Is this how our economy really works?

[dumpster56]

For now, however, the Fed has obviously concluded (and we hope it’s right) that it’s more important to try to mitigate current conditions than to worry about hypothetical concerns. Economic growth in the fourth quarter of 2007 slowed to a barely perceptible 0.6 percent. Housing is already in a recession, and manufacturing is headed down. Foreclosures are rising. Lending is constrained. Consumers are pulling back in the face of job uncertainty and a reduced ability to borrow against their homes.

From todays NYTIMES editorial...

It seems that the only way our economy will expand is through people borrowing against their homes to buy stuff made in another country. How does that help the economy?

I have a feeling that the big shoe is going to drop in the equity markets and 10,000 dow will be a speed bump on the way way down ....

 

[FinanceDude]

You're too pessimistic. People have to spend regardless of the economy, on things like food and gasoline and utility bills, etc.

The consumer has stepped up and done more than their share to get us back after 9/11. Meanwhile, the Fortune 1000 companies are sitting on hundreds of billions of cash on their balance sheets.

I think it's time for corporate America to step up and stimulate the economy..........

The Fed is dropping the cost of borrowing dramatically to invite businesses to do just that.

That's not to say there will not be ugliness ahead........

 

[Notmuchlonger]

Wall Street climbs the wall of worry.

 

[Retire Soon]

For now, however, the Fed has obviously concluded (and we hope it’s right) that it’s more important to try to mitigate current conditions than to worry about hypothetical concerns. Economic growth in the fourth quarter of 2007 slowed to a barely perceptible 0.6 percent. Housing is already in a recession, and manufacturing is headed down. Foreclosures are rising. Lending is constrained. Consumers are pulling back in the face of job uncertainty and a reduced ability to borrow against their homes.

From todays NYTIMES editorial...

It seems that the only way our economy will expand is through people borrowing against their homes to buy stuff made in another country. How does that help the economy?

I have a feeling that the big shoe is going to drop in the equity markets and 10,000 dow will be a speed bump on the way way down ....

I believe we're in for a big drop as well. Wilshire 5000 has had 5 positive years in a row, and I think we're overdue for a bear market. I look at that as a positive thing, because at that point I will be changing my stock allocation from 50% to 60%.

 

[brewer12345]

I believe we're in for a big drop as well. Wilshire 5000 has had 5 positive years in a row, and I think we're overdue for a bear market. I look at that as a positive thing, because at that point I will be changing my stock allocation from 50% to 60%.

Oh boy, break out the party hats and firecrackers! A whole 60%!

 

[FinanceDude]

Oh boy, break out the party hats and firecrackers! A whole 60%!

I'm at 85% in equities, does that mean I'm screwed

 

[al_bundy]

For now, however, the Fed has obviously concluded (and we hope it’s right) that it’s more important to try to mitigate current conditions than to worry about hypothetical concerns. Economic growth in the fourth quarter of 2007 slowed to a barely perceptible 0.6 percent. Housing is already in a recession, and manufacturing is headed down. Foreclosures are rising. Lending is constrained. Consumers are pulling back in the face of job uncertainty and a reduced ability to borrow against their homes.

From todays NYTIMES editorial...

It seems that the only way our economy will expand is through people borrowing against their homes to buy stuff made in another country. How does that help the economy?

I have a feeling that the big shoe is going to drop in the equity markets and 10,000 dow will be a speed bump on the way way down ....

even though i think the market is due for a bear market, the NY Times are idiots.

pretty much every company that makes stuff overseas has hired a lot of people here in the last 10 years. they just hire skilled people and not factory workers

 

[Retire Soon]

I'm at 85% in equities, does that mean I'm screwed

You said it not me.

 

[FinanceDude]

You said it not me.

I wasbeing facetious, I haved time on my side..........

Besides, I've been 15% in bonds since 1999.........

 

[cashflo2u2]

"From todays NYTIMES editorial...

It seems that the only way our economy will expand is through people borrowing against their homes to buy stuff made in another country. How does that help the economy?"

What about new jobs and rise in incomes?

 

[Marquette]

>What about new jobs and rise in incomes?

What new jobs and what rise in income?

 

[Notmuchlonger]

>What about new jobs and rise in incomes?

What new jobs and what rise in income?

Incomes have risen quite well.

 

[cashflo2u2]

I knew somebody would post that cute reply. FYI, normally we have have always had, in the long run, a rising GDP number that creates new jobs and we have rising personal income at least equal to inflation rate. Recessions come and go FYI.

 

[FinanceDude]

I knew somebody would post that cute reply. FYI, normally we have have always had, in the long run, a rising GDP number that creates new jobs and we have rising personal income at least equal to inflation rate. Recessions come and go FYI.

Maybe we should factor in that US personal productivity has been SOARING in the past several years.......and shows no sign of regressing.

 

[Notmuchlonger]

I know for a fact I am much better off financially now than I was 10 years ago. So even after a tech crash,9/11 and this real estate fiasco. Clinton and Bush both were good to me

 

[audreyh1]

Yes, I also have trouble getting excited about impending bear markets. Bear markets happen. They are temporary. I just have to look back at how much higher my portfolio is compared to 2000. Makes the short term stuff look unimportant.

I'm just not worried about the US economy falling off a cliff never to recover. Yes, there might be some short term pain. We'll get through it.

Audrey

 

[Marquette]

I knew somebody would post that cute reply. FYI, normally we have have always had, in the long run, a rising GDP number that creates new jobs and we have rising personal income at least equal to inflation rate. Recessions come and go FYI.

Sorry, I thought you had some specific resources for new jobs and rising incomes. I need a new job and a rising income!

edit: I'm a lot better off financially now as well. I was in college, living at home, and working for just a few dollars over minimum wage. I also didn't know beans about LYBM.

 

[W2R]

I know for a fact I am much better off financially now than I was 10 years ago. So even after a tech crash,9/11 and this real estate fiasco. Clinton and Bush both were good to me

I'm a lot better off too. Things could have been much worse. Let's see, in 1998 I was newly divorced, my net worth was negative, I had a soft money job that was projected to fold at any minute, my salary was only 42% of my present earnings, I had nothing in either retirement accounts or taxable, I had a total of $200 in the bank and the rent was due. Yep. Things are a LOT better, now.

 

[73ss454]

Maybe we should factor in that US personal productivity has been SOARING in the past several years.......and shows no sign of regressing.

FD, I think you should check with your AARP retirement calculator.

 

[Texas Proud]

I'm at 85% in equities, does that mean I'm screwed

I am at 90%..... and YES...

 

[Texas Proud]

I saw an interview with I believe was Paulson... can't remember his title...

He was saying about the number... and how we talk about how manufacturing has all be sent to China... but he said that we actually produce MORE today then we have ever produced in the US... and the we are still the largest production country in the world.... more than Germany, more than China.. etc...

Not sure if true, but if it is people are just not looking at some things correctly...

 

[armor99]

You are completely correct Texas Proud. There are very many.... especially in the media that have a vested interest in failure or misery. Some say it is political for the media. It is usually easier to get a democrat into office when times are bad than a republican, and most people say that the media is heavily left leaning these days. Others say that fear is the life's blood of the media. It is far easier to sell newspapers when people are afraid. Especially if they want to know more about how to save themselves, so they buy newspapers. I would tend to believe the latter reasoning the most. At any rate I think this is why things like recession, are so overhyped, and more positive events are not. Sensationalism sells.... where other things do not. I live here in AZ where the superbowl is being held. If people are paying $2700 a ticket, and renting homes to out of town visitors for $7000 a week, is america really doing so poorly?

 

[Khan]

You are completely correct Texas Proud. There are very many.... especially in the media that have a vested interest in failure or misery. Some say it is political for the media. It is usually easier to get a democrat into office when times are bad than a republican, and most people say that the media is heavily left leaning these days. Others say that fear is the life's blood of the media. It is far easier to sell newspapers when people are afraid. Especially if they want to know more about how to save themselves, so they buy newspapers. I would tend to believe the latter reasoning the most. At any rate I think this is why things like recession, are so overhyped, and more positive events are not. Sensationalism sells.... where other things do not. I live here in AZ where the superbowl is being held. If people are paying $2700 a ticket, and renting homes to out of town visitors for $7000 a week, is america really doing so poorly?

How many people are attending the Superbowl; and what percent of the 300,000,000 does that represent?

 

[dumpster56]

You are completely correct Texas Proud. There are very many.... especially in the media that have a vested interest in failure or misery. Some say it is political for the media. It is usually easier to get a democrat into office when times are bad than a republican, and most people say that the media is heavily left leaning these days. Others say that fear is the life's blood of the media. It is far easier to sell newspapers when people are afraid. Especially if they want to know more about how to save themselves, so they buy newspapers. I would tend to believe the latter reasoning the most. At any rate I think this is why things like recession, are so overhyped, and more positive events are not. Sensationalism sells.... where other things do not. I live here in AZ where the superbowl is being held. If people are paying $2700 a ticket, and renting homes to out of town visitors for $7000 a week, is america really doing so poorly?

But we are doing it on borrowed money.

The country does not build anything anymore. China owns how much of our money?

I am not a doom and gloomer but I believe sooner than later the piper will show up and want his money.

The american consumer has no home equity anymore, it was stupid in the first place to borrow against your home anyway. But then again how will joe 6pack afford that 58 inch plasma TV to watch a stupid football game. Or american idol.

 

[barbarus]

For now, however, the Fed has obviously concluded (and we hope it’s right) that it’s more important to try to mitigate current conditions than to worry about hypothetical concerns.

I dunno newguy, inflation seems more than hypothetical to me.
The falling buck seems like the real thing too.