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Old 04-30-2010, 09:15 AM
Location: 3rd Rock fts
749 posts, read 1,004,680 times
Reputation: 304


If this Economy is improving then something is wrong! This Economy needs a truthful, meaningful fix/correction. The people being bullish is the non-perscription 'Prozac' for the mind; it's better than reality. Wait until the Citizentry finally understands that the merry-go-round of handouts (steal from Peter to pay Paul) are coming to an end for good.
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Old 04-30-2010, 10:34 AM
Location: San Diego California
6,797 posts, read 6,624,776 times
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Because I have virtually all my money in the market, I pay very close attention to every GDP report, consumer spending report, unemployment report etc. The economy is improving on multiple fronts, not just in Wall Street earnings. Unemployment is the only major front that has not been growing, which is okay because large increases in employment usually come at the very end of a recovery.
First of all I am still waiting for someone to back what they are saying with the figures that show recovery is even possible, much less happening. As far as paying attention to government reports, if you are paying such close attention then you must be aware to what degree these reports are being manipulated. Ask yourself what it means when GDP reports continually go up and sales tax receipts, and income tax receipts continually go down. When the government artificially stimulates the economy to the degree they are, it is a given that you will see some results. The question is are the results in line with what they are spending and what will support the economy when the supports are removed. Also this support comes at a cost. Even Berne, and Obama now realize they cannot continue to spend at current levels and that the deficit now has to be addressed. We have people out there who have been out of work for 2 years and are still collecting unemployment, not making their mortgage payments and still living in their homes. They have more disposable income than if they were working and making payments. It is surreal at best. It is estimated that people living in their homes and not making payments are pumping $8 billion a month into the economy. Do you think that is sustainable?

The important thing is we are not loosing huge amounts of jobs anymore.
While job losses are not as large as they were a year ago, we are still loosing jobs. Prior to the crash job growth was dependent on a false economy based on massive borrowing on inflated property values. Those inflated values were creating a booming new home construction industry along with finance, manufacturing, services like termite and home inspections, carpets, furniture, paint, appliances, and many others. In addition people were buying cars, going on vacations, and in general living the good life. How are we going to return to that? We are not it was an illusion built on lies, and we still have the bills to pay from the party.

People don't understand the purpose of bailouts. They are basically emergency loans. Many of the major financial institutions have already paid the government back. Some of these include Morgan Stanley, Goldman Sachs, and American Express. The government has made a profit of $4 billion from the banks who have paid and are still paying their loans.
We understand exactly the purpose of the bailouts. It was to save the banks from reality. The reality is that the credit market was awash with worthless paper. It still is. That paper, based on inflated property values, is still there. It still needs to be accounted for. Kicking the can down the road only postpones the inevitable. As far as the big banks paying back their loans. That is a half true statement they are still sitting on billions and billions that were loaned to entities they took over, that we will never be paid back on. It is the same type of propaganda GM is spouting. There was over 400 billion loaned out on the taxpayers bill. Out of 722 recipients of TARP, 73 have paid back their loans and we are currently 315 billion dollars still in the red. Not to mention the Treasury will not give us the figures on what they have given to Mortgage Servicers, so we are potentially worse off than that.

If the government never bailed out these financial institutions we would have continued to see quarterly job losses in the hundreds of thousands and instability in our economy. I'm not saying every company that received bailout money will be able to pay us back, but I do believe we will get most of it back if not break even years down the road. It's much better than spending a trillion in Iraq, money that we will never get back and in fact now have to pay for support for the next million years.
When the government bailed out the financial institutions, they simply nationalized private debt bailing out the rich. There is so much wrong with this I could go on for pages but the main problem is that they have circumvented the very process that makes capitalism work, survival of the fittest. When you subsidize something, you get more of it. What are we subsidizing now? Failure! Failed economic models, Failed business models, Failed management, Failed policies. The same people who caused this fiasco are still in place doing the same things. What do you think that will mean for the future?

I don't want to start a debate about economic policies or politics, so I will just say time will tell. I strongly believe our economy will continue to improve over the next couple of years. I believe the stock market will continue to grow over the next couple of years.I believe reports on GDP, consumer spending, real estate etc will continue to improve over the next couple of years. You guys get my point.
Like I said good feelings and beliefs are only faith. What kind of figures can you produce to back what you say. People bought into the whole housing bubble because "They believed" their houses would go up in value. What they believed made no difference what so ever because the reality was they were paying more than the houses were worth and the market has now corrected their mistakes, just as it will correct the mistakes we are making now.

Look into the balance sheets and income statements of companies such as Google, Apple, Intel, Goldman Sachs, JP Morgan etc and see whether they increased revenue or decreased expenses by laying off workers. Check it out yourself.
Ok lets take them one by one Apple, is doing well, it has a product that is hot and people can still afford, the only problem is we cannot all work for Apple. Goldman Sachs and JP Morgan used taxpayer money, along with super computers and trading programs to manipulate the stock market and engineer a false rally. Their profits have nothing to do with real growth in the economy and they have only blown another bubble in stocks that will deflate taking many peoples 401K's and pensions for another fall.

Also...outsourcing jobs is not something that is done only during poor economic times. It started a long time ago for reasons I will not talk about now because it will get the thread off topic. If you are interested send me a DM
Outsourcing began in the 80's and Ross Perot warned us of its outcome. The point is not when it began but what effect it will have on our future. One look at Detroit blight will answer that question. Detroit was once the wealthiest city in the U.S. it is now a pitiful shell where the average home price is $7000. Over the past 30 years we have allowed the wealthy to decimate our jobs base, while we borrowed money on over inflated assets to support our lifestyles. We cannot return to an economy based on borrowing and we have no manufacturing base to return to, so tell me where are the jobs to employ the 16 million who are now out of work. The government is running out of money to supply the failed give away programs that are propping up the current economy and when they are removed, you will see round 2 of the great recession.
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Old 04-30-2010, 11:07 AM
Location: Great State of Texas
86,068 posts, read 76,616,443 times
Reputation: 27642
Originally Posted by tripleh View Post
So that companies blowing out earnings reports (with increasing markets in the international AND domestic fronts) means absolutely nothing, eh?

Who am I talking about?
Apple, Goldman Saches (I know I know), EMC, Caterpillar, etc for examples.

Oh I know, this is because its against really low expectations from last year, right?

Guess what....that means things are improving--and the stock market is very forward looking.
Discounting GS as they MAKE their money off trading..take a look at WHERE the revenue is coming from..and it's not the US.

There is a booming recovery going on in India and China right now and China is in the mist of a housing bubble with increasing home values.

Now, look at where the expenses are cut..in US employment.

Net profit = revenue - expenses.
P/E values are too high..the blowout in stock prices don't support the underlying company fundamentals.
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Old 04-30-2010, 11:50 AM
750 posts, read 1,345,272 times
Reputation: 1162
One of the best posts I have ever seen on the economy. The Fed is buying our T bills when the numbers being sold are to low. China Japan ect have too much want no more. They have started to be worried we will not pay them back. Or that the greenback will be worthless when we do. The Feds are cooking the numbers in almost every area. The media is along for the ride. The banks still have tons of worthless paper no one wants. There no market for it and it is a time bomb. The banks in many cases have stopped taking homes back. The backlog of homes on their books are so big. The reason the banks are letting people stay in homes two years is simple. They can not sell them they do not want to drive prices down more. If they do sell it is at a major loss. They do not want to own up to that loss. They keep hoping for better days only they are not coming. Outsourcing began in the 1960's with LBJ. It just started moving faster in the 1980's with moving our manufacturing base. Now we are moving IT banking backoffice work. The post office is looking at cutting 200k worth of workers they are one of the biggest employers at 675k. The states and local cities and school systems are cutting workers and will be for years. This could be in the millions where are these people going to work? We have 15.7m unemployed and 9.3m million working part time who were full time. You will see round 2 of this recession because their are no jobs we are not making any. On top of this we sending jobs overseas. Wages have been on a downhill tend for 30 years for most workers. Most income gains have been at the top not good. It has been a false economy. We are not going. back
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Old 04-30-2010, 03:20 PM
Location: Sinking in the Great Salt Lake
13,145 posts, read 20,358,230 times
Reputation: 14041
Originally Posted by jimhcom View Post
The world economy is surrounded by mines, any one of which could send panic and collapse spreading like wildfire throughout the world. So why all this bullishness? Here is a partial list of things which could cause credit and stock markets to implode.

Sovereign Debt Default; Greece is not the only country facing default which could cause economic calamity. Portugal, Spain, Ireland, Turkey, Pakistan, India, the Baltic States, are all on very unstable ground in regard to debt. A default in any one of them could cause a domino effect that would cascade into credit downgrades, higher interest, and more defaults worldwide.

Commercial real estate; 50% of commercial real estate mortgages are now under water. Without a dramatic turn around, these underwater mortgages have the potential to be the last nail in the banking industries coffin. When you add this to the Alt A, and Opt. ARMS in residential real estate, the outlook for banks going forward is dismal.

Federal Debt; The staggering Federal Debt which is now about $42,000 per citizen without Social Security and Medicare, and $500,000 with them, now is the focus of government and the FED. Without addressing the massive debt problem the US in danger of having it's credit rating downgraded. Any attempt to curb deficit and debt problems will need to include painful cuts and increased taxes. Both will be detrimental to the economy and unemployment.

State Debt; 50% of all States have liabilities of funded and unfunded debt over 38% of GDP. This will cause the same type of budget cuts and tax increases being examined at the Federal level. This will be a double whammy for taxpayers.

Local Debt; Cities with debt troubles severe enough to cause serious possible default on munis include Las Vegas NV, Merced CA, El Centro CA, Port St Lucie Fl, Fort Myers FL, Bend OR, Ocala FL, and Detroit MI. Thousands more are looking at unfunded pension obligations that could potentially drive them to bankruptcy. Again the answer will have to be cuts in services and higher taxes.

China's economy; With China facing its own bubble economy, it will soon have to increase interest rates and increase the value of the Yuan to slow it's growth and prevent a crash. This will have the effect of making the Chinese products we all now depend on more expensive, lowering the American standard of living. It will also make US assets more affordable to the Chinese which will translate into more Chinese ownership of American Business.

Higher taxes, higher interest rates, higher consumer costs, and cuts in government spending are all baked into the cake for our future, and all those things will have serious detrimental effects on both the economy and employment. We have lived for too long on borrowed money, and now must pay the bill. So again I ask why is everyone so bullish?
two words: Media Spin.
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