Chicken (Jobs) or the Egg (Housing)?

Ravi Batra, where have you gone?

Alan Abelson and Doug Cass - predicted twenty of the last two bear markets

Pat Choate - soaring unemployment?

Lou Dobbs - fill in the blank

I hate to spoil the doomsday scenario but this economy is a lot more resilient than these doom merchants will ever accept. Real estate is going through a significant correction, but in most parts of the country, prices never got out of hand. I live in South Florida and the last five years were great, but I also went through about seven years of 2% appreciation annually.

I love the REAL BUDGET DEFICIT types, like Social Security over-taxation is not supposed to count in revenues. An don't tell me about the demographics, etc., I have lectured groups on behalf of FreedomWorks on the issue. Everyone knows where this is going . . . means testing, some retirement age adjustments (longevity risk is the greatest risk to the current system), and eventually a trend towards personal accounts.

As for Social Security checks being higher under the Carter formula? SO WHAT!!! We changed the formulas under Reagan.

Actual inflation at 7% or 12%???? There are some things I pay more for now - gas, housing, health insurance. There are some things I actually find less expensive today - food, clothing, electronics, autos (certainly for the quality and the longer ownership - try getting 150,000 miles out of a 1975 GM car).

12% Unemployment??? - In my state the unemployment rate is 3%. It took us three months to hire a receptionist. Our city library construction is 18 months behind schedule due to a combination of material shortages AND skilled laborers. In some counties in Florida, unemployment is nearly 2%.

I'll tell you what, Chris. Keep thinking this way. My clients are up nicely this year with a very low volatility in their holdings. If you want to be scared, by all means do so. Those of us who actually manage other people's money, and therefore actually put our reputations on the line, will do nicely in our ignorance.

One of these days the News is going to kill me:

I’m in my 60’s and have lived a decadent lifestyle (love stuff full of Trans Fats) all my life and am in the greatest category for a heart attack

How is the News going to kill me? … I will open the paper, view the News on the internet or hear on my radio something positive about the economy, the war in Iraq or, even worse, something good about GWB and … BANG … the “big” one.

Sheeeeeezzzz

This article may be packed with info, but much of it is mistaken. If GDP grows 1.1% in a quarter is not a sign of recession let alone depression, after all in would nominally indicate a annual rate of 4.4%. Generally at least 2 and usually 3 quarters if negative growth are indicative of recession. Also,the monetary view of the cause of the great depression was a sharp contraction of the money supply M1, M2(pace Milton Friedman).There was not enough money in circulation to permit economic growth by the usual method(increase in demand deposits in commercial banks). Printing tons of money without GDP growth will increase the cost of all commodities because the value of the dollar contracts; too many dollars chasing too few goods and services, just like in the days of Jimmy Carter, foreign policy idiot, domestic policy idiot. Great peanut farmer however.

I listen to Bob Brinker on WLS Chicago on the weekend and he was really going after those who are preaching about inflation etc. He said it is really rediculous that these people have no clue about inflation or a threat.

Those of us old enough use the Jimmy Carter yardstick to determine the inflation threat.

Inflation ranks just below being eaten alive by gophers on my list of worries.

Modern economists often miss the real strength of our economy because they lack a measurement of what I call the relationship between "real money" and "imaginary money".

Real money is tangible. It is based on some good or service and there is a finite supply of it. The vast majority of money, far more than real money, is imaginary money. In effect, it is money created as a by-product of using real money.

For example, let's say that you are paid a dollar. Instantly, you now owe the government, say, 20% of that dollar in taxes. Instead, you spend that dollar, and the next person who gets it also instantly owes the government 20% in taxes. By the time that bill has changed hands five times, 100% of that bill is owed in taxes.

But it isn't. What has happened is that the real dollar has created an imaginary dollar, that only exists electronically. It only comes due on April 15. Until then, there is the equivalent of two dollars floating around in the economy.

Another example goes back to the S&L crisis. Say you owned a building worth $1M. But your friend at the S&L gives you a $10M loan based on that $1M collateral. Instantly, he has created $9M in imaginary money. But money you can spend as if it was real money.

This explains why economists who predict recession and depression are seldom right. They may not be taking into account 90% of the money out there, the imaginary money. In fact, the more imaginary money a society creates, the stronger its economy, because only a vibrant economy creates a lot of imaginary money.

That is, lots of transactions is not indicative of recession or depression. It means that people are still making and spending money.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.