johngonole

How Much Sidelined Money Remains?

I'm not sure I buy the cash on the sidelines bit either. It may be there but those who have cash probably want at least $25,000 just for a cushion. Beyond that if they haven't invested yet they are probably likely to wait for a 20% pullback or so. I have missed out on most of the run as I sold off way to early on the rise. I just don't see how we can justify current prices when on looks at company outlooks. The consumer isn't coming back while unemployment is rising. I think unemployment is actually a leading indicator this time. Markets have just ingnored it. I also have a theory that the Federal Reserve is behind much of the stock market rise. Much of the new liquidity (printed cash) has come in the form of the Fed buying worthless securities that they can't get rid of anytime soon. With a larger money base they know eventually that inflation will come. At that time they will try to raise interest rates by selling their assets to take cash back out of the system. They may not be able to do this with the phoney securities they bought. Now that they have stabelized markets they are keeping interest rates low. I think they are doing this by buying stocks. The stock markets is one of the only truly liquid markets left. Therefore, from the Fed's point of view, they will be able to raise interest rates most easily by SELLING the stock they are currrently buying. I'm sure, as always, that those in the know knew this and have profited handsomely from the stock market rise. This is my conspiracy theory but it could actually be true. Too bad, the audit the fed bill hasn't passed then we could know for sure.

Is Arthur Laffer Setting Up Another Debt Bomb?

Reagon was able to force a cut in taxes via his popularity but like all politicians didn't hold the line and let congress deficit spend. The author I think is off base laying all the problems at the feet of Laffer who has never been an elected representative. Obviously cutting tax rates will only optimize tax revenues if you are starting from the high point on the curve.

The problem we have is that the M1 base is what ultimately controls LONG TERM inflation/deflation. M1 is always increasing because Keynesians deficit spend at all times. I'd agree with Keynesian philosophy if I ever thought they would reduce spending during times of economic booms. When the budget was balanced for about two months in the late 90's we should have been cutting budgets and running surplusses. We should have had surpluses again in 2004-2006. This would have prevent the housing boom.

Stable long term prices prevent the booms and bust. Stable long term prices prevent misallocations of resources. Both parties share full responsibility for all the booms and bust since at least the 70's as we go from each boom and bust into ever higher deficits. Eventually all debts will be wiped and so will our dollar.

Beware those of you who are trying to save your way into prosperity. Borrow some money it is the only true protection.

The Beginning of the End of Meaningful Regulatory Reform

Instead how about this. Socialism for the poor in return for fascism for the rich. Capitolism for the shrinking middle class. Feudalism here we come

Good News, Bad News from Leading Indicators

The money changers are sticking it up my #$^#$^ again.

A Few Truths About Oil

I am one of the ultra-right conservatives but not a NeoConservative. I'm libertarian. I agree however that tax rates are too low. At some point on the laffer curve tax rates can be too low for optimum tax revenue raising for the government. Also when we allow the politicans to wage war, provide huge grants to non-profits serving as politcal machines, pork barrel spending, bail out banks and the like, etc etc.......without raising the necessary taxes it allows politicians to direct resources that IF TAXED we would never let them do it. People who don't pay taxes will always ask for more (supposedly) FREE government services. Bushes tax cuts for the middle class were appalling. When Obama is done more than half won't even pay Federal Taxes. Clinton perhaps the worst offender started allowing people to receive checks who don't even pay taxes (tax credits)

Spending without taxaction is the new "taxaction without representation". Our grandchildren (who have no representation) will have to pay for all of this.

Fascism for the rich, socialism for the poor, and capitolism for the dwindeling middle class. Soon there will be only the poor and the politically connected.

The reality is that the US is producing all kinds of crap that the free market would never support. This is a big reason why we've lost our competitve edge and are seeing real production moving over seas.

The calculus says we have no hope of unwinding this problem unless the masses can be persuaded to force the government to balance the budget. We must place shackles on our politicians before we leave our grandchildren in ruin. This is the time to push back it it probably our last chance. VOTE THEM ALL OUT....except Ron Paul and the campaign for liberty.


On Sep 22 02:32 PM Road Runner wrote:

> You conservatives miss a very big point about the economy and taxes
> today verses the economy and taxes when Reagan came into office.
> You believe that cutting taxes is always the solution to improve
> the economy, when in fact, it is only 1 tool to be used in the correct
> circumstances.
>
> When Reagan came into office, taxes were very high (80% plus for
> top earners) and the economy was stalling because of it (along with
> a sudden jump in oil prices that led to stagflation). Government
> was still taxing high but they had no "high multiplier" projects
> left. High multiplier projects are ones they pay back to the economy
> very much more than the cost of the project. Hydroelectric dams are
> a good example. They provide cheap electricity for many decades.
> Thus, Reagan did a very good thing economically by cutting taxes,
> thus pushing more money into the private sector, and away from bloated
> government that was adding little value to the economy.
>
> However, today we have the exact opposite problem. Taxes are too
> low on the wealthy at below 35%. Note that the Bush tax cuts will
> be rolled back at the end of 2010 leading to a top tax rate around
> 40%. This is too little tax on the wealthy. It leads the wealthy
> to build large houses and drive expensive cars that get poor gas
> mileage. Sure, this behavior puts people to work temporarily, but
> it has no long term benefit to the economy. In other words it has
> a 0 or negative multiplier effect. This behavior of the wealthy takes
> value away from the economy.
>
> Also, today we have a great need to make big chances in the world
> economy. This makes government more important than it was in the
> 80s and 90s. The move to alternative energy needs a strong government
> plan and support. For example, it is hard to build high voltage power
> lines now because of “not in my back yard”.
>
> Thus, a need today is to raise taxes in a smart, Moderate way. Raise
> taxes only where it makes economic sense. I don’t think the wealthy
> should be overly taxed. It destroys the incentive to work hard and
> start businesses, and creates incentives to move money overseas.
> Around 45% should be the maximum income tax.
>
> I think gasoline taxes should be raised. Let’s do $0.10 a year for
> 10 years. Doing it this way is a good balance. It creates incentive
> to conserve fuel, but it gives people time to smoothly adjust – they
> don’t have to hurry their next vehicle purchase.
>
> And please don’t think I am a Democrat. I am not. I am a long time
> Republican that feels betrayed by the ultra-right wing of the Republican
> party that hijacked the party. To paraphrase Ronald Reagan when he
> explained why he left the Democratic party and became a Republican,
> “I didn’t leave the party, the party left me.” I am a right leaning
> Moderate that finds both the far left and far right out of touch
> with economics.

The Recession Is Far from Over

I second that. Peter Shiff for Senator!

Sucker's Rally or Sucker's Shakeout?

Perhaps the FED is the one buying stocks with newly printed money. It would be a liquid way of providing liquidity and also an easy way to shrink liquidity. The stock market may be the only market where liquidity remains.

Of course we'll never know unless someone actually "AUDITS the FED". Go RON PAUL

Bill Gross: Sell Equities, Buy Treasuries

Bill Gross is for Bill Gross, period. He will seek government intervention when it benefits him and seek free markets for the same reason. At some point he began to use his voice to help the bets he has made.

Hyper Prosperity Will Replace Hyper Inflation

Sorry about the spelling

On Sep 23 12:32 AM johngonole wrote:

> Facism for the rich, socialism for the poor, and capitolism for the
> shrinking middle class. Good buy freedom.......hello fuedalism.

Hyper Prosperity Will Replace Hyper Inflation

Facism for the rich, socialism for the poor, and capitolism for the shrinking middle class. Good buy freedom.......hello fuedalism.

Flow of Funds Report: Credit Market Shrinks for Every Sector Except Government

Great article. Basically the consumer has reached the point where those who can't help them selves can no longer borrow. The rest of us who are responsible either don't want to borrow OR are waiting for a more clear picture.

Government spending is our leaders ways of saying, "We know better than you, therefore we are going to FORCE you to borrow". The author is correct when he says they can't do it forever. The bigger problem is that while our economy is trying to resize for REAL sustainable demand our government is messing the process up by forcefully spending. In the end we will arrive at the same place before the economy in REAL terms will begin to grow. All this is doing is weaking our country.

Stuffing Uncle Sam: Is More Trouble Coming for Mortgage Market?

I just don't get why anyone would want to buy the amount of stocks required to make the stock market surge like this. I'd like to believe that somewhere there are a ton of people in the know, who have very good reasons for bidding the price of stocks up. Corporate profits have a long long ways to go before being back to normal. Unemployment still rising and I don't buy the lagging indicator crap.

Its got to be people buying simply on the belief that it will keep rising. Could this be another bubble? Is our government buying stocks to try to change attitudes.

I personally sold way to early in this market rise. Perhaps it will go up another 2000 points. Don't want to enter this market now. PE's reflect a healthy economy. Government is the only area of increased activity but that is on borrowed money.

Don’t Blame Free Markets for the Crisis: They Never Existed

Bruce E. W. wrote, "Free markets don't work". But it took hime this huge paragraph to make that statement. Nothing in all those words amounted to anything else. No evidence, not even arguments to back up your belief. Adam Sharp's article is dead on. If you are trying to plan a business and interest rates are bouncing up and down like crazy how can you plan your business investments. Easy money allows too many start ups to find funding in crowded markets. I could go on and on about this. But money printing induced inflation causes businesses to mistake rising prices for increased demand. Only demand hasn't really increased only the amount of money.

Bruce E.W. rant only shows that he only has one singular thought without anything backing it up at all.


On Sep 17 11:34 AM BRUCE E. W. wrote:

> The ideology of "so-called" Free Market reactionary responses are
> always the same: it was never enough. The idea that somehow the corrections
> are cause is a twisted revisionary tactic that defies explanation.
> You sell an idea that can't possibly exist (brute nature is as close
> as you get to a free market) and then you blame the failure on not
> "trusting" it enough. Blame the victims, blame the "interference"
> and blame the messanger. When you are sending other people out to
> die, it is easy to pay the consequences. You present a "just trust
> me" attitude that has no substance. If you really think your so-called
> free market system would have worked out without accellerating the
> incindiary practices that started, flamed and fueled the fire...there
> are game models that could allow you to show the trajectories of
> the process.
> History, however, has demonstrated over the past decades that the
> social and political cost of saving the market for the priviledge
> of a few, has been the loss of democracy and massive misery for the
> people who are sacrificed by the process. Writing down debt is one
> thing; writing down people is an entirely different matter. All too
> often the mathematics of the free market magicians reduce everything
> to an equilibrium scale in a zero sum game. There is no justice in
> that arrangement. Ane there is no redemption for of the your wild
> card promise of a utopian market... final solution.

Bullish Stance Is Wearing Thin

I have to agree. In Florida the construction industry is still worsening. This is only one sector but it will be hard for employment to pick up when important sectors are still slowing down.

I can only conclude that we must allow prices to fall. Expanding government debt only delays the process. We can't compete at current wages with other countries. Asset prices must likewise fall to stimulate demand. Stagflation will be the result of current policies. Deflation can be terrible. However if the deflation is caused by lower consumer debt (more savings), higher empolyment at lower wages, and balanced government budgets we should see more actual consumption due to lower prices, and thus higher employment and increased business spending. Companies are not going to spend money building their businesses without REAL demand. Demand from borrowed money is temporary and peoples memories are too fresh for those lessons to be forgotten so soon. Lower prices are necessary. We are doing exactly the opposite of what we should be doing. Prices would be must lower if not for the government interference.

Banks could suffer from the falling prices I realize this but perhaps they should. Let people who have saved their money actually benefit for a change from the saved money. This will encourage REAL demand.

How to Prepare for the Inevitable Correction

Nuts to the guy who thinks the increase is a correction. The first 2/3 of the upswing maybe. But we are closing in on DOW 10000. I remember when the DOW first crossed that number and the economy and its future outlook was much better than now.