Obama Defies Pessimists as Rising Economy Converges With Stocks

[texdav]

I thnik the job lossses ease is the key word;not that they impoorve on not losing more jobs. That means in effect that the bottom of looses is near. The administrtion certainly doesn't buy that i that they are promoting the jobs bill and a extension of unemployment.Always remmeebr thaqt teh market reflect business worldwide and china and india have strong growth with growth expected to continue much stronger than the north america. Western europe and japan are expected to have the lowest growth moving forward.Mnay US companies expect their real growth to be from those two markets.

[TuborgP]

Originally Posted by texdav

I thnik the job lossses ease is the key word;not that they impoorve on not losing more jobs. That means in effect that the bottom of looses is near. The administrtion certainly doesn't buy that i that they are promoting the jobs bill and a extension of unemployment.Always remmeebr thaqt teh market reflect business worldwide and china and india have strong growth with growth expected to continue much stronger than the north america. Western europe and japan are expected to have the lowest growth moving forward.Mnay US companies expect their real growth to be from those two markets.

And many people are investing that way.

[ambient]

Originally Posted by pghquest

I indeed value the thinking of Bloomberg, its the linking of the economy with stocks that I disagree with. HISTORY has proven that any linking of a rising stock market to a rising economy is just plain false. People put money IN the market when they ARENT SPENDING it.. Its the reason that often times the market goes OPPOSITE of the economy.

But not for long, right? I trust you would agree that over the longer term, market growth is a leading indicator of economic growth. The two are not the same, but they are inextricably tied. People are willing invest in stock because they expect the value of the shares to appreciate in the future - and that appreciation in the longer term is driven by the economic performance of the underlying assets. People are willing to pay more for a share in a company expected to do well than one expected to go downhill.

I also think you have it backwards with your logic about when people put money into stock markets. When times are bad, people don't spend much and save instead. People do not "save" by putting their cash into highly volatile equities markets, which inevitably suffer a significant drop in value as they - again - are leading economic indicators over the longer run. People do the exact opposite because they don't want to lose cash - they pull them out of the market, which helps cause the near-term decline. Generally, people invest in the markets when times are good or are expected to be better - and when times are good, they also have plenty of cash to spend in addition to their investments.

Originally Posted by pghquest

Disagree with it, fine, but then explain to me why the market rose the way it did during the great depression and why its different from todays economy?

Easy. You're confusing short term fluctuations with long-term trends and the drivers behind them. Equities markets are extremely volatile in the short term and are subject to a ton of varying external factors in addition to pure economic output/performance (for example, market bubbles) - this is why I qualify everything I say with "in the longer term". You can't read much into short-term swings; you need to look at long-term trends, which are absolutely tied to economic performance.

Furthermore, to illustrate the case with the Great Depression: after a market index declines almost 90%, then a 50% return can occur quite naturally as a consequence of slightly improved performance from a very depressed baseline. Drop from 100 to 10 dollars and improve 50%, and you're at 15 dollars - still a long way to go from 100. So the market rose, but the indication of economic performance is still much, much lower than before the crash.

[floridasandy]

sure it's all good until you actually look at the facts:

50% of the federal budget right now goes to entitlements.

This last month we posted a record $220.9 billion budget deficit. We took in $107 billion but spent $328 billion.

Isn't that special. We only funded 32% of expenditures?

Remember - entitlements were half of that $328 billion.

So let's see if we can do the math here.

Entitlements were about $164 billion last month in spending. The rest was, of course, the rest.

But we only took in $107 billion.

So even if we eliminated all entitlement spending we still did not have enough money to cover the rest.

Yeah. (denninger)

http://market-ticker.denninger.net/a...mit-Again.html

[floridasandy]

of course, the stock market is happy because ZERO economic reforms have been made and they like it like that. (bloomberg likes it like that as well). this was a good article:
http://www.nakedcapitalism.com/2010/...ver-pitch.html

Cassidy’s article brings to mind a retort by Chou En Lai when he was asked about the success of the French Revolution. He said, “It’s too early to tell”. Yet here we have John Cassidy from the New Yorker and Joshua Green from The Atlantic both making the assumption that the Geithner plan “worked”. This whole line about “taxpayers to recover bailout money” is based on an ACCOUNTING FRAUD, because accounting abuses are the primary means by which TARP recipients have repaid bailout money — putting us at greater risk. That may seem paradoxical, but the rush to repay is driven by a desire to have unrestrained executive bonuses (a very bad thing associated with far greater accounting fraud and failures — requiring future, larger taxpayer bailouts) and accounting abuses produce the (fictional) ability to repay the United States (primarily by failing to recognize existing losses). The TARP recipients weakened their financial condition, and increased moral hazard, when they rushed to repay the TARP funds. Both factors increase the risk of making more expensive future bailouts more likely.

... But overpaying staff and keeping too little in the way of risk reserves was precisely the behavior that led to the near collapse of the financial system. Going back to business as usual would virtually guarantee more looting of major financial firm and another series of collapses.

But the Obama administration miscalculated badly. First, it bought the financiers’ false promise that massive subsidies to them would kick start the economy. But economists are now estimating that it is likely to take five years to return to pre-crisis levels of unemployment. Obama took his eye off the ball. A Democratic President’s most important responsibility is job creation. It is simply unacceptable to most Americans for Wall Street to be reaping record profits and bonuses while the rest of the country is suffering.