haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Hah. I thought that might get your attention
Here it is. If an economy absolutely needs something to happen for it to survive, that thing will happen.
I propose that the US economy absolutely needs our domestic savings to increase. Our federal government is committed to running deficits, the corporate sector is at best neutral. This means the consumer will have to achieve a positive savings rate.
He/she doesn't want to. There are too many nice things to buy. So how will she be forced to save?
So far we collectively have actually been able to fund consuption greater than our incomes, by tapping rising asset values- bonds, equities and now homes. You can be 45 years old today, and not know anything but bull markets in almost all classes commonly invested in by ordinary people. (There was one heck of a violent bear in the NASDAQ, but is was short and didn't seem to have much lasting psychologial effect.)
So what John and Jane Q. Public need is a compelling reason to start saving. Asset values must stagnate or decline, meaningfully, and at least giving the appearance of permanently.
It will then dawn on people that they are running out of time to prepare for retirement, and capital gains are not going to bail them out. Which means like it or not (and they won't!) they will have to increase saving, at least collectively. Not to ER, but just to R.
This should stop and then reverse the bull market in equities. In fact, it has probably already happened and we we just haven't figured it out yet.
Homes should slow down or stop their appreciation, and probably in some places decline. Homes ae peculiar though, so I am not very confident here.
Past results are no guarantee of the future, and anyway my past results as a prognosticator stink. So pay no attention to this rant!
Mikey
Here it is. If an economy absolutely needs something to happen for it to survive, that thing will happen.
I propose that the US economy absolutely needs our domestic savings to increase. Our federal government is committed to running deficits, the corporate sector is at best neutral. This means the consumer will have to achieve a positive savings rate.
He/she doesn't want to. There are too many nice things to buy. So how will she be forced to save?
So far we collectively have actually been able to fund consuption greater than our incomes, by tapping rising asset values- bonds, equities and now homes. You can be 45 years old today, and not know anything but bull markets in almost all classes commonly invested in by ordinary people. (There was one heck of a violent bear in the NASDAQ, but is was short and didn't seem to have much lasting psychologial effect.)
So what John and Jane Q. Public need is a compelling reason to start saving. Asset values must stagnate or decline, meaningfully, and at least giving the appearance of permanently.
It will then dawn on people that they are running out of time to prepare for retirement, and capital gains are not going to bail them out. Which means like it or not (and they won't!) they will have to increase saving, at least collectively. Not to ER, but just to R.
This should stop and then reverse the bull market in equities. In fact, it has probably already happened and we we just haven't figured it out yet.
Homes should slow down or stop their appreciation, and probably in some places decline. Homes ae peculiar though, so I am not very confident here.
Past results are no guarantee of the future, and anyway my past results as a prognosticator stink. So pay no attention to this rant!
Mikey