DU: Read this economic op-ed and tell me what you think...

[tedzbear]

This guy is very bullish on the economy during the next year or so. He says we're finally pulling out of the wreckage of the dot com bust and good times are ahead.
Me thinks he is a Repug shill master making the case for *. I don't think things are turning around very much in my neck of the woods...
Yes, stocks are up again, but interest rates are climbing. That alone should knock the wind out of the real estate bubble.

Thanks for your opinions, DU.
:bounce:

http://www.marketwatch.com/news/story.asp?guid=%7B862E02CC%2DDB7B%2D4DC3%2DAD3C%2D53D34CD09FA7%7D&siteid=myyahoo

[Friar]

1. Did we forget our link?

Real Estate is a good investment. Always has been. I don't think there's a "bubble". Value increase may slow down, but I doubt it will fall.

The stock market has almost nothing to do with the economy it appears. A company's value may rise even as it sheds workers and contributes to the general economic malaise. Just ask Jack Welsh, the bastard.

I have an opinion even when I haven't read the op-ed. Am I a liberal, or what?

[tedzbear]

3. Yes. Oops.

:eyes:

[Art_from_Ark]

8. Real estate can be a bubble just like anything else

Then there's the matter of liquidation-- real estate is one of the most illiquid of all investments-- you have to find someone willing to pay your price, and if your location or other conditions aren't right, you might be sitting on your land for a long time-- and paying $$$ in real estate taxes and maintenance fees in the meantime.

[papau]

2. He has no numbers - so how do you disagree?

There will be a positive GDP growth through the election - and it will show up as 2nd q 03 being revised from 2.4 to 2.8, 3 and 4q at 3.o and 3.5% (unless they move some good numbers from the 2nd into the 3rd q), and then we slide back down to 3 and 2.5 for 1 and 2q in 04.

And Job growth will be nil for the whole period. And National Debtm rather than decreasing, will 1.5 trillion higher than 1/20/01.

[FloridaPat]

4. Looks like a lot of BS with no facts - typical repub stuff.

How can he be thrilled with a $250 Iraq bill becaue it's not a trillion? And to assume the office of Homeland Security is working because we have no new attacks seems amazing. To me, that's proof the government is behind it. If the alQuada people are big on suicide attacks, it would take nothing to bring this country to a panic. Just too at that idiot shooter and his son in DC amazingly right before the last election.

Another thing - some of the indicators show growth - but the military bill is included in that. Like GDP. As for the Dot com bust, internet businesses are up 300% from 2 years ago. People are making money on the internet. Mostly because of the high unemployment people are starting their own businesses.

And final proof the economy is not recovering - Bush says it is. And we all know he can't tell the truth.

[JNelson6563]

5. hmmm

Well, we know the latest GDP growth was mostly military spending. Without that those #s would've been unpleasant. I also note that there was no mention of the drastic cost cutting measures that were required to make decent earnings the last two quaters. Cost cutting measures that cannot be repeated that can't be repeated with every cycle (like lay-offs/staff reductions).

I also see that the consumer confidence #s out of UofM are not mentioned and they are looming, announced Tues. I do not believe they are expected to be all that great.

Keep in mind the hit certain industries took for the recent black out. Airlines for instance. This will play into number's for the month and the quarter. The balance will be the boost in the retail sector thanks to the bribes, er tax-refund advances some are getting--that being the extent of the economy's benefit from those checks from the IRS, a little bump in some retailers sales......

Then there's that whole employment thing. Just won't go away. Keeps pokin' Jr. in the arse. See, the military spending just doesn't help with unemployment, especially when even they are laying folks off (Boeing etc.).

Then, as has been mentioned, there's the interest rate climb which will help the housing market and the refi's fizzle.........which BTW have been driving this economy.

Much is overlooked in this article. Very selective.

Julie

[rogerashton]

6. According to my back-of-the-envelope calculation,

we would need real growth of 7.5% to get the unemployment rate back to 4.2% by the summer of 2005. Won't happen.

Just to keep unemployment steady would take 5.5%

Businesses have started making replacement investments. That will help. I don't think we will see 5.5% before summer of '04, though. Until then, continued job-loss recovery. It's going to be nip and tuck for our boy *Georgie to get enough of a recovery by Nov. 04 to be re-elected. Possible, though, and Demos should be prepared. Even if a job-growth recovery is under way in fall 04, which is very probable, unemployment will still be higher than it was in the Clinton years, and we need to see a lot of videos of the misery of homeless families who had good jobs in '99-01.

[AP]

7. What I see happening is that the only improvements in the economy

come from a few corporations reporting increasing profits. However, they're getting those profits from things like handouts from the US treasury and from cutting jobs. They aren't more competitive, or making better products people want to buy, and they're actually reducing the buying power and the strength of the middle class. It's nothing that Keynes would be happy to see.

I don't see how this will result in anything but a little irrational exuberance on the stock markets in response to hazy profit reports. It will all come back to bite us on the ass.

[tedzbear]

9. I predict all hell will break loose when 30Y bond hits 6% and upwards...

It will be like an economic whiplash rollercoaster... a sudden expansion and then a terrible collapse led by the bursting real estate refi bubble. I am holding off on investing in stocks. I missed the run up in March and now its too late to buy until the next bear occurs.
Just my 2 cents...
:bounce:

[w4rma]

10. The stock market only measures how well big corporations are perceved to

be doing. Bush has pumped alot of our money into many of their owners' (who are all top 1%ers) bank accounts. But, more and more small buisnesses are going out of buisness. This is destroying some wealth and transfering other wealth upwards. The system is becoming too top heavy and Americans' standards of living is in a decline because we 99% of have a smaller share of the resources to divide up. Also, most folks are highly indebted to financial institutions and Americans are watching our manufacturing and engineering and accounting jobs go overseas.

I'm not quite sure if we'll see a stock market crash like during Hoover's presidency, but I do think the direction we are heading will lead to another Great Depression.



Robber Barons

I. Introduction

"Robber Barons": that was what U.S. political and economic commentator Matthew Josephson (1934) called the economic princes of his own day. Today we call them "billionaires." Our capitalist economy--any capitalist economy--throws up such enormous concentrations of wealth: those lucky enough to be in the right place at the right time, driven and smart enough to see particular economic opportunities and seize them, foresighted enough to have gathered a large share of the equity of a highly-profitable enterprise into their hands, and well-connected enough to fend off political attempts to curb their wealth (or well-connected enough to make political favors the foundation of their wealth).

Matthew Josephson called them "Robber Barons". He wanted readers to think back to their European history classes, back to thugs with spears on horses who did nothing save fight each other and loot merchant caravans that passed under the walls of their castles. He judged that their wealth was in no sense of their own creation, but was like a tax levied upon the productive workers and craftsmen of the American economy. Many others agreed: President Theodore Roosevelt--the Republican Roosevelt, president in the first decade of this century--spoke of the "malefactors of great wealth" and embraced a public, political role for the government in "anti-trust": controlling, curbing, and breaking up large private concentrations of economic power.
…
Ironically, it was Republican president Herbert Hoover who triggered the process. Hoover thought that Wall Street speculators were prolonging the Depression and refusing to take steps to restore prosperity. He threatened investigations to persuade New York financiers to turn the corner around which he was sure prosperity waited. Thus, as Franklin D. Roosevelt put it, "the money changers were cast down from their high place in the temple of our civilization." The Depression's financial market reforms act broke the links between board membership, investment banking, and commercial banking-based management of asset portfolios that had marked American finance before 1930. Investment bankers could no longer be commercial bankers. Depositors' money could not be directly used to support the prices of newly-issued securities. Directorates could not be interlocked: that bankers could not be on the boards of directors of firms that were their clients.
…
E. The Return of the Super-Rich

The years since 1980 have seen the return of the super-rich in the United States. Some of this is due to the great stock market boom of the past decade and a half, which has carried many of those who inherited their wealth and whose ancestors had never achieved "billionaire" status into the billionaire category. These are America's first true inherited aristocracy: the first generation of those with immense social and economic power who have inherited it.

More of the return of the super-rich is due to the blurring of the lines between financiers and corporate managers as the Depression-era order of American finance has fallen apart. It is once again possible to raise large sums of money and then direct them to suit one's own interest, rather than turning them over to salaried managers interested in perpetuating organizations.
…
http://econ161.berkeley.edu/Econ_Articles/carnegie/delong_moscow_paper2.html

Paul Krugman (NY Times columnist on economics) has an excellent column on this period of American history known as the "Gilded Age":
http://www.pkarchive.org/economy/ForRicher.html

...
According to Citizens for Tax Justice (www.ctj.org), 65% of the benefit of the recently passed tax cut will go to the richest 10% of taxpayers. In 2003, 49% of taxpayers will get less than $100 from the tax bill. The average tax cut for these 65.7 million Americans will be just $19. By 2005, 74% of taxpayers will be getting less than $100 from this tax cut, with the average person in this group receiving just $5 in tax relief. Meanwhile, these revenue cuts will force deep cuts in important social programs upon which we all rely.

This calculator will help you estimate what the 2003 tax cut will mean for you. We’ve looked at the three biggest components of the tax cut bill: individual rate reduction, capital gains tax cuts and dividend tax cuts.
...
http://www.responsiblewealth.org/tax_fairness/2003TaxCut.html

The top 1% wealthiest households in America own at least 38.1% of all the wealth in America. The Great Depression happened when 44.2% of all the wealth in America was owned by the top 1%.

The bottom 90% of American households own less than 30% of America's wealth.
The bottom 40% of American households own 0.2% of America's wealth.

http://www.ufenet.org/research/wealth_charts.html

Big buisnesses (owned by those in the top 1%) are running small buisnesses out of buisness. Big buisnesses are now leaving the country and taking their wealth with them. Run a small buisness and you have to pay high taxes. Run a big one and you can incorporate in the Cayman Islands, thereby avoiding federal taxes, and shop around in all 50 states for the one that will pay the board members the most to move there.

Treasury Chief: Tax Evasion Is on the Rise
http://query.nytimes.com/gst/abstract.html?res=F10915FB3C5E0C7A8DDDAE0894D9404482

[MaverickX]

11. these stupid economists...

Don't judge a good economy by productivity but by a big return for investors.