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Old 01-11-2018, 02:36 AM
 
64,530 posts, read 66,075,955 times
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i don't give our debt load a 2nd thought . i have been hearing about the debt load devastating us all my life .

the market leverage is what spooks me the most . all those "flash crash machines " reduce leverage when market volatility picks up and increase it when it is low .

we are at record leverage levels and selling will spiral more selling when it happens . we already saw what happens when these trading machines get the word . we have seen a thousand points in minutes over nothing ,
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Old 01-11-2018, 04:18 AM
 
482 posts, read 215,985 times
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I don't see why a bust/market correction/recession has to necessarily be the equivalent of the preceding boom in all cases. If we believe this, we're saying it's unnatural for our economic baseline to ever grow or expand over the long-term. But if we go back 100 years in most any developed country, what we'll likely see is the economies are larger and more sophisticated than they were before, with the general population having a correspondingly higher standard of living (possible exceptions to this rule would be countries that have been handicapped by war or political instability or some similar catastrophe).

So "bigger boom = bigger bust" is not true in all cases, but it's certainly true in specific cases: market bubbles. As in the boom is not an organically occurring boom, but is an artificially created boom with no ability to sustain itself independently. The epic housing crash of 2008 was not so severe because housing prices had naturally increased over time; it was so severe because housing prices had, in a number of ways, been artificially increased to beyond their actual sustainable value.

The U.S. economy overall is doing well and I believe will continue to do well in the near future. But there's still at least one other threatening bubble that looms on the horizon. Here's a warning about our student loan problem, given by one of our greatest business minds, Mark Cuban:


https://www.youtube.com/watch?v=ohLrNlY_TBk
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Old 01-14-2018, 08:37 AM
 
Location: Oregon, formerly Texas
5,242 posts, read 3,393,710 times
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Quote:
The U.S. economy overall is doing well and I believe will continue to do well in the near future. But there's still at least one other threatening bubble that looms on the horizon. Here's a warning about our student loan problem, given by one of our greatest business minds, Mark Cuban:


https://www.youtube.com/watch?v=ohLrNlY_TBk

College degrees are not assets with quantifiable value like a house. Therefore the value cannot "crash.". Your education has even less quantifiable value.

Then, it's not like the education is not needed. High school is not adequate anymore... in fact we're in the same situation as the 1890s, 1900s when high school was largely "optional" but becoming less so because of the growing complexity of the economy.

I'm sure the c-d pro-plumber brigade is ready to pounce on me, but all you have to do is look at BLS to see that we only need a marginal amount more of various trades-people. Not nearly enough to absorb 17 million college students.

The only solution is to subsidize college more. Eventually our community college system will become basically like public school, that's step one. Then we need to subidize state university tuition

People like Cuban have problems thinking beyond the present and future. They never think about the past. What did college cost before student loans existed? A LOT.

In 1927, a year at University of Pennsylvania cost around $1300.http://www.archives.upenn.edu/histy/...tion/1920.html That is about the average wage of what most union workers made in 1927. We don't really know what wages were for poorer people because in the 1920s we only have wage data for those who paid income tax, by definition the higher earners. We also know what the unions reported. For non union workers making too little to pay income tax, it was less to be sure.

At Ford Motor Company in the 1920s the line workers made $5 a day, considered an excellent wage at the time. That would come out to around $1300-1500 a year.

A year of a good college always cost the amount of an average worker's yearly salary. That's why it was for the middle and upper classes.

If anything college costs much less than it did then, since we have a lot of cheaper and more accessible options.

Last edited by redguard57; 01-14-2018 at 08:59 AM..
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Old 01-16-2018, 08:59 AM
 
Location: D.C.
1,816 posts, read 1,547,786 times
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Quote:
Originally Posted by tijlover View Post
The nation's debt load is the least of my worries. If we default, trust me, we'll be given a 2nd or 3rd chance.

Look at Argentina, they've defaulted on their national debt 8X times now, and all it takes is a new leader, with austerity promises, and they line right up to buy the new debt. Over and over and over again!


If that were to ever happen here, it would be game over. Do you know what a default scenario would look like to the US economy (and global)? Let me ask you a question - do you have a credit card? What's that interest rate? 5%, maybe 6%? Do you have a home equity loan? Are you going to buy a home soon and need a mortgage?


Imagine if your credit card interest rate went from that 6% to 30% in one month. Imagine what the value of your home would become if you had to sell it in a 20% interest rate environment? Think the value would increase, or decrease? I will tell you, it would do neither. It would crater into the ground because the buying pool who could qualify for a 20% mortgage would be beyond slim, therefore forcing you to either lower your price or give it back to the lender in foreclosure. Car business? Done. Given that personal credit card balances are approaching all-time highs now, the default rate on that debt would skyrocket and likely take out half of the financial institutions in the country alone.


Don't believe me? Then look up the Argentine benchmark interest rate set by their central bank. It's called the Lebac. They just lowered it actually by 75bps last week.....to 28%.


But, I do agree that we're far more strategically important to the global economy than Argentina could ever dream of. We are by most accounts, the world's consumer. We're "the customer". Our product is consumerism. So, the world economy would be far more inclined to support us for their own sake than they would be to support Argentina. But, let us not think Argentina is not strategically important either. Think Greece. Think Spain.


End of the day, equities are a gamble. Always have been, and reflective of the amount of liquidity floating around in the market. Today, it's at a record level, thanks in large part to the Fed policies under Obama. He took a temporary bailout provision set by Bush towards the end of his term, and extended them throughout his entire presidency to prop up the economy. They should have been eased back years and years ago. I don't know how we put the genie back in the bottle at this point.


Not to be a smarta$$ here, but I have a saying that I like.


"GOD Bless America" should not mean Guns Oil Debt.
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Old 01-16-2018, 09:33 AM
 
4,200 posts, read 1,535,511 times
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Quote:
Originally Posted by NC211 View Post
End of the day, equities are a gamble. Always have been, and reflective of the amount of liquidity floating around in the market. Today, it's at a record level, thanks in large part to the Fed policies under Obama. He took a temporary bailout provision set by Bush towards the end of his term, and extended them throughout his entire presidency to prop up the economy.
Obama had a "hands off" policy and let Bernanke do what he did. And Bernanke's policies were the correct medicine, he saved us from a depression, and laid the foundation for a full economic recovery. Bernanke could have used less debt and liquidity if Congress had approved a larger stimulus package, but the economic neanderthals at the time thought deficits and spending were the greater evil.

If excess debt and liquidity is a problem then one must question Trump's tax cuts. Is it really wise to goose liquidity at the top with deficit-funded tax cuts when the economy is growing and there's full employment? We'll find out.
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Old 01-16-2018, 10:37 AM
 
Location: D.C.
1,816 posts, read 1,547,786 times
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Quote:
Originally Posted by Elliott_CA View Post
Obama had a "hands off" policy and let Bernanke do what he did. And Bernanke's policies were the correct medicine, he saved us from a depression, and laid the foundation for a full economic recovery. Bernanke could have used less debt and liquidity if Congress had approved a larger stimulus package, but the economic neanderthals at the time thought deficits and spending were the greater evil.

If excess debt and liquidity is a problem then one must question Trump's tax cuts. Is it really wise to goose liquidity at the top with deficit-funded tax cuts when the economy is growing and there's full employment? We'll find out.
I agree, disagree, and onboard with the rest.


I agree, Bernanke did a good job hedging off a depression, but not entirely due to Obama being hands off, but rather not being on the front page of the money section talking about his plans. Obama operating much more in the shadows on certain topics. Economic stimulus was one of them.


I'm not sure I agree about the Neanderthals (I agree with that statement for sure!) thinking deficits and spending were the greater evil, given as how the US Government has been operating since Obama without an actual budget to manage. Literally, no budget. Who does that?


I do agree our corporate tax rate was not competitive in the global space and needed to be addressed, like Trump has done, to bring back some of our dollars. What concerns me though is that one thing Donald Trump has never understood is that leverage is a double-edged sword, and you can't sue your way out of it in this situation. But, this all speaks back to trying to figure out how to put the genie back into the bottle. At this point in the game, one almost has to double-down as the play, which we're doing. Reaganomics, trickle-down, etc. But the stakes are soo much higher now than they were when those catch-phrases were minted. Not only in terms of just pure dollar amount, but as a % of our GDP.


I agree though, we'll find out soon enough!


I am reminded of a saying from JFK - "The time to repair the roof is when the sun is shining..."


Are we?
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Old 01-16-2018, 11:11 AM
 
Location: Brawndo-Thirst-Mutilator-Nation
15,148 posts, read 15,198,298 times
Reputation: 10872
Much more room on the upside of both housing and the stock-market.

Will there be a big BOOM at some point, maybe or maybe Fedgov will find a way to stop that from happening >>> QE4 + negative interest rates!?!?!?!?
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Old 01-17-2018, 02:22 PM
 
24,885 posts, read 11,599,261 times
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Quote:
Originally Posted by redguard57 View Post
In 1927, a year at University of Pennsylvania cost around $1300.Educational Costs (1920-1929), University of Pennsylvania University Archives That is about the average wage of what most union workers made in 1927. We don't really know what wages were for poorer people because in the 1920s we only have wage data for those who paid income tax, by definition the higher earners. We also know what the unions reported. For non union workers making too little to pay income tax, it was less to be sure.

At Ford Motor Company in the 1920s the line workers made $5 a day, considered an excellent wage at the time. That would come out to around $1300-1500 a year.

A year of a good college always cost the amount of an average worker's yearly salary. That's why it was for the middle and upper classes.
From your link, the tuition in 1927 was $400. For pretty much anything. Including medicine. Also a bit of a cherry picked date as 2 years prior the lower degrees were as much as half. Tuition could be paid for by simply working a few months. Including room, board, clothing, books, etc it was $1,215, NOT $1,300. Rounding up like that to make it look like its higher is deceptive. But keep this in mind....the tuition for the school of medicine was that.

You are literally pointing out that you could become a Dr with no debt on the income of a ford motor company line worker.

Also? $1,215 in 1927 is the equivalent of $17,155 today. Close to full time minimum wage. The tuition of $400 for medicine is the equivalent of $5,634 today. Imagine that.
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Old 01-23-2018, 04:00 PM
 
Location: Sonoran Desert, AZ
2,836 posts, read 1,161,584 times
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I like a big bust as well as the next fella, but not sure about that big boom thing
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Old 01-24-2018, 12:20 PM
Status: "delete" (set 20 days ago)
 
3,189 posts, read 1,273,221 times
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Quote:
Originally Posted by ohio_peasant View Post
I'm spooked by worldwide retrenchment and rampant nationalism. Rich countries are increasingly hostile to immigration from poorer countries. International institutions are being respected less and less, and central banks are outright hated. The post-war consensus is under populist assault. Meanwhile, productivity-gains are asymptoting, or flat-lining. R&D investment - public or private - is waning. The pace of innovation seems to be slowing down, and in those areas where it remains vibrant - say, robotics or the misnamed "artificial intelligence" - there's outright derision and scorn lobbed against the innovations and the innovators.

Worldwide, markets are just now recovering to their 2007 highs; in US dollar-terms, they're not yet there. And did I mention an overvalued US dollar?
I have no problem with any of this. It's just if people can see that this innovation is going to lead to job displacement and eventually massive unemployability, then isn't it our responsibility to the people that have yet to be born to build a society that caters to this?

Also, I think there is quite a bit of investment in innovation (see crypto), but unfortunately much of the capital is misallocated (see crypto).

I think the push should be towards creating a sustainable economic system. Unfortunately, it requires that people become altruistic, disciplined, and selfless, so it will never happen.
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