Rantings and tirades of a frustrated economist.
New-home sales in 2010 fall to lowest in 47 years2011 BUDGET BLOWOUT: DEFICIT TO HIT NEW RECORD BREAK OUT: Dow Hits 12,000; First Time Since June '08... do you remember the old Seseme Street or Electric Company TV Show song:Which one of these don't belong? Which one of these is not the same?What the hell is going on?? Is the world going mad???
Just demonstrating how well the public school system taught economic and financial courses to 20-50 crowd.And, we wonder how the US believes Obama is going to "invest" our way out of this ridiculous debt.
Looks like a huge stock market bubble and another round irrational exuberance.When it crashes, hope your retirement accounts' asset allocation is not in stocks.I saw a chart the other day which mapped the great depression with today's great recession. The graphs could almost be superimposed. The scary thing in the great depressions' chart, there was a strong decline from here.If I can find the chart, I'll post a link.
Question for the Cap.Since the budget blowout is US-only and the new home sales drop is US-only, is part of the disconnect between the US economy and the stock market valuation explained by the more robust global economy? If so, how much would you estimate?If one is invested in stocks, would large multinational companies be a better investment than small and midcap American companies?
Stock market speculation is NOT investment.Better to watch the bond market. Fed funds are at .17 and the Prime is at 3.25. They can hardly GIVE money away. Nobody who has an idea wants to try it *now*. Everybody is waiting to see if the Government is going to get out of the market.It's simple. When the Referees are playing the game, the other two teams quit and go home.
Most of that deficit projection was due to static accounting regarding the extension of the Bush-era tax cuts. More than likely, this is NOT what will happen. All we can do is wait and see... in _theory_ the tax cuts will spur economic activity, and therefor, revenue will rise.If the congressional spending cuts follow, then we could, maybe, be in pretty good shape (all things considered).The bad part is, if we ARE in good shape, then it will become even more difficult to repeal O-care, and O will stand a better chance of being reelected. Ugh.
The DJIA is based on nominal dollars. As the value of the dollar erodes, the prices of stocks will naturally rise (as the price of _everything_ rises) in nominal-dollar terms.
Take a look back at the cost of Vietnam War and The Great Society. The US was later forced off the gold standard. The economy hit a wall in the 1970s. Real wages hit their peak in 1970, and have never fully recovered.Well folks those debts are nothing compared to today`s debt levels. In fact government accounting standards, do not even recognize a lot of federal debt obligations. Throw in some State and Municipal debt loads, and you have a problem on your hand. Lets not forget, in the past most US debt, was owned by Americans. Today those debts belong to someone over seas. How many more trillions can the US borrow? No one knows the answer to that question. But when the debt party ends, it is going to be very ugly.
What I think it means is that the Fed Gov is ultimately either going to nationalize 401(k) plans or they're going to (at the minimum) rescind the tax advantages and end up taxing both the initial investment *and* the withdrawal.
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