Posted on 03/09/2008 2:43:35 PM PDT by fweingart
Uhm, no. You don't presume much, do you?
“Until we start acting responsibly, getting our runaway spending under control and not borrowing from the ChiComs to go on expensive foreign adventures, we’re gonna have to face rough decisions. The money we borrowed and dumped into Iraq could have paid for years of our foreign oil consumption. Is it any wonder our economy is facing consequences?”
The French Revolution comes to mind...
Spare us the bilderbaloney, you don't have a capitalist molecule in your body.
US GPD is $13.5 trillion. A recession involves a lot more than domestic drilling or lack thereof.
We’re not in a recession - our economy is still growing (the opposite of a recession).
I sold my house this week at a very nice profit
I’m a headhunter (talent recruiter) - I have FAR more open positions than I have qualified people for.
We’re not even at 5% unemployment. Counting winter-seasonal unemployment (snow-driven employees leaving their seasonal jobs), we’re at absurdly low unemployment.
Our government and our citizens carry FAR too much debt and too many people tried to hit the equity lottery and didn’t. Or they did make a lot of profit off a home sale and rolled the profits into a bigger, more expensive home.
If you’re trying to have a bigger house/car/TV than your neighbors, you’re going to be in a tight spot. Stay away from Best Buy, save your money and keep your fixed expenses low. You’ll be just fine.
Wishful thinking.
“In politics, nothing happens by accident. If it happens, you can bet it was planned that way.” FDR
What’s wishful thinking, that the economy will come back?
Wishful thinking of the collapse of the fiat system.
The Democrats in the Congress were more interested in litigating the Vice President’s right to private counsel in policy development (they lost) than in considering the policy recommendations on energy that came from the White House in...2001.
I wasn’t complaining about the right of Oil Companies to make a fair profit, “fair” being defined as what the free market will bear. Sometimes I feel like gas prices are a bit controlled, but let’s assume the free market sets the prices and therefore the profits for the oil companies.
What baffles me is how the periods of greatest profits for the oil companies comes when material costs are the highest. Exorbitant increases in the cost of crude is followed by exorbitant increases in oil company profits. I can’t understand that.
It seems to me that they oil companies would pass on the increased material costs to consumers, but instead, they seem to pass on those costs plus an extra premium for profit. That is very confusing.
Then when oil prices collapse, they seem to reduce prices too much and profits go down. This is counterintuitive to me. It seems to me that cheap crude should mean higher profits, while expensive crude should mean it is harder to squeeze profits from the increased costs.
I’m completely baffled.
A solid leap in the Dow should have been seen after the rise of retirement investing, as companies shifted their retirement plans from defined payment pensions to defined contributions to 401(k)s. There are still many boomers who have defined payment pensions.
This trend is still on-going. Until all the boomers retire, I think we will continue to see a greater percentage of the workforce having to sock away money in equities for retirement.
I think that explains some of the leap shown on your chart, but only some. I think some of it is also funny money. Call it 50-50, because I just don’t know.
I do become highly suspicious when charts blast off from historic trends. This made me tell a lot of people to get out of the NASDAQ in 1998. I was two years early, but the charts showed tons of funny money, and scared the heck out of me. I was right, but I was just 2 years early. Of course, by the time the market plunged catastrophically, friends were all saying I had been crying wolf so long, well call it the old “a stopped clock is right twice a day” attitude.
I was right, I just had bad timing.
The charts looked much the same for median home values during the housing bubble. Again, it was funny money.
Yes, the S&P still has some funny money in it, but I think it is basically sound and nothing at all like the tech bubble NASDAQ or the housing bubble.
But I agree with you in principal. Charts that show a blast off from historical norms make no sense to me. I would ignore the DJIA trends before Reagan, as they don’t capture the new trend of workers to have to invest in the stock market in IRAs and 401(k)s. But the recent surge in stocks is “funny money to me.”
I honestly believe the S&P should be at about 900 today. Project the line from 1986 to 1995 and you get about 850-900 for the S&P. I personally believe everything above that level is “funny money”.
The trend line from ‘86 to ‘95 reflects increased investment from workers without defined pensions. The blast off surge in the S&P from 1995 to 2000 was a result of the NASDAQ bubble, IMO. When NASDAQ blew, the S&P correctly fell to 800, just about where it belonged. But we now had resistance defined at 1500, and people bought into it, so I think a lot of people simply believe the S&P should be about 1500 today. I’m not buying it. I wish that were true.
I guess we’ll see. It won’t surprise me in the least to see the S&P go down below 1000 and follow a long-term historic trend line from 1986. That’s my story and I’m sticking to it. Fortunately, most economists turn out to be wrong, so when I’m wrong on my prediction, I can at least fall back on the excuse that I am just a dumb Civil Engineer and don’t know a thing about formal economics.
Just my 2 cents. I think the S&P went over 1000 on funny money and is heading back to 1000. Time will tell.
Since your reference was the DJIA (which I think is too narrow an index and so I refer to the S&P), I owe you the courtesy of putting my conclusion in terms of DOW.
I personally think the DJIA should be around 6000 and will be returning that way eventually. I’m sure I will be excoriated for the pessimistic prediction.
First, you are right in that I know very little about economics.
Second, I wasn’t blaming the oil companies for making profits. Hell, government makes about 3 times off fuel taxes that oil companies make off taxes.
What I was baffled by is, why do oil companies make their maximum profits just when material costs hit their maximums. This has me completely confused. Every time crude shoots up in price, oil company profits shoot up in price. Shouldn’t high material costs HURT their profits. Shouldn’t their profits maximize when material cost plunge, meaning they have a lot more room for profits.
You sound knowledgable in economics, so this should be a very easy thing for you to explain in plain English. Thank you.
We borrowed $1.5 trillion from China? When?
Sorry, Reagan was complicit in the borrow and spending. He cut taxes while Congress raised spending. He approved every single one of those annual budgets. Or did you think it was the speaker of the house who submitted and approved the budgets each year?
You are the one re-writing history. Yes, the tax and spend Democrat legislatures got their way with spending but didn’t get their way with taxing, and so we ended up with borrowing and spending. But don’t pretend that Reagan didn’t play his part. He most certainly did. Even while needed, he still raised defense spending very much when nobody in the Congress requested it. Oh, they all loved the defense spending because it stimulated their state economies — all they while they were screaming against those spending increases.
But Reagan was no innocent little lamb slashing costs at every turn and being dragged kicking and screaming to approve every one of the 8 budgets he signed.
They spent. He cut taxes. He borrowed to pay for the spending. End of story. Don’t ignore those facts.
Thanks for your response. The S&P shows the same thing, going from around 300 at the start of the nineties to 1500 at the end of the decade, a five times growth. I fear you are correct, and instead of facing this and trying to get a soft landing, I am afraid our leaders will continue to pretend it’s not happening or that we can manipulate our way out of it altogether.
Your arguement contains its own refutation. Reagan persuaded Congress (including the Speaker of the House) to cut taxes. He did not cut taxes by himself. He had a mandate from his election and Congress understood that that was the popular will.
Most of the budgets he submitted to Congress were smaller than the ultimate appropriations that Congress voted on. Perhaps you are to young to remember, but I remember the Gipper standing before Congress with a 5 foot high budget document and scolding them for spending profligately.
-—the tax and spend Democrat legislatures got their way with spending but didn’t get their way with taxing—
You have it backwards. Congress agreed with Reagan to cut spending but did not live up to their commitment.
________________________________________________________________________
Budget Myths
President Reagan entered the White House with an attitude of working honest deals with the Congress on spending. He wanted more defense spending, lower entitlement spending, lower tax rates which would boost the economy (and thus revenues) and seemed to achieve that agreement with Congress in both 1981 and 1982. However, despite getting concessions on taxes, congress never once cut spending, and the actual budgets were higher than what Reagan asked for 7 out of 8 years. This attitude of “cut spending later” helped continue the debt trends that began under Ford and Carter. By the end of Reagans terms, debt had increased by $2 trillion.
We’ve all heard the myth: President Reagan asked for far more spending than congress wanted and/or congress actually spent less than what Reagan asked for...yet the truth once again tells a different story.
See the grid at the link for data which shows that Congress spent on average 3 percent more than Reagan submitted in the budget.
http://www.presidentreagan.info/reagan_budgets.cfm
Indeed, the static revenue losses from the Reagan tax cuts were so small that the Keynesians, including a number of Nobel Prize winners who live in Massachusetts, argued that their effects on aggregate demand would be so small that they could not grow the economy!!! There was a deep recession that began in 1981 and did not relent until late 1982, but that was entirely related to the monetary deflation of that period. The Reagan tax cuts invited increased economic activity which would require more liquidity from the Federal Reserve. When the Volcker Fed did not supply it, as it was still grappling with the inflation surge of 1979-80, the price of gold tumbled as a sure signal of monetary deflation. At the time, in early 1981, Professor James Tobin of Yale wrote a letter to the WSJournal arguing that the Reagan policy would not work, because monetary policy would be pulling against fiscal policy. As he put it, the policy mix was like a train in New Haven, with a locomotive on one end headed to Boston, with another on the other end headed to New York. But again, it is clear from that Nobel Prize winner that the deficits that emerged out of that recession were not related to the tax cuts, which were trying to grow the economy, against the deflationary policy at the Fed. \
http://www.polyconomics.com/searchbase/03-01-01.html
Sorry for the additional post, but this summary is too good not to include:::
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So there you have it. On average, Congress spent 2.8% more than Reagan asked for, while the cumulative (yearly compounding rate) was a whopping 24.5% more. If the budget in 1989 had been 24.5% smaller (i.e., 280 billion dollars) there could have been a surplus of about 130 billion dollars instead of a deficit. This is equivalent to a constant compounding increase of 2.8% every year during the 8 budgets above and beyond the previous year’s spending. If anyone still thinks that is not a significant amount, they should ask themselves whether a balanced budget in 1989 would have been significant.
Our lousy energy policy had nothing to do with the billions of dollars in bad mortgage debt issued to people who had no business buying houses. If you want to blame someone, blame the American people, who just had to have their six-bedroom Celotex mini-mansions built on strip-mined land fifty miles from the city. They could have settled for more modest housing closer to town, but, no, they had to live beyond their means — and now we all have to pay the price for their stupidity. Blame, too, the crooked mortgage-lenders, who suckered these greed-blinded fools into taking on massive APR notes now by promising them the opportunity to flip the properties for big bucks later.
For every loan-shark, there’s a sucker looking to borrow money he can’t pay back. That’s who is to blame for this mess. Meanwhile, those of us who scrimped and saved to make the big down payment and took the interest hit for a standard mortgage are going to get sucked under as the whole gigantic scam explodes.
Every time a lane is closed on a freeway, a line forms in the remaining lane as patient and polite motorists wait their turn to pass the roadblock. Yet there are always plenty of people who zoom right up to the roadblock in the open lane, then cajole the idiot at the front of the line to let them jump in ahead of all the people who waited. Moral: in America, only a loser plays by the rules. Being a selfish dick is how winners become winners.
Until the game collapses into chaos for lack of rules. Then everybody loses.
ANWR, ANWR, ANWR! ANWR is not going to solve the problem. According to the U.S. Energy Administration, the mean estimate of technically recoverable oil in ANWR is 10.4 billion barrels. At our current rate of consumption (20,687,000 barrels/day) that represents 503 days of available oil — about sixteen months’ worth.
Don’t believe me? Look up the figures and do the math yourself.
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