1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

The market and economy.....

Discussion in 'Economics and Financials' started by my 2 cents, Aug 6, 2010.

Tags:
  1. my 2 cents

    my 2 cents Well-Known Member

    4,090
    2,337
    113
    Dec 10, 2007
    NC Mountains
    I am of the opinion we are going to start to see a slow and accelerating slide in both the economy and the market.........a lot of economic factors have proven mutually exclusive of market performance but IMHO they cannot be "hidden" much longer...........and we all know the economy has sucked but IMHO it is about to get worse and take the market with it....................

    I would be very very very wary of segmented or fund investment right now and would not touch treasuries........the reason I am of that opinion is that we are now seeing the end of the resuilts from the government giveaway..uh, I mean stumulus, tax credits for mortgage buyers, and the end of census employment, and even the media is starting to segment the private sector hiring from the G-men. We have unemployment still terribly bad and not getting better, spending is not increasing, the response to mortgage adjustments programs has been abyssmal, and whatever the political bias the fact is overall there are a whole lot more people worried about our debt than not worried about it.

    Couple that with the FACT that corporate earnings through "earnings season" were largely based on accounting changes, cost cutting (people), and other bottom half numbers rather than top half increasing gross profit, or increasing revenue, and the picture for a "double dip" or a very long term adjustment is more than likely.

    And the picture from someone involved with some majors and a whole lot of medium sized businesses is not much more attractive.......looming tax increases as the tax cuts expire (many of these companies are LLC's), more company matching requirments in employee benefits, and a whole lot of other nasty scenarios in a economy where neither margin nor revenue are increasing.......................very bad scenario we are begining to see the first indicators of.......some of us at least.....and oh btw.....Asia continues to divest long term debt...

    So IMHO this situation is a bit different than the "normal" recovery and it is scary...this time the market is not indicating the economy it is lagging the economy......and I think it is about to turn south....slowly but will gain momentum...especially if revenues stay basically flat in general and the tax cuts are allowed to expire...employers just are not going to hire people when the demand sucks, their personal income is going to shrink and on top of that they are going to pay a higher share to employ someone.....not gonna happen...and when their is not employment there is not recovery......

    Couple all of that with a huge increase in debt (money supply) and thanks but no thanks to investment...I'll just hangon to my cash a couple years and lock into those 22% T-Bills if I have any confidence that the dollar will not go the way of the confederate dollar..................
     
    vt_dolfan likes this.
  2. vt_dolfan

    vt_dolfan Season Ticket Holder Club Member

    Man...

    I have to tell you...trying to make heads or tails of the economic situation we are in is very difficult....

    I just read a pretty good article on the Motley Fool entitled "This is killing America"

    http://www.fool.com/investing/general/2010/07/19/this-is-killing-the-recovery.aspx

    Now...for someone trying to understand alot of this....a piece like this article could very easily be taken the wrong way. The way I am reading this however, is that the treasurie is for all intents and purposes, out of "magic bullets". The short term lending rate is already at 0%...Wall Street by the way loves this "free money" and firms that feed off this kind of trading, Morgan Stanley, Goldman Sachs, etc....actually benefit from a protracted recession....and they benefit big time.

    The other way to get our economy is through some sort of Stimulous. Here's were those that fall in the Deficit Hawk category start to panic. We cant add any more to the already increasing debt we already have.....look at how long it took the last round of Unemployment checks to go out....not at the expense of the future is the rallying cry. So...take that magic bullet out of the gun.

    We are a nation where 70% of our GDP is consumer spending right? Well....thats what I had always thought....but then I did some more reading and found out some interesting things...take a look at this article written last year.....

    "I opened up this morning’s NYT and see the big headline “Retailers See Slowing Sales in a Key Season.” And I just know that we are about to have another round of “consumer spending is 70% of gross domestic product, so blah blah blah blah of course we can’t recover unless consumers start spending again.” (Not in the NYT story, to their credit, but you can find similar quotes everywhere you look).

    Blah blah indeed. As a textbook author, there are few things that frost me more than hearing “consumer spending is 70% of gross domestic product,” because it perpetuates two very large and very misleading untruths.

    First, the category of “personal consumption expenditures” includes pretty much all of the $2.5 trillion healthcare spending, including the roughly half which comes via government. When Medicare writes a check for your mom’s knee replacement, that gets counted as consumer spending in the GDP stats.

    At a time when we are wrangling over health care reform, it’s misleading to say that “consumer spending is 70% of GDP”, when what we really mean is that “consumer spending plus government health care spending is 70% of GDP.”

    Second, an awful lot of those back-to-school dollars are going to imported clothing and school supplies (how many of those laptops and iPods do you think are made in the U.S.?). A dollar of consumer spending does not translate into a dollar of domestic production.

    In fact, the whole way that the BEA presents the GDP statistics points the public debate in the wrong direction. GDP stands for “gross domestic product”—that is, domestic production. But the breakdown of GDP is into expenditures categories—personal consumption expenditures, government consumption expenditures, etc. Just take a look at Table 1 of the latest GDP release.

    So we have grown used to thinking of “spending” as “production”—after all, that’s the way it is presented. (I’m not blaming the BEA, by the way. This is the way that GDP was designed from the beginning, 70 years ago).

    I think we need to move towards presenting GDP in terms of production, rather than spending. We need a shift from the consumer to the producer as our main unit of analysis.

    But for now, we need to stop being so darned obsessed with consumer spending."

    http://www.marketoracle.co.uk/Article21613.html

    So....whats the truth....what will really stimulate our economy?

    Jobs.....as far as I can tell. And thats what has me so dismayed. I cant see where there is any incentive for employers to hire people. I mean...are tax breaks really gonna do it? Lets say Obama decides to keep and extend all of the Bush tax cuts....and basically does everything the conservative party wants him to do....if business' are already having record breaking productivity....and that productivity already keeps up with demand....why would they rehire? Manufacturing was the key to the last Depression....wasnt it? Manufacturers hired large numbers of people...people had more money to spend....first time home owners sprang up everywhere....whole housing developments were built....hiring more and more workers....more spending dumped more money into the tax coffers.....low to 0 deficits....

    After NAFTA....which Im beginning to think might be the first nail in this countries coffin...our Government actually made it more appealing for companies to move manufacturing jobs over seas. And they did....in droves....so what industry is gonna hire the amount of people we need to lower unemployment?

    Real unemployment, not the fake feel good Govt issued numbers, ranges from 14% to 22% depending on what you read....and I cant, no matter how rosie the glasses I put on, see how that is gonna change. I just cant....

    And if Im right....then our country as we all thought it was....is done. There will be no more middle class. None...its gonna be a top tier of rich people...and everyone else...left to fight over the scraps. Man...Im starting to see the parallels between us and Rome every day....no way the NFL cancels the 2011 season....its our modern day version of the Coliseum....and they are the Gladiators....our Govt knows we need to NFL to keep the masses quiet.

    And can anyone imagine what would happen if we have 9/12? Seriously...that would be the Cout De Grace...wouldnt it? One more large attack on our nation....and the United States is done. Not done as in no longer physically here....but how we live as a free nation....fear will rip our country apart.


    M2C...your so much more educated in these types of finances than I am....please...tell me....tell me it isnt as bleak as I really believe it is. Because if it is....I need to start figuring out how to compete in a game where the rules havent even been written yet. I want my kids ot have something....
     
  3. vt_dolfan

    vt_dolfan Season Ticket Holder Club Member

    Heres something else I think needs some light shed on it....but I think its important.

    I think alot of firms are going the route of the long term temporary employee....

    I think you'll see a lower number of core full time employees with a move to long term temp employees that cost far less to hire. This is a big incentive for manufacturing....temps dont require the number of benefits a full time employee has...they can be let go when demand drops.

    I think alot of employers are really skittish about the recovery....so hiring temps is much more palatable.....but hiring temps really doesnt solve our nations unemployment problems in the long term does it?
     
  4. padre31

    padre31 Premium Member Luxury Box

    99,377
    37,301
    0
    Nov 22, 2007
    inching to 100k posts
    Absolutely My.02, save your cash, cut expenses.

    And there is the rub, Consumerism requires the opposite, go into negative worth, spend copious amounts of money on baubbles and don't worry about tomorrow.

    I simply must add, historically Gold is a safe haven investment, when Crash Pt II hits, I fully expect the price of gold to DEFLATE as the current gold market is based on speculation not any sense of protecting wealth, when the market crashes, money will run from Gold and convert to Cash.
     
  5. vt_dolfan

    vt_dolfan Season Ticket Holder Club Member

    You know...I heard something at first glance sounded kinda stupid when listening to a Pod Cast the other day.....

    Seeds as an investment? Specifically non genetically changed seeds....is this way to apocolytic or serious?
     
  6. padre31

    padre31 Premium Member Luxury Box

    99,377
    37,301
    0
    Nov 22, 2007
    inching to 100k posts
    That is a bit overwrought Vt, there is a very valid reason for owning heirloom seeds, namely they do not have the Terminator gene spliced into them.
     
  7. my 2 cents

    my 2 cents Well-Known Member

    4,090
    2,337
    113
    Dec 10, 2007
    NC Mountains
    I know we are in the minority but I also think gold price will deflate.

    Gold is more a speculative hedge against the economy more than the market.....bottom mline...I agree with you.
     
    padre31 likes this.
  8. my 2 cents

    my 2 cents Well-Known Member

    4,090
    2,337
    113
    Dec 10, 2007
    NC Mountains
    I think it depends on your investment type..if you are investing in seeds because you think the world is heading for chaos then I think it is a bit over the top...and I would go for the guns myself...but that is just me.....

    Genetically modified seeds and urase inhibitor fertilizers are the under reported technologies that have allowed us to keep food prices relativly low.

    The bottom line is we will have something like 9 billion people somewhere around 2050, and only 19% of the land mass is tillable...and on top of that 20% of the tillable land has limited water resources....so you HAVE to get more product from limited land....so despite some liberal beliefs IMHO you have to make great use of advanced pesticide development (those pesky bugs do build immunities) since ytou cannot have your food source destroyed, you have to maxamize yield which is done through gentic modification of seeds breeding out the genes that will hamper yield and also modifying the crop to require less water, and using urase inhibitors that will require less urea/nitrogen to increase yields, use less water, and generally make bvetter use of the land we currently farm......

    Long answer and probably way more than you care to hear...but genetically modified seeds, advanced pesticide companies and urase inhibiting fertilizer companies are all pretty good investment bets for the long term IMHO.....people like Bayer, Syngenta, and such ...... I do not wish to get political since I am no longer a welcomed guest of that forum, but taking away Tax inventives for research is not exactly how I would incentivize these big bad companies to help us feed the world......................
     
  9. my 2 cents

    my 2 cents Well-Known Member

    4,090
    2,337
    113
    Dec 10, 2007
    NC Mountains
    Great post...and I do believe that the possibility for a complete currency meltdown in my lifetime is possible, I even say probable...I am struggling with how to protect myself and my family also......we have not seen a meltdown...Greece got bailed out, Mexico got bailed out all those years ago,,,,,we have never seen it so many cannot imagine the possibilities of the USD melting failing.
     
  10. my 2 cents

    my 2 cents Well-Known Member

    4,090
    2,337
    113
    Dec 10, 2007
    NC Mountains
    The new Helthcare laws require you have HC insurance or face penalties if you have over 50 employees starting in 2012......guess where majority of firms employee numbers are?.....40-60.....so if I have 56...guess what I am going to find a way to have 49 when that law goes into effect.....if I have 48...there better be a damn good reason to have 51......I just do not see any significant hiring in that demopgraphic anytinme soon under the upcoming laws......but hey a temporary does not count against your full time IRS reported employee.....the IRS will be some busy folks...but yes IMHO you are exactly correct in what will/is going to happen with regard to temp employees be hired.

    The problem with temporary employees is that same law will require temporary employees to have healthcare (rather than the hiring company)so it will have to be provided (offered) by the temp agency...and that cost will be passed on to the company hiring the temp.........but guess where that cost will end up........on the price of the good/service, and that will only maintain margin and not increase it.

    This is just a bad bad economy with may more bad changes in the law coming at us that will not increase any significant hiring IMHO.........
     
  11. padre31

    padre31 Premium Member Luxury Box

    99,377
    37,301
    0
    Nov 22, 2007
    inching to 100k posts
    Disagree My.02, in the sense that America could be far more productive agricutlurally speaking, in fact if one is looking longer term, it would be wise for those on the lower rung of the Income Scale to grow a significant portion of their own food and use the savings that will create.

    Self Sufficiency and DIY is one of the last avenues to create excess capital to be put to work, of course Joe American knows next to nothing about that sort of approach.

    As a part of that, such an effort is more conducive to using non Genetically Modified seeds, let ADM and ConAgra use them for their massive corporate farms, the small grower trying to save a buck needs seeds that can be reproduced.

    I never thought I'd see a day in America where the concept of Victory Gardens once again makes sense, but here we are, devolving into France, where such Gardens have been used for hundreds of years to defray high produce costs.
     
  12. my 2 cents

    my 2 cents Well-Known Member

    4,090
    2,337
    113
    Dec 10, 2007
    NC Mountains
    For you and I in vast beautiful North Carolina that is great....and I agree, when practical grow your own food. We do and we are not exactly economically challenged.........but we are talking 9 BILLION people by 2050...

    I do not know where you have traveled but when you start talking about Shanghai, Mumbai, Jakarta, Mexico City...there just is not tillable land in the backyard.....urbanization is as much an issue as water and land utilization.

    Those "corporate farms" are much more productive in terms of yield per acre. I spent a week at a conference on crop managment about 6 months ago...the numbers are what the numbers are....small farmers using reproducable seeds are going to a. require a great deal more water than non genetically modified crops (particuarly important in California, and with 9 billion people it will be damn important to everyone) b. face a much higher possibility of losing entire crops because of pesticide resistance. c. face lower yields per plant particuarly if they are not combining genetic modification with urase inhibation......we can agree to disagree but the issue are what the issues are and I do not see 22 million people in shanghai growing vegetables off thier porch.

    Love ya bro, but we gottaagree to disagree on this one.....
     
  13. padre31

    padre31 Premium Member Luxury Box

    99,377
    37,301
    0
    Nov 22, 2007
    inching to 100k posts
    1`

    Fair enough, but I will point out that America and I'd think prairie Canada can easily ramp up more production in both the commercial and private sectors.

    A. CA will never live up to it's Ag potential, Environazis have little problem shutting down production for the flimsiest of reasons.

    B. Pesticide overusage will do that.

    C. lower yields are relative, and have more to do with maximizing profits than any real need, if anything higher productivity in the AG field simply means less employment and less widespread production.
     
  14. vt_dolfan

    vt_dolfan Season Ticket Holder Club Member

    Great back and forth on this issue guys....GREAT. There is definitely two sides to this coin...and Ill admit, its easy to get caught up in being down on genetically modified veggies, without looking at the entire picture. Science plays a large role in sustainable agriculture...although I at times wonder is giants like Con Agra and Archer Daniels enforce their will on the smaller local farms by forcing them to buy their seeds....

    I think you'll see more companies popping up that will have products where you can grow your own food in a very limited space...quite similar to the hanging tomato baskets I get at Gardner's Supply.

    Discussing this topic has given me an idea on another thread, of which I hope youll both join in....
     
    my 2 cents likes this.

Share This Page