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Originally Posted by nep321
Under the surface, the American economy is in even worse shape today than it was before the 2008 recession.
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I'm not seeing any evidence of that.
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Originally Posted by nep321
Corporations are more leveraged than ever.
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Corporations have been indebted for quite some time, for about the last 5 years at least.
Note that publicly-traded corporations only constitute 3% of all businesses in the US.
Publicly-traded corporations, and even private companies, often carry debt, just like people. The debt is only an issue when it is excessive and functions as a bar to acquiring new debt needed specifically for expansion or research and development.
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Originally Posted by nep321
Housing bubbles have formed in major metropolitan areas throughout the country and wages have not kept up.
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So? That's a localized phenomenon. Those cities have more people than housing, so it's a function of Supply & Demand. Those particular cities have always had expensive housing and rents, because Supply has always exceeded Demand, so it's nothing new, and certainly not shocking.
Wages are unrelated to housing costs. Wages/salaries are determined by the Supply & Demand of Labor for a specific Skill-set (and the federal government identifies more than 800 Skill-sets), in a given Labor Market. The size of a Labor Market is determined by access to the Market, which is often how far people are willing or able to commute.
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Originally Posted by nep321
The national debt is now up to $21 trillion and growing.
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Federal debt has no bearing on the economy, until it reaches a point where foreign States, foreign banks, foreign corporations and private companies, and foreign investors are unwilling or unable to purchase US treasury notes, bills or bonds. Obviously, it will be a problem when US federal debt exceeds World GDP. Right now, federal debt is only 1/4th of World GDP, reaching 1/3rd of World GDP in less than 10 years from now.
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Originally Posted by nep321
The U.S. dollar had it's worst year ever in 2017.
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That has very little to do with economic expansion.
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Originally Posted by nep321
The stock market is now showing signs of volatility, which is indicative of a problem.
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That has no bearing on the economy. As history shows, the Stock Market has set records while the US economy was in a recession or otherwise performing poorly, and then the Stock Market crashed during periods of peak economic performance and output.
The only thing the Stock Market does is show where investors are putting their money.
During the 1990-1991 Recession, the Dow Jones went from 2,610 to 3,004.
That's a 15% increase.
Any of you who still maintain the fantasy that stock markets cause recessions/depressions or perform poorly during recessions/depressions, better think again, because history does not support your fantasies.
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Originally Posted by nep321
Home lending standards are relaxing a bit, with some now offering "nonprime" mortgages and many lending with small down payments.
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Lending practices were not the cause of the last recession and the requirement for a 20% down-payment went the way of the buggy-whip in the early 1990s.
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Originally Posted by nep321
Income inequality is at an all time high since the gilded age, with one in three Americans now unable to afford basic living necessities.
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And yet 75% of households have cable or satellite TV.
Americans are financially illiterate and make poor choices when it comes to money.
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Originally Posted by nep321
Interest rates are now increasing.
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That is not evidence of a poor economy. In and of itself, it means nothing. However, taken with heavily indebted companies, it could limit or reduce economic expansion. It primarily affects private companies who cannot issue stocks or bonds.
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Originally Posted by nep321
And the national debt to GDP ratio is higher than ever.
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It's "federal debt," not "national debt", since States have no ethical, moral or legal obligations to federal debt under federal or international law.
Federal debt has no bearing on economic expansions or contractions.
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Originally Posted by nep321
I predict that the bubble will burst within the next few years and the stock market will crash.
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That's vague and unspecific.
The current economic expansion is 106 months, tying second place as one of the longest economic expansions in US history. June will mark the 107th month, making it officially the second longest economic expansion in US history. The longest expansion ever was 120 months, and that could possibly be broken in August 2019.
Long economic expansions are rare, and statistically speaking, it's highly unlikely an economic expansion would exceed 120 months by any great length of time, like 12 additional months or more.
Pretty much any fool can claim a recession will happen, because statistically, the odds are in their favor.
A real prediction would actually state the quarter in which the recession would start.
1,555,000 more Americans were working in February than January. That number is always suspect, because BLS makes changes in January due to the fact that its Business Birth-Death Model is flawed. It's better to look at total private employment, which increased by 775,000 from January to February.
474,000 new jobs were added in March and 471,000 were added in April. Those numbers are the raw data, supported also by total private employment, and not the statistically manipulated "seasonally adjusted" nonsense, which is someone's idealized vision of what a graph should look like.
So long as employers are hiring, the economy is expanding. Even when employers aren't hiring, the economy can still expand.
And stock market crashes are irrelevant.
Even when stock markets crash, there has never been a case when they have not recovered and set new records.
Few people actually lose money during stock market down-turns.
The value of stocks and your stock portfolio is only theoretical. To determine the actual value, you have to liquidate the stocks, and the price at which you liquidate the stocks becomes the real true actual value.
If you invest $100,000 in stocks and the theoretical value becomes $1 Million and then the market crashes 50%, your stocks are still theoretically valued at $500,000, but you haven't lost a single dime, since your original $100,000 cash investment is still there untouched.
The stock price would have to drop more than 90%, before you actually lost anything.
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Originally Posted by nep321
Most experts such as Peter Schiff, Bill Gates, Robert Kyosaki, etc., say that the economy will crash much harder than it did in 2008, within the next couple of years...possibly even this year.
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Bill Gates is not an expert on anything, except Bill Gates and how to screw people out of money.
Gates didn't invent MS-DOS, he bought it. It was originally called QDOS. Gates paid something like $30,000 for the rights and in the contract, he promised to hire the inventor as a consultant with consulting fees attached. Gates reneged on the contract and never used the guy as a consultant, and then Gates and the idiots he hired didn't understand QDOS and they totally messed it up.
The end result was that MS-DOS had a lot of unusual quirks. If you attempted to write 0 bytes to a file, it would truncate the file where ever the file pointer happened to be located. Some clever people discovered that, wrote a neat little program of only a few bytes, and then stuck it on the internet where people could unknowingly down-load the virus. Every time they hit a certain key on the keyboard -- whatever key the programmer chose -- it would truncate your files, and they became all corrupted.
Gates didn't invent Windows, either. He bought that from a company called The Software Group who had created a neat little program called Enable. Enable was a software suite consisting of a word processor, spread-sheet, database and telecommunications program -- because you had to manually operate your modem back then. You could have as many as eight windows open at a time. Open up two different word processor templates, a spread-sheet with data, your mailing list database, then your telecommunications window then dump the contents of the two word processors and the spread-sheet data into a new document in another window, and send it to the people in your mailing list database using your modem.
That program cost $2,499 in 1984, and it was really advanced software for 1984. I used it at TRADOC Headquarters when we were crafting Division '86, Air-Land Battle 2000, and doctrine for geo-political regions.
Gates is a rather unremarkable "businessman" whose ethics are questionable and who happened to be at the right places at the right times.
To suggest he's an "expert" on the economy is absurd.
And Peter Schiff is a total failure who gets everything wrong.
You know, look, I know inflation is going to get worse in 2010. Whether it’s going to run out of control or it’s going to take until 2011 or 2012, but I know we’re going to have a major currency crisis coming soon. It’s going to dwarf the financial crisis and it’s going to send consumer prices absolutely ballistic, as well as interest rates and unemployment.
Then when he gets it wrong, he blames the Federal Reserve. Wrong again, since it's the Bureau of Labor Statistics that calculates Inflation.
Prices are inflated by 47% since January 2000.
That's about 2.5% per year, which is stellar, since few countries do better. In fact, historically, only Britain and Switzerland have done better, and they only do so occasionally.
Then Schiff claims the government manipulates the data to hide inflation, which is nonsense, since the data is available to anyone who wants it.
The CPI is an average, which means some people pay more (and some a lot more), while others pay less (and some a lot less).
Just because in some places a house costs $1 Million and a studio apartment rents for $3,000 doesn't mean everyone pays that amount. Some people rent a two-bedroom for $450/month, and you can still buy nice homes for $50,000 to $150,000 in a large number of areas in the US.
In any event, Schiff is the last person from whom I would accept advice (of any kind).
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Originally Posted by nep321
I just don't see how home values and stocks can just keep going up and up forever. That has never been the case.
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They haven't gone up forever.
You must be completely ignorant of recent stock market activity.
If you think stocks are going to lose 40.9% of their value over a period of 959 days (like it did when the economy was averaging a stonking 12.5% GDP growth per quarter) or lose 86% of its value over 813 days (like it did between April 1930 and July 1932), which is unarguably the worst crash ever, that just ain't gonna happen.
The nature of the World, the economy and the stock market itself, not to mention the nature and type of investors in the market, has changed dramatically. You'll never see anything like that again.
And, so what if the market drops 25%?
It doesn't have any bearing on anything.
As I proved earlier, very few people, probably less than 1% of actual investors, truly lose money.
So some retiree's stock portfolio was diminished in theoretical value from $1 Million to $750,000.
Unless that retiree was going to spend $1 Million tomorrow, it has zero effect on the economy and zero effect on the retiree.
The retiree is still going to draw down $30,000 to $50,000 a year to fund their retirement, and within a few weeks to a couple of years, it will theoretically have a value $1 Million again.
So, what has the retiree lost? Nothing. What harm was done? None. It's just as if it never happened.
In any event, neither India, Central Asia nor sub-Saharan Africa are ready for economic advancement yet, so there's no place to "off-shore" jobs, like when all the jobs went to China, Vietnam and Thailand in the early 2000's, which is what caused the last recession.
The economy will continue to grow until it no longer can, and the stock market won't have anything to do with that. Minimum wage laws, interest rates, and government policies will have a greater effect on economic growth than whatever the stock market does.
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