sabbadoo32

Non-Farm Payrolls: Enough for a Fed Rate Cut?

Dropping rates within the next 75 days won't do a thing. As we all know credit is too tight. Banks don't trust each other, much less the average person on the street. In Chicago, banks are requiring 12-15% down on people with 700 credit scores for car loans. AND that's only if they're not purchasing an SUV.

So lower rates may be a good thing. But it's a wasted effort until someone wants to loan money again.

Which Improves First - The Stock Market or the Economy?

We can "drill here, drill now". There's plenty of leased land available to oil companies to do that. However, there are constraints on man and equipment to do that. Doing some Googling will lead you to oil drilling industry information that tells you boats, derricks exploratory equipment, etc are currently leased through 2010 on existing projects. It's not a democrat trick, it's the fact that the industry is always looking for new oil somewhere.

Personally I believe market bottom will largely coincide with a significant decrease in unsold housing inventories and a stabilization in commercial real estate. Household savings need to rebound, household credit balances need to decrease. Home values need to begin to rise again. When the middle class feels comfortable about spending money again, we'll get our recovery--which should coincide with a stock market rally. These are the things that will lead to a sustained recovery.

Obama Is Bad for the Economy - Barron's

Eli,

You're rehashing the same arguments for the 2001 and 2003 tax cuts.

We gave the top 1% a lot of money in 2001 and even more in 2003. Either they didn't spend it, OR they're not enough of them to run this economy in the way the political economists (that's a scary two words) assured us they would. They didn't even come close.

It's very clear that for the past 5 years our economy was driven by MIDDLE-CLASS consumer spending based on increased debt-whether it be credit card, HELOC or whatever.

It's clear that this has been the weakest recovery. Weakest job growth. Weakest period of consumer sentiment while in the midst of a "boom." Negative household savings. And the list goes on.

But it's been very strong in divisive political bombast, which is good for those that sell hot air.

Were the top 1% theory true, then we should have given the stimulus to the them instead of the middle class, right? We gave the money to the middle class because we knew they'd spend it, and quickly at that. Were household debt not so high I'd imagine they'd have spent more of the stimulus.

We do need to keep taxes low, and fair.

But the past 8 years have allowed us to see how supply-side economics really works. It has been proven that it's a tactic for temporary revival of the economy and a very effective political tool. It is not a rational grand strategy for managing the republic.