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7054
Joined
12/7/2009
Location
Long Beach, CA, USA
Edited Date/Time
10/20/2012 6:56am
I wanted to respond to your post from another thread but I wasn't invited (not an Obama supporter) and I don't want to hijack it.
I don't share the same optimistic outlook on the economy as you do. I also don't use the recent stock market as a positive sign. If you notice on the chart you supplied, the market grew very quickly while the stimulus money was being spent. Now that it's almost gone, the market is relying on QE. The market loves government largess but these big players also see the end coming. At some point, the Fed will have to stop printing money and will have to begin the process of shrinking the Fed balance sheet. This will not be good for the market.
As to the economy, without some sort of bubble, I believe that what we are seeing now, 1 to 3 percent GDP growth, is normal for an aging economy. By aging I mean both in population aging and also in our position in the world economy. The growth in the 90's was from the internet bubble. In the 2000's it was the real estate bubble. Unless you see a new bubble coming, we are in for slow growth no matter who gets elected.
As far as Obama's policies go, other than the stimulus, he has neither helped nor hurt the economy. The stimulus is over now and is reflected in lower GDP. It was basically a rat through a snake. All we have to show for it is another trillion in debt. I also believe that anybody else in his place in 2009 would have done the same thing so I don't see that as a divergence from what Republicans would have done.
I'm not sure what you mean by supply side economics but stimulating growth by lowering marginal rates has worked very well in the past. (Kennedy, Reagan). But, there has to be 2 conditions present for that to have a positive effect. 1. High marginal rates. 2. A strong manufacturing sector in a coiled spring position. Well, we have neither. So in this case we agree that tax cutting will essentially do nothing under these conditions. So it doesn't really matter which guy wins as far as the economy goes.
I don't see either candidate or party addressing the only real problem they have control over and that is the Federal debt. The public has to be weaned off the government tit or we are headed for Greece. Now is just as good a time as any but there is no backbone in either party to start that ball rolling. Republicans will not raise taxes, at least to any level that would have significant impact and Democrats will not cut spending to any significant impact.
I've been called a grouch and a curmudgeon before but I think I'm right and no happy talk from either of these guys is making me fell any better.
I don't share the same optimistic outlook on the economy as you do. I also don't use the recent stock market as a positive sign. If you notice on the chart you supplied, the market grew very quickly while the stimulus money was being spent. Now that it's almost gone, the market is relying on QE. The market loves government largess but these big players also see the end coming. At some point, the Fed will have to stop printing money and will have to begin the process of shrinking the Fed balance sheet. This will not be good for the market.
As to the economy, without some sort of bubble, I believe that what we are seeing now, 1 to 3 percent GDP growth, is normal for an aging economy. By aging I mean both in population aging and also in our position in the world economy. The growth in the 90's was from the internet bubble. In the 2000's it was the real estate bubble. Unless you see a new bubble coming, we are in for slow growth no matter who gets elected.
As far as Obama's policies go, other than the stimulus, he has neither helped nor hurt the economy. The stimulus is over now and is reflected in lower GDP. It was basically a rat through a snake. All we have to show for it is another trillion in debt. I also believe that anybody else in his place in 2009 would have done the same thing so I don't see that as a divergence from what Republicans would have done.
I'm not sure what you mean by supply side economics but stimulating growth by lowering marginal rates has worked very well in the past. (Kennedy, Reagan). But, there has to be 2 conditions present for that to have a positive effect. 1. High marginal rates. 2. A strong manufacturing sector in a coiled spring position. Well, we have neither. So in this case we agree that tax cutting will essentially do nothing under these conditions. So it doesn't really matter which guy wins as far as the economy goes.
I don't see either candidate or party addressing the only real problem they have control over and that is the Federal debt. The public has to be weaned off the government tit or we are headed for Greece. Now is just as good a time as any but there is no backbone in either party to start that ball rolling. Republicans will not raise taxes, at least to any level that would have significant impact and Democrats will not cut spending to any significant impact.
I've been called a grouch and a curmudgeon before but I think I'm right and no happy talk from either of these guys is making me fell any better.
Investors do not buy stock in companies that aren't profitable.
If a company is profitable, investors buys, which drives up the stock value
If the market is at or nearing all time highs, it's because stock prices are at or near all time highs
They're at or near all time highs because profits are up.
You can disagree, and that's fine, and I am not even going to argue it, but investors do not invest in unprofitable or money losing companies, you know it and I know it and everyone else knows it.
Corporations are recording record profits, and sitting on it, that's not a secret
Corporations have trillions of dollars sitting on the sidelines, that is not a secret.
Markets are at all time highs for the same reason they were in 2007, they're making money, the difference is, they're sitting on that profit.
Now we can all sit and speculate as to why they're sitting on it, but all of those arguments boil down to greed...either corporate greed or personal greed. Corporate greed due to fear of corporate taxation or personal greed due to fear of letting the Bush tax cuts expire for earnings above $250K, but either one is greed and there's no denying corporate America, Wall Street, is making money hand over fist.
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Traders by stock to make money, not to invest in companies that are profitable. In today's "casino" environment, it's more about creating a facade that will allow a trader to make money.
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