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Making money on the way down is fundamentally different than making money by being productive. The difference is what I don’t like.
As an investor making money "on the way down" is little different than making money "on the way up", both cases its passive and has little to do with making money "by being productive".
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Originally Posted by newonecoming2
It is in yours as well as everyone else’s best interest to doing things that build real wealth. That is growing the pie. To make money in a way that shrinks the pie is not in your best interest or in anyone else’s over the long term.
Whether or not the "whole pie" shrinks or grows is largely irrelevant to an individual. An individual can become dirty rich while the "whole pie" shrinks. Indeed, an individual is most benefited by getting others to build "real wealth" while they suck the filling out of the pie.
In terms of bubbles destroying real wealth....how so? Bubbles certainly destroy paper wealth, but you are explicitly trying to make a distinguish between paper and real wealth. What "real" wealth was destroyed over the last few years? Did buildings collapse? Did machines stop working? Did homes vanish? What...exactly was destroyed?
As an investor making money "on the way down" is little different than making money "on the way up", both cases its passive and has little to do with making money "by being productive".
I can see someone not buying stock in a gun company on moral grounds. I can also see someone buying stock in a company that does business responsibly because they are being responsible not because they are going to get you the very best return on your money as measured in dollars. You can with your investments take an active role in shaping the US economy.
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Originally Posted by user_id
Whether or not the "whole pie" shrinks or grows is largely irrelevant to an individual. An individual can become dirty rich while the "whole pie" shrinks.
Tell that to the something like 1 in 4 would be workers that aren’t working because there isn’t work for them to do.
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Originally Posted by user_id
Indeed, an individual is most benefited by getting others to build "real wealth" while they suck the filling out of the pie.
As long as they avoid getting lined up against the wall and shot.
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Originally Posted by user_id
In terms of bubbles destroying real wealth....how so? Bubbles certainly destroy paper wealth, but you are explicitly trying to make a distinguish between paper and real wealth.
20% + real unemployment rate times how long? That lost productivity is a real destruction of wealth.
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Originally Posted by user_id
What "real" wealth was destroyed over the last few years? Did buildings collapse? Did machines stop working? Did homes vanish? What...exactly was destroyed?
The lost work opportunity, and vacant houses depreciate fast in some climates. That is in part the destruction of real wealth. Also bubbles tend to mask an unhealthy economy and what needs to be done to return it to health.
I You can with your investments take an active role in shaping the US economy.
The vast majority of shares traded on the exchanges are between investors, not between an investor and the company. Buying shares of a company you deem "responsible" is going to do nothing for the company.
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Originally Posted by newonecoming2
Tell that to the something like 1 in 4 would be workers that aren’t working because there isn’t work for them to do.
The unemployment rate is ~9%, but you are changing the topic. You said bubbles destroyed wealth, employment is another matter entirely.
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Originally Posted by newonecoming2
That lost productivity is a real destruction of wealth.
What lost productivity? You seem to be trying to equate employment with productivity, but they aren't the same. The bubble didn't destroy productivity at all, in fact, productivity has increased lately.
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Originally Posted by newonecoming2
and vacant houses depreciate fast in some climates.
Wait, you mean all the surplus houses created during the bubble? You said bubbles destroy wealth, yet you are referring to assets that would not have existed if it wasn't for the bubble.
Anyhow, you haven't answered the question. What wealth was destroyed? You are just talking about the lack of employment, but a reduction in the level of employment doesn't tell you much about national wealth. Furthermore, you are again referring to things created during the bubble...
You seem to think that because a bubble creates X and then X is destroyed when the bubble busts that some how wealth as a whole has been reduced. If I give you $100 and you give me $100....are you now poorer?
The vast majority of shares traded on the exchanges are between investors, not between an investor and the company. Buying shares of a company you deem "responsible" is going to do nothing for the company.
If everyone did it there would be a difference.
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Originally Posted by user_id
The unemployment rate is ~9%, but you are changing the topic. You said bubbles destroyed wealth, employment is another matter entirely.
Wealth is the product of the amount of labor times the skill level reducing the amount of labor, work preformed, reduces the creation of wealth. Shadow Government Statistics : Home Page here is what shadow stats has for the unemployment rate. As of Nov of 2010 we had a pay out rate for over 17% unemployment and that doesn't count the people that had fallen off of the back of their 99 weeks. Every month from when this started the months prior unemployment was revised downwards.
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Originally Posted by user_id
What lost productivity? You seem to be trying to equate employment with productivity, but they aren't the same. The bubble didn't destroy productivity at all, in fact, productivity has increased lately.
When you say this are you saying that the total economic output has gone up or are you saying that the output divided by the amount of labor has gone up?
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Originally Posted by user_id
Wait, you mean all the surplus houses created during the bubble? You said bubbles destroy wealth, yet you are referring to assets that would not have existed if it wasn't for the bubble.
The creation of houses that wont be used destroys the input value added to those houses. That is what I mean when I say that bubbles destroy wealth. You take perfectly good labor, materials, etc. build a house with them and then watch the value of the house go down. That is the destruction of wealth.
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Originally Posted by user_id
Anyhow, you haven't answered the question. What wealth was destroyed? You are just talking about the lack of employment, but a reduction in the level of employment doesn't tell you much about national wealth.
The manufactoring jobs going to China is destroying the wealth of America.
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Originally Posted by user_id
Furthermore, you are again referring to things created during the bubble...
The money and resources spent on blowing a bubble aren't adding wealth to the nation. They are taken away from things that would have added wealth to the nation if they had been spent differently.
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Originally Posted by user_id
You seem to think that because a bubble creates X and then X is destroyed when the bubble busts that some how wealth as a whole has been reduced. If I give you $100 and you give me $100....are you now poorer?
[We borrowed money to create X then X isn’t used and so is wasted, but the debt form creating X remains. We are poorer for having built X.
Yes, there would be a bubble in supposedly "responsible" companies....
"Wealth is the product of the amount of labor times the skill level reducing the amount of labor, work preformed, reduces the creation of wealth"
Is this suppose to be coherent? This sounds much more like the definition of productivity than wealth...the two aren't the same.
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Originally Posted by newonecoming2
As of Nov of 2010 we had a pay out rate for over 17% unemployment and that doesn't count the people that had fallen off of the back of their 99 weeks.
According to some conspiracy theorist website that nobody, except conspiracy theorists, take seriously? Also, the unemployment rate is not determined by looking at unemployment benefits so I have no idea why you are mentioning 99'ers.
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Originally Posted by newonecoming2
You take perfectly good labor, materials, etc. build a house with them and then watch the value of the house go down. That is the destruction of wealth
You are just doing the same thing, namely, counting things that were created during the bubble and then using the destruction of such as evidence that bubbles destroy wealth.
Without the housing bubble the labor would have remained idle, the materials would have never been produced, and so on.
You are again suggesting that if I give you $100 and you give me $100 that you are now poorer....
According to some conspiracy theorist website that nobody, except conspiracy theorists, take seriously? Also, the unemployment rate is not determined by looking at unemployment benefits so I have no idea why you are mentioning 99'ers.
www.boombustblog.com That is where I read about it first. But the numbers for Nov of 2010 were from an article that I read that didn’t do the math they were just comparing Nov of 2010 with Nov of 2007. they published the unemployment rate fro 2007 in Nov as 4.7% and the corresponding payout rate. They published the payout rate for Nov of 2010 as well as the published unemployment rate. I divided the 2010 payout rate by the 2007 payout rate and then multiplied the result by the 2007 unemployment rate and got the number 17 plus some change. The boom bust blog article said that historically the payout rate and the unemployment rate correlated nicely. Now there is approaching a 100% deviation. The article at boom bust also said the every month the unemployment rate for the month prior had been adjusted down.
You are just doing the same thing, namely, counting things that were created during the bubble and then using the destruction of such as evidence that bubbles destroy wealth.
Wealth was spent on creating those things so with their destruction the wealth was destroyed as well. Spend 1,000 hrs building something and then destroy it the value of that labor is gone. Borrow the money to pay for that 1,000 hrs worth of work and the debt remains. Borrowing money to do unproductive work destroys the value of the work performed. If you borrow money and get a positive return then you may have created wealth, if you get a negative return then you have destroyed wealth. Value added.
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Originally Posted by user_id
Yes, there would be a bubble in supposedly "responsible" companies....
Responsible companies would prosper and irresponsible companies would be less able to raise capital by issuing new stock.
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Originally Posted by user_id
"Wealth is the product of the amount of labor times the skill level reducing the amount of labor, work preformed, reduces the creation of wealth"
Is this suppose to be coherent? This sounds much more like the definition of productivity than wealth...the two aren't the same.
Being productive crates wealth, collecting the units of exchange of wealth doesn’t create wealth. There is a fundamental difference between creating wealth and accumulating wealth. Productivity creates wealth. The accumulation of wealth can destroy it in the process.
Your chart is skewed as this article explains. Wages have fallen, but overall compensation (benefits) have risen. Of course, benefits are usually concentrated in upper class jobs and are not evenly distributed among all asset classes.
Like I said "wages" have failed to keep pace with inflation.
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Originally Posted by user_id
Calling the participation rate "unemployment" is totally dishonest, the two are very different things. Anyhow, participation rate is still a lot higher today than it was in the past:
Of course this is all about women joining the work force.......
If anything is dishonest, it is the government’s statistics using fabricated birth/death rates and dropping anyone who is unsuccessful in finding work from their unemployment rates.
The participation rate is the closest thing we have to a honest statistic where unemployment is concerned.
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Originally Posted by user_id
Why wouldn't you? You can profit from the boom and the bust...
The argument was that housing prices were going to go up. The only thing that has driven housing prices in the past was bubbles. If you think they can pull off another nationwide artificial economic bubble then go ahead and buy, personally I think they have shot their wad in that area.
No....just another wacky blog that speaks to the choir.
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