Economics Thread

[jamesw 10+ year member]

Hoping someone could contribute as to whether or not people think that the recent economy status is actually getting better or is it a false alarm.?

My take on it is It seems as though the past rally has left a lot of us baffled on where the market wants to go. We know that the market is designed to go up. The typical mom and pop investors/retirement accounts are not long/short funds or short at all. There are rules in play (such as the uptick rule) that add stipulations to selling short and well as ***** short selling. Some brokers will not allow shorts etc, you get my drift. With this being said, there was a lot of news that was exaggerated both good and bad in 2008 in order to find a bottom. I feel like the general consensus now is that people are trying to exaggerate good news and shrug off bad news. There was one key factor that was missing back then that we have now, optimism.

We all knew things were going to be bad in 2008, the media did a lot to add as a catalyst to that state of mind, but we all saw the weakness and exposure that many companies were having. It was was obvious things were going to be rough after lehmen virtually disappeared overnight and Bear Sterns was allowed to fail. It was in our favor to be short because we saw little effort to effectively tackle the problem. When Congress failed to pass the first version of the stimulus bill that sent the markets plummeting in November, a lot of people I knew had zero optimism after that point. A few trillion dollars later, as well as earnings reports that are manipulated to look good through accounting laws (m2m), optimism has returned to the market in hopes that things will get better quickly. A lot of investors have began dipping their toes into the market out of optimism.

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[RJesus 10+ year member]

The US's market is %80 based upon spending.

In other parts of the world like europe, their economy is based primarily on saving.

If you really think about it, even though our economy is doing 'terribly', it simply means we might not be able to get that new iphone as quickly as we could before. That disappoints us because we've become accustomed to being lavished with the ability to buy things rapidly.

Basically:

OLD US: I'm going to work, save up my money for a month and buy a $500 iphone.

OLD Euro: I'm going to work, save the majority of my money, invest it, and eventually buy an Iphone about a year or two from now.

Both are perfectly fine in their own respects, as both put money into the economy. Its best to have a balanced economy though, as opposed to our economy which is based almost entirely on spending.

NEW US: I'm going to work, save up my money for a few months, and buy a $500 iphone.

NEW Euro: I'm going to work, save up my money for a year or two, and eventually buy an iphone.

People in the us are used to getting what they want in short periods of time. People in europe are used to waiting for their investments to pay off, they then use that money for the things they want.

The economy will get better. Because if it doesn't, the world will end :\

 

[Stalin-ohaulic]

Hoping someone could contribute as to whether or not people think that the recent economy status is actually getting better or is it a false alarm.?
My take on it is It seems as though the past rally has left a lot of us baffled on where the market wants to go. We know that the market is designed to go up. The typical mom and pop investors/retirement accounts are not long/short funds or short at all. There are rules in play (such as the uptick rule) that add stipulations to selling short and well as ***** short selling. Some brokers will not allow shorts etc, you get my drift. With this being said, there was a lot of news that was exaggerated both good and bad in 2008 in order to find a bottom. I feel like the general consensus now is that people are trying to exaggerate good news and shrug off bad news. There was one key factor that was missing back then that we have now, optimism.

We all knew things were going to be bad in 2008, the media did a lot to add as a catalyst to that state of mind, but we all saw the weakness and exposure that many companies were having. It was was obvious things were going to be rough after lehmen virtually disappeared overnight and Bear Sterns was allowed to fail. It was in our favor to be short because we saw little effort to effectively tackle the problem. When Congress failed to pass the first version of the stimulus bill that sent the markets plummeting in November, a lot of people I knew had zero optimism after that point. A few trillion dollars later, as well as earnings reports that are manipulated to look good through accounting laws (m2m), optimism has returned to the market in hopes that things will get better quickly. A lot of investors have began dipping their toes into the market out of optimism.

It's a false alarm. The stimulus has been an utter failure. The housing crisis is what caused this and if you look at the facts, it's not simply because of inflated home values that needed to be regulated. It's because the government required the banks to lend to people who could not pay the loans back and called it "equality". The people defaulted on their loans and the banks are stuck with property they can't move. It happens steadily over the years and then more rapidly because the measures taken to "correct" the market were to lower interest rates. The people wanted loans and the banks were in a pinch and ready to earn that interest on their loans so they readily approved the loans. These people too defaulted and the banks could no longer stand up to this vicious cycle. To this day, the problem has not been corrected. The government robbed the taxpayer of billions of dollars of their money to give to the banks. All that happened was the government has prolonged the inevitable.

If a company is not solvent it must fail. Injecting capital and not fixing the core problems will not fix anything. The crisis is not over. Bush was the President in 2008 so the media reported the end of the world. Now that obama is the president they are reporting that he has fixed it even though the unemployment rate continues to fall. We are still in a recession. Don't be fooled.

 

[jamesw 10+ year member]

It really seems like there just trying to get people to spend money and sort of well lets hope for the best approach.

 

[magliteman 10+ year member]

If you feel safe and secure you will spend money. If you don't then you won't.

Do you feel secure?

I work for a Canadian company and they seem to be over the recession and in recovery mode.

 

[Mr. Ahmadinejad 10+ year member]

The economy is best when I make all the calls.

 

[Flipx99 5,000+ posts]

Sounds like everything is a-ok.

 

[528hz 10+ year member]

//content.invisioncic.com/y282845/emoticons/laugh.gif.48439b2acf2cfca21620f01e7f77d1e4.gif We haven't seen shit yet...

 

[Ignatowski 5,000+ posts]

the stimulus failed IMO.......Yup wall street is up...Great and so is unemployment

and untill unemployment strats dropping our economy will stay in the crapper..

Something our current govt fails to grasp........

 

[azimuth 5,000+ posts]

they want an economic collapse (if you believe that the "cloward piven" strategy is real and has been being used for 40+ years). they need people to be scared and reliant on the government. cap and trade/health care/internet neutrality/etc. etc. etc. are all structures that need to be in place in order to dismantle the current free market system. a collapse of the economy without these structures in place, will yield the government far less power, than if they already control large pieces of what use to be private entities. it all started with bush/paulson and the bank bailouts, and will culminate, i believe, in the government fiscally controlling, or outright owning america. the beginning of the creation of a great new society.

 

[newusername 10+ year member]

the stimulus failed IMO.......Yup wall street is up...Great and so is unemploymentand untill unemployment strats dropping our economy will stay in the crapper..

Something our current govt fails to grasp........

I think you're argument is mistaken. If I may summarize it, you seem to imply that because unemployment is as high as its been in almost 30 years, we can infer that the stimulus has failed. I would counter that with a hypothetical: isn't it possible that unemployment would be significantly higher if it were not for the stimulus? This is part of the problem with post-stimulus analysis: it's not easy to uncover the specific effects it has had in most economic variables, with the exception of inflation, where we know for certain it is having a negative effect due to the expansion of the money supply.

 

[Flipx99 5,000+ posts]

I think you're argument is mistaken. If I may summarize it, you seem to imply that because unemployment is as high as its been in almost 30 years, we can infer that the stimulus has failed. I would counter that with a hypothetical: isn't it possible that unemployment would be significantly higher if it were not for the stimulus? This is part of the problem with post-stimulus analysis: it's not easy to uncover the specific effects it has had in most economic variables, with the exception of inflation, where we know for certain it is having a negative effect due to the expansion of the money supply.

Depends...

The way the average American understood the deal was that the stimulus would reduce unemployment, not slow it down...and furthermore, that was supposed to happen quickly. I am not arguing what was actually said, but what people understood.

Just as people understood that Obama was going to send them a check. A signifcant portion of my undereducated state thought that shortly after election day, Obama was going to mail them a check.

So, if you compare what people expected vs. what has transpired, it could be a failure. If you consider what is practical vs. what has transpired, it is too soon to tell. I fall in the "too soon to tell" column.

Also, what categorizes as "jobs saved" under ARRA filings is stupid.

 

[whitedragon551 5,000+ posts]

The US's market is %80 based upon spending.
In other parts of the world like europe, their economy is based primarily on saving.

If you really think about it, even though our economy is doing 'terribly', it simply means we might not be able to get that new iphone as quickly as we could before. That disappoints us because we've become accustomed to being lavished with the ability to buy things rapidly.

Basically:

OLD US: I'm going to work, save up my money for a month and buy a $500 iphone.

OLD Euro: I'm going to work, save the majority of my money, invest it, and eventually buy an Iphone about a year or two from now.

Both are perfectly fine in their own respects, as both put money into the economy. Its best to have a balanced economy though, as opposed to our economy which is based almost entirely on spending.

NEW US: I'm going to work, save up my money for a few months, and buy a $500 iphone.

NEW Euro: I'm going to work, save up my money for a year or two, and eventually buy an iphone.

People in the us are used to getting what they want in short periods of time. People in europe are used to waiting for their investments to pay off, they then use that money for the things they want.

The economy will get better. Because if it doesn't, the world will end :\

You have to spend money to make money. Your theory about us being 80% spending means we shouldnt be in the deficit we are in.

Its a team effort. People have to demand products and services at a fair price. Business create those products and services at a fair price that the consumers are willing to pay for it. Consumers spend money, more money is spent on production, works are employeed. Its a cycle and everyone has to play their part.

In a time like this goverment needs to step in. Id rather have a stimulus now and put more money into the economy and spending it to get it going rather than keep getting further and further into debt. Sure we will be in debt from the stimulus money we borrow from another country, but its not as severe as what will happen if we continue on the path we are on.

 

[azimuth 5,000+ posts]

You have to spend money to make money. Your theory about us being 80% spending means we shouldnt be in the deficit we are in.
Its a team effort. People have to demand products and services at a fair price. Business create those products and services at a fair price that the consumers are willing to pay for it. Consumers spend money, more money is spent on production, works are employeed. Its a cycle and everyone has to play their part.

In a time like this goverment needs to step in. Id rather have a stimulus now and put more money into the economy and spending it to get it going rather than keep getting further and further into debt. Sure we will be in debt from the stimulus money we borrow from another country, but its not as severe as what will happen if we continue on the path we are on.

i disagree with the second part, especially as to how we are getting the money. some of it may be borrowed, but alot of it is simply printed. they do things like sell treasuries, then buy them back 2 weeks later. or just flat out sell them to themselves. the FED refuses to open up any books. who knows how much they've actually inflated the money supply. and to non-chalantly talk about debt is hard to understand also. at what point does the world un-hinge from the dollar and go elsewhere. good times are coming.

 

[whitedragon551 5,000+ posts]

i disagree with the second part, especially as to how we are getting the money. some of it may be borrowed, but alot of it is simply printed. they do things like sell treasuries, then buy them back 2 weeks later. or just flat out sell them to themselves. the FED refuses to open up any books. who knows how much they've actually inflated the money supply. and to non-chalantly talk about debt is hard to understand also. at what point does the world un-hinge from the dollar and go elsewhere. good times are coming.

I was assuming we borrowed it. If we borrowed it thats what would theoretically happened, but its clearly not that easy. We are doing more than just borrowing money to create the stimulus package like raising taxes and cutting school funding. Cutting school funding is also another topic. Obama said we need to fund school to create a better tomorrow and then and goes and takes the funding away so only the people with money can get schooling.