Some perspective

[Notmuchlonger]

During any crisis. You could have made a huge list of bad things

That is if this is a crisis

[RockOn]

Quote:

Originally Posted by Notmuchlonger That is if this is a crisis

I only wish we knew!

Since the OP was "some perspective", we should have a list of good things.

It's harder, but I'll start:

1) Stocks and real estate are cheaper now than they were
2) Oil can't go up forever and may peak soon
3) Alternative energy may be on the horizon
4) Many markets are very oversold and due for a bounce

[Leonidas]

Quote:

Originally Posted by ladelfina ... and my biggest question that no one wants to answer: where are the future growth/earnings going to come from?

Nobody knows, maybe it isn't even in the pipeline yet. But the answer is that an opportunity will come along, next week, or next year or in the next decade.

Economies expand and contract. They always have and I know of no reason why that cycle would ever stop. There have been four recessions in my lifetime, (well, three and a period of stagflation) and I bet there will be about that many occur before I die. Maybe more if I'm blessed with longevity.

As best I can tell, I have absolutely no power over the economic cycle. All I can do is do my best to survive, and part of that is having plans in place so I am somewhat prepared for it.

There are no guarantees in life and none of us have a right to early retirement on our terms. We just have the right to seek it as best as we can.

I know what it's like to live on the wrong end of a recession, and it sucks. You have to watch every penny, cut expenses down to survival mode, and try to pick up extra money wherever you can. Eventually, as it has in every one of the 17 recessions/panics/depressions that this country has faced in its history, the economy begins to expand again and you move on with your life.

My pre-ER planning included a lot of really ugly "what-if" scenarios. I don't look forward to bad times, but I think I have a workable plan to survive them. I hope you do as well.

[clifp]

Quote:

Originally Posted by ladelfina I don't know what people are reading but I see bankruptcies up, foreclosures up, unemployment up, jobs down, credit tightening and cash short everywhere.. and my biggest question that no one wants to answer: where are the future growth/earnings going to come from? The US economy is contracting and it's been like pulling teeth the last few months here to get any number of people to admit to even that.

Perhaps because we have NOT seen data that shows that it is contracting. . Slowing, boarding on recession sure but actually there.. we will know in Aug. BTW, a lot of people claimed the US was in recession last summer.

Quote:

he U.S. economy grew slightly more in the first quarter than previously estimated, and home sales rose in May, but concerns are rising about potential threats to growth in coming months. "For the balance of this year, it looks like the economy is trapped in a subpar growth pace but not a recession," said Stephen Stanley, chief economist with RBS Greenwich Capital in Stamford, Conn. The Commerce Department said the nation's gross domestic product rose at an annual rate of 1% during the first three months of the year, up from its previous estimate of 0.9%. The economy grew at an anemic 0.6% pace in the final quarter of last year. Stronger consumer spending and export growth helped boost growth in the first quarter; inflation rates also were revised higher. The price index for personal consumption expenditures excluding energy and food -- a gauge of inflation watched closely by the Federal Reserve -- rose at a 2.3% pace, above the 1.5%-to-2% range that the Fed considers price stability. Sales of previously owned houses, meanwhile, rose 2% last month to a seasonally adjusted annual rate of 4.99 million after declining in the previous two months, according to the National Association of Realtors. Still, the sales pace of existing homes, which make up about 85% of the market, is down about 16% from May 2007. Sales of existing single-family homes rose 1.6% last month to a 4.4 million rate but are down about 15% from a year earlier. The monthly rise was likely fueled by declining prices; the median single-family home price last month was $206,700, 6.8% lower than in May 2007. Condominium and co-op sales also rose last month but remain 25% below the year-ago pace. On GDP, analysts expect a similar performance for the April-through-June period, as government economic-stimulus checks provide some relief to consumers. Rising exports also continue to buoy growth.

From June 26 WSJ

[ladelfina]

Quote:

1) Stocks and real estate are cheaper now than they were 2) Oil can't go up forever and may peak soon 3) Alternative energy may be on the horizon 4) Many markets are very oversold and due for a bounce

1) in many areas RE has a way to go yet. In Newport Beach, for example, the average income is something like $130k while the avg. house is $1.3MM. That's still a 1:10 ratio when traditionally it has been 1:3.
2) who sez? (I actually believe it may come down somewhat barring military actions or unforeseen acts of God, but it will never be at the old prices. Too much competition for declining prod'n. We have to start thinking about when oil is no longer plentiful and cheap, and adjust accordingly.)
3) yes, room for growth here, definitely BUT it takes existing fossil fuel to develop and could be the next bubble, not necessarily healthy for investors.
4) I don't think this is correct. Doesn't "oversold" mean "lack of sellers"?

I think the 21st-century economy could be as different from the 20th-century economy as the 20th century was different from the 19th. Again, in other recessions there have been sectors of relative health, which we seem not to be seeing these days. The 20th century has seen two very singular circumstances: one is the widespread exploitation of oil, and the second is the rise of the middle class as investors. I think they are related, and that the bounty of the first begat the prosperity of the second. That's why I am pre-occupied.

I read a very wise statement which I will paraphrase poorly here: the basis for all economic activity is either human labor, animal labor, or fossil/renewable fuels. That's what it all comes down to. The ergs.

---
clif, 2 thoughts on GDP.. one, a 1% increase does not even account for population adjustment, I don't think; two, do you have an idea of what the gov. spending component is on that? I couldn't find it quickly.

[brewer12345]

Quote:

Originally Posted by clifp Perhaps because we have NOT seen data that shows that it is contracting. . Slowing, boarding on recession sure but actually there.. we will know in Aug. BTW, a lot of people claimed the US was in recession last summer. From June 26 WSJ

Don't confuse the PSers with facts. And besides, we all *know* that the gubmint manipulates and falsifies the data to suit its pernicious goals.

FWIW, I personally think that the consumer recession started in December. Looking at ground level loan data for stuff like subprime auto loans (where you don't default as long as you have a job because you need the sled to get to work), stuff went off a cliff quite suddenly in December. But it remains to be seen whether the economy as a whole will actually go into a recession this time. That's why consumers are squealing in pain and selling assets like crazy even though the data suggests that they have waaaaayyyy over-reacted. No doubt this downturn will end in time and the US economy will continue expanding.

[cute fuzzy bunny]

Quote:

Originally Posted by kumquat WADR, how many of of the folks in the retirement community remember the depression. They'd have to be born before 1925, making them a minimum of 83. Even then, I'd want them to be 15 in 1930 making them 90+.

I'll put the word out that you've presented some specifications for the legitimacy of their complaints.

As it turns out, the average age range is the late 80's to mid 90's so I think they pass the test. I dont think there are many in the triple digits. My dad is considered the neighborhood baby at a youthful 75.

Since the depression didnt officially end until 1938 and was followed by WWII, the home front still a rather tough place to live and come of age for almost anyone currently 75 or older.

[Lsbcal]

I just came to this thread and was quite impressed with all the worries some of which mirror mine.
So for July 4th here is a happy thought:

Quote:

what if the fed raised short term interest rates ... and the dollar started going up ... and commodities started going down ... and US stocks started going up ... and foreigners started piling into US stocks because of the dollar going up and US stocks reversing trend ...

Well, it could happen.

[ziggy29]

I'm telling you, it's me. I bought USO last week to pop the commodity bubble. If commodities falter, the dollar rises and the economy and stock market recover, I want my birthday to be a national holiday.

[Marquette]

Quote:

Originally Posted by ziggy29 I want my birthday to be a national holiday.

I think I can make that happen.*





* assuming you were born on December 25th or July 4th.

[ladelfina]

History of continuous bi-partisan gov. statistics manipulation here:
Hard numbers: The economy is worse than you know - St. Petersburg Times

[ziggy29]

Quote:

Originally Posted by ladelfina History of continuous bi-partisan gov. statistics manipulation here: Hard numbers: The economy is worse than you know - St. Petersburg Times

From the article:

Quote:

"Pollyanna Creep" is an apt phrase that originated with John Williams, a California-based economic analyst and statistician who "shadows," as he puts it, the official Washington numbers. In a 2006 interview, Williams noted that although few Americans ever see the fine print, the government "always footnotes the changes and provides all the fine detail. Nonetheless, some of the changes are nothing short of remarkable, and the pattern over time is what I call Pollyanna Creep."

This is so much of what I've said again and again. People who insist we're doomed have a tendency to dismiss anyone who doesn't think we're doomed as "Pollyanna" about the denying the fact that we are inescapably ruined.

[ladelfina]

well, if you take out that offending nomenclature.. what about the actual content describing the actual historical tactics undertaken re. statistics?? It's just as irrational to over-react in one direction as it is to over-react in the other, just based on terms that are provocative.

[ziggy29]

Quote:

Originally Posted by ladelfina well, if you take out that offending nomenclature.. what about the actual content describing the actual historical tactics undertaken re. statistics?? It's just as irrational to over-react in one direction as it is to over-react in the other, just based on terms that are provocative.

I think the inflation numbers are bogus and I have for years. I don't think there's some grand conspiracy about them, but I can understand why some would think so given the government's obvious conflict of interest in being able to determine COLAs and interest paid on TIPS and I-bonds with their own numbers.

I'm not convinced the inflation numbers reflect a typical household budget, and I think the concept of using "substitution" to understate inflation is lame. Yeah, sirloin rose from $2.99 a pound to $4.99 a pound and ground chuck rose from $1.99 to $2.99, but we'll "substitute" ground chuck for sirloin and say meat prices are unchanged? Bogus.

Having said, if the "we're doomed" media message sinks in with enough people, it may become self-fulfilling. Is that what we want?

It's one thing to be personally prepared for very difficult times. It's another to try to convince everyone we're doomed so we can bring it that much closer to reality.

[ladelfina]

Fair enough, but I don't think the underlying situation will be changed by "pollyanna" rumors OR "doom" rumors. To paraphrase something I read in the context of one of the troubled IBs "if your business can be brought down by just a rumor, then it isn't sustainable in the first place". The US (and world) economy has problems greater than rumors. Just looked at the DJIA p/e which is now over 90. I'm not sure what part of that is company-reported vs. analyst-reported projections, but it's not made up by CNBC (which I don't watch, nor anything like it).

I'm not trying to do anything but work through ideas and get reaction and input, among the tiny handful of people here. Even if every ER forum member cashed out entirely and ran for the hills it would be unnoticeable in the market. I can't speak for or defend anyone else's motives.

[RockOn]

Quote:

Originally Posted by ladelfina History of continuous bi-partisan gov. statistics manipulation here: Hard numbers: The economy is worse than you know - St. Petersburg Times

I'm waiting for Independent to chip and take it down point by point.

For me, the article totally reflects today's reality. John Williams for Economist of the year! Someone telling the sometimes unpleasant truth.

[RockOn]

Quote:

Originally Posted by ladelfina Just looked at the DJIA p/e which is now over 90.

Really? If the DOW PE is currently 90, that is simply amazing.

[ziggy29]

Quote:

Originally Posted by RockOn Really? If the DOW PE is currently 90, that is simply amazing.

It's not unusual for a sky-high P/E during a weak economic period, because the 'E' tends to drop sharply or even be negative for many companies (especially the financials and train wrecks like GM). Because those depressed earnings rarely last for more than a few quarters, prices don't fall so far where the P/E would be in "normal" ranges for a healthy economy.

P/E tends to be a useless indicator in an economy and earnings environment like this one.

[RockOn]

Quote:

Originally Posted by ziggy29 It's not unusual for a sky-high P/E during a weak economic period, because the 'E' tends to drop sharply or even be negative for many companies (especially the financials and train wrecks like GM). Because those depressed earnings rarely last for more than a few quarters, prices don't fall so far where the P/E would be in "normal" ranges for a healthy economy. P/E tends to be a useless indicator in an economy and earnings environment like this one.

Still 90 would be an amazing number for the "blue chips". I doubt that has happened before. While depressed, it's hard to see the financials or autos earnings improving anytime soon.

[Leonidas]

Quote:

Originally Posted by RockOn Really? If the DOW PE is currently 90, that is simply amazing.

Apparently the folks at the Dow Jones would be equally amazed, as their figures are quite different: Dow Jones Indexes

Trailing P/E (including negative) is 14.14 and Projected P/E is 11.86.

Excluding the negative you get a trailing of 13.51 and projected of 11.42.

Just to double check, I looked at the Diamonds and found P/E of 5.98