Is this how our economy really works?

newguy88 · 01-31-2008, 11:32 AM

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 · 01-31-2008, 12:06 PM

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 · 01-31-2008, 12:09 PM

Wall Street climbs the wall of worry.

Retire Soon · 01-31-2008, 12:20 PM

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 · 01-31-2008, 12:25 PM

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 · 01-31-2008, 12:32 PM

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

al_bundy · 01-31-2008, 12:33 PM

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

Retire Soon · 01-31-2008, 12:47 PM

Quote:

Originally Posted by FinanceDude

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

You said it not me.

FinanceDude · 01-31-2008, 12:57 PM

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.........

cashflo2u2 · 01-31-2008, 01:09 PM

[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 · 01-31-2008, 01:28 PM

>What about new jobs and rise in incomes?

What new jobs and what rise in income?

Notmuchlonger · 01-31-2008, 01:32 PM

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.

cashflo2u2 · 01-31-2008, 01:32 PM

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 · 01-31-2008, 01:33 PM

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.

Notmuchlonger · 01-31-2008, 01:38 PM

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 · 01-31-2008, 01:44 PM

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 · 01-31-2008, 01:45 PM

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.

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.

**Want2retire** · 01-31-2008, 01:47 PM

Quote:

Originally Posted by 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

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 · 01-31-2008, 02:32 PM

Quote:

Originally Posted by FinanceDude

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 · 01-31-2008, 04:05 PM

Quote:

Originally Posted by FinanceDude

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

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

01-31-2008, 11:32 AM	#1
newguy88 Thinks s/he gets paid by the post Join Date: Nov 2005 Posts: 2,119	Is this how our economy really works? 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 ....

01-31-2008, 12:06 PM	#2
FinanceDude Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Aug 2006 Posts: 7,430	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........ __________________ Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:) President Obama, please know that I will continue to cling to my guns and religion........:)

01-31-2008, 12:09 PM	#3
Notmuchlonger Thinks s/he gets paid by the post Join Date: Dec 2007 Posts: 2,992	Wall Street climbs the wall of worry.

01-31-2008, 01:09 PM	#10
cashflo2u2 Recycles dryer sheets Join Date: Oct 2007 Posts: 177	[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?

01-31-2008, 01:28 PM	#11
Marquette Thinks s/he gets paid by the post Join Date: Jan 2008 Posts: 2,020	>What about new jobs and rise in incomes? What new jobs and what rise in income?

01-31-2008, 01:32 PM	#13
cashflo2u2 Recycles dryer sheets Join Date: Oct 2007 Posts: 177	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.

01-31-2008, 01:38 PM	#15
Notmuchlonger Thinks s/he gets paid by the post Join Date: Dec 2007 Posts: 2,992	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

01-31-2008, 01:44 PM	#16
audreyh1 Thinks s/he gets paid by the post Join Date: Jan 2006 Posts: 2,203	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