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View Full Version : Economics Wall Street baffled by economic slow down


Chocolate Hog
06-01-2011, 03:40 PM
http://www.cnbc.com/id/43236764


Wall Street is having a hard time figuring out what to do now that the U.S. economy appears to be sputtering and yields are so low, Peter Yastrow, market strategist for Yastrow Origer, told CNBC.

"What we’ve got right now is almost near panic going on with money managers and people who are responsible for money," he said. "They can not find a yield and you just don’t want to be putting your money into commodities or things that are punts that might work out or they might not depending on what happens with the economy.

"We need to find real yield and real returns on these assets. You see bad data, you see Treasurys rally, you see all bonds and all fixed-income rally and then the people who are betting against the U.S. economy start getting bearish on stocks. That’s a huge mistake."

Stocks extended losses after the manufacturing fell below expectations in May and the private sector added only 38,000 jobs during the month.

"Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything," Yastrow said. "We’re on the verge of a great, great depression. The [Federal Reserve] knows it.



"We have many, many homeowners that are totally underwater here and cannot get out from under. The technology frontier is limited right now. We definitely have an innovation slowdown and the economy’s gonna suffer."

However, he said he wouldn’t sell stocks.

"Any bears out there better be careful because the dividend yields on these stocks look awesome relative to all the other investment vehicles out there," Yastrow said. "So bears are going to have to find a new way to express their discontent with the U.S. economy."

ROYC75
06-01-2011, 03:48 PM
With the housing market still in shambles, it's right where I thought it would be.

I have said all along we were heading into a double dip recession when the Great One claimed it was over. I question if it was ever really over.

oldandslow
06-01-2011, 03:59 PM
With the housing market still in shambles, it's right where I thought it would be.

I have said all along we were heading into a double dip recession when the Great One claimed it was over. I question if it was ever really over.

No it was not and is not.

I don't know that the austerity policies of the right will work either. Indeed, I doubt it. However, they may conserve resources, which all in all, would be a good thing.

IMO, we are running into the borders of the pie. Too many people, not enough resources. Those that believe in the infinite planet resources theory will, of course, disagree.

Biological overshoot and her consequences, however, can seldom be avoided, when populations explode.

Brock
06-01-2011, 04:03 PM
No it was not and is not.

I don't know that the austerity policies of the right will work either. Indeed, I doubt it. However, they may conserve resources, which all in all, would be a good thing.

IMO, we are running into the borders of the pie. Too many people, not enough resources. Those that believe in the infinite planet resources theory will, of course, disagree.

Biological overshoot and her consequences, however, can seldom be avoided, when populations explode.

lolwat? This economy has nothing to do with resources. no, not even the price of oil.

oldandslow
06-01-2011, 04:09 PM
lolwat? This economy has nothing to do with resources. no, not even the price of oil.

I disagree. But I will never convince you of it. If you are a believer in infinite economic growth, that's fine. I do not believe it is possible.

Stewie
06-01-2011, 04:22 PM
Welcome to QE III.

vailpass
06-01-2011, 04:24 PM
Get obama out. The market is holding back as a caution against an unpredictable Potus. Even small timers like me and those I know are pinching, waiting for him to be replaced by a business-friendly Potus.

Brock
06-01-2011, 04:25 PM
Get obma out. The market is holding back as a caution against an unpredictable Potus. Even small timers like me and those I know are pinching, waiting for him to be repoaced by a business-friendly Potus.

This may be true.

ROYC75
06-01-2011, 04:43 PM
Get obama out. The market is holding back as a caution against an unpredictable Potus. Even small timers like me and those I know are pinching, waiting for him to be replaced by a business-friendly Potus.

I have to agree with you here. I know I just took an axe to my budget & cut about $ 600.00 per month because of the economy. I'm just tired of using a scalpel on it and can't trim anymore without taking big cuts.

talastan
06-01-2011, 04:47 PM
Get obama out. The market is holding back as a caution against an unpredictable Potus. Even small timers like me and those I know are pinching, waiting for him to be replaced by a business-friendly Potus.

Herman Cain? :shrug:

Simplex3
06-01-2011, 04:52 PM
Personally I refuse to put a bunch more money anywhere into a country that is sprinting headlong into financial ruin. Eventually shit economic policy is going to affect the market adversely and I don't want to be too deep into it when that happens.

ROYC75
06-01-2011, 04:58 PM
Personally I refuse to put a bunch more money anywhere into a country that is sprinting headlong into financial ruin. Eventually shit economic policy is going to affect the market adversely and I don't want to be too deep into it when that happens.

Many people are in the same boat dude, good call.

vailpass
06-01-2011, 05:05 PM
Personally I refuse to put a bunch more money anywhere into a country that is sprinting headlong into financial ruin. Eventually shit economic policy is going to affect the market adversely and I don't want to be too deep into it when that happens.

This isn't the first time we've been down, won't be the last. Trick is to tread water until the tide turns.

banyon
06-01-2011, 05:45 PM
Get obama out. The market is holding back as a caution against an unpredictable Potus. Even small timers like me and those I know are pinching, waiting for him to be replaced by a business-friendly Potus.

Obama, if anything, has been too business friendly, continuing the bush policies of handing bailout $ to wall street, outsourcing jobs, appointing corporate goons to important economic posts, leaving antitrust at doj asleep at the wheel, and not enacting any serious legislation thatt is anti-business.

Oh and continuing to tell main street to go f*ck themselves of course.

banyon
06-01-2011, 05:46 PM
Wall st is nervous because of qe ii, the dollar, and China slowdown.

Detoxing
06-01-2011, 05:50 PM
I don't know about you guys, but the month of may was the slowest month since i've been with the company, which would make it the slowest month is the last 5-6 years.

It's strange considering how well the year started for us.

vailpass
06-01-2011, 06:07 PM
Obama, if anything, has been too business friendly, continuing the bush policies of handing bailout $ to wall street, outsourcing jobs, appointing corporate goons to important economic posts, leaving antitrust at doj asleep at the wheel, and not enacting any serious legislation thatt is anti-business.

Oh and continuing to tell main street to go f*ck themselves of course.

Some business people/private investors I know (NOT mega-wall street size) are not investing/growing right now because obama is unpredictable and unreliable. We were discussing this at a KC meeting last week which is why I bring it up here.

Saul Good
06-01-2011, 06:42 PM
What if we were to do something crazy like pay people to destroy their perfectly functional cars and by new ones? Would that work?

banyon
06-01-2011, 06:43 PM
Some business people/private investors I know (NOT mega-wall street size) are not investing/growing right now because obama is unpredictable and unreliable. We were discussing this at a KC meeting last week which is why I bring it up here.

I can see medium size businesses being concerned with the effects of the boondoggle health care law, but tax proposals are all either status quo or favorable.

Bewbies
06-01-2011, 06:53 PM
A lot of people out there are learning that the policies they thought would lead to economic growth, don't. It is funny how any bad economic news as viewed as 'surprising' now...

mlyonsd
06-02-2011, 08:18 AM
What if we were to do something crazy like pay people to destroy their perfectly functional cars and by new ones? Would that work?

:LOL: GM, Ford, and Chrysler sales are all down so maybe it is time to prop them up again.

We could try different incentives, like maybe a 12 month extension of employment benefits if you buy a car, 18 month extension if you buy an SUV.

BucEyedPea
06-02-2011, 08:22 AM
With the housing market still in shambles, it's right where I thought it would be.

I have said all along we were heading into a double dip recession when the Great One claimed it was over. I question if it was ever really over.

Of course it's not over. But things were amidst the repair cycle before all the dollar printing and quantitive easing which enabled all the spending. That's when the MALLS were full. We were coming out of it then and would have been out of it by now. See, I KNOW my stuff and have sound observations.

alnorth
06-02-2011, 08:25 AM
Talk about a worthless article.

"Markets are confused and nervous"

"We're close to a depression"

"The bears better be careful because these dividend yields look great and people are overdoing it on the pessimism."

Something for everyone, all bases covered. Whatever bias or thought you had about the economy, good or bad, was validated.

HonestChieffan
06-02-2011, 08:31 AM
The author was baffled. Wall Street is and has been dealing with the same issues for the last few years.

Slow news day. Gotta fill some space.

petegz28
06-02-2011, 08:51 AM
Here is the low-down, skinny of it all and you can take it to the bank...

the US$ is worth less than the paper you wipe your ass with after large meal. Until the Ben Bernank grows a pair and quits this scam we have going to favor the Goldman Sach's of the world we are in deep shit. Inflation is now outpacing just about any form of savings. I say savings not "investments". You now have to go out to a 30yr T-Bond to make more than 3%. That is fucking ridiculous as the Fed continues to ignore the incresased costs of goods such as food and energy which is directly related to our $ being worth doggy poo. The tough love this economy needs is a raise in interest rates. Yes, as stupid as it sounds it will be the saving grace. It will bring back the housing market. It will bring back traditional savings. It will get our $ out of the fucking cellar. This is no revelation but rather a simple take on economics that our cheesehead leader at the Fed refuses to embrace.

The congress has not helped because they insist on excessive spending. And with rates so fucking low, why not? The Fed Gov is getting money cheaper now than it ever has. The entire bailout, QE's I & II, excessive printing of $'s and artificial depression of interest rates has finally come to bite us in the ass.

The Fed needs to raise rates, period!
The Fed Gov needs to quit the excessive regulation, get rid of the freeloading illegals and get their financial house back in order.

Unfortunately neither of those things are going to happen so welcome to the end of America as you knew it.

petegz28
06-02-2011, 08:58 AM
"Any bears out there better be careful because the dividend yields on these stocks look awesome relative to all the other investment vehicles out there," Yastrow said. "So bears are going to have to find a new way to express their discontent with the U.S. economy."

This statement spells out the danger of it all. You dump all your money into stocks paying a decent dividend then watch your capital go away as the market tanks from piss-poor economic conditions. It's a fucking scam to break the back of America, if you want to look at it in a conspiratorial aspect.

Simplex3
06-02-2011, 09:24 AM
Wall st is nervous because of qe ii, the dollar, and China slowdown.

China is building entire cities it doesn't need and that its citizens can't afford to live in. In some cases they're knocking down homes people can afford to put up condos they can't afford. Their housing bubble could make ours look like nothing.

Simplex3
06-02-2011, 09:26 AM
"The bears better be careful because these dividend yields look great and people are overdoing it on the pessimism."

Something for everyone, all bases covered. Whatever bias or thought you had about the economy, good or bad, was validated.

All he was saying was that market bears need to be careful because even though the market returns are shit right now everything outside the market is even worse. Thanks to the fed for near 0% interest rates.

petegz28
06-02-2011, 10:36 AM
All he was saying was that market bears need to be careful because even though the market returns are shit right now everything outside the market is even worse. Thanks to the fed for near 0% interest rates.

And that is the problem. The Fed has bascially forced everyone into the game a lot of people don't want to play which is stock investing. People on fixed incomes do not want to touch the stock market. They want savings, CD's and safe bonds. But when you can't even match inflation without going to a 30 year bond there is an issue.

But now take the other side of that. The Fed-friendly market maker side of it. Companies like Government Sachs will benefit greatly from this scenario. The increased trading fees for one. Secondly you can be sure that they will see the next big market downturn coming and will make sure they make money while those who are otheriwised forced into the market will lose. It's a big build up. One could almost view it as the final blow the middle class. You create a scenario where people are forced into markets they otherwise wouldn't get into, you suck up all the money then watch it all crash and burn when it tumbles. Similar to what happened last time around only you can't keep taking punches like that before you are knocked out.

L.A. Chieffan
06-02-2011, 10:49 AM
everything is going up except wages

petegz28
06-02-2011, 10:53 AM
everything is going up except wages

And jobs

petegz28
06-02-2011, 11:00 AM
Yes, it is worth repeating...

<iframe width="425" height="349" src="http://www.youtube.com/embed/PTUY16CkS-k" frameborder="0" allowfullscreen></iframe>

FD
06-02-2011, 11:01 AM
This place is just ridiculous some times. The very same week that we see a batch of indicators showing the recovery may be weakening, people here are advocating contractionary policy. It boggles the mind.

petegz28
06-02-2011, 11:07 AM
This place is just ridiculous some times. The very same week that we see a batch of indicators showing the recovery may be weakening, people here are advocating contractionary policy. It boggles the mind.

What is your solution? We need some contraction actually. Sometimes contraction spurs expansion in other areas. The fact is if rates started going back up then food, energy and most other commodity prices would come down. Also savings accounts may be something other than a myth again and people could actually save some monry without a ton of risk. I know, that sucks for the Goldman Sach's.

Bottom line is, higher interest rates = stronger $ = lower costs of goods. this whole mantra of basing everything of the housing market is what is the problem and causing us grief.

FD
06-02-2011, 11:12 AM
What is your solution? We need some contraction actually. Sometimes contraction spurs expansion in other areas. The fact is if rates started going back up then food, energy and most other commodity prices would come down. Also savings accounts may be something other than a myth again and people could actually save some monry without a ton of risk. I know, that sucks for the Goldman Sach's.

Bottom line is, higher interest rates = stronger $ = lower costs of goods. this whole mantra of basing everything of the housing market is what is the problem and causing us grief.

Two problems here, the savings rate is higher than it has been in 15 years, and core inflation is currently BELOW target. The basic facts your building your argument on are incorrect. Following that, they still lead to the opposite conclusion you are reaching for them. We don't need the economy to contract right now, we need it to expand.

petegz28
06-02-2011, 11:30 AM
Two problems here, the savings rate is higher than it has been in 15 years, and core inflation is currently BELOW target. The basic facts your building your argument on are incorrect. Following that, they still lead to the opposite conclusion you are reaching for them. We don't need the economy to contract right now, we need it to expand.

The savigs rate is higher but is earning the least they have in forever. When you factor in inflation increased savings means increased erosion of our dollars saved. No, the basic facts I am building my argument are are indeed 100% correct. The economy is contracting because the Ben Bernank wants to pretend higher food and gas costs, among other things, are trivial and non-impacting. In fact the AP had a story the other day where they claimed peope "feel" poorer than they actually are because of higher gas prices. Do you get that? Do you see how stupid such a statement is? It's as if these morons don't think you actually pay real money for gas.

The whole argument of core inflation is bunk. It's a bunk statistic. Particularly in the current environment. In case it comes as a shock to you, when the economy sucks, jobs are scarce and people are working for less than they did previously things like higher food and energy costs are a very real impact to their bottom line.

It's simple economics that you canno argue. The math doesn't lie as much as the Fed and others want us to believe it does. When everything we use is denominated in US $'s then they cheaper the $ the more things cost. That is Econ 101 stuff. Meanwhile you have the Execs of companies enjoying rising stock prices, not so much because they are doing a good job but because you have people who otherwise would not, buying into the stock market.

Mark Mobious had a great article about how we are set for another financial crisis because we did nothing to fix the first one. On th eother hand, the Ben Bernank has been wrong about just about everything he has said. So I guess we should continue to listen to him and follow his failed policies. After all, he made sure Goldman Sac's and others got our tax $'s as the rest of the country went to shit.

FD
06-02-2011, 11:50 AM
There is a reason economists focus on core inflation, even if its confusing to the man on the street. Core inflation, by stripping the most volatile elements of CPI, does a better job of forecasting total inflation in the future. Not just forecasting core inflation, but total inflation.

There is a reason almost every measure of inflation expectations declined over the past two months, even as food and gas prices jumped. Its because short, temporary jumps in prices like these are just that.

Pete, you also seem to be arguing that the problem with the economy is that people and companies are not saving enough because the return on saving is too low, is that correct?

Because its preposterously wrong. People are not consuming enough and businesses are not investing enough. This is why we have massive underutilized capacity and unemployment. Savings rates are higher than in a very long time and companies are sitting on boatloads of cash. Raising interest rates will only worsen this problem and slow the economy down further. To harm the economy in such a serious way out of fears of inflation that doesnt exist in the data is just mind-boggling.

vailpass
06-02-2011, 12:00 PM
There is a reason economists focus on core inflation, even if its confusing to the man on the street. Core inflation, by stripping the most volatile elements of CPI, does a better job of forecasting total inflation in the future. Not just forecasting core inflation, but total inflation.

There is a reason almost every measure of inflation expectations declined over the past two months, even as food and gas prices jumped. Its because short, temporary jumps in prices like these are just that.

Pete, you also seem to be arguing that the problem with the economy is that people and companies are not saving enough because the return on saving is too low, is that correct?

Because its preposterously wrong. People are not consuming enough and businesses are not investing enough. This is why we have massive underutilized capacity and unemployment. Savings rates are higher than in a very long time and companies are sitting on boatloads of cash. Raising interest rates will only worsen this problem and slow the economy down further. To harm the economy in such a serious way out of fears of inflation that doesnt exist in the data is just mind-boggling.

Yep. Not only companies but private investors big and small are pinching, waiting for the climate to change. No confidence in obama is part of the puzzle.

petegz28
06-02-2011, 03:07 PM
There is a reason economists focus on core inflation, even if its confusing to the man on the street. Core inflation, by stripping the most volatile elements of CPI, does a better job of forecasting total inflation in the future. Not just forecasting core inflation, but total inflation.

There is a reason almost every measure of inflation expectations declined over the past two months, even as food and gas prices jumped. Its because short, temporary jumps in prices like these are just that.

Pete, you also seem to be arguing that the problem with the economy is that people and companies are not saving enough because the return on saving is too low, is that correct?
Because its preposterously wrong. People are not consuming enough and businesses are not investing enough. This is why we have massive underutilized capacity and unemployment. Savings rates are higher than in a very long time and companies are sitting on boatloads of cash. Raising interest rates will only worsen this problem and slow the economy down further. To harm the economy in such a serious way out of fears of inflation that doesnt exist in the data is just mind-boggling.

You would not have said that had you been actually paying attention to what I have said. Please go back and read what I have said then ask a more appropriate question.

And Inflation does exist. I hate to point out the facts and save me the scuttlebutt of why F&E are excluded from core inflation. I am more than aware of why it is and think it leads one to false answers.

FD
06-02-2011, 03:16 PM
You would not have said that had you been actually paying attention to what I have said. Please go back and read what I have said then ask a more appropriate question.

And Inflation does exist. I hate to point out the facts and save me the scuttlebutt of why F&E are excluded from core inflation. I am more than aware of why it is and think it leads one to false answers.

I've read all your posts and I thought that was a fair assessment. Clear it up for me.

Do you think there is too much savings in the economy, or too little? Would the Fed raising rates increase savings or decrease savings?

Chocolate Hog
06-02-2011, 03:25 PM
Yep. Not only companies but private investors big and small are pinching, waiting for the climate to change. No confidence in obama is part of the puzzle.

Are you saying companies anticipate a tax increase in Obamas second term to offset record spending? I agree thats the wrong way to go we need to look into cutting the income tax and re-doing the tax code entirely.

petegz28
06-02-2011, 03:45 PM
I've read all your posts and I thought that was a fair assessment. Clear it up for me.

Do you think there is too much savings in the economy, or too little? Would the Fed raising rates increase savings or decrease savings?

If you read what I said you would realize how dumb your question is. I said that savings are being forced into the market to achieve a rate of return above inflation with an exponentially greater amount of risk. Those who keep saving in cash via savings and CD's are actually losing money when inflation is factored in. So, as I said once already, while savings may be at the greatest rate, the rate on savings is at its worst therefore collectively ****ing the american people out of their money. It's a hidden tax if you will. the Fed raising rates at this point allow people to remove a great deal of unwanted risk from their savings by them going back into savings accounts and cd's, money markets, etc. And, at this point in time, the decline in food energy that would be seen from increasing rates and strengthening the $ would be an increased savings to people and may actually spur more discretionary spending since they aren't having to throw out $400 a month for gas.

FD
06-02-2011, 04:15 PM
If you read what I said you would realize how dumb your question is. I said that savings are being forced into the market to achieve a rate of return above inflation with an exponentially greater amount of risk. Those who keep saving in cash via savings and CD's are actually losing money when inflation is factored in. So, as I said once already, while savings may be at the greatest rate, the rate on savings is at its worst therefore collectively ****ing the american people out of their money. It's a hidden tax if you will. the Fed raising rates at this point allow people to remove a great deal of unwanted risk from their savings by them going back into savings accounts and cd's, money markets, etc. And, at this point in time, the decline in food energy that would be seen from increasing rates and strengthening the $ would be an increased savings to people and may actually spur more discretionary spending since they aren't having to throw out $400 a month for gas.

So, before I respond, is this an accurate summation:

The problem caused by low rates is that they force savers to take on more risk than they would like to get a decent return on their savings (and they stoke inflation.)

alnorth
06-02-2011, 04:20 PM
In other words, if we raise interest rates, then through the magic of wishful thinking and unicorns, businesses will start to invest and people will spend more than they would had we not raised interest rates.

ROYC75
06-02-2011, 04:28 PM
In other words, if we raise interest rates, then through the magic of wishful thinking and unicorns, businesses will start to invest and people will spend more than they would had we not raised interest rates.

Liberals have been thinking this way for years. Same as the corporate taxes.

petegz28
06-02-2011, 05:32 PM
In other words, if we raise interest rates, then through the magic of wishful thinking and unicorns, businesses will start to invest and people will spend more than they would had we not raised interest rates.

It's not magic, it's math. Higer rates = stronger $. Stronger $ = cheaper commidity, fuel and food costs. Cheaper fuel and food costs = more disposable income. Cheaper fuel costs also = chear costs to transport goods. cheaper commodity costs = lower costs to manufacture goods.

It is a balancing game between rates and inflation. Right now the scale is tipped way to much to the side of lower rates. A 1-2% difference in rates is not going to adversely affect businesses if their business is up 10+% due to increased disposable income in the economy. Most people fail to associate weak interest rates with a low $ and therefore higher costs on essentials such as food and gas thus a smaller pool of money to spend on cars, stereo stuff, etc.

Saul Good
06-02-2011, 05:34 PM
So, before I respond, is this an accurate summation:

The problem caused by low rates is that they force savers to take on more risk than they would like to get a decent return on their savings (and they stoke inflation.)

We've pretty much reached the point of damned if you do and damned if you don't. You shouldn't be saving because inflation is eating away your value, and you shouldn't be investing because the market is a house of cards. Might as well just spend spend spend.

Saul Good
06-02-2011, 05:35 PM
It's not magic, it's math. Higer rates = stronger $. Stronger $ = cheaper commidity, fuel and food costs. Cheaper fuel and food costs = more disposable income. Cheaper fuel costs also = chear costs to transport goods. cheaper commodity costs = loswer costs to manufacture goods.

It is a balancing game between rates and inflation. Right now the scale is tipped way to much to the side of lower rates. A 1-2% difference in rates is not going to adversely affect businesses if their business is up 10+% due to increased disposable income in the economy. Most people fail to associate weak interest rates with a low $ and therefore higher costs on essentials such as food and gas thus a smaller pool of money to spend on cars, stereo stuff, etc.

This is kind of the way I see it. If people aren't buying houses anyway, then who really cares if rates are 4% or 8%?

petegz28
06-02-2011, 05:37 PM
I have posted charts on here showing the direct correlation between the $ and oil. Do people here really think that spedning and extra $100-$200 a month on gas does not effect otherwise disposable income? What drives an economy is consumer spending on non-essential items. Consumers cannot spend when all their money goes to essentials like gas and food. Some of you have fallen in love with the falacy that low interest rates=strong economy and the current environment is proof-positive otherwise.

petegz28
06-02-2011, 05:38 PM
We've pretty much reached the point of damned if you do and damned if you don't. You shouldn't be saving because inflation is eating away your value, and you shouldn't be investing because the market is a house of cards. Might as well just spend spend spend.

You're not far off the mark. We do need people to spend, spend, spend. But on things other than gas in their car, food on their table and heat\AC in their homes.

petegz28
06-02-2011, 06:26 PM
This is kind of the way I see it. If people aren't buying houses anyway, then who really cares if rates are 4% or 8%?

Again not far from the mark. If you cant buy a house beacause rates went up a couple points then you cant afford the house in the first place.

ROYC75
06-02-2011, 11:08 PM
New housing down to it's lowest mark since 2002. Not a good sign for Obama , that plus the unemployment,trillions spent to find out the jobs are not raising as fast as needed, the stimulus has failed, again, ObamaCare that nobody wants for the country, immigration,and just about anything else.

What kind of ( good ) record does Obama have to run on ?

FD
06-03-2011, 10:45 AM
So, before I respond, is this an accurate summation?

The problem caused by low rates is that they force savers to take on more risk than they would like to get a decent return on their savings (and they stoke inflation.)

No response, pete?

petegz28
06-03-2011, 10:47 AM
No response, pete?

I did respond..go back and read.....I have answered every question you have asked throughout this thread. Read my replies to everyone..you will have your answer.

but no, that is not an accurate summation. If you read what I have posted you wouldn't be asking these questions.

ClevelandBronco
06-03-2011, 11:29 AM
Great news! 54,000 new jobs reported! That makes the unemployment rate climb much more slowly! Thank you, Mr. President! (I know from past reports that you like to take credit for great news such as this.)

FD
06-03-2011, 11:42 AM
I did respond..go back and read.....I have answered every question you have asked throughout this thread. Read my replies to everyone..you will have your answer.

but no, that is not an accurate summation. If you read what I have posted you wouldn't be asking these questions.

I've read all your posts, and as far as I can tell you are saying that 1) inflation is too high (not supported in the data, but I'm willing to part with that) and that 2) low interest rates are hurting consumers by lowering the returns on their savings and increasing their risk exposure.

The problem is that this is not just wrong, its the exact opposite of the truth. Your prescription for the economy is a policy to increase savings and decrease consumption and investment. Saving is already much too high, we don't need to encourage it any more with higher interest rates. We need to encourage more spending and investment to get people back to work.

And yes, increasing interest rates does hurt the housing market.

gonefishin53
06-03-2011, 12:48 PM
Until something is done to regulate the powerful special interests who profit from policies intended to keep the product of American manufacturing workers off the shelves of America's major retailers, American workers, and America itself, are doomed.

First, we need to regulate the incredibly powerful and well connected Tax Code Compliance Industry. Because of our 55,000 page tax code and the Tax Code Compliance Industry's close relationship with corporate media (millions of dollars in ad revenue), the Tax Code Compliance Industry make billions of dollars in income for making American workers less competitive in world markets. A fair and honest tax code would be so simple that the average journalist could explain all it's provisions to the average small business owner.

Second, we need to regulate the obscene greed and absolute control of our "justice" system by the Litigation Industry. Nothing works better than frivolous lawsuits for making American workers less competitive in world markets. Like England, we need a loser pay law so litigators and judges hand picked by the Litigation Industry can't conspire to use frivolous lawsuits to make the product of American workers cost a lot more than the product of our competitors.

petegz28
06-03-2011, 01:54 PM
I've read all your posts, and as far as I can tell you are saying that 1) inflation is too high (not supported in the data, but I'm willing to part with that) and that 2) low interest rates are hurting consumers by lowering the returns on their savings and increasing their risk exposure.

The problem is that this is not just wrong, its the exact opposite of the truth. Your prescription for the economy is a policy to increase savings and decrease consumption and investment. Saving is already much too high, we don't need to encourage it any more with higher interest rates. We need to encourage more spending and investment to get people back to work.

And yes, increasing interest rates does hurt the housing market.

Again if this is what you think you are not reading what I am saying. The housing market is hurting anyway. Get off the housing market, it's a bunk stat at this point in time. Higer rates = stronger $ = lower food and gas costs = more disposable income for people to spend. I have said this now like 5 times. What is it I am not communicating properly for you to not understand that?

If I have an extra $200 at the end of the month because gas came down and food costs came down how is that bad for the economy? I now have $200 to spend on dining out, going to Best Buy or whatever. The problem you are ignoring is inflation is real, gas prices are up. Food prices are up. People have to buy those things. So when they have to spend more on those items they have less to spend in the areas we need them to be spending. It's basic math and economics.

Savings are high for a few factors..

1. Uncertain economic environment
2. People are having to save more to get half the return they were getting before

If I am a fixed income person that was making say 5% on $100k I am now having to save around 10X more to make the same return. Or I go into the market and take a huge risk at losing my captial thus making me save whatever I can that I don't put in the market to offset risk.

The economy thrives when 2 basic factors exist...

1. Certainty of the economic environment
2. Security in income

The housing market sucks ass right now because people are not either employed or are not secure in their employment to take on new debt regarldess of how low the rates are. And to humor this argument, if someone say does re-fi to a lower rate their savings are being eaten up by higher food and gas costs that people want to pretend do not exist.

FD
06-03-2011, 02:48 PM
Savings are high for a few factors..

1. Uncertain economic environment
2. People are having to save more to get half the return they were getting before

If I am a fixed income person that was making say 5% on $100k I am now having to save around 10X more to make the same return. Or I go into the market and take a huge risk at losing my captial thus making me save whatever I can that I don't put in the market to offset risk.


Finally, this is the heart of your theory, in point 2 above. In your view, when the return on savings is high, people will save less and when the return is low, people will save more. So, if, for instance, the return on savings went to 40%, everyone would take their money out of savings, and if it went down to .001%, everyone would save all their money.

I must say, this is a bizarre new theory of savings, especially bizarre because it directly contradicts everything economists know about savings. Do you have some evidence that this is how people behave?

petegz28
06-03-2011, 03:30 PM
Finally, this is the heart of your theory, in point 2 above. In your view, when the return on savings is high, people will save less and when the return is low, people will save more. So, if, for instance, the return on savings went to 40%, everyone would take their money out of savings, and if it went down to .001%, everyone would save all their money.

I must say, this is a bizarre new theory of savings, especially bizarre because it directly contradicts everything economists know about savings. Do you have some evidence that this is how people behave?

Dude, seriously? Is that all you can come up with is that much of a reach? You isolate one part of my argument then proceed to parse that out to make such a statement?

And let me just ask you though, what was the savings rate when rates were between 5%-10% on savings and CD's vs. what it is now when rates are .01% - 1.%?
LMAO sorry...but you just walked right into that one.

Stewie
06-03-2011, 03:46 PM
Great news! 54,000 new jobs reported! That makes the unemployment rate climb much more slowly! Thank you, Mr. President! (I know from past reports that you like to take credit for great news such as this.)

...and half of those jobs were McDonald's seasonal hires they do every summer. Gusto!

Stewie
06-03-2011, 04:00 PM
Spinning the Economy to a Recovery

3 June 2011 23 Comments
By Greg Hunter’s USAWatchdog.com (http://usawatchdog.com/)

http://usawatchdog.com/wp-content/uploads/2011/06/uncle-sam-debt-rating-300x203.jpg (http://usawatchdog.com/economy-recovering/)


Remember back in early-2009, when the mainstream media (MSM) started with the ridiculous “green shoots” talking point? Even though the data was dismal and there were no signs of the economy recovering, the “green shoots” term was used by just about everyone in the MSM. I think not long after economist Nouriel Roubini said that the much talked about “green shoots” was really “yellow weeds,” the talking point changed to “recovery.” (Click here to read the complete “Yellow Weeds” article from professor Roubini.) (http://www.project-syndicate.org/commentary/roubini13/English)Ever since, the MSM has described the so-called “economic recovery” in terms such as “fragile,” “jobless” and “tenuous,” to name a few. The data has repeatedly shown the “recovery” isn’t any of these terms because THERE IS NO RECOVERY. Oh sure, the stock market has gone up, but so have the number of people on food stamps, which is at a new record of 44 million. There is also no recovery for the 33 million people who are unemployed. Forget the government B.S. of 9%, the true unemployment rate has been stuck north of 22% for months according to Shadowstats.com.


The latest numbers have shown there is bad news across the board for housing, autos, manufacturing, employment and consumer confidence. Well, here we go again with the spin by the MSM. Even though many are now admitting there is a double-dip in the economy, the talking points used to describe this new downturn are things like “temporary,” “transitory” and a good old fashion “soft patch.” Here’s how the Associated Press reported the story after a nearly 300 point drop in the Dow this week. It said, “We’re definitely in a soft patch,” says Steve Blitz, senior economist for ITG Investment Research. No one knows whether the slowdown is a temporary setback or the start of a prolonged period of anemic growth. Many analysts hold out hope that the economy will rebound in the second half of 2011.” “Soft patch, temporary,” see what I mean? Since when is holding out “hope” and investment strategy? Me and the people I have been quoting on this site have been clearly telling readers there would be another plunge in the economy. We were right and the MSM was wrong—again.


Money manager Hank Smith of Haverford Trust said yesterday on FOX Business, “It looks like we are having a soft patch for a quarter of two as we are in the expansion phase.” Mr. Smith blamed this “soft patch” on higher energy prices, the Japan earthquake and extreme weather. Mr. Smith went on to say, “All these are transient or cyclical factors. So while it is having an impact near term we do expect growth in the second half.” “Transient, cyclical” all words that scream the message–don’t worry, it will be ok, just keep spending all your money!


The only way we see “growth in the second half” of the year is if the Fed starts printing gobs of money in what will be called QE3 (quantitative easing). Mike Riddell, a fund manager at M&G Investments in London, was quoted on CNBC this week. The story said, “Pointing to the dramatic turnaround in the Citigroup “Economic Surprise Index” for the United States, Riddell said the tumble in a matter of months to negative from positive is almost as bad as the situation before the collapse of Lehman Brothers in 2008. . . . ‘You’ve also got to wonder at what point the markets for risky assets start noticing, too. QE3 anybody?’ asks Riddell.”

(http://www.cnbc.com/id/43239586)
What you are seeing in the economy is not “soft patch, transient, temporary,” and it is veritable NOT a “recovery.” What we have now will one day be called the Greatest Depression in history! Things will forever be changed in America, and it will take a generation to dig out from under the avalanche of debt bankers created. That is the cold hard truth the MSM will never tell you.

Saul Good
06-03-2011, 05:31 PM
Finally, this is the heart of your theory, in point 2 above. In your view, when the return on savings is high, people will save less and when the return is low, people will save more. So, if, for instance, the return on savings went to 40%, everyone would take their money out of savings, and if it went down to .001%, everyone would save all their money.

I must say, this is a bizarre new theory of savings, especially bizarre because it directly contradicts everything economists know about savings. Do you have some evidence that this is how people behave?

You are out over your skis here.

FD
06-06-2011, 10:07 AM
Dude, seriously? Is that all you can come up with is that much of a reach? You isolate one part of my argument then proceed to parse that out to make such a statement?

And let me just ask you though, what was the savings rate when rates were between 5%-10% on savings and CD's vs. what it is now when rates are .01% - 1.%?
LMAO sorry...but you just walked right into that one.

This isn't one part of your argument, its the whole of it. You are arguing that, contrary to everything we know about economics, raising rates is expansionary and lowering them is contractionary. Your whole basis for this is your belief that when interest rates go up, people will save less, and when they go down people will save more. Based on everything you've posted, its either this or you just believe it will happen magically, but there is no other mechanism.

And I'm sorry but this could not be more wrong. The reason lower rates is expansionary is simple, lower rates encourage consumers to consume more and businesses to invest more. If you raise rates, investment and consumption go down and saving goes up. This is one of the fundamental truths in economics, and you seem either ignorant of this fact or are proposing a new a radical view of the economy.

The truth is, the economic recovery is much too weak right now for the Fed to start policies that would restrict growth, which is what you are advocating.