1893 (1893 - 1896), failure of the U.S. Reading Railroad and withdrawal of European investment leads to a stock market and banking collapse
>Panic of 1907 (1907 - 1908), begins with a run on Knickerbocker Trust Company stock October 22nd 1907 sets events in motion that will lead to a depression in the United States.
>Post-WWI recession - marked by severe hyperinflation in Europe over production in North America. Very sharp, but also brief.
>Great Depression (1929 to late 1930s, stock market crash, banking collapse in the United States sparks a global downturn, including a second but not heavy downturn in the U.S., the Recession of 1937.
>Post-Korean War Recession (1953 - 1954) - The Recession of 1953 was a demand-driven recession due to poor government policies and high interest rates.
>1973 oil crisis - a quadrupuling of oil prices by OPEC coupled with high government spending due to the Vietnam War leads to stagflation in the United States.
>1979 energy crisis - 1979 until 1980, the Iranian Revolution sharply increases the price of oil
>Early 1980s recession - 1982 and 1983, caused by tight monetary policy in the U.S. to control inflation and sharp correction to overproduction of the previous decade which had been masked by inflation
>Great Commodities Depression - 1980 to 2000, general recession in commodity prices
>Late 1980s recession - 1988 to 1992, collapse of junk bonds and a sharp stock crash in the United States leads to a recession in much of the West
>Japanese recession - 1991 to present, collapse of a real estate bubble and more fundamental problems halts Japan's once astronomical growth
>Asian financial crisis - 1997, a collapse of the Thai currency inflicts damage on many of the economies of Asia
>Early 2000s recession - 2001 to 2003: the collapse of the Dot Com Bubble, September 11th attacks and accounting scandals contribute to a relatively mild contraction in the North American economy.
I don't see any of these causing anything near the scale of the Great Depression, and being mere speed bumps to the financial apocalypse you seem to be predicting. Is there such a thing as good news to you?
loosecannon
05-04-2007, 11:33 AM
I don't see any of these causing anything near the scale of the Great Depression, and being mere speed bumps to the financial apocalypse you seem to be predicting. Is there such a thing as good news to you?
actually a few of those were pretty devastating. Feel free to check them out yourself.
Good news is fiscal responsibility, gold standard currency and federally owned central banks.
And it is Dick Cheney's financial advisor who is predicting a worldwide bubble collapse across all asset classes. (except perhaps select bonds)
Do your self a favor and read up about the carry trade and pay attention to the numbers. And check out the derivatives markets keeping a keen eye on the change in volumes beteen 2000 and today.
The increase in derivatives contracts is about $280 trillion since 2000.
Real estate worldwide has increased in value by approx $60 trillion dollars.
The carry trade has introduced approx $120 trillion in new debt since 2000.
Those three increases alone increase the "asset values" within those three classes by 260%.
Yet world GDP is only $46 trillion/year.
How did the asset value of the world grow more than $460 trillion in 7 years? (compare that number to the US annual GDP of only $13 trillion)
The asset value of the world has risen at least 100% since 2000, maybe closer to 200%.
THAT is a bubble. And that is what can collapse.
loosecannon
05-04-2007, 11:42 AM
No - the cost of living is NOT 160% of what it was. Fuel is higher. My utilities are marginally higher. Food has stayed about the same...Housing costs have gone up - only because we bought a more-expensive house. Oil? Eh? I still pay $4/quart, same as always. :)
Real estate almost double it's value in 2000, worldwide.
Oil has at least doubled since 2000
http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
I am not gonna do your research for you DMP, but if you really wanna know research the historic prices of copper, silver, gold, aluminum, steel, grains, real estate, gasoline etc and see for your self.
The only prices that haven't skyrocketed are the prices of imported manufactured goods.
darin
05-04-2007, 12:06 PM
Real estate almost double it's value in 2000, worldwide.
Oil has at least doubled since 2000
http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
I am not gonna do your research for you DMP, but if you really wanna know research the historic prices of copper, silver, gold, aluminum, steel, grains, real estate, gasoline etc and see for your self.
The only prices that haven't skyrocketed are the prices of imported manufactured goods.
Why do I care what Real-estate 'world-wide' has done? My 'cost to live' has not increased at even HALF the rate of salary increases...probably not 1/3, over-all. Mobil1 still costs about the same as it did years ago...Gas has almost doubled - on occasion, ups and downs...Natural Gas bills have been increased, because now we're heating a larger house; but we also use less of it thanks to better insulation...lots of things.
loosecannon
05-04-2007, 12:33 PM
Why do I care what Real-estate 'world-wide' has done?
because if you buy a house it will cost you twice as much.
My 'cost to live' has not increased at even HALF the rate of salary increases...probably not 1/3, over-all.
Then you haven't purchased a house in the last few years.
And your memory of oil and gas prices isn't too sharp.
Mobil1 still costs about the same as it did years ago...Gas has almost doubled - on occasion, ups and downs...
Oil has risen from $22.bbl in 1999 to $68/bbl in 2007.
Gas was $1.46/gallon in 2000. Now it is $3.79 for regular at the corner gas station.
darin
05-04-2007, 12:43 PM
because if you buy a house it will cost you twice as much.
No - It means I can afford only a smaller house than I could otherwise afford.
Then you haven't purchased a house in the last few years.
And your memory of oil and gas prices isn't too sharp.
3.5 years ago, in fact.
Oil has risen from $22.bbl in 1999 to $68/bbl in 2007.
Gas was $1.46/gallon in 2000. Now it is $3.79 for regular at the corner gas station.
I generally paid about $1.80 per, a few years ago...Gas was also 2.25 a few months ago. (shrug) Yesterday I paid $3.50
Right. Gotcha. No big deal.
gabosaurus
05-04-2007, 01:48 PM
The state of the economy depends very little on what party holds the White House.
loosecannon
05-04-2007, 02:00 PM
No - It means I can afford only a smaller house.
exactly.
Right. Gotcha. No big deal.
You are parsing.
gabosaurus
The state of the economy depends very little on what party holds the White House.
Only the budget deficit swings when the parties switch occupation of the oval office.
Psychoblues
05-05-2007, 12:15 AM
I hear what you are saying, hibbitt. But the facts and not your opinions are what count.
All of those are done through the use of force, as they require tax money, which is collected through the use of force, to accomplish.
I also challenge you on the Post Office and the VA. You're bringing 'cost' into it without including tax cost. Federal Express and UPS deliver packages and notes far faster and with far less risk of damage that the Post Office, and at less cost. As for letters, who uses those any more? We have e-mail.
On the VA, I know several veterans, and the VA system is terrible. It's not 'free' either, unless you spell free 'T-A-X.' It provides inferior care at a greater cost per patient, all paid for by the U.S. taxpayers.
As for sewage and water systems, yeah, once again, the reason the city can operate at lower cost is because they subsidize their own departments with tax money, eliminating the need to be profitable.
We could talk about this for a week or a month and you have your mind already made up. It took me a few years to get to the truths about all this so I don't disrespect you for your ignorance. I do, however, have no agreement whatsoever that you have done any research, have any personal experience or know one thing factual about anything you have had to say on this topic.
loosecannon
05-05-2007, 11:02 AM
We could talk about this for a week or a month and you have your mind already made up. It took me a few years to get to the truths about all this so I don't disrespect you for your ignorance. I do, however, have no agreement whatsoever that you have done any research, have any personal experience or know one thing factual about anything you have had to say on this topic.
iow par for the course.
avatar4321
05-05-2007, 12:00 PM
Yes, the economy is good. The fact that some people think we may have an economic downturn in the future doesnt mean the economy is any less good now.
Not to folks riding the false euphoria of a fake economic trajectory.
It would be much more cruel to say, enjoy the excellent economy.
Why would you wish to people to "enjoy" it?
Enjoy the "must come down" phase
Instead of rationally discussing this, it is as if you are happy that the world economy is in a bubble and will "pop" causing massive economic damage. Hence your smartass comment:
"enjoy" the must come down phase.
It is a lousy thing to wish someone to enjoy. Thats all.
Fountainhead
05-05-2007, 12:58 PM
because if you buy a house it will cost you twice as much.
No it won't.
The STATISTIC quoted was for the cost of housing "WORLDWIDE".
This is a FANTASTICALLY POSITIVE statistic. It means that the cost of the average Chinese suburban mud-hut has MORE than doubled in price as China moves toward a modern manufacturing economy. NIKE has increased the wages and standard of living for so many people, that they have BID-UP the price of mud-huts.
Increased housing prices in the US are the result of MOVE-UP buyers who have banked massive value $$$ in their homes. They are able to pay for newer, more luxurious homes. Developers, Contractors, and Financial Institutions WOULD NOT build higher-priced, more-luxurious homes IF there were not viable market for them. It is WEALTH (and in some limited cases: creative financing) that moves housing prices forward.
This principle is very similar to Multi-millionaire Hollywood stars and Corporate Heads moving to Vail Colorado. They have BID-UP the price of a limited supply of housing and land to the point where mere mortals couldn't afford a mud-hut at this exclusive ski resort.
Too bad that I didn't buy property in Vail in 1978
If I did ... I would be a multi-millionaire
loosecannon
05-05-2007, 01:08 PM
Developers, Contractors, and Financial Institutions WOULD NOT build higher-priced, more-luxurious homes IF there were not viable market for them.
actually they did. New home starts didn't fall until well after demand for new homes began to fall. The explanation was that the building projects were already in progress when demand began falling and the projects continued.
loosecannon
05-05-2007, 01:11 PM
Why would you wish to people to "enjoy" it?
Instead of rationally discussing this, it is as if you are happy that the world economy is in a bubble and will "pop" causing massive economic damage. Hence your smartass comment:
"enjoy" the must come down phase.
It is a lousy thing to wish someone to enjoy. Thats all.
No I just get sick of people who don't know much about what really IS happening to the economy repeat the party driven line that the economy is great.
Not nearly enough people are willing to address the tough issues because they are high on the bubble.
And those people are gonna be the cause of the distress when that bubble eventually corrects.
They are literally wishing disaster upon themselves.
Hobbit
05-05-2007, 01:14 PM
actually they did. New home starts didn't fall until well after demand for new homes began to fall. The explanation was that the building projects were already in progress when demand began falling and the projects continued.
Thus is the nature of economic trends. Knowledge of this trend and calculus made Sam Walton rich, as he slowed his supply of products when the rate at which the deman was increasing started decreasing. It'll lead to some houses being sold for less than they're really worth (clearance sale) and some people will lose some money, and then the world will keep spinning.
Edit: The economy is great. The thing you seem to be getting at...poorly...is that there will be good times and bad times, and that if you were smart, you'd use these good times to prepare for the bad rather than just assume it will always be good.
Fountainhead
05-05-2007, 02:26 PM
Some financial guru says that stocks are "overbought" ?
Sounds very much like Alan Greenspan during the dot.bomb era when he coined the term Irrational Exuberance to describe the ridiculously overbought NASDAQ
The crash of the FAKE Clinton economy will not be replicated by this stock market. The FAKE Clinton stock market was driven by pension funds being poured into LONG-SHOT bets in companies that had yet to turn a profit ... let alone even bring a product to market. What the financial genius, Clinton, termed "The New Economy". It was a total FRAUD ... like Clinton.
My diversified portfolio of stocks which spans multiple sectors of the economy including international stocks, is vested in SOLID companies that turn profits, along with agressive small and mid cap companies with REAL prospects for the future.
My home is in an exclusive upper middle class enclave where prices have stabilized in the past ... but NEVER retreated. And I have had to sacrifice and work hard to stay here and pay the usurious property taxes.
My financial decisions have always been conservative and sound, building a solid foundation for my family without incurring undue risk.
I will NEVER be unemployed because I have a solid educational background, I have continued my education, and built marketable skills that will always be in demand.
zefrendylia
05-05-2007, 02:58 PM
I like the economy. :) My pay is 160% of what it was 5 years ago. Definately ahead of the cost of living...not counting gas prices. :(
"A horse with blinders, only sees where his master wants him to go."
-zefrendylia
I know this post is on the stock market but since we've hit the subjects of jobs I thought I'd chime in:
Loss of Jobs in America
Paul Craig Roberts secretary of treasury to Ronald Reagan
Wednesday, Nov. 12, 2003
...
Only a few of the 116,000 private sector jobs created in October provide good incomes: 6,000 new positions in legal services and accounting – activities that reflect corporations gearing up to protect their top executives from Sarbanes-Oxley.
The remainder of the 116,000 new jobs consist of temps, retail trade, telephone marketing, and fund raising, administrative and waste services, and private education and health services.
Physicians' offices hired 9,000 people to cope with Medicare and insurance company paperwork. Nursing and residential care facilities hired 5,000, childcare services hired 6,000, and hospitals hired 3,000.
Many of the new jobs do not pay enough to support a family. The temp and retail jobs are 40 percent of the total.
All of the new jobs are in services. None of the new service jobs are capable of producing export earnings to bring balance to our massive trade deficit.
Jobs capable of producing tradable goods and services continue to be lost at a rapid rate. In the last three months, the United States lost 91,000 manufacturing jobs.
Computer jobs have disappeared. In Tampa, San Antonio, Seattle and California, office buildings are closed that a few years ago contained tens of thousands of computer engineers. People who in 2000 were making between $60,000 and $100,000 annually cannot today find jobs.
On Nov. 3, CBS News reported: "U.S. October layoffs surge 125 percent." Layoff announcements from U.S. companies more than doubled in October to 171,874, the highest in a year according to the outplacement firm Challenger Gray & Christmas. In October, the auto industry sacked 28,000 workers and telecommunications companies cut 21,000 jobs.
...
The United States is already a heavy energy importer with a serious trade deficit. The economic development projected for Asia means a huge increase in world energy consumption. Unlike the United States, Asian economies have export surpluses with which to pay their energy bills.
It is possible that the loss of American jobs in tradable goods and services, combined with the importation of massive numbers of poor people, will leave the United States without the means to purchase its energy needs in world markets. When the dollar's value is undermined by budget and trade deficits, energy prices for Americans will explode.
A country that substitutes foreign labor for its own domestic labor via outsourcing, offshore production and Internet hiring, a country that transfers its wealth to foreigners to pay for imports, a country that fills up with welfare-dependent multitudes while it squanders $200 billion in Iraq is a country headed for Third World status.
Some industry experts argue that the United States has lost so much of its core industrial capability that advanced manufacturing skills are disappearing in this country. The United States lacks mass production ability in critical areas of high-tech manufacturing.
The United States assembles parts made elsewhere. Knowledge- and capital-demanding activities, such as charge-coupled devices, industrial robotics, numerically controlled machine tools, laser diodes and carbon fibers, are passing out of U.S. hands.
A service economy has less to export than a manufacturing economy. What will the United States sell abroad to pay for its energy and manufacturing imports? [editorial note: hint--arms]
We are currently paying for our imports by giving up the ownership of our companies, real estate, and corporate and government bonds. Once the United States has spent its wealth, we will have no way to pay for the energy and manufactured goods on which we have become import-dependent.
While the once fabulous U.S. economy erodes, the hapless Bush administration thinks its most important goal is to waste American lives and massive sums of money to force "democracy" on Middle Eastern peoples who do not want it.
-----------------
Oh, don't worry--it gets worse in 2004, 2005, 2006...
zefrendylia
05-05-2007, 03:18 PM
U.S. Heading For Financial Trouble?
Comptroller Says Medicare Program Endangers Financial Stability
60 Minutes, 4 March 2007
...
"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility," Walker tells Kroft.
David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.
"I'm going to show you some numbers…they’re all big and they’re all bad," he says.
So bad, that Walker has given up on elected officials and taken his message directly to taxpayers and opinion makers, hoping to shape the debate in the next presidential election.
"You know the American people, I tell you, we've been to 13 cities outside of Washington with the fiscal wake up tour. They are absolutely starved for two things: the truth, and leadership," Walker says.
He calls it a fiscal wake up tour, and he is telling civic groups, university forums and newspaper editorial boards that the U.S. has spent, promised, and borrowed itself into such a deep hole it will be unable to climb out if it doesn’t act now. As Walker sees it, the survival of the republic is at stake.
"What’s going on right now is we’re spending more money than we make…we’re charging it to credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous," he told the editorial board of the Seattle Post Intelligencer.
...
"Well, those days are gone. We've gone from surpluses to huge deficits and our long range situation is much worse," Walker says.
"President Bush would argue that the economy is in pretty good shape, unemployment is down, the deficit is actually less than expected," Kroft remarks.
"The fact is, is that we don't face an immediate crisis. And, so people say, 'What's the problem?' The answer is, we suffer from a fiscal cancer. It is growing within us. And if we do not treat it, it could have catastrophic consequences for our country," Walker replies.
The cancer, Walker says, are massive entitlement programs we can no longer afford, exacerbated by a demographic glitch that began more than 60 years ago-- a dramatic spike in the fertility rate called the "baby boom."
...
Part of the problem, Walker acknowledges, is that there won't be enough wage earners to support the benefits of the baby boomers. "But the real problem, Steve, is health care costs. Our health care problem is much more significant than Social Security," he says.
Asked what he means by that, Walker tells Kroft, "By that I mean that the Medicare problem is five times greater than the Social Security problem."
The problem with Medicare, Walker says, is people keep living longer, and medical costs keep rising at twice the rate of inflation. But instead of dealing with the problem, he says, the president and the Congress made things much worse just three years ago when they expanded the Medicare program to include prescription drug coverage.
"The prescription drug bill was probably the most fiscally irresponsible piece of legislation since the 1960s," Walker argues.
Asked why, Walker says, "Well, because we promise way more than we can afford to keep. Eight trillion dollars added to what was already a 15 to $20 trillion under-funding. We're not being realistic. We can't afford the promises we've already made, much less to be able, piling on top of 'em."
With one stroke of the pen, Walker says, the federal government increased existing Medicare obligations nearly 40 percent over the next 75 years.
"We’d have to have eight trillion dollars today, invested in treasury rates, to deliver on that promise," Walker explains.
Asked how much we actually have, Walker says, "Zip."
So where's that money going to come from?
"Well it's gonna come from additional taxes, or it's gonna come from restructuring these promises, or it's gonna come from cutting other spending," Walker says.
He is not suggesting that the nation do away with Medicare or prescription drug benefits. He does believe the current health care system is way too expensive, and overrated.
"On cost we're number one in the world. We spend 50 percent more of our economy on health care than any nation on earth," he says.
"We have the largest uninsured population of any major industrialized nation. We have above average infant mortality, below average life expectancy, and much higher than average medical error rates for an industrialized nation," Walker points out.
...
You’re probably expecting to hear from someone who disagrees with the comptroller general’s numbers, projections, and analysis. But hardly anyone does. ...The only dissenters seem to be a small minority of economists who believe either that the U.S. can grow its way out of the problem, or that Walker is over-stating it.
...
"Unfortunately they don't get it. I don't know anybody who has done their homework, has researched history, and who's good at math who would tell you that we can grow our way out of this problem," Walker replies.
Federal Reserve Chairman Ben Bernanke validated much of Walker's take on the situation at congressional hearings this year, and so did ranking Republicans and Democrats on the Senate Budget Committee. Senator Kent Conrad of North Dakota is the Chairman.
Sen. Conrad thinks David Walker is "providing an enormous public service."
Asked if he agrees with Walker’s figures and his projections, Sen. Conrad says, "I do. You know, I mean we could always question the precise nature of this projection or that projection. But, that misses the point. The larger story that he is telling is exactly correct."
...
Asked if he thinks taxes should be raised, the senator says, "I believe first of all, we need more revenue. We need to be tough on spending. And we need to reform the entitlement programs … we need to do all of it."
But he admits he doesn't think there's a consensus for raising taxes.
"Any politician who tells you that we can solve our problem without reforming Social Security, Medicare, and Medicaid is not telling you the truth," Walker told an audience at the University of Denver.
Over the next year, the nation’s top accountant will be traveling to the early primary states, telling voters that we need to begin raising taxes or government revenues and put a cap on federal spending if we want to maintain our economic security and standard of living.
"If you tell them the truth, if you give them the facts, if you explain this in terms of not just numbers but values and people, they will get it and empower their elected officials to make tough choices," Walker argues.
...
------------
Sorry for the long post--but hey, the more you know, the more you grow:coffee:
Fountainhead
05-05-2007, 03:35 PM
U.S. Heading For Financial Trouble?
Comptroller Says Medicare Program Endangers Financial Stability
60 Minutes, 4 March 2007
...
"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility," Walker tells Kroft.
David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.
Over the next year, the nation’s top accountant will be traveling to the early primary states, telling voters that we need to begin raising taxes or government revenues and put a cap on federal spending if we want to maintain our economic security and standard of living.
their elected officials to make tough choices," Walker argues.
...
------------
Sorry for the long post--but hey, the more you know, the more you grow:coffee:
Yes. The MORE you know the more you grow. Here is what I NEEDed to know from your post.
1. Political bias: Anyone who starts an "economic" article with a weird, disjointed reference to Osama bin Laden and the War on Terror in Afghanistan has already revealed his EXTREMIST BIAS
2. 60 Minutes: Give me a break. EXTREMIST BIAS from the network that gave us Dan Rather and FAKE military documents about Bush's military service
3. Inconvenient missing information: Never once do we learn the EXTREMIST POLITICAL affiliation of this lifelong government worker.
4. Lifelong government worker: Enough said. He feeds at the public trough and wants more.
5. Raise Taxes: This is the "conclusion" of our nations "top accountant" RAISE TAXES. He is on the road ginning-up his DESIRE to RAISE TAXES.
6. Cut the military: Isn't this the TRUE MOTIVATION of his BIASED ATTACK on this administration ? Isn't this why he/60minutes started the article with a snotty reference to NOT having been able to FIND Osama bin Laden.
Try to read ... for CONTENT. Then you will become truly free, and truly grow.
zefrendylia
05-05-2007, 04:45 PM
Yes. The MORE you know the more you grow. Here is what I NEEDed to know from your post.
1. Political bias: Anyone who starts an "economic" article with a weird, disjointed reference to Osama bin Laden and the War on Terror in Afghanistan has already revealed his EXTREMIST BIAS
2. 60 Minutes: Give me a break. EXTREMIST BIAS from the network that gave us Dan Rather and FAKE military documents about Bush's military service
3. Inconvenient missing information: Never once do we learn the EXTREMIST POLITICAL affiliation of this lifelong government worker.
4. Lifelong government worker: Enough said. He feeds at the public trough and wants more.
5. Raise Taxes: This is the "conclusion" of our nations "top accountant" RAISE TAXES. He is on the road ginning-up his DESIRE to RAISE TAXES.
6. Cut the military: Isn't this the TRUE MOTIVATION of his BIASED ATTACK on this administration ? Isn't this why he/60minutes started the article with a snotty reference to NOT having been able to FIND Osama bin Laden.
Try to read ... for CONTENT. Then you will become truly free, and truly grow.
Thanks for the tip, but I think you mean "try to read for liberal bias." What ever the author's political views, I would suggest that you try and argue that the statistics he uses are faulty in making his argument. Next, so CBS made an error, does that invalidate any more news they put forth? Wouldn't that ding in their reputation force them to be more scrupulous with verifying their sources? Let me know if you want a list everytime FOX News has misrepresented the facts. Third, if you can prove that the comptroller is affiliated with an "extremist political group," then by all means... But again, you are attacking the messenger without analyzing the issue--or content if you will. Fourth, your irrational assumption of government workers is another attack on the messenger and not the message. If you actually read the article and understood it instead of understanding only what you want to believe, you will realize that the comptroller is simple advising the government to implement rational fiscal policy--and not asking for a bigger budget. Thank you for clearly showing your extreme bias: never raise taxes and keep spending extravagantly on the military, even at the detriment to the future of our country. You may think you're secure with great job skills, a nice house, and superior investment skills and you're right. But what you don't understand is that our society and economy are intertwined. When things start crashing all around us, all the money and gated communities in the world will not keep you protected from the angry hungry masses at your doorstep.
loosecannon
05-05-2007, 08:06 PM
Yes. The MORE you know the more you grow. Here is what I NEEDed to know from your post.
1. Political bias: Anyone who starts an "economic" article with a weird, disjointed reference to Osama bin Laden and the War on Terror in Afghanistan has already revealed his EXTREMIST BIAS
2. 60 Minutes: Give me a break. EXTREMIST BIAS from the network that gave us Dan Rather and FAKE military documents about Bush's military service
3. Inconvenient missing information: Never once do we learn the EXTREMIST POLITICAL affiliation of this lifelong government worker.
4. Lifelong government worker: Enough said. He feeds at the public trough and wants more.
5. Raise Taxes: This is the "conclusion" of our nations "top accountant" RAISE TAXES. He is on the road ginning-up his DESIRE to RAISE TAXES.
6. Cut the military: Isn't this the TRUE MOTIVATION of his BIASED ATTACK on this administration ? Isn't this why he/60minutes started the article with a snotty reference to NOT having been able to FIND Osama bin Laden.
Try to read ... for CONTENT. Then you will become truly free, and truly grow.
First of all the comptroller in question is the head of the US General Accounting Office.
Second he has delivered the same message dozens of times in the last few years. He has been described as being on a mission to warn policy makers and citizens of a VERY significant shortfall in unfunded liabilities that will dwarf the national debt shortfall.
AND he is the leading authoritative expert to have such knowledge.
The GAO is considered the most trustworthy dept in the entire federal gummit.
Try to get real
loosecannon
05-05-2007, 08:13 PM
Some financial guru says that stocks are "overbought" ?
NO, you pretty much missed the whole barn.
The DowJones stocks are probably the ONLY asset class that isn't in a bubble, or much of one. The stock market has barely recovered in 6 years whereas virtually every other class of investment has skyrocketed in price but not value necesarily.
You didn't read the article did you?
My diversified portfolio of stocks which spans multiple sectors of the economy including international stocks, is vested in SOLID companies that turn profits, along with agressive small and mid cap companies with REAL prospects for the future.
My home
THESE are some of the assets that are "overbought". The ones you think are safe.
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