Is this how our economy really works?

[newguy88]

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]

Quote:

Originally Posted by newguy888 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]

Quote:

Originally Posted by Retire Soon 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]

Quote:

Originally Posted by brewer12345 Oh boy, break out the party hats and firecrackers! A whole 60%!

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

[Retire Soon]

Quote:

Originally Posted by FinanceDude I'm at 85% in equities, does that mean I'm screwed

You said it not me.

[FinanceDude]

Quote:

Originally Posted by Retire Soon You said it not me.

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

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

[Texas Proud]

Quote:

Originally Posted by FinanceDude 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...

[Tadpole]

Quote:

Originally Posted by FinanceDude I'm at 85% in equities, does that mean I'm screwed

I don't know, of course. But I am wondering why anyone considers bonds to be much, if any, safer. Even cash, if not exposed to higher risk, may soon trail inflation.

[saluki9]

Quote:

Originally Posted by Tadpole I don't know, of course. But I am wondering why anyone considers bonds to be much, if any, safer. Even cash, if not exposed to higher risk, may soon trail inflation.

Because inflation risk is not the only risk you have to contend with when constructing a portfolio.

[al_bundy]

Quote:

Originally Posted by newguy888 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

[cashflo2u2]

[quote=newguy888;609607]

"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]

Quote:

Originally Posted by Marquette >What about new jobs and rise in incomes? What new jobs and what rise in income?

Incomes have risen quite well.

[Independent]

Quote:

Originally Posted by Notmuchlonger Incomes have risen quite well.

I suppose different people look at different statistics. It seems to me that "median earnings for full-time year-round workers", separated by education and gender eliminates most of the noise and reflects how ordinary people feel.

Here are total percentage gains from 1991 through 2006, adjusted for CPI. The first column is males, the second females.

-7 +5 Less than HS diploma
-1 +2 HS diploma
-1 +3 Some College
+1 +2 Associate Degree
+6 +14 Exactly 4 years
+9 +14 More than 4 years
+4 +13 Total

These are total gains for 15 years, not average annual gains. It seems that people with less than 4 years of college basically stood still. Women with 4 or more years gained almost 1% per year. Men with 4 or more years gained about a half a percent per year.

Of course "mean" earnings went up more, because it's the higher income people that saw the gains.

http://www.census.gov/hhes/www/income/histinc/p24.html

[barbarus]

Quote:

Originally Posted by Independent Here are total percentage gains from 1991 through 2006, adjusted for CPI. The first column is males, the second females. -7 +5 Less than HS diploma -1 +2 HS diploma -1 +3 Some College +1 +2 Associate Degree +6 +14 Exactly 4 years +9 +14 More than 4 years +4 +13 Total

Let me add to the doom & gloom with informal data I have gathered.
I know a heap a' them +6+14 and +9+14 critters and most of them would take exception to these reported increases.
Don't want to run my own numbers. Might get TOO gloomy.

[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]

Quote:

Originally Posted by 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.

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