7 Signs of an Economic Bottom 87 comments
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There are opaque and early signs that the U.S. economy has started the beginning of a bottoming process. Just like a diving submarine needs to stop its downward motion and reach its lowest depth before it can resurface, the economy needs to go through the steps of slowing its decline and stabilizing before it can start rising again. Some recent economic data seems to suggest that the rate of economic decline has started to slow and that sometime in the second or third quarter the bottom may be found.
Of course, external events such as a large natural disaster, war or a regional economic collapse (like of China, Japan, the EU or Eastern Europe) will push the U.S. into a renewed freefall. But, assuming the rest of the world isn’t dead weight on the U.S. economy, we are heading into a period of crummy economic performance with a dramatically diminished base of recurring economic activity. The economic bottoming won’t feel like recovery because it won’t be; it will merely be an arrested freefall of a damaged economy.
Recent news on continued home price deflation and sales, Bernanke’s testimony that the economy could be worse than expected and record low consumer confidence all mean the economy is still shrinking. The economy is, however, starting to show signs of shrinking at a slowing rate, which is the beginning of the bottoming process.
The early signs of finding a bottom include:
- Money supply is essentially stable and in the case of M1 slightly down (on a seasonally adjusted basis) since the beginning of January.
Money supply (as measured by seasonally adjusted M1 and M2) has stabilized and is no longer growing at weekly double digit rates. Seasonally adjusted M1 is actually slightly down since the beginning of January and seasonally adjusted M2 has been essentially unchanged since the middle of January. Exponential money supply growth is a sign that the Federal Reserve is trying to perform economic resuscitation while slower money supply growth indicates that the Federal Reserve believes that the economy is starting to stabilize. Hopefully the Federal Reserve knows more about the economy than we know.
- Excess reserves, while still at historically unprecedented levels, are dropping.
Excess reserves at the Federal Reserve are a barometer for the amount of cash hoarding that is taking place by banks. When banks hoard cash they increase their deposits at the Federal Reserve and “excess reserves” are created. On January 13th Ben Bernanke gave a speech where he said that when banks start lending again excess reserves will decline. Excess reserves peaked in early January at approximately $843 billion and have been steadily declining so that as of February 11th excess reserves were down to $611 billion. While the current level of excess reserves don’t mean that the economy is healthy (prior to the crisis excess reserves were around $2 or $3 billion), the direction of excess reserves is down which is a good sign.
- After 5 straight months of producer price deflation, PPI increased by 0.8% in January.
The economy won’t slow its freefall as long as there is deflation. The PPI data for January was very good news regarding producer prices. While one month of producer price increases doesn’t mean deflation is gone, the amount of the increase and that there were increases in finished goods suggests stable demand at current depressed inventory, price and production levels.
- Consumer prices increased in January by 0.4%, before seasonal adjustments, which indicates that the risk of runaway consumer price deflation has gotten lower.
Just like the PPI numbers were a good sign of restored supply/demand equilibrium, the CPI numbers also signaled that consumer prices may be finding a floor. If the economy is going to find a bottom, consumer prices cannot be dropping. January’s CPI numbers were a good sign for the economy.
- Housing construction and automobile manufacturing are hitting bottom; after all $0 of sales is the absolute bottom and the U.S. is getting close to that boundary.
These two sectors probably can only go up from here. When production and sales hit post-WWII lows and approach “$0″ of sales, there isn’t much farther to fall, which by definition puts them at a bottom. And, believe it or not, automobile sales are showing the signs of future strength. Used car sales were reasonably strong in January with some price-hardening taking place. When used cars go up in price, that is usually a pretty good predictor of new car sales rebounding.
- A few weeks from now fiscal stimulus will start kicking in.
Payroll tax cuts from the fiscal stimulus will begin in the next few weeks and will start to provide some added discretionary income to consumers. If the stimulus works as planned this should provide some additional cash for consumers, which will prop up demand. Also, construction spending from the stimulus bill will start to help the economy in the next few months.
- The newest version of TALF hasn’t started yet, but when it does, it will provide additional cash to prop up consumer demand.
TALF is a trillion-dollar program that should almost immediately help consumers get financing for purchases of automobiles, education and other consumer related items. TALF will also provide some relief for SBA lenders and small businesses. As TALF kicks in it should provide some additional underlying support for consumer demand and provide support to the economy.
Let’s hope that what the U.S. economy is looking at is the bottom and not its own reflection before being pulled down into a deeper abyss.
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This article has 87 comments:
Also, although this is not a sign of economic bottomming, it should help hasten it: the US scrapped 12.5m cars in December and built only 9m. This is a first in a long time and something that's needed to get people to buying autos again.
Given that the misnamed "Stimulus" package was little more than a plethora of garbage that had been rejected for the past 12 years, we can count on the pilfering politicians in congress to hit the taxpayer up for another "Stimulus" package before the end of the year.
Those who participated in the housing crises should be taken out of office, and out of leadership positions in the financial institutions that were involved.
I have EVERY confidence that the government will find a way to make a bad situation even worse - after all, "a crises is a terrible thing to waste"
Ukraine’s credit rating was cut two levels by Standard & Poor’s, a day after Latvia was downgraded to junk, because political turmoil.
Austria banks have lent $289 billion Eastern Europe, 70% of their GDP, also much of it in Swiss francs, borrowed from Swiss banks.
There are too many large banks in Europe that are too big to be saved.
If this trend continues pts 1 - 7 will not do much to bolster the U.S. economy.
The biggest problem to an early resolution to the crisis is continued meddling by the gov't to prop up failing banks and industries while creating unsustainable debts (that is assuming they can even borrow the money from somewhere) without any real plan or end game.
AIG is the perfect example of this failed policy and the rat holes just keep getting deeper and darker. Main Street can see these problems and will start hoarding and saving again until they are comfortable, which will take years. The country needs to become a net producer and not a net consumer again and that will take a ling time. Your example of cars means little when you look at the millions of new cars sitting in lots around the world as evidence that no new cars need to be built for years.
Unfortunately the stim bill is nothing but a giant welfare package that does little to promote long term growth. It may be necessary to temporarily provide relief to many, but will also fail to accomplish its intended goal.
They bottomed too. They just stayed there.
This particular lack of confidence is our main problem, with the fall being simply a natural consequence of it. We need to take measures that help make institutions and consumers feel safe to spend again.
We'll see soon enough, I suppose, whether or not this stimulus and these "stress tests" of the banks will do it. I'm somewhat doubtful, but here's for hoping we'll be pleasantly surprised.
www.telegraph.co.uk/fi...
I could not resist the urge to opine after reading HiSpeed's comments. What we need now more than ever, is another Mr. Smith in Washington. The nation and all members of elected office should be required to view Capra's celluloid classic and all of the shenanigans and arcane rules that endanger the future viability of America as a "going concern". Mssrs. Frank, Dodd and the rest of the rascals, should do the "honorable thing" and resign. Don't hold your breath. Mr.Smith will eventually make an appearance (cameo)and expose these "charlatans" and wash away the country club sandbox they call home. Americans and the rest of the world better pray that he arrives before the freight train.
"Let’s hope that what the U.S. economy is looking at is the bottom and not its own reflection before being pulled down into a deeper abyss."
Here are some numbers:
Federal Reserve Total Asset on 12/17/2008: 2312 billion
Federal Reserve Total Asset on 02/12/2009: 1845 billion
Federal Reserve Total Asset on 02/19/2000: 1917 billion
Bank reserves on 12/17/2008: 802 billion
Bank reserves on 02/12/2009: 600 billion
Bank reserves on 02/19/2008: 709 billion
All people, regardless of being born equal, do not have the same skills, nor do they have the same abilities to acquire the knowledge necessary in order for them to advance. That is why in any society, there are all types of positions, ranging from Doctors and Lawyers, to Garbage Collectors and Janitors.
As such, true capitalist economies such as those based on Adam Smith's lazzi-faire capitalism, can only grow to a point, after which time they will stall and eventually start to shrink. Allowed to continue shrinking, they will eventually collapse completely. Once the shrinking process begins however, it does take socialist actions to stop the shrinking, and eventually reverse the trend. There also has to be a re-distribution of wealth, no matter how bad the idea of that may sound to some (especially the rich). Once this wealth re-distribution takes place, the economy will very quickly get back on its feet, and begin to grow again.
Understand this: If there is no re-distribution of wealth, eventually the rich will end up with all the money and resources, and the less fortunate will end up with nothing or even less. And this is exactly what has happening in the USA and elsewhere today. And this is why government intervention is necessary and always will be necessary. Unfortunately this is where Adam Smith failed in his ideals. Smith failed to consider the human factors of intelligence, ambition, greed, sharing, cheating, corruption, theft and fraud...all factors proving why true lazzi-faire capitalism does not, and never will work in the real world.
Some say it should simply be survival of the fittest. No my friends, survival of the fittest does not apply, and cannot be allowed to apply to humans as it does to other animals. Hopefully mankind in general has advanced beyond that point.
But, I think it is worse now. We no longer have democratic capitalism. The methods of production are now concentrated in too few "hands" such that democratic capitalism has evolved to its natural conclusion: Fascism. This is evident by the $trillions in bail-outs of the ruling classes world-wide; and as global Fascists are now in control of our "democracies", the working class will, in the end, be made to pay for the $trillions in bail-outs.
"Destruction of Demand"
seekingalpha.com/artic...
littlurl.com/b8z3e
Sure, President Obama is the last hope of the American ruling class. The man selected to appease, at least minimally, the masses before the Greater Depression hits with its full force. But that is the problem... President Obama is a "Trojan horse" inserted into the consciousness of the working class to disperse, as must as possible, the mobilization of the masses which would result in the TRUE reform you alluded to in your writings.
"Recent Policy Decisions and a Greater Depression"
seekingalpha.com/artic...
littlurl.com/2it28
Some will say it is conspiratorial to portray President Obama as a "Trojan horse" of the ruling class. Perhaps, but is his administration not filled with members of the "old guard". Is his Treasury Secretary not the "point man" of the Federal Reserve? Did he not, without hesitation, vote for and support the Bush $700 billion bail-out of Wall Street "banksters"?
In the past, the capitalist ruling class would deal with the crisis of over-production by opening up new markets (European voyages of discovery starting in the 1500's followed by colonization) or starting huge destructive wars, for example WW1, then WW2, which had the effect of destroying the methods of production and allowed new investments to extract surplus value or profits.
However, the "triumph" of global capitalism has now come to past. And the threat of nuclear Armageddon makes another World War unlikely. Therefore, with Fascist Capitalism firmly in control of the "democracies", and thus preventing the reforms which you alluded to, and with the whole planet now capitalist, and with no option for a World War with which to destroy the methods of production and start anew, the Fascist Ruling Classes are trapped.
For more information see below:
"The Fed's War on the Middle Class"
mises.org/story/2983
"What's Behind the Financial Market Crisis?"
mises.org/story/3111
"Economic Fascism and the Bailout Economy"
mises.org/story/3333
"How to Avoid Another Depression"
mises.org/story/3103
"Destruction of Demand"
seekingalpha.com/artic...
littlurl.com/b8z3e
"Recent Policy Decisions and a Greater Depression"
seekingalpha.com/artic...
littlurl.com/2it28
For more information see below:
"The Fed's War on the Middle Class"
mises.org/story/2983
"What's Behind the Financial Market Crisis?"
mises.org/story/3111
"Economic Fascism and the Bailout Economy"
mises.org/story/3333
"How to Avoid Another Depression"
mises.org/story/3103
However, current initiatives for redistribution have nothing at all to do with the above, but instead are about bailing out the corrupt, the politically connected, the incompetent, and shrinking sectors of the economy.
"Unfortunately this is where Adam Smith failed in his ideals. Smith failed to consider the human factors of intelligence, ambition, greed, sharing, cheating, corruption, theft and fraud...all factors proving why true lazzi-faire capitalism does not, and never will work in the real world."
Somehow, 1,500,000,000 Chinese and 150,000, 000 Russians and 150,000,000 East European, etc., went through socialism and concluded that they like Adam Smith's lazzi-faire capitalism much more than socialism they had.
As for Charles Darwin's survival of the fittest, it is the Law of Nature; and no illiterate "intellectual" clown like you can do nothing about it.
DJ made a 7,106 on Monday which is almost exactly 50% from the Oct 2008 high of 14,210. Likewise, it made a small breakdown below th 7,198 bottom of Oct 2002 but is trying to recover above that level today with a closing price of 7,271. A small run above 7449 low of Nov 18, 2008 and DOW can trigger a short covering rally. A small run down to 7,003 is still on the table that will help push SnP500 down to Nov2008 double bottom support of 741 and the Compq to the usual 79% fibonacci retrace support level 1373.
Technically speaking, if DJ can break above 7853, probability goes high that it can rally above 8330 before the next question of what will happen next becomes 50-50 chances probability wise. A strong and fast rally that breaks above 8330 will tremendously increase the probability of DOW reaching 8752 with additional good size probability of further reaching into the 9435 to 9627 areas. A major snag is the weekly 20ema resistance for DJ which is now at 8586. This one scares me the most in the short term basis.
Weak and hesitant rally will only produce lower lows on the daily chart which can easily push Dow down 6,800 to 6,000 levels depending on what type of weak and hesitant rally can happen. I'll spare you the technicalities however. Let's just deal with the high probability scenario of a strong relief rally since things seems to be improving on the economic and political fronts.
If the economic " turnaround" depends on improved consumer sentiement , It's aint happening . Today , while in the toyota dealership service waiting room , I engaged in conversation with those also waiting . The " true sentiment "is " folks aren't buying anything , one women said " pay your house off , do not buy anything but food + essentials " Two others agreed. Screw them the boomers commented " they are trying to kill us off , we'll show them . Many reported growing gardens = canning . Some we're moving up to the north Ga mountains to ' live off the land ".Outside , I came upon a young women , very bright , we spoke at length . She is actually looking to leave the US + go to Aulstralia . It's so refreshing to speak to someone " who actually knows what's going on", she commented. This in a North metro Atlanta area . Folks are finished " buying stuff " , not coming back . Note Mr Sunshine reported "sales of used autos ".Bernankes statements on the tube today we merely an attempt to delude the TV watching masses " that all will be well soon, Please spend ".
Re-distribution via means of enhanced education and training programs, job creation through the re-building of the infrastructure, grants and incentives for research and development, enhanced health care programs, and so on are all valid ways of doing this. Very few will argue against such programs, at least once they see them put into action, and the results of them.
Bailouts however are completely wrong. Bailouts accomplish nothing except reward those who caused the problems in the first place, while putting a needless burden on all taxpayers. Companies which could not stand on their own should have been allowed to fail. And if they did fail, others would have quickly picked up the slack with no major impact on the economy, despite claims to the contrary. Sadly enough, those who claim otherwise usually have their own personal agendas for taking the positions they do. It really is that simple.
On Feb 25 10:39 PM PastTense wrote:
> Marcap, lots of us support federal help for those at the bottom of
> the economic ladder as well as substantial federal assistance for
> education/training for people to climb up the economic ladder.<br/>
>
> However, current initiatives for redistribution have nothing at all
> to do with the above, but instead are about bailing out the corrupt,
> the politically connected, the incompetent, and shrinking sectors
> of the economy.
Smith, not part of his theories.
As for evolution: there is little logical connection between what happens in the natural world, and ethical theories of right and wrong. The fact that chimps wage war on other tribes of chimps, or that some bears eat the cubs of sows to re impregnate the mother, or that some animals engage in homosexual sex has no bearing on what SHOULD be the case for humans. (Slavery makes sense under evolutionary ethics).
Finally, if socialism means redistribution of wealth then we have a socialized military, socialized education, and a socialized police force. Also, if socialism means the redistribution of wealth then some of the richest people on the planet are the largest socialists: Gates, Buffet, Soros for example advocate for paying taxes to pay for programs like education that help build our nation. THe uberr rich are the biggest socialists by the aforementioned definition.
A country that lived by evolutionary rules--this would be called anarchy.
> Somehow, 1,500,000,000 Chinese and 150,000,000 Russians and
> 150,000,000 East European, etc., went through socialism and concluded
> that they like Adam Smith's lazzi-faire capitalism much more than socialism
> they had.
While those Countries have indeed adopted various levels of Capitalism, as did the West, unfortunately the West is much further advanced along Capitalism's time line than are those other Countries. Those Countries you mentioned have not yet evolved to the point of realizing the problems that true Capitalism, if not controlled, will create. But make no mistake about it, if uncontrolled, the exact same sorts of problems, as are happening here, will eventually happen there.
> As for Charles Darwin's survival of the fittest, it is the Law of
> Nature; and no illiterate "intellectual" clown like you can do nothing
> about it.
It's interesting to see yet another reader, who rather than offer any form of valid argument against statements made, chooses to attack the person rather than the argument.
'A few weeks from now fiscal stimulus will start kicking in'
and
'The newest version of TALF hasn’t started yet, but when it does, it will provide additional cash to prop up consumer demand...'
Those aren't signs. They're hopeful wishes. The first stimulus in summer '08 didn't do bupkis. And the TALF stuff hasn't done anything at all either.
I own a business that does about $3mm/yr in sales, with lots of clients across the US and it just isn't as bad as the media says. We're actually hiring, due to demand. I believe that the American worker and economy are going to slowly pull the bankers back from the brink. It's good to see these kinds of articles. I'm fully expecting to see things quietly stabilize in the next 3-4 months. The biggest obstacle (to me) is the huge number of ARM mortgages that have yet to reset.
On Feb 25 09:19 PM Marcap wrote:
> "How does abandoning capitalism for socialism help the economy recover?"
>
>
> All people, regardless of being born equal, do not have the same
> skills, nor do they have the same abilities to acquire the knowledge
> necessary in order for them to advance. That is why in any society,
> there are all types of positions, ranging from Doctors and Lawyers,
> to Garbage Collectors and Janitors.
>
> As such, true capitalist economies such as those based on Adam Smith's
> lazzi-faire capitalism, can only grow to a point, after which time
> they will stall and eventually start to shrink. Allowed to continue
> shrinking, they will eventually collapse completely. Once the shrinking
> process begins however, it does take socialist actions to stop the
> shrinking, and eventually reverse the trend. There also has to be
> a re-distribution of wealth, no matter how bad the idea of that may
> sound to some (especially the rich). Once this wealth re-distribution
> takes place, the economy will very quickly get back on its feet,
> and begin to grow again.
>
> Understand this: If there is no re-distribution of wealth, eventually
> the rich will end up with all the money and resources, and the less
> fortunate will end up with nothing or even less. And this is exactly
> what has happening in the USA and elsewhere today. And this is why
> government intervention is necessary and always will be necessary.
> Unfortunately this is where Adam Smith failed in his ideals. Smith
> failed to consider the human factors of intelligence, ambition, greed,
> sharing, cheating, corruption, theft and fraud...all factors proving
> why true lazzi-faire capitalism does not, and never will work in
> the real world.
>
> Some say it should simply be survival of the fittest. No my friends,
> survival of the fittest does not apply, and cannot be allowed to
> apply to humans as it does to other animals. Hopefully mankind in
> general has advanced beyond that point.
whom do you think created and accelerated the housing bubble that precipitated all the turmoil that we see now? it wasn't the wealthy or the "elite". it was the average people who started and created a chain of debt on over-valued houses that eventually had to return to their normal values, and in the process (ironically) destroy the average man's wealth, since after all, for the average American "my house is my biggest asset".
Now to compare the current situation with the great depression is just unreasonable, since the causes of the great depression are completely different from today's ongoing recession.
in the great depression, the major issue that precipitated all the down turn was the burst of the stock market bubble. A complete stock market bubble when it eventually bursts is way more serious than a housing bubble, since in a market bubble assets are wiped out (bankruptcies) with no way of recovery of any of the losses (the NASDAQ is no where near its value in the peak of the dot com bubble, and every one should be thankful that that bubble was confined to a specific sector, or we could have been just getting out of the 2nd great depression). in a housing bubble, the assets are sill there but they got greatly devalued, and a recovery of the assets value can and will eventually happen.
now as the average householder was greedy and extracted money from his overvalued property beyond his capacity to repay that extracted money and he was really betting on the value of his property to continue to rise and eventually sell it and make a handsome profit after all his obligations have been settled, so did the banker who wanted to profit from the housing boom and continued to lend without discretion, so did the wall street banker or investor who traded in the derivatives that emerged based on this housing bubble.
now when the bubble bursts, the government has to make sure that ASSETS are not wiped out, not value, and since the banks hold most of the people's money, if they fail assets of the people will be wiped out, so the bailouts go to the banks not the average guy (who actually got himself in this mess and now is blaming everyone for not protecting him from himself in the 1st place)
> A couple of points: there is no country in the world with lazzi-faire
> capitalism. Neither did Adam Smith advocate for it, as the concept
> of lazzi-fare was after S
> Smith, not part of his theories.
While it is true that there is no country in the world with lazzi-faire capitalism, the concept of it did not come after Smith. In fact, it was actually first introduced by George Whatley in 1774, just 2 years before Smith wrote "An Inquiry into the Nature and Causes of the Wealth of Nations". In it, while Smith did not specifically use the term "lazzi-faire", but he did detail how he felt economic society should operate within a "free market" system, based very much on the concept of lazzi-faire capitalism. He placed the individual above that of society in general. He saw nothing wrong with the rich getting richer and the poor getting poorer. And he actually believed that the purpose of government was to defend the rich from the poor.
> As for evolution: there is little logical connection between what
> happens in the natural world, and ethical theories of right and wrong.
> The fact that chimps wage war on other tribes of chimps, or that
> some bears eat the cubs of sows to re impregnate the mother, or that
> some animals engage in homosexual sex has no bearing on what SHOULD
> be the case for humans. (Slavery makes sense under evolutionary ethics).
Slavery never makes sense under any circumstances, and there is certainly nothing ethical about it.
> Finally, if socialism means redistribution of wealth then we have
> a socialized military, socialized education, and a socialized police
> force. Also, if socialism means the redistribution of wealth then
> some of the richest people on the planet are the largest socialists:
> Gates, Buffet, Soros for example advocate for paying taxes to pay
> for programs like education that help build our nation. THe uberr
> rich are the biggest socialists by the aforementioned definition.
While some rich people may indeed pay a fair amount of taxes, perhaps we should consider the source of the revenue on which those taxes are payable. i.e. I think it would be very hard for most of us to have much sympathy for a bank executive who pay perhaps 30% in taxes on $20 Million in salaries and bonuses, while some of us are losing our homes to that same bank under foreclosure, or while others have credit card debts that they cannot handle because the same bank is raking in interest rates of 20% or more on those debts.
you seem to be so invested in this thread to eloquently state the case to why we're about to enter a new order of society, defending any rebuttal herein. why not be more truthful and simplistic?
DJIA could go to 6,000. DJIA could go to 9,000. Yada yada.
On Feb 25 10:50 PM aarc wrote:
> This is a critical stage for Dow Jones.
>
> DJ made a 7,106 on Monday which is almost exactly 50% from the Oct
> 2008 high of 14,210. Likewise, it made a small breakdown below th
> 7,198 bottom of Oct 2002 but is trying to recover above that level
> today with a closing price of 7,271. A small run above 7449 low of
> Nov 18, 2008 and DOW can trigger a short covering rally. A small
> run down to 7,003 is still on the table that will help push SnP500
> down to Nov2008 double bottom support of 741 and the Compq to the
> usual 79% fibonacci retrace support level 1373.
>
> Technically speaking, if DJ can break above 7853, probability goes
> high that it can rally above 8330 before the next question of what
> will happen next becomes 50-50 chances probability wise. A strong
> and fast rally that breaks above 8330 will tremendously increase
> the probability of DOW reaching 8752 with additional good size probability
> of further reaching into the 9435 to 9627 areas. A major snag is
> the weekly 20ema resistance for DJ which is now at 8586. This one
> scares me the most in the short term basis.
>
> Weak and hesitant rally will only produce lower lows on the daily
> chart which can easily push Dow down 6,800 to 6,000 levels depending
> on what type of weak and hesitant rally can happen. I'll spare you
> the technicalities however. Let's just deal with the high probability
> scenario of a strong relief rally since things seems to be improving
> on the economic and political fronts.
On Feb 25 04:46 PM J. Grandits wrote:
> Regional economic collapse Eastern Europe or the failure of EU is
> a definite possibility. Eastern Europe has borrowed an estimated
> 1.7 trillion, primarily from western Europe banks, the portion in
> Swiss francs is particularly susceptible due to currency weakness.
>
> Ukraine’s credit rating was cut two levels by Standard & Poor’s,
> a day after Latvia was downgraded to junk, because political turmoil.
>
> Austria banks have lent $289 billion Eastern Europe, 70% of their
> GDP, also much of it in Swiss francs, borrowed from Swiss banks.
>
> There are too many large banks in Europe that are too big to be saved.
>
>
> If this trend continues pts 1 - 7 will not do much to bolster the
> U.S. economy.
>
Fortunately today, there are mechanisms which can be put in place to help economically correct the mess that we are now in. And while some will not like the outcome, most will benefit greatly from it. But trust me, any radical actions taken today will be far more desirable for most than if this same situation had raised it ugly face perhaps 100 or so years ago...or perhaps in another place in the world...as may easily be determined by reading our history books. Riots and perhaps even a civil war would not have been outside the realms of possibility.
On Feb 26 12:36 AM crowdofcheerleaders wrote:
> so can you just be honest and tell us that the era of capitalism
> and individual freedom is now ending, while the era of outright,
> labeled collectivist economy and government is ready to be embraced.
>
> you seem to be so invested in this thread to eloquently state the
> case to why we're about to enter a new order of society, defending
> any rebuttal herein. why not be more truthful and simplistic?
The surest sign that markets/economy hasn't yet bottomed out- You see lots of articles around you saying that we have reached the bottom and its time to buy!!
These two sectors probably can only go up from here.
---
I'm still looking for the /sarcaism....
The auto industry can still go down. Like maybe bankruptcy?
Scarce resources will not be as efficiently allocated by politics. Ask who is going to pay for all the handouts. Remember, "the road to hell is paved with good intentions."
On Feb 26 01:12 AM Marcap wrote:
> The era of capitalism as we have come to know it is over, at least
> for now, simply because it did not work except for the relatively
> few who benefited from it. Many of the Country's rich got incredibly
> richer, but did so only at the expense of those less fortunate. Governments
> listened to corporations and lobbyists, rather than listen to the
> people. That I have confidence in will change.
>
> Fortunately today, there are mechanisms which can be put in place
> to help economically correct the mess that we are now in. And while
> some will not like the outcome, most will benefit greatly from it.
> But trust me, any radical actions taken today will be far more desirable
> for most than if this same situation had raised it ugly face perhaps
> 100 or so years ago...or perhaps in another place in the world...as
> may easily be determined by reading our history books. Riots and
> perhaps even a civil war would not have been outside the realms of
> possibility.
>
> On Feb 26 12:36 AM crowdofcheerleaders wrote:
You can't compare Japan to America.
Japan is just a few islands altogether smaller than Oregon.
Plus, Japan depends on imports of almost most industrial materials.
That's why recovery for them is so difficult.
> The claim that capitalism only benefits the few/rich is silly. An
> economy is not a zero-sum game. What about standard of living
> improvements enjoyed by many? For example, zillions of consumers shop
> at Wal-Mart. By choice.
And what about the fact that many cannot get a good education because they cannot afford to do so? Do you think that is an ideal society?
And what about the fact that under the current system, many corporate executives get millions of dollars per year in salaries and bonuses, while over 40 million Americans do not even have basic health care, and some do not even have jobs, while still others do not even have anything to eat? Do you think that is an ideal society?
And what about the fact that so many people die yearly simply because they cannot afford life-saving drugs, while the drug companies makes billions of dollars annually selling grossly-overpriced medications? Do you think that is an idea society?
And what about the fact that over 4200 American have died in Iraq, while another 30,000+ have been seriously injured, due to the lies and whims of a capitalist mad man and his followers? Do you think that is an ideal society?
Those who answer yes to any of the above, unfortunately are not part of the solution, but rather are part of the problem.
Look, secretly, in my heart of hearts, I would love for the world to be an ideal society. Honestly. It's a lovely sentiment. I'd love world peace and harmony and enough to go around and all of it. Unfortunately, it's one thing to have an idea, but quite another to implement it in the real world. And unfortunately, human nature is what it is. And so, I am grudgingly pragmatic. Human systems have to be designed around what people are, not what we wish them to be. It is unfortunate, but there are countless unintended consequences to simply throwing money at good-intentioned projects.
On Feb 26 03:48 AM Marcap wrote:
> On Feb 26 02:50 AM CuriousMonkey5 wrote:
But people are not working, Companies are not making money, and massive inflation is coming. Had there any recovery ever happened like these before?
We have more debt now than after the WWII. How did we paid the WWII debt? We paid with postwar inflation, 30% total during the postwar five years.
How very true!
On Feb 26 04:53 AM CuriousMonkey5 wrote:
> Nobody wants people to go uneducated, go hungry, lack healthcare,
> lack medication, lack jobs, or die or be injured in war. But as far
> as an "ideal society" goes, I guess I'll have to apologize for being
> realistic.
>
> Look, secretly, in my heart of hearts, I would love for the world
> to be an ideal society. Honestly. It's a lovely sentiment. I'd love
> world peace and harmony and enough to go around and all of it. Unfortunately,
> it's one thing to have an idea, but quite another to implement it
> in the real world. And unfortunately, human nature is what it is.
> And so, I am grudgingly pragmatic. Human systems have to be designed
> around what people are, not what we wish them to be. It is unfortunate,
> but there are countless unintended consequences to simply throwing
> money at good-intentioned projects.
>
Yes, the Dow may dip below 7000 and S&P below 700, but once the banks get themselves settled and stabilized the economy will start churning its way upward to another bubble in some other market segment.
> Nobody wants people to go uneducated, go hungry, lack healthcare,
> lack medication, lack jobs, or die or be injured in war. But as
> far as an "ideal society" goes, I guess I'll have to apologize for
> being realistic.
They may not want it to happen, but their actions (and lack of actions) do cause it to happen. The end result is the same.
> Look, secretly, in my heart of hearts, I would love for the world
> to be an ideal society. Honestly. It's a lovely sentiment. I'd
> love world peace and harmony and enough to go around and all of it.
If you actually believed that, you would not write what you write.
> Unfortunately, it's one thing to have an idea, but quite another
> to implement it in the real world. And unfortunately, human nature
> is what it is. And so, I am grudgingly pragmatic. Human systems
> have to be designed around what people are, not what we wish them
> to be. It is unfortunate, but there are countless unintended consequences
> to simply throwing money at good-intentioned projects.
No, our system is not ideal, and perhaps never will be ideal. But as few will deny, it is very very bad. Accepting that what we have, is simply the result of human nature, and nothing can be done about it, will accomplish nothing except ensure that it gets much worse. Change can only happen for the better when people take the steps necessary to help make it better. Change must start with you, and people like you, or else America unfortunately like so many empires which came before it, will evolve into extinction, and no number of "thumbs down" in the world will change that eventual fact.
We would like to direct our reader's attention to the following quote from Steven Wood, an analyst at Insight Economics. When asked to provide his assessment of the US housing market, Mr. Wood chose to grace us all with this insightful and prescient analysis:
"A sustained recovery in the housing market is unlikely until home prices stabilize"
The fact that a majority of middle school students would have been capable of producing the previous statement aside, we feel that this comment is indicative of the "experts" utter cluelessness within the current economic environment.
TheValueatRisk.blogspo...
The housing collapse is a long way from over, according to those who know. There are plenty of stats to back up that view if you are willing to do a bit of research. We are likely to have another year or two before the market stops declining and then another few years before it really starts to grow again.
Consumers are strapped, my friend. They are hunkering down and saving and paying off debt and hoping they don't lose their jobs. This is a not just a small business cycle contraction this is a generational unwinding that will take a decade or two for people to adjust to after spending like crazy for decades.
There has not yet been a real capitulation by the casual investor. They keep hanging in there and this will not end until they have completely had their confidence in the stock market shaken.
Stock market valuations have yet to adjust back to normal after decades of P/E's in the twenties and constantly rising earnings based on money that we are now finding out, never truly existed.
I could go on with all sorts of data but would you even listen?
We are far from a bottom, Sunshine.
America cannot stand for this. Thomas Jefferson must be rolling over in his grave!!
I've been trying to explain Obama's socialist platform to his avid fanatics for awhile. They are so busy looking at the shiny promises in his left hand, they don't notice that he's pick-pocketed their wallets with his right to pay for them.
Hind sight will be 20/20.
On Feb 25 04:30 PM HiSpeed wrote:
> How does abandoning capitalism for socialism help the economy recover?
>
>
> Given that the misnamed "Stimulus" package was little more than a
> plethora of garbage that had been rejected for the past 12 years,
> we can count on the pilfering politicians in congress to hit the
> taxpayer up for another "Stimulus" package before the end of the
> year.
>
> Those who participated in the housing crises should be taken out
> of office, and out of leadership positions in the financial institutions
> that were involved.
>
> I have EVERY confidence that the government will find a way to make
> a bad situation even worse - after all, "a crises is a terrible thing
> to waste"
Took you a while to get to your main point.
I refuse to shop there. (sorry you struck a nerve there, forgive the tangent)
However, I whole-heartedly agree with you. Yes, the road to hell is paved with good intentions. And my children, and their childrens children will pay for it, again and again.
On Feb 26 02:50 AM CuriousMonkey5 wrote:
> The claim that capitalism only benefits the few/rich is silly. An
> economy is not a zero-sum game. What about standard of living improvements
> enjoyed by many? For example, zillions of consumers shop at Wal-Mart.
> By choice.
>
> Scarce resources will not be as efficiently allocated by politics.
> Ask who is going to pay for all the handouts. Remember, "the road
> to hell is paved with good intentions."
Obama has to nurse a system bankrupted by conservative ecomomic policy and illegal war back on course. Its like getting a supertanker to turn at sea and he has just taken over at the wheel.
He has taken over Bush and Cheneys National Socialist policies and is trying to get back to some semblance of American free enterprise. One not entirely run by a kleptocracy of banksters
On Feb 25 04:30 PM HiSpeed wrote:
> How does abandoning capitalism for socialism help the economy recover?
>
>
> Given that the misnamed "Stimulus" package was little more than a
> plethora of garbage that had been rejected for the past 12 years,
> we can count on the pilfering politicians in congress to hit the
> taxpayer up for another "Stimulus" package before the end of the
> year.
>
> Those who participated in the housing crises should be taken out
> of office, and out of leadership positions in the financial institutions
> that were involved.
>
> I have EVERY confidence that the government will find a way to make
> a bad situation even worse - after all, "a crises is a terrible thing
> to waste"
Don't worry, I have no idea of how to recognize "the bottom." Thus, I am skeptical of people who do.
Statistically speaking, there will be an Elaine Garzarelli to call "the bottom," which may have large payout, so I understand the allure.
Note however that I say activity and not prices. Prices could still drop and probably will in housing and commercial RE
This is not investing in our future!
On Feb 26 12:53 PM freddyv wrote:
> The housing collapse is a long way from over, according to those
> who know. There are plenty of stats to back up that view if you are
> willing to do a bit of research. We are likely to have another year
> or two before the market stops declining and then another few years
> before it really starts to grow again.
>
> Consumers are strapped, my friend. They are hunkering down and saving
> and paying off debt and hoping they don't lose their jobs. This is
> a not just a small business cycle contraction this is a generational
> unwinding that will take a decade or two for people to adjust to
> after spending like crazy for decades.
SNIP
Agreed, particularly the para above. Ditto application applies here in AUS. People need to become fully and personally responsible for their own debts, - to live within ones means.
With well over 6 billion humans on this planet, our species has long since passed the Darwinian fitness test. Other tests may be more difficult.
i suspect the Dow (the worst measurement on planet earth) will land between 2500-3000 when this is all done. however, the Dow will be changed, so won't be a relevant comparison. maybe it should be a short indicator and will start goign up.
i also agree with the idea that we will never return to our excessive consumptive ways. and we will produce more for ourselves (instead of those wonderful China-cheap pieces of furntiure, a kid will take his friends into his room and say "my Dad made this".)
it is exceedingly difficult to foresee where all these changes will take us. all the stimulus is doing is buying the masses and their governemnt the time to figure out a few additional aspects of the new world we'll need to inhabit - and that's a necessary and appropriate thing, if only for that purpose.
How often does #4 not occur?
#5 can last a while...
#6 is one of the major problems, not a solution!
#7 is another major problem.
It was funny how quickly America has transformed itself to manipulate all markets with the full power of the government.
Want to know why the cost of a college education has increased at a faster rate than inflation for the last decade plus? It isn't the cover-story of needing extra funds to wire our universities to the Internet. It's because when you're spending other people's money (i.e. grants and loans for school), you don't price discriminate between a college that costs say $25k/yr versus one that costs $35k. If the consumer doesn't care about a competitive price, the colleges are free to jack up the price more than they should. And so, in the long-run, even though we threw money at the worthy cause of giving students money to get an education, the cost to so many others remains out of reach, since the colleges don't have to be price-competitive.
Want to know why so many people cannot afford health-care? Look again at how people tend to spend other people's money. If the insurance company is paying, neither doctor nor patient worry about whether someone really needs a battery of expensive tests and procedures, or what those cost, when they come in with the sniffles. And so the prices of so many products and services in health care are allowed to be insanely expensive.
The fact of it is, throwing more money at inefficient institutions or systems will not produce you result you say you want, any more than banging one's head against a wall would. Free-market competition is a proven way to drive innovation and lower prices. And if industries like education or health care were forced to be less wasteful, more people would be able to afford them.
On Feb 26 10:39 AM Marcap wrote:
> On Feb 26 04:53 AM CuriousMonkey5 wrote:
On Feb 25 06:00 PM Rob in Westchester wrote:
> I hope you are right. Another data point: My company does small business
> lending, and in reviewing our loan book the past couple of days we
> have been noticing revenues of our stressed borrowers bottoming out,
> and forward bookings of sales actually showing signs of life. Hopefully
> this is not a dead cat bounce, but consumer confidence and business
> confidence are funny things -- people are so desperate for some normality
> to come back that an expected wide, painful bottom of the "U" could
> surprise us and give us a "V" of a recovery (hopefully not a "W"),
> no matter how bad the structural problems of our financial system.
> Remember what Chauncey Gardner said in the movie Being There, "Yes!
> There will be growth in the spring! " (go to www.imdb.com/title/tt0.../
> quotes for the whole dialog -- very funny!).
On Feb 26 03:05 PM Green Eyes wrote:
> That is sort of a double edged blade there. Wal-Mart is such a jumbo
> chain that their prices are SO low... but at what expense? Many
> people shop there because they see that little price tag and are
> ignorant to the real cost. Wal-Mart keeps things cheap because they
> ARE cheap. Cheap wages, cheap insurance for employees. They are
> such a giant they can name their prices to vendors... I know this
> from experience -- they are also deal breakers. But I digress, the
> point is that nobody can really compete with them. So you can say
> that the masses shop there because they 'want' to. But I think a
> a more accurate statement is that they don't know better and don't
> know what that $8 beach towel REALLY costs.
>
> I refuse to shop there. (sorry you struck a nerve there, forgive
> the tangent)
>
> However, I whole-heartedly agree with you. Yes, the road to hell
> is paved with good intentions. And my children, and their childrens
> children will pay for it, again and again.
>
> On Feb 26 02:50 AM CuriousMonkey5 wrote:
On Feb 26 01:26 AM Shiva wrote:
> Increase in CPI may be a good thing for a while but it is bound to
> attain the shape of a monster thanks to the dollar printing &
> pumping, which is going on in the US. This is certainly not a signal
> that the economy has bottomed out.
> The surest sign that markets/economy hasn't yet bottomed out- You
> see lots of articles around you saying that we have reached the bottom
> and its time to buy!!
Looking for the bottom becomes an exercise in creative statistics. I have not trusted the numerical ruminations from the government in some time, especially from the Fed and estimates made about the holdings of Hedge funds and the criminal elements of our land (Mafia, Yakuza, etc.).
There are thousands of elements that make up our economy, and cherry picking the right ones can be a full-time job for trained economists and academicians. You are right in one respect, however. The markets must first stop falling before the bottom is seen. People must first gain confidence in the integrity of the system and the market makers.
Right now, there is no evidence that stability or a foundation of integrity exists.
Thank you for the clarification. Capitalism in itself DOES benefit everybody, I do concur -- just at varying degree as you implied.
On Feb 27 12:29 AM CuriousMonkey5 wrote:
> Green Eyes - Perhaps the Wal-Mart example was a minefield for other
> reasons which you bring up :-) The only point I was trying to make
> there was that people other than just the rich capitalists also benefit
> from the products of capitalism, i.e. things like standard of living
> improvements, low prices, selection of products which can make their
> lives better, etc. People love to demonize WalMart for a variety
> of reasons, but the notion that they add no value to the lives of
> the many consumers who choose to shop there is inaccurate.
On Feb 26 12:22 AM Wish I knew - Up or down? wrote:
> I'm glad to see an optimistic article. I agree with you that these
> are good signs, I'm anxious to see first quareter earnings releases.
P.S. the russian revolution early in the 20th century was financed by wall st. in order to "create" an enemy (good for business) situation. We have seen pictures of about a hundred brand new Monarch lathes (made in USA) that were melted in Nagasaki. Pray a lot bad times a'comin.
sorry if I scared anyone that is not my purpose.
This argument could be "made absurd" by comparison. Instead of investing in a fire department, we should instead let things burn and invest in training and educating people to not let future fires start in the first place.
While I am generally in favor of naked capitalism and against bailouts of commercial enterprises, there are some implicit assumptions in not bailing out a given institution:
(1) there is an acceptable degree of risk in allowing the institution to fail
(2) there is little or no value in the failed institution
(3) it is more efficient to start a new institution than repair the old one
(4) it is acceptable to allow the institution to fail and not be replaced
The current vogue for bailouts seems to extend amongst others to financial institutions and car manufacturers.
Denying at least some financial institutions bailout would fail test 1. We would all be in a lot more pain for a very long time if a number of large financial institutions fail. A lot of other enterprises could be wiped out by this through no direct failure of their own, destroying huge value. Maybe I am wrong, but some things aren't worth the risk of finding out and in my opinion this is one of them.
Auto manufacturing arguably fails the next tests. Based upon history elsewhere, if GM and Chrysler are allowed to fail they will likely not be replaced. The US auto manufacturing sector would simply shrink. This would lose a huge amount of skill, training, experience and expertise. Human capital would be redeployed to sectors that are somewhat related but still lose considerable value add. This would be a distressed sale that would destroy value, something that is worth trying to avoid. These companies are failing now because of the mess in the financial system, not because they add no value.
I think it is an acceptable use of capital to temporarily intervene with public money. This will likely save considerable quantities of value that can be subsequently returned to the private sector rather than destroyed.
However and as you point out it is important how this is done, with the earliest possible return to purely commercial operation being paramount.
On Feb 25 11:04 PM Marcap wrote:
> Yes, I agree completely. While I did state that re-distribution of
> wealth was necessary for the reasons stated, how it is done is a
> very important factor. Unfortunately that is the part which is most
> often misunderstood. And unfortunately the way the US is now doing
> this is very much wrong. It will likely solve very little in the
> long run.
>
> Re-distribution via means of enhanced education and training programs,
> job creation through the re-building of the infrastructure, grants
> and incentives for research and development, enhanced health care
> programs, and so on are all valid ways of doing this. Very few will
> argue against such programs, at least once they see them put into
> action, and the results of them.
>
> Bailouts however are completely wrong. Bailouts accomplish nothing
> except reward those who caused the problems in the first place, while
> putting a needless burden on all taxpayers. Companies which could
> not stand on their own should have been allowed to fail. And if they
> did fail, others would have quickly picked up the slack with no major
> impact on the economy, despite claims to the contrary. Sadly enough,
> those who claim otherwise usually have their own personal agendas
> for taking the positions they do. It really is that simple.
>
> On Feb 25 10:39 PM PastTense wrote:
I have no real idea what will work. But I believe if the government does nothing that the situation will worsen dramatically.
Stimulus is necessary. Cutting taxes alone will not work.
What's your plan?
G
On Feb 25 04:59 PM market ace wrote:
> I like an optimist, but you need a reality check. Of course things
> cannot keep going down at an acclerated rate, but there will be a
> giagantic adjustment period for consumers and financial institutions,
> before there is any economic turn around. Trillions in debt will
> still need to be written off, housing prices will need to decline
> further and unemployment will continue to haunt the country for a
> long time.
>
> The biggest problem to an early resolution to the crisis is continued
> meddling by the gov't to prop up failing banks and industries while
> creating unsustainable debts (that is assuming they can even borrow
> the money from somewhere) without any real plan or end game.
>
> AIG is the perfect example of this failed policy and the rat holes
> just keep getting deeper and darker. Main Street can see these problems
> and will start hoarding and saving again until they are comfortable,
> which will take years. The country needs to become a net producer
> and not a net consumer again and that will take a ling time. Your
> example of cars means little when you look at the millions of new
> cars sitting in lots around the world as evidence that no new cars
> need to be built for years.
>
> Unfortunately the stim bill is nothing but a giant welfare package
> that does little to promote long term growth. It may be necessary
> to temporarily provide relief to many, but will also fail to accomplish
> its intended goal.
If= Our Gov. would just give All of that money to people that WOULD SPEND IT[starting at the bottom=Street People] Instead of At The Top [Multimillionaires, who might buy a new Lear Jet] The street people Would just Spent it---spend it 3 times=Gov. has it Back!! Yet, THAT Would create Many New Jobs......I'm really looking forward to "my" 65 dollar increase in pay....NOT Really. This Stimulus May help...in 2010-2012.....2020?
On Feb 25 10:53 PM Lin wrote:
> Re
>
> If the economic " turnaround" depends on improved consumer sentiement
> , It's aint happening . Today , while in the toyota dealership service
> waiting room , I engaged in conversation with those also waiting
> . The " true sentiment "is " folks aren't buying anything , one women
> said " pay your house off , do not buy anything but food + essentials
> " Two others agreed. Screw them the boomers commented " they are
> trying to kill us off , we'll show them . Many reported growing gardens
> = canning . Some we're moving up to the north Ga mountains to ' live
> off the land ".Outside , I came upon a young women , very bright
> , we spoke at length . She is actually looking to leave the US +
> go to Aulstralia . It's so refreshing to speak to someone " who actually
> knows what's going on", she commented. This in a North metro Atlanta
> area . Folks are finished " buying stuff " , not coming back . Note
> Mr Sunshine reported "sales of used autos ".Bernankes statements
> on the tube today we merely an attempt to delude the TV watching
> masses " that all will be well soon, Please spend ".
Be careful about how you describe the Wealthy. The attitudes and opinions of Warren Buffett and Bill Gates should have no influence on our tax policy. I love the example they set with their (and many other Americans) philanthropic efforts, but their level of wealth (and many levels below) should not be used to create tax policy on families making over $250k.
One thing people forget about the wealthy (small business owners and savers included); they have options and don't have to work (or can work less). As such, a higher tax rate discourages work and investing by them. So they take time off until policy makers realize that a small percentage of the population will always be the engine for job growth (except the flip the switch government job engine, paid for by tax revenue of the wealthy, but wait...they are not producing as much...oops).
We will be much closer to an economic when we have evidence of the following:
***Real estate prices have stopped declining
***Unemployment has stopped rising
All the other numbers at this point, are secondary, IMO.
Unfortunately, because our economy is based predominantly on consumer consumption (approximately 70%), if Americans do start taking their personal financial future seriously by saving more, a recovery from the bottom will require a lot of patience (I don't expect this to happen, partially because there is little incentive to do so).
Fortunately, there will be ample investment opportunities for the counter recovery policy the current administration has proposed, and you don't even have to short a stock!
The problem is debt and home foreclosures and you talk about....excess bank reserves (freshly printed bailout money), stimulus plan (unprecendented deficit spending), and TALF (more debt).
Then you move to $0 car and home demand and how we can not go below 0 and somehow that is a positive.
Then we have an increase in PPI and CPI. A commodity spike will drive PPI up and eventually CPI; or worse yet all that fire sale excess inventory has finally burned off.
And all this from someone who works for a company called .........Capital.
Can you blame if I do not see any real positives here?
I just do not see things are bottoming with the so called "7 signs". Maybe it's more appropriate with "7 sighs".
One important thing you forget to look at is the unemployment data! With people losing jobs at the fastest pace every day, I just do not see that coming to an end any time soon!
If you think people will begin purchasing automobiles with the new TALF, I would suggest you to open an Auto Dealership of your own or better yet, load up the stocks of 3 big auto makers!
On Feb 25 09:19 PM Marcap wrote:
> "How does abandoning capitalism for socialism help the economy recover?"
>
>
> All people, regardless of being born equal, do not have the same
> skills, nor do they have the same abilities to acquire the knowledge
> necessary in order for them to advance. That is why in any society,
> there are all types of positions, ranging from Doctors and Lawyers,
> to Garbage Collectors and Janitors.
>
> As such, true capitalist economies such as those based on Adam Smith's
> lazzi-faire capitalism, can only grow to a point, after which time
> they will stall and eventually start to shrink. Allowed to continue
> shrinking, they will eventually collapse completely. Once the shrinking
> process begins however, it does take socialist actions to stop the
> shrinking, and eventually reverse the trend. There also has to be
> a re-distribution of wealth, no matter how bad the idea of that may
> sound to some (especially the rich). Once this wealth re-distribution
> takes place, the economy will very quickly get back on its feet,
> and begin to grow again.
>
> Understand this: If there is no re-distribution of wealth, eventually
> the rich will end up with all the money and resources, and the less
> fortunate will end up with nothing or even less. And this is exactly
> what has happening in the USA and elsewhere today. And this is why
> government intervention is necessary and always will be necessary.
> Unfortunately this is where Adam Smith failed in his ideals. Smith
> failed to consider the human factors of intelligence, ambition, greed,
> sharing, cheating, corruption, theft and fraud...all factors proving
> why true lazzi-faire capitalism does not, and never will work in
> the real world.
>
> Some say it should simply be survival of the fittest. No my friends,
> survival of the fittest does not apply, and cannot be allowed to
> apply to humans as it does to other animals. Hopefully mankind in
> general has advanced beyond that point.
Fix it, confidence will return, the market will return.
I guess I should say,
Confidence, confidence, confidence!!!!!