Konrad

Is This Rally the Real Thing?

China can cry all it wants at the issues in the post-industrial powers' markets.

Considering that the vast majority of its industrial production which has recently been buoyed by subsidies depends on external demand and most of it work force is operating on substance based labor...it hasn't got much place to cry.

Yes they hold our debt. However god forbid the post industrial powers unite economically against the developing world.

China is walking a thin line right now and I'm sure their educated know it.

In economical crisis situations it comes down to the military and logistics which the U.S., Japan, and G.B. have in droves.

China is hungry yes, however their best means of levying up the economy lay not in veiled threats of cashing in, but in stealing our intellectuals...(Which the U.S.A. has not got enough of)

GM Finally Dies - Does the U.S. Have Similar Symptoms?

#2. Very well said.

A summer before I went to college I had worked for UPS, that was the precise mentality. "Hey youngin' our standard here is 1,000 boxes an hour...slow down with your 1,600"

Why Consumer Confidence Is Not a True Indicator

In the short run I would probably go with getting a newer (not new) car unless you have a new transmission and fresh engine work on the old car. Though I'd probably buy a Hyundai instead; same basic idea and far better customer support.

Rule of thumb is to avoid buying a new car unless you truly need it due to your profession.


On May 28 07:09 PM Carey Rowland wrote:

> So... for the faithful, somewhat wary, garden-variety solid middle
> consumer with a reasonably secure job...what would be the recommended

Unemployment: The Number to Watch

Beyond that lets not forget that in each given year there will be more jobs created for the younger workers as the older ones retire (at least those who can still afford it) or are laid off in favor of less expensive fresh labor which for the most part can still accomplish 85% of the experienced employees' efficiency. That in itself will have an impact on the over-all unemployment in all sectors.

Unemployment: The Number to Watch

Unemployment is reflective of the individuals who have just recently lost their job and still have the ability to claim benefits. If the number rises above seasonal variances from past years and past recessions then we have a problem. While new claims rise in comparison to prior month's or week's claims there will be no recovery, period. When the numbers slow and stop it will be your first indicator of the market beginning to rectify itself.

What I would like for you to answer is how do companies who have substitutes in this economy, or who have outsourced large numbers of their positions abroad begin posting higher cash sales while the consumer base has LESS money to buy their goods and services with. In response to which the same companies had to lower their pricing.

Part of it is going to come from WMT no doubt as they offer valid substitutes at lower prices, so perhaps WMT will hire more people. I can't wait to see the spending patterns of their employees - most of whom make minimum wage. Makes me want to invest in "Cup O Noodle" companies and WMT itself.

Obviously you will see a GDP uptick when the unemployment starts falling again. However I doubt there will be one prior to that number's increase stopping.

On May 29 09:52 AM thiazole wrote:

> This is just wrong. Look at a chart of the unemployment rate vs
> GDP. The GDP ALWAYS turns before unemployment - ALWAYS. These aren't
> unprecedented unemployment levels, either. It was just as bad in
> 74-75, yet the GDP still turned before the unemployment levels came
> down. It just isn't logical to expect companies to start hiring
> again if no one is buying their goods.
>
> Now if you simply stated that initial claims needs to come down from
> its high on a 4 week moving average before the recession can end,
> then that is correct. Initial claims has always been a very good
> leading indicator in that respect.
>
> I think why people don't understand this is that they equate a "recovery"
> as meaning the economy is back to where it was BEFORE the recession
> - yes, you probably need a lower unemployment rate to get back to
> that level, but that isn't what a recovery means. A recovery is
> simply when the GDP starts to grow again. It is still much smaller
> than it was, but it is growing again. You don't need low unemployment
> to support the newer smaller GDP. As it grows, more people will
> need to be hired to support it.

Why Consumer Confidence Is Not a True Indicator

I have to disagree with you though on consumer confidence not being a strong of a market indicator. In the U.S.A. the confidence of a consumer bridges the gap between buying a $2,000 vacation, or shoving the cash into a savings account or worse yet, "under the mattress"

In the first scenario the consumer is paying $2,000 for something that only costs...let us say $1,200 to provide. Yielding for the company involved a 60% gain on investment. The company invests more into employing more people or paying off its debts - and someone wins. In the second scenario the money helps banks and becomes concentrated in a single basket - and so far we don't have much proof of anyone winning anything - especially not the unemployed.

While liquidity for banks is great in the latter scenario, but the obtaining of loans is still difficult for individuals due to increased credit requirements. Corporations obtaining loans is a moot point as well if the consumers aren't spending their money due to low confidence levels.

So perhaps 70% of the American public is gullible enough to take the hook, but the hook gets them spending, so that those who are unemployed stand better chances of drawing an income again.

To worry about that gullibility is ironic considering that such approach to spending (the rain will never come so spend as you will) drove much of the development in the world.

U.S. Hyperinflation: Is Faber's Prediction Realistic?

Is it realistic? Absolutely not.

Seems this man finally figured out that when consumer prices drop along with the prices of real-estate, largely stable income ranges, and large investment volumes into the best buyer's markets in decades; what follows is a period of double digit inflation

Someone get him a Nobel's Prize, this man is onto something a college freshman could tell you.

Will New Credit Card Regulation Lengthen the Recession?

This move is indeed a little late. The average household is already 8,000 or so in debt and I dread to even mention the average credit card debt of college students coming out to the market. With bankruptcy as a valid exit I won't be at all surprised to watch many such individuals take that route soon.

The predatory behavior of credit companies needed to be curbed in order to restore a semblance of conscionable practice to that particular industry. It takes a fool to look at a group of customers who had a hard time making more than minimum payments and then increasing the APR's hoping to squeeze some more dollar out of a rock.

Ironically many are racing to beat the clock and have already begun increasing their interest rates now, before the legislation takes effect. With what I see as more Americans drawing on their credit lines in the coming months this will have a negative effect on their ability to pay those credit card bills.

Free Market resolution is those companies that over reach will be faced with an increased percentage of defaults on credit loans they've issued and watch their own value go down the tubes.

Don't Count the Dollar Out

Lets stay on China's good side and the dollar will be fine.

Shouldn't be too difficult considering we account for roughly 20% of their exports.

Is the Current Stock Market Rally for Real?

The current unemployment rate whose rise albeit now slowed will only continue is your best indicator of where the market is going.

Pure and simple logic. There are only so many ways to keep operating volumes at a constant while decreasing costs, a good majority of those deals with outsourcing, which in the long run costs the economy as a whole in periods during which new jobs aren't created elsewhere.

You'll see creditors posting solid for the next few months as individuals who still haven't exhausted their lines of credit begin extending themselves along with those freshly unemployed.

However as long as the economy keeps shedding jobs there will not be a sustainable market appreciation. Consider that we haven't yet seen the full backlash of unemployment as many of those who lost their jobs still have funds to draw on for basic survival.

Dow 6500 in 6 Months or Less?

Thank you very much for tossing that in.

The politicos didn't have to pressure banks to make loans to under-qualified and un-qualified individuals. The banks themselves wanted to get the houses off the Market.

Pure and simple logic. Would you rather hold onto the real estate and pay the associated upkeep and taxes on it, or would you rather give it to some sucker to maintain for you, a sucker you could later easily remove legally.

Illegal Aliens here are the perfect "easy" slate. They have no option of fighting the foreclosure, and most don't know the U.S. law well enough to even say a pip when you threaten them with shipping back to Country of Origin.

Ironically they also have a MUCH higher saving ratio than Americans.


On May 27 03:52 PM tuj wrote:

> "Federal policy via Fannie Mae pressured banks to make loans to those
> who should not qualify for loans. This was not only the poor, but
> also included illegal aliens."
>
> While you are right about the illegal aliens part (I know because
> I wrote the code for a major institution's loan origination system
> that allowed loans without SSN's) it most *certainly* wasn't because
> of the Fed. It was because they wanted to make money, and they wanted
> market share, not because anyone was compelling them to make loans.
> Believe me, they *wanted* those loans, and they charged a damn good
> premium for them too, thinking they had correctly priced the risk.
> Blaming CRA is such a red herring that its a joke. youknowyoureright.blog...

Dow 6500 in 6 Months or Less?

One tidbit I wanted to throw in.
It isn't the buyer who destroyed the values in the housing market. The real estate sector had been manipulated in quite a brilliant fashion.

Ie: Banks putting people in properties which they could convince the said people of being able to afford. Then using the money to cover the holding costs of the said real estate while allowing the market to appreciate. Market appreciation mixed with ARM = unaffordable housing for many and in an ideal situation = the bank yanking the now appreciated property from under the "sucker" and re-selling it to someone who can actually afford it.

Brilliant plan, however, the mass foreclosures came too quickly.
Bear in mind I'm no expert yet, just in my first year of studying economics'. I am enjoying this recession as an illustrator of what occurs in a market where rational decision making had gone out the window in the name of splurge-spending on the hopes that what goes up will never come down.

Dow 6500 in 6 Months or Less?

You're looking at what happens when the marketplace itself adjusts itself back to the ground level of "what was there" in the first place after a decade of outright manipulation.

Just think about :Banks sold mortgages to unreliable people and immediately packaged those mortgages as "done deals" into ABS' which later crashed. This is what happens when you over-reach yourself on a national level as the U.S.A. has.

Savings' rates have been at record lows in the last years as well with most Americans only saving 2c to 5c per dollar earned. While this worked out well for many retailers and for many investment companies; when the proverbial shit hit the fan; it left those Americans with very little liquid assets to finance their day-to-day living expenses.

Expenses driven up by the costs of living as both mortgages and rent expenses shot through the roof since 1996. Take Connecticut where I live at present.

1996 it was feasible to rent a 3 bedroom apartment in Bridgeport, CT (not the best area but it fit the "necessity of living" category) for $500-600 a month. In 2009 you will be hard pressed to find a rent in that city for under $900 unless you want to live in the ghetto.

So nearly 100% price inflation in 13 years. The housing market is now resetting itself as that was the vehicle by which the entire market was thrown out of reasonable balance. In the long run this will make living more affordable and as we now being able to meet the costs of living is the primary necessity to be met before anything else is purchased.

In the short run we're not going to see the DoW driven down by that alone (though I doubt it will get anywhere near mid 6000's) what is going to hurt us is over-relying on China whose economy is going to continue improving albeit at a slower pace, and the mass layoffs which we just experienced cutting the Market participants' ability to spend on non necessities.

Don't Confuse a Bear Market with Stupidity

All it takes nowadays to be a financial adviser is a Bachelor's and some connections. That being said I agree with the person above me. Most financial advisers plain suck.

Student Loans: Can the Government Do a Better Job?

The private sector was doing fine up until the point where they decided to use government backed college loans such as FELP and PLUS and splice them into asset backed securities in order to prop up those securities' attractiveness.

We all know what happened last year in the private sector and they did not do a bad job, they did an abominable one. This country's future depends on college educated young individuals. This is in part due to the fact that the high school education system outright fails to prepare kids for the "real world", and in part due to the reality of India and China pumping out highly educated professionals at rates much faster than those of the United States.

I fear the government taking over anything just like anyone else. However at this point it may be a lesser of two evils given the backlash of shady loan making in the private sector.