amanda more

Why did you direct your post toward me when nothing you said related to what I posted?

 

 

Below is how I experience exchanges with you, Jackson:

 

You: It was hotter in my town today than it ever has been.

Me: How hot was it? What type of thermometer was used, and how do the readings compare to historical temperatures?

You: I don't know why you're asking about the history of thermometers, but here's a wiki link which says animals often have eye lashes, and Obama is a crazy marxist nazi muslim socialist who hates business.

He is pulling links from emails he gets or "he" is more than one person.

I have met people who run a social media company who pay people and get paid to go into sites and add content. They usually talk about the latest style jeans but I can imagine it is a part of "social media strategy" for politicos too. The more links you add the more you get paid.

The Tea party is well funded so I can see his laundry list of links could be paid for by them. His inability to respond to anyone else's input doesnt bode well for someone who cares to use forums to think and respond.

So is the reason no one cares and/or cares to examine the huge number of food insecure children what? Here the facts get in the way of what? I am truly asking. It mystifies me that so little concern during a recession perhaps depression is turned towards this. Why?

March 25, 2011 "GDP growth was revised up from 2.8 percent at an annual rate to 3.1 percent"

http://www.esa.doc.g...s-bouncing-back

 

June 24, 2011 "U.S. 1Q GDP Growth Revised Up to 1.9%"

http://www.foxbusine...-edges-up-to-1/

The first article show a revising up from a revising down so a net revising down. I guess if there is unscientific skewing I am ok with "erring on the side of caution" and not saying it is a smidgeon worse than it is. I do stand kind of corrected because I was following by hearing media instead of going to the source.

GDP from the source http://www.bea.gov/newsreleases/glance.htm

:

The graph doesnt look good to me. I hate it that they dont date their pages so dont know if this is current revision.

Reason: Stimulus had a huge effect enriching Washington DC drawing college graduates which has skewed the attitudes of people who run us causing them to talk of ridiculous stuff because reality of the country is so easy to ignore. That does not bode well for the future economy when the tiny minority by wealth and geography gives no consideration of the rest of us. It is like Detroit executives sitting in Michigan happy physically seeing SUV's and ignoring the land of Toyotas and Hondas like LA.

Have you noticed this thing that they revise the previous quarters and months and it is always down? If the wrong numbers were totally random one would think some revised up - some down.

The news media doesnt splash it that the first quarter GDP was revised down recently. I guess play it rosy until you cant.

So now the news media does find it necessary to publicize the bad jobs numbers. Was it so the debt fiasco wouldn't immediately crumble everything?

There was the rosy consumer price report but commentators admitted half was inflation. If that then gets revised will it be so distorted as a rosy report was actually zero growth and only inflation? Is stagflation totally here and has been?

In the paper last week they said the actual counties with food insecure children. I can't believe a third of the kids look at bare shelves some of the month.

The politicians make money while in office. We have corporate welfare- wall street, military-industrial welfare- Lockheed Martin etc. and now career politico welfare.

All we will here about is the mythical welfare queen driving a cadillac. A third of the children feel hunger at least part of a month.

Reason Parents are too discouraged looking at hungry kids to vote for the right people and so the system crashes around our heads taking the stock market with it. All the while rosy reports feed the media beast until it can't anymore.

The threads about food shortages in the political forum, bring up the fact that there is a connection between government and our food supply. There is also a connection between food and our economy, and between food and international national relationships.

 

And we might want to improve the connection between science and voters, because just hoping the future won't be as bad as some say, is not highly responsible, and as self governing people, perhaps we should be more responsible? While those arguing against fear mongering have made a good point too. Running around like chicken little crying the sky is falling, is not helpful either. However, what are the politicians doing about our food supply and what might you say to a representative, or for whom might you vote, or what meant information you might give others on the Internet?

 

This is a link for the US Farm Bills. Hopefully others will add information regarding food supply and the politics of other countries.

 

http://www.nationala...g/farmbills/#08

I met the activist founder of Food not Bombs hanging out in a coffee shop. No matter if only a penney that makes its way to the consumer, subsidizing food for food even for the big guys has to assist prices. Subsidizing for ethanol wouldn't. Should this ever pan out where say grass can be used economically then it will help lower prices in the future- I'd say far future like 20 years. The poor are then subsidizing a research project and starving. There has to be a lot of 15 year old active growing boys that are hungry as they need 4800 calories. To feed them in the "food wars" method of greens etc. costs $48 a day. Not happening. I wrote a super simple book "Eating on $1" in amazon that merely called out prices and calories. Oddly revolutionary, I suppose. Those on the left don't want to think a teenager needs empty calories and those on the right think $7 a day is a huge program and superfluous even as more children have fallen into poverty just as prices have risen. Everyone is ignorant that the Clintons were successful. Except for droves of people that recently found that "no safety net" means no cash for heating/cooling, a roof over the head and gas to go to food banks. By getting that whopping $7 per kid families have squeaked by. The single guy who has no work? I guess he could try thumbing a ride to and from a food bank. Unlike food stamps which he needs disability for he will only get $30 worth and so cant spend gas to get to and from. The book shows that since 1600 calories of rice is like 60 cents it is possible to get calories. One would still die on that. Exceedingly simple science shows- food costs money. But not particularly a talking point for anyone in politics today.

Uhmm... Hurricanes? On topic, how exactly?

Normally, no, but if it goes over Wall Street . . .

I would think traders will be royally bummed. I wonder if Wall Street has had a force one hurricane ever. It depends if it just skirts the Carolinas which is what they are predicting.

Unlike Houston watch how no one leaves. Much more intense than a mere stock market. Now is the time for many to leave for an early weekend as long as it is somewhere on high ground. I guess they would close the market Monday if it hits.

Andrew because insurance was solvent paid money into the economy. Expensive areas I wonder if they have flood protection. The terms infuriate me. Landfall is for the eye- they should call it eyefall. Storm force winds can hit hours before for slow moving storm. Storm surge of ten feet sounds like it is ten feet further up on to the beach. Think the tsunami in height and coming in at a hundred miles an hour. Just call it tidal wave all along.

If people get accustomed to these things then they can work to save lives.

I suppose it will be federal flood insurance. Most of the world's population lives near an ocean.

One the plus side maybe it will flood those darn trading computers . . . . . .

You still haven't come up with convincing reasons why one should expect a 50% decline. But, even under the assumption that one might occur, why would it be any different than the 50% drop we saw in 2008/2009? i.e. a recovery of almost all of the drop over the course of several months? If I'm not in the market, I lose the opportunity for all that gain. I'm not buying stocks when they are the cheapest. My dividends are nonexistent, and don't get reinvested on the cheap.

 

What do I do with my newly-expanded cash position? Where can I get more than a percent or two return on it? I've seen the crash of '87 and the one after the new millennium/9-11 in addition to the housing bubble crash. The market recovered each time. My investing horizon is longer than the next year or two. If it wasn't, I shouldn't be in stocks.

A big problem with statistics is that one has to have sufficient time for the 6% to come about. Oddly enough a lot of retired people appear to have latched on to the market as a substitute for a job. Often, even an 85 year old has trouble seeing his days as numbered. So, despite that the age percent thing has been widely publicized there are lots of seniors with all their savings/retirement in the stock market. Many younger people have been able to use their retirement dollars in a last ditch effort to live on some cash once they are unemployed.

Will Rogers once said, "I'm not concerned with the return on my money, just the return of it."

Aunt Mable wouldn't be riding a rollercoaster with her lifesavings.

You may have no relatives like this. I would invite you to consider bringing it up in conversation. I've gotten "I don't have stocks." " Then so you haven't used a 401k or IRA?" "Well yes I have one but I don't think about it"

 

 

 

That's why we have the FDIC, which sort of makes the rest of your hypothetical scenario non-reality based.

"So, this basically brings us back to what was said on page 1 of this thread. Folks like you should probably avoid getting into the stock market at all if you're not comfortable with the risks or feel you don't have adequate information to make intelligent decisions."

Intelligent decisions one would think would include simple contingency theory. A little arithmetic is beyond the average investor? It is challenging for many to think of the common language mentioned above. The question here is what risk and how much and quantifying it. So, slightly tongue in cheek:

Reason : Those who resist simple contingency planning using simple arithmetic should be avoiding the risk of a dime due to their inability to have a clear-eyed view of risk. Since few do, it endangers the stock market with more highly intense emotion causing crashes.

P.S. Just heard Libyan liberation of Tripoli

I

 

1) Is the fact that they didn't mention (during this 20 minute program focused on larger issues and concerns about growth) that it's a good idea not to withdraw your money from the market until it picks back up somehow supposed to be relevant to anything I've said?

 

2) Are you now advocating that people should withdraw from the market and sell during this time when they'll have the lowest possible return for those assets?

 

 

1)I am first just kind of observing. Hypothesizing.

2)Mathematically a 20% grab from an individual's stocks that will have a realized loss is a risk that I am advocating is acceptable. At a crash of 50% then the savings is much more precious than the perceived loss. What you paid and what the stock is currently worth are two different things.

Let's say there is a run of a bank. Would anyone have advocated that people do a run on a bank? Would they rather the government have prevented it? Observing similar to a natural event, can it be described and analyzed?

This is like a run on the bank. Sensible people could have prevented this to begin with. Our government could have prevented it but paralysis appeared to be a political tactic.

So it is two very different questions.

-Aunt Mable wonders if she should go down and be first in line otherwise she will lose everything and come live with you.

-One advocates that everyone suddenly do a run on a bank.

As similar as they appear there is some thorniness. One friend said bank runs are illogical. But for Aunt Mable to go get in line is very logical. Is she being then irresponsible? If she has little Elroy to take care of she would be irresponsible not to try to get her money to feed him?

As collective advice is it irresponsible and illogical?

This I truly advocate: At 7-11 for state lotteries- on the ticket:

"This is gambling. For every $1 you wager you will get back 50 cents in the long run"

Business programs instead of "past returns are no guarantee of future profits"

"The stock market is gambling. You can lose all the money invested in stocks."

More than Truth in Lending why must we as a culture go through these experiences over and over? The main thing I advocate is increased truth telling. Or rather attempts at truth telling. Constant daily truth telling works a lot better than a sudden shock that deepens losses. In the example they are now saying there is a recession coming. Others have said a second recession has to be a depression because there aren't scenarios for getting out of it.

http://video.pbs.org/video/2099556994

It was late at night so maybe I did dream some of it. For this show we have actually a lack of a pundit saying :stay the course.

Now if they had always had shows that had clear disclaimers instead of gobblygook bizspeak then it wouldn't be so startling.

Surprising Morgan Stanley warns of a depression but maybe they are preventing lawsuits. Surprised this is associated with Forbes connection no less:

http://www.forbes.com/sites/joshuabrown/2011/08/19/ten-rules-for-surviving-a-market-crash/

Reason: Once no one will step forward with the usual calming "everything will be allright speech" on Biz programs then the market really tanks. All along if more realistic programs cautioned and emphasized the betting nature of the stock market there would have been a more ethical approach and there wouldn't be such a strong shock when it comes causing an even worse market.

Primarily when that viewpoint is unsupported by evidence, based on a flawed non-representative sample, and biased heavily toward "OMG! THE SKY IS FALLING!!!!1!!2!one!!."

 

 

The challenge I think, amanda, is that you're stopping with the first and never getting to the second. You instead cycle back to postulating cause after cause after cause without ever scrutinizing them for validity.

 

 

 

I believe there is a bit of delusion and lack of self-awareness here. You have been many things, but objective is not one of them. Further, the accusation of fear mongering was hardly immediate.

Perhaps this is oversimplification. Assuming the stock market is crashing- why is that? I invite to somehow sanitize this with a different thread to prevent any lively misinterpretation as fear mongering.

Most scientific thoughts do have an emotional component of fear. Global warming etc. anyone? The intent here for myself is to counter the staid pundits populating conventional airwaves. Challenged to stay on topic it could be found here. In that venue perhaps any negative truth telling should be examined for the fear factor. This forum doesnt have millions watching.

Perhaps for those who have missed the intent. My longstanding interest in economics and some history has always made me ponder the multifactorial causes of The Great Depression.

Most almost intensely have accused me of deep thought and almost brutal objectivity. Perhaps an advantage to a cyber life is to step away from one's true self.

Hindsight is 20 20. Weather predictions are 100% as the hurricane is overhead. This is an attempt to see reality in real time.

Only an attempt.

Reason: Reality is tough and the realization of the then pure arbitrariness of their fate and especially the stock market has effected outlooks of traders and consumers alike. All it takes is one example of precarious situations like the debt ceiling debacle to call attention to the possible downside. It is surprising because this downside discussion is generally avoided in the media and even in online social media.

Why should I assume the market is crashing? That's your thesis. You support it.

 

Media conspiracy to keep investors in the market? I don't find that convincing.

"Media conspiracy to keep investors in the market? I don't find that convincing."

So one might be able to guess that viewers of stock market programs generally have stocks in the stock market and have not exited their position in stocks. Pundits who advocate exiting of positions don't increase viewership do to people getting away from stocks and are very rare on the airwaves. Shows are compelled to produce say two reasons but they interview an "expert" who presents the oddly rosy view with more airtime.

This is an if then statement

If the stock market was to crash then what would be the causes.

(note The fine print said- assuming it is.)

Can you consider the highly negative viewpoint that the stock market is in the process of crashing and hypothesize and consider some reasons. The thesis is therefore -not- is the stock market crashing?

There may be a tendency to believe that picking only one reason has some kind of a benefit. Currently a simple turn of the dial on any day can have one hear multiple things. Economics is multifactorial. So this reminds me of a reason.

Reason: As markets decrease on any one day the public is actually exposed to reasons for each individual fall usually a short two reasons. This is unable to be counteracted by the usual long talk by a pundit again saying that investors have to take a long view. At some point negative assertions however do weigh on the psyche of investors even if it is always multifactorial and they feel a chance of a bear market is more likely.

You first*. I've been practically begging you to present an argument more involved than hand-waving to support your position, but all I've seen so far is fear-mongering.

 

 

I've been practically begging you to address the topic at hand and assuming the stock market is crashing, the reasons that could end up being the cause. Negating others forays into odd repetitive rhetoric however exacting does not address the question. In a science forum since when is taking a viewpoint to establish some reasons suddenly fear mongering? Postulate a cause- see if it holds up. You have done some of it but I have been modeling a reply then a short sentence. One reason that media keeps parroting (as long as you dollar cost average etc) to the individual investor is to keep them in the market which increases viewership.

Reason: Those who take an objective approach to reasons regarding stock market and economic downsides are immediately accused of fear mongering which tends to decrease intellectual activity and deludes participants into making bad decisions. This heightens swings as truth has a hard time being denied and provides more energy for crashes.

Support of my position? The above post.

Then there's what Hoover actually believed/espoused in his writings:

American Individualism by Herbert Hoover

[/size][/font]"In our individualism we have long since abandoned the laissez faire of the 18th Century—the notion that it is "every man for h. We have also learned that fair division can only be obtained by certain restrictions on the strong and the dominant.…"

Memoirs; The Origins of the Depression

"Two schools of thought quickly developed within our administration discussions. First was the 'leave it alone liquidationists' headed by Secretary of the Treasury Mellon, who felt that government must keep its hands off and let the slump liquidate itself.

 

But other members of the Administration...believed with me that we should use the powers of government to cushion the situation. To .

 

The record will show that we went into action within ten days and were steadily organizing each week and month thereafter to meet the changing tides—mostly for the worse. In this earlier stage we determined that the Federal government should use all of its powers:

 

 

 

And there's his acutal record, which contradicts many of the statements you quote:

• Hoover advocated a strict laissez-faire (hands-off) policy dictating that the federal government should not interfere with the economy - Nope, rejected by his administration rather early, and he is on the record as early as 1922 in denouncing laissez-faire policy. With his industrial labor program he convinced business leaders to maintain or raise wages and provide for work-sharing by promising them safety from union pressure in return. He proposed a new department of education, a monthly stipend for seniors, and provided an enormous increase in farm subsidies. Then there's that massive tax increase I mentioned earlier. I could go on. These are not the actions of someone who advocated a strict laissez-faire policy.
• Hoover might have been able to dampen the effects of the depression by using the federal government's authority to establish financial regulations and provide direct relief to the unemployed and homeless.However, Hoover continued to adhere rigidly to his hands-off approach. - From wiki: He advocated tax reduction for low-income Americans (not enacted); doubled the number of veterans' hospital facilities; wrote a Children's Charter that advocated protection of every child regardless of race or gender; proposed federal loans for urban slum clearances (not enacted); advocated $50-per-month pensions for Americans over 65 (not enacted); chaired White House conferences on child health, protection, homebuilding and home-ownership.

 

Hoover was a progressive Republican, whose policies had more in common with today's Democratic party than those you would call "Hooverists"

 

So Hoover wasn't a Hooverist?

a) to avoid the bank depositors' and credit panics which had so generally accompanied previous violent slumps;

Bush did this

(b) to cushion slowly, by various devices, the inevitable liquidation of false values so as to prevent widespread bankruptcy and the losses of homes and productive power;

Cushion slowly- in a plummeting market

© to give aid to agriculture;

this was now what 30% of the economy?

(d) to mitigate unemployment and to relieve those in actual distress;

except he kept believing being strong would do the trick

(e) to prevent industrial conflict and social disorder;

Many places became a police state over riots over bread

(f) to preserve the financial strength of the United States government, our credit and our currency, as the economic Gibraltar of the earth—in other words, to assure that America should meet every foreign debt, and keep the dollar ringing true on every counter in the world;

Again, wait for a war to spend because I am only the measure of my bank account

(g) to advance much-needed economic and social reforms as fast as could be, without such drastic action as would intensify the illness of an already sick nation;

drastic oooh G. forbid

(h) to sustain the morale and courage of the people in order that their initiative should remain unimpaired, and to secure from the people themselves every effort for their own salvation;

constantly tell people it was their own fault

(i) to adhere rigidly to the Constitution and the fundamental liberties of the people.

we hear this especially from the oligarchy

I suppose the discomfort of great grandfathers got passed down to the current crop of believers. Far be it from me to particularly disparage your honored ancestor but it isn't any better than the "old wives tales" except "old husbands tales" History says different

swansont; Markets are driven by people or people representing others, we're talking hundreds of millions that have or are taking risk with their money. To even infer their general sentiment is somehow an overreaction seems a bit ludicrous to me.

 

Not trying to change the "goal post", we are a World Economy and what effects one can have a devastating chain reaction around the World, the most vital chain being the US. We effectually now have a 16.8T$ debt, just to get by fiscal year 2012, with estimates up to 24T$ by 2024, total unfunded liabilities about 115T$ TODAY, with a National Revenue that will possibly hit 2.4T$ this FY and your discussing or advocating, there is no problem, WE NEED TO SPEND MORE. I'm sorry this just won't calculate, in my mind.

 

http://www.usdebtclock.org/

 

We have an actual unemployed of 24M, major problems/obligations in the Middle East and on our Southern Border and at any moment one or more of four to six major EU members could default, where dozens of US Financial Institutions can be badly hurt, while Congress is out of session and a President just off a three day campaign tour, now on Vacation.

So Jackson, you may be the most rational here. Exactly how much are you getting paid for your "social media" strategy?

Yes Amanda , I think like that reading Swansont , he affects my thinking , forgive me .

 

Amanda , what's wrong with having a 50 % corporate tax rate ?

Currently,corporations remind me of a run at the bank. Individually being the front of the line makes eminent sense- you get your money. But "runs on banks" are so illogical - destructive.

Each corporation couldn't help itself. It pays for elections and pays for legislation and judicial rulings to make it legal to pay for elections.

For corporation ABC everyone pats each other on the back.

But collectively, they strangled the golden goose. We let them. This kind of self-interest thing just like in life is such a short term strategy. Considering your environment, the world, others, reason helps in the long run and is then in your true self-interest.

One bright spot: The national dining chains have tanked around me helping in the bringing back of the humanity of the Mom and Pop cafe.

Reason: Corporations have had legislation for so long preventing taxation (taxrate doesnt matter if you never collect) that they don't feel vested in the country they are in which leads to a kind of lack of responsibility and extreme shortsighted thinking.

I think that almost everyone who has posted here, except amanda, thinks the markets are overreacting.

Reasons? Optimistic data? Your grandmother's advice?

So wouldn't then your definition of a crash be the markets overreacted?

Reason: Pundits have marketed such weird Orwellian speech that those who invest parrot nonsensical things having to do with emotional responses of the market. Said "emotional responses" even if true are still not essentially relevant because one still loses cash. Reason for crash? You can't fool all the people all the time.

 

Well, to me it's called reality, not defeatist. I'm not sure of your point here, but political influence in the economy, more so recently with regulations, has everything to do with the economy, not separable....

 

Jackson, this is the most lucid discussion I have ever experienced regarding our current state of affairs. You have articulated quite well a point of view that has a lot of good company. Previously, I have been totally lost trying to see this point of view.

The responses you have engendered have then been very colorful and exacting. Too bad this couldn't be a bigger platform. I see so few who step up to scrutinize ideas the way you have.

And now- drumroll the Stock Market:

NEW YORK (CNNMoney) -- Wall Street got socked on Thursday as renewed concerns about the U.S. and global economies sent major indexes plunging, pushed gold to a new high and bond yields to a record low.

Stocks were hit with bad news on multiple fronts. Morgan Stanley put out a dismal forecast for global economic growth. A key reading on U.S. housing came in worse than expected. And a report showed a significant slowdown in the domestic manufacturing sector.Investors rushed to move their money into safe U.S. government bonds -- and the yield on the benchmark 10-year Treasury briefly fell below 2%.

"We had a couple days to stabilize and breathe, but you forget that it's a war zone out there and there's just too much uncertainty about the economy," said Frank Davis, director of sales and trading at LEK securities.

At the preliminary close, the Dow Jones industrial average (INDU) dropped 418 points, or 3.7%, to close at 10,991. The blue chips fell as much as 528 points.

The S&P 500 (SPX) lost 53 points, or 4.5%, to 1,141; and the Nasdaq Composite (COMP) lost 131 points, or 5.2%, to 2,380.

At the center of Thursday's sell-off were renewed macroeconomic fears about a possibly slowing global economy.

In a gloomy report from Morgan Stanley, the investment bank slashed its global growth outlook for 2011 and 2012, adding that the U.S. and Europe are "hovering dangerously close to a recession."

"The fact that Morgan Stanley has downgraded its global growth forecast really highlights the concerns and problems facing the global economy," said Michael Hewson, market analyst at CMC Markets in London. "It begs investors to question where future growth will come from."

What does cutting spending have to do with "Hooverism"? Despite a stated belief that spending should be restrained, spending increased significantly under Hoover - some 50% in a failed bid to stimulate the economy. During his term as President, the debt/gnp ratio shot up from 16% to 40%.

 

Like Roosevelt, he believed in the importance of a balanced budget. And like Roosevelt, he believed the best way -- the necessary way -- of accomplishing that was through tax increases. He did so significantly with the Revenue Act of 1932, which doubled the estate tax, increased corporate taxes, and more than doubled tax rates on "the rich," ushering in the era of progressive taxation. It was the biggest tax increase in history. It brought in a lot of extra revenue that was spent as quickly as it came in.

 

These policies have very little in common with an "if I cut back government should too" approach, and seem more in line with the modern day progressive than the guy waving the tea pary sign.

Hoover's Inaction

At first, President Herbert Hoover and other officials downplayed the stock market crash, claiming that the economic slump would be only temporary and that it would actually help clean up corruption and bad business practices within the system. When the situation did not improve, Hoover advocated a strict laissez-faire (hands-off) policy dictating that the federal government should not interfere with the economy but rather let the economy right itself. Furthermore, Hoover argued that the nation would pull out of the slump if American families merely steeled their determination, continued to work hard, and practiced self-reliance.

Hoover’s Failure

Hoover’s inability to recognize the severity of the Great Depression only magnified the depression’s effects. Many historians and economists believe that Hoover might have been able to dampen the effects of the depression by using the federal government’s authority to establish financial regulations and provide direct relief to the unemployed and homeless. However, Hoover continued to adhere rigidly to his hands-off approach. This inaction, combined with Hoover’s treatment of the “Bonus Army” and his repeated arguments that Americans could get through the depression simply by buckling down and working hard, convinced Americans that he was unfit to revive the economy and destroyed his previous reputation as a great humanitarian.

http://www.sparknote.../section4.rhtml

Why would they expand if sales are down? Me saying demand is low is equivalent to sales being down, which they are, in the US... Due to the bad economy... Due to people not having jobs... Due to the unemployment preventing these people from having money... to spend... at Wal-Mart, or at Target, or at wherever.

 

 

Here again you are being defeatist, despite your previous claims to the contrary. It's important to note, Jackson, that the only limitations here are political or ideological in nature, not economic.

Thanks for the graphs. I do love data. The nearby Target store took out plants and some other things and replaced with food. I know that increased its sales. I read a Manager's book about Wal-Mart requiring managers to cut personnel on Fridays. They promoted rotten service.

My experience I had with K-mart was that I would go in for a few things and spending a lot on things I didn't really need. I got to where I bought things at Walgreens instead.

Target has a card - I haven't used yet that gives 5% off. Since that is the profit for food generally, high use would hurt profits. So, they may have been angling for some kind of better position in the markets. Or the strategy worked and more people are shifting department store to Target purchases after coming in for food.

So what I am saying is with these few nit-picking details that it may not be that Target is all that healthy and maybe people on hard times dislike the added stress of a hateful fifteen minutes in a line at Wal-Mart.

Another Econ 101 thing that many don't realize with Jackson etc. is the multiplying effect. Henry Ford said he wanted to pay factory workers the outrageous level of $5 a day because then they could afford to buy cars. That factory worker may have paid 20 cents to the diner down the street at lunch break. He could save for a home which paid carpenters etc. the $20 etc. as part of the expense for the $1000 home. The clothing store could count on selling a few even $15 suits so he could look great on Sundays. When he pays these bills these people in turn pay their bills and it is a multiplying effect.

There are even equations to show how income from employment gets spent. The opposite happens when government cuts jobs and money. Joes Diner down the street from the federal building notices some familiar faces aren't there. Without a minimum amount of business can they pay the light bill? They have fixed expenses and may have to close down without a certain minimum number of customers. Joe used to buy himself a nice car occasionally but now he is working as a fry cook for minimum wage.

"limitations here are political or ideological in nature, not economic."

The banks did the equivalent of holding a gun to our heads , "Your money or you financial life." But in spite of feeding wall street fat cats and foreign corporations the banks are in trouble now and they may still tank. So will the result be that the government will wholeheartedly increase the supply of jobs and therefore money at this late stage? Or will they again take the waitress's wages and hand it to BOA?

Reason: Paralyzed or destructive government politicos hamstring a full implementation of a massive Roosevelt style New Deal crashing Banks again which causes government to have to spend again on them instead of the economy.

 

Interestingly, the fact that rates are at 2.3% instead of 3% only further strengthens swansont's central point... That now is a great time to borrow. With that said...

 

I think it's important to note that in a situation where we're experiencing moderate inflation in the short term there are actually quite a number of very positive benefits (again, at least in the short term, and especially given that we're in a liquidity trap and pressed against the zero bound).

 

With a higher level of inflation, the value of the dollar is decreased relative to other currencies and relative to it's past value. When the value decreases relative to it's past value, our debt becomes lower and it's essentially easier to pay off. For every dollar of debt we owe, inflation reduces the impact of the payments on that debt since each dollar is worth less, but we still owe the same number of dollars overall. For example, if we owe $100, and we experience 5% inflation, then the value of that $100 we pay back is actually closer to $95 at the time we entered into the debt. In essence, we get a free discount on our debt if moderate inflation is allowed in the short term. This adds up to some enormously large savings when that debt is larger than $100 (for example, when it's $14 Trillion like our government currently holds).

 

Also, moderate inflation in the immediate term would make US exports much more attractive to other countries, and would help boost manufacturing in the US. More people would be put to work because companies would have more demand for their products (because those products become much more attractive to purchasers paying in other currencies in an environment where the dollar is worth less than their own currency... It's like going to Mexico and being able to get tons of stuff for just a few bucks since the dollar is worth so much more than the peso). That higher demand for US produced products overseas would increase employment within the US. There are obviously some challenges in that imports would cost more when purchased with the US$, but overall some inflation now would help manufacturing (and job creation) rather significantly.

 

So, my basic point is that, no. If we experience some moderate inflation now, it is NOT true that "everyone pays the price."

So, the dollar would normally be such that it takes more dollars to buy foreign goods (inflation)

The trade deficit has currently increased. Wholesale prices have suddenly risen.

For the trade deficit to decrease this country would need to either stop buying as much goods and since they normally come from abroad then that decreases the deficit. Or companies gear up to produce American goods that are sold overseas or replace goods normally bought overseas.

The dollar with however bad the US economy may get, may end up as strong do to being the only game in town. Anyone for Euros or Yens? That strong dollar may prevent an effect to decrease the trade deficit?

Reason: An oddly strong dollar could prevent increases in manufacturing for foreign customers further crippling the economy and the stock market.

The US can borrow at 3%. Surely there are investments that have a greater return on capital than that. Maintenance and expansion of bridges, roads and rail would reduce congestion and improve productivity, but even at a more basic level, it's cheaper to repair them now than wait and fix them later when the problems are worse. In appropriate areas we could be installing solar panels on government building roofs to reduce future electrical costs, or at least painting them white to cut down on summertime AC costs. All of that with the added benefit of putting people to work and collecting taxes on their income and spending rather than paying them unemployment.

 

 

Are you familiar with the story of chicken little?

 

Most Insider Buying Since 1998

http://finance.yahoo...0.html?x=0&.v=1

 

The people running companies don't seem to be too worried about a crash. They're buying stock like crazy.

Well, that is like saying ignore the sick patient because it is highly likely he won't die today. A concerned physician even would be chicken little.

This question came from Why is the American economy deteriorating? There was little argument there that it was. There seems to be this huge disconnect. Businesses close around us. People known to us to be industrious aren't working. It is easier to get to work as there aren't traffic jams (unless you are in Washington DC or Houston)

Companies today are often not in the business of goods and services. They are in the business of paper. And Wall Street is happy to trade on paper.

Until it isn't.

There are big words that are thrown around. Fundamentals show that the economy is sick. An understanding of these would well point to a then sickened stock market. My interest is to ferret out all the downside reasons. Optimism may well, somehow win out.

America is infected with Horatio Algerism as its current religion. Precious data on it. Just announced huge numbers of children in poverty. I wonder, of course, about European fatalism. Either is centered on emotions.

An observation: Economic data which has shown increased sales are, instead, a measure of stagflation. Food prices have been impacted by $1 box of food now with $.70 in it. When it sells for $1.40 that is not a 40% increase over the last few years but a de facto 100% increase.

Households switch to bulk rice muting overall prices. That can't continue to have effects as prices rise.

Reason: Stagflation is already happening causing increased havoc and then stock market woes. (plus Federal Reserve has judged it won't intervene on inflation usinf interest rate for a couple of years)

 

That does nothing to address the point that US government spending on the WWII wartime effort did a great deal to stimulate the economy and had long-term lasting effects on our growth.

 

 

 

Again, that does nothing to address the point. The point is corporations are (generally) already sitting on a lot of cash, the highest amounts in years. You're recommending we remove their taxes, which will do little more than give them even more cash on top of what they already have, and you're making the argument that this will fix the economic hardship currently being faced. Why? That doesn't even begin to make sense.

 

With taxes or without, they still must compete. Who is burdened most by those taxes and who pays them is also completely irrelevant to the point. You have yet to address the question about why adding to an already large supply of cash is supposed to create the growth we need, or why they would invest in making more products when demand for products is so low.

 

 

Very well put. Now for some market analytics. Ever heard of the VIX? I hadn't. But I have heard of system theory. I couldnt upload the graph. Since it is a measure of volatility and is going nuts recently it may mean lots. It -can- presage crashes as imminent.

The market appears unstable. Here I had thought it would have immediately tanked.

Reason: US govt folly and other bad news sent the market into wide swings causing instability and soon to be crash.

 

 

Then I would suggest, programs, policy and legislation to correct what I believe was a make believe (made up) crisis, would have never been implemented.

 

Yes, I know your a promoter of Keynesian Economics, a Krugman fan, but what Government was doing then and to some degree now, was total control over business and much business was operating just fine in Europe.

 

 

From your article, swansont; I think you understand from early on this thread, as does iNow from elsewhere, I'm not pessimistic on the future of US Markets. Under Rumsfeld theory, looking at the US political climate and changing climates and results in Canada or Australia from 10-20 years ago, things can be reversed here. The problem to me is 5 more years of what's been happening over the last 3/5 years, will not fit into my optimistic projections. In some ways, I feel the markets, or those driving them, feel the same. I don't like using polls (snap shots), but you might say the general US sentiments are already falling into line.

Whose general US sentiments are falling in line with what? Policy generally swings back and forth. Off the golf courses there is a sea change in attitude. People are currently too overwhelmed. But the wild outlaw cowboys may have to leave the prairie town. The townspeople want the sheriff back. Even if no one yet is putting a posse together to immediately get some law and order.

I'm not so sure how I feel about this because I think that cash goes a long way (often) toward R&D, and also allows for mergers and acquisitions to grow the company in the long-term. I'm not immediately inclined to do this as I think it addresses symptoms instead of root causes. Having that cash on hand isn't really the problem so much as not spending it is, and I am not sure the proposal you shared is really the best way to encourage spending. I think increasing demand is, as that will require more spending on goods, materials, and staff. I haven't thought it all the way through, though.

 

 

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You're oversimplifying. This is true sometimes, but it's hardly the infallible axiom you suggest. Clean energy is a clear example. Simply transfer the subsidies from oil to solar and wind and that would go a VERY long way to stimulating job growth in these sectors and across worker type... in manufacturing, installation, and service... and it would help the environment. High speed internet, too. You can't seriously be here suggesting to all of us that people in rural areas enjoy having slow internet and an inability to watch simple videos or perform online transactions? Come on, Jackson. You're really straining credulity here in an attempt to stick to your ideological guns.

 

First paragraph is in response to:

mississippichem, on 15 August 2011 - 05:51 PM, said:

"I'm not one to take tax increases likely but I've thought for some time now that there should be a fairly hefty tax on corporate retained earnings. This could incentivize the big blue chip companies to not keep as much on the books in these down economic times perhaps leading to employment expansion and a greater desire to acquire physical capital (trucks, buildings, land, etc.)."

For the second paragraph, I see you are from oil country. Do you find that those in the oil industry understand the need for alternatives better? (that would be rather ironic)

So, we could be having lean times and a volatile stock market due to lack of incentives to move retained earnings into better areas. Does R and D still have big tax advantages? If retained earnings are taxed it may further push into R and D to not pay the tax.

Swansont , I'm assuming you're an expert at not plain and simply answering the questions you've been asked and asking instead a question to them . Did you learn that in grade school ?

And yet you state a question.

Perhaps you could mention something which is on topic. You may actually want to mention some idea,concept reason which effects the American stock market.

 

Stagnation and contraction and austerity will result in just what the names imply... A stagnant and contracted economy, and while the Patient Protection and Affordable Care Act might have some peripheral effect on business, it's hardly the core issue with which businesses are struggling as your post directly implies. That is more accurately explained by low demand and unavailable cash in the hands of consumers. Put people back to work, and those people have cash to spend, which increases revenues in businesses where those people spend their cash... Lather, rinse, repeat.

This is so very basic. Where were these people raised that they missed this? Or are they just so blinded with some skewed self-interest that such basics are too disturbing?

Perhaps history will point to a simple little rule change by an organization we think of as dealing with entertainment. The repeal of the FCC guidelines on equal time opened the floodgates. We own the airwaves but now have such distortion that many have been raised with this. This has taken modern thought a huge step back from rational thinking and discourse.

It isn't like people's characters are much different from Roman times. I'm sure the Coliseums were packed as christians lost to lions. So the argument that it sells is pretty lame. It is after all, our coliseum.

My money is now though on the elite- that upper 2%. It has certainly been fun for over a generation. My Great Depression experienced 85 year old friend said several years ago that economic collapse means riots in the streets. I listened but didn't believe. I knew things can get wild in Europe. But England?

Even the rich follow fads. The tide may turn and a realization hits that for those who have found it less fun to hang in Barcelona or Paris they may want to enjoy the USA. Riots here would be disconcerting even to them. The penthouses can still view the streets.

Someone I know who hates the liability of an ER may get health insurance today. Young adults will have the grandparent who managed to get to 65 but the babyboomer parents are currently being done in in their fifties. Who wants to insure them? Why as a culture must the 80 year old watch grandchildren left without parents? One 62 year old worked weeks on it, got opportunity to spend 650 a month for health insurance and had short hospital stay. She knows she would have died with only ER care.

The rich- the ones I know are already out of the market so this downturn effected 401ks but not them. The rich just got richer-again. Which brings power.

I think the future belongs to them as it probably always has. So, even if personally not suffering will the rich allow policies to prevent tanking the economy and prevent the stock market from continuing a risk of crashing? If not, by standing idly by when it is in their power to be ethical will the wealthy have caused the crash?

Better phrased- Oligarchy causes stock market crashes.