hoover

The Economic Recovery That Isn't

Peter, excellent article. But, there aren't enough influencial people that are listening and those that do listen don't like reality. Your main point that job creation and real recovery go hand in hand, is simply falling on deaf ears. In time, however, what you have said will become painfully obvious.

Doug Kass Bearish on Equities

I have owned and operated a small business in a major city for 25 years. I would only say that looking UP through the economy from main street, like I view it, is far different from looking DOWN through the economy from Wall Street. I don't believe more money for banking conglomerates, more large corporate mergers, more glowing stock market BS, more loans for business large and small, more leverage, more exotic financial instruments, or magic Wall Street tricks are going to fix anything. I would suggest the financial gurus start looking at the economy from the botom up, instead of the top down, and be prepared for a major shock.

The Seduction of America

I agree. I also believe the monopoly problem goes deeper than just the banking industry. Free markets and relatively fair markets require rules of the game to be established and enforced. If you establish real competition in a capitalst game with free and fair markets, smart regulation instead of corrupt lobbyist induced regulation, and constant monitoring to stop monopolistic practices (both old methods and new high tech methods), I believe most economic problems would eventually disappear. Just an opinion.

On Apr 19 10:15 AM derryl wrote:

> John,
> Great article. A few weeks ago a former chief economist of the IMF
> published an article warning of the excessive influence of bankers/Wall
> St on US government policy. His conclusion was that these extremely
> rich people were manipulating the political system to get even richer,
> at the expense of the interests of the nation as a whole.
>
> I see a couple of comments claiming you are guilty of envy of 'successful'
> people. If some group (bankers) enjoys such power that they can hijack
> government policy to enrich themselves without producing anything
> of value for the economy, it is not 'envy' to denounce this. If socialists
> hijack the US agenda and implement fiscally unaffordable universal
> health care, would you be guilty of 'envy' for denouncing these unearned
> benefits which some are given at the expense of others?
>
> In 1848 Karl Marx noted that 'capitalism tends inevitably toward
> monopoly'. In the tradition of Adam Smith I think what we want is
> not 'capitalism' per se but free enterprise. Enterprise cannot be
> free and competitive in a monopoly environment If some relatively
> small group gains control of the monetary apparatus and concentrates
> economic power in a few hands, this is not free enterprise but oligarchy
> and tyranny.
>
> Since the beginning the Founding Fathers have warned against this
> development, against the 'European banking powers' (Benjamin Franklin's
> term) who seek to control the issue of nations' money and thereby
> own and control the nation. A democratic republic has the right and
> duty to limit the concentration of the nation's wealth in too few
> hands, because overconcentration chokes out real economic development
> and a free market distribution of incomes.
>
> Mammon, the god of capital, is not the god of free enterprise. We
> do not need to honor this false god by surrendering our economy to
> the clutches of Money.

Barron's Plan to Save the Economy - For Just $200B?

This is just more silliness spewed out through Barron's by banking interests. If government is footing the bill, they could simply pay off 25% of each subprime mortgage directly without the middleman bankers adding nothing to the process except costs. And besides, if banks have ANY discretion in the use of the money, they will give most of it to their top executives in bonuses as a reward for wrecking the economy. Big broke banks need to be either nationalized, eliminated because they are useless relics, or split up into 20 or 30 competing banks each with COMPETENT managements.

One Scary Unemployment Chart

The unemployment rate in 1981 was figured differently that today. Today's rate uses a formula that lowers the rate (surprise, surprise) beginning with Reagan and "enhanced" by Clinton. I would suggest adding a couple of percentage points to the current rate to make it comparable.


On Feb 09 07:02 PM lucky lenny wrote:

> • are the Democrats playing politics with the unemployment rate.
>
>
> • The historical unemployment rate used to be much higher than it
> is now. In fact, in the early 1980's, the unemployment rate almost
> hit 11%. I think it's very odd to now being loading up on trillion
> dollar debts to address a so-called massive unemployment rate of
> only 7.6%.

Can We Go Back to the Old Wall Street?

I have a lot of ideas about fixing our current economic disaster and I would agree that your ideas are correct. You must have private sector decisions that run the economy and minimal but necessary government regulations. But right now, colossal debt everywhere, ludicrous leverage, CDS insurance written by bums with no money, and worldwide fiat money, disfunctional banks, PLUS the fact that all of this KNOWN by mainstreet small business people like me, seems like a disaster that should pick up speed -- No matter what is done by government. I would advocate regulations that set fair rules for the "monopoly" game we are all playing. But, government is too corrupted for that to ever happen. Lobbyists (tens of thousands of them) are a government in and of themselves. I believe we are in an unfortunate downward spiral that feeds on itself. All lobbying money should be outlawed. Lobbying information should be allowed because that is often the main source of government information. But, nothing that makes any sense will be done by government. So, I believe it has to get so bad people are in a mood for revolution before anything useful will happen.

Different Administration, Same Market

i would say that I might have agreed with that 15 years ago, before I realized through intense analysis that the right wing has been trying to diminsih the wealth and power of the middle class, and create an aristocratic society with increasing riches and power at the top. Economic theory that the right likes, is all about pouring money into the top, combined with so-called free markets (ie. no rules of the game) and somehow this is supposed to cause a "rising tide that will lift all boats." What I believe it actually creates is a rising tide of bigger and bigger stagnant companies, that go further and further into debt, and control more and more markets. I believe that in the thirties Depression, this same philosophy was called "pump priming" by the same people. (You know, pour a little water in the top of the old cast iron pump and it begins sucking water out of the ground -- suddenly we all have lots of water!!) Farmers and others were supposed to connect with the pump analogy I suppose, and believe that "prosperity was just around the corner." After the right wing's Hoover defeat, Roosevelt started pumping money in at the bottom and middle. But, that didn't really work well either. And Obama's financial wizzards unfortunately may not be able to do much. Someone out there may eventually realize there are bad, bad consequences from living far above one's means, conducting casino banking practices, and diminshing the manufacturing base. It may take many years to crawl out of this mess.

Jan 20 04:25 PM callawayfoundingfamily wrote:

> Why won't anyone point out/admit that the economy and thus the market
> went South as soon as it appeared we would have a liberal Congress
> and President. They have no clues, nor intentions of seeing capitalism
> succeed in America and we stockholders/investors know that. Quit
> being PC and express true market realization and conditions as they
> are.

How High Will Unemployment Go?

I was born in the middle of the depression. Some people in the town I'm from NEVER had a job, and got by only by doing a few side jobs. They had families to support. Farmers were wiped out; their crops were worth little IF they could even sell what they produced, and the proceeds wouldn't pay for the cost of the previous year's crops. The current recession seems more ominous than ANY of the cyclical recessions we have had since the thirties. The asset price drops, enormous U.S. debt, and the government that doesn't have a clue what to do, are all parallels with the thirties. A change in administrations in 1932 (Hoover out, Roosevelt in) didn't really change much except Roosevelt created more optimism which helped a little. WWII began to change everything because the government in effect nationalized most industry to produce war goods, men were taken out of the unemployment lines to serve in the army, and good paying civilian jobs became available. One difference between today and the thirties is that government already sends out trainloads of money each month for social security, medicare, unemployment, defense contracts and payments to other entities too numerous to mention. That may help this time around.

Paychex Warns About Small Businesses

I own a small business with about a dozen employees, down from about twice that many a few years ago. Sales are a little slow, but the big change in the past six months is too many customers (some big ones) aren't paying the bills they owe us. Government is pouring enormous amounts of money into the largest banks which produce nothing these days except credit scams and horded money. So, that money is essentially wasted. Congress made the auto exec's crawl like worms in order to give them a relative pittance compared to banks. Yet, the auto companies at least produce something worthwhile. Meanwhile the productive part of the economy (medium sized and small businesses) fall under the policy of TOO SMALL NOT TO FAIL.

On Jan 06 06:05 PM curbs-in wrote:

> Judy,
>
> Excellent...
>
> Small business has been overlooked in this whole crisis. Small business
> is (or was) responsible for most of our country's job growth for
> several years.
>
> The Fed should do something SMART (if they can do anything that would
> be considered smart) and pump a lot of those TARP $$$ through the
> SBA -- PLUS give small business a BIG tax break. I think it would
> be wise to give the self-employed a tax break too -- it would encourage
> those who are out of work to engage in entrepreneurial activities.
>

Will 2009 Bring Ring Three of the Financial Circus?

Excellent article. The overall debt problem (businesses, people and government) spending years and years of earnings, wages, and tax collections ahead of time, finally reached a point where it can't be sustained. Now add in EXPECTATIONS by the same people of major stock and housing capital gains for years into the future, plus casino gambling on the whole leveraged mess by banks and the worlds rich, and you have a real problem. The government's answer -- increase the debt. I wish Obama well -- he is smart and has selected supposedly some of the best talented people to work on this disaster. But, the best captain and crew in the world could not have saved the Titanic AFTER it hit the iceberg.

S&P Set for 50%+ Gains? Not So Fast, UBS

True. All you have to do is look at the several major bear market rallies from 1929 through 1932. These were big rallies on the Dow lasting months. Prosperity was "right around the corner" acording to the politicians of the era, but they never found the right corner. When the first cycle was over the Dow had lost a "mere" 89%. Then the market rose for a few years, before collapsing again slowly in the late thirties. Finally WW-II began, millions of young were pulled from the work force to fight the war (reducing unemployment), government took over production to produce war equipment, the equipment was destroyed in the war reducing supply, consumers products were rationed further reducing supply, and pay was pumped into workers pockets that couldn't spend the money because goods were unavailable, Result after the war: people had money to spend for the first time in 15 years, high demand existed from a goods-starved population, and companies were converting back to consumer goods to increase supply. Demand was high, U.S. was victorious, and people had money to spend -- the thirties depression in 1946 was finally over. Today, like 1930, we have too many goods (supply) and too little money to buy the goods. Obama and his financial team are going to have many sleepless nights.


On Dec 06 04:12 PM the_feds_corrupt wrote:

> The banks right now are "flush" with cash from the fed.The banks
> are begining to buy each others stocks .Look for the financials to
> lead the way in the next bear rally.They will attempt to "jump start
> the markets" and then sell their positions before the average investor
> is just getting fully invested.In that way the banks will reap handsome
> profits.
> They will also do the same thing with the chinese market.
> All depressions and recessions have large bear market rallies -we
> will have one as well.
> Watch for the following to determine when a rally begins
> 1) investor sentiment seems hopeless
> 2)the market shakes off "bad news" or becomes immune to bad news.
>
> 3)the Russell 2000 leads the way up.
> 4)The financial sectors garner strength.
> Once these forces become apparent we will have a rally. It will not
> sustain itself -but we will have it !
> It could take us from 11k to 13k somewhere in that range.
> It happens in ALL bear markets it will happen here as well.
> g/l to all cheers...;}

Five Ways the Global Economy Is Rebounding

Your optimism is refreshing, but there are always occasional bursts of positive sentiment on the way down as a major bear maket unwinds. There is an incredible amount of leverage out there it isn't just going to go away. Company earnings are just beginning to fall, and unemployment is just beginning to rise in earnest. Farmers are going to get a lot less for their crops this year than they anticipated. And home prices are still dropping. I could mention twenty more things that are negative. But, I hope you are right.

Obama vs. McCain: Who's Better for Dividend Investors?

I don't believe anyone needs to panic if Obama wins. One post said Obama is a Marxist, meaning, I assume, a wholesale redistribution of wealth. I believe today's distribution of wealth is such that 50% of wealth is owned by 10% of the population. That 50% of wealth at the top 10% would probably drop to 47 or 48% under Obama, or rise to 51% or 52% under McCain in 4 years. Under a Marxist it would probably drop to 25% to 20% of wealth at the top 10%. Billionaires would still exist at the top under eithr McCain or Obama, but would be reduced in numbers and reduced to multi-millionaires under a Marxist. The current ruling elite under either Obama or McCain would be a partial rearrangement of some of the deck chairs. Under a Marxist the ruling elite would be smaller but much more powerful, the deck chairs would be different, and the ruling classes would have less aggregate money. Just some thoughts -- don't think its panic time.