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post #201 of 286 (permalink) Old 05-14-2008, 09:25 AM
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I thought there was a rule here about not letting members post drunk--or naked...
We let you post "stupid", so fair is fair.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #202 of 286 (permalink) Old 05-14-2008, 12:16 PM
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May 12, 2008 1:32PM
The Argument Against the Doom and Gloom Crowd
By Elizabeth MacDonald

The doom and gloomers are out in force, but don’t be fooled by their blinkered concretism when it comes to the health of the US economy.

Listen I’m a realist, I’m no Pollyanna, I know there’s acute pain out there and that this economy may be in the weeds for a few years now. We won’t know whether the recent 0.6% GDP quarterly growth rate gets adjusted downward for a few months from now, so we won’t know whether the US economy is in a recession. Many say we are.
She knows there is pain OUT THERE. It would be nice if she got her ass out of DC and NYC and took a peak at the rest of the world to take a look.

But who knows? Just the experts, not the Faux journalists.

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But the doom and gloomers ignore the fact that the US economy has been growing at breakneck speed for five years, and any growth, no matter how fractional, is huge as it comes off a massive $12t economic base. It’s more, too, then the fact they shy away from this bit of info, that the US economy has added something like the equivalent of five Saudi Arabias, or one Great Britain or China since the the Bush tax cuts of 2003.
Breakneck speed??? Look at China or Brazil for Breakneck speed, or even the US Economy during Clinton's terms as the stock market went from 2400 to 14000. That is breakneck speed. We have been wandering along.

As for adding the equivalent of five Saudi Arabias or one Great Britain since the tax cuts of 2003. Shy away from it, we point out that $5Trillion in DEFICIT SPENDING daily. WE did NOT grow the economy, we borrowed the money from our kids and grandkids to pump up the numbers.

Please get that simple concept straight.

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The doom and gloomers ignore too this fact, that financial booms and busts have been a hallmark of the world economy historically, with more than 30 such severe busts since the first one, the south sea bubble of 1720 and ending with the ‘87 crash, according to Charles Kindleberger’s “Manias, Panics and Crashes.” Since then, the US economy has seen two recessions, and two busts, the dotcom crash and now two more joined at a meta-hip, the housing and credit crisis.
She got this one pretty right, but then again, it is not really anything more than a post-it note to the article.

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A market pro also disgruntled by the crowd that wants you to slam your door shut and get out the nail gun is Brian Hamilton, who runs the stock market and economic research firm Sageworks of Research Triangle Park, NC. He says: “I am not sure that the news coverage remotely reflects what is really going on in our economy.”

Here’s Hamilton’s dose of reality, adding more to the broad-zoom perspective I have been advocating since the fall. Hamilton now takes the stage:

1.US employment: Today, our unemployment rate is roughly 5%. Last year at this time, the unemployment rate was 4.5%. Five years ago, the rate was 6%. The average rate of unemployment over the past 50 years is 5.86%. So, the rate of unemployment is higher today than a year ago, but it is by no means stark. A fair number of economists have set the “natural” rate of unemployment at about 6% to account for those people temporarily off of payrolls. Some would argue that the current trend is bad, but they typically go too far in assuming that small trends will become long-term trends. (These are the same types of forecasters who, in the 60s, projected overpopulation would cause worldwide economic calamity);
this logic fails to note the population variance between the 50 year ago numbers and now. 50 years ago, when there was a recession, when it was over, there were hundreds of manufacturing jobs to go back to. They are in India and China now. 50 years ago the population was less than 180 Million [10M unemployed @6%]. Now we have 305 Million so 5% is 15M unemployed a 50% increase. And that does not include those OFF THE ROLES.

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2. Disposable income: The average household income in 2006 was $48,201. In 2005, it was $46,326. Ten years ago it was $38,885. Real US disposable income has been rising nicely for over 40 years. On balance, it would be extremely difficult to contend that people have a lower standard of living today than five years ago;
Do we really need to still be mixing up "average household income" with "disposable income" Since the assertion does not include fixed, inflation adjusted numbers, it is not accurate in either way but then again, hold your hand up if ANYTHING you buy is the same price now as it was a decade ago?

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3. US inflation: The current rate of inflation is 3.98%. Last year, it was 2.78%. Over the past 50 years, the average rate has been about 4.10%. While gas prices are definitely a problem in the US right now, especially for lower and middle income earners (and especially with relation to our dependence upon foreign oil), overall price inflation is acceptable and even positive. Do you remember the late ’70s? Starting in the late ’70s, Paul Volcker’s Federal Reserve made a great effort to curb the devastating effects of inflation in the United States;
Would this be CORE, TOTAL or ACTUAL INFLATION numbers. They vary from 4%-7.6% annually depending on what you count. As an example BLS determines that if steak gets too expensive you will move to hamburger so it recalculates to hamburger in the inflation numbers. Neat, huh.

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4. U.S. interest rates: If you want to buy a house today, the average 30-year mortgage will cost you 5.97%. Ten years ago, the same interest rate might have been 7.13%. Thirty years ago, the rate would have been 9.2%. The “credit crunch” we are experiencing (whatever that is; I have yet to hear an acceptable or uniformly applied definition of “credit crunch”) might be noise on the screen, but people and businesses are still able to borrow cheaply, which is all that counts on an aggregate level. In order for banks to make money, they need to lend money. Let’s assume that banks want to make money. If they lend money at low rates of interest and people are buying things, this component will be fine;
The only reporter who doesn't have a definition of "credit crunch". NICE.

As for her assertion that people and businesses are still able to borrow money cheaply, I think she needs to go out and do some research. That tightening of credit standards was not just for show.

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5. U.S. GDP growth: In the last quarter, GDP growth was 0.6%, which, while nothing to write home about, is positive, not negative. Last year, GDP growth was 2.2%. Five years ago, it was 2.5%. The average real rate of GDP growth for the past 50 years has been 3.31%. It is clear that GDP is slipping today, which is not good at all, but real GDP growth is still positive, albeit anemic. It makes sense that, after almost 10 years of high growth, it might slow down for a short time. (Keep in mind that the average “recessionary” GDP cycle has been about 11 months, while the average expansionary cycle has been about four years.)

Hamilton adds that: “So, while the US economy is admittedly slowing, if you use basic and reliable economic data, it seems clear that, despite what you hear daily throughout–almost literally–the entire media world, we are not in a recession.”
And this is why BA Journalism grads aren't Economists. Nice simple view without a foundation to understand what she is talking about. While some of her points are close, others are somewhat far off the mark.

McBear,
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Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
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post #203 of 286 (permalink) Old 05-14-2008, 01:35 PM
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The entire financial reporting system no longer works. In the days when we were a predominately middle-class society, you could report "the unemployment rate" or "the inflation rate" etc and it would reflect the life realities of everyday people. It doesn't work any more. Our society has become so segmented between the rich, the suffering middle class and a lower class made up increasingly of a foreign national wage-slave class, that we need three reporting systems. Anyone can tell you, in a world where the rich have had every decision made in their favor for the last eight years, they are having no recession. In a world where the corporations have had everything decided in their favor, they are doing mighty well, thank you. While the rich and the corporations are doing well thanks to rigging the country for their benefit for the last eight years, the middle class is in a true recession. They live lives of out-sourcing fear where groceries go up every week and the price of fuel goes out of sight.

We should not be talking about general unemployment, the questions should be: how many high-tech jobs were created? How many companies moved factories overseas? How many people moved out of poverty? How much is industry spending on job training? How much are oil companies investing their fat profits in alternative sources? How many US citizens entered college this semester, more or less than last? How much is business providing for technical scholarships? How many people gained or lost health insurance last week? Those would be real indexes. Then maybe people wouldn't look at them as a joke. How can anyone say "inflation is low" without laughing, knowing that fuel costs go into everything? It is a canard, and if you look into it, they pull energy and food out of the calculation! And I loved the one where the Bush Admin said "50,000 jobs were created last month!". If you analyze the figures, they turn out to be low wage jobs that went to illegal aliens, while those that left the country during the same time period where good manufacturing jobs. Why doesn't the government release those figures in the true context of what happened?

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address

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post #204 of 286 (permalink) Old 05-14-2008, 09:52 PM Thread Starter
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More good news...

Inflation pressures ease despite food price jump: Financial News - Yahoo! Finance

The Labor Department reported Wednesday that consumer prices edged up 0.2 percent last month, slightly lower than expected and better than the 0.3 percent rise in March.

Don't believe everything you think
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post #205 of 286 (permalink) Old 05-14-2008, 10:07 PM
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um yeah
LOL Where the hell do you find all this stuff to post?

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post #206 of 286 (permalink) Old 05-15-2008, 08:16 AM
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Inflation pressures ease despite food price jump: Financial News - Yahoo! Finance

The Labor Department reported Wednesday that consumer prices edged up 0.2 percent last month, slightly lower than expected and better than the 0.3 percent rise in March.
Interesting that the report showed Energy as FLAT even though AAA showed an 11% rise for the same period and food showed UP an annualized rate of 12%.

I would love to see inflation numbers drop to zero but it would really be nice to see them drop based on real data, not tweaked, twisted numbers in an attempt to try and make things look better than they are.

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post #207 of 286 (permalink) Old 05-15-2008, 09:05 AM Thread Starter
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Interesting that the report showed Energy as FLAT even though AAA showed an 11% rise for the same period and food showed UP an annualized rate of 12%.

I would love to see inflation numbers drop to zero but it would really be nice to see them drop based on real data, not tweaked, twisted numbers in an attempt to try and make things look better than they are.
Inflation will never drop to zero, but it could be worse...
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Don't believe everything you think
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post #208 of 286 (permalink) Old 05-15-2008, 01:44 PM Thread Starter
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Mortgage Rates Lower In Good News for Homebuyers

Mortgage Rates Lower In Good News for Homebuyers



Rates on 30-year mortgages edged down this week to their lowest point in a month, a spot of welcome news to would-be homebuyers.

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post #209 of 286 (permalink) Old 05-15-2008, 02:14 PM
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Yay way to go Kali.

Californians leading the way to consumer bust - International Herald Tribune
Californians leading the way to consumer bust
By James Saft Reuters
Published: May 15, 2008

LONDON: As it did when the housing bubble began to burst, California is leading the way in the next leg: a consumer bust.

Squeezed by rising unemployment, inflation in food and energy costs and plunging home values, Californians are cutting back on spending. Besides causing woes for state and local government, the cutback is giving California's economy another knock and makes further job losses, home repossessions and banking problems more likely.

The figures are pretty bad. The median home price has fallen by 29 percent in the year to March, according to the California Association of Realtors, and repossessions are increasing.

Unemployment hit 6.2 percent in March, up 1.2 percentage points from the same month last year.

But most important, in the 10 months to the end of April, sales tax receipts in California are actually down in absolute terms. Gasoline tax receipts are essentially flat. When you factor in that there would have been considerable inflation during the period, and that some essentials like gasoline would have risen sharply in cost, the picture is clear: Californians are tightening their belts.

And California matters. It accounts for 13 percent of the U.S. economy. It was also where more than a third of the non-mainstream home loans, like subprime and Alt-A, were made in 2006 and 2007, making it very important to the health of the banking system.

"California is big enough that it is going to drag a lot of the nation down with it," said Christopher Thornberg of Beacon Economics, a consultancy in Los Angeles. "You can't have collapsing consumer demand in California and not expect it to have an influence."

Thornberg sees a recession in California being closer to the recession of the early 1990s in severity rather than the briefer recession after the Internet boom ended. But while California is not suffering from an industrial bust, as it did when aerospace was hit after the Berlin Wall came down, its consumers are poorly set to weather a recession.

"People have racked up a phenomenal amount of debt, savings rates have been at zero and the piper has to be paid," Thornberg said.

Vallejo, a city in Northern California, said last week that it would file for bankruptcy, prompted by rising costs and falling tax receipts due to the housing slump.

Governor Arnold Schwarzenegger is expected to unveil plans for $15 billion in bonds backed by lottery revenues to help plug a state budget hole.

A lottery jackpot is just about what the state needs right now, though the odds seem equally remote.

The downturn is clear, too, from company results.

Nordstrom, the department store chain, reported last week that same-store sales fell 6.5 percent in the first quarter, dragged down in part by lower numbers of shoppers visiting its stores in California, a state that accounts for about a third of its turnover.

Starbucks blamed some of its recent disappointing performance on a new unwillingness among coffee drinkers in California and South Florida to pay top dollar for stimulants.

At the lower end of the scale, Jack in the Box, the fast-food chain, said Wednesday that it had seen softer sales at restaurants in California.

One particular area of concern is the way in which California's faltering economy and rising unemployment interact with falling home values to prompt greater rates of mortgage defaults. This could hit banks with exposure to California in their mortgage loan portfolios, not to mention Fannie Mae and Freddie Mac.

"There is a very strong relationship between delinquencies and the coupling of job losses with falling home prices," Ajay Rajadhyaksha and Derek Chen of Barclays Capital in New York wrote in a note to clients.

For example, in the areas of Modesto, Stockton and Merced, the unemployment rates are above 10 percent while more than 60 percent of loans are close to being underwater, or larger than the value of the house. Serious delinquencies in those areas are above 18 percent, while the national average is 3.6 percent, according to Barclays.

But beyond the implications for banks, California can really be seen as the testing ground for what the U.S. consumer looks like in coming years, and how he or she manages. If, somehow, the move from spending to savings can be done gradually, the downturn in the United States may be gentle.

If it happens quickly, watch out.

Last edited by mlfun; 05-15-2008 at 02:24 PM.
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post #210 of 286 (permalink) Old 05-15-2008, 02:16 PM
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Still the big bully.
When Italy, Spain get weak enough, it will be a simple walk in by the likes of Helger und Kock.
=============================
German economy leads euro area to surprisingly robust quarter
By Carter Dougherty
Published: May 15, 2008

FRANKFURT: Surprising even the most optimistic forecasters, the German economy grew 1.5 percent in the first quarter of this year, delivering its best performance in over a decade despite the global financial crisis and recessionary fears enveloping the United States.

The euro zone, where Germany accounts for a third of economic output among 15 members, grew 0.7 percent during the period, the statistics agency Eurostat reported Thursday. The region's numbers, which represent quarter-on-quarter growth, also got a surprising lift from France, where the economy grew 0.6 percent in the first quarter.

The figures, which were about double what most economists expected, suggested that the European economy was demonstrating a resilience that seemed unlikely as recently as last autumn. The numbers do obscure, however, severe slowdowns in Ireland and Spain, which have been battered by the global housing decline, and a probable recession in Italy, economists said.

Still, the statistics appeared to validate the path of the European Central Bank, which has resisted cutting interest rates as the Federal Reserve has done in the United States. The ECB has repeatedly emphasized that inflation remains a threat while playing down the risks to growth posed by financial market distress since August.

Most private economists have taken issue with what they see as the overly sanguine view of the ECB. They have forecast that financial conditions, which have ratcheted up borrowing costs, the strong euro and declining demand in the United States will eventually pinch German and European growth.
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