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pueno



Joined: 03 Mar 2007
Posts: 2351

PostPosted: Sat May 18, 2013 12:20 pm    Post subject: Reply with quote

Mr. Bard wrote:
...now that their unemployment insurance has ended...

<sarcasm>
You can blame the fascist socialist commie Marxist Kenyan for that; it happened on his watch.
</sarcasm>


boggsman1 wrote:
There are a lot of positive things happening right now, I think we should be cognizant of them.

<sarcasm>
Dubya gets credit for those because of his careful and thorough planning.
</sarcasm>
.


Last edited by pueno on Sat May 18, 2013 3:53 pm; edited 1 time in total
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stevenbard



Joined: 11 Nov 1993
Posts: 3608

PostPosted: Sat May 18, 2013 3:15 pm    Post subject: Reply with quote

Everyone is scoffing at trickle down economics, now that they've become trickle down tyranny. Let's hope everyone gets rich!
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pueno



Joined: 03 Mar 2007
Posts: 2351

PostPosted: Sat May 18, 2013 3:53 pm    Post subject: Reply with quote

Mr. B. wrote:
Everyone is scoffing at trickle down economics, now that they've become trickle down tyranny. Let's hope everyone gets rich!

Trickle down works just fine.

From the 1% to the 99%.

Unfortunately, what trickles down is not green.

It's yellow and at 98.6 degrees F.
.
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stevenbard



Joined: 11 Nov 1993
Posts: 3608

PostPosted: Sat May 18, 2013 7:24 pm    Post subject: Reply with quote

Does anyone on this site know the difference between an asset bubble and a good economy? Assets are inflating, but there are few jobs.
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swchandler



Joined: 08 Nov 1993
Posts: 5444

PostPosted: Sat May 18, 2013 7:49 pm    Post subject: Reply with quote

What you're seeing Bard is that the rich are getting richer, at least for now. Most normal folks aren't. The big downside in the picture is that the rich don't really create jobs. That's why some financial stimulus from the government is so important right now on infrastructure and in education, especially in areas that center on job training for the jobs of today. Just like the government has done for defense and civil space related industries for so long. The rich will invest in private industry when the government sets an aggressive agenda and gets things going. However, I seriously wonder though whether the Republicans are savvy enough to get on board. Sadly, I doubt it.
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boggsman1



Joined: 24 Jun 2002
Posts: 3328
Location: at a computer

PostPosted: Sat May 18, 2013 8:15 pm    Post subject: Reply with quote

Chandler
You are right, the rich are getting richer .
Today 4.2 , yesterday 4.7, wed 3.7, Tuesday 4.7, Monday 4.2 , Sunday 4.7
What a week ! I love California....
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stevenbard



Joined: 11 Nov 1993
Posts: 3608

PostPosted: Sat May 18, 2013 8:25 pm    Post subject: Reply with quote

boggsman1 wrote:
Chandler
You are right, the rich are getting richer .
Today 4.2 , yesterday 4.7, wed 3.7, Tuesday 4.7, Monday 4.2 , Sunday 4.7
What a week ! I love California....


Where are you sailing Boggs? Chrissy or the coast?
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boggsman1



Joined: 24 Jun 2002
Posts: 3328
Location: at a computer

PostPosted: Sat May 18, 2013 9:56 pm    Post subject: Reply with quote

Both,crissy, Waddell, tomales. When are you coming North?
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stevenbard



Joined: 11 Nov 1993
Posts: 3608

PostPosted: Sun May 19, 2013 2:35 am    Post subject: Reply with quote

Should be in the next 6 weeks! Maybe even a 2 day trip to Davenport on w-th if the stars are lined up. We had some good days down here, but it looks like you've been killing it up there. We're going into "June Gloom" for a while. That means the N coast should continue to rock! One good thing is our water is in the 60's!! Cool
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mac



Joined: 07 Mar 1999
Posts: 4650

PostPosted: Sat May 25, 2013 11:06 pm    Post subject: Reply with quote

Two interesting commentaries on the question of a bubble. First:

Quote:
By Matt Taibbi
May 22, 2013 2:55 PM ET

Welcome back to the dumb season. It’s debt-ceiling time again.

We’ve been at this two years now. It was back in 2011 when the Republican Party, seized by anti-government furor, first locked on the lifting of the federal debt ceiling – an utterly routine governmental mechanism that allows the Treasury to borrow to pay for spending already approved by the entire Congress, Republicans included – as a place to hold a showdown over . . . government spending. That first battle resulted in a “Mutually Assured Destruction”-type stalemate, in which both parties agreed that if they couldn’t reach a deal by New Year’s Day 2013, a series of brutal, automatic, across-the-board spending cuts would take effect. At the time, it seemed unthinkable Congress would let that happen. By the time we passed that date, the thing that seemed unthinkable was the idea that Congress would ever make a deal. The cuts took effect in March and we were headed for a full-on fiscal crash on May 19th, when fate intervened to stop this stupidest-in-history blue-red catfight in its tracks, if only temporarily.

In early May, Treasury Secretary Jacob Lew announced that the federal government suddenly had enough cash on hand to stay afloat until “at least Labor Day.” We were saved by, of all things, a record quarterly profit from the notorious state-seized mortgage-finance company Fannie Mae, which is paying the state $59 billion, enough to keep us in the black through the summer.

But this reprieve is only for four months, and if anything, the latest stay of execution only underscores the utter randomness and imbecility of our political situation. If the one thing preventing Washington from seizing up in fatal gridlock for even a brief spell is a surprise burst of good fortune from a bailed-out financial zombie like Fannie Mae, we’re screwed. The only thing that will rescue us from having to go through this over and over again from now until the end of time is for our increasingly polarized Congress to come to some broad agreement on tax hikes and spending cuts – the kind of routine deal that now seems politically impossible.

That leaves us in a state of permanent paralysis that is at once more dangerous and even more stupid than the time the business of our entire nation ground to a halt over a blow job. Americans at least know what a blow job is, and they understood how the white stuff got on the dress.

But the national debt? Nobody understands it, and anyone who tells you he or she does is almost certainly lying. In fact the supreme irony of this endless controversy over spending and austerity is that it has pushed the Federal Reserve as well as major European and Asian central banks, especially recently, to bypass the ignorant arguing public and take dramatic interventionist action on their own, tinkering with the world money supply in ways that are highly experimental and have no parallel in modern times. By all rights, this should be stimulating a profound debate around the industrialized world about who controls the process of money creation and about the role of government/central banks in the economy, but here in the U.S., that is exactly the debate we’re mostly not having.

The debate we are having is childish, irrelevant and self-destructive, as has been proved by all the recent developments on the debt front, including:

THE MORONIC NEW HOUSE BILL

Here’s a quick and easy rule: any time any politician, pundit, TV talking head or self-proclaimed financial expert starts comparing the U.S. federal budget to anything other than the U.S. federal budget, that person is automatically full of shit and should be instantly voted off the conversational island, if not outright beheaded.

This whole debt debate really began devolving in earnest into total mindlessness once people like Oklahoma Republican Sen. Tom Coburn started likening the government spending deficits to family budgets, pushing to “make Congress live under the same rules as families across the country and treat the federal budget like the family budget. Families have to live in their means and so should Congress.” Not paying our government obligations, Coburn said recently – remember, this is a U.S. senator talking – might be a “wonderful experiment.”

Comments like these led to Tea Party protesters descending upon Washington screaming about how not raising the debt ceiling is like giving your kids the bad news that they can’t afford to go to the movies – difficult but necessary, a kind of homespun tough love, except that a global superpower intentionally defaulting on its sovereign debt is actually way closer to an act of apocalyptic suicidal madness than it is to good parenting. (“It would be the financial-market equivalent of that Hieronymus Bosch painting of hell,” said JPMorgan Chase chief U.S. economist Michael Feroli.)
Still, the mere fact that the Republicans made such hay with the household analogy forced politicians and economists on the other side of the aisle to respond with similar oversimplifications, in what amounted to a desperate attempt to plant their own flags in the growing mountain of popular anti-knowledge. Even Fed chairman Ben Bernanke has reached for household analogies in his efforts to explain what a default would mean. “This is sort of like a family saying, ‘Well, we’re spending too much – let’s stop paying our credit card bill,’” Bernanke said.

The next agonizing step was the Republican constituency’s slow realization that “not paying our bills” is bad. This should have actually been a good thing. But it only led to this month’s latest harebrained idea: the so-called Full Faith and Credit Act, a Republican bill passed in the House that would direct the U.S. Treasury, in the event that we hit the debt ceiling, to pay interest to bondholders before making any other payments. In other words, we’d pay people who loaned us money by buying treasuries – China’s, for instance – before we’d pay, say, veteran benefits or Medicare.

Read more: http://www.rollingstone.com/politics/news/the-mad-science-of-the-national-debt-20130522#ixzz2UM10x53J


Then there's a different view from James Surowiecki:

Quote:
With the stock market setting new highs on a nearly daily basis, even as the real economy just slogs along, there seems to be one question on everyone’s mind: are we in the middle of yet another market bubble? For a growing chorus of money managers and market analysts, the answer is yes: the market is a house of cards, held up by easy money and investor delusion, and we are rushing all too blithely toward an inevitable crash. Given that we’ve recently lived through two huge asset bubbles, it’s easy to see why they’re worried. But in this case the delusion is theirs.

The bubble believers make their case with a blizzard of charts and historical analogies, all illustrating the same point: the future will look much like the past, and that means we’re headed for trouble. Smithers & Company, a London market-research firm, says that, according to a number of market indicators, stocks are, by historical standards, forty to fifty per cent overvalued. The bears admit that corporate profits are high, which makes the market’s price-to-earnings ratio look quite normal, but they insist that this isn’t sustainable. They think that earnings will return to historical norms, and that, when they do, stock prices will be hit hard. Today, after-tax corporate profits are more than ten per cent of G.D.P., while their historical average is closer to six per cent. That’s a vast gap, and it’s why bears believe that the market is, in the words of the high-profile money manager John Hussman, “overvalued, overbought, overbullish.”

It’s certainly unusual for corporate profits to soar during a slow recovery. But the argument for a stock-market bubble is flawed: when it comes to the role that corporations play in the U.S. economy, the present looks very different from the past, which means that historical comparisons to the nineteen-fifties, let alone the thirties, tell us little. The four most dangerous words in investing may be “This time, it’s different.” But this time it is different.

Take taxes: one big reason that after-tax corporate profits are much higher than their historical norm is that corporations pay much less in taxes than they used to. In 1951, corporations had to pay almost half of reported profits in taxes. In 1965, they had to pay more than thirty per cent. Today, they pay only around twenty per cent.

Then, there’s globalization. Many of the “American” companies in the S. & P. 500 are multinationals: a study of two hundred and sixty-two of them found that, on average, they got forty-six per cent of their earnings from abroad. This is a relatively new phenomenon. As late as 1990, foreign earnings accounted for only a small fraction of corporate profits in the U.S. Today, they account for almost a third of corporate earnings, and they’ve nearly tripled since 2000. So comparing corporate profits only to American G.D.P. yields a false picture of how companies are doing. The global economy, even with its current woes, is projected to grow more briskly than the U.S. economy over the next decade, so corporations will continue to benefit.

Finally, the decline of unions and the sluggish labor market have enabled corporations to cut payrolls, thus keeping profits high. The result is that labor’s share of the economy has fallen steeply. Skilled workers are still in demand, but most workers have little bargaining power. This could change if there is another economic boom—during the tech bubble, in the late nineties, wages did rise briskly—but, even in that case, corporate profits would likely stay high, as increased sales would make up for narrowing profit margins.

The underlying issue is that in recent decades there’s been a shift in the U.S. economy: it’s become far more congenial to businesses and investors. The fundamental trends that have driven the profit boom are unlikely to be reversed. That doesn’t mean that companies are going to be able to keep slashing their way to profit growth. As Doug Ramsey, the chief investment officer for Leuthold Weeden Capital Management, told me, “It’s hard to see how companies can get profit margins much higher, unless they want to see massive labor strikes across the country.” But keeping profits where they are doesn’t look all that difficult, which makes stocks today quite reasonably priced. It’s still possible that investor hysteria could eventually inflate stock prices, or that investor panic could send them crashing, but there is no profit bubble and, for now, no stock-market bubble, either.

For investors, that’s obviously good news: there’s nothing wrong with profits, and the rebound of the stock market has helped restore many Americans’ battered finances. Still, it’s unsettling that companies and investors are doing so well while the economy as a whole is stuck in the mud. Throughout the postwar era, high corporate profits were coupled with rising wages and strong economic growth. Today, there’s a growing divide between the fortunes of corporate America and those of the majority of Americans. You might hope that people could make back as investors some of what they’re not getting as workers, but in fact only about half of Americans have any money in the stock market, and most of those who do have only small sums. What’s more, the crash of 2008 scared many ordinary investors out of the market, so they haven’t benefitted from the recent profit boom at all. “There’s a lot of residual shell shock at work, and that’s made investors still pretty gun-shy,” Ramsey said. The stock-market boom is real, but most Americans have been left on the outside looking in. ♦
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