neutrino23

Another Crisis Looms Right Around the Corner

I don't understand why you mention expanding healthcare as a negative. The largest cause of bankruptcy in this country is due to health problems. Sensible healthcare will help the economy in numerous ways.

Why the Dow Is Headed to 6000

The arguments given are pretty weak. These are black and white descriptions of a nuanced reality. I don't know the future but I can argue with these points.

1. Not only the government is spending money. AAPL, RIMM and others are spending heavily on R&D. Other industries are also doing well. This is why we measure things, to get a handle on complex situations.

2. Unemployment is rising. Yes, and it is expected to keep rising for a while as it is a lagging indicator. This is not unexpected.

3. Wages are depressed. Really? Wall street is still handing out bonuses. Other companies have given raises. How about some measurement of the net effect of raises and trimmed salaries?

4. Boomer retirement. It would be nice to have a study done on this. What will be the effect of boomers postponing retirement? Is it a good thing that they keep working? Would it be better to have them retire and then start spending some of their nest eggs and contributing to consumer consumption?

5. Catch 22. Complex issue. No comment.

6. Government Tapped Out. I'll plead ignorance but it seems we still have a number of options open to us.

7. US can't export itself out of this problem.
I'll agree with that given we've been running a trade deficit for quite some time.

The Economy Can't Be That Bad if Thousands Can Pay $100 for a Ballgame

It is very difficult to gauge the success of a business by the feel of the crowd. I'll agree, the upscale restaurants I've been to lately have been quite crowded. On the other hand, if business is down 10% that means just one empty table or one empty seat at the bar, or people are ordering the less expensive dishes or wines.

Also, spending $100 on something is not that important. In fact, $100 purchases might increase in a down period. If I decide not to purchase a car or home this year I can then spend several thousand on small purchases and still come out tens of thousands to the good. This is why we measure things and keep statistics. Anyway, I was born in 1951 and as a kid I recall that ten cents bought a good candy bar which now goes for about a dollar so while $100 is an emotional benchmark it's not what it used to be.

Finally, I have to disagree with Mark about unemployment. The official rate may be near 10% but alternate sources put it closer to 20%.
www.shadowstats.com/al...

The official rate is a narrowly defined statistic. It only counts people actively looking for work and excludes many others. It is not true that if the unemployment rate is X% then (100-X)% are employed.

The Case for Depression, Part 1: Unemployment

MudEngineer: Yes, cuts in hourly pay do not show up in the unemployment stats, but neither do they show up when hourw worked increases and people work more overtime.

I forget the name but another statistic keeps track of hours worked and average weekly pay.

PIMCO's Bill Gross Sees a Bleak Future

So what is wrong with focusing on middle class wager earners? Seems like it would be good for business if buying power increases.

Similarly with regulation, I'm happy to see more regulation to the extent that it leads to transparency and honesty. Excessive deregulation is part of the reason we're in this mess. I'd like to know that if something is rated AAA that really means something. I'd like to know that if a company publishes earnings statements that those are close to realistic.

10 Things That Will Make Obama's Economic Plan Successful

I think people are suggesting lower taxes and smaller government without thinking it through. Small government might have made sense in the horse and buggy age when most people lived on the farms. Most of the common areas were left to fend for themselves. That world is gone. The population is enormous, demands on the environment are large, we need a large institution to manage the large areas of common interest to us. Government after all is us, not some alien entity.

As to taxes, lowering taxes only provides a short term bubble followed by a crash, it doesn't lead to long term stability and growth. High marginal (emphasis on marginal) rates promote the growth of business.

When rates are low people are eager to take the cash out of the business, they go for the quick return. When rates are high money is kept in the business and people are more protective of the business because they view it as a long term source of income, not a quick score.

If tax cuts were so good our economy should be pumping on all cylinders given the enormous tax cuts of the Bush administration. Businesses taxes now only account for about 7% of federal income, that used to be 35%. If tax cuts are so great why didn't these huge tax cuts help?

There was an article I read last month ranking states on taxes. It called California unfriendly to business because of high taxes and ranked it second from the bottom. It ranked South Dakota at the top due to low taxes. What a joke. No knock on SD but if these guys were right then entrepreneurs should all be moving to Sioux Falls and abandoning Silicon Valley. It must be an absolute puzzle to these guys that nearly half of VC money is spent in business unfriendly California.

It shouldn't be a surprise. Taxes pay for infrastructure. You can't have world class research universities, national laboratories, NASA labs, libraries, museums and open space without spending money and that money comes from taxes. Money invested in a community creates the environment where business can thrive.

My suggestion to President Obama would be to roll back the Bush tax cuts, close loop holes, reinstate Glass Steagal, improve regulations, put the unemployed to work as much as possible. It doesn't do that much to just give people money. They need jobs.

Interest Rates Cannot Go Lower Than Zero

Just a theoretical point but why can't rates go lower than zero? Instead of a contract to repay principal plus alpha after some period of time you write a contract to repay principal minus alpha after some period of time. Basically you pay people to borrow money.

Why America Won't Become Like Japan

I lived in Japan nine years. I would not call the big 3 zombie companies. At least not yet. My simplistic view is that they are primarily a victim of the current credit crisis and the overall lack of consumer confidence. It is not that sales of other companies are great and only the big three are suffering. All auto companies, foreign and domestic, have seen a huge downturn in sales. Fixing the credit crisis will go a long way to protecting the car industry. They may need a line of credit to tide them over till then.

Markets Will Hit More Lows Before They Bottom

endoftheworld:
"as soon as the real estate market bottoms out"

seekingalpha.com/artic...

Looks like by far the worst to come is in 2010 and 2011. ugh!

5 Reasons Stocks Will Keep Falling

The point about corporate taxes is way off base. On paper the rate is as high as 39% ( for incomes around a few hundred thousand dollars, it drops to 35% for larger incomes). Most companies take advantage of various deductions to greatly reduce that rate. US corporate tax is 2.2% of GDP. The average for the most rich countries is 3.2%. Clearly US corporations are not over taxed compared to other industrialized nations.

Moreover, corporations receive benefits from paying taxes. Highways deliver goods, an educated population provides customers and employees, public health standards make for a healthy population which promotes higher profits, and on and on.

www.smartmoney.com/inv...