8:30 AM….”DJ US 3rd Qtr GDP +4.9%, unrevised from Prelim Report…(consensus was 5.0%)”
This is a huge number, especially in view of the 2nd Qtr number and all of the gloom and doom from the main line media. I have gone on record stating as of this moment, we are not facing a recession. This is strong support for my position. …so far.
This is GREAT NEWS, but it will be drowned out by the media’s take. Too bad. They should take some economics classes.
Cheer up, it ain’t so bad.
“The nearest thing to eternal life we will ever see on this earth is a governmental program” -Ronald Reagan
Replies
You an Ed Hyman disciple?
Well, I might be...if I knew who he was!!!
My real economic hero is Arthur Laffer, (Laffer Associates)Second to him is Thomas Sowell, but he less quantitative, even though he is an active economist at Stanford University."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
?
Ed Hyman of ISI - International Stategy and Investment. The top economist on wall street for the 28 years in a row - as determined by Institutional Investor mag.
They have a small division selling retail mutual funds (TRUSX, STRTX, and others), primarily bond related, primiarily treasuries, actively managed based upon his outlook for rates.
Sell a few of his funds and you will be allowed his daily economic report via email. In my 20 years, I saw nothing better. You'll kill for therse reports after a few weeks of exposure.
as you know, Institutional Investor is sort of a political venue. I have an ex admin assist who is now #3 in his field as a research analyst, now with B. of America Securities. He has an inside take on that whole scene.But to be that highly rated for 28 years means that you are doing something right!! very impressive. I just don't know him. I have worked for wirehouses all my life and I don't have relationships with funds that are not cleared with my own firm. We don't work with his, for example. But I will keep my eyes open. The only economists I care about are the ones who can make money before the event...not the Monday morning quarterbacking we hear so much, reflecting the dumbed-down media."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
If we could only use one indicator, and it always followed what we think, your logic would be correct.
Personally, I believe that we are facing a downturn. The sub prime situation is a major factor and it will be getting worse next year with a lot of loans resetting.
Bob's next test date: 12/10/07
Depends what part of the country one is in.
As you know, Michigan is in a depression. Colorado seems like a slight downturn, but not recessionary yet. How's Texas?
Yes, MI has been heading down for the last 6 years. Texas is fine but the lending rules apply nationwide and are having an effect on every buyer, seller and lender. Housing was fueling the economy a few years back when economic indicators showed it should have been stagnant. The entire economy was growing because people were tapping their new found equity and spending it. Now, they are paying the piper. Texas is fine but I'm very concerned. Bob's next test date: 12/10/07
how long has the current governor been there? 6yrs???? hmmmmm.I grew up in Livonia Mi, but have not been back in years."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
There are a lot of people that want to blame the Democratic Governor in MI. I don't agree with them. The problems that MI face are significantly more than what the governor controls. MI built it's infrastructure and economy around the industrial revolution. Their entire economy is steered by manufacturing. When I grew up and started my blue collar career, I could get a decent paying job EVERYWHERE. The want ads begged for help in every industry including manufacturing, construction, service and of course all the professions. We have moved on beyond the early years of the industrial revolution. Whereas MI benefited from the need to concentrate small shops and major factories, they also are now victimized by the ability to design things one one continent, fabricate them on another and assemble them in yet a third. They boomed because their policies and resources capitalized on their location and now suffer because their economy is so dependent on that. The rustbelt lost more than 50% of their manufacturing base in the last ten years and will continue to slide. The sunbelt has gained in population at the rustbelt's demise. It will continue on this path. The Governor that implements policies that improve MI with a ten year goal will be the one to save it. They cannot overcome the financial difficulties in the short term. Bob's next test date: 12/10/07
Im just on the first dew posts so excuse me if i say somthing thats been beaten to death .
I dont see how any state could be in good shape because of the oil crisis which effects everything we buy and use. Being a lanlord , I get to listen to problems around why its hard to pay rent . I also have my own examples too.
3.00 gallon for gasoline
My heating gas bill just hit a new high record in the month of December with the two hardest months left to go. 280.00. Just gas alone .
Price increases every where I look. I just got through paying 33.00 for a gallon of paint which I needed for a durable finish. You know If "I" spent that it was necesary.
Big trucks get 5mpg and the drivers have all gotten raises to keep them behind the wheel. Everything Walmart and the building supply has that tacked on. Speaking of which their utilities have also soared for those 24 hr stores. After cost of doing business , theres a percentage put on everything for profit . That percentage has all this underneath it .
Health care and those with out are putting a serious bind on the economy and no one has answered the call. We treat everyone still but not only do we pay our health care but we have to pay for thiose that dont. Otherwise we wouldnt have hospitals .
Children with illegal parents is a big problem with out an answer unless one is implemented. IN our small town far enough away from borders [we thought] we are now at 40 percent Spanish in our grade schools. Its time to make them legal and get them on the pay system. Its putting tremendous pressure on tax payers . We all need to be tax payers and we need everyone of them to pay our SS and fight our wars. They need to do their fair share of what americans are doing . After that , IM fine with it . Until they are we are in trouble . We need health care for everyone at the same cost per person that must be enforced to live and work here . Payroll deductions and sales taxes will get us there . Im against property taxes as you might have already figgured . Its not a fair way to do it . When we can get everyone contributing when they draw a check or buy somthing then we will have unity of paying. If we implement these things then I think we can turn this whole mess around for many years to come . There are somthings like oil I dont have an answer except getting the current president out of office which is going to happen . If we turn around and elect someone else thats in bed with the oil business then it probably wont happen. Even if someone was of that party , I believe they can see that point.
The trouble is , its not of one of thems answers and they will continue to argue instead of comming together. On part of the points above its Democrat and others its definately Republican. Its sad that because of that we will not be able to fix our problems .
Dang, Mooney. You said it better than any pundit ever. I'd vote for you in a second. Everyone should re-read Mooneys post. Beautiful.
What does a "downturn" mean? 94% of all mortgages are currently in good order and being paid on time. How do you extrapolate bad news out of that???, if indeed you imply bad news!! I just dont know what you mean by a downturn."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreated wood, we all know about spin..
For example your statement that 94% of all mortgages are OK.. That also means we are at record levels of nonperforming.
I know a few bank managers and excuetives who cannot report non-performing loans because they cannot have another repossesion on their books or the bank is technically in default..
So any payment no matter how trival, keeps the loan in the performing column.
But you do have a point.. We are making our payments on time in spite of my unemployment but to do so we take money intended for our retirement and use that..
My younger sister is making the payments on her house with money intended for maintinance and remodeling.. Due to her being laid off from the mortgage company she worked for the past 11 years.. She didn't do anything wrong,, the mortgage company was under orders to cut back almost completely.. Only the boss and one clerical remain from a staff of 35
The company I used to work for eliminated all but three out of a staff of 21 because we haven't sold any new units in over a year and a half..
last year only 5.8 % of the listed homes in the seven county area sold.. this year promises to be under that number by a significant amount..
what sort of "record"??? explain."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
The fact that 94% are performing doesn't change the other facts. The housing market has significantly slowed. New housing starts have slowed. I'm not extrapolating any breaking news. It's all over the headlines. The fed is cutting rates. Big names in the world of economics are concerned. There are bears and there are bulls. Each can make their arguments based on whatever data that they choose. At this point, I'm a pessimist. I can't enter into a technical debate because I don't study it that much. I was right when I predicted a major downturn in housing prices and I believe that we are facing a recession. To me, it's about the fundamental issues of what the common everday blue collar type guy is earning and what it costs for him to survive. There is a significant imbalance. Bob's next test date: 12/10/07
Blue,
I heard today that we (middle class workers) haven't had a real pay raise in nearly 3 decades..
MY first reaction , is no way!
but upon reflection what they were saying wasn't that people hadn't earned more money just that the rate of pay hadn't gone up. Another words Pay scale hasn't increased for typical jobs.. carpenters are making the same hourly wages they were in the late 80's (adjusted for inflation.. I suppose)
The more I thought about it the more true that rang.
MY daughter graduated from college with an aviation administration degree and the airline was happy to hire her, at near McDonald wages.. 4 years of college $40,000 worth of tuition plus books and etc.. and she is making what they make at the McDonalds that she gets lunch at!
Sure she gets near free flights (as do I ) but she can't afford to go anywhere.. Daddy's still making her car payments and paying for it's maintinance.. She has to come to daddy to pay her rent periodically.
Pilots with $120,00 worth of student loans make $17, 500 per year starting wages.
The security guards out front making sure you don't go thru wearing shoes make more than that!
" MY daughter graduated from college with an aviation administration degree and the airline was happy to hire her, at near McDonald wages.. 4 years of college $40,000 worth of tuition plus books and etc.. and she is making what they make at the McDonalds that she gets lunch at!"
Just curious but did she know the wages she was going to get before she took the course?
roger
roger G
Perhaps you have heard of what's happening to the airline industry? traditional carriers like Northwest are forcing pilots to take 1/2 their former wages, baggage handlers stewardesses and others have been cut similarly. Middle management has taken the real hit.
They don't accept the terms the airline declares bankrutcy and can do it anyway..
Real major hardball stuff.. yet senior management took home tens of millions of dollars in bonuses. when they emerged from bankruptcy..
That's all happend from the point where she went into college untill she graduated..
Watch your pilots.. a lot of the really young kids with minimum hours of flight time are moving into seats vacated by the experinced pilots who can make more money and better benefits flying corporate planes.
About 15 years ago the ambulance service in Ontario was run by the province but decided to dump the service and because most ambulance services were run on a county system (paid and controlled by the province though) the counties were sold the ambulance services for a token one dollar. Some of these counties decided to operate the system but other counties decided to sell thier service afterall they only paid a buck for it. A number of ambulance companies from the states came up and bought some local homegrown people bought some.
All of the drivers and attendants were part of some government union and when the term of the contract came due the new owners in some cases let everyone go but they could reapply for their old job at 1/2 pay. Gotta love captalism.
So I know where you are coming from because alot of students coming out of Ambulance School (or whatever it's called) were not going to get the pay they originally thought.
I laugh because some people used to complain about the provincial ambulance service. They should see it now!
Be carefull of what you pray for, you might get it.
roger
>Perhaps you have heard of what's happening to the airline industry? <
and don't forget that the aircraft heavy maintenance is being shipped to China.
a correction in housing prices does not imply an imminent recession. Sorry. Slow down, is NOT a recession. If YOU are unemployed that is not pleasant and I am sympathetic. But the bigger picture does not tell that story. Again, the yield curve is the key, and it not inverted at this point. I use 2year to 10 year spread. It is NOT inverted."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
I wish I shared your optimism about a simple slowdown. I don't. I'm not unemployed. I have more projects on my books than I have had in the last five years. I don't know how a family man can raise a family on $12 per hour and no benefits. I was paying carpenters more than that in 1988. As a contractor, my expenses were half of what they are now and I got paid more. I could easily make six figures in 1989 and it's a huge struggle today. The price of good is going up because China will lose it's monetary edge. Gas will be more contributing to inflation. How much will things cost as they print more money to pay for Iraq? Recession might look good when the piper comes alookin'. Bob's next test date: 12/10/07
Blue,
I think you've got it.. the only real question is when are things going to implode.. There is something on AOL where the American family took a 300 billion dollar hit in 2007 on their homes value..
If your home is worth less this year than last how are you going to justify remodeling or fixing it up? IF you got a big pay raise or promotion why wouldn't you just buy one of those homes sitting on the books? I don't see a lot of new homes being built. So all of those contractors and carpenters etc. will be scrambling for a new job..
Add those who used to make appliances and furniture for new homes, plus
Fewer people working in the trades mean less need for trucks.. add those laid off from lumberyards and big box stores plus carpet layers and electricians/plumbers and etc.. and the spiral effect is pretty great!
Lumber jacks and sawmill workers plus all those who doug foundations and put in sewers.. even the landscape supply stores and everything else that goes with few new homes..
I think we'll begin to see the compounded effects of that 300 billion dollar writedown in the next few years. For decades, the rise in home prices was fueled by the down payments created by the boomer's equity. Now, all of a sudden, that equity has shrunk. Additionally, the requirements for higher down payments and more scrutiny have been implemented. Add a layer of stagnant and receding wages and you have a recipe for disaster. If disaster wasn't looming, would we see the Bush administration stepping in and trying to insert policies that would make any true Republican cringe? This reminds me of the days of wage freezes....I feel like we are floating down a beautiful stream....everything seems so splendid and peaceful....and a roaring waterfall looms just around the bend.I hope I'm wrong.
Bob's next test date: 12/10/07
Blue,
As the crash loomed Im sure Hoover took some steps, I'd have to carefully reread history to verify that but I suspect they were similarly ineffective to the steps bush is taking. We all know that as the crash occured Hoover didn't want to interfer with the markets and the crash worsened..
The government does have a place interfering with free markets..
They do it all the time.. republican and democrat alike.
When they give a tax break to one group over another or a tax break that benefits one group over another (Like the tax break bush gave which mainly benefitted the wealthy) they are interfering..
Tax policy however enlightened it may be is classic government interferance. We need a strong military to protect ourselves and that must be paid for.. there are thousands of other tasks we ask a government to do.. They all must be paid for. the only way to do so is thru taxes and thus tax policy comes into play..
With 300 million people you will not agree with every need seen by the other 299,999,999 people and I sure don't. Together we can agree that the government spends too much, but you only get one vote and I only get one vote.. If I want this or that funded, I'll have to agree to let you fund this or that as well..
The point is For this country to work well, it needs a strong right and left wing or it cannot soar.. we had 6 years of trying to fly on one wing.. we are now coming up on one year of a weak left wing up against a strong right wing and we aren't going to be able to fly striaght and high for a while yet..
My only hope is that a balance can be achieved before the Armerican Eagle crashes.. like it did in 1929
Frenchy-----
i know things are tough right now in your neck of the woods. you have my best wishes.
but--across the country there is a specific class of homeowner--that are good customers-and will always be good customers.
they get overlooked in an economy where statistically most people move every 5-7 years.
a customer who has lived in their house for years-and intends to live in their house for many years--is an excellent customer. they will continue to remodel-and purchase appliances etc.-they may be a BIT more cauitious-but they will BUY--and they will buy exactly what they want. If the appraised value of their home has dropped in the last year or so--they aren't unduly concerned-in fact they probably haven't even checked---because to them their home is their home--NOT an investment they hope to sell in a year or so.--if anything---people like that see present economic conditions----as an opportunity to pick up some nice bargains.
Me, personally?-- i haven't been this excited in my entire career.--circumstances beyond my complete controll--have given me ----what is for me---a huge backlog of work.- i have some money available--i am designing a new marketing effort to highlight my longevity in the local trade-- i have bought some new equipment-- and i have more equipment purchases planned for after Jan. 1st- i think the market for labor--is gonna be quite favorable for me in the new year---and i think a lot of weaker "competitors"--are gonna be swept out of the market place over the next couple years.
something else??--- i don't think I am at all unusual-- i think around the country-- there are a LOT of people--in a similar situation to myself. we are going to have an opportunity to pick up some excellent employees, we will have an opportunity to pick up some deals on equipment---and we have an advantage with a certain type of customer-because THAT's our customer base--not new construction. A lot of people who have been in new construction are gonna try to move into this type of market-and some will succeed-- but most will be at a tremendous disadvantage.
Very best wishes to you,
stephen
stephen,
I hope you don't think in absolutes.. I know I sure don't.
I'm sure somebody bought a new house in November of 1929. They also bought new cars and clothes as well. but the volume was down, down enough that shortly over 25% of the country was unemployed.. (an interesting side note was that those numbers only listed male head of housholds. Women weren't part of the labor force that counted) I digress,
I really am glad for you.. it's nice to hear of success stories when there is so much doom and gloom.
As for myself? well I was careful, saved prudently and can look for a while yet before things get despirate.
I have time now to work on my house, a great deal more than ever before. I was also smart enough to buy all my wood a long time ago so I have a lot of material to work with.. I've got a good stock of nails screws and glue.. The shop is filled with all the equipment needed to turn rough wood into finished stuff.
I have a great resume and an extremely positive attitude. My wife's job is secure and Our only debt is this house.. In my career about every 7 years I've needed to go find a new job.. So this isn't tramatic to me. I'll tighten my belt, work on my house, and look forward to my new job..
"IF you got a big pay raise or promotion why wouldn't you just buy one of those homes sitting on the books? I don't see a lot of new homes being built. So all of those contractors and carpenters etc. will be scrambling for a new job.. "
This saids something about our whole economic model in this country. The notion of continuous consumption as the economic engine translates into a vicious cycle that is unsustainable for long periods of time. And order for our economy to remain healthy we need to keep feeding the system by consuming more and more. We always here the phrase, "It's not good for the economy . . ." But maybe what we really should be asking is the "economy" good for the people.
ted,
Fair enough and well said,, however I doubt that at this juncture society will sit back and be philosophical. The old saw when your up to your azz in aligators it's hard to remember your goal is to drain the swamp..
A person can only do what they can control.. When I built (am building) my house I took the longer look at it.. I built it in european style, which is to say to last for centuries. I used decay resistant hardwoods and stainless steel fasteners. There is massively more strength in this house than called for because strong equals durability..
I also paid a great deal of attention to energy consumption and sealed and insulated it as well as possible..
Because of those sorts of factors this should be an extremely durable home and well outlive the time it takes to regrow the trees needed for it's construction.. In a sense that makes this house sustainable..
the most current rate of forclosures in the us is1.65. the 6% number is the number of homes in forclosure and the number which are in prefoclosure. the number of new and used homes sold in 2007 is 6.4million. this number is the fifth highest on record.refer to kenneth harney's column washinton post writers group. our media is focused on what is happening in only a few markets. these are the same people in upstate n.y. that claim how bad the economy is , in the next paragraph report that the unemployment rate is 4.5%. these also are the same people who report that our local economy is the wourst in upstate ny, then burried at the bottom in small print the don't include the numbers from our local indian tribe (5000). please people chill out. parts of our country are not in good shape, this is normal. every gdp report this year has been revised upwards two months later. there are always weak spots in our economy.
>>the number of new and used homes sold in 2007 is 6.4million. this number is the fifth highest on record.refer to kenneth harney's column washinton post writers group. our media is focused on what is happening in only a few markets.
2007 is a long period of time: Check the new home permits from the Fed:
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May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
And this sales chart from 2006:
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May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
or these tidbits:"Today's news will contain further housing data, with November new home sales expected to near an 11-year low, pointing to a continuation of the housing recession."
http://www.foxbusiness.com/markets/industries/technology/article/comtex-smartrendr-morning-december-28-2007_419853_12.html"US new home sales slump, business activity increases"WASHINGTON: Sales of new US homes fell in November to the lowest rate since 1995, but business activity perked up this month, according to reports that showed pockets of strength in the economy despite a housing sector meltdown."New single-family home sales dropped 9 percent to an annual rate of 647,000 in November from a downwardly revised pace of 711,000 in October, the Commerce Department said."Analysts polled by Reuters were expecting a seasonally adjusted annual sales rate of 720,000."http://www.dailytimes.com.pk/default.asp?page=2007%5C12%5C30%5Cstory_30-12-2007_pg5_31>>our media is focused on what is happening in only a few markets.Like the Fed? Or all things republican is good Fox News.com?
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
These statistics mean nothing in a vacuum. The fact is, there were many people who were loaned money because the banks HAD the cash and needed to get the money into the system. They virtually threw the money at the borrowers with terms that were ridiculous. Those loans would have never been made 5 years earlier, and certainly will not be made today. so how many of those delinquincies as a percentage are part of the numbers being thrown around in your percentages?? I would guess at least 1/2. That puts a whole DIFFERENT import to the assertion that it is the 5th highest rate ever...please, let's understand what is really going on here. I have several clients who are mortgage brokers. They were being pressured to offer these "aggressive" type of loans in the San Diego area, and I convinced them to stick to the tried and true traditonal approach to lending and mortgages. They did, and boy are they glad they did now!!! They look like heroes. Do what's right for the client/homeowner and it will withstand these stupid trends."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
the statistic is for the year 2007. the loans now in forclosure were made before this year. i didn't check, but the majority of these loans were made in places and states which had and have unrealistic home prices. i agree that a mortgage company would have been much better of if they stuck to old fashioned rules. the economy in the us is large enough to absorb these "problems" and continue to have a growing economy. my point is that the media has greatly exagerrated these problems.
Okay, I misunderstood...my apologies. The media doesn't understand ANY of this. And yes they most certainly exaggerated the situation."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Another article highlighting our excellent economy at the national level. I withhold the author's name because many of our socialist friends run to find out who the author is and proceed to demean him as a person. so I post this for the substance. I'll reveal the author and source in a day or so. It's great news!!!
++++++++++++++++++++++++++++++++++++++
Gas BagsWhy the money pundits were wrong in 2007.
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Two thousand and seven was the year of the “R word†— recession. How many times did you hear a network reporter drone on about how high gas prices are about to “hit the consumer,†predicting that retail sales must eventually drop in response to $3 gas? If you watch network TV, the answer is quite a lot. But weeks, months, and quarters went by and strong consumer-spending habits showed little sign of abating. Meanwhile, gas prices have held near historical highs. We got to the end of a whole year of high gas prices and the consumer never quit and the economy never went into recession. The recessionistas have been disproved, although they’ll never be discouraged. They will continue their dirge starting, well, today. Through 2008 they will ask, “When will high gas prices kill the consumer?†And the answer will remain the same: never.Gas-price hikes will never, ever, ever cut into consumer spending. It’s a mathematical impossibility. Here’s why: Gas prices are a component of consumer spending.You see, when gas prices climb from $2 a gallon to $3 a gallon, one of the components of retail spending goes up. Gas stations are retail establishments. People make money working at gas stations (which now generally serve as convenience stores). People make money managing the corporations that own these stores. And, of course, people make money by owning shares in these companies.Sure, if people spend more money on gas, they may very well spend less on soft drinks. But that’s a substitution, not a decrease in overall spending. The spending simply shifts from one retail category to another.So why don’t we ever hear this? Well, with a few notable exceptions, mainstream TV commentators don’t know the facts, which often are buried in the details. You can’t just read a financial press release from a government organization (or worse yet, the blurb about the press release) and understand what the data are saying. A Larry Kudlow, a Steve Forbes, a Dan Yergin, a John Rutledge, an Art Laffer, a Brian Wesbury — these folks actually read the reports, including the tables in the back. They look at rows of numbers; in the case of a consumer-spending report, they note the row that is devoted to gas stations.Meanwhile, the network pundits only study the lingo that will keep them on the air: “hit the consumer,†“Arab Street,†“connect the dots,†“quagmire,†“sub-prime meltdown.†The only numbers they master are the phone numbers of their favorite producers.Good at getting on the air is not remotely the same as good at getting it right."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
How does it go, liers figure and figures lie? I used to have a boss who spent all of his time creating charts and graphs showing how good he was doing.. Slowly he let people go and the business shrank.
But the charts all showed he was making the right moves..
Our auto companies are like that. At one time the Ford Motor company had 85% worlkd wide market share. Today Ford has less than low single didgets..
If GM or Chrysler had replaced them that would be OK.. but it's not GM or any other American company.
heh, heh, heh...why don't you just admit you don't understand the graph? The numbers are public and subject to oversight by anyone who knows how to confirm what they are, so why would they be "lieing"??? They aren't. "The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood.
What? You care if I accept your statements? you want me to make some graphs up? I'm sure I can find some that say the direct opposite of what your graph is supposed to convey.
What a waste of time..
Untreated,
Maybe you can explain this to me. Why are falling house prices treated like a national emergency? For young couples seeking to enter the housing market, they are a wonderful opportunity. For people who want to buy rental property, they mean bargains. Is there anything in the Constitution that ensures property owners the right of a profit?
And, if rising house prices are considered so great, why are rising oil prices considered so horrible. If you're in any business that has to do with saving energy (weatherizing homes, spraying insulation, etc.) or if you manufacture ICFs or cars with excellent mileage ratings, rising oil prices are an opportunity. Where I live, higher energy costs probably help remodeling contractors. A new house usually means a commute; a remodel of a house in town cuts that commute way down, saves gas, time and money. If the price of oil gets high enough, people will pay more to live close to work.
If you believe (as I do) that oil products cause pollution or global warming, you should be cheering because now there is an incentive to use less. If you own stock in the oil companies, you make a nice profit. Uh-oh, I just said a dirty word (unless it has to do with your house).
>>Why are falling house prices treated like a national emergency? For young couples seeking to enter the housing market, they are a wonderful opportunity. Because falling house prices is a symptom of a deeper problem, not the problem itself. There is the accompanying credit "crunch, and that same young couple who could get a great deal can't get the financing.>>And, if rising house prices are considered so great, why are rising oil prices considered so horrible. Because not many businesses have to buy houses to produce the goods or services they provide.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
I'm not sure if you are asking a rhetorical question...but I'll bite. It's NOT an emergency. Except that we have created a pool of village idiots who think they should be creating news instead of reporting it....so they don't understand markets, and they don't understand cycles. THis is definitely NOT a national emergency."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"THis is definitely NOT a national emergency."And that first wisp of smoke wasn't the forest fire. I saw this credit crunch game play out in the '70s and the late '80s. Those real estate busts were small potatoes compared with the stuff that's going to hit the fan this time.But not to worry, Uncle Sam's magic printing press will probably bail out the major banks and "players" like Countrywide. Everyone else will pay for the fix with higher prices on goods and services -- a tax called inflation. Read about events in Russia and Argentina when their economies took a sudden turn. Average people found their lives turned upside down in the period of a few months.
The problem with pessimists like you, is that most wisps of smoke are harmless. But you alarmists get everyone so worked up, that when we do have issues, no one is paying attention...like the boy who cried wolf!! It takes intelligence and experience to identify specifically what is going on, ...but it takes only common sense to see the general direction. BTW, keep on crying wolf...you and your ilk give me and my clients plenty of opportunities when the smoke means nothing. Keep up the good fight TJK!! We need you to do your thing."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
un treatedwood
Those who fail to learn from history are condemned to repeat it.
History has given us ample opportunity to see what the result of unfunded spending is. Like Vietnam we did not raise taxes to pay for that war. instead we paid for it with inflation..
You insist that inflation can be kept in check thru some unnamed magic. History disagrees with your assessment..
Okay, gimme some specifics. You fall into the liberal stereotype with generalities. Vietnam War without tax increase = inflation. Wow. What trade did you say you were in? That is some math. I'd love to see where you get THAT premise, which I do not accept, by the way."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
Simple, I lived thru it..I read newspapers I watched the prices of things.. but maybe that's all fiction and new cars still cost $2000.00 like when I went in the service. Maybe President Ford was kidding when he walked around the White house with WIN buttons (Whip Inflation Now)
Edited 1/3/2008 6:56 pm ET by frenchy
Pres. Ford was not kidding, but the program was a joke!! ( from a fellow U-M alum!) "The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
un treatedwood,
So we did have post Vietnam era Inflation?
End of Vietnam War: April 30, 1975. President from 1974 - 1977 Gerald Ford; President from 1977 - 1981 Jimmy Carter. 1981 - 1989 Ronald Reagan.
Vietnam War was a mess, and there were other problems going on, such as the oil embargo, etc. I'm not sure how simplistic you want to be, but I would say Jimmy Carter was probably the most ineffective president we've had in current times. Ford was pretty close. so whatever we had left over from Vietnam, and the oil embargo, it was solved by Volker and Reagan starting in 1982. Other than that, I'm not sure what you are asking. It appears that you are trying to make an incredibly simplistic corelation, one that begs credulaty. I have learned over the years that you really only engage in these combative dialogues to be combative. I started this thread to highlight great news. that's what I want to focus on. you are the one who wants to take all good news and make it bad...somehow. Suit yourself. I just get bored by it.
"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
LOL.Yeah, frenchy is the only idiot in the entire world who noticed that the inflation which took off during Ford's administration (remember WIN - Whip Inflation Now" buttons?) seemed to be connected with the deficit spending (unfunded war expense) of the Vietnam war era (much of which can be laid at Lydon Johnson's feet.)Oh, wait a minute, just about all conservative economists criticize deficit spending because of its inflationary effects.>>It appears that you are trying to make an incredibly simplistic corelation, one that begs credulaty.
LOLWhat exactly is your role on the Street? "Occupation
Banking/Financial Services/Real Estate"
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
"What exactly is your role on the Street? "OccupationBanking/Financial Services/Real Estate"
Maybe AM radio talk show host
i believe thaqt inflation took of because of the unchecked spending in the war on poverty. oh by the way the government, raised taxes and taxes during this period to the point that in 1979 paid 55% of my income to the federal gavernment. to those of you to young to remember the top rate in 1981 when reagan took office was 70%. i could use sarcaism at this point bet i won't. remember that there is no limit to the gdp, when you overtax, the gdp doesn't grow as fast as when you lower taxes. this is a hard concept, except if you relate it to walmart. the lower the prices the more you sell. the lower the tax, the more you collect. remember that the top 20% of taxpayers pay 97% of the taxes. i still repeat we may be in a business slowdown, this is not a recession.
Curios what your location is ? Where you live can make a big difference between a "slowdown " and "recession"
They can't get your Goat if you don't tell them where it is hidden.
utica ny
>>i believe thaqt inflation took of because of the unchecked spending in the war on poverty. I don't know how definitive these figures are, but they suggest otherwise:"The War on Poverty began with a $1 billion appropriation in 1964 and spent another $2 billion in the following two years."
http://en.wikipedia.org/wiki/Great_Society"The [Vietnam] war cost nearly 150 billion U.S. dollars."
http://en.wikipedia.org/wiki/Indochina_War_timeline"America's involvement in Vietnam ended in 1973. The war had cost her one billion dollars a day at its peak; she had dropped 7 million tons of bombs - more than the entire total of all participants in World War Two. The cost of the war in 1968 alone was $88,000 million while the combined spending on education, health and housing in that year was $24,000 million."
http://www.historylearningsite.co.uk/vietnam.htm
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
i misspoke when i implyed that war on poverty was sole cause of inflation as frenchy states that the vietnam war was. the combination with the shortsighted raising of taxes, had much more of an effect. the economy is not static. the raising of prices or taxes has not increased the level of income for the government as fast as a healthy tax break does. if you don't like the economy now, wait until a democrat is elected pres. with all their candidates wanting to raise taxes.
>>the combination with the shortsighted raising of taxes,Ahh. Trying to hit the laffer curve ball?
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
untreatedwood
Both Ford and Carter were victums of the times. If America hadn't tried to fight a war on poverty and the Vietnam war without paying for it by raising taxes neither president would have been forced to make the choices they did and would have a far better oppertunety to achcieve the goals they had when they became president..
Bottom line, the cost of war continues long after the soldiers come home..
As for your overly simplistic Rah, Rah, well that's fine if it worked..
Unemployment reached 5% last week, there were 49,000 jobs lost in construction, compared to only 18,000 new hires in all fields.. (nation wide numbers)
Remember that 5% unemployment is only those who can draw unemployment checks.. that does not count the discouraged workers or those who's unemployment benefits have been used up.
"It takes intelligence and experience to identify specifically what is going on, ...but it takes only common sense to see the general direction."Indeed.
the last bailout of a company was Chrysler corp. big win for the american taxpayer. do not give a kneejerk reaction, come up with some reasoning.
>>the last bailout of a company was Chrysler corp. The only money paid out by the US gov't and taxpayers was for the lawyers to draft and negotiate the loan guarantee.Essentially, the "bailout" was the restoration of confidence for lenders to Chrysler.Kind of like the Federal Reserve being the lender of last resort for the US banking system, a key factor in foreign willingness to deposit significant funds in the US banks, which provides significant liquidity for our economy (and our guns and butter economic policies of the current admin.)
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Did the government bailout the saving and loan companies?
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
Frammer?
Does Savings and Loan scandle ring any bells?
nice house saw your picts. i am not implying that something must be done in reguards to the subprime mess but as bad as it is for an individual homeowner caught in the mess, it has been blown out of proportion. the media in this country likes human suffering. now relax. it all will end. if we had a fed that was proactive the economy would look a lot better. please don't make histerical comparissions to the president in office at the start of the depression. just because you live in an area that the economy is worse than the overall us economy, doesn't mean we are either in a recession or a depression.
Frammer,
thanks for the compliment..
You are correct in that the media does focus on the same story every other media is focusing on. (herd of cattle mentality)
However that does not mean the problem doesn't exist..
What the media doesn't tell you is when all this will end.. or how bad it's going to get.. Those are things we must figure out ourselves..
If you have a book full of approved projects things look a lot rosier than if you have nothing and are dipping into savings to stay afloat..
Words like recession depression have no meaning until they impact you..
Once they do endless hope seems hollow after time..
I've weathered recessions in both positions and while my fundamental nature is one of optimism When the national econmomy isn't strong it starts to ring hollow and you feel like a phoney being that optimistic.
the savings and loan scandle was exactly that. the fdic stepped in as designed to protect peoples assets. there always will be scandles. relax
"the fdic stepped in as designed to protect peoples assets."
That's not how I recall it. Those savings and loans were outside the FDIC at the time. The resultant agency created to oversee the mess did end up merging with the FDIC later. At a cost of over $200 Billion.
that is correct, again proving my point. this will pass. frenchy, you and i have weathered many recessions, again as of right now this seems to affecting small portions of this country, not the whole country. last night someone emailed me how bad it was in memphis. wow is him. spend a little gas money and go on down to mississippi. drive a little and there is still work out there.
>>the savings and loan scandle was exactly that. the fdic stepped in as designed to protect peoples assets. there always will be scandles. relaxAre you sure you're in the financial industry?First, S&Ls are neither regulated nor insured by the FDIC The Federal Savings and Loan Insurance Corporation (FSLIC) does.)Second, the government had to make direct, and huge expenditures in rescuing the failed and failing S&Ls (see, e.g., http://www.econlib.org/library/Enc/SavingsandLoanCrisis.html)
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
you have me mistaken. i swing a hammer
Oppps. I'm trying to remember if I've ever made a mistake before <G>
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>Gas-price hikes will never, ever, ever cut into consumer spending. It’s a mathematical impossibility. Here’s why: Gas prices are a component of consumer spending.Wow!!! Freakin' amazing! How come nobody ever thought of that until you came along????Shoot, we'd all still be idiots if you hadn't revealed that extraordinarily obscure fact to us!!!BTW, in my experience there are few people as arrogant as someone who learns some basic principle for the first time and thinks he has invented the human thought process.[Sorry, but I find it impossible to restrain my sarcasm in the face of wholly unjustified arrogance.]
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
"Sure, if people spend more money on gas, they may very well spend less on soft drinks. But that’s a substitution, not a decrease in overall spending. The spending simply shifts from one retail category to another."It may not be a decline in spending, but it sure is a decline in consumption and it is consumption that fires economic activity. People are spending more money to acquire the same amount of gas. No new gas was made, no employment was created, no economic stimulus is provided and no multiplier effect comes into play.On the other side, people don't buy as many soft drinks. Therefore, fewer soft drinks are made, jobs are lost and an economic drag is created. This does have a multiplier effect in the economy as the consumption of both manufacturers and the newly out-of-work declines and dominos to other sectors, an effect much like rolling a snowball downhill. The further it goes, the bigger it gets, the faster it moves and the harder it becomes to stop it.Radical drops in house prices might be good for those with the savings to take advantage of them but not for anyone else. One of the big drivers of any economy is housebuilding. When house prices drop, that activity drops in tandem and the multiplier effect drops a much larger amount then just the expenditures by the industry from the consumption that is the stimulus for the economy. It also tends to cause a negative savings rate that removes investment capital from the economy, though given the conditions of this last boom where household savings rates were generally negative anyway and investments were funded as result of the government firing up the printing presses that is less of an issue here. Mind you, using the printing presses to fund investment has it's own set of problems as the recent devaluation of the US buck clearly shows.
Edited 1/2/2008 4:21 pm by observer
observer,
well explained..
negative savings rate not in the US. this is another popular myth that our media friends can't repeat enough times. the savings rate in the us does not take into account the retirement accounts . don't just repeat things you do not know to be true. frenchy, don't just make fun of someone that does not see things the same way you do, it will make you a lonely man.
Savings rate is a trend indicator, not an absolute measure of savings.Here is the historical data. Note the overall trend from 1959 to the present. http://research.stlouisfed.org/fred2/data/PSAVERT.txtNote also that these figures have been revised to reflect the new definition adopted by the BEA in 2001 when the old definition provided a negative savings rate for 11 consecutive months. By the old definition, savings rate has been negative since then. Don't ignore the trends just because you don't like them.
Edited 1/4/2008 11:13 pm by observer
I promised to post the site by the end of the week, so all the socialists who tear down the writers without reading the column can have at it. Here is the reference. Have a great weekend.
http://article.nationalreview.com/?q=MTNlZWEyOTJkYjJmYmVlNTJmNzdhZDI0MGIyZjRlYTY="The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
I don't know what you do for a living but fuel prices for me are my biggest expense and have definatively affected my tool buying decisions this year.And when we add up the entire cost of fuel for my family it is more than our mortgage and home insurance combined.
Add in the increases in food and materials from shipping charges and I feel an unprecidented dent in my wallet.
Then take into consideration that new housing construction has come to a standstill and the displaced workers are crowding into my niche and cutting their prices to just get work and the word RECESSION has meaning in my view.
So until the home building scenerio goes back to a strong demand I see very little good economic news in my future.
And if you think that I am a small portion of the economy I seem to have read in several places that the construction industry and its offshoots feed around 40% of our economy.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
recession by definition is two quarters or more of negative gdp. please be advised that we have not had even one quarter in years!!! please use another word.
Yeah except economist don't know if there is a recession until well into it or its over.
Another definition is The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) provides a better way to find out if there is a recession is taking place. This committee determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it’s called an expansionary period. By this definition, the average recession lasts about a year.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
again i refer you to the definition of a recession. please , what you have defined is a slow down in business. this does not mean you are in a true recession. i personally believe unless the fed gets serious and lowers the fed rate in jan. at least .50 basis points we may by the end of the year be in a recession. relax people those of you running a good business will be able to survive. by the way during the last recession in 1991, i was still able to find enough work to survive. it did require some downward price adjustments, but i survived. life will go on.
Maybe you ought to google recession and see whats out there.
Would you agree that the economy has reached a peak and for the next several quarters it will be on the downhill slide.
This is part of the business cycle and I believe it is called a recession but it can't be determined until it cycles back up.
ANDYSZ2 WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
google not necessary, i argued whith my economics professor in college about this. unless i'm to old and stupid, the definition of a recession is two consecutive quarters of neg. gdp. relax, it wil be over soon.
So there is no other definition but the one you are stuck on.
And of course you were smarter than your teacher.
So if you found a hundred definitions out there you can't except any of them as equal to your own.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
you misunderstood me, i was you when i arguedwith my professor.
Andy, what is the definition of...a purlin? What if I can find someone who doesn't quite understand what it is, and defines it differently from what you and I understand it to be? It doesn't change what the general accepted use is, does it? Just because we have a lot of blowhards out there masquerading as economists, (including a lot of the professors!!) doesn't mean they know what a recession is in the normal usage of the word. Heck, most of them don't even understand WHAT it is let alone the definition. so after 23 years in money management, and 30 yrs+ in the trades, I know what a recession is, and frammer52 is right on the money. Now what was a purlin, for the record???"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
If 100 are wrong, why should he accept them? I don't understand your correct by majority notion. You certainly dont build that way do you?"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
you are correct, and if you will recall, a depression is ....6 quarters of continuous negative QTRS."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Frammer,
I'm sure your approach is exactly the approach that Herbert Hoover took.. relax it will be over soon.
by the way, a true ecinomist does know a recession when it is going on. this statement is an excuse for the lazy people who don't really know what a recession is..
this is normal expansion and contraction. That is not a recession."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
So does this not count as a definition of recession.
Recession
From Wikipedia, the free encyclopedia
Jump to: navigation, search
This article needs additional citations for verification.Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (June 2006)
In macroeconomics, a recession is a decline in any country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. However, in the United States the official designation of recessions is done by the business-cycle dating committee of the National Bureau of Economic Research (Feldstein, 2007). The American National Bureau of Economic Research defines a recession more ambiguously as "a significant decline in economic activity spread across the economy, lasting more than a few months." A recession may involve simultaneous declines in coincident measures of overall economic activity such as employment, investment, and corporate profits. Recessions may be associated with falling prices (deflation), or, alternatively, sharply rising prices (inflation) in a process known as stagflation. A severe or long recession is referred to as an economic depression. A devastating breakdown of an economy is called economic collapse. Newspaper columnist Sidney J. Harris amusingly distinguished terms this way: "a recession is when you lose your job; a depression is when I lose mine."
Market-oriented economies are characterized by economic cycles, but actual recessions (declines in economic activity) do not always result. There is much debate as to whether government intervention smoothes the cycle (see Keynesianism), exaggerates it (see Real business cycle theory), or even creates it (see monetarism).
[edit] Causes of recessions
The precise causes of recession are the subject of fierce debate among academics and policy makers although most would agree that recessions are caused by some combination of endogenous cyclical forces and exogenous shocks. For example, Keynesian economists and Real business cycle theorists would all disagree about the precise cause of the business cycle breakdown, but most would agree that purely exogenous factors like the price of oil, weather conditions, or a war could by themselves cause a temporary recession, or, conversely, increase short term economic growth. Keynes himself, however, pointed out that when interest rates become too small – below about 2% – then people no longer have an incentive to save, preferring to hold money for what he called "transactions demands." If there are no savings, banks get no money with which to make loans, and it is this drying up of savings – and loans – that causes the regular business cycle to break down. Austrian school economists hold that it is an inflation of the money supply that causes modern recessions, and that recessions are positive forces in that they are the market's natural mechanism of undoing the misallocation of resources present during the boom or inflationary phase. Most monetarists believe that the cause of most recessions in the United States is this mishandling of the money supply, while an extreme change in the structure of the economy is responsible for very few.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
I dont want to get technical, but this is research posted by the New York Fed, and the comment I'm interested in is the last sentence..THESE DATES ARE NOT WITHOUT CONTROVERSY....ETC. In other words, unless you understand the issues, you just can't claim the definition you want. When one of the most prestigious organizations in the world publishes a piece that questions the NBER, I listen. Furthermore, it's not fair to use a word that has historically meant one thing, and now the meaning is supposedly being questioned. That is a common political trick: change the meaning of a word and then use it to death.http://www.newyorkfed.org/research/current_issues/ci2-7.pdf4. For a technical discussion of this model and how it is estimated,
see Estrella and Mishkin (1996). The economy is designated as “in
recession†starting with the first quarter after a business cycle peak and continuing through the trough quarter. The peak and trough dates are the standard ones issued by the National Bureau of Economic Research (NBER) and used in most business cycle analy-
sis. These dates are not without controversy, however, because the
NBER methodology makes implicit assumptions in arriving at
these dates."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
ANd the very last line is:
The views expressed in this article are those of the authors and do not necessarily reflect the position of
the Federal Reserve Bank of New York or the Federal Reserve System.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
No question and no argument with that..., I said they published it. That means it's worth paying attention to. It is CONTROVERSIAL. I''m not willing to stake my world view on something that is that up in the air. I'll stick to the textbook in this case. And sorry, I had you confused with Andy Rae. My error."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
>>I''m not willing to stake my world view on something that is that up in the air. Wow. Have you read any of your posts here?
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
I make my living in two ways: I manage money during the week (23 years) and I have a finish carpentry biz on the side (32 years). Right now, I have to drive 70 miles one way to work with an all wheel drive, (Toyota 4-runner) when I go into my office, ( generally 3 days per week). I clearly understand and can relate to your dilemma, it is not unrelated to mine. However, when I speak of recession, I have to elevate the discussion above what you and I experience. My pocketbook is hit with any whiff of a slowdown. People hold off putting in those new doors or installing those new cabinets, and they definitely hold off investing money that might stay in money market. But we tend to project our situation on the entire country..a common mistake. When the stock market was in its once in a century bear market beginning in March of 2000, we on Wall Street all thought the whole world was in a depression. It most certainly was NOT. In fact, many argue that we were not even in a recession in those next 3 years....because THEY were doing fine. The truth of the matter is that we have the strongest economy in the world, and when our industries suck air, others are doing fabulous. That's why the GDP for the last quarter "surprised" the "experts". They were accepting the moaning about how terrible everything is/was. In fact, not everyone experiences the same because we are a diversified economy.Whether I "THINK" you are small or not is irrelevant. We had excess for 3-4 years in lending and now it is correcting. We had excess in technology spending leading up to Y2K..it took 4 years to work that off. That is why the market is the best indicator of what's going on.
As I recall, you were just working on a basement project, and an interesting one at that. Are you still working on it? Are they paying you on time? What do you have lined up? I'm thinking you probably have not slowed down. So why do you state that you see very little "good economic news in your future"??? When I first started in this forum, most had little if any work and everyone had time to write and post. But now,many are working and have not slowed down. Sure some have, but not that many. I can tell that most posts are done at night, after they work, in general. That is a GOOD sign. I just think that you and others listen to the media way too much. You look to be an excellent tradesman and you have had constant work. That was not the case for most of the trades in the last serious recession, in the late 80s. Great craftsmen had no work for a long period of time. That is not the case now. Things have slowed down, NOT COME TO A STOP. So don't get sucked into the doom and gloom.I have several bathroom remodels in the spring. I would be the first to see things slow down in my carpentry as I am really part time. But that has not happened yet. If it does, I will still not characterize it as the economy going into the toilet. It just means that my part of it is slowing down. I will remain optimistic in any case. I urge you to do the same."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
So what industries are doing fabulously?
No basements here in Memphis I have been doing everything from picking up trash to working on a remodel for my mom.Mainly small jobs for 1/2 day or so.Sat idle for 3 weeks late last year.
I do have work lined up but most of them are wait and see how their money situation is.
I think that the last building boom is over and that it will take several years for house values to increase enough to see a general increase in remodel work as there is not the equity or confidence to sustain the uptick.
I do have the fortune of building a clientale of old money that actually looks forward to these downturns to buy up at low prices and refurbish to make a profit, but I don't believe it to be a large percentage of the market.
Maybe I am a worry wart but I am not blind either and I get a broad prospective of our industry from here and the industry rags. One thing I have noticed about builders is they are some of the most optimistic small business owners I know and when they start crying the blues I pay attention.
ANDYSZ2
WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
are you the one who just starting writing for FHB after moving? did you do the article on the workshop?"The nearest thing to eternal life we will ever see on this earth is a governmental program"Â -Ronald ReaganÂ
Edited 1/4/2008 10:19 pm ET by unTreatedwood
NOWHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
Industries that are strong include: consumer electronics, many drug companies, drug related peripherals, one client I talked to said his market in Las Vegas is growing so fast, they can't keep up, biotech, discount retail HAS been doing well, but they are slowing down, Oil exploration and R&D, (don't laugh!)."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Ok lets take consumer electronics I believe that the vast majority of these products are made outside of this country so they will not lift our economy much.
Besides drug companies being a good fallback stock when the economy is going south there is also the fact that our population is growing older and medicine has become the fastest growing profitable part of the health industry and lots of the production has been moved to third world countries again mainly helping the stockholders but not the growth of our economy by actual production here.
Biotech yeah but in the scheme of the economy how big is biotech 1 100th of a percent(?) I also count this as R & D and I strongly hope for great successes here as it could elevate our country in production and maybe relieve us of oil dependance.
Discount retail that should tell you that the general public's finances are getting tighter so they shop for bargains, but where do their products come from (China). So once again not a great plus for our economy.
Oil exploration Yeah and the reason behind that, other countries large increase in consumption along with ever dwindling easy recovery.And with difficult recovery comes ever increasing prices.
R and D I like this field as the potential for new products and resources could be very good for us but who is educating more engineers and scientists than us ( China and India).
Definately not laughing as I see some fundamental shortfalls of us remaining a world leader.
1. We need to reinvest heavily in education to the point it hurts if we want to remain on top.We need to steal the smartest from the rest of the world and keep them here.( easement of immigration and free education)
2.We need to create alternative fuel sources that not only wean us off of oil dependance but make us the world suppliers.
3.We need unified leadership that quits wasting our time and helps lead us to prosperity
4.We need to quit borrowing from other countries and become much more fiscally responsible.
I am sure that you find me naive but none of these suggestions will hurt us and I think they are doable.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
I don't know what you guys want to call what is happening here. Sugar coat it how ever you want.
More people are leaving MI than any other state. State has a huge deficit already and with the mass exodus it's only going to get much, much worse. Woods favorite carpenter
downturns are great if you have a little money. personally, i like to buy stock when people think a downturn is happening. by the way, we all have to suffer a little in a downturn. the 1900's for upstate ny was terrible with no upturn until the end of clintons second term. this is were i learned to buckle down and accept smaller jobs. it got so bad that i even traveled 2 hours to work . if you are good you will find something, just don't limit yourself. give the people who are waiting an incentive to do business now.
industries doing well.... oil, mining and all who export
Andy,
Unemployment in the construction sector last week was 49,000 newly unemployed. Compared to the total new hires last week of only 18,000 in all fields. (not just construction)
Nation wide unemployment reached 5% last week. That does not count the discouraged workers or those who have used up all of their benefits..
you see on the news where they claim $0.40 of every gallon goes to wall steet invester that ran the price up for profit, people that never touch a gallon of oil. since theu deregulated the price in 2002, it has gone up.It has nothing to do with supply and demand but money, everything is about money
brownbagg,
interesting tidbit,, wasn't aware of that fact.. However you are correct everything is about money, except money isn't about money!
What I mean is that money isn't a constant.. any more than gold isn't a constant..
Today a dollar will buy .86 euros at one time about 6 years ago a dollar would buy 1.24 euros.
and we all know how the cost of gold has changed lately. So .40 cents a of a gallon of oil is affected by investors, how much is affected by the weaker dollar?
The dollar wouldn't matter if our pay increased with the value of the dollar but we haven't had a real pay raise in three decades..
amen to no pay raise in thirty years. it could be worse. we could work in an industry that has dissapearred. part of the problem is the illegal workers entering our country working for substandard wages. our politicians are more worried about there jobs than prottecting us.
frammer
Yes illegal (or even legal) immigrents are a problem. They prevent a labor shortage from causing a raise in wages..
Employers don't want workers to get a pay raise because that will reduce their profits.
Lower profits doesn't hurt the wealthy, past a certain point profits are just differant numbers on a score sheet..
Yet the wealthy were given a major tax break about 6 years back so they have to pay out less. The currant economic conditions allow the wealthy to indulge in luxuries which those who aren't in the top 5% no longer can afford..
That makes the top 5% in a unique position. I sure wish I were in that top 5%
Frenchy,
I'm in that top 1%. And I can tell you from experience and calculations - you're full of it.
I'm paying over 45% on what comes in the door. And I don't see anywhere else (well, maybe the special state credit for donations to certain organizations, but I'm still paying out) where I'm getting any kind of a break. And EVERYBODY has their hand out.
Pass whatever you're smokin' over here.
I need relief from the pain.
Hey I'm in that top 1% also. I can assure you I'm not smokin, anything, and yes, I did benefit from the Bush tax cuts. "Based on an exhaustive analysis of tax records and census data, the study reinforced the sense that while Mr. Bush’s tax cuts reduced rates for people at every income level, they offered the biggest benefits by far to people at the very top — especially the top 1 percent of income earners."
Untreatedwood:
To get back on topic, there is not much difference between an economy growing at 1% vs one dropping by -0.5%. Right, several quarters of decline is a recession, BFD, whatever you choose to call it, it sucks, whether the economy is inching along or slightly falling a lot of people are miserable.
We are not experiencing economic boom times. Expressing that reality will help us deal with future situations. I'd hate to see someone get overextended based on your optimistic economic outlook.
Peace, all
cJm
The only thing that benefitted me was the long term cap rates and 15% dividends. But those benefit far more at the lower incomes than me.
That's cool. Everyone has a different tax situation so I understand that some get less benefit. I used to get raving mad when I'd see, like you, the + 45% tax bill. Then with my blood pressure over 166, my doc friend put it to me straight, 'You take home after taxes more than $100k/yr so shut up and settle down or you'll be dead within the year. And the IRS will still take their share."
I've followed this for some time and had a different point of view I'd like to share. This is hard for me to articulate, but bear with me.It seems to me that a dollar more spent on say gas for heating (a consumable) is different than a dollar spent on a house (a long term asset) and it's not clear to me that this is adequately distinguished. Besides the short life of the benefit (temporary warmth) and the potential long term costs (global warming) {which a buddy who drives subs told me was indistinguishable from relieving yourself with your pants on} many of our expense dollars flow out of the country but don't return, hence a trade deficit.Dollars spent on assets tend to have some staying power.The change I see in our economy has to do with what types of investments we make with our dollars. Over the past ten years I watched a shift in industry from dollars used to create "Intellectual Assets" to dollars used to pay non US companies to make stuff for us. In the process, we gave them the Intellectual Assets to do this. These almost never show up on a balance sheet or income statement because the FASB (Financial Accounting Standards Board) can't agree on hos to measure the value. Nevertheless, many economists agreed that a significant (like a third) of the market capitalization of the S & P 500 was attributable to Intellectual Capital. Since these transfers don't show up, it offers a way for officers of a company to bleed assets out of a company while appearing to save money.You may know intuitively what Intellectual Assets are, but to be clear it things like patents, copyrights, trade secrets for manufacturing, and process technology. Anybody in construction has more or less in terms of the know how that makes them more effective, more efficient and more economical than the next guy. How would your life be if you had to give that all up to competitors, and not just next door, but around the world. We're not just teaching our competitors in global markets how to fish, we're given them the best fishing equipment, telling them where the fattest fish are and giving fishing lessons, all for free.I saw this when the multinational I worked for couldn't give away our technology fast enough to "partner" companies" overseas. Now, my old employer is gone. Split into smaller and smaller bits that got bought up or went bankrupt as the True Value of the company became apparent.I'm not saying this is a novel viewpoint, but I do think it integrates the sense many Americans have that we've lost (or given away) much of what makes us great. I believe that Ford didn't loose out to Toyota via shenanigans, but because Toyota invested in building up their Intellectual Property and Ford in marketing stuff fewer and fewer people want.The sad irony, to me, is that we seem incapable, as a nation, to learn this. We can debate whether we face or are in a recession, but I think it's indisputable that we're failing to invest in what will make our lifestyle and economy sustainable. I lecture a few times a year at the VCU Engineering School. The class rooms are burdgeoning, but not with US students. I guess they're all studying finance...Frank
Excellent points Frank. Bob's next test date: 12/10/07
peteschlagor,
So you're in the top 1% of wealth in the country? Congradulations! What is that level of net worth? 50 million plus? or is it 100 million plus required to get to that level.. I'm sure it's around someplace..
Compared to that level I'm a real piker.. I doubt my net worth gets me in the top 20%
It's darn hard to tell, last time I had access to local peoples net worth (I used to know someone who had access to that sort of data) some of the seemingly wealthy local people were in debt up to their ears. They may have multi million dollar homes and drive new cars and go to fancy events but they are a couple of paychecks away from bankruptcy..
common misunderstanding...Pete is NOT referring to his net worth...I don't think .
I think he's talking about his income. I dont' want to put words in his mouth, but this comes up all the time. The only ones who have the type of money you're talking about are the Democrats in the Senate, and they definitely dont want US to accumulate what they have!!!"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Frenchy likes to speak for others.
As we can see although he talks the talk, he cannot walk the walk.
>>As we can see although he talks the talk, he cannot walk the walk.And you?He not only presents his views, but he presents the reasons for them.So how about you showing us how he doesn't "walk the walk" and put him to shame.As you have just demonstrated, talking the talk is simple and cheap.So, let's see your strut....
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Peteschlagor,
You made the statement, I congradulated you on your wealth. Note I didn't challenge you to prove it or ask for a connecting link.. I simply congradulated you..
I then explained why taxes are decieving.
Tsk Tsk!
Why are these guys in such denial, just because they are not directly affected how can they ignore the rest of people's woes?
And they are directly affected, they have to see food prices escalating ,fuel escalating ,medical costs, in fact the only thing deescalating are house prices yet the property taxes are not dropping.
The majority of people's incomes are not matching these cost increases so each month we can afford less and yet everything is just fine.The government seems to be hiding the real inflation numbers yet we don't see any documentation to prove it.
Now is the time to buy assets but if you are in the crunch the last thing possible is to buy or take on more debt.
I am not going to go down in a flame but I sure feel like every year has become more of a struggle.
ANDYSZ2
WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
Andy,
Many have their ego involved in who they voted for and refuse to accept that their leader could have lead them astray..
Some bought the whole story. Hook, line, and sinker and if any of the story proves wrong then they want to shoot the messinger rather than learn anything..
Frankly there are good repiublicans and good democrats out there plus a few bad from either party..
Anytime I hear someone complain about one party I know that I'm speaking to that kind of fool..
>>The only ones who have the type of money you're talking about are the Democrats in the Senate,Earth to unTreated, Earth to unTreated ....
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Lots of people say the rich are getting a break on taxes, but here's something you might want to look at"Based on the latest available tax data, no Administration in modern history has done more to pry tax revenue from the wealthy than the current one, says the Wall Street Journal today. Consider: * For 2005, the richest 1% paid about 39% of all income taxes that year (see chart above). * The richest 5% paid a little less than 60%, and the richest 10% paid 70%. * The richest 1.3 million tax-filers -- those Americans with adjusted gross incomes of more than $365,000 in 2005 -- paid more income tax than all of the 66 million American tax filers below the median in income; ten times more."It looks to me like the "rich" are paying a higher percentage than before. How is that a tax break?
TJK
Hopefully you will understand what I'm saying and not take it as any sort of bashing or attempt at a political agenda.
Taxes paid really isn't a fair indicator of wealth..
It's an indicator of the persons ability to be taxed..
There are 22,000+ pages in the currant tax code.. less than 100 apply to the average Joe.. the rest are exclusions written so that only one or a small handfull of people are entittled to get that deduction..
To get those deductions requires political connections who will put it as a rider in a bill. Another words, you have the means to pay some politician enough money to ensure that he will not only take your phone call but also trade votes enough to get support to allow your rider to tack onto an ammendment on some bill that will be passed.
That's how Washinngton works.. Both parties are equally guilty of it and both parties claim the other party is owned by special interests groups..
How else do you think politcians can get hundreds of millions of dollars worth of donations only to start over agianb in a few years getting more hundreds of millions?
Let me give you a clear and simple example..
Joe Jones wins 200 million dollars in the lottery..
After taxes he has under 100 million left..
Cargill, is the richest privately owned comapny in the world.. They didn't achieve that by giving 45% of their income to Uncle Sam.. ( since they are privately owned only the IRS knows for sure exactly how much they made last year).. If you were able to gain entrance to their corporate headquarters exactly what they own and control would blow your mind!
You are absolutely right, Cargill doesn't pay the corporate income tax, its customers take care of that bill. The critics of our current policy claim it's not progressive enough, and that "rich" people should pay even more. The flaw with that argument is they don't realize that truly wealthy people and corporations can live or operate wherever they please. If Uncle Sam gets too greedy they will just pick up and move somewhere else. So what you say? Good riddance? Think again.The way taxes are proportioned today, the top 5% pay about half of all income taxes collected. If only a few thousand of the richest leave the country, the taxes for everyone else will have to go up dramatically to make up the loss. No country ever taxed its way to prosperity, and the proposals I'm seeing for higher taxes on the "rich" make no sense to me. When people and their politicians start to punish achievement and glorify sloth and cons (the real estate flippers, mortgage bailouts, lotto winners, etc.), there is something very wrong with that society. In fact for the first time in my life I'm seriously considering leaving the U.S. and emigrating to another country. I may not be in the "top 1%", but I'll be damned if Uncle Sam is going to take my hard-earned wealth and give it to some idiots who couldn't be bothered to read the mortgage contract.
TJK
You and I will debate endlessly about the perfect tax code. In fact there are proabably 300 million differant versions of the tax code Since American population is around that number.
Bottom line, the very best we can agree on is that the system is flawed..
Let us eliminate any system which benefits only a small portion of the population and then we can seriously look at the remaining systems.
If you object to the way the government spends our money you are not alone.. 300 million people feel the same way.. I can point out thousands of far more expensive abuses of our tax dollars than those you mentioned.. If you spent a year or two going over everything carefully you'd come up with many more and not just current headlines stuff either..
As for leaving America please don't feel that we will miss you.. Your place in this country will be readily replaced by countless foriegners who would see America as a wonderful country,, flaws and all.
top 5% pay 50% taxes. please look thia up. more like 80%. by the way at the low end of the scale, by the way, the rich got a tax cut as well as middle class. if you payed no taxes you received no tax break. of course if you are poor you didn't pay any taxes. something to think about. hummmmm
It's exploitation of class envy at its worst. And it may doom us in the long run."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
I heard an analyst explain it differntly. He stated that the laws of supply and demand would put the price of a barrel at $65 and that everything above that is being caused by investors (Wall Street). Bob's next test date: 12/10/07
Blue,
That's massively over simplifiing things.. and most analysts disagree with that assestment..
The dollar no longer buys what it used to
It used to be the dollar was at 1.24 euro's today it's at .86 euro's that differance is a large part of the increase in the price of oil.
America is buying oil with less valuable dollars..
actually that is not the case. the price of oil is set in dollars. oil prices are set by the futures market. i saw a ceo of an oil refiner on cnbc explain that if supply and demand was allowed to work the price of oil would only be 60-65/barrel. the only hope for oil right now is the elimination of futures speculation. of course that would mean that it would go offshore. it's a complicated situation. our hope is that iraq, brasil oil brought on the market will cause a glut, thereby forceing those long positions to be hit hard by extreme losses. this would cause those speculatories to look elsewhere for there profits.
"That's massively over simplifiing things.."Of course it's massively oversimplified. I explained a multi-zillion dollar business in one post! ;) Bob's next test date: 12/10/07
@ .84 the USD was grossly overvalued. It is probably 15% - 20% undervalued right now. That's what makes a market."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
well that's simple back up your statements with buy orders!
I have been...did you buy any CFC today? check it out at 5-6 bucks/share."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Broadbrushing investors the way I read in this forum is unfortunate....it's like a Homeowner calling everyone in the trades a crook, or blue collar, or some other generalization. As a point of reference, it's the futures market that is speculating on the price of oil. Those are not your "typical" wall street investors, it is individuals, and small companies like Soros. They definitely do not have your best interest in mind. On the other hand, they provide liquidity, and for better or worse that is a good thing. Many of you who read these threads have mutual funds....who do you think is benefiting from profits? Mexico? Not at all. Your funds are! So without dissing anyone, please understand who you generalize about!! If we were drilling in ANWAR as we should be, oil futures would crash immediately. I think the price would fall to $50 - $60/bbl....overnight. THAT is how we should be independent."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
We are about to witness something worse than a recession, or even a depression. Major banks around the world are technically insolvent because they loaned money to people and companies that can't pay it back. Will the banks admit they're bankrupt and close? No, because that would snare too many powerful people and force them to admit the screw ups -- all in an election year.Instead we will see huge bailouts where central banks around the world just buy up the bad debts and pay for it with "money" created out of thin air. The bankers and politicians will be "saved", but you and I will pay for it through that magic tax called inflation. Make plans to deal with it -- it's going to be a wild ride.
TJK--- you present an interesting situation.
i don't know if you are right-or wrong-----
but for the sake of conversation---let's assume you are correct.
that presents us with an interesting opportunity.
in an inflationary economy---what performs well???-actual assets!!!!!!!!!
I believe that means that right now----might well be an excellent opportunity to actually BUY---and that opportunity to BUY-real estate, stocks-whatever--is likeley to continue for some time---actually the opportunities-may get even better
soo folks who actually have some scratch--and some stones---things look pretty rosey actually.
things are NEVER as bad as they seem--and there are always opportunities--they just might not be the opportunities we are conditioned to look for--or want to look for.
seriously-we have some pretty smart people here on breaktime-------on the whole-- i think most of us have some excellent opportunities ahead of us---if we open our eyes--and THINK.
stephen
"i don't know if you are right-or wrong----- but for the sake of conversation---let's assume you are correct. that presents us with an interesting opportunity. in an inflationary economy---what performs well???-actual assets!!!!!!!!! I believe that means that right now----might well be an excellent opportunity to actually BUY---and that opportunity to BUY-real estate, stocks-whatever--is likeley to continue for some time---actually the opportunities-may get even better soo folks who actually have some scratch--and some stones---things look pretty rosey actually."Yes, owning assets sure beats watching the value of cash depreciate like snow melting on a warm sidewalk. But remember that all assets are not created equal. Some might actually decline in value due to oversupply or a big drop in demand. A time will come to buy investment real estate, but IMO that time is a few years in the future. I figure when Time magazine features a cover story about the endless troubles in housing, _that_ will be the time to start looking for bargains. Inflation is a scenario most young people in business have never dealt with. When materials prices are increasing 1% (or more) a month, it gives a whole new meaning to accuracy for things like quotes and proposals. I lived and worked through the mild (12%/yr) inflation and the credit crunch we saw in the late'70s. It looks to me like we are again headed for a similar period of stagflation and limited credit.
TJK-- you do well to urge caution
I can only ad that it is very difficult to spot the bottom of the trough -except with 20 /20 hindsite
so I will be buying into the market consistently over the next 2-3-4 years.
I doubt 20 years from now that i will much care exactly when the bottom was.
Best wishes,
stephen
>>Instead we will see huge bailouts where central banks around the world just buy up the bad debts and pay for it with "money" created out of thin air. The bankers and politicians will be "saved", but you and I will pay for it through that magic tax called inflation.Remember when Japan was considered an economic powerhouse?And then the bubble burst and the gov bought up a lot of bad debt to keep the banks solvent.Heard much talk lately about Japan as an economic powerhouse?
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
none of those items you mention have short term effects. On the other hand, if we could DRILL FOR OUR OWN OIL, we could drop the price of oil by 30-50%. Wonder why the libs dont want us to have our own oil???
As for Iraq...what will it cost if they use our country for "military manuvers"...like, say, dirty bombs??? I dare say you can kiss your projects good-bye for a while, even if it doesn't go off in your neighborhood. It's all how you slice and dice...pay me now or pay me later, as the man says."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood
If the oil in Alasaka had been drilled for when first discovered it would have perhaps dropped the price of oil from 18 dollars a barrel to 17 dollars a barrel. Today we'll get close to $100. a barrel for it!
Who ever stopped the drilling saved America a lot of money didn't they?
Oh right, those darn enviornmentalists..
Since the most optimistic estimates of oil there is slightly less than what this country uses in a year that would be a pretty minor dip wouldn't ?
As for dropping the price of a commodity, what's dropping oil prices is the Canadain Oil sands.. our little pool of oil is pretty small potatos compared to what they have..
Also I think you mistyped something, Iraq doesn't have weapons of mass destruction. We're pretty sure of that fact! and they don't really have a weapon system that would reach America.. (Neither does Iran if that's what you meant) Pakistan (our alli) does have weapons of mass destruction but they are pretty anti Taliban, at least your poster boy Bush thinks so..
<<...the Canadain Oil sands.. our little pool of oil is pretty small potatos compared to what they have....>>Yes, we're expecting that you folks will be bringing democracy to Canada sometime in the next ten years or so.
observer,
You can relax for a bit,, all of our northern bases are pretty much closed down. Even reserve units are pretty well moved south. The military doesn't really want to fight a northern war, they prefer the tropics instead where the generals can sit on the beach and get a tan drinking drinks with little umbrellas in them while scantily clad native women look adoringly at them.
The Army doesn't own a single snow moble or dog team. and our tanks would be pretty ineffective up in your bogs.. before we attack the army would have to teach soldiers how to march in snow shoes. Besides you could booby trap our men by leaving cold beer for them to drink.. since your beer doesn't taste like pizz water and has a serious kick to it, our young men would quickly get drunk and try to date a moose..
Can't you see the report the general would make? Sighted Moose! Kissed same, affection not returned.. Would have destroyed said moose but my electronic night vison glasses frooze up from the breath of the moose..
And with those night vision goggles froze up, he wouldn't be able to find the igloos where we would have our terrorist insurgent headquarters.
observer,
That's your real secret weapon!
Bush sent million dollar tomahawk missle to blow up stone huts worth maybe a hundred dollars.. Actually 1 million 100,000 dollar missles (old prices) so to get those igloos he'd have to launch a lot of those Tomahawks since there is a very tiny heat signature from a igloo.. ;-)
He'd keep on doing it untill the price of those Tomahawks are up to a zillion dollars American or Ten candian dollars.. At which point you could buy America and annex us to save us from ourselves..
Don't think Canada will be able to buy you up. China, Dubai and a few others have such a lead on us with their purchases, we could never catch up.I heard the Chinese government investment arm just bought a substantial chunk of Morgan Stanley. Apparently, MS needed some funds to bolster reserves in the face of the subprime blowback.
canada is currently exporting 60% of its oil output to the USA and a plan is in place to pump crude to Texas as our refining ability is currently streatched to the limit
one big problem is our loonie (dollar) as 5 years ago it was only worth 62 cents US now its gone as high as $1.10 US recently which causes our expots to be more expensive and we export a lot of goods
too bad you dont work in alberta selling heavy equipment as last year canada bought billions of $ of construction equipment mostly in alberta
in fact it took the next 10 countries on the list to equal the amount we bought from the US
i understand they are having a hell of a time getting enough tires for the stuff
due to the tar sand canada has the second largest proven oil reserves in the world after saudi arabia
buy the way according to the paper home prices in my area are predicted to jump 4.5% next year the largest jump predicted for any where in the country
Dude,
Between your diamond mine and oil plus lumber exports etc. Canada is finally getting her rewards. I expect $1.10 will seem like a wonderful deal in future My bold prediction is over $2.00 US to the Canadain dollar and it might approach $3.00
See good things come to good people..
frenchy-please bear with me
15-20 years ago-my little family of 4 had no health insurance.-the same situation plenty of people are STILL in.- If you had asked me at the time-I would have ranked that health insurance question high up on the list of this countries problems- I know I worried about it every day.
fast forward 20 years. i put my wife through college in the meantime---she got a teaching job---nice benfit package--- I no longer much worry about medical insurance--------selfish bastard that I am--it's not a problem for me---so it's urgency becomes less pressing
but when "I" needed insurance---- well-"the sky is falling, the sky is falling" LOL
TODAY--------within our breaktime peers-many are tied to new construction. A slow down is HIGHLY relevant to them--- but much less pressing to ordinary folks. OUR perception is somewhat skewed- because we are so close to it.
also--most mortgages are not in default--they are fine--even the "sub-prime" mortages--only a small percentage are in default-----so--it's entirely possible that the problemn here--is NOT as catestrophic as the media is portraying.
Best wishes to you and yours,
stephen
Steve,
The media does focus attention on issues and I wish they would focus attention more like in Canada. Here if it bleeds it leads even though that news may only affect a relative handful of people. In Canada talking heads prevail and issues which affect the nation as a whole get far more attention.. Issues that don't have good "visuals" complex multifacited issues such as is this potential government rule in the countries best interest.
Even NPR doesn't dig into Washington the way that Canadian media does. CNN is for the confirmed political junkie who has the time to sift thru endless mettings and is capable of understanding who's going to benefit and who's going to lose when various bills and ammendments get passed..
Anyway with regard to foreclosures and such you are right when you say that 94% of all mortgages are performing OK but 6% is the highest rate of forclosures I've ever heard and if media is to be believed it's a record for the nation..
Doesn't that send alarm bells ringing in your head?
Let's stop placing blame, owners, greedy banks, regulators, estimators, etc.. and look at both the action and the consquences of those repossessions..
Some people will wind up homeless because of this action.. they bought a home because the payments on the home were cheaper than rent.. then they borrowed money to furnish it and put up drapes etc. and now all of that is gone.. (due to new bankruptcy rules those loans won't be forgiven and must be paid)
OK so you don't care about the homeless, TSSSkTsssK they should have been smarter.
Do you care that the ripple effect will affect you?
Further like me you have a wife with benefits, so insurance woes.. Don't bother you, right? except you the tax payer pay for what the person without insurance can't pay for..
So insurance does affect you..
This is a big complex society and when grief befalls someone we may not feel it,unless it befalls a whole lot of somebodies.
Is my math correct. 300 million people in America
100 million housholds,
6% of them at risk of losing their home means it affects 6 million homes at riskof foreclosure?
Edited 12/23/2007 11:15 am ET by frenchy
frenchy
your 6% foreclosure rate sounded high to me. But whadda I know. A first glance at this report says 1.15%.
Subprime foreclosure was actually worse im 2001. About 9%. But the overall foreclosure rate then was about the same as now.
http://assets.opencrs.com/rpts/RL34232_20071105.pdf
Scrapr,
I know it's hard to know what to believe 6%, 4% I've seen both numbers. Talking to local bankers their rates are close to 20% but they don't report all non- performing mortages because if they did they would be (I think the term was out of trust)) or basically they have to close their doors.. They call owners and ask them to make even trival payments in order to keep them "performing"
He says the vast majority of his time is spent trying to convince people who are hopelessly behind in their payments to keep making whatever payment they can..
How much of the problem is hidden because bankers can't risk reporting everything.. The few bankers I know have fantasic deals available, Corvettes boats homes and etc.. the laon may be X and the bank will take X minus a lot simply to get it off their books..
My sister-in-law recently picked up such a deal.. The house was the model home in a development that didn't sell.. listed at $380,000 the bank has it on the books at $285,000 for over a year and not a single nibble.. vandles break in and steal the copper out which damaged the house over $80,000 . (broken window,, winter, water soaked into all the sheetrock and ruined it and insulation.
They paid $149,000 for it. Spent weekends repairing it and now are set to move in.
A few thousand dollars worth of materials some long nights and weekends worth of work and they acquired a home worth" $380,000 and have a mortage of $149,000.
So there are rays of sunshine out there.. amongst all the doom and gloom.
Another problem about the 6% is that the safety net that is supposed to temper the damage is not set up to handle the record number of foreclosures. 6% is the reported number now but we have another larger wave coming. Additionally, the banks are already looking the other way on a large number of foreclosures and not reporting them. I know someone that called to see what they could work out. The bank asked them how far behind they were. They were going to be two months behind in the next missed payment. The bank told them that they aren't considering anything until they are six months behind. Every bank is different depending on their reserves and balance sheets. The danger is the the overall system. Fannie Mae and Freddie Mac implemented new guidelines that put the entire system in danger. Now, the roosters are coming home to roost. The rash of current foreclosures will contribute to more foreclosures in the future. The danger is that they will not be able to meet their obligations and the bailout will fuel inflation. Start the printing press and shift it into high gear. The correction that Reagan forced on us might look like good times. Bob's next test date: 12/10/07
ANWAR has close to 20 Billion bbls last I heard. The futures market, which is what is pushing the price towards $100/bbl would crash if we started drilling, pure and simple. As for your other comments, they don't warrant a response."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood
20 billion barrels Those are massively more optimistic numbers than I've heard.. But I suppose that depends on who's version of politics we're trying to use..
To put those numbers in perspective that's about one years worth of oil at our rate of consumption isn't it?
It's kind of like discovering you have some money sitting around that you'd forgotten about.. Money that's in a investment that is rapidly appreciatiing. Sure you can take it out and spend it, or should you leave it alone and let it become even more valuable.
Depends on your priorites doesn't it?
Do you think politicains can be trusted to establish prioities which may not benefit them?
Why is this a VERSION of politics??? This would be a version of...engineering, unless i don't understand how this is done. why is it wrong when it doesnt support your negative view? Because you don't want to accept the FACTS, you demean the messenger, and if that doesn't work, you demean the numbers.
If we were to be completely isolated, I'm not sure what our annual use rate is right now, but I don't think we will EVER be completely isolated, thus, that is a meaningless hypothetical. As a percentage of daily use, it is NOT a hypothetical, and THAT is why I claim futures prices would drop 40-50%. But then again, I'm sure you will find some what to demean that, as well."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
I've heard all sorts of numbers depending on who's reporting them and no estimates aren't facts they are pure estimates.. estimates based on some prety flimsey knowledge at this point..
If you are correct and we do have a years worth of oil there please remember it doesn't arrive here in Santa's sleigh.. it gets here either thru pipelines (which don't exists yet, or tanker which can't get there or some other delivery method.. which isn't built yet) All of those things have costs
Not only dollar costs but energy costs as well as enviornmental costs. I for one don't think enviornmental costs have to be too great to afford but I don't have a well informed opinion yet..
Since there is currantly a flood of Canadian oil being extracted from the oil sands and those fields are estimated to last as much as 30 years at todays usage, one year isn't going to drop costs 50% Not when China and India are massively increasing their usage. Remember they are the prime reason opil prices are spiking where they are..
>>Why is this a VERSION of politics??? This would be a version of...engineering, unless i don't understand how this is done. why is it wrong when it doesnt support your negative view? Because you don't want to accept the FACTS, you demean the messenger, and if that doesn't work, you demean the numbers.But there are a lot of assumptions in those calculations: likely increases in the ability to extract crude - future prices which effect the determination of whether and how much to erxtract, etc.That you think this is simply an "engineering calculation" demonstrates a less than full appreciation of the factors which need to be considered, even for such a "simple" concept of "how much is there?"
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>ANWAR has close to 20 Billion bbls last I heard. The futures market, which is what is pushing the price towards $100/bbl would crash if we started drilling, pure and simple.1: The most recent figures I could find were fairly old (from around 2000+/-) but they all said about 10-11 bbl2: And why would the futures market crash? All of the arguments from that period made it clear that actual production would not meet increased demand.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Here's an analysis that's a few years old, especially when you look at the price per barrel, but that's not the point of the analysis.
Unless there have been more recent studies, even the possibility of 10.3 mb is a stretch.
http://www.sibelle.info/oped15.htm
I've seen estimates of 50 Bln bbls for Anwar. The whole problemn there is that they won't even allow test holes up there. I think they know that if there is onfirmnation that it should have a minimumof that, there will be intense pressure to develope it, so they want to keep the facts hidden and force us to keep importing while devaluing the dollar to bring us down to the same level as the rest of the world
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Who is this "They" you are referring to ?
They can't get your Goat if you don't tell them where it is hidden.
The enviros who do not want any test drilling done on the north slope
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Why would you support long term dependence on oil anyway? It's a foolish position. ANWR would have a fraction of our annual usage for a short while, then it would be gone. It would not mean energy independence for this country, or even a temporary end to imports. As our population continues to grow, energy demands will grow also, and then add to that surging demand in the developing world and you have a completely unsustainable situation. A lot of us recognize that a combination of conservation and alternative energy sources are going to be all we have, and that we're going to get bloodied in the process. Look at the ridiculous consumption habits we have in this country. They're stupid and unsustainable. If there were oil to be drilled for on Isleboro would you support that so that I can drive a gas guzzler and live in an energy-pig house??
I'm realistic enough to recoignoize that we already are dependent on oil - for our economy and for our strength. Cutting off or restricting the supply to save both of those reindeer is foolish." A lot of us recognize that a combination of conservation and alternative energy sources "I'm all for conservation and alternative supplies too, but they will not do it all alone either.
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"As our population continues to grow, energy demands will grow also, and then add to that surging demand in the developing world and you have a completely unsustainable situation. A lot of us recognize that a combination of conservation and alternative energy sources are going to be all we have, and that we're going to get bloodied in the process. Look at the ridiculous consumption habits we have in this country. They're stupid and unsustainable."Amen to that. I watched a video the other day (Crude Awakening) that looked at the current situation with oil supplies. A barrel of oil, 42 gallons, contains energy roughly equal to the physical labor of 12 men for a year (25000 man-hours!). Even at $100/bbl it's a ridiculously cheap energy source compared to alternatives. We can buy gasoline for about $3 a gallon, so it takes only 20-cents worth of gas to move six people and their stuff a mile or two. Imagine offering to pay somebody with a horse and wagon 20 cents a mile to haul your work crew and tools down the road. They would laugh out loud and rightly demand a lot more money for the job.We need to realize what a precious commodity oil really is and start setting priorities for its use.
The market will start setting those priorities here as it has in other countries, where gas has been $5+ per gallon for a long time. Smaller vehicles, fewer trips, smaller and better insulated houses, less distance to market for products, less packaging, fewer products that are not necessities, less after-hours lighting in office towers and parking lots, people wearing warmer clothes inside their houses during winter, etc. etc. My prediction is that it will cripple our country for a while since our leaders do not seem to be steering the ship away from the rocks. 5, 10 years, maybe 20.
I agree with you here David. Europe has been functioning very well for a long time on $6 gas ($6 is the price last time we were there in 2005 which is more reflective of the pre weakened dollar price).
If you fly over Europe and look out the window (or go to googleearth or googlemaps for that matter), one can see the stark difference when compared to the US. Development is more compact and what's not obvious from the air or on the web is public transportation there is the very best; fast, cheap, clean and reliable.
I think one of the best things that could happen to this country is gas going to $6. It should be obvious to everyone that this would be very painful for a while but us Americans have a proven track record of innovation and more importantly, a "can do" attitude. I think we'd come out on the other end far stronger.
Runnerguy
PIffin,
Well thank the enviro's then..
If they'd drilled in the anwar when they "discovered" it they would have sold it for the less than $20 a barrel it was going for back then.. now as oil approaches $100 a barrel it 's worth 4 times as much!
Wait a few more years and it might be even more valuable!
If you have money in the bank doubling every few years how much do you really want to take out?
Yeah, Yeah, Yeah, leave it all there until the country is so weak we are all speaking chinese and worshipping in mosques;)
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Man I know you don't really believe that a 1-2 year supply of oil is going to make us so strong that we can eliminate our competition or trade deficit. if there ever was a time to hold out it would be till GW has opened up the North passage and oil has hit 200 a barrel until then I am perfectly happy to be dependent on Canadain oil.
ANDYSZ2 WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
piffin?
That you? You're normally not this pesimistic, anything wrong?
just your perception of reality;)
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>>I've seen estimates of 50 Bln bbls for Anwar. Where?
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
why ask bob?We had this discussion before and all you did was say my sources were suspect.The whole point i am making is that nobody knows because there is no test drilling allowed
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>>We had this discussion before and all you did was say my sources were suspect.No:
I did not question your sources. The discussion then was your (and Buck's) claim that ANWAR could supply _all_ of our energy needs for something like 20 years, apparently based on your misreading of claims that it could be in production for 20 years.>>The whole point i am making is that nobody knows because there is no test drilling allowedThat's based on an assumption that test wells are the only way to base an estimate.It might be true, but with the advances in various other forms of testing, I don't think it is a given
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>On the other hand, if we could DRILL FOR OUR OWN OIL, we could drop the price of oil by 30-50%. Wonder why the libs dont want us to have our own oil???Ahhh, it's all the "libs" fault.So much for considering your views as anything other than partisan flummery.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>a correction in housing prices does not imply an imminent recession. Sorry. Slow down, is NOT a recession.Do you know that there is a general definition for "recession?""recession - roughly defined as two consecutive quarters of negative economic growth."No, we are not in one yet, and there are some indications of strength in a few sectors.One of those is a double edged sword: as the value of the dollar declines, exports increase.Here are some recent discussions:http://www.boston.com/business/personalfinance/articles/2007/12/23/looking_ahead/http://www.foxbusiness.com/markets/economy/article/uhoh-said-r-word-does-mean_411472_3.htmlhttp://online.wsj.com/article/SB119784514764832443.html?mod=googlenews_wsjBTW: "Fed: Another $20B Auctioned to Banks"Did you know that although the fed publishes a "fed discount rate" and has done so for years, it has always been considered a lender of last resort (one of the primary functions of a central bank) but, until the "Bush economy" no banks had ever been in bad enough shape to actually call on such a loan.In 1986, in fact, a fairly major US bank was on the edge of having to borrow from the fed, and it and the fed had to create a process to do so, because it had never been done before. Its condition didn't become so bad that it had to borrow, fortunately.No economists are talking about this aspect of the current financial situation. (I expect few are aware of that fact.)
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
rjw,
Thanks for that bit of information.. No I wasn't aware of that aspect.. thank you for informing me..
"There are bears and there are bulls. Each can make their arguments based on whatever data that they choose. At this point, I'm a pessimist."That is because your focus is on building. There is a broader economy out there.I agree it has slowed, but the objective metrics show no recession. We may be closer than any time since '91 though. I'll give you that.
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True, a lot of my perspective is based on construction but a lot of my fears is based on the forces of the real estate market. I also place a great deal of weight on the manufacturing market. Detroit was a huge force in manufacturing and the thousands of small job shops were a huge segment of the economy, both large and small in SouthEasterd Michigan. It is suffering and there are no signs that it will return...unless China is going to ship back all the tools, dies and machinery that they have bought over the last 15 years.I know auto designer in high tech jobs that have seen their real wages (on the check) cut in half and all their overtime is gone too. Basically, that means they went from 150k to 60k and they are desparatly hoping that they don't get cut further. They are locked in. Five years ago, they were writing their own tickets. I know there is a broader market but I also see the two ends of the spectrum drifting further apart. Bob's next test date: 12/10/07
Hard for anyone to make an accurate prediction.But Warren Buffet said back in Oct that it would take 6-24 months for the subprime ripple to work its way thru the economy, and that it would probably be difficult for some but not to the point of being ruinous for the entire economy.That's just one man's opinion though.
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This is scary...I've been agreeing with you more than not recently...I better check my perspective again.!! (LOL)
You're right. actually, we were closer a YEAR AGO than we are now, based on the yield curve. It was completely flat 1 year ago today, and it could have easily gone inverted at that point. We are quite a ways away from that right now. It would take several months to change that, but for NOW, it is not showing recession."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Yes, when it tickled and toyed with inversion a year ago, I was expecting worse than now.
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me too. Earnings have surprised us all. I have SLOWLY been switching clients towards growth stories. I've been in cash flow stories for 5 years.....it's been a great place to have been. Not sure now with the interest rate dance we are seeing."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
>>What does a "downturn" mean? 94% of all mortgages are currently in good order and being paid on time. How do you extrapolate bad news out of that???,And what is the "usual" rate?One number alone doesn't mean squat.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Just to add a small perspective.......
During the Reagan administration, and continuing into Bush-1, there were numerous occasions on which the government released rosy-sounding economic-outlook numbers, similar to the one you quote.
Only to quietly issue a downward revision a couple of months later.
In general, the media trumpeted the good news. And, in general, they barely mentioned the revisions.
Just one of those things that can make ya go:
Hmmmmm.............
Politics is the antithesis of problem solving.
really??? such as?? These were realeased as...NUMBERS THAT DIDN'T NEED TO "ADJUSTED". Or in other words, the stats check out correctly, and they did not call for an adjustment. Check out the press release for yourself!!
And what does that mean anyway?? Often the numbers are adjusted up, just as well. The real issue is how the media creates the expectation. Then, when good numbers are released,....oh my, it surprised EVERYONE!!! No, they didn't. Not the economists who knew what they were talking about. anyway, I'd be interested in some of your examples...and then I'll give you a whole bunch from Slick Willy's admin!!"The nearest thing to eternal life we will ever see on this earth is a governmental program"Â -Ronald ReaganÂ
Edited 12/22/2007 9:43 am ET by unTreatedwood
>>These were realeased as...NUMBERS THAT DIDN'T NEED TO "ADJUSTED".
Try reading what he said.
And maybe consider what you actually are referring to: "Check out the press release for yourself!!"
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>The increase in real GDP in the third quarter primarily reflected positive contributions from exports, personal consumption expenditures (PCE), private inventory investment, nonresidential structures, federal government spending, equipment and software, and state and local government spending that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
"The acceleration in real GDP growth in the third quarter primarily reflected accelerations in exports, in PCE, and in private inventory investment that were partly offset by an upturn in imports, a larger decrease in residential fixed investment, and a deceleration in nonresidential structures."
>>This is GREAT NEWS, but it will be drowned out by the media's take. Too bad. They should take some economics classes.
From you?
"Looking forward, economists expect slower growth in consumer spending, business investment, exports and inventory building. And they expect little or no improvement in a housing market that was the worst in 16 years during the third quarter.
The third quarter "really represents the calm before the storm," wrote Bernard Baumohl, managing director for the Economic Outlook Group. "The economy has since stumbled badly and indeed we have now come face to face with recession."
"Further evidence of the slowdown surfaced in the weekly jobless claims report, which showed an increase in initial claims of 12,000 to 346,000, while the four-week average of continuing claims hit the highest in nearly two years."
From that bastion of liberalism:
http://www.marketwatch.com/news/story/third-quarter-gdp-unrevised-49-growth/story.aspx?guid=%7B373CBF96-7815-4ED8-A8A0-DBC13A43D7F0%7D
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
This being an election year, I don't expect anything until 18 months out from now.
You don't expect "anything". what does that mean???"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
By "anything" I'm speaking of a general upturn in the economic growth pattern.Of course this is my own observation based on the continued rise in gold price. And some of the sale downturn of such things as saw logs and stone product for building (both important in my local economy).Right now, as in the past, the upcoming election has the country "hold it's breath". As usual the news and those who give us the spin will attempt to place fear in everything we do (do as in what we need to survive) to keep us (the common man) in check.
Gold pricing is far more complicated than what the goldbugs try to explain to us. There is no question the rise in gold has been meteoric, and those who were long gold have done very well. But we should see 10 year interest rates MUCH higher than they are now if there is to be real inflation. That is NOT to say it won't be here in a couple of years. But the current indication is that the markets are not concerned about inflation. And the government cannot, I repeat, CANNOT manipulate the long end of the yield curve. As for economic recoveries, ...they are definitely regional, and non-concurrent. So some will feel it before others. That is why it is so difficult to quantify economic activities in such a way that everyone can relate. I hope I didn't confuse the issue too much!"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
There is a lot of manipulating done with regard interest rates to control inflation..
Bankers are clever enough to know that when interest rates are expected to rise steeply they don't use their liquidity to go after that market.. instead they do just as they are doing now which is increase down payment requirements and raise credit standards to minimise their exposure at the lower fixed rates..
"There is a lot of manipulating done with regard interest rates to control inflation.."Really....Can you explain how that happens??...other than the discount and short rates, (< 90 days). I'd love to learn how that goes on so I can alter how I manage my clients' short term paper. I'm always open to new ideas, if they are correct, that is. And then, I would REALLY like to know just how that CONTROLS inflation........"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"other than the discount and short rates,"That is the "lot of manipulating". Need there be more? Bob's next test date: 12/10/07
Not really. Inflation is a concern/function of time, thus, if you think you are goint to get money back in non-inflated $, you are not worried about longer term rates. If, however you are concerned with inflation, you are VERY concerned about getting paid in dollars worth less.....the longer the bond, the worse the decline in value. Thus, longer term interest rates that reflect inflationary concerns are much, much higher than short term paper, often 300- 400 basis points higher. That is nowhere to be seen right now. In fact, short term futures today place a 50/50 chance of another Fed cut at the next FOMC meeting. In short, you don't really understand what short term money is used for versus long term obligations. Not a problem, just don't pretend you do!!"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
I don't pretend to know anything. The people manipulating the currency are working full time, with large staffs of people and meeting with others who work full time and have large staffs of people.If you think the money supply is just wandering along without being manipulated, I've got a bridge to sell you. Bob's next test date: 12/10/07
I would think the majority of that "manipulation" is coming from private equity investors like Geo Soros and his buddies.
They play with multiple Billions in that game. I've heard that they're able to play against the feds themselves.
But from another angle, that forex game gets another boost from the dang banks adding that 3% forex fee to every CC transaction.
I'd dare say that because most people don't understand the currency markets, they lay down to those that do. These players are simply printing money.
The only thing I would challenge is the word "majority". We would have no way of quatifying that but your point is well taken.In the Carter era, we had the silver brothers manipulating the price of silver. Today, we have a world economy and everyone is attempting to manipulate everything. The price of oil affects our currency and vice versa. It's a complicated topic and I don't claim to know 1/1,000,000th of what it involves. I do know one thing though: the currency is being manipulated! Bob's next test date: 12/10/07
Pete,
Soros cannot corner a market on anything for any length of time. Go back and look what happened to the Hunt brothers when they tried to corner the silver market back in the 80s. They lost everything. The short term market gives liquidity to our day to day cash operations in this country. Of course it is manipulated, but its manipulated to keep our country working. This was a problem, by the way, in the 30's because they had a different view of what that should look like, and they perpetuated the depression. (Yes I know the banking system was different back then, but the intent was still there). But that is another story and another thread. The government/agencies/Fed have a vested interest in keeping our system liquid. Yet, with all that, they cannot corner the long term rates. It would be impossible. Even the speculators would have a tough time with that one."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
My two cents (exactly what most opinions are worth)?
The best we can hope for is a Dem prez with a Rep. congress, or vice versa. That tends to keep the damage to a minimum. My current connection to construction is working on my house-which requires endless trips to the local lumberyard. I know the mgr well enough to trust his opinion, that the really good contractors are always busy. Period. I install some carpet for locals, and the local furniture stores could keep me busier than my knees could ever stand. Our economy here is balanced between corn and cattle. When one is up, the other is almost always down. Recession? Fed manipulation of money supply? Stock market? Taxes? Yep, its all a mess and has little to do with raising my family in the long run. I'm trying to follow the advice of Dave Ramsey and live on cash and invest and give the rest. I have faith in the long term resiliancy of the American mutt, we have always had problems in our short term visions, and in hindsight we're almost always better off than we thought at the time. My thought is, keep your faith, keep your chin up, do the best you can do in all things, and it will all work out the way it will work out.
bowquack
I read and agree with virtually everything you said.. The sole exception is failing to use credit wisely..
Maybe you do and just don't think of it that way.. for example is your house paid for or do you have a mortage?
If you use cash only you must pay rent to live someplace because I know of nobody who has what housing costs sitting around in the bank.. When you rent you are paying for that property plus giving the owner a small profit and an allowance for maintinance.
Cash sitting around in the bank is also losing value. The interest rates paid on deposits never exceeds the core rate of inflation minus the profit factor the bank needs to remain viable..
Cash is simple, it's predictable, and it feels safe..
However, nobody who really prospers fails to use credit wisely. Perhaps because the last word, wisely seems so simple but is so difficult that credit itself gets a bad rap..
"I read and agree with virtually everything you said.. The sole exception is failing to use credit wisely..
Maybe you do and just don't think of it that way.. for example is your house paid for or do you have a mortage?"
I understand what you are saying, but I don't wholeheartedly agree. There are a few, notable exceptions to a "cash only" mindset. Your home is one, but even then there are caveats; only if you have a sufficient down payment, only if it is a small percentage of your income, and only if you plan on staying put for a while. Home values in my area are unbelieveably low compared to the rest of the world (nice 3 b.r., 1500 s.f. 2 bath can be had for less than 100k almost anyday, mine was less than 50k) and i do have a small mortgage partly to pay for improvements. With no other debts and a fair income, saving for a down payment is not an impossible task in almost any scenario.
This is a concept I have only come to embrace recently, I am buried in debt now for my past "sins". If I had adopted this philosophy earlier I staunchly believe I'd be better off now than I am. I have had to forego many opportunities in the past because I did not have the ability to borrow in when I could have used invested money (cash) to buy in cheap.
In the bank is almost the worst place to keep cash. Rates are pathetic and i do not want to see my money erode long term. I keep only enough cash to pay expenses on a carefully thought out budget and an emergency rainy day reserve (money market rates, still low but completely liquid), the rest is invested. Real investment is long term in mutual funds (yeah, yeah I hear all those bemoaning our overblown stock market, but history sez otherwise), paid for real estate, and businesses that have a long term plan and a history of profitability.
"However, nobody who really prospers fails to use credit wisely. Perhaps because the last word, wisely seems so simple but is so difficult that credit itself gets a bad rap.."
IMO "using credit wisely" is an oxymoron, because the word wisely is so hard to define, and credit is just too risky. The best true source of wealth is your income, not other people's money. Like I said, pay cash for what you need, invest and give away the rest. I am not a fanatic about Dave Ramsey's advice, but I do believe the advice has more merit than any other i"ve heard lately-Live like no one else today, and you can live like no one else tomorrow. With no debt, I'd be in great shape today with what I know now. I've also seen this in the real world. My FIL built a tremendous net worth and rental protfolio while he was working for someone else by doing just that. When his job was downsized he was able to choose his own path. He went into the used car business at a great time, borrowed virtually no money and prospered slowly but significantly. In time, he started to borrow small amounts here and there. He also started to invest in things he really did not have control over (single stocks in the market). Then he got hammered by the market, and borrowed more heavily in his business because he didn't have the cash as before. When he hit a true lull in the market, he mortgaged his paid for rental portfolio to carry him over. Then came the hailstorm that nearly did him in (hail ins. for independent dealers is expensive and his carrier had just dropped him a few months earlier 'cause he had the gall to actually file claims). His business has teetered on the edge for years and is just now coming back, my fate as well because i run a store for him.
I say all this with no disrespect intended, I know there are people that use credit and are doing fine, but as a car dealer, I see far more who can't do a deal unless the bank loans them all, because they don't have any down payment and are leveraged to the max.
Bowquack
I understand what you are saying and it's nice that we can respectfully disagree without trying to force the other into your viewpoints..
I'm nearing retirement but I still have another decade of solid work left in me. I'm currantly out of work and have been since before labor day.. However we are currant with all obligations and have virtually no credit card debt. Whatever we acquire this month will be paid this month.. Another words I use credit cards like cash.
The shirt on my back is a decade old and while shabby it's fine for the purpose I use it.. Another words we are prudent with money..
I've been so all of my life but you might not see it that way if you take snap shots of any particular moment. I buy expensive items at times. My bedroom set for example cost north of $25,000. that's a bed, two night stands and an amoire. Yes today those items would be more than that by a significant amount, however I went for decades on an extremely modest set from used furniture stores in order to be in a position to purchase those items.. Yes I put it on credit.. the store had a interest free loan avialable, and the particular items are fair traded (another words no discounts) so I was happy to use the interest free loan intead of my capitol.. Since the laon was backed up by my own on deposit money there wasn't an issue of failure to pay..
I'm building my own home and I have made extensive use of interest free credit cards to do that.. I don't need bank approval and all that hassle I simply buy and charge it.
When the credit is due I either roll the loan over to another interest free card or I put it all in a home equity loan. They come out and appraise the house and since my total debt is less than 20% of the value of the property it's granted quickly with no troubles.
I bought my first home GI nothing down.. I didn't even have earnest money!
I borrowed $50.00 from the realtor. That house trippled in value over the time I owned it. This property has increased 23 times in value.. Sure I've made payments.. about what rent would have been. Today due to wise use of borrowed money my net worth is very high.
My method won't work for everybody..
Nor will any get rich scheme work..
But reason and logic will show a dilgent and steady person a way to achieve their goals..
Based on your story it sounds like you have a long way to go before you should ever consider wandering from the path you've outlined..
Frenchy
Thanks for the acknowlegement. I see how credit has worked for you, but I fear that things aren't quite the same now. I believe we have been overwhelmed by a generation (or 2) of "I want it NOW and I'm entitled to it!" Everyday I talk to people who can't scratch up 2 dimes to rub together to pay down on a car, but they have the latest cell phone on their hip and every other electronic gadget at home. I admire the way you are frugal and level headed, you deserve the toys and luxuries you have, but you spent a lot of years earning those things. Life has kicked us hard a couple of times with medical issues and other real life problems, and I have fallen back on credit to my own detriment in the long run. Been in the position to file bankrupt more than once, but I won't. When i borrowed the money I promised to repay it, not walk away. But I am the eternal optimist. This is a great country, and has blessed me with more happiness and opportunity than i deserve. I will continue to work hard and honor my obligations, and hopefully it will rub off on my kids.
BTY, hope you are back working soon.
If it's as irrational as your "feeling" about the credit markets, I'll take a look at it!!"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Umm...evidently Ben Bernacke is also irrationally "feeling" like the credit markets could bring down the economy. He's promised a rate reduction today.When was the last time the fed promised one going into the meeting? A lot of the troubles are being covered up with innovative programs in the banking industry. This is mitigating the crash to the degree that it can.For instance, I know several people in MI that have entered into agreements with their bankers that allows them to sell their house "short". They sign papers agreeing to mow the lawn, keep the electrical on, etc and stop paying the mortgage. When a buyer buys the property, the bank will accept whatever is offered (within reason of course). The people can live in the house free. If the banks don't institute these types of programs in MI, the foreclosure rate would be triple (my wag) right now and then triple (my wag) again this summer. This might be good news to you, but maybe our definition are different. Bob's next test date: 12/10/07
No, it's okay. You have lost track of what we are talking about. Giving guidance before testimony is standard fare....especially when not wanting to surprise the markets, (as with the stupid 'rational exhuberance' comments from Greenspan.) I'll leave this discussion with your comments. But don't get TOO exasperated, we have a great country and a great economy."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
un treatedwood,
Am I the only person who listens to the news? Well there are a fair number of articles published by Newsweek and such to read. No, I don't save old copies but maybe you could visit a doctor or dentist? :-)
"8:30 AM...."DJ US 3rd Qtr GDP +4.9%, unrevised from Prelim Report...(consensus was 5.0%)"
This is a huge number, especially in view of the 2nd Qtr number and all of the gloom and doom from the main line media. I have gone on record stating as of this moment, we are not facing a recession. This is strong support for my position. ...so far.
This is GREAT NEWS, but it will be drowned out by the media's take. Too bad. They should take some economics classes."
Hey I'm just trying to understand things here.
Jan 7 2008 "NEW YORK (Reuters) - Wall Street analysts have turned increasingly pessimistic about U.S. financial results for the fourth quarter and trimmed their profit growth forecasts for the first and second quarter of 2008, according to a weekly survey by Reuters Estimates released on Monday.
The survey, which follows a slew of weak economic data and announcements of financial write-downs, showed analysts expected S&P 500 companies' fourth-quarter earnings to fall 8.4 percent from a year earlier."
Is this an example of the media getting it wrong? Does Reuters need some econ classes?
You don't know anything about the survey, only what they SAY about the survey;
You don't know what was said about the original predictions, only what they SAY about them.
I don't know if this is an example, but it's 3 or 4 sentences out of 10's of thousands. I'm not sure what you are trying to understand. The best examples are the air heads on TV. Start there."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
>>I'm not sure what you are trying to understand. That is one of the moist insightful observations ever posted here, IMHO<G>
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
So if earnings fall 8.4%, they are still making money. BTW, WHO are the Wall Street Analysts? There are thousands of them...How does Reuters decide whom to listen to? Remember, Reuters is the media group that refuses to call terrorists, terrorists. so Im not sure who they call analysts!!! Maybe they are referring to terrorists!!! HA, HA. Just kidding though."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Curious to have your opinion of today's economic rumblings...
Everybody's got an opinion - that's the same as something else everyone has.
The real question should be: On the downside slide of the economic curve as it slips towards recession, which sectors perform best and which we should stay away from. And then within those sectos, which individuals stand out?
That answer provides us something concrete to work with. The other is gas.
We are in a predictable correction, pure and simple. Several years ago, my best friend was diagnosed with esophegus cancer. He wanted me to watch over his older boys as they got into business. The older one was developing a nice mortgage practice in San Diego area, but was being assaulted to push the ultra risky mortgages...the ones that are collapsing now!! I counselled him to stay away from them and stick to traditional platforms. Not only is he glad he did, but his competitors are blowing up daily. So that's how I happen to know that just a few years ago these things were being pushed with little concern about what would happen when rates turned around. Houses that are abandonded include those who should have never had a mortgage in the first place. Banks were sucked into the biz because it was profitable, yet there are plenty out there who did not veer into that "sub=prime" fiasco. In the 80's they were junk bonds, and we all recovered. In the 70's it was commercial property, and we all survived. The iritating part to me is that no one complains when we go through this, but everyone wants to point fingers and assign blame when the junk hits the fan. That really gets me pizzed off. Bank of America will make a fortune on the Countrywide deal. They are taking advantage of an opportunity. GE capital did the same with Kidder Peabody in the 90s with the Joe Jett deal. GE made a fortune. Last I checked, there is nothing wrong with people making money.
There IS something wrong however with people borrowing money that they feel they don't have to pay back. I consider that stealing. But I AM radical!!"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Are you still so sure that the economy is not in a recession or do you believe that banks failing and the Fed stepping in with bailout money is no big deal?
How can gas go up 100% in a year and there be no inflation?
70% of the economist feel the country is in a recession Do you still fall in the minority side?
We still haven't seen the glut of foreclosers go thru the system yet but devaulation and extreme inflation have to rear their head soon.What is your take on the state of the economy now 2 months after our last debate?
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
andy: one bank was in danger of failing, the fed convinced another bank, JPmorgan to step in and take over. There was no taxpayer money involved.
On a personal note, I wish they wuold have let it fail. The sooner we open all of these banks stupidity, the sooner we can get on with life.
As far as oil going over 100 barrel. The congress should look into hedge funds. There appears to possibly be some monkey business involved.
1000 to 1 leverage!!!!
Unfortuneatly, the democratically controlled congress won"t open an investigation bcause there largest money supporters come from hedge funds.
Instead we will undergo investigations of Clemons use of a legal substance. What is wrong with this picture...
frammer 52,
No The Fed did step up to the plate and guarantee JPMorgan funds That's our money the feds are playing with..
The previous rules in place since the depression were swept under the rug..
the fed guarenteed 30billion of bear stearns part in the subprime mess.
the latest is that it may be2-3 billion either loss or profit.
no way to know until people pay off their mortgages
probably not gonna happen. Where are these people gonna get the money? Why is it when the rich get in bed with dogs, they never have any fleas?
Boy do I agree with you!! Just a comment about the JP Morgan buy out. The treasury provided financing for those institution who bought some of the more illiquid assets on their balance sheets. So directly, no taxpayer money. But for financing, some WAS invovled. Not that that was terrbile, mind you.
GE bought out Kidder, Peabody's mortgage portfolio in the mid-90s and made a killing. The problem is that when the government bails out these companies who take undo risk, the competition who is not taking that risk looks at themselves and asks, "why shouldnt we take risk?". indeed, why shouldn't they if the government comes in to bail them out? Why should nt they face the failure that they have earned? I for one wish they would be allowed to collapse. But that is not a popular approach, I'm afraid."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
A couple of things:
1) When MY industry is affected, I am in a personal recession, regardless WHAT industry I'm in. Unfortunately, other industries may NOT be affected;
2) Most everyone in this forum is affected by the housing slowdown. That's what makes this much more personal. When the Financial Industry was hit hard in 2001, 2002, following 9/11 and the surplus of cash from Y2k, many economists insisted we were NOT in a recession, yet the financial industry WAS in a recession.
3) Housing is being affected big time right now, yet when it was going up like CRAZY in the last 2-3 years, no one was concerned that it would stop...and it always does! So now it HAS stopped, and the world is coming to an end. No it is not coming to an end.
4) We may indeed be talking ourselves into a recession. No recession is the same. Mr. Clinton insisted on banks lending money to all comers in the late 90s, and now we are paying the price for having lent to those who are unable to pay back...duh!! Yet, it comes as a surprise when the bubble bursts. I fail to understand why we always forget!!
Who bought Bear Stearns???? Another American bank run by a very bright, creative individual named Jamie Dimon. Anyone remember who he was? I'll wait to see if anyone does. In any case, JP Morgan had the reserves to buy out Bear Stearns...how did they do that? they have been managed well enough to be in a position to buy. Bear Stearns was on the opposite end. Why isn't anyone pleased that we did not have to go to China to buy an American Investment Bank?
So, in the end, we may be closer to a recession, thanks to our own doomsday frame of mind. But if it happens, it will not have been because of fundamentals. It did not need to happen...."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreated wood,
Except they don't have the funds! typical investment house has lent out 20 times their own asset..
Those funds were guaranteed by the fed.
"typical investment house has lent out 20 times their own asset..
Those funds were guaranteed by the fed."
Got some proof of this claim? Or is it another Frenchyism?
Peteshlagor
On the news all day, haven't you heard it? I first heard it this morning on CNBC, then NPR later.. this afternoon they were talking about it, Variations of the same story..
I suppose that's a a liberal conspiracy?
Edited 3/18/2008 10:32 pm ET by frenchy
yes."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
That's what you get when you listen to people explain transactions when they were lucky themselves to get through 8th grade math. IT'S A STOCK FOR STOCK DEAL...IT DIDNT TAKE CASH!!! As I said previously, the fed is guaranteeing the assets, not the deal. They have a vested interest in making a market for THEIR SECURITIES. (Stop listening to left wing idiots who hate capitalism in the first place and then making a decision!!)
+++++++++++++++++New York, March 16, 2008 -- JPMorgan Chase & Co. (NYSE: JPM) announced it is acquiring The Bear Stearns Companies Inc. (NYSE: BSC). The Boards of Directors of both companies have unanimously approved the transaction.The transaction will be a stock-for-stock exchange. JPMorgan Chase will exchange 0.05473 shares of JPMorgan Chase common stock per one share of Bear Stearns stock. Based on the closing price of March 15, 2008, the transaction would have a value of approximately $2 per share.Effective immediately, JPMorgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. Other than shareholder approval, the closing is not subject to any material conditions. The transaction is expected to have an expedited close by the end of the calendar second quarter 2008. The Federal Reserve, the Office of the Comptroller of the Currency (OCC) and other federal agencies have given all necessary approvals.In addition to the financing the Federal Reserve ordinarily provides through its Discount Window, the Fed will provide special financing in connection with this transaction. The Fed has agreed to fund up to $30 billion of Bear Stearns' less liquid assets."JPMorgan Chase stands behind Bear Stearns," said Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase. "Bear Stearns' clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns' counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner."Dimon added, "This transaction will provide good long-term value for JPMorgan Chase shareholders. This acquisition meets our key criteria: we are taking reasonable risk, we have built in an appropriate margin for error, it strengthens our business, and we have a clear ability to execute.""The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
But those assets have no ready market due to other factors You and I both know about and understand. Basically the government is willing to buy what cannot be sold.. Does the concept of horse manure come to mind? (figuratively not literally).
Without that guarantee this deal would stink.. with that guarantee this deal offers profit potential.
Wouldn't it be nice if the average Joe on the street could stumble into deals where the government virtually assures you of getting rich? (rhetorical)
I understand why it was done.. what I object to is the way banking regulations, lessons we learned the hard way in the great depression are neatly being sidestepped in an attempt to extract America from a position she shouldn't be in..
Yes. I am refering to that expensive military adventure in Iraq.. In the end that is why we are in the position where regulations need to be side stepped at all. I'm sure that you understand the connection..
Frenchy:
Those assets that can't be sold right now are subprime.
When the market figures out how to properly price these assets they will be sold, and most likely for a profit.
Listening to CNBC this morning and it seems the fed has finally figured out how to make money available to be lent again.
frammer 52,
That's correct, however the way they are doing it is further violation of sound banking principles..
Those principles are hard learned lessons from the great depression.. when they are violated the whole banking industry suffers.
You are aware that the great depression wasn't caused by the stock market crash aren't you? At the time relatively few people owned stocks. So the stock market crash would have impacted a handful of people.
What caused the actaul crash is banks made risking investments (in the stock market) when the stock market crashed they couldn't pay back depositers and that caused others hearing that this bank or that bank went bust to try to take their money out.. The run is what caused the great depression..
People lost faith in the banking system and loans couldn't be made etc.. thus jobs were lost and the great depression resulted..
This is differant.. but it's also the same thing.. Same basic principle..
you said that the run on banks caused the depression.
I was taught thet that was the reason for FDIC.
Until we lose complete faith in the ability of our gov. to pay off depositers, relax.
This to will pass!
frammer 52
Yes FDIC did slowly start to convince people that responsible measures were being taken But that was a small part of the new regulations implimented to give the American public confidense in the banking system. Eventually Americans could start to trust banks again.. however look at the duration of the depression. Even after WW2 some peaple who'd been thru the depression refused to use banks.
The world revolves on credit. Undermining the foundation of that credit as America has been doing lately is costing all of us.. Ask yourself, would you do business with those you don't trust?
This is why the fed arranged for the takeover of Bear Sterns.
That is why the Fed is bailing out or letting investment banks step up to the discount window.
In combination with the above, you will find, finally that banks will be lowering the mortgage int. rates.
When the int. rate gets to around 5%, look out.
There is a lot of pent up demand for housing as people are waiting for a lower int. rate..
Yeah and there is a large glut of unsold or forclosed homes going on the market.From all I have read it will take over 3 years to get rid of the glut before demand will start increasing home constuction.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
In the 80's it was the oil related properties; in the 90's it was the S&L crisis; and now we have residential housing. This is the way markets work. This is why you should never put down LESS than 20% on your home...stuff happens. If this were anywhere else in the world, it would take decades to work out. But a few years or less is nothing in the long run. If you have savings, and are an excellent tradesman, you will survive. This is where the chaff shakes out, to put it bluntly. We should have never offered people who could never pay off loans 0% down loans in the 90s and early 2000s. Those who bought homes with traditional financing are doing just fine ( me, 1998, and again in 2005).
In short, keep your chin up, keep on improving in your craft and take market share! "The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
frammer52
That is exactly the problem though.. (actaully worse) depression era Banks only could loose the depositers money..
Investment firms can and do make investments world wide. That south American gold mine goes Bust American tax payers take it on the chin..
As someone else has pointed out we have a 3 year supply of non new sold homes. plus nearly every new home sold will require an existing home to be sold first. The trouble is a lot of the buyers who would ordinarily be stepping into those starter homes are leaving the country..
In case you aren't aware of it the street corners are no longer 30 deep with illegals looking for work.. I drive past areas that used to be called "slave Markets" where sometimes a hundred or more illegals waited for work and at best there are 5 or 6 guys standing around..
Oh bye the way, the unsold spect homes (1million) is a 2.5 year supply but who is counting.
This is figured that we need400,000 homes to meat demand each year.
We are still building new homes in US at annual rate of around 1 million.
Somehow the numbers do not compute.
maybe because liars figure and figureas don't lie?
But those assets have no ready market due to other factors You and I both know about and understand. Basically the government is willing to buy what cannot be sold.. Does the concept of horse manure come to mind? (figuratively not literally).
You don't know what you are talking about.
Wouldn't it be nice if the average Joe on the street could stumble into deals where the government virtually assures you of getting rich? (rhetorical)
They DID...When Slick Willy mandated that banks loan to the "average Joe" when he otherwise would never have been able to get a loan to buy a home. Thus, the average Joe borrowed 100%LTV and now is unable to repay, and is now a victim. The "average Joe" is now supposed to have the government bail him out because he was not SMART enough to realize what would happen when rates went back up, and he had taken out a teaser rate negative amortized loan. So what happens when they STUMBLE on such a deal??? They don't have a clue what to do about. Once a victim, always a victim.
As for the military, that's a leftist canard; I'm not interested in discussing it at this point."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreated wood,
I'll bet that you think this war has been good for the economy don't you?
As for the rest of your slick willie comment..
Well did you ever hear of the GI bill? a whole bunch of us leftist commie lovers came back from Vietnam, Korea, and WW2 and bought houses with just such a deal..
GI, nothing down..
I'll bet that you think this war has been good for the economy don't you?
I never view any war as being good/bad for an economy. Only leftists see it in that light. We fight wars because we have to, period.
Well did you ever hear of the GI bill? a whole bunch of us leftist commie lovers came back from Vietnam, Korea, and WW2 and bought houses with just such a deal.. GI, nothing down..
Too bad they didn't teach you how to compare and contrast!! My guess is that you paid your loans back. And the value of the homes at that point were not going up like they were in the last 2-3 years. There are other points that make it a much different situation...one that you should not compare yourself to. "The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
Us commie leftists who fought for the freedom you enjoy in WW2, Korea , and Vietnam had just as much chance to lose it all as today.. we went through up and down cycles and some of us lost our homes because of circumstances beyond our control just like homeowners today are doing.
Appreciation isn't why we bought homes and it's not why most buyers today buy homes.. Those that did buy for that appreciation listened to the same experts you are claiming to be. There were plenty of seminars locally to that effect.
Oh sure I gained big time on this place as well as the place before it.. But I didn't do it for those reasons.. I did it to have a home where I wanted to live.
The increase in my net worth is a bonus to make up for all the losses I've endured in the market.. (karma)<grin>
By the way your little tag line? Properly should be followed by a, "thank God because without Government we would have anarchy..
You may be a commie leftist...(I can certainly attest to the leftist part of that), but I am not sure about the communist part...I have an open mind.Many people fought for my liberty, and ARE fighting for it now. That has absolutely nothing to do with loaning money to people who cannot and will not pay it back. I don't follow your jump there with a dose of patriotism. Is that suppose to make me feel guilty or something? It doesn't. If someone signs a note agreeing to pay back a loan, and they will never be able to pay it back, that's wrong. Without going into details, the loans being signed by virtue of the GI bill have nothing in common with the ones that stand in default today,...AKA sub-prime loans. Banks would have never created loans like that following WWII and the Korean War. It took a idiot president to force banks to lend to illegitimate borrowers so that "all americans could enjoy the right of home ownership". What a crock. No one remembers that now. I'm sorry you cant tell the difference between that situation and the one you describe post WWII. It IS different."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
untreatedwood,
In the end will America be better off with more of her people owning their homes than less? That was the gist of the argument which helped to pass the GI bill home ownership clause.
Prior to that banks didn't consider it wise to lend to anyone who didn't have 25% down payment or collateral.
The GI bill put millions to work building new homes at a time when war based factories were laying off and the economy was slowly switching to peacetime economy..
GI nothing down. very risky! But it resulted in a good thing..
Open up the market to everyone even those without a down payment and we got really busy.
I remember those heady days.. when I could sell any piece of equipment I could get my hands on.. The equipment paid for itself. I'd rent it to you to prove that. Once you saw how much faster it made you and you'd built up credibility with the credit department I'd even finance it to you.. It didn't matter what your past credit history was because now you were making money.. serious money and equipment payments came easy..
Everybody was working and making money.. ah those were the days..
great policy!
If you got in on the early days of that your equipment is paid for,, you've put money in the bank and the future looked pretty good..
Those who jumped on the wagon in the last couple of years were those at the bottom of the barrel.. without enough time to build equity before the slowdown caused problems.
What was the cause of the slowdown?
Well some investment firms which bought subprime mortgages resold them.. Only trouble is they sold them as Triple AAA rated not as the near junk they were..
They sold them To foreign investors who when they didn't perform as they'd been led to believe started to raise a stink. With the stink foreign investors already nervous because of our borrowing massive amounts of money to fund a war they didn't approve of refused to buy any more or lend money to those who had a lot of them..
Hence the cashflow problem..
So plane and simple the problem doesn't fall on Clintons shoulders as you so cleverly try to claim.
It's first on the shoulders of Bush who's spent our resources in an unwinnable war. and the banks who misrated the quality of the loans made.. Without the war we'd have the resources to deal with the problem internally. without the misrepresentation of the quality of the loans normal prudent banking practices would have kept any bank from becoming so strapped for cash..
Those few who are losing their houses are doing so mainly because the economy is slowing to the point where they can't make payments..
Edited 3/20/2008 12:35 pm ET by frenchy
bottom line...you don't have a clue about what you are talking about. Stick to your trade. I reserve the right to include "commie" in your description!!!"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
That may be a little harsh.
It is a shame we can't reason with him.
Logic works on republicans and conservatives but doesn" on liberals otherwise they would be conservatives! hmmmmmm.
frammer52
The reverse is also true.. logic works on liberals and those open to ideas but conservative neo ####'s who call others commie pinkos are unable to accept anything other than party dogma
logic only works when a person is willing to accept that they may be wrong!
Think about it...
Frammer52
I guess your'e correct, you are wrong..
I think everyone here is tired of the poor illegals without a tax burden. Most of us here are working folks and these illegals are taking our jobs
The GD republicans ship our jobs overseas, the democrats want to give them to illegals. When they learn english and move into sales you'll scream bloody murder.
Catfish,
I'm not glad that illegals are holdingback our wages.. but I'm man enough not to pick on the weak.
It's the rich and powerful who benefit in the end.. Follow the money.. that's where the guilt lays.
You are freaking unbelievable.
catfish,
thank you.. I'll presume you meant that as a compliment..
You my friend are getting a little carried away.
Don't feal sorry for the illegals, their own countries could care less about our problems.
All they seem to care about is themoney these illegals send back to their country.
You want
us to take care of people their own country won't take care of
Maybe it is time for us to insist that their own country take care of them
after all, we have shipped thousands of manufactoring jobs to them
please don't spout off the talking points from the DAily Kos.
frammer52
Please do not tell me who I should be concerned with.. I feel blessed, I have health, a good family, some comforts, and success.
If I'm not in a position to care about others who pray tell would be? If the majority of illegals I meet were shady characters and as selfish as you claim maybe then I would have a differant viewpoint..
However I have always been a defender of the weak and downtrodden. I may achieve more in my life, but if I do it won't be because I stepped on those weaker than me..
No, it's not harsh. He has had some excellent trade posts, which I have appreciated. But he does not even comprehend the difference between a vet coming back and taking a 100% loan for a 30 year traditional mortgage, and the virtually homeless taking teaser rate, interest only mortgage and then not being able to keep up when rates do a back up. He is unable to process that. He really does not understand. It's not the first topic dealing with finance and economics, either."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Maybe I painted with a little to wide of a brush
maybe not!
Can you please explain this "bank speak" I do not understand just what is being said here. ""In addition to the financing the Federal Reserve ordinarily provides through its Discount Window, the Fed will provide special financing in connection with this transaction. The Fed has agreed to fund up to $30 billion of Bear Stearns' less liquid assets."JPMorgan Chase stands behind Bear Stearns," said Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase. "Bear Stearns' clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns' counterparty risk."" I read that to say that the Federal reserve (Which I understand is not a privately held , nor publicly held corporation ) is underwriting this transaction. I then ( in the 2nd. paragraph) read that JP Morgan is Chase is standing behind the deal. So which is really underwriting it , and is any govt. money ( ie. tax money) being used for the underwriting? And why if it is such a good business move for JP Morgan Chase does the deal need a federal reserve back up to make it work? I am just a dumb carp who asks stupid questions. If JP Morgan Chase has problems, and the deal goes south in the long run who pays for the Federal reserve $30 B. that has been under writtten?
They can't get your Goat if you don't tell them where it is hidden.
we all maybe a little dumb when it comes to some of these things.
My understanding is that jp morgan is buying the assetts of bear stearns.
They are paying $10/share for a 40% stake.
As far as the fed they are guarenteeing the 30 bil. in subprime loans
that is causing the problems.
The problem as I understand it is, the mortgages are having trouble being sold to the secondary market.
The secondary market is made up off institutions and mutual funds
that buy these mortgages as income vehicles
What has happened is that these mort. have become scary for investors because of a higher than normal rate of forclosure.
Less than 20% of those mort. are at risk.
No one wanred them on their books because they are unsure of the actual value..
The fed is now backing these as a lender of last resort.
By doing this, it has opened up the banks to underwriting other investments, without the stigma of "subprime"
"By doing this, it has opened up the banks to underwriting other investments, without the stigma of "subprime""The way I see it what the Fed has opened is Pandora's Box. Who is going to be next in line for the special Sunday morning, Paulson/Bernanke massage treatment, Citi, WaMu? How can the Fed say no to them, aren't they even bigger and more important than Bear Stearns? And what of the BSC shareholders - they went to bed on Friday with a share price of $38, and woke up Monday morning with Hank Paulson telling them their shares are worth $2, and oh by the way, we sold the company you own over the weekend!This whole thing stinks to high heaven. I thought I was living in America but somehow the guys at the top are running the banks and the markets more like the Soviet Union.
Edited 3/26/2008 2:15 pm ET by TJK
citi and wamu are convential banking institutions
They have both had to raise capital to continue in business.
To remain, they must have a certain amount of capital to continuing loaning etc..
bear stearns is an investment bank, there is a big difference.
The fed and treasury dept. had to step in or this bank would have been
in default. This could have caused a rush on banks deposits. This
could have put us very close to what happened in 1929. By helping
jp morgan buyout bear stearns, they stopped this from happening.
The only potential cost to taxpayers is in the 30 billion in loan guarentees the fed made, to make the buyout happen.
The stockholders in bear stearns on monday of this week had the buyout offer of $2/share increased to $10/share.
What you fail to realize is that if this hadn't happened, bear stearns would have had to file bankruptcy.
Your last statement makes no sense. In the soviet union the banks
and economy was owned and run by the state.
No one forced bear stearns into the takeover. The problem is that
they had no choice. bankruptcy or takeover what a choice
This is very disconcerting to the average business person or taxpayer,
because they see extra benifits given by our gov. In reality the gov
was trying to protect us from a run on banks which created the last
depression. Yes, there are businesses the gov. can't allow to fail.
Think of it like you have so many loans from a bank that if you default
the bank would fail.
It is complicateed but necessary for our gov. to help.
If that had happened, the stockholders would have stock worth -0-.
"Yes, there are businesses the gov. can't allow to fail. Think of it like you have so many loans from a bank that if you default the bank would fail. It is complicateed but necessary for our gov. to help."Yes, that is the explanation given to justify this unprecedented intervention in the our markets and banking system. Dozens of banks and hedge funds are insolvent, some are big, and some are small. Which ones should the Fed "save"? If your answer is "Any that they care to", then I say we have the American equivalent of the Soviet, centrally-planned, system. You are absolutely wrong about the BSC shareholders losing everything in a bankruptcy. Hell, they weren't even allowed the courtesy of a notice when Treasury and the Fed sealed the deal behind closed doors. The fact is nobody knows what the assets would have sold for, and to claim it is $0 is just as ridiculous as to say they are worth $10 a share. There are plenty of lawyers in NYC, and I suspect that might explain why the offer jumped from $2 to $10 a share. Rectal extrapolation?When supposedly "free" markets aren't allowed to operate under market forces, to average investors it's no different than a rigged stock trade or a Ponzi scheme. The insiders and those with powerful friends will steal the others blind! With these actions the Fed and Treasury may have averted some unpleasant days for a few large banks, but they also destroyed the trust of millions of investors here and abroad. Without the trust, there can be no real markets.
Edited 3/26/2008 11:43 pm ET by TJK
It is not only the explanation given but the reason that makes sence.
If the investment bank was allowed to fail this could lead to a string of failures.
A string of failures would lead us into a depression.
Bear Stearns was having a run in the week before the proposed takeover.
If this allowed to continue Arun on all investment banks would result.
Confidence in the banking system is necessary for the system to work.
It is also my understanding that BS possibley could have survived if the
fed and treasury had just guarenteed the loans. This brings up the
question, why should the gov. not demand a change in management?
If the existing management had been allowed to stay in place, who is
to say that they had learned their lesson and would run it properly.
I am a champion of market forces in most cases, but in a case that
could expand to the entire banking world it is best that some intervention is necessary.
Your last paragraph does not make sense. How is trust destroyed?
The exact oppisite in fact happened. The stock market settled down
with the comfort that strategic intervention in the market caused.
Our gov. with this action, commiting probably at most 3-4 billion, gave
confidence that our gov. is commited to helping. This is much cheaper
than the stimulis package the gov. already has in place.
Your statement that dozens of banks and hedge funds are insolvent
must be proved. If this was true, fdic would have shut them down by now.
Hedge funds should be allowed to fail. I see market manipulations
that they appear to have caused. Banks, fail, depositors are insurred.
Investment banks and reg. banks are in fact 2 diff. things. Reg. banks
do own investment banks but they are not a part of FDIC. Depositors
are not guarenteed by federal agency.
Here is something else, hedge funds I believe, are not paying their fair
share of taxes. But that is something else.
"How is trust destroyed? The exact oppisite in fact happened. The stock market settled down with the comfort that strategic intervention in the market caused."Trust is destroyed because they are openly rigging market transactions. Who wants to be a counterparty in a market where the other side is backed by unseen funds or political "help"? If an investor was smart enough to short BSC at $150 and it fell to $2, then they should enjoy the rewards for their insight and the risk they took. When the Fed or Treasury butts in and sets some arbitrary price, $2, $10, whatever, that investor is cheated and played for the fool. The same thing happens when Treasury wades in to the futures markets on down days to head off steep declines (google working group PPT). They are manipulating markets - at the margin - to effect an outcome decided by some guys behind closed doors.There have even been comments recently from Fed governors calling individuals and hedge funds who place transactions counter to the Fed's stated goals as "unhelpful". What's next, are they going to arrest investors under terrorism statutes for "attacking" their bailout schemes? WTF? These are free markets? Talk all you want about averting crises or bank runs. The fact is these guys no longer even try to hide their interventions and justify their actions under the notion they are smarter than the average bear. And like anything else in government bureaucracy, these interventions will only get bigger and more intrusive over time.
unfortunately, you have some very valid points."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
I'm thinking the breaking of Glass Seagel was an error.
And your reasons would be...???? ( Not that I disagree with you, mind you!!)"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
I don't see how you consider it rigging the market. The are not openly rigging the market.
The hedge funds are another problem. These are co. set up in such a way that they can leverage their funds up to 1000 to 1.
These co. are one of the major reasons that there is such a steep increase in oil futures.
The Hunt bros. tried to corner the market in silver, in the 70's.
These people are doing the same thing with oil and money futures.
We need a congressional hearing into these hedge funds and their operation.
Side note: These hedge funds are operated by democrats that fund
most of the national and state canditates. This is the reason that
there will be no investigation. Bush and Cheney have both begged
the Saudis to flood the market with oil. If and when this happens
the oil futures will make a tremendous drop. It will take some courage
but as faR AS i SEE, this is the only thing that will restore some
sanity to the oil markets.
Remember, hedge funds are run by people who are extreemly liberal,
Because of this, in the present polictal climate, there is no will to do
the right thing.
I'm sorry it's taken so long for me to get back...I'm the middle of a very large transaction..check out the news on symbol CCU...talk about volitile.This sounds like gobbledy gook...but in essence, this is no different than what goes on with mortgages, and collateral loans in industrial bonds. In fact, Brady bonds were deposited as collateral when south America got into trouble. It did not guarantee the debt, but was used to "secure" the debt...there is difference.The biggest problem with Bear Stearns, (a competitor of mine) in this situation is not the operations, but rather they are holding assets that when "marked to market" are not able to be sold, easily, anway. That is one of the things this fed secured fund will allow for...the sale of these assets. A similar transaction took place with Kidder Peabody and GE, but was NOT secured by the Feds.In any case, this was brokered by the Feds, as Bear Stearns is a venue to place GNMAs and other treasury issued debt...the government had a vested interest in seeing this out in an orderly fashion. I believe in letting the market do its thing.... but that will never happen in this world."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
I understand the need to back up the deal using the fed. Not any different then what happened with Chrysler back a few years. The nation cannot afford the fall out . I would perhaps feel better about the Federal guarantee if that package included a requirement that those responsible for the Mismanagement of Bear Stearns had to give up all of the monies they earned for the last 5-10 years.
It is sickening to see the amounts of money those in charge made off with and then see them get a pass on having to feel the pain they bring to others. I would go so far as to include all who profited from the dealings that are now being covered with federal funds, that includes stock holders who rode the rise and then sold off before the fall. Never happen , but if my dollars are going to back up a profit taking concern then I want those who are responsible to cough up their gains to the treasury.
They can't get your Goat if you don't tell them where it is hidden.
Actually, this is classic fallout from liberals trying to force their agendas on our economy! I was working in the private client group of what is now Bank of America in the 90s and we were under extreme pressure from Slick Willy's admin to loan to the poor and impoverished. Combine that with the influx of the Fed liquifying the economy in anticipation of Y2K, you had the perfect storm. And now when we try to unwind it, the real reasons are nowhere to be found. To hold those responsible for "mismanagement of Bear Stearns" is virtually impossible. The treasury made demands on their dealers that were impossible to ignore. That's why the capital to bail our troubled banks came from outside the U.S. There are other reasons, too, but they are too complicated and technical to try to explain here. But suffice to say that this is what we get when we try to do social engineering in the capital markets. I always suggest to those who have a passing interest in this area that they buy Thomas Sowell's book "Practical Economics", It's very accessible and explains the law of unintended consquences in a way that is easy to understand. I recommend it highly."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Andy,
I just realized I did not respond to the rest of your post!!
How can gas go up 100% in a year and there be no inflation?
The increase in Gas at the pump IS inflationary. But when there are more than 30 different requirements in the various states for refining and delivery specs, it makes it hard to even out many of the production costs. Any pressure is immediately felt, in other words. (After Hurricane Katrina, most of those requirements were vacated and the price fell dramatically, much to the surprise of the so called "experts".)
70% of the economist feel the country is in a recession Do you still fall in the minority side?
I could give a rat's A@# what a majority says. I make a living doing what the majority doesn't!! I won't go into the history of how wrong the majority ususually is. Suffice to say, the majority ususally exhibits a "herd mentality", giving rise to the term mob rule, by some. In this environment, we don't have mob rule, but a majority is meaningless to me. I explained my attitude about recession in the previous post.
We still haven't seen the glut of foreclosers go thru the system yet but devaulation and extreme inflation have to rear their head soon.What is your take on the state of the economy now 2 months after our last debate?
What do you "devaluation"? Housing, retail, what? Extreme inflation is not in the cards at THIS point. I was unhappy to see how much money the fed was pouring into the system, however. The state of the economy is still better than what the media is letting on. I am worried about oil futures, and $1000/ounce gold. Oil futures are pure speculation, as evidenced by the relative stability of gas at the pump. If gas were to rise to parity to 109 oil, it would have to be over $5/gallon!! While that may be coming, it's not showing up at this point. I still maintain that if we would announce that we were going to drill in ANWAR, futures would fall to $45-50/bbl. immediately.!!! I don't know why we let that reserve stay there untouched. Oh well...."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
If you lived on the Gulf Coast, gas went up from 20 to 50 cents a gallon after Katrina, depending on where you lived.
unTreated wood,
those are a couple of pretty good posts right there--well spoken.
especially about "Herd Mentality"
Stephen
thank you. I make a lot of people mad in this forum.
but I manage money during the day and run a carpentry 1 man shop on the side. Have to keep an open mind with those two atmospheres."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Given the recent headlines, that we ARE indeed NOT in a recession, I just thought I'd highlight the fact that I held firm to my position that we were and are still NOT in a recession. that's not to say that I enjoy paying $4/ gal for gas, and that it will not affect us eventually. but even though it's been tough, it's not as bad as it was in the 80s, or 70s for that matter, and we are still chugging along with an unemployment rate that is still historically low. I am concerned about commodities, the US $, and oil. But for now, we are holding our own."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"but even though it's been tough, it's not as bad as it was in the 80s, or 70s for that matter, and we are still chugging along with an unemployment rate that is still historically low. "If we calculated unemployment using the same metrics as the 1970s, the rate would be around 12% today.http://www.shadowstats.com/imgs/sgs-emp.gifIt seems the BLS stops counting unemployed workers once they give up lookin for a job. And unlike the '70s and '80s, 85% of the employment "data" are based on hedonic computer models, not actual headcounts. So why do we appear so well off with mall parking lots full and chicken Mcnuggets in every minivan? Credit. Americans spend about $1.07 for every dollar they earn, all courtesy of the people in Asia who loan us $2-$3 billion a day so we can pretend we're still rich. Of course their lending and our excess spending can't go on forever. When the party finally ends you will see the real American economy, and it won't be a pretty sight.
For $175/year, I can read about another conspiracy calculator...just what I need to run my business...!! This where he got his "unbiased" chart....
++++++++++++++++++++
The Shadow Government Statistics Newsletter
Subscription includes access to all back issues and SGS Alternate Data Series.
"John Williams' Shadow Government Statistics" is an electronic newsletter that exposes and analyzes the flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers, and provides an assessment of underlying economic conditions, net of financial-market hype .
"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"For $175/year, I can read about another conspiracy calculator...just what I need to run my business...!!"So I take it you believe the official, gubmint CPI numbers that claim inflation is 3.6%, while the money supply is growing at 22% annually? And the fact that increases in Social Security payouts are tied to CPI wouldn't have any influence on their numbers. No, we can trust ol' Uncle Sam to give us the straight skinny. What other fairy tales do you believe?Go ahead and "run your business" and plan for prices 4% higher a year from now. Here in the real world, the one Mr. Williams and others track and the one I operate my businesses in, we have prices 10% to 20% higher than a year ago.
yeah, and how long has that gone on? I'd like to see your biz plan that calls for 10% hikes each year for 10-15 years. Give me a break. This guy is selling gloom and doom and someone willing to pay him $175/year will get just that...a conspiracy theory. and he will feel vindicated that the world is out to get him. And what will that accomplish? Nothing. Because prices don't go up 10% per year, year in and year out, otherwise, interest rates would be 15%+. And, they arent....not even close. Even a broken clock is right twice per day.
Yeah, just run your biz and good luck to ya."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
More 'UNEXPECTED GOOD NEWS'......
++++++++++++++++++++++++May 28, 2008Durable Goods Orders Rise - Unexpectedly
Rick Moran
Analysts are claiming that foreign companies are buying more American factory goods and cushioning the blow for many. If so, it is because of a very weak dollar and probably can't last.However, it is still a spot of good news on the economy that few expected: Orders for U.S. durable goods excluding cars and planes unexpectedly rose in April, signaling that international customers are helping factories ride out the economic slowdown. Excluding transportation orders that tend to be volatile, bookings for goods meant to last several years rose 2.5 percent, the most since July, the Commerce Department said today in Washington. Total orders fell a less-than-forecast 0.5 percent. Exports are keeping the economy from shrinking as American manufacturers grapple with the slowest economic growth in seven years and oil costs that have doubled in the past 12 months. Dow Chemical Co., the largest U.S. chemical maker, said today that surging expenses mean it will raise prices by as much as 20 percent. "Here we really see that the effects of a weaker dollar are in fact giving us a lot more juice in this economy than we had expected,'' Anthony Chan, chief economist at JPMorgan Private Client Services Group, said in an interview with Bloomberg Radio. "When the economy weakens you tend to see the manufacturing sector also weaken,'' though ``this time around, we're not seeing that,'' he said. The report will be welcomed at the Fed who had been contemplating yet another rate cut to deal with the downturn in business. What the durable goods report reveals is a world economy that no longer rises and falls along with America's economy. The "euro zone" showed strong growth last quarter as did parts of Asia which allowed them to purchase goods at bargain prices here because of the weak dollar."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
You failed to mention april house starts up 3%
I just want another president . Im not gonna vote for him again. <G>
Tim
my bad...sorry."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"You failed to mention april house starts up 3%"
Maybe, but
From census.gov ..."Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,032,000. This ... is 30.6 percent (±6.7%) below the revised April 2007 rate of 1,487,000.Single-family housing starts in April were at a rate of 692,000; this is 1.7 percent (±11.7%)* below the March figure of 704,000."
Still a lot of houses being built! My numbers came from CNBC.
I don't get the "maybe, but"....is that how you measure your cuts? ... maybe, but?"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
frammer52
from a 27 year low? a 3% gain during the time when there is normally a much bigger increase? you're looking for positive results under a lot of rocks..
However to be fair, anecdotally I have noted a modest increase of new construction/remodeling locally over this time last year.. Since last year there was zero activeity other than finishing up, that's a pleasant contrast..
We are starting to notice an uptick around here also.
You have to start somewhere!
Frank just relayed a story from MI. He said one of the biggest framing contractors has just raised their sf prices by $1.50. From 3.75 to 5.25. They had artificially lowered the price to knock out all the little guys through the winter and spring. They did a pretty good job. Framing contractors are scared in that area now. Now, one of the local builders has 28 frames to stand up and can't find anyone to build them at the $3.75 he budgeted for. All hells going to break loose there in MI LOL! Bob's next test date: 12/10/07
That increase doesnt sound like a deal killer if they dont have other increases. Lumbers very cheap.
Tim
You don't know those Italian builders if you think they are going to take $2500 out of their pocket and give it to a carpenter. Why do you think all the carpenters went broke and left the state? Bob's next test date: 12/10/07
Thats one state. Mich?
I am reading that water front is drawing buyers out of state though and they have money their bringing in. May not be close to a cure but its a shot in the arm doncha think? Two on here bought water front . One in Mich and one in Ar.
Or were you talkin bout Texas ? Its a Southern state.
Sorry I dont know anyting about Italin builders.
Tim
I've had three lots on the water for sale for the last few years. No offers. I'm 60k below what the last lot sold for. I did sell some lakefront property last year. I "only" lost about 200k in equity from it's top value. The guy that bought it wishes he hadn't. There aren't as many buyers as you think. Maybe over there close to Chicago, they still are doing okay...but like anything else...it's a regional thing. On the whole, MI is dying, including lakefront property. Bob's next test date: 12/10/07
I cant see a state dying although it might seem like it .
Whats gonna bring it back?
Tim
When someone says a state is dying, that is known as a figure of speech. It's not to be taken literally.What's going to bring it back? Time. As it sinks lower, the cost of living will decrease. Eventually, the empty factories will be priced low enough again to be viable. The wage earners won't need $25 per hour because the houses will be half price...so their wages will be cut in half. It certainly would help if the State government was savvy enough to understand that raising taxes and regulations is driving the businesses out of the state and causing more damage to the economy. The state was built on the income produced by thousands of small manufacturing plants. Most of those products are produced overseas now and the industries won't return untill it's cheaper to produce them here rather than Mexico or China. Right now, Ford is committed to building a major plant in Mexico. They are making the largest foreign investment in the history of Mexico. A generation ago, that plant would have been built somewhere in MI. Ford is abandoning MI, just like every other major manufacturer. Why? Regulation. And it's not just state regulations. They cannot meet new federal regs and stay competitive with the Chinese or Mexicans. Michigans economy will have to settle into the bottom tier of all states as based on per capita income before they will make the turn up. Their days as an economic leader are waning. With so many people leaving the state (they have the worst numbers in the nation) the future doesn't look good. There are far too many empty houses and not enough jobs to go around for those that stay. Bob's next test date: 12/10/07
Thanks . I was wondering what actually happened as a result. I think americans should quit buying fords . Maybe Toyota will run a campaign they are american made and ford is not.
Toyota put in a plant in Arkansas . Right after Mich people rejected their pay cut in half they announced the plant here . 12 dollars an hour . With the gas crunch going on they are of course booked solid. If Mich got offered a plant now do you think they would be happy working for 12 dollars per hour or reject it again?
Tim
Edited 6/12/2008 9:34 am by Mooney
The bottom line is that American automakers are paying, on average, $76 per man-hour. Japenese automakers are paying $47 per man-hour. Who here can afford to pay $76 per man-hour?
These increased costs are reflected in the vehicles. My theory is that the American automakers focus a lot of engineering on keeping the number of assembly man-hours to a minimum rather than on quality. The results are vehicles that are stinko. I know. My 2000 Chevy S10 is presently in the shop getting its third fuel pump. The door leaks and the compressor for the air-conditioner is shot. Meanwhile I'm driving my other vehicle, a 1989 Toyota. No engine proplem so far and still has the original clutch. Guess what I'm going to buy next time around.
GM and Ford are tanking because they provide a lousy product. Meanwhile, Michigan and the other rust-belt states are going down the tube. So much for the wonderful benefits of unions.
"The bottom line is that American automakers are paying, on average, $76 per man-hour."Whoa there, is that what they are paying or what it is costing them with the benefits and labour burden? There is a large difference between one term and the other, and without knowing the difference, the comparison you make is invalid.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Thats what their total cost per hour is. They are slashing that with every new hire though. Bob's next test date: 12/10/07
Piffen,
I was talking about the total costs for the automakers. In an article I read in my newspaper concerning a recent contract dispute between the UAW and one of the major automakers, it was said that the total cost of American automakers is $29 more per man-hour than the costs of Japanese automakers.
Look at this comparison:
http://www.npr.org/news/specials/gmvstoyota/
Edited 6/16/2008 10:37 am ET by Mudslinger
Mudslinger.
Your numbers are wrong!
Why would Honda/Toyota Build cars here and import them to Japan? When you add the cost of an ocean voyage plus import duties etc.. They are either very foolish or your numbers aren't complete..
That's often done when management is trying to pressure someone..
As to your example.. My 1997 chevy with 287,000 trouble free miles on it counters your problems.. I had S10 blazers and Jimmy's and ruetinely got 180,000 miles plus from them before any repairs were needed..
Frenchy,
Check out this article from NPR comparing GM and Toyota. The average cost per man-hour for GM in the US is $73.73. The average cost per man-hour for Toyota in the US is $48. The difference is the benefit package.
http://www.npr.org/news/specials/gmvstoyota/
They would reject it again but they are getting much closer. As the housing stock continues to decline in value, the $12 figure will get much more realistic especially if the workers can get 55 hours (40 straight and 15 at time and a half). The unions have agreed to a two tier wage structure inside the major plants. The new hires are now coming in with a much different wage rate and benefit package and less restrictive working rules. That type of thinking will trickle down into the smaller job shops. One of the keys to making money in manufacturing in MI is making something NOT RELATED TO THE AUTO INDUSTRY. MI was built on the auto industry but that's a bygone era. The companies that are still thriving are selling to any industry EXCEPT the auto companies. The tooling is there, the skill is there, the education is there but if you are selling to the auto plants, the money isn't there. They have cut the prices they will pay to outsourcers so low that they've bankrupted just about everybody. They also string the accounts payable out so long that the businesses end up risking everything in hopes that they will get paid. Not all of them get paid. The big auto companies have been chewing up suppliers for the last two decades. I do think the bottom is near in MI. I'm thinking that they will decline all the way through 08 and maybe level off if the general economy nationwide stabilzes. If it tailspins, then MI will rocket down in 09. There are investors moving into Detroit becuase a lot of that money is government subsidized housing and the price points on income property has plummetted. All the small players, who thought they were big players have found out they can't get financing. Guys with hundreds of units were doing well when everyone was working but when the money wheel stops at the factory doors, the rents don't get paid. When the rents don't get paid on a hundred units out of 200...the note doesn't get paid...so that merry go round is spinning fast and the only ones that can do the deals are the big money....the industrial sized players: reits, pension funds, etc. MSA1 is a prime example. He sees the opportunity but the banks don't have any appetiete for MI...probably because they know the bottom hasn't been hit yet. In a way, they are doing Mark a favor and he just doesn't know it...yet. Bob's next test date: 12/10/07
Good post.
By all means, ignore what you see and hear in your daily life, and believe what the experts and government officials have to say:"We will not have any more crashes in our time."
- John Maynard Keynes in 1927"I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928"No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment...and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding."
- Calvin Coolidge December 4, 1928"There may be a recession in stock prices, but not anything in the nature of a crash."
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929 "We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929 "Buying of sound, seasoned issues now will not be regretted"
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929 "Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929"... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- HES, November 10, 1929 "In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929 "Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929"I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
"I am convinced that through these measures we have reestablished confidence."
- Herbert Hoover, December 1929 "[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929"For the immediate future, at least, the outlook (stocks) is bright."
- Irving Fisher, Ph.D. in Economics, in early 1930"...there are indications that the severest phase of the recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930"There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930"The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
- Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930
"... the outlook continues favorable..."
- HES Mar 29, 1930"... the outlook is favorable..."
- HES Apr 19, 1930"While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- Herbert Hoover, President of the United States, May 1, 1930
"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930 "Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930"... irregular and conflicting movements of business should soon give way to a sustained recovery..."
- HES June 28, 1930"... the present depression has about spent its force..."
- HES, Aug 30, 1930"We are now near the end of the declining phase of the
depression."
- HES Nov 15, 1930"Stabilization at [present] levels is clearly possible."
- HES Oct 31, 1931"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933
Had to dig to bring up that meaningless drivel, didnt you!
"Had to dig to bring up that meaningless drivel, didnt you!"Easy stuff to find. Lying government officials and clueless economists aren't new to this century. Few of us alive today in the U.S. have any idea of what "hard times" really means. For the most part we've forgotten the lessons of that era, and you know what they say about people who forget the lessons of history.
So far so good!
All I can say is: That is depressing.
They can't get your Goat if you don't tell them where it is hidden.
what a waste of your time and BT space. Where I live, talk is cheap. and this is a fire sale. You will be a lot smarter if you follow the advice of a famous Radio Talk show host: follow the money......People will say anything as your worthless list reveals. But when it comes to money, they put it where it will do the best....That is, unless it's a lib stealing MY money, and then, they are much less discerning.... But is to be expected."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"You will be a lot smarter if you follow the advice of a famous Radio Talk show host"LOL - If Americans spent less time listening to the talking heads on radio & TV, and instead used their own brains more often, we wouldn't be in this mess now. There is nothing wrong with optimism, but false/misguided optimism bordering on propaganda is another story.Debts are either repaid or repudiated. The United States is now the largest debtor the world has ever known, and our banking system is being propped up by the equivalent of payday loans from the Federal Reserve to the largest banks under a theory that they are too big to fail. We have to borrow 2-3 billion dollars a day from foreigners just to make ends meet! Other than that, things are just wonderful.I'm optimistic we will find ways to get through this debt crisis, but not before quite a few us of learn first-hand, what hard times are all about.
Love your post, may I further more on your point unemployment, when I see 4% unemployment I also see that Half of that percent are unemployable people
Think about it
there is work out there that illegal immigrants can't do
at LEAST!!"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
and the hits to the doom and gloomers just keep coming. If we get economic results we dont "expect", we then accuse them of being short term...right. here's the scoop:(and I repeat, we are not in a recession, yet!!!)+++++++++++++++++++++++++++++++++++By Ann Zimmerman and Nicholas Casey
Of THE WALL STREET JOURNAL U.S. shoppers spent more than expected in May, giving a lift to retailers
including Wal-Mart Stores Inc. (WMT), where results were buoyed in part by
consumers spending their tax-stimulus checks.
But the majority of the increase came from Wal-Mart and other discount stores
such as Costco Wholesale Corp. (COST); sales at purveyors of clothing and other
discretionary items fell short of forecasts.
With the price of gasoline pushing $4 a gallon, an ailing housing market and
climbing food prices, shoppers had been expected to shy away from stores once
again last month. Many analysts predicted that consumers would use most of
their tax-rebate money to defray mounting debt, add to their savings, or simply
gas up their cars.
Nonetheless, U.S. retailers posted a 2.8% gain in sales at stores open at
least a year, twice what was expected for May, according to an index of
retailers compiled by consulting company RetailMetrics LLC.
Wal-Mart, of Bentonville, Ark., said same-store sales rose 3.9%, excluding
gasoline purchases, far more than the 1.6% gain predicted by analysts surveyed
by Thomson Financial. Including fuel purchases, same-store sales rose 4.4%.
(This story and related background material will be available on The Wall
Street Journal Web site, WSJ.com.)
Tom Schoewe, Wal-Mart's chief financial officer, told reporters gathered in
Arkansas for a conference Thursday that the company had cashed $350 million in
tax-rebate checks, though he didn't know what percentage of that money was
actually spent at Wal-Mart. The company was one of the few that didn't charge a
fee for cashing the checks, which appears to have lured savings-conscious
consumers.
He credited the checks and improvements in Wal-Mart's merchandise, marketing
and service for the company's besting its own expectations for a same-store
sales rise of flat to 2%.
Disposable income is down among Wal-Mart customers, Schoewe said, adding that
they are staying at home to save money, buying more prepared meals and even -
for the first time in two years - buying more home furnishings.
Many discounters and warehouse clubs have benefited from the current economic
climate, as shoppers increasingly seek bargains and buy in bulk. For example,
BJ's Wholesale Club Inc. (BJ) reported a 13% jump in same-store sales, with
half that coming from gasoline sales.
Target Corp. (TGT), the "cheap chic" merchant whose sales have stagnated the
past six months, posted a 0.7% decline. The company forecast that June
same-store sales will be flat to down 2%.
Department stores, which have been struggling, were expected to post the
weakest sales, and they did.
J.C. Penney Co. (JCP) reported a 4.4% sales decline, in line with its
forecast, amid weakness in jewelry and home goods. The company expects another
mid-single-digit percentage decrease for June. Fast-growing Kohl's Corp. (KSS),
whose sales have also weakened of late, reported a 7.2% drop, meeting
estimates.
The only department-store chain that had been expected to report higher
same-store sales was Nordstrom Inc. (JWN), because it moved the start of its
semiannual sale to May from June. Its May same-store sales rose 11% because of
the shift, but June sales are projected to fall 18% to 22%. The luxury
retailer's sales have slowed since last fall, after going gangbusters much of
last year along with Saks Inc.'s (SKS).
Among the other standouts was teen retailer Buckle Inc. (BKE), which continues
to report sharp sales increases. It posted a 35% jump in May same-store sales.
Other teen retailers showed signs of a slump. Abercrombie & Fitch Co. (ANF)
reported a 1% decrease in same-store sales and American Eagle Outfitters Inc.
(AEO) posted a 9% decline. Same-store sales at Pacific Sunwear of California
Inc. (PSUN) fell 3%. Analysts foresee even more difficult times ahead for
specialty youth-apparel companies, as teens with pinched wallets turn to
cheaper department stores.
Another weak spot was Gap Inc. (GPS), which posted a 14% slump for May,
dragged down by a 25% plunge in sales at its struggling Old Navy chain. Chief
Financial Officer Sabrina Simmons warned that product improvements probably
won't occur until late fall.
While discounters fared well, Scott Krugman, a spokesman for the National
Retail Federation, said the gains may not last once the tax-rebate money is
spent. "The big question is, can this be maintained?" he said. "Is this a
short-term fix? To a degree, it is.""The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
""Disposable income is down among Wal-Mart customers, Schoewe said, adding that they are staying at home to save money, buying more prepared meals and even, for the first time in two years, buying more home furnishings."" Now that makes no sense to me at all. Wonder how well Walmart is going to look after the rebate checks all get cashed?
They can't get your Goat if you don't tell them where it is hidden.
dont worry, they are a far site smarter than you and your liberal friends. They will do just fine. just ask Obama's new Economic Advisor: Jason Furman. He wrote a very nice White Paper defense of Walmart. Imagine that: a liberal defender of Walmart....."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"'dont worry, they are a far site smarter than you and your liberal friends"" Not sure who the "they" is in your comment , but no matter. I didn't know I was taking an intelligence test, I would have tried harder to score higher. How did you score? BTW They can't get your Goat if you don't tell them where it is hidden.
Edited 6/10/2008 12:51 pm by dovetail97128
Of course you weren't sure. I understand. I was referring to your post in which I was commenting on Walmart and their ability to react to various dilemmas. They (Walmart) ARE smarter than you and your liberal friends. As for your intelligence, I will stipulate that you have it."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Remember that WalMart exec who was recently busted ? Vice president and one of those in line for running the whole show? I know him, went to the same high school as he did. I know I am smarter than he is. No question about it. Now about me and my "Liberal Friends". Want to run that one past me again? If he is an example of your conservative friends I have no doubt as the relative intelligence measurements. Want to quit insulting me ?
They can't get your Goat if you don't tell them where it is hidden.
oooh...now I'm REALLY impressed...you're SURE you are smarter then them Walmart wascals...well that settles it. Let's see: you go to school with a guy who ends up making more money than he's entitled to and then shows he doesn't know right from wrong...I'd say that rather than intelligence, which I DID stipulate that you HAD, I think you are probably envious. Why, he's no better than you are, and you could have done a whole lot better than he did, no question... and that is at the heart of the class envy you and your liberal friends are trying to pull off. No, if you think I'm insulting you, you should probably "think" again, and again, and again...."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Perhaps I misunderstood, in which case I apologize. ""Of course you weren't sure. I understand. I was referring to your post in which I was commenting on Walmart and their ability to react to various dilemmas. They (Walmart) ARE smarter than you and your liberal friends."" I read that as in insult. Yes, I also read your stipulation. I decided I was unsure of the thrust or intent of that statement though. I have no "class envy", I choose my lifestyle deliberately. I am quite content with my place in life. I own my own place, work when I want, as much as I want generally, don't work if I choose not to.
For example I get to go canoing in my 60 year old wooden canoe that cost me $135 all day long and not worry about how am I going to pay for it, unlike perhaps others who own a $25,000 boat on a $5.000 trailer and pay license, insurance and fees plus fuel to tow it, dock it, and maintain it. They have to work to earn that money, I get to play while they work. My point is I am intelligent enough to not try to beat the law and become a thief to increase my wealth. Using that as a standard who is smarter? I who succeeded or he who failed. Maybe the biggest difference is I don't count accumulating $ as a measure of my success in life. I count things like honesty, integrity , the ability to help friends and neighbors when I can, satisfaction with a job well, and legally, done. React to dilemmas?
I was just faced with one. I was slated to be site super on a $1.2 million dollar job.
I was suddenly faced with either losing that opportunity or else becoming both the GC for that contract and the Site Super of the project. What Would the Walmart intelligence do ?
They can't get your Goat if you don't tell them where it is hidden.
What was your choice?
Nope , Walmart smarts get to answer first. I am the dumb envious lib here remember.
They can't get your Goat if you don't tell them where it is hidden.
you aren't a lib, you are a socialist and I know it!
Probably a bit smarter than some of our conservative friends too.At least you would expect so when one of the conservatives comes up with a comment like this:"Gas-price hikes will never, ever, ever cut into consumer spending. It’s a mathematical impossibility. Here’s why: Gas prices are a component of consumer spending.You see, when gas prices climb from $2 a gallon to $3 a gallon, one of the components of retail spending goes up. Gas stations are retail establishments. People make money working at gas stations (which now generally serve as convenience stores). People make money managing the corporations that own these stores. And, of course, people make money by owning shares in these companies.Sure, if people spend more money on gas, they may very well spend less on soft drinks. But that’s a substitution, not a decrease in overall spending. The spending simply shifts from one retail category to another."
I don't expect much of an attention span out of you, but did you bother reading past the first sentence of that report? If that's an example of what you consider a positive outlook on the economy, you need to get your rose-tinted glasses steam-cleaned.
The interesting part of the report was that recipients of stimulus checks were expected to pay down debt....and didn't. Wal-mart coaxed them in with free check-cashing - a service no one but the financially insolvent needs to pay for anyway - and they spent it on more Chinese goods in addition to the ones they've already gone into debt to buy. Moreover, their tax rebates next year will be reduced by the amount they just borrowed from their future selves. I suppose that will be Obama's fault then...
Your potatoes are way too small for a free lunch, but if you want one, here's how it's done:
dream on.. I warned people of the terms of the "stimulus checks" months ago, Where were you with this intelligence? Okay genius, If copper goes up, who pays more for their raw materials? plumbers or carpenters? (not a trick question)
And if the the GDP (Gross Domestic Product) has not seen a negative number, YET, why do the idiots who call themselves journalists say we are in a recession? Because they want to believe it. As John Adams said, facts are a difficult thing. So you believe what you want to, but don't try to manage my money, eh? Stick to your blueprints, or wiring, or whatever it is you do....."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"Dream on"? What's that a response to? It's not me who is pulling erroneous conclusions out of his butt based on reading only the first paragraph in a Cut-and-Paste effort, but yourself who was 'stimulated to pronounce Walmart's uptick as a sign that all is well. I simply read past the opening sentences, something you might think about next time. Do you have a response to the article about opening up the Fed piggy bank...or is referring to dead Presidential authority figures the extent of your game? So far i'm underwhelmed by your powers of perception and precognition. I'm not surprised your wood isn't getting treated; good thing you know all about stimulation. Now...back to my blueprints...or whatever it is i do.
I will be happy to explain THIS one to you...after all, it's the same theme: gloom and doomers are again "surprised". And still no recession. What's a lib to do...
*************************************Retail sales rise much more than expected
Thursday June 12, 8:31 am ETWASHINGTON (Reuters) - Total sales at U.S. retailers rose a full percentage point in May as many consumers had more spending cash in their wallets from government rebate checks, a report on Thursday showed.The Commerce Department reported an increase last month that was twice as much as expected by Wall Street economists polled before the report. Taking out the higher prices consumers paid for gasoline, sales still rose by a strong 0.8 percent, the biggest increase in a year.Economists were expecting to see a boost in spending during the month because a large portion of government rebate checks, which are a key part of the president's economic stimulus package, have been distributed.Excluding autos, sales rose 1.2 percent, the biggest rise in six months and well beyond the 0.7 percent rise economists were expecting.Taking out autos, building materials and gasoline, sales rose a steady 0.8 percent during the month."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
"I will be happy to explain THIS one to you...after all, it's the same theme: gloom and doomers are again "surprised". And still no recession. What's a lib to do...
*************************************Retail sales rise much more than expected"Yup, retail sales are higher because people are beginning to anticipate higher prices in the future - IOW they are stocking up on non-perishables, and running up their credit card balances to pay for it.As for your claim there is no recession, ask a car dealer, realtor, clothing store owner, restaurant, landscaper, roofer, retired pensioner, etc., and see what they tell you about the state of the economy. It's been demonstrated by multiple sources that the government's numbers for growth and inflation are cooked, and what a shock, the bias is in their favor. If the true value (8%-12%) for price inflation were used to calculate GDP instead of the phony "core rate" inflation used by BLS, the numbers would show we've been in a recession since last Summer.We are entering a period of stagflation similar to the '70s, but unlike the '70s, most Americans have little or no savings to fall back on. That is why the Feds have to send out "stimulus" checks and why the Federal Reserve is expanding their program(s) to float loans to banks. If we aren't in a recession, then why the hell is the federal government pumping nearly a trillion dollars into various pockets?The next step is wage and price controls, and the resulting shortages that follow. Better stock up on that toothpaste, lipstick, and bar soap while you can still get it...
Do you think the end of the world is coming?
I won't be as sharp as untreated, but the economy is showing surprising strength. This is because of factors the talking heads on TV didn't think about.
The rest of the worlds economies have slowed to a degree, not as much as us , with a few exceptions. Because of lower dollar value, we are now exporting more. There is even some talk, to the surprise of talking heads, that we may have some new steal mills in the US. This is a result of energy costs making Asian steal so expensive.
The thing that you keep overlooking in your posts, some items are going down in price, this helps to keep inflation numbers under control
The Fed has announced that the discount rate will remain steady, with a possibility of an increase towards the end of the year, if inflation fires up any more.
It appears that the stimulus checks have worked. The increase in retail numbers seem to indicate this.
Now if we could figure a way to get the speculators out of the futures market, maybe oil prices would come down to where it belongs.
"Do you think the end of the world is coming? I won't be as sharp as untreated, but the economy is showing surprising strength."No, the world won't end for me because I have no debt. I do expect a lower standard of living is in the cards because the damn government will expect me to pay "my fair share" when TSHTF in the next 2-3 years. As for the "surprising strength" in the economy, IMO it is an illusion bought and paid for with trillions of dollars of funny money, much of it created out of thin air over the past four years by the Federal Reserve. Austrian economist Ludwig von Mises had a term for this kind of economy -- he called it the "Crack Up Boom":"This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against 'real' goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them."Mises was of course right, and all of the experts who blame this current mess on "speculators" are missing the point. The problem is not caused by speculators in the oil/housing/stock markets, it is caused by irresponsible borrowing and the creation of too much money by the federal government - money that people naturally want to spend before it loses value. The spending of this excess money gives the illusion that things are going well in the economy, but in reality the money is not being saved or invested wisely. We're seeing this now in commodities like precious metals and oil where companies are buying futures contracts to lock in prices as a hedge against further price increases or a drop in the value of the U.S. dollar. I'm no hedge fund, but I've intentionally started buying extra stuff like deoderant, plumbing parts, etc., because I know they'll cost me a lot more down the road. The way I see it I'm better off getting these necessities at today's prices than putting that money in a CD earning 4% and watching 8% inflation eat it away.Those who say it can't happen here, read what went down in Argentina just a few years ago. The lives of millions of ordinary, middle-class people were turned upside down in just a few months when their currency was debased and the government confiscated their savings to pay foreign creditors.
Very interesting read and post . Thanks
They can't get your Goat if you don't tell them where it is hidden.
The same thinking that was here in the 70's.
why not borrow and buy hard commodities, with inflation you have to come out ahead.
Good luck with your thinking. I happen to be more of an optomist. It is a lot easier to live this way!
I enjoyed that immensely, and i think you may be right, if you would be so kind as to answer a few questions.
"within a short time the things that were used as money are no longer used as a media of exchange"
i don't disagree with this except what about things like mortgages and taxes?
i have signed up for a 30 year mortgage, will the institution holding that note no longer accept the terms agreed upon? can i not go on happily paying my $1500 a month mortgage on the farm because now all of a sudden $1500 is an easy amount to aquire?
taxes may be raised but won't there still be a lag time, that is to say if i am paying a bill from last year with this years money, money thats easy to get because it is no longer used as a media of exchange...
you may well be right, we may well be headed to another greater depression, but i can't help but think that some will be making money on the situation. i remember reading the story about the mailman who bought apartment houses during the depression, since nobody had any money his meager amount as a mail carrier went a long way, exceptionaly so as he was also very frugal.
i too think we will see in the not to distant future some radical change in the world, but i don't think it will go down as any of us think, even the brightest among us will be forced to "think on the run" and figure out how to deal with the challenges of future world.
you raise an interesting point. Lets assume I have 30 year mortgage, 25 years left to go . Payment is $1000. Now hyper inflation hits, can I take what used to be $100.00 dollars and now is $1000.00 and pay off my mortgage? Unless your contract has a prepayment penalty I see no reason you can't.
They can't get your Goat if you don't tell them where it is hidden.
i'm not even talking about paying off early, in fact as long as inflation is happening you want to drag it out as long as you can.
as long as they keep accepting the payments according to the terms of the contract, you are golden.
anything you can get a loan on and pay that loan off with inflated dollars you are money ahead, imagine you are a farmer when there is a food shortage with rampant inflation.
all of your state of the art high tech equipment and the land you farm is mortgaged/borrowed to the hilt, you have payments of $5000 a month, but a loaf of bread is $100. your wheat crop is worth hundreds of thousands of dollars, and you pay your loans with 50 loaves of bread a month.
i'm tellin you, somebody is making money.
Ahh, but not with hyper inflation if I understand history well at all. With hyper inflation there always comes a time when a devaluation of currency occurs. time it just before that and you are done paying using the hyper inflated money. No?
They can't get your Goat if you don't tell them where it is hidden.
i dunno. i remember reading about people buy a loaf of bread with a wheelbarrel full of deutchmarks, will it get to that point?
i don't think the great depression was a case of "hyper" inflation, but i dunno. you tell me.
My understanding is the US escaped Hyper Inflation. But I can see it happening here. Why not is has occurred in many other countries. I don't know that what I posted actually is what could happen or not , it was as much a hypothesis to the economic brains here rather than a statement.
They can't get your Goat if you don't tell them where it is hidden.
i understand and appreciate the food for thought.
"'within a short time the things that were used as money are no longer used as a media of exchange'i don't disagree with this except what about things like mortgages and taxes?"As I recall in the inflation and high interest rates that hit during the 1970s and early '80s, banks offered people with low-interest mortgages a buyout deal to get the loans off of their books. If the going rate for mortgage loans was say 15%, and you had a $20K loan balance at 6%, the bank would let you pay it off at some discount depending on the time left on the note. Things are different now, many loans have adjustable rates, and most banks don't carry the loans on their books anymore. They were bundled together with other loans and sold as bonds to investors. But I suspect if we have serious inflation in the U.S. again and interest rates hit double digits, similar deals will be offered to people with 30 year fixed notes at 5%. If you read about what happened in countries like Argentina and Russia when they experienced economic turmoil, hyperinflation, and collapse of the currency, you find that mortgages and other business contracts are now written with clauses to protect lenders in case of serious inflation. Taxes? Most automatically increase with inflation, and the fixed ones will be indexed faster than you can say lazy bureaucrat.
Check the small print on your loans many (I can't make claims on contracts i have not seen) have terms that allow the bank to call that loan at anytime for just about any reason. So if you are faced with a demand to payoff your debt in full and you do not have it, it really does not matter what the value of the dollar is. I also do not see people who took out interest only loans over 900K 2 years ago getting much benefit from a inflation when they can't pay their monthly payments because all their other bills are going up faster then their salaries. When you loose 200 per week to just higher fuel and Groceries I do not see anyone getting income increases that cover that amountI like to be positive as well but you can't ignore that unless incomes increase to match, the increased expenses which they are not likely to, I see a lot of people facing some pretty hard times. Now it is true there are always opportunities to make money for someone in any economy. And usually it is those who already have the most money who benefit the most from hard times with some exceptions of course.Now it really depends on your personally situation on how you see the economy as a whole. Even if unemployment is at 1 percent if you are that one percent you are in your own personal recession. I for one went through 5 years of unemployment/underemployment after getting laid off from a career in the software industry just after 911. So I know what it is like to be the one laid off even when others are making money. And to be faced with the fact that the job you once had is now being done in india by someone making a tenth of what you made and it is unlikely that you will ever find a job in that field that will pay the salary you had.
So you tell those that are about to loose their jobs in the Air line industry that the higher fuel cost are not putting us in a recession.
Good post.
They can't get your Goat if you don't tell them where it is hidden.
i couldn't agree more. it depends on your personal situation.
quite frankly your personal economy is better in a bad economy if your job/wages/income didn't change.
oh yeah you may be paying more for gas and food but think of the house you can buy now today? much better than 3 years ago for the same money.
if you have money to invest, if you can buy the rental houses in a depressed real estate market and keep it going until the pendulum swings back the other way your fat city.
i have been looking for a job all my life. as a career construction professional i have had to change specialties/crafts in order to stay employed. i have had to abandon residential and work heavy highway and vise versa. my whole life i have been preparing for the upheaval a depression will cause just by being a construction worker.
i know its not easy to lose your job, or see the kind of work your good at disappear whatever the reason, but going through that stuff you went through causes you to be in a better position for the upcoming economic downturn. you have already had to figure out how to make a living in a whole new career, its gonna be easier for you to do it again than for those who havent't.
"Check the small print on your loans many (I can't make claims on contracts i have not seen) have terms that allow the bank to call that loan at anytime for just about any reason. So if you are faced with a demand to payoff your debt in full and you do not have it, it really does not matter what the value of the dollar is."I've seen those terms in business loans and revolving credit lines, but not in private mortgages here in the U.S. The only way a mortgage or other consumer loan can be called is if the borrower is in default.
I think you are correct but a lot of home equity loans and less then conventional loans were granted in the past few years with homes as the security.
I would not be surprised if they had the ability to call those loans at any time. But like I said I have not read every loan contract so I can not say I was only speculating.Now at least here in MA most have a homestead protection that even if a lean is put on your home for a law suit or from some other debt you can't be put out on the street as long as you pay your mortgage. They can of course put lean on your title and make it very hard to sell your house if you needed to if the loan was greater then it's currant value. And with the down turn in the housing market in some areas that had escalated values many now find they owe way more then the currant sale value.
thanks for the reply.
clearly we are agreed that things are going to get worse economically. just how bad it will get nobody knows for sure. for planning we should consider a few different scenarios I think.
my questions have to do with how we can position ourselves to weather the storm, and your answers help.
I know that if I am locked in at 6% interest, and inflation is 10% and I have a job my economy is good.
"If you read about what happened in countries like Argentina and Russia when they experienced economic turmoil, hyperinflation, and collapse of the currency..."I'm interested - do you have any recommendations?"there's enough for everyone"
yeah me too, i don't think it will get that bad here for some reason, i made a remark in one of the posts in this thread about reading story of pushing wheelbarrel full of deustchmarks to the store for a loaf of bread, obviously that was in the thirties and in germany.
in this country i don't believe it got that bad, and if memory serves movie theaters made excellent money during the depression, it was an escape for the masses for a little while, and everybody could come up with the small amount to get in every once in awhile, again just something i read. not old enough to have been there.
in my discussions with people who experienced the depression, inflation was not the problem- money was metal or was backed by metal - goods were availible, but nothing was moving - the coming times will be different - I seldom agree with Jim Allen, but I believe he's nailed it when he describes prices of goods 2-10 times the current, and wages not rising anywhere near enough to keep pace - consumption goes down, govt reciepts go down, 90% of the population becomes insolvent - the consequences of a system that relies not only on increasing consumption to remain solvent, but on increasing rates of consumption - anybody that has graphed a algebraic equation knows what the the curve looks like as it approaches the limits - not gonna be pretty - "there's enough for everyone"
Good gracious that must hurt to admit that we have an agreement on something LOL!I think Japan experienced deflation back in the 90's. Hyperinflation combined with flat or negative rates of income. Yes, they survived it but there are lots of people financially ruined in the wake. Bob's next test date: 12/10/07
you know there were lots of people comparing our situation to what japan went through several years ago when our economy first started its downturn.
japan also had incredible run ups in real estate before it came crashing down. the hindsight was it might have been better minimized by quicker action of their governments agency that oversees national economy, their equivalent to our FED.
bernanke got high praise for at least doing something very quickly, i don't know what more he could have done.
that greenspan was really smart, while he presided things were great, unprecedented in history. when he saw the #### approaching the oscillating device, he got out!
Greenspan was as lucky as he was smart, IMO.
The smarts really showed thru when he ducked out in time though!
;)
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
not painful at all Jim - as they say in Texas, even a blind hog can find an acorn once in a while - http://www.siskiyous.edu/class/engl12/TEXAS.htmbut I think your description of Japan's real estate crisis leaves something to be desired - http://www.npr.org/templates/story/story.php?storyId=88156284"...In other ways, though, the U.S. is more vulnerable than Japan was in the 1990s. Japan has one of the highest savings rates in the world; the U.S. among the lowest. Japanese consumers, flush with savings, maintained virtually the same rates of consumption throughout the 1990s. American consumers have no such savings to draw upon — and, in fact, carry heavy debt loads — including debt accrued through home equity loans."It is the debt load of consumers in the U.S. that makes U.S. problems much worse than what happened in Japan," argues blogger Mike Shedlock in globaleconomicanalysis.com.As many analysts have pointed out, millions of American homeowners used their houses as ATMs. That ATM, however, is now out of service and probably won't be open for business again anytime soon.""there's enough for everyone"
good stuff, thanks
Something to read. A whole lot here I do not understand , some I do. A lot to learn about. http://en.wikipedia.org/wiki/Hyperinflation http://en.wikipedia.org/wiki/Washington_consensus
They can't get your Goat if you don't tell them where it is hidden.
http://www.hyperinflation.net/about.html
They can't get your Goat if you don't tell them where it is hidden.
Just remember that when the gov. reports savings rate, they don't include in the numbers from retirement accounts like IRA, 401k etc.. This tends to give a skewed view of our savings rate.
Do you have any ides why Japan went through what they did?
I have heard that one of the big problem is the gov. was in cahoots with the banks, who didn't report their insolvency. We may blame the gov for a lot of bad things, but we do have a lot more transperency.
It's been a long time since I read a very long news piece on the situation in Japan. I read it when Japan was going through it at their worst of times and I remember thinking that we were headed in the same direction. But...when you look at our situation today, you have to see and understand that we have been spending a lot of money in Iraq that has not been earned. At some point in our history, we are going to either have to earn it, or print it. We earn it by producing goods and services and as we move forward in this new world economy, it will become increasingly difficult to create a positive cash flow with "real" earned dollars. So, the Fed creates more dollars in various ways to deal with the need to payoff debts. When, the Fed creates too many dollars, they will trigger the inflation that we saw after Vietnam. When the dollar starts to lose it's value, in terms of trust, on the world market, it begins to buy less, thus contributing to the problem. Think about it. The dollar is a piece of paper. It literally is worth about 1 penny. Theres nothing backing it but the reputation of the United States of America. When the other countries see us printing more dollars they will begin to lose trust. It's a tricky situation.So, what do other countries, who have been collecting our dollars do with them? They buy stuff. They get rid of the paper and invest in brick and mortar and precious metals and commodities. When the dumping of the dollars is through....there still has to be some currency that has the trust of the world. Our currency has enjoyed a very high level of trust for a very long time because we have a stable system of government and we also were the world leaders in many areas of income production. We still are a very powerful economic force and the fundamental reasons for that will still be a factor for a very long time. So, it's not all doom and gloom but the people who control the printing presses will have to make the hard decisions that were made in the Reagan era. And that is what I see coming again. I think Japan had to wake up it's government to change some of it's policies to restart it's engine. One last thing. I believe that the oil in Iraq is the key issue when viewed in context of "how are we going to deal with the trillion dollars we've 'wasted in the war' there". I believe it is imperative that the United States continues as an allie to the government there, with the agreement that we share in the oil sales as repayment for their release from the chains of Saddam. Without the oil dollars repaying us for our "service", we will be headed for a very bleak finacial rude awakening. With the oil dollars, it will be much more manageable. With that thought, which I cannot prove, I believe that the Bush administration is doing everything it can, and should to support the current Iraqi situation. If the oil dollars fall into the hands of the terrorists, the ensuing situation will be far worse than anyone could have imagined. Bob's next test date: 12/10/07
"It's been a long time since I read a very long news piece on the situation in Japan. I read it when Japan was going through it at their worst of times and I remember thinking that we were headed in the same direction.But...when you look at our situation today, you have to see and understand that we have been spending a lot of money in Iraq that has not been earned. At some point in our history, we are going to either have to earn it, or print it."Japan: The Japanese still _make_ stuff, and that is why they are pulling out of their economic crisis. What do we still make here in the U.S. that others around the world want to buy? Airliners, jet engines, military gadgets, and a few pieces of construction equipment are about all I can think of. Agriculture is a strong element of our economy, but remember we have to eat too. Without an industrial base that can export a wide range of goods it is difficult to recover after an economic crisis. And once the U.S. dollar is devalued past a certain threshold, it will lose its place as the world's reserve currency and IMO that is when TSHTF for real.You are absolutely right that the money for the war is not earned -- it's mostly borrowed from Asians. We now owe foreign countries $2.5 trillion, and that number increase by about $3 billion a _day_. Eventually this debt has to be repaid. History teaches that when faced with a debt crisis politicians usually choose to gradually inflate away debt because it's easier than outright default. One bright spot today is the Treasury's "printing press" is mostly electronic!
America still is a leading economic factor and we still produce a lot of stuff. It's not like were not doing anything! That's the bright side of the equation. Bob's next test date: 12/10/07
Yeah, we produce a lot of 'stuff' the world wants. Movies, video games, tourism. We're number one in software, for example, and if I had to, I'd choose it vs having the next generations working in steel mills or mines. Five years underground with the UMWA was enough for me, but I miss those guys.What I'd really like to see is more recognition for the fine work done by craftsmen here. An American style, appreciated around the world. We've seen different techniques from the past that have staying power, I wonder what history will call this decade we're in. But that is for another thread.
"America still is a leading economic factor and we still produce a lot of stuff. "If we still swing the big stick, why then do we import $60 billion more every month than we export? It can't go on forever. If we count all of the other deficit spending, Americans on average consume about $1.08 for every dollar we earn. The rest of the world no longer depends on us like it did in the '70s. If Boeing disappeared, people would fly in aircraft made by Airbus. If Cat went away, there are dozens of Japanese and Korean companies to fill those orders. Software? More of it comes from China, India, and Israel every day. Computers and electronics? China could shut down that entire industry overnight. Wake up and look around, sure we did great things in the past but how long can any country live off of memories of past accomplishments? We're a nation of pitiful credit junkies in leisure suits and gold chains pretending that the disco never closed. One day our Chinese landlords will knock on the door and tell us the party is over, the lease is up, all the gold chains now belong to them.
you need to recheck your numbers.
I have a strong belief that our economy will outgrow those deficits, if not and the economy becomes inflated, at least we will be paying those loans back with devalued dollars.
Did you know that one of the reasons that when Clinton was in office the defecit dissapeared was because all debt was being finaced in short term notes, thereby lowering the amount in interest expense. This was done for a number of years.
I do remember the talking heads talking about the fuzzy accounting procedure that Clinton was using. They still aren't reporting the number s honestly according to normal business practice. Bob's next test date: 12/10/07
"at least we will be paying those loans back with devalued dollars."Devalued dollars -- think about what that means to YOU. Everything we import will cost more to buy because of "devalued dollars". There ain't no free lunch at this diner buddy. Let politicians pay of those pesky foreign debts with devalued dollars, and you will end up paying $8 for a gallon of gas.
Edited 6/16/2008 11:21 am ET by TJK
"you need to recheck your numbers."If you've got some different numbers for the deficit, where are they?http://tinyurl.com/ys2yq9Looks like about $60B a month to me.
Jan is a long time ago look up current numbers.
"Jan is a long time ago look up current numbers."LOL - that's really lame, the trade deficit is even worse now with oil prices up 25%. Ever hear of Google? Try using it sometime, you might even learn a thing or two.
TJK
according to Whitehouse. gov currant nation debt is 9 1/2 trillion
National debt is different from the trade deficit. Add them together and you get something called deep dudu.
We import 60billion? How much do we export? If Airbus disappeared, people would fly in planes made by Boeing. If the dozens of Korean and Japanese companies went away Cat would fill those orders. The point is that we still have major companies and the knowledge and ability to produce. Were not a third world start up even if we run into tough times. All of the countries you mentioned lagged behind us, yet they somehow managed to not get hurled off the face of the Earth. I'm sure we'll survive in some fashion. So, lets talk about China owning all our notes. Lets say they own 100 trillion of our dollars and our currency collapses. Couldn't we just print on large 100 trillion dollar bill and hand it to them? Or declare bankruptcy? Bob's next test date: 12/10/07
Blue,
Several points. If you're counting on Boeing Caterpillar etc. to "save" us forget it! most of Caterpillar's products are foriegn made. Many of those that still have American content have just enough American content to be labeled as made in America..
Same with Boeing, much of their production comes from foriegn made sources..
And General Motors etc..
As for inflation making our money worthless. Germany did that and it took WW2 to correct it.. Italy suffered from inflation for decades before she finally managed to bring it under control.. Once the world loses faith in your currancy the cost you pay is massive!
This isn't like some mom and pop operation that once they go bankrupt they go to court and everything is OK..
It will cost us in so many ways I don't want to begin to start to explain them..
I'm not counting on any one company anywhere in America to "save us". That's an absurd idea. American enterprise is far larger than one company or another. Collectively, America has a solid fundamental basis for strong economic activity even when facing difficult monetary policies. We are far better off than a county like Mexico or New Zealand as proven by our GNP's. My SIL works for Boeing and put almost a quarter million dollars into the US economic base on his work alone...so even though there might be foreing content in their product, there is a lot of American product in it too. Bob's next test date: 12/10/07
Blue,
The old addage of whats good for General Motors is good for America is no longer true..
In effect through a series of greedy actions General motors and all of the major fortune 500 companies have virtaully bankrupt America..
The process is simple.. the better the country as a whole does the better big business does.. when the country does poorly, business does poorly.
By not providing any real wage increase in the last several decades the buying public is too strapped to help America much more.
Our last area of growth, the housing market. Was destroyed by greed. Banks and lenders took advantage of peoples desire for a nice home and basically killed the last golden goose..
Oh the farming sector looks good now for the first time in over 50 years. But considering that amounts to less than 2% of the population it's doubtful any real positive impact will move through the country. Plus they are faced with rising energy prices putting High grain prices under increased pressure.
The lack of strength in any real economic sector is the only thing holding the country back from massive inflation.. The Flood of those unemployed in housing moving into other sectors is depressing wages across the economy..
An increase in wages is the only cure for the inflationary pressures of paying for Iraq..
you know i have thought for a long time now that as the world becomes a smaller place and we move into more of a world economy that we, the working class in USA, would have to take less to be able to compete.
i realized by the mid 80's that it was going to have to be that way, that there was no way that our "middle class" was going to be able to maintain our standard of living. i didn't know how it would come about that this would happen, i just kind of assumed it would happen little by little over time.
now looking back it is clear, jobs are outsourced, and even in this country cheap immigrant labor is used for much. good paying jobs are dissapearing, and people will either take less or get nothing.
i think that when the pendulem swings far enough it will start heading back. but we have been due for a correction for a long time. after this correction our "standard of living" will never be what it once was, and quite probably rightly so.
there are just to many peasants in the world for our general population (middle class) to go around living like kings. i think the recent display of greed with the whole financial crisis will serve to further the restructuring of the world economy, and i think its going to get worse before it gets better.
segundo,
there are two ways to achieve that change.
You can either bring some down or the rest up.
Those with short sight will always take the choice of lowering a few rather than raising everyone.
Those who really understand the way the world works will see that a rising tide floats all boats..
It's not greed to want a nice home.. it is greed to approve a loan knowing full well there is no reasonable chance of repayment. Knowing that if you guess wrong you can simply write off the loss on your taxes.
Regulations have served a purpose over history. They aren't as Reagan suggested simply old fashioned. Deregulation means that those with access to money mean there is little control over how that money is used..
Why not deregulate criminal law as well as business law? Same thing, same ends.
there is no possible way for everyone on the earth to enjoy the standard of living that the average american has today. just look at the carbon footprint, it is physically impossible today.
that rising tide will flood and sink lots of boats
segundo.
Look beyond today's abilities. To raise the tide properly we need to invest in things with long term socital benefits..
we are currantly a oil based economy yet the sun provides more energy in a month than all of our proven oil reserves!
So what does it take to convert silicon (one of the earths most abundant resources) to energy? What break through needs to occur to make it affordable? The rest is simply desire and ability..
We are quickly approaching the point where recycling is becoming a major source for most materials. I don't care if dads old Pontiac becomes a Chevy or a Toyota. I don't care if our batteries are recycled in China or in America. There are clean eco friendly ways to do it (just as there are eco disater ways to recycle stuff)
If America fails to educate our children to the level most advanced civilizations do we will lose. But that is because of greed not because of anything inherantly wrong with America.
"We import 60billion? How much do we export?"What I said is we import $60 billion _more_ every month than we export. It's called the trade deficit, and it's like a loan given to us by those other countries. Eventually we have to settle the debt or default on it. "Couldn't we just print on large 100 trillion dollar bill and hand it to them?"Sure, we can just print money and "pay off" the debt -- that's called inflation, and in the end it's like a tax levied on every working stiff in the country. The smart thing would be for us to turn off the TV, get up off our fat asses, and stop pretending we can be wealthy without working hard and producing stuff.
"The smart thing would be for us to turn off the TV, get up off our fat asses, and stop pretending we can be wealthy without working hard and producing stuff."You seem to imply that Americans aren't working or producing anything. Are you aware that the average American work week if longer than Europes? And we have less vacation time too? Bob's next test date: 12/10/07
Dang they have all that and Universal Health care?
Where did we go wrong?
They can't get your Goat if you don't tell them where it is hidden.
They also live in apartment boxes that are a whopping 250 sf and 250 years old. Only the ultra, ultra rich could ever hope to live on a lake. Bob's next test date: 12/10/07
Actually, any apartments that are in those 250 year old buildings are very big but like here in North America newer apartments are quite small but nowhere like 250 sq ft unless you're talking Japan.
In Switzerland when you leave an apartment you take the floor covering with you as well as the light fixtures because you paid for them. You can sell them to the next tenant if they want to buy them. Europeans also do not change apartments like we change underwear. They stay for a very long time usually.roger
Jim I met a woman today and she and her husband are "repo man"They repo cars She stated they get $150 to $300 per car.They also charge for storage of vehicles (if the owner pays the overdue balance and reclaims the car within 10 days)Apparently there are several levels and they are doing it as subcontractors.Someday they hope to be contractor and they will receive as much as $800 to $900 per carShe thinks their business will increase if the economy continues downhill.It's dangerous work but can be pretty lucrative
Did you know we make tv's here again, Did you know that it is now less expensive to make steel here than in Asia.
While manufactoring things is important, things have changed and our economy is sevice oreinted.
"I'm interested - do you have any recommendations?"Argentina:http://tinyurl.com/3gxtw4http://tinyurl.com/2s3l2jThe sequel may be in theaters soon: http://tinyurl.com/3hh4rgRussia:
The 1998 crisis: http://en.wikipedia.org/wiki/Russian_financial_crisisAn up-close view from the trenches: http://tinyurl.com/d28kfOrlov recently published a book "Reinventing Collapse", that summarizes his experience watching the Soviet Union fall apart and why he believes American society and government are headed down a path that will end in drastic changes for most of us.Russia has since recovered, paid all its international debts, and is now a major oil exporter. But from 1992 to 2005, most Russians saw huge changes in their lives as once-stable institutions and life-long habits were turned upside down by the economic turmoil. Argentina is still a basket case, borrowing huge sums of money from Hugo Chavez and veering toward another collapse.
Yes, you could go on happily paying your $1500 mortgage with your uber inflated dollars....assuming you earn any. Where are your dollars coming from? Right now, we are seeing a small blip in the price of fuel and look at the panic that is setting in. Now, imagine how things will look when it doubles again. The inflation eats up all your spendable income far faster than you can earn it. Do you walk into the office and tell them that you need to double your hourly rate because everything has doubled in price? How many times has your boss responded "Yes...in fact, since inflation is causing your standard of living to erode so rapidly, I'm going to triple your hourly wage so you can keep up!" So, think about it...yes, your mortgage is easier to pay, but your dollars are going for $10 fuel, $100 meals and $5000 health insurance payments. You get to do all that on your $20 per hour salary as your boss is looking to cut your income down to save as much for himself as he can. Bob's next test date: 12/10/07
"you could go on paying your $1500 mortgage with inflated dollars, assuming you earn any"
well thats my whole point, if we can see whats coming and position ourselves to be able to make money we will be in good shape. just like the mailman in the depression. might be a good time to take the postal test.
both you jim and TJK seem very down on the economy, more so than the rest in here. do you know or see something we aren't geting yet? i don't see it getting that bad and i personally have taken some hard hits.
fortunately a lifetime of hard hits has enabled me to bounce back, good thing i'm used to it!
Me...I look at everything through Michigan eyes now. I suspect I'll be jaded for quite a while. I'm also very disturbed about the fundamental shape of the general economy. The others continually mention the problem that the trillion dollar was has caused and I believe that will affect us in a big way, just like Vietnam did. I had a rough year then too. I'm okay with a positive attitude knowing that I have to bounce. I'm not sitting in a corner wailing. Bob's next test date: 12/10/07
yes i could read that into your posts, that you are looking at things through michigan eyes.
this too shall pass brother. as you know i feel it too. don't buy any silver bullets.
as for me i am all the more driven to move forward as a result of the setback, and thankful for another chance.
"Me...I look at everything through Michigan eyes now. I suspect I'll be jaded for quite a while.I'm also very disturbed about the fundamental shape of the general economy. I'm okay with a positive attitude knowing that I have to bounce."Well said. A realistic outlook. We need to accept that the economy has slowed and manage our own finances accordingly.
i agree, and am trying as best i can to plan for what might happen.
basically i am just waiting and watching and trying to assess the situation.
patience is not my strong suit, i want to do something but i don't know what as far as investing in anything or purchasing a house.
is gold still at a record high?
UnTreated....you already responded to that post once before, and twice you've stuck your head in the ground about contrary signs you were reminded of in your own C&P, plus you've not responded to anything i asked. And you have no link to the last blurb, which is just bad manners.
Nice [not] talking to you. Buh-bye.
no head in the sand...just smart enough to know what to pay attention to. I have been correct consistently about the recovery 3 years ago...when the doom and gloomers said otherwise. I have been correct about the economy currently...slowing, but no recession. This is not rocket science. I try to share what I have been successful with my own clients with my friends in this forum. I have to be successful in the long run or I starve. I DONT have to put stuff in writing in this forum. I do so because I have had a lot of wonderful advice from very smart people. Interestingly enough, the best advice is generally counter to the "concensus", just as it is with my primary career. So just because you don't have the experience to sort through the key stuff, eliminating the chaff, don't assume that I, too , am not able to do that...because I can. I generally try to bring good news, not bad.
I am currently concerned about: wholesale tranfer of wealth to the mid-east ($400 BILLIION this year alone!), the US Dollar, potential taxation of monumental proportions, (just look at the turmoil in the UK, even today, as they are reeling from their Greenies and tax and spend politicians). Those are things that can have a "secular" impact on all of us. Other than that, you will be sucked into the daily cable news idiots who couldn't make a living managing their lawnmowers, let alone in finance.So take it or leave. I want to be positive, because I choose to. That doesn't mean I ignore dangerous numbers or bad news."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
""So just because you don't have the experience to sort through the key stuff, eliminating the chaff,..."" ""reeling from their Greenies and tax and spend politicians"" Can't speak for anyone else here but the chaff in the second quote is what makes it difficult for me to really follow what may be really good solid information being delivered on your part.
They can't get your Goat if you don't tell them where it is hidden.
I'm surprised that you don't like abrasive language. Perhaps you have decided on a new course of living? Bob's next test date: 12/10/07
LOL
That would be funny if abrasive meant chaff.
They can't get your Goat if you don't tell them where it is hidden.
Sorry, but listening to you beat your chest isn't improving the reception of your reporting. that huge axe you have to grind overshadows any measure of objectivity you purport to have.
~Splinter, self-made career hippie-artist, worked hard, made several lucky mistakes, retired at 47, devotée of Nassim Taleeb (who!??!?)